Pre‐marketing is a type of marketing

Abstract

‘BONUS up to 12 Months Premium Stan plus NETFLIX plus Free Delivery on TVs 75” and above from these brands Samsung LG Sony Hisense TCL’ reads the banner at The Good Guys online television store. It does not take a higher degree to spot MARKETING in action. It would be a naive customer who thought The Good Guys are really giving away free Stan, Netflix or delivery. The customer buys the bonuses when they buy the product. This may be why savvy customers opt for No-Frills goods at ‘lower prices without bonuses’. Some really savvy customers engage in behind-the-scenes haggling to secure even lower-than-advertised prices. It does take time and energy to hunt down a bargain. Physicians are probably better off paying the labelled price and investing spare energy in private practice. In this issue of the Internal Medicine Journal (IMJ), Truong et al. have analysed the drug acquisition component of the cost of pharmaceutical clinical trials. The authors develop the hypothesis that commercial trials offer financial benefits to participants, and cost avoidance to Australian government, because industry provides the drugs for free. Most readers of this journal would agree that it is desirable to have trials. We need them to advance knowledge and improve health. From a physician perspective, a clinical trial might be worth paying for. Free drugs are a nice addition to the science, but there is also marketing at work. One way to understand the marketing of drugs to society in clinical trials is through the work of economist Joel Dean. In his paper ‘Pricing Pioneering Products’, published 50 years ago in the Journal of Industrial Economics, Dean developed a concept of ‘penetration pricing’. This is the use of low prices ‘as an entering wedge to get into mass markets early’. Dean considered that penetration pricing would be successful under four conditions: (i) when sales volume is sensitive to price (price elasticity of demand); (ii) when economies of unit cost [economies of scale] are possible; (iii) when there is the threat of strong competition; and (iv) when there is no ‘elite’ market of buyers. To what extent do these four conditions for penetration pricing apply to drugs? (i) The World Health Organization finds that sales are eventually sensitive to price on account of substitution by me-too and generic competitors. (ii) A limited literature search on pharmaceutical manufacturing found theoretical appeals to economies of scale but limited empirical examples. (iii) As of 2017, eight pharmaceutical companies had conducted over 500 clinical studies with PD-1 inhibitors, using nine different antibodies, each threatening strong competition to the others. In relation to (iv), one can observe that, if there is an elite buyers’ market, developers of massmarket pharmaceuticals have not been playing to it. Dean suggested that the speed with which a product ‘sank to the level of just another competitive product’ would depend on factors, including: (i) total sales potential (by definition, large for Big Pharma); (ii) the cost of market entry for rivals (increased if it includes provision of ‘free’ product for research); (iii) the strength of patent protection; and (iv) the competitors’ alertness and power (subverted by commercial confidentiality). In summary, subsequent to Dean’s work, industrysponsored clinical trials that waive drug acquisition costs can be re-interpreted as a form of penetration pricing. They minimise the time taken to establish a drug’s market position, and they increase the cost of entry to rivals. This view of clinical trials through a marketing lens is not alien to anyone who followed the literature since the 1990s. Denig et al. found a significant relationship between trials of semi-innovative (‘me-too’) drugs in a hospital and the introduction of those drugs into general use in the same hospital. Chren and Landefeld found that physicians who requested drugs be added to a hospital formulary were more likely to have accepted money from companies to perform research. A decade ago, evidence emerged about post-approval ‘seeding trials’, conducted across multiple centres by cohorts of investigators who are in fact the object of marketing. It turned out that the ADVANTAGE trial of rofecoxib had in fact been run by the Marketing Division of Merck. More recently, Federico and colleagues found that small exploratory trials might encourage offlabel prescribing by generating ‘clinical agnosticism’ not addressed in confirmatory trials within 5 years. Perhaps Merck’s mistake with ADVANTAGE was to have conducted it under the heading of ‘Marketing’. In this age of document discovery, it seems unlikely that industry will do that again. Even so, Barbour and colleagues concluded that one in five drug trials in the six top general medical journals in 2011 had features ‘suggestive of being designed for marketing purposes’. Matheson contextualised this result in terms of the marketing functions of trials, decrying ‘the