12 Things the Pharma Industry Can Do to Rebuild Real Public Trust

12/9/13Follow @xconomy

Remember when Merck was the most admired company in America? When pharmaceutical companies ranked among the most respected of all industries, because of their achievements for human health and well-being?

I don’t. I was born in 1975, putting me smack in Generation X. I started paying attention to the business of biomedical innovation, as a journalist, about a dozen years ago. My experience, like others my age and younger, is shaped by an endless series of headlines that portray the pharmaceutical industry as the bad guy. The public belief in the U.S. is that drug companies are the ones who price-gouge Grandma and Grandpa. They hide their dirty laundry—like dangerous side effects on top-selling products. They talk a good game about science and innovation, but they have failed to deliver big health advances for most people over the past couple decades. They have a reputation for unseemly wining and dining of influential doctors. Most people would probably put pharma’s reputation on par with Big Tobacco.

But it hasn’t always been this way. I was struck recently by an experience reading a 20-year-old business book, called “Built to Last,” written in less cynical times. The authors, like many business writers in the ‘90s, wrote about Merck with awe. They quoted, without any snark, George Merck’s motto about how if the company served patients, the profits would naturally follow. This idea created a powerful science-based culture that gave the company a competitive edge.

It’s stunning to witness pharma’s fall from grace. I tend to believe the wounds are largely self-inflicted, as pharma lost its moral compass and put profits ahead of patients. But I also believe that science is a fundamentally good force for progress, and that pharma has made many great achievements building on its investment, and society’s investments, in basic biomedical science. There are many supersmart, dedicated, well-meaning pharmaceutical and biotech employees today who are getting results. If they didn’t have adequate economic incentives, we’d never get them to work so hard creating the great drugs, vaccines, diagnostics, and devices that do a lot of good. There’s no reason why pharma should always be destined to be a public enemy.

Given pharma’s current reputation, it shouldn’t surprise anyone that the industry has endured years of adversarial, rather than more constructive, regulation at the FDA. The thicket of burdensome conflict-of-interest rules that have been enacted at universities and research institutes, which impede collaboration with industry, were put there because of a desire to prevent more confidence-shaking scandals. Patients in the U.S. are slow to enroll in clinical trials, slowing down the innovation process. Morale inside many of the pharma companies is poor.

So what are some actions pharma can take to turn this around, to rebuild some of the public trust it once enjoyed? I tried to put together a list of ideas this past week. I spoke with David Shaywitz, a thoughtful industry commentator for Forbes who works as a strategist for a San Francisco-based biotech company, and Thomas Stossel, the director of the translational medicine division at Brigham & Women’s Hospital in Boston. Stossel, a forceful defender of pharmaceutical companies and frequent writer on the subject of academic/industry relations, dismissed almost every remedy I suggested to repair pharma’s public trust.

What the industry really needs to do is “fight back” harder against its critics, Stossel said. Many of the big pharma scandals of the past decade, like Vioxx and Avandia, were overblown by the critics and sensationalists in the media, he says.

“The bad reputation didn’t come from bad things the pharmaceutical industry did. It came from lies,” he said.

Stossel makes some persuasive points about how the “pharmascold” movement has gone too far, cutting down on academic/industry collaboration, undermining continuing medical education, and creating unnecessary barriers to medical progress. But, respectfully, I don’t think the industry is a blameless victim, and I don’t think the industry will dig itself out of a hole by attacking its critics. An industry PR offensive isn’t enough to restore public trust.

So, in the spirit of stirring constructive dialogue, here are 12 suggestions—some that others have advocated for years, others that get less notice—that I’d like to put forward for consideration.

1. Stop overreaching on drug prices. Yes, I know, you have to move mountains to develop a new drug, when you add up all the time, money, and risk that goes into the equation. Pricing is based more on what the market, dysfunctional as it is, will bear—not the cost of manufacturing or development. The market should reward real innovators with high prices, when they offer a great benefit to patients. But even when the market allows for a high price, how much is too much? Time and again, I’ve seen companies over the past couple years push drug prices to stratospheric levels that surprise and sometimes shock Wall Street analysts. Some of these drugs are important advances. Others are more incremental. Even the co-pays on these drugs are so high that they can bankrupt middle-class people with so-so insurance. If the industry wants to continue to command such high prices in the U.S., in an era of healthcare cost containment, it absolutely must start proving—once and for all—that its drugs are cost-effective, not just effective enough to win FDA approval. That means if you want to charge $100,000 for a drug, you had better be able to prove that you save the healthcare system even more money by reducing hospitalizations, disease complications, and improved quality of life/work productivity for the affected patients. Healthcare reform is making cost-effectiveness essential anyway, so it only makes sense to get on board.

