By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
One of my colleagues has a saying, “Let’s get the ugly on the table,” which means, let’s talk about the real issue/s. This year, as in previous years, I’ve written a few pieces around the biopharmaceutical industry’s reputation problem (see list below).
But as our industry has found its reputation with the American people now dead last, and I and others wonder, “How is this possible,” there exist those who see things quite differently. Recently, I received an email from a reader with thoughts as to why the industry ranks where it does. So, let’s get the ugly on the table. Below is an edited email from a reader that spells out why the biopharmaceutical industry’s reputation has gotten to where it is along with suggestions for what can be done to repair it.
Thoughts on Current Negative Perceptions of the Pharma Industry
First, pharma decision makers need to address whether the public assessment of the industry is deserved, or if the result of ill-intentioned reporting on the part of the media. Clearly, if the public is simply misinformed, media campaigns on the part of the industry could turn these negative views around. On the other hand, if the industry’s poor standing in the public eye is a reflection of real failures on the part of the industry, then no amount of “feel-good” publicity campaigns will change this.
In recent years there have been a number of scandals associated with the drug industry, which due to broad and relentless media coverage, have profoundly affected the public’s opinion of the industry. These include:
- The oxycontin debacle, which goes on and on. From what I have read, the behavior of the Sacklers was absolutely despicable. If the reporting is accurate, it appears that they did everything in their power, for years on end, to addict as many people as possible, to cover their tracks, and to protect themselves from litigation. They deceived their drug reps and deluged physicians with inaccurate information. The number of deaths from prescription opioids overdoses rose steadily to 47,000 in 2017. They have already settled hundreds of millions of dollars in lawsuits and have announced their intentions to reach a blanket settlement totaling billions more. If this is all a media war against Purdue Pharma, it must have some basis in reality, otherwise the company would have successfully defended itself against this storm of litigation.
- Bad boy Martin Shkreli was convicted and sentenced to jail for wire and securities fraud when he managed a hedge fund while he also guided the pharma company Retrophin. Shkreli’s machinations caused a loss of more than $11 million to his investors over a five-year period, from 2009 to 2014. Moreover, Shkreli was in the headlines for months when he acquired the drug Daraprim and promptly slapped a 5,000 percent price increase on it. His nastiness and arrogance were legendary, and I can’t imagine that even his mother wept a tear when he headed to the slammer.
- Big Pharma has for years used the high cost of new drug development to justify the astronomical costs of their products. Yet the industry spends $19 on promotions and advertising for every $1 spent on research.
- Eli Lilly has become embroiled in a number of scandals, including ghostwriting scholarly articles about their drugs and commissioning physicians to put their names on them, as did Merck over the now pulled Vioxx. In addition, Lilly has been loudly criticized for egregious price increases for their insulin product. Priced at $137.35 per vial, it is about the same as Humalog in 2012 — 16 years after it came to market. And yet, the same product is priced in Canada at $30 (there is a lot of variation in these prices, so what I quote may not be precisely accurate). I fail to see the justification for such high runups on a drug that was discovered in the 1920s.
- And of course, Elizabeth Holmes’ behavior is so vile that it is the topic of a bestselling book, soon to be a movie with superstar Jennifer Holmes playing the Lady Macbeth of the biopharma industry. How her net worth went from $4.5 billion to zero is so extraordinary that it should qualify for some recognition in the world-wide annals of bozo financing. I would not want to turn her loose on 101 Dalmatians.
Editor’s note: Elizabeth Holmes was trying to disrupt the medical lab market, which is dominated by Quest and LabCorp. As such, it is questionable if this is linked to the biopharmaceutical industry’s reputation decline. However, it isn’t inconceivable that the majority of American people might struggle in differentiating the difference between biopharmaceutical companies and various other medically oriented businesses.
Some personal input:
A. I have a family member who is a drug rep for Novartis and has weathered the storms and done well over the years as those above and below were dumped in the trash heap. However, they seem to be in a constant state of ambivalence concerning their profession, and I believe they would leave it if not so good at it.
