Tough times agead for Amgen
I
am sure there will be some executives at Amgen who
will be reading the Long Tail after possibly losing
possibly $2 billion in sales from it's top selling
product Aranesp. What surprises me is that most
pharmaceutical companies continue to rely on
blockbusters to drive their profits at a time when it
is getting harder and harder to develop and launch
blockbuster products.
Lilly went through this when their top selling
product Prozac came off patent and Pfizer is
preparing to lose it's $10 billion drug Lipitor to
patent expiration in the near future. Pfizer tried to
develop a follow up product to Lipitor but after some
early negative press they decided to pull continued
development. This is another example of relying too
much on one product to drive sales and profits.
Investors for many years have been told to
"diversify" their portfolios but in the pharma
business it seems to be "milk the product and drive
sales for every dollar we can get back".
Today's New York Times, in its Editorial section,
called for an end of the practice of pharmaceutical
companies reimbursing physicians for using their
products. It is of course legal to do so but this is
a case when following the law may lead to the bad
practice of payments driving off label or high use by
the medical community. In any case the pharma pricing
people are going to have to formulate new pricing
models that allow drugs to succeed while limiting
payments to physicians who prescribe them. Of course
the reason that these payments are so important is
that our current health system does not allow
adequate, in some cases, cost reimbursement for using
these drugs but as long as there is money to be made
by prescribing them you can bet medical practices
will count on these dollars towards their bottom
line.
There a lot of issues with the cost of pharmaceutical
products and what I have presented here is a
simplification of one of the issues but what I am so
puzzled about is how these high paid CEO's continue
to earn the big bucks without the ensuring that their
companies are financially sound even if they lose
their biggest seller. It's called scenario planning
and in this case Amgen may be caught with their pants
down. When I was at Lilly and we lost the Prozac
patent we immediately implemented a plan called
Year-X in which ALL expenses were curtailed, raises
were kept to a minimum and bonuses were put on hold.
The result is that Lilly is slowly rebounding
although this author feels that they are relying too
much on Zyprexa sales which were $2.4 billion last
year.
During World War II, as the allies were driving deep
into Germany, General Patton prepared for a major
offensive by German forces. Many commanders felt that
essentially the war was over and that the troops
would be home for Christmas, after all the German
army was finished and they had never mounted a winter
campaign since the days of Fredrick the Great but
Patton felt that the data he looked at supported an
attack by the enemy and prepared scenarios for a
response. CEO's in a sense are commanders and even in
good times, especially in good times, they need to
anticipate worst case scenarios and be prepared to
react with speed to ensure that their company can
weather the storm. It's time for them to earn those
salaries not to retire with millions in stock
options.
The Internet bringing wired physicians together at
last
It
looks like a physicians portal has finally got it
right and figured out that the power of the Web to
bring people together and collarborate can lead to
success. Sermo.com now has over 10,000 physicians
registered and judging from recent posts to the site
it looks like the their slogan is right "Why consult
with one collegue when you can consult with
thousands?".
According to a recent article in Digital
Communications;
Sermo.com is the
fastest growing online community created by
physicians, for physicians, today announced that it
has exceeded the 10,000 registered physicians mark --
just six months after launching. Growing at a rate of
more than 600 physicians per week, Sermo has become
the "go to" destination for physicians nationwide to
share observations from their practices and exchange
medical insights as they are happening. U.S. doctors
logged more than 6,000 hours and viewed nearly 1
million pages on Sermo in March alone, as they shared
the latest observations from the front lines of
medicine about the effectiveness of drugs, devices
and treatments.
What a great idea and a great tool for wired
physicians who are time pressed to attend meetings
and conferences. Here are some of the recent posts on
Sermo.com;
* Can Gabapentin be
used for hot flashes?
* Given the injuries associated with chiropractic
care, do you refer your patients to chiropractors?
* Have you seen hearing loss caused by Azithromycin?
* Which is the best quinolone for respiratory
infections?
* Do you examine older kids and adolescents without a
parent present?
* Do you agree with Novartis discontinuing Zelnorm?
* Have you experienced compassion fatigue?
* With new drugs coming to market all the time how
long do you like to wait before prescribing them?
* Is it ethical to Google your patients?
* Is Cymbalta good for Fibromyalgia?
* Which Brand Name Drugs are better than Generics?
