Thursday, May 14, 2009

Good - Not Great - News on Pharma Reputation

Hold the Champagne for Now
You may have read of the recent Harris Interactive Reputation Study that showed that "the overall reputation of Corporate America has never been worse in the eyes of the general public." The bright spot in the report? Surprise! It's the pharmaceutical industry.

Pharmaceuticals posted their highest rating in five years -- up to 31% in 2008 from 26% in 2007. Is this the beginning of a turnaround? Is the public perceiving more value in the discoveries and treatments from this critical industry? Maybe, maybe not.

To place this in perspective, we can look at what else transpired in this time frame. With bank failures, AIG, home foreclosures, executive bonuses and Bernie Madoff, the financial services industry has fallen into the reputation cellar with the tobacco industry. Both share an 11% positive rating by the public. And, there's the auto industry. It suffered the largest decline (22%) in the survey's history. So, while there may indeed be some reason to cheer, the uptick for pharma may be a case of looking good by comparison. And, remember, 31% good means 69% not good.

I'll hold on to some hope, though. This increase in Harris' "Reputation Quotient" was observed during a time of high-profile drug withdrawals, the Presidential election (which included industry bashing from both sides) and the largest average price increase in five years. Something went right for the industry.

During this time, also, was a steep decline in DTC advertising -- a drop-off of 8% in 2008, which followed a 4% decline in 2007. Is less DTC advertising inversely proportional to pharma reputation? Or, is this pure coincidence? I wish I had some data to share -- this would be an interesting phenomenon to study.

What I can tell you is that I have a hunch that these facts do have an association. I've been saying for years that, while some efforts do a great job of informing and educating, DTC advertising can trivialize side effects, create false hope and interfere with an individual's calculus of risk/benefit. In addition, the pervasiveness of some ads has fueled the perception that increases in promotional spending come at the expense of research and development. Indeed, at the end of last year Roche CEO Bill Burns said, "DTC advertising has been the worst decision for the drug industry. When industry says we're spending all the money on R&D, but actually it's spending it on TV advertising to preserve margins, it doesn't get much credibility." And, more recently, concerns have been escalating over the appropriateness of some ads (e.g., ED spots during "family hour").

Here's a case where less really could mean more. Fewer shot-gun approaches to advertising and fewer goofy stunts in an attempt to start a discussion may lead us back to more effective communications that improve relationships with stakeholders and enhance industry reputation.

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