There isn't one of us who hasn't felt the painful sting of rejection at some time. It's part of the human condition; anyone who says they haven't been through it is either acutely neurotic, is suffering from chronic amnesia, or is in total denial.   

Why then must we take it so personally? Well, biology, for one. Scientists at UCLA have demonstrated that the brain's response to rejection is the same as the reaction to actual, physical pain. The pain is real and we all feel it; the difference is in how we deal with it. As Henry Wadsworth Longfellow said, "Into each life some rain must fall." Yet even through a hailstorm, we must carry on, the hail stones bouncing away, their sharp bites lessening with time.  

A person who is rejected is forced to make some emotional choices. The easy choice is to get angry and hole up somewhere with a vodka or two feeling sorry for yourself. Another option is to reflect on the rejecter, gradually dismissing her or him as ignorant, naive, misinformed, dumb—then climb up to a better place and make something good happen. Said another way, winners take a deep breath and bounce back, relaunching with boundless energy. When faced with rejection, we must act decisively and with enthusiasm at the earliest opportunity. 

A good example is one of our nation's greatest heroes, Abraham Lincoln, a man who was defeated in races for the Illinois General Assembly, US House of Representatives, and US Senate, as well as failing in a bid for his party's Vice Presidential nomination before becoming the 16th President of the United States. Decades into his career, he still considered himself a failure in comparison to the man he would ultimately defeat for the presidency, fellow Illinoisan Stephen Douglas. But it was Lincoln's perseverance and integrity that carried him through numerous setbacks and personal attacks.  

Lincoln had a number of obstacles to overcome—he had neither looks, formal education, nor money. He was called "a horrid looking wretch," and a "zoological curiosity," by the newspapermen of the day. He suffered brutal criticism of his administration and his personal character from detractors on both sides of the Mason-Dixon Line, as well as from members of his own Cabinet. Long tormented by his own melancholy and such torrents of criticism, he nonetheless stayed true to the course and his vision to preserve the Union. Abraham Lincoln, frequently named the greatest of all American Presidents, persevered in the face of the most cruel rejection.   

Whether rejection stems from a brilliant idea whose time has not yet come, a leadership style conflict, a promotion you thought you deserved but were passed over for, or lack of cooperation from key players in strategy implementation, the bounce-back strategy is crucial. Consider the difficulties executives face today, with tremendous turnover among the top ranks and reductions announced by eight of the world's 10 largest Pharma companies in the last three years.   

Getting to the top is no accident. Leaders become accustomed to being right, and having people believe in them. Therefore, when someone doesn't, it is, frankly, a blow—maybe even a bigger blow because of the personal investment of lifework, energy, passion, and vision.  

But rejection can also be a kind of gift. Dealing with the rejection in a positive way will allow the situation to propel you forward, making you better today than you were yesterday. Hear the train whistle blow and get aboard—rejection should be nothing more than a station stop along the line to your chosen destination 

Lincoln said: "If I were to try to read, much less answer, all the attacks made on me, this shop might as well be closed for any other business. I do the very best I know how—the very best I can; and I mean to keep doing so until the end. If the end brings me out all right, what's said against me won't amount to anything. If the end brings me out wrong, ten angels swearing I was right would make no difference."  

Success over time is the best tonic to rejection. So when it's time to step up to the plate, keep your eye on the ball and hit it out of the park. Everything comes down to practice, and rejection is an opportunity to practice greatness, wisdom, magnanimity, integrity, and perseverance.   

Sander A. Flaum is managing partner of Flaum Partners and chairman, Fordham Graduate School of Business, Leadership Forum. He can be reached at 

Articles

Leadership

Rejection is tough to take, but leaders have the drive and ability to bounce back from a setback with boundless energy

Get Over It!

I know I should be ashamed of myself, but I find that I just can't listen to the presidential candidates. I actually like Barack Obama and John McCain. They're not dumb, and they seem to actually speak their minds from time to time. But as soon as they open their mouths to talk about policy, it's as if these smart men fade into the distance and the pollsters take over. I want to hear what they're actually going to do, or try to do. Instead, they want to tell us what they think we want to hear. Listening to a political speech is like looking into a funhouse mirror: You think, can this really be how they see me?  

When it comes to healthcare, Barack Obama and John McCain seem to see us as good-hearted folks who aren't very good at math. 

Obama wants the 47 million uninsured to have insurance. Admirable. But 47 million multiplied by $5,000, the annual cost of an average health insurance plan, comes to a bit over $200 billion, roughly what we'll pay on the Iraq war this year, and about half of the total 2007 Medicare expenditures. That's not an impossible number, but it's an extremely unlikely one. Sure, we could develop cheaper plans, but the question is how much lower we can go and still solve the problem.  

McCain proposes to provide direct, refundable tax credits of $2,500 per individual or $5,000 per family to pay for health insurance. With roughly 100 million households in the country, that's an even bigger number, somewhere between $250 million and $500 million a year (compared with total federal tax revenues of $2.6 trillion). Is that really going to happen?  

Both candidates, of course, expect to save tons of money by eliminating waste and inefficiency. (They also apparently both see us as not having very good memories.) 

I realize the candidates aren't actually trying to be informative in their positions on healthcare. That would be politically dangerous. But it means there's no reason to listen to either one. 

 be worth hearing? I've got a little mental list. When I hear it, I'll know that they're actually serious. So, John, Barack, if you want this inattentive voter to listen to your healthcare policies, please: 

1. Tell me some things you think a national healthcare system 

 pay for. A big problem with getting your arms around healthcare is that there's no reason why costs shouldn't go up indefinitely. Sometimes rising standards will be the driver, sometimes fear of lawsuits, but there's no natural point at which to say "enough." That's going to be partly your job. Tell me how you plan to do it. 

2. Show me a connection between your plan and making US companies more competitive by removing healthcare costs from the cost of goods sold. 

3. Show me you understand the role of drugs in controlling as well as driving healthcare costs. No one would vote for a candidate who complained about the cost of motorcycle helmets if he didn't also talk about fractured skulls. It's the same deal here. 

4. Talk about Alzheimer's. In just a few years it promises to be an epidemic and an economic nightmare. There's still time to plan for it. Show that you understand. 

