More than 7 million Americans may be gaining healthcare coverage through Obamacare, but that doesn't mean they will be able to obtain needed medicines. Despite provisions in the Affordable Care Act (ACA) that require qualified health plans to cover "basic" benefits, access to prescription drugs may be limited by high out-of-pocket costs and tight pharmacy management strategies. 

These developments were discussed last month at the annual meeting of the Pharmaceutical Research and Manufacturers of America (PhRMA) in Washington, D.C. The need to better communicate the value of medicines and to shift the debate from costs and prices was a major theme. Speakers were optimistic about the enormous potential for new biopharmaceutical discovery, but predicted this could be limited by curbs on research funding and on drug reimbursement.  

A report for PhRMA by Battelle put coverage and payment policies at the top of the list of issues predicted to limit biopharmaceutical innovation and industry growth over the next ten years. The recent administration proposal to drop certain "protected drug classes" in Medicare Part D is a sign of the problem, noted Robert Hugin, Celgene CEO and former PhRMA chairman, at a press briefing. He observed that high cost-sharing raises questions about whether new exchange plans will provide appropriate coverage, and whether these strategies will migrate to commercial plans. 

These concerns were highlighted at a panel on how health reform is reshaping pharmacy benefits, as exchange plans establish narrow formularies and specialty pharmacy tiers with steep coinsurance rates. Patient advocates cited plans that put all drugs for HIV/AIDS and hepatitis in the top specialty tier, which in some cases carry 50% coinsurance rates and excessive prior authorization requirements. And with out-of-pocket maximums exceeding $6,000 for low-cost bronze plans, many beneficiaries cannot afford needed medicines. These high cost-sharing benefit designs, moreover, could have "a ripple effect" if such strategies become "the norm" for commercial plans, noted Mark Velleca, executive VP at the Leukemia and Lymphoma Society.   

Chet Burrell, CEO of CareFirst BlueCross BlueShield of Washington, D.C., Maryland, and Virginia, offered an alternative approach. He explained that insurers are looking for ways to better manage pharmacy spending, which now exceeds outlays for inpatient care for his organization with the rise in specialty medicines. Burrell explained that the ACA requiring guaranteed issue and community rating, insurers cannot offer lower rates to patients who adopt wellness programs that keep them out of hospitals. 

So CareFirst is proposing to control spending on patients with multiple chronic conditions by waiving cost sharing in 2015 for those very sick beneficiaries who agree to adhere to a special care management program supervised by a physician. He acknowledged that many actuaries fear this approach will fail to achieve savings. But if it works, Burrell predicted, others may adopt it.  

Another strategy is for states and regulators to set tighter limits on cost-sharing. Maryland recently enacted a $150 limit on co-pays for specialty drugs, and other states are looking at similar measures. Such a policy sets a level playing field for insurers and may prevent a "race to the bottom" in the drug coinsurance department. 

Yet, the federal government is leery about setting limits on cost-sharing for fear that will drive up premiums, noted Jonathan Blum, principal deputy administrator of the Centers for Medicare and Medicaid Services (CMS). He acknowledged concerns about "true access" to benefits and said that CMS will be monitoring how well plans comply with policies designed to prevent discrimination against older, sicker patients. CMS issued guidance last month advising insurers that compliance reviews will scrutinize marketing practices  and benefit designs that deter less healthy individuals from purchasing a plan.  

Yet, that's just what occurs with plans that place whole classes of necessary medicines in the specialty tier with high coinsurance, said Carl Schmid of The AIDS Institute, who urged CMS to do more to halt such tactics. If there's no enforcement now, he queried, "who will stop the 'good' plans this year from becoming 'bad plans' next year?"  

Broader changes in pharmacy benefit design are needed, observed Jim Robinson, president of Astellas US. He recalled that tiered benefit plans gained traction under Medicare Part D, along with the $600 price definition for specialty drugs. He and others want to see that threshold revised upward, and co-pays replace coinsurance for pricey therapies. 

Higher cost-sharing also puts pressure on pharma companies to maintain drug co-pay assistance programs, long sponsored by marketers to help low-income and uninsured patients obtain brand medicines. While co-pay vouchers and coupons are accepted by commercial plans, they are considered "kickbacks" to prescribers under government-funded programs such as Medicare and Medicaid.  

Pharma companies may channel patient support through non-profits that independently dispense the assistance to needy individuals. But uncertainty about whether CMS considers plans sold on exchanges as "federal plans" that cannot accept industry financial assistance has prompted some manufacturers to hold off on co-pay assistance for ACA beneficiaries; other firms continue to offer co-pay support pending a clear CMS ruling that this is illegal.  

Meanwhile, pharmacy benefit managers (PBMs) and insurers seek new strategies for controlling outlays for specialty meds, which are expected to reach $235 billion by 2018, according to a new report by Milliman for CVS Caremark. The analysts propose that insurers shift prescription drug coverage from medical to pharmacy benefits, which can better utilize formulary tiers and utilization management to control costs. Savings close to 20% would come from revising reimbursement strategies for certain self-administered drugs obtained from pharmacies, as opposed to doctors' offices. Such a shift, though, runs counter to pharma efforts to highlight how outlays for medications can reduce overall healthcare spending—and provide value to the healthcare system. 

correspondent. She can be reached at 					

Articles

Column

Despite provisions in the Affordable Care Act that require qualified health plans to cover 'basic' benefits, access to prescription drugs may be limited by high out-of-pocket costs and tight pharmacy management strategies.

Reimbursement Limits Threaten Drug Access

The pharmaceutical industry in Asia is gearing up to be at the center of the global market—and most expect that the shift has already started. A survey by  PwC shows that 55% of MNCs and 62% of domestic companies believe that the center of gravity of global pharma will be in Asia rather than the Americas or Europe. Asia could well become the biggest pharmaceutical market and will look radically different in the medium-term. 

