Pharma’s Cutting Edge

In Open Access to Science Under Attack, Scientific American’s David Biello describes some of the PR efforts by scientific publishers who hope to extend their subscription-based business model.

Open access to most of the world’s peer-reviewed scientific research is an inevitability  Subscription-based access to the primary scientific literature is, quite simply, an anachronism of the print age; it’s dead–it just doesn’t know it yet.  The enterprises that will be hurt will be those that cannot or will not alter their business models to reflect the reality of our always-on, just-in-time, just-the way-I-want-it, hyperlinked society. 

For example, most scientific societies rely on both membership dues and journal subscriptions for support of their activities.  Should open access diminish their subscription bases, they will be forced to increase membership dues, curtail activities, or find alternative sources of revenues to survive.  For the most popular societies, the impact will be noticed, but they will find ways to survive.  For niche societies and their publications, survival will be a struggle, and many will undoubtedly perish as independent entities. 

Not surprsingly, the most powerful opponents of the open-access movement are the for-profit publishing houses.  The major for-profit scientific publishers by no means rely solely on scientific journals as a source of revenues; they are diversified businesses.  But journal subscriptions and advertisements remain an important source of revenues, and these firms will fight to maintain subscribers.

Why should Pharma get involved in the skirmishes that promise to get nastier as paid-access publishers fight for their survival?  There is no doubt that pharmaceutical researchers and marketing strategists rely heavily on the scientific literature to create and sell their products, and they pay dearly for the privilege.  But the relative cost of subscriptions and reproduction fees is small compared with the returns it generates.  As open access papers proliferate, and paid-access journals feel the squeeze, journal subscription costs might rise.  But I can’t imagine that most life-science are going to complain too loudly.  Based on cost considerations alone, Pharma should probably sit this fight out.

The real reason Pharma (and related industries) need to get behind open access is that open access will benefit the scientific enterprise generally, by increasing the pace of scientific discoveries.  A higher pace of discoveries means more fuel for industrial discovery, which means a faster rate of industrial innovations.

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If you don’t have a chance to view the slides or watch the videocast of yesterday’s Pfizer meeting outlining its plans for the near-future, you should check out BusinessWeek’s coverage of the analyst event for a nice summary.  One reason to pay attention: Pfizer is the world’s largest pharmaceutical firm, so their actions influence the entire industry.  A better reason: Mr. Kindler’s succintly summarized, coherent vision for Pfizer is a response to forces affecting all companies making innovative drugs, biological and small-molecule both.  Pfizer’s moves may be opening up windows of opportunity for other companies who’ve been waiting for it to blink, but eventually all companies of a certain size will be compelled to make similar changes in their operations and approach to the marketplace.  Small firms and their investors should take note too; it’s a seller’s market for your technology and is likely to remain so for the forseeable future.

Last week Byron Dorgan, Senator for North Dakota and colleagues, including Olympia Snowe, Republican from Maine submitted legislation to the U.S. Senate that would amend the Food, Drug and Cosmetic Act to provide for drug importation by non-manufacturing companies and individuals into the United States from registered exporters in other countries.  For individuals, importation would be limited to drugs originating from Canada, whereas registered institutional importers would be able to import drugs from Canada, Europe, Japan, Australia and New Zealand.  A companion bill was introduced into the House by Representatives Rahm Emanuel (D-IL) and Jo Ann Emerson (R-MO). 

The AARP promptly supported the bills, which are variants of very similar legislation that was first introduced into Congress in 2003 and re-introduced in 2004 and again in 2005.  Is the fourth time a charm?  Well, with a newly Democratic Congress it might be, although poltical pundits, which I do not claim to be, seem to believe that there will not be enough votes to avoid an assured veto by President Bush should the legislation make it to a vote and be passed by both houses. 

I know that pharmaceutical companies and FDA have both argued against such legislation, ostensibly because they believe such export/import will leave U.S. consumers with a drug supply tainted with counterfeit medicines.  The bill’s sponsors believe that they have adequately addressed such concerns in their legislation. 

