The pharma and biotech industries continue to face the perception of unfair drug pricing. If left unchecked the result will be an irreversible vilification of pharma as a whole. What can we do to mitigate these perceptions, and convey actual benefits?
The views expressed here are those of the author and not necessarily those of Klick.
The pharma and biotech industries continue to face a barrage of negative press and political attention based on what is perceived as unfair drug pricing. The negative sentiment has been prevalent throughout the 2016 presidential election with politicians taking aim at specific players in the pharma space who have built business models based on purchasing companies (or individual molecules) with the intent of dramatically raising prices. These practices have, in part, allowed some pharma companies to significantly outperform the S&P 500 over the past 5 years and further fueled the public perception that pharma as a whole is gouging US consumers to maximize profits. However, many companies operating in good faith are subject to arguments against current drug pricing which are fallacious.
If left unchecked with industry self-regulation of bad actors and a conscious effort to change the public discourse, the result will be an irreversible vilification of pharma as a whole. The outcome will be stronger government regulations on pricing, shorter patent cycles, and ultimately a disincentive to commercialize new medicines. We would no doubt see reduced investment into new product development, less innovation, and ultimately an impact on public health.
THE CAUSES SURROUNDING NEGATIVE SENTIMENT
The pharma industry is at a time when pricing has hit mainstream news and politics for all of the wrong reasons. It’s no surprise that recent news coverage has been dominated by ex-Turing CEO Martin Shkreli’s move to increase prices on a life saving drug, predominantly used by AIDs and cancer patients, by over 5000%. At 32 years old, Shkreli has masterminded a PR nightmare for the industry by following up the extreme price hikes with lavish personal purchases and flaunting his apparent wealth- including the purchase of a one-off Wu-Tang Clan album for $2 million followed by a public video feud with the artists of that album. When called to answer for the price hikes he evoked his Fifth Amendment rights at a congressional hearing, but not without smirking and coming to near laughter at the suggestion that many people will no longer be able to afford the life-saving treatment Turing had purchased. There have been antagonistic tweets and more horrible sound bites than anyone cares to count with events culminating in unrelated federal indictments on a number of fraud and conspiracy charges linked back to Shkreli’s hedge fund days.
No one can argue that these events lived in a vacuum and I acknowledge that Valeant is also front of mind and was present in the same congressional hearing. That said, even before anyone had heard of the childish Shkreli, pharma pricing was a loaded conversation in both Media and Politics. Hopefully Shkreli’s whirlwind will pass and responsibly-run pharmaceutical companies can re-enter the public discourse on pricing without his baggage attached to the conversations. When they do however, they will remain at a severe disadvantage with circular, pre-canned and often-illogical arguments being echoed by Media and Politicians.
Truth be told, pharma pricing has always had Public opinion constantly pushed to visceral reactions to current pricing. Ideologically, I truly believe that the American public believes that all companies have the right to make reasonable returns and that profits (to an extent), and fuel innovation by deploying more capital at finding solutions to some of our largest health issues. We are no doubt better as a society with more treatment options available and new drugs constantly being developed. If we as a population didn’t put value on these treatments, few people would be upset over pricing, which may limit access. The problem is that rehashed talking points try to sway opinions and remove us from the realities of pricing by creating slanted arguments solely created to play on emotions and cast pharma in the role of the villain. These arguments are circular- and opposing arguments are often made by the same people at different times- but the result is a lose-lose situation for pharma companies. Let’s look at the most frequently used arguments and the inherent emotions they elicit.
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