Category Archives: Pharma company reforms

drugs

Big Pharma R & D Failing

Research and development … innovative new drugs … “the life blood of the pharmaceutical industry.”

Tens of billions spent on research and what does Big Pharma have to show for their investment?  What do the multi-million dollar a year CEO’s and executive teams have to show for their brilliance in delivering the much needed new treatments they keep promising?   Not much, according to the FDA calendar for 2013 drug approval decisions chronicled in a recent article by Seeking Alpha (http://tinyurl.com/qjdyc3m).  Moreover, based on their pay and bonuses (http://tinyurl.com/p57yt5o) CEO performance reviews obviously do not put much importance or weight on drug discovery or approvals. 

Here’s my assessment.

From what I could determine, only five drugs (suvorexant, dabrafenib, tivozanib, dolutegravir, trametinib) discovered and developed by the sponsors are what I would consider “new”.  GlaxoSmithKline developed and sponsors three of those five drugs and one was developed and sponsored by Merck.  Two new drugs (efinaconazole and sofosbuvir) were acquired and then developed by the sponsors, Valeant and Gilead.

Six additional drugs scheduled for FDA decisions in 2013, are merely reformulations or new delivery systems for already approved drugs.

And finally, there are five,  already approved drugs,  awaiting new or expanded indications. 

Think about that for a second.  Tens of billions of dollars spent on R & D and technology acquisitions every year for decades and only seven new drugs.   Every year PhRMA touts the thousands of new compounds in development, several hundred by disease state.  How many Big Pharma company executives get up at the never-ending investor conferences to brag about their pipelines of new drugs coming?  With more than a thousand drug or biotech companies, spending tens of billions of dollars year after year and we only get seven new drugs?

I would also point out that, from my perspective, only Merck and Glaxo qualify as Big Pharma.  Ok, Pfizer is in the joint venture on dolutegravir, but still.  Even if you throw in Cubist and Gilead, where are the rest of the Big Pharmas? 

This is a sad commentary on disastrous pharmaceutical R & D productivity (and the lack thereof). More importantly, it’s a very scary picture for investors and worse for those with diseases for which there are few or no therapeutic options.

Perhaps Pharma will figure out that it is not more money that delivers breakthrough new treatments.  Focused, high-level basic science expertise (not just academic degrees) and a deep multi-disciplinary understanding of the target disease are required to crack the drug discovery code.  Unfortunately, for the past couple of decades, Big Pharma hasn’t valued discovery research. They would rather just write a check than do the hard work.  And the results show.

How Bad Behavior Evolves in Pharmaceutical Companies and Probably Other Big Businesses

There appears to be an interesting pattern of corporate behavior that seems to evolve over time and accelerates with the need for executive incentive compensation driven financial performance (sales growth). This behavior is especially noticeable in larger organizations and is government protected if your behavior is within a large corporation (too big to fail).

Whenever there is a need or demand for more robust financial returns, the evolution advances another step.  Here is the progression of behavior that seems to transpire in the context of Pharmaceutical industry executives but it probably applies to other industries as well (think investment banking). So, here’s how it goes…

We have a great product that really can help people.  We have the resources to  make sure physicians and patients know about it, know how to use it  appropriately and safely.   We want to be credible in the market and trusted so let’s  make sure we are ethical about our marketing and sales.

This evolves to…

There is a much bigger market for this product than we are currently capturing …  we’ve probably been to conservative in our promotion so what do we need to do to grow this product even faster?

The plan sounds good,  as long as we have the regulatory language to market it that way.

It looks like it should be ok from a regulatory perspective if we present it like this so we can argue it is our interpretation of the package insert language.

Still need more sales…

OK, it may be questionable from a regulatory perspective but is it legal?  We can  deal with a warning from the FDA if it comes and we’ll probably end up in lengthy but inconsequential litigation to determine if it really is illegal  …  so let’s go with it.

Wanting more sales…

Nobody has called us on our marketing and sales activities yet so what else can we do?

Ok, not sure if this is really illegal but even if it is … what are we facing here?   We might have to pay a fine or something … but nobody’s going to jail.

