We have many reasons to be thankful this year — and we hope you do too. In the spirit of being thankful, The Week That Was team will be on hiatus next week to chow down on turkey and stuffing leftovers and score a few Black Friday deals. We’ll be back for regularly scheduled programming on December 4th.
FEDS NOT FEELIN’ THE LOVE FOR PHILIDOR
The Greek prefix “phil” is supposed to suggest love or affinity, which is exactly the opposite of what U.S. Attorney Preet Bharara is feeling for Valeant Pharmaceuticals and its mail order pharmacy Philidor Rx Services. Last week, federal prosecutors arrested Philidor CEO Andrew Davenport and former Valeant employee Gary Tanner, accusing the two execs of a “multi-million dollar fraud and kickback scheme.” The arrests are the first charges in multiple federal and state investigations into Valeant’s previous business practices, which have come under intense scrutiny and resulted in a nearly 90% reduction in market capitalization. If you haven’t read the headlines, the alleged situation is this: Valeant bought an option to acquire Philidor in 2014, a detail never disclosed to investors. Last fall, the press revealed Valeant used this relationship to unlawfully drive products sales — including a scheme to alter Philidor-dispensed prescriptions to specify fulfillment with branded Valeant drugs instead of lower-cost generics. According to federal prosecutors, Tanner and Davenport oversaw this plan while Tanner headed Valeant’s “alternative fulfillment” efforts. At its height, 90% of Philidor-filled scripts were Valeant-branded products. Most damning of all though was an email Davenport sent Tanner comparing their actions to Butch Cassidy and the Sundance Kid. Bad idea, much?
This should be obvious, but if you engage in unlawful actions, sending emails comparing yourself to Wild West bank robbers is probably not a smart idea! Unfortunately, this story adds to the ugly narrative being written about the pharma industry − and once again − eclipses its positive contributions to healthcare. Back in the public hot seat, the industry is forced − once again − to prove that one or two “bad apples” are not representative of the majority. Drug makers need to press forward with changing the conversation back to what they do best—improving and extending the lives of millions.
AMERICA’S PHYSICIANS VALUE-BASED PRICING POLICY
Last week, the American Medical Association (AMA) announced it has adopted a value-based pricing (VBP) policy to address the escalating cost of prescription drugs. As part of this approach, the AMA will use its advocacy efforts to support value frameworks, such as those advanced by the Institute for Clinical & Economic Review (ICER) for pricing standards for medicines. The AMA’s guiding principles reference the need for “independent agencies” to establish value-based prices for pharmaceuticals and recommends criteria similar to those ICER uses in its model. Notably, the AMA cites a near doubling of drug prices since 2011, and emphasizes that such costs are used as the main justification for health insurance premiums’ increases. With ICER soon to issue upcoming reports in major disease categories like rheumatoid arthritis and multiple sclerosis, we expect it will leverage continued outrage over drug pricing to drive media and public attention to its work.
Unfortunately, the AMA only tells one side of the story, failing to note the cyclical nature of payers’ rebate expectations that often prompt increases in drug pricing to maintain formulary access. More work needs to be done so that providers, patients, and the general public understand the competitive dynamic of formulary negotiations and begin to follow the rebate dollars. The AMA does highlight the need for physician discretion and flexibility regarding patient response to medicines. With the AMA pushing for pricing transparency through its Truth in Rx grassroots campaign, pharmacos must remember physicians are a key group to connect with when making decisions on drug-pricing —before pricing is announced.
FACEBOOK NAVIGATES FAKE NEWS & FALSE METRICS
This week, Facebook embarked on a reputation-mending journey, trying to rebuild trust with advertisers and publishers after inaccurately measuring the frequency and duration of user interactions with content. Back in September, the company apologized for an error resulting in significant overstatements of how long users watch videos on the social media site. Since then, the company has undertaken several corrective steps, including increased use of outside measurement services, forming a “measurement council,” and launching a new blog: Metrics FYI. But Facebook isn’t out of the woods yet. Recent reports claim that in the final three months before the U.S. presidential election, the top-performing fake election news stories on Facebook generated more engagement than the top stories from real major news outlets. President Obama is calling these false reports a “threat to democracy.”
What impact will these measurement miscalculations have on advertisers and publishers? And should Facebook be held responsible for flagging bogus news stories? If we had a crystal ball, we’d say the measurement blips probably won’t harm Facebook’s reputation or its bottom line much, since they’re taking a ‘mea culpa’ approach and communicating frequently and transparently about the issue. But the fake news is a tougher call. As our experience in reputation management has shown us, trust is a tricky thing, and once lost, it’s hard to regain. The key for Zuckerberg and his team on the fake news is to acknowledge and act fast to correct it. Fast. Hey, Mark—call us?
SHOW EVERYONE THE MONEY
A new report published in Mayo Clinical Proceedings claims there is a “sizeable alliance” between cancer patient advocacy organizations and pharma. Of 68 cancer patient advocacy organizations reviewed, almost all received funding from the biopharmaceutical industry. The only patient advocacy group not accepting pharma funding is San Francisco-based Breast Cancer Action, which noted, “Money buys silence [about high drug prices].” This is not the first time that press have alleged that advocacy groups are effectively silenced on drug pricing because they source funding from the same pharmaceutical companies who make the medicines they need.
The pharma pricing specter looms so large that it is now casting shadows over patient advocacy groups’ good intentions. The allegation that these organizations don’t speak freely about issues like the affordability of medicines because of financial ties is troublesome for both pharmacos and patients. A possible answer? Show them (and everyone else) the money! Pharmacos should publicly list the donations given to all independent charitable organizations and educate the public on why and how you support chosen advocacy groups. Transparency will go a long way in proving that pharma relationships are above-board.
Wishing everyone a wonderful Thanksgiving holiday,
– The Issues Management Practice @inVentiv Health PR
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