During the campaign, President-elect Barack Obama promised to change Washington policies and practices. His strategy is to expand federal and local government programs that provide healthcare for adults and children, and require employers to "play or pay" to support insurance for workers. While Obama stopped short of backing a mandate for universal coverage as advocated by many Democrats, his proposals raise the prospect of increased government involvement in the nation's healthcare system. 

Expanded coverage also fits the goals of pharma manufacturers. Third party payment for healthcare services and products could boost drug utilization by shielding consumers from the real cost of medicines; millions of seniors joined the system with the establishment of the Medicare drug benefit four years ago. The Part D program has been a boon to pharma, but has also shined a spotlight on drug costs and value while prompting Congressional scrutiny of drug pricing, marketing, safety, and effectiveness. 

Early initiatives for the new administration include expansion of the State Children's Health Insurance Program (SCHIP) and increased federal support for state Medicaid programs. Bush twice vetoed legislative proposals to expand SCHIP, prompting Congressional leaders to hold off on further action until after the election. But SCHIP must be reauthorized by April, putting it at the top of the health policy agenda.  

Expanding SCHIP and Medicaid would help Obama fulfill his campaign promise to provide healthcare for every American child, and offer coverage to some 25 million of the nation's uninsured. But other reform proposals may take longer. During the campaign, Obama talked about mandating large employers to support insurance for workers or pay a fee. Individuals without work-based coverage and small employers would gain access to private insurance options and a government-sponsored national plan through a newly created National Insurance Exchange. Under this plan, all insurers would have to issue coverage to all applicants without regard to pre-existing conditions.  

These changes will be challenging—and expensive. Obama's reform proposal is pegged to cost between $1.2 trillion and $1.6 trillion over 10 years (2010 to 2019), depending on various models. But the plan also includes initiatives to reduce federal spending for healthcare. Health information technology, including electronic prescribing, could net $100 billion in savings over 10 years, and additional savings from expanded disease management programs, coordinated care models, and pay-for-performance initiatives are also forecast. 

 Obama has also jumped on the comparative effectiveness (CE) bandwagon, predicting that an institute producing research on the relative effectiveness of alternate treatments would save money by reducing unnecessary treatment. However, analysis by the Lewin Group puts the savings from CE at a modest $40 billion, based on low expectations that providers and patients will adhere to new medical guidelines.  

Because these strategies yield little in the way of near-term savings, a more popular tactic is to cut government outlays for prescription drugs. Democrats believe they will save millions by revoking the Medicare "non-interference clause," a controversial policy that prevents the Secretary of Health and Human Services (HHS) from directly negotiating payments for drugs covered by Medicare drug plans.   

Part D relies on private insurers to hold down costs by demanding low prices and rebates from pharma companies. That approach has worked to some extent, as shown by the recent announcement from the Centers for Medicare and Medicaid Services (CMS) that Medicare drug spending totaled just $44 billion for fiscal 2008—much less than the $74 billion predicted. However, Medicare drug plans do pay more for medicines than federal healthcare programs offered by the Veterans Administration and the Department of Defense, and state-administered Medicaid programs reduce outlays for drugs by collecting additional rebates from manufacturers. 

 The first order of business for many Democrats is to simplify and centralize the Part D program. Pharmaceutical manufacturers lobbied for the competitive approach to avoid creating a central Medicare formulary that would provide a coverage and cost model for the broader healthcare market. Insurers thus have crafted plans with noticeable differences in formulary coverage, copayments, and premiums. And although the resulting variation has expanded choices and contained outlays, the program has also confused seniors and created disparities in beneficiary costs.  

According to the Boston Consulting Group, allowing direct price negotiations by the HHS secretary could cut manufacturer revenues by some $10 billion to $30 billion, depending on whether insurers and pharmacy benefit managers demand the same low prices set by Medicare. But the real impact of direct government price negotiations is unclear. There isn't much room to negotiate lower prices for drugs that have no therapeutic alternatives, or for products in classes where Medicare requires coverage of all medicines. Manufacturers may be reluctant to accept a low price that would extend to the broader market, but it will be difficult to resist selling a chronic care therapy to the huge Medicare population. 

Another strategy for curbing Medicare drug outlays is to require manufacturers to pay rebates to CMS. This could start with reimbursement for drugs provided to dual-eligible seniors enrolled in Part D plans, those low-income beneficiaries who previously obtained drug coverage from state Medicaid plans. Switching these patients to Medicare drug benefits has reduced pharma Medicaid rebates and raised manufacturer revenues. Congressional leaders would like to reverse that shift.  