Notice how fast “ethical” gets dismissed without much thought.

In the end, money and greed protected in the labyrinth of  “Big Corporate” decision making drive this scenario.  For those who want less regulation and less legislation, you can expect even more aggressive business practices.  Without strict enforcement and personal (not corporate) accountability with behavior deterring consequences, regulation and the law are meaningless.   mike@pharmareform.com

Drug Developers: Putting on a Show at JPMorgan Healthcare Conference

Each year there is considerable excitement, behind the scenes deal-making, networking, and of course, 4 days of never ending executive presentations at the JPMorgan Healthcare Conference. This year will be no different.  Over 400 company presentations (the overwhelming majority from Biotech and Pharma company executives) proudly highlighting accomplishments of the past and pipeline promises for the future, all with the caveat of “forward looking statements.”  Virtually every company in drug development that comes to JPMorgan each year declares they have strategically honed their pipelines filled with promising new agents for diseases with significant unmet medical needs.

Granted, not all the JP Morgan presenting companies are working on drug development.  Some are medical device companies, healthcare systems, pharmacy chains, distributors, or contract support companies to the biotech and Pharma industry. Without going through and deciphering which of the more than 400 companies are actually working on drug development, it’s at least 200 and probably closer to 300 of the presenting companies.  So what’s my point?

Unfortunately, all the JP Morgan presenting drug companies collectively delivered less than 35 FDA drug approvals in 2012.  In fact, 12 of the approvals came from companies and organizations not even presenting at JP Morgan this year.

35 approvals is not a very impressive number, especially when you consider the tens of billions of dollars spent each year on drug research, the hundreds of thousands of scientists and clinicians engaged in drug development, and the number of companies professing to have promising new drugs in development.

mike@pharmareform.com

What did Big Pharma contribute to 2012 New Drug Approvals?

I’ve read several press releases over the past couple of week announcing and interpreting the significance of FDA drug approvals over the past year.  Most give you the impression that the results are encouraging and suggest Pharma R & D is in recovery mode.  Traditional PhRMA bragging points of spending more than $60 billion per year on R & D, the thousands of compounds in development, and hundreds of innovative new medicines approved over the past couple of decades are, however, somewhat tempered by the reality of the recently reported drug approvals, especially for Big Pharma.  I don’t mean to downplay the challenges of drug discovery and development but it’s important to look beyond the total number of approvals to determine what that number really represents.

A closer look at the list of 35 FDA approved drugs for fiscal 2012 (October 1, 2011 to September 30, 2012) reveals rather dismal R & D productivity and lack of innovation that has haunted Big Pharma for the past several decades.

First let’s put 35 new drug approvals into context.  These new drug approvals were the results of decades of  hundreds of billions of dollars invested in research being done at or by more than a thousand Pharma and Biotech companies as well as thousands of government and university laboratories.  Pharma reminds us frequently of the hundreds of compounds in development for different diseases.   Yet, only 35 new products in 2012 … not very impressive.   Also interesting to note is that there are 31 different sponsors for the 35 New Drugs Approved.  So out of more than 1000 pharma and biotech companies out there, only 31 entities got a drug to the approval list.

The list better reflects the importance of smaller research organizations in discovering and developing new drugs.  Depending on how you define Big Pharma (e.g., are Gilead, Forest Labs, and Astellas Pharma considered Big Pharma?), you may end up with slightly different numbers but Genentech/Roche, Bayer, and Sanofi contributed 4 of the 12 “Priority Drug Approvals”.  More to the point, of the 35 drugs listed, if we’re generous in a definition of Big Pharma, only 13 of 35 drug approvals were “sponsored by” Big Pharma.

What’s more disheartening is the evidence of diminishing drug discovery at Big Pharma.  While celebrating the 35 approvals, a little investigating reveals that the overwhelming number of approved products were not discovered by or at Big Pharma.  You have to dig a little but even where Big Pharma is listed as the sponsor, many of the approved compounds were licensed in or acquired from collaborative work with smaller biotech companies.  Again, being generous in how you might define Big Pharma, only 6 or 7 products on the list were actually discovered at a Big Pharma.   And in this number, two were discovered by Genentech (acquired by Roche), one is an analog of a previously approved biotech product, one is a combination vaccine, and another is a combination of previously approved products.  So much for Big Pharma innovative “discovery research.”

