“This is something we’d be doing regardless,” said spokesman Bo Piela, adding that the layoffs were reported to stockholders back in May as part of a five-point cost-cutting plan. The company’s public announcement at that time confirmed there would be cost reductions — in light of its reduced 2010 forecast — but did not specifically mention job cuts.

Genzyme rejected Sanofi’s $18.5 billion takeover bid last month, saying the offer of $69 a share undervalued the company. Genzyme CEO Henri Termeer later wrote in a staff memo that the takeover proposal “reinforces how important it is to take control and maximize the value we bring to patients and shareholders.” But he also wrote that, for the first time in the company’s history, Genzyme is faced with the need to make “painful decisions.”

The company is set to face a further 1,900 job losses when it sells its genetic testing business to Laboratory Corp. of America Holdings (LabCorp) for $925m later this year It has said however that these employees will be offered new contracts when the sale is completed. Nonetheless, the The five-point plan will also the divestment of two other, ‘non core’ units, diagnostic products and pharmaceutical intermediates — proceeds from which may be used to finance the second half of the company’s $2 billion stock buyback in a move to reduce share price volatility.

The company will begin to implement the job cuts before the end of this year.

FDA on Monday announced that it was looking to withdraw approval for the low-blood-pressure treatment midodrine hydrochloride because the companies manufacturing the drug failed to provide data from post-approval studies.

The kicker: The drug was approved 14 years ago.

FDA gave midodrine hydrochloride—branded by Shire as ProAmatine and produced by a half-dozen generics firms—the green light in 1996 as part of the fast-track approval program designed to speed to market drugs for diseases with no current treatments.

The catch is that FDA requires post-market clinical trials to ensure that the drug is meeting risk/benefit endpoints. In other words, the regulatory body wanted to make sure no hiccups occurred with the treatment when it hit the general population.

In response, Shire—who acquired the drug when it bought Roberts Pharma in 1999—chose to withdraw the drug as of September 30. The drug firm made it clear that the withdrawal had nothing to do with any safety concerns. In addition, Shire stated that it had conducted post-market trials in conjunction with Roberts, but FDA felt the results were “inconclusive.”

According to a release by FDA, none of the companies selling the drug have provided any data to prove that the treatment is beneficial. That said, some 100,000 people were treated with the midodrine hydrochloride last year alone.

“We’ve worked continuously with the drug companies to obtain additional data showing the drug’s clinical benefits to patients,” stated Norman Stockbridge, director of the Division of Cardiovascular and Renal Drugs in the FDA’s Center for Drug Evaluation and Research. “Since the companies have not been able to provide evidence to confirm the drug’s benefit, the FDA is pursuing a withdrawal of the product.”

FDA stated that patients currently on midodrine hydrochloride should not stop taking the medication. Shire now has 15 days to respond to FDA’s inquiry and provide some data supporting the drug. Shire did not respond to calls as of Monday afternoon. In addition, it’s unclear as to why FDA waited so long to ask for more data and whether any adverse reactions have been reported pertaining to the drug.

Crestor’s patent is not scheduled to expire until 2016. However, a group of generics firms had claimed that a substance patent (314) protecting one of the active ingredients in Crestor was invalid, and that other companies had the right to file abbreviated new drug applications for generic versions of the cholesterol treatment. AstraZeneca sued them when they filed the applications, and a judge agreed with AZ.

“We are pleased with the court’s decision upholding the validity and enforceability of the ‘314’ substance patent,” said David Brennan, AstraZeneca’s CEO. “The court’s decision reaffirms the strength of the intellectual property protecting Crestor.”

The defendants claimed that Shionogi Seiyaku Kabushiki Kaisha—the patents original owner—engaged in shady tactics to get approval from the US patent office.  The court, however, disagreed chalking any filing discrepancies up to clerical errors.

“The court is not persuaded that the evidence presented by defendants rises to the level of the clear and convincing evidence required to establish inequitable conduct,” said Judge Joseph Farnan, US District Court in Delaware.

“While in hindsight it may be attractive to construct a deliberate scheme of deceptive intent from the actions of these individuals given the success of Crestor in the marketplace, it is at least equally plausible from their testimony and the contemporaneous documentary evidence, that a scheme to defraud was the furthest thing from the minds of these individuals at the relevant time, and that their vision was limited to the overwhelming demands they faced daily in their severely understaffed department.”

