The pharmaceutical industry has often utilized the expertise of key opinion leaders (KOLs). These thought leaders and healthcare professionals (HCPs) could be helpful in guiding new drug discoveries or getting the word out about a new commercially available treatment. In recent years, however, a new kind of thought leader has emerged in this space: the digital opinion leader (DOL).

 brought together a panel of industry experts to discuss how the roles of KOLs and DOLs are changing and how they are coming together in efforts to improve brand awareness and engagement.

How has communicating with KOLs changed or evolved in recent years?

CARY CLAIBORNE, CEO, ADIAL PHARMACEUTICALS: 

We launched our Phase III trial in February 2020, which was just as the [COVID- 19] pandemic began. So, of course, technology had to change and adapt and so did our role with KOLs. Most of our KOLs are in Europe—so, a big driver in the change was communicating over video. We’ve adapted very well to that. The technology has helped a lot, and we are going to continue to use that going forward. It allows us to meet with our KOLs every other week without the travel costs involved, have more robust discussions, and get more involvement, because KOLs are very busy [as a lot of them are treating patients]. This allows them to be able to make more time available to us.

NATALIA FORSYTH, SVP, HEAD OF DIGITAL STRATEGY, GREEN ROOM COMMUNICATIONS: 

The biggest difference I’ve witnessed is that now we need to have two strategies: one for KOLs and one for DOLs. While they seem like they might be the same thing, we lean on them for different purposes.

KOLs could be the most credible scientific voice in that community, but DOLs also have that online reach, that social media reach that allows you to disseminate broad-based messages. It’s like two different channels we now have that we didn’t have previously.

RITA DALAL EXECUTIVE MEDICAL DIRECTOR OF ONCOLOGY, ALKERMES: 

We launched our Phase III trial in 2021. And as you might all have experienced, initially launching the new trial was kind of difficult. This is where the DOLs and KOLs who have a presence both in the digital world as well as in-person became very critical for our success since our trial was a global trial as well. It just makes more sense to sometimes use the technology to our advantage and meet them where it fits for the kind of meeting. Sometimes, you need the experience of a DOL and their expertise, and then you may need more in-depth/detailed interactions where you might want to meet in person.

In the past, most meetings were face-to-face; however, during COVID-19, most of these meetings became virtual. Now, it’s becoming a hybrid of the two. You are setting up your interactions with KOLs and DOLs with the idea of what fits the purpose.

JOE WELLINGTON, SVP, MANAGING DIRECTOR AND HEAD OF MEDICAL, EVERSANA INTOUCH: 

HCPs, like everybody else, have become more digitally mature, and KOLs are on the leading edge of that spectrum in forward thinking. Foreign organizations have embraced this. At EVERSANA INTOUCH, we’re working with several clients in spearheading omnichannel scientific exchange to increase insight velocity in fluid data environments, like oncology. What really excites me the most in terms of what’s changed is that we’re doing so much more co-creation of content through these platforms, not only on things like scientific platforms and medical education, but beyond the purely scientific engagements into areas like [diversity, equity, and inclusion] and shared decision-making initiatives. It’s an exciting time.

ROB ETHERINGTON, CEO, CLENE NANOMEDICINE: 

I think the [KOL] is still as important as they ever were. And, yes, I concur with Joe. They’ve matured, and they now recognize [the need] to have an online presence. Even just the way they communicate with the pharmaceutical company can easily be [done digitally]. In fact, arguably many of them even prefer that interface, based on a number of the [KOLs] who we have historically worked with. Clene is in a rare space—amyotrophic lateral sclerosis, or ALS, a disease formerly called Lou Gehrig’s. There is a relatively small group of KOL individuals who drive many key decisions; they offer Zoom as an option every time we want to meet. Frankly, I think they may prefer it. But the criticality, the importance, [and] the relevance of KOLs haven’t changed at all. We just now have more methods by which we can communicate, learn together, and drive change clinically.

You bring up a really interesting point about the disease areas and how DOLs and KOLs factor in. In rare disease, you have a smaller group of KOLs who you’re working with, and they may be more inclined to be KOLs and not DOLs; whereas, say you’re working in a condition like diabetes, you have hundreds of thousands of individuals to choose from and many of them have leaned on those more digital technologies to be DOLs. So, sometimes, being a DOL isn’t even an option for the disease state you’re working in.

EDITH PEREZ, CHIEF MEDICAL OFFICER, BOLT BIOTHERAPEUTICS: 

Maybe I can add comments from a slightly different perspective because I may say that I was considered a KOL before deciding to get into the biotechnology/ biopharma space. Having that perspective has been very helpful in my transition to biopharma. I had the honor to be part of the Mayo Clinic faculty for 27 years, leading and collaborating in many trials, working with a wide range of people around the world, and being a co-author in more than 450 manuscripts. Integrity, ethics, team work, and communication have been driving principles in this trajectory. No matter how much technology we’ve been able to take advantage of, it is amazing to me how important it is to try to still meet face-to-face when feasible. We still need to take advantage of what’s new and communicate it effectively.

A big difference is that sales representatives have had much more access to physicians in the past compared to what’s happening now. To me, there has been a major change. I think focused and targeted meetings, plus digital strategies, are going to become even more important than they were in the past.

KILIAN WEISS, GENERAL MANAGER, VEEVA LINK: 

One thing we’re clearly seeing from the engagement is that hybrid is coming back and is super effective. It’s more effective than just in-person or just digital, and we have very clear data. The other interesting thing, going back to the theme we already discussed, is there’s a bigger group of stakeholders now. It’s the different channels; it’s more fragmented themes; it’s the different roles of these people all the way through market access. And what we’re seeing with many companies is they’re expanding the pool. There’s still a lot of, I would say, randomness in the engagement patterns. We’re seeing that about 70% of the KOLs engage with one company. It’s super interesting, actually.

