In today's competitive business environment, the pressure to reduce operational costs while simultaneously maximizing revenue and shareholder value is a challenge for executives in every industry. In the pharmaceutical industry, one area of significant loss—and opportunity—is managed care rebate programs.  

The rise in participation in managed care programs in the US is staggering—from 40 percent in 1990, the rate has skyrocketed to 90 percent today. Much of this growth can be attributed to the government's use of managed care programs through Medicare Part D. In addition, since 1990, consistent fiscal pressures have increased the role of PBMs and other managed care organizations as principal negotiators with pharmaceutical manufacturers for complex rebate agreements. 

 Drug Expenditures and Percent of Healthcare Cost  

Because pharmacy benefit managers (PBMs) oversee formulary development, managed care rebates have become the essential tool for pharmaceutical manufacturers to influence market share. Yet because most manufacturers don't have the necessary data on rebates, they lose billions of dollars each year in overpayments to trading partners.  

Fortunately, manufacturers can adopt a series of "best practices" in this area, which will mitigate revenue leakage.  By gaining access to granular, prescription-level sales data, manufacturers can identify the discrepancies that are responsible for rebate overpayments, address the issues with their trading partners, reclaim lost revenue, and, eventually, stop the bleeding. 

Manufacturers enter into contractual relationships with PBMs, who in turn sell prescription medications to their constituents. Because patients pay different rates for a prescription based on their program's negotiated price, the actual price of the prescription isn't known until the drugs are distributed. This situation has resulted in a highly complicated rebate process in which PBMs submit invoices to manufacturers for rebate payments based on criteria such as sales volume or market share. These invoices typically include a summary of sales data representing what the PBM believes has been sold. Typically, the manufacturers review the summaries and pay the invoices. 

This use of summarized data was sufficient when the volume of prescriptions paid through the rebate process was relatively low in comparison to the total number of prescriptions. But with more and more prescriptions being purchased via managed care plans, submission errors have increased exponentially—and most of those errors don't save money. Most manufacturers don't even realize that summarized sales data masks a variety of errors and discrepancies. For example, members often switch between prescription drug plans within a program. As a result, two PBMs might submit rebates for the same individual, charging the manufacturer twice for the same drugs. Another source of overpayment is mathematical mistakes, such as decimal point errors in units of measure, which can dramatically skew rebate claims. 

Because pharmaceutical manufacturers only have access to high-level summaries from PBMs, they have no way of analyzing the underlying data to identify the source of errors. They are, in fact, flying blind. According to several internal audits, manufacturers overpay millions of dollars in rebates each year with no clear understanding of why, and no documentation to support potential disputes.   

And it's a very big deal. Collectively, these discrepancies result in billions of dollars in lost revenue for the pharma industry. Based on today's prescription drug expenditures, an error rate of only 1 percent would result in industry-wide revenue leakage of more than $2 billion. And that's a conservative estimate when you take into account that the average error rate is more like 3 to 5 percent. 

Somewhat surprisingly, most manufacturers have not focused on claims validation and the clear opportunities it offers for revenue recovery. There are two main reasons: some have tried and failed, and others are simply not aware of the issue.   

Many tier-one pharmaceutical manufacturers with annual gross revenue of more than $5 billion fall into the first category. They're aware of rebate overpayments, and have tried to build and implement their own internal systems to gather and analyze detailed sales data from trading partners. But there are many challenges in building complex, data-intensive information systems, and the results have been less than satisfactory. 

Other manufacturers have hired vendors to gather and analyze the data externally. But in this "one-size-fits-all" solution, the vendors were unable to drill down to the manufacturers' individual trading partners and uncover specific errors and discrepancies.  This is due to the fact that these vendors perform an identical, limited set of data validations for all PBM submissions.  Manufacturers are, therefore, unable to alter validation parameters for particular PBMs or data submissions in order to target entity or data-specific error trends and known issues.  As a result, they could only produce high-level reports that were not much better than what PBMs were offering.  

Many tier-two and smaller pharmaceutical manufacturers, those with annual gross revenue below $5 billion, fall into the second category: they simply are not aware of rebate overpayment. They typically don't have the resources or infrastructure to identify such issues in the first place 

According to the Centers for Medicare and Medicaid Services' (CMS) National Health Care Expenditures Projections: 2005–2015, prescription drug costs will grow an average of 8.1 percent over the next 10 years. This indicates that at least $446 billion will be spent on prescription drugs in the year 2015(roughly double the expenditure in 2007.) Based on those projections, revenue leakage for manufacturers will skyrocket to almost $4.5 billion by the year 2015.  

The advent of Medicare Part D has also thrown fuel on the fire. Perhaps the biggest script processing risk imposed by Medicare Part D is the potential massive switching of participants on a yearly basis between various Medicare Part D managed care plans. As of September 2007, more than 26 million individuals were enrolled in Medicare Part D, and this number is expected to grow to 43.8 million by 2015, further increasing the risk for error. 

Another major issue stems from the fact that Medicare Part D is administered by commercial entities—the same entities that administer commercial drug plans. At its creation the government, looking for cost efficiencies and not wanting to create additional infrastructure, outsourced management of Part D to these companies because they already had the infrastructure in place to manage the programs.   

But this consolidation has led to a host of rebate errors.  The companies that manage Medicare Part D distribute prescription drugs under the various programs but with different price structures, and process the sales data through the same computer systems internally, often resulting in mispriced drugs, duplicate rebate submissions, and other discrepancies that are passed along to the pharmaceutical manufacturers. Add to this scenario the switching of participants between Medicare Part D and commercial plans, and you have a recipe for disaster. 

Further roiling the managed care rebate atmosphere are significant changes taking place within the commercial PBM industry. For one thing, smaller PBMs are growing at the expense of larger ones. In 2002, the top three PBMs by prescriptions-per-year—held over half the total market share. By 2Q 2007, their share of the market had dropped to 44 percent. That same quarter, the top five PBMs' share dropped from 70 percent in 2002 to 61 percent. 

These industry dynamics increase the risk for error in a variety of ways. Rapidly growing, smaller PBMs may have more immature processes and higher manual intensity, thereby increasing the risk of poor script quality and/or rebate processing errors. Mergers and divestitures among PBMs could also bring about organizational, process and automation/IT risks. All of these factors put increasing pressure on pharmaceutical manufacturers to incorporate a process through which they can validate claims and stem the flow of lost revenue. 

The question for pharmaceutical executives is how best to guarantee results and maximize benefit. Based on 20 years of experience consulting with the world's leading pharmaceutical manufacturers, here are my best practices for claim validation and reducing rebate overpayment. 

 Deploy an internal, integrated solution to automate claims validation; this offers a better return-on-investment than an external service. Once the initial acquisition and implementation costs have been realized, ongoing costs for an internal solution drop dramatically. You'll enjoy continual revenue recovery while remaining in full control of the process. 

The other benefit of having the data in-house is that it enables you to perform a variety of advanced analyses to improve overall business processes.  For example, manufacturers can use this data to make educated decisions about their contracting relationships. 

 Manufacturers need a solution that enables them to examine and validate sales data down to the lowest granular level. You should be able to view the data by individual trading partner, submission time period, and each individual submission. That way, you can uncover and resolve specific discrepancies and errors. In addition, you can identify whether or not certain trading partners have tendencies toward particular issues with their data, and if so, improve your efficiency by targeting those specific issues moving forward. 

