Who is going to lead the pharmaceutical industry in the difficult decade ahead? It may sound like a rhetorical question, but it's not. 

 is launching a search for the industry's next generation of leaders—the people who will ultimately take over from the Hassans, Vasellas, and Kindlers who currently hold the reins. With that goal, we've created the Pharmaceutical Executive Emerging Pharma Leadership Awards to honor these folks for their achievements and (we hope) egg them on toward greater ones. The competition is open to current employees of the pharmaceutical industry who are age 45 or under as of January 1, 2008 (our apologies to the talented people who work in agencies, PR firms, consultancies, and contract service organizations, but you're not eligible). 			

For more description of the award, see the ad on page 92 of this issue. To nominate a colleague, or to nominate yourself, visit 

. Entries will be assessed by a panel of judges, including 

's editors. The winners will be profiled in a special editorial feature in our June issue. 

The leadership awards are hardly the only innovations at

 these days. Here's a quick look at some of the others: 

We've just rolled out the latest version of 

. We've improved the navigation system, creating special-interest home pages that will help you quickly find content on, for instance, R&D, sales, marketing, or strategy.  

To me, the best part of the design takes place behind the scenes, where we've retagged thousands of articles in the

 archive to make them easier to find. But there are also new features that we hope you'll enjoy, including Discovery News—daily updates on early-stage medical discoveries that will have an impact on the pharmaceutical industry—and something we're very excited about, the 

As regulation becomes more complex and companies are forced to do more with less, we expect technology to play a more prominent role in many companies. With that in mind, we've created a new technology column and we've scheduled extra technology articles for the year. Our goal: to give senior executives a perspective on the business applications and business consequences of information tech.  

 There's no doubt that licensing and M&A are going to be significant concerns of pharma for the forseeable future. To respond, we're increasing our coverage of deals. (For an example, see "Big Deals," an analysis of the biggest and most interesting recent licensing arrangements, on page 38.) 

 As part of our commitment to providing more frequent news and commentary about the industry, and to making the 

 experience more interactive, we've launched a new blog. (You can reach it from 

.) It's already up and running, but stay tuned for a whole range of planned new developments: guest contributors, audio and video, and much more. 

We're far from through with updating and improving 

. Let us know what you think of what we've accomplished—and what you'd like to see us turn our attention to next. 

Articles

From the Editor

New from Pharm Exec: a blog, expanded tech and deals coverage, and a new awards program for emerging pharma leaders

Calling All Leaders

Though the number of specialty drugs promoted in the United States is set to outpace primary care products in 2008, according to IMS Health, specialty pharma companies are struggling just to get off the ground in Japan. In fact, of the 500 start-ups in Japan, there are just four companies with drugs in clinical development, says Steve Engen, CEO of JapanBridge. 

Engen joined JapanBridge from Purdue Pharma (known as Mundipharma outside the United States), where he established the company's Tokyo and Osaka offices and served as president. JapanBridge is fueled by MPM Capital, the world's largest healthcare venture-capital firm; Japanese-based Itochu Corporation; and their latest investor, Kyowa Hakko, a Japanese company focused on therapeutic antibodies. These investors hope JapanBridge can gain Japanese rights to promising drugs in US companies' pipeline and become a specialty pharma company in its own right.  

JapanBridge is still searching for its first asset, but it represents the type of company that can take off, given the changing regulatory environment in Japan. Here, Engen sits down with 

 to discuss the business opportunity in Japan, and its government's new take on using data from around the world. 

Which pharmaceutical companies are having success in Japan?

The big companies—Glaxo, Pfizer, Novartis, Schering-Plough—are there and doing very well. In fact, they are growing far faster in Japan than Japanese companies. There's also Mundipharma, Lundbeck, Amgen, and Biogen. But there aren't a lot of new startups.  

The venture-capital money just isn't there. In 2006, the total amount of VC spent in healthcare was about $160 million. That scale of capital is not going to give you what it takes to build a company. It's a very young market, and the VCs have invested only minimally. 

That's a stark difference from the United States.

Sure. In the States, almost daily you see specialty pharma companies being formed and doing very well, like King or Endo. This just doesn't happen in Japan. Those companies are focused on the United States, and they see Japan as an afterthought. It's only once they've reached a certain scale that they will think about Europe and then maybe Japan. Take Celgene. Celgene is doing very well with Revlimid in the States. They're building a business now in Europe, and now they have the scale to start building a business in Japan.   

Traditionally, the Japanese MHLW [Ministry of Health, Labor, and Welfare] has required all Phase I through Phase III studies be replicated in Japan. That's resulted in five to 10 years of a drug lag, with a lot of pharmaceutical products that are available in the United States but not available in Japan.  

But more people, particularly younger people, are starting to speak up. Now you have grassroots advocacy—especially with cancer patient groups—saying, "We're suffering. We're trying to get these drugs from overseas. Why does it take so long to get these drugs when Europe and the United States have them?"  

You also had the [Japanese legislator] Takashi Yamamoto, who has cancer himself, who got up in front of the Parliament and said Japan's patients were cancer refugees. Things like this are really making the Japanese government realize the problem.  

Some say [the delay is] about 4.6 years—others say it's over six years. But what companies need to think about is, What is the value lost to companies who don't have their drugs in the second-largest market of the world?  Japan's a $60 billion market—so it's huge. We also have to realize the patient side. Avastin, the cancer drug which was approved in the United States in 2004, just was approved in Japan this year.  

It is allowing companies to use a lot more foreign data now. Iressa was one of the very first drugs to be approved using foreign data, back in 2002. The Japanese government is also pushing for global studies and has opened up a separate window for people to talk about that.  

Pfizer's Detrusitol was approved last year with a global study. It used patients from Japan as well as from Taiwan and Korea and showed how companies can supplement studies using data from outside the country. 

What are global studies, and how do they work?

The idea behind global studies is to get things approved at the same time so Japanese patients don't have to wait. 

