The pharmaceutical industry’s tarnished image was analyzed, even quantified, in January, when PricewaterhouseCoopers issued a survey report that characterized the industry’s loss of public trust as a serious, long-term threat.

“It was certainly shocking to us that the industry was held in such low esteem,” said PWC partner Peter Claude, one of the principal authors of the report, “and that the responses were so strong in their criticisms of the industry’s actions. But the survey results also illustrated a tremendous number of misconceptions and misunderstandings.”

The report, Recapturing the Vision: Restoring Trust in the Pharmaceutical Industry by Translating Expectations into Actions, commissioned by the industry, shows that a substantial portion of the public believes that pharma puts profits before patients. The report also shows that the public has a distorted sense of how much pharmaceuticals contribute to the total cost of health care.

“What is heartening,” Claude added, “is that the companies realize that they need to take ownership of this issue.” And there are many issues to own:

Nearly two out of three consumers (63 percent) estimated that prescription drugs account for between 40 percent and 79 percent of overall US health care costs. In reality, prescription drugs account for about 10 percent of the total cost.

Three out of four consumers (74 percent) estimated that the average R&D investment required to develop a new drug is less than $500 million. The actual cost, on average, is $802 million.

94 percent of consumers said that drug companies are too aggressive in promoting unapproved uses of their product.

41 percent of consumers, along with 57 percent of stakeholders, held the belief that drug companies don’t disclose their products’ negative side effects. Only 7 percent of industry executives surveyed shared this belief.

80 percent of consumers believed that pharma makes R&D decisions far too frequently on the basis of which drugs will sell the most; 45 percent assume that developing “me-too” and “lifestyle” drugs with the greatest sales potential is the greater consideration.

Pharma’s determination to get to the root of its public perception problems was in part driven by a recent Harris Interactive survey showing that between 1997 and 2005 only one other industry fell further in terms of reputation - Big Oil. A 2005 Rating Research study estimated that only one in four US consumers agreed with the premise that major drug companies engage in “ethical business practices.”

“We looked at the situation two years ago and saw a poll indicating that we were minus four in public perception,” said Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA). “And we looked back historically, when Merck was not only the number one pharmaceutical company, but the number one in natural respect and admiration of all the corporations in the US. The whole industry was seen as making miracle drugs and saving lives, something that needed to be supported and appreciated, and we said: How can we get back there? How can we restore that trust relationship? What broke it down?”

“The pharmaceutical companies may have been hoisted on their own petard,” PWC’s Claude explained. “By direct consumer advertising, they increased their visibility, which infl ated public awareness of drugs and their costs. But this also had an effect similar to that of advertising among lawyers. Whereas once the public saw the lawyer as a learned professional, and people wore their Sunday best to an appointment, we saw billboards saying, ‘1 800 sue your neighbor.’ With familiarity sometimes comes a loss of status.”

“We looked like used-car salesmen on television,” Tauzin added. “Prior to direct-to-consumer advertising, the industry was represented as part of the medical community, and the medical community - doctors and nurses - were revered. Here was something that had been so important in people’s lives, and we were turning it into a commodity.” The industry commissioned PWC to survey 500 consumers, as well as 150 stakeholders, including doctors, researchers, former health policy makers, hospital executives, managed-care organization executives, and pharmaceutical company executives. A comparison of the responses from the two groups reveals a chasm between how the industry sees itself and how others see it.

“When a group of people thinks about itself differently from what others think about them,” Claude went on, “they tend to develop some degree of tunnel vision. As a result, they can lose perspective. What is important to them takes precedence over their larger place in society as well as the impact of their actions on others.”

But the PWC research found problems even within the smaller circle of those with direct, professional involvement: 62 percent of stakeholders agreed with the proposition that drug companies often manipulate or suppress negative clinical trial results to maximize sales. 73 percent agreed that drug companies spend too much money and effort attempting to prevent generic drugs from competing with their branded products. Nearly three-quarters of industry executives expressed the belief that drug companies spend too much money on drug promotion overall: on sales force, physician education, conferences and events, and DTC advertising. (According to Advertising Age, large pharmaceutical companies spent only 5 percent of their revenue on advertising in 2005, compared with 14 percent on worldwide R&D.)

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