Data States and Innovation Gaps
That industry trade groups endorse comparative effectiveness ("in theory") indicates that Big Pharma recognizes at some level
that a new era of evidence-based medicine is in the offing. For one thing, the writing is on the wall at FDA, where follow-on
drugs that fail to prove superiority are increasingly getting shot down, marking the emergence of "stealth comparative effectiveness,"
according to former deputy FDA commissioner Mary Pendergast. The agency is also attempting to neutralize the volatile issue
of drug safety by demanding that drugmakers do large-scale, long term postmarketing studies as a condition of drug approval.
FDA may not officially acknowledge that superiority has replaced non-inferiority as the new standard. What matters more is
what payers want, says Phil Katz, codirector of Hogan & Hartson's pharma practice. "If insurers and the government are not
going to pay for a new drug unless it's proved to be superior, then FDA approval is, to some degree, beside the point. Drugmakers
will push the new standard down into pre-approval clinical trials on their own."
In the outcomes business, pharma will have to prove the value of its products with more compelling data than FDA requires,
says Buck Luce. "Brands will no longer be built around promising potential efficacy, but around optimizing the patient experience,"
she says. This redefinition of commercial goals will require, in turn, a reorientation toward data. "Drugmakers need to be
asking themselves, 'How do I unbundle my value?'—in terms of all the knowledge they have about a drug. And then 'How do I
make money off of that?'" Buck Luce says.
The transparency of data disclosure has ceased being merely an ethical imperative and taken on economic significance. "The
concept of full transparency, and that 'customers are beginning to know more about our drugs than we do' is still new to the
industry," says Tollman. New "sunshine" requirements in the reform bill address publicizing both positive and negative results
from all clinical trials; these may get drugmakers up to speed with transparency in 2010.
As CER gathers steam, FDA's Sentinel Initiative will also get up and running. By reviewing electronic claims and medical-records
data from public and private payers, the agency will attempt to detect safety signals in real time rather than waiting years
for voluntary reports to accumulate. The new system will deliver, for the first time, a vast trove of new information about
the real-world effects of drugs into a public forum. Between CER and Sentinel, pharma will be forced to reckon with potential
blowback from big retrospective studies that are out of its control. "Retrospective analysis is useful, but it has to be used
with caution. I foresee a lot of work that generates findings that are non-significant," says Aitken. "That could be a big
problem for pharma companies."
As the knowledge about a drug becomes more open-access, drugmakers are likely to find themselves competing with other industries
for its commercial application. "When all of that knowledge can be owned by someone else, who's going to monetize it? Companies
may discover that the value of a drug is different once the knowledge of what's efficacious has shifted," says Buck Luce.
As if this prospect was not disorienting enough, drugmakers also face a regulatory thicket blocking their access to consumers,
who play an increasingly complex role in this real-time, knowledge-generating feedback loop. "Pharma is at a disadvantage
in the social-media competition because of FDA regulations. That leaves room for other players to get in between the drugmaker
and the consumer," Buck Luce says. In 2010, the agency has promised to produce long-awaited recommendations, if not firm regulations,
about the use of social media by pharma.
In 2010, expect PhRMA to take on the issue of the US's innovation gap. "We're asking the White House for a deep dive by a
blue ribbon panel that takes a serious look at whether the environment for innovation in this country is degrading or not,"
By framing its lobbying efforts around innovation, PhRMA aims to get policymakers to consider, from pharma's point of view,
a host of issues ranging from education in the sciences to tax-and-trade laws to the FDA approval process. And by arguing
that anything that threatens pharma innovation also threatens the nation's health and economy, PhRMA angles to catch public
appreciation for the unique value created by the medicine-making business.
This is certainly one approach to resetting pharma's public image. Whether it will have any effect on the drug-pricing squeeze,
not to mention the many other upheavals rocking the industry, is an open question. Some analysts believe that cost effectiveness
and other healthcare transformations are not only inevitable but beneficial—though not necessarily to pharma's short-term
bottom line. They hope that the industry will lead the way, and help shape change, but they fear it will resist instead.
Pharma CEOs can be forgiven for their resistance. The enterprise of discovering treatments and cures for diseases is hard
enough without a other pressures. Yet cutting R&D budgets may not be the best way to reboot the innovation system. Wall Street
is always lurking in the background, with its bottomless hunger for strong quarterly results, even though the biggest bets
demand a lengthening development horizon overshadowed by growing risk.
As industry leaders wait for this experiment's results, they have a new entire decade to practice their new realism. Megablockbusters
are a thing of the past. Hundreds of thousands of people have been laid off. The value of the industry is down by a trillion
"The revenues of the industry haven't declined yet, but projections say they will," notes Tollman. "Growth rates have gone
down significantly, so it's certainly not a growth industry anymore. That's a very long journey."