Pharma Reform

A guest post in Forbes by Dr.Tom Yates, a UK-based physician, challenges the disclosure statements in two review articles on anticoagulant therapies published in the September 2011 edition of the Quarterly Journal of Medicine.  Dr. Yates also seems to dismiss peer-review as a safeguard and essentially suggests that despite disclosure statements and the peer-review process, any funding by sponsors (pharmaceutical companies in this case) of authors or for editorial assistance for review articles will bias the information presented and will result in an unbalanced assessment of the therapies being evaluated.  He doesn’t critique the papers or their conclusions, admitting that that he is “not an anticoagulant expert.”

In the Forbes blog published letter response to the journal, Dr. Yates’ expectations regarding conflict of interest and the potential for bias are reflected in the following statements:

“In answer to Prof Hobbs’ question [2], I believe it is important that clinicians are able to access review articles on this topic. However, they should be written by authors who have no financial relationship with the companies who make the products under discussion.”

I don’t believe Dr. Yates is alone in his thinking.  I do wonder, however,  if  Dr. Yates and his like-minded colleagues have considered the practicalties of completely eliminating the potential for financial conflict of interest.

1. There are few therapeutic area relevant clinical experts (not just those who are self proclaimed) who could meet his expectations for independence.    As suggested in his statement above, the only people who could publish review articles are those who have never received any financial support from a pharmaceutical company that has a product in the therapeutic category being reviewed.  That would have to include pharmaceutical company sponsored clinical study investigators, consultants, and advisers.
2. Only clinical studies that have been independently funded (self funded, government funded, or funded by an advocacy group that accepts no pharmaceutical industry support) could be included in the publication of therapeutic reviews. To accept results from pharmaceutical industry funded studies done by investigators supported by the pharmaceutical company in a review would further propagate the conflicts of interest and biases inherent in the original publications.
3. Only unconflicted, qualified authors (no potentially biasing financial support from any benefiting organization, be it pharmaceutical companies or therapeutic area advocacy group) could initiate the drafting and publishing of reviews and they would have to seek their own editorial support (including graphics and formatting) at their own personal expense.
4. Peer reviewers for journals would have to be held to the same independence and conflict of interest standards as they have the potential to introduce their personal biases in their feedback and commentary during the peer review process.   Perhaps then these conflicts would also have to be disclosed in the review article as well.

Here are some things to think about in the context of espousing Dr. Yates’ position:

1. There are probably too few independently funded clinical studies that are large enough to adequately provide data to do a meaningful review for any therapeutic category or class of drugs.
2.  “… authors who have no financial relationship with the companies who make the products under discussion” probably don’t have sufficient, statistically relevant, independently funded, personally developed  “controlled clinical data” to support their “independent conclusions.”  Peer-review would have to eliminate any inferences or conclusions that reflect personal biases or opinions from their anecdotal clinical experience that are not supported by statistically relevant clinical data.
3.  As a result of points 1 and 2, very few review articles could be published.  In fact, I’m not sure there has ever been a clinically helpful therapeutic class review article that is completely void of financial conflict of interest and bias as suggested by Dr. Yates.

Unfortunately, history has demonstrated that we can no longer rely on the integrity of investigators, authors, peer reviewers, and editors to assure us that the implications and conclusions in a review article are valid and were not financially influenced.  Therefore, we have to depend on the disclosure statements and rigorous peer-review to mitigate the potential for financial conflict of interest and bias in scientific and medical publications.

Completely eliminating financial conflict of interest might be impossible and even if achieved has its own negative consequences. You would get reviews done by unconflicted experts who have little or no personal,  controlled clinical experience with the products discussed.  This being the case you really have to wonder “are the experts really experts?”   Their conclusions could only be based on their personal interpretation of financially biased industry supported clinical studies, perhaps some small self funded statistically meaningless studies, or worse, their own anecdotal clinical experience.  Where else would they get the data to support their conclusions?

As a result,  I still believe that honest,  full disclosure and rigorous peer review are better solutions than trying to completely eliminate financial conflict of interest. mike@pharmareform.com

I’m a little tired of reading about “off-label” promotion of prescription drugs, especially in the context of whistleblower instigated fraud cases and lawyer/patient driven product liability cases.  I’m not a lawyer but here are some solutions that would discourage inappropriate “off-label” promotion and would consume far fewer resources and certainly cost a lot less than is being spent now on litigating these types of offenses.

