Pharmaceutical Marketing 101
Posted: Tue Dec 22, 2009 12:39 am
I heard this on the radio today. It's an interesting story about Merck and how they built from thin air the marketing machinery in order to sell their drug Fosamax. This even included creating a "nonprofit" organization, the Bone Measurement Institute, where the only physical entity of which was the desk of a Merk employee!
How A Bone Disease Grew To Fit The Prescription
NHE
How A Bone Disease Grew To Fit The Prescription
Then in 1995, Allen was approached by the drug company Merck. The pharmaceutical giant had just released a new drug called Fosamax, which, Allen says, represented a sea change in osteoporosis treatment.
"Fosamax was the first [nonhormonal] drug that could credibly make a claim to stop the progress of osteoporosis," he says.
Until drugs like Fosamax began to emerge, the standard treatments were calcium, vitamin D, weight-bearing exercise and hormonal treatments, though ultimately hormonal treatments proved problematic.
Since osteoporosis is a serious problem that affects millions of women, the potential market for Fosamax was enormous. Fosamax could become a blockbuster drug, one that made over $1 billion a year.
The problem, Allen says, was that after its release, "Merck wasn't selling its drug."
Allen had known the president of Merck America, a man named David Anstice, for years; they'd worked together at IMS Health. Allen says Anstice came to him with a proposition: Figure out this problem and then fix it.
"My job description read: 'Provide some out of the box thinking,' " Allen said.
So Allen set to work. He talked to researchers, doctors, and soon the issue with Fosamax sales became clear: To get large numbers of women on Fosamax, large numbers of women needed to get their bones scanned and be diagnosed with osteoporosis. But in America in 1995, there was simply no way to do that. Allen says the machines that actually measured bone density were exceedingly rare.
"The only diagnostic procedure was an expensive machine called a tabletop bone densitometer that was costing the patient between $200, $250, $300 per test," Allen says. "And there were only a couple hundred testing centers in the United States, which meant that almost everybody had a day's ride, or had to go from the suburbs to downtown to get the test. It was expensive and it was inaccessible, so lo and behold nobody did it."
To sell Fosamax, then, Merck and Allen needed to do two things: place machines that could measure bone density in doctors' offices all across America and bring down the price of the tests.
But Allen says for him this wasn't just a matter of selling drugs; he considered osteoporosis a public health crisis. He points out that 1 in 5 elderly women with a hip fracture dies within a year. "Clearly that's not very good," he says.
And so armed with the firm conviction that he was about to do good in the world, and coincidentally sell a ton of drugs for Merck, Allen set out to completely rework the way the American health care system measured bone.
To do this, Allen figured, the first thing he needed was an institution, an entity whose mission was not just to sell drugs, but to serve the public good.
So he decided to create one. In 1995 he persuaded Merck to establish a nonprofit called the Bone Measurement Institute. On its board were six of the most respected osteoporosis researchers in the country. But the institute itself had a rather slim staff: Allen was the only employee.
"There was no payroll, there was no building, there was no office with the name 'Bone Measurement Institute,' " Allen says. Essentially Allen's desk at Merck was the only physical space the Bone Measurement Institute actually inhabited. "I was it," he says.
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