I can add something, and it is [about] how we can help disseminate or communicate our own data, our own platforms, [and] the science behind the work that we’re doing. Because, again, in the past there has been a tendency to keep everything internally for pharma. All the slides are confidential; and if everything’s confidential, then we’re not making information accessible so that others can amplify the message. I think [we must] consider early [on] what is confidential versus what can be shared with KOLs, with digital persons who can assist us. It’s going to be critical [to be] very open and transparent.

Edith, you bring up a great point about safety. When it comes to opinion leaders, there is a higher risk inherently in working with a DOL than a KOL because something that can be said online can be shared at lightning speed. And we’ve seen it come back and hurt companies in the past. So, having those risk mitigation strategies, those very clear, concise messages that are approved, it’s really a different strategy—a different interaction. I did want to bring up that slightly elevated risk.

We’re used to traditionally having a lot of control over what is said about our drug in our tightly regulated environment, and even the [KOL] is used to having a lot of control about what he or she says about a disease, about a drug. In this new era—which we’ve all dealt with in all different parts of our life with respect to social media—we have less control. It’s almost incumbent upon and critical that we carefully use the appropriate language. And, again, Edith, you’d made this point that we really consider if we’re going to help frame the argument, frame the conversation, and bracket it. [This is] so that we make sure it is done properly and within the safe boundaries that the regulatory agencies require. Then we need to be very forward thinking and cautious about what we present publicly and that we are careful to not present something that’s confidential. What we publicly say should be designed to influence the conversation because it’ll get used, picked up, and magnified.

One other thing to raise that, I think, is critical for [the] rare disease [space]—and we’ve kind of touched on this point a little bit—is that it’s not just physicians who have an important digital role. Now, the people who are devastated by rare disease, as well as their advocacy groups, are also important. In fact, for ALS, we’ve seen two approvals this year. There’s an advisory committee coming up for another ALS drug; and in both cases, there’s been a slew, a cacophony, a torrent of patient petitions, patient support, [and] patient testimonials. And the way that ALS progress and programs have been publicized digitally are such that even non- ALS patients have rallied around this possibility for approval. We’re going to see not just physicians driving, but patients, themselves, and advocacy groups in support of those patients and everybody who struggles with disease X, Y, or Z really making a push for having an influence and a power.

That is actually very true for oncology drug development as well. Many times, the companies also collaborate with the patient advocates, and their digital platforms also help with the dissemination of information. It’s becoming a very digital world. Again, as I was mentioning earlier, those personal interactions are also important because there is that in-depth knowledge that we need to share and have a group of scientists in that same room talking to each other and trying to help the development of new therapeutics.

I would add nurse practitioners and nurses to this list as well. They continue to increase in importance as they help fill the physician shortages. They manage many chronic conditions and spend a significant amount of time with the patients, compared to physicians. It’s important that pharma companies communicate with these unique audiences, addressing their unique needs in an authentic voice versus taking this one-size-fits-all approach. I think that’s kind of what we’re getting at here, right? Everybody’s got unique needs. We have a collective goal in terms of better outcomes, but connecting with these audiences in an authentic way is very important.

It’s almost as if digital and social media have allowed for the democratization of shared decision-making in collaboration. We have patient influencers with millions of followers who are now able to weigh in on the clinical journey and weigh in on the pricing strategy with advocacy groups. It’s a very different world we live in.

I’m so with you. That’s definitely one of my remits, especially when I work with medical affairs clients. Let’s get medical affairs right off the ivory tower and into the community— and where we can really make a difference.

[When] treating an area like addiction, one of the issues we see is that for something like alcohol use disorder, only 5% of the people suffering seek medical treatment and most don’t because they don’t know medical treatments are available. So, I can imagine an influencer in the DOL space being able to reach a broad audience and let people know that there are options out there that are available, which is not the way you would see it being done through a KOL. [That is] because they’re experts and they do the trials. They have the knowledge, but they don’t have that broad reach to quickly get [information] out and get patients involved in the discussion and spread the word digitally.

And in terms of credibility, too. In the community of physicians, they have a high level of respect for KOLs. Not only the ones who have built up these impressive resumes in academia, but they trust the KOLs who continue to see patients and actually gain the trust of patients. That’s where you gain credibility. That’s where you say, “Okay, this person is living in the same world as I am.”

I have also seen some DOLs pulling the KOLs in. I have seen many online discussions where one of the DOLs will get a group of KOLs into the same space and have a long conversation on a specific disease type from beginning to end. What’s the current standard of care, what’s coming up in the future, [and] what excites them about these new drugs or new therapies? I think DOLs have a very special role in the scientific community nowadays.

One of my favorite tactics is to pair the credibility of a high-ranking KOL with a DOL to extend the message. There’s nothing better.

One thing that we haven’t talked about is how to monitor what’s happening out there in the digital space and who is mentioning our different technologies and trials. This is something that is really in my head quite a bit. What are people saying about our own work that we need to monitor, especially depending on the truthfulness of the information that’s out there?

That is a great point. It’s something that I do for most of my clients. We monitor the online landscape because people want to know what is being said about them by KOLs, HCPs, [and] patient advocacy groups, and they want to know before their investors know. So, we do a lot of monitoring. My only caveat is that I will always look on public forums, but I won’t go into private Facebook groups or other private forums because those are places where patients like to have private conversations. I feel like there’s a little bit of an ethical boundary there; but otherwise, it’s so crucial in developing strategy.

We’re seeing a similar pattern. We monitor about three million HCPs and what they’re saying on social [media], blogs, etc. We’re seeing almost two parallel universes. One universe is basically the scientific community, which is actually starting to communicate a lot via different digital channels. And then there’s another one, which is more of a new evolving group of let’s call them [DOLs] who are less connected to the scientific group. When we talk about [DOLs], there’s this group of traditional KOLs who sometimes have a huge digital audience, and then there’s a group of people who don’t have that academic credibility often, but they’re really important in the digital space. They’re very different groups, and we’re seeing their discussions and how the fusion of information through these networks is extremely different. I thought that was an interesting pattern.

KOLs and DOLs are not, at least by definition, mutually exclusive. So, ideally, your brand team or your medical affairs team can engage with a trusted leader in your disease state who also has an established online presence. And we’ve worked with many KOLs who have a passion for educating both patients and community HCPs online. We take pride in helping them translate the science by partnering with both our medical team and our behavioral science experts.

