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

Should they get bigger, should they downsize?  Should they acquire, grow organically, or divest? Should they be “pure” pharmaceutical plays or diversified healthcare companies?  Should they continue to exploit the US market or expand into emerging markets?  Should they rebuild and restructure R & D or move to a more flexible outsourcing model?  Should they focus on diseases, products, or technologies?  Are regulatory compliance, manufacturing quality, and integrity important for building trust and credibility or are they “envelops to be pushed” for competitive advantage and financial gain?  Strategic and tactical choices that can affect business today and well into the future.

So what’s the big deal?  Don’t all companies go through this?  Why is this important?

It’s important because, when a company determines who they are, finds its purpose, and develops a passion for what they do; strategic and daily operational decision making become easier and are more likely to deliver the organizational goals and objectives that support the company purpose.  This corporate understanding of “self” includes a deep seated set of behavioral expectations, values, and principles by which the company operates and does business.

Definition, consistency of behavior, and organizational alignment allow employees to embrace and support the corporate purpose in their daily activities.  Decisions become easier as choices and options either fit or don’t fit the behavioral values or purpose.  More importantly, employees, prospective employees, customers, collaborators, and investors all know what to expect from the company.

Despite all the mission and vision statements in their lobbies, I believe many of the Big Pharma companies today have lost their purpose and are confused about their ”self.”  With a fixation on near-term financial performance (their apparent purpose), they seem to be struggling to find the “quick fixes” to business success in the evolving new healthcare market.

Most pharmaceutical companies would never admit they have lost their purpose.  At the same time, if they were to explore this fundamental business principle, many might learn that even their management teams are uncertain, if not finding total organizational disagreement about who they are and what they do.

mike@pharmareform.com

Those looking for or postulating near-term quick fixes from strategic restructurings, mega-mergers, technology acquisitions, or breakthrough serendipitous discoveries to resolve the industry dysfunction will be sadly disappointed.  As described in Pharmaplasia™, the problems in the pharmaceutical industry are deep rooted and involve more than just a lack of  R & D productivity.

Sure there are going to be the occasional successful new product introductions that give us hope that the industry is recovering but even those introductions will have been the result of decades of development work and there will be too few to really make a significant impact on restoring healthy consistent revenue growth for the industry.  For the pharmaceutical industry there are no quick fixes and it could take decades for the impact of the multitude of strategic efforts today to really begin delivering the types of financial results expected from the magnitude of investment being made by the industry.

In addition to fixing R & D, the pharmaceutical industry business model must become more efficient (increase operational productivity and reduce waste), must be more responsive to healthcare market needs, and must replace traditional sales and marketing tactics with healthcare market embraced programs.  Success will depend on competent leadership that is more interested in satisfying evolving new healthcare provider needs and patient well-being than “driving revenues”, satisfying Wall Street, and building personal financial wealth.

In the end, a more prosperous future for the pharmaceutical industry will come from discovering and developing truly innovative new treatments that provide clinically meaningful benefits over currently available therapeutic alternatives.  This will take a major change in R&D philosophy with a much more comprehensive basic sciences approach to finding preventions, treatments, and cures for diseases rather than relying on historical “tweaking of chemistry” and “trial and error” approaches of matching compounds with postulated disease targets.   mike@pharmareform.com

Industry reports, Wall Street commentary, media exposure, and trade journal articles continue to paint a pretty depressing picture for the pharmaceutical industry. Declining revenues, thinning pipelines, prominent blockbuster products coming off patent, an inordinate number of disappointing clinical trial results, and inexplicable regulatory rejections are just a few of the issues haunting Pharma executives.  Collateral damage from mergers and acquisitions, plant closings, downsizings, and continued regulatory and legal consequences from questionable, if not illegal, activities.  The state of the pharmaceutical industry seems more than just a little challenging as a place to work.

