HEALTHCARE PR: Global preference

Drug firms are boosting their reputations by preferential pricing, writes Mary Cowlett.

When it comes to fighting global disease, the pharmaceutical industry has the apparently insurmountable dilemma of balancing reputation with profit.

While the world's biggest killers, such as HIV/Aids, TB and malaria, together with other, mostly tropical diseases, continue to threaten the long-term prospects of millions throughout the developing world, the most severely affected nations are those who can least afford to pay.

The problem for the multi-national drugs giants, is that to protect their interests in the industrialised world, it is vital that they appear to be good corporate citizens in the Third World. But with the massive expense of bringing new products to market - around £350m for every new medicine, according to The Association of the British Pharmaceutical Industry - the drugs manufacturers need to make a return on investment and protect their intellectual property rights. The latter is important given that drug patents typically last only 20 years, including the eight to 12 years it usually takes for R&D.

And as the landmark HIV/Aids court case in Pretoria in 2001 proved, financial concerns and patent issues can make a huge dent in terms of reputation.

As 39 of the world's most powerful drugs companies pitted themselves against the South African government to prevent cheaper generic versions of their treatments being imported, ordinary people took to the streets to express their disgust and the image of a big, bad, money-grabbing drugs industry was cemented around the globe.

'The whole South African situation was a debacle,' says Adam Barak, head of pharmaceutical pricing consultancy Adam Barak Pharmaceutical Pricing Consultants. 'The drugs giants shouldn't have let the situation go as far as it did and ultimately they were left with a PR disaster, where across the world people were accusing them of being greedy and letting people die.'

But if the planet's poorest nations cannot afford life-saving treatments, what can the drugs companies do? After all, they are not charities and the costs of developing new medicines have to be met.

One solution is to offer preferential pricing strategies, whereby treatments are supplied at cost to those most in need. This policy is pursued by all the major manufacturers, including GlaxoSmithKline. Earlier this year, the company offered preferential prices for its HIV/Aids therapy Combivir to South African mining company Anglo American, and this September, announced a further reduction in the not-for-profit preferential prices of its HIV/Aids medicines of up to 33 per cent and its anti-malarial medicines by up to 38 per cent, for patients in 63 of the world's poorest countries, as identified by the UN.

Following the abandoned Big Pharma court case, the difficulties of supplying not-for-profit medicines to South Africa are complicated by issues of patient access guarantees from the South African government.

But, with the announcement in June by TRIPS (the World Trade Organisation council responsible for intellectual property), that the least developed countries do not have to provide patent protection for pharmaceuticals until at least 2016, lowering prices in a more open developing world market, could be viewed with cynicism.

However, John Weekes, chairman of the global trade practice at APCO, says: 'The TRIPS ruling is accepted by everybody and most of the patent holders aren't worried about patent protection in Africa as it's not really a big market for them. What they are more concerned about is countries such as Brazil and India producing cheaper generic versions of their drugs.'

A further problem, is that preferential pricing strategies shout out to stakeholders in the industrialised world that the planet's richest nations are subsidising its poorest.

This may be an unpalatable truth for some shareholders, but appears not to be an issue for other interested parties, such as fundraisers. 'My reaction is overwhelmingly positive,' says Dr James Deutsch, chief executive of Crusaid, the national fundraising charity for HIV/Aids in the UK. 'Most people who live with or work in the area of HIV/Aids accept that it's right for the UK government to pay ten or 20 times more for anti-retrovirals than the government of Uganda, for example,' he adds.

However, in terms of reputation, it is pretty clear that corporate announcements about price reductions of treatments for highly sensitive conditions like HIV/Aids attract attention and often, unwanted headlines.

Many drugs manufacturers therefore prefer to distance themselves from controversy and concentrate on other developing world issues, such as healthcare delivery infrastructure.

For example, healthcare giant Roche has a preferential pricing programme for its HIV/Aids therapies for the world's least developed countries, as identified by the UN.

