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Consumer shifts demand changes in healthcare marketing
In its latest report on market insights, Cheskin, a strategic market research and consulting company, defines three consumer trends that are driving the evolution of the healthcare and lifesci ences industry: consumer enlightenment and empowerment, the blur between Western and alternative medicine, and greater life expecta tions. The direct implications that these trends have,and will continue to have, for pharmaceu tical and biotech companies, and healthcare providers are outlined in the study. In addition the report touches on the issue of consumer trust in this industry, including the changing role of advertis ing and marketing. The 12page report, Life Science Perspectives: The Emerging Healthcare Consumer, defines pri mary qualitative research with healthcare consumers and medical experts, in addition to secondary research on the industry, and provides implications and direction for lifesci ence companies. “ The healthcare indus try is going through a tremendous upheaval, in part due to technology advancements and changes in marketing regulations,” says Jen nifer Mitchell, a partner at Cheskin. “More importantly however, it is the consumer who is causing this shift. The nature of the physician/patient relationship is changing,as are consumers’overall expectations and involvement with their own health and well being.” Typically consumers become more demanding as they become more informed. They also can become more skeptical. While d i recttoconsumer advertising has enhanced pre scription sales, it hasn’t done much for pharmaceutical compa ny awareness and building trust with the consumer. While awareness is key, Cheskin analysts believe trust will become the most crucial component in all relationships forged by the consumer with any healthcare constituency. . Twothirds of respondents said they trusted doctors, but less than 10% claimed to “completely trust” physicians. Hospitals were the next most trust ed constituency, followed by support groups and organizations, which also fared well in trust. Pharmaceutical companies and insurance com panies fared the worst, with over half of respondents saying they don’t trust pharmaceutical com panies and twothirds saying they don’t trust insurance com panies. . Emerging consumers had a difficult time naming more than one pharmaceutical company. While aided awareness was bet ter, only 4 of the top 10 largest pha rmaceu t i ca compan i es worldw i de were recognized. 64 J a n u a r y / F e b r u a r y 20 0 2 PharmaVOICE PHARMA TRAX SALES, MARKETING, AND R&D TRENDS AFFECTING THE HEALTHCARE INDUSTRY Trend 1: Consumer Enlightenment and Empowerment Trend 2: Western and alternative medicine Trend 3: Greater life expectations THREE CONSUMERTRENDS DRIVINGTHE HEALTHCARE EVOLUTION CONSUMER ENLIGHTENMENT AND EMPOWERMENT.Much of the change experienced by the emerging consumer is motivated by an unsatisfactory relationship with the physician and with Western medicine, by the influence of cultures other than our own, and by the plethora of information that is out there — from the Internet, to “Buzz,”to directtoconsumer advertising. The most immediate impact of enlightened and empowered con sumers is a change in the patientphysician relationship.There is a grow ing “feeforservice” attitude among consumers towards their physicians, who are being regarded more as consultants and less as key family advi sors — many would argue thanks to managed care. Two thirds of the emergingconsumersCheskinpolled felt the way they relate to physicians had changed within the past 5 years.They report feeling more informed and being more proactive in discussions. Less than 10% strongly agree with the statement,“I always do exactly as my physician tells me.” The repercussions are substantial. Relationships will continue to mutate as this emerging consumer behavior spreads to the mainstream. Existing interactions between healthcare constituencies (labs, patients, physicians, pharmaceutical and biotechnology companies, payers, and patient rights organizations) will continue to evolve. New liaisons, which previously involved middlemen,will be made directly. Groups that didn’t interact will forge new relationships. WESTERN AND ALTERNATIVE MEDICINE. Emerging consumers are questioning some fundamentals of Western medicine. Practices such as treating only symptoms are becoming unacceptable. At the same time, alternative practices, such as chiropractic, yoga, and acupuncture are gaining acceptance. In 1998,40% of people 18 or older had used some form of alternative medicine, an increase from 34% in 1991. Two out of three users of alter native medicine (or complementary medicine) have been following this practice for six years or more.Several hadbeenusingalternative medicine for more than 10 years. GREATER LIFE EXPECTATIONS. Consumers are living longer and their expectations about their lifestyle in their retired years are greater. While Baby