Transcript No Slide Title

Pharmaceuticals:
The New Consumer
Marketing Frontier
Len Tacconi
Executive Director
Consumer Marketing
Merck & Company
May 8, 2001
Pharmaceuticals: New Frontier for Consumer Marketing?
Frontier. 2a: Region that forms the margin of
settled or developed territory. 2c: A new field that
offers scope for exploitative or developmental
activity
Why?
• Evolution Of Managed Care
•
•
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Demographic Changes in US
Trend To Self Care
Success of Industry R&D
Competitive Pressures
• Regulatory Changes by FDA
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PDUFA Funding
Industry Business Model
Limited Product Patent Life
Because It Works!!!
Agenda
• Evolution of consumer prescription drug
promotion in the U.S.
• Impact of consumer on Rx buying process
• Overview of the emerging Consumer Self
Care movement
• Merck Challenge & Singulair Case Study
• Words to the MIT Wise
Evolution of
Consumer Promotion
In The Pharmaceutical
Industry
DTCA Trends -- Annual Expenditure
•
DTCA continues to be one of the largest and fastest growing categories in
advertising…and will have exceeded the $2 Billion spending level in 2000.
Total DTC 1995-1999 Spending (Branded/Unbranded)
$1,600
$1,500
$1,309
Spending (MM)
$1,400
Unbranded
Branded
$1,187
$1,200
$1,000
$864
$800
$600
$400
$364
$200
$0
1995
1996
1997
1998
1999
IMS Data
DTC Spending by Advertising Type
• 85% of Category spending is driven by Branded messaging split between
Product Claim (82%) and Reminder activity (3%)
1999 Spending by Advertising Type
$26MM
$48MM
Unbranded
14%
Corporate $254MM
Reminder
1%
3%
$1453MM
Source: Nielsen AdViews
Product Claim
82%
Top 10 Spending Industries
• Drugs & Remedies moved to #4 of top 10 spenders in 1999 from #5 in
1998, replacing Financial Services…it will be #3 after 2000 data.
Category
Automotive
Retail
Media & Entertainment
Drugs & Remedies
Financial
Telecommunications
Restaurants
Public Transportation/Hotels & Resorts
Direct Response Companies
•
Total 1999 ($B)
15, 432.5
11,450.3
4,492.9
4,240.3
4,135.9
3,718.2
3,402.6
3,086.5
2,452.1
Merck was the 30th leading consumer advertiser in the US for 1999 as
measured by Ad Age; we’ll be in the top 25 for 2000
Source: CMR
DTC Advertising at Merck
•
Merck was the first pharmaceutical company to use DTC advertising. Merck’s DTC has
evolved with changing regulations and our growing understanding of how to
communicate effectively with consumers.
Mevacor®
Proscar®
Fosamax®
Timoptic XE®
Pneumovax®
Propecia®
Singulair®
Zocor®
Vioxx®
Crixivan®
‘81-’91
‘92
‘93
‘94
‘95
‘96
‘97
‘98
‘99
‘00
Merck’s Continued Partnership with DDMAC
MERCK
• Increased submissions due to
expanding product line in 2000
• Utmost attention to regulatory
issues and DDMAC’s comments and
feedback
• All consumer work is pre-cleared
DDMAC
• Issued a total of 78 regulatory
letters to pharmaceutical companies
in 2000
• 74 Notice of Violation
• 4 Warning Letters
• Most letters driven by:
• Lack of adequate fair balance
• Unsubstantiated efficacy
• Unsubstantiated safety
• Unsubstantiated comparative
No regulatory letters to Merck in 2000!
Impact of Consumer Promotion
On Buying Process
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Patient cannot prescribe
70% of patients don’t pay for product [above co-pay]
All consumer promotion is pre-cleared by DDMAC
Probably the most regulated form of consumer
advertising for logical reasons
Today’s Healthcare Environment
• Aging Baby Boomers are more self-reliant than their parents
– As many as 30-50% of patients are considered “communication-cravers”.
[Source: 2000 DVC ActiveCare Quantitative Research]
• A Self-Care movement in healthcare has resulted from this trend
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94% of patients will self-treat common illnesses
80% use OTC medicines
78% or 140MM Americans take vitamin and mineral supplements
45% or almost 84MM use herbal treatments; many without a physician’s advice
despite very little clear scientific data on safety or efficacy and potentially harmful
consequences
[Source: 2000-2001 Prevention Magazine Study in consultation with FDA]
• Managed Care has changed health care
– 47% of Americans are worried that their health plan is more concerned about
saving money than providing the best care
[Source: The Prevention Study]
– The physician sees 130 patients and works a 55-hour week.
[Source: AMA Socioeconomic Statistics, 2000-2002]
DTC Facts
Creates awareness about diseases, the
availability of diagnostic tests and
treatment options
Public Health
DTC
Consumer
Physician
Pharmaceutical
Company
Examples: BMD testing program,
cholesterol screening, HIV awareness health
fairs, and the promotion of newer pain relief
options
• 169MM American adults are aware of DTC (91% of total)
• 54MM patients were motivated to see a doctor due to DTC (32% of DTC aware)
• 14MM (one in four) people asked about an advertised drug during an office visit:
• 9.94MM were prescribed the product asked about (6% of DTC aware)
• 1.40MM were prescribed a different drug
• 2.66MM were not prescribed anything
[Source: 2000-2001 Prevention Magazine Study in consultation with FDA]
Overview of the emerging
Consumer Self Care movement
• Brief Environmental Scan
• Key Drivers Of Change
• Emerging Challenges
Evidence of Consumer Interest in Health Care
Health & Medical
Internet Usage
Growing SelfCare Movement

