Transitioning to a New FDA: What's Next for Von Eschenbach?

As Barack Obama said at his first press conference as President-elect on Friday, there can only be one president at a time. Likewise, there can only be one FDA commissioner at a time.

While there’s been a lot of speculation about who might take the reins from Andrew von Eschenbach (see our picks here and here), there hasn’t been a lot of talk about the plans of the current commissioner. When will he leave? Where is he headed? Who will fill in for him until a permanent replacement can be found?

Von Eschenbach himself has remained mum on his post-FDA plans, but we’ve heard that a deanship is in the works—potentially a return to the University of Texas MD Anderson Cancer Center in Houston, where he served as VP and chief academic before being named director of the National Cancer Institute in December 2000.

One thing appears clear: von Eschenbach will tender his resignation before Obama takes office, probably sometime in December, and will leave the agency soon after January 20. That is the typical protocol for presidential appointees--or at least for those not named David Kessler (the one FDA commissioner holdover since the 1950s). FDA officials have been preparing for the transition to a new Administration for months.

Given that the selection of an FDA commissioner is pretty far down Obama’s to-do list, von Eschenbach’s departure will involve a temporary replacement for at least the near-term. Recall that during the last transition after President Bush took office in 2001, it took until early 2002 before Lester Crawford was named acting commissioner, and until November before Mark McClellan was sworn in.

So whomever is named acting commissioner when von Eschenbach leaves could remain in that position for some time. As much as the pharmaceutical industry would like that temporary head to be Center for Drug Evaluation & Research director Janet Woodcock, FDA chief scientist Frank Torti is a more likely pick.

But despite what you may have heard, FDA says von Eschenbach's departure is not imminent. We asked the commissioner’s office about reports that von Eschenbach is packing his bags, and here’s what a spokesperson had to say:

“The FDA Commissioner serves at the pleasure of the President. As protocol dictates, all senior political appointees submit their resignation to the President who appointed them at the conclusion of the Presidential term.

Commissioner von Eschenbach will remain deeply engaged and sharply focused on leading the Agency in accomplishing its mission of protecting and promoting the health of the American people every single day of his service, until the very last day, whenever that may be.”

Was Tom Scully Right About Nexium?

You probably remember when Tom Scully was the head of the Centers for Medicare and Medicaid Services.

If you do, you may also remember his rants about successor products companies create to offset generic competition for one of their brands. He was particularly concerned about the amount of taxpayer money being spent to cover AstraZeneca’s Nexium. The company’s original proton pump inhibitor omeprazole (Prilosec) works just as well, he maintained – and extremely cheap omeprazole generics are available, as are over-the-counter versions.

Here’s a sample of what Scully said about Nexium back in 2003 and 2004:

• "The fact is, Nexium is Prilosec. It is the same drug. It is a mirror compound. It is exactly the same."
• "You should be embarrassed if you prescribe Nexium because you're screwing the patients and you're screwing taxpayers.”
• “Nexium is a game that is being played on the people who are paying for drugs, and it's not right."

Get the picture? Mr. Scully isn’t a fan of Nexium, at least when it comes to the government paying for it.

Well, now CMS has released some of its findings from an examination of Part D drug claims data from 2006 and 2007, and guess what? It looks like Tom had a good reason to be concerned. Nexium is the fourth largest drug in the program by cost. Only Lipitor, Plavix and Zyprexa have a larger claim to Part D dollars.

CMS says gastrointestinal drugs accounted for 8.7% of overall drug costs, and presumably Nexium is a big chunk of that, given its fourth-place ranking. TAP’s PPI Prevacid also contributed significantly to spending in the category, coming in seventh overall.

Interestingly, proton pump inhibitors seem to be the drugs Part D beneficiaries think they can do without when they reach the donut hole and have to cover the full cost of the drugs themselves.

A recent study by the Kaiser Family Foundation found that, on average across eight drug categories, 15 percent of Part D enrollees stopped taking their medicines when they fell into the donut hole, but the highest rate of discontinuation was for PPIs, at 20 percent.The study said, “Because there is some concern that PPIs are overused for more routine gastrointestinal conditions, terminating medication use might not pose serious health risks in some cases.”

There’s been a lot of pushing by the plans to use low-cost drugs by having lower copays for generics than brands. One problem with differential copays in Part D is that many of those enrolled in the program are eligible for a low-income subsidy from the government, and they are protected from the higher copays for brands. As a result, they don’t respond to the financial incentives provided by differential copays to take the cheaper drug.

Plans are starting to respond to that by putting stricter drug utilization management rules, like prior authorization and step therapy, in place for those beneficiaries. The biggest Part D plan sponsor, UnitedHealth, is taking that route, as detailed in a recent article in “The Pink Sheet.”

So what would Tom say about this data? I asked him, and he was nice enough to provide a few thoughts by e-mail. First, he wished to say that he has no grudge with Nexium per se, and if someone wants to pay for it in a private plan, that’s just fine with him, but “no government insurer should pay for Nexium as an added cost to Prilosec. … My last year at CMS I think Medicaid spent $350 M on Nexium – absolutely insane.”

