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Pharmaceutical Executive Digital Edition - April 2011

With the reform of CENABAST requiring the outsourcing of all its distribution activities, logistics providers are stepping up to meet the demand of pharmaceutical laboratories. Just outside of Santiago, iLogistica has built a brand new 8,000m2 storage warehouse with the latest technology for the most efficient distribution of pharmaceutical products. Having reconstructed almost from scratch after the earthquake in February of 2010, the company has refurbished itself to become the strategic partner for the industry. General manager, Raul Zamorano, explains his company's comparative advantage to serve the pharmaceutical industry: "being an entirely independent company that is not linked to any pharmaceutical laboratory, we can ensure the utmost confidentiality of our clients' data and product information. We also have no alliance with any of the players in the industry and this allows us to act freely always looking to serve our clients in the most efficient and effective way possible. In this sense we are positioned to become a trustworthy partner for any international company that wishes to distribute their products in Chile and who might have reservations about the safety of their company's data." The company has gone as far as developing a custom-made software platform that allows the greatest adaptability to the demands of its customers. "In order to provide the best traceability for our clients we have developed our own software platform that allows full customization to each one of our clients' needs," explains Zamorano. 				

 Raul Zamorano, General Manager, iLogistica			

Ilogistica has built a brand new warehouse facility with the latest technology to keep up with outsourcing demands

iLogistica

Something is definitely wrong if nearly 50 percent of all prescriptions written in the US are "off-label." Are physicians becoming reckless; is the FDA having trouble keeping pace; are patients making unrealistic demands on the health system, or is it all of the above? 

When a drug product is approved for marketing by the FDA, it is given that approval for a specific indication. FDA approval of a prescription drug requires substantial evidence of efficacy and safety for that specific indication. Once the drug is approved for marketing, the manufacturer is legally able to promote the drug only for use in the approved indications. Yet, in the course of widespread use, it often becomes known by the clinician community that certain drugs also possess effectiveness against other medical conditions for which there has been no clinical data submission to the FDA. Even though new indications may be added to a drug's label through a supplemental new drug application (sNDA), this is not a common practice because the additional clinical trials—which might not provide sufficient evidence to grant a new indication—are costly and lengthy. Moreover, drug manufacturers have only a limited incentive since the drug is already marketed. 

Off-label use is the practice of prescribing drugs for a purpose outside the scope of the drug's approved label, most often concerning the drug's indications; but it could also be for the use of a drug in unapproved subpopulations. For example, in a study analyzing prescriptions for children ages 0 to 16 in the Netherlands, it was found that 22.7 percent of the prescriptions for children were used off-label. In another study in the US, it was found that off-label prescribing of 160 commonly used drugs was 21 percent. Off-label use has been most common among cardiac medications (46 percent) and anticonvulsants (46 percent); whereas gabapentin/Neurontin (83 percent) and amitriptyline (81 percent) had the greatest proportion of off-label use among specific medications. Neurontin was used off-label for neuropathic pain (it was only indicated in controlling epileptic seizures and in pain from post-herpetic neuralgia); it is also commonly prescribed for chronic back pain.  

With more than 3.5 billion prescriptions written in the US each year, estimates suggest that up to 50 percent of these prescriptions are for an off-label indication—this is an international, widespread, and growing practice. The scope of off-label use includes even the practice of Aspirin use for prophylaxis against cardiovascular disease.  

Perhaps the largest area of off-label use is in pediatrics. If a drug is approved for patients 16 years and older, what physician should not assume that the drug would be equally effective in 14 and 15 years olds? This age limit was due to the budget and inclusion criteria of the sponsor during the NDA clinical trial studies and does not at all reflect the effectiveness of the drugs in younger patients. 

If one argues that there is not rigorous scientific evidence to support effectiveness for a "new indication," why do physicians prescribe drugs off-label? Physicians are free to prescribe a drug on the market for any indication. This prescribing freedom allows innovation in clinical practice. Off-label use is a delicate balance between the regulatory objective of protecting patients from unsafe or ineffective drugs and the physician's professional role to use their best judgment in treating their patients. 

Medical practice often moves faster than the FDA, for example, among physicians treating AIDS patients where the drug trimethroprim/sulfamethoxazole was found to be effective for treating pneumonia long before it was labeled for this use by the FDA. As was stated earlier, many non-approved uses of drugs are for conditions and populations different from those for which the drugs are initially approved. Beta blockers are now used to prevent tremors and perspiration, antiseizure medications are used as mood stabilizers, antihistamines are used as sleeping aids, and so on. 

In many cases the drug of choice fails to stem a patient's disease, such as in cancer. Patients with terminal diseases demand new approaches despite risks and low odds of success. Those patients are more open to experimental or innovative treatments.  

No patient wants to hear the words: "I'm sorry but there is nothing further we can do." Those words often drive patients into therapies in Mexico or elsewhere, to unorthodox healing systems, or to request the physician use X or Y or Z based upon what the patient read on a website or learned from a neighbor. In order to satisfy the patient (read: customer), the physician prescribes some vitamins or bioflavinoids, folic acid, or mineral complexes. 

Off-label prescribing is also common for so-called orphan populations and for orphan diseases. Too small and too rare to justify costs to undergo the FDA approval process for new indication labeling, manufacturers do not invest in new studies. Finally, getting the FDA to approve a new use for an old drug is an expensive, lengthy, often unprofitable process. The FDA requires an sNDA, which calls for extensive clinical trials that are costly and take years to complete, and then the approval itself can take even longer before the label can be changed. 

Off-label use has negative attributes. First of all, it may be misleading to patients. They assume that any approved drug is effective and safe. They might not know that drugs are approved for a specific indication. Therefore, when prescribing off-label, physicians might consider informing patients about the lack of indication information and then evaluate together the risks and benefits of such a prescription. A legal problem for physicians could arise if they were faced with a malpractice suit, since off-label use often does not reflect a "standard of care" treatment. This leads to possible concern about the risk of prescribing off-label should a patient have serious side effects or a bad outcome from treatment. 

Regarding reimbursement for off-label prescribing, some managed care organizations and other payers will not pay for off-label prescriptions, increasing the patient's out-of-pocket expense for medicines. Many insurance companies will not pay for an expensive drug that is used in a way that is not listed in the approved label; insurers claim that its use is "experimental" or "investigational." 

Permitting companies to promote off-label use diminishes the incentive for manufacturers to apply for new indication labeling. If the market for a product is small, the investment in a clinical trial would not be warranted. That is the same situation if a product had only three or fewer years remaining of patent protection, since the benefits would only accrue to future generic manufacturers. 

Perhaps the FDA now takes the most progressive stance, allowing drug companies to give physicians journal articles that discuss off-label uses of products not yet approved by the FDA. This approach replaces the relevant provisions in the FDA 1997 Modernization Act (FDAMA), which expired in 2006. The new guidelines include provisions allowing dissemination of information if a drug company meets certain criteria. In this way, the FDA is making it easier for pharmaceutical companies to distribute more truthful, non-misleading, and objective information than had been possible in the past. It is assumed and hoped that this will benefit patients who might gain access to products which their physicians were previously unaware of, or reluctant to try. 

Even with these protections and the additional latitude provided to drug companies and prescribing physicians, there are still some who object, claiming that there are insufficient protections for the patient. They argue that there should be a strict requirement compelling doctors to obtain informed consent from patients who are prescribed drugs for an off-label use just as they would before enrolling patients in a clinical research study.  

Off-label prescribing of medications cannot automatically be criticized, as often this is the optimal therapy for some conditions. Unfortunately, there are numerous medical conditions and other morbidities where there are no approved, effective drug therapies available. Moreover, some very effective therapies have been discovered by serendipity in this way—an off-label use today may lead to tomorrow's effective and officially approved use of a drug. It is becoming possible for the practitioner to gain some legitimate and non-commercial information. The reference work "Facts and Comparisons" includes information about known off-label uses of many drugs. In addition, the US Pharmacopeia reference compendium lists at the end of a monograph information about any known off-label use of that drug. 

As with many other situations where not all of the facts may be known, it seems that the wisest path is to approach the use of drugs for off-label conditions with great caution and as much knowledge as may be gained before the prescribing decision is arrived at. 

 is director of the Center for Pharmaceutical Health Services Research and Professor, Temple University School of Pharmacy. He can be reached at 

Columns

Use of off-label drugs is a balancing act for physicians, and poses even more problems for pharma. The FDA is moving slowly to help

Off-Label But On Point?

