Pharmaceutical Outsourcing: Trading Quality for Lower Costs?

With the waning economy, outsourcing has never been a more popular route for businesses to take.  Why pay more when you can get a similar product or service for less overseas?  Traditionally, outsourcing has been limited to low-end, back-office type of work. However, in the recent years, more companies have been outsourcing complex services such as medical diagnostics.

So it should be no surprise that India, a country with an abundance of cost effective labor, has emerged as a hot spot for pharmaceutical companies to outsource their drug manufacturing.  The NY Times reports,

India’s drug industry — on track to grow about 13 percent this year, to just over $24 billion — was once notorious for making cheap knockoffs of Western medicines and selling them in developing countries. But India, seasoned in the basics of medicine making, is now starting to take on a more mainstream role in the global drug industry, as a result of recent strengthening of patent law here and cost pressures on name-brand drug makers in the West.

Not limited to just manufacturing, India is projected to further expand into more sophisticated aspects of drug making such as pharmaceutical research and development. Due to its cheap labor, Indian drug companies are able to “discover new drugs at a tenth of the cost” incurred in the United States, according to Ajay G. Piramal, the chairman of Piramal Healthcare.

This pharmaceutical boom in India has been relatively recent.  Initially, pharmaceutical companies were hesitant to outsource their internal operations.  Sujay Shetty, an associate director with PricewaterhouseCooper in Mumbai, described pharma as  “an incredibly arrogant industry” and predicted that “everything in the value chain will move to different parts of the world that are cheaper.”

But, what risks are these pharmaceuticals companies taking?  Outsourcing, in general, can be riddled with quality problems and pharmaceutical outsourcing to India has been no exception.  According to the NY Times,

Recent growth, though, has been shadowed by quality problems. The F.D.A. cited Ranbaxy [India's largest pharmaceutical manufacturer] for manufacturing violations several times in recent years, and in February ordered a review of the company’s global manufacturing operations.

In May, Sanofi-Aventis recalled vaccines made by Shantha Biotechnics that were distributed to the World Health Organization after users complained about white sediment in the vials. In June, after floating matter was found in some plastic IV bags, Pfizer recalled injectible drugs made by Claris Lifesciences and sold in the United States.

Maybe pharmaceutical companies were justified in being cautious, even to the point of arrogance, in deciding whether to outsource in the past.  Drug manufacturing is a complex process that needs proper review practices to prevent errors.

Fortunately, the Food and Drug Administration (FDA) has taken note of India’s growing influence in the drug industry and has been cracking down to prevent substandard and contaminated drugs from entering the United States.  In the past two years, the FDA has opened two new offices in India, one in Delhi and the other in Mumbai.  And just last month, as reported by The Wall Street Journal, the FDA stated that “it will propose stronger regulation for pharmaceutical companies that outsource manufacturing, putting more responsibility on the companies to ensure the purity and safety of the products…”

Whether or not the FDA’s crackdown improves the quality of the outsourced drugs remains to be seen.  But, with lower costs and regulation avoidance said to be the primary motivation behind pharmaceutical outsourcing, it’s uncertain whether the quality problems mentioned by the NY Times will be the last.

Nurses, Prescriptions and Pharma Influence– Under the Radar?

Very interesting point made over at Gary Schwitzer’s Health News Review Blog regarding Industry funding of Continuing Medical Education (CME) for Nurse Practitioners (if you’ve never visited Mr. Schwitzer’s blog you should, he is informative, well written and generally brief).

Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy issued a White Paper last year, “Drug and Device Promotion: Charting a Course for Policy Reform,” which called for a cessation of industry funding of CME. The Center noted:

Reforming Funding for Continuing Medical Education (CME). Most states require physicians to undertake continuing medical education to maintain their medical license. The drug and device industry currently funds over half of the accredited CME courses available to physicians. The Center recommends that industry funding for continuing medical education should be phased out, and replaced by an educational process driven by physicians.

And that

• Ninety-four percent of physicians have some kind of financial relationship with industry, as reported in a major recent national study.

• Commercial support for accredited CME, nearly all of it from drug and device manufacturers, grew from $302 million in 1998 to $1.2 billion in 2006.

But what about nurse practitioners? Schwitzer, who attended the recent Georgetown Conference, “Prescription for Conflict: Should Industry Fund Continuing Medical Education?” noted that:

There are more nurse practitioners (147,000) than there are family physicians (100,000) in the US.