 Take control of your managed care rebates by designating someone within your contracts organization to be responsible for minimizing rebates and maximizing retained earnings. To be effective, this individual must have maximum control of how data is validated. This includes, on a granular scale, manufacturer- and product-specific elements, as well as the ability to vary validation strategies by individual trading partner and data submission.  

 Directly integrate the claims validation solution with your internal contract and rebate payment systems in order to maintain the full integrity of the results. This provides rapid and accurate responses to data corrections within incoming utilization submissions, as well as within your own contract membership and product structures. 

 Implement systems that capture and retain all utilization data throughout the life cycle of the claims validation process. Ensure that you can access your prescription-level data at any time, and that you have a full audit trail to demonstrate how the data was validated.  This will support trading partner reconciliation activities and help facilitate internal and external audits. 

 Clearly define your rebate validation process, ensuring it utilizes consistent and comprehensive validation tests. If you don't know whether or not you are operating in the most effective manner, take a snapshot of a few PBMs over a short period of time. This exercise will give a sense of what revenues could be regained through a claims validation strategy. 

At this juncture, it's vital for manufacturers to recognize the inevitability of government examination within the context of Part D. As the next presidential election approaches, both opponents and proponents of the Medicare Part D legislation will look to more effectively quantify its results throughout the marketplace. Therefore, it's crucial that pharmaceutical manufacturers implement strategies within their commercial and Medicare Part D processes that provide the same level of detailed examination and transparency as is common practice within their internal Medicaid operations.  

Now more than ever, market forces have converged that mandate that pharmaceutical manufacturers deploy a consistent and reliable strategy for utilization-based claim validation. Fortunately, this is one area that all but guarantees a solid return on investment along with numerous other benefits, both tangible and intangible, for those manufacturers that have the foresight to capitalize on the opportunity.

 is the vice president of Life Sciences Direction for I-many, Inc. He has consulted with leading pharmaceuticaturers to successfully validate rebate submissions, and currently consults for seven out of the 10 largest pharmaceutical manufacturers in the world. He can be reached at 

Articles

Features

Manufacturers overpay PBMs millions of dollars each year in rebates overpayments. Here's how to stop the leakage.

Stop the Bleeding

What's the most frustrating thing about being a sales rep? Micromanagement. Take the common pharmaceutical sales manager: he or she knows the situation on the ground, but isn't allowed to manage. This causes increasing frustration, especially when managers are given specific revenue targets but not the necessary information and flexibility to achieve their goals.  

Typical refrains such as "Why does the home office think they know which doctors to call and how to detail them better than me?" and "I know the doctors in my territory and the tactics my competitors are using in the field" are becoming all too common. Thus, it may be time to move forward with decentralization of the decision-making process—an old idea that's ready for a serious reassessment given the competitive environment and the state of technology today. The stakes are higher than ever, with a need to use every resource in the sales arsenal more efficiently. 

A few organizations have already made the switch to decentralization, and have reaped benefits. For example, one biotech company recently enabled its specialty representatives to identify and follow up on triaged patient cases in its payer database. This led to a decrease in turnaround time by the payers in resolving patient cases, more revenue, and a shorter cash cycle for the company. The field managers were also equipped to analyze their representative's performance, and were given visibility into specific cases to redirect or mentor the representative, as necessary.  

At both levels, the technology encapsulated a business decision-making framework used by representatives and district managers to get answers to their specific questions. Such a system not only reduces the workload for the home analysts, but also helps build loyalty, efficiency, and a "can-do" spirit among the field force. In the long run, such a culture will give rise to pharmaceutical sales teams that are more responsive to new opportunities and adaptable to the market challenges they face.    

Today, pharma sales managers are deluged by sales reports that only manage to confuse an already challenging job. It is no wonder most of these "reports" go unread or even unopened. Unfortunately, sales representatives, our real foot soldiers, are required to provide details about every call so someone can publish these unread reports. This is neither a good use of the representative's time nor valuable for the field manager. If anything, these reports tend to be a distraction for many in the field and are only used by a few analytically savvy managers. The irony is that even these savvy managers export the data to Excel to do the necessary manipulations and understand the meaning of the reports.  

So the central challenge is to figure out a model that allows for decentralization while keeping the field managers and the representatives focused on the end goal. In fact, it is imperative that reporting challenges and administrative overhead be substantially reduced for a decentralized model to work.  Here are some top-line ideas on a few elements of a decentralized model and how it might be understood, supported, and measured. 

In the last decade, pharmaceutical sales forces have rapidly expanded, resulting in field managers and new representatives being instructed to strictly execute the "Headquarters Plan." These plans and updates are so detailed that they don't allow a representative to use their local knowledge and change tactics if necessary. The field is asked to provide extensive data, but managers are provided very little actionable information to help them become more productive.  

A more effective sales model is one that allows field managers to take the reins and become more or less the "CEO" of their region. Thus, to support our future leaders, a change in the current systems for hiring, training, and providing feedback would benefit industry. 

Clear, objective metrics that measure reps and managers are important for a successful decentralized sales force. Today, many companies produce a scorecard that typically reveals no clear information about performance. A scorecard with the following elements will be simple and consistent across the entire sales organization, allowing a VP of sales and his or her managers to be measured the same.   

Revenue Goal Focused:  Every metric on the scorecard should be tied to the company's revenue goals and its product strategy. For example, if senior leadership believes that Product A is a growth product, and its target audience should be neurologists, then it can set a goal to attain at least 20 percent share among neurologists this year. In this case, the only metric that should show up for Product A should be the YTD neurologists' share.    

Clarity: The goal-oriented focus described above removes the need to have the historical comparisons that one finds in abundance today. Change or growth measurements benchmarked to the previous year or the prior quarter are only relevant for the metric we wish to measure. 

Stability: The chosen metrics have to stabilize over the performance period. Stability is a function of the metric as well as the time period over which it is measured. Share metrics are always better as they are less volatile than volume, and remove the effect of market growth.  Further, reporting for the entire performance period in aggregate mutes the weekly or monthly variations. Most variations are random noise that obfuscate the underlying performance, thus reporting weekly share or volume changes is futile. 

Given the variation in the business environment, questions asked will take different forms based on position and geography. What's going wrong at the national sales level will reveal national trends and issues—identifying weak regions (for example) and potentially identifying weak teams and managers, poorly performing promotions, and/or competitors' strengths. On the other hand, what's going wrong at the sales manager level might reveal specific physicians or hospitals that are changing their behavior. Different levels of field management yield different questions, and each individual's interests are based on the resources they can influence. A sales vice president has no reason to know which physician is dropping share. This information would be more relevant for a newly empowered "CEO" district manager.  

The questions will also be different for managers in different areas. A certain product could be doing well in the Southeast, but dropping share in the Great Lakes region due to demographic or business reasons. Under these circumstances, an ineffective dashboard would distribute the same reports to all these managers. A more appropriate reporting would provide pertinent business information for the different levels of field managers, and let them answer their own business questions in a controlled framework. But this requires considerable thought. Ultimately, these frameworks should be simple, flexible, and intuitive, allowing managers to make decisions. Moreover, a number of new technologies can help implement such frameworks.  

In particular, next generation business intelligence—with its ease of use and end-user orientation—and Web 2.0 technologies make it possible to go from vision to implementation in time frames unimaginable only a few years ago.  

