Stung by Public Distrust, Drug Makers Seek to Heal Image

by LEILA ABBOUD,
The Wall Street Journal

USA, 26 Aug 2005 - The pharmaceutical industry is undertaking a makeover of its public image.

It's no easy operation. The decision by a Texas jury a week ago to award $253 million to the widow of a user of Merck & Co.'s Vioxx illustrates the deep distrust of drug companies by ordinary Americans. Jurors interviewed after the verdict said they thought Merck concealed the risks of the painkiller, which the company withdrew last September because it raised the risk of heart attack and stroke in people taking it longer than 18 months.

"The decision against Merck...is a clear statement that despite all the good our industry is doing, we're losing the battle for consumer trust," says Arthur Higgins, chairman of Bayer Healthcare, a Bayer AG unit.

Even though the drug industry develops medicines that benefit millions of people, it has ranked among the least trusted industries in opinion polls of consumers. A Wall Street Journal/NBC News poll conducted in January found that only 3% of people polled thought that drug companies were working for the public good, and 76% thought they were mostly interested in making a profit.

Now, drug makers are trying several approaches to revamp their image, including curbs on their consumer ads, expanded access to low-cost drugs for the poor, and more open disclosure of clinical trial data. But unlike in some other embattled industries, they don't plan a public-image campaign or other feel-good moves.

Over the past year, the industry's trade association set up the Partnership for Prescription Assistance, which includes a Web site and hotline staffed by 450 operators to help consumers enroll in programs that give discounted drugs to the poor and uninsured. The companies spent millions advertising the partnership, and more than 750,000 people have signed up so far.

The industry's trade association, the Pharmaceutical Research and Manufacturers of America, hired a new top lobbyist, former Rep. Billy Tauzin, a Lousiana Republican who had headed the powerful House Committee on Energy and Commerce, and charged him with winning back the public trust. And after years of squabbling, the companies in the trade group agreed to new guidelines on consumer advertising.

The public perception of drug makers "went about as low as it can go in the last couple of years," acknowledges Karen Katen, a vice chairman of Pfizer Inc., the world's largest drug company in terms of sales and market capitalization. To address the public's real concerns, she says, the industry has to help patients in need, rather than rely on public-relations campaigns.

The industry's woes are in large part its own making, critics say. High drug prices have made many people fear they won't be able to pay for the drugs they need. Aggressive ads for drugs on prime-time television and in print served to create the false impression that medicines, which inevitably have serious side effects for some users, are safe for everyone, these critics say.

The public's faith was further rattled when safety concerns about widely used antidepressants and painkillers showed how drug companies often are less than forthcoming about what their internal data say about risk. And the industry's efforts to change have mostly seemed reactions to bad publicity, rather than proactive efforts in meeting consumers' needs.

The industry has had notable success lobbying in Washington, but it's not lost on executives that those victories may have hurt their image further. The industry's effort to rehabilitate its image began soon after a string of major lobbying victories, including the passage of a favorable Medicare drug benefit without government price controls.

"Our industry has been successful in lobbying efforts, avoiding bad legislation and getting good legislation to pass," says Eli Lilly & Co.'s chief executive, Sidney Taurel. "But we did that at the expense of our image. In fact, as our lobbying grew more successful, our image suffered."

One sign of the public backlash is unfolding in California, where some consumer groups and unions are pushing a ballot initiative that would punish drug companies if they don't reduce their prices to low- and moderate-income people.

Nevertheless, the drug industry still appears to be putting its faith in lobbying. The industry, including its trade group and individual companies, has spent $72.9 million to oppose the initiative, which will come up for a vote on Nov. 8.

Some companies have been making efforts to buff their own image through advertising and other means. According to advertising-research company TNS Media Intelligence, in the first five months of 2005, Johnson & Johnson boosted spending to 25.3% from 8.7% of its total ad budget of $189.6 million on ads that focus on corporate image or general information on diseases, instead of a specific drug. Lilly has set up a public Web site listing the clinical trials and their results for most of its drugs.

But much of the focus has been on trying to address the underlying issues of why many Americans don't like drug makers. Miles White, the CEO of Abbott Laboratories, was head of the pharmaceutical trade group's board in 2004, when he hired a team of McKinsey consultants for help with the industry's image. They conducted focus groups of consumers and doctors to learn about how the industry was seen, and what could be done.

Several themes emerged: People valued the innovative drugs that the industry produced but were frightened that they wouldn't be able to afford the medicines they needed if they got sick. Rising drug co-payments imposed by many insurers led even consumers with drug benefits to perceive that pharmaceutical costs were out of hand. (Although prescription drugs account for only about 10% of overall health-care expenditures, they make up nearly a quarter of people's out-of-pocket costs.)

People also wanted the drug industry to do more than just push pills; they wanted honest information about which drug was right for them and advice on alternatives like diet and exercise.

One of the first things the industry focused on was consumer drug advertising. "We had created this problem that if you advertise drugs on TV like toiletries or deodorant the implication to consumers is that the products must be safe," says Bayer's Mr. Higgins. "We needed to do a better job in communicating the right balance of risk and benefits."

The industry discussions on coming up with new ad rules were "highly contentious," says Mr. Higgins, with one camp saying the ads were crucial to educating consumers and the other favoring more draconian controls. After much wrangling, the new head of the trade group, Mr. Tauzin, corralled the companies into an agreement: They would submit all new TV ads to regulators before broadcast, clearly identify the product by name and what it was used for, and communicate the risks and benefits of drugs in "clear, understandable language."

Drug makers are following the pattern set by tobacco and chemical companies -- taking tangible steps to address criticisms and then trumpeting their moves. Paul Argenti, a professor at the Tuck School of Business at Dartmouth, cautions that it will take a long time to win back trust. "If consumers think they are getting ripped off, they will remain skeptical no matter what companies do," he says. "Over the long term, the companies could do a lot better. Unlike tobacco, they are not peddling death."

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