The time to think about trying to leverage Japan as part of a global clinical strategy is no later than Phase I or maybe early Phase II. And then the clinical team builds the protocols together. Instead of studying 600 patients in the United States, you study 200 patients in America, 200 in Europe, and 200 in Japan simultaneously. It doesn't speed up FDA approval, but it does speed up things in Japan because instead of waiting till the study finishes, you can conduct the clinical trials at the same time. So the idea is to do Phase II and Phase III as part of a global study and file the New Drug Application simultaneously in each region. That's the holy grail that everyone's shooting for. 

Is there anything companies can do if a compound is further along in its clinical development?

Bridging is a concept that applies to drugs that are already in late-stage development and are undergoing clinical trials outside of Japan. It means you already have the data, and now you have to somehow bridge it to Japan. Instead of redoing the whole Phase III study, companies can bridge that data by doing a small study to just prove things are similar in the Japanese and Caucasian populations. If the American, European, and Japanese protocols are similar, companies can leverage the international data as part of the Japanese filing.  

The International Conference of Harmonization (ICH) was the wind behind all this. It was built on the concept of safety, efficacy, and quality. E5 was the guideline of ethnicity. It stated that researchers don't have to replicate studies as long as they can prove that there's no intrinsic or extrinsic differences between the regions.  

That's sometimes difficult to prove in practice, because you may have a great Phase III program done in the States, but how do you make sure that the data really is applicable to Japanese people? It became pretty difficult. But it is possible, especially in oncology. ICH has been a real godsend in that respect. 

How many companies are currently bridging a study? 

Most pharma companies are really thinking about it. The Western biotechs want to now get value from Japan quickly instead of having to wait a long, long time. They want to see what Japan can bring.  

 is currently CEO of JapanBridge, which aims to gain rights to oncology drugs and market them in Japan. Previously, he was president of Mundipharma in Japan and helped establish the company's headquarters there. Engen graduated from the University of Utah in 1990 and received his MBA in 2000, from Temple University. He is a former chairman of Pharma Delegates Japan. 

Thought Leader

Global marketing strategies and the business opportunities in Japan

Rights to Japan: Q&A with Steve Engen, Japan Bridge

If there exists a magical cure for the concerns plaguing the ever-shrinking pharma sales force today, no one seems to have found it. According to Mike Luby, cofounder of sales consultancy TargetRx, there are creative solutions to these problems, but a multifaceted approach is necessary.  

   Is pharma's sales force too bloated? How did we get where we are right now? 

I think the industry's been a victim of its success. Think about the incredible drug discoveries and medical breakthroughs in the eighties and nineties. 

According to the numbers I've seen, there were about 40,000 reps on the ground in 1993 or 1994. In 2006, there were over 100,000. With the pace of medical innovation in the eighties and nineties, it just seemed like it was a good idea to invest in more sales and marketing. These medical breakthroughs radically changed the course of treatment of a lot of diseases. What was getting hidden along the way was that sales and marketing wasn't as effective or as efficient as maybe everybody thought it was.  

Cholesterol drugs are a good example. Mevacor was the first statin, and the total market for treatment of cholesterol was probably $50 million at the time. And what is it now? $20 billion? So over that period of time, everybody who's launched a product has essentially made money. Today the market's a little bit more penetrated. There are many more options out there. Some of the really good drugs have gone generic. There's just a really different market situation now. There's a different level of competitiveness. And I think the people who now sit in the executive suite are realizing that a lot of the things they used to do don't work anymore.  

  Is the recent flurry of restructuring a good thing? 

Absolutely. I think companies are realizing the current sales structure isn't particularly effective or efficient. They've also found that it can be frustrating to doctors. And yet, we know physicians still really value reps. They see it as a great way to get information about drugs. There's just a huge need to make this work more effectively, I think.  

What kind of company do you think is in a precarious situation?  

I think, categorically, all of the big ones have some degree of challenges. Some are reporting nice earnings, but the reality for all of them is that the environment is tougher. I don't think any are immune.  

The specialty companies don't have a $50 billion base to grow every year, so there's a more narrow focus on what they need to do to be successful. When it comes to sales and marketing, though, I think their challenges are the same. They don't have quite the size of infrastructure, but they still have to break out of the models and the molds here that are deeply entrenched and highly ineffective. 

Do you feel that the current sales model is broken? 

Yes. I think the industry's sort of stuck in 1985. There's just a huge need and opportunity to profile physicians and target them more effectively. The prescriber who's much more concerned generally about safety should get engaged differently than the one who's really concerned about efficacy. You'll be appealing to more of their needs. And that's what I think physicians are really calling for. They don't want to be treated like a number—they want to be engaged with stuff, with information and resources that are going to be relevant to them. So the targeting is broken. 

Does pharma need to rethink the whole strategy of selling or do they just need to fine-tune it? 

Rethink the whole strategy. The model has been: More resources, more reps. The analogy I use is: If you don't speak English, does it help if I talk louder?  

What way can it be changed to improve the reps' methods of selling?

We're big proponents of more systematic understanding of what will drive and appeal to physicians. There are a lot of people that grew up in the industry and have a lot of experience. The old model worked for them in the 1980s. Now they're general managers and senior managers and they're judging messaging and sales aids and sort of subjectively saying, "I think this is a winner."  

Can you give me some examples of what's being done or what could be done?  

First, we're seeing a movement to a much more metric-driven approach, a more systematic measurement of execution with more proof of what's effective with physicians. Now there's greater pressure on ROI, and that means you have to measure and you have to be systematic about evaluating what's working or not and making adjustments. 

The other movement we've seen pretty consistently is the trend toward fewer reps promoting any given brand to any given doctor. I think Pfizer started that a few years ago when they said they'd have no more than two Pfizer reps promoting any single drug to any single doctor. And a number of other companies have followed suit.  

Where does the Web fit into the grand scheme of things?  

The jury's still out, but I think there's some promising things happening. When you look at WebMD, they've got a lot of physicians interacting. If you look at their press materials, they've got more than a million physicians visiting a month. And they're doing various services, like e-detailing. It looks like they're starting to crack the code on how to use the Web channel. I think the final pieces of code need to be cracked to find out how to do it more effectively. 

How can sales reps maximize the amount of face time they have with doctors? 