I was at a meeting [recently] where there were many, many people (KOLs, friends, etc.), and there were some opportunities from early pharma companies to present their data, and then the slides from the meeting were made available to everybody. I was shocked that some of the early pharma companies actually did not make the slides available. I thought, what a wasted opportunity. This person had a chance to present to 85 KOLs, and then they’re not making the slides available. It’s just to follow up on the conversation. We have to be part of what’s out there so that people can utilize it.

I have seen that both ways as well. Sometimes there is confidential proprietary information that companies are unable to disseminate broadly. You do have to make a decision on which media you will use, how well you want to use it, and how far you want to use it.

I think it’s all about strategy and being proactive in these interactions with KOLS and DOLs.

But I do want to bring up that point where we were talking about some KOLs also being DOLs. I think that is becoming more and more common because everybody’s understanding that the next generation who is coming in are going to be very efficient and very well-versed in technology. The one way to get their attention to influence or educate them is going to be through media. I think more and more KOLs who are interested in continuing to spread the knowledge will have to use multiple platforms, and they’ll have to get comfortable with the digital platform as well and kind of take on both roles. They’ll be a KOL sometimes and a DOL other times.

I believe that DOLs are the future. I think we look at medical students in medical school, and they’re all digital natives. They’ve just grown up with that type of interaction, and that’s going to naturally bleed into their practice and how they learn and how they share information.

They’re very comfortable having virtual meetings. I think about myself 10 years ago, and I know video conferencing was not as advanced. Also, you were very nervous about it. You were concerned about things like the background, if somebody’s going to knock on the door, or making sure that you have privacy. I think COVID pushed us into this new area where we just all became comfortable with it. We are fine having our cameras on or having a little background noise. We now have technology that cancels the noise, and we learned to work with it. I think the same goes for the KOLs because, remember, these are physicians who were treating patients, and they had to modify their habits along with their comfort level to even just do their job. They started treating and having consults online; they started looking at patients online. I think that transition during COVID helped them move into the DOL space as well.

They’ve gotten used to it so much that they appreciate some of the time saving that comes along with it— along with the cost saving. They don’t have to disrupt their schedule to have an in-person two-hour meeting out of the country sometimes. So, I think it’s here to stay.

As others have said, there’s a balance that’s going to exist going forward.

One other trend that I would like to raise is environment, social, and governance (ESG). When we think about the environment, sustainability, and all, these big companies now have these goals. They’re not flying KOLs around as much. There’s less physical presence at these different events.

Why do you think TikTok has become so popular with DOLs?

I personally think it allows physicians who came online during the pandemic to correct misinformation, to vent, and to get through the experience as a collective group of HCPs. TikTok allows them to share their scientific information but to do so in a way that is human. It allows them to show their personality with that scientific credibility. And that’s what I hear again and again from physicians who engage on TikTok. That’s why it’s their preferred platform.

Social media, especially over the last year or so, can be somewhat volatile. How do you handle the constantly changing landscape of social media platforms?

We’re monitoring a lot of these platforms and constantly have to make big investments and think about what areas we should be monitoring. We’re surprised by some of the things we’re seeing. One is that Twitter, or X now, is still being used a lot. It’s not a massive decline we’re seeing in the data, and then we are seeing increasingly fragmented platforms, some private. For example, video platforms like eCancer.

Even KOLs and DOLs have been actively championing a lot of changes on social media, such as platforms becoming more advanced or removing chatbots, de-amplifying hate speech, and even having input on algorithms. I’ve heard on Instagram, for example, the algorithm seems to be ever-changing. They’re all over it. In terms of how we see KOLs engaging in the social space, I think we mentioned TikTok quite a bit. But we also see [KOLs and DOLs] using features like polls on X and LinkedIn to gauge the knowledge base of their peers surrounding new clinical trial data. Drug announcements on Reddit with their ask-me-anything initiatives and the Q&A sessions, they can directly answer in-depth questions specific to disease states and patient journey experiences. They can reach a broader audience and correct a lot of the misinformation that’s out there while at the same time establishing their own personal brand as well as the institutions they represent.

I think the X/Threads conversation we’re having right now is a great example of this. We saw so many people flock to Threads at the very beginning. We’ve seen a little bit of drop off since then, but it’s still a viable platform. We look at Twitter, which has declined month over month, unfortunately, since Elon Musk took over, for a lot of different reasons. However, I’m thinking about upcoming medical conferences, where Twitter was that central platform for communication. Are people going to go to Threads? I’m not seeing that as much. I’m not seeing as much HCP engagement there. I’m actually seeing HCPs flock to Instagram, of all places. I’m curious as to how that will shake out.

I think people will find their new homes. When we saw Twitter start to dwindle, we saw a huge pickup in LinkedIn for HCPs. It’s a migratory pattern, and people evolve and adapt.

The more ambidextrous we are, I think, the better off everybody will be because the world is changing, it’s changing fast, and it’s not going to stop changing. For decades, the dynamic between pharma companies and [KOLs] was effectively the same. There were not a lot of differences the way most of our careers were for the first decade or two. Suddenly, in the last five years, everything changed. The more flexible that we are, the better off we are.

The smaller companies must be even more nimble because they have to see wherever the KOLs and DOLs and the other scientific communities are leaning. That’s where you can’t get stuck with one platform. You just have to continue to explore and shift if need be.

That research, that social monitoring, we do that for many clients. It’s a full-time job. You need to have those platforms to be able to do it. If you’re looking globally, you have to do it in multiple languages. There’s just a lot of considerations that go into it, and it takes time. It’s not just the mining of the data and the insights and the verbatims online. It’s that analysis that brings you to the insights that help form your strategy.

Lastly, I would like to talk about a new technology that’s gained a lot of attention in recent times. How does everyone see something like artificial intelligence (AI) impacting KOL engagement in the future?