The generics companies also argued that the patent should not stand because the substance could have been created by anyone. The judge disagreed, and stated “there was much skepticism in the industry concerning the safety of rosuvastatin and the court finds it telling that no other pharmaceutical companies attempted to create a comparable product despite research in the area and the economic incentives of entering an additional player in the statin market.”

Analysts predict that the generics firms will fight the decision, but none of the companies have made a public statement as of Wednesday afternoon.

The Japanese are taking a play from the US pharmaceutical industry’s rulebook and restructuring itself under the auspices of a fun catch phrase: “Transformation for a New Takeda.”

The punch line, however, isn’t too funny.

According to a two-year mid-range plan announced yesterday, Takeda will cut about 1,400 positions in the US to fend off loss of revenue due to looming generic competition. That number includes about 28 percent of the sales and marketing division and 20 percent of employees at the drug development center, according to Business Week.

Takeda’s billion-dollar blockbuster Actos is set to lose patent exclusivity in two years, and the company is still reeling from generic competition with its heartburn medication Prevacid.

Most of the job losses will be in the Chicago offices, particularly in the Deerfield and Lake Forrest offices and R&D center. According to the company, it plans to “shift to lean and flexible marketing organizational networks that can flexibly respond to changes in the business environment and product mix.”

“Takeda has experienced halted development in some pipelines and delays in obtaining drug approvals,” it stated in a release. “The company has therefore decided to respond flexibly to these changes in the business environment and ensure a sustained growth trajectory by developing and implementing a Mid-Range Plan starting in the fiscal 2010, one year ahead of schedule.”

Takeda is forecasting a net profit loss of 26 percent and a 4.5 percent drop in sales. The company is banking on a number of new products—primarily in metabolic/CV, oncology, and CNS. It currently has four new treatments filed, and another 10 in Phase II trials. The company expects to recover by 2016.

The Center for Business Intelligence, on Monday, revealed winners of its annual Strategic Patient Adherence Awards as part of its two-day conference about patient compliance with their drug regiments.

This year’s award winners are:

• Best Integrated Program—Shire Pharmaceuticals: FOSRENOL ON TRACK Direct To Patient Support Program
• Best Disease State Program—BMS/Sanofi-Aventis Canada & Rx Canada: My Plavix Partner Program
• Scientific Excellence Award—Merck: Medication Non-Fulfillment Rates and Reasons:  Systematic Review
• Innovation Award #1—Kaiser Permanente: B-Smart Program
• Innovation Award #2—Pfizer/Walgreens Patient Adherence Collaboration Project

Pharm Exec chatted with Robert Nauman, one of the judges and principal at Biopharma Advisors to find out more about the state of adherence programs in the drug industry.

Where is industry at right now with regard to adherence programs?

The pharma industry is at a point where they are falling behind other channels within the healthcare space in being able to provide adherence programs. The industry has never been very customer-centric over the past 15 years. They tried it, but struggled with customer-based programs.

That’s partly because their model is built around generating medical content. But that content is highly regulated. Today’s patients have very specific information needs, and we are seeing a trend towards behavioral-specific content that would move the needle for a particular patient.

Isn’t that positive for industry and patients?

Yes, but pharma is having a tough time getting behavioral-specific content through the FDA regulatory review process through a drug company. A lot of the adherence initiatives that are going on are marginally effective for two reasons. One, the content isn’t really valued by the end user; and secondly, none of them have been able to build programs of significant scale at this point in time. No one has ever reached a million patients through an adherence program. Some of these therapies have millions of patients on these drugs, but only register 15,000 people in the programs.

Are there any leaders in the area?

Healthcare providers like Kaiser, Partners Health, and MEDCO are really picking the ball up and running with it. Industries role is being relegated to a second string player. Also, I think collaboration/integration was a clear theme with all the award winners.

Shire’s On Track program was an integration of a lot of different marketing efforts that were designed as a multi-channel approach to improving adherence. It included targeted mailings, pharmacy letters, and a financial assistance program—all integrated in under an umbrella of a patient-support program that offered soup-to-nuts patient support.

