The Painful Effects of Healthcare Reform

I last wrote a couple of weeks ago about Obama’s vision of comparative effectiveness and the healthcare reform bill.  Since that report, the end of April saw a raft of first quarter financial results issued by pharmaceutical manufacturers.  Whilst some reported fairly buoyant figures, these were offset by one common theme; the emerging financial impact of this landmark change in US legislation.

Over time, the healthcare reform bill is expected to have a positive impact on the pharmaceutical companies, as the coverage of health insurance increases across the US population, thus increasing demand for their products.  However, this is not expected to come on-stream until at least 2014.

Although the healthcare reform bill was only passed at the end of March many pharmaceutical companies have revised their 2010 financial outlook downwards – and the blame has been firmly placed on the doorstep of the new legislation.

Lilly, as an example, ranked 11 amongst the pharmaceuticals in terms of turnover in 2009, reported “as a result of the new legislation, Lilly will incur substantial costs” in their 2010 1st quarter earnings reports.  Lilly expect these “substantial costs” to be in excess of $435 million during 2010 – which represents approximately 2% of 2009 turnover.  The company expects this negative impact to worsen to between $600m – $700m in 2011 – highlighting the further pain to come.

Another large US based pharma, Merck, anticipates that healthcare reform will adversely impact 2010 revenues by $170 million, rising to $300 – 350 million in 2011.

The world’s largest pharmaceutical company, Johnson & Johnson, estimates that the impact from the legislation will reduce sales by $400 – $500 million for the year, which represents less than 1% of 2009 turnover. Due to Johnson & Johnson’s diversified nature of the business, the impact is not as significant as in some of its competitors.

Whilst these three businesses reflect what is happening in the larger manufacturers, it demonstrates what is happening across the pharmaceutical industry.  The large companies appear to be able to accommodate the loss in revenue, but how the smaller companies will cope with the reduction in revenue remains to be seen.

At the heart of the healthcare reform bill lies Obama’s vision of the role comparative effectiveness will play in sculpting the landscape of the future healthcare markets.

The financial losses discussed in this article clearly demonstrate the critical importance of comparative effectiveness across the board.  This concept is not something that can be dismissed and swept under the carpet!  All players in the healthcare industry – whether they be the drug suppliers, the healthcare providers or the insurers – must have a firm grasp on the basic concepts and language of comparative effectiveness as it WILL influence every pricing, marketing and purchasing decision the company makes.  And it is not enough that only a selected few individuals within businesses hold this knowledge, cross-company training is vital.

Kinza Sutton

Help your colleagues understand the basic concepts of comparative effectivness with Rx’s quick and easy to read booklet Introduction to Comparative Effectiveness and Evidence Based medicine. Visit Amazon to buy online today.

Will that be hollandaise with your egg, or a side of vaccine?

The second wave of the H1N1 flu sweeping the world is now officially classified by the WHO as a pandemic. Its second coming has sensitized the medical community, governments, and to a lesser extent, the general public to the real and perceived limitations of rapid responses by vaccine manufacturers to a worldwide public health crisis. It gets more confusing when the ‘experts’ on television discuss vaccine manufacturing, almost always accompanied by a roving health or medical correspondent who interviews a technician at a vaccine production facility. In the background are numerous staff wearing ‘bunny suits’ and hair nets, pushing around rack upon rack of chicken eggs. While some consumers may be worried more about the shortage of eggs for their breakfast than the vaccine shortage, these images in the context of a worldwide pandemic cause many to ask, what is the difference between a vaccine and a drug?

There is a simple and fundamental physical distinction between vaccines and drugs that has implications for discovery, development, manufacturing, and clinical testing of both products: drugs are synthetic, chemical entities and vaccines are protein products, analogous to eggs and milk (ie, they ‘go bad’ if they are not properly handled). In clinical use, there is also a relevant distinction between vaccines and drugs. For example, people with hypertension will take drugs (an ACE inhibitor, calcium-channel blocker, or diuretic) for the rest of their lives, but the hypertension will be neither prevented nor cured, just controlled. However, to obtain protection from a viral infection such as polio, smallpox, or hepatitis, one or two vaccinations will confer, in most instances, life-long protection. As an example, the rate of acute viral hepatitis B infections has dropped 88% from 1982 to 2006 because of vaccination, while smallpox has been totally eradicated due to vaccination.