First, Pharma companies should not promote products for uses that are not approved by the FDA.  If a company is found guilty of “off-label” promotion, in addition to any corporate fines (which should equal total product revenues during the time of illegal promotion) , responsible individuals should be held legally accountable and convicted, with personal fines, disgorgement of incentive compensation during the time of illegal activities, and even incarceration if warranted.  No corporate settlements.  It is very likely that criminally charged front line employees directed or even trained to promote for off-label uses may be more than willing to offer up and provide evidence against culpable higher level executives who encouraged or approved of the promotion.  I’m pretty sure this would increase executive management oversight to ensure compliance.

To remove the financial incentives for “off-label” promotion, government programs (Centers for Medicare and Medicaid Services and states) should not reimburse for unapproved uses of prescription drugs.  If the patient wants to pay for the unapproved use of a prescription drug that a physicians has prescribed, that should be their choice.  At the same time, that choice carries the liability that if something should go wrong; the only legal recourse for the patient should be to hold the prescribing physician and perhaps their healthcare provider accountable.  Because “off-label“ use is an informed decision, neither the patient nor the physician (or healthcare provider system) could sue the pharmaceutical company for any negative consequences resulting from the unapproved use.  Physicians who prescribe for unapproved uses but post a diagnosis that aligns with approved uses just so the patient can get it reimbursed would face fraud charges and be held personally liable.  Similarly, there would be no need for federal or state litigation against pharmaceutical companies for False Claims that inappropriately causing taxpayers to fund unapproved uses.

If physicians and patients have made a choice to use a product “off-label” and private payers (insurance companies, employers, or PBMs) choose to pay for the unapproved use then they should assume the same liabilities as stated above.  They are making an informed decision and the payer is agreeing with that choice by reimbursing for the unapproved use.  The patient could sue the prescribing physician, healthcare system, and perhaps the payer, but they would have no legal recourse against the pharmaceutical company should a harmful event occur from the unapproved use.

But what about all the “medically established” unapproved uses in treating things like cancer?  The same rules and legal liabilities should apply.  Physicians have the choice to prescribe, patients have the choice to take, and payers have the choice to reimburse for the unapproved use if they want to assume the liabilities with the inability to sue the pharmaceutical company.  If the medical experts, patient advocacy groups, or government programs and insurance companies feel a prescription drug should be approved and reimbursable for a particular use, they should petition the FDA and submit their clinical proof of efficacy and safety to obtain an FDA approved label claim for the product.

While preserving physician, patient, and payer choice these recommendations remove a major financial incentive (reimbursement) for pharmaceutical companies and increase the legal consequences for individuals who inappropriately promote for off-label uses of prescription drugs.  More importantly, it appropriately shifts product liability for unapproved uses to healthcare providers and payers.   www.PharmaReform.com

The J P Morgan Healthcare Conference is, among other things, an annual four days of back to back 30 minute presentations by Pharma, biotech, device companies, CROs, and a diversity of healthcare institutions.  C-level presenters, mostly CEOs, trying to persuade analysts and potential investors that they have the business model designed for increasing shareholder value, some bolstered by forward looking statement disclaimed historically based promises for product approvals, revenue and earnings growth,  dividends, and stock buy backs.

The conference is the premiere healthcare conference in the industry and has become “old home week” for industry executives to reconnect, schmooze, and initiate discussions for potential deals.  Getting an invitation is near impossible if you are not among the presenting companies or on the JP Morgan A-list.  I am neither, so I spent last week listening to all the webcasts that are available for the Pharma and biotech company presentations.

Perhaps the single most stunning, yet less obvious (non- investor perspective) “take away” for me was how rapidly Big Pharma is moving away from Primary Care.  With almost 75% of prescriptions now being filled with generic drugs, the trend may not be that surprising.  What is surprising is that the pace of proactive strategic abandonment of Primary Care is far more dramatic than what I believe most people in the industry would want to admit or even realize.

This trend really got my attention when companies with traditional Primary Care portfolios blatantly stated or clearly outlined that they have strategically refocused their pipelines and commercialization efforts to target specialty markets.  With very few exceptions, company presentations were absent references to products or commercial strategies targeting the Primary Care market.  Oncology, neurology, psychiatry, rheumatology, and dermatology seem to be the focus of attention unless you had a Hepatitis C compound in your pipeline.

