Pharma Reform

As a first time author and publisher it’s been an interesting road from drafting, writing, and editing to finally publishing Pharmaplasia™.  Fortunately I had some fantastic professional help putting it all together.

My intent was to call out the historical missteps of the pharmaceutical industry, provide some deeper organizational and business insight (rather than superficial sensationalized hype) as to why they happened, and identify a better path forward for pharmaceutical companies, especially in light of the evolving new healthcare market.   After a year and a half of grueling long hours of writing and editing I was told the work really begins after you have your book written and published.   I was stunned but can now tell you they were absolutely correct.  Marketing and selling books  is challenging and time consuming.

Recently,  a customer who was interested in purchasing a bulk supply for their pharmaceutical company alerted me to the fact that my book cost $49.99 on Amazon.  At the time I only had the Kindle e-book version available on Amazon for $9.99,  so I was totally confused.

So I searched Amazon.com and to my surprise, in addition to my Kindle version,  Pharmaplasia™ was listed as a “Collectable” (presumably because it was a signed paperback copy) and it was (and as of today,  still is) priced at $49.99.  Anybody who wants a signed paperback copy can send me a check for $49.99 and I’ll be happy to send you a signed paperback copy.

So last week I put the paperback copy up for sale at Amazon for $19.95 (plus shipping and handling) and unintentionally started a price war with my own book.  Within days, somebody decided to offer “new”, “never opened” paperback copies for $19.90.  This is really interesting because I have the inventory in my house except for those that I have sold (mostly through my website) or provided for review purposes or to friends and family.

So you don’t have to spend $49.   Pharmaplasia™  only costs $19.95 (plus shipping and handling) for the paperback and $24.95 (plus shipping and handling) for the hardcover.  Both are available by clicking on the Buy Now button to the right on this website.  The paperback and Kindle version are also available at Amazon.com.  And for those interested in discount pricing for bulk purchases for your group or company, please shoot me a note mike@pharmareform.com and I’d be happy to work with you on pricing and delivery.

mike@pharmareform.com

The US government driven (CMS, Centers for Medicare & Medicaid Services) incentivized push for electronic health records (EHRs) has mostly focused on the business logistics of tracking healthcare delivery and associated costs.  And while the proposed Accountable Care Organization concept deepens the utility of EHRs to include quality and clinical outcome performance metrics they also have implicit goals for managing and controlling costs.  Under the guise of better healthcare at lower cost, my impression is that most healthcare systems are probably looking at this more in the context of making sure CMS or insurers are comprehensively billed and that they have a way to verify billing accuracy and any incentive payments have been rightfully earned.

I wonder if we will ever get to a point of exploiting the clinical information hidden in these electronic data files.   Could EHRs ever lead to better real world data to support evidence based medicine?  With millions of patients in the “real world” data sets over an extended period of time you would think that figuring out “best practice treatment guidelines” would be better served than by a couple of clinical trials with a few hundred or even a couple thousand carefully selected patients studied over a relatively short period of time.  Want comparative effectiveness?  You would think this could be determined with the electronic data on thousands if not millions of patients rather than a small statistically designed trial in a single institution or small number of sites.  EHRs could also be useful for identifying treatment trends or determining where companion diagnostics might be most helpful.

The challenges of HIPAA compliance, research regulations, and bioethical considerations are beyond my area of expertise but I feel it would be a unfortunate if they stood in the way of being able to use this valuable information.  There must be ways to design and execute this type of research without compromising patient confidentiality and ensuring patient safety.  I also appreciate the pitfalls, limitations, and scientific critiques of retrospectively data mining to assess and evaluate clinical data.

The value of EHRs goes well beyond the financial implications and benefits.  To realize their clinical potential the data must be accessible; it must be analyzed and accurately interpreted.  This will require a new breed of clinicians with specialization in the design, execution, and reporting of EHR clinical study data.  Clinical interpretation of the data will require therapeutic area expertise, an appreciation for statistics, and a comprehensive understanding of the data set and the nuances of the data limitations.  These are not part-time jobs but rather new job functions (staffed with expertise) that add cost to healthcare initially with cost benefits coming in the form of more cost effective, better treatment outcomes in the future.

