Pharma's New Face
Billy TauzinThe Pharm Exec Interview
Pharm Exec : What do you see as your mission?
Billy Tauzin: It's complicated. But if I can summarize it for you, it's to do what I can in collaboration with our member companies to rescue and restore the reputation of what I consider national treasures—companies that produce the medicines that keep us all alive. It is to do everything I can to demonstrate that they care about things like access and affordability, and in the end, to create a better environment for them to continue the great work of discovering and producing cures and therapies. That's why I think I was hired here—to give this industry a chance again to earn the respect and admiration of our country.
I am trying to go to all the companies to meet, not just with the board members, but more importantly with their employees and their management team, to learn from them. I visited Lilly in Indianapolis last week, and there was a town hall meeting with the workers there.
You've been in a position that gives you a unique view of how pharma handles itself, both from a public relations perspective and from a political perspective. What has the industry done wrong and right over the past few years?
They will be the first to tell you they have made mistakes. They have earned some of their black eyes. But from all my discussions with the leaders of this industry, they want to do better. They understand that access and affordability are not just ideals. If Americans are going to appreciate the work companies do, they can't just find and manufacture and market these medicines—they have to make sure they reach patients. So insurance coverage, or healthcare coverage, is very important.
It is not all the industry's fault. I don't know of anybody who gets on a bus to drive to Canada to go to a hospital or see a doctor. We don't do that, because we have healthcare coverage in America for those kinds of healthcare events. The reason people go to Canada and the reason people are upset about the prices of drugs in America is there are too many uninsured. Medicines are not covered under Medicare until 2006. There are people slipping in between the cracks of Medicaid and Medicare who receive no help at all. We have to find ways to solve that basic problem.
What would be an example of an ugly victory?
I don't know that I want to pin it on any one of them. There's sort of a perception that pharma wins because it's big, it's powerful, the companies are strong and financially able, and they go out and fight hard and win.
Let's take Medicare.
That was clearly less than beautiful. There was more partisan politics played around that fight than it deserved. Patients don't sign in as Democrats or Republicans when they go to the hospital or to fill a prescription, and yet this became a big partisan fight. The bottom line is you just can't keep having those kinds of fights without suffering in the long haul.
Speaking of Medicare, you had a front-row seat for what the industry was attempting to do and how it performed. If you had been at PhRMA instead of in the House during the battle over Medicare, what would you have done differently?
It was also all about elections. There was a feeling that people were voting against the Medicare Bill in order not to give the other side a win before the election. There was a sense that if you could just keep the issue alive, you could keep beating up on each other, and somehow somebody would gain an advantage. It became the battle for the majority. It became the battle for the White House. We as Republicans were either going to take that issue away by successfully passing the Medicare bill or lose it and perhaps lose the majority. It was that critical at points.
When these issues become so political, so heavily burdened with success or failure of a thinly held majority, they are going to stay ugly. I wish I could promise you differently. I wish I could tell you I could have done a better job on it from this position. But I don't know that I could have.
On the other hand, when you look forward to the things that are coming up, is it going to be much better? We won't have the Presidential election, but the rest of the jockeying for power is still going to be there. Renewal of PDUFA [Prescription Drug User Fee Act] is coming up. That should be a no-brainer. But it's going to be ugly, isn't it?
What I can do is help position this industry in a more favorable light with the public. When people have a better respect and appreciation for you, they give you a little more room. You should feel more tolerance in the way you operate and what you do. I have to somehow place pharma squarely on the side of patients, to the point where patients and caregivers are going to be upset if people try to make partisan politics around the issues.
That's one obvious tactical way of dealing with it. The other is repairing broken alliances. When I got here, after so many wars, there were alliances that were not as solid as they should be—with physicians, for example. Physicians in this country generally understand and are supportive of efforts to develop drugs for them. That's an important feeling. We have to put ourselves squarely on the side of physicians again.
Here is a simple remedy, not difficult to understand, but difficult sometimes in application: Just do the right thing. Whenever you get down to that place where you are going to make a decision, and it's clearly a choice between doing the right thing and doing something you may have been doing wrong, do the right thing! And you won't have to have a PR campaign to convince people you are okay.
