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Pharmaceutical Executive Digital Edition - November 2012

There seems to be something wrong with our bloody ships today," remarked a British admiral at the Battle of Jutland, as he witnessed his fleet being depleted one after another by enemy fire. Pharmaceutical regulators in Europe today might be forgiven for entertaining a similar thought about their institutions.  

The latest and most dramatic blow—the abrupt departure of health commissioner John Dalli in highly controversial circumstances—comes on top of an extremely difficult year for the European Medicines Agency. The European Commission and the EMA are two principal arbiters of control on medicines in Europe—the twin pinnacles of the European Union's regulatory system. And they have both been severely shaken.  

At the same time, one of the main supervisory bodies for all the European Union's institutions—the European Court of Auditors—has admitted to a crippling weakness: It announced this month that it ran a check last year on what was going on at the EMA, and found disturbing evidence of mismanagement, but it doesn't have a clue about what has happened since 2011. 

This is not just a crisis for the regulators. It is a crisis for the drug industry too. At a time when the industry can scarcely afford to suffer any further loss of reputation, major weaknesses have been exposed in the very systems created to safeguard public health against any risks of industry irresponsibility or malpractice. The public is naturally inclined to worry about the risks that can arise when the appointed watchdogs are shown to be sleeping, or sick, or dead. 

The Dalli débacle is disconcerting in many ways. The European Commission's mid-October announcement that he had stepped down from his post "with immediate effect" in the wake of an anti-fraud investigation sent shockwaves through Europe. The link that the commission made to suggestions of corruption in decision-making compounded the concern. 

But on closer inspection, the announcement did more to provoke questions than to supply answers. It did not accuse Dalli of any evident misdemeanor, but merely alleged that he was aware of attempts by others to traffic influence (in relation to legislation to control tobacco rather than medicines). On top of that, it recognized that in any case no transaction was concluded and no payment was made. It did not say Dalli had been fired, but merely that he had "decided to resign in order to be able to defend his reputation and that of the commission." 

Dalli, summarily stripped of office, immediately riposted through his own channels. He rejected any suggestions of guilt, and claimed that he had been forced to resign by commission president Jose Manuel Barroso. Worse, he went on, Barroso had presented no evidence of wrongdoing, but had merely shown him the summary of an investigation that had been secretly underway for five months.  

The bizarre sequence of events inevitably prompted further speculation. If Dalli had merely been aware of a lobbying attempt by a vested interest (and the commission made no accusation beyond this), why should he be obliged to resign, it was asked. Lobbying of commissioners is an everyday routine in Brussels, and is considered a normal and indeed necessary part of the discussions that underpin the preparation of any legislation. Logically, every commissioner should be removed from office if they were to be treated in the same way as Dalli. So had Dalli transgressed in some way that the commission did not reveal? Or, if he had not, was there some other reason that determined Barroso to get rid of him? Or had the commission over-reacted and fallen into a trap set by business interests? Dalli's departure will delay progress on new tobacco-control legislation that is vigorously opposed by the tobacco industry.  

The commission has done nothing to answer these questions, or to clarify the extraordinary procedure, and a cloud of suspicion consequently hangs not only over Dalli, but over the commission itself—and not just in relation to possible impropriety, but also over what looks dangerously like incompetence and mismanagement. 

Much of the equally unedifying saga of the EMA's conflicts of interest has already been recounted at length in this column and elsewhere, since the equally abrupt departure (but in different circumstances) of its executive director, Thomas Lonngren, nearly two years ago. Lonngren's overnight switch from being head of Europe's drug regulatory agency to acting as a consultant to the pharmaceutical industry was shocking enough in itself. The insouciant complicity of the agency's management board in condoning this move was even more troubling. Inevitably, questions were raised over the agency's handling of conflicts of interest—and probes into its performance revealed deficiencies so evident that the European Parliament decided to refuse approval of the agency's accounts. 

Throughout the whole of 2012, the EMA—now under new management—has battled to regain its credibility as a reliable defender of the public interest. It failed to do so in time for a crucial Parliament vote in the spring. "The agency did not apply the staff regulations properly, which in turn raises serious questions about their application of the rules in general," said the budgetary control committee, expressing dissatisfaction with checks on the completeness of declarations of interest. Monica Macovei, the MEP who was piloting the debate in the Parliament, noted concerns "over allegations that the agency's former executive director created his own consultancy firm while still in office" and spoke of "concerns on the actual independence of the agency." 

Vigorous attempts by the agency to clean up its act did win back some support from the Parliament. By early September, the Parliament's health committee accepted that the changes made over the preceding months had eased concerns. By the end of the month, the budgetary control committee had also softened its stance, and was recommending approval of the accounts. 

It was therefore all the more surprising that in early October the European Court of Auditors unveiled a highly critical report of its own investigation of the EMA. The agency had not "adequately managed conflict of interest situations," and it relied on experts with connections to the industry "in drafting scientific opinions which underpin vital decisions affecting the health and safety of consumers." 

"Most scientific opinions and decisions prepared by the agency also use the research carried out or financed by industry," and the EMA "has to rely on trials conducted by organizations and companies that have vested interests in the products concerned," it thundered. "Conflict of interest policies and procedures do not cover national experts working on the tasks outsourced to the national authorities," and "the EMA does not perform any verification of the conflict of their interest policies and procedures." 

What was the public expected to conclude from such a damning evaluation—and what was the public expected to infer about the rigour of the European Parliament's monitoring of the EMA's adjustments made during the year? Not a lot, perhaps, because the Court of Auditors admitted that its research was completed even before the end of last year —and, yet more seriously, it confessed that it was utterly incapable of offering any view at all on whether the failings it had identified persisted.  

It will take months for the dust to settle from these episodes of confusion and these demonstrations of incompetence. The downside for industry is that it too suffers from additional suspicion, merely by association. It should not be tempted to seek to exploit the current weaknesses of authority. On the contrary, the potential upside of the situation is that it could encourage industry to redeem its own reputation. If it is smart, it will seize on this opportunity to present itself as responsible, and capable of a great deal of effective self-regulation, even when those who are supposed to regulate it are incapable of doing so adequately. But to do that effectively, the industry will not only have to present itself as responsible. It will have to be responsible—and that could prove a far greater challenge. 

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

Column

For the second time in recent memory, a top European regulator leaves office abruptly and under a cloud of suspicion.

Europe's Trust Gap

Unless it's a spectacular, fireworks-generating breakup of a giant client and giant agency, you don't often read much about client-agency splits in the medical trade press. While we often read about who's on which loose account or who just got assigned the latest launch, we rarely hear the backstory of an agency-client relationship gone bad and the decision to part ways. 

So what's the big deal? It's business. Agency changes are part of the landscape. But the way in which a termination is handled before, during, and after can tell you a lot about the players and their future success. It's been said that circumstances don't build character, they reveal it. This is certainly a concept that applies here because how a company (client or agency) behaves in these uncomfortable situations provides insight into just who they are. 

When a client fires an agency or an agency fires a client (yes, agencies actually do choose to walk away from difficult clients on occasion), it's usually not as dramatic as a movie breakup scene. More often it's a contract that doesn't get renewed, a declaration that "we're going in a different direction," or an admission that "fresh thinking" is needed for the brand. And, truth be told, it's rarely a complete surprise to either party. But no matter how the partnership ends up, a conversation happens and both parties move on. Usually one party is relieved, the other embarrassed or confused.  

So is there any really good way to handle an agency-client breakup? Even if the relationship isn't salvageable, can both parties leave still friends, or at least with their business reputations intact? We think so. And here are a few pointers if you ever find yourself in this unpleasant situation.  

Given the time, energy, and dollars invested in the typical agency relationship, it doesn't make sense to give up easily and walk away mad in the middle of a project. Stop, think it through, and put the issues down in writing. Then take the time to talk with the other party and try to find solutions. It could be a certain underperforming team member or a process that doesn't work. Set measurable goals for improvement and allow enough time to make corrections. Then, if it can't be fixed, you can move on in good conscience.  

If the first step fails and the relationship is truly over, the breakup conversation should be face to face. Not by phone, and certainly not by e-mail. If it requires a trip, then get on a plane. Given the time, emotion, and expense that went into not only the selection process but the relationship up until this point, both parties deserve the respect of an in-person discussion. 

This is sometimes the most difficult part, no matter which side of the breakup you're on. But it's worth it to leave the discussion with the facts (or feelings) on the table and understood by all. No sugar coating. No "it just isn't working out." Give the other party the brutal truth. Tell them exactly what went wrong and why it can't be fixed. Chances are they won't agree with your assessment, but give it anyway. It's painful but respectful. And it will help both sides in the future.  

No finger pointing. No SOD (some other dude) defense. (In murder trials the defense often uses a SODDI strategy—some other dude did it.) Not here. Good agencies know what they need from clients to do their job, and they know how to get it. Clients know what they want from their agency and should be able to communicate that. If neither of these things are happening, responsibility lies with both parties, and both should take ownership of the problem. 

