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Pharmaceutical Executive Digital Edition - June 2012

Companies using game mechanics to encourage specific patient behavior is not a new phenomenon within Big Pharma—a surprising conclusion given that the industry tends toward the walker's lane in the race to apply hard technology to the art of marketing and promotion. But the game is changing fast, driven by two major changes in the way technology can be applied to broaden the patient experience in healthcare. These are the widespread adoption of mobile devices with computer-strength processing power and graphics, and the participation of nearly everybody in one online social network or another. 

On top of that, game developers have learned how to control costs and address the issue of scale by anticipating precise needs in the market, like training reps or illuminating biological systems for physicians through simulation; targeting a condition or disease state and the already-existing behavior set of those patients; or creating an emotional response to facilitate learning around specific tasks. By building technology platforms, agencies don't have to start from scratch with each new game, which can quickly get prohibitively time consuming and expensive.  

To examine the evolution of gaming in the healthcare space—what companies are doing now, where things are going, and why—

 spoke with three gaming agency CEOs about the programs they've developed for Big Pharma clients, and their approaches in general to engaging physicians and consumers using game technology. 

Doug Seifert, CEO at Syandus, a small experiential learning agency in Exton, PA, says "learning by doing" is the most effective way to absorb complex concepts. One of Syandus's projects, created for two large pharmas that co-promote a drug for chronic obstructive pulmonary disease (COPD), is a simulation tool that lets physicians explore the disease with unprecedented interactivity. COPD is complex, and often patients—and their physicians—don't fully understand the consequences of certain behaviors. 

With the COPD simulation, physicians can control a virtual patient (which can mirror an actual patient through the insertion of medical record information), and tweak environmental variables to see how that patient might respond, on a deep physiological level. A physician can introduce a drug therapy, or even change the number of cigarettes a patient smokes per day. This kind of 

 by a physician provides a stronger knowledge of the disease, and it also facilitates a more valuable exchange during a patient consultation. 

 Syndus's COPD simulation lets physicians interact inside the disease environment. 

Specifically, physicians have used the simulations to help patients visually understand how behavior affects their health outcome. Take smoking, for example. "It's hard for a patient to really understand what's going on in their lungs, but when you go into the [simulation environment] and see a cross-section of what's happening when you breathe—here's the constriction that occurs—it helps to create a very vivid image of, 'this is where you are, and if you keep smoking it will get worse, so let me show you where it's going.' Being able to demonstrate disease progression visually is very important," says Seifert. The COPD simulation program isn't really a game per se, but it employs game technology, by allowing physicians to make choices and see the results of those choices. 

Physicians can demonstrate to patients how smoking exacerbates COPD.  

Seifert calls simulation an example of "serious games," which differ from games constructed around missions, which the player traverses through failure. "Try this over and over again and you'll eventually get it—that's not really effective from a learning perspective," says Seifert. "Casual games for learning is the 

 model; kind of fun, and you play around and learn a few things along the way, but it's not built around how can we help a learner understand this concept using this technology. That's a different twist and it's harder, but the results are spectacular." 

Speaking of results, what are the key performance metrics on a program like this? "ROI and how you measure it is always an important aspect...sometimes you can't tease out the exact lift [in prescriptions sold], and you need control groups," says Seifert. "But we can measure where the physician is, how many access the simulation, how long they were on it, where did they spend their time, how far did they go, et cetera," and then those analytics can be combined with in-house claims data and the like, to measure results.  

If these kinds of metrics get frowns from upper management, Seifert says it's important that companies understand that for complex diseases and best clinical practices, videos sometimes aren't enough. "A simulation program creates value for customers, and if you leverage it broadly, measure the results, and earn respect through providing real clinical value, then selling the brand becomes a lot easier," he says. "For these programs to be successful, they have to be positioned as part of the fabric of the company's brand strategy, not just a tactic subject to budget cycles." Seifert says the technology's "wow-factor" has staying power, citing a client that's been using one of the programs for over five years.  

To get access to the simulation, physicians receive a link and a code, which can go out in professional marketing materials (reps can hand out a "web code card," for example). The program is self-contained online so physicians can access it anywhere. Codes can also be placed in journal articles, says Seifert, underscoring the educational element.     

Seifert's philosophy on learning, which is the catalyst for behavior change, is based on the idea that "human beings are pattern recognition machines," he says. "We learn by recognizing those patterns and new experiences, and they can be virtual experiences or not. We link those patterns to our existing patterns, and that's how we learn. If you look at didactic learning—the lecture format—it's linear, and it has been demonstrated to have low retention levels. Learning by doing results in higher retention rates, because you're placed in a situation where you need to make choices to achieve a specific outcome, whether those choices are in a virtual environment or a real environment, and then you learn what patterns lead to the desired outcome. This is powerful, and it works whether you're a physician trying to do a differential diagnosis and come up with the appropriate treatment plan for a specific patient history, or if you're trying to do an analysis of the patient situation. The same holds true if it's the patient trying to improve her health. I think that's the value and attraction of this learning tool."  

From Syandus's we move to Vancouver, British Columbia, where Michael Fergusson works as CEO at Ayogo, a four-year-old shop that employs 30 people. The number of employees is important to Fergusson. His agency's work is founded on the principles of Robin Dunbar, a British anthropologist and evolutionary psychologist. In his research with primates, Dunbar concluded that the number of relationships any one gorilla (and human, implicitly) can sufficiently maintain, or "groom," in Dunbar's parlance, is finite. In short, when troops of silverback gorillas grow to a certain size in the wild, they inevitably splinter into smaller groups, because only a certain number of relationships between gorillas can be properly groomed. From this research came "Dunbar's number," which is roughly 150 (more precisely, it's 148, Fergusson notes, with 150 representing the tipping point). 

Aygoto's Tamagotchi-style game rewards kids for checking their blood sugar. In-game currency builds with desired behavior.  

Dunbar's number was popularized by the author Malcolm Gladwell to illustrate the limitations of large teams or organizations. "When a company gets to be about 150 people, it should really start thinking about being two smaller teams. Neolithic farming villages, the size of the Roman legions...these were all around 150 people," says Fergusson. There are only certain kinds of information that a person will typically share with 150 people, however, and there are other kinds of information that is only shared in smaller, intimate groups of between four and 12 people. What does all of this have to do with gamification in pharma? Potentially a lot, it turns out, if brands are interested in leveraging social connections to reinforce behavior change.  

Ayogo's business model is to partner with non-profit organizations and have a pharmaceutical sponsor underwrite the game development. That allows the games to be given to patients for free, a point of importance for Fergusson. A current project was created in partnership with the Diabetes Sisters Foundation, an advocacy group for women with diabetes, and funded by Sanofi. Called SisterMatch, the game was developed for women between the ages of 40 and 60 years old, with type 2 diabetes. "Often these women feel very isolated," says Fergusson. "Many have developed sophisticated coping skills, with good ways to manage their condition, and some others have not. What the research tells us and we accept as true is that people who have strong relationships with other people who have diabetes—strong peer groups—are more successful in staying healthy. The behavior change we want is for these women to find each other, and to exchange information about their lives and about managing their disease, and to provide each other with practical and emotional support." 

The target group for SisterMatch, unlike teenaged boys, doesn't like to fight and compete; they like to cooperate, says Fergusson. Thus, the game needed to be built around the dynamic that leads to cooperation within this group. 

