For a company whose HQ sits astride Europe's second-longest river, "riding the current" is a descriptive metaphor for a distinctive strategy. That strategy is to set a steady course through waves of market turbulence—connecting to the flow of opportunity, fixing a destination, and getting there first with an anchor chain of distinctive, segmented products that out-propellers the competition. Novartis CEO Joseph Jimenez calls it "focused diversification." His strategy is now being applied to aggressively expand sales by 2015—and the number of patients served—in the key emerging markets of Asia, Latin America, and Eastern Europe, where growth is trending one way: upstream. 

Novartis begins the effort on a strong base, with its six top emerging markets—China, Russia, India, Brazil, South Korea, and Turkey—notching $5.8 billion in sales in 2011, up from just over $4.6 billion in 2010. In 2011, double-digit gains were posted in three of the four BRIC countries (Brazil the lone exception), with China leading at a heady 24 percent. Looking at prescription pharmaceuticals alone, the company predicts sales in the six countries will account for a fifth of the global total by 2020, compared to slightly less than 10 percent today. Hopes vested in these iconic geographies are vital to replacing the revenue from the loss of exclusivity for the company's biggest-selling medicine, the anti-hypertensive Diovan, whose U.S. patent runs out in September.  

But there is no desire to stop there. In an interview with 

 CEO Jimenez said management has set its sights much wider. Two other countries where Novartis is making a bet are Taiwan and Indonesia. Novartis is investing approximately $17 million annually in clinical development in Taiwan and is a key funder in clinical trials in the country. Under an existing Memorandum of Understanding with the Ministry of Economic Affairs, Novartis is working to foster local R&D and is currently collaborating with five leading medical centers to help build clinical trial capabilities and excellence. Another high-profile market is Indonesia. "Indonesia's demographics alone—the world's fourth-most-populous country, with a rising middle class—makes it a fit for all of our businesses," Jimenez says.  

The play for emerging markets is a natural extension of the company's overall strategy, which is to apply the best science to those therapeutic areas where there is unmet patient need and a high potential for growth. A Swiss small-market heritage dictates an outward perspective in seeking new opportunities; through its predecessor companies, Sandoz and Ciba-Geigy, Novartis can count on a long history in the BRICs, with a business in Russia, for example, that dates back to the 19th century. More importantly, Novartis has amassed a diverse, multichannel product portfolio that can be customized to fit local health demographics and medical practice. Familiarity and depth are important to chasing profits from the often bewildering complexity of the local environment, which can consist of literally dozens of sub-markets: Urban or rural? Rich, poor, or inbetween? Variant geographies: coastal or interior? And the distinctive architecture of reimbursement: private out-of-pocket, social insurance for the manufacturing middle class, and the publicly subsidized solidarity programs for the poor? The choices are vast.  

Hence, success for Novartis is a question of offering a range of options—including services beyond the pill. A leadership position in five distinct businesses—innovative pharmaceuticals, eye care, generics (the Sandoz unit ranks second in sales worldwide), vaccines and diagnostics, and consumer health (including veterinary products)—gives Novartis the advantage in providing these options in a way that accommodates stark differences in the demand profile of each country. Jimenez notes that Novartis "is comfortable in pursuing very different strategies depending on the country. For example, in China we are building a visible field-force presence, as the market is still very much driven by share of voice, while in Russia we are taking a more concentrated, key account management approach." Adds Peter Catalino, a physician who is the global head of pharma strategy for Novartis: "A portfolio relevant to a diversity of local purchasing segments is a precondition for benefiting from the sheer momentum of growth in these countries." 

 "A portfolio relevant to a diversity of local purchasing segments is a precondition for benefiting from the sheer momentum of growth in the BRIC countries." â Peter Catalino, global head of pharma strategy, Novartis			

In addition, many analysts believe the recent—and costly—acquisition of Alcon carries huge potential for building a bigger presence for Novartis in the BRICs. "Eye care is a significant unmet medical need for millions of consumers in these countries, with Brazil being a particularly good example," Seamus Fernandez of Leerink Swann told 

To ensure the full Novartis portfolio is properly leveraged, the company has a central coordinating unit, Group Emerging Markets. It pools resources from the five business units and then works with the affiliates to create customized solutions for big local customers. The goal is to make sure that size is not a disincentive and that Novartis operates with one face as a supplier of products and services.  

The common thread to all this is that once Novartis commits, it does so full throttle. In contrast to the strategies of some Big Pharma rivals, it relishes a highly visible local presence with the kind of sizeable investments that span the range from manufacturing, to R&D, to public health infrastructure. These also attract positive attention from governments as a contribution to industrial policy and local development through technology transfer. In the past two years, the company has committed nearly $2 billion to build a manufacturing presence in Russia and Brazil and to conduct R&D in China with a vast brick-and-mortar facility in Shanghai. "These are not toe-in-the-water partnerships but rather a signal that Novartis is here to stay," says Catalino.  

The potential from emerging markets is critical to executing against Jimenez's three strategic priorities. He explains, "The first, extending our lead in innovation through pipelines that are best in class, requires us to build strong networks and pursue new ideas outside the traditional range; consumers in emerging markets use technologies differently and the lessons from that can lead to innovations that are applicable worldwide. The emerging bloc is also making big investments in basic R&D, so we have to be there if we want access to the talent pool. That's one of the drivers behind our investments in R&D in China. Our second goal, accelerating growth, can only benefit from our access to the rising disposable incomes of a billion-person-strong emerging middle class determined to invest in its own health. The third priority, improving productivity across our operations, will prove elusive unless we take appropriate advantage of the lower cost base and infrastructure in many of these countries. And any savings we make there are strategic, in that we apply them to fund investment in the medicines that emerging markets will need tomorrow."      

The scale of commitment Novartis is making, particularly in the BRIC zone, is not without its share of risk. This is why, in addition to the investment, the company works with local stakeholders to improve standards for conducting business. Jimenez says Novartis considers four factors as crucial: predictable, non-discriminatory and transparent rules on market access; consistent and effective enforcement of intellectual property rights; a qualified and well-trained labor pool; and government support for good business ethics, including anti-bribery legislation, to be observed by all. The perspective explains why an erratic stance on patent protection has put India behind the other BRICs in winning the big, trend-setting investment dollars from Novartis.  

Emerging markets also serve as a test of Jimenez' vision to reposition Novartis from a pure-play pharmaceutical company to a broadly based health solutions enterprise. The transition is well under way; with the recent acquisition of the Alcon eye care business, the share of pharmaceuticals in overall sales is down to about 56 percent, from 80 percent a few years ago.  

What emerging markets offer here is a relatively blank slate. Basic health infrastructure is either being created from scratch or repurposed to address the fact that, with rising disposable incomes, health is becoming a consumer priority as well as an essential public good. This gives Novartis the opportunity to grow its business by offering investments that promote good health practices while expanding access to treatment. These investments are focused outward, with an emphasis on institution-building rather than one-off sales; many local stakeholders benefit from the company's engagement and there is a reputational enhancement for Novartis by reinforcing the perception that it is going to be there for the long term. "We call it a social business model because it blends corporate citizenship with entrepreneurship," Jimenez says.  

An example is a comprehensive health education program, "Arogya Parivar" (Healthy Family), that Novartis launched in India in 2007. The initiative recruits and trains citizens in predominantly rural areas to teach preventive healthcare and disease management practices and to direct those deemed most vulnerable to chronic conditions to a network of mobile clinics—health camps—for screening, diagnosis, and treatment. Novartis funds the camps and makes available a range of prescription and OTC medications to treat major chronic ailments at low cost.  

