Missing the Forest for the Trees: Marketing Systems Approach to Pharmaceutical Industry Marketing Practices

Abstract

The overall aim of this study is to examine firm strategic choices that trigger negative externalities culminating in market failure, system crisis, and public harm. A conceptual framework of marketing system crisis rooted in conflict of interests (COI) theory is used to make the following arguments: (1) marketing strategies emulated by the industry actors at micro level set lock in through path dependencies, (2) such path dependencies may be associated with negative externalities in the form of reduced quality of life of downstream stakeholders in adjacent systems, (3) back lash by system actors precipitates market failure inviting regulatory oversight in the form of fines that tarnish trust and firm reputation, (4) with implications for system crisis and public welfare. A systematic analysis of court documents pertaining to pharmaceutical industry settlements bolstered by sales data from the company reports and Medicaid reimbursement data indicate that, for the case examined, diverse marketing practices are systematically developed with the strategic intent to insert external incentives that influence physician judgment and trigger market failure through negative externalities. Implications for marketing for a better world, systems health, pharmaceutical marketing, and suggestions for incorporating COI principles into theories of marketing for a better world conclude the paper.