I have so many thoughts on this one. I use AI every single day in my work. I make sure that I disclose when I use it, but it is incredible for research, for authoring social posts, for authoring content, and things that DOLs really need to use. Where there are extreme risks is that sometimes AI will generate things that are false, inaccurate, or plagiarized. When it comes to a KOL or a scientific piece, you must make sure that you have those safeguards in place to ensure you’re not plagiarizing someone else or that AI didn’t just come up with a completely false precedent for you that ends up included in a medical piece or something of that nature.

Where we are starting to see a really interesting potential is in helping to crunch all the data that’s out there and give very specific kind of recommendations on what to do. It all comes back to people. In the end, when I speak to a KOL, it’s common that they have a basic problem. They might have 20 to 50 people knocking on their door, and they don’t know what’s relevant and who can help them find the one relevant thing. I think that’s where AI can really help a lot because it’s less about creating that paper or creating that post that then goes out. It’s more for aggregating information and recommending maybe two or three relevant things. That’s what we see is probably the easiest application.

Articles

Executive Roundtable

Industry experts discuss the relationship between digital and traditional (key) opinion leaders and how companies are adjusting their strategies to harness the unique brand engagement benefits each role can provide in driving better patient outcomes.

An Evolving ‘Opinion’ Landscape: New Paths—and Synergies—for Pharma KOLs & DOLs

Stephen Rivera, vice president, global technical accounting advisory services and policy, Johnson & Johnson (J&J), isn’t a typical number cruncher. He’s happy to crack a joke, he welcomes people into his office if they need something, and he’s eager to jump out of his seat to display a CBI Life Sciences Financial Series Industry Trailblazer Award in order to underscore his accomplishments. His energy is undeniable, and he has used this superpower to bring people together throughout his career. For years, he has been helping to shape the accounting side of biopharma, both at J&J and as a chairperson of the Pharma-Biotech Accounting & Reporting Committee, a grassroots consortium of accounting professionals in the biopharma industry.

Rivera started from humble beginnings. He was born in Brooklyn, and his dad was a sanitation worker. From an early age, he had a passion for taking care of people. Initially, he thought that would lead him to become a pediatrician or family physician. However, he realized that blood and cadavers “weren’t for him” when he was exposed to the medical profession in the 1980s.

Looking to pursue an alternate service-minded profession, he saw accounting as a way to advise and help people. He studied at St. John’s University and became a certified public accountant (CPA) in 1984. Since transitioning from public accounting to the pharma industry, he has been able to leverage his profession to aid and represent fellow accountants to better understand, influence, and change the status quo in biopharma. He has helped create positive change, not just for his own company but for the industry at large by advocating for better accounting policies that make it easier for users of the financial statements to understand the economics of a transaction.

“At the end of the day, it all goes back to the accounting and making sure that you are shaping things in a way that helps investors and is compliant,” he says. “My role has always been getting closer to the economics of what the transactions represent so that investors have a better way to explain if it makes sense. Sometimes, accounting is so theoretical that it doesn’t tie into economics, and people get very confused. This is where I think the industry has come together to bring things closer and make that happen.”

Rivera’s goal is to uphold biopharma’s life-saving mission and support business innovation and opportunities that can benefit the future of humanity.

“When the accounting and economics are misaligned, it gets in the way of cures, and that’s not a good day for anybody,” he says. “It’s not good for the industry, and it’s not good for the profession.”

When Rivera started his career at Coopers & Lybrand in the 1980s, the mission of a public accountant was to be a business adviser. His job was to deal with clients and build business, and his personality helped him excel at the job.

At the same time, he felt somewhat out of place because he was extroverted and didn’t fit the typical accountant profile.

“People never saw me fitting in because I had empathy for the clients,” he says. “I was never black and white, telling clients what to do. I would try to understand what they were trying to do and be a good listener. And the people I worked for in those days looked at that as a weakness.”

But Rivera never let that deter him and kept true to himself. In retrospect, he realizes that may have held him back. Many of his peers who were promoted had a personality that drove clients in a certain direction. But that just wasn’t Rivera’s style.

After six years, he started working for a small utility company in New Jersey as his initial transition out of public accounting.

One day, Rivera received a phone call to work at AT&T in a financial reporting position. The hiring manager was someone Rivera previously worked with on an audit.

She appreciated his personality and passion for accounting and took him under her wing.

“She was way ahead of her time when it came to looking for diversity and uniqueness,” he says. “She knew the profession needed more of that, and when she met me, she said, ‘This is great—someone who can really speak honestly and feel comfortable,’ as opposed to coming in and telling people what to do.”

Rivera went to Lucent Technologies through the AT&T breakup and then eventually made his transition from telecom to the life sciences industry. His move to another highly regulated industry was seamless because he was skilled in technical accounting and generally accepted accounting principles, transferrable skills that are always in demand.

His first job in the pharma industry was at Aventis Pharmaceuticals, which later merged with Sanofi. When the French company asked Rivera to relocate to Paris, he declined. Through word of mouth, J&J heard that Rivera was looking for a job in the US and brought him on board.

“It was a lateral move, which I didn’t care about because J&J is a great company,” he says. “Our Credo at J&J aligns with my beliefs—how we think about caring for people [and] how we think about reputation. It all made me want to come here.”

Rivera started in a technical role and then moved into a director role. When the person who was leading his group retired, he took over and started managing the accounting for the entire enterprise, which he still does.

Rivera says accounting doesn’t drive the value on when to buy things but reveals how the company reports and discloses it for investors. He describes technical accounting as being the foundation of the company.

“It’s like a house,” he says. “It’s the cement underneath the entire company. Without having the accounting right, everything falls apart, and you lose your reputation. You can fix broken products; you can fix broken buildings; but when you have bad accountants who do bad things and it’s in the media, that’s something you can’t get out of. You can never lose sight of the reputation of what the company represents.”

Shortly after Rivera started in the industry in 2000 as director of financial legal accounting at Aventis, the Enron accounting scandal occurred. The energy corporation had been hiding entities offshore. To prevent further abuse of this nature, new regulations and legislation were issued, most notably the Sarbanes-Oxley Act of 2002.

