On a panel titled “Activist FDA: Transformation Agent,” Prevision Policy founder and former Pink Sheet editorial head Cole Werble relayed the tale of Acadia Pharmaceuticals, a San Diego-based company with a stage three compound (pimavanserin) targeting Parkinson’s disease-related psychosis.

A month ago, Acadia met with FDA to discuss the proper design of a new phase III trial intended to confirm the results of a previous, 17-month study that met its primary endpoints. A confirmation trial was needed, Acadia presumed, since the first phase III trial of pimavanserin, conducted in 2009 at half the dose of the successful trial, had failed. Acadia had already begun to enroll patients in the confirmation trial – which represented an $18 million commitment – when it met with FDA in April to get the agency’s blessing.

To Acadia’s surprise, FDA responded that the additional confirmation trial wouldn’t be necessary, based on the pivotal phase III trial already on the books, combined with supportive data from other studies on pimavanserin. As a result, Acadia scrapped plans to do another trial, and began preparing its NDA posthaste. But the company wasn’t hasty enough, and investors dialing in to a call about the FDA meeting balked at the company’s projected filing date – near the end of 2014. Why not file immediately, they wanted to know? Acadia executives’ refrain in response, was, “these things take time.” FDA had reversed the waiting game, making Acadia itself responsible for the delay in review and commercialization of a new product.

This is just one example, of course; it isn’t likely that a big pharma looking to introduce another DPP4 into the market for type 2 diabetes, for example, would be told not to worry about additional trials studying cardiovascular or pancreatic side effects. But the fact remains that FDA approved 39 NDAs in 2012 – the most since 1997 – and the agency launched yet another expedited regulatory pathway – breakthrough therapies – at the beginning of 2013. The breakthrough therapies designation is likely to shorten the timeline from discovery to commercial approval – for those drugs receiving the designation – to between three and five years, according to IMS estimates.

Rachel Sherman, associate director of medical policy and director of the Office of Medical Policy, CDER, FDA

The timeline from discovery to approval could be as short as 26 months, said Rachel Sherman, FDA’s associate director of medical policy at the Center for Drug Evaluation and Research (CDER). Sherman said her office had received – to date – 39 requests for breakthrough therapy status, of which 12 have been granted and 14 denied, with 11 pending and two withdrawn. She said the breakthrough therapies program is already “an enormous success.”

Joseph Herring, CEO at Covance, noted that pharmaceutical companies are often difficult to work with, from his perspective as the head of a CRO. “[Investigators] want a perfect trial that can’t be enrolled.” He wondered about the interplay companies have with FDA regarding trial design discussions. In response, Sherman advised more communication. “If what we say doesn’t make sense, ask us. Argue with us. We’re receptive to it.”

How does a company know whether it’s sufficiently engaged with FDA? “If your lead clinical person is on a first name basis with the [respective] lead reviewer at FDA, you’re in good shape,” said Sherman. “If you’re not, you’re not.” Sherman cited the Clinical Trials Transformation Initiative as another program aimed at “identifying and promoting practices that will increase the quality and efficiency of clinical trials.”

“The point of all our programs is better evidence generation…we lack evidence,” said Sherman. “The most expensive drug is the one given to the wrong patient, or given incorrectly.”

On the subject of biosimilar approvals, Sherman said FDA hasn’t received a single application yet, adding that the phrase “follow-on biologics” is dead. The requirements for biosimilars, according to Sherman, are that a biosimilar be “highly similar” to the original product, with “no clinically meaningful differences.” Sherman said that does not mean “interchangeability,” though, suggesting that a biosimilar could not be substituted for a brand biologic at the pharmacy, without specific doctor’s orders.

Comparing the current activist FDA with the activism the agency demonstrated during the HIV epidemic, Werble said that in addition to the breakthrough therapies designation, FDA has also launched the GAIN ACT, and its anti-infective exclusivity provision; has opened up FDA meetings to rare disease outside consultants, who advise companies on efficient FDA regulatory navigation; and has implemented PDUFA 5’s “patient-focused drug development meetings,” which solicit patient opinions around specific diseases.

Speaking on the “agency-wide impact of management attention and staff commitment” mustered during the HIV crisis 20 years ago, Werble said the pendulum has once again swung back toward FDA activism. “That commitment [to HIV] was infectious 20 years ago, and it’s occurring again,” said Werble. He also noted that a solid one-third of all drug applications submitted to FDA now come from small companies, a rejection of the thesis that only big pharma is properly equipped to navigate FDA’s regulatory structure.

The Rutgers Business School Annual Healthcare Symposium, convened on April 30, was presided over by Mahmud Hassan, director of the Blanche and Irwin Lerner Center of the Study of Pharmaceutical Management Issues, at Rutgers. John Castellani, president and CEO of PhRMA, and Seyed Mortazavi, president of IMS Health US operations, also gave presentations.

At the beginning of the Reboot Camp – held at New York City’s Alexandria Center on April 12 – Intouch Solutions’ CEO Faruk Capan declared the days of Don Draper effectively over. The route to patients’ hearts and minds isn’t Old Fashioned cocktails and intuition; it’s solutions based on patient, provider and payer needs, and making disparate data streams pool around brand objectives.