End the relationship quickly and with class

When it's over, it's over. Although work in process needs to be finished, don't drag it out any longer than needed. Lame-duck situations don't help anyone. The agency should finish all projects efficiently and with attention to detail. Project files should be organized, inventoried, and transferred efficiently, not just dumped on a disk and sent. On the client side, invoices should be paid promptly and include those for time spent transferring files, recapping processes, and wrapping up loose ends. 

Another thing to think about is the tone you take as things wind down. Remember that the relationship started with excitement and high expectations. It should end with the same level of attention and professionalism on both sides. A simple thank you or even a farewell lunch (not a celebration) can go a long way in terms of maintaining a good relationship. And assuming your last few meetings or calls aren't right out of Jerry Springer, try to stay in touch. It's a small industry, and we all know we will meet again. Better that tone be positive (and not awkward) the next time you find yourselves in a conference room together.  

When something like this happens, it's a good idea to look closely and honestly at yourself. Not an easy task to do, but if there's any benefit to be had from this situation, it comes from a ruthless review of what just happened. So now's the time to ask yourself: Are our people up to the task? Do we need to examine how we're working with our clients (or our agencies)? Are the processes we have in place working or actually sabotaging all our hard work? And if you feel you were blindsided by the decision to call it quits, quickly review the rest of your business relationships—you may need a better way to monitor them to prevent this from happening again.  

Gather your senior staff. On the client side gather your brand leaders and those responsible for agency/communications management and discuss how each of your agency relationships are managed: expectations, ongoing communications, monitoring, and measurement. On the agency side don't just meet with the specific account team, extend the process to all of your account leaders and account service team. Similarly review the key elements of account management and your overall service and production process.  

While there are, of course, variances in individual accounts and brands, there should be consistency in the key elements that deliver extraordinary thinking, long-term relationship building, clear ongoing communications and outstanding creative work. If not, it's up to the management team, client, and agency to make it work. 

Finally, move on. Don't wallow in self-pity, don't dwell on what you (or they) could have done better. Just look forward to building better, stronger relationships in the future.  

Agency-client breakups are never easy, but they are a reality of the business. Learning to handle them with professionalism, respect, and goodwill is critical if you want to make them few and far between. How do we know? Well, we recently went through a breakup ourselves, so now we're taking our own advice. 

 is President of Topin & Associates, and a member of 

 Editorial Advisory Board. He can be reached at 

How an agency and client behave after they split speaks volumes about their culture and character, writes Al Topin.

Agencies and Clients — Dealing with a Break-Up

While the nation was embroiled in this year's presidential elections and heated debate over the impact of health reform, a number of important legal and regulatory issues absorbed pharmaceutical executives. One bit of good news was Congressional approval of legislation that stiffens penalties for crimes involving theft and hijacking of drugs and medical devices. Just before leaving town in September, the Senate quietly enacted the Safe Doses Act (HR 4223), which had been approved by the House in June, and President Obama signed the bill into law last month. Manufacturers have long complained that criminals face stiffer penalties for stealing handbags and CDs than prescription drugs. The legislation, which was sponsored by Rep. James Sensenbrenner (R-Wis) and Sen. Charles Schumer (D-NY), changes that by imposing hefty fines and jail sentences for falsification, alteration or forgery of medical products and their subsequent transportation or sale.  

Meanwhile, FDA stepped up its campaign against illegal Internet drug sales, joining the fifth "Operation Pangea" coordinated by Interpol. The recent effort shut down more than 18,000 pharmacy websites worldwide and led to the seizure of about $10 million worth of drugs. In the United States FDA took action against some 4,000 Internet pharmacies, sending out warning letters, seizing illegal products, and shutting websites—at least temporarily. At the September meeting of the Partnership for Safe Medicines, commissioner Margaret Hamburg also described FDA's "BeSafeRx" campaign, which aims to educate consumers on the dangers of Internet drug purchases.  

All this took place amidst a mounting national outcry over a meningitis outbreak linked to contaminated injectables from a Massachusetts compounding pharmacy. The health crisis focused attention on FDA's limited authority to regulate these operators and generated calls for legislation to remedy the problem, a move supported by both parties. 

During the Congressional recess, discussions continued over legislative proposals for establishing a national drug track-and-trace system. Manufacturers and FDA officials still hope to devise a workable program for monitoring drugs through the supply chain, but have been stuck over whether to start with a more limited batch-level tracking approach, versus the feasibility of requiring tracking for every vial, as FDA prefers.  

The prospect of across-the-board federal budget "sequestration" to reduce the projected $1.2 trillion budget deficit began to generate "savings" proposals from interest groups on all sides. The Pharmaceutical Care Management Association (PCMA), which represents pharmacy benefit managers (PBMs), weighed in last month with its list for cutting federal spending on prescription drugs by $100 billion over 10 years. PCMA urges more generic drug use by Medicaid and Medicare Part D drug plans, expanded mail order services for home-bound elderly patients, and an end to Part D "protected drug classes" to permit broader price negotiations. The PBMs also want to drop tax deductions for direct-to-consumer drug advertising to make it harder for brand manufacturers to drive consumer use of their more expensive products.   

Another PCMA idea is to speed new "biogenerics" to market by reducing the 12-year exclusivity for innovator biologics and accelerating FDA efforts to establish an approval pathway for biosimilars. Here FDA officials are hard at work mapping out an innovative "weight of evidence" approach for testing and developing biosimilar products. It relies on extensive comparative analysis and functional studies upfront to shape the size and scope of further testing, a policy that represents "a paradigm shift" in how FDA documents drug safety and efficacy, observed Janet  Woodcock, director of the Center for Drug Evaluation and Research (CDER), at a Drug Information Association (DIA) September conference. 

FDA laid out this concept for biosimilar development in three draft guidances published in February 2012, and a CDER/CBER biosimilar implementation committee is weighing comments and further changes. Meanwhile, manufacturers are seeking advice from FDA about biosimilar development options, as seen, as of early October, in 47 requests for pre-IND meetings on proposed biosimilars to 11 reference products. Agency staffers have held 30 meetings, and 12 INDs have been filed for possible biosimilars, some involving new development programs and some building on data from products already licensed in Europe. Biosimilar review committees in the agency's centers for drugs and biologics are vetting sponsor queries and agency answers to ensure that staff advice is consistent across divisions.  

Despite all the discussion, FDA still awaits its first official 351(k) biosimilar application, as authorized by the Biologics Price Competition and Innovation Act (BPCI) in the Affordable Care Act of 2010. Teva Pharmaceuticals recently received FDA approval of its version of Amgen's Neupogen (filgrastim), but opted for a biological license application (BLA) instead of taking the new route. This approach gives Teva 12-years of exclusivity for its product and avoids the complex and untested patent dispute resolution process established by BPCI.  

In addition to technical and scientific challenges, a number of legal and regulatory issues will shape the development path for a new biosimilar. Besides the convoluted process for addressing exclusivity and patent rights, there is considerable debate over biosimilar names and product codes, which are key to market acceptance of the new products. The size and shape of clinical studies remains uncertain, along with questions about non-US comparators and bridging studies. Interchangeability is still the ultimate goal for most biosimilar makers, but such a designation may require more extensive test data. All sides anticipate lawsuits and citizens' petitions that will take years to resolve, in addition to other controversies.   

Despite these uncertainties, the first step for manufacturers is to develop a clear analytical plan for demonstrating biosimilarity of a follow-on to a reference product, advised Steve Kozlowski, director of CDER's Office of Biotechnology Products (OBP). He observed that manufacturing and product analysis are usually at the "low end of the totem pole" in drug development, but for biosimilars, structural and functional characterization provides a foundation for determining the scope of pre-clinical and clinical studies. Advances in manufacturing science, moreover, may support comparative assessment using a fingerprint-like analysis or "super characterization" approach. 

FDA is trying to be flexible, Kozlowski emphasized, noting that different formulations and alternative delivery devices or container closure systems may be acceptable. While FDA expects that sponsors will have to conduct at least one immunogenicity study, Koslowski says that "the door is open," to the concept that "added studies may not be necessary." 

Pharmaceutical Executive's Washington correspondent. She can be reached at 

While the nation was embroiled in the presidential elections, a number of important legal and regulatory issues absorbed pharmaceutical executives, writes Jill Wechsler.

Budgets, Biosimilars, and Bad Ads

Do higher patient co-pays impede access to the best that modern medicine has to offer in the specialty segment? It's more than an abstract question: big money is at stake as pharmacy benefit managers (PBMs) campaign to block efforts by specialty drug manufacturers to defray patients' out of pocket prescription costs through co-pay offset coupons and other discount programs. United Health Care's Specialty Pharmacy group has issued the latest salvo from the PBM community, barring as of January 1, 2013 the redemption by innetwork pharmacists of manufacturer-sponsored offset coupons for six key specialty medicines, including the Abbott blockbuster Humira. 

