In Pharma We Trust?

January 17, 2007
Pharmaceutical Executive

Volume 1, Issue 4

Consumers say no, and they're watching which companies are naughty or nice.

Pharma's reputation woes are a danger to its bottom line--and industry leaders aren't even aware of the size of the problem, according to a study released by PricewaterhouseCoopers. The nationwide survey of 500 consumers and 150 executives found that the two groups have vastly different perceptions of drug companies' trustworthiness, honesty, goodwill, and financial motivations.

It's no surprise that consumers don't think too highly of pharma. Nor is it news that company heads express confidence in industry values. What's surprising is how little the two points of view have in common. According to the report, 45 percent of consumers believe companies are more interested in developing "me too" and lifestyle drugs than innovative products, 62 percent believe they manipulate clinical data, and 94 percent believe they're too aggressive in promoting drugs off-label. By contrast, 91 percent of pharma executives say they are developing drugs for unmet health needs, 80 percent believe in the sanctity of clinical data, and 53 percent believes the industry abides by off-label promotion rules.

Consumers often don't understand what makes a follow-on drug unique from its competitors, said Brian Riewerts, a partner in PWC's pharmaceutical and life sciences advisory-services group. "That goes to the heart of the definition of innovation."

Whether accurate or not, public perception seems to be a growing force in the consumer-directed healthcare model--with a direct impact on a company's revenues. The survey's most important finding may be that corporate brands matter as much to consumers as product brands--with 78 percent of consumers saying that when given a choice, they consider a company's reputation before taking a drug. A 5 percent positive change in corporate reputation can translate into a 3 to 5 percent change in market capitalization, the PWC report found, citing data from the Research Institute, an independent organization. And yet the study found that two-thirds of execs remain convinced of the conventional wisdom that corporate reputation is not a factor in drug selection, with most leaders still skeptical that consumers even knew which companies produce which products.

"This is a bell that's ringing that we need to pay attention to," Riewerts said. He predicted that consumers will become even more savvy about who the players are in the drug industry as they begin to pay more of their own healthcare bills.

Under the leadership of Billy Tauzin, PhRMA has launched a series of campaigns to improve the reputation of the drug industry. Where the trade group was once considered something of a black hole among reporters, PhRMA now boasts TV, radio, and at least two educational Web sites that promote disease awareness, patient assistance programs, and the investments that are being made in R&D. And then there's Montel Williams--the drug industry's celebrity champion. Companies such as GlaxoSmithKline, Bayer, and Merck have also undertaken their own corporate-image initiatives to highlight their science-based mission.

Whether these efforts will succeed in restoring consumer confidence while drug safety and pricing remain hot-button issues is uncertain. "The challenge for many of our clients is that consumers are still concerned about issues that industry has tried to address," said Riewerts, noting that changes to DTC marketing--like doing away with "reminder" ads and imposing six-month "quiet periods" before new DTC campaigns--haven't stemmed criticism of the practice.

Consumers also underestimate the cost of bringing drugs to market by more than 50 percent.

Trust in healthcare, and especially pharma, has been in steady decline over the past 10 years, according to a separate report from Ernst & Young. That study found that trust is higher in countries with blanket drug coverage--suggesting that anxiety over cost and access still very much color how the public views the industry, and may have to be resolved before reputations improve.