Photo credit: Gage Skidmore/Creative Commons
In normal times for pharma, reputation and policy travel in separate lanes The former tends to be minded independently of concerns related to the latter; the misdeeds of a given company rarely prompt pushback that weighs on the entire industry.
But these aren’t normal times for pharma. In the wake of yet another year’s worth of public shaming and spectacle, the pharma and healthcare businesses are running low on friends in high places. Donald Trump and Hillary Clinton didn’t agree on much during the race to the bottom that was the 2016 presidential campaign, but both made it clear that they were not big pharma fans.
While one might ordinarily dismiss campaign calls to bring pharma to heel as mere election-year bluster, the attacks had the industry spooked even before the unexpected events of Election Day. With Trump set to enter office next month, all bets are off. As it became clear that his early election-night momentum was no mirage, pharma futures shot upward.
Some of the changes that might have taken longer to effect under a Clinton administration — ones related to repatriation and tax rate — could be addressed more quickly with Republicans controlling Congress and the White House. The M&A environment should be kinder to pharma than it would otherwise have been. And whatever is to become of the Affordable Care Act, it’s not going to drag on for long.
But would the public push back in case Trump does decide to press the industry for change? It ain’t likely: In Gallup’s annual survey of opinions about U.S. business sectors, 51% of respondents said they have either a “very negative” or “somewhat negative” view of the business versus 28% with a “very positive” or “somewhat positive” view. Pharma placed second to last among the sectors considered, above only the federal government.
Translation: If Trump decides to go after pharma, politicians aren’t likely to receive too many “How can you do this? Think about the children!” notes from aggrieved constituents. Along those lines, if he makes it a priority to “fix” drug costs, he’ll have a formidable amount of public support.
REFURBISHING PHARMA’S REPUTATION
That’s why nearly every discussion about pharma policy in 2017 and beyond veers into a broader conversation about the industry’s lowly reputation and the best way to go about resuscitating it. “The year 2016 was one of self-inflicted wounds,” says Mike Luby, president and CEO of the BioPharma Alliance. “A small number of obnoxious and irresponsible decisions have put the industry in a very bad position.”
Much of the industry’s response to date has been oriented around attempting to “tell its story,” the tried-and-true tactic for entities or individuals who find themselves under siege and believe they’ve been wronged. Pharma does have a positive tale to tell: It has developed drugs that cure diseases or render life-threatening ones more manageable. But the audiences pharma hopes to charm with its industry-approved stories aren’t listening.
That frustrates Sharon Callahan, CEO of TBWAWorldHealth and chair of the Coalition for Healthcare Communication’s executive committee.
“If we argued our [pricing] case in a court of law, we’d win,” Callahan points out. “But facts and figures are not winning the hearts and minds of the public. We’re picking up the R&D burden for the rest of the world. We’re taking deadly diseases and [reducing them to] manageable chronic conditions. Somehow, it barely matters.”
That’s why she and others who make their hay at the intersection of marketing and policy believe pharma’s 2017 priority has to be restoring the industry’s reputation. This should prove easier now that the presidential election year is behind us, but the industry’s boosters realize it will be an uphill slog. Although, with watchdogs now asking payers for clarity on how they account for rebates, they’re now taking some of the heat for high prices off pharma’s shoulders.
Assuming continued short attention spans among the audiences pharma wants and needs to win back, don’t look for many more of the long-winded explainers the industry issued during its last tell-our-story blitz. Instead, expect that companies will take matters into their own hands.
The current industry poster boy for reputation reclamation is, without question, Allergan chairman, CEO, and president Brent Saunders. In Our Social Contract with Patients, a post published on Allergan’s corporate blog in September, he didn’t merely talk around the issue: He went on the record as publicly as any pharma CEO has in recent memory.
“What Saunders did was huge and unconventional,” Luby says. “You almost never see that kind of transparency in terms of, ‘Here are our views on pricing and this is what we promise to do going forward.’ Senior executives at major [pharma] companies rarely criticize their peers. He may not have named names, but it was as close to a criticism of other companies and their practices as I’ve seen.”