Katherine Patterson, global marketing communications manager, growth initiatives, GE Healthcare

Katherine Patterson, global marketing communications manager, growth initiatives, at GE Healthcare, gave the keynote address, which focused on clarity of mission in marketing execution, and the importance of marrying science and emotion for consumers. Marketers too obsessed with social media, or the newest digital platform, might impress only themselves. “It’s like peeing down your leg…hot to you, but nobody else,” said Patterson. In Japan, for example, GE Healthcare’s medical device customers “are moving back toward print” as a preferred marketing channel, although growth markets “want digital,” and they want it on their mobile devices, she said.

Citing Eric Topol, currently director of the Scripps Translational Science Institute, Ben Chodor, CEO at Happtique, said we’re not too far away from a time when physicians prescribe more apps than pharmaceutical drugs. Chodor is betting on Topol’s prediction; Happtique, a mobile health application store, will “curate” mobile apps for docs through a private, customized dashboard of Happtique-certified health apps. The company’s patent-pending software would allow physicians to electronically prescribe apps to patients. Chodor says he’s lobbying the SEC to reimburse medical apps, noting that some private plans already do.

Happtique doesn’t make apps itself, but Chodor appeared before the US House of Representatives’ Energy and Commerce Subcommittee on Communications and Technology in March to support FDA’s regulation and definition of mobile medical apps. “It’s relatively simple to take an app through FDA” [for a medical device designation], and it only costs between $10,000 and $20,000, he said, noting that 75 mobile devices/apps have already been approved. Chodor said the Affordable Care Act’s medical device excise tax – “the absolute worst tax ever” – should not be levied on smartphones or apps.

Asaf Evenhaim, co-founder and CEO of Crossix, reminded Reboot Camp attendees about the unfathomable amount of individual consumer or patient data that exists for marketers, while insisting on the importance of privacy and HIPAA regulations. His company collects this data to create “propensity scores,” which serve as the basis for highly specific predictive models. The models can then be used to predict healthcare purchase decisions.

Where does all that data come from? Some of it is volunteered, some is collected invisibly through cookies, Facebook and other online aggregators, and some of it – but not Crossix’s data – is gleaned from trolling social media channels and blogs. Passive data collection, said Intouch Solutions’ senior vice president David Windhausen, is revolutionizing pharma marketing and health itself. Windhausen said he looks at his Nike FuelBand in the evening, and if he hasn’t been active enough, it’s time to exercise.

Windhausen’s talk lovingly described the Sanofi mobile app “GoMeals,” an app for diabetics specifically, but also for anyone who wants on-the-go nutritional facts about nearby restaurants (among other things). An attendee representing Sanofi – which is an Intouch client – let slip that GoMeals, and possibly the iBGStar glucose meter, would start to integrate passive data from wearable tracker gadgets like Fitbit or the FuelBand as early as this year.

Capping off the Reboot meeting was Augustin Fou, founder and chief digital strategist, Marketing Science Consulting Group. Fou emphasized the importance of recognizing how patients’ habits, expectations, and actions – in the context of healthcare – have changed, and how they continue to change. He referenced a Capgemini Consulting report on “digital maturity” that placed pharma at the very bottom of the list.

Despite regulatory hurdles and because of an explosion in mobile technology, data capture, and the influence patient’s have on the delivery of healthcare, pharma marketers could use a reboot. But they’ll need to back-up some of the dusty old tropes of yesteryear, even those that precede Don Draper. As GE Healthcare’s Patterson noted, Aristotelian rhetoric, comprised of ethos, pathos and logos – in equal measure – works as well in a sales detail as it did in symposia. The occasional Old Fashioned might be okay, too.

Dr. Gregory Geba, who was appointed OGD director last July (2012), says “I entirely support” plans to shift all the chemists out of OGD to a new Office of Pharmaceutical Quality (OPQ), as proposed by CDER director Janet Woodcock.  Yet his memo of March 13 announcing his resignation indicates considerable frustration with the situation. Geba came to FDA from Sanofi, he says, to help “pave the way” for extending generics from conventional pills to more complex dosage forms, and to address a broad range of complex quality and regulatory issues. But he notes that the shift of his chemistry group to OPQ will limit OGD resources and “inevitably resets the scope of responsibilities and remit of our office.”

Ever since the OPQ proposal emerged last fall, OGD staffers have voiced concerns that combining generic and new drug review chemists in the same operation would decimate OGD and complicate the generic drug review process. Moreover, the change appears to counter Woodcock’s move last September of elevating OGD to “super office” status, with Geba reporting directly to her.

Similarly, staffers in CDER’s Office of Compliance are leery about OPQ swallowing up much of its Office of Manufacturing and Product Quality. The idea is to combine operations responsible for evaluating chemistry and manufacturing controls data in applications for new drugs and generics with those overseeing compliance with good manufacturing practices, but so far, the change appears disruptive to many CDER officials.

