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

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

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

Reasonable market expectations are best addressed by the consistent actions and behaviors of the company over time.  Unreasonable market expectations, on the other hand, require understanding of the source, empathy, patience, and clear consistent communications to help the market better understand why some of their expectations are not practical or not in the best interest of patients.

The industry must effectively demonstrate that they are delivering on the reasonable expectations, before the market will be ready to accept explanations for why the unreasonable expectations can not or should not be met.  So what expectations are reasonable and which ones might be considered unreasonable?

Reasonable market expectations of pharmaceutical companies:

• To bring safe and effective innovative new drugs to the market at fair prices
• To not have to pay premium prices for products which can not be clinically differentiated in a meaningful way that matters (comparative value)
• To moderate pricing based on substantiation of the pricing rationale with data and clinical information that demonstrate the value of the drug treatment
• To make certain physicians and patients understand the risks associated with product use. Never putting patients at undue risk for the sake of selling more products.
• To assure regulatory compliance in development, manufacturing, and commercialization (marketing and sales). Respect that prescription drug regulations are intended to protect patients from undue harm.
• To act with integrity in support of legal and ethical business practices
• To be transparent in financial support of societies, patient advocacy groups, and other information sources so as to not secure deceptive implied endorsements for products
• To be forthcoming and take decisive action to protect patients when concerns for safety arise, even if it means a temporary negative impact on sales
• To hold executives accountable for their organizations actions and behaviors

Unreasonable market expectations:

• To sell innovative new products at generic drug prices
• To operate pharmaceutical companies as “non-profit” organizations
• To not advertise or promote products for appropriate uses
• To rely on medical school and professional society medical education programs to educate physicians about drug treatment, especially new products
• To execute clinical studies or access clinical expertise without paying investigators, advisors, and consultants reasonable fees (absolute “conflict- of- interest”  free)
• To develop treatments for small patient populations and not charge prices which allow for a profitable return of investment
• To blindly write checks for product liability claims when the risks have been clearly delineated in product information, advertising, and promotion.

Doing a good job of meeting the reasonable expectations will mitigate the importance of and insistence on many of the unreasonable expectations in the evolving new healthcare market.

mike@pharmareform.com

• Fewer treatments that have contributed to the health and well-being of society and in many cases, saved lives (contributing significantly to increasing life expectancy)
• Many physicians would be less well educated about drug treatment options, especially any new products, without the advertising and promotion efforts of Big Pharma
• Fewer patients would be aware of or have access to information about their diseases and treatment options
• Medical schools, professional medical societies, scientific meetings and conferences would be financially challenged with severely constrained medical education programming without Big Pharma support
• Medical journals would have far fewer well controlled clinical trials of sufficient size to reach clinical significance to publish
• Many medical journals would not exist without Pharma advertising support
• Millions more patients would not be able to afford their medicines without assistance from pharmaceutical companies
• Start-up biotech companies would find it nearly impossible to find investors who are looking at Pharma as development partners (to help fund expensive development trials) and possible acquisitions as an exit strategy for their biotech investments
• Hundreds of thousands of well paying jobs would not exist and along with those jobs would go the money that those people put back into their local communities (not to mention the corporate taxes and philanthropy).
• There would be a smaller generic drug market (no generics without proprietary products to copy)
• There would be little hope for developing and commercializing (making products readily available to patients in need) the yet to be discovered new treatments

While some may take exception to these points and might suggest there are better alternatives to Big Pharma, and others may also feel I have missed a few points,  it is still hard to imagine a world without Big Pharma and I don’t believe it would be good for the healthcare market or for patients.

Unfortunately, the good the pharmaceutical industry does is often overshadowed by sensational misbehavior, the seemingly endless number of product liability cases, and the nagging reinforcement of perceived high prices every time patients get their prescriptions filled.  It is time for the industry to change.

“Get the dirt and fog off the windows so the sun can shine in.”

With all the good the pharmaceutical industry has to offer, it should be an industry the market and patients embrace and appreciate, not despise.

Thanks to Dick Bergman comment for getting me thinking about this.

mike@pharmareform.com

You have the treatment of choice with few, if any, other therapeutic options that can help patients for a particular indication.  Any ethical issues in promoting your product?  Probably not, unless you really go out of your way to exaggerate the efficacy or safety of the product beyond what you can prove.  How about when your product benefit and indication is for a small patient population for which you already have a majority of the market and the company expects you to grow revenues next year? Any ethical issues now? Probably not if you continue to promote within your market but what about bigger “off-label” indications?.

