Interactions with Trade Associations
It is interesting to reflect on the defecatory habits of the hippopotamus. The male indicates to other hippopotami the extent of his own territory by defecating all around its perimeter. Outside that ring they can go where they please, but if they come inside it he will fight them to the death. So, too, nations make a ring around their territory: To Elizabeth I, the wars in Holland were beyond the ring but the Armada came inside it. No doubt the United States government wishes it had left Vietnam on the outside of its defecatory ring. And so, too, industrial corporations, consciously or unwittingly, make the same sort of ring around products and sales territories and sections of the market. Antony Jay. From Management and Machiavelli.
ACTIVITIES OF TRADE ASSOCIATIONS
Trade associations discussed in this chapter are industry-wide associations formed for the purposes of providing public policy advocacy or other services on behalf of their typically corporate members. They are not to be confused with professional or other advocacy organizations that have individuals as members. There are approximately six to ten major pharmaceutical related groups in the United States and many others internationally. An extremely large number of other trade associations represent a specific segment of the industry. Specific associations and their primary objectives are briefly described at the end of this chapter.
Advantages of Trade Associations Representing the Pharmaceutical Industry
Trade associations are involved in many types of activities, including those listed in Table 35.1.
Companies are often not in a position to conduct or act on issues that an association is able to act on. This is sometimes a result of the size of the effort required, and in other situations, it is the lack of credibility that might be associated with having specific companies sponsor reports, events, or actions. It also might be due to the fact that a specific company does not want to be identified as promoting a position that an industry trade group can readily endorse.
A major trade association activity involves lobbying. It often makes more sense for companies to unite and lobby via their association(s) than to lobby as independent companies. Many issues that companies want to lobby for (or against) are not drug or product specific, but are germane to the entire industry. For example, at the federal legislative level, drug issues are usually industry specific (e.g., patent issues, product tampering, drug sampling, animal rights, generic biologics) and not company specific. At the state level, the same principle generally holds, although
company specific issues are more likely to emerge (e.g., issues regarding a specific plant in that state). Such lobbying and trade association advocacy in general, such as with legislatures and government agencies is viewed by antitrust authorities as being basically pro-competitive (e.g., by providing an efficient means to provide governments with input on industry-related perspectives). Indeed there is a legal (Noerr-Pennington) doctrine that protects the right to communicate with and urge government action. However even that doctrine has limits (e.g., if used for sham reasons or solely to suppress competition), and associations have to be very careful in conducting their business, because when competitors get together such as at association meetings, there is always the potential for membership discussions to stray into inappropriate, competitively-sensitive matters. One key role for association management is to assure that meetings and other activities are “antitrust compliant” and many associations have compliance policies to help assure the association focuses only on proper subjects and to empower member company representatives to speak up if they are uncomfortable with a given issue or action.
company specific issues are more likely to emerge (e.g., issues regarding a specific plant in that state). Such lobbying and trade association advocacy in general, such as with legislatures and government agencies is viewed by antitrust authorities as being basically pro-competitive (e.g., by providing an efficient means to provide governments with input on industry-related perspectives). Indeed there is a legal (Noerr-Pennington) doctrine that protects the right to communicate with and urge government action. However even that doctrine has limits (e.g., if used for sham reasons or solely to suppress competition), and associations have to be very careful in conducting their business, because when competitors get together such as at association meetings, there is always the potential for membership discussions to stray into inappropriate, competitively-sensitive matters. One key role for association management is to assure that meetings and other activities are “antitrust compliant” and many associations have compliance policies to help assure the association focuses only on proper subjects and to empower member company representatives to speak up if they are uncomfortable with a given issue or action.
Table 35.1 Selected activities conducted by trade associations | ||||||||||||||||||||||||||||||||||
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Another major function of most industry-wide trade associations relates to education. As with lobbying, many education issues relate to the entire industry. Some of the specific activities on both lobbying and education are discussed in this chapter. Other aspects of lobbying are discussed in Chapters 28 and 36.
Roles of Pharmaceutical Trade Associations and Their Relationships with Companies
Some of the most important roles and functions of pharmaceutical industry trade associations are mentioned below.
Important trade associations of the pharmaceutical industry should be able to collect and present information to politicians that will help them in deliberations on current issues. This information may be in the form of background data, white papers on positions of the industry, or ad hoc information assembled at a politician’s request.
Associations should endeavor to preempt issues that are developing, but have not yet reached a crisis state (for example, among the more challenging current issues are generic and follow-on biologics and the use of animals in pharmaceutical research). This information should be collected and presented to politicians as a means of helping to develop the most optimum public policy outcomes, or, in appropriate cases, as a preventive measure to help ward off ill-considered or untimely legislation and problems the industry wants to prevent.
There are many industry-wide questions that trade associations can address through collecting and statistically evaluating data. The associations are in a good position to do this (always bearing the antitrust laws in mind) because they can gather data from multiple companies in the same format. Data of individual companies are kept private and only provided to the trade association when averaged or merged data are published or made available to members for their use. These data provide industry trends and a benchmark against which (with appropriate caveats) a company may compare its own data. The Pharmaceutical Research and Manufacturers of America (PhRMA) Industry Profile is an example of this type of book that provides annual data on many aspects of the industry.
Scientific and nonscientific (e.g., marketing, production, public affairs) activities of trade associations are highly variable in nature and value. Associations hold many meetings of various types for their members. These are important because they provide a forum for discussing issues of mutual interest. These meetings also help to educate many people. Associations also play an important role in disseminating information on relevant issues to their members.
Educational activities include seminars, courses (e.g., for managers and for clinical monitors), and special meetings, in addition to publications and regularly scheduled meetings.
Associations have numerous committees to conduct their business and most are composed of professionals who work for their member companies. Some associations request more assistance from members than do others in this regard.
As far as lobbying is concerned, associations have a generally successful record of obtaining the type of regulations they support. This is especially true when the association is able to determine and then present a common front of their members who are concerned about a specific issue. There are some occasions when individual companies have widely divergent views. Associations
may then be forced to present the lowest common denominator position that all major members agree on or (barring a mechanism to effectively identify and communicate minority views) the association will be unable to present a unified industry view and will be forced to lobby less effectively.
may then be forced to present the lowest common denominator position that all major members agree on or (barring a mechanism to effectively identify and communicate minority views) the association will be unable to present a unified industry view and will be forced to lobby less effectively.
How Can a Company Increase Its Participation in the Association?
The optimal approaches for a company that wishes to increase its participation in trade association activities varies widely depending on the specific types of activities, the politics, policies, and rules of the organization. Attendance at annual and other meetings are appropriate times to make your interest clear, as well as making directly contacting association staff. If necessary, the company’s Chief Executive Officer may contact senior executives at the association to discuss the company’s interest.
Limitations of Trade Associations
Trade associations are often held accountable for problems they have no control over. An important issue relates to the difficulty of finding a common denominator between their members on many important issues. Because of this restraint, the actions they are able to take become “watered down.” In addition, companies may only be willing to share information that will not provide any advantage to their competitors, and sometimes an issue is discussed without all of the most useful and appropriate information being brought to bear. Discussions may be lacking in substance. All of these limitations when they arise may relegate many meetings and activities to those of a debating society and may compromise the effectiveness of the association.
Deciding which Activities to Funnel through Trade Associations
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