Our Blog


How Not To Talk About Drug Prices

Photo by Chris Potter, courtesy of http://www.stockmonkeys.com/. Used under Creative Commons license.
By Mike Kuczkowski

 

It was, according to Turing Pharmaceuticals CEO Martin Shkreli, “a great business decision that also benefits all of our stakeholders.”

Not so fast, buddy.

Shkreli was referring to his company’s decision to raise the price of Daraprim, a treatment for toxoplasmosis it had recently acquired, from $13.50 to $750 per pill. Some 60 million Americans carry the parasite that causes toxoplasmosis, but most people are unaffected by it. For those with suppressed immune systems, however, like pregnant women or people with AIDS, it can be life threatening.

Turing’s move sparked a rhetorical war on drug prices tailor-made for our social media age. The story, which had been simmering for a couple of weeks in the infectious disease community, was broken by a trade publication Sept. 17. USA Today picked it up on the 18th. The following Sunday, The New York Times wrote about the price increase.

As the media coverage was amplified across social media, people expressed outrage. Shkreli engaged directly in the debate, crossing swords with media and others on Twitter. The 32-year-old tweeted more than 125 messages, many of them brusque and snarky. (He called the editor of one trade publication a “moron;” asked how he slept at night, Shkreli replied “ambien.”)

By Monday, the digerati were salivating at their newfound target: Gawker called Shkreli a “greed villain”; The Daily Beast declared him “Big Pharma’s Biggest A**hole”; a Reddit thread about the story erupted with more than 4,500 comments, including several ill-advised posts from Shkreli; Hillary Clinton tweeted that the price hike was “outrageous.” The S&P biotech index fell 4 percent following Clinton’s tweet.

Describing Turing as “Big Pharma” is misleading. The company was founded in February with three products in its pipeline and one FDA approved product. In August, it acquired Daraprim. Still, the public outrage machine, stoked by Shkreli’s tweets, was in full gear. Shkreli went on Bloomberg TV and CNBC to defend his company’s actions.

Shkreli’s broadcast performance had considerably more depth than his social media outbursts. Despite the occasional uncomfortable smile and body language, Shkreli made a reasonably strong case that the additional revenues Turing would receive from the increased price would benefit patients.

  • Saving people’s lives: We’re talking about a therapy that saves peoples lives, isn’t that worth more than $13.50 per pill?
  • Comparative value: The pricing of the (in some cases) life-saving therapy was in line with other life-saving therapies, such as cancer drugs
  • High costs of doing business: The costs of running a pharmaceutical company, which include manufacturing, distribution and regulatory compliance, are high
  • Investing in new medicines: Half the profits from Turing’s price increase would be used to fund research and development
  • Unmet need: Daraprim is a fairly toxic drug, Shkreli said, meaning there’s an unmet need for new therapies (this claim was disputed by some doctors)
  • Patient assistance: Co-pay relief and patient assistance funds would ensure that patients would not go without their needed medications
  • Patients first: The company would provide additional services for patients ‘beyond the pill’

In many respects, it was a strong performance. But, it did not work. Media were not buying his rationale – the $750 pill was exactly the same as the $13.50 pill – and his earlier combative posture poisoned any chance at redemption.

That same day, in what can only be described as fortuitous timing, Clinton outlined her proposal for prescription drug price reforms, including a copay cap of $250 and moves that would allow the federal Medicare program to directly negotiate prices with pharmaceutical companies. This latter move would unquestionably alter the industry’s economics and business model, according to most experts, and runs a strong risk of reducing investment in innovation (though Clinton says it won’t).

Regardless, Turing was definitely experiencing its 15 minutes of fame. For the next two days, “Martin Shkreli” was more popular in Google searches than “Donald Trump.”

On Sept. 23, Shkreli backed down. He took his Twitter account private and announced Turing would lower the price, though he did not say what the new price would be. Clinton’s response, a one-word tweet: Good.

So exactly what went wrong?

Turing never should have raised prices that much to begin with — the business case wasn’t there. But that’s not what made Shkreli our “villain of the week.”

The issue of drug prices appears on its face to be a rational, logical issue. But it’s not. It’s an emotional issue. Specifically, it’s about the confusion, frustration and anger that patients feel at their increasing out-of-pocket costs (which is different, in most cases, from the underlying price of the drug.) This pent-up anger got a release valve with the Turing story, and Shkreli’s lack of empathy ran into that emotional vector like a buzz saw.

That’s instructive because while Turing’s moment under the microscope may be over — or not, depending on the eventual price announced for Daraprim – this won’t be the last time we hear about drug prices as an issue.


