Professionals have an inherent need to know as much as they possibly can about their profession and the work they are doing.  This includes learning about differing points of view and why people might hold them.  This includes different ways of doing things,  even though they may not agree with the method.  Professionals strive to keep themselves up to date and ahead of their colleagues and anybody else for that matter.  They go well beyond what the average person will do to stay current or to do their jobs better.   And, while they know they can command higher compensation than non-professionals doing similar work in the same field, compensation is not a motivator for true professionals.

Professionals maintain their expertise and keep it current because it is a big part of who they are and they know that being a true professional with genuine expertise is rare.  They  continuously look  for ways to improve and enhance their expertise, often evaluating and employing new technology quickly if they think it might help them.  And while the internet makes it easier for them, books, including electronic versions, still provide information, insights, and unique author perspectives that can not be found on the internet.

Are you a professional or are you just doing a job?  It really is a personal choice and being a professional may not be for you.  It is also not a right or wrong choice, good or bad choice type thing.   It is also not about doing your best but more about being the best.  It takes commitment, dedication, skill, expertise, and an internal, self motivating drive to be the best at what you do.

So, if you consider yourself a professional, what’s on your bookshelf?  What have you read lately?

mike@pharmareform.com

This organizational transformation will require that commercial management step up their game and the level of their own professionalism.  Expertise in traditional marketing and sales tactics is not going to help much in this evolving new healthcare market. There are no slick technology quick fixes or gimmicky tactics that will substitute for meeting product and data needs of the market.  It is critical that marketing and sales management understand and accept that tactics that worked in the past and the bad behaviors that drove revenues in the past, are no longer going to be tolerated and will not work in the evolving new healthcare market.  It means marketing and sales management must reformulate their strategies and acquire new skills and expertise that are better aligned with the needs and expectations of the evolving new healthcare market.  This includes being able to effectively deploy a  sophisticated team of professional representatives and arm them with products and support resources that address the evolving healthcare market needs and expectations.

Unfortunately, most executives and the people running commercial teams today are grounded in a traditional mentality about pharmaceutical marketing and sales.  This is where I predict most organizational transformations will fall short and stall out.  Those who can make the changes and should be championing the changes will feel threatened by a move away from their own expertise, experience base, and comfort zone.

Here is something to think about.  Let’s assume the company decides to embrace the organizational changes we have discussed and it is ready to embrace the new professional representative profile. Where do you find marketing and sales management with the new skills, expertise, and mindset needed to formulate and implement the new commercial strategy?  For example, will sales managers understand and appreciate the differences between sales reps and professional representatives?  Will marketing managers understand that they need to spend more time comprehending the complexities of the evolving decision-maker processes and nuances of customer expectations (not just market research) rather than worrying about the copy and graphics for their next TV commercial?

Again, don’t underestimate the need for executives and commercial management to really understanding the market at the customer level and having the right mindset about how to approach this new commercial model.  Some sales representatives and some commercial management may be close to the desired profile and mindset needed for these changes but they also need corporate executives who can create an environment in which these individuals can champion these changes and flourish.   Unfortunately, there are probably more who don’t get it, won’t get it, and will probably fight it, if not actively, passively by doing nothing.

mike@pharmareform.com

If we work back from how the market is evolving and what companies need to do to address the changing expectations of a broader and at times, more sophisticated customer (not just physicians), we can see that the implications for change at a pharmaceutical company are organizational and not just for “sales”.  This is truly transformational for executives and senior management, R & D, and commercial operations.  Companies will fail miserably if they are merely looking at how to change their sales organization (e.g., restructure, new compensation, and new titles).

Of all the issues we could discuss, getting all the functional areas aligned for this change is the one that precludes most pharmaceutical sales organizations from making the fundamental changes they know they should make in light of the evolving new healthcare market. What we are talking about is formulating an organizational strategy that creates a comprehensive culture and support system that embraces the role of the professional representative so they and the company products can succeed in the evolving new healthcare market.

The first change that needs to take place is the organizational mindset from the traditional “sales” position to that of the professional representative.  Your CEO and executive team play a huge role in this.  They must see professional representatives in the light we have described and not as “expendable field people” deployed tactically to drive sales.  This mindset change requires that executives and senior management understand the changing healthcare market at the customer level (not just physicians).  They must appreciate how the role of professional representative will be different from that of the sales job they have known for decades and probably did themselves.  If executives and senior management don’t understand the difference, it will make no sense to implement any of the other organizational changes needed.   In fact, the other changes are probably not going to get their support because they will seem like a waste of time and money to the “sales rep” oriented executive team.

If it is not somebody on the executive team proposing the changes it is incumbent on the person or team that is to make sure the executive team fully comprehends and supports the strategy, organizational implications, and the rationale for the changes being proposed.  As bureaucratic as large companies can be, but more importantly because of the multi-functional implications,  this is not just a discussion over coffee.  It will require well thought out planning with a series of discussions to work out details of the functional implications and to garner functional support.

