The European Commission's proposed pharmaceutical reform package has finally been unveiled—months later than scheduled. However, to the dismay of pharma companies, the section that would have effectively put an end to parallel trading in prescription medicines has been removed. The proposals are now being passed on to the European Parliament and Council of Ministers for further discussion and voting, but the earliest they could become law is 2010.  

An earlier draft banning the repackaging of medicines would have made it extremely difficult for traders to buy up drugs in "cheap" countries and sell them for a profit where prices are higher. (Drugs could not be sold in Sweden, for instance, with a carton and insert labelled in Greek.) Following pressure from the traders, this part of the proposal was dropped—causing delay in publishing the document. 

Instead of a blanket ban on repackaging, all drug products will require barcodes or serial numbers, as well as tamper seals that a limited number of certified manufacturers will be allowed to use. This will include parallel traders, who won't be able to alter the blister packs that contain the pills, but the rest of the package will be fair game as long as the pack meets all the new requirements. The aim of this part of the legislation is to make it more difficult for counterfeiters to create legitimate-looking drug packaging.  

There has been disappointment, however, that no Europe-wide strategy to regulate Internet drug sales will be implemented. The proposal calls for member states to address that issue individually, despite the fact that counterfeits are a particular problem in Internet-based pharmacies.  

Two other parts of the proposal will likely result in legislation. One allows pharma companies to give the public limited information about their products, and another will strengthen the pharmacovigilance system within Europe. 

This does not mean that Europe plans to go down the DTC route. However, companies would no longer be completely banned from disseminating factual information about their products, such as a summary of product characteristics, ADR warnings, prices, and notification of packaging changes. These would be allowed only via health-related Web sites and publications. Importantly, pharma companies  would also be able to respond directly to inquiries about their products from the public. Currently, all pharma companies can do is point consumers in the direction of their doctors, even for answer to a factual question about mode of action or potential interactions—which the company is far better placed to answer. 

The proposals for modifying the pharmacovigilance system state that member states should retain overall responsibility, but they should work together more often. EMEA will gain a new scientific committee, which will play a key role in pharmacovigilance assessments within the EU, and all ADR reports should be channelled through the centralized Eudravigilance database. There are also plans for a European Web portal for drug safety information.  

A fourth, non-legislative, section of the reform package covers pricing and reimbursement, initiatives to boost pharma research in the EU, improved cooperation with other industrialized countries such as the US and Japan, and greater cooperation with emerging nations such as India, China, and Russia.  

Although disappointed that the ban on repackaging is not included, the European trade association EFPIA has welcomed the proposals. Its current president, Bayer HealthCare CEO Arthur Higgins, said that the organization appreciates the fact that the Commission recognizes the importance of the pharma sector to Europe, and appreciates its focus on patient safety.  

's global correspondent. She can be reached at 

Articles

Global Report

EC proposal loosens restrictions on drug packaging and information dissemination.

Reforms Offer Good News for Trade

Everyone wants to reform the nation's healthcare system. The main problem is that the US healthcare bill keeps rising faster than the economy, with little to show in terms of higher quality of care. Recent analyses by the Centers for Medicare and Medicaid Services (CMS) and the Congressional Budget Office (CBO) indicate just how difficult it is to make a dent in healthcare expenditures, even with a record slowdown in outlays for prescription drugs.  

Last year, CMS projected that the nation will spend $2.6 trillion for healthcare in 2009, which equals 17 percent of gross domestic product. Under current policies, that amount is projected to rise to 20 percent of GDP by 2017, and nearly 50 percent in 2082, according to the CBO reports, "Key Issues in Analyzing Major Health Insurance Proposals" and "Budget Options on Health Care" (available at 

). Annual healthcare spending will increase from $8,300 per person today to $13,000 by 2017, and federal outlays for Medicare and Medicaid will grow from $720 billion to about $1.4 trillion by 2019. The number of uninsured people is projected to rise from 45 million today to about 54 million in 10 years because health insurance premiums will increase much faster than income, making coverage more difficult to afford.  

One bright spot on the healthcare horizon is a slowdown in expenditures for prescription drugs. In 2007, the growth rate for spending on drugs hit a 45-year low, according to the CMS Office of the Actuary. Outlays rose only 4.9 percent, to $227.5 billion—that's a little more than half the 8.6 percent rise in 2006, and the slowest rate of growth since 1963. 

However, this development carries little good news for pharma companies as increased utilization of cheaper generic drugs drove the decline. Generics accounted for 67 percent of drugs dispensed in 2007 (up from 63 percent in 2006 and 60 percent in 2005) as more blockbuster drugs went off patent, six-month exclusivity periods expired, and formularies set higher copays for branded products.  

Wider use of generics and retailer discount programs have also curbed total drug prices, which rose a paltry 1.4 percent in 2007—even less than the 3.5 percent price increase in 2006. Brand name drug prices increased at a higher rate, but less than in previous years. CMS also noted that drug utilization declined in some therapeutic areas due to concerns about drug safety, as the proliferation of black-box warnings from FDA discouraged prescribing of certain medicines. Fewer blockbuster drugs coming to market further reduced the number of products able to command premium prices.  

CMS statistician Micah Hartman noted that the slowdown in drug outlays was "one of the major factors driving down overall healthcare spending growth in 2007." Total expenditures for healthcare increased only 6.1 percent in 2007, to $2.2 trillion, the smallest increase since 1998.  

Analysts predict that savings from generics could be extended by promoting competition for biotech therapies. CBO calculations support such a move, projecting $9.2 billion in government savings over 10 years from an abbreviated pathway for FDA approval of follow-on biologics (FOBs). CBO assumes a 12-year exclusivity period for brand-name products and limited requirements for duplicating innovator clinical trails. Medicare would save the most, but other government health programs could also gain from access to less costly therapies. 

The savings would be even greater—about $12 billion over ten years—if CMS also revised billing codes for biologics administered by physicians under Medicare Part B. Placing an FOB in the same billing code as a brand-name counterpart allows CMS to reimburse physicians based on a weighted average of the prices paid to all manufacturers in the group. Doctors who dispense less expensive FOBs thus can retain the difference between product cost and Medicare payment, while those who prescribe more expensive brand-name products would face a financial penalty.  

Another cost-cutting strategy is to require manufacturers to pay rebates on medicines purchased by Medicare Part D plans. House Energy and Commerce Committee chairman Henry Waxman (D-CA) has been pushing an initiative to reduce "windfall profits" to manufacturers due to reduced rebates to state Medicaid programs. CBO calculates that a mandatory 15 percent rebate of the average manufacturer price, beginning in 2011, would save the government $33 billion over five years and $110 billion over ten years. Manufacturers would pay rebates to retain coverage for their products by Medicaid, the Veterans Health Administration, and other government health programs, as well as Medicare Parts B and D. The policy builds on the Medicaid drug rebate program, but drops the "best price" provision to reduce the impact on price negotiations by private purchasers. 

