Pharma Business
Another hangover for pharma...
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Well one look at today's Wall Street Journal section on pharmaceuticals is enough to make a portfolio manager downgrade all pharma stocks. Avandia could cause heart attacks, Amgen gets a subpoena from the New York, and a Novartis drug could cause kidney failure. What does this all mean? Well for pharmaceutical companies it could mean that portfolio managers are going to direct more investment dollars away from pharma and biotech but there are also some serious implications for DTC marketers.


We live in the information age thanks to the Web and portable handheld devices. Often when people wake up in the morning or get to the office the first thing they do is go to the Web to catch up on the news. Stories about pharma have been everywhere and are hard to ignore. There is a transformation taking place in the environment in which we market:

-Customers have more power than ever before and information can no longer be "pushed" to them.

-Transparency at the highest levels is becoming the norm for all industries and CEO's.

-There is a new FDA chairman who is facing intense pressure from a new Congress to implement changes at the FDA including the way the FDA approves drugs.

All this happening at a time when the biggest demographic segment in the US is reaching ages when they are going to need more and more prescription drugs to maintain their lifestyles. Now most DTC marketers will ignore these trends and act like they still need to push the brand message to consumers but I believe this is a big mistake. If customers research and compare detergents don't you think that they would do the same for prescription drugs that they put into their bodies?

It used to be that we could rely on physicians to tell us what drugs we should take but that is changing. Physicians don't have the time to sit with us and talk about medication side effects or choices. In fact research shows that consumers will go to product websites when receiving an Rx to determine if the medication is right for them and examine potential side effects. It has been my experience that one of the top pages within product websites is always the side effects and warnings pages.

Explanation of ongoing clinical trials

So what can the industry do to calm patient apprehension about prescription drugs? Well first the industry has to make clear that all medications have risks. Yes I know that is what fair balance is supposed to do, but it has to be more in a consumer friendly format that is easier to understand like Pfizer has done in their print ads. Second, the FDA and drug companies need to inform and educate patients about ongoing clinical study findings. If for example a new medication causes weight gain in some patients I would want to know that so that I can gauge the risk(s) and benefits of taking the medication.

For DTC marketers these events are going to present more of a challenge. Consumer can no longer be "told" what to buy so marketers are also going to have to be transparent in their marketing messages. Don't oversell the message and inform and educate patients/consumers. Separate promotional messaging from factual disease state messages. Ensure that the message in all channels is consistent and monitor BLOG's and chat rooms for buzz on your products. Listen to what your customers are saying about your drug and find ways to embrace Web 2.0 (if you don't know what this is your already in deep trouble).

There are challenges to be overcome but great marketers know how to turn challenges into opportunities. They embrace new channels and listen to what consumers want and need to make decisions. Pharma marketers need to understand that the environment is changing so rapidly that only those that keep pace are going to succeed.


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Do drug labels now need to be localized?
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In a way Shakespeare was right...shoot all the lawyers ! Let's face it, lawyers should be thanking the pharma industry for all the business they getting. The latest comes from a woman in Vermont who is suing Wyeth because the FDA approved label "didn't go far enough". She won a $6.8 million judgement but now it maybe up to the Supreme Court to determine if in fact there is any liability here.



Product labels negotiations are often intense between the FDA and pharmaceutical companies. The language in the label can lead to increased sales and marketing messages or a very narrow indication which would limit it's use. When negotiating with the FDA drug companies try and incorporate language which can be used to market the product to HCP's and consumers as the label is the "bible" for what can be communicated to patients and HCP's. According to an article this morning in the
Wall Street Journal:


In 2000, Diana Levine lost a hand and forearm to gangrene after Phenergan was inadvertently injected into an artery during a so-called push IV injection, which is more potent and puts injected drugs into the body faster than a normal injection. Ms. Levine had gone to a medical facility in central Vermont for treatment of nausea.


The drug's labeling, approved by the FDA, included the injection method as an option but warned of risks like gangrene if the drug were injected into an artery. Ms. Levine sued, arguing Phenergan's labeling was unsafe, and a Vermont jury awarded her $6.8 million in damages. On appeal, the Vermont Supreme Court upheld the award, ruling that FDA drug regulations don't prevent a company from being sued under state law over drug labeling.



