Pharmaceutical Marketing

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1 Pharmaceutical Marketing Principles, Environment, and Practice Mickey C. Smith, PhD E. M. "Mick" Kolassa, PhD Greg Perkins, PhD Bruce Siecker, PhD Pharmaceutical Products Press An Imprint of The Haworlh Press. Inc. New York London Oxford

2 CONTENTS Preface xv SECTION I: INTRODUCTION Chapter 1. General Principles 3 The Evolution of Marketing 4 The Development of Pharmaceutical Marketing > 5 The Social Functions of Marketing 7 The Right Product 10 The Right Quantity 10 The Right Place 11 The Right Price 11 The Right Time 12 Spreading the Word 13 Marketing Management 13 The Social Position of Pharmaceutical Marketing 14 Chapter 2. General Environment 17 Introduction 17 Patients and Customers: The Inner Circles 18 The Outer Ring: The Aggregate Environment 43 The Middle Ring 62 Conclusion 69 Chapter 3. General Practices 71 Introduction 71 Who Are We? Who Are Those Other People? What Can We Do About Them? 87 What Business Are We In? How Does This Guide Us? 92 Internal Review Another Look at the Corporate Navel 96

3 SECTION II: PRODUCT Chapter 4. Principles of Product Research and Development 103 Greg Perkins Product Scope Strategy 103 New Product Strategy 106 Product Positioning Strategy 120 Product Repositioning Strategy 121 Product Elimination Strategy 121 Diversification Strategy 125 Ibuprofen From Drug to Drug Products: A Case 130 Chapter 5. Responsiveness of the Pharmaceutical Industry to Its External Environment 143 Greg Perkins High-Value Molecule Selection 148 Clinical (Drug) Development and Launch Project Management Skills 151 R&D Life Cycle Management Postapproval 158 Mergers 162 Conclusion 166 Chapter 6. Product Research and Development Practices 167 Greg Perkins Orphan Drug Act 172 Expedited Drug Approval 175 Prescription Drug User Fee Act of 1992 (PDUFA) 179 FDA Modernization Act of 1997 (FDAMA) 182 Conclusion 185 SECTION HI: PRICE Chapter 7. Pharmaceutical Pricing Principles 189 Mick Kolassa Essential Factors in the Pricing Decision 189 Competition 191

4 Patient Characteristics 194 Value of Therapy 196 The Decision-Making Process 197 Disease Characteristics 198 The Reimbursement Environment 199 Company Needs 200 Company Abilities 201 Public Policy Considerations 202 Summary 203 Chapter 8. The Pharmaceutical Pricing Environment 205 Mick Kolassa New Product Pricing 208 Pharmaceutical Pricing and Public Policy 209 Pricing on Purpose 210 Chapter 9. Pharmaceutical Pricing in Practice 211 Mick Kolassa New Product Pricing Trends 212 The Need to Price on Purpose 216 SECTION IV: PLACE Chapter 10. Principles of Place, Channel Systems, and Channel Specialists 219 Bruce Siecker Introduction 219 Challenges of Managing Place 219 Channel Systems 223 Crucial Place Factors 225 Channel Specialists 228 Channel Relationships and Conflict 234 Channel Access 235 Physical Distribution 235 Chapter 11. Place Factors in the U.S. Drug Market: The Environment 239 Bruce Siecker Drug and Related Health Care Products 239 Use of Prescription Medications 240

5 Drug Product Imperatives 243 Physical and Fiscal Product Characteristics 244 Legal and Regulatory Requirements 245 Chapter 12. Place Applications in the U.S. Drug Market 251 Bruce Siecker Drug Suppliers Producers, Labelers, and Repackagers 251 Wholesale Distributors 254 Chain Warehouses 256 Pharmacies The Patient-Pharmacist Interface 256 Return Specialists Reverse Distributors, Reclamation Specialists, and Disposers 260 Clinics, Surgery Centers, Dialysis Centers, Laboratories, and Planned Parenthood 261 Pharmaceutical Sampling 261 Institutional (Hospital) Marketing 261 Wholesale Distribution 264 SECTION V: PROMOTION Chapter 13. Principles 269 Introduction 269 Rational Appeals 274 Nonrational Appeals 276 To Whom Should Products Be Promoted? 278 A Special Case: Prescription Drug Advertising to Consumers 279 Where to Promote: Strategic Choices Among Media 284 Media Types 288 Media Selection Procedure 297 Deciding How Much to Spend 300 Conclusion 303 Chapter 14. Environment 305 Legal/Regulatory 305 Ethical/Cultural 307

6 Technical 308 Economic 308 Social 308 Competitive 309 Internal 309 Individual Patients/Consumers 310 The Human Medical Condition 311 Conclusion 311 Chapter 15. Practices 313 A Bit of History 314 Targets of Promotion 314 Messages 317 Life Cycle Considerations 317 Product Considerations 318 Blending the Promotional Mix 323 Budgets 323 Conclusion 328 SECTION VI: CONCLUSION Chapter 16. Prospects: Linking Therapy to Patient Needs 331 Public Perceptions of Pharmaceutical Marketing x 331 What Pharmaceutical Marketing Is and Does v 332 What Drives Product Development? 333 Marketing Exerts Downward Pressure on the Price of Medicines 335 Cost Savings Through Efficient Distribution: A Key Element of Marketing 336 Communicating with Physicians: Linking Products to Patient Needs 337 Cost Savings Through Marketing Directly to Patients 341 Pharmaceutical Marketing Stimulates Demand: Good for the Health Care System 343

7 Appendix: Resources 345 Books 345 Periodicals 346 Notes 349 Index 361