Ross Mullner - Pharmaceutical Marketing [Journal of Consumer Marketing Vol 22 N 7 2005]

Journal of

Consumer MarketingPharmaceutical marketingGuest Editor: Ross Mullner

Volume 22 Number 7 2005

ISBN 1-84544-855-3 ISSN 0736-3761

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Journal of Consumer MarketingVolume 22, Number 7, 2005

ISSN 0736-3761

Pharmaceutical marketing

Guest Editor

Ross Mullner

Contents

362 Access this journal online

363 Editorial

364 Introduction

Misplaced marketing

365 For the drugs we needHerbert Jack Rotfeld

369 Direct-to-consumer prescriptiondrug advertising: a study ofconsumer attitudes and behavioralintentionsTanuja Singh and Donnavieve Smith

379 Direct-to-consumer advertising andyoung consumers: building brandvalueErin E. Baca, Juan Holguin Jr andAndreas W. Stratemeyer

388 Understanding the dynamics of thepharmaceutical market using asocial marketing frameworkDavid Holdford

397 Direct-to-consumer prescriptiondrug advertising: concerns andevidence on consumers’ benefitJaeun Shin and Sangho Moon

404 Global marketing of lifesaving drugs:an analogical modelOswald A. Mascarenhas, Ram Kesavanand Michael Bernacchi

412 Does DTC mean “direct to court”?Donna J. Cunningham and Rajesh Iyer

421 Pharmaceutical marketing on theinternet: marketing techniques andcustomer profileCalin Gurau

429 Direct-to-consumer advertising ofprescription drugs: help orhindrance to the public’s health?Greg Finlayson and Ross Mullner

432 Herbal product claims: boundariesof marketing and scienceStephanie Y. Crawford andCatherine Leventis

437 Executive summary

442 Book reviews

447 Computer currencyEdited by Dennis A. Pitta

449 Internet currencyEdited by Dennis A. Pitta

451 Note from the publisher

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Editorial

Today, pharmaceutical companies are increasing theirmarketing budgets to advertise directly to the consumer.This spiraling effort has begun to attract the attention of bothconsumer advocacy groups, as well as the federal government(in the USA), in terms of taking a closer look at the effects ofsuch advertising efforts. In July of 2005, the US SenateMajority leader asked pharmaceutical marketers to voluntarilystop their direct-to-consumer advertising during a drug’s firsttwo years on the market. The ability for a pharmaceuticalcompany to affect both the physician (who can prescribe aspecific drug) and a consumer (who can request that theyreceive a prescription for a certain drug) has virtually affectedthe traditional model of marketing communications, whichhas been used for many years. In addition, products that arenot regulated by the United States Food And DrugAdministration (FDA) are also gaining popularity, in termsof being advertised directly to the consumer.

There is no doubt that pharmaceutical companies havediscovered that appealing directly to the consumer, and by-passing the “traditional” doctor-patient relationship, hasbecome a very effective tool. The pharmaceutical companieshave been able to create a heightened awareness amongconsumers, as it concerns the introduction of new drugs, andhave observed how consumers have the ability to literallycreate strong market demand a for these new prescriptiondrugs. It will be interesting to observe how this new model ofmarketing communications will play out.

Singh and Smith have tried to determine whether direct-to-consumer drug advertising influences consumers’ behavioralintentions. They indicate that while consumers generally havefavorable perceptions of prescription drug advertising, theirbehavioral intentions are influenced by a heightenedawareness of specific branded drugs. Consumer motivationto request drugs may be impacted by several factors.

Baca, Holguin and Stratemeyer have shown thatdemographics influence attitudes and interest in direct-to-consumer advertising, and those younger consumers’ interest,and propensity to seek additional information for themselvesand family members, increases as a result of this type ofadvertising.

Holdford describes the “affordable drugs movement” andpresents a social marketing framework to place major

developments within a meaningful theoretical context. Theauthor also provides referenced descriptions and examples offorces causing change within the pharmaceutical market. Healso classifies forces into six conditions influencing successfulsocial movements.

Shin and Moon provide an overview of the economic andclinical impacts of direct-to-consumer advertising on both theconsumer and physician. Their findings recognizes direct-to-consumer advertising as a positive force for public health andat the same time identifies its potential negative effects on theeconomic and clinical aspects of the health care markets.

Mascarenhas, Kesavan and Bernacchi apply the concept of“analogical reasoning” (paying attention to select features of(marketing) information, discerning patterns in it, andapplying said patterns to present market challenges) to thecurrent situation in the pharmaceutical industry. The authorsposit that challenging pharmaceutical companies to explorenew innovations in reengineering and redesigning theirproducts and services so that developing nations that needthem the most can afford them is of the utmost importance.

Cunningham and Iyer have examined the currentcontroversy in the direct-to-consumer advertising arena, andhave created an intricate “road map” of recommendations ofhow to prevent this concept from coming to mean, “direct-to-court” for the pharmaceutical industry.

Calin Gurau investigates the perceived advantages and risksassociated with online pharmaceutical transactions. From thisresearch, the author proposes specific segmentation of

consumers into four main categories.Finlayson and Mullner review the issues regarding the

direct-to-consumer advertising that have been identified inthe literature from the perspective of consumers, consumergroups, physicians, the medical profession and thepharmaceutical industry.

Crawford and Leventis explore the boundaries in marketingand science with respect to labeled claims of herbal productsand other dietary supplements. They report that the need forconsumer choice, meaningful information and free-marketaccess to dietary supplements must be balanced with thedemands for truth-in-advertising and consumer protectionfrom unreliable claims and adverse health events.

Included in this issue, you will also find our other sections

of interest to you the reader – “Misplaced marketing”, “Bookreviews” and “Computer currency”.Richard C. Leventhal

Journal of Consumer Marketing

22/7 (2005) 363

q Emerald Group Publishing Limited [ISSN 0736-3761]

363

Introduction

About the Guest Editor

Dr Ross Mullner is Associate Professor in the Division of Health Policyand Administration at the School of Public Health, University of Illinoisat Chicago. He is also Adjunct Associate Professor in the Department ofPharmacy Administration at the University of Illinois’ College ofPharmacy. His research interests include health care marketing, healthservices research, and the history and future of medicine and publichealth. Dr Mullner has written six books and over 100 journal articles onvarious aspects of health care. He has served on the editorial boards ofseveral journals including Health Services Research, and Inquiry. He iscurrently the Associate Editor of the Journal of Medical Systems. DrMullner received his doctoral degree and two masters degrees from theUniversity of Illinois.

Pharmaceutical marketing

In 2004, pharmaceutical companies in the USA spent morethan $10 billion on marketing activities. Of the total, $7billion was spent on one-on-one marketing to physicians bycompany sales representatives, and more than $3 billiondollars was spent on marketing to the general public throughtelevision and newspaper direct-to-consumer advertising.

Many politicians, public policy makers, and the generalpublic are beginning to seriously question the need for theselarge marketing expenditures. Physicians are beginning torestrict the number of drug company sales representativesthey see, and the general public seems to be saturated fromthe many drug advertisements they are exposed to each day.Some are beginning to feel the nation’s pharmaceuticalcompanies are becoming more concerned with marketingthan scientific research.

Those who oppose these marketing efforts argue thatpharmaceutical companies aggressively market only the latestand most expensive drugs, even though other older drugs maybe more effective, safer, and much less costly. They arguethese marketing efforts greatly increase both the private- and

public-sector expenditures for prescription drugs. For

example, the price of prescription drugs has dramatically

risen in the last several years, and the price of drugs is rising at

a faster rate than the general rate of inflation for health care.

They also argue the pricing policies of the pharmaceutical

companies are inappropriate and socially irresponsible. For

example, prescription drugs are sold at much lower prices in

Canada and Mexico than they are in the USA. And millions

of US citizens are forced to purchase their drugs from these

countries to lower their medical costs. The pharmaceutical

companies have also been accused of keeping the prices of

their HIV/AIDS drugs artificially high, forcing many

developing countries experiencing the devastating AIDS

pandemic to either go without the drugs or to produce their

own HIV drugs at a fraction of the cost.In sharp contrast, those who favor these marketing efforts

argue that the pharmaceutical companies are conducting

huge, privately funded, highly visible and effective public

health education campaigns. They argue these marketing

efforts raise the general public’s awareness of important

medical conditions, motivates the public to take action, and

helps them to better and more effectively communicate with

physicians and other health professionals. They also argue

many people who seek care because of their marketing efforts

are frequently diagnosed with medical conditions different

from those that were advertised. And many of these

conditions such as diabetes, hypertension, and heart disease

are discovered earlier when they can be more effectively

treated. Lastly, they argue that the pharmaceutical companies

are responding to the public’s concerns by adopting a

voluntary code of conduct that will ensure better dialogue

between patients and physicians.The purpose of this special issue is to address some of the

complex and controversial issues posed by pharmaceutical

marketing. Specifically, articles in this issue will address the

impact of direct-to-consumer advertising of drugs, the

marketing of drugs over the internet, pharmaceutical

companies’ marketing policies, and the marketing of herbal

products, which are not regulated by the United States Food

and Drug Administration (FDA). Hopefully, this issue will

provide many new insights into the benefits and pitfalls of

pharmaceutical marketing.Ross Mullner


22/7 (2005) 364


364

Misplaced marketing

For the drugs we needHerbert Jack Rotfeld

Auburn University, Auburn, Alabama, USA

AbstractPurpose – To delineate confusions and uncertainties of the issues surrounding those criticisms. Critics assert that all marketing of medical products isabusive, while actual impacts are disputed.Design/methodology/approach – Pulling from past commentaries on pharmaceutical marketing and current criticisms of the practice, to indicateareas of confusion.Findings – The ills of pharmaceutical marketing are not as great as critics presume, but the practices are not as positive as the companies might wishto assert. With uncertainty on the actual impact of specific practices, the companies are engaging in a certain degree of warfare via ever-increasingbudgets of sometimes-questionable value.Practical implications – Puts criticisms of pharmaceutical marketing in context.Originality/value – Perspectives for understanding pharmaceutical marketing.

Keywords Pharmaceuticals industry, Drugs, Brand names

Paper type Viewpoint

Regardless of the consumer protection problem described in

our term papers, the students in our 1975 graduate marketing

and society course mentioned “consumer information” as a

major part of the solution. Misprescribed pharmaceuticals,

deceptive loan terms, fraudulent car repairs and many other

consumer problems would be solved, we often said, if the

businesses were required to provide consumers with more

detailed and accurate information. Our instructor, Mary

Gardiner Jones, had recently completed her service as a

member of the Federal Trade Commission, and while she

generally agreed with us, I will always remember her lament

after one too many presentations on this theme: “I don’t want

to be required to be my own expert pharmacist, mechanic,

accountant or doctor.” She was a lawyer by education and

that, she said, was difficult enough.

Over five decades ago, the US Government changed the

relationships among doctors, patients, and pharmacists.

Initially, prescriptions were a doctor’s recommendation of a

potentially useful drug, but patients did not need the doctor’s

permission to make a purchase and pharmacists could also

make recommendations. The 1951 Durham-Humphrey

Amendment defined the kinds of drugs that cannot be

safely used without medical supervision and restricted their

sale to prescription by a licensed practitioner. In theory, with

all the new drugs just starting to come out at that time,

patients would be forced to have the rational and informed

expertise of a doctor involved in their drug-purchasing

decisions.

Advertising information or influence

The doctors are the experts, or so we like to believe. And with

the medical doctors as the decision makers, for many years

the pharmaceutical industry exclusively focused their brand-

name promotional practices on physicians. Even with the

more recent advent of direct-to-consumer (DTC) advertising,

the companies’ sales representatives still have regular and

expensive contacts with physicians, spending large sums of

money per year promoting brand name drugs by giving

doctors various gifts, travel subsidies, and free meals in

addition to the arguably more educational, though potentially

biased, sponsored teachings and symposia.

The total annual advertising and other promotional

spending by US pharmaceutical companies has grown into

the billions of dollars, or as some industry critics like to say,

well over a thousand dollars per physician per year. And to the

critics, that huge sum alone is the basis for asserting a huge

and improper influence on prescribing decisions. Some rare

doctors refuse any gifts from the drug companies of any kind

in an effort to remain free of the taint of being “bought.”

Skeptical patients given a brand name prescription look for

coffee mugs with that same name around the front office as

potential proof that the brand’s company salesperson had

recently paid the doctor a visit and generated the direction to

buy an expensive product.

It is hard to tell just what influence specific promotional

efforts might have on the doctors who honestly assert they

have patients’ interests as their prime concern. No one wants

to believe that a patient will be prescribed new anti-depressant

The Emerald Research Register for this journal is available at

www.emeraldinsight.com/researchregister

The current issue and full text archive of this journal is available at



22/7 (2005) 365–368


[DOI 10.1108/07363760510631093]

365

or antihistamine just because the doctor has a pen with that

name written on it. To some extent, it is possible that even the

drug companies question the sales value of the plethora of

special gifts and advertising specialty products with a brand

name printed on the side. At the same time, however, the

drug manufacturers must feel the competitive pressure to

provide the same sales “support” as is done at the competing

companies. In a competitive industry, there must be a degree

of advertising dollar combat, with the different companies

trying to maintain a financial share of advertising voice.

It still must be admitted that like any other consumer-

purchased product from cars to house paint, the physician

decision-maker’s primary source of product information is

provided by the manufacturers. Some critics of the

pharmaceutical industry assert that the companies abuse

this information power and intentionally desire to mislead

medical people. Regardless of whether there is intentional

malfeasance, one study found that a significant number of

statements from the sale representatives contradicted

information readily available to them, and that the

physicians generally failed to recognize the inaccuracies

(Ziegler et al., 1995). While our personal doctors might

claim that they derive their information only from research

articles, there exists persistent evidence that they may be

misled about a brand’s value apart from the scientific data on

the matter (e.g. Avorn et al., 1982).

Even the medical practitioners do not always know or

understand all the information they have available. Research

repeatedly finds that once a company starts selling a drug to

assist a certain condition, the number of people diagnosed

with the problem increases by several times the original rate.

Patients must at least wonder about the medical decision

when their new prescription is pre-printed on the doctor’s

note pad (Wazana, 2000).

Questions of brand value

When new pharmaceutical products are first introduced, the

primary marketing goal is to generate awareness of a

previously-unavailable potential treatment for medical

problems. Yet the longer-term desire would be to generate a

degree of brand awareness and even brand loyalty among

doctors and their patients that extends beyond the time of

patent protection to when generic substitutes are available.

Such brand loyalty exists for many categories of products,

including non-prescription over-the-counter (OTC) drugs B

i.e. many consumers pay a premium price for Aleve or

Sudafed instead of the chemically identical generic naproxen

sodium or pseudophedrine hydrochloride B So it is logical for

a pharmaceutical manufacturer to desire such loyalty to their

brand names after the patent expires.

Yet even where such loyalty might have a potential to exist,

it is discouraged by state laws that encourage pharmacists to

substitute the cheaper generic products for prescriptions. In

addition, insurance companies have taken brand names, any

brand names, as a surrogate indicator of medical profligate

spending, and in the process, they also make it more costly for

people to use any and all newly developed drugs. Even if is a

new product without an available generic version, many

frustrated patients discover that their medical coverage either

refuses to pay for brand name drugs or requires a higher co-

payment for coverage of brands than for generic products. In

theory, when a doctor recommends a brand name, the patient

must decide if the specific brand is worth the higher cost. In

practice, the patient is forced to pay for a unique treatment

that is still under patent protection.

The possible solution that some would like to see at some

future time is a designation as all pharmaceutical brand names

as unnecessary, or, at least, not serving the needs of doctors or

their patients. In those nations that require dispensing of

generic forms of prescriptions whenever they are available,

this is the de facto outcome.

At a more basic level, there is some question as to whether

the medical system is served by brand names for any

prescription drug product whose patent has expired. Some

people retain an unrealistic faith in the power of brand name

drugs, but the Food and Drug Association (FDA) repeatedly

assures the public that any functional benefit is virtually non-

existent. Generic drug manufacturers are subjected to the

same standards as their brand name counterparts. But despite

these repeated assurances from the government agency

charged with regulating the efficacy and purity of

prescription drugs, some patients and even doctors retain

faith in the brand names.

Logically, the FDA could ban the use of all brand names for

pharmaceutical drugs. When a new drug first comes on the

market, the pharmaceutical company has a patent. No one

else can make it without their permission and they can charge

whatever mark-up is deemed necessary, or rather, whatever

the market will tolerate. They do not need a brand name to do

this. And once the patent expires, they have competition from

what are now identical products. The new products’ brand

name might have had an initial value to make it easier for

consumers to recall the name in direct-to-consumer television

commercials, but once the product becomes generic, maybe

the former brand name could become generic, too.

Of course, no company would ever tolerate such a change

in regulations, especially since brand names have a carryover

value after the initial patent expiration. Higher dose or time

release variations of the product can give new extended life to

a brand name, as can new approvals of the original drug in

combination with other products. There are also a growing

number of prescription brand names that find extended life as

the product gains new approval for OTC sales. Without

prescribing laws or insurance payments encouraging generic

substitutions, potential brand loyalty acquires new strength

with consumer purchases.

Over-informed consumers

New Zealand and the USA might be on the leading edge of

what could be an international trend as consumers are

expected to play a bigger role in their drug decisions as the

two nations allow direct to consumers (DTC) advertising for

various prescription drugs. Reportedly the physicians in the

two countries are skeptical to outright opposed to the

practice, and despite similar survey responses from UK

physicians, there is pressure to start allowing the practice in

UK and the greater European Community (Reast et al.,

2004). The a priori presumed benefits and potential problems

have been debated ad infinitum in the news media (for a

For the drugs we need

Herbert Jack Rotfeld


Volume 22 · Number 7 · 2005 · 365–368

366

summary, see Auton, 2004), yet one detailed large-scale

consumer study on actual impacts concluded that:

The reality of DTC’s effect on consumer behavior and doctor-patientrelationship [in the USA] is more benign than its detractors fear and lessspecifically influential on product sales than many pharmaceutical brandmanagers would hope (White et al., 2004, p. 65).

In theory, consumers are well informed by the new conduit of

information. While the main “promotional” pages of the

advertising have many appeals to consumer emotions (Main

et al., 2004), the print versions are filled with the same page of

print-heavy data on indications, contraindications and

precautions found in medical journal advertisements, and

the television voiceovers and superimposed print disclaimers

themselves provide enough warnings of side effects to make

the audience members nauseous. This additional regulatory-

required information is the same materials required in the

advertising to the expert audience of physicians; if the front

makes a emotional sales appeal, the extra two data pages

provide all the information needed for an informed rational

decision. While there would exist serious doubts that the

typical consumer, or any non-expert layperson, would read

the data.

A secondary effect of requiring the technical prescribing

data in all DTC advertising is that there are fewer such

messages. When a prescription drug changes to OTC status,

the data pages are no longer required. With the advertising

purchases now able to be a single page instead of three, an

extensive study of magazine advertising in one product

category found a near-immediate tripling of the number of

advertisements for the brand when the former DTC

prescription product became OTC (Avery et al., 2005).

Such an effect of limiting pharmaceutical advertising could be

an unspoken regulatory intent of the data requirements,

though there does not exist any proof that rule-writers at the

FDA considered this as a goal. But it is clearly an effect.

Yet you have to wonder about just what impact all this DTC

advertising must have or what the companies hope to

accomplish. The products are often brands under exclusive

patent rights, so the company is trying to establish strong and

broad demand while they still have an exclusive product. And

since the ads often make emotional appeals, people are

encouraged to rush to doctors for what could be minor non-

medical concerns. Not every case of depression, sleep loss, or

lowered sex drive should be treated by expensive drugs. Even

highly educated medical students tend to spot each new

disease studied in their own bodies, and freshman psychology

students tend to suddenly find all sorts of neurotic difficulties

in themselves or their friends, so these DTC ads can readily

play on consumers’ uncertainty about their own health.

Food and Drug Administrations officials repeatedly insist

that, at least in their view, the medical practitioners are still

gatekeepers on the drug purchases. Unfortunately, with the

increasingly competitive environment of patient services and

medical care, many doctors concentrate on patient

satisfaction, satisfying the medical customer’s short-term

perceived needs even when the therapeutic solution is not so

simple. A patient comes to the office wanting a cure or

something that looks like a cure, and even without DTC

advertising the physicians can make prescriptions that are, at

best, useless.

A sizable percentage of patients would probably respond

negatively if their physician refused to prescribe the DTC

drug the consumer thinks will solve the problem (Bell et al.,

1999). Physicians must feel the pressure (Spurgeon, 2000),

and a possibly misplaced marketing orientation insists that the

customers needs be satisfied. It would be unrealistic to think

that many doctors would not give the requested drug, even

when the advertised brand might not be the physicians’ first

choice for treatment, or even when the patient might be better

off not taking any drug at all.

Meanwhile at the advertising spending war

Columnists in the advertising trade magazines have

questioned the value of DTC advertising. While it might

generate some consumer knowledge or inquiries of a newly

introduced product, there does not seem to be any long-term

effects on brand demand by consumers. In the wake of a

scandal over the hidden dangers of a heavily promoted

branded pain reliever, the introduction of a different new

product included a promise by the company to refrain from

any consumer-oriented advertising for one year. It is hard to

believe that a company would so quickly give up a

promotional tool if it felt it was important for long-term

consumer awareness and prescription sales, so it is possible

that the company also questioned the actual value of

expenditures on consumer advertising. The new scandal-

tied criticisms of DTC advertising gave the company an easy

way out of expensive spending on a practice of questionable

value.

But then, there are so many variables in prescription

decisions, every decision on promotional spending is filled

with uncertainty, and valid questions exist of each specific

practice’s pragmatic utility. In a highly competitive business,

with a short shelf-life on a prescription brand name, each

pharmaceutical manufacturer is encouraged to maintain a

loud and strong spending voice. Advertising and promotional

spending almost becomes an arms race of sorts, with spending

on marketing increasing as fast as successes in research and

development on new products. In turn, the expensive

marketing becomes are added target for blame in the high

costs of drugs.

References

Auton, F. (2004), “The advertising of pharmaceuticals direct

to consumers: a critical review of the literature and debate”,

International Journal of Advertising, Vol. 23 No. 1, pp. 5-52.Avery, R., Kenkel, D., Lillard, D. and Mathios, A. (2005),

“Regulating advertisements: the case of smoking cessation

products”, unpublished presentation to the 2005 American

Council on Consumer Interests National Conference,

Columbus, OH, April 6-9.Avorn, J., Chen, M. and Hartley, R. (1982), “Scientific versus

commercial sources of influence on the prescribing behavior

of physicians”, The American Journal of Medicine, Vol. 73,

July, pp. 4-8.Bell, R.A., Wilkes, M.S. and Kravitz, R.L. (1999),

“Advertisement-induced prescription drug requests:

patients’ anticipated reactions to a physician who refuses”,

The Journal of Family Practice, Vol. 48, June, pp. 446-52.




Volume 22 · Number 7 · 2005 · 365–368

367

Main, K.J., Argo, J.J. and Huhmann, B.A. (2004),“Pharmaceutical advertising in the USA: information orinfluence?”, International Journal of Advertising, Vol. 23No. 1, pp. 119-42.

Reast, J.D., Palihawadana, D. and Spickett-Jones, G. (2004),“UK Physicians’ attitudes towards direct-to-consumeradvertising of prescription drugs: an extension andreview”, International Journal of Advertising, Vol. 23 No. 2,pp. 229-51.

Spurgeon, D. (2000), “Doctors feel the pressure from directto consumer advertising”, The Western Journal of Medicine,Vol. 172, January, p. 60.

Wazana, A. (2000), “Physicians and the pharmaceuticalindustry: is a gift ever just a gift?”, Journal of the AmericanMedical Association, Vol. 283, 12 January, pp. 373-80.

White, H.J., Draves, L.P., Soong, R. and Moore, C. (2004),“‘Ask your doctor!’ Measuring the effect of direct-to-consumer communications in the world’s largest healthcaremarket”, International Journal of Advertising, Vol. 23 No. 1,pp. 53-68.

Ziegler, M.G., Lew, P. and Singer, B.C. (1995), “Theaccuracy of drug information from pharmaceutical salesrepresentatives”, Journal of the American Medical Association,Vol. 273 26 April, pp. 1296-8.




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Direct-to-consumer prescription drugadvertising: a study of consumer attitudes and

behavioral intentionsTanuja Singh and Donnavieve Smith

Department of Marketing, Northern Illinois University, DeKalb, Illinois, USA

AbstractPurpose – To determine whether direct-to-consumer prescription drug advertising influences consumers’ behavioral intentions.Design/methodology/approach – Gathered data from 288 respondents using a pencil and paper mail survey. Respondents were asked about theirknowledge and behavior regarding prescription drugs.Findings – Indicated that while consumers generally have favorable perceptions of prescription drug advertising, their behavioral intentions arenevertheless influenced by a heightened awareness of specific branded drugs. Consumers feel empowered by the information provided in direct-to-consumer advertising and they are concerned about governmental attempts to regulate prescription drug advertising.Research limitations/implications – Data was collected from a relatively homogenous sample with respect to ethnicity. Future research efforts couldinclude respondents from diverse ethnic backgrounds and could incorporate questions regarding respondents’ actual behaviors with respect to brandedprescription drug medications.Practical implications – Useful information for researchers, public policy makers and prescription drug manufacturers. Results suggest that consumermotivation to request branded drugs may be impacted by factors related to the quality of advertisements, trust in their physician, and personalcompetence. Consumer interest in advertised drugs may also depend on the strength of the relationship that they have with their physician.Originality/value – This research fills an identified gap in the literature. While researchers have examined consumers’ general perceptions of direct-to-consumer prescription drug advertising, little research has been done on the link between consumer perceptions and behavioral intentions.

Keywords Advertising, Promotional methods, Consumer behaviour, Pharmaceutical products, Medical prescriptions

Paper type Research paper

An executive summary for managers and executive

readers can be found at the end of this issue.

Introduction

“Depression elicits Prozac, high cholesterol has made Lipitor

a familiar name and hay fever sufferers are all familiar with

Claritin”(Schroff, 2003). A once mysterious industry has now

opened its doors to American consumers and prescription

drug advertising has become a billion dollar business. From

the multimillion-dollar Super Bowl ads to the repetitive spots

that are shown during primetime sitcoms, advertising for

branded prescription drugs abounds. Overall, the advent of

prescription drug advertising has added an entirely new

dimension to the role of consumers in the decision making

process for prescription medications and consumers are now

more informed than ever before (Smith, 1998).

In order to increase brand awareness for prescription

medication, drug manufacturers spent $15.7 billion on

promotions in 2001, of which $2.5 billion went to mass

media advertising. Prescription drug advertising, often

referred to as direct-to-consumer (DTC) advertising, has

increased at an annual rate of 13-20 percent since 1997. Thus

far, there have been mixed findings regarding the overall

financial impact of DTC advertising on the pharmaceutical

industry. While there is some evidence that suggests a direct

and positive correlation between mass media advertising and

drug manufacturers’ earnings (Findlay, 2002; Anderson,

2003), the relationship between adverting expenditures and

the success of specific brands is not clear. Clearly, drug

manufacturers place a great deal of faith in DTC ads and the

impact that they can have on consumers’ decision to adopt

advertised brands, but the exact nature of that impact remains

controversial. While a recent study reports that for every 10

percent increase in DTC advertising, there is a 1 percent

increase in drug sales (Kaiser Family Foundation, 2003),

there is also evidence that DTC advertising often serves to

increase the size of a market for a specific class of drugs, but

not necessarily the market share for a particular brand

(Krisanits, 2003).

Researchers have examined DTC advertising from various

viewpoints. Some have focused on the governmental rulings

that have paved the way for DTC advertising (Dukes et al.,

2001) and the case law that deals with drug manufacturers’

responsibility to warn consumers about the side effects of

prescription medication. Other researchers have recently

addressed the efficacy of DTC advertising as an educational

tool. While some claim that there is “little rationale for direct-

to-consumer advertising of prescription drugs” (Lexchin and






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[DOI 10.1108/07363760510631101]

369

Mintzes, 2002, p. 194), others suggest that DTC advertising

benefits not only health-care organizations, but also

physicians as well as patients (Calfee, 2002).

Researchers (Wilkes et al., 2000) have also examined

consumers’ attitudes towards DTC advertising and the

actions that consumers have taken in response to DTC ads.

However, research has not investigated how consumers’ self -

perceptions or perceptions of their relationship with their

primary physician might impact their decision-making for

DTC advertised drugs. Further, while all of these studies have

established that DTC advertising is a topic worthy of further

investigation, there has not been any research done on the

individual and relational variables that might influence the

behavioral intentions of consumers during their medical

decision making processes. Furthermore, researchers have not

investigated whether these behavioral intentions might be

detrimental to the doctor-patient relationship.

The debate between industry advocates and public policy

advocates is often rancorous in so far as DTC advertising is

concerned. Industry advocates obviously argue that there are

numerous merits to DTC advertising. They contend that it is

primarily an educational tool for the consumer. Conversely,

public policy advocates point to the inherent dangers of such

advertising and suggest that the effects of too little knowledge

may in fact be harmful to the consumer.

This study was designed to provide some insights into

consumers’ thinking and decision making processes as they

respond to DTC advertising in the current marketplace. In

particular, the study attempted to answer the following

questions:. How do consumers view DTC advertising in general?. Does DTC advertising cause consumers to engage in

specific behaviors or behavioral intentions (e.g., asking a

primary care provider for more information about a drug

that they have been exposed to or asking a physician to

prescribe a particular advertised drug)?. Does DTC advertising empower consumers and if so,

what are the outcomes of this perceived empowerment?

Background

History of direct-to-consumer advertising

Despite its origins in the sixteenth century, direct marketing

of pharmaceutical products to consumers is a relatively recent

phenomenon (Dukes et al., 2001). Prior to the 1980s,

prescription drug manufacturers primarily marketed branded

drugs to physicians in an effort to avoid disrupting the

intricate, and often delicate, relationship that existed between

doctors and patients (Dukes et al., 2001; Ausness, 2002).

Between 1983 and 1985 the FDA requested a voluntary

moratorium on DTC advertising noting that there was a lack

of previous court rulings on the issue. Around 1985 the ban

was lifted and the courts reached a compromise by declaring

that DTC ads were to be subjected to the same regulations

that had previously guided pharmaceutical drug advertising to

physicians. Consumers were to be protected through “full

disclosure” and drug manufacturers would be required to

provide a “brief summary” of the product in the form of

package insert.

As a result of industry pressure, and after considerable

debate and deliberation, the FDA relaxed its rules in 1997

and for the first time, manufacturers were allowed to provide

the name of the drug and the conditions that were associated

with its use. At the same time, the FDA relaxed the guidelines

concerning the information regarding the inclusion of product

risk information. With the relaxed guidelines, drug

manufacturers would only be required to mention the most

critical information – basically those risks that would be

common for the general population. In addition, drug

manufacturers were also required to open up the lines of

communication with their consumers. Consequently, drug

manufacturers started providing consumers with information

on request via toll-free numbers, the Internet, print

advertising and similar means (Wilkes et al., 2000). By

1999, the final guidance on DTC advertising was issued and

DTC ads had gone mainstream with drug manufacturers

using a broad spectrum of promotional devices for

prescription drugs including the back of ATM receipts,

bank statements, and airline luggage labels (Reast et al.,

2004).

The debate over DTC advertising

While the pharmaceutical industry was once enveloped in a

shroud of mystery, consumers now have more information at

their disposal than ever before. On the surface it appears that

consumers might appreciate the opportunity to become more

involved in their medical care and it also seems apparent that

drug manufacturers should benefit from the provision of

information in the form of DTC ads. However, there have

been growing concerns about the necessity of DTC ads and

their true benefits. “Proponents and opponents of direct-to-

consumer advertising have established their rhetoric and have

staked out their positions” (Dukes et al., 2001, p. 2). While

many arguments have been advanced regarding the legitimacy

of DTC advertising, the central question revolves around

whether or not DTC advertising is truly beneficial to

consumers and if so, how?

Drug industry advocates point to the “educational” value of

advertising directly to consumers and assert that consumers

are now able to manage their health issues more effectively

because of the information they garner from DTC ads.

Supporters also point to the criticality of time, noting that

there has traditionally been a time lag in the communication

between pharmaceutical companies and doctors/patients; that

doctors would often hear about medical advances and new

medicines well after the information was needed. Supporters

assert that DTC advertising bridges this information gap by

informing consumers and physicians about new and

promising advances in the medical field to treat particular

conditions (Calfee, 2002).

Opponents of DTC advertising disagree with these

assertions and charge that FDA’s decision to allow DTC

advertising of prescription drugs has created or will create

numerous problems (Elliott, 2002). Some lament the

changing doctor-patient relationship, while others decry the

viewing of patients as consumers (Reast et al., 2004). These

detractors argue that DTC ads might create a false sense of

empowerment for the average consumer who does not have

the ability or background to effectively evaluate the claims

associated with the advertised drug (Wilkes et al., 2000). For

these consumers, the complexity of information presented in

DTC advertisements may prove to be too difficult to

Direct-to-consumer prescription drug advertising

Tanuja Singh and Donnavieve Smith


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understand and interpret. Opponents also contend that DTC

advertising might result in self-diagnosis of “assumed”

medical conditions by the consumers, leading to

unnecessary and perhaps even dangerous uses of

prescription drugs (Chandra and Holt, 1999).

Opponents are also skeptical about the incremental value of

information provided about new drugs. Citing data from

numerous studies, Lexchin and Mintzes (2002, p. 194) note

that a very small percentage of new medications are truly

breakthrough advances that provide “substantial

improvements over existing therapies”. In fact, they claim

that drug companies are motivated more by profits than they

are by informing consumers about better or safer drugs that

offer significant advances over existing treatments. It has also

been suggested that the drive to increase profits could

eventually become a detriment to drug manufacturers.

Opponents believe that DTC advertising has little

educational merit and that most prescription drug

advertising only serves to meet the financial motives of drug

manufacturers. Some feel that DTC advertising might

eventually increase the costs of prescription medication as

consumers “demand” branded drugs to treat their medical

conditions and abandon the less expensive, generic versions of

the drugs that might be equally effective.

Overall, DTC advertising offers several fruitful avenues for

continuing research. From a consumer context, it is

important that researchers empirically assess the impact of

DTC advertising on consumer decision making regarding

medical treatment. This exploration should focus on

consumers’ acquisition of product knowledge, the formation

of consumer attitudes towards individual brands and/or

classes of prescription medication and the behavioral outcome

after exposure to DTC ads. For example, it would be

instructive to evaluate whether DTC advertising has changed

the manner in which consumers acquire, view and utilize

medical information. If consumers have become more

attentive to their own medical needs and have taken steps to

discuss their medical questions with a medical practitioner,

then DTC ads would foster positive behavior change.

However, if consumers resort to “self-diagnosis” after

exposure to DTC ads, have pressured their physicians to

provide unnecessary prescriptions, or have resisted competent

medical advice, then DTC ads would be contributing to

negative and potentially dangerous behavior changes.

Theoretical foundations

Attitude-behavior research

Generally, advertisers have assumed that consumers’ attitudes

towards a brand directly affect the choice of that particular

brand. While it is not possible to review the vast domain of

attitude research in this paper, the earlier foundational

theories in attitude research would lead one to assume that

consumers’ behavioral intentions could be reflective of their

attitudes towards advertising, as well as attitudes towards a

certain branded product. In other words, it could be argued

that if consumers have positive attitudes towards DTC

advertising, they are more likely to adopt the specific

advertised brand and vice-versa (Ajzen and Fishbein, 1977).

More recent research has shown that attitude towards an ad

or a brand may not always be indicative of a consumer’s final

choice in decision making; in fact, in some cases consumers’

intentions and final brand choice may not necessarily be

related at all (Biehal et al., 1992). Research also suggests that

the relationship between consumer attitudes and behavioral

intentions might be more complex than originally believed

(Biehal et al., 1992; Burton and Lichtenstein, 1988). As such,

consumers may develop a preference for a particular brand or

product even when they do not have very favorable attitudes

towards the advertisements for these products particularly in

situations where consumers perceive greater risk levels (Biehal

et al., 1992).

Various studies point to consumers’ lack of faith in drug

manufacturers and their perceptions regarding prescription

drugs as belonging to a risk-laden product category. A recent

survey indicated 57 percent of Americans do not trust

corporate executives to give them honest information, with an

overwhelming number of respondents expressing negative

views about drug manufacturers in particular (Schroff, 2003).

Additionally, a Harris poll reported that the number of

respondents who felt that drug manufacturers do a good job

of serving consumers dropped by 20 percent between 1997 to

2002. These statistics suggest that consumers may not be as

receptive to DTC advertising as drug manufacturers would

like and as consumer advocates fear. Therefore, it seems that

while consumers may have negative perceptions of DTC

advertising and/or drug manufacturers, they are still willing to

inquire about and request specific branded drugs that they

have come to know about as a result of DTC advertising.

Overall, one could argue that DTC advertising has created

at least some value for the consumer (Shankland, 2003).

Proponents of DTC advertising suggest that as patients

become increasingly more involved in decisions that relate to

their medical conditions, DTC advertising enables them to be

not just better informed about their medical options, but it

also provides a level of control over their medical choices

(Eagle and Kitchen, 2002). Supporters of DTC advertising

also claim that while the rise in DTC advertising might create

some discomfort for the physician, it empowers the patient as

it seeks to change the previously paternalistic approach that

governed the doctor-patient relationship. Drug manufacturers

of course invest a great amount of time and effort into DTC

advertising by spending millions of dollars on commercials

and other promotional tools that purport to reach a large

current and potential consumer population. These changes in

the DTC promotional environment have at least partially

contributed to millions of people actually inquiring about

particular drugs by name and 25 percent of these requests

resulting in the physician prescribing the requested brand

(Shankland, 2003).

Our research explores the relationship between consumers’

views of DTC advertising and the resulting behavior or

behavioral intention. We suggest that consumers may have a

paradoxical relationship with DTC advertising in that the

factors that facilitate consumer attitudes toward DTC

advertising may differ from the factors that facilitate

consumers’ behavioral intentions (e.g. propensity to ask

their medical provider about a drug or a disease) or actual

behaviors (e.g. actually seeking information from their

physician about a particular drug), interest and/or adoption

of DTC advertised drugs. Whether a patient would ask his or

her physician about a specific prescription drug is likely to be




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function of several variables including such things as whether

the consumer perceives him/herself to be competent to

evaluate the claims, the quality of DTC advertising and the

value of the information contained in the ad. Therefore, we

suggest the following hypothesis:

H1. Consumers’ willingness to consult his/her physician

about an advertised prescription medication will be a

function of the perceived information value in the

DTC ad, the quality of the DTC ad, and a consumer’s

perceived competence.

While DTC advertising has become commonplace, the

terminology used in majority of the ads can be difficult for

the average consumer to comprehend. Studies have found

that 97 percent of prescription drug literature is too difficult

for the average adult to digest (Smith, 1998). As a result,

consumers are turning to others in their personal

environments to assess the credibility of information that

they receive via DTC ads; consumers are asking their friends,

families, and/or their co-workers about specific branded drugs

(Smith, 1998). Most important, consumers are turning to

their physicians to confirm or dispel specific claims made via

DTC advertising (Alleyne, 2002; Wilkes et al., 2000).

Research also suggests that doctors themselves have varied

perspectives on the value of DTC advertising (Coney, 2002).

While medical opinion in the USA was initially quite favorable

towards DTC advertising, recent data seems to suggest

growing skepticism and negative attitudes towards such

advertising (Reast et al., 2004). Similarly, other researchers

have found that of the physicians surveyed in a study, only 15

percent had a positive view of DTC ads, 33 percent were

neutral, and 52 percent disapproved of the practice (Yuan and

Duckwitz, 2002).

As consumers become better informed regarding various

drugs that are available to treat specific illnesses, their

decision to insist on a specific brand will most often be a

function of the type of relationship that they have with their

primary physician. Generally, most physicians would be more

likely to prescribe a brand name prescription medication that

had been requested by a patient, when the patient had either

failed to respond to or tolerate another form of treatment

(Yuan and Duckwitz, 2002). Moreover, it has been suggested

that doctors will prescribe a DTC advertised drug because it

is indeed the best treatment available for that specific

condition (Shankland, 2003) irrespective of patients’

requests fostered by DTC advertisements. Conversely,

doctors offer many reasons why they might refuse patients’

requests such as potential drug interaction and the availability

of better treatment alternatives.

If the patient-physician relationship is good, one would

expect that there is a lot of informational exchange taking

place in the physicians’ offices between the consumer and the

medical service provider. At the crux of these conversations

lies the patient’s trust in his/her physician’s ability to create

the most effective treatment plan. Therefore, if a patient views

his/her physician as the primary source of medical

information, there will be a higher level of trust in the

relationship. On the other hand, if consumers feel that they

are competent and knowledgeable about their medical needs,

they might discount their physician’s advice. Finally, if

consumers believe that the information in the DTC ad is

valuable to them, they would tend to rely less on their

physician’s judgment and could seek alternative sources of

information.

Accordingly, we advance the following hypothesis:

H2. Consumers’ willingness to trust their physician’s

judgment regarding an advertised drug will be a

function of whom they view as the primary source of

medical information, their personal perceived personal

competence, and value of information contained in

DTC ads.

Consumer empowerment/freedom of choice

Advocates of DTC advertising contend that the advent of

DTC advertising has given consumers an opportunity that

they have never had before. They claim that consumers can

take an active role in the treatment of their medical conditions

via the knowledge they acquire from DTC advertising.

Industry advocates claim that consumers now have increased

choice in their medical decisions, which obviously is

beneficial. Research dealing with empowerment can provide

the backdrop against which the issue of increased choice can

be evaluated. Some researchers believe that increased choice

and information availability provide consumers with increased

level of control in their decision making environment.

Consequently, it is assumed that a sense of empowerment

will always be viewed by consumers as a benefit since

increased control allows consumer to get a better match

between their needs and market offerings (Kreps, 1979).

Based on this argument, it could be said that a sense of

empowerment about their medical decisions would be viewed

positively by consumers and welcomed.

However, other researchers question the generalization that

consumers always view increased choice as a benefit (Wathieu

et al., 2002, p. 298). Instead, these researchers believe that

“providing consumers with more control may be a mixed

blessing, potentially leading to a less compelling choice or a

less satisfactory outcome”. In fact, some studies have found

that when consumers are provided with fewer alternatives,

they often feel more satisfied with the decision they make

(Iyengar and Leppar, 2000). This view would compel one to

argue that DTC advertising may not always contribute to the

consumer’s sense of empowerment. Wathieu et al. (2002)

contend that it is not merely the size of the choice set that

matters in a decision environment, but it also depends on

whether or not consumers have the ability to specify and

adjust the choice context. Clearly medical decisions are

considerably more demanding, risky and complex than many

average everyday, ordinary decisions consumers make.

Therefore, consumer empowerment may not be as simple as

having more choice but rather would be determined by a kind

of trade-off between the benefits and costs associated with the

ensuing empowerment. Thus, we propose the following

hypothesis:

H3. Consumers’ perceived empowerment as a result of

DTC advertising is a function of perceived benefits

and perceived costs of DTC advertising.

Some of these ideas are rooted in the “theory of choice”

(Steiner, 1970) used by social scientists to explain the

“perception” of freedom of choice, and may have some

bearing on consumers’ perceptions of DTC advertising. The




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theory of choice argues that there are two aspects to choice –

decision control and outcome control. It can be argued that

the DTC prescription drug advertising might give consumers

the perception of freedom of choice and decision control as

they feel that their medical decisions reflect their own

judgments and personal preferences rather than those of their

physician. This sense of empowerment or freedom of choice

could prompt consumers to oppose any regulatory actions

that might limit their access to prescription medication

information. If consumers perceive that they have been

“liberated” by the advent of DTC advertising, any attempt

that threatens to limit communication between information

providers (i.e. drug manufacturers) and consumers could be

viewed as a threat to consumers’ freedom of choice. This

leads us to the following hypothesis:

H4. The higher the degree of felt empowerment and the

more the perceived benefits, the more negative the

attitude toward governmental regulation of DTC ads.

Methodology

Survey design and sample description

A paper and pencil survey was developed after a review of the

extant literature in the area. A pilot test suggested minor

modifications in the wording of some statements to improve

communicability. The revised survey was further tested for

face and content validity by scholars working in the area of

survey design. Overall, the survey contained thirty-five

statements anchored from strongly disagree to strongly

agree, eight questions addressing consumer knowledge and

behavior regarding prescription drugs and seven standard

demographic questions, resulting in a total of 50 questions. A

mailing list of adult respondents (aged 21 or above) residing

in a large mid-western region of the USA was leased from a

commercial list provider. The survey was mailed to 2,500

randomly selected addresses from this list. It included a

standard statement regarding the confidentiality of consumer

data and an offer to participate in a drawing for $100.

A total of 288 usable responses were received in the allowed

time-frame. After taking into account the 64 surveys which

were returned undelivered, the response rate is approximately

12 percent. The sample consisted of approximately 58

percent of women and 42 percent men. The subject pool was

quite diverse in terms of income, education, and age but

relatively homogenous in terms of its ethnic background with

the majority of the respondents being Caucasian

(approximately 89 percent). About 90 percent of the

respondents considered themselves to be “healthy” and 94

percent reported having health insurance which covered

prescription drugs at least to some extent. Table I describes

the demographic information for the sample.

Consumer beliefs and opinions about DTC advertising

Approximately 66 percent of the respondents reported that

they pay some attention to prescription drug ads.

Interestingly, 63 percent of the respondents did not know

whether DTC prescription drug ads require government

approval (they do not) and 14 percent erroneously believed

that some government agency approves these ads. Almost 37

percent did not know if companies can only advertise

completely safe drugs (there is no such requirement) and

about 13 percent believed that companies can only advertise

safe drugs. Only about 58 percent of the respondents correctly

noted that the statement, “companies cannot advertise those

prescription drugs which might have serious side effects,” is

false. About 40 percent of the respondents had asked their

physician about a particular drug after seeing an ad and about

15 percent reported being motivated to inquire about a

condition they believed that they might have, after watching a

DTC ad. A total of 17 percent had requested a particular

brand of drug after seeing an ad; in about 58 percent of these

instances, the physician prescribed the requested brand.

There was a near unanimous agreement among

respondents that DTC prescription drug advertising has

increased significantly in recent years. A majority of

Table I Sample demographics

Percentage

AgeUnder 21-30 13.2

31-40 19.4

41-50 22.6

51-60 17.7

Over 69 27.1

GenderFemale 58

Male 42

EducationLess than high school 3.1

Finished high school 17.4

Two-year college 14.2

Some four year college 16.7

Completed four-year college or university 28.8

Completed Master’s degree or equivalent 15.6

PhD or other advanced degree 4.2

IncomeNo answer 6.6

Less than $20,000 5.6

$20,001-$40,000 20.8

$40,001-$60,000 18.8

$60,001-$80,000 16.7

$80,001-$100,000 13.2

$100,001-$130,000 11.8

$130,001-$150,000 3.1

More than $150,000 3.5

Marital statusMarried 68.4

Single 22.3

Living together 2.8

Other 6.6

Political affiliationDemocrats 29.5

Republican 33.0

Independent 14.2

None 18.0

Other 7.30




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respondents (more than 73 percent) viewed DTC advertising

as “nothing more than savvy marketing” (mean value ¼ 3:97)

and there was a statistically significant difference between

men and women (mean values 4.13 versus 3.84; t ¼ 2:429,

two-tailed significance ¼ 0:017) in terms of how they

responded to this statement. Respondents with advanced

degrees were much more skeptical of DTC advertising

relative to others in the group. For example, the mean

agreement level with the statement about DTC advertising

being nothing more than savvy marketing was 4.33 for

respondents having a Ph.D. or an equivalent degree, which

was significantly higher than those with a Master’s degree

(mean value ¼ 3:76; t-value ¼ 1.989; two-tailed

significance ¼ 0:050). However, there were no systematic

differences among respondents as a function of political

ideology, age, or income in so far as this statement was

concerned.

In general, consumers did not believe that they had become

more knowledgeable about their medical needs as a results of

DTC advertising (mean value ¼ 2:44) but, agreed somewhat

that DTC advertising empowers people (mean value ¼ 3:22)

by giving them more say in their own medical decisions.

Interestingly, people aged 40 years or less felt significantly

more empowered than those over 40. For example, the mean

value for the statement that DTC advertising empowers

people was 3.41 for people aged 31-40 years whereas it was

3.03 for people older than 60 (p , 0:05, t ¼ 2:072)

About 65 percent of the consumers believed that the

average consumer does not have the competence to evaluate

claims made in a prescription drug ad and 58 percent

indicated that they did not trust DTC ads. Interestingly, more

than 80 percent disagreed that consumers are better informed

as a result of DTC advertising. However, only about 46

percent of the respondents agreed that they were personally

opposed to DTC prescription drug advertising and only 42

percent supported the idea of banning DTC advertising of

prescription drugs. At the same time, Democrats, more than

Republicans, agreed that they would personally support

stricter regulations on DTC advertising (mean values ¼ 3:54

versus 3.21; t ¼ 2:146, two-tailed significance ¼ 0:033).

There were no other systematically significant differences as

a function of gender, income, and education. Government’s

role in approving and controlling DTC ads was supported by

only 31 percent of the respondents but, an equal number of

respondents were indifferent to the idea. About 37 percent of

the respondents supported the idea that DTC advertising

should be controlled by the government.

Factor analysis and hypotheses testing

A principal components analysis with a varimax rotation

resulted in a six-factor solution (Eigenvalues above 1.00) with

62 percent of variance explained. A variance extracted of 60

percent or more is considered satisfactory in the social

sciences, particularly in exploratory research (Hair et al.,

1998). The six factors generally reflected the following

dimensions of consumer attitudes towards DTC advertising:

information value of DTC ads, perceived quality of DTC ads,

consumer competence, views about information complexity of

DTC ads, views about the primary source of medical

information, and beliefs about the outcome of DTC

advertising. Most factor loadings were above 0.50 and

significant indicating a relatively clean factor structure. The

first factor, which contained 12 items, extracted the highest

amount of variance (23 percent) and the last factor, which

contained two items, extracted the least amount of variance

(4.7 percent).