Manufacturing processes are a point of significant departure between vaccines and drugs. For many drugs classes (eg, statins to control cholesterol or triptans for treating migraines), there may be several drugs with subtle but patentable differences; each of them generally represents one structurally-related class of synthetic organic compound for each therapeutic indication. On the other hand, since Jenner developed the first vaccine in 1796, we now have at least 8 different key vaccine forms:

• Toxoid
• Live-attenuated (recombinant; killed, metabolically active)
• Virus-like particles
• Inactivated
• Subunit (purified or recombinant)
• DNA
• Vector
• Prime-boost combinations

These 8 different vaccine forms each require their own unique method of vaccine manufacturing. And, while a vaccine might start out in cell culture or fermentation, the downstream processes can be as varied as the 8 different forms noted above. The combinatorial explosion of downstream processes necessary to produce a vaccine compared to a drug is best illustrated by the comparison of drug and vaccine/biologics key properties (Table 1).

Table 1. Physical differences between vaccines and drugs

As one can see, the differences between vaccines and drugs are rather profound, especially when comparing their physical properties. As noted above, a drug is a synthetic, organic chemical; a vaccine is extracted from living organisms, processed further, and becomes a very complex substance(s). Most vaccines in the USA, especially vaccines for influenza (seasonal and H1N1), are started in cell cultures and then grown in tiny incubators: chicken eggs. This slow and labor-intensive process has not changed in over 4 decades. As there is a long history for this production process, regulatory agencies such as the FDA are hesitant to switch manufacturing processes until product safety can be established for any new process, such as cell-based methodology. Demonstrating product safety takes time, but so does producing vaccines using chicken eggs — typically many months. A more recent concern with chicken-egg incubators – which did not exist a decade ago — is the consequence of avian flu re-emerging on a large scale, which might kill significant numbers of the chickens that produce the eggs used in vaccine production: no eggs, no vaccines.

Furthermore, these physical differences between vaccines and drugs lead to further differences in preclinical clinical studies – differences in the body’s reaction to the vaccine and the way the vaccine induces an immunogenic response. Because a vaccine is not a synthetic chemical, even preclinical evaluation methods are still a ‘work in progress’ with many unknowns regarding biological responses to new vaccinology modalities, such as subunit-, recombinant-, and vector-based agents.

There are some not-so-subtle differences among vaccines that must be taken into consideration when evaluating vaccines preclinically and clinically (Table 2).

Table 2. Clinical differences between vaccines and drugs.

All of the above drug characteristics lend themselves to being quantified rather easily and quickly by an analytical chemist. For example, there may be more than one way to attach methyl groups to a chemical structure but NMR can tell you exactly where it is attached and the body will respond the same way each time. Even if that synthetic process is changed to optimize it or improve the product yield, the end product will be the same. It has to be, because the end product has been patented and part of the patent process is showing how the drug was made. In addition, part of the regulatory burden is showing that the process is reproducible.

However, in vaccine production, if the method of cell culture is changed or an extra downstream filtration, chromatography, or centrifugation step during purification is added, the complex physicochemical structure of the final product may change. Thus, the bottom line for vaccines is that the process defines the product. Change the process and the product might be changed, which could change its immunogenicity, which can significantly affect what degree of protection to the disease the patient receives. Considering all of the above differences and the limited similarities between vaccines and drugs, the conundrum the vaccine industry faces at every stage of development becomes apparent. Speedier vaccine production would be nice, but quality and the expected immunogenic response cannot be sacrificed. Change is difficult and the processes, even modern ones for new vaccines, are fraught with sometimes more art than science. So, will that be hollandaise with your soft-boiled egg, sir, or a side of hepatitis A vaccine?