As it turned out, that dynamic was the telling of embarrassing stories. "Women love to do this, you see them all standing together, and someone says, 'this really embarrassing thing happened to me.' And they all bond around it," says Fergusson. "So we built [SisterMatch], an application in the form of a quilt. It's a cooperative game, and together the objective is to build a quilt, and each square represents a story that's told by someone in the community. Others can comment on the quilt, and make connections." Squares on the quilt are the game's reward, and there are quizzes that provide additional ways of initiating new conversations. "We might also give the community a mission, for example, we want them to try going to bed earlier to see how that affects the way they feel," says Fergusson. "We could just say 'go to bed earlier,' but it's much more effective if we say, 'go to bed earlier three times this week, and then come back and tell us how it affects your sex life.' That turns out to really work."  

The game also has "an eHarmony-like personality matching system, so that when you visit your quilt, the other people's quilt squares nearby are people whose personalities most closely match yours. So you're more likely to find people you can relate to, who have similar interests, and live in similar geographies," says Fergusson. Dunbar's research helped Ayogo determine the optimal group sizes for cooperation and sharing, which is one reason the game isn't on Facebook, for example. "Facebook is not a good social network environment for transmitting behaviors of certain types," particularly when the focus is on making changes around intimate health and medical areas, according to Fergusson.  

SisterMatch facilitates social connections between senior women.  

Another game called Small Things, also funded by Sanofi, is currently in the beta testing phase and is designed for families with children diagnosed with type 1 diabetes. It's tough on kids to have to get up and leave the classroom to test their blood sugar every day, and the real kicker of it, says Fergusson, is that if the child does the right thing, dutifully pricking a finger and recording the result, nothing happens. Things happen—negative things—when they don't follow the rules. "Our brains are designed to respond to something, not nothing, even if that thing is negative. Small Things is a smartphone app, and it works around a Tamagotchi-style game (Tamagotchi is the hand-held digital pet that every kid wanted a few years back) for the child with diabetes. The app sends an alert when it's time for a blood test, and then results are typed into the app. The app transmits the data to the child's parents or caregiver, and the next thing that happens, before they leave to go back to class, is they get a notification announcing some earned game currency. Currency allows them to create little monsters and then nurture them. The monsters live in a world that the user can customize, and this play—which is only 15 to 20 seconds after the test—provides an award. Parents get the blood results, but also data on their child's participation in the game play, through access to a web interface, and they can also get it sent to their phones. 

From the web interface, parents can also communicate with other parents, because "that's the right time and place, when [parents] are online and thinking about their child, and have a question," says Fergusson. "That's done through a social network, optimized for small groups, and the parent can also push additional game play rewards into the monster environment for the child. "Susie is keeping her room tidy or taking care of her diabetes equipment, or doing a better job of eating on schedule. That might not be directly measurable, but the parent can reward the behavior they want to reinforce." Ayogo hasn't partnered with a non-profit yet for this game, but is in discussions currently, and Sanofi has an option to brand it and disseminate it to patients. 

Asked about ROI and metrics from a pharmaceutical underwriter's perspective, Fergusson says some of the companies he works with are only interested in getting to the patient right when a treatment decision is being made, but others are more forward looking. "Something really interesting is happening in the pharma space...one by one, companies are coming to the conclusion that they don't sell pills, actually. Their business is getting people healthier. I want to engage with a company that I trust to help me manage my health, and if I do need pills, then it should be a company that I know can deliver them. But if all you can do is sell me pills, you're not part of my health solution or part of me living a healthy life." 

Emotions often run high when it comes to children and diseases. Scott Randall, CEO at BrandGames, an elder statesman of the gamification industry (BrandGames set up shop in 1995), recently did a project aimed at helping parents inject their kids correctly. That's a tricky task, particularly when the caregiver or parent himself is afraid of needles. "The risks involved in administering the medication are significant, and all patients get is this little box with a piece of rice paper in it, and it says, hold the syringe like this, put it together like this, do this, do that, and stick it in your kid's leg," says Randall. "They've never done this before, and now they have this hysterical child on their hands, and they're supposed to be administering the medication." 

The idea for the game is built around the concept of a tutorial, with added emotion. "You match the different steps in the process and assemble an interactive syringe, and then you get coached on whether or not you've done a good job," says Randall. "There's a big-picture comfort piece for the caregiver or parent that says, you know, this is something you can do." The online tutorial discusses how the drug works, to help increase competency in administration at the same time. "It's really for the protection of the patient, because at the end of the day, a calm and confident caregiver projects that onto the kid, who can smell fear a mile away," says Randall. The key performance metric in this instance is based on a reduction of adverse events. 

For Randall, the key to developing games to modify behavior is time and engagement. "People don't have either. You have to get them engaged emotionally in what's going on, or they won't participate," he says. 

BrandGames has also done healthcare training for a nursing program at Johnson & Johnson, and pharma rep training for Daiichi Sankyo. "The idea is, how do you engage the doctor and how do you engage patients? When you're looking at patient outcomes, you have to give the patient the big picture of what the medication is doing. At the doctor's office, you get a Xerox of a Xerox of a Xerox. You go home with no emotional engagement; you have no context around your treatment. Without that, patients don't participate in their treatment, and outcomes are worse," says Randall. 

Taken together, the message emerging from Seifert, Ferguson, and Randall is that pharma companies looking to gamify their brands need to put education and learning up front, and figure out what specific behaviors are unique to the patient audience. Then decisions can be made about the appropriate gaming mechanisms to use, who to share with, and how to get it in the customers' hands. 

Features

Early efforts in the pharma space to harness the engagement factor in game technology focused on delivering a fun experience, with a tackedon educational component. Today's games bring behavior change to the forefront, incorporating social dynamics, mobility, and increasingly sophisticated mechanics.

Gamification Grows Up

Conversations around value, and how to create it in 2012, can usually be separated into two categories: hard and soft. Hard value deals with operational efficiencies, getting a drug approved on time and executing on a quarterly sales goal. Soft value, on the other hand, has to do with addressing an unmet need, investing in services around a product, and improving health outcomes. Shire's Jeffrey Jonas, installed in 2008 as senior vice president, R&D, for the specialty business, believes that he can help the company do both, by placing the focus on clinical value, not p value, the latter being a statistical measure used to prove significant change or efficacy with a drug, compared against a chance result.  

Jonas joined Shire a month after Angus Russell took over as CEO, and quickly went to work on the company's prized ADHD portfolio, which included the newly approved prodrug Vyvanse (lisdexamfetamine dimesylate). With academic and entrepreneurial bona fides beyond dispute—Jonas received his MD from Harvard Medical School and was chief resident in psychopharmacology at Harvard's McLean Hospital, and has also founded and co-founded two biotech companies, in addition to serving as chief medical officer and EVP at Forest Labs, and EVP at Isis Pharmaceuticals—Jonas found himself in a position to change the way Shire approached product development. Based on Vyvanse's mechanism of action, a dopamine modulator, and the safety data produced in ADHD trials, Jonas wanted to test the drug for new indications. "When I got to Shire, there wasn't really much of a lifecycle management program in place for Vyvanse," recalls Jonas. "I was in a meeting very early on, and we had just started talking about a Vyvanse lifecycle management plan, and one of the comments from someone relatively senior was, 'This is very risky to do this. It's our major asset.' And my response was, 'Do you know what's risky? Having an asset with a patent life to 2024 without a lifecycle program. That's risky.'" 

