The Role of Marketing in Pharmaceutical Research and Development

Pharmaceutical marketing, which is primarily targeted at physicians, has been criticised because it may distort physician prescribing and thus potentially raise costs and/or worsen health. An alternative view, presented in this paper, is that successful marketing of pharmaceuticals can improve consumer welfare by increasing incentives for research and development (R&D) investment and by providing guidance to R&D to make it more consistent with consumer preferences. There are a number of arguments that support this view, despite impediments to pharmaceutical marketing such as the prohibited dissemination of off-label information in the US, difficulties in estimating potential pharmaceutical demand, and the long time lag between demand assessment and the introduction of new drugs. For example, physicians are often slow to modify their prescribing practices, even when new evidence-based practice guidelines are issued by prestigious organisations. Pharmaceutical promotion is likely to be particularly valuable because information plays a key role, is highly technical, and can change rapidly. Even consumer advertising can potentially improve health, for example, by improving patient compliance with drug therapy. In addition to disseminating information about the benefits of new therapies, an essential (and perhaps unique) role for pharmaceutical promotion is to encourage physicians and payers to pay closer attention to consumer needs (i.e. willingness to pay) for new medical technology. Moreover, successful marketing of pharmaceuticals increases the returns from R&D, thus increasing incentives to explore consumer demand and to contribute to basic research on the role of drug therapy. Consumer benefits from this process may be very large.