by Mark KesselNature Biotechnology 2014 32[10]:983–990.
It wasn’t that long ago that the pharmaceutical industry was considered among the most respected industries and Merck the most admired corporation in the United States.
This is in sharp contrast to consumer attitudes today, when the industry’s reputation is not much better than that of the financial sector or tobacco companies. Why has an industry in the business of developing lifesaving drugs garnered such a negative reputation, and how should it go about fixing it?
Washington Irving’s Rip Van Winkle slept through the whole American Revolution. I guess I’d done some power sleeping of my own, because we now see PHARMA as among the greediest and most unscrupulous of the lot – from Paxil Study 329 to Gilead’s pricing of Sovaldi and the table from the paper in the last post in which the word criminal appears much too often. Kessel’s analysis of the reason for the change is detailed and contains a lot of food for thought. It’s there for all to read, but here’s where he starts:Big pharma and big business: To some extent, reputational decline can be attributed simply to the fact that many pharma companies are large multinational corporations that are now facing strategic issues that require an adjustment to the traditional business model. The increasing price and cost pressure, patent expirations on blockbuster drugs leading to aggressive generic competition, public policy and changes in how consumers access medicine are leading to erosion of profit margins. Big pharma, like other industries, is not immune from the pressure of having to meet Wall Street quarterly earnings expectations; indeed, today’s companies are measured on how well their stock performs and boards of directors incentivize management accordingly to meet Wall Street’s demands. The needs of patients are secondary.
Kessel makes an eloquent plea for the value of corporate reputation, and outlines changes that would, indeed, improve both the company’s image and function. But I expect most of the multinational PHARMAs already have a "workgroup" "tasked" with the same thing. GSK has Sir Andrew Witty out front carrying a banner of reform while his Chinese division is bribing physicians to prescribe their drugs. Alex Gorsky of Johnson & Johnson masterminded Risperdal®’s meteoric rise, and now an army of lawyers works to keep him out of a courtroom as they try to cut their losses in the aftermath. In the legal actions, PHARMA settles the government suits rather than allowing them to go to a jury, and later "denies any wrong-doing" – no matter what they admit in the settlement agreements. In the Civil suits, they play the legal chess in the appeal courts when they lose – much like the culture of jail-house lawyers inhabiting our crime dramas.
According to Alexander Brigham and Stefan Linssen of the consulting firm Ethisphere Institute, over the past three decades, the percentage of a company’s value attributable to tangible assets has dropped from 90% to just 25%. Other estimates also suggest that it is the intangible assets of a company [including reputation] that currently represent as much as 40–60% of a corporation’s market capitalization. Thus, a company’s reputation is among its most valuable assets.
My read is that these major pharmaceutical corporations have completed the move from being drug·discovery and drug·manufacturing companies, part of the legitimate health care effort, to being drug·selling cash·cows in the business of "doing business" [in the Bernie Maddof/Enron tradition]. I would suspect any moves they made in the reform arena would be called "brand·building" in their meetings – illusions they definitely know how to create [that should probably be followed with mumbles like at the end of the DTC ads as we watch the cured patients and colorful butterflies]. Meanwhile, here‘s the Forbes’ version of a PHARMA argument lest you’re hoping for anything but the business of "doing business."
We physicians don’t need to sit on our hands waiting for the legal system to rein in the bad behavior of pharmaceutical corporations. There are things we can do already. Like don’t see drug reps in our offices. Like ban drug reps from hospitals and from access to residents. Like ban the free lunches for residents and for doctors’ offices.
The professional societies also have a role to play. I have recommended to the American College of Neuropsychopharmacology that any corporate sustaining member that shows up on penalty tables like in the last post should be cut loose for a 5-year period – denied access to the members, that is, at official functions. Plus, if they prove to be recidivists, as many do, then they should be kicked out permanently. Pharma is going to need all the help we can give it to restore its ethical house to order.
In life most things flow down hill. A couple of weeks ago a lab was investigated for kick backs to physicians for Medicare blood work that could cost $1,000.00 per test. There will be charges, but of course this was all done to help the patient.
Today’s print version of the WSJ headlines on page one Doctors “Self-Referral” Thrives on Legal Loophole. This story covers the rise of a FISH bladder cancer test at a substantially higher cost than an older test by a group of urologist. The OIG is investigating how one lab can account for such a large number of tests nationwide along with the financial incentives for the doctors involved.
Speak to a person from a local hospital or private practice and they will tell you breathlessly how they must maintain margins, and the practice managers must be hard edged to maintain profitability.
The day of the manager interested in putting their best foot forward has gone, replaced by a very nasty person who will do anything to win. Larger corporations seem to be more adept at this practice as the blame does not fall on one person, but on groups.
Pharma sales techniques have impacted almost every aspect of our lives as sell, sell, sell is now the mantra of almost any company of any size. Ritualistic feeding is common as well as the “goody bag” for attending any meeting, pens all around.
There will be little hope of improving pharma’s image as long as people like me realize that we the tax payer will bear the cost of a new hep C drug since the majority of those who will test positive reside in jail or prison. Good business? No, because being cute creates resentment. No body likes to be taken advantage of financially.
We need to regulate pharma like any other questionable industry and remember they will always tell us “but wait there is more.”
Steve Lucas
Amen x 2…
Kessel appears to be associated with private investment and some pro bono work developing drugs to be used on endemic diseases in Africa that are not attractive to the profit motive of pharma.
He’s coming from the position of an idealist. Whatever big pharma is working on to rehabilitate its reputation, it’s to give the appearance of penitence while being ever more sneaky. They don’t have to be honest, they’ve got public relations and marketing to take care of damage control.
From http://www.sourcewatch.org/index.php?title=Pharmaceutical_Research_and_Manufacturers_of_America
In 2010, PhRMA spent $21,740,000 on lobbying costs.[18] It has 20 lobbyists on staff in 2011 [19] and had 29 in 2010.[20] PhRMA has lobbied for 22 bills in 2011[21] and lobbied for 51 bills in 2010.[22]