2. Support greater data transparency. Share data widely, even the bad stuff. There’s been a transparency movement going on for a while now, as industry critics in academia are seeking highly granular data from clinical trials to evaluate drug safety and effectiveness. This is the kind of granular data that regulators at the FDA and EMA get to see, but is typically off-limits to all others. A few companies have taken steps in the direction of greater data transparency and data sharing, but it’s mostly lip service at this point. I know the pharma industry fears that it would be giving away a gold mine of data to its competitors, putting patient privacy at risk, and a treasure trove of details for tort lawyers trying to play gotcha games. These are issues that need to be worked out, and shouldn’t be excuses for inaction. It’s time to get on board with transparency, because it would build more trust, and it’s how the world works in the Internet age. Wide-scale data sharing is also one of the best ideas out there for helping the industry break out of its R&D funk.

3. Get real about patient engagement. Shaywitz suggested this one. It’s about “really trying to understand and solve the patient’s problem, not just selling them more pills,” he says. “we need to be less transactional and more relationship-focused.” This is partly a culture thing. Genzyme, for instance, was famous years ago within the industry for its dedication to helping patients with Gaucher’s disease, a rare and debilitating condition. Selling them the company’s lead product was part of it, but Genzyme sought to take a more holistic view of the patient, to really listen to what their issues were, and try hard to solve them. Pharma would be wise to dust off the old Atul Gawande article in The New Yorker to see what patient engagement looks like in the treatment of cystic fibrosis. In the future, drugs will be part of the solution, along with integrated digital health offerings that help keep track of whether patients are staying on their meds or suffering any unusual effects. If people felt like the pharma companies truly cared about solving their problem, that would be a great way to replenish the goodwill reservoir.

4. Support the FDA, even when it might hurt. The industry has a love/hate relationship with its primary regulator. On one hand, the FDA’s rigorous review process ensures quality standards that put the pharmaceutical industry on a pedestal way above the snake-oil salesmen hawking nutraceuticals on late-night infomercials. The industry loves that, and when its companies are successful, they love how FDA regulation provides high barriers to entry for new competitors. But of course, the FDA sometimes bites companies in the butt, which they don’t like. If the pharma industry wants to appeal to the public, the same taxpaying public that the FDA is responsive to, then it needs to do something big to support this vital agency. I’m thinking of a pharma- and taxpayer-supported big data initiative that tracks adverse events in real-time. The FDA doesn’t have this kind of 21st century capability, which offers the promise of spotting rare, dangerous side effects before they become wide-scale drug safety catastrophes. Stossel told me he thinks this is a waste of time, because “the critics will trash it,” but I think it could be a real way to prove to the public that pharma is willing to put its money where its mouth is on safety. It’s also within our technological capabilities, and the right thing to do.

5. Don’t pay lip service to global health. Do something real. I’ve seen all the stories about CEOs of Big Pharma companies buddying up with Bill Gates at big summits devoted to coming up with vaccines and treatments for the world’s poorest people. Some of these efforts are well-intended, but others, if you scratch below the surface, are little more than PR exercises for the pharma companies. One of the bigger global health advances in recent years, a vaccine for meningitis in Africa, bears no Big Pharma fingerprints. And yet, people respond positively to stories like Merck’s development of mectizan, a cure for river blindness. If you spend $200 million coming up with a vaccine for malaria, and give it away for free, you could probably save millions of lives. It wouldn’t bankrupt any of the Big Pharma companies. And it just might generate 100 years of future customer goodwill in the developing countries where that kind of breakthrough occurred.

6. Discover more great drugs. Dazzle people. You can laugh at this one, because discovering drugs is easier said than done. But seriously, a redoubled industry effort on R&D at all levels, which delivers more great drugs, would be noticed. Create more drugs like Vertex’s ivacaftor (Kalydeco), Genentech’s trasztuzumab emtansine (Kadcyla) and Pharmacyclics’ and Johnson & Johnson’s ibrutinib (Imbruvica). People will always complain about price, but the pharma industry argument is far stronger when it’s defending life-changing therapies. Incremental innovation at a premium price is a losing business strategy in the long run. As they sometimes say in biotech venture capital, “Go big, or go home.”

