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www.harrisinteractive.com©2004, Harris Interactive Inc. All rights reserved.
The Public Perception of the Pharma, Biotech and Device Sectors
A Special Report Prepared for the Pharma Colloquium June 8, 2005
Katherine BinnsSenior Vice President, Health Care and Policy ResearchHarris Interactive
www.harrisinteractive.comSlide 2
The Reputation QuotientSM (RQ)
REPUTATIONREPUTATION
EmotionalAppeal
FinancialPerformance
WorkplaceEnvironment
Products &Services
Vision &Leadership
SocialResponsibility
Reputation
Feel Good AboutAdmire and RespectTrust
Market OpportunitiesExcellent LeadershipClear Vision for the Future
Rewards Employees FairlyGood Place to WorkGood Employees
Outperforms CompetitorsRecord of ProfitabilityLow Risk InvestmentGrowth Prospects
Supports Good Causes Environmental ResponsibilityCommunity Responsibility
High QualityInnovativeValue for MoneyStands Behind
www.harrisinteractive.comSlide 3
The Annual RQ 2004 — The reputations of the most visible companies
Rank 1 - 15 RQ Rank 16 - 30 RQ Rank 31 - 45 RQ Rank 46 - 60 RQ
1. Johnson & Johnson 79.81 16. The Walt Disney Company 74.03 31. Sears, Roebuck, and Co. 70.06 46. Gateway 62.27
2. 3M Company 79.07 17. Starbucks Corporation 73.68 32. Best Buy Co. 69.15 47. ChevronTexaco Corporation* 62.22
3. The Coca-Cola Company 78.90 18. Target Corporation 73.25 33. McDonald's 68.56 48. Altria Group 60.58
4. The Procter & Gamble Company
78.26 19. Anheuser-Busch Companies
73.17 34. Apple Computer 68.26 49. AT&T Corporation 60.23
5. United Parcel Service (UPS) 78.24 20. Hewlett-Packard/Compaq 73.16 35. General Motors Corporation 68.18 50. AMR Corporation (American Airlines)
60.13
6. Microsoft Corporation 78.00 21. Southwest Airlines 73.08 36. Verizon Communications 67.71 51. Sprint Corporation 59.63
7. Sony Corporation 77.95 22. General Electric Company 72.66 37. J.C. Penney Company 67.56 52. Tyco International, Ltd. 59.35
8. FedEx Corporation 77.49 23. Unilever (Parent of Ben and Jerry's)
72.55 38. Ford Motor Company 65.64 53. Martha Stewart Living Omnimedia
58.36
9. General Mills 77.42 24. Pepsico 72.54 39. DaimlerChrysler 65.21 54. Bridgestone Corporation* (Parent of Brigestone/Firestone)
58.08
10. Honda Motor Co. 76.15 25. IBM Corporation 71.77 40. SBC Communications 65.05 55. Alticor* (Parent of Amw ay) 54.63
11. Intel Corporation 76.10 26. Pfizer 70.97 41. Citigroup Incorporated* 64.10 56. Adelphia Communications Corporation*
52.61
12. Dell Computer Corporation 76.00 27. Nike 70.57 42. Time Warner Inc. 63.89 57. Kmart Corporation 51.06
13. Toyota Motor Corporation 75.59 28. Wal-Mart Stores 70.56 43. Bank of America Corporation
63.56 58. Halliburton Company 50.25
14. Lowe's* 75.43 29. American Express Company*
70.47 44. ExxonMobil Corporation 63.09 59. MCI (formerly Worldcom) 43.53
15. Home Depot 74.77 30. The Boeing Company 70.40 45. Allstate Corporation* 62.46 60. Enron 29.03
* = New to the Annual RQ Survey and/or not measured in Annual RQ 2003.
Note: Companies with identical RQs at one decimal place are ordered according to their RQ ranking at the second decimal place.