Whatever the merits of Woodcock’s organizational changes, Geba’s sudden departure comes at a difficult time. OGD and manufacturers are immersed in the details of implementing a major new user fee program as well as issuing new guidance and refining programs to smooth the development and approval of safe and high quality generic products. Geba noted in his memo that OGD has approved nearly 200 Abbreviated New Drug Applications (ANDAs) since it began collecting user fees last October, and that it’s beginning to whittle down the massive application backlog.

He also notes that to continue these improvements, OGD plans to hire 100 new staffers and to implement a number of new initiatives – prospects that likely will be undermined by depleted resources under the current budget sequester and a continued impasse in Congress over spending limits. No surprise that someone with a strong resume might not want to stay around to deal with all of this.

In the usual political gamesmanship that accompanies government budget stalemates, the administration cancelled visitor tours of the White House and delayed access to national parks, blaming Congress for failing to deal with the budget impasse. Reductions in airport services threatened flight cancellations. The Centers for Disease Control and Prevention (CDC) predicted difficulties tracking and identifying outbreaks in infectious disease, and the Obama administration warned of reduced funds for childhood vaccines. The National Institutes of Health said its loss of $1.6 billion in funding (on its $31 billion budget) would translate into 2000 fewer research grants, diminishing prospects for new treatments for cancer and other serious diseases.

These and other reductions in government services really go into effect March 27, when employee furloughs without pay begin at many agencies. FDA officials say the agency can avoid reductions in staff, but that the impact will be felt on fewer field inspections and problems meeting application review time frames, scheduling meetings, developing new guidances and rules, and a host of agency functions.

A key issue is whether FDA can gain authorization to spend the new and increased user fees it has been collecting for the last six months. Congress needs to authorize the agency to collect the newly established and increased fees and to rule that sequestration should not apply to all the fees, but has been reluctant to do so. There is some $82 million in fees in question, which FDA desperately wants to tap.

Even more disastrous for the nation than sequestration is the prospect that Congress will let the current continuing budget resolution (CR) expire; if that occurs on March 27 it would end current funding for most government programs. Because Democrats and Republicans really don’t want to shut down the entire federal government, Senate and House leaders are working hard to at least extend the CR through September of this year.  Under the latest Senate budget proposal, the CR legislation also would provide additional funding in many areas for the rest of the 2013 fiscal year. Here, FDA benefits from Sen. Barbara Mikulski (D-MD) now chairing the Senate Appropriations Committee. She has engineered a 2013 budget plan with Republican support that provides $2.5 billion in funds for FDA for this year, including added resources for foreign inspections, food and drug safety and agency operations. With all its $1.8 billion in user fees, the agency would have $4.3 billion in funding, slightly more than for 2012.

The Senate plan also provides an extra $71 million for NIH, but that’s just a token in light of the $1.6 billion hit under sequestration. And no one expects sequestration cuts will be restored.

Key policymakers also are rolling out proposals for a compromise budget plan for 2014, due in April for the next fiscal year beginning Oct. 1, 2013. The latest Republican budget plan calls for transforming Medicare into a voucher program, cutting Medicaid and eliminating the Obama health reform program; at a minimum it cuts millions authorized for implementing insurance exchanges and other reform components. Those health proposals failed to gain public support last November and don’t carry much weight in the Senate. Yet Democrats will have to agree on serious reductions in outlays for entitlements and social programs to enact a workable spending program, and that will require strong presidential and congressional leadership. Every interest group – including research scientists and pharma companies – have been trooping up to Capitol Hill to beg for special treatment for their particularly vital programs, but there’s not much extra money lying around.

For guest blogger Tom Norton’s previous take on pharma and The Sequestration Transparency Act of 2011, click here.

This past week or so, with Obamacare’s start up less than a year away, we have been treated to several entertaining vignettes as the nation’s governors begin to wrestle with the realities of the new healthcare law.  Consider these:

California

In California, where substantial personal income and sales tax increases were recently passed, Governor Jerry Brown said last week that, in fact, the newly flush state perhaps shouldn’t be solely responsible for shouldering the burdens of Obamacare.   Apparently now fully comprehending the cost of the program, Brown cavalierly suggested during his State of the State address that California’s counties should share the tab.  Stand by for reaction to this idea from California’s 58 counties.

Colorado

Meanwhile, in Colorado, Governor John Hickenlooper has projected that his Medicaid budget, due to include 160,000 new Medicaid patients under Obamacare, will increase his state budget by $128 million over the next decade.  Responding to that obligation, Hickenlooper has proposed $280 million in cuts to Colorado Medicaid over the same period of time. Entitle them and then take it away?

Mississippi

And, finally, in Mississippi, who’s on first? Governor Phil Bryant and state insurance commissioner, Mike Chaney, are fighting over who is really going to run that state’s variant of Obamacare: the federal government or the state?  What’s interesting is that both are Republicans and both are strong opponents of Obamacare.