There were a number of Canadian nominations this year; the Canadian branches of Bristol-Myers Squibb and Sanofi-Aventis won best disease state program. Is this trend telling?

This says something to the larger companies that tend to silo different patient initiatives and don’t tie them together. Because Canadian healthcare is national in scope, the programs they have must work together.

Can you talk a bit about the innovation awards?

The innovation awards were given to companies that we felt were fairly unique in some particular aspect of what they were doing. Maybe they didn’t fit into the criteria we were looking at in terms of best disease state program or best branded, but it helped evolve how we will look at entries in the future.

For example, Kaiser Permanente has a program that trains physicians and developed a process by which they could identify and target non-adherent patients for specific adherence interventions within the Kaiser Permanente system. They rolled this program out into their group in Southern California and had a significant impact in adherence rates in the patients that they ran through the program.

Why did you choose the collaboration between Pfizer and Walgreens?

Our second innovation award went to the Pfizer/Walgreens, which was interesting because Pfizer invested in the program but was completely hands-off and didn’t control it. It was Walgreens that made the investment to retrain its people to do motivational interviewing at the pharmacy counter. Rather than ask if a customer has any questions about a treatment, the pharmacist helps coach the customer about their disease and why it’s important to take his or her medication.

The program has shown an increase in adherence by 47 percent over the test group and proves that personalized interactions work.

Do you see things moving in the right direction?

I do, I just don’t think they are moving fast enough. There is also a rationale that industry shouldn’t be the only one paying for these programs, because adherence isn’t just a brand problem. One of the things we brought up at the conference was the concern over who will pay for these programs. Almost 75 percent of the medications dispensed today are generics and that is only going to grow. It shouldn’t just be pharma’s responsibility.

The move comes amid speculation that the President’s healthcare reform bill has stalled in Congress thanks in part to the recent Republican Senate win in Massachusetts. Tauzin was an integral part of the reform bill, both representing the pharmaceutical industry in negotiations and agreeing to cut prescription drug costs by $80 billion over the next 10 years.

Tauzin’s resignation also comes after the group spent $100 million in ads to support the President’s plan—money that appears to have been spent for nothing.

The bill was not mentioned in PhRMA’s press release announcing the resignation. Instead, it focused on the positive aspects of Tauzin’s tenure including the launch of the Partnership for Prescription Assistance program and his push for voluntary codes for direct to consumer advertising, as well as the establishment of rules for relationships between industry and physicians.

“Billy brought a new openness to PhRMA’s advocacy, ensuring that we partner with anyone willing to join us in our fight against disease,” stated David Brennan, chief executive officer of AstraZeneca and chairman of PhRMA. “We wish him the best as he turns the page on another successful chapter in his career.  With Billy’s strong leadership and commitment to PhRMA’s mission, the Board is confident that we can ensure a smooth transition to new leadership.”

No word yet as to who is being considered for the job.

Crafting consensus legislation on health reform depends heavily on all parties understanding precisely the terms of the debate. With the two House and Senate bills now topping out at more than 4,000 text pages, prospects for even a basic awareness of the implications of this reform for big pharma and society are dim. The unfortunate result is that ideology and punditry are today driving much of the discussion, orchestrated by interest groups with an eye on shaping the opinions of a restive public.

As always, money is the price of admission to the circus inner ring. The Center for Responsive Politics reports that health sector interests – ranging from the drug industry and insurers to organized labor and professional academic organizations – will spend $400 million by the end of this year to influence the reform legislation. This is a record in terms of any one piece of legislation before Congress, and for that the many who have invested resources in lobbying have scant assurance that their goals will be secured – or more important, maintained for the long-term.

The conclusion is to expect the unexpected. And to drive that point further, here are a few choice clichés about health reform and the realities likely to intervene to humble even the most confident of forecasters:

“Getting a bill passed will provide the certainty that investors need to secure their business.”  Signing a massive reform bill into law is but the first step of a mandated process likely to take years – well beyond the current business cycle.  Hence the impact of reform is virtually impossible to assess, except for the fact that more uncertainty involving one sixth of the US economy is unlikely to encourage the private risk-taking that creates jobs and tax revenues.