In the midst of this challenging environment, pharmaceutical executives need the support and high level performance from their employees more than ever before.  Unfortunately, executive credibility among the rank and file may be somewhat compromised by uncertainty precipitated by their actions of the past and more recently, the pick slips handed to many of their fellow co-workers.  With the continued threat of even more cost cutting and downsizing,  inspiring and maintaining employee morale will take more than visionary leadership and executive cheerleading.

The single biggest factor company executives have to deal with as they try to manage through to prosperity is the psyche of their employees.  What if I’m worried about my job, the financial viability of the company, the stock price (my retirement), more pipeline failures, litigation losses, and bad press?  Can I really be performing at my highest level?  Do I even care?

So, when are people most productive and performing at their highest level?

When they feel good about themselves, their job function, and their company.  When they are well trained and have the expertise to perform at a high level.  When they have the right mindset about who they are, the role they play in what they are doing, and how well they are doing it.  When they feel they can still grow in their jobs, know they can learn and feel good about finding new ways to do it better.  When they don’t feel like their job is a job but rather what they do makes a significant contribution to the good of the company.  When their efforts and performance level are acknowledge in a meaningful way.

How does your company deal with these issues?  Do company executives and managers have a psyche improvement plan?  Do they have the training to help employees create and develop the right mindset and reach these higher levels of performance?  Or,  are they just hoping things will get better?   mike@pharmareform.com

Almost nothing of importance in the pharmaceutical industry happens fast yet an incessant sense of urgency almost seems to be a badge of honor and is often applauded by Wall Street.  There seem to be a pervasive need to get things done quickly at pharmaceutical companies to create a competitive advantage (first to market) and potentially increase the commercial opportunity (more time left on the patent to market the product).

But, is having this sense of urgency always a good thing? Let’s take a look at four areas where an indiscriminately managed sense of urgency can lead to inferior, if not disastrous, results for a pharmaceutical company.  A reckless sense of urgency in research, manufacturing, commercialization, and employee development all carry significant potential liabilities.

Looking for quick hits in discovery research, rushing products through clinical development and even quickly killing product candidates early in development can all lead to disappointing results, even for products that might have otherwise done really well.  Missed therapeutic applications, overlooked safety issues, and product failures in late stage clinical trials can be symptomatic of making urgency and speed a priority in research.

Manufacturing operation with a heightened sense of urgency may be able to get up and running quickly or increase production output but run the risk of operational errors, increased waste, and fostering damaging quality issues.

Similarly, when commercial plans and tactics are deployed without due processes in an effort to get it done or to make a change quickly, marketers run the risk of medical-legal compliance liabilities, market miscommunication, misdirection of the sales force, and potentially slow adoption or even instigate rejection of the product by the market.

Also, when individuals who have accelerated promotions to higher levels of corporate responsibilities before they are truly ready, they are probably not thinking about the potential liabilities of premature advancement. Unfortunately, the realities of their inexperience can quickly catch up with them,  resulting in mistakes and poor decisions that have increasingly greater and longer lasting impacts on the company and the people who report to them.

I’m not suggesting the pharmaceutical industry and executives abandon this sense of urgency but rather to apply it discriminately and manage it carefully.  Not everything should have the same heightened sense of urgency and those that do require a commensurate high level of attention to detail with a disciplined, realistic assessment of expectations and potential liabilities.  Somebody needs to be asking; “Are these timelines necessary and realistic?  Why? And For what end result? “  With these timelines; “What are we missing here?” and “How do we mitigate the risks?”   mike@pharmareform.com

Here are some things for Big Pharma executives to consider as they restructure for the future:

