Drug pricing has long been a key reputational issue for the pharmaceutical industry in the eyes of consumers. In light of recent media coverage of this issue, it is unlikely that perceptions are going to shift any time soon. However, many senior stakeholder groups are positive about the future of Pharmaceuticals.
Key trends identified by our research are:
- Scrutiny concerning drug pricing continues; consumers identify drug pricing as the main challenge facing the pharmaceutical industry.
- Investment in R&D has potential as a response to drug pricing criticism, especially as most consumers are undecided or neutral towards individual pharmaceutical companies.
- Senior stakeholders, such as MPs and business journalists view the pharmaceutical industry favourably and identify it as a sector with high growth potential.
- Understanding the views and opinions of senior stakeholders and consumers is key to building trust and reputation strength and securing license to operate.
In 2015, controversy regarding the price of drugs set by pharmaceutical companies had a new face, the CEO of Turing Pharmaceuticals Martin Shkreli. Now in 2018, the impact of this controversy continues to be felt. Not only has the reputation of both Martin Shkreli and Turing Pharmaceuticals suffered but the whole industry is facing further scrutiny. As one member of the Ipsos Reputation Council stated in relation to pharma, “one bad apple spoils the bunch”. At the same time, the UK Competition and Markets Authority has been handing out big fines for over-charging the NHS. This increased scrutiny is having an impact on consumer perceptions and vice versa.
Ipsos MORI’s annual Key Consumer Influencers Study (previously called the Sustainable Business Monitor) reviews sustainability and performance through the eyes of customers, consumers and the general public. We asked participants what the main challenges were for the pharmaceutical industry today. The majority, 53% stated that drug pricing was the main challenge. This was well ahead of the second most prominent challenge - providing people with access to medicines (23%). Both access to medicine and drug pricing are linked to the actions that the UK Competition and Markets Authority took regarding over-charging of epilepsy and hypothyroidism medications.
When we asked consumers why they see drug pricing as the main challenge for the industry, the perceived exploitation of the NHS was clearly stated as one of the main reasons.
NHS is being extorted when it comes to certain medicines
Participant, Key Consumer Influencers Study 2017
There is support for the recent stance taken by the UK Competition and Markets Authority and this demonstrates the reputational risk that pharmaceuticals can face. Some consumers have a negative perception of drug pricing and are unlikely to support future increases. This could impact the regulators’ actions.
Because a number of drugs being produced have very high margins and are not affordable for people - this can cause reputational damage if this is seen to be withholding life-saving treatment
Participant, Key Consumer Influencer Study 2017
Identifying the reputational risk, some pharma companies, such as Sanofi, have taken action in the US. Sanofi has effectively limited the increase in the price of its products to 5.4%, by pegging their price increases to the national health expenditures growth projection.
However, consumers do recognise intensive, costly research and development as a key reason why drug prices can be high. Building understanding of this necessity therefore has potential to mitigate the reputation risk from pricing issues:
NHS wants cheap [medications], drug companies want return on investment from R&D expenditure
Participant Key Consumer Influencer Study 2017
There is also a large proportion among consumers who are neutral in their views of the pharmaceutical sector, or undecided. They form a key constituency who might be open to engagement around these issues. The majority of consumers' responses are currently ‘neither favourable nor unfavourable’ or ‘didn’t know’, when asked whether they view individual pharma companies favourably. Of course, this neutrality can be either a strength or a weakness for companies, depending on the specific context.
The same is true for the extent to which consumers trust various companies; an essential building block of reputation strength. The Ipsos Global Reputation Centre tracks these perceptions over time and analyses the impact of major news stories, campaigns, communications and interactions among consumers – and whether these communications touchpoints shift their opinions of the sector and individual companies.
Beyond consumers, key stakeholder audiences, such as politicians and journalists tend to be more favourable than the public towards the pharmaceutical (and biotech) sectors. This positivity may be a result of having more direct engagement with the sector, for example via senior management, public affairs and media relations teams, and being more familiar with the sector-wide response to topical issues. Ipsos MORI’s MPs study takes place twice a year, in summer and winter, and is used to better understand the views of these senior political stakeholders. For the pharmaceutical industry, there is good news; after a dip in Summer 2016, the proportion of MPs who view the pharmaceutical industry favourably rose to 68% in Summer 2017.
Indeed, relative to other industry sectors, Pharma attracted some of the strongest levels of favourability among MPs. Pharma’s potential for growth was also identified by Business and Finance Journalists, 10% of whom said the sector had the greatest potential for growth. The pharmaceutical industry’s potential is clearly recognised by these influential stakeholders.
As drug pricing continues to be on the political agenda, analysing and understanding the views of both senior stakeholders and consumers will be key to shaping the pharmaceutical industry’s future. This insight can help communicators to engage more effectively around the issues that matter most to these audiences, and thereby build reputation strength and trust in the sector.