Jacky Law

Guest blog by Pharm Exec Europe’s Jacky Law.

It’s hard to get precise figures of how many people have been taken off the payroll at pharma and biotech companies recently. According to staffing firm, Challender, Gray and Christmas, the combined industries shed 58,969 jobs in the first nine months of 2009, 15,000 more than the whole of 2008. In total, that makes around 74,000 redundancies in just 21 months, many but not all of which came from sales forces. Figures from FiercePharma, meanwhile, show just ten companies saw 66,850 jobs go in 2009. And this doesn’t include layoffs from the merger of Roche and Genentech nor the 860 jobs that were announced at Boehringer Ingelheim in August.

They could do worse than follow the example of Medivation, a Californian company that has more than doubled its workforce, albeit from an extremely low base, from 28 in 2007 to 59 in 2008. Founded by a group of experienced professionals, its business model tries to bridge the gap between early-stage development and product launch. It finds promising compounds in markets with significant unmet needs, adds a bit of value and then sells them on to big pharma in record-breaking deals. In that sense, it is doing precisely what a team of analysts at Morgan Stanley said in January that Big Pharma should be doing, moving away from internal R&D and focus more on in-licensing. To move, in other words, from research and development to search and development.

While well-argued, it is not a particularly original proposal and forecast data from EvaluatePharma shows that while Big Pharma is certainly up for in-licensing, it is also not that keen to give up its central defining activity. Indeed, it is actually spending more on internal R&D as a percentage of sales. In 2008, it spent $69.8 billion, a figure that had grown by 9.3% annually since the turn of the century. And while it is set to slow quite radically to 1.5% CAGR from 2008–2014, when expressed as a percentage of sales, the figure is actually rising, from 15.6% in 2000 to an expected 18.5% in 2014.

Medivation, meanwhile, has done spectacularly well from buying in and partnering on. It had just two pipeline candidates in 2008, both of which have since been bought up by Big Pharma in record-breaking deals. The first was in September 2008, when a $225 million upfront fee from Pfizer for its Alzheimer’s candidate Dimebon was the largest for a single pipeline product that year. The second, in October 2009 with Astellas Pharma, brought in another $110 million upfront for the prostate cancer drug, MDV3100. That was the fourth largest upfront fee in 2009.

A reason for its success may be to do with its size and focused business development team that would confirm another suggestion on how pharma might revamp its ailing R&D model. This comes from the consultancy firm McKinsey & Co, which brought out a report in February that said scientific innovation is only part of pharma’s R&D problem. Better management could also play a part. “Increased attention to costs, speed of development and decision making,” it said, “could increase the internal rate of return (IRR) of an average small molecule from around 7.5% — less than the industry’s cost of capital — to 13%.”1

Without knowing the IIRs on Dimebon and MDV3100, investors are certainly impressed. Shares in this small company initially rose to $27.92 after the deal with Astellas Pharma, giving the company a market capitalization of $935 million, which is not bad for an outfit that has a payroll of just 59 and demonstrating there is life after Big Pharma.

Reference
1. The Road to Positive R&D Returns, Eric David, Tony Tramontin and Rodney Zemmel, McKinsey & Co Pharmaceutical and Medical Products Practice, February 2010.

PhRMA showed off two versions of its recommended search ad, one with a universal symbol that’s easily recognizable as a link to risk information (the sample one showed the FDA symbol). The other ad includes a short-form version of the adverse event warning, such as “All drugs have risks, click here for more information.”

The two versions of the search ads also include some form of warning information on the actual ad. Pharma marketers originally thought they could have risk information provided on a separate landing page linked to the ad, but FDA shot down this “one-click rule” last year.

Social Media has become a necessary evil for pharma in the past few years. Once upon a time, news took days to spread through media channels; now someone can post an article on a blog or social network site and millions of people view it almost instantly. While some pharma companies have taken advantage of social media, creating their own networks and blogs, others are taking a wait-and-see approach toward such technology.

And with good reason. Last April, the FDA released 14 warning letters to pharma companies for improper use of search link advertising. The agency expressed the opinion that pharma companies which listed the brand name of a drug and included health information without safety information were in violation of pharmaceutical marketing regulations.

Many companies were stunned, and called for a proactive response or guidelines from the agency.

“PhRMA remains an active participant in this discussion, and our goal is to help FDA create standards that will allow truthful and accurate discussions about medicines online, by the companies that research, develop, and manufacturer them,” said Jeffrey Francer, PhRMA’s assistant general counsel.

