51.2 What is marketing?
Marketing is a process of identifying the needs,
wants and demands of customers and organizing
the creation, offering and exchange of ideas, pro-
ducts and services of value to both the customer
and the organization (James, 2004). Marketing
requires a clear and specific focus on the market
and the customer, so that promotional activity can
be tailored as appropriately as possible to each
customer group or segment. Marketing is ubiqui-
tous, pervasive and extremely competitive in all
industries. In most developed countries, the aver-
age person is exposed to 2000–3000 promotional
messages a day (James, 2004).
51.3 Pharmaceuticals are
different from other
productsThe pharmaceutical industry differs from other
industries in that in many cases a third party (or
‘learned intermediary’) is responsible directly for
the purchasing decision (prescribing) and indirectly
for payment to the supplier. The prescriber chooses
the drug and its quantity, subjectinvarying degreeto
audit by the dispensing pharmacist, who may point
out drug interactions, and encourage alternative
brands or generic equivalents of what was pre-
scribed. Pharmaceutical wholesalers prefer to pur-
chase from cheap suppliers. The organizations
ultimately responsible for paying are governments,
viastate health providers such as the National
Health Service in the United Kingdom, or insurers,
whether federal (such as Medicaid and Medicare) or
private in the United States (Kanavos, 2001). This
all combines to provide a complex market facing
increasing cost-containment restrictions globally.
There are other unique facets of the pharmaceu-
tical market. Pharmaceuticals are seen as life-
saving interventions, therefore, infinitely desir-
able, but with potentially serious side effects,
leading to ethical dilemmas about their widespread
use. This is particularly the case for antibiotics,
where overuse leads to bacterial resistance. They
can also be perceived as a tool for the unscrupulous
manipulation of prescribers and patients by the
multinational pharmaceutical industry.
There are strict laws to control quality of the
products, and most countries have a national
formulary in which all products must be included
on if they are to be prescribed in that country.
Advertising of products by brand name to the final
consumer – the patient – is prohibited in all countries
except the United States and New Zealand, and may
well soon cease in the latter (James, 2004).
The pharmaceutical industry aims to produce
effective drugs, but it needs to do this while meet-
ing its main objective of profitability in a compe-
titive environment. This can lead to an uneasy
conflict with governments which are trying to con-
tain costs of healthcare, in particular, of prescribing
costs, even though these typically account for only
about 10–15% of the entire healthcare budget. The
relationship between the pharmaceutical industry,
government and the NHS in the United Kingdom
has been fairly stable, but initiatives such as the
National Institute for Clinical Excellence (NICE),
established in 1999 to promote cost-effective prac-
tice and prescribing, threaten this balance (Walley
et al., 2000).
All European Union (EU) governments have
taken measures to contain pharmaceutical spend-
ing, although so far with only minor, brief effect
(European Pharmaceutical Research, 1997). These
measures include promotion of innovative medi-
cines which add therapeutic or cost-effective ben-
efits, more effective prescribing and greater use of
generic drugs where appropriate (EU Pharmaceu-
ticals and Public Health in the EU, 2000). The
World Health Organization also actively
encourages development of drug policies based
on the promotion of generic medicines. Competi-
tion among chemically different but therapeuti-
cally similar patented drugs can also reduce the
prices of patented products, for example the price
of antiretroviral products fell by 73% in five years
once a number of products were available (WHO
Medicines Strategy, 2000–2003). In the United
Kingdom, the average NHS price of a generic
prescription is £3.78 and that of a branded prescrip-
tion is £13.04. In the United States, patented pro-
ducts cost three times as much on average as those
for generics (Oxfam).654 CH51 ADVERTISING AND MARKETING