“Reputation, built on our past, shapes our present and future. A good reputation can open many doors; a bad reputation can close many more. A good reputation generates respect. A bad reputation breeds suspicion.”
Those are not the words of a business consultant or from a television talk show host like Dr. Phil. They are from Ian Read, the CEO of one of the world’s biggest companies, Pfizer PFE -0.7%. In a compelling article that he wrote on February 19th entitled “You Gain Respect in Drops, But Can Lose It in Gallons,” Read correctly talks about the importance of a company’s reputation, particularly in the pharmaceutical industry. But the industry continually stumbles in its efforts. Just last week, Takeda announced that it agreed to pay $2.4 billion in fines to settle lawsuits related to its diabetes drug, Actos. As outlined by Andrew Pollack in the New York Times, this is not a rare event in this industry. Pollack went on to list other large settlements such as the those against Wyeth for the fen-phen diet pills and Merck for Vioxx ($4.85 billion). These type of headlines are definitely in Read’s gallon category.
The industry also suffers from transparency issues on a variety of fronts such as the publication of clinical trial data, hiding or minimization of drug side-effects, and payments to physicians. In terms of the latter, the biopharmaceutical industry has been making progress. Partly due to the Affordable Care Act (ACA) and partly due to their own initiative, companies have begun to make public the payments that they make to doctors. Before the enactment of the ACA, people could go onto the websites of Pfizer, Lilly , and GSK and see all the payments that are being made to doctors and institutions for the work they undertake for these companies. The advent of the ACA has now made it mandatory for all companies to do this via “Open Payment” databases. There was some trepidation as to the potential negative impact that such openness would create. However, as these data rolled out, it became clear that the vast majority of payments to physicians, roughly 80%, are for the discovery and development of new medicines. All payments to doctors are now available, not just for R&D but also those for meals, speaking fees, and consulting. Such transparency did result in concerns voiced by some, including those who believe that physicians should not receive ANY payments from biopharmaceutical companies as these exert undue influence on prescribing practices. However, on balance this transparency eliminated the “behind the curtain” view of company payments to doctors. With the majority of payments being made for critical clinical work, critics have to acknowledge that such payments are indeed justified.
However, as reported last week by the Wall Street Journal’s Ed Silverman, the biopharmaceutical industry seems to be regressing on this issue. In Australia, regulators have approved new rules that require biopharmaceutical companies to disclose all payments made to doctors for speaking and consulting, as well as for travel. However, excluded from the reporting requirements are all payments made for food or beverages given to doctors. The reason given is that ongoing reporting would impose a significant administrative burden on companies. That sort of rationale rings pretty hollow when these payments are routinely reported in the U.S. How can this be an administrative burden in Australia when a system is already in place in a far bigger country? Excluding these payments from reporting practices only serves to breed suspicion.
There is also pushback on aspects of financial disclosure now mandated by the ACA specifically with respect to payments for Continuing Medical Education (CME). These are events designed for doctors to get the latest information about drugs. As again reported by Silverman, Congress now has a draft of the 21st Century Cures bill, designed to jump start medical innovation, that includes a provision that that would eliminate CME payment disclosures now required by the ACA. The problem with doing this is that, again, the perception would be created that the biopharmaceutical industry is hiding these data as these types of events are a way for companies to influence the prescribing habits of the doctors who attend.
So, here’s a suggestion for the biopharmaceutical industry. The trade organizations representing these firms – the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO) – should each issue statements that their members do not agree with the Australian payment position on meals, nor do they agree with creating an ACA exemption for CME payments. Instead, member companies of these organizations will make ALL payments to doctors available in Australia as is done in the U.S. and will NOT support a CME payment exemption in the current form of the 21st Century Cures bill now in the House of Representatives. Will such actions make major headlines? Probably not. But as Ian Read said, “You gain respect in drops”. A few drops would be helpful alleviating the drought suffered in pharma’s reputation.