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The Week That Was: Crises in Communications

The Week That Was: Crises in Communications

July 13, 2016 0 Comments

Hello Readers,

After this gorgeous sunny summer weekend, we bring you the high-brow and low-brow highlights that the healthcare sector has to offer. From the pages of Vanity Fair, we are reminded about the Icarian downfalls of two healthcare industry execs, Elizabeth Holmes and Mike Pearson: an unchecked lust for growth (and shaky business fundamentals) can get you burned. And not to be forgotten in the pages of infamy, Martin Shkreli is potentially getting a last laugh on Mark Baum, the CEO of Imprimis.  And we ask whether the Department of Health and Human Services will deliver the next punch to the industry in the national drug pricing debate…

Read on for more in The Week That Was.


The exiled bad boy of the pharmaceutical industry can’t seem to stay away from Twitter more than Winnie the Pooh from honey. And the FDA delivered a particularly sweet fodder to Shkreli last week in the form of draft guidelines for drug compounding. Drug compounding, the process by which pharmacy labs combine the component parts of a medicine, have led to infectious outbreaks and even deaths in recent years when quality plunged. So why would Shkreli care? Rewind to last year, when the CEO of Imprimis Mark Baum signed an agreement with Express Scripts to make the component parts of Turing’s drug daraprim available for one dollar, thereby, undercutting Shkreli’s suggested pricing for the medicine.  In the new guidance, the FDA cautions against compounding commercially approved drugs because it needlessly exposes patients to products that the government has not evaluated for safety and quality.  Naturally, Shkreli handled this news with the statesmen-like poise we’ve come to expect by Tweeting at Mark Baum:


Despite oversight and quality concerns, there are moments in history, propelled by drug scarcity, allergy or affordability, when compounding comes back in vogue. So, it’s no surprise that Imprimis scored major points last year when it checked the public nemesis Shkreli. So the debate over FDA’s draft guidance may elicit more sparks yet. As long as drug prices remain high, compounders will have a populist argument for making medicines more affordable.


Vanity Fair gave readers an insider look at how two former bright lights in the healthcare industry – Mike Pearson and Elizabeth Holmes, obfuscated and unraveled much of the empires they built. VF exposes in detail how former Valeant CEO Mike Pearson molded Valeant into a company that prioritized creating shareholder value above all else – a move making him beloved among Wall Street and hedge fund investors such as Bill Ackman, but reviled among some patients and physicians who experienced higher drug prices and minimal support. The investigative feature portrays Pearson as a CEO driven solely by profits, who told audiences to “charge what the market will bear,” and also stated publicly that breast cancer research was a losing proposition because no pharmaceutical company has generated a positive return on it. Not exactly patient-centricity. Meanwhile Elizabeth Holmes, CEO of Theranos, is beset by her own troubles. On Thursday, it was reported Holmes has been barred from operating or managing a diagnostics laboratory in the United States, following quality violations plaguing the company over the past year, leaving many to wonder whether this is the last chapter for Theranos.


Hubris seemingly fueled the rise of Holmes and Pearson, and then hastened their fall. Warning signs were flashing to employees and investors long before their public downfalls.  In the case of Valeant, dermatologists and hospitals were raising warnings about the price of Valeant drugs like Isoprel and Nitropres before their concerns erupted in The New York Times. And Holmes knowingly dismissed the concerns of several internal whistle blowers. Both Pearson and Holmes are a cautionary tale to investors to ensure the prophesizing by the “key man” at the top must be supported by strong underlying business fundamentals and performance.


As we head toward a Congressional summer recess, the focus on drug pricing may slow down… EXCEPT for a forthcoming report expected from the Department of Health and Human Services (HHS). Morgan Stanley reports HHS is due to release a Prescription Drug Report any time now, which will detail prices paid by federal programs for the ten most expensive and widely prescribed drugs (watch out if you’re a manufacturer of a major chronic or infectious disease). It will also evaluate: price changes of prescription drugs, patient access to medicines in government programs, health outcomes, and the time/cost it takes to bring a drug to market.


The most interesting components of the report may be what is left out — the disclosure of true net prices after discounts and rebates. The report may perpetuate a debate about the true cost of medicines in America. The future of state drug-pricing policies being considered California and Ohio may also ride on this report, as they rely on transparency for the net pricing that the Department of Veterans Affairs pays for medicines. Time will tell!

Until next week,

 The Issues Management Practice @inVentiv Health PR

Missed us last week? Past issues can be found on our blog by clicking here.

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