In early 2023, 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.
“After life sciences companies have experienced two years of reputational decline, Lilly’s perception among stakeholder groups may benefit from this announcement,” says Patrick Rigby, Senior Vice President of Reputation and Risk Management at Syneos Health. “Meanwhile, other companies are likely to feel additional pressure from policymakers and the media.”
Rigby and team pinpointed three important takeaways that life sciences companies can learn from Lilly’s decision:
- Consider the value of goodwill. Companies should weigh the benefits and risks associated with proactively implementing pricing reforms or staying the course. This requires manufacturers to first identify the potential value to earning goodwill with the administration. The impact of proactive price cuts or commitments can then be assessed as the industry’s reputational halo evaporates. Equally important, price increases or harmful changes to patient assistance programs could have a negative effect on a company’s reputation that could outweigh any potential profits to be gained.
- Prepare for increased attention. 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. 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 importance of taking the first step. “By moving first, not only has Lilly diverted pressure away from itself, but it has set the parameters of the decisions that other manufacturers must now make,” says Rigby. Policymakers have set the agenda on this topic for months, with the media following in their footsteps. “Lilly has helped crystallize this discussion by being the first company to take concrete steps. Their actions have further defined this issue and will be what the rest of the industry will be judged against.”
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Senior Vice President, Reputation and Risk Management | Syneos Health