Pharmaceutical Marketing and Promotion

Abstract

This article discusses the role of consumer-directed and physician-directed promotion in the pharmaceutical market, based on the classic conceptual framework of whether such promotion is ‘persuasive’ and/or ‘informative.’ Implications for public health and welfare partly depend on whether, and to what extent, advertising: (1) raises ‘selective’ or brand-specific demand versus ‘primary’ or industry-wide demand; (2) impacts drug costs; and (3) impacts competition. Empirical evidence from the literature bearing on these effects is surveyed. These studies show that pharmaceutical promotion has both informative and persuasive elements. Consumer advertising is more effective at enlarging the market, educating consumers, inducing physician contact, expanding drug treatment, and promoting adherence among existing users. Physician advertising is primarily persuasive in nature, effectively increasing selective brand demand. There is no strong evidence that drug promotion is anticompetitive and deters entry; it may even be mildly pro-competitive and increase branded substitutes as well as new products entering clinical development. There is also no strong evidence that either consumer- or provider-directed promotion substantially raises retail-level prices. Although all of these effects point to welfare improvements as a result of pharmaceutical promotion, there is also evidence that consumer advertisements may induce overuse and overtreatment in certain cases. Market expansion, overtreatment and shifting brands for nontherapeutic reasons further raise the concern of a suboptimal patient–drug match at least for some marginal patients. A comprehensive evaluation of the welfare effects of pharmaceutical promotion requires a balanced assessment of these benefits and costs.