Vivus Can Teach Old Drugs New Tricks, But Does It Have a Bidil Problem?

A lot has been said and written over the past week about Vivus' obesity drug candidate Qnexa, which is a combination of two older, approved products. Its Phase III data was surely quite impressive, as impressive perhaps as the obesity market has been intractable.

But setting aside questions about safety and efficacy--lets assume the company is on to a winner in those respects--and likewise ignoring the not-so-successful track record of existing drugs approved to treat obesity (two recent posts by our friends at Bnet make each of those points well, here and here), there are some complicating and inconvenient factors for Qnexa that aren't getting much play.

First some background. On September 9 the company announced spectacular weight-loss data from two Phase III trials; one study showed an average of 37lbs (14.7%) weight loss for patients on the drug for 56 weeks. The news, which sent Vivus shares up a whopping 70%, also put pressure on late-stage rivals Arena and Orexigen.

(As an aside, the fact that there are three Phase III obesity drug candidates out there, each showing a little extra leg for eligible pharma partners and each surpassing FDA's 5%-weight-loss hurdle guideline for obesity drugs, is a drug-journo's dream, so expect lots more stories on these candidates from your favorite news outlets.)

Arena is developing the serotonin activator lorcaserin (a first Phase III was successful, showing average 5.8% weight loss; a second Phase III trial is expected to report out any day now) and Orexigen is developing Contrave, a combination of the antidepressant bupropion (aka Wellbutrin) and a sustained release form of naltrexone, a an opioid blocker marketed to treat various addictions. Contrave's Phase III data in July was also solid, showing an average 6.1% and 6.4% weight loss in two trials.

Each company even managed to take advantage of their good data and investors' returning appetite for biotech: Arena raised more than $52 million and Orexigen netted $81.6mm in a FOPO on the backs of their respective news. Vivus has yet to pull the trigger on a stock offering (it had just over $144mm in cash and equivalents at mid-2009).

OK. So far, so good for Vivus: it has shown the most impressive results and could therefore ink a successful partnership and have a leg up on its rivals for share in tomorrow's obesity-drug-marketplace. Perhaps! But Qnexa is, like Contrave, a combination of two generic drugs: the stimulant phentermine and the epilepsy and migraine treatment topiramate. Vivus' explanation for how the drugs work together is here.

Now we are aware that this isn't exactly the same scenario, but Qnexa reminds us of another generic-generic combination that was destined for blockbuster-status (only to fall very flat): Nitromed's Bidil. And why did Bidil hit the skids so spectacularly? One word: Pricing.

It's by no means a perfect comparator, but the similarities are there. Bidil is a fixed-dose combination of the generics isosorbide dinitrate and hydralazine hydrochloride used to treat heart failure in black patients. The drug showed stunning results in this population, FDA approved it in June 2005, and then Nitromed priced it at $1.80 per pill--or about $5.40 per day (up to as much as $10.80/day depending on a patient's dose).

That price was four times the retail cost of the combined generics and much higher than even industry analysts thought Nitromed would go. FDA said yes on safety and efficacy, but would doctors prescribe it at that price? Would payors foot the bill? See this IN VIVO feature from a few months post-launch for all the details.

Suffice it to say, although the company had blockbuster dreams, Bidil never took off, at least in part because of its price relative to generics (though the company surely tried to nip generic prescribing in the bud, going as far to file a Citizen's Petition to get FDA to reiterate that there was no generic substitute for Bidil; FDA complied). Did Nitromed strike out while swinging for the fences, when it could have settled for a nice double?

Now, again, Qnexa isn't Bidil, and the circumstances aren't identical. The components of Qnexa aren't available commercially right now in the exact doses that Vivus has tested in combo. And Qnexa's formulation involves controlled release, minimizing certain side effects like tingling, which is related to topiramate. Doctors also "won't take on liability of prescribing off-label when there is a drug approved by FDA," Vivus COO Peter Tam told our colleagues at 'The Pink Sheet' DAILY last week, adding "we are not concerned about generic substitution." (Orexigen execs are similarly sanguine about generics.)

But a highly priced Qnexa may still face some of the same hurdles as Nitromed's Bidil. Off-label prescribing may become a factor. Payors that universally prefer behavioral changes--diet and exercise--in this kind of market may balk at reimbursement for all but the most intractable of patients, limiting Qnexa's market.

Orexigen has in fact said that they planned to price Contrave roughly in line with or even lower than the total cost of its component generics, though at about $8 per day for bupropion and naltrexone generics (a price quoted by Orexigen execs during a presentation in January) that isn't exactly a low ceiling. Topiramate and phentermine cost considerably less, under $1/pill for 100mg topiramate and just over $1/pill for 15 mg phentermine at drugstore.com, for example. (Qnexa's highest dose in Phase III--the one that achieved the best results--was 92mg of topiramate plus 15 mg of phentermine, once a day.)

Now, another potential difference between Bidil and--should either drug make it to market--Qnexa and Contrave: Nitromed tried to sell Bidil itself, without a partner. Both Orexigen and Vivus are out pounding the pavement, in search of pharmaceutical partnerships, or perhaps acquirers, to provide the necessary commercial infrastructure for selling a mass market obesity drug.

We won't be surprised to see either company land a deal, though we have our doubts--because of the pricing problem described above--that either drug will land the kind of blockbuster alliance or acquisition that each company is surely hoping for. What are we expecting: lots of risk-sharing stuff like sales milestones, lower-than-typical-Phase III upfronts.

In short, maybe a nice double.

Rangel-ing Over Drug Promotional Expenses: A Tussle That Might Not Scare Pharma Too Much

The advertising, broadcast and medical publishing sectors were thrown into a tizzy on June 16 when reports from Capitol Hill said that removing the tax deductibility of drug promotional expenses remains a live issue in the funding discussions around health care reform.

They should have been ready. There have been reverberations for over a year that pharma’s critics on Capitol Hill might try to raise some money for health care reform from the drug industry’s marketing budgets. White House Chief of Staff Rahm Emanuel has previously talked about giving manufacturers a choice between deducting R&D expenses or promotional expenses.

So it shouldn’t have come as such a shock when House Ways & Means Chairman Charles Rangel (D-NY) said on June 16 that his committee was looking seriously at removing the deductibility for drug promotional spending. But the thought of losing such a lucrative and solid stream of funding has a way of focusing the attention of the sectors that count on pharma promotional budgets: think of the nightly news programs on TV. Their ad sales staff must be in a panic.

The $37 billion price tag that Rangel casually attached to the possible change quantified the challenge and gave it a magnitude that made it more threatening.

The $37 billion figure is presumably calculated as a ten-year revenue estimate, the format that dominates government projections. It does not, however, appear to relate directly to any discreet part of promotional spending like DTC, which is generally estimated at about $4 billion per year.

Eliminating ten years of DTC expenditures would add up to a figure in the ballpark range to Rangel’s number, but that does not mean the government would collect that amount of money. The government revenues would come from the reduced taxes on the expenditures, not from the reduced expenditures. The total expenditures do not translate directly into new tax revenues.

To achieve $37 billion in new tax revenues at the current corporate tax rate would require removing the drug industry business deductions on somewhere around $106 billion in expenditures over the next ten years.

We’ll have to wait a while to find out where the calculation comes from. Removing the tax deductibility of promotional spending was not included in the June 19 draft of the House Democratic health reform proposal.