R&D organizations who are struggling to justify their existence go for a p value. Clinical organizations that are struggling to get a molecule on the market that helps patients are testing for a clinically relevant value.  -Jeffrey Jonas			

In collaboration with the commercial group, Jonas's more aggressive approach toward product development has already resulted in an additional indication from FDA for Vyvanse—as a maintenance treatment for adults with ADHD—and the drug is currently being tested in four new areas: major depressive disorder, negative symptoms and cognitive impairment in schizophrenia, excessive daytime sleepiness, and binge eating disorder. These new clinical programs push the limits of Shire's "search and develop" model, causing the company to make difficult choices about when it makes sense to go into the clinic, and when it makes sense to duck out. If the hard and soft value categories are a Venn diagram, then clinical trials can only go forward in the intersection. For now, Shire isn't interested in doing five-year, Kaplan-Meier-style outcome studies, says Jonas, because those kinds of programs too greatly elongate the development cycle. But Jonas isn't afraid to take his lead asset into a head-to-head trial versus a competitor. In March, Shire announced two Phase IV clinical trials comparing Vyvanse to Concerta. Speaking on the decision to go head-to-head, Jonas says the purpose is to "show that my drug is better, or I'm wrong." The way to de-risk a head-to-head trial or other potentially dangerous clinical adventure, says Jonas, is to take a broader look at the clinical implications beyond sheer efficacy. "R&D organizations who are struggling to justify their existence go for a p value. Clinical organizations that are struggling to get a molecule on the market that helps patients are testing for a clinically relevant value," he says. 

One way to answer the value question in CNS areas like depression, Alzheimer's disease, or ADHD comes from social science as much as it comes from the laboratory. "We're in an age where patient reports, rating scales, and subjective measures are now almost requirements," says Jonas. "A lot of [industry executives] have come out of CNS specifically because of their ability to deal with murky, fuzzy data...it's the most difficult thing we do in our industry." Technology has made surveys and questionnaires much easier to conduct and process, but fundamentally you're still asking the patient for a self-reported assessment. Jonas says the "methodologies around validation have been firmed up" with FDA. Regulators may not be ready to accept every quality of life measure as a consideration for approval, but these measures can open doors with payers, physicians, and patients.  

Jonas says productivity measures like missed days at work or at school can be used as data points to establish value. But to what extent can a caretaker scale influence an approval decision? "We're looking at some novel approaches in Europe that unfortunately I can't talk about, but that may give us some answers," says Jonas. Vyvanse is currently approved in the United States, Brazil, and Canada, and in January, the drug was accepted for review by the Medicines Healthcare products Regulatory Agency (MHRA) in the United Kingdom. Vyvanse would go by Venvanse in Europe, as it does in Brazil.  

Asked for an opinion on Jonas's preference for clinical value instead of p value, David Steinberg, managing director, equity research, specialty pharmaceuticals at Deutsche Bank, said, "Well, to get approved you need a p value that is statistically significant." True, but regulatory approval is just one of the several approvals needed for a successful brand; if payers don't approve, for example, a regulatory approval isn't worth much. "I think the greater the value proposition you can bring to the payers, the better," added Steinberg. On the merits of a head-to-head versus Concerta, Vyvanse for adults, and the clinical evaluation of Vyvanse as a possible treatment for binge eating, Steinberg says the strategy makes sense. "It looks to be a clever strategy in that they're trying to extract a lot more value out of an already approved molecule." 

At ISIS and at Forest Labs, Jonas worked on products where differentiation was critical to market success, and that experience has carried over into his work at Shire. "If you look at what ISIS did with mipomersen [a treatment for a rare genetic lipid disorder] we differentiated into an area where there was a clear unmet medical need. That was based not only on mechanism of action, but also on the issue of how it would be tolerated...the whole thesis was, go into an area where nothing else worked." This strategy is similar to Jonas's decision to bring Vyvanse into the clinic for negative symptom predominant schizophrenia; the investigational Phase II study delivered positive results in April, and was given Fast Track designation by FDA. "Most patients with schizophrenia have residual symptoms, significant morbidity, unmet medical need...nothing really works that well," says Jonas. "[Vyvanse] was so well tolerated at 70 milligrams, which completely defied conventional wisdom." In a statement on the results, Dr. Henry Nasrallah, professor of psychiatry and neuroscience and director of the schizophrenia research program at the University of Cincinnati College of Medicine, said, "If these results are confirmed in controlled clinical trials, they would represent a significant step forward to address the unmet need of treating the negative symptoms of schizophrenia, including a fundamental reexamination of dopaminergic and noradrenergic transmission across brain regions in treating the negative symptoms" of the disorder.  

I think the greater the value proposition you can bring to the payers, the better. -David Steinberg			

At Forest, Jonas says Lexapro was "one of my programs," and "we did head-to-heads with everyone." To differentiate a product successfully, development programs must go beyond "some loosey-goosey, let's compare two labels" kind of approach. "Every Shire product will have a concrete value proposition. It may be quality of life, it may be return to work...we'll find some pharmacoeconomic measure that's relatable to payers and physicians and patients," says Jonas. "I'm fortunate that our CEO will actually let us put our money where our mouth is on this."  

Jonas has a thesis—unproven—that "if you treat kids earlier [for CNS disorders], the ingrained behaviors that may be debilitating later on don't ever develop." The question then becomes, "If you can prove it, can you claim it? It is possible, for example, to show that productivity is enhanced by treatment." This idea raises many questions, not least of which would be the establishment of an acceptable definition of "productivity" in this context, but there's another problem. "The one fly in the ointment for all of this is that a lot of times you don't understand the full value of the drug until it's on the market for a awhile. So to some extent, while all of us want to add value, it does require a certain amount of prescience on the part of the developers to know where that value might be. And we probably lose out on some opportunities for this reason," says Jonas.  

As a mid-sized specialty firm with a rare diseases business and a recently added regenerative medicine unit—the latter of which Jonas also serves as SVP, R&D—Shire can't succeed through brute force, says Jonas. "We're not going to give sales reps data and just hope they can make a market. They have to have real data, comparator data, that's how a specialty model thrives." Generating so-called "real" data can be a problem in CNS, particularly at the earliest stages, which is one of the reasons that Jonas is happy to stay out of the discovery game with Shire. "People use these animal models that really aren't relevant to beings with frontal lobes and cortexes...the models are anthropomorphized," says Jonas. "I don't know when a rat is really sad. Is not running on a wheel sad? I don't know." Jonas believes that CNS is a pragmatist's game, and it's an incrementalist market for treatment of depression. The way forward in depression will be to focus on treatments for patients that don't respond to currently available products; Vyvanse is being studied as an adjunctive therapy. "You'll see new antidepressants get launched. Will they be fully differentiated? No. Will they do fine? Yeah. But we're not interested in the brute force model," says Jonas, adding that data requirements for making promotional claims will force the sales model to evolve. In the first quarter of 2012, Intuniv (guanfacine), Shire's third best-selling ADHD drug (behind Vyvanse and Adderall XR, respectively) increased its sales by 54 percent compared with first quarter of 2012, a development Angus Russell, on an earnings call, attributed to "new consumer marketing campaigns" and an expanded approval last year for use as an adjunctive therapy in combination with a stimulant.  

In addition to Shire's patient marketing efforts in ADHD (which currently involve a retired Philadelphia Phillies outfielder, and a pop/rock singer), there's "a group of non-promotional sales reps who are not compensated by sales but are actually more geared toward disease state," says Jonas.  Shire is also "growing our medical science liaison (MSL) organization in Europe, to prepare to work with European thought leaders around launching" Vyvanse. The company has an in-house program in the works called "virtual MSL" that "will allow MSLs to be available for questions any time, 24/7," says Jonas. Offering up the obligatory comment with respect to selling medicines in Europe, Jonas says companies "have to pay attention to reimbursement strategies because it's almost like you have two parallel paths you must follow to get the drug on the market, the regulatory and the pricing."  