Asia has its own set of challenges and risks and demands a "whole new strategy approach" for all emerging markets to compensate for the internal factors of MNCs that can limit their success. These challenges include intellectual property rights, corruption, reputation, regulated pricing pressures, affordability, and lack of knowledge of the local business environment and culture. Generic and domestic companies, meanwhile, have been performing well in the same environment. 

In the last three decades, MNCs have contributed greatly to the transfer of knowledge to generic companies in areas such as technology, marketing know-how, working methods, management techniques, R&D, and branding. However, now is the time that MNCs can also learn significantly from generic companies amid the changing global industry landscape. This evolution has enabled generic companies to outpace MNCs' performance in most emerging markets, including Asia.  			

What can MNCs learn from generic companies?

There are 13 important lessons that pharma MNCs can learn from generic companies when planning and designing their strategies in emerging markets in Asia and other regions. 

 MNCs should analyze the market needs and understand the local dynamics, rather than rely solely on their indigenous pipeline and wait for headquarters to feed new products.   

 Every market has its own set of disease burden, which may not be answered by an MNC's indigenous pipeline. The product portfolio can be designed in such a way to address the local disease profile, and MNCs may introduce off-patent products  to address the unmet treatment solutions. 

 Various markets may have a different market share for each anatomical therapeutic chemical (ATC) classification, but, generally, more than 85% of market share remains within the top ten ATCs. Similar to generic companies, MNCs should have no limitation in introducing products in all ten ATCs, rather than limiting them to an inherent strong foothold of product options,  which may not be significant in different markets. 

The majority of  MNCs believe that the industry is failing to fully grasp the potential of outsourcing and, thus, are missing opportunities. According to the PwC survey, 56% of companies agree that organizations do not view outsourcing in a dynamic way. Nevertheless, today, a majority of companies are willing to outsource R&D, clinical trials, and manufacturing—with suitable controls and good partnership selection  to counter the risks of outsourcing. The major benefits of outsourcing can be low-cost manufacturing and capacity optimization, allowing MNCs to focus on branding, sales, and marketing. 

» Flexible management method and localized decision-making processes:

 It's unavoidable that the bigger  a company's hierarchical management in different regions, the longer it takes to get approval from headquarters on certain decisions. A delegated decision-making process (within a broader strategy frame) can help pharma MNCs  expedite "speed to the market," which is paramount in emerging markets, and especially in generics.  

 Shrinking pipelines at MNCs, pricing pressure, and ever-upgrading regulatory regimes have created a space for MNCs to introduce products in areas such as healthcare, consumer, personal care, dietary supplements, and phytopharma, among others. And to do so the way domestic generic companies have successfully done in bringing alternative solutions to patients, as a clear shift is being observed from chemical products to more natural options. Today, natural products are available in standardized forms, manufactured in a pharmaceutical framework mode, and are clinically supported. Hence, the same learning curve in the pharmaceutical business can also be used for alternative medicine brands. 

» Hiring professionals from generic companies:

 Generic business is largely driven by training and by mindset. Professionals at MNCs are best prepared for proprietary, innovative "new-to-market" products. Therefore, in order to excel in generics marketing, MNCs should recruit more professionals from leading generic companies in hopes of bringing in those elements best suited to the generics business. 

 Due to limitations of proprietary products, sales and marketing teams at MNCs typically visit a large number of physicians, but often only  focusing on one or two products. Thus, there is great need to engage physicians on a larger number of products, creating a deeper product portfolio in each therapeutic category. In addition, off-patent products can generate value in terms of business, physicians' trust, and in optimizing the selling cost. 

 An integrated and well-executed multi-channel approach can help accelerate the effectiveness of an MNC's sales force. MNCs should consider leveraging non-traditional channels that go beyond the individual sales rep. Similarly, MNCs should create a channel to safeguard prescriptions at the pharmacy level to help their brands avoid being substituted with brands of domestic companies solely on the basis of price.  

 Stakeholders' interest will remain a prime factor in how companies form business models and strategies that deliver the best ROI. This, however, should not mean underestimating the unmet medical needs of patients in a given market condition and the existing gaps in treatment options. 

 Studies have identified that country of origin (COO) cue can be a big competitive advantage for corporations operating on a global scale. MNCs should leverage the COO factor when introducing generic product portfolios, and ensure that the highest quality standards  of their organization are applied in all business processes. There is a need for precaution as well in this approach. Due to political or other specific reasons, using COO can sometimes be counterproductive and will upset entrenched domestic competitive interests. 

The ability to accelerate a company's "go-to-market" capability can be improved if multi-channel bureaucratic hurdles can be addressed effectively and efficiently, a challenge regulatory staff must master.  

» Stand brave against domestic companies:

 Without ignoring the fact that domestic companies have a unique set of capabilities in the emerging markets setting, MNCs should, nevertheless, stand brave against domestic companies, leveraging their own set of capabilities, skills, reputational assets, quality connections, and global product knowledge. It is time to "thrive" rather than just "survive." 

Branded generics in emerging markets present a viable avenue for potential growth for big Pharma companies, but MNCs must also understand the often-unique challenges they face in pursuing these opportunities. The window of opportunity may not remain open for long; therefore, MNCs should consider exploring a combination of strategies to prevail. 

 is Director of Business Development at PharmEvo Pvt. Ltd. He can be reached at 

MNCs can learn a lot from generic companies in their strategic approaches to emerging markets.

Gravity Shift: What MNCs Can Learn from Generics

's Brand of the Year selections from the last few years are still alive and kicking, although some have aged more gracefully than others. Combined, PE's picks pulled in nearly $30 billion in 2013, which complicates the oft-repeated notion that the blockbuster drug era has come to an end. Patent expiry isn't even the end for some biologics and other complicated products in the US, given the challenging regulatory environment for biosimilars. The US drug pricing wars may be coming, but these products already made their mint. We checked back in with them to see how things are going, and to look for indicators about their future prospects. 