Access to medicines: Ranking the social responsibility of pharmaceutical companies

Pharmaceutical companies produce hundreds of life-saving drugs every year. Yet each year, millions of people in developing countries die from preventable and treatable illnesses – diseases such as HIV/AIDS, malaria and tuberculosis – because they can’t afford to buy the drugs they need.

In an era when businesses are scrambling to prove their corporate citizenship credentials, big pharma could be playing a key role in bridging that gap. Indeed, one of the United Nation’s Millennium Development Goals specifically calls on the cooperation of drug companies to ensure that developing countries have access to essential drugs at an affordable price.

But how well do pharmaceutical companies actually measure up when it comes to helping the world’s poorest citizens? Thanks to the Netherlands-based Access to Medicine Index, that information is now just a click away.

Launched in June 2008 by the Access to Medicine Foundation, an independently-funded non-profit organisation, the index assesses 20 of the world’s largest drug companies based on criteria ranging from equitable pricing to research and development into neglected diseases. Its goals: to engage the pharmaceutical industry in improving global access to medicine and to give socially conscious investors an impartial assessment of how well individual companies currently perform.

According to the inaugural index, their efforts vary widely. While GlaxoSmithKline topped the list with 4.5 out of a possible score of 5.0, followed closely by Novo Nordisk, Merck & Co., Novartis, and Sanofi-Aventis, the lowest-ranked company garnered a mere 1.3.

As well as scoring companies, the index highlighted a number of best practices, such as Sanofi-Aventis’s decision not to patent the anti-malarial ASAQ, Merck & Co.’s tiered pricing policy for HIV drugs based on the UN Human Development Index and HIV/AIDS infection rates, and the Wyeth/WHO collaboration on river blindness drugs.

“The Access to Medicine Index finds good practices within individual companies and holds them up as a shining example to others,” says Index founder Wim Leereveld.

The foundation consulted extensively with government, researchers, NGOs, and the pharmaceutical industry to develop assessment protocols. Drawing on a variety of data, it ranked companies on a total of 28 indicators, grouped into 8 main criteria:

• Access to medicines management
• Public policy influence and lobbying
• Research and development into neglected diseases
• Patents and licensing
• Drug manufacturing, distribution, and capability advancement
• Equitable pricing
• Drug donations
• Philanthropic activities

Companies had an opportunity to verify the accuracy of the information, and a draft of the report was reviewed by independent experts.

To date, the index has attracted substantial media attention along with kudos from Microsoft Chairman Bill Gates, World Bank Executive Director Herman Wijffels, and UN High Commissioner for Human Rights Mary Robinson.

Perhaps most significantly, 12 major global investors, together representing more than $US 1.2 trillion in assets, have formally acknowledged the index as a tool to improve transparency and assess the long-term value of pharmaceutical companies.

The Access to Medicine Foundation plans to issue the rankings annually and expand them to include more companies in 2009.

How sick are you? It depends on what the definition of ‘sick’ is…

The publication several years ago of Selling Sickness: How the World’s Biggest Pharmaceutical Companies are Turning Us All into Patients by Ray Moynihan and Alan Cassels has brought the concept of disease-mongering into a global debate, and has introduced (or reintroduced) terms such as “medicalisation” and “lifestyle drugs” into today’s lexicon.

An entire issue of PLoS Medicine was devoted to the topic in 2006. The first international conference on disease-mongering took place in 2006 in Newcastle, Australia. Disease-mongering even has its own Wikipedia page.

Moynihan and colleagues define disease-mongering as “widening the boundaries of treatable illness to expand markets for those who sell and deliver treatments”. It “turns healthy people into patients, causes iatrogenic harm, and wastes precious resources”. In short, disease-mongering is purported to make us believe we are sick (or more sick than we really are) so that we will buy more drugs to cure what ails us (or at least make us happier). Iona Heath, MD* has said it exploits our deepest atavistic fears of suffering and death.

Those who say that pharmaceutical companies promote disease-mongering point to the recent upsurge in diagnoses and treatments for numerous conditions (see right) , asking whether some of these are even real conditions, or whether the stated prevalence is as broad as commonly stated by both medical professionals and the media.