• No single blockbuster product can fix a dysfunctional pharmaceutical company.  It can only buy time to make the inevitable difficult but necessary changes.
• The pharmaceutical market will become increasingly global with less regional variation in treatment practices, regulation, and pricing.
• Unsubstantiated value of seemingly unjustifiably high prices will be met with market rejection, outright price controls, government price negotiations, and higher rebate expectations.
• Relative to Big Pharma pipeline needs, Biotech will have a finite supply of clinically meaningful differentiated innovative products available for acquisition
• Traditional marketing and sales activities will have little impact on prescribing behavior which will be more influenced by scientific rationale, demonstrated meaningful clinical benefit, and the impact on overall healthcare costs of treating the patient
• Prescribing will be increasingly managed with “best practice treatment guidelines” prompted and monitored for compliance through e-prescribing technology
• Electronic medical records with medical information systems driven algorithms will allow for real world assessments for determining relative therapeutic benefits and healthcare cost implications of treatment options
• Financial incentives, cost management benefits, and more effective products and programs will drive a revitalized interest in making preventive medicine and medically prescribed life style changes a priority
• Product and treatment assessments will be more rigorous, more sophisticated, and less easily influenced by Pharma companies unless they have  compelling real world clinical data to support their claims
• Comparative efficacy will become a regulatory and healthcare market expectation
• Therapeutic options will include stem cell, gene therapy, and synthetic biology- derived treatments.  Some may ultimately eliminate the need for chronic treatment in small molecule mass markets.
• Drug-device and delivery systems will target treatments to specific disease targets, increasing efficacy at lower doses while reducing the potential for side effects and adverse reactions
• Companion diagnostics and personalized medicine will be a regulatory, market, and healthcare provider expectation
• Reliable, high quality manufacturing that ensures consistency and safety will be a differentiating feature for pharmaceuticals, especially for generic drugs
• Affordability will eventually mean denying insurance coverage (private or government) for high priced drugs with marginal therapeutic benefit, especially those with minimal end of life benefits
• To maintain profitability under intense pricing pressure Pharma companies will be forced to dramatically reduce their operating expenses (well beyond their current thinking)
• Big Pharma companies that maintain their large organizational size will have less pricing flexibility and will be hampered in their ability to deliver innovation, ensure customer satisfaction, and avoid regulatory and legal missteps

So what to do now:

• Pharma recruiting, training, and talent management must improve with a focus on expertise, competence, and integrity.  Hire and develop “the best” (e.g., world class scientific expertise, visionary leadership with integrity, highly skilled operations personnel) rather than just finding somebody who has done or can do the job.
• Focus research on comprehensive understanding of diseases rather than just exploiting chemistry and disease targets.  Strive for preventions and cures rather than just developing another compound or molecule to get to the market.
• The number of pipeline projects is only meaningful in the context of new market expectations.  Products that can not deliver clinically meaningful differentiation should be objectively reevaluated for commercial viability in a more demanding healthcare market. Fewer development programs will make it past this assessment if companies are truly objective and critical in their evaluations.
• Pipeline target product profiles should define the potential “comparative efficacy“ and the meaningful clinical benefits relative to other therapeutic options
• Identify and develop plans for securing the specific data needed to substantiate the claims of efficacy, safety, and “value”.  This is not just to meet regulatory requirements but to withstand rigorous, more sophisticated managed market expert assessments.
• Make companion diagnostics a requirement for pipeline projects
• Develop managed market expertise throughout the organization not just as commercial function.
• Develop healthcare system collaborations that allow for understanding, designing, and executing comparative product and treatment assessments in different electronic medical records systems
• Assume none of the traditional marketing and sales tactics will work (including social media) and then prepare plans for promoting your products in this new healthcare market. For example, think about how electronic medical records and best practice treatment guidelines will influence e-prescribing.  How will you educate a physician population without traditional tactics?
• Assume that even your most aggressive cost cutting programs in operations will not be enough.  Root out legacy, non-essential expenses as if you were facing bankruptcy.
• All non-core competencies should be critically evaluated as outsourcing opportunities
• Invest in expertise, competence, integrity, and high performance systems and equipment to ensure consistent high quality manufacturing (if the company plans to continue manufacturing as a core competency). Invest and retool your processes now for the future.