Steinberg says that Europe "seems finally ready for the ADHD market to take hold, and who's better in ADHD than Shire?" Global expansion is an important strategic initiative at Shire, and last November the company announced a partnership with Shionogi to "co-develop and co-commercialize certain of Shire's ADHD medicines in Japan," but the specifics of the deal were not disclosed. Shire's last co-promote deal on Vyvanse ended badly. The three-year agreement struck in 2009 with GlaxoSmithKline was an attempt to expand Vyvanse's reach to US primary care docs, but it fizzled in September of 2010, after sales goals were not achieved, and no payment was made (or was due, per the agreement), to GSK.   

Interestingly, Shire's decision to go for a binge eating indication would most likely require additional sales reps, per Steinberg and probably the muscle of a large pharmaceutical company. Shire says binge eating patients are the  province of psychiatrists, and they have that covered if the indication is approved. There are no currently approved treatments for binge eating, and primary care docs would presumably be making most of the diagnoses. Jonas is very bullish on a binge eating indication, but says he'll live or die by the data results. "I think it's a major opportunity. The patients are well-defined, and the pharmacoeconomics will be good, so I'm very excited about it, if the study is positive....I think it's an opportunity that might dwarf almost everything else we're doing, in terms of value and in terms of time to market." For a diagnosis of binge eating disorder to be made, a patient must experience binges for two days per week for a minimum of six months.   

Jonas says Shire has built up its health economics group and its assessments group in recent years, and new talent has been brought in, and talent has departed. On the latter point, Michael Cola, president of specialty pharmaceuticals, announced his resignation at the end of March. But the biggest cultural shift since Jonas came on board has been "the acknowledgement of how you take risk and how you stop projects as well as keep them going when they're successful."  

Jonas acknowledges the Shire "search and develop" model, but says it's more like "search and rescue," since "there are lots of really good assets out there that may have languished because of regulatory uncertainty." Innovation at the discovery level, says Jonas, has to come from multiple sources, which is why Shire's model makes sense. "Who in their right mind would hook themselves up to one supplier or one thesis?" he wonders. "If you acknowledge that innovation has to come from everywhere, not just internal, the whole thesis of being an R&D organization goes away. Why would I want that?" Once a drug goes from preclinical and animal studies to human subjects, at that point "skill sets are more transferable and more stereotyped; and there you want to bring some things in-house," says Jonas. On conducting trials, he says smaller is better. "I don't need a thousand patients because if I'm looking for a bigger effect, I need a smaller study. The point is that if you need more than 75 patients per arm, you're looking for significance, not value. That's how we see it." 

Other big pharmaceutical companies would almost certainly dispute this conclusion, but Jonas says that organizations that focus on discovery are "intrinsically building infrastructure and intellectual bureaucracies...they develop an inertia that impedes innovation because very few people will say, 'That molecule and mechanism is better than mine. Fire me and bring that in.'" Despite a desire to keep clinical trials small, programs exceeding 1,000 patients are almost inevitable, and Shire's Phase III program in depression for Vyvance is roughly 1,500 patients, Jonas said on the earnings call. He expects a Phase III binge eating trial to be of similar size, but said the programs are "easily manageable by Shire, and are well within our wheelhouse for how we operate." 

As a kid, Jonas used to hang around the Graybar building, on Lexington Avenue in New York City's midtown. "My father was a dress buyer, and the Graybar building was a cutting factory," he says. The experience was influential. "At some point, we've got to look at ourselves like a retail business. We need products, an immediate product that's better and more effective, or has some kind of value to offer."  

Will Jonas's approach to R&D at Shire—based on demonstrating large effect sizes in small clinical programs, and leveraging quality of life measures—take the CNS franchise into new realms and revenue streams? Can Shire stake out the middle ground between hard and soft value in CNS, and keep shareholders and the street happy at the same time? Based on full-year earnings in 2011, Shire's specialty division, which includes the ADHD portfolio plus six other key products (three of which are for GI conditions), comprises 61 percent of the business, and brought in $2.6 billion in sales, an increase of 18 percent from 2010, according to company reports. The jury is still out on the company's regenerative medicine unit, which also falls under Jonas's remit, but Shire has a history of "out of the box" acquisitions, says Steinberg, pointing to the success of the human genetic therapies business unit. For Vyvanse, Shire has predicted blockbuster sales this year. With another decade of patent protection in the United States and Europe, a growing middle class in Asia and Latin America and an entrance into Japan via Shionogi, Shire seems poised to expand the brand into new therapeutic areas and geographies. But as Jonas says, the CNS category is a murky one when it comes to the production and management of data. For the strategy to work, regulators, payers, physicians, and patients will also need to broaden their perspective, and decide what value means to them. 

As brands are required to produce more and more data to convince not only regulators, but payers, physicians, and patients, Jeffrey Jonas is pushing Shire's "search and develop" R&D model into new and sometimes uncomfortable territory.

Raising the Stakes in CNS

I recall talking to a brand director who said to me, "I'm facing a problem. My product is receiving a new indication within the next year, and I'm worried it's going to hinder the brand more than help it."   

I asked, "What is your worst nightmare for your brand?"  She replied, "It's that our target will only use the drug in this narrow population, all because of its potential indication approval."  

I said to her, "It's time we address your nightmare head on and turn it into one of your best dreams come true."			

This challenge isn't unique for brand managers, especially in the oncology, hematology, and rheumatology arena, where one product can typically have more than one indication and multiple targets with different needs and mindsets.  

When this happens to you and your brand, you should be armed with the right approach and a plan of action. This article covers four key steps you should take, along with some case studies. When we boil it down it's actually pretty simple to ensure that you take the right path. 

Research previous brands that had similar issues and find out what they did. Use these case studies as guidance when thinking about what contributed to the brand's success and what didn't.  

Step 2: Brand awareness—ask yourself two key questions: 

Would the brand be more successful if we had one overarching brand position, or should we separate positions based on indications or different therapeutic categories? 

How can we ensure our brand connects not only on the rational data points but also on an emotional level? 			

Institute a full-day workshop that entails research insights, competitive analysis, positioning, and personality exercises that help you answer the questions from Step 2. 			

This is an easy one. Pick up the phone or send an e-mail. Brand consultants with a knowledge of the therapeutic area will be happy to help you through your challenge.  

Every brand has its own set of objectives and issues. These four steps may help your brand with multiple indications thrive. Each of these cases will look at similarities and differences in the areas of brand ideas/concepts, brand identity, and messaging. 			

It is common to see one oncology product that has several indications. From smaller brands to large blockbusters, the key is to build a brand that can be everlasting through multiple indications. The line of usage, the endpoint, and the competitive set often vary by indication, thus making any one campaign or single message hard to implement. As brands expand their usage throughout their lifecycle, what's needed is to identify the similarities and to strive to make the campaign work across indications.  

When we look  at Herceptin, a blockbuster brand for breast cancer and gastric cancer, we find that all three indications keep the concept of "proven

 intact (see artwork). There is a consistent visual campaign, with the silhouette of the woman with the bow and arrow focusing on targeted therapy that succeeds whether it is for treatment in early stage or metastatic breast cancer or metastatic gastric and GEJ cancer. From an identity standpoint, where we start to differentiate in the ad is with colors. Each color represents a different indication for Herceptin. 

Yet another key differentiator is with the messaging. Each indication has a different endpoint. The early stage breast cancer messaging focuses on the risk of disease recurrence; therefore, duration of therapy message is utilized. The metastatic breast cancer messaging focuses on median time to progression and median overall survival. The metastatic gastric and GEJ cancer messaging focuses on overall survival.  