You can see why the high court might want to get involved here. The potential for endless litigation is staggering adding hundreds of millions of dollars to costs which ultimately will lead to higher drug prices. Now this author doesn't feel that pharma companies should be immune from labeling language missteps that could lead to patients being endangered but at sometime you have to draw a line in the sand and say "enough is enough". The attorney who is suing Lilly for Zyprexa, (he refused to settle with Lilly) leaked information to the press that even a judge said was reprehensible and the commercials recruiting people for class action litigation can be seen throughout the cable channels. There is no excuse for hiding information or misleading HCP's on a drugs side effects but if this lawsuit is heard by the court and upheld it could open the door to massive delays in new drug introductions. Can you imagine the logistics of trying to prepare different labels for different states?

I am studying law and I love what I am learning but the law is supposed to be about the facts not emotion. I am truly sorry that this patient lost a limb because of the use of the drug but all drugs have risks that is why they have to be approved by the FDA. Patients need to understand that and lawyers need to stop looking to big pharma for a new Lexus or Mercedes.

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Current patients can hold the key to valuable information
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Marketers spend way too much time conducting research with "potential patients" rather than current patients and that's a shame as current patients can provide a wealth of information on what made them finally take action and ask for your brand. Rather than learn from patients who have not made the decision to seek treatment marketers should listen to patients who made the move and ask "what were the keys to seeking treatments...?".



There is a feeling in pharma that once you have a current patient on your product that he/she is not a valuable asset anymore. Their advertising is focused on people who are not on the brand rather than reenforcing the decision to stay on the brand. The track record for patient compliance for pharma is pretty poor but rather than abandon these customers pharma should embrace them. What made them finally decide to seek treatment" Can we segment this group and identify a common barrier that was overcome? These are all questions that may be answered by current patients but alas pharma marketers seem to turn a deaf ear to this audience.


Let's, for example, look at the ED market. There are millions of men who have not sought treatment for ED because of the psychological barriers. Yet ED brands continue to advertise on TV and go after these men with refined messages. What they should be doing is talking to men who are currently on treatment and ask them "What made you finally ask your doctor about ED?" This way they can identify the triggers to action and utilize marketing channels to deliver messages that address these triggers.


Then there is the CRM component of current patients. Pharma seems to ignore current customers and very few brands, if any, value current patients as a valuable resource. For medications like Lipitor, where patients can't "feel" the benefit of taking the medication everyday, patients need to be reminded that they are fighting bad cholesterol while promoting healthy cholesterol. Yes the Lipitor website has a section for current patients but does Pfizer really believe that people are going to go back to the website, log-on and enter their new numbers? That shows that Pharma is still stuck in Web 1.0 and doesn't understand how people want to use the Web. A CRM program has to be based on a relationship of VALUE to the PATIENT: before someone is going to have a relationship with your brand you have to clearly identify the value equation of your customer.

Listening is a lost art and listening to current patients seems non-existent in most pharma DTC programs. Yet listening to your current patients can provide a wealth of information to your brand.
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Some predicitions about the pharmaceutical industry
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The environment is which pharmaceutical companies market their products is changing quite rapidly. Those companies that adopt to the new environment will survive those that do not will merge or be bought out with the loss of a lot of jobs. Here are my predictions for the future of the pharmaceutical business.




1. Pharma brand.product teams will be reduced in size- There is no need for a lot of people across the brand team. P&G managers manage billion dollar brands with and the same will happen in pharma with regulatory, legal and medical personnel working across several functional areas.


2. Pharma sales forces will continue to be condensed - Physicians don't have enough time to meet with the reps so they eventually pharma will realize that they cannot afford such high priced sample deliverers.


3. The Internet will be embraced more for both DTC and DTP initiatives- Sooner or later marketers will wake up and realize the the Web can drive business successfully if used correctly.


4. The FDA will limit DTC but product website will not be considered DTC unless they become overly promotional- Pharma will have to add more credible information and less promotional information to get past FDA reviewers.