Changing the status quo is a challenge. The success of a decentralized sales force will hinge in large part on the quality of its field managers. Budget responsibilities of field managers should be expanded, and the critical support roles like HR, training, and compliance should be regionalized to support this model. Other areas like analytics and reporting groups can be redeployed or outsourced. With these changes, one should stay true to the spirit of giving field managers what they need to succeed in their business, and nothing more. 

Greater responsibility delegated to field managers and simplifying performance measurement can result in better leaders, as well as a leaner, more sustainable, and more effective sales establishment. To make it happen, the next generation of sales managers and sales representatives need to be equipped with actionable information about their business; and that information needs to be delivered in a way that is clear, stable, and empowering. When each individual of an organization combines what they know about their territory with key sales performance data, then that organization not only achieves real competitive advantage but also success.  

 is the senior director, Industry Solutions Life Sciences for TIBCO Spotfire. He can be reached at 

Columns

It's management makeover time-and micromanaging is so last year.

Remodeling Your Sales Force

Yoshihiko Hatanaka is a slight, smiling man in late middle age and a dark blue business suit. When we meet, he shakes my hand only after bowing, presenting his business card, and telling me his title: president and CEO of Astellas Pharma US. There is a touching humanity about this little ritual; Mr. Hatanaka's silky formality, a touchstone of the Japanese professional class, contrasts dramatically with US executive style, which, however polished, tends to reveal the stresses and strains of the personality inside the suit.  			

In a 45-minute interview, Mr. Hatanaka shows no sign of stress or strain—a noteworthy fact, because some analysts believe that Astellas (formed in 2005 by the merger of Yamanouchi and Fujisawa) may be heading for a fall. Although his English is halting, Hatanaka effortlessly fields questions about Astellas' recent big moves, including a pricey biotech acquisition, some big-ticket platform licenses, the move of the firm's global development headquarters to the US—and the announcement last year that Astellas would close five plants and trim its workforce by 10 percent. (See "Astellas in Brief".) 

Despite his elegant manners, Hatanaka, who worked his way up the hierarchy at Astellas and Fujisawa over 26 years, is a plain talker when addressing the stark challenges driving Astellas' new direction. "For the last 10 years the Japanese market has stagnated because of price cuts," he says. "In the past, Japanese companies were satisfied with just the Japanese market and licensing out their assets in other markets. But now it is required that we go out to United States, Europe, and even emerging markets." 			

Today, this "going out" is one of the drug industry's biggest stories. Just look at the deals involving the top four Japanese Pharma League: Takeda, Astellas, Daiichi Sanyko (another 2005 merger), and Eisai. (See "The Japanese Pharma League".) In the first eight months of 2008, Japanese pharma acquisitions added up to $42 billion—nearly twice last year's total, according to Thomson Reuters. This flurry of activity shows Japan's cash-rich drugmakers reading from the same playbook as Western Big Pharma: stocking up on biologics, especially in cancer, and setting up shop in nations with a fast-growing middle class. Necessity is the mother of imitation. 

In April, Takeda, the league's 800-pound gorilla, paid $8.8 billion for Millennium, the Boston-based maker of the cancer drug Velcade. Eisai has also been ramping up its cancer portfolio; its $3.9 billion purchase of Minnesota-based MGI last December was its third major oncology acquisition in two years. Meanwhile, Daiichi Sanyko bought a majority stake in Ranbaxy, India's generics juggernaut. For an estimated $3.4 billion to $4.6 billion, the Japanese company will make a big footprint in India, and gain a toehold just about everywhere else. (See "The Top 10 Deals.) 

"Japanese pipelines have done a decent job with small-molecule drugs, but the industry has almost entirely missed the biotech revolution," says Toshiaki Iituka, a Japanese economist and professor at Aoyama Gakuin University's business school.  

Discussing Astellas' recent $387 million up-front purchase of Agensys, a Santa Monica–based biotech with an oncology-focused monoclonal antibody platform, Hatanaka is candid about the need to play catch-up. "Oncology is highly competitive, the evolution of the science is so quick, and we don't have enough antibody technology within our company," he says. 

Can Astellas and its compatriots catch up? Many observers would pose the question less politely: Is the company's way of doing business too "Japanese"—too painstaking and traditional, too risk-averse and consensus-oriented—to make the leap into a new age of innovation? 

"The Japanese have been criticized for not being overly innovative in their drug development," says the Bruckner Group's Michael Russo. "It's 'Take an idea and do it better, but do not invent something new.'" 

"The culture doesn't allow you to be a cowboy. It encourages conformity," says Miller Tabak's Les Funtleyder. "If they want to move into high-stakes R&D, they need a whole new approach to how they do things."  

As if anticipating the "too 'Japanese'" issue, Hatanaka is accompanied by two American members of his management team: William Fitzsimmons, head of R&D, and Patrick Shea, head of marketing and sales. They sit on either side of Hatanaka and respectfully wait for him to defer to them, with a gesture of his hand, before elaborating on his own answers to my questions. The three form a tableau that illustrates the culture Hatanaka wants to create. "This is not just a Japanese company," he says. "It is not a US pharmaceutical. We are not a Big Pharma, we are not a start-up. We have selected our area and our strengths, and based on that we are building our strategy." 

The global ambitions of Japanese pharma have been forced on the industry by economics. According to IMS Health, the Japanese domestic drug market grew last year by 3.8 percent, compared to a worldwide average of 6.4 percent. And although Japan's $59 billion market is second in size only to the US, it accounts for just 10 percent of the global total—half of the amount a decade ago.  

At 11 of Japan's top 16 drug firms, sales are growing faster outside Japan than in the country. Astellas, a $9 billion company, reports that its domestic sales rose by all of 0.8 percent last year, compared to sales increases of 14.8 percent in the US and 11.4 percent in Europe.  

Domestic hurdles have long hampered Japanese pharma's profitability and productivity. Government policies can be blamed for almost every aspect of the market's stagnation except one: demographics. These days, Japanese people are living longer (and require more meds), but have fewer children (future taxpayers). This imbalance has squeezed a national healthcare system that pays 90 percent of senior citizens' medical costs. In an effort to control ballooning expenditures, the government clings to its drug pricing controls—which have proved to be a drag on innovation. 

Every two years, the government announces an across-the-board reduction in drug prices, typically 4 to 6 percent. This year, the cut was 5.2 percent, with an additional one-off 10 percent price slash for certain drugs, including Prograf, an immunosuppressant used by transplant patients—and Astellas' longtime cash cow.  

"These mandatory price cuts have a neutralizing effect on any drug company's ability to grow," says AVOS Life Sciences' Jim Wahl. "They discourage investment in R&D, which discourages innovation, which discourages profits. It's a vicious cycle." 

"The drug market in Japan is dying," says Toshiaki Iituka. "Many firms haven't produced a new drug for 10 years." 

Japan's own health ministry has called this a "crisis" situation. According to a 2007 policy statement, "Since 2000, no major-league new drug has emerged from Japan." Yet among the proposed reforms, including a big push to popularize generics, the draconian price cuts went unmentioned. 

And as Western giants like Pfizer and GlaxoSmithKline make incursions into the Japanese market, the writing is on the wall. Says IMS Consulting's Ray Hill, "The Japanese companies finally woke up to the fact that they have to defend their market at home and go global." 