5. Finally, give up on drug importation. It's wrong, and it won't work, and you have to know that. Show some spine. 

Somebody, anybody, if you hear a word from either candidate on these subjects, let me know, and I'll tune in. Until then, I'll be in the funhouse. 

From the Editor

It's not that I disagree with the Obama and McCain healthcare proposals. It's that there's nothing actually there to disagree with

Healthcare Funhouse

At a time when the public seems terminally pessimistic that pharma regulation promotes the public good, it's reassuring to look back at a canny piece of legislation that for a quarter century has been doing just what it was intended to do. 

The law in question is the Orphan Drug Act of 1983, sponsored by Rep. Henry Waxman (D-CA). Back then, pharmaceutical companies were unlikely to invest in developing drugs for rare diseases—FDA had approved only 10 in the preceding decade. But Waxman's act offered some powerful economic incentives for orphan development, including seven years of exclusivity that blocks other companies from selling the same drug to treat the same disease, a 50 percent tax credit for clinical study costs, grants to support clinical research, and FDA protocol assistance. In 1985, further legislation added biologics to the program, and defined orphan drugs as treatments for diseases affecting fewer than 200,000 Americans.  

The ODA has demonstrated that economic incentives and regulatory flexibility can spur development of previously discarded treatments for small patient populations. Since enactment, FDA has approved more than 300 medicines for some 12 million patients around the world. Today, genomic discoveries have the potential to expand our understanding of the science behind many serious conditions, and personalized medicine promises increased benefits and decreased side effects for many therapies, commented Janet Woodcock, director of the Center for Drug Evaluation and Research (CDER) at a May conference sponsored by the Drug Information Association (DIA). Still, there are some 6,000 to 8,000 rare diseases, notes Woodcock, and "we still have a very long way to go." 

The incentives for industry contained in the ODA have generated some controversy, however. Certain orphan therapies such as human growth hormone became highly profitable, raising cries about limiting exclusivity and preventing "salami slicing"—seeking orphan status for a very narrow indication with an eye to promoting the drug more broadly after approval. In addition, high prices for certain orphan therapies have led to challenges for payers, and limited patient access to vital medicines.  

The ODA gave FDA the job of defining orphan diseases and potential treatments. In the last 25 years, FDA's Office of Orphan Products Development (OOPD) has received 2,622 requests for orphan designations, and has awarded that status to 1,850 products. Of those, 326 have been approved, and 41 of those orphan drugs were supported by FDA grants.  

After OOPD designates an orphan product, it's up to CDER's new-drug review offices to evaluate clinical protocols and approve market applications (as with any new medical product). Review staffs vary in how willing they are to modify data requirements to accommodate treatments for small patient populations. OOPD doesn't "meddle" in safety and efficacy assessments, notes OOPD chief Timothy Coté, but his office does provide input requested by review divisions, and works to prevent reviewers from rejecting products that might have modest benefit. 

Russell Katz, director of CDER's Division of Neurology Products, says that reviewers try to be flexible about orphan drugs, especially when no other therapy is available. He explains that randomized withdrawal studies and trial enrichment strategies can be useful for testing orphan drugs, but trials must have some minimum number of patients to justify the study. "The last thing a sponsor wants is to invest in a study that's fated to fail because it does not have enough patients," says Katz. 

The benefits of the US orphan drug program have inspired similar efforts around the world. In 2000, the European Union adopted an orphan drug program that has resulted in 28 product approvals. Now FDA and the European Medicines Agency (EMEA) are establishing common rare-disease regulatory processes, beginning with a joint application for orphan drug designation. That harmonization process was achieved in a record six months because the EU and US already had similar approaches, and the political winds supported more "trans-Atlantic administrative simplification," notes Kerstin Westermark, chair of EMEA's Committee for Orphan Medicinal Products (COMP).  

The common application may simplify the designation process, but each regulatory agency still does its own assessment. Each region's policies differ on key points—EMEA requires manufacturers to show that a new orphan drug will have "significant benefit" over any alternative therapy. There's also variation in the prevalence threshold for designating an orphan disease: 200,000 patients in the US, compared to about 240,000 in the EU, reflecting its expanded population. 

Further harmonization could involve developing a common annual report on orphan drug development, as well as similar orphan drug terminology and standards for clinical data requirements. FDA and EMEA also recognize the need for more common approaches to categorizing medical conditions—key to determining disease prevalence and orphan qualification. It makes a difference, for example, if a drug treats all B-cell, non-Hodgkin's lymphomas or only a specific subset of that disease class.  

In addition to clinical research issues, formulation and manufacturing challenges can potentially stymie orphan drug development. Many biotech orphan treatments involve complex production processes that can raise problems when scaling up or moving to new facilities. FDA recently emphasized that even life-saving orphan drugs are not exempt from quality standards when, in April, it blocked Genzyme's plan to expand production of a treatment for Pompe disease at a larger facility.  

FDA determined that Myozyme (alglucosidase alfa) from Genzyme's 2000L Allston, MA, facility exhibited differences in the carbohydrate structure of the molecule when compared to batches from the company's 160L plant in Framingham, MA. The agency requested more data from larger clinical trials to ensure that the differences do not affect product quality. Genzyme thus had to postpone its expansion and file a new biologics license application. The company said the delay will cost some $50 million in lost sales, plus the cost of providing Myozyme for free to some patients that it is unable to supply from the smaller plant.  

There is, however, a silver lining for biotech companies in this development: FDA's demand for additional clinical data to support Genzyme's site shift illustrates that the agency may require clinical trials by companies seeking to document comparability for follow-on biologics. 

No one is eager to make substantive changes in the Orphan Drug Act, but fuller implementation is on the agenda. Patient groups want to expand the ODA grants program, which has been stuck at a $14 million budget level for years, and suffers from eroded buying power; Congress regularly authorizes additional funding, only to see the number cut by appropriators.  

Another FDA project hopes to "rescue" abandoned orphan drugs: FDA has designated 1,850 orphan drugs and approved 326 products, which means that some 1,500 potential therapies have never come to market. FDA plans to search through the abandoned applications to find "the diamonds hidden in all that gravel," says Coté.  

There's a lot of optimism about orphan drug development as the research community makes advances in translational science and champions personalized medicine. Increased partnering of industry and patient groups, and growing demand for pediatric treatments open the door to many more therapies for rare conditions. And harmonization efforts are extending from the US and EU to Japan, Australia, and other regions.  

