I never really understood why some physicians wouldn’t take the free pharma lunches that were offered at the office or hospital. I even asked a few of them why they weren’t eating and they babbled off something about ethics and free lunches as they are related to drugs.
What’s The Main Argument?
The main argument is that the free lunches, pens, and prescription pads increase the cost of the drug to the consumer. This is absolute nonsense and emphasizes the average physician’s lack of understanding of basic business principles.
Now I won’t deny that the cost of marketing new drugs is factored into the cost of the drug. This cost is passed to the consumer. However, you aren’t doing your patients a disservice for sitting in on a free lunch. In other words, the price of the drug will not change. Let me explain.
If money isn’t allocated towards free physician lunches in a company’s marketing budget, they will allocate that money into marketing elsewhere. For example, if all direct physician marketing was banned, drug companies would simply shift that money into another advertising vertical such as print, television, or radio ads.
Let’s talk about that.
Let’s look at this from a business standpoint. Each product that is produced and sold has what is known as an optimum price point. This is the price that will produce both optimum revenues and sales volume. It looks like this:
As you can clearly see, if you drop the price volume will increase but revenues will drop. Conversely, if you increase the price your volume will decrease. If you adjust the price too high or low on either side, you will also begin to decrease your revenues no matter which way you are moving your price. At this point you are at sub optimum levels.
So What About Marketing Expenses?
As stated earlier, the argument is that eliminating the drug rep lunches and free pens will decrease the cost of the drug to the consumer.
Marketing directly to physicians is extremely effective and most likely offers drug companies the most bang for their advertising dollar. If they are banned from marketing directly to physicians through free lunches, they’ll simply shift those marketing dollars into other areas in order to maintain optimum volume.
Get off your ethics soapbox and spend some drug company money. Who gives a shit, they’re going to spend it anyway.