There is one quick hint in the bill about what promotional expenses being considered for losing deductibility. The June 19 draft contains a penalty provision for companies that do not live up to new sunshine disclosure provisions for gifts to doctors. If companies get caught failing to report gifts or misreporting gifts, then they would lose the ability to deduct “any expenditure relating to the advertising, promoting, or marketing (in any medium)” of a drug or device during the year of the violation.

That can’t be a penalty if elsewhere the bill would take away the deductibility of all promotional spending. Therefore, the Democrats do not appear to have in mind a full-out assault on the deductibility of promotional spending. Which means if you are a business that relies on promotional spending from pharma, now is the time to get to the Hill to draw the line between the dollars that support your efforts versus the dollars that support other forms of promotion. The definition could have a big impact.

Did Critics Force Pharma To Cut Back Spending Too Early?

Maybe Rangel and company hoped to get some of the saving from the lavish pharma entertaining budgets. But in what may now appear in hindsight as a strategic miscalculation, the industry critics have already forced pharma to stop some of that entertaining voluntarily – getting rid of what could have been a nice source of health care funds.

Pharma’s voluntary cutbacks over the past five years in the most unseemly marketing practices, in fact, gives a hint why Rangel’s comments may not scare the industry so deeply.

Forcing pharma companies to think more carefully about their marketing expenditures (as tax disadvantaged expenditures will be more painful) may provide the cover that some industry execs want to trim back marketing and sales budgets. This is similar to arguments by pharma execs for decades that they did not like having to fund expensive sampling/giveaway programs but were afraid to stop until their competitors stopped.

An across-the-board rule like taxing ad expenditures would force all the industry companies to reassess promotional budgets and force an assessment of new ways to build customer loyalty and interest in their products.

In Vivo Blog and its affiliate The RPM Report have been touting the new post-market control programs (the REMS of the 2007 FDAAA Act) that are being required more frequently by the Food & Drug Administration as an alternative to fill the gap for discredited promotional activities. There are other, less costly ways that the current detail forces and TV ads for pharma to build its ties to the medical community and patients. Rangel and his tax approach may just be hastening the era of those changes.

That may be why we are hearing that some influential strategists within pharma are not putting a fight with Rangel at the top of the 2009 health care reform fight. Privately, they say there are much more important fights and issues in health care reform to waste too much time and effort fighting the deductibility of promotional expenses. This may be a legislative argument that pharma is not afraid to lose. They won’t say that openly, but don’t expect much effort and money directly from the drug companies to be devoted to the promotion fight.

Of course, if pharma reacts in a prudent way to higher promotional costs and cuts back those expenditures effectively, then the government will not have promotional tax dollars as one of its sources of revenues for health care reform. That would mean that the government would under-estimate the sources of funding for a new health care program. Would that be the first time?

Novartis Puts Its Money Where Its Mouth is, Too

Last month we heard about how Proctor & Gamble and partner Sanofi-Aventis have agreed to reimburse a health insurer, Health Alliance, for the costs of any fractures suffered by patients taking osteoporosis drug Actonel. That’s putting one’s money where one’s mouth is, as P&G’s NAM general manager pointed out in this NYT piece.

Now you've of course read all about the pay-for-performance style deals that are increasingly popular in Europe—whereby, for instance, a company agrees to re-fund the cost of a drug if it doesn’t work, or help pay for part of it. But the Actonel deal is a bigger deal: it’s pay-for-non-performance. That could get expensive. We’ve no doubt that P&G/Sanofi have gone mad with their small-print. But still, this is potentially the top of a very slippery slope for drug firms in their desperate bid to win favorable coverage.

Turns out Novartis is doing something similar with its own bone drug, Reclast—this time in Europe (where it’s sold as Aclasta). The Swiss firm is running two pilot studies, in Germany and Italy. According to Joe Jimenez, CEO of Novartis Pharmaceuticals, “we pay for hospitalization and nursing care if there’s a fracture” for patients taking Aclasta, which is given as a once-yearly infusion.

That’s faith in the product for you—given that Novartis won’t easily, with a once-yearly infusion, be able to claim non-compliance. (P&G/Sanofi might: Actonel is once-weekly.) And indeed, Jimenez was quick to add that he “does not see more broad-scale use” of such programs (even though the pilots, running for one or two years, are not yet complete). “Reimbursement is not going to be an issue for us” in the US, he argues. “The drug stands on its own benefit. Clinical evidence of efficacy tends to be enough.” (Though not, apparently, in Italy and Germany.)

Still, one big reason these companies are bending over backwards to get their drug nicely fitted into formularies and onto reimbursement lists is the imminent arrival of Amgen’s denosumab, currently under FDA review but expected to be approved before year-end. That drug is the company’s future, and you can be sure it will market the hell out of it.

Amgen’s most obvious trump: denosumab is not a bisphosphonate like Actonel and Reclast. D-mab builds up bone, rather than preventing its breakdown. (For more on future osteoporosis drugs, read this.) It also thus circumvents the bad bisphosphonate press that is emerging after many years of market usage: osteonecrosis of the jaw, bone pain, ‘frozen’ bone…all thought to be a result of blocking the normal bone regeneration process over the long-term.

Now sure, both Reclast and D-mab are really looking to take share from oral bisphosphonates which account for over 90% of osteoporosis sales volume. But if there’s only a bit of share to go around (and let’s face it, with generic Fosamax about, oral BPs aren’t going to go away) Novartis will be up against Amgen big time. “And you can assume we’ll aggressively defend what we’ve built” asserts Jimenez, in case it wasn’t clear. He points to Reclast's good fracture reduction data (he’s right; D-mab doesn’t beat it), and the drug’s once-yearly administration. But convenience isn’t going to be the trump-card for a 15-minute infusion given in specialist centers only—not over a twice-yearly subcutaneous injection.

The trump card for Novartis may well be denosumab’s as-yet-unknown long-term safety profile, particularly as, according to Jimenez, the drug “is still in the system after six months, unlike Reclast which is cleared within 24 hours.” BPs long-term safety may not be great, but in such matters it might be a case of better the devil you know--and of putting your money where your mouth is.

image by flickrer johnmuk used under a creative commons license

A "Sophie's Choice" for Pharma in Tax Policy: R&D or Marketing?

The tax write off available for pharmaceutical marketing costs has been a popular political target for industry critics for more than 20 years—and all the moreso in the era of broadcast direct to consumer advertising. Many in Congress want to ban DTC ads outright; that almost certainly won’t pass First Amendment scrutiny, so making advertising more expensive by changing the tax code is an appealing alternative.

Still, while it makes a good talking point, advertising critics have never succeeded in pushing the idea through to enactment.

Now the Democratic leadership in Congress is considering a new twist, a proposal to give pharma companies a choice: write off R&D costs or write off marketing costs. Not both.

That, according to Polsinelli Shugart public policy group Chair Jim Davidson during his update to the DTC National Congress April 15, was an idea offered by former Rep. Rahm Emanuel during a closed door meeting with some advertising types last year.

The idea sure sent a ripple through the 400 or so pharma, ad agency and media attendees at the DTC Congress.

Emanuel has since left Congress to serve as chief of staff to President Obama, which does nothing to blunt concerns among advertisers about the potential for the tax policy proposal to slip into legislation this year, especially in the context of finding new revenues to cover costs of expanded health care coverage. (Read more about Emanuel’s recent statements here.)

