A magazine ad for Boniva, fronted by actor Sally Field, generated the DDMAC (now the Office of Prescription Drug Promotion, or OPDP) Untitled Letter last year due to following phrase: “After one year on Boniva, 9 out of 10 women stopped and reversed their bone loss.” That didn’t jibe with the scientific data, DDMAC said in the letter, before requesting that all ads containing the phrase be removed from the campaign.

Genentech went a step further. In September of last year, the company began running corrective magazine ads addressing the overstated claim. The corrective ad states that the violative ad “may have given you the wrong impression.” It goes on to state that “Boniva has not been proven to stop and reverse bone loss in 9 out of 10 women and is not a cure for postmenopausal osteoporosis.” The corrective ads will run though April 2012.

Unlike their mild-mannered, Untitled Letter cousins, Warning Letters are considered more severe, and they typically mandate corrective ads to clear up any overstated claims or minimized risk information. Given that Genentech received the former communique and not the latter, it’s notable that the company chose to run corrective ads without a mandate.

After speaking with DDMAC about the Untitled Letter, Genentech worked with the agency to create and then “voluntarily” launch the corrective ads last September, according to Chris Vancheri, director, public affairs, at Genentech.

In a statement, Genentech said that in addition to the corrective advertisements – which are running in several women’s magazines, including Weight Watchers and this month’s WebMD the Magazine – “our clinical specialists have reached out to health care providers” to inform them about the corrective ads, which intend to “clarify the benefits and risks of Boniva in women suffering from post-menopausal osteoporosis.”

Sally Field was the face of Boniva beginning in 2006, but Vancheri says Field is “no longer engaged” on the campaign. GlaxoSmithKline signed a co-promotion deal with Roche on Boniva in 2001, but the companies broke the partnership in 2010.

At first blush, a system whereby countries or geographic areas are carved out along socioeconomic lines maximizes profit: prices are set according to consumers’ “willingness or ability to pay,” which can bring previously unaffordable treatments into use. However, a tiered price can work against local competition in a given area, which tends to deliver a lower sustainable price over the long term, according to a critical analysis of tiered pricing done by authors from Medecins Sans Frontieres and Harvard School of Public Health.

Of the case studies examined in the report, Abbott’s price for the HIV treatment lopinavir and ritonavir (LPV/r) remained at $500 in African countries and other “least developed countries” from 2002 to 2007, or until the Clinton HIV/AIDS Initiative announced a generic LPV/r for $470. Abbott then reduced its price to $440, suggesting that manufacturers “do not have strong incentives to reduce tiered prices in the absence of competition, nor are tiered prices immune to competition when it does arise,” according to the report.

In the case of Bristol-Myers Squibb’s antiretroviral (ARV) treatment for HIV, the company created a Category 1 tier including 57 primarily low-income and African countries, but excluding southern African countries, which were lumped into a higher income Category 2. Southern Africa has the highest HIV-prevalence rates in the world, and the impact of a Category 2 placement means that BMS “prices its important second-line drug atazanavir 25% higher, at $547, in southern Africa, compared with $412 in other [Category 1] countries where HIV prevalence is lower, and in a few cases, income is higher,” the report found.

In the case of Lilly’s drug-resistant TB products capreomycin and cycloserine, however, tiered pricing did work to create lower prices than competitive production, but there were special circumstances. For example, TB endemic countries participating in the “preferential price” scheme facilitated by the WHO Green Light Committee beginning in 2002 – a program that also transferred technology to local generics manufacturers in support of local production – did not see a cheaper generic reach the market. In the case of capreomycin, no generic products were WHO pre-qualified for use as of September 2011, and cycloserine had gone up in price by a multiple of four, after Lilly stopped producing the drug. Lilly’s tiered pricing did in fact keep prices at the lowest rates, although demand was low and production capacity was limited.

“Tiered pricing does not necessarily result in the lowest sustainable prices, nor does it reliably lead to price reductions over time,” the report’s authors conclude. “In comparison, when markets are sufficiently large and multiple sources of production exist, robust competition has consistently proven across different therapeutic areas to result in lower prices.” Tiered pricing also leaves “too little decision-making power to governments, which are accountable to their populations under international law for insuring access to medicines.”

Countries that aren’t strong negotiators, and can’t convincingly threaten compulsory licensing, for example, get the short end of the stick with tiered pricing. In 2006, Honduras purchased LPV/r for about six times more than Brazil paid, despite the fact that HIV rates are equivalent in both countries, and Honduras per capita gross national income is roughly 25% of Brazil’s. To create a truly “win-win” situation for manufacturers and patients, governments and manufacturers will need to consider new models that “de-link” medicine prices from R&D costs. How countries contribute to R&D financing as a global public good will influence the new models that help to bring new medicines to the most needy.

