Prescription drug revenue has stalled
Retail prescription drug spending has plateaued, and drug companies are planning their strategies to recover the lost revenues. On a per capita basis, Americans spent over $1,000 per year on prescription drugs in 2017. This compares to $90 per person just 60 years ago. This impressive growth had to end eventually, as spending dipped ever so slightly in 2017–but enough to raise eyebrows in the boardroom.
So pharmaceutical companies are looking for growth in a segment of the market which is primed for spending: millennials. Millennials are much more open to talk about even stigmatic diseases, they crave and consume information, and finally they make more money than their age group from any era in the past.
This group, generally thought of as born between 1981 and 1996, are ready to make up the dip in growth. And pharma has decided how to reach them: social influencers. But some of those characteristics of millennials, which make them such a juicy target, will also pose the most challenges. A light hand will be necessary to navigate these challenges, but the reward may be another half century of upward growth.
Income is not an issue
One aspect of Gen Y that poses no challenges is their ability to access and pay for healthcare. One of the most popular provisions in the Affordable Care Act is that kids up to the age of 26 can remain on their parents’ plan. There are no income or family status limitations – they can be married tech billionaires who don’t live at home and still have dad or mom list them on their policy.
But this doesn’t mean they, as a group, can’t afford it. Millennials now earn more than similarly aged households did at any time in the past 50 years, according to a Pew Research Center analysis of census data.
So millennials can afford prescription drugs; even high cost specialty drugs. The question is, will they?
Do you want to talk about it?
More than any segment from any recent era, millennials have embraced acceptance of stigmatic diseases. Whether it’s HIV, mental disorders, or even venereal disease, millennials reject the old social pressure to stay quiet and instead, seek treatment with head held high.
Importantly, millennials receive the social support needed to brave the discussion with family and friends and make that call to the doctor. This vast cultural change is reflected in the statistics: use of antidepressants has grown 65% in the past 15 years. Now, progressively-minded millennials may not account for all of this growth but one could reasonably say that it couldn’t have happened without them.
Social acceptance is achieved through supportive social media groups, where members are encouraged to speak about their condition, now aware that they are not alone in the world. Social influencers, sponsoring posts on platforms like Instagram and YouTube, really become social leaders for issues such as these. Their audiences trust them like no parent, public service announcement, or advertisement could ever achieve. Of course the most effective influencers will only take sponsored work if they, too, agree with the issue at hand so finding the right influencers can be a time consuming effort.
The consumers of this rich, social media? Millennials. But although having a broad availability of information just a few clicks away seems only good, there is a downside–and it threatens pharma in ways unheard of just a decade ago.
The smug new face of Pharma
The beneficial life changing aspect of the Internet–the democratization of information–can also breed fear and misinformation, unfairly damaging reputations of companies and their products.
The leading contender for the most punchable face in the 21st century has to be Martin Shkreli, the former CEO and “Pharma Bro” of Turing Pharmaceuticals. Smug Martin seemed to relish the opportunity to raise the price for a life-saving drug from $13.50 to $750 per pill. For a few weeks in 2015, Americans were squinting and cracking their knuckles like Clint Eastwood facing down a giant opponent, seething at each news story flitting around social media featuring the smug young face of Pharma.
This story really hit a nerve; Pharma is literally making a killing off of you or your parents or neighbors who can’t afford their meds. And now you know that the life-saving drugs draining your savings could be priced at 50x cheaper! The temptation to apply Smug Martin’s punchable mug to the face of every pharma in America was simply too strong. News stories still pop up in 2019 about the fractional cost of equivalent drugs in Canada or Mexico.
Along with reputation destruction, the spectacular growth of information sharing has dealt another challenge to Pharma: pseudoscience and their “cures”. Aside from the real dangers untested treatments or anti-vaccination studies pose to blog readers, every dollar spent on a non FDA-approved drug is one (or more) lost to Pharma. And misinformation or exaggeration about the risks of some medications can spread like a virus on an international flight, further hurting sales.
Free access to people and information on social media offers necessary support to Pharma’s products but can it be used to combat reputation-smashing stories?
A most potent antidote
Pharmaceutical companies face seemingly existential balance sheet challenges: the cost of bringing a drug from inception to market has only increased, so how will they recover the R&D expense to fuel the innovation of new drugs? And pressures to sell to third world countries at well below cost continue to rise with awareness.
Perhaps their best antidote lies with millenials, the most informed and monied generation of consumers in recent history. But this will prove no small challenge as the very system of information which enabled this unique generation also threatens Pharma in seemingly insurmountable ways.
So it’s little surprise that pharma is turning to millennial social influencers to rescue them from Martin Shkreli and homeopathy. The trust imbued in the right influencers with the right audiences can begin to repair the reputation destruction and ever increasing digital mountain of misinformation available.