Press Release: Consumers and Pharmaceutical Companies Far Apart on Views of Pharma Industry
Consumers and Pharmaceutical Companies Far Apart on Views of Pharma Industry, Finds PricewaterhouseCoopers Survey
Perception Gap is Eroding Public's Trust, Industry's Reputation
NEW YORK, Jan. 9 -- Significant differences between the public's view of pharmaceutical companies and the industry's self perception have caused the pharmaceutical industry to lose the trust of its key stakeholders, according to a PricewaterhouseCoopers (PwC) report released today, titled "Recapturing the Vision: Restoring Trust in the Pharmaceutical Industry by Translating Expectations into Actions." The disconnect is contributing to the decline in the industry's reputation and causing the industry's messages about its value to society to fail in the court of public opinion.
In a nationwide survey of consumers and pharmaceutical industry stakeholders, including physicians, health insurers, researchers and policymakers, PwC found that the public believes the industry has put profits before patients, abandoning its original vision of improving human health. As a result, the public disregards the benefits that pharmaceutical companies bring to healthcare. According to PwC, unless the industry takes decisive steps to understand and narrow the gap between its actions and public perception, its damaged reputation will continue to pose a threat to the long- term success of the industry.
"It is difficult to comprehend how an industry that has saved so many lives should be held in such low public esteem. Yet in the current climate of distrust, the public is questioning the industry's motives and practices from sales and marketing to pricing to drug development," said Peter Claude, a partner in PricewaterhouseCoopers Pharmaceutical and Life Sciences Advisory Services Group. "Pharmaceutical companies need to demonstrate a better balance of their primary healthcare mission with their fiduciary obligation to shareholders through patient-focused behavior. Research has shown that a 5 percent positive change in corporate reputation translates into a 3 percent to 5 percent positive change in market capitalization."
Key findings of PwC's survey reveal striking differences in the public's versus industry's perceptions about pharmaceutical companies:
-- Three out of four (74 percent) consumers underestimate the average financial investment required to research and develop a new drug by more than 50 percent.
-- Consumers are split between believing that pharmaceutical companies consider important unmet medical needs when deciding to develop a new drug (55 percent) instead of choosing to develop "me-too" and "lifestyle" drugs with the greatest sales potential (45 percent). This compares to 71 percent of industry stakeholders and 91 percent of pharmaceutical executives, respectively, who say health needs are a top priority for pharmaceutical companies.
-- 94 percent of consumers and 81 percent of industry stakeholders said that drug companies are too aggressive in promoting unapproved uses of their product. Fewer than half (47 percent) of pharmaceutical company executives agreed.
-- 62 percent of stakeholders agreed that drug companies often manipulate or suppress negative clinical trial results to maximize sales. Four out of five pharmaceutical executives disagreed.
-- More than seven in 10 stakeholders (73 percent) agreed that drug companies spend too much money and effort attempting to prevent generic drugs from competing with their branded products. Consumers strongly agreed that drug companies should be working with generic drug manufacturers to make generics available upon expiration of their branded drug's patent.
Misconceptions about the Cost and Role of Pharmaceuticals in the Healthcare Continuum
The PwC survey found that consumers and stakeholders believe pharmaceuticals comprise a much higher percentage of total healthcare costs than they do in reality. Two-thirds of consumers surveyed by PwC estimated that prescription drugs account for between 40 percent and 79 percent of U.S. healthcare costs. In fact, just 10 percent of healthcare spending goes to drugs, according to Centers for Medicare and Medicaid Services (CMS). According to PwC, this disconnect may stem from the fact that pharmaceuticals can consume a higher share of consumers' out-of-pocket spending than other components of health spending.
"The rise of consumer-directed healthcare will only feed the public's distorted view of how much drugs contribute to overall health spending," said Brian Riewerts, partner, PricewaterhouseCoopers Pharmaceutical and Life Sciences Advisory Services Group. "As consumers share more of the cost of care and make their own decisions about health services and products, they will be far more sensitive to drug pricing-yet they clearly do not appreciate the cost and financial risks of drug research and development. Worse, pharmaceutical companies aren't educating the public because they don't have adequate tools or transparency to accurately track and report the cost of innovation."
Almost nine out of ten (86 percent) consumers underestimated the cost of bringing a new drug to market. Independent studies place the cost of developing a single marketed pharmaceutical product in excess of $800 million. Part of public's misconception may stem from the fact that consumers neither understand who funds drug discovery nor appreciate the cost of failure that factors into each success in the drug discovery process.
PwC found that consumers place more value on a pharmaceutical company's reputation when deciding whether to use a given pharmaceutical product than pharmaceutical executives believed. Nearly eight of every 10 consumers (78 percent) said that when given a choice, they will consider a drug company's reputation when choosing which product to take. Only one out of three pharmaceutical executives, however, thought reputation was a factor. One of the chief ways patients become familiar with a company is through direct-to-consumer advertising, which poses a double-edged sword for the industry. In an era of growing consumer power, direct-to-consumer advertising can provide valuable information to a large audience of consumers. However, only 10 percent of stakeholders and consumers think that direct-to-consumer advertising provides complete and useful information, compared with 40 percent of industry executives. Furthermore, nearly 94 percent of stakeholders agreed that drug companies spend too much money on drug promotion overall, including direct-to-consumer advertising as well as physician education and overall sales force initiatives. Surprisingly, nearly three-quarters of industry executives agreed.
The report was developed by PricewaterhouseCoopers' Health Research Institute and PricewaterhouseCoopers' Pharmaceutical and Life Sciences Industry Group. To gather insight into the gaps between the industry's self- perception and the perception held by its stakeholders, PwC fielded a nationwide survey of 500 consumers and 150 members of industry stakeholder groups (doctors from physician groups, researchers, former health policy makers and executives from hospitals, managed care organizations and employers). In addition, PwC surveyed and/or conducted in-depth interviews with 20 pharmaceutical and biotechnology company executives.
About PricewaterhouseCoopers Pharmaceutical and Life Sciences Industry
PricewaterhouseCoopers Pharmaceutical and Life Sciences Industry Group (www.pwc.com/pharma) provides clients with audit, tax and advisory services. The firm has extensive experience in delivering solutions to a wide range of strategic, financial and operational issues. The firm has also developed industry-specific services in the areas of regulatory compliance, IT and financial effectiveness, and performance improvement. The Pharmaceutical and Life Sciences Industry Group is part of PricewaterhouseCoopers' larger initiative for the health-related industries that brings together expertise and allows collaboration across all sectors in the health continuum.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
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