Back in August, before there was any mainstream media coverage of the movement, Occupy Wall Street (OWS) cited Franklin Delano Roosevelt’s Economic Bill of Rights speech on one of its websites, which includes the “right to adequate medical care and the opportunity to achieve and enjoy good health.” To the pharmaceutical companies with headquarters in the tri-state area: why not send a few boxes of provisions to the demonstrators? Not prescription drugs, of course, but OTC products like Band-Aids, Neosporin and tampons (Johnson & Johnson), and Advil, Robitussin and ChapStick (Pfizer).

Pharmaceutical companies complain, rightly sometimes, that they aren’t duly recognized for the community service and philanthropic efforts they provide and support, outside of core business operations. Industry’s current reputation may be slightly “above Congress and tobacco,” as Pfizer CEO Ian Read recently put it, but that isn’t saying much. Pfizer headquarters is a subway ride away – without the need to change trains – from Zuccotti Park. Johnson & Johnson likes to talk about the clear social benefit its products have provided over the years, but here is a chance to bandage the cuts and scrapes of an active and visible community. It’s a PR play, but one that isn’t damaged by its transparency. Given J&J’s ongoing manufacturing difficulties, and Pfizer’s ongoing promotional missteps, both companies could use a reputational lift.

From an OWS perspective, companies like Pfizer and Johnson & Johnson represent a scientific vehicle fueled primarily by commercial interests, without seat belts or airbags; the humanistic objectives of most pharmaceutical scientists get left by the wayside. Executive compensation at top pharmas, in the context of plant closures in the U.S., is also a point of contention. Despite this perspective, a goodly portion of the demonstrators, not to mention their families and friends, have probably depended on medicines produced by one of these two companies, at one time or another. The question is, would OWS be willing to accept a gift of bandages, pain relievers, decongestants and other products from pharma, to aid in the struggle against the elements? My guess is that they would, and that they would be grateful. It wouldn’t hurt to ask. Perhaps the question can be put to the General Assembly, for a consensus vote.

Regardless of whether you believe access to adequate medical care is a right or a privilege, what would be lost by donating a few boxes of Dr. Scholl’s to OWS, Merck? The Congressional Budget Office’s October report on income growth (1979-2007) makes it more difficult for political pundits to continue saying they don’t understand what the OWS message is, or why these demonstrations are occurring (full CBO report here). Gifting medical supplies to protesters accomplishes PR goals, and it aids those demonstrators willing to stand and sleep outside for a cause they believe will help make America a stronger, more equitable place to live and work.

Pfizer, J&J, Merck and others, will you step up? Anyone own a subsidiary that makes hand warmers?

According to the World Health Organization, neglected tropical diseases affect more than one billion of the world’s poorest 2.7 billion people. Many of these diseases, which can cause blindness and other debilitating symptoms, have reached endemic levels in 149 countries and territories. In a difficult-to-break cycle, such diseases are born in poverty-stricken areas, and then shackle patients to that poverty when symptoms prevent populations from working; and of course, the cost of treatment compounds the issue.

A new consortium of public and private sector organizations spearheaded by the World Intellectual Property Organization (WIPO)—dubbed WIPO Re:Search—aims to promote the development of new vaccines, drugs, and diagnostics to treat neglected tropical diseases through intellectual property (IP) sharing. Organizations committed to the new consortium include pharma players AstraZeneca, GlaxoSmithKline, Novartis, Pfizer, Sanofi, Merck, Eisai, and Alnylam; in addition, BIO Ventures for Global Health (BVGH), the NIH, and nonprofits such as the California Institute of Technology, the Center for World Health & Medicine, the Drugs for Neglected Diseases Initiative, Medicines for Malaria Venture, and others are on board.

“The demand for these products is huge,” said Dr. Margaret Chan, Director General of the WHO at a round table discussion held on October 26^th at WPIO’s Geneva headquarters. “As we all know, market forces fail to drive innovation, because this particular market has virtually no capacity to pay; any price, when you multiply it by the millions, is way too high for the bottom billion to pay. With the world now facing a new era of financial austerity, I view innovation as a key way to maintain the great momentum for better health that marked the start of this century.”

Don Joseph, COO of BIO Ventures for Global Health, agrees. “Today, biopharmaceutical companies invent most of the new medicines for cancer, cardiovascular disease, or diabetes. These are diseases that offer companies a clear commercial return for their investments,” he says. “But neglected tropical diseases do not promise the same type of financial return. This financial reality makes it difficult for biopharmaceutical companies to invest the millions of dollars and 10+ years of research and development needed to create a new drug, vaccine, or diagnostic. WIPO Re:Search brings the horsepower typically expended on developed world diseases to bear on the neglected tropical diseases of the developing world.”