5. TV will become less important in the DTC mix.


6. At least 3 CEO's from top 10 pharma will step down in the next two years.


7. Some colleges will offer a medical degree for those people who don't want to practice medicine but who will need an understanding of medical principles in their careers. This will be driven by the need of pharmaceutical companies who will need marketers with more knowledge of medicine to market new drugs.


8. Smaller companies that are able to respond to market place challenges will be more successful and deemed more credible by physicians.


9. Vendors/agencies will be out...strategic partners that have quantitative measurement criteria will be in.


10. More venture capital money will flow into small biotech companies that are developing new drugs with hopes that if successful they will be purchased by big pharma.


11. eMarketing people, people who really deeply understand the Internet, will be in high demand while traditional media people will be looking for work.


12. Pharma will eventually embrace Web 2.0 at a time when other marketers are embracing Web 3.0


13. There will be more reports of medications causing problems with continued use that will lead to more litigation from the bloodsucking legal profession.


14. When Viagra comes off patent sales of Cialis and Levitra will decline rapidly.


15. The days of big salaries and bonuses at pharma will be coming to an end. The pressures on pricing and promotion will continue to force pharma to more performance enhanced compensation models.



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Tough times agead for Amgen
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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.
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$600 Million fine is not enough
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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.


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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.

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Whistle blower suit against J&J (Caught with their hands in the cookie jar?)
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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

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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

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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.


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Why the pharmaceutical industry continues to step on mines
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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.
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Unless you have been there don't point fingers
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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.
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Does Pharma Zoom?
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James Citrin's book, Zoom, details how some exceptional companies are navigating the road to the next economy. Of course pharma is nowhere to be found on the list of exceptional companies and you shouldn't be surprised. Pharmaceutical marketing is stuck in an age of old marketing practices where spending mega dollars on TV seems to be the only tactic they know.


Mr. Citrin states that in order to excel in the new economy, business leaders need to master six basic strategies:


1. Be capable of doing everything at speed (Pharma marketing has two speeds..slow and dead slow)

2. Create a true learning organization (A lot of pharma companies do have "shared learnings" but few learn from innovators outside the industry. While smart marketers are learning how to leverage consumer generated media, pharma marketers are developing bad DTC).

3. Obsess over the needs of the customer (Like pharma could ever care about the customer. It's all about ROI and driving Rx's not satisfying customer needs).

4. Reward risk taking (FDA..NOV = Trouble...enough said)

5. Learn to live with greater uncertainty (Pharma has no choice and seems willing to let the environment take it where it wants to go !)

6. Master the art of deal making and partnerships (pharma companies don't talk to each other even when it is for the patients good)

Is it any wonder that pharma marketing is looked upon as nonexistent? The more things change the more pharma marketers seem stuck in a rut and it's awful deep.
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Aranesp: Death of a blockbuster
Amgen Inc.'s drug Aranesp didn't reduce the need for blood transfusions in anemic cancer patients and was linked to a nearly 45% increase in deaths compared with patients taking a placebo. That's really bad news for Amgen the maker of Aranesp but there are a number of issues that go a lot deeper here. When did Amgen know and why didn't this data show up in the initial, and ongoing, clinical trials? Lot's of questions that need to be answered and someone needs to be held accountable.


Legislators in Congress are going to use the Aranesp example of things that can go wrong when bad decisions are made. Amgen's CFO has resigned, or was shown the exit, but frankly that is not enough. Did the CFO hold back the release of clinical trial information because of financial considerations of Amgen stock? If so he needs to held criminally liable as do the other people who were involved in the decision. The CEO must also be held accountable and shown the door as this type of behavior starts at the top and can be inbred through the whole organization.

How can this happen in a world where everything is transparent and paper trails are everywhere? It starts with a belief that shareholders and investors are more important than patients. It tells me that Amgen may talk the talk about patients being important but somewhere the chain broke that people believe that dollars are what drives pharma not successful patient outcomes. I'm sure that Congress is going to have a field day with this one...

