Pharma Flailing
MedAdNews is a trade publication covering the business of pharmaceutical marketing. It’s somewhat like Advertising Age, in that it’s focused on serving and celebrating the subsystem of communications agencies and media buyers who create the content to position and promote the feature/benefit story of prescription drug brands directly to consumers and health care professionals.
It’s big business. In 2016 alone, according to the Journal of the American Medical Association, the pharmaceutical industry as a whole invested somewhere around $30 billion on drug advertising, promotion, public relations and sales across audiences and therapeutic categories.
April is always an exciting month at MedAdNews. It’s the issue where most drug advertising agencies get profiled and submit their best “creative” in the hopes of winning a Manny Award. The Manny Awards, says the magazine, “pay tribute to the creative work of agencies serving the healthcare market, their people, and their contributions to the industry.”
The prelude to this year’s edition, beneath the headline “Another Year of Changes, Growth” sets the stage with this odd retrospective:
“In 30 years of the Manny Awards, many things — technology, medicine, and ways agencies do business — have changed. But the healthcare ad industry continues to thrive and adapt to the new demands for relevance and creativity.
Think of where you were 30 years ago. Were you already working in healthcare advertising? Were you still in college or just graduated? Or were you in high school….?
Now think about what the media world was like 30 years ago. Network television was still king. The primary places to advertise were newspapers, magazines and radio, as well as direct mail.
And the internet was not really a thing.”
The gala ceremony announcing the many Manny winners (there are 40 categories) was April 18. Which, as it turns out, coincided with the publication in JAMA of an editorial, “Lowering Cost and Increasing Access to Drugs Without Jeopardizing Innovation.”
The authors of the JAMA editorial are Robert M. Califf, MD, a former FDA Commissioner now at Duke University School of Medicine, and Andrew Slavitt, a former Acting Administrator of the Centers for Medicare and Medicaid Services. They begin their view this way:
“US drug costs have reached unacceptable and unsustainable levels. Evidence shows that “financial toxicity” arising from drug costs and other medical expenses is reducing financial security for many families, and prompting difficult choices, as patients defer or forgo therapies they cannot afford.
In stark contrast, comparable countries negotiate drug prices and use drugs more effectively. Recent data suggest that other high-income countries have an average life expectancy approximately 3 to 5 years longer than that of the United States, which ranks last among high-income countries and is losing ground compared with peer nations. Although drug prices account for only part of these trends, they nevertheless add to disparities that dominate the trajectories of US health outcomes.”
They go on to say:
“Direct-to-consumer advertising, detailing, and excessive physician payments also drive up costs. A particularly troubling issue to health professionals is the increasingly brazen use of the internet, social media, and television for marketing based on marginal or unproven benefits under the protection of current legal interpretation of First Amendment rights.
Which brings us back to one the central points of this blog: $30 billion buys a lot of awareness about disease and drugs. If only it worked to change behavior and deliver tangible business impact. (I’ve written before on “awareness” campaigns as a new category of waste in healthcare. Read more here.)
Another Market Forecast Meets a New Market Reality
Amgen reported earnings yesterday.
Aimovig is its new drug to prevent migraines. Sales were $59 million for the quarter, short of the $83 million projected and down from $95 million in the fourth quarter. As a new class, drugs to prevent migraines were forecast to yield $4 billion in annual sales by 2026 in major global markets.
Amgen cited pricing pressure from payers, and is still giving out 40% of Aimovig prescriptions for free.
The story line for Amgen is following a pattern essentially all of the pharmaceutical majors are experiencing: muted top-line growth bouncing around 2-3 percent (similar, as it happens, to the advertising holding companies Omnicom Group, Interpublic Group, and WPP), and weaker-than-exepcted sales for key drugs fighting for share in hyper-crowded markets. Price competition and profit pressure are the inevitable result, as the pharmaceutical sector tries to create negotiating leverage for insurers.
The implications here are that the technical merits of a new “drug” are table stakes in the market shift to value.
This is why “digital” + drug discovery = status quo: you’re reinforcing the past, and creating with the same mindset from the Industrial Age. The nature of thinking and innovation needs to fit a radically different context for strategy. The aim should be for something qualitatively different, more imaginative strategically, more systemically transformative.
Competing on outcomes begins with a new system vision, one that’s conceptualized concurrently with new science and new evidence. The end state is a “value” story defined and priced by impact at a system level.
More succinctly, there’s a difference between bringing a new drug to market, and bringing a new outcome to market. For the pharmaceutical industry, the should mean more B2B, less DTC.
But then, who wins a Manny?
/ jgs