The danger will be in executing poorly designed,  “quick and dirty” reviews and clinical assessments without expertise which can lead to misleading or wrong conclusions and potentially adverse or costly recommendations … purportedly supported by data.   mike@pharmareform.com

Comparative effectiveness studies like the recently reported SATURN study comparing Crestor^® (rosuvastatin) with Lipitor^® (atorvastatin) sponsored by AstraZeneca may on the surface appear to be a big win for patients (and prescription drug providers) especially those awaiting generic versions of Lipitor (anticipated by the end of this year).  The reported preliminary topline results show a numerical advantage favoring Crestor but no statistically significant difference in the primary endpoint of the study (change from baseline in percent atheroma volume (PAV) in a ≥40 mm segment of the targeted coronary artery as assessed by intravascular ultrasound).

The apparent implication from these results is that there is no difference between Crestor and Lipitor and therefore, when available, generic atorvastatin will work just as well as the brand Crestor.  Extrapolating this “no difference” conclusion for a single endpoint to the totality of efficacy for atorvastatin could result in significant cost savings for patients and providers of prescription drug benefits.  You would think this is great news for patients but I believe the ramifications of this study go well beyond cholesterol lowering agents and the impact on future sales of Crestor.

Because of the investor interest, high media visibility, the enormous healthcare cost savings potential, and the mass market served by cholesterol lowering agents I believe there will be significant fallout from this study that is not necessarily beneficial to patients.

First, there are undoubtedly going to be patients who could benefit from Crestor rather than atorvastatin but who will not be given that option.  Smaller patient populations may never be studied well enough to determine if there really are patients who might benefit from one product or another in the face of large comparative trials showing no statistically significant difference.

Second, company executives have always been, but will now be even more, reluctant to sponsor comparative effectiveness studies for established products even when they feel they have an opportunity to demonstrate a difference (as I believe was the case for AstraZeneca).  The requirement for “statistically significant” clinically meaningful differences may be too high a hurdle (and represent too much risk) when complex trial designs are expected to prospectively identify a specific primary endpoint for a patient population with considerable variability.  We may, in an ideal world, feel we know enough about biology, disease pathophysiology, pharmacology, and the nuances of patient populations to be able to precisely design these definitive trials, but we probably don’t for most diseases.

Third, pharmaceutical companies may prematurely stop developing drugs they feel might not be able to demonstrate statistically significant differences to available therapeutic agents.  This would have been a catastrophe for antivirals HIV/AIDS treatments which we now know work best as cocktails of several products rather than one being “statistically  significantly “ better than another.  To further complicate this, regulatory approval studies are designed to establish efficacy and safety, not superiority.  I believe the need for demonstrating a statistically significant difference to meet market expectations and regulatory requirements for making a superiority claim (or to potentially gain approval) will make drug development near impossible where products already exist and efficacy is well established.

And if you are thinking about developing an as effective but “safer” product, good luck.  Regulatory requirements for claiming “safer” are even more challenging and from what I have seen, near impossible.

Lastly, this market expectation for demonstrating “superiority to available treatments” and regulatory requirements for making those claims, I believe will result in fewer therapeutic options for treating specific diseases (think antibiotic drug development over the past decade).  We are getting to a point where if a product is already available to treat a disease,  clinicians and payers want to know if your new product is better.  You would think this is not an unreasonable expectation, but it is an expectation that increases the cost, complexity, and uncertainty of drug development.

At the same time, pharmaceutical companies that demonstrate statistically significant differences for their branded products in comparative effectiveness trials will be able to command “super premium pricing” with an almost monopolistic “treatment of choice” position for the duration of their patent.  When a product demonstrates a clear benefit (statistically significant) over other treatments the bar is  raised for subsequent new products to demonstrate statistically significant superiority.  For products with trial supported superiority, regulators will have no choice but to allow superiority claims,  physicians will have little choice but to prescribe the product, and payers will have little choice but to provide reimbursement.  Unfortunately,  this also dampens drug development interest in therapeutic categories that already have well established “treatments of choice.”