But clouds also loom on the horizon. Heightened fears about drug safety could expand post-approval study demands and impose limited distribution programs that overwhelm sponsors of  rare disease treatments. Such requirements will "significantly add to the cost of drugs," notes Marlene Haffner, previous head of OOPD, who is now with Amgen. And the cost of drugs, she adds, "is a very real issue."  

s Washington correspondent. She can be reached at 

Washington Report

Rare disease treatments are riding high as patient adcovates, pharma companies, and government officials celebrate the ODA's 25th anniversary

Smooth Sailing for Orphans

With a wide range of cancer treatments coming to the market, oncology has become one of the fastest growing segments of the pharma/biopharma business. In order to better understand how pharma companies can reach doctors with these new products, Market Strategies International (MSI) conducted its third annual MSImage Oncology & Hematology Study, which identifies those pharmaceutical/biopharmaceutical companies that oncologists and hematologists perceive to have the best overall image. The study asked 465 physicians to evaluate which measures drive a pharma/biopharma company's image and performance.   

 talked with Peter Carlin, senior vice president of Market Strategies International, about how pharma and biopharma companies can go about reaching this burgeoning market. 

In terms of marketing, what specific needs of oncologists and hematologists did the study address?

The study looked at how oncologists and hematologists define company image, and how they evaluate performance in terms of services and other value-added programs offered by pharmaceutical and biopharmaceutical companies. We looked at 31 different performance measures ranging from customer satisfaction issues to how an oncologist or hematologist generally perceives a company's commitment to their practice or their patients. The performance measures are divided into three different areas: sales representative performance measures, corporate commitment performance measures, and R&D performance measures. The study ranks all the companies that deliver oncology products to physicians.  

Genentech has been ranked number  one by oncologists and hematologists for three straight years; this year, Novartis, Sanofi-Aventis, AstraZeneca, and Amgen round out the top five. Essentially, Genentech finished first in all three areas. What's interesting about 2008 is that Genentech had previously been number one by a very wide margin. This year that margin really started to narrow. Novartis is now a much closer second, implying that oncologists and hematologists are starting to see Novartis as the major threat to Genentech's leadership. 

Over the last few years, Genentech has had four major products—Avastin, herceptin, torciba, and retuxin—that have been widely used by oncologists. In many respects, those products drove Genentech's leadership, as well as its profile among oncologists and hematologists. Those products have been around for a while, and they're still first in almost all their categories, but Novartis has come up with a number of different products, and has started to perform better on many of the measures we evaluated. Novartis is now second to Genentech in all the sales force attributes, as well as corporate commitment and R&D measures. 

What kinds of sales force attributes create a positive image of a pharma company? 

The most important sales force drivers among office-based oncologists were: 								

Being responsive to a physician's request

Providing valuable information to physicians

Respecting the physician's staff's time. 

The last two of these key sales force drivers—that reps respect physicians' time and that they respect the time of physicians' staff—are very important in the industry right now. MSI recently looked at whether or not sales reps were being restricted in terms of their access to physicians. It's been going on now for a while in the mass market (the non-specialty areas like primary care physicians), where more and more sales reps are finding it difficult to get into a physician's office to see them.  

We did a separate study with oncologists, and what we found was that a growing number of oncologists are restricting the access of sales representatives to their practice. And when they do see a physician, they're spending less time than they used to. It's a general trend throughout the industry.  

In oncology, clearly one of the key reasons for this is the nature of the practice and the treatment of patients. Oncologists want to spend a lot of time with patients; what they're looking for from sales reps is not old data but new information that's going to help move the needle and treat their patients more effectively. 

Oncology is the fastest growing area of the pharma/biopharma business. Still, a lot of the mass market products are finding it difficult to crack the market because of managed care restrictions and because of R&D issues that have been cropping up in clinical development. On the other hand, because of the focus on cancer, and the fact that cancer products are becoming much more widely used and certainly widely paid for by both Medicare and managed care, there are close to 25 major companies involved in oncology. 

Why is oncology growing so rapidly? Are cancer rates shooting up?

There's clearly an unmet need. PhRMA [Pharmaceutical Research and Manufacturers of America] just released a new study that said there are around 700 drugs for oncology. And an area that's driven by unmet need becomes a very competitive part of the industry. Five years ago, Pfizer didn't have an oncology division. Now it has a major one. Bayer, Merck, as well as big biotechs like Amgen and Genentech—all major pharma companies now have oncology divisions. 

Then why don't oncologists want to spend as much time with sales reps?

It's not that sales reps are becoming less important, it's that more pieces of a company are reaching the oncologist. In other words, a company has many different types of activities that focus on the oncologist, not just the rep, who is obviously interested in influencing prescribing behavior.  

What we've been suggesting to our clients is that they need to go beyond relying solely on their sales reps, and look at what we call "the total customer experience." Companies need to look at what the total customer experience is. This might include everything from CME to patient assistance programs to help with reimbursement—all the areas that are most important to an oncologist's experience with a pharma company.  

So the answer is a more holistic approach, rather than just focusing on the sales call.

That's correct. There are many services and activities being brought to the oncologist by pharmaceutical and biopharmaceutical companies—well beyond the sales force. In oncology, a physician's image of a [pharma] company ends up being important not just because they may or may not prescribe a product; they may also be willing to participate in other areas of the company's needs. For example, serving as a clinical investigator in a clinical trial. That's one of the key issues right now in oncology: There are simply not enough physicians and not enough patients for all the clinical trials. A company that provides a good experience in clinical trials is more likely to attract more physicians. If you deliver a good experience with CME, you're more likely to have physicians want to participate. If a physician has a strong image of and experience with your company, they're more likely to visit your company's booth at major medical meetings. 

So that's one area that I think companies need to be looking at—that total customer experience, rather than simply that sales rep call. The second area that is becoming very important is healthcare reform. More patients are finding it difficult to pay for drugs or cover the cost of out-of-pocket expenditures, and many pharmaceutical and biopharmaceutical companies are turning to patient assistance programs to help physicians provide their product to patients. In oncology, it's very important, because the cost of treating cancer has risen tremendously, and so almost every oncology pharma has a strong patient assistance program. This year, MSI has created a division called Access to Care, and one of the topics we've been studying is these patient assistance programs, because it's a very important part of the customer experience to oncologists.  

 is the senior vice president of Market Strategies International's Healthcare division, and brings more than 25 years of experience within healthcare and life sciences to the company. He specializes in oncology, nephrology, and hematology strategic market research and consulting, and has held senior level positions with companies including Novartis, Ciba and Pfizer. 