In an interesting and potentially useful contribution to the larger debate on how best to manage the cost of these life-saving drugs, strategy and analytics consultant the Amundsen Group has conducted an intensive data analysis to gauge the impact of patient co-pays on access to specialty therapies.  

The not so subtle conclusion? Insurers, by discouraging specialty prescribing and pushing patients into using lower cost medicines, may end up being penny wise and pound foolish. In the following summary of their findings, two Amundsen principals argue for a policy reset on benefit design for specialty medicines, taking into account the system-wide cost implications of drug therapy foregone. 

Although used by a small number of patients, specialty drug therapies are attracting attention because, while they represent a major advance in medical care, their high out-of-pocket costs can cause a financial burden for consumers. These costs may create a disincentive to finding the most appropriate therapy for the individual patient. Even when specialty medicines provide important new treatment options, high cost-sharing causes a substantial share of patients to abandon these medicines at the pharmacy counter.  

Health insurance is intended to protect against the risk of major financial loss to specific individuals by spreading the cost of low probability, complex and treatment-intensive diseases over a large population. Numerous surveys show that spending for medicines, compared to hospital stays and other healthcare services, is frequently concentrated in a small share of the population. Analysis of a recent Express Scripts Drug Trend Report and other studies show that specialty drug therapies are used by less than 5 percent of US patients, primarily those with severe chronic or life threatening diseases, and these medicines represent a small share (13 percent or less) of total health plan costs. Similarly, a small number of hospital admissions account for a sizable share of spending. The most costly 5 percent of US hospital stays represented 32 percent of total charges and had an average charge of about $18,000 per day in 2008. In Medicare, the most costly 5 percent of beneficiaries account for about 40 percent of expenditures, the majority of which are for hospitalization.  

In recent years, many health benefit plans have changed formularies to create new "specialty tiers" requiring higher cost sharing—typically coinsurance—for specialty medicines. The outcome is that health plans impose a high out-of-pocket burden on sick patients who need specialty tier medicines, rather than spreading these costs across the broader population, as insurance should. It would clearly be inappropriate to require patients needing lengthy or complex hospital stays to pay a higher share of their total costs than other patients. Yet the concentration of costs on the sickest patients is the practical effect of specialty drug tiers. Simply put, our research shows that this practice has an adverse effect on patient access.  

 Many innovative therapeutics that treat serious medical conditions have earned the designation as "specialty medicines." They often address the root causes of disease, for instance by targeting a particular protein through antibodies or gene expression. They may tailor a treatment to an individual patient's physiology and risk factors. Many are biotechnology-based products that are made in living systems (e.g., cells, tissues), require special precautions or methods of administration, or treat small but severely ill populations, and thus bear higher prices than traditional medicines.  

 In many health plans, medications are designated for coverage on a specialty formulary tier based on cost, rather than clinical or pharmacologic attributes. In Medicare, guidance from the Centers for Medicare & Medicaid Services (CMS) indicates that medicines may be placed on a specialty formulary tier if the negotiated price exceeds $600 per month.  

Health plans commonly use prior authorization to manage the use of specialty tier therapies and ensure that treatment is appropriate. Reliance on percentage coinsurance on the specialty tier, rather than fixed dollar co-pays, is also a widespread practice. Kaiser/HRET's latest Employer Health Benefits Survey shows that in the commercial market, coinsurance on the specialty tier averaged 32% in 2011. Many commercial plans do not offer any annual limit on out-of-pocket spending for outpatient medicines, including for medicines on the specialty tier. In Medicare Part D, patients who don't qualify for low-income subsidies usually pay 25 percent or 33 percent for a specialty tier medicine in the initial coverage phase. Part D plans may deny patients the ability to seek lower cost sharing for specialty medicines (tiering exceptions), a protection available for non-specialty tier medicines. Once patients reach catastrophic coverage, however, they pay no more than 5 percent.  

 Patient advocates, members of Congress, and others have expressed concern regarding the impact of specialty tiers on out-of-pocket cost and medication use. For example, research on oral oncology medicines recently published in the 

 found that Medicare patients with co-pays of $500 or more were four times more likely to abandon these therapies than patients charged $100 or less.  

We evaluated the impact of out-of-pocket (OOP) cost on access to specialty medicines for enrollees in Medicare Part D, using patient-specific, de-identified longitudinal claims data that capture the sequence of steps in pharmacy transactions. First, we assessed the cost burden in 2011 for Part D enrollees in three therapeutic areas: rheumatoid arthritis (RA), multiple sclerosis (MS), and oral oncology. For each therapeutic area, we determined patients' actual out-of-pocket costs for Part D prescriptions filled in 2011 that had no secondary source of payment. Because one specialty prescription claim may span several Part D coverage phases, we estimated monthly OOP costs in each coverage phase by applying phase-specific coinsurance rates to the total cost per product.  

We then evaluated whether behavior of new patients is affected by the OOP costs they face at the pharmacy. We measured the proportion of Medicare patients without a low income subsidy who did not fill (abandoned) their first approved prescription for a specialty medicine during 2009 through 2011. The analysis was restricted to prescriptions approved in the initial coverage phase for patients new to a specialty therapy (i.e., with no prescription for the product within the previous 12 months). We assessed abandonment by OOP cost at three time points: the initial approval date, 30 days, and 90 days thereafter.  

First, we identified the OOP cost burden of specialty tier medicines for patients in each of these three therapeutic areas. In all three, patients' estimated cost for a 30-day fill exceeded $400 at the 25 percent coinsurance level and $600 at the 33 percent coinsurance level (see table). 

 Average Monthly Patient Out-of-Pocket Cost per Prescription, 2011*			

Second, we asked if OOP cost matters—and does it affect patient behavior? Across all three therapeutic areas, more than half of patients starting treatment with a medication covered on the specialty tier abandoned their prescriptions at the pharmacy. The total proportion of new patients who abandoned their first script was 56 percent for RA patients, 55 percent for MS, and 53 percent for oral oncology (see figure). These rates were substantially greater than the abandonment rates below 20% that we observed during the same time period for traditional oral therapies that treat chronic conditions such as high cholesterol and Parkinson's disease. 

And abandonment of specialty tier medicines went up as patient out-of-pocket cost increased. Most new RA patients faced OOP cost of $100 or more, and their abandonment rate (52 percent and higher) was more than double the 11 percent and 21 percent seen in cohorts paying less than $50 and $50-$99.99, respectively. For new MS and oral oncology patients, the first jump in abandonment occurred when OOP cost reached $250 or more. 

Among our sampled patients, the cost burden was highest for oncology patients: 78 percent of their initial scripts showed OOP cost of $500 or higher. Because cancer is often acutely life-threatening, oral oncology patients were less likely to abandon medications than RA and MS patients who faced similar OOP costs. For example, 45 percent of oncology patients abandoned prescriptions despite OOP cost of $500-$749.99, compared with 71 percent of RA patients. Abandonment of oral oncology products increased steadily as patients' costs for these life-saving medicines escalated to thousands of dollars per month. 

To make sure high abandonment wasn't a transient phenomenon, we reassessed rates at two additional time periods. Longitudinal data showed progressive slight improvement in fill rates after 30 and 90 days, with abandonment decreasing in several cost cohorts. However, overall abandonment rates remained high even after 90 days, dropping by only 8 to 10 percentage points to 47 percent for RA and MS patients and 43 percent for oral oncology patients. 

Analysis of Medicare claims demonstrates that patients on specialty tier medicines face high out-of-pocket costs. High cost sharing impedes access to these medicines, causing a large proportion of new patients to abandon therapy. In some instances, patients may be able to choose an alternative treatment, but our analysis shows that many patients are not initiating therapy that their doctors prescribed and their plans authorized. Delaying or foregoing treatment can have serious health consequences and result in higher overall health costs. As health plans design prescription drug coverage, it is crucial to assure that benefit designs spread costs across the entire insured population, rather than concentrate the highest costs on a small subset of patients who may be forced to abandon needed prescriptions for specialty tier therapies.  

 is a Senior Consultant at The Amundsen Group and can be reached at 

. Lauri Mitchell is a Director at The Amundsen Group, and can be reached at 

The authors appreciate the data analysis conducted by Christopher Katz and William Aubin of The Amundsen Group. This research was funded in part by the Pharmaceutical Research and Manufacturers of America.

Features

Providers and patients fish for that delicate balance between access and abandonment.

Who Pays for Specialty Medicines?

California's Safer Consumer Products regulations, currently in draft form and set for implementation in early 2013, pose a serious challenge to US over-the-counter (OTC) drug manufacturers by imposing a new layer of bureaucratic oversight on top of what already exists through federal statutes. There is a high potential for contradictory labeling and information requirements as well as greater liability exposures—even an outright ban on sale of OTCs in the state. Nevertheless, there is little awareness of the extent of the threat. To date the pharmaceutical industry has been largely missing from the dialogue.  

