• February 23, 2016 at 9:28 am

    I’ve often told my students (and anyone else who will listen) that rule #1 of understanding the business world is this:

    “Never assume that large, complex, successful organization is guided by morons, just because you can’t understand that organization’s behaviour.”

    So here’s a story that caught my eye, about drug companies apparently throwing away hundreds of millions of dollars on useless direct-to-consumer advertising:

    Study says direct-to-consumer drug advertising not that effective

    Drug advertisements aimed at consumers may not be having the effect on sales that opponents and proponents of the practice assume they do, a new study suggests. 
    The analysis, by researchers from Harvard Medical School and the University of Alberta, looked at Canadian sales data for three drugs that were heavily advertised in the United States, ads which Canadians watching U.S. television would have seen. 
    The researchers found no evidence of a spike in sales for two of the drugs after the TV ads started to run. There was a marked increase in sales for a third drug but the effect was short-lived.

    Basically the study went like this. Direct-to-consumer (DTC) advertising of pharmaceuticals is generally forbidden in Canada, but permitted in the U.S. But TV signals (and the ads they carry) tend to cross borders, so most Canadians see plenty of DTC advertising of pharmaceuticals on American TV. But people in Quebec — a predominantly French-speaking Canadian province — watch much less American TV, and hence presumably see far fewer pharmaceutical commercials. So, measure the differences in prescription rates, in Quebec vs the rest of Canada, for well-advertised drugs, and you have a rough estimate of the effectiveness of those ads. Neat idea. And the conclusion reached in this case is that, actually, the ads don’t have much effect.

    OK, I’m sure there are plenty of methodological questions to ask. But skip that for a minute and ask yourself this: what happens next? What do you do now, if you’re in charge of marketing for a major pharmaceutical company. Do you:

    a) Immediately rush to cancel all advertising, based on the realization that you’ve been wasting zillions of dollars on something that really doesn’t work; 
    b) Re-evaluate your marketing plan, based on the realization that, in at least some cases, advertising seems not to have the impact you had hoped it would have;
    c) Laugh out loud.

    Sure, it’s an intriguing study. And it is indeed possible that the marketing people working for big pharma are really bad at their jobs. But don’t bet on that.

    Here’s the link to the original paper: Effect of illicit direct to consumer advertising on use of etanercept, mometasone, and tegaserod in Canada: controlled longitudinal study

    Chris MacDonald, Business Ethicist

    Chris MacDonald, Ph.D., is an educator, speaker, and consultant in the realm of business ethics. He teaches at the Ted Rogers School of Management, at Ryerson University in Toronto, where he is Director of the Jim Pattison Ethical Leadership Education & Research Program, at the
    Ted Rogers Leadership Centre.

    He is also a Senior Fellow at Duke University’sKenan Institute for Ethics.

    Courtesy – 

    The Business Ethics Blog