* FDA sleeping pill warnings -- Have they gone too
far?
As you can see there are some pretty good subjects
being addressed here by physicians who are hungry to
collaborate with other HCP's. The post on compassion
fatigue is especially interesting given that
physicians have to see a lot of patients during the
day and may not have the time they would like to site
and counsel patients on treatment conditions and
issues.
This is a great example of Web 2.0, using the
Internet to bring people together rather than push
information. It's long over due and pharma should
take notice of this great site because this is just a
small example of how the pharmaceutical industry can
bring people together to talk about issues that issue
THEM.
$600 Million fine is not enough
The fine levied
against Purdue pharmaceuticals for aggressively
marketing Oxicontin and then lying about its
potential for addiction is not high enough to send a
message to the drug industry that this type of
behavior will not be tolerated. The FDA should have
put these executives in jail and fined the company $2
billion as this would have told drug industry exec's
that if you lie and put patients health at risk your
going to be held accountable.
This plea agreement is a sham and for Purdue pharma
will be just another expense on the balance sheet.
Oxicontin has made billions of dollars in profits
over the years and the government should have gone
after Purdue where it really hurts..their
pocketbooks. I mean here you have a drug company
admitting that they lied and as a result putting
patients health in jeopardy. This is more than
unacceptable this is an outrage and these executives
need to go to jail to be held personally accountable.
Yes they were each fined but I am sure the company
will help them out with that or that they will cash
in some of their options to cover the fines.
I
would not have accepted the plea agreement I would
have proceeded to trial and alerted opposing counsel
that their clients had better get used to group
showers and wearing orange jump suits. I would have
appointed somebody from the FDA to personally oversea
ALL of Purdue's marketing material for the next 5
years and then I would have confiscated the profits
from the product for the periods in question. This is
the only way to deal with people who put profits
ahead of patient health especially when they commit a
criminal act and lie about it. It's time to get
tougher with weasels.
Implications of headlines for DTC marketing
If
DTC marketers don't feel that the recent rash of
negative headlines (Oxy Cotin maker lied about
addiction, J&J and Amgen possibly promoting
higher dosing of medications) is going to effect
their campaigns then they are living in a fantasy
world. These stories are going to continue to chip
away at the credibility of pharmaceutical companies
to deliver relevant information to patients and cause
more consumers to research all treatment
options.
The headline in NBC News last night could not have
been more dramatic: The maker of Oxicontin lied and
has to pay a $600 million fine. The front page of
Wednesday's New York Times details how doctors are
making a lot of money by prescribing anemia drugs.
Welcome to the world of information where everything
is transparent. Unfortunately most DTC marketers will
continue to live in their own world oblivious to the
damage these headlines do to their campaigns. They
believe that consumers can be "sold" and that we see
something on TV and then go ask our doctor for that
medication. Rumor has it that they also believe in
the tooth fairy !
These headlines do have implications for DTC
marketers regardless of what the polls or research
say. With the current political climate, gas reaching
$4.00 a gallon and a impending change at the
Presidency consumers are going to be even more
skeptical of anything that corporate America has to
say. Here are some possible implications for
marketers;
-Consumers are going to do a hell of a lot more
research. They may not trust their physicians
recommendations anymore if they believe the physician
is motivated by drug industry dollars. Consumers will
seek out more health information online with
credibility of content being a key driver.
-New Products: Wait and see? Some patients may take a
wait and see attitude on new products to ensure that
they are indeed safe and effective. However patients
may ask the FDA for speedy approval of new products
that may extend life for potential fatal conditions
such as cancer.
-Separate credible information from promotional
information: Don't sell too hard let consumers make
up their minds. Present the facts and let consumer be
your jury.
-Be transparent: If their are issues surrounding your
product admit it upfront and inform the public what
YOU are doing to address these issues.
The power continues to shift from markers to
consumers and as along as the pharma industry
continues to screw up and is driven by corporate
greed consumer will become more and more skeptical of
marketers product claims.
Whistle blower suit against J&J (Caught with
their hands in the cookie jar?)
I
don't get it? How many ways can the pharmaceutical
industry continue to screw up and in the process put
patients health at risk in pursuit of profits? The
latest example comes from a whistle blower lawsuit
from a couple of ex J&J salespeople who have
provided the Wall Street
Journal with a wealth of
information on the promotional practices of Procrit.