On first blush, the regulations, like the federal Toxic Substance Control Act, appear to exempt drugs, devices, and food, which are regulated by the Food and Drug Administration (FDA). However, the regulations only exempt "dangerous drugs," which are defined in the text as prescription (Rx) drugs, not OTC products. Therefore, the entire range of OTC medicines and their packaging—from aspirin to sunscreen—is susceptible to the state's expanded powers of oversight.  

Although the pharmaceutical industry is pressing the argument that state-level OTC controls are preempted by the FDA regulations, not everyone in California agrees. And it is unclear whether the industry strategy of obtaining a legislative amendment to make OTC drugs exempt will succeed before the regulations are enacted.  

California's Safer Consumer Products regulations address all consumer products sold in California that contain a "Chemical of Concern." There are currently over a thousand Chemicals of Concern on the California list, and an initial review of the list includes more than 25 chemicals used in OTC drugs. Additional chemicals may be added at any time by the Department of Toxic Substance Control (DTSC), and this can be facilitated by a citizen petition process. The Chemicals of Concern list becomes a problem for OTC drug manufacturers if these chemicals are present in an OTC drug, in a concentration greater than the "alternative analysis threshold" specified by DTSC. DTSC intends to set this threshold on a case-by-case basis for each product, but it is likely to be below 0.01 percent and perhaps as low as the minimum concentration detectable by available laboratory equipment. For comparison, the widely accepted global standard today for triggering chemical regulatory requirements is 0.10 percent. 

This threshold is of great concern for the pharmaceutical industry, as a concentration over 0.01 percent of a chemical is often necessary for the efficacy of an OTC drug. For example, aspirin, a chemical included on the initial Chemicals of Concern list, is available in a 325mg tablet, at a concentration of 85.98 percent. 

The regulations require DTSC to evaluate and prioritize products containing a Chemical of Concern based on vague criteria concerning "safety" and "exposure." It must develop a list of priority products for which the responsible party (usually the manufacturer) must conduct a life-cycle-based Alternative Assessment (AA) to determine how to design the product without using the Chemical of Concern. The cost of conducting an AA is estimated to range from $500,000 to $6 million, including obtaining information from the global supply chain as well as the cost of conducting the chemical analysis (along with fees paid to DTSC to conduct review).  

Based upon DTSC and public review of the AA, a manufacturer could also be subject to a state-mandated redesign of the product to replace the Chemical of Concern with what DTSC considers to be a safer chemical. Designing an OTC drug without a Chemical of Concern will be impossible for products where—as in the case of aspirin—the Chemical of Concern is the active pharmaceutical ingredient.  

In addition to the AA and redesign requirements, manufacturers of products sold in California may be required, at the sole discretion of DTSC, to provide to that agency, for public review, data on the "toxicity" characteristics of the product. This data will be based on newly created California "hazard traits," many of which are not considered to be hazards anywhere else, have no known test methods to measure hazards, and are inconsistent with recognized global hazard trait standards. DTSC may use this data to expand both the list of Chemicals of Concern and the list of Priority Products. The cost of this toxicity review could cost from $5,000 to $100,000 (depending upon availability and cost of the test method) to test for 40-plus hazard traits for chemical ingredients, retool lab equipment to meet a 0.01 percent threshold, and to hire third-party labs.  

As a result of this analysis, DTSC may implement labeling requirements, such as requiring that a product be labeled as hazardous. Although FDA strictly regulates the labeling of OTC drugs, DTSC will have the authority, under the Safer Consumer Product regulations, to impose an additional labeling requirement on OTC drug products. A label of hazardous on an OTC drug will drive consumers away from the drug and damage the reputation of the drug manufacturer. 

FDA regulation of OTC drugs entails consideration of human health effects and environmental impacts. There are two regulatory pathways that ensure the safety of the chemicals used in an OTC drug. OTC drugs are either approved through a new drug application (NDA) or must conform to a drug monograph issued by FDA. Through the NDA process, FDA approves a drug if, and only if, it is shown to be safe and effective. FDA permits an Rx-to-OTC switch if there is a long history of safe use, a prescription is no longer necessary to ensure safe use, and it is in the public interest to increase access at a lower cost. Similarly, drug monographs outline detailed conditions to which the OTC drug product must conform in order to be legally marketed. The use of active ingredients is specified in the monograph by dosage strength and dosage form. The active ingredient in a drug monograph has been extensively assessed by FDA for human health effects, for purposes of both safety and efficacy.  

Through this detailed assessment, FDA determines what level of chemical is not hazardous and acceptable for use—i.e., conditions under which an OTC ingredient is generally recognized as safe and effective. The monographs contain specific requirements regarding permissible active ingredients, dosage strength, directions for use, claims, warnings, and precautions. The entire OTC monograph development and assessment process is conducted by FDA through public, notice-and-comment rule making, based upon recommendations by expert advisory panels.  

The California Safer Consumer Products regulations are largely duplicative of FDA's regulation of OTC drugs. Although the Safer Consumer Products regulations do permit DTSC to grant a regulatory exemption from a requirement if it is in conflict with a federal regulatory program, such that the responsible entity could not reasonably be expected to comply with both, there is no guarantee that DTSC would do so for OTC drug products. Moreover, the burden should not be on industry to resolve conflicts and overlap between regulatory regimes. To obviate the need for a DTSC regulatory exemption, the pharmaceutical industry needs to take an active role and demonstrate to the California legislature that its proposed regulation of OTC drugs is preempted by the federal Food, Drug and Cosmetic Act (FDCA) and FDA regulation of OTC drugs.  

In our view, the FDCA, the FDA's NDA process and drug monograph requirements likely preempt the Safer Consumer Product regulations as they relate to OTC drug products. Section 751 of the FDCA expressly preempts states from imposing additional regulation on OTC drugs: "no state may establish...any requirement (1) that relates to the regulation of a [nonprescription] drug...and (2) that is different from or in addition to, or that is otherwise not identical with, a requirement under this chapter."  

In this regard, the statute dictates that "a requirement that relates to the regulation of a drug shall be deemed to include any requirement relating to public information or any other form of public communication relating to a warning of any kind for a drug." Courts have held that federal laws preempt conflicting state laws when it is the "clear and manifest purpose of Congress to do so." An express preemption provision, such as Section 751, is direct evidence of congressional intent to preempt state law. The Safer Consumer Product regulations, as they relate to OTC drugs, are different from, and in addition to, the FDA regulations of OTC drugs. Therefore, they should be interpreted as being preempted by the FDCA. 

In sum, California's Safer Consumer Products regulations could impose significant financial costs and other related regulatory burdens on OTC drug manufacturers, and may even bar the sale of OTC drug products in the California market. There is a strong argument that the DTSC requirements conflict with and are preempted by FDA laws and regulations. However, manufacturers cannot expect a quick and favorable judicial review of the preemption issue after implementation of these new regulations. By then, industry may also have to contend with product liability claims. It must take action on the legislative front—beginning now.  

 is a partner at Alston & Bird LLP. She can be reached at 

 is an Associate at Alston & Bird LLP. She can be reached at 

Over-the-counter products face a new wave of regulation.

OTC Crunch Time in California

More than 500 representatives of Big Pharma joined a select roster of Nobel prize winners, key regulatory officials, and trade association leaders at the New York Museum of Natural History on October 16 with one purpose in mind: to recognize the latest innovations in new drugs and medical devices that support, improve, and lengthen the lives of patients worldwide. A highlight of the evening was the presentation of the Prix Galien's 2012 Pro Bono Humanitarian Award to Francis Collins, MD, Director of the National Institutes of Health, for his record in advocating higher ethical standards in the conduct of medical research, particularly in improving the design, execution, and application of clinical trials to ensure safe and appropriate use of new treatments. Collins was presented the award by 1986 Nobel Peace Prize recipient and author Elie Wiesel, whose forthcoming book, Open Heart, documents his personal encounter with the practical results of the trial process as a coronary bypass patient last year. 

Fred Hassan, chair of Bausch and Lomb and former CEO of Schering Plough.			

The award ceremony's product honorees included Bristol-Myers Squibb's Yervoy (ipillumab), as Best Biotechnology Product, for treatment of melanoma; Merck's Victrelis (boceprevir), and Vertex's Incivek (telaprevir) both of which won for Best Pharmaceutical Agent, for treatment of hepatitis C; and Edwards Lifesciences' SAPIEN Transcatheter Heartvalve and Medtronics Melody Transcatheter Pulmonary Valve, as Best Medical Technology Product. This year was the first time Prix Galien's award committee of seven nobelists recognized innovation in medical devices, a decision that was made due to the expanding and complementary role that devices play in the treatment of disease. 

