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Pharmaceutical Executive Digital Edition - March 2011

With 7 percent growth in 2009, Boehringer Ingelheim continues to defy conventional growth in a 1 to 3 percent market uptake for R&D-based companies in the Netherlands. Perhaps by no coincidence, its above-average performance is attributed to a different sales strategy. "Our approach in the Netherlands today is very different from what it was 10 years ago.," says general manager Xander Bos. "Our approach then dictated that the larger the share of voice, the more market success—of course backed by the best products. Today we have several products in the market but share of voice is not central in our approach anymore. The size of our organization is still the same as it was five years ago, but over the past few years we have decreased the number of our sales representatives. Instead, we now have other people working in the market with more of a focus on account management activities." 

Xander Bos, General Manager, Boehringer Ingelheim			

What has become increasingly central, however, is Boehringer Ingelheim's focus on engaging industry stakeholders to improve patient care. The flagship program to achieve this is Partners in Care Solutions (PICASSO). Co-founded in 2001 with Pfizer at the University Hospital of Maastricht, PICASSO consistently unites stakeholders in chronic obstructive pulmonary disease (COPD)—pharmaceutical companies, specialists, physicians, patients, and dieticians—to optimize quality of care. 

PICASSO initiates activities in four areas to achieve its goal: quantifying and measuring quality of care; supporting scientific research; aiding local innovations in COPD intervention; and increasing COPD awareness. 

To date PICASSO has completed 12 scientific studies in COPD and has supported 11 daily practices in care optimization. PICASSO has become a respected partner in the Dutch healthcare landscape with closely established partnerships with renowned organizations such as The Netherlands Organization for Health Research and Development. Since 2004 PICASSO has also supported 15 projects that optimize care for COPD patients. According to Boehringer Ingelheim, COPD treatment over the past six years has increasingly moved toward identification, self management, spirometry, and undoing recurring bottlenecks associated with smoking prevention. A major testament to PICASSO's success has been helping local caretakers recognize and circumvent bottlenecks in the care process—the starting point for discussion with caretakers that ultimately garners support for local initiatives. 

Boehringer Ingelheim's PICASSO program helps it focus on engaging industry stakeholders to improve patient care

PICASSO—Truly a Work of Art

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Despite its diminutive size, the Netherlands has historically carried a large weight in the world because of certain cultural endowments: small but united, entrepreneurial, innovative, and externally oriented. During the Dutch Golden Age, the "Low Country" monopolized international trade and commerce, giving rise to tulip manias, artistic masters, and the world's first multinational corporation. Though the sun has long set on that era, the historic imprint of the Netherlands' open mindedness to the world defines its present industrial standing. Today, the pharmaceutical industry looks to the Netherlands for a world-class medical infrastructure, new standards in innovation, and a closely-knit community of stakeholders. Like many countries, the Netherlands will need to adopt new approaches to tackle the increasing challenges of cost-containment pressures and fiscal austerity. But as history has proven, "going Dutch" has come to mean a proactive nature and ambitious attitude that makes no challenge too big. 

The Night Watch, Rembrandt van Rijn, Rijksmuseum, Amsterdam			

At an initial glance the Netherlands might not seem like the most attractive of pharmaceutical markets. Sandwiched in between big brothers France, Germany, and the United Kingdom, a modest population of over 16.5 million Dutch inhabitants hardly drives global growth for multinationals. But it is precisely the assets derived from a small market, mixed with a unique Dutch identity, that makes the Netherlands an ideal destination for international commerce, pharmaceuticals included. 

That the Netherlands is a country literally built on ingenuous innovation goes a long way in explaining the creative flair of the culture. Inhospitable below-sea-level conditions bred infrastructural novelties in the form of iconic windmills and Amsterdam's dizzying array of canals. Cooperation, collaboration, and coalition-building were essential for survival. Furthermore, the country's rich history as a trader nation engendered a sharp commercial instinct. Translated to today's pharmaceutical industry, ingenuity, collaboration, and commercial prowess are embodied in a "build, bundle, and benefit" approach—the three-pillar strategy of the Dutch life sciences and health sector to combine the country's strong research talents with commercial opportunities through public/private partnerships and various investment vehicles. 

Minister Edith Schippers, the Netherlands Minister of Health			

"We are very good at the way of doing research, clinical research predominantly," says Dr. Michel A. Dutrée, general manager of Nefarma, the leading association for research-based pharmaceutical companies in the Netherlands. "The Netherlands has invested heavily in clinical research infrastructure that is based in universities and the country's top hospitals. We have almost 28 top clinical hospitals whose excellent medical specialists provide valuable research for industry. Our research strength and good relationships with biotech firms and universities is a major reason why big and intermediate pharmaceutical companies are interested in the Netherlands." 

Further underpinning the attractiveness of the Netherlands for pharmaceutical and life sciences companies is a strong pipeline of top-level talent. Dutch education levels are consistently ranked among the highest in the world. A 2007 Global Talent Index of the Economist Intelligence Unit placed the Netherlands third (after the US and Canada) in its ability to attract and promote talent. Similarly, in the 

2008 Times Higher Education World University Rankings

, 11 of the Netherlands' 12 universities ranked among the world's top 200. 

As Dutrée explains, "In contrast to other European countries, we have a network of universities here. Rather than competing with each other, Dutch universities work together since, ultimately, they are all government financed. Private financing streams do exist for Dutch universities, but base funding all comes from the government. It is very easy for government and industry to work together in the Netherlands since we are such a small country. The collaboration between the two entities is very pleasing for government." 

Dr. Michel A. DutrÃ©e, General Manager, Nefarma			

"A typical and more traditional Dutch strength that comes from being a small country is to be very internationally oriented with an inclination for going all over the world," assesses Jan Wisse, managing director of Niaba, a leading Dutch biotechnology association. Consistent with this trait, approximately 87 percent of Dutch over age 15 speak English, 65 percent speak German, and 25 percent speak French, according to the Ministry of Economic Affairs. Strength in small numbers, ingenuous innovation, and openness to the world have indeed branded the Netherlands as a gateway to Europe. Top 50-pharmaceutical companies such as Amgen and Genzyme have chosen the country as its headquarters for European activities. 

Most pharmaceutical executives rank the Netherlands as first among the "next tier" of European markets behind France, Germany, Italy, Spain, and the UK. "The Netherlands has been for years a significant market for the international pharmaceutical industry," states Michael Dumas, country manager of the Italian pharmaceutical giant Menarini in the Netherlands, "not by volume and turnover, but through the innovative character, the high level of carrying out clinical studies, the level of planning and organization, and infrastructure in the country." Translated to the bottom line, Curd Lejaegere, managing director of Daiichi-Sankyo Benelux, notes that "financial performance for pharmaceuticals in the Netherlands typically has slow uptakes, but continuous growth. Other markets have initial steep curves which eventually flatten out after two years. Initial returns and results take longer in the Netherlands, partly driven by entrance guidelines or initial market accessibility constraints, but continuous growth can be counted on." 