Considered to be Latin America's economic powerhouse, Chile is typically a solitary country that is forgotten, or remembered, because it is the most politically and economically stable in the region and therefore produces minimal headlines for the world—unless they involve tragic seismic events or heroic mining rescues. This loosely-populated nation of almost 17 million is ranked as the 30th most competitive country in the world (ahead of Brazil and Mexico), holds an A+ credit rating, a AA grade for investments and is the only Latin American nation accepted as a member of the OECD. With health indicators such as life expectancy and infant mortality rates that rival those of most developed nations, surely this country's healthcare and pharmaceutical sectors must also be thriving. Indeed Chile's pharmaceutical industry, estimated at US$1.5 billion in 2010 and expected to reach US$2 billion by 2015, is lucrative but has not always been the most popular among Big Pharma. For decades the country has been notorious for producing the cheapest similar and generic drugs in Latin America, some of them marketed in violation of patents and without proper bioequivalence studies. With other serious issues such as the concentration of distribution channels into three main pharmacy chains that control 93% of pharmaceutical sales and the dominance of a "lowest price wins" public healthcare system, representing 80% of the population, the country's pharmaceutical sector quickly became uninviting for innovators. This was up until 2006 when then President Bachelet saw the great need to overhaul the healthcare system of her country and began a series of reform policies that marked the beginning of the sector's revitalization. While efforts are still ongoing, the push for a modern and efficient healthcare system is in full force today and the country is now poised to offer fresh and attractive opportunities within its own borders and beyond, for local and foreign companies alike. 

Pharmaceutical demand in Chile is focused on 80 diseases that are covered by the Regime of Explicit Health Guarantees (GES-AUGE) healthcare program enacted in 2005, which ensures government-funded coverage for patients regardless of age, class, and ability to pay. While this universal health plan covers four-fifths of the population, under Chile's dual healthcare system the remaining 20% is entitled to pick their coverage from a number of private insurance companies known as ISAPRES. Jorge Rodriguez, CEO and general manager of Deloitte Chile, explains that "the private healthcare system began operating in 1981 and since then it has been perfecting itself to offer the highest quality services. Governmental authorities have witnessed this transformation and today are aiming to improve their provision of healthcare so that it is on par with those offered by the best private providers in the country." As a key partner to the healthcare sector, Rodriguez aims "to assist the government in their objective of providing better healthcare to a greater number of people in Chile" by providing consulting and advisory services to the government's reform initiatives. 

"A major issue for our healthcare system is related to the structure and quality of health institutions, including hospitals and regulatory entities." - JAIME MAÃALICH,  MINISTER OF HEALTH 

Leading today's healthcare reform is Minister of Health, Jaime MaÑalich, who is determined to iron out the inefficiencies of the healthcare system to reflect the rest of the country's economic and political achievements. "A major issue for our healthcare system is related to the structure and quality of health institutions, including hospitals and regulatory entities," he asserts. Two main entities on the Ministry's radar are the Public Health Institute (ISP), the regulatory agency for the pharmaceutical industry, and the National Supply Center (CENABAST) that is the public purchasing entity and distributor for all public hospitals and clinics—the pharmaceutical industry's de facto biggest purchaser. A recent audit of CENABAST conducted by advisory firm PWC, brought to light the severe inadequacies of the institution and the desperate need for a professionalization of its activities. Minister MaÑalich explains that "the underlying problem is that CENABAST does not have the adequate facilities and capacity to handle the logistics required to supply the system appropriately. We are therefore proposing to delegate this responsibility to the private sector by having pharmaceutical laboratories deliver directly to hospitals and clinics." Initiatives such as this will save the government millions of dollars in health expenditures that will allow for the coverage of higher quality treatments under the GES plan, therefore narrowing the gap between private and public healthcare options. Other proposals in the pipeline include the liberalization of OTC products that today are, paradoxically, kept behind the counters and sold only in pharmacies, as well as the creation of a National Pharmaceutical Agency (ANAMED) that will be solely charged with the registration and regulation of pharmaceutical products—a task that today is overseen by the overwhelmed and underbudgeted ISP. The director of the ISP, Maria Teresa Valenzuela, echoes the need for drastic change and stresses that "the key area for this new administration is the search for quality in all possible aspects—from administrative management up to the most detailed analysis of technical processes". For Valenzuela this also means improving protocols and approval of clinical trials, as well as enhancing the bioequivalence capabilities of the institution by "supporting the accreditation of three new centers of bioequivalence in the country in partnership with three major academic institutions". 

Maria Teresa Valenzuela, Director of the Publich Health Institute (ISP) 

As regards the old tales of Chilean imitators violating patents, the National Institute of Industrial Property (INAPI) has been at the forefront in setting the record straight. Chile is one of the countries in the world that has signed on to the most free trade agreements, including one with the United States and an Association Agreement with the European Union. Maximiliano Santa Cruz, national director of INAPI, admits that Chile "committed to several obligations in these treaties, many of them impacting directly on the pharmaceutical sector, such as extending the protection of patents in case of delays which we are already running in INAPI and ISP." Part of his institution's efforts to optimize patent regulation includes a direct partnership with the national police's "IP brigade" in charge of IP enforcement and national customs agencies. With such proposals already rolling, Santa Cruz is bold enough to proclaim that "INAPI is going to be the best IP agency in Latin America in the future." 

Maximiliano Santa Cruz, National Director of the National Institute of Industrial Property 

As a direct consequence of healthcare optimization, international innovators are seeing greater opportunities to grow their operations in the Chilean market. Jose Manuel CousiÑo, executive vice president of the Chamber of the Pharmaceutical Industry in Chile (CIF), representing the international innovators in Chile, explains that the country "has the advantage that it is an economy truly based on the notion of free trade and competition." Now that the playing field has been leveled for the MNCs, due to better regulation by the authorities and greater access to innovative products within the public system, the possibilities for major growth are within grasp. As a strategic consulting partner to the Chilean pharmaceutical sector, Rodrigo Castillo, business manager for IMS Health in Chile, provides a more in-depth analysis when explaining that innovators "suffered more in Chile up until 10 to 15 years ago, when there was no patent protection and the competition [there] was very strong. At this point in time, Chile has managed to learn how to compete and are in a better position." Furthermore, "multinationals are now consolidating and improving their market share and have future plans of getting their products into the GES program, which would highly benefit them," says Castillo. This renewed momentum is also evident in the sharp increase of clinical trials that are being conducted in the country by them with the aim that innovation is valued for its worth in the local market. "Chile has great research centers and universities and a very good scientific community, which makes it attractive for these kinds of studies," concludes CousiÑo. The country has also updated is clinical research legislation to accelerate the work of ethics committees and the approval times for trials and is now the fourth-largest market for clinical trials in the region. 

Jose Manuel CousiÃo, executive Vice President of CIF 

Leading the innovator revolution in Chile is none other than megalith Pfizer, who today is following close on the heels of the national pharma companies coming in as the No. 1 MNC in the country. Undoubtedly the company has benefited from its recent acquisition of Wyeth, not only in the expansion of its product portfolio and sales force, but also because Pfizer Chile general manager, Monica Zerpa, was the former general manager of Wyeth in Chile. Ever the optimist, and one of the very few top women executives in the industry, Zerpa believes that Pfizer has "many opportunities here, thanks to the solid regulatory framework for the pharmaceutical market and to the country's economic and political stability." She is of the opinion that MNCs brought upon their own past failures in the Chilean market because they chose to focus on the challenges of the industry. "I think multinational pharmaceutical companies in Chile have remained very static in their approach and we must become more flexible regarding the prices, services, and access to products that we offer. We need to learn how to become more agile and responsive to this dynamic market, and that's what I aim to bring to the company," she says. 

This agility is exemplified by Zerpa's decision to "create a sales structure with representatives specially trained to support our institutional clients, such as hospitals, patient programs, and CENABAST. The Chilean government has been modernizing the public healthcare system over the years, and we must ensure that our services take these reforms into account so that patients have wider access to our products. I am confident that this will also make our products and services more competitive—vis-à-vis low-cost generics." Beyond their sales strategies, Pfizer has seized the advantages of Chile's updated regulatory environment and rich scientific community for clinical research and has already completed 49 of its trials in the country. Even more impressive is Sanofi-Aventis' dedicated clinical research center in Santiago that in 2009 invested US$6.3 million into its operations. 

Indeed Mauricio Rosas, managing director of Merck's pharmaceutical division, also believes that the current environment is promising for innovators. "Even though we are facing tough competition from generics and private labels, we are still top-of-mind for our clients. Our sales force is exceptional because it has managed to build strong relationships with the practitioners," he says. Their sales prowess is so impressive that they have been asked by BMS, AstraZeneca, and Novartis to commercialize some of their products in the Chilean market. "If we include the BMS products that we distribute, then Chile is actually the country with the highest market share for Merck in Latin America. Moreover, Chile represents 5% of the Latin American operations in terms of sales for the group, which is a very good figure taking into consideration that the Chilean pharmaceutical market in general is only 3% of Latin American sales," details Rosas. Riding on the company's local excellence, he foresees that "in the next few years the market is expected to grow at 6% and we plan to maintain our growth rate at the actual level of 12%." With such figures it is evident that global innovators have learned the ways of the Chilean market and are taking advantage of the opportunities being created by the optimized healthcare sector. MSD general manager Henrik Secher expresses this best by saying: "I wouldn't say that we have completely resolved these issues in Chile, but we have been dealing with them for a lot more time here and this means that we have greater chances to fight back and to leverage our position." 