Be really well prepared. Physicians' calls are longer, and doctors are much more likely to prescribe when they believe a rep has good product and disease knowledge, when they believe a rep is well prepared for the discussion, and when they feel that a rep has listened to what they've said and built on it in future calls.  

In addition, we know that helping the physician understand the right patient type for a drug is a huge driver of satisfaction and utilization. It's a way to help physicians get value and use from that information and translate it back into their practices. One of the things doctors are really concerned about is staying current with all the advances in medicine. And to see a rep, all they have to do is break stride in the hallway. They don't have to plan for it, and if they don't want to do it they can keep walking. But when they stop for maybe two or three minutes, they can get good perspective.  

Finally, where do you see industry going? Do you see more layoffs in the near future? 

Using rough math to tally it up, you're probably talking more than 95,000 reps even after the layoffs. We think that's still significantly overweight. I think it's going to continue as people get comfortable and they see that those who have made the reductions have not gotten crushed in the marketplace. So you'll continue to see the sales force sizes come down a little bit, which I think would be a good thing for the industry. 

Column

With sales forces shrinking, how does the industry combine new technologies with old-fashioned face time to maximize sales?

Saving Sales

Just before leaving Washington in December, Congress approved a $2.2 billion budget for the Food and Drug Administration as part of a massive spending bill for fiscal year 2008 (which began Oct. 1, 2007). FDA will get $1.7 billion from the treasury—a 10 percent net increase over 2007 appropriations—and the rest from user fees. In light of heavy spending cuts across the federal government, FDA did well to receive any budget increase at all, but the amount falls far short of the $2 billion appropriated funding sought by former FDA officials and agency advocates. 

As usual, Congress utilizes the appropriation process to micromanage FDA operations. The agency will get an extra $56 million to bolster oversight of food products and imports, but only if FDA provides Congress with an acceptable food-safety performance plan. The legislation authorizes FDA to collect nearly $460 million in prescription drug user fees, but axes the new DTC ad review program (see sidebar). Congress specifies a $42 million budget for the Office of Generic Drugs, up $6 million, and earmarks half of the $20 million added for drug safety activities for FDA's drug safety office. The agency's Critical Path Initiative gets an extra $7 million—much less than initially proposed by the Senate—with the requirement that one-third of those funds have to be handed out in grants to universities and nonprofits. For example, Ray Woosley's Critical Path Institute and the University of Utah received $563,000 to support research on warfarin dosing.  

The legislators instruct the agency to work with pharmacy and patient groups to improve the MedGuide program, a response to pharmacists' fears about the growing number of patient leaflets on specific drugs. FDA also has to establish a more efficient process for vetting long-used medicines that were never approved by the agency and have been targeted for enforcement action in recent years. 

And FDA has to produce a long list of studies and reports on everything from Ketek safety to microbial resistance. The final legislation omits an earlier provision to expand drug reimportation but still requires FDA to analyze how well it oversees foreign manufacture of active drug ingredients.  

Several provisions reflect ongoing concerns on Capitol Hill about excessive pharmaceutical industry influence on FDA policies. Congress reminds FDA to reduce the number of advisory committee members with conflicts of interest. And it takes a big swipe at the nascent Reagan-Udall Foundation by stipulating that FDA cannot use any appropriated funds to support this new organization.  

That curb reflects the concerns of Rep. Rosa DeLauro (D-CT), chair of the House Appropriations subcommittee that oversees FDA, that Reagan-Udall provides an avenue for manufacturers to shape FDA safety initiatives—similar to how The Tobacco Institute supported research refuting health concerns about cigarettes. The FDA Amendments Act (FDAAA) allowed FDA to provide up to $1.25 million for this public–private entity to advance drug development science, but DeLauro flexed her legislative muscle and inserted the funding hold in the final bill.  

It didn't help politically that one of the newly named Reagan-Udall board members was Tachi Yamada, former GlaxoSmithKline R&D chief who now heads the Bill & Melinda Gates Foundation's global health program. Unfortunately, this eminent researcher recently came under fire on Capitol Hill for allegedly pressuring a researcher for Glaxo not to raise safety concerns about Avandia.  

While FDA officials hope to assuage DeLauro's concerns, the rift is likely to delay Reagan-Udall projects: One possible initiative was to encourage collaboration on standards for a new pharmaceutical active-surveillance system that FDAAA also added to FDA's to-do list. Former FDA commissioner Mark McClellan, recently named to chair Reagan-Udall, is a strong advocate for using health system databases and advanced IT systems to detect and analyze safety problems earlier and faster and was poised to tackle this challenging task.  

The legislators also are concerned about the expanding influence of user fees on FDA operations, as seen in their rejection of the DTC prereview program. For the most part, though, members of Congress find it too easy to tap this ready revenue source to support FDA programs. In fact, FDAAA boosted drug user fees by another $25 million for each of the next five years to support additional drug safety initiatives, and pending legislation proposes to raise millions more through fees on food and drug imports.  

Congress is likely to authorize new import fees because FDA's field operations are in shambles due to chronic underfunding and obsolete IT systems. FDA officials unveiled a major field-consolidation plan two years ago that proposed to close regional offices, reduce the number of district offices from 20 to 16, and shut seven of 13 field laboratories in order to streamline these underfunded operations. But Congressional leaders objected and added a ban on any field office closures to the appropriations bill.  

Meanwhile, scandals over contaminated food and medical products from abroad have rocked the agency. In the past year, FDA has had to contend with melamine-contaminated pet food and tainted toothpaste from China, along with fears about lethal cold medicines containing diethylene glycol. These crises prompted hearings on Capitol Hill about food oversight and foreign drug manufacturing inspections. A Bush administration task force unveiled a report in November offering a rehash of strategies for improving the US food and drug import system.  

House Energy and Commerce Committee chairman John Dingell (D-MI) proposed legislation authorizing user fees on food and drug imports to bolster inspections and field labs. The Senate Finance Committee wants to tackle import safety this year, and Senate Health Committee Chairman Ted Kennedy (D-MA) is working on a comprehensive food safety bill.  