The downside is that over time manufacturers will likely try to offset rebates by raising prices for new medicines, and by introducing new strengths and dosages for existing drugs, thus commanding higher rates. But Sanford Bernstein financial analyst Timothy Anderson calculates that a 20 percent rebate on all Part D drugs "would be tolerated surprisingly well" by leading pharma companies, reducing earnings only 3 to 10 percent. 

With many popular reform proposals, however, CBO sees little potential for reducing government outlays. Prevention and disease management programs may lessen some patients' need for expensive care, but such initiatives can be expensive, especially if provided for large populations. Anti-obesity and anti-smoking campaigns may extend lives, but over time will increase demand for elderly care. And modifying medical malpractice laws would have only a modest impact on healthcare expenses.  

Many policymakers support wider adoption of health information technology to help lower healthcare costs and improve quality of care. But implementation will be costly up front—more than $50 billion a year to establish a national health IT system. CBO also continues to challenge the idea that comparative effectiveness research will generate savings. Budget analysts estimate that studies weighing the clinical effectiveness of medical products and procedures could lower total healthcare spending by about $8 billion over 10 years, but upfront costs would eat into most of those savings and yield limited financial gains.  

CBO agrees with pharmacy benefit managers and manufacturers that permitting the federal government to negotiate lower Medicare drug prices with pharmaceutical companies is likely to produce "small if any savings." The Secretary of Health and Human Services (HHS) might persuade some companies to reduce prices for select single-source products, but would not have sufficient leverage to secure significant discounts. 

 These issues will be revisited in coming months under a number of initiatives. Congress has moved quickly to reauthorize the State Children's Health Insurance Program (SCHIP), and is working with the White House to craft a 2010 budget, tax changes, and additional economic stimulus proposals. Most significantly, the Medicare physician-pay solution looms ahead.  

Many legislative experts believe there's not enough time to address broad health issues this year, but reform advocates insist that American industry cannot compete globally unless the nation develops a more efficient and cost-effective healthcare system.   

's Washington correspondent. She can be reached at 

Washington Report

A close look at the healthcare industry will separate real cost-cutting measures from money-saving myths.

Securing Savings

 I've met my share of hard bargainers, aggressive marketers, and tough competitors, but I don't think I've come across a single pharma professional who treats the industry as if it's just another business. Whatever the problems the industry faces, it has at least built a culture based on the idea that business success and patient benefit must go hand in hand. The results are never perfect, but if you take the long view—especially the view that includes off-patent drugs and their strikingly low prices—things tend to work out, and patients eventually get what they need at affordable prices.  

But not always. And nothing is a more consistent rebuke of the "good medicine is good business" philosophy than the persistent, pervasive, debilitating diseases of developing nations. In these poor countries, millions lack access to the most basic elements of public health—clean water, sanitation, and adequate food. And the drugs and vaccines that could have a transformative effect on the "bottom billion." Too often there simply isn't an economic justification to develop them. A handful of companies have made commitments to the emerging world, but it's too soon to tell whether their efforts will prove sustainable in today's (and probably tomorrow's) dismal economic situation. 

Besides, even when pharmaceutical companies' products do match the needs of the poor, no one who cares about advancing global health can be happy about a system that delivers results for a vast portion of the world's population only "eventually"—after the citizens and payers of the developed world have paid for (and benefited from) costly research and development. 

That's why we're pleased to bring you this month's cover story, Executive Editor Joanna Breitstein's in-depth look at the latest developments in vaccines for the emerging world. Many of you have met Joanna over the years. For those of you who haven't, it's worthwhile to mention her deep commitment to Third World health issues—a commitment that led her a few years ago to launch a foundation that built and operates a free school and clinic in the slums of Kabalagala, Uganda. (For details, visit 

.) In this month's article, she explores the web of public health agencies, NGOs, charities, and, yes, pharmaceutical companies that are gradually learning to align science, business, charity, and government investment to fight disease among the world's poorest. 

It's a fascinating story of ongoing experiments in how to make the pieces fit and the players cooperate. And contrary to the spirit of the sweeping political promises we've heard in our recent, endless Presidential campaign, every decision and every innovation is rooted in the idea of incremental, sustainable change that starts not in the abstract world of ideas, but right here where we live. 

This sort of experimentation has the  potential to benefit all of us, not just the poor. Even amid the wealth of the United States, we've hit a point where most of us face the prospect of receiving less-than-optimal healthcare because of prohibitive costs. We know that the healthcare market can be transformed. Perhaps outreach to those least able to pay will reveal potential solutions. After all, pharma really ought to be more than a business.  

From the Editor

No one who cares about global health can be happy with a system that only "eventually" delivers drugs and vaccines for the planet's neediest people

Working Together

Healthcare product companies have intensive capital requirements. While this has historically been a challenge for small and mid-sized pharmaceutical and biotech companies, the current chaos in the financial markets poses a significant barrier to the growth and viability even of larger companies. Now more than ever, pharma companies need to consider alternative approaches to accessing the capital they need to grow and thrive.  

For many pharma and biotech companies, one particularly attractive alternative is the sale of future revenue—either in the form of royalties or product revenue. Such sales, known as royalty monetization and revenue interest transactions, provide flexible alternatives to standard equity and debt financing, and can be customized to meet a company's near-term financial needs, as well as long term growth objectives, corporate priorities, and time lines. By converting future revenue into present value, these transactions provide capital today that can be invested in achieving tomorrow's growth potential.  

While royalty monetization and revenue interest financing have long been available, they have become increasingly popular in the past few years. Deal flow, which historically was measured in the low hundreds of millions of dollars annually, now exceeds $1.5 billion.  

What was once a unique way for small companies to raise $20 million to $50 million has now been adopted by progressively larger entities with greater capital requirements. It is clear from the increasing number and size of these transactions that they will be part of healthcare companies' capital formation strategies for the foreseeable future. No longer a stopgap measure to be used in chaotic markets, royalty monetization and revenue interest financing have become viable strategies for balancing near-term financial needs with long term growth objectives.  

The growth of the market for product revenue financing reflects the numerous potential benefits these transactions offer to small and medium-sized pharmaceutical companies seeking capital to achieve a variety of strategic objectives. These vehicles can benefit almost every company at some stage of the corporate life cycle, and in today's market conditions they are useful to a growing number of companies. Royalty monetization and revenue interest financing transactions are typically less expensive than traditional public or private equity. Additionally, because they do not involve equity, they do not dilute the ownership stake of a company's existing investors. 