If even there is a slight truth to some of the
allegations then the FDA should hit J&J where it
hurts..their pocketbook.
Documents in a
lawsuit filed against Johnson &
Johnson by two former
salesmen show how the pharmaceutical giant sought to
boost sales of its blockbuster anti-anemia drug
Procrit by offering contracts that fattened doctors'
profits and urging its salespeople to push
higher-than-approved doses. According to todays Wall
Street Journal;
Dean McClellan, who worked for 12 years at
J&J's Ortho Biotech unit selling Procrit, saved
15,000 pages of company memos, contracts and other
work-related documents in a storage unit and shed
he built off his garage. He says he was forced to
retire in 2004 because the company told him his
sales increases weren't high enough. He believes
the company wanted him out because of his age,
which was 55 at the time. Angry, he agreed to join
a whistleblower lawsuit by another former Procrit
salesman, Mark Duxbury. A brief filed by J&J
says Mr. Duxbury was fired in 1998 for racial and
sexual harassment. Through his attorney, Jan
Schlichtmann, Mr. Duxbury says he was a star
salesman for Ortho whom the company turned on after
he told the truth about their business practices at
a court-ordered deposition.
The Office of Inspector General of the Health
and Human Services department put out new
compliance guidelines in 2003 saying that marketing
the spread may be in violation of anti-kickback
laws. The Justice Department has been investigating
drug companies for such marketing practices,
resulting in big settlements of $875 million for
TAP Pharmaceuticals in 2001 and $355 million for
AstraZeneca in 2003. After extensive debate,
Congress overhauled the Medicare reimbursement
system in 2005 to prevent such practices. But drug
companies continue to offer large buyers big
rebates, which they say are lega
l.
Mr. McClellan's documents on the marketing of
Procrit show that in 2004 -- after Amgen Inc.'s
competing drug Aranesp came on the market --
J&J made offers that would allow buyers of
Procrit to receive discounts off an already-reduced
price as well as rebates. For example, an internal
company memo calculates that a physician who bought
nearly $1 million of Procrit over 15 months would
get a check for $237,885 back, or 24%.
Another J&J program offered hospitals an
incentive to buy Procrit and shun Aranesp:
discounts on purchases from across Johnson &
Johnson's product line -- including some
huge-selling drugs and medical devices sold by
different subsidiaries -- if the hospital used
Procrit at least 75% of the time when prescribing
anti-anemia drugs. In addition, J&J created a
"Right of First Refusal" contract for doctors,
requiring them to allow Ortho Biotech to make a
counteroffer if Amgen's Aranesp price undercut
Procrit
.
Mr. McClellan also alleges the company pushed
doctors to prescribe a higher dose years before it
was approved as safe and effective by the FDA. For
years, the company focused on educating health care
providers on Procrit's medical benefits, he says.
But in the mid-1990s at a national sales force
meeting, an Ortho executive announced that the
division was moving to promote what it called "QW
dosing," switching patients from three, 10,000-unit
doses a week to a single, 40,000-unit dose in
cancer patients, Mr. McClellan says.
At that time, that dose wasn't approved for
cancer patients. Many years later, the FDA approved
the dose in cancer patients, but before then,
pushing the unproved dose would have violated FDA
rules.
Where the hell was management and where the hell was
ethics in all this? Hidden under the financial
calculator no doubt. And does the pharmaceutical
industry really believe that stories like this won't
circulate among patients and HCP's? Does the pharma
industry really believe that patients are going to
continue to "buy-in" into DTC for new products with a
track record of "profits over scientific benefits"?
The successful new CEO knows that everything their
company does is transparent in a world where
information is readily available. Unfortunately the
pharmaceutical industry continues to set standards of
bad conduct in pursuit of the almighty dollar while
pretending to be concerned about patient health. Take
notice marketers: the public is not going to buy this
anymore and marketers can no longer tell people what
to think and buy.
Off label use of anemia drugs..was it supported?
The
tale of anemia drug use in the US is taking more
turns and twists than "curve ahead" road in San
Francisco. According to an article in this mornings
New York Times, doctors are gaining a financial
benefit for prescribing the drug and the more they
prescribe the more they make. The drug companies
simply say "what we are doing is legal" but frankly
that is not enough and it's time for the FDA to come
down hard on Amgen and J&J if they find that they
supported this practice
The anemia drugs when used according to the label
maybe safe and effective but the problem seems to be
that physicians in this country are using it off
label and as such have been getting millions of
dollars in payments from the pharmaceutical industry.