Netherlands already has high generic penetration of unprotected market with low generic price and very fast penetration after patent expiry			

According to Nefarma, pharmaceuticals generated $4.88 billion (€3.55 billion) in total revenues in 2009. Employing over 50,000 people—27 percent in R&D—and accounting for 9 percent of private Dutch R&D investment, a 2010 study by Roland Berger Strategy Consultants cites the high-quality, cost-effective healthcare that pharmaceuticals provide by imparting health and wealth to Dutch society. 

 is a defining term for pharmaceuticals in the Netherlands. The same study concluded that in 2008, the Netherlands spent only $430 (€313) per person on medicines—10 percent below the European average. In 2010, pharmaceutical expenditures were estimated to account for only 9 percent of the €60 billion ($82.5 billion) total Dutch healthcare budget, similarly low for European averages. Largely driving these trends is a greater than 70 percent generic penetration rate, among the highest in Europe. Generic penetration, however, is just a piece of what many local executives describe as the unsustainable pressures of cost-containment in the Netherlands today. 

Despite enviable research infrastructure and a knowledge economy that are conducive for the pharmaceutical industry in the Netherlands, enormous cost-containment pressures make it difficult to bring products to market with favorable returns. 

The Netherlands underwent a major overhaul in 2006 by implementing a universal insurance mandate to curb soaring healthcare costs. Previously a public system, the Health Insurance Act of 2006 required every Dutch citizen to purchase health coverage from a private insurer, with the government establishing quality of care guidelines. The theory behind managed competition was for providers to attract as many patients as possible and allow freedom of mobility across insurers to stimulate better quality care. 

Dr. Uloff MÃ¼nster, Managing Director, Merck			

Successfully, compulsory insurance now covers all but approximately 1 percent of the Dutch population. However, a negative side-effect since 2006 has been a preponderant shift in deciding power to the health insurers who are neither equipped nor incentivized to uphold quality. A growing one-sided cost focus on reforms risks overshooting its initial objectives and jeopardizes the long-term sustainability of pharmaceutical care. 

Managed competition has effectively increased the buying power of insurers without a concurrent rise in advising power by pharmaceutical companies. The generics industry has been hit particularly hard by a cost-containment "preference policy." In 2006 "along came a new stakeholder to the table called health insurance companies, which made this business completely different," says Kalman Petro, managing director of Actavis Benelux, No. 3 in the Dutch generics market. The preference policy means that when a number of medicines contain the same active agent, only the cheapest medicine—the "preferred product"—is reimbursed, as decided by the insurance companies rather than physicians or pharmacists. This has created deflationary pressures with prices being pushed to their lowest. The policy has realized noticeable returns, with generics prices dropping over 53 percent from May 2003 to April 2010, according to Roland Berger. But the industry has reached a dangerous point in which cheaper prices are doing more harm than good. 

Some manufacturers have stopped making certain economically unviable products, moving the picture away from healthy competition to uncertainty of supply. When a manufacturer has cornered the lowest price of a medicine, within one to two months they find themselves having to supply far greater quantities, regardless of production capacity. Petro recalls "one company that reduced the price of a product below the 5 percent bandwidth. Suddenly a small preferred company with less than 1 percent market share was responsible for supplying 80 to 90 percent of the total market. Companies are not going to order products if they are not preferred, which makes things very dangerous. The customer—the patient—is suffering." 

Offering his view of the preference policy, Dr. P.F. Bongers, chairman of Bogin, the Dutch generics association assesses that "for the generics industry, if only the lowest price possible is the guiding principle next to long periods of preference, then you are endangering the continuity and quality of supply. Our aim is for fair market competition, but the preference system is not stimulating normal market competition within generics." 

R&D companies are equally squeezed by price pressures between generics penetration affecting reimbursement schemes and the maximum price levels for their medicines. Introduced in 1991, the GVS system is a reimbursement price for therapeutically interchangeable drugs. Medicines with equivalent modes of action are clustered into one group, with the average price calculated based on comparable doses. The first price below the average is the reimbursement price. With such high generic penetration, traditional lines for R&D companies in the Netherlands such as primary care have become relatively small. As Uloff Münster, managing director of Merck-Serono in the Netherlands explains, "The most important step is to get to the reimbursement stage. This is a market-specific issue because copayments are not well accepted in the Netherlands, unlike in other European countries. If a medicine is not reimbursed in this country, the introduction of this new medicine does not make much sense." 

The maximum price for pharmaceuticals in the Netherlands is determined by the average prices of comparable drugs from four reference countries: Belgium, France, Germany, and the UK. With a reference pricing arrangement, the tenuous macroeconomic situation sweeping Europe can have a potentially destabilizing effect on pharmaceuticals in the Netherlands. Han Brouwer, general manager of orphan drug specialist Actelion's Dutch affiliate, explains, "We have a very tight economic situation here, much like the rest of Europe. European Union countries that are running into financial difficulties are now cutting healthcare costs. Because our reference pricing is based on a basket of countries, we will face price cuts due to the fact that other countries have to decrease their healthcare prices for economic reasons. The price/quality phenomenon in the pharmaceutical business is eroding dramatically." 

A tricky road remains for the Dutch pharmaceutical industry and the Ministry of Health, Welfare, and Sport. They must soundly manage austerity plans in the face of aging populations and rising healthcare costs while continuously incentivizing innovation for biopharmaceutical companies. Annual spending on healthcare is forecast to reach $76.5 billion (€55.7 billion) by the end of 2010, a 12 percent increase from 2005. In October 2010 a new conservative government came to power to manage these challenges. The atmosphere they inherit will see total expenditure on health and welfare services rise 3.3 percent to reach €63 billion ($87 billion) in 2011, according to the Ministry of Health, Welfare and Sport. Certain austerity measures in the 2011 budget will impact the reimbursement of certain drug classes and save approximately €32 million ($44 million) for health insurers. 

Despite cost-containment measures that have been exacerbated with the greater role that health insurance companies have come to play in the system, there are some advantages. 

Erik Lommerde, General Manager, Novo Nordisk			

Most immediately, it has emboldened companies, inciting some to raise their voices in defiance of reforms and motivating them to succeed in the face of regulatory barriers. "The Dutch environment still challenges Menarini to maintain the level of investments, hoping that access to new medicines will be more driven by the general opinion of Europe," says Dumas. "Finding the right balance between the system's sustainability and fair prices rewarding innovation is critical and far from easy." Proudly present in over 110 countries and initially drawn to the Netherlands in 1996 because of high-quality infrastructure, organization of healthcare, and top-level physicians, Menarini's commitment to a vast international presence guarantees a committed fight for its established product lines in the Netherlands. 