Critical Success Factors

• Innovative new products with companion diagnostics
• Robust real world data to support clinically meaningful differentiation
• Organizational managed market expertise
• Talent management focused on expertise, competence, and integrity
• Low cost, efficient yet reliable operations
• Commercial programs designed to help healthcare providers and patients realize the full value of the company’s products
• Become a trusted and credible source of disease and treatment information
• Patient well-being must be a priority (e.g., patient safety more important than negative impact on sales or potential implications for litigation)
• Leadership and organizational integrity

The intent here was not to draft a business plan but rather to identify some of the predictable changes of the evolving new healthcare market that will impact Pharma companies.  This was merely to demonstrate that it is possible to anticipate the changes we see evolving in the market and prepare for them if we look forward and take action now.

Now, I’m sure some of you are thinking… ” do you think we are idiots? You made me read all this for nothing.  Obviously, the industry and its executives are doing this.  We have strategic planning groups of MBAs working full time on this stuff.”

Well, I’m pretty sure industry executives thought they were taking care of the future back in the mid-1990’s as well.

mike@pharmareform.com

I believe the current layoffs are in large part a result of Big Pharma mismanaging the cash they were generating over the past two decades.  Innovation in R & D was not critical for market success when you could “tweak molecules” and drive sales of even marginally differentiated products with aggressive, and wastefully expensive marketing and sales tactics.  Efficiencies in operations were not a priority when you had so much cash coming in that the modest  savings generated by pseudo cost reduction programs seemed inconsequential and not worth the effort.  And despite laboring through annual departmental political battles for headcount requests, cash rich Big Pharma continued to add staff while still delivering Wall Street acceptable operating profits.

You can’t blame the economy for historically bloated operating expenses, diminished R & D productivity, or the billions of dollars spent on litigation, fines and settlements for questionable marketing and sales activities.  The patent cliff and the increasingly managed evolving new healthcare market were not only predictable but their impact could have been mitigated had executives worried more about long term strategies rather than focusing on meeting quarterly numbers to appease Wall Street and ensure their own personal financial security.

But now Big Pharma has no choice. There is no way for the slowing revenue growth to support the expensive, inefficient operating infrastructures they have accumulated over the last several decades.  Unfortunately, and even unfair perhaps, this means their front line employees will bear the brunt of the mismanagement.  Even more unfortunate, is the loss of jobs at Big Pharma at a time when unemployment is at an all time high and the global economy is struggling to recover.

Even without 20/20 hindsight, I believe the current situation was avoidable.  Had Big Pharma pursued innovation in the mid-1990’s rather than relying on “tweaking chemistry” just to get products to the market, managed their expenses when cash was plentiful, and had the foresight to begin adjusting their strategies and workforce for the evolving new healthcare market rather than trying to be the biggest Big Pharma you would not be seeing the layoffs we have been experiencing.

So what does Big Pharma need to do to make sure they realize the benefits of this painful but necessary downsizing?  We’ll discuss that in the next post. mike@pharmareform.com

Even with all the automation, IT support, instrumentation, purpose built facilities, and technical expertise, pharmaceutical manufacturing is difficult.  Those who do or have done pharmaceutical manufacturing know how challenging it is to maintain consistency and the high quality of products, batch after batch for tens of millions of tablets, capsules, or doses, year in and year out.

Pharmaceutical manufacturing is tightly regulated for quality with highly developed quality systems supported by rigorously defined product specifications, detailed SOPs (standard operating procedures), training requirements, job qualification expectations, and mandatory supervisory and quality assurance (QA) checks and balances.  One of the biggest question I  had when these issues started to more frequently hit the press was, “where was  Quality Assurance management?”

I believe with all the regulatory safeguards supposedly built into pharmaceutical manufacturing,  industry executives who have never worked in manufacturing have  very simplistic views of manufacturing, have developed a false sense of security about compliance requirements, and many are probably taking quality of manufacturing for granted.