The Amgen story that is coming out of Thousand Oaks is going to be a lot more damage to an industry that is already under fire from all sides. People make up a company but somewhere along the way Amgen has hired people who believe that their wallets are more important than patient health and that is beyond reprehensible
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A new tactic for the FDA - Are they overstepping their authority?
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The Food and Drug Administration said proposed prescription painkillers should fill an unmet medical need for patients who have no other "relatively safer" alternatives, suggesting Merck & Co.'s bid to have a Vioxx-like successor drug approved in the U.S. faces a tough road. But who is to say that a new drug fills an unmet medical need for patients who have no other "relatively safer" alternatives ? This author feels that this action by the FDA is a dangerous precedent that could quickly lead to major issues for consumers, insurers and pharma companies.


I used to take Celebrex for joint pain until I read information on the Celebrex website that said one of the potential side effects could be "intestinal bleeding or death". When I first received the Rx for Celebrex I received a letter from my health insurer informing me that OTC Ibuprofen (store brand no less) worked just as well as Celebrex and costs a lot less. I switched to Advil but the key point here is that it was MY decision based upon the risks I was willing to take from information on all types of pain relievers.

I know, as all consumers should know, that all prescription medications have risks and potential side effects. I can work with my HCp to determine what is best for me but at the end of the day I am the one who makes my healthcare decisions. To be honest Celebrex worked better for me on my joint pain than OTC products but I did notice some stomach discomfort when I used Celebrex. Rather than risk what I perceive to be more serious problems I decided that ibuprofen will work well while not providing any possible GI problems. I don't want the FDA making these decisions for me I want to make them myself with input from my HCP and no amount of DTC advertising is going to change my mind. DTC ads may enlighten me as to new products or treatment options but I am the one who will go to the product.com website and look at the side effects and warnings to determine if the risk is acceptable for me.

The FDA obviously does not believe that consumers are smart enough to research products on their own even though traffic to health websites, including prescription medications, keeps increasing. Under this new guideline, unmet medical need for patients who have no other "relatively safer" alternatives, products like Ambien might not have made it to the market. If Pfizer informed the FDA that Lipitor, the world's biggest prescription drug, patients were reporting more side effects would the FDA require Pfizer to take it off the market in favor of other cholesterol lowering medications?

This is wrong direction for the FDA to take. Instead they should be working with the drug industry to continually educate and inform consumers about the risks of approved prescription drugs. They should not determine if other "safer alternatives" are available because under that guideline some supplements may work better than prescription drugs with less side effects thus the Rx should be taken off the market. Consumer have the power now and we don't need the FDA to limit the choices WE want to make in OUR treatments.

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Being first in the inhaled insulin market is not an advantage for Pfizer
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Could Pfizer have an expensive failure on their hands with Exubera, the first inhaled insulin? It seems like a lot of people think so including some Wall Street analysts who are revising the sales forecast for Exubera way down. Pfizer has changed the selling of Exubera from the pain management division to the CV division but what Pfizer hasn't learned that in order for a product to be adopted by the market it needs to be easy to use and convenient. Exubera unfortunately doesn't have any of these traits and companies like Lilly which have inhaled insulin in development are taking notes from Pfizer's mistakes.



According to an article in today's New York Times:


But Pfizer’s marketing may not be enough to overcome the medical, economic, practical and legal concerns that have hurt Exubera. In theory, the drug’s biggest advantage over standard injectable insulin is that it is more convenient and does not require needle pricks. In reality, though, the Exubera inhaler is bulky and can be hard to use, doctors say. The device is nearly as large as a tennis ball can when it is open, and must be repeatedly pumped before the insulin can be inhaled. Making matters worse, Exubera doses differ from those for standard insulin, and converting doses can be complicated, the doctors say. Also, insurers have been reluctant to pay for Exubera, which costs about $5 a day, compared with $2 to $3 a day for injectable insulin. In addition, the needles now used for conventional insulin injections are smaller and less painful than they once were. “Out of 2,000 times or more I’ve tried to start patients on insulin, I’ve only been turned down twice,” said Dr. John Buse, professor of medicine at the University of North Carolina.