Boomers are leading this trend,the generation before themhas sim ilar expectations. Life expectancy has increased significantly — by 1960, life expectancy had increased to 70 years, and in 1997, life expectancy at birth was 79 years for women and 74 years for men. The current older population is also living longer — people who survive to age 65 can expect to live an average of nearly 18 more years. Most importantly, the expectations and outlook on life and aging have changed dramatically,thanks in great part to the Baby Boomer generation. Baby Boomers amount to more than 75 million consumers in the U.S. alone.Within the next 13 to 34 years, today’s Baby Boomers will enter the 65yearsandolder age category. The U.S. will see an unparalleled increase in the absolutenumber of elderly persons,and services,products and messaging will have to be adjusted accordingly. While one in eight Americans was 65 or older in 1994, in a little more than 30 years, about one in five is expected to be in this age group. CHESKIN IDENTIFIES THREE EMERGINGTRENDS PHARMA trax When asked about their trust in those recognized pharmaceutical companies, consumers make little distinction between them.For the most part,respon dents could not state which company they trusted the most, explaining that there is no difference between them. More than half of respondents said that they have a hard time trusting pharmaceutical companies in general. Despite their (decreasing) dependenceonphysi cians to recommend an effective, safe drug, con sumers don’t make decisions in a vacuum.There are numerous venues of information that can educate the consumer. In addition, if pharmaceutical companies don’t establish a presence in consumers’ minds, instilling trust, they will have a difficult time selling their prod ucts, communicating their values, and positioning to consumers.The entity behind the drug or device will become increasingly important. . The role of DTC. In 1997, when the FDA clarified rules pertaining to prescription drug advertising, the floodgates opened and consumers were bombard ed by more and more ads every day. Prescription drugs that are supported by DTC advertising are now the largest and fastestselling medicines. Physi cians wrote 34% more prescriptions in 1999 than in 1998 for the 25 DTCpromoted drugs that contribut ed most to overall drug spending. They wrote only 5% more prescriptions for all other prescription medications. Early focus on successes DRIVES CUSTOMER RELATIONSHIP management process, study finds Companies need to have clear goals when implementing customerrelationship management initiatives,according to a study released by Best Prac tices LLC. In its report, Best Practices found that com panies that focus on small successes during the early stages of implementing the CRM process have seen marked results that drive the ultimate success of cus tomerfocused programs. The study, titled “Countdown to Customer Focus: A StepByStep Guide to CRM Implementation” reveals how leading CRM implementers create a sys tematic approach that uses performance metrics to propel the CRM process.The study analyzes the CRM performance drivers such as expectation manage ment, performance measurement, continuous improvement,and knowledge management. The report found that up to 70% of customer relationship management initiatives fail to deliver expected results because of poor implementation. The research reveals a stepbystep roadmap to CRM excellence, based on oneonone interviews and exclusive surveys with CRM team leaders at 32 of the world’s most profitable companies, including executives at pharmaceutical, financial, transporta tion, and energy companies, as well as government agencies. One example from the study is a benchmarked pharmaceutical company using employee empow erment as a leading indicator of CRM success. The company’s internal assessment of customerfacing employees reveals improvement opportunities while creating buyin for customerfocused initia tives. In addition, the analysis offers best practices,ana lytical metrics, and executive insights on areas including, leadership and structure,customercentric culture,and performance measurement andprocess management. “CRM implementations have to show clear returns for bottomline results,” says Adam Bianchi, project manager. “That means better targeted mar keting, smarter sales,and more costeffective service. Understanding that customer relationships are important is not enough.You have to know exactly what your economic goals are and whether your implementation is meeting those targets. “Flashinthepan technology is not going to realize the potential that lies in customers,” Mr. Bianchi says. “Companies have to build a workforce that thinks in terms of customers and solutions rather than products and services. This can be done through various performance management tools, from hiring and training to incentives and leadership development. Those are the keys to a customer focused culture.” INTERNET plays KEY ROLE in physician