Here are a few issues, attitudes, and situations that may be at the root of some of these pharmaceutical manufacturing issues.  Many if not all of them have to do with management’s perspective or the perspectives and expectations they project to their manufacturing teams.

• Management thinking that manufacturing is all about efficiency, so “let’s have manufacturing find another 5% reduction in cost of production.”  If you make this request year after year, at what point do you compromise quality?
• With the jobs so well defined in our SOPs, “we can train anybody to do these jobs.  How hard can it be?”
• Once the process is defined, it’s just a matter of production execution and efficiency
• Repetitive, routine operational steps by otherwise competent operators can lead to complacency, including at the checking and double checking steps of the supervisory role
• we don’t need QA people who are going to be difficult to work with (interpretation…we don’t need people who aren’t flexible in their process reviews and sign-offs)
• “we are not making any product when we are cleaning.”  “what is the longest stretch of time between cleanings that we can justify?”   Facility, manufacturing room, and equipment cleaning time, when viewed as non-production time (reduces productivity), puts pressure on performance metrics.
• Similarly, “when people are training they are not making product”
• “We are not going to let a meticulous operator get in the way of making our numbers.  Find a new operator.”
• “I am so busy with paperwork…nobody is going to know if I just sign off on this, even though I haven’t really checked it”
• “Nobody in management needs to know, we’ll just write that batch off as waste”
• “Let’s just do another sampling. I’m sure the batch will pass”
• “let’s just get a management authorized override for that deviation”
• We can’t afford the shutdown time to make the necessary upgrades to the process, even though it makes sense.
• FDA will require a new set of trials if we make these changes to our outdated process
• “We’ll never get caught up with these CAPAs” (Corrective Action and Preventive Action).  Sometimes the hardest but most important never get addressed in a timely fashion despite SOP defined prioritizations and timelines that are supposed to safeguard against delaying the fixes.

OK.  I think I have made my point.  Time for pharmaceutical manufacturing to get some respect and more importantly, some much needed investment.  I’m not talking just about buildings and machines although that may be in order for some.  I’m talking about putting quality standards of production ahead of production output metrics (no game playing, not just lip service).   I believe well managed manufacturing teams of  competent, conscientious operators, supervisors, and QA/QC staff with expertise and integrity will take pride in delivering high quality products as efficiently as they feel is possible.  It is the “well managed” part that I believe may be missing in some manufacturing operations.

It is also time for pharmaceutical company executives to appreciate the contribution manufacturing makes to the revenue line and not just look at the expense line impact.  Some executives, unfortunately, now know the negative impact manufacturing can have on revenues, especially if you take it for granted and don’t pay attention to it.

mike@pharmareform.com

Nobody wants to hear these words, especially as it relates to our health or the health of a mother, father, son, daughter, close relative, or friend.  Most of us have had people in our lives who have heard these words.  From what should be simple to treat infectious diseases to the complexities of cancers and physically debilitating, if not lethal diseases like Alzheimer’s, there remains a huge medical need for effective and safe new treatments.  Too many people hear these helpless words today and even more may hear them in the future as the population ages with increasing life expectancy.

We have seen how financial rewards can drive  decision making and  behavior in the pharmaceutical industry but really… not wanting to hear these words should be the single biggest reason pharmaceutical companies continue to invest heavily in drug discovery research.

It starts with a mindset to discover truly innovative new drugs that are better than what we have available and that can treat diseases we can’t treat today.  It is frightening that the industry has spent so much in the last decade to deliver so little in terms of innovation.  Think about the billions of dollars spent on clinical trials just to get  “me-too” drugs to the market.  It is equally frightening to think of the cash being spent on mega-mergers and acquisitions to source near-term products to fill the depleted late stage pipelines.  Neither of these contributes to bringing innovative new products to the market that wouldn’t otherwise have come to market.  I’m also not sure how long biotech can support the drug discovery needs of Big Pharma before that well runs dry.