The trouble is that pharmaceutical products have dangers and side effects that are difficult to understand, and the drug development process seems intrinsically difficult for people to understand. We look in the newspapers recently, and people are horrified to learn that there's a scientist at FDA who didn't want to approve certain drugs.
It is absolutely flabbergasting to believe that we accept risks/benefits in every phase of our lives except drugs. Take medical surgery. If the doctor told you today that you need bypass surgery you wouldn't hesitate to say, "Doc, if that's what I need, let's go do it." One of my best buddies had bypass surgery here in Washington. The guy to the right of him and the guy to the left of him both died in the recovery room. There is a lot of risk to open-heart surgery. But I don't hear anybody saying we need to stop doing it.
There is no drug that has a worse risk profile than some surgeries.
That's my point. When I had surgery, I came within a hair. I had the last sacrament. I made peace with the Lord and basically asked him to be very tolerant and patient, and said that I would come up and try to explain everything when I got there.
He decided he didn't want to hear it yet.
He didn't want to hear it. I gave him another chance. But the bottom line is that we accept risk/benefits in almost every phase of our lives. For every million people driving a car, you lose two hundred and eleven in traffic deaths every year. We spend a ton of money mitigating that risk. But we accept it. We don't pull cars off the highway and shut down highways. When it comes to drugs that have been approved by the FDA, we have done a miserable job of communicating to the American public that every drug bears some risk, just like every surgical procedure and every physical event in your life. We have done a miserable job of explaining that just because a drug is approved by the FDA the risks have not gone away.
PhRMA just finished a survey to find out how much people knew about the approval process. We asked the survey group how many years it takes to get a drug approved. Most of them said three to five years. When we told them it takes fourteen years, their confidence in the process rose dramatically.
We asked how many people are involved in clinical trials and how many clinical trials you need to get a drug approved. They said one successful clinical trial and maybe four hundred or five hundred people. When we explained that it takes three successful clinical trials involving thousands of people, their confidence in the process went up.
We asked how much of the clinical trial information is shared with the FDA. The majority said fifty to seventy percent. When we told them that one hundred percent of the clinical trial information—good, bad, and ugly—is supplied to the FDA, their confidence level soared. When we asked them whether there was any post-marketing surveillance, we generally got a feeling that no, there was not. When they learned that FD, as a condition of approval, increasingly requires post-marketing surveillance, their confidence level soared, both in the FDA and the pharmaceutical companies.
What I learned in that survey is that we have done a miserable job of communicating risk/benefit. We have done a miserable job of communicating the truth about the approval process.
When I went through my own cancer experience, I had a profound moment, as my principal caregiver and my doctor at MD Anderson Cancer Center had to tell me, "We think you ought to have this drug, but if we put it in your protocol, it might disrupt the healing process of your surgery." We all sat down together and evaluated the risk of adding Avastin [bevacizumab], this brand new drug that just came out, to my protocol. I was so pleased that there was not a government official in the room telling me what I had to do, what I couldn't do. I made the choice to take a chance. I could have been one of those who died, but I also knew this drug could save my life.
The tragedy is when we pull a drug that is critical to someone because of a misunderstanding about the risk profile. We have to somehow break through the misunderstanding and fear and talk honestly about risk/benefits to the American public.
In the survey we did, when we asked the survey group what was most important to them in this process, the word we got back was "accuracy." Safety, as important as it was, was second. So the more we can do as an industry to honestly share accurate information about the processes by which drugs are discovered, proved, and marketed, the better we are all going to be.
And we have to trust in the American public. Believe me, we can. I have been through it. It's not the end of the world when you are faced with risk/benefit choices. People handle them every day. We need to ensure that we never end up with the European model, where the government decides, "No, Billy. You're not going to get that drug, because we're not going to put it on the formulary. No, you're seventy years old, and you've got prostate cancer. You're just too old." I hope that in America we never get to the point where, when we have that profound moment of decision, the room is crowded with federal bureaucrats.
You were talking about the cost of drugs. Do you think we are looking at price controls in this country?
