This is why I love Forbes. The February 25th edition has a great guest editorial by Paul Rubin, Professor of Economics and Law and Emory and former economist at the FTC. It's entitled "A Free Lunch: There's nothing wrong with letting drug reps schmooze with doctors." With that subtitle you just know it's going to be good.
And what I found was a fairly principled defense of drug sales. In today's world where "marketing" seems to be synonymous with lying, and the pharmaceutical industry especially is excoriated for its supposedly over-the-top sales practices, it's nice to hear someone defend the practice on a rational basis.
Contrary to the conventional wisdom, marketing is about getting the right products to the right people, and when done effectively it has positive results for the patient, and in turn generates additional profit for drug companies part of which they reinvest for new product development. Sales reps perform a valuable service to doctors by providing them direct information on drug performance and value, saving them time and effort. Competing sales reps balance out the claims made.
But here was the item I found astonishing. While many think doctors forego less expensive generics, in favor of newer drugs that are incremental improvements over them, the reality is that newer drugs are more cost effective!
...new drugs lead to better health outcomes. They keep people out of the hospital. A 2007 study by business professor Frank Lichtenberg of Columbia University estimated that a prescription for a new drug (5 years from FDA approval) costs an average $18 more than an older one (15 years on the market) but reduces other medical costs, including hospital and office visits, by $129.
That's right. New drugs are innovative, and they create more than enough value to justify their higher prices. Best kept secret? Only if you're out to smear drug companies. Marketers know that in industries like health care, value is about actual dollars and cents saved, and while many would have you believe sales and marketing types are simply charlatans, it simply is not true.
Thank you Mr. Rubin for defending an honorable profession!