Pharm Exec editor-in-chief Bill Looney (left) and Pharm Exec EAB member and head of JBL Asssociates Montreal, Bernard Lachapelle (right).			

FDA Commissioner Margaret Hamburg delivered the evening's keynote address, which centered on her personal commitment to promoting innovation through metrics built around the FDA's program initiatives to foster "smart regulation" rather than the pursuit of the bureaucratic status quo. Hamburg, along with European Medicines Agency Executive Director Guido Rasi, also participated in panel discussions at the 3rd annual Prix Galien Forum of policy experts held earlier in the day at the Alexandria Center for Life Sciences in lower Manhattan. 

Chair of the Prix Galien committee and former chairman of Merck, Roy Vagelos.			

In their comments to attendees, both leaders confirmed the expanding role of the regulator in an era of globalization, with Hamburg noting that the FDA today is not only assessing a drug around the traditional metrics of safety and efficacy, but on performance—under real market conditions—as well. 

's Associate Editor. He can be reached at 

Prix Galien celebrates a new round of next generation drug technologies.

Prix Galien: Night at the Museum

Managed access programs (MAPs) are designed to provide access to medicines outside of the clinical and commercial setting, for patients who have no other available treatment options. Such programs provide patients with access to treatment in special cases, but companies can also use information gathered under compliant MAP programs to gain insight into how a product might perform in the real world, ahead of regulatory decisions and commercial launch. 

MAPs can be applicable whenever there are patients with unmet medical needs wanting access to a medicine which shows evidence of efficacy and safety relevant to their condition and which are unavailable through the normal commercial or clinical trial routes. This situation arises in a variety of circumstances: 

» During Phase II/III for patients who fail to meet the strict inclusion/exclusion criteria of a clinical trial or access to a clinical trial site.  

» In the time after clinical trials and before commercial availability, while waiting for NDA/marketing authorization submissions to be submitted and approval granted. 

» Following first global approval of a new medicine, commercial availability in other markets can take months or years.  

While keeping focus on creating access for patients, there is a unique opportunity to observe how the product is used and performs in this wider setting. By its very nature, the context of a MAP is closer to a real world setting than to a clinical trial setting. This information is useful to the manufacturer, and will also be welcomed by regulatory agencies and health technology appraisal bodies.  

It is important to recognize that MAPs are neither clinical research nor seeding trials. In this column, we look at the types of insight that can be gained, and how the data might be used. 

MAPs utilize regulatory mechanisms in place around the world that allow a physician to treat a patient with an unlicensed medicine. These regulatory mechanisms have a variety of names including expanded access, named patient, and compassionate use, and the exact approach to be used may vary depending on whether the product is globally unlicensed or available in some countries. The key to such programs is that irrespective of the regulatory mechanism, it is the physician who requests access to a medicine that they feel would benefit the patient.  

The scope for data capture beyond the required adverse event information includes patient demographics, medical history, baseline symptoms, drug and dispensing information, laboratory data, and outcomes. The general guidelines for collecting data as part of a MAP are meant to ensure that physicians don't have to perform additional tests beyond what he or she would normally do as part of his or her clinical practice, unless there are tests or follow-up required for safe use of the product. This is not a limitation but a benefit, since it keeps the environment as close to the "real world" as possible.  

The intended use of the data from a MAP will have some influence over the approach and tools used. In all countries the collection of adverse event information is required and can be used to get a real-world view on the safety profile of a product. However, in countries where the treating physician is responsible for the reporting, it may be more challenging for the manufacturer to get comprehensive information on the safety profile. So in cases where a company wants to collect robust data on a specific outcome measure or follow an important laboratory safety parameter, it would be more appropriate to focus on countries that have group access mechanisms where a protocol covering the required assessments is agreed on with the regulatory agency, and physicians are obliged to comply.  

From a regulatory point of view, the data can be enormously valuable in offering insight into the safety profile of the product outside the controlled environment of a clinical trial. In terms of planning for risk management post-launch, data from a MAP represents a bridge between the controlled, monitored environment of the clinical trial and the real-world usage patterns with commercial availability. In the 2009 preamble to the updated FDA rules on expanded access programs, the agency acknowledged the usefulness of data collected in support of an NDA, both from a safety and efficacy perspective.  

In a review of 49 orphan drugs approved in the European Union between 2005 and August 2012, seven (14 percent) of the applications included safety data derived from a compassionate use program. In three cases information from the program was included in the safety sections of the approved summary of product characteristics (SmPC). In the case of Laboratoires Biocodex's Diacomit, an anti-epileptic approved in 2007 for the treatment of a rare, severe form of epilepsy in young children, the data from the French compassionate use program was quoted in the SmPC to provide some guidance to physicians on use of the product in children who were younger than those included in the main trial. 

A number of studies have been published describing how data collected within MAPs can be used to help confirm or give indication of further study, and importantly, demonstrate possible benefits for patient subtypes excluded from or underrepresented in pivotal studies.  

Genzyme's Mozobil (plerixafor) received approval from FDA in 2008, and EMA in 2009, to enhance mobilization of hematopoietic stem cells in patients with lymphoma and multiple myeloma. Registration trials had excluded patients who had failed to mobilize adequate numbers of peripheral blood stem cells via traditional approaches. A compassionate use program was initiated in 2008 in the European Union for these patients. 

Among patients at risk to mobilize poorly, the subgroup most difficult to treat are those who have already failed mobilization attempts. A review of the compassionate use data revealed that approximately 75 percent of the patients who are hardest to mobilize were successfully rescued after one or more previous failures. 

Similarly, a retrospective study of over 70 patients enrolled in a named patient program was used to assess the real-world clinical benefits of Celgene's Vidaza (azacitidine), for treatment of patients with lower risk myelodysplastic syndrome (MDS). Trial data demonstrated that Vidaza induces a significant survival advantage in patients with higher risk MDS. The trials however, included only a small number of patients with lower-risk disease. Data from lower-risk patients enrolled in the named patient program indicated that Vidaza may be a good therapeutic option for these patients. The study's authors conclude that:  

				"These observations represent real-world data, because patients were treated outside of the setting of a clinical trial, in which strict inclusion and exclusion criteria may have limited the generalizability of the findings." 			

Data derived from MAPs can also be used to create a more patient-focused approach to treatment. A study published last year in the 

 uses data from expanded access programs conducted in the United States and Europe, along with clinical experience, to help guide optimal use of several drugs for renal cell carcinoma. The authors noted that populations recruited for randomized clinical trials can under-represent patient subtypes, which can impact the clinician's ability to select the most appropriate agent for a particular patient. A retrospective analysis of MAP data yielded important insights into treatment of what the authors describe as "emerging" and "minority" patient subgroups.  

Data collected during a MAP can also provide strategic insight to support internal decision making and planning. Companies can learn about demand levels by geography, key prescribing centers, treatment pathways, and off-label use by country. This sort of information, although not conclusive, can offer valuable insight to multiple departments within pharmaceutical organizations. The relevance of the information stretches beyond the medical and clinical departments and could extend to health economics and outcomes research. 

When considering options for such data collection, a few best practices will help optimize efforts:  

» Understand the normal treatment practice so data collection works in concert with physicians. 

» Define your objectives for the data. Identify those areas in which you are seeking to gain greater insight and let that guide what data is collected. Be cognizant of the burden the data collection may put on the physician and refine accordingly. 

» In some countries such as the United States, France, and Germany, there is a regulatory agency review of the protocol one intends to use for a MAP. If a company wants to collect data in any organized fashion and use it, putting a protocol in place is advisable, regardless of whether it's required by the national regulatory agency. 

 is Global Director, Regulatory and Medical Strategy at Idis. She can be reached at 

Commercial teams as well as patients can benefit from managed access programs.

Real World Insights

JUST A FEW YEARS AGO, SPAIN WAS FOR EUROPEAN DRUG MAKERS THE COUNTRY OF INFINITE PROMISE.

 Sales forecasts were as bright as a Valencia orange, with the Spanish market set to vault beyond Italy and the United Kingdom toward the top of the region's league charts as represented by Germany and France. But like Newton's apple, gravity came calling instead, with the dead weight of recession and a budget, debt, and lending crisis that has added new tensions to the traditionally combative relationship between industry and the 17 regional governments that subsidize the cost of medicines to the public.  

Relying on the adage to never let a crisis go to waste, Spain's leading business school, IESE, organized an expert conference on October 2-3 to address two simple questions. First, if austerity is the "new normal" in healthcare, how can providers and payers work together to generate more value from existing resources? Second, what must be done to ensure the system continues to create value in the first place, through support for innovations that have, for example, made Spain a world leader in transplant surgery? 

Participants, including myself, agreed that Spain had reached the end of the road in crafting policy remedies from existing rule books. "My government has adopted no less than 30 reports on sustainability of the public system since IESE convened its first meeting on healthcare in 1994," observed Catalonia's Health Secretary, Roser Fernandez. "With our budgetary resources so constrained, the task of the administrator is to facilitate, not innovate." 

