Staying Ahead of the Curve

Nov 13, 2008

On January 20, 2009, a new president will be sworn in for the first time in eight years. Significant and dramatic healthcare policy changes are likely to follow after Barack Obama takes the oath of office and the expanded Democratic congressional majority settles in. But what does the electoral outcome mean for healthcare companies and the industry as a whole?

First, it means pharmaceutical companies must bring their new ideas to the table immediately. They cannot wait until January to start preparing for the new political dynamic in Washington: The time for action is now. Unlike the experience of the Clinton administration in 1993, some form of healthcare reform will likely be enacted in 2009 or 2010. (One should not assume the economic crisis and skyrocketing deficit will inevitably delay action; social security was enacted in the midst of the Great Depression, and President Obama could argue that tough times make reforming health care that much more urgent.)

There already exists a remarkable consensus within the Democratic Party on a broad framework for universal access to healthcare coverage, which is reflected in the President-elect’s healthcare plan. It includes a mandate that large employers cover their employees or pay a percentage of payroll into a healthcare fund to subsidize coverage for the uninsured; a requirement that insurers have open enrollment policies with no exclusions for pre-existing conditions; and the establishment of a federal employee–style health insurance option. Cost-containment measures will also be a central part of any plan.

Thus, the political environment would look something like this: unprecedented Democratic unity, a sense of urgency among party leaders that they must deliver on campaign promises, and a Republican Party that is more chastened than it was in 1993. This combination of factors should sweep aside many hurdles that stopped healthcare reform during Clinton’s first term.

In response, what should the pharmaceutical and bio sciences industry do? It should immediately embrace a three-track strategy.

First, remind the public, policymakers, and the media of all the good pharma companies do. That means demonstrating their alignment with the well-being of patients and doctors. While there may be differences among these groups, their shared interest, especially in preventing disease, must be articulated clearly and regularly. Life-sciences companies are investing billions on research into life-saving medications. In doing so, the companies take on great risk even during good economic times—but during a recession and credit crunch, the financial perils of innovation loom much larger. At the same time, they should also put the quality of care front-and-center in the healthcare reform debate. The more the focus is on quality, the stronger ground this industry will stand on.

Second, the industry should take action to defuse and reframe some of the negative public perceptions they face. This initiative must be different from those undertaken in the past few years. New value propositions should be advanced that connect directly with the companies’ key stakeholders. The tried and true question — “What’s in it for me?” — needs to be answered anew. Otherwise, government will answer it for industry.

Third, and perhaps most importantly, pharma companies must recognize that the giant wave that is coming will flatten anyone who stands there and tries to stop it; far better to surf the wave and steer in the direction you want to go. That suggests the wiser course of action is to sit down at the table with leaders of the new administration and Congress to tensure that their concerns are addressed. Lawmakers and regulators are looking for solutions and seeking consensus; it will be better for the pharmaceutical and bio science business to propose serious alternatives than to lose their seat at the table.

Why not try to limit the damage and maximize the opportunities presented by change, rather than let others dictate how change will be imposed? For example, rather than telling policymakers that they need to go in a different direction, propose a better way to go in the same direction, such as replacing mandatory requirements with voluntary incentives.

Change is coming; of that there can be no doubt. For the pharmaceutical and bio sciences businesses, the only question is whether to be a friend or foe to change. By taking action today, they can decide the issue.

Jeffrey M. Sandman is CEO of Hyde Park Communications. He can be reached at [email protected]

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