Factor scores were used as independent variables in

subsequent regression analyses to test hypotheses H1 and

H2. For H1, the dependent variable was the mean of the item

that asked whether DTC advertising would prompt the

respondents to inquire about a branded drug that they saw

advertised to treat a medical condition that respondents

believed they had. This dependent variable (DV1) was labeled

DOCADVICE and the mean value for this item is 3.54 on a

five-point Likert-type scale ranging from strongly disagree (1)

to strongly agree (5), indicating a general agreement with this

statement. The first regression with the dependent variable

DOCADVICE resulted in three independent variables being

significant predictors of DV1. These comprised of

information value (factor 1), perceived quality of DTC ads

(factor 2) and perceived consumer competence (factor 3).

Tables II and III present the results of the regression analysis.

As shown, the F-value for the model is 44.799 with a p-value

of ,0.005 and an adjusted R2 of 0.313. Thus, views about

the information value of DTC advertising, quality concerns

regarding these ads and respondents’ views of their own

perceived competence were significantly related to their

behavioral intentions regarding seeking information from

their physician about a particular drug that they saw

advertised. Therefore, hypothesis, H1 is supported.

As shown in Tables II and III, information value is

positively related to the propensity to ask one’s physician

about a branded drug, along with the quality of information

contained in the ad and how competent the consumer feels to

evaluate the claims contained in the ad. Quality of

information contained in the ad and consumer competence

are negatively correlated with the criterion variable suggesting

that the more competent the consumer feels about being able

to evaluate the claims and the higher the perceived quality of

information contained in the DTC ad, the less likely he/she is

to inquire about particular prescription drugs and seek advice

from his/her physician. It is pertinent to note the relative

Table II Seeking advice from the physician (dependent variable:DOCADVICE)

Independent variable Standardized Beta t-value p-value

Information value 0.532 10.897 0.000

Perceived quality of DTC ads 20.151 23.086 0.002

Perceived Personal Competence 20.121 22.474 0.014

Note: Adjusted R 2 ¼ 0.313

Table III

Model Sums of squares df Mean square F Significance

Regression 90.325 3 30.108 44.799 0.000

Residual 191.544 285 0.672

Total 281.869 288





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importance of the first independent variable – information

value, as evidenced by the high standardized beta in the

equation. It is the most significant predictor of consumers’

behavioral intentions. The other two, perceived quality of

DTC ads and perceived competence, while important,

explain lower incremental amounts of variance in the

equation.

For hypothesis H2, the dependent variable is the mean of

the item that asked the respondents whether they would

respect their physician’s judgment if he/she turned down their

request to prescribe an advertised drug that the respondent

had requested. This dependent variable (DV2) was labeled

MEDDEC. The mean values for this dependent variables is

3.90 on a five-point Likert-scale ranging from strongly

disagree (1) to strongly agree (5), indicating a general

agreement with this statement.

The second regression with the dependent variable

MEDDEC resulted in two variables being significant

predictors of DV2. These comprised of respondents’ views

about the primary source of medical information (factor 5)

and information value of DTC advertising (factor 1). Tables

IV and V show the results of the regression analysis. As

shown, the F-value for the model is 41.548 with a p-value of

,0.005 and an adjusted R2 of 0.220. Thus, consumers’

willingness to respect their physician’s judgment about a

medical condition was significantly related to whether his/her

physician was the primary source of medical information and

information value of DTC advertising. In this model, the

higher standardized beta is associated with respondents’

primary source of medical information. Information value is

negatively correlated with the dependent variable whereas

views about the primary source of medical information are

positively correlated. In essence, the higher the perceived

information value of an ad, the less the willingness of the

consumer to go along with the physician’s judgment. On the

other hand, if the physician is the primary source of medical

information, this translates into a higher level of trust in his/

her judgment. Thus, hypothesis H2 is supported.

To tests hypotheses H3 and H4, multi-item measures were

used: perceived cost and perceived benefits of DTC

advertising were measured using three items each

(Cronbach’s alpha ¼ 0:7028 and 0.6662 respectively). The

two dependent variables were: perceived empowerment which

was labeled EMPOWER (DV3) and attitude towards

governmental regulation of DTC ads, which was labeled

REGULATE (DV4). Mean value for DV1 on a scale ranging

from strongly disagree (1) to strongly agree (5) is 3.22

suggesting that the respondents agree that DTC advertising

empowers people. Mean value for DV4 is 3.16 on the same

strongly disagree (1) to strongly agree (5) scale suggesting that

in general, there is some support for governmental regulation

of DTC advertising.

Tables VI and VII present the results of the regression

analysis with the dependent variable “Empower”. The model

is significant with an F-value of 68.838, p , 0:005 and an

adjusted R2 of 0.320. The model suggests that empowerment

is positively related to the perceived benefits of DTC

advertising and negatively related to the perceived costs of

such advertising. In essence, mere information and

information availability do not empower the consumer.

Instead it appears that consumers make a trade-off between

the perceived benefits of DTC advertising versus the costs

they believe are associated with such advertising. As such, H3

is supported.

Finally, Tables VIII and IX present the results of the

regression analysis with the dependent variable “Regulate”.

As shown, the model is significant with an F-value of 16.659,

p , 0:005, and an adjusted R2 of 0.098.

Both empowerment and perceived benefits are negatively

related to consumers’ willingness to support government

regulation of DTC advertising. Thus, the more empowered

the consumers feel the less amenable they are to support

regulatory interference in their medical information seeking

environment. However, despite the statistical significance of

these results, one must interpret these results with caution

due to the low adjusted R2. In effect, while H4 appears to have

been supported, these results should be validated using

another study to ensure the strength of the relationships in the

equation.

Table V


Regression 22.974 2 30.108 41.548 0.000

Residual 158.143 286 0.672

Total 204.090 288


Table IV Impact on medical decision (dependent variable: MEDDEC)

Independent variable

Standardized

Beta t-value p-value

Views about primary source of

medical information 0.434 8.338 0.000

Information value 20.192 23.685 0.002


Table VII


Regression 98.548 2 49.274 68.838 0.000

Residual 204.718 286 0.716

Total 303.266 288


Table VI Perception of empowerment (dependent variable:EMPOWER)


Standardized


Perceived benefits of DTC advertising 0.445 7.793 0.000

Perceived costs of DTC advertising 20.193 23.374 0.001

Note: Adjusted R 2=0.320




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Discussion and implications

Overall, the advent of DTC advertising presents a wealth of

interesting dichotomies and valuable insights regarding

consumer perceptions. Our findings reveal that although

consumers are motivated to ask their primary care physicians

about drugs promoted through DTC advertising, they are not

particularly knowledgeable about DTC advertisements. In

particular, our findings show that consumers are not

particularly knowledgeable about prescription drugs or the

laws that govern DTC advertising, even though they claim

that DTC advertising has increased their overall awareness of

prescription drugs. It could very well be that while consumers

have become more aware of the brands mentioned in DTC

ads, they are not necessarily more educated about the benefits

and risks associated with advertised brands. Specifically,

consumers know that DTC drug ads abound; however,

consumers may not fully understand the message in DTC

ads, nor do they trust in drug manufacturers to provide them

with accurate information. This disparity may exist because

consumers are not comfortable with the format in which

drugs are advertised, they do not feel competent to evaluate

the claims made in such advertising, and they are not aware of

the various avenues to get more information.

As consumers become savvier and as drug manufacturers

seek to establish profitability for their specific brands,

researchers and practitioners will need to examine the types

of ads that most impact the development of favorable

attitudes towards DTC advertised drugs. Currently, many of

the ads for DTC drugs feature consumers who are active and

thriving in their day-to-day lives with little mention of the

drug’s connection to the alleviation of specific symptoms

related to the individual’s given condition. Perhaps,

consumers are in need of more information regarding the

drug’s specific impact on the condition and their long term

benefits and effects. Currently, many of the ads are

ambiguous and it seems that drug manufacturers have left it

to the physicians to fill in the blanks regarding the actual

benefits of their respective products. However, as we move

into an era of consumer empowerment, we should expect that

consumers will be demanding more of the drug

manufacturers and their brands. These changing demands

could mean that drug manufacturers may have to take the

extra steps needed to ensure that consumers make the

connection between their drug and alleviation of specific

medical conditions.

Behavioral intentions are positively influenced by DTC

advertising in that consumers are asking their physicians

about DTC advertised drugs and are more likely to ask about

a specific brand, however, our findings also suggest that

consumers’ willingness to take action is dependent on a

number of variables. Consumer action after exposure to DTC

ads is not only a function of the effectiveness of DTC ads, but

also a function of their perceptions of their own personal

competence, the value of information in the ads, and the

overall quality of DTC advertisements.

While some researchers and practitioners have noted that

consumers might shop around until they find a doctor that is

willing to issue a prescription for a specific brand, our findings

suggest that this “shopping around” will stem more from the

level of trust that consumer places in his/her doctor and the

relationship that exists between the consumer and his/her

physician. However, our research also suggests that the

quality of the DTC ads may have some bearing on consumer’s

willingness to seek a DTC advertised drug from another

physician. In other words, if consumers do not have a strong

relationship with their primary care physicians but find the

information in a DTC ad to be useful and informative, they

may be more likely to seek the brand from an another

physician.

This reasoning highlights the way in which the physician-

patient relationship has evolved with the onset of DTC

advertising. Where consumers once felt entrapped in their

relationships with their physicians, the acquisition of

information regarding branded drugs has given consumers

more power than ever before. Interestingly enough, our

findings suggest that mere empowerment may not be enough

to ensure consumer satisfaction with DTC advertising, nor

might it be enough to facilitate consumer acceptance of and/

or trust in drug manufacturers. While drug manufacturers

have assumed that merely providing consumers with more

information would ensure consumer trust and acceptance,

researchers have found that increased choice alternatives do

not necessarily lead to increased satisfaction (Wathieu et al.,

2002).

In order for consumers to truly be satisfied with DTC

advertisements, they must become more knowledgeable about

the products and their efficacy. “Patients face a daunting task.

True empowerment demands the truth . . . ” (Friedwald,

2000). As it stands, there seems to be a gap between

consumer awareness and the “real” truth about DTC

advertised brands. While consumers/patients do have more

information available to them because of DTC advertising,

they may not necessarily be able to effectively evaluate the

costs and benefits of the given options. As such, our findings

highlight the need for increased focus and attention on the

manner and context in which branded drugs are advertised.

On the surface it seems that advertising broad-based benefit

would be attractive to consumers; however, there is no

guarantee that consumers are able to differentiate these

benefits from those offered by competing drug manufacturers

or other nutritional supplements (Wealleans, 2003). Typically

DTC advertisements show “a stream of indistinguishable

communication in which execution cliches abound-walking

Table VIII Feelings about government regulation (dependent variable:REGULATE)


Standardized


Perceived benefits of DTC advertising 20.213 23.186 0.002

Level of perceived empowerment 20.153 22.293 0.023


Table IX


Regression 24.828 2 12.414 16.659 0.000

Residual 213.15 286 0.745

Total 237.943 288




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376

the dog, playing with grandchildren, painting, cooking, etc.”

(Wealleans, 2003, p. 98). Our findings suggest that it may not

be enough to merely mention a brand name and to show that

the consumer is able to engage in an “active” lifestyle despite

his/her medical condition.

Further, as noted by practitioners, the traditional consumer

goods product marketing model may not be the best option

for the marketing of DTC branded drugs. Marketers must

thoroughly understand the psychology of the consumer and

his/her beliefs about a particular drug category before

formulating an ad campaign (Schroff, 2003). While

consumer goods manufacturers have relied on brand

associations to build brand loyalty, drug manufacturers must

create a distinct format for the successful advertisement of

branded drugs. With consumer goods, it may be enough to

merely get consumers to be familiar with a particular brand

name; however, with branded prescription drugs there are

many other factors to consider such as the patient’s disease

history, their physician’s medical training, possible generic

substitutions and the amount of co-pay that the patient may

have to contribute (Shankland, 2003). As such, consumers

may need to receive information about branded drugs that

reaches beyond the scope of hearing the brand name repeated

time and time again, and drug manufacturers must determine

the best method to convey this information. Thus, drug

manufacturers must address whether would be advantageous

for them to modify the way in which DTC advertising is

created and disseminated.

At the present time, drug manufacturers have been

successful in terms of getting more information to the

public and opening up lines of communication with their

consumers. Next, drug companies must determine what type

of relationship they want to have with consumers. DTC

advertising has been successful in making the consumer aware

of various medical conditions and increasing the recognition

of branded drugs (Alleyne, 2002; Krisanits, 2003; Smith,

1998; Wilkes et al., 2000). With the flattening out of DTC

advertising spending (Shankland, 2003), it seems that DTC

advertising is at a major crossroads and drug manufactures

will have to make some critical decisions regarding the future

of prescription drug advertising to consumers.

Future research

This research addressed attitude and behavioral change issues

from the consumer’s perspective. To have a better

understanding of how DTC advertising affects the

physician-patient dyad, it would be useful to evaluate what

physicians feel about the efficacy of such advertising for their

patients. Since DTC advertising is here to stay, it might also

be useful to get the physicians’ perspectives on what type of

information should be incorporated into DTC advertising by

the drug companies so that the consumers can use it more

effectively and benefit from the information provided in the

ad.

Another rich avenue would be to address the impact of

ethnicity and/or other individual differences on consumers’

response to DTC advertising. For example, it is well known

that African-Americans lag behind their Caucasian

counterparts in terms of access to quality healthcare and

knowledge about medical issues; evaluating the efficacy of

DTC advertising for this population may be of tremendous

value in assessing whether it can bridge the knowledge gap

that has existed for decades. The National Medical

Association, the nation’s oldest and largest African-

American medical association, recently released findings

from a survey of 900 black physicians in which they found

resounding support for DTC advertisements, particularly for

African-American patients (Alleyne, 2002). These physicians

noted that DTC advertisements encourage dialogue between

doctors and patients and it increases the likelihood of doctor’s

visits, both of which have been fairly difficult issues for

African-American patients. Similarly evaluating perceptual

differences regarding the value and efficacy of DTC

advertising among other sub-cultures (e.g. Hispanic-

Americans, Asian-Americans, etc.) might also be useful to

assess whether cultural variables play a role in medical

decision making, and whether DTC prescription drug

advertising might be used to encourage information seeking

among these sub-groups.

References

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practices lead to greater tort liability for prescription drug

manufacturers?”, Wake Forest Law Review, Vol. 37 No. 1,

pp. 97-139.Biehal, G., Stephens, D. and Curlo, E. (1992), “Attitude

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Findlay, S. (2002), “Do ads really drive pharmaceuticalsales?”, Marketing Health Services, available at: web.lexis-nexis.com/universe (accessed October 17, 2003).

Friedwald, V. Jr (2000), “The internet’s influence on thedoctor-patient relationship”, Health Management Technology,Vol. 21 No. 11, p. 80.

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Krisanits, T. (2003), “DTC grows drug class, not brandshare”, Medical Marketing and Media, Vol. 38 No. 12, p. 26.

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Wertenbroch, K., Droleet, A., Gourville, J.,

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Wu, G. (2002), “Consumer control and empowerment”,

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Direct-to-consumer advertising and youngconsumers: building brand value

Erin E. Baca, Juan Holguin Jr and Andreas W. Stratemeyer

Department of Marketing and Management, College of Business Administration, The University of Texas at El Paso,El Paso, Texas, USA

AbstractPurpose – Direct-to-consumer advertising (DTCA) is a pervasive element in society today. Consumers have responded accordingly by becoming moreknowledgeable, developing specific perceptions and attitudes toward DTCA. The purpose of this article is to examine direct-to-consumer prescriptiondrug advertising issues among younger adults as both consumers and caregivers to determine whether companies are, or should be, taking advantageof building brand value through DTCA.Design/methodology/approach – A sample of 225 young adults answered questionnaires to measure the effects of DTCA. The questionnaire wasbased on a study by the National Consumers League and only the items that were most central to the current study were utilized and/or modified tomeasure the following key variables: age; current health status; prescription drug use; attitudes toward DTCA; interest in DTCA; DTCA recall; andinclination to seek additional information.Findings – The findings show that demographics influence attitudes and interest in DTCA, as well as younger consumers’ interest and propensity toseek additional information for themselves and family members. Details of the statistical analysis of the study are given.Originality/value – The implications of the findings for pharmaceutical marketers, health care advisors, and academic researchers are discussed in thepaper.

Keywords Advertising, Brand identity, Young adults, Pharmaceuticals industry, Prescription medicines




While advertising expenditures continue to grow every year in

the USA, marketers, executives, policy makers, academics,

and the general public continue to debate its merit (Macias

and Lewis, 2003). Although personal selling, sales promotion,

publicity, and public relations are important elements of

promotional activities within the marketing mix, advertising is

likely the most visible and noticeable component (Coulter

et al., 2001). This is clearly exemplified in the pharmaceutical

industry where expenditures on promotions have grown from

$2.64 billion in 2002 to $3.2 billion in 2003 (Slaughter,

2004). There is little doubt that the average American has

seen an increasing number of advertisements from

pharmaceutical firms (Findlay, 2001). For example, for

heavily advertised brands, increases in consumer awareness

levels have ranged from 40 to 75 percent over previous years

for drugs such as Viagra, Allegra, Lipitor, and Zoloft

(Slaughter, 2004). Additionally, Parker and Pettijohn (2003)

suggest that information regarding DTCA for pharmaceutical

products will continue to grow as the baby-boomer generation

continues to age. In 2003, the Food and Drug Administration

(FDA) identified the benefits of direct-to-consumer

advertising (DTCA) as, creating increased levels of

awareness, involvement, compliance, reach, and client-

patient interaction (Food and Drug Administration, 2004).

As a result, medical patients are recognized as an evolving

market segment in terms of influence. Further noted by

Mintzes et al. (2002, p. 279) “Patient requests for medicines

are a powerful driver of prescribing decisions”.To capture this fast growing and profitable market, direct-

to-consumer advertising (DTCA) has flourished with

expenditures in the billions for some of the largest

pharmaceutical firms. Promotional activities for

pharmaceutical products is approaching that of the largest

Fortune 500 firms’ products with Advertising Age (2004) listingpromotion expenditures for Pfizer at $2.57 billion,

GlaxoSmithKline at $1.55 billion, and Merck at $1.16

billion. These expenditures rank Pfizer, GlaxoSmithKline,

and Merck as the 4th, 12th, and 19th largest Fortune 500

advertisers respectively in the USA for 2002. With such large

investments in promotional activities by pharmaceutical firms,

consumers appear to be responding to DTCA.Extant literature has suggested that consumers in general

have positive attitudes toward advertising and feel that DTCA

is a valuable source of information regarding various products

and services (for examples, see Perri and Nelson, 1987; Perri

and Dickson, 1988; Everett, 1991; Williams and Hensel,

1995; Shavitt et al., 1998; Paul et al., 2002). However,

because prescription drug DTCA is relatively new, having

only been legal since 1985 and only used extensively after

1997 when the FDA relaxed the standards for DTCA (Macias

and Lewis, 2003), questions remain regarding the

effectiveness of the advertisements for this segment of the

industry. Thus, what is not known is how effectively these

advertising campaigns achieve the goals of the firm in






22/7 (2005) 379–387


[DOI 10.1108/07363760510631110]

379

reaching consumers as well as which advertising theories aremost appropriate for measuring the effectiveness of DTCA.Therefore, given that researchers have only recently examinedthe effectiveness and the related impact of DTCA bypharmaceutical firms and that empirical research on thissubject is still emerging (Menon et al., 2004), this research isexploratory in nature.Although skepticism remains regarding whether DTCA

truly educates the consumer and thus begins to establishbrand loyalty or whether DTCA merely contributes to risingdrug costs, “drug companies are discovering what packaged-goods companies and other consumer markets have knownfor years: Nothing is more powerful than building consumerbrand loyalty,” (Marx, 1996, p. 56). To build brand loyalty,companies have to focus on building value for their brand(Moore et al., 2002). According to Rutledge:

The brand is your customer’s belief in what you stand for as a company. Thebrand is what allows you to charge a little more or merit a larger market sharethan the companies selling no-name products. That “little bit more”translates into future incremental cash flow. The present value of this streamof future-incremental-cash-flow is brand equity. Building brand equity is theonly way I know to create long-term value for shareholders (Rutledge, 1998,p. 154).

The result of building or increasing product brand valuetranslates into increased sales and increased value for thecompany. For example, after Merck invested approximately$145 million into the advertisement of Vioxx, a product forarthritis and joint pain, sales increased more than 300 percentto over $1.5 billion (Bittar, 2001). Interbrand’s 2004 report, awell-respected private brand consulting firm in the UK,identified Coca-Cola as the world’s most valuable brand,possessing a brand value of $67.4 billion (BBC News, 2004);this figure represents about 68 percent of the total marketvalue of the firm, supporting the idea that brand names addvalue to firms. Kirmani (1990) suggests that consumers usetheir impressions of advertising costs as an indication of brandquality. While the effects of DTCA have been investigated,unanswered questions remain, such as; Who is responding toDTCA? What is motivating the consumer to request a specificdrug? And finally, what are consumer attitudes towardDTCA?Questions such as these are important given the enormous

costs that firms, specifically pharmaceutical firms, invest inbringing products to market and the subsequent costs ofpromotional activities. While various efforts have been madeto understand the effects of direct-to-consumer prescriptiondrug advertising in terms of consumers’ interest, attitudes,and propensity to seek additional information (Hoek et al.,2004), the majority of the research has focused on olderconsumers or current users of prescription drugs. This studyadds to the extant literature by empirically determining whateffects, if any, DTCA has on younger adults as consumers andcaregivers in terms of interest and attitudes as well aspropensity to seek additional information. Specifically, weseek to extend past research by examining this demographicrelationship to determine whether pharmaceutical companiesare taking advantage of building brand value through DTCA.

Background

Direct-to-consumer advertising researchDrug companies recognize the value of DTCA, allocating atotal of $2.5 billion to media campaigns during the year 2000including television, print, radio, billboards, and other forms

of media and promotional activities. It is reasonable to

conclude that pharmaceutical firms believe that increasedlevels of media and sales promotion spending is directly

related to establishing and maintaining strong brand equity

(Herremans et al., 2000). Additionally, DTCA is being placedwithin a multitude of media so that the actual audience ranges

from young adults to senior consumers with much of thisadvertising placed in primetime television and national

magazines that appeal to a broad-based audience. Thus,exploring the likelihood of specific demographic groups, or

younger consumers, and responses to DTCA is an importantresearch topic (Pinto et al., 1998).The majority of the literature on DTCA has focused on

consumer attitudes, propensity to seek information, andcomprehension of DTCA among older adults (Maddox,

1999; Menon et al., 2004). Overall, the literature suggests thatconsumers have an awareness of and carry a positive attitude

toward DTCA (Perri and Nelson, 1987; Everett, 1991;Williams and Hensel, 1995); thus far, however, the vast

majority of research efforts focused primarily on consumersage 35 and older. Studies have focused on older consumers

because it is assumed they are the primary users ofprescription drug medications (Williams and Hensel, 1995;

NCL, 2003). However, the National Consumers League(2003) conducted a study regarding the effectiveness and

attitude toward DTCA of prescription drugs, and in general,their findings reveal that attitudes toward DTCA were

positive across a broad range of age groups. Variances infindings across these studies were found among different age

groups with regard to interest level and DTCA. Overall, the

NCL (2003) study did not investigate specifics regardingyounger consumers and DTCA. Thus, it is suggested that

factors such as interest level varies based on the age of theconsumer.The phenomenon of younger people paying attention to

DTCA may seem somewhat perplexing. Burak and Damico

(1999) found 35.9 percent of 18-24 year olds were familiarwith the prescription allergy medication Allegra. Although

intuitive, older consumers typically need more medication

and are therefore more likely to be interested in DTCA;however, many prescription drugs such as allergy medications

are targeted to a broad age group. Coupled with the aging ofthe population, a trend involving the growing numbers of

caregivers, typically younger consumers, has been a topic ofdiscussion.Caregiving refers to individuals who undertake everything

from the primary caregiving role itself to support for older

relatives (Dellmann-Jenkins et al., 2000). The activities

surrounding caregivers involve assistance with searching forinformation to help with illnesses which includes reviewing

DTCA. A study by Prevention Magazine (2004) found thatcaregivers are more likely than other consumers to pay

attention and respond to DTCA. Of the population ofcaregivers sampled in this study, 29 percent were in the 18-34

age group, which was the largest proportion in relation to theother age categories (Slaughter, 2004). The categories

identified for caregivers (specifically, whom they areresponsible for) include everything from children to

grandparents. Another study found that of the individualsunder the age of 40, one-quarter to one-third of this

population is identified as caregivers of someone in theirfamily (Dellmann-Jenkins et al., 2000). Additionally, the same

study found that younger consumers (one in four) obtain

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information from DTCA for someone else to whom they aregiving care. The overarching theme is that younger consumersare becoming increasingly more aware and knowledgeableabout DTCA. It seems younger consumers (as responsiblecaregivers) want to provide information to assist in making aninformed decision.Given that prescription drug manufacturers are spending in

excess of one billion dollars per year in marketing theirproducts directly to consumers, it appears logical to assumethat a variety of individuals (both target audience membersand caregivers) are going to be exposed to, recall more, andhave a higher level of interest in prescription drug advertising.Advertising of pharmaceutical drugs is influential inencouraging consumers to seek additional information forthese products (Williams and Hensel, 1995; Hoek et al.,2004). As awareness and interest expands for DTCA, theconsumer base is also expanding from users of prescriptiondrugs to those caring for someone with health conditionsrequiring a prescription drug. Thus, higher recall and interestin DTCA and an increased motivation by consumers toobtain more information may cause pharmaceuticalcompanies to re-think the concept of building brand value.

Brand value and direct-to-consumer advertisingMarketing experts generally agree that there is a strong linkbetween advertising and building value for a brand (Cobb-Walgren et al., 1995). Miller and Berry (1998, p. 82) note,“established brands are stronger and more robust than manysuspected.” Brand value goes beyond brand awareness toinclude favorable attitudes toward the brand (Moore et al.,2002). Building brand equity is related to the degree of brandrecognition, the strength of consumers’ mental and emotionalassociations, as well as perceived brand quality (Aaker, 1996).When brands are positioned correctly, consumers feel strongties toward them (Cobb-Walgren et al., 1995).Pharmaceutical advertisers have a unique opportunity toposition their brands through promoting desirable andpositive benefits of their products. By expanding the targetaudience, firms can help develop strong consumer beliefsabout product benefits and brand value throughpharmaceutical drug advertising and integrate the brandingstrategy throughout the organization (Dunn and Davis,2003); this approach may be critical to achieving overallsuccess with the brand. Although pharmaceutical companiesare utilizing a combination of promotional activities to addvalue to their brands, the majority of their brand value is beingbuilt through advertising (Kirmani, 1990; Cobb-Walgrenet al., 1995; Miller and Berry, 1998; Herremans et al., 2000;Coulter et al., 2001).Because consumers cannot purchase certain medications

without a prescription, pharmaceutical companies who utilizeDTCA are trying to encourage some other behavioralresponse such as seeking additional information (Williamsand Hensel, 1995). Eliciting positive attitudes and increasedinterest in DTCA is an important goal for pharmaceuticalcompanies in order to move consumers closer to actualpurchase by encouraging them to seek additional informationabout their product(s). The attempt to position a brand namein the consumer’s evoked set allows companies to buildfamiliarity with the brand (Cobb-Walgren et al., 1995);establishing familiarity with the brand name and conveyingfavorable images for the brand can be translated intoacceptance and preference for the brand (Bogart andLehman, 1973). In turn, this awareness should result in

purchase request or some other positive behavioral response

(Cobb-Walgren et al., 1995; Miller and Berry, 1998).The awareness and attitudes toward DTCA among older

adults are particularly important to pharmaceutical

companies because older adults tend to be heavy users of

advertised drugs (Perri and Nelson, 1987; Williams and

Hensel, 1995). However, younger consumers may be equally

important to pharmaceutical companies because they often

become caregivers of older adults and as this segment ages,

they may also become users of pharmaceutical drugs.

Furthermore, pharmaceutical companies should look at

younger consumers as caregivers and future consumers for

their brand as firms may be able to move those they care for

along the path to purchase by encouraging younger

consumers to seek additional information for others or

themselves (Williams and Hensel, 1995). The path to

purchase was first proposed by Lavidge and Steiner (1961)

as a seven-step process, labeled the “Hierarchy of effects

model” and suggested that the buying process is not a single

event, but rather composed of a series of steps that a

consumer goes through that ultimately leads to a purchase.

Hierarchy of effects modelThe framework proposed by Lavidge and Steiner (1961), as

well as the numerous variants proposed over the last 40 years,

can be traced back to Lewis (1898), and the AIDA model

consisting of four separate attributes:(1) attention;(2) interest;(3) desire; and(4) action.

In this model, researchers noted that advertising can be an

important factor in creating awareness for a product or service

(Moore et al., 2002; Parker and Pettijohn, 2003). This is

particularly important for pharmaceutical companies because

consumers have limited outlets in which to gather information

about various healthcare options (Roth, 2003). The

framework is a suitable model to help gain an

understanding of the effects of DTCA (Vakratsas and

Ambler, 1999; Menon et al., 2004), and for this study, the

impact on different segments of the market. Therefore, it

could be suggested that without awareness, other marketing

objectives are not likely to be achieved (Roth, 2003).Lavidge and Steiner (1961) suggest that different

advertisements or campaigns can be focused at different

steps in the seven-step buyer process. For example, the

authors posit that firms, when bringing a new product to

market, should focus their advertising primarily during the

first steps of the process. The primary goal of the advertiser in

this scenario should be to make potential customers aware of

the new product and inform them of the product’s benefits

and features. However, because consumers are not the final

authority in regards to the purchase of prescription drugs, it is

difficult to assess the actual path to purchase (Menon et al.,

2004). Therefore, this study will not examine the final

conditions and determinants that lead consumers to purchase

a pharmaceutical drug. Rather, this study will investigate

whether consumers, specifically young consumers, pay

attention to DTCA by reviewing their attitudes, interest,

and recall of pharmaceutical advertising.




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Research hypothesesWhile age may impact the degree to which consumers havefavorable attitudes and interest in DTCA, two other variables

are suggested to impact attitudes and interest, includinghealth status and prescription drug use as well as anadditional variable, concern for family member’s condition,

is expected to impact interest in DTCA (see Figure 1).To accomplish the stated objectives of this study, several

research hypotheses are proposed. First, research has shownthat older consumers are more likely to be users ofprescription drugs and are more likely to have favorable

attitudes toward DTCA (Williams and Hensel, 1995; Menonet al., 2004). Research has indicated that overall consumersfeel DTCA is a useful source of information (Perri andNelson, 1987; Everett, 1991; Williams and Hensel, 1995;

Roth, 2003). What is currently unknown is the attitudes ofyounger consumers toward DTCA. It is unclear whetherconsumers who do not currently suffer from any acute

medical conditions will or will not pay particular attention toDTCA. Younger consumers are less likely to have these sortsof chronic medical conditions. Thus, it can be expected that

younger consumers’ attitudes may vary from olderconsumers’ attitudes toward DTCA. Since consumers thusfar have been found to hold favorable attitudes towardDTCA, it is expected:

H1. Older consumers will have more positive attitudestoward DTCA than younger consumers.

Because of the multitude of media outlets chosen for DTCA,it is difficult to ascertain whether older consumers would havemore interest in DTCA than younger consumers. Younger

consumers have been found to display interest in DTCA(NCL, 2003). Pollay and Mittal (1993) and Shavitt et al.(1998) suggest that consumers use advertising for information

about brands and product availability, and further posit thatyounger consumers think of advertising as an informationalsource for products in general more than older audiences do.

Generation Y consumers have been found to be just as likelyas Generation X, Baby Boomers, and Matures to recallpharmaceutical advertisements (Slaughter, 2004). Therefore,it can be expected that younger consumers would be just as

likely as older consumers to have an interest in DTCA, whichleads to the following hypothesis:H2. Younger consumers are as likely as older consumers to

express interest in DTCA.

Previous studies have hypothesized expected relationships

between health status and attitudes toward DTCA (Williams

and Hensel, 1995), as well as health status and interest in

DTCA among older consumers (NCL, 2003). These findings

suggest that there is a propensity for those in poor health to

have more favorable attitudes toward, and be more interested

in, DTCA. Based on these results, there is no reason to expect

that younger consumers would not respond similarly. Thus

the following hypotheses are proposed:H3. Health status will directly affect the interest in and

attitudes toward DTCA among younger consumers.H3a. Younger consumers in average or poor health will be

more likely than younger consumers in good health tohave an interest in DTCA.

H3b. Younger consumers in average or poor health will bemore likely than younger consumers in good health tohave favorable attitudes toward DTCA.

There has been little empirical research on the relationship

between ad recall and interest in DTCA. In a study

conducted by the NCL (2003), a positive relationship was

indicated between ad recall and interest in DTCA among

older consumers (i.e. over 35 years of age). Based on their

findings and the belief that younger consumers are similar to

older consumers regarding their interest in DTCA, the

following hypothesis is proposed:H4. There is a positive relationship between interest in

DTCA and recall among younger consumers.

It is also reasonable to assume that those younger consumers

currently taking prescription drugs would have positive

attitudes toward and interest in DTCA. Although Williams

and Hensel (1995) did not find a significant relationship

between older consumers’ current drug use and their attitudes

toward DTCA, the NCL (2003) study found a positive

relationship between prescription drug use among older

consumers with regard to attitude and interest in DTCA. As

previously noted, there is an expectation that younger

consumers and older consumers respond similarly to

DTCA, thus the following hypotheses are proposed:H5a. There is a positive relationship between prescription

drug use and attitude toward DTCA among youngerconsumers.

H5b. There is a positive relationship between prescriptiondrug use and interest in DTCA among youngerconsumers.

Because DTCA has been identified as an important source of

information overall for consumers (Perri and Nelson, 1987;

Everett, 1991; Williams and Hensel, 1995; Roth, 2003), it is

expected that a positive relationship exists between attitudes

toward DTCA and an inclination to seek additional

information among younger consumers. Additionally,

Williams and Hensel (1995) found that those consumers

with more favorable attitudes toward DTCA were more

inclined to seek additional information from a pharmacist

and/or a friend. This leads to the following hypothesis:H6. There is a positive relationship between attitudes

toward DTCA and inclination to seek additionalinformation among younger consumers.

Similarly, because pharmaceutical companies are trying to

move consumers closer to an actual purchase by encouraging

them to seek additional information, the AIDA model

suggests that favorable attitudes and increased interest in

Figure 1




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DTCA are related to consumers’ inclination to seek

additional information (Parker and Pettijohn, 2003). Perri

and Nelson (1987) point out that a majority of consumers

would likely ask their doctor about a product that they had

seen advertised, and consumers with an interest in advertising

will use this information to help guide their decision making

(Shavitt et al., 1998; Handlin et al., 2003). As noted earlier,

the NCL (2003) found that younger consumers display an

interest in DTCA. Therefore, the following hypothesis is

proposed:H7. There is a positive relationship between interest in

DTCA and inclination to seek additional informationamong younger consumers.

Finally, it is expected that younger consumers may expressmore interest in DTCA when a family member has anunresolved health condition. Little research has addressed therelationship between younger consumers’ caregiving activitiesin terms of interest in DTCA. These caregiving activities maybe heightened when younger consumers become concernedabout a family member who suffers from a conditionillustrated in a DTCA. Younger consumers have been foundto exhibit a more active caregiving role with the emergence ofa trend among young adult children and grandchildrenserving as caregivers to elderly relatives (Dellmann-Jenkinset al., 2000). Thus, the following hypothesis is proposed:H8. There is a positive relationship between concern for a

family member and interest in DTCA among youngerconsumers.

Methodology

Research instrument and subjectsThe questionnaire was obtained from the NationalConsumers League (NCL, 2003) and only the items thatwere most central to this study were utilized and/or modifiedto measure the following key variables: age; current healthstatus; prescription drug use; attitudes toward DTCA;interest in DTCA; DTCA recall; and inclination to seekadditional information.Questionnaires were administered to 225 undergraduate

students enrolled in a major university in the southwest USA.The mean as well as the median age for the undergraduatepopulation is 25. Students were given the questionnairesduring their classes but were not forewarned of the study inorder to ensure there were no biases toward the topic.Responses from 20 participants were deemed unusable,resulting in a total of 205 usable questionnaires.

MeasurementParticipants were asked to provide information on theircurrent health status through a slightly modified version of anitem developed for the NCL (2003) study. The item consistedof six categories and was modified from “Would you consideryourself . . . ” to the following question: “Overall, how wouldyou rate your current heath?” Choices in the NCL (2003)study included:. generally healthy;. in good health, but have some chronic conditions;. not in very good health;. in poor health; and. do not know.

The choices in the current study included:. good health;. average health; and. poor health.

The original NCL (2003) instrument may have been biased

toward older consumers as the choices appeared skewed

toward a negative assessment rather than a positive

assessment of current health status. The modified version

for this study reflected a more realistic assessment of health

assessment by a younger population.Prescription drug use, ad recall, and interest were measured

with questions taken from the survey obtained through the

NCL (2003). Respondents were asked to report their use of

prescription medication for pain over the previous year.

Specifically, the question asked, “In the past year, have you

used a prescription medicine for pain?” Choices included:

Yes, currently use; Yes, have used in the past year; and, No,

have not used in the past year. The questions for ad recall and

interest were, respectively, “In the past 12 months, have you

seen or heard any advertising for medications that you can

only get with a prescription?” and “Were any of these

prescription drug advertisements for a condition that was of

particular interest to you?” Respondents were simply asked to

respond to each question: Yes; or No. Additionally, to

measure degree of information search, respondents were

asked: “Thinking about a prescription drug advertisement

you saw or heard that interested you, what did you do after

seeing or hearing that advertisement? Did you seek more

information?” Respondents simply answered: Yes; or No.Attitudes toward DTCA of prescription medications was

measured using ten items developed by the NCL (2003) in

order to assess the multiple facets of attitude toward DTCA.

Overall, the scale contained both positive and negative

statements regarding DTC pharmaceutical advertising. The

scale consisted of ten, five-point Likert-type statements

anchored by strongly disagree and strongly agree. Only one

item, the second question, was modified for better

understanding, with “provide information” replacing “de-

stigmatize.” It was deemed that the rest of the questions

appeared clear and straightforward so additional modifications

were not necessary. All items for this scale are shown below:(1) Advertisements describe the side effects and/or risks of

medications so that you understand them.(2) Advertisements provide information about the

conditions that may have gone untreated due to

patient embarrassment.(3) Advertisements help you when you want to talk to your

doctor about a condition that you think you might have.(4) Advertisements encourage people to ask for drugs they

do not need or cannot take.(5) Advertisements just help pharmaceutical companies sell

their drugs.(6) Advertisements are largely responsible for the increased

cost of prescription drugs.(7) Advertisements for medicines should only be in medical

magazines for doctors.(8) Advertisements remind people to take their medicines

or refill their prescriptions.(9) Advertisements are confusing.

(10) Advertisements make you feel good about the

medicines you are already taking.

Items 4, 5, 6, 7 and 9 are reverse coded.




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The NCL (2003) study did not report reliability for theattitude scale. Therefore, the ten-item attitude scale wassubjected to an exploratory R-type factor analysis to testconvergent validity. The data is appropriate for factor analysiswith an overall measure of sampling adequacy (MSA) of0.841 (Hair et al., 1998). Factors were extracted usingprincipal components estimation with a varimax rotation,which revealed three factors. Factor loadings ranged from0.463 to 0.844. According to Hair et al. (1998), factorloadings of 0.40 or greater are considered important. Thepercentage of variance explained by the three-factor solutionwas 53.1 percent. Factor one included items 4, 5, 6, 7, and 9,which are negative statements related to attitudes towardDTCA in general and exhibited factor loadings of 0.463,0.605, 0.722, 0.749, and 0.564 respectively. Factor twoincluded items 1, 2, and 3, which include positive statementsrelated to attitudes toward information regarding DTCA andexhibited factor loadings of 0.844, 0.822, and 0.516respectively. Factor three included items 8 and 10, whichinclude positive statements, related to attitudes towardDTCA prescription medicines specifically and producedfactor loadings of 0.735 and 0.771 respectively.Reliability levels were assessed among the three factors,

with a ¼ 0:62 for factor one, a ¼ 0:66 for factor two, anda ¼ 0:64 for factor three. A commonly used threshold foracceptable reliability is a coefficient alpha of 0.70, althoughthis is not an absolute standard and may decrease to 0.60 inexploratory research (Hair et al., 1998). All items wereretained for further analysis. The scale as a whole showed anadequate level of reliability, a ¼ 0:68. In summary, the ten-item, three dimensional attitude scale developed by NCL(2003) showed sufficient internal consistency across alldimensions and proved to be reliable measure of attitudestoward DTCA for the present study. For the attitude scale,the dependent measure was calculated by averaging overallacross the scale to assess each variable.The final part of the instrument contained demographic

measures of age, education, and income. Based on the medianage of 25 years, the sample was split into two categories basedon their responses. The first category represented youngerconsumers (25 years or younger) while the second categoryrepresented older consumers (26 years or older).

Results

H1 predicts that there is a positive relationship between ageand attitudes toward DTCA and was supported (p , 0:05) asthe ANOVA shows, attitude toward DTCA was significantlyrelated to age (F-value ¼ 5.520, p , 0:020). Mean differenceswere examined to test if the relationship was in the expecteddirection. As expected, younger consumers (25 or less) holdless positive attitudes toward pharmaceutical advertising witha mean score of 3.0236 than older consumers, with a meanscore of 3.1688.H2 examined the relationship between younger consumers

and interest in DTCA. A correlation revealed no significantrelationship (r ¼ 20:024, p ¼ 0:733) between youngerconsumers and interest in DTCA. Based on these resultsH2 was not supported.H3 was tested in a one-way MANOVA with health status

used as the independent variable. The analysis shows that theset of dependent variables (interest and attitudes) wassignificantly related to health status (Wilk’s l4;392 ¼ 0:918,p , 0:05). Given the positive MANOVA findings for the main

effects, follow-up univariate ANOVAs and Tukey-HSD pairedcomparisons were performed on each interest and attitudemeasure (Hair et al., 1998). Health status was significantlyrelated to attitude and interest (H3a and H3b) across the threecategories of health status (p , 0:05). Therefore, H3, H3a,and H3b were all supported. MANOVA and ANOVA resultsare summarized in Table I.Pairwise comparisons of each dependent variable on health

status is displayed in Table II. These results further revealedthat the differences between the groups were as hypothesized.Those in poor health had higher interest levels (with a lowermean indicating higher interest levels). Although significantoverall (p , 0:05), the mean score for good health was higherthat the mean score for average health in relation to attitudetoward DTCA. In terms of attitudes, it seems those in goodand average health have similar views toward DTCA, withthose in average health with slightly less positive attitudes thanthose in good health.H4 predicted a positive relationship between interest in

DTCA and recall. A one-way ANOVA was utilized to test thesignificance of the variables. Interest in DTCA wassignificantly related to recall (p , 0:001). Youngerconsumers who indicated interest in DTCA were able torecall more pharmaceutical ads (F-value ¼ 42.274,p , 0:000). Given these results, H4 was supported.The hypothesized positive relationships were examined

between attitude toward DTCA and prescription drug use(H5a); and interest in DTCA and prescription drug use (H5b)among younger consumers. ANOVAs were utilized to testboth hypotheses and the relationship between attitude andprescription drug use was marginally significant, p , 0:10 (F-value ¼ 3.551, p , 0:061), and the relationship betweeninterest and prescription drug use and was not supported(F-value ¼ 0.012, p , 0:912). Further, the results of thesetests revealed that prescription drug use has a marginallysignificant positive effect on younger consumer’s attitudes.Prescription drug use does not, however, relate significantlywith interest in DTCA. Therefore, H5a was partiallysupported and H5b was not supported.To test H6 and H7, which predict that there is a positive

relationship between attitudes toward and interest in DTCAand inclination to seek additional information, univariateANOVAs were utilized. H6 was not statistically significant, (F-value ¼ 0.920, p , 0:538). However, H7 was statisticallysignificant, (F-value ¼ 7.521, p , 0:007), with interest inDTCA being a significant predictor of younger consumerspropensity to seek additional information regardingpharmaceutical drugs. Therefore, H6 was not supportedand H7 was supported.The hypothesized positive relationship was examined

between concern for family member and interest in DTCA(H8). Univariate ANOVA was utilized to test the hypothesisand the relationship between concern for family member andinterest in DTCA among younger consumers was statisticallysignificant, p , 0:0001 (F-value ¼ 21.978, p , 0:000). Asexpected, younger consumers who are concerned about afamily member is a significant predictor of interest in DTCA.

Discussion

This study examines the relationship between DTCA andyoung consumers’ attitudes, interest and inclination to seekout additional information regarding pharmaceutical drugs.Overall, the results of this study confirm and extend previous




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research by developing and empirically testing these

relationships and the findings support the role of age in the

relationship between attitudes and interest in DTCA.

Attitudes of younger consumers toward DTCA were related

to age, health status, and prescription drug use. Moreover,

younger consumers’ attitudes toward DTCA were not related

to recall of DTCA or inclination to seek additional

information. This research also demonstrated that younger

consumers were just as likely to have an interest in DTCA.

However, this interest was not related to inclination to seek

out additional information which implies that younger

consumers are paying attention, moving through the initial

stages of the AIDA model, but have not progressed to the

desired stage of the model.These results are of importance because both attitude and

interest can serve as important indicators of the attractiveness

of DTCA advertisements for younger consumers. These

results indicate that younger consumers are aware of

pharmaceutical products and are taking a participative role

in DTCA. Additionally, relationships were established

between health status, ad recall, and prescription drug use

among younger consumers with regard to interest in DTCA.Our study of younger consumers was partially consistent

with the research of Williams and Hensel (1995) which found

DTCA to elicit positive attitudes among older consumers.

Thus, this study supports previous findings and suggests a

generally positive attitude toward DTCA existing across

different age groups. While the relationship between younger

consumers and older consumers with regard to attitude

toward DTCA was not as strong as previous findings, younger

consumer attitudes are still an important component of

DTCA as both future consumers and caregivers. This is

particularly clear as our study found a significant relationshipwith younger consumers’ attitudes toward DTCA.Research done by Williams and Hensel (1995) found that a

negative relationship existed between health status andattitudes toward DTCA, and our results in examining thesame relationship revealed the same relationship amongyoung consumers. Thus, as health status decreases, attitudesand interest in DTCA increases. Williams and Hensel (1995)further suggested that the theory of selective attentionexplains this relationship. Consumers, in general, payattention to advertising which is meaningful and relevant indifferent situations. Since younger consumers overall areexhibiting positive attitudes toward advertising, this findingwould imply that further research is warranted to examine theprecise relationship between perceived health status ofyounger consumers and attitudes toward DTCA.

Managerial implications

In general, pharmaceutical marketers, health care advisors,and academic researchers should note the strongestrelationships within this study concerned interest in DTCA.This implies that DTCA is influential in attracting attentionfrom not only older consumers, but also younger, and moreimportantly, future consumers. This finding is important notonly because younger consumers are undertaking care-givingroles, but also as the younger population group begins to age,they become a stronger customer base for the wide range ofpharmaceutical products. With increases in purchasing powerover time, these consumers will already posses a heightenedawareness of various products and brand names associatedwith pharmaceuticals. Similarly, as products move throughtheir patent cycle to become over-the-counter (OTC – e.g.

Table I Health status and attitudes toward DTCA

MANOVA Results ANOVA Results

Independent variable Dependent variable Wilk’s Lambda F df P < F df P <

0.918 4.306 (4, 392) 0002

Health status Interest 5.210 (2, 197) 0.006 *

Attitudes 3.427 (2, 197) 0.034 *

Note: * Significant at the 0.05 level

Table II Pairwise comparisons between health status and DTCA outcomes

Dependent variable Health status Meana Mean difference Std. error Sig.

Attitude toward DTCA Good Health 3.041

Average health 20.138 0.064 0.033 *

Average health 3.179

Poor health 0.379 0.198 0.057 * *

Poor health 2.800

Good health 20.241 0.195 0.218

Interest in DTCA Good health 1.722

Average health 0.169 0.090 0.062

Average health 1.603

Poor health 0.603 0.278 0.031 *

Poor health 1.000

Good health 20.772 0.273 0.005 *

Notes: a Lower score indicates higher interest and attitudes toward DTCA; * Significant at the 0.05 level; * * Significant at the 0.10 level




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Claritin, Claritin-D) or generic drugs, younger consumers will

be more familiar with the brand names of these medications.

As such, it is important for pharmaceutical marketers to

educate and provide access to information to build brand

value with younger consumers. Researchers and managers

should recognize that the attitude formation process clearly

begins with younger consumers who are not necessarily

current users of prescription drugs but will be in the future

and as caregivers may have influence over current users.In contrast, interest in DTCA and relationships between ad

recall, health status, and prescription drug use were all

significantly related. The relationship between ad recall and

interest in DTCA is also positive for younger consumers such

that the greater the ad recall, the greater the interest in the

advertised product. This finding is interesting and merits

further exploration of this relationship by pharmaceutical

marketers since this confirms earlier results found with older

consumers, but younger consumers have not been identified

as primary users of pharmaceutical drugs. This provides a

unique opportunity because younger consumers are taking an

interest in DTCA, and pharmaceutical marketers can channel

their efforts toward building their brand by creating an

awareness of pharmaceutical drugs in new market segments.Firms that take advantage of building their brand should

likely benefit in a couple of different ways. First, firms should

be able to reach this audience and establish a market for

products that are currently unknown to this segment but

could be appropriate at a future date. Second, establishing the

brand name is an important means to reach consumers who

care for and attend to older family members. With consumers

entering their senior years, it is reasonable to assume that

while the current market consists of these consumers, a

secondary target would be the care-givers. Information and

branding learned through DTCA would be valuable in

establishing the firm’s brand with this secondary target

audience for top of mind awareness. Through communication

and influence, caregivers can be more informed with the daily

decisions that face the older population.