This June, at the American Society of Clinical Oncology meeting in Chicago, I saw two converging forces.

The first was rooms full of doctors, investors and executives excited by the promise of immuno-oncology treatments (Disclosure: one of my clients is a biotech focused on immunotherapy). These drugs are expensive to produce. Unlike Daraprim, they represent real scientific advances. They are often showing promise in small patient populations, and may work best in combination with other therapies.

The second was concern about the price tag of these regimens, as embodied in a keynote speech by Dr. Leonard Saltz, of Memorial Sloan Kettering Cancer Center. “These drugs cost too much,” Saltz said before a room full of oncologists and pharmaceutical industry executives. After the meeting, ASCO and MSKCC unveiled new tools aimed at reining prices in.

Those two forces are going to collide. The industry, particularly small biotechs who are betting their futures on successful regimens with small patient populations, are going to need to price their therapies at a relatively high price point in order to be successful in business. Yet payers and health systems are going to do whatever they can to keep prices down.

What should the industry do? There is a case to be made that the best strategy is to let the rhetoric pass and wait out the calls for reform. And, while the industry’s reputation will continue to suffer with such an approach, it might work.

But there’s also a significant risk that drug prices could become the one thing that Democrats and Republicans can agree on, and not in a way that favors the industry. A major policy move would be predicated on clear public support for such a move, and at the moment the industry is doing little to generate public favor. A recent poll showed that 72 percent of Americans think prescription medicines are unreasonable. Another poll says only 35 percent of Americans have a positive view of the industry. If pharma were a candidate for office, it would be out of the race already.

Here’s an alternative approach that could have worked for Shkreli, and can work for others:

Engage stakeholders: Shkreli and his leadership team should have talked to specialists in infectious disease, patient groups and payers – those “stakeholders” he could have been referring to in his quote at the top of this piece – about why the company needed to restructure pricing on the drug. See what tolerance stakeholders would have for a higher priced drug with the benefits of copay relief, patient assistance and additional research and development around toxoplasmosis.

Listen (and act accordingly): I’m fairly certain that if Turing had laid out its plans to stakeholders, it would have heard clearly that the $750 per pill price tag would spark outrage. That should have prompted a whole set of questions about the strategy itself that would drive better actions: Are we right that there’s a need for a less toxic treatment? Can we shoot for a more modest price increase? Can we show that patients need the services we are adding? What else can we do to support the infectious disease community and be a real partner? (I don’t see how you could ask those questions and not make a different move on pricing than Turing did.)

Be transparent: Don’t wait for the story to break against you. Put out information about pricing and the rationale behind it at the earliest possible stage. The several weeks delay between Daraprim’s price hike and Shkreli’s broadcast interviews explaining it cost Turing significant points in the court of public opinion. If they’d had a sound business case for the pricing, they should have put it out publicly.

Gilead Sciences issued the infographic below as a tweet explaining the pricing of Harvoni, a hepatitis C regimen that combines its existing drug Sovaldi with another compound. Harvoni, which costs more than $90,000 for a course of treatment, cures 94 percent of Hep C cases, saving the costs of liver failure and liver transplants, which can cost $600,000 per patient. It also compares favorably with other combination therapies. Still, Gilead taken heat for the price of the drug. They deserve credit for engaging in the conversation about pricing. (Note: this tweet led to a Motley Fool article titled “How Gilead Sciences Inc. Isn’t Gouging Hepatitis C Patients in 1 Simple Infographic.”)

harvoni2

Reference credible third parties: It’s hard for a pharma CEO to say, “doctors need this” and then be confronted by a journalist who says she just got off the phone with a doctor who says they don’t. No pharma executive trumps a doctor on matters of patient care. If an infectious disease specialist agreed with Shkreli, then it becomes an entirely different conversation. Specialists have a halo of credibility that commands respect and changes the conversation. Even credentialed experts within a company, such as lab scientists or chief medical officers, can serve in that kind of role, though external third parties who have no financial interest in the company are the best.

Act with empathy and compassion: I could rewrite this as “stay off Twitter,” but that’s too glib. Pharmaceutical company leaders need to demonstrate a fundamental understanding of what patients face when they have a serious health condition. That’s the starting point. Don’t start with “profits are essential.” Start with, “We’re working to give patients and physicians what they need.” And when you say that, have the research, insights and actions to back up that claim.

The world can look at what Martin Shkreli did as a cautionary tale and decide that there is no upside to talking about drug industry pricing. I say, look at what he did wrong and learn from it.