Hopefully not, if we do a good enough job of helping seniors enroll in Medicare coverage, if the industry does a good enough job in helping the uninsured. There is something critically wrong when the uninsured pay the highest prices for medicine of anyone in the country. We need to deal with that. We need to do something for those who, through no fault of their own, cannot get insured. And we will be working with friends in Congress and the industry to find ways to address that.
If we do all that right, and we make access and affordability one of our main goals, and we begin to see progress, there is no reason why Americans should have to turn to what I consider failed experiments in other countries: government price controls.
I come from a part of the country where they produce a lot of oil and gas. I lived through natural gas price controls. And when you had government-controlled prices on an essential commodity, people stopped producing it for the interstate market. We had a lot of gas in Louisiana for the uncontrolled intrastate market—high prices and a lot of gas. Meanwhile there were shortages all over America. Plants were shut down, and there were concerns about people freezing to death in the dark, because price controls had diminished the incentive to produce.
I think Americans understand the free market system. If you really want something, you had better not go to price controls, because you end up getting less of it, not more.
You say that people understand the market system, and they understand that price controls fail. But I seem to recall a number of our Congressmen voting to allow importation of drugs, which is basically importing another country's price controls. Maybe you could tell us a little bit about the politics of importation.
As long as drugs are not accessible and affordable, people are going to look for other options. As long as insurance coverage is not available to them and drugs are cheaper somewhere else, they are always going to be thinking, "How can I get a cheaper drug?" It's human nature.
So there's pressure on members of the Congress to support a solution like that. It's simple, and they think it will answer a political problem a lot easier than trying to go through the complex business of trying to help the uninsured and doing all the things that you have to do if you want to make the system work. The easiest solution sometimes gets the most support. That's the truth. And you put aside other concerns—for example, safety. We have literally, I think, ignored the safety concern. We thought it was an excuse to stop the imposition of price controls.
I think that's exactly how it came across.
Exactly. The truth is that safety concerns are real and growing. We know the trade in counterfeit drugs is growing. We know the customs office has confiscated drugs at test sites in Miami where 95 percent of the drugs were counterfeit. Sooner or later we are going to be importing death. I don't believe people yet get that.
We have three jobs to do. One is somehow to make this safety argument real in people's lives. They have to see the danger. They have to understand that if you are worried about Al Qaeda shipping in anthrax, you better think about whether you want to really open up our borders to unlimited importation. Second, we have to make drugs accessible and affordable in America. If we do, no one will want to take a chance on buying a drug on the Internet. It's as simple as that. Third, we have to work with FDA to make drug safety in this country as good as it can be and to continue to build the confidence of Americans in that process, in spite of some of the news they recently received.
Actually, importation is less attractive today as an issue. The margin between Canadian prices and American prices has thinned, and when you put American discount cards on the table, the margin shrinks even more. The currency exchange has shrunk the margin. The entry of generics will shrink the margin even more—and there will be a lot more generics entering the marketplace soon. Finally, the Surgeon General report helps you focus on what you give up when you go after that thinner and thinner margin. You give up the right to know where the drug came from, how it was handled, and whether it was packaged properly. And here is the most important thing: You give up the right of legal redress when something goes wrong. Who do you sue when you order something over the Internet and it comes from a basement lab in Indonesia? In America, if you didn't like what Merck did, there are a lot of class action lawyers ready to talk to you.
Do you see the industry getting together with leaders on the Hill and developing some kind of a bill that would somehow make the issue go away?
I don't know yet. In my mind, making the issue go away is only possible when we really address the issues of access and affordability. Privately, people tell me they know importation is a bad solution. They say, "This is not the right answer. But if you don't give us a better answer, we are going to continue to vote for it."
You are talking about political realities. Another one has to do with the tort reform. As near as I can tell, 100 percent of the people getting ready to sue Merck at some point in their lives held in their hands the packaging insert that had 750 words describing a clinical trial in which people taking Vioxx had an increased rate of cardiac problems.
That's a classic case where the system worked correctly, where drugs were approved correctly and risks were properly identified. For the uses the drug was intended, it worked correctly. It was only when the drug was tested as a cancer drug at much higher doses and prolonged use that problems developed. And when they did, Merck took the precaution of pulling the product off the market. Things worked correctly, and yet this company finds itself embroiled in incredible litigation.