In fact, disease-mongering proponents lay the blame for this alleged deception on several participants with Pharma affiliations: medical professionals (who are duped by Pharma via pharma-sponsored continuing education, especially in the United States), patient advocacy groups (also influenced by Pharma sponsorship to further their cause by “raising disease awareness”), and the mass media (who have a propensity to exaggerate a problem to sell their product and rely on lazy journalism in which facts such as prevalence statistics are never questioned).

In fact, as Drs Steven Woloshin and Lisa M. Schwartz* note, disease-mongering stories have all the ingredients for what is considered “good journalism”: compelling personal anecdotes, public health crises, uncaring or ignorant doctors, and miracle cures. Much like the field of pharmacoeconomics, the pursuit of disease-mongering involves multiple disciplines (beyond medical science and economics) such as public health policy, sociology, psychology, anthropology, and patient advocacy.

The idea of questioning the diagnosis of conditions such as bipolar disorders, menopause, or erectile dysfunction (ED) is sure to ruffle some feathers. While the symptoms of menopause or ED may be a “troublesome inconvenience” for some, they can be debilitating and/or terribly embarrassing for others, affecting long-term personal relationships and self-esteem.

Is it disease mongering? NO

We live in an era in which each generation has lived longer and better than the preceding one. We expect the most out of quantity and quality of life, simply because it is possible. Is that wrong?

Second, let’s be honest – Pharma products are addressing consumer needs, not medical science. Push-pull marketing has been around for ages, long before direct-to-consumer advertising. However, the danger is that Pharma is one of the few industries where profit-making activities have ethical overtones.

Third, the search for a biologic basis of disease and a reconsideration of what is normal has also led to some conditions being de medicalised, such as homosexuality.

Fourth, disease-mongering is not universally defined. Moynihan admits that the first step to studying possible disease-mongering is to create an operational definition.

Is it disease mongering? YES

The availability of so many pills and potions to address every ache, pain, and risk factor (which is treated as a disease state) runs the risk of removing the patient’s responsibility for any lifestyle changes that would help to address the condition. The impetus to reduce risk factor exposure (such as stress, tobacco smoke) is removed so the condition may be treated but the underlying potential causes remain. And, as noted by Iona Heath, MD, the irony is that such profit-driven practices of Pharma marketing “poisons the present in the name of a better, or at least a longer, future”.

Note also the increasingly stringent definitions of what are considered to be optimal measures of health, for example blood pressure, cholesterol, and weight. Achieving these levels through diet and exercise alone may be possible only for the truly devoted, but “we do happen to have a pill that will reduce your______”.

As discussed by Dr Olavo B. Amaral**, the struggle over disease-mongering may force us (ie, those involved directly or indirectly in the practice of medicine and medical consumers) to consider diseases as spectra rather than binary states (i.e., sick or well), and patients can decide, by working with their physicians, if they are sick enough for treatment and whether the treatment is worth the risk of the adverse events.

*Drs Heath, Woloshin, and Schwartz were authors of two of the articles from the PLoS Medicine issue on disease-mongering. Dr Heath is a general practitioner in London , UK . Drs Woloshin and Schwartz are at the Veterans Affairs Outcomes Group in Vermont , USA , and the Center for the Evaluative Clinical Sciences at Dartmouth Medical School , New Hampshire , USA .

**In a Letter to the Editor in PLoS Medicine.

Association of American Medical Colleges issues task force report on industry funding of medical education

The Association of American Medical Colleges (AAMC) recently issued a 43-page report of its task force on industry funding of medical education. Sections of the report deal with site access by pharmaceutical company representatives.

Specifically, the report states that “to protect patients, patient care areas, and work schedules, access by pharmaceutical representatives to individual physicians should be restricted to non-patient care areas and nonpublic areas… and should take place only by appointment with or invitation of the physician.”

The report goes on to state that highly trained industry reps with a PhD, MD,or PharmD are best suited for conveying science and pharmaceutical information in academic medical centres… and that this also should be by invitation only.

Moreover, industry-supplied food or meals are to be considered personal gifts and will not be permitted; and travel funds, other than for contractual services or legitimate reimbursement are not allowed. Finally, on the subject of drug samples, the report states that these may be of some benefit… but that physicians may run the risk of conflict of interest if they are seen to profit from recommending certain products.