How about a product that is as good as everything else to treat a particular disease?  Your product is no better or no worse than the other products.  You might have a few features that are better but the other products have a few that are better than yours.  Neither your product nor competitors has a clear efficacy, safety, or feature advantage that clinically matters.   What are the ethical issues for promotion in this situation?  How about comparative advertising when you know there is no difference?  Can you make your product look better than the other products? This is probably the most likely scenario for most products today.  Probably not too many ethical issues yet unless you exaggerate your benefits beyond your clinical proof or downplay your safety issues to create a competitive advantage.

Now, same scenario as above (no difference) but you are the branded product and there are several generic versions of therapeutic alternatives (in the same class of drug) for the indication?   Are you tempted to make a difference out of no difference to maintain your branded product sales? Is it ethical to expect patients (or insurers) to pay more for the same therapeutic outcome? I can hear it already…branded products are de facto better than generics.

How about when you have a product that is not as effective or as safe as competitive products or therapeutic alternatives?  Getting more interesting isn’t it?  The company still has revenue growth expectations so what are you going to do?  Should you be trying to get more patients on your product if it isn’t as safe or effective as other products?  You are probably thinking it is the physician’s choice, not you making that decision….right?  If you can convince the physician to use your product, it’s their decision…right? How do you feel about that?  How does your manager feel about this?  How does your company feel about this?  What would they say if you raised the issue with them?

While I’m not certain product managers or companies for that matter are thinking this way,  they are faced with these issues everyday in the pharmaceutical industry.  Think about the products your company promotes.  Which scenario do each of the company’s products fit into?  How are they being promoted?  How do you feel about that? Anybody in the company asking these questions?

What’s the answer to this dilemma?

How about company executives (VP Marketing or higher) recognizing the issues and making the call so as not to put front line marketing managers in a difficult, potentially career jeopardizing position?  In the future,  have more products in the first scenario ….innovative clearly differentiated products that you are proud of and that you can promote without having to compromise your ethics.

mike@pharmareform.com

Unfortunately, the industry is constrained by traditional regulatory requirements and worse, a lack of clarity regarding the regulatory interpretation for applying those requirements to the use of this evolving new media.  The FDA is struggling with how to manage, regulate, and control this new media opportunity which has the potential for rapid “viral” distribution of pharmaceutical company provided product and disease-related information.  PhRMA has drafted suggestions for how the industry could employ social media while maintaining regulatory compliance. (PhRMA letter to FDA February 26, 2010)

So, what’s the fuss?

The issue is simple.  Based on past performance and behavior, the pharmaceutical industry can’t be trusted.  Even with guidance, standards, regulations, and laws the industry has demonstrated that they will do whatever it takes to sell their drugs.  Pharmaceutical companies even ignore their own PhRMA codes and guiding principles that are supposed to “assure that promotion of medicine is truthful, scientifically accurate, and non-misleading.”

If pharmaceutical companies had an established base of credibility and had historically demonstrated they could be trusted to provide truthful, scientifically accurate and non-misleading information in their promotions their use of social media would be much less an issue.  With a trusted pharmaceutical industry, regulators could have responded more proactively and would be less concerned about trying to anticipate every potential abuse to make sure they leave no loopholes in their compliance standards which would provide the industry a legal way to abuse or take inappropriate advantage of social media promotion.

Nobody argues the value of informed healthcare providers and patients accomplished through dissemination of truthful, scientifically accurate and non-misleading product or disease-related information.  If the industry could be trusted to do this, regulation would be simple and everybody would benefit.  Time for the industry to work on reestablishing trust and credibility.

mike@pharmareform.com

So what to do from a marketing perspective?  I fully appreciate the need to grow sales and deliver results but if the only way you feel you can do this is by not being truthful, not being fully truthful,  or not being forthcoming about risks, you can not expect to reestablish trust in the market. Trust requires truth and integrity and consistent behavior over time.

One way to get after this is to assess what you are doing and begin to make any necessary adjustments in your marketing planning to reflect truthful disclosures and integrity in marketing. You can’t expect people to trust you or what you say about your product if you can’t be truthful and honest with yourself in doing your own product assessment.

