Industry Voices

Economics and politics: A lethal cocktail for pharma and biotech

Mon, 01 Dec 2008 08:48:34 -0500

Dr. David Gershon is the Chairman of the National Institute for Healthcare Economics and Regulatory Policy, is a designated Standard & Poor's 'Industry Leader,' and currently serves on the Advisory Board of Pictet & Cie, one of the largest Swiss private banks with $400 billion under management, and Sectoral Asset Management, a Lifesciences Hedge Fund and member of the State Street Global Alliance with $4 billion in assets under management. He has over 20 years experience as an oncology physician-researcher, healthcare economist, and healthcare regulatory attorney with expertise in FDA drug and medical device approval processes and CMS and private payor pricing and reimbursement.

What does the global economic downturn mean for the healthcare sector? And how will the new White House Administration reshape the healthcare landscape given the current macro-economic backdrop?

Global Economic Downturn: Credit Crisis and Possible Deflation

Deflation is a real possibility in 2009 as a consequence of a global recession. Currently there are 16 countries in recession, including 5 of the G8 with Russia and France not far behind and China, India and Brazil likely to continue to show slower downward growth for several quarters.

Several key indicators are predicting a deflationary environment going forward. US Consumer Price Index readings indicate a drop in pricing that has not been seen for 61 years and Producer Price Index readings also indicate a strong trend downward. Manufacturing readings are at an 18 year low. Jobless claims at a 26 year high. And State revenues continue to plunge due to drops in sales tax and property tax revenues.

Asset classes in most sectors are continuing to decline, led by real estate, energy and commodities. A sobering reflection of this is the loss of $30 trillion dollars in equity prices globally.

Credit markets and specifically Treasury Bond prices corroborate the real fear of deflation, which could have dire negative consequences on pricing power and therefore valuations in pharma and biotech companies.

St Louis Federal Reserve President James Bullard said the US central bank may need to take more dramatic steps, including "quantitative easing", to stop deflation, reminiscent of the unprecedented large Bank of Japan injections of liquidity in the 1990s once their interest rates went to zero.

While deflation is a low probability given the strong measures available through monetary and fiscal policy, the negative downward momentum on pricing power is significant and is likely to impact all sectors of the global economy, including life sciences.

New Head of HHS Rolls Out White House Healthcare Policy

In addition to these economic pressures, new White House healthcare policies will likely heavily regulate and reshape the healthcare industry.

The new head of the Department of Health and Human Services (HHS), Tom Daschle, is likely to put forth an agenda that has significant impact on healthcare services and insurance, as well as pharma, biotech, PBMs (Pharmacy Benefit Managers), CROs (Clinical Research Organizations), generics and device companies.

This could be expected to include a multi-year plan to roll out government negotiated drug pricing, drug re-importation for Medicare Part D, and a heavy emphasis on generic substitution that favors generic reimbursement over brand drugs (including bio-generics in the distant future), as well as patent reform legislation and FDA oversight and safety legislation. All of this will be underpinned by a new national healthcare program and State-by-State healthcare reform initiatives that are likely to be based on a cross between the UK's NICE and the Swiss mandatory insurance model. This could lead to a long-term down trend for small molecule and biotech drugs.

What is the prognosis of the American healthcare system? Perhaps we should all take two aspirins and call again in four years to find out. But I would suggest that maybe there's a silver lining.

A Silver Lining?

While these policy initiatives and economic pressures may pose significant risk to revenue growth, the silver lining is that this may support significant M&A and promote a much-needed industry consolidation. This may roll out as a full consolidation, over time, between pharma, biotech and generics companies.

Evidence of this trend can be seen in Pfizer's recent bid for Indian generic drug maker Ranbaxy and Daiichi's acquisition of the company. Other examples include Lilly's purchase of ImClone as part of a move towards biotech, Schering-Plough's purchase of Organon BioSciences, Roche's offer to buy Genentech and AstraZeneca's purchase of MedImmune.

While these mega-deals may represent a first phase in a consolidation trend, it is likely that we are in the early stages and that M&A among small and mid-sized companies will continue. These deals involve the purchase of Sirna Therapeutics, NovaCardia, Coley Pharmaceutical Group, Domantis, Cambridge Antibody Technology and Omrix, and mark a long-term attempt at pipeline replenishment to bring growth back to the industry.

According to Business Insights, "4 percent of M&A deals since 2003 have been valued at more than $500 million, while 70 percent were for less than $100 million. The average deal value for the five year period was $94 million." With the strength of the current credit crunch and economic downturn, valuations will likely continue to decline as cash starved smaller companies are acquired.

In a recent publication by Steven Burrill, he cited that nearly a third of publicly traded biotech companies were facing delisting because of their drop below the minimum price and market cap requirements for the Nasdaq.

The Irony of Our Times

The irony of our times is striking. The US government is spending hundreds of billions of dollars to bail out insurance companies, investment banks and auto companies who abandoned risk management regimes and employed excessive leverage to increase revenues. Yet the critical areas of healthcare and pharmaceuticals--which arguably have greater intrinsic value than the products created by these other industries--will not only be ineligible for government assistance, but will be subject to tighter regulation and pricing pressures.