7. Invest in your own employees. The biomedical industrial complex has educated lots of young graduate students and postdocs over the past decade, during the boom in NIH funding from the late-90s to the early 2000s. Many of these people are stuck with no job prospects, because they can’t get the precious few faculty gigs at cash-strapped universities, and most haven’t gotten all the training and mentoring they need to be relevant for jobs in industry. Ethan Perlstein, a former Princeton University postdoc who struck out recently on his own as an independent scientist, has referred to this phenomenon as the “postdocalypse.” This is a huge recruiting opportunity for pharma, to snap up lots of bright people at entry and mid-levels and train them for long careers in industry. Instead, you just see wave after wave of layoffs in R&D, as companies seem to be almost throwing in the towel on all their good medicinal chemists, molecular biologists, biochemists, and more. It’s short-sighted, and unfair to those people. This isn’t a poverty-stricken industry like my former world of newspapers, which can’t afford to hire people. Pharma can and should do this for its long-term survival.

8. Stop breaking the law in your sales and marketing departments. “Off-label” marketing has got to stop. If you want to market a drug for a new population of patients, spend the money and do the hard work of proving it works. Industry insider John LaMattina, a former president of R&D at Pfizer, said so himself in a January column on Forbes.com.

9. Invest more in the basic public R&D system. Put your own money into more sponsored research at academic institutions, which are starving because of NIH budget cuts. Be the white knight for basic research into understanding of genomics and cell biology, which will lead in all kinds of fascinating directions. And don’t stop there. Use your political clout in Washington, DC, to go to bat for the NIH, for real. The public knows that you fight tooth and nail for your patent rights, and for your Medicare Part D drug benefit—things that benefit your industry’s narrow self-interest. Pharma spent more money on lobbying than any other industry in 2012, although it dialled back spending earlier this year, according to the Center for Responsive Politics. How about putting some money to work aligning pharma with basic biomedical research, a broader public interest, that also happens to benefit the industry? How about playing hardball politics on behalf of the public? I wonder what would happen if Big Pharma called on its friends in Congress, and vowed to withdraw campaign contributions from people like Sen. Ted Cruz until they restore NIH funding to pre-sequester levels. What would elected officials do if this powerful lobby used its resources to run TV ads that shame them, in their home states, for pulling the rug out from under our nation’s great biomedical research centers? A majority of the public would cheer.

10. Stop direct-to-consumer TV advertising. These ads make the industry look like a bunch of hucksters, not all that different from juicer-masters or whatever of late-night TV. It cheapens the value of these drugs, making important advances like AbbVie’s adalimumab (Humira) look like bar soap or breakfast cereal. It’s all white noise to consumers after a while. If you want to be seen as a science-based industry genuinely interested in human health, then make your best arguments on data to doctors and patients, not emotional or demographic identity-based appeals. The 30 or 60-second spot is for entertainment, not medical information. You’re probably wasting your money, so why not stop? TV ratings aren’t what they used to be anyway.

11. Work more on enabling technologies, and find creative ways to fix the clinical trial process. “The industry must figure out how to fail faster,” said Shaywitz. That partly means working with regulators on new study designs. But it also depends on the industry’s own ability to find technological ways—bioinformatics, stem cell models, organs-on-a-chip, whatever—that will reduce the time, expense, and risk of clinical trials. The randomized, prospective, double-blind, placebo-controlled clinical trial is still the gold standard for determining whether a new drug or vaccine works, but that may not always be the case. The technology industry used to have high costs to entry as well, during the dot-com era, when every Internet company had to spend millions of dollars on infrastructure, like servers. Now you can build an Internet startup quickly, on a shoestring budget, while renting cloud server space from Amazon. It’s made it much easier for people to start companies, try things, fail, see what works, and iterate fast to get some traction. Pharma and biotech still don’t have an enabling technology quite like cloud computing, and it needs to invest in that kind of thing if it wants to do better.

12. Come up with a moonshot. It was beyond most people’s imaginations in the 1960s when John F. Kennedy set a goal of putting a man on the moon before the end of the decade and bringing him home safely. It was a classic “big hairy audacious goal” or BHAG, as they say in the business schools. These can be incredibly motivating, inspiring things for people in the industry, and can captivate the imagination of the public too. What is pharma’s moonshot today? A cure for Alzheimer’s by 2025? Or is it Calico, the Google-backed startup led by former Genentech CEO Art Levinson, which aspires to extend human lifespan by decades? I don’t know what it is, or should be, but I have to believe that some success on a pharmaceutical or biotech BHAG would be enough to earn the respect of most people, even in our cynical world.