1)      Product Assessment (based on FDA approved label claims only)

• What indications are approved for your product?

• What limitations on use does your product have?

• What patient population is most likely to benefit from your product? Do you know which patients will not respond well or as you might expect?

• How would you describe this population within the confines of your approved label claims?

• Does your product have two well controlled peer-reviewed published clinical data to support the patient populations you plan to market to? (this means the trial data used for the approved claims are available to clinicians for their own evaluations and interpretations)

2)      Market assessment (given your product profile and label claims as assessed above)

• What market is available to you? How large or small is it?

• What limitations are there on your market potential? (e.g., age constraints, drug interactions, etc.)

• How much of the market is not available to you due to potential for side effects or adverse reactions?

• How much of your current revenue is beyond the approved label claims? Are you actively or passively trying to increase sales beyond your approved label claims?

3)      Competitive assessment

• What other products have similar label claims?

• Is your product the best product on the market to treat the approved indications?  Why?  Why not?

• Is your product risk profile (side effects and adverse reactions) better or worse than competitive products?

• Do you have label claims or two well controlled peer review published trials to favorably differentiate your product from competitive products?

• Do your competitors have label claims or two well controlled peer review published trials to favorably differentiate their product from your product?
• If your product is the market leader, how did it get there?
  1. First to market?
  2. Definitive favorable product differentiation based on label claims
  3. Marketing presence (e.g., share of voice, spend, or execution)?
  4. Market expansion beyond approved claims
  5. Implied favorable product differentiation from competitors

4)      Marketing communications assessment

• Is your messaging consistent with the patients identified in the product assessment above?

• Are the claims you want to make, or are making, consistent with your label claims or two well controlled peer-reviewed published trial data?

• Does your advertising imply or suggest a broader market than label claims might include?  Is this intentional?

• Are adverse reaction and side effects an important part of your communications plan or are they merely a regulatory necessity?

• Is your communications strategy inclusive of building trust in your advertising and promotion?

5)      Tactical plan assessment

• Are programs consistent with label claims and the indicated patient populations

• Are your tactics designed to capture patients beyond the label claims of the product?

• Are your tactics designed to encourage market expansion through off-label use driven by “physician choice”

• Are there veiled inducements (e.g., speaker fees, sponsorships, consulting fees, or promises of clinical trial participation) to encourage healthcare providers to espouse implied product differentiations or implied uses beyond label claims?

• Are your medical education programs designed to capture patients identified in the product assessment above and to encourage appropriate product use or are they intended to expand use beyond that population.

• Do you find yourself rationalizing why something is ok and consistent with labeling?  Are your activities defensible without rationalizing?

• Do you have organizational controls to make certain execution of the tactical plan is consistent with the intended plan and can not stray  (e.g., no maverick sales promotions, no locally funded inducements)

As you go through assessing your own products you should have additional questions that make you stop and think about the intent of what you are doing verses what you say you are actually doing.  To reestablish trust in marketing, communications and actions must be truthful, must not be misleading, must be compliant (regulatory and legal), and must consistently support the best interest of patients over time.  No amount of revenue or profit opportunity can or should be able to change this.  Remember, trust and integrity are not a matter of convenience or circumstance.

Next we will discuss pricing practices and their impact on reestablishing trust.

mike@pharmareform.com

This renewed commitment should be reinforced in mission and vision statements and even considered for goals and objectives.  Repetitive corporate communications should reinforce what this renewed commitment means and what the expectations are for compliance.  The desired behaviors and responses to potentially compromising situations should be clearly defined with examples of what is expected and what past behaviors, actions, and decisions are no longer going to be acceptable.  Clear instructions for what individuals should do if they are aware of, are about to be a part of, or feel there is going to be a compromise to integrity.   Managers and executives must be vigilant to intervene before breaches occur or have the potential to compromise trust.

Most importantly, executives and senior managers must set the example with their own behaviors, actions, and decisions.  Compliance should be mandated (zero tolerance) with significant consequences including letters of reprimand in personnel files, reduced or complete denial of incentive compensation, and even loss of job depending upon the seriousness of the breach.  Managers and executives should be held personally accountable (including suffering consequences) for breaches in their areas of responsibility.