Royalty monetization and revenue interest financing transactions can be used to achieve a variety of strategic objectives. To date, their use in the pharmaceutical industry has included: 

» Defraying the cost and risk associated with launching new products

» Increasing the amount of capital available for near-term R&D initiatives

» Strengthening a balance sheet through monetization of a passive royalty

» Resolving potential Federal Trade Commission (FTC) issues associated with the acquisition of companies with competing products

Royalty monetization and revenue interest financing are quite similar: In both cases, the company receives near-term cash in exchange for all or a portion of a future income stream. There are, however, some differences in the structure of deals and the flow of cash.  

 converts a future income stream generated by an intellectual property asset or licensing deal into cash today. This reduces risk by shifting future revenue streams to the investor and allowing for greater "predictability" of cash flows to the company. In a royalty monetization transaction, a company sells all or a portion of a royalty stream in exchange for agreed-upon payments. Royalty payments that would typically flow to the company may be placed in a "lock box" account, with the agreed-upon portion of those payments flowing to the investor, and the remainder (if any) flowing back to the company. (See Figure 1.)  

Figure 1: A comparison of cash and intellectual property (IP) flows between a licensing agreement (A) and a royalty monetization transaction (B)			

 converts all or a portion of an existing or future income stream from revenue on product sales into a significant source of up-front capital without impacting reported revenues or EBITDA. This provides an opportunity to use future cash flows to accomplish shorter term objectives and accelerate company growth. In this sort of transaction, a company in effect "borrows" funds and then uses revenues from product sales to "repay" the debt in the form of a synthetic royalty on sales to the investor. (See Figure 2.) The transaction may be also structured to include other financing elements such as equity and/or traditional debt.  

Figure 2: A comparison of cash flows between a non-monetized revenue stream (A) and a revenue interest financing transaction (B). Revenue interest transactions create a "synthetic" royalty based on product sales revenue, which is paid to the revenue interest buyer in return for near-term cash			

Royalty monetization and revenue interest financing transactions offer unparalleled flexibility and customization with respect to the interest being sold, the percentage of the interest sold, the territories covered by the agreement, and the duration of the agreement. Transactions can be structured to comprise royalty or revenue streams derived from a single product or a suite of products, and/or specific geographic territories. Similarly, a transaction can be a straight sale or a structured sale. For the latter, the structure can comprise a percentage and/or tier of royalty or revenue stream, and may include a cap on aggregate payments, either over the life of the transaction or annually, with surplus flowing to the seller. After the term of the agreement is completed, the entire revenue or royalty stream once again flows to the seller.  

These transactions can be structured to enable companies to retain a large portion of the upside if the sales generating the royalty or revenue stream exceed expectations. Additionally, revenue interest transactions give a company the opportunity to repurchase revenue interest when additional capital becomes available, preserving long term value and growth potential. 

The ability to tailor the duration of an agreement allows for consideration of near-term and long term corporate financing needs, as well as the potential of the product underlying the revenue stream and the changing condition of the financial markets. In today's financial environment, a transaction with an 18- to 24-month horizon provides shelter from the current stormy market conditions while providing maximum financing flexibility once the equity and debt markets become more favorable. In addition, the option for structures with longer time horizons provides companies with an important tool for managing future capital requirements.  

This flexibility of structure, interest(s) sold, and length of the transaction enable pharmaceutical companies to meet their near-term capital needs while preserving substantial long term opportunities and growth potential.  

Most significantly, the buyer in a product revenue financing transaction is more like a partner than an investor because there's a shared ambition for the success of the product underlying the revenue stream. Generally, the success of an individual product is predicated on the long term overall health of the company with product marketing responsibility. This provides the buyer with strong motivation to establish transaction terms that consider the various development and commercialization needs of specific products and companies on a case-by-case basis. Ultimately, alignment of the seller's and the buyer's objectives under these circumstances better supports long term corporate success than typical debt transactions do.  

It's important to note, however, that the realization of these potential benefits is dependent on working with an investor who understands the risks and benefits inherent in developing and commercializing life sciences products. Companies should seek an investor with a level of expertise in the technology, development, manufacture, commercialization and product potential that is commensurate with their own. The growing number of successfully completed royalty monetization and revenue interest financing transactions should help companies identify qualified investors. 

A number of recently completed royalty monetization and revenue interest financing transactions demonstrate the flexibility, utility, and diverse applications of these vehicles. The following case studies provide real-world perspective on the ways in which innovative companies throughout the pharmaceutical and biotechnology industries use these transactions to achieve a variety of strategic objectives.  

Reducing the cost and risk of launching a new product

 Typically, pharmaceutical companies directly pay for contract services from contract development and commercialization organizations. However,  a leading provider of these services has developed the capacity to offer a variety of risk-sharing deals. In a 2004 transaction with Eli Lilly & Co., a leading contract pharmaceutical development and commercialization company agreed to provide Lilly with five years of sales services in return for royalties on US net sales of Cymbalta (duloxetine), Lilly's antidepressant and pain reliever. The development and commercialization company also invested $110 million in marketing and milestone payments into the pre-approval Cymbalta program. The structure of the transaction allowed Lilly to establish new revenue streams without taking on the full cost or risk of launching a new product in multiple indications. 

In this transaction, the contract development and commercialization company served as both the contract service provider and the royalty buyer. Similar transactions can be structured so that a third party provides all or a portion of the funding to the contract sales organization in return for sales royalties paid by the pharmaceutical company. 

 Glenmark Pharmaceuticals (GPI), a wholly owned subsidiary of India-based Glenmark Pharmaceuticals, was looking to establish a portfolio of generic dermatology products for the US market in order to advance its niche products strategy into new indications and expand its offerings in the US generics space. The company sought non-dilutive access to capital to fund research and development for 16 dermatology products. GPI monetized a portion of the future revenues of these 16 products in return for $27 million, which was provided along with development milestones to match actual clinical development expenses. With this funding, GPI was able to offset its R&D expenses while building its US franchise. 

 SkyePharma is a specialist drug delivery company that develops oral and inhaled therapies. The company needed $30 million to fund Phase III trials of its sustained-release morphine product DepoMorphine (now DepoDur). Although SkyePharma intended to find a commercialization partner, the company wanted to delay partnering until Phase III trials were complete in order to optimize its partnering economics.  

The company entered into a hybrid monetization plan for a portion of its royalty/revenue interests on four of its products (three smaller products already on the market and DepoMorphine). SkyePharma estimated that delaying the partnership until after Phase III trials enabled the company to receive significant milestones and a higher royalty rate on sales of DepoMorphine than if the partnership had been established at the completion of Phase II trials. 