Where was the government when tens of thousands of jobs were lost as large pharma cut jobs and as small and mid-sized biotech companies halted clinical studies and closed their doors?

Shouldn't we--as part of the Obama era of change and as a matter of good policy--be promoting science, innovation and the development of next-generation medicines to promote the public health, rather than saving companies that demonstrated (arguably) reckless behavior?

Ultimately, with the large amount of cash and the strong cash flow in the pharma industry, acquisition and consolidation of pharma, biotech and generics companies over the next several years should mold an industry that is more cost effective and sensitive to the needs of the new direct to government model that recognizes that government is the new driver of sales and revenues and not the consumer.

With increased M&A, we are likely to see a single drug manufacturing industry with strong economies of scale, diversification in product mix and, in general, a new compelling growth story. One that will be good for the healthcare industry and our aging society, which is increasingly demanding better medicines and treatments. - Dave Gershon

Industry Voices: NICE tries to expand healthcare coverage

Mon, 17 Nov 2008 21:15:59 -0500

This week Senator Max Baucus released a blueprint to create a national health plan. A central feature of his proposal is something called the The Health Care Comparative Effectiveness Research. The Institute is modeled on Britain's National Institute for Health and Clinical Excellence (NICE) which was established to compare the relative value of medical technology. The Institute has enthusiastic support from advocates of government-run healthcare and the health insurance industry's lobby, America's Health Insurance Plans (AHIP). Both groups argue that the institute should compare treatments for the same disease, find which works best, chuck the one's that are less effective and use the savings to pay for expanded insurance coverage.

Baucus claims the Institute's decisions would not be binding. The problem is that voluntary decisions don't stay voluntary for long. NICE decisions were immediately adopted by Britain's National Health Service to determine what it would pay for and to further tighten the government's control over healthcare.

Comparative effectiveness advocates like the fact that NICE focuses on the value of care. Recently the group ruled that four drugs used to extend the life of people with stomach cancer "aren't effective enough to warrant their high cost and shouldn't be prescribed to new patients." NICE decided that the $39,000 the drugs would cost to keep people alive wasn't worth the money.

NICE determines what's valuable by assuming that anything that costs too much isn't worth the money, even if it helps people live longer or better for a year. That so-called 'quality-adjusted life year' is the upper limit NHS uses to determine what it will pay for. To NICE, breast enhancements and Viagra are a bargain, but new drugs for stomach cancer are a waste of money.

Many comparative effectiveness advocates claim that in America, which spends more per person on health than Britain, the appraisals would only eliminate "wasteful" care. Tell that to Barbara Wagner. She's enrolled in Oregon's Health Plan which used comparative effective analysis from Oregon's Drug Effectiveness Review Project to tell her it wouldn't pay for Tarceva, a drug proven to extend life in people with her particular type of lung cancer.

DERP receives funding from the federal government's Agency for Health Care Quality and Research, which already produces comparative effectiveness research. AHRQ also funds the comparative effectiveness institutes of HMOs who, along with DERP, crank out reports used by Medicaid and insurance plans to ration drugs for cancer, mental illness, arthritis and other serious disease in over 25 states.

AHRQ and these organizations would essentially run the new Institute with a budget of about $300 million a year. The legislation says they should do large studies that compare one drug or device to another. Such research take years to complete. All the better if you want to dodge paying for some new cancer drug or medical device. And such studies ignore racial, gender or genetic differences that allow doctors to match the right treatment to the right patient. That makes it easier to conclude that there is no difference between any treatments, and to recommend using the cheapest available.

Comparative effectiveness fans point to the ALLHAT trial (Antihypertensive and Lipid-Lowering Treatment to Prevent Heart Attack Trial) as another "gold standard" for what they want. That five-year, 42,000 patients trial compared older blood pressure drugs (diuretics) against newer medicines in reducing heart attacks.

The study concluded cheaper diuretics were just as effective at reducing death from all forms of heart failure. Michael Weber, professor of medicine at Downstate Medical Center and a study adviser, points out diuretics only seemed better overall because the study produced a 40 percent excess stroke rate in African American patients who were given a type of blood pressure drug called ACE inhibitors. It's known that blood pressure in African Americans responds poorly to ACE inhibitors. The one-size-fits-all approach to treating hypertension taken in ALLHAT exposed black patients to certain danger and even death.

Comparative effectiveness is marketed as a tool for promoting better health and universal coverage. In fact, it's used mainly to deny people care when they need it most by the folks holding the purse strings. Both NICE and the new Institute will ration care by deciding some lives are worth saving and others are not. The difference is, in America, the insurance companies have found a way to have us pay them to do it. - Bob Goldberg

Industry Voices: Creating a center of excellence in China

Mon, 27 Oct 2008 15:10:36 -0400

Stephanie Wells is the Senior Vice President of the U.S.-based CRO Charles Rivers Laboratories.