Of course, these proscriptions are not new. The pharmaceutical industry and its watchdog organisation the Pharmaceutical Research and Manufacturers Association (PhRMA) have tried to curb the excesses of trinkets and junkets being offered as blandishments to the medical profession. In fact, PhRMA recently issued a new ‘Code on Interactions with Healthcare Professionals‘ that bans giveaways like pens, notepads and coffee cups with company logos, and meals in restaurants. The code also calls for caps on how much companies can pay physicians for speaking engagements. While firms such as Pfizer, J & J, Eli Lilly and GSK have unanimously endorsed the code, the Wall Street Journal suggests that some critics claim that it will do little to curb industry influence on doctors. But the AAMC task force report appears to put some teeth in the rulings.

So, are there ways to get around these new rules? Well, Health Outcomes Communicator ( HOC ) was among the first to call attention to alternative ways by which pharmaceutical companies can reach physicians. In an article in the December 2007 issue of HOC titled “A new way for pharmaceutical companies and prescribers to interact,” we published an interview with the founder and CEO of Sermo, Dr Daniel Palestrant. Sermo, he told us, is an internet-based social networking site for physicians. Pfizer, which had laid off 20% of its US and European sales teams, quickly saw Sermo as a way to communicate with doctors online and provide them with drug and disease information. Sermo, said Palestrant, provides the technology to change the way industry and the medical profession talk to each other.

HOC , as its lead page proclaims each issue, is not only about ‘information and ideas for health economists;’ it’s also about being at the cutting edge of both.

The Pharmaceutical industry: Some good news to tell, but not always told well

The pharmaceutical industry is too often blamed for the stratospheric costs of healthcare — particularly in the United States. Yet, according to a series of surveys conducted by USA Today, the Kaiser Family Foundation, and the Harvard School of Public Health, pharmaceutical products account for only about 10% of the total spent on healthcare in the US.

There was further good news of sorts for the industry. Of the 1695 people surveyed, slightly more than half believed that prescription drugs developed over the past 20 years have made life better; and a similar proportion of respondents felt that drug advertising is mostly a good thing, with two thirds saying such advertising helps to educate people. Again, asked whether prescription drugs reduce the need for expensive medical procedures and hospitalization, the answer was a 59% affirmative.

Continuing on a positive note, 80% of respondents said that they trust drug companies to develop new and effective products; 72% said those companies offer reliable information about side effects and safety, while 55% believe that the industry informed the public quickly of a safety concern.

So much for the good news. Among the negative views were a whopping 79% who maintain that the cost of prescription drugs is unreasonable. Strangely enough, in light of the percentage of healthcare costs attributable to pharmaceuticals, another 79% believed that drug company profits contribute to the price of prescription drugs, with 74% saying that that was too much… and more than half of respondents claiming that those companies spend too much on marketing to doctors, and to patients.

The pharmaceutical industry has clearly done much to alleviate pain and suffering: antibiotics, analgesics, antivirals, and antihistamines, just to deal with the ‘a’s. Yet it continues to be the whipping boy of present and aspiring politicians, and segments of the press. This, I believe, has much to do with the way in which pharmaceutical companies tell their story. Sometimes, their public relations are handled with brilliance. An example was the way in which McNeil Pharmaceuticals, a subsidiary of Johnson & Johnson, handled the tainted Tylenol© episode … pulling every last package of the product off the shelves in addition to being very open and transparent about their ongoing investigations into the incident. But mostly, the industry’s public stance might be seen as reactive and sometimes even secretive.

During my tenure at the Canadian Medical Association Journal I wrote lengthy articles about several pharmaceutical companies, visiting their facilities in Switzerland, Germany, Austria, the United Kingdom, and the United States. What I found, in interviewing scores of their researchers and executives, were dedication, enthusiasm, and commitment to enhancing the health and well-being of patients. That’s the kind of positive image the industry needs to project by opening a window to its activities for medical journal writers and the public press; by transparency leading to greater awareness.