 Oscient Pharmaceuticals needed capital to acquire US rights to Antara (fenofibrate), a drug indicated for the treatment of high cholesterol and triglycerides. The company wanted a flexible financing vehicle that would be neither too dilutive to equity nor have a heavy impact on near-term cash flow. 

Oscient undertook a hybrid financing transaction—consisting of a revenue interest, debt, and equity—that monetized a portion of the sales revenue that would be generated by Antara after its acquisition, as well as a portion of the revenue generated by Factive (gemifloxacin), an antibiotic already marketed by the company. In exchange for portions of the revenue streams, Oscient received $40 million in cash, $20 million in mezzanine debt, and $10 million in equity financing.  

The acquisition of Antara transformed the company, leveraging its existing sales force to generate an expanded revenue base and accelerating its path to profitability.  

Divesting a royalty to clear the way for a strategic acquisition

 Prior to approval of the 2004 acquisition of Aventis by Sanofi-Synthelabo, the US Federal Trade Commission required that Aventis divest itself of a future royalty it was entitled to receive from Sepracor on US sales of Lunesta (eszopiclone). This divestiture was required because Sanofi marketed Ambien (zolpidem), the market-leading sleep product. At the time of the proposed acquisition, FDA had not yet approved Lunesta. The US market for prescription sleep products at that time was approximately $1.8 billion and was expected to exceed $3 billion by 2010.  

Aventis sold the entire Lunesta royalty stream in return for fixed and milestone payments totaling up to $115 million, payable after commercial launch of Lunesta in the US. Through this royalty monetization, Aventis met the FTC's requirements, allowing Sanofi to successfully complete its $64 billion acquisition of Aventis in December 2004. That same month, the FDA approved Lunesta for the treatment of insomnia. 

This is not the first time that the pharmaceutical and biotechnology industries have faced difficult markets and reduced access to capital. Previous market upheavals have been characterized by Darwinian dynamics, with larger, cash-rich companies often devouring smaller, less robust companies. Some smaller companies have found synergies with one another that enable them to evolve in direction and scale into a new entity that can survive in a more challenging financial environment. 

Today, royalty monetization and revenue interest financing have the potential to generate substantial, immediate capital injections that can have a transforming effect on healthcare companies. Moreover, with the ability to raise several hundred million dollars, these transactions are now more than just a blip on the radar of large and mid-sized pharma companies. While many of the big players have sufficient cash reserves to weather the current financial crisis, their ability to access additional capital outside the equity and debt markets gives them unparalleled flexibility in deploying their financial resources and managing risk. 

Darwinism will ultimately rule the day, but the availability of alternative funding strategies may provide a greater number of healthcare companies with the financial resources they need to avoid becoming dinosaurs.

. All three are partners at Paul Capital Healthcare. 

Features

Convert future revenue into present value with alternative approaches to access capital.

Stream Power

The first time Margaret McGlynn heard about the brother she never met, it was the 1960s, and she was with her mother at an immunization clinic in Buffalo, NY, waiting to be injected with a brand new measles vaccine.  

As the line moved slowly forward, four-year-old Margie grew frightened watching the needle sink into the arm of child after child. That's when her mother took her aside and told Margie the story of this other child, who died a decade earlier of the same disease this vaccine would protect her from.  

Margaret McGlynn, President, Merck Vaccines & Infectious Diseases 

The 18-month-old had been suffering from measles when he spiked a high fever. McGlynn's mother called the doctor. Wrap the baby in cold towels, the doctor told her. Helplessly, McGlynn's mom pressed the towels around the baby, only to see him get worse. Eventually, she rushed the baby to the hospital, where she learned that he had contracted pneumonia as a complication of measles. He didn't survive the day. 

"After hearing how my brother died, I didn't ask any more questions as to why I needed to get this shot," remembers McGlynn.  

Merck's Dr. Mark Feinberg (center) administers RotaTeq to an infant in Nicaragua. The rotavirus vaccine marked the first time a vaccine reached a poor nation in the same year it was licensed in a rich one. 

In the course of her lifetime, McGlynn has seen the elimination of many diseases—measles among them. She's even done her part in exterminating them. McGlynn was senior director of marketing for Merck's MMR (measles, mumps, and rubella) vaccine. Now, she heads Merck's recently reorganized vaccine group, which fights childhood and early mortality through products such as the cervical cancer vaccine, Gardasil (human papillomavirus quadrivalent, types 6, 11, 16 , and 18) and RotaTeq (rotavirus vaccine, live, oral, pentavalent) which prevents rotavirus, a potentially fatal diarrheal disease.  

Vaccination rates have long been dismally low outside of rich countries. Vaccines that have already been developed and cost pennies per dose could prevent some 20 percent of the seven million child deaths each year, according to the World Health Organization (WHO), but fail to because they don't reach the people in need.  

Rotavirus disproportionately affects the developing world, where citizens have the least access to vaccines. 

But in the last few years, in some places, things have started to change: Deaths from measles worldwide fell 74 percent between 2000 and 2007. The rate of polio, which afflicted 350,000 people per year as recently as 1988, has dropped 99 percent (the disease is expected to be eradicated within five years). And countries that have introduced mumps vaccination have seen cases drop from between 100 to 1,000 per 100,000 population to less than one per 100,000.  

 All this comes at a time when pharmaceutical companies are entering back into vaccine research, after largely abandoning the field for two decades. Small-molecule pills for chronic diseases offered higher margins and less legal liability. But now, new science has caused many of the world's biggest pharma players—like Merck, GlaxoSmithKline, Sanofi-Aventis, Wyeth, Roche, and Novartis—to come back to the field. It appears that vaccines will again be a major driver in the industry.   

That people in the US and other Western markets can access these promising vaccines there is little doubt. But the real opportunity to prevent human suffering is in the developing world. For that to happen, pharma needs not just next-generation vaccines, but a whole new approach to R&D and access for the poor. In coming years, vaccine makers will be called upon to help define the new rules of global access, and what new progress in science and technology will mean to the 90 percent of the world that can't afford it.  

A confluence of political will, funding, and innovation have made these goals more possible than ever. For example: 

» In 2000, 192 United Nations member states and more than 20 international organizations agreed to eight Millennium Development Goals—including the goal of reducing mortality of children under five by two-thirds before 2015.  That has rallied the global health community behind vaccines, since they are the most cost-effective way to prevent death among young children. President Obama expressed support for the Goals during his campaign, and with strong familial roots in Kenya, it is hard to doubt that he is in alignment with them.  

With a multitude of donor commitments, market-based incentives, and new science, vaccines for some of the worlds leading killers of children will reach millions in need. 