Katia Trusich, General Manager of Genzyme 

The country's impressive economic success over the last decade, together with the ongoing modernization of Chilean healthcare, is creating a greater demand for innovative treatments. Chile's increasing wealth is reflected by Santiago's shiny glass skyline and luxury megamalls, but also in the quality of healthcare and medical treatments being demanded by the population, including those covered by the public healthcare system. Furthermore, as a true free-market economy, the liberalization of the industry to include private healthcare providers and insurance companies is allowing patients to pick and choose their medical treatment options, causing first-class products and niche segments to become solid drivers of the industry. This trend is illustrated in the marked difference of a ranking of the top 10 pharma companies in the country in terms of units sold versus one measured in terms of value. The first only includes two innovator companies, namely Merck and Bayer in the eighth and 10th positions, respectively, whereas the second lists Pfizer as the fifth-most-important company, immediately followed by MSD, Bayer, Merck, and GSK in descending order. Such figures are also indicative of the increasing consumption of innovative products by the public system, including premium and niche products. As a whole the country is slowly moving to improve the quality of treatments available to the population. 

As the leader of the Chilean biotech offering, Roche is the prime example of a company benefitting from upgrades in the public healthcare system. General manager Rene Delsin comments on the successful implementation of pilot programs to introduce new products into the public sector: "With these programs, such as one for our HIV products, we were able to gain access to the public system serving 80% of the population." The company already dedicates 50% of its portfolio to oncology products, most of which fall under the public healthcare plan, and is currently growing above the market driven by their biotech offering. Delsin describes the company's strategy as one that is migrating from primary care to high-tech drugs. Lilly has been taking a comparable approach to the Chilean market by targeting therapeutic areas that are currently not addressed by the public system. Cesar Buendia, general manager for Chile, Peru, Ecuador, and Bolivia, explains that "given Chile's highly competitive environment, I would say the main challenge is indeed to continue providing new innovative treatments to address unmet medical needs, which is our main objective, in a way that is timely and cost-effective". The company is leveraging their position in the market by specializing in neurological diseases, erectile dysfunction, and diabetes that are all covered under the AUGE-GES plan. Buendia further states that "as long as there are patients that can benefit from innovative products then we as a company will strive to provide them." 

Another unusual success story has been that of Hospira in Chile, which until very recently functioned as the headquarters for the Southern Cone region. Even though the company has not introduced new pharmaceuticals beyond its initial eight products since it began its operation, it have managed to double its sales in the last five years entirely based on its high-tech medical devices. Aldo Arata MuÑoz, general manager of Hospira Chile, explains, "This year my plan is to open up the market to our infusion security software and to expand our sales in this segment by convincing the hospitals that this is a very important issue for them. It won't be an easy endeavor, but it is definitely our big chance for growth, and I would like Hospira to be the first company working on this issue in Chile to differentiate our medical devices in this way." The company is betting that its software offering will be valued by the public hospitals enough to drive its sales beyond its past performance. 

Andres Rudolphy Fontaine, General Manager of Andromaco  

Similarly, Baxter has been expanding its business in Chile by focusing on its end-stage kidney disease and hemophilia products. As a matter of fact, the company is one of the few MNCs that still has production facilities in Chile and has been putting them to good use at the local level. General manager Christian Quiroga elaborates that, "Today, we also export products to other Baxter facilities in Ecuador and Central America, but that only represents about 10% of our total production. The rest is entirely for the local market." The Argentine manager has been exploring to further diversify its portfolio in the public system as a means to drive growth. "In Chile, bioscience products, which include therapies for hemophilia, are awarded on a tender basis, and represent one of our greatest growth opportunities," concludes Quiroga. 

Francisco Medone Crovetto, CEO of Â­ITF-Labomed 

As premium and niche segments are increasingly recognized, new product offerings have been constantly sprouting throughout the country, bringing the most innovative treatments into the market. Genzyme only established itself in the country in 2008, but nevertheless has managed to introduce 15 of its products for rare diseases mostly through the use of educational initiatives. "We have done a lot of work on medical education, which is the main challenge for rare diseases, because you need to make sure that doctors are fully trained to correctly diagnose patients and have an impact in the development of the disease" says general manager, Katia Trusich. Her strategy for the company is based on the need to "create access to medicines and support the development of new policies that are more open and have higher standards of care for its patients. If we manage to make these changes, then our growth and revenue will follow naturally." The educational approach has also been essential for companies like Novo Nordisk, who aim to transmit the vast advantages of their modern insulin products to Chilean doctors. They certainly have done a fair job so far considering that they have more than 55% of the market share for insulin products and are the official providers for the state. 

Hernan Pfeifer Frenz, General Manager of Laboratorio Chile 

Today it is evident that changes in the healthcare system have not only affected Big Pharma but also the local industry that has had to adapt, shape up, and keep the pressure on the competition. This has helped develop entirely new strategies and scenarios, including international mergers and acquisitions that today have made "national" industry a difficult term to define. This is the new face of Chilean pharma. 

Maria Angelica Sanchez, Executive Vice President of ASILFA 

When global pharma shut down local production plants back in the '80s and '90s, contract manufacturing became essential to placate national demand for pharmaceuticals. As a direct answer to this need, Farmindustria bought the former Schering-Plough manufacturing plant in 1998 to later become the largest contract manufacturing in the country. Today Farmindustria is responsible for 40% of all contract manufacturing in the country and has created its own laboratory known as Laboratorio Volta. Roberto Roizman, CEO of Laboratorio Volta and Farmindustria, describes that "the company began as a very small operation 12 years ago, but that was the perfect moment to enter the market because at that time the majority of the global pharmaceutical companies were shutting down their manufacturing facilities in the country. In parallel there were the local companies that were growing very quickly and did not have the capacity to produce all of their products." Farmindustria has remained at the cutting-edge of the industry by investing 50% of its profit  on new technology and equipment every year. Furthermore, they have maintained flexibility as a key element of their operations and Roizman describes the company as one "that is willing and able to adapt to the specific needs of our clients. If one of our customers comes to us with a proposal illustrating a new production process with higher quality control standards, then we will do our best to implement the changes and to achieve the highest levels that are required by the international industry." 

Fernando del Puerto, General Manager of Pharma Investi  

Beyond this the company recently developed a "partnership with Eurofarma in Brazil that is a very reputable company with an extensive international network already in place ... and in this way Volta can increase its role in the region", explains Roizman. The company also is pushing its limits to experiment with innovation and has gone as far as to exploit the country's natural resources to develop a supplemental treatment for cancer derived entirely from a national berry known as Maqui. 

Another notable example of evolution within the local Chilean industry is that of the No. 2 company, Andromaco, that, despite its two manufacturing sites, is concentrating its efforts entirely on the commercialization of its products. It goes as far as claiming that even if its production facilities were to shut down, it would still maintain their current market position entirely based on its sales and marketing expertise. The company is now focusing on penetrating smaller markets in the region, such as Bolivia and Central America, and even plans to acquire a company closer to those locations. Argentine Laboratorio Bago, has also decided to use its Chilean operation for a similar purpose by exporting the majority of its production to the Andean markets. 

In a similar fashion, ITF-Labomed CEO Francisco Medone Crovetto tells his company's story of building an international network of partners: "Chile's market size and high competition made me realize that as a non-innovative company the best way for me to grow was through licensing agreements. I then proceeded to look for licensing partners abroad to bring new products into the market, and today 50% of our products are licensed and the other 50% are our own branded generics." After many years of partnership with the Italian group Italfarmaco, Labomed was acquired in 2009 to form the current ITF-Labomed, which served as an entry point into the Latin American market for the Italian mother company. Now that they are part of a European pharmaceutical group, "We have aspirations to have a manufacturing plant that is certified by EMEA," concludes Crovetto. 

Despite the optimism in the air, the country is still considered to be the most competitive pharma market in the Western hemisphere. Such notoriety is still partly due to a preference for similars and generics by the public healthcare system, with original drugs only representing 19.2% of the market. Another major factor is also the robust manufacturing capacity that Chile has developed over the decades despite the small size of the market. Most exemplary of this is the national manufacturing giant, Laboratorio Chile, "which today is the market leader in both branded and pure generics, and No. 2 in exports and the OTC market," explains general manager Hernan Pfeifer Frenz. The company is the producer of one out of every four pharmaceuticals consumed in the country, and exports 20% of its production to 14 countries. The company's success was so glaringly obvious that the company was acquired by IVAX in 2001 as part of a strategic expansion into the Latin American market, and consequently by Teva in 2006 who acquired IVAX's global operations. All the same, Laboratorio Chile still retains its monolithic brand name as part of the country's pride and joy. 