Coalition for Healthcare Communications Director John Kamp noted the threat of Emanuel’s proposal, describing it as presenting a “Sophie’s choice” to industry by asking, in effect, whether companies love their marketing departments or their R&D organization more. It is a classic divide-and-conquer maneuver, Kamp says, since it is sure to exploit the tensions that already exist within pharma companies over that very question.

“Think about your own companies,” Kamp told the brand managers in the audience.

Well, it certainly got us to thinking…and quickly got us thinking that maybe this “Sophie’s choice” wouldn’t be all bad.

Now, let’s be clear: biopharma companies will fight this proposal, as will advertising and media companies. And, if history is any guide, they will win. Pharma, in particular, has a good track record in working the intricacies of tax policy. No reason to expect a different outcome here. Nor do we seriously think pharma should support a tax hike on itself in any event.

It is just that this could be a case where a policy threat would force a healthy business adjustment.

The new tax policy would, in effect, force pharma companies to choose between a reduced return-on-investment from their R&D or a reduced RoI on marketing, since the elimination of the tax deduction in effect amounts to a reduced return on the dollars devoted to the affected activities.

So the first step would be to force senior management to take a stand on which actually delivers a better RoI in the first place.

In some cases, it is easy. Most biotech companies, for instance, only wish they had marketing costs to write off, and even those that do wouldn’t have too much trouble choosing to keep writing off R&D. On the other hand, “specialty” companies like Forest or Ovation would surely want to write off marketing costs, since they tend to in-license late-stage projects rather than shoulder the full R&D burden themselves.

But what would Pfizer do? The company spends billions on R&D and billions on marketing, and so could ill afford to accept higher taxes on either front.

Surely one option would be to divide into smaller companies that more clearly fit the biotech (R&D-first) or specialty (commercial-first) models. That happens to be exactly what some of us have been suggesting for a long time now.

Indeed, one way to view the Pfizer/GlaxoSmithKline HIV partnership is as a baby step (or maybe a toddler step) in that direction. Glaxo/Pfizer HIV Inc. would surely choose to keep its R&D deduction. (As would, presumably, a stand-alone Pfizer oncology unit.)

Pfizer itself, on the other hand—if it indeed continues to consolidate towards a GE style health care marketing colossus—would probably end up protecting the deductibility of its marketing costs. In fact, its hard to see how R&D fits long term in that GE model anyway. (You can read coverage of Roger Longman’s latest take on this topic in “The Pink Sheet” here.)

See how fun it is to play what ifs?

And that’s the point. Pharma companies are right to oppose the policy, but there is surely value in playing out this “Sophie’s choice” anyway. It may turn out to be good business for pharma to focus on one side or the other of the great pharma divide between R&D and marketing, even if Congress doesn’t force that choice upon them.

Pfizer's Four-Legged Message For Consumers

we will spare you the screen-capture!

Movie goers in the UK beware. An ad playing on cinema screens could make you choke on your popcorn.

The clip features a middle-aged man who takes a pill from a package on his kitchen counter. He immediately starts to tug at something in his mouth – which viewers soon realize is a tail – and pulls out a huge dead rat. Pfizer created the ad campaign to warn about the risks of buying counterfeit medicines from websites and other unregulated sources. It takes a couple viewings – you can see it here at Pfizer's web site or here on youtube – to catch that message though. The rat is pretty distracting.

We first saw the ad over at Bnet Pharma, where Jim Edwards astutely wonders whether there's some sort of double standard at play. Pharma Marketing Blog and Mike Huckman at CNBC have also picked up the story, and Drug Channels has pointed out that Pfizer's other main target--besides counterfeiters and dodgy web sites hawking little blue diamond pills--is the parallel import trade (you can find some of our analysis on that topic here and here).

Pfizer told us the piece will run across 2,651 screens in about 600 cinemas from Jan. 16 to March 5. The company notes that due to its graphic nature, the ad was classified as a 15 so children under 15 should not watch it. Good luck keeping adolescent boys from watching this.

“The advert has been developed in direct response to new research highlighting that more than 330,000 men purchase prescription only medicines from unregulated sources, such as Internet sites, every year in the UK,” Pfizer states in a release. The company collaborated on the ad campaign with the U.K.’s Medicines and Healthcare Products Regulatory Agency, The Patients Association, Mean’s Health Forum and H.E.A.R.T. UK.--Brenda Sandburg

image of Banksy rat mural in NYC by flickr user caruba

An Orphaned Article Gets Reprinted

Awards season feels like it’s winding down. The Oscars are still to come, but there’s already been Time’s Person of the Year, the Golden Globes – you even helped us choose a Deal of the Year. But recent events have made us look back on 2008 in a new light, and now it’s time to present the award for Least Read Article in “The Pink Sheet.” Last year’s, um – we’ll just call it an honor – goes to “Orphan Drugs Are Rare Area Of Agreement In Off-Label Debate.”

The article is sidebar to our coverage last year of FDA’s development of guidance on “good reprint practices” that would set goalposts for firms that wanted to distribute reprints of journal articles about their drugs that discuss uses not approved by the agency. The rest of our coverage about the draft is here, here, and here. FDA just finalized the guidance, and you can find coverage of that here and here. And don’t miss our related coverage of Lilly’s $1.4 billion settlement for off-label promotion violations (here and here).

So, yes, we write a lot about reprint issues, and maybe that’s the reason this particular article didn’t get the attention it deserved, or perhaps there was just a glitch in our page view accounting. Whatever the cause, we thought we’d give people another chance to read the piece. Because, as the Lilly settlement shows, issues that seem small at the time can become quite significant. Here’s hoping that our least read article of 2009 doesn’t become your billion-dollar problem in 2010.

Without further ado, here in its entirety is the Pink Sheet’s least read article of 2008. Both of you who’ve already read it can skip to the next post.

Orphan Drugs Are Rare Area Of Agreement In Off-Label Debate
While promotion of off-label drug use is a flashpoint issue, off-label drug use for rare or orphan diseases is not. Regardless of where people come down on FDA's draft guidance, they generally supported patients with limited access to approved drugs. For example, in an April 17 article in the New England Journal of Medicine which is generally critical of off-label promotion, Aaron Kesselheim and Jerry Avorn state that "In certain patient groups, such as children and patients with rare diseases, off-label use may reflect the standard of care."

Indeed, the National Organization of Rare Disorders -- which has often tangled with the pharmaceutical industry on issues related to patent extensions and consumer advertising -- in this case joins many drug firms in advocating for the draft guidance. The association did not submit comments to FDA, but, "I would ask Congress to keep in mind patients with rare diseases," Diane Dorman, NORD's VP-public policy, said at an April 16 media briefing sponsored by industry supporters of the guidance.

image from flickr user '... Tim' used under a creative commons license

Andrew Witty Has Seen the Future and the Future Is Mouthwash

Biotene mouthwash. And toothpastes and gels and chewing gum to alleviate dry mouth. GSK bought the Biotene brand for $170 million, it announced today, from the private firm Laclede.

Biotene generated about $50 million in revenue last year, according to GSK's release, and joins a host of consumer oral-care brands at the Big Pharma, including Aquafresh. (For the low-down on all things consumer healthcare, visit our colleagues at The Tan Sheet.)

GSK's other news today is that it is opting out of its collaboration with Vitae Pharmaceuticals. The two firms were developing Vitae's preclinical renin inhibitors for hypertension under a deal signed in 2005. (Read about Vitae's strategy in this 2005 Start-Up article.) Vitae plans to continue development of the renin program on its own.

