The pharmaceutical sales industry is strong, and most pharma reps are happy in their careers. On the other side of the spectrum, however, are consumers who have serious concerns in the wake of drastic price increases.
According to the 2016 U.S. Senate Report: Sudden Price Spikes in Off-Patent Prescription Drugs, 60 percent of Americans depend on prescription drugs to survive. The vast majority of American senior citizens (90 percent) take more than one prescription drug daily. Researchers also found that Americans spent more than $328 billion on prescription drugs in 2016. More than $50 billion of that was paid out of pocket by consumers.
All of this adds up to a vested consumer interest in the cost of medicine. When prescription drug prices drastically increase, consumers have no choice but to find ways to pay. This disrupts lives and puts people in danger who cannot.
Consumers and their friends and family members then take on a negative view of the entire industry. This is especially true when industry leaders make inflammatory comments about the price increases.
Negative publicity and the inability for patients and practitioners to afford price hikes make it difficult for pharma reps to keep up sales and generate new business. This adversely affects their own livelihood as well as the financial future of the companies for which they work.
Here’s a look at how new pricing laws affect the pharmaceutical sales industry:
1) More stringent pricing rules
The state of California recently made headlines following legislative action requiring pharmaceutical companies to explain the reasons for price increases. Under the new law, companies must provide consumers with 60 days notice when the price of a drug will increase by 16 percent or more over a two year period. In addition, company leaders must justify the increase.
Meanwhile, a similar law in Maryland authorizes the state’s attorney general to prosecute pharmaceutical companies that institute price increases drastic enough to “shock the conscience” of consumers. Lawmakers in other states are pushing for similar legislation aimed at pricing transparency.
Any regulation makes it difficult to conduct business. In addition to their regular research, pharmaceutical reps now have to keep on top of such legislation in order to provide customers accurate and comprehensive information.
2) Slower drug approval times
New drugs take an average of 10 years to get to market, and cost upwards of $2.6 billion in research and development, according to 2016 report in the Journal of Health Economics. Researchers found that $1.4 billion of the total cost is spent on laboratory use, clinical trial expenses, and manufacturing. Lawmakers largely dispute these figures.
While the exact numbers are open for debate, the fact remains that drug approval is costly in both time and money. To make matters worse, some suppliers of brand-name drugs try to block approval of similar or generic versions in order to preserve a stronghold in the industry.
Delays and back-room deals breed mistrust among consumers and health professionals. Though not directly involved in the decision making or approval process, pharma reps must answer to slow drug approval times and the reasons behind them.
In addition, if consumers are able to find alternatives to their required prescriptions (other drugs, lifestyle changes), they will sever the professional relationship, which results in decreased sales.
3) Patient quest for alternatives
To that end, consumers are increasingly searching for ways to monitor and control personal habits, without dependence on prescription drugs. Patients who are unable to shoulder higher prices (or simply refuse to pay more) seek ways they can better monitor and manage their own health.
One option is wearable tech, which includes activity trackers, heart monitors, and more. Over the long-term, these devices provide data that allow individuals to recognize areas for improvement, and make real lifestyle changes to correct unhealthy behaviors. Many even come with software that provides basic health advice.
Meanwhile, others are turning to homeopathic remedies but for most patients, the quest for alternatives isn’t about cutting out the middleman. In fact, in a 2017 report, AARP found that some patients forego medications altogether when it comes to deciding between prescription drugs and food, rent, or other necessary expenses.
While this surely puts their own health in jeopardy, it also translates to decreased sales for pharma reps. As these trends continue, overall, the industry will see a decline in revenue, which could lead to layoffs and discontinuing low-performing drugs.
Prescription drug prices are forecasted to remain a point of contention well into the foreseeable future. Regulation, legislation, and public backlash will continue to complicate how pharmaceutical companies market products and how pharma reps are able to keep sales figures high. While pharmaceuticals will never become irrelevant, it’s critical pharma reps stay constantly educated on impacts of regulation.
What’s your take on prescription drug price laws? Let us know in the comments!