What can I tell you?  There are many more state tales out there, and I am sure, many more to follow.  But these “policy pirouettes” are not what I’ll focus on today.  Instead, I would like to zero in on several key states that qualify as the true ‘surprises’ in the Obamacare start-up.  First, a few givens:

First Given:  Under Obamacare, the states really are important.  If the states don’t cooperate, Obamacare won’t work.  But courtesy of last summer’s Supreme Court decision, the Feds cannot threaten or otherwise force the states to cooperate on this new law.  If they do, they will answer to the Supreme Court.

Second Given:  Right now is the leverage point for the states.  In effect, over the next 11 months, HHS needs the states more than the states need HHS and Obamacare.  So now is the time for states to ask for specific accommodations on Obamacare from HHS.

Third Given:  This state of affairs won’t last long.  Soon, within the next year or so, the states that don’t play along with HHS will likely be sorry.  There’ll definitely be a point of diminishing returns for those that hold out.

OK, with our “givens” in place, let’s check the stats.

The Yes’s, The No’s, and The Fence Sitters

First, as of today, how many states have said “yes;” how many have said “no;” and how many are sitting on the fence?

The best chart I found is from the Kaiser Family Foundation.  Here we learn that 18 states and the District of Columbia have approved Obamacare; 25 states have rejected the concept of setting up the state exchanges — defaulting to the so-called “Federal Exchanges”; and seven are sitting on the fence with no formal action.

Considering the national population, this breakout is fascinating. The 18 states and DC currently comprising the “yes” states equal 112 million individuals, or about 36% of the country, while the “no” states opposing Obamacare equal  161 million citizens, or 51% of the population.  The “fence sitting” states are another 40 million, or about 12% of the country.

That means even if all the “fence sitting” states were to join the “yes” group today, more than half of the country, led by Republican governors, is still saying “no” to Obamacare: 51% to 48%, in January 2013.

And how are the Republican “no” states managing this unique moment?  Let’s explore some of the more interesting surprises that have already occurred, and look at a few more that may be occurring, soon.

Arizona

In the currently Republican state of Arizona, we have big surprises developing.  Governor Jan Brewer who said “no” to Obamacare as late as November, 2012, has had a change of heart.  What happened?  An election and the future of Arizona’s demographics.

In Arizona and actually, the entire Southwest, the Hispanic electorate is rapidly increasing, to the point that, for example, in both New Mexico and Nevada, Republican governors have recently “decided” that implementing Obamacare is a good idea. This seems a good call since the vast majority of those individuals in those two states who will be newly entitled by Obamacare will be Hispanic and, who, by the way, also voted heavily for Obama in this last election.

In Arizona, it also seems the famously “hard-edged” Gov. Jan Brewer has been reviewing the same demographic reports.  Indeed, she not only announced this week that Arizona is supporting the law, but she also went one step further by proposing an Arizona “circuit breaker” law which says the state will automatically provide 80% of coverage for childless adults, should Obamacare welch.

So what is going on here?  Many are suggesting that by extending this new Medicaid coverage to those Arizonans who are predominantly Hispanic, Brewer is actually attempting to soften the hard edge she has on another Hispanic hot button: immigration.  All of this is seen as preparation for a possible Brewer run for governor in 2014.

North Dakota

To the north, it appears a fourth Republican, Governor Jack Dalrymple, of North Dakota has also decided it’s time to accept Obamacare.  Unlike his Republican colleagues in New Mexico, Nevada, and Arizona, however, demographics have nothing to do with his decision. Instead, Dalrymple’s rationale is simple: “In the end, it comes down to are you going to allow your people to have additional Medicaid money that comes at no cost to us, or aren’t you?” In other words, take the money and run, Jack?

Florida

Certainly a leading public proponent of “making a deal on Obamacare” is Gov. Rick Scott of Florida.  In numerous statements following the election, Gov. Scott confirmed his “strong opposition” to Obamacare; but in the same breath, repeatedly stated his fervent desire to sit down and talk about Obamacare with HHS Secretary Kathleen Sebelius.

Secretary Sebelius got the message.  She and Scott had a much hyped DC meeting early in January. The outcome? Surprise! Scott reportedly was looking for a deal in return for his support of Obamacare.  According to the Wall Street Journal, Gov. Scott asked the Secretary “to approve changes to the state’s Medicaid program, which, among other things, would allow managed-care plans to participate in a long-term care program for seniors.” It’s worth noting that Scott was an insurance executive in his previous life!

So will Sebelius find a way to give the governor of the nation’s fourth largest state what he wants?  I’d bet on it.

Other surprises in the offing

Despite the set “battle lines” on Obamacare, other Republican governors continue to “evaluate” the law.  Consider these developments:

Virginia

Although Virginia Governor Bob McDonnell has been a strong Obamacare opponent from the beginning, his actions last week suggest that not only will a federal exchange be functioning soon in Virginia, but also very likely there will be at least ‘one VA partnership with the federal government’, i.e., a ‘state exchange,’ operating by Oct. 1^st.

Indiana

Newly elected Republican Governor, Mike Pence, who opposed Obamacare in Congress has indicated he is evaluating the position taken in opposition to Obamacare by his predecessor, Mitch Daniels.  Pence is suggesting that it may be fiscally prudent to incorporate Obamacare “proportionately” into the existing Indiana health insurance program set up by the Daniels’ administration.