How does the pharma industry respond? "What we are
doing is perfectly legal". What a bunch of duckers
and a load of crap.
The FDA needs to determine if Amgen and J&J knew
about the off label dosing and if they did what did
they do to inform physicians that the drug had not
been tested at these higher doses. My guess is that
they knew of the higher dosing but chose to turn away
because after all it provides millions of dollars in
sales to the bottom line. However what is lost in
this whole myriad if misinformation and turning a
blind eye is patients health. According to the
article;
Dr. Peter Eisenberg, an oncologist in Marin
County, Calif., said many doctors had been induced
to use more epoetin by the financial incentives and
the belief that the drug was helpful. “The deal was
so good,” he said. “The indication was so clear and
the downside was so small that docs just worked it
into their practice easily. “Now it’s much scarier
than that,” he said. “We could really be doing
harm.”
And of course the
drug companies involved did not conduct clinical
trials at the higher doses..why should they there was
no financial incentive and could only harm a
potential blockbuster?
This is why the pharmaceutical industry continues to
reap the scorn of the media. This is what is wrong
with the pharmaceutical industry and frankly it is
this authors opinion that the FDA should come down
really hard on Amgen and J&J if there is ANY
information that showed these companies promoted off
label use. The FDA is supposed to protect us from
dangerous drugs and it seems that in this case they
failed to intervene when the drug companies conducted
business as usual. the problem is that business as
usual should not endanger
patients....
Huge DTC budgets are not needed if you can innovate
Starbucks
is one of the best known brands i the world yet this
marketer spends less than 2% of its annual budget on
advertising. They probably realize that spending $100
million, primarily on TV, to reach certain awareness
levels is old school marketing that provides little
ROI for the brand. There are a lot of innovative ways
to reach your target audience and raise awareness of
the brand but most pharma marketers would rather
continue to spend millions of TV or Golf because they
are stuck in the past where marketers told consumers
what to buy.
Imagine if you will an open house event where top
chefs from your city prepare great meals for you to
sample. There's just one catch...all these meals are
heart healthy and have low cholesterol and the event
is sponsored by Lipitor. Then there could be a
weekend park or beach cleanup sponsored by Boniva
because a little exercise can help maintain strong
and healthy bones. These are the kind of grassroots
efforts that some marketers are doing to enhance
their brands. What is the pharmaceutical industry
doing? Hosting a golf tournament because God knows
men with ED play golf (or one of the executives wants
to play a round with Tiger Woods).
We
all have to learn to be able to do more with less but
in the pharmaceutical industry DTC marketers don't
yet understand that. If the budget is too small to
allow a successful campaign that will meet reach and
frequency numbers they still will spend the money
just to be able to say " we did it" or add the
campaign to their resumes. DTC marketers very rarely
think outside the box when it comes to the
development and strategy of campaigns. They'll spend
millions of dollars to develop and refine messages
but they won't allow agencies to become strategic
partners. Pharmaceutical companies are also great at
promoting people, with no marketing background, into
senior executive positions where they can be
"dazzled" my marketers manipulation of data to show
that current DTC campaigns are successful. I saw this
happen a lot at Lilly.
There are marketers who continually innovate (Apple,
Starbucks, BMW) and then there are pharmaceutical
marketers who only look at barriers not
opportunities. The pharma industry has been hiring
consumer marketing people for DTC roles the problem
is that old marketing methods are s dead as analog
technology. Until the budgets get tighter and tighter
marketers may continue to have that google eyed look
of a kid in a candy-store with a $20 bill.
Why the pharmaceutical industry continues to step on
mines
I
had a chance this week to go back into the New York
Times archives and research the complete stories on
Lilly's Zyprexa. Since I worked at Lilly and was
aware of the stringent regulatory environment I was
trying to understand how this could happen, but after
listening to a number of people within the industry
the question became "I am surprised this doesn't
happen a lot more". It's only a matter of time before
another product gets called under the microscope only
to find that mistakes were made along the
way....mistakes that could endanger patients health.