I think manufacturers and FDA have a legitimate point.  I don’t believe that current technology and oversite resources, even if boosted by money flowing into FDA from fees collected from importers, will suffice to keep the supply of drugs on store shelves at the status quo level of quality.  My opinion is subject to change in the near-term, particularly if some clever technologies are deployed to tackle the tough problem of tracking medicines.  RFID was once portrayed as a panacea, but it is showing itself to be something less. 

In prinicple, however, I support legislation providing for regulated trade of medications across international borders.  Generally speaking, I favor relatively unimpeded international trade of nearly all manufactured goods and see no compelling reason to prevent cross-border trade of pharmaceuticals once a drug-supply equivalent to the U.S. status quo can be reasonably assured.

The $64,000 question pharma would like to have answered is:  What will happen to U.S. drug prices if this or similar legislation becomes the law of the land?  The Congressional Budget Office was asked in 2003 to make an estimate of cost savings to taxpayers, and they chose European parallel imports as the basis for making the estimate.  Of course, they had to lay all sorts of assumptions on top of the European analog to make it work as a basis, but it’s as good a basis as any, which is to say it’s not very good. 

The real problem with interpreting CBO’s estimated drug expenditure reductions of 0.5% for Years 1 and 2 post-implementation and 1% for the Years 3 through 9 is that their report doesn’t actually show how they arrived at their figures for expenditure savings.  Doh! 

Nevertheless, it’s clear that any savings to consumers will be modest.  Personally, I think consumers in the U.S. won’t save a dime, because other governments have no interest in creating a supply shortage in their homelands that could drive domestic drug prices upwards.  They’ll do what they must, including banning drug exports to the U.S. to avoid it.  The most popular drugs (i.e the most expensive drugs) will be banned from export first.  Limited export supply will drive up the prices exporters charge for all non-banned drugs.  Importers wil have no choice but to pass along these higher prices, owing to their already razor-thin margins, leaving wholesalers with a not-so-cheap supply, etc. 

Eventually, the bulk of the export-import business goes away, as everyone realizes that it’s not such a hot business to be in, leaving a handful of very efficient exporters and importers who survive but make almost no impact on consumer drug spending.  That is…I guess that’s what would happen.

So if I were advising PhRMA, I’d say fear not this legislation.  The marketplace efficiencies will reveal that higher drug prices in the U.S. are not primarily due to restricted importation.  But I’d also say, you’re not crazy for worrying about the quality of the U.S. drug supply.  Sure, coming out against the bill for whatever reason makes the industry look like a gang of lying, hypocritical profit-mongers, but hey, you should be used to that by now.  Fact is, importation as proposed could harm the U.S. drug supply.  Work behind the scenes to get that part of the bill fixed, then, as a wise doctor once said, stop worrying and learn to love the bomb. 

FDA is actively soliciting sellers of COTS (commercial off-the-shelf) adverse-event software to strut their stuff for FDA brass.  But software firms had better act quickly; this is a limited-time offer and demand has been strong (Actually I have no idea what the demand for this solicitation has been like, but it sounded good).  FDA has published a Market Research Reference Guide to aid presenters in their sales-pitch efforts.  What interests me about the the guide, though, is that it offers a few insights into FDA’s desires for AE-data tools. 

Overall, it looks like FDA is headed towards installation of a comprehensive AE data capture, translation, archiving, retrieval, analysis and reporting system.  Whether its able to find such a system in a single COTS package (highly doubtful) or it cobbles one together from a combination of COTS and custom packages (very likely) might affect the timing and cost of implementation, but we can only hope that it won’t affect the program’s apparent goals and eventual implementation. 