Again, the interest in specialty products is not surprising.  They command higher prices, yielding higher margins with less onerous managed market intervention into prescribing practices.   From a commercial perspective, specialists represent a smaller, more easily targeted and sales force friendly customer base.   Specialty market physicians and their patients also seek out and are more receptive to disease and treatment information making promotional education a viable and efficient tactic.

The implications of this trend away from Primary Care are clear.  Fewer sales reps needed for calling on Primary Care.  Less need for expensive Primary Care sales and marketing support activities such as purchasing mass market prescription data, coordinating the complexities of territory management and sales reporting, and dealing with sales force related employee relations issues.  It also means fewer industry sponsored educational programs for Primary Care.  Fewer Primary Care clinical trials.   And,  fewer new Primary Care products means Primary Care physicians and their patients will have to be satisfied and content with the treatment options currently available to them.

The real message here is that while Primary Care has been at the foundation of Big Pharma growth and financial success in the past and there may well be exceptions in the future, the importance and interest of Primary Care to Big Pharma is diminishing quickly.  If your expertise or responsibilities include pharmaceutical sales and marketing to the Primary Care market, I believe your days are numbered and you probably have fewer days than you might think.  Specialty products and markets are where the action is and where the industry is headed and it is moving fast.   mike@pharmareform.com

In a previous post we discussed the opportunity for Big Pharma companies to potentially preserve market share for their brands by competing with generic versions on price once their products lose market exclusivity.  Pfizer seems to have taken this strategic concept to a new level.  First cutting deals with Pharmacy Benefits Managers to make Lipitor^® available at or below generic drug prices, then turning around and also providing discount coupons to lower patient co-pays for example from $10 for generic drugs to $4 for Lipitor.

Pfizer’s aggressive approach to “competing “ in this market has been met with considerable negative commentary and even Congressional inquiry.  Interestingly, Pharmacy Benefits Managers and their trade association (Pharmaceutical Care Management Association), the same groups that use and advocate similar tactics to encourage generic drug use,  are on the front lines of criticizing the Pfizer co-pay discount tactic.  The contention is that the Pfizer campaign will cost insurance companies and employers more,  even if patients benefit from a lower out of pocket cost.   And some of those in Congress have expressed concern,  wonder if the discounts provided by Pfizer will be passed along to insurers and employers or be pocketed by the PBMs.

Well, if there was such a thing as a “free, open market” there might be a simple answer to this.  Let the market decide.  If Pfizer wants to price their products similar or even lower than their generic competitors,  they can.  If patients want to use the discount coupons to lower their co-pays,  they can.  If generic drug companies want to provide co-pay discount coupons,  they can.  If the PBMs, and their insurance company and employer partners,  want to lower or even eliminate their co-pays for generic drugs, they can.

If this is really about “price” and lowering the cost of prescription drugs, especially for a particular product, within regulatory quality standards, let the low cost producer and provider with the lowest price win.  Why shouldn’t branded product manufacturers be able to compete on price in the generic drug market, if they want to?  m ike@pharmareform.com

I was recently surprised by my own indifferent response to a couple of recent pharmaceutical industry news reports that should have been shocking, if not mind boggling. One of them was:

 “Merck CEO defends hefty research spending” (Reuters).

Defend research spending?  Since when would investors be concerned about spending too much on R & D,  in any industry for that matter, but for pharmaceuticals? Are you kidding?

There are a couple of underlying issues that make this situation very disconcerting but understandable.  First, the article identifies “investors” as those who have expressed concerns about the amount Merck and other pharmaceutical companies are spending on R & D.   I’m pretty sure they are not talking about individual investors but rather institutional investors and investment analysts.

The problem is that these analysts and the firms they work for are mostly driven by short term financial results.  When long term corporate value-creation compromises short term financial gain opportunities, analyst and investment banking compensation (especially bonuses) can be negatively impacted.   For example, cutting corporate expenses to increase near-term earnings usually creates more positive stock movement and compensation opportunities than any long-term strategic investment will ever create.

Just look at the daily stock price ups and downs for pharmaceutical companies driven by a single piece of clinical data or a letter from the FDA.   For an investor market driven by a short term “make a quick buck” mentality, long term financial consequences become somebody else’s problem.

So why does Merck CEO Kenneth Frazier get so much attention for what is considered by some analysts as a questionably high level of R & D spending?  For most pharmaceutical company executives, their short term incentives are often similar to those of the analysts and investment bankers.   So, in this light, Mr. Frazier’s long-term perspective may be an outlier in not playing to the expectations of Wall Street.