Having integrity can also not be a matter of circumstance or convenience where it is expected if it doesn’t hurt the revenue, if it doesn’t impact the stock price, or if there is no potential for litigation.  Integrity is expected even if it means being put at a competitive disadvantage or involves upsetting an important KOL. The industry has gotten quite good at rationalizing and finding excuses (CEO’s who claim they didn’t know what was going on?)  to mitigate integrity implications of their questionable behavior and actions.

While you might think integrity should just come naturally and that compliance to the organizational expectation should just happen, in reality, it must be managed. As most good managers know, “you can’t expect what you don’t inspect.”  If you don’t believe integrity needs to be managed …how many companies do you think could go a full year with no breaches in their organizational expectations for integrity?

Assuming your organization is committed to reestablishing trust with a strong culture that supports integrity, we’ll next look at marketing’s role in reestablishing trust.  Stay tuned.

mike@pharmareform.com

1. Acknowledge the wrong doing and take responsibility for the distrustful actions
2. Commit to never do it again and to never betray the trust again
3. Establish practices that ensure trust is never breached again. Trust can not be broken just because the circumstances at the time will benefit you.
4. Demonstrate commitment to the relationship with supportive goodwill gestures
5. Have consistent positive behavior (no breaches) over time

The industry has plenty to do and decades of distrusting behavior to mend.  No single act of goodwill or launch of a miraculous drug will put the industry back in good graces.  There is no amount of advertising, eloquent speeches, or contributions to charitable organizations that can replace consistent good behavior.  Making this increasingly difficult is the fact that any breach, by any company, can quickly negate the progress the industry might have made to that point.  So what specifically can the industry do and more importantly, what can pharmaceutical companies and individuals at companies do to reestablish market trust?   Stay tuned.

mike@pharmareform.com

1. Lack of honesty and full disclosure about product information (Corporate, Marketing, Sales, and Scientific integrity issues)
   1. Not disclosing, not acknowledging or downplaying potential serious adverse reactions and side effects (e.g., many including  Fen-Phen, Vioxx^®, OxyContin^® , Ketek^®)
   2. Exaggerated product claims in marketing or in sales presentations…especially comparative claims
   3. Scientific data manipulation to highlight benefits, exaggerate efficacy while carefully downplaying side effects and adverse reactions
   4. Deception in advertising (paid actors or celebrities to project credibility as they play healthcare providers or miraculously recovered or satisfied patients)
2. “Off-label” promotion (e.g., many such as Neurontin^® and Bextra^®)
   1. Companies not willing to spend the money to prove the claims but willing to encourage physicians to subject patients to uncontrolled experimental use
3. Questionable physician payments, inducements, and “conflicts of interest”
   1. Extraordinary Speaking fees and resort location training programs
   2. Excessive consulting fees, including suspect clinical study payments
   3. Board of Director fees (hundreds of thousands of dollars)
   4. Office practice meals, tchotchkes, and other perks
   5. Expensive meals, cultural or sporting events (e.g., Broadway shows, golf outings) for physicians and other healthcare providers who can influence prescribing
4. Pervasiveness of industry influence on scientific and medical communications
   1. Promotional programs presented as CME
   2. CME program development and sponsorship
   3. Medical Science Liaisons as safe harbors for scientific exchange of product information
   4. Publications, including sponsoring ghostwritten articles and books
   5. Journal advertising in medical journals
   6. Scientific and medical conference participation and exhibits
   7. Internet medical information sites
5. Pricing practices
   1. Pricing fraud (especially as it relates to Medicare and Medicaid)
   2. Unsubstantiated high prices (lacking credible rationale or cost benefit data)
   3. High price increases (recent 9.3% increase compared to -0.3% for general inflation (CPI-U)

This is now a complex, multifaceted, and time entrenched distrust. Can the industry afford to ignore it?  If the industry or a company decides to work on this, what should they do?  What can they do?  Stay tuned.

mike@pharmareform.com

Why is it so difficult to stop wrong doing or make a change at a big pharmaceutical company? I’m sure there are company specific reasons but here are some that are likely at many companies.

First , organizations have safeguards built in so that everybody who happens to have an idea doesn’t just run off and do their own thing or execute something that may or may not be in the organization’s best interest.   Process, however, is usually not the reason employees don’t or can’t affect change as much as they might.

Probably the single biggest reason is risk.  The risk is high for low level employees and even senior management, at times.  First your reputation is at stake. You risk being ridiculed by your manager, being chastised and ostracized by your peers, maybe even humiliated in front of your peers.  You risk job security, career growth, and your compensation might suffer as a result of identifying a problem or trying to encourage changing to a better way of doing things.