Limitations and directions for future research

Despite some potentially important implications of this study,

there are some limitations. While the sample for the study

consisted of a convenience sample, this approach provided a

relatively good basis for comparison among younger

consumers. Future studies should assess generalizability of

the results to younger consumers across a larger geographical

area. Furthermore, despite efforts to insure reliability, it

should also be noted that the measures for attitudes toward

DTCA utilized in this study were those developed by the

NCL (2003) study. The measures obtained through the NCL

(2003) study, particularly the assessment of attitudes toward

DTCA, only provided acceptable reliabilities and would need

improvement in the measures for DTCA. Although the NCL

study included a large population group, the strength of

various items within the dimensions associated with attitude

were not clear and merit attention before utilizing the

measures in subsequent studies. Therefore, pharmaceutical

marketers and researchers should coordinate their efforts and

take a careful look at the measurement and formation of

attitudes by consumers toward DTCA.

Conclusion

This research has added an important component to extantliterature concerning attitudes, recall, and an intention to seekadditional information regarding DTCA from target marketsegments and younger consumers. Despite certain limitations,our results also add to understanding the multidimensionalnature of DTCA. A significant amount of DTCA targetsolder adult consumers because they tend to be heavyconsumers of prescription medications (Everett, 1991;Williams and Hensel, 1995; Menon et al., 2004). However,DTCA is found across a multitude of media outlets gearedtoward a broad audience base.Therefore, examining younger population segments are

important for understanding how potential consumers aremoved along the “path to purchase” in an effort to build valuefor the brand. In particular, investigating younger consumersfurther establishes the impact of DTCA on both caregiversand potential users instead of limiting the audience to currentusers of pharmaceutical drugs (Shufeldt et al., 1998). Youngerconsumers are just as likely as older consumers to receive druginformation through mass media. Furthermore, the emphasisof building brand value among younger consumers withregard to DTCA should be further extended to ensure youngconsumers attitudes and interest in DTCA is positive.

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New York, NY.




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Understanding the dynamics of thepharmaceutical market using a social

marketing frameworkDavid Holdford

Virginia Commonwealth University School of Pharmacy, Richmond, Virginia, USA

AbstractPurpose – The objectives of this paper are to describe the “affordable drugs movement” and present a social marketing framework to place majordevelopments within a meaningful theoretical context.Design/methodology/approach – Specific examples are used to illustrate the framework and its utility in understanding the complexities of thepharmaceutical market. Methods to research the dynamics of the market are also presented.Findings – Provides referenced descriptions and examples of forces causing change within the pharmaceutical market. Classifies forces into sixconditions influencing successful social movements: structural conduciveness, structural strains, growth of generalized beliefs, precipitating events,mobilization for action, and utilization of social control by opponents. Suggests social research methodologies to study the conditions in greater depth.Research limitations/implications – This is a descriptive framework that has not been validated for its use in the pharmaceutical market.Practical implications – Offers a useful framework for academics, managers, students, and individuals to classify and study developments in thepharmaceutical industry.Originality/value – This paper provides an overview of major forces within the pharmaceutical market and offers direction for those who wish toexplore it in greater detail.

Keywords Pharmaceuticals industry, Social marketing, Economics

Paper type General review



The pharmaceutical marketplace is facing major pressures

from a broad range of dynamic and powerful forces. Major

healthcare legislation such as the Medicare Prescription Drug,

Improvement Act of 2003, widespread criticisms of

pharmaceutical industry marketing, increasing consumer

involvement in health care, calls to improve FDA oversight

of the pharmaceutical industry, and demands for more

affordable drugs are forcing society to re-examine the way that

pharmaceuticals are developed, distributed, and financed

within the USA. To understand the impact and potential

consequences of these forces, it is helpful to place them within

some meaningful theoretical context.“Social marketing” has been presented as a framework for

analyzing social change (Kotler, 1971). Social marketing is a

process for influencing social ideas and behaviors based on the

premise that social causes can be marketed like any product.

Founded on the fields of sociology, psychology, and

marketing, it best known for its utility in promoting socially

desirable behaviors such as recycling, seat belt use, family

planning, and AIDs prevention. It can also be used to studyand influence major social movements such as consumerism,conservatism, and many other ism’s (Fox and Kotler, 1980).Social movements are defined as relatively persistent,

organized efforts by large numbers of people to effect socialchange. The study of social movements attempts tounderstand their success or failure with the intention ofpredicting their consequences and influencing their course.Social movements studied in health care include themovements toward self-care, (Schiller and Levin, 1983)health care reform (Hoffman, 2003), and insurance reform(Atim, 1999). It has been suggested that social movementswould benefit from marketing thinking and planning (Kotler,1971). It has also been proposed that a social movementframework can help in understanding the dynamics of thepharmaceutical market (Wells and Banaszak-Holl, 2000).There is currently an organized movement by individuals

and groups to change how the pharmaceutical marketplaceprovides safe, effective, and affordable medicine. Thismovement is not new. It has been around since thebeginning of the modern pharmaceutical industry,periodically intensifying and diminishing throughout theyears. Revitalized in recent years, movement supportersassert that the current pharmaceutical system is broken andmajor changes are necessary (Angell, 2004; Avorn, 2004;Goozner, 2004) They allege that the pharmaceutical industrymakes excessive profits by taking advantage of perverseincentives in a market where consumers rely on third parties(i.e. physicians) to choose drugs for them and prescriptiondrug insurance coverage (often provided by employers or thegovernment) to shield consumers from the full cost of payingfor those drugs. The distorted economics of the markettherefore permits the industry to succeed by marketing new,






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[DOI 10.1108/07363760510631129]

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expensive drugs that are often no better than cheaper

alternatives currently on the market. Those high priced drugs

are supported by tax incentives and Federal investment in

research and development. Furthermore, promotional efforts

by drug companies encourage inappropriate prescribing by

physicians, incorrect drug use and unreasonable expectations

by patients, and wasteful expenditures on drugs and other

health care. Drug price comparisons between what Americans

and citizens of other developed countries are presented as

further proof of problems with the market.In defending themselves, the pharmaceutical industry

counters that money spent on drugs brings tremendous

value to Americans. They contend that drug costs are a small,

affordable portion of the health care dollar. Drugs are cost

effective, because they reduce and prevent hospitalizations,

doctor’s office visits, nursing home stays, and emergency

room visits. Furthermore, they assert that billions of dollars in

revenues received by the industry are reinvested into research

and development of new therapies that will save millions of

lives and prevent untold suffering. They insist that if change is

needed, it should strengthen the patent system on new

medications, ensure the freedom to inform and educate the

public and health care professionals, and reduce government

regulation. Any remedies proposed by opponents that restrict

financial incentives to innovate, reduce educational and

promotional efforts, or add to regulatory costs will only result

in negative, unintended consequences.Opposition to the pharmaceutical industry occurs for

several philosophical and practical reasons. One is the belief

that it is unethical for any industry to profit from the suffering

of others and that the market should not be used to distribute

health care. Another is concern about the overuse of drugs to

solve the ills of individuals and society. There is also the real

concern that drug expenditures are becoming unaffordable.This paper will focus on the struggle to control the costs of

prescription drugs. Specifically, it will deal with the effort of

individuals and groups to improve the way we pay for and

finance drug development and manufacturing, distribution,

prescribing, and medication use. Labeled the “affordable

drugs movement,” it will be studied using a social marketing

framework. Opposition to the movement will be considered to

come primarily from members of Pharmaceutical Research

and Manufacturers of America (PhRMA), a trade association

that represents all major pharmaceutical manufacturers. This

paper does not contend that PhRMA is against affordable

drugs – just that PhRMA is opposed to many of the

movement’s proposed strategies for achieving affordability. In

fact, PhRMA resists most efforts to challenge the status quo

when it comes to promoting affordable drug initiatives

(Murray, 2004).This paper will be organized in the following way. First, it

will describe how social movements develop and sustain

themselves using illustrations from the pharmaceutical

market. Then it will list social marketing strategies

employed by the industry to interrupt or divert change

efforts of the affordable drugs movement. Finally, a discussion

will present ways that the affordable drugs movement

framework can help understand and research the changing

pharmaceutical market.

Factors associated with social movement success

The sociology literature identifies six factors associated with

successful social movements (Table I) (McAdam et al., 1988)These factors are the conditions and stresses affecting society,

public perceptions that reform is needed and agencies to

support it, the presence of precipitating events to trigger

change, and the techniques used by opposing parties to

support or hinder change.

Structural conduciveness

The first factor, structural conduciveness, describes the broad

social conditions necessary for collective behavior (McAdam

et al., 1988). Structural conduciveness refers to the degree to

which an environment encourages conflicts between groups.

The aging US population is an example. It is a broad social

condition increasing the need for drugs. As the population

ages, demand for pharmaceuticals to treat chronic diseases

increases. A related social condition leading to conflict is the

public’s demand for the newest, high priced drugs. Fueled by

profit expectations of shareholders and the increasing

complexity of drug development and research, prices for

some drugs, such as the cancer drug Erbitux, can cost

$10,000 per month or more (Nishad, 2004). Consequently,

drug spending has been increasing at double digit percentage

rates up to $179.2 billion in 2003 (Smith et al., 2005). The

global marketplace is another cause of conflict because it

permits consumers to compare the cost paid for drugs in the

USA with the relatively low prices paid by the rest of the

world. Discord is further fanned when rising drug

expenditures exacerbate governmental deficits, since state

and Federal governments are some of the largest purchasers of

prescription drugs. The Federal debt limit will soon exceed

eight trillion dollars, without considering the demands for

Social Security and Medicare reforms or spending for the

military (Wall Street Journal, 2004). Even the Medicare

Prescription Drug, Improvement Act of 2003 has exacerbated

Federal budgetary concerns about drug affordability with

program cost estimates rising from an original $400 billion to

$720 billion over ten years (Lueck, 2005). All of these

structural issues increase conflicts between providers, payers,

politicians, employers, consumers, and patients and enhance

the demand for change.

Structural strains

A related factor stimulating social movements is the existence

of structural strains which are defined by sociologists as

stresses existing within a social system that lead to discontent

(McAdam et al., 1988). These strains are caused by events or

situations within society that lead to the perception of a

problem.Two major structural strains causing discontent with drug

affordability are the increased requirements in patient cost-

sharing by health plans and the impending retirement of baby

boomers. Increased patient cost-sharing causes dissatisfaction

because it forces patients to share the pain of high drug costs.

In the past, employer-paid private drug insurance plans

covered most or all of employee drug costs as a way of

attracting and keeping employees in a competitive job market.

Now, rising drug costs have forced employers to pass some of

those costs on to employees through increased prescription

drug co-payments and coinsurance. Some employers are even

dropping drug insurance altogether. Consequently, more

Understanding the dynamics of the pharmaceutical market

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people are feeling the pinch of rising drug costs. This strain is

exacerbated by the fact that baby boomers are now facing

retirement. Baby boomers are a large and activist cohort of

current and potential prescription drug users who are

expected to demand drugs not just to treat illnesses but

improve lifestyle. There is also concern that many boomers

have not saved enough to adequately fund their retirement.

Increased cost sharing and the aging of baby boomers will

cause significant strains on the US health care system.

Growth of generalized beliefs

The conduciveness of structural conditions in society and its

resulting stresses can help shape public opinion that current

conditions are undesirable. When public opinion coalesces

into common generalized beliefs of social events and stresses,

it can lead to a call for change. Public opinion is influenced by

many sources – mass media, personal experience, and word-

of-mouth discussions between individuals. Movements that

control public generalized beliefs and public discourse can

dictate the direction and perceived viability of change.Lanzarfeld and Merton argue three conditions are

necessary to control social discussion: monopolization (i.e.

control of mass media), canalization (i.e. presence of general

attitudes supporting change), and supplementation (i.e.

word-of-mouth discussions that supplement messages in the

media and help spread general attitudes) (Lazarfeld and

Merton, 1949). When these three conditions favor one side

over another, public dialogue can degenerate into propaganda

promoting a favored viewpoint.

MonopolizationSocial movements that monopolize traditional media (e.g.

newspapers, television) and non-traditional media (e.g.

internet) can present their viewpoint in a way that

effectively obstructs any counter-arguments of opposing

viewpoints. Monopolization is very difficult to do in a free

society with freedom of speech and the press. Nevertheless, it

does sometimes happen. In 1993, when President Clinton

attempted to implement a major reform of the health care

system, media coverage turned so negative against the

pharmaceutical industry that major legislation to overhaul

the pharmaceutical market almost passed (Ostrowski, 1994).

If the proposed plan had been simpler and less confusing,

public discourse would have led to major changes in the

pharmaceutical market. Instead, squabbles among supporters

of change let PhRMA and other powerful interest groups

effectively challenge the legislation (Hoffman, 2003).

Today, industry opponents have had some success

monopolizing the media to portray it in a negative light

through the publication of studies, polls, anecdotal reports,

articles, and books. Several books critical of the

pharmaceutical industry have been published (Abramson,

2004; Angell, 2004; Avorn, 2004; Goozner, 2004; Jerome

Kassirer, 2004). Public media have also given extensive

coverage to politicians, consumer groups, academics, policy

analysts and others with grievances against the industry.

CanalizationPublic acceptance of propaganda by either side of the

affordable drugs debate is facilitated by the public’s prevailing

attitudes (i.e. canalization) (Lazarfeld and Merton, 1949).

Polling data indicate little support for drug companies.

Opinion surveys rank public perceptions of drug companies

down with cigarette companies (Time, 2004) Polls

consistently and strongly indicate that the public believes

drug prices are too high with as many as 87 per cent thinking

drug prices to be “unreasonably high” or “somewhat high”

(Harris Interactive, 2004a). A total of 60 per cent of

Americans express support for drug price controls (Harris

Interactive, 2004a), 81 percent believe that drug prices are a

greater burden in the USA compared to Canada (Harris

Interactive, 2004b), and 84 per cent support drug

importation from Canada (Harris Interactive, 2004c). The

one positive finding for PhRMA is that most Americans feel

that drug costs are not a difficult problem at the moment with

75 percent indicating that they have little difficulty paying for

drugs (Harris Interactive, 2004d).

SupplementationSupplementation of media coverage and public opinion

through word-of-mouth (WOM) sets the final condition for

developing a generalized belief that change is needed

(Lazarfeld and Merton, 1949) WOM consists of non-

commercial discussions of products and ideas between

friends, peers, acquaintances, and family members. They

are considered more credible than commercial forms of

communication but more difficult to control due their

spontaneity and randomness. WOM discussions about drug

prices may occur between individuals, friends, and family

members who experience hardships in paying for drugs. Even

individuals with full prescription drug coverage may complain

about the high price of drugs if their uninsured parents are

forced to pay a large portion of their discretionary income for

prescription drugs. Despite the difficulty influencing WOM,

Table I Conditions influencing successful social movements

Condition Description Examples

Structural conduciveness Broad social conditions necessary for collective behavior and

conflicting interests

Increasing drug expenditures, Federal budget deficits

Structural strains Stresses existing within a social system that lead to open

discontent

Increased cost-sharing, retirement of baby boomers

Growth of generalized beliefs Growing and spreading perception that current conditions are

unacceptable

Polling data, content and direction of media coverage

Precipitating events Events that trigger the desire for action Thalidomide disaster, recession

Mobilization for action Marshaling of resources to change the status quo Proposals for legislation, protests

Utilization of social control by

opponents to movement

Use of social influence techniques to control individuals or

groups

Public relations, co-opting opponents


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social movements try to facilitate discussions through

grassroots organizing of protests and other forms of activism.

Precipitating events

Social movements can be paralyzed even when a dissatisfied

public demands change if there exist significant barriers toaction (Kotler, 1972). Movements often need some

precipitating factor or event that sparks action. Precipitatingevents may be spontaneous or provoked by agencies such as

the American Association of Retired Persons (AARP). Overthe years, most major drug legislation has occurred because

some precipitating event turned public sentiment against drug

companies. The Federal Food and Drugs Act of 1906, Food,Drug, and Cosmetic Act of 1938, Durham Humphrey

Amendment of 1951, and the Kefauver Harris Amendmentsof 1962 all occurred because events turned public opinion

against the prevailing practices of the pharmaceuticalindustry. Precipitating events can be a single, major episode

or a series of smaller incidents that incrementally ratchet upthe pressure for change.Single events such as the thalidomide tragedy have initiated

most major legislation governing the pharmaceutical industry.Thalidomide was a sedative and anti-nauseant drug used by

pregnant women in Europe in the early 1960s. At the time,the Food and Drug Administration (FDA) resisted putting

the drug on the US market. When reports started to appear inEurope of thousands of infants with grotesque birth defects

born to pregnant mothers who had been taking the drug,

support blossomed for the previously languishing Kefauver-Harris Amendments to the Federal Food, Drug, and

Cosmetic Act. This legislation required pharmaceuticalcompanies to prove that their drugs were effective prior to

marketing. Without the precipitating thalidomide tragedy, thelegislation likely would not have passed.In contrast, the Medicare Prescription Drug, Improvement

Act of 2003 resulted from a series of precipitating events.

Organizations such as the AARP provoked politicians to act

with a series of media events (e.g. busloads of seniors crossingthe border to buy Canadian drugs) and drug price studies

illustrating the high cost of prescription drugs for seniors.State and local governments demanded relief on drug costs

from the Federal government. The re-election strategyadopted by President George W. Bush and Republican

congressional victories also contributed to the passing of a

drug bill that was pushed through Congress by a small votingmargin.Current events have weakened the credibility and public

confidence in the industry and increased the pressure for

reform. Some pharmaceutical companies have run intotrouble with their marketing practices (Angell, 2004;

Lenzer, 2004). Warner Lambert plead guilty to illegal andfraudulent promotion of unapproved uses for the drug

Neurontin and paid fines of more than $430 million (FDA

Consumer, 2004). Links between the widely used andmarketed COX-2 arthritis drugs with heart attacks and

strokes have lead to calls for changes in FDA oversight.Concerns over cholesterol lowering agents, attention deficit

therapies, antidepressants, and other drugs have the furtherundermined confidence in the pharmaceutical industry.

Mobilization for action

Public opinion will only translate into social movement when

conditions mobilize action. Action requires “direction”

(knowledge of how and where a person might go to act)

and “mechanism” (the existence of an agency that enables the

person to act) (Weibe, 1951). Direction provides an outlet for

movement supporters to act on their beliefs. Mechanism

provides a way to gather like-minded individuals and

coordinate their actions. AARP is a mechanism used by

seniors to contribute money, participate in protests, write

letters to legislators, and organize voter drives. Without the

AARP, many seniors would need to find other ways to remain

engaged in the seniors’ movement.A major impediment to the affordable drugs movement is

that there are not many outlets for opponents to express their

dissatisfaction. Individuals who want to push for affordable

drugs have few organizations that promote affordable drugs.

Indeed, the lack of grass roots activities has been cited as a

reason for some of the past failures of health care social

movements (Hoffman, 2003).

Social control techniques

The progress of social movements depends, in large part, on

the reaction of those opposing them. Opponents who

effectively exert social control techniques can deflect

negative public opinion and undercut the arguments of

social movements. Social control techniques are defined as

social strategies used to influence individuals or groups

(McAdam et al., 1988). Social control borrows heavily from

social marketing. Several strategies used by the

pharmaceutical industry are described below.

Manage the public’s imageDrug companies are aware that they have image problems

(Ostrowski, 1993, 1994). They have responded with public

relations campaigns that attempt to present a consistent and

coherent message (Tsao, 2004). The message is that drug

companies need money to innovate, high profits to pay for the

risk of research, marketing to educate people about complex

therapies, me-too drugs to meet the individual needs of

patients, and less regulation to reduce the costs of making

drugs. In addition, industry emphasizes how they provide free

and low cost drugs to needy patients and save lives. A good

public image helps when implementing some of the other

social control techniques.

Influence the evaluation processSocial movements operate on the premise that objective

assessments of a situation lead to the conclusion that change

is needed. Opponents to movements attempt to influence this

evaluation process so their viewpoints are represented. In

health care, evaluations of drug affordability are conducted on

multiple levels and by many players. Public policy relating to

prescription drugs is made at the international (e.g. World

Health Organization, World Trade Organization), national

(e.g. FDA, FTC), state (e.g. board of pharmacy), and local

levels (e.g. public health department). The pharmaceutical

industry attempts to influence discussion at all levels in their

lobbying and advocacy. To illustrate, pharmaceutical

companies spent $93 million in 2000 lobbying Congress,

the White House, and other federal agencies. (USA Today,2004) State and local lobbying totals are substantial too but

harder to come by given the differences in state and local

reporting requirements. At the health system and hospital

levels, pharmaceutical companies heavily lobby medical

directors, pharmacy directors, formulary committee


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members, and individual physicians to present their

perspectives in decision-making forums.

Influence the agendaA related tactic is to influence the agenda of decision makers

in a way that benefits drug companies. Industry often argues

that opponents focus on the wrong issues. They counter that

affordability is not a question of high drug prices, drug

company profits, nor marketing clout. Instead, the real issues

are the needs to permit the marketplace to decide what drugs

will succeed or fail, reduce legislation that prevents

innovations from getting to patients, and reward the risks of

investors with profits. Indeed, marketers would likely argue

against the label “affordability movement” used in this paper

in favor of an industry friendlier tag such as the “drug

regulation burden movement”.

Build coalitions and alliancesOpponents of social movements frequently build coalitions

and alliances to give them allies to lobby for their cause and

influence public opinion (Joanna, 2002; Sibyl, 2000).

Pharmaceutical companies often develop coalitions with

consumer and disease advocacy groups to work together

toward common goals and associate themselves with good

causes (Herxheimer, 2003). Relationships with disease

advocacy and public health groups are especially important

given these groups’ own potent lobbying efforts – $12 million

for Federal politicians and officials in 2000 (Landers and

Sehgal, 2004). Industry often contributes to the lobbying

efforts of advocacy groups by funding those with similar goals.

Some advocacy groups are accused of being so closely

attached to industry that they are little more than front-

groups used to conduct stealth-lobbying campaigns

(Moynihan, 2003). Although they profess their

independence, advocacy groups openly work with industry

to influence legislation (Joanna, 2002).

Co-opting opponentsCo-opting occurs when one converts an opponent into a

supporter. Co-opting can be accomplished in a variety of

ways. One is to place a supporter in an opposition group. This

might be done by encouraging a supporter to serve on a

regulatory agency that is blocking a pharmaceutical industry

initiative. Another strategy might be to co-opt potential

opponents with consulting fees or other financial incentives.

In fact, financial relationships between clinical researchers

and drug companies are a serious concern among many

(Bodenheimer, 2000a). Co-opting can also occur when

opponents find areas of common interest and work together.

This occurred when pharmaceutical companies found that

AIDS activist groups, vocal critics of drug pricing policies,

could be used to pressure politicians to support funding for

expensive AIDS treatments.

Cultivate opinion leadersCultivating key opinion leaders (KOLs) is a major strategy

used by pharmaceutical companies to influence public and

private discussions about drugs (Angell, 2004; Avorn, 2004;

Jackson, 2001). Industry develops relationships with KOLs in

medicine, academia, public policy, and government to spread

key talking points about the value presented by drugs. KOLs

are physicians and other individuals whose opinions have

greater influence due to their position, expertise, and/or

connections (Holdford, 2004).

Drug companies spend a large portion of their marketing

budget on KOLs. For the average physician, drug companies

spend an estimated $8,000 to $13,000 every year inpromotional expenses (Wazana, 2000). For opinion leaders,

the amount is significantly more. Opinion leaders are wooed

with dinners, trips, and consultant contracts. Influentialphysicians in some key practice settings annually receive

hundreds of thousand of dollars worth of drug samples (Wolf

et al., 1998). Physicians who are willing to write editorialssupporting industry interests receive monetary compensation

(Brennan, 1994). Drug company support of KOLs influences

information provided in continuing medical education(Relman, 2001) and medical publications (Lexchin et al.,2003).The effectiveness of the pharmaceutical industry in using

social control techniques is illustrated by the fact that few

changes opposed by industry have occurred over the yearsdespite widespread negative public opinions about drug

companies (Time, 2004). In effect, the pharmaceutical

industry has been able to use social control to “divide anddisarm opposition in the community” (Dukes, 2002).

Proposed changes

The fundamental structural issues affecting drug expenditures(e.g. aging population, government budget deficits) will

continue to pressure the status quo (Moran, 2000). There isalso a belief that the current structure of the health care

system is a major part of the problem (Newhouse, 2004;

Nichols et al., 2004). Therefore, some change is likely tooccur although the exact form is still undetermined. Proposed

changes associated with improving drug affordability fall into

three types: regulating industry, increasing competition, ormaking better purchases with our drug dollars.

Regulating industry

Most regulatory solutions for making drugs more affordable

focus on having the Government control the price of drugs

(Maynard and Bloor, 2003) The Government can accomplishthis directly by restricting the prices charged by companies or

indirectly by restricting the amount of drug revenue that can

go to profits. Direct price controls in European countrieswork by having some governmental agency establish a price

ceiling for which a drug can be sold or reimbursed through aninsurance program. Prices are typically set based on charges

for comparable drugs in other markets within or outside of the

country. Prices are controlled through the establishment of anational drug formulary that permits the government to

negotiate drug prices and influence prescribing (Huskamp

et al., 2003) An indirect mechanism of price control used inthe UK attempts to regulate pharmaceutical company profits.

Profit controls are problematic because they do not halt drug

price increases and encourage inefficiency in drugdevelopment (Maynard and Bloor, 2003).There is significant resistance to price controls by the

pharmaceutical industry and public policy experts (Calfee,

2001). One reason is that experience in other countries

indicates price controls alone do not stop drug price increases(Menon, 2001). All industrial countries face rising drug

expenditures despite a broad range of price controls. Another

reason for opposition is that it is not clear what unintendedconsequences price controls may have on innovation and long

term health care costs (Maynard and Bloor, 2003). If price


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controls choke off the pharmaceutical innovations coming

onto the market, any savings might come at a high cost. Price

controls also invite meddling by politicians who may try topick up political points by interfering with their

implementation and administration (Frank, 2003;Newhouse, 2004). Finally, price controls fly in the face of

free market advocates who argue for private markets toregulate health care costs and encourage pharmaceutical

innovation (Bush, 2004).

Increasing competition

Despite the resistance to governmental price controls, there

are growing feelings that reliance on the market alone is notthe solution (Nichols et al., 2004). Under the current patent

system for drugs, abusive pricing practices by industry can

occur unless patented medications are made to competeagainst generic and therapeutic alternatives (Newhouse,

2004). Consequently, efforts have been made to increasemarket competition by enhancing drug choices. One

proposed strategy is to weaken patent laws to allow cheapergeneric drugs to more quickly enter the market. The problem

with this strategy is that it reduces incentives to developtherapeutic innovations (Eisenberg, 2001). An alternative

solution is to permit substitution of lower priced,therapeutically similar drugs for more expensive ones.

Patents would still be in place but low priced substitutescould be switched for higher priced drugs, regardless of

whether they differ chemically, if they achieve the same

medical outcomes. The argued advantage of this therapeuticsubstitution is that it permits competition between

therapeutic equals (i.e. me-too drugs) but still gives acompetitive advantage in the market for drugs that achieve

unique therapeutic benefits.Importation of low priced drugs from Canada and other

countries has also been suggested as a way of increasing pricecompetition. In fact, the new Medicare Drug Legislation

permits importation, if the Food and Drug Administration(FDA) demonstrates that it can be done safely (something the

FDA has been unwilling to do). Nevertheless, some states

encourage their citizens to shop for Canadian drugs.Minnesota, Illinois, New Hampshire, Wisconsin and other

states direct citizens to purchase at state-approved CanadaInternet pharmacy web sites. It is believed that some form of

legalized drug importation is inevitable, if no majorunforeseen roadblock occurs (i.e. deaths due to counterfeit

drugs) (Jill, 2004). The benefits of doing so, however, areexpected to be modest (1 percent decrease in total drug

expenditures) (Congressional Budget Office, 2004).

Make better purchases

Demands to regulate drug companies are based on the

assumption that industry is the problem for high drug

expenditures, while calls to increase competition assume thatthe market needs to be fixed. However, the problems of drug

affordability could be resolved simply if better purchases aremade at the payer, physician, or patient levels. If more

discipline and rationality were encouraged in the process ofdrug selection and reimbursement, greater value could be

achieved with health care dollars spent. Current mechanismsfor purchasing drugs encourage industry to increase

marketing, charge higher prices for new drugs, and promoteutilization (Newhouse, 2004). None of these things are bad if

they increase the development and use of necessary drugs.

The problem is that the health care market chooses and pays

for many drugs that are unnecessary, overpriced, and

inappropriate. Drugs could be made more affordable if

payers, prescribers, and patients made better choices.

Improve prescribingPhysicians are responsible for most health care utilization

choices, so the health care system should facilitate cost-

effective prescribing. Managed health care had argued that

drug costs can be controlled through the use of drug

formulary systems that restrict physician prescribing and

insurance coverage to a limited list of essential, cost-effective

drugs (i.e. formulary). Formularies are enforced with the use

of management tools such as drug utilization review,

restricted provider networks, therapeutic and generic

substitution, provider benchmarking, and patient cost-

sharing. To get on the formulary, drug companies are forced

to offer their drugs at lower prices or be excluded from

insurance coverage.However, evidence of the effectiveness of managed care is

still limited (Bodenheimer, 2000b; Carroll, 2002; Schulman

et al., 1996). Despite the spread of managed care coverage,

plans still see double digit increases in drug expenditures. One

reason is that many of the tools in the formulary toolbox are

rarely utilized (Carroll, 2002). Reasons include public

opposition to restrictions on drug therapies, lack of

integration between health care providers, and patient

demand for the newest pharmaceuticals. In addition,

managed care can be profitable under the current ineffective

cost control system because most excess drug costs can be

passed on to payers (Moran, 2000).Even the Federal Government, the largest single purchaser

of prescription drugs, is unwilling to utilize some tools to

control drug costs. Critics of the Medicare Prescription Drug

Program complain that the Federal government is expressly

prohibited from negotiating lower drug prices with

manufacturers. Instead, negotiations on drug prices will be

made by the individual drug plan providers (e.g. pharmacy

benefit managers) to avoid governmental price controls.

Rightly or wrongly, this restriction takes away one of Federal

Government’s most potent cost management tools. State and

Federal governmental politics have also hamstrung the ability

of pharmacy benefit managers and other non-governmental

purchasers to control drug costs with numerous rules,

regulations, and laws that reduce their ability to restrict

payment on drugs (e.g. birth control), restrict provider

networks (e.g. any willing provider laws), and integrate

services (e.g. antitrust laws).

Involve patients in their drug choicesThe difficulty in implementing cost control strategies has lead

managed care providers to share the risk of pharmaceutical

costs with patients through consumer-driven health care.

Consumer-driven healthcare is a broad term for strategies

designed to empower patients to choose their own health care

and share the risks of their costs. Elements of consumer-

driven plans include choice of different healthcare options,

medical savings and flexible spending accounts, and cost-

sharing through co-payments, coinsurance, deductibles, and

reimbursement caps. The goal is to make patients take greater

responsibility for their drug and health care decisions.

Although cynics might describe consumer-driven healthcare

as just another way of saying “consumers pay more for


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healthcare” (Kleinke, 2004), it is a cost control strategy that isbecoming increasingly important.

Focus on value in making drug choicesThe current environment of medical research and evidence-based medicine results in the conclusion that “more medicineis better” (Kleinke, 2004). This means that even if the mosteffective drug is chosen for every patient who needs it,pharmaceuticals expenditures will continue to spin out ofcontrol unless cost is also factored into the choice. Someargue that payments for drugs should be structured aroundconsideration of value rather than price (Kleinke, 2004;Chernew et al., 2004). That means that payers need to be ableto refuse to cover drugs that are not cost-effective (where thecost exceeds the benefit received) (Newhouse, 2004). Ifpatients want to pay for any extra marginal benefit associatedwith an uncovered drug, they should be expected to pay for allor part of the cost of drugs depending on their impact onhealth outcomes (Fendrick et al., 2001; Morgan et al., 2004).Methodological and practical issues still exist with the

assessment of drug cost effectiveness. For instance, few head-to-head comparisons of competing drugs occur in clinicaltrials making direct cost effectiveness comparisons difficult.Another issue is that cost-effectiveness analysis requirestransparency in data, analytical methods, and conclusionsalong with transparent rules before it can be widely applied inthe design of pharmacy benefits (Kleinke, 2004). Theproblem with transparency is that it opens up methods toimmediate criticism by opponents that can be exploited bysavvy pharmaceutical marketers. KOLs can be solicited toattack the methods or results in order to water-down thepharmacoeconomic decision-making process.


Issues relating to the affordability of drugs are complex andmultifaceted. The descriptive framework presented in thispaper can be used as a tool to place developments in thepharmaceutical marketplace into a meaningful context.Conditions listed in Table I describe variables that can bestudied to understand the swirl of conflicting informationabout pharmaceuticals. The two conditions of structuralconduciveness and structural are useful but stablecharacteristics of the broad market environment. Therefore,their value lies in providing groundwork for understanding theother four, more dynamic conditions of the framework. Theremaining four conditions from Table I can be studied tomonitor major trends and events that impact thepharmaceutical market.Social research methodologies can permit researchers to

understand the growth, direction, and character ofgeneralized beliefs by the public about drug affordability.Public opinions about drug affordability are being monitoredthrough polls conducted by media such as the Wall StreetJournal, but most are static cross-sectional studies that do notprovide much depth about public feelings. More extensive,longitudinal studies of public opinions would provide greaterunderstanding of changes in attitudes over time. Opinionleaders can also be interviewed about their feelings on majorissues such as that demonstrated in the community trackingstudy. This study conducts periodic interviews of households,physicians, and health system leaders in 60 communities andrecently found greater support for government intervention inhealth care (Nichols et al., 2004). Content analyses of media

reporting and publications can also be conducted to examine

issues and trends identified as important by the media.Case studies can explore the direct and indirect significance

of major events in the pharmaceutical market. Case studiescan describe and explain unique or interesting events such as

the implementation of the Medicare Prescription Drug,

Improvement Act of 2003. For instance, it is not clear at the

moment whether the Act will increase or decrease pressure forchange. Although it was meant to solve the problem of

affordable drugs for seniors, many details and consequences

of the Act are unclear. If seniors judge it favorably, and it

slows the rise of inappropriate drug expenditures, pressure on

the pharmaceutical market will be relieved. If things go badly,however, renewed calls for price controls and other dramatic

solutions will intensify.Content analysis of the media can be used to explore

resources mobilized by governmental, political, consumer,business, and professional agencies. It has been used to

understand how agencies in the consumer movement

mobilized resources to promote their agenda (Smith and

Bloom, 1989). In a similar manner, content analysis can beused to examine issues advanced by the movement, the types

of groups and individuals promoting change, and the form

and direction of the change advanced over time.Finally, researchers can study the changing social control

strategies used by industry to resist change. The evolving

effectiveness of techniques can be instructive. For example,

there is growing resistance to the acceptance of drug company

money by individuals and groups. One group called “No Free

Lunch” advocates the elimination of pharmaceuticalpromotion from medical education, practice, and research

(No Free Lunch, 2005) If physicians, educators, and

researchers widely adopt the solutions proposed by No Free

Lunch, the influence of drug companies in resisting changewill be diminished.

Conclusion

The only certainty in the pharmaceutical market is that

change will occur. It will either happen when public demands

for change overpower the ability of the pharmaceutical

industry to resist it or when industry decides that change is inits best interests. In other words, industry can be proactive in

their support of change, or they can wait and let others

decide. The economics of the pharmaceutical market are

unlikely to spontaneously improve it, so systematic research

should be conducted to understand its dynamics. The paperpresents a framework for doing so.

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Understanding the dynamics of thepharmaceutical market using a social

marketing frameworkDavid Holdford

Virginia Commonwealth University School of Pharmacy, Richmond, Virginia, USA

AbstractPurpose – The objectives of this paper are to describe the “affordable drugs movement” and present a social marketing framework to place majordevelopments within a meaningful theoretical context.Design/methodology/approach – Specific examples are used to illustrate the framework and its utility in understanding the complexities of thepharmaceutical market. Methods to research the dynamics of the market are also presented.Findings – Provides referenced descriptions and examples of forces causing change within the pharmaceutical market. Classifies forces into sixconditions influencing successful social movements: structural conduciveness, structural strains, growth of generalized beliefs, precipitating events,mobilization for action, and utilization of social control by opponents. Suggests social research methodologies to study the conditions in greater depth.Research limitations/implications – This is a descriptive framework that has not been validated for its use in the pharmaceutical market.Practical implications – Offers a useful framework for academics, managers, students, and individuals to classify and study developments in thepharmaceutical industry.Originality/value – This paper provides an overview of major forces within the pharmaceutical market and offers direction for those who wish toexplore it in greater detail.

Keywords Pharmaceuticals industry, Social marketing, Economics




The pharmaceutical marketplace is facing major pressures

from a broad range of dynamic and powerful forces. Major

healthcare legislation such as the Medicare Prescription Drug,

Improvement Act of 2003, widespread criticisms of

pharmaceutical industry marketing, increasing consumer

involvement in health care, calls to improve FDA oversight

of the pharmaceutical industry, and demands for more

affordable drugs are forcing society to re-examine the way that

pharmaceuticals are developed, distributed, and financed

within the USA. To understand the impact and potential

consequences of these forces, it is helpful to place them within

some meaningful theoretical context.“Social marketing” has been presented as a framework for

analyzing social change (Kotler, 1971). Social marketing is a

process for influencing social ideas and behaviors based on the

premise that social causes can be marketed like any product.

Founded on the fields of sociology, psychology, and

marketing, it best known for its utility in promoting socially

desirable behaviors such as recycling, seat belt use, family

planning, and AIDs prevention. It can also be used to studyand influence major social movements such as consumerism,conservatism, and many other ism’s (Fox and Kotler, 1980).Social movements are defined as relatively persistent,

organized efforts by large numbers of people to effect socialchange. The study of social movements attempts tounderstand their success or failure with the intention ofpredicting their consequences and influencing their course.Social movements studied in health care include themovements toward self-care, (Schiller and Levin, 1983)health care reform (Hoffman, 2003), and insurance reform(Atim, 1999). It has been suggested that social movementswould benefit from marketing thinking and planning (Kotler,1971). It has also been proposed that a social movementframework can help in understanding the dynamics of thepharmaceutical market (Wells and Banaszak-Holl, 2000).There is currently an organized movement by individuals

and groups to change how the pharmaceutical marketplaceprovides safe, effective, and affordable medicine. Thismovement is not new. It has been around since thebeginning of the modern pharmaceutical industry,periodically intensifying and diminishing throughout theyears. Revitalized in recent years, movement supportersassert that the current pharmaceutical system is broken andmajor changes are necessary (Angell, 2004; Avorn, 2004;Goozner, 2004) They allege that the pharmaceutical industrymakes excessive profits by taking advantage of perverseincentives in a market where consumers rely on third parties(i.e. physicians) to choose drugs for them and prescriptiondrug insurance coverage (often provided by employers or thegovernment) to shield consumers from the full cost of payingfor those drugs. The distorted economics of the markettherefore permits the industry to succeed by marketing new,






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[DOI 10.1108/07363760510631129]

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expensive drugs that are often no better than cheaper

alternatives currently on the market. Those high priced drugs

are supported by tax incentives and Federal investment in

research and development. Furthermore, promotional efforts

by drug companies encourage inappropriate prescribing by

physicians, incorrect drug use and unreasonable expectations

by patients, and wasteful expenditures on drugs and other

health care. Drug price comparisons between what Americans

and citizens of other developed countries are presented as

further proof of problems with the market.In defending themselves, the pharmaceutical industry

counters that money spent on drugs brings tremendous

value to Americans. They contend that drug costs are a small,

affordable portion of the health care dollar. Drugs are cost

effective, because they reduce and prevent hospitalizations,

doctor’s office visits, nursing home stays, and emergency

room visits. Furthermore, they assert that billions of dollars in

revenues received by the industry are reinvested into research

and development of new therapies that will save millions of

lives and prevent untold suffering. They insist that if change is

needed, it should strengthen the patent system on new

medications, ensure the freedom to inform and educate the

public and health care professionals, and reduce government

regulation. Any remedies proposed by opponents that restrict

financial incentives to innovate, reduce educational and

promotional efforts, or add to regulatory costs will only result

in negative, unintended consequences.Opposition to the pharmaceutical industry occurs for

several philosophical and practical reasons. One is the belief

that it is unethical for any industry to profit from the suffering

of others and that the market should not be used to distribute

health care. Another is concern about the overuse of drugs to

solve the ills of individuals and society. There is also the real

concern that drug expenditures are becoming unaffordable.This paper will focus on the struggle to control the costs of

prescription drugs. Specifically, it will deal with the effort of

individuals and groups to improve the way we pay for and

finance drug development and manufacturing, distribution,

prescribing, and medication use. Labeled the “affordable

drugs movement,” it will be studied using a social marketing

framework. Opposition to the movement will be considered to

come primarily from members of Pharmaceutical Research

and Manufacturers of America (PhRMA), a trade association

that represents all major pharmaceutical manufacturers. This

paper does not contend that PhRMA is against affordable

drugs – just that PhRMA is opposed to many of the

movement’s proposed strategies for achieving affordability. In

fact, PhRMA resists most efforts to challenge the status quo

when it comes to promoting affordable drug initiatives

(Murray, 2004).This paper will be organized in the following way. First, it

will describe how social movements develop and sustain

themselves using illustrations from the pharmaceutical

market. Then it will list social marketing strategies

employed by the industry to interrupt or divert change

efforts of the affordable drugs movement. Finally, a discussion

will present ways that the affordable drugs movement

framework can help understand and research the changing

pharmaceutical market.

Factors associated with social movement success

The sociology literature identifies six factors associated with

successful social movements (Table I) (McAdam et al., 1988)These factors are the conditions and stresses affecting society,

public perceptions that reform is needed and agencies to

support it, the presence of precipitating events to trigger

change, and the techniques used by opposing parties to

support or hinder change.

Structural conduciveness

The first factor, structural conduciveness, describes the broad

social conditions necessary for collective behavior (McAdam

et al., 1988). Structural conduciveness refers to the degree to

which an environment encourages conflicts between groups.

The aging US population is an example. It is a broad social

condition increasing the need for drugs. As the population

ages, demand for pharmaceuticals to treat chronic diseases

increases. A related social condition leading to conflict is the

public’s demand for the newest, high priced drugs. Fueled by

profit expectations of shareholders and the increasing

complexity of drug development and research, prices for

some drugs, such as the cancer drug Erbitux, can cost

$10,000 per month or more (Nishad, 2004). Consequently,

drug spending has been increasing at double digit percentage

rates up to $179.2 billion in 2003 (Smith et al., 2005). The

global marketplace is another cause of conflict because it

permits consumers to compare the cost paid for drugs in the

USA with the relatively low prices paid by the rest of the

world. Discord is further fanned when rising drug

expenditures exacerbate governmental deficits, since state

and Federal governments are some of the largest purchasers of

prescription drugs. The Federal debt limit will soon exceed

eight trillion dollars, without considering the demands for

Social Security and Medicare reforms or spending for the

military (Wall Street Journal, 2004). Even the Medicare

Prescription Drug, Improvement Act of 2003 has exacerbated

Federal budgetary concerns about drug affordability with

program cost estimates rising from an original $400 billion to

$720 billion over ten years (Lueck, 2005). All of these

structural issues increase conflicts between providers, payers,

politicians, employers, consumers, and patients and enhance

the demand for change.

Structural strains

A related factor stimulating social movements is the existence

of structural strains which are defined by sociologists as

stresses existing within a social system that lead to discontent

(McAdam et al., 1988). These strains are caused by events or

situations within society that lead to the perception of a

problem.Two major structural strains causing discontent with drug

affordability are the increased requirements in patient cost-

sharing by health plans and the impending retirement of baby

boomers. Increased patient cost-sharing causes dissatisfaction

because it forces patients to share the pain of high drug costs.

In the past, employer-paid private drug insurance plans

covered most or all of employee drug costs as a way of

attracting and keeping employees in a competitive job market.

Now, rising drug costs have forced employers to pass some of

those costs on to employees through increased prescription

drug co-payments and coinsurance. Some employers are even

dropping drug insurance altogether. Consequently, more


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people are feeling the pinch of rising drug costs. This strain is

exacerbated by the fact that baby boomers are now facing

retirement. Baby boomers are a large and activist cohort of

current and potential prescription drug users who are

expected to demand drugs not just to treat illnesses but

improve lifestyle. There is also concern that many boomers

have not saved enough to adequately fund their retirement.

Increased cost sharing and the aging of baby boomers will

cause significant strains on the US health care system.

Growth of generalized beliefs

The conduciveness of structural conditions in society and its

resulting stresses can help shape public opinion that current

conditions are undesirable. When public opinion coalesces

into common generalized beliefs of social events and stresses,

it can lead to a call for change. Public opinion is influenced by

many sources – mass media, personal experience, and word-

of-mouth discussions between individuals. Movements that

control public generalized beliefs and public discourse can

dictate the direction and perceived viability of change.Lanzarfeld and Merton argue three conditions are

necessary to control social discussion: monopolization (i.e.

control of mass media), canalization (i.e. presence of general

attitudes supporting change), and supplementation (i.e.

word-of-mouth discussions that supplement messages in the

media and help spread general attitudes) (Lazarfeld and

Merton, 1949). When these three conditions favor one side

over another, public dialogue can degenerate into propaganda

promoting a favored viewpoint.

MonopolizationSocial movements that monopolize traditional media (e.g.

newspapers, television) and non-traditional media (e.g.

internet) can present their viewpoint in a way that

effectively obstructs any counter-arguments of opposing

viewpoints. Monopolization is very difficult to do in a free

society with freedom of speech and the press. Nevertheless, it

does sometimes happen. In 1993, when President Clinton

attempted to implement a major reform of the health care

system, media coverage turned so negative against the

pharmaceutical industry that major legislation to overhaul

the pharmaceutical market almost passed (Ostrowski, 1994).

If the proposed plan had been simpler and less confusing,

public discourse would have led to major changes in the

pharmaceutical market. Instead, squabbles among supporters

of change let PhRMA and other powerful interest groups

effectively challenge the legislation (Hoffman, 2003).

Today, industry opponents have had some success

monopolizing the media to portray it in a negative light

through the publication of studies, polls, anecdotal reports,

articles, and books. Several books critical of the

pharmaceutical industry have been published (Abramson,

2004; Angell, 2004; Avorn, 2004; Goozner, 2004; Jerome

Kassirer, 2004). Public media have also given extensive

coverage to politicians, consumer groups, academics, policy

analysts and others with grievances against the industry.

CanalizationPublic acceptance of propaganda by either side of the

affordable drugs debate is facilitated by the public’s prevailing

attitudes (i.e. canalization) (Lazarfeld and Merton, 1949).

Polling data indicate little support for drug companies.

Opinion surveys rank public perceptions of drug companies

down with cigarette companies (Time, 2004) Polls

consistently and strongly indicate that the public believes

drug prices are too high with as many as 87 per cent thinking

drug prices to be “unreasonably high” or “somewhat high”

(Harris Interactive, 2004a). A total of 60 per cent of

Americans express support for drug price controls (Harris

Interactive, 2004a), 81 percent believe that drug prices are a

greater burden in the USA compared to Canada (Harris

Interactive, 2004b), and 84 per cent support drug

importation from Canada (Harris Interactive, 2004c). The

one positive finding for PhRMA is that most Americans feel

that drug costs are not a difficult problem at the moment with

75 percent indicating that they have little difficulty paying for

drugs (Harris Interactive, 2004d).

SupplementationSupplementation of media coverage and public opinion

through word-of-mouth (WOM) sets the final condition for

developing a generalized belief that change is needed

(Lazarfeld and Merton, 1949) WOM consists of non-

commercial discussions of products and ideas between

friends, peers, acquaintances, and family members. They

are considered more credible than commercial forms of

communication but more difficult to control due their

spontaneity and randomness. WOM discussions about drug

prices may occur between individuals, friends, and family

members who experience hardships in paying for drugs. Even

individuals with full prescription drug coverage may complain

about the high price of drugs if their uninsured parents are

forced to pay a large portion of their discretionary income for

prescription drugs. Despite the difficulty influencing WOM,

Table I Conditions influencing successful social movements

Condition Description Examples

Structural conduciveness Broad social conditions necessary for collective behavior and

conflicting interests

Increasing drug expenditures, Federal budget deficits

Structural strains Stresses existing within a social system that lead to open

discontent

Increased cost-sharing, retirement of baby boomers

Growth of generalized beliefs Growing and spreading perception that current conditions are

unacceptable

Polling data, content and direction of media coverage

Precipitating events Events that trigger the desire for action Thalidomide disaster, recession

Mobilization for action Marshaling of resources to change the status quo Proposals for legislation, protests

Utilization of social control by

opponents to movement

Use of social influence techniques to control individuals or

groups

Public relations, co-opting opponents


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social movements try to facilitate discussions through

grassroots organizing of protests and other forms of activism.

Precipitating events

Social movements can be paralyzed even when a dissatisfied

public demands change if there exist significant barriers toaction (Kotler, 1972). Movements often need some

precipitating factor or event that sparks action. Precipitatingevents may be spontaneous or provoked by agencies such as

the American Association of Retired Persons (AARP). Overthe years, most major drug legislation has occurred because

some precipitating event turned public sentiment against drug

companies. The Federal Food and Drugs Act of 1906, Food,Drug, and Cosmetic Act of 1938, Durham Humphrey

Amendment of 1951, and the Kefauver Harris Amendmentsof 1962 all occurred because events turned public opinion

against the prevailing practices of the pharmaceuticalindustry. Precipitating events can be a single, major episode

or a series of smaller incidents that incrementally ratchet upthe pressure for change.Single events such as the thalidomide tragedy have initiated

most major legislation governing the pharmaceutical industry.Thalidomide was a sedative and anti-nauseant drug used by

pregnant women in Europe in the early 1960s. At the time,the Food and Drug Administration (FDA) resisted putting

the drug on the US market. When reports started to appear inEurope of thousands of infants with grotesque birth defects

born to pregnant mothers who had been taking the drug,

support blossomed for the previously languishing Kefauver-Harris Amendments to the Federal Food, Drug, and

Cosmetic Act. This legislation required pharmaceuticalcompanies to prove that their drugs were effective prior to

marketing. Without the precipitating thalidomide tragedy, thelegislation likely would not have passed.In contrast, the Medicare Prescription Drug, Improvement

Act of 2003 resulted from a series of precipitating events.

