Non-Advertising Promotional Expenses in the Medical Industry

Since we’ve been discussing health care, I want to quote something reader Sebastian Holsclaw posted in comments

You should also note that what you normally think of as marketing (the advertising side) is less than 20% of the total promotions. Most of the rest is spent on samples and ‘explanatory’ advertising in medical journals. That at least is much more defensible than the consumer advertising–which frankly if we wanted to make illegal again I wouldn’t cry about it at all.

Now, when you hear about promotions, you’re probably thinking the free samples and pens that companies give doctors. You might think to yourself: wow, that’s an awful lot of pens. Maybe you’re even thinking of free meals, and you wonder what kind of barbecues they might be thrown in.

OK. Now a digression while I meander toward the point. Bear with me… Regular readers know I used to be an adjunct professor at a business school for about five years. It was a lot of fun, and I’m glad I did it. I’ve kept in touch with a lot of former students. In fact, for the gossip-hounds, I should note that the Ex-GF is a former student, but that’s another story (and for the gossip-hounds, completely unrelated with the fact that I don’t teach any more).

After reading Sebastian Holsclaw’s comments, I thought about something a former student told me over dinner a few months ago. He lives abroad, and is kind of in charge of foreign sales for a rather expensive medical, well, let’s call it a a product. (For reasons that will become obvious, I’m not going to provide any information that would identify the product.) I believe there are only three companies that manufacture these items, and my former student has worked for two of them, and the job is done the same way at both of these companies. Presumably, the third company is no different.

Every four to six months or so, my former student flies to the US. The company also flies in a bunch of doctors that use (or are considering using) the product for a few days of, well, its called “training.” Now, many of these doctors have been using the equipment for years, and really don’t need a week of training in the US. Perhaps there are some new features to see, and a good fifteen minutes is enough to get across the changes.

So what do they during the rest of time? Well, some of the doctors really like golf… arrangements are made at Pebble Beach. Perhaps one of them wants to see the Grand Canyon… and a small plane is chartered. Every few months another batches of doctors flies in, and while the company won’t provide them with hookers or drugs, otherwise it makes sure they leave very, very happy. I’ll have to remember to ask him what they do for the American doctors next time around.

In any case, it goes without saying that this process falls under providing samples, training, and providing samples to doctors. And of course, it would never influence doctors to suggest a course of treatment for clients, I mean, patients, that is unwarranted. Training simply is intended to produce better doctors.

So when someone tells you that non-advertising promotional expenses and training are some of the biggest expenses that the pharma/health industry has, I suggest you believe it. And apropos of nothing, this is one of those pieces of equipment that doesn’t get used as often abroad as it does here in the US. In fact, there are plenty of instances of wealthy patients flying to the US for the procedure with which this piece of equipment is associated; the procedure is performed so much more frequently here in the US that the best experts are here.