So while the total number may be reassuring in the context of previously disappointing years of smaller numbers of drug approvals, a closer look reveals that drug discovery and drug development are no longer being driven by Big Pharma.  More importantly, despite the investments being made, new drug discoveries remain elusive and approvals are rare regardless of who is doing the work.

mike@pharmareform.com

You can ignore but you can not hide from Change in Pharma

A few years ago, contrary to the recommendations in Pharmaplasia and in the face of an industry-wide “patent cliff” and a rapidly changing healthcare market, the Pharma industry went on a binge of mega-mergers and multi-billion dollar acquisitions.  The book Pharmaplasia had identified large organizational size as not only challenging but as a liability in the evolving new healthcare market.  But “Big Pharma” wanted to get “Bigger” and it took years for Pharma to appreciate the need for change that had been recommended in Pharmaplasia“eliminate facilities, people, and support systems that no longer have a role in the evolving new healthcare market.”   Now, more recently, we have seen unprecedented downsizings, including elimination of facilities and people in massive restructurings at some Big Pharma.

Sure,  change can take time, especially in large public corporations.  The status quo and doing “what we have always done” is easier but it merely delays the inevitable and can give current frontline employees a false sense of accomplishment and security.

There are over 20 specific recommendations for change in Pharmaplasia that could accelerate a positive evolution for Pharma.  If these recommendations are being ignored by your company for now, it may be just a matter of time before you are affected?

With the information and recommendations in Pharmaplasia you can determine how the changing Pharma business model will affect you in this evolving new healthcare market.  Better yet, Pharmaplasia can help you determine how to  align yourself with these changes so you can participate in these positive changes and not be caught off guard by the inevitable.  mike@pharmareform.com

used-car

Do Manipulative Pharmaceutical Sales Techniques still work?

I’m curious and seriously don’t know the answer to this as it’s been a while since I’ve been in the field.  As a VP of  Sales (admittedly long ago) our management team continuously looked for training programs and techniques to help our sales force be more effective in the physician’s office.   Some were pretty basic but others were just outright manipulative.  I guess in the days of “reach and frequency,”  “reminder detailing,” and unencumbered access we thought we were being cleaver and maybe they even worked to some extent.  At the same time, I have to believe some of these types of techniques also contributed to physician frustration, resentment, and ultimately denied access.

The reason I am asking the question now is because I still see pharmaceutical sales training programs offering what appear to be decade’s old sales techniques that border on manipulative.  Even back in the day when I was selling (admittedly even much longer ago) we learned about “closing the physician”, challenging them, and “getting them to commit.”     I now wonder how much damage these basic sales tenants, combined with a few “tricks,” did in terms of our relationship with physicians.   The reason I say this is because there is nothing more demeaning than to have a sales person try their manipulative sales pitch on you when you go to a store to buy something.  The automobile industry learned this the hard way.  You would think the pharmaceutical industry would have learned by now as well.

But, maybe these techniques and “tricks” still work.  What do you think?  More importantly, how do physicians feel about being sold this way?

mike@pharmareform.com

Five Underappreciated Contributions from Pharma

In my previous post I pointed out the Five Irreparable Mistakes made by Pharma.  At the same time, many patients owe their health, if not their lives, to advances in drug therapy.  The good is often overshadowed by the unethical and greedy, if not illegal activities and behaviors that make the headlines.  Here are some of the “good” that have been mitigated by the bad:

  1. Treatments for most common diseases

Decades of drug discovery and development have filled pharmacies and our medicine cabinets with a broad range of treatments for many of the common diseases that can compromise our health today.  Most of these are now available as low cost generic drugs.  Sure there are diseases yet to be conquered and recent R & D productivity has been disappointing but we still have to appreciate the numbers of affordable drug treatments we have available to day.

