A study by the National Institute for Health Care Management found that, in 2001, the 40 most heavily advertised brands accounted for almost half of the increase in consumer spending on pharmaceuticals. Significant news coverage in the consumer and trade press implies a direct relationship between those two factors. Critics point to the tripling of pharma companies' marketing spend since 1997 and link that to higher prices.
"The huge expenditures that you see in brand marketing are possible because the drugs sell at huge costs to the consumer. It's a vicious cycle," says Clay O'Dell, spokesperson for the Generic Pharmaceutical Association.Merck-Medco has already broken that "cycle" through Generics First, the company's sampling program. Participating physicians receive bimonthly mailings containing educational material and generic drug sample forms and meet with pharmacists who discuss the benefits of generics. In the first six months, those doctors increased their generics prescribing rate by 22 percent and generated $3.5 million in savings for health plan sponsors and patients.
"State Medicaid programs that put their foot down by excluding branded drugs open themselves up to charges that they are too harsh," says O'Dell. "But when a private insurer gives information about generics and offers samples, it's good public relations. It's leading the horse to water, and hopefully, making him drink."
Blue Cross Blue Shield of Michigan is also rolling out several consumer initiatives. Its latest is a pilot program that waives the co-pay when the health plan member switches from certain brand-name drugs to their generic equivalents. The insurer projects total savings of $1.5 million for patients in the pilot.
Other payers are likely to mount similar campaigns to control their own drug costs. How they affect brand sales remains to be seen. But with FDA expected to deliver new guidelines for DTC within the year, pharma marketers should be prepared for their impact on message development and delivery.