Callahan agrees, adding, “The CEOs are the ones who can tell the real, authentic stories. We need more of that.”
Saunders, for his part, doesn’t seem to regard his post as bold or unprecedented. He characterizes the feedback he received on the Social Contract as “very encouraging” and notes that industry peers have largely been “supportive.” At the same time, he doesn’t necessarily believe that others will rush to follow suit.
Industry leaders also believe that pharma needs to take credit where credit is due. With more than a hint of frustration in her voice, Callahan notes that other organizations within the healthcare ecosystem have been less than shy about honking their own horns, often at pharma’s ultimate expense.
“Immuno-therapies are incredible, but it’s the cancer hospitals who are out there saying, ‘We have immuno-therapy’ and getting the credit for it from patients, which is absurd. They weren’t the ones who spent a zillion dollars developing them,” Callahan notes. “Advocacy organizations like Susan G. Komen do wonderful work, but they’re not the ones developing new medicines for breast cancer.”
Callahan similarly worries about the groupthink that informs many pronouncements by industry bodies. “We’re not a business that sings from the same songbook,” she continues. “When you have a committee decision that’s made by so many people who have their own interests, you always wind up with the lowest common denominator. That doesn’t help anybody.”
Luby agrees, especially within the context of price gouging and other deplorable conduct. “Leadership of these companies has to be unafraid to call out bad behavior. They have to say, ‘This is wrong,’ rather than do what pharma always does, which is give a quick ‘no comment,’” he says. Similar to how BIO gave Turing the boot for its egregious behavior, the consultant wants to see more policing by industry trade groups. “Some of the companies that have done bad things were or are on the board of PhRMA. To not call out those actions is to implicitly endorse them.”
YOUR FRIEND, THE FDA
Beyond worries about the industry’s rep and the chilling effect it could have on policy posturing going forward, the top-of-mind concern for many policy minders is the FDA’s leadership team. Unlike in years past, though, just about everybody is content with the status quo. The only major fear is that Dr. Robert Califf, who was appointed as FDA commissioner in early 2016, could be nudged out by the Trump administration.
This seems somewhat unlikely. Democrats and Republicans alike have rhapsodized about Califf’s qualifications, with academics, scientists, economists, and marketers describing him as the most qualified individual ever to have held the job.
“Getting somebody of his stature into the commissioner’s chair was a major coup, frankly,” says Peter Pitts, president and cofounder of the Center for Medicine in the Public Interest and a former FDA associate commissioner for external relations. “There was no learning curve. From day one, he hasn’t been afraid to make tough decisions.”
Under Califf, the FDA has addressed many of the industry’s longest-standing complaints. It has pursued an exceedingly patient-friendly agenda, especially compared to prior regimes. And the FDA is now prodding the industry to pick up the pace. Those who have pressed for more consideration of real-world evidence are likely to get their wish: Most pundits expect the FDA to start considering far more data collected post-approval — not just to update safety profiles, but also for secondary indications.
“The FDA sees a need to understand the entire lifecycle of all the products it regulates, not just to serve as the policeman for bad drugs and keep an eye on new ones,” Pitts adds. “That’s going to be [Califf’s] legacy — the use of data that’s collected post-approval for regulation-making. He sees the value in using real-world evidence versus just relying on randomized trials well before a product or device ever goes out into the world.”
Observers are far less certain about the upcoming arc of most other things FDA-related. Noting how contentious biosimilars have proved — not merely from a regulatory, but also a political and constitutional perspective — they hope the agency’s long-awaited guidance puts to rest any number of concerns. Chief among them: biosimilar nomenclature.
“What’s interesting to me is the players,” Luby says. “Only a handful of major companies have invested in generics over the years. With biosimilars, you’re seeing big investments from big, research-driven, proud-of-their-science companies, who have really embraced them. It’ll be interesting how that plays out.”
As for the delivery of more in-depth guidance on off-label communication or social media, both of which remain high on the wish lists of in-house and agency marketers, FDA watchers expect another year’s worth of vexing delays. In regard to off-label communication, they don’t understand what’s taking the agency so long.