WIPO Re:Search is a searchable, royalty-free public database of available assets, resources, patent rights, expertise, and knowledge, to which any individual or institution can gain access and express interest in obtaining additional proprietary information. WIPO Re:Search’s Partnership Hub will connect neglected disease researchers to one or more of the pharmaceutical companies, research institutions, or government organizations that have resources or expertise to help move the neglected disease research project forward.

During the round table discussion, David Brennan, CEO of AstraZenenca—which has made its entire patent portfolio available to the consortium—said: “We need to make more progress. I don’t think we can underestimate in any way the social consequences, or the policy and health consequences.”

“I hear this time and time again from ministers of health: a vaccine or medicine that is too expensive is worse than having no vaccine or no medicine at all,” said Dr. Chan at the round table. “Equally important … in developing countries is support and assistance that helps them build their own R&D capacity and to manage their own priority diseases and health needs. The objective of any form of health development should be to build self-reliance; in other words, good aid aims to put itself out of business.”

As the country struggles with the current economic malaise, and the pharmaceutical industry enters into yet another difficult quarter of “trying to make the numbers,” one matter that I doubt many Rx execs are thinking about today is the HCR Taxman.  That’s too bad.  They probably should.  That’s because he’s coming for the entire industry on September 30^th.

Now that I have your attention, what in the world am I talking about?  It’s a long story, but let’s just say that the HCR chit that the industry signed in Washington, D.C. during the summer of 2009 has come due, and it’s time to begin paying up.  If your company does more than $5 million a year in sales to various federal government entities, you should read on.

On August 22^nd, the IRS issued temporary rules on the matter that direct the following:

“Drug manufacturers that sell $5 million or more annually through the federal government’s Medicare Parts B and D, Medicaid, Veterans Affairs, the Department of Defense and TriCare programs, are required to make combined total fee payments of $2.5 billion by Sept. 30, 2011.”

The Obama Administration, in the push for HCR in 2008, understood that it needed to bring the Rx industry “into the fold.” The subsequent deal – $80 billion over 10 years – struck between the Administration and PhRMA required the Rx industry to “fill the donut hole in Part D,” offer up other payments to ameliorate the costs of Medicare Part B, and to “contribute” to various military health services. In exchange, the Administration would back off demands for additional HCR taxes on the Rx industry, going forward.  Clearly, the industry’s theory was that the Rx volume to be generated by 35 million newly covered HCR patients would more than offset the costs of the deal. But now, two years later, PhRMA is back in protective mode, as the same fee proposals have begun to resurface. So much for the Administration’s 2009 deal with industry.

Back to the impending September tax obligation. According to the preliminary rules the IRS released on August 22^nd, the aggregate fee amount due from the Rx industry for each year of the HCR funding is:

• $2.5 billion for fee year 2011;
• $2.8 billion for fee years 2012 and 2013;
• $3 billion for fee years 2014 through 2016;
• $4 billion for fee year 2017;
• $4.1 billion  for fee year 2018;
• $2.8 billion for fee year 2019 and thereafter.

The fees for each year will be allocated:

• Using a specified formula, among covered entities (i.e., manufacturers & importers) with aggregate branded prescription drug sales of over $5 million to specified government programs (Medicare Part B program, the Medicare Part D program, the Medicaid program, any program under which branded prescription drugs are procured by the Department of Veterans Affairs, any program under which branded prescription drugs are procured by the Department of Defense, and the TRICARE retail pharmacy program).

Provides that the annual fee for each covered entity is calculated by determining the ratio of:

• The covered entity’s branded prescription drug sales taken into account during the preceding calendar year to…
• The aggregate branded prescription drug sales taken into account for all covered entities during the same year, and applying this ratio to the applicable amount.

So what is the Rx industry’s tax liability?  Here’s a 2010 estimated look at how this lays out, courtesy of Foley-Hoag, LLC:

The table that follows illustrates the graduated structure of the fee for a (hypothetical) covered entity, “ Q Pharmaceuticals,” with $1 billion in total branded prescription branded drug sales in 2010 (under specified programs):

To calculate a covered entity’s share of the statutorily determined aggregate fee, the IRS would multiply the fee by the ratio of the covered entity’s total sales taken into account to the aggregate of all covered entities branded drug sales taken into account.

Under the above scenario, where Q Pharmaceuticals total sales taken into account is $783 million in 2010, and where the aggregate sales taken into account for all covered entities is $10 billion, Q Pharmaceuticals fee would be:

If you’re an Rx firm doing an aggregate one billion dollars of business with the federal entities listed above, you’re on the hook for nearly $200 million by September 30, according to the IRS and the 2010 Foley-Hoag formula. This is a hypothetical, but the above formula is pretty straightforward.  You should be able to load in your federal sales numbers, as appropriate, and figure out where you will actually stand on September 30th.  It could be a very interesting number.