PhRMA’s final recommendation pertained to Twitter and other microblogs that allow users to post brief statements and link to other Web sites. PhRMA thinks FDA should allow pharma companies to provide news and information about drugs on these sites, along with topics related to regulatory events.

Last November, in a massive public hearing, FDA asked for input pertaining to pharma’s use of the Internet as a promotional tool. Hundreds of speakers gave their ideas, and FDA promised to reconvene with answers later this year.

But shortly after the launch, the company began getting reports of dispensing errors. Some were due to prescription misreading, others to simple, honest mistakes. The two drugs causing all the confusion were AstraZeneca’s Casodex (bicalutamide) and Actavis’ Kadian (morphine sulfate extended-release), treatments for prostate cancer and chronic pain, respectively.

The number of incident reports was actually quite small: less than 20 out of over a million prescriptions. Still, Takeda decided not to take any chances and expedited reporting to the FDA. They released sales reps into the healthcare professional population to increase awareness of the name confusion, published announcements in journals—and saw a decrease in incidents.

Before the company could breathe a sigh of relief, though, the numbers started climbing again. That’s when Takeda’s conversation with the FDA took on a new urgency. “The FDA recognized the fact that lots of patients have come to rely on this medication,” said Robert Spanheimer, Takeda’s VP of medical and scientific affairs in North America. “Both parties knew how important it was to not have gaps in patient care.”

So Takeda swiftly came up with a list of possible names and sent them off to the FDA for review. After some back-and-forth, they agreed on Dexilant.

Name changes can be confusing for consumers as well as professionals, so as early as next week the company will send out an army of reps to educate pharmacists and pharmacy technicians about the switch—which is just the name, by the way. The formula and approved indications are the same, Spanheimer stressed.

What’s really interesting about this story isn’t the name switch; it’s the fact that the FDA and a pharma company worked together harmoniously—and quickly—to nip a potential fiasco in the bud. All those promises of a more efficient FDA seem to be the real deal….For now, at least.

Guest blog by Reflector,

Denmark is still on the fringes of some European Union policies. Notably, it has not yet embraced the euro as a currency, and it keeps its distance from the common defence policy. But in one respect, its pharmaceutical industry has just shown that it is well abreast — and even ahead — of EU developments.

As from the start of this year, the members of its national drug industry association, LIF, have committed themselves to a new code of practice on lobbying. The code sets ethical standards for member companies’ dialogue and negotiation with authorities and politicians.

This is different from the codes in most European drug industry associations on product advertising and promotion, or on relations with patient organizations. Here we see the Danish industry responding to a more generalized European concern: that big business has too much influence over politicians. It is a theme that has repeatedly erupted in Brussels, disturbing relations between industry and the political class. And the drug industry, along with other high-tech sectors such as plant biotechnology, car makers and nanotechnology, is frequently on the receiving end of accusations of indecent behaviour and excessive arm twisting.

The Alliance for Lobbying Transparency and Ethics Regulation, a coalition of civil society groups, trade unions, academics and public affairs firms, says it is “concerned with the increasing influence exerted by corporate lobbyists on the political agenda in Europe, the resulting loss of democracy in EU decision-making and the postponement, weakening, or blockage even, of urgently needed progress on social, environmental and consumer-protection reforms.”

Under increasing pressure for greater transparency, the EU has moved over recent years towards some form of governance in this sensitive area. Its own officials are now subject to rules about accepting gifts or other favours, and both the European Commission and European Parliament have established their own registers of lobbyists, with some element of commitment to observe minimum values of fair play.
But so far the drug industry, at European level, has not taken any particular initiative.

The European Federation of Pharmaceutical Industries and Associations has a code of practice on relationships between the pharmaceutical industry and patient organizations, and a code governing the promotion of prescription-only medicines to (and interactions with) healthcare professionals. But nothing about lobbying.

This is what makes the Danish initiative interesting. LIF members have signed up to a detailed code that requires disclosure through corporate websites of companies’ use of external consultants, insists that information supplied to decision makers is updated and complete and must not contain false or misleading information, and prohibits any form of financial support, sponsorship, payment or gifts to civil servants or politicians, including to political parties or to electoral funds.