And, not to rub it in or anything, but he did have this final reaction to all the money being spent on Nexium in Part D: “I told you so.”--Scott Steinke

image by flickr user shoothead used under a creative commons license

The New Administration: More Names to Consider

We didn't wait for the election to start the speculation about who might play an important role in an Obama Administration. But now that the voters have spoken, we've heard a few more names bandied about for key posts in the new Administration.

So, without further ado, here are some additions to our prior post:

HHS Secretary:

Rosa DeLauro (US Congress): We thought Tom Daschle was sure to end up as HHS Secretary, but now we hear he may instead be leading the health care reform effort from within the White House. (You know, kind of like Hillary did in the Clinton Administration. Not exactly like that, we hope.) And we've heard that maybe Connecticut Congresswoman Rosa DeLauro (pictured) will get the job. DeLauro currently chairs the agriculture appropriations subcommittee in the House, which among other things oversees FDA's budget. She's no fan of DTC ads, sloppy overseas manufacturing, or anything that looks like overly cosy relationships between industry and regulatory. In other words, she would make a verrrrry interesting secretary for the pharmaceutical industry. The suspense on this position won't last long, so stay tuned...

FDA Commissioner:

Ezekiel Emanuel (NIH): The National Insitutes of Health's chief bioethicist has a cv that is longer than a typical issue of IN VIVO, packed with publications, books, awards and honors. The one thing not on it: his brother, Rahm, was just named chief of staff to President-elect Obama. Those family connections ensure Emanuel will be an influential figure in the new Administration; whether FDA is the right fit is a different question. Still, his involvement in addressing conflict-of-interest issues--both within NIH and in other professional societies--is likely to set the tone for how clinical research and medical education evolve in the years ahead. (FYI, the third Emanuel brother is an agent in Hollywood. That's right: Mr. and Mrs. Emanuel have one son who is a hard driving political operative, one who is a hard driving Hollywood agent, and one who is...a bioethicist.)

Jerry Avorn (Harvard): One of the pioneers in the field of pharmacoepidemiology, Avorn's post at Harvard gives him an in with the Obama health team and the Massachusetts Senate delegation. FDA is prey to internal disagreements between its clinicians and its epidemiologists, and historically the leadership has come from the clinical world. But the emphasis on drug safety and post-marketing surveillance could make someone like Avorn an attractive candidate.

Joshua Sharfstein (Baltimore Commissioner of Health): Kennedy is the traditional power broker for FDA, but it is an open question whether his health will allow him to continue to play that role in 2009. So someone like Sharfstein, who once served on Rep. Henry Waxman's staff, could be a more likely candidate since House members have a strong interest in FDA as well. And he has Steve Nissen-like drug safety credentials, having helped led the charge to withdraw pediatric indications for OTC cough/cold medicines. A pediatrician by training, Sharfstein graduated from Harvard Medical School in 1996.

David Kessler (UCSF): Yes, that David Kessler. Plenty of folks are suggesting that he wants back into government and that he could end up back at FDA. We've been telling people for more than a year the next FDA commissioner will be from the Kessler mold, so we certainly can't resist passing on the notion that it will just be Kessler himself. He recently lost his post as Dean of the UCSF Medical School--under unpleasant circumstances--so we're betting a move back East would not be unwelcome.

CMS Administrator

Judy Feder (Ex-Georgetown): Feder is also certain to play a prominent role in the Obama health team after her unsuccessful bid for Congress in Virginia. Feder's campaign was closely aligned with the top of the ticket, and though she fell far short of unseating incumbent Frank Wolf in Virginia's 10 District, she is likely to be rewarded for helping increase Democratic support for Obama in what proved to be a pivotal state for the campaign. A veteran of the Clinton Administration (she was HHS principal deputy assistant secretary), she surrendered her position as Dean of Georgetown's Public Policy Institute before launching her unsuccessful bid.

Elizabeth Fowler (Senate Finance Committee): Fowler, one of the key Democratic staffers who worked on the Medicare Part D benefit, certainly has the resume for the job: in addition to her time on the Democratic committee staff, she worked as VP-public policy at Wellpoint, as an attorney at Hogan & Hartson, and as a health services researcher with HealthSystem Minnesota. Ironically, one drawback could be the key role she played as one of the few Democratic staffers who helped draft the Medicare Modernization Act. Changes to MMA are atop the agenda of many in the Democratic Congress, and having a CMS administrator so closely tied to the 2003 law could be a problem.

Cybele Bjorklund (House Ways & Means Committee): Bjorklund, on the other hand, would be the staffer who represents the Democratic opponents to MMA still bitter about being shut out of the end of the debate that created Medicare Part D. In the House, Bjorklund has worked on legislation to undo the "non-interference" clause in Part D - including proposals to have Medicare launch its own prescription drug plan.