Since its launch, Arogya Parivar has provided this basic service to more than 42 million people in 33,000 villages in 10 Indian states. The company is rolling out similar programs in several other Asian and sub-Saharan African countries—Novartis has a related "Health Express" initiative in China geared to health professionals in rural Xinjiang province to improve public health awareness—with the aim of reaching 100 million people. Each of these programs provides a commercial boost by giving management more insight into local customs and the relationships that motivate patterns of medical practice, including patient compliance with dispensed medications. One consequence is that Novartis has tailored its distribution strategies to give precedence to OTCs and generics issued in smaller packs that require the patient to return to clinics more frequently for refills. This conforms to patient preferences for lowering the out-of-pocket costs of each transaction while providing the means to better measure rates of compliance—a key driver of public health outcomes.  

Another attribute of these initiatives is it gives Novartis the opportunity to showcase the synergies between Sandoz and its prescription pharmaceuticals business. "Our message to even the poorest consumer is that our generic products form part of a global portfolio characterized by a consistent overall commitment to delivering the highest possible standard of quality," said Catalino. "When we sell a generic in an emerging market, we are selling the best you can get."    

Management is emphatic that the social business model is not to be confused with charity. Instead, the intent is to help Novartis structure its commercial operations to allow for maximum penetration of the customer base. In other words, what good is a great product if it is unaffordable and can't be accessed by the audience most likely to benefit from it? Jimenez also takes the view that programs with a social objective can be profitable too. "Our Arogya Parivar initiative turned profit-positive this year, after four years of losses. This is critical for sustainability," he notes.   

So, in looking ahead, Novartis sees its commercial progress in emerging markets as dependent on how well it does in facilitating market reform. This represents a departure from Big Pharma's traditional reluctance to engage in issues beyond the narrow circle of what is required to obtain the authorization to sell medicines. Yet because the rules of the road are either different from mature markets or are still subject to the mystery detour, Novartis feels it has no choice but to engage, in the widest way possible.  

And the big question the company must answer is: What is our value proposition? That answer, according to Novartis, must be tailored to each market. But it begins with an assessment of the diverse mix of products a big company like Novartis can bring to the customer. Beyond that is the post-pill service orientation, which Novartis feels is a much underestimated driver of value. This includes leading the competition with "reverse innovations" in process applications, ranging from diagnostic tests to supply chain improvements, all based on local precedents; developing evidence directly from local sources to document the clinical and cost effectiveness of Novartis products, including customized clinical trials and relevant pharmacoeconomic data; and promoting patient access through novel P&R strategies, patient assistance, and adherence programs, each appropriate to the way healthcare is delivered and paid for. Information, in particular, is a prized asset in demand in these markets, and a data analytics center the company has built in the Indian city of Hyderabad is one way Novartis is responding.  

Although the business investments outlined above are an important indicator of strategy in emerging markets, Novartis is placing its ace card around another factor: human resources—'people power.' The core unifying element in the Novartis game plan, it comes from the recognition that the best strategy is little more than a paper weight without the internal capacity to motivate and change the organizations responsible for executing it. This view is bolstered by a new CEO issue survey conducted by PricewaterhouseCoopers, which found a high level of concern about the ability to recruit—and retain—capable managers in the emerging markets. While its rivals also stress the importance of building a strong local talent base, Novartis is unique in leading this process from the very top, with a specialized management training and exchange program that Jimenez himself has personally driven the creation of and actively participates in.  

Called "LEAD," the program singles out 25 of the most promising executives from each of the business segments in the four emerging markets where Novartis wants to extend its footprint—Brazil, Russia, India, and China. The group meets twice a year for a weeklong session consisting of leadership course work and coaching based on individualized skill development plans; lectures by a mix of local and outside experts; and consultations with members of the HQ Executive Committee around an ongoing set of "country action" projects designed to implement LEAD learnings under actual market conditions, in real time. These include: 

				» Identifying talent needs in Brazil as the local business grows, sponsored by Andrin Oswald, division head of Novartis' vaccines and diagnostics unit; 			

				» Setting targets to improve regulatory compliance standards for the Russian business, sponsored by Jeff George, division head of Sandoz, the company's generics business; 			

				» Building a locally appropriate strategy to market and distribute medicines in rural China, sponsored by David Epstein, division head of Novartis pharmaceuticals; and 			

» Leveraging India's leadership in traditional medicines and other areas to create innovative marketing campaigns for the Novartis portfolio, sponsored by George Gunn, division head of the Novartis animal health business, who also leads the company's corporate social responsibility.  

The emphasis here is on practicality in solving a business problem. For example, the Brazil project is responding to a specific challenge: the ability to find qualified staff and management talent to run the new vaccine manufacturing plant Novartis has built in the distant and impoverished state of Pernambuco. Although the investment is a huge boost to the local economy, it will not succeed without the right people, so the project is drafting a plan to create a talent pool from scratch, with training programs and other outreach activities conducted in cooperation with local academic institutions. "The spillover from this effort in terms of local development is immense," says Joshi Venugopal, assistant to the chairman and administrator of the LEAD program.  

At the most recent LEAD session, held in Kerala, India, in November 2011, the group focused on understanding how culture and environment affect the practice of management in different countries; responding effectively to these forces requires a capacity to interpret, adapt, and integrate on the spot—there is no lesson book for success. Practical exposure to this learning was provided through visits to local hospitals and healthcare management facilities, where the group was assigned to evaluate and then recommend ways for Novartis to adjust its business model with product and service offerings that fill an unmet need—not only in Kerala but in other locations as well.  

But the highlight of the meeting was the full day Jimenez spent with this small group, where the exchange was frank and informal. As I observed firsthand, no intermediaries or "handlers" were present to interfere with the provocative question Jimenez posed to each country participant: "If you were in charge, what would you do differently?"   

LEAD has already been judged a success, and the plan is to expand participation to young managers from 12 other emerging markets: Algeria, Argentina, Egypt, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey, and Venezuela. Ultimately, what Novartis intends is to build a reserve of young managers who combine local business expertise with a global policy perspective, whose skills can be applied throughout the company, between businesses and across geographies. Eventually, these managers will be in a position to return home and lead their country business from a perspective that is not parochial but expansive.  

What Novartis hopes to achieve is to focus on developing an at-home innovator and not have someone from the multinational leadership team being recycled as a manager or administrator. Good benchmarks already exist, in that for three of the four BRICs, the head of the business is a local.  

The Novartis profile in the emerging markets is front forward, with many good people executing around a diverse portfolio that can be bundled to meet the apparently endless variations in customer need. Maintaining that global perspective has been challenged, however, by the difficulties the company has encountered in integrating the manufacturing function across the different divisions, such as Sandoz and Consumer Health. But there are still some rich tools in the arsenal: "Alcon has a strong competitive position in tapping the global potential in cataract surgery, while the upward growth cycles for Gilenya and Tasigna, combined with the launch of the meningitis B vaccine Bexsero and Afinitor for breast cancer, means that Novartis will have good things to sell that match the long-term demand implicit in emerging markets, Fernandez of Leerink Swan told 

For Novartis management, the metric for success is more than financial. Says Jimenez, "What's most rewarding is heaering from patients whose lives we've touched. This past year, we reached more than 1.1 billion patients around the world, and we're constantly striving to address new disease areas where we can have an impact." 

No intermediaries or "handlers" were present to interfere with the provocative question Jimenez posed to each country participant: "If you were in charge, what would you do differently?"