The added layer of a payer body has also forced pharmaceutical companies to be more methodical and meticulous in presenting the pharmacoeconomic value of their products. This has indeed penetrated the commercial mentality of Merck-Serono, a market leader in the Netherlands through biotechnology products in fertility, neurodegenerative disorders, and oncology. According to Münster, "The new landscape will increase the complexity of any decision-making process which already is not so easy in this country. There are lots of bodies involved and various layers to work through in order to come to a reimbursement decision. We as an industry, and Merck as a company, need to better understand what drives these decisions. We need to understand in the larger sense what will make the future pharmaceutical world tick." He adds that as a result, "we will need to increase our effort to strongly document not only the long-term clinical value of our new products, but also the pharmacoeconomic value. It will not be enough to show 

Ultimately, the right products in niche markets will always drive growth, even in the face of cost-containment, as experienced by Italian-based Chiesi. The Netherlands was one of Chiesi's first startup affiliates outside of Italy, according to general manager Maurits Huigen. Established in 2007, immediately after structural reforms to the healthcare system, Chiesi doubled its growth in the Netherlands in its first two years on the backs of products such as Foster for respiratory care; Bramitob, a tobramycin nebulization solution for the treatment of chronic lung infections; and Curosurf for the treatment of respiratory distress symptom in premature babies. 

Dr. Bernhard Sixt, President & CEO, Agendia			

More importantly, such niche market opportunities will not limit themselves to pharmaceutical companies alone. Related companies that are able to provide improved outcomes in a cost-effective manner generally carry the potential to play an increasingly important role under budget-tight regimes. An example as such is Netherlands-based Agendia, providing breast cancer patients with what President and CEO Dr. Bernhard Sixt describes as "pathologyon-demand." Dubbed "cancer's crystal ball," the FDA-cleared MammaPrint, provides physicans with a breast cancer recurrence test that will identify those patients where chemotherapy or hormonal therapy will work. "Mamma-Print reduces the incidence of unnecessary treatment and improves the quality of treatment for those who do need it. Medical costs are reduced, patients receive better care, and many patients are spared the unnecessary burden of chemotherapy; it is truly a win-win-win situation," Sixt explains. 

Greater connectivity between organization and market environment speaks to an overarching theme: Pharmaceutical companies are increasingly looking to move beyond 

. Local industry executives almost unanimously agree that this will define the "new pharma" of tomorrow. "The long-term sustainability of the business will come through our ability to show that we are able to create solutions rather than just deliver a product," says Münster. 

Alie Tigchelhoff, Managing Director, Utrecht Science Park			

Local industry executives almost unanimously agree that this will define the new pharma of tomorrow. "Just 

 product is not enough. New pharma needs to be solution-oriented rather than focusing only on the pharmaceutical 'hardware'—that is, the product," says Münster. "On top of that, there should not be the slightest doubt that we will deliver top quality and that we are ready and able to ensure high standards. The long-term sustainability of the business will come through our ability to show that we are able to create solutions rather than just delivering a product." Partnering with the industry and reshaping organizational processes have played a large part in Novo Nordisk's success in the Netherlands. "Novo Nordisk wants to change diabetes, with products being just a part of the process," says Netherlands general manager Erik Lommerde. "If you want to be involved in diabetes care, the only right way forward is to become a complete stakeholder in the treatment process. It is also why we have been changing our organizational setup in ways that are probably not ideal for short-term commercial interests, but are ways that we believe are necessary in order to be a long-term partner in diabetes care on a local and regional level. For example, we have been setting up account managers with no commercial objectives." In practice, Novo Nordisk has the ambition to incentivize its representatives based on HBA1C indicators—a measurement of glycated hemoglobin in the blood, often considered one of the best ways to check for diabetes. In linking representatives with eventual HBA1C tests, Novo Nordisk's incentives would be "purely based on improvements in quality of care, not on how many products they sell," says Lommerde. 

Despite its dimunitive size, the pharmaceutical industry looks to the Netherlands for a world-class medical infrastructure, new standards in innovation, and a closely-knit community of stakeholders

The Netherlands: Innovation through Collaboration

The new, stronger roles of payer bodies in the system have led to various restructurings at the affiliate level for pharmaceutical companies, often for the better, in order to revamp their communication strategies with stakeholders. Ferring, the 60-year old Swiss biopharmaceutical specialist in reproductive health, urology, gastroenterology, and endocrinology, found that a whole new approach was needed in order to communicate its value offering to the "new kid on the block." Anita Goedknegt, general manager, explains that "prior to 2006 pharmaceutical companies had a large group of sales representatives or account managers who were predominantly focused on the prescribers. The prescribers were the decision-makers with whom you needed to be in constant contact. After the policy change it was no longer just the doctor in charge. We as an organization needed to change everything—and I mean everything."  

Human resource changes were necessary in order to align Ferring's structure, processes, and organizational attributes with evolving market needs. "Our growth was driven by a stronger connection between the organization and the market environment," she explains. Growth and results for that matter have been extraordinary for Ferring since 2006, despite not introducing new products to the Dutch market until 2009. "Up to 2006, we were in a stable annual growth scenario. In that year we changed the entire organization, including its structure and quite some processes, which altogether created a 'hockey stick growth' for our affiliate." Operating in niche markets of fertility, obstetrics, and inflammatory disease, Ferring has consistently relied on double-digit growth in volume, and is projecting similar success for 2011. 

Ferring finds a new approach to communicate its value offering

Restructured for Success

Pharmaceutical companies are in business to break new barriers in innovative medicines. But thinning pipelines and price pressures make conventional innovation harder to come by. With numerous cost-containment reforms in the past five years many industry leaders view the Netherlands as prohibitive for new innovation. However, with a fresh set of eyes and an active agenda on patient care, French pharmaceutical company Ipsen's local Dutch affiliate is redefining a standard for success when it comes to innovation. 

Dr. Adrienne M. de Waal, Country Manager, Ipsen			

"We are a small organization with limited budgets so we must be creative to develop meaningful solutions," says Dr. Adrienne M. de Waal, country manager of the Netherlands. Therefore in addition to flagship lines in neurology, endocrinology, and an orphan drug treating IGF-1 deficiency—a child growth hormone—Ipsen considers its customer approach and market entrance as equally important determinants of its innovation. Developing specific home-care programs for patients in which nurses administer injections directly in patients' homes, provide treatment followup, and report feedback to the doctor, Ipsen places itself as close and supportive to the patient as possible. "Innovation from this perspective translates to being very service-oriented," says de Waal. "From a patient perspective it is very customer friendly to have dedicated home care, compared to the alternative of additional visits to a general practitioner or the hospital." 

Ipsen's shift to more Web-based services is another element of the "other" innovation that it provides. "We cooperate in specific medical projects with doctors by facilitating the construction of databases that collect historical and current treatment information for a very rare and genetically inherited disease. By building this database and analyzing the information, doctors can deduct the best treatment. Future patients will benefit from this information and receive the best treatment right from the start. The setup of this database has been judged as innovation for patients; without it they are treated by 'trial and error' to receive the best options." 