Pope Francis on Reframing the Conversation

The pontiff, who visits the US this week, has effectively used symbols in his communications to change the dialogue about the Roman Catholic Church. Photo by Tânia Rêgo for Agência Brasil, used under Creative Commons 3.0 Brazil license.
By Mike Kuczkowski

Imagine, if you will, a hypothetical scenario for the 2016 presidential election. After a tough series of primary battles, former Washington Gov. Christine Gregoire[i], is drafted out of retirement by enthusiastic Democratic supporters into the South Carolina primary and secures a stunning win.

After a run of primary victories, she secures enough delegates to compete for the party nomination. She makes a moving four-minute speech at the Democratic convention in Philadelphia, speaking stirringly of America’s need to recall its origins and find strength in essential truths: freedom, liberty, equality of opportunity and the pursuit of happiness. After five ballots, she wins.

Throughout the fall, the nation watches as she projects a humble yet visionary profile. In two presidential debates, she is sharp, articulate and unruffled. Her ads are upbeat and optimistic. On a cold and expectant November night, she accepts a phone call from her opponent, who concedes. Against all expectations, she has won.

That night, she appears before a massive crowd of supporters in jeans and a t-shirt. They cheer her madly. Beaming generously, she says simply “Thank you,” and wades into the throng shaking hands and embracing supporters. Days after the election, she announces that she will not move into the White House, preferring an apartment in Georgetown. On Inauguration Day, after taking the oath of office, she serves dinner to prisoners — something no sitting American president has ever done.

Just imagine….

That is a rough equivalent of what happened in March 2013 when Argentinian Cardinal Jorge Mario Bergoglio was elected pope of the Roman Catholic Church following the unexpected retirement of Pope Benedict XVI. Bergoglio hails from a country — and a continent — that has never before produced a pope. He was elected on the fifth ballot of the papal conclave, after giving a four-minute speech about the church’s need to return to its evangelical roots, spreading the good news of Christ.

As Pope Francis arrives for his first visit to America this week, there will be much reflection on his leadership of the world’s one billion Roman Catholics. Yet, while the media will talk about the church’s major scandals and the many unresolved debates facing the institution, Francis has stepped aside from the culture wars and advanced a powerful dialogue centered on love, compassion and poverty. For Catholics (disclosure: I’m one) it is as though we are talking about an entirely different church than just a few years ago.

Looking at his 2 1/2 years in office, Pope Francis serves as a powerful example of how leaders can use symbols to reframe the dialogue surrounding their institutions, and how quickly communications can change culture.

Naming conventions: Bergoglio chose Francis as his papal name, in honor of St. Francis of Assisi. St. Francis is to Catholics what Abraham Lincoln is to Americans — a larger-than-life figure who represents humility, intelligence and a bias toward peace. It is notable that in the 785 years since St. Francis’s canonization, Bergoglio is the first pope to use the name. His first words upon election, “Although I am a sinner, I accept,” signaled a humbler approach.

Stand-up guy: Traditionally, the new pope sits, as if on a throne, and greets the members of the conclave who have just elected him. Pope Francis stood. Mic drop. (Or, perhaps, the opposite.)

Fashion statements: The vestments of priests, cardinals and other religious orders are part of the ritualism of the church, of which the pope’s regalia is the most elaborate. Red slip-on shoes, fur-trimmed velvet capes. Not for Pope Francis. He eschewed those clothes in favor of simpler vestments, wears regular black shoes, and rides the bus. He says morning mass four days a week at the Casa Santa Marta, where he lives in a suite rather than occupying the Papal Apostolic Palace. He drives a Ford Focus, rather than the traditional chauffeured Mercedes.

The washing of the feet: There is a tradition in the Catholic faith that on Holy Thursday, as part of the celebration of the Last Supper, a presiding priest will wash the feet of a dozen people, recreating Jesus’s act of washing the feet of his disciples. (I had my feet washed when I was 10 as an altar boy, and trust me, you want to have very clean feet.) For centuries, the pope traditionally washed the feet of a dozen senior priests and clerics. Pope Francis, a month after his election, went to a juvenile detention center and washed the feet of a dozen prisoners. Two of the prisoners were women, at least two were Muslims — also firsts.

Media Savvy: The pope famously does not hold press conferences, but he does give press interviews — often on the papal plane, during state visits. In one of his first interviews, asked about rumors of homosexuality surrounding a priest he had appointed to oversee an internal investigation into the Vatican bank, Pope Francis said “Who am I to judge?” That response has come to embody the compassion of his papacy and has been widely quoted. His first major interview, granted in September 2013, yielded the following Q and A: “Who is Jorge Mario Bergoglio?” After a pause, he said “I do not know what might be the most fitting description…. I am a sinner. This is the most accurate definition. It is not a figure of speech, a literary genre. I am a sinner.” (The interview itself, at 40,000 words, is an astonishing read.)

