CONGRESS FIRES AT PHARMA
The day we’ve all been waiting for did not disappoint. In fact, the rhetoric was fiery between Congressional committee members and pharmaceutical executives testifying at Thursday’s hearing on drug pricing. Convened by the Congressional Committee on Oversight and Government Reform, executives from Valeant and Turing were summoned to defend their significant price increases to existing drugs. Valeant Interim CEO Howard Schiller (who is stepping in for Michael Pearson while he battles severe pneumonia), Turing Pharmaceutical’s Chief Commercial Officer Nancy Retzlaff and former CEO Martin Shkreli all appeared. Under questioning, Schiller said Valeant has had a “change of heart” and will revisit its pricing strategy. Shkreli clarified his last name before consistently taking the Fifth. His doodles and smirks initiated a series of Internet memes, before he was dismissed. Shkreli didn’t hide his thoughts after the fact, tweeting that Congress is full of “imbeciles.” The Pharmaceutical Care Management Association’s CEO Mark Merritt argued for Congress to monitor a list of off-patent drugs. You can watch Thursday’s fireworks here.
Our Take: Don’t hold your breath for legislative action any time soon. While the hearing was contentious from start to finish, House Republicans appear less concerned than their Senate counterparts about pursuing any meaningful legislation on drug prices. But, the hearing reflects the ongoing pressure on the industry. We’re taking bets about which company will launch the next pricing and transparency pledge.
DIETARY GUIDELINES A FOOD PYRAMID SCHEME?
Remember when consuming fats were bad and carbs were good? (Yes, for those old enough, this was a brief period of history…) Well, the misguided war on fat is just one example of the flaws in the national Dietary Guidelines, according to a recent Wall Street Journal oped by Dr. Steve Nissen. Nissen is the Chairman of the Department of Cardiovascular Medicine at the Cleveland Clinic (and the man known for taking down Vioxx and Avandia). He claims the government and its advisors tender tenuous dietary advice because it uses models based upon observational, epidemiological studies and not more rigorous randomized clinical trials. He claims this has led to the federal government propagating bad counsel for decades – leading to adverse — rather than beneficial outcomes to public health. Congress apparently agrees and has appropriated $1 million for an independent review with guideline revisions due in 2020.
Our Take: It’s extremely difficult to conduct experimental studies needed to determine true cause and effect when it comes to nutrition and food consumption. Just imagine what it takes to scientifically control for anything and everything people consume! We would not bet on USDA RCTs anytime soon. But, we would bet on Dr. Nissen vying for a Cabinet position in the next administration. This would not be the first time Nissen plants a flag in an election year.
BLANKFEIN BACK IN ACTION
Goldman Sachs Chairman and CEO Lloyd Blankfein gave his first interview to CNBC’s Squawk Box since undergoing treatment for lymphoma in late 2015. Despite enduring over 600 hours of chemo, Blankfein described how he continued to work, but had a plan in place to delegate tasks when he was too ill to complete them. Blankfein is one of just several CEOs in recent months who demonstrated the potential conflict between medical privacy and Company stability. We’re reminded of Bob Benmosche, the former CEO of AIG, who led the company’s turnaround while battling terminal lung cancer. Benmosche, continued to work almost until his death, but had organized a clear CEO succession plan almost two years prior.
Our Take: Leading a company is a hard and high-stress job, and it’s even harder when scrambling to fill a leadership vacuum when a C-Suite executive’s health may be in question. There certainly is a fine balance between transparency and privacy, but Blankfein’s approach is a new model for the committed C-Suite executive.