As LIF says, it is important to raise the industry’s profile in the outside world, and make clear that the industry’s lobbying activities are conducted in an open, honest, fair and credible manner. Being able to demonstrate that the industry’s dialogue with the political/administrative level is based on independence and is fully transparent will help to enhance the industry image, it remarks. It does not go on to make the related point that failure to do so is likely, in an increasingly transparency-conscious age, to land the industry with a lot more trouble.

Helen Disney

When most of us look at taking a new medicine we tend to think it will make us better. Some of us may think about possible side effects but few of us expect the medicines we take to actually be dangerous. Recently, the public and policymakers have become more aware of the issue of counterfeit medicines — especially as patients increasingly learn about how to shop safely online for pharmaceuticals. But scant attention has been paid to a safety issue that is also important to patients — the problem of substandard medicines.

Unlike counterfeits, which have been much more widely discussed, substandard pharmaceuticals have been legally authorized for manufacturing and, more often than not, approved for market and sale by a national or regional drug regulatory authority. Despite this, these medicines nevertheless do not meet the required quality or safety requirements for that particular drug or treatment, compromising safety and efficacy.

It may appear that this is more likely to be a problem affecting developing countries such as China, India or Latin American countries, and indeed these countries are certainly affected. But this issue is not just one that affects developing countries. Especially now that global supply chains bring medicines quickly and easily from one country to another, substandard medicines can reach also American or European patients. While safety regulations may look good on paper, several countries are still failing to meet the required standards and the consequences for public health are worrying. Regulators need to take a closer look at what is happening on the ground.

A new report by the Stockholm Network, Keeping Medicines Safe, cites examples and case studies from China, India, Brazil, Argentina and Turkey to demonstrate the lethal effects that counterfeit and substandard drugs can have on public health. It shows how bad, non-existent or unenforced regulations can play a serious part in this process.

For instance, current regulations in India divide regulatory responsibilities between state and national authorities. The delegation of inspecting and enforcing Good Manufacturing Practices (GMP) to the state level has resulted in substantial variation in the quality of medicines produced, despite all manufacturers having been certified by the relevant authorities. Some Indian states do a good job of maintaining high levels of manufacturing practices but other states do not. As a result, substandard medicines can easily move from one state to another.

In Argentina, the government and national drug regulator actively promote the prescription and use of a category of medicines called ‘similars.’ These drugs are advertised as being generic drugs, but in actual fact ‘similars’ have not been tested for bioequivalence — a prerequisite in much of the developed world for labelling a drug a generic.

China’s national drug regulations are comparable to those of Europe or North America, but the lack of implementation and enforcement is glaring. China is one of the world’s largest producers of both substandard and counterfeited medicines. One of the main reasons for this is wide-spread and pervasive corruption, even among government regulators. Indeed, only five years ago the head of the national medicines regulator was executed on charges of corruption.

All of these circumstances are causes for concern, but there is a further wrinkle in the ointment. The development of biological drugs makes the problem of substandards potentially far riskier — especially when it comes to similars. As the use of this type of drug increases, patients and policymakers can expect to encounter more problems with defective medicines than they did before.

Policymakers and regulators need to acknowledge the problem of substandard drugs and improve the regulation of drug manufacturing and the enforcement of good manufacturing processes. If they fail to do so, some patients who faithfully take a seemingly innocuous white pill could be doing themselves more harm than good.

Helen Disney

Together, the three drug giants will pull together an undisclosed dollar amount in seed funding and create the independent, non-profit Asia Cancer Research Group (ACRG). The new company’s purpose is to grab Asia’s lung and gastric cancer problem by the horns.

Neil Gibson, chief scientific officer of Pfizer’s oncology research unit, pointed out that there’s a “huge unmet need and a disproportionate health burden to Asian patients.” A significant portion of lung cancer in Asia seems to be related to a mutation in a gene that helps regulate cell growth and division—a mutation far more common in Asia than the West. Gastric cancer shares this skew, accounting for 630,000 deaths each year.

The ACRG will have a six-person research-specific board (two experts from each company) to approve major decisions and material. Lilly will provide virtual access through its research site in Singapore. Researchers can cull from at least 2,000 tissue samples as part of the ACRG’s two-year plan to create the biggest pharmacogenomic cancer database in the world. While research avenues into other cancers are a possibility in the future, the group’s focus for now is on lung and gastric cancer.

This is just the latest example of a pharma “open source” policy, a concept adopted by the techies long ago. Open-sourcing takes some of the pressure off R&D units, which have sustained heavy losses the last couple quarters.