Perhaps Mr. Frazier understands that innovation in prescription drugs is critical for the long term success of Merck.  Perhaps he understands that truly innovative new products are what pharmaceutical companies need to remain relevant and viable in the evolving new healthcare market.  Perhaps he realizes that a reliance on academia and small entrepreneurial ventures for innovative new products carries the risk of a limited supply. This reliance on outside sources of innovation could subject his company to the finite availability of viable drug candidates at any given time which drives up pre-approval (and sometimes before clinical proof-of-concept) prices (think Gilead $11 billion acquisition of Pharmasset) with no assurance the products will ever get approved.

Mr. Frazier gets noticed  and media attention because he’s in the minority of not playing to the investment analysts’ needs for short term financial gains that can drive stock prices up and provide investors with temporary gratification while handsomely rewarding analysts and their firms for being so smart.

It would be one thing for investors to insist on increasing the productivity and output of Merck and pharmaceutical industry R & D.  I have commented before  and the industry has proven that merely spending more doesn’t necessarily get you more innovative new products.   But, to suggest Merck is spending too much on R & D seems to me to be another attempt by analysts to drive for a near-term balance sheet excitement that can help them drive share price, temporarily.

I’m sure there is room for improvement in Merck’s R & D productivity but I believe that to outright suggest they are spending too much money on R & D is not in the best interest of Merck, its shareholders, or patients.   mike@pharmareform.com

We all depend on pharmaceutical manufacturing to produce our prescription drugs that are consistent in formulation, safe, and not contaminated with foreign materials or potentially harmful pathogens.

Anybody who has done pharmaceutical manufacturing, especially biologics or sterile injectable prescription drugs, knows how challenging it is to repeatedly get it done right in large scale.  From engineering and process controls to supply chain and inventory management to quality systems the expertise required to consistently produce high quality, regulatory compliant prescription drugs is perhaps one of the most unappreciated critical success factors for a pharmaceutical company.   If you can’t make it you can’t sell it.

This expertise is a core competency that has clearly been taken for granted by Big Pharma senior executives.  This lack of appreciation for manufacturing expertise is evident every time a pharmaceutical company faces a recall or needs to shut down due to “quality issues.”   Perhaps best exemplified by the now well publicized drug shortage situation, the inability to manufacture these life saving prescription drugs is putting patient lives at risk.   The lack of appreciation for the complexities and challenges of pharmaceutical manufacturing manifests itself in these shortages.

So what does it take to do high quality, safe, and regulatory compliant prescription drug manufacturing?  It takes a broad range of expertise (not just well trained technicians and operators), significant ongoing capital investment in facilities and equipment, and rigorous, almost obsessive quality systems.  These are not the places pharmaceutical executives  should be looking to cut costs.  And worse,  generic drug pricing generally don’t allow for the levels of continuous investments I believe are necessary in people (expertise), facilities, equipment, and quality systems.

But what about Big Pharma?  Well, who had the expertise?  Who had the robust quality systems?  I’ll even add … who had the proprietary insight into the nuances and complexities of making a particular prescription drug.  Big Pharma.   At least they did until they decided to take manufacturing expertise for granted.  Unfortunately, Big Pharma continues to close manufacturing facilities, outsource more to contract manufacturers, and retire or let go much of their manufacturing expertise.  And, this expertise and know-how doesn’t necessarily get transferred from Big Pharma to the manufacturers that will be making the generic versions of their products.

I often wonder how generic drug manufacturers or even contract manufacturers who take over manufacturing a prescription drug figure out, understand, and know how to deal with all the nuances and complexities of making a particular prescription drug.  Again, if you’ve done pharmaceutical manufacturing, you know how much is learned by doing hundreds and thousands of batches over years of experience.   Perhaps those who are challenged with making the drugs that are now in shortage are finding this out the hard way.  Unfortunately, it is patients who are now suffering and dying because pharmaceutical manufacturing is harder and takes more expertise than most pharmaceutical company executives appreciate.    mike@pharmareform.com

First, I am not going to defend the FDA or ignore its organizational dysfunction and seemingly antiquated review processes.  No doubt, the agency is underfunded and lacking in the necessary expertise to carry out its broad and geographically disperse responsibilities.   At the same time there are steps the pharmaceutical industry could take to help increase FDA productivity.

