Yesterday Reuters reported that, in comments at a Financial Times conference in London, a top executive at Roche Pharmaceuticals condemned direct-to-consumer advertising as a disaster. “Direct-to-consumer promotion [of drugs] was the single worst decision for the industry," said William Burns, Roche’s head of pharmaceuticals, to conference attendees. "When industry says we're spending all the money on R&D but actually it's spending it on TV advertising to preserve margins, it doesn't get much credibility,” he continued.
Burns’ despondency is understandable: if ever there was a time that the prescription drug industry needed credibility, it’s now. For the first time in recent memory, drug companies are facing the prospects of an end to their free ride of unregulated profiteering. There are already rumblings that both the Obama Administration and the Democratic Congress want to stack up a series of clean legislative victories by going for “low-hanging fruit”—bipartisan, popular initiatives that will pass easily—and there are few juicier targets than Big Pharma.
A few days ago, The Chicago Tribune reported that President Obama will likely push for “cheaper copies of expensive drugs derived from biotechnology,” will let Medicare “negotiate drug prices directly with drug companies,” and will try to make “it legal for pharmaceuticals to be imported into the U.S.” In other words, Obama wants to make drugs cheaper for patients, and thus impact drug companies’ bottom line. According to David Dranove, professor of health industry management for Northwestern University's Kellogg School of Management, these changes have been “hanging there [in Congress] for some time and will be easy sells and easy to get through."
For its part, the industry knows that it’s got a big, fat target on its back. During the presidential election, drug companies were torn over which candidate to support, mostly because they couldn’t decide who hated them less. Even John McCain boasted—not untruthfully—that he repeatedly “took on the drug industry” over the course of his career.
The comparable distastefulness of both candidates led to a development that hasn’t happened in almost twenty years: the prescription drug industry gave to the Democratic and the Republican presidential candidate in almost equal amounts (usually pharma goes for the GOP). “Both [Obama and McCain] blame big drug companies for high prices and reduced innovation,” sighed one industry insider. “In either case, we should expect more price negotiation and re-importation [of drugs].” Translation: the honeymoon is over.