Each company and executive team will be different.  Company strategy, financial position, product pipelines, and even the expertise and competency within the organization will factor into how receptive an executive team might be to the magnitude of change being proposed.  Whether or not you can get the executive team to buy in and how to do that may be interesting fodder for another series but in our next post, let’s just assume the executive team is on board. They not only understand and are ready for change but  embrace it, expects it, and they are ready to support it.  I know this is a big assumption but we can’t get to where we need to be without it so let’s play this out in the next few posts.  What else has to change?  Stay tuned. mike@pharmareform.com

For industry insiders, Pharmaplasia provides a nostalgic look back at the changing pharmaceutical industry over the past five decades.  The book is packed with management and leadership lessons learned as industry veteran Mike Wokasch explores the root causes of mistakes and poor decisions that led to diminished trust and credibility and its current state of dysfunction.  With specific recommendations for change, Pharmaplasia answers many of the questions being asked about how pharmaceutical companies can increase R & D productivity; reduce operating expenses without sacrificing profitability, and what they should do to align with the evolving new healthcare market in light of healthcare reform.

“Wokasch’s insightful view of the pharmaceutical industry offers some logical explanations for the volatile changes and disappointment in that once proud business sector. As a senior level insider with access to key decision makers, Mike is able to provide both concrete examples and an educated perspective of the pinnacles and pitfalls surrounding this important segment of our economy and lives. This is a must read for both senior level pharma executives and those aspiring to bring back the real value to this once respected industry.” Jim Patchen (former pharma colleague of Mike Wokasch)

“(book) Came today and I read it straight thru. YES! I can certainly relate to the things you said in there! I just kept saying, how true, how true! ” C. Karabin (former pharma colleague of Mike Wokasch)

Order your  Kindle Edition of Pharmaplasia at Amazon.com

I’m sure some readers are saying they already do these things and this is not new.  I am going to make a point here that might irritate some readers but it needs to be made.  There is a difference between being a sales representative and being a professional representative.  I believe sales representatives have little opportunity in the future of the pharmaceutical industry while professional representatives will be in high demand.

Being a true professional is more than just getting paid to do something.   So what’s the difference between being a professional and not being a professional?  One way to distinguish a professional from others is that they works so hard at being good at something that they can  even make difficult things in their profession look easy to do.

I know you have seen it.  There are those who always have perfect scores on package insert tests and always win the product presentation contests.  They even know stuff you don’t need to know.  They are also the ones who know every office staff person in their territory and have more access in their territories than most of their competitors.  They are always in their territories until late, sometimes even after most sales representatives would consider beyond a reasonable time to call on an office.

Professional representatives are frequently the ones who volunteer to help or mentor new representatives.  Probably most interesting is they are also the ones that seem to complain the least and accept regulatory or market challenges as something they just have to deal with.  And, while they may be critical of marketing materials, they offer constructive feedback and find ways to work with what they have.  They also welcome skillful manager coaching and performance reviews as ways to get critical feedback on how to get better rather than looking at them as their manager checking up on them and a scorecard for incentive compensation.

For every job there are different levels of performance and expertise.   If you are a sales representative you do what needs to get done, make the calls you can, learn enough about your products to deliver the marketing message and answer the important, high probability questions, and in the end,  hopefully you’ll deliver the sales expected.  You give the company a full day of “work stuff” and maybe even do some “work stuff” at home to make you feel better about being committed to your job.  Again, there are varying degrees of performance and expertise in being a sales representative.

If, on the other hand, you are a professional representative, you commit to a much higher level of job performance and expertise than merely going through the motions and doing “work stuff.”  You research more, study harder, practice often, and try to reach a level of job performance and expertise beyond the expectations of others.  You are doing it not just to increase sales in your territory.  You are doing it not just to be the smartest person in your district or to garner favor with your District Manager.  You are not even doing it just to please your customers.  You are doing it because it is your profession and you are committed to being a professional representative.

Today both types exist (pharmaceutical sales representatives and professional representatives) but I believe you have no choice in the evolving new healthcare market.  If you want to be employed as a pharmaceutical sales representative, your days are numbered.

If, on the other hand, you are committed to being a professional pharmaceutical representative you have a much higher probability for being employed and having a positive impact on patient care.  And while you may find the market more complex and products more technically difficult, you will find that overcoming those challenges will be even more professionally satisfying.  You will also find that patients in your territory who should be on your products will have a higher probability of that than if you are a pharmaceutical sales representative in that same environment.   Professional representatives will be in demand because, while there are plenty of people who can be pharmaceutical sales people, there are far fewer people who are ready, willing, and able to commit to the hard work and effort required to be a professional pharmaceutical representative.

In our next post we will discuss how the corporate mindset and expectations must be aligned to support professional pharmaceutical representatives in the evolving new healthcare market.

mike@pharmareform.com

• The market must be made aware of and educated about the product, who it is for, what it can do clinically, what patients can expect if they take the drug and why it has value as a therapeutic option
• Healthcare providers and laboratory personnel must be educated about the companion diagnostics including the potential use of genomics testing. (What the tests are, who should be tested and who doesn’t benefit from testing, how to do the testing, what the tests can and can not tell you, and how to interpret the results).  Insurers and providers also need to understand the economics of ordering and using a test (when does it make economic sense, when is it cost prohibitive).
• Formularies must have the data they need to evaluate the product, its appropriateness for their patients and the potential clinical and economic impact on their patients and plan or institution.
• Prices and reimbursements must be negotiated
• Supply chains must be informed and stocked (potentially includes lab testing and handling supplies)
• Government decision makers, hospitals, insurers, and physicians will need to understand the clinical value, cost benefit, and impact on quality metrics and patient outcomes
• Hospitals in particular, will need to understand how to evaluate the product (have validated designs and models) for determining the impact on quality metrics, patient outcomes, and pharmacoeconomics within their own healthcare systems.
• Physicians and patients must understand how best to use the product for optimal clinical benefits
• Patients must understand the importance of compliance and adherence and the consequences of neglecting to take the product as prescribed

