'No-win situation': Pharma trade CEO steps down after clashing with board

The leading industry group for biopharmaceutical companies is reeling after the departure of its CEO — just as the Biden administration is poised to begin implementing key drug pricing provisions and the balance of power could shift in Congress.

Michelle McMurry-Heath stepped down earlier this month after leading the Biotechnology Innovation Organization, a 1,000-member trade group that lobbies for policies impacting biotechnology products made in the healthcare, agricultural and environmental sectors, for a little more than two years.

McMurry-Heath, the group’s third leader since its founding in 1993, faced headwinds shortly after taking the reins in mid-2020, including over how aggressive BIO should be on social and political issues that dominated the headlines but were outside the group’s traditional interests, according to six people with knowledge of the group’s inner workings.

The turmoil at the industry group comes as Democrats are set to implement one of the most sweeping drug reform packages in the last decade and underscores the challenge of leading a large board with disparate policy goals and views about its mission.

There are a half-dozen members of BIO’s 120-person board, sometimes referred to as “the Gang of Six,” who wanted the organization to be more assertive on issues such as opposing efforts to restrict voting rights in Georgia and abortion following the Supreme Court’s decision to overturn Roe v. Wade. In another instance, some of them organized a letter promising to cut ties with Russia following its invasion of Ukraine — and they wanted their trade association to make a sweeping statement about it too.

At the Hotel Washington, located just steps from the White House, Jeremy Levin — BIO’s immediate past board chair and CEO of Ovid Therapeutics — wanted to make the case to his fellow board members, some of whom have operations or clinical trials in Russia, that they needed to respond to the war.

In the meeting, he called the invasion the most significant act of aggression in Europe since World War II — going on to suggest that anyone who declined to discontinue their business involvement or investments in Russia could be viewed as similar to individuals who appeased the Nazis as they came to power in Germany, according to one of the six people, who were inside the room. Another person with knowledge of the conversation confirmed that account.

Following a debate on the issue, McMurry-Heath ultimately declined to have BIO take a position, according to three people with knowledge of the meeting.

“Nobody wants to fall on their sword on Russia in the middle of the BIO board meeting. There are too many other things, literally Rome is burning,” said a third person with direct knowledge of the meeting. At the time, Democrats in Congress were trying to revive their drug pricing package, which the industry viewed as an existential threat.

“It’s not an example of Michelle not managing the board,” the person continued. “It’s an example of how difficult it is to manage that board.”

In an email to POLITICO, Levin said that he has been consistent about his views on how the industry should approach Russia, echoing the pledges laid out in the letter he helped write shortly after the invasion.

“As an industry that exists to protect and improve human health, I encourage colleagues to reflect on the implications and consider what their respective companies and employees should do,” he said. “When I look myself in the mirror, I commonly ask myself, ‘do my actions reflect my values?’”

McMurry-Heath declined to comment on the circumstances surrounding her departure. But in a statement to POLITICO, she said she was proud of what she accomplished at BIO.

“We achieved many of the organization’s strategic priorities,” she said through a spokesperson. “I was brought in at the beginning of the COVID-19 pandemic and led the organization during perhaps the most challenging period in its history. Despite that, we raised BIO’s political and public impact to its greatest point in more than a decade, and we also strengthened its financial position by prudently navigating the pandemic.”

The dispute over whether the industry group should take a strong position on Russia was just one of the behind-the-scenes disagreements between McMurry-Heath and a group of about half-dozen influential executives on BIO’s board that played a role in her hiring and her stepping down, according to five of the people with knowledge of the situation.

POLITICO spoke to more than a dozen people – including current and former BIO staff, lobbyists and a healthcare executive – about the internal dynamics of the organization and the circumstances around McMurry-Heath’s tenure and departure. All but four have been granted anonymity because of the sensitivity of the personnel issue or fear of retaliation.

Ted Love, the vice chair of BIO’s board, said that the group “experienced a change in executive leadership, but not a change in direction,” in a statement after POLITICO had contacted BIO and others on the board for comment. “We are looking forward to all BIO can achieve in the future in support of the biotech sector and the people and patients who benefit from biotech innovation and breakthroughs.”

The statement misspelled McMurry-Heath’s name, referring to her as McMurray-Heath.

Love, in a subsequent statement, called the description of a small number of CEOs having outsized influence — and McMurry-Heath’s departure comes as a result of disagreements with them — an apparent “misinformation campaign.”

Due to its size, BIO’s “process of recruiting executive leaders and their transition is extensive, fair, thorough and heavily informed by independent outside experts. The notion that a small group of individuals could unilaterally do anything in an organization this large with an actively engaged board is simply not feasible,” Love said.