» The field of vaccines has been transformed in recent years by the GAVI Alliance (formerly known as the Global Alliance for Vaccines and Immunizations), which has worked with stakeholders from NGOs—including the Bill and Melinda Gates Foundation—pharma companies, and governments to increase the use of underutilized vaccines and introduce new ones. "The GAVI Alliance is providing the direct financial support that, once countries recognize the problem and the availability of the solution, gives them the means to move forward," says John Wecker, who directs the immunization activities for the nonprofit group PATH (formerly known as the Program for Appropriate Technology in Health). 

» Part of GAVI's approach is to educate developing nations on the burden of disease, and to ensure they pay copays on vaccines. This process has bred a new recognition in government officials that health equals wealth, and that investment in preventive medicine makes economic sense, even for a relatively poor country.  

» The battles pharma has fought with the developing world over AIDS drugs and intellectual property have been damaging to the industry—and have taught it a lesson. "The attention that's paid to access will continue to increase, and so being global 'actors' rather than 'tourists' is going to be increasingly important for how companies do business," says Kate Taylor, vice president of global vaccine policy at GlaxoSmithKline Biologicals. 

The economic crisis threatens to slow or reverse this progress. But for the moment, even these poor economics have not dampened the promising developments that can stop millions from dying. There's an "if" to that promise, of course, and it's a big one: Companies and other stakeholders need to learn how to reverse a long term trend and ensure that medicine goes to those who need it most and can least afford it. That means solving not just technical problems but finding a way to align moral and ethical principles with the demands of good business. 

In 1974, the World Health Organization established its Expanded Program on Immunization (EPI) to guide and support vaccinations for some of the world's biggest killers, including tuberculosis, polio, measles, and diphtheria-tetanus-pertussis. But chronic underfunding of vaccine programs meant that immunization rates remained low among the world's poor. At the end of the 1990s, fewer than half the children in sub-Saharan Africa were immunized, and three million lives were being lost each year to preventable infectious diseases.  

As time passed, WHO expanded the EPI list with vaccines for yellow fever, hepatitis B, and Haemophilus influenzae type b (Hib). But the high cost of these new vaccines kept them out of reach. In the early '80s, when a hep B vaccine became available, according to the World Bank, a three-dose course cost more than $150—far too much for the poorest countries. 

But there's more to vaccine access than price. There's also the lag between when a vaccine is licensed in the developed world and when it becomes available in developing nations—traditionally 10 to 15 years. "When we really got going in the early '80s, we were just piggybacking off developed countries," says Stephen Jarrett, deputy director of UNICEF's supply division. "Companies were selling vaccines at high prices, but they recovered all their costs, so we managed to get low prices for developing countries." 

But it now appears that the vaccine lag need not be a permanent feature of global healthcare. In the past few years, a pharma company working with public health authorities was for the first time able to bring a new vaccine to a developing market in less than a year, if only for a single country. 

The vaccine in question is Merck's RotaTeq, approved in February 2006 for the prevention of rotavirus—which is responsible for the deaths of an estimated 600,000 children a year. A GAVI-funded group called the Rotavirus Vaccine Program investigated the disease in the world's 72 poorest countries, where many health authorities were still unaware of the link between fatal diarrhea and rotavirus.  

Nicaragua, a member of the bottom 72 and one of the poorest nations in the Western Hemisphere, suffered an outbreak of rotavirus in 2005, the year before RotaTeq received FDA approval. More than 50,000 cases were reported and 52 children died. Nicaragua couldn't pay for RotaTeq, but did strike an innovative deal with Merck. In exchange for a three-year supply of donated vaccines, it agreed to undertake a demonstration project that would add to the body of evidence on how this new vaccine would work in a resource-constrained setting.  

"We wanted to change the history of the slow rollout of a new vaccine," says Mark Feinberg, MD, vice president of medical affairs and policy at Merck, who has long chartered access issues for the company. "But there were questions over whether a poor country like Nicaragua could effectively introduce it." 

But with government backing—and high public awareness of the toll rotavirus was taking—Nicaragua rolled out the immunization campaign. In just a few months, the country achieved the world's highest rotavirus immunization rate, exceeding even the United States.  

The official results of the demonstration project are due later this year, as well as the results of African and Asian clinical trials of RotaTeq and Rotarix (rotavirus vaccine, live), GSK's rotavirus vaccine, conducted by PATH. Those results are expected to form the basis for recommending, funding, and rolling out rotavirus vaccines in the 72 GAVI-eligible countries. By 2025, this vaccine should save 2.4 million lives, according to PATH. 

The speed of introduction is a testament to just how much the landscape has changed.  

Nina Schwalbe, GAVI's head of technical policy, says—aside from more reliable funding—it comes down to new partners that help mobilize the vaccine infrastructure. "There's PATH, which tests vaccines in developing countries, and WHO that approves them and signals to countries that they are beneficial. There's GAVI—the 'Sam's Club' of vaccines—and UNICEF, which is the major procurement agency for vaccines." That doesn't even take into account the other nonprofits that educate, advocate, and build the investment case for vaccines in developing countries. 

This web of interconnected health agencies, health systems, funders, and companies is now mobilizing behind a vaccine for pneumococcal disease, which kills almost a million children each year, 90 percent in developing nations. The Pneumococcal Accelerated Development and Introduction Plan (PneumoADIP), a project based at Johns Hopkins University and funded by GAVI, is working to bring Wyeth's Prevnar, a seven-valent pneumococcal conjugate vaccine, to several countries over the next few years. (Meanwhile, Wyeth is developing a next-generation dose of Prevnar that offers more protection.) To facilitate this rollout, Wyeth plans to donate 3.1 million doses of Prevnar in 2009, to be used in Rwanda and Gambia, the first two African countries to introduce the vaccine.  

The GAVI Alliance is still deciding which vaccines to fund—and like everyone else, seeing how the financial crisis pans out. But with several new therapies on or close to market, their short list of diseases to tackle over the next few years include cervical cancer, typhoid, Japanese encephalitis, and rubella. 

Less than 10 percent of investment in health research goes to diseases that affect 90 percent of the world, according to the Commission on Health Research for Development. Still, companies are more engaged in global health than ever before—and not just because of the sales they hope to eventually make in poor nations. "All of the large pharmaceutical companies recognize that the world is changing, and there is also an ethical obligation to enable access to life-saving drugs and vaccines," says Merck's Feinberg. "Companies will have a difficult time if they approach the world solely from a commercial perspective." 

