Consumerization: Pandora's Pillbox - Pharmaceutical Executive


Consumerization: Pandora's Pillbox
By going direct-to-consumer, the industry unwittingly unleashed a swarm of opportunities for other players to enter the pharmaceutical fray. And they made the most of it. Now, a decade later, pharma is feeling the fallout in consumer trust and product value. It's time to take back control.

Pharmaceutical Executive

Meanwhile, the media have aggressively stepped up their coverage of the industry. Even the Wall Street Journal, a bastion of capitalism, runs more and more stories critical of pharma practices. Recent headlines such as "The Real Story Behind Alleged 'Copycat' Drugs," "Off-Label Drug Use Flourishes Despite Curbs," and "Generic Drugs Often Delayed by Settlements" are testimony to the intense scrutiny of pharma affairs.

Needless to say, the legal profession has also hit the gravy train. With Big Pharma replacing Big Tobacco as the new product-liability cash cow, the courts are swamped with class-action lawsuits. Some 65,000 suits have been filed against drug companies since 2000, by far the most against any US industry.

But not all pharmaceutical stakeholders have capitalized on consumerization. Above all, many physicians—believing that it may undermine their authority—have resisted third-party efforts to influence consumers' use of drugs. The American Medical Association has called for a moratorium on DTC ads for all products on the market for one year or less, echoing similar calls in Congress.

Clearly, consumerization has had profound effects on the industry. DTC ads delivered what pharma wanted—consumer demand and increased sales. Initially, the ads may even have enhanced pharma's image: Many surveys show that DTC ads offer useful information, stimulate productive doctor-patient discussions, and promote earlier diagnosis. After a decade, however, the blowback from bringing consumers—and other opportunistic stakeholders—into the pharmaceutical fray is undeniable. Consumers are increasingly frustrated by the high price of healthcare in general and pharmaceuticals in particular. Consumers, politicians, and the media have all taken aim at pharma for what they consider to be disproportionate spending on marketing and "me-too" drugs at the expense of innovative R&D.

Direct-to-consumer TV advertising has also come in for its share of criticism. For instance, controversy erupted after the makers of two of the three ED drugs ran ads during the 2004 Super Bowl. Robert Essner, the chairman and CEO of Wyeth, told the Wall Street Journal in 2007, "I thought [the ED ads] were inappropriate for medicines, for the seriousness of what we do, and were sending the wrong image about drugs and drug companies."

Some critics have blamed DTC ads for exposing more consumers to unnecessary drugs with unnecessary risks. The obligatory recital of side effects in DTC ads, combined with the rash of drug recalls and product-liability cases, has accentuated the issue of drug safety, further devaluing pharmaceutical products. Which brings us full circle to the $4 Wal-Mart promo and the ultimate devaluation to mere commodities.

From Targeting to Teaming

There are several ways that pharmaceutical executives can harness consumerization to improve the industry's image and enhance the value of its products. The most direct—and challenging—is to commit to developing breakthrough drugs. In fact, the industry recently has commercialized highly targeted cancer therapies, more tolerable HIV agents, and several novel vaccines. Innovative work is also being done in areas of tremendous unmet medical needs, such as Alzheimer's.

But pharma's leaders need to go further than R&D to reach today's consumers. Many executives are familiar with the "Four Ps" of marketing: product, promotion, place, and price. Now they need to focus on the "Four Cs" of consumerization: commitment, choice, collaboration, and customization. Each has important applications for pharma's future.

First, consumers want reaffirmation that drug companies are committed to their welfare and that they can trust pharma's products. And pharma needs to demonstrate such a commitment. Advertising that clearly communicates both the risks and the benefits of drugs will help rebuild trust. For example, Johnson & Johnson, which learned how to regain public trust by handling the Tylenol product-tampering scandal in 1982, produced a 2005 TV spot with a real physician advising a patient about the safety issues of the Ortho Evra contraceptive patch.


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