Organizations such as the AARP provoked politicians to act

with a series of media events (e.g. busloads of seniors crossingthe border to buy Canadian drugs) and drug price studies

illustrating the high cost of prescription drugs for seniors.State and local governments demanded relief on drug costs

from the Federal government. The re-election strategyadopted by President George W. Bush and Republican

congressional victories also contributed to the passing of a

drug bill that was pushed through Congress by a small votingmargin.Current events have weakened the credibility and public

confidence in the industry and increased the pressure for

reform. Some pharmaceutical companies have run intotrouble with their marketing practices (Angell, 2004;

Lenzer, 2004). Warner Lambert plead guilty to illegal andfraudulent promotion of unapproved uses for the drug

Neurontin and paid fines of more than $430 million (FDA

Consumer, 2004). Links between the widely used andmarketed COX-2 arthritis drugs with heart attacks and

strokes have lead to calls for changes in FDA oversight.Concerns over cholesterol lowering agents, attention deficit

therapies, antidepressants, and other drugs have the furtherundermined confidence in the pharmaceutical industry.

Mobilization for action

Public opinion will only translate into social movement when

conditions mobilize action. Action requires “direction”

(knowledge of how and where a person might go to act)

and “mechanism” (the existence of an agency that enables the

person to act) (Weibe, 1951). Direction provides an outlet for

movement supporters to act on their beliefs. Mechanism

provides a way to gather like-minded individuals and

coordinate their actions. AARP is a mechanism used by

seniors to contribute money, participate in protests, write

letters to legislators, and organize voter drives. Without the

AARP, many seniors would need to find other ways to remain

engaged in the seniors’ movement.A major impediment to the affordable drugs movement is

that there are not many outlets for opponents to express their

dissatisfaction. Individuals who want to push for affordable

drugs have few organizations that promote affordable drugs.

Indeed, the lack of grass roots activities has been cited as a

reason for some of the past failures of health care social

movements (Hoffman, 2003).

Social control techniques

The progress of social movements depends, in large part, on

the reaction of those opposing them. Opponents who

effectively exert social control techniques can deflect

negative public opinion and undercut the arguments of

social movements. Social control techniques are defined as

social strategies used to influence individuals or groups

(McAdam et al., 1988). Social control borrows heavily from

social marketing. Several strategies used by the

pharmaceutical industry are described below.

Manage the public’s imageDrug companies are aware that they have image problems

(Ostrowski, 1993, 1994). They have responded with public

relations campaigns that attempt to present a consistent and

coherent message (Tsao, 2004). The message is that drug

companies need money to innovate, high profits to pay for the

risk of research, marketing to educate people about complex

therapies, me-too drugs to meet the individual needs of

patients, and less regulation to reduce the costs of making

drugs. In addition, industry emphasizes how they provide free

and low cost drugs to needy patients and save lives. A good

public image helps when implementing some of the other

social control techniques.

Influence the evaluation processSocial movements operate on the premise that objective

assessments of a situation lead to the conclusion that change

is needed. Opponents to movements attempt to influence this

evaluation process so their viewpoints are represented. In

health care, evaluations of drug affordability are conducted on

multiple levels and by many players. Public policy relating to

prescription drugs is made at the international (e.g. World

Health Organization, World Trade Organization), national

(e.g. FDA, FTC), state (e.g. board of pharmacy), and local

levels (e.g. public health department). The pharmaceutical

industry attempts to influence discussion at all levels in their

lobbying and advocacy. To illustrate, pharmaceutical

companies spent $93 million in 2000 lobbying Congress,

the White House, and other federal agencies. (USA Today,2004) State and local lobbying totals are substantial too but

harder to come by given the differences in state and local

reporting requirements. At the health system and hospital

levels, pharmaceutical companies heavily lobby medical

directors, pharmacy directors, formulary committee


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members, and individual physicians to present their

perspectives in decision-making forums.

Influence the agendaA related tactic is to influence the agenda of decision makers

in a way that benefits drug companies. Industry often argues

that opponents focus on the wrong issues. They counter that

affordability is not a question of high drug prices, drug

company profits, nor marketing clout. Instead, the real issues

are the needs to permit the marketplace to decide what drugs

will succeed or fail, reduce legislation that prevents

innovations from getting to patients, and reward the risks of

investors with profits. Indeed, marketers would likely argue

against the label “affordability movement” used in this paper

in favor of an industry friendlier tag such as the “drug

regulation burden movement”.

Build coalitions and alliancesOpponents of social movements frequently build coalitions

and alliances to give them allies to lobby for their cause and

influence public opinion (Joanna, 2002; Sibyl, 2000).

Pharmaceutical companies often develop coalitions with

consumer and disease advocacy groups to work together

toward common goals and associate themselves with good

causes (Herxheimer, 2003). Relationships with disease

advocacy and public health groups are especially important

given these groups’ own potent lobbying efforts – $12 million

for Federal politicians and officials in 2000 (Landers and

Sehgal, 2004). Industry often contributes to the lobbying

efforts of advocacy groups by funding those with similar goals.

Some advocacy groups are accused of being so closely

attached to industry that they are little more than front-

groups used to conduct stealth-lobbying campaigns

(Moynihan, 2003). Although they profess their

independence, advocacy groups openly work with industry

to influence legislation (Joanna, 2002).

Co-opting opponentsCo-opting occurs when one converts an opponent into a

supporter. Co-opting can be accomplished in a variety of

ways. One is to place a supporter in an opposition group. This

might be done by encouraging a supporter to serve on a

regulatory agency that is blocking a pharmaceutical industry

initiative. Another strategy might be to co-opt potential

opponents with consulting fees or other financial incentives.

In fact, financial relationships between clinical researchers

and drug companies are a serious concern among many

(Bodenheimer, 2000a). Co-opting can also occur when

opponents find areas of common interest and work together.

This occurred when pharmaceutical companies found that

AIDS activist groups, vocal critics of drug pricing policies,

could be used to pressure politicians to support funding for

expensive AIDS treatments.

Cultivate opinion leadersCultivating key opinion leaders (KOLs) is a major strategy

used by pharmaceutical companies to influence public and

private discussions about drugs (Angell, 2004; Avorn, 2004;

Jackson, 2001). Industry develops relationships with KOLs in

medicine, academia, public policy, and government to spread

key talking points about the value presented by drugs. KOLs

are physicians and other individuals whose opinions have

greater influence due to their position, expertise, and/or

connections (Holdford, 2004).

Drug companies spend a large portion of their marketing

budget on KOLs. For the average physician, drug companies

spend an estimated $8,000 to $13,000 every year inpromotional expenses (Wazana, 2000). For opinion leaders,

the amount is significantly more. Opinion leaders are wooed

with dinners, trips, and consultant contracts. Influentialphysicians in some key practice settings annually receive

hundreds of thousand of dollars worth of drug samples (Wolf

et al., 1998). Physicians who are willing to write editorialssupporting industry interests receive monetary compensation

(Brennan, 1994). Drug company support of KOLs influences

information provided in continuing medical education(Relman, 2001) and medical publications (Lexchin et al.,2003).The effectiveness of the pharmaceutical industry in using

social control techniques is illustrated by the fact that few

changes opposed by industry have occurred over the yearsdespite widespread negative public opinions about drug

companies (Time, 2004). In effect, the pharmaceutical

industry has been able to use social control to “divide anddisarm opposition in the community” (Dukes, 2002).

Proposed changes

The fundamental structural issues affecting drug expenditures(e.g. aging population, government budget deficits) will

continue to pressure the status quo (Moran, 2000). There isalso a belief that the current structure of the health care

system is a major part of the problem (Newhouse, 2004;

Nichols et al., 2004). Therefore, some change is likely tooccur although the exact form is still undetermined. Proposed

changes associated with improving drug affordability fall into

three types: regulating industry, increasing competition, ormaking better purchases with our drug dollars.

Regulating industry

Most regulatory solutions for making drugs more affordable

focus on having the Government control the price of drugs

(Maynard and Bloor, 2003) The Government can accomplishthis directly by restricting the prices charged by companies or

indirectly by restricting the amount of drug revenue that can

go to profits. Direct price controls in European countrieswork by having some governmental agency establish a price

ceiling for which a drug can be sold or reimbursed through aninsurance program. Prices are typically set based on charges

for comparable drugs in other markets within or outside of the

country. Prices are controlled through the establishment of anational drug formulary that permits the government to

negotiate drug prices and influence prescribing (Huskamp

et al., 2003) An indirect mechanism of price control used inthe UK attempts to regulate pharmaceutical company profits.

Profit controls are problematic because they do not halt drug

price increases and encourage inefficiency in drugdevelopment (Maynard and Bloor, 2003).There is significant resistance to price controls by the

pharmaceutical industry and public policy experts (Calfee,

2001). One reason is that experience in other countries

indicates price controls alone do not stop drug price increases(Menon, 2001). All industrial countries face rising drug

expenditures despite a broad range of price controls. Another

reason for opposition is that it is not clear what unintendedconsequences price controls may have on innovation and long

term health care costs (Maynard and Bloor, 2003). If price


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controls choke off the pharmaceutical innovations coming

onto the market, any savings might come at a high cost. Price

controls also invite meddling by politicians who may try topick up political points by interfering with their

implementation and administration (Frank, 2003;Newhouse, 2004). Finally, price controls fly in the face of

free market advocates who argue for private markets toregulate health care costs and encourage pharmaceutical

innovation (Bush, 2004).

Increasing competition

Despite the resistance to governmental price controls, there

are growing feelings that reliance on the market alone is notthe solution (Nichols et al., 2004). Under the current patent

system for drugs, abusive pricing practices by industry can

occur unless patented medications are made to competeagainst generic and therapeutic alternatives (Newhouse,

2004). Consequently, efforts have been made to increasemarket competition by enhancing drug choices. One

proposed strategy is to weaken patent laws to allow cheapergeneric drugs to more quickly enter the market. The problem

with this strategy is that it reduces incentives to developtherapeutic innovations (Eisenberg, 2001). An alternative

solution is to permit substitution of lower priced,therapeutically similar drugs for more expensive ones.

Patents would still be in place but low priced substitutescould be switched for higher priced drugs, regardless of

whether they differ chemically, if they achieve the same

medical outcomes. The argued advantage of this therapeuticsubstitution is that it permits competition between

therapeutic equals (i.e. me-too drugs) but still gives acompetitive advantage in the market for drugs that achieve

unique therapeutic benefits.Importation of low priced drugs from Canada and other

countries has also been suggested as a way of increasing pricecompetition. In fact, the new Medicare Drug Legislation

permits importation, if the Food and Drug Administration(FDA) demonstrates that it can be done safely (something the

FDA has been unwilling to do). Nevertheless, some states

encourage their citizens to shop for Canadian drugs.Minnesota, Illinois, New Hampshire, Wisconsin and other

states direct citizens to purchase at state-approved CanadaInternet pharmacy web sites. It is believed that some form of

legalized drug importation is inevitable, if no majorunforeseen roadblock occurs (i.e. deaths due to counterfeit

drugs) (Jill, 2004). The benefits of doing so, however, areexpected to be modest (1 percent decrease in total drug

expenditures) (Congressional Budget Office, 2004).

Make better purchases

Demands to regulate drug companies are based on the

assumption that industry is the problem for high drug

expenditures, while calls to increase competition assume thatthe market needs to be fixed. However, the problems of drug

affordability could be resolved simply if better purchases aremade at the payer, physician, or patient levels. If more

discipline and rationality were encouraged in the process ofdrug selection and reimbursement, greater value could be

achieved with health care dollars spent. Current mechanismsfor purchasing drugs encourage industry to increase

marketing, charge higher prices for new drugs, and promoteutilization (Newhouse, 2004). None of these things are bad if

they increase the development and use of necessary drugs.

The problem is that the health care market chooses and pays

for many drugs that are unnecessary, overpriced, and

inappropriate. Drugs could be made more affordable if

payers, prescribers, and patients made better choices.

Improve prescribingPhysicians are responsible for most health care utilization

choices, so the health care system should facilitate cost-

effective prescribing. Managed health care had argued that

drug costs can be controlled through the use of drug

formulary systems that restrict physician prescribing and

insurance coverage to a limited list of essential, cost-effective

drugs (i.e. formulary). Formularies are enforced with the use

of management tools such as drug utilization review,

restricted provider networks, therapeutic and generic

substitution, provider benchmarking, and patient cost-

sharing. To get on the formulary, drug companies are forced

to offer their drugs at lower prices or be excluded from

insurance coverage.However, evidence of the effectiveness of managed care is

still limited (Bodenheimer, 2000b; Carroll, 2002; Schulman

et al., 1996). Despite the spread of managed care coverage,

plans still see double digit increases in drug expenditures. One

reason is that many of the tools in the formulary toolbox are

rarely utilized (Carroll, 2002). Reasons include public

opposition to restrictions on drug therapies, lack of

integration between health care providers, and patient

demand for the newest pharmaceuticals. In addition,

managed care can be profitable under the current ineffective

cost control system because most excess drug costs can be

passed on to payers (Moran, 2000).Even the Federal Government, the largest single purchaser

of prescription drugs, is unwilling to utilize some tools to

control drug costs. Critics of the Medicare Prescription Drug

Program complain that the Federal government is expressly

prohibited from negotiating lower drug prices with

manufacturers. Instead, negotiations on drug prices will be

made by the individual drug plan providers (e.g. pharmacy

benefit managers) to avoid governmental price controls.

Rightly or wrongly, this restriction takes away one of Federal

Government’s most potent cost management tools. State and

Federal governmental politics have also hamstrung the ability

of pharmacy benefit managers and other non-governmental

purchasers to control drug costs with numerous rules,

regulations, and laws that reduce their ability to restrict

payment on drugs (e.g. birth control), restrict provider

networks (e.g. any willing provider laws), and integrate

services (e.g. antitrust laws).

Involve patients in their drug choicesThe difficulty in implementing cost control strategies has lead

managed care providers to share the risk of pharmaceutical

costs with patients through consumer-driven health care.

Consumer-driven healthcare is a broad term for strategies

designed to empower patients to choose their own health care

and share the risks of their costs. Elements of consumer-

driven plans include choice of different healthcare options,

medical savings and flexible spending accounts, and cost-

sharing through co-payments, coinsurance, deductibles, and

reimbursement caps. The goal is to make patients take greater

responsibility for their drug and health care decisions.

Although cynics might describe consumer-driven healthcare

as just another way of saying “consumers pay more for


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healthcare” (Kleinke, 2004), it is a cost control strategy that isbecoming increasingly important.

Focus on value in making drug choicesThe current environment of medical research and evidence-based medicine results in the conclusion that “more medicineis better” (Kleinke, 2004). This means that even if the mosteffective drug is chosen for every patient who needs it,pharmaceuticals expenditures will continue to spin out ofcontrol unless cost is also factored into the choice. Someargue that payments for drugs should be structured aroundconsideration of value rather than price (Kleinke, 2004;Chernew et al., 2004). That means that payers need to be ableto refuse to cover drugs that are not cost-effective (where thecost exceeds the benefit received) (Newhouse, 2004). Ifpatients want to pay for any extra marginal benefit associatedwith an uncovered drug, they should be expected to pay for allor part of the cost of drugs depending on their impact onhealth outcomes (Fendrick et al., 2001; Morgan et al., 2004).Methodological and practical issues still exist with the

assessment of drug cost effectiveness. For instance, few head-to-head comparisons of competing drugs occur in clinicaltrials making direct cost effectiveness comparisons difficult.Another issue is that cost-effectiveness analysis requirestransparency in data, analytical methods, and conclusionsalong with transparent rules before it can be widely applied inthe design of pharmacy benefits (Kleinke, 2004). Theproblem with transparency is that it opens up methods toimmediate criticism by opponents that can be exploited bysavvy pharmaceutical marketers. KOLs can be solicited toattack the methods or results in order to water-down thepharmacoeconomic decision-making process.


Issues relating to the affordability of drugs are complex andmultifaceted. The descriptive framework presented in thispaper can be used as a tool to place developments in thepharmaceutical marketplace into a meaningful context.Conditions listed in Table I describe variables that can bestudied to understand the swirl of conflicting informationabout pharmaceuticals. The two conditions of structuralconduciveness and structural are useful but stablecharacteristics of the broad market environment. Therefore,their value lies in providing groundwork for understanding theother four, more dynamic conditions of the framework. Theremaining four conditions from Table I can be studied tomonitor major trends and events that impact thepharmaceutical market.Social research methodologies can permit researchers to

understand the growth, direction, and character ofgeneralized beliefs by the public about drug affordability.Public opinions about drug affordability are being monitoredthrough polls conducted by media such as the Wall StreetJournal, but most are static cross-sectional studies that do notprovide much depth about public feelings. More extensive,longitudinal studies of public opinions would provide greaterunderstanding of changes in attitudes over time. Opinionleaders can also be interviewed about their feelings on majorissues such as that demonstrated in the community trackingstudy. This study conducts periodic interviews of households,physicians, and health system leaders in 60 communities andrecently found greater support for government intervention inhealth care (Nichols et al., 2004). Content analyses of media

reporting and publications can also be conducted to examine

issues and trends identified as important by the media.Case studies can explore the direct and indirect significance

of major events in the pharmaceutical market. Case studiescan describe and explain unique or interesting events such as

the implementation of the Medicare Prescription Drug,

Improvement Act of 2003. For instance, it is not clear at the

moment whether the Act will increase or decrease pressure forchange. Although it was meant to solve the problem of

affordable drugs for seniors, many details and consequences

of the Act are unclear. If seniors judge it favorably, and it

slows the rise of inappropriate drug expenditures, pressure on

the pharmaceutical market will be relieved. If things go badly,however, renewed calls for price controls and other dramatic

solutions will intensify.Content analysis of the media can be used to explore

resources mobilized by governmental, political, consumer,business, and professional agencies. It has been used to

understand how agencies in the consumer movement

mobilized resources to promote their agenda (Smith and

Bloom, 1989). In a similar manner, content analysis can beused to examine issues advanced by the movement, the types

of groups and individuals promoting change, and the form

and direction of the change advanced over time.Finally, researchers can study the changing social control

strategies used by industry to resist change. The evolving

effectiveness of techniques can be instructive. For example,

there is growing resistance to the acceptance of drug company

money by individuals and groups. One group called “No Free

Lunch” advocates the elimination of pharmaceuticalpromotion from medical education, practice, and research

(No Free Lunch, 2005) If physicians, educators, and

researchers widely adopt the solutions proposed by No Free

Lunch, the influence of drug companies in resisting changewill be diminished.

Conclusion

The only certainty in the pharmaceutical market is that

change will occur. It will either happen when public demands

for change overpower the ability of the pharmaceutical

industry to resist it or when industry decides that change is inits best interests. In other words, industry can be proactive in

their support of change, or they can wait and let others

decide. The economics of the pharmaceutical market are

unlikely to spontaneously improve it, so systematic research

should be conducted to understand its dynamics. The paperpresents a framework for doing so.

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Direct-to-consumer prescription drugadvertising: concerns and evidence on

consumers’ benefitJaeun Shin

KDI School of Public Policy and Management, Seoul, South Korea, and

Sangho MoonSungKyunKwan University, Seoul, South Korea

AbstractPurpose – The purpose of this study is to provide an overview of the economic and clinical impacts of direct-to-consumer (DTC) advertising onconsumers and physicians.Design/methodology/approach – Controversy around the benefits and concerns associated with DTC advertising are summarized. The sources aresorted based on their position toward DTC promotions: defending or opposing. Two recent works by Woloshin et al. and by Weisseman et al. arediscussed in depth to provide the empirical evidence for the impacts of DTC promotions.Findings – Notwithstanding many concerns against DTC advertising, evidence-based papers report that both consumers and physicians are potentiallybenefited from it. Consumers rate the health-related information contained in DTC advertising as important. Physicians do not feel that they arepressured to prescribe inappropriate medications driven by DTC advertising. Physicians perceive improved communication and education among DTCA-influenced patients. However, consumers tend to overestimate drug effectiveness when the ads vaguely convey the benefit information andsubsequently, seek unnecessary treatments. DTC advertising needs to be required to demonstrate the benefit information using actual data. This willhelp consumers avoid overuse of drugs.Originality/value – This paper recognizes DTC advertising as a positive force for the public health and at the same time identifies its potentialnegative effects on the economic and clinical aspects of the health care markets. This can offer practical help policymakers develop the effectiveregulations on DTC advertisings to reinforce the beneficial outcome while attenuating the potential harms that might take place.

Keywords Medical prescriptions, Advertising, Drugs, Consumers

Paper type Literature review



1. Introduction

As one of the fastest-growing components in the US health

care market, prescription drugs command much attention.

Spending on prescription drugs exceeded $150 billion in

2001, which is almost twice $79 billion spent in 1997

(National Institute for Health Care Management, 2002). In

2001, the industry spent more than $19.1 billion in

promotional activities. The spending for direct-to-consumer

(DTC) drug advertising increased from $1.1 billion in 1997

to about $2.7 billion in 2001, which is as dramatic as the

increase in drug companies’ spending on research and

development (R&D), from $19 billion to $30.3 billion (US

General Accounting Office, 2002).

Following a public hearing and debate in 1997, the FDA

issued a proposal for new guidelines on DTC advertising.

This proposal was designed to entitle prescription drug

manufacturers to give both the drug’s name and the condition

without disclosing all of the product’s risks. The FDA

guidelines clarified and relaxed the quantity of “balanced”

information that was required in each broadcast

advertisement. Yet, advertisers were required to mention

important risks and to provide a statement explaining that

additional information is available from other sources, such as

toll-free telephone numbers and print advertising. The FDA

thereby ensured that persons with varying levels of education

and technological knowledge would have access to additional,

detailed information.

DTC advertising is defined as “any promotional effort by a

pharmaceutical company to present prescription drug

information to the general public in the lay media”[1]

(Conti et al., 1999). Among drug companies’ general

promotions, direct-to-consumer advertising (DTCA) of

prescription drugs is particularly interesting, because it

affects patients, doctors, and health care organizations in

profound but not always predictable ways. For example,

Wilkes et al. (2000) report in a recent survey that more than

one-third of respondents reported asking their doctors for

information about a drug they had seen or heard advertised,

and nearly one-quarter asked for the drug itself. Of these,

three-quarters reported that their doctors provided the






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[DOI 10.1108/07363760510631138]

397

requested prescription (American Pharmaceutical

Association, 1997).

Since 1997 not only have the number of drugs advertised

increased, but so have the drug companies’ advertising

budgets directed at consumers. The advertisements have also

become far more sophisticated. The consumer is no longer

simply provided with information about a pharmaceutical

product. Advertisers enlist well-known celebrities to endorse

their products (T’Hoen, 1998; Wilkes et al., 2000).

Drug companies’ promotional spending leads to exposure,

getting messages about prescription drugs to physicians and

patients. Physician-oriented marketing consists of detailing

(in-person visits by drug company representatives),

advertising in journals, and continuing medical education

events. Patient-oriented marketing has focused on advertising

in various media, including print, broadcast, and online.

The position of pharmaceutical companies behind the

rocketing increase in the DTCA spending is plain: “We

believe that any health information for consumers is

beneficial” (Kelly, 2004). However, there have been

concerns that this belief can be true only when certain

conditions are embedded: the information must be accurate

and lead to more and better physician-patient encounters.

2. Concerns

Of concern is the question about whether the consumers’

exposure to the drug advertising fills a needed educational

gap, or it merely promotes inappropriate and unnecessary use.

Pharmaceutical manufacturers and other proponents of

DTC advertising claim that it is informative and educational:

it teaches consumers and physicians about health conditions,

new medicines and treatment options. It contributes to

increased disease awareness, greater detection and patients’

compliance with medical care. Eventually, it improves the

quality of overall public health (Rosenthal et al., 2002; Fintor,

2002).

They argue that the FDA’s existing regulatory regime is

sufficient to protect the public health and that the government

should not mandate unnecessary restraints on commercial

free speech. Indeed, there are studies to advocate drug

promotion and advertising showing its usefulness as a means

of educating the patient, its contributions to the doctor-

patient relationship and the beneficial quality outcomes

associated with new and, in some cases, high priority

diagnosis (Jeffords, 2004).

Opponents of drug promotion are concerned about that

information conveyed is inaccurate or unbalanced and

promotes the inappropriate and unnecessary use of drugs.

DTC advertisements may lead to inappropriate patient

demands on providers and to overuse of prescription drugs

against the doctors’ judgment. In some instances, it may

encourage the use of more expensive brand-name medicines

by consumers even with cheaper and equally effective

alternatives available.

Payers are also concerned about the promotion of non-

essential or lifestyle drugs, such as drugs to treat nail fungus

and sexual dysfunction, which drive up their pharmaceutical

spending without providing significant health benefits.

According to World Health Organization, even among the

drugs most heavily advertised directly to consumers, many are

believed less effective than expected (Batchlor and Laouri,

2003).

Critics counter that promotion has fueled the rise in drug

spending, chiefly in the form of inappropriate prescribing

caused by ad-induced patient demand or incomplete

information influencing physicians’ decisions, or both. As a

recent medical journal stated, “The education of patients – or

physicians – is too important to be left to the pharmaceutical

industry” (Wolfe, 2002). Whether this is a valid conclusion or

misguided assertion is one of the main questions around the

controversy on DTC advertising. How policymakers should

react to this controversy is another issue to be responded at

once.

This paper provides an overview of recent evidence, both

endorsing and defying, for the controversial issue. Using the

recent literature to date, we review the economic and clinical

impacts of DTC advertising on the consumer, the medical

professionals, and the health care system. The leading

concerns raised against DTC advertising are that it leads

doctors to write unnecessary prescriptions under pressure

from patients and that it increases the cost of prescription

drugs. Because some critics believe that DTC advertising

leads to overuse of costly drugs, it is not surprising that it has

come under increasing scrutiny (Bonifazi, 2002; Weissman

et al., 2004). Another concern is that if the information on

drugs is inaccurate and misguided, the active involvement of

patients in the medical decisions which is motivated by

DCTAs is likely to end up with serious clinical mistreatment

and eventually harm the quality of public health.

Recommended solutions to these problems reach from an

outright ban on DTC advertising, to removing business

expense tax deductions, and to strengthening the FDA’s

oversight capacity (Jeffords, 2004). A critic on the role of

FDA on regulating DTC advertising is that FDA enforcement

against false and misleading advertisements have dropped

sharply in recent years, raising concerns over consumer safety

(Waxman, 2004).

2.1. Economic aspect: overuse of resourcesImpact on consumers

From a public health point of view, the question we must

address is whether it is the best way to spend nearly $3 billion

on health communications to the American public. Avorn

(2003) states this question in a practical context: even if more

patients with high cholesterol or depression seek treatment

because of DTCAs for Lipitor or Proza, how many more

could be treated if they were instead prescribed the equally

effective generic drugs in the same classes, lovastatin or

fluoxetine?

The publication of the Anti-hypertensive and Lip-lowering

Treatment to Prevent Heart Attack Trial (ALLHAT) showed that

the older thiazide drugs are both better and cheaper than

many newer drugs in the management of hypertension. Then,

it raises skepticism on the net public health benefit of costly

advertisements and the promotion-driven use of these

expensive products.

When there is no fervent promotions for generic drugs,

DTC advertising for prescription drugs conveys the

information that mislead viewers to lean more on the drugs

whose prices embed the advertising costs even when they are

aware of the availability of cheaper and equally-effective


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alternatives. Further, the frequent and repeated watching of

DTCAs may enhance consumers’ dependency on drugs.

Consumers are likely to demand specific drugs more than

necessary and demand it immediately (Bell et al., 1999).

Of course, there is counter evidence by Dubois, Alexander,

Wade, Mosso, Markson, Lu, Nag and Berger (2002) that

growth in a specific drug use, which corresponded to a time

period of much pharmaceutical promotion, was associated

not with inappropriate use or overuse, but rather with the

identification of additional patients in need of that drug. This

contends that promotion is not accompanied by excessive use.

Impact on manufacturers

Given the economic incentives, pharmaceutical companies

may provide a more than optimal amount of advertising from

a societal perspective (Carlton and Perloff, 2000; Dubois,

2003). Annual spending on DTC advertising rose gradually in

the 1990s and then tripled between 1996 and 2000, when it

reached $2.5 billion (Rosenthal et al., 2002). Although DTC

spending had been increasing prior to 1997, the FDA

guidelines issued in 1997 seem to correspond with the rapid

increases in DTC spending that were observed thereafter.

In 2000, drug companies spend more than a billion dollars

on marketing directly to consumers, up from $55 million in

1991 and represent five times larger amount compared to the

spending in 1994 (Wilkes et al., 2000). The driving force for

this rise has forced pharmaceutical manufacturers to stimulate

consumer demand (Tully, 1993; Hollon, 1999).

Impact on insurers

People who benefit from the pharmaceuticals often do not pay

for them directly. In recent years people with insurance have

paid relatively little out of pocket for their medicines. A large

proportion of the cost has been borne by their insurers and by

purchasers (employers) in the form of insurance premiums.

The fact that the consumers who view the advertising and are

influenced to consume the drugs do not generally pay for

them contributes to the controversy surrounding advertising

prescription drugs to consumers.

According to the report by American Pharmaceutical

Association, of all prescription filled in 1997, 79 percent are

paid for at least in part by some type of private or public

insurance. Even given the push from managed care and other

payers to increase the use of generic drugs, most prescriptions

written are still for brand-name medicines.

From the economic perspective, the impacts of DTCAs on

consumers are threefold: first, the amount of DCT

promotions may be socially excessive due to pharmaceutical

manufacturers’ desire for high sale and large market share.

High and rising spending for advertisements may result in

high price of the prescription drugs (price effect). Second, the

amount of consumption of prescription drugs may be far

above necessary, which is advertising-induced (quantity

effect). Lastly, as more drugs are prescribed, the insurance

companies are doomed to increase the associated premiums

charged on consumers (insurance effect).

2.2. Clinical aspect: inappropriate use of drugs

DTC advertising unfolds to consumers what kind of drugs is

available in the market and what extent those drugs work.

Typically, this sort of information has been monopolized by

medical professionals and pharmacists. Continuous viewing

of DTC advertising may interest consumers in their health

conditions in a regular basis. The alert consumers can take

actions to prevent or detect the outburst of a health problem

in its early stage before it exacerbates. This entire conceptual

and behavioral response of consumers to DTC advertisings

can contribute to the improved quality of public health.

Well acknowledged of the medical information through

DTC promotions, consumers begin to involve in the decisions

on the medical treatment. By interacting with the physicians

vigorously, the patients’ compliance with physicians order is

expected to be enhanced. Subsequently, health outcomes of

any medical treatment on patients can be upgraded. However,

as Wilkes et al. (2000) argued, there is evidence to suggest

that clinical quality of care is harmed by DTC advertising.

Impact on consumers

From the DTC advertisement, patients and physicians receive

the repeated and consistent education on a drug’s

characteristics and its potential role. This is deemed to

reduce the variation in therapy, that is, patients with a specific

symptom are uniformly prescribed more expensive brand-

name drugs they are exposed through the ads.

Although reduced variability of treatment is often translated

to quality improvement, there are challenges that greater

uniformity in use of medications may not necessarily

appropriate (Dubois, Batchlor and Wade, 2002; Dubois,

2003). Even when we assume that the uniformity in practice

render the improved quality of care, whether it is attributable

at least in part to the educational role of drug promotion to

physicians is neither proved nor refuted (Batchlor and Laouri,

2003).

In addition, receiving prescription drugs advertised in

broadcast rather than possibly equally effective generic drugs

may not be medically correct. Many new drugs are found to

offer few advantages over pre-existent drugs. For worse,

whose safety profiles are shown to be less well understood

(Kessler and Pine, 1990). It is because DTC ads tend to

emphasize the positive features of a drug and downplay the

negative or unknown aspects. Side effects are typically

discussed last or buried in the narrative. Only 35 percent of

advertisements invited the viewer to learn more about the

drug by obtaining information from the company (Wilkes

et al., 2000).

Even when the information in DTC advertisements is

balanced and accurate, it is still possible that consumers are

confused and construct erroneous perceptions of a drug’s

effectiveness and safety. Because most of consumers do not

have the clinical and pharmacologic background to properly

understand and evaluate DTC advertisements, the

miscomprehension of drug advertisements is not a

surprising phenomenon (Cohen, 1988; Morris et al., 1986).

Ultimately, the argument that DTC promotions are

educational for the public about medical conditions and

their treatments hinges on the quality of drug information

available to consumers through advertising.

Impact on medical professionals

With the explosion of DTC drug advertising, physicians begin

to experience the change in their relationship with patients.

The American College of Physicians feels that DTCA “is not

a proper practice” and “undermines the patient-physician

relationship” (American College of Physicians-American




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Society of Internal Medicine, 1998). However, Weissman’s

et al. (2004) surveys of physicians show a mixed picture.

Some physicians appreciate DTCA for increasing patients’

awareness, encouraging patients to seek medical advice for

conditions that might otherwise go untreated, and improving

doctor-patient communication (Allison-Ottey et al., 2002).

Negative views are more frequently reported including

concerns that when patients misperceive a drug’s

effectiveness, physicians’ time is wasted in correcting the

biased view on a drug’s pros an cons. DTC advertisements

may challenge physicians’ professional authority in the

medical decision as the better-informed consumers intend

to pressure their physicians to prescribe drugs either

inappropriate in effectiveness or excessive in quantity and to

order advertised drugs, perhaps against physicians judgment

(Avorn et al., 1988; Petroshius et al., 1995; Lipsky and Taylor,

1997). This active patient involvement encouraged by DTC

promotions is a main reason for physicians’ reluctance to

embrace the popular drug promotions.

3. Evidence

As the DTC advertising gets widespread and the associated

spending proliferates, there is an enlightened discussion to

know whether pharmaceutical promotion educates or

misleads. The recent debate is focused on whether the

potential benefit of educating physicians and consumers

outweigh the potential clinic and economic harm of overuse

(Kravitz, 2000). Although advocates of DTC advertising

argued that there are no objective data showing that DTC

advertising results in an inappropriate use of drugs (Ziegler

et al., 1995), this argument was not particularly persuasive for

opponents since there has been little reinforcing data for the

positive impacts of DTC advertisings.

Recently, a growing body of research shows that DTC

advertising is having some beneficial effect. Those studies

claim that consumer-direct advertising raises awareness of

diseases, treatment, and specific drugs – and that patients

who are exposed to this information are more likely to request

specific drugs. In particular, the papers by Weissman et al.

(2004) and Woloshin et al. (2004) make indispensable

contributions to understanding how DTC drug advertising

is perceived by the two most important participants in this

policy debate: the physicians and the patients.

3.1. Consumers’ perception of the DTC advertising

effects

Woloshin et al. (2004) research question comes from

recognizing that DTC advertising offers limited information

on the efficacy of the drug. The US Food and Drug

Administration (FDA) requires the advertisements to include

information about potential harms. In contrast, information

on drug benefit is not specifically regulated, and most

advertisements assert that drugs do work using vague,

qualitative terms rather than presenting actual data (Bell

et al., 2000). Lacking from much of the debate surrounding

DTCA was empirical evidence of its impact on patients’

health and health care.

Woloshin et al. (2004) describe consumers’ evaluation of a

“prescription drug benefit box”. The benefit box is a table

presenting the proportion of people experiencing various

outcomes with and without the drug. In addition, one-word

summary to describe the direction of effect was included in

the benefit box. For each drug, the efficacy data came from

the published article of the randomized trial cited in the FDA

drug approval document, which matched the indication and

outcome in the advertisement.

For this study a total of 203 in-person interviews were

conducted with consumers selected from the greater Boston

area. Experiments are performed in two ways. Before-after

comparisons include the procedure that after people are

trained to familiarize with the three elements of interest (the

ad, the brief summary, and the drug benefit box), each

participant is shown the standard version of the drug

advertisements. They are then asked to indicate how they

thought effective the drug was using a standardized five-point

scale. Participants are then given the benefit box version of the

ad and are again asked to rate the drug effectiveness.

In the randomized comparison, respondents are asked a few

general questions about the benefit box itself such as whether

they think the information is important, should be required,

and is easy to understand to evaluate consumers’ perceptions

on the benefit information. Then they are randomized into

two groups. The intervention group is shown only the benefit

box version of an ad. The control group sees only the

standard version of the ad. Their findings are summarized as:. Most participants in the experiment rate the health

information provided by DTC advertising as “very

important” or “important”.. Almost all participants find the information in DTC

promotions easy to understand.. Most people can understand the data and are influenced

by the drug advertising.. Most people interviewed want benefit data in drug

advertising.. Perceptions of drug effectiveness drop after respondents

saw the benefit box (in before-after compassion).. Perceptions of drug effectiveness are much lower for drug

advertising that incorporates the benefit box than for

advertising that does not (in randomized comparison).

The main weakness is pointed out that the findings are based

on an experiment over convenience samples. Nonetheless, the

study has important qualitative message only extraordinarily

powerful counter evidence could defeat. Consumers collect

useful information on drugs from DTC advertisings. They

have no particular difficulty in understanding the ads. Their

perceptions and presumably consumption decisions on drugs

are influenced by the ads. In general, the participants are very

optimistic about the effectiveness of each drug with the

standard form of drug advertising. However, the perceptions

of effectiveness drop after seeing the benefit box of actual

data. That illustrates the necessity of the drug benefit boxes

on its ad to prevent possible illusion among viewers on how

well and safely the drug works.

3.2. Physicians’ perception of the DTC advertising

effects

Weissman et al. (2004) use a national survey of physicians

who reported on recent patient visits during which they

discussed advertised drugs. Their goal was to describe

physicians’ perceptions of actual health care experiences and




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their attitudes toward DTC advertising, and to predict the

resulting outcomes as it affects medical practice.

The sample was randomly selected from a national list of

physicians[2] provided by National Marketing Service. The

questionnaire was designed to give physicians equal

opportunities to express positive or negative views about

DTC advertising. Physicians are asked to report their

perception on whether the drug promotion might be

beneficial, inconsequential, or harmful. The largest portion

of the survey was designed to gather data on the health care

events surrounding the most recent visits in which patients

initiated discussions about prescription drugs they had seen

advertised on any means of multimedia, so called “DTCA

visits.” The findings are as follows:. The majority of physicians could not feel that DTC

advertising has pressured them to prescribe inappropriate

medications.. Patients reported that they benefited from their

interactions with physicians related to DTCA, including

diagnosis of new conditions and delivery of other health

care services that are widely perceived as beneficial.. DTCA discussions occurred in a small proportion of all

physician visits (31 percent), but more than half of

physicians had participated in at least one DTCA visit in

the past week.. Physicians perceived improved communication and

education but also thought that DTCA led patients seek

unnecessary treatments.. Physicians prescribed the advertised drugs in 39 percent

of DTCA visits but also recommended lifestyle changes

and suggested other treatments.. Referring to visits when the DTCA drug was prescribed,

46 percent of physicians said that it was the most effective

drug, and 48 percent said that others were equally

effective.

The study confirms that consumers get educational benefit

from the drug advertising. The information they gather from

the ads enables them to have more productive encounters

with physicians. Though DTC advertising induces

unnecessary “DTCA visits” and pressures on physicians to

prescribe the advertised drugs, these impacts are relatively

mild. Physicians are likely to maintain their professional

authority over patients in the decisions on the proper medical

treatments and prescription of drugs.

4. Discussion and policy implications

DTC drug advertising has been controversial since its

inception, with proponents and opponents debating the

educational value of ads and their impact on the physician-

patient relationship. For areas where it is known that a

particular treatment option works well but it is underused,

any means to educate and promote is probably beneficial.

DTC advertising operates as a beneficial market-expanding

mechanism, spreading awareness of newly drug therapies.

Perhaps the concern about promotion relates to utilization

of prescription drugs in the absence of consensus or strong

evidence for proper use. Most troubling is the potential for

advertising to stimulate inappropriate demand for drugs. For

instance, most would agree that Cox-2 inhibitors greatly help

some patients with arthritis and pain. However, less costly

alternatives are available for the broader population of people

with these conditions and there is no consensus on its use.

Promotion of Cox-2 inhibitors might provide patients with

added clinical benefit, but perhaps at a higher cost.

Papers by Woloshin et al. (2004) and by Weissman et al.

(2004) provide some validation for the views of both sides of

the DTC advertising debate with more emphasis on the

supporting evidence that DTC drug advertising appears to be

a generally positive force for health. Yet, these studies are

critiqued to be limited to draw definitive conclusions about

key issues involving inappropriate use of expensive

medications and their substitution for cheaper medications

that are just as effective.

Avorn (2003) claims that the data presented in these two

studies do not justify the conclusions that the effects of

pharmaceutical promotion are beneficial. Further he argues

that some of the data they present suggest a different

conclusion. Since the factors initiating a visit to the doctor,

the topics discussed between physicians and patients, and the

subsequent events are all complex interactions so that it is not

straightforward to interpret the results as supporting evidence

for the consumers benefit from DTC advertising. Though it is

appealing to think that DTCA may alert patients to diagnoses

that have been undetected or under-treated by their

physicians, it is criticized that among consumers of direct-

to-consumer advertising, those heavily influenced by such

DTC advertising were no more likely to have laboratory

studies ordered or lifestyle changes recommended. Economic

inefficiency of pharmaceutical promoting is severely criticized

(Avorn, 2003).

Since the impact of promotion is neither uniformly efficient

nor inefficient from a societal perspective, it would be hard to

implement a rule that would selectively limit “relatively

inefficient” promotional efforts. Proposals for stricter

regulation may have to consider their potential impact on

the desirable outcomes that accrue from pharmaceutical

promotion.

Beyond the regulatory scope, the federal government, as a

major purchaser of pharmaceuticals, may enforce drug

makers to disclose information about safety and comparable

effectiveness in their DTC advertising as part of any

purchasing agreement (Jeffords, 2004).

From a market perspective, another approach is to regulate

the content of DTC advertising to improve their educational

content. The systematic provision of drug benefit data would

educate consumers and promote informed decision making

by providing easy access to scientific data on drug benefit

whenever a drug advertisement appears.

5. Conclusion

We review the literature examining one of the most

controversial issues in an ever more competitive health care

market, the goods and bads of the DTC advertising. By and

large, drug promotion is a mixed bag. In some cases it

promotes educational benefit for consumers and appropriate

use of drugs, but in others, it encourages inappropriate use.

When drug promotion is aligned with evidence-based

medicine, it may have a positive effect. Recently a growing

body of research supports the view that the information

presented in DTC advertising informs patients’ decision




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401

making and leads to more productive physician/patient

encounters by reducing the information gap between the

two. Obviously, public debate should focus on making

information about both the benefit and potential side effects

clear and comprehensible so that consumers can get

maximum value possible from DTC advertising.

Notes

1 Increasingly, the drug advertisements offer additionalinformation to consumers through the internet. A total of

14 percent of advertisements provided a web site.2 The list of physicians includes both American Medical

Association (AMA) members and non-members and is

updated in a weekly basis

References

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Batchlor, E. and Laouri, M. (2003), “Pharmaceutical

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Bell, R., Wilkes, M. and Kravitz, R. (2000), “The educational

value of consumer-targeted prescription drug printadvertising”, Journal of Family Practice, Vol. 49 No. 12,

pp. 1092-8.Bonifazi, W.L. (2002), “Hard sell: drug makers are spending

billions on direct-to-consumer ads, but just how effectiveare the products?”, Wall Street Journal, March 25.

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Zapert, K., Leitman, R. and Feibelmann, S. (2004),




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“Physicians report on patient encounters involving direct-

to-consumer advertising”, Health Affairs, pp. W4-219 (web

exclusive).Wilkes, M.S., Bell, R.A. and Kravitz, R.L. (2000), “Direct-

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Calfee, J.E. (2003), “What do we know about direct-to-consumer advertising of prescription drugs?”, HealthAffairs, pp. W3-116 (web exclusive).

Lewis, C. (2003), “The impact of direct-to-consumeradvertising”, U.S. Food and Drug Administration, FDAConsumer Magazine, March-April.




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Global marketing of lifesaving drugs:an analogical model

Oswald A. Mascarenhas, Ram Kesavan and Michael Bernacchi

College of Business Administration, University of Detroit Mercy, Detroit, Michigan, USA

AbstractPurpose – In light of the desire to bring about an increase in the global distribution of lifesaving drugs at affordable prices, the purpose of this paper isto focus on the global marketing of lifesaving drugs related to the current pandemic of HIV/AIDS.Design/methodology/approach – An analogical model is used to challenge companies to reengineer their products and their strategies to meet thetwin objectives of profitability and humanitarianism. Following analogical reasoning, it is argued that an innovative reengineering and redesigning oflifesaving drugs can meet the great needs of developing countries with affordable prices.Findings – The paper proposes an analogical model that treats the marketing of drugs in general and of lifesaving drugs in particular, to the developingcountries as a “target problem.” This problem can be resolved by seeking analog “candidate solutions” from other “source industries” that have facedsimilar problems.Practical implications – In recent decades the pharmaceutical industry and its free market model of marketing drugs have come under sharp criticismboth domestically and globally. Their pricing and distribution of lifesaving drugs to developing countries have been severely criticized. This paper helpspharmaceutical firms to meet the need for lifesaving drugs in developing countries.Originality/value – Analogical reasoning as applied to marketing is new. The paper submits that this solution will be more effective in combating theHIV/AIDS pandemic than any current solutions. The paper discusses the strategic marketing implications of the analogical model.

Keywords Medical products, International marketing, Developing countries, Acquired immune deficiency syndrome, HIV

Paper type Case study



In the domain of pharmaceutical marketing, the marketing of

lifesaving drugs has recently received explosive and critical

attention. The pricing and distribution of HIV/AIDS drugs in

particular has attracted an even more passionate media blitz

and political opposition. Several constituencies from both the

developed and the developing countries have accused the

pharmaceuticals of price gouging, overextended brand name

patent protection, blocking the production of cheaper generic

drugs, and for failing to prevent the millions of preventable

deaths in the poorest nations who have died and will die from

the HIV virus (Kennedy et al., 2004; Kremer, 2002; Rosen

et al., 2003).

Several conventional solutions have been proposed to solve

this problem such as free market-driven pricing (Calfee and

Bate, 2004), differential pricing (Danzon, 1997; Danzon and

Towse, 2003), socially responsible pricing (Vachani and

Smith, 2004), compulsory licensing (Ashcroft, 2001) and

pricing using the stakeholder model as a guide (Kennedy et al.,

2004). Each of these solutions, however, is ideological, very

general and fraught with a bevy of other problems. Based on

Gavetti and Rivkin (2005), we suggest an alternative

“analogical” model that is independent of the

aforementioned models or ethical ideologies. The analogical

model solves a “target problem” by seeking and evaluating

“candidate solutions” from a “source industry” that bears

close resemblance to the target industry. Though one could

apply the analog model for the purpose of gaining access to

any lifesaving drug by those who need them most, our

application in this paper is related to the lifesaving drugs for

HIV/AIDS. Our thrust is to shape the right conditions so that

the poorest of the poor will be able to immediately access the

essential medication that they desperately need at affordable

prices.

We divide this paper into four parts:

(1) a description of the “target problem” of the HIV/AIDS

pandemic;

(2) an exploration of the “source industries and problems”

that might offer;

(3) a feasible set of “candidate solutions” to the pandemic;

and

(4) an evaluation of the “target problem solution.”

We submit that the analogical model that seeks a bilateral

case-by-case solution to this pandemic is well within the

domain, capabilities and long-term corporate interest of

pharmaceutical producers and distributors. Essentially, the

analogical approach is a bilateral, market-by-market, drug

brand by drug-brand, or even corporation-by-customer

(patient) approach. It has been noted that multilateral,

general and ideological models have failed to solve the

problem of obtaining lifesaving drugs to those who need them

most paying prices that they can afford (e.g. Ashcroft, 2001;

Garrett and Rosenstein, 2005). Even appeals to

pharmaceutical company’s moral responsibilities, ethical






22/7 (2005) 404–411


[DOI 10.1108/07363760510631147]

404

corporate citizenship and the application of the distributive

justice principles to mandate the prevention of preventable

deaths have led to an impasse. These models do not generate

any effective remedy to the teeming millions of lives at risk

today, we need to look at alternative models such as the

analogical model to provide useful and doable solutions to the

global HIV/AIDS pandemic.

The analogical model

Recently, Gavetti and Rivkin (2005) have emphasized the use

of cases or analogies in framing and implementing business

strategies. Analogical reasoning (AR) makes efficient use of

information, but does not pretend to detail every marketing

issue of the problem at hand. AR pays attention to select

features of the information, sees patterns in it, and applies the

patterns to the present market challenges. For example, the

supermarket, a retail format pioneered during the 1930s in

the USA, has served as an analogical source to many

subsequent strategies. Charlie Merrill relied heavily on his

experience as a supermarket executive when he developed the

financial supermarket for the Merrill Lynch Co. Later,

Charles Lazarus employed the supermarket model when he

conceived and designed the Toys R Us in the 1950s. Then,

Thomas Stemberg, modeled Staples on the “mini

supermarket” Toys R Us. In each of these three instances

AR was applied. AR gives novel problems the opportunity of

being solved because precedent is used from a similar but

different problem set.

In short, a previous solution may be transferred to solve a

present problem. The value of application of precedent is fully

recognized in analogical reasoning. For instance, had Charles

Lazarus analyzed all of the interdependent configurations of

choices in toy retailing – from marketing to operations, from

human resource management to logistics – it is unlikely that

he would have discovered a strategy as coherent and effective

as the one Toys R Us he eventually adopted. In other words,

AR encourages one to think completely “outside of the box”.