Familiarity and depth are important to chasing profits in the often bewildering complexity of the local environment, which can consist of literally dozens of sub-markets.

Articles

Features

With growth as its guiding light, Novartis has big plans for the emerging markets. Pharm Exec sits down with CEO Joe Jimenez to understand what it will take the company to best the competition.

Novartis: LEADing in Emerging Markets

Issue PDF

Pharmaceutical Executive Digital Edition - March 2012

The Food & Drug Administration made a propitious start for this New Year. Right on deadline, the agency produced recommendations for the Prescription Drug User Fee Act (PDUFA) and two programs governing the fees the biomedical industry pays to fund the regulation of prescription drugs, generics, and biologics. FDA stayed in the spotlight last month when Commissioner Margaret Hamburg testified before Congress.  

The next series of hurdles is unlikely to be as propitious. Hamburg and her staff must begin to fix a drug approval process many patients, doctors, drug developers, and investors—even regulators—consider to be in need of repair. Inefficiency at this agency has profound consequences: foremost to public health, and also to our country's ability to maintain our global leadership in drug development.  

Let me be clear: The problems I'm discussing have nothing to do with the work ethic or talent at FDA. To the contrary, I've dealt with dozens of smart, hard-working staff members there over the years who are dedicated to improving public health. But even with the best intentions, regulators are stymied by deeply flawed processes and systems. To name a few: 

 FDA has had five commissioners in the past 10 years alone. How can we expect effective leadership when the commissioner changes every couple of years, subject to political whims? A fixed term of, say, six years, would go a long way to correcting this flaw. 

 Too many companies developing new drugs run aground when the rules change or the goal posts shift at the eleventh hour. In 2006, the FDA surprised three companies presenting at an advisory committee meeting on their antibiotics for bacterial sinusitis or community-acquired pneumonia. The companies had spent millions of dollars and years of effort on their clinical trials based on previously accepted standards—and now, the standards have changed. All of the drugs were rejected and all three companies went out of business.  

 Even when a procedural change is legitimate, information often fails to reach companies with drugs under review. It is also difficult to have any informal exchanges with FDA, so that even questions that might readily be addressed in a phone call can require months of waiting for a formal meeting or conference call to be scheduled. Meanwhile, drug development programs languish. 

 All stakeholders in healthcare agree that patient safety is paramount. But the balance of benefit versus risk at the FDA has moved dramatically toward risk aversion. No surprise here. With the media sensationalizing the risks not just of medications but of everything from drinking water to tricycles, and Congress grilling FDA staffers repeatedly before the cameras, regulators have received a clear message: the safest route is to heap on new requirements and delay approvals. Yet the risks of delaying patient access to drugs that might help them are not taken into account. 

Narrow application of accelerated approval.

 FDA has the ability to speed approval of new medications that address serious conditions with unmet medical needs. However, accelerated approval has been applied primarily to drugs for HIV and cancer, while many other serious conditions don't benefit from this process. 

 Congress often hears from patients desperate to see new drugs approved, but their voices don't carry significant weight in the review process. 

 The U.S. has the world's most nimble infrastructure for medical advancements, but at FDA there is no mandate to promote innovation. FDA's mission statement should highlight the importance of innovation, and a Chief Innovation Officer should be appointed to ensure that FDA processes take this into account.  

Biotech companies have grown increasingly alarmed by the impact of these regulatory shortcomings. A survey of biomedical CEOs in California released last month shows that eight in 10 CEOs believe the FDA approval process is slowing growth of their companies and threatens growth in the medical technology sector. Three-quarters of those surveyed said problems at the agency place U.S. biomedical leadership in jeopardy. 

Another influential constituency is voting with its feet: venture capitalists who, historically, have funded small companies developing many of the most promising experimental drugs. Last fall, the National Venture Capital Association (NVCA) and its partner organization, the Medical Innovation and Competitiveness Coalition, released a survey of 156 VC firms that account for about $10 billion in venture backing for medical startups. Thirty-nine percent said they had cut spending on life sciences in recent years, and another 39 percent expected to do so in the future. Asked why, nearly two-thirds of companies cited regulatory uncertainty and risk-aversion at FDA. Eighty-six percent said that, in coming years, first commercialization of some products they backed would occur in other countries. 

It's also troubling that many respondents said they expected to see investments in treatments for diabetes and obesity plummet. These are two of the biggest contributors to healthcare costs, morbidities, and death in this country. Yet it's easy to see why investors would head for the exits. FDA has rejected three obesity drugs in the past six years, one of which was recommended by the agency's own advisory panel. At the same time, FDA has markedly increased the requirements for demonstrating cardiovascular safety of new drugs for diabetes.  

How can we achieve a better balance between addressing medical needs and ensuring that new drugs are both safe and effective? A new mechanism is required, but what shape should it take? Accelerated approval offers a useful paradigm. First implemented in the 1980s to speed HIV drugs to market, this regulatory approach acknowledges that surrogate markers can reasonably predict drug efficacy, even without evidence from lengthy clinical trials. Based on success with HIV/AIDS, both Congress and cancer patient advocates demanded similar treatment for oncology drugs. Not surprisingly, the numbers of new treatments in development for cancer now far outstrip those for any other condition. This shows what the American innovation enterprise can accomplish when obstacles are lifted and the right incentives are in place. 

Medical science has continued to advance on numerous fronts since the 1990s, to the point where genomics, molecular biology, and bioinformatics have provided an unprecedented understanding of the underlying biological mechanism and pathogenesis of serious diseases, in addition to HIV and cancer. It should now be possible to expand the accelerated approval pathway to include other diseases, applying strategies based on biomarkers or pharmacogenomics, predictive toxicology, clinical trial enrichment techniques, and novel clinical trial designs (such as adaptive clinical trials). As in the case of HIV and cancer, standards of safety would be preserved. In addition, drugs green-lighted in an accelerated approval pathway would be subject to more definitive clinical trials in the post-market setting, and approval would be withdrawn if these were not confirmatory.  

It would be unreasonable to pin all the blame for regulatory dysfunction on FDA. Regulators are buffeted by political winds that blow hot or cold indiscriminately. Our society is at fault because we expect to live in a 'Neverland' where powerful medical interventions have no risks whatsoever. The media and our political leadership too often serve as echo chambers for our fears, and ubiquitous personal injury ads reinforce our society's insistence that no risk should go unpunished. Notwithstanding all this, most Americans would likely be shocked to learn that they have 20 or more times the risk of dying from a fall than from taking most approved medicines.  

There are no secret weapons in the reform proposals I've seen that can help FDA combat misguided social expectations. Nor should regulators relax their guard on patient safety. However, the reform measures noted above might reassure investors in U.S. biotechnology and preserve this sector as the birthplace of medical breakthroughs. These measures emerged from task forces within the Biotechnology Industry Organization and were informed by lengthy discussion with a wide range of interested parties, including FDA officials, patient and pharmaceutical groups, and political leaders.  

FDA has been responsive to calls for change in the past. The agency embraced accelerated approval for HIV and cancer, and was receptive to calls from the biotech industry on the need to create an ombudsman's office to serve as a liaison with drug sponsors. Robust biopharmaceutical innovation is critical to our personal health, as well as the economic health of our country. With so much riding on the outcome, it's time for all parties to leave their biases at the door and agree on innovations to optimize the regulatory process itself. 

 is President and CEO of Acorda Therapeutics. He can be reached at 

Regulatory

How can we better balance addressing medical needs with ensuring that new drugs are safe and effective? Ron Cohen reports.

How Can We Fix the FDA?

