At Janssen, we focus our investment on research and development (R&D) to discover and develop differentiated medicines that address many of the most serious unmet medical needs of our time. After we have U.S. Food and Drug Administration approval to bring an innovative medicine to market, we invest in providing accurate, up-to-date information about the medicine to health care professionals and patients through marketing and sales activities. We are sometimes asked if these activities are necessary and how our investment in R&D compares to the amount we spend on marketing our medicines. This section of the Transparency Report directly answers these questions.
Sales and Marketing to Health Care Professionals
One way we market to physicians and other health care professionals is through visits by our sales representatives. Our sales representatives provide information about our medicines’ effectiveness, approved uses, side effects, benefits and risks. They may also raise awareness of current clinical practice standards and guidelines. In addition, we consult with health care professionals to gather information about how they are using our medicines and engage physicians to educate their colleagues about the approved uses of our medicines.
In fact, research has shown that health care professionals value information provided by pharmaceutical representatives; please refer to the box below.
Marketing to Patients and Caregivers
For consumers in the United States, marketing and promotional activities consist of educational materials we provide to help patients better understand their conditions and treatment options, as well as direct-to-consumer (DTC) advertising that provides information about our medicines.
The Social Benefit of Direct-to-Consumer Advertisements
Pharmaceutical DTC advertisements raise awareness about diseases and available treatments, may encourage people to get treatment, and may prompt more informed conversations between patients and their doctors or nurses. The time physicians have to spend with patients is limited by desk work and record-keeping,2 so it is especially important that patients have the information they need to have productive conversations with their doctors. Research shows that DTC advertising can enable these more informed conversations. In a 2010 survey among consumers:3
75-76 percent found the information they learned in DTC television ads — including benefit and risk information — “very or somewhat useful.”
33 percent of Americans reported speaking with their physicians about a condition after seeing a DTC advertisement.
Advertising and Marketing Standards that Protect Consumers
We believe acting ethically and responsibly is not only the right thing to do but also the right way to do business. We follow all relevant laws and regulations regarding the promotion of prescription drug products and submit promotional materials to the U.S. Food and Drug Administration at the time of initial publication or dissemination.
Our marketing and sales activities adhere to industry ethics standards and codes of conduct, including the PhRMA Code on Interactions with Healthcare Professionals and the Guiding Principles on Direct to Consumer Advertising about Prescription Medicines. In accordance with these guidelines, we may provide health care professionals with textbooks, medical journal articles and other educational resources, consulting-related travel, as well as modest meals if we are meeting with them during a mealtime. We do not provide physicians and health care professionals with promotional or recreational items or entertainment.
Ongoing Open Payments Disclosures
In 2010, Johnson & Johnson began voluntarily disclosing payments made to physicians by our U.S. pharmaceutical companies and posting this information to our websites. Beginning in 2013, as required by the Physician Payment Sunshine Act — passed in 2010 as a part of the Affordable Care Act — we began annually disclosing payments and items of value we provide to health care professionals to the Centers for Medicare and Medicaid Services (CMS), part of the U.S. Department of Health and Human Services. CMS posts these disclosures on an online, publicly available database, referred to as “Open Payments.”4 This data includes payments related to marketing activities. For example, all payments and items of value we provide to physicians when they are meeting with or consulting for us — such as modest meals or travel expenses — are disclosed in the Open Payments database.
The database also contains details about payments we make to physicians and teaching hospitals for their work in conducting clinical research. This work may include helping us design and conduct clinical trials. While these are not marketing activities, payments related to these activities are disclosed through the Open Payments database.
We anticipate that 2016 Open Payments data will be available through CMS on June 30, 2017. In this report we have included information on Janssen’s 2015 payments and transfers of value to physicians and other health care professionals. Importantly, research activities account for more than 60 percent of these payments.
2016 Marketing and Sales Spending
In addition to the disclosures outlined above, here we provide data about our pharmaceutical sector marketing and sales expenses as compared to our R&D expenses.
In 2016, our global pharmaceutical marketing and sales expenditures were $4.5 billion, and our global pharmaceutical R&D investment was $7 billion.5 In other words, in 2016 we spent 55 percent more on developing medicines than we did on marketing and selling them. Of the $4.5 billion, $2.6 billion were U.S. pharmaceutical marketing and sales expenditures.6 (For information on what these expenditures and investments include, please refer to the box entitled " Definitions of Marketing and Sales and R&D Expenditures" located below.)
Understanding Our Financial Statements: Selling, Marketing & Administration vs. Marketing and Sales Expenses
Public companies like Johnson & Johnson disclose detailed financial information so that the investing public can make informed judgments about a company’s performance. In our financial reporting, the marketing and sales expenses we describe above are combined with other items in a budget line item described as “Selling, Marketing and Administration” (SM&A). The SM&A figure reported in Johnson & Johnson financial documents accounts for much more than just marketing and sales expenses:
It includes administrative and overhead activities that are not related to marketing or sales — such as expenses for insurance, legal, finance, distribution and accounting functions.
It pertains to all of Johnson & Johnson, which includes medical devices, consumer products, and over-the-counter medicines, as well as pharmaceuticals.
It is global, not solely for the United States.
1. “Survey of Physicians About Pharmaceutical and Biotech Research Company Activities and Information,” KRC Research, commissioned by PhRMA, March 2011.
2. Christine Sinsky, et al., “Allocation of Physician Time in Ambulatory Practice: A Time and Motion Study in 4 Specialties,” Ann Intern Med. 165(11) (2016):753-760, doi: 10.7326/m16-0961.
3. “13th Annual National Survey: Consumer Reaction to DTC Advertising of Prescription Drugs,” Prevention Magazine, (2010).
4. Johnson & Johnson has voluntarily posted the aggregated data for our companies covered by Open Payments, as submitted to CMS on March 31, 2016. Due to the CMS data review process, there may be differences between the aggregated totals for data posted here and aggregated totals derived from currently available data on the CMS website.
5. According to Janssen internal financial accounting. While we wish to provide as much detail to our stakeholders and consumers about our investments in R&D as possible, global R&D investment cannot be segmented by region. The R&D activities we undertake around the world collectively contribute to product development for the benefit of all consumers, regardless of market.
6. The financial figures in this section have not been audited and should not be read in conjunction with our filings with the Securities and Exchange Commission.
8. According to Janssen internal financial accounting.