The analogy of a supermarket gave Toys R Us an effective

framework, an integrated bundle of choices that included

exhaustive selection, relatively low prices, rapid replenishment

of stock, deep investment in information technology and self-

service with shopping carts (Gavetti and Rivkin, 2005).

We apply AR as follows: Given a target problem (i.e. the

rapid and effective distribution of lifesaving HIV/AIDS drugs

to the developing countries whose poor populations need

them the most at affordable prices), AR looks for similarity

mapping using source industries with their source problem

(e.g. other comparable industries that tackled similar

problems) that offer candidate solutions (product

redesigning and reengineering, wider distribution, close

collaboration with locals) to the target problem. Figure 1

outlines the analogical model.

The target problem: the AIDS pandemic

The HIV/AIDS crisis may well be the worst pandemic since

the fourteenth century AD Black Plague. The first case of

AIDS (acquired immune deficiency syndrome) was identified

in June 1981 at the US Center for Disease Control (CDC) as

a rare illness among homosexuals (Gottlieb, 2001). In 1983,

the retrovirus dubbed HIV (human immunodeficiency virus)

was identified as the cause of the deadly AIDS disease.

Although the latency period between HIV infection and full-

blown AIDS can last for many years, untreated HIV

eventually kills all its victims.

HIV is extremely difficult to control or to eradicate after

infection has occurred. No one has developed a cure or

vaccine for HIV. Several companies have developed drugs that

inhibit the ability of the HIV virus to either replicate or enter

host cells. The best that can be done at present is to

temporarily suppress the virus in the HIV patient, thus

delaying the progression of the infection. The drugs that

suppress HIV are called anti-retrovirals. Burroughs Welcome

introduced AZT known also as Retrovir in 1987, the first

drug that suppresses HIV.

AIDS now kills more people worldwide than any other

infectious disease. Already, more than 22 million men,

women and children have died from AIDS since 1981,

including three million deaths in 2003 (UNAIDS, 2004).

Nearly all of the 42 million currently infected AIDS victims

will die from AIDS-related complications within the next two

decades (International AIDS Vaccine Initiative, 2005). More

than half of these HIV/AIDS victims are women and children.

An estimated five million people were newly infected with

HIV in 2003. More than 95 percent of all new HIV/AIDS

infections are in developing countries where medical and

economic resources are very scarce. By 2010, unless the

pandemic is drastically controlled, we may register more than

100 million HIV-infected people outside of Africa (Tenet,

2003). Even though the pandemic is predominant in the

developing nations, AIDS is now everybody’s business (Rosen

et al., 2003). The national, international and global health-

security dimensions of the HIV virus are increasingly clear.

An effective solution to the HIV/AIDS pandemic, therefore, is

in the long interest of all, including USA and the rest of the

developed world.

We propose the analogical model as an action-oriented,

negotiating, holistic and compassionate approach to such

tragic human problems. Specifically, we submit that the HIV/

AIDS pandemic needs a case-by-case approach that translates

to a patient-by-patient, market-by-market, country-by-

country strategy. Reducing it to a price that “transfers” to

all or to an ideological issue oversimplifies the problem.

The source industries and problems

Thus, the “target problem” is how to rapidly produce and

effectively distribute lifesaving HIV/AIDS medication in the

developing countries that need them most. The “source

industries” are all those industries and corporations that have

effectively and profitably resolved the problem of producing

and marketing products and services critically needed by the

developing nations at affordable prices.

In general, the development of most brand name

pharmaceuticals takes place in developed countries (e.g.

USA, Canada, Western Europe and Japan) and targets health

problems that are prevalent in those countries. For instance,

there is no effective drug treatment for a number of tropical

diseases ravaging the developing countries. The developed

countries consume 85 percent of the pharmaceuticals even

though they represent less than 15 percent of the world’s

population. The need for pharmaceuticals is just as great in

the developing world, even though the resources and

Global marketing of lifesaving drugs



Volume 22 · Number 7 · 2005 · 404–411

405

infrastructure necessary to create, purchase and deliver

pharmaceuticals are largely absent. Thus, the developing

world is characterized by very strong medical need and very

weak economic ability.

The markets of the developing nations are underserved in

relation to high-tech and quality products. The conventional

reasoning is that these markets though large have a very low

buying power and therefore, cannot afford lifesaving products

and services. In relation to lifesaving drugs, such reasoning

implies that “they who cannot pay, die”. New thinking has

proved that this conventional reasoning is flawed (e.g. Handy,

2002; Letelier et al., 2003; Prahalad, 2004; Prahalad and

Hammond, 2002).

The poor are human beings, and as far as lifesaving drugs

are concerned, society owes them the access to lifesaving

drugs by unsigned social contracts, un-contracted joint

responsibility and global distributive justice rather than by

patent laws. Not all diseases are self-inflicted, and most of the

victims of HIV/AIDS are children of HIV/AIDS infected

parents. Coming to the aid of these victims is

humanitarianism (Nierle, 2003), a response to the call of

respecting human dignity and the right to life of all the

peoples of the world.

Serving the poor of the world that are the most affected by

HIV/AIDS, moreover, can be a great uncontested business

opportunity (Kim and Mauborgne, 2004; Prahalad, 2004).

The developing world offers multinational firms an

opportunity to find new sources of value and to be

profitable at the same time. There is an invisible

undiscovered, ignored and/or untapped market waiting at

the bottom of the economic pyramid – a market of five billion

people who live on less than $2 a day, nevertheless, their

annual market exceeds $3.6 trillion. The poor can be

profitable (Prahalad and Hammond, 2002). Selling to these

poor is a uniquely powerful way of achieving breakthroughs in

the production and marketing of products and services

(Prahalad, 2004). The markets at the bottom of the economic

pyramid can be a sandbox for innovation, a powerful force to

rethink costs, scale of operations and use of capital (Prahalad

and Hammond, 2002). In the context of HIV/AIDS

pandemic, furthermore, the poor desperately need the

lifesaving drugs, and may even be able to afford them as

long as they are marketed to them in innovative ways

(Prahalad, 2004; Prahalad and Hammond, 2002). Let us

explore how the “source industries” addressed similar

problems in relation to the developing countries.

Figure 1 The analogical model applied to the pharmaceuticals




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406

Candidate solution types

When Aravind Eye Care in India proposed to offer affordable

cataract surgery to the poor of southern India, it knew that its

customers could never afford the usual procedure cost of

$3,000 prevalent in the developed world. The company,

therefore, reengineered the procedure and innovated a

process with high quality that decreased the cost from

$3,000 to $30 per procedure. Aravind Eye Care is now the

globe’s largest eye-care facility. It performs more than

200,000 surgeries a year. The quality of care Aravind

delivers is as good as any in the developed world. Debt-free

and highly profitable, Aravind Eye Care records an annual

return on equity of more than 75 percent. The poor can,

indeed, be profitable (Prahalad, 2004).

Casas Bahia, a Brazilian retailer, built a highly profitable

$2.5-billion-a-year chain of 300 stores primarily in the

nation’s shantytowns. This retailer has developed skills to

assess the creditworthiness of the poor even though their

incomes are uneven and often unreported. The company

offers credit at a low cost that enables its consumers to buy,

for instance, their favorite kitchen appliance or television. The

poor also hunger for credit, good products and technology.

Obsolete products and technologies cannot satisfy the bottom

of the economic pyramid anymore than it can its top.

In the 1890s, the Singer Company showed that the sewing

machine could be a great productive asset in poor countries.

Knowing that the poor of the world could not afford its then

price of $100 and more, Singer devised a credit system for the

developing countries whereby it charged customers $5 a

month. The ordinary poor women put the machine to good

productive and income-earning use, paid off their loans within

20 months, and even applied for second Singer machines.

The Singer Company was a roaring success in the developing

countries.

Similar is the story of Mohammad Yunus, the founder of

the Grameen Bank. The philosophy of Grameen was and is

that individual customers are not just consumers of credit or

mere laborers but “entrepreneurs”. Since 1983, and after five

years of successful pilot programs in Bangladesh, the Bank

has been extending credit to groups of the poorest of the poor.

Grameen does not make home loans to the poor but rather it

makes loans to their factories where they exercise their

entrepreneurial skills in handicrafts. Grameen has been

replicating credit programs in Indonesia, Africa, Latin

America, and now throughout South Asia. Grameen

achieves repayment rates of 98 percent and more, much

higher than what most banks receive on collateralized loans in

the developed world. When mainstream markets of the

developed world get saturated and competitive strategies

focused on differentiation indicate diminishing returns,

marketers are best positioned to penetrate sizable emerging

markets of the developing countries (Kim and Mauborgne,

2004; Letelier et al., 2003).

Cemex, a Mexican company and currently the world’s third

largest cement company, used core methods and

competencies to sell its premium-priced cement to an

increasing number of low-income, do-it-yourself

homebuilders who join “patrimony-building” (Patrimonio

Hoy) clubs. Like other traditional cement companies, it did

not merely sell cement by cubic yards; instead, it changed its

business unit to perfect deliveries. The company started

delivering the exact amount of cement in a timely fashion to

each of its big and small customers (McGrath and

MacMillan, 2005). Cemex soon started selling homes or

parts of them to its customers throughout the world. Cemex

created the Patrimonio Hoy program a la carte Grameen

Bank. This club signs do-it-yourself homebuilders into a

system for building homes one room at a time. Patrimonio

customers join into groups of three who take joint

responsibility for making weekly payments. Their payments

entitle them to quality building materials for a full new room,

which are delivered, in general, about the middle of the

payments program. The Patrimonio Hoy also counsels

customers on designing their rooms, warehousing privileges,

rights to delivery, and other rights with preferred local dealers.

By summer 2003, the Cemex Patrimonio Club had 39,000

families as members, and over 100,000 had successfully

passed through the Hoy. This was a remarkable achievement,

given the fact that the largest subsidized Mexican government

plan had captured only 4,000 families. The rate of complete

payment after the building materials were received, moreover,

was 99.6 percent (Letelier et al., 2003).

Finally, in India, China, the Philippines, and in other

developing countries, single-serve packs of shampoo,

detergents, tea, aspirin, matches, pickles, and ketchup are

common. Almost 60 percent of the value of all shampoo sold

in India is in single-serve packets, sold for a penny a piece.

This market was a very profitable business for global

corporations such as Unilever and P&G and for local firms

as well. Profiting on penny sachets of shampoo or detergents

is just a start. The markets at the bottom of the economic

pyramid challenge managers to reengineer design,

production, quality and marketing.

The target solutions

In the past, the brand name pharmaceuticals of the developed

world have adopted several strategies to market lifesaving

drugs to the poor nations but with no significant long-run

effects. Some of these strategies include the following.

Discount pricing

Discount pricing has been a common solution in distributing

lifesaving drugs to developing countries. For instance, on

intense and increasing pressure from protestors (e.g. the ACT

UP coalition), including policy makers from the USA and

Europe, Burroughs Welcome (now GlaxoSmithKline or

GSK) pared the price by 20 percent in 1987 and again by

30 percent in 1989. Pressure for discounting HIV/AIDS

related drugs was sparked in the wake of Fuzeon that was

introduced early 2003 by Timeris and Roche at $23,000 price

per patient per annum, twice the price of any previous AIDS

therapy. With accelerated pressure from international

government agencies and especially, from sub-Saharan

African countries, GSK, Timeris and Roche and other

leading HIV/AIDS drug manufacturers have offered heavily

discounted drug prices to developing nations. In the year

2000, manufacturers began talking to various UN agencies

about offering AIDS treatments to African nations at

“affordable” prices.

But price discounts may not be an effective solution for the

HIV/AIDS pandemic. For instance, Bristol-Myers Squibb

(BMS) reduced the price of two widely used AIDS drugs, ddI




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and d4T, to $500 or so in Senegal. Senegal has over 80,000

HIV/AIDS patients. Besides drugs, patients need drug

therapy, hospitalization and rehabilitation, testing and

counseling, prevention and palliative care, which together

with the needed drugs could cost well over $2,000 per patient.

The median income in Senegal is around $550 per year that

makes discount pricing ineffective. Arguably, the case is

similar in almost all developing countries where HIV/AIDS is

a serious problem. Discount pricing, moreover, could be

bound by problems of time and quantity limitations and will

most often depend on the capricious goodwill of the

pharmaceuticals.

Donation of drugs

From 1987, Merck has donated its drug Mectizan

(ivermectin) to anyone afflicted with river blindness, as long

as the drug is needed. Most drugs go to Africa, the Latin

American countries and Yemen. In 2002, Merck donated the

250 millionth dose. Pfizer agreed to provide fluconazole to

South Africans affected by cryptococcal meningitis.

Boehringer-Ingelheim for a limited period of time donated

Nevirapene, a drug proven to drastically reduce the mother-

child transmission of HIV. To the extent that these donations

are voluntary and not coerced, they indicate an assumption of

moral urgency and moral responsibility by corporations. But

the problem with these handouts is that they offer ad hoc

solution, often fraught with dependency conditions, time and

quantity based limitations and the contingencies of corporate

goodwill. They also spell paternalism and a continuing

dependence of developing countries on the generosity of

pharmaceuticals for their healthcare planning. For these and

other reasons, this donation-solution may not be sustainable

or desirable over time, especially when millions of

immediately preventable deaths are at stake.

Differential pricing

Drug manufacturers engage in differential pricing or price

discrimination for patented drugs. That is, they charge higher

prices in markets with greater willingness to pay and lower

prices in countries with lower buying power (Danzon and

Towse, 2003). Higher prices in developed countries often

subsidize lower prices (just above marginal costs) in the

developing countries. The drug price differential between

developed and developing countries may be as much as

tenfold. This tenfold price differential has created many

problems such as parallel importing. The latter implies

parallel pricing and parallel trade, that is, it could well reverse

the shipment of drugs from low price markets to high-price

markets by unauthorized dealers, thus depressing domestic

prices in the USA and Western Europe. South Africa’s 1997

Medicines Act sought to legalize parallel imports and

compulsory licensing as part of a campaign to combat

AIDS. If markets cannot be separated (as with globalized

markets), massive parallel trade can undermine and soon

neutralize differential pricing and its benefits.

For these and other reasons, we do not support discount

and differential pricing nor the donation of drugs as long-run

effective solutions to the HIV/AIDS pandemic. We have

recourse to the candidate solution suggested by analogical

reasoning.

Analogical candidate solution: innovativeproduction and distribution strategies

The analogy between source industries and the target industry

and between candidate solutions and the target solutions must

be real and well considered within a concrete framework (see

Figure 1). Both the source and the target industries must:. relate to critically needed products and services such as

eye care (Aravind Eye Care), credit for rural

entrepreneurship (the Grameen Bank), cement for

individual home construction (Cemex), and HIV/AIDS

drugs (pharmaceuticals);. relate to developing countries such as India, Bangladesh,

Mexico, and Brazil; and. relate to the distribution, prices and logistics that make

sense to vulnerable and disadvantaged customers.

The basic differences in the above examples are that the

source industries are the companies related to life enhancing

products and services (e.g. eye care, credit, home building,

rural entrepreneurship) while the target industry is focused on

life saving products and services such as HIV/AIDS drug and

therapy. Far from weakening, this difference even reinforces

analogical reasoning and urges its quick application for

preventing millions of preventable deaths due to HIV/AIDS in

the developing countries. That is, if the source industries

radically innovated production and distribution for life-

enhancing products services, the target industry should do

this all the more for life-saving situations. We now suggest

various strategies to this effect.

Reengineering the product/service bundle are

requirements

All the previously mentioned source industry companies must

have and did reengineer and redesign their products so that

they become relevant and affordable to the market conditions

of the developing nations. Rather than just entering,

penetrating and exploiting an existing market, the source

industry companies must have and did construct the markets

from a bottoms-up perspective of developing the credit

potential and worthiness of indigent customers by

collaborating with local distribution logistics and by

delivering a full product/service from the beginning to the

end. The target (pharmaceutical lifesaving HIV/AIDS drug)

industry must therefore, respond in its most efficient and

effective manner. In all of the above examples, the source

industry companies were successful in expanding revenues

and profits. The pharmaceutical industry will enjoy similar

outcomes as long as it can reengineer and redesign the drug-

therapy bundle from its start (prevention, testing, and

detection) to its end (therapy, control, and rehab).

This is possible. For instance, in February 2001, the Indian

pharmaceutical company Cipla offered to make generic AIDS

medicines available to the governments of developing nations

for $600 per patient per year. The same year, Cipla further

reengineered its product to decrease that price to $350 to the

Nobel Prize-winning healthcare aid agency, Medecins Sans

Frontieres.

Volunteer licensing

Innovative production of drugs in the developing countries

can be spurred by voluntary licensing, especially, by brand

name pharmaceuticals of the developed world. When patents




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expire, competing manufacturers are generally permitted (by

the 1984 Hatch-Waxman Act) to introduce generic versions

of the drugs that quickly drive down the prices of brand name

drugs. The 1984 Hatch-Waxman Act does not apply to

“biologicals” (drugs that are derived from biological

processes) as opposed to those synthesized from simple

chemical compounds. Some HIV drugs (e.g. Emtriva) are

biologicals.

Volunteer licensing should ensure quality generic

production in the developing countries with provisions to

block parallel trading. In 2001, Cipla, an Indian

pharmaceutical company, offered 5 percent royalties to

brand-name companies of the West in exchange for

licensing agreements to sell generic versions of their

medicines in developing nations (Slater, 2003). The

prospect of generic competition, however, prompted

significant price discounts by such brand-name innovator

companies as Bristol-Myers Squibb, GlaxoSmithKline

(GSK), Merck, and Pfizer. GSK has allowed South African

firms to produce and market its AIDS drugs (Zimmerman,

2001). GSK is the market leader in the USA with 40 percent

market share of AIDS related drugs. It also owns 66 percent

of all patents for AIDS in 53 African countries. Thus,

volunteer licensing, especially by GSK to African countries,

can be very effective. It can also stimulate the reengineering

and redesigning of the entire lifesaving product/service so that

millions of preventable deaths could be rapidly prevented.

Cooperation in prevention

Drug therapy is not keeping pace with the raging growth of

the HIV/AIDS pandemic. For instance, the UN’s goal of

treating three million HIV patients by 2005 will not match the

eight million new HIV infections that will have occurred by

2005 (Nakashima and Brown, 2004). Unless the average

annual increment of five million HIV infections falls sharply,

treatment programs will not match the number of people in

need (Gayle and Lange, 2004). Prevention, hence, is better

than cure and HIV/AIDS remains a preventable condition

even in poor nations. For instance, the remarkable decline of

HIV infection rates in Senegal, Botswana and South Africa is

strongly correlated with fundamental behavior modifications

in sexual practices. Several African nations are working on

prevention strategies. Uganda has obtained a striking

reduction in the incidence of HIV from 21 percent in 1991

to 10 percent in 1998 to 6 percent in 2001 (Low-Beer, 2004).

While pharmaceuticals enable generic production of lifesaving

drugs, developing countries affected by HIV/AIDS must

simultaneously and actively engage their people in prevention

modalities that control the spread of the disease. Finally, on

obtaining lifesaving medication HIV victims must be educated

and encouraged to meticulously follow the entire drug-

therapy treatment regimen for an effective control of the

disease. The pharmaceuticals that volunteer licensing and

accelerate generic production should exert pressure on local

governments and on affected people and their families to do

their part in preventing the disease by appropriate behavior

modifications, and, if affected by the disease, to commit

themselves to the full drug regimen and therapy that can

avoid premature deaths.


Companies like Costco, Sam’s Club, Wal-Mart and other

wholesaler institutions encourage consumers to stockpile

based on bargain prices and convenience. Selling to poor

countries mandates the opposite perspective (Prahalad,

2004). Successful companies that retailed to match the

specific needs and capabilities of the poor like Aravind Eye

Care, Casas Bahia, Cemex, Grameen Bank, P&G, and

Unilever challenge the pharmaceuticals to do the same. The

secret here is a strong analogical reasoning being applied

creatively, without letting the conventional wisdom determine

the process or the outcomes.

Pharmaceuticals should be able to recover R&D costs

We understand that in the high-technology driven

organizations of HIV/AIDS drug manufacturers, it is critical

that funds are available to attract, develop and retain the best

scientists and to foster a R&D team research that would

expedite the new drug development process. In the past, high

prices and high profitability of major pharmaceutical firms

have enabled this continuous funding. Drug prices typically

have been well above the marginal costs of manufacturing and

distribution so that profits can quickly recover developmental

costs and continue to motivate investments in new and

ongoing research (Calfee and Bate, 2004). Studies also

indicate that R&D investment averages 12 percent of sales in

the pharmaceutical industry and about 21 percent of sales in

big R&D pharmaceutical firms (Danzon, 1997). If we factor

in the opportunity costs of the funds expended during the

long gestation period (average 15 years) that culminates in

commercialized drugs, R&D cost estimates could rise to 30

percent of annual sales revenues (Danzon, 1997). During

1993-2002, R&D spending by the top pharmaceutical

companies tripled to more than $30 billion annually

(Challener, 2003). The target solutions that we suggest

must keep the problem of rapid R&D costs recovery in

perspective. Serving the poor, indeed, can be profitable

(Prahalad, 2004) and help pharmaceuticals to recover R&D

costs and more.

The analogical model we suggest challenges

pharmaceuticals to explore new innovations in reengineering

and redesigning their products and services so that the

developing nations that need them the most can afford them.

In this connection, source industries and their great

corporations such as Aravind Eyecare, Casas Bahia, Cemex,

Grameen, Singer, P&G and Unilever provide outstanding

insights. These corporations did not compromise their

products or their quality. Instead, they either reengineered

their products to enable mass generic production, or they

reinvented their distribution (e.g. redefining business unit,

redesigning financing or credit-enabling) systems whereby the

poorest of the poor could afford it at the time they needed it.

Analogically, the brand name pharmaceuticals need to do this

in the context of all lifesaving drugs, and HIV/AIDS drugs in

particular.

Respect brand name patents

We also support brand name patent protection. In general,

pharmaceuticals are characterized by high technology, lengthy

drug development cycles, large capital investments and high

financial risks. Only about 30 percent of all new drugs are




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profitable and generate enough revenues to cover their

development costs (Grabowski et al., 2002). Some HIV drugs

are difficult and expensive to manufacture. During the 1990s,

on average, each new compound cost close to $800 million

and these costs have increased each year by more than

7 percent (DiMasi et al., 2003). In the USA, new drug patents

extend for 20 years from the filing date. Long clinical trials

and the FDA approval process itself totals to 8-15 years of real

patent shelf life. Patent protection is essential to the drug

industry. But while protecting their patents, brand name

pharmaceuticals can also engage in reengineering and

redesigning the lifesaving drugs so that they become rapidly

and effectively available to the increasing millions of HIV/

AIDS victims in the developing nations.

Generic drug manufacturers from the developing countries

have copied leading brand names, almost defying the patent

protection laws of the developed world. Compulsory licensing

as a solution (Ashcroft, 2001) can lead to such defiance, and

hence, we do not advocate it. Brazil passed a new patent

protection law in 1996 that requires brand name companies

to produce patented drugs locally within three years from

their introduction in the developed world or face compulsory

licensing by Brazilian state-run factories. Brazil enforced this

law to leverage price reductions. Apparently it worked, as the

incidence of HIV has been reduced by 80 percent since 1996,

though this “success” implied an open defiance of the

universal patent law. We do not advocate such patent

infringement. If price discounting, patent infringement in

the developing nations and patent threats in the developed

world continue, then the high-tech HIV/AIDS drug industry

may not be able to recover R&D costs on the one hand, and

allocate resources for future R&D on the other. This would be

a loss-loss situation. Furthermore, this may seriously

discourage if not paralyze HIV/AIDS research and new drug

development in the developed world, thus creating a problem

worse than the solution to the pandemic. This is where a case-

by-case analogical approach becomes an imperative and

effective solution.

Analogies are context-dependent. Depending on the

context, scholars or strategists may differently establish the

analogy between a “target problem”, the “source industry”

and the “candidate solution” and thus arrive at different

solutions to the target problem. Proper evaluation and

validation of the analogy and the candidate solution are

needed before decision and implementation. Analogical

thinking is independent of ideologies or ethical systems. It

does not engage them but may derive support from them. The

analogical model can help discussants communicate with one

another without unnecessarily getting trapped in the

ideological differences and details that underlie, for

instance, the stakeholder and capitalist models. It is for

these reasons that we invoke the analogical model as a

solution-approach to the HIV/AIDS pandemic.

AR can be a source of remarkable insight. Business schools

typically teach strategy using case studies that provide an

abundance of analogies from which students can draw

problem-solutions. The best strategy according to

consultants is to draw lessons from one industry and apply

them to another. AR, however, needs careful causal

reasoning. Dangers arise when strategists draw an analogy

based on superficial similarity rather than the real causal traits

between the target problem and the source problem. We need

breakthrough thinking in the distribution of lifesaving drugs,

and AR provides a wonderful opportunity for it.

In producing and marketing lifesaving drugs, manufacturers

and distributors need to redefine their unit of business

analysis (McGrath and MacMillan, 2005). It cannot only be a

drug regimen for HIV/AIDS priced at affordable levels to the

developing markets. It should be a total patient experience of

education, medication, therapy, hospitalization and

rehabilitation. The pharmaceuticals need to “immerse”

themselves in this holistic experience of ministering fragile

patients and patient families whose lives reflect unspoken

resignations. This is what Medecins Sans Frontieres (MSF)

did, and the pharmaceuticals could take this lead. The credo

of MSF is humanitarian medicine, one person at a time. MSF

puts the individual at the center of its attention and deals with

the total patient in a very humanitarian way (Nierle, 2003).

MSF is a grand humanistic application of the case-by-case,

patient-by-patient analogical approach to the distribution of

lifesaving drugs and therapy. Strong humanitarian values can

empower pharmaceuticals to reengineer and redesign

products and services so as to reach the needy.

Concluding remarks

The pharmaceuticals that sell higher priced drugs to the

saturated markets of the developed world can expand the

market for their products and services by targeting low-

income customers of the developing countries. The

developing markets, however, need to be carefully

constructed and not simply entered.

The analogical model challenges pharmaceutical companies

to reengineer their products, the production process and the

marketing strategies such that the same product is distributed

to a much larger market of the developing countries at prices

they can afford, using the twin guideposts of profitability and

humanitarianism. To be profitable, firms cannot simply

compromise the products they sell to rich countries or to

simply give them away. Instead, they must thoroughly

reengineer products to reflect the very different economics

of the very different developing countries. In this manner

greater number will be served with a “greater good” outcome

but it will be on a basis of sound business not charity.

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medication in developing countries: conflicts between

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Calfee, J.E. and Bate, R. (2004), “Pharmaceuticals and the

worldwide HIV epidemic: can stakeholder model work?”,

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Danzon, P.M. (1997), “Price discrimination for

pharmaceuticals: welfare effects in the US and the EU”,

International Journal of the Economics of Business, Vol. 4

No. 3, pp. 301-21.Danzon, P.M. and Towse, A. (2003), “Differential pricing for

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DiMasi, J.A., Hansen, R.W. and Grabowski, H.G. (2003),“The price of innovation: new estimates of drugdevelopment costs”, Journal of Healthcare Economics,Vol. 22 No. 2, pp. 151-85.

Garrett, L. and Rosenstein, S. (2005), “Missedopportunities”, Harvard International Review, Vol. 27No. 1, pp. 64-70.

Gavetti, G. and Rivkin, J.W. (2005), “How strategists reallythink: tapping the power of analogy”, Harvard BusinessReview, April, pp. 54-65.

Gayle, H. and Lange, J.M.A. (2004), “Seizing theopportunity to capitalize on the growing access to HIVtreatment to expand HIV prevention”, Lancet, Vol. 364,3 July, pp. 6-7.

Gottlieb, M.S. (2001), “AIDS – past and future”, NewEngland Journal of Medicine, Vol. 344, 7 June, pp. 1788-91.

Grabowski, H.G., Vernon, J. and DiMasi, J.A. (2002),“Return on research and development for 1990s new drugintroductions”, Pharmacoeconomics, Vol. 20, Supplement 3,pp. 11-29.

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Kennedy, C.R., Harris, F.H. and Lord, M. (2004),“Integrating public policy and public affairs in apharmaceutical marketing program: the AIDS pandemic”,Journal of Public Policy and Marketing, Vol. 23 No. 2,pp. 128-39.

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McGrath, R.G. and MacMillan, I.C. (2005), “Marketbusting: strategies for exceptional business growth”,Harvard Business Review, March, pp. 80-91.

Nakashima, E. and Brown, D. (2004), “AIDS meetingfocuses on prevention: Bangkok conference ends amiddebate on progress and funding of methods”, WashingtonPost, 17 July, p. A13.

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Does DTC mean “direct to court”?Donna J. Cunningham and Rajesh Iyer

Department of Management, Harley Langdale Jr College of Business Administration, Valdosta State University,Valdosta, Georgia, USA

AbstractPurpose – The purpose of this paper is to investigate the changing legal landscape associated with the growth of advertising of prescription drugsdirectly to the consumer, and makes recommendations designed to assist advertisers in avoiding legal liability based on those advertisements.Design/methodology/approach – This study investigates the phenomenal growth of DTC advertising since 1997, when a profound change in theFDA regulations took effect. These changes permitted advertisers significantly more flexibility in providing information about the advertised drugdirectly to the consumer. Since then, however, DTC advertising has repeatedly come under attack. A review of the literature, changing law, and otherfactors, reveals the primary criticisms of DTC advertising, and its tendency to expose pharmaceutical advertisers to legal liability.Findings – The paper recounts the development of the law concerning pharmaceutical advertising, and particularly, the application of the LearnedIntermediary Rule. Previously, this Rule operated to shield pharmaceutical companies for liability by passing liability on to the physician who wrote theprescription for the drug. Now, that law is changing, with resulting liability for pharmaceutical advertisers.Practical implications – The study recounts the primary criticisms of DTC advertising, and provides a number of steps that can be taken to help avoidlegal liability for pharmaceutical companies that engage in DTC advertising.Originality/value – The study looks at DTC advertising from both a marketing and a legal perspective, and combines those disciplines to drawconclusions helpful to DTC advertisers.

Keywords Advertising, Medical prescriptions, Laws and legislation

Paper type Viewpoint



Introduction

Direct-to-consumer (DTC) advertising is the subject ofintense debate. Proponents argue that it can educateconsumers about new treatments, increase treatment forunder-diagnosed conditions, and help patients make better-informed health care decisions. Opponents contend that itcould interfere with the physician-patient relationship, raisehealth care costs, and increase consumption of new, morecostly products over older, cheaper, and safer alternatives.Opponents also argue that DTC ads oversimplify complexissues and may confuse consumers who lack specializedmedical knowledge (Kaphingst and DeJong, 2004).

This article investigates the changing legal landscapeassociated with the growth of DTC advertising ofprescription drugs, and offers some suggestions for ways inwhich pharmaceutical companies can avoid liability arisingfrom their DTC advertisements. We limit our discussion toprescription drugs, and do not address the sale of over-the-counter drugs. In the next sections, we discuss the success ofDTC, and the views of proponents and opponents of DTC,

and then explain the current state of the law and regulations

governing a pharmaceutical company’s advertising of

prescription drugs. We conclude the paper by offering

recommendations which we hope will provide direction

toward a harmonious co-existence between DTC and the

laws and regulations governing it, and toward a marketing

paradigm which recognizes its customers as “patients” first,

and “consumers” second.

The success of direct-to-consumer advertising

For decades, prescription drug makers promoted their

products exclusively to health-care professionals, who were

expected to interpret drug information for their patients. But

about 15 years ago, partly because of the increase in the

number of patients making their own health-care decisions,

some manufacturers began to produce ads targeted to

consumers. Since then, DTC advertising has become a

popular promotional tool (Mehta and Purvis, 2003).The phenomenal growth of DTC advertising is a result of a

change in Food and Drug Administration (FDA) regulations

in 1997, which have made it easier for pharmaceutical

companies to advertise prescription drugs, especially on

television. These regulations include permitting advertisers

more flexibility in providing information about the advertised

drug. For example, the guidelines allowed advertisers to

include both the name of the drug and the health condition it

treats, along with a statement of major risks and side effects,

and a reference to a source of further information such as a

toll-free number or web site without requiring a complete






22/7 (2005) 412–420


[DOI 10.1108/07363760510631156]

This research was partially funded through a summer research grant fromthe Rae and Lillian Steele Foundation at the Langdale College of BusinessAdministration, Valdosta State University.

412

statement of side effects and contraindications (Brumback,

1999). This made television broadcast ads possible (Mehta

and Purvis, 2003).Consumer awareness of direct-to-consumer (DTC)

advertising has climbed from 75 percent in 2002, to an all-time high 81 percent in 2003, according to data from

healthcare and pharmaceutical marketing research firm

Market Measures/Cozint. In all, this widespread awarenessextends to print and broadcast DTC ads across all 25 disease

states tracked by the firm’s annual DTC Monitor. Based oninput from more than 6,000 consumers, the study found that

sufferers are not only recalling DTC ads for their conditions,

but are also increasingly acting on the ads (Gatti, 2003).In particular, doctor contact rates – the percent of

consumers who call or visit their physicians as a result ofseeing a DTC ad – have risen for the second consecutive year

to 23 percent. Moreover, among those patients contacting

their doctors, 47 percent specifically request the brand theysee advertised (up from 41 percent), while 74 percent of

physicians actually comply with these requests (up from 71percent). Furthermore, 58 percent of DTC-driven

discussions lead physicians to write a prescription or provide

a sample for the advertised brand – whether or not the patientever directly asks for the product (Gatti, 2003).

“Clearly, DTC is a powerful tool, for driving bothawareness and action”, said Sue Ramspacher, senior vice

president of consumer services for Market Measures/Cozint.

This is particularly true for magazine campaigns, which generate both higherdoctor contact rates and higher prescribing rates than television ads. In spiteof magazines’ superior performance, television continues to be the mediumof choice for DTC advertisers, due mostly to its broader reach. The gap isnarrowing, however, as marketers experience the impressive results that printcan deliver (Gatti, 2003).

Proponents and opponents of DTC

Proponents of DTC prescription drug advertising believe thatthe knowledge and information function of such advertising

has enormous benefits. It is claimed that DTC advertising “isan excellent way to meet the growing demand for medical

information, empowering consumers by educating them

about health conditions and possible treatments” (Holmer,1999). DTC advertising helps to educate consumers about

the choices available in treatment, as well as provideinformation about various health conditions, which may not

be widely known or easily recognized by patients. In some

cases, patients may not even be aware that treatment exists.Armed with knowledge from DTC advertising, proponents

say, consumers may discuss their treatment options with their

doctors and be better qualified to help manage their ownhealth care. Patient compliance may also be improved as a

result of this interaction. With an aging population and thecultural trend toward increasingly easy access of medical

information, DTC advertising is seen by many as appropriate,

relevant, and beneficial (Mehta and Purvis, 2003).Opponents, on the other hand, believe that DTC

advertising, even when truthful, may not always becompletely read, so that consumers will not fully

comprehend the side effects and risks associated with adrug’s use. Further, some feel the increased patient

involvement in the prescription development process may

have unfavorable medical consequences since physicians maybe persuaded, even pressured, by patients to prescribe the

requested medication even when it is not the first choice of

the physician. Many believe that, in fact, the “principal effectof DTC marketing is to create consumer demand, changingthe physician-patient relationship to a physician-consumerrelationship” (Hollon, 1999). It is claimed thatpharmaceutical manufacturers are using enlightened“health-care consumers” to market their drugs throughhealth-care providers (Hoffman, 1993; Mehta and Purvis,2003).

There is concern whether inappropriate prescribing isleading to people obtaining drugs they should not be getting.“The problem with DTC advertisements for prescriptiondrugs is that patients think that drugs are right for themwithout knowing the full story of their condition,” says JohnBertolini, Director of DDB Remedy. “I believe it puts extrapressure on doctors and possibly inappropriate prescribing.”Not the least of all, DTC advertising’s impact on costs ofmedications is also a serious consideration (Sudhaman,2004).

However, these conflicting views are only part of thepicture. What has changed, perhaps more than anything else,is the way in which the potential buyer of a prescription drughas come to be viewed as a “consumer” rather than as a“patient.” DTC advertising is responsible for that change,and because of that, the laws and regulations governing DTCadvertising are changing.

Laws and regulations governing the sale ofprescription drugs and medical devices

Drugs are dangerous products

As do all products, sales of prescription drugs and medicaldevices are governed by state product liability laws. Thegeneral rule of product liability law is that the manufacturerand seller are liable to an injured consumer for injury causedby a product which is unreasonably dangerous – even if themanufacturer is not negligent in the design or manufacture ofthe product. Prescription drugs and devices, by their verynature, are dangerous, because they pose risks to patientseven if they are used as intended. However, in 1965, the lawrecognized that:

There are some products which, in the present state of human knowledge,are quite incapable of being made safe for their intended and ordinary use.These are especially common in the field of drugs . . . [B]oth the marketingand the use of [prescription drugs] are fully justified, notwithstanding theunavoidable high degree of risk which they involve. Such a product, properlyprepared, and accompanied by proper directions and warnings, is notdefective, nor is it unreasonably dangerous (Restatement 2nd of Torts,Section 402A, comment k (1965)).

Therefore, even an unsafe product can be made and soldwithout liability if it is properly prepared, adequateinstructions are given for its use, and warnings are givenabout any risks, both known and knowable. The sale ofprescription drugs and devices is different in another way:before the prevalence of DTC, such instructions andwarnings were not given to the patient-consumer directly,but rather to his doctor.

The learned intermediary rule

Ordinarily, the manufacturer or seller who sells anunreasonably dangerous product is liable if the consumer isinjured as a result of using the product. However, in the caseof the sale of prescription drugs and medical devices, theLearned Intermediary Rule was developed as an exception tothe liability for failure to warn of risks and dangers. Simply

Does DTC mean “direct to court”?

Donna J. Cunningham and Rajesh Iyer


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stated, the Learned Intermediary Rule (as to prescription

drugs) stands for this proposition:

A prescription drug manufacturer or seller is not liable for failure to warn a

patient-consumer directly of the dangers of the prescription drug if themanufacturer or seller adequately warns the patient’s prescribing physician,

or other medical professional, (a “learned intermediary”) of the potentialrisks inherent in the use of its product (American Law Reports, 5th 1, 2005,Vol. 57).

Under the Learned Intermediary Rule, instructions and

warnings could be relayed to a patient-consumer’s doctor,

rather than directly to the patient himself. Although FDA

regulations later came to require direct warnings for some

products, such as birth control pills, this was the law in 1966

and until recently, when direct-to-consumer advertising

became widely used. Now, drugs are advertised directly to

the patient-consumer, bypassing the traditional physician-

patient relationship, and influencing a patient’s health care

decisions directly. “The modern medical marketplace focuses

on the patient as consumer to an extent unimaginable forty

years ago” (Hall, 2004, p. 197). The presumptions underlying

the sale and purchase of prescription drugs and devices have

changed, and the law is changing with them.By 1998, the Restatement of Law relating to the sale of

prescription drugs and devices had modified its advice. No

longer would manufacturers and sellers be able to rely

completely on the Learned Intermediary Rule to escape

liability. No longer would the act of providing information

and warnings to a “learned intermediary” automatically

exculpate the drug manufacturer or seller from liability. Now,

it is recognized that in this changed landscape, warnings given

to a learned intermediary might do no good. It is not just

pharmacological advertising that has changed. It is much

more than that.

Changes in the health care system

Gone are the days of Dr Kildare and Marcus Welby, M.D.,

when physicians were autonomous providers of medical

advice and counsel in a traditional American health care

system. Then, a patient’s health insurer had nothing to do

with health care decisions. Today, however, 78 million

Americans under age 65 receive health care through

managed care organizations (MCOs), which exercise

significant oversight of the independent authority of the

physicians who treat them. Doctors are now required to

provide more services in a given amount of time, leaving less

time for each patient, and less time for doctor-patient

interaction, during which discussion of medications might

take place. “These circumstances allow physicians little time

to process warnings provided by drug manufacturers into

forms in which they will be heard, understood and heeded by

patients” (Hall, 2004, p. 195–197).Patients without a primary care physician are treated at

clinics or in emergency rooms, where they see a doctor once,

and not again. Or they are prescribed drugs by a physician

they never see, who writes a prescription based on the

patient’s answers to a questionnaire, submitted to a web site.

Prescription drugs are being increasingly sold outside the

usual channels, and without any meaningful doctor-patient

relationship on which the patient may make an informed

decision. In this situation, no one in the supply chain has any

incentive to provide the patient with adequate warnings. The

internet pharmacy and physician, if any, may be outside the

jurisdiction of the US courts, leaving the plaintiff with no

recourse (Hall 2004, p. 239).Under today’s new health care system, the physician or

health care provider is not necessarily a “learned

intermediary”. Frequently, there is no doctor-patient

relationship, or there is no time for the kind of interaction

between doctor and patient which is required in order for the

doctor to function as a “learned intermediary”. This presents

a problem for marketers, because it is on the learned

intermediary that marketers rely, and because the learned

intermediary may not be able to do what is expected. Now, it

depends. Now, the restatement recommends that instructions

and warnings be given to:. prescribing and other health-care providers who are in a

position to reduce the risks of harm in accordance with the

instructions or warnings; or. the patient when the manufacturer knows or has reason to

know that health-care providers will not be in a position toreduce the risks of harm in accordance with the instructions

or warnings (emphasis provided). (Restatement 3rd of

Torts, § 6(d) (1998)).

In essence, there is now an exception from the Learned

Intermediary Rule for direct-to-consumer advertising – an

exception to the exception. This new view of the law was

adopted by the New Jersey courts in the case of Perez v. WyethLabs, 834 A.2nd 1245 [N.J. 1999][1], a case involving the sale

of a Norplant medical device, sold by prescription. The

court’s well-reasoned opinion recounted that the Learned

Intermediary Rule was adopted in 1966, at a time when Dr

Kildare was a popular television show, doctors still made

house calls, and the relationship between patient and

physician was a comfortably close one in which doctor

advised patient, and patient believed that “doctor knows

best”. But, the court recognized, “for good or ill, that has all

changed”. The court posed the question “whether our law

should follow these changes in the marketplace or reflect the

images of the past”, and concluded:

“. . .when mass marketing of prescription drugs seeks to influence a patient’schoice of a drug, a pharmaceutical manufacturer that makes direct claims toconsumers” should not be relieved of liability for its actions (Perez v. WyethLabs, 834 A.2nd 1247 [N.J. 1999][1].

Some states still apply the Learned Intermediary Rule, but

others do not. Some states have never adopted the Learned

Intermediary Rule. And, some states have banished the Rule

by statute, incorporating into the state’s laws a duty to warn,

but excluding the Learned Intermediary Rule from the

statute, so that the Learned Intermediary Rule cannot be

adopted in those states. Increasingly, courts have come to the

realization that the Learned Intermediary Rule should not

apply when the reasoning behind the Rule does not exist.

(Hall, 2004, p. 239) “Precedents drawn from the days of

travel by stage coach do not fit the conditions of travel [by

automobile] today.” (Hall, 2004, footnote 342, citing

MacPherson v. Buick Motor Co., 111 NE 1050, 1053 [NY

1916][2]).What all of this means for the marketer is that an ad that

appears in one state may be subject to very different laws in

another. The only way to be sure to avoid liability for a failure

to warn is for the drug manufacturer or seller who sells to the

patient-consumer to provide adequate instructions and

warnings directly to the patient-consumer. In essence, the

duty to warn which was always originally the duty of the




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manufacturer or seller, has returned to the drug manufacturer

and seller. Today, a drug manufacturer or seller who sells its

products nationwide no longer enjoys a freedom from liability

across the nation based on state law. Moreover, there are calls

for reform at the federal level.Many members of Congress would like to see stricter

policing of DTC messages. And that has prompted talk of the

mandatory pre-approval DTC ads. Two bills were recently

submitted to Congress for the purpose of further regulating

DCT advertising. One was an amendment to the Medicare

prescription-drug benefit bill, sponsored by Sen. John

Edwards, D-N.C. The second was a proposal to require

DTC drug ads to include information on how each drug

compared with others on the market. Both were defeated

(Thomaselli, 2003). But when Congress begins to suggest

legislation, it is time to take a look at the industry’s practices

to see if further legislation can be avoided. Even if no new

federal legislation is passed, the drug manufacturer must

comply with existing federal laws

The FDA and direct-to-consumer advertising

The FDA oversees the advertising of prescription drug

products under the Federal Food, Drug, and Cosmetic Act

and related regulations. That means the agency must ensure

that prescription drug information provided by drug firms is

truthful, balanced, and accurately communicated. This is

accomplished through a comprehensive surveillance,

enforcement, and education program, and by fostering

better communication of labeling and promotional

information to both health professionals and consumers

(Lewis, 2003).Bringing a prescription drug to market requires the

approval of the FDA. In addition, the FDA’s Division of

Drug Marketing, Advertising and Communications

(DDMAC) controls the advertising of prescription drugs. In

1997, the FDA approved a trial run of direct-to-consumer

advertising without the necessity of including complete risk

information in each ad, as long as “adequate provision” was

made for the viewer to get complete information elsewhere.

This made television broadcast ads possible. DTC advertising

began in earnest. Since then, the FDA has continued to

monitor DTC, providing guidances for its use, and regulating

the content of ads and labels. Currently, pharmaceutical

companies face no limit on the amount of money that can be

spent on those promotions. In 2002, drug companies spent a

combined $2.5 billion on DTC ads (Thomaselli, 2003).Prescription drug ads may be broadcast on television or

radio, communicated over the telephone, or printed in

magazines and newspapers. Under FDA regulations, there are

three categories of ads:(1) Product-claim ads:

. mention a drug by name;

. describe the condition it is intended to treat;

. describe the risks and benefits of the drug.(2) Reminder ads:

. mention a drug by name;

. but do not say what it is used for;

. need not include risk information.(3) Help-seeking ads:

. contain information about a disease, but do not

mention a specific drug;. need not include risk information;

. often, these ads are extremely informative, and

helpful to the patient-consumer. Examples are ads

that mention high cholesterol or diabetes, then direct

the viewer to see a physician (Rados, 2004).

FDA compliance requirements

Among the requirements for product-claim ads for

prescription drug and medical devices are these:. Advertising for prescription drugs must disclose certain

information about the product’s uses and risks.. Ads must contain information about risks and benefits in a

“brief summary”.. Recognizing the time constraints of broadcast ads, instead

of a brief summary, a broadcast ad may include only

information about the major risks of the drug, if

“adequate provision” is made for the viewer to obtain

complete FDA-approved labeling information about the

product.. “Adequate provision” refers to the concept of providing

ways for consumers to find more complete information

about the drug. (Most ads fulfill this requirement by

including a toll-free telephone number, or web site

address, or advise viewers to see their health care

providers.). Any ad directed at consumers, either print or broadcast,

may not make any claim that is not supported by scientific

evidence.. Ads may not be false or misleading, or omit material

(important) facts.. Each ad must show “fair balance” between the risks and

benefits. Risks and benefits must be presented with

comparable scope, depth, and detail.. Pre-approval of DTC ads is not required, but a copy of the

ad must be submitted to the FDA when the ad begins to

run. However, the Agency will preview an ad if requested

(Rados, 2004).

FDA guidance and warning letters

In 1997, the FDA released a draft “guidance” describing the

“adequate provision” requirements, and giving suggested

ways the requirement might be met, such as a toll-free

telephone number, a reference to print ads, or a suggestion

that the patient-consumer see a physician (Nordenberg,

1998). Based on its experience, and on comments from

patients, physicians and others, in August, 1999, the FDA

released its final Guidance for Industry, Consumer-DirectedBroadcast Advertisements, which did not differ substantially

from the draft. The final Guidance described the “brief

summary” as “information in brief summary relating to side

effects, contraindications, and effectiveness (available online

at www.fda.gov).The FDA monitors ads as they are presented or released. If

the agency finds that a company has broadcast an ad that is

false or misleading, the agency may take enforcement actions,

beginning with one of two types of letters. “Untitled” letters

are usually sent to first time violators, or for less serious

violations. “Warning” letters are sent to companies that have

violated the law repeatedly, or that have committed serious

regulatory violations in their advertising. Such letters typically

demand corrective advertisements to ensure that the audience

that received the original false or misleading information also

receives truthful and accurate information (Rados, 2004).




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The FDA is more closely scrutinizing drug ads. Of 18

warning letters sent by the FDA in 2003, seven were for DTC

ads. Two were sent within 22 days of each other in the month

of August, 2003, to major pharmaceutical companies that

were asked to pull their advertising – one to Bristol-Myers

Squibb for a misleading print ad for Pravachol, and the other

to Novartis for a television spot for Lamisil (Thomaselli,

2003).In reprimanding the pharmaceutical companies for the

Lamisil and Pravachol ads, the FDA took issue with what it

called misleading claims of efficacy and for targeting illnesses

and ailments for which the drugs had not been approved. In

the case of the anti-cholesterol Pravachol, the FDA also asked

for “prompt dissemination” of corrective ads (Thomaselli,

2003).Public input and FDA experience with DTC led to FDA’s

publication of two new draft guidances in February, 2004,

one on the brief summary, and one on help-seeking ads (Both

may be downloaded from www.fda.gov). A continuing

problem the FDA has encountered had to do with the

requirements of particular kinds of ads. Rather than use a

product-claim ad, which requires the disclosure of risk

information, some marketers have been known to combine

help-seeking ads with reminder ads in a way that causes the

audience to perceive the two pieces as one advertisement.

Individually, these ads require no disclosure of risk

information. But by the use of this strategy, the patient-

consumer knows the name of the drug (pursuant to the

reminder ad), while the marketer has avoided disclosing risk

information by using a “help-seeking” rather than a product-

claim ad. The FDA’s 2004 Draft Guidance bans such a

strategy, and mandates that if those two types of ads are used

in combination, there must be separation between them – in

print ads, by space, and in television ads, by time.With all of these efforts, the FDA’s goal is to encourage

more informative, understandable ads. Nevertheless, a broad

public perception of escalating problems with DTC

continues.