Historical precedent would suggest that pharmaceutical companies are more interested in getting products to the market than making sure their products are safe, effective, or even needed.  They tend to do the absolute minimum to get through the regulatory approval process (fastest, easiest indication first), hoping to argue there way through questionable safety data and relying on marketing to find expanded revenue opportunities in patients for whom they have little or no proof of efficacy or safety.   Some of the antics reported in the trade and lay press would suggest that pharmaceutical companies are continuously trying to find new ways to “game” the system.  If you need the details, there is a good review of the past forty years of industry missteps and flagrant disregard for regulatory expectations in the book Pharmaplasia™.   It is clear that the FDA has been put on high alert police mode by what historically has appeared to be an out-of-control, intentionally non-compliant, almost defiant pharmaceutical industry that can’t be trusted.

In this context, is it any wonder that the FDA is skeptically cautious, more demanding for proof of claims, and sometimes even slow and seemingly uncommitted when it comes to product approvals and issuance of guidance documents yet deliberate and critical, albeit intermittent and inconsistent in their enforcement?

Here are five steps the pharmaceutical industry could take to help improve the regulatory process and FDA efficiency.

1. Focus on Innovation
2. Makes safety issues easy for the FDA to understand
3. Make manufacturing quality an organizational priority
4. Commit to ethical and regulatory compliant marketing and sales
5. Establish a base of credibility

Focus on Innovation

Despite the sunk costs of discovering and developing a product that companies hoped would turn out better than it did, don’t bog down the FDA review process with products that have little or no clinical benefits over what is already available on the market.  If you feel compelled to bring a comparable product to market, don’t try to make it sound better than it really is to substantiate a higher price.  Again, trying to angle for a labeling claim advantage that doesn’t really exist consumes FDA time and resources.

Make safety issues easy for the FDA to understand

It is mind-blowing to me that pharmaceutical companies can get to a final advisory board meeting prior to an expected approval and find out there is a concern and unanswered questions about an animal toxicology study or clinical finding?  Well, maybe the company was hoping it would just slip by and nobody would notice the data or they thought they could argue their way through the questionable or disturbing data.  Why not be proactive, anticipate the concern and just get the data to prove it’s not an issue?  Well, maybe companies still believe in the “don’t look for it unless it is a regulatory requirement” theory because they might find something they don’t like or can’t explain.  I appreciate the need for speed in development but you have at least 3 to 5 years after a product starts clinical studies to sort out any safety issues.  That is, if you really want to take the risk to understand the basic sciences of the concern or potential problem.

Make manufacturing quality an organizational priority

First, the answer to industry manufacturing issues is not lower quality standards, fewer FDA inspections, or less rigorous, less critical inspections.  In fact, I am a proponent of maintaining high quality standards,  more frequent and more rigorous inspections, including of foreign facilities.

As challenging as pharmaceutical manufacturing can be, I don’t see why pharmaceutical companies should expect anything other than a clean slate, no 483′s,  when the FDA inspects their facilities.  With appropriate management manufacturing expertise and robust quality systems in place, avoiding 483’s should not be a matter of chance or wishful thinking but rather a matter of fact.  Clean, high quality, cGMP – compliant manufacturing would make FDA inspections (and follow-up) easier, less laborious, and less time consuming.

Commit to ethical and regulatory compliant marketing and sales

“Pushing the regulatory envelop” and “off-label” promotion can drive revenues and increase your market opportunity but also puts tremendous additional workload on the FDA.   So much so that it is clear that pharmaceutical companies have taken advantage of this burden by trying to be clever in their advertising and promotions knowing full well the FDA can’t police everything and the chances of being caught are remote.  Even if caught, the consequences are minimal (a “slap on the hand” in the form of a letter) unless the Department of Justice pushes for some financial penalty.  And then,  it just becomes a cost of doing business.  Unfortunately, pharmaceutical companies may feel they will be at a significant commercial disadvantage if they don’t “push the regulatory envelop” because “everybody is doing it.”

An industry-wide commitment to ethical and regulatory compliant marketing and selling would make non-compliant outliers more obvious and allow FDA to focus resources  on the more egregious and potentially harmful marketing and sales activities.

Establish a base of credibility

If the pharmaceutical industry were trusted, credible, and committed to regulatory compliance the FDA would not have to spend as much time, effort, and resources trying to sort out the “gamers” from bona fide efforts to bring safe and effective innovative new products to market, to maintain high quality manufacturing standards, and to market products in compliance with the approved label claims.  Yes, I believe there are companies and their CEOs who profess this to be their intent, but the historical record suggests there are few who have been able to deliver or credibly live up to this commitment.

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

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