I must say, my third “given” — the window of opportunity for Republicans to deal – may be cranking shut pretty quickly here!  At this rate, within the next 11 months, I would bet well over 50% of Americans will be in “yes” states and at that point, HHS no doubt will have little time for Republican governors who “want to make a deal on Obamacare.”

So what do all of these “surprises” mean to the Rx Industry?  First, there is going to be a lot of chaos.  The transition is clearly going to be messy for several years, and for those hold out states, trying to figure out what to do with all the new Medicaid patients looking for service from the “federal” exchanges will only lead to medical service headaches.  Secondly, trying to plan for Rx marketing to this segment will also be difficult. How do you set up programs for your target groups that may or may not be reimbursable?  And finally, on the other hand, how does industry walk away from 40 million new patients who all of a sudden have some kind of drug coverage?  That’s concerning to any Rx manufacturer, no matter what the confusion factor maybe.

At best, I am guessing the companies will just “make it up” year to year as each state comes on line. Or, at worst, the Rx business will throw up its hands and tell Obamacare administrators, “We’ll check back with you in five years.”

That’s my point of view.  I would be interested to hear your thoughts on my observations.

Tom Norton is Principal, NHD Smart Communications of Illinois, Inc. He can be reached at tnorton@nhdcomm.com

In addition to taking a close look at pharma’s internal processes, manufacturing facilities and corporate policies this year, the US Justice Department (DOJ) – in the name of “protecting consumers where they are most vulnerable,” according to Frimpong – is also placing a “focus on people,” since processes and policies (at least publicly-circulated processes and policies) don’t typically break the law; people do. “We know there are enormous cost pressures, but you can’t sacrifice safety under these pressures,” said Frimpong.

To that end, Frimpong recommended that attendees ask themselves five questions about the group of people they work with, to help identify potential problems before they result in an investigation or worse. In summary, Frimpong’s questions are:

1. Do we have the right people? Are they experts in their specific task areas? “People are not fungible,” said Frimpong. Given the complexity involved in certain manufacturing practices, for example, it’s crucial that the right person is working in the right role.

2. Do our people have the right incentives enabling them to see problems, report problems, and fix problems? Frimpong said strong internal communications are key to facilitating diligent compliance programs.

3. Are our people satisfied and engaged with the company and their jobs? Frimpong said the departure of key people can sometimes lead to lapses in compliance, citing SB Pharmaco, a GSK subsidiary, and the manufacturing deficiencies at the company’s (now-closed) plant in Cidra, Puerto Rico.

4. Are people and policies working in harmony? Companies should set realistic goals, and refrain from crafting compliance programs and procedures that can’t be met. Unrealistic standards are doomed to fail, said Frimpong.

5. Do we, as chief compliance officers, know what our people are actually doing? Given the size and scope of many large, multinational pharmas, it’s important that leadership make a concerted effort to communicate with and assess the performance of specific individuals whenever possible.

Frimpong underscored the problem – and gave examples – of companies who’ve put patients in harm’s way in service of the bottom line, saying, “when companies put profits over patients, everyone loses.”

Extra: For a report from Jill Wechsler on comments about the recent Caronia decision made by Tom Abrams, director of the Office of Prescription Drug Promotion, at the CBI Congress, click here.

Speaking at the CBI Pharmaceutical Compliance Congress in Washington DC this week, Tom Abrams, director of the Office of Prescription Drug Promotion (OPDP) in the Center for Drug Evaluation and Research (CDER), said that the government is not seeking further review of the Caronia decision, largely because the decision “does not find a conflict between the Act’s misbranding provisions and the First Amendment.”

In fact, the Court of Appeals decision didn’t challenge FDA’s contention that promoting a drug for unapproved uses may be evidence of misbranding. Thus, the Second Circuit ruling – which involved a divided panel, Abrams emphasized – “does not bar the government from continuing to enforce the misbranding provisions of the FD&C Act.” After delivering his remarks on the Caronia case, Abrams told the audience that he would not take any questions on the subject. Maame Ewusi-Mensah Frimpong, deputy assistant attorney general, consumer protection branch, civil division, at the US Department of Justice, noted during a separate CBI panel that shortly after Caronia, an off-label Amgen settlement went through the Second Circuit, the same court that found in favor of Caronia, without all of the First Amendment fanfare.

Here’s Abrams’ full statement:

The government has determined not to seek further review of the Second Circuit’s decision in United States v. Caronia, No. 09-5006-cr (2d Cir.).  FDA does not believe that the Caronia decision will significantly affect the agency’s enforcement of the drug misbranding provisions of the Food, Drug, and Cosmetic Act (FD&C Act).

In 2009, Alfred Caronia was convicted of conspiring to distribute a misbranded drug in violation of the FD&C Act.  A divided panel of the Second Circuit held that the jury instructions erroneously permitted, and that the government’s argument encouraged, the jury to treat speech promoting unapproved (off-label) uses of an FDA-approved drug as a criminal offense in and of itself.  The court of appeals did not address the constitutionality of the theory of liability on which the government had defended the conviction:  namely, that the promotion of a drug for an unapproved use may be relied on as evidence that the unapproved use is an intended one, and a drug that lacks adequate directions for its intended uses is misbranded.