Problems with direct-to-consumer advertising

Among the problems encountered with DTC advertising (as

reported by Rados (2004), unless otherwise indicated), are

those listed below.Critics contend that DTC advertising:(1) Encourages overuse of prescription drugs.(2) Encourages the use of the most costly treatments,

instead of less expensive treatments that would be just

as satisfactory.(3) May cultivate the belief among the public that there is

“a pill for every ill”. (quoting Michael S. Wilkes, M.D.).(4) May contribute to the medicalization of trivial ailments,

leading to an even more over-medicated society.(5) May encourage patients to withhold information from

their doctors or try to treat themselves.(6) Can affect the dynamics of the patient-physician

relationship in negative ways. Some physicians report

it time-consuming “trying to talk people out of

something they have their hearts set on”(quoting

Carol Salzman, MD, PhD).(7) Often masquerade as educational tools, but are more

promotion than education; ads provide little

information that not biased.

(8) Are not fairly balanced as required by FDA regulations,

and actually convey 30 percent more benefit

information than risk information (Kaphingst and

DeJong, 2004).(9) Present risk information in one continuous segment

rather than interspersed with benefit information,

thereby reducing its impact (Kaphingst and DeJong,

2004).(10) Did not change tone or speed when conveying risk

information, in order to convey different content

(Kaphingst and DeJong, 2004).(11) Conveyed “adequate provision” information (where to

go for more information) entirely in text form, making

it much less understandable to those with limited

literacy.(12) Had SMOG scores (SMOG readability formula) that

exceeded the maximum eighth-grade reading level

recommended for material used with the general

public, in all but one of the tested ads. College-level

reading ability would be required to read the brief

summary information (McLaughlin, 1969; Kaphingst

and DeJong, 2004).(13) Showed several factors in the tested ads (Kaphingst and

DeJong, 2004), which increased reading difficulty

according to the suitability assessment of materials

(SAM) method, including:. extensive information was presented which was not

essential for consumers (for example,

pharmacokinetic data);. lack of key idea summaries;. use of passive voice, complex sentence structure and

technical vocabulary;. lack of illustrations for key ideas;. lack of visual and typographic cues to highlight key

content;. use of small type, long line lengths and crowded

layout; and. presentation of text without sub-divisions (Doak et al.,

1996);(14) The typical “brief summary” is not brief, and uses

technical language. Usually, it reprints the entire FDA

labeling information intended for physicians. Patient-

consumers cannot understand it (see Figures 1 and 2).(15) A patient-consumer might not understand the

admonition to “tell your doctor what other

medications you are taking” to mean that other

medications could interact with the advertised

medication. Such an approach assumes the patient

understands the context, which may not be true

(Kaphingst and DeJong, 2004).(16) Drug firms have tended to promote the sale of so-called

“lifestyle” drugs, such as Viagara, Rogaine and Botox,

which provide higher profit margins, leaving fewer

resources devoted to the research and sale of drugs

which are more medically necessary (Hall 2004, p. 197).(17) Promoting a drug for a rare but minor condition which

arguably, does not warrant drug therapy, and

consequently detracting from the efforts to find

treatments for conditions which do warrant therapy

(Pollack, 2005).




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DTC advertising faces mounting criticism, and if it continues

to escalate, then DTC ads may be regulated out of any

meaningful existence.

The FDA is not under a legal mandate to allow DTC and, as it has before,

may study the evidence and restrict or restrain the use of DTC for medical

reasons that can vary widely. The agency may discover evidence that

consumers are receiving many improper medicines from the doctors they

pressure for new products. They may find evidence of consumer perceptions

of ad claims being incorrect. They may be under political pressure related to

any number of public and political reasons to restrict an allegedly wasteful

tool that does not produce demonstrable benefits for patients better than a

world without DTC (Richardson and Luchsinger, 2004).

The FDA itself says:

Assessing DTC advertising is an ongoing process for the FDA. As more

research surfaces, the agency will continue to evaluate DTC drug promotion

and will take additional measures as appropriate to protect the public health

(Rados, 2004).

Attempts to use federal laws to pre-empt state tort laws have

failed for decades. There is a strong belief not only that states

have the right to govern the health, safety and welfare of their

citizens, but also that a patient must have the information

necessary to give an informed consent.There are calls to change the Learned Intermediary Rule in

those states where it still exists from an absolute exemption

from liability to a fact-based case-by-case determination of

whether the patient actually had a meaningful interaction with

a learned intermediary. If no meaningful interaction took

place, the rule should not apply, and the manufacturer would

be strictly liable (Hall, 2004). This change is not merely an

academic one; it directly affects litigation costs. If the Learned

Intermediary Rule is an absolute exemption from liability, a

manufacturer may be dismissed early in the litigation. But if it

is to be a case-by-case, fact-based inquiry, those cases will go

to trial, and the jury will decide whether the patient had any

meaningful interaction with a learned intermediary. If the

patient did not have the benefit of a learned intermediary, and

no adequate direct notice of risks was received, the

manufacturer will be strictly liable to the patient for his

injury, or to his family for his death.

Recommendations – how to prevent DTC fromcoming to mean “direct to court”

It is very easy to see the dilemma faced by the marketing

professional, who must find a way to promote a product while

disclosing certain information which is contra-promotional,

all within certain parameters and, in the case of broadcast

media, also within strict time-frames. Yet, this is the task

facing today’s professional marketer of prescription drugs.

Figure 1 Physician label version




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How can this be done in a way which protects the patient, and

does not jeopardize the future of DTC advertising?First, many of the criticisms of DTC advertising appear to

be well-deserved, and would stand as the primary reasons to

abolish DTC advertising, or severely curtail it. Those

practices which have received universal criticism should be

changed first. And this is not to say that all DTC ads are

suspect. Many firms do a creditable job and a public service

with DTC advertising, but some do not. If the industry does

not regulate itself, the government will surely do it.Second, DTC advertising of prescription drugs has the

potential to provide many benefits – truly educating the

public, making the public aware of under-diagnosed and

under-treated illnesses such as high blood pressure and high

cholesterol, and helping to remove the stigma associated with

certain disorders such as erectile dysfunction and depression

(Rados, 2004). But that potential is not being realized. So

much opportunity exists to adopt and accomplish these goals,

and improve the perception of direct-to-consumer

advertising, and the pharmaceutical manufacturers, but that

opportunity is being wasted.

If the perception of DTC advertising continues to worsen,

you may be sure that new laws and regulations will follow.

Even now, the Learned Intermediary Rule can no longer be

relied on to shield drug manufacturers from liability for their

products. Because the health care system has changed so

dramatically, and because DTC advertising has essentially

filled the void created by those changes, DTC advertising is at

risk. Can it fulfill its promise?The authors offer these recommendations:(1) Always remember that your customer is a “patient”

before he is a “consumer.” If you approach advertising

with this in mind, you will build credibility – your most

important asset in any promotional endeavor. At the

same time, you will be protecting your customer, and

avoiding liability.(2) Provide full disclosure of relevant information,

particularly about the risks of your products, directly

to the patient-consumer. Remember that any patient

needs enough information about your product to make

an “informed consent.” She must know the risks, as well

as the rewards. If you do this, you will protect your

patient-consumer, and avoid liability.

Figure 2 Consumer-friendly version




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(3) Make it a primary goal to educate your patient-

consumer (Thomaselli, 2005), rather than to merely sell

to him. It is a change of perspective which will havemany benefits.

(4) Make sure your drugs come to market only after fulltesting. Avoid the kind of disaster brought about by

Vioxx and Celebrex, both of which leave their

manufacturers facing expensive litigation. Adequatepre-testing to make sure the product was safe would

have been less expensive in many ways, not the least of

which is the appearance to the public of the rush tomarket of an unsafe drug in order to make huge profits.

(5) Comply with FDA regulations and guidances in allrespects; give no cause for further regulation.

(6) Comply with all state laws in all respects; avoid losing

what protection remains of the Learned IntermediaryRule.

(7) Establish and safeguard your company’s credibility:. Avoid the kinds of activities that have led to criticism

by doctors, patients and consumer groups. Forexample, don’t encourage overuse of prescription

drugs. Liquor ads tell viewers to “drink responsibly.”

Why not include in your ads some cautionary advicelike “As with all medication, take it only if you need

it,” or something similar. You will be doing a public

service.. If you promote new or costlier treatment, advise the

patient that other treatment may be available. And tellhim that his doctor will be able to advise which will be

best for him.. Make sure ads are fairly balanced between benefit and

risk information, and do it in a way that calls attention

to the risk information (Kaphingst and DeJong,2004).

(8) Bring the physician back into the decision-making

process. Make sure your patient-consumer knows thatindividual health factors may affect a decision to use

any medication, and that only her doctor can make thisassessment.

(9) Direct at least some product ads to the physician or

health-care provider. You will be building credibilitywith both doctor and patient.

(10) Be mindful of the patient who does not read well. Whenpreparing “adequate provision” information, be sure

that everyone knows where to get more information –

even those who do not read well (Kaphingst andDeJong, 2004).

(11) Compose your advertising at the recommended level foradults, an eighth grade reading level, and not to the

college level. Use sub-titles, bullet points and key ideas

to make your ads both more readable and moreunderstandable (Kaphingst and DeJong, 2004) (see

samples from FDA Draft Guidance for print ads,

included at the end of this paper; Samples may bedownloaded from www.fda.gov).

(12) Make sure that any admonition to “tell your doctor,”includes the reason why – because this medicine may

interact with others. You will be protecting your patient-

consumer, and avoiding potential liability (Kaphingstand DeJong, 2004).

(13) Your “brief summary” should be just that – brief,written in laymen’s terms, relaying key ideas, and

understandable at an eighth grade reading level

(Kaphingst and DeJong, 2004). Be certain to providea way for your patient to get access to full information.Do not default to copying the FDA labelingrequirement. Your patient-consumers cannotunderstand it. This increases your risk of liability.

(14) Promote medically necessary drugs at least as much as“lifestyle” drugs such as Viagara, Rogaine and Botox.Make sure your priorities are correct. Your credibilitydepends on it.

(15) Avoid creating a disease just to be able to sell a drug. Inthe eyes of many observers, this is pharmaceuticalmarketing at its worst, and cannot be justified.

(16) Do more than is required by the laws and regulations.Your most important asset is your firm’s credibility.Establish it; maintain it. A company which acts ethicallywill avoid liability. An industry which acts ethically willavoid new laws and regulations which are almost certainto reduce its options for conducting business, andincrease its costs.

(17) Create more “help-seeking” ads. Provide the publicservice of raising awareness of undiagnosed and under-treated illnesses. With medical advice, include in yourads symptoms (Kaphingst and DeJong, 2004) theviewer should watch for, and if he finds them, tell himto see his physician to determine if what he thinks maybe true actually is true. Educate your patient-consumer;establish your credibility.

The goal is do all of this, and still sell your product. That isundoubtedly a challenge. The professional marketer mustcombine marketing skills with compliance dictates in a waythat is both appealing and understandable, and conveys allinformation necessary to any patient-consumer’s informeddecision. This will require a new kind of creative thinking.

Compliance with creativity

The FDA has this to say about one DTC television ad:

You may have seen the advertisement: A melodrama of crime andcorruption, conflict and emotion, centering on indoor hit men like dustand danger, and outdoor hit men such as pollen and ragweed, all threateningto offend a young and very beautiful woman’s nose. The 45-secondbroadcast ad covers everything from talking to your doctor to the possibleside effects that people can expect. Then the narrator mentions “Flonase”.

Entertaining though it may be, the Food and Drug Administration saysthis promotional piece about nasal allergy relief also has all the elements of awell-crafted, easy-to-understand prescription drug advertisement directed atconsumers, and it meets agency requirements for these ads (Rados, 2004).

Direct-to-consumer advertisers are becoming moreinnovative, and are resorting to tactics more often associatedwith consumer-packaged goods marketers such as buy-one-get-one-free promotions and money-back guarantees. “It’s amovement toward promotions as a form of marketing, whichis different than we’ve ever seen, at least to the consumer”,noted Lynda Maddox, professor of marketing and advertisingat George Washington University, who noted that physicianshave been subject to promotionally positioned pharmaceuticalmessaging and samples for some time (Johnsen, 2004).

“What you’re seeing is an evolution of the strategy forDTC, as well as the expectation”, commented D. ChaunceySmith, senior brand manager at Glaxo-Smith KlineConsumer Healthcare and spokesman for the MedicalMarketing Association. The industry has transitioned fromfitting the square peg of stiff, pharmaceutical-orientedmarketing into the round hole of a broadcast televisionformat. “It really stuck out”, he said. “The manufacturers and




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the marketing personnel have gotten a little moresophisticated in following the consumer model for copydevelopment and what the creative strategies look like”(Johnsen, 2004).

However, some new ideas should be used sparingly andonly for appropriate products. Remember always that yourcustomer is a “patient” first, and a “consumer” only afterthat. Achieving the proper tone is everything. Appealing toyour audience at the proper level is everything. Offeringvolume discounts for patients who must take a medication forthe rest of their lives makes sense, and helps the patient-consumer. But the offer of “buy-one-get-one-free” will notalways be appropriate. Any marketing practice which gives offechoes of the days when hucksters sold snake-oil to unwittingtownspeople will raise the calls for an end to DTCadvertising. But marketers who maintain credibility andprofessionalism will thrive.

Changing the face of DTC advertising will require manythings, not the least of which is creativity. It is the newchallenge facing the marketers of direct-to-consumeradvertising.

Notes

1 Perez v. Wyeth Labs, 834 A.2nd 1247 [N.J. 1999].2 MacPherson v. Buick Motor Co., III NE 1050, 1053 [NY

1916] (see Hall, 2004).

References

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Doak, C.C., Doak, L.G. and Root, J.H. (1996), TeachingPatients with Low Literacy Skills, J.B. Lippincott Company,Philadelphia, PA.

Gatti, J. (2003), “Study: DTC ads are driving strongconsumer awareness and response”, Direct Marketing,December 1.

Hall, T.S. (2004), “Reimagining the learned intermediaryrule for the new pharmaceutical marketplace”, Seton HallLaw Review, Vol. 35, pp. 193-254.

Hoffman, J.R. (1993), “Direct to consumer advertising ofprescription drugs: an idea whose time should not come”,British Medical Journal, Vol. 31 No. 980, pp. 1301-2.

Hollon, M.F. (1999), “Direct-to-consumer marketing of

prescription drugs: creating consumer demand”, JAMA:

The Journal of the American Medical Association, Vol. 281

No. 4, pp. 382-4.Holmer, A. (1999), “Direct-to-consumer prescription drug

advertising builds bridges between patients and physicians”,

JAMA: The Journal of the American Medical Association,

Vol. 281 No. 4, pp. 380-2.Johnsen, M. (2004), “Are DTC ads for pharmaceuticals too

promotional?”, Drug Store News, August 23, p. 96.Kaphingst, K.A. and DeJong, W. (2004), “Market watch: the

educational potential of direct-to-consumer prescription

drug advertising”, Health Affairs, Vol. 23 No. 4, pp. 143-51.Lewis, C. (2003), “The impact of direct-to-consumer

advertising”, FDA Consumer, March-April, p. 9.McLaughlin, G. (1969), “SMOG grading – a new readability

formula”, Journal of Reading, Vol. 12 No. 8, pp. 639-46.Mehta, A. and Purvis, S. (2003), “Consumer response to

print prescription drug advertising”, Journal of Advertising

Research, Vol. 43 No. 2, pp. 194-207.Nordenberg, T. (1998), “Direct to you: television drug ads

that make sense”, FDA Home Page, available at: www.fda.

gov/ fdac/features/1998/ 198_ads.htmlPollack, A. (2005), “Marketing a disease, and also a drug to

treat it”, New York Times Online, available at: www.nytimes.

com/2005/05/09/business/09avanir.htmlRados, C. (2004), “Truth in advertising: Rx drug ads come of

age”, FDA Consumer Magazine, July-August, available at:

www.fda.gov/fdac/features/2004/404_ads.htmlRichardson, L. and Luchsinger, V. (2004), “International

pharmaceuticals industry: the new marketing paradigm in

the United States and unresolved issues of public policy”,

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pp. 21-6.Sudhaman, A. (2004), “Writing a prescription for trouble?”,

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approval”, Advertising Age, Vol. 74 No. 39, p. 63.Thomaselli, R. (2005), “J&J stance on DTC ads irks rivals”,

Advertising Age, Vol. 76 No. 13, p. 1.




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Pharmaceutical marketing on the internet:marketing techniques and customer profile

Calin Gurau

Groupe Sup. de Co. Montpellier, Montpellier, France

AbstractPurpose – Attempts to investigate the perceived advantages and risks associated with online pharmaceutical transactions, and on this basis, topropose a specific segmentation of consumers.Design/methdology/approach – Analyses the marketing procedures applied by pharmaceutical sites to emphasise the specific advantages and tominimise the perception of transactional risks, as well as the segmentation techniques applied online.Findings – The results of the study indicate the existence of four main consumer categories. This schematic categorisation needs further development,in order to define more precisely the decision taking process and the online shopping behaviour for each customer segment, as well as the level of post-purchase satisfaction. On the other hand, the paper demonstrated that the marketing approach of various online pharmacies is determined by thetransactional model applied.Originality/value – The empirical analysis presented in this paper should be complemented by future qualitative study, in order to facilitate a deeperunderstanding of the factors determining the growing success of online pharmacies.

Keywords Pharmaceuticals industry, Consumer psychology, Marketing strategy, Internet




Introduction

The explosive development of the internet in the last ten years

has created new commercial opportunities. Despite the strict

regulations enforced by national states, the commercialisation

of medicines was introduced with success on the web by an

increasing number of online pharmacies. The therapeutic

products sold on the internet include over-the-counter (OTC)

and prescription drugs, as well as alternative remedies,

vitamins and nutraceutical supplements (Smith et al., 2002).

In most cases, the drugs sold online have lower prices that the

offer on the classical market (Sweet, 2001), either because the

pharmacies outsource generic drugs from developing

countries, or they take advantage of price differentials

introduced by health system regulations in different

countries (such as the difference between the medicines’

prices in the USA and in Canada). This issue has created a

heated debate between national regulatory bodies, consumer

groups, and the large pharmaceutical companies.In the USA, The American Medical Association and the

Food and Drug Administration (FDA) declared that doctors

who issue prescriptions without personally examining the

patient are engaging in substandard health care. FDA has

strongly recommended consumers to not buy drugs from

online pharmacies that offer an online consultation andprescription (Rowland, 2005). However, on the other hand,

the practice of prescribing without a physical examinationdoes not violate the US federal law, as long as the sites do not

dispense narcotics or other controlled substances.Despite the strong warnings launched by governmental

agencies, the online sales of medicines seem to prosper: in thelast trimester of 2004, 17.4 million Americans have visited

online pharmacies, an increase with 36 per cent comparedwith the third trimester of 2004 (Rowland, 2005). A study

conducted by comScore Networks reported that the mainadvantage sought by online buyers is price – nearly two-thirdsof respondents used online pharmacies to save money. Also,

66 per cent of respondents considered that online pharmaciesprovide a healthy competition to regular pharmacies (Kerner,

2005).Customer satisfaction with online prescription drug buying

is high. A study conducted by eMarketer (2004) indicatedthat only 10 per cent of the respondents felt less satisfied with

buying their drugs online than through a traditionalpharmacy, 32 per cent were more satisfied with the

experience, and 56 per cent were equally satisfied.In Germany, the trend is similar: in 2004, 1.7 million

people have bought medicines over the Internet, which isalmost double the figure from previous year (Gfk, 2005).

Considering this situation, the present paper attempts toinvestigate the perceived advantages and risks associated with

online pharmaceutical transactions, and on this basis, topropose a specific segmentation of consumers. On the other

hand, the study analyses the marketing procedures applied bypharmaceutical sites to emphasise their specific advantages

and to minimise the perception of transactional risks, as wellas the segmentation techniques used online.

Online pharmaceutical marketing

The internet represents an attractive alternative channel for

gathering information and purchasing healthcare products






22/7 (2005) 421–428


[DOI 10.1108/07363760510631165]

421

(Kanungo, 2004; Klein-Fedyshin, 2002). The US and

European audience for online health information is

substantial and growing. Web sites have become just as

important as some offline sources of health information. A

study published by Datamonitor in 2002 indicated that 57 per

cent of those who looked for health information in the past 12

months consulted internet sources (Datamonitor, 2002).The deficiencies of regular medical services, such as long

waiting list, insufficient doctors and poor service quality, have

determined people to search for more efficient ways to treat

their diseases. For the elderly, ill, handicapped, or isolated

consumers, online health information and drug sales with

home delivery can be lifesavers. Other customers are attracted

by low prices, the virtual anonymity, or the discreet delivery

promised by online pharmacies (Spain et al., 2001).The old people are particularly attracted by the

transactional convenience of the web. Wilson Health

Information (2005) reports that only 10.7 of the people

under 50 use online pharmacies as the preferred channel of

medication; but for the customers between 50 and 65 years

old, the percentage increases to 21.6 per cent, and for people

older than 65 years to 23.9 per cent.Pharmacychecker (2004), an organisation specialised in

evaluating and validating the profile and the activity of online

pharmacies, has identified the following benefits of buying

medicines from the web:. Lower prices: lower drug prices in some countries, and

lower overhead costs compared to “brick and mortar”

pharmacies often result in savings compared to local

pharmacy prices. In addition, the Internet offers

specialised tools that can provide a quick comparison of

prices available in various online pharmacies.. Privacy/anonymity: some customer feel more comfortable

purchasing or asking questions online, for certain

medication – as for example the so called “lifestyle

drugs”, treating obesity, hair loss or male impotence.. Access to more generic drugs: due to difference in patent

protection, more generic drugs can be available in foreign

countries, for medicines sold on the local market only

under branded names.. Prescription not needed: some web sites do not require any

prescription for the medication sold, even when the drugs

are regulated in the domestic market. Other sites offer to

write a prescription based on an online consultation/

questionnaire.. Convenience: for people in remote rural areas, handicapped

or old customers, ordering online can be more convenient

than the physical visit to a pharmacy, especially when the

medicines are delivered by mail at their domicile.. Medical information: some pharmaceutical sites provide

rich information about diseases, symptoms and

medication, as well as links to other medical resources,

such as universities, specialised government agencies and

health organisations.

The same organisation has also outlined the associated risks

with the online purchase of medicines:. some web sites are not licensed pharmacies;. some online pharmacies do not adequately protect the

privacy of customers, selling personal information to third

parties; the web line for online payments might not be

secured;

. some online pharmacies do not give their address and/or

telephone number, which reduces the possibility to

contact them directly or to send a complaint;. additional fees are sometimes added to the drug price,

such as medical fees, order fees and/or account set up fee;. prices can change quickly – online pharmacies reserve the

right to update their prices, some very frequently;. some online pharmacies do not provide adequate

protection for customers’ health: the sale of drugswithout a proper prescription, health history or a

medical exam, can be sometimes dangerous, due topossible incompatibilities with the patient or with

additional medication.

Despite the importance of this phenomenon, there are very

few academic studies that analyse the marketing techniques

used by online pharmacies, or the profile of customers(Maddox, 1999). Most of the publications published on this

topic focus on the legal/regulatory issues (Spain et al., 2001;Sweet, 2001), analyse the impact of online sales on traditional

pharmacies (Schmidt and Pioch, 2003), or present isolatedcases of online marketing of medicines (Sweet, 2001; Wrobel,

2002). However, the existing interest for this topic isindicated by the rich offer of professional reports, published

by market research organisations (Datamonitor, 2002; Gfk,

2005; Wilson Health Information, 2005).In order to fill this empirical gap, the present study focuses

on the following research objectives:. To identify the advantages and risks associated with the

online commercialisation of medicines.. To investigate the consumers’ perceptions regarding

online pharmacies and their activity.. To identify the profile of various consumer segments that

would buy medicines online.. To analyse the marketing techniques used by online

pharmacies to emphasise the advantages, reduce theperceived risk of internet sales, and segment the market.

After the presentation of the research methodology applied to

collect and analyse primary and secondary data, the findingsare discussed in direct relation to the formulated research

objectives. The paper concludes with a summary of researchfindings and with propositions for future research projects.

Research methodology

To answer the research objectives presented above, both

secondary and primary data were collected and analysed. In

the first stage of the research process, secondary informationabout the pharmaceutical sector, pharmaceutical marketing,

and online pharmacies were accessed using the academic andprofessional literature, as well as the Internet. This

information facilitated the understanding of the mainadvantages and risks related with online pharmacies, as well

as the specific application of pharmaceutical marketingtechniques on the internet.

In the second stage of the research project, a semi-

structured questionnaire was applied to 300 UK consumers.The respondents were contacted in the city centre of five large

UK cities (60 respondents in each city), by applying a randomsampling technique, during May-June 2004. The questions

focused on the respondents’ perception about the advantagesand the risks related with online pharmacies, as well as the

consumer behaviour concerning the purchase of drugs on the

Pharmaceutical marketing on the internet

Calin Gurau


Volume 22 · Number 7 · 2005 · 421–428

422

internet (type and location of preferred online pharmacies,

source of medicines). These data were then processed using

the SPSS software for data analysis.Finally, in the third stage of the research project, the sites

on 300 online pharmacies were accessed, and the mainmarketing procedures used by online pharmacies were

identified and analysed. The survey also collected dataconcerning the methods used by pharmaceutical web sites to

segment the online population of customers. These data wereagain analysed using the SPSS package.

Analysis and interpretation of data

The socio-demographic profile of respondents

A total of 173 (57.7 per cent) of the respondents were male

and 127 (42.3 per cent) female. 42 respondents were between18 and 25 years old (14 per cent), 57 between 26 and 35 (19

per cent), 85 between 36 and 45 (28.3 per cent), 60 between46 and 60 (20 per cent), and 56 older than 60 (18.7 per cent).

86 (28.7 per cent) respondents had a low level of revenue (lessthan £1000 per month), 134 (44.7 per cent) a medium level

(between £1,000 and £2,000 per month), and 80 (26.7 per

cent) a high level of revenue (more than £2,000 per month).In order to understand the consumers’ behaviour and

attitudes towards online pharmacies, it is important to assessthe particularities of the UK National Health System (NHS).

In UK, the patients need to register to a medical surgery,which usually has more general practitioner (GP) doctors.

These doctors provide a wide range of family health servicessuch as: advice on health problems, vaccinations,

examinations and treatment, prescriptions for medicines,

and referrals to other health and social services. Mostsurgeries can also provide family planning/contraception

services, care during pregnancy, child health checks andimmunisations, health promotion/health screening services,

and other minor operations and procedures. The doctors canbe seen on appointment, which can be sometimes quite long

(three to ten days), depending on the number of patientsregistered and on specific circumstances. However, there is

also an emergency service for special cases.The patients that require specialist consultation need a

recommendation from the GP surgery. For cases that are not

considered emergencies, the waiting list for a specialistconsultation or operation can be as long as 6 to 12 months.

People with high revenues can register in a private medicalsystem - The British United Provident Association (BUPA),

which has its own network of GPs, specialists, clinics andhospitals. It is also becoming more common for people to

travel to Belgium, France, Germany, but also India or China,

to have their operations – cataracts, hip replacements,hernias, heart by-pass surgery, gallbladder removal, etc.

These operations are performed at reputable hospitals to thesame high standard as in the UK, but for less money than is

usually charged in the UK private system.Once a GP or a specialist prescribes a treatment, the patient

can buy the medicines from a pharmacy, for a fixed,affordable, price per medicine. The difference between the

real cost of a drug and the price paid by the patient is covered

by the NHS. The GP and the specialist consultation are alsocovered, entirely or in a high proportion, by the NHS.

The majority of respondents were using only the NationalHealth System (262 – 87.3 per cent), and 38 were registered

with BUPA.

The use of online pharmacies services

A total of 102 respondents (34 per cent) indicated that they

buy or consider buying medicines over the net; 130 answered

that they do no want to use the services of online pharmacies

(43.3 per cent), and 68 (22.7 per cent) said that they do not

know, or “it depends” on particular circumstances. All online

buyers were exclusively using the NHS.Table I shows that the localisation of online pharmacies

(country of registration) and the country-of-origin of drugs

sold on the web, influences the choice of online buyers. The

large majority of respondents would only buy online from

pharmacies located in economically developed countries that

have a clear system of drug regulation and high standards of

quality (96.1 per cent of respondents). The respondents are

even stricter with the country-of-origin of the medicines

acquired online – 97.1 per cent want their drugs to originate

from economically developed countries. However, in this case

a lower proportion of respondents indicated that they will buy

only drugs produced in the UK, since it is common

knowledge that the pharmaceutical industry is a global sector.

The perceived advantages and risks of online

pharmacies

The results presented in Tables II and III indicate that

consumer decision on using or not online pharmacies

represent a complex, multidimensional process. Both buyers

and non-buyers are aware of the advantages and risks involved

in online transactions, however, the overall perception of

buyers is more positive – proportionally, more online buyers

Table I The preferences of online buyers concerning the location of thepharmacy and the country-of-origin of the drugs acquired on theinternet

Localisation of

pharmacy

Country-of-

origin of drugs

Possible answers n % n %

UK only 35 34.3 14 13.7

EU countries 36 34.4 40 39.2

Economically developed

countries (e.g. EU

countries, US, Canada,

Australia, etc.) 27 26.4 45 44.1

Any country 4 3.9 3 2.9

Total 102 100 102 100

Table II The advantages of online pharmacies perceived by variouscategories of respondents

Category of respondents/

Buy

online

Do not

buy

online

perceived advantages of online pharmacies n % n %

Price 78 76.5 75 57.7

Convenience 76 74.5 35 26.9

Choice 39 38.2 28 21.5

Anonymity 68 66.7 44 33.8

Information 72 70.6 51 39.2

Total 102 100 130 100


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perceive benefits and less of them perceive risks, incomparison with non-buyers. It is also interesting to notethat significant percentages of non-buyers consider onlinedrug sales attractive because of lower prices (57.7 per cent),and health information (39.2 per cent).

The respondents indicated that the decision to buy onlinemedicines involved in most cases a detailed cost (risks)/benefits (advantages) analysis, determined by theirdissatisfaction with the regular medical system. After thefirst experience with online pharmacies, many peoplecontinue to use their services because of the beneficesprovided and the high level of satisfaction.

The female online buyers seem to be more receptive to theadvantages offered by online pharmacies (see Table IV),especially concerning price, choice, and information services,but on the other hand, they are also more concerned aboutthe risks of online transactions – the differences between maleand female buyers regarding online privacy, security of onlinepayment, additional charges and the superficial prescriptionof drugs are statistically significant to a level of p , 0:05 (seeTable V). These results indicate the need of marketsegmentation, and the application of differentiatedmarketing procedure to attract potential customers andmaintain the existing ones.

The revenue of online buyers is significantly shaping theirperceptions about web-based pharmacies (see Table VI) in thecase of price advantage – the lower the revenue, the higher isthe percentage of people perceiving this advantage; and forthe choice offered online – the higher the revenue ofrespondents, the higher is the proportion of peopleappreciating the advantage. Although the convenience ofonline shopping, the virtual anonymity, and the healthinformation published online have not indicated significant

statistical differences between various categories of customers,

it can be noted that these advantages are positively considered

by a high proportion of high-revenue buyers.Table VII shows that there are no clear trends in the

perception of risks by various categories of online buyers. As it

is logical, many low-revenue customers are concerned about

the security of online payment. On the other hand, the high-

revenue customers present the higher percentages concerning

perceptions about possible lack of proper license, privacy,

quality of drugs, and superficial prescriptions. These

responses probably indicate a request for high quality

services, for which they might be willing to pay additional

charges.The data presented in Table VIII supports the previous

findings regarding the preference of various age categories to

Table IV Cross-tabulation between the perceived advantages of onlinepharmacies and the gender of online buyers

Male Female

Gender/perceived advantages n % n %

Chi-square

test values

Price 42 68.9 36 87.8 4.895 p ¼ 0:027

Convenience 45 73.8 31 75.6 0.044 p ¼ 0:834

Choice 16 26.2 23 56.1 9.262 p ¼ 0:002

Anonymity 39 63.9 29 70.7 0.510 p ¼ 0:475

Information 36 59 36 87.8 9.788 p ¼ 0:002

Total 61 100 41 100

Table III The risks of online pharmacies perceived by variouscategories of respondents

Buy online

Do not

buy online

Perceived risks of online pharmacies n % n %

Lack of proper license 32 31.4 87 66.9

Privacy 28 27.4 86 66.1

Security of online payment 23 22.5 90 69.2

Additional charges 22 21.6 79 60.8

Quality of drugs 18 17.6 89 68.5

Superficial prescription 22 21.6 89 68.5

Total 102 100 130 100

Table V Cross-tabulation between the perceived risks of onlinepharmacies and the gender of online buyers

Male Female

Gender/perceived risks n % n %

Chi-square

test values

Lack of proper license 15 24.6 17 41.5 3.242 p ¼ 0:072

Privacy 12 19.7 16 39 4.611 p ¼ 0:032

Security of online payment 9 14.8 14 34.1 5.280 p ¼ 0:022

Additional charges 7 11.5 15 36.6 9.139 p ¼ 0:003

Quality of drugs 8 13.1 10 24.4 2.145 p ¼ 0:143

Superficial prescription 8 13.1 14 34.1 6.411 p ¼ 0:011

Total 61 100 41 100

Table VI Cross-tabulation between the perceived advantages of onlinepharmacies and the revenue of online buyers

Low Medium High

Revenue/perceived

advantages n % n % n %

Chi-square

test values

Price 24 96 29 76.3 25 64.1 8.615 p ¼ 0:013

Convenience 17 68 27 71.1 32 82.1 1.965 p ¼ 0:374

Choice 7 28 11 28.9 21 53.8 6.522 p ¼ 0:038

Anonymity 14 56 25 65.8 29 74.4 2.332 p ¼ 0:312

Information 14 56 27 71.1 31 79.5 4.054 p ¼ 0:132

Total 25 100 38 100 39 100

Table VII Cross-tabulation between the perceived risks of onlinepharmacies and the revenue of online buyers

Low Medium High

Revenue/perceived

risks n % n % n %

Chi-square

test values

Lack of proper license 5 20 13 34.2 14 35.9 2.015 p ¼ 0:365

Privacy 6 24 10 26.3 12 30.8 0.390 p ¼ 0:823

Security of online

payment 8 32 6 15.8 9 23.1 2.279 p ¼ 0:320

Additional charges 4 16 9 23.7 9 23.1 0.611 p ¼ 0:737

Quality of drugs 4 16 5 13.2 9 23.1 1.365 p ¼ 0:505

Superficial prescription 4 16 6 15.8 12 30.8 3.160 p ¼ 0:206

Total 25 100 38 100 39 100


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shop online medicines (Wilson Health Information, 2005).

The older respondents (more than 60 years old) have clearly

indicated the convenience of online shopping as a significant

advantage, but also the availability health information and the

low price. Price is also important for the majority of young

buyers (18-25 years old), while anonymity is important for a

large percentage of middle-age customers (26-60 years old),

probably as a result of their active social and professional life.Table IX indicates that although the old customers can

represent an important target for online pharmacies, a

relatively large percentage of these buyers are concerned

about the risks of online transactions. These findings outline

the need for friendly customer interfaces and the

dissemination of information explaining in detail the

functioning of online pharmacies and the mechanism of

online transactions.

The transactional models used by online pharmacies

Not all online pharmacies use the same transactional model.

The analysis of secondary data Pharmacychecker (2004),

combined with the information collected through the survey

of 300 web sites of online pharmacies indicated four main

alternatives:(1) Model A. The customer is required to send an existing

prescription, written by a licensed doctor, either by post,

fax, or e-mail. The validity of the prescription is than

verified by the pharmacist, who eventually approves the

online transaction. After the customer pays using online

systems, the medicines are delivered to his/her address.

Usually the medicines are delivered directly to the patient,

who has to provide a valid identification document and to

sign for their receipt. In some cases, the customer is also

required to provide the contact address of the doctor who

gave the prescription, in order to facilitate the validation

process. Most of these online pharmacies are selling

medicines only nationally, many of them representing

online alternatives of existing regular pharmacies.(2) Model B. The online pharmacies applying this

transactional model ask customers to register, and then

to fill in and submit an online questionnaire requiring

information about the symptoms/disease of the patient,

his medical history, and his/her specific level of

responsibility (the patient has to acknowledge that he/

she has submitted truthful information and assumes

responsibility for the online order of drugs). Based on the

submitted information, a doctor prescribes a treatment,

and the online pharmacy sells the drugs to the patient.

These pharmacies usually sell internationally, and use a

system of additional delivery charges. Although remote

medical consultations are legal in many countries, this

model was strongly criticised in the professional

literature for failing to provide the required standards

of healthcare, because of the superficial nature of online

consultation (Rowland, 2005; Sweet, 2001). There are

also other possible risks associated with this system: it is

difficult to verify if the questionnaire was really analysed

by a licensed doctor, and sometimes the customers

themselves might provide false information in order to

obtain a specific medicine.(3) Model C. This transactional model presents the highest

level of risk, since the medicines are sold without

prescription. These sites clearly indicate that the

responsibility for the selection and the purchase of

drugs is entirely assumed by the buyer. Usually these

pharmacies attempt to limit the perceived risk by stating

that they are not selling and delivering any illegal drugs.

Table VIII Cross-tabulation between the perceived advantages of online pharmacies and the age of online buyers

18-25 26-35 36-45 46-60 60 <

Age/perceived advantages n % n % n % n % n %

Chi-square test

values

Price 14 93.3 13 76.5 24 66.7 16 72.7 11 91.7 6.005 p ¼ 0:199

Convenience 8 53.3 10 58.8 26 72.2 20 90.9 12 100 13.064 p ¼ 0:011

Choice 3 20 4 23.5 15 41.7 10 45.5 7 58.3 6.386 p ¼ 0:172

Anonymity 7 46.7 12 70.6 27 75 17 77.3 5 41.7 8.431 p ¼ 0:077

Information 7 46.7 12 70.6 26 72.2 16 72.7 11 91.7 6.797 p ¼ 0:147

Total 15 100 17 100 36 100 22 100 12 100

Table IX Cross-tabulation between the perceived risks of online pharmacies and the age of online buyers

18-25 26-35 36-45 46-60 60 <

Age/perceived risks n % n % n % n % n %

Chi-square test

values

Lack of proper license 2 13.3 3 17.6 13 36.1 9 40.9 5 41.7 5.650 p ¼ 0:227

Privacy 1 6.7 3 17.6 12 33.3 7 31.8 5 41.7 6.128 p ¼ 0:19

Security of online payment 2 13.3 2 11.8 10 27.8 4 18.2 5 41.7 5.177 p ¼ 0:27

Additional charges 0 0 1 5.9 9 25 5 22.7 7 58.3 16.454 p ¼ 0:002

Quality of drugs 0 0 1 5.9 7 19.4 3 13.6 7 58.3 18.826 p ¼ 0:001

Superficial prescription 2 13.3 3 17.6 6 16.7 4 18.2 7 58.3 11.005 p ¼ 0:027

Total 15 100 17 100 36 100 22 100 12 100


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They are selling internationally, and their headquarters

are located in developing countries.(4) Model D. These pharmacies sell only non-prescription

drugs, including vitamins, dietary supplements andhomeopathic remedies. The online customers can freely

select and order the remedies, although the quantity ofdrugs that can be purchased in one transaction is limited.

Despite the lower risks presented by these medicines,there can still have secondary negative effects, which are

usually presented in detail by most of these web sites, inorder to offer the customer an informed choice. Many ofthese outlets sell internationally, although there are cases

of sites that distribute only nationally or regionally, toavoid possible incompatibilities between different

national regulations regarding OTC drugs.

Table X presents the preference of male and female customers

for various transactional models (the respondents wererequired to indicate all the models that they use or would

use to buy drugs online). The male customers prefer in aslightly higher proportion the first transactional model (and

the less risky one) than the female respondents. On the otherhand, a very high percentage of women are inclined to buydrugs from non-prescription outlets (85.4 per cent), which

can be explained by their high consumption of dietary andnatural remedies.

The higher percentages of online buyers in all transactionalmodels are the low-revenue customers, while the high-

revenue buyers clearly prefer less the web sites sellingmedicines without prescription (only 17.9 per cent of this

category of respondents indicated that they would buy fromthis type of outlets) (see Table XI).

The older customers prefer in large numbers the onlinepharmacies using models A, B and D, but they show a clear

avoidance of the “no prescription required” model. Overall,the OTC pharmacies seem to be preferred by many

respondents, maybe because of their clear conformity with

safety standards and regulations. Among all categories of

respondents, the younger customers (18-25 years old) haveshown the stronger willingness to buy from Model C

pharmacies (53.3 per cent) (see Table XII).

Marketing procedures applied by online pharmacies

The mix of perceived advantages and risks associated with

online medical transactions indicates the necessity of an activemarketing strategy. The online pharmacies can increase the

acceptance of their offer and transactional model by providingon their web sites information that, on one hand, explain the

selling process and provide guarantees – reducing theperceived risks, and, on the other hand, that emphasise the

advantages of an online transaction. These organisations can

also increase the effectiveness of their communicationstrategy, by creating procedures for an effective

segmentation of the online market.Table XIII presents the information categories identified on

the surveyed web sites, that can reduce the perceived risk ofonline transactions. All types of online pharmacies provide

contact information, although the level of detail differs: insome cases only a brief postal address and/or an email address

is published online, while the majority of sites include also thetelephone and the fax number. A large percentage of Model A

pharmacies publish a privacy policy, information about thesecurity of payment, and about their licence. At the other

extreme, many “no prescription needed” sites attempt to

reduce the perception of risk by providing information aboutthe source of their drugs. Many Model B sites are also

characterised by a high level of transparency and details, thattry to reassure customers about the feasibility of remote

medical consultations.In order to enhance the perceived advantages of online

transactions, the sites publish information concerning price,convenience, choice, and discreetness of service (see Table

XIV). In addition, many sites using the transactional modelsB, C and D, that have the highest level of potential risks,

provide testimonials of existing customers to reinforce their

positive messages.The advantage of price is not particularly emphasised by

Model A pharmacies since in some case the range of pricesproposed is quite similar with the regular system; however,

they try to outline the convenience of shopping online. Price,convenience and discreetness of service are used as main

arguments by Model B and C pharmacies, some of thembeing specialised in “lifestyle pharmaceuticals”, such as

Viagra for erectile dysfunction, Propecia for hair loss orXenical for obesity (Sweet, 2001). The influence of the

transactional model is statistically significant for all categoriesof information presented online.

The segmentation techniques applied by online pharmacies

are strictly determined by the specific characteristics of theinternet (see Table XV). Since the customer has the control

over the information that he/she accesses online, theprocedures applied are self-segmentation mechanisms, such

as lists of diseases or drugs, that can be selected by theinternet user, or mini-search engines.

The large majority of sites are using a combinedsegmentation, applying sometimes two or three different

criteria, such as gender, age (by presenting gender-specific orage-specific treatments), and diseases. Overall, the system

applied on most sites includes a first list of diseases, and then,

Table X Cross-tabulation between the transactional models of onlinepharmacies and the gender of online buyers

Male Female

Gender/online model n % n %

Send prescription 41 67.2 25 61

Online consultation and prescription 27 44.3 23 56.1

No prescription required 18 29.5 14 34.1

OTC medicines 41 67.2 35 85.4

Total 61 100 41 100

Table XI Cross-tabulation between the transactional models of onlinepharmacies and the revenue of online buyers

Low Medium High

Revenue/online model n % n % n %

Send prescription 18 72 24 63.2 24 61.5

Online consultation and prescription 14 56 18 47.4 18 46.2

No prescription required 11 44 14 36.8 7 17.9

OTC medicines 22 88 27 71.7 27 69.2

Total 25 100 38 100 39 100


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for each disease, a range of specific drugs. A large majority of

“no prescription needed” sites offer only a list of drugs or a

mini-search engine, since the customer is supposed to select

him/herself the medication.On the other hand, almost all sites require customer

registration, a procedure that collects general socio-

demographic and medical information about buyers, which

can be eventually used for database analysis and

segmentation.

Concluding remarks

The popularity of online pharmacies represents an intriguing

phenomenon. On one hand, most people acknowledge the

risks of online transactions, but on the other hand a high

proportion of customers that buy drugs online declare a high

level of satisfaction. As any commercial activity, the success of

online pharmacies is directly related to their capacity to

segment the market, understand the customers and satisfy

their needs. The popularity of professional market reports

that analyse consumer preferences and profiles prove the

importance of this marketing approach.This paper attempted to investigate and present the

perceptions of UK customers about the advantages and the

risks of online health transactions, and the marketing

procedures applied by online pharmacies to modify and/or

reinforce these perceptions. The information presented

permits the definition of specific consumer profiles:. Consumer A: young, with low revenues, less interested in

online service quality and less sensitive to online risks, but

concerned about price and online payment security.

Table XII Cross-tabulation between the transactional models of online pharmacies and the age of online buyers

18-25 26-35 36-45 46-60 60 <

Age/online model n % n % n % n % n %

Send prescription 12 80 9 52.9 20 55.6 16 72.7 9 75

Online consultation and prescription 5 33.3 11 64.7 16 44.4 10 45.5 8 66.7

No prescription required 8 53.3 7 41.2 11 30.6 5 22.7 1 8.3

OTC medicines 14 93.3 13 76.5 24 66.7 15 68.2 10 83.3

Total 15 100 17 100 36 100 22 100 12 100

Table XIII Cross-tabulation between the transactional models of online pharmacies and the information categories presented online to reduce theperceived risk

Model A Model B Model C Model D

Online model/information n % n % n % n % Chi-square test values

Contact information 86 100 147 100 18 100 49 100 N/A

Privacy policy 84 97.7 127 86.4 10 55.6 27 55.1 50.16 p , 0:0001

Payment security 81 94.2 139 94.6 9 50 38 77.6 41.527 p , 0:0001

Licence pharmacy 75 87.2 114 77.6 8 44.4 32 65.3 19.182 p , 0:0001

Licence doctor N/A 84 57.1 3 16.7 N/A 10.54 p ¼ 0:001

Source of drugs 35 40.7 104 70.7 14 77.8 26 53.1 23.701 p , 0:0001

Professional certification 6 7 5 3.4 0 0 11 22.4 21.26 p , 0:0001

Total 86 100 147 100 18 100 49 100

Table XIV Cross-tabulation between the transactional models of online pharmacies and the information categories presented online to enhance theperceived advantages

Model A Model B Model C Model D

Online model/advantages n % n % n % n % Chi-square test values

Price 43 50 136 92.5 18 100 34 69.4 62.366 p , 0:0001

Convenience 64 74.4 121 82.3 15 83.3 16 32.7 46.781 p , 0:0001

Choice 23 26.7 78 53.1 15 83.3 36 73.5 37.905 p , 0:0001

Testimonials 26 30.2 115 78.2 16 88.9 36 73.5 62.471 p , 0:0001

Discreetness 12 14 124 84.4 17 94.4 25 51 122.137 p , 0:0001

Total 86 100 147 100 18 100 49 100

Table XV Cross-tabulation between the transactional models of onlinepharmacies and the criteria used for market segmentation

Online model/ Model A Model B Model C Model D

segmentation n % n % n % n %

Gender 14 16.3 38 25.8 3 16.7 21 42.8

Age 2 2.3 17 11.6 0 0 8 16.3

Disease 67 77.9 123 83.7 7 38.9 34 69.4

Medicine 12 13.9 6 4.1 11 61.1 15 30.6

Total 86 100 147 100 18 100 49 100


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. Consumer B: middle-aged, with good purchasing power,

requiring privacy and discreetness of delivery.. Consumer C: middle-aged, high-revenue customer that

requires a high service quality, anonymity, rich online

information and choice.. Customer D: old-aged, with low or medium purchasing

power, attracted by the convenience of online shopping

and home delivery, but highly concerned about onlinetransaction risks.

This schematic categorisation needs further development, inorder to define more precisely the decision taking process and

the online shopping behaviour for each customer segment, as

well as the level of post-purchase satisfaction.On the other hand, the paper demonstrated that the

marketing approach of various online pharmacies is

determined by the transactional model applied. Model Apharmacies emphasise their compliance with national health

regulation standards, and propose an alternative channel ofdrug distribution, that for specific categories of customers

might be more convenient than the regular pharmaceutical

system. Considering that often these pharmacies have also aphysical presence in the pharmaceutical distribution, their

strategy can be considered as a diversification/development of

classical retail channels, to a “bricks and clicks” model.On the other hand, the pharmacies that offer remote

consultations, or that do not require any medical prescription,attempt to create an image of transparency and honesty by

providing detailed information about the online transaction

system, security of payment, and origin of drugs.Finally, the pharmacies specialised in OTC remedies

emphasise the low prices and the rich choice offered by

their sites.The present study has a number of limitations, determined

by its exploratory nature. The number of people and onlinepharmacies included in the study were relatively small,

although the representativity of the sample permits the

generalisation of findings. The profiles of online customerspresented in this paper is valid only for the UK market, since

national and cultural conditions can determine specific

customer behaviour and preferences. From this perspective,the findings can be used as a starting basis for future research

on this topic. A replication of this research methodology inother countries can provide an opportunity for comparison

studies at international and transnational level.On the other hand, the quantitative analysis presented in

this paper should be complemented by qualitative

information, in order to facilitate a deeper understanding of

the factors determining the growing success of onlinepharmacies. Despite the risks created by some illegal web-

based organisations, it would be a mistake to demonise theentire phenomenon. In fact, their very existence and

development proves that online pharmacies answer to a real

and present need expressed by customers. The online sales ofdrugs should be surely improved, and the best way forward

might be a stricter regulation of medicines sales attransnational level, combined with better customer education.

References

Datamonitor (2002), Who is Looking for Health InformationOnline ?, Datamonitor, London.

eMarketer (2004), “Only 10% of respondents felt lesssatisfied”, eMarketer, available at: www.emarketer.com/news/article.php?1002721& trackref ¼ edaily (accessedApril 2005).

Gfk (2005), The 2005 Online Shopping Survey, Enigma Gfk,Nurnberg.