Some might argue that these are the same issues and tactics that have to be dealt with in the market today.  None of this is a lot different than what companies are doing or at least should be doing now.  If that is true, then with all this to get done for so many products in a large very complex market, why is it that so many pharmaceutical sales representatives find themselves out of a job today with an increase in discussions about the lack of value being delivered and the potential extinction all together of the pharmaceutical sales representative job?  We’ll explore that further in the next post.

mike@pharmareform.com

I don’t want to get off on a tangent but the needs and expectations I’m talking about here are not for things like lunches being delivered or a return of the tchotchkes.  Unfortunately, the industry trained physician offices into developing these expectations in lieu of meaningful clinical discussions about products.

So let’s review some of the evolving market expectations for pharmaceuticals that the industry must be ready to meet, especially in light of healthcare reform:

• Safe and effective products that can be differentiated (clinically proven and with label claims where possible) from currently available treatment options (including preventive medicines)
• A clear understanding with supportive data for the basic science behind the product, its mechanism of action, and rationale for efficacy and potential side effects and adverse reactions.
• Clinical data to support “comparative efficacy” and other claims of differentiation or even superiority (justify the premium pricing)
• Personalized medicine supported by biomarkers and companion diagnostics that can predict response, determine extent of response, and anticipate side effects and adverse reactions with specificity and accuracy
• Real world pharmacoeconomics data to support the economic value of the product and pricing that reflects the value being delivered. Again, justify the premium pricing.
• Hospitals will want data and methodologies to demonstrate the impact of products on newly established quality metrics and outcomes data that will be used to force rank their institution performance against national standards.

One of the first implications of meeting these more demanding market expectations is that pharmaceutical companies must readjust their thinking to be more selective in their pipeline evaluations and  a lot more comprehensive in their approach to research and development.  In the past, you could just find a compound, identify the potential indications for use, do the clinical studies, get approval, and go to market.  This traditional “get it to market” approach to R & D will deliver products and data that fall short of market expectations and hamper commercial viability of products in the evolving new healthcare market.

It also becomes apparent that regardless of the representative’s scientific or technical expertise, even the best of sales representatives will struggle to address these market expectations if the research foundation and data are lacking.  I believe this is one of the reasons sales representatives are struggling today.  Pharmaceutical research has not kept pace with the demands of the market and sales representatives are being asked to compensate for limited regulatory product labeling, a lack of product differentiation, and minimal real world clinical data that can be used in product discussions.

But let’s assume your company is committed to a much more comprehensive research approach to deliver truly innovative new products with robust data packages.  This has significant implications for how pharmaceutical sales representatives can add value for customers.   You might be surprised by some of the implications we’ll discuss in our next post.  mike@pharmareform.com

To survive, most would agree that pharmaceutical sales representatives must add more value for customers and be able to justify the substantial expense of continuing to have them in the field.  One of the more popular solutions often proposed is to enhance the scientific and technical expertise of those who want to pursue this profession, modeling the position closer to that of a Medical Science Liaison.  But, after having spent considerable time reflecting on this I have come to the conclusion that the challenges facing the sales representative position are not necessarily just related to the lack of skill, competence, or expertise.  Rather, I believe the pharmaceutical sales representative dilemma is a symptom of the current state of industry dysfunction with broad based, deep seated root causes within most pharmaceutical companies.

If this is true, then companies and especially senior commercial management are making a huge mistake and wasting time and money by taking a narrow minded approach to resolving this problem by thinking that this is a sales issue best left to sales management to figure out and fix.  It is equally naive to think marketing can figure this out and strategically determine the clever new tactic to resolve this “sales” issue.  Territory realignments, new territory management analytics, flashy new electronic detailing aids, and even enhancing hiring standards are desperate attempts at a magic bullet, quick fix for what I believe is a much broader, inherent organizational misalignment with the evolving healthcare market.  Companies that appreciate the pervasiveness of the organizational dynamics that impact the sales representative will be able to more efficiently identify the changes needed (less trial and error) and will be able to deploy more impactful commercial organizations for the evolving new healthcare market.

Over the next several posts, we’ll discuss the basis for this conclusion (Hint: it starts with the customer), what organizational changes companies need to make (Hint: it has less to do with sales than other parts of the organization) before company representatives can once again add value and justify their deployment, and finally how the job description for field deployed company representatives will change.

mike@pharmareform.com

What makes this rationale even less believable today then ever before?  The fact that pharmaceutical companies can afford to spend tens of billions of dollars on mergers and acquisitions while dismantling the acquired companies, laying off thousands of employees (including research scientists), and at the same time, reducing the R & D investment the two merged companies might have otherwise spent.

The other area that challenges the credibility of the bogus high pricing rationale is the affordability pharmaceutical companies have to pay hundreds of millions of dollars or even billions of dollars in fines and settlements for alleged and sometimes proven wrongdoing.