Herceptin succeeded with one overarching position for all its indications.  

Rituxan differs a bit, as this brand has chronic lymphocytic leukemia (CLL) and non-Hodgkin's lymphoma (NHL) indications, as well as a rheumatoid arthritis (RA), Wegener's granulomatosis (WG), and microscopic polyangiitis (MPA) indications. Focusing on oncology, the CLL and NHL indications remain consistent from a concept perspective but begin to differentiate when focusing on the other indications. The differentiation centers on the messages, with durable response being communicated with the NHL indication and progression-free survival for the CLL indication. Where we begin to see a departure is when we cross over to the RA indication. This is where we see the branding change from one therapeutic category (oncology) to another (immunology). It seems the marketers answered the question in step two by deciding that Rituxan would be more successful with separate positions and branding for the different therapeutic categories. 

As in many classes, and especially in oncology, efficacy is a key factor in drug choice, balanced by a positive safety profile. Treanda keeps a consistent campaign/idea whether speaking about CLL or NHL. The idea is that therapy for CLL and NHL goes beyond chemotherapy to what personally motivates patients to live. Within each indication, there are different endpoints used in each communication.   

For CLL, the measurement is median progression-free survival, whereas for NHL, overall response rate is used. While the messages differentiate to help strengthen each indication, the overall idea remains strong to help Treanda sell the brand. Consistent branding and positioning was chosen across its indications. 

When looking at these top oncology brands that have been successful in marketing, we find they all trend toward consistent branding across indications (typically within the same therapeutic category), with tailored messaging by indications, of course.   

Step 2 and 3: Brand awareness and positioning workshop 

This is where we dive into the positioning workshop. You and your team will want to institute what we call a Firestarter branding workshop. This requires the proper prep work, including studying the cases in Step 1. You will want to define what elements to use as a baseline; they should be in these areas:  

What are the customer's passions?  Delve deep into all the research to pull out the key emotional, diagnostic, treatment, and prescribing insights along with beliefs around your brand and your competitors. 

Perform a full competitive analysis. Analyze clinical and promotional messages to understand what "position" your competitors are trying to own. 

Your own brand is what's going to move minds and build loyalty. At this point, delve deep into the brand's features, benefits, data, and anything else it offers. 

With this background work completed, the workshop would entail discovering a rational and emotional connection for the brand and the customers. One exercise can explore every potential avenue that the  brand can own. Remember, there are hundreds of different ways to position—by attribute, benefit, cost, patient type, line of treatment, etc. The key is to find an exercise that allows you to uncover each potential avenue in a timely manner—this is a simple one- to two-hour exercise, not a week's worth of exploring. Another critical part of the workshop day is a personality exercise; one that allows you to explore how your brand would behave, as that is critical to gaining an emotional connection with the audience. Again, this is a simple one- to two-hour exercise.   

This one-day workshop will have you seeing the writing on the walls (literally) for the brand. 

Workshops are most successful when you collaborate with experts in their discipline. The workshop should include all disciplines: marketing, medical, legal, sales force, and agency partners. Let's remember, the more you talk through your nightmares and fears, the higher the chance that you can turn them into a dream come true.  

Don't let a future indication approval be your brand's nightmare.  

, Drector of Strategic Services and Business Development, Flashpoint Medica. He can be reached at 

Column

New drug indications can be a brand manager's worst nightmare or a dream come true. The difference lies in the perspective and in the branding strategy.

A Brand Positioning Nightmare

Back in February, European Union health minister John Dalli conceded that the EU regulatory framework for medical devices needs an overhaul to—as he coyly expressed it—"remedy certain weaknesses that have come to light." Looming large over these was the discovery of the fraudulent use of non-medical-grade silicone in breast implants manufactured by the Poly Implant Prothèse company in France. The risks spread anxiety among thousands of women who had received these implants; more recent reports of the premature disintegration of prosthetic hip joints intensified this concern among the general population.  

The overall effect has been to erode still further the European public's faltering confidence in the regulatory system that is, in principle, guaranteeing their safety.  

The European Commission called for "immediate actions," including tightened controls, increased surveillance, and moves to restore public confidence. It plans to present proposals for new EU regulations governing medical devices later this year, with the intention of creating "a more transparent regulatory system." The new rules will retain the "innovation-friendly character" and "cost-efficiency" of the current system, Dalli promised. But they will also "ensure that the rules are effectively enforced across the EU."  

At the same time, the requirements concerning clinical evidence will be strengthened and clarified to demonstrate the safety and performance of a device. And improvements will be made to ensure timely and uniform action in the areas of vigilance and market surveillance. 

Above all, the new rules will be directly binding on member states, eliminating the margin for maneuver that member states currently enjoy in interpreting the rules.  

The European Union is currently handicapped because virtually all it can do in the legislative framework is urge member states to act at the national level. EU legislation exists, but it is national authorities who are responsible for ensuring "full and stringent implementation of the current legislation on medical devices," the commission pointed out. So the commission has been reduced to encouraging member states "to tighten controls, provide a better guarantee of the safety of medical devices, and to restore patient confidence in the law that protects them."  

Dalli called on health ministers for "a joint plan of immediate measures," asking for their "full cooperation in beginning work without delay." But not a lot has happened since then. Things don't move that quickly in Brussels—particularly when the member states haven't agreed to give some powers to the European Union to make things happen. Often, national interests—or simple national inertia—triumph over even the best-intentioned Brussels-led initiatives.  

However, some sense of guilt over inaction may help to explain why ministers allowed themselves to be bullied or embarrassed into a formal decision in late April to use the existing Health Security Committee (HSC) as "a platform for crisis management in the field of medical devices." 

This is a sign of the times in more ways than one. For starters, it shows just how few and inadequate are the control measures the European Union has over this sector of the healthcare industry. And for lack of any better option, the responsibility has been placed on an obscure and unofficial body. 

The HSC is already overburdened and under-resourced, and was certainly not designed with this task in mind.  

At the same time, the way the move came about itself served to underline how desperate the European Union is to show that it is coming to grips with a troubled sector. The formal decision was taken at an 

 meeting of health ministers, hosted by the current Danish Presidency of the European Union, Astrid Krag, with the aim of some leisurely strategic reflection on comfortably broad themes such as innovation, or the challenges of chronic disease. Informal meetings of ministers are not, in the normal scheme of things, supposed to make any decisions at all. But the concern over a regulatory vacuum in which things are perceived as getting out of hand was so great that ministers broke with tradition and signed up to a new initiative. 

The European Parliament is baying for vigorous action to remedy the deficiencies in the current system. The background to the health ministers' hasty decision included parliamentary debates on a resolution demanding "strengthened cooperation within the existing legal framework to tighten controls, in order to provide a better guarantee of the safety of medical technology." Citing the PIP case, the draft resolution emphasized that "this health fraud has shown a malfunctioning at European and national levels." 

The European Commission may be the European Union's principal conscience in such matters, but it is equally vulnerable to conflicting pressures and priorities. While conscious of the need to protect the public against risks, it simultaneously champions healthcare innovation both for its potential economic benefits to Europe, and for its capacity to come up with new answers to the seemingly insoluble problem of keeping European healthcare sustainable in the face of public spending difficulties and an ageing and chronically sick population.  