That's a terrible signal to every other company. If you do something right, you ought not get burned. You ought to be rewarded. That's the way most of us raise our children.
But the Vioxx situation is exactly the opposite. Here is a company embroiled in litigation, having followed all the rules and having taken the extraordinary step of pulling their product off the market when there were indications that in extraordinary-use cases it might cause problems. And this company, let me make it clear, is a national treasure. If ever this country had a national treasure, it is NIH and companies like Merck. They have found some incredible medicines for our population. And they do not deserve what they are going through.
A lot of what you have talked about here today has ultimately to do with public relations. And PR has not been PhRMA's long suit.
In fact, PhRMA had a mission of PR at one time. It shifted that mission almost exclusively to advocacy. One of my jobs is to change that. It is to reculture this organization so that it understands the triple mission of education, of communicating facts and the truth, and of advocating, hopefully in a better environment because we have done the first two things correctly.
You're going to see big changes in the way PhRMA operates. You're going to see us focusing on using our assets, our tools, our advocacy groups, our allies, in trying to make people understand risk/benefit equations, understand the truth about approval processes and safety, understand the truth of the safety concerns of importation, understand the facts that underlie the legal conundrum we find ourselves in.
But let me say this as clearly as I can. This effort cannot simply be about a PR effort to make the industry look better. Industry has to do—and is willing to do, and is anxious to do—some positive things for the patients of America. And when they do, it is going to make communicating and educating and advocating for the industry a much more successful venture. So have I lifted a ton of bricks onto my shoulder? Yes. Can I pull it all off? I don't know yet. I can tell you I am going to try.
Can you share any specifics?
I can share one with you. This organization has already agreed, and I think the companies have also agreed, that we are going to take over the Group on Access and Affordability (GAA) initiatives. It's an initiative the companies launched several years ago to try to find ways to address issues of accessibility and affordability of drugs. We are going to embrace those initiatives from a standpoint of communications and from a standpoint of educational outreach, so that we will help the industry not only do the right things, but to make sure the industry and its efforts are well known.
Billy Tauzin did his undergraduate work at Nicholls State University and took a law degree from Louisiana State University in 1967. He began his political career in the Louisiana State Legislature. He was elected to Congress in 1980 and served 13 terms, first as a Democrat, and then, starting in 1995, as a Republican. Tauzin served as the chairman of the House Energy and Commerce Committee, which has jurisdiction over interstate and foreign commerce. In February 2004 he announced that he would not seek another term. He is currently president and CEO of PhRMA.
BIO’s new president left Congress for what he sees as a more influential role. First order of business: Teach his former peers that biotech isn’t just stem cells. James Greenwood The Pharm Exec Interview
Greenwood follows in the footsteps of Carl B. Feldbaum, who served as president of the organization from its creation in 1993. He comes to office at a remarkable moment for the biotech industry: The same press release that announced his arrival also announced that the industry had received $20 billion in investment the previous year, including a record $5 billion in small, private biotechs, and that during the same period, FDA had approved 32 therapies discovered, developed, or marketed by biotech companies.
Early in February, Greenwood sat down with Washington correspondent Jill Wechsler and editor-in-chief Patrick Clinton of Pharmaceutical Executive. What follows is an edited transcript of their conversation.
Pharm Exec: What are the most important things that you are going to be focusing on?
Obviously reimbursement is always important for us. CMS [Centers for Medicare & Medicaid Services] is trying to understand the cost effectiveness of therapeutics. We have to make sure that it is done well. So we want to be—and will be—at the table for those discussions. As we all know, FDA is taking a look at the issue of follow-on biologics. That is a critical issue for the biotechnology community because making biologicals is different from making run-of-the-mill pharmaceuticals. So we need to understand the safety issues clearly and make sure policy makers are cognizant of them, as well as the important intellectual property rights of our innovators.
Do you think there will be some kind of a compromise pathway developed in that area? There seems to be enormous pressure, and there also is a lot of advancement in the technology related to refining biotech production.
Are you particularly concerned about the focus on pricing these days? Your members make some of the most expensive medicines in the world.