Some sly smiles flickered across the lips of the veterans of European pharmaceutical affairs last year, when it started to look as if an Italian was going to be put in charge of the European Medicines Agency. Those with long memories nudged one another knowingly, in complicit acknowledgement that the last Italian in such a distinguished role wound up in prison after being convicted on charges of massive and systematic corruption. 

Guido Rasi, who took over as executive director of the EMA in November 2011, has many challenges ahead of him. And one of them is escaping from under the shadow cast by Duilio Poggiolini. As they like to say in serialized romantic fiction, new (or in this case, young!) readers start here. Poggiolini was, like Rasi, head of the Italian medicines agency. Like Rasi, he was a distinguished physician and researcher. Like Rasi, he was a professor of microbiology. And, like Rasi, he was promoted to European stardom, as chairman of the EU's top body for drug authorizations (which, back in 1991, before the EMA existed, was the Committee for Proprietary Medicinal Products—now reborn as the CHMP within the EMA).  

Unlike Rasi, Poggiolini was given a heavy jail sentence in 2000 for abusing his position and taking bribes in return for favorable decisions on pricing and authorization. Poggiolini's misdeeds, uncovered during a 

—clean hands—investigation into an influential Masonic lodge, were on an epic scale. He had amassed cash, jewelry, gold, and works of art estimated at more than $150 million, stashed not just in Swiss bank accounts but even hidden in the sofas in his house in Naples—including gold rubles from the reign of Czar Nicolas II and South African Krugerrands. It took investigators 12 hours just to catalog the spoils stowed around the house. As if that were not enough of a record, Poggiolini was subsequently charged with delinquent management of Italy's blood transfusion services, and responsibility for thousands of cases of hepatitis C and HIV from contaminated blood. 

Unlike Poggiolini, Rasi already has a profile for 

 Rasi was appointed head of the Italian health agency in 2008 as as new broom after his predecessor, Nello Martini, was unseated in the course of an investigation into trafficking of influence. Rasi had been an advisor to the Italian agency for four years by then, but he had a reputation as an honest dealer—vitally important as Martini was facing trial on charges related to agency failures that allegedly put patient safety at risk. Under its new command, the agency recovered some of the credibility it had lost over yet another incident calling into question the probity of Italian officials. Rasi oversaw a restructuring of the agency designed to make it more efficient and improve drug registration times. 

Only three years later, Rasi finds himself in a similar role at European level. The reputation of the once-glistening European Medicines Agency had become heavily tarnished during 2011 by accusations of conflicts of interest and mismanagement. Thomas Lonngren, its executive director, provoked sharp criticism when he quit his job to walk straight into consultancy work in the pharmaceutical industry (see 

 December 2010). At the same time, charges were flying wildly of agency incompetence and even complicity in leaving unchallenged, for years, Servier's Mediator, by then linked to hundreds of deaths in France. And the European Parliament refused to sign off on the agency's accounts because of concerns over insufficient financial and personnel controls. It was onto this unpromising stage that Rasi stepped last November, after the agency had drifted for nearly a year without an executive director. Small wonder that malicious chuckles ran round Brussels along the lines of "and after all that, they could only get an Italian!" 

Rasi's declaration of interests is unequivocal. He says he has no financial interest in any pharmaceutical company, owns no product patents, and that he has no personal gain from any grant or other funding from a pharmaceutical company to any organisation he is employed by. So 

 could be. But Poggiolini is only one of the shadows over the EMA. Now there are other battles of a more technical nature for the London-based agency and its new boss.  

Rasi has shown some lithe thinking about squaring some of the circles he is confronted with, and doing so with what are widely recognized as insufficient resources for a growing workload and ever-more-sensitive decision-making. He has publicly admitted there are problems, and has publicly promised "not to hide from them." 

One dilemma arises from implementation of new EU pharmacovigilance rules due to come into effect in July, for which large amounts of drug information from companies is supposed to be entered in advance into the agency's EudraVigilance safety database. Rasi has spoken of this as his "biggest headache," because of the administrative implications in handling complex information on more than half a million products. Pragmatically, the EMA reached a compromise agreement last month with companies to smooth the process, after industry warnings that the requirements were unworkable. Rasi himself will lead from the front in tackling the problem, heading a task force set up specifically to oversee the implementation of the legislation.  

On the thorny issue of biosimilars, Rasi has shown similar agility. Europe's generic medicines industry is now hopeful of his backing for changes that could cut the cost of developing biosimilars by harmonizing European and U.S. regulation and avoiding the need for duplicative approval procedures. He is planning to create a joint U.S.-EU biosimilar conference to simplify the work while maintaining standards. He has also promised guidelines on the harmonization of regulatory procedures for biomolecules, to increase the use of biosimilars. 

He has also indicated ambitions for the EMA to accept a broader responsibility to patients and industry, breaking a taboo that limits its role to merely showing a red or green light to marketing authorization applications. "I see the next phase of the agency's development to be focused on rethinking how medicines contribute more broadly to public health, how access to medicines can be assured in a world of increasing scarcity, and a growing focus on safety," he said on his first day in office. His vision is of an agency that can contribute to ensuring access to medicines by taking some account of what happens to products—on pricing and reimbursement—after authorization. He has spoken of making the agency's work so credible and scientifically authoritative that its thinking is not challenged. 

He has also indicated concerns over combating falsified medicines, the challenges of new approaches to medicines development, the lack of harmonization of clinical trials rules across member states, and the need to adapt to the new demands of assessing personalized medicines on the basis of pharmacogenetic criteria. He is alert to what he sees as the "disparity" between the risk/benefit analysis the EMA does and the emerging disciplines of health technology assessment, and he is conscious of the still-to-be-faced challenges of regulating medicines derived from nanotechnology or using new routes and methods of administration. His battles will be many—but at least he comes to it with a spotless record and evident energy. 

So maybe Rasi should not be compared so much with Poggiolini as with some of his compatriots currently making the running in Europe—such as Mario Draghi, who is competently piloting the European Central Bank through the turbulent waters of the euro crisis, or Mario Monti, the former European Commissioner who is now trying to salvage Italy from the near-disaster of Berlusconi's misrule. And if Rasi ever gets around to writing his book, it will suffer a less ignominious fate than Poggiolini's 1989 "Practical Guide for Applications for Marketing Authorizations on Medicinal Specialities in the EEC," which has been long since—and unsurprisingly—pulped. 

's anonymous columnist, a commentator so close to the action in Europe that his identity must remain secret. 

European Report

After his predecessor and countryman left the EMA in disgrace, Guido Rasi jumps in as executive director-with great challenges ahead.

The Italian's Job

The big news in 2011 for pharma was ... no news. The year was the quietest for big daily newspaper coverage of the pharmaceutical industry since we began tracking the data in 2004. And since newspaper coverage of the industry has historically been more negative than positive, this "neglect" gives Big Pharma a respite—and a welcome chance to reinvent itself and repair its reputational credentials. 

 Coverage of the industry in print is at its lowest level since the Saint Joseph's study began in 2004-down 48.4 percent in 2011 from the previous year. (GETTY IMAGES / PETER AUGUSTIN)			

Sponsored by the Arrupe Center for Business Ethics at Saint Joseph's University, the audit also found a less negative tone in coverage. Two issues drew the most attention: drug safety and the FDA regulatory environment. 

» Coverage of pharma is down 48.4 percent from last year and the lowest it has been since the study was launched in 2004. 

» Coverage is less critical of the industry. In 2011, 21 percent of articles were negative toward the industry compared to a five-year average of 48 percent negative.  

