A few months after President Trump arrived in the oval office, I observed that jousting over drug pricing was the “new reality” for pharma.

Now that the Democrats have taken a majority of seats in the House, and some relatively pharma-friendly pols have been replaced as chairs on influential committees, the stage is set for that reality to really sink in.

It’s said that Republicans and Democrats are rallying around the pricing issue, and that political action is expected on some of the many proposals being floated to lower costs. The measures are a focal point of bipartisan support, a way for members of Congress — some of whom campaigned in the mid-term elections on healthcare reform (and may do so for the 2020 race) — to show their bases that they’re doing something to address high healthcare costs.

This past week’s Senate Finance Committee hearing involving pharmaceutical CEOs could be a harbinger. While the executives largely escaped a serious grilling, many expressed their support for rebate reforms, and Astra Zeneca chief Pascal Soriot closed by urging government action to reform the pricing system. The majority of the country’s largest drugmakers are also under investigation by the House Oversight Committee for their pricing tactics, with other committees reportedly set to launch probes of their own.

Meanwhile, the MM&M/Deloitte Healthcare Marketers Survey, which will be unveiled Tuesday morning at mmm-online.com, reveals mean marketing budgets among pharma and device makers rose significantly last year. And in a study published in JAMA earlier this year, Dartmouth researchers reported that from 1997 through 2016, annual spend on medical marketing in the US grew from $17.7 to $29.9 billion, with DTC advertising for Rx drugs and health services accounting for the most rapid growth.

This combination — generous funding for healthcare communications on the one hand, and profound skepticism of the pharma industry on the other — is a perfect storm, with the former perhaps stoking the latter.

But marketing’s convergence with pricing need not be a collision course, and that has a lot to do with diminished pricing power. In 2018 branded-drug list prices — before rebates and discounts paid out to PBMs — rose by 5.7%, according to IQVIA. There’s been a marked slowdown in growth since 2014, when it topped off at 13%.

As I argued two years ago, when industry’s pricing power was just beginning to slip, this diminution would be a net positive for pharma marketers. Here are three new reasons why that’s still the case, and what I envision for marketing in the months ahead:

More experimentation

“It’s very clear… [growth] will come from breakthrough medicines and based on volume rather than on price increases,” said Pfizer CEO Albert Bourla on an earnings call with analysts.

When that happens, the marketer’s skills are emphasized, and brand managers may become more apt to experiment. The health industry has already started marketing its wares differently, from the use of AI assistants in supporting sales reps, to deploying machine learning in serving up content and driving multichannel physician engagement.

All of which was preceded by the advent of non-personal promotion, the de-escalation of field sales forces, and the rise of medical affairs as a centerpiece of drug launches as trends that have altered the face of pharma marketing.

Fewer infractions

The Dartmouth study showed that, as medical marketing surged over the last 30 years commensurate with an unprecedented HCP educational curve, enforcement actions decreased. That’s not as attributable to FDA changing its enforcement philosophy as much as it’s due to industry doing a better job of staying within the guardrails of what’s legal and compliant, say some regulatory experts with whom I’ve spoken.

Moreover, physicians are losing some control over off-label prescribing, as insurers increase use of formulary management and prior authorization adds yet another layer of red tape over prescriptions.

Another factor behind the diminution of promotional enforcement: one-third of drugs approved by FDA are for rare diseases, for which there is very little traditional product promotion per se (the emphasis being on diagnosis and patient identification).

Same vigilance

To be sure, budgets may lose steam next year, due to any number threats. Take the measure to end the tax deduction for pharma DTC advertising expenses, a so-called shovel-ready proposal reintroduced in January by Sens. Jeanne Shaheen and Elizabeth Warren in a bill whose teeth wouldn’t bite any other category of marketing other than pharma.

Industry types I’ve spoken to feel drugmakers haven’t been focused enough on what could lead to a pullback on promotion and thus a huge threat to their ability to communicate about products.

And this is just one of the serious threats on the horizon. Marketers should be concerned about these measures to the extent they limit the ability to communicate.

As pricing power gives way to marketing strategy, pharma will need to build new muscle. And this will serve it well should the bottom fall out of marketing budgets in coming years.

Handing over the baton

There’s a new name atop the masthead, MM&M’s new editor-in-chief, Stephen Madden. He brings considerable magazine experience to the job, as well as new energy and ideas for elevating our editorial content. I have every confidence the brand is in good hands. As for me, readers will continue to see my byline as I assume a supportive content role on the team. It’s been an incredibly rewarding four-and-a-half years at the helm, and I look forward to taking part in this next stage of the journey.

From the March 01, 2019 Issue of MM+M - Medical Marketing and Media