Kanungo, R.P. (2004), “E-commerce in the pharmaceuticalindustry: threshold of innovation”, Management ResearchNews, Vol. 27 No. 8, pp. 98-108.

Kerner, S.M. (2005), “Online pharmacies continue to grow”,available at: www.clickz.com/stats/ sectors/healthcare/article.php/ 3495456 (accessed April 2005).

Klein-Fedyshin, M.S. (2002), “Consumer health informatics– integrating patients, providers, and professionals online”,Medical Reference Services Quarterly, Vol. 21 No. 3,pp. 35-50.

Maddox, L.M. (1999), “The use of pharmaceutical web sitesfor prescription drug information and product requests”,Journal of Product & Brand Management, Vol. 8 No. 6,pp. 488-501.

Pharmacychecker (2004), “About online and mail-orderpharmacies: what you need to know”, Pharmacychecker,available at: www.pharmacychecker.com/ aboutop.asp(accessed April 2005).

Rowland, C. (2005), “Buyers flock to lax online pharmacies”,The Boston Globe, 10 April, available at: www.ecommercetimes.com/ story/49091.html (accessed April2005).

Schmidt, R.A. and Pioch, E.A. (2003), “Pills by post?German retail pharmacies and the internet”, British FoodJournal, Vol. 105 No. 9, pp. 618-33.

Smith, M.C., Kolassa, E.M., Perkins, G. and Siecker, B.(2002), Pharmaceutical Marketing: Principles, Environment,and Practice, Pharmaceutical Product Press, Binghamton,NY.

Spain, J.W., Siegel, C.F. and Ramsey, R.P. (2001), “Sellingdrugs online: distribution-related legal/regulatory issues”,International Marketing Review, Vol. 18 No. 4, pp. 432-49.

Sweet, M. (2001), “Policing online pharmacies: bioterrorismmeets the war on drugs”, Duke Law and Technology Review,No. 41, available at: www.law.duke.edu/ journals/dltr/articles/ 2001dltr0041.html (accessed April 2005).

Wilson Health Information (2005), Age Segmentation Report,WHS, New Hope, PA.

Wrobel, U. (2002), “‘Not in front of your mother!’: onlinemarketing for pharmaceutical products addressing tabootopics”, Qualitative Market Research: An InternationalJournal, Vol. 5 No. 1, pp. 19-27.


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Direct-to-consumer advertising of prescriptiondrugs: help or hindrance to the public’s health?

Greg Finlayson

Manitoba Centre for Health Policy, Community Health Sciences, University of Manitoba, Winnipeg, Canada, and

Ross MullnerSchool of Public Health, University of Illinois at Chicago, Chicago, Illinois, USA

AbstractPurpose – The purpose of this paper is to review the issues regarding direct-to-consumer advertising that have been identified in the literature fromthe perspective of consumers, consumer groups, physicians, the medical profession and the pharmaceutical industry.Design/methodology/approach – Literature from international sources was reviewed to identify themes relating to direct-to-consumer advertising.Findings – Direct-to-consumer advertising is expressly permitted in only two developed countries (USA and New Zealand). All other countries placevarious limitations on the practice. The debate surrounds whether or not the advertising provides a public health benefit.Originality/value – The debate over direct-to-consumer advertising continues in jurisdictions around the world. This paper identifies and summarizesthe issues that are being considered.

Keywords Prescription medicines, Pharmaceuticals industry, Advertising, Public health, Health education




Introduction

Pharmaceutical companies in the USA spent $3.45 billion on

direct-to-consumer advertising (DTCA) of prescription drugs

in the year ending March 31, 2004 (Lam, 2004). This

represents a substantial operating expense for the companies,

and the trend over the past few years is to spend an increasing

proportion of marketing budgets on DTCA. The USA is only

one of two industrialized countries in the world that expressly

permits DTCA of prescription drugs. In New Zealand, the

other country that currently allows DTCA, the issue has been

hotly debated over the past several years as a result of a treaty

between that country and Australia that would result in a

common drug standard between those two countries.

However, DTCA is not permitted in Australia, and several

professional and consumer organizations are supporting the

implementation of a ban in New Zealand. In the United

States no such debate is apparent.This article will review the main arguments posited by both

sides of the debate. While New Zealand is considering

banning DTCA, other countries including Canada and the

countries of the European Union are considering relaxing

their restrictions on the practice.

Direct-to-consumer advertising of prescription drugs can be

defined as the presentation of messages regarding

pharmaceuticals directly to the public. Strictly speaking, in

countries where DTCA is prohibited, no information about

prescription drugs may be provided to the general public

through print or the electronic media such as radio or

television. However, in practice, such bans may not be total.

For example, in Canada advertising of a product is permitted,

but only if the medical condition it is designed to treat is not

indicated; or a medical condition that may be treatable by a

drug can be presented, but the product that could be used

may not be mentioned. Further, marketing information on

drugs is readily available through the internet.Those who support DTCA argue that drug advertising is a

form of public health education that will ultimately result in

the improved health status of the population. Detractors of

DTCA, however, see it as being exclusively driven by a profit

motive, and they argue that it encourages excessive,

unnecessary, and potentially dangerous use of prescription

drugs. The main arguments of both groups are presented

below.

DTCA is important for health education

The pharmaceutical industry actively promotes DTCA as a

method of getting important health information to the general

public. Pharmaceutical advertising messages make the public

aware of the availability of treatments, and it encourages them

to see a physician to talk about their health problems. Indeed,

appropriate messages could be a valuable public health tool

(Berndt, 2005). DTCA may result in people seeing physicians

earlier, receiving treatment earlier, and potentially avoiding

future medical complications. In addition, advertising may

result in people who would not otherwise have seen physicians

to make appointments, possibly allowing other health

problems (i.e. hypertension, diabetes, heart disease) to be

identified and treated (Holmer, 2002). Some consumer






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groups agree with the pharmaceutical industry, and provide

additional support for DTCA.Starting in the twentieth century and continuing today,

there has been a growing consumer movement directed to

empowering the public to take greater control of their health.

This has resulted in increased demands for information aboutmedical conditions and health care, and a heightened need for

physicians and other health professionals to disclose to, andeducate, their patients. Further, there has been an increase in

the medicalization of various human conditions. Medical care

is now expected to provide treatments for conditions that werepreviously considered to be societal problems, such as

alcoholism, drug addiction, and domestic violence. As a

result of these two trends, the general public has an increasinginterest in prescription drugs. They also have heightened

expectations that drugs can be used to treat a wide array of

medical conditions. While physicians recognize the limitationsof drugs, they may also support DTCA because of the impact

that it can have on their practices, and the care they can

provide to their patients.Studies have shown that DTCA increases the utilization of

physician services (Holmer, 2002). If a person sees aphysician earlier for a health problem, the physician may be

in a better position to provide treatment. Having a medical

appointment also allows the assessment of other possiblemedical problems, which may allow prevention or treatment

that would not otherwise be possible. From a physician’s

perspective, these are good reasons to allow and supportDTCA. Finally, physicians who receive fee-for-service

payments would expect to receive increased income due to

seeing more patients. Proponents of DTCA include thepharmaceutical industry, the general public, and many

physicians.

DTCA is contrary to the public interest

Education in general, and health education in particular, is

considered important. What is it about the provision of

prescription drug information directly to the public in theform of advertising that is objectionable to some?In general, the argument is that DTCA is different from

other forms of health education because prescription drugs

are only one component of the health care system, and should

not be removed from the context of a continuing relationshipbetween a patient and their physician. As well, prescription

drugs may be considered different from other drugs (i.e. over-

the-counter drugs) in that they are generally used to treatmedical conditions that are more difficult to self-diagnose,

and may be more toxic than other drugs. In addition to these

general concerns, some consumer groups and somephysicians present additional arguments against DTCA.Those who support the restriction of DTCA believe that

the primary motivation of the pharmaceutical industry is to

produce as large a profit as possible, not to educate the public.

Hence, the foundation for advertising of prescription drugs ispotentially contrary to the public’s interest. Some consumer

groups argue that DTCA should be banned because it

encourages the unnecessary utilization of drugs, thusincreasing the overall cost of health care. Further,

advertising primarily focuses on drugs that are new to the

market. These drugs frequently do not have a proven safetyrecord compared to older more established drugs. And, the

actual content of DTCA may maximize benefits and minimize

potential risks. While some consumers have these concerns,

there are also issues raised by the medical profession.Despite the fact that DTCA may motivate people to seek

medical care, many physicians are concerned about this typeof advertising. In particular, some physicians may feel

pressured to give a prescription, or to prescribe a particular

drug, when they would not have, had the patient not made a

specific request for it, placing a strain on the physician-patient

relationship. Further, when the physician deems the requested

drug to be inappropriate, they may need to spend additionaltime with the patient to discuss why they will not issue the

prescription, or why alternative pharmaceutical or non-

pharmaceutical approaches may be preferred.

Is the evidence for either side conclusive?

In spite of much study, there are only a few aspects of the

issue for which there is strong evidence, either supporting orrefuting the arguments raised. Research has clearly shown that

DTCA does indeed affect consumer behavior. And, DTCA

does result in physicians prescribing more. For example,

between 1999 and 2000, prescriptions of the 50 drugs most

heavily advertised in the USA rose by 24.6 percent while the

prescriptions for the remaining 9,850 drugs rose only by 4.3percent (National Institute for Health Care Management

Research and Education Foundation, 2001). This increased

utilization understandably results in an overall increase in the

nation’s expenditure for drugs.

What is the answer?

Countries around the world are debating the merits of

DTCA. Options range from an outright ban, to setting nolimitations whatsoever on the practice. Many countries in the

future are likely to allow some form of DTCA, but it seems

likely they will regulate it. For example, the New Zealand

Ministry of Health (Meek, 2001) has proposed the following

regulations:. Only allowing drug advertisements in the public media

such as newspapers, magazines, or on the radio and

television, and preventing the practice of drug companies

promoting pharmaceuticals by directly writing to

individual patients, running competitions, giving freeoffers, and paying for physician’s visits.

. Banning advertisements by pharmaceutical companies of

brand names on vehicles such as buses, because it is

difficult for the public to read the mandatory riskinformation.

. Banning sponsorship of events by pharmaceutical

companies using a brand name, because it may promote

a drug name, but without the responsibilities.. Increasing fines for non-compliance with legislation and

regulations.. Specifying the length of time for television advertisements

for the mandatory risk information to be presented, as

well as the font size of the information.. Requiring voice-overs of risk information (mandatory in

the USA).. Shifting the onus from the complainant having to find an

example of the offensive advertisement to the

pharmaceutical company.. Requiring a fair balance of benefit and risk information

(again, required in the USA).

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Greg Finlayson and Ross Mullner


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While there is little support for unrestricted DTCA, those

proposing a full ban on the practice recommend that state-

supported public education campaigns be used as a means of

making people aware of treatments that are available, and

encouraging them to see a physician. The inherent additional

cost to already stretched health care budgets makes this

alternative politically unattractive.In the USA, where freedom of speech, including

commercial speech, is constitutionally protected, it is

unlikely that a full ban would be effected. However, there

have been limitations placed on DTCA by the Food and Drug

Administration (FDA), particularly the requirement to

include information on risks, and that this information be

provided in a way that it is accessible to consumers such as

voice-overs in television ads.This article has outlined the main arguments in support of

and opposing direct-to-consumer advertising of prescription

drugs. The discussion is one that has increased in intensity in

recent years, and it is likely to continue for some time to

come. Countries around the world where the debate is taking

place will be looking for the best balance between educating

the consumer, and protecting them.

References

Berndt, J. (2005), “To inform or persuade? Direct-to-

consumer advertising of prescription drugs”, New England

Journal of Medicine, Vol. 352 No. 4, pp. 325-8.Holmer, A.F. (2002), “Direct-to-consumer advertising –

strengthening our health care system”, New England Journal

of Medicine, Vol. 346 No. 7, pp. 526-8.

Lam, M.D. (2004), “A $20 billion bill and plenty of change”,Pharmaceutical Executive, September.

Meek, C. (2001), Direct-to-Consumer Advertising of PrescriptionMedicine: A Review of International Policy and Evidence,Royal Pharmaceutical Society of Great Britain, London,available at: www.rpsgb.org.uk/ pdfs/dtcarep.pdf

National Institute for Health Care Management Research andEducation Foundation (2001), Prescription Drugs and MassMedia Advertising, 2000, NIHCM Foundation, WashingtonDC, November, available at: www.nihcm.org/DTCbrief2001.pdf

Further reading

Canadian Health Services Research Foundation (2004),“Myth: direct-to-consumer advertising is educational forpatients”, Mythbusters, December, available at: http://chsrf.ca/ mythbusters/pdf/ myth16_e.pdf

Jeffords, J.M. (2004), “Perspective: direct-to-consumer drugadvertising: you get what you pay for”, Health Affairs WebExclusive, April 28, available at: http://content.healthaffairs.org/ cgi/reprint/hlthaff.w4.253v!

Kelly, P. (2004), “Perspective: DTC advertising’s benefits faroutweigh its imperfections”, Health Affairs Web Exclusive,April 28, available at: http://content.healthaffairs.org/ cgi/reprint/hlthaff.w4.246v1

Mansfield, P.R., Mintzes, B., Richards, D. and Toop, L.(2005), “Direct to consumer advertising is at the crossroadsof competing pressures from industry and health needs”,British Medical Journal, Vol. 330, pp. 5-6.

Milne, C. (2004), “Direct-to-consumer drug ads still raisingdebate”, The Medical Post, Vol. 20 No. 34.

Direct-to-consumer advertising of prescription drugs

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Herbal product claims: boundaries ofmarketing and science

Stephanie Y. Crawford

Department of Pharmacy Administration, University of Illinois at Chicago, Chicago, Illinois, USA, and

Catherine LeventisMcKesson Medication Management, Chicago, Illinois, USA

AbstractPurpose – The purpose of this article is to explore boundaries in marketing and science with respect to labeled claims of herbal products and otherdietary supplements.Design/methodology/approach – Supplement manufacturers are allowed to include claims on product labels without meeting an acceptablesubstantiation standard, as long as such claims are accompanied by an FDA disclaimer statement. While manufacturers are prohibited (though theregulation is often violated) from making specific claims about prevention or treatment of disease, the implied associated health benefits of usingdietary supplement products are usually clear from marketed claims. A case example on themes expressed in labeled structure-function claims forginkgo biloba is presented to illustrate the issues.Findings – Marketing of product claims is controversial due to differing perspectives about the truthfulness of claimed health benefits and quality ofinformation presented to consumers. Although dietary supplements could have pharmaceutical-like properties, they are not required to demonstratesafety and efficacy before market availability. The US Food and Drug Administration (FDA) can take action only if supplements are shown to be unsafeafter market introduction.Practical implications – The need for consumer choice, meaningful information and free-market access to dietary supplements must be balancedwith the demands for truth-in-advertising and consumer protection from unreliable claims and adverse health events. Marketing and policy implicationsare described.Originality/value – The outcome would help increase consumer confidence, while continuing to allow free-market forces for the dietary supplementindustry, to a large extent.

Keywords Diet, Natural products, Marketing, Labelling




Introduction

This article explores boundaries in marketing and science

with respect to the labeled claims of herbal products and other

dietary supplements. Use of herbal therapies in the USA

predates the nation’s founding, experiencing a golden age of

usage during the latter nineteenth and early twentieth

centuries.(Tyler, 2000) The popularity of herbal remedies

waned and usage curtailed in the 1940s with the advent of

breakthrough, synthetically-derived pharmaceutical agents.

Renewed interest in herbal remedies rebounded in America

over the past 15 years. During this period, consumer efforts

shifted from avoidance behaviors (e.g. of bad nutrients or

unhealthy ingredients) to behaviors that promote health,prevent or treat disease.(Mason and Scammon, 2000) From1990 to 1997, sales of herbal remedies increased by 380 percent.(Eisenberg et al., 1998) Sales of herbal products areestimated to be greater than $4 billion annually,(Mar andBent, 1999; Eisenberg et al., 1998) which represents a sizeableportion of the $18 billion dietary supplement market (Morrisand Avorn, 2003).

Herbal therapies are used by approximately 38 million USadults and are the most common form of complementary andalternative medicine (Tindle et al., 2005). These products arereadily available for purchase in a variety of retail settings (e.g.pharmacies, health food stores, grocery stores andsupermarkets, and mass merchandisers) and the internet.Passage of the Dietary Supplement Health and Education Actof 1994 (DSHEA) and its regulatory implementation led tounprecedented growth in sales and widespread promotion ofherbal products and other dietary supplements (Morris andAvorn, 2003; US Department of Health and Human Services,US Food and Drug Administration, 2000). The associatedpromotional activities have become increasingly contentiousdue to differing perspectives about the reliability of claimedbenefits and quality of information presented to consumers(Mason and Scammon, 2000). Debate centers around theneed for consumer choice balanced with truth-in-advertisingand consumer protection from unsubstantiated claims(Nesheim, 1999; Ernst, 2001).






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[DOI 10.1108/07363760510631183]

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Background on regulation of dietary supplementsunder DSHEA

The DSHEA defined dietary supplements as herbs or similar

botanicals, vitamins, minerals, amino acids, enzymes, organ

tissues and metabolites that are intended to supplement the

diet (US Food and Drug Administration, 1995). The

definition is limited to products that are taken by mouth,

e.g. capsules, tablets, liquids, powders and other oral

formulations (Nesheim, 1999). Dietary supplements are in a

distinct category, neither considered to be drugs nor

conventional foods, which raises questions about product

classification and regulation (Harris, 2000). Categorization of

dietary supplements is based more on labeling than biological

data (Lewis and Strom, 2002). Product labeling for herbs and

other dietary substances is regulated by the US Food and

Drug Administration (FDA) under a much less stringent

regulatory system than what exists for drug products (Morris

and Avorn, 2003). Product labeling for dietary supplements

includes the affixed label, packaging, inserts or point-of-sale

promotional materials (Harris, 2000).Supplement manufacturers are responsible for ensuring

product safety before marketing. Unlike drug products,

dietary supplements are not required to demonstrate safety

and efficacy before market availability. Supplement

manufacturers establish their own guidelines for

manufacturing practices because good manufacturing

practices for the industry have not been developed

(Fontanarosa et al., 2003). With limited exceptions,

manufacturers of dietary supplements are not required to

obtain FDA approval before producing or selling the

products. The FDA has authority to take action if

supplement products are deemed unsafe after market

introduction (US Food and Drug Administration, 2005a),

i.e. if the product poses a significant or unreasonable safety

risk for consumers (Harris, 2000; Fontanarosa et al., 2003).

In the most serious cases, FDA actions could include product

seizure and pursuance of injunctions and sanctions. In reality,

though, the FDA has limited resources and insufficient

manpower for these activities. Misleadingly labeled products

could remain commercially available for months or years

before possible regulatory action ensues (Hampton, 2005).While there are voluntary guidelines, no regulation exists to

ensure the identity, purity, quality, strength, and composition

of dietary supplements (Fontanarosa et al., 2003). Many

herbal products have some pharmaceutical-like properties.

While often touted as natural, they are not harmless. Dietary

supplements often act in ways similar to drugs and

consumption of large or small amounts may lead to side

effects and untoward interactions with drugs and other

substances. Concerns have also been raised because of limited

evidence on product consistency and standardization issues

(Mar and Bent, 1999; Harris, 2000; Tyler, 2000). Currently,

reporting on adverse events for herbal products and other

dietary supplements is on a voluntary basis only.Scientists and many in the medical and health communities

have decried the lack of scientific justification to establish

safety and efficacy (Hampton, 2005; Harris, 2000; Morris

and Avorn, 2003; Tolstoi, 2001). Product sales are often

driven by non-scientific, anecdotal evidence (e.g. word of

mouth, consumer perceptions) of potential health benefits

and manufacturer-marketing justification through labeling

and advertising (Harris, 2000; Grivetti, 2002). Controversies

abound with respect to the safety concerns, as well as

unsubstantiated and unreliable claims of dietary supplements,

with calls for increased regulatory scrutiny over the dietary

supplement industry (Hampton, 2005).

Controversies over marketed claims of dietarysupplements

FDA regulatory authority over health claims in labels and

labeling of dietary supplements was restricted by the Pearson v.

Shalala [1999] court decision[1], which the agency complied

with in its final rule (US Department of Health and Human

Services, US Food and Drug Administration, 2000) The

court ruled that dietary supplement claims could be based on

less than a “significant scientific agreement”, as long as such

claims were accompanied by an acceptable disclaimer, as

described later in this section. If manufacturers or distributors

choose not to make a claim, no disclaimer is necessary

(Mason and Scammon, 2000).Herbal products and other dietary supplements are

prohibited from using a disease or therapeutic claim. In

other words, dietary supplements may not imply a drug, nor

use statements that claim to prevent, diagnose, treat, mitigate,

or cure a specific disease (US Food and Drug Administration,

1995) For example, a dietary supplement cannot claim to

“cure cancer” or “treat heart disease.” Health maintenance

and non-disease claims are allowed for dietary supplements,

including minor, common symptoms associated with life

stages, e.g. hot flushes, mild memory loss related to aging

(Harris, 2000). DSHEA provides for use of three types of

other claims, as appropriate, on the labels of dietary

supplements – nutrient content claim, health claims, or

structure-function claims.Nutrient content claims pertain to relative amounts of

nutrient levels in dietary supplements, e.g. “high” or “good

source of calcium,” based on guidelines provided by FDA.

Health claims express the effect of a dietary supplement on

preventing or reducing the processes of a disease or other

health-related condition (US Food and Drug Administration,

2005b) As such, health claims must be evaluated and

authorized by FDA in the preapproval stage, based on

significant scientific evidence. Examples of health claims

include “reduces the risk of osteoporosis” (or other disease) or

“does not promote tooth decay”. Structure-function claims

do not require FDA pre-approval and may describe how a

dietary substance is intended to affect or maintain the

structure or function of the human body. Structure-function

claims may state benefits of the dietary supplement related to

nutrient deficiency, general well-being of product

consumption, and other statements regarding maintenance

of body structure and function (US Food and Drug

Administration, 2005b) Examples are “promotes vitality” or

“helps maintain healthy heart function”.Structure-function claims are often included on labels of

herbal products. Statements on structure and function cannot

be false or misleading. However, if the claims are

unsupported, that would potentially make them false and

misleading. Structure-function claims, if present, must be

labeled with an FDA disclaimer. A typical disclaimer would

be:

This statement has not been evaluated by the Food and DrugAdministration. This product is not intended to diagnose, treat, cure, orprevent any disease (US Food and Drug Administration, 2005b)

Herbal product claims: boundaries of marketing and science

Stephanie Y. Crawford and Catherine Leventis


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Tyler (2000) criticized the hypocrisy of the dual message in

allowing nebulous statements on product labels in reference

to structure and function, while requiring a follow-updisclaimer. Accompanying the structure-function claim is

the paradoxical requirement of language that essentially states

the herb is not “good for anything”, i.e. no therapeutic claim(Tyler, 2000). Consumers tend to disregard disclaimer

language since they purchased the herbal products with theexpectation of some beneficial health purpose. From a

scientific perspective, structure-function claims can be valid

only if the supplement displays inherent biological activity(Fontanarosa et al., 2003).The disclaimer is often of limited

utility when present (Morris and Avorn, 2003). Readabilityand effectiveness can be easily compromised, e.g. small font

size, separation of the claim from disclaimer (such as claim on

front of label and disclaimer on back; or one near top of labeland the other near bottom), or placing the claim in an

inconspicuous location. Consumers who read the disclaimers

may consider them to be confusing or hard to comprehend(Mason and Scammon, 2000).

The differentiation between structure-function claims andexpress or implied disease claims is sometimes hard to

distinguish. For example, the claim, “maintains urinary tract

health” is allowable, but “treats urinary tract infections”would not be permitted since it refers to a specific disease.

Disease conditions are sometimes included on trademarkedproduct names, such as “Migraine B-Gone”, as well as

pictures, symbols and vignettes on product packaging (Harris,

2000).Although the FDA does not approve structure-function

claims, manufacturers are required to notify the agency ofsuch labeled claims within 30 days of product marketing

(Nesheim, 1999; Harris, 2000). Manufacturers are also

required to have data that substantiate the truthfulness ofclaims on file, although that data is not reviewed by FDA or

made public unless there is the need for enforcement action

post marketing (Nesheim, 1999). The lax nature of thisrequirement for substantiation of claimed effects limits the

accessibility and scrutiny of information to consumers, healthclinicians, and researchers. Consumers are not seeing the

scientific data, if any, on which the claims are based. Rather,

consumers see the manufacturer’s interpretation of the data.It is questionable if a consumer could understand the data;

however, the issue is raised about the availability oraccessibility of data. Consumers are generally unaware of

the type of evidence used to meet a substantiation standard,

the type of evidence on which the claim was made (whether ornot the claim was made on the basis of clinical or scientific

study), and source of sponsorship (Mason and Scammon,

2000).

Advertising issues

The Federal Trade Commission (FTC) regulates advertising

of dietary supplements, including claims in print or broadcast

ads, infomercials, catalogs, direct marketing materials and theinternet (Harris, 2000; Fontanarosa et al., 2003). Advertising

is supposed to be truthful, not misleading and substantiatedby sound science. Regular users of dietary supplements are

more likely to believe that advertising claims are generally true

than non-regular users (Blendon et al., 2001). Hyperbolicadvertising of unsubstantiated claims is used by some dietary

supplement manufacturers (Tyler, 2000). There are questions

on the effectiveness of the monitoring and regulation of

dietary supplement advertisements, especially on the internet

(Morris and Avorn, 2003; Harris, 2000; Ashar et al., 2003).

One study reported that 55 percent of analyzed web sites

reported health claims that also included statements to

prevent, diagnose, treat or cure specific diseases in blatant

disregard of DSHEA regulations (Morris and Avorn, 2003).

Further, more than half of these web sites failed to include the

required FDA disclaimer statement. Findings have shown that

internet sites often fail to disclose potential adverse effects,

contraindications, and toxicities of herbal products (Morris

and Avorn, 2003; Ashar et al., 2003). The distinction between

labeling and advertising is often blurred for herbal products

and dietary supplements (Morris and Avorn, 2003).

Case example from Leventis (2001) study onherbal product structure-function claims

To illustrate issues related to marketed claims, a case example

is presented on summarized findings from a 2001 thesis by

Leventis (2001). The thesis analyzed the structure-function

claims used for the then ten top-selling herbs in the USA,

which represented 54 per cent of market sales.(Richman and

Witkowski, 1998; Mar and Bent, 1999). Common names for

the herbs are echinacea, St John’s wort, ginkgo biloba, garlic,

saw palmetto, Asian ginseng, goldenseal, aloe, Siberian

ginseng, and valerian. These top-selling herbs have been

studied more extensively than other herbs on issues of safety

and efficacy (Tyler, 2000).Leventis collected data for the herbal products sold in retail

sites (i.e. pharmacies and/or drug stores, natural products

outlets, supermarkets, and mass merchandisers) located

within Chicago, Illinois, web sites were excluded. After

removal of duplicate entries, the following results were found:. 151 different products from 44 manufacturers;. 103 (68 percent) of products listed a structure-function

claim on the label;. 114 (75 percent) of the products did have the FDA

disclaimer statement;. 37 (25 percent) of the products did not have the FDA

disclaimer, yet five (14 percent) of these products still

listed a structure-function claim on the label.

Structure-function claims were categorized into

macrothemes, which represented a subject or general theme,

and microthemes listing the actual structure-function claim

on the product label. Labeled claims were designated as

declarative or suggestive (included the words “may” or

“might”). A total of 61 macrothemes were identified. Most of

the structure-function claims were associated with words such

as regulate-maintain-support or promote-assist-enhance. As

an example, Table I presents results for ginkgo biloba

(Leventis, 2001). While no disease condition is listed, the

themes might imply health benefits to some consumers that

the herb is associated with the treatment or prevention of

Alzheimer’s type diseases, dementia and/or peripheral

vascular disease.Leventis also reviewed the published literature to investigate

if there was support for the labeled structure-function claims.

Depending on the literature source evaluated, literature

support (albeit inconsistent) ranged from 44 per cent to 68

per cent for the listed structure-function claims among the

top-selling herbs (Leventis, 2001). With ginkgo biloba, for




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example, evidence-based literature supported an effect in

circulation or peripheral circulation. There was no substantive

literature evidence on the relationship between ginkgo biloba

and brain circulation. For the common memory/focus/

concentration macrothemes, there were inconsistent findings

about benefit of use among targeted populations.Other authors have published literature support on the

benefit of using ginkgo biloba for dementia (Mar and Bent,

1999). While generally well tolerated, side effects of the herb

include mild gastrointestinal distress, headache, and

anticoagulant effects. Side effects are not required to be

listed in product labeling.

Marketing and policy implications

Promoting consumer empowerment to make choices and

facilitating access to desired products are laudable goals. The

marketplace should share the burden of providing useful and

meaningful information that will assist consumers in making

decisions about potential health benefits related to particular

dietary supplements (Mason and Scammon, 2000). The

Pearson v. Shalala decision expressed the court’s preference in

disclosing limitations of marketed claims of dietary

supplements, rather than suppressing such claims in the

absence of meeting an acceptable substantiation standard

(Mason and Scammon, 2000). This has created a “safe

harbor” for supplement manufacturers to market productsthat fall into the gray area of acceptable claims. Herbal

products, especially, are not inert commodities. In addition totheir use by some consumers as supplements to the diet, other

consumers purchase the products in the attempt to provideself-care in the treatment or prevention of serious disease and

health-related conditions (Mason and Scammon, 2000;Tolstoi, 2001). This paper has attempted to summarize

some of the compelling reasons for more attention to theproblems.

Appropriate use of quality herbal products and other

dietary supplements can have medical and economic benefits.The US relies primarily on the free-market system to balance

and control issues regarding safety and efficacy of dietarysupplements. Reconsideration of requirements for product

marketing is evident because the current system is ineffective(Lewis and Strom, 2002). National surveys have shown

positive views on derived benefits of dietary supplements, aswell as support for increased government regulatory efforts on

issues of safety and claims (Blendon et al., 2001). While thispaper has focused on the American system, the need forglobal harmonization on health claims of herbal products and

other botanicals has also been recognized (Mahady, 2001).In 2000, the FDA Center for Food Safety and Applied

Nutrition published its Dietary Supplement Strategy: TenYear Plan (US Food and Drug Administration, 2000). Among

the planned objectives is future publication of a final rule onstructure-function claims and the need to establish valid

substantiation of such claims. The document also listed plansto clarify boundaries between dietary supplements and drugs,

as well as boundaries between dietary supplements and foods.The need for this clarification is great, especially in light of the

new marketing of so-called nutraceuticals or functional foods,which are food products that have been enriched with herbsor other dietary supplements (Ernst, 2001). Examples include

cereals with ginkgo biloba, kava candy bars, and fruit drinkswith echinacea. While these food products cannot use

therapeutic claims, the industry has been successful ingetting consumers to associate their products with implied

health benefits despite the small amounts ofpharmacologically-active ingredients in the products, as well

as unknown and potentially destructive effects of themanufacturing processes on the herbs or other active dietary

substances (Ernst, 2001).To some extent, the overlapping jurisdiction of the two

government agencies responsible for dietary supplementsallows problems with product claims to fall through thecracks. The FDA and FTC are working together on an

increasing basis. The two agencies recently formed a DietarySupplement Enforcement Group in the attempt to thwart

health care fraud (Hampton, 2005). Individual and jointinitiatives by the agencies have included Internet searchers to

identify and police fraudulent marketing, which resulted inwarning or advisory letters sent to hundreds of product

distributors and internet supplement marketers whopromoted unsubstantiated claims (considered to be product

misbranding by FDA and deceptive practices by FTC)(Hampton, 2005; Harris, 2000; Fontanarosa et al., 2003).

Dietary supplements are subject to far less regulation thanprescription drugs, non-prescription drugs, food additives,infant formulas, and virtually any other products subject to

public consumption (Fontanarosa et al., 2003).

Table I Examples of labeled structure-function claims of ginkgo biloba

Macrothemesa Microthemesb

Enhances focus/

concentration

Enhances mental focus

Promotes focus

Improves concentration

Promotes concentration

Maintains focus/

concentration

Maintains focus

Helps maintain concentration

Maintains concentration

Enhanced mental

alertness

Herbal supplement for enhanced mental

alertness

Maintains mental

alertness

Helps maintain normal mental alertness

Mental alertness dietary supplement

Improves mental

sharpness

Improves mental sharpness

For improved mental sharpness

Promotes mental sharpness

Supports memory Supports memory

Helps maintain memory

Improves memory Improves memory

Dietary supplement for improved short-term

memory

Supports circulation Supports circulation

Supports circulation to the

brain

Supports circulation to the brain

Helps circulation to the brain

Cerebral circulation

Increase blood circulation

to the brain

Helps increase blood circulation to the brain

Supports increased blood flow to the brain

May enhance blood flow to brainc

Enhances peripheral

circulation

Helps enhance peripheral circulation

Notes: a General subject area; b Actual structure-function claim statementon product label; c Suggestive claim statement (contains “may”); all otherlisted claim statements designated as declarative




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Unsubstantiated claims of benefit represent a threat tobusiness and the public health. After the unprecedentedgrowth experienced in the 1990s, sales of herbal products andother dietary supplements have been strong, but flat (Tyler,2000). Possible reasons include negative publicity aboutadverse events and the availability of junk products, whichmay prompt consumer word-of-mouth about ineffectiveness.We agree with other authors that increased governmentregulation is inevitable in realizing the goal of promotingclaims that are truthful and not misleading. Such anundertaking will likely take a dozens of years because of theenormous costs and efforts that would be necessary. Theoutcome would help increase consumer confidence, whilecontinuing to allow free-market forces for the dietarysupplement industry, to a large extent. In addition toincreased government scrutiny, however, is the need forgreater involvement by physicians, pharmacists and otherhealth practitioners, the business community, and theultimate consumers in reporting problems and demandingproduct quality.

Note

1 Pearson v. Shalala [1999], 164 F.3d 650 (D.C.Cir.)

References

Ashar, B.H., Miller, R.G., Getz, K.J. and Pichard, C.P.(2003), “A critical evaluation of internet marketing ofproducts that contain ephedra”, Mayo Clinic Proceedings,Vol. 78, pp. 944-6.

Blendon, R.J., DesRoches, C.M., Benson, J.M., Brodie, M.and Altman, D.E. (2001), “Americans’ views on the useand regulation of dietary supplements”, Archives of InternalMedicine, Vol. 161, pp. 805-10.

Eisenberg, D.M., Davis, R.B., Ettner, S.L., Appel, S., Wilkey,S., Van Rompay, M. and Kessler, R.C. (1998), “Trends inalternative medicine use in the United States, 1990-1997:results of a follow-up national survey”, Journal of theAmerican Medical Association, Vol. 280, pp. 1569-75.

Ernst, E. (2001), “Functional foods, neutraceuticals, designerfoods: innocent fad or counterproductive marketing ploy?”,European Journal of Clinical Pharmacology, Vol. 57,pp. 353-5.

Fontanarosa, P.B., Rennie, D. and DeAngelis, C.D. (2003),“The need for regulation of dietary supplements – lessonsfrom ephedra”, Journal of the American Medical Association,Vol. 289, pp. 1568-70.

Grivetti, L.E. (2002), “Dietary supplements in Americanchildren: scientific vs marketing justifications”, NutritionToday, Vol. 37 No. 3, pp. 128-9.

Hampton, T. (2005), “More scrutiny for dietarysupplements?”, Journal of the American Medical Association,Vol. 293, pp. 27-8.

Harris, I.M. (2000), “Regulatory and ethical issues withdietary supplements”, Pharmacotherapy, Vol. 20,pp. 1295-302.

Leventis, C. (2001), “Analysis of structure-function claims of

herbal products”, unpublished Master’s thesis, Department

of Pharmacy Administration, The University of Illinois at

Chicago, Chicago, IL.Lewis, J.D. and Strom, B.L. (2002), “Balancing safety of

dietary supplements with the free market”, Annals ofInternal Medicine, Vol. 136, pp. 616-8.

Mahady, G.B. (2001), “Global harmonization of herbal

health claims”, Journal of Nutrition, Vol. 131, pp. 1120S-3S.Mar, C. and Bent, S. (1999), “An evidence-based review of

the 10 most commonly used herbs”, Western Journal ofMedicine, Vol. 171, pp. 168-71.

Mason, M.J. and Scammon, D.L. (2000), “Health claims and

disclaimers: extended boundaries and research

opportunities in consumer interpretation”, Journal ofPublic Policy & Marketing, Vol. 19, pp. 144-50.

Morris, C.A. and Avorn, J. (2003), “Internet marketing of

herbal products”, Journal of the American Medical

Association, Vol. 290, pp. 1505-9.Nesheim, M.C. (1999), “What is the research base for the use

of dietary supplements?”, Public Health Nutrition, Vol. 2,

pp. 35-8.Richman, A. and Witkowski, J.P. (1998), “Herb sales still

strong”, Whole Foods Magazine, pp. 19-26.Tindle, H.A., Davis, R.B., Phillips, R.S. and Eisenberg, D.M.

(2005), “Trends in use of complementary and alternative

medicine by US adults: 1997-2002”, Alternative Therapies

in Health and Medicine, Vol. 11, pp. 42-9.Tolstoi, L.G. (2001), “Herbal remedies: buyer beware!”,

Nutrition Today, Vol. 36 No. 4, pp. 223-30.Tyler, V.E. (2000), “Herbal medicine: from the past to the

future”, Public Health Nutrition, Vol. 3, pp. 447-52.US Department of Health and Human Services, US Food

and Drug Administration (2000), “Regulations on

statements made for dietary supplements concerning the

effect of the product on the structure or function of the

body; final rule”, Federal Register, 65(4), 21 CFR part 101.

Docket No. 98N-0044, available at http://www.cfsan.fda.

gov/ , lrd/fr000106.html (accessed June 6, 2005).US Food and Drug Administration, Center for Food Safety

and Applied Nutrition (1995), “Dietary Supplement

Health and Education Act of 1994 (DSHEA)”, available

at: www.cfsan.fda.gov/ , dms/dietsupp.html (accessed

June 4, 2005).US Food and Drug Administration, Center for Food Safety

and Applied Nutrition (2005a), “A dietary supplement

labeling guide, chapter VI, Claims”, available at: www.

cfsan.fda.gov/ , dms/dslg-6.html (accessed June 4, 2005j0.US Food and Drug Administration, Center for Food Safety

and Applied Nutrition (2005b), “Dietary supplements,

overview”, available at: www.cfsan.fda.gov/ , dms/

supplmnt.html (accessed June 4, 2005).US Food and Drug Administration, Center for Food Safety

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, dms/ds-strat.html (accessed June 6, 2005).




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Executive summary

This summary has been provided to allow managers and executivesa rapid appreciation of the content of this issue. Those with a

particular interest in the topic covered may then read the article

in toto to take advantage of the more comprehensive description ofthe research undertaken and its results to get the full benefit of the

material present.

What is wrong with consumers having alittle more information?

Healthcare is an enormous industry absorbing a considerable

– and growing – proportion of what we earn. At the same

time the wider health debate is of central political significance

with every aspect of the industry under some kind of scrutiny.

The debate in the UK over the non-availability of expensive

cancer treatments through the National Health Service, the

disaster of last summer when a heatwave drove the French

care system into crisis contributing to the death of thousands

of elderly people, the critical importance of Medicare and the

prescription drugs debate to swing states like Florida – these

are big issues.

At the same time as we in the developed world argue over

whether we should put up taxes to pay for an enhanced

healthcare system, the developing world struggles on with

limited resources for the basic health provision we take for

granted. Our complaints about facilities at public hospitals

seem churlish when we consider the kind of conditions in the

third world.

Beyond this central debate over health sits a still wider

debate around health promotion, disease prevention and the

thoroughly modern concept of well-being. These debates take

us into the realms of regulations, bans and non-traditional

medicine. Whole new categories emerge – foods offering

medical benefits such as reducing cholesterol, for example.

And then there is the growth in supplements.

Healthcare is huge and, because it is so important, subject

to considerable regulatory control, legislative restraint and

risk. In places such as the USA, growing consumer activism

and awareness leads to the growth in medical liability and

malpractice law suits – and the creation of a whole new

industry servicing this process. And, as people live longer, we

see still more pressure on medical services and growing

demand for new care services delivered cost-effectively. The

days of the local council providing a couple of day care centres

and a few home helps are gone – this will never satisfy the

requirements of a richer, more aware and more active older

population.

And, to return to politics for a moment, old people vote!

Which makes them the most pampered old folk in history. It is

not far from the truth to observe that the purpose of the

USA’s welfare system is not the transfer of resources from rich

to poor but the transfer from younger to older. It is no

surprise therefore to find that healthcare and pharmaceuticals

marketing are a huge concern to some and a big issue to all.

This special issue scrutinizes aspects of this marketing

especially against the backdrop of liberalization in the

promotion of prescription drugs in the USA. In some

respects this is the most significant change in drugs marketing

and has to be seen in the context of drug company

performance, the ethical limits of marketing in healthcare

and political pressures to remove (or at least limit) big

business involvement in health.

Commercial freedom of speech – is therea limit?

The debate over commercial freedom of speech is significant

(although the term is seldom heard outside of the USA) since

it governs our appreciation and understanding of advertising.

And we should remember that, in operational terms,

advertising lies second only to direct sales in its significance

to marketing. We start with the idea that, all other things

being equal, we have an absolute right to advertise. This does

not excuse misrepresentation, passing off or the slandering of

competitors but it does say we have a right to communicate

our message to those who may wish to buy what we make or

do.

The limits to commercial freedom of speech have been

debated in such areas as tobacco advertising and we now have

an emerging debate around the targeting of advertisements to

children – especially those promoting “unhealthy” food and

drink. Within this big debate sits this issue of directly

advertising prescription drugs to consumers and whether it

provides benefits or represents a retrograde step in the

effective delivery of health care.

Most of those commenting on this debate within this special

issue start with the US Food & Drug Agency’s (FDA)

decision in 1997 to allow the direct-to-consumer advertising

of prescription drugs in such a way as to open up mass media

channels. Prior to this removal of requirements for detailed

statements of risks and side effects, direct-to-consumer

advertising, while technically possible on TV, was limited to

specialized publications.

The results of this liberalization have got something of a

mixed press. The industry has welcomed the opportunity to

extend brand development beyond the medical profession and

argues that direct-to-consumer advertising is of real social

benefit. On the other hand others – health activists, some

physicians, politicians and consumer campaigners – argue

that such advertising undermines the doctor-patient

relationship, adds to already high drug prices and gives a

false sense of empowerment to the consumer. Some of the

work in this special issue – while it cannot set aside

ideological objections to the US healthcare system – helps us

to place support and criticism of direct-to-consumer drugs

advertising in the context of factual information about

consumer response.

As Singh and Smith point out in the opening article: “. . .the

central question revolves around whether or not DTC (direct-

to-consumer) advertising is truly beneficial to consumers and,

if so, how?”

Three in the bed? Drug ads and thedoctor-patient relationship

One of the central accusations from those who argue against

direct-to-consumer advertising of prescription drugs is that is

compromises the doctor-patient relationship. Rather that the


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doctor dealing with the symptoms presented by the patient

and making an appropriate diagnosis and prescription, the

doctor is faced by an “informed” patient demanding a

specific, branded solution they have seen advertised on TV.

The doctor runs the risk of falling out with the patient by

refusing to prescribe (at which they may well take their

business elsewhere) or else goes with the flow and prescribes

the desired drug.

Singh and Smith, Baca et al. and Shin and Moon appear to

concur in their assessment of this situation. While the

concerns about DTC advertising remain, most of the

evidence suggests that such advertising is, on balance,

benefiting consumers. This chimes with the FDA’s review

(reported by Baca et al.) describing the benefits of DTC as

“. . .creating increased levels of awareness, involvement,

compliance, reach and doctor-patient interaction.”

The advent of DTC advertising has resulted in rather better

informed patients rather than misled consumers demanding

inappropriate prescriptions of potentially dangerous drugs. As

Singh and Smith argue, where consumers “. . .once felt

entrapped in their relationships with their physicians, the

acquisition of information regarding branded drugs has given

consumers more power than ever before”. The system is not

perfect and does run some risk of abuse but it is an

improvement over the third party moderated system that

prevailed before 1997.

Perhaps the main concern that remains and is hard to set

aside stretches beyond the issue of advertising and into the

much wider debate about health care. This is the ethics of

taking profit from making and selling drugs and from

providing health care. To some (and you only have to peep

at the health debate in the UK or Canada to appreciate this)

any involvement of the private sector in health is a matter for

at best regret and often anger. And the big, bad drug

companies are a favourite target of many looking for reasons

behind failures or problems in the health system.

Why is profit such a rude word in healthcare?

Holdford’s article looking at applying a social marketing

framework to health campaigns (of which more later) shows

us why there are so many criticisms of the perceived

profiteering of drugs companies. Not only do these

companies make enormous profits on the back of the USA’s

strict patent laws but they work actively and assiduously to

prevent any move towards more affordable drugs.

We read that (taken in aggregate) consumers have little or

no trust or confidence in drug companies or their executives.

These businesses protect a system that allows little or no

consumer interaction with the market. As Holdford points out

many take the view that “. . .the pharmaceutical industry

makes excessive profits by taking advantage of perverse

incentives in a market where consumers rely on third parties

. . . to choose drugs for them and prescription drug insurance

coverage . . . that shields consumers from the full cost of

paying for those drugs”.

The result of this perverse system (and despite the debate

around DTC advertising 80 per cent of drugs marketing

spend is still directed to the medical profession) could be

inappropriate prescribing, incorrect drug use, unreasonable

consumer expectations and wasteful expenditure. Unlike most

markets in the USA, the drugs market acts ineffectively

resulting in far higher prices than we find elsewhere. And

while Holdford does not propose specific strategies or policies

to correct this dysfunction, it is clear that market reform is

one way in which US healthcare might improve (or at least

become more efficient).

The problem with the system is not that drugs companies

are making profits but that the industry is acting to sustain an

inefficient system that acts to the benefit of producers rather

than to the advantage of consumers. And any market that acts

in this way is perverse since the operation of free markets

usually results in direct benefits to the consumer (e.g. lower

prices or higher quality). In order to reform the system we

have to get over our occasional distaste at the “profiteering” of

drugs companies and set about getting greater consumer

control over the system and hence a downward pressure on

costs.

One factor that will begin to drive down drug costs is the

Internet and the emergence of online pharmacies. Holdford

refers to the use of Canadian online pharmacies by consumers

in several US states and notes that some states have actively

encouraged such use in order to apply pressure to the drugs

companies. The challenge online is dealing with the need for

input from a medical practitioner in many drug choices.

Gurau explores the growth of online pharmacies noting that

they can be seen as a way “round national regulation” and (as

we have seen above) a means of reducing the cost of drugs to

the consumer. Indeed this grey market for prescription drugs

is significant as it takes advantage of the long-term price

differentiation practiced by most multinational drug

companies. The result is that, for important and widely

prescribed drugs, there is a significant downward pressure on

the price.

However, lower prices are not the sole perceived benefit of

online pharmacies and we need to understand that, as with

other areas of business, the internet represents a massive

challenge. Indeed, many of the peculiarities of general

practice and primary care across national boundaries may

be undermined by the role of the internet.

Online healthcare – the way of thefuture?

In looking at the growth in online pharmacy, Gurau refers to

the deficiencies of regular medical services arguing that

“. . . long waiting lists, insufficient doctors and poor service

quality . . . ” are leading people to seek out more efficient ways

to obtain good medical care. We have little confidence that the

everyday health care systems (and this is especially the case

where socialized medicine predominates) will go the extra

mile in improving service or support.

At the same time as one section of the medical and

pharmacy professions is using the Internet to deliver real

improvements in service quality, others continue to resist the

use of online advice, support and service. In many ways this

mirrors the debate over direct-to-consumer advertising where

some consumer advocates and some medical practitioners are

enthusiasts for the extension of advertising whereas others see

only problems, risks and dangers in such an extension.

It is clear that the online supply of drugs presents some risks

to the consumer and there has to be some reassurance. But

the general public experience of online pharmacy (as reported

Executive summary Journal of Consumer Marketing

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by Gurau) suggests high levels of consumer satisfaction. In

Gurau’s UK sample around one-third of respondents had

used online pharmacies – a significant percentage in a

country that is not especially adventurous when in comes to

healthcare markets. It seems to be that case that other factors

are as significant as the price – protection of privacy and

convenience are especially important. Gurau reports that

online pharmacy is especially popular with older people who

value the convenience it affords.

This last point is significant – we do not have the

information to hand as to the proportion of prescriptions that

are straightforward repeats but for many older people there

will be the regular bother of renewing supplies of drugs taken

to manage chronic conditions such as arthritis and heart

conditions. The ability to get this service from the

convenience of the home computer represents a significant

step forward. And, if the medical profession stop and think for

a moment, such a system frees up doctors time currently

spent writing out repeat prescriptions.

The other aspect of online activity takes us back to the

discussion about direct-to-consumer advertising and the

extent to which it provides real consumer benefits. It seems

likely that those seeking to preserve the doctor’s gatekeeper

role will win the short-term battle and secure tighter

regulation (or as is possible in New Zealand a ban of DTC

advertising). But in the long-term consumers will – via the

medium of the internet – get the detailed information about

drugs, medical conditions and treatments.

Consumer awareness – the mainobjective of DTC advertising

Given that most of the information – and much more –

currently given to consumers via DTC advertisements is

available online in an almost entirely unregulated

environment, is seems rather foolish to spend so much time

worrying about such advertising. The 1997 FDA guidance on

DTC advertising opened up the use of such advertising as a

gateway to far greater information supplied on web sites. This

is not to say that drug companies are wholly honourable in

their advertising – the detailed assessment of the US legal

environment presented by Cunningham and Iyer shows some

of the problems and Finlayson and Mullner’s brief review of

the current state of play reveals some real worries about the

approaches adopted by some drugs advertisers.