With its impressive pool of native scientific talent, large population with unique therapeutic needs, rapidly growing economy, and rising interest in Western products and services, China is emerging as a powerhouse in the life sciences industry. However, in the past year a series of product contamination incidents have beset China's manufacturing industry, emphasizing how vital it is to establish Good Laboratory Practice (GLP) so that China's potential as a quality pharmaceutical producer can be fully realized. As China continues to evolve as a center of R&D innovation, providing GLP-compliant preclinical services is critical to fostering this culture, as well as to helping academia, scientific societies, and biopharmaceutical organizations accelerate their drug development programs.

To accomplish this goal, it is critical to make a strategic investment in local resources and staff to support these drug development programs. A critical component of this investment is the transfer of expertise and western lessons learned to Chinese talent, including high standards of research, safety, humane care, and good laboratory practices. The goal is not to have a Chinese facility that is staffed and operated from the west, but to create an autonomous operation that meets the same regulatory and quality standards as its Western counterparts.

Creating a Culture of Compliance

The most important aspect of successfully replicating GLP procedures in a new location is to rigorously train the people responsible for carrying out the procedures. It is at this fundamental level that quality can be most easily compromised. In other words, personnel can make or break a GLP facility.

To guarantee the quality of the knowledge and actions of personnel, the staff needs to be well trained. This is accomplished by either training them at other GLP-compliant facilities before placement at a China facility or transferring key management positions from those GLP-compliant facilities to China to train and oversee staff on-site. Ideally, a combination of these plans should be implemented to achieve effective training.

After establishing a base of highly-trained staff members, the GLP standard must be maintained. From the start, the goal of all training should be to create and sustain a culture of compliance, where compliance is not a goal to be reached daily, but the normal state of affairs in which any deviation is immediately evident and quickly corrected. This is maintained through orientation and refresher training, as well as quality assurance initiatives.

An Assurance of Quality

When setting up a facility in a different country, the amount of regulatory complexity that is involved increases significantly. Achieving these new quality standards in addition to meeting domestic GLP standards while in a foreign environment takes both prior planning and continual oversight.

Much like the aforementioned training, which in itself is an important component for quality assurance, engagement and importation of key quality assurance personnel is essential to the success of any such offshoring venture, and not just after the facility has opened. Quality assurance starts in the planning stages, with detailed validation plans drawn up by experts in the field. Validation plans should include facility construction, standard operating procedure implementation, and staff training. Throughout the planning stage and all the way through to implementation, it is vital to involve international experts in addition to imported quality assurance personnel, in conjunction with local experts in Chinese regulations and processes.

Finally, a Quality Assurance unit should be instituted and empowered to monitor compliance once the site is functioning. Quality audits should be conducted frequently, and continued process improvements should be developed and implemented wherever possible to more efficiently meet GLP standards.

An Integration of Local Resources

Although the above two steps involve the importation of a considerable amount of skill and resources, it is also essential that local resources are engaged and incorporated. In fact, eventually a company should come to rely on the resources available locally.

The main reason for importing resources at first is one of trust. The suppliers and vendors that a company normally relies on for support have already been vetted and have proven over time to be dependable. However, for fiscal and geographical reasons, that same pipeline of resources might be impractical or impossible to use on the opposite side of the world. As a result, relying on domestic suppliers as a long-term strategy is untenable.

Fortunately, China has a great deal to offer with respect to local expertise. In addition to knowledge of local regulations and the prodigious scientific talent of the country, there are plenty of high-quality suppliers and vendors available. However, these local resources need to be subjected to the same quality control scrutiny to which the domestic pipeline is subjected. In fact, by importing resources from domestic sources at first, a company can buy itself the time it needs to properly examine and establish local China suppliers and vendors for GLP-compliance.

Conclusion

To achieve a culture of compliance, effective quality assurance procedures, and the successful integration of dependable local resources, it takes an immense amount of planning before the first brick is laid in a new China venture. To reiterate, the goal is to create a preclinical center of excellence in China and an offshore partner for multinational and local biopharmaceutical companies. By definition, such a goal is best achieved by leveraging domestic experience and importation in the early stages to ensure quality standards are established and replicated. If the appropriate blend of domestic expertise, western compliance processes, and oversight are linked with proper utilization of local resources, an efficient GLP-compliant facility can be established and maintained. Once created and maintained, this will go a long way toward delivering the enormous potential that China offers in helping the pharmaceutical and biotechnology industries enhance development of more effective therapies, both in China and the rest of the world. - Stephanie Wells

Industry Voices: Get the most from your CRO

Tue, 30 Sep 2008 08:31:16 -0400

Stephanie Wells is the Senior Vice President of the U.S.-based CRO Charles Rivers Laboratories.

Ever-growing healthcare costs mean that new drug discovery is increasingly important, but the R&D process has never been more complex. Global economics, market pressures from payors and patients and a need to reduce internal infrastructure costs are forcing pharmaceutical companies to rethink traditional drug development strategies, as well as increasingly shift spending towards the early phases of R&D. In addition, increasing development of biologics requires not only greater flexibility in R&D, but also enhanced expertise in more complex therapeutic areas and new technologies.

This changing landscape is the driving force behind a collaborative evolution within the industry, transforming traditional pharma-CRO relationships. Increasingly, CROs are evolving to become long-term partners, versus simply individual product or service vendors. They're also becoming involved earlier in the R&D process.

