It wasn’t that long ago that pharmaceutical industry was considered among the most respected industries. The high price of the drug has become an increasing problem, blaming on the pharmaceutical industry, despite the fact that drug price is not the biggest contributor to healthcare costs as a whole. The relationships between the pharmaceutical industry and its various stakeholders have changed over the past few years.
These changes have contributed to the loss of reputation, which has been due to numerous factors. Each factor taken in isolation would not have been sufficient to have brought about the decline all itself, it’s the combination of these factors that has brought about the loss of prestige. The pricing of the new drug or biologic is based in part upon the cost of developing the product. Basic research is important to this effort and is often done in a university setting, while industry spends upwards of $50 billion a year to advance compounds into a man.
Overall, almost 9 of every 10 drugs tested does not make it to the market. Drug companies risk a large sum of money and only occasionally succeed in developing breakthrough medicines that cure illness and save lives. The United States is the only market remaining that doesn’t control the price of pharmaceuticals, and as such American taxpayers and consumers subsidize this good work for a limited number of years after the product launch until market exclusivity expires.
The issue of striking an optimum level of the drug pricing, so as to favour both the customers as well as the producers, has been one of the most volatile topics at the National Pharmaceutical pricing authority (NPPN) for the past one year. The U.S, which is a free market for Pharmaceutical pricing was a victim of the rise of the abnormal and exponential rise in drug price. The burden of high drug cost falls upon individuals and the state and local government and insurers, which needs to balance the access and affordability to an increasing extent. Such costs are being unsustainable for the way they are being passed on to the patients, in some cases leading to the bankruptcy of the patients.
Reasons and Effect Of Hampering Of Pharma Reputation
The historical focus on drugs has been regarded by critics of big pharma as emphasizing sales volume over whether patients receiving a drug actually gain any benefit from it or not. Although the high costs of bringing a proprietary drug into the market and in the relative short time of market and data that is exclusivity available to recoup these costs before generic competition, increasingly strident group of physicians, legislatures and pharmacy benefits managements have weighed in questioning and speaking about whether the cost of these drugs are reasonable or not.
One recent case concerned the Hepatitis C drug ‘Sovaldi’(Sofosbuvir) from Gilead Sciences, which has been subjected to maintaining criticism from the world health organization(WHO), health care companies and patients over the drug price. As companies bridge many different markets in a globally interconnected world, differences between ethical standards in the different national jurisdiction can translate into scandals for pharma on an international scale. In 2013, when the Ranbaxy one of India’s oldest drug companies, agreed to the U.S department of justices(DOJ’s) charge of wrongdoing in its manufacturing process $ 4500 million fine. Ranbaxy became a stick for global competitors of Indian drug companies to beat the industry with the issue of poor quality.
Once a company’s reputation declines, some sources have estimated that it takes an average of about 3-5 years to rebuild it, even in the best of circumstances. The process of restoring reputation will be very complex, as it requires the rebuilding of the trust among multiple stakeholders. The price difference between the branded and the generic can be significant. According to cost database, the price of a single tablet of Lipitor is more than double, when compared to the generic form Atorvastatin of the same dose.
Another allergen, known for its Botox wrinkle treatment, also sells a version of Prozac for women with a severe form of premenstrual syndrome, under the Sarafran brand, which is dyed pink and comes in a box with sunflowers on the front there is no difference between the drug and generic fluoxetine, except for the color, the packaging and price.
Undoubtedly, these findings and related controversies over drug prices further undermined trust in the industry. Price control would have crimped industry profit in the U.S, the world’s largest and most profitable healthcare market. This worrisome mix of little growth and low reputation has become the main reason for explaining as for why investors are increasingly interested in how pharma companies manage access-to-medicine opportunities and risk, which range from developing new treatments for neglected populations and pricing existing products at affordable levels to avoiding corruption and price collusion.
The recent pharma reputation survey
Despite all the criticism over its pricing, the pharmaceutical industry managed to improve its reputation last year, though very slightly, according to a new survey released. Using a formula that relies on ranking several different attributes, the industry received a passing grade of 67.6, a modest two-point improvement. Although these are variations among countries. Industry reputation was highest in the U.S. The survey, which was conducted earlier this year, queried more than 23000 people in 15 countries that represent a mix of the largest economies and emerging markets, including the U.S, United Kingdom, France, Germany, Italy, Russia, Canada, Spain, Brazil, China, Mexico, South Korea, Japan, India and Australia.
The success of the new business model depends on both the willingness and the ability of pharmaceutical companies to fully integrate access to medicine into their business strategies. Companies should take a patient-centric approach, where the barriers to access are first fully understood and then proactively addressed. Moreover, they should partner with other actors, including government, NGOs and private foundations to build capacities into the pharma value chain while avoiding conflicts of interest.