Drug Pricing: A Brave New World

By Robert Murphy

Drug pricing has been a consistent lightning rod that has kept the pharmaceutical industry under the collective microscope of the general public, healthcare professionals, payers, the media, and the highest levels of the American political system.

It’s a complicated issue that, in 2015, hit a fever pitch when Turing Pharmaceuticals boosted the price of Daraprim by over 5,000 percent shortly after acquiring the drug without making any formulary or manufacturing changes. Martin Shkreli, former CEO of Turing, was globally vilified. His irreverent responses and cavalier attitude regarding the criticism earned him the infamous moniker of “Pharma’s Bad Boy” and made him the face of the pharmaceutical industry’s drug-pricing challenges.

Valeant Pharmaceuticals, Taro Pharmaceutical Industries, and most recently Mylan, have also drawn national criticism and congressional scrutiny for similar questions around drug price increases, casting an ominous shadow of doubt over the entire industry.

The Status Quo Won’t Cut It Anymore

Historically, the pharmaceutical industry has responded to pricing criticisms by citing the complicated balance between managing the high costs of innovative R&D necessary to bring life-saving medicines to market with ensuring a return on investment and maintaining a competitive edge. Companies often cite the value that a drug brings to the market or to patient quality of life as a means of setting and justifying price.

In the past, those messages were more effective. Today, the issue has become more complicated and the media and politicians are delving deeper into financial figures and drug revenue to make sweeping generalizations about what constitutes a fair profit or not. In turn, pharmaceutical companies are struggling to provide answers that will satisfy the many questions around drug pricing.

One thing is clear: the public outcry over drug pricing has reached a fever pitch and the drum beat of change is growing steadily louder.

An Innovative Communications Approach to Influence the Conversation

Can pharmaceutical companies respond in a way that addresses these concerns while ensuring their positions are clearly understood?

One strategy that stands out recently is Allergan’s proactive and bold announcement of a comprehensive Social Contract with Patient. The document outlines a series of principles governing the company’s future business strategies, including price increases, as it strives to meet the needs of a broad range of stakeholders. This brilliant, albeit risky, move elevated Allergan above the criticism into a leadership position as a drug company that is offering a solution to a vexing issue.

The company acted decisively using the credibility of Allergan’s CEO Blog, written by CEO Brent Saunders, to communicate clear, concise messages outlining the need for the Social Contract as well as its impact on the company, the industry, healthcare professionals, and most of all patients.

The effort was well received by the marketplace, generating enormously positive praise and media attention for Allergan and Saunders.

How to Effectively Influence the Narrative

Communications professionals may not set a company’s drug-pricing strategy, but, we do play a critical role in helping executives to successfully navigate the potential business challenges associated with pricing discussions.

The best time to prepare for communicating about sensitive issues like drug-pricing, is before the opportunity arises. In other words, planning is a critical component of maintaining readiness and delivering a credible, informed response.

At SmithSolve, we have extensive experience helping our clients develop a working narrative around sensitive issues and implement successful global communications strategies that resonate with key stakeholders and enhance corporate reputation.

Below are six key steps to consider when developing a communications strategy involving drug-pricing—or any other type of sensitive issue.

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1. Understand the Landscape. The drug-pricing issue has been around a long time, yet new developments make it an almost constant topic of conversation on the national agenda. Be sure to conduct extensive research to develop an informed position on key areas such as:

  • Historical perspective
  • Competitor responses
  • Market and investor reactions
  • Media response and public perception
  • Advocacy group response
  • Government involvement

Maintaining a finger on the pulse of the pricing issue will ensure relevant communication and allow the company to take advantage of emerging proactive or reactive opportunities.

2. Define and Refine the Message. A positive outcome starts by developing core messages that are concise, accessible, compelling, and use language that rings true     and builds trust. Remember: motive matters. Every message should support and reinforce the company’s overall mission and purpose.

Avoid intentionally vague answers or citing complicated financial figures or obscure economic pressures that will only confuse people and add to their mistrust of the company. Create messages that clearly state the company’s views on pricing and be prepared to defend that position with back-up information. As an added layer of credibility, strongly consider involving patient organizations and physicians during the message development process, because they can provide valuable feedback that will strengthen credibility.

3. Speak With One Voice. It’s critical to designate a short list of approved company spokespeople who can speak on behalf of the company. Those individuals, typically C-suite executives, should be well versed on the pricing discussion. It’s critical that each spokesperson delivers the same messages to ensure the corporation’s position is communicated with One Voice continuity.

4. Practice Makes Perfect. Effective message delivery hinges on proper training. Even the most media savvy politician gets caught on an open mic sometimes. It is important to schedule periodic media/message training sessions with key spokespeople to maximize readiness. Build this process into the communications plan as a mandatory activity.

5. Prepare for All Contingencies. Communicating about sensitive topics like drug-pricing can be a slippery slope. It’s important to understand that even positive messages can become muddled into an overall negative narrative. Before issuing any statement, be sure to develop a scenario plan that reflects a strategy for dealing with a positive, negative, and neutral outcome. This will help set internal expectations and minimize the potential for being caught unprepared for an unfortunate outcome.

6. Be Dynamic. It’s critical that communicators actively monitor the ongoing conversation surrounding the issue. Discussions in the media, especially those in social media, can simmer in one moment and become a raging inferno in the next. Maintain readiness and be prepared to adjust strategy on the fly. This is when taking the time to scenario plan will pay dividends!

Have a question? Contact us for a more information about how SmithSolve can help prepare a customized communications program to fit any company’s needs.