Vision Statements: Pope Francis’s symbolism has not been without depth of thinking. He has so far issued two encyclicals, or major public statements on church doctrine. The first was titled “The Light of Faith,” and in keeping with his more positive public agenda, emphasized the elements of love, tolerance, openness and

duty to the poor. The second was a treatise on the environment that spoke broadly of the need for social justice.

The list doesn’t stop there. He has allowed a child who had wandered up to the Pope’s side to remain at his side during a speech at the Vatican. He made headlines around the world for embracing a severely disfigured man. He has taken aim at the curia and the Vatican Bank. And he has personally helped broker a peace agreement between Cuba and the United States.

In their 2003 book “Reframing Organizations,” Lee Bolman and Terrence Deal propose that decades of management theory can be distilled into a four-frame model. The structural frame involves thinking of the organization as a machine, like the early Ford factories. The human resource frame looks at an organization like a family. The political frame looks at the organization as jungle. The symbolic frame considers the organization as theater.

Pope Francis clearly understands this last frame, with its emphasis on culture, rituals and ceremonies. As papal biographer Paul Vallely said last week on NPR’s Fresh Air, “[T]here are lots of little symbolic things, and one of the things about the Church is it’s a place of symbol. So people say, ‘oh it’s just symbolic,’ but it’s not just symbolic in the church. Changing the symbols is changing the substance in some ways.”

Vallely is careful to describe Pope Francis not as a liberal, pointing out that he has been largely consistent with historic church doctrine on issues like contraception and the ordination of women. But, he does consider Francis a radical, and he credits Francis’s symbolic leadership with leading the church forward.

“All those kind of things — they’re not intuitive or spontaneous. This is how he was when he was archbishop of Buenos Aires, so he’s bringing that notion with him. Christians must change to respond to the modern world. That’s what he’s saying. And, the change starts with the Pope.”

Just two years in, Pope Francis’s legacy is very much a work in progress. The church still has many deeply troubling issues with which it must grapple. But in his use of symbols and his communications, Pope Francis has shown a remarkable ability to shift the dialogue both within and around the church. Expect to see more of his deft use of symbols in the week ahead, and beyond.

 

[i] I know nothing of Gov. Gregoire. The fact that she is a female governor and from the state of Washington (unlike any president yet) makes her a unique metaphor for Pope Francis, who is a Jesuit and from the Americas.

Trump’s Winning Narrative

To understand Donald Trump’s lead in the polls, look closely at the narrative he’s constructing about himself – and America. Photo by Gage Skidmore. Used under Creative Commons license.
By Mike Kuczkowski

It was January 2004, and I was meeting with my boss when a colleague knocked on the door and popped in. “Hey, did you see ‘The Apprentice’ last night?”

My boss and I looked at each other and smirked. “No.”

The smirk was telling. The program, which was being billed as “The Ultimate Job Interview,” featured real estate magnate Donald Trump and a cast of 16 contestants who vied for a one-year, $250,000 job in Trump’s organization. As a concept, the show sounded like a loser.

And then there was Trump himself. Or, as he was known, The Donald — a larger than life real estate and casino magnate whose claims to fame included a high-profile affair with actress Marla Maples (while he was still married to his first wife, Ivana Trump), a lavish lifestyle followed by bankruptcy and a seemingly bottomless well of egotistical and caustic quotes. Trump was the poster boy for the crashing and burning of the 1980s lifestyle of the rich and famous. He was a joke.

Still, our colleague pressed on. The show was something to see. The tasks were surprising, well designed to reveal the leadership qualities (and shortcomings) of the contestants. The teams — one for the men, one for the women — highlighted some really interesting dynamics. And, most importantly, Trump, who winnowed out the field in the final boardroom scene of the episode with what would eventually become his catch-phrase (“You’re fired!”), was a revelation.

“He was a lot more interesting and insightful than I had expected,” our colleague said. “A lot.”

I tuned in the following week, partly so that if my boss asked about it, I’d be able to say I had. I was stunned. Our colleague was right. Trump was no buffoon. He had hired strong leaders to run his organization. He was very observant. He was unpredictable. He gave insightful feedback. He displayed values around hard work, collaboration and entrepreneurial thinking.

Trump was the real deal.

I watched every episode that season, a rare instance of appointment TV viewing for me. I learned a lot more than I expected, and “The Apprentice” went on to be a huge television hit with 14 seasons to its credit.

So here we are, 11 years later, watching Donald Trump the presidential candidate fare far better than expected.

