With ‘Cutting Corners’ Going North, Pharma Reputation Dives South

Posted on January 15, 2018 by Tapan Ray

Just a few months ago, on October 24, 2017, ‘New Jersey Law Journal’ came out with an eye-catching headline – “Sanofi Set to Pay $ 61M Settlement in Antitrust Suit Over Vaccine Bundling.” The suit says: “Sanofi-Pasteur allegedly suppressed competition for its pediatric meningococcal vaccine, Menactra, by charging physicians and hospitals up to 35 percent more for its product, unless they agreed to buy Sanofi’s pediatric vaccines exclusively. Sanofi-Pasteur is the vaccines division of French drug manufacturer Sanofi.”

Nevertheless, a statement from the company said: “Despite Sanofi’s strong defenses, Sanofi recognizes that continued litigation is likely to be extraordinarily expensive and time-consuming and thus has agreed to enter into this Settlement Agreement to avoid the further expense, inconvenience, risk and distraction of burdensome and protracted litigation. Sanofi is finally putting to rest this case by obtaining complete dismissal of the action and a release by settlement class members of all released claims.”

When such incidences – of various scales and dimensions, continue being reported by both the global and local media, over a long period of time, one can fathom the potential of their cumulative impact on public and other stakeholders. Severely dented image and reputation of pharma, in general, before the eyes of so many, across the world, is a testimony to this phenomenon. Considering these as ‘cutting corners’ syndromes, I shall discuss in this article, how fast is pharma reputation diving South, with incidences of ‘cutting corners’ keep going North.

‘Cutting Corners’:

The Oxford dictionary defines ‘cutting corners’ as: ‘Doing something perfunctorily so as to save time or money’. Putting it in the context, I reckon, legally or ethically questionable actions with a deliberate intent of making quick profits, if not profiteering, can be termed as ‘cutting corners’ or business malpractices.

‘Cutting Corners’ going North:

This is no way a recent phenomenon. Gradually increasing number of new reports on pharma’s alleged malpractices are not uncommon, either. On the contrary, these keep coming rather too frequently – baffling many industry watchers and its well-wishers, for different reasons.

The details of 20 largest settlements in this area reached between the United States Department of Justice and various pharmaceutical companies from 1991 to 2012, as available from Wikipedia, provide a glimpse to its magnitude and dimension. The settlement amount reportedly includes both the civil (False Claims Act) settlement and criminal fine. Glaxo’s US$ 3 billion settlement is apparently one of the largest civil, False Claims Act settlement on the record, and Pfizer’s US$ 2.3 billion settlement includes a record-breaking US$ 1.3 billion criminal fine. A federal court also recognized all off-label promotion as a violation of the False Claims Act, leading to a US$ 430 million settlement during that period, as this report highlights.

In one of my articles, titled ‘Big Pharma Receives Another Body Blow: Would Indian Slumber End Now?’, published in this blog on May 19, 2014, I quoted a few more examples from 2013 and 2014, as well. A few of these are as follows:

In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder.

Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofi and convicted two of its former employees on bribery charges.

In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.

Pharma reputation dives South:

That pharma reputation is diving south, is well captured in the ‘Business and Industry Sector Ratings’ by Gallup, dated August 2-7, 2017. According to this public rating, the top 5 and bottom 5 industries came up as follows:

Top 5:

Industry	Total Positive %	Neutral %	Total Negative %	*Net positive or negative %
Computer	75	15	8	+67
Restaurant	72	21	7	+65
Farming and agriculture	70	17	12	+58
Grocery	60	23	17	+43
Internet	59	21	18	+41

The bottom 5, including the federal government:

Industry	Total Positive %	Neutral %	Total Negative %	*Net positive or negative %
Airline	41	20	35	+6
Oil and gas	38	21	40	-2
Healthcare	38	18	45	-7
Pharmaceutical	33	16	50	-17
Federal Govt.	29	19	52	-23

*Net Positive is % Positive minus % negative (in percentage points)

Image rejuvenation campaign not yielding results:

Arguably, the richest and the most powerful pharma industry lobby group in the largest pharmaceutical market of the world, is incurring a mind-boggling sum of expenditure to mend the severely dented collective reputation and image of its members.

