shutterstock_432404491.jpgThis is the second post in a two-part series on reputation management in the pharmaceutical industry. 

I concluded my last post by saying that the actions of one company can affect the public’s perceptions of many. That, in a nutshell, is a primary contributor to the pharmaceutical industry’s reputation problem. Over the past year, for example, a few companies’ drastic drug price increases have shaped the public’s perceptions of pharmaceutical pricing overall—so much so that, in an attempt to counteract negative perceptions, many pharma companies have publicly announced plans to keep their own price increases reined in. Last October, Allergan CEO Brent Saunders promised to avoid any price increases greater than 10% per year, and a half dozen or so companies followed suit. 

Pricing is one of many factors shaping the pharmaceutical industry’s reputation, of course, but it’s a big one. It’s likely the primary reason why so many pharmaceutical employees are hesitant to discuss their jobs at cocktail parties, for fear of being judged. High prices for a public necessity can lead to erroneous connotations of greed, but the public is privy to only a sliver of the reality of pharmaceutical financing. I recently discussed how this confluence of economics and awareness and education currently is directing public perceptions of pharma—and what pharma companies can do about it—with my colleague Jeanne Ryan, a principal of marketing and growth strategy consulting, who has spent several years helping both B-to-B and B-to-C companies overcome their reputation management challenges. The first half of our conversation appeared in my previous post, and here’s the second half. 

Pratap Khedkar: When pharma companies react to the pricing debate or other situations, instead of hiding under the radar, they tend to take big action—maybe it’s symbolic—to counter a specific allegation. When there have been such pointed counteractions and declarations, either in the past or in other industries, do they work or do they actually harm? 

Jeanne Ryan: It gets people’s attention because, as you said, pricing is top of mind when it comes to the pharma industry. But there’s a lack of understanding of how much pharma companies invest in the research and the clinical trials they do in addition to—or instead of, depending on the company—doing price increases. It may be equally important to be more transparent about the amount of money spent on developing these lifesaving drugs. We don’t want to take away their incentive to invest in research. People don’t realize that that’s a possible outcome of pricing pressure, and that wouldn’t be good for anyone. 

PK: A company may have to try 50 times to get one drug approved, so 49 times out of 50, the drugs fail. Of those 50 attempts, the one drug that succeeds has to carry the monetary burden of 49 failures. It’s the opposite of how the insurance industry works: When one building out of 50 is damaged, the policies on the other 49 buildings each pay some of the expense. Can you imagine if one building was expected to pay for the other 49? 

What about the messaging strategy? Counterattack ads are common in elections, and recently in pharma, companies have launched a direct counterattack on the lack of transparency associated with PBMs, the middlemen, specifically around their lack of transparency and the money they keep. I don’t know if it improves pharma’s reputation, but it helps that some other industry can share in the blame. Does pointing the finger at others work, or is the lesson to always stay positive and true to your story? 

JR: The messaging strategy is very important. There’s a lack of transparency and lot of misinformation out there. For example, it seems that whenever we talk about the rising cost of healthcare, we refer to drug pricing, but it’s not actually the biggest contributor to healthcare costs overall. But I don’t know whether attack ads are the right strategy. Unlike an election where it’s one candidate or the other, pharma still has to work with the PBMs. But I certainly appreciate the desire for better transparency as to where the money really goes. 

PK: Back to the reputation piece, can pharma companies take a cue from other industries to successfully reverse and repair their own reputations?

JR: Pharma’s reputation can absolutely be reversed. Companies need to take control of their story and focus on how their products improve lives, as well as other positive elements such as the philanthropic drug access programs offered by many of them. Right now, they’re letting everyone else tell their story for them. The more I work in the industry, it’s surprising to me that it has a negative reputation. What’s interesting about pharma is that those in the industry rate it much higher than those outside the industry. One contributing factor is that the general population is unfamiliar with these pharma companies. If you could have a little bit more familiarity and understanding from the general population, the industry’s overall reputation would improve. 