behavior The Internet is having an increasing influence on the way physicians conduct their business, and that influence is likely to increase,according to a survey of 400 physicians across the U.S. The findings are the focus of a report by the Boston Consulting Group. The report,“Vital Signs Update:Doc tors Say eHealth Delivers,” is based on newly released data from a nationwide survey of practicing physicians which takes a closer look at how the Internet is influencing physi cians’behavior. The proprietary study by BCG, conducted by Harris Inter active, was based on interviews with U.S. physicians done via telephone in February and March of 2001. Of the 400 physicians surveyed, 356 responded that they use the Internet. With ehealth startups floundering, many healthcare players have been quick to dis count the viability of ehealth. This survey, however, indicates that ehealth has quietly become a vibrant medium for reaching the medical commu nity — and promises to gain even greater acceptance in the future. PATIENTS,DOCTORS can work together to improve outcomes Patients should be given more control,and enjoy greater collaboration in their own care, according to a panel of health experts at a meeting of the Aca demic Medicine and Managed Care Forum, con vened by Aetna Inc., a healthcare and related bene fits organization. Giving patients more say in diagnosis and decision making can lead to signifi cant improvements in healthcare outcomes and patient satisfaction,according to the panel. “We need to give up the false notion that the doctor supplies all of the answers,” says John H.Was son,M.D.,moderator of one of the forum’s panel dis cussions.“The patient is the agent of change.” Dr. Wasson, who is the Herman O.West Professor of Geriatrics in Community and Family Medicine at Dartmouth Medical School, also is the codirector of a national project, the “Idealized Design of Clinical Practice,” which is sponsored by the Institute for Healthcare Improvement. At the forum, held in Arlington, Va., Dr. Wasson joined four other health professionals in a panel dis cussion entitled, Interaction is the Heart of Care, But Can it Work Here? The other panelists were: Ehab Molokhia, M.D., and Tangela Atkinson M.D., both of whom are chief residents at the University of South Alabama;Cory B. Sevin, R.N.,MSN, VP of La Clinica Campesina Family Health Services;and Col.Jill S.Phillips of the U.S.Army 65 PharmaVOICE J a n u a r y / F e b r u a r y 2 0 02 Physicians are using the Internet for gathering medical knowledge. Physicians are beginning to embrace online tools that enhance patient care, such as electronic prescribing, online communication with patients, and electronic medical records. Physicians are reporting that the information they find online is influencing — for some, in a major way — the types of diagnoses they make and the prescriptions they write.This has significant implications for pharmaceutical companies, managedcare organiza tions, and healthcare delivery systems that seek to influence physician behaviors. INTERNET USEAMONG PHYSICIANS ONTHE RISE STRATEGIC PLANNING — Learn how com panies establish a CRM implementation plan with actionable tasks and clear, quantifiable goals PILOTPROGRAMS — Savvy CRM teamsbuild pilot programs that are intended to win sever al small, highimpact successes in a short peri od of time GLOBAL ROLL OUT — Develop a global roll out program that is aligned with project goals and change management programs to deploy pilot program processes CONTINUOUS IMPROVEMENT — Imple ment continuous improvement processes to engrain CRM as a critical business activity BEST PRACTICES’GUIDETO EXCELLENCE: PHARMA trax Nurse Corps, who is director of outcomes manage ment and an adult nurse practitioner at the Walter Reed Army Medical Center. “Today’s patients are much savvier about health issues,” says Dr. William Popik, Aetna Chief Medical Officer, who opened the forum pro gram. “ They see the physician as simply one source, albeit an important one, of information about their health.But patients also get health information from the media, from friends, and from alternative care practitioners. And let’s not forget the Internet, which has empowered a whole generation of consumers with detailed, but some times confusing and contradictory, information.” False images of what leads to good healthcare make the doctorpatient relationship less effective than it could be, the panel agreed. Among those misconceptions are the notions that healthcare is delivered primarily during office visits, that the demand for healthcare is patientdriven,and that the vast amount of healthcare information available via the Internet is “not right” for patients. The group discussed ways that medical profes sionals can make their discussions with patients more productive. “Physicians need to speak less during a patient’s visit, and learn active listening techniques,” Dr. Was son says.