December is here and elves have started hiding on shelves—but there’s no sign that things are slowing down as we head toward the holidays. Big news from the weekend saw CVS moving closer to buying Aetna in an agreement that will redefine traditional “stakeholder” categories in healthcare. The Senate passed its version of the GOP tax overhaul and now must reconcile its version with the House bill, which, among other things, would eliminate tax credits for developing orphan drugs. We also saw new allegations that once again rocked morning television and heated conversations among pharma CEOs on company conduct.
There were also a few other news items that caught our attention, so read on for The Week that Was.
► OPIOIDS: DISCUSSIONS, DOLLARS & A CZAR-DESIGNATE
In one of the most enduring news trends of the year, we saw a lot of activity on the nation’s opioid crisis this week. On Tuesday, Johns Hopkins Hospital hosted the House Oversight Committee and NJ Governor Chris Christie to discuss the Commission’s findings and recommendations. On Wednesday, Jeff Sessions noted that Kellyanne Conway would be replacing Christie as “Opioid Czar” and announced $12 million in grants to state and local police departments. Thursday morning, the Senate HELP Committee held its own hearing on the crisis. And on Thursday afternoon, Donald Trump declared he would be donating his third quarter salary to fund solutions for the epidemic.
► OUR TAKE
Even after spending hours watching C-SPAN this week, we didn’t see all of this coming. While the details around the appointment, salary donation and grant funding are all a little fuzzy, they do speak to the two questions driving this debate: “Where is the funding to solve this problem?” and “Who is in charge of implementing the Commission’s recommendations?” But for the pharma industry, another question persists: “What ethical obligation do healthcare businesses have to address a public health crisis, and how do they fulfill that obligation?”
It’s certainly not an easy question to answer, but it’s one that will continue to plague the industry. When considering the reputational challenges facing pain management developers, one of the Senate HELP witnesses, Dr. Omar Abubaker, offered an important reminder: the prescription medicines implicated are only part of the problem. Dr. Abubaker stated, “Do not confuse winning the war on opioids with winning the war on addiction. Opioids are only a decoy, the real foe is addiction.” Keeping this in mind, we advise our pain management clients to think about how they can work with other industry stakeholders to support responsible prescribing, safe storage and medication compliance to reduce risks of abuse and misuse.
► SENATORS CHALLENGE HHS NOMINEE AZAR'S OBJECTIVITY
On Wednesday, President Trump’s HHS Secretary Nominee Alex Azar appeared for the Senate confirmation hearing on Capitol Hill. Azar outlined four main areas that he would focus on when leading HHS: drug prices, affordable and accessible healthcare, increased emphasis on health outcomes, and the opioid epidemic. He was met with near equal parts support and skepticism from both parties, with Senators sharing concern about whether he could remain impartial given his pharmaceutical ties to Eli Lilly (Azar was the former President of Lilly and a leader in industry trade association BIO). Despite some pushback, Azar remained positive, noting that he was honored to be nominated for his “dream role” and will work to provide care and access to every American as directed by law.
► OUR TAKE
While he professed to remain steadfast in his ability and intention to represent all industries equally, Azar will face tremendous scrutiny over his perceived allegiance to Big Pharma. How much HHS can or will affect drug pricing is unknown, since the issue is outside the traditional remit of the Department and its regulatory agencies. Regardless of precedent or policies, Azar will likely become a symbol of drug pricing debate, and will be pressured to take some action, should he win the nomination. What does that mean for drug makers? Signs are pointing to more pay-for-performance in drug reimbursement similar to what CMS negotiated with Novartis for its CAR-T, Kymriah.
► RE-BRANDING YOUR DAILY DAIRY
Celebrating 10 years of shaking up the yogurt industry, Chobani re-branded itself this week as a food-focused wellness company. In an effort to “bring the specialness back to yogurt,” a revamped logo with lowercase, curved font, painted fruit images to replace photography, and a matte container instead of the usual glossy finish are coming to grocery stores near you. The au-naturel design was reportedly inspired by 19th century American folk art to compete with millennial attraction to highly-stylized brands like Noosa and Siggi’s. The company announced that expansions of existing yogurt flavors are on the horizon, but has yet to disclose what other products will emerge as they embark on their new creative journey of “fighting for happily ever after.”
► OUR TAKE
Despite being a steady market leader since launching the Greek yogurt craze back in 2008, Chobani is feeling the need for continued innovation. Yogurt sales dropped over the past year as a result of market saturation with competing brands, so the company has chosen to adapt in creative ways, such as providing alternative uses for their large tubs of yogurt and counter-intuitively boasting less fruit in an effort to cut down on sugar. Being first to market doesn’t guarantee continued leadership, so we advise our clients to never lose sight of opportunities to reinforce or redefine your brand in an increasingly competitive market. In a brand overhaul like Chobani’s, it’s important to remain authentic to your original mission, but make room in the new identity to accommodate new products and audiences to allow the company to continue to grow will into the future.
With the year coming to a close, your TWTW team is busy working on a "The Year That Was" recap tracking what we believe were the biggest stories and trends of the year. Watch for that issues hitting your inbox on December 18th.
Until next time,
- the Reputation & Risk Management Practice