We typically don’t get emails from FDA  asking for information about stolen goods with massive bold letters, but that’s what just came into our inbox. Looks like a transport truck containing a mix of GlaxoSmithKline’s pharmaceutical and over-the-counter medications was jacked in Puerto Rico on January 29, and the feds are looking to the general public for any information. It’s curious that it took more than three weeks to announce the news. No word on whether the theft was just now discovered, or if they are reaching out to us because all other leads have run dry.

Below is a list of the stolen drugs. Please contact 1-800-551-3989 if you have any information about this incident.

NDC     Description     Lot #   Quantity

(Unit of Sale)
0173-0697-00    Advair Diskus 500/50mcg 60 Dose 9ZP2144 2
0007-5500-40    Albenza 200mg 112s      9B001   4
0007-3152-13    Avandaryl 4mg/2mg 30s   9ZP2540 48
0029-3159-00    Avandia 4mg 90s 9ZP2237 48
0029-1527-22    Bactroban Cream 15gm    C433259 160
0007-4139-20    Coreg 3.125 100s        MTSR1212        4
0007-3370-13    Coreg CR 10mg 30s       9ZP4771 96
0007-3371-13    Coreg CR 20mg 30s       9ZP0413 95
0007-3372-13    Coreg CR 40mg 30s       9ZP3661 224
0007-3373-13    Coreg CR 80mg 30s       9ZP3920 16
0173-0201-55    Daraprim 25mg 100s      A44519  3
0173-0470-01    Epivir 150mg 60s        9F004   3
0173-0470-01    Epivir 150mg 60s        9K007   9
0173-0662-00    Epivir HBV 100mg 60s    9D003   1
0173-0471-00    Epivir Oral 10mg/ml 240ml       9E003   12
0173-0719-20    Flovent HFA 110mcg 120 Actuation        F0638   48
58160-825-51    Havrix 720 ELU Tip Lok 10s      AHAVB371BA      1
0173-0260-35    Lanoxin Inj 0.5mg/2ml 50s       8M920   2
0173-0713-25    Myleran 2mg 50s 809980  1
0007-4883-13    Requip XL 6mg 30s       9ZP3419 2
0173-0750-00    Treximet 85mg/500mg 9s  8ZP2362 60

The health reform proposal unveiled by the White House on Feb. 22, 2010 retains a number of provisions that directly affect drug coverage and industry revenues. The plan highlights that it will close the Medicare drug benefit “doughnut hole” by 2020 to make drugs more affordable to the elderly. Seniors will get some relief this year through a $250 rebate, and coinsurance will phase down over the next decade.

Because broader insurance coverage and gap closure will expand drug sales and industry revenue, the Obama plan also increases a proposed “assessment” on pharma from $23 billion in the Senate bill to $33 billion, starting in 2011 to avoid tax problems. Medical device makers also would have to pay $20 billion in fees over 10 years, starting in 2013.

Similar to previously approved Senate and House bills, the plan retains a boost in Medicaid drug rebates from 15 to 23 percent and authorizes discounts on drugs sold to community hospitals. Drug companies would have to fully disclose financial arrangements with doctors, and pharmacy benefit managers would report rebates and discounts on drugs, along with success in boosting generic drug use.

The proposal also seeks to curb “pay-for-delay” deals between brand and generic drug manufacturers; stipulates that effectiveness research would not influence coverage decisions; and supports establishing a pathway for follow-on biologics.

For these and most of the provisions in the White House announcement, there are few specifics or proposals for implementation.

Many key provisions in enacted Democratic legislation are featured in the plan: an insurance exchange to provide coverage options to the uninsured; tax credits to help individuals and small business pay premiums; curbs on insurance industry discriminatory practices; aid to state Medicaid programs; an individual coverage mandate (with low penalties); and cuts in rates for Medicare Advantage plans.

Most notable politically, there’s no govern-run coverage option. And the plan significantly scales back a proposed tax on high-cost “Cadillac” health plans, making up the lost revenue with a tax hike on high-income individuals. Most notable politically, there’s no govern-run coverage option.

This column has frequently drawn attention to the complexities of getting anything done in Europe. A brilliant researcher can explore visionary horizons, an ambitious entrepreneur can offer a package of goods or services of inestimable value, but the degree of control and regulation becomes more intense every year — sometimes every month or week.

This is not an argument against controls, or against the democratic system that erects them. But just as new medicines or new services are subject to scrutiny before they are released, so too should a critical eye be passed over new developments in the controls that are introduced. And this week has seen a striking example meriting some review.