"In Business Ranking, Some Icons Lose Luster"The Wall Street Journal, November 15, 2004
www.harrisinteractive.comSlide 4
Attitudes toward the US health care system
24%
42%
35%31%
24%
33% 31%31%29%30%30%
36%
0%
10%
20%
30%
40%
50%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Percentage that believe that the US health care system “has so much wrong with it that we need to completely rebuild it”
Source: Harris Interactive polls, 1990-2004.
www.harrisinteractive.comSlide 5
Dissatisfaction is not at 1993 levels
Percentage dissatisfied with availability and affordability of health care in the US
Sources: aBlendon, Benson, Challenge, 2004; bKaiser Family Foundation/Harvard School of Public Health poll, 2004.
a
a
b60%
67%
77%
2004
2000
1993
www.harrisinteractive.comSlide 6
Many consumers say their health insurance benefits are getting worse
5% 6% 11%13%
20%31%
27%
41%
39%39%
16%10%
14% 8% 7%
Salary or pay Retirementbenefits
Health insurancebenefits
Much betterSomewhat betterNeither better or worseSomewhat worseMuch worse
42%
Over the last 2-3 years, have each of the following been getting better or worse?
Base: Have employer-provided health insurance
(Source: Wall Street Journal/Harris Interactive, September 26–30, 2003)
www.harrisinteractive.comSlide 7
Consumers are becoming somewhat less satisfied with the costs of health care
77%
67%
67%
64%
74%
62%
61%
56%
Health insurancebenefits
OOP costs of HCservices
OOP costs for Rxdrugs
Total costs ofhealth care
2003 2004Source: Harris Interactive Strategic Health Perspectives 2004.
Percentage of consumers that are satisfied with selected aspects of the health care system
www.harrisinteractive.comSlide 8
It’s not about the burden of cost (for most people)
Doctors Visits
Your Deductibles
Health Insurance Premiums
Prescription Drugs
23162411Don’t pay
28413837Not at all difficult
22271927Not very difficult
18121418Somewhat difficult
9457Very difficult
%%%%
“How difficult is it for you to pay each of the following?”
Base: Have health insurance
Source: Harris Interactive Strategic Health Perspectives 2004.
www.harrisinteractive.comSlide 9
When do people get angry about prices and costs?
When their out-of-pocket costs increase sharply(It’s the rate of increase, not the absolute $s involved)
When they pay more for the same, unimproved product or service
When they don’t think they are getting more benefits for more $s(i.e., value for money is declining)
When big, profitable companies are benefiting
www.harrisinteractive.comSlide 10
14%
21%
24%
32%
35%
36%
43%
63%
Health insurance companies
Brand name prescription drugs
Hospitals
Pharmacies
Doctors
OTC (non-prescription) drugs
Medical devices
Generic prescription drugs
Percentage of consumers rating each of the following a very good or fairly good value
Source: Harris Interactive/Wall Street Journal. Aug 19, 2003
Health care products and services are viewed differently when it comes to providing “value”
www.harrisinteractive.comSlide 11
69%
21%10%
72%
18%11%
Have access toaffordable Rx drugs
even if they aren’t thenewest ones available
Have access to newand better drugs, no
matter what theymight cost
Not sure
TotalAge 65+
Most consumers value affordable drugs over innovative drugs
“Overall, do you think it is more important for people like you to…?”
Source: Wall Street Journal/Harris Interactive, May 2004
www.harrisinteractive.comSlide 12
Most consumers believe drug prices and hospital charges are unreasonably high
49%
63% 67%
48%
62% 64%55%
66% 64%
Doctors Bills Prescription Drugs Hospital Charges
2000 2002 2004
Percentage saying the prices of each of the following are “unreasonably high”
Source: Harris Interactive Strategic Health Perspectives 2004.
www.harrisinteractive.comSlide 13
Awareness of international price differences in prescription drugs continues to grow
25% 29% 35% 37% 45% 51%16%
20%21% 19%
18%22%
Feb-00 June-00 June-01 March-02 April-03 Sep-04
Much higher here Somewhat higher here
41%49%
56% 56%63%
How do you think the prices of of prescription drugs in this country compare with drug prices in Canada and Western Europe? Are the prices her much higher,
somewhat higher, about the same, somewhat lower or much lower?