FDA has lagged behind regulators in some other countries in its ability to capture and analyze safety signals.  In part this has been due to lack of FDA leadership with the vision, skills, drive and authority to make the U.S. second to none as far as drug safety is concerned.  But FDA has also been hampered in its efforts by lack of funds to perform all of the types of safety surveillance work that could and should be done with the right technology and collaboration among data holders.  Getting the technology right is necessary first step that I’m glad to see FDA taking. 

Now that PDUFA 2007 negotiations have opened up the door for increased industry funding of FDA safety surveillance efforts, responsibility for upgrading FDA’s drug surveillance capabilities falls to a newly Democratic Congress to pony up its share of increased FDA funding for drug safety surveillance.  With enough money in FDA’s coffers, there will be no excuses for the U.S. to lag any nation in drug safety.   

I know how easy it is to feel down about this business of ours under the near-constant bombardment of salvos fired by critics who portray the pharmaceutical industry as little more than a profit machine; a machine run by greedy, unscrupulous, overpaid marketers (hucksters, really) who care as much about healing the sick and preventing disease as the sick and diseased care about them, which is to say not a whit.  Hell…this would be a generous portrayal next to some I’ve seen.

Perhaps you’ve begun to accept some of these criticisms at face value; after all there is no shortage of bad actors in this industry, as in every other.  “Maybe,” you’ve thought, “maybe the harshest of our critics are right, and I am just a pawn being played in some huge corporate swindle of our governments and the most vulnerable among us.”  If that’s really how you feel, I urge you to get out of this business and do something you can feel good about. 

But maybe you’re just feeling confused or ambivalent about some of the industry’s practices or about your own company’s actions.  I say…there’s nothing wrong with feeling confused or ambivalent in this climate; it’d be strange if you didn’t feel confused or ambivalent at times.  There’s nothing wrong with questioning your employer’s policies or practices, either because you don’t understand or you disagree with them.  If you get flak for raising what you consider to be important questions or for speaking your mind in an appropriate forum, something is wrong, and you should seek to redress it.

Your employer should understand that its employees are concerned about what they read and hear and want honest, candid dialog.  They don’t want to read their company’s position in a press release that includes some bullshit about the company standing by its actions at the same time it agrees to pay a half a billion dollars to settle a lawsuit that is “in the best interests” of everyone. Those press releases might satisfy Wall Street, but they don’t cut it as an internal corporate communication.  If you’re in a position to improve the way your employer communicates with its employees why not make that a priority in 2007?

What you have to really watch out for is cynicism and its cousin, apathy.  Once you start believing that your co-workers care about only themselves, or that your job has no real meaning beyond your paycheck and retirement plan, you’re done.  You’ll become miserable, you’ll stop caring about your work, and your performance will suffer noticeably.  In other words, your cynicism could cost you your job.  So, you have to stay positive.  That might be easier said than done, so here are a couple of ideas to help.

Find a pet project or skunks works.  If you’re feeling like your current project(s) lack importance, find a project that you can really believe in and that will benefit your employer.  Volunteer yourself and steal time away from your primary work if you must.  The time away from your “real” job will be offset by your improved productivity, because you’ll be feeling better about work generally.  Who knows, you might even be able to transfer full-time to a small project as it grows up.

Be a champion of a cause.  There are many opportunities to become involved in rewarding causes sponsored by your company.  Some of these are very visible, like United Way drives or community education outreach programs.  Others aren’t so obvious, so you might have to seek them out.  I think there are many unexploited opportunities for pharma to be more involved in positive and fruitful ways with the practices of medicine, nursing and pharmacy.  Why not figure out whether your personal interests could be applied to new ways for your employer to help advance medical care and its pharmaceutical business at the same time?  Once you have a good idea, bring it up the chain of budget authority and see if you can get funding for it.  Don’t give up if you get some early skeptical feedback.  Be persistent and build support for your idea.

Let’s hope all of us read more pharma success stories and fewer scandals in 2007, but let’s also remember that each of us has a role to play in making our industry the envy of all others.  Good luck this year.