Marketing 101: Ensure your product is easy to use and understand as compared to the competition. I'm not sure why Pfizer thought that the use of the product would not be an issue for diabetics who currently self inject. Then there is the use of consumer generated media. One person has stared a campaign via the Internet to warn people that inhaled insulin can damage lungs. Pfizer’s clinical trials show that the drug causes lung function to drop in some patients. Again Marketing 101: patients view side effects and make trade offs for product conveniences. Unfortunately Exubera doesn't seem to have advantages over injected insulin.

So now Pfizer is taking their message directly to consumers. Not a good move in my opinion. Physicians don't have the time to work with patients to explain treatment options or how to use prescription drugs. For patients who are used to small, less painful needles the answer might be to just keep on "doing what works" instead of using a new product that requires them to change their lifestyle.
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For those of you who haven't worked in pharma..
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I read a lot of BLOGS that have to do with pharma and DTC but in order to truly appreciate the problems of big pharma one has had to experience it first hand. the endless meetings, the micromanagement the throwback thinking and a culture that leaves dead weight in place while people who want to think outside the box move on to more challenging positions. Think this is wrong? Well let me tell you a story about my first years at Lilly....



When I first arrived at Eli lilly in Indianapolis I was given a booklet on leadership that was written by our CEO Sidney Taurel. I enjoyed reading the book and made the mistake of trying to embrace some of his principles including the need to "implement with speed". I know that speed is a competitive advantage and organizations have to review processes to streamline them so that they can in fact implement faster. What I found was resistance at every level of the organization and my manager even told me to "slow down" to allow people to catch up with me.


Then there was a forum that was help on DTC. While at this forum I was told by a Director that I had to learn more about DTC and I responded "DTC needs to learn more from consumer marketers" upon which there was a loud round of applause from the rest of the audience. When I worked on the Cialis launch team I observed first hand how data was manipulated to show the results that supported more money for television while leaving the Web behind. To this day the website has not changed since I left the company and they are still spending money on TV while the Web site suffers from neglect. By the way 85% of the visitors to our website the first year came from online ads and search engines not TV although I am sure that the two worked together to drive traffic.


Another accurate picture of working in pharma is the endless meetings. Death by meetings is a great way to characterize the atmosphere. Calendars are often booked for weeks at a time and God forbid you just stop bye someone's cube to talk over an idea? For vendors it's even worse with endless presentations and dollars used for trips to Indianapolis only to be told that we had decided to use someone else.


So could it get worse? Well yes....there are a great number of people who I know got promoted to Manager at Lilly that were promoted because of "who they know or how they act" rather than what they did for the company and the brand. This while very talented people continue to transition from careers to jobs and collect paychecks and go through just enough to survive. One author calls them the walking dead and there are a lot of them within pharma. A good leader can transform the WHOLE organization with a vision not just words but I am afraid that this doesn't happen much at big pharma. Companies like Amgen, which had and edge as a biotech company, are hiring more and more people from big pharma as they make the transition to execute by endless meetings and at a snails pace.


Think that this is not true? Ask anyone who works in pharma and chances are that you will hear the stories of long meetings and twisted data (400% ROI on a TV campaign for example). I still believe that out there there are some companies that believe they are in business to help their customers but it looks like that is getting harder to find. Maybe I'm an idealist or maybe I just believe that we can be successful by providing patients with the drugs they need to continue to lead productive lives.
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Should pharma get naked?
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There is a very interesting article in this months Wired Magazine. The cover story is "Get Naked and Rule The World" and it makes some really great points about corporate transparency in today's wired world where secrets are more increasingly coming out into the open. Should pharma embrace this philosophy and what are the potential ramifications for the industry and patients.




The philosophy behind getting naked is simple:

cover2Smart companies are sharing secrets with rivals, blogging about products in their pipeline, even admitting to their failures. The name of this new game is RADICAL TRANSPARENCY, and it's sweeping boardrooms across the nation. Even those Office drones at Dunder Mifflin get it. So strip down and learn how to have it all by baring it all.