If the risks are not real enough, the fear that the risks can harbor are often enough to keep employees from stepping up to identify problems and make suggestions for change. If you think I am being to negative and unrealistic, just do a review of some of the litigation cases against pharmaceutical companies and tell me how the whistleblower or anybody else, besides executives, might have been able to intervene or affect change without these risks.  In many cases they and others  did try to intervene and make a change, but obviously they often did not succeed until they went to court.

Why is this important in the context of healthcare reform and the need for change in the pharmaceutical industry? Because, change and knowing how and what to change often lies within the organization, and not necessarily at the top of the organization.

The solution may sound idealistic but in reality the only way to resolve this is for management to make sure you have competent people with integrity in your organization.  This increases the probability that the problems identified are real and the suggestions for change are worth consideration.  These employees need a management culture that encourages open communication that minimizes personal risk when identifying problems and suggesting change.

Employees in this type environment have a higher probability of affecting change and the organization can better leverages the talent they have working for them.    We’ll discuss how employees can be more effective at pointing out problems and affecting change in the next post.

mike@pharmareform.com

I couldn’t resist commenting myself;  so here is what I have posted on some sites:

Unrestricted grants are not a new concept. I’m not sure how, or if, this is different. While Stanford control and lack of Pfizer input on specific content may be the implied distinction being proposed here, that has been the intent and practice of many unrestricted pharmaceutical industry grant supported programs including many ACCME programs in the past. Without more transparency about the negotiations that took place surrounding this grant, it is hard to understand how identifying “programs of mutual interest” with “milestone” payments hasn’t already or isn’t going to influence what topics are going to be covered in these Pfizer sponsored Stanford programs.

It appears that Pfizer merely found the price point at which Stanford was willing to compromise its previously stated position (Stanford Report dated September 13, 2006 “New Policy Limits Drug Industry Access”) that “industry-directed funding may compromise the integrity of these education programs”. The $3 million seems to have also moderated Dr. Pizzo’s concern about “the pervasive presence of the pharmaceutical industry in the medical profession” and his desire for Stanford educational activities to “not be influenced by any kind of financial industry support.”

A couple of things must have happened. Either Stanford could not find sufficient alternative sources of funding for their continuing medical education department and/or the $3 million was just too hard to turn down.

I guess everything still has a price; you just have to figure out what it is. This relationship based on a $3.0 million grant does not help move CME forward for the industry, academia or healthcare providers. It provides validation for those who continue to be concerned about financial influences of the industry. Pfizer merely proved that even Stanford can’t resist…when the price is right.
mike@pharmareform.com

So the industry “bought” some time.

It is not clear that companies have figured out that the need for change is still there.  Even the hot legislative issues of government negotiated prices,  additional rebates or other price control strategies,  and importation are not going away. Market expectations also remain high for more effective and safer products at market sensitive, value-based prices.   The market is also no less weary from the “hype”, questionable ethics,  and financial “conflicts” of traditional sales and marketing tactics.  Public trust and confidence has probably not improved as a result of the multimillion dollar lobbying campaign.

Healthcare reform should be acting as a catalyst for change.  Now is the time for pharmaceutical companies to formulate new, more market receptive strategies, and retool their R & D to deliver truly innovative new products, dramatically reduce their operating expenses, and reestablish corporate cultures that embrace integrity.  Unfortunately, the “dodged bullets” and “bought time” may have just mitigated the organizational “need for change” and  sense of urgency.

Companies that remain committed to change, address their organizational challenges, and correct the market driven concerns will find they are creating a competitive advantage for when the market, and not legislators, decide how to employ pharmaceuticals in the delivery of healthcare.  An increasingly cost conscious “managed” market with expectations to have better treatments for more patients at lower costs awaits the industry.

mike@pharmareform.com

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The solution to this healthcare reform driven change is for pharmaceutical R & D to step up to an even higher level of performance than companies might be anticipating.  Many pharmaceutical companies are struggling to correct diminishing R & D productivity seen over the past decade.  So what else is there besides bringing innovative new products to the market?