Vindicating this point, a January 18, 2017 media report articulated that a major pharma industry lobby group – PhRMA, is gearing up for a new image building campaign by spending in the “tens of millions” each year to drum up support for the reputationally challenged pharma industry. Such initiatives by PhRMA, as I understand, are not totally new, but rather ongoing. Be that as it may, as the Gallup survey confirms, pharma reputation keeps diving South, unabated.

Mending pharma’s reputation surfaces as one of the top concerns of the pharma industry. It, therefore, demands commensurate priority in working out a meaningful strategic plan, and its effective implementation on the ground, collectively. More so, when the POTUS – Donald Trump, has also emerged as a vocal pharma critic. He has already proclaimed that drug companies “are getting away with murder,” – as the above media report highlights.

Where is this campaign going off the mark?

On this subject, an article of September 5, 2017, published by Ars Technica – a technology news publication aptly epitomized, what is happening today with these campaigns, against what should have happened, instead. The column carries a headline ‘Big Pharma hopes research spending – not reasonable pricing – will improve image’.

The columnist wrote: “To scrub down their filthy reputations, drug makers could try lowering prices, a public mea culpa, or pledging to make pricing and marketing more responsible and transparent. But they seem to have taken a different strategy.” On this score, a relevant example, out of several others, was of Biogen introducing a drug in 2016, for a rare spine disorder and priced it at an eye-popping US$ 750,000 for the first years’ worth of treatment.

In pharma image revamp campaign, the focus on R&D spending or drug innovation, including blatant self-serving demands, such as strictest product patent and data exclusivity provisions, is rather overwhelming. It is understandable that all this fits in well with various pharma lobby group’s mission and mandate, but is unlikely to deliver what consumers would consider good behavior on the part of drug companies.

Is Indian pharma out of this loop?

The answer to this question is an emphatic – ‘No’. Alleged ‘dubious product quality’ related ongoing saga, is known today by all concerned. This had often culminated into US-FDA import bans of many drugs, manufactured by several Indian drug manufacturers – starting from the very top. Nonetheless, that’s not ‘the all’ or ‘end all’ in the ballgame of ‘cutting corners’ in India, as I explained above.

On September 26, 2017, a media report flashed: ‘The Income Tax (IT) investigation wing claims to have unearthed a nexus between a leading pharmaceutical company and doctors, and the evidence showing payments running into Crores to the latter for prescribing the company’s medicines.’

Close on the heels of ‘compromised drug quality standard’, such malpractices come as a double whammy for patients. But, the saga continues. In my article, titled ‘Healthcare in India And Hierarchy of Needs’, published in this blog on November 06, 2017, I mentioned about the October 31, 2017 public notice of the State Attorney General (AG) of Connecticut. The notice cited several instances of alleged drug price fixing in the United States. Interestingly, this lawsuit includes name of several large Indian companies, such as Dr. Reddy’s Laboratories, Emcure, Glenmark, Sun Pharma, and Zydus Pharma. The expanded complaint also names two individual defendants, one among them is the promoter, the chief executive officer and managing director of a large Indian pharma manufacturer.

Further, as I wrote before, the Maharashtra government’s recent announcement on enactment of a new law called the “Cut practices in Medical Services Act, 2017”, casts a darker shadow, not just on the doctors’ reputation, but also over the health care industry, in general, including pharma.

Today’s patients are more informed:

In today’s world, wider access to the Internet for a large number of global population has a profound implication in every sphere of life. News, discussions, opinions, comments and a plethora of other information on various industries, including pharma, are available from different credible websites, just as anything else.

Additionally, the social media, collectively, have made exchanges and interpretations of such information within various groups and communities, as fast as these could be. Just as many other different things, wrongdoings or malpractices, if any, of various industries, also get quickly captured and shared by the Netizen with ease and élan. These include incidences of ‘cutting corners’ by constituents of the pharma industry too.

Conclusion:

The Public Relationship campaigns of pharma lobby groups, with a hope to bridging the industry’s ‘trust deficit’, have been reported from the United States and other countries. However, any such campaign for the pharma industry in India hasn’t arrested my attention, as yet.

It’s beyond any reasonable doubt or debate that the pharma industry, in general, has saved and is still instrumental in saving more lives, in every nook and corner of the world. Ironically, the same industry, for its own deeds prompted mostly by the self-serving needs, has been suffering a massive collateral damage.