For brand managers who are sweating out sales every quarter, trying to make quota, the idea that the profitability of their product may be adversely impacted by this new HCR “fee” is no small matter. Will these fees have an impact on 2011 bottom line, year-end bonuses, for example? As HCR continues to roll out, keep an eye on the activities happening beneath the surface of the law. Rx industry CFOs and industry tax departments are well aware of this development, but I’m guessing that the September 30^th tax obligation might come as a surprise to many in the C-suite. I would be interested in your thoughts on this latest development in HCR.

If the debt ceiling is raised, which seems likely, and the deficit can (or trillion-gallon drum) gets kicked down the road to the 2012 presidential primary stumping season, the momentum to limit federal spending could bring consequences for Big Pharma beyond state-level legislative acts, like the proposed incentive for generic substitution put forward by Senators Scott Brown (R-MA), Ron Wyden (D-OR) and John McCain (R-AZ).

Cost-cutting measures from the once-dismissed Obama budget, like enforced drug rebates for Medicare/Medicaid dual eligibles and a shortened biologic exclusivity period, are now back on the table, as is the removal of the ban on Centers for Medicare & Medicaid Services (CMS) negotiating drug prices under Medicare Part D, and the tax deduction for pharma advertising, once supported by the GOP. There’s also the question of tax repatriations; the White House signaled in March that it would not support a repatriations tax holiday like the one in 2004, which temporarily cut the corporate tax rate from 35% to 5% on dollars flowing in from overseas.

All of these proposals could do significant damage to industry profits. According to CMS, the U.S. government paid a combined $74.8 billion for prescription drugs under Medicare and Medicaid in 2009, a figure that underscores the importance of government as a pharma customer here in the US.

Meanwhile, European governments are subsumed in their own debt crises, with a major ripple effect possible as Greece, Portugal, Ireland, Spain and now Italy struggle to impose harsh austerity measures. Social outlays are so large a part of the debt problem, that health — and drug — spending must figure as a target. Portugal for example is endorsing cross-national reference pricing based on a benchmark of the three countries with the lowest prices. Can the big markets like France, the UK and Germany be far behind? An even more dramatic scenario is the impact of a possible break in the 17-country Eurozone, which would restore parallel trade as a bona fide commercial strategy for drug distributers throughout the region.

Industry’s response to date has been sporadic, ad hoc, and deeply unpopular as evidenced by the negative reaction in Greece over company decisions to terminate business and withhold access to hospital supplies of vital medicines. Apart from recording revenue losses on their balance sheets, industry needs a rethink; how to remain viable players in health systems that have little choice to shrink to something leaner — and meaner. A stronger value proposition and a refusal to remain a silo purchase is one way to start. What other ways can industry respond to the debt crunch?

Jennifer Ringler: How do you motivate staff in an environment that’s focused on doing more with less?

Steven Blum: First, I’d like to mention that any statements I make are my personal views and opinions, and do not represent the view or position of my employer, Forest Research Institute or its parent company, Forest Laboratories. That being said, as far as motivating staff in an environment where you need to do more with less, I think the key is really to have a good plan, a good team, and good leadership. I think you need to effectively communicate what your strategy is and what some of the key objectives are. That way, each person knows what their role is and how it fits into the overall objective of the organization. It’s important to build a culture of accountability—I think that you need to lay out expectations. It’s important for a leader to show commitment early on, and there needs to be accountability on all levels—management really needs to serve as a role model for accountability.

Each person in the organization that’s involved in any particular project really needs to understand what their roles and responsibilities are. In doing so, they need to own that role—they need to be responsible for keeping pace with the organization; they have to be able to anticipate and overcome challenges; and most importantly, they need to be enabled and they need to be empowered. Which is something that we need to do as managers—we need to empower them, and give them the latitude to be effective in their positions.

You also need to eliminate distractions and any negative forces. If there’s somebody within the organization that doesn’t have the same commitment or has an opposing position, then it’s important to determine whether they’re going to be a distraction or not—they may not be the right person to be serving in that capacity. It’s fine to have different ideas, but you really need to maintain positive energy and eliminate those distractions.

I think it’s also important that you need to have a good measuring stick—one of my favorite sayings is that you can’t manage what you can’t measure, so it’s really critical to establish expectations, set timelines, and set benchmarks that progress can be measured against. Having that type of transparency really lets everyone know where you are versus where you should be and helps keep you on that path going forward. Having transparency is also important in communicating business decisions. When resources are limited and you have to do more with less, proactively keeping people informed about decisions really helps to eliminate some of the second guessing and keeps the team focused—it’s really important to continually engage and maintain momentum. Reach out to the team, keep them involved, let them know what’s going on, and try to keep them motivated and excited.