These advance practice nurse professionals can write prescriptions, and it’s estimated that the average nurse practitioner writes more than 6,000 a year.

And about 70-80% of those nurses who regularly attended lunch or dinner “continuing education” events sponsored by drug companies said they were more likely to prescribe the drugs that were highlighted in the lunch.

The presenter was nurse-researcher Elissa Ladd, PhD, RN, Asst. Clinical Professor, Massachusetts General Hospital Institute of Health Professions, who says the possible pharma influence on nurse-prescribers has largely flown “under the radar.”

A little quick and basic math will give us some inkling of just how much flies under that radar. We’ll use the minimum figure in all estimates. So…

147,000 Nurse Practioners each writing 6,000 prescriptions per year = 882,000,000 prescriptions. Yes, that’s 882 million prescriptions per year– conservatively estimated.

“More likely to prescribe the drugs that were highlighted in the lunch” we can estimate at 51%. We wind up with a potentially influenced 449,820,000 prescriptions. Again, conservatively estimated.

So now the only question is just what percentage or how many Nurse Practitioners “regularly attended lunch or dinner ‘continuing education’ events sponsored by drug companies?”

With a total pool of over 882 million prescriptions per year available– at least 450 million of them potentially swayed over lunch–my guess is that Pharma’s answer would be “As many as possible.”

Ethical Marketing Measures in Access to Medicines Index: An Important First Step

Earlier this week, the Access to Medicine Foundation released its 2010 Access to Medicine Index, “a ranking of the world´s largest pharmaceutical companies on their efforts to increase access to medicine for societies in need.”

In a change from the 2008 Index, which was the first to be issued, the 2010 Index includes measures designed to assess companies’ commitment to, and practice of, ethical marketing behavior.  Per the report accompanying the Index, “[t]he marketing and promotion of drugs can have a significant influence on the type of medicines that patients receive.  Particularly in Index Countries [88 countries with low or medium levels of development] with less robust regulatory enforcement and consumer protection, the marketing behavior of pharmaceutical companies can shape access to both appropriate and affordable medicines.  Unethical marketing can lead to suboptimal clinical decisions, prescription of more expensive drugs and irrational use of medicines by consumers, which can result in reduced treatment efficacy and other complications, such as adverse drug reaction and drug resistance.”

The Index ranks pharmaceutical companies’ marketing behavior along three axes: (1) commitments, (2) transparency, and (3) performance.  In the commitments category, companies are assigned points for the marketing codes and standards they have adopted and that they require their local third party sales agents to adopt.  For example, “originators,” i.e., research-based pharmaceutical companies, receive 5 points on a scale of 1-5 for committing to the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) Code of Pharmaceutical Marketing Practices, the WHO Ethical Criteria for Medicinal Drug Promotion, “or an equivalent industry code.”  Originators that have not committed to any external codes but that have an internal code which covers the same core principles receive 2.5 points.  (The scoring is different for generics on this measure because they do not have a “viable up to date and auditable external code.”)  With regard to third party sales agents, both originator and generic companies can receive all 5 points if they make “specific ethical marketing demands” of their sales agents and then audit the agents’ practices to ensure compliance.

For transparency, the Index gives points to companies that “publicly disclose[] detailed information regarding [their] marketing and promotional programs in the Index Countries, such as payments to physicians or other key opinion leaders and also its promotional activities for other healthcare providers, distributors, etc.”  None of the companies earned any points in this category.  While some have started to disclose payments made in the United States, no company has disclosed payments made in any of the Index Countries.  According to the report, three companies — GlaxoSmithKline, Merck, and Roche — have pledged to disclose payments made in the Index Countries soon.  Companies can also earn disclosure points for revealing breaches of marketing codes and marketing-related litigation in the Index Countries.

For the third category, performance, companies lose points if they breach the IFPMA Code or if they are sued or subjected to fines for marketing behavior.  Companies can earn points for including binding ethical marketing requirements in their agreements with their sales agents and by establishing employee codes of conduct in the Index Countries equivalent to the codes they have in place in other markets.  Despite the fact that issues have been raised “about pharmaceutical marketing practices in the Index Countries, especially regarding clear mention of … adverse side effects,” none of the companies studied lost any points in this category.