Other notable national companies are Laboratorios Saval and Instituto Sanitas, both operating state-of-the-art production facilities certified under GMP standards and offering extensive product portfolios that cover the therapeutic gamut—from oncology to central nervous system (CNS) disorders, from cardiology to infectious diseases. These triumphs of Chilean pharma today are reverberating in the region like never before, with Laboratorio Recalcine acquiring several Argentine laboratories in the past few years and, even more impressively, a UK allergy-oriented vaccine producer in 2009. Some regional players have decided to become a part of the action in Chile, as was the case with Argentina's pharmaceutical champion Roemmers, who entered the market through its local subsidiary named Pharma Investi and ranked in the top 10. Pharma Investi general manager Fernando del Puerto points out that the company "increased its sales fivefold in the last seven years ... moved up in the ranking and improved its position mostly through organic growth." 

The Industrial Association of Pharmaceutical Laboratories (ASILFA) that was created to defend the interests of the generic and local manufacturers is working hard to erase the blemished past of patent violations and to shape a compliant and high-quality national industry. In line with governmental reforms, Maria Angelica Sanchez, executive vice president of ASILFA, explains that its current agenda is focused on raising production standards and increasing the role of innovation as part of the Chilean industry. The first step to achieve this is by ensuring that national health authorities are efficient and up-to-date with global regulatory norms. "The new presidential administration has already begun to address some of our concerns by tackling these problems in small committees that deal with specific topics. These discussions will also include other companies that are not part of our association," she explains. 

This loosely populated nation of almost 17 million is considered to be Latin America's economic powerhouse, with a pharmaceutical industry estimated at $1.5 billion

Chilean Pharma: Exploring Beyond Copper

For a model that is supposed to be dead, the field sales force continues to drive a remarkable portion of growth for pharmaceutical companies. As a result, 

 companies have cut back field sales has had as much impact on performance as 

they have cut back. The companies that approached reductions strategically gained immediate efficiencies and in some cases even improved revenue, mostly by shifting resources to the highest potential prescribers. They also ruthlessly disinvested where returns were unlikely. Other companies took the blunt instrument approach-and felt all the pain and little of the gain. 

The lesson learned is that the industry needs to look far beyond the simplest metric of account value-past prescribing behavior-to prioritize the field effort. A more nuanced, factored measure is a must-have to compete today: By looking at such factors as the impact of the managed-care environment, ownership structure (i.e., group practice), office access, and the type of physician (is he or she an early adopter? does he or she prescribe generics?), companies can identify the best of the best prospects. Once the value of targets is clear, companies must match resources to targets. The result? Maintaining or even increasing volume with reduced headcount. By contrast, companies that continue to deploy based on historic prescribing volume see measurably lower sales and profit.  

We have seen that using this refined criteria to assign field representatives to a tightly focused list of highest-potential physicians generates far better growth than assigning reps an entire zip code or territory-the sharper the focus, the better the results. We also believe in cutting your losses; companies that significantly reduced field strength in highly payer-controlled markets, de-emphasized highly controlled physicians, and in some cases shifted new resources to replace the traditional detail where it wasn't working did not lose share in these markets. 

Prioritizing the field effort is a must in this age of cutbacks. A less-is-more approach will only be successful at your company if your sales force is optimized to isolate the best prospects. (GETTY IMAGES / MICHAEL HITOSHI)			

We also believe that isolating the best prospects using the factored measure and then pointing resources at those prospects is not enough. You have to arm the field (whether traditional representatives or other resources) with the right messages and the right tools and offerings for each type of prescriber. For example, doctors managed under strict pay-for-performance (P4P) metrics respond well to messages about how a product can help them meet their performance goals. Using this approach, teams that specialized in large group practices gained share where the traditional field had stagnated.   

First, throw away the idea of using a single field deployment model for the whole country and for every type of customer-approaches will differ by environment. Also, understand that when you use multiple measures to gauge physician value, you must also deploy in a more sophisticated way-with customized roles and coverage models for each geography. 

Second, get comfortable making decisions in uncertainty. As the industry updates the commercial model, innovators will need to size the field based on the (uncertain) potential of new approaches. Typical industry sizing and deployment analysis is built on backward-looking, nationwide physician data, which measures responsiveness to traditional reps. This strategy may be irrelevant for determining the value of deploying a different type of field resource to a subset of physicians. Innovators must experiment, learn, and rapidly adapt as the ownership structure of the physician office and many other factors change the landscape.  

Third, stop investing in losing propositions and put money into new growth levers. Stop deploying incremental representative resources until the point of zero marginal returns. Invest instead in the full toolkit of personal and non-personal levers that are increasingly useful. Build an arsenal of promotional levers tailored to the specific product, including field-based promotional medical, sample droppers, patient educators, etc. Use non-personal promotions: outbound tele-details, e-mails, and even traditional (snail) mail. Pharma companies will need to coordinate a mix of resources effectively to get optimal results.   

Despite the cutbacks the industry has made, we believe that personal promotion will remain one of the most powerful tools for branded pharmaceutical revenue and profit maximization. However, maximizing sales rep productivity will remain a top concern, too, and will require more insight, more flexibility, and more variety in roles. The rumors of the death of the sales model are greatly exaggerated. 

 is Director, Global Commercial Practice for Pharma-ceuticals and Medical Products at McKinsey & Co. He can be reached at 

The lesson learned is that the industry needs to look far beyond the simplest metric of account value–past prescribing behavior–to prioritize the field effort. A more nuanced, factored measure is a must-have to compete today 

These days, learning to strategically do more with less can keep your sales force performing at a high level

The Death of a Sales Model?

For today's C-suite, "revolution" is the driving sentiment that will set the future of Big Pharma. However, the basis for strategy has changed, from maximizing prices among a stable network of passive customers to one built on continuous, disruptive innovation against all manner of competition worldwide. Navigating this transition in an industry as conservative as Big Pharma is difficult.  

In evaluating the prospects, one issue that has garnered little attention is the quality of Big Pharma's service partnerships, particularly among that second tier of providers who bestow a critical layer of support to the C-suite through their expertise in the specialized skills required to execute strategy and fill gaps in a fast-moving competitive environment. Can this key link in the industry's value chain keep pace with the restructuring going on around them, generating a continuous cycle of innovation adapted to serve Big Pharma's evolving business model?   

 went looking for some answers from a major player in a largely unexamined segment of the biopharmaceuticals business: manufacturing excellence via contract manufacturing organizations (CMOs). DSM N.V. is our target, a Dutch-based company with over $10 billion in revenues and a large but little-noticed global footprint as a key supplier of technologies that support the processing and manufacture of compounds ranging from traditional small molecules to the most complex next-generation biologics.   

The DSM franchise is highly technical—but the very future of biopharma depends on it, because without complementary advances in materials management and manufacture, a novel treatment cannot successfully navigate the passage from bench to the bedside. It falls to organizations like DSM to help Big Pharma match the science of discovery and development to the mechanics of ensuring a new compound is formulated, manufactured, and dispatched to the patient for its intended use—safely and expeditiously, across functions and geographies, and at the lowest possible cost.  

As many of these compounds contain active biologic material with a minimal shelf life, there is little room for improvisation. Extensive new investments are required to customize the manufacturing process, and the consequences of a false start or high error rates in batch production can be devastating. "Supply chain complications are an increasing challenge for an industry that depends heavily on reliability against a drug or vaccine's clinical profile," Karen King, president of DSM's Biologics division, tells 

 "Product lifecycles are shorter, and payer uncertainties mean that manufacturing has to adapt to more fluctuations in demand. Failure to address these can hurt the bottom line through waste, or, in the case of a product shortage, force companies to take a huge reputational hit." Product shortages due to flaws in the processing stage have been defined in recent surveys as a $200 million problem, just in the US.  

Precisely because of the high risk of failure, the strategies and tools applied to manage production often need to be more innovative than the pill itself. What DSM provides is expertise that delivers certainty against everything from drugs not being properly absorbed in the patient's bloodstream to the uncontrolled release of toxic chemicals and other hazards at the manufacturing stage. 

Paul Sidhu, vice president, marketing and strategy; Karen King, president, Biologics; and Patrick Weinberg, chief financial officer at DSM.			

DSM has a very simple description of its mission: selling solutions that nourish, protect, and improve performance. To do that, it has built an internal culture focused on innovation as the platform for what it calls "focused growth." All five divisions of the company—covering, in addition to pharmaceuticals, nutrition, performance materials, polymers, and emerging businesses—are required to set annual targets for revenues derived from new innovations, which management defines as products and applications introduced within the past five years. Twenty percent of revenues from innovation is the company-wide goal, to be achieved by 2015.  

And the drive to connect with change continues. The emphasis is on the Emerging Business cluster, which is itself segmented into three areas, covering: 1) bio-based products and services, such as enzyme crop boosters and wellness/nutritionals that carry a health application; 2) advanced surfaces, to promote greater energy efficiency for durables such as automotive coatings and to lower the cost of establishing tolerability for personal care products [including drugs]; and 3) biomedical technologies and materials, involving capabilities ranging from polymers for joint replacements, implants, and medical devices, to the testing and manufacture of biosimilar drugs. Also on the docket in this segment is regenerative medicine and tissue engineering.   