And while we may have more effective and potentially safer products in the future,  if you think prescription drug prices are high now, just wait for these products that establish “treatment of choice” with clinically meaningful statistical differences.    mike@pharmareform.com

Have things changed that much or have sales reps with the help of their lawyers just figured out how to characterize the pharmaceutical sales representative position so as to align their cases with the FLSA definitions for “non-exempt?”  Granted, it has been a while since I have been in the field (as a rep or riding along) but I always felt pharmaceutical sales reps were pretty autonomous, responsible, and accountable for “selling” the company products (legal and regulatory constraints considered) and “managing” the business in their territories.

Ok.  I’m not an attorney but the recent U.S. District Court ruling (Kuzinski, et al. v. Schering Corporation, Civil No. 3:07cv233 (JBA), August 5, 2011) would seem to suggest that all pharmaceutical representatives will have to be classified “non-exempt” hourly employees and be eligible for overtime pay.

By the courts’ strict interpretation of the FLSA (Fair Labor Standards Act) definition, pharmaceutical representatives do not actually make sales. Basically, they do not “consummate sales or obtain contracts or orders” or “binding commitments for purchase” from the physicians they call on and therefore do not qualify for the “outside sales exemption.”  This is hard to argue when a Department of Labor FLSA literal definition for prescription drug “sales” would only occur at the pharmacy or within the supply chain (e.g., wholesalers, chain pharmacies, buying groups, and hospitals) through negotiation, contract, and transaction activities that do not directly involve pharmaceutical representatives.  Despite arguments about the regulatory requirements dictating the role of physicians in the prescription drug sales process, without a lenient interpretation (consideration for regulatory and prescription drug market limitations) of the FLSA definition, it is unlikely that pharmaceutical representatives could ever qualify under the “outside sales exemption.”

The court’s interpretation of “administrative exemption” as it pertains to pharmaceutical representatives, however, is even more disconcerting.  It seems that if you do any training, supply any company developed sales materials or territory management assistance, or provide any management oversight, the courts will determine that “the primary duties” of pharmaceutical representatives do not include the “exercise of discretion and independent judgment with respect to matters of significance.”  This would suggest that the only way to qualify for the “administrative exemption” is to make sure pharmaceutical representatives have complete autonomy (totally independent of any corporate input), do their own training and planning, do whatever they want in the territories that they define as theirs (on their own with no physician or account data supplied by the company), decide and say what they want about the products they choose to promote, and are not managed or supervised in any way.

While this may sound absurd, this is not meant as a sarcastic commentary and certainly is not meant as legal advice but rather a practical observation of how the courts seem to be interpreting the FLSA definitions for “outside sales” and the “administrative exemption” as they pertain to pharmaceutical representatives.  As a result, if the courts continue to rule on these grounds,  I believe pharmaceutical companies will have little choice but to classify pharmaceutical representatives as “non-exempt” hourly employees and will be forced to implement some of the types of tactics discussed in an earlier post.  mike@pharmareform.com

One would think that by implying your prescription drugs keep people healthy and out of the hospital you could also imply and conclude that drug treatment will lower overall healthcare costs for those patients.  The pharmaceutical industry has implied this for decades.  And, this may actually be true in many cases but the evolving new healthcare market is becoming much less receptive to what would seem to be obvious and will be demanding more and better data to support any claims of improving clinical outcomes at lower cost.   Interestingly, some healthcare providers have already determined this is not just a pharmaceutical industry issue.

For example, pharmacists for years have claimed that they can help patients avoid medication errors and improve patient care through patient counseling and follow up.  They are often the only healthcare provider with that opportunity once a prescription is written, especially for chronic conditions.  Seems logical that pharmacists obviously play an important role here.  But then you read the recent study that suggests that mail order pharmacies may do a better job of lowering costs while improving clinical outcomes than local pharmacies.  Whether or not this study can be replicated or validated remains to be seen but it represents how it is going to be better to have data to support your position than to rely on implication.  Think about pharmacists who now are trying to make their case for improved clinical outcomes with counseling at the local pharmacy.  What data do they present to refute this mail order study?