That will go a long way towards dealing with the adverse reactions and side effects that too often mask the good that the industry does.

Pros and cons of direct-to-consumer advertising

Obnoxious, annoying, Big Pharma strikes again – these are just some of the sentiments heard when encountering a direct-to-consumer (DTC) advertisement, the myriad commercials on radio or television, or adverts in magazines, newspapers, or on the internet, promoting prescription drugs to consumers. The pros and cons of DTC advertising have been bandied about since the inception of this marketing platform more than a decade ago. DTC advertising is currently permitted only in the United States and New Zealand, but Canada and/or Europe may follow suit as pressure to allow this form of advertising increases.

Arguments against DTC advertising are familiar – it increases the cost of medications, it has created a society of hypochondriacs, it reinforces that “quick fix” so many in modern society seek, instead of the lifestyle changes necessary to address some diseases, and it reinforces the sinister concept of Big Pharma.

The arguments in favour of DTC advertising are less well known, but still important to consider. First, DTC advertising helps to make patients aware of their treatment options, such as new drugs for a particular disease, and the potential side effects of taking the drug. DTC adverts also help to destigmatise and raise awareness of certain disorders, prompting patients to seek medical attention when they might not have otherwise. In short, patients become more motivated to take control of their healthcare and become more active partners in the patient-doctor relationship.

The extent to which the pros outweigh the cons (or vice versa) has been argued in recent years, as long-term studies have followed the effects of DTC advertising – the percentage of marketing budgets spent on DTC advertising, the effect on the number of prescriptions written, surveys of physicians on the extent to which DTC has affected the doctor-patient relationship and prescribing habits, the spread of costs across healthcare delivery (eg, fewer hospitalisations with increased use of prescription drugs).

Supporters of DTC advertising are also facing criticism of poor oversight of the ads by the FDA. The recent decision by Pfizer to pull their Lipitor ads featuring Dr. Robert Jarvik only highlight such scepticism. (With pressure from the US Congress, the Jarvik Lipitor ads were deemed to be misleading, for several reasons: Dr. Jarvik is not a licensed physician, he is not a cardiologist, and some of his colleagues are debating whether he should receive sole credit for [or even be credited at all with] inventing the artificial heart.)

Although the ads may seem to be ubiquitous, the number and type of drugs advertised to consumers is small, and the ads focus on new drugs to treat chronic diseases and diseases for which patients can recognise the symptoms (eg, depression, dyslipidaemia, obesity, allergies, osteoporosis, arthritis, asthma, and diabetes). Also, DTC advertising still occupies a relatively small portion of marketing budgets for those drugs that are advertised. The New England Journal of Medicine reported that while spending on DTC advertising rose 330% between 1996 and 2005, it made up only 14% of total promotional expenditures in 2005. Advertising to doctors is still one of the biggest drivers in marketing budgets.

Ultimately, the effect of DTC advertising will depend on the individual patient – his interest in and capacity to understand his disease and the drug, including its benefits and risks.

The importance of the economic value message

The pharmaceutical industry faces the major issue of top selling drugs losing their patent protection, allowing generic products to replace them at much lower prices.

This leads not only to the restructuring of the larger pharmaceutical companies to mitigate financial losses, but the subsequent job losses lead to insecurity and to cutbacks in research, sales, and marketing efforts.

This means the important benefits of major drugs are communicated less – or less strongly – thus creating confusion about which drugs actually improve the overall quality of patient life.

Far too often, internal communication of a drug’s economic value fails at the first hurdle because sales and marketing departments don’t understand the economist’s message.

This can lead to a mixed message about the products and to misconceptions among consumers about what the best treatment is for them – a generic product or the more expensive brand-name one.

If pharmaceutical companies fail to communicate the key messages about cost-effectiveness, budget impact analysis, burden of disease and the quality of life, their branded products will have a shorter life cycle.

This could allow those products to be totally outpaced by cheaper mass generics that may not necessarily provide the most effective therapeutic outcomes.

Is big pharma becoming big biotech?

