Tag Archives: pharma

Drug Company Spends $100 Billion But Not to Find New Drugs

This could be the headline if the Pfizer acquisition of AstraZeneca comes to fruition.

Pharmaceutical companies continue to remind us that the reason they have to charge outrageously high prices for their drugs is because drug discovery and development is high risk and very expensive. This argument has always been suspect but now there is clear evidence that it isn’t the high risk and high cost of drug development that drives high drug prices.

Here are two examples that totally discredit the premise behind high drug prices being espoused by Big Pharma.  Gilead spent $11 billion and Pfizer is contemplating an acquisition which will cost the company over $100 billion to buy a company.  These acquisition costs represent more than 5 years’ worth of R & D spending by either company.  Unfortunately, no new drugs will be coming from the money spent on these acquisitions. That’s right, no new drugs, not one, come from the money spent on these acquisitions.  Sure the companies will continue to develop some of the compounds that are already in their respective pipelines, but the $11 and $100 billion isn’t going to discovering or developing any new treatments.

Unfortunately, rather than increasing drug discovery and development, these type acquisitions divert money away from drug research. In addition to the cash and stock value used in the acquisition, the acquiring company looks for “redundancy” and “operational synergies” which result in massive cuts in research budgets and staff.   Bottom line?  Billions of dollars spent for less research, fewer drug discoveries.

It is clear that drug companies don’t have to charge outrageously high prices to cover their R & D expenses. In the examples given here, patients are paying for the acquisitions.  Drug companies obviously have more than enough cash to fund even more research than they currently do.  Rather than innovative drug research, their high drug prices are supporting luxurious operating expenses, overpriced acquisitions, and extraordinary executive compensation (Gilead, Pfizer, and several other Big Pharma CEOs are among the top compensated CEOs in Corporate America).

Rationalizing the high prices they charge for medicine with the high cost of R & D is just another reason Big Pharma has lost all credibility with patients, regulators, and the healthcare market.

healthcare.gov

Why didn’t President Obama just read PharmaReform?

If  President Obama really wanted to know if Healthcare.gov was ready to go live on October 1 he should have read my last two blog posts ( September 11 and 12).  Having now listened to most of the Congressional hearings on the failed launch, it is clear to me that CMS was not being honest about the disastrous state of the website in the months leading up to the launch on October 1.

Again, even if the President had read PharmaReform, I’m certain CMS would have blown it off,  just as they have obviously ignored all the internal clues, information, and data demonstrating poor and functionally inoperable system performance of the site.  My assessment is that Healthcare.gov was doomed from the beginning.  Here are just a few of the issues that compromised the development and successful launch of Healthcare.gov.

  • Outdated IT procurement requirements limiting contractor selection, possibly precluding more capable and competent providers of IT services from participating in the bidding process (apparently the list of qualified vendors was compiled in 2007 … over 5 years ago and more than 2 years before the start of the project).
  • CMS blindly entrusted contractors depending on money (a virtually unlimited budget with hundreds of millions of dollars) and hiring lots of people rather than enlisting, securing, and deploying expertise to help build the site
  • Total incompetence at CMS in managing the project
  • Ignoring, suppressing, dismissing, or rationalizing bad news concerning the functional status of Healthcare.gov during development  
  • Total lack of coordination across the functional components of the project
  • The politically driven deadline (October 1)  wasn’t taken seriously by CMS leadership, contractors, project managers, and development teams until the final months leading up to the launch.
  • Poor, deceptive, if not outright dishonest communication about the status of Healthcare.gov, by contractors and HHS/CMS leadership to the Obama Administration and Congress

One of the most disappointing and frustrating take-aways from listening to the hearings is that this whole Healthcare.gov debacle could have been avoided had HHS and CMS management done their jobs.

mike@pharmareform.com

The Five Types of Biotechnology Companies

Type One:  Big Biotech

Biotech companies with full product lines and significant revenues that rival those of Big Pharma.  They have sufficient cash from operations (profitable) to support healthy, well-funded research pipelines and to acquire technologies that fit their business strategy.

Type Two: One Trick Ponies

Companies with a single major marketed product and sufficient revenues to support some operations with or without profit.  These companies are often acquisition targets for Big Pharma.  With no follow-on products or pipeline, company executives and investors are counting on the company being acquired before they run out of money, lose investor interest, or their product becomes obsolete.  