PK: The divide between the inside and outside perception of pharma is very stark. Most people I talk to in pharma companies are completely mystified and don’t understand how people can think of the industry so poorly. 

JR: Companies underutilize their employees as reputation management tools. Employees can be amazing ambassadors for the industry because they have knowledge to share, but few companies are mobilizing that resource in an effective way. Thinking about employee engagement and deputizing them to be ambassadors for the industry would be an impactful strategy. 

PK: That’s a great point. I know some pharma employees say, “When I’m at a cocktail party nowadays, I try not to talk about the fact that I work in pharma.” [Laughs] Pharma needs to turn that passion into advocacy a little bit more openly. 

JR: Absolutely, but they need a story to tell, right? They need to be equipped with the company’s elevator pitch and ongoing positive stories, and that needs to come from those driving the company’s reputation management initiatives. That’s the other thing that’s striking to me: If you survey CEOs and ask them whether reputation is important, most of them will say yes, but then very few of them actually have something in place to manage their reputation. They have few KPIs, despite knowing on some level that reputation is important. If you actually had someone managing that, then your employees would know what to say at that cocktail party instead of trying to hide the fact that they work in the industry. 

PK: Right, and after all of the stuff that’s happened in the industry, the only pharma CEOs who have been on C-SPAN or CNN testifying before Congress are the bad actors because they’re the ones who get summoned. But where are the companies that do a lot of good research and have lifesaving drugs? Why don’t their CEOs come before Congress to proactively tell their stories so that people watching get a balanced view? Do we create our own bias? 

JR: Absolutely. If that’s the only thing you’re hearing, then that’s what you take away from it. To your point, they need to balance their story significantly, and if they all told their stories, the balance would be decisively in their favor. There’s a handful of bad actors, but the overall story would be incredibly positive. 

PK: Isn’t it part of the reputation game that some unpredictable thing like President Trump’s tweets can whiplash companies around both reputation-wise and stock price-wise in a single day? He came out and said that pharma companies are “getting away with murder” and stocks fell by 3% to 5%. All hell broke loose and then things quieted down afterward, but that kind of whiplash can happen anytime. I think this goes to your point that when things are going well, you should always be building your reputation so that you can be insulated against unpredictable and random events. Any thoughts on what pharma needs to do to counteract that? 

JR: The best way to counteract that is to always be building a positive reputation and telling the company’s story, and then something like President Trump’s statement won’t have a big impact. A company is most vulnerable to random events when the focus has shifted away from building its reputation. 

In my reputation management work, I’ve measured the difference between supportive behaviors such as the likelihood of giving a company the benefit of the doubt in the case of bad news. In one study, consumers were three times more likely to give the benefit of the doubt to a company with a strong reputation versus one with just an average reputation. 

For example, in the midst of a norovirus outbreak last year, fast-casual restaurant chain Chipotle acted quickly to turn the disaster into a teachable moment for its employees. By taking the contamination threat seriously and working to improve food standards, the company re-earned the public’s trust. The events were more than a bump in the road for the restaurant chain, but its strong reputation leading into the events minimized the crisis’s effects

I think that all of this is best illustrated by the Warren Buffett quote: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” It speaks to the importance of companies proactively building their reputation at all times, and minimizing the mistakes. 

Jeanne is right—as is Warren Buffett. Building a good reputation takes time, and you have to do the work when things are going well, developing and then shoring up positive perceptions of your company and brands. A strong reputation is an invaluable asset that can help improve your revenue and market share now, and get your company out of some tough spots later—and you never know when you’ll need it. 

Pharmaceutical companies are accustomed to taking the long view. We just need to broaden our focus beyond managing pipelines and hone in on improving perceptions. 


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Topics: marketing, Pratap Khedkar, Pharma, Pharmaceutical Companies, Pharmaceutical Marketing, healthcare ecosystem, reputation marketing, reputation management, reputation, corporate reputation, pharma marketing, Jeanne Ryan, perception