Pharma Reform

The residual effects of pharmaceutical industry indiscretions of the past will linger for some time but also make it all the more important for the industry to be more truthful and forthcoming in their marketing and corporate communications.  The recent disclosures and concerns about GSK’s handling of the potential for cardiovascular events associated with the use of Avandia^® just further highlights the challenges facing the industry in reestablishing trust.

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

The single most important step a company can take in reestablishing market trust is for the CEO and C-level executives to make a definitive personal and corporate commitment to integrity.  This has to be a visible organizational declaration and become inherent in the corporate culture.  You and your company will either have integrity and can be trusted or not.

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

Like developing a tactical plan without a strategy is not advisable, before we get to specific actions, it is critical to understand the basis for reestablishing trust.  First, completely restoring trust may not always be possible but that doesn’t mean you shouldn’t try.  Without reestablishing trust, the pharmaceutical industry will find the evolving healthcare market even more challenging as it disregards the industry as a credible source of product information. This will make new product introductions and market adoption more difficult, slower, and more expensive.  To reestablish trust one must:

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

No single event, single offense, issue, or individual company can be identified as the source of or considered responsible for the market distrust of the pharmaceutical industry.  This has been a cumulative affect over the past 30 years or so of modern day Pharma.  It is important to identify, recognize, and acknowledge the sources of distrust before solutions can credibly and effectively be formulated.  Here are the 5 major sources of market distrust of the pharmaceutical industry:

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

Drug information sharing in the past provided an important role for sales reps, Medical Science Liaisons, and even journal advertising.  Even back in the mid-1980’s I remember doing online research (think dumb terminal with phone couplers) for infectious disease experts in their offices.  For most, their only alternative to get this information was to sit with the Med School reference librarian and try to figure out how to get what the physician needed from the National Library of Medicine database.  Searching was actually a skill back then.  This was probably as cutting edge at the time as you could get for information retrieval and sharing.

With the advent of the internet, robust search engines, and the pervasive availability of electronic retrieval devices, calling on physicians to do literature searches became limited in value.  Now these experts can do their own searches from their own computers. What’s the point?

For the industry to add value through information sharing, it is going to take more than sending a sales rep or MSL to see a physician with basic company product information.  Most companies realize this and have moved to take advantage of the internet, e-learning, e-prescribing, and television. In time however, this will also get old, build skepticism, and diminish in value as marketers abuse these tools, trying to cleverly hype  their product advantages, and overcommercialize their products with bold intrusive branding.

So what’s the solution?  Better science.  FDA approved label claims for what you want to say about your product and strong definitive clinical data to support the claims.  Peer reviewed presentations and publications with full disclosure and fair balance of data to support the benefits and risks. If you want to claim superiority, do the studies, get the claims, or at the very least, have credible data from reproducible controlled trials.

Then use whatever electronic communications you chose to disseminate your data.   This is not to say you don’t need marketing or sales to promote your product.  Professional, data supported claims merely provide a more credible base for promotion.  No hype required. You could even have life science trained medical personnel who can discuss in detail, on a peer basis, the nuances of the data and what they mean. If these people can not stand in front of a medical conference and defend their presentations, comments, or the implications of the data being presented, they should not be presenting in a one-on-one setting either.  A very tough standard, perhaps.  But, a lot more credible than the industry has provided healthcare providers in the past.

mike@pharmareform.com

Editorials and commentary on Pharma web and blog sites continue to highlight the massive layoffs of pharmaceutical sales reps. These are frequently accompanied by commentary with justifications and desperate rationalizations for maintaining the role of the traditional pharmaceutical sales representative. Most frequently, the commentaries blame regulatory constraints and promotion guidelines for the diminishing value reps can now provide.  Many forget that the industry has brought this upon themselves by repeatedly compromising market trust with blatant advertising and promotion abuses.

Here is the reality. Physicians no longer value sales people or the information they try to convey.  Patients and office staff see sales reps waiting in the office delaying appointments and taking up physician time. Managed markets find sales people a nuisance and counterproductive to their formulary management and cost control initiatives. Legislators and regulators see the reps as uncontrollable extensions of the “not to be trusted” corporate, Big Pharma and feel compelled to restrict sales activities.  Yes, the reality is that sales reps and the information they convey are no longer respected, valued, or trusted. The traditional pharmaceutical sales role has become ineffective, and is quickly becoming obsolete.

If the industry has any hopes to deliver product information “in person”, it needs to abandon this traditional sales rep model, including the hiring profile, job requirements, title, and incentive compensation plans.  Yes, get rid of it completely.  There is no transformation or minor adjusting that will change the market perceptions or the effectiveness of this outdated model.

Healthcare providers in the evolving new healthcare market will still need information and education about pharmaceuticals and therapeutic options.  The internet, continuing medical education, and scientific meetings and conferences will continue to be major sources for product information. If the industry feels a need to continue to communicate product information “in person”, their only hope is with smaller therapeutic area teams consisting of far fewer life sciences trained (degrees) medical specialists with clinical training and therapeutic area expertise. Call them what you like (except sales people), their job will not be to “sell”. They will report to Medical Affairs in research, are salaried professionals with incentive compensation (if there is any) based on advancing their therapeutic expertise.  Their role will be as therapeutic consultants to healthcare providers and managed plans.  No slick marketing materials or gimmicks to curry favor. Their value is their familiarity with the literature, knowledge about the nuances of therapeutic options (competitive products including generic drugs) as they are of their own and they can back up claims and recommendations with data and literature support. Their job is to ensure the appropriate use of drug treatment, regardless of which product the healthcare provider prefers.  They will be seen and respected as therapeutic area experts.

While many might argue this sounds like the role of the Medical Science Liaison.  I would agree except that the industry has also corrupted and abused this once valuable resource, pushing them to glorified sales roles or enlisting them to covertly and overtly promote products for “off-label” use.  The roles proposed here are for true expertise, no sales responsibilities or expectations, and a genuine interest in supporting the information needs of healthcare providers for the benefit of patients.

The second management or aggressive marketers decide to take advantage of this newly established resource and push this group to a sale responsibility, they will once again, mitigate the value and compromise perhaps one of the last opportunities for credible, value-adding “in person” communication of product information with healthcare providers.

mike@pharmareform.com

It appears the pharmaceutical industry may have dodged a few healthcare reform bullets, at least temporarily, with the pending legislation.  Again, maintaining the industry business model status quo while enhancing their potential customer base by tens of millions of newly insured patients.

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

RANWVW5PHV9M

Integrity is leverage for optimizing the value of your business. Organizational trust built on a culture embracing integrity can facilitate operational business processes, reduce the risks and complexities of organizational growth,  and enhance commercialization initiatives, including market acceptance of pricing.

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