Type Three:  Prolific Pipelines

Biotech companies with pipelines of high probability technologies.  Their compounds have a sound basic science premise supported by encouraging preclinical and perhaps even Phase II clinical data.  These biotechs focus on developing a strong regulatory package of clinically relevant “proof of concept” data to support optimism for FDA approval and commercial success.   Single product companies might be acquired outright while multiple product companies may sell individual compounds (or technologies) while leaving the discovery research and early clinical development infrastructure in place.  These companies have recently been the source of compounds for Big Pharma looking to replenish and bolster their depleted pipelines.

Type Four:  Too Little, Too Late

These companies have compounds that will probably work, deliver positive clinical results, and even achieve FDA approval.  Unfortunately, their product will provide no meaningful clinical benefit over currently marketed products (some of which might even be generic drugs).  The commercial potential for these products  is limited.   These companies, nevertheless, continue to persuade investors with slick presentations espousing large market size numbers and an insistence that with “a new treatment” even a small percentage of that large market will result in significant revenues for the company.

 Type Five:  “Promises, Promises”

Biotechs that are developing products based on extrapolation of flawed or misinterpreted laboratory-derived conclusions.  This is different from bonafide discovery research based on progressively revealing evidence of potential safety and efficacy.  Unfortunately, while their story may sound plausible, there is little or no evidence to support hope for clinical or commercial success.  These companies thrive on finding investors who are looking for lottery size payouts from picking a winner where nobody else seems to appreciate or understand the medical and scientific techno babble.  These companies require eloquent CEOs who can tell a story and preach the promise of a promising technology.  Unfortunately, the only winners for this type biotech company are the executive teams who continue to be paid Big Pharma salaries and bonuses for prolonging the unfulfillable promise.

So what’s the point?

There are probably in excess of 4000 companies (private or public) worldwide that consider themselves “biotech” companies. 

             Think about the large number of Type Four and Five companies masquerading as Type Three companies.

             Think about the venture capital, investment, and research grant money that Type Four and Five companies wastefully divert from Type One, Two, and Three Biotech companies.

             Think about investor confidence in Biotechnology when Type Four and Five companies fail to deliver.

 mike@pharmareform.com

drugs

Big Pharma R & D Failing

Research and development … innovative new drugs … “the life blood of the pharmaceutical industry.”

Tens of billions spent on research and what does Big Pharma have to show for their investment?  What do the multi-million dollar a year CEO’s and executive teams have to show for their brilliance in delivering the much needed new treatments they keep promising?   Not much, according to the FDA calendar for 2013 drug approval decisions chronicled in a recent article by Seeking Alpha (http://tinyurl.com/qjdyc3m).  Moreover, based on their pay and bonuses (http://tinyurl.com/p57yt5o) CEO performance reviews obviously do not put much importance or weight on drug discovery or approvals. 

Here’s my assessment.

From what I could determine, only five drugs (suvorexant, dabrafenib, tivozanib, dolutegravir, trametinib) discovered and developed by the sponsors are what I would consider “new”.  GlaxoSmithKline developed and sponsors three of those five drugs and one was developed and sponsored by Merck.  Two new drugs (efinaconazole and sofosbuvir) were acquired and then developed by the sponsors, Valeant and Gilead.

Six additional drugs scheduled for FDA decisions in 2013, are merely reformulations or new delivery systems for already approved drugs.

And finally, there are five,  already approved drugs,  awaiting new or expanded indications. 

Think about that for a second.  Tens of billions of dollars spent on R & D and technology acquisitions every year for decades and only seven new drugs.   Every year PhRMA touts the thousands of new compounds in development, several hundred by disease state.  How many Big Pharma company executives get up at the never-ending investor conferences to brag about their pipelines of new drugs coming?  With more than a thousand drug or biotech companies, spending tens of billions of dollars year after year and we only get seven new drugs?

I would also point out that, from my perspective, only Merck and Glaxo qualify as Big Pharma.  Ok, Pfizer is in the joint venture on dolutegravir, but still.  Even if you throw in Cubist and Gilead, where are the rest of the Big Pharmas? 