Recent reports in the Wall Street Journal and The Economist describe an imminent seismic shift in business models for pharmaceutical companies, as current blockbuster drugs are set to go off-patent and a rapidly dwindling pipeline of new drugs are under development or are being reviewed for approval.

The result? Big Pharma may become Big Biotech (or Big Biopharma, as it now refers to itself) as the focus shifts to protein-based biotech products from chemical-based pharma products.

Pfizer, Inc. recently announced the closure of its Ann Arbor, Michigan (USA) laboratories, laying off 2100 employees. Pfizer also announced it will eliminate 10,000 jobs by the end of 2008. But they are not alone. In 2007, Astra-Zeneca reduced employee counts by 7600 and Bristol-Myers Squibb by 4350. Other big pharma companies have reduced their workforces in recent years as well.

Pharma companies appear to be shifting business models, from chemistry-based research for new drugs, to biologics-based research for new treatments using biotechnology. In fact, Pfizer opened a new biologics center in San Francisco in October 2007, and many of the major drug companies have acquired biotechnology companies in the last two years (see table).

Highlights of recent biotech acquisitions by pharma companies

In addition, both Wyeth and Eli-Lilly have entered into collaboration agreements with biotechnology companies.

Why such a dramatic shift?

More than three dozen drugs will lose patent protection over the next four years. Moreover, the WSJ reports that 43% fewer new chemical-based drugs have been brought to market between 2002 and 2006 compared with the 1990s, despite more than doubling the R&D spending.

This paucity of potential blockbuster drugs, along with advances in diagnostics and data technology (high through-put gene sequencing, genomics, and personal phenotyping), and changes in regulatory processes (particularly at the US Food and Drug Administration), have provided an opportunity for biotechnology to emerge, filling in the healthcare gaps where pharma has been unsuccessful or neglected, namely more acute diseases or those that specific sectors of the population.

How will this affect health economists? As noted by The Economist, cost-benefit analyses will become even more crucial as health care payers consider the long-term benefits of innovative (and expensive) new biologic agents. Consider the decision by Britain’s National Institute for Health and Clinical Excellence to approve the use of Hercepin, a targeted cancer drug with a cost of nearly $50,000 per year, per patient.

Related articles

A new way for pharmaceutical companies and prescribers to interact?

Call them Sermoans, Sermophiles, or just plain members, the 32,000 physicians enrolled in Sermo could be changing the way that pharmaceutical companies interact with healthcare professionals.

Certainly Pfizer thinks so. Having laid off 20% of its US and European sales teams last year, it recently linked up with Sermo – an internet-based social networking site for doctors which was founded in September 2006. Pfizer will work with Sermo to establish how drugmakers can communicate with physicians online and provide drug and disease information to them, and Sermo’s members will have a forum for seeking diagnostic advice from their peers.

Sermo’s founder and CEO, Dr Daniel Palestrant, said in an interview with HOC: “The concept is a simple one. I talked to my colleagues about clinical events and then read about them in the mainstream press weeks later.” Palestrant, a surgeon turned entrepreneur, wondered how these kinds of discussions could be captured and made available to all physicians.

Sermo faced three challenges, he said: what would motivate physicians to share the observations and conversations they made with colleagues? What would the business model be? How could credibility and confidentiality be ensured? Initially, the concept was supported by financial services companies, and government and research entities, and Dr. Palestrant was reluctant at first to involve the pharmaceutical industry. But then Sermo’s physician members themselves asked to be connected with that industry because much relevant and useful therapeutic data emanates from it. “And so,” he says, “we looked for a company that would work on our community’s terms.”

At a time when the pharmaceutical industry is finding it increasingly difficult to gain access to physicians, not just because of regulations that preclude providing them with meals and gifts… but because physicians themselves are more and more pressed for time, the timing may be right for new initiatives. So-called detailing, says Palestrant, “can be effective; but it’s expensive and contentious.” Doctors’ relationships with pharma have worsened in recent times, he believes, but each needs the other, and engagement is preferable to a standoff. Sermo, he says, provides the technology to change the way they talk to each other.

The company expects that other pharmaceutical companies will soon follow Pfizer’s lead, and has plans to expand its service into Europe.