Democrats and Republicans alike have looked to reduce drug prices by making it easier to re-import drugs from other countries. Obama offers the usual caveat that the medicines coming in must be safe and effective. But taking steps to ensure product quality appears to limit potential savings. Several state and local drug import programs have been dropped because of high costs and low consumer interest, and extending drug coverage to seniors has removed a large pool of customers for reimport programs.  

What may be more palatable for the new administration is to make generic drugs more readily available to patients and payers. At the annual meeting of the Generic Pharmaceutical Association in September, Obama health policy adviser Dora Hughes said that reducing barriers to generic drug use should be central to health reform efforts. Hughes voiced support for curbing reverse payment agreements, and backed legislation that would allow FDA to approve generic versions of biologics. But she said that the market exclusivity period for brand-name biotech therapies should be much shorter than the 14 years advocated by the biotechnology industry. 

Although the savings from many of these cost-cutting policies may be elusive, they are likely to gain support on Capitol Hill and in the White House. Political leaders believe it's possible to ratchet down outlays to Big Pharma without undermining R&D, and the prospect of saving some $60 billion in the process is too attractive to pass up.  

With Democrats extending their control in both houses of Congress, pharma is bracing for additional regulatory measures that may squeeze prices and operations even more. Industry anticipates bills to limit direct-to-consumer advertising and to require greater transparency in sales and marketing activities. A top Congressional priority is to expand FDA oversight of imported medical products and foods, a move that industry supports. But any FDA legislation will provide a vehicle for enacting additional drug safety and marketing measures.  

's Washington correspondent. She can be reached at 

Articles

Washington Report

To expand health coverage amid an economic crisis, Obama will be looking hard for ways to cut costs

Challenge and Challenges

This year's pipeline might be best remembered for drugs that evaporated at the last moment. Sanofi-Aventis gave up on Acomplia, one of the most celebrated drug candidates in the Pipeline Report for three years running, and took a whole crop of CB1 obesity drugs down with it.  Flurizan, last year's headliner in Alzheimer's therapy, proved less than efficacious. And Prasugrel, once Eli Lilly's breathtaking balancing act of efficacy and safety, became the poster child for gridlock at FDA.   

"It's grim," says Barbara Ryan, pharma analyst with Deutsche Bank. "There isn't a lot in late-stage development that we're really excited about." 

But even in discouraging times, the academic, medical, and market experts who referee our drug candidates find compounds that promise therapeutic progress and even healthy profits. From the Factor Xa heart medications to new vaccines and cancer therapies, we take a look at 33 drugs that will matter in 2009 and beyond. 

Asthma: chronic obstructive pulmonary disease (copd)

Novartis is poised to take a big piece of the market in chronic obstructive pulmonary disease (COPD) with its inhaled 24-hour bronchodilator 

(QAB149), which will pave the way for new combination drugs that marry the new therapy with complementary compounds to create once-daily inhalants.  

will combine indacaterol with Asmanex (mometasone), a corticosteroid developed by Schering-Plough. The likely delivery device for once-daily dosage is S-P's Twisthaler, according to Adis R&D Insight. 

Because the two long-acting compounds have different mechanisms of action, the combination therapy may result in greater efficacy. 

"We see peak sales of $2.4 blllion in 2017 for QMF149," says Holger Rovini, a Datamonitor analyst in London. "GSK will no longer have the market to themselves." The drug's chief competitors are twice-daily inhalants, so the new drug is expected to have compliance advantages. 

Rovini expects the second leading product in 2017 to be Novartis' long-acting single-dose inhalant 

(indacaterol/glycopyrrolate), which will reach sales of nearly $1.9 billion worldwide. Datamonitor expects QVA149 to be particularly popular for the treatment of COPD patients. 

In the treatment of type 2 diabetes, glucagon-like peptide-1 analogs—the class of drugs including Lilly/Amylin's 

(exenatide)—have a special place, according to Jay Skyler, MD, of the University of Miami's Miller School of Medicine. "GLP-1 therapy has the unique advantage of effective glucose control and concomitant weight loss," he says. "There appears also to be the potential for unique cardiovascular benefit." A crop of new once-a-week GLP-1 drugs promise to transform the class. 

First up is a weekly formulation of Byetta, which as a twice-daily formulation remains a favorite among doctors and patients, despite persistent reports that it causes acute pancreatitis. A 30-week, open-label, non-inferiority Phase III study of 295 patients showed that once-weekly exenatide was more effective than twice-daily exenatide. But in early November, FDA rejected part of the data in the NDA having to do with equivalence, potentially delaying the drug's anticipated 2009 launch.  

a human GLP-1 analog, has not been approved for daily use, and will begin its clinical life as a once- or twice-weekly treatment. Roche, which licensed rights to the drug everywhere but Japan and France, recently announced a Phase III study, triggering a €6.7 million milestone payment to Ipsen, which originated the compound and developed its excipient-free time-release mechanism. The study will enroll 990 patients with type 2 diabetes, and is scheduled to end in 2010.  

from diabetes powerhouse Novo Nordisk, is being touted as the better Byetta. But to be approved, it first needs to satisfy FDA on pancreatitis. So says Les Funtleyder, healthcare strategist at Miller Tabak. FDA will see it as a class issue, even if Novo argues that diabetics just get more pancreatitis than the population as a whole. "If they have the pancreatitis data, fine," Funtleyder says. "If not, they'll have to get it."  