Most recently, the first pharma-funded institute was established dedicated solely to the development of vaccines for neglected disease. The Novartis Vaccines Institute for Global Health (NVGH), in Siena, Italy, is a companion to the company's nonprofit Singapore site, focused on drug treatments for tropical diseases. NVGH is Novartis' answer for developing vaccines that target developing world needs, but it does so in a context where it can work with and trade intellectual property with the company's commercial arm. NVGH's first project aims to develop a broad-range enteric vaccine to protect children against several 

 infections, including typhoid fever, which kills 200,000 children each year outside the West.  

"New medicines can only be made efficiently by commercial organizations," says Paul Herrling, head of corporate research at Novartis. "We have some responsibility to think about access to medicine, and simply allocate the portion of our research capacity and science technology to these diseases. We think it's a way companies can distinguish themselves from one another." 

Still, most companies don't go it alone. In fact, the majority opt to participate in product development partnerships, or PDPs, which have exploded in number in recent years as a result of the massive influx of Gates Foundation funding. In 2005, there were 32 PDPs with pharma companies. By 2008, the number had jumped to 67, according to a study undertaken by the International Federation of Pharmaceutical Manufacturers.  

There are many reasons why it makes sense to work within the PDP framework. "The success rate is much higher if pharma works in collaboration with a product development partner," says Alan Fairlamb, a professor and researcher at the University of Dundee's school of life sciences, a hub for research on sleeping sickness and other diseases. "They are constantly checking to make sure that the additional challenges that a product faces in the developed world are being addressed." 

The evidence to the contrary, says WHO's EPI medical officer Rudi Eggers, MD, is products like Prevnar. "The pneumo vaccine comes in a pre-filled syringe, which is very complicated in the public sector because it adds to your cold chain storage," he says. "Disposal of pre-filled syringes is also complicated. In terms of developing future vaccines, the interaction between the advisors, ourselves, and the manufacturers has to be much closer to develop appropriate formulations that actually would work better in developing-country public-sector markets." 

PDPs have been successful in creating a neglected disease pipeline where there was none. In particular, the malaria vaccine RTS,S—a recombinant circumsporozoite protein fused to a hepatitis-B surface antigen which uses an adjuvant to enhance the immune response—illustrates the power of PDPs to mount research where the risk would be too large for any one entity to bear. GlaxoSmithKline first undertook development of a malaria vaccine more than 25 years ago, but progress picked up when Gates committed funding to the PATH Malaria Vaccine Initiative, and GSK teamed up with the group. The vaccine is expected to move into Phase III, where it will be tested in 16,000 patients in Africa—the largest clinical trial ever conducted for a vaccine on that continent.  

"We've reached a high in malaria vaccine development, but this high is a real high," says GSK's Joe Cohen, an inventor of RTS,S. "It will very hopefully take us all the way to registration and implementation of the very first malaria vaccine. That's a big step forward, a big breakthrough." 

As the vaccine progresses through the pipeline, it has generated more excitement, but the majority of neglected disease projects—39 of the 67—are still in early-stage research. "There may be a lot of science and discovery projects," says IFPMA president and Schering-Plough CEO Fred Hassan. "But frankly, the funnel becomes pretty narrow on the other end." 

The cost of early-stage research is just a fraction of full-scale clinical development. "To move these drugs in the pipeline, it will cost $1 billion a year," says Herrling. "That's what it cost to build the pipeline over the last five to eight years." Indeed, the IFPMA study estimates that the funding shortfall from now until 2017 is between $6 billion and $10 billion. With no indication that current donors could meet the need, many fear such research efforts will simply stall. 

With the expected funding shortfall of the pipeline, efforts to develop a market-based solution to the R&D problem have been energized. "The challenge over the next few years is financial innovation as much as product innovation," says Peter Hotez, MD, president of the Sabin Vaccine Institute, a nonprofit developing vaccines for hookworm and other diseases.  Here are some new ideas to spur neglected R&D. 

 At press time, the PDUFA date for Novartis' gold standard antimalarial Coartem (artemether–lumefantrine) had come and gone without any decision, but all eyes are on the drug as it waits to hear from FDA on its eligibility for a PRV. 

The world is suffering. But just over the horizon is a new access equation that could speed innovative vaccines to where they're needed most.

Vaccines for All

Barack Obama's inauguration was a reminder that Americans are hungry for change. Can you blame them? Our nation is mired in an economic slowdown, the cumulative result of financial markets in disarray, a credit crisis, a housing correction, a mounting trade deficit, a retail slump, and an energy market tied to the political stability of a volatile region. In the business world, the old ways have not been working.  

Take the auto industry.  Perhaps the best thing we can say about the rescue package for Detroit is that it appears frugal compared to the $700 billion bailout of the financial sector. Not only did the government spend $17.4 billion to keep two terminally ill companies afloat, but it stipulated that a "car czar" act as liaison between the automakers and the federal government. Why a self-destructive industry deserves representation in the White House is beyond me. 

We need more than just a refurbished Cabinet; we need all new furniture. It's time for the federal government to make a sincere commitment to innovation. 

 columnist Tom Friedman noted that a flawed system has hijacked the country's brain trust, creating radical new investment vehicles instead of, say, radical new motor vehicles.  "We don't just need a bailout," wrote Friedman. "We need a reboot. We need a build out. We need a national makeover." 

The Obama administration has taken the first step toward that makeover with a $1 trillion stimulus plan designed to create 3 million jobs by 2011, in part by reinvesting in our national infrastructure. If this sounds familiar, it may be because Franklin Roosevelt did the same thing about 75 years ago. Back then, we called it the New Deal. 

"We won't do it the old Washington way," Obama said of his spending plan. "We won't just throw money at the problem. We'll measure progress by the reforms we make and the results we achieve—by the jobs we create, by the energy we save, by whether America is more competitive in the world." 

These are admirable goals, but one must at least raise an eyebrow.  An explicit distaste for "the old Washington way" is pretty common in Washington, and a focus on rebuilding things that are already falling apart could well be a step in the wrong direction. Let's make every one of those trillion dollars count. 

Obama recently won acclaim from the Industry Advisory Council, a group of information technology contractors, for the decision to tap a chief technology officer. The trade group also recommended that the President form a Government Innovation Agency to serve as an incubator for ideas and a repository for best practices. 

The Obama administration could demonstrate its commitment to innovation by naming a Cabinet-level Secretary of Innovation. It's an aggressive idea, but for a President who campaigned on change in a nation dealing with a recession, it could meet little resistance. 

The first Innovation Secretary would have three primary goals: 1) assemble a regular summit of economists, academics, and innovators to get input on the state of industry; 2) help author and support legislation to create financial incentives that favor entrepreneurs and drive new ideas; and 3) develop a Web site that will serve as a suggestion box for innovations (in the style of Procter & Gamble's site). 

