I happened to be in Boston the day after the presidential election and decided to take an evening stroll. Walking past Beacon Hill to Boston Common, I saw wave after wave of young people joining the Boston Against Trump rally. Little did I know that this scene was playing out in cities across the U.S.
Protesters’ chants may have little to do with the pharma industry, but the rally was a stark reminder that issues voiced during the factious campaign will not soon fade. High drug prices will likely remain on the agenda, even under President-elect Trump and with the GOP holding both houses of Congress.
Recall, wrote Finn Partners’ Gil Bashe, managing partner, global health, in a note analyzing the impact of Trump’s win on this sector, that “the congressional hearings on drug pricing — driven by industry outliers such as Turing, Valeant, and Mylan — were held during Republican majority. Pricing will not go to the back burner.”
Real change seems at hand, and it could come involuntarily or voluntarily in either the price-setting or -increasing arena. For their part, pharma marketers ought to be looking forward to this new reality. Here’s why.
The rank and file are already in favor. After Bill Drummy, founder and CEO of Publicis agency Heartbeat Ideas, advocated “ethical marketing” — calling on the industry to promote drugs and devices in ways that do not preclude patients’ “ability to safely use and reasonably pay for [them]” in his talk at October’s Digital Pharma East — several audience members approached him. Their reaction, he told me, was uniformly positive. Anecdotal evidence, perhaps, but nonetheless a soft indicator of popular sentiment.
Being at the mercy of price increases is demoralizing. Marketers on both the client and agency sides tell me that whenever they hear that management has decided to pull the pricing lever once again because, say, profits did not meet expectations, their reaction is something akin to disappointment.
Pricing restraints will emphasize the marketer’s skill and creativity. What brand manager wouldn’t relish the chance to improve a product’s position with the right mix of commercial strategy, messaging and media investment, or beyond-the-pill collaboration? Discipline, not discretionary power, will change the motivation for properly incentivized marketers.
It will help bring price in line with value. “In healthcare, value is divorced from price,” said Roger Green, president and CEO of consultancy RG+A. “The best thing that can happen is that pricing and value realign. This industry can benefit from that.”
A little pricing discipline is inherently good. True, in a restraint scenario, each prescription is worth less, and industry executives maintain that profit margins enable reinvestment in innovation. Not to mention, payer rebates need to find their way back to patients. Such counterarguments speak to larger complexities. Bottom line? Lower prices will improve patient access, something to which nearly all biopharmas say they’re committed.
What will the pricing landscape look like in the coming year? We’ll soon find out. My hope is that all of us do a better job of focusing on value.
Marc Iskowitz is editor in chief of MM&M.