This is why Dalli has been treading so carefully in his pronouncements. Speaking recently to high-tech medical equipment manufacturers, he said, "Innovation—and more specifically harnessing innovation for the public good—holds great promise for the future of healthcare systems." He told the European Coordination Committee of the Radiological, Electromedical, and Healthcare IT Industry, "There is tremendous potential for such innovation and your companies have an important contribution to make—for patients, for the healthcare sector, for health professionals, and for the wider economy."  

"We need to work together to find better innovative models that address the unfolding challenges—not least the ageing society," he went on, listing some of the moves that, he claimed, were supporting innovation. He spoke of "appropriate regulation in the health sector that provides incentives for future growth whilst safeguarding patient safety, increased cooperation on health technology assessment to avoid duplication of research and to speed up reimbursement, and uptake of eHealth solutions to support health systems as they strive for better health outcomes and more efficient models." In his February missive to health ministers he added, "There can be no compromise on safety." Citizens, he said, "should be confident in the safety of medical devices." 

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

A recent medical device controversy in France has pushed European health ministers to agree on a crisis management program for the troubled sector.

Europe Responds to Medical Device 'Crisis'

 convened on April 10 its annual panel of heavy hitters in business development to crack the bat on best practices in licensing and M&A for the year ahead. The 11 starters [see list, "Participants"] are our biggest group to date, and the discussion proved equally wide-ranging, building on the latest findings from co-host Campbell Alliance's 2012 Survey of Dealmaker Intentions. The detectable trend is the desirability of making a deal, with a particular focus this year on snapping up Phase II assets. The market is hungry enough to end its wait for that perfect, late Phase III compound ready to hit the streets at minimal risk. Oncologics remain the target of choice and there is more interest in claiming promising therapies at a much earlier stage of development.  

Overall, what the dealmakers panel found striking is the widening circle of players: academia has found its business roots and is proving a tough negotiator; patient/disease groups are beginning to pinch hit for sidelined venture capitalists as a source of development financing; and new arrivals from emerging countries are beginning to test the waters with deals to gain a foothold on the US market money tree. The conclusion is "know thy partner" will be crucial to a profitable marriage. With the cost of assets rising and payers demanding a more extensive up-front case for value, it's no time for rookies.  

The Campbell Alliance Survey of Dealmaker Intentions is now in its fourth year. This is long enough to filter out the background noise and identify distinctive trends in the attitude of investors toward a sector with a historically high risk profile. What are the expectations for deals in 2012 and do we see a transition from the caution that branded previous surveys? 

Our survey polled 160 decision-makers, about three quarters of whom were at the VP level or higher. Overall, the outlook for the year is positive. A key finding is that players on both sides of the negotiating table expect increases in the number of deals for Phase II assets. You will recall that in 2011 the emphasis was on sweeping up compounds that had progressed to Phase III because these are perceived as less risky in making it to commercialization. Clearly, investors are more confident about the science and market potential in some therapeutic areas and this has increased the allure of medicines that have established their bona fides at the Phase II (b) stage of testing. 

    What is interesting is a divide in expectations about deals at Phase III. While in-licensors among the group expect a rebound increase in Phase III deals, those who out-license are projecting a drop. This spread between the in-licensors and out-licensors is the most pronounced in the survey's four-year history. It's hard to identify precisely what is driving the gap, but it is clear that Big Pharma—flush with cash—is desperate to acquire late stage assets that complement their therapeutic portfolios. The desire to supplement their stretched in-house development pipelines is contributing to the tagline: it's a seller's market. What the out-licensors seem to be saying, however, is that they don't expect to have a lot to put on the table, or that financing conditions may improve so they can do the commercializing themselves.  

What therapy areas are attracting the most interest among in-licensors? 

Oncology leads the pack, followed by cardiovascular, CNS, metabolic, and respiratory drugs, respectively.  At the bottom are dermatology, vaccines, and women's health. Oncology has a unique characteristic in that interest is high at all levels of the development cycle, including pre-clinical and Phase I and II; in fact, the interest in doing deals here is higher for Phase II and pre-clinical compounds than for those "sure bets" in Phase III. This is likely due to awareness that a good cancer drug open for licensing in Phase III is a rarity. All the other major therapeutic segments—with the exception of immunology, which has a market profile similar to cancer—show a preference for Phase III candidates. 

Is the continuing interest in oncology leading to saturation in terms of available opportunities?  Has the "low hanging fruit" disappeared from the proverbial tree? 

 There is no doubt that it is harder to find the perfect compound. But if you look over a multi-year cycle and compare the number of late-stage assets out there to the actual number of deals consummated each year, we estimate a 20-year backlog of unlicensed oncology assets are in the hands of parties that lack the wherewithal to bring them forward to commercialization. It's not exactly low hanging fruit, but it's an exaggeration to claim the oncology field is played out.   

Do the conclusions of this year's survey conform to the expectations of those of you engaged in active deal-making negotiations?

There is a proliferation of proposals out there in the market—but not every one is an opportunity. Contacts today are like a form of speed dating: as an example, at each annual BIO meeting, my company will typically get more than 600 requests for a quick, 30 minute exchange. And most of these encounters revolve around potential oncology products.  

In oncology, I don't see much interest in pre-clinical deals; the preference is for Phase II and beyond. Demonstrating proof of concept and then building on it to make the case for an improvement over the current standard of care remains the mantra of choice in driving negotiations.  

 What the survey data doesn't show is the fundamental issue of perception—how players approach the art of a deal. Today, Big Pharma dominates the deal-making environment. And what Big Pharma wants to acquire are products able to secure registration without extensive additional investments in development, to begin generating revenue as quickly as possible. What the biotech start-ups want is the capital to launch and grow their company. It is important to understand how these basic values shape the motivation of each party to finalize a transaction. I don't think there is adequate understanding of what the young start-up company needs, nor is there much clarity on how much Big Pharma wants to risk in paying out for an asset. The big companies are most comfortable with the classic textbook licensing deal, while young players are seeking a lot more flexibility in return for their commitment. It's a real disconnect.  

Opportunity is finely parsed for small companies. Their bets are limited. So if you have a great late-stage asset, with a strong probability of success on the regulatory pathway, then why out-license when there is the potential to hit a home run by commercializing it? Yes, commercialization is costly and carries some execution risk, but out-licensing means you are giving away a lot of value over time.  Many times it makes more sense to hedge your risk and keep a large chunk of the value through a commercialization partnership. But one plus one has to equal something north of three.  

What other factors might be driving decisions on therapeutic targets? 

A challenge specific to oncology is an erratic regulatory climate. Standards imposed by the FDA for clinical trials are increasingly difficult to replicate successfully at the Phase III level. There is also a conflict between the FDA and the European Medicines Agency [EMA] on standards for approval: while the EMA continues to accept disease-free progression as a benchmark, the FDA is moving to embrace overall survival rates, which is a much higher hurdle of proof for sponsors.  

Oncologics, like all specialty medicines, have to evidence a stronger value proposition simply because of their high cost to the payer. The assertion that oncology drugs are affordable because they are "targeted" and volume sales don't approach the level of a Lipitor is no longer defensible. There has been a threefold increase over the last 10 years in the cost of oncology drugs to the major PBMs.  

David Thomas, Biotechnology Industry Association (BIO):

 It is interesting that the top therapeutic areas of interest for in-licensors in the Campbell Survey are inversely correlated to development success rates. BIO's study with BioMedTracker, which surveyed over 4,000 compounds from 2003 to 2011, found that oncology, CV, and CNS had the lowest success rates. Less than one in 10 compounds in these therapeutic categories makes it from Phase I to commercialization. Success rates are higher for the categories ranking lower in the survey.  