“It’s Waiting for Godot, but somehow even worse,” Pitts deadpans. “The real issue now is what we saw with Amarin. If the FDA doesn’t act, the courts will. As an industry, we don’t want a judge to determine what’s legitimate and what’s not legitimate when it comes to the sharing of highly scientific information.”
Provisions within the 21st Century Cures Act would codify some of what’s been thrashed out in the courts with regard to communicating off-label information, but analysts don’t yet see a clear path to passage. The FDA allowed views on both sides of the issue to be aired at a public two-day hearing in November but it is unclear whether the agency will issue guidance on the issue.
As for the possibility of more or better-defined rules of the road for social media, marketers have long since passed the point of exasperation. In the absence of further FDA guidance, cautious clients have little interest in venturing deeper into the social media wilds. That leaves them frustratingly absent from online conversations in which, ideally, they’d actively participate to the likely benefit of patients and caregivers.
One senses that most marketers have more or less given up hope. “Whenever [the FDA] says they’re going to give us guidance, it arrives a year late,” Callahan shrugs. “So in social media now, brands and therapies are getting defined by people who don’t have the experience and expertise that [industry people] do. Beyond the obvious ones, we still don’t know exactly what constitutes an adverse event. How liable are we for reporting AEs that we don’t know are out there? Who knows?”
DEDUCTIONS, PDUFA, AND MORE
And then there are the policy-related issues that have burbled beneath the surface for the past few years, which may or may not rise anew when the Trump administration takes control. John Kamp, executive director of the Coalition for Healthcare Communication and consulting counsel at law firm Wiley Rein, wonders whether anti-pharma sentiment might reappear in the form of changes to tax policy. For years Kamp has worried about the possibility that, in its misguided zeal to regulate the DTC advertising of pharma products, Congress would limit or eliminate the tax deductibility of marketing expenses. Never mind that DTC ads represent only a fraction of companies’ marketing spend — threatening that deduction remains a sure-fire way to get pharma’s attention.
Pitts seems less concerned: “DTC advertising is always on somebody’s hit list. Everybody knows that eradicating DTC isn’t going to affect the price of pharmaceuticals by 10 cents. Taking away the deduction is just a way to try to make pharma stop doing DTC.”
And in the other corner there’s the politically weakened, but still standing House Speaker Paul Ryan, whose proposal, A Better Way, would reduce the tax rate for corporate payers to 15%. While pharma companies — especially those with large sums of cash parked overseas — would welcome any such cuts, Kamp cautions that they might come at a price.
“In order to get to 15%, a lot of tax deductions that are pretty popular would have to be on the chopping block,” Kamp points out. “You have to think that the marketing tax deduction could potentially be one of them.”
As for sleeper issues, FCC chairman Tom Wheeler has made some noise in recent months about requiring all internet publishers to mandate that all behavioral advertising be opt-in (currently, opt-in is required only for data that is personally identifiable). It goes without saying that such a change would hit pharma hard.
While Clinton was publicly supportive of Philadelphia’s push to enact a so-called soda tax, it’s not as likely that a Trump administration will press the case for doing so, especially on a national level. Might it attempt to incentivize “healthy lifestyles” in a more aggressive manner than before? Probably not. But should either eventuality come to pass, expect pharma’s reaction to straddle the line between cautiously supportive to bemused.
“Even though it’s only sort of related, it’s hard to think about it in terms other than how unfairly we’re treated,” Callahan says. “There are a lot fewer consumer brands than pharma ones, and they’re not being asked to scan the entirety of the internet every time somebody says he gained 40 pounds by drinking Coca-Cola 10 times a day his entire life.”
As if all this weren’t enough, the existing legislative authority for PDUFA expires in September. The question isn’t whether PDUFA will be reupped. It will be because it has to be. The problem is that when a measure absolutely, positively has to pass, it becomes what Kamp and his fellow policy wonks call a “Christmas tree.”
“Every person in Congress is going to want to put an ornament on it,” Kamp says. “How that will play out is anyone’s guess, but it’s something to watch carefully.”