Of course, creating such an agency won't be an easy sell with the federal government. There is a bias, particularly during difficult economic times, toward sticking to the conventional business model. But that's counterproductive thinking. According to a November article in Knowledge@Wharton: "Given the high failure rate of innovative projects, companies are smart to develop an array of possible situations and contingencies, rather than pin all their hopes on one plan."  The article cites Paul J.H. Shoemaker, research director for the Mack Center for Technological Innovation, who says firms should approach innovation with a shotgun, rather than a rifle. That is, try as many different approaches as resources permit, and hope that you hit something. 

Funding and rewarding innovation will require new ways to assess success. If the US continues to ignore national sponsorship of innovation, we risk falling behind the curve and losing ground to countries that dedicate resources to meaningful technological advancement. 

 is managnig partner of Flaum Partners and chairman of the Fordham Graduate School of Business, Leadership Forum. He can be reached at 

Leadership

The President is ready to spend heavily to help out economy. Let's invest in ideas that carry us forward.

Innovation Nation

Across industries, marketers are recognizing the power of digital marketing to establish real-time relationships with new and current customers while maintaining the ability to track and analyze customer touches and adjust accordingly. Looking at the digital landscape from a media-spend perspective, total Internet ad spend ($21.2 billion) in 2007 was up 26 percent from the year before, according to the Internet Advertising Board. A similar increase is expected for 2008.  

But it's not just about Internet advertising. Smart marketers in B2C and B2B are utilizing a variety of digital channels—Web 2.0 tools such as blogs, wikis, social networks, and video—to engage with customers and create thriving relationships. What separates these marketers from others who may be experimenting with new media strategies? Channel integration. 

Integration of these channels with traditional outlets such as TV, radio, direct mail, and direct sales, coupled with rigorous analysis, allows marketers to understand the consumption patterns of their content. This gives them the information to adjust their marketing mix, pushing spend toward channels that work, and pulling dollars from channels that don't work.  

KEY FINDING: Manufacturers concerns in adopting digital marketing tactics; experience, ROI measurement top list 

The pharmaceutical industry is facing formidable challenges. From influencing physicians to educating consumers to overseeing relationships with managed care organizations, pharma has unique market dynamics that make the go-to-market model far more complicated than a traditional push/pull paradigm. Interwoven with this complexity is the challenge of determining what actually drives prescription volume, and how to drive growth with increasingly tight budgets and new regulations amid high-risk product launches. 

While other industries are beginning to take a multichannel marketing approach, pharma still prefers a "feet on the street" sales rep model. Top pharmaceutical companies are now experimenting with Web 2.0 strategies, but they have yet to put the pieces together to enable digital marketing outcomes to permeate their organizations.  

KEY FINDING: Overall effectiveness of the new media platforms that you have used (on a scale of 1 to 5, 5 being most effective) 

To find out just how far pharma marketers have come in implementing Web 2.0 strategies—and how far industry has to go—in 2008 MarketBridge and 

 magazine fielded "Digital Marketing in Pharma," a groundbreaking survey designed to shed light on the prevalence and effectiveness of digital marketing tools and techniques.  

The following research was distributed primarily among 

's subscribers and MarketBridge's Life Sciences Practice database. A total of 220 people completed the survey, answering questions on digital marketing and budgeting, usage of digital marketing channels, analytics, resources, and attitudes and beliefs.  

Because of the respondents' wide range of job titles and responsibilities, the survey findings were segmented into four basic categories:  

 Presidents, CEOs, and other C-level titles that have authority over marketing and sales 

 EVPs, vice presidents, directors, and managers of marketing organizations  

 EVPs, vice presidents, directors, and managers of sales organizations 

 People who do not have direct authority over sales and marketing but may support one or both, including directors, managers of interactive, and operations 

While the industry lacks the understanding, organization, and experience to measure digital marketing returns, it's slowly moving forward with implementation. Here's what the survey revealed:  

 When asked to rate their understanding of digital marketing, nearly 45 percent of respondents said they "need to know more." Asked how prepared their companies are to plan and implement digital marketing strategies, only 12 percent said  "well organized." More than a third said they were "not very well organized." 

Measure ROI more easily with the right tools 

Respondents were equally concerned with their lack of experience with new digital marketing platforms and the inability to prove ROI with them—though many of the latest digital marketing tools and techniques actually make it easier to measure ROI. Close to 50 percent cited regulatory issues as a top concern. 

 Not surprisingly, pharma marketers cite search engine marketing, webinars, and organic search as their most effective digital vehicles. (See above.) Least effective: blogs and virtual networks. Interestingly, social networks, considered promising within the industry, were also on the low side of effectiveness.  

 While companies do use digital marketing channels, half of the respondents spend 10 percent or less of their budget on digital. The majority of pharma marketers (57 percent) are spending the most on what they are familiar with, mainly their own Web sites. Relatively few (10 percent) are spending toward Web 2.0 vehicles such as blogs, social networks, and video.  

 Digital marketing influence appears to come from the top down: next to business line/country managers, CEOs have the most influence on digital marketing strategies. Surprisingly, finance, which controls the purse strings, ranks below IT in influence.  

Pharma's reluctance to deploy Web 2.0 tools is rooted in a lack of familiarity and a perceived inability to measure ROI. The fact that pharmaceutical marketers are not even experimenting with these tools will hamper efforts to fully integrate digital marketing within the organization. As it is now, they are missing opportunities to fully engage consumers and boost compliance. 

There is a silver lining, however. Pharmaceutical marketers plan to fully integrate digital marketing in their strategies. Digital marketing spend is expected to rise, and digital has at least "some influence" in hiring, as organizations move more toward its adoption. 

Bottom line: Pharma companies risk falling behind unless they recognize the need to utilize digital marketing platform tools to effectively reach their audiences. 

For more information on the "Digital Marketing in Pharma" study, further interpretation of the results,  and case studies pertaining to overcoming sales and marketing challenges, contact 

Columns

Exclusive Pharm Exec survey details how pharma can make virtual channels effective marketing vehicles

Dive into Digital

Though 2008 was not a banner year for pharma, the industry can still pat itself on the back: It continued to extend control over HIV with three important new drugs, including Merck's Isentress; Treanda, brought to market by Cephalon, became the first advance against CLL in seven years; and Pfizer revamped an old pain drug as Lyrica for a newish condition, fibromyalgia. All three drugs showcased pharma's drive toward innovation in discovery, development, or marketing. For patients who benefited by them, each drug was no doubt the brand of the year. (See sidebars for more on each of these three finalists.)   

For our third annual Brand of the Year, however, 

 is honoring AstraZeneca's Crestor (rosuvastatin)—a selection that struck some of our advisors as eccentric. After all, Crestor is not a medical breakthrough, first in class, or even  new. Cynics asked if its recent success is anything more than a marketing marvel.  