This is a sad commentary on disastrous pharmaceutical R & D productivity (and the lack thereof). More importantly, it’s a very scary picture for investors and worse for those with diseases for which there are few or no therapeutic options.

Perhaps Pharma will figure out that it is not more money that delivers breakthrough new treatments.  Focused, high-level basic science expertise (not just academic degrees) and a deep multi-disciplinary understanding of the target disease are required to crack the drug discovery code.  Unfortunately, for the past couple of decades, Big Pharma hasn’t valued discovery research. They would rather just write a check than do the hard work.  And the results show.

sales-rep-feature

Thinking about being a Pharmaceutical Sales Representative

People researching pharmaceutical sales as a career option often come across some of my blog posts and ask my opinion about becoming a rep.  It seems everybody has their own impressions about what pharmaceutical sales is all about and why this might be a good job or career choice.

Seasoned veterans looking for a new position have their own criteria for making a change, often just trying to determine if a company can deliver what they are looking for that they aren’t getting from their current position.  For some, including those who might have been laid off,  it’s more about whether or not they want to continue being a pharmaceutical sales rep, finding “the right company”, making more money, or maybe even making a big change and pursuing another sales field (e.g., medical devices) altogether.

Some of the requests I get come from those who have never done pharmaceutical sales but have heard about the attractive starting salaries, enticing bonus opportunities, car, full benefits, an expense account, and flexible schedule.  For others, however, pharmaceutical sales  is just another job option rather than a career aspiration.   This situation is probably more prevalent today, especially in this economy where it is difficult to get any job.

Finding a job and pursuing an career opportunity can be an emotional roller coaster, which can cloud thinking and compromise decision making.  This is especially true when an unemployed person is desperate to pay bills.  Therefore, rather than draft a job description and debate the pros and cons for becoming a pharmaceutical sales representative, here are some questions to help think through some of the issues.

    • Are you comfortable with what you have been able to find out about the company?
    • Does the company have a product or products that you can believe in?
    • Is the territory in a place you want to live?
    • How extensive (how long) is training?
    • How important is understanding the science and medicine behind the products?
    • How does the company determine you are ready to sell their products?
    • What resources does the company provide to help you sell their products?
    • Are physician presentations “scripted” marketing messages or conversational?
    • What training do you get for working in a “managed market?”
    • What is the sales performance history for the territory?
    • What is the reputation of the previous representative in the territory?
    • How much managed care is in the territory? Is managed care helping or hurting sales?
    • Are your products on formularies with favorable reimbursement status? Any major issues?
    • Can you see the influential and high volume prescribers in your territory (access rate)?
    • Have you met your manager and is it somebody you feel you could trust and work with?
    • How successful has your manager been from a sales perspective?
    • Does your manager have a District of sales superstars or average performers?
    • How many people has your manager had promoted?
    • What are the job expectations?
    • How will your performance be measured?  (e.g., sales, customer feedback, activities)
    • How are territory sales measured and how accurate are the reports?

 

Seasoned pharmaceutical sales reps could contribute more and perhaps even more germane questions than I have provided here.   I hope, however,  these questions at the very least,  stimulate thinking and will help formulate a more fact based process for people considering a job or career in pharmaceutical sales.  If this is a career decision for you, a more thorough assessment is warranted, especially for the impact of the ever-changing healthcare market on your products, your company, and your job function.  I would suggest writing out answers to your questions as this can help take the emotion out of the process, will generate additional follow-on questions, and will help keep your decision more factually grounded.  If you are  exploring pharmaceutical sales as just one of many job options,  you might take a different, perhaps less analytical, approach to your decision.   In the end, if you finally decide you would like to become a pharmaceutical sales representative, before taking the job I would recommend you talk with a current sales representative, preferably from the hiring company.  mike@pharmareform.com

How Bad Behavior Evolves in Pharmaceutical Companies and Probably Other Big Businesses

There appears to be an interesting pattern of corporate behavior that seems to evolve over time and accelerates with the need for executive incentive compensation driven financial performance (sales growth). This behavior is especially noticeable in larger organizations and is government protected if your behavior is within a large corporation (too big to fail).

