Trust (trəst) noun – the firm belief in the reliability, truth, ability, or strength of someone or something.
Not necessarily the word that comes to mind when you read/hear about the turmoil in the pharmaceutical industry as it relates to drug pricing.
Payers lack trust in the therapeutic value of their patient’s treatment, particularly as justification for the proposed price points.
Providers don’t trust the product’s marketing; they just want to be educated on the product so they can best treat their patients.
And patients are losing more trust as prices rise with limited understanding of the reasons.
Though most companies would say the recent charges from the Department of Justice (DOJ) on generic drug price fixing have nothing to do with them, it does impact the industry reputation as a whole. Even the new administration in the U.S. has criticized the pricing practices of the industry (and subsequently sent market value plummeting). President Trump again emphasized the need to lower pricing in a recent meeting with pharmaceutical executives – showing that even among a myriad of high-priority, high-visibility national issues, drug pricing is still at the forefront.
Is pricing THE tipping point?
Will pricing regulation be in the foreseeable future for the industry? By most indications, it seems the pricing discussion is hitting critical mass, making the industry’s next steps crucial to future success.
Developing a trusted relationship with payers, providers, and patients is fundamental to the industry improving public perception. The recent ad campaign launched by the Pharmaceutical Research and Manufacturers of America (PhRMA) is a good start but it won’t be enough to quiet the industries critics or improve its reputation with the American public.
Unfortunately, the argument that the research and development of new therapies drives pricing is not holding water with customers any longer. The average American doesn’t understand the complex supply chain from manufacturer to pharmacy. Just as the food industry has done with the “farm-to-fork” movement, pharma needs to illustrate the complex operations behind drug development and distribution so the public truly understands the drug’s entire journey.
Pharmaceutical companies are also not typically a household name – unlike consumer goods, where brand influences reputation. Instead, the entire industry has obtained a blanket reputation. Transparency and a more intimate relationship with the primary end customer is absolutely imperative to rebuilding trust and fostering a more positive reputation for the entire industry.
What’s the path forward?
This is no small challenge for the industry. But it’s one that each and every executive should be considering as pricing pressures grow and the product pipeline narrows and slows.
Trying to eat the whole elephant at once isn’t the right approach either – this will need to be addressed in small bite-sized, measurable, and manageable chunks. New innovative approaches are necessary to communicate with patients and develop deeper relationships with payers and providers.
Trust is built over time and there’s no time like the present for the industry to start rebuilding trust.