“This hurt all industries and stifled innovation, because every time somebody made an investment in R&D, they had to look to these consolidation rules,” says Rivera. “Companies were walking away from opportunities because the accounting was too punitive. We used to do so many deals. But there was one year [around 2005] at J&J where we had almost no deals other than a true acquisition. No one could get a deal done. Every deal was a consolidation accounting issue, and the concern was that companies would have to consolidate an entity that they did not legally own.”

With the support of others in the industry, Rivera developed a dialogue with policymakers. He asserted that while it was important to recognize what happened with Enron, not everything benefitted from being consolidated. Together, they were able to get the pendulum swinging back toward the middle.

“We’re in a much better place today,” says Rivera. “We understand [the rules] and always look to them, but not in the way we used to.”

For the past 14 years, Rivera has used his voice as the chair of the Pharma-Biotech Accounting & Reporting Committee to discuss a variety of industry issues. The group has grown to include more than 100 accounting professionals from small biotechs to Big Pharma. They discuss emerging issues in accounting and topics unique to biopharma, such as business acquisition vs. asset acquisition, revenue recognition, sales-based milestone payments, collaboration agreements, in-process R&D, and goodwill impairment analysis.

Bringing these industry minds together is where Rivera shines. His mild, cheerful manner puts people at ease. His ability to listen makes people feel welcome. His ebullient personality is contagious.

“I have the skill of creating an atmosphere and getting people to talk,” he says. “I get people to feel comfortable and let their guard down, and then we can talk [candidly] about what’s going on and what’s at stake.”

Rivera is proud to be involved in shaping the accounting that exists today through his work on the committee. He has been able to create collaboration and consensus across the industry quickly, especially when issues arise that could have widespread negative impacts.

One of the topics currently being addressed by the committee is sustainability. Companies are conflicted about what it means for them and who owns it.

“As soon as there’s a number, people automatically say, ‘The accountants know how to do it,’” he says. “But this is way beyond accounting. We don’t know environmental laws. We don’t know all the metrics around climate and emissions. But we can help with developing processes and controls to help get that data and include it in a financial report.”

Another timely issue is whether accounting rules need to change as new concepts and ideas arise, such as crypto currency. There are various viewpoints on how to evolve, but Rivera believes that no accounting rule can ever be static.

“As the environment changes, as the industry changes, as work execution changes, so will accounting,” he says. “It’s another change-up that we might have to disclose to investors because of the way things have been done, and we have to prepare to be current on that.”

The committee also has discussed how increased automation might impact the workforce. Although technology can perform much of the information gathering that accountants have traditionally been responsible for, Rivera has confidence that the judgment of humans is irreplaceable. In fact, leaving the heavy lifting of data generation to technology can allow accountants more time for analysis.

“In the old days, I would spend hours working at night [tracking down data],” he says. “This is where accountants get a bad rep because we spend so much time finding stuff. Everything is manual, information is not readily available, you have to make phone calls, [and] you have to send emails. Artificial intelligence lets us flip the pyramid and make sure that the time spent on analysis is on top and information gathering is at the bottom.”

Rivera brings his true self to work each day. Raised in a Puerto Rican-Italian household, it is his nature to talk with his hands and speak fast, he says, and he is proud of it.

“It’s okay to be you,” he says. “It’s okay to be authentic. It’s okay to have transparency. And vulnerability is okay, too.”

Though he’s always had a bold spirit, Rivera didn’t always advocate for himself. That was something he learned to do eight years ago when he was diagnosed with pancreatic cancer and was given six months to live. From that experience, he gained a newfound courage that signaled a turning point in his career.

Rivera decided it was time to speak up after he was still in a middle-management position after years of hard work. He felt he wasn’t getting the opportunity and recognition he deserved at the midpoint of his career.

“If you believe that you’re not being recognized fairly where you are, it’s time to move on,” he says. “People need to reassess their balance sheet value. I knew that my balance sheet value outside of the company was worth more than I felt internally at that time.”

Fortunately, someone who worked with Rivera at J&J noticed his frustration and talent. That advocate couldn’t understand how Rivera could go so long without being recognized because he had seen his value firsthand.

“I think a big part of my [stagnation was due to] how people think about me,” he says. “But this person came in and was open to me—was okay being with someone who is extroverted, caring, and different.”

With internal support, Rivera received his due and was promoted within one year, ultimately elevated to the executive level.

“It wasn’t about being threatening,” he says. “It was about taking care of me and finding happiness. I’m glad that someone stuck their neck out for me. I think that being happy and having positive energy means a lot to the people you work with and your family. I think that’s part of why I survived cancer.”

Based on his experience rising through the ranks, Rivera worries about diversity in his profession. In his 40 years in accounting, he says he’s never had a diverse mentor. He hears from minority students that they don’t see accounting as a profession where they can excel or advance, particularly when the current leadership doesn’t represent them. From companies to standard setters to regulatory bodies, this lack of diversity often results in a one-dimensional way of thinking throughout the profession.

To counter this, Rivera has built a staff at J&J that includes talent and diversity of all types, such as professional, gender, and ethnic. His open-door policy allows his staff to share opinions and positions that may sometimes seem controversial, but he strongly believes that having people of different backgrounds brings original ideas and opinions to the forefront, which results in smarter decision-making. He also advocates for and promotes his staff to add to the diversity that J&J wants to see in its finance leadership.

While participating in employee resource groups and corporate diversity programs can be helpful, Rivera knows the value of having and being an advocate. He now pays it forward by sharing his story with college students and reaching out to young professionals and others in need of support. When a Mexican cafeteria worker saw Rivera’s name tag and asked how he could move up from serving coffee in the executive conference room to working for him, Rivera offered his advice. The man listened, went back to school, and received his MBA in accounting. He is now working at J&J and is in the process of taking the CPA exam.

“I always reinforce to other leaders that we need to be intentional,” he says. “There are people who are qualified, but we need to open the door and let people in.”