The Crestor brand team, led by Lisa Nanfra, may be doing for C-Reactive Protein what they did for atherosclerosis. "It will be up to the regulatory and other guidelines bodies to make use of the JUPITER trial information in terms of clinical practice," Nanfra says. "But regardless, we are incredibly proud of the fact that we have been part of helping advance scientific knowledge." 

 a marvel—and something of a mystery. Since generic simvastatin (Zocor) hit in 2006, it has wreaked havoc on the $34 billion cholesterol market, long a leading engine of the blockbuster economy. Copycats immediately crushed sales of Zocor with a 97 percent switch rate in the first 12 months, according to Datamonitor. Sales of Pfizer's Lipitor—the fattest pharma cash cow ever—plunged 20 percent from Q1 2005 to Q2 quarter 2008. Crestor, alone among branded statins, has made gains—big ones. According to the drugmaker, in 2005, the superstatin recorded $1.2 billion in global sales; in 2006, $2.1 billion; in 2007, $2.8 billion; and in 2008, an estimated $3.5 billion. 

Crestor's improbable success derives from AZ's determined belief in the drug's value and its willingness to take big risks to demonstrate that value. Born amid a tempest, Crestor weathered the worst of the post-Vioxx storms to find safe harbor as the statin of choice for patients at highest risk for cardiovascular disease; in order to make the most of its major feature, high potency, AstraZeneca invested in an ambitious range of postmarketing trials. In 2007, the science earned Crestor the only indication among its class to treat atherosclerosis.  

A print ad (left) and three images from a TV spot for Crestors atherosclerosis DTC campaign. 

A giant Crestor trial called JUPITER was also responsible for what was arguably 2008's biggest medical news, supporting the use of statins to prevent heart attack and stroke in healthy people with normal LDL cholesterol but high levels of a C-Reactive Protein (CRP), a marker for inflammation. "The trial was originally conceived to see how important a factor inflammation is in cardiovascular disease," CEO David Brennan told 

If, as expected, FDA approves Crestor to lower CRP, it will be "another plank in the bridge we have built for this product," Brennan said. It will also likely set in motion a paradigm shift in cardiovascular medicine, addressing the long-unmet medical need of the healthy—who suffer nearly half of all heart attacks and strokes.  

Expanding the statin market to include testing and treatment for inflammation could send Crestor sales as high as $15 billion by 2016, when the patent expires. Such a scenario is unlikely to materialize unless AZ can win the daunting cost-effectiveness battle, but one thing is certain: As the other statins fade, Crestor's best days are still ahead. 

According to 2004 American Heart Association (AHA) estimates, cardiovascular disease afflicts 78 million Americans (half 65 or over), and is responsible for 58 percent of all deaths. With those numbers, statins were predictably hailed as wonder drugs by doctors and a license to print money by Wall Street. Public-health officials even joked about putting statins in the water, like fluoride.  

The first statins quickly revealed two key side effects in a small percentage of patients: kidney problems and muscle damage. Although the class has proved to be well tolerated by many millions of patients, in 2001 Bayer's statin, Baycol, was yanked from the market following 31 deaths. Sales dropped for the four other statins on the market.  

Such was the climate when rosuvastatin came before FDA with data showing it lowered LDL cholesterol and raised HDL further and faster than its rivals. But higher potency often meant higher toxicity, and the agency demanded more safety tests. Approval was finally granted in July 2003.  

With its top-selling drug, Prilosec, losing its $6 billion annual sales to generics, AZ craved a seat on the statin gravy train. But just as the statin marketing battle was heating up, the Vioxx scandal broke, fomenting near panic about drug safety. The cloud over Crestor took on a toxic hue.  

Yet the  safety albatross that stymied Crestor's early growth was not simply a matter of bad timing, says Stan Bernard, MD, MBA, of Bernard Associates. "Pfizer recognized that Crestor's superior potency was a threat to Lipitor, so the company—skillfully and  stealthily—refocused the statin discussion from efficacy to toxicity," he recalls. Even before Crestor was launched, it had been positioned as a niche product too dangerous for ordinary use.   

slammed AZ for running its marketing machine "too hard and too fast" given the safety issues, and Sidney Wolfe, MD, of the consumer group Public Citizen petitioned FDA to withdraw Crestor from the market. Then, at a now-legendary appearance before a Senate hearing on Vioxx and drug safety, FDA researcher David Graham included Crestor on a list of five drugs he wanted off the market. With sales plummeting, AstraZeneca ran full-page newspaper ads, defending Crestor, and TV spots claiming it showed superiority over other statins, but the bad press persisted when FDA slammed the ads as misleading. Crestor sales were $908 million in 2004, compared to market leader Lipitor's $10 billion and Zocor's $4 billion.  

The cloud began to lift only when the results of one of the largest ever post-marketing studies of statins showed that all four marketed statins were safe. Its reputation tattered but intact, Crestor took its place as statin of choice for patients at highest risk of heart disease. As the most powerful statin arriving late to the party, Crestor presented a challenge: How to strengthen its claim to superiority so it could withstand the class effect when Merck's Zocor went generic in 2006.  

The skies over Crestor brightened for good in March 2006 with publication of the results of AstraZeneca's ASTEROID trial in the 

Journal of the American Medical Association

. The data showed for the first time that a statin could reverse the progression of atherosclerosis (inflamed arteries due to the accumulation of macrophages caused by plaque buildup), the leading cause of heart attack and stroke, and a condition afflicting an estimated 4.5 million Americans. Crestor also reduced LDL by 53 percent and upped HDL by 15 percent—the best performance by any statin.  

ASTEROID was led by Steven Nissen, MD, a star cardiologist at the Cleveland Clinic and frequent critic of drug safety. "The results were shockingly positive," he told 

But because the study did not measure outcomes, naysayers were quick to point out that Crestor's feat of reducing arterial fat deposits by 7 to 9 percent may not decrease cardio events. Nissen disagreed. "You get rid of the lipid, and what's now left is the fibrous material, which won't rupture," he said. "It's a stable scar—there is nothing to cause morbidity or mortality." 

AZ followed up with METEOR, basically ASTEROID with a bigger, healthier population. METEOR enrolled close to 1,000 people with only one risk factor for heart disease, but who were showing early-stage athero. Asymptomatic, these people would go untreated; for some, the first sign of disease would be a heart attack or stroke. 

For aiming to be a game-changer in cardiovascular disease, we recognize comeback kid Crestor as the year's No. 1. Plus three fine finalists.

Pharmaceutical Executive-02-01-2009