Because the court did not address the constitutionality of a prosecution resting on that theory, and because the court also acknowledged that the First Amendment does not preclude an enforcement action based on speech regarding unapproved uses that is false or misleading, the Second Circuit’s decision does not bar the government from continuing to enforce the misbranding provisions of the FD&C Act, including through criminal prosecution where appropriate, in cases involving off-label promotion.  More generally, the decision does not strike down any provision of the FD&C Act or its implementing regulations, nor does it find a conflict between the Act’s misbranding provisions and the First Amendment or call into question the validity of the Act’s drug approval framework.

Abrams said that pharmaceutical promotional materials are “improving,” and that strong voluntary compliance by industry is critical for OPDP to be able to oversee some 80,000 promotional pieces a year. In general, pharma ads appear to be less violative, and of a higher quality, though some materials still present cause for concern, said Abrams. OPDP has “zero tolerance for misleading promotion,” he said. In response to a question from the audience on whether OPDP would tread lightly on a company if it voluntarily reported a promotional misstep or mistake, Abrams reiterated the need for voluntary compliance, and said OPDP would hardly ever take an action if a mistake is self-reported, and also corrected. Given the number of promotional materials OPDP is tasked with reviewing each year, the agency must set priorities, said Abrams. Those priorities include ads for newly approved products, drugs with significant risks and products subject to past violations and complaints.

With respect to policy and guidance documents for industry, Abrams once again stated that social media guidelines are among the agency’s “top priorities,” in addition to other areas of interest, including the use of health economic information in making formulary decisions, and the addition of comparative effectiveness claims in a drug’s label.

Additional reporting contributed by Ben Comer.

Yet, the data also reveals that most of these therapies are in early stages of development:  less than 1000 of the 5400 products in clinical development have reached stage III, and only 82 are headed for market following approval by the Food and Drug Administration. The attrition from phase II to phase III remains very high despite a range of scientific advances and regulatory improvements. Of nearly 3000 new molecular entities (NMEs) to treat cancer, only 288 have reached stage III clinical trials, and only  a handful make it to market. Therapies for infectious diseases seem to have a higher success rate, with about 700 investigational projects yielding 22 recent approvals. Certainly a higher “early kill” rate may be a sign of progress in the  risky world of pharma R&D, where a key goal is to avoid costly phase III studies that won’t pass muster with FDA. The current study doesn’t provide the historical data that could tell more about whether pharma R&D is becoming more productive, but there doesn’t seem to much evidence of progress.

A more telling sign is the recent rise in FDA’s approval numbers for NMEs, reaching almost 40 in 2012 and still providing steady good news for sponsors. The promise is that more INDs eventually will yield more new approved medicines. “There are no guarantees” from a stronger and more diverse pipeline, but the study reveals the “depth of possibilities,” observed Genia  Long of the Analysis Group in a PhRMA webinar. However, it also is important for pharma to reduce the overall cost of developing new drugs, and that will require more informative early stage research strategies that efficiently separate potential winners from likely losers. Researchers are making progress in developing treatments for Alzheimer’s disease, pointed out Eli Lilly CEO John Lechleiter, acknowledging that success “will require longer, more expensive studies to show benefit for patients.”

The PhRMA report aims to demonstrate to the public and policymakers the high value of biopharmaceutical R&D and the importance of continuing government support for FDA programs and research funded by the National Institutes of Health. It also highlights the value – and the need to pay for – new therapies to treat rare diseases and conditions that currently lack effective treatment. Ultimately, these new, costly research endeavors could lead to cures and preventives for cancer, Alzheimer’s and other devastating illnesses that affect millions. But the costs for individual patients may be enormous, and it remains to be seen if public and private health programs will pay for them.

It has come to be expected that the successive Grand Ballroom PowerPoints – limited to twenty-five minutes apiece and kept tightly on schedule, almost uncannily so – given at J.P. Morgan each year by the largest healthcare companies in the world, don’t sparkle with revelation. The majority of presentations highlight the positives of the preceding year, gloss the negatives or omit them entirely, and project new positives – to be detailed in upcoming earnings reports or analyst meetings – on the years to come.

As everyone knows, the action at J.P. Morgan happens behind closed hotel room doors, or in San Francisco’s near limitless supply of coffee shops, restaurants and taverns. Absent a meeting beyond the bounds of the conference’s relentless schedule, attendees would do well to skip the formal presentations and plant themselves in one of the several breakout rooms, which often feature top management and an open microphone for questions. It was in this context that Vertex – still radiant from last year’s approval of Kalydeco, a drug targeting a small fraction of the cystic fibrosis patient population (and costing almost $300,000 a year) – that president and CEO Jeff Leiden told attendees that payers in mature markets have shown a willingness, so far, to pay a premium for the value Kalydeco provides to patients.