Ipsen is redefining a standard for success in innovation with its local Dutch affiliate

The "Other" Innovation

A $280 billion opportunity is left behind each year due to the failure of pharmaceutical companies to retain their customers. That's the equivalent of the combined total global revenue in 2009 for the top six pharmaceutical companies. For an individual pharmaceutical company, that's the equivalent of the cumulative 

 revenue of launching a new blockbuster every year for the next 10 years. So why is this massive opportunity not managed with the same focused tenacity with which our pipelines are managed? 

While advances in consumer science have blossomed, providing growth opportunities for savvy marketers, application has lagged as a tool for better adherence. (Getty Images / Stockbyte)			

In the past several months in the pages of 

 I've presented the argument that, while being very complex, the lost revenue from non-adherence can be systematically harnessed with principled resource allocation. In December 2010 (

), I introduced the concept of marketing programs that have a Mechanism of Action (MOA)—a concept we are very familiar with from the R&D side of the business. Within R&D, it is comforting (not to mention necessary) to be able to operate within a guiding framework that has been securely demonstrated, to not only provide appropriate boundaries for avenues of exploration, but to also provide a beacon of the path to success. In all, the supporting MOA provides the framework to shape developments towards fairly predictable outcomes that we can be somewhat confident will: A) lead to a positive risk/benefit offering towards improved patient health outcomes; B) provide additional needed armamentarium for physicians; and C) create an estimable and worthwhile return to the manufacturer. 

What if we had this same navigational MOA to highlight our path in marketing? Do identifiable MOAs even exist in the commercial arena? If they did, would we have the desire, or the discipline, to stay within these prespecified boundaries?   

Also in December, I presented a formulaic argument for non-adherence—one that is specified in mathematical terms using scientific principles of cognition. This essentially provides an MOA behind consumer decision-making and physician choice, something akin to the MOA that drug development scientists use prior to their avid pursuit of (and expenditure towards) drug development. This illustrates that scientific MOAs can indeed be generated to support a scientific approach to pharmaceutical marketing. 

While significant advances in consumer science have continued to blossom and provide admirable growth opportunities for savvy marketers across diverse industries, the pharmaceutical industry has pretty much sat on the sidelines and watched this happen in the outside world. What's more is that industries that have been successful in this space are not nearly as sophisticated as pharma. So why hasn't the commercial side of the pharmaceutical industry paced itself with advances in consumer science? Or even just peeked over the wall at their internal R&D colleagues to gain some new processes that could potentially be applied to business? And why is such a richly scientific industry as pharma with so much to gain behind the curve, instead of leading the curve, in the science of marketing? Surely we have the intellect, the long-term tenure, the budgets, and we certainly have the need. 

My prediction is that it will likely take another two or three years of running with unprincipled strategy before the industry cries out, "Enough! The mania has to stop!" And it will. Then, the reins will be picked up by their rightful owners: CEOs, CFOs, and executive VPs, who are currently standing back and watching as their marketing teams spin in ever frustrating circles, crippled by outdated business models. The problem is not that brand teams and middle management are not working hard enough, or smart enough—they are doing what they can, with the resources they are given, within the business framework they have to operate. I see the problem as two-fold: 1) there is a lack of ownership within top-tier management for scientific marketing models; and 2) there is an overemphasis on short-term quarterly objectives rather than the long-term goal. This has to change.   

Harnessing the lost revenue from existing brands deserves the attention of upper management, executive directors, and shareholders. And it deserves a critical evaluation of where and why things are going wrong. Salvaging this revenue requires more than a new marketing strategy, it requires a new business model—one that is firmly rooted in scientific principles; one that can depict a formulaic MOA for consumer engagement and prescriber choices; one that can provide brand teams with the tools they need to securely set their strategy and direct their resources to initiatives that they 

 will have an impact. In essence, an MOA takes the guesswork out of budget planning, marketing program design, forecasting, and most importantly, harnesses lost revenue that our products were designed to deliver. 

 is a Cognitive Scientist and CEO of Mind Field Solutions. She can be reached at 

andrea.lafountain@mind-field-solutions.com

Columns

With an emphasis on short-term objectives rather than long-term goals, pharma is missing a huge opportunity in applying market science to drive adherence

Where have all the Scientists Gone?

The transformative landscape of US health reform presents a significant challenge to the traditional managed market organization within Big Phama. The basic task of demonstrating value to the customer is now more complex than simply obtaining a formulary listing at an acceptable cost. Today, what matters most is pursuing a problem-solving "health solutions" approach, in which the medicine is only one factor in a broader nexus of relationships with the customer.  In a nutshell, it's all about making partnerships more productive in terms of the commercial results. 

Although most companies recognize the current disconnect in addressing market change, internal efforts to respond are posting mixed results. Why? Complacency may be one reason. Executing a fundamental redesign in the approach to managed markets is not an exercise in tinkering. The goal is not to marginally increase effectiveness, but to commit to building an organization that can solve customer problems and create business-to-business (B2B) partnerships for mutual advantage. This will require the managed care market team to assume more of a leadership role inside the company, coordinate cross-functional solutions, and obtain appropriate funding and resources. Both the organization's external focus and internal dynamics must evolve—and the faster the better. There's much more to it than manipulating an organizational chart or moving a few bodies around. 

Managed Markets and Healthcare Reform: Ready for Change?  

Healthcare reform will establish state-run exchanges where individual consumers can purchase health insurance. This creates daunting challenges for payers. Should they participate? Can they keep up with frequent changes on a state-by-state basis? Do they have the right lineup of drugs? Can they accurately assess risk? A managed markets organization that can help address these questions not only will create value, but in doing so will strengthen the company's position and influence. 

Competency Priorities Today and Tomorrow			

While our research reveals that most companies recognize the opportunity for managed markets to create value, only a few properly estimate the level of organizational effort required. The result: Across the industry, managed market organizations are spinning their wheels. Why this lack of effective propulsion? There are many reasons:  

 Even though customers recognize the potential value that life sciences companies can provide, they are highly skeptical about the commitment and motivations these companies bring to the table.  

 Building B2B partnerships requires highly competent and experienced account managers with sophisticated B2B skills that are not necessarily prevalent in current managed market organizations.  

 These managers must be backed up by cross-functional support teams with complementary skill sets—again, not typically found in current life sciences companies.  

 Managed market organizations are not fully chartered with the authority, reputation, and leadership needed to be the internal change agents that can right this ship.  

While these barriers are daunting, the potential payoff for meeting them is huge; larger still may be the consequences for not meeting them. As an industry, life sciences companies have lost as much as $600 billion in market capitalization in the last decade. CEOs and industry analysts know that product-based innovation and differentiation alone will no longer be a dominant driver for business success. The life sciences companies that can begin to reclaim leadership positions will be those that find new ways to create value for the complicated ecosystem of payers and providers that ultimately impact patient experiences and outcomes.  

When asked to list the most troubling issues facing managed care organizations, 70 percent of responses pointed to factors that drive account management sales effectiveness. Of these, fully two-thirds are traditional drivers such as time allocation, sizing, access to formulary decision-makers, and product launch discipline. While these drivers are important, success these days is increasingly determined by the other one-third—the new factors that include up-to-the-minute knowledge of healthcare reform and implications for payers and providers; working with new customers such as integrated healthcare providers; and providing health economic data and analysis that is relevant for customers. 