Thought Leader

Genentech had previously been number one by a very wide margin. This year, that margin started to narrow. Novartis is now a much closer second

The Total Customer Experience

It certainly isn't news that physicians are stretched thin. They're too busy (and increasingly, too skeptical) to see pharmaceutical sales reps and listen to well-crafted details about brands. Yet even though they're restricting time with reps, physicians have less and less time to spend with patients during office visits. In fact, a 2000 study ("Managed Care, Time Pressure, and Physician job Satisfaction) found that 83 percent of family physicians in HMO settings, and 54 percent of family physicians in small group practices reported needing more time per patient visit. 

The problem is further compounded for physicians treating pediatric patients, as they face a unique set of challenges. Not only do they struggle to find enough time with patients during office visits, they must also work to help parents understand the child's condition and response to treatment.   

Parents are often unsure how to assess and track their child's response to medication. That difficulty can result in an increased burden on the treating physician during the examination and follow-up visits. Worse yet, because of the volume of activity in today's typical medical practice, physicians often only have enough time to provide a quick synopsis of the child's condition and treatment before the patient and their parents depart. There is usually no communication until the next office visit, so physicians are left with numerous questions, such as:   					

Did the parent understand the diagnosis?  

Did they understand and are they following the dosing schedule?   

Is that medication the right one for this patient?   

How is the child responding to treatment?   

Will the parent be able to identify and discuss signs of progress and response to treatment?  

Even at the follow-up visit, these answers can be difficult to ascertain. In between office visits, parents may underestimate the importance of consistent treatment. In addition, during this "communication gap," parents are often unsure of what to look for, what questions to ask their children, and what information will be most helpful to the physician in discussing treatment progress. Imagine the difficulty of such a discussion during a time-compressed office visit, and you begin to recognize the unique challenge of the pediatric patient–physician dynamic.  

Together, Infomedics and Shire decided to address these challenges head-on while developing launch plans for a new ADHD treatment in an extremely competitive marketplace. The plan's aim was to go beyond traditional brand launch activities in order to reach physicians and make a deep impression on them. The launch plan included a program designed to deliver detailed patient feedback, and facilitate better communications between patient/parent and doctor.     

Here's how it worked. Parents of ADHD patients received disease education materials and an invitation to join the Shire CRM program through product starter kits. Enrolled parents were then asked to complete three brief surveys taken during the pediatric patient's early experience with the medication, addressing a range of issues including satisfaction levels and symptom relief.   

The parents' survey responses were then delivered directly to the prescribing physician in the form of an individual patient feedback report. With their survey responses in hand, physicians were able to quickly see the patient's treatment progress, level of satisfaction with the medication, symptom relief, impact on quality of life, and intent to continue on the medication. Reports not only brought the physician up to speed in between office visits on the patient's experience with the new drug, they helped to facilitate a more informed, efficient, and effective dialogue with the parent and child at the next visit. The surveys and resulting report provided a way for parents to know what they should be tracking and what the physician would be interested in knowing about the child's progress, making the conversation easier for both parent and physician. 

The survey feedback also produced an important by-product: Physicians received positive affirmation of their prescribing decisions from their own patients. And the significance of this affirmation shouldn't be minimized; when making prescriptions, physicians typically rely on their training, online prescribing database tools, medical journals, clinical trial data, and previous experience. Usually, they only hear from patients when a medication is not working for them. They seldom receive real world confirmation that the patient's needs are being met. 

With this feedback in hand, the physicians can now have a greater understanding when discussing treatment options and making decisions for other patients.   

For Shire, the feedback program had an immediate and major impact on prescribing. An independent review by IMS Health compared a group of participating (test) physicians against a control group of non-participating physicians. They found that:  					

The program increased prescribing within the first month of product launch, and quickly covered the costs of the program. 

Physicians receiving patient reports significantly increased their market share vs. matched control physicians. 

In addition, this novel approach established physician acceptance of the new therapy, with proof of patient response delivered through feedback reports. It also distinguished Shire as a manufacturer that understands the challenges patients/parents and physicians face treating ADHD. Shire representatives were excited to highlight the program to their physicians as a way to differentiate the brand from its competitors. Since representatives were not burdened with additional work around the program, they eagerly promoted the patient feedback program, which served as a positive reinforcement to their product detail. That allowed sales reps to follow up their messages with an offer to deliver early experience with the new product—and in so doing, show real confidence in the product. 

Providing physicians with direct feedback from their own patients (or in this case, the patients' parents) enabled physicians and patients to talk candidly and constructively about the treatment and challenges of the condition. Everyone involved appreciated the ability to provide structured feedback about this new treatment option, which facilitates improved communications between patient and doctor, and can potentially improve health outcomes.  

 is Product Director for Vyvanse Marketing, Shire. He can be reached at 

 is senior vice president, sales and client relations for InfoMedics. He can be reached at 

Columns

An innovative approach bridges the pediatric communication gap

Tough Nut to Crack

In the early morning cold of mid-January, members of the European Commission were poised for a cross-continental raid on the biggest pharmaceutical companies in the world. These dawn raids hit GlaxoSmithKline, Pfizer, and AstraZeneca, among others, with regulators intent on proving that the companies were engaged in price fixing and misusing patent rights. Strangely enough, the EC didn't have any evidence of these charges, or any wrongdoing whatsoever. Rather, the raids were prompted by a general sense that the market was broken. Competition in pharmaceutical markets, according to EC claims, didn't seem to be working. Drugs were too expensive, and not enough new ones were coming to market. 

"This all reflects a very aggressive attitude by the Commission against the industry which is unprecedented," says David Roberts, former global head of intellectual property at GlaxoSmithKline, now chairman of the consultancy Stratagem IPM. "Expect anti-competition action to follow." 

These are lively times for pharma. Governments are pushing back hard against the cost of healthcare, partly by putting the industry under a microscope. Generics companies are going after patents with a variety of new strategies. Tort lawyers are busily hunting for the next Vioxx, while consumer groups are on the prowl against marketing and advertising techniques they feel are misleading. 