Kevin Concannon (Iowa Department of Human Services): Concannon is only one of many state Medicaid program directors who could be considered for positions in the federal agency. However, he bubbles to the top of the pack because: (1) He has led two state Medicaid programs, first in Maine and now in Iowa; (2) In Maine, Concannon implemented a state-wide drug discount program that withstood a court challenge from the brand name pharmaceutical industry; (3) His boss, Gov. Tom Vilsack, helped deliver Iowa for Obama (after Vilsack ended his own presidential campaign, and then supported Clinton in the rest of the primaries), and may join the administration in the Department of Agriculture; and (4) Iowa is the home state of Finance Committee ranking Republican Chuck Grassley, which would presumably help Concannon get through the Senate.

While You Were in New Orleans

Actually we suppose that if you were in New Orleans for the American Heart Association's scientific sessions this weekend you'll probably have caught wind of much what we're about to highlight below. But who knows--maybe you spent the whole weekend on a Bourbon Street bar crawl?

While you were eating po'boys and beignets ...

• Earphones and pacemakers don't mix.


• Ah, outcomes studies. Sometimes they actually work out for sponsors! New data from AstraZeneca's Jupiter study are in--the study was halted two years early because the results were so positive--and the results were very good. Published in the New England Journal of Medicine and presented at AHA, Jupiter showed that AZ's Crestor reduced deaths, heart attacks and strokes, and other measures of cardiovascular health by about 44% in less than two years in patients with already normal-to-low LDL cholesterol. Patients in Jupiter instead had high levels of the inflammatory marker high sensitivity C-reactive protein. What does this mean for the future of statin therapy? The NEJM editorializes that the study raises
  

  "two important questions about the primary prevention of coronary disease. Should indications for statin treatment be expanded? And how should measurements of high-sensitivity C-reactive protein be used? The relative risk reductions achieved with the use of statin therapy in JUPITER were clearly significant. However, absolute differences in risk are more clinically important than relative reductions in risk in deciding whether to recommend drug therapy, since the absolute benefits of treatment must be large enough to justify the associated risks and costs. The proportion of participants with hard cardiac events in JUPITER was reduced from 1.8% (157 of 8901 subjects) in the placebo group to 0.9% (83 of the 8901 subjects) in the rosuvastatin group; thus, 120 participants were treated for 1.9 years to prevent one event."

  Hmm, very glass half empty. Even if they're not about to advocate putting statins in the water supply there was a lot of good news in the study and according to several reports experts are saying it will affect clinical practice, even if Jupiter doesn't offer any guidance as to who should be tested for high CRP. Further Jupiter coverage at the New York Times, the Wall Street Journal, Reuters and Pharmalot (where Ed beats us to the blockquote).


• Merck & Co: we're not giving up on cardiovascular R&D (WSJ Health Blog). At AHA results of its high-dose Zocor trial however were mixed.


• Now that the NHS is allowing UK patients to 'top-up' their health coverage privately without forfeiting NHS services, insurers are stepping up to offer coverage for those non-NHS-covered expenses, reports The Times.

image by flickr user wallyg used under a creative commons license.

Deals of the Week: 44

Much ink has been spilt this week here and elsewhere about what the election of Barack Obama as 44th POTUS and the continued ascendence of the Democratic party might mean for the health care world.

Who's going to lead FDA, CMS and HHS? What does the potential shuffling of committee leadership mean for industry? Will FDA staffers get paid this week?

We don't expect positions like FDA commish are too high up Obama's priorities list, but we'll have more to say on appointments and other political topics next week.

Meanwhile some of industry's biggest players continued to cut the fat this week. GSK reduced its commercial infrastructure by 1800, which meant the dismissal of 1000 US sales reps. Apparently also lost in the shuffle: Philadelphia as a GSK HQ, which the fine WSJ Health Blog says is a victory for firm's Glaxo Wellcome camp, since GSK will maintain the ex-GW base in RTP North Carolina as its US headquarters. (We remind you that Philly has had its share of victories this fall.)

Also this week Pfizer and Sanofi followed Merck in eliminating obesity R&D around the cannabinoid type-1 receptor. Perhaps they got around to reading the article referenced here?

Obesity R&D got you down? Never fear, there's always Slim Fast--some pharma might think the consumer medicine route a better bet anyway. And besides, the dealmakers extraordinaire below never have to go on a diet. They won North Carolina, Virginia, and Ohio. They are forming formidable transition teams to tackle industry's problems. They have accepted the congratulations of world leaders and will grace the covers of tomorrow's papers. They have all been promised new puppies and indeed they share the honor of being elected to the highest office in the blog-land (for a one-week term), for they are:


Genzyme/Osiris: Genzyme has always been pretty clear on its strategy. Having diversified away from dependence on Cerezyme largely thanks to a series of acquisitions (GelTex, Biomatrix, and Sangstat, among others), the company seems pretty comfortable about forecasting earnings through 2011 (for an in-depth strategic review, see this IN VIVO story). And so it’s now embarked on a new series of deals to continue growth into 2012 and beyond (big deals with Isis, PTC and Ceregene). And Genzyme figures that the current environment – with biotech stock prices at rock bottom and with their managers and investors increasingly anxious for new sources of non-dilutive funding -- will encourage companies to be a lot more willing to encumber their prize assets with major partnerships. Such deals are, from a discounted cash flow point of view, a lot cheaper than acquisitions since, even though Genzyme has to share the ultimate proceeds, the expense money comes out more slowly, with risks adjusted by milestone success. Thus Genzyme’s latest deal, with Osiris on the Phase III anti-inflammatory stem cell treatments Prochymal and Chondrogen: $75 million right away, $55 million in July ’09, $600 million in regulatory milestones (if Genzyme goes ahead with both products) and $650 million in sales milestones (likewise for both products). A lot of money, sure, particularly since Genzyme gets commercial rights only outside the US and Canada. But Osiris still has to finish paying for all ongoing trials (three Phase III programs, plus a number of Phase II studies) plus any new trials (through Phase II) that it starts for new indications (of which there are lots – the products are being studied in graft vs. host; Crohn’s; COPD, osteoarthritis – a flock of inflammatory conditions). Indeed, Genzyme had a lot of leverage in this deal: Osiris had about $11 million in cash at the end of September but an annual burn close to $80 million. Luckily it had a patient majority owner in Swiss investor Peter Friedli, who’d given the company access to another $30 million in a credit facility – but the fact is Osiris needed a deal. An acquisition would have looked cheap (before the deal, Osiris was trading at around $360 million); better to take the Genzyme money, even if it meant closing out some global-rights-demanding acquirors going forward. We think that’s a decision a lot of other biotechs are going to make – granted they get the opportunity to do so.--Roger Longman

Onyx/BTG: Not so long after swallowing Protherics in a stock deal then valued just shy of $400 million, it seems BTG is busy making good on its promise to decide what it will keep in-house and what parts of the companies' combined portfolio is slated for outlicensing. (A weak sterling and decline in BTG's shares have conspired to significantly reduce the value of the Protherics acquisition.) Today the British firm said it was outlicensing to Onyx Pharmaceuticals its preclinical BGC 945, a thymidylate synthase (TS) inhibitor BTG has thus-far developed with the compound's discoverer, The Institute of Cancer Research. BTG gets $13 million up-front to add to its already large cash-pile and stands to see up to $72 million in development milestones and $235 million in future commercial milestones, plus an undisclosed royalty. The ICR sees about 10% of all payments to BTG. Onyx adds to its oncology portfolio the promptly renamed compound (now ONX 0801), which is in the same class as well known drugs like 5-fluorouracil. Onxy notes in its own release that due to 0801's selective tumor cell-specific uptake by the alpha-folate receptor the compound may surpass the efficacy of available compounds. The alpha-folate receptor is overexpressed in a number of tumor types with significant unmet needs, including ovarian cancer, lung cancer, breast cancer, and colorectal cancer, says the company. [UPDATE: we're told that the decision to out-license 945 was made pre-Protherics acquisition and has been underway for some time.]

Replidyne/Cardiovascular Systems: The only response we've received to the post below about this reverse merger goes like this: "Why? Because devices rule and biotech drools, baby!" Better than nothing, we suppose.

Pfizer/WuXi: WuXi PharmaTech, China’s top CRO, announced today that it has signed a new three-year deal with Pfizer to develop in vitro ADME screening assays on compounds it synthesizes for the Big Pharma. This is not the first time the two companies have paired up: beyond these ADME assays, Pfizer has already outsourced certain synthetic chemistry and parallel medicinal chemistry services to WuXi. "A high quality and flexible Asia R&D partnership network is critical to Pfizer's emerging market and Asia strategy. We want to build strong relationship with leading Contract Research Organizations such as WuXi PharmaTech to tap into the scientific talents and R&D capabilities in Asia," commented Dr. Steve Yang, VP and Head of Asia R&D at Pfizer, in a press release. But this WuXi collaboration and a sales-and-marketing agreement with China-based specialty pharma NovaMed Pharmaceuticals announced this summer amount to little more than baby steps for a company Pfizer’s size. Accessing the growing middle classes in both India and China has never been more important to Big Pharmas trying to maintain their top-line growth thanks to late stage product failures and an increasingly difficult regulatory and reimbursement climate. But unlike AstraZeneca, GlaxoSmithKline, Novartis and Roche, which are aggressively building China-based R&D organizations, Pfizer has been slower to elucidate its strategy in this hot market. With more than 80 partnerships, WuXi continues to dominate as one of the leading CROs in China and beyond thanks to its acquisition of AppTec earlier this year. As biopharma companies continue to cut the fat out of their R&D budgets, interest in WuXi seems likely only to grow—Ellen Licking

WaPo image via the Newseum.

