Drug Sales Reel Amid Probe Into Charities. This was the headline of Jonathan Rockoff’s June 12, 2017, Wall Street Journal article that points out how sales for two U.S. “blockbuster prostate-cancer drugs” (i.e., J&J’s Zytiga and Pfizer’s Xtandi) were down (i.e., 14 and 11 percent respectively) for the first quarter from a year previous. Apparently there are two contributing factors that explain this drop in sales — a charitable-giving federal investigation, and how the companies have responded to patients in need.
Do Good Deeds = Good Business?
In 2015, federal prosecutors started to investigate charities that provide financial assistance to Medicare patients, and at least six companies (i.e., Biogen, Celgene, Gilead, J&J, Pfizer, and Valeant) have received federal subpoenas seeking information about their dealings with the charities.Drugmakers donate “hundreds of millions of dollars” a year to charities that help U.S. patients cover out-of-pocket costs for drugs. Seems like a pretty good thing right? People are struggling to pay for what they need, so companies that make what they need try to help by giving money to an intermediary to distribute as they see fit. But if you are going to give to charity, would it be good business to try to work with charities/organizations (at least a few anyways) that are well aligned to your company’s mission? Isn’t that human nature — supporting things that matter to you? As such, I am not surprised that insulin maker Novo Nordisk is a long-time partner with JDRF, a diabetes research foundation. What about Apple? Was Apple’s rise driven (at least in part) by its charitable initiative to get a computer in every school? For if you want to get a customer for life, start by capturing them during their formative years.
Industry officials, analysts, and charities agree that donations to funds that provide prostate-cancer drugs assistance have fallen off since the federal investigation began. This too is not very surprising. For any time there is the possibility of improprieties, companies, like people, tend to distance themselves from scandal, often via their wallets. But according to Sanford C. Bernstein & Co. analyst Ronny Gal, as drug companies distanced themselves from these particular charities, it did not equate to the abandonment of patients, a message seemingly lost in an era of biopharma bullying. In fact, as Gal noted, drug companies (i.e., J&J and Pfizer) gave their drugs away for free to many patients that were in need. “[And] when you give patients [a drug] for free, it comes off your sales number,” he explained. So yet once again, we find the biopharmaceutical industry in a lose-lose situation (i.e., giving to charity is bad if it also ends up helping profits, and giving away drugs to those in need is bad as it hurts profits and shareholders).
According to the Wall Street Journal article, this sales drop “offers a window into a Byzantine arrangement that has drawn criticism for increasing health-care costs by keeping patients on ever-costlier medicines.” But just as I don’t view the efforts of Apple or Novo Nordisk as being “Byzantine”, I am hopeful that the drug companies that have been subpoenaed were doing what they have a lengthy history of doing — simply trying to help those in need in an area where they have a common interest.
Where Does Biopharma Rank When It Comes To Charitable Giving?
I read with interest the 2016 Fortune article, The 20 Most Generous Companies of the Fortune 500. When I saw that the ranking was determined on cash contributions only, I fully expected biopharma to be conspicuously absent — again. This is because a few years ago I came across a similar ranking, and not one biopharmaceutical company made the top 10. Not one! However, if you read the article through to conclusion, you’d have learned that if the ranking had been determined on cash and the giving of products, then Pfizer, which had given about $3.1 billion in total that year, not only topped the list, but did so for the fourth consecutive year! So I was admittedly surprised to not only see three biopharmaceutical companies making the giving list, but the one leading the way at number one was the company that has been viciously maligned for the price of its Hepatitis C cures, Gilead Life Sciences. In fact, Gilead gave $446.7 million in cash contributions last year. That’s $146 million more than number two WalMart, a company that generates more than 10 times the annual revenue of Gilead. By the way, Merck (12) gave $132.5 million in cash, while Pfizer (17) was listed as having donated around $93.3 million.
When I worked in biopharma, I recall receiving a hard copy charitable-giving annual report. It had been put together by my employer, included a letter from the CEO, and provided a lengthy and detailed list of all the charities and dollar amounts given in the past year — and it was about as thick as a monthly issue of Life Science Leader. I wonder if companies still produce these kinds of reports to keep their employees in the know. If not, perhaps they should. For repairing the biopharmaceutical industry image will require a grassroots effort of its employees at all levels.
Pfizer’s Approach To Giving
As Pfizer has been a consistent top giver, I reached out for information on its approach to giving. The company was not only extremely gracious in getting back to me, but did so rather quickly, and to them I offer a sincere thank you. Here is just some of the information Pfizer shared about their approach to grants and giving.
I began this article with the question, “How Has Biopharma Arrived At Its Current Lose-Lose Situation?” Could it be that those of us who work for industry haven’t taken an active enough interest in defending it? Sure, we have our issues, but so do other industries. And while we can’t control every decision made at the top (e.g., how a drug is priced), we can all be better at knowing many of the good deeds our employers do. That way, the next time you show up at those annual gatherings where friends and family feel compelled to share their negative opinions on everything that’s wrong with biopharma, you are not only well informed, but prepared to not let such attacks go unchallenged.