Status Update: Pharm Exec’s Brands of the Year, 2008-2013			

Last spring, FDA launched a review of incretin mimetic drugs, including 

, following published research suggesting the possibility of increased pancreatitis. Although FDA said patients should continue on therapy, and didn't ultimately add new safety information to Januvia's label, the publicity may have been partly responsible for the small decline in revenues. That and the launch of J&J's Invokana, the first of a new class of drugs called SGLT2s. Another SGLT2, Farxiga, went live in January. 

brought in more sales revenue than any other brand. Abbvie, Humira's parent after the Abbott Laboratories divorce, will continue to pursue additional indications for the product; currently, Humira is being tested in a pivotal Phase 3 trial for fingernail psoriasis in patients with moderate-to-severe plaque psoriasis. In the first quarter of 2014, Humira earned $2.6 billion, more than half of that sum arriving from markets outside the US.  

 nearly $2 billion in sales last year aren't as strong as some analysts initially thought they'd be by now, due to a combination of cardio-related safety concerns and competition in the category. A patient death spooked physicians and regulators, even though FDA found nothing conclusive linking Gilenya to patient deaths. On the competitive side, Biogen Idec priced its Tecfidera product, another oral medication, just below Gilenya when it was approved last year. But Gilenya looks like it's headed in the right direction. 

The release of Medicare payments made to doctors last month caused a minor imbroglio that, among other things, demonized ophthalmologists for prescribing Lucentis instead of 

 for wet macular degeneration. Avastin isn't FDA approved for that use, but studies point to similar efficacy rates, and Avastin is available at a much lower cost than Lucentis. That may seem like a positive development for Avastin, but it's actually a net negative; Genentech (which markets both drugs) will face more criticism over its maneuvering with Avastin and Lucentis, a money game without much regard for patients or costs to the healthcare system.  

Probably the last of the blockbuster statins, 

 has had a pretty good run, considering it was late to the party. AstraZeneca was able to extend its patent on Crestor in the US, until 2016, but had less luck in other countries, where it's already available in generic form. But Crestor is hanging in there, and grew sales to $1.3 billion in the first quarter of 2014, a 2% increase from the first quarter of 2013. 

 has become something of a pop culture nightmare,  due to the strange and occasionally violent behavior sometimes seen in patients who take the drug. There's now a "Chantix defense" in court, most recently deployed by Tim Danielson, who allegedly murdered his ex-wife. Pfizer said blood tests show Danielson didn't have Chantix in his system at the time of the murder, but Danielson says the drug's side effects, including depression, played a role in the crime. 

We check back with previous Pharm Exec Brand of the Year winners to see how things are going.

The Brands of Yesteryear: Where Are They Now?

Even though Africa boasts a fifth of the world's population, it only accounts for 3% of the world's foreign direct investment (FDI). Corrupt governments, the legacies of colonization, coup d'états, civil wars, bad governance and unfortunate natural disasters have all conspired to hinder Africa's growth, whilst the rest of the world marched on. 

But in the last decade, things suddenly began to change. Improved governance, better market-friendly policies, the decline of civil wars, as well as the establishment of democracy began to yield accelerating economic stability and growth. 

In telecommunications, Africa has more people connected to a mobile network than the whole of Europe; economic growth, though not quite the 7% needed to achieve the Millennium Development Goals (MDGs) set by the World Health Organization in 2000, was relatively close at 5–6% in the last decade, according to a report by the Commission for Africa in 2010. 

According to the World Bank, 60 million Africans earn over $3,000 per year, a figure set to reach 100 million by 2015. The consumption of Africa's households has grown by $275 billion in the last decade, similar to Brazil, and higher than India (see Figure 1). 

Figure 1: Distribution of the African population by income (including remittances)			

The February 2013 edition of the African Business newsmagazine stated that if current growth continues, by 2050 roughly 300 million Nigerians will enjoy an average income of $10,000 with a GDP of $3 trillion, similar to Germany today. 

				Africa's economic output has almost tripled in the last ten years; more wealth has been created in Africa in the last decade than any other time in its history, writes Evelyn Mhango, an economist in the "Fastest Billion."			

The reasons for this explosive growth are manifold: 

» Improved government policies have increased the scope for the private sector to grow, and have created the low-debt, low-inflation, much improved macro-conditions that have enabled this growth. 

» According to Ernst & Young's (EY) African Attractiveness Survey, the strengthening of regulatory and legal systems, privatization of public enterprises and the opening up of economies to international trade have led to the quintupling of exports, record inflows of FDI and a doubling of per capita GDP. 

» Increased democracy and the sharp decline of civil wars. 

, lists eight megatrends that have driven Africa's current and future economic realities: population growth and demographic shifts; cultural revolutions; rapid urbanization; commercialization of essential services such as healthcare; deregulation and liberalization; growth of credit; capital market development; and consolidation and evolution of intra-African markets. 

» The recent debt relief through the IMF/World Bank Highly Indebted Poor Countries Initiative (HIPC) have enabled African countries to divert much-needed funds earmarked for debt repayments into health, education and infrastructure.  

 magazine (December 3, 2012), business increasingly dominates foreign investment in Africa. Investment first outpaced aid in 2006, and now doubles it. This growth was, contrary to popular belief, spread across various sectors. 

Healthcare outcomes in sub-Saharan Africa remain the worst in the world. Even though its population is around 11% of the world's total, it bears a quarter of the global disease burden; less than 1% of the global health expenditure is spent here, and it has just 3% of the world's health professionals. 

Infectious and parasitic diseases form the bulk (42.4%) of the disease burden in Africa, but this is rapidly being compounded by the sharp rise of NCDs, particularly diabetes, chronic respiratory diseases, cancers and cardiovascular diseases. 

A major problem is the sorry state of the majority of Africa's public health systems. Billions of aid spent on improving Africa's health systems has yielded poor results. Health systems are grossly understaffed, have crumbling and decaying infrastructure and are short on medical supplies. In addition, being built, equipped and trained to handle mainly parasitic and infectious diseases, Africa's health systems are ill-prepared for this extra epidemic of NCDs. 