» Flu vaccines, which earned the top spot on the list of issues last year, dropped to 11th.  

» Drug prices are receiving less media scrutiny, but are still on the radar screen, at fourth place on the list of issues.  

» Merck, Roche, and Pfizer were the companies identified most frequently in the news. 

» Healthcare reform coverage decreased by 88 percent, from last year's 86 articles to only 10.  

The audit analyzed the top five newspapers in the United States as defined by circulation for a 12-month period and identified all front-page and editorial articles pertaining to "hot button" pharma issues. The purpose of the audit was to shed light on the following questions: 

» What ethical and legal controversies face the pharma industry—and what kinds of coverage do they attract? 

				» Do the articles and headlines support or oppose the positions taken by the industry, as defined by the Pharmaceutical Research & Manufacturers' Association (PhRMA)?			

» How often do reporters include the industry's perspective in the stories that cover the issues of the day? 

» What pharmaceutical companies and brand names are identified and discussed in the articles?   

» What are the implications of these findings for the industry? 

» To be included in the study and in our EthicsTrak database, an article had to be published between October 1, 2010, and September 30, 2011, in one of the top five US newspapers (as measured by circulation): 

USA Today, Wall Street Journal, The New York Times, Los Angeles Times,

Table 1 (at right) shows the breakdown of coverage by newspaper. Coverage is down by a wide margin in all five newspapers, ranging from a drop of 31 percent in the 

Table 1: Number of Articles by Newspaper and Section			

Table 2 identifies the issues covered in the articles, the frequency of their coverage, and how the results compare to previous years. At the top of the list of topics attracting media attention in 2011 are two issues related to drug safety. Scrutiny and criticism of "FDA and Regulatory Issues" was first on the list, which fits the pattern of previous years. Next up on the list is the related issue of "Drug Safety," another perennial focus of the media. With a combined total of 46 references in the 80 articles audited, these two issues, "FDA" and "Drug Safety," continue to dominate the news and reveal the continuing media scrutiny of the drug approval process, cases of misuse or abuse of prescription drugs, the impact of adverse events, and consumer lawsuits related to drug safety. As you might expect, most of those articles were critical of the industry and/or a specific pharma company or brand.  

Third on the list was "Research and Development." This set of articles reported mostly good news about the industry, in the form of progress made in research and drug development for cancer, lupus, schizophrenia, AIDS, and advancements in diagnostic testing for head injuries and Alzheimer's disease.  

The focus on high drug prices has ebbed and flowed over the eight years of the study. In the beginning years, drug prices were consistently at or near the top of the list of hot-button issues. Last year, the number of articles on drug prices dropped to sixth on the list, but this year it bounced back up again, to fourth place, just one article behind the focus on R&D. Furthermore, two related pricing issues—"Importation/Reimportation of Drugs" and "Differential Pricing and Distribution"—once a significant focus of media attention, make barely a blip on the screen now. Each received just one reference in 2011.  

Flu vaccines dropped from the top of the list last year to a distant 11th place in 2011. In fact, flu vaccine articles were so prominent in 2010 that they received more than double the coverage of any other single pharma-related issue.  

Surprisingly, healthcare reform was not a hot issue in 2011, at least not in comparison to 2010. As shown in Table 2, the 10 references about the pharmaceutical industry are divided evenly between "Healthcare Reform" and "Medicare/Medicaid," with five references each. Although there was far less newspaper coverage this year, the rankings of these issues only moved slightly when compared to last year. "Healthcare Reform" dropped from fifth in 2010 to sixth in 2011 and "Medicare/Medicaid" went from seventh in 2010 to sixth in 2011.  

A consistent finding throughout the eight-year study is that articles and headlines tend to be more negative than positive for the industry. The good news over the past two years, however, is that the proportion of both negative headlines and negative articles declined considerably from previous years. In fact, the analysis of full-text articles reveals a significant shift toward less negativity about the industry, to an almost equal balance of positive (17.5 percent) and negative articles (21.2 percent). Despite that bit of good news, headlines were still twice as likely to be negative (25 percent) than positive (12.5 percent) toward the industry.  

Newspaper Coverage of Companies and their Products

A component of our audit is to track the number of times a pharmaceutical company and/or one of its products are mentioned. For example, if the company is mentioned by name once and two of its products are mentioned once apiece, then that would account for three mentions for that company. This is an excellent proxy for the amount of media attention, good or bad, the company received during the year.  

This year there were 69 mentions that included 25 companies and 55 of their products. The most frequently mentioned company was Pfizer (Wyeth included) with 18. The 18 included nine mentions of the company by name and nine mentions for eight products: twice for Prempro and once for Aricept, Celebrex, crizotinib, Lyrica, Neurontin, Reglan, and torcetrapib (one of the industry's biggest disappointments). The anti-hypertensive caused mortality in the treatment group receiving a combination of torcetrapib and atorvastatin (Lipitor) during Phase III clinical studies in 2006. 

Genentech was second with 13 mentions; four for the company and nine for three of their products: Avastin, Rituxan, and Herceptin. Avastin was the most mentioned product with seven due to concerns about the drug's link to blindness when used off-label to treat macular degeneration and about FDA's withdrawal of its approval of Avastin for breast cancer.  

GlaxoSmithKline and Merck were tied for third with 11 mentions. For GSK, three identified the company by name and eight identified six products by name: Avandia and Paxil each had two, and Bactroban, Coreg, Tagamet, and Welbutrin each had one. For Merck, there were seven mention of the company by its name and four for its products: Gardasil, Varivax, Vioxx, and Zostavax. Roche and Johnson & Johnson (McNeil included) were fourth and had nine mentions apiece. Roche's mentions were a combination of the company name (five times) and product names (three times; one each for Orlistat, Plexxikon, and Vemurafenib). Johnson & Johnson's mentions included four by company name and five for five products: Benadryl, Motrin, Tylenol, Zyrtec, and Zytiga. Abbott was a distant fifth with five mentions; three for company name and two for Meridia. Following these was a collection of companies and/or products with two or fewer mentions. 

We analyzed the top five U.S. newspapers to address the following questions: 

» Do the healthcare articles and headlines support or oppose the positions taken by the industry? 

» What ethical issues face the pharma industry in these articles on reform? 

» How often are the industry's perspectives included in the articles? 

» What pharmaceutical companies and/or brand names are identified in the articles?   

» When the full articles were considered, 80 percent (eight of 10) were neutral, while positive and negative articles decreased to 10 percent apiece, which was lower than the two previous years.  

 each had three neutral articles and the 

 this year's most prolific paper, with four articles, had the only positive article, and the 

 only article was negative. Comparisons of coverage among the five newspapers are depicted in Table 3 (at right). 

Table 3: Healthcare Reform-Number of Articles by Newspaper			

Despite the data showing a decline in coverage of the industry in 2011, the 

 emphasized it was a matter of quality, not quantity. 

 health editor, Rosie Mestel, told us "there has been no strategic change in our coverage of the pharmaceutical industry. It's possible there was a decrease in coverage because the emphasis in 2011 of our health writers/editors was on healthcare initiatives. We have two stories scheduled for early this week on medications and another upcoming story on Lipitor." 

Our annual press audit finds that the big news in 2011 for pharma was ... no news.

Off the Hook? Pharm Exec's Annual Press Audit

MAKING FLAT WORDS SING should be the mission of every magazine. Ink and paper just aren't enough to draw the high notes from distracted readers used to having their content delivered in that single chord called te-di-um. As an editor, I find the first line of defense against complacency is to invite your critics into the chorus and ask them for advice in penning the monthly libretto. The best critic is a dedicated outsider, familiar with the fine print of the trade but objective enough to point out when and where the music falls flat.  