As the title of this post suggests, I think that the Index’s attempt to rank companies’ commitment to and practice of ethical marketing practices is important.  Anyone who works in a law school knows how influential rankings can be — for better or for worse.  It is easy to imagine the Access to Medicine rankings providing an additional nudge to companies to begin disclosing payments to healthcare providers around the world not just here in the United States.  At the same time, there is ample room for refinement.  In the performance category, for example, measures, in addition to breaching the IFPMA Code/being sued/ being fined, are needed to expose differences that surely exist in companies’ approaches to marketing in the Index Countries.

Former UN Special Rapporteur Paul Hunt on International Law & Health as a Human Right & the Human Rights Responsibilities of Pharmaceutical Companies

During his week-long visit to Seton Hall Law School, Paul Hunt, Professor of Law, University of Essex School of Law, provided several lectures to students and faculty on international human rights law and health law.  These guest lectures included “Health as a Human Right” in Professor Elizabeth Defeis’ International Law class; “On Human Rights Guidelines for Pharmaceutical Companies” in Professor Kathleen Boozang’s Pharmaceutical and Medical Device Marketing and Compliance Class; a faculty colloquium on “GlaxoSmithKline and the Human Right to Healthcare;” and participation in classroom discussion of human rights issues raised by hospitals’ repatriation of indigent aliens in Professor Lori Nessel’s Immigration & Human Rights Clinic.

In his public presentation, “The Human Rights Responsibilities of Pharmaceutical Companies,” Professor Hunt argued that pharmaceutical companies have certain social/human rights responsibilities, including the duty to take reasonable steps to enhance equitable access to medicines. You can find an audio recording of this presentation below as well as copies of Professor Hunt’s Reports to the UN General Assembly regarding “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health,” and “the responsibilities of pharmaceutical companies, including innovator, generic and biotechnology companies, with regard to the right to health in relation to access to medicines.”

Professor Hunt practiced as a litigation solicitor in London before specializing in international and domestic human rights law.  He has undertaken human rights work in Europe, the Middle East, Africa and the South Pacific.  From 2002-2008, he served as a UN Special Rapporteur on the right to the highest attainable standard of health, and in 2008, was awarded Honorary Doctorate by the Nordic School of Public Health.  He is a member of the Human Rights Centre at Essex University and Adjunct Professor at Waikato University, New Zealand.

Professor Hunt’s lecture can be streamed to your browser by clicking on the link below. Clicking on this link will also provide you with a link to download the mp3. Click here to listen to Paul Hunt’s Lecture

The two UN reports mentioned by Mr. Hunt can be accessed by clicking on the thumbnails or captions below:

UN Report on Right to Health	UN Report on GlaxoSmithKline

A Hat Tip to Pharmalittle

Health Reform Watch wishes to congratulate the folks over at Pharmalittle for being named one of the Top 100 Pharma Blogs. They deserve it–and if you’ve never checked out their site– I highly encourage you to do so. Upon the dissolution of Ed Silverman’s Pharmalot, which was hosted here in Newark by the Star Ledger, a group of contributors and commenters banded together to pick up the mantle. For those of you who have a keen interest in Pharma (and who doesn’t?), you’ll find truly insightful and often witty commentary over at Pharmalittle. As an example, this post of theirs announcing their Top 100 status is classic:

HAT TIP TO OURSELVES….

Pharmalittle to be Honored at White House

OK, so we lied. It’s all part of the same strategy. As the impressive badge on the left (suitable for framing) shows, this blog has been named one of the top 100 pharma blogs. Did anyone know there were that many pharma blogs?

Anyway, a lot of people out there will wonder how we accomplished this. It’s simple. We followed basic marketing principles:

1. We promoted the blog for off-label uses. For example, it makes a great eye chart and may help slow the growth of cataracts.

2. We gave kickbacks to everyone on the internet. Really.

3. We buried studies 34, 57, and 105.

4. We changed the endpoints in study 35 and left out the last six months of data.

5. We delayed the appearance of generic Pharmalittle (liloxazorx) through a bunch of nuisance suits.

6. We intimidated people who read other blogs.

7. We hired Key Opinion Leaders like Anonymous to talk us up.

8. We funded studies showing all the dangers of other pharma blogs.

9. We convinced people that failure to read Pharmalittle will result in the end of innovation in the industry and the complete dissolution of life-saving medications.

