Big Pharma Marketing
Big Pharma Marketing
Early in dopesick, a book examining how Purdue Pharma helped addict an alarming number of Americans to opioids, Beth Macy writes about the army of drug reps who pushed the painkiller OxyContin. In its approach to sales, Macy shows, Purdue was scientific. Using information purchased from a data-mining firm, the company determined which physicians were prescribing the most of its competitors’ painkillers, and dispatched sales reps to their practices. The more likely a doctor was to prescribe, the more often the reps darkened his door. The reps were highly motivated: Their bonuses were pegged to the milligrams of OxyContin a doctor prescribed.
The reps, traditionally known as “detail men”—though since the mid-1990s, when OxyContin was introduced, the field has become more associated with young women—usually arrived bearing gifts. A rep might invite a doctor out to a fine restaurant, or on a junket in a desirable vacation destination. For doctors too busy for such gifts, work-arounds were devised. “Reps began coming by before holidays to drop off a turkey or beef tenderloin that a doctor could take home to the family—even a Christmas tree,” Macy writes. To bend the ear of the most harried physicians, reps would invite them to meet at a nearby gas station, where they would buy the doctors a fill-up and pitch them on their wares as the fuel flowed into the tank.
In the years since OxyContin came to market, the industry has implemented rules that forbid the most egregious forms of gift-giving. As early as 1991, the American Medical Association had issued recommendations: Ideally, gifts would benefit patients (free samples for those who otherwise couldn’t afford them), but gifts to doctors were generally aboveboard as long as they were of “minimal value”—notepads and pens.
As the methods of Purdue’s detailers make clear, the AMA’s recommendations were honored in the breach through much of the ’90s—and Purdue reps were hardly alone in using such methods to their advantage. In 2009, amid intensified government scrutiny of the industry, Big Pharma instituted a code that banned gifts large (tickets to sporting events or the theater) and small (coffee mugs).
Still, that code was itself full of loopholes. Pens were prohibited, but meals—most often casual, in-office affairs—were still permissible. A 2017 article in the Journal of the American Medical Association found that in a single year (2015), nearly half the doctors in America received a payment from a drug rep. Close to 90 percent of those payments came in the form of free food and beverages.
You might reasonably ask whether a modest meal with a pharmaceutical sales rep matters all that much. You might also be surprised by what a small gift can buy. In recent years, social psychologists and marketers have demonstrated that the pull of reciprocity is exceedingly powerful in human beings, often acting on us in ways we may not consciously appreciate. Perhaps it’s too much to suggest that free pens were responsible for the opioid epidemic. But it’s become more and more clear that a gift, even from a salesperson, can make the receiver feel obliged to give something in return.
The potential conflicts of interest created by detailers’ gifts have been recognized for as long as the money’s been flowing. Doctors tend to prescribe drugs from companies that give them gifts—but there could be harmless reasons for the pattern. Doctors who believe that Prozac is an effective drug might prescribe it a lot and also spend time with reps from Prozac’s manufacturer, Eli Lilly, to learn about the latest research on how best to use it in treating patients.
Another 2017 study in jama, however, suggests that even small gifts can cause doctors to change their script-writing behavior. It looked at what happened to the market share of brand-name drugs sold by reps at 19 academic medical centers from 2006 to 2012. Each institution in the study banned small gifts and regulated pharma reps’ visits more strictly at some point during this time; the first enacted its prohibitions in October 2006, the last in May 2011. This staggered timeline allowed the researchers to examine how the rate of prescriptions for the repped drugs changed when the policies went into effect. They found that these drugs lost 1.67 percent in market share to cheap generics and drugs without a dedicated sales force. If that doesn’t sound like a lot, think of it as a percentage of $60 billion, the 2010 sales revenue for the drugs covered by the study. It works out to a pretty handsome payback for some turkey sandwiches.
At a minimum, when doctors prescribe brand-name drugs rather than generics, insurance companies’ costs increase, as do your insurance premiums. Other recent research suggests more damaging consequences from gift-giving. One study found that placing limits on sales calls (including, in most cases, a ban on gifts) led to a decline in children being prescribed antidepressants and antipsychotics not approved by the FDA for pediatric use. (Such “off label” prescribing is common, but the direct promotion of drugs for off-label uses is prohibited by federal law—there is insufficient evidence that these uses are effective.) Whether because they simply felt less beholden to salespeople, or perhaps because they were hearing fewer pitches for off-label uses, doctors prescribed these drugs to children less often when detailers’ visits were restricted.
