I trust the reader is familiar with my premise: What are the topics of conversation at the typical open house, hospitality party, exhibit hall reception or other similar business event? They usually revolve around industry news and chatter, current events, and personal updates among acquaintances. But there are usually a few topics that everyone avoids. The obvious personal ones concern our private views on sex or religion. The obvious business ones might be those that challenge deep-seated consensus beliefs in our industry, particularly when those views are not shared by outsiders.

Here then are some thoughts about a couple of “elephants” that have been in the rooms in which I’ve engaged in recent conversations.

PDUFA IV, Kennedy-Enzi, Medicare Part D, and various congressional hearings are all topics of much conversation. But one potential outcome of this Congress’s analysis of the drug industry is not. Is it possible that the U.S. will move towards a form of socialized medicine? There are several interconnected questions:

• Will the government adopt de facto price controls? And won’t every buying group take its cue from Medicare?
• Will Congress establish formal or informal limits on spending for certain activities, i.e. direct-to-consumer advertising or certain types of “me-too” research?
• Will it mandate spending on other efforts, i.e. certain “safety” activities that may or may not be based on science?

The selection of highly-regarded ex-congressmen Billy Tauzin and Jim Greenwood as the heads of the drug industry’s two major trade associations was supposed to bring a change in tone to the conversation in Washington about the role of drug development in our society. I certainly don’t see all the behind-the-scenes lobbying efforts of PhRMA or BIO. But it seems that the charges, allegations, and outspoken vitriol against the makers and sellers of medicines have become more pronounced, not less. Visible outrage from groups that oppose the very idea of a for-profit drug industry is expected. Similar indignation against the companies’ practices regarding research, advertising and pricing from policy-making legislators is not. Patients and physicians who may not want to accept the unintended consequences of a more tightly regulated drug industry may stay in a new “silent majority” until it’s too late.

And if you like that elephant, you’ll love this one. Is it possible that the drug industry deserves to be treated more harshly by regulators, policy makers, advocacy groups, and health care consumers? Again there are several interrelated issues:

• Is drug development too important to be left to drug developers? If so, what other groups should be more involved?
• Have companies finally gone over the top in using TV ads to create demand in an unsavory manner?
• Is the drug industry too intent on selling pills and not focused enough on encouraging healthy lifestyles?
• Is it right to expect such “counseling” behavior from this particular group of manufacturers?
• Has this famous-for-being-insular industry finally run out of excuses for not adapting its ways to meet the changing needs of society?

Many of us have repeatedly noted the potential for learning lessons from other industries. Those conversations usually focus on outsourcing — a well-developed business techniques in many industries. More fundamentally, there may be lessons the drug development companies can learn from other research-intensive industries, other health care industries, and other regulated industries, that would help those firms gain a different appreciation of their constituencies’ viewpoints.

One final thought: as Walt Kelly’s Pogo said several decades ago, “We have met the enemy and he is us.” Is the drug industry its own worst enemy? How else can we explain the disconnect between the industry’s demonstrated ability to save lives and improve health, and its current position as a whipping-boy for a range of critics, only some of whom seem to have justifiable complaints? And what other elephants are in the rooms you’ve been frequenting?

Michael A. Martorelli is a Research Partner at the investment banking and capital advisory firm Fairmount Partners. To discuss further the topics covered in this column, please contact him at [email protected], or at Tel: (610) 260-6232; Fax (610) 260-6285.