Last week, Lilly announced a 70% price reduction for its most prescribed insulins and implemented caps to patient out-of-pocket (OOP) costs at $35 or less per month. The manufacturer’s decision comes amid mounting attention to Inflation Reduction Act drug pricing reforms and President Biden’s recent State of the Union address that doubled down on the urgent need to reduce the OOP cost of insulin.
While the reputation of pharmaceutical companies continues to wane in polls, Lilly may enjoy a reputational boon from this announcement. Meanwhile, other companies – insulin competitors, but also others (such as the manufacturer of the EpiPen) – are likely to feel additional pressure from policymakers and the media.
Immediate impact:
- Lilly’s decision received immediate praise from leading advocacy groups and President Biden.
- By acting first, Lilly has diverted pressure away from itself and onto other manufacturers who will need to address any plans concerning price and access, including questions from media, investors and regulators alike.
Reputational currency:
- Lilly’s immediate boost in reputational and political currency has placed itself in stark contrast to other pharma companies that have appeared in the news for raising drug prices or reputedly reducing patient assistance.
- Media is following in policymakers’ footsteps here by taking a magnifying glass to topics previously considered too “wonky” to resonate with a broad public audience. Recent focus on nuanced factors influencing patient out-of-pocket costs – like price caps and co-pay accumulators – sets up a parallel story to ongoing congressional and Federal Trade Commission inquiries into the effects that pharmacy benefit manufacturers (PBMs) have on patient OOPs.
What should life science companies do:
- Consider the value of goodwill: Companies should weigh the benefits and risks associated with making proactive pricing reforms or staying the course. Is there a value to earning goodwill with the administration in the short-term? As pharma’s reputational halo evaporates, can proactive price cuts push you to the top of favorability rankings? Will price increases or deleterious changes to patient assistance programs receive higher-than-normal scrutiny from external stakeholders?
- Prepare for increased attention: Develop reactive Q&A for pricing inquiries from media and investors who are curious (or concerned) that a company may be considering proactive price adjustments or changes to their patient assistance programs. The recent news will cause a short-term surge in scrutiny. Patients and advocacy too may find themselves galvanized, positively or negatively, in response to pricing or assistance changes.
The Syneos Health Reputation & Risk Management team will continue to monitor the policy landscape, provide insights and recommendations for clients with stakeholder engagement and value communications strategies. If you have questions, please reach out to [email protected].