Unfortunately, the billions of dollars spent on mega-mergers and litigation settlements don’t go towards producing any innovative new products.  Pfizer spent $68 billion (equal to the total annual amount of industry spending on R & D) to acquire Wyeth and Merck spent $41 billion to merge with Schering, not to mention the hundreds of millions spent by the two on restructuring, legal, and banking fees.  None of this money went to R & D.

Similarly, none of the $2.3 billion in fines and settlement Pfizer recently coughed up nor the hundreds of millions of dollars of settlement paid by other companies for their alleged indiscretions will go to R & D.   In fact, Pfizer’s $2.3 billion settlement represents more than 30% of their anticipated $6 billion spend on R& D this year.  The $2.3 billion alone would have put any other company in the top 20 of pharmaceutical companies in R & D spending.

So when Pharma says they need high prices to support R & D it is no surprise that the healthcare market and patients recoil with skepticism, frustration, and animosity.

mike@pharmareform.com

The first strategy involves avoiding expensive clinical trials but capitalizing on markets of unmet medical need where you can formulate a story around why your product might make sense for those patients even when you have little or no data. The second strategy is to take advantage of the fact that all prescription drugs have side effects and possible adverse reactions.  By mitigating and disguising the safety issues hidden in the cloud of prescribing information it is easy to downplaying side effects and adverse reactions, even if they might be fatal for some patients.  You can even create a perceived competitive advantage by implying your product has fewer and less serious side effects and adverse reactions than other therapeutic options.

Yes, it might be embarrassing to get caught and you may have a credibility issue with some physicians who don’t go along with your therapeutic rationale or concocted story but the negative financial consequences are pretty benign.  FDA could send you a warning letter.  The government might even fine your company or make you ante up some money to settle the case.  The same is true for product liability litigation.  Yes, there are legal fees and occasionally the company may have to pay the victims multi-million dollar settlements.   But, none of these consequences has near the financial impact of the positive revenue upside that can be generated over the same period of time.

Here is the best part about these strategies.  Many pharmaceutical companies try to play by the rules, so sorting out those who are intentionally deploying these strategies takes time and it is more difficult to identify than you might think.  Companies do inadvertently stray into off-label promotion and may appear to be understating their product risk profiles, especially as interpreted by the FDA.  This makes it all the more effective to hide strategically intended campaigns.  The FDA has to nit pick every promotion they get around to reviewing for clues of impropriety which ties up valuable agency resources making it all the more difficult to do a comprehensive job of surveillance.  Without any real regulatory consequences for non-compliance, the FDA must rely on whistleblowers going to the Department of Justice with their cases in hopes of putting a stop to protracted and egregious abuses of these strategies.  But that also takes time and years to gather sufficient documentation to legally take a company to task.

I am not advocating these strategies.  To the contrary, I believe these corporate orchestrated strategies are potentially harmful to patients and contribute to diminishing trust and credibility of the industry.   But, unfortunately, until the negative financial consequences exceed the revenue and earnings opportunities there is little incentive to stop the use of these strategies in companies with “whatever it takes”  cultures. mike@pharmareform.com

If you’re wondering about your company’s viability in the evolving new healthcare market or considering a move to another company, here are a few things you might want to assess and check out:

• Does the executive team describe their vision in terms of patients and value to healthcare or do they talk about how big the company will be and what industry ranking by revenues they are shooting for and how they are going to get there?
• Is your C-level and management team committed to an uncompromised culture of integrity and what have they done to prove it? DOJ Corporate Integrity Agreements don’t count as proof of their commitment.
• Does your company make decisions based on doing what is right or are decisions driven more by what is legal or what is regulatory compliant?
• Is your executive team more concerned about just having something to sell and the ability of sales and marketing to drive sales than they are about having innovative products that can deliver meaningful clinical benefits to patients?
• Is R & D focused on a few therapeutic areas they intend to conquer with a broad basic science approach and a continuous search for expertise to help them or is your company merely searching for any compound or technology that might have a commercial opportunity?
• Are you proud of your management team, their skill and expertise or are you wondering how in the world they got to be managers?
• Is your marketing team dominated by MBAs who have never spent a “real day”, much less a year or more, in the field? Market research focus groups don’t count as “real days.”
• Are the entry requirements for your sales organization based on high standards for professionalism and technical competence or are people hired because they can talk a good story (read BS meter overload) and have exceptional social personality traits (look nice and are very cordial)?
• Are sales managers focused on the value reps are delivering to their customers or are they still concerned about trying to quantify your activities and deliver the marketing message?

No company is perfect, but if your assessment from these questions are not as reassuring as you might like them to be, you might have good reason to be concerned.   We haven’t even gotten into assessing business considerations like financial stability, pipeline strength, acquisition vulnerability, or litigation exposure.

If you like the answers you got from this assessment you are very fortunate indeed.

mike@pharmareform.com

There is a lot of blame to go around for why pharmaceutical sales is struggling for survival.  There is a rarely talked about and hidden reason but first here are a few of the more obvious and frequently complained about reasons for why pharmaceutical sales representatives find themselves either unemployed or wondering if they will still have a job at the end of the year:

Some have also postulated that the advent of electronic communications and internet availability of medical and drug information have made sales representative obsolete.  I believe electronic communications should not be seen as a threat or replacement for pharmaceutical sales but rather could be a future necessity for handling the large volume of data available and to explain the complexities of new treatment options.

