In 2022, a writer for a progressive magazine wanted to make a statement about the cost of drugs in the U.S. So, he sent out a tweet from a false Eli Lilly account claiming insulin was free.
The tweet went viral and although the writer later said he never thought anyone would think it was real, the fake statement had major consequences for Lilly. Within a few hours, the uproar triggered a $23 billion sell-off of Lilly’s stock, which eroded its market cap by over 6%.
The incident illustrated the steep and, some say, growing risks of false information on social media, said Dr. Nir Kossovsky, CEO of Steel City Re, a reputation insurance and risk solutions company.
“Monitoring and moderation are failing. Artificial Intelligence is making it that much harder,” he said. “I don't think the source, or threats or attacks are going to fall off in any way whatsoever. They'll be prevalent and they'll be problematic. So, the only strategy is prevention, mitigation and defense.”
BlackRock, an investment management firm, and Glass Lewis, a governance and proxy advisory services company, both hold significant sway in the investment world and have taken notice of this issue. Recently, they made waves by recommending that boards claw back incentive compensation from executives whose behavior has damaged the company’s reputation, said Kossovsky. The guidelines go further than Security and Exchange Commission rules that trigger clawbacks in the event of financial errors in previously released statements.
“Misinformation and vaccine hesitancy is one of a few things that push investors away from the vaccine space."
David Thomas
Senior vice president, industry research and analysis, BIO
The idea is to spur companies to fortify their risk management efforts, Kossovsky said.
“Pharma depends on trust,” he said. “You’re putting something into your bloodstream, into your mouth, into a body part, and you have to trust that it is medicinal, not malignant,” he said.
With the stakes rising, the pressure is on the industry to better prepare for reputational risks.
The information battle
Medical misinformation and disinformation plague social media. Studies reviewed by the World Health Organization found false or misleading information in 51% of social media posts related to vaccines, 29% linked to COVID-19 and 60% related to the pandemic.
A recent vaccine report from the Biotechnology Innovation Organization (BIO) identified combating vaccine misinformation as a critical strategy to lure more investors into the vaccines market.
“We are finding that mis-and-disinformation around science issues and vaccines, is at the center of that storm,” said Phyllis Arthur, senior vice president of infectious disease and emerging science policy at BIO. “People have a lot more questions about routine immunizations that they've historically accepted.”
Not only do false statements about vaccines trigger hesitancy in patients — some estimates show as many as 40% of COVID-related deaths could have been avoided if the public had more trust in public health officials and science — they also have a chilling effect on investments.
“Misinformation and vaccine hesitancy is one of a few things that push investors away from the vaccine space,” said David Thomas, senior vice president of industry research and analysis at BIO and one of the report’s authors.
“It’s outside the purview of a company to stop the bad guys, who will do what they do. That’s a cybersecurity problem, that’s an X problem, it’s a social media problem."
Dr. Nir Kossovsky
CEO, Steel City Re
The vaccine market — where the chances of getting a product over the finish line are just over 10% — has often struggled to attract as many investors as other niches of biopharma.
“Investors look at the odds of success when they make a decision,” Thomas said.
In addition, development risks are higher because if a vaccine fails, the company can’t go after another indication.
“If you have a breast cancer drug and it fails, you might be able to go into brain cancer and try again. But in this case, you're pretty much done because you only have one pathogen to go after,” he said. “So, the risk is amplified.”
Aside from pandemic years, 2020 and 2021, venture capital investors have largely steered clear of vaccines, Thomas said.
“The entire vaccine space, in some years, is a fraction of what single companies get in oncology or rare disease,” he added.
Developing reputational resilience
While vaccine-related misinformation is prevalent, it’s not the only threat. False information can arise around ethics, innovation or safety, and threaten a pharmaceutical firm’s reputation, viability and profitability. Reducing the damage from these threats requires a proactive approach.
“I think we all feel like the hardest part is that you can't be everywhere within social media,” Arthur said. “So, one of the things we're all trying to think through is how we can make more general social media content and noise so people feel like they're hearing as many positive messages about vaccines from trusted sources as they unfortunately are from those who may have misinformation.”
Kossovsky agrees.
“It’s outside the purview of a company to stop the bad guys, who will do what they do. That's a cybersecurity problem, that's an X problem, it’s a social media problem,” he said.
Instead, organizations need to anticipate risks ahead of time, much like protecting a forest against the threat of lightning. Lightning will strike, he said, but a proactive strategy can minimize the damage.
“The point of developing reputation resilience is the difference between lightning striking a tree and incinerating it, or lightning striking the tree and incinerating the entire forest,” he said.
The stakes are high and a major incident can slice at a company’s value in little time..
“When you're in the pharma world and you're talking about firms on the order of $200 billion, you’re talking about a loss of $30 billion in weeks,” Kossovsky said.
The information battle is ultimately won by building trust with the audience.
“Will they accept the information as true, or will they dismiss it as fake news?” he said. “The stakeholder has to believe in the company, and trust the company to a point where when bad or false information, malicious information is distributed, the stakeholder is sufficiently sophisticated or attuned or predisposed to dismiss it.”
Ultimately, a risk management strategy should prioritize the company’s biggest potential risks.
“A successful strategic reputation resilience program comprises authenticated thoughtful risk management and dutiful governance over everything that is mission critical,” he said. “At the operational level, this translates to processes to build trustworthy systems for ethics innovation and safety; trustworthy systems to mitigate risks to those systems, and the means to ensure that stakeholders can appreciate and value them.”