The European Ombudsman — a relatively new function in the European Union — has just opened an investigation into how the European Commission conducted a study into the use for research purposes of non-human primates, such as chimpanzees. The role of ombudsman is well recognised in Europe as a buffer against state or bureaucratic abuse. It gives the ordinary citizen a right of appeal. But like any valuable instrument, it requires some precision in use.

In this case, the ombudsman has launched an inquiry into what an animal rights lobby group has described as a ‘deeply flawed and biased’ Commission report about monkeys in research. The European Coalition to End Animal Experiments alleges that the Commission working group that drew up the report “lacked expertise in the area and that it failed to take certain evidence into account”.

The ombudsman has asked the Commission for its opinion. P. Nikiforous Diamandouros, who has just been re-appointed to the post by the European Parliament, is clearly determined to assert his renewed authority. “The Ombudsman has a vital role to play in promoting effective and transparent policy-making in the EU institutions,” he says in announcing his new inquiry. And he goes on: “I expect this role to become even more important in light of the Lisbon Treaty, which strengthens the right of citizens and associations to participate in the democratic life of the Union.”

Would it be inaccurate to discern the sound of someone scrambling onto a bandwagon in this declaration of self-importance? And would it be inappropriate to speculate that the ombudsman is now determined to seize on any grist might be brought to the mill of self-aggrandisement?

Many European pharmaceutical executives will be aware that the EU is currently in the process of updating its 20-year-old rules on the use of animal in experiments. The European Commission proposed a revision last year, and the European Parliament has already given its view, and the Council of Ministers is scheduled soon to adopt its position. It is, of course, a tangled debate, because of the inherent ethical problems posed by research using animals. It combines profound technical and scientific complexity with high emotion — heightened by the increased sensitivity to biodiversity and sustainability of recent decades.

But no-one in the industry is in any doubt as to the stakes in this debate: it affects the future of research and the future of medical science. It is too important to hijack for other motives. But the ombudsman seems heedless of the complexities. He takes at face value the complaint from the European Coalition to End Animal Experiments, and “noting that this issue is of great interest for the general public” — a questionable consideration in a matter supposedly of scientific and procedural exactitude — he ploughs on with his demand for a response by 30 April, and his undertaking to “ examine whether there has been any maladministration by the Commission.” The animal activists’ complaint is that the consultation process leading up to the legislative proposal was “unfair”, and that experts drafting the legislation did not take into account “a substantial amount of evidence” they supplied.

The sad truth is that if every complaint from every disappointed lobbyist is to be elevated to the level of a formal investigation, the democratic processes on which the EU is built are themselves jeopardised. And when the criterion for elevation to formal investigation status is the degree of public interest in a subject, effective democracy collapses completely.

The public have had ample opportunity to make their views heard on the subject. The parliament and the council are the appointed bodies to make decisions in light of all that input — and the process cannot be arrested simply because some people don’t like the way the discussion is going.

Deirdre Connelly

GSK’s Deirdre Connelly has been named the Healthcare Businesswomen’s Association’s Woman of the Year for 2010. Connelly, who just passed the one-year mark as president of GSK’s North American pharmaceuticals unit, is the 21st woman to win the organization’s “WOTY” award, which comes on the heels of another honor: She was ranked #37 in Fortune’s 50 Most Powerful Women last September, jumping five notches from #42 in 2008.

Before making the move to GSK, Connelly was president of Eli Lilly’s US operations for almost four years, a position she ascended to after starting her career with Lilly as a sales rep 22 years prior. The San Juan native worked her way up through the ranks, serving in positions such as general manager of Lilly’s Puerto Rico operations and executive director of HR in the US.

Though she’s only been at GSK for a year, Connelly has already helped turn GSK into one of the most transparent companies in the industry, and her primary focus is on achieving GSK’s—and all of pharma’s—primary purpose. “We have a calling to find a cure for diseases,” she said. “We have a duty to the patients, to respect them and put our money where our mouth is.”

Diversity also plays a key role in Connelly’s strategy, and it’s a role she’s uniquely positioned to implement. Of Irish and Puerto Rican descent, she is also one of two women on GSK’s corporate executive team. “Women leaders like Ms. Connelly serve as role models for all women in the healthcare industry,” said HBA president Susan Torroella.

Upon hearing of the honor, Connelly retained the grounded attitude she’s come to be known for. “It’s an honor,” she said. “But it’s also a responsibility.”