In short, pharma's finding itself in the courtroom pretty often these days. To date, some interesting trends have emerged:  

The US government has shown increasing finesse with leveraging the qui tam provision of the False Claims Act, and now has a pipeline of whistle blowers' testimonies to fuel a generation of lawsuits against the industry.  

The Feds have shown the states how to go after Big Pharma in a number of different areas, specifically in Medicare and Medicaid fraud. Meanwhile, the lines are being redrawn  in the area of product liability and states' powers.  

The effects of court decisions are reaching well beyond the compliance officer's jurisdiction, and are having meaningful impact throughout the rest of the industry, particularly in medical marketing. 

There also seems to be no ceiling to charges over off-label promotion. Lilly recently paid $1 billion—the largest sum ever—to settle the investigation surrounding the off-label promotion of its bipolar and schizophrenia drug, Zyprexa.  

But there's more to prosecutions and lawsuits than fines and settlements. Some of the most interesting legal cases facing pharma these days could actually change the playing field. With that in mind, here's a look at some of the most important pharma-related legal cases of the past year or so.  

The US Constitution states that the laws of the United States shall be the supreme law of the land. When federal and state laws conflict, what the federal government says, goes. If this concept—called preemption—holds true in the realm of pharmaceutical regulation, FDA's decisions should trump the states. If FDA says a drug is safe, the states shouldn't be able to rule that it's dangerous. If FDA approves a drug's labeling, a state court shouldn't be able to hold a pharma company liable for failure to warn of a side effect. 

So how thoroughly does preemption protect drug and device companies? The question has been before the Supreme Court twice in 2008, with another important case expected to be heard this fall. "This is the most active the Supreme Court has been on the topic of preemption probably ever," says Mark Hermann, partner at Jones Day and coauthor of the popular "Drug & Device Law Blog." 

, which involved a patient who was injured when a Medtronic balloon catheter burst during an angioplasty procedure. Five days later, the Court heard 

, a case brought by a group of Michigan citizens who say they were injured by Rezulin (troglitazone), a diabetes drug that was withdrawn from the market in 2000 because of liver toxicity. 

Both cases dealt with the issue of whether state courts and juries had the power to resolve negligence claims for damages, or if the FDA's decision to approve a drug or device, through powers granted by Congress, preempted them. "At the base of the preemption argument in 

 is a premarket FDA approval process, which is a very stringent, well-considered process," says Caitlin Halligan, a former Solicitor General of New York State and now a partner with Weil, Gotshal & Manges. "Where you have decisions by FDA based on a less stringent review process, that's where you may see continued litigation over whether state laws can be enforced." 

, the justices voted 8-to-1 in favor of preemption. But that was a device-related case involving premarket approval, and there is specific language in the Medical Device Amendments of 1976 establishing preemption. Closer to home is 

—but once again, the case has limited applicability. Michigan, where the case was first brought, is one of a handful of states that have laws granting FDA-approved drugs protections against liability suits, except when the approval was obtained by fraud. In 

, the plaintiffs charged that the company concealed data about Rezulin's toxicity when it submitted the drug to FDA for approval. With Chief Justice John Roberts recusing himself, the Court split 4-4, affirming the decision of the lower court, which had ruled that the suit could go forward.   

, which goes before the Supreme Court this fall. In this case, a musician named Diane Levine was administered Wyeth's anti-nausea drug Phenergan (promethazine) by IV push. Somehow, the drug came into contact with arterial blood (something the label warns against); Levine's arm turned gangrenous and had to be amputated.  

The Phenergan label not only warns against the dangers of injecting into the artery, it urges "extreme caution" to prevent this outcome when the drug is given by IV push. The plaintiffs argued that the label should have prohibited IV push injection. Wyeth argued that FDA's authority over labeling prevented them from doing so, and that the suit was preempted. The Vermont Supreme Court rejected the claim, and the case now awaits review by the US Supreme Court. 

It's a case that potentially offers companies a broad shield against product liability suits. "If the court in 

 finds that state court actions are preempted, it would set a new base line by taking a wide range of tort claims off the table," says Halligan. "That's a powerful tool for industry in terms of predicting and containing its litigation exposure."  

Intellectual Property: Isn't It Obvious? 

To be patentable in the United States, an invention must be novel, non-obvious, and useful. In one of the most important intellectual property cases in recent memory, 

, the Supreme Court examined an adjustable gas pedal connected in a specific way to an electronic throttle, and declared the invention obvious and unpatentable. In the process, the Court laid out new guidelines for obviousness that have had significant impact on the pharmaceutical industry, making pharmaceutical patents harder to obtain and easier to invalidate. 

Jonathan Singer, a principal for Fish & Richardson, explains that the whole way of looking at obviousness has changed. "It used to be a much more rigid analysis," he says. The patent stood if the elements of it weren't specifically disclosed in prior art or the total body of knowledge available, and if one had to combine two or more references of prior art to create the invention. "Now it's more about, if one looks at prior art, how would one with ordinary skill interpret it? If it's a logical next step to get where the patent is, there can be a finding of obviousness. Watch for companies on trial to focus on telling the 'invention story' and demonstrating unexpected results," says Singer. 

What could be at stake are formulations, controlled releases, and enantiomer patents, which in many cases represent line extensions and next-generation dosing of pharma's remaining blockbusters. 

 has already been used to invalidate several such patents. For example, Mylan successfully overturned the patent to Pfizer's Norvasc by attacking as obvious the idea of creating the besylate salt of amlodipine, the drug's active ingredient. (The patent on amlodipine itself had already expired.) The formulation of Merck's Pepcid Complete—which uses an impermeable coating on granules of famotidine—was similarly declared obvious under the new rules.  

But the rules for obviousness are still being written. As a single enantiomer of a previous drug, Forest's SSRI Lexapro looked like a good target. The court found otherwise, at least partly because of the difficulty of separating the enantiomers. And Mylan argued that the chemical structure of Takeda's Actos (pioglitazone) was an obvious development on a known compound. The court said that wasn't enough, stating, "[I]n cases involving new chemical compounds, it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new claimed compound."  