Similarly, Express Scripts® recently reported on several research studies that demonstrate the ability of Pharmacy Benefits Managers to lower costs and improve clinical outcomes.  Again, even as part of the “managed market,” Express Scripts® felt compelled to support their benefits claims with data.

Why is this important?  Because pharmaceutical companies who still feel they can use traditional marketing and sales advertising and promotion to imply being able to lower costs while improving clinical outcomes  without actually having the data are going to have a much more difficult time convincing decision makers and selling their products.  More importantly, pharmaceutical companies that develop the real world data to support their claims for improving clinical outcomes and lowering overall healthcare costs (and not just shifting costs to another part of the healthcare system), will find a more receptive audience and create a significant competitive advantage.

We are entering a time where the healthcare market will expect you to prove (“show me the data”) that you (as a healthcare provider) or your products or services are delivering demonstrated (data driven) real world clinical outcomes that reduce overall healthcare costs.   mike@pharmareform.com

Several courts have now determined that pharmaceutical sales representatives should be considered “non-exempt” hourly employees and therefore are entitled to overtime pay.  In coming to this conclusion the courts agreed with the pharmaceutical sales representatives who filed the suits claiming they were not sales people or professionals exercising discretion or independent judgment as defined by provisions of the Fail Labor Act for “exempt” employees.  If the courts continue to hold these findings to be true, here are some new work rules “non-exempt” pharmaceutical representatives can expect to see:

•  Your work day is expected to be 8 hours per day Monday through Friday between 7am and 6pm.  You must not work more than 8 hours per day or more than 40 hours per week without prior written approval from your District Manager.

• Working weekends (Saturday or Sunday) or holidays is prohibited unless you have prior written approval from your District Manager for a particular weekend or holiday requiring your presence for work related activities.

• You are expected to “clock in” using your iPad when you leave your home for work and “clock out” when you have completed your 8 hour work day.  You must plan to complete your 8 hour work day with arrival back at your home.  You can chose to complete your 8 hour work day in your territory but that will be your choice and you will be on personal time after the point you “clock out.”   Use of the company car from that point to the return to your home must be recorded as personal miles .

• If you receive emergency customer calls (you are not to make customer calls except in response to their call) outside your work day hours, you are to record those (caller name, time of call, purpose of call) in your weekly activity report and include the time in your time log.  You will have to adjust your subsequent work time so as not to exceed the 40 hours per week maximum.

• Failure to “clock in and out” may result in loss of pay for that period of time.  Repeatedly “forgetting to clock in or out” may result in disciplinary action including the possibility of termination.

• You may take personal time during the work day as long as you put in your 8 hours between the hours of 7am and 6pm.  You must clock out and back in for all personal time taken during the work day.  Other than clocking out and back in, you do not have to provide any information regarding personal time activities.

• If you plan to take more than 2 hours of personal time during work day hours (7am to 6pm) on any one day you must get prior approval for a vacation day.

• You will be gps tracked to verify time and location for all work related time during your work day.  This will also be used to verify mileage for business versus personal use of the company car.

• You are required to clock out and back in for your mandatory 15 minute breaks, once in the morning and once in the afternoon.  You can not skip breaks or combine break times. You are not to do work related activities during your breaks.

• You must clock out and back in for your mandatory 1 hour lunch break during which you are not to do work related activities.  You can not skip your lunch break and your lunch break must be taken daily between 10am and 1pm.   If you do a work related food activity with physicians or office staff during lunch time, this can not be your lunch break.

• Nobody, not even your District or Region Manager or the VP of Sales, can require you or request that you do work related activities when you are clocked out, including for breaks and lunches.

• Because all work related travel time counts against your 8 hours per day and 40 hours per week, all territories will be reevaluated and realigned where necessary to minimize travel requirements.

• Where possible, all company required meetings will now be by teleconference or video conference to avoid travel.

• You will not be expected or allowed to travel outside your territory to attend any medical or scientific meetings or conferences, if it means you will exceed your 8 hours per day of work.

• District meetings will be kept to a minimum and centrally located to minimize travel for all attendees.  District meetings will be structured to an 8 hour work day with the mandatory “non-business-related” breaks and lunch for which you must “clock out and back in”.  You will be required to take your lunch break and can not do any work related activities during your District meeting lunch break.   So as to not encourage work related activity during District meeting lunch breaks, you will be expected to determine where you would like to have your lunch and pay for your own lunch.  There will be no District meetings requiring overnight stays.