Thus, it fell to the pharmaceutical industry to show up with answers to the questions posed by the IESE team. But first we listened to a litany of woe from Farmaindustria President Jordi Ramentol: The government now regulates drug pricing by emergency executive order, arbitrarily, with no opportunity for appeal. Companies wait 535 days on average for payment, with no interest on arrears. A 40 percent cut in the drug budget has been decreed for 2013, on top of double digit declines for each of the past three years. He stressed that company revenues today are at the level of 1998, a virtual lost decade of eroding wages and layoffs for the 160,000 people still employed by the industry.  

Farmaindustria presented a three pillar proposal to reverse this backward slide—and asked representatives of the public sector in attendance to stay and listen to it. At its heart is what Ramentol referred to as a "repositioning," not only around policy issues but on the specific manner in which government and industry interact. What companies want most is a uniform, predictable government strategy on pharmaceuticals, applied equally, with legal security, across regions. "We would rather have clarity about the penalties imposed on us than endless, ad hoc changes in regulation. Let's have one approach and stick to it."  

The other two pillars are what the industry is offering in return for a clear road map. First up is alliances with stakeholders to promote increased access to medicines, particularly through at-home investments in R&D, which, at just under €1 billion annually, ranks second only to the much larger auto sector. The second is to build new "clusters of production" to pool capacity and improve the sector's job-creating export potential. The Spanish industry exported €8.8 billion worth of drugs last year; Ireland, a far smaller market, shipped out more than €40 billion. So why can't Spain achieve the same?  

Farmaindustria is promising more production in return for an industrial strategy that recognizes the innovative industry's contribution to Spain's future—as a knowledge economy, not a fading refuge for tourist touts. The message is: Access to tomorrow's medicines depends on a growth plan for the industry that provides them today. Without more growth in the economy, the public welfare deficit will smother this pivotal Spanish industry for good. Social charges, already high at 26 percent of GDP in 2010, are forecast to reach a staggering 35 percent by year end. 

From the Editor

Spain's leading business school, IESE, organized an expert conference on October 2-3 to address two simple questions. First, how can providers and payers work together to generate more value from existing resources? Second, what must be done to ensure the system continues to create value in the first place?

Simple Questions for Spain

Historically, many companies have had ill-defined processes for planning market research activities across their product portfolio. Market research, especially payer research, typically was planned product by product amongst the various brand teams without internal alignment efforts. This siloed planning often creates misaligned market research efforts across the company's product portfolio.  

The current issues with planning market access research are two-fold. First, payer research planning is often a rushed initiative after the summer budget planning process. During budget planning, employees tend to spend much of their efforts securing the necessary budget for each asset and less time strategically considering the most appropriate types of payer research. Second, there are overlaps and inconsistencies in the types and timing of payer market research commissioned across a portfolio. 

Companies often have similar market access research requests within the same treatment setting across different assets. Ideally, the key learnings would be translated to similar assets. Pharmaceutical companies have been attempting to standardize market research throughout the product lifecycle and across their entire portfolio, and as such there is a growing need to develop a 'market access roadmap. 

Over the past several years, market access has become an increasingly important topic. Given the tough economic situation, especially in a number of European markets, the national and local healthcare budgets in many countries have been cut significantly. Many countries have overhauled their pricing rules and introduced strict market access policies. With the introduction of cost-saving measures in various countries, market access has become a bottleneck to the successful launch of new products. Further compounding this situation is the loss of exclusivity of many key products and the drying of pharmaceutical pipelines, which has also caused a decrease in the budgets available for market research projects. This is especially the case for payer research, which is difficult and often costly to conduct due to the limited number of stakeholders able to participate. 

The increased focus on market access results in an increased need for payer research and employees with in-depth market access experience to help execute this research. However, given that market access is a niche knowledge area; pharmaceutical companies are struggling to find experienced professionals. The lack of employees with in-depth market access knowledge has also contributed to inconsistencies in the market access research conducted throughout the company. Additionally, the economy and the changing healthcare environment have forced many large pharmaceutical companies to cut team sizes—leaving the same amount of work, if not more, to be done by fewer employees.  

As a result, many companies are looking for streamlined methods to share market access best practices. In order to effectively share best practices across their entire product portfolio and reduce overall costs, companies have begun developing a unified roadmap for payer market research. The goal of this process is to work more efficiently given the limited resources available to prevent the unnecessary duplication of research, look for potential research synergies, and ensure the execution of only the most critical research efforts throughout an asset's lifecycle. 

Developing a unified roadmap allows for knowledge sharing by highlighting the value of market research planning and defining the necessary payer research initiatives and activities throughout the lifecycle of an asset (figure). A standardized roadmap necessitates internal alignment across therapeutic areas, brands, and global markets. It can also be used as a training tool for employees who are unfamiliar with market access planning; it allows employees to quickly understand the market access environment and the relevant stakeholders in different countries across various therapeutic areas. With this tool, employees are challenged to take a high-level perspective on a company's product portfolio, to identify assets with similar indications, and/or development milestones and to assess the key research needs within the asset's lifecycle. 

The roadmap provides a standardized structure and centralized storage place for market access information. Since the roadmap outlines items like key project objectives and appropriate research sample, it allows companies to efficiently generate requests for proposals for market research studies, ensuring that only the most critical research is executed at each product phase. Additionally, the roadmap can function as a tool for budget planning and ensuring all the important payer research milestones for each product are reached. 

Market Acces Research Roadmap Across the Product Lifecycle			

However, implementing the standardization process and developing the roadmap is not an easy undertaking, since it requires buy-in from stakeholders throughout the company; often a significant challenge given the current organizational structure of many pharmaceutical companies. As mentioned, market access research and decisions are typically siloed by disease areas, by the brand team, or as a separate group all together. This structure can result in each team or unit having its own "best practices" for market access and payer research. Therefore, obtaining agreement on one process for payer market research requires buy-in from colleagues with potentially conflicting research methodologies. To facilitate this buy-in process, companies must articulate the need for this new uniform process. 

With the implementation of this roadmap, budgetary conflicts can arise with the current organizational structure. For example, if research synergies between different assets are discovered, there is the potential for conflicts regarding who is the budget holder for the research among the asset teams. Furthermore, research topic priorities could also become a point of contention with such an overlap. Additionally, the internal structure of the company can lead to uncertainty in who is responsible for guiding the roadmap's development, and more importantly, who is responsible for paying for the initial development of the roadmap itself. In order to avoid this conflict, some companies have developed teams within the organization solely responsible for organizing market access activities. 

In order to ensure successful implementation of the payer market research roadmap, the developed tool must be specific to the organizational needs and processes. The roadmap should also be integrated with existing tools for other processes, such as physician/patient market research and/or annual budget planning. Most importantly, the roadmap should be simple and straightforward. However, it is critical to keep in mind that the roadmap is only a tool; it is meant to arm employees with a standardized thought process of payer market research, not to be a one-size-fits-all solution.  

Throughout the development of the tool, it should be tested by internal stakeholders and potentially even be pressure checked during a planning cycle. The ultimate goal should be to develop a roadmap that is user friendly and intuitive; otherwise, employees will be hesitant to adopt it. 

As a final step to ensuring successful implementation of a payer market research roadmap, a detailed roll-out program needs to be developed. The goal of this training is for employees not only to learn how to use the tool, but also to understand the key objectives for developing the roadmap and how it fits into the overall organizational goals. To complement the roadmap, a wider training to build a common baseline knowledge among employees on the critical pricing and market access research methods throughout the product lifecycle can also be of value. 

Standardizing and centralizing payer research across product lifecycle helps develop an overall vision for pricing and market access research across products and disease areas. This unified roadmap approach ensures a consistent high-level research strategy while capturing product and market specific intricacies. Furthermore, implementing such a roadmap will enable employees to develop a common understanding of various pricing and market access environments and increase their strategic thinking across an asset's lifecycle. 

 is a Consultant at Simon Kucher & Partners. She can bea reached at 

 is a Senior Consultant at Simon Kucher & Partners. She can be reached at 

Unified payer research planning is of top import.

Market Access Roadmap

Is the "lost decade" of declining pipeline productivity finally over? Our annual survey of analyst assessments of the state of drug development suggests so, with subtle shards of sunlight beginning to penetrate the gloom cast by the historic loss of exclusivity on more than $80 billion of blockbuster medicines since 2009, as well as the unexpected challenges in leveraging the promise of the human genome through the application of molecular biology to drug treatment. 