 Top L to R: Rob Dhoble, Mason Tenaglia, Bob Jansen, Clifford Kalb, Terry Hisey, Barbara Ryan, David Verbraska, Bill Drummy, Bruno Cohen, Brad Sitler; Middle L to R: Joanna Breitstein, Bernard Lachappelle, Rajesh Nair, Murray Aitken, Ian Wilcox, Ed Schoonveld, Albert Wertheimer; Bottom L to R: Charlotte Sibley, Daniel Kracov, Charlene Prounis, Peter Young, Fred Frank, Catherine Sohn, James Forte, Bill Trombetta			

 have assembled a full orchestra of 31 critics through an Editorial Advisory Board (pictured above) of real opinion leaders, from all key segments of the industry. It's our own little in-house symphony—a highly opinionated group, heavy on the brass and percussion.   

Our most recent meeting of the EAB took place in the 

 editorial offices on Jan. 26. In addition to a frank exchange on where we needed to be in inhabiting the digital space, the group provided some interesting insights on issues ranging from the regulatory pressures on drug approvals to how to succeed in emerging country markets by being "more local than the locals." One of our board members, from SAS, posed the provocative question of whether the industry recognized the negative impact that indiscriminate outsourcing of key functions is having on the capacity to generate real customer insight—at a time when our traditional understanding of the customer has been turned on its head. The paradox is that just as data and analytics about the customer are becoming richer and more accessible than ever, using that information productively is impaired. Why? Because, in the effort to redefine this all-important relationship, outsourcing has the potential to relegate pharma to third-party status—the guest at his own family banquet.  

Overall, our board emphasized the importance of keeping our message fresh and to furnish insight by tracking the diverse personalities that drive progress in this business. Individuals—not committees—serve as the stimulus for new technologies and products, and much of this innovation is starting to appear from sources outside the OECD. Stretching the mind means seeing things globally.  

 value the embellishments of our in-house band of critics. And we want to continue to hear from all of you on how to build an editorial mission that delivers to our "C-suite" readers a combination of evidence, news, commentary, good sense, and grounded judgment—consistently—in the midst of market uncertainty. In print and online. 

From the Editor

Pharm Exec's latest EAB meeting offered a frank exchange on this magazine's digital future.

The Maestros

Digital marketers in the pharmaceutical space are an ambitious group. Many get frustrated with a restrictive regulatory environment, and jump ship for other industries such as consumer packaged goods or electronics, where social media is just that—social—and phrases like "adverse event" or "off-label discussion" don't quicken the pulse. Those in pharma with the courage to stick it out are moving the needle by increment, and their success is the result of careful measurement. In our industry, past is prologue: To keep pace with technology change and deploy the newest tools to attract providers and other customers, there has to be a strategy based on careful analysis of the actual performance of the most recent service innovations. This is true not just for social media plays, but also multichannel executions targeting HCPs, or a physician finder on unbranded disease awareness sites for consumers. Success is also founded on an integrated approach. Content is still king, but distribution models that maximize the accessibility of good content are increasingly important. 

 sister organization, The Center for Business Intelligence (CBI) says, "At its core, digital marketing is about making connections. For pharma, bio, and device manufacturers, this is defined by the connections with patients, physicians, and payers." 

Those connections can't happen unless marketers understand where, and when, these groups (and the individuals comprising the groups) want to receive information. To put all these themes together, CBI will sponsor its 11th annual iPharmaConnect conference on March 26 to 28, "Digital Innovation for Marketing Decision Makers in the Life Sciences Industry." In preparation for the event, 

 spoke with two experts—Jim Currie, director of marketing services for PamLab, and Baber Ghauri, chief medical officer at Saint Mary's Medical Center—to help gauge the impact that advances in digital technology are having on the day-to-day practice of healthcare. 

What is the most influential piece of new technology and its impact on the healthcare industry? 

 Smart email. I see this technology—no longer cutting edge—as still being vastly underutilized. The capability to allow a physician to interact with a sales message and dive deeper into technical clinical data and be "tracked" all the while is extremely attractive. In doing so, we can significantly increase market penetration (broader reach) into white space as well as improve message frequency among our core targets. In my view, the key is successfully incorporating the micro-activity data into our traditional sales process. This involves having the sales force and leadership rethink their paradigm in terms of what data points are true indicators of physician perception shifts. The answers aren't always the obvious or intuitive clicks. The answers also aren't the blatant call-to-action buttons. Learning the subtleties of which parts of the message and which bits of data will aid sales is the dance that marketing analytics needs to master.  

How can social media improve the physician/patient relationship?

 In one of the simple examples, it seems that many patients are counseled in the office and yet seem to "forget" the information by the time they get home. For example, I observe lots of social media posts from women diagnosed with MTHFR polymorphism (creates folate issues in many problem pregnancies). It's clear they got the diagnosis in the office setting. It's frightening how they reach out for advice or explanations from the social community. The answers range from the obscure to the completely misinformed. If offices or specialties had a better sense of these online discussions, I think they would alter their in-office counseling or provide followup calls to clarify the information and the next steps.  

How can pharma sales reps leverage mobile and social media technologies to their advantage?

Not sure. We have a strict policy that our employees/sales force may not engage in social media around our products. However, a good sales rep can certainly invest time within certain disease state groups or communities to better understand the questions/concerns/issues/fears of the patient at large. I think having that insight brings a sense of relevancy and a sense of urgency to conversations within the office setting.  

What are the biggest challenges that industry faces with deploying a mobile marketing campaign?

 I think the technology and vendor support is in place ... still waiting for demand and utilization in the marketplace to catch up.  

What are the benefits and risks of a truly two-way conversation between pharma and patients, as can take place on websites such as Facebook?

 I am not yet convinced the conversation needs to be two-way. Patients (as consumers) are indeed empowered to have these conversations in other industries/categories. I think the empowered consumer is a wonderful thing. However, I view regulation in our industry as a necessary constraint. Medical issues are often too complex to be boiled down into an online conversation. Such medical discussions too often blend into a diagnosis-style conversation that belongs between doctor and patient, not with industry. I do not think the reward warrants the risk at this time.  

How can pharma measure ROI of mobile-based and social media marketing efforts?

Show me the volume. If your patient base wishes to hold the conversation via mobile or through social media interaction, the beauty is in the measurement of these tools. The metrics should be the cleanest and clearest of any we have in pharmaceutical marketing. If we fully understand our brand and the lifetime value of our consumer/patient, then the ROI calculations should not prove cumbersome. 

What are the pros and cons of patients using mobile technology to gain access to health information? What are the pros and cons of physicians doing the same? How do you strike a balance between real-time information versus risk of becoming too impersonal or accessing inaccurate information? 

 The evidence unequivocally shows that it is not the caliber or quality of the provider that determines the quality of care delivery—it is the level of 

 to information. While the pros far outweigh the cons for most users to gain this access, for the tech-unsavvy users especially, the cons are a significant barrier to being 

 to use mobile technology. Password policy and poor user interfaces are the biggest deterrent to significant use. 

Gauri: No surprise, the smartphone is by far the most influential new technology in healthcare. It ranks in the top dozen of the 100 greatest technologies ever invented, such as [devices like the] GPS, the portable music player, the calculator, and the camera. Smartphones and other mobile technologies give the consumer 24-hour access to information—and this technology has changed the way we view the world. 

 While social media has the potential to improve the physician/patient relationship, privacy issues have and will continue to significantly limit the evolution of this technology.  