Communication is key, but it also has to go in both directions. So I think a lot of companies are pretty good about sending messages downstream, but you really have to work harder in making sure that communication can also flow upstream. To do that, you really need to build a culture of trust, where people know that their opinion counts and they’re not afraid to come forward if they see a problem or if they have an idea that they think may result in some sort of improvements. You really need to encourage that type of open and honest communication. It’s also important to give the people the tools they need to do their jobs effectively—whether that’s appropriate resources, training, or the type of supervision that they need. A lot of times you deal with shared resources, so it’s critical to be clear on prioritization when you have competing tasks.

So I think if you do all those things—you keep people engaged with their jobs, and they know how important their role is and how it fits within the big picture, you can keep them focused on the task at hand and you can focus on achieving those shared objectives. And if they’re emotionally engaged in a positive way, they’ll certainly be motivated. And as a company, if you’re able to align incentives or performance reviews along with those goals, then the employees will also have some skin in the game. So I think a lot of these are things you can do to keep the team focused, even when you’re dealing with a smaller team or smaller resources.

JR: It’s interesting that you mentioned the phrase, ‘You can’t manage what you can’t measure.’ That brings to mind the question, as more and more functions are outsourced in the industry, what is required to maintain that essential oversight and control? Is there any risk of dilution of quality and integrity in the drive for increased efficiency and lower costs?

SB: Certainly. If you’re not effectively managing your partners and the vendors that you work with, there certainly can be a gap, and you do have to have good communication channels between you and the partner. You don’t want to just drop something in their lap and not continue to monitor, to make sure that you’re getting the same level of quality that you would expect from an internal team.

The first step in deciding whether or not to outsource something is making a strategic decision in terms of what you want to keep in house versus what you want to outsource. And there’s really a number of different factors you need to evaluate in determining which functions to outsource—beyond the obvious factor, which is cost. From a strategic standpoint, you need to get a sense of which capabilities you want to own. A lot of the decision-making and core planning elements are things you’re naturally going to want to keep, but it’s when you start to look at some of the more functional areas where you can start to make some decisions.

Certain functions, from a risk perspective, are things that you’re going to want to keep in-house. So for a lot of organizations that are going through a transformation or evolving their business model, outsourcing might be a good way to address current needs while you start to build that capability in-house. For more established firms, that’s where you might be looking for some more operational efficiency. So you really need to know what it is you want to outsource—you need to understand what the capabilities are of the various firms that are out there. It’s a relationship. There are a lot of great vendors and companies that are out there.

You have to have a good team on your side that can integrate with them, that can work with them, to ensure that you’re getting the same quality that you would expect from your in-house team. And if you don’t think that you’re going to be able to get that same baseline of quality that you would expect, then it probably doesn’t make a whole lot of sense.

The other thing to think about is capacity, in terms of how many resources you’re going to need. One of the nice things about outsourcing is that you can use it to add capacity. So you can have an internal team, but at times when you have a higher demand, you can add some capacity from the outside without to increase your overhead or your full-time employees and so forth. Regardless of what you do, measuring performance and measuring the quality of work, ensuring that you’re getting the types of efficiencies that you expected when you started to engage in an outsourcing venture, is going to be critical to continue to monitor as you’re working with a partner.

JR:  Is the ‘middle manager’ an endangered species in tomorrow’s pharma?

SB: As our organizations start to move towards flatter hierarchies or more non-traditional organizational structures like a matrix, there is less of a need to have as many layers of traditional command-line supervision. So you can certainly flatten the hierarchy by eliminating some of the more traditional supervision, if you think you have some redundancies. I think the biggest thing to understand is what your organization is going to look like, how you envision it, and then getting a sense of what types of people and resources you think you’ll need to fill out that organizational structure and be successful.

A lot of middle managers are folks that have been promoted into those positions, they’ve come up through the ranks, the have a lot of industry knowledge and institutional know-how that they’ve built up over the years, so it’s important to get a sense of which individuals can play a key role in helping the organization to transition to a new structure. Some of those middle managers may be people who are able fulfill some of those roles, even if the job is not the same exact job that they’re doing now. It’s very likely that they do have relevant skills and abilities, and a good base of knowledge from moving up through the organization.

I think when you move towards a leaner organization, you move away from traditional supervisory tasks. The people that you’re going to want to have at hand are the people that can be effective project leaders—people who are willing to get their hands a little bit dirty. You need to establish the resources that you have and the resources that you think you need, and determine who is going to get you through that transition and lead you into the future.

Organizations really need to be able to challenge themselves, to look beyond current roles and responsibilities when assessing the organization, because you don’t want to discard talent that might be misplaced or misused. You’re going to want to identify who your top people are and find them roles where they can be effective, while at the same time ensure that they are professionally fulfilled. The bottom line is, as the company transitions to leaner times, you don’t want to throw the baby out with the bathwater.