In watching Trump’s success for the past few weeks, I’ve been amazed, though not necessarily surprised, at how he has dominated the field of Republican candidates. With his willingness to hurl insults, engage in stunts and generally court controversy, he is giving a master class in media manipulation.

One day he gives out Lindsay Graham’s cell phone number at a rally. A few weeks later, he insults Sen. John McCain’s war record. A few weeks after that, he ejects Univision’s Jorge Ramos from a press conference. Trump generates so much media attention for his comments and his actions that there’s little room for the press to cover anyone or anything else. I’m certain that reporters on his beat feel like they must always be attentive for a potentially headline-grabbing quote. He defines “attention-grabbing.”

But, Trump is no mere demagogue, as some observers claim.

If Trump succeeds, and he well may, it will be on the strength of the narrative he is constructing — and the narrative he represents.

Simply put, a narrative is a story. It involves characters and a plot, a conflict and a resolution. Narratives have been with us, in the form of mythical tales and works of art, for centuries. Recent research shows that the human brain is hard-wired to respond to narratives. In the context of strategic communications, a narrative is a sense-making vehicle that explains how the world looks from the organization’s perspective.

In his 2004 book “Changing Minds,” Harvard psychologist Howard Gardner uses the political campaign of Margaret Thatcher to illustrate how a narrative can be a powerful tool to unite a diverse audience, as in an election.

In 1979, when Thatcher ran for Prime Minister, Gardner says she embraced a simple slogan: “Britain has lost its way.” At the time, she was speaking to an electorate that must have felt like the country’s best days were behind it. It had seen Britain win World War II and then dismantle its empire, join up with various European institutions, and allow unions and civil servants to take dominant roles in society.

Thatcher, Gardner says, asserted that if she became Prime Minister, she would change all of that. She would reinvigorate the economy, reassert Britain’s leadership abroad and get the country moving again.

Gardner says there were two keys to Thatcher’s success. First, she wove a story to the nation about the nation’s recent decline that felt real and right, and motivated many people to take action.

Second, her personal story mapped to the story she had created about Britain at that time, and suggested that she was uniquely qualified to lead Britain out of its current state. She had grown up in a middle-class family. She had worked hard in school and had done well, earning a degree in chemistry from Oxford. She had ran for office as a conservative, taking on roles in the Shadow Cabinet and advancing within the party structure through determination and persistence. She had not been born into anything, which meant that as a leader, she could speak to a path forward that would require hard work and smarts.

Whatever one thinks of Thatcher’s ascendance or policies, Gardner’s analysis casts an interesting light on the power of narratives to unite a diverse population.

How does this analysis apply to Trump?

First, let’s look at a potential narrative for the country, from the perspective of middle-class white Republican primary voters who have Trump leading the field in Iowa, New Hampshire and South Carolina.

America emerged from the Cold War as the lone superpower. Yet, in an era of globalization, we’ve seen good middle-class manufacturing jobs get shipped overseas, and high-paying innovation jobs be given to highly educated immigrants. Our leadership internationally has been diminished by a series of wars that have not ‘won’ us security at home. Constituencies for issues like gay marriage earn victories, while we are told to just accept change. Our economic security is shaky. Our educational system has us lagging the world. Our government keeps expanding, but we’re not sure what it does for us. Our president speaks like a professor, and our government always seems on the edge of shutting down.

I’m not saying these things are right, but I think for many Americans, particularly the socially conservative voters Republicans have been courting for more than 20 years, they resonate.

Then along comes Trump. He demonizes immigrants. He talks about building a wall to keep immigrants out and making someone else pay for it. To the middle class, again, that probably sounds like a pretty good deal. He demonizes the political class. He says that government is too big. He calls it like he sees it.

At a deeper level, though, Trump is constructing a narrative that America has lost its way and that he — the “really rich” businessman (his own words) — has what it takes to chart a better course.

He has, after all, succeeded in rebuilding a commercial empire after falling nearly $1 billion in debt. He has succeeded in real estate, entertainment, personal branding, sports and even beauty pageants. If Trump maintains his current momentum, expect to hear more about his personal story (as with this week’s in-depth Rolling Stone profile) in ways that support his ability to lead America forward.

Trump also has a winning ability to laugh at himself, as with last week’s bit on The Tonight Show with Jimmy Fallon. That’s pure genius. Only someone with real, genuine self-confidence can get up there and do a bit like that.

Why shouldn’t Trump have that self-confidence? He’s been a huge success. Just ask him.

And why shouldn’t America have that self-confidence? Make no mistake, that’s a message that has broad appeal to millions of Americans, who would – per Trump’s slogan – like to “Make America Great Again.”

Trump surprised me once, in 2004. That’s not going to happen again.