The resulting legislation is likely to give FDA more authority to halt unsafe imports, mandate product recalls, and impose penalties for illegal activities. It also could authorize FDA to establish regulatory offices in China and India to manage their fast-rising volume of drug exports to the United States. FDA signed a memoranda of agreement (MOA) with China in December that encourages safety certification of exported drugs and information sharing related to inspections, focusing initially on "designated" high-risk products subject to counterfeiting and safety issues, such as insulin, human growth hormone, and certain popular medications. 

A main thrust of reformers is to require foreign manufacturers and importers to certify product compliance with quality standards as part of a lifecycle approach to import regulation. The aim is to reduce reliance on border controls and use electronic systems to identify high-risk products and track them through the supply chain.  

It remains to be seen if FDA will gain the resources needed to really modernize its regulatory operations and replace outdated IT systems. The White House could regard the outcry over lax food and drug safety programs as a rationale for boosting FDA funding. But the more likely scenario is for policymakers to instruct FDA to do more with the limited resources it already has. 

's Washington correspondent. She can be reached at 

Washington Report

Congress blocked DTC user fees, Reagan-Udall, field force reforms while slightly bumping FDA's budget

Funding Follies at FDA

Between 2004 and 2005, FDA required 91 products to carry "black boxes"—the agency's most serious level of patient warning. That was more than double the 45 black boxes required during the 25 years from 1975 to 2000. 

Brands with black-box warnings face unique challenges when communicating with potential customers: Promotion for black-box products must always include a prominent display of the warning and full prescribing information. In addition, reminder advertising cannot be used. But these challenges do not mean the products cannot be successful. In fact, more than 300 active ingredients with black-box warnings are currently on the market. (For a complete list, see 

.) Many are thriving, including Altace, Celebrex, Fortamet, and Paxil. 

How has that success been possible? The answer most likely can be found in the way these drugs were marketed: They shared information to ensure patient safety and employed marketing strategies crafted to drive appropriate use.  

Sometimes an entire class of drugs carries a black-box warning. All ACE inhibitors, for instance, carry a warning for increased risk to the fetus during pregnancy. Similar class-based black boxes can be found on SSRIs, NSAIDS, beta blockers, and angiotensin II antagonists. Other products might be the single agent or one of a few agents in its therapeutic class to be restricted by a boxed warning. Remicade (infliximab), for example, carries warnings on increased rates of infection, risk of tuberculosis, and the potential for T-cell lymphomas. Competitor Humira carries a similar but less detailed boxed warning, while Enbrel, a similar compound, has no such warning. 

With a class-based black-box warning, the communications challenge is to differentiate the brand on its efficacy advantages while communicating class-effect language in its safety messages. Altace, for instance, has a benefit its fellow ACE inhibitors don't have: It lowers the risk of heart attack. The brand has used this benefit to approach the market by partnering with the American Heart Association in providing information on the risk of heart attack. 

The challenge is more complex when the warning applies to a single drug. Take, for example, GSK's recent activities in support of Avandia. Following the May 2007 publication of a meta-analysis in the 

 concluding that Avandia increases cardiovascular (CV) risk, the company had to quickly and clearly communicate a significant amount of information. Company representatives positioned GSK's own RECORD study as the best available information on CV risk. They challenged the methodology of the meta-analysis, including questioning the fact that only 65 percent of the conclusions were consistent with the results of prospective, randomized, large-scale controlled studies. In short, GSK both disseminated information regarding RECORD and interpreted and managed other sources of information.   

Novartis' Zelnorm, which recently reentered the market following its safety-related withdrawal (due to increased risk of heart attack, stroke, and unstable angina), also provides an interesting case study. Recognizing that for certain patients the benefits outweigh the risks, FDA announced in July 2007 that it would permit restricted use of Zelnorm under a treatment investigational new drug (IND) protocol to treat irritable bowel syndrome with constipation and chronic idiopathic constipation in women younger than 55 who meet specific guidelines and for whom physicians determine the drug is medically necessary. Importantly, patients must sign consent forms ensuring they are comprehensively informed about Zelnorm's potential risks and benefits.   

What both brands have in common is the amount of information they have communicated to prospective customers, as well as the factual manner in which they have communicated that information. Demonstrating that the benefits of these therapies outweigh the risks has been key to continued marketing of the products. Clinical rationale, relevant disease information, appropriate drug usage, patient selection, compliance, and physician and consumer responsibility are other types of information that help offset concerns raised about boxed warnings. 

The strategies employed by successful black-box and postwithdrawal brands suggest a three-part approach to marketing these drugs.  

First, disseminate information appropriately. The controlled dissemination of information and education provides the cornerstone of promoting brands hindered by the presence or prospect of a black box. It is crucial to fully disclose clinical studies' results, appropriate use data, patient types, and clear, concise information on risks.  

Brands that try to downplay or withhold negative information will ultimately be found out. One has only to look at Vioxx, or even the recent Avandia news, to see that complete disclosure coupled with information on managing the risks is the best approach. 

Full disclosure can optimize brand efficacy through proper usage and compliance, underscore corporate responsibility, develop good will across constituencies, and engender customer loyalty.   

Second, develop deep, diverse customer relationships. Customer loyalty, important for any brand, is crucial for brands with black-box warnings, including those that have been reintroduced following a safety-related withdrawal or suspension. It was, after all, largely due to consumer demand that FDA reexamined Tysabri after it was initially withdrawn.  

Developing deep and meaningful relationships across multiple constituencies can have a major impact on receptivity to a brand as well as to its long-term success. Taking the time to listen and respond to the input of patient advocacy groups helps engender goodwill and a powerful voice in support of appropriate use of a brand.  

Regulatory bodies are also key customers. Sharing information throughout the process helps nurture a strong tie with FDA and DDMAC that can inform the decision-making process and allow the brand team to be a proactive partner that contributes to the outcome. Depending on the brand, other constituency groups, such as payers and pharmacies, may also be relevant and therefore crucial to include in the brand's partnership strategies.    

Third, review ongoing brand performance. To create the types of relationships described above, it is imperative that a brand behave in an actively responsible way, from allocating resources to tracking the performance of the brand and the perceptions of its customers. In addition to the typical sales tracking, brand teams must develop an ongoing dialog with all constituents to learn how messages are received so they can be adjusted accordingly. 