Mark Swai, former hospital director of the Kilimanjaro Christian Medical Centre, talking to 

in 2013, said "the beds of our new HIV/AIDS were filled with HIV patients whose diseases were not under control. Since the introduction of affordable anti-retroviral drugs that decreased the disease burden, those beds are now filled with diabetes ­patients." 

Due to these chronic problems, most Africans flock to the private sector, not through choice but because in most cases, it remains the only option. 

But the private sector is also bedevilled with its own serious issues; poor managerial competency and regulatory oversight mean that prices for essential drugs cost hundreds more than the trade costs, services are poor, staff are badly trained with questionable ethics, the sector is plagued with excessive fragmentation, and medicines are either poor quality, expired or counterfeited.  

The problems listed above, though posing huge issues, point to a low-hanging-fruit market that is ripe for innovative disruption and presents huge opportunities. 

Faster economic growth signals that the healthcare market is sure to grow; the International Finance Corporation estimates that the pharmaceutical market will expand to $35 billion by 2016, and $40 billion in 2020, surpassing the UK. Spending on healthcare has increased by a compound annual growth rate of 9.6% since 2000. This demand for better healthcare presents several different bankable opportunities (see Figure 2). 

Figure 2: Breakdown of private health investment opportunities in sub-Saharan Africa, 2007-2016 %, $ million (11,300-20,300)			

The IFC estimates that $25-30 billion in new investments will be needed to meet the demand for medical care between now and 2016, of which up to 40% is expected to come from the private sector; Robertson, writing in 

 expects a real increase of 72% in health expenditure through 2020.  			

Investing in healthcare also makes financial sense; in stark contrast to the 9.6% CAGR in the African healthcare sector from 2000, the healthcare, drug retailing, and pharmaceutical market growth were all in the six-worst performing sectors in the Financial Times Share Exchange (FTSE) 350 in 2012 (see Table 1). 

Table 1: FTSE sector performances, the six worst performers in 2012			

However, private investment into the healthcare sector in Africa has been strikingly low: 

» EY's African Attractiveness survey revealed that, of the $587 billion of FDI that Africa attracted in 2011, only 1% went to healthcare projects. 

» In one of McKinsey's often-quoted studies on Africa, "Lions on the Move (2010)," healthcare is not in the top 12 sectors for attracting investment. 

» According to an EY study, of private equity in Africa, healthcare accounted for only 5% of exits by sector; even though 70% of FDI was in the services sector, healthcare did not even make the top ten. 

 (2012), healthcare does not feature in the listings of the sectors most attractive for investment. 

The five determinants of FDI in healthcare in sub-Saharan Africa

 (2009), the low-hanging fruit—or the elite (Africa One)—is the target of most private for-profit healthcare investments in sub-Saharan Africa. These models tend to be fragmented with minimal capitalization and are non-scalable, putting them beyond the reach of the middle class (Africa Two), where the real per capita growth is taking place (see Table 2). 

Table 2: The potential of Africa’s elite, middle class, and poor			

Lack of properly developed affordable health insurance schemes also compounds the affordability problem, further worsening the ability of Africans to pay for healthcare treatment. 

. The issue of tangibility as a determinant of FDI into healthcare can be divided into three areas: 

» Lack of data: African healthcare data is at best fragmented, unreliable and vertical, hence, increasing risk and, therefore, unappealing to investors. 

» Healthcare infrastructure and uncertainty of demand: Healthcare investing involves huge sunk costs; the issue of affordability leads to uncertainty of demand, which in turn discourages high-level investment. 

» Lack of tangibility: Healthcare is an intangible asset, which cannot be measured, unlike a mobile phone or FMCGs. 

. The issue of "brain drain" has been one of the most problematic areas in healthcare in Africa. As a result, partly at least, sub-Saharan Africa has the lowest availability of qualified medical resources in the world. 

. Dr. Ernest Darkoh, founding partner of Broadreach Healthcare, an African-based healthcare consultancy, bemoans the "perception of risk putting many investors off making major investments in healthcare in Africa despite the good opportunities available." 

Aside from the general perceived and actual risks in investing in Africa, political risks and instability also tend to affect the healthcare sector more disproportionately compared to other sectors due to healthcare provision being perceived as a right, not an option, by most African countries. 

Linked to political risks are regulatory risks—government resistance to reforms, an inadequate and discriminatory regulatory structure, continued threats of strike action by healthcare professionals, and the reluctance to privatize public systems. The availability of cheap money in the form of aid is also a massive put off for potential for-profit investors. 

. Governments and host countries may need to promote and market healthcare more vigorously to attract increased FDI into the sector. However, any marketing strategy must be backed up by advantageous location-specific advantages on the ground. The most critical factors facilitating healthcare FDI in Africa are market openness, good quality government institutions, regulation harmonization and a good regulatory environment. 

Many first-time investors into healthcare in Africa have had bad experiences, and, thus, have now become very tentative. To enter an African market, it is vital to choose the right country, the right risk profile, and the right model. This necessitates a lot of research work and market analysis. Alliances with domestic African healthcare businesses may increase penetration efficiency and decrease risk. 

Features

Driven by a rising GDP and calmer political and financial waters over the past decade, Africa's nascent healthcare sector is poised for a fresh surge in growth.

Africa: The Lost Continent No More

 has entered a new phase, with three of the largest companies—Novartis, GSK and Lilly—engaging in a mutually beneficial set of asset swaps that align around a new strategic thesis: specialization and value differentiation are preferable to sheer bulk. Even what appears as a return to the old form of wholesale takeover—Pfizer's prospective $100 billion acquisition of AstraZeneca—is being sold as a safer way to get small, with the combined assets helping to fuel Pfizer's eventual breakup into two separate companies, one focused on innovative drugs and vaccines and the other on established, off-patent products. If this latter deal is consummated in a friendly manner, it will confirm a larger trend toward a step down from the bitter rivalries that once made any form of collaborative transaction unthinkable among the big Pharma players. 

