Biomedical Engineering Reference
In-Depth Information
Such product design features and or visual dimensions of the product can thus be
the common visual cue to move the brand loyal population from one patented drug
to another there by extending the brand equity advantages of the original patented
invention (Conley et al.
2008
).
The literature on the effects of the promotion marketing mix variable on sales
through the expiry event is diverse and considered. We limit our discussion to direct
to consumer (DTC) advertising and sales rep/doctor visits also known as detailing,
the content of which is regulated in the United States by the FDA.
10
Iizuka (
2004
)
fi nds that direct-to-consumer advertising (DTCA) of prescription drugs has sky-
rocketed in the United States, creating a controversy over the role of DTCA. Little
is known however regarding what affects fi rms' advertising decisions and which
drugs have been advertised to consumers. Using brand-level advertising data, the
determinants of DTCA for prescription drugs are examined. It is found that drugs
that are new, of high quality, and for undertreated diseases are more frequently
advertised. Furthermore, advertising outlays decrease with competition. These results
complement the demand-side evidence that DTCA has a market-expanding effect
but little business-stealing effect (Iizuka
2004
). DTCA increases are also correlated
with more doctor visits per patient. Hence, to the extent that this can be segmented
to the appropriate target patient group, DTCA can be used to grow the market for
prescription drugs pre-expiry. This effect is found to wane in the face of price-based
competition. A more recent review by Atherly (
2009
) points to the demand increas-
ing effect of DTCA that is class wide and not limited to the specifi c advertised drug.
However the DTCA is undertaken, Scott-Morton (
2000
) has found that brand
advertising in general is not a barrier to entry for generics. A strong determinant of
the number of generics that will enter or attempt to enter post expiry is the size of
pre-expiry revenues of any given drug.
9.2.4
Arbitraging the Rules
In considering how pharmaceutical fi rms may navigate the ground rules described
above, it is helpful to clarify that the patent grant with attendant rights to exclude all
others from making using or selling the claimed invention is issued by the local
patent authority. In the United States this entity is the United States Patent and
Trademark Offi ce (USPTO) that operates under the Department of Commerce
(Conley and Orozco
2007
). Marketing exclusivities like those discussed above are
granted by the US Food and Drug Administration (FDA) an arm of the US Department
of Health and Human Services (Schacht and Thomas
2002
). The FDA is not involved
10
It is important to note here that the 1997 changes in US FDA governed direct to consumer mar-
keting regulations resulted in a dramatic, fi vefold increase in spending in DTC advertising. This
change has brought about a new era of informed consumer behavior that should be accounted for
in any comprehensive, academic review of the literature examining the effect of DTC promotional
advertising on the market success of pharmaceutical products.
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