WASHINGTON — It is a collection of news clips that terrifies corporate executives.
“Pharma Bro” Martin Shkreli pleading the Fifth Amendment. Lawmakers scolding the CEOs of Chrysler, Ford, and General Motors for flying private jets to hearings at which they’d plead for a $25 billion government bailout. A committee chairman imploring a witness accused of financial crimes to “try an honest answer.”
It’s a pantheon of nationally televised corporate implosions that represents a worst-case — and increasingly plausible — scenario for the pharmaceutical industry Tuesday, when seven executives from major drug companies will testify before the Senate Finance Committee about the high cost of prescription medicines.
To avoid the fate of so many executives before them, the pharmaceutical companies are shelling out for lawyers and strategic communications experts who specialize in teaching unpopular corporate figures how to survive a Capitol Hill grilling.
STAT spoke with more than a dozen corporate lobbyists, lawyers, and public relations consultants who laid out the extensive preparations that go into avoiding a cable-news catastrophe. Their advice’s central themes: appear contrite and willing to work with lawmakers. Remain humble, even with senators who attack your compensation or lifestyle. And even in the face of aggressive questioning, never — never! — push back with force.
“It’s a dark and elaborate art, preparing an executive for this kind of setting,” said Matt Herrington, a partner at the Washington law firm Steptoe & Johnson whose practice involves preparing corporations for the gauntlet of Capitol Hill.
The strategy hinges on “being appropriately deferential and not a soundbite,” he added. “Do you want Lester Holt talking about you tonight?”
The CEOs and executives summoned to Capitol Hill on Tuesday are up against a daunting set of interrogators: politicians who see an opportunity to win points with frustrated constituents by publicly embarrassing drug company figureheads. For executives from seven drug companies — Merck, Pfizer, AstraZeneca, Johnson & Johnson, AbbVie, Sanofi, and Bristol-Myers Squibb — lawmaker aggression will make Tuesday a daylong public relations minefield.
“If you’re doing your job during these mock hearings, the CEO is going to get a little bit angry,” said Rick Boucher, a former Democratic congressman who now helps clients navigate congressional investigations for the D.C. firm Sidley Austin.
According to congressional aides and consultants familiar with the hearing preparations, senators from both parties plan to show little mercy in questioning “Big Pharma.” Sen. Ron Wyden (Ore.), the committee’s top Democrat, has instructed colleagues that no topic is off limits, an aide said. Democratic lawmakers are preparing salvos that center on what they see as emblems of excess: private jet travel, yearly compensation exceeding $20 million, and drug companies’ penchant for multimillion-dollar sponsorships of sporting events.
Republicans are expected to strike a softer tone. But as a group, they, too, have assigned different senators distinct lines of questioning about particularly noteworthy price increases — an effort to ensure each executive faces an appropriate grilling. Even the Republican senators, according to a GOP aide, will want a soundbite.
John Russell, who works in the public policy practice of the multinational law firm Dentons, joked that corporations facing congressional scrutiny might consider “a loss of less than 4 percent of their stock value” a success.
Hoping to fend off financial consequences — or simply to avoid public embarrassment — the seven pharma executives have likely been preparing for weeks. The drug company Sanofi retained the law firm Arnold & Porter to help prep its CEO, Olivier Brandicourt. At least one other pharmaceutical manufacturer is using WilmerHale, a firm lobbyists and corporate clients see as expert in helping companies navigate congressional investigations.
Once Congress notifies an executive that he or she will be invited to testify on Capitol Hill, teams of lobbyists, lawyers, and corporate communications consultants spring into action. Their first step, typically, is to compile a dossier profiling each of the lawmakers who will participate in the hearing.
“We’ve done investigations that resulted in a briefing book that was 2 feet high, with 100 tabs and extensive material behind every tab,” Boucher said of his practice at Sidley Austin. “We would have a team of associates working extensive hours.”
Executives are likely to have been subjected to training sessions lasting at least a day — often beginning with a slideshow detailing each member of the committee in question, and information about each member’s demeanor and legislative record.
They will spend time, too, workshopping a palatable narrative with the outside experts. In this case, consultants said, drug companies would present their company’s rationale for the price hikes that led to congressional scrutiny, then allow outside consultants to shape those complex arguments into an argument that could temper the anger of lawmakers and the public. On Tuesday, drug makers are expected to deflect some blame for high drug costs to insurers or pharmacy benefit managers, and to emphasize the “miracle” cures their companies work to create.