Whenever there is a need or demand for more robust financial returns, the evolution advances another step.  Here is the progression of behavior that seems to transpire in the context of Pharmaceutical industry executives but it probably applies to other industries as well (think investment banking). So, here’s how it goes…

We have a great product that really can help people.  We have the resources to  make sure physicians and patients know about it, know how to use it  appropriately and safely.   We want to be credible in the market and trusted so let’s  make sure we are ethical about our marketing and sales.

This evolves to…

There is a much bigger market for this product than we are currently capturing …  we’ve probably been to conservative in our promotion so what do we need to do to grow this product even faster?

The plan sounds good,  as long as we have the regulatory language to market it that way.

It looks like it should be ok from a regulatory perspective if we present it like this so we can argue it is our interpretation of the package insert language.

Still need more sales…

OK, it may be questionable from a regulatory perspective but is it legal?  We can  deal with a warning from the FDA if it comes and we’ll probably end up in lengthy but inconsequential litigation to determine if it really is illegal  …  so let’s go with it.

Wanting more sales…

Nobody has called us on our marketing and sales activities yet so what else can we do?

Ok, not sure if this is really illegal but even if it is … what are we facing here?   We might have to pay a fine or something … but nobody’s going to jail.

Notice how fast “ethical” gets dismissed without much thought.

In the end, money and greed protected in the labyrinth of  “Big Corporate” decision making drive this scenario.  For those who want less regulation and less legislation, you can expect even more aggressive business practices.  Without strict enforcement and personal (not corporate) accountability with behavior deterring consequences, regulation and the law are meaningless.   mike@pharmareform.com

Drug Developers: Putting on a Show at JPMorgan Healthcare Conference

Each year there is considerable excitement, behind the scenes deal-making, networking, and of course, 4 days of never ending executive presentations at the JPMorgan Healthcare Conference. This year will be no different.  Over 400 company presentations (the overwhelming majority from Biotech and Pharma company executives) proudly highlighting accomplishments of the past and pipeline promises for the future, all with the caveat of “forward looking statements.”  Virtually every company in drug development that comes to JPMorgan each year declares they have strategically honed their pipelines filled with promising new agents for diseases with significant unmet medical needs.

Granted, not all the JP Morgan presenting companies are working on drug development.  Some are medical device companies, healthcare systems, pharmacy chains, distributors, or contract support companies to the biotech and Pharma industry. Without going through and deciphering which of the more than 400 companies are actually working on drug development, it’s at least 200 and probably closer to 300 of the presenting companies.  So what’s my point?

Unfortunately, all the JP Morgan presenting drug companies collectively delivered less than 35 FDA drug approvals in 2012.  In fact, 12 of the approvals came from companies and organizations not even presenting at JP Morgan this year.

35 approvals is not a very impressive number, especially when you consider the tens of billions of dollars spent each year on drug research, the hundreds of thousands of scientists and clinicians engaged in drug development, and the number of companies professing to have promising new drugs in development.

mike@pharmareform.com

What did Big Pharma contribute to 2012 New Drug Approvals?

I’ve read several press releases over the past couple of week announcing and interpreting the significance of FDA drug approvals over the past year.  Most give you the impression that the results are encouraging and suggest Pharma R & D is in recovery mode.  Traditional PhRMA bragging points of spending more than $60 billion per year on R & D, the thousands of compounds in development, and hundreds of innovative new medicines approved over the past couple of decades are, however, somewhat tempered by the reality of the recently reported drug approvals, especially for Big Pharma.  I don’t mean to downplay the challenges of drug discovery and development but it’s important to look beyond the total number of approvals to determine what that number really represents.

A closer look at the list of 35 FDA approved drugs for fiscal 2012 (October 1, 2011 to September 30, 2012) reveals rather dismal R & D productivity and lack of innovation that has haunted Big Pharma for the past several decades.

First let’s put 35 new drug approvals into context.  These new drug approvals were the results of decades of  hundreds of billions of dollars invested in research being done at or by more than a thousand Pharma and Biotech companies as well as thousands of government and university laboratories.  Pharma reminds us frequently of the hundreds of compounds in development for different diseases.   Yet, only 35 new products in 2012 … not very impressive.   Also interesting to note is that there are 31 different sponsors for the 35 New Drugs Approved.  So out of more than 1000 pharma and biotech companies out there, only 31 entities got a drug to the approval list.