Reliance on these technologies of the future means that DSM is expanding into virtually every aspect of the "performance culture," from human and animal nutrition and wellness/personal care, to diagnostics, medical devices, and implants; small molecule drugs as well as biologics, and their generic equivalents; machinery coatings and paint; electric/electronic measurements; public safety and individual security monitoring; and housing materials.  

"What we are doing is applying new biotech technologies to improve the materials structure of basic consumer staples. We are helping our customers move from a production model built around petroleum and hydrocarbons to one based on what we call "white biotech"—lightweight, stress-resistant composites derived from a 'clean/green' organic base," says DSM's vice president, marketing and strategy, Paul Sidhu. "In pharma, we are very active in innovation as a CMO as well, so creating new platforms for cost-effective manufacture of complex biologic medicines is a key part of that value proposition."   

Another element in the link between innovation and future growth is a commitment to seek out new ideas from non-traditional sources. DSM has opened two new Innovation Centers, in China and India, to supplement an existing facility in Europe. Both Centers will examine opportunities for development of innovative technologies in the five business segments based on the distinctive market characteristics of the two countries. Together, the three Centers have a broad remit, with freedom to take on a concept regardless of source and run with it. Among other things, they manage their own venture capital units that can invest in promising startups.   

DSM is also a believer in "reverse innovation;" that is, how ideas that resonate in the resource-constrained countries of the developing world can be applied to help lower costs or generate new demand in the more affluent markets of Europe and North America. The Centers are integral to the achievement of another set of ambitious revenue targets: By 2015, DSM is committed to doubling its annual sales in China, to $3 billion, while growing the business in emerging "high-growth economies" to half of total sales. The intent is to position DSM as the leader in helping these markets upgrade their performance culture, through use of clean technologies as well as new product offerings geared to the interest of a more affluent consumer base in quality of life, health, and wellness.   

It follows that DSM's innovation strategy is rooted in an awareness of larger social trends, led by factors such as the lean production movement and growing consumer interest in products that do least harm to the environment. DSM management interprets these public expectations less as an obligation than as a huge business opportunity. "Sustainability is a competitive differentiator for us," Sidhu says. "Our goal is to help customers perform and function more efficiently, with a smaller footprint on the external environment." Sidhu notes that DSM was early to predict that the "naturals" trend among consumers would eventually create pressures to insert the same ethos into the manufacturing and supply chain.   

Some of the company's best work on innovation is driven from within the pharmaceuticals cluster, which accounts for about 10 percent of DSM's overall revenue and incorporates four businesses: biologics, small molecules, finished dosage forms, and anti-infectives. The group has a history as a CMO and also as a supplier in producing the active ingredients for key essential medicines, including penicillins, cephalosporins, and other anti-infectives. The strategy now is to move beyond the CMO role to secure lead status as an integrated supply chain service partner in emerging high-growth markets, with a particular emphasis on Asia.  

The group is also developing new technologies to boost the cost-efficient production of complex biologics—and biosimilars. "In the high-growth economies of China and India, there are already 200 to 300 local companies committed to producing biosimilar drugs; some are already marketing them," King says. "The opportunity for us is that their process technologies are quite old. We can license our advanced capabilities to them or come in as a CMO. Either way, we help them lower their manufacturing costs, which is key to gaining the advantage in biosimilars."  

The value proposition here is actually very global, and has been crafted in close approximation to the changing needs of Big Pharma. The patent cliff and accompanying pressures on the traditional blockbuster model—in which manufacturing was an afterthought, in terms of cost exposure—have forced companies to devote more attention to proactive management of the entire supply chain.   

Sidhu says: "The questions we now get from the industry are not about how fast we can build that specialized production facility in time for a registration decision by the FDA. The dialogue is far more strategic: How can we do manufacturing differently, using process technologies to reduce time to market or prevent product shortages? How do we increase security of supply through multisourcing? Or lower the risk of steep financial investments in new facilities as well as hedge the political complications that stem from employing large numbers of workers in different areas? There is an awareness that costs can be taken out of the old system of production and that this is a new source of competitive advantage in a market divided between commodity products and advanced therapies. For either, how well you manage manufacturing will determine a big chunk of your ROI over time." 

In response to this need in the biologics field, DSM has built a number of proprietary process platforms that significantly reduce costs, reduce risks, and enhance the reliability of pharma production. The first is its XD technology, which is a process improvement that enhances the environment for cell growth and protein expression, thus allowing for gains in the productivity of batch production. DSM contends this technology can boost yields from five to 10 times against conventional applications. (In biologics production, use of smaller-liter reactors to synthesize materials is optimal; XD technology helps to facilitate it.) "The gains from this tool alone are enormous," says King. "We can produce enough active ingredient from a single batch to create product for a full Phase II clinical trial—safely, at lower cost to the sponsor."  

Another is the Rhobust technology, which avoids the traditional large-scale cell harvesting approach with a tailored, targeted process for capturing/clarifying the proteins/antibodies required for biologics composed from living material. This results in less handling and a shorter processing time, which saves on costs.  

The newest of these is what DSM calls the "Kremer Method," a purification measure that reduces the materials used and the number of steps in downstream production. DSM has applied for a patent on this method. 

Taken together, the company says its technology platform is 40 percent more cost effective than currently available technologies.    

Each of these tools are being licensed to partners and applied at the company's own biopharma production sites. DSM's new biologics production facility currently being built in Australia will employ these state-of-the-art technologies and is being supported through funding provided by the Commonwealth of Australia and Queensland governments.   

Overall, the aim here is to strengthen DSM's CMO franchise by incorporating use of the company's own technologies rather than having to rely on externally derived assets. But there is a more practical element as well: DSM cannot easily compete on cost alone with nimble local CMOs in growth markets like China and India. Hence its ability to differentiate depends on providing something new around innovations that customers will pay that extra margin for.  

Positioning the pharma business for success carries a specific metric: to achieve annual EBITDA (a key measure of earnings/profit against sales) in the 15- to 20-percent range by 2015. This will require innovation of a different sort, the most important of which is executing in the pharma space the business complementarities that management wants to extract through the broader DSM portfolio. "The goal is to soften our dependence on the traditional CMO model, which is inherently volatile, through a range of new offerings that will make our business more predictable through the transitions that pharma is now undergoing," Patrick Weinberg, DSM's chief financial officer, tells 

No less than for any company engaged in the know-how business, success will depend on a cross-fertilization of links between an expanding opportunity set in life sciences and technological progress in materials performance. The company now has the diversity of capabilities to do it, assuming it can get the sum of its parts to work harmoniously.     

As DSM grows, it will also be critical to stay close to its Big Pharma customers, many of whom are being buffeted by external forces to the extent that it is not always clear what they want. DSM is adhering to a basic strategy rule of thumb by concentrating in areas where it expects to see the greatest cost pressures on the industry. These include finding new ways to leverage efficiencies—and the returns—from innovative drugs nearing the end of their patented product lifecycles; supporting the move toward adjacent businesses such as biosimilars; fostering more innovation in the rationalization of company supply chains; and finding new customers in high-growth markets, where the performance culture is subpar.     

Will it work? Time and the quality of DSM's management will tell. But if you care about that unnoticed concept of a superior performance culture—and every patient should, whether he takes a pill or a nutritional supplement, or hosts a medical device—then the answer to this question carries much more import than a simple business calculation. In an industry increasingly structured around partnerships at every stage of the healthcare continuum, from bench to bedside, this concept 

It falls to organizations like DSM to help Big Pharma match the science of discovery to the mechanics of ensuring a new compound is formulated, manufactured, and dispatched for its intended use

The patent cliff and pressures on the traditional blockbuster model—in which manufacturing was an afterthought—have forced companies to devote more attention to proactive management of the entire supply chain

Features

Dutch-based DSM N.V. is seeking innovatinve ways to partner through bolstering manufacturing

The Big Business of Boosting Performance

 Editor-in-Chief William Looney was honored March 10 at American Business Media's Neal Awards for "Best Commentary" for his monthly editorial columns. 

The Jesse H. Neal Awards were established in 1954 to recognize and reward editorial excellence in independent business publications. Reflecting the changing face of business media, the awards now encompass 19 categories of work and this year attracted more than 600 nominated entries from publications with a combined circulation of some 20 million readers. The awards were handed out at the Mandarin Oriental Hotel in New York at a luncheon sponsored by the B-to-B industry's trade group, American Business Media (ABM), and chaired by Bill McDowell, VP/Editorial Director, Marketing & Technology Group. 

