Artifact Summary 1 – Cross-Cultural Business Policy Analysis
The artifact presented for this program outcome is an essay for course OL 635 – Social, Legal, and Cultural Perspective. The program outcome my presented work represents is outcome number 1 “Interpret the contexts and environments in which organizations operate” (Saint Mary’s University of Minnesota, 2018). One of the course objectives this presentation addressed was “Analyze compliance issues and principles that affect an organization operating internationally” (Saint Mary’s University of Minnesota, 2018). The presentation, Marketing United States Pharmaceuticals in Denmark, dives deeply into the regulations Denmark must follow regarding pharmaceuticals. United States companies that wish to sell pharmaceuticals in Denmark and many other countries in the world must comply with very different regulations that are followed in the United States.
The artifact was chosen as an effective representation of how the external environments and cultural influences impact how companies must adapt to be successful in other cultures. Beyond following regulations, an organization must consider the cultural norms of other countries prior to engaging in business. For instance, Danish citizens have generally negative attitudes toward information pharmaceutical companies provide them (Rehne & Møldrup, 2008, p. 37). Their culture relies heavily on physicians in their universal healthcare system. This course and the essay presented helped me to better understand the implications of working with other cultures no matter the product or the country. Careful consideration must be taken when an opportunity to work with another company or culture presents itself.
The artifact is presented after the summary references.
References
Rehne, J., & Møldrup, C. (2008). Danes’ awareness of and attitude towards direct-to-consumer advertising (DTC-A) of prescription drugs: A quantitative survey of 3,000 respondents. Journal Of Medical Marketing, 8(1), 31-38. doi:10.1057/palgrave.jmm.5050120
Saint Mary’s University of Minnesota. (2018, July). 2018-2019 SGPP catalog & student handbook, Organizational Leadership, M.A. Retrieved from http://catalog.smumn.edu/index.php
Marketing United States Pharmaceuticals in Denmark
Laura Englander
Saint Mary’s University of Minnesota
Schools of Graduate & Professional Programs
OL 635 – Social, Legal, and Cultural Perspectives
Charles Eltonga
November 29, 2017
Introduction
Pharmaceutical companies, no matter where they are based, rely heavily on the marketing of their products. Without marketing, the products would not be sold and the company would not make money. Citizens in the United States are used to the barrage of advertisements of pharmaceuticals. The drug companies spend billions of dollars spreading messages about why a consumer with a specific medical condition should consult a physician about using their product. When these companies, used to accessing millions of Americans through several marketing channels, are prohibited from advertising, the game changes. Only one other country in the world, New Zealand, allows for direct-to-consumer pharmaceutical advertising. Therefore, American pharmaceutical companies are at a significant disadvantage when attempting to sell their products in other countries. The marketing of pharmaceutical products becomes even more of a challenge when the country to which a company is marketing a drug is a country like Denmark which has universal healthcare.
Analysis
The Scandinavian country of Denmark has a health system far different than that of the United States. The universal healthcare system of Denmark is governed by a combination of levels of government including the national state, five regions, and ninety-eight municipalities. Most hospitals are owned by regional government operations and their employees, including general physicians, are salaried employees of that region. All Danish citizens are afforded health care coverage that is paid for primarily through tax revenues. Citizens choose one of two of the national health plans. Approximately 97% choose to be part of “Group 1” which places them with a general practitioner (GP) and requires a referral from that GP to see a specialist (Kristiensen, 2015). Consequently, the GP becomes the primary source of information for prescription medication options.
Pharmaceuticals are reimbursed through taxes paid on the national level and supplemental costs are provided by local municipalities based on socioeconomic conditions (Kristiensen, 2015). Under guidance from the Danish Ministry of Health, a governing body like the U.S. FDA, the Danish Health Authority, and the Danish Medicines Agency monitor the health care system. The two health agencies oversee the activities of pharmaceutical companies and their products and advise the Ministry of Health on various items including suitable reimbursement costs for pharmaceuticals.
The reimbursement prices of pharmaceuticals, based on wholesale costs and set by the Danish Medicines Agency, are disclosed to the public via the internet and updated every two weeks. Prescription medication is reimbursed at the level of the least expensive product for a drug category. Unlike many other European countries and the United States, the prescription options given to Danish citizens by the pharmacists are limited initially to the least expensive (Kristiensen, 2015). The patient then has the decision to pay more for a different drug out of their own pocket or with private insurance. The consumer may not know of any alternative drug though. Unlike the United States, pharmaceutical companies are not allowed to market drug products that require a prescription directly to consumers. This fact becomes problematic for United Stated companies that are used to advertising to the public in print, on the radio, and on television.
Pharmaceutical companies rely heavily on direct-to-consumer advertising in the United States and have been investing billions of advertising dollars over the years. Only two countries, the United States and New Zealand, allow direct-to-consumer advertising of pharmaceuticals. In the U.S., the practice became legal in 1985 then increased heavily in 1997 when restrictions around listing side effects were loosened significantly (Humphreys, 2009, 576). The rest of the world, including Denmark, prohibit such advertising. Pharmaceutical companies used to access to consumers in the U.S. must get creative with reaching consumers in markets like Denmark.
Since direct-to-consumer advertising of pharmaceuticals is prohibited in Denmark, citizens must look to either the internet or their GP for advice on medication. GP’s are the first point of contact and only refer to a specialist when needed. The GP needs to have a broad understanding of several disease states and medications available. They often receive information about medications from the Institute for Rational Pharmacotherapy (IRF), a department within the Ministry of Health (Wadmann & Bang, 2015, p. 112). The IRF “provides information and independent advice on the most rational use of current and future medicinal products with respect to both pharmacological and economical aspects” (Kristiensen, 2015).