"The fact that the Supreme Court chose to rejigger the standard for determining whether a patent is enforceable or valid is huge," says Jim Hurst, litigation partner at Winston & Strawn. "It's too early to tell if it going to result in patents being held invalid or not, but we know that in 90 percent of patent cases, the parties and the court are analyzing 

Criminal Prosecutions: DOJ Gets Personal 

By now, just about every Big Pharma has been investigated for off-label marketing, and gone through what's become a fairly standard settlement process: huge fines, a Corporate Integrity Agreement, and a long list of compliance and monitoring tasks. It's only in the biggest and most egregious cases—such the Feds' whopping $875 million bust of TAP in 2001 for using kickbacks and other questionable tactics to promote Lupron (leuprolide)—that criminal charges have been levied against specific individuals. (The TAP defendants, by the way, were all found not guilty.) 

But now the Justice Department is raising the specter of individual liability in the pharmaceutical industry. Over the last three years, it has brought criminal charges in three important cases. In 2006, the US District Court in Brooklyn charged Maryland psychiatrist Peter Gleason with the unlawful promotion of Xyrem, a drug  approved for narcolepsy that shows promise in fibromyalgia and other conditions. (The charges were against Orphan Medical, a company that was later acquired by Jazz Pharmaceuticals.) It contains the active ingredient gamma-hydroxybutyrate, which the Drug Enforcement Agency classes as a Schedule III drug. Although physicians enjoy far greater liberties to talk about off-label uses for drugs, the state felt that Gleason went too far, taking tens of thousands of dollars from the drug's manufacturer in exchange for touring the country touting Xyrem's benefits in treating depression and pain relief. The indictment raises troubling issues about regulation of physicians' free speech and the use or lack of use of scientific evidence in forming medical opinions. The case has not yet come to trial. 

In 2007, the three top executives at Purdue Pharma pled guilty to criminal charges of misbranding for their part in promoting OxyContin as safer and less subject to abuse than other pain relievers. The company paid more than $700 million to settle the case. Then-CEO Michael Friedman, general counsel Howard Udell, and former chief scientific officer Paul Goldenheim paid fines ranging from $7.5 million to $19 million.  

Perhaps the most curious case is the indictment this past March of Scott Harkonen, former CEO of the biotech InterMune. Starting in 1999, InterMune marketed Actimmune (interferon gamma 1B), which was approved for chronic granulomatous disease and severe malignant osteopetrosis—both rare, hereditary conditions. However, most of the sales of Actimmune were for idiopathic pulmonary fibrosis (IPF)—also a rare disease, but a much bigger market than either of the approved uses. In 2006, the company paid nearly $37 million to settle False Claims Act violations and off-label marketing charges, and Harkonen moved on to become CEO of the biotech CoMentis.  

But now, the DOJ has come back for Harkonen personally, charging him with wire fraud and felony violations of the Food, Drug, and Cosmetic Act for his part in the off-label promotion. The smoking gun: a press release, issued in 2002, reporting on a clinical trial of Actimmune in IPF. The trial, as subsequently written up in the 

, was a failure. The drug had no effect on progression-free survival, pulmonary function, or quality of life. More patients died on placebo—17 percent, compared with 10 percent on Actimmune—but the difference wasn't statistically significant. That didn't stop InterMune, though. "InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF," read the press release headline.  

"The fact that the case involves a press release as a central facet [makes it] a ripple effect case—it has importance for everybody in the PR business," says Wayne Pines, president of regulatory services at APCO Worldwide and former associate commissioner for public affairs at FDA. "It shows the seriousness with which the government takes off-label cases." 

Harkonen's first court appearance, to review discovery, is scheduled for September. 

Until a recent key decision, if you outlicensed a piece of patented technology to another company, the deal brought with it a bonus piece of protection for your intellectual property: The company you licensed it to wasn't allowed to ask a court for a declaratory judgment holding the patent invalid. The Federal Circuit interpreted a license as a settlement between parties and said a licensee cannot challenge a patent held by its partner without first breaching that contract—a risky action, to be sure. 

That rule has changed, thanks to a Supreme Court decision over one of the most controversial of biotech patents—a decision that seems likely to change the playing field for both licensing and at-risk launches of generics. 

The suit involved Genentech's so-called Cabilly patents, (named for inventor Shmuel Cabilly), which protect the company's method for developing antibodies. The original Cabilly patent was filed in 1983. The same year, a company called Celltech filed a similar patent in the UK. After long and complicated proceedings before the patent office and the courts, Genentech ended up with a new patent, Cabilly II, granting it a full 17 years of protection—for a total of 29 years of patent life, expiring in 2018. This was great news for Genentech, but bad news for companies that licensed the technology, including MedImmune, which paid royalties to use the Cabilly technology on Synagis, a drug for pediatric respiratory viruses. 

MedImmune had few options. With 80 percent of its revenues wrapped up in Synagis, the company couldn't risk breaching the contract. But if it didn't breach the contract, there could be no suit. The Supreme Court saw things differently. "Where threatened 

 action is concerned, a plaintiff is not required to expose himself to liability before bringing suit to challenge the basis for the threat," wrote Justice Antonin Scalia in the majority opinion. He argued that the same should hold true in private disputes as well. 

The decision now gives licensees the best of both worlds. "The issue has always been: you would have to give up your license to challenge the patent, which meant if you lost, you'd be stuck," says Stephen Albainy-Jenei, an attorney with Frost Brown Todd, and the editor of the "PatentBaristas" blog. "That has really put a damper on anyone challenging. It's going to make licensees to take a harder look. Are they paying a bunch of money where they don't need to?" 

While MedImmune may destabilize thousands of existing patent settlements and license agreements, a more immediate effect, as shown in 

Caraco Pharmaceutical Laboratories v. Forest Laboratories

, seems to be the wider opening for generic companies to seek the court's decision on a patent's status. 

And by the way, acting on its own, the Patent Office voided Cabilly II. Genentech is appealing, which should take a couple of years. The patent remains enforceable in the meantime, but Genentech and MedImmune have settled, terms undisclosed. 

Ever wonder why the federal government is so relentless in pursuing pharma companies for violations of the False Claims Act? It could be a matter of return on investment. Every dollar invested in FCA healthcare investigations brings in a return of $15. 

"I would like to say the explosion in growth and dollars is capping off, but unfortunately, I don't think we've reached the peak," says Paul Kalb, MD, head of Sidley Austin's healthcare group. "This has been a major priority for the government."  

