PHARMA: Media bias against big Pharma? The Industry Veteran responds

Last week I got an email from a group I’d never heard of called The Business and Media Institute promoting their new study of how TV news media was biased against Big Pharma. Their main complaint is that while the news media are always harping on about high drug prices, but they never mentioned the cost of bring a new drug to market—which of course as anyone who believes in the industry-funded center at Tufts knows is $800m, $2 billion or $50 billion—all depending on what else the pharmaco would have done with the money it invested in year 1 of the 20 year development process. (The $50 billion number is my understanding that for a development started in 1986 the typical pharmaco was deciding between investing in researching a new molecule or buying Microsoft stock at the IPO).

And to be fair the news media didn’t even mention the amount Public Citizen admits it actually does cost to develop a new drug.  (Clue: that number is a just a leetle beet lower than Tufts says it is). On the other hand the news media didn’t mention what happened to the Federal Office of Technology Assessment  (OTA)when it put out a study also rebuking the Tufts numbers. (Hint: the OTA didn’t make political contributions and PhRMA does, so guess which one is still around!).

But none of this is surely anything new. News media understand that we the public are dumb and only have 6 seconds to understand any story. And there are a smattering of front groups on both ends complaining about bias in the media. I tend to be a scad more sympathetic to those on the left who think that the media is biased towards big corporations—after all the TV news media is owned by big corporations (Disney, GE, Viacom) whose CEOs meet those of big Pharma, or at least pass their corporate jets as they fly in and out of Jackson Hole. But I remain hopeful that some people watching the news are smart enough to see through the misinformation, at least eventually.

I did email back and forth with the PR flack from the “Business and Media Institute” which put out the study. I asked him the obvious question of who paid for the study and where the organization’s money came from. I didn’t exactly get the transparent response I was looking for. He said, “Prescription for Bias” is the latest study in a series of special reports analyzing media coverage of specific issues and industries. No one paid for it. Our general funding comes from individual donors, none of whom represent the pharmaceutical industry.

Of course armed with a couple of minutes and Google you can find that the Business and Media Institute is part of a conservative group called the Media Research Center, and you don’t have to be Hillary Clinton to guess where their money comes from. I wasn’t going to get too excited about all this, but luckily for you all who think that THCB has gone soft in recent weeks, The Industry Veteran decided that he would instead. He also sees a bigger conspiracy theory at work. Here are the Veteran’s dulcet tones on the matter:

I see that the poor, bedraggled pharmaceutical industry feels itself unfairly vilified by the yellow-liberal media and other birds of the same flock whose true purpose lies in subverting our sanctified capitalist system.  Pharma’s aggrieved cry from the heart began late last year when the industry’s big anoos’s, as Borat would call them, convened in Washington to develop a strategy for dealing with a Democratic-controlled Congress and a public, which at one time had been at Pharma’s feet, but is now at their throats.  Did these knifemen of the Avantine Collegium decide to assuage Congress and the public by reducing prices on their me-too, palliative products?  Did they deign to permit transparency into their clinical trials and their actual costs of drug development?  Perhaps, one might plaintively hope, they developed innovative approaches for increasing public access to medication, reducing costs or improving the outcomes for people who use their products?  If you believe that, it is probable you are also convinced that Saddam had weapons of mass destruction. Rather than altering the realities underlying their abysmal public image, Pharma’s capos relied upon the first refuge of scoundrels, that is, they decided to launch a PR campaign. Now on the heels of Pharma’s Washington parlay, we have a front group, Business and Media Institute in Arlington, Virginia, distributing a flack report that purports to show a “bias against drug companies” from ABC, CBS and NBC news during the first nine months of 2006.  Their analysis does not justify close scrutiny any more than similar screeds such as Protocols of the Elders of Zion.  A principal funding source for this Pharma champion is the Scaife Foundation, the right wing tank that brought us Whitewater, Kenneth Starr, the Contract on America and other quasi-fascist machinations during the Clinton years. The Business and Media Institute appears to possess all the requisite elements of a right wing, scorched earth campaign.  They start with the self-pitying cry that liberal elitists in the media and academia discriminate against them.  They then proceed to the Know-Nothing assertion that the “real people,” in their homespun wisdom, support Pharma’s predatory practices and, finally, there is the Dick Cheney implication that people who perceive greed at the core of Pharma are doing the anti-Christian work of terrorists or other subversives. This crude attempt to elevate Pharma’s lower-than-whaleshit image is only a first, sputtering attempt by a resolute group that maintains the largest lobbying army in Washington. Subsequent refinements are apt to be more insidious.

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4 replies »

  1. I see reps all the time at my office at the community health clinic here in SC. mostly jocks and cheerleaders types (not organic chemists!) my patients are often uninsured and I give them generics to not p##s them off. they work just as well for most apps.
    you cannot press a pill for ten cents and charge five bucks its reverse robin hood!

  2. “Pharma fears voters”
    I think you have the correct view. Put “big pharma” out of business.
    That’ll show ’em.
    That will show us, too. Who needs them?

  3. Pharma fears voters which would put a dent in its bribery control of Washington politicians. Fear that voters will actually participate in democracy can be very scary and undo the best bribery system. I don’t think big pharma has much to worry about, politicians still feed best on cash.

  4. > The $50 billion number is my understanding that
    > for a development started in 1986 the typical
    > pharmaco was deciding between investing in
    > researching a new molecule or buying Microsoft
    > stock at the IPO
    Yes, that’s what they’re doing, and there are a couple problems with that. First, 20 years on is its all retrodiction. It wasn’t so clear in 1986 that Microsoft would succeed the way it has. Of course, it wasn’t clear in 1986 the one new molecule in question would succeed either — pharma drills a lot of dry holes, and lots of software companies have gone bust.
    There is also an important question about the nature of a corporation here: do stockholders want pharma managers investing their earnings in the software (or any other) industry? I think the answer is a resounding “no”. If stockholders want to invest in another industry, they can do that themselves, thank you very much. Pharma managers, howsoever talented, simply aren’t needed. They should be working on pharma.
    There truly is an opportunity cost, but what that cost is depends on one’s perspective. For the outside investor, his opportunity cost is the next best company he can find to invest in (this is like the Microsoft example). It is useless for him to compare retrospectively what what he has actually invested in with what he might have invested in had he only known. He didn’t. For the pharma manager, the opportunity cost is the expected net of his next-best project, or his cost of capital.
    Prospectively, the pharma managers are “investing” in a particular molecule as if they were investing in a whole company. In a very real way, this is exactly what is happening. But so far as they are concerned, “pharma” is their only investment choice. This says the cost of capital and hence opportunity cost from their perspective is the one appropriate to their segment of the pharma industry. For them, what might happen with Microsoft or anyone else is irrevelant.
    Public Citizen’s self-serving analysis is just as susceptible to a good solid Fisking as any self-serving industry analysis of itself. For example, they presume a tax deduction is a reduction of net spending. It isn’t. They prattle on about what they think might happen in the future. This has no impact on the here and now, much less on yesterday. They say their assessment of risk is different from investors’ assessment. So what? Sounds to me like a good investment opportunity for them in that case. Let `em put their money where their mouth is. They confuse the risks of the pharma industry overall with the risks of a single firm, or with a single project in that firm. Similarly they confuse returns.
    One thing we can be sure of: the cost borne by a pharma to bring a new chemical entity to market is somewhere between $71M and $50B.