Our discussions with a baker's dozen of investment analysts and experts provided insights that lead us to three strategic conclusions about new drug prospects for the year ahead. First, the demand from payers and patients for better evidence of outcomes has imposed new discipline on the R&D process, which is bearing fruit—our list of promising compounds clearly shows an improved correlation between development priorities and areas of real unmet medical need. Second, the emergence of biologics as the dominant area of focus suggests that the process of drug development has finally caught up with the science unleashed by the genomics revolution. Third, the commercial potential of many of these compounds are cited sufficiently to lead us to conclude that predictions of an end to the blockbuster era of "billion dollar plus" medicines are premature. 

It all goes back to the traditional premise that if the clinical need is there, revenues will follow. The big overhang is whether those revenues will be accompanied by the high profit margins required to defray an equally high level of exposure risk. The irony is that, even with the resolution of the so-called crisis in R&D and a return to a more productive pipeline, the industry must still confront a gradual but irrevocable erosion of control over access and pricing for these "next generation" products. 

Without a drug that truly modifies, if not halts, the progression of Alzheimer's disease, caring for patients in the United States alone is expected to top $1 trillion annually by 2020. Late last summer, Pfizer and J&J ended their joint development program on bapineuzumab, a late-stage monoclonal antibody targeting beta amyloid, a primary component of amyloid plaque build-up in the brains of most Alzheimer's patients. Beta amyloid appeared to be the most promising target for new drugs, which made bapi's failure all the more distressing. 

Many disheartened onlookers assumed that Eli Lilly's solanezumab, a similar compound also targeting beta amyloid, was destined for the same fate. While solanezumab is not the game-changer in Alzheimer's that everyone is still waiting for, Lilly's Phase III EXPEDITION trial did evince a slowing of cognitive decline among patients in early stages of the disease. Whether or not solanezumab will eventually receive approval—and there are plenty of opinions in support of both answers to that question—what's more important is that companies working in Alzheimer's can now optimize their own development programs around Lilly's results. 

"There's a difference between the fact that it got the scientists and clinicians very excited, and the fact that it's not going to be approved and be a revenue generator for Lilly," says Ben Weintraub, senior principal and director of research at inThought, a division of Source Healthcare Analytics. "The results were statistically significant but not clinically significant. But the fact that it had any effect [on cognitive decline] at all—this is the first drug that showed any hint of doing anything—is very exciting." In a note to investors, Tim Anderson of Bernstein Research described the solanezumab "controversy" as one related to Lilly's "out of favor stock among the majority of sell-side analysts," in that "bears will likely continue to find reasons to be bears, and bulls will likely continue to remain bulls until more definitive data on solanezumab is generated." 

Anderson, as of late October, put solanezumab's chances of eventual approval at about 40 percent. Seamus Fernandez, of Leerink Swann, gave solanezumab a 30 percent to 50 percent chance of earning $5 billion in sales in 2022, "despite evidence giving a modest signal of cognitive benefit at 18 months." 

"Alzheimer's disease affects the most complicated functions of the most complex organ in the body," said William Thies, chief medical and scientific officer at the Alzheimer's Association. The consensus of the research community is to temper expectations and keep pushing for increases in government funding for early stage research. Combating Alzheimer's disease will require a multilateral approach across many fields of science: "activity must span the range of tangled plaques, beta amyloid, tau," you name it, says Les Funtleyder, president of the investment advisory division at Poliwogg. " The problem is that we know little of the etiology of the disease, so finding a new drug is particularly hard when you can't even necessarily identify the disease in vivo." 

Even so, industry, government and academia are racing ahead. In October, Washington University School of Medicine in St. Louis announced worldwide Alzheimer's prevention trials to commence in early 2013, conducted by the Dominantly Inherited Alzheimer's Network (DIAN) Trial Unit, and supported by the National Institutes of Health (NIH), the Alzheimer's Association, and the DIAN Pharma Consortium, a group of 10 pharmaceutical companies serving as trial advisors. So far, the trials will include Lilly's solanezumab, Roche's gantenerumab, and a small molecule beta-secretase (BACE) inhibitor currently in Phase II, also from Lilly. It goes without saying that any safe and truly disease-modifying drug to reach the market in the next five to 10 years will be handsomely rewarded by payers. 

Excitement around the development of new therapies and combinations for hepatitis C continues unabated, as the need for safer and more convenient products creates significant commercial opportunities. Just in the last seven months, the "overall tenor of discussion on what's going to be the future of hepatitis C therapy has completely changed," asserts Raghuram Selvaraju, head of healthcare equity research at Aegis Capital Corp. He noted that in April, attendees at the European Association for the Study of the Liver (EASL) were all talking about the NUCs—nucleoside analog polymerase inhibitors—and how they were in a position to steal the show. "That's clearly no longer the case," says Selvaraju. 

Now that development of the Bristol-Myers Squibb/Inhibitex NUC compound has been halted due to cardiovascular side effect issues (resulting in a $1.8 billion BMS write-off in the third quarter), and Idenix Pharmaceuticals' lead NUC put on hold a second time by FDA over safety concerns, the only NUC left standing is Gilead's sofosbuvir (GS-7977), a Phase III drug obtained through Gilead's recent $10.8 billion acquisition of Pharmasset. Sofosbuvir stands tall, and tops several forecast lists—assuming it gets approved—with peak sales estimated at $2 billion in 2018 (Adis Insight), $4.5 billion in 2017 (Thomson Reuters Cortellis), and a whopping $5.8 billion in 2018 (EvaluatePharma). These numbers anticipate the promise of the NUC class as an interferon-free treatment, which could also be achieved through a spate of emerging non-NUC products and combinations. 

Bristol-Myers Squibb/J&J/Medivir's protease inhibitor simeprevir is currently being tested in combination with Bristol's daclatasvir, an NS5A inhibitor, and could potentially launch in 2014 without interferon. Abbott's ABT-450, an oral NS34A inhibitor, is being tested in Phase III combination trials with other Abbott compounds plus ribavirin, with a target approval date in 2015. ABT-450 posted strong initial data from a Phase IIb trial (AVIATOR), with a full data read-out scheduled for the American Association for the Study of Liver Diseases (AASLD) in Boston this November. Adis Insight predicts blockbuster sales for ABT-450 by 2019. 

Roche continues its focus on non-NUCs, namely setrobuvir, danoprevir, and mericitabine, and several combinations thereof. All three remain in Phase II at the moment. Aegis Capital's Selvaraju is bullish on a fast-tracked Achillion Pharmaceuticals protease inhibitor called sovaprevir, currently in Phase II, which he says has "significant advantages" over orally bioavailable classmates including denoprovir, Vertex's Incivek, simeprevir, and ABT-450. Achillion is the company to watch at the upcoming AASLD meeting, predicts Selvaraju. "I think the long-term future is going to be some combination of GS-7977, ABT-450, Roche's denoprovir, and Achillion's sovaprevir. These cocktails will render their forefathers—like Incivek and Merck's Victrelis—completely irrelevant," he says. 

"The interesting thing about hepatitis C is that it's a virus infection so prone to mutation that we need to build up a big armory of treatments, so that when a patient becomes refractory to one, they've got something else to move on to," says Kiran Meekings, a consultant at Thomson Reuters Life Sciences in London. "People are rightly focusing on drug combinations, which are likely to be the best pathway to resistance." 

"I think within five years we will have an all oral, interferon free hepatitis C regimen that works at least in some of the mutations," says Funtleyder. "That's a big deal in the United States, and to a lesser degree in Western Europe. But in Asia, where patients really need new hepatitis C products, these new combinations will find challenges to uptake due to their high costs." 

Rheumatoid Arthritis: Return of the DMARDs

Abbott's—soon to be AbbVie's—injectable biologic drug Humira probably won't ever unseat Pfizer's Lipitor as the best selling drug of all time, but it may come close. Sales in 2012 will likely approach $9 billion, only $4 billion away from Lipitor's staggering $13 billion in annual sales during its heyday. 

But despite Humira's ever-widening label, new orally formulated JAK inhibitors seem poised to wrest some of those dollars away. While a degree of safety-related uncertainly looms over Pfizer's JAK3 inhibitor tofacitinib, which had its August PDUFA decision delayed by three months (it's now November 21), most analysts are betting that the drug will be approved this year. Even so, "we don't think tofacitinib is going to take a bunch of share from the anti-TNFs right away," says Michael Latwis, an analyst at Decision Resources. "Physicians will want to become more comfortable with it over time." If approved, tofacitinib would become the first disease-modifying antirheumatic drug (DMARD) to receive approval in more than a decade; Decision Resources puts 2018 sales at $1.2 billion, but Springer's Adis Insight sees a quicker uptake, with billion dollar blockbuster status by 2015. 

Despite Abbott's deft management of Humira's lifecycle, the company evidently sees oral JAK inhibitors as pillars of the future RA treatment landscape. Last February, Abbott signed a deal with Belgium-based Galapagos (a research company founded in 1999 as a joint venture between Crucell and Tibotec, both of which are now J&J subsidiaries) for an oral JAK1 inhibitor—GLPG 0634—currently in Phase II. The deal, worth up to $1 billion in milestone payments after an upfront payment of $150 million, and a $200 million payment upon successful completion of Phase II (expected in 2014), puts Abbott in charge of development and commercialization beginning with Phase III. If GLPG 0634 is eventually approved, Galapagos also gets tiered double-digit royalties on net sales, and retains co-promotion rights in Belgium, the Netherlands, and Luxembourg. Not bad for an early-stage candidate with clinical trials conducted exclusively in Eastern Europe. 