To their credit, managed market organizations recognize the need to address these new sales effectiveness drivers, as evidenced by our data that demonstrates the current emphasis on building competencies around payer needs, building relationships, customer focus, and business acumen. Looking to the future, leadership and change management skills will become more important, signaling a recognition that working with customers to proactively drive results is increasingly important. 

While it is heartening that industry professionals are building competencies in line with evolving sales effectiveness drivers, our experience working with life sciences companies tells us that many are behind the curve in adopting sales behaviors that lead to results. In part, this is because high-impact account management is an apprenticed skill—it takes time and an experienced hand to develop a skilled force of account managers. 

There is another dynamic at play here. A predominant focus on payer customers perpetuates a "rebate for volume" account management culture that will remain entrenched until relationships with providers evolve as a consequence of the improved commitment to partnership. These relationships are lagging, as we will further see. 

More than 90 percent of managed market organizations report they have established working relationships with managed care organizations. Asked to describe the effectiveness of account management efforts, most exude confidence. According to most respondents, their organizations follow a clear strategy, focus on performance, and create results for customers. However, a small cloud of uncertainty peeks over this otherwise blue horizon when these same respondents consider their organization's underlying account management "culture." 

Effectiveness cannot be judged without context, however; when considering account management, it is important to understand the type of relationship created with customers along a continuum of B2B partnerships, from preferred vendor to trusted advisor. Research findings at this level of investigation are striking. 

For the most part, after many years of effort, managed markets have created customer-serving relationships with payers. Lower prices are offered for formulary status, and managed market organizations are responsive to customer requests and demands. In this context, success is measured by achieving a "preferred vendor" relationship.  

Customer-serving "preferred vendor" relationships, however, are far from B2B partnerships; these relationships are limited to a cut-and-dry exchange of product for price. Our survey did find that organizations—though significantly fewer—have established a higher "value-add" position on the relationship continuum with payers. Tellingly, these higher-level B2B partnerships are more common among less powerful regional payers than with large, national payers. Still, evidence of value-added relationships confirms that some managed market organizations may be able to solve problems and create value. As a test, managed care organizations should determine if their value offerings—including access to scientists, marketing support, and health economic data—are offered as solutions with links to improved business results. 

Still, the Holy Grail of B2B partnerships—a trusted-advisor relationship—remains an elusive goal for most managed market organizations. Our customer interviews reveal that payers question the credibility and intentions of life sciences companies, pointing to conflicting actions among their various agents: managed markets, the sales force, marketing, and other functions. Also, payers feel reluctance on the part of life sciences companies to increase their value by dedicating resources to them or helping to measure performance. 

These findings may link back to the "cloud of uncertainty" concerning culture and effectiveness. For many managed market organizations, performance strategies dominated by cost containment are at odds with a commitment to creative problem solving.  

Another new finding jumped out from our research: More than half of managed market organizations have not attempted to build a B2B relationship with customers other than payers. Developing partnerships with these "new" customers represents the next frontier for managed markets. Customer segments to be developed include hospitals, retailers, and wholesaler/trade accounts, but may also include reaching patients through direct relationships with employers and unions.  

These customers complete the healthcare ecosystem that exists to provide patients with the best possible health outcomes and with an efficient allocation of costs and resources. Companies in the vanguard of efforts to cross this border are finding a self-made barrier to success; the people who fill account manager and support positions today may not be the same people required for success tomorrow. 

In our survey, only 44 percent of managed market organizations indicated that they had the right people in place for the required force of the future. New customers with differing business models require people with new competencies and experiences. In today's managed market organizations, developing and hiring the right people—always important business activities—is fast being elevated to a status of "crucial." 

According to our research, a majority of life sciences companies are stuck in a traditional mindset when choosing how to invest in improved organizational effectiveness. These companies cling to role improvements and force size as the only priorities worthy of investment. Two other priorities—process improvements and the tough work of improving implementation and execution—are managed as important but underfunded change drivers.  

These decisions may be shortsighted and forestall progress toward building relationships, solving problems, and creating value. Here's why: Building fruitful B2B partnerships is not just about having the right number of the right people. Results flow from executing the right behaviors, sustained over time, backed by performance measures and rewards. In short, it's about creating and managing critical processes and following through on promises. 

What are the critical processes for solving problems and creating value? Our work with managed markets organizations indicates that account management sales processes that dig deeply into customer organizations and create a network of advocates is important. Another necessary process is one that justifies resources and creates support teams. Partnering with marketing to align messages and initiatives is a third. There are more.  

Ultimately, a successful shift of organizational effort from managing contracts to creative problem solving involves a new assessment and balancing of risk. Will the change result in lost market access? Will new organizational investments lead to measurable gains? To some extent, these questions are unanswerable in the short run. But the healthcare market is evolving on its own, and allowing the future to arrive without active participation carries a risk of its own—the risk of inaction, or action without sufficient forethought.  

Among the myriad of actions a company can take to reinvent its managed care organization, here are three starting points that you should consider: 

1) Align Resources for Solving Customer Problems.

 It is true that account managers must possess critical competencies around business savvy and relationship building. But, even the strongest account manager cannot solve payer and provider problems through individual force of will. Successfully creating value for customers requires a team effort. Account management can identify problems and confirm customer commitment for collaboration, but execution demands additional horsepower. 

For example, a company may decide to focus on improving the healthcare ecosystem for elderly patients, as Sanofi-Aventis has done. Collaboration with willing payers may lead to smoothing reimbursement practices, while work with providers may focus on treatment protocols and medical staff training. All of this may come together with cobranded marketing campaigns, supply chain improvements, and performance metrics, which include measures in each partners' business. This effort will take time, but will not get off the ground if the proper resources are not first aligned and committed. 

2) Create a Learning Process to Capture Value.

 By design, customer-focused account management creates value for customers. The challenge is to create value for the sponsoring company. In the short-term, value for managed markets and their companies may be conceived as improved customer influence or patient outcomes. However, if success does not lead to improved sales, share, or profitability, commitment to proactive problem solving will wane. Robust performance metrics are essential, but an actively managed learning process is also critical. 

Actions that may be included in a well-designed learning process include: regular internal and client account reviews to provide oversight and track progress, customer listening programs that include individual contributors up to senior management, and rotation of high-potential employees through account management and other managed market organizations. This last action will infuse new ideas from new team members, and also carry the learning back to other functions when they rotate back to their primary career track. 

 Truth be told, the legacy reputation of managed market organizations is not one of the strategic capabilities for driving critical business results. This will need to change as problem-solving cultures take root and as the opportunity to create higher levels of value grows. Success will require cross-functional commitment of companywide resources, and also increased coordination among other market-facing functions including field sales, marketing, and medical affairs. On this trajectory, account managers will become widely respected and influential with customers and within their company. Support teams aligned with strong customer partnerships will have increasing accountability for driving measurable results, whether they have fixed or dotted-line report arrangements. 