There is the obvious fact that for budgetary reasons much of the contents of the bill will not be implemented until 2014, midway through a President Obama second term.  What takes place first is the preparation of regulations to put flesh on obscure legislative language, and this will involve the participation of staff from at least 40 federal departments and agencies. And many changes with the largest impact on industry – including bundled payment schemes, accountable care organizations or activities to support biomedicines innovation – must be tested first as “pilot” programs. These require extensive negotiations with state and local governments as well as with industry; based on previous legislative history this can take as long as a decade.

Finally, there is a follow up legislative agenda for Congress, which according to the Democratic leadership will include hotly contested and commercially sensitive issues like coding reforms for Medicare reimbursement, due to the fact that the current system has not really been changed since the 1970s.

“Universal coverage for all Americans can be achieved without raising taxes on the middle class.” Reform will move the US closer to the ideal of the Euro/Japanese welfare state – that is clear. But the structural implication of financing this worthy goal over time is not addressed in the current legislation.  The best way to show this is to examine what the public in other OECD countries accept as the condition for maintaining social equity.  In all the major European markets plus Canada, Australia and Japan, the cost of health care is paid for through a mix of employer and employee contributions, dedicated taxes, general revenues, and, most importantly, a value added tax [VAT] on consumer purchases.  In most countries, VAT is applied to retail transactions at the staggering rate of nearly 20 per cent.  It’s a proven revenue raiser for expanded government; experience suggests that if the US wants universal subsidized coverage combined with continued quality care for aging baby boomers on Medicare, it will have to crack this nut, sometime in the next 5 years.

“More competition will be good for our industry.”  Examine carefully where such competition is applied: experience outside the US shows that competition-based reforms usually focus on the insurance sector, which is then compensated for by stronger government regulation of commoditized purchases like medicines. Countries where “market competition” has been endorsed as a broad reform objective – including the Netherlands and Switzerland – have actually tightened constraints on biopharmaceutical spending as a way to recover “savings” captured by the private sector in insurance.  Thus, for some segments of the health care supply chain, more competition leads instead to the opposite.

“We need a process where decisions on access to a new therapy is held separate from politics.”  This notion is commonly cited as justification for creating a new federal panel to evaluate the clinical effectiveness of alternative health interventions. Yet is this approach necessarily good for patients or industry?

Again, precedents outside the US show that when decisions are taken by “experts” immune to stakeholder pressure, fewer new drugs are made available to patients. In Quebec last year, the pharmaceutical industry hastily reversed its position on a new health technology assessment agency to be run exclusively by appointed bureaucrats after realizing it would lose its leverage as a key investor and job creator to shape actions taken by that body on provincial formulary listings. Politics may be as messy as making sausage but the ingredients are moldable and soft to the touch – not to mention quite tasty for those who can pay to watch.

“No enacted bill on health reform will incorporate costs into the evaluation of new medicines for public reimbursement.”  Regardless of the wording of the law, this barrier will be breached through application in practice, particularly once FDA and CMS begin cooperating in the collection and assessment of information provided by industry through the clinical trial process.

The history of the UK National Institute for Health and Clinical Excellence [NICE} bears repeating. Endorsed by the industry at its founding in 1999, on the basis of a guarantee that decisions would never incorporate pricing, NICE today is knee deep in what amounts to price negotiations through the euphemistically titled “patient access schemes” that effectively lower prices paid through the NHS to below list.

There is no contest between a piece of paper law and “mission creep:” once the bricks and mortar of a new federal Center for Comparative Effectiveness are in place, all bets are off because of the basic driving instinct of organizational self-preservation, which is to fill empty space with action.

In sum, the road to reform begins with a single step, but keeping pace will require the stamina of a marathoner – and the balance is likely to be off stride. The best advice in following the process internally is to ensure ongoing input from experts outside the US because in policy, the past is prologue.

Guest blog by W Scott Evangelista, principal, Deloitte Consulting LLP

Without committed leadership from the top of an organization, the best answers will not find the light of day, and the “my number is better than yours” issue will persist. The shackles of the past (standard reports with standard data) will inevitably bind companies to increasingly failing strategies. I believe it is time leadership embraces predictive modeling to enable better decision making.

