Priyabrata Sahoo | MetricStream Inc.
Sales targets! Profit margins! Lead generation! Conversion rate! Market share! These are terms that constantly haunt sales individuals. From giving doctors expensive gifts to recommending off-label uses for drugs, pharma sales representative were more concerned on achieving sales goals rather than ethical considerations. But now it is changing. With the new code of ethics guidelines from OIG and PhRMA, traditional sales and marketing activities are triggering enforcement actions. So what are the new marketing strategies pharma companies are considering?
Traditional Marketing: Old Strategies Face New Challenges
Less than a decade ago, traditional marketing tools including visits by sales agents, gifting of things such as meals, travel expenses, use of consultants and speakers, distributions of books and educational items were very common.
But policies and guidelines have changed recently. The Office of the Inspector General (OIG) and the Pharmaceutical Researchers and Manufacturers of America (PhRMA) have developed new code of ethics and stricter guidelines to oversee sales and marketing of the drugs in the U.S.
The advent of these guidelines and increased scrutiny from the governing bodies has made it clear that pharma companies cannot afford to go easy in their sales and marketing policies. Irregularities in the procedures can certainly result in the billion-dollar penalties and irreparable damage to an organization’s reputation as it’s evident from the recent GlaxoSmithKline (GSK) China Bribery scandal. British giant GSK was fined $3 billion for bribing doctors, off-label promotional activities and its failure to report safety data.
Not only GSK but dozen of other huge pharma companies including Elli Lilly, Pfizer, Johnson & Johnson, Bristol-Myers Squibb and AstraZeneca have recently settled government cases under the False Claims Act.
What are the Additional Strategies Companies are Following/Considering?
Keeping ethical considerations in mind and changing regulatory landscape, pharma companies have shifted their approach to sales process. These companies are now more focused one other strategies including the use of digital marketing and social networking and providing anti-bribery and anti-corruption training to the employees.
Use Digital Marketing and Social Media Tool: But Be Cautious
With the growing array of digital technologies in today’s world, pharma companies are taking a cue from it and are aligning their marketing strategies towards digital interactions, social media and mobile applications. These companies are not only using these platforms to just publicize their new products and company news, but also to interact directly with consumers and healthcare professionals.
The spend companies are allocating for this can go as high as 25% of total marketing budget. However the indecorous use of these tools can present regulatory pitfalls for companies and dangers to consumers.
Some of the most common examples of mishaps on social media are:
- The FDA forced celebrity Kim Kardashian to remove posts on Facebook and Instagram after she promoted Diclegis, Duchesnay’s morning sickness drug, without stating any of its side effects or risks.
- The FDA warned Zarbee’s Naturals,a dietary supplement manufacturer, because the company liked or commented on posts that implied the supplements cured disease such as insomnia, bronchitis, pneumonia, colds, congestion and allergy relief, though they’re not approved to treat the same.
- The FDA issued a warning to Akrimax Pharmaceuticals after the company Facebook page misrepresented its drug Tirosint. The company failed to communicate risk information associate with its use.
- AstraZeneca had to suspend a Twitter campaign because the summary section of a link embedded in a tweet mentioned the company’s drug without providing safety information making the tweet non-compliant.
So, What is the Way Out?
Given that drugs can do harm if not used properly, information regarding their use that’s put online should be vetted and approved by the company’s key opinion leaders/decision makers along with various ways the employees and agents of companies need to be trained on the regulations.
- Key Opinion Leaders
Key opinion leaders (KOL), or “thought leaders”, are highly respected medical experts within their domain, who influence physicians and consumers through their professional status.
Pharma companies hire KOL’s to speak on their behalf to help educate the medical community and medical institutions. This information helps in the proper use of new drugs and reduces adverse events.
- FCPA Compliance Training
Pharmaceutical companies are particularly vulnerable to falling afoul of corporate anti-bribery and anti-corruption regulations as they have a global reach, use subsidiaries and operate in countries with public healthcare systems and highly competitive markets.
A number of pharma companies have been in the news lately for violating FCPA:
- Eli Lilly and Company was fined $29 million for improper payments its subsidiaries made to foreign government officials to win business in Russia, Brazil, China, and Poland.
- Pfizer was charged $45 million for illegal payments made by its subsidiaries to foreign officials in Bulgaria, Czech Republic, China, Croatia, Italy, Kazakhstan, Russia, and Serbia to obtain regulatory approvals, sales, and increased prescriptions for its products.
- Johnson & Johnson was accused by the SEC of bribing public doctors in several European countries to win deals for their products and paying kickbacks to Iraq to illegally obtain business. The healthcare giant ended up paying a huge fine totaling USD 70 million.
The millions of dollars in fines paid by these high profile pharmaceutical firms should act as deterrent enough to others from pursuing the same course. It’s clear that there is a need for not just stronger compliance programs, but also an urgent requirement for nurturing a culture that adheres to anti-corruption rules.
From top management to personnel involved in the sales and marketing of the drugs, FCPA training is mandatory to understand the complex regulatory requirements and ways to comply with them.
An effective FCPA training program should cover the following topics:
|For Sales Personnel||For Top Management|
|– Key anti-corruption and anti-bribery laws that regulate business conduct
– Prohibited actions and penalties under the FCPA
– Liability for the actions of foreign subsidiaries, agents and rogue employees
– Exempt actions from FCPA prosecution by the DOJ and SEC
– Lessons learned from recent cases
– Red Flags and other warning signs that point to corrupt practices
– FCPA compliance in accounting and recordkeeping
|– How to implement and assess FCPA compliance policies and procedures
– Internal investigations—when to conduct one, who should conduct it, and what to do if you find evidence of non-compliance
– Issues that can arise during employee interviews and collection of electronic records
– Steps that can be taken to better understand global corruption risks
– Why third-party due diligence can make or break your program
– The need for ongoing risk assessments and review
No other industry is as strictly regulated across the world as the Pharma. It is, after all, in the business of improving and, in many cases, saving the life of a human being. So the network of regulatory requirements across jurisdictions is onerous and complex with good reason. By using advanced marketing strategies and providing the proper training to the employees, smart pharma companies are thriving—not just surviving– in this regulatory environment.