Data from the largest of the Phase II studies is expected in November, which, if positive, means "we can legitimately consider a potentially best-in-class among the orals," says Selvaraju. Incyte and Lilly are co-developing baricitinib, also an oral JAK inhibitor in Phase II. Selvaraju says all efficacies being equal, the Galapagos drug "is much safer than tofacitinib, and much safer than [baricitinib], because it's specific to a certain subtype of the Janus kinase. That is why Abbott went after it with such alacrity." With an estimated approval date set for January 2017, GLPG 0634 almost certainly won't be the first oral JAK inhibitor to market in RA, but then, Humira wasn't the first anti-TNF to market, either. 

Bucking the oral JAK inhibitor trend in RA is Rigel Pharmaceuticals and AstraZeneca's fostamatinib, an oral Syk kinase inhibitor, currently in Phase III. Michael Latwis, at Decision Resources, predicts that fosamatinib will launch in 2015, and bring in $450 million in sales by 2018. Adis Insight has it doing slightly better, with sales close to half a billion in 2016, and $651 million in 2018. 

Leaders in the cancer space, old and new, are building on recent successes to bring even safer and more efficacious products to bear on the most notorious and deadly forms of the disease. In malignant melanoma, Bristol-Myers Squibb's Yervoy and Roche's Zelboraf —approved by FDA in March and August of 2011, respectively—will likely compete against next generation combination drugs conceived by the same parents. 

Roche recently announced a Phase III trial—not yet enrolled—that would evaluate a combination of Zelboraf and GDC-0973, the latter a small molecule MEK inhibitor originating from Exelixis's kinase inhibitor research program. GSK is also getting into malignant melanoma with a BRAF inhibitor akin to Zelboraf called dabrafenib, which employs a companion diagnostic developed in concert with the French company bioMerieux SA. Dabrafenib is also being tested in combination with a MEK inhibitor, GSK/Japan Tobacco's trametinib. Both dabrafenib and trametinib are in preregistration as monotherapies in the United States and Europe, and GSK is conducting Phase III trials on the combination. Both of the GSK drugs reported positive data at ASCO this year, says Tatiana Spicakova, a consultant at Kantar Health. "For so long there was nothing for melanoma patients, and that has changed dramatically in the last couple of years. And now, with the BRAF/MEK inhibitor, combination products are supposed to be more efficacious and actually safer than the monotherapies." 

The National Cancer Institute estimates that 76,250 new cases of melanoma will be diagnosed in the United States this year, and almost 10,000 patients will die from the disease. Yervoy, a monoclonal antibody and CTLA-4 inhibitor, only works in about one in four patients, but it works well in those patients. Zelboraf is faster acting and has excellent response rates due to its companion diagnostic, but only around half of the patient population carries the BRAF mutation. 

BMS's nivolumab, a PD-1 inhibiting monoclonal antibody, is being tested for malignant melanoma (Phase II in Japan), renal cancer, and, surprisingly, non-small cell lung cancer, among other cancers and other diseases. Despite early phases of development, Stephanie Hawthorne, director at Kantar Health, and Spicakova say nivolumab could be huge, given its apparent range of activity. "Renal cell carcinoma and melanoma are smaller populations, but the lung cancer population is huge," says Hawthorne. Responses to nivolumab in non-small cell lung cancer, presented at ASCO this year, "were a big surprise to everyone because lung cancer is not usually thought of as a particularly immunogenic tumor," says Spicakova. "And it's supposed to have a better safety profile than Yervoy." 

Thomson Reuters, Decision Resources, and Kantar Health are all predicting blockbuster sales for trastuzumab emtansine, also known as T-DM1—but better known as Roche's next generation Herceptin. It is in preregistration as a second-line therapy (behind Herceptin) for breast cancer. Backed by two Dako-developed companion diagnostics, next-gen Herceptin also targets the HER2 population, but adds ImmunoGen's anti-mitotic agent DM1 to create an antibody drug conjugate that links with a cytotoxic (e.g., chemotherapy) treatment. In Phase III studies, Roche is pitting T-DM1 head-to-head against it's own Xeloda plus GSK's Tykerb in second line treatment, and against Herceptin and Perjeta in the first-line, metastatic breast cancer setting. Given the success of Herceptin, which earned over $5 billion last year, "Roche is being very cautious about how to position these drugs relative to each other, because TDM-1 could very well cannibalize Herceptin' sales," says Hawthorne. Upon receiving approval in second-line treatment, Roche is expected to go after a first-line indication next, which "is the ultimate goal," says Thompson Reuters' Meekings. In the European Union, Herceptin's patent could expire in 2014, but is expected to hold out in the United States until 2018 or 2019. 

In prostate cancer, a perennial area of interest for investors and analysts, the Norwegian biotech Algeta and partner Bayer are developing a Phase III radium-223 chloride product to be called Alpharadin in Europe, and Xofigo in the United States. Featuring a completely new mechanism of action, radium-223 employs a radioactive isotope that acts as a calcium mimic to target bone metastases without affecting normal bone marrow. Algeta is testing the drug in patients with metastatic hormone refractory prostate cancer (fast-tracked in the United States), and Bayer has initiated expanded access programs in the United States, Canada, Europe and Israel. Since roughly 70 percent to 95 percent of prostate cancer patients get bone metastasis, in addition to 75 percent of breast cancer patients and 40 percent of lung cancer patients, this product could cover a lot of ground. "Algeta leadership has said they believe they'll get 85 percent of the global prostate market, which is massive" all by itself, says Meekings. Radium 223 chloride has shown a significant improvement to overall survival—the gold standard of cancer drug endpoints—in hormone refractory prostate cancer patients. 

Aragon Pharmaceuticals is in early stages of development with ARN 509 for prostate cancer as well, with one cohort of patients that didn't respond to Zytiga. It's early days, but Spicakova says ARN 509 could potentially best Medivation/Astellas' Xtandi (formerly MDV-3100), which was approved in August, three months prior to its PDUFA date. Selvaraju believes Xtandi will surpass Zytiga with forthcoming trial results. "When Medivation/Astellas unveils Xtandi's Phase III results in chemo-naïve patients with hormone resistant prostate cancer, it's going to blow J&J's Zytiga away," says Selvaraju. "As you go earlier and earlier into the therapy paradigm, you're going to see better and better results with Xtandi." 

In hematological cancers, Ariad Pharmaceuticals' ponatinib is awaiting approval in the United States and Europe for acute lymphoblastic leukemia (ALL) and chronic myeloid leukemia (CML), and could earn over $800 million by 2018, according to Latwis at Decision Resources. Celgene's pomalidomide, for multiple myeloma, is preregistered in the United States and Europe, and has a PDUFA date coming up in February 2013. Howard Liang, managing director, biotechnology at Leerink Swann, expects pomalidomide to gain approval and be "highly profitable" for Celgene, due to its sales synergy with Revlimid. Pharmacyclics and Janssen Biotech's orphan drug ibrutinib, a novel Bruton's tyrosine kinase (Btk) inhibitor for chronic lymphocytic leukemia (CLL), is in Phase III, and could reach blockbuster status by 2017, according to a Thompson Reuters estimate. 

Hyperlipidemia: CETP Inhibitors, PCSK9 Inhibitors, and More

Two events have conspired to delay—and perhaps demolish—development efforts for novel drugs indicated for the treatment of high cholesterol and the reduction of atherosclerosis. The first was Pfizer's failure with its first-in-class CETP inhibitor torcetrapib, which killed patients in clinical trials. The second was the ubiquitous use of statins, and their standout efficacy and safety as a class. Roche's CETP inhibitor dalcetrapib, a drug with blockbuster status written all over it, according to many analysts, was shuttered after a Phase III trial in May. At the time, Roche's chief medical officer and head of global product development Hal Barron said "lowering cardiovascular risk beyond that which is achieved with intensive statin treatment is a very challenging goal." 

Merck is still working on its CETP inhibitor anacetrapib, but the excitement over this class of drugs has cooled, given the need for extremely robust data proving efficacy and safety. Given that, Meekings at Thomson Reuters says anacetrapib could still become a blockbuster several times over, but "it probably won't get approved before 2016." Lilly commenced Phase III trials on its CETP inhibitor, evacetrapib, but it's behind Merck's drug and faces the same challenges. 

Is the 'lost decade' of declining pipeline productivity finally over? Our annual survey of analyst assessments of the state of drug development suggests so...

Pharmaceutical Executive-11-01-2012