Some have suggested sales and sales management brought it upon themselves with questionable sales tactics and the hiring of less than professionally or scientifically qualified sales personnel.  While these may have ultimately contributed to the continuing demise of this important position, I believe you have to dig deeper to uncover the genesis of this unfortunate evolution.

Some have blamed management for just about everything and in this case, you don’t have to be very specific, from C-level to front line managers.  Unreasonable expectations and “stretch” sales forecasts drove a lot of sales organizations and individuals to do “whatever it took” to meet those sales goals.  Sales management complied with these expectations and was bound and determined to make their incentive bonuses and ensure their place at the annual sales incentive trip.  Again, “whatever it takes” to make or exceed your numbers.

Marketing often built those sales forecasts out of hubris and pushed the sales organization to deliver while also provided the marketing message and resources to do “whatever it took” to  deliver the sales.  Think of the virtually uncontrolled, unlimited (by standards for most other industries) funding for tchotches, lunch and learns, speaker programs, and of course, samples and literature (marketing materials).  Of course reps were encouraged to fully deploy and leverage all their resources.

Some people like to blame the regulatory environment (constraints on what reps can say and do) while others point to a less tolerant healthcare market (increasingly difficult physician access and institutional limitations on promotion).  These, however, while real, were more a response to increasingly aggressive and sometimes questionable (unethical or illegal?) activities rather than being inherent in the market.

No doubt, pressure on sales representatives to make their numbers was and is intense and often requires incredible selling skills and creativity to compensate for the realities of marginal product profiles given the market expectations and sometimes even harmful side effects of the products they were selling.

This leads us to one of the less obvious sources for why I believe the sales representative position has become threatened with extinction.  And that is,  the lack of credible clinical data and appropriate regulatory labeling to support the commercial claims needed to deliver the forecast sales numbers.  Sometimes the clinical data and marketing messages provided to the sales organizations have even been inaccurate, intentionally misleading, or even concocted.

Solid credible clinical data and regulatory approved labeling to support commercial claims mitigates the need for overly aggressive and questionable sales activities and reduces the regulatory constraints that bar sales representatives from having meaningful clinical discussions with physicians.  It is hard to imagine the level of sales that might have been achieved had the talented, skilled sales representatives been armed with better clinical data and stronger, more definitive regulatory label claims.

Research teams pushed (and senior management was pushing even harder) for approval rather than building comprehensive product profiles to support the commercial expectations.  The get-it-to-market drive for approval to attain indication- based label claims without differentiation or consideration for what sales representatives will be able to say or use in promotion unfairly puts sales representatives in an awkward, boring, professionally compromised, and near impossible selling situation.

So before you blame or criticize sales and sales management for jeopardizing the pharmaceutical sales position, look at the clinical data they had to work with.  You might find that they did a better job than might have been expected and you might find the reasons they felt compelled to go to such extremes in some cases to make their sales numbers.

mike@pharmareform.com

(Four of Five Stars)

ForeWord CLARION Reviews

Unlike other books written about the pharmaceutical industry, Mike Wokasch, a 30 year industry veteran, delves into the causes of the industry’s current state of dysfunction.  He provides practical solutions for a prosperous future, even in light of the increasing regulatory constraints, restrictions on marketing and sales, and the demands of an increasingly cost conscious market with its own challenges imposed by healthcare reform.

The author provides an insider’s perspective with unique insights into the unintended consequences of the industry’s rapid growth and explores why some Big Pharma companies may be too big for the complexities of the science, the business, and the market.  Much like his blog PharmaReform.com, this 180 page book is not an exposé but rather a hard hitting discussion of how the industry’s mistakes and poor decisions have led to serious questions about its outdated business model, its long-term commercial viability, and the imbalance between corporate priorities for “profits and patients” that have driven product sales but often put patient health and safety at risk.

Pharmaplasia™, which is available in hard and soft cover at  www.Pharmaplasia.com,  addresses important management, organizational, functional, and philosophical questions such as:

• How will Healthcare Reform affect the pharmaceutical industry?
• What do pharmaceutical companies need to do to better align with the expectations of the market and to adapt to Healthcare Reform?
• What factors, actions, and decisions led to the current state of industry dysfunction?
• Why can’t $65 billion in annual R & D spending produce more innovative products?
• What did organizational growth do to pharmaceutical companies and the industry?
• Is the role of the pharmaceutical sales representative obsolete?
• What do pharmaceutical companies need to do to reestablish trust and credibility in the market?
• What should pharmaceutical executives focus on as they reconfigure their business models?

Industry executives and employees will relate to the historical insider perspective but more importantly, take away practical recommendations for increasing R & D productivity, preserving profitability in the face of healthcare reform, and reestablishing public trust and credibility.

Pharmaceutical industry service providers and vendors will better understand their customers and comprehend the transformative challenges the industry faces; ultimately they will be in a better position to align their products and services to the address the changing needs of the industry.

