Pharma Faces CRM Data Crisis

Sales reps may no longer know who's prescribing their company's products.

States Target Pharma Marketing

How do you sell products when you can’t, by law, sell them directly to consumers?

That’s long been the challenge facing pharmaceutical companies. Consumers use their products, but doctors must first prescribe them. Accordingly, pharmaceutical companies market their products to physicians, to try and influence which drugs they prescribe. In 2009, according to competitive intelligence firm IMS Health, the industry spent about $6.3 billion on marketing visits to U.S. doctors.

But four states have now passed laws or created regulations that allow physicians to opt out of sharing their prescription-writing habits, or which simply prohibit the sharing of such data. For example, a 2007 Vermont law restricts how pharmacies can sell prescription-writing information to data brokers, who in turn sell it to pharmaceutical companies and researchers.

Pharma Fights Back

Pharmaceutical data brokers and users are fighting the state laws. Last week, the U.S. Supreme Court heard arguments in the case of Vermont versus IMS Health, which tests whether blocking prescription-writing data violates the First Amendment’s free speech protections. A judgment is expected by the end of June, and it could have profound implications for pharmaceutical companies’ CRM practices.

“This decision will certainly have an impact on the practices of pharmaceutical manufacturers and data minders dealing with prescriber-identifiable data,” says attorney Eric Bukstein, an associate at Hogan Lovells. “If the law is upheld, many states may attempt to pass similar laws regulating the use of prescriber-identifiable data. Further, states may try to regulate data mining more broadly, perhaps even outside of the commercial context.”

Fallout Over CRM Data Restrictions

If widespread prescription data restrictions are upheld, this would be the second major shift in the United States over pharmaceutical sales and marketing practices. Not so long ago, the industry readily distributed freebies such as flying doctors to the Caribbean for “conferences.” Now, the Pharmaceutical Research and Manufacturers of America code of conduct prohibits them from leaving so much as a pen.

A dearth of prescription data would further complicate pharmaceutical companies’ ability to market their wares. Indeed, based on the five CRM best practices that companies must pursue to excel at sales, here’s how restricting prescription data would complicate each one:

Rebooting Pharmaceutical Sales Practices

If the Supreme Court rules in favor of states being allowed to restrict prescription data, then the billions of dollars spent by pharmaceutical companies to correctly segment and target physicians, and then influence them, will be rendered useless.

On the other hand, how useful is this data? The current U.S. pharmaceutical narrative is that if you arm a sales representative with the right facts and figures, they can convince doctors to use their products. Does this, however, give too much credit to salesmanship? If every pharmaceutical manufacturer has its salespeople in the field — current estimates say there is one sales rep for every seven physicians — might not the competing marketing messages largely cancel each other out?

That’s food for thought, as the industry may soon need to undertake a massive marketing rethink — if not reboot.