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An Industry in Desperate Need of Reinvention

The Pharmaceutical Industry is once again being called out for being callous, venal and the root cause of a national epidemic. Yet another reputational debacle for an embattled industry. If you haven’t read the headlines, here’s a quick redux:


  • A massive lawsuit, representing nearly 2,000 cities, counties and towns, contending that several pharmaceutical companies and distributors “knowingly flooded their communities with opioids, fueling an epidemic that has killed more than 200,000”


  • Billions of dollars in fines, settlements, and lost business have already resulted from regulatory actions

  • Smoking gun emails from a cravenly indifferent national account manager have circulated around the news media, including: “Keep ’em comin’... It’s like people are addicted to these things or something. Oh, wait, people are. . .”

So what happened? The over-simplified trope is that this yet another example of the pharmaceutical industry being a greedy, profit seeking institution that doesn’t do the ‘right thing’. In fact, according to public relations firm Edelman, who publish an annual Trust Barometer, the level of trust for the pharmaceutical industry trails all other healthcare sectors and is steadily declining. The pharmaceutical industry’s rebuttal is that these are the actions of a few, rogue employees who lacked a moral compass and flouted the compliance guidelines. The truth lies somewhere in between. In any organization there are always going to be individuals who are apathetic and morally bankrupt. You cannot account for, or fully control, the actions of every employee. That said, the actions of employees are often a reflection of the organizational ethos. The executive leadership inside an organization sets the conditions and the social norms of the organization. What the leaders say and do signals the organizational values and priorities. And employee behaviors are therefore in part predicated on the culture those leaders have built. Thus, the senior leaders in the industry cannot shrug their shoulders and claim that they are equally outraged and feign innocence. With great power, and pay packages, comes great responsibility.


If we are honest with ourselves, the root cause of this recent reckoning is that many drug companies remain product-centric and profit-centric, rather than people-centric. For the industry to reform, there needs to be a wholesale shift in the way the executive leadership, and all employees, think about the purpose and mission of their company and industry. People-centricity should not be thought merely as a model, rather a mindset and ethos. The purpose should be felt and understood by the most senior leaders AND the most junior colleagues from across the organization. Behavior change does not happen overnight. It requires constant reinforcement, training and practice. It also requires understanding. And before the industry is able to reform itself, I believe that it is going to have to address a few of the most pressing issues that inhibit people-centricity.


So what’s stopping increased people-centricity? Here are three observations from more than two decades of working across the industry.


The Investor – Patient Tension


Pharmaceutical companies are not set-up as non-profit organizations. And for good reason. A profit motive has the effect of inspiring employees to be more innovative and efficient with their time and resources which should produce better goods, services and outcomes. Afterall, Milton Friedman, the world-renowned economist, argued that “the sole purpose of a firm is to make money for its shareholders.” Full stop. Friedman’s shareholder value theory led to the creation of stock-based executive compensation to improve the company performance and increase shareholder value over time. However, it has had a very large and unintended negative benefit: A myopic focus on the investor and financial return. While patients and customers have remained a part of the equation, they are often weighted as just one of the many variables rather than the end goal. The result is a tension between satisfying investors and doing right thing by our patients. And all too often there is a disconnect between what the investment community rewards and what is in the best interest of our end customers – patients. While a profit motive remains important, having a “double bottom line” that equally weights the end customers is essential in reforming the industry.


Authentic Connections with our Customers


As an industry, we tend to talk about our customers rather than to our customers. I recently conducted a non-scientific survey of over a hundred current and former colleagues from the pharmaceutical industry and asked a single question: When was the last time you interacted with a direct customer (i.e. a patient or caregiver) of your medicine(s)? Over 60% either responded “never” or “not sure”. The problem is that as an industry our employees are extremely disconnected from our end-customers. And this often through no fault of their own. Onerous external and internal regulatory hurdles make it extremely difficult to interact with the primary beneficiaries of the industry’s work. While some groups of employees are trained to speak to patients and encouraged to connect with them more regularly, the majority feel disconnected from the overall purpose of the company and the experiences of the patients it serves. When there is significant drift in attention away from the end-patient, it can be hard to align the work of the organization with the outcomes of the medicines the industry invents and produces. Perhaps worse, is that you can end up with employees that see patients as abstractions or mere widgets. This can have the effect of desensitizing employees. Changing the way our employees think about and interact with our customers is essential to building empathy and understanding.


Disconnected Efforts


Here’s the good news. There are numerous patient-centricity initiatives across the industry and if you were to scan job titles across many life science companies, you will see more people dedicated to “Patient Engagement” and “Patient Officers” than ever before. That said, each company and set of leaders goes about creating a patient-centric movement in different ways and marches to different beats. In order for the industry to change, the patient-centered movement must transcend corporate communications hype and individual corporate efforts. It must become a group approach that brings together the varied corporate interests in the healthcare value chain and knits together the disparate investments and initiatives.


There is no doubt that change is afoot in the United States healthcare system and the pharmaceutical industry is one of the most obvious and dire areas for reform. The recent epiphanies in the opioid crisis is truly a canary in the coal mine. But the change must go much deeper than just policy proposals or individual acts of corporate window dressing. The culture and mindset of industry leadership, as well as the rank and file, needs to shift away from product and profit-centric and truly become people and patient-centric if we want to see real and lasting change.

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Dan Seewald

To find out more about Deliberate Innovation, please contact me to discuss.

Email: Dan@Danseewald.com

Phone: 201.724.9111

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