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Analysis, Health care   08.29.2018

How big pharma buys goodwill: Set up a foundation, stage media events, please politicians

Were it not for the business practices of some of the biggest corporations in America that profit from the manufacture and distribution of massive quantities of opioids, many of those we have lost likely would still be with us. How are those big corporations responding? In one notable case with a charity-based public relations campaign to buy goodwill and stay in the good graces of politicians.

60 Minutes recently exposed the role some of those companies—prescription-drug distributors in particular—are playing in America’s opioid epidemic. The show reported that the distributors have shipped astounding quantities of opioids to rogue pharmacies and pain clinics across the United States. Example: a pharmacy in Kermit, WV, population 392, ordered nine million opioid pills over two years from drug distributors. The pharmacies and distributors have been getting away with it because the U.S. Drug Enforcement Administration, under the influence of industry lobbyists and some members of Congress, was not acting in the best interests of the public.

The biggest distributors of prescription medications in the United States are AmerisourceBergen, Cardinal Health and McKesson. In a separate expose, The Charleston Gazette-Mail found that AmerisourceBergen’s oxycodone shipments to just one West Virginia county increased from 292,000 pills in a recent year to 1.2 million a year. Over six years, the newspaper reported, that company and the other big drug distributors pumped more than three-quarters of a billion hydrocodone and oxycodone pills into West Virginia, a state with fewer than two million residents. More than 1,700 West Virginians fatally overdosed on those two painkillers during that time, the newspaper found.

Sadly, but not surprisingly, West Virginia has the highest combined rate of deaths from drugs, alcohol and suicide in the country, according to a recent study by the Commonwealth Fund. The rate of drug overdose deaths in that state more than quintupled between 2006 and 2016.

Damage Control

As the former head of PR for a big health care corporation, I can assure you that when your company is the target of a 60 Minutes investigation, you’ve got a PR crisis on your hands. And what you do to keep your job is go into damage-control mode right away.

A common goal of a damage-control plan is getting people to believe your company is part of the solution, not part of the problem. One way of doing that is to throw a little money at a PR campaign aimed at getting the media and politicians you help elect to portray your company as a benevolent corporate citizen.

AmerisourceBergen appears to be doing just that. The company created a foundation, led by the head of its marketing and PR department, to give away money its executives say is aimed at preventing opioid misuse and promoting recovery. The fact that the company’s top PR person heads the foundation is not unusual. When I was Cigna’s communications chief, I also ran the Cigna Foundation for a while. Here’s something you should know: many of the donations made by foundations established by corporations are aimed at buying goodwill as much as doing good. The grants they make are often connected to the companies’ brand protection and enhancement efforts.

Rosy PR materials

As reported last week by The Philadelphia Inquirer, AmerisourceBergen’s foundation has given money to police departments and nonprofit groups, and, as you would expect, those police departments and nonprofit groups have said good things about the company. They told the Inquirer they can put the money to good use, and I’m sure they will. At the same time, the paper said, “The company’s foundation grants, which totaled $1.4 million last year, have set the stage for press events, social media posts, and rosy PR materials with members of Congress, including those who have received contributions from the company’s political action committee or lobbyists.”

So far this year, the foundation has made a little north of $800,000 in grants to a few communities. It spent $50,000 to sponsor a one-day symposium in Philadelphia at which AmerisourceBergen’s PR chief and foundation president spoke—about corporate philanthropy.

I don’t want to belittle the importance of scattering $800,000 around the country to help with the opioid epidemic. But let’s put that figure in perspective. AmerisourceBergen ranks 12th on the Fortune 500 list. It has taken in nearly $164 billion dollars in revenue over the past year, according to Yahoo Finance, the same year its CEO, Steven Collis, was paid $10 million.

Here’s another way of looking at that: Collis was paid more in one month last year than the amount of money the foundation has doled out so far this year. And here’s another fact: the company spent $1.2 million in federal lobbying in just the first half of this year. It’s making generous campaign contributions to members of Congress, some of whom have appeared at press events and been quoted in AmerisourceBergen press releases.

As I mentioned, AmerisourceBergen is making sure its grants are getting into the media. It’s also getting sued, and some of the company’s critics suggest a motive for setting up and publicizing the foundation is to influence judges and jurors. As the Inquirer noted, AmerisourceBergen reached a $16 million settlement in West Virginia last year over claims that the company profited from sending excessive amounts of painkillers into the state and failing to report suspicious orders. And in early August of this year, AmerisourceBergen disclosed that it had gotten a bunch of new subpoenas from federal prosecutors, and even from the DEA, related to opioids and the way the company keeps tabs on controlled substances.

Pouring fuel on the fire

Here’s what Andrew Kolodny, co-director of the Opioid Policy Research Collaborative at Brandeis University, had to say about big drug companies and distributors like AmerisourceBergen and their role in the opioid epidemic:

“You can think of the manufacturers as having lit the fire. The distributors really poured fuel on the fire. And then I would say the manufacturers and distributors together prevented the fire department from putting out the fire.”

Kolodny added that he suspects AmerisourceBergen’s grants are linked to the company’s legal problems: “They’re engaged in these activities because they want a jury to be able to hear this. Or they want a judge to see that they’re stepping up to the plate.”

Meanwhile, while you’ve been reading this, someone, maybe even someone you know, has died from an opioid overdose. We lose 115 people every single day from this epidemic.

In my humble opinion, $800,000 is not stepping up to the plate. It’s not even in the ballpark.

Solutions Database

America’s Broken Drug Supply Chain: What You Can Do

  1. Check the cash price on your prescription. There’s a good chance that number is lower than your co-pay. You can find out fast and shop for the best local deal by visiting Goodrx.com.
  2. Arm yourself with knowledge. Physician David Belk has dug deep into the costing of American healthcare. It’s all laid out at his website truecostofhealthcare.org.
  3. The Trump administration has unveiled a plan it says will fix the high cost of drugs. Find out more here.
  4. A coalition of doctors unveiled a counter-proposal that they say will address drivers of high drug costs like Big Pharma directly funding its regulators and cost controls to make medicines affordable for all Americans. Find our more here and connect with the health care advocacy group, Physicians for a National Health Program, behind the proposal here.
  5. Large hospital systems are launching their own nonprofit generic drug manufacturing company to do an end run around middlemen and lower prices. Find out more here.
  6. Medicines360 uses a hybrid model to get affordable drugs and medical devices to poor women around the globe. Check it out here.

Tarbell is nonpartisan. We do not endorse you taking these actions. But sharing them with you is part of our commitment to helping you find solutions. Email questions to questions@tarbell.org.