The timing of the two moves by GSK is certainly coincidental. Still their juxtaposition illustrates well where this Big Pharma--and probably a lot of Big Pharmas--are moving. Cardiovascular drug development isn't extremely popular these days, especially in areas like hypertension that are relatively well-served by existing (often generic) therapies; companies (like Pfizer) are opting out of that space in particular and much of the generic-heavy primary care areas in general.

And they're also diversifying into consumer medicine at an increased clip. Pfizer's likely kicking itself for offloading its consumer business to J&J--brands like Zyrtec helped boost growth overall at J&J despite a poor showing by the branded pharma unit in the last quarter's results. GSK's CEO Andrew Witty said on a recent earnings call that consumer medicine R&D is also more predictably successful. As Roger Longman wrote in the September IN VIVO:

At GSK's earnings meeting, Witty described OTC product development as the antidote to R&D attrition. Its Aquafresh White Tray tooth whiteners cost £6 million to develop and, in its launch year of 2007, did £21 million in sales. Its Commit smoking-cessation lozenges, launched in 2001, cost £26 million to develop and did £329 million in 2007 sales. Witty claims that 70% of GSK's consumer R&D projects end up creating marketed products. Meanwhile, he says, the average approved GSK drug takes two years to recoup its R&D costs – but that figure, he says, doesn't include the many projects which fail along the way (indeed Witty couldn't say whether pharmaceutical R&D was actually generating positive returns).

Of course not every consumer medicine story has a happy ending. Sales of GSK's own OTC weight-loss product Alli, for example, have fallen flat after a significant and expensive roll-out. But look for GSK and other Big Pharma to continue to diversify away from their traditional strengths in branded primary care medicines: into OTC, branded-generics, me-too biologics, etc.

You don't need Witty's crystal ball to see that it's in pharma's future.

What's the Secret of Comedy ... and PR?*

Our colleagues at the Tan Sheet think the Consumer Healthcare Products Association, the trade group representing over-the-counter drug manufacturers, has a handle on the latter, given the timing of their announcement today that their members plan to relabel OTC pediatric cough cold products “do not use” in children under 4.

The announcement garnered industry headlines like this: Drug companies: No cold medicines for kids under 4. The relabeled products including some in Novartis’ Triaminic Line, McNeil’s Tylenol line and and some from Procter & Gamble, Reckitt Benckiser and Wyeth Consumer Healthcare (a full list is here) will be on shelves within weeks, under a plan the association worked out with FDA's blessing - well before the agency's Part 15 hearing held last Thursday to gather information on the products.

Notably, both the agency and the association kept mum at the hearing about the relabeling plan.

As a result, petitioners seeking to have pediatric cough/cold products off the market for children under 6 didn’t get a chance to pick at the plan at the widely covered event, and industry is able to announce a public safety initiative that appears to address at least part of the program in the next news cycle.

Which had some reporters griping at FDA today when the agency held a press call on CHPA’s plan. “Why couldn’t you have brought this little tidbit up during the nine-hour meeting on exactly this topic last week?” was the gist of the complaint. FDA’s director of the Office of New Drugs, John Jenkins, and drug center head Janet Woodcock said they deferred to CHPA on the announcement and split a hair, saying the meeting was about proposed changes to the OTC monograph, not about short term industry efforts. Given FDA’s recent track record on public relations, this isn’t too surprising.

For an in depth look at FDA’s meeting and some clues to agency thinking about revising the OTC monograph for the products, see “The Tan Sheet” here.

--Chris Walker

*(timing.)

Why Merck’s Problems are Also Your Problem

Will Vioxx never go away?

It has been four years since Merck withdrew the COX-2 inhibitor. It is a full year since Congress enacted legislation intended to “fix” the drug safety problems highlighted by Vioxx.

But Vioxx is still in the news. Now, the focus is on how the product was marketed. Academic journals, mining product liability dockets, are highlighting instances of “ghost writing” and “seeding studies” involving the product. The media gleefully piles on.

If you don’t work for Merck, you may be tempted to think none of this much matters. (Except perhaps as an occasion for schadenfreude, if the unrestrained glee of these posts is any indication.)

We’ve written before about the far reaching impact of a damaged reputation, and specifically about the implications of the blemishes on Merck’s once-stellar image as the drug company that does things the “right way.”

But Merck’s problems are not just Merck’s problems. The damage to Merck’s reputation is the whole industry’s problem.

Here’s why: Just as Vioxx was the short-hand explanation for a whole host of drug safety changes—most of which, both Merck and its harshest critics agree—had nothing whatsoever to do with the drug, now it is a short-hand for everything that people object to about industry marketing practices.

And Vioxx’ potency as a weapon against the whole industry is all the greater because it was sold by Merck.

One example came during the Food & Drug Law Institute advertising & promotion conference September 8, when Ann Witt, a former FDA ad division head who is now an advisor to Congressman Henry Waxman, discussed Waxman's opposition to a proposed guidance that would allow companies to disseminate peer-reviewed journal articles on off-label uses:

"There are many many examples, and unfortunately there are more coming to light every day, of company-manipulated data that ends up in peer reviewed reports. I’m sure we’ve all followed the somewhat distressing trail of evidence that is coming out about how Vioxx was promoted. There have now been at least four or five separate articles on the different methods that Merck used to manipulate study results."

"I--who have spent probably 20 years following drug advertising and thought I was pretty cynical about it--I found the stories about Merck personally extremely depressing. I would imagine many of you do. "

"I, like many people at FDA, always thought of Merck as sort of the gold standard in the industry, and to find that this kind of really irresponsible marketing and distortion of the scientific record was so pervasive there is truly troubling."

"I would hope that it would lead all of us to question whether substituting peer review, for FDA review and approval, is really a good way for doctors to learn about new uses of drugs."

In other words, if Merck does it, then everybody must do it.

And consider the context: Witt is citing allegations against Merck to block a guidance on off-label journal reprint distribution. That is an issue that is of far less significance to Merck than to dozens of other companies with more prominent positions in oncology, pain or other markets where off-label uses are essentially standard practice.

That is how it works. Companies that never marketed a COX-2 inhibitor have to live with mandatory post-marketing studies and Risk Evaluation & Mitigation Strategies. They may also have to live with a whole host of new marketing restrictions—whether enacted by Congress or simply created by more aggressive enforcement at FDA.

How PhRMA’s Marketing Code Sells Itself

When it comes to marketing, packaging counts.

That also seems to be the case with marketing guidelines--at least, with the revised Code on Interactions with Healthcare Professionals from the Pharmaceutical Research and Manufacturers of America.

We've written a lot already about what the substantive changes to the code itself means, including its compliance mechanism, and new limits on pens, meals, speakers and CME. We’ve even offered three easy steps companies can take next to achieve a utopian future.

But beyond the message PhRMA is sending though the content of the code, there’s the image the association is projecting through the formatting of document itself. The precepts in the revised code are basically a progression from the 2002 code, but the layout is stunningly different.
The most obvious change to the code’s formatting is the color palette and design motifs. The blocks of black and red had been replaced by blues and grays in spiral patterns. What do those changes mean?

Well, we asked some of our designers their opinions. Overall, the design of the 2002 code is “forceful” and intense, they tell us, while the 2008 code is relaxed, though still “peppy.”