A new Prevnar, plus new vaccines from Novartis and GSK

Established meningitis vaccines may lose market share to their successors beginning next year, when a fresh crop of multivalent vaccines is expected to hit the market. 

Candidates by Wyeth and Novartis are expected to become at least $2 billion opportunities, according to Datamonitor's Holger Rovini.  

family of vaccines protect against pneumococcal serotypes that cause a variety of infections including blood infections and meningitis. The original Prevnar worked against seven serotypes. The new version, 

also known as Prevnar 13v, targets those seven plus six more, including 19A, which is especially important in Asia. An additional indication is being sought for vaccinating the elderly. Rovini cited data that indicate vaccinating the very young can reduce the incidence of pneumococcal infections in the elderly, because vaccinated children do not infect their caregivers.  

a 10-valent vaccine, excludes serotype 19A but adds non-typeable Haemophilus influenzae. The GSK drug could reach peak sales of  $600–700 million.  

could reap upwards of $2 billion for Novartis, according to Datamonitor. It competes with Sanofi-Pasteur's Menactra. Rovini notes that clinical data released by Novartis make Menveo appear superior, but the endpoints chosen may not prove any advantage over Menactra in terms of real-world benefits. 

PIlls can be slow and relatively ineffective (to say nothing of addictive), and self-injection is a problem for many patients. As a result, too many post-operative patients spend extra days in the hospital. 

Roxro's new nasally delivered formulation of the NSAID keterolac solves both of those problems. Rox 888 is fast acting and has proven as effective as intramuscular injections of keterolac in the control of abdominal and orthopedic post-surgical pain. 

"This is a drug that can be easily administered in a home environment," says Neil Singla, MD, of Lotus Clinical Research in Pasadena, CA. "That's a huge advantage." 

Meanwhile NiCox, a French company with an attractive nitric oxide–contributing technology has received positive Phase III results on its 

—which hit all its end points without detrimental effects to patient blood pressure. At a time when chronic pain meds are increasingly under fire for cardiac side effects, naproxcinod and the class of drugs coming up behind it could become major players. 

New targets, small molecules, oral delivery

An orally active immunosuppressant, Pfizer's 

could be the long-sought small-molecule treatment for rheumatoid arthritis, says Clare Davies, lead analyst for immunology and inflammation at Datamonitor. An RA pill would help payers and patients alike, since monoclonal antibodies are all injectibles. The new drug attacks lymphocytes by inhibiting the Janus-activated kinase 3 (JAK3) pathway. In addition to RA, the therapy is being tested for Crohn's disease. 

Another promising small molecule inhibits the related JAK2 enzyme. Incyte's 

not only promises efficacy against rheumatoid arthritis but is also in trials to treat multiple myeloma, prostate cancer, and psoriasis. Once again, the fact that the drug is an orally available daily-dose treatment should encourage patient compliance.  

ChemoCentryx and GlaxoSmithKline are partners in the discovery, development, and marketing of compounds targeting chemokine and chemoattractant receptors for the treatment of inflammatory disorders. Two of these compounds aim to treat various forms of inflammatory bowel disease, including Crohn's disease, celiac disease, and ulcerative colitis. Their mechanism: selective binding to the CCR9 chemokine receptor, which according to the company is a "highly specific receptor expressed by T cells that migrate selectively to the digestive tract." 

Currently in a Phase II/III trial for Crohn's disease is the first of these compounds,  

GSK paid $63.5 million in upfront cash and equity investments for world marketing rights to Traficet-EN, CCX025, and two other compounds. Milestones payments could reach $1.5 billion. 

After Pfizer withdrew Exubera from the market in October 2007, the once-crowded field of inhaled insulin candidates thinned to a single product: MannKind's 

But instead of convenience, the product—still better known as Technosphere insulin—appears to be surviving on clinical benefit. 

"I am still optimistic that MannKind's Afresa will be sufficiently beneficial because of its profile to be successful in the market even though Exubera failed," says Jay Skyler. 