Healthcare providers will relate to how the industry needs to evolve, appreciate the need for and value of “conflict of interest-free” relationships with the industry, and gain further understanding of the important role they play in ensuring that their patients receive the best available treatment options.

Patients and the general public will enjoy the insider perspective about Big Pharma while learning what they should be able to expect from an industry we all depend upon for innovative new drug treatments that can relieve pain and suffering and save lives.

Preview Table of Contents

Preview Chapter 1

Go to www.Pharmaplasia.com

Integrity and objective science were once the hallmark of pharmaceutical research.   Valid testing methodologies, rigorous analysis and interpretation of data, and accurate complete disclosure of findings and understandings provide the medical community with a sound basis for making informed clinical decisions.  Too many case studies over the past several decades, however, have raised serious questions about the integrity and objectivity of pharmaceutical research.

Not to make excuses but, physicians and scientists at pharmaceutical companies are subjected to intense organizational pressures that can cajole them into compromising their objectivity and scientific integrity.  These pressures come in subtle and sometimes not so subtle forms.  Emotional attachment, satisfaction of personal ambitions, peer pressure, and management can all influence decision making and can provide a rationale for questionable actions taken.

Emotional attachment results from years and sometimes careers worth of product development, creating an instinctive need to nurture and protect “their babies”.   Wanting to maintain a positive outlook, securing incentive compensation, enhancing professional stature, and wanting to be a part of the team can all drive the behavior of individuals and groups to do things they might not otherwise consider.

Perhaps the single biggest challenge for industry physicians and scientists trying to maintain scientific integrity is dealing with the implicit and explicit demands and expectations of management.

Some of the types of scientific integrity issues we are talking about include:

• Designing studies around problems without disclosing the problem
• Data manipulation
• Covering up, hiding, or minimizing relevant negative data
• Disproportionately highlighting efficacy benefits to mitigate safety issues
• Not challenging or correcting company statements (or marketing) when they know they are scientifically not valid, incomplete, or misleading

None of these happens in a vacuum as it would be rare that they could be accomplished by a single individual without the knowledge of others.  At the same time, an individual physician or scientist puts their career at risk when they challenge organizational thinking and management prompted or endorsed indiscretions.

That being said, pharmaceutical industry physicians and scientists are often the only ones who have the corporate platform and organizational position power to guide management regarding what can be supported scientifically or what can or can not be claimed clinically.   They are in the best position to insist on integrity in drug development as well as in how the company promotes its products. They are in the best position to clarify and correct misleading corporate commentary, statements, or implications.

When integrity and objectivity of the science around a product are ensured, when scientists hold their management accountable for accurate and complete disclosures, and when they don’t let marketing and sales make misleading or false claims, then pharmaceutical industry physicians and scientists will provide the basis for restoring confidence and credibility in the work they are doing.  An organization that embraces integrity will value these physicians and scientists and reward them for keeping the company honest.  Unfortunately, companies that do not embrace integrity will probably find a reason fire these these physicians and scientists, if they don’t decide to quit first.

mike@pharmareform.com

Think about it.  At what point are consulting assignments and advisory payments to physicians a bribe or kickback?  Could providing lunch for the office staff really be a bribe or kickback?  Is any comment about product efficacy or safety that is not verbatim out of the package insert possibly “off-label” promotion?  When are graphic interpretations or implications from an advertisement “off-label” promotion?  At what point do random side effects and adverse reactions become “hidden” if not publicly broadcast to the media?  Are systematic miscalculations of pricing always an indication of fraud?  When is competitive pricing considered price fixing?  At what point does editorial assistance become “ghostwriting?”

I am not an attorney and this is not a legal discussion.  Rather, this is about past history of proven and alleged pharmaceutical industry misbehavior including illegal activities.  Perhaps most disappointing has been the fact that as prosecutors pieced together their better informed perspective of alleged illegal activities they often found both willful intent and additional even more egregious activities to support the initial allegations.   The seemingly endless offenses have tainted the perception of prosecutors, legislators, healthcare professionals, regulators, industry critics, and of course, patients.  Virtually everything the industry does is now suspect and often transformed into allegations of unethical if not illegal activities.  Even normal course of doing business activities (e.g., presenting a favorable product profile, trying to influence prescribing, and providing samples) are now being viewed as inappropriate and possibly illegal.

It all boils down to a lack of trust and credibility.  The industry can’t even credibly defend itself to maintain normal business practices because there are just too many cases that demonstrate companies are willing to betray this trust and take advantage of the market for financial gain.  Unfortunately, the pharmaceutical industry doesn’t seem to be too concerned or you would have seen a dramatic change in behavior.

Before trust and credibility can be reestablished the industry and company executives must be on their best behavior.  Once again, actions and consistent behavior will speak louder than words or intermittent gratuitous gestures.  Trust and credibility are much harder to reestablish than to maintain.

mike@pharmareform.com

They should be embarrassed because many of these cases demonstrate that the medical profession has no effective way to educate physicians about prescription drugs.  More importantly, it demonstrates that the evaluation process used by physicians to select treatments for their patients is less than rigorous and not necessarily based on package insert information, a critical evaluation of clinical data, or the literature.  Simple “show me the data” requests with a diligent comparative evaluation should have revealed the data gaps and more importantly, exposed the marketing hype and sales slight of hand for many of these campaigns.  How embarrassing for the medical establishment to have to face suggestions from litigation that pharmaceutical sale representatives and paid physician advocates have the skill and ability to influence prescribing practice without even having legitimate clinical proof of efficacy.

