Pharma Reform

I’m a little tired of reading about “off-label” promotion of prescription drugs, especially in the context of whistleblower instigated fraud cases and lawyer/patient driven product liability cases.  I’m not a lawyer but here are some solutions that would discourage inappropriate “off-label” promotion and would consume far fewer resources and certainly cost a lot less than is being spent now on litigating these types of offenses.

First, Pharma companies should not promote products for uses that are not approved by the FDA.  If a company is found guilty of “off-label” promotion, in addition to any corporate fines (which should equal total product revenues during the time of illegal promotion) , responsible individuals should be held legally accountable and convicted, with personal fines, disgorgement of incentive compensation during the time of illegal activities, and even incarceration if warranted.  No corporate settlements.  It is very likely that criminally charged front line employees directed or even trained to promote for off-label uses may be more than willing to offer up and provide evidence against culpable higher level executives who encouraged or approved of the promotion.  I’m pretty sure this would increase executive management oversight to ensure compliance.

To remove the financial incentives for “off-label” promotion, government programs (Centers for Medicare and Medicaid Services and states) should not reimburse for unapproved uses of prescription drugs.  If the patient wants to pay for the unapproved use of a prescription drug that a physicians has prescribed, that should be their choice.  At the same time, that choice carries the liability that if something should go wrong; the only legal recourse for the patient should be to hold the prescribing physician and perhaps their healthcare provider accountable.  Because “off-label“ use is an informed decision, neither the patient nor the physician (or healthcare provider system) could sue the pharmaceutical company for any negative consequences resulting from the unapproved use.  Physicians who prescribe for unapproved uses but post a diagnosis that aligns with approved uses just so the patient can get it reimbursed would face fraud charges and be held personally liable.  Similarly, there would be no need for federal or state litigation against pharmaceutical companies for False Claims that inappropriately causing taxpayers to fund unapproved uses.

If physicians and patients have made a choice to use a product “off-label” and private payers (insurance companies, employers, or PBMs) choose to pay for the unapproved use then they should assume the same liabilities as stated above.  They are making an informed decision and the payer is agreeing with that choice by reimbursing for the unapproved use.  The patient could sue the prescribing physician, healthcare system, and perhaps the payer, but they would have no legal recourse against the pharmaceutical company should a harmful event occur from the unapproved use.

But what about all the “medically established” unapproved uses in treating things like cancer?  The same rules and legal liabilities should apply.  Physicians have the choice to prescribe, patients have the choice to take, and payers have the choice to reimburse for the unapproved use if they want to assume the liabilities with the inability to sue the pharmaceutical company.  If the medical experts, patient advocacy groups, or government programs and insurance companies feel a prescription drug should be approved and reimbursable for a particular use, they should petition the FDA and submit their clinical proof of efficacy and safety to obtain an FDA approved label claim for the product.

While preserving physician, patient, and payer choice these recommendations remove a major financial incentive (reimbursement) for pharmaceutical companies and increase the legal consequences for individuals who inappropriately promote for off-label uses of prescription drugs.  More importantly, it appropriately shifts product liability for unapproved uses to healthcare providers and payers.   www.PharmaReform.com

The J P Morgan Healthcare Conference is, among other things, an annual four days of back to back 30 minute presentations by Pharma, biotech, device companies, CROs, and a diversity of healthcare institutions.  C-level presenters, mostly CEOs, trying to persuade analysts and potential investors that they have the business model designed for increasing shareholder value, some bolstered by forward looking statement disclaimed historically based promises for product approvals, revenue and earnings growth,  dividends, and stock buy backs.

The conference is the premiere healthcare conference in the industry and has become “old home week” for industry executives to reconnect, schmooze, and initiate discussions for potential deals.  Getting an invitation is near impossible if you are not among the presenting companies or on the JP Morgan A-list.  I am neither, so I spent last week listening to all the webcasts that are available for the Pharma and biotech company presentations.

Perhaps the single most stunning, yet less obvious (non- investor perspective) “take away” for me was how rapidly Big Pharma is moving away from Primary Care.  With almost 75% of prescriptions now being filled with generic drugs, the trend may not be that surprising.  What is surprising is that the pace of proactive strategic abandonment of Primary Care is far more dramatic than what I believe most people in the industry would want to admit or even realize.

This trend really got my attention when companies with traditional Primary Care portfolios blatantly stated or clearly outlined that they have strategically refocused their pipelines and commercialization efforts to target specialty markets.  With very few exceptions, company presentations were absent references to products or commercial strategies targeting the Primary Care market.  Oncology, neurology, psychiatry, rheumatology, and dermatology seem to be the focus of attention unless you had a Hepatitis C compound in your pipeline.