  1. Technology acquisition and development

There is no doubt that without pharmaceutical industry funding and development expertise, we would not have seen the benefits from technologies that would have otherwise remained hostage to under-funding in university laboratories or small biotech companies.   Depleted pipelines in the past decade forced Big Pharma to abandon the NIH (not invented here) research mentality and aggressively pursue acquisition strategies.  To the benefit of patients around the world, Pharma pulled out their checkbooks, took the financial risks, and in many cases, over paid for promising but unproven technologies.

  1. Medicine for the poor

It is easy to criticize the pharmaceutical industry for their seemingly greedy pricing policies and taking advantage of their monopolistic hold on drug treatments.  It is also important, however, to recognize that the industry has done a lot to offset costs for the poor and elderly but even more importantly, making sure that the poor in developing countries have access to drugs they need.  OK, they could have done more and could do more but you can not ignore the free medicines, discounted treatments, and global in-kind disaster support.  And let’s not forget the often criticized sampling programs that often meant the difference between a patient taking medicine that they could not afford or going without treatment.

  1. Continuing Medical Education

Despite the concerns and criticism about whether or not pharmaceutical industry CME is or was promotional and biased, the contribution the industry has made to educating healthcare providers is undeniable. The pharmaceutical industry helped educate millions of healthcare providers not only about drug therapy but about the associated diseases.  While you might debate the quality of the programs, it is clear that academia and the medical profession will have a hard time replacing the numbers of programs and frequency of reaching the numbers of physicians exposed to educational programs by the pharmaceutical industry.  Even if you discount industry sponsored programs for their promotional, biased approach, at the very least, these programs encouraged and provided regular opportunities for healthcare providers to reflect on and do their own research about a broad range of drug therapies and diseases.

  1. Providing a venue for Scientific Excellence

The pharmaceutical industry has provided a fantastic place to train, develop, and apply scientific and technical expertise.  From research and development to manufacturing, science is at the foundation of operational performance excellence.   In the end, pharmaceutical industry training and application of science leads to products and programs that positively benefit mankind in ways that are unmatched by other industries, except perhaps, by healthcare itself.

So for all the notable greed-driven bad behaviors and mistakes that characterize the pharmaceutical industry today, we should not forget the good that has been done.  Unfortunately, the pharmaceutical industry had the chance to be the most respected and valued industry in the world while being embraced, not begrudged, as the most profitable.  Still a laudable goal but one that will take decades to recover from past indiscretions and to demonstrate consistency of good behaviors over time while delivering clinically meaningful breakthrough drugs that can satisfy the remaining unmet medical needs.   mike@pharmareform.com

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

Less Regulation for the Pharmaceutical Industry

I have always been perplexed by the contention that we need less government regulation and more lenient regulatory enforcement in this country, including in the pharmaceutical industry.   Proponents of less government regulation often make their case by proposing to “get government out of private sector business and let the market decide.”  They point to the unnecessary costs, business hardships, and ineffectiveness of government regulation.

We hear about “too much government” until something happens.  Something bad enough to negatively affect a large number of people.  A financial system meltdown, security breach that compromises their safety, or when people take advantage of them through deceptive marketing practices or fraud.  You really hear about the need for more government when people die unnecessarily due to a faulty or poorly manufactured product or a blatant disregard for health and human safety.  Then you hear “where is the government?” “isn’t there a law against that?” and “I’m going to sue.”

For years I have wondered how compounding pharmacies that scale to the size of drug manufacturers could operated without FDA oversight of their manufacturing processes.  Just leave it to State Boards of Pharmacy to monitor.  How “nutritional supplements” could make the health claims pharmaceutical companies could not make without rigorous clinical trials and FDA approval.  Do they really do what is claimed and do no harm?  How device companies could merely claim their product was “substantially equivalent” to an already marketed product to get on the market.  Does it really matter that pharmacies can sell drugs over the internet?  Why should I need a prescription?  Does it matter that the pharmacy operates out of another country or that the drugs I get are counterfeit?  Should it really be ok to create billion dollar blockbuster prescription drugs by marketing them for unapproved claims for patients who might be putting their lives at risk for no benefit?  Less government regulation and limited enforcement make these all possible, today.