Rivera loves having people around him, whether that’s co-workers, friends, or family. He and his spouse raised four children— including a set of triplets—so get-togethers are always lively.

He has found that sharing his passion for cooking is a great way to gather people. Rivera is particularly fond of baking and enjoys bringing his creations into the office. He is known for his homemade crumb cakes, which have earned him the nickname “Stevie Cakes.” His chocolate-and-vanilla variety with dark chocolate crumbs on top is popular. He also makes plain, apple, blueberry, and peach versions. Another favorite is his tropical carrot cake, which includes pineapple and coconut.

“Food always seems to get people together to talk,” he says. “They come in and they can chat, which is fantastic. My motto is: I keep all the cooking in the kitchen, not on the books.”

— Elaine Quilici is a freelance content specialist based in New Jersey.

Executive Profile

Stephen Rivera, vice president, global technical accounting advisory services and policy, Johnson & Johnson, capitalizes on his lively personality—and a courageous career journey—to bring people together to shape the future of biopharma.

A Blueprint for Balance

Although the pace of innovation was strong for both pharmaceutical and the biotech companies and the pace of the US and European drug approvals continues to be solid, the financing, M&A, and stock market situations were divergent in 2022 and the first half of 2023.

Pharmaceutical share prices and valuations were strong in 2022, but they did poorly in the first half of 2023, increasing by only 1.1%, according to company data.* The positive news from the industry’s response to the COVID-19 pandemic and increased R&D productivity has been replaced by concerns about price regulation pressures and the fading tailwinds from the pandemic.

As we all know, there has been a huge decline in the biotech stock market prices and the number of IPOs and secondary offerings. For example, the number of IPOs dropped from 126 in 2021 to 17 in 2022 and only six in the first half of 2023. This has made it much harder to raise money for public and private biotech companies. The only positive was some improvement in the share values of the Young & Partners mid- and small-capitalization biotech index in the first half of this year.

Many biotechs who had plans to go public have been having serious funding problems since the IPO market has been an important source of very attractive equity funds to extend their research and regulatory runways. This has driven many to sell themselves earlier than they would have previously.

The drop in biotech stock market valuations has also pushed down the private equity funding valuations and availability. Venture capital firms took big paper losses on their existing ownership positions in private and public biotech/biopharma companies and dramatically slowed funding, except in the hot areas of technology. Their focus has been on defending their existing portfolio companies to make sure they survive the funding and IPO drought. However, there are signs that investing activity is picking up as venture firms take advantage of lower valuations and because they really cannot stop investing entirely.

With many of the private biotechs running out of money, we will continue to see downsizing announcements on a regular basis. Some biotech companies will not survive and will have to shut down. This down cycle has happened to biotech many times historically; so, this is not a new development in the history of the industry.

Acquisitions of biopharma companies by pharma have traditionally been a regular part of their business strategies. Although Big Pharma companies have revived their ability to invent new drugs, they still need to supplement their own efforts with acquisitions of and collaborations with mid-sized pharma and biotech organizations. This is particularly true for companies facing patent cliffs for their major drugs. However, the need and desire to acquire other pharma companies is now diminished.

Only 12 deals worth $5.3 billion were completed in the first half of 2023 vs. 42 deals totalling $59.9 billion for all of 2022. This represents a dramatic decrease on an annualized basis of the dollar volume and the number of deals, respectively.

However, the dollar volume may end up stabilized at last year’s levels, as the pipeline of deals on a dollar basis is strong, with two large deals announced: Pfizer’s acquisition of Seagen for $44.5 billion and Amgen’s purchase of Horizon Therapeutics for $30.2 billion (early last month, the FTC settled its challenge to the arrangement). As of June 30, the dollar value of deals announced but not closed was $81.7 billion (nine deals), including the planned Amgen-Horizon merger.

Big Pharma’s balance sheets and cash flows are strong in general; so, these companies have a great deal of dry powder. However, their more selective, cautious acquisitions of medium-to-small pharma companies is a reflection of concerns about the overall business environment, a move away from mega deals, and access to a wide variety of other strategic asset avenues, such as biotech acquisitions, partnering, and licensing.

Big Pharma companies have rightly come to realize that mega mergers/acquisitions are less effective compared to targeted acquisitions of pharma companies for a specific strategic purpose. The mega deals in the past did have significant cost synergies; but for the most part, they did not drive an increase in innovation and research results.

The M&A market outlook for pharma deals will likely be a decline in terms of the number of deals, but flat to potentially much higher in terms of dollar volume.

In the first half of 2023, 34 deals worth $30.9 billion were completed vs. 45 deals worth $24.3 billion in 2022. In other words, the total dollar volume and number of deals rose dramatically on an annualized basis compared to 2022. There was one large transaction, the $9.6 billion acquisition of Prometheus Biosciences by Merck & Co. But even if you take that deal out of the totals, the pace is much higher than last year. As you would expect, the largest volume of M&A deals for biotech was in the US with 24 of the 34 deals in the first half of 2023. Eight of the remaining 10 deals were done in Europe.

There is a distinct possibility that we will have a record number of deals and dollar volume this year compared to the yearly numbers going back to 1986. The pipeline of deals is also very strong. The dollar value of the pipeline of deals announced but not closed as of Sept. 30 was healthy at $11.2 billion (14 deals).

What is driving this trend? First of all, most of the acquisitions are being initiated by pharma companies who are aggressively looking to build their pipelines and revenues. Second, with the collapse of the IPO market, a severe reduction in equity funding, and a dramatic reduction in the share prices of biotech companies, biotechs are more willing to consider a sale of the company at an earlier stage than they were just a year and a half ago.

What is the outlook for biotech M&A? We expect more of the same in the future, driven by the same factors, with a relatively robust number and dollar volume of deals being completed the next couple of years, along with strategic partnerships and licensing.

Management will be heavily focused on acquisitions where there are compelling strategic rationales and where the same results cannot be obtained internally or through licensing and strategic partnerships. However, it will be challenging to determine what the right valuations are for each deal. With the collapse of the public market values for biotech companies and the downward repricing of private biotech companies in down rounds, matching buyer and seller expectations will continue to be a challenge.

