You had to love the photo of a baseball catcher falling, heels over head, which CNBC ran on its site accompanying a story about pharma brand Valeant ( PRN, Mar 28), whose stock fell 5%+ May 12. The decline was based on media reports that Valeant welched on a promise to Congress to lower prices on drugs. In February the embattled company told lawmakers it would cut as much as 30% off prices for two critical drugs. The Canadian company was on the Hill explaining the huge price increases it and a few other pharma brands had enacted.
Sure, you had to love the photo, except if you’re Valeant, a Valeant shareholder (the stock is trading in the 20s today, down from $260 over the summer) or a member of the pharmaceutical industry.
Like Turing Pharmaceuticals’ enfant terrible Martin Shkreli ( PRN, Oct 12, 2015), who made headlines last year for increasing the price of an AIDS drug more than 5000%, Valeant has helped put a negative spotlight on pharma. That Valeant’s price rises weren’t in Shkreli’s league or that plenty of pharma brands were lumped in with them was immaterial. As Gil Bashe, managing partner, health, Finn Partners wrote in these pages regarding pharma’s grilling on Capitol Hill, “The congressional paintbrush of alleged greed spares no one” ( PRN, Dec 14, 2015).
The declining stature of the pharma sector is the subject of a new report from APCO Worldwide, State of the Biopharmaceutical Industry. Made available first to PR News, the study examines reputation based on “the extent to which the industry meets the expectations of its stakeholders,” says Chrystine Zacherau, APCO’s senior director, health care research. Some 1500 health care stakeholders in 4 groups were polled: opinion leaders; policy leaders; providers; and payers. The sector’s reputation score fell “significantly” with all 4, providers the most.
That the study found “an overall decline” in reputation is little surprise. More interesting is the study’s ranking of pharma’s pain points: pricing is at the bottom of the list, surprisingly.
The top weakness is pharma’s external focus, or “how the industry acts with its stakeholders.” This includes how it functions as an advocate and partner for patients, patient groups and healthcare providers. Next is ethical engagement with regulators and its responsiveness to government. Last is responsible marketing (pricing transparency and controlling costs). To get well, pharma should attack these weaknesses, APCO says.
On the upside, there is much admiration for pharma’s innovation, concern for safety and high-quality products. Those perceptions are “fairly fixed,” the study says. Yet they are “softening” in the current climate as “good will among certain stakeholders is drying up,” Zacherau adds.
In sum, it’s not so much what pharma does, but how it engages.
Here’s hoping the sector will take its medicine.
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