Are Pharma Companies Idiots? Unlikely…
I’ve often told my students (and anyone else who will listen) that rule #1 of understanding the business world is this:
“Never assume that large, complex, successful organization is guided by morons, just because you can’t understand that organization’s behaviour.”
So here’s a story that caught my eye, about drug companies apparently throwing away hundreds of millions of dollars on useless direct-to-consumer advertising:
Study says direct-to-consumer drug advertising not that effective
Drug advertisements aimed at consumers may not be having the effect on sales that opponents and proponents of the practice assume they do, a new study suggests.
The analysis, by researchers from Harvard Medical School and the University of Alberta, looked at Canadian sales data for three drugs that were heavily advertised in the United States, ads which Canadians watching U.S. television would have seen.
The researchers found no evidence of a spike in sales for two of the drugs after the TV ads started to run. There was a marked increase in sales for a third drug but the effect was short-lived.
Basically the study went like this. Direct-to-consumer (DTC) advertising of pharmaceuticals is generally forbidden in Canada, but permitted in the U.S. But TV signals (and the ads they carry) tend to cross borders, so most Canadians see plenty of DTC advertising of pharmaceuticals on American TV. But people in Quebec — a predominantly French-speaking Canadian province — watch much less American TV, and hence presumably see far fewer pharmaceutical commercials. So, measure the differences in prescription rates, in Quebec vs the rest of Canada, for well-advertised drugs, and you have a rough estimate of the effectiveness of those ads. Neat idea. And the conclusion reached in this case is that, actually, the ads don’t have much effect.
OK, I’m sure there are plenty of methodological questions to ask. But skip that for a minute and ask yourself this: what happens next? What do you do now, if you’re in charge of marketing for a major pharmaceutical company. Do you:
a) Immediately rush to cancel all advertising, based on the realization that you’ve been wasting zillions of dollars on something that really doesn’t work;
b) Re-evaluate your marketing plan, based on the realization that, in at least some cases, advertising seems not to have the impact you had hoped it would have;
or
c) Laugh out loud.
Sure, it’s an intriguing study. And it is indeed possible that the marketing people working for big pharma are really bad at their jobs. But don’t bet on that.
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Here’s the link to the original paper: Effect of illicit direct to consumer advertising on use of etanercept, mometasone, and tegaserod in Canada: controlled longitudinal study
The Business Ethics Blog 
Chris,It depends upon what their own internal feedback is telling them.It is true that even large corporations are prone to ineffective campaigns which fail to have the desired effect. It is also true that some ineffectual marketing campaigns run far too long before being cut. In my home country of Australia, an awful ad designed to promote tourism was run for about four years before being finally booted. (the particular ad concerned featured a female model saying “Where the bloody hell are you?” – a message which was not well received).However, I would think that the majority of large pharmaceutical companies would have an ample setup of internal feedback methods to determine how successful or otherwise a promotional campaign is. If internal intelligence agrees with the conclusion of the study, they will pull the campaign. If not – they won’t.
Beware of blanket statements. The very limited study done with Canadian respondents did not take into account prescription drugs advertised in the USA and not approved in Canada (such as the sleep aid Lunesta), or drugs marketed under different brand names. This would skew the numbers considerably. We should also not disregard the fact that, regardless of whether or not it had an impact on sales, this advertising does alter our image of the pharma company behind the brand; even if the food gives you a stomach ache, most of us feel all warm and fuzzy when we are exposed to the Macdonald’s logo. As brand drugs go generic, this will help pharma companies boost their image in the public eye via the only direct advertising available to the. Finally, doctors watch television. I suspect that given the growth of the Internet as an information source and knowing the history of marketing, it is in everyone’s best interest to allow the manufacturers to produce the advertising to their patients, if only to stem the flow of potential disinformation and self-diagnosis/medication, etc. People want information, so let them have it. Regulate it if you must, but disallowing it draws more attention to it and (similar to cellophane-enclosed magazines) creates a curiosity where non existed before. I think pharma marketers know what they’re doing, whether we agree with it or not.