The new document also tones down PhRMA’s self branding. In the old version, the association’s acronym was the biggest thing on the cover page, and it towered over every question in the Q&A section. In contrast, the PhRMA logo only appears three times in the new version. Those changes may reflect an industry that now feels its size and strength make it a target for criticism. Blue is also a “loyalty color,” we are told, and the new code may in fact be bathed in Patone’s “Dispense As Written Azul.” The 2008 version also boasts a table of contents – how’s that for transparency?

Another formatting change may be evidence of industry belt tightening. Even though it contains more words, the page count of the 2008 code is 36 pages, while the old one weighed in at 58. Like marketing departments everywhere, it’s doing more with less.

Despite the reduced page count, the text in the revised version is larger and more readable than the previous version, but it uses a sans-serif font. While clean and easy to look at, a sans-serif font (like Helvetica) does not fit with the eye the way a serif font (like Times) does. According to the experts, when reading large amounts of text, people are better able to absorb it if it comes with the complex features at the tops and bottoms of the character strokes.

If that’s not an endorsement of industry’s shift towards biotech products, we don’t know what is.

– M. Nielsen Hobbs

Next Steps for PhRMA and Marketing (Part 3): Let the Sunshine In

Concluding our series of proposals for pharmaceutical marketing to reclaim the high ground. We've already suggested re-defining the mission and combining the Pharmaceutical Research & Manufacturers of America's various codes of conduct.

Today, step three: Let the Sunshine In

“Transparency” is now everybody’s favorite buzzword in Big Pharma. Merck CEO Richard Clark urged his colleagues to embrace the call to "create transparency" during his inaugural address as chairman of PhRMA.

Indeed, the immediate impetus for PhRMA’s effort to update the marketing code came when Congress got serious about pushing “sunshine” legislation. (And the Code is already a success, since that initiative did not make it into law this year.)

The problem with transparency: by definition, you can’t see it. Obstruction you can see. Transparency is invisible.

Since the calls for transparency are motivated fundamentally by mistrust of industry, how will the public (or at least its elected representatives) ever be satisfied that industry is in fact being transparent? Put another way, if industry chooses to hold anything back—for competitive reasons or otherwise—why wouldn’t the assumption continue to be that some ugly truth is being hidden away?

Our suggestion: invite the public in to those conversations. Every pharma company should appoint a transparency committee, a group of independent outsiders--preferably well-known critics. The transparency committee (though we prefer the name "sunshine band") would have carte blanche to review anything and everything related to the company's procedures on information disclosure. They would be empowered to make recommendations that the company would be obliged to respond to. (Not necessarily implement--but at least acknowledge and explain a decision not to implement.)

The transparency committee should report directly to the board—or even better, to a central transparency committee convened by PhRMA. We even have the perfect chairman: Cleveland Clinic Cardiologist Steve Nissen. (He may have bigger plans for his career that rule him out, but still.)

Nissen is a particularly articulate critic of industry on issues like publication bias and clinical trial result reporting. But he is also a clinical investigator and an experienced author of academic research, so he understands the importance of protecting information as well.

That whole idea may sound crazy, but give us a second, we're just getting warmed up.

Industry could go yet one step further than letting its critics shape disclosure policies: it could ask them to review and approve its marketing plans in the first place. Now we know this sounds crazy. Pharma companies went ballistic over a provision in an early draft of the FDA Amendments Act that would have explicitly authorized FDA to review a company’s marketing plan in the context of assessing a proposed Risk Evaluation & Mitigation Strategy.

That provision came out--but the spirit lives on. In fact, we would argue that a suitably motivated FDA can and will demand access to marketing plans for drugs under the REMS authority. And even if FDA doesn't push that way on its own, the fact that Congress thought about it once means it is likely to come up again later.

More to the point: industry says marketing is about delivering valuable scientific information to doctors and patients. It is about education. So why not ask those being educated to review and respond to the curriculum? Who knows, they might even get excited about the new medicine...

Enough opining from us. What do you think?

Next Steps for PhRMA and Marketing (Part 2): Combine the Codes

Continuing our free advice for Big Pharma marketing groups on ways to reclaim the high ground. (And yes, you do get what you pay for...)

Yesterday, we suggested a new mission statement for marketing.

Today, step two: Combine the Codes

PhRMA has statements of principle governing professional promotion, direct-to-consumer advertising and clinical trial disclosure. But industry’s critics do not see them as separate issues. Neither should industry.

Let's start with the two "marketing" codes, one for DTC and one for interactions with physicians. It is easy to see why there are two: there are very real differences in the regulatory oversight of DTC and professional promotion, reflecting the fact that DTC is a "new" phenomenon (at least in the sense of broadcast television ads), while sales reps calling on doctors is a venerable industry institution.

But when it comes to defending marketing in the political realm, it is silly to try to differentiate. Indeed, association CEO Billy Tauzin acknowedges that many of the public perception issues facing the industry require addressing both DTC and professional promotion. So PhRMA is upgrading its principles of consumer advertising too.

In an era when informed patients often know more about their medical conditions than the physicians who treat them, it is also absurd to argue that there is a fundamental need to craft different messages based on who has the MD. (Different messages based on knowledge level yes, but sometimes that means dumbing it down for the docs and engaging more scientifically with patients.)

We might also highlight the danger for industry if doctors—not the biggest fans of DTC in the first place—begin to really get upset about it now that they spend more time in front of the TV and less time at industry sponsored dinners.

Updating the DTC code is a nice first step. But PhRMA and its members should go further. In age when Big Pharma is rethinking everything (or should be), it is time to challenge the mindset that professional marketing and consumer promotion are two different activities. A sales rep visit is indeed different than a TV commercial during the Super Bowl. But both are probably equally inefficient.

If industry wants to reclaim the high ground for marketing it must take a stand on who the marketing is supposed to benefit. The updated PhRMA code does that, by the way: "Our relationships with healthcare professionals are regulated by multiple entities and are intended to benefit patients and to enhance the practice of medicine."

If the goal is to benefit patients, then it is nonsensical to consider sales force activities and DTC as in any sense separate. If either the patient or the physician lacks the necessary information to make an informed therapeutic choice, then the marketing campaign failed.

The code of conduct for clinical trials is less obviously part of the same picture, but PhRMA would do well to look at it in that light. Industry bristles at claims that its big R&D budgets are really just to support marketing. But let’s face it: the questions asked and answered by clinical trials and other industry sponsored research are indeed the primary source of information about medicines—and so the very essence of all industry marketing.

Put another way: no one objects to industry sponsored research. They object to the perception that the results are skewed or hidden based on a commercial agenda. In other words, they think marketing trumps R&D.

PhRMA’s current clinical trial code covers issues related to reporting and disclosure, but Congress has already taken that issue much further. If PhRMA wants to reclaim the high ground, the association will need to take another look at that policy—especially in the context of even bigger steps to rebuild its reputation.

Tomorrow: Step Three—Let the Sunshine In

Next Steps for PhRMA and Marketing (Part 1): Define the Mission

Our hats are off to the Pharmaceutical Research & Manufacturers of America task force on professional practices. It is no simple matter to get three dozen companies to agree on anything—much less something as politically and commercially sensitive as the rules governing marketing to physicians.

And to do so in a way that addresses real-world, day-to-day operations is so much tougher. PhRMA’s updated Code on Interactions With Healthcare Professionals wrestles with the nitty gritty details of how physician marketing works, and doesn’t shy away from tough, specific directives on everything from pens to meals.

So no one can say PhRMA is hiding behind bland statements of principle rather than addressing the real world.