How has mobile technology changed the way pharma connects with HCPs?

 Ubiquitous and ready access to HCPs using asynchronous communication technologies has affected users of all types. Unfortunately, unregulated and constant bombardment of physician users with messages from pharma has steadily reduced the impact of this technology over the past decade. 

 I would speculate that social media websites such as Facebook will be hard-pressed to be considered a viable hub for serious, meaningful communication with patients. Still, more formal social media sites are already showing the benefits of this nascent modality of communication. Security concerns again plague the evolution of this medium. 

Making real connections that resonate with audiences in a digital world is a fine art, especially in the heavily regulated world of Big Pharma

The (Life) Science of Digital Connections

The expense of public healthcare has given rise to a policy debate regarding whether the public would benefit by increased use of less-expensive generic pharmaceuticals rather than brand-name pharmaceuticals. One proposal to decrease physician and patient preference for brand-name pharmaceuticals would be to eliminate trade dress protection for pill shapes and colors. Historically, drug companies have been accorded exclusive rights to their pharmaceutical "trade dress"—the unique, eye-catching pill colors and shapes that consumers use to identify the brand of the pharmaceutical product. Pharmaceutical trade dress protects both the drug manufacturer and the public by preventing: A) the surreptitious substitution of a similar, but not identical, drug for the one being prescribed; and B) the accidental substitution of one drug for a completely different drug when the two happen to look alike. 

Some recent commentators allege that pharmaceutical trade dress protection deters use of FDA-approved generic drugs due to fears of medication errors, decreased patient adherence, and the loss of the beneficial placebo effect. Specifically, these commentators argue that patients who rely on pill color and shape to identify their medications may stop taking the medication or become confused if their switch to a generic is accompanied by a change in the color or shape. Further, they assert that effectiveness of all drugs can, in part, be ascribed to a beneficial placebo effect. This placebo effect may be reduced if patients have less faith in the generic medication due to use of a different color and shape from the original name-brand drug. Despite the vigor of the criticism aimed at pharmaceutical trade dress, there has been little factual analysis of whether pharmaceutical trade dress is actually an impediment to the use of generic drugs or whether there are potential adverse consequences of scrapping pharmaceutical trade dress in its entirety. 

Trade dress is the overall look and feel of a product, including the physical attributes of the product's design and/or its packaging. Product-design trade dress may include color, size, shape, aroma, and even flavor. To secure trade dress protection, the drug manufacturer must demonstrate that the consumer has come to associate the particular combination of physical attributes (color, size, shape, flavor, etc.) with the drug manufacturer. Marketing and advertising typically play a central and critical role in this process. Further, the physical attributes of the drug must not be "functional." That is, they must not be essential to the use or purpose of the drug, and must not affect the cost or quality or performance of the drug. If the product design is found to be legally functional, protection is not available. Over the past 30 years or so, the U.S. courts have been judicious in granting trade dress protection when the combinations of a pill's physical attributes are shown to identify the source of the product, and also in denying such protection when those same physical attributes serve another purpose, such as making the pills more palatable and digestible, or making it easier for consumers to determine the pills' strength. 

Proponents of the recent attacks on pharmaceutical trade dress have failed to address a number of theoretical and practical issues that would arise should trade dress protection be eliminated in the pharmaceutical field.  

 the debate so far has focused solely on FDA-approved generic drugs that are bioequivalent to the brand-name drug. However, pharmaceutical trade dress serves a very important function in preventing infringers from marketing non-generic and non-bioequivalent "look-alike" drugs with significantly different active ingredients and/or effectiveness. It is unclear how a world without pharmaceutical trade dress would effectively combat such look-alike problems absent significantly increased FDA supervision.  

 there has been no discussion of accidental medication errors when two completely different pharmaceutical products by happenstance share similar but uncommon physical attributes. While patients may double-check medications that consist of commonly used physical attributes (such as plain white tablets or clear capsules), they may be less likely to do so when the pharmaceuticals have an unusual shape or color combination. So pharmaceutical trade dress protection may reduce the risk of a medication error by assuring that unusual combinations of physical attributes are not displayed on multiple drugs. Preventing accidental medication errors from look-alikes may be particularly important to over-the-counter drug or vitamin manufacturers who may not have the benefit of strict FDA regulatory review.  

 pharmaceutical trade dress may not be as significant an impediment to the use of generics as the commentators presume. To the extent that pill color and size are used by consumers to identify dosage strength or other non-source identifying information about a medication, those color and size features are functional and therefore already non-protectable under current U.S. trade dress law. Indeed, the name-brand drug manufacturers have a fairly steep hurdle to establish trade dress protection in their pills' shape and color. As noted above, as a prerequisite for trade dress protection, the manufacturers must show that patients use the color and shape to identify the source of the pharmaceutical. Typically, this is only successful with unique and eye-catching color combinations or unusual pill shapes that have been highlighted for consumers in the branded drugs' advertising.  

 there is a question as to whether the benefits of the placebo effect are sufficiently great to outweigh the benefits of trade dress protection for pharmaceuticals. The beneficial placebo effect is likely to be most pronounced in the treatment of conditions with a psychosomatic component (such as anxiety, depression, impotence, etc.). This fairly small portion of the pharmacopoeia may be insufficient to justify the total elimination of pharmaceutical trade dress protection. Further, the placebo effect may not be attributable to pill shape and color at all, but may instead derive from the perceived quality of the medical care and/or the high cost of the name-brand prescription. If the patient is aware of the generic switch, and believes that the generic is a lower-quality product, a continuation of color and shape may not preserve the beneficial placebo effect.  

 the legitimacy of adopting a public policy to foster a "beneficial" placebo effect may be philosophically suspect. The placebo effect occurs when patients' conditions improve merely because they believe that they are taking a helpful drug (whether it actually is helpful or not). However, the same "positive effect" could be felt by any consumer of counterfeit goods in other fields. The fashion-conscious consumer could look and feel better when they believe they are wearing a Rolex watch or sporting a Gucci handbag, even if the watch and handbag are fakes. Clearly, these sorts of psychological benefits to the consumers of counterfeit goods do not justify the illegal actions of counterfeiters outside the pharmaceutical field. Should our health policy aim to preserve a similarly psychological placebo effect by purposefully clouding the source of a pharmaceutical product in the mind of the patient? 

Given the rise of patient-directed advertising, combined with the rise of FDA-approved generics, the issue of pharmaceutical trade dress is likely to become an increasingly important and contentious issue for the near future. Indeed, there is a general expectation that generics companies will seize on this debate in an attempt to defeat trade dress protection for brand-name pharmaceutical products whose U.S. patents are set to expire soon.  

With respect to the public policy debate, it is imperative that brand-name drug manufacturers: A) educate the public about the importance of trade dress to the industry; and B) publicly question the assumptions underlying the arguments for the elimination of pharmaceutical trade dress. While the debate about promoting the use of generic drugs is a healthy one, it should not be hijacked by generic manufacturers as a justification for a wholesale attack on pharmaceutical trade dress rights.  

As a practical matter, drug name manufacturers desiring trade dress protection for their products must carefully select and cultivate that trade dress. The combination of physical attributes comprising the trade dress must be unique and not commonly found in the field. It must not serve a functional purpose or affect the performance of the drug in any way. Further, once a unique combination of non-functional physical attributes is selected, the drug manufacturer must launch a campaign aimed at linking this trade dress exclusively with the manufacturer in the minds of consumers. While developing a protectable pharmaceutical trade dress may require a great deal of planning and effort, it may be a very effective tool to boost consumer recognition and desire for the product. 

 is a Partner at Finnegan Henderson, Farabow, Garrett & Dunner. He can be reached at 

Marketing

Pharmaceutical trade dres is an effective marketing tool that helps boost product recognition for consumers. It's worth protecting.