As pharma looks for new ways to reduce costs and gain a competitive advantage by accelerating the R&D process, there's an increasing need to break down barriers that previously separated--and in some cases still divides--the various phases of the R&D process. As traditional R&D models are challenged by top management, and procurement or Lean Six Sigma processes are applied, there is a shift towards internal, global process consistency. As a result, there is a reevaluation of internal structure, around both therapeutic areas and compound classes.

Drivers for Change

The challenges facing the pharmaceutical industry are enormous--fewer robust pipelines, rising and increasingly volatile costs and lingering patent expiration issues. There's a need for a paradigm shift. To leverage constrained internal resources, pharmaceutical companies are seeking CROs with experience not only in specific areas, but also know-how that spans the entire development process.

Drug companies are realizing that they don't have to reinvent the wheel for each new project; CROs have scientific expertise and state-of-the-art infrastructure. The industry evolution towards more comprehensive collaboration is leading to more objective CRO selection and higher expectations by pharma companies.

Changing Role of the CRO

CROs are poised to become viable, strategic partners for companies both big (to help improve productivity) and small (to help maximize licensing opportunities by achieving proof-of-concept without high infrastructure costs). Using CROs to ease the workload/workforce balancing act is becoming essential for the efficient development of new therapeutics. While still maintaining specialty programs throughout the development process, CROs can focus on the overall success of a drug candidate--versus only the success of an isolated study.

As with any strategic partnership, clearly defined roles, expectations (metrics), and governance processes--to say nothing of good communication--are the drivers for success. With joint expectations and a clear understanding of exact protocol specifications and project needs, the CRO can tailor its resources to achieve the program goals.

Transparent communication and building trust between the collaborators can overcome potential barriers to implementation. As in any evolving model, there are always obstacles--including maintaining confidentiality, building relationships based on quality outcomes and shared ownership of a program, overcoming the "not-invented-here" syndrome, internal politics and aligning of business goals. For CROs, balancing the need for efficiency through internal standardization with the clients' need for replicating their specific requirements will continue to present challenges. All must be overcome in the future to truly leverage the significant resource pool available through outsourcing.

Pharma Opportunity: Comprehensive Program Advantages

Although individual studies may be cheaper and faster to outsource in the short-term, comprehensive programs offer greater benefits by maintaining consistency and scientific oversight throughout each entire study. This allows individual studies carried out within the context of larger development goals, ultimately saving time and money.

Players should deploy a "right-fit" model. The degree of expectation of the CRO should be balanced with a stable core staff to manage the R&D planning for each compound. By engaging the CRO early in a program, pharma companies can access the scientific expertise of the CRO, strategically fill gaps and allow the CRO to influence the science objectively, through operational best practices and concurrent project management. The CRO's influence is also transferred throughout the entire drug development process, while elevating pharma resources to overall program oversight and designated scientific expertise. This process challenges both collaborative parties in an effort to achieve faster, cheaper and more accurate outcomes.

The role of CROs as a regulatory resource has grown significantly due to the current regulatory landscape. The regulatory expertise provided by CROs generally is due to broad exposure to programs, resulting in earlier insight into all aspects of the development process. Using the CRO as a regulatory resource enables pharmaceutical companies to focus on R&D.

Strategic Partner, Not Vendor

When choosing to outsource, pharma companies should consider the breadth and depth of science-based services and program management that a CRO can deliver. This will help decide which tasks it needs to keep in-house and what outside expertise they need. Because specific outsourcing needs vary, the CRO will work with the pharmaceutical company to help determine what is essential to accelerate drug development. In the current life sciences environment, it is critical to demand and expect more from the CRO. If the CRO is marginalized, only a modicum level of results can be expected. Achieving a truly innovative and more productive end result requires a new level of CRO commitment across the entire pharma R&D organization.

Ultimately then, the role of the CRO is changing from a one-off study vendor to a strategic partner in tune with the goals and objectives of their client. While maintaining a strictly fee-for-service relationship, aligning with the pharmaceutical company's overall strategic objectives not only maximizes efficiency, but allows the CRO to challenge processes and thereby help reduce the time and cost required to accelerate drug development. - Stephanie Wells

Industry Voices: How to survive generic erosion

Mon, 08 Sep 2008 14:57:02 -0400

Rhonda Greenapple is the President of Reimbursement Intelligence. She can be contacted here with comments or questions.

Generic Erosion: How Osteoporosis Category Impacts Current and Future Market Entrants

Osteoporosis currently represents over a $4 billion dollar market that will continue to grow as a result of shifting demographics, DTC campaigns and new market entrants.

It becomes a significant cost center to health plan pharmacy budgets, especially Medicare, where 30 percent of the population has osteoporosis. These treatments aim to reduce the risk of fractures and promote bone growth. Within the Medicare population, 17 percent will sustain a fracture during their lifetime. It becomes more critical to prove medical cost offsets if they desire a premium price.

Plans are seeking evidence that new products prevent the costs of vertebral and hip fractures that increase medical costs including hospitalization, long-term care or home care, physician visits and procedures, medication, etc.

