Five months after PhRMA’s Billy Tauzin announced he was relinquishing his title of president and CEO, the lobby group has found its new head: Business Roundtable President John Castellani.
Castellani will take the reins on September 1. Timing is critical, given that September marks the start of the fall congressional campaign in which the GOP is forecast to regain control of the House of Representatives from the Democrats. In contrast to Tauzin, Castellani is a conciliator, and in his current role is known and trusted by the GOP leadership. Consider him an investment by big pharma in shedding the perception of bias toward the Democratic agenda on healthcare, where PhRMA continues to spend heavily in helping the White House build public support for reform. One early sign of change: How much longer will those friendly ads for key Democratic legislators under election pressure continue?
Castellani will also put a more prominent face on the industry as a solution to eroding US industrial competitiveness, rather than as just another self-interested driver of soaring healthcare costs. The Roundtable has for years produced useful research in documenting the contributions of biopharmaceuticals to US growth, exports, and high-pay employment. Under Castellani, PhRMA will push this concept much further to document how market-friendly, predictable government policies will translate into US global leadership in what is an increasingly multidisciplinary “strategic” sector—the economic spinoff benefits when government “does it right” on healthcare are many. The goal of PhRMA should be to forge a stronger awareness of the link between what happens in Korea and what happens in Kansas. If anyone can do that, it’s him.
On a more practical level, Castellani will need to review PhRMA’s internal structure, due to budgetary pressures from the consolidation of industry members. Another critical, if little acknowledged, challenge is PhRMA’s role in upgrading the quality of trade association representation in key emerging countries, where much of the industry’s future growth is slated to take place. Is there a coherent, adequately funded and well-organized strategy to shape the healthcare environment in these countries? It’s a significant question.
And finally there is the departure of some members—notably Roche—who believed PhRMA has failed to address a set of growing gaps in policy alignment under a more diversified business model. The problem for trade associations is that it is getting harder to forge any level of unity on policy; generic and patent businesses are now integrated in the business models of many companies, while specialty biologics interests can diverge with the small molecule primary care agenda in sensitive areas such as pricing and reimbursement and comparative effectiveness research. For example, specialty companies feel they have grounds for concern about the implications for their high-cost products on PhRMA’s promise to fill the “donut hole” on Medicare Part D drug reimbursement.
On all fronts, the prized asset for any PhRMA leader is going to be as a consensus builder—with a White House, prepared to revisit “deals” fixed under a now departed industry leadership; with a Congress possibly under the control of another party; and within the industry itself, which faces a far more competitive commercial environment. On all counts, the “watering hole” for successful engagement is shrinking fast.