While off-label promotion has been the focus of some of the highest profile investigations and settlements, some important recent cases focus on different aspects of pricing. 

One approach involves "nominal pricing." Under federal law, the government is supposed to pay the lowest price manufacturers offer any customer. It makes just one exception: to encourage companies to sell its drugs cheaply to charity, it doesn't count products that are discounted 90 percent or more.  

Many pharma companies offered nominal prices to hospitals to encourage use of their drugs. That may have been legal, but it stuck in the craw of many critics. "It's heroin-dealer economics," said Patrick Burns, spokesperson for Taxpayers Against Fraud, in an interview with 

. "Your first shot is for free, and after that it becomes more expensive—not to the hospital but to Medicaid, which is paying the bill." In 2005, when the Deficit Reduction Act rewrote the rules, nominal pricing was limited to institutions such as intermediate-care facilities for the mentally retarded, state-owned nursing facilities, and other "safety net" providers. 

In the meantime, state and federal prosecutors started putting together a case against Merck, arguing that the nominal prices it offered hospitals weren't really nominal because they were tied to conditions—giving the drug preferred status or hitting market-share goals. That theory might or might not have persuaded a jury, but it didn't need to. Why? Because drug companies found guilty of Medicare fraud can be banned from all federal programs—the "pharma death penalty"—so such cases rarely if ever go to trial. This February, Merck agreed to pay $650 million to settle the case.  

And litigation continues over one of the key numbers used for years in calculating Medicare and Medicaid reimbursement and rebates: Average Wholesale Price. AWP may have been intended to reflect actual wholesale prices, but in practice it was always a "sticker price" set by the companies. Many states, however,  have argued that AWP was supposed to be what the name implied, and that by reporting anything else to the government, pharma companies were gouging Medicaid programs. In June 2007, Judge Patti Saris heard a nationwide, multi-district class action case involving AWP and came to some fairly temperate conclusions. She didn't buy the idea that AWP meant just what the name implied, but she determined that government and payers expected a fairly standard "markup" in AWP. She shot down companies that had exceeded it. In March, 11 companies paid $125 million to settle their part in the case. 

Features

A look at some of the court cases that could actually change the pharma playing field

Pharma's Day in Court

A March 2008 report from eMarketer notes that in 2009 online ads will make up 10 percent of the total US advertising spend, amounting to $30 billion. Of course, the crossing of this critical threshold won't come as a surprise to pharma marketers, who have watched their share of online spending increase by leaps and bounds in recent years.  

As digital grows from an experimental tool to a mature channel, more emphasis is sure to be placed on maximizing return on investment, bringing online in line with every other channel in the marketing array, from sales representatives to direct-to-consumer (DTC) television ads. Years of highly effective off-line marketing programs have allowed most organizations and brand managers to develop a list of tried-and-true principles to ensure the success of the next program. But because digital is such a new channel, no one has yet developed a comprehensive list of principles for successful marketing online.  

Consumer packaged goods (CPG) companies, fighting in an ultra-competitive marketplace with small profit margins, have had to be innovators in finding new ways to communicate their messages to their customers. And they have led much of the innovation in online brand promotion, utilizing Web sites, search engine optimization (SEO), e-newsletter programs, mobile marketing, and tailored, individualized messaging. Applying the lessons learned through years of experience in CPG marketing to pharma can give an immediate advantage to the first companies willing to truly embrace these principles.  

If pharma can effectively implement these principles, it has potentially even more to gain than CPG companies: Because pharma products have much higher margins, a similar investment yields much better returns. So where CPG must carefully manage spending on a program to maximize the small lifetime value of a customer, pharma can deliver an even richer experience, because its lifetime value is far greater. 

Industries such as CPG have developed some of the most cutting-edge digital programs, and also have learned a lot of expensive lessons. Much of this experience can be effectively (and legally) tailored to pharma, and those companies who get out front in this race are going to have a considerable advantage for a long time. 

Of course, simply copying every digital program created for CPG isn't going to work, because regulatory issues between CPG and pharma aren't comparable. (Pharma is, of course, one of the most regulated industries in the world.) However, there are ways to implement online programs that obey the regulatory rules and also respect the sensitive nature of DTC pharma marketing. A series of comical YouTube videos may not be right for your brand, but completely discounting that channel isn't the answer either. (Novartis, for instance, ran a very effective campaign for 

, garnering more than 795,000 views of the contest rules video alone.) 

Digital no longer gets a free pass. As budgets become tighter, senior managers are going to require that every program show value from day one. If pharma companies are willing to embrace the 10 principles we've developed by working in both healthcare and CPG, we believe their brands will be stronger and that they will see an immediate improvement in a number of measurable outcomes for all of their digital programs.  

 A demonstration, picture, or video always beats words on a page. Make your content scannable (easy to read quickly) and memorable. 

 uses videos of both patients and healthcare professionals to deliver content, instead of using countless pages of text. 

 Do your Web site, e-newsletter, banners, AdWords, widgets, blog, emails (and so on) all work together to drive action? You've got to do all this before even considering TV, radio, and print. Pharma can learn a lot from the marketing of alli, an over-the-counter product from GSK. The OTC version of weight loss pill Xenical, alli launched with a large media campaign that included several unique consumer programs such as a comprehensive starter kit with each bottle (which included a well-designed pill case) and a highly customizable Web site at 

. What made the program stand out, however, was the alli cookbook, with special recipes to help users avoid foods likely to cause undesirable side effects. In-store efforts pulled all this together with excellent product placement strategies. 

3. Deploy Rapid Segmentation With Digital Technologies

 There's no excuse for sending the same thing to everyone, or for providing the same information to everyone. Find out what each Web site visitor needs and provide it. 

, the Nexium-branded site, does this with its navigation. Visitors can indicate whether they are curious about symptoms, are suffering from symptoms, are ready to talk to a doctor, or are a current Nexium patient. Depending on what they select, they have immediate access to content tailored to their needs. 

4. Create Value for Everyone, Not Just Your Brand

 No one trusts Big Pharma anymore, right? So create something that helps the patient, and they'll help you. A number of brands have used an unbranded site to educate patients and help them find the information they need. Roche did it well with 

, a site that offers good, basic information about the flu and useful tools like a flu tracker—all without pushing the company's flu product, Tamiflu. This approach has undoubtedly driven traffic and awareness of Tamiflu. 