Listen to prescribing physicians. Formally collect feedback from sales representatives. Talk to patients and their advocates. Make sure that educational programs are effective in how they communicate the risks and benefits of the brand. Do follow-up surveys to ensure the testing required is being done and information is being reported back to both the pharmaceutical company and the proper regulatory bodies. Taking control of the flow of positive and negative information will demonstrate a corporate commitment to ensuring patient safety and appropriate use of the brand. 

It is also important that these efforts be consistent across the life of the brand. Trying to court goodwill when safety or other problems arise won't work if the information delivered hasn't been consistently honest and up-front from the conception of promotional efforts.  

Finding the Silver Lining in Those Black Boxes

The notion of risk versus benefit poses an age-old dilemma, one that requires careful consideration. For many patients, therapies that carry a black-box warning can open up possibilities to live more fully, more freely. Pharmaceutical marketers have a significant responsibility to provide the full story to enable patients and their physicians to make the most informed decision possible about their treatment.  

As pressure to ensure the safety of drug treatments while continuing to provide cutting-edge therapies increases for the industry as a whole—and FDA in particular—the demand for full disclosure will increase. The use of new technologies for disseminating the information will allow for greater reach of risk-and-benefit messages to key customers, building the customer relationships necessary to be successful.  

Kathy Magnuson is executive vice president and managing director at Brand Pharm. She can be reached at 

A black-box warning needn't spell doom for your product. Here's how to take the good with the bad and end up on top.

Out of the Black Box: Marketing a Product with a Warning Box

The UK's Office of Fair Trading (OFT) published the results of a study that concluded that if pharma companies limit the number of suppliers they work with, they could increase costs to the National Health Service (NHS). The study also predicts that it might mean that some patients would have to wait longer to get their drugs. 

The report comes in the wake of Pfizer's decision to use a single distributor to supply pharmacies with its products on a fee-for-service basis. Pfizer's rationale for this system was that closer control of the supply chain would minimize the opportunities for counterfeit products to reach patients. Since then, AstraZeneca has said that it will work with just two distributors starting in February. 

Traditionally, the United Kingdom has had a number of medicines wholesalers who compete for business with pharmacies. While some of them have the same owners, there remains a healthy number of independent pharmacists who are free to choose which wholesaler they deal with. If drug companies tie up supply with specific wholesalers, these independents may now have to deal with several different distributors in order to get all the supplies they need. 

The historical system involves pharma companies offering their drugs to wholesalers at a discount from the list price at which it is reimbursed under the Pharmaceutical Price Reimbursement Scheme (PPRS). This discount is typically 12.5 percent. The drugs will then be offered by the wholesalers to the pharmacy, again at a discount from the list price, normally about 10.5 percent, with that two-percentage-point difference representing the wholesaler's profit margin. The pharmacy is reimbursed by NHS, which then claws back some of its profits. In effect, this means that NHS pays less than list price for meds. But if the discounts offered by wholesalers are cut—as could happen if competition is reduced—then the profits the pharmacists make drop. And, thus, NHS would end up paying more for medicines—OFT estimates that each percentage-point reduction in discount would cost NHS Â£50 million. 

Under the direct-to-pharmacy system, the arrangements are a little different. The manufacturer decides what price the pharmacist will pay for the products, and then pays a fee to the wholesaler for distributing them. OFT claims there is a "significant risk" that such DTP schemes will increase NHS costs, as the competition aspect of setting discounts to attract business from pharmacies is removed in the three-quarters-plus of all drugs where the only option is to dispense the branded product. 

The government is currently renegotiating the way the PPRS works with pharma companies, and OFT believes it should change it in such a way that will safeguard the discounts that pharmacies currently receive.  

Another concern for OFT is that using a sole distributor is a risk of poorer service for both pharmacists and patients: There would be little incentive for the wholesaler to improve its service as the pharmacists have no choice over where they go for their supplies.  

OFT has decided not to launch a full-scale competition inquiry, but it believes that a method should be implemented that would prevent the NHS budget from being adversely affected. It has two suggestions: Either reduce PPRS list prices by an amount equivalent to the average discounts that pharmacies receive or have suppliers offer a minimum list-price discount to pharmacies. It prefers the former option because it offers greater transparency of the actual prices being paid by NHS. The agency also believes that the government should specify minimum service levels that distributors should offer pharmacies.  

"We anticipate that manufacturers will share some of our concerns and note, in particular, that it is not in their long-term interests for there to be insufficient competition between distributors," the report says. "If more manufacturers do opt for exclusivity in distribution in such a way that competition in the sector is reduced significantly, future intervention by OFT may be necessary." 

The Association of British Pharmaceutical Industry is already working with government on how medicines can be delivered to NHS with maximum efficiency as a part of the renegotiations of the PPRS. A spokesman for the organization says, "We believe that the whole business about how NHS gets its medicines in the broadest sense should be subject to discussion during those talks and be looked at more than just the money." 

's global correspondent. She can be reached at 

Global Report

Will the sole-wholesaler approach mean higher costs for NHS?

Wholesale Change: UK Responds to the Single-Supplier Practice

				 "It's easy to quit smoking," Mark Twain is said to have said. "I've done it a thousand times." Twain could joke about the insidiousness of nicotine addiction more than a century ago, but lately society has lost its sense of humor about cigarette smoking—along with its sympathy for smokers. They are casually dismissed as "slow suicides," their health problems shrugged off as their just desserts. 

The medical group (left): Cristina Russ, Larry Samuels, Doug Vanderburg, Deborah Petrowsky, Martina Flammer (group leader), Anjan Chatterjee. The marketing group (right): Dina Klugman, Karen McDonald, Chris Hogan, Veronique Cardon (group leader), James Humphries, Deborah Hamel, Amrish Luthra.		

Smoking is the single most preventable cause of morbidity and mortality in the developed world. According to the Centers for Disease Control and Prevention (CDC), an estimated 440,000 Americans die from smoking-related illness every year, and nearly 20 percent of the 44.6 million adult smokers have at least one serious smoking-related disease. All this adds up to an annual $157 billion in economic losses.  