Here is the thing with pricing. Most of BIO's members, maybe three-quarters of them, don't have products for sale on the health side. For most of our members, capital formation is everything. They live by the degree to which angels and investment bankers and others are prepared to provide them with financing.
At the same time, I think the kids in the laboratories who are trying to cure these diseases would feel most gratified and most motivated to know that their products are available to the widest market—the children in India and Africa, too. I think the win-win is ultimately to pursue ways to manufacture these products less expensively, so makers can still achieve appropriate returns on investment, and the money is there to pay for the product. I think that is happening every minute of every day.
You don't have quite the same critical baggage that pharma is plagued with right now. Do you feel a need to maintain that distinction?
I don't think biotechnology or BIO needs to define itself as "not pharma." I think we need to define ourselves based on what our companies are working on.
There is no simple definition of biotechnology that all of our members would agree to. To some extent, there is the large molecule-small molecule distinction. But many biotech companies do exclusively small-molecule research. To some extent, there is the large company-small company distinction. But, of course, Amgen is not going to be described as small, and it is a major biotech company. To some extent, there is kind of the spirited innovation and the desire to find new remedies for terrible diseases as opposed to the reiteration of an existing product. I think those distinctions cause us on a policy matter on one particular day to diverge from a pharma position and on another day to collaborate with pharma.
You are right that pharma has a lot of baggage right now, because they are big, because any time anyone is big and successful they have detractors. And employers, both private and public payers, are trying like mad to hold down costs. That's an issue that because the pharmaceutical industry is much more mature than the biotechnology industry, it's an issue that they have confronted before. But it certainly is one they are confronting more and more.
As you said earlier, very few of your members actually have products on the market. Do their interests in these issues, such as pricing and safety, do they tend to go together or do they tend to diverge? Do you have one organization or do you have two that you have to keep together?
Of course for our members without products, what they are most interested in receiving from BIO is help with capital. They gravitate to BIO to see if they can participate in either partnering meetings or venture capital meetings so that they can have access to resources. They are primarily focused on developing their products, getting their products into trial, and getting their products approved. They are not thinking much about that phase at the reimbursement levels.
But I think, as I said earlier, when they do think about it and they have the time and luxury to think about that, of course they know that if public policy and private sector insurance carriers make decisions that make it very rough to succeed, then it is going to hurt them, and it's just a matter of time. That doesn't impact them only when they get to the place where they have products on the shelves for sale. It can very well hurt them now when it comes time to attract investors. So I think those who are thinking over the horizon understand that they are all in the same boat.
When you were on the Hill, you saw a lot of pharma companies and biotech people come up, seeking to press their positions. Do you have some advice for companies regarding what they might do more effectively?
I would say this: In the six months between the time that I announced I was withdrawing my candidacy and leaving the Congress and when I arrived here, as you might imagine, I had scores and scores of my colleagues coming up to me on the floor during votes or walking the halls saying, "Oh. You're leaving the Congress. We are going to miss you, Jim. Where are you going?" I would say, "I am going to be the president of BIO." Somewhat to my surprise and dismay, that drew a lot of blank stares.
It made me realize that members of the Congress, unless they are deeply involved in these biotech issues, do not necessarily know what BIO is. Second, when I would say that it is the trade association for biotechnology, the most common response was "Oh, stem cells." So I realized that was the extent that members even know what biotechnology really is; that is what they think of. Of course, only a very small percentage of our companies are engaged in stem cell research.
We have a big selling job to do and an educational job to do on the Hill. I think that's going to be some challenge. But I think it's going to be a lot of fun and a terrific opportunity, because when you tell the biotechnology story in Technicolor, if you will, it is such an astounding story. It is profound to talk about the extent to which we have been able to look inside our bodies, examine our own DNA, sequence the genome, and apply that in a revolutionary change in the way we do healthcare—and in the way we grow crops and feed hundreds of millions of mouths, and the opportunities to change the equation with regard to our energy demands to biofuels, and what biotechnology has to offer in terms of protecting us from bioterrorism.
That is a whale of a story. I think it's a fresh story. It's an exciting story. And it's all about the future. So I think we are going to have a good time in the course of this Congress, telling that story on the Hill. I think the more we tell that story in exciting ways, not just with another sheaf of paper, I think the better off we will be.