“By putting moreemphasison asking open ended questions, doctors can better obtain the information that both they and their patients need to bring about a positive outcome.” Clinical trial OUT SOURCING growing trend With the number of clinical trials required for the discovery and development of new medications growing, pharmaceutical and biotechnology com panies are increasingly turning to contract research organizations to pass their products through the testing and regulatory process in a rapid, costeffec tive manner. New analysis from Frost & Sullivan, World Con tract Research Organizations Markets, reveals that the contract research organization industry generat ed worldwide revenue of $9.8 billion in 2001. Ana lysts predict that the CRO industry is projected to surge to $16.3 billion by 2005. “The longterm success of the pharmaceutical outsourcing industry is dependent on lasting rela tionships with sponsors and the need for trust at all levels of cooperation, including individual clinical research associates,”says Rinat Ariely, a research ana lyst with Frost & Sullivan. With technologies such as highthroughput screening and proteomics becoming an increasing ly important part of the drugdevelopment process, pharmaceutical companies are seeking outsourcing partners who will be able to provide superior tech nology and introduce a potential product to market faster. This is indicative of a trend towards greater col laboration and operational integration between the outsourcing partner and the sponsor. “A balance that includes ongoing communica tion, timely access to data by sponsors, and project updates must be maintained to achieve successful relationships,” Ms. Ariely says. “ This challenge is expected to have a longterm effect on the contract research organization market, as sponsors continue to demand more oneonone attention and greater clinical data accessibility.” Learning to GETTHE MOST from employees Leading human resource managers integrate employee measurement and appraisal into HR sys tems to generate the most effective performance management and development processes. Accord ing to research from Best Practices LLC, companies that employ continuous learning successfully meet corporate goals. Based on information gathered from 70 compa nies across more than 30 industries, the study, Best Practices in Employee Performance Management and Development, contains best practices, bench marking metrics, case studies and lessons learned, and reports how actual training practices have been profitable. “Worldclass companies realize that their people are their most valuable asset, and they are making tremendous improvements in all areas of human resources,” says Chris Bogan,president and CEO, of Best Practices. “These compa nies are investing billions of dollars to develop systems that will increase employ ee retention and overall workforce morale.” TheBest Practices’report also contains recruiting and career planning strategies;training information and metrics; cost and time investment; content and delivery methods; as well as employee evaluation rating systems. Kalorama identifies the 50 LEADING PLAYERS in $1.5 billion PROTEOMICS INDUSTRY The proteomics technolo gies market surged past the $1.5 billion mark in 2001, and is expected to soar to $6 billion within the next five years, according to Kalorama Information LLC. The growth will be propelled by scores of companies trying to position themselves in the asyet unsettled industry. The study, Kalorama’s Proteomics 50: Competing Technologies and Alliances, identifies the 50 best positioned companies to capitalize on the sector’s potential. Protein chips, protein to protein interaction maps, protein databases, and biological assays are the technologies most in demand, according to the study,and top competitors in each of these areas are identified. In the realm of alliancemaking, the report identifies the important deals, revealing that compa nies such as Incyte Genomics Inc. and GPC Biotech are wellpositioned with the agreements they have forged — forming almost 30 major deals with the pharmaceutical industry between them in recent years. Funding is another important area identified by the study.Venture capital has been a major factor;20 startup proteomics companies attracted more than $530 million in venture capital in the last 20 months. 66 J a n u a r y / F e b r u a r y 20 0 2 PharmaVOICE Providing patientowned medical records Establishing continuity of care with a clinician or team of clinicians Surveying patients’visit expectations Making doctorinitiated telephone calls to the patient’s home as part of the effort to shift the doctorpatient relationship from an office directed model to a collaborative one Using email, audiotape, and videotape in furthering the doctorpatient relationship STRATEGIESTO ENHANCE PATIENTDOCTOR INTERACTIONS One benchmark partner developed an apprenticeship program to develop employee knowledge across skill competencies.The program enabled the company to achieve a 90% retention rate for employees who partici pated in the program. Another manufacturer requires