Address High Drug Pricing via New Strategy

In formal shareholder resolutions, a number of groups have recently called for JNJ to conduct reports

"assessing the reputational and financial risks to the Company from rising pressure to reduce high prescription drug prices in the United States by removing barriers to generic competition. The report should address, but need not be limited to, the Food and Drug Administration’s (“FDA’s”) publication of a list of branded drugs about which the FDA has received inquiries from generic manufacturers unable to obtain branded drug samples, regulatory and legislative efforts to increase generic manufacturers’ access to those samples and measures to allow generic manufacturers to create their own Risk Evaluation and Mitigation Strategy programs." [0]

As shareholders speaking frankly, the risks are obvious. Public ire attracts scrutiny, and long-term repercussions. 

The public gets upset when drug prices are dramatically above 'common sense' thresholds. Media grabbed onto the ongoing tragedy of felon Martin Shkreli when he hiked up prices of a drug by 5000%. A few weeks ago, national news picked up a story of a Florida woman who, after a rabies shot following a bite from a stray cat, received a bill for $48,000.[0] 

While the above two examples may not be directly related to JNJ's practices, the traction of those stories in national media underscores the degree to which the American public is sensitive to these issues, across all demographics. 

The brilliant move, which we here suggest, would be to come out in front of this issue. Make drug pricing a selling point, not a liability. 

If JNJ comes out with a pricing and marketing strategy to maintain reasonable drug prices, and specifically lower than comparable practices from competitors, the move will 

  1. Gain goodwill among health system stakeholders (e.g. doctors you are marketing to)
  2. Pre-empt regulatory action, in the USA and elsewhere
  3. Grow goodwill among consumers (as consumer products are another large division within JNJ)

While the exact marketing language is not my forté, a message of "JNJ always there for you" or JNJ "honest and fair" could totally get out in front of this important issue. 

Pricing reductions have been historically hard because the long-term stability is harder to measure than the short-term loss of revenue. Why not leverage JNJ's brand position to make this a short-term opportunity as well, by approaching consumers from a position of trust and care, as they choose whether to invite JNJ products into their homes?



[0] quoted from Proxy Preview, 2019