McMurry-Heath remains an adviser to the group, according to a press release announcing the leadership change. But further details about her role are unclear. Rachel King, a BIO board member, and co-founder and former CEO of GlycoMimetics, was named interim CEO while the association searches for a permanent replacement.

A physician and former Food and Drug Administration official, McMurry-Heath became BIO’s chief executive in June 2020 during the early months of the pandemic. The group’s first woman and African American leader, she had been hired from Johnson & Johnson to transform the association.

“It's a tough job with a divided industry and an unclear mission. She’s somebody who wasn't a hack — like, a real scientist and a real regulator — who wanted to really take this, in some ways, more seriously in terms of just their straightforward policy challenges,” said a health industry executive who has advised BIO. “It’s going to be a loss and it’s going to blow up in their faces at some point because she's going to be regulating them in some capacity.”

Interviews with the individuals knowledgeable of the group’s internal workings place a different emphasis on various factors that led to her stepping down. They describe a mix of pressure from some of BIO’s board members, McMurry-Heath’s rocky transition into the role and early changes that were made, some staff firings or departures, and a review of her overall performance, which has been viewed by some as targeted.

The association represents corporate giants, but also strives to be a voice for the smaller and mid-size companies that aren’t a part of groups like the Pharmaceutical Research and Manufacturers of America, which only has 33 members and an annual revenue of nearly $600 million — roughly seven times BIO’s.

“The fact that we have lively debates on the many issues of the day in America is a strength and not a weakness and it is why we believe we are in a great position to impact policy now and in the future,” Love said in his statement.

Three of the people with knowledge of the group’s inner workings acknowledged some of this dynamic existed before McMurry-Heath took the job, particularly over a concern with then-President Donald Trump’s immigration policies. However, it intensified once her predecessor, former Republican congressman Jim Greenwood, left the group after leading it for 15 years.

“When you’re the president of a trade association that has 1,000 member companies and a board of 120, you need to devote a significant amount of time to reaching out to board members, listening to board members, being respectful of board members – always aware you serve at their pleasure,” Greenwood told POLITICO. “You earn your ability to remain in that position day by day.”

Three people with knowledge of the organization’s history noted that McMurry-Heath had not been as adept as Greenwood — a former politician — at managing the personalities on the board. Two of them acknowledged that the lack of in-office work for staff and business travel for executives on the board made it harder to win allies.

Following McMurry-Heath’s appointment, the organization went through pandemic-driven layoffs and some staff turnover — the latter of which three people with knowledge said were like any staffing changes that occur during a leadership transition. Four others, also close to BIO, said that there are lingering resentments about some of the high-level staff leaving and how the departures or layoffs were handled.

There had been a general awareness of a difference in opinion among certain board members over where the group should place its focus, including Levin and Paul Hastings, the board chair. The duo was among those who wanted the BIO to be more forceful on social issues, said five people familiar with the discussions.

Levin and Hastings referred all questions about board dynamics to the group’s spokesperson.

“This kind of all came to a head because you've got this group of CEOs — not all of them, but remember, these are the people that hired her — I really do believe that they wanted to turn BIO into a social change organization, in addition to being a trade association,” said one of the people familiar with the events. “She was in a no-win situation in that respect.”

Although Democrats passed the Inflation Reduction Act, which allows Medicare to negotiate drug prices — three people close to BIO said that did not contribute to her stepping down.

Leading a trade association can be difficult under ideal circumstances, but BIO’s broad membership — which includes companies in the pharmaceutical and agricultural sectors — makes it a distinct challenge.

“On a good day, you're spinning tops. On a bad day, they're all coming crashing down,” said a former BIO staffer, about the complicated nature of leading the organization and generating consensus among members.

While larger companies have sway at BIO, smaller companies have always been a force on the board because the association prides itself on being a platform for companies with fewer resources.

Although the overall board has more than 100 members, there is a 21-person executive committee that the group had expanded over the last year to “ensure voices from all sized companies are heard when we are making decisions,” according to Love’s statement. Hastings led the charge to expand the executive committee, he said.

Her exit, first reported by The Wall Street Journal, which described her as being “on leave,” took most people by surprise, said three people familiar with the events. By Monday, the board had a call and McMurry-Heath’s impending departure was announced, the Journal reported and POLITICO confirmed.

“The executive committee of the board operated pretty stealthily,” said an in-house lobbyist for one of BIO’s member companies, “to be able to pull something like this off and keep it so quiet.”

“We saw improved responsiveness, improved advocacy materials and member engagement. Maybe she just needed another year to start seeing more tangible results,” said the lobbyist of McMurry-Heath’s tenure. “Maybe some of these board members are too close to it.”