The industry’s long unblemished image and reputation have been severely tarnished, requiring rejuvenation with an inclusive approach. This may call for a mindset, at least, nearer to the same of George W. Merck – the legendary President and Chairman Merck & Co., Inc. He articulated a vision – “Medicine Is For The Patient, Not For The Profits”, and practiced it religiously. In today’s context, this may sound rather utopian in letters, but surely not in its spirit… be that as it may….

Pharma lobby groups hope to reverse the current trend by focusing only on R&D spending, drug innovation and strictest patent protection and data exclusivity ecosystem is apparently a non-starter. That ongoing multi-million-dollar pharma image revamp campaigns haven’t yet captured any tangible positive outcomes – not even in the United States, is possibly a testimony to this fact.

The status quo is expected to continue. More so, when ‘reasonable pricing’ of drugs is one of the top most demands of patients, patient groups and even many governments – and that’s exactly where the buck stops in pharma business.

In my view, pharma reputation restoration process isn’t merely a one-sided communication issue, as it appears today. A strategic blue print of this critical industry need, deserves to be drawn on a much broader canvass with a patient-serving mindset, instead of just a self-serving one. Otherwise, with incidences of ‘cutting corners’ going North, pharma reputation will keep diving South… till it finds its very bottom.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Pharma ‘To Endeavor More To Be What It Desires To Appear’

Posted on August 21, 2017 by Tapan Ray

Reputation is one of the most fundamental requirements for long-term sustainability of any business, without facing too much of avoidable distraction, or even a tough headwind from any hostile business environment. This fact is, of course, no-brainer. We all know it, yet continue faltering – often not so very infrequently.

Before proceeding further, let me recapitulate, how has the Oxford Dictionary defined reputation? It says, reputation is ‘the beliefs or opinions that are generally held about someone or something.’ Or in other words, it is ‘a widespread belief that someone or something has a particular characteristic.’

The subsequent logical question then arises – how to gain reputation? Again, this was very aptly captured long ago by none other than Socrates, when he said: ‘The way to gain a good reputation is to endeavor to be what you desire to appear.’

Taking a leaf from this quote, in today’s article, I shall focus on whether pharma is making enough endeavor to be what it desires to appear in the eyes of its stakeholders, and the public at large. If not, what are the ways forward.

Not all of it is pharma’s own creation:

The host of reasons for pharma’s adverse public image, may not necessarily be its own creation. Some of these could well be lying miles away from its operational domain. For example, articles such as, what appeared on July 7, 2017 in the BMJ titled, ‘We need to end cut practice in Indian healthcare,’ doesn’t seem to be much related to pharma’s direct business operations. But in many respects, the subsequent unprecedented announcement of the Maharashtra government on enacting a new law called the “Cut practices in Medical Services Act, 2017”, casts a darker shadow, not just on the doctors’ reputation, but also covers the health care industry, in general, including pharma.

Nevertheless, a commonly perceived nexus between the doctors and pharma companies, or for that matter alleged malpractices in many hospitals, also prompts a rub-off adverse perception – indirect though, on pharma’s overall reputation. Such barriers also need to be carefully navigated through.

While moving towards this direction, effective management of consumer perception is also of critical importance. For, reputation is a complex blend of both reality and perception, where perception is believed to contribute around 66 percent, and reality – about 33 percent, in various organizational efforts to gain business reputation.

Changing from a dogmatic to pragmatic approach:

The above area of adverse perceptual impact causing further dents in pharma’s reputation, is understandable, as these are beyond its control, as such. Nonetheless, what is difficult to fathom, why does pharma continue to remain so dogmatic in recreating a make-believe image, that continuously gets negated by its own actions on the ground.

To illustrate this point when I briefly look back, one of the critical themes around which, especially the research-based global drug industry has been trying to gain reputation, over a long period of time, is woven around – ‘innovation’. Concerned pharma players keep trying to gain consumers’ trust and reputation by trying to make them believe that pharma is one of the most innovative industries in the world, thus possibly trustworthy.

The same tradition continues even today. Millions of dollars are being spent through various communication and advocacy campaigns, hoping to drive home this point. Nonetheless, the current reality is that the pharma consumers hardly believe that the industry is particularly innovative today. I discussed that point in my article of July 26, 2017, appeared in this blog.

Therefore, I shall not dwell on that area again. Instead, let me try to arrive at, how is this dogmatic approach going way off the mark from consumers’ expectations, repeatedly. More importantly, why it calls for a rather pragmatic approach from pharma to gain reputation, taking well into consideration – what the patients’ or patient groups’ expectations are from the industry, based on meticulous research findings.