I believe the current “product driven mentality” of many Big Pharma company executives today (and Wall Street analysts) is blinding these companies to the long-term solutions to finding truly innovative new products.  I have said it before.  Drug discovery is hard work and getting harder. It is going to take a much deeper, multidisciplinary understanding of human biology, molecular biology, biochemistry, and pathophysiology of diseases that most companies only think about once they have a potential therapeutic target or drug candidate in hand (most likely acquired from outside the company in most recent history).

I believe this comprehensive approach to drug discovery is where Big Pharma should be making significant investments.  Choose a therapeutic area of interest.  Find, recruit, and collaborate with world class scientific and medical expertise in that therapeutic area.  Invest in an exhaustive understanding of the disease,  explore beyond the known,  and challenge common principles of disease management.  Don’t just look for a compound, look for a comprehensive approach to treating and possibly curing the disease.

Big Pharma is one of the few place with sufficient resources to fund, coordinate, and execute this comprehensive approach over a long period of time.  I am not suggesting universities and biotech companies won’t continue to be a great source of novel, innovative new drug candidates.  In fact, much of the necessary drug discovery expertise now resides in academia.   At the same time however, I am concerned with Big Pharma moving away from drug discovery and relying on universities and biotech as their primary sources of innovative new products.  Why?

Because… I don’t want to hear… “I’m sorry we have done everything we can do…there is nothing left to try.”

mike@pharmareform.com

Criteria used to assess what gets divested or downsized include things like poor or mediocre past performance, lack of perceived need, and the magnitude of the potential expense savings.  In the spirit of fairness (especially when it comes to employee relations issues) and to satisfy the quantitative justification needs of management, numbers often drive the decision making process.  As strategic as companies might try to be,  a numbers-based decision making process will lead to collateral damage with unintended consequences including:

• Loss of  expertise
• Loss of management experience
• Disruption of business relationships

Unfortunately, these are the very business assets pharmaceutical companies need and can least afford to jeopardize as they prepare for the evolving new healthcare market.

But you might be thinking that companies and management are smart enough to avoid these pitfalls by being analytical about their choices, right?  Well, let’s take a look at a few examples of where the process may not yield the results expected and could be detrimental to the company.

• Early retirement packages often accommodate employees with years of experience, including seasoned managers, scientists with expertise, and employees (including sales) with valuable long standing business relationships.  How many of your best people can’t resist the offer and walk out the door?  Remember, your best people are not afraid of being unemployed for too long if they take your offer.
• How about when the numbers  suggest eliminating sales representatives and territories with lagging sales and diminishing physician access.    Are less effective and even poorer performers being protected by having better sales numbers because their territories are in a less managed market…today?  Are your sales numbers a real reflection of the experience, expertise, and effectiveness of your sales representatives and managers?
• What about a manufacturing operation with a perfect track record for production that has comparatively higher costs driven mostly by the expenses associated with a larger, more experienced quality staff and more operational training.  Is this staffing and training perceived to be quantitatively excessive and unnecessary in the context of downsizing expectations?  Have you factored the complexity of their manufacturing and the impact (and expense) of a recall compared to the other production facilities? If so, do you eliminate the management experience, the staff (operational expertise), or the training?  What numbers do you use for that decision?

The point is that divestitures and downsizing while necessary in the current business environment for most large pharmaceutical companies will have collateral damage that goes well beyond the personal impact such decisions have on employees and their families.  Also,  a company’s assets may not be accurately reflected in the numbers used for the analysis of what to keep and what to let go.  Companies that are aware of potentially losing these hidden assets may ultimately make the same decisions but they also might look to find ways to avoid the loss or at least mitigate the impact rather than just accepting collateral damage as a part of the process.   mike@pharmareform.com

• “kill early, kill fast”

This has been intended to encourage researchers to cut losses by quickly identifying drug candidates that have a high probability of failing in later trials because of safety concerns or lack of efficacy.   Poor Phase 1 or Phase 2 results may raise concerns about mass market use of the product but may not necessarily reflect how the drug candidate might perform in a more targeted population.  Think personalized medicine with companion diagnostics.  A more comprehensive understanding of the disease, product pharmacokinetics, and pharmacogenomics may be needed to avoid killing promising compounds for smaller, targeted patient groups with significant unmet medical needs.

