Five Irreparable Mistakes made by Pharma

Over the past several decades the Pharmaceutical Industry has made more than its fair share of mistakes but there are five that may be irreparable.   These mistakes that will be near impossible to correct, even in the long term.

  1.  Taking  manufacturing for granted

Pharma executives still don’t get it.   cGMP – compliant pharmaceutical manufacturing is difficult and requires expertise.  It also takes considerable investment to support the quality systems and to maintain operationally.  Pharmaceutical companies often looked to manufacturing for cost cutting opportunities disguised as challenges for operational efficiencies.  Some found outsourcing to be the answer to lower costs and a way to abdicate responsibility.  Others merely delayed repairs and maintenance, reduced labor costs (e.g., hire lower cost, inexperienced technicians and supervisors) or shortcut quality.  And now we wonder why the industry is plagued by seemingly endless episodes of FDA interventions, product recalls, and plant closures.

  1. Valuing “talent” and organizational savvy over expertise

Compensation has been driven by getting promoted, not by the expertise you brought to the table.  People skills, slick presentations, and “managing up” were critical success factors for corporate ladder climbing.  For some it was being lucky enough to be on a blockbuster product team or having a sales territory that embraced private practice over managed care.  Broad general management was valued more than individual contribution as an expert.  For example, wouldn’t you think that individuals who discovered the blockbuster products or figured out how to deliver them safely would be compensated as well as some of the executives who benefited financially from those discoveries?  Without expertise you don’t discover breakthrough products, you can’t consistently manufacture cGMP- compliant products, you can’t run efficient organizations, you can’t be a credible source of information, and you can’t rebuild public trust and confidence.

3.      R & D focus on “development “ rather than discovery research

Just find a patentable compound that has some disease modifying affect that is safe enough to get through the FDA and get it to market as fast as possible.  Fill the pipeline so the CEO can brag to Wall Street about the number of projects in the pipeline, regardless of their real clinical value.  But drug development, while expensive, is the easy part.  Drug discovery is the hard work.  I’m not talking about the simple  “hit and miss” screening for activity.  Finding that new breakthrough product with clinically meaningful benefits for patients requires multidisciplinary expertise, a comprehensive understanding of the underlying pathophysiology of the disease, and takes a long time to produce results.  Most of Big Pharma no longer has the expertise or “know how” to do drug discovery well or efficiently.

  1. Abusive customer practices

If unethical and illegal marketing and sales practices were not enough to erode public trust and confidence in the industry; abusive pricing practices have certainly done so. Desperate patients have been subjected to expensive therapies that, for many, caused more harm than good.  In many cases, the drug companies knew full well they were profiting not from helping patients but rather by putting patient health and safety at risk.  For all the good the industry has done, most patients and the healthcare community don’t care anymore because they no longer trust the industry.

  1. Wasteful spending

Lack of money was never a reason not to do something, including building organizational empires, ramping up sales organizations to tens of thousands of individuals, spending billions on ineffective Direct to Consumer advertising, and billions on promotional “medical education” lunches and dinners.  Tens of billions were spent on R & D that resulted in more “me too” products than true clinical breakthroughs.  And when a Big Pharma got desperate to show growth they spent tens of billions to acquired another struggling Big Pharma at a premium price only to dismantle the acquired company, pay exiting executives lottery size bonuses for getting the deal done, and promising investors long term better results which never came.  We’ll never know what good could have been done with the hundreds of billions of wasted money over the past couple of decades.

The cumulative impact of these mistakes is enormous.  And, as much as these seem like they could be fixed, the damage has been done. What’s most depressing is that the executives managing drug companies contributing to these mistakes were handsomely rewarded for these industry-destructive behaviors.

So, has the pharmaceutical industry done anything good?  We’ll look at that in the next post.   mike@pharmareform.com