The company recently achieved a favorable reimbursement in England, one of the more frugal and skeptical nations in Europe with respect to drug pricing, which bodes well for reimbursement in Ireland and Wales, said Leiden. In France, the company is currently selling Kalydeco through a patient access program, but Leiden spoke optimistically about that country, as well as Australia, Canada and Germany. New Kalydeco trials for younger patients, aged two to five years, are set to commence this quarter.

There was plenty of talk about genetics, but outside of the success stories mostly in cancer, the enthusiasm of recent years seemed tempered by investors and others who feel that most of the current sequencing activity adds a layer of complexity but often doesn’t lead to actionable insights for drug development, or the treatment of patients in most settings. However, Life Technologies’ CEO, Gregory Lucier, said his goal is to “be the only company in the world that can read, write, and edit DNA,” which is difficult to fully explain in a twenty-five minute presentation (or in a blog post, for that matter). Like Illumina and other device and non-traditional pharma companies, Life Technologies drew capacity crowds, and Lucier described fascinating, almost sci-fi seeming technologies, such as the company’s Pervenio lung cancer molecular test, launched in September, which could dramatically affect survival rates for patients by making it much easier for physicians to determine the best course of therapy for an individual patient based on clear prognostic data in the early stages of the disease.

Although most medicines are still impersonal instead of personalized, catering to patient needs as a way to create value and differentiate products came up again and again in discussions with biopharma executives. Biogen Idec CEO George Scangos talked up his company’s intramuscular injectable form of Avonex, approved last February, describing it as “remarkably popular with patients.” Kermit Crawford, president, pharmacy, health and wellness, at Wallgreens, gave the company’s inaugural PowerPoint at J.P. Morgan, in no less than the Grand Ballroom – the largest of the presentation halls – telling attendees during the breakout session that the retail pharmacy administered five million flu shots in 2012. Flu shots, by the way, are a lot less expensive at Walgreens than they are at most doctors’ offices, said Crawford. The company is building out new capabilities in the form of clinics and home care for patients with chronic diseases, and expanded its global footprint last summer with the purchase of a $6.7 billion, 45% stake in Alliance Boots, a European pharmacy retailer.

Anne Whitaker, Sanofi’s president of pharmaceuticals, North America, said in an interview with PharmExec that supporting patients in areas like diabetes, for example – not just providing medications, but focusing on services that help patients meet their goals – can help to differentiate the company and its products from competitors. “We don’t want to just be the Lantus company,” said Whitaker. Helping diabetic patients successfully control their glucose levels, which means keeping HbA1c levels below 7%, means fewer complications (and less cost to the healthcare system), and since only half of the eight million basil insulin users are hitting those numbers, according to Sanofi’s global R&D president Elias Zerhouni, success in this area would be good for other stakeholders as well. Whitaker alluded to risk-sharing pilot programs Sanofi is conducting with payers that might reward the company with favorable reimbursement based on patient adherence and outcomes.

It should be mentioned that both Abbott and AbbVie gave presentations, neither of which were terribly exciting, although Thomas Freyman, Abbott’s EVP, Finance and CFO, said the nutritionals (one of four core business areas within the new Abbott, the others being established products, diagnostics, and medical devices) market is expected to top $50 billion by 2016, up from $36 billion in 2011, an area in which the company continues to invest; Freyman said Abbott has recently opened the doors to a new nutrition research center in Singapore.

It’s literally impossible to see more than about a seventh of the presentations live on any given day, since they happen concurrently and successively, without breaks in between, and the hallways of the Westin St. Francis get notoriously bottlenecked in between sessions, but the PCSK9 target seemed present in many pipeline overviews, in addition to the use of product combinations to treat larger sub-populations within a given disease or therapeutic area. Outside of the lunchtime keynotes on Monday and Tuesday, given by journalist Bob Woodward and J.P. Morgan head honcho Jamie Dimon, respectively, politics was conspicuously absent from company presentations compared with last year, although Ken Frazier, Merck’s CEO, said at a breakout session that he “told Obama” not to use mandatory drug price cuts to achieve healthcare savings, but to instead create policies that better incentivize the commercialization of innovative new products, which control costs by preventing severe (and expensive) health complications and related hospital visits. Amgen CEO and president Bob Bradway said unspecified provisions of the fiscal cliff bill, signed into law by President Obama on January 3, would generate incremental gains for the company’s Sensipar product, indicated for patients with hyperparathyroidism who are on long-term dialysis for kidney disease, and also to lower calcium levels in people with cancer of the parathyroid gland.

The first two days of the conference offered an increasingly diverse group of companies, including a room and track dedicated exclusively to non-profits, and a lively group of suited attendees who pressed executives for answers in the breakout sessions. More than one CEO expressed relief to find himself in calmer waters, having finally navigated through treacherous patent expiries and R&D failures in recent years, and the mood from the stage was generally upbeat, which might be expected for an audience largely comprised of potential investors. Even so, lots of companies detailed lots of mid and late-stage pipeline candidates, offering new hope for patients and new bets for Wall Street.