 Give users the ability to make your stuff their own—be it through customized homepages, content they can borrow, or a section of your site that they own and manage. Once they've invested time and energy there, they'll be more likely to return to your site. This rule hasn't been fully embraced by any pharma companies, but brands throughout the healthcare industry have effectively leveraged it for years. Consider an online program to support Glucerna and FreeStyle from Abbott Nutrition, Diabetes Control for Life (

). All features of the site are completely individualized, allowing users to select the tools most useful to them, customize meal plans and activities, and determine which news articles appear on their personalized site. 

 Research shows that consumers find visually appealing sites more credible than their plain counterparts. Did you make your site look like an exam room? (Incidentally, in the same study, healthcare professionals had the exact opposite reaction, preferring more plain-looking sites.)  

 Because imitation is the sincerest form of flattery, flatter. Learn from what's worked, and what hasn't. Don't stop at looking within your company or even within pharma at large. Apply lessons from other companies and industries. From this, create something that's never been done before. Don't shy away just because it hasn't been tried before. If it's effective, go with it. 

 Because you need to impact a lot of people to meet your goals doesn't mean that spending more money is the answer. Find out what your patients want and deliver it. Create programs you can build over time in planned phases. As you get positive results and more funding, build on your successes and cut your losses. Resist the temptation to create more one-off campaigns that don't have a long life span. 

 Yes, pharma and healthcare have their own unique set of regulatory hurdles, but this doesn't mean you have to ignore all of the new channels available to you. If the latest tools (e.g., Facebook, MySpace, widgets, etc.) aren't allowed, find smart people who can figure out how to take what patients love about those tools and distill it into something you and your legal team can agree on. Reckitt Benckiser is one of the few companies willing to reject the idea that MySpace and sites like it aren't a place for pharma. You can visit their MySpace page and become friends with "addiction411." This page links to the 

 site. The effective use of MySpace to help educate adolescents (one of the site's key demographics) about the risks of and treatments for prescription painkiller addiction shows that just about any digital channel can be brought into regulatory compliance. 

  With infinite choices online, you have only seconds to show why you are genuinely different before your audience moves on to the next search result. If you obey all of the above principles but ignore this one, you might as well give up now. 

Now that you know the rules, be sure to consider them before designing your next digital program or look for ways to enhance your existing programs. Tack them to your wall and look for ways to enforce the rules every day. 

Jonathan Richman is director of business development for Bridge Worldwide. He can be reached at 

A strict marketing regimen will help keep your brand healthy in the digital

Exercising your Brand

 So said MIT biologist Phillip Sharp, Nobel laureate and founder of Alnylam Pharmaceuticals, to 

 in 2003. Sharp was rhapsodizing about RNA interference, or RNAi, the swift and efficient way a cell protects itself by dispatching tiny snippets of RNA to silence harmful gene expression. Researchers at Harvard had just succeeded in using RNAi to "turn off" a worm's genes, one at a time, to identify which causes obesity. And given that the human RNAi pathway is very similar to a worm's, this was yet another in a series of fast affirmations of RNAi's therapeutic promise. While gene silencing (through approaches such as antisense) has so far proved dicey, and RNA research has so far yielded a decade's worth of failed drugs, RNAi is sparking visions of a revolutionary technology spitting out one new highly specific compound after another—almost as fast as the Human Genome Project can name disease targets.  

Today, just five years since Sharp's pronouncement and only a decade since the discovery of RNAi, the first RNAi drug, Opko Health's controversial bevasiranib, for wet age-related macular degeneration (AMD), is enrolling Phase III, with a competitor or two right behind.Moreover, in these tough financial times, RNAi R&D shops are flush with cash. Kalorama Information estimates that the best case market for RNAi and other nucleic acid (NA) therapies is worth $210 billion, led by neurological diseases ($83 billion), cancer ($44 billion), and autoimmune diseases ($42 billion). Since 2005, leader of the pack Alnylam has inked milestone deals ranging from $700 million to more than $1 billion with Novartis, Roche, and Takeda, while Merck bought Sirna Therapeutics flat out for $1.1 billion.  

Yet despite the enthusiasm, the "gift from heaven" remains largely an article of scientific faith. While direct delivery to the eye and the lungs has been achieved, systemic RNAi delivery (intravenous or subcutaneous, for example), which would open up RNAi for many more diseases, is far more challenging. (Significant progress has been made for systemic delivery to the liver, tumor tissues, and kidneys.) "RNAi will not be validated as a therapeutic until there is a market launch of a systemically delivered product," says Barbara Bolten, a Decision Resources biotech analyst. "If this milestone is achieved, there will be an explosion of interest and investment equal to what we see in biologics today." 

The discovery of RNA interference is the latest triumph in the resurgence of the RNA molecule as a focus of intense scientific interest. Kicked to the curb by the mid-century discovery of DNA, nondescript, single-stranded RNA was long viewed as subsidiary to its double-helix master, shuttling production orders to the cell's protein-making refineries. In this scenario, proteins, designed by the DNA, carry out most of a cell's function, including the on/off switch for genes. (For another view of recent RNA research, see "That Thing about RNA".) 

"There's been a huge leap in our understanding of RNA," says Jim Niedel, a managing director at New Leaf Venture Partners and former chairman of Sirna Therapeutics. "Just about everything that DNA, enzymes, and proteins do, RNA was basically there first."  

Biologists Craig Mello, of the University of Massachusetts, and Andrew Fire, of Stanford, discovered RNAi in 1998 while studying the worm genome. The simple, elegant process by which RNA blocks gene expression was gradually worked out: As double-stranded RNA (dsRNA) enters a cell, it is recognized by an enzyme dubbed Dicer, which chops the long strands into many smaller units, 20 to 25 nucleotides long, called small interfering RNAs (siRNAs). These siRNAs are the stars of the show. Like dsRNAs, they're two-stranded. In the cell, the strands are separated and the active strand is loaded into the Slicer complex which is then guided by the small RNA toward its target: a long strand of messenger RNA (mRNA) carrying coded information from DNA to the cell's protein-making mechanism.   

Could gene silencing be the next great innovation in drug development? Some biotechs are betting on it.

Pharmaceutical Executive-07-01-2008