Between the launch of generic Aledronate in March 2008 and July 2008, the market share of Fosamax has declined from a market leader 45 percent to 10 percent, and the generic during that same period rose from 0 percent to 35 percent. How will this change in a $4 billion-plus market affect current treatments and future market entrants?

Reimbursement Intelligence conducted a study in August 2008 with Pharmacy and Medical Directors representing 100MM covered lives to understand the impact of generic entry. The study revealed more than 40 percent of plans had a generic conversion rate of over 60 percent.

Generic conversion was dramatic in four months and it applied not only to new starts but also existing patients. In the past, plans left patient's therapies with the policy. We do not tinker with what is working. In the current category, plans do not see differentiation and therefore the rate of switching is high.

Plans use aggressive campaigns, including mailings to physicians, regarding generic availability. For members, the plan offers coupons as incentive to switch and reminds them of the reduced co-pays for generic or alternatively force switches by increasing co-payments.

The most impactful cost control is using utilization restrictions that force "generic first." This limits the market substantially as it pushes the branded products to second line.

The pipeline for osteoporosis products is robust, and includes SERMS, Estrogen Agonists, and Monoclonal Antibodies. What does generic market entry mean for these products?

As plans look at cost controls, they will start asking what the "value" is of new therapies relative to generic alternatives. In other words, is the incremental benefit worth the price? The chart below demonstrates that almost a third expect a 30 percent or greater risk reduction to differentiate from current therapies. The bar for access is not equal to but better.

How can future products prepare for this environment?

1. Do not assume you will be unique.

It is important you understand how you will be perceived and compared to current standard of care. Plans consistently rank MOA behind efficacy, safety and price. In reality, it is price, efficacy and safety.

2. What is the best strategy to differentiate?

You must understand what can make your product stand out from the crowd. With each new class and product, it becomes more difficult to get SOV with both payors and physicians. With targeted research, payor evaluation should be sought in developing clinical trials and health outcomes research.

Also, it is important to look at subpopulations, prevention and reducing the progression of the disease.

3. Prepare for the worst

It is important to identify what is the worst case scenario for formulary access and reimbursement for your brand. This will allow you to incorporate into your business planning and commercialization strategy. With the risk of being second line, it is critical to build physician loyalty, reimbursement support programs and effective pricing/contracting strategies.

Lipitor was able to defend its position with only a 30 percent loss in market share. However, it is not a good analogue for most companies as they put a lot of muscle behind DTC, physician campaigns, etc. There are plenty of examples where it was an 80 percent loss of market share as well.

Preparing for the worst allows you to plan to improve and minimize erosion.

4. Make sure the price is right

These formulary and reimbursement restrictions can impact revenue forecasting and commercialization for products in the pipeline. Manufacturers will also need to look at pricing and contracting strategies that will maximize access and minimize utilization restrictions. This requires a careful analysis of how these rebates and contracts will impact profit margins.

On the other hand, premium pricing strategies need to be tested and validated prior to implementation. The ability to price premium will only become more difficult in the current environment.

Generic market entry in billion dollar categories impact both current brands as well as future market entrants. It is critical to plan and ameliorate erosion with effective strategies. - Rhonda Greenapple

The future of drug development

Mon, 11 Aug 2008 15:29:17 -0400

Robert Goldberg is one of the authors of DrugWonks. It is the blog of the Centers for Medicine in the Public Interest (CMPI), which debates today's drug policies.

Last week the FDA issued a statement essentially saying that it was not responsible for the dearth of new drug approvals in recent years. It would be easy to blame a more cautious agency responding to harsher Congressional oversight for the fact that the there has been both a decline in new drug approvals and an increase in approvable letters issued.

But the answer is not so simple. Pharmaceutical companies have reached the end of what can be produced from targets validated 15 to 20 years ago. The FDA is understaffed and overworked, and approvable letters are often used as a safety valve. Alternately, new drugs may have side effects that require the development of risk management plans and additional data collection.

In any event, the focus on the present is misplaced. So is the emphasis on the quantity of drugs and biologics in the pipeline. The more important questions are: How well will the future crop of drug candidates be validated? Will these drugs target specific groups of individuals based on biological markers of response and disease? Will the success rate increase--rather than decrease--over the next five years? Will time to market for those candidates decrease?

Ironically, it is here where Congress could have the most influence. When Senator Grassley claimed that no surrogate marker should be used to approve a drug, what he essentially said was that that the new science of personalized medicine should be scrapped in favor of waiting ten years until a new drug is approved. But if Grassley and others who favor what amounts to an anti-science approach to drug approvals had won the argument nearly two decades ago, many medicines for cancer and HIV that have cut the death rate of those diseases dramatically would just be hitting the market.

Congress is currently in a regulatory rage. The key to better drug development is not more bureaucrats or lawsuits, but a stronger scientific foundation for risk assessment, which is at the foundation of everything the FDA does. And genomics--not a stand-alone drug safety agency inside the FDA accountable only to Senator Grassley--should play a central role in building that scientific platform.