If we set aside the online diagnosis and prescription offered

by some internet pharmacies, most drugs advertising is aimed

at driving consumers to visit their physician to discuss a given

condition and drugs associated with its treatment. The

positive side of this activity is that, as Finlayson and Mullner

point out, consumers may be “. . .seeing physicians earlier,

receiving treatment earlier and potentially avoiding future

medical complications”. The contra-argument that this

promotion of public health is a specific public sector

function not only gets drugs companies off the hook (the

Government takes responsibility) but the costs would be

considerable.

If drugs companies are spending over $3 billion per year

promoting drugs directly to US consumers, it represents an

enormous opportunity to develop substantial public health

promotion budgets outside the limited scope of public

investment. Rather than trying to regulate the advertising to

the stage where it becomes pointless, public authorities

charged with promoting health messages should seek

partnerships with pharmaceutical advertisers intended to

embed core public health messages into such advertising.

Taking such a proactive approach would be a considerable

shift away from the traditional command and control

approach beloved of bureaucracies.

However, this does not exonerate marketers involved with

drugs promotion from the job of acting ethically and

responsibly. Cunningham and Iyer’s checklist is an ideal

start for anyone looking at developing strong strategies to

DTC advertising in the USA. And the list is underscored by

the real risk that one or more drug company will find itself in

court as a result of claims made in DTC advertisements.

However, the most important observation that Cunningham

and Iyer make is that the drugs industry in the USA has done

nothing to sort out its own house. Aided and abetted by the

advertising business (who have to take some responsibility

here), drug companies have created a rod for their own back

through weak strategies predicated on shifting boxes rather

than developing long-term engagement with consumers.

Drug brands and DTC advertising

The pharmaceuticals industry is unusually placed in respect

of brands since its most profitable products exist behind a

strong patent protection. This protection is necessary because

of the significant costs associated with research and

development in the drugs business. Getting a drug from the

lab, through trial, tests and approvals to the point where it can

be sold represents a huge commitment. The patent allows the

firm to get a satisfactory return on that investment in R&D.

Without this return future investment in the development of

new drugs is jeopardized. As with the health promotion

situation, the argument that governments can pick up this

strain does not hold up since the industry invests over $30

billion each year in research (and that is just in the USA).

So drug companies enjoy greater protection for the brand

than is the case in many other markets. And the opportunity

to promote directly to the consumer gives a brand building

opportunity too good to miss. However, because drug

businesses are concerned with driving consumers into seeing

their doctors – with short term sales – brand development is

overlooked. And this oversight is exacerbated by a sales-

oriented marketing culture. It is ironic that the skills and

expertise many drug companies have developed in the

promotion of branded over-the-counter drugs have not

transferred to the development of prescription drug brands.

It is reasonable to assume however, that most drugs

marketing strategies assume a huge change at the point when

the patent expires. Given the current approach in respect of

patents where the high margins are sustained behind the

protective barrier of the patent, it is not surprising that any

long-term strategy depends on existing patented drugs being

replaced by a new generation of patented drugs. Once a drug

is out of patent, it becomes a mere formulation that any

manufacturer can produce. The result is that generic drugs

are treated as commodities – sold unbranded.

Perhaps this need not be the case (and we should note that

some manufacturers have begun to appreciate that there is a

far wider issue that extends beyond price). In some cases drug

promotions have been assisted by the development of OTC


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versions of prescription drugs – the liberalization of OTC

drug markets has assisted this process in some countries. But

the company should be considering how the investment in

brand development during the drug’s protected period is

captured and maintained after the drug loses its patent. There

is an argument to be made that drug manufacturers should

develop corporate brands and should pull away from the

individual product branding approach that prevails at present.

Such a change represents a radical step for the drug

manufacturer but, as we have seen, the market is changing

rapidly. Consumers will be better informed, price levels will

be pushed down by online trading and the general practitioner

will lose a great deal of the gatekeeper role that currently

contributes to the drug companies’ power – patients do not

have the specific medical knowledge, nor do they know how

much the drug costs or how much money the drug company

have spent promoting the drug to the doctors. In the new

environment there should be greater openness and a level of

product knowledge sufficient for many patients to make a real

assessment of the advice they receive from the doctor.

Cunningham and Iyer report on one legal ruling (Perez v.

Wyeth Labs, NJ [1999]) that recounted how many aspects of

the laws governing drug promotions date back to a time when

“. . . Dr Kildare was a popular television show, doctors still

made house calls and the relationship between patient and

physician was a comfortably close one in which doctor

advised patient and patient believed that ‘doctor knows

best’”. This is no longer the case and becoming less so with

each passing day – new means of communications, the size

and significance of the health care system, the growth in

Government involvement and intervention and the

complexity of treatment all make for a less personal system.

What ever we do to make the most of this changed world, it

should centre on the provision of good quality information to

the patient as a consumer of health care.

To achieve this, drugs companies need to examine their

business and marketing models. The emerging challenge to

patent-based systems from developing countries is significant

as is the focus in the development world on “wellness”. These

two considerations are the subject of the remaining two

articles in this special issue: Crawford and Leventis looking at

the growing market for herbal remedies and Mascarenhas et al.

examining radical business models for addressing the moral

challenge of delivering drugs and health care in poor

countries.

In a connected world health care in Malireally does matter

In the latter case we should start by understanding that we

cannot isolate ourselves from the health care and medical

challenges in the developed world. It is not just the high

profile “pandemics” like SARS, avian ’flu and AIDS/HIV but

many other conditions – resistant TB, malaria and hepatitis

variants are all significant challenges in the developing world

that will affect us in the developed world if we do not take

actions to assist in managing their spread. Mascarenhas et al.

focus on the challenge of AIDS/HIV which has been the

subject of considerable debate and controversy especially

given the complex nature of treatment for the condition and

the expense of the antiretroviral drugs used in that treatment.

Despite a widespread recognition that endemic diseases in

the developing world require urgent action, there has been

reluctance (from all sides) to see a significant role in such

action for the private sector. The assumption is that

developed world Governments will use their taxpayers’

money to fund health programmes elsewhere. And, while

some of such actions are probable (e.g. the US Government’s

considerable contribution to the AIDS/HIV crisis in sub-

Saharan Africa), they will never be sufficient or sustainable.

The long-term solution lies with local Governments and with

the private sector. And, as Mascarenhas et al. point out, to get

the most out of the private sector you present them with the

opportunity to make some money.

Mascarenhas et al. stress the significance of entrepreneurial

actions in the successful delivery of health care in the

developing world – some of this is through NGOs (the

authors cite the example of Medicines sans Frontieres) while

other success is via local managed private businesses. The

central tenet of Mascarenhas et al.’s essay is that we must

package the “goods” in such as way as to make them

affordable by those at the bottom of the income pile and that

it makes sense to use communal institutions and associations

as a way to sustain very local business models.

The lesson for the drugs companies here is that they can

package drugs to make them applicable in the developing

world without necessarily crippling pricing strategies

elsewhere. With the right model we can avoid (or at least

significantly reduce) the risk of low priced drugs leaking back

into higher priced markets. For drug companies the changed

business model will require a very different approach that

works very closely with local people on the ground. But this

approach stands more chance of succeeding than does the

unsustainable approach of governments in the rich world

subsidizing wealthy drug companies to provide low cost drugs

to people in the third world. This approach appeals to the

moralists but fails to deliver the change we need on the

ground.

Importantly, this need to look at the strategies used in the

developing world presents an opportunity to re-examine the

strategies used in the rich world. We have noted that the

internet, consumer activism and other factors are changing

the dynamics of the health market. If drug companies are to

sustain their position, they will need to adjust business models

to deal with this new reality. And all this takes places at the

same time as the “wellness” market begins to take off.

Health foods, diet supplements andalternative medicine

The US market for dietary supplements is very large at $18

billion (although not so massive set next to the market for

traditional pharmaceuticals which sits at around $180 billion).

In addition there is a growing market made up of foods with

health claims (led by the dairy industry). Much of this market

focuses on overall well-being rather than on addressing

specific conditions indeed, the limitations on herbal remedies

are such that is suits their promoter to pull them back from

specific claims as to the herb’s effect.

Compared to other parts of the healthcare sector, the

marketing of herbal remedies and supplements is relatively

unregulated. And we should note that the drugs companies

and many parts of the medical profession are very protective


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of health claims relating to anything other than a properly

formulated and clinically tested drug. There is often

frustration about this but it is wholly reasonable given the

protection that governments wish to extend to the population

and the extensive regulation that applies to traditional drugs.

Nevertheless, there is a lesson for drug companies in the

success of dietary supplements and herbal remedies. This

market builds on levels of health awareness, on the desire to

promote our own good health and on the view that we should

regulate what we put into our body. This health awareness

extends beyond the market for supplements and we can see it

as one factor in the positive response from consumers to DTC

advertising of prescription drugs.

Consumer empowerment is to bewelcomed not restrained

Those who resist the opening up of access to information

about drugs run counter to the trend in consumer marketing.

This is especially the case with DTC advertising of

prescription drugs where one of the commonest arguments

against such advertising is that consumers might not

understand the information. Leaving aside the rather

patronizing implications of this stance, we need to recognize

that prescription drugs are a directly regulated market where

the prescribing doctor and dispensing pharmacist act as

protectors for the consumer.

The consumer in today’s developed market is looking for

the information that allows sensible choice. Sometimes the

use of information is moderated (in this case via a physician)

but this does not provide a reason for withholding that

information. However, there remains a worry for consumers

that the advertiser is being less than complete in their

provision of information. Nevertheless, much of this is

verifiable and we operate on the principle that our doctor is

not going to prescribe drugs we do not need (there is a

separate debate to be had on the extent to which the

promotional tactics of drugs companies could compromise

the independence of physicians).

The articles in this special issue direct us as marketers

towards the appreciation that, in general terms, what we do is

morally good. Despite the dreadful stories of misplaced

marketing and the voices opposing the making of profits,

allowing consumers to be fully informed about the drugs

others are buying for us improves the quality of health care.

Given the opportunities presented by the Internet and by the

sophisticated broadcast media available to advertisers it seems

rather foolish to prevent their use because we are worried

about the ability of consumers to understand the information

it brings.


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Book reviewsThe 18 Immutable Laws ofCorporate Reputation

Ronald J. Alsop

Kogan Page Ltd

London

2004

286 pp.

£17.99

Keywords Corporate identity,

Organizational behaviour,

Corporate communications

Review DOI: 10.1108/07363760510631192

When the Journal of ConsumerMarketing,

sent me The 18 Immutable Laws of

Corporate Reputation I thought, “Great:

another book of lists for success” And, I

tossed it on my desk for a couple of

months. I was the poorer for those

months because this substantive, well-

documented book basically shows how

proper management leads to strong

public image and reputation. Not a

book for your public relations and

advertising people, it is a book for your

entire management team.

Alsop’s basic argument is that

corporate reputation is ultimately a

function of corporate practice. While

there are occasions when a public

relations crisis must be managed, the

bottom line is, every functional area of

the business and every management

decision either builds or diminishes

your reputation.

You can skim the book’s cases and go

straight for the key points of each

chapter – they are nicely marked with

bold headers and have a relatively quick

read. On the other, reading the

contemporary substantive cases reveals

how each principle played out or was

violated in the real world. As each

chapter develops a law, there are boxes

with important research information

that supports the key point. Divided

into roughly three equal parts, Part 1:

“Establishing a good reputation”, Part

2: “Keeping it”, and Part 3: “Repairing

it”; The 18 Immutable Laws of Corporate

Reputation can help you if you are in

good shape, if you want ideas on

maintaining your reputation, or if you

are in the middle of a crisis.

Law 1: “Maximizing your most

important asset” opens with FedEx’s

nightmare of losing a truck to fire being

prominently featured on televised news.

Alsop lays out how FedEx’s established

reputation, thorough preparation, and

planning for dealing with such a disaster

via an aggressive but substantive and

thoughtful response, minimized any

damage. A firm needs to actively

develop its reputation, build an

organizational culture that weighs

decisions in terms of impact on

reputation, and uses its reputation

capital wisely.

Laws 2, 4, and 6 are the heart of this

first section as Alsop calls on firms to

know themselves and operate on that

basis. His suggestion that firms make

decisions in the light of reputational

impact is not suggesting duplicity but

rather looking at your firm positively.

Does this decision represent who we

really are? Is it consistent with our own

values and ethical standards? The

author suggests that a firm’s

leadership, its CEO, needs to cast a

compelling vision that builds on its

values, as both BP or Dell have. Then

its managers and employees will make

decisions that do right by the customer

and confirm the company’s reputation.

In fact the personality of the firm’s

public figures, the CEO, president, are

often closely linked to the vision and the

firm’s reputation.

Laws 3 and 5 demonstrate the

importance of a company knowing its

constituencies and regularly giving back

to its community. But it is not

calculation and weighing costs and

opportunities; it is about creating

emotional attachment and

commitment. It can be as simple as

Sue Harness at Wawa baking cookies

for departing employees or as expensive

and time consuming as the effort to

redesign the airplane seats and flight

crew uniforms by Continental, moves

that significantly improved customers’

feelings about the airline. Companies

need to consider the feelings of their

internal and external constituencies and

ask themselves what business decisions

will enhance their customers’ and

employees’ satisfaction, thereby

building “reputational capital” that can

be stored and used in times of need.

Unfortunately, carefully establishing a

good reputation by doing the right

things and making good decisions is

not enough. Hence why Part 2 and

Laws 8 through 13 address the need to

protect that reputation. As Home

Depot learned, a firm needs to track

its reputation and be aware of its

shortcomings (Law 8). Home Depot

lost its focus in its drive to profitability

and moved away from its vision. It took

a survey to bring HD back to its senses,

and it took specific, concrete actions to

address customer service.

Consequently, over time its reputation

rebounded. This is Alsop’s point.

Reputation is a function of doing

business correctly; it is not an add-on

through manipulation or heavy

promotional budgets. Understanding

this, HD held back on emphasizing

service quality in its advertising until it

felt they could legitimately claim it.

Laws 9 and 11 are the ones that will

keep you awake at night. Law 9, “Stay

vigilant to ever-present perils”, opens

with the mistake of a misguided

employee in a moment of high stress

deciding to sell water (rather than give it

as other businesses in the area did with

food, etc.) to the firefighters and rescue

personnel at the Twin Towers site on 9/

11. Then Starbucks sought to defend

itself by “setting the facts straight”, even

though it was in conflict with their own

published customer service policies.

They underestimated the power of

word-of-mouth and the internet in

spreading the story, not to mention the

print media. Law 11 – “Control the

internet before it controls you”, brings

home the power of the internet for good

and ill for any business. The case of how

Tommy Hilfiger countered a negative

urban myth by aggressively countering,

seeking its origins, etc., is consistent

with Alsop’s continuing proactive

message. Reputation is something you

actively build and defend. Alsop then

goes into how companies can positively

use the web to enhance reputation by

providing customers with product

information, company information,

even posting “myths and legends” and

offering counters to them.

In Laws 10, 12 and 13 we learn the

importance of consistency in a public

message and having employees who

communicate that consistent message

in all they say and do. The author closes

Part 2 by reminding us of the

importance of deciding and acting in

ways consistent with whom the

company is, even to the point of being

careful of partnerships, strategic

alliances, etc. Do these cooperative

efforts not only make business sense

442

but are they consistent with whom we

are as a company?

The four of the last five laws under Part

3 – “Repairing a damaged reputation”,

carry a consistent message – fixing a

reputation problem requires skill,

honesty, and humility, and it needs to

be done right the first time. The closing

Law 18 – “If all else fails change your

name”, may seem like an attempt at

humor but it is practical advice with a

caveat. Even that may not be enough.

While this is the most “defensive”

portion of the book, Alsop wants us to

understand that anyone, even DuPont,

can recover from a crisis. Responding

with the customer in mind, being willing

to humbly accept even what is not the

firm’s fault, and acting at the right time,

usually sooner than later, go a long way to

restoring company image. The public’s

cynicism – Law 16 and their desire for

contrition – Law 17, make it critically

important that a company deal with the

issue right the first time – Law 15, and

with care – Law 14. It is clear that no

course of action, no event is isolated. It is

the coordination of doing the right

things, of basically good humane

management, and appropriate timing

that result in success in dealing with

crisis. The author’s final advice in Law 18

seems mixed. He offers as many

examples of name changes not working

as working. I believe he included it to

argue the opposite. It is not change your

name; it is do everything you can to not

reach this point because you only have a

50-50 chance that this last-ditch strategy

will work.

Entertainingly written, exemplified

with many current and some classic

case studies, and adequately supported

with research, The 18 Immutable Laws of

Corporate Reputation is a practical

management tool for understanding

both the importance of corporate

reputation and how ethical, humane

management practices support and

enhance it.

If you react to the title and “judge the

book by its cover”, you will miss an

excellent, integrated management book

that your entire management team will

benefit from. And, it may help you head

off a future reputation crisis. Because

while we can control our firms to some

extent, we cannot control the future.

Jim Dupree

Professor of Business, Grove City

College, Grove City, Pennsylvania,

USA

ageless marketing: Strategiesfor Reaching the Hearts &Minds of the New CustomerMajority

David B. Wolfe with Robert E. Snyder

Dearborn Trade Publishing, a Kaplan

Professional Company

Chicago, IL

336 pp.ISBN 0-7931-7744-3

US $25.00, Can 37.95

Keywords Ageless marketing,

Anti-being experience, Being experiences,

Boomers, Experiential segmentation,

Left brain/right brain, Seasons of life,

Value portraits

Review DOI: 10.1108/07363760510631200

ageless marketing, divided into five parts,

of three chapters each, presents a

compelling charge to marketers,

advertisers and salespeople to look at

the market in a new light. Beginning

with Part I, “An era of new rules”, all

the way through and including Part V,

“Preparing landing sites for marketing

messages”, readers will find new ideas

and concepts mixed with classic

philosophical quotations that support

the new. A delightful twist in format is

offering the readers an interlude in the

middle of the book and then a later

chapter that chronicles five generations

of a family. The Erskine family logs give

enhanced credibility to all of the

author’s “seasonal” concepts. Wolfe

uses this particular family as a

“microcosm of the marketplace”

(p. 217). Its members range from ten

months to 91 years of age.

Mr Wolfe, with Mr Snyder, insists

that marketing is missing the boat

without recognizing, addressing, and

implementing many ideas he has

brought together. For serious

marketers, this business book requires

thorough reading with attention to, and

retention of, the many terms the author

creates and uses. It comprehensively

includes and builds upon these terms,

the most frequently uses of which I list

above as keywords. While many may

argue that younger consumers pay more

attention to advertising and act on it,

the new consumer majority becomes

larger each day and thus has the

potential for greater revenues. Their

sheer volume makes appropriate

advertising a must.

There is often much-appreciated

connectivity in the book to examples

and relationships from past chapters.

These serve readers as both a review of

major applications and, while the same

time, introducing new topics. For one

example, in Chapter 12, where the

discussion of the “marketer as a healer”

arises, the author takes readers back

only one chapter, to Chapter 11, where

he cited the success of a Trappist monk,

Abbot Joseph, for the importance of

story telling. Another example of

connectivity is in the “Conclusion” to

Chapter 13. Here, when discussing the

importance of symbols and avoidance of

“anti-being experience symbols”, Wolf

and Snyder take readers back to

Figure 7.1 that delineates the seasons

of life in matrix form.

The authors begin, and continue

throughout the book, by stressing the

importance of developmental

psychology, “a field almost completely

ignored in consumer research” (p. 37).

They call on marketers to understand

the relationships of related fields to

current marketing needs. They spend a

good deal of time providing an

understanding the roles of the right

and left brain. Their major contention

states that we can no longer target

markets by chronological age and by the

statistics we gather from questionnaires.

The first challenge presented is the

“extraordinary population shrinkage

taking place in the historically-most-

important age group in the consumer

economy – adults from 25 to 44. The

grim outcome of this is a total absence

of sales growth in this age group

throughout this decade” (p. 331).

To meet the new demands of “ageless

marketing,” we need to understand fully

the three “Experiential stages of adult

life”:

(1) possession experiences of the

earlier years;

(2) catered experiences of the mid

years, or “the first stage of being

someone versus becoming

someone”; and

(3) Being experiences of the later

seasons of life (p. 242).

The authors go on and quote Peter

Kim, who said:

As Americans redefine what it means to growold, age, in many ways, will become an obsoletemarketing concept (p. 243).

Instead of putting our beliefs into focus

group outcomes and questionnaire

results exclusively, we must look at the

443

life span as two halves, under and over

age 40. Wolfe includes comments for

and against focus groups and suggests

times to have panelists record their

thoughts rather than speaking aloud to

influence one another’s responses.

A major problem Wolfe deals with is

that the often, and incorrectly,

sympathetic symbols and words

addressing the senior market, those in

the “winter season” of life, are offensive

and, equally important, probably

causing companies to lose business.

He gives examples of people, who

probably think they are being

courteous, without request take the

arm of the elderly to help them walk.

There is grave concern about

advertising and marketing people, who

are still in their first halves of life, having

responsibility to create messages

targeting those in later seasons of life

without yet having had the personal

experience of the second half of life.

Thus, there is an urgent and immediate

need to correct the many inappropriate

ads targeting people in the fall and

winter life stages. These messages

convey a lack of awareness of things in

which seniors are still interested in, such

as excitement and sex, to name only

two. The author suggests such creators

have coaching and guidance from those

in the “winter” stages.

Offensive advertising and marketing

to those in the second half cannot

continue with the rapid growth of the

“fall and winter” markets. Values of

members in each season accompany

this discussion. Unchanging values

mold the behaviors and actions of

most consumers.

An emerging segment Wolfe feels

marketers overlook, because of current

and inappropriate segmentation

precepts, is comprised of another

unaddressed group: those who have

wound up in different circumstances,

such as divorced people, single people

who have always been single, and others

out of the anticipated molds.

Wolfe faults corporations for being

more concerned with moving product

than for understanding their customers.

He does give examples of companies that

have been unusual in their successful

customer recognition programs, such as

Southwest Airlines. He and Robert

Snyder have worked in community

development and “senior” housing.

They get to the crux of the matter by

pointing out that most senior

developments advertise golf courses and

other amenities that presume those in the

winter season of life either place strong

value on these amenities or have no other

values they treasure and want to use in

their retirement. Promotions

inappropriately and regularly show

pictures of a senior couple walking hand

in hand with “pasted smiles” on their

faces.

In this section, Wolfe provides many

enjoyable ways in which he has listened

to, and then accommodated,

consumers. He even continues by

advising the best practices for

attracting people in different seasons

of life at the same time to the same

property, rather than limiting the

property to seniors. He provides

photos of collateral publicity he and

his clients used to coax the younger

segment to share events in one formerly

senior-only housing complex. Later, he

concludes that in “over 400

communities, representing over

600,000 homes, no developer client

was ever sued” (p. 303). They

maintained dialogs with residents by

invoking what they called “the four Cs

– communicate constantly with candor

and control”. Until then many people

had stereotypical images of housing

especially for seniors. This practice of

listening to, and talking with,

consumers of various life seasons, and

his amalgamation of the members of the

Spring stage of the life cycle with the

Winter stage people, is one way Wolfe

addresses the questioned ability of

marketing to bring various groups

together.

Wolfe is consistent with his argument

against restricting market knowledge to

numbers when he says that customer

relationship management (CRM) has

not worked. He talks in the opening

chapter, with a sub-heading of “Why

marketing stopped working”, of the

“dehumanization of customer

experiences with a company” (p. 7).

There needs to be a way to learn about

customers, especially the ever-growing

customer majority, which mostly the

boomers comprise. To do this, we must

consider that people are in four seasons

of life, beginning with spring. We must

understand what values exist in each

season and how the members of that

group relate to the corresponding

season.

The end of “ageless marketing”

directs attention to the ever-growing

consumer majority, the “seniors.” Wolfe

identifies symbols, nomenclature, and

terms that this huge group of winter

people (seniors) like and dislike. To use

better terminology is imperative. These

negative symbols repel people from

advertising. At one time, Wolfe asked

a 66-year old to review a stack of

brochures from extended service

communities. These brochures opened

with a promise to people that they

would remain independent. After one

paragraph, the brochures told

everything about what the property

would offer to keep people from being

independent; i.e. how they are going to

feed you, clean your apartment, launder

your linens, bus you to where you want

to go, and, with a social director, decide

what you will do each day.

The book provides additional

knowledge to marketers of the state of

the five senses during aging. Anyone

committed to getting a 360-degree view

of customers in their 50s and older

needs to be aware of these changes

because they can influence product

design, marketing, sales, point-of-sale

environments, and post-sale servicing

(pp. 305-306). Marketers must address

these issues. He wants to know why

companies put so much effort and

money into package design and yet

pay no attention to whether or not

seniors have the strength with which to

open the packages.

Before the appendix, which defines

the research that went into this book,

the author concludes by repeating his

objective was to provide “for the first

time in a business book” (p. 332) the

integration of psychology with

marketing and more. The legacy Wolfe

wants to leave readers with by the end

of the book is a much greater

understanding of self, those around us,

and, in fact, the “Family of man”.

This book is a “must read” for those

in marketing, advertising, publicity, and

sales. It could be a “light read” for

seniors and those interested in

segmentation. Wolfe accomplished his

objective with me, and I implore those

involved in marketing and related fields

to carry on to the end of this book. It is

a slow read of changes requiring high

speed.

Sylvia Keyes

Professor, School of Management,

Bridgewater State College, Bridgewater,

Massachusetts, USA and Immediate

Past Vice President, American

Marketing Association, Collegiate

Chapters Division

444

Celebration of Fools: An InsideLook at the Rise and Fall ofJCPenney

Bill Hare

AMACOM

New York, NY

www.amacombooks.org

284 pp.

$24.95

Keywords Partnerships,

Merchandise versus Merchandising, Specialist

Review DOI: 10.1108/07363760510631219

Who knew or cared what was

happening? “In 1994, after all, they

had a record year of immense profit.

The party was Texas-sized, with praise

and rewards all around. It was a

‘celebration of fools’” (p. 173).

When I saw the jacket covering the

hard copy of Celebration of Fools, the

author’s background as a speechwriter

and filmmaker was notable. I presumed

the book would contain discrete press

releases and short stories of the

corporate history. Instead, Bill Hare

presents a saga, in non-fiction, that I

did not want to put aside. He recounts

the ups and then the downs of this

leading department store chain from his

own eight years with its executives and

combines it with knowledge of others

from JCPenney. Since the company

tended to maintain an insular position

in the retailing and business world,

there was little for the writer to find

externally. Thus, admittedly, Hare

presumes his conclusions from many

conversations. He makes it clear on that

“the book concentrates on the major

events that drove the company up . . .

and down” (p. 3).

I enjoyed every page of this book.

However, I showed it to a professor

from a Texas university, who was unable

to get beyond the first chapter – even

though, ultimately, JCPenney moved its

corporate headquarters to Dallas.

Perhaps Hare’s story had so much

meaning for me because, in the ’60s,

for a short-lived part of my career, I

worked for Federated Department

Stores. There were no first names in

the JCPenney nor in the Federated

vintage, when I reported to Mr Maurice

Lazarus, the Vice Chairman of

Federated and the President of

Filene’s, its Boston Federated store. At

the same time, Mr Harold Krensky rose

to be the successor to Mr Maurice

Lazarus as the President of Filene’s and

then replaced Mr Ralph Lazarus, who is

mentioned ion this book as the top

officer of Federated. So, to me, the

climb to the top was similar in the two

famous organizations. In fact, as I read

about a CEO of JCPenney trying to

systematize its business by a secret,

manual record of consolidated

transactions, I was, in the same year,

working on what sounded like the same

project for Mr Lazarus. Similarly to

Filene’s, the people at the top of

JCPenney rose from their ability in

merchandising or strategy and overall

vision; and their wives became a part of

the interviewing process. In fact, James

Cash Penney’s wife was always “Mrs

Penney”, even to him. For me, this was

of interest in demonstrating the need for

a company to establish a posture in

consumers’ minds, its human resources’

development, and its contributions

within surrounding communities.

To most readers, who are probably

those with interest in retailing and

management, either from experience

or from study, Bill Hare presents a

continuing and convincing argument in

favor of the retail giant’s founding

fathers, beginning with J.C. Penney

and continuing through Walt Neppl

and Don Seibert, of the wonderful years

that included success in acquiring

personnel and training them in the JC

Penney ways. In 1936, in Salt Lake

City, at a company gathering of then 36

stores, Mr Penney introduced the “body

of doctrine” of H-C-S-C. He invoked

this acronym, which represented

Honor, Confidence, Service, and

Cooperation (p. 37). As simplistic as it

seemed, numerous CEO’s followed this

credo until the time of Bill Howell, the

chairman and CEO, responsible for

moving the company from New York

to Dallas. The leaders, prior to Howell,

followed the beliefs of both

merchandise and merchandising, had

the ability to withstand and ameliorate

the differences among people at the

store level and others at the buying

level, held appreciation for a varied

product mix – in spite of these

managers leading the path to the malls

of America – and showed foresight in

attempting to computerize systems with

leaders in the cash register industry.

Mr Hare, at the other extreme, presents

a convincing argument against those at

the helm, beginning with W.R. Howell,

and, especially Jim Oesterreicher. These

top officers were “preening themselves”

(p. 169), and pushing toward further

self-aggrandizement by acquiring the

Eckerd Corporation, an unsuccessful

venture into the pharmacy business.

It is not surprising that AMACOM

published this book. In addition to

retailing, it contains many management

lessons. In the early years, Penney’s

management training endorsed leading

by example. Employees moved up who

followed the H-C-S-C doctrine and the

procedures that related to it. Hare

explains the result of this philosophical

underpinning by saying: “Remember,

Penney was the godfather of sharing. If

you produced, you did very well”

(p. 15).

An important word from the

beginning of James Cash Penney’s

regime was “partnerships”. After

people of the Golden Rule Stores

proved their worth, they received

offers to become partners, a

managerial technique that accounted

for the stores’ ability to thrive. They

paid attention to the customers and

provided the product mix important to

those customers. Many years later, the

top officers lost this objective and

replaced it with profit.

In the center of the book, among

glossy photographs, readers can see the

James C. Penney Meat Market. Jim

Penney’s first venture failed because he

would not pay bribes. The picture

shows both Jim Penney and his

beloved, Berta, who worked in the

market where they met. Berta had

arrived in Jim’s hometown after

deserting the location of her first

marriage, which ended in divorce. She

and Jim worked together in his first

Golden Rule Store and, while he was

away on a buying trip, Berta learned she

was pregnant. Jim returned much later

and, on learning of the pregnancy,

proposed to Berta. She worked

tirelessly in both the home and the

business, keeping the baby’s basket on

the premises. When she needed to have

her tonsils removed, she walked to and

from the surgeon’s office, and thereafter

became very ill. Jim had planned a trip

for the then family of Berta and two

children because they never had a real

vacation. However, Berta never

recovered from her illness and Jim

never recovered from the fact she was

gone even when she died. This caused

him to institutionalize himself much

445

later in life. Fortuitously he did recover.

Frugality did remain a major part of his

life, as his tips were an embarrassment

to those around him.

From a company that began around

1903 and that had no Jewish employees

until the 1960s, it turned into a

company that later claimed to be

interested in equal opportunity for

women and minority members. Long

before this, the wife of one manager was

rude and haughty to a woman

salesperson. Another CEO soon

thereafter tried to picture his own wife

having to stand there all day for less pay

than her male counterparts. Along

came the upwardly mobile Gale Duff-

Bloom, who oversaw the successful

movement toward equity. At the same

time, Gale suffered hurt when she went

to celebrate her achievements for

women with the top officers. The men

were whispering to one another before

and during this jaunt, and, only on

arrival, Ms Duff-Bloom, learned she

had to return to her office alone, as the

men remained to play at this golf course

that did not welcome women. The men,

allegedly supportive of her efforts, did

not leave and return with her.

A further personal frame of reference

in the “Celebration of fools” led me to

read about Dr Barton Weitz. Dr Weitz

received the full respect of Gale Duff-

Bloom. When she arrived on his

campus, she felt a pang of regret that

she had, by her own design and

demands, risen to the top without a

formal, on-campus college education.

Barton is the JCPenney Scholar at the

Warrington School of Business at

University of Florida. Moreover, I

agree with Duff-Bloom’s assessment of

Professor Weitz, who was Chairman of

the Board of the American Marketing

Association, when I was its top officer of

the collegiate division in 2002 and

2003. He is as bright, “amiable,” and

effective as Ms Duff-Bloom describes

him.

Hare divides the book into four

chronological parts:

(1) The founder;

(2) The visionary;

(3) The betrayer; and

(4) The end.

There are 27 chapter titles, which

become apparent and appropriate as

readers understand the text preceding

each heading. For example, Chapter 9

bears the title of “The common touch”.

This chapter describes the

commonalities of JCPenney’s top

executives. Only one, Mil Batten, who

was the fourth Chairman and CEO,

never managed a store. He did train

under and work with others in the

organization and moved up until he

retired to become the head of the

United States’ Securities and

Exchange Commission.

Most chapters were under 20 pages.

For me, not one chapter dragged and

there was no redundancy. It is a read

those in retailing and management

should not miss.

Sylvia Keyes

Professor, School of Management,

Bridgewater State College, Bridgewater,

Massachusetts, USA and Immediate

Past Vice President, American

Marketing Association, Collegiate

Chapters Division

446

Computer currency

Edited by Dennis A. PittaUniversity of Baltimore

A fast and secure wireless network forhome or office

When Bill Gates recognized the internet as the next bigopportunity, he repositioned Microsoft to emphasize InternetExplorer and added networking capabilities to Windows 98Second Edition. At the time, the networking wasaccomplished using network cards and cables. Networkingin turn spurred cable and telephone providers to roll out

broadband connections for small businesses and individualconsumers. The reliance on cable connections was logical. Atthe time only cables provided the speed necessary to give fastinternet access.Cable installation was one of the more difficult tasks,

especially in older business buildings. When necessary, thetask of drilling through concrete walls made the task morecostly. As a result, companies and individuals faced withlaying out the networking infrastructure embraced wirelessconnectivity. As the internet and networking grew inpopularity, wired networking became a challenge for boththe individual with a small office at home and the small

business owner.The following review represents actual experience in

entering the wireless domain. Our personal wirednetworking experience concentrated on integrating hardwaremade by Netgear. Netgear’s equipment earned a reputation

for easy configuration, flawless performance and economy. Itwas logical that we chose Netgear equipment for a wirelessnetwork. Netgear marketed a new wireless router, whichforms the heart of a wireless network. Our choice was the newWGU624 wireless firewall router. Wireless routers require acommunications protocol to communicate. The protocoldetermines the ceiling of communication speed. When a radio

frequency current is supplied to an antenna, it creates anelectromagnetic field that can propagate through space. Theprotocol determines how that field is used forcommunication. Many wireless technologies are based onradio frequency field propagation. Since the WGU624 usestwo protocols, 5GHz 802.11a and 2.4GHz 802.11b/g, itallows sending data in two separate radio frequencies insteadof just one. 802.11 refers to a family of specifications

developed by the Institute of Electrical and ElectronicsEngineers, (IEEE pronounced I-triple-E). 802.11 specifies anover-the-air interface between a wireless client and a basestation or between two wireless clients. The IEEE acceptedthe specification in 1997. That specification promisesenhanced performance.Netgear also promises that its router will deliver fast

delivery of data over significant distances using eitherfrequency. Independent laboratory tests support the claim.

For example, the WGU624 garnered excellent overall

throughput scores in CNET Labs’ technical tests. CNET is

a website that maintains a professional evaluation staff and

performs numerous tests of software and hardware.Speed is only one aspect of wireless technology: the other is

security. Since it is based on radio waves, security is of special

concern. All radio waves can be intercepted. To provide

security, a security protocol is necessary. The router uses

secure WPA technology. WPA is short for Wi-Fi Protected

Access, a standard that was designed to improve upon the

security features of protocols. Wi-Fi is short for wireless

fidelity and is meant to be used generically when referring of

any type of 802.11 network, whether 802.11b, 802.11a, orother.WPA technology and extensive firewall features should

protect your transmissions in both modes. This sounds good

but there is another requirement. Not only do you need a

router, you need a specific wireless PC card to reap thesebenefits. In this case, the WGU624 requires use of a Netgear

WG511U PC card or another brand of dual band adapter, in

each of the computers on your network.

Setup

Netgear provides a browser-based tool to configure the

WGU624. The setup tool allows the user to manipulate

aspects of its integrated 802.11as well as its 802.11b/g access

points. Using the tool one can create keys for 64-, 128-, and

152-bit Wired Equivalent Privacy encryption. Wired

Equivalent Privacy (WEP), is a security protocol for wireless

local area networks defined in the 802.11b standard. It is

designed to provide the same level of security as that of awired LAN (WLAN). In essence LANs are inherently more

secure than WLANs. Because they rely on physical

connections, they do not have the radio wave “leak point”

that wireless LANs have. In fact, national security agencies,

which know how to hack an enemy’s communications, view

WLAN’s as security risks and tend to rely more on wired

networks.Since WLANs are more vulnerable to tampering, other

safeguards are needed. WEP attempts to provide security by

using encryption to protect the data sent via WLANs. In the

world of secrecy, it is clear that few encryption schemes are

totally secure. If communications use the same encryption

algorithm over time, eventually the cipher becomesvulnerable. Spies sometimes use a “one-time encipher pad”,

a non-repeated cipher that cannot be broken because it is not

repeated to give clues to help the code breaker. Since WEP is

used repeatedly, it is not as secure as once believed. If security

is paramount, perhaps wired LAN’s will be required. The tool

does provide a log of access attempts so that a vigilant LAN

manager may use it to discover attempts to penetrate security.

The WGU624’s configuration tool allows users to foilexternal attempts to gain access to LAN connected

computer contents.The WGU624’s setup guide and documentation are

supplied on a CD. The WGU624 setup guide is clear andoffers a good explanation of how to hook up the router’s

hardware. The documentation on the CD is detailed and

explains the configuration tool well.Users report that it is easy to setup and get working out of

the box

Performance

Netgear WGU624 seems to deliver the speedy performance it

promises. Tests in both the 2.4GHz and 5GHz bands showed


22/7 (2005) 447–448


447

fast data throughput. LAN performance is measured in Megabits per second. Modern wired LAN’s may reach 100 Mbps.The WGU624 mode, the router can attain 42.1Mbps, slowerthan wire but still fast. There are other wireless routers thatare rated a bit faster. However, the WGU624 performs verywell compared to most routers.Speed is a critical metric of LANs. WLANs also must

deliver performance at a distance from a router. Like the old“portable” telephones, the farther the handset traveled fromthe telephone base, the weaker the signal became. Tests of theWGU624 at 200 feet showed that the router transferred dataquickly.

Warranty

The WGU624 comes with one-year warranty. In addition,Netgear provides 24/7, toll-free phone support during thewarranty period. The FAQ and troubleshooting info on thecompany’s support web site is okay. However, Netgear seesthe value in customer-to-customer communication and set upa nicely organized customer forum. A sampling of thecommunication shows it to be helpful in getting router advice.

Cost

The WGU624 lists for $105. If you use the WG511U PCCard, each will cost $65. Thus the cost for the router and afew wireless connected PC’s can add up.

Caveats

While wireless hardware is better today than it was last year,there can be lurking problems. PC configurations vary andsome can cause unforeseen performance problems. Whilesome users praise the unit for ease of setup and performance,others report stability problems with the WGU624. Theyrange from having to reboot once a month to once eachmorning.Some users report that the router is buggy. Actually the

Netgear user forum had numerous complaints. One of themost damaging is that users have to “constantly reboot therouter to get it to work for just a few hours”. In many casesthe router just seems to continually reboot. Sadly, Netgeardoes not seem to respond to consumer complaints aboutstability.Users also complain about the technical support. It is 24/7

but as with many products, technical support is offshore.Users report that the support is not effective in solving theirproblems.

Still others report that the unit fails to deliver its promisedrange, even at distances much less than 200 feet.

Specifications for the Netgear WGU624. Networking form factor – external.. Connectivity technology – wired, wireless.. Data transfer rate – 108 Mbps.. Data link protocol – Ethernet, IEEE 802.11a, IEEE

802.11b, IEEE 802.11 g, Fast Ethernet.. Transport protocol – L2TP, PPTP, IPSec, PPPoE,

TCP/IP.. Features – DMZ port, Manageable, Auto-uplink, NAT

support, DHCP support, E-mail alert, URL filtering,VPN pass through, Content filtering, Firewall protection,DoS attack prevention, MAC address filtering, IntrusionDetection System (IDS), Stateful Packet Inspection (SPI)

. Networking compliant standards – IEEE 802.11a, IEEE802.11b, IEEE 802.11 g.

. Routing protocol – RIP-1, RIP-2.

Overall evaluation – Netgear WGU624

As far as wireless routers go, the WGU624 offers a well-rounded bundle of fast throughput, long range, and tight datasecurity. On the plus side it has 802.11a/b/g support; fastmaximum throughput at both short and long ranges; goodsecurity via WPA and firewall settings. On the negative side, itis more expensive than other routers, and its one yearwarranty is considered short.Personally, it was found to be very good for exploiting both

of its internal protocols to send multiple streams of dataacross a wireless network simultaneously. Therefore it wasspeedy and speed is vital.I am somewhat technically oriented and like to play with

new technological toys. For my office, and me the routerworked well and gave me the performance I expected. I haveseveral PC’s networked without the need to run cable over thebuilding. Truthfully, it is a little less tweakable than I like butrelatively unsophisticated users (with standardizedconfigurations) will find it fine.In summary, time and money are required to properly

install the WGU624. Therefore it is most suitable forcompanies with an available technical staff or individuals witha technical bent. Without these, it might be better to findanother alternative.Robert Jameson

Practice Management LLC, Columbia, Maryland, USA

Computer currency Journal of Consumer Marketing

Volume 22 · Number 7 · 2005 · 447–448

448

Internet currency

Edited by Dennis A. PittaUniversity of Baltimore

One to one marketing finally hits itsstride

Not too long ago, marketers talked about one to one

marketing and mass customization. The idea, which was

promoted by Pepper and Rogers, sought to satisfy customer

wants at a profit by giving them exactly what they wanted.

The idea was based on getting to know exactly what the

customer wanted and creating want satisfying goods and

services that met those wants. Information technology was

vital in helping companies learn and remember the wants of a

specific customer. Some of the earliest examples involved

items like coffee purchased from a Starbuck’s like shop or

specific preferences of hotel guests.

The one to one concept requires that customers divulge

what they want when they interact with an organization. The

communication occurs naturally in some settings. For

example, the hotel guest who wants a larger number of

towels, an extra pillow or a bathrobe to use at the pool would

ask the front desk. Similarly, revealed preferences for a special

type of room service meal, or a room located on a lower floor

would help the hotel keep satisfying the guest. Pepper and

Rogers and other authors stressed the need to remember that

information using sophisticated databases. For chain retailers,

the customer information could be stored in a central

database accessible from any retail location. The benefits

include being able to access customer address and contact

information, payment data, and preferences without having to

ask the customer every time he or she trades with the

company.

In fact, the concept was more easily applied to services

rather than products. Customizing products for individuals is

often beyond the means of the typical manufacturer. Often

the emphasis is on making a uniform product or a uniform set

of products to satisfy the largest number of consumers. The

limitations of production have only recently been overcome.

Now, computer aided design and computer aided

manufacturing have made it possible to allow the customer

to design his or her own customized product.

In this issue we look at a recent project devised by a

venerable shoe manufacturer, Nike.

Nike

(www.nike.com/main.html)

The Nike web site is animated and asks the visitor to choose

his or her geographic region of interest. The rest of the site is

professionally done which is expected. The one aspect of

interest in this review is the facility that allows individuals to

design his or her own Nike products.

Other companies have used the “design a product” idea to

gain insight into the customer’s preferences. For example,

Proctor Silex the small appliance manufacturer used the

“Design a toaster” interactive module to plumb customer

preferences. Their results were mixed since toasters may be

inherently less interesting than other products. No consumer

supplied a “category busting” design. There were some

interesting features that customers designed into their

products but there was no provision to assess a consumer’s

tradeoff of cost versus features. The lesson is that it takes

more than a slick computer module to learn what bundle of

features might make a successful product. It also requires a

knowledgeable and skilled staff to sort out the noise and fun

and isolate the “voice of the customer.”

Nike’s site offers a breakthrough feature: it allows

individuals to “Design” and “Buy” products that can

actually be produced for sale. It exemplifies one to one

marketing perfectly.

We decided to explore a sample of the “design it yourself”

choices that Nike offers. The designer required a choice of

region and then a further choice of country. We chose the

UK. The next step is to select a reference shoe (the inspiration

for the design) and a shoe size. In this case we chose a shoe,

the Nike Dunk Low Parque iD, described as the Soul of

Brazil. Notably, the description also features the price:

US$75. One can take a basic shoe and customize the color of

five interchangeable components: the base color, the

secondary color, the lining, the Nike swoosh accent and the

outsole. Different combinations of each element create

strikingly different designs. It is fun to change one element

and see the effect on the total shoe design.

Design choices are strictly multiple-choice to minimize the

difficulty in manufacturing. Mercifully, the combinations of

several designs we played with yielded few horrid results.

Most were at least acceptable. Several had a striking

appearance. For individuals or groups of individuals like

sports teams, the chance to customize a style of footwear is

valuable. The price is also attractive and approximates the

normal retail price.

Nike has selected a series of styles each of which has enough

customizable elements to create a shoe with a distinctive

appearance. They have also minimized the manufacturing

difficulties by concentrating on “assembly”. In other words,

shoes can be assembled using elements that correspond to the

customer’s color choices. So a red base color upper can be

combined with a white Nike swoosh (accent) and a gray

secondary color outer cover. There is a lot of computer aided

design and manufacturing behind the scenes here.

The results are not totally unique, since statistically

someone on the net will have chosen “our” exact design. In

addition, one cannot yet specify a particular style of sole

pattern that is not part of the basic shoe design. However, the

website conveys the benefits of mass customization, namely

allowing individuals to buy something they would have

designed for themselves and really want.


22/7 (2005) 449–450


449

Overall comments

After years as a concept and topic of marketing discussion, a

company has finally implemented mass customization for a

physical product well. Hotels and restaurants may have

pioneered the one to one marketing concept in the service

industry.Nikehasdoneso inmanufacturingandproductdesign.

Moreover, Nike has not neglected the pricing or

promotional aspects of its customized shoes. It has

progressed beyond the limited product design websites of

the past. Currently, Nike has created another engine for

online sales. As online retail sales continue to grow, Nike may

find its distinctive “create a shoe design” web site is a valuable

competitive tool.

In our next issue, we will investigate other informative sites

and invite readers to submit their favorite internet sites for our

consideration.

Reader requests

Please forward all requests to review innovative internet sites

to: Dr Dennis Pitta, University of Baltimore, 1420 North

Charles Street, Baltimore, MD 21201-5779, USA.

Alternatively, please send e-mail to: [email protected] for

prompt attention.

Internet currency Journal of Consumer Marketing

Volume 22 · Number 7 · 2005 · 449–450

450

Note from the publisher

Outstanding Doctoral Research Awards

As part of Emerald Group Publishing’s commitment to

supporting excellence in research, we are pleased to announce

that the 1st Annual Outstanding Doctoral Research Awards

have been decided. Details about the winners are shown

below. 2005 was the first year in which the awards were

presented and, due to the success of the initiative, the

programme is to be continued in future years. The idea for

the awards, which are jointly sponsored by Emerald Group

Publishing and the European Foundation for Management

Development (EFMD), came about through exploring how

we can encourage, celebrate and reward excellence in

international management research. Each winner has

received e1,500 and a number have had the opportunity to

meet and discuss their research with a relevant journal editor.

Increased knowledge-sharing opportunities and the exchange

and development of ideas that extend beyond the peer review

of the journals have resulted from this process. The awards

have specifically encouraged research and publication by new

academics: evidence of how their research has impacted upon

future study or practice was taken into account when making

the award selections and we feel confident that the winners

will go on to have further success in their research work.

The winners for 2005 are as follows:. Category: Business-to-Business Marketing Management

Winner: Victoria Little, University of Auckland, New

Zealand

Understanding customer value: an action research-based study

of contemporary marketing practice.. Category: Enterprise Applications of Internet Technology

Winner: Mamata Jenamani, Indian Institute of Technology

Design benchmarking, user behaviour analysis and link-

structure personalization in commercial web sites.. Category: Human Resource Management

Winner: Leanne Cutcher, University of Sydney, Australia

Banking on the customer: customer relations, employment

relations and worker identity in the Australian retail banking

industry.

. Category: Information Science

Winner: Theresa Anderson, University of Technology,

Sydney, Australia

Understandings of relevance and topic as they evolve in the

scholarly research process.. Category: Interdisciplinary Accounting Research

Winner: Christian Nielsen, Copenhagen Business School,

Denmark

Essays on business reporting: production and consumption of

strategic information in the market for information.. Category: International Service Management

Winner: Tracey Dagger, University of Western Australia

Perceived service quality: proximal antecedents and outcomes

in the context of a high involvement, high contact, ongoing

service.. Category: Leadership and Organizational Development

Winner: Richard Adams, Cranfield University, UK

Perceptions of innovations: exploring and developing

innovation classification.. Category: Management and Governance

Winner: Anna Dempster, Judge Institute of Management,

University of Cambridge, UK

Strategic use of announcement options.. Category: Operations and Supply Chain Management

Winner: Bin Jiang, DePaul University, USA

Empirical evidence of outsourcing effects on firm’s performance

and value in the short term.. Category: Organizational Change and Development

Winner: Sally Riad, Victoria University of Wellington,

New Zealand

Managing merger integration: a social constructionist

perspective.. Category: Public Sector Management

Winner: John Mullins, National University of Ireland,

Cork

Perceptions of leadership in the public library: a transnational

study.

Submissions for the 2nd Annual Emerald/EFMD

Outstanding Doctoral Research Awards are now being

received and we would encourage you to recommend the

awards to doctoral candidates who you believe to have

undertaken excellent research. The deadline by which we

require all applications is 1 March 2006. For further details

about the subject categories, eligibility and submission

requirements, please visit the web site: www.emeraldinsight.

com/info/researchers/funding/doctoralawards/2006awards.

html


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