• June 1, 2005
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Show Me Where It Hurts

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The pharmaceuticals industry increasingly has come under fire from consumer groups over alleged unfair pricing practices, and more and more people are seeking medicine from cross-border and online pharmacies. But there's a misunderstanding between drug makers and the consumers who need them. The only response, if any, comes from the Food and Drug Administration in the form of grave warnings about the safety of medicines bought from foreign and/or online pharmacies. Is there a way to solve this CRM nightmare? "It sometimes looks like there might not be a CRM answer to the pharma problem," says Dale Hagemeyer, research director of the CRM Practice at Gartner. "If the CRM tripod is sales, marketing, and customer service, the consumer isn't directly touched by any of them." The sales and marketing efforts of pharma manufacturers are intended to get doctors interested in prescribing their drug over a competitor's, Hagemeyer says. "Drug companies would love to market directly to consumers, but because of HIPAA and other rules they can't unless the consumer opts in." Customer service only becomes a factor when a customer calls in regarding problems with a particular medication. This, combined with a price structure that transfers the burden of research costs to American wallets, "leaves consumers feeling that 'Big Pharma is after my money,' instead of [thinking] 'drug companies have helped me live a longer and happier life.'" Ron Buzzeo, R.Ph., chief regulatory officer of BuzzeoPDMA (a division of Dendrite International), says there are still consumer-centric tactics drug makers can deploy to rescue the situation. Those tactics, however, must be partnered with industry- and government-side technology to make a workable solution. "Much of the cost passed along to consumers is for drug companies to protect themselves against counterfeiters," Buzzeo says. He cites studies that have shown that knockoffs account for 3 percent to 12 percent of the world's drug supply. As a result, he says, "States are working with the Drug Enforcement Agency, the National Association of Boards of Pharmacy, and other organizations to put heavier requirements on wholesalers to track and pedigree their stock." Not all the work is relegated to the background, however. "Part of the job needs to be done by the drug companies and the insurers, educating the public about the dangers of some of these questionable-source drugs and how to determine if a dealer is legitimate," Buzzeo says. Media coverage of the problem can also go a long way toward creating consumer awareness. Another way to improve relations between drug makers and consumers, according to Hagemeyer, is to shift pricing to a model based on the consumer price index. "The pharmaceutical industry is largely responsible for the huge increase in life expectancy over the past century, but the benefit to mankind comes at the expense of the American consumer," he says. The disparity in pricing creates arbitrage--people explore whether it's worth it to counterfeit a drug or acquire it through nonstandard channels. "My health plan copayment could buy me the entire prescription in Mexico," he says. "Linking the price to the CPI by country, and providing some consideration for those less able to pay, would be a big first step in rescuing manufacturers' images."
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