Big surprise: Payers don't trust pharma. The fix? Risky trials and transparency

Just in case you need more evidence that U.S. payers and pharma companies are at loggerheads, check out Ernst & Young's latest report on the pharma industry. It shows that drugmakers have certain opinions about their products and prices--and the people who write the checks have an entirely different set.

For one thing, drugmakers don't generate the kind of trial data payers want. Pharmacy benefit managers and other gatekeepers--not to mention healthcare providers--are most interested in comparative data. They want to see strong evidence that new meds are better.

But pharma companies try to avoid studies pitting their new products against older (and often cheaper) alternatives. That's too risky. Consider Eli Lilly's ($LLY) trial pitting its blood thinner Effient against the standard of care, Plavix; no dice. Or Merck ($MRK) testing its combination cholesterol pill Vytorin against Zocor, one of the combo's components; also a dud. So placebo remains the comparator of choice, at least until a drugmaker sees a competitive advantage in a head-to-head trial.

That means payers are left skeptical about the value of new meds. Providers, too. Maybe that's why only 20% of payers see new drugs as "significantly differentiated" from current standards of care.

Which leads us to pharma's reputation problem. According to Ernst & Young's research, less than half of payers consider industry data to be credible. That's the perceived "truth deficit"--a term coined by former Merck CEO Dick Clark--that has afflicted pharma companies for years now.

Ernst & Young's Global Life Sciences Leader Glen Giovannetti

Of course, all this cognitive dissonance is helping to feed the rapidly intensifying debate over drug prices. If payers are up in arms about the prices of new drugs shown to be highly effective--exhibit A being hepatitis C drugs, of course--then consider the conflict over meds whose benefits aren't well quantified. And given the billions drugmakers have at stake when rolling out new products--and pharma's long-habitual, play-it-safe-as-possible approach--that's a conflict that isn't likely to end soon.

"[R]estoring trust with payers and the public is perhaps the most urgent and important issue facing the pharmaceutical industry today," Glen Giovannetti, EY's global life sciences leader, said in a statement. "This is no longer just about doing the right thing--it's about doing the right thing for business. Companies urgently need to become more consistent, proactive and transparent in trust-building initiatives."

- see the release from E&Y
- read the Medical Marketing & Media story (reg. req.)

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