But there's more to going global than buying biotechs, as Astellas showed by moving its global development headquarters to North Deerfield, IL, the old Fujisawa US base. "It was critical [for us to] get to the major pharmaceutical market in the world," says Fitzsimmons. "We also did it to have closer relationships with FDA, to tap into US and European talent, and to build on our two decades of infrastructure here." 

In the 1980s, Fujisawa was the first Japanese pharma to have a small top-to-bottom organization (R&D, sales, legal, compliance) in the US, according to Morrison & Foerster's Michael Braun, who did legal work for the company. "Basically, the Japanese companies did not have the confidence that they could establish infrastructure in the US to compete adequately." 

As a result, they depended on the sales muscle of US pharmas to market their drugs—an arrangement that proved incredibly lucrative for the Americans. For example, in the early '70s, a Japanese team at Sankyo made one of the industry's most profitable discoveries: the $26 billion statin class. To sell their statins in the US, Sanyko and Shionogi used the marketing clout of Bristol-Myers Squibb and AstraZeneca, respectively, and were content to pocket a small percentage of the profits. Under similar agreements, Takeda's Actos (the top-selling diabetes drug) is copromoted by Eli Lilly, and Otsuka's Abilify (for schizophrenia) is copromoted by BMS.  

"Until recently, they were satisfied to take the proverbial 10 percent and leave the rest to the Western companies doing the selling," says IMS's Hill. "There was no pressure. They just focused on their home market and thought, 'The US market is too different—we can't figure it out.'"  

But now there is pressure. "There has been a definite change in the Japanese companies' involvement in the copromotion of their products," says Frost & Sullivan's Daniel Ruppar. "They are now interested in having more control over their products and building up sales forces." 

That's why it was so significant when Takeda announced in March that it was ending its involvement in TAP Pharmaceuticals, the company's 30-plus-year-old joint venture with Abbott, widely viewed as one of the most successful joint ventures in US business history. TAP's end symbolizes for many the end of Japanese pharmas' dependence on US multinationals.  

"The Japanese companies are coming of age," says Morrison & Foerster's Mark Wicker. "They're announcing that they can and will compete in the world market by selling their drugs themselves rather than relying on Western companies."  

There's an irony to the fact that Astellas, Takeda, Daiichi, and Eisai are scaling up as the rest of Big Pharma scales down. Calling the Japanese Pharma League one-hit wonders would be unfair, but they have long lived off a slender yield of innovative blockbusters. And that means patent expirations pose as big a danger to them as to Pfizer or Sanofi. 

"They have only one or two key global products and some nondynamic 'me-toos,'" says Decision Resources analyst Jackie Innes. "Their mature portfolio does well in Japan, thank you very much, but it does nothing in the US and Europe. There's enormous pressure to come up with new drugs that will sell here." 

What's worse, their cash cows are due for the slaughter over the next few years, as US and European patents expire. Eisai's Alzheimer's blockbuster, Aricept, loses protection in 2010. Last year the company had revenues of $6.6 billion; for 2011, even assuming best-case revenue from the late-stage cancer drugs gained when Eisai acquired MGI, it projects sales of only $4 billion. And Takeda has two big tickets heading straight for the patent shredder: Actos, in 2009, and its ulcer drug, Prevacid, in 2011. By 2012, Japan's top drugmaker may see its $11.1 sales for 2007 cut in half. Astellas faces the same danger. 

A leader in urology, Astellas makes Flomax and Vesicare, both of which treat urinary incontinence and have entertained TV viewers with DTC ads to make this hush-hush complaint comfortable, even amusing. Global Vesicare sales almost doubled last year to about $500 million, making up for ready-to-retire Flomax, whose sales fell to $1.1 billion. The firm has estimated that Flomax sales will drop by as much as 25 percent by 2011.  

The fuel that drives Astellas' financial engine, however, is Prograf. Isolated in 1984 from soil containing a particular bacterium, Prograf is used during and after liver, kidney, and heart transplants to reduce the risk of organ rejection. The average US cost is about $1,500 a month.  

Global sales of the product were $1.9 billion last year, up about 6 percent. Although its patent expired earlier this year, no generic has yet emerged to threaten Prograf's long-standing reign in this niche. Yet in anticipation of the inevitable, Astellas has whipped up Advagraf, a once-daily version of Prograf. Although approved in Europe, Advagraf has been delayed at FDA since 2005. Meanwhile, LifeCycle Pharma, a Danish biotech, has claimed superiority for its new immunosuppressant after a Phase II trial against Prograf in kidney-transplant patients. Astellas estimates that Prograf sales will sink to less than $750 million by 2011. 

"Astellas is definitely over-reliant on Prograf," says Decision Resources' Innes. "Even though there is no generic yet, it shows you how exposed they are to risk." 

Astellas execs acknowledge their predicament, though they frame it more optimistically. "The three key pillars of our 'Vision 2015' plan are transforming, partnering, and branding," says R&D head Fitzsimmons. "And 'transforming' is essentially the movement of the company away from relying just on Prograf." 

Prograf is supported by a treasure trove of drugs in another narrow niche: hospital cardiology. Adenoscan and the just-approved Lexiscan are pharmacologic stress agents used in heart health imaging tests; Vaprisol is an injectable for the treatment of sodium/water imbalance; and Adenocard is an anti-arrhythmic. Astellas also sells two antifungals: Mycamine, which brought in $160 million in global sales last year, and AmBisome, a formulation of Amphotericin B. In dermatology, the company has Protopic, a version of Prograf used for eczema, which brought in $153 million; and Amevive, a psoriasis drug.  

				Meanwhile, the company owns the Japanese rights to global giants including Lipitor, Ambien, Micardis (for high blood pressure), Seroquel (schizophrenia), and Celecox (arthritis).

As luck would have it, in addition to Advagraf, the company has two other NDAs languishing in FDA "approvable letter" limbo: Telavancin, an injectable antibiotic for MRSA skin infections codeveloped with Theravance; and Kynapid, an IV anti-arrhythmic codeveloped with Cardiome. 

Peering into Astellas's pipeline, its Phase III holds two novel compounds in urology and hospital cardiology, one to treat overactive bladder, the other an anti-thrombosis agent. Further back are compounds for dyspepsia, irritable bowel syndrome, and urinary tract syndrome, while the anti-infective franchise features agents for hospital-acquired pneumonia, herpes, and MSRA infections. 

In Phase II, there are more novel compounds for diabetes, renal anemia, and cancer (a small-molecule survivin-blocker). And in Astellas' signature specialty, transplant-related immunosuppressants, there's Amevive—a psoriasis drug Biogen Idec was only too happy to unload in 2006 after lousy sales.  

Such a portfolio and pipeline may seem respectable enough for a company that "has selected its own area and its own strengths," and is content with that. But industry dynamics have never been rougher. In response to Astellas' Q2 analysts' briefing, Credit Suisses' Fumiyoshi Sakai reported: "There is no drug in hand to follow overseas after Vesicare. We believe it is crucial for the company to take advantage of its marketing network developed in Europe, the US, and Asia to sell new drugs. But drugs developed in-house have been insufficient, and the company has not been licensing new drugs enough from other pharmaceuticals makers."  

Japan is playing a game of catch-up, dropping big cash on biotechs and risky acquisitions. But with patents expiring and sales falling, can they really pay their way to global success?

