Lilly's "Transparent" Move

Lilly’s May 13 endorsement of the Grassley-Kohl Senate “sunshine” bill (S2029) calling for listing physician payments from pharmaceutical companies shows more about Lilly’s political positioning skills than about the prospects for the bill.

In fact, it looks like a transparent move in favor of transparency. It’s pretty easy to see the advantages that Lilly sees in coming out in favor of the bill now.

At first glance, the endorsement may seem like big news, a break with the general slow, foot-dragging response to the push toward transparency. Most companies have been telling Grassley they will look at making some grants to organizations public but staying away from the full push to “transparency” that would start naming individual doctors. (See “Saying ‘No” to Legislated Disclosure”.)

For Lilly, open support for the legislation fits the current situation and the company’s traditional approach to staying out ahead of efforts to rein in novel marketing strategies.

Lilly has been out on the front of transparency for over a year. The company was pushed in that leadership position in response to allegations that it used grants and payments to physicians to support marketing efforts, primarily for the antipsychotic Zyprexa (olanzepine).

The company put up the first listing of grants on its webpage a year ago at the start of May 2007. That puts it more than a year ahead of the next drug company to make the information public.

Pfizer put its listing of grants up on May 15 right on schedule with a self-imposed deadline. (See Pfizer grants here.) Lilly’s May 13 statement of support, in fact, also has a touch of upstaging the Pfizer postings. Pfizer made its deadline public at least two months ago.

As first off the blocks in transparency, Lilly has no reason not to want the rest of the industry to follow. Lilly has taken the plunge: they want everyone else in industry in the water with them.

By signing on to the Grassley proposal, Lilly follows Zimmer and Medtronic and several other device firms which have similarly come out in favor of the sunshine approach.

Some of the device companies, of course, have also been pushed into transparency as the result of settlements of charges against payment practices for consultants. Once pushed to transparency, it makes little sense to oppose legislation if the legislation makes your competitors follow the same path.

Some companies (most notably Stryker Orthopaedics) have gone the next step and determined that, handled right, physician listing can even be a good tool for cementing relationships with key physicians. Stryker turned the requirement to expose physicians on its head and created a clever, open treatment of its listing of consultants. The open approach leads to a website that is part endorsement, part networking page for its outside consultant physicians (See “Flourishing in the Sunshine: Disclosure as a New Commercial Advantage”).

Lilly also timed its support well. Not only does it take some of gloss off of Pfizer’s move, it is from of no-cost, no-pain support. The Grassley-Kohl bill still faces substantial hurdles to get attached to the Medicare physician payment fix this summer. The payment fix is the best vehicle to get the sunshine bill through Congress. If there is not much chance that the proposal will really get through Congress, then it gives Lilly a chance for some gratuitous support.

Getting out in front in support, also assures Lilly a voice in writing the important final details if the bill breaks through this year. It positions the company as a corporate good guy for the debate if it starts up again next year, in a potentially less favorable environment.

The move to stay out ahead of the other pharma companies on the issue interestingly takes place under a new senior Lilly management team: CEO John Lechleiter just officially took over the top spot at the beginning of last month, the new top policy person, Alex Azar joined the company just under a year ago from the number two position at the Department of Health & Human Services. (See here for background on the choice of Azar to join the Lilly team and here for Azar’s advice to the industry on a legislative strategy.) Several close observers of pharma in Washington see Azar's hand in the decision to work with Grassley.

But the tactic of trying to make the most out of being caught by writing the rules your way is not new to this Lilly team. Lilly has done this before under other senior managers. It is a well-tried and tested approach.

Lilly took the same posture of getting out ahead on working with the government during the industry rush to own pharmacy benefit companies in the early 1990’s. Lilly used negotiations with the Federal Trade Commission on its deal for PCS to help write rules for the entire group of pharma-owned PBM companies. It’s a well-worn path; Lilly is skilled at following the path to its advantage.