So, even if Pfizer's Chantix (varenicline) did nothing more than help an estimated million or so smokers (so far) break their addiction, it would be a strong contender for 

s Brand of the Year. But, in fact, Pfizer's entire approach to branding the drug is itself worth admiring for several reasons: 

 We live in an anti-tobacco time. Smoking bans are spreading, cigarette taxes are increasing, and health warnings grow more graphic by the day. But in another sense, society has yet to get serious about smoking—it is still generally viewed as a lifestyle choice, even a moral failure. Chantix is promoting a more enlightened, scientific view of smoking as a serious, difficult-to-treat addiction—and spreading the word not only to smokers but also to physicians. 

Drug companies are traditionally better at selling pills than at coordinating treatments—a fact that has done much to harm the industry's reputation. For Chantix, Pfizer has addressed this issue with an intensive consumer-focused strategy—including a 52-week program of patient education and support intended to maximize success rates.  

Some of the recent public uproar over drug safety is due to the blockbuster model's focus on expanding the consumer pool. If Vioxx, for example, had been used only by patients with severe arthritis and who had problems tolerating other pain meds, it would probably still be on the market. Pfizer has taken a major step toward pharma's future by trying to limit the use of Chantix to informed, motivated patients—and making information about the drug's limitations not just a disclaimer, but an essential aspect of marketing. 

If Gardasil, our Brand of the Year in 2007, was Merck at its best, Chantix is Pfizer at its best, restoring luster to its reputation as a sophisticated marketer of consumer-oriented drugs. What's more, this first-in-class product is the first potential blockbuster discovered in its own lab since Viagra. And Pfizer's fine-tuned launch, which focuses less on quantity of prescriptions than on quality of treatment, is a strong sign that the firm is moving fast to embrace new branding and business models. 

Smoking cessation is a market that pharma has largely avoided. Though there are some 1.3 billion smokers worldwide, global sales of aids for quitting barely hit $1 billion in 2005. Survey after survey shows that seven out of 10 smokers want to stop, and about half of all daily smokers are actively 

 to stop. Yet by many estimates, only one out of 12 quitters remains abstinent after six months, a stat that drops to one out of 20 at one year and declines from there. The average smoker makes six to nine attempts before getting it right. 

Market research told the Chantix team that attitudes toward smoking cessation are rife with cynicism and defeatism. One self-proclaimed quick fix after another has gone bust, leaving a bad taste for consumers and the media alike. Boasting a novel mechanism of action, Chantix proved its clear superiority over the competition in clinical trials. Yet Chantix is still no silver bullet—a fact placed front and center in its branding strategy. 

"Smoking is a chronic relapsing condition and an addiction," said Veronique Cardon, group leader of the Chantix US marketing team. "We wanted to be very careful never to overpromise or position Chantix as a magic pill." 

Nicotine-replacement therapies—patches, gums, lozenges, and nasal sprays—deliver a 5 to 10 percent success rate. A course of psychological or other counseling does about as well. Zyban (bupropion), the first smoking-cessation drug, was introduced a decade ago and pushed success rates to about 16 percent, according to some studies. In Pfizer trials, the success rate of Chantix, at one year, reached 22 percent.  

"We desperately needed new medications," said Neal Benowitz, an expert in nicotine addiction at the University of California–San Francisco who advised Pfizer on its clinical trials. "If you were going to pick one first-line drug, this would be it." 

The man behind Chantix is chemist Jotham Coe. He quit nicotine 20 years ago at age 30, then watched the death of his father from emphysema and his uncle from lung cancer, both caused by smoking.  

Coe joined Pfizer's antismoking project in 1995. He focused on cytisine, a substance derived from plants that has a molecular structure similar to nicotine's and competes with nicotine for the brain's dopamine receptors. Coe hoped that if he could tweak the structure of cytisine just right, it could beat nicotine to the punch. 

The eureka moment came a year later, after dozens of dead ends. Frustrated, he took a step back and began reviewing earlier work on morphine-related chemicals (because they are built like cytisine). There he hit upon a paper published in the seventies that said a morphine molecule seemed to have anti-addictive effects when a nitrogen atom was removed. Sure enough, the same nitrogen sleight of hand in cytisine neutralized nicotine. By 1997, Coe had a new molecular entity, dubbed varenicline, ready for clinical trials. 

The beauty of varenicline is the double duty it performs as both an agonist and an antagonist of a key nicotine receptor, says Martina Flammer, MD, senior medical director for Chantix, US and global. "It releases dopamine, but at a much lower level than nicotine. This takes away the urge to smoke. At the same time, it shields the receptor from nicotine, so that if you do smoke, you don't get the same pleasure." 

Over the next eight years, Pfizer tested varenicline in some 5,000 patients in six clinical trials. Five of the six were classic placebo trials with smokers who had averaged 21 cigarettes a day for 25 years. The drugmaker was so confident in its product that it also went head-to-head against Zyban. 

Unlike many smoking-cessation studies, Pfizer followed patients for a year, tracking relapses. "We chose the most stringent endpoint out there," said Flammer. 

Chantix scored a clean sweep. In one 1,025-volunteer study, 44 percent of the subjects taking Chantix were not smoking after 12 weeks, compared with 29.5 percent on Zyban and 18 percent on placebo. After a year, these rates fell by about half: 22 percent, 16 percent, and 8.4 percent, respectively. (A second, nearly identical study got nearly identical results.) In a third study, 1,900 smokers in seven countries were given Chantix for 12 weeks, at which point 65 percent were tobacco-free. These 1,236 quitters were then followed for another 12 weeks, half on Chantix and half on placebo. At the 24-week mark, 70.5 percent of those on Chantix were still not smoking, compared with 49.6 percent of the placebo group.  

"The research was very robust," said Andrea King, an associate professor of psychiatry at the University of Chicago who played no role in the studies. 

FDA fast-tracked the drug and approved it in May 2006—the first new anti-smoking drug in a decade. With Edelman handling the PR, word spread quickly. By the first week of July, the 

Journal of the American Medical Association

 had reported Chantix trial results and the 

 had run a front-page story. Pharma blogger John Mack praised the strategy as a "case study in [how] pharmaceutical marketers [can] build their brands using public relations followed by advertising." In addition, Mack wrote, "it's not all positive news, which makes it even more credible." 