• Any travel outside your territory, except for District Meetings, will require prior written approval from your District Manager.  If travel time requires you to take more than 8 hours per day to attend and return home from a District meeting, you must have prior written approval from your District manager with the anticipated “Overtime” required to make the meeting.

• Only company provided training programs will be considered “work related” required training for which work day time will be allotted.   Any additional training, reading, or research you choose to do with regards to your job or career development will be your choice and done on your personal time.  These “extra” activities will not be required and are therefore “on your own personal time.”

• You will be allotted 2 hours of “work time” every week to take care of any company required administrative tasks (e.g., expense reports, weekly activity reports, or planning) or training. You must be clocked in during this time.

• Your biweekly pay will be automatically calculated from your time sheets captured from your “clock in and clock out” data.

• Any exceptions to these work rules must be identified upfront with the anticipated number of “work hours” involved, any anticipated overtime hours identified, and must have prior written approval from your District Manager.

• Failure to comply with any of these new work rules will result in disciplinary action including the potential for termination.

I am not espousing these rules and I have probably missed a few.  I’m not an attorney but I tried to look at what pharmaceutical companies might have to do to avoid further Fair Labor Act liabilities by establishing work day expectations and accurately tracking and recording work hours for pharmaceutical representatives who are considered “non-exempt” hourly employees.

Of course, the company will have the choice to just pay the overtime when they want to make the exceptions for business reasons.  But, to manage overtime pay and not have it be abused or extended beyond financial feasibility and to avoid litigation, these types of work rules will almost certainly be required.  One could also argue that these work rules are necessary to protect the “non-exempt” pharmaceutical representative from being taken advantage of by management.

While I’m sure some reps may be applauding the overtime pay rulings, I see this as an unfortunate situation, fostering a distrustful work environment with a demoralizing outcome for “professional pharmaceutical representatives.”  How disappointing that it has come to this.    mike@pharmareform.com

Now you can take over 100 PharmReform articles with you and have it with you in the new Kindle version e-book format.

PharmaReform.com has explored a broad range of challenges and issues affecting the pharmaceutical industry.  The intent of the blog posts has been to encourage and  stimulate thinking about how to address industry shortcomings while finding more patient- and healthcare customer-friendly approaches to marketing and selling prescription drugs in an increasingly complex business environment.  The management and leadership challenges of running a drug company make for stimulating discussion with plenty of opportunities for improvement.

Reviewing the functional  diversity of running a drug company from manufacturing to research, the author provides an industry insider perspective to the commentary, suggestions, and recommendations for transforming drug companies into innovative profitable businesses in the evolving new healthcare market while reestablishing public trust and credibility.

Over 100 blog post articles, organized by topic (see Table of Contents),  are included in this e-book format (Amazon’s Kindle) providing readers who prefer them in this handy, easy to retrieve, convenient portable document.   mike@pharmareform.com

While it is hard to argue that you don’t need money to discover innovative new treatments for all the complex diseases that continue to cause illness, disability, and even threaten life.  At the same time, Big Pharma has shown that merely throwing money at discovery research won’t necessarily deliver the results you might expect.

As evidenced by many academic researchers and their teams, it is possible to discovered relevant disease targets and disease altering compounds with far fewer research dollars than Big Pharma has been spending over the past three decades.  Big Pharma R & D budgets, however,  are a misleading indicator of investment in innovation.   In other words, when Pharma holds out the total amount they are spending on R & D ($68 billion), you have to know that only about 30% of that is for discovery and preclinical research.  Still billions of dollars for a disappointing drug discovery return on investment.

Here is another way to look at pharmaceutical innovation productivity.  Let’s say the average Big Pharma has a $1 billion per year to spend on drug discovery and preclinical research.  How do you think that compares to what academic labs (or start up biotechs for that matter) have to spend on discovery research?  Maybe a couple million dollars they have secured in government grants?  Yet, dollar for dollar, who’s delivering the innovation? And why?  An increasing number and percentage of innovative new drugs are being discovered in government or government funded public laboratories.