Rather than reveling in the success of winning billions of dollars in fines and settlements levied against the pharmaceutical industry, the plaintiffs and the medical profession should see this as a disturbing scorecard of medical education ineffectiveness and the inability of practicing physicians to critically evaluate prescription drugs for use in their practice.

It is also ironic and very disconcerting that states, private insurance companies, and even the federal government (CMS), all of whom espouse rigorous expert formulary evaluation processes, willingly encourage this prescribing by paying for these off-label uses without approved label claims or even supportive clinical data.  These very same organizations however, find it lucrative to sue pharmaceutical companies for what is actually their own lack of due diligence (no clinical proof of efficacy or safety required), ineffective medical education processes, and lax prescribing oversight (more than just a few cases needing this product off-label might have raise concerns).

There are five simple solutions for preventing pharmaceutical companies from enhancing their sales from off-label promotion. These five actions would make it less attractive, less tempting, and less profitable for pharmaceutical companies to even consider off-label promotion.

• If the government, insurers, or plan mangers don’t approve of off-label prescribing, they shouldn’t pay for off-label uses.  If they decide to pay, they should not be allowed to sue the pharmaceutical companies for their own negligence in product assessments, inability to control prescribing, or ineffectiveness of their medical education processes.
• Physicians should be required by law to inform patients that they are being prescribed a product off-label for their condition.  If the patient agrees to the treatment, they should not be allowed to sue the pharmaceutical company for any reason related to the use of that product.
• Physicians merely have to be more demanding for data and rigorous in their evaluation of off-label claims made by sales people and paid physician advocates.  If they agree to use the product off-label, they should assume all liabilities related to its use.
• Academia and medical education providers should be doing a much better job of teaching physicians about treatment options and challenging, even debunking off-label claims being made by pharmaceutical companies.
• Academics and practicing physicians should be writing articles in medical journals that challenge the off-label claims being promoted by pharmaceutical companies.

If the market feels it is inappropriate to use prescription drugs off-label, that it results in the inappropriate overuse of higher priced prescription products, and therefore contributes to inflated healthcare costs, then the market should do its part and take responsibility for better educating the physician population and better manage the off-label use of prescription drugs.

mike@pharmareform.com

Are we getting to a point where the level of ethical and conflict of interest concerns about pharmaceutical industry influence will be moderated more by the level of financial impact than the convictions of those imposing the restrictions?

Here is one way to keep people honest about their ethical and conflict of interest considerations when restricting pharmaceutical industry activities.

It is the right of these groups and organizations to regulate and even ban pharmaceutical industry activities.  But,  if industry influence on prescribing and concerns for conflict of interest are seen to be detrimental to patients and are the basis for these decisions to preclude the industry from participation, then the restrictions and the need to avoid these influences should apply in principle to all members of that group or organization as well.   There are now a sufficient number of cases which demonstrate physicians and scientists are not immune to breaches of integrity and have been equally responsible for creating these concerns for biasing information about prescription drugs and participating in the creation of conflicts of interest.  Therefore the restrictions should apply to both sides of the activities of concern.   Here are some examples of how they should apply to Massachusetts or for any other organization with pharmaceutical industry restrictions:

• No physicians in the state of Massachusetts (faculty member of Stanford or AHA member, for example) should be allowed to accept any fees from industry, even for legitimate advisory, consulting services, or Board of Directors participation.  These individuals are selected for their expertise and they could be influenced by these payments (more so than a free lunch or pen).  More importantly, these individuals, because of their expertise and influence, have the capacity to influence (pass along biased information) far more physicians in private conversations and even in non-industry sponsored programs.
• Massachusetts licensed physicians and other healthcare providers (or from other restricting groups) should not be allowed to participate in any industry sponsored meetings or conferences.  This includes any national society meetings or conferences or scientific meetings sponsored by industry.  A pharmaceutical company merely being seen as a sponsor could favorably influence a physician about their views of the company and their products. Not to mention the exhibit area influences they would be subjected to.
• No medical meetings or events sponsored by the pharmaceutical industry should be allowed to be held in Massachusetts as this would be encouraging the very behavior (inappropriately influencing physician prescribing) and activities they are trying to curtail with their restrictions.
• Clinical studies are powerful ways to influence prescribing, especially for new products.  Therefore, clinical studies should not be done in Massachusetts (or other restricting institutions).  If they are done they should be done for no fees with only nominal, non-compensation related administrative expenses being reimbursed.
• Research grants and funding have the potential to favorably influence prescribing practice, especially if the data are published under the reputable name of the institution.  Therefore, no industry sponsored research should be conducted at or in institutions other than drug, life science, or biotech companies within Massachusetts.  No industry sponsored research should be allowed at any state facilities or their affiliates.

While these may have significant negative financial implications for individuals, businesses, and organizations, this mutual implementation of restrictions would preserve the integrity of decisions made to avoid conflicts of interest and limit the perks and financial influence of the pharmaceutical industry on prescribing practices.  In fact, these restrictions would have a far greater impact on assuring the elimination of industry influence than taking away pens, pads, and free lunches.