JR: In addition to the strong management skills you’re discussing, it seems that stable partnerships will be an integral part of success for pharma companies going forward. What are the key elements of productive partnerships with external groups, given that lean management practice puts companies on a more outward-looking trajectory?

SB: You need to have good partners. You’re likely to have a number of different partners or vendors that you work with, and they’re all going to want to have a piece of your business. So your really have to manage that vendor selection process and the relationships with the vendors. Internally, you need to have good project managers that are able to manage the vendors. It’s important to remember that it’s a relationship—there’s going to be a learning curve between the organizations as they start to learn how to work with one another and what the dynamics of that relationship is going to be.

You really need to have good processes and systems in place. You need to figure out how your organizations are going to be integrated, or at least how their work stream is going to be integrated into yours. You need to figure out how to best work together, and how information is going to be shared. Again, it’s a relationship, so it’s going to need to be managed over time.

If you’ve had success working with a partner, then you’re certainly going to want to continue to leverage those efficiencies and work with that partner. Maybe they’ll move from being strictly a vendor to more of a strategic partner over time. In working with the vendors you need to know their capabilities, but you also need to know who on the team is going to be working with you—whether you’re getting their A-Team or not. And if you are getting the A-Team, I think it’s really important to know whether they’re going to have the time and ability to focus on your project.

A lot of times you look for big names or people that have a lot of recognition, but are they really going to be engaged in your project or not? Or are they the person who shows up at the capabilities presentation and kickoff meeting, but then you don’t see them visibly involved in the project? So it’s really important to know from an organizational standpoint, not only who the manager is, but who the people are who you’re partnering with, and if they’re really the people you wanted. Whether you’re really getting their expert people or getting their junior staff, is going to make a difference.

If you set expectations, continue to monitor progress, continue to monitor your success, and continue to make changes as necessary, it’s possible to have a good partnership.

JR: Back to the topic of internal best practices, is your company doing enough right now in leaner times to foster talent development, mentoring, and other HR functions that help to retain top performers? Where do you see the ‘people-planning’ gaps?

SB: I think you can always try to do more. I’m a big fan of developing human capital—I’ve always been an advocate of constant improvement and continual learning, whether that means me continuing to learn the business, or sharing my knowledge with others in the organization or in the industry. As a manager, it’s vital to incorporate time for training. It’s really easy to get caught up in managing the day-to-day tasks, so taking time out from your schedule to train or mentor people is going to compete with time that would otherwise be spent on certain projects and tasks. So on a personal level you really need to make that commitment toward your people.

It’s a lot easier to make that commitment at an organizational level, because then you’re really demonstrating the importance of training, and you’re likely to get a greater commitment from people. You get more consistency when you do things at an organizational level than if you leave it up to an individual manager to train his or her people, but you have to have good people and good resources. There’s a lot of efficiencies that you can gain with formal training and development programs.

Mentoring isn’t going to cost you a lot in terms of money, but it’s certainly going to cost you in terms of time for both the mentor and the mentee. That time can be well-spent because you have that knowledge transfer, and often that’s something that you can’t bottle any other way. If an organization encourages mentoring, either formally or informally, it can really help with team members coming up on the learning curve.

At Forest, we have a process for onboarding new hires that is really focused on trying to get them acclimated to our culture as quickly as possible. In a lean organization, training and development are really critical for a number of reasons. First, you’re dealing with less resources, so you really need to ensure that your team has the tools they need to do their job—especially if more is going to be expected from them. You also want to provide them with ongoing training so they continue to grow within the organization, so that they’re able to take on new or additional responsibilities.

It’s also critical from a succession-planning standpoint. You’re going to want to be able to plug any holes that you have quickly, so that you don’t lose any momentum or have an impact on your timeline. So having people that are able to quickly step into a role is really ideal. They may still need some additional training, but at least you’re not stuck having to go all the way back through the whole recruitment process, trying to identify somebody from the outside, then worrying about whether they’re going to fit within your organization.

But ideally, with a lot of your top performers, you want to do what you can to keep your best people from leaving in the first place. You want to identify who the rockstars are within the organization and do what you can to keep them. You want to really leverage the organization to identify those people. Things such as peer reviews or 360-assessments can often present different perspectives than the traditional review process.

I’m a big fan of meritocracy—I don’t have a problem treating people differently. You want to reward the people that can do the most, so from my standpoint, people that prove themselves and demonstrate that they can provide value to an organization—I’m more inclined to give those people more of my time at the end of the day. It’s great to have a commitment to training and development. Your employees also need to see it as being beneficial. If they don’t see the training and development as a valuable use of their time, then you’re not going to get the type of response that you expected—for training and development to be effective, it really needs to work for everyone.