But the peace may be temporal, because another aspect of the current resurgence in deal making is the arrival of the hedge fund investor. These are activists who have discovered in pharmaceuticals a set of conditions that permit disruptive innovations of a purely financial nature. Their notion of partnering is stripping out the industry's high fixed costs through tax and accounting manipulations that display a fine knowledge of the ineptitude of regulators and politicians but little about the science that—in their vision—takes forever to deliver the goods.   Because drugs are a "public good," some observers claim there are moral implications to the relentlessly short investment horizons of this class of financier influentials. If medical progress requires long lead times and lots of up-front money, is a hedge fund really going to wager what amounts to a non-quantifiable bet on the future? 

Late last month, just as the deal maker master class struck pedal to the metal, 

 retreated to a race track just north of Silicon Valley to consider the state of M&A with our thought leadership partner, Campbell Alliance, and 15 business development experts from pharmaceuticals, biotech, VC and the patient community.  Like everything in California, the Roundtable discussion was both insular and worldly, with a fine appreciation of how today's business performance targets keep moving.  It's all about the need for speed, with faster starts, more and longer laps—and no flag at the finish line.  

Here are some of the meeting's main takeaways: 

Higher market valuations are shifting the traditional trajectory of deals. 

Smaller biotechs are more confident about commercializing their "first born" product assets themselves rather than relying on a buy-out from the deeper pockets of big Pharma.  The big players still tend to be conservative on due diligence, so risk-mitigating instruments like earn outs and contingent value rights are becoming even more important as a competitive differentiator, if and when a biotech decides to move a deal forward. 

Big pharma interest is moving to early-stage from mid to late-stage assets. 

Nevertheless, buyers want a well-established proof of concept and a distinctive compelling value proposition, along with bullet proof protection of IP rights. According to Campbell Alliance survey data, oncology remains the default therapeutic area of choice for deal makers, for the third consecutive year.  

Venture capital is still wary of committing new funds to support the long lead times demanded in the pharma and biotech space. 

Private VCs have faster alternative ways to realize a good return, which means much of this money is not coming back.  Government funding for basic research is also shrinking. New streams of money—from corporate (i.e., Google's Calico) and philanthropic foundations; high net worth individuals; crowd-sourcing, through the federal JOBS Act; and professional disease associations—are unlikely to bridge the gap. It was agreed that in-house corporate VC units could do more, and should in any case raise their visibility and tolerance for risk.  

Industry hasn't solved its messaging problems—few stakeholder influentials nor does the general public believe this is an industry of high costs and big risks. 

Strong margins for protected products and enormous cash flow must be counter-argued and measured against high development failure rates, declining periods of exclusivity and stiffer evidence-to-outcomes hurdles on pricing. Payers are beginning to coalesce around activist-style pressure campaigns designed to lower the price bar for next-in-class entry products, representing a significant threat to incremental innovation. When combined with the steep drop in financing for early stage discovery, the drag on future medical progress is clear. 

Look for our take on the Roundtable in next month's 

. Until then, as those deals proliferate and CEOs bask as kingmakers on the front pages of the financial press, it's best to keep your—very dry—eye on the science. 

From the Editor

Recent deal making signals that the rehabilitation of big Pharma has entered a new phase aligned around a new strategic thesis, writes Pharm Exec Editor-in-Chief William Looney.

What's Real in Deals

 award is itself a brand with staying power—our first recipient was Merck's Gardasil papillomavirus vaccine, which eight years later is still going strong as one of the company's 10 top-selling products. This year's winner, Teva's Copaxone, also pins the needle on the long tail, at 17 years on the market with an equally durable safety profile against its nemesis, the elusive autoimmune disease multiple sclerosis. But lest we be accused of being safely predictable, this year Pharm Exec decided to focus, too, on clinical and marketing achievement for an orphan-status rare disease drug, calling out Bay area start-up Corcept Therapeutics' initiative in repurposing an old drug, mifepristone, for a new indication as the first treatment for Cushing's syndrome, a disabling metabolic disorder that is habitually underdiagnosed. Corcept's KORLYM carries larger potential as the test launch for a new class of medicines to address how the "fight or flight" hormone, cortisol, works as a precursor to many chronic life-threatening conditions that affect millions of patients outside the rare disease space. It's literally a new way to think about disease. — William Looney, Editor-in-Chief

The first prescriptions for Teva's Copaxone were written in the spring of 1997, with peak sales estimated at $250 million. Seventeen years and many billions of dollars later, Teva has returned for an encore with the approval of a newly-formulated Copaxone touting fewer injections, just in time to upstage the potential entrance of generic competition this summer. 

Specialty drugs for the treatment of chronic disease, along with orphan drugs for rare conditions, are the two most popular areas of biopharmaceutical R&D activity for one obvious reason—optimal return on investment. In the case of chronic diseases, companies turn patients into walking annuities toting a prescription that needs to be filled and refilled perpetually, with a caveat: it's hard to know how a drug will perform for patients 10 or 20 years later, in the real world. Products age along with the patients who take them, sometimes with unexpected results.  			

Copaxone (glatiramer acetate injection), Israel-based Teva's multiple sclerosis drug and a once unlikely blockbuster, was chosen by 

 as one of this year's two Brand of the Year awards for its consistent success in this context. Copaxone has been on the market for 17 years, with virtually no serious side effects emerging during that time. According to John Hassler, Teva's VP of marketing for neuroscience, Copaxone is the "market leading therapy for relapsing-remitting forms of multiple sclerosis, with over 40% more total prescription volume than the next closest competitor."  

About 35% of all patients taking a drug for MS take Copaxone, or roughly 85,000 patients, adds Mike Derkacz, VP and general manager of Teva's CNS unit. Derkacz held the same title at Cephalon prior to Teva's acquisition of that company in 2011.  