that 85% of its employees be in continuous training.The company’s production rates are four times faster than that of its competitors.The company attributes this growth to continual employee training. A third benchmark partner made the decision to put continuous training first among its priorities, and allowed its training budget to make up 3.3% of its annual payroll.This decision allowed the company to generate customer price reductions of up to 22% and rework production by 25%. EMPLOYEE PERFORMANCEMANAGEMENT ANDDEVELOPMENTTECHNIQUES 20 STARTUP PROTEOMICS COMPANIES ATTRACTED MORE THAN$530 MILLION INVENTURE CAPITAL INTHE LAST 20 MONTHS PHARMA trax PHYSICIANS RATE DTC as beneficial to patients and their own practice In a recent survey jointly conducted by Advanced Analytics Inc. and Guideline Consulting, the majority of primarycare physicians surveyed indicated DTC advertising is beneficial. The national survey was conducted during the last two weeks of July 2001 among a telephone sample of 350 gener al/family practitioners and internists. “Recent physician efforts to ban DTC advertising at the American Medical Association convention in Chicago in June of this year donot reflect the feelings of the majority of primarycare physicians,” says Dr. Morris S. Whitcup, president of Advanced Analytics. “Physicians feel that these ads are informative and make their patients more knowledgeable about dis eases and conditions.These advertisements increase patient awareness and lead some patients who would not otherwise seek medical help to consult with a physician.” According to Nick Tortorello, president of Guide line Consulting, the survey was the first national 67 PharmaVOICE J a n u a r y / F e b r u a r y 2 0 02 Physicians React to DTC ADVERTISING PHYSICIANS RESPONSETO DTCADVERTISING TOPATIENTS OVERALL 55 55 55 25 28 22 44 44 43 16 17 15 19 16 21 Beneficial Very Somewhat Not Not very Not at all beneficial beneficial beneficial beneficial beneficial Figures noted in percent 39 38 39 Total (350) General/Family Practitioner (175) Internist (175) Source:Advanced Analytics Inc. and Guideline Consulting DTCTVADVERTISING — NONBRANDSPECIFIC 80 82 78 12 11 12 20 18 21 35 35 34 8 7 9 Beneficial Very Somewhat Not Not very Not at all beneficial beneficial beneficial beneficial beneficial Figures noted in percent 45 47 44 Total (350) General/Family Practitioner (175) Internist (175) Source:Advanced Analytics Inc. and Guideline Consulting DTCADVERTISING — BRAND SPECIFIC (Includes condition,risks,and side effects of the medicine) 63 62 65 19 19 18 36 38 35 21 21 21 17 18 17 Beneficial Very Somewhat Not Not very Not at all beneficial beneficial beneficial beneficial beneficial Figures noted in percent 43 42 43 Total (350) General/Family Practitioner (175) Internist (175) Source: Advanced Analytics Inc. and Guideline Consulting DTC ADVERTISING — BRAND SPECIFIC (Includes only the name of the drug, but not the medical condition) 18 17 19 32 35 29 82 83 80 3 2 3 50 48 51 Beneficial Very Somewhat Not Not very Not at all beneficial beneficial beneficial beneficial beneficial Figures noted in percent 15 15 16 Total (350) General/Family Practitioner (175) Internist (175) Source:Advanced Analytics Inc. and Guideline Consulting . 55%ofphysicians surveyed rated DTCadvertising as beneficial overall to patients . Ads describing a condition, but no mention of a specific medication, were the most favorably received: 80% of primarycare physicians sur veyed indicated these ads are beneficial to patients . Ads citing both a condition and medication were also warmly received: 63% of surveyed physicians indicated that these ads were beneficial to patients . Reminder ads, which only mention the name of the medication, were evaluated by 18% of surveyed physicians as beneficial to patients quences for the more than 41% of the population who have chronic conditions such as diabetes,heart disease,hypertension,and arthritis, and have to pay a considerable portion of their income onmedical ser vices. Of the 108 million individuals with chronic conditions, about 26 million had two chronic condi tions and another 20 million had three or more. A chronic condition is defined as a condition that has lasted or is expected to last 12 months or more and results in functional limitations and/or the need for ongoing medical care. Individuals with one or more chronic conditions were responsible for more than 75% of healthcare spending. Individuals in the oldest age category (greater than 80 years) spent more than five times more out ofpocket than persons in the youngest age catego ry (0 to 19 years) and more than twice as much as those in the middle age category (45 to 64 years). study to ask not only about DTC advertising overall, but also about three specific types of DTC advertis ing: ads describing treatment for an ailment or con dition, but no mention of a specific medication;ads citing both a specific medication and a condition; and “reminder ads” that only mention the name of a medication. “Physicians