90% of Consumers trust
their own judgment on
health issues

85% like to know all
options, decide for selves

76% think people should
take primary responsibility
for their own health


Ease of access to
information

$27 billion on alternative
medicine (1997)

30 million people use
Web for health info (2000)
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Over 15,000 Web health
sites
Herbal supplements
growing faster than
ethical pharmaceuticals (4
years)

Will be source of data for
new medications

Alternative solutions often
cost Consumer more
46% will self treat before
seeing doctor
Health Care Press
Coverage
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Growing Sales of
Nutraceuticals
All Consumer media cover
health care routinely (New
York Times, tabloids, CNN)
Health care issues receive
intense scrutiny by news
organizations
Success of DTC

54 million doctor
discussions and 14 million
prescriptions in 2000
Health CareRelated Mail

High volume

High level of
sophistication
Every one of these factors is on a rising curve
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Key Drivers
Political Climate
Institutional Changes
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Growth of Managed Care
and rationing of treatment
Politicians responding to
outcry about MCOs
denying choice
Easy Access to
Information

Internet creates wide
availability and easy
access to health and
medical information

Interactive technologies
on Internet platform
– Patient Bill of Rights
– Lower satisfaction
with quality of care
– Drug Coverage
legislation
– Declining confidence
in medical authority
Increasing Role
of Consumer in
Medical Choice
Demographics and
Psychographics

DTC
Baby Boomer generation
approaching retirement
– More medically
oriented phase of life
– Driving self- care
movement

Patient Economics
(Emerging)

Corporate America
shifting more of health
care cost to employees
FDA regulatory change
made product claim DTC
more probable

Pharmaceutical DTC
spending quadrupled from
1995-2000
– E.g., Tiered copay
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Patient Economics
Corporate America is Shifting More Health Care Cost to Consumers
Phase
Implications for Patients

Self-Pay System

No third party payment for pharmaceuticals
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Old “Cost Plus”
System
(pre 1980s)
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Full choice of health care options
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Third party payment (corporate benefit) contributed
to large increases in pharmaceutical volume
Rise of Managed
Care
(1980s - 1990s)
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Treatment rationing / limited choice
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Minimal, uniform patient co-pays
Consumerist Era
(2000 and beyond)
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Return to broader health care choice for consumer
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Patient bears significant share of medical expenses
(e.g., tiered co-pay)
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– Formularies / treatment guidelines
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Changing Value Proposition for Consumer

