Why you have to get in front of the story

Was Turing CEO Martin Shkreli's media performance really all that bad - or was he doomed to failure from the start?

Tough week: Martin Shkreli, founder & CEO of Turing Pharmaceuticals; Image via Bloomberg
Tough week: Martin Shkreli, founder & CEO of Turing Pharmaceuticals; Image via Bloomberg

Being a CEO is undoubtedly a tough job, but it’s been a particularly tough few weeks for some incumbents in that role.

First BMW’s CEO Harald Krueger fainted on stage at the Frankfurt auto show during his first major press presentation since joining the German automaker in his new role in May.

A spokesman took to the stage and admitted, "I’m a bit lost for words, but that doesn’t help. We hope it’s nothing serious."

Another German automaker, Volkswagen, has been in crisis this week following an emissions scandal prompted by the EPA issuing a report last Friday accusing VW of putting software in almost 500,000 of its cars in the US in an effort to avoid diesel emission regulations.

VW instructed dealers to stop selling the cars on Sunday and CEO Martin Winterkorn apologized to customers on Sunday, saying the company had broken the trust of customers and the public.

The company’s top US executive Michael Horn went a step further on Monday, telling an audience at a launch event in New York City that "our company was dishonest" and "we totally screwed up."

He added: "We have to make things right, with the government, the public, our customers, our employees, and also our dealers."

Then there was Turing Pharmaceuticals, whose CEO Martin Shkreli found himself defending his company’s decision to raise the price of its drug Daraprim by 5,000%, from $13.50 a tablet to $750.

A piece in The New York Times on Sunday threw the issue into the spotlight, and Shkreli received widespread opprobrium following his attempts to defend the strategy on broadcast and social media this week.

Three different CEOs: And three very different lessons for communications professionals.

In the case of BMW, I guess the lesson is that PR people have to be prepared for every eventuality, no matter how surprising or unexpected, and it is often down to them to smooth over a situation and return things to normality as much as possible.

VW was very different. The company’s senior executives were quick to apologize, which is not always easy to do, especially with the legal department breathing down your neck. But this case was so egregious that it seems nothing was going to stop the eventual departure of CEO Winterkorn, who fell on his sword and resigned on Wednesday.

No amount of contrition and apologies could rectify this snafu, and it remains to be seen whether VW can recover from this serious breach of trust with its customers, and the regulatory and legal ramifications that may follow.

You can be sure other automakers will also come under scrutiny now that the regulators have got a sniff of something untoward that could be happening more widely.

But for VW it is too late. The crisis demonstrates that transparency and authenticity can’t wait until you have been caught out. Trust is much harder, if not impossible, to regain in that situation and communications counsel becomes about fire-fighting and making the best of a bad job. It’s a business problem, not a PR problem.

Finally, we have Turing and its brash founder and CEO Shkreli. The pharma company’s first CCO was former Johnson & Johnson exec Craig Rothenberg, but he decided to resign the role on the Monday after the Times article, stating that the environment at Turing wasn’t right for him.

Rothenberg declined to comment when contacted for this piece, saying only that: "Integrity means a lot to me. I view the CCO-CEO relationship the same way I do the doctor-patient and lawyer-client relationship. Sharing what took place would be entirely inappropriate."

Before making a judgment on Shkreli and his performance this week, it’s worth digging beneath the apparently arrogant and slightly gauche exterior - and seeming lack of media training - to actually listen to what he said in an interview with Bloomberg on Monday.

Here are Shkreli’s key messages:

  • "We need to turn a profit on the drug," which Turing acquired in August after it had been passed around various other pharma players, often being sold in packages with other products.

  • "We’re the first company to really focus on this product. The companies before us were just giving it away."

  • "The price of treatment to save your life was only $1,000. Cancer drugs can cost $100,000 or more, rare-disease drugs as much as $500,000. Daraprim is still underpriced relative to its peers."

  • When asked about the cost of actually physically producing the drug, Shkreli admitted it costs very little, but explained production is not the only cost: "You have distribution, FDA costs, manufacturing costs not associated with the actual pill but the people who make the pill. Those costs have increased dramatically over the years."