What would this look like for the pharma industry and what can the companies do to become more transparent? Well for a starter pharma could update their product websites on a regular basis with the results from ongoing clinical trials. In fact there should be a page on every product.com website entitled "results from continuing clinical trials". Rather than report the scientific results however the results should contain a simple to read abstract so patients can understand the data. Is this risky? You bet but I would imagine that the litigation commercials for Zelnorm, now that it's been taken off the market, are only a few weeks away from airing.

Pharma needs to inform the public that even though the FDA has approved a drug that continuing clinical trials may indicate that there are other side effects and risks. Might this scare people away? Hell yes but transparency is a philosophy that in the long run can enhance a brand or company.

New products are often talked about at investor meetings but unless consumers are willing to dig real deep it's hard to find within a companies website. Yes pharma is restricted in what it can say (claim) about new products but allowing the public access to the initial data can lead to customers becoming working partners. Before we received approval on Cialis in the US for example there were a number of websites talking about the new products benefits among men with ED. Just look at all the insights that are surfacing on the Internet about political frontrunners Rudy Gulianni and Barrak Obama.

Every manager needs to learn how to manage risk but the CEO and senior managers need to set the trends of what is acceptable risk and what is not acceptable risk. Pharma needs to start opening up more to customers and especially the media who has been extremely critical of the industry. It's time to understand that secrecy is dead and the sooner that pharma understands this the sooner they will be able to become better companies that are customer focused.
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So how is pharma doing compared to the S&P 500 ?
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Some pharma companies have actually managed to out perform the S&P 500 but it probably wouldn't surprise you to learn that the majority of companies are not doing so well while their CEO's pull down big bucks.



Let's start with Eli Lilly & Company. Sidney Taurel pulled down a total package worth more than $15 million yet look at Lilly's performance vs. the S&P 500.....


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Lilly has never recovered from the loss of patent on Prozac and now Zyprexa sales have reached a peak.




Pretty dismal ha ? If this is a scorecard for the CEO's performance then I think it's a pretty sad shape of things overall. The stock options that I received at Lilly over 7 years ago are worthless and Lilly has never recovered from the loss of patent on Prozac (the contingency plan was called Year-X and was not strategic at all) and now Zyprexa's days as a blockbuster are numbered.


What about Pfizer? Surely a company that markets Viagra and Lipitor can beat the S&P ! Think again... The recent clinical trial setback for their new cholesterol drug and generic competition looming for Zoloft and Lipitor have hurt the pharma giant while Jeffery Kindler pulled down a compensation package of more than $9 million.




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Pfizer's performance has been dismal



Amgen is another company, that until recently, had been doing very well. The recent coverage of Aranesp has really hurt their performance and the FDA has informed Amgen to halt all DTC advertising (they weren't doing any ?). Kevin Sharer the CEO of Amgen had a lot of money to play with for the high cost of living in California. His package was over $24 million !

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Amgen has really been hurt by the recent Aranesp problems



There have been some companies that have managed to do well against the S&P 500. Wyeth, whose CEO made a whopping $32.9 million was one of those companies. However, one has to ask if a compensation package over $32 million is worth this performance?

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Wyeth has had some bumps in the road but is performing well.


Kudos go to Mr Cornelius of BMS. His compensation was more reasonable in all this madness at only $1.5 million. I can tell you that in New Jersey that's a good salary but not one that could let you live as a king. It all comes down to a philosophy of shareholders and the board:


"Are we here to please Wall Street and increase shareholder value? Or are we here to provide patients with medicine that can extend lives and ensure that we live a better quality of life?"


I for one believe that there is too much focus on trying to keep Wall Street happy and not enough focus on people. These two philosophies can coexist but it requires someone with foresight and vision to lead the charge. You would think for the money these guys are pulling down they could at least try and lead...

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CEO compensation out of control
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What if I told you that the average compensation for the top 8 pharma companies CEO's is $18.3 million? Upset? You should be ! At a time when the pharmaceutical industry is desperately looking for a leader to step forward it's amazing that these gentlemen can pull down this type of money. An average compensation of $18 million is more that 146 times higher than someone making $125,000...146 times !! I don't get it and frankly it's time for shareholders and employees to look at the compensation of these people and ask "are they really worth that" and "am I really worth 150% less then they are making?"