10. We avoided being bought by Pfizer.

11. There is no evidence reading Pharmalittle leads to weight gain, morbid obesity, and diabetes. And anyone who thinks differently will never find Study 57 anyway.

12. We don’t believe in morbid obesity. If you’re going to be obese, at least be up-beat about it.

And stuff like that.

Read more from Pharmalittle here.

Medical Science Liaisons: Walking the Line between Scientific Exchange and Promotion

[Ed. note: As noted in the post above, we are very pleased to welcome Kate Greenwood, J.D., to the blog today.]

As the Wall Street Journal recently reported, at a time when the ranks of pharmaceutical sales representatives are thinning, the number of medical science liaisons (MSLs) is (or was until very recently) growing.  MSLs are doctors, pharmacists, or scientists employed by drug companies to disseminate scientific information about the companies’ drugs — including information about off-label uses of those drugs — usually to physicians who are key opinion leaders.  MSLs are, at most companies, part of the medical affairs or research and development departments and, unlike sales reps, they are not typically evaluated or compensated based on increases in market share or prescription volume in their regions.  Still, as suggested by this PharmExec article on permissible metrics for measuring the value to companies of both MSLs and the thought leaders they court, it is not always clear how the work MSLs do differs from that of a sales rep.

FDA regulations ban companies from “represent[ing] in a promotional context that an investigational new drug is safe or effective for the purposes for which it is under investigation” but explicitly allow companies to engage in “the full exchange of scientific information.”  Sales reps cannot take advantage of the scientific exchange safe harbor to discuss off-label uses with physicians, but MSLs can, as long as they do so in response to a physician’s unsolicited request.  Jeff Patrick, who holds a doctorate in pharmacy and is Director of Medical Scientists at the biopharmaceutical company Dyax, explained to the Wall Street Journal that, unlike a sales rep, he could respond to a question like “Were there pediatrics in your trial?” even if the drug being evaluated was not approved for pediatric use.

Because MSLs are out in the field engaging doctors in free-ranging and difficult to police discussions, they present evident compliance challenges for companies attempting to follow the rules regarding off-label promotion.  On the other hand, their scientific expertise and established relationships with thought leaders may also present compliance opportunities.  For example, earlier this year, the FDA approved the use of MSLs in the Risk Evaluation and Mitigation Strategy (REMS) for UCB’s Cimzia, a drug used to treat Crohn’s disease and rheumatoid arthritis which carries with it a risk of serious infection.  The Cimzia REMS requires as part of its communication plan that the company’s MSLs make a presentation about the drug’s risks to all of the nation’s approximately 500 gastroenterology key opinion leaders.

Health Care Reform, Lobbyists and the Importance of “Being There”

“Since it cost such a lot to win,
And even more to lose….”

J. Garcia & R. Hunter, “Deal”

This last week NPR’s All Things Considered ran an interesting story focused on lobbyists in the Health Care reform debate. NPR reports that

Between 1998 and 2008, the number of registered lobbyists on health care more than doubled, to 3,627, according to the Center for Responsive Politics. The statistic doesn’t include players who don’t engage in lobbying as defined by federal law - among them, grass-roots organizers, producers of TV campaigns and former members of Congress who remain in Washington as senior advisers to corporate clients.

And that

Spending on lobbying jumped even higher over the past decade. Organizations lobbying on health care spent $484.4 million in 2008, more than two and a half times the spending in 1998.

There is no reason to think that this year’s figure will not easily surpass that. More than 15% of the nation’s GDP is “on the table” so to speak, and an ox gored now will suffer a long long time. According to an informative, very well charted, but not widely reported (a big thank you to “Blue Bunting” over at Care2), recent report from Common Cause

The major health interests have spent an average of $1.4 million per day to lobby Congress so far this year and are on track to spend more than half a billion dollars by the end 2009. That comes out to about $2,600 per day per member of the House and Senate. The pharmaceutical lobby alone spent $733,000 per day in the first quarter of 2009. Since 2000, the industries have spent over $3 billion on lobbying, with the total increasing every year and rising more than 142 percent over the course of the decade. In each of the past four years health interests have been the number-one lobbying force in Washington, measured in expenditures, and have averaged over $1 million per day.