Global Warming

In the early 1900s, time-motion studies showed that manual laborers could boost productivity and reduce fatigue by taking on more than one task at a time. As a result, over the course of the 20th century multitasking gained momentum among academics and professionals. Now, however, the push to do two or 10 things at once has fallen into what economists might call the "law of diminishing returns" phase.  

Business-research firm Basex estimates the American economy loses $650 billion dollars a year to interruptions and recovery time in the workplace. On the issue of recovery time, or lack of it, American swimmer Michael Phelps became an Olympic legend this summer taking eight gold medals at the 2008 Beijing Games. His focus for each event was perfectly fixed on improving his time and outmaneuvering the competition. His strategy was simple: Focus on one thing and execute it exquisitely. If that's the secret, where should you place your focus? What's on your things-to-do list  right now? There's an opportunity for a new personal best. Will you go for it? 

We all have ups and downs. Even Michael Eisner didn't leave Disney honored with a gold watch ceremony; but the mogul's magic was instilled in the metrics. When Eisner took the helm in 1984, Mickey Mouse licensing was keeping the doors open. During Eisner's time at Disney, revenue, stock price, and market value went up over 2,000 percent. Disney's income went from $294 million in 1984 to over $449 billion in 2004. Eisner locked himself onto one goal: to hone Disney into the world leader in family entertainment. And it paid off big-time. Singular focus was Eisner's winning leadership formula. 

No doubt, many things vie for attention on your to-do list, but they are not of equal weight, to be sure. A clear understanding of the issues before you is essential to prioritizing your tasks, so spend a bit of time analyzing your to-dos. Some may be urgent, but not terrifically important; leadership is distinguished by tackling the important issues. Put the highest priority challenge on the top of your list, stay extraordinarily focused on it, and execute it perfectly before moving to number two. For example, if there's a key product that is under quota, are you going to focus on a cost-cutting move now No! Concentrate on strategies and tactics for reaching and jumping the revenue curve. Devote your best strategic people to it and put them on a tight time line to get it done. Unclear priorities, unclear roles and responsibilities, worry, and indecision kill productivity.Wrench those bad habits loose, or you'll really lose out.  If you find yourself juggling equally urgent issues, divide and conquer. Create a team for each solution, and assign dedicated people who are accountable to a schedule set to solve one problem at a time. The teams should function on parallel tracks, and they should be in communication with each other every day.  

Near the top of any leader's to-do list are personnel decisions. Granted, we all make mistakes, and that includes hiring people who aren't right for the job.Terminating an employee who happens to be a good person is one of the toughest tasks there is, but if you put it off when you know the person is in the wrong job and you made a mistake, that hurts the company and it hurts your reputation. Fix it quickly. Legendary CEO Jack Welch, after stepping down from GE, said that in looking back, the biggest mistakes he made had to do with procrastinating about terminating people.  

Executing the simple stuff further down on the list is easy; but that won't prevent you from stewing over the big issues. Don't let day after day go by in a blur of answering e-mails and phone calls, mistaking that for effectiveness. Multitasking isn't the path to greatness. It's the path to being below average, expending valuable time on low value priorities. It never ends up with an A+ result, never feels satisfying, never gets the gold.  

Do one thing exquisitely well today. The world depends on the ability of leaders to get positive outcomes. To reach the full magnitude of what you can achieve, manage time by applying riveting focus on your key issues and challenges. Every facet of your life can be improved with focus on priorities either personal or workplace. History teaches that's how great leaders get rated—on accomplishing the one or two A+s, not submerging themselves in the 20 Bs.  It's the points of excellence that matter. 

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

Leadership

Try this one on for size: Multi-tasking isn't the path to greatness

Going for Gold

After a decade of hype and expectancy, personalized medicine is still in the process of "becoming." The science is there, but it's still in the process of being perfected. With new entrants such as Pfizer's Selzentry for CCR5 trophic HIV, and the relabeling of Warfarin to include genomic-dosing data, the industry is moving beyond the mere promise of targeted therapies—and thankfully, moving the discussion beyond oncology and the overhyped Herceptin case.  

 columnist Olivia Judson recently asked: So why hasn't personalized medicine yet hit it big? In part, it may be a simple matter of timing. In a Spectrum report, one industry commentator estimated that "[i]n 10 years, about 20 to 25 percent of new products in the pipeline will depend to some degree on a related test."  

The greater problem, and perhaps the biggest barrier to realizing the promise of personalized medicine, might be perceptions about the potential of these drugs held by the pharma industry itself. Most companies have a difficult time seeing therapies targeted toward specific genotypes—which depend on diagnostics to guide prescribing decisions—as anything more than a way to enhance R&D productivity within the currently challenged "one-size-fits-all" model of drug development.  

Somewhere along the way, the pharmaceutical industry decided that the market segmentation implicit in targeted therapies necessarily translates into fewer patients and, therefore, reduced returns. But in reality, personalized medicine has far greater potential and much broader applicability than just an R&D enhancement. The industry needs to overcome the divergent business models between pharma and the diagnostic industry, and learn how to harness the marketing dynamics embedded and largely unexplored within personalized medicine.  

Pharma companies can go beyond viewing personalized medicine as just an R&D productivity tool to understanding how it can reshape market dynamics, alter a drug's marketing trajectory, and drive sales—possibly even in the face of generics competition. In fact, if managed and positioned correctly, tailored therapeutics can even offer a return on investment (ROI) equal to drugs developed under the one-size-fits-all model. 

While many of the leading pharma and diagnostic companies have outwardly embraced the idea of personalized medicine, how to get such therapies translated into practice is a very different question. The two industries have developed very different business models, which are culturally, strategically, and financially distinct, and their junction during co-development and clinical decision-making is a much more difficult and complex prospect than simply working side-by-side.  

The difficulty in working together is particularly exacerbated when dealing with personalized medicine, which requires the diagnostic and pharma industries to overcome not only a cultural and strategic divergence, but also a technological divergence of therapy and diagnostic. Historically, when the two industries have attempted to work together the results have been suboptimal. In one notable case, diagnostic and pharma companies agreed to co-develop and co-market a targeted therapy, but the diagnostic partner ultimately sued its pharma partner when it found out that drug reps were telling physicians that they didn't need to use the test.  

To make personalized medicine a reality, the pharmaceutical and diagnostic industries must learn to work together, as interdependent partners motivated around and by the same value proposition. Other industries have showed the value of this convergence. Take, for instance, the marriage of computing and hardware manufacturers like Nokia and Motorola, which have developed mobile-based television broadcasts. Companies such as these offer a good example of how integrated thinking and development processes can lead to coordinated, market-driving products.  

Within the field of healthcare, other prototypes of integrated development exist, such as drug-eluting stents for cardiovascular management and the integration of robotics and prosthetics. But these examples are not sufficient for most pharma companies. Time and again, executives and development teams brush aside analogies from other non-targeted drugs or other industries, asking, "What about other personalized medicines? How have they achieved this goal?"  

The answer is that with only approximately 14 targeted therapies on the market across all disease areas, there are simply not enough examples from which to draw a roadmap sufficient enough to guide business practices and development decisions. Companies that wait for a well-traveled path built by their competitors will simply be the last to capitalize on the benefits of the new technology.  

At present, the idea of developing and launching a test alongside a therapy is either resisted by the individual drug development teams or undertaken on an "if we have to" basis. One of the most common, self-limiting, and damaging ideas within drug development teams is the desire for a hands-off approach to a companion diagnostic strategy under the simple rationale that "we are not a diagnostic company."  