Following the Vioxx withdrawal, many demanded long and expensive post-market trials. But some drug developers have found a way to detect routine toxicity by literally getting the problem to turn on a blinking light in a genetic expression array from cells exposed to a prospective drug. Indeed, the goal of the Critical Path is to evaluate the safety and efficacy of medical products with the same science being used to discover how different pathways and polymorphisms shape our unique response to medicines and disease.

Drug approvals are declining because drug development is moving from the blockbuster model to a process of creating medicines of great benefit to a small group of patients with specific diseases. Many others will become orphan drugs with targeted--and limited--markets. This will lead to wider off-label use, since formal trials with every genetic sub-group that would benefit from a drug would be unreasonable, unnecessary and unethical. It will also lead to fewer DTC ads, as a fragmented market will make such methods less cost-effective.

Clinical trials will still have an important role in drug development. But their design and analysis can be made more fruitful by learning from failed clinical trials. Genetic evidence of different responses to medicines will force companies to mine such data in cooperative fashion as a way to confirm that a test for drug safety is as reliable as, say, blood typing.

Further, companies and the FDA will have to spend more time analyzing what happens when people are receiving treatment under real-world circumstances. The factors that make a treatment work at a genetic level won't be detected by large clinical trials. Therefore, post-approval clinical trials that follow human biology in the real world will optimize use, instead of the artificially controlled environment that drug experiments currently use. That's a more productive focus for legislation.

Hence, we should worry not about how many new drugs there are, but what kind of new medicines and when they arrive. Drug development can become safer, less expensive and more efficient. Medicines tailored to smaller groups would allow prescribing and reimbursement to be based on the true biogenetic and medical conditions of patients. There are many legislators and special interest groups who fear this future. They're the ones who favor more regulation at the FDA, which could hinder scientific breakthroughs. - Robert Goldberg

Industry Voices: Personalized medicine will drive management, restrictions by health plans

Tue, 01 Jul 2008 10:56:52 -0400

Rhonda Greenapple is the president and founder of Reimbursement Intelligence.

Personalized Medicine Will Drive Management, Restrictions by Health Plans

Scientists and researchers alike were optimistic and excited by the announcements made at the 2008 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago regarding advances in personalized medicine.

One drug at the cusp of economic uncertainty, ImClone Systems's Erbitux, has been proven to be effective in 64 percent of individuals with the normal K-ras gene, but deemed ineffective in those with mutated K-ras genes. Payors are frustrated that there is a hit or miss as to whether these expensive products work.

Plans have been taking a hard line on these products with over 30 percent of major health plans requiring prior authorization for Erbitux before to allowing an oncologist to administer. In addition, Medicare Drug plans are increasing their use of cost sharing where the patient pays 20-30 percent of the cost of the drug as opposed to a flat co-pay.

To better understand the significance of "personalized medicine" to managed care, Reimbursement Intelligence conducted a survey of Medical and Pharmacy Directors at 50 top managed care plans covering more than 100 million lives. The survey was fielded over a 72 hour period and the data was analyzed and reported in 24 hours.

Payors Anticipate Use of Erbitux to Decline by 15-30 percent

The recent survey revealed that about 37 percent of payors believe Erbitux will be restricted to second-line treatment after Avastin. In addition, 49 percent prognosticate that the use of Erbitux will decrease by 15-30 percent as a result of the narrowed target market and perhaps as a consequence of mandatory K-ras marker testing.

Third Tier Placement and Administrative Hurdles May Further Threaten Erbitux

Of those surveyed, 62 percent believe Erbitux will be placed on third tier or third tier with a prior authorization. In addition, 41 percent believe their plan will change their prior authorization (PA) criteria.

Nearly two-thirds of payors (62 percent) reported that they will require the K-ras test prior to approval of Erbitux use. Third tier placement and new PA requirements may be a further threat to the success of Erbitux, since higher co-pays and administrative hurdles at the retailer may decrease script compliance.

Payers would have to pay $500 to $1000 to test for the mutation to determine who is an appropriate patient. This would encourage plans to further restrict off label and look for future products to push Erbitux to third line.

As we move forward, it is critical for biotech companies to proactively develop a managed care strategy to educate on the value of a targeted approach in improving health outcomes. - Rhonda Greenapple

Let my voice be heard, please?

Tue, 20 May 2008 10:01:10 -0400

Robert Goldberg is one of the authors for DrugWonks

Let my voice be heard, please?

The title of this feature is "Industry Voices." I do not represent industry. Over the 15 years I have written and been involved in healthcare issues and have advocated--at least from my perspective--the interests of patients and medical progress. I believe commercialization is the fastest and most dependable way to translate and transfer innovation to humanity as a whole. I believe that medical progress has, more than any other human endeavor, added more to the longevity, well-being, and prosperity of humankind. I believe that as life expectancy increases and face the so-called problem of rising healthcare costs, we will no choice but to learn about the underlying mechanisms of the most troublesome diseases, apply our findings, and prevent disease onset. These preventive inventions will emerge from private companies, which should be encouraged and rewarded for their efforts by a robust patent system, a science-based regulatory system and a healthcare system that encourages the use of new technologies.