This Common Cause chart below, which like NPR utilizes data from the Center for Responsive Politics, illustrates these numbers rather well (I highly recommend taking a quick look at the report itself, there are a number of charts showing the amounts received by Congressman, Health Committee, and Party).  $1.4 million per day is a lot of money. And as that was the average expenditure from the first three months of this year, one might think that as the debate heightens, so may have the money– which is to say that the $513 million estimate for 2009 may be conservative. The question of course is why. All Things Considered offers the following:

Why spend so much? Three words: return on investment. While a drug company might spend a few million dollars lobbying, it stands to gain, or lose, billions in the outcome.

One big example: the 2003 Medicare drug legislation, under which Medicare began covering prescription drugs. One provision shifted poor, elderly consumers from Medicaid to Medicare - more bluntly, from a program where the government can negotiate with drug companies over prices, to a program where the new legislation prohibited such negotiations.

Most estimates find that the Medicaid-to-Medicare shift was worth billions of dollars for the drugmakers. Meanwhile, the Center for Responsive Politics puts the pharmaceutical industry’s 2003 lobbying expenditures at $126.1 million.

That would seem to be a bargain.

Of Doughnut Holes and Simple Math, or, “Even if I Pay Half Price For Brand Name Drugs, Won’t That Still Be $4,350 Out of Pocket Until Medicaid Kicks In?”

Forgive me if I sound naïve, or perhaps a wee bit skeptical, but I’m somewhat perplexed as regards the bottom line of PhRMA’s well cheered announcement to offer a 50% discount on name brand prescription drugs to seniors stuck in the money pit known as the Medicare “Doughnut Hole.”  The New York Times has said that the “Federal Saving From Lowering of Drug Prices Is Unclear” and the Washington Post has said that  ”It was not clear how much of the savings would accrue to the government side of the ledger and how much would represent lower out-of-pocket payments for consumers.” Unclear as it may be, it may be worth a look. This is not to say that this move announced by PhRMA is not a step in the right direction, just that a closer gauge of the step, as it appears at present, would seem to be in order.

First things first, in its 2008 fact sheet, “Prescription Drug Trends, September 2008,” Kaiser Family Foundation found (pdf. page 2) that

“The average brand name prescription price in 2007 was over 3 times the average generic price ($119.51 vs. $34.34).

Kaiser also found that “For products with a large number of generics, the average generic price falls to 20% of the branded price and lower.” And that “Approximately three-quarters of FDA-approved drugs have generic counterparts.”

When considering the approximately 25% of FDA-approved drugs which do not have generic counterparts, and which would figure largely in any savings under the new PhRMA discount plan, it is probably important to remember that pharmaceutical companies often  engage in what is known as “pay-for-delay:” the practice of paying generic drug manufacturers not to market generic drugs which would compete with their own branded drugs.

Might I suggest that without a concomitant decrease in the breadth of the lapse in coverage known as the “Doughnut Hole,” or some after purchase rebate scheme which allows the full price of the discounted drug to count towards satisfaction of the Doughnut Hole requirement, the net result for many of the hardest hit  seniors will be fairly limited? That they will still have to pull approximately $4,350 per year out of their pockets?

What’s a Doughnut Hole?

The PhRMA discount goes to the price of brand name prescription drugs after the initial cap is met on the Medicare prescription drug benefit. This initial cap on prescription benefit coverage can result in what CMS refers to as “the coverage gap” or what is often referred to as the Medicare Part D “doughnut hole.”

As we reported in a post back in February,

The Dallas Morning News has offered this explanation of “the doughnut hole”

Seniors with Medicare’s standard drug benefit for 2008 pay the full price once their total drug expenses — both Medicare’s costs and their own out-of-pocket deductibles and co-payments — reach $2,510.

They are then on their own for the next $3,216, until their total drug spending exceeds $5,726. At that point, catastrophic coverage kicks in, and Medicare pays 95 percent of their drug costs.

Some seniors are able to avoid the doughnut hole because they qualify for extra government help or buy extra insurance. But everyone else has to mind the gap, which lawmakers included in Medicare’s drug benefit to hold the line on federal costs.
The WSJ Health Blog reports that in 2009, “The coverage gap will open up after beneficiaries and their drug plans have spent a total of $2,700 on medications…. Seniors are then on the hook for the next $4,350.”

We also noted that “In response to that expense, the Kaiser Foundation has shown that many seniors cease or diminish the use of their medications.”