But perhaps you can say the opposite: that in getting into the weeds of how marketing works, PhRMA has lost site of some bigger principles. Debates over pizza and pens may help in that cause, but they don’t come close to justifying marketing as a vital, necessary activity for society.

In that spirit, may we suggest three modest proposals of our own?

Step One: Define the Mission

It is time (past time, perhaps) for PhRMA and its members to redefine the role of marketing and reclaim the high ground.

Every marketing organization should have a mission statement that it can embrace and brag about. The goal cannot be simply to increase sales. The goal should be to ensure the widest appropriate use of life-improving or life-extending medicines. Marketing done right means a medicine reaches more of the right people; it maximizes the benefit society receives from medical science.

PhRMA’s updated code on interactions with physicians suggests this mission in the preamble: “Appropriate marketing of medicines ensures that patients have access to the products they need and that the products are used correctly for maximum patient benefit.”

Hopefully, every marketing organization believes that already. The hard part is convincing the rest of the world to see it that way.

To do that, you can’t just say that’s what marketing is—you have to mean it. For example, do companies compensate marketing personnel based on “maximum patient benefit”? Its hard to say yes if sales reps get bonuses for boosting prescription market share in their territory: that is compensation based on maximizing revenue.

Of course, coming up with bonuses tied to maximizing appropriate use requires some real creativity, and probably a complete rethinking of the marketing effort.

But that’s only step one.

Tomorrow: Step Two--Combine the Codes

PhRMA Marketing Code: Throw Away Those Pens, The Time Is Perfect

Talk about a perfect sense of timing.

The Pharmaceutical Research & Manufacturers of America unveiled its new marketing code (“Code on Interactions with Healthcare Professionals”) on July 10: one day after the Senate passed the Medicare physician payment extension (HR 6331).

PhRMA announced the unanimous commitment of its board to throw away pens and trinkets as marketing gimmicks among a wide range of changes to old drug marketing practices.

The jettisoning of the pens is an apt symbol of the larger changes underway in the drug business, and PhRMA couldn’t have found a more fitting time for the symbol.

For the Medicare bill contains its own version of a de-penestration of the drug industry: a carrot-and-stick payment adjustment to doctors to speed the adoption of e-prescribing.

The pharma companies might as well have said to the docs we don’t need to give you pens anymore, you won’t be using them for long anyway.

Beyond the engaging symbolism of throwing away the pens. the July 10 unveiling of the PhRMA code was also well-timed to show that industry’s self-regulation of marketing practices appears to have survived another major challenge.

Coming a day after the bill passed without new restrictions on drug marketing practices, the industry’s voluntary code demonstrates that the industry has responded to the recent round of criticisms and has effectively taken charge of the issue: specifying its own changes instead of being forced to adopt changes by outside parties.

Sen. Grassley (R-Iowa) had been pushing to attach a Physician Payment Sunshine provision to the recent Medicare bill.

Now that the threat has passed for this session, PhRMA has a chance to try to make its voluntary code satisfy the demands for changes to marketing practices.

As PhRMA President Billy Tauzin describes it: Members of Congress appreciate it when an industry under criticism shows that it can listen and respond on its own. The former House Energy & Commerce Committee chairman points out that there is “less enthusiasm” for legislating when companies manage their own ethics.

And the changes being adopted by PhRMA in this round of changes (the last major changes occurred in 2002) are substantial.

In addition to getting rid of the small gifts, PhRMA is urging companies to set publicly stated “caps” on payments to physicians for speaking engagements. “Each company should, individually and independently, cap the total amount of annual compensation it will pay to an individual healthcare professional in connection with all speaking arrangements.”

PhRMA’s critics have adopted transparency as a way to discourage payments between industry and the medical professions. Learning from its critics, PhRMA says that policies on speaker choice, training and compensation should be publicly divulged by individual companies, preferably on their websites.

As a trade association, PhRMA cannot set limits on speaker compensation for its members. It is relying on the encouragement for firms to make that information public to serve as a indirect form of enforcement.

As Tauzin explained at the industry wants to show that it has heard the criticisms from a variety of sources (political, the medical professions and the media) and the pharma companies want to show that they have been listening.

One of the toughest issues for PhRMA was the policy towards meals. As we predicted previously (see here), PhRMA came up short of banning all meals for doctors and supporting medical staff.

The new code does come out strongly against meals beyond a doctor’s office or medical institution. “Meals offered in connection with informational presentations made by field sales representatives or their immediate managers should also be limited to in-office or in-hospital settings.”

Defending the decision to permit some “modest” meals, Tauzin mentioned several that even “the counterdetailers” will attest to the need to offer some food to get the attention and time of busy medical staffs.

But even take-out meals will require a new level of decorum. “Offering ‘take-out’ meals or meals to be eaten without a company representative being present (such as ‘dine & dash’ programs) is not appropriate.”

PhRMA had a very modest spread of sandwich fixings on a side table in the room for journalists to hear about the new code on July 10. In the new spirit of serious communications, however, the press conference ran long and the sandwiches went uneaten.

If PhRMA can engage journalists without food and entertainment maybe its members will have similar success with the medical professions.

Drug Safety = New Drug Review

FDA’s “Safety First” initiative imagined a world in which different agency offices (and two in particular) would be able to easily resolve disputes over regulatory policy. So unlike past practice, experts in one area (say, drug safety) would be on equal footing with experts in other areas (say, drug review).

Center for Drugs Evaluation & Research director Janet Woodcock discussed this, among other topics, during a recent interview with The RPM Report. The solution to tension between offices like the Office of New Drugs and the Office of Surveillance & Epidemiology, she said, was ensuring that drug safety was as important—if not more so—than approving new drugs.

More than that, “Safety First” relies on the “expertise model,” Woodcock said. “I want the experts to be advising me or making decisions in the Center on whatever matters they’re expert in”—whether that’s chemists deciding how to make the product, or compliance experts ensuring that people are following the law. And, she said, “I want OSE to be expert in pharmacovigilance and medication errors.”

Given the comments made at a recent public meeting on the brand name approval process, it looks like the implementation of “Safety First” is going quite swimmingly.

FDA called the meeting to consider a new way to review proposed proprietary brand names for new products by transferring the responsibility for testing for potential medication errors over the drug sponsors. (You can check out our earlier blog post on that meeting here.)

Right now, not only is industry facing high rejection rates for proposed names, but last-minute rejections that can lead to the classic “train wreck” scenario. In the worst case, the pre-approval testing process misses problems with look-alike/sound-alike drugs, leading to medication errors. In those circumstances, it’s not uncommon for FDA to ask a manufacturer to change a product’s name after launch—the worst nightmare for marketing execs.

During the meeting, Mike Cohen, the president of the Institute for Safe Medication Practices, expressed concern that disagreements between OSE and OND about the approval of drugs names would continue to hinder the process. Cohen specifically pointed to GSK/Reliant Pharmaceutical’s fish oil Omacor (which went through a post-approval name change to Lovaza) and asked whether that situation could happen again under FDA’s proposed review process for proprietary brand names.

The answer, according to OSE director Gerald Dal Pan, is no. And here's why: “Some of you might have heard that Dr. Woodcock announced a ‘Safety First’ initiative. One of the features of that is that our office, the Office of Surveillance and Epidemiology...will have an equal voice with the Office of New Drugs.”

In the past, Dal Pan acknowledged, the drug safety office had more of a “consultative role where our opinions could be accepted or rejected.” That, he said, “is changing to one of an equal voice and equal role where we will have to work these things out. We’re also working out for our office...to really take the full lead in this area of proprietary name review as well as other aspects of the error prevention review.”