Current Message
Future Message
“Intrinsic Worth”
“Intrinsic Worth”
+
“Fair Exchange”
Selling to Consumers focuses on
describing value of products
according to their “intrinsic worth”
– Positioning statements and
specific messages describe
product characteristics and
merit
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Positioning statements and
specific messages continue
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The increase of tiered co-pay will
add the issue of “fair exchange”
(price) to Consumer decisionmaking
“Fair exchange” approach dominates Managed Care, with limited attention to “intrinsic worth”
Consumer will be very motivated by both concerns; emergence of this first true hybrid customer will
generate debate about:
– Consumer price sensitivity in environment of material co-pay
– Appropriate messaging about price
– Potential for direct financial interaction with Consumers
– Role and importance of brand awareness and brand satisfaction
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Technology Tools
Real Time Interactivity and Integrated Communications
Key Technology Tools (Existing and Emerging)
Supporting
Infrastructur
e
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Consumer database
– Permission-based and completely integrated with all channels of
Consumer communication
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Customization technologies (e.g., personal web pages)
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Streaming video
– Allows the Consumer to double click on high quality video
presentations on any subject and any length
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Interactive Internet technologies
– Low speed access (e.g., email and email fulfillment)
– Broadband high speed access (e.g., integrated 2-way Internet and
television)
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Internet-based customer service (e.g., e-rep stations in call centers)
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Physician automated Rx writing systems
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Internet-based personal medical records
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Merck Challenge
& Singulair Case Study
Summary Of DTC Marketing Challenges
Demonstrate the
viability of DTC
for the brand
•Role of the consumer in
the buying process
•Rationale for allocating
resources to DTC Vs.
traditional promotion to
physicians
•Marketing objectives
•Branded Vs. unbranded
•Go/no go decision
Develop an
effective DTC
campaign
Measure the
success of the DTC
campaign
•Key consumer insight
from the buying process
•Targeting
•FDA supervised
advertising standards
•Media
•Messaging
•Marketing objectives
•Targeted messages
•Look and feel
•Media plan
•Incremental prescribing
•Financial return
•Ideas for improvement
Singulair Case Study
of DTC Decision-Making at
Merck
Symptoms of Asthma
Symptoms
Airway
inflammation
 Wheeze, cough, chest tightness
 Nighttime awakenings
 Recurrent attacks related to triggers
Asthma triggers:
 Allergens like pollen, mold and dust
 Irritants including smoke, perfumes, air
pollution and latex
 Physical conditions such as exercise,
weather changes, very cold air, medication
and stress
Impact of Asthma
Airway
inflammation
 Afflicts 1 in 20 adults and 1 in 10 children
 Growing prevalence, especially in children
 Has a dramatic impact on society
 1.9 million ER visits (in 1995) and 466,000
hospitalizations (in 1993)
 Third-ranking cause of hospitalization in children
<15 years old
 3 per 10,000 asthmatic patients die (1994)
and the life of the sufferer
 The most common chronic illness of childhood
 3x more school absences in asthmatic children
 23% of adults missed work in prior year due to
asthma
Managing Asthma
• Avoiding and controlling asthma triggers
• Medications to relieve symptoms and keep asthma under control
– Quick-relief medications (rescue medications) act to quickly relieve
bronchoconstriction and other asthma symptoms
– Long-term controllers are used on a regular basis to keep asthma under
control and reduce asthma symptoms before they occur
Product Overview
SINGULAIR is a leukotriene receptor antagonist
– Leukotrienes are chemicals produced by cells which cause inflammation.
– SINGULAIR blocks leukotrienes and improves asthma symptoms.
SINGULAIR is indicated for the prophylaxis and chronic treatment of
asthma in adults and children 2 years of age and older
– SINGULAIR is always to be prescribed in addition to “as needed” rescue
medication
– SINGULAIR is not indicated for the treatment of asthma induced by
exercise
Singulair Case Study
of DTC Decision-Making at
Merck
Product Overview
Safety Profile
– SINGULAIR is generally well tolerated.
– In clinical studies, side effects were usually mild and did not stop patients
from taking SINGULAIR.
– The most common side effects included headache, flu, runny nose and ear
infection.
Dosage and dosing
– SINGULAIR is available in:
• 10 mg tablets for adults
• 5 mg cherry chewable tablets for children 6-14
• 4 mg cherry chewable tablets for children 2-5
– SINGULAIR is taken once-a-day in the evening.
Key Consumer Messages for Singulair
• Adult Patients
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Help control your asthma with once-a-day Singulair®
Singulair® is not a steroid
Singulair® helps keep airways open, making breathing easier
Safety similar to a sugar pill
Cherry chewable tablet available for children 6-14
• Parents
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Help control your child's asthma even when you can't be there
Singulair® is not a steroid
Singulair® helps keep airways open, making breathing easier
Safety similar to a sugar pill
Cherry chewable tablet for children 6-14
New DTC Campaign for Singulair
• Launch campaign was highly successful
–
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Brand and ad awareness
New patient starts
Adherence among existing patients
Physicians becoming aware of product from advertising
• Yet, we needed to develop a greater understanding of target’s mind set
and the impact asthma has on their lives
• We incorporated research learning to refine ad messaging to strengthen
the emotional benefits of using Singulair
Print Ad Female Patient
Print Ad Mothers
Active Merck Programs
Male Pattern Hair Loss
Unbranded “help seeking” ads
educate patients about product
options that are not reimbursed
Osteoporosis
Unbranded ads to motivate women
over age 60 to seek a Bone Mineral
Density Test to assess whether they
have osteoporosis
Osteoarthritis
Branded ads to inform patients
about a breakthrough product that
offers excellent tolerability with
efficacy comparable to NSAIDs
Cholesterol
Branded ads to promotes the use of
a cholesterol lowering medicine
which is proven to reduce death
and heart attacks among patients
with elevated cholesterol and heart
disease
Asthma
Branded ads to inform patients
about Singulair that helps kids as
young as 2 to breathe easier.
HIV
Branded ads that inform HIV
positive patients and offers a life
saving treatment option that just 4
years ago was unavailable
Chicken Pox
Unbranded ads that inform parents about the risks and
benefits of immunization to prevent this disease
Words to the MIT Wise
• Advice on company selection
• Suggested interview techniques
• One guy’s successful approach to Marketing Management
Company Search Suggestions
• Marketing Driven Company
– Balanced Use of “4 Ps”
– Commitment to building brands
• Markets products that you can believe in
• Make a difference in the world if you can
• Make certain that integrity is ingrained in the company culture
• Follow your passion
MERCK
During the Interview Process
• Probe for the company attributes just described
• Prepare as employee
• Provide company specific observations, examples, and solutions
• Primary sales drivers should be known
• Provide an understanding of the margin structure of the business
•Provide ideas that generate sales, and can maintain margins
As a Brand Manager
• Know thy customer and all segmentation differences
– that includes every shred of information you can get your hands on
• Share your brand vision constantly
– look at your competition in a “rear view” mirror
• Don’t be afraid to get your “hands dirty”
– new parent analogy
• Learn how to implement tactics
• Leverage the many talents of those around you
– agencies, marketing services, researchers, telemarketers
• Use metrics for everything; if they don’t exist create them