Further, the source of preventive medical technologies will most certainly emerge from the ability to precisely distinguish and predict differences among individuals and groups of people. We must understand their response to disease and treatments, as well as how certain types of medicines affect disease systems and humans as a whole. It is increasingly clear that a considerable amount of variation in health and longevity is a result of such differences--differences that were indecipherable less than ten years ago. Similarly, many of the high profile side effects of medicine that have made the headlines are the result of idiosyncratic responses to treatment that could be considerably reduced--and will be--with the use blood tests or whole genome sequence data to guide healthcare decisions.

Unfortunately, little of the coverage of the pharmaceutical industry--particularly coverage of failed clinical trials and safety risks--takes this scientific perspective into account. To do so would suck much of the sensationalism out of the reporting and commentary, depriving journalists and bloggers of the opportunity to engage in conspiracy theories about the bad things happen to good people when the take pharmaceuticals.

The most recent case is the tragic story of Dennis Quaid's newborns twins, who were given 1000 times the dose of heparin. To Mr. Quaid, it wasn't enough to chalk it up to a horrible error. He said was the drug company's fault for putting varying doses in the same size bottle, and covering up other problems with the production of heparin. At least that was the strained assertion of the members of Congress who invited Quaid to testify.

Do journalists have a responsibility to put the relative risk of heparin use in the context of the benefits? How about reporting accurately and honestly about the source of the problems in heparin processing? Would a discussion about genetic variability and the challenge of titrating blood thinners in general be helpful in this regard? Or how about one of the more common mistakes the media makes in medical reporting: the relationship between SSRIs and suicide. Since a British researcher alleged that clinical trial data revealed a higher incidence of suicidal behavior and use of Paxil (Seroxat) nearly seven years ago, it has been all but assumed that all SSRIs were associated with a higher risk of suicide among children. (By the way, there is no correlation between suicidal thoughts or suicidal behavior and suicide.)

How did this assertion, which has never been proven and is not even in the black box warning now required by the FDA as part of the package insert for all antidepressants, become conventional wisdom? The black box warning, based on clinical trials and not clinical use, says the following: "There was considerable variation in risk among drugs, but a tendency toward an increase for almost all drugs studied. The risk of suicidality was most consistently observed in the MDD trials, but there were signals of risk arising from trials in other psychiatric indications (obsessive compulsive disorder and social anxiety disorder) as well. No suicides occurred in these trials."

About a year ago there was wide coverage of genetic associations between SSRI's, genes and adverse responses to the drugs. Note the wording of the reporting from Amanda Gardner of Healthday:

"Variations in two genes may help spur suicidal thinking in individuals taking a commonly prescribed antidepressant, research suggests.

Although preliminary, the findings could pave the way for genetic testing to determine which patients with depression are likely to have this unusual but dangerous side effect.

"These findings, if replicated, would provide a way to have a genetic test that would tell us who is at a higher risk of developing suicidal ideation when taking antidepressants," said Dr. Gonzalo Laje, lead author of the study and associate clinical investigator at the U.S. National Institute of Mental Health. "Our long-term goal is to make sure that people with depression can take antidepressants, because treating depression is the best way to avoid suicide," he said.

Notice the care distinction between "two genes may help spur suicidal thinking" and "treating depression is the best way to avoid suicide."

Now, at the risk of immediately wearing out my welcome at FiercePharma let me cite this publication as a repeat offender in confusing suicidality with suicide risk. (To its credit other Fierce publications have noted that a decline in SSRI scrips among kids has been associated with an increase in suicides.) Here is a post from the March 28, 2008 publication:

"These questions are arising in the wake of a British investigation into GlaxoSmithKline and its antidepressant Seroxat. The government concluded that GSK withheld information on the med's suicide risk for teens, but could not prosecute because withholding that data wasn't illegal under British law because Seroxat wasn't approved for use in kids, just adults. (GSK maintains that it didn't withhold info, anyway.) Officials say they intend to strengthen legislation governing clinical trial info by year's end.

And just the other day..."Suicide-risk warnings (and generic competition) hampered growth in the antidepressant market."

Companies should be held accountable for the good that they do, the important research they conduct, the silly and stupid actions they engage in. This goes without saying. But we all need to be more careful in describing the risk and benefits of medicines particularly in an age when the genomic is likely to be the Rosetta Stone for explaining much that seems wrong or tragic. That's how I hope to express myself, if allowed to be heard. - Robert Goldberg

FDA aims to hire 1,300 by October

Thu, 01 May 2008 06:59:57 -0400

In answer to its critics, FDA is mounting a major hiring push to expand its drug safety operations. By October, it hopes to add 1,300 to its payroll--600 new positions and 700 vacancies that have lain unfilled. According to the agency, that's almost three times the number hired during the past three fiscal years.

Who should apply? Potential medical officers, chemists, biologists, microbiologists, epidemiologists, pharmacologists, nurse consultants, general health scientists, and more. The agency will be holding job fairs across the country to troll for job candidates. Plus, FDA got special hiring authority so it can make quick decisions; new hires could be on the job within three weeks.

You'll recall that the FDA's Science Board--and Congressional investigators and other watchdogs--consider the agency seriously understaffed. But hiring these specialized types is no easy task; Commissioner Andrew von Eschenbach said at a recent Senate hearing that it couldn't absorb a recommended $375 million in extra funding in one year because it's so time-consuming to recruit and train new employees.