Weighing in on the question of buying back stocks versus giving money back to investors in the form of higher dividends, J.P. Morgan’s Dimon said he tended to prefer higher dividends, unless a company can be sure it’s buying back stock at a very low price. But then again, “you know more about healthcare than I do,” Dimon told attendees. Asked what he had learned from J.P. Morgan’s billion dollar trading loss fiasco last spring, Dimon said: “Don’t screw up.”

It’s no secret that the pharmaceutical industry faces significant challenges. In his opening remarks as emcee of this year’s NYPF General Assembly, BIO president and CEO James Greenwood didn’t shy away from some of the starker realities, like the fact that annual venture capital funding for biotech hit an all time low this year, at $2.9 billion as of early November, compared with nearly double that amount in 2007.

The dream of “going public” as a start-up biotech is more or less a pipedream for most organizations these days; while capital raised from an IPO has slowly crept back up from almost nothing in 2008 to around $13 billion in 2011, the number of deals done hasn’t kept pace. Roughly 10 deals were done in 2011, according to Greenwood’s slides, compared with nearly 30 deals and $28 billion in capital raised through IPOs in 2004. FDA approvals are up, relatively speaking, but VCs once active in the biopharmaceutical space are now taking their dollars elsewhere, to industries with clear exits on investment and shorter periods to payoff.

In what appears to be a show of solidarity, however, companies are combating external market forces by working together. Greenwood cited a collaboration between Pfizer, Lilly and Merck to create a not-for-profit cancer research partnership, which pools resources to bring down the costs of developing new treatments.

Part of this collaboration, the Asian Cancer Research Group, is tasked with creating “one of the most extensive pharmacogenomics cancer databases known to date…composed of data from approximately 2,000 tissue samples from patients with lung and gastric cancer,” that will be made publically available to researchers.

But emerging markets represent more than an opportunity for growth, balanced against stagnant Western markets. People living in these geographies are “facing problems we don’t fully comprehend,” noted Tadataka Yamada, EVP, board member, and chief medical and scientific officer at Takeda Pharmaceuticals. “Eight million children” – three billion in India alone – “under the age of five die every year from diseases that could be treated,” said Yamada. “We must become a partner in finding solutions to these countries’ biggest problems.” Yamada said innovation comes in two forms: evolutionary innovation and revolutionary innovation. The latter is most desirable, as it represents fundamental change and progress.

But what kind of environment is needed to facilitate this kind of innovation? One that doesn’t rely on peer review, for starters, said Yamada. “Innovators have no peers.” In addition, companies need to facilitate an environment that’s willing to “challenge dogma, to fail and to fail often…success is built on the backs of failure.” Reflecting on his time with the Bill & Melinda Gates Foundation, and emphasizing the importance of collaboration among industry and other groups, Yamada offered an African proverb: “If you want to walk fast, walk alone. If you want to walk far, walk together.”

Alan Paau, vice provost, president of the Cornell Research Foundation and executive director at the Cornell Center for Technology Enterprise and Commercialization, acknowledged the importance of working with industry to translate academic research into new treatments, but said companies should keep things simple. “Universities are not your competitors…you don’t need a six-figure salaried lawyer to write a contract with a university,” said Paau. Companies interested in partnering with academic institutions need to understand the two basic tenets of the university with respect to IP: “If we create it or invent it, we own it,” and secondly, “use it or lose it.”

Bringing things back to a local context, Ann Li, EVP, business development for the New York City Economic Development Corporation, underscored the importance of the biopharmaceutical industry as an engine for economic growth in New York, adding that New York City is second only to Boston in the amount of grant money received from NIH. Li provided several examples of municipal investment – including the Alexandria Center, on the East River, which, when completed, will house 1.1 million square feet of laboratory and office space; BioBAT, a commercial life science research park in Brooklyn’s Sunset Park neighborhood, which will provide over 500,000 square feet of lab and office space when completed; the New York Genome Center, an organization designed to facilitate resource sharing in genomics and bioinformatics, of which nine academic medical centers in New York have already joined; and a series of Small Business Innovative Research (SBIR) workshops aimed at helping NYC-based biotechs get access to over $2 billion in federal SBIR funding each year.

Greg Wiederrecht, VP and head of external scientific affairs, worldwide licensing and acquisitions at Merck, wrapped up the speakers portion of the General Assembly, noting that 55% of Merck’s $49 billion in human health revenue for 2011 came from licensed products and patents. While Merck continues to invest in internal research – to the tune of $8.5 billion a year – the company still relies on partnerships to bring new drugs to market. “More than one third of our current pipeline is licensed in,” said Widerrecht. In addition to direct partnerships and licensing deals, Merck also funds the California Institute for Biomedical Research, or Calibr, a non-profit led by Peter Schultz, formerly the director of the Genomics Institute of the Novartis Research Foundation. Calibr is funded “mostly by Merck,” which has earmarked $92 million for the cause, over the next few years, said Widerrecht.

Despite the fact that VCs “aren’t so venturesome anymore,” as Widerrecht put it, when it comes to biotech and pharmaceutical drug development, there is reason to believe that collaboration is on the rise, as industry takes stock of its predicament and concludes that together we stand, divided we fall.