Industry

The implications of an industry with a poor public image can be highly detrimental and are often very difficult to overcome. One such implication of this is that it can provide various statutory bodies, including the government, with an excuse to take action, be it budgetary cutbacks, or legislative changes. The obvious example is the tobacco industry.

It’s possible however, for an industry to overcome these perceptions. Take the forestry industry, who successfully managed to change public perceptions through an effective, expensive and ongoing advertising strategy started more than 10 years ago – the challenge is identifying the best approach.

It will be fascinating to see the success, or otherwise, of the current attempt by the pharmaceutical industry to address its own negative branding as ‘big pharma’, despite being an industry that develops and produces products that save lives and prevent major illness. 

The fuel of these negative perceptions is the notion of “profits from disease” – an industry not focused on patients, but on profits and an ethic-less pursuit for greater margins.  One example of this is the inappropriate behavior visibly demonstrated with prescribers though hosting showboats for doctors on Sydney harbor designed to sell their products (among other incentive schemes).

Probably one of  the most spectacular own goals of any industry was when the pharma industry collectively sued Nelson Mandela and the South African Government over claims they were breaking patent to obtain access to cheap generic HIV drugs.  Suing the world’s most admired person is never going to win much public sympathy, particularly on an arcane subject such as intellectual property ownership.

The negative perceptions of the industry have contributed to the willingness of politicians to take measures to reduce budgetary expenditure on drugs, for example, through the encouragement of a greater generic uptake to spending constraints on the Pharmaceutical Benefits Scheme (PBS).

Changing perceptions, and in turn, changing government attitudes to an industry, requires a long-term approach fraught with risk – it only takes one industry “backslider” to engage in inappropriate behavior to ‘tar the whole industry with the same brush’. This can subsequently transform the once genuine concerns of an industry, into spin, and not substance.  Social media only increases this risk.

What’s fascinating is the approach by one of the major pharmaceutical companies, GlaxoSmithKline (GSK) under its inspirational CEO Sir Andrew Witty to change the perception, not only of his company, but the industry, and to also change the nature of interactions with government.

In a recent speech to the Medicines Australia Annual Parliamentary Dinner, Sir Andrew admitted that the past poor image of the industry had by and large been a result of its own poor efforts.  This included failures to be transparent in areas where the public demanded more information, such as clinical trials and the nature of interactions with, and payments to, health care professionals.  He went on to say that the industry’s focus on “profit” and failure to acknowledge the needs of the developing countries to access advanced medicines had also been particularly damaging.

“We need to adopt a new mindset.  We in big pharma should never take our right to exist; our business model is not written into any country’s constitution.  So we should be turning up to work every day with the mindset that we are earning the right to exist.  We are earning it by meeting the expectations of society.  When you start to think like this you see the world differently.”  (Harvard Feb 2009)

GSK and many other pharma companies now make information on all clinical trials available on the web as well as looking at ways to reduce the cost of developing new drugs and therefore their prices.  Glaxo is leading the industry in making public the nature of its interactions with doctors etc. and now prices a number of drugs to treat diseases of the developing world at cost price – a huge change.

In recognition of the pressures on health budgets from the expenditure on pharmaceuticals and vaccines, Glaxo now initiates at an early clinical stage discussions with payers around the value of the proposed treatments and potential pricing implications. 

Sir Andrew noted that other major players are also taking a similar approach and highlighted the recent signing by the CEOs of the 13 major pharmaceutical companies of an agreement with the World Health Organisation (WHO) to commit to actions to eliminate a number of diseases of the developing world by 2020.

Whilst noting the industry is not perfect, Sir Andrew highlighted that government now needed to recognise the changing nature of the industry and its willingness to engage in a new level of dialogue on pricing and access. The industry is now being subjected to an unprecedented level of ad hoc pricing reductions across Europe and many other developed countries in response to the GFC.  He noted that some of the expectations upon industry of its ability to respond to changing government short term requirements were unrealistic given the long timeframes required for developing new treatments.

Rather than having these changes simply imposed from above in response to the “annual budgetary crisis” there was now more scope for a mature level of discussion. He highlighted the advantages of the approach adopted in Australia where the MoU between the industry and the Government provided a relatively predictable mechanism for the industry to have discussions with the Government on key industry issues whilst also providing the Government with savings. Speaking elsewhere, Sir Andrew had noted that pharmaceuticals comprise “only 8 per cent to 10 per cent of the total healthcare bill and what is being lost in this stampede for cost cuts is any kind of strategic thoughtfulness.”

What is impressive about the approach adopted by GSK has been its recognition of not only the importance of Government but its budgetary pressures.  Rather than conducting a slanging match where most leverage lies in the government’s hands as the principle funder, it has adopted an approach of seeking engagement and long term discussions.

From a GSK perspective the company has gained “first mover” advantages as being a company that it is worth engaging with and that it is offering substance not spin.  It is also leading the efforts of the rest of industry although it is doubtful that all companies necessarily subscribe to the same philosophy and approach of Glaxo.

With a promising pipeline of 30 new products in development at a cost of $4 billion achieving a new approach in its dealings with Government in a challenging environment will be critical to Glaxo’s commercial success.

Its approach has lessons for all those companies subject to extensive government oversight and regulation one can either fight with government or work with government.  Where the government is the single payer and delays can cost millions, the answer would appear pretty simple and it is surprising that it has taken so long for this approach to be adopted.

-AG
CPR Communications & Public Relations

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