It's not easy to be a CEO of any big company today. There are always people who are second guessing what you do and Wall Street can be relentless in its pursuit of earnings. But how many people who are senior level managers would gladly take on the challenge of leading a major company for a lot less money? My guess is there would be a lot of volunteers.

What are the qualities needed to be an effective pharma CEO? Here is a list of some attributes I believe every CEO needs to be successful:

-Lead don't follow: Set a clear direction for your company and don't bow to pressure from the outside. Strategic direction is an important framework for the health of the company.

-Listening: Listen to the life's blood of your company; your employees. Listen to what they are saying and implement changes to allow them to succeed.

-Implement with speed: Pharma is moving at 20 mph while customers are moving at 100 mph. Pharma has a huge competitive disadvantage here.

-Be a great salesperson: sell your ideas to your senior managers, ensure they understand and get rid of the ones that are resistant to change. Sell your vision to Wall Street and to the Board. Make sure they are willing to support your decisions.

-Be a marketing driven organization: The days of the big pharma sales force are coming to an end. Physicians don't trust pharma messages and consumers are taking control of their healthcare decisions. This all means that you had better learn to change your business model from a sales driven company to a marketing driven company quickly.

-Embrace the Long Tail: Blockbusters are going to be few and far between. Diversify your portfolio to include a lot more products that produce sales of $200-$700 million rather than one product that may account for a big part of your revenue.

-Prepare for coming storm: Lead your company through the coming storm that is being generated by the media and Congress. Have plans in place to so that they can be executed at a moments notice.

-Mingle: Sit down with your employees at the cafeteria. Talk to them, listen to them, get them to open up.

Sounds simple but it's not. There are way too many CEO's who sit in their big offices and have a "town hall" meeting with employees and believe that is all they need to do. When I was at Lilly I tried to follow Sidey Taurel's book on leadership and ran into brick walls again and again. If your vision is not communicated and enforced at every level of the organization your spitting into the wind. It's time for changes in compensation and a new face for pharma CEO's to emerge.

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Once again the Times has pharma in the crosshairs
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“When honest human beings have a vested stake in seeing the world in a particular way, they’re incapable of objectivity and independence,” said Max H. Bazerman, a professor at Harvard Business School. “A doctor who represents a pharmaceutical company will tend to see the data in a slightly more positive light and as a result will overprescribe that company’s drugs.” Such is a quote from a front page story in todays NY Times. I guess the Times would have us believe that physicians would gladly give talks and attend events without compensation. Now who is naive?


I have worked with a lot of physicians and I can tell you that for most of them unless there is some type of compensation for their time they don't want to get involved. Take online detailing for example, most research clearly shows that a majority of physicians will only participate in online detailing if there is some type of compensation involved. When we don't offer compensation the response rates are minimal.

Is the article one sided? Well look at this quote...

“Drug companies are like lions,” Dr. Grimm said of his sponsored talks. “For lions, it’s their nature to kill zebras and eat them. For drug companies, it’s their nature to make money. They’re not really trying to improve anybody’s health except if it makes them money.



So according to the NY Times they are to ask doctors to speak on their behalf about medications for no compensation. Drug companies have already stopped the practice of spending sprees on lavish resorts but the truth of the matter is that physicians want to hear from other physicians. Can they be impartial when they receive payments from pharma companies? My guess is no but don't you think that they have to believe in a product to pitch it or does the Times believe that all physicians are for sale?

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A prescription for bias
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From one of my readers comes a report from the Business and Media Institute that confirms what a lot of us in the business already know: the media is bias against the pharmaceutical industry. However what puzzles this author is why the pharma industry seems to have chosen a strategy that involves retreat? Are industry leaders so afraid of the environment that don't want to make waves or are they more focused on pleasing Wall Street than helping patients?


Among the key findings of the report:


Industry Ignored: While covering everything from medical “controversies” to breakthroughs, nearly 80 percent of the stories excluded the viewpoint of the pharmaceutical industry, failing to include either a company statement or a company spokesman.


Media Overemphasize Cost to Consumer: The broadcast networks mentioned costs to consumers or drug company revenues 11 times more often than they mentioned drug development costs.