I suspect the negative financial impact will probably be far too great to allow ethics and decision making integrity to prevail in most situations .  As long as it makes financial sense for Massachusetts or other organizations,   the restrictions and expectations for compliance will be one way (only the industry must be controlled and comply) and will not really be driven by the ethical and integrity convictions of those imposing the restrictions.

mike@pharmareform.com

One of the near term beneficiaries of out of control healthcare costs is going to be the pharmaceutical industry.  Coverage and use of expensive branded prescription drugs will continue and while adoption and market acceptance may be slowed by higher introductory prices for new prescription drugs, they will most likely still get on formularies and be available for physicians to prescribe.  I believe, however,  this will be a short lived upside.  Without change and a focus on cost control, here is how I see it playing out.

In the near term, as long as insurance companies and pharmacy benefit providers can continue to raise their rates to cover their costs and maintain profitability, there is little incentive to get aggressive about coverage or costs.  If patients and physicians demand treatment, including expensive procedures or branded prescription drugs, insurers may assess the impact on profitability near-term and they may go through the motions of evaluating reasonableness long-term but in the end they know they have the ability to cover costs by squeezing providers and increasing rates.  So, it really doesn’t cost them anything to include coverage for example of expensive branded prescription drugs. Their only incentive to keep costs down is to remain competitive, but in reality there really isn’t that much competition (similar insurance premiums) amongst the few providers available in a particular geographic healthcare market.

Lack of competition and the ability to raise rates to cover increasing costs will eventually make healthcare insurance unaffordable for businesses to provide, for individuals to consider, and for government to adequately subsidize.  At that point healthcare reform will meet a crossroad of needing to legislate cost controls (e.g., limit insurance rate increases) or be forced to a single payer system. Both options will impose reductions in coverage and costs that will seem draconian by today’s standards of care.  Expensive procedure and branded prescription drugs for which there are less expensive therapeutic options or that can not demonstrate real cost benefit will be first on the hit list.

Unfortunately, a real opportunity for healthcare reform will have been missed as cost cutting becomes the quick fix method of choice for reestablishing sanity to healthcare coverage.  Incentives to dramatically reduce costs will be stronger than those to increase efficiency and leverage cost benefit.  Prospects for efficiencies driven by electronic medical records will stall out as funding is seen more as an expense rather than an investment. Wellness programs and personalized medicine will be wishful thinking as they flounder in development without a chance to mature and deliver the anticipated cost saving benefits.

Despite pleading from the president and state governors, current healthcare reform initiatives will not keep insurance premiums in check  or  moderate increasing costs and ensure long term healthcare affordability.  Pharmaceutical companies will definitely benefit from the  lack of  health insurance competition and a healthcare market with no incentives or serious mandates to reduce or control increasing costs but may be among the first and hardest hit when controlling healthcare costs becomes a priority.

mike@pharmareform.com

The sources for these innovative products have historically been Pharma discovery research, start-up biotechnology companies, and university laboratories.  With a disappointing track record over the past decade or more, pharmaceutical companies have been narrowing their focus and downsizing their research efforts in favor of in-licensing technologies for development.  Looking for reduced risk and higher return on investment opportunities Pharma targets late stage technologies with proof of concept and a high probability of scientific and technical success.  Unfortunately, virtually every pharmaceutical company is now evaluating the same finite supply of technologies to find the few that fit the innovative, late stage, high probability of success profile.

Although one might expect a regular replenishing of the supply, this  should not be taken for granted.  While universities are fertile grounds for therapeutic concepts, targets, and interesting compounds,  few can afford or have the expertise to take potential drug candidates to proof of concept in a regulatory acceptable fashion that will mitigate the risk sufficient to warrant Pharma investment.   As a result, the diminishing supply of investment- worthy late stage programs is about to be exacerbated by the lack of adequate early stage discovery research funding.

At the same time, Biotech companies that can transform these promising technologies into viable development candidates have been starved for cash for the past two years making it nearly impossible to sufficiently fund new projects much less keep current programs adequately funded.  What this means is that the university/biotech pipeline of innovative new products that Pharma is counting on may soon become depleted if it isn’t already.

The obvious solution is for Pharma to accept more risk, invest much earlier, and collaborate.  Given the challenges of drug discovery research and the time required to get programs to proof of concept, Pharma may not have much time before the lack of discovery stage funding creates a gap in the flow of innovative pipeline products far greater than has ever been imagined.

mike@pharmareform.com

Continuing with this train of thought, imagine a future in which pharmaceutical companies consistently put patient health and safety ahead of profits.  A future where pharmaceutical executives care more about their employees and customers than they do about their own career aspirations and personal wealth generation.  Imagine a future in which generous pharmaceutical industry philanthropy makes medicine affordable and available to all in need, regardless of their ability to pay or where they live.  A future in which the healthcare market is better informed of treatment options  and freely acknowledges the disease altering and life-saving value of prescription medications.

Imagine a future in which investors appreciate and understand the inherent challenges of the pharmaceutical industry but value its ability to consistently bring innovative new products to the market and are willing to accept the vagaries of short-term financial performance because of the more predictable long-term returns on their investments.

Is this future for pharmaceutical companies possible, or is it just so much wishful thinking?

mike@pharmareform.com