All of this will result in strategic repositioning of the managed market organization, by evolution, or in some cases, by actions taken now by the actions of visionary leadership. Actions that can be taken today include adjusting talent programs to staff-managed markets and placing proven individuals in positions of increasing responsibility. Perhaps more importantly, the effectiveness of senior leadership teams across the organization must be judged by their track record of supporting—not impeding—problem-solving and value-creation initiatives. Organizations tend to reject change, and without a successful repositioning of managed markets, the journey may end sooner than desired—far short of its intended destination. 

Features

A highlight of the Hay Group's annual study of Sales Force Effectiveness, focusing on managed care markets

Creating Customer Value: New Horizons on the Managed Markets Journey

 with limited capacity to gaze beyond its own narrow frame of vision. That vision, even at its most expansive, usually consists of a threefold commitment: to advance new science, serve the patient, and wrest reimbursement access from an even more myopic class of payers and providers. Yet is this enough? As a key actor in a sector that has become a hotbed of politics, any self-interpreted evaluation of what really counts can be harmful to the bottom line. Issues like democracy, social inclusion, gender-based ethics, and the confusing agenda around globalization are not abstract concepts. Poorly handled, they can sour the diverse professional relationships that accumulate to help drive revenues and profits. 

A case in point is the industry's not-so-evident stake in the outcome of the current turmoil linked to democratization in North Africa and the Middle East. Not only is there a broad reputation play in getting on the "right" side of a shifting policy dynamic, significant changes are possible in the way business is conducted around health and pharmaceuticals. The potential for an assertive new class of actors to drive decisions on basic issues of industrial policy needs to be assessed through the appropriate focus on outreach and stakeholder support. 

Looking ahead is the critical first step. Market analysis alone suggests these countries are important as a source of future opportunity. Egypt, Pakistan, and Turkey have been tapped by IMS as leaders of its "pharmerging 17" high-potential markets, followed closely by Saudi Arabia and Jordan.   

The landscape of need is also promising. All countries in the region share the common characteristic of youthful populations, high adult literacy, and are experiencing a full-blown transition from infectious to non-communicable disease. Patients want access to modern medicine, and there is a trained professional infrastructure to administer drug therapy. Yet public investment in health services remains low. Despite their growing populations, spending on health for countries in what the World Health Organization (WHO) defines as its Eastern Mediterranean Region is stagnant, at less than $60 billion a year—what the US spends every 10 days.   

Simple health conditions amenable to prevention continue to fester: tobacco use is rampant, while malnutrition is a hidden plague among young children. And cultural barriers continue to dog essential public health interventions—pervasive gender bias helps explain why 460,000 people in the region are living with HIV even as these countries have the world's lowest rate of coverage on anti-retroviral drugs.   

In evaluating the next stage of the region's prospects for Big Pharma investment, the following factors are relevant:     

Regime change and democratization will have an impact on the health professions.

 In Egypt, for example, the long-banned Muslim Brotherhood has attracted a small but dedicated base of followers among physicians and other organized healthcare providers. A more pluralistic approach to stakeholder liaison is one outgrowth of this trend that pharma should carefully assess. The definition of share-of-voice "elites" is likely to change.  

The region's governments, already sensitive to the issue of "health as a human right," will put more emphasis on the WHO's global health equity agenda.

 To build popular support, interest is likely to increase in essential drugs access and transposing initiatives such as the Pan American Health Organization's (PAHO) "revolving fund" for vaccines, which basically replaces private resourcing with a public health procurement approach that requires furnishing stock at the prevailing lowest price—globally.     

Trade and industrial policy will strike a more populist cast.

 Expect countries like Jordan, which once touted its support for "world class" patent protection, to emerge as more cautious participants in the debate on the globalization of IP, to avoid appearing as a shill for the foreign multinational investor community.   

Regional cooperation around a "pro-Arab" health agenda is likely to gain fresh momentum.

 One action pharma can take is to emphasize its capacity to boost drug quality, with particular emphasis on guaranteeing the supply chain and fighting counterfeits. Health ministries are likely to face more pressure to evidence their value to the public. Helping to slow the incidence of adverse effects linked to low quality as well as poor compliance is one way to demonstrate success for institutions on which the industry depends, but whose legitimacy has been undermined by repeated public health disasters over the past few years.   

Some thoughts for a world in flux … until next month.  

From the Editor

Pharma can be an insular industry, with limited capacity to gaze beyond its own narrow frame of vision

Making Sense of Market Chaos

As with most everything in life, there are always two sides to every story, two dissenting views on a situation. What might be repulsive to some (peeing on the side of the road) may resonate with others (peeing on the side of the road!).  

It's no different in pharma advertising, where innovation has been slowly stifled by rampant cost-cutting throughout the industry. It is this showcase of creativity in an otherwise trying environment that makes this year's Ad Stars all the more impressive. In fact, succeeding in a resource-constrained environment is something to be lauded: "Tighter budgets encourage innovation. People need to work a bit harder to get business," says Jay Carter, senior VP and director of strategy services at AbelsonTaylor.

GETTY IMAGES / HIROKI - RUSH OF HAPPINESS  

This year's group proves innovation has not been held back in the face of adversity. From the clever use of a CFC light bulb, to a baby with telekinetic powers, to a trailing dark cloud, messages were relayed loud and clear to consumers.  

Of course, nothing about the creative process is simple; it takes time, trials, and effort to bring an effective idea to light. But being simple yet effective is key, according to Al Topin of Topin Associates (see "The Brand Promotion Gauntlet"). 

According to Topin, simple delivers clarity, leads to relevance, and enables big ideas that are memorable—and, hey, what's the point of an advertisement if it's not memorable, right? 

For Carter, what's complicated isn't a deterrent at all. "The industry has always been regulated. The invasiveness of the regulations waxes and wanes, but it is a constant. For me, finding things that work brilliantly in the face of regulation is part of the fun, part of the challenge." 

Ad Stars 2011 is the story of the people behind the best of pharma advertising over the past year. It gives credit where credit is due to those who developed, wrote, shot, and designed the spots you've seen all over television, in print, and online. These are the people who help bring the compelling messages to the forefront. It's their job to find out what it feels like to be the BPH sufferer, the depressed soccer mom, or the spasmodic child. And they've done a masterful job. The following pages are 

 senior vice president and executive creative director; 

Infantile spasms is a serious, frightening disease, made even more disturbing by the fact that those who suffer from it are usually between four and eight months of age, and that parents can often only watch helplessly as their children suffer. Potential long-term effects of infantile spasms can be as serious and frightening as the condition itself, including cognitive impairment, neurological complications such as epilepsy and autism, and motor development concerns.

In an area where fear is already so prevalent, AbelsonTaylor made a conscious effort with its sales literature concerning Acthar—aimed at child neurologists—to convey empowerment, hope, happiness, and good health, implying that Acthar can be the very opposite of everything infantile spasms means to the physicians and parents who face it. 

