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they could operate within a structured environment and that their advice would be heard. Whereas I believe that the administration was quite clear that it was going to be highly disruptive and very different. And so that decision to participate early on was well intentioned, but at the same time I think miscalculated. The [red] flags were already raised before they joined. Then, by golly, they were raised a lot higher once you started to see things like the immigration [ban], healthcare reform, et cetera. At that stage I’m sure that many of them were already scratching their heads. And I think the instance of Charlottesville was simply a bridge too far.
X: Was Charlottesville really a tipping point? Are biopharma CEOs no longer afraid of the administration, or will they no longer be selectively silent because of possible tax reform?
SH: You have to recognize that CEOs are a heterogeneous group of people. And boards are a heterogeneous group of people. There will be those who view their role as largely, if not exclusively, limited to maximization of profit and therefore they ought not participate in the public discourse. There are those who will view their role more broadly. But under these kinds of conditions, it becomes all the more important for more people to recognize that broader role. So I don’t know if it’s being scared or not, part of it is just who you are, how you came to be where you are, and your conception of your job.
JL: What Steve just said is terribly important. When nobody else has picked up the ball, and it’s just basically drifting around the field, we as CEOs need to do it. We aren’t given a choice. We’ve entered an industrial limbo where there is no clear direction, there are no clear policies, and those that are described are very, very antithetical to the very concept of delivering good healthcare. How do we move this country forward? The only way is for us to stand up, and to say we’re here, we have a voice, and we have things to say.
X: Isn’t lobbying for the repatriation of offshore cash an abdication of moral authority? In the past, studies have shown that this leads to M&A, mass job losses, and stock buybacks, not job growth.
JL: The repatriation of cash coupled by, and restricted by investments in new ideas and/or acquisitions of pipeline products would be terrific. Unabridged cash repatriation in the absence of that will lead to short term benefit for a very small, and very restricted number of individual shareholders within some of these companies. I don’t think there’s any moral difficulty with that, that’s the way the system works, but cash repatriation can be done in a thoughtful manner that truly can make America great again, as opposed to make a few Americans rich again, or richer.
X: What impact does the threat of an inflammatory tweet from the President—either directed at you, or regarding drug prices—have on the idea of speaking up?
SH: I grew up on the streets and playgrounds of Brooklyn. My father was a cab driver, and my mother was a Cuban immigrant. He is a bully. And when he rants and bullies, I find it all the easier to stand up.
JL: You need to distinguish between public statements and public policy. From a business perspective, it’s not material what is tweeted if it isn’t accompanied by clear policy steps. In this discourse, the one thing I’ve learned in the face of chaos is that fortitude, calmness, and complete value-based decisions are what wins. You can’t be intimidated. When a bully runs at you, the one thing you do not do is run back. You stand.
X: So what does “speaking up” look like in terms of the future of the healthcare system and possible drug price reforms?
SH: We need to take responsibility for the overall health system. I don’t mean running it, I mean directionally and morally. We claim to be making medicines that truly make a difference, and therefore we need to embrace whatever reform takes shape on value-based pricing. If our medicines are not making a difference, than they should not receive high prices. But if they do make a difference, then [high prices] can be justified.
Regeneron [Pharmaceuticals] could have charged a hell of a lot more for [its recently approved atopic dermatitis drug] Dupixent. It chose not to—it chose to look at what the value was, and say ‘This is a justified price.’ Regeneron also hasn’t raised the price year after year on [its age-related macular degeneration drug] Eylea, whereas Jeremy and I know many drugs—some of which we’ve been associated with or companies we were associated with—which raised their price year after year after year with no increase of benefit. The pricing policy was simply, ‘What will the market bear?’
JL: A responsible industry doesn’t consistently raise prices every year without increasing benefit. I think boards have to reexamine how they incentivize CEOs and their management teams, so it’s based much more on innovation and new products than on rewarding them for raising prices consistently without investing in or furthering innovation. These incentives are effectively driving CEOs to benefit from price rises as opposed to innovation. And that is not a healthy circumstance.