Drug companies will also work to develop what consultants call “island statements” — generic, philosophical, and sometimes apologetic lines that corporate executives can retreat to when taking a beating from lawmakers.
Once the outside firms have compiled lawmaker dossiers and workshopped the narrative executives hope to deliver, they subject the CEOs to “murder boards.” The mock hearings, which sometimes feature former lawmakers who grilled corporate figures during their time in Congress, entail hours and hours of a simulated hearing-room environment, during which consultants attempt to simulate the unpredictable and aggressive tone lawmakers may take in attempting to bait executives into gaffes.
The overarching goal: to ensure the preparation sessions are so brutal in tone that the hearing could not possibly be more painful.
“I honestly would be scared to death, if I were a CEO and I didn’t have that sort of support — their reputational risk is incredibly high,” said Kristina Moore, a managing director at the business advisory firm FTI Consulting and former counsel to multiple oversight committees on Capitol Hill. “If you’re going to go on a journey in the desert, you want a guide.”
Orchestrating the trainings makes for a frenetic preparation period for the lawyers, lobbyists, and public-relations gurus.
“They should be cramming like college students for an exam, putting their bosses through drills and murder boards,” said William LaForge, the author of the 2010 book “Testifying Before Congress” and a former lobbyist for the drug company Amgen. “And they’ll video them so they can see and hear themselves, which is torture, but necessary so they can see what their demeanor is.”
Russell, the Dentons lawyer who has prepared corporate clients for Capitol Hill testimony and has lobbied for drug companies including Bayer and Genentech, has suggested executives think of the experience “not so much as a public execution, but as a confessional.”
“When you walk into a confessional, you’re supposed to make an act of contrition and pledge no more,” he said. “That’s the lens I try to get folks to look through in terms of what their time in front of the committee will be like.”
Above all else, the lawyers and lobbyists involved in preparing executives for testimony highlighted the inherent difficulty of convincing Fortune 500 CEOs that they should sit quietly and accept a congressional scolding. Striking back in the face of aggressive questioning — as executives from the tobacco industry, major automakers, Wall Street firms, and drug companies have demonstrated through the years — rarely leads to anything but disaster.
“These men and women are generally used to controlling all of the oxygen in a room,” Russell said. “And in this instance, they have none. The loss of control and the failure to realize that you have to be supplicant — when you lose that, there’s a natural reaction to strike back. Once that happens, you’re done.”
Already in 2019, the pharmaceutical industry has emerged as one of Washington’s most popular punching bags for Democrats and Republicans alike. And with pharmaceutical executives on Capitol Hill for the first time in years, Tuesday is lawmakers’ best chance to paint them as out of touch with the struggles of Americans struggling to afford lifesaving medicines.
Collectively, the seven executives’ compensation is worth more than $100 million per year.
Wyden, for example, has developed a penchant for beating up on Pfizer. The senator has called out the company’s “consistent and egregious price increases” for its best-selling nerve pain drug, Lyrica, vocally objected to a deal between Pfizer and the National Institutes of Health over the arthritis drug Xeljanz, and has even accused the company of penning a “secret, sweetheart arrangement” with President Trump.
The CEOs themselves may also struggle to heed the advice of the lawyers and communications experts.
Pascal Soriot, the CEO of AstraZeneca, for example, is not known for his humility — he has complained that he is underpaid, despite earning $13 million in 2017, and boasted about his childhood penchant for fistfights. Richard Gonzalez, the CEO of AbbVie who is also set to appear Tuesday, has spent as much as $600,000 on private jet travel in a single year.
Meanwhile, the argument drug makers most frequently employ to defend high prices has fallen out of favor in Washington. Alex Azar, Trump’s health secretary and a former executive at the drug company Eli Lilly, has forcefully rejected the narrative that lowering costs will jeopardize the industry’s ability to fund research into innovative new cures.
In a recent speech, Azar cautioned drug makers to work with government to lower drug prices, or else “you can put your head in the sand and pretend change is not coming and you’ll get whatever comes at you.”
The frosty reception the executives can expect to receive from both Democrats and Republicans leaves consulting firms with a simple piece of counsel for the pharmaceutical company chiefs who will face the Tuesday-morning gauntlet, at least according to the Dentons lobbyist, Russell.
His main advice: “Take your medicine.”