Healthcare reform will have these added expectations:

1. Regulatory approval for all indications that are anticipated for product use.  With few exceptions (e.g. cancer treatments), refusing to pay for “off-label” use of prescription drugs (especially new products) will become a cost containment tool.
2. “Comparative efficacy” means de facto clinically proven “superiority” to other treatment options.  This will require more comparative clinical trials against multiple treatment options to demonstrate definitive “best practice treatment “.  Without the data, branded prescription products will be defenseless and subject to more ready generic and therapeutic substitutions.
3. To ensure appropriate use and to help control costs, pharmaceutical companies will be expected to provide diagnostic tools to identify the patients most likely to respond to a innovative new product, tools to determine if their products are working, and tools to help avoid side effects and adverse reactions.  Drug product oriented pharmaceutical R & D programs today are not set up to deliver these expectations and many do not have the diagnostic development expertise to even consider these possibilities. It will be interesting to see if those pharmaceutical companies that do have both drugs and diagnostics (e.g. Abbott and Roche) can make drug supporting diagnostic tool development a priority, leveraging this advantage across their business units, aligning goals and mitigating bureaucratic obstacles.
4. The need for more sophisticated cost benefit data to support pricing strategies and reinforce product value will heighten the need for enhanced expertise and organizational commitment to generating more “real world” and higher quality pharmacoeconomic data.
5. Credible peer-reviewed publications and peer-reviewed data presented at medical meetings will become the scientific basis for the market to evaluate the safety, efficacy, and appropriate use of products.  This will require credible transparency to company research findings and a corresponding increase in scientific integrity, expertise, and communication skills on the part of pharmaceutical researchers.    “Ghostwritten” publications and “expert” guest lecturers hired to provide product endorsements will have little impact on healthcare executives focused on reducing the cost of prescription drugs for their plan participants.

With companies focused on the challenge of discovering and developing “innovative new products”, these evolving market expectations will require new and different expertise.  More importantly, these expectations represent significant incremental costs to current R & D programs.  Affordability will have to come from dramatic improvements in R & D operational efficiency, fewer pipeline projects with narrower therapeutic areas of focus, and more cost sharing collaborations. (e.g. other pharmaceutical companies, biotechnology and diagnostic companies, academia, and government agencies).

mike@pharmareform.com

Integrity and trust are essential to effective leadership.   An organization is nearly impossible to lead, regardless of size, if management is not trusted.  Perhaps an inherent survival mechanism, employees have to trust that the leaders of the organization will make good decisions, even in difficult situations, and will not compromise the well-being of the company or the employee’s personal situation.

Trusted leaders can spend more time leading and can create much more responsive companies that can  adjust quickly and take advantage of unexpected market opportunities.  They spend less time trying to convince their organization (and sometimes their own management) about what needs to be done.

Similarly, organizational size and rate of growth  can be limited by the lack of organizational commitment to integrity.  The extent to which management and employees trust each other to do the right thing, regardless of the circumstances, is a critical success factor for growth.  Simply put, you can manage a larger organization of people  you can trust compared to an organization of people you can’t trust.

An organization that supports and promotes a culture of integrity will also function more efficiently, spending more time exploiting opportunities rather than managing disciplinary situations, dealing with regulatory or legal issues,  or administering corrective actions.  Personal and corporate integrity  enhance the capacity for organizational growth.

As previously suggested, integrity is also at the heart of efficient commercialization practices. Pharmaceutical companies that establish trust with healthcare providers and patients will find a more receptive audience for their product information and new product introductions. Unfortunately, litigation and accompanying negative publicity highlighting past pharmaceutical company missteps in sales and marketing have compromised public trust and will make product promotion and new product launches in the evolving new healthcare market more challenging than it otherwise might have been.

Healthcare reform will bring with it a heightened but reasonable expectation for personal and corporate integrity. To succeed in the evolving new healthcare market, it is critical for pharmaceutical companies to strategically make a demonstrable renewed commitment to personal and corporate integrity, even under difficult and sometimes  financially damaging circumstances.

Perhaps a disappointing commentary on the current state of the industry but, those companies that successfully execute against this single objective (establish a reputation for integrity and being trusted) will create a valuable competitive advantage in the evolving new healthcare market.   They will find their organizations easier to lead and manage, they will increase their operational capacity for growth, and most importantly, their product information and new products will find a more receptive market.  It is the responsibility of corporate executives to set a clear organizational expectation for integrity, to provide visible examples by their decisions and actions, and to ensure unwavering compliance.

mike@pharmareform.com