CSI-Replidyne: A Reverse Merger Mystery Maybe Grissom Can Solve

Those public biotech companies unlucky enough to see their drug development hopes dashed when clinical failure rears its ugly head have a few choices when it comes to the question of what to do with their leftover cash.

Option 1. They can push ahead with earlier-stage development projects and hope they're luckier the second--or third, or fourth--time around. Option 2. They can liquidate and give the money back to their shareholders and turn out the lights in the labs and the boardroom. Option 3. They can start looking for a merger partner.

There are about fifty seven million VC-backed biotech and medical device companies that would like to suggest Option 3 is the way to go.

So when the antibiotic developer Replidyne began evaluating its strategic alternatives following the failure of its Phase III faropenem compound you can be sure there was a long line of suitors hoping to access the biotech's $40 million and Nasdaq listing. That queue, said CEO Kenneth Collins on a conference call this week, was 120 companies long.

One hundred and twenty! And apparently Replidyne's board so tired of the biotech scene that they picked the medical device play Cardiovascular Systems to settle down with. The Pink Sheet Daily's in-depth coverage of the deal is here.

RDYN shares promptly fell about 20% to a 52-week low, below $1. Some analysts were upset that the deal, essentially valuing Replidyne at cash, didn't ascribe any worth to the firm's pipeline, but management had clearly given up on Option 1. Why any other company would therefore put any value on Replidyne's pipeline is beyond us.

But we are confused as to why more public boards don't opt for Option 2. The track record of reverse mergers over the past four years has been woeful.

In September, START-UP analyzed 28 biotech reverse mergers initiated since the beginning of 2005, as part of our private biotech M&A review. For those deals where we could find a shareprice six months post-closing (presumably when a lock-up would expire), only five firms kept their heads above water. The average decline at six months was –18.8%. When to-date performance was reviewed as START-UP went to press in early September, the news was worse: an average decline of –41.0%.

So why do companies like Replidyne participate? One last roll of the dice? Replidyne's investors will get 17% of the combined company in this case.

And granted this is a bit of an unusual situation in that Cardiovascular Systems actually generates revenue (its minimally invasive catheter system for the treatment of peripheral arterial disease launched in Sept 2007). We're on record as actually believing that CSI could pull off its planned IPO! But had Replidyne' s backers wanted to invest in a shell--or a catheter--they probably could have done so elsewhere. So why not liquidate and return the cash?

For cash-hungry private companies, unable to tap public markets for an IPO, and with their own VCs largely unwilling to provide further funding, the rationale for these reverse mergers is clearer -- unlike the Replidynes of the world, they haven't failed yet.

But the underperformance of reverse mergers (even compared to companies that are newly public thanks to an IPO or the biotech space in general) seems to have little to do with quality. There are plenty of exciting biotechs with top-tier management and promising pipelines that have reversed into a public shell only to struggle, valuation-wise. See Infinity Pharmaceuticals or Micromet, for example.

So have at us. Are we missing the point? There were 119 other companies interested in Replidyne. So with IPOs off the menu surely we'll see more reverse mergers in the coming months. Unless VCs tamp down their valuation expectations and begin selling their companies outright for whatever they can get.

image from flickr user Great Beyond used under a creative commons license

Let the Fights Begin: Card Looks Nasty for House Oversight Committee Ring in 2009

By the end of the presidential race, it was commonplace to hear the media bemoaning the nasty, brutish tone of the campaign. Headlines right up to election day highlighted the continued attacks and counterattacks by the campaigns.

The Obama-McCain discourse is going to look like civil banter in comparison to what may happen in the House Government Reform & Oversight Committee starting in January.

The committee is the fiefdom of California Democrat Henry Waxman. He has used it during the past two years to keep up a steady barrage of three or four hearings a week on the Bush Administration, investigating aggressively into issues from the conduct of the Iraq War to the financial bailout and looking closely at the efficiency of Part D in the health care area.

Some Washington watchers, itching for a big internecine fight to get the Democratic Congress started, hope that Waxman will take on his nemesis on the Energy & Commerce Committee and challenge long-time sitting chairman John Dingell (MI) for the leadership of that committee. That fight would come near the end of November. Waxman won’t challenge Dingell unless he is sure he has the votes.

If he stays at Oversight, however, things should get interesting and nasty. Waxman will lose the wide range of easy GOP bureaucratic targets with the change to the Obama Administration. But that turns him lose to hold tougher hearings on private sector witnesses from companies that he believes are getting overpaid by the government or taking advantage of government programs. He won’t beat up on the leadership of the Centers for Medicare & Medicare Services, for example. The new targets will be the execs of the companies running Part D plans or selling drugs to the plans.

But that is not where the biggest fireworks are likely to break out – between the chairman and a stream of beleagured corporate execs. The hostilities are likely to be most pronounced between Waxman and the ranking minority member.

The current ranking minority member of the committee Tom Davis (R-VA.) did not run for re-election. One of the next likely Republicans for the position by seniority, Christopher Shays of Connecticut, was defeated on Nov. 4 in the Democratic sweep of New England. Both of them have been civil adversaries to Waxman.