It remains to be seen whether pharma companies will acquire their diagnostic partners or continue to try and create strategic partnerships. Whatever the model, both sides need to learn how to integrate their divergent development and business models to effectively co-develop and launch personalized medicines.  

If there's anything the industry should have learned from Vioxx, Rezulin, and other highly litigated one-size-fits-all drugs, its that pharmaceuticals developed for mass market conditions don't always serve mass markets. A drug being given to 1,000 patients that is only effective in 500 patients is not a treatment for a patient population of 1,000. It is a drug that is only appropriate for 500 patients—and while those additional 500 people may provide an early ROI, they are likely to discontinue the drug after receiving little or no benefit or, worse, experiencing an adverse event.  

Personalized medicines offer companies the opportunity to shift from focusing on less precise ideas of market share to focusing on the share of patients who would actually benefit from the drug or drug class. Well-planned personalization will ensure that a drug reaches as close to 100 percent of its target patient population as possible—and more importantly, in the current era of abysmal industry reputations, only reaches the patients for whom that drug will actually be effective.  

Forget the idea that segmentation results in smaller markets. Personalized medicines may actually allow a company to reach beyond those 500 patients, and potentially beyond the 1,000 treated with the one-size-fits-all drug. According to IMS Health, prescribers are more likely to use a drug that comes with a test—at a rate of 70–90 percent more than other more traditional drugs—because the test provides greater evidence of likely positive patient outcome.  

Consider the case of Takeda's Actos, a PPAR agonist for the management of diabetes. In 2005, it was used to treat around 1.5 million US diabetics. According to Evaluate Pharma, the company had a 50 percent market share—putting the "hypothetical" total patient pool at three million diabetics.  

However, epidemiology studies showed that there were actually almost nine million US patients with insulin-resistant diabetes at that time, a significant percentage of whom could hypothetically have benefited from Actos. Why weren't they switched to Actos? The answer, perhaps, goes back to physicians' reluctance to switch their patients' therapies, even when they're not achieving optimal results. But the additional confidence and higher degree of evidence seen through a diagnostic test may be just what the doctor ordered. Thus, by actually segmenting the market and by treating that segment more efficiently, companies have the potential to access patient numbers that are at least similar to the blockbuster model.  

There aren't many examples of marketing and sales strategies that showcase how pharma should promote the "test and treat" paradigm, but the introduction of sport utility vehicle (SUV)-type vehicles does provide an analogy of how a high-capital industry with long development cycles used converging technologies and segmentation to dominate a new niche. 

In the early 1980s, Ford's and Chevrolet's SUVs were fully enclosed, two-door pickup trucks used mainly by outdoorsmen. American Motors (AM) came late to the market, and didn't want to compete head-to-head against more established brands.  

Instead, they saw a way to differentiate from the competition. AM designed an SUV with four doors, cargo room behind a second row of seats, and a chassis that rode high like a truck but handled like a car. Immediately, AM's Jeep Cherokee appealed to urban families. And by differentiating the product for these consumers, AM carved out a powerful new market while retaining their loyal customers, who still just wanted their standard truck or car. In 1980, SUVs held just 0.1 percent of the US automobile market. But the introduction of the Jeep Cherokee forever recreated the typical urban family vehicle, and SUVs increased their share to 3.6 percent of the market by 1989. 

But differentiation can be a powerful tool, and can be used by more than one competitor. Later, Ford capitalized on AM's design changes and created an SUV with many of the same parts and the same chassis as the light pick-up truck, but used differential pricing to charge up to $10,000 more per vehicle.   

The automobile industry, too, faced a lack of direct analogues on which to predict success. At first blush, it would have seemed that, given the niche market to which such vehicles would have been marketed and the increased costs of creating such vehicles (including the ad budgets required to "educate" consumers about the need for these trucks), this would have been unduly onerous—certainly not profitable. 

Indeed, the industry spent a collective $9 billion on advertising SUVs from 1990–2001, as reported in Keith Bradsher's book, 

High and Mighty: the Dangerous Rise of the SUV

. But ultimately, the investment paid off. By May 2007, the midsize SUV represented a full 11.3 percent share of the US automobile market share, according to J.D. Power and Associates. 

Let's break down the components of the SUV example to understand how this strategy applies to personalized medicines. 

 The pharmaceutical industry redefines markets as drugs mature, face competition, or go off-patent by using the standard "Four Horsemen" of differentiation—efficacy, safety, convenience, and cost effectiveness. This product differentiation can result in the ability to capture greater market share, charge higher prices, deflect competitive initiatives, command greater buyer loyalty, and stimulate earlier trials and referrals of products. 

 It is already well understood that the simple step of differentiating your product in the crowded clinical marketplace—whether through better dosing, reduced adverse effects, or greater efficacy—can greatly increase returns for comparably small input. Personalization represents the possible Fifth Horseman, and is an effective and powerful tool to segment and define clinically meaningful patient populations for whom the drug works.  

 Physicians can be fickle. Research shows that their prescribing choice is highly sensitive to drug rep visits, direct-to-consumer advertising, price, and the availability of therapies with more convenient dosing schedules. Look at Fosamax, the gold standard osteoporosis drug built to last as the market leader through a series of improvements to its dosing profile to a once-weekly dosing. Even so, it lost 15 percent of its market share within three years to Actonel, when it launched in 2000 with a more convenient once-monthly dosing. 

Personalized medicines can create market security to guard against these common, competitive threats. If a therapy is targeted at a specific patient group based on a particular genetic difference, it will be very difficult to substitute products, and physician commitment and loyalty are likely to be high. First entrants are likely to capture and hold onto market share to a much greater degree than one-size-fits-all drugs. And the benefits of a "targeted" lock on patients is highly likely to confer the same market security as that bestowed in mature markets on leading brands.  

 Research by DiMasi shows that, historically, the average time to peak sales for drugs is 4.5 years. This adoption curve is lengthened when looking at diagnostics, which historically have slower market diffusion and adoption than drugs.  

So how do you get doctors to adopt new drugs more quickly? Some say it's impossible—just as some bought the iPhone as soon as it was released and others are still waiting for a better-generation product. There will always be physicians who take a watch-and-wait approach.  

But there's reason to believe that by providing the necessary evidence, more physicians will become "early adopters." Diagnostic tests help provide that evidence in the prognosis and monitoring of patients, and by eliminating skepticism on behalf of prescribers typically slower to adopt new technologies. Plus, clinical trials based on genetically stratified patient populations mean there will be less potential for adverse events, easing physicians' concern. With this, there will be a wider base of early adopters, which will speed adoption and increase usage in the rest of the physician population. 

 The evolution of pharmaceutical markets has now become almost standardized. First-in-class drugs set the rules. Second generation therapies are primarily differentiated relative to where in the class they are launched. As follow-on generations expand the market, they are differentiated from the first-in-class entrant by means of a different mode of action, fewer side effects, or new data on cost effectiveness. Finally, drugs will come onto the market with twice-a-day dosing or novel delivery mechanisms (e.g. nasal sprays, patches) to further differentiate new entrants from products already within the class.  

But with personalized medicine, there is potential for a much richer promotional landscape than what's currently seen using the standard approach to differentiation. Diaceutics worked with a leading UK advertising agency to understand how it works. One surprising finding was that, unlike the traditional empirical paradigm, the "test and treat" protocol contributes toward building in physicians' minds the concept of a "consistent standard of care." Specifically, diagnostic tests offer the opportunity to manage genetically identified patients in the same way, every time, without letting empirical observations get in the way. Embedding a therapy-response test may appeal to the physician's desire to adhere to the highest of clinical standards long before treatment guidelines have been fully established.  