While they may have less money to work with, academic labs have three essential ingredients that increase the probability for innovative drug discoveries;  expertise, time, and a passionate focus for a comprehensive understanding of the science behind their work (e.g., disease, pathophysiology, biochemistry, and molecular biology).

This is not to say that all Big Pharma researchers lack these essential ingredients.  But even if they do have them, these attributes are mitigated by the distractions of organizational expectations, bureaucracy,  and time pressures to deliver compounds rather than understanding the science.  Perhaps most importantly, expertise in Big Pharma is often rewarded with more work (projects, administrative duties, or increased management responsibilities) that removes (mitigates) the expertise, or at least the focus of the expertise, from the day to day work of discovery research.

Sure, more money can facilitates innovative drug discovery but without expertise, time, and a passionate focus on the science, don’t expect to fill your pipeline.    mike@pharmareform.com

In an earlier post we discussed the role of the clinical pharmacist in the evolving new healthcare market.  Medication therapy management as required by CMS as a part of Medicare Part D plans is a good example of where and how pharmacists can and are expected to help improve adherence and therefore clinical outcomes while potentially lowering overall healthcare costs.  Given the healthcare failure statistics we  previously discussed it’s hard to imagine that medication therapy management really gets all that much attention from pharmacists or pharmaceutical marketers.

A recent featured article in Health Benefit News highlights the success WellPoint has experienced in a pilot program to enlist and pay pharmacists for more attentive “medication therapy management.”  They were able to demonstrate increases in adherence which not surprisingly translated to better control of disease symptoms for hypertension,  hyperlipidemia, and diabetes mellitus.   While pharmacy costs went up they also “saw a great reduction in hospitalizations.”  Overall, in the one year study, they saw cost neutral results, but concluded “it’s going to take more than a one-year time frame to see dramatic changes in cost.”

The healthcare market (with pressure from government, payers and insurers) is getting more aggressive about delivering better clinical outcomes as one way to help increase quality and lower the cost of care.  So whether it is through Accountable Care Organizations, Integrated Healthcare Systems, or just enhancing outcomes from solo or group practice settings, I believe pharmacists will play an increasingly important role in medication therapy management, especially adherence-enhancing programs.   Pharmaceutical marketers who view the retail or hospital pharmacist as merely a dispenser of medications and cursory counseling will be putting their products at risk of competitive erosion and never meeting their full commercial potential in the evolving new healthcare market.

So what’s a pharmaceutical marketer to do?

Well, how many pharmaceutical marketers have assessed (not just mentally speculated) how their product might perform in this type of a trial or study?  How many have commissioned similar types of studies?  How many marketers have partnered with healthcare provider systems to determine the adherence value (clinical outcome differences) between adherent and non-adherent patients and what the value proposition could be?  How many marketers have actually met with pharmacists about their evolving role? How many have started to work with pharmacists on developing educational programs and materials for their products?  How many have pharmacist training programs for their patient education programs?  More importantly, how many pharmacists are considered high priority calls for your sales representatives?

I think I just heard somebody say…”of course we are doing all this.”

Great.  Now, are you doing it as  just another marketing tactic?

I might suggest that if you are doing it to genuinely help patients, pharmacists, and healthcare provider systems achieve their goals, you will find a much more receptive audience, ready to embrace your efforts and make meaningful contributions to your product success without feeling compromised.      mike@pharmareform.com

The internet and it’s applications like Twitter have created a seemingly endless source of timely information.   Sorting through the noise however to get to tweets that can help and get you the information you really need can be a real challenge.  This is especially true in the world of pharmaceuticals, biotechnology, and healthcare.   In a previous post I listed my top 10 internet sources but only mentioned a couple of helpful Tweeters.   While I follow only a small number and I’m sure there are plenty of other good tweeters,  those who seem to have consistently delivered content or links that have been helpful in keeping me current include (no particular order):

@ChristianeTrue

@kevinmd

@matthewherper

@Pharmalot

@Pharmaceutical

@cafepharma

Who do you follow that is really helpful in keeping you current?  mike@pharmareform.com