The first announced candidate on the Republican side to succeed Davis is Darrell Issa of California (San Diego and Riverside). The Issa-Waxman relationship is much more strained. Waxman and Issa are oil and water at best. A better analogy is probably chemicals that combust when they get near each other. The National Journal reports that Waxman threatened to have Issa forcibly removed from a hearing.

Issa announced his interest in the ranking member position in a November 5 statement. “This committee will need a strong voice,” Issa declared, “when hearings and investigations are one-sided, inappropriately partisan, or oblivious to government failures like Fannie Mae and Freddie Mac that embarrass the majority.”

Issa was one of the driving forces behind the recall vote against California Democratic Governor Gray Davis in 2003. Issa put $2 million behind the effort. He is a tough, sarcastic and acerbic partisan.

He displays a relish and willingness to take on Waxman. For example, during the June 2007 hearing on Avandia safety he attacked the proceeding as a review of the drug by unqualified people. Throwing Waxman’s words back at the chairman, Issa said: “As the Chairman said, rightfully, and I appreciate his saying it, none of us here is qualified to evaluate this drug.” He accused the hearing of treading “closely toward the hypocrisy that I believe this hearing begins to look like.”

As ranking member, Issa would take on Waxman at every turn. It could quickly develop into one of the roughest shows during the next Congress, with all the subtlety and productivity of professional wrestling.

It Doesn’t Always Pay to Work at FDA

When FDA commissioner Andrew von Eschenbach testified during his confirmation hearing in front of the Senate Health Committee in 2006, he pointed to one area on which he would be dedicating plenty of attention: employee morale.

“Attention to our workforce is my number one priority. It is the most precious asset that FDA has,” von Eschenbach told Sen. Barbara Mikulski (D-Md.) during the hearing. “Improving and enhancing retention and recruitment opportunities, career development opportunities will also address morale.”

Turns out one detail may have been overlooked. Someone forgot to, um, pay everyone on time.

So, at least, says Senator Chuck Grassley. He claims that FDA has some serious issues with its payroll system. Some employees aren’t getting paid, while other are being overpaid by thousands of dollars. That kind of “sloppy record keeping,” Grassley says, has “shaken confidence in the personnel management system.”

“I am very concerned that payroll problems are adversely affecting employee morale and work performance at the FDA,” Grassley says in an October 28 letter to von Eschenbach and HHS secretary Michael Leavitt. One FDA employee, he says, went to the emergency room in the middle of the night with a sick child, only to discover that FDA had incorrectly terminated him, thus cancelling his health insurance benefits.

“On at least two occasions employees may have been mistakenly overpaid by several thousand dollars,” while in another case, “a brand new employee at the FDA was not paid for several pay periods because the employee ‘fell out of the system,’” the letter says. Grassley is requesting that FDA submit all wage- or benefit-related complaints filed since January 2006.

This isn’t the first time that FDA pay practices have attracted congressional attention. House Energy & Commerce Committee Chairman John Dingell and Oversight and Investigations Subcommittee Chairman Bart Stupak have both complained about FDA awarding excessive bonuses to its highest paid employees, while not making a greater effort to retain employees with a scientific function in the agency.

And low morale has been a persistent problem at FDA. An understaffed agency that is always under a threat of whistleblower actions and intense scrutiny from Congress over issues like drug safety doesn’t always make for a pleasant place to work. And unhappy FDA employees aren’t good for drug sponsors—especially if disgruntled reviewers leave before an NDA is approved.

Indeed, Mikulski’s line of questioning for von Eschenbach in 2006 was prompted by a survey released a month before by the Union of Concerned Scientists that found low morale among many FDA employees due to a perceived lack of support from top agency officials.

Even before his confirmation hearing, von Eschenbach talked about his commitment to turn “FDA into an efficient, modern, performance-based organization” with an emphasis on improving “business” operations. And he later named the agency’s first-ever chief operating officer, John Dyer, to focus on “strengthening the management, business processes, and information technology of the agency.”

But as Janet Woodcock, the director of the Center for Drug Evaluation & Research, put it earlier this year, all FDA employees really want are the basics: an opportunity for professional development, good communication from the top, and—believe it or not—decent parking.

Of course, getting paid would be a plus, too.

The Next Administration: Obama’s Top Health Positions

Earlier, we put out the short lists of possible McCain health people. Now, again, the lists are by no means scientific. These are names that have been circulated, brought up in discussions with sources, or individuals we think could end up being candidates based on their experience. Remember, this is just for fun. Here we go:

Obama Administration

HHS Secretary:

Former Senator Tom Daschle: The former Senate Majority leader is a favorite for Obama’s chief of staff along with Rep. Rahm Emanuel. If Obama goes with Emanuel, HHS Secretary would be an obvious spot for Daschle. He wrote a book on health care and he was a supporter of President Clinton’s health care proposal, and universal health care is Daschle’s pet issue.