73%
Source: Harris Interactive polls, 2000-2004.
www.harrisinteractive.comSlide 14
Americans view medical costs as an exception to the rule
Percentage saying prices of selected items are higher in the U.S. compared to Europe
7% 8% 6% 11% 14% 18% 19%3% 4% 8%6%
7%
37% 39%
Computers Food Gas Cameras Autos Medicalcare
Rx drugs
Much more expensive in USSomewhat more expensive in US
11%
21%14%11%
55% 58%
16%
Source: Harris Interactive/Wall Street Journal. January 19 – 28, 2004.
www.harrisinteractive.comSlide 15
16% (>$750)
50% (<$300)
-13%$476$550Trip to the Hospital in an Ambulance
-73%
(<$150)-52%$143$300Blood Chemistry Test
-72%
(<$10,000)-57%$10,639$25,000Hip Replacement
-83%
( <$1,500)-71%$1,058$3,600Day/Night in Hospital
11% (>$150)
24% (<$50)
+21%$97$80Primary Care Visits
+65%
+43%
% Difference of Estimated from
Actual
% Estimating Too Much
% Estimating Too Little
Average Estimated
Cost
Average Actual Cost
Healthcare Service/Product
$93
$109
High Blood Pressure Medication
Statins
21% (<$50)
18% (<$50)
$153
$156
21% (>$200)
21% (>$200)
Source: Wall Street Journal/Harris Interactive, June 24-28, 2004
Americans lack knowledge of health care costs
www.harrisinteractive.comSlide 16
Public trusts companies far less than they trust their products and services
Source: Wall Street Journal/Harris Interactive, January 13-15, 2004
DoctorsYour doctor/s
EmployersYour employer
Pharmaceutical companiesRx drugs you take
Managed careYour managed care co
Health insuranceYour health insurance
PharmaciesYour pharmacy/ies
HospitalsLast hospital you visited
+30
+14
+34
+11
+2
+1
+1
Difference
29%
37%
7%
25%
11%
8%
5%
59%
51%
41%
36%
13%
9%
6%
Distrust in professions, companies and institutions IN GENERALDistrust in professions, companies and institutions that you have USED
www.harrisinteractive.comSlide 17
Most consumers lack confidence in drug companies to publish timely information on side effects
Source: Wall Street Journal/Harris Interactive, January 5 - 7, 2005
“How confident are you that drug companies will publish any information they have about the side effects of any of their drugs as soon as they have that information?”
5%
30%
42%
17%
5%
Veryconfident
Confident Not veryconfident
Not at allconfident
Not sure
60% (Net)
www.harrisinteractive.comSlide 18
58511Charge whatever prices they want, if they can sell their drugs at those prices
4897Increase the price of a drug several times in the first few years after it becomes available
87319
Be able to charge substantially more than the price of current drugs when they bring out very effective new drugs
Not Sure%
Unreasonable%
Reasonable%
Large majorities believe pharmaceutical pricing practices are unreasonable
Source: Harris Interactive Strategic Health Perspectives 2004.
www.harrisinteractive.comSlide 19
23%30%
42%
16%
47%
27%
Medical research Marketing andadvertising
Profit margin
All65+
Only 1 in 4 consumers believe medical research contributes the most to Rx prices
Which do you think contributes the most to the price of prescription drugs?
(Source: Harris Poll April 2003).
www.harrisinteractive.comSlide 20
Consumer perception of cost drivers
% of adults saying selected items are very important factor in rising health care costs
Source: Harvard School of Public Health/Kaiser Family Foundation, October 2004.