• “what’s the fastest, commercially viable indication that will get us to market”

The thinking behind this was that “we can use the scientific literature and medical education to expand the market.”  This will become increasingly difficult as the FDA, CMS, and the managed market become more demanding for label indications and data to support claims for use and reimbursement.  Relying on traditional sales and marketing tactics to fill the label claim or data voids to expand market opportunities will be less likely and less tolerated in the evolving new healthcare market.

• “if we do that study or analyze that data, we might find something we don’t want to know”

Product liability cases continue to make headlines and the ability for pharmaceutical companies to “bury” findings, mislead the market, cover-up or ignore potential safety issues or inferior efficacy results is becoming increasingly difficult.  Research organizations might as well assume that if they know or suspect an issue, they will need to explore it, get the science behind it, and be forthcoming about the findings.

• “our research is built around (you name the biological target) program”

As many “target-based” biotechnology companies and Big Pharma research programs have found, this is a very high risk strategy of  “either it works or it doesn’t work” (betting black or red at the roulette table).  In the evolving new healthcare market where proven innovation and differentiation are going to be essential for commercial success,  I believe companies that take a more comprehensive approach to understanding the pathophysiology of the disease will have more opportunities to discover and develop ways to intervene in the disease process, will better understand how different targets interact with each other, and will reduce the risk of betting on a single target.

• “we can do it cheaper and better in house”

Market expectations for innovative and differentiated product profiles will make research pipelines more variable than they have been in the past.  The days of merely bringing any safe and effective product through the regulatory development process and onto the market are gone.  Disciplined research portfolio management will eliminate those products that will not meet market expectations, creating more dramatic time gaps, and making pipeline flow less consistent than in the past.  This will require research flexibility of facilities, equipment, and staffing.  While a core team of research expertise is essential to retain in-house, most laboratory, preclinical, and clinical work can now be outsourced to well staffed, competent CROs that often have as much if not more expertise, capabilities, and capacity than the research teams at Big Pharma.  Even at higher per project costs, these incremental expenses will be far lower than the inevitable up-sizing and downsizing of staff or the carrying costs of intermittently idle facilities, equipment, and staffing.

mike@pharmareform.com

I believe it is because it takes experience and a much higher level of coaching skills and management expertise to leverage the value and satisfy the performance expectations of a professional representative.

You may have heard the term “high maintenance rep.”  Well, they can exist on both ends of the performance spectrum but it is probably used most often to describe professional representatives.   The reason is that professional representatives will push sales managers, sales training, and marketing to their limits of technical and scientific competence, coaching skills expertise, and management capabilities.  When the skills and expertise of the professional representative exceed the management competence of the sales manager, it becomes personally threatening to the manager and makes their job much more difficult and sometimes even impossible.

Professional representatives are so good at what they do and they have such an instinctive sense for what is going on in their market that they are often the ones that ‘complain” about the crappy marketing materials and boring marketing messages they are being asked to use.  When they point out that they really don’t have the data to support the claims or the efficacy implications of the marketing materials they get labeled as trouble makers.  Professional representatives also expect insightful post call coaching for improvement not just critique of what they did wrong.   And, despite being less driven by numbers, when they point out that their sales forecast makes no sense as it applies to their territory, professional representatives are frustrated by the lack of rationale for their increase, especially in the context of other conspicuously low territory growth rates.

Experienced, skilled sales managers with expertise treasure and nurture professional representatives.  They lean on them for help. They tap their technical and scientific expertise for the benefit of the district or region.   Experienced and skilled sales managers know how to inspire and help professional representatives achieve their seemingly impossible expectations for excellence.  They have the exceptional coaching skills necessary to identify the nuances of interpersonal and presentation skills that can make the difference between an impactful discussion and merely delivering another marketing message.  It takes a confident (not arrogant) manager to hear what is really being said in the “complaints” of the professional representative.  You have to be a much better, more experienced sales manager to appreciate and effectively manage a highly skilled professional representative.