Kansas Governor Kathleen Sebelius: The Kansas Governor made a name for herself in Kansas as an insurance reformer (she wouldn’t accept campaign contributions from insurance companies) and stopped Blue Cross Blue Shield from merging with another out of state firm. She is very close to the Obama campaign as a key surrogate and was supposedly in the top 3 for VP. Sebelius makes a lot of sense here.

Former Vermont Governor Howard Dean: The DNC chairman is an obvious possibility here with his MD, plus he oversaw expansion of health care in Vermont. But Dean is such a lightning rod for the Republican party, we just don’t know that he would be the right choice here considering how fragile a coalition it will take to advance Obama’s health plan.

Massachusetts Governor Deval Patrick: No governor, it seems, has been more active in the health care discussion as Patrick. Whether its universal health care, the state’s $1 billion life sciences/biotech plan to bring more companies into the state, or the Mass. law on pharma marketing restrictions, Patrick has been in the middle. We think Patrick is perfect for the position, but we think he’s more likely to get a nod for the next Supreme Court opening. Otherwise, it could be Patrick.

FDA Commissioner:

Bruce Psaty (U of Washington): We think Psaty’s drug safety work probably make him a possibility but also may take him out of serious consideration. His focus on drug safety issues may be too extreme to appease both reformers and more moderate FDA stakeholders. Still, he warrants mention.

Steve Nissen (Cleveland Clinic): Avandia. Need we say more? However, Nissen also works closely with drug manufacturers on large, important clinical trials (Pfizer’s HDL-raising drug torcetrapib, for example). He’s recently changed his messaging somewhat from one focusing on drug safety to one more rooted in pro-innovation themes (witness his endorsement of Lilly’s anticlotting drug prasugrel). If Obama goes with a real reformer in the mold of David Kessler, Nissen has to be at the top of the list. He’s also an official adviser to campaign now, an important development.

Robert Califf (Duke): The Duke researcher has close ties to FDA through the Critical Path Initiative, and advisory committee process and has both Republican and Democratic supporters. In September 2006, Duke entered into an agreement with FDA to serve as a warehouse for electrocardiograms to serve as tools for drug safety research. If Obama goes with a big name, but one less associated with major reforms, Califf could easily be the pick. One thing that may serve as roadblock is his close ties to drug manufacturers (a Kennedy pet peeve).

Mary Pendergast (consultant): The former associate commissioner under Kessler and independent consultant is a dark horse candidate for the job. It’s understood she was previously vetted by Kennedy for commissioner (and did well) after Kessler left. She’s not an MD but that may not matter if Obama chooses an MD to head up HHS (Howard Dean, for example).

David Blumenthal (Harvard): A Harvard professor and director of Massachusetts General Hospital’s Institute for Health Policy, Blumenthal is a major contributor to the Obama health plan. He will be a strong candidate for a number of important positions either in the White House as a special assistant to the President or as head of one the key health agencies. Blumenthal, a physician, got his start in politics as a professional staff member on Senator Ted Kennedy’s Subcommittee on Health and Scientific Research during the 1970s.

Susan Wood (GWU): The former head of women’s health at FDA resigned in protest from the agency due to the delay in switching the morning-after pill over-the-counter. She now represents the Union of Concerned Scientists in a public capacity and is a research professor at the George Washington University for Public Policy. Wood campaigned vigorously for Hillary Clinton during the primary, and if Clinton takes over the Senate HELP Committee in the case that Kennedy becomes less involved, the former FDAer would have an outside shot. Still, the odds are against her.

Dora Hughes (Obama Senate FDA advisor): Hughes, an internal medicine physician, is Obama’s Senate health advisor. If Obama picked her, she would be the first African-American woman commissioner. It’s more likely she will be highly involved in making the pick. She previously served as deputy director for health for Senator Ted Kennedy on the HELP Committee.

CMS Administrator

CBO director Peter Orszag: The head of the Congressional Budget Office has been everywhere making public speeches on skyrocketing healthcare costs, regional disparities in how care is paid for, the Medicare program, and strategies on how to find costs savings without compromising quality of care.

Harvard Economist David Cutler: The health economist and Institute of Medicine member is a top health adviser to Obama and is considered a major architect of Obama’s health care reform plan. Cutler has co-authored health economics papers with McClellan and shares some of McClellan’s views on finding significant cost savings by correcting and reforming the inefficiencies in the system. Cutler could end up in any number of positions, probably at the White House council of economic advisors, but we think this isn’t such a bad one, is it? Blumenthal could also be a candidate here.

Avalere Health founder Dan Mendelson: Before starting Avalere, Mendelson served as associate director for health under the Clinton Administration from 1998-2000 at the Office of Management and Budget. Mendelson’s ties to people involved in the campaign make him an intriguing candidate for a position at CMS or possibly another health role in the next administration.

