Want To Unleash Digital Innovation In Pharma? Think Rewards

Last month, the U.S. Food and Drug Administration provided a measure of relief for anxious agencies and pharmaceutical executives awaiting direction from the agency on how it would regulate drug firms’ social media marketing and communications activities. 

The FDA issued guidance, currently in draft form, that covers a rather narrow slice of the interactive media pie. Executives at Edelman describe the FDA’s guidance as simply covering “when and how pharma companies should submit formsto the agency in order to fulfill requirements for post-marketing submissions.” 

Yet, FDA’s guidance does provide some insights about how the agency will view content and commentary appearing on company-owned social and web media properties. As long as companies have no control over the content, and the person commenting has no affiliation with the company, it will not be viewed as promotional in nature.



Overall, this draft guidance may make life a little bit easier for executives striving to convince reluctant pharmaceutical companies to engage in social media activities more aggressively. But, don’t expect drug firms to greatly accelerate their efforts to communicate actively with patients and other stakeholders via digital channels anytime soon. Why? The answer is simple: pharmaceutical executives are not rewarded for engaging in activities that are not proven to demonstrate clear financial benefits to the company in the short or medium term. 

Some may view executives’ laser focus on financial results as counter-productive, but until recently this approach has served the pharmaceutical industry well. The key to drug firms’ success lies in striking a balance between making expensive bets on medications that may never yield a profit and maximizing returns from products that have successfully navigated the regulatory-research gauntlet. This focus naturally makes leaders conservative, resistant to radical change and unwilling to engage in activities with no clear (in their eyes at least) return on investment. 

But, drug firms face some real dangers to their future success. The world is radically changing. Many once-profitable products have become commodities. New technologies are re-shaping how doctors practice medicine, how health authorities view pharmaceuticals and how consumers think about their care. Leaders at drug firms recognize this, which is why some are struggling to figure out how to remain relevant and profitable in this new environment and are desperately looking for new sources of significant revenue. 

Unfortunately, the profits that can currently be extracted from even the most promising digital innovations (including working with patients online) are minuscule compared to the billions of dollars pharmaceutical companies have been used to earning from blockbuster medications. When viewed from within this context, is it any wonder that pharmaceutical companies have largely been bystanders in the digital health revolution (which includes social media)? 

Recently, the famed marketer Seth Godin wrote a brief, but insightful blog post in which he said: 

“If you're not happy with how institutions or people act, take a look at what they get rewarded for. Until we change the rewards, we're not going to change the behavior, because people always have a reason. Even if the reason isn't our reason.”

Those interested in bringing pharmaceutical companies firmly into the digital revolution must figure out how to transform the ways executives are incentivized. Key steps toward meeting this goal include: 

  • Crafting a strategy that fits within drug firms’ capabilities, culture and goals, that enables them to figure out a viable path to commercializing digital products and services while ensuring meaningful profits in the medium and long term
  • Engineering a fundamental realignment of how executives are incentivized for their activities aligned with this strategy
  • Cultivating a culture that recognizes that the path to profitability requires a willingness to conduct (sometimes expensive) research, accept and learn from mistakes and more (there’s hope here, as drug firms regularly make big bets on medications; but they need a reason to believe investing in digital is worth it)
  • Providing internal innovators with real support (funding, people, protection) that allows them to pursue strategies that could yield significant benefits in the future 

This is a critical do-or-die time for pharmaceutical companies. Digital evangelists and others interested in spurring change within pharmaceutical companies need to recognize and realistically address the true (and formidable) barriers to digital innovation rather than simply complaining that things never change.

1 comment about "Want To Unleash Digital Innovation In Pharma? Think Rewards ".
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  1. R.J. Lewis from e-Healthcare Solutions, LLC, February 21, 2014 at 4:41 p.m.

    Great piece. It is critical for pharma to ask these same questions, around incentive plans and internal rewards, internally at a high level if they truly want to embrace change. The typical brand manager is simply trying to get by doing what's worked before, long enough to get promoted. It's antithetical to a culture of innovation where fast failures are rewarded and instead a conservative approach of avoiding failure at any price is embraced. That has always struck me as odd given the high risk and innovative culture of the drug development side of the business. We would benefit greatly from some cross-pollination of the R&D and Marketing cultures.

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