Building on the survey, can we identify some of the broader environmental and policy factors that are influencing the art of the deal? 

I have covered the industry as an analyst for 30 years. I find there is a surprising consistency in the trends we see before us.  For example, the current productivity gap in R&D is not unprecedented; we are an industry of cycles and there have been droughts and patent cliffs before. These pressures have driven consolidation. When I started my career, I covered 16 companies. It's now down to six. I would also say that the impact of the trends may be more intense. Certainly there are mounting financial pressures on R&D to get more productive. Consider how Pfizer has slashed its R&D spending by 40 percent. Why? Simply put, the market is impatient and is demanding a better return from that massive investment. The patent cliff is also higher today than in the past. Most companies have successfully navigated their way through the first wave—you could say we are currently at the "eye" of the LOE hurricane—by accelerating cash flow through aggressive cost reductions and applying the savings to dividends and share repurchases.  

The current productivity gap is manageable, especially because of the strong appetite for deals. A few years ago, all we talked about in the analyst community was pricing and access for the big blockbusters. No one mentioned new products because there were none to talk about. Today, I actually have to go to clinical development briefings. Output from the labs is slowly improving and the market is showing a bit more tolerance for risk. There is still an enormous amount of innovation in the marketplace; it just comes from a more diverse array of sources. And when you have a real potential breakthrough against current standard of care, the money is there to follow it through.  

What I find most interesting is that the progress we are starting to see has little to do with the current emphasis on restructuring R&D operations, because the innovation coming on stream now stems from actions companies took more than a decade ago.  What is good about today is companies are limiting the earnings shortfall from LOEs through improved operational efficiencies. The focus is on executing on plan and avoiding the distractions of big, costly mergers in favor of low profile bolt-on acquisitions. Everyone is more sensible about valuations.  

Laurence Blumberg, Kadmon Pharmaceuticals: 

A key driver of innovation in the West is the state of the capital markets, which variably support risk-taking behavior. Unfortunately, we face a stiff challenge from the progressive demise of the venture capital model which historically has funded the bulk of new product discovery coming from the biotech sector. There is less appetite among this group for backing the original science and the technology platforms that over time built real companies and yielded many significant therapies. Today, they frequently target late-stage products for quicker investment returns.  There are examples like Vertex that started out with basic seed money where investors took big risks. Today, I doubt any investor group would go the distance to create a winner like Vertex.  

How do we restore vigor to the venture capital space? 

 It's a big challenge with the inherent high costs of drug development, long timelines, and other risks, with the growing demand for quicker investment returns. The business of venture capital is essentially unregulated, highly competitive, and tends to perpetuate a race to the bottom where the goal is to exploit the most broken situations. The way the race for capital has become today, I am not sure anyone ends up a winner. And the funds are so skittish about the longer timelines on commercialization to the point where I don't see venture firms returning as the solution to the innovation drought.  

 The venture capital community is stagnant, if not in decline. Few if any new funds are being created. This is not necessarily a bad thing, because it ensures only the fittest will survive. What remains will be stronger, and maybe then we will see the community do what it should do: funding real innovation rather than just taking on the overflow of what Big Pharma doesn't want.  

 There is a clear overlap of roles among those who finance deals, but what all the players—Big Pharma, biotech, the VCs, pensions and hedge funds—have in common is a desire to reduce risk.  

Would a broader consensus on what innovation is in medicine lead to less risk and more certainty, unlocking the resources to bring more products to market? Isn't it the innovators' responsibility to anticipate what the payer wants in a product? And is it possible for the smaller biotechs to build, maintain, and expense that capability well before market authorization? 

Resources or not, we have to do it. Two things are required. First, you must have convincing answers for the payer about value. The evidence must be relevant and transferable. Without it, your ticket to access won't even get punched. The second is compliance with the growing complexity of the regulatory rules of engagement, including Phase IV follow-up studies. All this extra work on making the case for your product is expensive. People want their information in real time too.  

 Advances in molecular biology are raising the bar on clinical outcomes.  The ability now exists in many disease areas—oncology comes to mind—to target therapy to the individual patient rather than to the broad population. The per patient drug costs can be higher but it is also more likely the payers will support a price premium for some guarantee of better performance among a defined group of patients.  

 Regulators have taken some positive actions recently toward personalized medicines. The FDA has approved three drugs in the last 12 months whose mechanisms are intended for a specialized target sub-population.   

 I will say flatly that the overriding criteria for doing a deal is whether the compound provides added value to the payer and contributes to an unmet need for the patient. If we don't see that, we don't do it. Most of the products we work with have been in various stages of development for more than a decade before a payer comes into play. The cost is measured in billions. We are not going to wager an idle bet with that amount of money at stake. The value has to be visible up front and measurable. There is no choice—it is expected of us now.  

NuPathe is a small company, with 37 full-time employees. Yet we do a lot of work around assessing prospects for reimbursement in advance of registration and launch.  

 Amassing the right evidence is crucial. If you can show that 80 or 90 percent of the target population is going to benefit from your drug, then payers are less likely to have a problem in meeting your price. J&J did a deal with the UK National Institute for Health and Clinical Excellence [NICE] in which we basically guaranteed that if our drug [Velcade] did not work in a patient, we'd pay back the NHS. It was groundbreaking at the time and shows what steps a company may be willing to take to obtain payer buy in.  

Further to the point about funding innovation, who pays for process design and accompanying improvements to enable companies to target the right patients? 

 This is potentially a very fertile area for private equity investors, if only because a targeted therapy is likely to find its appropriate audience relatively quickly. It also lowers risks around efficacy and even safety. The more we unravel the molecular pathway and figure out targets that are amenable to diagnostics, the more it could spark venture capital interest. 

 Smaller companies gain from a targeted biologic therapy because it lowers marketing and promotion overhead. A good companion diagnostic could lower the investment needed to identify appropriate patients.  

Is the market getting more sensible—a better word might be sophisticated—about asset valuations? 

 A decade ago the approach in valuing a target incorporated a lot of material that frankly is irrelevant, such as the number of patents on file, the number of employed scientists, or the square footage of lab space. None of this necessarily correlates to output in terms of real products. Valuation has since become more rational.  

Any attempt to link the number of compounds in development with productivity and returns is not credible. Such information is irrelevant. Pfizer consistently spent the most money on R&D and employed the most scientists, yet the return from its effort was poor.  R&D is not a numbers game. It is true, however, that companies are valued on the basis of their strong cash flow, and little credit is given for development stage assets. Such assets are seen as little more than a lottery ticket—if you hit the jackpot, so be it.  

 The early 1990s saw enormous valuations for "ideas" with early stage IPOs, but with investors unable to sort through the good from the bad and value assets appropriately. Many companies subsequently failed. Investors know more today because there is a strong track record where we can see how the game played out commercially, after a Phase II asset has proof-of-concept data. There are many examples like MedImmune, which had a market cap of only a few hundred million dollars after the Phase II Synagis data, then hit the therapeutic jackpot with a definitive Phase III data set and commercial success, which led eventually to it being acquired by AstraZeneca for upwards of $15 billion. An enormous amount of value was also unlocked by that pipeline. Ironically, a lot of value now gets baked in to companies post Phase II as investors have a sense of how big the product can be. The pool of potential investors has also evolved somewhat with the participation of hedge funds as private investors, who tend to be less valuation-sensitive than the traditional private equity players. The challenge remains getting the true innovation to Phase II.  

Speaking of truth to power, what are the most important actions that should be taken to enhance the climate for productive partnering around more and better innovation? 