What about opioids? Well, there’s this: A short paper published in jama Internal Medicine in 2018 found that, while prescriptions have dropped across the country in response to their much-publicized abuse, among physicians who continued to receive gifts from opioid makers, prescriptions continued to see a modest rise.
The role of gifts in commerce dates back at least to ancient Rome. The poet Catullus described the gifts Caesar deployed to cajole and manipulate others as “wicked generosity.”
In recent decades, social psychologists have helped turn consumer-focused gift-giving into a science. One of the godfathers of this field is Robert Cialdini. Early in his career, in the 1970s, he became intrigued by the various tactics that salespeople used to get consumers to buy stuff. He set out to explore whether these tricks actually worked. He went undercover, taking sales and marketing jobs at a used-car lot, a fund-raising organization, a telemarketing company. He cataloged the tactics he witnessed and began to test them at Arizona State University, where he was a faculty member.
This work culminated in 1984 with Influence: The Psychology of Persuasion, which became a best seller and is still assigned and read in business schools today. The book lays out six principlesthat can make a pitch more persuasive. Among them is reciprocity, which Cialdini’s book helped package as an explicit—and easy-to-implement—tactic for marketers.
More recent research has highlighted just how good an investment gifts can be—no matter what you’re selling. In one experiment, the economist Armin Falk had a charity send about 10,000 letters to potential donors, asking them to give money. About a third of the would-be donors received only a letter. Another third received the letter accompanied by a postcard with a colorful drawing on it—a gift, the recipients were told, “from the children of Dhaka” that could be “kept or given to others.” The final third received the letter and four postcards.
The postcards were not much of a gift—they cost pennies apiece. But they led to dramatically higher response rates. One postcard increased the response rate by 17 percent; four postcards raised the rate by 75 percent. According to Falk’s back-of-the-envelope calculation, the four-postcard solicitation improved the profitability of the direct-mail campaign by about 55 percent relative to the no-postcard solicitation (after accounting for the cost of the postcards themselves).
Other fund-raising experiments leveraging reciprocity have seen similarly impressive results. In a study conducted by Michael Sanders of the Behavioural Insights Team—Britain’s “Nudge Unit,” dedicated to using behavioral insights to improve government policy—investment bankers were asked to donate a day’s salary (roughly $750) to be split between two charities. Some were given a small packet of candy. The gift increased the likelihood of a full donation from 4.4 percent to roughly 11 percent—yielding a return on investment of more than 1,000 percent. (Like postcards, candy is cheap.) Clearly, even small gifts can have an outsize impact.
The prevalence and effectiveness of strategic gifts raise important questions for each of us as consumers, and for society at large: How can we protect ourselves from unwittingly falling prey to reciprocity? Should government regulators get more involved?
To some extent, regulators are already involved in reducing the use of gifts in the pharmaceutical industry. In 2003, the Department of Health and Human Services issued guidance about which industry marketing techniques violated federal anti-kickback laws. Recently, some states and even cities have imposed more stringent rules. Chicago, for example, has introduced a licensing system for pharmaceutical reps, aiming to mitigate “predatory marketing” of prescription drugs, with revenue from the licenses helping to fund opioid-addiction treatment.
While targeted regulation is a positive step, it’s unlikely to solve the gift-giving problem entirely. It’s hard to imagine legislation banning the World Wildlife Fund from sending you your annual batch of return-address labels, for instance.
So we must be on guard against salespeople—and our own instincts. Although some reciprocity can be explained by a natural desire to foster relationships with the people we interact with in our daily lives, studies have shown that the impulse is more reflexive than pragmatic. Many people will reciprocate even in a onetime, completely anonymous transaction in which the gift giver and the recipient never learn each other’s identity.
The reciprocal pull may be impossible to overcome. But while the desire to give back may be strong, it is also often short-lived. Research has shown that the feeling can wear off quickly, which may explain why Purdue’s sales reps paid doctors so many visits.
Big Pharma Marketing
Big Pharma Marketing