Although we are facing likely recessions in many global regions, the EU in particular, no one expects the downturn to last for a long time; and pharmaceuticals are much less cyclical than most industries. The war in Ukraine and the geopolitical tensions between the West and China have become severe, but these factors will not have a dramatic effect on drug demand or strategies.

However, the ongoing challenges related to the supply chain, the dependence on China and India for active pharmaceutical ingredients and drug production, and the efforts globally to constrain drug pricing will have an effect over time on pharma companies and the role that M&A will play in their strategic plans.

* All data cited in this article were created by Young & Partners’ internal research group.

Feature

Exploring the pharma and biotech financing, M&A, and stock market
pictures through the first half of 2023—and implications for the future,
as market challenges continue to weigh heavily in senior management
decision-making.

Biopharma Stock Check: Market Review and Outlook

According to a recent Kaiser Family Foundation poll, 43% of US adults report in the past year that they or a family member in their household has put off or postponed needed healthcare due to cost. And that same poll reported that 47% of US adults say that it is very or somewhat difficult to afford their healthcare costs.

Fortunately, independent, charitable patient assistance foundations have long been recognized by the US government for their role in providing a critical safety net for Medicare beneficiaries and commercially insured patients with life-threatening, chronic, and rare diseases. In fact, these foundations are often the only available support people on Medicare with limited income can turn to for help, due to the Anti-Kickback Statute. As chief compliance and privacy officer with the PAN Foundation, I recognize the important role we play in supporting patients in need, while also adhering to the laws, regulations, and government guidance we are subject to.

In 2003, Congress created the Medicare Part D program to cover outpatient prescription drugs, requiring patients to pay out-of-pocket copays that can easily run thousands of dollars per year.

While pharmaceutical companies can, and do, directly assist commercially insured patients with their copays through their own programs, they are unable to provide direct support to patients on Medicare Part D and other federally funded insurance programs due to the Anti-Kickback Statute. This statute is designed to protect patients and eliminate abuse and healthcare fraud from federal healthcare programs.

To fill the gap in the safety net for federally insured patients who may need help affording their drug copays, the US Department of Health and Human Services Office of Inspector General (OIG) issued clear guidance to charitable foundations. These OIG special advisory bulletins and advisory opinions outline how foundations should operate to accept charitable donations from pharma companies in a manner that does not violate federal laws and regulations and helps patients access their necessary treatments.

Grants from charitable patient assistance foundations are often the only available support for people on Medicare with limited incomes, as they are facing high out-of-pocket costs for their prescribed drugs Rising out-of-pocket costs for these medicines impact economically vulnerable patients and can often lead patients to delay or go without their needed treatments.

When evaluating charitable patient assistance foundations, the intersections between compliance and operational excellence should be front of mind for both the foundations themselves as well as their donors, including pharmaceutical companies.

Charitable patient assistance foundations such as the PAN Foundation are independent, philanthropic organizations that are heavily regulated. There are multiple laws that all these entities—as well as pharma—must adhere to on an ongoing basis. These laws, regulations, and guidelines include but are not limited to the federal Anti-Kickback Statute, the federal Beneficiary Inducement Provision, the Internal Revenue Service’s code for tax exempt status, and advisory bulletins and advisory opinions issued by the OIG.

The federal Anti-Kickback Statute prohibits pharma companies from providing direct copay assistance to Medicare beneficiaries or others receiving government-funded insurance. More specifically, the OIG advisory opinions outline how drug manufacturers can donate to independent copay assistance foundations without violating the Anti-Kickback Statute. OIG Advisory opinions also outline how patient assistance foundations may operate.

For example, copay assistance foundations cannot maintain any disease fund that provides copay assistance for only one drug, or only the drugs made or marketed by one manufacturer or its affiliates. Independent, charitable assistance foundations clearly define for corporate donors—whether they are prospective or current donors—what we can and cannot communicate with them about our funds, patient population, and operations.

The federal Beneficiary Inducement Provision prohibits any individual or entity from offering or providing any type of payment to Medicare or Medicaid beneficiaries if doing so will influence the patient’s decision to use a particular healthcare provider, facility, or drug. And the Internal Revenue Code tax exemption status for charitable patient assistance foundations requires them to be organized and limits how they can influence legislation or participate in campaign activities.

Independent, charitable assistance foundations identify, design, and establish disease funds based on patient need, with full independence from donors, and have specific safeguards in place to ensure even unintentional influence cannot happen. Donor influence in disease fund creation can compromise foundation independence and can be the basis for an Anti-Kickback Statute violation—for both the foundation and donor company.

At the PAN Foundation, we provide donors with a documented policy for the types of communication we will not permit as it relates to the identification of a disease fund. Our funds are researched and reviewed by multiple clinical experts to document the impact that the disease fund will have on a patient community. If foundations receive input from a pharma company donor regarding the design of new or existing disease funds, they must not accept or pursue their proposals and advise the donor of this rule.

Independent, charitable assistance foundations should create and manage formularies in consultation with medical experts and maintain comprehensive standard operating procedures and policies that detail these processes. Importantly, foundations must cover all approved treatments for a diagnosis and cannot limit assistance to high-cost or specialty drugs. PAN’s formularies contain all prescription medications, including generic or bioequivalent drugs that are FDA-approved, listed in official compendia, and published in evidence-based or clinical guidelines.

In today’s landscape of charitable assistance, and in accordance with OIG informal guidance, foundations should ask donors for the same amount, or the total estimated patient need for a given time frame, when submitting funding requests for a disease fund.

This safeguard prevents manufacturers from donating in a manner that could be construed as an effort to target only the patients with the disease utilizing the manufacturer’s products and sets an objective, standard policy. The estimated total patient demand for disease funds, and the methodology used to analyze demand, should be shared proactively with donors. The information provided by the foundation cannot allow a donor to correlate its donations with use by patients of its products. In addition, working with foundations that ask for a minimum donation amount should be avoided. Every single donation—no matter the size—helps patients access critical medical treatment.

