Friday, February 15, 2008

JP Garnier's Farewell Address: The Lessons of Avandia (Part 2)

The Avandia disaster is probably not what JP Garnier imagined he would spend most of his time talking about in his swan song as CEO of GlaxoSmithKline.

But give him credit: Garnier is using GSK's setback to draw attention to some important trends that we think, at least, will indeed be ever more critical for the biopharma sector in the years ahead.

Earlier we laid out Garnier's argument that the drug safety pendulum will never swing back. So what is industry to do? Here is the outgoing GSK CEO's six-step program.

(1) If you have important new safety information, get it out as soon as possible (even if the regulator wants you to wait.)

“You should do the meta-analysis as we did with Avandia,” Garnier said. “But then you should absolutely demand that this would be issued and put in context by the appropriate authority. That didn’t happen in every country. That’s why we had a problem in the U.S. where the FDA wanted to do the work first.”

Indeed, one underappreciated benefit to industry from the new FDA safety law is that, by giving FDA the authority to mandate warning labels, it also creates deadlines that will help ensure that sponsors do get new safety information out sooner.

(2) Be proactive with payors.
“Payers don’t necessarily wait for the FDA,” Garnier said. “Think about it. If you’re an insurance company reimbursing Zetia and Zelnorm and products like this including Avandia, you will also get the phone calls from the patients. What you’re going to do? Say I’m waiting for the FDA, maybe in six months I will have an answer for you?”

“So we have seen payers jump in and take a stand while the dust has clearly not settled and before the body of scientific evidence has been really reviewed in appropriate way, and that is also something that needs to be managed very carefully. You could quickly lose formulary position for reasons which are not solid.”

GSK is hardly the only company to learn that lesson in 2007. (EPO anyone?)

(3) Don’t rely on labeling to communicate warnings to prescribers.
“Black boxes are becoming trivial. It used to be a very rare event to get a black box on your product, [but] they have tripled in the last four years. So now there is so many of them that frankly they don’t make the same impact with the medical profession, which is a pity, because sometimes we really need to warn our physicians.”

“We’ve already adjusted to this and we’re taking on now the role of communicating … to the physician who is not waiting for FDA. We have sent physician letters because in some cases we do want to alert them to what is likely to come out based on what we know about the products.”

(4) Expect to do more outcomes studies.

“There will be more demands for outcome studies. People are even questioning whether hemoglobin A1c is a good indicator for diabetes. It is very easy to say well why don’t you do outcome studies and show us that over five or six years you can reduce the rate of gangrene and heart attacks and the like. Well, if we have to do that, it is going to be a long time before the product can hit the market. So we’re going to have to deal with this issue.”

Once again, it is not just Avandia that supports that argument. Look at ENHANCE.

(5) Get ready for the “Progressive Blockbuster.”
“The development of new chemical entities and new biologicals is going to change,” Garnier says. “One way is to slice the patient populations, not to try to put the drug on the market for all the patients that could benefit, but focus on the easiest slice, the ones where they would be the least amount of controversy from a safety efficacy standpoint.”

Then you “get the drug on the market because there you will have … an easier file for the FDA to react to.” And “then build up your product as you would an oncology drug” by adding more and more slices of the potential patient population. “By that time you have developed a lot of knowledge about your drug anyway, so it becomes easier to do the right development.”

“You are not going to get instant blockbuster with this kind of technique, you are going to get progressive blockbusters.”

That, to us, seems spot on—though we would argue that there is also room for “minibusters,” products that never reach traditional blockbuster sales levels, but still generate healthy returns because they deliver high value to patients (and correspondingly high gross margins to the manufacturer) without requiring the conventional Big Pharma sales and marketing infrastructure.

(6) Innovate, innovate, innovate.
“If you had any doubts, with this kind of environment, we need not just new products, we need breakthrough new products. We need added value. We need best-in-class and first-in-class, nothing else. Line extensions are on the decline, there is no question about it.”

Once again, Garnier is hardly alone in stressing the importance of first in class products in Big Pharma pipelines. But we haven’t heard anyone in pharma say quite so clearly that line-extensions are passé.

We’ll give the last word to Garnier:

“In a fast changing environment, you can’t fight the government agenda. You can’t fight the environment. You have to fit to the environment, take advantage and ride the wave.”

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