Nominees were evaluated through a two-tiered screening process by an independent panel of judges drawn largely from both the professional ranks and academic schools of journalism. Three finalists were selected in each category by the ABM Editorial Committee, after which a Board of Judges comprised of 11 members made the final decisions on the winners. 

Awards were presented by Paul Maidment, Principal and Editor-in-Chief of Bystander Media, and CBS News Correspondent Rebecca Jarvis (shown at left presenting the Neal Award to Mr. Looney). Jarvis cited Mr. Looney's winning columns as topical and provocative in asserting the biopharmaceutical industry's need to repair a declining level of public trust—a breach that threatens to override the ultimate value it provides to society through contributions to medical progress. In receiving his Neal Award for Best Commentary, Mr. Looney commented: "After many years in the industry—struggling to parse both sides of an 'Alice in Wonderland' looking glass—it is great to get paid to have an opinion! I am truly honored." 

 will continue to let you, our readers, know what we think, in a distinctive voice designed to keep all parties in this vital industry—including ourselves—honest to the truth. 

William Looney, Editor-in-Chief, last month took home the award for "Best Commentary"

Pharm Exec Wins a Neal Award!

Little does one realize that a harmonious relationship must exist between a philharmonic's conductor and his orchestra to ensure a flawless performance. The conductor determines tempo, encourages precise composition of notes, and listens critically to contour the sound of the ensemble, which unifies the orchestra. The craft of conducting requires the ability to inspire, stimulate, and challenge the performers. A symphonic experience is also highly dependent on the skill set of the performers, and only those capable of delivering musical expressions in synch with the conductor's guidance will be successful. It is this type of symbiotic relationship that we in the healthcare setting can learn from and apply to the healthcare provider (HCP)/patient relationship.  

Patients are an all-too-often invisible stakeholder in the healthcare system. The traditional provider-centric healthcare model focuses on the medical disease, with the HCP viewed as the 'knowing' expert and the patient a 'passive' recipient. However, the roles have shifted, and patients are taking a more active stance in their disease management. In this case, both patients and HCPs are experts: Patients are experts on their lives and experiences, and HCPs are experts on the art and science of medicine. Catalyzed by new technology, a patient revolution is under way: Patients are seeking and sharing more healthcare information online and are increasingly showing a desire to be equal partners in the participatory medicine movement.  

Patient empowerment is the missing catalyst in affecting change and is based on basic principles of engagement, knowledge, skills, and attitudes, which affect behavior changes that can improve treatment concordance, adverse event management, and mitigate medical errors. A patient is empowered when provided with sufficient knowledge to make informed decisions, given adequate control and resources to implement their choices, and is armed with the necessary experiences to evaluate the effectiveness and impact of the steps taken. Essentially, patients may be architects of their own success, but this requires that they be recognized as a partner in the circle of care. 

Despite its theoretical appeal, the concept of a healthcare partnership has been sporadically embraced and adopted into practice. A major impediment is that few HCPs are equipped with the skill set, tools, or system support to encourage patients to consider outcomes, ask questions, and clarify preferences within allocated consultation times. In addition, most medical encounters focus on defining the problem rather than discussing alternative treatment pathways and associated risks/benefits based on the patient profile.  

To foster the transformation of the HCP/patient relationship, the traditional medical encounter must evolve into one that is more interactive in nature and based on shared expertise, to allow for informed decisions to be made. The question is, How?  

The empowered patient is emerging as a key opportunity in transforming the healthcare landscape. How do we embrace the patient revolution and leverage it as we educate HCPs more effectively? How can we seize opportunities to allow for a true partnership that can lead to improved patient outcomes?  

Ultimately a future with improved outcomes is contingent upon the evolution of the HCP/patient relationship. A few key interdependent principles can bridge the gap and guide this change:   

				» Embed patient-centered care and patient education theory into the HCP's lifelong learning curriculum; 

				» Educate HCPs on the benefits and workflow integration of resources and tools to enable the patient as a healthcare partner; 			

» Embrace the concept of personalized healthcare that provides tailored options based on the patient profile; and  

» Integrate collaborative assessment and decision-making into practice to allow for goals and action plans to be successful.  

, meaning "to teach," many HCPs have not been thoroughly trained on the cornerstones of effective education. Do HCPs effectively teach their patients using patient education theory, reinforcing key messages throughout the continuum of care? Do they use the "teach-back" method to ensure that the patient has thoroughly understood the treatment plan, for instance? Do HCPs take health literacy into account, which goes far beyond reading level, translating key points into a language the patient can understand? The issue is that the training that most HCPs receive is focused more on the science and art of medicine and less on the patient profile, personalized healthcare, and patient engagement. These emerging facets in healthcare should be embedded into the medical education culture.  

In alignment with the concept of lifelong learning, patient-centered education must occur across the medical education continuum—commencing in medical school, continuing throughout residency and fellowships, and reinforced through continuing medical education (CME). 

Give the patient a prescription to learn by arming them with a toolkit to succeed. As opportunities for greater patient empowerment are identified, the impact of technology as a means to improve and support the relationship with an HCP is profound. Further integrating the patient into the healthcare system through the use of guiding tools and evidence-based resources can help bridge the disconnect, enabling the patient as an active partner. 

Patients are a powerful diagnostic tool that should be leveraged to understand preferences and circumstances to allow for personalization of the treatment pathway. A baseline assessment allows for the whole complex patient to be accounted for and concerns and expectations to be understood. The patient profile may include past experiences, beliefs, cultures, fears, psychosocial issues, comorbidities, and perception of values and quality of life that may affect levels of engagement and/or success with a treatment pathway.  

Research has shown that shared understanding, which enables patients to actively participate in their care (such as involvement in treatment choices) can lead to improved outcomes, without incurring an increase in healthcare costs. In the collaborative decision-making model, a convergence of both medical and non-medical issues occurs based on the exchange of information between the HCP and the patient, encouraging shared learning.  

In this bidirectional process, the patient's role is to communicate informed values and needs shaped by their experiences and preferences. The HCP shares medical expertise, which include diagnosis, treatment options, risks/benefits, and probabilities of outcomes. Using the patient's profile as a compass, the HCP may reassess treatment plans, provide tailored decision support (aids, coaching), and arm the patient with problem-solving strategies. This partnership allows for coordinated goal-setting and an optimal course of action to be devised with continuous assessment built in to allow for modification, as necessary.  

As the patient profile is taken into account, medicine transcends beyond a "one-size-fits-all" model. Concordance with guidelines and performance measures are important in healthcare; however, they often ignore patient preferences and their perception of value and quality of life. Patient-centered outcomes are important in this equation. Again, this is where the concept of a successful partnership is important: Process measures shaped by patient preferences to allow for patient-centered outcomes are crucial in ensuring healthcare is personalized and accounts for individual needs and decisions. The importance of the patient profile, power of the collaborative decision-making model, and the impact of tailored strategies on improving patient outcomes should be understood and integrated into practice.  

A transformation of the healthcare landscape is under way, as patients that were once "invisible" in healthcare play a more active role, truly acting as catalysts to change. There is interdependency between the science and art of medicine, the patient's personal profile and preferences, and the empowered patient's role in healthcare, but they have not been well integrated into practice. As a pharmaceutical sector, we can act as a strategic partner in healthcare by helping to bridge the gap between the revolution of the patient and medical education and increasing the focus on patient-centeredness in both patient and HCP education. Disease state education needs to be supplemented with the support of key theories such as collaborative decision-making and patient education theory. These concepts need to be interwoven into the thread of medical education, while addressing potential barriers to adoption. The transition into this model will take time to translate widely into practice, yet as the patient fine tunes their skill set in reaction to the HCP's ability to shape the composition, a seamless relationship will ultimately result in a harmonious performance. After all, what is the sound of a symphony where only the conductor can read the score? And where is the beauty of the soloist if they are never heard? 

 is Global Education Director, Medical Education Group at Pfizer. She can be reached at 

All ideas/opinions expressed are the author's own and do not represent those of her employer, Pfizer Inc.

Pfizer's Sarah Krug describes what's necessary to bridge the gap between the patient revolution and healthcare provider in the 21st century

Bridging the HCP-Patient Gap

The buzz of renewed pharmaceutical and healthcare sectors has extended beyond the direct activities of pharma companies and been spilt over to the service providers who are quickly adapting themselves to cater to the new and improved industry. A notable example of adaptation to the needs of pharma companies is that of the largest event space in the country, Espacio Riesco. Sergio Gutierrez, general manager of Espacio Riesco, describes that "we built this space in order to address the need for large congresses and conferences in the country and we began our operations by organizing the International Gynecology Congress at which we received more than 7,000 delegates. We are now counting with 180,000 square meters in total, out of which approximately 40,000 square meters are covered, which makes us the biggest multipurpose venue in the country. In this regard, we now have the capacity to accommodate 8,500 people for a sit-down dinner and not only for fairs and conferences." The conference center has its own in-house services for options such as catering and decoration, and is increasingly host to a number of pharmaceutical events. Gutierrez offers his vision for the future of Espacio Riesco by asserting that "we want to consolidate ourselves as the leader in the market of fairs, conferences, congresses and big corporate events." 