Child neurologists easily recognize the EEG brainwaves on the left of the image as characteristic of infantile spasms. And the happy, healthy baby sitting up next to the brainwaves is more than just cute. "By the baby sitting up, we're actually suggesting that with Acthar, the baby can reach normal developmental milestones, because in some infants who have this condition, sometimes these developmental stages are inhibited," explains Joe Pajkos, senior art director. 

In addition, the hand raised in the stop position and the police officer outfit symbolize power that is in direct juxtaposition to the often helpless feeling associated with the condition. "It's not going to be uncommon for child neurologists to see images of babies looking happy and healthy," says Stephen Neale, senior vice president and executive creative director. "But we've gone an extra step symbolically, to put the baby in a cop's outfit, to say that once the baby is given this product, it now has the power to stop this disease." 

"The way that doctors described this ad, they thought it conveyed strength, hope, happiness. It was easy for them to understand," adds Jonathan Davila, senior copywriter. 

What makes this ad stand out is that rather than focusing on the disease, or even really on the product itself, it focuses on the patient—in this case, the infant—and the patient's ability to overcome the condition. "Dressed as a cop, the baby is able to have power over his own destiny," says Rob Kienlie, vice president and creative director. "He is able to overcome this condition that exists within him. And that's really what conveyed the sense of hope and optimism for the future that resonated so well with doctors and made the ad come to life." 

 executive vp and chief scientific officer; 

 associate creative director–copy; John Kemble, associate creative director–art 

	Laurie Bartolomeo, John Kemble, Scott Harper,

Dudnyk's Metal Man AzaSite bacterial conjunctivitis campaign spans print, Web, sales rep materials, and 2-D barcodes to reach ophthalmologists through as many avenues as possible. 

In a world where the competition consists almost solely of brochures full of closeups of red, splotchy eyes, Metal Man exemplifies the symptoms of bacterial conjunctivitis in a new way. "In the ophthalmology journals, there are a lot of eyes, for obvious reasons. The target audience likes to see eyes—that has a lot to do with how they visualize the disease or their patients. What this creative team set out to do was be able to land in that area but not look like everyone else," explains Christopher Tobias, PhD, Dudnyk's executive vice president and chief scientific officer.

"The metal surface of Metal Man's face is a metaphor for the ocular surface—the region around the eye—and the rust is a metaphor for bacterial conjunctivitis and the symptoms that it causes," adds Laurie Bartolomeo, Dudnyk's associate creative director, copy. In the "after" image, Metal Man's rust has cleared up, and he is visibly happier and more "himself" again. 

This striking visual of the rust and the metal not only stands out from the competition, but also captures the misery and subsequent relief of a patient who is suffering from conjunctivitis and then finds a solution. "People go to see an eye care professional usually because they're miserable. And the specialists like making their patients 

happy. In addition to the resolution of the eye symptoms, Metal Man obviously goes from being very irritated and miserable in his expression to being happy afterwards, so I think the specialists really responded well to that emotional connection," says Bartolomeo. 

The Metal Man campaign becoming such a success, according to Dudnyk, is a testament to the client, AzaSite, as much as to the agency. "We're really lucky to have a client that trusts us, and has an amazing understanding of the market and target audience, and is able to make the kind of creative decisions that have an impact on the brand," says John Kemble, Dudnyk's associate creative director, art. 

 BRAND: Auxilium's Low Testosterone Therapy 

Some men need a "pick-me-up" in the morning—a cup of coffee, an energy drink, a bowl of granola. Some men come into the office, stare at the mounds of paperwork on their desks, and just aren't able to muster up the strength to begin their work. It's not procrastination and it's not lack of ability—it's lacking the energy to get moving.

Some men need a pick-me-up at other times, too. And it's this idea that sparked Heartbeat Ideas's creative process while working on Auxilium's low testosterone therapy campaign. The therapy is a topical gel applied daily for those with low testosterone—a performance-boosting cup of coffee, if you will. "Our strategy was based on the insight that something like 90 percent of symptomatic men are undiagnosed," says John Washburn, creative director at Heartbeat Ideas. "The strategic position of the communication was to raise awareness of the condition in a way that would segue neatly into a brand message."

The creative team had a very close, collaborative relationship with the client, according to Washburn. "During the development, Heartbeat collaborated closely with the Auxilium brand team and we held multiple brainstorming sessions. Collectively we were able to leverage each other's skills and experience to achieve the campaign goals and deliver an outstanding campaign," says Eric Karas, senior product manager at Auxilium. 

But broaching a sore subject with a sense of humor takes a certain tact. "We had to be very, very careful on how we approached humor in the topic," says Washburn. Yet emotional areas still needed to be explored in a way that educated the consumer while being sensitive to the issue at hand. "It's possible with low testosterone to have completely adequate sexual function but just no libido to deliver," he says. This is in stark contrast to erectile dysfunction, another sexual issue that males are well informed about—which had to be overcome. 

So what makes the campaign so compelling? Says Washburn: "I think the work is, in large part, successful because we paid a lot of attention to casting. We hired really good actors, who could deliver nuanced performances with little to work on. Our main guy has basically no lines! He just kind of grunts. But he's able to bring a lot of humor to that. And the wife character? She's in the ad for literally a few seconds, but you can identify with them and see them as a couple very quickly. I am very proud of how we executed the ad in a way that felt respectful and sensitive to the subject yet managed to make it 

Pharm Exec's annual feature applauding the people behind the best of pharma advertising over the past year

Ad Stars 2011

Public reputation has become a key strategic indicator for Big Pharma—and the media plays a subtle but critical role in fixing the criteria by which the industry finds itself evaluated. To set some basic metrics for progress in the biopharmaceutical industry's relationship with the US press, 

 has for the past seven years commissioned the Arrupe Center for Business Ethics at Saint Joseph's University in Philadelphia to conduct an audit of the hot-button biopharma issues covered in the five biggest circulating US dailies (

USA Today, Wall Street Journal, New York Times, Los Angeles Times, Washington Post;

 see chart) as well as overall attitudes toward the industry and individual companies. 

This year's report finds a strong upswing in coverage, with the "top story" being flu vaccines, followed closely by the FDA regarding regulatory issues, and then drug safety. Conversely, interest in drug pricing is down, while the progress of health reform contained less information on industry positioning than was the case last year.   

At the top of the list of issues attracting media attention in 2010, for the first time ever, were flu vaccinations. The media's coverage of this issue is telling, as it shifted from alarming reports of vaccine shortages, to the relatively mild strain of the virus, to an oversupply by the end of the year. At the beginning of the cycle, the 

 reported a shortage of H1N1 vaccines due to delays and difficulties in production as well as the lack of production within the US. By the end of the review year, the story was the abundant supply of flu vaccines, many of which would go to waste.  

Scrutiny and criticism of the FDA and regulatory issues placed second on the list. This issue has ranked first or second for four consecutive years. Next up was the related issue of drug safety. Taken together, these two issues reveal the continuing media scrutiny on the drug approval process, cases of misuse or abuse of prescription drugs, adverse impact, and lawsuits. Most of those articles were critical of the industry and/or a specific pharma company or brand.  

