There has been an extraordinary amount of discourse during the past two years regarding direct-to-consumer and direct-to-patient communications, emanating from the Food and Drug Administration Draft Guidance for consumer directed advertisements, published in July 1997.
The final guidance, issued in August, does not differ substantially from the draft guidance, which could mean that the overall effect of DTC/DTP communications has been positive. The minor revisions include:
• Reformatting the assumptions underlying what constitutes a compliant broadcast advertisement.
• Emphasizing the need for the print advertising component of the adequate provision approach to be broadly disseminated.
• Acknowledging that the print brochures alternative component of the adequate provision approach is likely to be feasible only when broadcasting is fairly limited in scope.
• Acknowledging explicitly that healthcare providers – other than physicians and pharmacists – can be sources of additional human drug product information.
• Adding a discussion to clarify the differences in satisfactory, adequate provision approaches for telephone advertisements, compared with television or radio spots.
The basic rationale behind DTC advertising is to engage patients with relevant information and persuade them to go to their physicians to discuss a symptom, a disease or a drug therapy. However, for DTC to pay off financially, the initiatives have to move a prescription product from manufacturer to the consumer, to the physician and finally to the pharmacy. There are basically four types of DTC ads:
• Reminder ads. These feature the brand name but no therapeutic indication.
• Help-seeking/disease awareness ads. They feature the therapeutic class but no brand-name mention.
• Brand-specific ads. These feature the brand name and the therapeutic indication and must carry fair balance, major risk statement and the product’s brief summary (print) or a major statement (broadcast).
• Direct response ads. These are usually brand specific and feature some sort of offer or call to action, such as a coupon, rebate, newsletter, etc. The toll-free number is very prominent, and it stays on screen for the length of the spot.
The approach selected will depend on key variables, such as whether the drug advertised is for chronic or acute therapy, but the overall goal of all these tactics is to stimulate patients to initiate a dialogue with physicians about their specific disease states and specific treatment options.
Some companies have opted to focus aggressively on an awareness-building approach, which has the primary objective of convincing consumers to see their doctors and ask about the advertised product (acquisition emphasis).
Other companies start with mass marketing, acquisition driven initiatives but build in a direct response component to capture potential patient names (leads), which can be housed in a database for future one-to-one marketing initiatives, such as loyalty and compliance programs (retention emphasis). These product databases also can be migrated into a corporate data warehouse, which can be used (with patients’ permission via opt-in device) to keep patients informed about emerging treatment alternatives and to potentially cross sell other appropriate products.
The key issue to keep in mind is that advertising for prescription products is unique and substantially more challenging than other product categories, mainly because consumers cannot go out and buy the product by themselves. The other difficulty is that 60-second broadcast spots for prescription products have to include a “major statement” regarding side effects, warnings and drug interactions, which can confuse and frighten consumers.
Once the name has been captured – with the consumers permission (opt-in option) – an ongoing one-to-one relationship can be established and maintained with consumers using a variety of communication touchpoints, i.e., newsletters, surveys, Internet, brochures, etc.
Consumers and patients are hungry for healthcare information, and it takes ongoing conversations with them to communicate the importance of compliance, persistence, potential drug interactions and adverse events.
There are two recent cost-related trends regarding the use of prescription medications that are of major concern to many stakeholders in our healthcare system:
• Pill splitting, which is the act of physically splitting pills in half to save money. This could have serious consequences depending on specific disease states.
• Drug holidays, which is when patients skip doses, sometimes for days or weeks to also allow their dollars to go further. Patients need to clearly understand the ramifications of these actions.
The major focus of pharmaceutical manufacturers will continue to center on measuring the effectiveness of these communications in driving market share for DTC advertised products, since DTC/DTP expenditures are rapidly approaching $2 billion. Quantifying the ROI has become a top priority, and gauging the effectiveness of these initiatives relative to other marketing mix options will become paramount as senior management continue to conduct trade-off analyses. One-to-one marketing initiatives can be very helpful in this regard, since they have the ability to incorporate many measurement tools to facilitate the monitoring of pre-established performance metrics.
On the healthcare side of the equation, DTC/DTP initiatives should have a positive effect on the well-being of patients by improving quality of life, reducing the need for expensive interventions, and teaching patients how to use prescription products safely and effectively. Joe Palo, a partner with PricewaterhouseCoopers recently stated that the ultimate goal of these communications is to achieve better outcomes, i.e., less death and morbidity and a better quality of life.
One of the most important decisions a pharmaceutical marketer can make is to determine how much to invest in customer acquisition and how much to allocate to retention initiatives. The key lies in measuring the average lifetime value of specific patients. With a few calculations, you’ll be able to extract a wealth of information.
In direct marketing, lifetime value is defined as the “total profit or loss estimated or realized over the active life of a customer,” according to Successful Direct Marketing Methods, by Bob Stone.
In more practical terms, lifetime value is the dollar figure you get when you subtract your acquisition cost from the current value of your average customer. Knowing the lifetime value of your customers can help your business punch up profits and fortify its competitive edge, according to an article by Len Egol. He maintains that when you place a dollar value on your customers, you tend to work harder to keep them because you know how much they’re worth. Without knowing the lifetime value of an average customer, businesses can potentially forgo a substantial amount of profit.
Remember that according to Don Peppers and Martha Rogers, it is less expensive to keep an existing customer/patient than it is to acquire a new one. Statistics show that it costs five times more to recruit a new customer/patient than it does to retain an existing one. Most companies lose about 25 percent of their customers every year, but if they retained just 5 percent of that loss, they could add 25 percent in profits to the bottom line. This means that the more you sell to your existing customers, the higher your profits.
The patient database provides the power to maximize ROI, monitors the lifetime value of patients, and can provide manufacturers with the ability to increase profits for many years to come. The overriding benefit, however, is that the best interest of patients will be served.
Julian M. Parreno is senior vice president of pharmaceuticals at Harte-Hanks Direct Marketing, Fullerton, CA.