At day's end, the value proposition of a therapy and companion diagnostic combination is very different from that of a one-size-fits-all, standalone therapy. That personalization means the research and development model is no longer being debated; that it further enables the pharmaceutical marketing model should be debated more actively and with the bias toward change rather than retaining the status quo.  

In their review of the capabilities required to enable personalized medicine, Lara and De Mesa suggest that pharmaceutical and diagnostic companies that address the lack of appropriate marketing capabilities for personalized medicines could gain a competitive advantage by enhancing relationship marketing with consumers. Similarly, newer education and sales management will also need to be adopted and the industry will need to move away from its traditional reach and frequency metrics that it depended on for the blockbuster model.  

The installation of an appropriate, evidence-based method to manage the personalized medicine approach is likely to require longer but fewer details, and doctors and reps working closer together. Interestingly, this trend is already witnessed in the launch of oncology products, so it is not entirely alien to pharma's business model. Moving that approach out of specialty medicines into mainstream diseases like diabetes or cardiovascular disease may be where the greatest savings and efficiencies are evident. 

Of course, change is not easy. The convergence between the pharmaceutical and diagnostic industries, with their disparate business models and cultures, brings a host of difficulties and likely errors before we reach significant signposts toward success. For this reason, the marketing power of personalization may first be pioneered in mature therapy areas where entrants previously considered fourth or fifth in class can be recast and repositioned as first in a genetically targeted subgroup.   

However the life sciences community gets there ultimately, a more thorough exploration of the market-shaping benefits of personalization will increase the current momentum already building for personalized drugs within the pharmaceutical and diagnostic industries.  

 is CEO of Diaceutics and can be reached at  

 is Corporate Counsel and Vice President of Business Development for Diaceutics and can be reached at 

Stop worrying about shrinking the market for your drug, and start figuring out how the "test and treat" business model works.

Getting Personal(ized)

The UK's pharmaceutical industry has called for a public debate to discuss access to modern medicines. This follows in the wake of some severe criticism of the National Institute for Health and Clinical Excellence (NICE), the agency charged with determining which medicines should be paid for by the National Health Service (NHS).  

According to the Association of the British Pharmaceutical Industry's (ABPI) current president, AstraZeneca UK chairman Chris Brinsmead, a frank, open, and honest debate is in the best interests of patients. "We are calling for the patient groups, healthcare charities, doctors, government, NICE, and the NHS to join with the pharmaceutical industry to debate these crucial issues and hammer out a lasting solution," said Brinsmead. "The time has come to discuss how we best resolve the issue, and where better than on a public platform?"  

NICE and its decisions have been the subject of much public scrutiny throughout its nine-year existence, but in recent weeks the level of outrage has grown. Hot on the heels of its refusal to recommend reimbursement for four kidney cancer drugs comes a U-turn on Lucentis (ranibizumab), the Novartis drug to treat wet age-related macular degeneration.  

NICE's initial ruling on Lucentis last year was that patients would only be able to have the drug paid for once they had gone blind in one eye. Now all who might benefit can have Lucentis, but a second drug in the same class, Pfizer's Macugen (pegaptanib), is not being recommended.  

The change of heart over Lucentis was accompanied by an apology from NICE chief executive Andrew Dillon about the delay. But in an interview on BBC Radio, he appeared to shift some of the blame onto patients themselves, claiming that their protests had slowed his agency's review. "Everybody involved needs to look back to see if there was anything they could have done to speed up the process," he said. "Once you start consulting, once you start giving people the opportunity to appeal. All these things add time."  

This is one of many cases where a NICE decision has been challenged in court by disgruntled patients. With the backing of the Royal National Institute for Blind People (RNIB), three pensioners took their local Primary Care Trust (the local organizations that ultimately decide where NHS money is spent) all the way to the High Court in July to force them to pay for the drug; this is in addition to almost 1,000 other patients whom RNIB backed in battles with their local Primary Care Trusts.  

Yet another court case is on the docket—this time featuring a terminally ill patient with multiple myeloma who can no longer tolerate the side effects of either Velcade (bortezomib) or thalidomide, and whose PCT is refusing to pay for Celgene's Revlimid (lenalidomide). This is an extreme example of the "post code lottery," where access to drugs depends on where patients live. (In this case, if the patient lived just a mile and a half in either direction, the PCT there would have allowed the drug.) 

Such legal action has already forced NICE to make changes to some of its decisions. The agency, however, appears to be trying to shift the blame for its negative guidelines onto the industry. Its chairman, Sir Michael Rawlins, told 

 that companies charge what they think they can get away with for drugs. He also said that linking the pay of pharma executives to share prices means there are perverse incentives to keep the prices of new drugs high and increase profits. He believes that the kidney cancer drugs that NICE won't pay for could be produced for about a tenth of what they cost. While admitting that research and clinical trials costs add to this, Rawlins said the industry's desire to cushion the impact of patent expirations and marketing costs inflate prices. 

Industry has hit back at these claims. "[We] are committed to developing innovative approaches to pricing, ensuring that patients receive the medicines that they need," claimed ABPI's Brinsmead. "All the [four kidney cancer] medicines are widely available to patients throughout Europe—where the prices are higher than in the UK." 

These are all issues that ABPI will want to include in its proposed public debate. Plans for this are "moving forward," according to a spokeswoman for the organization. 

's global correspondent. She can be reached at 

Global Report

Tensions mount as stakeholders in the UK health industry attempt to work out drug cost problems

Open For Debate

No matter what brand you promote, chances are that people are talking about it. And the higher their level of involvement, the greater the likelihood that they'll feel compelled to raise the topic in conversation. It's not just high-involvement categories like breast cancer that make people talk. For every condition, there is a discussion—and you can be certain, it's already happening, with or without your involvement.  

For example, one consumer reported a recent conversation with a neighbor on the topic of ulcerative colitis: "He was in his garden watering his plants. We started talking, and I asked him why he didn't go out so much.  It turns out he has the same condition as I do. He asked me why I seemed so well, and I said I was using this product and was getting better. We told him to go see his doctor and ask for that product. He did, and then he went to his son's wedding a month later—the first time he'd left the house in eight years." 

In another compelling example, a consumer shared this story: "I saw this family locally in the park and I said to them, 'Gee, your kid looks so small, maybe she needs to get checked.' The mother of that child liked me and asked about my kid because she is also very small.  So I told the mother everything about what medication my child takes ... and I tried to help them out. That's why God gave us a heart; we should use it to help others." 

People are desperate to connect, and seek outlets to share their story, help others, and be a part of a structured community that helps people feel less alone with their condition. Pharma now has a great opportunity to shape the conversations, to be perceived as a partner in the healthcare process, and to optimize its media spend, using a tool more powerful than any TV ad—the words of the patients themselves.  

Word-of-mouth communication has become a practical, measurable way for pharmaceutical companies to communicate with patients about health issues. It's a technique that is in its early days for pharma, and it must be handled with care. But word-of-mouth is a compelling concept, because it comes with the power of a recommendation from a trusted source—a friend, a family member, a business colleague—with an element of authenticity that a traditional advertisement can never match. 