Again, the interest in specialty products is not surprising.  They command higher prices, yielding higher margins with less onerous managed market intervention into prescribing practices.   From a commercial perspective, specialists represent a smaller, more easily targeted and sales force friendly customer base.   Specialty market physicians and their patients also seek out and are more receptive to disease and treatment information making promotional education a viable and efficient tactic.

The implications of this trend away from Primary Care are clear.  Fewer sales reps needed for calling on Primary Care.  Less need for expensive Primary Care sales and marketing support activities such as purchasing mass market prescription data, coordinating the complexities of territory management and sales reporting, and dealing with sales force related employee relations issues.  It also means fewer industry sponsored educational programs for Primary Care.  Fewer Primary Care clinical trials.   And,  fewer new Primary Care products means Primary Care physicians and their patients will have to be satisfied and content with the treatment options currently available to them.

The real message here is that while Primary Care has been at the foundation of Big Pharma growth and financial success in the past and there may well be exceptions in the future, the importance and interest of Primary Care to Big Pharma is diminishing quickly.  If your expertise or responsibilities include pharmaceutical sales and marketing to the Primary Care market, I believe your days are numbered and you probably have fewer days than you might think.  Specialty products and markets are where the action is and where the industry is headed and it is moving fast.   mike@pharmareform.com

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

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

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

mike@pharmareform.com

We all depend on pharmaceutical manufacturing to produce our prescription drugs that are consistent in formulation, safe, and not contaminated with foreign materials or potentially harmful pathogens.

Anybody who has done pharmaceutical manufacturing, especially biologics or sterile injectable prescription drugs, knows how challenging it is to repeatedly get it done right in large scale.  From engineering and process controls to supply chain and inventory management to quality systems the expertise required to consistently produce high quality, regulatory compliant prescription drugs is perhaps one of the most unappreciated critical success factors for a pharmaceutical company.   If you can’t make it you can’t sell it.

This expertise is a core competency that has clearly been taken for granted by Big Pharma senior executives.  This lack of appreciation for manufacturing expertise is evident every time a pharmaceutical company faces a recall or needs to shut down due to “quality issues.”   Perhaps best exemplified by the now well publicized drug shortage situation, the inability to manufacture these life saving prescription drugs is putting patient lives at risk.   The lack of appreciation for the complexities and challenges of pharmaceutical manufacturing manifests itself in these shortages.

So what does it take to do high quality, safe, and regulatory compliant prescription drug manufacturing?  It takes a broad range of expertise (not just well trained technicians and operators), significant ongoing capital investment in facilities and equipment, and rigorous, almost obsessive quality systems.  These are not the places pharmaceutical executives  should be looking to cut costs.  And worse,  generic drug pricing generally don’t allow for the levels of continuous investments I believe are necessary in people (expertise), facilities, equipment, and quality systems.

But what about Big Pharma?  Well, who had the expertise?  Who had the robust quality systems?  I’ll even add … who had the proprietary insight into the nuances and complexities of making a particular prescription drug.  Big Pharma.   At least they did until they decided to take manufacturing expertise for granted.  Unfortunately, Big Pharma continues to close manufacturing facilities, outsource more to contract manufacturers, and retire or let go much of their manufacturing expertise.  And, this expertise and know-how doesn’t necessarily get transferred from Big Pharma to the manufacturers that will be making the generic versions of their products.

I often wonder how generic drug manufacturers or even contract manufacturers who take over manufacturing a prescription drug figure out, understand, and know how to deal with all the nuances and complexities of making a particular prescription drug.  Again, if you’ve done pharmaceutical manufacturing, you know how much is learned by doing hundreds and thousands of batches over years of experience.   Perhaps those who are challenged with making the drugs that are now in shortage are finding this out the hard way.  Unfortunately, it is patients who are now suffering and dying because pharmaceutical manufacturing is harder and takes more expertise than most pharmaceutical company executives appreciate.    mike@pharmareform.com

Pharmaceutical companies are held legally and financially accountable for making sure their drugs are used appropriately and that physicians and patients are aware of and understand the risks associated with their prescription drugs.

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

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

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

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

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

mike@pharmareform.com

As a first time author and publisher it’s been an interesting road from drafting, writing, and editing to finally publishing Pharmaplasia™.  Fortunately I had some fantastic professional help putting it all together.

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

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

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

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

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

mike@pharmareform.com

Comparative effectiveness studies like the recently reported SATURN study comparing Crestor^® (rosuvastatin) with Lipitor^® (atorvastatin) sponsored by AstraZeneca may on the surface appear to be a big win for patients (and prescription drug providers) especially those awaiting generic versions of Lipitor (anticipated by the end of this year).  The reported preliminary topline results show a numerical advantage favoring Crestor but no statistically significant difference in the primary endpoint of the study (change from baseline in percent atheroma volume (PAV) in a ≥40 mm segment of the targeted coronary artery as assessed by intravascular ultrasound).