For drug sponsors, it’s something to watch. Under “Safety First,” the rules have changed. No longer is the Office of New Drugs calling all the shots—and the brand name review process is only the latest example. We're on the prowl for other examples of how FDA is implementing “Safety First.” We'd love to hear from you—send them our way.

(Ying/yang photo courtesy of Flickr user Paddl via a creative commons license.)

Lilly's "Transparent" Move

Lilly’s May 13 endorsement of the Grassley-Kohl Senate “sunshine” bill (S2029) calling for listing physician payments from pharmaceutical companies shows more about Lilly’s political positioning skills than about the prospects for the bill.

In fact, it looks like a transparent move in favor of transparency. It’s pretty easy to see the advantages that Lilly sees in coming out in favor of the bill now.

At first glance, the endorsement may seem like big news, a break with the general slow, foot-dragging response to the push toward transparency. Most companies have been telling Grassley they will look at making some grants to organizations public but staying away from the full push to “transparency” that would start naming individual doctors. (See “Saying ‘No” to Legislated Disclosure”.)

For Lilly, open support for the legislation fits the current situation and the company’s traditional approach to staying out ahead of efforts to rein in novel marketing strategies.

Lilly has been out on the front of transparency for over a year. The company was pushed in that leadership position in response to allegations that it used grants and payments to physicians to support marketing efforts, primarily for the antipsychotic Zyprexa (olanzepine).

The company put up the first listing of grants on its webpage a year ago at the start of May 2007. That puts it more than a year ahead of the next drug company to make the information public.

Pfizer put its listing of grants up on May 15 right on schedule with a self-imposed deadline. (See Pfizer grants here.) Lilly’s May 13 statement of support, in fact, also has a touch of upstaging the Pfizer postings. Pfizer made its deadline public at least two months ago.

As first off the blocks in transparency, Lilly has no reason not to want the rest of the industry to follow. Lilly has taken the plunge: they want everyone else in industry in the water with them.

By signing on to the Grassley proposal, Lilly follows Zimmer and Medtronic and several other device firms which have similarly come out in favor of the sunshine approach.

Some of the device companies, of course, have also been pushed into transparency as the result of settlements of charges against payment practices for consultants. Once pushed to transparency, it makes little sense to oppose legislation if the legislation makes your competitors follow the same path.

Some companies (most notably Stryker Orthopaedics) have gone the next step and determined that, handled right, physician listing can even be a good tool for cementing relationships with key physicians. Stryker turned the requirement to expose physicians on its head and created a clever, open treatment of its listing of consultants. The open approach leads to a website that is part endorsement, part networking page for its outside consultant physicians (See “Flourishing in the Sunshine: Disclosure as a New Commercial Advantage”).

Lilly also timed its support well. Not only does it take some of gloss off of Pfizer’s move, it is from of no-cost, no-pain support. The Grassley-Kohl bill still faces substantial hurdles to get attached to the Medicare physician payment fix this summer. The payment fix is the best vehicle to get the sunshine bill through Congress. If there is not much chance that the proposal will really get through Congress, then it gives Lilly a chance for some gratuitous support.

Getting out in front in support, also assures Lilly a voice in writing the important final details if the bill breaks through this year. It positions the company as a corporate good guy for the debate if it starts up again next year, in a potentially less favorable environment.

The move to stay out ahead of the other pharma companies on the issue interestingly takes place under a new senior Lilly management team: CEO John Lechleiter just officially took over the top spot at the beginning of last month, the new top policy person, Alex Azar joined the company just under a year ago from the number two position at the Department of Health & Human Services. (See here for background on the choice of Azar to join the Lilly team and here for Azar’s advice to the industry on a legislative strategy.) Several close observers of pharma in Washington see Azar's hand in the decision to work with Grassley.

But the tactic of trying to make the most out of being caught by writing the rules your way is not new to this Lilly team. Lilly has done this before under other senior managers. It is a well-tried and tested approach.

Lilly took the same posture of getting out ahead on working with the government during the industry rush to own pharmacy benefit companies in the early 1990’s. Lilly used negotiations with the Federal Trade Commission on its deal for PCS to help write rules for the entire group of pharma-owned PBM companies. It’s a well-worn path; Lilly is skilled at following the path to its advantage.

Whither Thrombin?

On seeing today’s New York Times article “Seeking Alternative to Animal-Derived Drugs,” my first thought was that it could’a/should’a mentioned the January 2008 approval of the first recombinant human thrombin, which has the potential to replace bovine- and plasma-derived equivalents now on the market. But as noted in stories in IN VIVO and The RPM Report this month, ZymoGenetics, the developer of recombinant thrombin, can’t seem to catch a break these days, especially from Wall Street analysts.

"moo"

ZymoGenetics saw its recombinant thrombin, Recothrom, the first product it decided to commercialize on its own, as a way to balance the risk in its portfolio. Management has noted that all previous recombinant clotting factors -- along with insulin, hGH and a host of women's health hormones -- had succeeded in clinical trials and in the market. When it initiated the program, “we thought the major risk wouldn’t be clinical trials or commercial, but whether we could manufacture with an appropriate cost of goods,” says CEO Bruce Carter. Bovine thrombin, sold by King Pharmaceuticals, carries a Black Box warning about the severe bleeding risks associated with potential antibody formation. It’s also blocked from the market in Europe because of fears around potential transmission of Mad Cow disease.

But despite the implicit logic that a recombinant product is safer, for various reasons, it’s near impossible to directly correlate bleeding and bovine thrombin, and therefore there's no baseline with which to measure improvement in patient outcome, which poses a problem for reimbursement. As a surgical adjunct, recombinant thrombin also has to make its way through hospitals’ Pharmacy & Therapeutics Committees before it’s stocked, which takes time.

Plus, because Recothrom is a biotech product (and as a biotech company, ZymoGenetics is covered by biotech analysts with little experience following the launch of such a device-like medical product), there appears to be even more uncertainty over how to gauge the product’s trajectory in the market.

It’ll take time to prove the value proposition. Oppenheimer’s Kevin DeGeeter, for example, in a March 31 note, perhaps unfairly used Recothrom’s modest February sales ($26,164) to say that while it’s still very early in the product launch, there are concerns that conversion from bovine-derived thrombin “will take much longer than the Street expects.”

In any event, it is true that ZymoGenetics is in a tough position in a tough biotech stock environment, as it starts to be judged less on the value of its pipeline than on its commercial performance. It'll also be facing a cash crunch later this year and, with hindsight, probably should have financed in 2007 instead of waiting for a potential bump in stock price on the Recothrom approval.

The company likely could have done a better job of prepping analysts for a slow conversion process and launch, instead of believing validation would have come more easily after it found a partner (Bayer) to help with the US launch and open up the European market, and got the drug through FDA with a broad label despite analysts' worries over that.

That said, a tipping point favoring a safer if somewhat more expensive thrombin could come anytime, especially in this politically charged, safety-first health care environment.

Photo from Flickr user foxypar4 used under a creative commons license

While You Were Hanging Your Stockings By the Chimney with Care

"It's a major award!"

Not many creatures stirring this pre-holiday weekend, but we couldn't resist keeping up our weekly roundups of what you might have missed anyway. Basically, not much. We guess it isn't a surprise that you won't find us keeping up the not-quite-rigorous blogging pace this week and the beginning of next, though surely we'll pop up from time to time to amuse those of you hard at work. For the rest of you, bundled up on the couch watching "A Christmas Story," be careful not to shoot your eyes out this week.