That’s it for my suggestions this week. Am I totally full of beans? Got any better ideas? Please share. Leave a comment in the section below, drop me a note at ltimmerman@xconomy.com, or fire away on Twitter @ldtimmerman

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  • BarbaraKimmel

    Luke- you are absolutely NOT full of beans and I commend you for your “spot on” insights on building trust back into the pharmaceutical industry. Please keep writing with the security of knowing its not falling on deaf ears!

    Barbara Kimmel, Executive Director
    Trust Across America – Trust Around the World
    http://www.trustacrossamerica.com

  • Ken Kaitin

    Luke – As someone who has been observing and writing on the pharma industry for nearly 30 years, I thought your suggestions were on target. Here’s another suggestion: work with academic institutions to push for the inclusion of “drug development science” in high school, undergraduate, and, especially, biomedical graduate and medical school curricula. Some of the industry’s harshest critics are also the least informed about what it takes to develop a new drug and bring it to market. In particular, the idea of not providing medical students with even rudimentary exposure to these concepts is both irresponsible and problematic, in that it only fuels the anti-industry biases they’re exposed to in their medical school education.
    Ken Kaitin, Professor and Director
    Tufts Center for the Study of Drug Development, http://csdd.tufts.edu
    Tufts University School of Medicine

  • bcampion

    Luke, good column and excellent suggestions across the board. Patient and medical need are the true north of most every scientist who decides on a career in biotech.

  • http://www.xconomy.com/ Luke Timmerman

    Ken — thanks for the comment. I like your suggestion about high school, college and graduate education. Seems like a natural complement to a lot of the basic science instruction people can get at those levels.

  • Robert Jones

    “Some of the industry’s harshest critics are also the least informed about what it takes to develop a new drug and bring it to market.”

    If the industry knew what it takes to develop new drugs and bring them to market one might think they would do so more often. They would cut back on the layoffs and put their scientists to work rather than throwing them under the bus when times get tough.

    The industry must first learn what it takes, then train their employees. Our education system can only train people in the ways of science, not your company or industry.

  • Jim

    One challenge for the industry that is often overlooked is that the U.S. healthcare market subsidizes the rest of the world by allowing our U.S. free-market systems to bear the cost of drug development. This results in much higher prices for American consumers and much lower costs for other countries. This is unfair to the U.S. as we end up footing the enormous cost of new drug research and development, while providing the rest of the world with the majority of the new drugs needed. We benefit in the form of many companies and jobs in this space, but more and more the companies are getting squeezed at every turn and can not profitably develop new drugs. This issue needs to be addressed at the WTO to ensure that our citizens are not unduly providing the entire financial backing to help create new drugs.

  • cynicwithtaste

    Per your link, Philip Morris was the 2nd most admired business in the same year (1990) that Merck was number 1. So maybe people then were just more focused on financial performance and less focused on CSR fluff.

  • http://www.xconomy.com/ Luke Timmerman

    A few more suggestions have piled up in my inbox from readers. Here’s a sampling:

    1. Spend more money on developing companion diagnostic tests to make sure your drugs get to the right patients.

    2. Stop pandering to Wall Street’s desires for short-term increases in your share price.

    3. Commit to solving the problem with chemo drug shortages, including with generics. These drugs are important to patients, and often need to be given in tandem with expensive brand-name targeted drugs the industry depends on.

    As for cynicwithtaste, I’ll just say I think there is more to life than straightforward financial performance. Maybe the business community admired Phillip Morris years ago for its discipline and focus, but that success came with a devastating cost to public health. You can call CSR a bunch of fluff, and if companies aren’t serious about it, it certainly can be. But I believe companies should exist to do more than just make money and make shareholders happy.

    Thanks for all the feedback.

  • infamouscrimes

    Great write-up… but there’s no fixing Pharma. They’re too rich, corrupt, and frankly… evil. One thing you left out is accountability and justice. All of the executives who knew about dangerous life ruining side effects of their poisons and put them on the market anyway needs to be tried, convicted, and imprisoned. Until this happens they will never be forgiven.