The apparent implication from these results is that there is no difference between Crestor and Lipitor and therefore, when available, generic atorvastatin will work just as well as the brand Crestor.  Extrapolating this “no difference” conclusion for a single endpoint to the totality of efficacy for atorvastatin could result in significant cost savings for patients and providers of prescription drug benefits.  You would think this is great news for patients but I believe the ramifications of this study go well beyond cholesterol lowering agents and the impact on future sales of Crestor.

Because of the investor interest, high media visibility, the enormous healthcare cost savings potential, and the mass market served by cholesterol lowering agents I believe there will be significant fallout from this study that is not necessarily beneficial to patients.

First, there are undoubtedly going to be patients who could benefit from Crestor rather than atorvastatin but who will not be given that option.  Smaller patient populations may never be studied well enough to determine if there really are patients who might benefit from one product or another in the face of large comparative trials showing no statistically significant difference.

Second, company executives have always been, but will now be even more, reluctant to sponsor comparative effectiveness studies for established products even when they feel they have an opportunity to demonstrate a difference (as I believe was the case for AstraZeneca).  The requirement for “statistically significant” clinically meaningful differences may be too high a hurdle (and represent too much risk) when complex trial designs are expected to prospectively identify a specific primary endpoint for a patient population with considerable variability.  We may, in an ideal world, feel we know enough about biology, disease pathophysiology, pharmacology, and the nuances of patient populations to be able to precisely design these definitive trials, but we probably don’t for most diseases.

Third, pharmaceutical companies may prematurely stop developing drugs they feel might not be able to demonstrate statistically significant differences to available therapeutic agents.  This would have been a catastrophe for antivirals HIV/AIDS treatments which we now know work best as cocktails of several products rather than one being “statistically  significantly “ better than another.  To further complicate this, regulatory approval studies are designed to establish efficacy and safety, not superiority.  I believe the need for demonstrating a statistically significant difference to meet market expectations and regulatory requirements for making a superiority claim (or to potentially gain approval) will make drug development near impossible where products already exist and efficacy is well established.

And if you are thinking about developing an as effective but “safer” product, good luck.  Regulatory requirements for claiming “safer” are even more challenging and from what I have seen, near impossible.

Lastly, this market expectation for demonstrating “superiority to available treatments” and regulatory requirements for making those claims, I believe will result in fewer therapeutic options for treating specific diseases (think antibiotic drug development over the past decade).  We are getting to a point where if a product is already available to treat a disease,  clinicians and payers want to know if your new product is better.  You would think this is not an unreasonable expectation, but it is an expectation that increases the cost, complexity, and uncertainty of drug development.

At the same time, pharmaceutical companies that demonstrate statistically significant differences for their branded products in comparative effectiveness trials will be able to command “super premium pricing” with an almost monopolistic “treatment of choice” position for the duration of their patent.  When a product demonstrates a clear benefit (statistically significant) over other treatments the bar is  raised for subsequent new products to demonstrate statistically significant superiority.  For products with trial supported superiority, regulators will have no choice but to allow superiority claims,  physicians will have little choice but to prescribe the product, and payers will have little choice but to provide reimbursement.  Unfortunately,  this also dampens drug development interest in therapeutic categories that already have well established “treatments of choice.”

And while we may have more effective and potentially safer products in the future,  if you think prescription drug prices are high now, just wait for these products that establish “treatment of choice” with clinically meaningful statistical differences.    mike@pharmareform.com

Have things changed that much or have sales reps with the help of their lawyers just figured out how to characterize the pharmaceutical sales representative position so as to align their cases with the FLSA definitions for “non-exempt?”  Granted, it has been a while since I have been in the field (as a rep or riding along) but I always felt pharmaceutical sales reps were pretty autonomous, responsible, and accountable for “selling” the company products (legal and regulatory constraints considered) and “managing” the business in their territories.

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

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

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

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

While it is hard to argue that you don’t need money to discover innovative new treatments for all the complex diseases that continue to cause illness, disability, and even threaten life.  At the same time, Big Pharma has shown that merely throwing money at discovery research won’t necessarily deliver the results you might expect.

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

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

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

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

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

The internet and it’s applications like Twitter have created a seemingly endless source of timely information.   Sorting through the noise however to get to tweets that can help and get you the information you really need can be a real challenge.  This is especially true in the world of pharmaceuticals, biotechnology, and healthcare.   In a previous post I listed my top 10 internet sources but only mentioned a couple of helpful Tweeters.   While I follow only a small number and I’m sure there are plenty of other good tweeters,  those who seem to have consistently delivered content or links that have been helpful in keeping me current include (no particular order):

@ChristianeTrue

@kevinmd

@matthewherper

@Pharmalot

@Pharmaceutical

@cafepharma

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