B. While visiting another member of my family who is an oncologist, they had to excuse themselves to attend a one-hour seminar for which they were being handsomely compensated. Drug companies pour huge sums into these promotional activities, and I can understand why it is difficult for physicians, especially those in training, to pass up such opportunities.
C. Another close relative, a type 2 diabetic, is absolutely livid concerning the cost of drugs used to treat the condition. I have no details on the agents being taken or their costs, so I cannot vouch for the validity of their claims. But this is typical response you’ll be hit with when asking ordinary people how they feel about drug costs and the industry as a whole.
I would argue that the worst bill ever passed by Congress (and this is in the face of stiff competition) was the 1985 law that legalized pharma advertising to the public. There is only one other country in the world that permits this (i.e., New Zealand), and I think this legislation has allowed biopharma to create nonexistent illnesses and convince most of the public to purchase ineffective remedies for diseases they do not have. Even former Roche Pharmaceuticals CEO, William Burns, stated publicly that direct-to-consumer ads were “the single worst decision” drug makers have ever made because of the damage done to the industry’s image.
I remember clearly the TV ad for Lipitor featuring Dr. Jarvik (who attended medical school but was never board certified and does not have a medical license), which pictured him as an authority on cardiovascular illness, which he is not. He is the engineer of a failed model of the artificial heart. The ad was played over and over again, and even used a body double to portray Jarvik exercising in a kayak. In fact, Pfizer’s claim that Lipitor was the only cholesterol-lowering agent proven to lower cardiovascular mortality was correct, yet deceptive, because it was the only drug that had ever been evaluated on this basis (at that time).
I am well aware that there are many fine, decent people in the pharma industry. I am also aware of the efforts and the failures involved in getting successful drugs through the FDA and into the marketplace. I realize pharma companies are not charitable organizations and must make a profit in order to survive. But most of the Big Pharmas have profit margins in the neighborhood of 20 percent, and their executive compensation can range into 7 figures. So, it seems they’re hardly teetering on the edge of bankruptcy. But of course, there is no agreement on how low a profit margin would need to drop before the company would conclude that the risk of huge expenditures to develop new drugs was an insufficient as an incentive, and either give up, or retreat to a new version of erectile disfunction agents, for example.
But I don’t think you’re interested in a litany of curmudgeonly complaints, but rather, some actionable recommendations.
Here’s what I suggest:
- That the pharma giants put more of their resources into clinical R&D and less into advertising. If the drugs work, then physicians will recognize the benefits and prescribe to their patients. If they don’t work, then no amount of “feel-good advertising” on the part of the industry can alter this reality.
- That the drug companies should be more open and transparent about their actual costs and how funds are allocated into the various sectors of the business. We should not need investigative reporters to spend months (or years) combing through the records and interviewing industry turncoats to have an accurate picture of how the industry allocates resources. For years there have been ongoing debates concerning the costs of developing new drugs, and these estimates go anywhere from hundreds of millions to billions per drug. Why so much variation?
- That drug companies put more money into funding academic research, including competitive grants, fellowships, endowed professorships, and other mechanisms for training and supporting scientists in university settings. I believe the record shows that pharma companies are not very good at targeting basic research, so why not subcontract it out to the academic sector to generate more long-range benefits.
- Finally, if drug companies truly want to change the public’s perception of their industry, they will have to adopt a persona that really runs against the grain of what capitalism stands for, that return on investment is the sole criterion that matters, and that the only reason for actions in the public good is to ward off the hounds of socialism. This would mean a sharp reversal of the current business model.
According to a seminar series at Harvard Business School, some industries do pursue such a route. The evidence that more businesses and their "purpose-driven managers" are investing in society comes from CEOs at several multibillion-dollar organizations, including Unilever, Nestle, Nissan, United Stationers, and Aetna — all trying to make money while also making a difference. Thousands of smaller firms are also creating change in smaller projects. I don’t see drug companies in this list, but if they’re REALLY serious about modifying their public image, this might be one place to start.
Have some thought of your own as to why biopharma is where it is, or how it can be fixed? Feel free to share in the comments section below, or do what this reader did and type them up in an email to: email@example.com.