SSRI manufacturers spend substantial amounts promoting their products through the use of DTCA, detailing, free samples, and other strategies. The amount and composition of promotional spending differs both across SSRIs and over time for a given drug, with changes occurring with own generic entry, reformulation entry, and new indications.
Promotional spending (both total and detailing alone) is generally lower after own generic entry than before, a finding consistent with the Dorfman Steiner theorem and other empirical literature, although the impact of generic entry has become more nuanced in the wake of regulatory changes permitting extension of marketing exclusivity. Promotional expenditures generally dropped as patent expiration approached for the drugs that lost patent protection during our study period.
The introduction of a new product formulation appears to be a common strategy for attempting to extend market exclusivity for medications facing impending generic entry. Because the Hatch-Waxman Act allows for an additional three years of market exclusivity for a new formulation, manufacturers have an incentive to shift demand for the original formulation of a brand drug that will soon lose patent protection onto a reformulation of the drug. The manufacturers of Paxil and Celexa shifted almost all promotion dollars from the original brand to the new formulation (Paxil CR and Lexapro, respectively) when the new formulation was introduced. In both cases, the reformulation was introduced long before generic entry (15 months before paroxetine’s entry in the case of Paxil CR and 27 months before citalopram’s entry in the case of Lexapro), which is consistent with the hypothesis that manufacturers attempted to shift demand for the original brand onto the new formulation in advance of generic entry. Eli Lilly released Prozac Weekly, the first SSRI reformulation to enter the market, just five months before generic entry of fluoxetine. Promotional spending for Prozac decreased somewhat gradually in the months after patent expiration rather than stopping more abruptly once the reformulated product entered or right before patent expiration. One reason could be that Eli Lilly may have expected to win a patent litigation case that would have delayed patent expiration beyond the actual expiration date of August 2001 (Angell, 2004).30
Eli Lilly’s detailing and DTCA contracts may have been fixed in the short term and non-cancellable immediately after generic entry. Also, Prozac was the first SSRI to lose patent protection, and the past six years have likely generated considerable experimentation and learning in the marketing of antidepressants.
It is clear that the manufacturers of these products faced a trade-off between lost profits today from brand cannibalization versus increased profits tomorrow stemming from brand protection. Our empirical work can offer some insights on the optimal timing of the launch of a reformulated product, viewed from the manufacturer’s perspective (not necessarily the consumer’s). Future work should examine manufacturer strategies regarding the timing of new product formulation entry relative to the originator brand’s patent expiration, recognizing that the observed effect of generic entry on promotional spending is conditional on a particular reformulation introduction strategy pursued by manufacturers.
Receiving FDA approval to market a drug for a new clinical indication may represent another way for a brand manufacturer to extend market exclusivity for its product. The results for the SAD and GAD indications suggest that manufacturers may target a particular type of promotion for a given indication. Paxil’s manufacturer increased detailing expenditures for Paxil after receiving FDA approval to market the drug for GAD, but did not appear to change its use of DTCA for Paxil. This suggests that the primary promotional target for GAD, a condition seen often in both primary care and specialty mental health settings, may have been physicians instead of consumers. In contrast, FDA approval to market Paxil and Zoloft for SAD did not affect the manufacturers’ detailing expenditures but did result in a greater likelihood of using DTCA in a given quarter. This result suggests that the primary target for promotion of the drugs as treatments for SAD may have been consumers rather than physicians, with manufacturers perhaps hoping to convince consumers that social anxiety is a treatable clinical condition. A complementary explanation may be that Paxil was the first drug to receive an FDA indication approval for SAD. Therefore, its manufacturer needed to convince patients to ask their doctors for the medication but did not have a need to persuade doctors that its drug was the best to treat that condition.
It is important to place our findings into the context of what is known about the welfare effects of pharmaceutical promotion for antidepressant medications. Most studies that shed light on this issue focus only on DTCA. Donohue and colleagues (2004) found that DTCA for antidepressants results in increased antidepressant prescribing.31
Donohue and Berndt (2004) found that DTCA has little effect on the choice of a specific antidepressant among individuals who initiated antidepressant treatment, although detailing does have an important effect on medication choice.32
The evidence on the effect of promotion and patient requests stemming from those promotions on the appropriateness of antidepressant use is mixed. Donohue and colleagues (2004) found that DTCA expenditures were associated with a small increase in appropriate duration of antidepressant use among individuals diagnosed with depression who initiated antidepressant therapy. Kravitz and colleagues (2005) found that standardized patients (actors following strict protocol for presenting their condition) who presented with symptoms of major depression were more likely to receive appropriate medications if they made a request either for any antidepressant or one that they had seen advertised (e.g. Paxil) than if they made no medication request.33
To the extent that DTCA results in patients requesting medication from their doctors, this suggests that DTCA may result in more appropriate treatment for major depression for some patients. However, the study also found that patients who presented with symptoms of adjustment disorder with depressed mood (a condition for which there is no consensus supporting antidepressant use) and who made general or DTCA related requests for an antidepressant were also more likely to receive an antidepressant than those who made no requests and merely presented with symptoms. Thus, DTCA may alleviate problems with underuse of antidepressants but could result in increased utilization of these medications for conditions for which there is no clinical consensus on the appropriateness of treatment. Thus, the net welfare effects of increased promotional spending for antidepressants are unclear.
There are several limitations of our work. First, findings from the antidepressant market may not generalize to other therapeutic categories. Second, when time series analysis is employed, it can be difficult to distinguish effects of multiple events occurring approximately simultaneously. Third, there may be partial adjustment of Paxil detailing expenditures that we do not account for with our specification. Fourth, we ignore price in these models because we lack data on transactions prices. Manufacturers seeking to maximize profits have several instruments available to affect profits, including promotion, new product formulations, new clinical indications, and prices. Fifth, our analyses of total promotional spending do not include data on journal advertising expenditures. However, journal advertising expenditures for SSRIs and SNRIs represented a very small share (0.4%) of total promotional spending for these medication classes in 2005.1
A number of changes in the competitive environment for SSRIs and other drugs are likely to affect manufacturer promotional strategies in the future. For example, in response to increased generic competition, brand drug manufacturers are increasingly releasing authorized generics (generic versions introduced by the original brand manufacturer) in an attempt to maintain revenues after generic entry, albeit at a lower level. The release of an authorized generic is likely to affect the promotional strategy of a brand drug manufacturer.34
Because promotions for the original brand could have positive spillovers onto a brand manufacturer’s authorized generic, promotional spending for the original brands might actually increase right before and after generic entry. Also, three-tiered formularies have no doubt led to stronger price competition in some classes. As pharmacy management tightens further and there are more generic SSRIs available, pressure by payers for consumers to use generics may cause manufacturers to invest even more in development and promotion of reformulations. If manufacturers can convince consumers and payers that the reformulations are sufficiently different from the original brand product, payers may be more likely to include the reformulations in preferred tiers of their formularies or be more willing to grant prior authorization or formulary exceptions for the reformulations.
Pharmaceutical manufacturers have developed a number of strategies for extending their effective patent life that have important effects on promotional spending. Given the significant impact pharmaceutical promotion has on prescription drug spending and public health it is important to gain an understanding and appropriate interpretation of these relationships. This study provides an important first look at how the promotional strategies of branded SSRI manufacturers are affected by generic competition by a competitor in the same class, by new product formulations, and by new clinical indications.