Besides going out and telling your story, are there some defensive things that you see coming up that make you really nervous?
On the defensive side, there are the genetically modified crops, which are under attack. Most Americans do not realize they are consuming them every day without problem. But there are radical organizations that are not scientific in their approach that are mounting attacks and actually bringing votes, arranging for ballots and referendums in California counties and so forth. So I think we are a little bit on the defensive on that issue. Again, we have to follow the science and explain to the members of Congress and the public at large what this is really all about.
Certainly, the embryonic stem cell issue is highly controversial. That is an evolving issue every day. I just heard something yesterday about stem cells found in bone marrow, I think, and their ability to morph into other kinds of cells. But having carried the therapeutic cloning substitute to the Weldon Bill in the last two Congresses, I am acutely aware of how much disinformation there is about some of these stem cell issues. There are members of Congress who believe that biotech companies want to create embryo farms and that sort of thing, which is quite ridiculous.
Is there a danger that the United States is going to lose out in maintaining its cutting edge position?
Of course. When we have our conference in June, you will see pavilions there from dozens of countries. And they are not there to invite us to come to their beaches. They are there to invite companies to leave America and make their products in Asia and Europe and elsewhere and take jobs away. It is important that America maintain its prestige and its first-rate status in every aspect of biotechnology.
All of a sudden, both of the major advocacy organizations for the pharmaceutical industry are headed by recent former members of Congress. Of course, it has raised a certain amount of controversy—more when Congressman Tauzin was first talked about for PhRMA and less now when it is actually happening. It's clear what the industry gets from the so-called "revolving door." It's clear what you and Congressman Tauzin can get from it. What is the public-interest argument in favor of people going from Congress to organizations like BIO? Why is this a good thing for the public?
You look at someone like Billy Tauzin who has been thirty-seven years in public policy in public office. And you look at Jim Greenwood who has been twenty-seven years in public policy. I don't think you do that unless you are deeply committed to serving your community and the country and ultimately the world. That's why we both did this into our fifties from very young years of our lives.
If you look at our records, I think you would see in both instances very long records of commitment to trying to do just that. That is why I'm here.
You look at Billy Tauzin, and I'm sure you talked about his cancer. He has made some very tough decisions in his life about what medicines to take and what surgeries to undergo. He is deeply committed to the notion of putting patients in the driver's seat.
When I interviewed for this job, and the board of the search committee said they wanted BIO to become a world-class advocacy organization, I said to them, "After twenty-four years of being on the receiving end of that, I can tell you that I will bring to BIO the three secret tools of advocacy." And they all leaned forward and asked, "What are those?" And I said, "The truth, the truth, and the truth." One thing the public gets from us is that we know, from years of experience, that when people came to the Hill, if they couldn't give me the dead honest truth, I never listened to them again. I don't expect anybody on the Hill or in the public to listen to me if I am not truthful with them at all times. So I think those people who are fair give us both time and watch what we do.
You have quite an order ahead of you. Any specific changes in the organization to accomplish all this?
I've just hired Scott Whitaker who is Tommy Thompson's chief of staff over at the Department of Health and Human Services to come on as executive vice president here. So he will be the number two guy here. And what he brings is the experience that comes from managing the second-largest department in the federal government next to defense, obviously the intimate knowledge of the workings of the FDA and CMS and NIH, plus he spent ten years in the Senate as a staffer. So he understands the legislative process. And I think he will be a real asset to our team, both in terms of coordinating our various departments so that they function well and also with our advocacy.
James Greenwood began his career as a social worker in Bucks County, Pennsylvania, after graduating from Dickinson College in 1973. He served in the Pennsylvania Legislature, and was elected to Congress in 1993 from the states Eighth Congressional District. Greenwood specialized in health, environment, and childrens issues. In Congress, he wrote legislation to promote pediatric labeling for pharmaceuticals, reform medical device review and approval, and expand research on traumatic brain injury. He served as chairman of the Energy and Commerce Committees Subcommittee on Oversight and Investigation. Greenwood left Congress in 2004, and in January 2005 assumed the position of president and CEO of the Biotechnology Industry Organization (BIO).
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