Pharma, heal thyself
Drug dealers were once favorite movie bad guys. These days, it's drug companies. Can they repair the damage?
By John Simons, FORTUNE writer

NEW YORK (FORTUNE) - In certain K Street corridors -- not to mention whole swaths of New Jersey and Pennsylvania -- this year's most controversial Oscar-nominated film isn't "Brokeback Mountain." It's "The Constant Gardener," a suspense-thriller whose chief villain is a big, bad drug company.

Drug dealers were once favorite movie bad guys. These days, it's drug companies. That Hollywood can manufacture a plausible storyline in which a major drug firm commits all manner of corruption and even murder, speaks volumes about the American public's already deep mistrust of drugmakers.

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A 2005 poll by the Kaiser Family Foundation found that 7 in 10 Americans believe the drug industry "puts profits ahead of people." It wasn't always this way. As recent as 1997, nearly 80 percent of respondents to Harris Interactive's industry reputation poll said they believed Big Pharma did a good job serving the needs of consumers.

Since that time, however, as drugs have become the fastest-growing portion of the health care budget, the portion of Americans who have a negative opinion of Big Pharma rose to an all-time high of nearly 60 percent in 2004.

Sentiments like those are causing Big Pharma executives ulcers. It's not just a matter of bruised egos and hurt feelings. The public's revulsion translates directly to support for tighter government regulation of drug prices. According to the same Kaiser poll, two-thirds of Americans would favor government intervention -- even if it means reducing the industry's ability to fund new research and development.

No one is more forthright about Big Pharma's PR troubles than Billy Tauzin, president and CEO of PhRMA, the drug industry's powerful trade organization and lobbying group.

"The question is: Are we doing things to deserve a better relationship," asks Tauzin. In the recent past, he admits, the industry seemed disconnected from patients outside of its sometimes shrill and sensational direct-to-consumer advertising. It's not a coincidence that the industry's decline in public esteem occurred after the FDA's 1997 relaxation of advertising rules.

Tauzin, who took over as head of PhRMA a year ago after retiring from 13 terms as a U.S. Congressman, is attempting to bridge that gap between pharmaceutical companies and patients. Part of the answer, he believes, lies in the industry's new self-imposed advertising guidelines. The new rules, which went into effect on January 1 of this year, require drug advertising to be generally more educational and more candid about safety concerns and side effects.

In-your-face ads aren't the only thing that has consumers steaming. "If you're watching an ad on TV showing a drug that could save your life and you can't afford it, you have a right to be resentful," insists Tauzin. "People are angry about not having access to medicine."

To address lack of access among the poor, PhRMA launched a nationwide Partnership for Prescription Assistance. Tauzin won't reveal the operation's budget, but, he says, in nine months of operation the program has matched 1.6 million low-income patients with public and private coverage plans, resulting in "free, or almost free medication".

PhRMA's member companies are also grasping for their own ways to combat the public's ill regard. GlaxoSmithKline (Research), the world's second largest pharma company (behind Pfizer (Research)), recently announced a plan to deputize all of 8,000 sales staffers as grassroots PR agents. The idea is to turn them into community evangelists. According to a recent piece in Advertising Age, GSK salespeople are speaking before Lion's Clubs, Rotarians and student groups, say, addressing drug safety.

It remains to be seen whether any of these efforts can repair Big Pharma's damaged reputation. Oddly enough, in the wake of Merck's (Research) Vioxx recall -- perhaps the biggest crisis to hit the drug industry in recent decades -- Big Pharma's likability rose to 56 percent in 2005. Still, drug companies are on par with Big Oil, Big Tobacco and managed care companies when it comes to low public approval ratings.

Even more needs to be done. Over the last decade, drug companies have not only peeved consumers. They've angered doctors too. As Big Pharma's ever-growing battalions of salespeople are putting greater demands on physicians, doctors are also forced to counsel patients' about self-diagnoses they'd made after seeing television drug ads. Mending the relationship with doctors seems more fruitful than empowering glad-handing marketing reps to "sell" the notion that Big Pharma cares about them. Doctors are, after all, the middlemen in the relationship between Big Pharma and patients.

The industry would also do well to squarely address the issue of drug prices. Most of the public doesn't understand why a pill the size and shape of an aspirin costs 10 times more if it cures high cholesterol rather than headaches -- or 100 times more if it stops cancerous tumor growth.

Part of the answer is that much of what drug company lab workers do is exploratory in nature. Most of the drugs they test will never find their way to pharmacy shelves. The price of that free-ranging experimentation is fairly high.

In an interview I did with Pfizer CEO Hank McKinnell a few years ago, he lamented patients' obsession with pill prices. "When people worry about growth [of medical costs, including drugs], I say let's make more patients aware of the consequences of not maintaining their health, sometimes with prescription medicine," McKinnell said.

He noted that a bypass surgery or coronary angioplasty procedure can cost $30,000 to $50,000. "When the patient is discharged, they can reduce the risk of a second such event by 30 percent to 40 percent by taking [Pfizer's top-selling cholesterol reduction drug] Lipitor everyday. That Lipitor prescription costs them two to three dollars per day... And that's the long-term way to hold down health care costs."

Will patients ever swallow that argument? If so, Hollywood may soon have one less bogeyman to spook moviegoers.

Plugged in is a daily column from writers at FORTUNE magazine. You can reach today's columnist, John Simons, at jsimons@fortunemail.com . Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.