 Companies need to behave responsibly. Science is tricky and much damage has been done over the years when companies flogging a development-stage product take advantage of the unknowing public investor. The goal always has to be not just to sell shares but to provide value. The same can be said about partnering transparency and reasonable expectations driving fair and successful deals.  

 Big Pharma, small biotech, and the financing community all tend to speak different languages. It is important to keep bridging this gap in business cultures, by bringing in people who understand the other side because they've been there.  

 It would be helpful to smaller companies if Big Pharma companies could settle on a single point of contact within the company. A critical pre-condition for success with a partner much bigger than you is to find the right people who can make the decisions. I've seen situations where you are speaking to an internal group that eventually declines interest, only to be discovered by another internal group who insists "we have to talk." It can be frustrating since business development is rarely centralized within Big Pharma.  

Pharm Exec convened a panel of heavy hitters in business development to crack the bat on best practices in licensing and M&A for the year ahead.

2012 Dealmakers Outlook

If you've spent any time working in the device industry, you've probably heard pharma marketers make premature assumptions about what it takes to market a medical device. It's true that drugs and devices have things in common—both are regulated by the FDA and many devices are prescribed for patients—but that's where the similarities end. Pharma marketers will need more than a tried-and-true approach to drug promotion in order to succeed in the device space. 

If you're willing to understand the nuances of device marketing, however, you can have a lot of fun and create a killer brand. But beware. The secret is in the sauce. Great creative for a device can be the foundation of a brilliant campaign strategy, but if you get the creative wrong, you can bet it will do more harm than good.  

In this article, we will examine the variances between device and drug marketing, and how specific differences translate into opportunities, strategies, and approaches.  

By understanding the key differences between device and drug promotion, marketers can maximize their effectiveness with customers.  

 Training is a must with devices. Since healthcare professionals need to be well-trained to operate with confidence, marketers can emphasize this in their sales efforts. Training can be a positive selling tool, allowing a field rep to build invaluable relationships with healthcare professionals through recurring visits. Despite media reports about drug reps getting bounced from practices more frequently these days, the time they spend with docs is holding steady, demonstrating the value of what they bring to physicians.  

There are a number of ways that marketers can leverage educational opportunities around devices. Here are a few:  

» Create training programs for both the field and healthcare practitioners (and even patients). 			

» Weave marketing messages into training programs to maximize marketing goals. 

» Consider additional education, or "advanced certification," for various levels of device capabilities training. 

 Unlike drugs, in which one doctor writes a single prescription and more or less controls the sale, devices require a juggling of many different decision-makers and influencers, from nurses to dieticians to purchasing agents. This means your messages must reach and target the complete spectrum of touchpoints throughout the sale. 

As an example, take negative pressure wound therapy devices. To get this device to—and on—a patient, a physician must first write a prescription for it. A nurse then places the device on the patient. If the nurse, a major influencer, feels this device isn't as easy or effective as another treatment, she may convince the physician to change the prescription. 

Cost, of course, also plays a huge part in the selection process, so a different set of messages must be tailored to those people who negotiate costs and determine brands. At the treatment center, a hospital materials manager negotiates price contracts for preferred brands, determining which are stocked and available. But once a patient is ready to leave the hospital, a case manager can influence whether that brand will be switched at discharge.  

Compare this with a pharmaceutical product, where the equation is simple and touchpoints are few: doctor writes script, patient fills script. With devices, if you overlook a single touchpoint, you could risk losing the sale.  

For this reason, device marketers have to develop a locked-and-loaded targeting matrix with comprehensive objectives, message points, and tactics depending on the audience. With multiple audiences, program-based selling can be very effective—going beyond the fundamentals of simple launch branding. 

 What can a device do that a drug can't? It can give healthcare professionals a competitive edge. Once surgeons or hospitals are trained and equipped to offer a specific diagnostic machine, surgical system, or implant, devices can offer something unique that the practice next door cannot. 

To hone in on these advantages, let's first take a broad look at some of the complexities of device reimbursement. When implants are reimbursed, the process is not as straightforward as with a drug schedule.  

First, there are numerous cost codes, each reimbursed at different rates. For example, there's a cost for the device itself (HCPCS code), a cost for someone to put the device in the body (CPT code), and a cost for the facility resources surrounding the procedure (ICD-9 code). Each of these audiences has to be addressed in your communications. 

Second, not all implants are covered by managed care. Women who want breast implants, for example, generally have to pay out of pocket. Similarly, advanced technologies like prosthetic limbs are only partially reimbursed, so a patient who wants to upgrade from the basic model to a more advanced device may be required to purchase additional coverage. So cost must be taken into consideration. 

Third, equipment usually isn't directly reimbursed by managed care at all. An outpatient clinic or a hospital might use a capital expenditure budget or operational budget to purchase the device, with the intent of recouping that cost through procedural fees or diagnosis-related group (DRG) reimbursement. Because equipment is considered an investment in a medical business, such as a private practice or an inpatient facility, messages must target purchasing agents, and offer a sound rationale for the investment. 

Implants and equipment can, however, deliver major advantages to healthcare providers and facilities by generating better outcomes and/or unique approaches to, or treatment in, their local areas. These advantages may include: 

» Adding value to physicians by helping their practices perform with better clinical success. 

» Offering patient training and education materials to supplement a healthcare provider's efforts. 

» Delivering specific tools for a practice's self-promotion by supporting the group's advertising, PR, and gateway referral efforts. 

Not every type of device or organization has the liberty of offering these kinds of support, however. Some brands may be required to keep the focus on clinical benefit only. 

 Unlike pharmaceuticals, devices don't have the burden (or benefit) of launching with three phases of clinical trials right out of the gate, for the following reasons: 

» It's difficult to conduct a double-blind study with a device. 

» It's much more expensive to conduct a device trial than a drug trial. (Think of the training and intensive involvement from the manufacturer.) 

» It's challenging to go head-to-head with competitors, since endpoint definitions may vary from device to device. 

You might think this would make things easier for a device manufacturer than for a drug company. However, there are many pitfalls for device manufacturers that muddy the water. For one, the regulatory path for approval is often a 510(k), which is based on a predicate device in the market, so pre-market trials tend to be simpler in order to demonstrate safety. But approval can be challenging for a completely new concept that requires a PMA (premarket approval).  

The good news is that for innovative devices, there is a new fast-track pathway for getting a PMA. This year, the FDA's Center for Devices and Radiological Health (CDRH) intends to improve the FDA's premarket approval process using the "Innovation Initiative." But don't be fooled: It still requires significantly less burden of proof than for a drug at launch. 

For marketers, then, the benefits of devices are diverse—but so are the challenges.  

» Although clinical effectiveness is important, look beyond clinical effectiveness alone. Consider: Will it save or make money? Is it easy to use? Will it enhance patient compliance?  

» Use a variety of metrics for proof: retrospective data, meta-analyses, even bundles of case studies.  

» Don't underestimate the power of trial and experience. With equipment especially, some surgeon specialists are more comfortable than others in taking on some risk to "see for themselves" how a device works in their hands. 

It takes a deep understanding of the nuances of device marketing to get it right.  

There's a science to creative, whether it's an ad or a program. And it's important to remember that the expectation of the device customer is not the same as it is for a pharmaceutical product. Implants and equipment require different approaches, but they afford some exciting opportunities to build brands in completely new ways. Be open to the possibilities that devices present, and you can start to write your own rules—without stealing a single idea from your pharma friends. 

is Account Director, at HCB Health. She can be reached at 

Understanding the differences between drug and device marketing can make or break the brand's promotional activities.

Pharmaceutical Executive-06-01-2012

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