• Winner: IMS Health: Maine's state law that restricts access by medical-data companies to doctors' prescription information is unconstitutional, says a Federal Judge, according to an AP report in today's WSJ. You could have seen this one coming if you a) thought a previous ruling in New Hampshire pointed toward a similar result in Maine or b) you read about this on Friday (hey we told you it was a slow weekend).
• The Boston Globe ran a Q&A with CMS boss Kerry Weems on Sunday. Weems is on the road encouraging consumers to shop around for the best medicare plans.
• The Times profiles Renovo CEO Mark Ferguson, whose career has taken him from "dentist to alligator biologist to pharmaceutical chief executive eyeing an estimated £6 billion virgin blockbuster market."
• Ben Goldacre's Bad Science reminds us that particularly around the holidays, some health studies are too good to be true.

Pfizer Supply Deal Ups Pressure on UK Price Cuts

UK drug pricing reform was on the books anyway. The Office of Fair Trading in February 2007 recommended a switch from the traditional PPRS system whereby companies are free to set prices as they wish, within broad profit constraints, to a “value-based” approach whereby drug prices are cut and capped according to a product’s perceived therapeutic benefit.

Now the OFT’s just gathered some more fodder in its call for an end to one of Europe’s friendliest national pricing schemes—from their review of the direct-to-pharmacy drug supply arrangement initiated by Pfizer in March, with several other Big Pharma following suit.

Pfizer decided to cut out the wholesaler and sell its drugs directly to pharmacists. It still uses a wholesaler, UniChem, to do so, but UniChem in this case is simply a logistics provider, receiving a fee-for-service rather than buying the drugs outright and taking a margin from selling them on to pharmacists itself.

Pfizer had plenty of reasons to embrace DTP, which you can read about in more detail in this IN VIVO feature. One of them is that it gets to control individual drug discounts. In the traditional model, manufacturers sell to wholesalers at a 12.5% discount to list price, wholesalers compete to offer pharmacies the most attractive price and typically pass on about 10.5% of that discount. The National Health Service reimburses the pharmacies at list price, but then claws back some of the profits they make from the discounting.

The OFT has concluded from its investigation that there is a “significant risk” that DTP schemes will result in higher costs to the NHS (despite Pfizer’s assurances otherwise). So, it says in a release issued today, since the PPRS scheme is under review anyway (the current plans runs from 2005-2010), here’s another reason to switch to a pricing system that ensures that pharmacists’ discounts are safeguarded.

The OFT’s helpful suggestions:

1) reduce list prices in the PPRS framework by an amount equivalent to the average pharmacy discount

2) force pharma firms to offer a minimum list price discount to pharmacies

The bit of good news: Pfizer and others are free to pursue the DTP set-up (“manufacturers should be free to choose the distribution method they consider to be most efficient,” says the OFT).

A somewhat Pyrrhic victory, though. As far as drug prices are concerned, whatever freedom there was will now certainly soon come to an end.

DTC User Fees: Will This Program Fly?

A new program to allow prescription drug advertisers to pay for a pre-review of TV spot by the Food & Drug Administration is struggling to get off the ground.

With about a week to go before the first critical deadline to create DTC user fees, FDA has gotten commitments from industry to submit 47 ads. That is about 20 short of the absolute minimum necessary to get the new review system up and running—and way short of the 150 ads used as the benchmark in creating the plan.

The new user fees were created by the FDA Amendments Act signed into law September 27. The program allows advertisers to buy a pre-review from the agency; sponsors are free to advertise without paying the fee, but if they want the agency’s feedback before the ad airs, then they have to participate.

The logistics of the program are a bit convoluted. Because the fee is voluntary, the agency first needs a commitment from sponsors to participate; then it calculates the fees and sends out invoices. Sponsors are supposed pay up front; they can change their minds later and pay a penalty to participate.

But if everyone waits, the entire program will shut down. The law stipulates that FDA must collect at least $11.25 million to get the program up and running by January 25. Since there is a cap set on the fee, that means FDA must get commitments from industry for 68 ads in order for the program to take off.

Time is tight. The program was designed with the hopes that everything would be in place ahead of the start of the fiscal year on October 1. That obviously went out the window when FDAAA--which includes groundbreaking drug safety provisions--took most of the summer to complete.

In October, FDA published a notice seeking commitments from sponsors by November 26. During a Food & Drug Law Institute meeting on FDAAA implementation November 16, Division of Drug Marketing Advertising & Communications director Tom Abrams provided an update.

First the good news: FDA is already doing the ad reviews and meeting the goal of responding within 45 days. Abrams says FDA has already gotten 12 ads under the program, and has provided feedback on 4. The agency is comfortable it will answer the next eight within 45 days as well.

But there is reason for concern. The agency has commitments for 47 ads so far, Abrams said. The division director is confident that sponsors are interested in making it happen; he said he understands that the challenge is getting sign off within corporations to make the commitment to participate.

But, he stressed, time is running out. FDA needs answers by November 26 so it can calculate the fee and collect the money.

WilmerHale attorney Scott Lassman, who helped negotiate the new user fee program on behalf of the Pharmaceutical Research & Manufacturers of America, underscored that concern. The new user fee “is in some jeopardy,” he told FDLI.

Assuming companies are able to turn around their commitment notices in time, there will still be some nervous weeks ahead, Lassman pointed out. That is because the deadline for FDA to collect the money is firm: January 25. It is not good enough for the agency to have commitments or even to have invoices out. The law says it must “receive” a total of $11.25 million by then -- or shut down the program.

Oh, and one other thing. Even if FDA does collect the money for the pre-reviews, it can’t actually spend it unless or until Congress passes an appropriations bill for the agency for 2008. FDA is currently operating under a continuing resolution—an issue that hangs over every aspect of implementing FDAAA.

There is a silver lining. As Lassman points out, lower than expected participation should mean faster reviews. Assuming FDA collects enough money to meet the January trigger point--and assuming Congress finishes an appropriation bill in some reasonable timeframe--FDA will be able to hire 27 new staffers just for TV ad reviews. The goals set in the program were based on having 150 ads to review; if the agency only has to review half that many, it should be able to do virtually all of them within 45 days.

The stakes are high, Lassman says. “This is industry’s opportunity to show a voluntary program works,” he told FDLI, noting that there was a big push in Congress for a blanket moratorium on ads for new drugs. Still, he acknowledged, “there are legitimate reasons to deliberate.”

The betting here is that industry will come forward and make it work. Why? Because the “voluntary” user fee program sure looks a lot better than the alternative. As we discussed in The RPM Report last month, the new law also gives FDA the authority to require pre-review of DTC ads whenever it chooses. And, more importantly, it gives FDA the power to impose fines on ads it deems violative.

Anyone who obtains a pre-review from FDA (and makes all the changes requested by the agency) is protected from fines. FDA can still change its mind about an ad, but it must give the sponsor a chance to change the ads before it can levy fines. So the pre-review is really a form of insurance, and one that looks relatively cheap.

So if you plan to run TV ads in 2008, it probably makes sense to get that notice in to FDA before heading out for the Thanksgiving holiday. It may seem odd to be thankful for the chance to pay more money to FDA, but given the alternatives that is probably the right spirit.

Now, who gets the wishbone?