The goal of pharma WOM programs is to stimulate informed conversations about health conditions and to encourage people to ask their physicians about treatment options.  Essential to the process is educating the consumers who participate so that they are well informed and knowledgeable about the condition in question.  

The thousands of conversations that occur will be educational and informative, and will come from a trusted source—the very people who use these products or care for those who take them. These kinds of discussions can then motivate others to take action by seeing their physician, complementing existing DTC efforts.  

The process of launching a WOM campaign typically starts with WOM-specific research to understand how consumers talk about certain conditions—what words they use, who they would speak to, where conversations happen, and why they occur at all. Those insights are wrapped into a recruitment process of engaging brand advocates to join a structured program.  This type of direct relationship marketing puts a new spin on how to engage the folks who have opted for more information, but who are rarely contacted after that first welcome mailer.  

Consumers may receive a permission-based e-mail offer from the pharma company to join an awareness program.  After an individual opts in and registers on a site, he or she completes an online educational tutorial about the condition and is mailed a welcome kit. This kit includes materials that can be distributed to people who want to learn more about the health issue in question. The pass-along content includes consumer-friendly facts about the condition, and directs consumers to a microsite where they can learn more about symptoms, treatment options, and questions for physicians.  (Think clear call-to-action, measurement, and engagement.) 

The "brand ambassadors" then report back about their conversations by completing a brief online survey so pharmaceutical sponsors can gain insights into who is having conversations, where they are taking place, and what outcomes can be expected.  

Word-of-mouth conversations typically take place off-line (see sidebar). But that doesn't mean that a WOM campaign cannot be tracked. As a place to start, you can measure and model various data points, such as the number of brand ambassadors in a program and the number of conversations that are generated as a result. You can then further explore opt-in rates from calls-to-action, time spent on Web sites, referrals to a physician's office, and of course, the number of new prescriptions that come from word-of-mouth programming.  

And this doesn't even begin to consider the loyalty effect of the consumers who participate in a structured program, and receive ongoing messaging on behalf of the sponsor, encouraging compliance and brand affinity.  

In our heavily regulated industry, a structured WOM program comes with some challenges as the control of the message is relinquished to the consumer—at least to some degree. With proper training of participants, pharma companies have the ability to impart accurate content that can then be shared with others who are interested.  

People are enthusiastic to share their stories and tell others about the importance of treating a certain condition. And when they are asked (as they often are) what product they're using, it's easy and acceptable from a regulatory perspective for that individual to reveal the product that they were prescribed.  

As a result, the brand gets some promotion, the consumers have had a meaningful discussion, and the ensuing dialogue that the target consumer has with a physician should be that much more productive.  

Many companies remain concerned about uncovering adverse events, either from discussions that may take place between consumers—or in comments that may be made in an online community forum. The reality is that this is an issue that can be readily managed if it is handled properly, through close coordination between the vendor, pharmacovigilance, and the brand teams.    

Only serious adverse events and those that are unexpected (that is, not typically seen in clinical trials or identified already in the package insert) need to be reported within 15 days to FDA; all others may be handled in a more reasonable time frame.  

Of course, it is impossible to monitor what is said during an offline conversation, but by keeping the emphasis on non-branded, educational information, pharma sponsors can stay on the right side of the line.  Also, when communities are moderated and focused on particular lifestyle issues (not specific products), the likelihood of uncovering AEs decreases significantly. 

This type of real-world consumer feedback should also be viewed in a positive light as an early warning sign, in case there are real issues with a marketed product. It also has the benefit of showing consumers that pharma listens and is responsive about the products it sells. 

Pharma must embrace that which is new and novel (think Internet, circa 1998), and push forward into areas that make sense for brand promotion, not just because something is "new" but because it will build your brand in a way that other media just can't. 

Industry must continue to explore this dynamic area of word-of-mouth, and push through the inevitable challenges that our friends in Legal and Regulatory throw at it.   

There is so much more that pharma can do to shape and influence the conversations that people have, and that can lead to increased awareness about disease states and proper treatment options by everyone involved. Additionally, consumers are enthusiastic to participate, so everyone wins in the end.  

Gee, that cough of yours sounds a lot like asthma. Are you taking anything to treat that?  

 is the founder and CEO of HealthTalker. He can be reached at 

What's the buzz all about? Word of mouth is more effective than we think.

What's The Buzz

All of a sudden, Amgen's future seems a whole lot brighter. The source of salvation? Denosumab, a Phase III monoclonal antibody that targets the RANK ligand pathway, which is responsible for regulating cells that destroy bones. Some analysts have called denosumab the most valuable late-stage compound in the industry's pipeline. And certainly, with Amgen testing the drug for the multi-billion dollar osteoporosis market as well as several oncology conditions, including breast and prostate cancer, excitement behind the biologic is mounting. 

With sales of Amgen's EPO drugs expected to slow, there's no time to waste, and the company is moving full-steam ahead. If successful—and the recent news that denosumab outperformed the osteo gold-standard Fosamax provides solid evidence—it could be the first personalized therapy for a primary care condition, and the first drug to target the RANK ligand pathway, discovered at Amgen. 

Multiple indications for biopharmaceuticals is nothing new for the industry. But Amgen has bet big on denosumab by undertaking two enormous, nearly concurrent clinical trials for the drug. Its 8,000-patient oncology program is larger than the trials conducted for Avastin, Rituxan, Zometa, and Gleevec, and its osteoporosis study, with 10,000 patients, is Amgen's largest ever. 

Steering the future for "d-mab"—and in essence, the company as a whole—are the program's two development heads, Dr. Javier San Martin, an Argentine native who cut his teeth designing osteoporosis and parathyroid hormone clinical trials for Lilly; and Dr. Roger Dansey, a physician from South Africa who brings a detail-oriented approach gleaned from his years as an associate professor and attending physician in a bone marrow transplant unit. Here, the men discuss the promise of denosumab, and their experience running these global clinical trials in tandem. 

Osteoporosis and cancer seem like completely different conditions. What allows these two diseases to be treated with the same drug?

SAN MARTIN: The interesting feature for these two different indications is that the "bad guy" is the same: the osteoclast. The overfunction of osteoclasts is the key feature for both osteoporosis and cancer. Denosumab inhibits osteoclast formation, which has an effect on their function and survival. 

With both conditions, the aim is to prevent clinical events related to bone failures. In osteoporosis, it's spine fractures and hip fractures. Osteoporosis is a chronic, progressive condition, and the goal is to increase overall bone strength to prevent those fractures from happening in the first place. We measure that improvement in bone strength by looking at bone density gains—and we have strong data there. On the oncology side, the failure happens where the bone metastasis makes the bone weaker in a particular place.  

DANSEY: It's not without precedent.  If you look at bisphosphonates, they play in both areas. There's the very potent intravenous bisphosphonate Zometa that dominates the cancer market versus the oral bisphosphonate market. 

Amgen's salvation just may be denosumab. We sit down to talk with the head scientists driving the drug.

Pharmaceutical Executive-10-01-2008

Stop the Bleeding

Remodeling Your Sales Force

Global Warming

Going for Gold

Getting Personal(ized)

Open For Debate

What's The Buzz

The D-Mab Men

The Drug Vote '08

Getting "Engaged"

Future Shock

Part D Under Attack

Seasoned Leaders

Specialty Sales Gets No Resistance

Evolving Clinical Trials