At Forest, we’ve always had solid training and development for our field-based folks. Over the last few years I’ve really seem a strong commitment from the organization to ensure that our internal staff were also receiving great training and development. I’ve had the opportunity to attend a number of different courses, and I think they’ve been great—I’d love to attend more of them. Especially because this way, you have the opportunity to interact with some folks from other groups within the organization, and you quickly find out that the organization has a lot of really smart people. I think it’s key to identify who those people are and how they can grow and adapt in the organization.

JR: If you take a step back and look at the bigger picture, what do you think the prevalent organizational model for pharma will be in five years’ time? Will it be a return to innovation and science, or a distribution platform to commercially execute the inventions of others?

SB: I think there’s room for both—a company that’s focused on the science and developing the compounds themselves, as well as leveraging the inventions of others. Licensing products from others does take out some of the risk from a development standpoint, in that you’re dealing with a product that has been proven up to a certain point, depending on where it is in the development cycle. So that may minimize risk, but ultimately you’re not going to know a lot about the product until you get some experience in patients.

The downside of licensing is that you’re really limited in what products are available for licensing, so you’re going to have to pay a premium for that product in terms of things like royalties and fees. You also have to compete with other firms for that product, and the rights may be limited to certain territories, or may not be available in the terms that you may be interested in. Often with the licensing model, you may have a partner that you need to collaborate with during either development or commercialization, and that’s not always easy—it’s another relationship that needs to be managed, and some partners are going to want to be more active partners than others.

I think Forest in particular has done a really great job in this area. They have a really strong structure in place for managing collaborations, and many of the partners that we’ve had have often wanted to collaborate with us for multiple programs.

In contrast to licensing, though, if you look at in-house development, you can really remove a lot of those constraints. You own the molecule, you own the rights, and you can even out-license the rights to certain territories if you wanted to. You can develop the molecule when you want, how you want, without really having to be in alignment with a partner. But there is more risk involved, and there is more overhead in having to maintain all the different discovery infrastructure and capabilities. You’re also likely to be a bit more focused towards specific targets and therapeutic areas, whereas with in licensing, you really can be open to any and all opportunities.

I think there are also probably some options that are in between. You can have some research collaborations where maybe you’re not fully at risk, or maybe you have first dibs on a candidate. So I think in-licensing, or in-house development, or something in between, that can all work—it really depends on the organization and what they determine they need in order to be successful. It’s also about the culture of the organization—some research-based organizations may have a little bit of that ‘not invented here’ mentality, and you really want to make sure that you’re giving the appropriate commitment to whatever the product is, whether you discovered it or somebody else did.

Either way, I think innovation still fuels this industry—there’s always going to be a need for better and new treatments. I think companies can be successful using either route, whether through in-house discovery or in licensing other people’s inventions. In the near-term of the next five years or so, fundamentally I don’t think you’ll see that big of a shift. But maybe moving a little bit further out, things will change a bit.

“Today’s decision introduces a critical distinction between brand-name and generic drugs. Consumers of brand-name drugs can sue manufacturers for inadequate warnings; consumers of generic drugs cannot,” writes Sotomayor. “These divergent liability rules threaten to reduce consumer demand for generics, at least among consumers who can afford brand-name drugs.”

In an article published in Pharmaceutical Executive’s May issue, John Brenner, a partner at Pepper Hamilton, suggested that it’s not inconceivable for plaintiffs seeking “failure to warn” protection to take up their grievances with the brand drug manufacturer, the originator of a given drug label. Generics companies must, by law, use a verbatim copy of the original brand drug label, regardless of new risk information or adverse events reports.

Commenting today on the Supreme Court’s decision, Brenner noted that two state courts, an appellate court in California (Conte v. Wyeth, November 2008), and a Vermont District Court (Kellogg v. Wyeth, October 2010), have ruled that brand drug companies could be held liable for the labeling on a generic drug, and therefore be subject to claims. While the California and Vermont decisions don’t necessarily constitute a consensus, Brenner said that “there are 50 states out there, and a lot of them have a great penchant for saying, ‘We really don’t like to leave our injured citizens without a remedy.’”

Writing for the majority, Justice Clarence Thomas acknowledges “the unfortunate hand that federal drug regulation has dealt [the plaintiffs],” leading Brenner to surmise that “there can’t be any question about the fact that the majority knew exactly what it was doing.” In her dissenting opinion, Sotomayor writes that “a drug consumer’s right to compensation for inadequate warnings now turns on the happenstance of whether her pharmacist filled her prescription with a brand-name drug or a generic…if she takes a generic drug, as occurs 75% of the time, she now has no right to sue.” Brenner says Sotomayor may want to check with the plaintiff’s bar about that one. “[Sotomayor] doesn’t know how clever these folks are,” said Brenner.

