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 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

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

 “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

PharmaReform.com has explored a broad range of challenges and issues affecting the pharmaceutical industry.  The intent of the blog posts has been to encourage and stimulate thinking about how to address industry shortcomings while finding more patient- and healthcare customer-friendly approaches to marketing and selling prescription drugs in an increasingly complex business environment.

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

Over 100 blog post articles, organized by topic (see Table of Contents),  are included in this e-book format (Amazon’s Kindle) providing a more convenient portable document for readers who prefer keeping, retrieving, and reviewing them as a reference.

mike@pharmareform.com

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

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

Product liability litigation against pharmaceutical companies often feature how the pharmaceutical company insufficiently or inaccurately informed physicians  (often highlighting what the sales representative said or didn’t say and the brochure used) about the appropriate use of products (right patients, right dose) or communicated misleading understatements or outright omissions of the risks associated with prescribing those drugs.  Companies who can demonstrate they did everything they could to accurately and comprehensively inform the prescribing physician, especially about the risks involved in the plaintiff claims, are generally afforded some degree of legal protection under what is called the “learned intermediary” doctrine.

An increasing number of healthcare systems, hospitals, and academic medical centers are banning pharmaceutical sales representatives from their institutions.  Some group practices and even individual physicians are also placing restrictions on pharmaceutical representatives.  The intent is often to control the influence of sales representatives on physician prescribing but also to preclude representatives from distracting physicians and consuming practice time with interactions that are perceived to have little or no value.

Whatever the reason for limiting sales rep access to physicians, I am wondering how pharmaceutical companies could possibly be expected to fulfill and demonstrate their “duty to warn” responsibilities when institutions and physicians have decided to ignore and outright refuse one of the historically most effective means of communicating product information.  Will the package insert information now be the basis for appropriately “informing” the medical community and satisfy the “learned intermediary” doctrine?

Again, I am not a lawyer but I wonder what the courts and patients are going to say when a pharmaceutical company facing a “failure to warn” product liability charge demonstrates that their package insert clearly delineates the appropriate use and potential risks and they did everything they could to get the information to the physician but they were banned or denied access.  What are physicians going to tell their suing patients when the pharmaceutical company representatives testify that they tried repeatedly to get time with the treating physicians  to discuss the risks and benefits of the drug but were prohibited by policy and rejected at the office or hospital.

If healthcare systems and physicians make the decision not to include pharmaceutical company representatives in their drug education process are they also assuming more liability when pharmaceutical companies defend themselves by demonstrating that healthcare systems and physicians “chose” not to be informed or educated by the company?   They may in fact feel this is no big deal, they’ll just do their own educating.  But if physicians and healthcare systems assume this responsibility and take the deep pockets of the pharmaceutical company  “off the table” , are they really ready to assume the financial consequences or will patients seeking compensation and their lawyers be less quick to file these product liability suits?

mike@pharmareform.com

The drug shortage problem has been evolving over the past 5 years or so and was inevitable given the market pressures on generic drug pricing and a market expectation for FDA approved products to be manufactured under rigorous cGMP conditions affirmed by FDA facility inspections (remember heparin?).

First, I believe the root cause of most of the drug shortages is the lack of financial incentive (profitability) to ensure a continuous supply of product to the market.  This is mostly not a Big Pharma issue with high margin branded products.  The majority of drug shortages are for generic drugs and many are injectable products (difficult to manufacture).  Generic does not necessarily mean easy or cheap to manufacture.

So, why don’t generic drug companies just raise their prices?  Well, perhaps the biggest factor is Medicare pricing and the 6% price increase cap in any 6 month period but also the aggressive price negotiations by Pharmacy Benefits Managers, pharmacy chains, hospital purchasing groups, and wholesalers.   Besides the manufacturing logistic challenges, the Medicare price increase cap leaves little incentive to ramp up production in the face of a shortage.

If low profit margins accentuated by the challenges and expense of maintaining manufacturing quality are to be blamed for these shortages,  what can FDA do?

First, FDA could be more lenient about the expectations and enforcement of cGMP requirements.  This might be a reasonable option where compliance issues are minor administrative deficiencies that should be in place but may not be as tidy as FDA and cGMP regs might require.  If administrative record keeping and paperwork issues are keeping otherwise high quality products off the market, FDA could provide some relief, at least temporarily.  My guess is this is not the case in most current drug shortage situations with manufacturing quality and FDA concerns being of a more serious nature.  And, to ignore cGMP entirely (e.g., don’t inspect so you don’t find)  is not a viable option where patient safety is at risk.

A more reasonable option, if the manufacturer really wants to continue manufacturing, would be to have the FDA work closer on an expedited plan for resolving regulatory concerns about safety or quality manufacturing issues.  Similarly, the FDA could work with interested alternative manufacturers to facilitate an accelerated approval of facilities, processes, and drug application.

I’m somewhat skeptical about fixing manufacturing issues because the investment (accelerated cash spend in short period of time) to resolve the issues may be far more than the market might be willing to pay for in terms of higher prices.  And with higher prices, even if manufacturers could raise prices to sufficiently profitable levels, comes the potential for market criticism and resentment because you are charging more than they used to pay.  Raising prices on prescription drugs, even when warranted, is a “no win” for manufacturers.

FDA could require filing “continuity of supply” plans with new drug approvals, brand or generic.  No viable alternative plan, no approval.  Besides being difficult to enforce, it won’t help the near-term drug shortages.