If there is anyone naive enough to believe that, when
drugs are being developed, drugs are marketed because
they provide better health solutions then there is a
bridge I want to sell you really cheap. Drug
development is a business decision, that means that
the key driving decision as to whether the drug will
continue in development is the potential for sales
dollars not "how many patients will it help". I know
of at least two drugs in development at major
pharmaceutical companies and what is being discussed
internally is the potential for "off label sales".
The sales people know that regardless of what the
label says that a number of physicians will use these
drugs off label and could add hundred of millions of
sales dollars to the bottom line.
On the other side of the coin I also know of a drug
that could be used to prolong the lives of patients
with a certain type of cancer but that these drugs
are getting reduced funding because the sales
potential is very low. So what does all this mean?
Well it brings us back to the age old paradox: is
profit the underlying driver in pharmaceutical
business decisions? But first let's take a step back
here...Chrysler is for sale because of sagging sales
and because the models they have introduced have
little consumer appeal. When an automobile company
decided to take a concept car to production they have
to determine their break even sales point and project
how many units need to be sold in order to maximize
investment. This is traditional, standard MBA
analysis. The difference is that these are cars, or
SUV's that take people places they are not products
that could save or enhance lives. Ahhhh, there's the
rub...profit or patients health...shareholders or
customers?
I'll be the first to admit that it's not easy being a
CEO today. You have to please board members who look
at a companies financial sheet for quantitative
measurements of performance. Wall Street analysts can
swing hundreds of millions of investor dollars to or
from your company depending on what they want to hear
and the regulatory environment is getting a hell of a
lot tougher. Still, if I was earning millions of
dollars a year and was guaranteed a golden parachute
I would embrace this challenge. The problem seems to
be, as I have written many times before on this
forum, is that there is a real lack of business
leaders in American industry today. Bill Gates is
semi-retired and Microsoft has become a huge, slow
bloated company, Steve Jobs is still a driving force
with Apple but then again his compensation is valued
well over $600 million and the auto industry
compensates a new CEO from Boeing $24 million to
report record losses and lay off thousands of people.
So what does all this mean for the pharmaceutical
industry? Well first the company slogans don't mean a
thing. "Answers that matter" should be "answers that
matter for a price", "where patients come first"
should be "where patients come first behind Wall
Street, "working for a healthier world" should be
"working for a healthier stock price". Pharmaceutical
companies are public companies and as such have a
responsibility to earn a return for investors.
George Merck in 1952 said "Medicine
is for people, not for profits.” I think that too
many people in the industry have forgotten that and
as long as they do the pharmaceutical industry will
continue to go blindly into the mine fields that
await them.
DTC Ads driving customers online?
Manhattan Research
loves to issue data in press releases. The problem is
that unless you know what the data says it's just
statistics. Data should tell DTC marketers a story
and help them gain insights into WHY consumers act
the way they do....In the not-too-distant past, prime
time television was filled with pharmaceutical
advertisements urging prospective patients to call a
toll-free number for more information. Thanks to the
Internet and other emerging technologies, today's
pharmaceutical marketers have an arsenal of new
strategies at their disposal, making this call to
action seems as antiquated as VCRs and dial-up
modems. One of the most popular trends in
pharmaceutical marketing over the past few years is
the shift toward unbranded advertisements focused on
building awareness for a certain condition, and, in
many cases, encouraging consumers to visit a website
for more information about that condition.
Many in the pharmaceutical industry have questioned
the viability of this approach and whether it is
actually effective in driving consumers to research a
condition. A recent study from Manhattan Research
demonstrates the impact of these advertisements on
the health information seeking behavior of consumers
exposed to these advertisements. The rankings are
based on the comprehensive online consumer research
study with 4,965 U.S. adults titled ePharma
Consumer(R) v6.0: The Future of Integrated DTC
Marketing.
Top Conditions Researched Online Because of TV
Ads
1
Restless Leg Syndrome (RLS)
2 Smoking/Trying to Quit Smoking
3 Erectile Dysfunction
4 Acne
5 Human Papillomavirus (HPV)
Source: ePharma Consumer(R) v6.0, Manhattan Research,
LLC
"Unbranded advertisements are building awareness for
certain conditions, and encouraging consumers to take
action and research these conditions online," says
Mark Bard, President of Manhattan Research. "In some
cases, more than one-third of consumers researching a
certain condition online report that research is the
direct result of a television advertisement they saw.
