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Big_Pharma_Pinksheet

Seven top executives from the pharmaceutical industry have a very unpleasant meeting on their calendars for Feb. 26: public testimony before the Senate Finance Committee as part of a series of hearings on drug prices.

After receiving a public summons from the committee, all seven companies agreed to testify, and so Pfizer Inc. CEO Albert Bourla, AstraZeneca PLC CEO Pascal Soriot, Sanofi CEO Olivier Brandicourt, Johnson & Johnson Executive VP Worldwide Pharmaceuticals Chair Jennifer Taubert,Bristol-Myers Squibb Co. CEO Giovani Caforio,Merck & Co. Inc. CEO Ken Frazier, and AbbVie Inc. CEO Richard Gonzalez will all be making the trek to Capitol Hill to answer questions from the 28 members of the panel. (Also see "Invitation Accepted: Biopharma Leaders Will Testify At Senate Hearing On Pricing" - Pink Sheet, 7 Feb, 2019.)

Herewith is some unsolicited free advice for those executives – and for others in the industry – as the hearing date approaches:

Accept A No-Win Situation. Let’s face it: there is an inherent difference of interest between manufacturers (who naturally want as high a price as possible) and everyone else, who would rather that their medicines be free. So there is no upside for any of the companies involved in the context of a hearing premised on the idea that drugs are too expensive. The only goal should be trying to make it as painless as possible.

Avoid That  Picture. The Finance Committee does not usually swear in witnesses for its hearings, and the companies should do everything they can to make sure that they don’t in this case. If all seven executives have to stand and swear, that picture will bethe story of the hearing, no matter what else happens. Remember the tobacco hearings from the 1990s? Sen. Ron Wyden does. The Oregon Democrat is the Ranking Member on Finance and is itching to recreate the narrative of holding CEOs to account by making them swear under oath – and then catching them in a lie. (Also see "Opioid Manufacturers Should Prepare For A Tobacco Moment" - Pink Sheet, 5 May, 2018.)

In his opening statement during the first Finance Committee pricing hearing in January, Wyden once again compared Big Pharma to Big Tobacco: “The Finance Committee invited the heads of several of the largest drug companies to testify today. They weren’t willing to come answer our questions about why their products cost so much. Even the Big Tobacco CEOs were willing to come to Congress and testify, and they made a product that kills people. They all lied to me, but at least they showed up. The drug makers won’t even do that much.”

Don’t Lie. Okay, that should go without saying, but bear in mind that Wyden at leastwants the CEOs to lie. It may be trickier than it sounds to avoid doing so, particularly if Wyden (and others) ask simple-sounding questions that lure executives into repeating talking points that turn out to be provably false in the context of a specific pricing actions. So, for example, a company may “price to value” in theory – but what if there are emails showing that an individual pricing action was based on other considerations (like, say, an idea to exploit a reimbursement policy)?

Show Some Contrition. The industry’s campaign to focus the pricing debate on “middlemen” has been almost unbelievably successful, to the point that HHS is now proposing to do away with rebates altogether. (Also see "No More Rebates: HHS Proposed Rule Revises Anti-Kickback Safe Harbor" - Pink Sheet, 31 Jan, 2019.) But the finger pointing won’t play as well in a hearing with no middlemen to point at.

No one should apologize for developing and marketing successful medicines. But surely there is some room to acknowledge error in some things? After all, the industry is universally unpopular, and that can’t have been part of the plan. So – after reminding everyone that your business is driven by net prices, not list – find a way to express regret for failing to recognize that those list prices were having adverse consequences on individuals.

Change The Subject. Any time you can talk about a potential breakthrough in the pipeline – without appearing to duck a tough question – do it. If you can, plant some teasers that peak interest in follow-up questions thatdon’t have to do directly with pricing. Heck, even an argument over the fair term for patent life or the size of recent corporate tax cuts might be safer ground.

This Is A Group Portrait. You know the old joke about two friends being chased by a bear? The one with the punchline: “I’m not trying to outrun the bear. I’m trying to outrunyou?” That doesn’t apply here. No one remembers which of the tobacco CEOs looked best during those hearings 25 years ago.

There Is Safety In Numbers. There are advantages to being part of a group. Seven witnesses is a lot for one hearing. That assures that no one should be in the hot seat for too long during the five minute rounds of questioning.

If You Aren’t There, Be Grateful – But Take Notes. The list of companies “invited” to the first hearing is odd. It excludes, for example, the two largest insulin companies (Eli Lilly & Co. and Novo Nordisk AS ), even though insulin prices were a key focus in the first hearing. It excludes the two largest Medicare Part B companies (Genentech Inc. andAmgen Inc.), even though Part B reform is a hot topic in the pricing debate. And it excludes the one company recently investigated by the Finance Committee for its pricing actions (Gilead Sciences Inc.).

The good news for all those companies (and everyone else not invited Feb. 26) is that there can only be one “first” hearing. The photos from this event will be illustrating countless stories about the drug industry’s response to pricing policies for the next year or two – no matter how many more hearings are held.

But there will be plenty more hearings, and it is safe to assume that anyone wondering why they were lucky enough to avoid a summons this time should be expecting one very soon.

From the editors of the RPM Report

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