Teva has continued to improve the Copaxone brand experience for patients over time, from a new injection device to engaging patients online and off. The company hosted an early online MS patient community—

—"long before the term 'social media' was coined," says Hassler. Shared Solutions, now a part of Teva, made nurses available to patients around the clock beginning in 1997, when Copaxone launched. Shared Solutions, a gold standard in the category, is open to all MS patients, regardless of therapy.  

In January, Teva received approval for a new 40mg version of Copaxone that reduces the number of injections from seven a week, to three. Despite the recent Supreme Court decision on Copaxone's patent—which opens the door to potential generic competition as soon as this month—Teva has already recorded strong results from the newly-formulated 40mg version. Seven weeks into the launch, Copaxone 40mg became the most prescribed treatment in terms of new prescriptions for patients with relapsing-remitting MS, the most common form of the disease, and has remained at the top since then, the company says. 

Despite competing with at least a half-dozen newer disease-modifying agents for the treatment of MS, some of them oral formulations, Copaxone still managed to lead the category in 2013, with global sales topping $4.3 billion.  

Multiple sclerosis, a chronic and potentially debilitating disease, affects some 450,000 people in the US, and over two million lives globally. Symptoms occur due to an autoimmune attack on nerve fibers in the brain and spinal cord, which can damage the protective myelin coating and lead to scarring and nerve damage. As with most autoimmune diseases, the causes of MS aren't well understood; an inflammatory response in the body can be as harmful as it is helpful, and no one is sure exactly what triggers an appearance of Mr. Hyde from the typically Jekyllian, and protective, human immune system.  			

As a result, MS can feel to otherwise young and healthy patients like it has fallen, unduly, from a clear blue sky. The effects of nerve demyelination present in many different ways, from subtle pain or blurry vision, to an inability to stand or speak, with a host of other problems in between. Symptoms—in the case of patients with relapsing-remitting MS—can suddenly dissipate into thin air as quickly as they arrived, only to reconstitute days, months, or even years later. Not knowing when or to what degree the symptoms will return can be a nightmarish predicament for MS patients, akin to cancer patients in remission long enough to almost forget they had the disease. 

The unpredictable progression of MS (along with the failure of available drugs to halt it) is maybe the worst aspect of the disease. Does waking up with stiffness or numb legs indicate a new MS exacerbation, or is it simply due to an especially vigorous exercise effort the day before? When only time can tell, the clock and calendar become sinister partners in an unwelcome alliance; MS patients, a population that skews toward but isn't limited to women in the prime of their lives, can't afford to sit around and wait for what may or may not happen next.  

That's why disease awareness is critical, says Melyssa Weible, president of Rx Mosaic Health, a New York-based "specialty-only" PR shop under the Omnicom umbrella. Rx Mosaic has worked on Copaxone for nine years. "When we started working with Teva, MS wasn't oncology, it wasn't being mentioned every day in the news," says Weible. "That's no longer the case."  			

MS is at least two to three times more common in women than men, and possibly more than that, according to the National Multiple Sclerosis Society (NMSS). But Teva's celebrity faces of the disease are men: country music star Clay Walker, and Jack Osbourne, a media personality and the son of Black Sabbath front man Ozzy Osbourne. 

Jack Osbourne’s documentary-style webisodes offer a candid view of life with MS. 

Both men have worked with Teva on disease awareness initiatives—Clay Walker has taken Copaxone for 15 years, says Teva—and Jack Osbourne's surprise diagnosis two summers ago led to a series of candid online webisodes about living with MS, and the misconceptions people have about the disease. 

Teva’s patient switch campaign, seen here in a People magazine cover buy, emphasizes the "freedom" of convenience.

"You Don't Know Jack About MS," the joint project sponsored by Teva and created by Osbourne's production company, Schweet Entertainment, debuted last December. Teva also donated $100,000 to the NMSS in recognition of Osbourne's work as an MS advocate and his participation on "Dancing with the Stars," a reality TV program. The webisodes, available at 

, feature Osbourne as man on the street, attending a MS patient gathering, and managing family life with a young daughter. Weible says the decision to go with documentary-style webisodes is a reflection of Osbourne's persona and interests. "We wanted to maintain the authenticity that comes with him...he's a reality TV star," says Weible.  			

During a webisode titled "Many Symptoms," Osbourne and five other patients recount the stories of their first symptoms and diagnosis. The individual experiences vary dramatically, reminding one of the patients of a quote from a physician: "Once you've seen one case of MS, you've seen one case of MS." Osbourne, for example, first visited the doctor due to the sudden onset of blindness in his right eye. Another patient felt an extreme numbness in his leg, and, after attempting to walk it off for 17 minutes, couldn't walk anymore. This discrepancy in the initial symptoms of MS can make an early diagnosis difficult. Osbourne was diagnosed with MS a year and half after his first symptoms emerged, he says. 

Clay Walker was diagnosed in 1996, at the age of 26, after experiencing symptoms, including tingling, numbness, and facial spasms. A long-time Copaxone user, Walker has remained active in promoting disease awareness and education. Ten years ago, Walker founded a charity called Band Against MS, and has continued to speak out on behalf of MS patients, and to hold fundraising events. In March 2013, Band Against MS and Teva worked together for a public service announcement campaign intended to remind patients about the importance of adhering to their medications. Titled "Stick With It"—in reference to the daily injections most patients must give themselves—the campaign launched a Facebook page and Teva agreed to make a $1 donation for every "like," up to $25,000. 

Since Copaxone is the most prescribed and best-selling MS drug on the market, it makes sense for Teva to invest in non-branded, educational campaigns. After all, if most new patients get a prescription for Copaxone, making more people aware of the symptoms, and the importance of treatment, means more prescriptions and sales. Weible says the goal of the celebrity campaigns is to "share the patient experience with newly-diagnosed patients who may feel isolated, or for patients who have MS and have been treating it for a while," she says. "Dealing with a chronic condition can be isolating and lonely, and patients want to hear from a 'patient like me,' a real-life story," she says.  			

