Pricing

Facing a deepening political crisis, PhRMA launches a major counterattack against its legion of critics

Under the most heated political attack the drug industry has ever faced on Capitol Hill, the lobbying powerhouse PhRMA is rolling out its most ambitious public relations campaign in its history.

Just months after raising dues to generate an extra $100 million for its war chest, PhRMA is reportedly spending tens of millions of dollars on a new campaign aimed to win hearts and minds in the growing battle over drug prices. PhRMA’s campaign will initially hit hard on the scientific advances that are being made, spotlighting big advances in R&D to the general public. And then they want to sponsor more discussions in public forums while pursuing their legislative agenda.

The campaign has been in the works for months now. But it comes just days after President Donald Trump went on a tirade against the industry, saying that drug makers had been “getting away with murder” on pricing and vowing to rein in costs. Later, Trump explained that he planned to allow Medicare to directly negotiate drug prices for the first time, putting Big Pharma on notice that it would soon lose one of its most prized political accomplishments.

Hillary Clinton had more criticisms for pharma during the presidential campaign, but Trump has made up on any lost ground, adopting what is likely to be a widely popular stance on drug prices.

The most explosive element in drug prices, and the most potent politically, has focused on companies like Turing, Mylan, Valeant and Mallinckrodt, which all jacked the price on old meds, unfettered by any laws or regulations that might prohibit price gouging. But there has also been considerable criticism of the industry’s widespread practice of pushing annual price hikes on their portfolio drugs. And the price of many new drugs often reach well into six figures, adding to the general discontent that could spawn legislation that would have a wide influence on all biopharma companies.

PhRMA CEO Stephen Ubl touched on the upcoming campaign at a panel discussion I hosted at JP Morgan a few weeks ago. He said:

At PhRMA and within the industry, we’re focused on two things. First, we’re going to launch a very ambitious, comprehensive, national communications and public affairs effort. One component will be advertisements that are focused on the exciting breakthroughs in science that we’ve not been, again, reporting on in my view. But more importantly, it’s not just about ads. The effort is going to be putting the industry in a leadership role and convening stakeholders to talk about how we move the system from volume to value and what our role in that is. We need to come to the table with solutions, whether they’re FDA reforms, barriers to innovative contracting, consumer-oriented transparency.

One of the major themes in this campaign is expected to be the extraordinary cost involved in drug development as cheap generics continue to limit the amount of money spent on drugs in general. Pfizer has taken that stance already. But even with a high level of bipartisan support in Congress, evident in the recent passage of the 21st Century Cures Act, PhRMA and pharma face a big and growing deficit of public trust.

This new campaign is likely to elicit comparisons to the “Harry and Louise” campaign that the health insurance lobby used to help beat back threatening legislation. But it will come at many times the cost of that $20 million effort.

Drug prices may actually only account for a fraction of the healthcare dollar, but there’s no question it’s a high-profile item for the public. A few days ago The Harris Poll found that only 9% of Americans believe that drug companies put patients ahead of profits.

That’s a dangerously weak position to be in.

“There are undeniable reputational risks for pharmaceutical and health insurance companies – more so than other parts of the health care ecosystem,” said Wendy Salomon, vice president of reputation management and public affairs at Nielsen. “Reputation matters to patients, care providers, investors, employees, and potential hires. Positive reputations can pave the way in times of crisis, in times of transition – and when it’s critical to have a seat at the policy-setting table.”



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