 Sergio Gutierrez, Espacio Riesco General Manager			

Espacio Riesco has adapted to the needs of pharma companies with the largest event space in Chile

Espacio Riesco

We all know the challenges facing our industry—patent expirations, declining R&D productivity, and ever-increasing pressure to hold down costs and deliver value—to name a few. But the biggest challenge we face, and one that permeates every aspect of our business, is the public's lack of trust in our industry. 

Patients are looking for Big Pharma to give it a lift, and it's industry's job, through improving perceptions, to get its customers on board with the notion that it has their best interests at heart. (Getty Images/Compassionate Eye Foundation/Sam Diephuis)			

For those of us who have made their careers in pharmaceuticals and know the contributions our industry has made to society, this lack of trust is both puzzling and frustrating. Why is this happening? After all, our industry has discovered and developed hundreds of medicines and vaccines that have made important contributions to improve the health and well-being of people around the world. Yet, instead of being held in high regard as one of the greatest contributors to health in our society, our industry ranks among the lowest in public trust. In a recent Harris poll, only 11 percent of people said the pharmaceutical industry is generally honest and trustworthy. 

So what went wrong? The answer, I believe, is that in some ways our industry lost its way, and failed to fully appreciate the evolving expectations of our stakeholders. 

Before the first PhRMA Code was adopted in 2002, the industry engaged with its customers in ways that are common in many industries in which business-to-business selling takes place. That business model may still be OK for some industries, but we do not sell chocolate or cars. We bring life-altering and life-saving medicines to patients. Society holds our interactions with our customers—healthcare providers and payers—to a higher standard. And it should. Society expects our business to be conducted openly and transparently and in a way that does not create even a perception of inappropriate influence. 

To be fair, our industry has made significant changes in how we operate over the past decade with the adoption and strengthening of the PhRMA Code. This may be something our critics either are unaware of, or choose to ignore.   

So, negative perceptions remain. Some of this has to do with long-running government investigations, litigation over past practices, and the resulting news coverage. Some of it is because we haven't done enough to communicate what we do and don't do. Some of it is because industry bashing is good politics. Some of it is because we still make mistakes. No matter the reasons, at the end of the day, we must regain the public's trust in our industry. 

We need to ensure our customers understand—that beyond compliance laws and regulations, which is a given—we operate from a core set of values that underpins every decision we make and every action we take. We must inculcate those values into our corporate cultures to create a framework and a mind-set in which compliance with rules and regulations is not the ceiling, but the floor from which our organizations operate. 

At GlaxoSmithKline, the four values we strive to live by are: 

» Focus on the best interests of the patient; 

» Be transparent about our working relationships;

» Respect those we work with and serve. 

These values are not new to GSK, and we don't always get it right. But, one of my goals in joining GSK two years ago was to ensure that if you stopped any GSK employee and asked them what the values of the company are, they could tell you without hesitation. Most importantly, my goal is to ensure our customers see those values in each of our employees. 

It is my view that, as long as we continue to demonstrate these values into our daily conduct and decision-making, we will meet the expectations society has for us, and we will be able to deliver value to our stakeholders in a values-based way. 

So how do we put these values to work in our business? 

Let me give you an example: When our representatives talk with doctors, we require that they share the extensive knowledge they have about our drugs—including both who should and, quite importantly, who should not take our medicines. To reinforce this requirement, we're changing the way we provide bonuses to our sales professionals. In the past, like other companies, we based the variable portion of their compensation on the volume of prescriptions they obtained in their sales territory. Now, we're rewarding them for providing the information and support our customers need and that is in the best interest of the patient. 

Integrity is doing the right thing; transparency is being open about what we do. Some of the financial relationships and industry practices from previous years are no longer viewed as appropriate, and so we've changed them. Other practices that the public sometimes views as inappropriate are actually important to good healthcare. For instance, we believe properly engaging doctors to share their knowledge with other physicians in peer-to-peer education programs helps them keep up with advances in medicine. 

We also believe that physicians should be fairly compensated for their time and expertise. Yet some patients, government officials, policymakers, and even some in the medical community have questioned the integrity of these relationships. So to provide assurance on the integrity of these relationships and to be transparent, we began voluntarily posting our payments to US healthcare professionals for speaking and consulting services on our website.  

Our fourth value is respect. We all know the golden rule: Treat others as you would like to be treated. We market a drug that treats erectile dysfunction (ED), a legitimate medical condition that affects the lives of many men. It is also a condition that many people are not comfortable speaking about. And it certainly is not a condition parents, aunts, uncles, and grandparents want to explain to children while watching a football game on Thanksgiving. 

This is where respect comes in. While a practice may be perfectly legal and even acceptable according to industry codes, we have to respect the wishes of the society we serve. At GSK, we are very thoughtful about where we advertise our ED medicine so we can reach the patient where they are, rather than blanketing the airwaves, in order to avoid advertising in places that are easily accessible to children. 

For our industry to regain public trust, we must constantly examine how we interact with our customers, how we communicate with patients and providers, how we fund activities, and how we share information. We also need to do a better job of informing those we serve about how we operate now. We also need others in healthcare to stand with us and embrace a values-based approach to our interactions and recognize and respond to how we've changed. 

By doing these things, we can assure the public that our industry—an industry that has brought so much benefit to so many—is conducting its business with focus on the patient, with transparency, with integrity, and with respect. In this way we will be worthy of trust. 

 is President, North America Pharmaceuticals at GlaxoSmithKline. She can be reached at 

GSK's Deirdre Connelly puts the focus on four steps to cement a new compliance culture

Restoring Public Trust in Pharma

Mother. Daughter. Mentor. Advocate. Leader. And friend. All these words describe the Healthcare Businesswomen's Association's (HBA) 2011 Woman of The Year, Dr. Freda Lewis-Hall. Yet none is enough to explain the keen observational skills and engagement assets that have placed her squarely on the path to where she sits today: A key member of the "C suite" at the world's largest biomedicines company. 

 had the opportunity to sit down with Lewis-Hall to learn about the experiences, both professional and personal, which brought her the HBA award and built her career in linking the profession of medicine to the larger politics of public health.  

A "can-do" attitude and the natural inclination to help others are traits that Lewis-Hall says were literally seared into the fabric of her childhood from day one. Besides having supportive, encouraging parents who she says "actually believed [she] could fly," Lewis-Hall also had an uncle who moved in with her family when she was a toddler. Her uncle, a paraplegic, spent a great deal of time fashioning everyday tools for himself to use for chores so that he was able to maintain his self-sufficiency. Years before the Americans with Disabilities Act (ADA) came to fruition in 1990, Lewis-Hall grew up with a role model in the house whose motto—which he practiced literally and philosophically every day—was, "When things seem out of reach, move closer." 

Pfizer "has a lot of experience [in global health]," says Lewis-Hall, pictured here in Uganda, and "would love personally to become more involved in that and to appply the medical community of Pfizer to this work in a bigger way." (GETTY IMAGES / ALANIE/LIFE FILE)			

If her uncle's adaptability to his own condition instilled in Lewis-Hall an enterprising attitude, then the rest of her family's reaction taught her selflessness, cooperation, and generosity of spirit: "In our house, there were stairs that led up to the bedrooms. My uncle would wait [there] in the evenings if he was too tired to walk up with his crutches. My dad would be out late driving a cab ... and I would hear him come in and literally carry my uncle up the stairs. It was the idea that we were always there for each other and literally carried each other on our backs to make things happen," she recalls. "It was profound learning about being part of a community, and for me, now, being part of a workplace." 

One other person became a crucial part of the family unit that Lewis-Hall observed in her early years—Dr. Settles, the family physician. "I saw my uncle treated and moved along not just by the love and attention of the family, but by the medical care he received," she explains. "By age six, I was hooked. I really knew that some way, some how, I was going to be a physician." 

Lewis-Hall grew up during a time when the glass ceiling around female advancement in the professional world was so firmly in place that many never bothered looking up, if they were even aware it was there at all. For example, despite Lewis-Hall's excellent grades and demonstrated leadership abilities in high school in Annapolis, Maryland, her guidance counselor suggested that being a Navy officer's wife would be an excellent "career" choice. "I was absolutely stunned," says Lewis-Hall. 

When asked about her views on the glass ceiling today, Lewis-Hall says, "Well, first of all, I never thought it was glass. I thought it was concrete and lead-lined, so Superwoman couldn't even see through it with her X-ray vision. I don't know who was nice enough to call it glass, but it wasn't me." But even this experience was something her supportive family, with its mantra of positivity, spun into gold from straw: "I went home that evening and told my mother," recalls Lewis-Hall, "and she said, 'We're going to take the best colleges list and start at the top and apply until the money runs out.'" And so the two women sat down together and applied to the most prestigious schools out there—Harvard, Yale, Brown, Johns Hopkins—shunning society's expectations for women to accomplish the very least, defiantly aiming instead for the very best. Lewis-Hall ended up earning her undergraduate degree in Natural Sciences from The Johns Hopkins University in large part because it was close to her Maryland home, and because, "I wanted to be a doctor, so where else but Johns Hopkins?" 

