Better Rx needed to treat drugmakers’ PR malady

September 22, 2015 – 6:06 pm | By Mari Serebrov | No comments yet

inside2 7-16-12Biopharma has a bad PR disease. The diagnosis is pretium offensus, otherwise known as “sticker shock.” The infectious condition has two causes: enormous, inexplicable, overnight price hikes and six-figure drug prices that spread from headlines to become a viral meme in congressional hearings and social media.

The symptoms are a growing distrust of drugmakers, demands for comparative effectiveness-based pricing, calls for government price controls and, in an election year, much-hyped presidential campaign promises to curb the “skyrocketing costs of prescription drugs.” The prognosis is disastrous for everyone affected.

Industry is responding, but its Rx isn’t working. Historic trending charts, comparisons with other health care costs, discussions about the time and money involved in developing new treatments, and explanations about the difference between list price and the negotiated, discounted or rebated price insurance companies end up paying are misapplied bandages in a communications world driven by catchy 10-second sound bites and 140-character tweets.

Even in a congressional hearing, drugmakers are limited to a few minutes to present their case. That’s not enough time to explain the underlying causes, change opinions and counter the clamor continually raised by constituents who can’t pay for, or access, the drugs that may be their only hope for life.

Therein lies the PR affliction. In making its pitch, industry often touts the value of its products. If a new therapy can save a life, isn’t it worth $240,000? industry asks.

Each additional minute, hour, day, week or month spent with loved ones is priceless, patients would say. Assigning dollars to that precious time is tawdry. Making a huge profit from it is utterly debased. Such is the thinking of a society that funds billions of dollars’ worth of basic research each year and sees health care as a right rather than a privilege.

Regardless of its truth and logic, no lengthy, number-crunching explanation is going to shake the perception that drug companies and their investors are getting filthy rich from the suffering of U.S. patients. Especially when patients in other countries are paying a lot less for the same drugs and some biopharma execs are famously pocketing millions of dollars in salary and benefits every year.

It’s hard for patients to be sympathetic when, if they have a college degree and steady employment, their lifetime earnings might total $1 million. Living paycheck to paycheck, the majority of patients can’t afford the thousands of dollars they may be required to pay up front as their “coinsurance” for a pricey new drug relegated to their insurance company’s top tier – if their insurer even covers the drug. And many middle-class patients don’t qualify for the assistance programs drugmakers set up to soften the financial blow and build community goodwill.

Even before their illness, those patients were juggling their bills to cover the mortgage on their modest three-bedroom/two-bath home, make the car payment, keep up with the ever increasing utility bills and insurance premiums, help the kids through school, put food on the table and try to save a little bit for their rapidly approaching retirement years.

Their paychecks, which likely haven’t grown much over the past several years, just don’t have enough stretch to cover hundreds or thousands of dollars for coinsurance and co-pays for several drugs plus all the tests and doctor visits, particularly if their illness makes it difficult to work and other family members are having to take unpaid leave to care for them.

So what’s the cure for the pretium offensus plaguing drugmakers?

There is no easy answer, given the diversity of drugmakers and the products they provide. And since this condition has developed over years, there’s no instant cure. But there are some first steps industry could take to treat its PR malady:

Self-restraint. Price increases that exceed the cost of inflation taint the entire industry with perceptions of greed and self-enrichment. U.S. patients don’t think they should have to cover M&A costs, pricing pressures in other countries or industry setbacks due to currency fluctuations or preventable manufacturing problems.

Reports of one company inexplicably hiking the price of a 60-year-old life-saving drug from $13.50 per tablet to $750 will live long in the public conscious and serve as a political rallying cry for years. To keep from being afflicted by the resulting bad PR, industry should publicly discourage such behavior and distance itself from tactics that take advantage of vulnerable patients.

Transparency. Instead of giving a high list price while secretly negotiating with each payer, drug companies need to be honest and public about their prices. That top-of-the-market list price is what’s going to be initially quoted by analysts and shouted ever after by lawmakers and in the media. Even if it’s not the price charged to most payers, that list price is what will turn a healthy brand into a perceived parasite greedily feeding off the desperate misery of patients. Is that really the number drugmakers should put out there?

Patient engagement. In the past, industry priced new drugs at what the market would bear by taking the pulse of payers to see what they would be willing to cover after the negotiated discounts, rebates and bundling. But today, talking only with third-party payers is like stopping a drug before it has any effect.

Since patients on the costliest drugs are having to pick up a larger share of the tab, they should be part of the pricing discussion. That means drugmakers need to get to know their intended patients and understand what they can afford and how big a burden insurance companies are passing on to them, keeping in mind that what seems like a paltry pittance to a multibillion-dollar company could mean the difference between solvency and bankruptcy or life and death for a family already living at the edge of its means.


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