Networks Leave Companies Unnoticed: Only 22 percent of the stories even named the company that developed the drug or drugs featured in the story.


What Development Costs?: A mere 2 percent of stories dealt with the cost of developing drugs, and even those costs were downplayed by industry skeptics.


Special Treatment for Left-Wing Causes: Nineteen stories focused on drugs that were popular liberal causes such as the morning-after pill or HPV vaccine Gardasil. The networks didn’t apply the same scrutiny to those drugs and their makers as they did to others.


Surprised? You shouldn't be. What should surprise you is that the pharmaceutical companies will spend millions of dollars and thousands of man-hours to research positioning statements or DTC messaging but when it comes to communicating the challenges the industry faces to the general public the lack of noise if deafening. How many millions of people are leading better quality lives because of prescription medications? How many people are adding years to their lives because of prescription medications? A diagnosis of HIV is no longer a death sentence. People who have cancer are living longer and beating back this horrid disease because of the prescription drug industry. Yet papers like the New York Times continue to report one sided stories which is scary because too many people believe what they read without challenging information.

Again I believe that a leader needs to emerge from the pharmaceutical industry to state the facts and defend the industry. He, or she, needs to remind people within the industry that we are here to benefit patients and to never lose sight of that. But more importantly this leader needs to tell the instant gratification people on Wall Street that the industry will continue to devote resources to new product development and if short term profits could take a hit at the expense of strategic or long term company health. Help Wanted ...now !


For copies of the report send me an
email
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Of course you know this means war !
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Well it's started..this week the Justice Department has issued subpoenas to J&J for marketing related to three drugs, Amgen & J&J had to put black box warnings on anemia drugs because physicians were using the drugs off-label and a jury has overturned an award in a Vioxx litigation. It's time for the pharma industry to circle the wagons but what is missing is the one leader who can step forward and remind us how many people are living longer and healthier lives thanks to the drugs that are on the market today.


There is a fine line between cooperating with the FDA and tucking your tail between your legs and kissing someone's ass. If the FDA mandated that CEO's wear clown suits I believe they would comply ! The battles looming with the FDA are all politically motivated and the new head of the FDA has shown that he is going to play along with Congress and do whatever is necessary to get in their good graces even if, in the long run, patients are hurt. Make no mistake about it patients will be hurt. Amgen alone lost $18 billion in market capitalization when the black box warning was issued. That means less money to investigate new drugs and less products in development.

There have been accusations that the FDA is too cozy with big pharma. I frankly don't buy that for a second. The FDA is understaffed and overworked and has to rely on a good relationship with pharmaceutical companies to streamline work loads. Drugs that may have received approval through the normal NDA process are now being held up because the FDA wants "more clinical studies". Most pharma companies work with the FDA while a drug is in development to ensure that protocols and studies are set up correctly. The problem is that once the data is submitted via a NDA the FDA can use subjective criteria and tell the company that it now wants more studies. The pharma economics of this long process means higher development costs, less revenue and will lead to higher drug costs across the board.

Rather than point fingers it's time for pharmaceutical companies to ban together and come up with a plan to better work with the FDA, Congress and the media. Lobbyists are not the answer pharma needs to remind everyone of the value they provide to society in the form of better health and lower health care costs. Pharma will spend billions on DTC message development but not one leader will step forward and reach out to other industry leaders with a plan that clearly addresses the challenges facing the pharma industry today. Help wanted....
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The FDA overeacts to anemia drugs and issues black box warnings
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According to an article in August of 2006, the Annals of Internal Medicine "Off-label use is the common practice of prescribing a drug for an indication other than those approved by the FDA. The physician rationale for prescribing off-label is often based on the lack of FDA-approved effective treatments, reports of clinical effectiveness for the off-label use, or both. A recent study confirms that off-label prescribing continues in earnest, with 21% of drugs listed in a data set being prescribed for off-label uses, most with little scientific evidence of efficacy. One then has to wonder why the FDA issued a sweeping safety warning about heart and cancer risks that arise from overuse of a family of anemia treatments that is the biotech industry's biggest drug class with $7.3 billion in U.S. sales in 2