Harvard’s Steven Pearson: The comparative effectiveness guru is a senior fellow at the insurer’s trade association the America’s Health Insurance Plans and runs Harvard’s Institute for Clinical and Economic Review. Pearson has published research on how to use a standardized scoring system when it comes to comparative effectiveness research. Interesting. If not CMS, Pearson would be at the top of any list to head up a national center on comparative research.

This list is just a start and we'll be adding to it and subtracting from it after the election depending on who wins. We'll give you our picks next, but what do you think? Show us your picks and we'll post them.

The Next Administration: McCain's Top Health Positions

With the actual election almost here, we figure we’d provide you with a few shortlists of possible candidates for three key positions under either a McCain or Obama Administration. First the McCain people. The lists are by no means scientific. These are names that have been circulated, brought up in discussions with sources, or individuals we think could end up being candidates based on their experience. Remember, this is just for fun. Without further ado:

McCain Administration

HHS Secretary:

Former Arkansas Governor Mike Huckabee: The former governor’s name has been floating around as a possible HHS Secretary from the time he bowed out of Republican Primary because of his reputation as a health reformer in his home state. Will his cool relationship with McCain preclude him from a role in the Cabinet?

Former Massachusetts Governor Mitt Romney: Romney makes the most sense as HHS Secretary for the leadership role he took in ushering in the universal coverage system (with the help of Ted Kennedy and state congressional leaders) in Massachusetts. The program initially ran into serious early problems but now it seems to be gaining in popularity. Why not Romney? As they say in boxing: these two guys just plain old don’t like each other.

Former FDA/CMS head Mark McClellan: There’s only one significant health care post McClellan hasn’t held: HHS Secretary. The reasons for choosing him are obvious: former FDA commissioner, former CMS administrator (implemented the Part D program), leading the way on active surveillance through the Engelberg Center for Health Care Reform, and chairs the public-private Reagan-Udall Foundation. And he’s respected by Republicans and Democrats alike. The problem? We think McClellan’s best shot at HHS Secretary was during the Bush Administration and he was passed over for Utah Governor Michael Leavitt.

Iowa Senator Chuck Grassley: The ranking minority member on the Senate Finance Committee is a reform-minded Republican, particularly when it comes to FDA and Medicare. He hasn’t been talked about much but we think he should be considered.

FDA Commissioner:

Bill Schultz (Zuckerman Spaeder): Although Schultz is considered to be a Democrat, his name has surfaced as a possible commissioner candidate under a Republican administration. Why’s that? We’re not sure, and this one has us scratching our collective heads. However, Schultz played a key role representing generic drug makers in Congressional negotiations over a follow-on biologics bill that barely missed getting attached to the FDA Amendments Act.

Ray Woosley (C-Path Institute in Arizona): The cardiologist is highly regarded by both sides of the aisle and has made a name for himself in the area of drug safety. With his C-Path Institute, Woosley has also taken the lead on one of FDA’s most high profile public/private efforts, the Critical Path Initiative.

Edward Diethrich (Arizona Heart Institute): The cardiovascular surgeon is a prominent physician with a specialty in endovascular procedures and founder of the Arizona Heart Institute. His strong Arizona ties make him an obvious candidate for the commissioner’s job.

Frank Torti (FDA): The FDA’s chief scientific officer and former Wake Forest researcher is only one of two viable internal candidates for the job. Many think he will take over FDA in the interim between Andrew von Eschenbach’s departure and the choosing of the next commissioner. If he plays his cards right, with the administration and Congress, it could be him. But the permanent job almost certainly won’t go to someone from the inside.

Janet Woodcock (FDA): We believe that Woodcock is a registered Democrat (Plan B testimony) but she has a very good working relationship with the drug industry and proven herself to be a good manager of a number of large initiatives within FDA ranging from the Sentinel active surveillance system and Critical Path to Safety First. She could also lead FDA in the interim post-Von E, however, we believe her chances of landing the top spot permanently are incredibly slim.

CMS Administrator:

Former CMS Administrator Gail Wilensky: Currently a senior fellow at the non-profit Project HOPE, Wilensky is an official adviser to the campaign and is on any short list for administration positions. She served a two-year stint as administrator of the Health Care Financing Administration (now CMS) from 1990-1992 under Bush I. We could see her going back to oversee the next complicated phase of Part D.

McCain Advisor Jay Khosla: Khosla serves as a health policy advisor on the McCain team. He served in the Senate as health counsel for the Senate Budget Committee and health policy counsel to former Senate Majority Leader Bill Frist (R-Tenn.). Medicare cost-cutting has been a focus of his public comments.

McCain Advisor Dan Crippen: Former domestic policy advisor to President Reagan from 1988-1989, Crippen could take on any number of advisory roles in a McCain Administration. The former CBO director would seem most suited to the top spot at CMS given his stance on addressing Medicare cost savings above and beyond anything else.

This list is just a start and we’ll surely be adding to it and subtracting from it after the election. We’ll give you the Barack Obama short lists on Tuesday. Then we'll give you our picks, but we want to know: What do you think? Any names you’d like to add? We’d love to see you’re picks. We may even post them.