So many companies when faced with gradual market shifts and increasing competition or strengthening barriers keep turning to old solutions and don’t recognize they are in the midst of new problems. Leadership with many companies react so slowly to change that the companies are often in dire straits before the mandate for change comes…usually from the newly appointed CEO.

The one advantage pharmaceutical companies have in leveraging predictive analytics is that most of them are so far behind the state of what is possible that they can learn quickly from other industries and adopt tested technologies to facilitate their rapid adoption.

If pharmaceutical leadership is not investing today in building robust capabilities in predictive analytics, they will soon be looking to leverage their vast experience on the lecture circuit.  Leadership needs to embrace the notion that analytics can help them create and find insights that will yield competitive advantage, and even if they don’t embrace it, they should at least be willing to do robust tests of the concept. In many ways, companies have been outsourcing these capabilities for years to vendors that do very robust statistical modeling and make recommendations on how resources should be allocated. This results in many companies getting the same advice (most use the same few vendors) and having no meaningful advantage.

It’s time for a change, the lecture circuit isn’t that interesting.

To hear other perspectives on how business analytics can be leveraged for a strategic advantage, you might want to check out the recent Pharm Exec Webcast in which I  participated on a panel Daniel Feldman of the Pharmaceutical Management Science Association, and SAS’s Patrick Homer.

Pfizer, on Wednesday, agreed to pay $2.3 billion to end a US Department of Justice investigation citing the company for illegal off-label marketing tactics related to a number of products. It represents the largest single settlement of its type for a pharmaceutical company, topping Lilly’s $1.4 billion Zyprexa settlement reached in January of this year.

Pfizer was accused by company sales representatives of encouraging promotion of the painkiller Bextra in doses beyond what the arthritis drug was sanctioned for, and at levels for which FDA specifically denied approval due to health concerns. Pharmacia & Upjohn Co., a subsidiary of Pfizer, also pled guilty to a felony count of fraudulent marketing.

Whistleblowers claimed that the drug company fully sanctioned off-label promotions on a number of drugs, even after warning letters were issued. One rep accused Pfizer of placating FDA after receiving a warning letter for Zyvox, yet the firm continued to allow reps to make claims to physicians that the drug was better than its far cheaper generic equivalent. 

The bulk of the money—$1.3 billion—will be used to settle criminal charges involving Pfizer’s promotional tactics, which the company pulled from the market in 2005. However, the DOJ ordered Pfizer to pay $503 million to settle civil charges of shady promotional activities. The breakdown is as follows: $301 million for Geodon, $98 million for Zyvox, and $50 million for Lyrica, as well as a $48 million in civil damages for payments given directly to physicians.

“This historic settlement will return nearly $1 billion to Medicare, Medicaid, and other government insurance programs, securing their future for the Americans who depend on these programs,” stated Kathleen Sebelius, Secretary of the Department of Health and Human Services.

Pfizer stated adamantly that it denies all of the civil allegations, with the exception of “certain improper actions” surrounding marketing strategies for Zyvox.

“These agreements bring final closure to significant legal matters,” stated Amy Schulman, senior vice president and general counsel for Pfizer.  “We regret certain actions taken in the past, but are proud of the action we’ve taken to strengthen our internal controls. We will continue to take appropriate actions to further enhance our compliance practices and strengthen public trust in our company.”

The $2.3 billion expense was accounted for in the company’s Q4 2008 earnings.

According to the report, The Eastern European Pharmaceutical Market Outlook to 2014, the main player in the region is Novartis, which led the market with $1. 5 billion in sales in 2007 thanks to the marketing of both generic and branded pharma products. However, the leading treatment in 2007 was Sanofi-Aventis’ Lovenox (enoxaparin) with sales of $152 million.

Traditionally, pharma companies have been quite successful in Eastern European countries; however, healthcare systems have become increasingly complex during the past few years. As a solution, governments have been attempting to reduce costs by launching healthcare reforms. Many countries have now introduced regulated health insurance systems to replace state-controlled healthcare, and the Czech Republic and Slovenia have also opened up health insurance markets to competition from private insurers. This move to curb pharmaceutical expenditure could lead to new opportunities for pharma companies involved in the manufacture of generics.