Once a fund is created, foundations must determine valid enrollment based on reasonable, objective, and verifiable eligibility criteria while processing applications. Tapping subject matter experts is a good way to determine eligibility requirements—and publishing all eligibility requirements and disease fund information on foundation websites.

There are several compliance considerations for foundations to weigh when communicating with current and prospective donors. To provide additional clarity, below are examples of what information can and cannot be shared. Foundations are allowed to share:

Reports that contain certain information in the aggregate, including but not limited to number of applications approved; net funds allocated; total copayment paid out.

Information regarding the total amount allocated to a disease fund and projections regarding the total estimated amount needed for each fund to maintain fund operations.

Information on existing or prospective disease funds.

General information about a foundation’s overall operations, including initiatives with providers and pharmacies, advocacy initiatives, key partnerships, and events and webinars.

Information about any individual patient.

Information that would enable a donor to correlate the amount or frequency of its donations with the number of patients that use its products or services, or with the amount or frequency of the use of its products.

The use of or fund support of a specific product or service.

Any wait/notification lists or information derived from such.

Information regarding donations made to the foundation by other individuals or entities.


Pharma companies should conduct their due diligence before deciding to work with a charitable patient assistance foundation. The key areas to evaluate include disease funds, formularies, eligibility and enrollment, donation practices, reporting, financials, data security and privacy, and compliance leadership programs. The following is a starting, non-exhaustive list of questions to ask:

Does the foundation have an established and independent body of experts to set disease fund policy?

Does it have an independent and standardized process for identifying disease funds that best serve patients’ needs?

Does it consult with subject matter experts to understand and project patient need for its disease funds?

What clinical standards does it use to define its funds?

How does it define and set eligibility criteria for its funds?

How does the foundation’s enrollment process work?

Does it utilize counsel to review new funds for compliance?

Does it have a documented policy for the types of communication it will not accept from manufacturers as it relates to the identification or delineation of a disease fund?

While this is a landscape filled with compliance considerations, by providing transparency around the processes of creating funds and determining eligibility, pharma companies will gain a greater understanding of why the need for independence is critical and how to compliantly engage with these foundations.

A look at the intersection of rigorous compliance and ethical behavior:
independent, charitable patient assistance foundations.

Securing the Safety Net in Drug Access and Support

The old axiom, “The truth is somewhere in between” may be a useful lens to gauge how a new generation of obesity drugs will perform in the payer market.

On one side is the school of thought suggesting that annual revenues will be in the multi-billions, with investment analysts’ tacitly assuming insurance will support demand.

On the other side is the “PCSK9” school, referring to extreme barriers payers created to restrict Repatha and Praluent coverage as an alternative to statins.

The discussion below will draw on conversations with payers and describe the likely payer market between these two sides.

There is a through line from the cholesterol lowering drugs that put their stamp on the market starting in the 1990s and weight loss drugs today. Assuming Mounjaro follows Wegovy’s recently announced outcomes data, the parallel with statins centers on huge patient markets and drugs that reduce cardiovascular events.

What bears emphasis is that aggressive statin discounts were essential for formulary access. Despite their varying potency, in battles between Pravachol, Zocor, Lipitor, and Crestor, access depended on steep discounts.

I recall an interview with the chair of a health plan P&T committee years ago, in reviewing impressive outcomes data and testing a more moderate discount. His response, “class effect.” I said, “But they have the outcomes data.” His follow-up, “We require outcomes data when we want and assume class effect when we want.”

Based on current discussions with pharmacy directors, it is highly likely that, depending on the AWP, discounts for obesity drugs could range from 35-50%. Also, with added competition, pressure for greater discounting will escalate. If manufacturers hold their ground on discounts, the potential to lose access grows.

Adding to the challenge is that closed formularies today have far more market share than in the statin era and, with payers readily assuming “comparability,” any product could be non-formulary.

In addition to a binary world of access, payers intend to use prior authorization (PA) to manage utilization. Discussions with key decision-makers point to requiring physician notes, with one sizeable insurer indicating it hired additional licensed practical nurses to review prescriber notes and BMI calculations.

Along with BMI requirements, a six-month try-and-fail diet and exercise step is likely. Also mentioned is a step through generics (e.g., phentermine) or older brands (e.g., Qsymia).

While tighter-than-label PA requirements are associated with orphan products, it would not be surprising to see high control plans use trial data to narrow the patient profile for coverage.

In addition to the threat formulary restrictions and PA limitations pose for product revenue, availability of coverage creates a separate limiting factor. For the commercial population, of the six scenarios noted below, only 1 and 6 translate to broad coverage. Scenarios 2 to 5 represent a continuum from modest coverage available to none.

States where obesity is formally a disease and coverage is required.

States where obesity is not recognized and coverage requires a separate rider.

Employers where obesity drugs are paid for from health savings accounts.

Employers ending or planning to end coverage.


Medicare is a big question mark, but four factors suggest no future coverage: 1) requires an act of Congress; 2) increased premiums; 3) lack of real-world evidence on safety for a senior population; and 4) multi-morbidities being so prevalent, as one medical director put it, “CMS is not worrying about the long-term complications from a risk factor like obesity.”

For obesity drug coverage today, as it has always been for breakthrough treatments targeting large populations, in the payer market past is prologue: since payers have the upper hand on cost management, even in this era of transparency, high rebates delivering low net cost will be the norm.

Pharmaceutical Executive: October 2023

An Evolving ‘Opinion’ Landscape: New Paths—and Synergies—for Pharma KOLs & DOLs

A Blueprint for Balance

Biopharma Stock Check: Market Review and Outlook

Securing the Safety Net in Drug Access and Support

Obesity Drugs in the Payer Market: What to Expect

Boosting Clinical Trials and Patient Access with Payer Insights

Are We Close to a Peak in Interest Rates?

The Harms of ‘Helicopter Research’ in the Life Sciences

The Rising Importance of Patient Advocacy Innovations in Asia

A Fond Farewell

Pharmaceutical Executive, October 2023 Issue (PDF)