Currently, says Lewis-Hall, that concrete ceiling "is being chipped away. Now around our [industry's] tables as part of our leadership teams are people who look different from each other—we come from different backgrounds, we have different perspectives that allow for robust decision-making and sharing. I don't think it's gone by any stretch of the imagination, but it's coming down; it's more porous. The value of complementary leadership is being seen by women who have gotten through the cracks in the concrete ceiling and by men who have realized that this is much better in a lot of ways." 

Trips such as this to Ethiopia helped Lewis-Hall begin to shape her thoughts on the future, where she sees an opportunity to "serve in a broader way and to really change the face of global health."			

After college, Lewis-Hall was faced with another choice that would become a stepping stone on her journey to becoming a doctor: getting into medical school. She was working at the time for the Federal Power Commission in Washington, DC, when she told her mother she wanted to attend Howard University Hospital and College of Medicine. Her mother replied, "Isn't that right up the street from where you're working? You should go over there and ask them if you can be in their medical school." 

"I said to my mother, 'That's not how it works; you don't just walk in and ask someone if you can be in their medical school,'" recalls Lewis-Hall. Nevertheless, she walked over on her lunch break one day and filled out the application, and was accepted for the upcoming school year. Was the decision to become a doctor based on it being a lucrative career? A way to provide solutions to public health challenges? The draw of the mix of policy and medicine? "That all sounds so profound," says Lewis-Hall. "I just ... wanted to help people."  

One such opportunity for Lewis-Hall to help people occurred after her residency, when she worked for the National Health Services Corps in the Virgin Islands. "I was in a health manpower shortage area, helping people that wouldn't have otherwise had psychiatric care at that point," she says. 

During this time, psychiatry was undergoing a major shift towards taking patients out of hospitals and mainstreaming them back into their communities, and places like the Virgin Islands had no provisions in place for such a shift. "I was in Washington, DC, doing work at St. Elizabeth's Hospital, and I realized that the people hospitalized there were likely going to be deinstitutionalized and sent back to the Virgin Islands, and there wasn't anyone or anything that was going to provide care," says Lewis-Hall. 

Eventually, she went on to serve as acting medical director for the US Virgin Islands Department of Health. "I went down to try and help evolve the system so it could meet the needs of those chronically mentally ill patients, and it was a very, very profound experience," she says. "Going to the Virgin Islands, where there was just little or nothing, was a really shocking learning experience." 

After leaving the Virgin Islands, Lewis-Hall returned to Howard, where she learned even more about psychiatry while counseling patients and serving as vice chair and assistant professor. "I loved what was happening in psychiatry, and I was drawn to it," she says. "Psychiatry at that time was still grounded in understanding people, in listening. It was really a listening profession at that time, and I loved the idea of being taught to professionally listen." That skill—the capacity to evaluate carefully what others are saying—is often missing in the conventional list of leadership traits, but Lewis-Hall has been careful to cultivate it in making her way up the professional ladder.   

Lewis-Hall's work at Howard also got her interested in the biology behind psychiatry. "I became fascinated with brain biology and learning—learning what was being learned. I think it's also part of what got me ready to come into the [pharma] industry," she says. 

Lewis-Hall's first foray into the pharma industry was at Eli Lilly, where she began as clinical research physician and, over a period of eight years, moved her way up the ranks, creating and directing the Lilly Center for Women's Health and then serving as product team leader. 

"What attracted me to [pharma] and what ultimately won me and kept me is the idea that probably the most incredible science happens in this environment. It's a data-rich environment where you have the ability to help not just one patient at a time, but millions of patients at a time."			

While we all recognize that diversity can play a role in our lives in cultural and philosophical ways—from civil rights to workplace equality—Lewis-Hall began to understand during her time at Lilly that diversity may have biological and physiological roles to play as well. "I spent some time on gender-based health, gender-based biology, and ethnopsychopharmacology—looking at the differences that race and ethnicity made and how these things affect the way that drugs are metabolized in different people," she explains. 

Such interests led to Lewis-Hall developing and directing the Lilly Center for Women's Heath, aimed at incorporating science-based, gender-related advantages into all life-cycle stages of Lilly's neuroscience, cardiovascular, and women's health therapies. "That was a time when there wasn't a lot of thought about gender-based research," she says. "So my first few years in the industry were really great in that they confirmed the power of science for bringing benefit to patients and provided me with an opportunity to really connect with the community around a health issue." 

In fact, diversity issues played a role in Lewis-Hall's career not only in the research she was working on at Lilly, but—throughout her life—in her personal development as well. "Sometimes I have a hard time teasing apart what my ethnicity and my gender bring to the table, although I am not at all confused about the fact that there is a significant impact," she says. "I think there were times when I felt that maybe my credibility was challenged in a way that it might not have been ... As a young, female, African-American physician, I had to wonder if I carried the same weight—had the same gravitas—that someone else might have." 

Thankfully, Lewis-Hall had a mentor to look to at Lilly, Dr. August "Gus" Watanabe, who oversaw Lilly's research labs. "He reminded me over and over that at the end of the day, I am a physician, trained in the art of healing," she recalls. "He told me to never forget that my grounding at the company was that I brought patient-centeredness into the room with me—that when I walk into the room, someone who has touched a patient, treated a patient, and understands the patient is now here representing that; the patient walks in with me." 

Sound advice like this is what helped Lewis-Hall realize that diversity in the workplace was not just something that might or might not bring her credibility into question, but something to be celebrated and leveraged, using each person's strengths and differences to contribute to the greater good of the company.  

Sidney Taurel, former CEO of Lilly, had this to say about Lewis-Hall: "Freda is one of the most energetic, communicative, and driven people I've worked with. She combines competence as a physician with a passion to make a difference in peoples' lives as a leader, a mentor, and an advocate. With her infectious enthusiasm, she is good fun to be around." 

That patient-centeredness and respect for diversity has transferred to Lewis-Hall's current role as chief medical officer (CMO) of Pfizer. "At the end of the day, I believe we as a company are accountable for the safe, effective, and appropriate use of our medicines," she says. "This is a really good opportunity for us to live our word that the patients are at the center of what we do." 

Being at Pfizer—where she administers a division budget of more than $600 million annually—has given Lewis-Hall time to reflect on why she transitioned from direct patient care into the private sector and the pharma industry: "What attracted me to it and what ultimately won me and kept me is the idea that probably the most incredible science ever happens in this environment," she says. "It's a data-rich environment where you have the ability to help not just one patient at a time, but millions of patients at a time. I would never, ever have guessed that this was what I'd be doing now." 

Part of the way Lewis-Hall keeps her focus on the patients through her work at Pfizer is by stressing the importance of clinical trials. "If medicines are going to be evolved so that they properly serve the people that are going to use them, then the globalization of our clinical trial effort is critical," she explains. Pfizer is the only pharmaceutical company to be accredited by the Association for the Accreditation of Human Research Protection Programs (AAHRPP) for ensuring the protection of human subjects taking part in early-stage clinical trials. 

Finally, Lewis-Hall notes how important her role is as industry representative on the new federal Patient Centered Outcomes Research Institute's (PCORI) governing board, which will fund studies to evaluate the clinical effectiveness among the patient population of drugs and other medical treatments. "It is a striking opportunity to really be able to focus on patient-centered outcomes with a group of people that are dedicated to that task. And I'm especially excited because pharma's there at the table." 

As CMO of Pfizer, as well as being an Executive Officer and member of the senior leadership team, Lewis-Hall is one of the highest-ranking women in the industry. (And best paid, with a $4.5 million total pay package last year.) Lewis-Hall has tackled the highly sensitive issue of increasing the effectiveness of internal systems for collection and reporting of adverse events, particularly through the integration of Wyeth's safety reporting system with Pfizer's—a complicated process that was completed ahead of schedule.  

Reflecting on her own leadership role at Pfizer, Lewis-Hall recognizes that a certain skill set and leadership style is necessary in dealing with the uncertainty in the industry going forward. "I think the more mature you are as a leader, the better able you are to manage uncertain or ambiguous environments, because that's what's required," she says. She believes that a new form of leadership—quite the opposite of the old "command and control" model—is required now, "which isn't, 'Do what I told you to do,' but 'Do what 

Looking beyond her current role, to what else she'd like to accomplish professionally, Lewis-Hall says, "Introducing new treatments and new preventions is part of it, but I think that our ability to serve in a broader way and to really change the face of global health is really profound.  

The determination of Pfizer's Freda Lewis-Hall has enabled her to find a ray of hope in every situation she's encountered

Pharmaceutical Executive-04-01-2011