Patients’ recent perception on pharma reputation:

A recent report by ‘PatientView’ – a leading specialist in understanding the patient movement, and its impact on health care, captured perceptions of patient groups on the pharma industry, in this area. The report is titled, ‘Corporate Reputation of Pharma in 2016 – The Patient Perspective.’ The phrase ‘corporate reputation’, as defined in the study, is the extent to which pharma companies are meeting the expectations of patients and patient groups, and was assessed by the following three types of measures:

How pharma’s corporate reputation compares with that of seven other healthcare-industry sectors.
How pharma’s corporate reputation has changed over the past five years.
How good or bad the pharma industry is at various activities.

The results of this study are based on a survey conducted between November 2016 to early-February 2017 on 1,463 patient groups; 46+ specialties in 105 countries. 47 pharma companies were assessed on seven indicators of corporate reputation, as follows:

Patient centricity
Patient information
Patient safety
Useful products
Transparency
Integrity
Effectiveness of patient-group relationships

47 companies surveyed include names, such as AbbVie, Allergan, Amgen, Astellas, AstraZeneca, Bayer, Biogen, Boehringer Ingelheim, Bristol-Myers Squibb, Eisai, Eli Lilly, Gilead, GSK, Hospira, Janssen, Merck & Co, Merck KgaA, Mylan, Novartis, Novo Nordisk, Pfizer, Roche, Sandoz, Sanofi, Takeda, Teva, UCB and Valeant.

Some of the key findings of this survey are as follows:

In 2016, just 37.9 percent of respondent patient group thought that the pharma industry had an “Excellent” or “Good” corporate reputation. Whereas 44.7 percent of patient groups had said the same in 2015.

In 2016, only 23 percent of patient groups thought that pharma’s corporate reputation had improved over the previous five years. Whereas 28 percent of patient groups had said the same in 2015.

In 2016 (as in 2015), pharma continued to be ranked 5th out of eight healthcare sectors (ahead only of generics, for-profit, and not-for-profit health insurers).

Patient groups thought that pharma’s ability to conduct activities of importance to them declined in 2016. Patient groups were more sceptical in 2016 even about pharma’s ability to innovate, which is an important patient-group measure of confidence in the industry.

Regarding the quality of pharma’s innovation across several geographic areas: patient groups in New Zealand expressed the least confidence in pharma’s ability to innovate; and those in Greece, the most.

What should pharma do?

Keeping the above findings in perspective, the consequent question that arises in this area is, what should pharma do to improve its patient centricity, and thereby to gain trust and reputation?

It is interesting to note that pharma companies should ‘consider the cost of drugs’, has featured as one of the top three, in the 14-point plan proposed by the 460+ patient groups in the above study, as follows:

Partner with patient groups
Provide more or better patient services
Consider the cost of drugs
Try to understand patients
Develop better medicines
Be transparent
Involve patient groups in the design
Look at continuity of care
Listen to patients
Help patients in a holistic way
Increase participation in clinical trials
Offer training
Concentrate on safety
Tailor services to individual patients

Conclusion:

Thus, the bottom line is, among various stakeholders, patients and patient groups, play a critical role in pharma to gain reputation. Winning their trust is widely considered as the substratum to get this process rolling, effectively. In that sense, pharma players individually, and the pharma industry collectively, need to have innovative, and game changing strategic plans to win the patients’ trust, for a long-term gain in reputation.

Repeatedly trying to communicate that life-changing medicines exist, because of pharma’s years of efforts in painstaking research and development that are hugely expensive and time-intensive, doesn’t seem to be working much, any longer. Patients are increasingly expecting improved access to drugs for various treatments, coupled with related value added services, from the drug players.

In such a scenario, many top drug companies, on the other hand, publicly express: ‘we are patient-centric’. This creates a logjam, as it were, to take pharma’s ‘patient centric’ endeavors from this point to where the patients’ expectations really are. Thus, I reckon, it’s time for pharma to deeply introspect and act on what Socrates had advised a long time ago, ‘‘The way to gain a good reputation is to endeavor to be what you desire to appear.’

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

PILMAN

A Tapan Ray Website

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Pharma ‘To Endeavor More To Be What It Desires To Appear’