are positive to DTC advertising over all and to two of the three specific types of DTC advertising,”Mr.Tortorello says.Almost six in 10physi cians interviewed in the survey indicated that DTC advertising has had a positive impact on their own practice of medicine. Individuals with chronic conditions SPEND UP TO FIVE TIMES MORE According to a recent study released by Health Affairs, and sponsored by The Partnership for Solu tions, led by Johns Hopkins University and the Robert Wood Johnson Foundation, individuals with chronic conditions spend up to five times more for healthcare than individuals without a chronic condi tion. The study, OutofPocket Medical Spending for Care of Chronic Conditions, shows how nonexistent or inadequate health insurance coverage may leave individuals with chronic conditions at risk for large outofpocket expenditures for healthcare services. The study reveals there are significant conse PHARMA trax 68 J a n u a r y / F e b r u a r y 20 0 2 PharmaVOICE THEACADEMIC MEDICINE AND MANAGEDCARE FORUM,Blue Bell, Pa.,is a partnership of medical institutions working with a variety of groups to address issues facing medicine.For more information,visit academicforum.org. ADVANCED ANALYTICS INC. and GUIDELINE CONSULTING,part of Guideline Research Corp.,are marketing research and consulting companies based in NewYork.For more information,visit guidelineresearch.com. BESTPRACTICES LLC,Chapel Hill, N.C., conducts studies into the best business practices, operating tactics, and winning strategies of worldclass organizations.For more information,visit bestinclass.com. THEBOSTONCONSULTING GROUP, Boston, is a general management consulting firm. For more information,visit bcg.com. CHESKIN,Redwood Shores, Calif., is a strategic research and consulting company.For more information,visit cheskin.com. FROST & SULLIVAN,San Antonio,Texas, is a global leader in strategic market consulting and training. For more information,visit frost.com. HARRIS INTERACTIVE,Rochester,N.Y., is a worldwide market research and consulting firm. For more information,visit harrisinteractive.com. KALORAMA INFORMATION LLC,a division of MarketResearch.com based in NewYork, supplies market research to the lifesciences industry. For more information,visit MarketResearch.com. PARTNERSHIP FOR SOLUTIONS, led by Johns Hopkins University and the Robert Wood Johnson Foundation, is an initiative to improve the care and quality of life for the more than 125 million Americans with chronic health conditions. Follow up Survey finds as copayments increase, noncompliance will probably get worse The outofpocket cost of copayments required for the filling of prescriptions is a substantial barrier to compliance, and this problem is likely to get worse. A Harris Interactive telephone survey of a nation wide sample of 1,010 adults surveyed in June this year found that more than one infive of all adults (22%) had not filled at least one prescription in the last year because of the cost. Furthermore,one in seven adults (14%) said that during the last year they had taken a prescription drug in smaller doses than pre scribed because of the cost.And slightly more (16%) said they had taken a medication less fre quently than pre scribed to save money. There is no way of determining the impact of this non compliance on health outcomes, but it is widely believed that noncompliance toward drugs that treat chronic diseases such as diabetes, hypertension, or elevat ed cholesterol can often have serious health consequences. It is probable, there fore, that noncompliance,on this scale, is a serious health problem. It is also a business issue for the phar maceutical industry whose sales are sure ly reduced by billions of dollars by non compliance. This Harris Interactive survey shows that noncompliance to save money is much higher with people in low income groups. The proportions of people in house holds with incomes below $15,000 and those with incomes of $15,000 to $25,000, who did not fill a prescription (39% and 40%), took a drug in smaller doses than prescribed (31% and 24%) or took a med ication less frequently than prescribed (21% and 30%) are about twice as high as they are among all adults. Noncompliance for financial reasons is very common amongpeople with disabil ities, many of whom are quite heavy users of prescription drugs. INDUSTRY SNAPSHOT Employers are expected to increase employee cost sharing during the next two years; in many cases this will meanmore tiering of formularies and higher copayments. HARRIS INTERACTIVE reports employers to pass on costs to employees Mean expenditures on prescription drugs for individuals 65 years old and older with no chronic conditions: $113 a year Mean expenditures on prescription drugs for individuals 65 years old and older with one chronic condition:$235 a year Mean expenditures on prescription drugs for individuals 65 years old and older with three or more chronic conditions:$667 a year OUTOFPOCKET SPENDING INCREASESWITH AGE ANDVARIES BY INSURANCE COVERAGE