Some simple, if not rudimentary, math
In order to make a complex matter slightly easier, allow me the liberty of making the numbers even: we’ll use $2,500 for an initial cap, and we’ll use $4,500 for the out of pocket or “on the hook number” — that which one must pay until Medicaid kicks in and pays 95% of the cost. [Because of the wide variation in coverage plans, the actual numbers can vary as well, and there is some fluctuation in the amounts reported.]

Again for even number ease sake, consider someone with a large, constituting catastrophic, $12,000 per year brand name prescription bill. That person, regardless of the discount, will still have to take $4,500 out of his or her own pocket during the Doughnut Hole period of non-coverage-unless the Donut Hole itself is changed or eliminated. Looking at the calendar year, if the Doughnut Hole is not changed or eliminated, with or without the discount, the initial cap ($2500 @ 1000 per month) will be met at around the middle of March. The primary difference with the discount is that instead of making it only to August before Medicaid picks up the tab for the consumer, Medicaid will not kick in until December. Under this scenario, the brand name consumer stands to ultimately save roughly $200 as a result of the 5% Medicaid co-pay,  and Medicaid will have to make a payment for the brand name pharmaceuticals for roughly 3 weeks worth of supply. But the consumer’s out of pocket $4,500 still went to the brand name  pharmaceutical. Read more

PhRMA Shows Its Committment to Transparency With Revised Principles on Conduct of Clinical Trials

The Pharmaceutical Research and Manufacturers of America (PhRMA) Board of Directors announced yesterday their unanimous endorsement of revised principles to increase transparency in medical research through their newly revised PhRMA Principles of Conduct of Clinical Trials and Communication of Clinical Trial Results.  The revised principles are part of an effort to encourage behavior that benefits the healthcare community and the public through objectivity in research and strengthened transparency in medical studies.

PhRMA states that the Principles of Conduct, which are to take effect on October 1, 2009, will:

Fortify our commitment to patients and healthcare professionals by increasing transparency in clinical trials, enhancing standards for medical research authorship and improving disclosure to manage potential conflicts of interest in medical research.

The pharmaceutical and biotech industries have been under recent pressure to become more transparent, specifically concerning the disclosure and publication of clinical trial results, the disclosure of physician payments/reimbursement for conducting clinical trials, and authorship standards.

Read more

The Life Cycle of Objectionable Drug Marketing Practices

[This is a guest post by Nathan Cortez, assistant professor of law at the Dedman School of Law at Southern Methodist University. Cortez has published in the peer-reviewed Food and Drug Law Journal and teaches international health, pharmaceutical and administrative law. I've learned a lot from his work, and I'm happy he's agreed to let me post this here.]

By Nathan Cortez

The pharmaceutical industry spends some serious coin on sales and marketing-anywhere between $30 billion and $57 billion per year. And this money funds much more than the ubiquitous ad campaigns to which we’ve grown accustomed (sing along if you know the “Viva Viagra” jingle). Over the years, sales and marketing departments have conjured up increasingly creative marketing practices of questionable legality. For example, drug companies have funded “research” and “educational” grants of questionable validity, sponsored continuing medical education (CME), paid ghost writers to generate favorable journal articles, provided free gifts, meals, and entertainment to prescribers, paid prescribers as speakers, consultants, or preceptors, and even hired former college cheerleaders to gain access to prescribers. Most of these practices have been condemned, and many have been prosecuted, resulting in billions in settlements for federal and state governments. The pharmaceutical industry can’t even give away free drugs without being punished.

Last Monday, the New York Times highlighted yet another objectionable drug marketing practice: targeting medical schools. As the article explains, drug companies have long had ties to medical schools and their students by funding endowed chairs, faculty prizes, research grants, capital improvements, and even volunteering employees to teach classes. Students get showered with enough free pizza and trinkets to think that they might already have prescribing privileges. More recently, the Times reports that the faculty at Harvard Medical School has come under fire for its ties to drug companies that hire faculty as speakers, consultants, or even board members. More than 200 Harvard Med students have objected, leading the school to convene a 19-member panel to reevaluate the school’s conflict-of-interest policies (meanwhile, the University of Minnesota Medical School is loosening them).