Teva and Rx Mosaic assisted in hosting a Twitter conference on March 14, 2012, in partnership with the NMSS. "I think we were the first people to ever do a Twitter conference for an ethical healthcare product," says Weible. "We connected a doctor (Dr. Gabriel Pardo, @DocforMS), Clay Walker, and MS patients, and they were able to ask questions in real-time...we were thrilled with the amount of people that participated." The Twitter conference wasn't Copaxone-branded, but participants asked Dr. Pardo questions about Copaxone and several other MS products. It's hard to tell from Twitter how many people participated, and Walker (@ClayWalker) did tweet a link to Copaxone's product information at the conclusion of the one-hour event. The conference hasn't been repeated since, but it exists online as proof that pharma can engage patients using social media channels like Facebook and Twitter.  

Long before Dr. Pardo and Walker took to Twitter, Teva and InTouch Solutions, a Kansas-based digital marketing agency, launched 

. The site functioned as a resource and community for patients living with MS. Matthew Goyer, VP of client services at InTouch, said patients signing up on 

 "not only had the ability to interact with the content provided by Teva—all the tips and suggestions and everything else to help manage their MS—but there were also methodologies where they could interact with each other through the patient forum."  

Asked why the platform was discontinued—it lives on in Canada, in limited form, at 

—Teva's Hassler says the company is "proud to have been an innovator in developing this online community," but "as the social media landscape evolved, it enabled the MS community to expand the conversation beyond industry platforms." 

The patient section of the Canadian site, dubbed MS Oasis, bills itself as a "safe place for the patients and caregivers in the MS community to log treatment and connect with one another." Individuals registering on the website are asked to choose a bird avatar, and then "perch in the tree where you can find resources in the birdhouses and check in on fellow Sanctuary members." There's also a rewards system where visitors "can earn badges just by keeping up with appointments and therapy." 

 visited the site, seven "birds" were chirping in the sanctuary, ostensibly meaning seven people were logged in. Unless users create a therapy journal, there doesn't appear to be a way to communicate directly other than to "chirp" at someone else, similar to liking them on Facebook. Of the birds in the sanctuary when 

arrived, none were reachable beyond a chirp. 

Teva's Derkacz says Copaxone participates in all of the standard digital marketing channels, including CRM and database marketing, search optimization, display towers and banners, rich media, et cetera, but emphasizes that digital is not a silver bullet. "We're not taking a big gamble on one new innovative idea...we're making sure that we surround the patient and physician with what Copaxone is and what it can do," says Derkacz. "Let them pick the channel and the content they want to consume at the time they want to consume it." 

The iTracker app lets patients record injection sites to aid in proper rotation.

Teva's Copaxone iTracker app, which anyone can download for free from the iTunes and Android stores, helps patients manage the injection routine—it's important to rotate the injection site—as well as set therapy reminders and receive prescription refill alerts, among other things. Derkacz says the wow factor for a prescription drug companion app is gone—"almost everyone's got an app"—but says iTracker "has been very well received by patients."  

In April, Teva and Intouch launched a new "webTracker" tool which Goyer says is complimentary to iTracker, in that it allows patients who register with Shared Solutions to login to webTracker and track "not just their injections but their overall feeling of well-being and current state of health." The webTracker tool helps patients figure out what to do if they forget a dose or use the wrong injection site, says Goyer. "We developed an algorithm, approved by Teva's regulatory staff, that automatically provides the next step for the patient," he says. "It's a tool that's a lot smarter than the tools have been in the past."  

On the physician side, Intouch partnered with Harrison & Star, Teva's professional and direct-to-patient agency, for content and sales messaging materials used by sales reps in the field. Those materials are "all in a digital format and available to reps on the iPad," says Goyer. Mardene Miller, president at H&S, says the physician audience for MS—primarily neurologists—are "more the cerebral type," which seems fitting. "They're also very practical in terms of their clinical view, and they're very patient-oriented," says Miller. Teva fields a team of roughly 200 reps servicing around 7,000 neurologists in the US, says Hassler.   

For the Copaxone 40mg launch, H&S developed new creative for both physicians and patients aimed at "reinforcing the overall Copaxone brand promise of trust and experience," says Kathleen Murphy, SVP, group account supervisor at H&S. "Coming soon" ads launched last October, three months prior to approval. The MS community is an active one, says Murphy, and they engage in a variety of digital channels. "But I don't want to underestimate the importance of the personal touch that Shared Solutions has with patients," she says.  

Not everyone with a question about MS wants to address it to a screen or an algorithm. In preparation for the Copaxone 40mg launch in January, Teva hired an additional 100 people to work in the company's Shared Solutions group, and also added sales reps at a time when other parts of the company are shedding positions.  

Shared Solutions was originally an independent third party patient services company, based in Kansas City. Teva acquired the group in 2002, and every executive interviewed for this article—internally and externally — pointed to Shared Solutions as a critical component of Copaxone's success. Anyone with MS, not just Copaxone patients, can use Shared Services free of charge.  

"The key, I think, in the launch and success throughout the 17-year history of Copaxone has been Shared Solutions," says Derkacz. Shared Solutions is focused on three areas: assisting patients in getting access to therapy; providing one-to-one injection training to make sure patients have the best experience possible; and promoting adherence.  

Shared Solutions has a call center component, where registered nurses answer inbound calls on a 24/7 basis, and also make outbound calls to patients who have signed up to receive them. There's also a field component, where nurses provide injection training at the doctor's office. Derkacz says physicians really appreciate this service. "They don't have the time or resources to do all of this training and hand-holding and educating that we can do for the patient [through Shared Solutions]," he says. 

Patients like it, too. Derkacz and Nancy Leone, communications director at Teva, say patients form relationships with the nurses at Shared Solutions, sometimes over years on therapy. Teva has staged meetings at headquarters between patients and nurses who have bonded through Shared Solutions, to dramatic result, says Leone.  