The negative news consisted mainly of pointing out that the trial results might inflate the drug's real-world effectiveness, because the volunteers were all "highly motivated"—and excluded people with a history of depression or substance abuse. What critics missed was that Pfizer was aiming to maximize the real-world effectiveness of Chantix by ensuring that consumers use it in almost clinical trial–like way.  

The decision to brand Chantix as "a Pill and a Plan" was the brainchild of Marketing Team Group Leader Veronique Cardon. The launch had to establish credibility with skeptical patients and doctors by promoting a realistic understanding of nicotine addiction—and of "treatment" as requiring not just the drug but the hard work of behavior change. Even pre-approval, an unbranded Consider Quitting print and online campaign identified consumers who were highly motivated—and most likely to succeed on the drug. A 52-week online program called Get Quit—complete with patient ed, e-mail check-ins, phone support, even a personal coach—went live before the first script was written. 

The last thing Pfizer needed was to sell a lot of Chantix in a short period to people hoping for miracles. "It was important to shape patient expectations," Cardon said. "The message had to be: 'You are taking a medication that is powerful and will help you stop smoking, but you also have to work hard to make behavior changes. And there will be bumps in the road.'"  

Doctors can be a tougher audience. "Healthcare practitioners' attitude has become, 'I have no empathy and no time for you if you smoke. And if you ask, I will make you feel very guilty for smoking,'" said Cardon. "The patient, of course, shuts down immediately." 

Pfizer's professional campaign, featuring the image of a giant broken cigarette, had to break through this resistance. The sales force had go-slow orders, initially detailing only to the highest-prescribing primary-care physicians. For doctors too busy to coach their patients, Get Quit was a safety net. Theone thing reps did not offer was a single free sample—a first for Pfizer, according to Flammer—so as not to lower the motivational bar. Because Pfizer backs the PhRMA Code's six-month moratorium on consumer advertising for newly marketed drugs, Chantix DTC wasn't set to debut until December 2006. In the end, though, Pfizer delayed its consumer blitz until late September 2007; the company depended on PR, a series of unbranded ads, and Get Quit to spark interest. The results exceeded Pfizer's projections, with $168 million in revenue in the first half of 2007. 

With McCann HumanCare, the agency that also handles Viagra DTC, Pfizer rolled out a $75 million tortoise-and-hare-themed campaign in print, TV, online, and out-of-home, tagged "On the road to quitting, it's all about getting there." The campaign has attracted criticism for its cutie-patootie imagery. But the ads were among the year's most-recalled and clearly defied the anti-smoking fear-based approach. 

"We chose to use the fable of the tortoise and the hare because...the imagery resonated strongly with smokers," said Pfizer PR's Jeanne Traflet. "People described them as engaging and inspiring. They also said the message of a steady, determined approach to quitting smoking was realistic." 

 last year that Chantix was "the company's fastest launch ever," outpacing even Viagra. He may have been exaggerating just a bit. After all, the rollout was geared to a slow, steady uptake of motivated consumers. But even with the soft launch, in just 18 months, 4.5 million, or 10 percent, of US smokers have already taken the three-month course. 

This is major mojo, given that only one-fourth of managed care organizations (MCOs) reimburse or even discount smoking-cessation products. Payers have had little incentive to shell out for products whose long-term quit rates are in the single digits. Medicare Part D is more generous, covering prescription aids and some counseling.  

If the Chantix pill-and-plan program works as well in the real world as in clinical trials, Pfizer may get Chantix on formularies by arguing that it is the first truly effective treatment. "The success rate is encouraging to MCOs," said Cardon. And the rates of Get Quit enrollees are even 25 percent higher.  

Paying out of pocket for a drug may be the best screening device for attracting motivated consumers. Pfizer set the US price at $3.24 a day (two tablets)—cheaper than a pack of cigarettes. A full treatment course is 12 weeks; consumers who reach that goal without relapsing are advised to play it safe by going another 12 weeks. 

"It's the difference between putting money into making yourself sick or putting money into making yourself healthy," said Pfizer marketing director Terri O'Gorman.  

Chantix pulled in $603 million in sales through the third quarter of 2007, and it looked to be on track to hit the billion-dollar mark this year, ahead of most analysts' predictions. And given the high prevalence of smokers in emerging markets worldwide, Pfizer was justified in thinking on a megablockbuster scale. You could almost see that giant hole that will be left by Lipitor's patent loss begin to fill up with cash. 

And then this dream scenario turned into a drugmaker's worst nightmare. 

On Sept. 19, ABC News did a segment on the freak death of Carter Albrecht, a Dallas musician with the band Edie Brickell and New Bohemians. After a night of drinking, Albrecht went on a tear, smacking his girlfriend around, then banging on a neighbor's door. Suspecting an intruder, the man fired a warning shot, killing Albrecht. According to his girlfriend, Albrecht had just started taking Chantix when his nervous system went wrong: nightmares, hallucinations, violent behavior. 

The media went on a tear of its own. The Dallas medical examiner ruled that Chantix was not responsible for Albrecht's behavior—the level of alcohol in Albrecht's blood was reportedly three times the legal limit. But this did little to put the controversy to rest, since he had inexplicably failed to use the Chantix assay Pfizer had sent him. 

Pfizer did its best to get in front of the story. The data from six studies in 5,000 people showed no incidence of violent behavior; there was no difference between the Chantix and the placebo groups in the rate of neuropsychiatric adverse events. But other than national newspapers, the media often showed little interest in the data—or a realistic view of smoking. That nicotine withdrawal itself causes serious psychological effects; that smoking can mask depression, anxiety, and other symptoms that emerge only upon quitting—facts like these were glossed over. Once again, nicotine addiction was not taken seriously. "No-Smoke Pill on Sale Despite Death Link," read one headline. 

Features

With Chantix, Pfizer combined inspired drug design with innovative customer-focused marketing to make the first real medical assault on nicotine addiction.