  • "The drug was doing $5 million in revenue and I don’t think you can find a drug company on this planet that can make money out of $5 million of revenue."

  • "They were not providing the dedicated services drugs to treat rare diseases require. This requires a lot of focus from the drug company, patients, and distributors to make sure it’s a very cared-for community – and that costs a lot of money too."

  • "We’ve put the right protocols in place to make sure patients get the drug faster and at almost no cost. Previously, there were co-pay systems for this drug – we have a co-pay system in place that will limit that."

  • "Previously there was a limited free drug system, we’ve expanded that. Half of our drug we give away for one dollar – that shows our commitment to patients. If you can’t afford the drug, we’ll give it away totally for free, especially if the patient’s in need or doesn’t have an income."

  • "It’s an impediment to us making money on this drug, but we’ll never decline someone treatment for their inability to pay. Even if we’re having a disagreement with the insurer, we’ll continue to send them the drug for free."

  • "This drug is from the 1940s – we can make a better drug for this disease. We’re spending tens of millions of dollars to make a better version of Daraprim that is more effective, less toxic. These patients deserve a drug company that is turning a fair profit and developing a drug that is better for them. They don’t deserve a drug that’s 70 years old."

  • "We know we there’s a better way to treat toxoplasmosis, we’re developing three or four new drugs – no-one’s cared about this illness for a long time from the pharmaceutical perspective, if ever. Now you have a powerful new ally."

  • "New drugs are very expensive to develop - it can cost $1 billion. It’s only fair that we make a fair profit and we take that money and put it back in the patients’ hands. I don’t advocate it for companies that raise prices and don’t put in that investment – and by the way there are dozens of those."

Every point was followed by a little smile, which grated a little, and he might not be the most likeable guy in the world, but that’s a pretty impressive list of key messages to convey in one five-minute interview.

I’m no pharma expert, and I'm not passing an opinion on the validity of the points Shkreli made (many don't buy his claims), but to the general TV viewer his arguments were pretty compelling.

He looked a little nervous and uncomfortable, but it certainly wasn’t the worst TV interview I’ve ever seen from a company spokesman or CEO. He also performed adequately in a further interview on CNBC.

I can imagine a practiced communications pro such as Jay Carney at Amazon or Gary Sheffer at GE, or savvy CEOs such as Starbucks' Howard Schultz or JPMorgan's Jamie Dimon, taking such material and key points and making a really compelling argument from it - or at least presenting the company’s case in such a way that it would be listened to by the audience.

Hillary Clinton and Donald Trump predictably jumped into the debate and in an interview with NBC News on Tuesday it seemed Shkreli was considering revisiting the price increase in response to the barrage of negative response. He sounded much more humble and chastened in that segment.

Essentially the "drug company that jacked up the price of a life-saving drug" narrative was cast from Sunday onwards and Turing needed to get in front of the story before that, rather than trying to play catch-up afterwards – just like VW.

A recent survey by financial PR firm Finsbury suggests a paltry 16% of companies have a dedicated chief communications officer (an incredibly low number if it is to be believed) despite the fact that 91% of CEOs say communications has a significant impact on their companies’ ability to meet business goals. In essence, they understand the value of PR but not how to apply it.

One can only assume Turing’s former CCO Rothenberg either wasn’t able to convince his CEO Shkreli to get in front of the story, or that the CEO reacted very badly to the negative piece in the Times last Sunday.

However, no matter what Shkreli said, the court of public opinion - influenced by "The Grey Lady", the most authoritative newspaper in the world - and the maelstrom of follow-up coverage and social media, had already delivered its verdict.

I spoke to one very senior global in-house communications professional this week who told me: "Once you are behind the story now, you are terminally screwed." (OK, they didn’t say screwed; they actually used a more descriptive word, but this is a family newspaper…)

That blunt observation may be the best lesson of all to come out of these various CEO trials and tribulations over the past couple of weeks.

Would you like to post a comment?

Please Sign in or register.