The list better reflects the importance of smaller research organizations in discovering and developing new drugs.  Depending on how you define Big Pharma (e.g., are Gilead, Forest Labs, and Astellas Pharma considered Big Pharma?), you may end up with slightly different numbers but Genentech/Roche, Bayer, and Sanofi contributed 4 of the 12 “Priority Drug Approvals”.  More to the point, of the 35 drugs listed, if we’re generous in a definition of Big Pharma, only 13 of 35 drug approvals were “sponsored by” Big Pharma.

What’s more disheartening is the evidence of diminishing drug discovery at Big Pharma.  While celebrating the 35 approvals, a little investigating reveals that the overwhelming number of approved products were not discovered by or at Big Pharma.  You have to dig a little but even where Big Pharma is listed as the sponsor, many of the approved compounds were licensed in or acquired from collaborative work with smaller biotech companies.  Again, being generous in how you might define Big Pharma, only 6 or 7 products on the list were actually discovered at a Big Pharma.   And in this number, two were discovered by Genentech (acquired by Roche), one is an analog of a previously approved biotech product, one is a combination vaccine, and another is a combination of previously approved products.  So much for Big Pharma innovative “discovery research.”

So while the total number may be reassuring in the context of previously disappointing years of smaller numbers of drug approvals, a closer look reveals that drug discovery and drug development are no longer being driven by Big Pharma.  More importantly, despite the investments being made, new drug discoveries remain elusive and approvals are rare regardless of who is doing the work.

mike@pharmareform.com

You can ignore but you can not hide from Change in Pharma

A few years ago, contrary to the recommendations in Pharmaplasia and in the face of an industry-wide “patent cliff” and a rapidly changing healthcare market, the Pharma industry went on a binge of mega-mergers and multi-billion dollar acquisitions.  The book Pharmaplasia had identified large organizational size as not only challenging but as a liability in the evolving new healthcare market.  But “Big Pharma” wanted to get “Bigger” and it took years for Pharma to appreciate the need for change that had been recommended in Pharmaplasia“eliminate facilities, people, and support systems that no longer have a role in the evolving new healthcare market.”   Now, more recently, we have seen unprecedented downsizings, including elimination of facilities and people in massive restructurings at some Big Pharma.

Sure,  change can take time, especially in large public corporations.  The status quo and doing “what we have always done” is easier but it merely delays the inevitable and can give current frontline employees a false sense of accomplishment and security.

There are over 20 specific recommendations for change in Pharmaplasia that could accelerate a positive evolution for Pharma.  If these recommendations are being ignored by your company for now, it may be just a matter of time before you are affected?

With the information and recommendations in Pharmaplasia you can determine how the changing Pharma business model will affect you in this evolving new healthcare market.  Better yet, Pharmaplasia can help you determine how to  align yourself with these changes so you can participate in these positive changes and not be caught off guard by the inevitable.  mike@pharmareform.com

used-car

Do Manipulative Pharmaceutical Sales Techniques still work?

I’m curious and seriously don’t know the answer to this as it’s been a while since I’ve been in the field.  As a VP of  Sales (admittedly long ago) our management team continuously looked for training programs and techniques to help our sales force be more effective in the physician’s office.   Some were pretty basic but others were just outright manipulative.  I guess in the days of “reach and frequency,”  “reminder detailing,” and unencumbered access we thought we were being cleaver and maybe they even worked to some extent.  At the same time, I have to believe some of these types of techniques also contributed to physician frustration, resentment, and ultimately denied access.

The reason I am asking the question now is because I still see pharmaceutical sales training programs offering what appear to be decade’s old sales techniques that border on manipulative.  Even back in the day when I was selling (admittedly even much longer ago) we learned about “closing the physician”, challenging them, and “getting them to commit.”     I now wonder how much damage these basic sales tenants, combined with a few “tricks,” did in terms of our relationship with physicians.   The reason I say this is because there is nothing more demeaning than to have a sales person try their manipulative sales pitch on you when you go to a store to buy something.  The automobile industry learned this the hard way.  You would think the pharmaceutical industry would have learned by now as well.

But, maybe these techniques and “tricks” still work.  What do you think?  More importantly, how do physicians feel about being sold this way?

mike@pharmareform.com