- see the FDA's release
- check out USA Today's story
- read the article in the Wall Street Journal

ALSO: FDA is working with computer services firm Epocrates to step up doctors' reporting of adverse events, errors, and product quality problems. Release

FDA wants power to police imports

Wed, 30 Apr 2008 06:59:57 -0400

The FDA finally put its mouth where the money is. During congressional hearings yesterday, CDER chief Janet Woodcock said the agency would need $225 million to $250 million in additional funding to inspect foreign plants as frequently as it does in the U.S. And, along with drug compliance director Deborah Autor, Woodcock asked Congress for the power to inspect foreign companies that ship drugs to the U.S., stop imports at the border if necessary, and require U.S. drugmakers to police their foreign suppliers.

"We currently have a crisis and an opportunity to make real change," Autor said.

The requests came during hearings into the heparin-contamination scandal. The blood thinner has been linked to 81 deaths and 785 allergic reactions. In written testimony, Woodcock reiterated the FDA's suspicion that the med was deliberately tainted with oversulfated chondroitin somewhere along the Chinese supply chain. Some batches of the Baxter med consisted of more than 30 percent of the contaminant, "and it does strain one's credulity to suggest that might have been done accidentally," Woodcock said.

Congressional investigator David Nelson, who's leading the heparin inquiry, criticized the FDA for failing to inspect the Chinese plant operated by Baxter's API supplier. But Nelson reserved his most pointed critique for Baxter, saying that the company hadn't adequately inspected that plant, either. For his part, Baxter CEO Robert Parkinson called import oversight problems "a global and industry-wide crisis."

- read the Los Angeles Times story
- see the New York Times coverage
- check out Parkinson's remarks at CNN Money

A closer look at industry issues

Tue, 22 Apr 2008 06:59:59 -0400

As we announced several weeks ago, FiercePharma will be featuring a new special section called Industry Voices. A variety of columnists will discuss issues affecting the pharmaceutical industry and examine the trends that are changing the way drug makers do business. We hope this feature will give you deeper insight into larger issues that don't always make the daily news cycle.

Our first columnist is Mark Senak, an industry expert with over twenty years of experience in law, communications, public health and public relations. He is also the author of Eye on FDA, a popular blog covering the ins and outs of FDA news and policy. Scroll down to check out his article on the recent upheaval at the FDA, or click here to read it online. - Maureen

Industry Voices: Reading the tea leaves at the FDA

Mon, 21 Apr 2008 15:14:45 -0400

Mark Senak is the author of the blog Eye On FDA

When lava flows from an island volcano--and when an extensive eruption is over with--the island will be re-shaped. Right now, that is what is happening on Capitol Hill. Members of Congress are reacting to long-standing inertia at the FDA by sending a multitude of rapid-fire letters and launching investigations into practices at the agency. Like the volcanic island, if we carefully examine the lava flow, we can get a pretty good idea as to how the regulatory landscape will change, what kind of reforms will be proposed through the election cycle, and what legislation will be sitting on the next President's desk. Here's what happened during the first quarter of 2008 in the areas that face the most change:

Changes in Fast Track/Accelerated Approval designations - In January, Senator Sherrod Brown (D-OH) has asked the Congressional Research Service, a research arm of the Library of Congress, to conduct an investigation of Fast Track at the FDA to see whether or not the practice of Fast Track is actually speeding the availability of drugs. On the other side of the aisle, Senator Chuck Grassley (R-IA) asks for an investigation by the General Accountability Office to investigate FDA's use of Accelerated Approval and the management of post-marketing commitments by companies. Pharmaceutical companies that don't know their own post-marketing commitment track record better prepare now to discuss it later at Congressional hearings.
DTC and Marketing Practices - Representative John Dingell (D-MI) has questioned the FDA role in supervising the Pfizer Lipitor ad campaign over the use of Dr. Robert Jarvik, who, though he is a doctor, has never practiced medicine. Then there was a call for the FDA to require drugmakers to include a toll-free telephone number on ads so that patients can easily report adverse events experienced with drugs. Representatives Rosa DeLauro (D-CT)--who has referred to the management of the FDA as "Keystone Cops"--and Jan Schakowsky (D-IL) backed this legislation. Also on the House side, Congressmen Dingell and Stupak have written letters to Amgen and Johnson & Johnson seeking details regarding the marketing of ESAs. At the very least, look for reforms around DTC that address safety concerns and create greater transparency, or perhaps, as some have called for, a moratorium on advertising pending greater experience with a new drug.
Study Publication - The timing of the release of study results from the ENHANCE efficacy study on the combination drug Vytorin is the subject of another letter issued by Senator Charles Grassley sent to both Merck and to Schering Plough. Critics want to know why there was a delay between the time the results were known and the time they were released.

In addition to all this, the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations is conducting six separate investigations of the FDA--on compensation, conflicts of interest, drug safety, device safety, food safety and into the Office of Regulatory Affairs. With so much going on, the climate is ripe for reform and a new FDA is taking shape now. - Mark Senak