Pharmaceutical Executive-05-01-2002

The National Institute of Health Care Management made headlines with its report on double-digit increases (17 percent) in retail spending on medicines in 2001. The total reached $155 billion last year, almost double the $80 billion spent in 1997, according to the study, "Another Year of Escalating Costs." PhRMA president Alan Holmer said the increase is a good thing, signifying that more people who need medicines for chronic conditions are being treated and thereby avoiding more expensive medical procedures.

African-American physicians regard direct-to-consumer advertising of prescription medicines as one way to educate minority patients about needed treatment and healthcare options, according to a survey conducted by the National Medical Association (NMA). Almost all of the 900 physicians answering the questionnaire reported that DTC advertising has prompted patients to ask questions, and one-third acknowledged that they feel additional pressure to justify their prescribing decisions. But almost half (48 percent) said that such promotion increased communications between physicians and patients.

Among the dozens of initiatives in Washington affecting the pharma industry, one common thread is the growing movement to control accelerating expenditures for prescription medicines.

Science deserves all the credit it gets, and more, for driving this industry. Still, no science succeeds without a certain application of what we broadly call art. Inside the scientific discipline, many arts apply-the art of experiment, the art of planning, and the art of free association among them.

The returns are in, and they are not pretty. Janus Funds' billion-dollar investment in WebMD in 2000 now has a net value of roughly ten cents on the dollar, and many observers see WebMD as a winner in their space-whatever that space is now.

The European Medicines Evaluation Agency (EMEA) has promised to get tough with pharma companies if they fail to follow its rules for reporting product side effects. It may resort to naming and shaming those that do not comply and could even prosecute offenders.

Kiln, a Lloyds of London underwriter, has come up with a novel way for pharma companies to mitigate the risk of patent challenges: insurance. Kiln created a policy for a big pharma company covering a number of patents and trademarks the company considers essential for its future profitability.

As the fanfare over the sequencing of the human genome fades, the spotlight turns to the "shovel and pans" companies offering the tools investors are betting on to make "gene to drug" a reality.

Products in Trouble