Can the Shine be Restored to Pharma’s Tarnished Reputation Crown?

Hydro-fracturing (i.e., fracking) and tobacco have long endured societal disdain. Tolerating public abuse has become an operational strength. Images of a planet in harm’s way and bodies wracked by lung disease and cancer contribute to this widely accepted negative view. Over time, the energy and tobacco industries steeled themselves to expect no tip of the hat—rather the wag of the finger. They are regulars at congressional hearings, front-page press exposés and legal action. In response, they hunker down and their CEOs avoid public spotlight. Their mantra: “No news is good news.”

In stark contrast, pharmaceutical giants have graced the cover of Fortune’s “Most Admired” companies. Their historic achievements have been associated with extending life for people with heart ailments, cancer, diabetes and infectious diseases and their academic partners transformed into Nobel laureates. Today, the biopharmaceutical industry remains central to inventions eradicating diseases that terrify major cities and developing-world villages. Headlines speak to amazing medical inventions. We are seeing save-the-day medical solutions emerge overnight, from vaccines that battle deadly epidemics, such as Ebola and bird flu to pioneering cancer immunotherapies that extend once sharply abbreviated lives to therapies that stamp out costly hepatitis C. Surprisingly, this same life-giving industry finds itself sharing space alongside reputation bottom feeders.

Mission Impossible?

This year, the Fortune “10 Most Admired Companies in the World 2015” did not include a pharma company. The pain of being so disenfranchised has led to countless corporate affairs, marketing and policy gurus tasked to shoulder the pharma reputation problem. Can this brain trust of noted counselors make a dent in improving overall biopharma reputation? This may be a mission impossible even for the sector’s best minds. However, with a demonstrated track record of creating medical miracles, a turnaround is worth imagining.

In difficult times—under relentless criticism—people and companies exhibit a natural human tendency to “lose themselves within the crowd.” Pharmaceutical and biotechnology companies turn to their trade associations—Pharmaceutical Research and Manufacturers of America (PhRMA) and Biotechnology Industry Organization (BIO)—to carry their message of value. In the face of no-win conversations, the hope is that these trade groups will halt public and policy pushback and keep the spotlight away from any one company.

These organizations are staffed with dedicated professionals from all walks of the health sector. They perform their jobs expertly, but it is not enough. Constant public attack is like pounding surf upon stunned companies holding fast to their desire to solve humanity’s pressing need: Getting old, well.

We must ask ourselves: “Why are so many people critical of biopharma companies?” Especially if the industry’s intent is to extend and save lives? Consumers expect pharma to come up with life-saving answers. They hold the industry to a higher standard than other Fortune 500 sectors. Put aside the finger-pointing diatribe of payers, providers and policymakers for a moment. Patients are the ultimate voice in determining the industry’s future reputation standard.

What’s at the Heart of the Debate?

People with deadly illnesses are hoping and praying that research laboratories and physicians—neither of which set drug prices—will extend their lives quickly and in comfort. They are expecting payers to find a way to make these medical innovations accessible. They are looking to policymakers to find a path to encourage drug development and affordability. At the heart of the reputation debate, patients are quick to put aside judgement—they want a cure! But they also have opinions that stimulate public discourse.

One polling organization called PatientView conducts pharma corporate reputation surveys providing patient advocacy perspectives. The surveys have appeared in numerous national publications and examine views on the pharma industry and therapeutic categories. Their recent study reports that only 34% of patient groups believe large pharma companies have an excellent to good reputation. If patient support is lost, then the possibility of returning the most admired crown to its rightful owner will be gone.

According to PatientView, most patient groups responding to their 2014 survey acknowledge pharma’s innovative capabilities and the industry’s ability to ensure patient safety. They rate these qualities as “excellent” or “good.” At the same time, these patient groups do not believe that the industry is “excellent” or “good” in other core reputation-building activities, including:

  • Having a good relationship with the media
  • Providing high-quality information for patients
  • Providing access to clinical trials
  • Having a patient-centered mindset
  • Acting with integrity
  • Managing adverse news about products
  • Having ethical marketing practices
  • Providing services to patients outside its business focus
  • Being transparent in all corporate activities
  • Practicing philanthropic activities
  • Fair-pricing policies

Pharma’s Industry Behavior Is Questioned

It is expected that payers and providers will differ in opinion on pharma drug innovation price and value in which new products fit into clinical guidelines. Yet, it would be expected that patients who need medicines would stand firmly in the industry’s court. But pharmaceutical industry behavior has brought even that into question.

