This weekly column offers opinions on the latest pharmaceutical industry news.
The pharmaceutical industry wants you to know that it’s not “getting away with murder.”
That was the accusation leveled by President Trump two weeks ago, and it stunned industry executives, who were already on the defensive after sustained and increasingly harsh criticism of drug prices that has lowered their reputation among consumers and politicians.
So the industry is trying to fight back with a new ad campaign called “GoBoldly,” which aims to convince the American public that its efforts are all about saving lives.
“This industry is the crown jewel of the American economy,” said Stephen Ubl, who heads the Pharmaceutical Research and Manufactures of America, the industry trade group that is spearheading the campaign with an extra $100 million in company membership dues. “… We have a great story to tell and we’re going to do a better job telling it.”
Good luck. This diversionary effort may have its virtues, but could also be a waste of time.
Here’s why: No matter how many times drug makers rightfully point out the positive differences their medicines make in relieving illness and prolonging lives, the increasing costs are putting these drugs out of reach for more and more people.
Just last week, a new Harris Poll reported that only 9 percent of Americans believe drug makers place more value on patients than profits; only insurers have a worse reputation overall among the various players in the health care system.
To be sure, some companies have been more egregious than others.
One notable example was Turing Pharmaceuticals and its former chief executive, Martin Shkreli, who bought an older, life-saving drug and hiked the price by 5,000 percent. He then taunted critics on social media and, while wearing a hoodie, told an industry conference his only regret was not raising the price still higher.
Ubl told the media Monday that he hopes the campaign will overhaul the industry image to reflect “fewer hoodies and more lab coats.”
But while such outliers may have tarnished the industry as a whole, pharmacies and medicine chests are filled with numerous drugs for which prices either started out high or have been rising. Some companies regularly raise prices more than once a year, and increases on list prices often exceed the inflation rate.
“To some extent, the industry was led into [its image] problem by the rogue players,” said Ira Loss of Washington Analysis, who tracks the pharmaceutical industry for investors. “But to some degree, it’s justly deserved and I don’t think there’s much they can do to change their reputation.”
Drug makers complain that harping on list prices is unfair and misleading, because the pricing system is enormously complicated and consumers generally do not pay those prices, anyway. Why? A portion of sales go to middlemen in the form of rebates that may or may not get passed on to consumers by health plans.
To bolster its contention, the industry trade group last week issued a report that found, based on list prices, companies kept 63 percent of the money spent last year on brand-name medicines. In fact, after subtracting rebates, net prices for brand-name drugs fell 0.3 percent in last year’s third quarter, even as list prices rose nearly 10 percent, according to Sector & Sovereign Research analyst Richard Evans.
It may be too late to save their reputations.
For one thing, the money trail is hard to follow because the pricing system is not transparent. Drug makers do not want to reveal actual prices for competitive reasons, making it hard to appreciate the nuances in the industry arguments. And even those companies that do limit their price hikes to, say, 9.5 percent, are taking increases that are much higher than inflation.
The industry has argued that its prices fund the research needed to find new therapies. And there have been significant advances in recent years, notably hepatitis C medicines with high cure rates and new immunotherapy medicines that are helping some patients beat back certain types of cancer.
The new ad campaign focuses on this theme, but without delving into the pricing debate and for good reason. “They’re keeping their heads down and trying to talk about the good stuff — and hope that Trump gets distracted,” said one industry veteran who works in drug development.
Ad campaigns can work, of course. The pharmaceutical industry used a marketing blitz last fall to defeat a California ballot measure that was designed to lower drug prices. So while some might argue that the money spent on the latest ad campaign could be put to better use, drug makers may see this as a good investment if they can deflect any moves by Trump that would curtail prices and their profits.
Trump, however, appears to be singling out drug makers in keeping with his populist strategy. And as long as consumers have difficulty affording their medicines, the industry is likely to remain a whipping boy, cures or no cures.
Dylan Scott contributed to this report.