PhRMA tightens its membership criteria, losing a third

Trade association is now big companies with big R&D spending


In a period where the industry continually gets buffeted by drug-pricing and -marketing miscues—and while it is spending a reported $50 million to buff its image with national advertising—the board of the Pharmaceutical Research and Manufacturers Assn. has tightened its membership rules. The Washington powerhouse lobbying group’s website now lists 37 members; press reports indicate that some 22 companies, many of whom were qualified as “associate” members, are now being drummed out. Two companies, Marathon Pharma and Mallinckrodt, had left prior to the May 9 announcement. The former had had its own recent pricing controversy over an old (but newly approved in the US) drug for Duchenne muscular dystrophy; the latter had recently been embroiled in an FTC action over monopoly practices.

The new qualifications for PhRMA membership are:

  • A three-year average global R&D to global sales ratio of 10% or greater
  • A three-year average global R&D spending of at least $200 million per year.

According to the EndPoints news website, companies such as AMAG Pharma, Jazz Pharma, The Medicines Company, and Grifols no longer qualify. But BioMarin, a biotech and former associate member, could qualify as a member under the new rules, and the company is considering that action.

“By putting in place new membership criteria, the board is sending a clear message that being a member of PhRMA means being committed to doing the time-intensive, scientifically sound research it takes to bring bold new advances in treatments and cures to patients,” said Joaquin Duato, PhRMA board chairman and worldwide chairman, pharmaceuticals, Johnson & Johnson.

Even since the controversies over Turing Pharma and Valeant Pharma in mid-2015, PhRMA has been signaling a degree of separation from pharma companies not deeply committed to R&D for new drug development, a theme that it has harped on nonstop for many years as a justification for the favorable positioning of pharma products, their pricing and the industry’s trade practices in the US. It is apparent that to maintain that stance (and the favorable positioning), PhRMA wants a unified member base. Whether that unity will be able to maintain the industry’s position going forward remains to be seen.