Judging a Pill by its Cover

Hearings last month before the House Energy & Commerce health subcommittee provided a forum for the opening salvos in the user fees renewal campaign needed to keep the FDA going. Commissioner Margaret Hamburg made the case for renewing the Prescription Drug User Fee Act (PDUFA V) and legislation to spur pediatric drug labeling; Janet Woodcock, director of the Center for Drug Evaluation and Research (CDER), explained the importance of new fees for generic drugs and biosimilars; and Jeffrey Shuren, director of the Center for Devices and Radiological Health (CDRH), outlined a hard-fought agreement on the medical device user fee program (MDUFA). 

Marketers, providers, and FDA leaders want to enact a user fee bill by summer, but the legislators indicated they have pet issues to tag onto this must-pass legislation. The most likely addition is a measure enhancing FDA controls over the global drug supply chain, including stiffer import controls, more inspections of foreign operators and (most likely) wider manufacturer notification about looming drug shortages. Both Democrats and Republicans want to boost foreign inspections to level the playing field for U.S. firms, and new user fees for generic drugs provide needed funding for these activities.  

More contentious is whether to loosen conflict-of-interest (COI) requirements for advisory committee members that Republicans say are too stringent and can delay new drug approvals. Orphan drug advocates similarly claim that stiffer restrictions on FDA advisors keep out key scientists in specialized research fields. However, commissioner Hamburg said that the current COI policy and waiver caps are not a problem, and that the issue doesn't need a "legislative fix." That was a shift from her testimony last year that the COI rules made it difficult to find sufficiently qualified individuals to serve on advisory panels.  

There was debate over proposed changes to the Best Pharmaceuticals for Children Act (BPCA) and the Pediatric Research Equity Act (PREA), which both offer incentives for manufacturers to study the safety and efficacy of drugs for children and are up for five-year renewals as part of the PDUFA process. The programs enjoy strong support from health professionals, researchers, and pharma companies, but a number of reform proposals have surfaced.   

Industry opposes any reduction in the extra six months' exclusivity given for doing requested pediatric studies, as well as new penalties for failing to complete requested studies on schedule. But there's support for FDA to be able to levy fines on companies that miss deadlines. The American Academy of Pediatrics (AAP) also wants pharma companies to submit pediatric study plans at the end of Phase II, instead of waiting until application submission, and to include neonates in more studies. Researchers and sponsors agree that PREA requirements for pediatric studies should be made permanent, but the docs support the Democratic position that the exclusivity provisions authorized by the BPCA should continue to be re-evaluated every five years.  

In addition to providing more information on therapies for children, PDUFA may contain new proposals to spur development of critical therapies, including antibiotics to combat drug resistance and treatments for rare conditions. There's bipartisan backing for the "Sprint Act" (Spending Reductions through Innovations in Therapies), which would provide $50 million to fund public/private partnerships doing research on critical conditions like Alzheimer's disease. However, FDA and sponsors are leery of measures that prevent the agency from seeking necessary clinical data to approve a new drug, as sought by smaller biotech firms and patient groups clamoring for more certainty in the approval process.  

Complaints about the proliferation of Risk Evaluation and Mitigation Strategies (REMS) may be off the table due to FDA efforts to scale back that program. But there may be some sparring over revising FDA's mission statement to highlight its role in creating jobs and economic growth. Hamburg noted at the Energy & Commerce hearing that FDA would have trouble factoring jobs creation into decisions on new product approvals. "It will get very, very complicated and, frankly," she said, "I think it would be quite inappropriate."  

In addition to lobbying for PDUFA, pharma companies are anxious to gain clarity from FDA on how its rules on drug marketing and promotion can fit the age of instant Internet communications and unfettered public access to information previously limited to health professionals. Although much of the world now uses the Internet to communicate with friends and relatives, to market goods and services, and to announce important developments around the globe, pharmaceutical marketers are stuck in regulatory limbo due to curbs on what they can tell the public about their products and operations.  

After extensive discussion of social media uses and formats, FDA's Office of Prescription Drug Promotion (OPDP) within CDER now plans to develop several guidances on "concepts that have long-term applicability," said Jean-Ah Kang, OPDP assistant to the director, at CBI's January Pharmaceutical Compliance conference in Washington, D.C. Instead of issuing platform-dependent policies that would apply to posting information on, say, Twitter or YouTube, which could become outdated quickly by changing technology, the agency is looking to address broader Internet communications issues. These include messages with space limitations as found in banner ads or social media listings; manufacturer accountability for online communications; links to Internet websites; correcting misinformation on third-party websites; and how to notify FDA of a real-time communications activity.  

FDA also is addressing social media use through guidance on other marketing practices, as in its December 2011 draft guidance on how pharma marketers should respond to unsolicited requests for off-label information. In distinguishing "unsolicited" from "solicited" queries, FDA notes that questions spurred by a company video posted on YouTube, for example, would shift the question into the "solicited" category, which may be a violation. Social media sites also are mentioned as possible forums for a company to receive questions from the public, including those involving off-label drug uses.  

Most contentious is FDA's proposal that manufacturers handle requests for information made in public or via the Internet the same as queries made in writing, by email or the phone: provide a response only to the individual requester in "a private, one-on-one communication"—and 

 online. The agency's concern is that a public response exposes those not making the query to off-label information, and that such messages could remain on a website after they become outdated. When receiving an unsolicited request on an issue related to off-label use, FDA advises companies to provide contact information to medical or scientific personnel (not salesmen) and direct the individual to follow up off-line. However, this means that a broad audience can see a query and any resulting independent statements, which could be erroneous, but not the company's answer.  

Such communications restrictions raise concerns about broader limits on industry use of modern IT for a broad range of corporate and operational functions, such as reporting corporate news and developments, recruiting patients for clinical trials, or operating hotlines to receive consumer questions and comments. A hot topic is utilizing social media to expand public reporting of adverse drug events. Pharma companies are leery of having to scour Twitter and Facebook to identify such reports and respond to them, which could be a monumental task. But the larger problem is that manufacturers still could be constrained from addressing misleading AER reports, particularly if they touch on off-label use.  

Additional guidance on pharma use of social media to communicate information may take some time because OPDP is under pressure to develop policies on a number of drug marketing topics. The agency checked off one item by publishing draft guidance in January on product name placement, updating a 1999 policy. A top priority on its to-do list is to implement a program established in 2007 for providing timely pre-review advice on direct-to-consumer TV ads. And work continues on the seemingly endless task of revising the "brief summary," now likely part of a larger effort to establish a common format for multiple patient information documents.  

's Washington correspondent. She can be reached at 

Column

FDA and industry are pushing user fees, while they struggle with curbs on communications.

When Talk is Not So Cheap

In a fictional piece translated as "On Exactitude in Science," the author Jorge Luis Borges writes of a society so obsessed with the "art of cartography" that it constructs a map of ever-increasing size and detail, until one day the map grows so large as to "coincide point for point" with the landscape, covering everything. In the story, future generations "saw that the vast map was useless," and left it to decay under the sun and rain. Tattered ruins of the map still remain, "inhabited by animals and beggars." 

In the rush to collect as much patient data as possible, are we sacrificing quality for quantity? Ben Comer reports.

Pharmaceutical Executive-03-01-2012