If you lack experience, sales management skills, coaching expertise, and technical competence, you will hate managing a professional representative.

mike@pharmareform.com

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

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

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

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

mike@pharmareform.com

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

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

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

Order your  Kindle Edition of Pharmaplasia at Amazon.com

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

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

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

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

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

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

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

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

mike@pharmareform.com

(Four of Five Stars)

ForeWord CLARION Reviews

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

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

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

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

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

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

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

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

Preview Table of Contents

Preview Chapter 1

Go to www.Pharmaplasia.com

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

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

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

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

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

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

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

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

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

mike@pharmareform.com

As Big Pharma companies depend more on the acquisition of products to fill out their product lines, add generic products to their offering, diversify their product lines (devices, diagnostics, and consumer products), expand their global presence, and shift commercialization efforts to mass purchasers and payers (think government, insurance companies, and Pharmacy Benefits Managers), these companies look more like pharmaceutical Big Box outlets for the healthcare market.

This is not a good or bad thing.  It is a strategic business decision that companies are making which will have implications for the entire industry. These decisions will gradually establish a clear delineation between companies that build their strategies around science and the discovery of innovative products and those companies that supply products to the healthcare market.  Like in the retail market, smaller innovative product companies can go it alone and bring their products to market but they may not have the market reach or support infrastructure to service the payer market as effectively or as efficiently as the Big Box Pharmas.

So what is the fundamental business proposition of the pharmaceutical industry?

Sometimes we may take it for granted but the foundation for a healthy pharmaceutical industry is discovering and developing innovative new treatments.  Without a continuous flow of innovative new treatments, there is no pharmaceutical industry and Big Box Pharma would have to find something else to sell the market.

mike@pharmareform.com

You have probably heard and may even think you like the management concept of “hire the right people, then get out of their way and let them do their job.”  Well, I believe this can be taken to the extreme and in some cases, to the point of abdication of management responsibility.  I believe many of the missteps pharmaceutical companies have made over the past and perhaps even the current J & J recall situation could be attributed to a lack of diligent management oversight.  There is some truth to the sayings “inspect what you expect” and “trust but verify.”  No, I am not a control freak but where was management when the quality issues at J & J first surfaced or when pharmaceutical companies were involved in some of the questionable and sometimes illegal activities of the past?

So what is diligent management oversight?  From my perspective, it is knowing what is going on throughout your span of responsibility?  If you are a front line manager, it is knowing what is going on within your team and the jobs they are expected to do.  If you are the CEO, it is knowing what is going on in your company.   Diligent management oversight includes evaluating performance against goals and objectives, ensuring regulatory and legal compliance, and maintaining organizational standards for cultural and behavior expectations.  It also requires management to provide timely feedback and to make decisive interventions when deviations from expectations are identified or have the potential for doing harm by exposing the company to unacceptable risks.

Diligent oversight takes skill to avoid annoying micromanagement and to leverage the value-added benefits of diligent management oversight.  Skillful oversight provides employees with coaching and nurturing to enhance  performance, guide career development, and can convey a sense of caring about the person and demonstrate an appreciation for the job employees are doing.  Even the best of athletes have coaches who are watching, evaluating, and providing insightful corrective actions and encouragement to improve performance.  The better the athlete, the better the coach must be to have credibility and to have a positive impact.  The same is true in business.  The stronger your team, the better the management must be.

So the next time your manager seems to be asking too many questions, trying to understand more about what and how you are doing your job, maybe even challenging you to do better, don’t take it personal.  They are doing their job and you might actually be lucky enough to have a manager who wants you to do well, is willing to help you, and can help keep you out of trouble.

mike@pharmareform.com