The focus on high drug prices declined in 2010, dropping from third to sixth on the list. Furthermore, two related pricing issues—importation/reimportation of drugs and differential pricing and distribution—did not appear on the list at all. This is an interesting finding in light of reports evidencing drug price increases last year averaging about 9 percent.  

Healthcare reform emerged again as a hot issue in 2010. Healthcare reform articles were separated into two populations: one that specifically referred to the response of drug makers to reform (10 articles) and the other that focused more generally on the healthcare reform movement and debate over its provisions (74 articles). In the latter case, status of drug benefits under Medicare and Medicaid got the most attention.  

A consistent finding throughout the seven-year study is that articles and headlines tend to be more negative than positive for the industry. The good news for 2010, however, is that the proportion of both negative headlines and negative articles declined significantly from previous years. Nevertheless, as shown in the tables, articles and headlines are still about twice as likely to be negative than positive toward the industry. 

Bias Analysis of Headlines and Full-Text Articles			

 from zero in 2009 to 22.2 percent in 2010. The articles were also analyzed to determine whether they included the industry's perspective no matter what position taken by the articles' authors. Less than half of the articles in 2010 (34 of 74, or 45.9 percent) included the industry's perspective. This is a substantial decrease from 2009, where 81.3 percent of the articles (13 of 16) mentioned both sides. 

Companies mentioned most frequently in 2010 were Merck (13 times), GlaxoSmithKline (13), and Pfizer (12), each involved in major news stories for drug safety and/or efficacy. The results of the trial known as 

, questioning the efficacy of Merck's cholesterol drug, Zetia, received ample attention. Similarly, drug safety reports about GSK's Avandia and ongoing troubles with Paxil were reported widely. Johnson & Johnson/McNeil garnered attention after receiving a warning letter from the FDA for a musty or moldy odor of certain products, leading to product recalls of McNeil's children's Tylenol products, including Tylenol, Motrin, and Benadryl. 			

Next was coverage about merger and acquisition strategies. The brands most frequently cited were Wyeth's Phenergan and Pfizer's Lipitor. Lipitor received extensive coverage as it is the world's best-selling drug and is slated to go off patent later this year.  

The media continues to track the industry closely. Yet despite the tendency toward negative coverage, there is recognition of the industry's capacity to develop and implement solutions to medical problems as evidenced by migration of the hot-button issue of flu vaccines to the most-reported issue. This coverage specifically highlighted industry contributions to a public health threat and showcased the challenges facing companies struggling to keep pace with patient and provider expectations—a "cure" for influenza is not simply achieved through wide distribution.  

In addition, individual companies continue to shape overall attitudes toward industry reputation, particularly where safety is concerned. Adverse publicity from Johnson & Johnson over the counter-recall initiatives was the driver behind the rise in negative views of the industry last year. The same trend is evident on broader topics such as health reform. Coverage about it was down by 6.1 percent in 2009 and was more neutral (77 percent versus 70.9 percent) last year. However, Republican efforts to rescind the entire bill and the anticipated Congressional debate about implementing key provisions is likely to increase media coverage in 2011—and the partisan nature of the debates to date suggests that coverage will be more polarized. How much damage this does to Big Pharma will depend, in part, on the legality of its promotional activities as well as the visibility of its lobbyists. Assuming there are no off-label promotions and the lobbyists are invisible, adverse publicity may be minimized.    

Pharma also now has the opportunity to work constructively with other stakeholders on innovative ways to deliver healthcare, such as states seeking grants to introduce accountable care organizations or to administer the new medical insurance exchanges. This could be a source of "free earned media" if companies play it right by being seen as motivated by a desire to enhance value in the healthcare system. 

 is Associate Dean and Arrupe Fellow at St. Joseph's University. They can be reached at 

Negative views regarding pharma are on the rise, but vaccines help keep the focus on the positives of innovation

Pharm Exec's Seventh Annual Media Audit

The process for establishing an active drug safety surveillance system that can quickly detect and assess adverse events is emerging as a model for tapping third-party data to develop information on the performance of medical products and healthcare delivery. In demonstrating ways to link and analyze different data sources, FDA's emerging Sentinel System may be a "national resource for evidence development," says Mark McClellan, former FDA commissioner, now director of the Brookings Institute's Engelberg Center for Healthcare Reform.  

Establishing Sentinel, as required by the FDA Amendments Act of 2007 (FDAAA), is a complex undertaking that involves linking up diverse databases and establishing standard analytical methods for evaluating safety signals. As a distributed network, Sentinel leaves patient health information with the data holders, an approach designed to ensure the privacy and security of personal health information. This approach now appears to have uses beyond safety surveillance—for comparative effectiveness research (CER), assessing quality of care, and supporting drug development by identifying patients for clinical trials and evaluating biomarkers. 

Leaders of the Sentinel Initiative discussed its larger impact at a January workshop organized by Brookings as well as at the Drug Information Association's pharmacovigilance conference. Rachel Behrman, associate director for medical policy in the Center for Drug Evaluation and Research (CDER), noted that FDA's collaborative experience with Sentinel may influence the shape of similar initiatives by other government agencies.  

For example, the Department of Health and Human Services (HHS) is building a multipayer claims database (MPCD) to support comparative effectiveness research, as authorized and funded by the economic stimulus legislation of 2009. The plan is to build a "hybrid" system with a centralized administrative database on some 100 million individuals in Medicare and other health plans, plus a parallel distributed network component, similar to Sentinel, that can tap additional patient information held by health plans.  

The HHS project also may incorporate data from states that have established their own MPCDs, primarily as cost-control strategies. About a dozen state initiatives are analyzing eligibility and claims data to track healthcare use and quality, and to uncover fraud and waste.  

These systems currently tap into administrative and claims data, but the plan is to add clinical data in the future, at least for some patient cohorts. For now, Sentinel data partners may be asked to provide certain patient-level information if needed to confirm unclear findings, with that data stripped of patient identifiers before transmission.  

Ultimately, a national interoperable electronic medical records system will feed patient-level information into all these information systems. With appropriate privacy protections, this will facilitate assessments of healthcare delivery, support biomedical research, and track medical care for many purposes. But because a comprehensive e-health system is still years away, HHS and FDA will continue to build systems that can assess specific healthcare issues through third-party data banks.  

At the Brookings workshop, HHS assistant secretary for policy and evaluation Sherry Glied emphasized the need to coordinate the MCPD project with Sentinel, and CDER director Janet Woodcock similarly suggested that it's important to avoid "reinventing the wheel" with each initiative. Woodcock acknowledged that Sentinel is part of a broader effort to better use data to improve healthcare, and FDA, she said, "is willing to be a node" on these larger e-health information operations.  

FDA's Sentinel Initiative raises broader questions about tapping patient information and health IT for comparative studies in drug development

Pharmaceutical Executive-03-01-2011