But Maria Vigneau, Roche's international communications manager, says: 'You have to remember, that with preferentially priced products, we have no controls over the local distribution network, so we can't guarantee that other people will not make a profit, before treatments reach the right people.'

To ring-fence its activities, Roche links its not-for-profit medicines to its philanthropic efforts to address improved care; education; information and research. To this end, the Swiss-based pharma company has developed a BlueSky programme, which aims to increase resources and adapt care programmes at a local level, to give health professionals and patients the tools they need to fight HIV/Aids.

In the developing world, to date, this programme covers projects in India, Thailand and Brazil. 'Even though prices for HIV treatments have come down hugely in some areas of the world, access remains a major problem and the fundamental issue is poverty,' says Vigneau.

Indeed, since the disastrous Big Pharma court case, the drugs industry as a whole has begun to recognise that publicising some of the great work it does, rather than defending its position with financial arguments, promotes a far more positive image.

For example in June, on the eve of the G8 Summit in Kananaskis, the International Federation of Pharmaceutical Manufacturers Association (IFPMA) sent a letter to the heads of government, detailing its members' 50-plus partnerships with international organisations and aid bodies around the world.

With a top-line finding that the value of the pharma industry's contribution to developing countries amounts to $1.9 bn in donation of products since 1998, clearly the IFPMA and its members have some tales to tell.

These include the Accelerating Access to Aids Medicines Initiative, which is a public-private partnership with UNAIDS, the World Health Organisation, the World Bank, UNICEF and UN Population Fund, to improve access to HIV/Aids care and treatment in developing countries.

Officially launched in May 2000, six firms, namely Abbott Laboratories, Boehringer-Ingelheim, Bristol-Myers Squibb, gsk, Merck & Co and Roche have been supplying products at heavily-reduced costs to 19 countries globally.

'There is clearly a pressure on the industry to move more in this direction,' says Weekes. 'But the major challenge is in getting the messages across.'

Some have succeeded however, most notably Boehringer-Ingelheim, which scored a real PR coup when it announced that it was providing its anti-retroviral treatment Viramune, which reduces the risk of mother-to-child HIV transmission, free of change for a period of five years to developing countries.

Likewise, Merck & Co stands as a shining beacon within the healthcare sector, most especially for pledging to donate as much of its Mectizan as necessary, for as long as necessary, until river blindness is eliminated as a public health problem. At present this programme, which is the longest running and most successful initiative of its kind, reaches an estimated 30 million people in 33 endemic countries in Africa, Latin American and Yemen.

But if other drugs companies are less vociferous about their ethical activities in the Third World, where are they going wrong?

'The pharmaceutical industry has lost the right to make a profit from life-saving drugs in the Third World and needs to develop a new set of arguments,' says Charlotte Ersboell, director of European healthcare at Manning Selvage and Lee, whose clients include Pharmacia, Pfizer and Eli Lilly.

Ersboell states that global drugs manufacturers should be more joined-up in their thinking, integrating PR with investor relations, public affairs and marketing activities.

However, she also highlights that the industry has a massive task ahead to overcome the perception that it is reluctantly adopting improved policies for the developing world, in response to pressure from governments and NGOs.

'And firms can't do that alone, they need PR to create a fair debate and work with powerful third parties,' she says.

Indeed, it is far too easy to make the drugs industry the bogey-man in the current fight against global disease, when clearly other issues, such as patient access, infrastructure and delivery, poverty and political will, all have a role to play.

As Deutsch says: 'We would be entirely willing to work with pharmaceutical companies to make life-saving drugs available at cost in poor countries, while protecting the companies' profit margins in rich countries. We understand that research into the drugs of the future, depends on companies profiting in wealthy markets.'

To turn this situation around, the drugs giants should look to the example of the energy sector and the likes of Shell, and embrace the support of NGOs and other third parties. The image of the big, bad pharma giants would then seem all too far fetched.

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