CAMPAIGN REPORT ON HEALTHCARE: Sales at a price - With RPM now back on the agenda, Julie Hayward argues that price competiton may be valid for consumer goods, but it’s the wrong way to push the sale of medicines

By JULIE HAYWARD, campaignlive.co.uk, Friday, 08 January 1999 12:00AM

Resale price maintenance. Just as you thought it may have gone away, the topic is now back with a vengeance. It looks likely that it will soon go under review, with the Office of Fair Trading taking the issue to the restrictive practices court early this year. Although the current mood of the healthcare industry seems to be one of optimism that RPM will be saved, its loss would, quite naturally, have a major effect on the industry. Many will already be looking at contingency plans for 1999.

Resale price maintenance. Just as you thought it may have gone

away, the topic is now back with a vengeance. It looks likely that it

will soon go under review, with the Office of Fair Trading taking the

issue to the restrictive practices court early this year. Although the

current mood of the healthcare industry seems to be one of optimism that

RPM will be saved, its loss would, quite naturally, have a major effect

on the industry. Many will already be looking at contingency plans for

1999.



For those of us who are a little rusty on the subject, cast your minds

back to the supermarket challenge to RPM in 1995 when Asda took on the

fixed price of vitamins, and then painkillers. It was this action which

led to the issue being so thoroughly aired at a time when the Net Book

Agreement had collapsed, leaving medicines as the only other

price-maintained goods. Although pharmaceutical manufacturers obtained

injunctions against Asda and prices were rightfully restored, the

supermarket had resurrected the issue.



The Office of Fair Trading announced this latest review of RPM on

medicines in July 1996, on the grounds that there has been a

circumstantial change to the criteria for justifying RPM since the last

court ruling on the matter in 1970.



A great deal has been written about the pros and cons of RPM, but what

about the marketers and advertisers? So, I want you to close your eyes

and imagine the creative brief on a medicine in the absence of

RPM ...



Enshrined and treasured in the advertising industry is the code of

practice and its 46 restrictions relating to over-the-counter medicines.

The daily mantra in the healthcare agency has traditionally been ’we

must not make outrageous claims’ and ’we must be ethical at all times’.

This, to me, has always been perfectly acceptable for a product which

has a dosage regime, side-effects, contra-indications and is open to

misuse.



The words ’legal, honest, decent and truthful’ ring loudly in my ears

and I find it a struggle to then superimpose this sentiment into an ad

scenario within the medicines market where a price war is going on.

Product claims for medicines are arguably more important than any other

sector. Surely with price becoming a main message, we would then be into

a whole new arena for advertising medicines - ’It’s tried and trusted

and efficacious. Ask your pharmacist, you’ll be getting good advice. Oh,

and by the way, we are the cheapest/buy one, get two free.’



I worry about the first signs of erosion of the industry’s ability to

work with a plethora of rules and regulations. Like professional

dancers, we tango with the Advertising Standards Authority, foxtrot

around the Broadcast Advertising Clearance Centre guidelines and waltz

along with the Proprietary Association of Great Britain’s concise rule

book. The dances are clear, even if they do involve some fancy footwork.

While we may all become occasionally frustrated with the number of

restrictions, do we really want to include a whole new dimension created

by market forces and so embrace a different standard for advertising

medicines?



If all advertising incorporates a price message as the key strategy,

then I also fear for the confidence of the consumer, who can currently

learn enough about the product from the advertising to conduct a

sensible and helpful discussion with the pharmacist. I shudder at the

image of the consumer at the chemist simply asking for ’the cheapest

one, please’.



As it is, we already face the own-label price differential with

consumers seeking out the bargains within healthcare more and more. It

should be a concern to the industry that so many consumers now look for

good value in the medicine category, whereas, in my experience, only a

tiny minority of people knew about generic alternatives ten years ago

and some of those were still unconvinced that 50 tablets for under

pounds 1 could replace the efficacy of their favourite brand.



Perhaps the constant threat of own-label pricing has made us better

prepared to face the inevitable discounting should RPM end, although a

fair amount of mystery lies ahead. I would imagine the marketing budget

will need a good shake-up in order to prepare for unknown market

trends.



Today, we have a fairly familiar traditional approach to advertising

schedules - some seasonality in cough/cold and hayfever sectors and a

steady pattern of bursts for all-year-round brands. But in the absence

of RPM, there would be a very unpredictable picture. Who exactly is

about to discount and when? What will the advertiser do to counteract a

major discount on a brand within its own therapeutic category? Will

advertisers still be able to afford a huge TV spend when they may have

to use the same budget to react to competition or discounting? Will a

change of media be more appropriate if our messages in the future focus

more on price than promise?



While I am sure that industry organisations will see to it that medicine

advertising is not allowed to lower the tone of the industry, I foresee

a slippery slide towards the fmcg ad territory where the focus is on

price.



Fine for a washing powder, but not quite the thing for a pharmacy-only

product.



Of course, I’m probably exaggerating, but I do think it would be the end

of an era in terms of existing advertising standards. And while I am

confident that the industry would wish to retain the high standards and

customer satisfaction with medicine advertising, who will be able to

afford to miss out on participation in a price war? Whatever happens,

the industry will need to keep ahead of the game to ensure it is not

short-changed.



Julie Hayward is the marketing services director at PTK Healthcare.



This article was first published on campaignlive.co.uk

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