The Role of Pharmaceutical Companies in the Quest for the Triple Aim

Chung Ji
Ji Chung
Vice President of Healthcare Strategy

Watching football on TV without commercial interruptions during time-outs and between quarters is a near impossibility. In recent years, ads for pharmaceuticals have become an expected part of the advertising mix (think of the obligatory shot of a couple in side-by-side bath tubs in a meadow). Since the advent of direct to consumer (DTC) pharmaceutical advertising, drug spots have become as much a part of Americana as beer and automobile commercials. Reflecting on how this has become an accustomed part of my TV sports-watching experience makes me think about the consumer healthcare experience. No matter where each of us sits with our opinions on the value and appropriateness of DTC pharma ads, we would probably all agree that these ads do play a role in the healthcare consumer experience. They provide patient education and potentially increase consumer engagement in their own healthcare. With DTC advertising, pharma pursues a direct relationship with the healthcare consumer, with many target audiences in mind – those with erectile dysfunction, irritable bowel, rheumatoid arthritis, chronic obstructive pulmonary disease, dry eye, and even now, cancer.

In November 2015, the American Medical Association (AMA) called for the ban of DTC pharmaceutical advertising (like hard liquor and tobacco) over “… concerns among physicians about the negative impact of commercially-driven promotions, and the role that marketing costs play in fueling escalating drug prices.”1 Tim K. Mackey et al in The rise of digital direct-to-consumer advertising?: Comparison of direct-to-consumer advertising expenditure trends from publicly available data sources and global policy implications points out that traditional DTC advertising may be on the decline while eDTC advertising is seeing increases.2 In yet another publication, Research in Social and Administrative Pharmacy, Mr. Mackey highlights the evolution of DTC pharmaceutical advertising via prescription drug coupons.3 If we consider the Cowen Pharmaceutical Industry Composite P&L, spending for Research & Development (R&D) as a percentage of revenue has gone from 9.9% in 1990 to 17.4% in 2015(E). Selling, General and Administrative (SG&A) spending as a percentage of revenue has fluctuated between 35.9% and 28.2% over the same time frame. It’s not as simple to say that pharma spends more on advertising than on R&D, given that marketing and sales expenses are lumped into SG&A.

One can posit that for many healthcare stakeholders involved in the lifecycle of a drug, DTC pharma advertising may be largely about the quest for meaningful data – an attempt by pharma to get to necessary insights. Whether it’s a scattered, demographic-specific commercial or targeted patient-focused support for a specialty drug therapy approach, the goal for pharma appears to have a great deal to do with the identification and acquisition of data on the patient-consumer that fits their drug profile. It’s possible that pharma, like managed care and health delivery systems, after years of sitting on troves of data has not yet been able to get to the right insights from the data it possesses and the data it desires to further drive top and bottom line growth while achieving positive clinical outcomes.

McKinsey & Company in an article titled How pharma can win in a digital world touches on re-imagining pharma as “solutions companies, not asset companies,” which necessitates better cooperation with other healthcare stakeholders.4 Clinical trials data provide a limited, controlled-environment view into efficacy, safety, and approvability, but lack real world data insights that health plans and health systems encounter on a daily basis. Thus, pharma continues to look for ways to zero in on segments and sub-segments of their population while relying on disparate sources of information. The challenge for pharma then should be to find new ways to more fully enter into the Triple Aim5 discourse as a stakeholder in the outcome of a patient-consumer. In order for pharmaceutical companies to make meaningful contributions to the healthcare goals of positive clinical outcome, financial benefit, and operational efficiencies (in that order), they require a greater view of disparate sources of data and a better understanding of this data.

In the meantime, while we watch the healthcare transformation, including the role of pharmaceutical companies in partnerships to achieve the Triple Aim, here’s an idea of how you might respond during the football game when your seven-year-old walks by, looks over at the flat screen and asks, “What’s that about?“ referring to a DTC ad for erectile dysfunction. There is no need to get embarrassed. You can dig deep into our pharmaceutical knowledge bank and blurt out, “That’s for a medicine for pulmonary hypertension.” Success! You will have averted a potential disaster and managed to postpone a talk-to-be had. You can justify this explanation knowing that you are technically accurate (in high-dose form). So feel free to make this pronouncement about the information dispensed as the long list of potential side effects and risks get their allotted screen time.

References

1 American Medical Association. AMA Calls for Ban on Direct to Consumer Advertising of Prescription Drugs and Medical Devices. http://www.ama-assn.org/ama/pub/news/news/2015/2015-11-17-ban-consumer-prescription-drug-advertising.page. Published November 17, 2015. Accessed January 28, 2016.

2 Mackey TK, Cuomo RE, Liang BA. The rise of digital direct-to-consumer advertising?: Comparison of direct-to-consumer advertising expenditure trends from publicly available data sources and global policy implications. BMC Health Serv Res. 2015;15:236.

3 Mackey TK, Yagi N, Liang BA. Prescription drug coupons: evolution and need for regulation in direct-to-consumer advertising. Res Social Adm Pharm. 2014;10(3):588-594.

4 McKinsey & Company. How Pharma Can Win in a Digital World. http://www.mckinsey.com/insights/pharmaceuticals_and_medical_products/how_pharma_can_win_in_a_digital_world. Published December 2015. Accessed January 28, 2016.

5 Berwick DM, Nolan TW, Whittington J. The triple aim: care, health, and cost. Health Aff. 2008;27(3):759-769.





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