It is clear that unbranded ads are having an impact."
Behind
the Propaganda-This Authors Opinion
DUH !!!!!! When I
was at Lilly we used Manhattan Research and they can
be a great resource for information but DTC marketers
have to be careful not to use this information as the
base for all decisions. It provides part of the
picture but does not tell the whole story. All too
often we look at data and fail to understand what it
tells us. Let's take ED for example; it's no wonder
that it is on the top researched list but it maybe
there because aging baby-boomers are not able to
"respond" like they used to when they were younger.
As men age they require more sexual stimulation to
engage in intimate activities and many men may feel
that because of this they have ED when in reality
they do not.
Restless Leg Syndrome is another condition that many
people may have had but weren't aware that it was a
"medical condition" until we were exposed to the DTC
ads. A friend of mine saw the ads and commented that
he had some of the symptoms. Upon going to his doctor
to talk about the symptoms his doctor did a blood
test which revealed he had Type II diabetes and the
pain he was feeling in his legs was because he had
started to experience some nerve damage.
It's alarming that 4 out of the top 5 conditions
researched most online are lifestyle issues more than
serious medical conditions. Yes smoking can lead to a
wealth of health issues but smoking is all too often
a choice that is made by people who are well aware of
the risks involved. High cholesterol is a much more
serious problem yet millions remain untreated. The
education of consumers about dangerous conditions,
high cholesterol, obesity and high blood pressure is
where the drug industry has fallen short. Rather than
educate a public about these life threatening
diseases they would rather talk about ED or restless
legs. Rather than integrate and combine strengths to
inform and educate they would rather sell you a
brand.
If the drug industry is to gain the respect of
legislators and the public they have to do a hell of
a lot more unbranded advertising on serious and
potential life threatening medical conditions. It's
time to stop continually talking about ROI and then
say we are here to provide better health solutions
for our customers. But then that would piss off Wall
Street wouldn't it?
Unless you have been there don't point fingers
It
was disturbing to learn this week, according to John
Mack's survey, that BLOGS critical of the
pharmaceutical industry are viewed more credible than
BLOGS supportive of the industry. There's a lot wrong
with the pharmaceutical industry from DTC marketing
to CEO's who are so anxious to please Wall Street
that the lose site of what we should be all about but
unless you have worked in the pharma industry there
is no way that you can sit on the fence and point
fingers at people inside the house.
I don't believe that at any time in its history the
pharmaceutical industry has been facing more
challenges than the current environment. Wall Street
demands profits, Congress wants accountability,
people want real answers to health problems and CEO's
continue to be shuffled in and out. As I have written
many times on this BLOG before the industry is in
dire need of strong leadership. Working in the pharma
industry is unique and unless you have spent time on
the inside I don't believe that you can understand
the environment in which we work. In my 10 years in
the pharma and health industry I have seen some
amazing things including manipulation of data to
support more money for DTC channels, senior managers
making decisions about DTC marketing without an
understanding of how to measure ROI's and personal
agendas that lead to decisions of what is best for
the person making them not the brand.
Yet as a pharmaceutical marketer I have chosen to
make a stand and do what is right for my customers
and patients. Are there that many people out there
who purposely hide data from the FDA that could harm
patients? Are there managers who make decisions based
upon what is right for the balance sheet rather than
the patient? The answer to these questions is
probably yes. But these managers didn't just come
into a company with the idea that sales is more
important than patient health. It is started when
people don't question numbers or data or don't have
the knowledge to ask the right questions.
The pharmaceutical industry is at a crossroads. CEO's
need to communicate throughout the organization that
whatever else we do the patients always come first.
As marketers we all have to put ourselves in our
patients shoes and ask "what do they need and want".
CEO's have to be strong enough to stand up to MBA
Wall Street analysts whose slogan is "instant
gratification takes too long" and pharma marketers
have to be held accountable for everything they do.
It's easy to point fingers on the outside looking in
but frankly there are no short term fixes for any of
these problems. It's going to take time at a time
when the marketing environment is changing as we
speak. What is wrong with pharma is indicative of
what's wrong with American Business..too many
layers..too much emphasis on paychecks and not enough
emphasis on being customer centric.