39%
46%
54%
55%
62%
69%
Consumers have little incentive to seeklower cost care
Use of expensive medical technologies
Malpractice suits
Aging of the population
Greed and waste in system
High profits/Drug companies
www.harrisinteractive.comSlide 21
7773 73 73
70
7979
73
57 59
4944
5655
48
4138
51
4036
5145
3429
3330 30
67
71
66
4041
20
30
40
50
60
70
80
90
1997 1998 1999 2001 2002 2003 2004 2005
Hospitals PharmaceuticalHealth insuranceManaged care
American’s views of health care institutions and industries
Percentage of consumers that say each industry does a “good job” serving its customers
Source: Harris Interactive polls, 1997 - 2005
www.harrisinteractive.comSlide 22
Who does the public want to regulate?Which of these industries do you think should be more regulated by government - for example for
health, safety or environmental reasons - than they are now?56%
55%55%
50%45%
42%37%
35%30%30%
29%29%
22%13%
12%11%
Health insurance companies
Pharmaceutical and drug companies
Managed care companies (i.e. HMOs)
Oil companies
Tobacco companies
Hospitals
Medical device companies
Biotechnology companies
Telephone companies
Car manufacturers
Airlines
Packaged food companies
Banks
Computer software companies
Supermarkets
Computer hardware companies
www.harrisinteractive.comSlide 23
Medical advances the public has noticed
“Improvements in surgery”– (e.g., less invasive treatment/testing, improved surgical techniques,
organ transplants)
“New treatment technologies”– (e.g., treatments for heart disease, joint replacements, pacemakers,
defibrillators, improved prosthetics)
“Imaging diagnostics”– (e.g., MRIs, CAT scans, PET scans, ultrasounds)
“Improvements in prescription drug treatments”– (e.g., improvements in medications, HIV/AIDS treatments, Diabetic
treatments/medications)
www.harrisinteractive.comSlide 24
Growing percentage of growing costs“Outrageous prices”Most profitable large industry“Only care about profits”“Strong-arm marketing”
– To public– To doctors
“Don’t care about those who can’t pay, (poor and third world)”Quality production problems“Put their interests above those of patients even when it puts patients at risk”“Ruthless lobbying – legal maneuvering”Too many “me-too” drugs with marginal benefits
Demonization of pharmaceuticalsWhat others say about the industry
www.harrisinteractive.comSlide 25
You are popular target for criticism – by the media and politicians
It’s harder to get federal or state governments to support you on legislation and regulation
It increases pressure to cut your prices and restrict marketing
It makes it easier for health plans to increase co-pays and co-insurance
Employers and plans get mad at you (less support from corporate America?)
Increased non-compliance (including not filling prescriptions, taking smaller or less frequent doses)
Increased resistance to your marketing and reduced demand
Easier for legislators and regulators to interfere
Marketing and pricing practices become a target for increased scrutiny…by everyone
The impact of demonization
www.harrisinteractive.comSlide 26
Growing demand for “look good – feel good” medicine and alternative treatments
– Cosmetic surgery, Botox, etc.– Viagra / Cialis / Levitra– Minerals, vitamins, food supplements– “Anti-aging” medicine
Impact of new medical technology– New drugs– New devices and implants– New imaging techniques– New diagnostics– Genetic testing and gene therapy
Efforts of consultants, insurers and employers to “build a better mouse trap”
– High deductible / “consumer-directed” health plans– HSAs– Reduce cost of preventive care, maintenance drugs for chronic diseases (Pitney-Bowes)– Disease management– Demand management– Wellness programs
Future drivers of reputational challenges (1)
www.harrisinteractive.comSlide 27
The desire of “medical-industrial complex” to maximize revenue and profit
– Pharmaceuticals– Devices/Diagnostics/Implants/Imaging– Hospitals– Nursing Homes
Health care providers’ desire to maximize revenue and autonomy– From physicians and other professionals– To unskilled hospital workers, aides and cleaners
Future drivers of reputational challenges (2)
www.harrisinteractive.comSlide 28
Challenges and opportunities looking forward
Benefit design that supports intelligent consumer engagement– (e.g., Pitney Bowes, Aventis/APhA Foundation Patient Self Management Project, RxImpact)– Preventive safe harbor– Medicare Part D– Medicare MTMPs (Medication Treatment Management Programs)
Pay-for performanceQuality initiatives
– AHRQ– Leapfrog– Specialty societies– Etc.
Electronic prescribingMarketing practices
– Physicians– Consumers– Payers
Demonstrate value!!
www.harrisinteractive.com©2004, Harris Interactive Inc. All rights reserved.
Thank-you!
Katherine BinnsSenior Vice President, Health Care and Policy Research
Harris Interactive Inc.