Patients are connected with Shared Solutions when they receive the first Copaxone prescription, and the group makes sure there aren't any hiccups in timely access to the drug. Shared Solutions is supporting the campaign to switch Copaxone users to the new formulation by answering questions, and placing calls, to patients who've opted in to the program, says Hassler.   

Copaxone enjoys "the best formulary positioning across the entire category, meaning that we have the least number of NDC blocks," says Derkacz. "You're talking 98% open access to this product." Teva offers a $0 copay option for eligible patients, as well as other kinds of qualified financial assistance. Asked about the CMS reversal and decision not to block copay assistance from drugmakers under Medicare plans, Derkacz said it was the right decision."We know that high co-pays have a negative impact on patient adherence...co-pay assistance can help achieve improved outcomes," he says. 

Pharm Exec's Brand of the Year recipients for 2014 are multiple sclerosis treatment Copaxone and KORLYM for diseases driven by excess production of the metabolic hormone, cortisol. We profile the journey of both drugs.

2014 Brand of the Year

Pharmaceutical companies are undergoing radical changes—they are no longer solely in the compound development and brand marketing businesses. Today, they're moving more and more into the patient care business. Along with that, comes different responsibilities. 

Back in the day, the only relationship that mattered was the one between your brand and the physician. Simply put, doctors prescribed your drugs to help patients. Today, not only can doctors prescribe your brands, they can also recommend your technology. 

However, the increasing complexity of technology leads to increasing risk and greater scrutiny.  

What does this mean to Senior Directors and Franchise Leaders at pharmaceutical companies? It means that there is a need for better process and quality assurance benchmarks. 

Technology offers the promise of engaging patients on a level never seen before. The benefits of an engaged patient start with increased compliance—a great thing for pharmaceutical companies—and extend to a more active and empowered consumer of healthcare, and ultimately to better and more affordable outcomes. 

Your marketing teams and agencies have been rightly focused on developing up-to-date, innovative digital tools in order to engage healthcare providers and patients.  

However, in their rush and excitement, have they ensured the correct infrastructure and processes are in place to mitigate risk? Clearly, digital requires a new level of rigor. 

Consider this scenario: As a Senior Director and Franchise Leader, you're responsible for the successful launch of a new drug for a chronic condition. In your tactical mix, you're including a downloadable monitoring app as part of the starter kit.  

Your extended team executes what appears to be a flawless prelaunch-to-launch plan. All of the programs and tactics are successfully kicked off. 

Physicians begin writing new Rx's and handing out the starter kit. They're excited that their patients will have a digital monitoring app to go along with the new drug regimen. 

, not enough time was put into the quality assurance process during development. Problems occur as soon as patients start using the app on their mobile phones. Quickly, it becomes clear that the app needs to be discontinued.   

What was thought to be a successful launch turns into a mess when patients complain to their physicians about the poor performance of the monitoring app. 

This negative feedback leads to lost revenues, damaged relationships with healthcare professionals, and increased scrutiny of your new brand—now compromised by a technological glitch.  

And, unfortunately, you find yourself in ex-HHS Secretary Kathleen Sebelius's shoes. 

Cases like these are not atypical in today's world. Pharmaceutical executives need to think about evolving technology and be prepared for the impact when glitches happen. After all, the possibility exists that glitches may represent the same level of liability as a brand recall.  

If your digital property is riddled with errors, your target is going to have a suboptimal experience. In other words, defects erode the relationship your target has with your brand. 

Finally, when problems get big enough to make it to the boardroom, it doesn't matter how small the glitch was that occurred. The outcomes can be devastating to a brand's revenue and to how both the brand and company are perceived. Senior executives need to be more cognizant of the time and costs associated with providing appropriate quality assurance scrutiny for the development of digital communications and apps that, if not done correctly, can have a major impact on your business. 			

In October 2013, GA Communication Group and AbelsonTaylor hosted the first-ever Quality Assurance Summit for Digital Healthcare Marketing in Chicago. It brought together more than 50 senior marketing directors, QA professionals, and digital directors from some of the leading healthcare companies and advertising agencies to discuss, evaluate, and scrutinize how digital quality assurance processes are being handled by the industry. 

The summit was followed by a panel discussion at South by Southwest (SXSW) in March. At SXSW, it became very apparent that QA is no small issue; attendance and the level of participation indicate that it's a major concern shared by pharmaceutical executives and agencies alike.   

The focus of both meetings was to identify best practices for ensuring that quality assurance is an intrinsic part of the entire process. Quality assurance has to be an attribute of the process, not an afterthought. 

				This is the concept of "Shift Left."			

The principles of Shift Left state that quality assurance must be an integral part of the digital project development life-cycle—from planning to completion—and that QA must remain present even during maintenance.  

Most importantly, Shift Left states that quality assurance is the responsibility of all stakeholders: marketing, regulatory, and ad agency personnel. 

Shift Left: QA integral across digital project continuum			

The goal of Shift Left is to be more nimble, accurate and inventive when creating digital projects (see chart above). If we're looking for defects up front, we can catch them and move on. That's nimble. If we catch defects as they occur, we improve accuracy. Finally, if we're both nimble and accurate, we allow ourselves the opportunity to be more inventive—creating better communications, better interface design, and projects that benefit both our brands and our customers. 

The benefit of Shift Left is that we can now set and meet expectations for successful quality assurance across every browser, every operating system, and every device. And every brand.  

And we can be efficient, because doing it right, at the right time, is faster than finding and fixing the problems just days before launch—or worse yet, after your app launches. 

According to the American Society for Quality, "The 'cost of quality' isn't the price of creating a quality product or service. It's the cost of not creating a quality product or service." Adopting Shift Left allows you to protect brand equity, improve customer relationships, and save money, all while limiting liability. 

For more information on Shift Left and quality assurance, visit 

is VP, Executive Director, Digital Creative, AbelsonTaylor. He can be reached at 

Digital technology has changed the risk relationship between brands, HCPs, and patients – it's vital to get that technology working right the first time.