The August 2015 Kaiser Health Tracking Poll finds most Americans feel drug companies play a vital role in society (62%) and a sizeable minority have positive feelings for biopharma innovators (42%). At the same time, consumers note that drug costs are unreasonable (72%) and that drug companies put profits before people (74%). It’s not that consumers—patients—don’t value pharma companies, it’s that pharma’s poor reputation has made it fashionable to join the detractors. In their desire to gain easier access to innovation, 83% of patients suggest that the Federal government should be given leeway to negotiate with drug companies to improve Medicare prices. Of course, their opinion opens the door to others advocating for government involvement to keep drug costs down.

Reputation Speaks To The Future Of The Industry—And Innovation

While the trade associations will need to play a vital role in representing industry in the Beltway and state capitals, companies concerned about reputation will need to chart their own course. To thrive, leadership companies can no longer hide within the pharma pack. While patients and other stakeholders will rate the pharma industry overall, it is possible for outstanding leaders and their companies to be evaluated outside the context of their sector. To do so, executive teams must assess the business behaviors people find unacceptable and establish vision for value they wish to establish.

1. Stop hiding behind the cost of developing new molecular entities. For years, the pharmaceutical industry has explained that the price of drugs is related directly to the costs involved in their development. PhRMA states that the journey from lab to medicine chest—with no promise of success—is at least 10 years and costs exceed $1 billion. The consumer response is “Your business model is broken. Fix it.” Patients want life-enhancing therapies, but the time-worn defense of development cost without guarantee of market success no longer gains their sympathy.

2. Leaders listen to their customers. Direct-to-consumer advertising and promotional social media have a place in the marketing mix. These vehicles build disease awareness, however, they are recognized business building tools. How often do pharma C-suite executives go out to meet with patients for listening tours? Almost never. Patient advocacy consists not only of investment in therapeutic franchises, it provides insights that guide thought out C-suite decisions. CEOs must leave their closeted offices and understand the aspirations and concerns of their patient customers.

3. One price may not fit all. While drug pricing is cited often as out-of-line, probing further shows that it is pricing transparency, or how industry arrives at a price, that is troubling to consumers. Michael Rosenblatt, MD, Merck Chief Medical Officer, acknowledges in an HBR.org blog what the consumer dilemma is: “Focusing only on the cost of a medicine—without considering its health-improving or life-saving benefits, or consequent reductions in other healthcare expenses—ignores its real value. While the cost is immediate, the benefits often don’t accrue for years.” Bold companies will be proactive with pricing approaches to secure public buy-in as part of its drug introduction strategies. Alexion, the developers of a life-saving drug for an ultra-rare disease took that approach in introducing Soliris and ensured access for all patients regardless of ability to pay. Payers, providers, policymakers and patients understood this company’s decision-making process and rewarded innovation with support.

4. Be bold and do well. When Merck CEO Emeritus Dr. Roy Vagelos donated ivermectin to eradicate river blindness in developing nations, it was the critical first step in combating this infectious disease. This was the pioneering launch of global population health, in which ideas, skills and medicines transform communities. Who will be the next pharmaceutical executive to take that bold step and transform people’s lives and a company’s reputation? Instead of unleashing PhRMA to protect pricing, why not lobby for tax credits to make these far-reaching efforts possible?

Most likely, it is too late for the industry as a whole to regain its “Most Admired” reputation position. Pharma CEO decision making is uncoordinated and unpredictable. But for any one biopharma company, large or small, to capture the respect and admiration of patients and their families—that is a possible mission. Start with the patient, stay close to the patient and dedicate our efforts—the struggles and successes—to the patient. Then, the crown will be restored.

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