In the “Life Cycle of Objectionable Drug Marketing Practices,” we’re currently at the “media coverage and public outrage” phase. Gradually, most of the practices listed in the initial paragraph have either disappeared or have lost their allure. Media coverage and public outrage is quickly followed by government outrage (possibly even Congressional hearings) and promises of self-regulation by the drug companies to preempt more stringent regulation. Self-regulatory efforts like the PhRMA Code and the AMA Ethical Guidelines provide some bright-line standards for complying with ridiculously broad laws like the federal anti-kickback statute and its complicated safe harbors. If companies still don’t get the hint, the government simply tells drug companies what not to do.

And if none of these events ends the Life Cycle of the Objectionable Drug Marketing Practice, litigation usually does. Pretty much every major pharmaceutical company has settled a Corporate Integrity Agreement with the government for violating federal drug marketing laws-the latest being a staggering $1.4 billion settlement paid by Eli Lilly to settle claims that it illegally marketed its anti-psychotic drug Zyprexa. By settling, companies thus avoid the “death penalty”–being excluded from Medicare and Medicaid.

Although the drug companies never die, the practices usually do, precipitated by an avalanche of government investigations, whistleblower suits, shareholder suits, and even marginally-related product liability suits. Federal and state lawmakers also pile on. In the last few years, nine states have enacted (and dozens have considered) pharmaceutical marketing laws, requiring disclosures of marketing payments made by drug companies to potential prescribers, in addition to caps on payments, disclosure of sales representative activities, and other prohibitions. Indeed, the Senate Finance Committee is currently considering a federal bill that would explicity preempt state laws.

Thus, the Objectionable Drug Marketing Practice dies a violent death. It can rest in peace, but the sales and marketing departments can’t. Because they have to find new ways to drive market share.

Biopharmaceutical Companies Continue to Advance and Invest In Rough Economic Times

A recent press release from the Pharmaceutical Research and Manufacturers of America (PhRMA) reports that pharmaceutical and biotech companies continue to invest substantial amounts of money into research & development, despite the dismal current economic situation.  Research from PhRMA and Burrill & Company shows that “pharmaceutical research and biotechnology companies invested a record $65.2 billion last year in the research and development of new life-changing medicines and vaccines — an increase of roughly $2 billion from 2007.”  There are almost 30,000 medicines in development in the country right now.

In a time when most other industries are struggling and the unemployment rate is the highest it has been in 25 years, it is encouraging to see that the biopharmaceutical industry, one whose existence and success directly impacts the health of our nation, is continuing to invest and advance.  For example, this week we saw Merck make a serious investment through its $41.1 billion merger with Schering-Plough.    In addition, as we posted in December, Merck announced its plan to enter the biosimilars market, which will cost an estimated $1.5 billion.

Biopharmaceutical companies are continuing to spend on R & D, and the great majority of their investments are within the US.  According to “The Biopharmaceutical Sector’s Impact on the U.S. Economy: Analysis at the National, State, and Local Levels”, a study out this month by Archstone Consulting and Dr. Lawton R. Burns, this industry creates millions of US jobs and contributed three times as much to the GDP than the average of other industries and sectors in 2006.

Besides the struggling economy, drug companies face other challenges.  As we recently reported, President Obama’s health reform plan may negatively impact pharmaceutical companies through an increased discount to Medicaid (from 15.1% to 22.1% of avg. manufacturer’s price).   Despite the economic crisis and health care reform changes, it is hopeful to hear the industry’s continued commitment to progress. Said PhRMA President and CEO, Billy Tauzin:

America’s pharmaceutical research and biotechnology companies are not immune to the challenges presented by our current economic crisis.  However, the important work that we do every day in the battle with disease cannot stop. The U.S. is the world’s hotbed of medical innovation, and throughout the country, we remain committed today to finding tomorrow’s cures, despite the incredible challenges that are posed by the current economy.

e-Prescriptions Increase as Medicare Incentive is About to Take Effect

The AP reports that in “December 2007, 35,000 doctors were writing at least some paperless prescriptions, according to SureScripts-RxHub, which tracks the drugstore network.
The 2008 count isn’t finished yet, but SureScripts estimates that number has doubled to more than 70,000. Moreover, the volume of prescriptions filled electronically grew about 15 percent a month since August, faster than the 5 percent to 8 percent monthly increase seen earlier in the year - presumably as doctors geared up for the Medicare incentive.” Read more here.