The pharmaceutical industry and healthcare market have proven that business enterprises and individuals will push the limits of the law and even ignore the law to make a buck.  That doesn’t mean we should just get rid of government regulation.  In fact, less government regulation and diminished enforcement merely create even more opportunities without negative consequences for fraud, for dangerously marginalizing manufacturing quality, and for the unscrupulous to take advantage of consumers, regardless of how informed or well educated the consumer might be.   Less government regulation and limited enforcement in a “buyers beware” market is not an acceptable commercial environment, especially for the pharmaceutical industry where patient health, safety, or lives are at stake.

So what’s my conclusion?  We need government agencies to do a better job of enforcing the laws that are already in place. We need them to work with law makers to eliminate laws that are no longer doing what they were intended to do when they were adopted.  We need law makers to do a better job of drafting legislation (have you ever read a page of Final Rules in the Federal Register?) to protect consumers.  But what we need most is for businesses and individuals to quit “gaming the system” with wealth building strategies based on taking advantage of lax regulatory enforcement and the unaware or mislead consumer.  mike@pharmareform.com

Mindset Change Needed for Re-Engineering Pharmaceutical/Biotech R & D

In the previous post and in the book Pharmaplasia I suggest a need for a new approach to pharmaceutical R & D.  There are two essential elements to this proposal.

The first has to do with scientific and corporate integrity.  If the research scientists and corporate executives are not honest about what you have and what you have seen in drug development (if their priority is to protect the “potential“ of your compounds), you can’t make good decisions about your pipeline products.  Research scientists or corporate executives trying to preserve compound “potential” by strategically navigating around potentially damaging data, half-truth disclosures, or blatantly ignoring negative results and their implications can easily sabotage any corporate effort to produce a more robust pipeline with a higher probability of success.  The second essential element will be meaningless if this first element is ignored.

The second essential element:

Know more about your compounds before they go into Phase III clinical trials.

A more comprehensive basic science understanding of your compounds before they enter the clinic, especially expensive Phase III trials; can increase the probability of success.

For safety, this requires an aggressive exploratory preclinical program that “looks for toxicity” (going well beyond the regulatory requirements) and understanding what you find and what you see … not just being able to explain it away.

From an efficacy and safety perspective, if your compound affects one biologic system, what other systems does it affect? Have you really looked or have you been focused on “getting an indication?”   Do you have the basic science data to support the premise/hypothesis for efficacy (or comparative superiority)?  Have you scientifically challenged the premise with alternative outcome possibilities with data to support the different probabilities?   Or, is it still just a hypothesis you plan to prove in Phase III?  Are you sure you have the right endpoints for your Phase III trials?  Have they been sufficiently validated (high probability statistics) in Phase II studies?  By this I mean, have you done more than just a couple of regulatory required trials?  Have you looked at design alternatives that could affect outcomes for different endpoints options?

This strategy may take longer.

But, rather than how fast can you get how many compounds into patients and to the market, research teams and corporate executives need to shift their mindset to increasing the probability of success.  You can do this with a more comprehensive approach to preclinical research.  Thoroughly understanding how your products are going to perform in Phase III trials (or comparative trials) before the trials commence.  Eliminate the “surprises” with better, more comprehensive science around the products.  Be exhaustive in exploration, honest about the findings, inclusive of interpretations, and have better data to support the “go forward” premise or hypothesis.  This all may seem like a simplification but if you’re interested in a more elaborate discussion, I invite you to read about the need for pharmaceutical R & D change and recommendations for change in Pharmaplasia.

Sure there will still be failures, but they should be fewer.  But perhaps the biggest benefit from this approach is the potential for new discoveries of safer, more effective products.  Better diagnostics, more definitive efficacy benefits (maybe we are looking at the wrong endpoints), and advances in the understanding of human biology await this new Pharmaceutical R & D model.  Not to mention, less contentious regulatory reviews, renewed hope for patients with difficult to treat diseases, and more certainty for the investment community.  mike@pharmareform.com