PRESCRIPTION FOR PROFIT: DIRECT MARKETING ON RISE WITH DTC: MANAGING COMPLIANCE ISSUES AND SENSITIVE MEDICAL INFORMATION

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Prescription drug marketers' rush into direct-to-consumer media advertising hasn't drained enthusiasm or budgets for database marketing and similar efforts.

In fact, the explosion of prescription drug database marketing that began in 1995 actually appears to have gained momentum since the Food & Drug Administration liberalized ad guidelines in August, according to John Cummings, at John Cummings & Partners, a company which tracks database and direct-response marketing.

DIRECT EFFORTS RISING

New database and direct-response efforts from prescription drug marketers rose from 108 in 1995 to 258 in 1997. The industry is on pace to add more than 300 new programs in 1998, based on figures from the first six weeks.

Despite the recently publicized withdrawals from database drug-compliance programs by pharmacy retailers CVS Corp. and Giant Foods, the explosion of DTC advertising is actually fueling database efforts, he says.

DTC ads are teeming with toll-free numbers but most drug companies go beyond simply offering information through their call centers. They use them to build customer databases and long-term programs, Mr. Cummings says. Callers frequently are given detailed surveys and funneled into loyalty or other direct-mail programs based on their responses.

SOPHISTICATION INCREASING

As drug company databases get more sophisticated, so too are the programs they drive.

"The first efforts we saw back in 1994 were straight direct-mail packages with promotional offerings such as a rebate, sometimes with a survey," Mr. Cummings says. "This has evolved into a bunch of newsletters."

Though 33 drug companies have used some kind of database and direct response advertising, the four most active -- Glaxo Wellcome, Merck & Co., Pharmacia & Upjohn and Schering-Plough Corp. -- account for 48% of programs tracked.

Database marketing makes sense for prescription-drug marketers, since even the most widely prescribed drugs reach only 1% to 2% of the population. Prescriptions also have what Mr. Cummings calls a "high lifetime value" that makes it easy to justify the expense of database programs of up to $1 per person.

19 LOYALTY PROGRAMS

"You're on some of these drugs, such as blood pressure medication, for life, and you could be paying $100 a month," he says. "You can run very good long-term [profit and loss statements] on loyalty programs for the drug industry."

He counts 19 ongoing full-scale loyalty programs, which feature two-way communications and incentives to patients. Though the number of new programs dwindled from 10 in 1996 to only two last year -- for Schering-Plough's Claritin and Intron-A -- old programs that survive their first years tend to get increased funding and sophistication.

GLAXO MOST ACTIVE

Glaxo Wellcome, the most active drug database marketer by Mr. Cummings' count, has a branded loyalty program backed by the "On the Nose" newsletter for its Flonase allergy spray and Flovent asthma inhaler brands and an unbranded program called "Air Currents" for asthma sufferers.

In February, Glaxo launched an additional direct-mail program that also includes some corporate image advertising. The 30-page custom publication produced by Time Venture's is called "Total Well-Being."

COMMITTED QUITTERS

One of the most highly-targeted database programs to date, and one of the only marketing programs ever tracked by a clinical study, is SmithKline Beecham's Committed Quitters program for users of its Nicorette nicotine gum and Nicoderm CQ nicotine patches.

In a clinical study of 3,800 Nicorette users by the University of Pittsburgh (funded by SmithKline Beecham), 36% of those in the CQ program quit smoking for six continuous weeks, compared with 24% of those who did not receive any assistance.

A key to the apparent success of the program is the individualized targeting of the materials, says Ilyssa Levins, vice chairman and president of Grey Healthcare Group, New York, which developed the model for the program.

SmithKline Beecham customizes the copy, layout and graphics of the CQ materials to target hundreds of consumer types. Materials targeted at a grandmother, for instance, can be broken down more than a dozen ways, based on such factors as whether her mother died early of lung cancer or smoked until age 90 with no health problems, whether she has a grandchild ready to graduate from high school or whether she likes pink or blue.

CONSUMER COMPLIANCE IMPROVES

A growing number of these database marketing efforts aim to improve consumer compliance with existing prescriptions rather than selling them new ones, Ms. Levins says. There's been so much growth in the field that Grey Healthcare Group, a division of Grey Advertising, plans to launch a new division strictly for database-driven compliance programs later this year.

"On average, 40% of patients don't follow the doctor's orders when it comes to taking their medicines correctly," Ms. Levins says. "In some categories, such as cholesterol reduction, noncompliance can be as high as 80%."

Compliance programs have in many cases merged with what Mr. Cummings sees as another of the major trends in database marketing -- retailer-manufacturer partnership programs.

Elensys manages prescription databases for 22 retail chains totaling 15,000 stores and arranges for drug companies to pay retailers for use of their database in direct mail appeals. But publicity surrounding compliance and other marketing mailings by drug companies to pharmacy customers of CVS and Giant led those retailers to drop out of the Elensys program in February.

SENSITIVE MEDICAL INFORMATION

"I don't think the sensitivity of the issue can be overstated," says Scott Nesbitt, VP-marketing at Health Resource Publishing, a unit of Catalina Marketing Corp. that runs an in-store direct marketing program. "No one trusts anybody with their medical information. You trust a marketing company even less."

Health Resource Publishing issues newsletters through 1,700 U.S. stores and has contracts to expand to 6,000. The newsletters include prescription disclosure information along with ads and promotional offers from pharmaceutical companies and other package-goods manufacturers.

Mr. Nesbitt says he believes his system won't raise the ire that other uses of retailer databases have, because, while the newsletters are customized depending on what drug the consumer takes, consumer medical data remains in the retailer's database.

"We will not, for example, allow brands to target generic, because they are chemically equivalent and we are not going to get people to switch to a brand because it's more expensive," Mr. Nesbitt says. "We have turned down plenty of business because of that."

Catalina Marketing has done similar direct marketing of prescription drugs through its Checkout Coupon system, where makers of high-cholesterol, allergy and even anti-depression drugs will target messages to consumers, usually steering them to toll-free lines, based on the types of grocery products they purchase. A typical use is a prescription drug brand targeting buyers of over-the-counter allergy medications.

`INFORMED CONSENT' IN PROGRAMS

Ms. Levins believes all drug database programs should be based on informed consent, including voluntary contribution of information from patients, full disclosure of how that data will be used and a way to opt out of any target marketing program. But she doesn't believe privacy fears will crimp growth of database drug marketing.

"We have to address ways to assure (that confidentiality breaches don't) happen," she says, "but it's not going to stop the explosion of this important technology. Just like with any emerging technology, there are going to be questions that need to have uniform answers."

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