Brand of the Year 2008

Outside of pharma, the titans in information systems, consulting, and other industries have earned their "street cred" by collecting and publishing data that shows how training employees can drive performance as well as the organization's overall business strategies. So why hasn't a pharmaceutical company achieved the learning-giant status of an IBM or a GE? Despite multimillion-dollar budgets and some of the best technology money can buy, the pharma industry has yet to propel its own superstar into the limelight. The problem could be that pharma companies still haven't concentrated on measuring—and publicizing—their success. 

But that might be changing. Training departments are starting to take a high-profile role at many pharma, biotech, and medical device organizations.  

The Society of Pharmaceutical and Biotech Trainers (SPBT) and Health Strategies Group worked together to create a 2007 benchmark study of 47 companies' learning-development practices. The participants represent more than 1,600 full-time employees in training, 83,000 salespeople, and more than $200 billion in 2006 US revenues (see "Methodology of the Study,"). The organizations' joint venture uncovered the training trends found throughout the industry.  

Trend 1: More Development for More People 

Sales training continues to be the bread and butter for many pharma and biotech learning and development (L&D) departments. Yet in recent years, upper management has halted the arms race in the field. Training departments are no longer churning out class after class of young sales recruits. Instead, heads of training are being asked to develop programs that make representatives better businesspeople, armed with negotiation skills and financial knowledge. 

"The pendulum is swinging away from quantity back to quality of sales professionals and their interactions with customers," says Michael Capaldi, associate vice president, sales training and management development, Sanofi-Aventis. "Couple this with the need for field professionals to have more broad business acumen, and organizations are seeing training and development as a key driver for this change." 

Trend in Linking Training to Competency Models			

In concert with this trend, training departments have developed more formalized development programs for their senior sales management staff and regional and district managers. Marketing training, too, has become an area of focus. In 2005, only 14 percent of organizations offered training for brand managers. Today, 43 percent provide that training—with another 7 percent planning to add this offering in the next year. Genentech's commercial training and development organization—which comprises the marketing and sales groups—recently built a targeted curriculum for managers, marketers, account managers, and thought leader liaisons. One area of focus is compliance training. Genentech trainers worked with their company's healthcare-compliance office to develop comprehensive course content for training within the commercial organization. "Training is about being able to translate strategy into execution through skills development," says Carol Wells, senior director, commercial training and development, at Genentech. "Outside of the clinical and sales training that is typically provided by companies, Genentech also provides the support for several functional skills—including compliance, management development, selling and account excellence, marketing, and thought leader liaison training—which we believe will enhance the success of all our clinical specialists." 

Some L&D departments are taking on nontraining responsibilities as well. At the medical device company B. Braun Medical, the training team leads the organization's national sales meeting, establishing the agenda based on input from the sales and marketing organization. "Our training department has gained a lot of credibility in recent years by heading up projects such as succession planning for field managers," says Kevin Glover, director of sales training and development. His department also leads the effort to create a defined sales process to help the company accelerate the growth of B. Braun's most profitable IV product. "Typically, these kinds of initiatives are driven by HR or marketing, but we [in training] are often asked to lead the effort. This gives us a high degree of influence." 

Trend in Measurement Tools and Metrics			

Another factor that is helping pharma L&D departments command more corporate respect is better data. Training executives—not just inside the pharma industry—have known for some time that simple post-course evaluations that generate Level 1 ROI data aren't enough to justify future investments in training. These days, when training directors come together, the discussion often turns to metrics. "Organizational leaders are requiring that metrics be provided long after the event to show impact on performance and the bottom line," Sanofi's Capaldi says. "This doesn't necessarily mean cost savings, but rather that the training dollars spent actually lead to positive changes for the learner and their customers." Today's trainers also are armed with better tools to capture these metrics than in the past. For example, new technology on the market is allowing training departments to pool performance data, test results, financial data, and other metrics to create "dashboards." Using dashboards, trainers and managers can view an employee's performance on test scores, time to completion, and compliance on policy exams. 

Whichever measurement tools pharma companies choose to use, more are looking outside of the industry for answers. Firms like IBM, for example, have developed specific methodologies to assess how well their learning programs support their organizational objectives. IBM's five-step measurement methodology takes a proactive, rather than retrospective, approach to measuring how well training works. Instead of asking "What happened?" the model asks "What should happen?" and then "maps" the way for learning design and delivery. 

Another key question that pharma trainers are asking is: What do we measure? When Pfizer shed its divisional structure for a more nimble business unit structure this year, Vice President of US Sales Training Tim Kern saw it as an opportunity to "open up training's wares" to other Pfizer groups, such as medical and marketing. When it comes to measurement, Pfizer tends to concentrate its efforts on new initiatives. "We focus on what are the real cost drivers, or what equates to real field-force effectiveness," Kern says. "The key is agreeing to what the evaluative metrics are up front." According to respondents in the 2007 benchmark study, the most commonly used metrics involve testing trainees' knowledge after a course; surveying learners on the course value; and developing competencies or standards of desired behaviors. Pharma organizations, like companies in other industries, continue to develop competency models for key roles like district managers and representatives. More than 90 percent of companies link their representatives' training to a competency model, while 85 percent of companies connect their DM training to a formalized standard. 

In addition, more companies—27 percent of those surveyed, up from 7 percent two years ago—are looking to demonstrate that training can have an impact on sales force retention. Again we consider B. Braun Medical. Exit interviews in 2003 revealed that two of the top-three complaints among salespeople were learning related: Reps said they didn't get enough training and didn't have defined career paths. The organization's board of directors decided to resolve these issues by investing heavily in training. While other departments were asked to maintain or reduce existing expense levels year over year, the training department received increased headcount and discretionary budget in 2004, 2005, and 2006. At the end of 2006, turnover was 7 percent, down from 16 percent in 2003. 

Trend 3: Trainers Cope with "Senior-itis" 

When a new rep comes on board, companies dedicate an average of 62 days to training during the first year. After the first 12 months, training significantly drops off—to about two days a year. However, some companies are taking a new look at their training for tenured salespeople. 

Can pharma take its talent-and its earning potential-to the next level with employee education?

Pharmaceutical Executive-02-01-2008

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Brand of the Year 2008

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