UPDATE: Brenner points to a statement released yesterday by metoclopramide (the generic form of Wyeth’s Reglan) claimants, including Elizabeth Conte of Conte v. Wyeth, announcing plans to take their cases to the brand manufacturer, in this case, Wyeth (now Pfizer). If generics companies can’t be held liable for what Reglan users consider an insufficient warning label, then Wyeth/Pfizer itself must be liable, according to the statement. “This ruling puts the responsibility back in the lap of brand name manufacturers,” said Michelle Schwartz, a metoclopramide victim who is also a spokesperson for the Reglan Metoclopramide Victims Organization, in the statement.

But the single most effective tool in the Bad Ad program’s toolkit, according to Arnie Friede, principal at Arnold I. Friede & Associates, and a former associate chief counsel at FDA, is fear. Or rather, in terrorem, a “Latin term that lawyers use” to mean frightening someone into compliance, says Friede.

When the program launched, FDA Commissioner Margaret Hamburg sent an explanatory letter to “more than 33,000” physicians, a fraction of the roughly 972,000 physicians in the US. Sales force management and reps themselves will have to decide if they are willing to play Russian roulette with a physician who may or may not be an informer. “FDA is trying to create the perception that the rep doesn’t know if the doctor is or is not a friend,” says Friede. “Accordingly, reps should be on the straight and narrow.” For FDA, the conversation between a rep and a doctor is one of the hardest areas to regulate efficiently, according to Friede. Creating in terrorem means prevention, he says.

Concerns about the Bad Ad program being abused by competing brands seem to be unfounded. According to FDA’s Division of Drug Marketing, Advertising and Communications (DDMAC), only 4% of the complaints that came in since last May were anonymous. Friede says complaining to DDMAC about competing brand messages is not something new, to be facilitated by the Bad Ad program. “There are plenty of channels for competitive complaints with DDMAC,” says Friede. Companies wishing to complain about marketing materials anonymously can simply do it through a law firm, Friede says, adding that “people that live in glass houses shouldn’t throw stones.”

Of the 328 submissions to the Bad Ad program, 188 came from HCPs, 116 from consumers, and 24 were submitted by industry representatives. The program will be expanded this year, according to DDMAC, to include a “web-based continuing education program,” and a new focus on med students and early career HCPs. FDA will also seek collaborations with medical, pharmacy and nursing schools to “enhance student education.”

Billed as the first Chinese product development partnership (PDP), the Global Health R&D Center of China (GHRC) hopes to discover and develop new treatments for tuberculosis (TB) and other diseases by collaborating with pharmaceutical companies, the Chinese government, academic institutions and other groups, according to a statement.

The GHRC was created through a partnership between The International Scientific Exchange Foundation of China (ISEFC), a translational sciences group, and the TB Alliance, a not-for-profit organization focused on developing new and better TB medications.

Mel Spigelman, president and CEO of the TB Alliance, said in an email that pharmaceutical companies stand to gain from sharing resources, such as intellectual property, with the GHRC. “The GHRC will offer companies financial and world-class discovery and clinical development resources to advance compounds for neglected diseases that they otherwise may not be able to [develop] on their own,” said Spigelman. “In addition, companies will establish strong working relationships with key discovery, regulatory, and clinical resources in the fastest-growing pharmaceutical market in the world.”

The TB Alliance has drug development partnerships with AstraZeneca, Bayer, GSK, Novartis, Sanofi-Aventis, and Tibotec, and is currently managing three drug candidates in clinical trials, according to organization’s website. Spigelman declined to specify which compounds the TB Alliance itself will contribute to the GHRC.

“The vision of the GHRC is to focus on translational medicine for public health and bridge the innovation gap that currently exists into new treatments and cures,” said Geng Jianyue, secretary-general assistant of the ISEFC, in a statement. In China alone, some 1.3 million people develop active TB annually, and 150,000 die from the disease each year, according to the TB Alliance.

A recent World Health Organization (WHO) report found that only a 10% of the multidrug-resistant tuberculosis (MDR-TB) cases identified globally received treatment in 2009. The WHO report called multidrug-resistant and extensively drug-resistant tuberculosis a global epidemic, and TB in general kills almost 2 million people each year, according to the TB Alliance. The announcement of the GHRC coincides with World TB Day, which is celebrated on March 24 each year, to commemorate Robert Koch’s discovery of TB bacillus, the cause of the disease.

While access to treatment remains a major problem in many of the 27 countries most burdened with MDR-TB, the treatments themselves, many over forty years old, present further difficulties, since first-line drugs like isoniazid, ethambutol, pyrazinamide and rifampin require a six to nine month regimen. Failure to adhere to a treatment regimen can result in drug resistant strains of TB, which require second-line drugs, many with severe side effects.

In addition to developing new TB treatments and addressing other public health diseases in China, the GHRC will also develop compounds for the rest of the developing world, according to Spigelman. “Global development programs will likely be partnered with disease-specific PDPs or with global pharmaceutical companies, who will then work with GHRC to register the compounds throughout the world,” he said.