I’ve also read about building government stockpiles of “critical medicines. “  I’m not sure about the practicality of this in terms of how much supply for how long.  Would you stockpile months or year supplies? This might provide some modest initial financial incentive to the chosen manufacturers and these stockpiled drugs would also need to be replenished once they expire.  Managing this process and determining which manufacturer will get the contract at what price for a particular product, however, could undermine the purpose and viability.

The problem with most of the proposed solutions is they don’t address the root cause …  lack of financial incentive to ensure a continuous supply.

If the products that are now on the shortage list were priced at or maybe even priced slightly below the historic branded prices, I’m certain most would not be in short supply.  Manufacturers would already have “continuity of supply” plans in place. They would be making absolutely sure they made the necessary investments to ensure cGMP compliance.  They would make sure their active pharmaceutical ingredient (API) suppliers were sufficiently incentivized to ensure a continuous supply.  And if there was an anticipated problem, they would be working diligently around the clock and making any necessary investments to ensure supply to the market.  The FDA can not fix these financial incentive issues, regardless of the regulatory authority the President or Congress might want to bestow on the agency.  mike@pharmareform.com

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

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

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

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

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

mike@pharmareform.com

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

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

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

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

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

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

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

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

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

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

•  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

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

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

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

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

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

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

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

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

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

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

So what’s a pharmaceutical marketer to do?

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

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

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

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

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

Healthcare failure statistics (e.g., hospital related infections, treated but uncontrolled diseases, lack of responsiveness to treatment, complications of multi-drug treatment, and patient non-adherence to treatment) while disconcerting, have often been ignored or just taken for granted.  But, these types of numbers can give clues as to where prescription drug treatment could help healthcare providers in ACOs (or other healthcare provider systems) improve the quality of care and clinical outcomes in cost effective ways.

Across healthcare, the list of failure statistics seems never ending from clinically inappropriate drugs or dosing being prescribed to adherence related issues, outright medication errors, and patient disappointment with the explanation about discharge medications.  Even a cursory internet search of product relevant disease states will yield a wealth of failure statistics that could potentially be improved, many simply with the appropriate use of  prescription drugs.

Don’t be discouraged by the variability of the statistics for any given problem.  The precision of specific numbers is not important because at this stage you are looking for clues for where you might be able to make an improvement.  You’ll get real world hard numbers from the healthcare provider sites you work with to develop your baseline data.

You should be able to put together a disease and treatment statistical profile for each of your products.  What I am suggesting is going beyond the global numbers of patients and market shares traditionally used for determining opportunities and driving forecasts.  You need to dig deeper to find the performance improvement opportunities, the types of patients or situations that represent less than satisfactory healthcare performance.   Here are a couple of examples:

Hypertension:

There are plenty of safe and effective prescription drug treatments available, including generic drugs.  When you take a quick look at the overall average numbers there might not seem to be much of an opportunity for significant performance improvement.  After all, 68% of adult hypertensive patients are being treated with anti-hypertensives and 64% are achieving blood pressures less than 140/90mm Hg (controlled).   But a closer look reveals that the percentage of treated patients is much low in younger patients (age 18-59), especially men (47%) and Mexican Americans (50%).  The percentage of controlled hypertension is also lower in older patients (58%) than in younger patients (72%), in general.  Insurance coverage has also been identified as a factor with 71% of uninsured hypertensive non-elderly adults uncontrolled.  More striking is that 52% of those with private and 45% with public insurance remain uncontrolled.

Pneumonia:

Again, at first glance one might find it hard to suggest there is an opportunity for performance improvement when you read that over 60% of elderly patients receive pneumococcal vaccine.  But a closer look reveals that the percentage of adults aged 65 years and over who had ever received a pneumococcal vaccination was 39.8% for Hispanic persons, 64.9% for non-Hispanic white persons, and 44.5% for non-Hispanic black persons.  More importantly, despite vaccinations and effective antibiotics there are still 52,000 deaths related to pneumonia in the US every year.

Depression:

While there may be considerable opportunities realized by encouraging more patients with signs and symptoms of depression to seek treatment, here are some statistics that would suggest there are even opportunities within the treated patient population.  Only 24% of depression patients recover following 16 weeks of drug or psychotherapy and remained well during 18 months of follow-up and  50% of depressed patients treated by medication relapse within two-years.

My intent here was not to provide an exhaustive statistical profile for these diseases but rather to demonstrate that previously ignored or taken for granted healthcare failure statistics, especially those related to treatment  failure may represent new ways to help healthcare providers achieve their quality and clinical outcome performance metrics.  It may take some investigation into the reasons behind some of these numbers but if they are patient selection, dosing, or adherence related, you could be onto something.

Developing a useful value proposition and supportive data will require identifying the specific failure-based  statistic opportunities and then determining with provider systems which improvements will make a difference for them and what data could be developed to demonstrate meaningful improvements.  Keep in mind, healthcare provider systems will now have electronic medical records to help track and follow interventions (e.g., education and adherence programs) and patient responses to treatment.

Again, this goes beyond marketing your regulatory claims for safety and efficacy.  It also takes some research beyond traditional market profiling in a marketing plan.  It will require creativity to interpret the ACO performance metrics in the context of how your products will be assessed and how your product might be able to improve some of the relevant healthcare failure statistics.  These healthcare system improvements in quality or clinical outcome performance metrics not only benefit patients but could have significant financial implications for healthcare providers.  mike@pharmareform.com