Pharmaceutical companies in the United States receive guidance and oversight by the FDA in terms of what they can and cannot say in any type of advertising, including the internet. Companies need to include the drug name, key risks, and benefits and information for the consumer to find out more about the drug (US FDA). People who can access the internet, including citizens in Denmark, have that information available to learn about a pharmaceutical product. Socioeconomic factors can influence who has access to the internet. Rehne and Møldrup (2008) conducted a quantitative survey of three-thousand Danish citizens about their awareness and any influence of pharmaceutical advertising. Fifty-five percent of respondents were not influenced to buy a drug advertised on a website and most found it acceptable to learn about health and disease treatment even if they found that a drug company was behind the message (Rehne & Møldrup, 2008). Of the approximately eighty percent of the respondents saw internet advertisements, only nine percent of them took steps to either find out more information about the drug or visited their pharmacist or physician (Rehne & Møldrup, 2008, p. 37). The Danish culture is known to avoid being too heavily influenced or excitable in general.
An entire country, such as Denmark, has not been used to the influence of pharmaceutical companies. A sampling of Danish citizens shared negativity when provided information from pharmaceutical companies (Rehne & Møldrup, 2008, p. 37). Perhaps this speaks to a general cultural feeling of Danish citizens because they are not used to seeing so many messages from drug companies and therefore do not see them as partners in their quest for knowledge. Trompenaars, & Hampden-Turner (2012) assert that “lack of trust is often caused by different views of what constitutes a trustworthy partner” (p. 264). The pharmaceutical companies have an uphill battle in convincing Danish citizens to buy their drugs. The drug companies instead must send their representatives to build trust and educate the GPs.
The GPs in Denmark are governmental, salaried employees who are still able to be swayed by the deep pockets of drug companies. These front-line physicians sometimes look to specialists for prescribing habits, a group the GPs hold in high esteem (Schramm, Andersen, Vach, Kragstrup, Kampmann, & Søndergaard, 2007, p. 96). Pharmaceutical companies in Denmark understand the need to educate and work with the GP’s. The influence of the deep-pocketed drug companies is still prevalent. There are GPs that prescribe expensive drugs whether better or not than older drugs simply because of the frequent visits from company representatives (Schramm, et al., 2007, p. 93). It appears the culture of pharmaceutical companies being influential crosses all borders. At least the Danish government has the exclusive influence on the cost of the medicine and how much they will contribute for each citizen. This, along with the lack of direct-to-consumer pharmaceutical advertising, requires medical professionals in Denmark to be knowledgeable about the many diseases and treatments. This surely increases the dialogue between physicians and their patients which instills a culture of trust in the Danish system.
Conclusion
Developing and manufacturing pharmaceutical products can take millions of dollars and several years. The cost of the extensive development and marketing must be made up somewhere. Most of the countries in the world do not allow pharmaceutical companies to push their products directly to consumers. Denmark, with their universal healthcare, also poses challenges for drug companies due to fixed costs and limited access to consumers.
Physicians are the first avenue for drug companies to disseminate their information regarding new drugs and should remain the focus of drug companies. To make sure the consumers in Denmark are receiving information about new drugs the best avenue is the internet. Drug companies should aim to educate the Danish people through informative websites about diseases and tips on improving health. By doing so, the drug company can establish trust and begin to chip away at the negative stigma perceived by Danish consumers.
While it may seem difficult to imagine the U.S. adopting a universal healthcare system, perhaps our country could prohibit direct-to-consumer drug advertising. Without the billions of dollars spent on advertising the cost of medications should come down significantly. Even more than that, it would be refreshing to not see so many drug advertisements on television like the lucky folks in Denmark.
References
Background on drug advertising. (n.d.). US federal drug administration. Retrieved from https://www.fda.gov/Drugs/ResourcesForYou/Consumers/PrescriptionDrugAdvertising/ucm071964.htm
Humphreys, G. (2009). Direct-to-consumer advertising under fire. Bulletin of the World Health Organization, 87(8), 565-644. Retrieved from http://www.who.int/bulletin/volumes/87/8/09-040809/en/
Kristensen, F. B. (2015, December). Pharmaceutical hta and reimbursement process – Denmark. Retrieved from https://www.ispor.org/HTARoadMaps/Denmark.asp
Rehne, J., & Møldrup, C. (2008). Danes’ awareness of and attitude towards direct-to-consumer advertising (DTC-A) of prescription drugs: A quantitative survey of 3,000 respondents. Journal Of Medical Marketing, 8(1), 31-38. doi:10.1057/palgrave.jmm.5050120
Schramm, J., Andersen, M., Vach, K., Kragstrup, J., Kampmann, J., & Søndergaard, J. (2007). Promotional methods used by representatives of drug companies: a prospective survey in general practice. Scandinavian Journal Of Primary Health Care, 25(2), 93-97.
Trompenaars, F., & Hampden-Turner, C. (2012). Riding the waves of culture: Understanding diversity in global business (3rd ed.). New York, New York: McGraw-Hill.
Wadmann, S., & Bang, L. E. (2015). Rationalising prescribing: Evidence, marketing and practice-relevant knowledge. Social Science & Medicine, 135109-116. doi:10.1016/j.socscimed.2015.04.032
Laura's Leadership Portfolio 