MannKind's unique technology allows an acidic crystalline powder dusted with insulin to liquify at neutral pH deep inside the lungs and seep into the bloodstream across tiny pulmonary membranes. The relatively quick delivery of insulin (slower than the pancreas, but faster than subcutaneous injections) creates an insulin profile more like the body's own than any other drug available, according to Skyler. In addition, the drug disappears faster from the bloodstream when its work is done. 

In September, MannKind released top-line results of a Phase III clinical trial comparing Afresa to subcutaneous insulin aspart. The inhaled product better prevented incidents of hypoglycemia and glucose spikes after meals. It had no pulmonary side effects, and it had a welcome benefit for diabetes sufferers: an average weight loss of 4.4 pounds in 52 weeks for Afresa users with type 1 diabetes, compared to a three-pound weight gain for patients on insulin aspart. 

The drug may have to carry a class-wide warning for cancer, but company market research suggests that even with a tough label, Afresa is a potential blockbuster. 

New agents for prostate, renal, and basal cell cancer

Features

We scrub industry's pipeline to find the drugs that everyone will be talking about in 2009 and beyond

The 2008 Pipeline Report

The other day I was invited to give a talk at an industry event. I spoke about some of the challenges I see coming for the industry, then sat down and listened while Doug Long from IMS Health gave a presentation on the state of the pharmaceutical market—the patent cliff, the slowing growth in developed markets, the dominance of generics, the whole shebang. At the close of the day, I said goodbye to Doug. "Pretty grim," I said. He looked at me. "At least I was more optimistic than you were," he said. 

I was taken aback. Because the fact is that, though I spend a great many of my waking hours thinking about bad things that  

might be happening to the industry—the way a watchdog spends a lot of his hours brooding about burglars—I'm optimistic about the future of the business of discovering and making medicines. There may be tough days ahead, but there's a dance or two left in pharma. 

So what's there to be hopeful about? Here are a few things: 

When we talk about dry pipelines, we're mostly talking about late-stage development. Back in Phase I and II, there are so many candidates that they'll probably create a crisis of oversupply as they move toward approval. We'll see new methods of action, breakthroughs in efficacy, new side-effect profiles, patient-friendlier drugs—and beyond them, the promise of the latest discoveries of science. 

The sales force is out of the driver's seat 

The last few years of the great Pharma Arms Race were pure madness. It was obvious that huge sales forces, a blockbuster mentality, and who-cares-about-the-customer selling were alienating doctors, demolishing the industry's reputation, and attracting the wrong kind of public attention. There will be pharmaceutical marketing and sales in the future. (Okay, Mr. Obama?) But the structural changes in healthcare over the last few years nearly guarantee their sanity. 

It's never easy to change the course of an industry. It's even harder if you were around for the glory days. Pharma needs a generation of CEOs for whom the glory days are still ahead, and it's starting to get them. 

Pharma isn't going through a slow downward spiral like the newspaper industry. It's getting ready to drop off a cliff. And if you're prepared to act quickly, a cliff is not death, it's just a deadline.  

is breaching the barrier between patients and pharma in productive ways. Attribute it to payers' drive for data on comparative effectiveness, or to FDA's insistence on better risk management, but we're starting to see companies develop new relationships with the people who take their drugs. Those relationships will have to be handled scrupulously, but I'm betting they'll be a good thing for all.  

The uproar over safety of the last few years, 

though overblown, was necessary. Drugs aren't consumer goods. They're not supposed to be. To work well and safely they need a level of commitment and knowledge on the part of patients that arguably we haven't had. Patients should start to take drugs more seriously. 

The best part of this job was never about making the numbers. It was about overcoming disease and suffering. And this may be a funny way to express optimism, but don't worry, the enemy is still there waiting to be beaten.  

From the Editor

Maybe what you're feeling isn't impending doom. Maybe it's just growing pains.

Reason to Believe

Doing deals has become Big Pharma's lifeline, and that fact is more evident in 2008 than ever before. With patents on megablockbusters falling like dominoes, and in-house R&D no match for vanishing sales, industry giants are reaching into their deep pockets to bridge the growth gap. This has drugmakers rolling the dice on more products that are in early-stage development. 

 "The proportion of revenues of products sold last year from partnered products is up to half or more," says Lulu Pickering, biotech program director at Decision Resources. "So deals are running the gamut from Phase II to pre-discovery, with a lot of pressure going toward early-stage products, technologies, and targets." 

These M&As, licensing deals, and other strategic alliances are proliferating as drugmakers try to meet a growing range of challenges, from adding revenues or filling pipelines, to entering new markets or exiting therapeutic areas, to diversifying or streamlining a business model. 

"Given the amount of uncertainty in the industry, no company knows what will be the most successful business model. We are seeing more experimentation, trying out more strategies—products, diagnostics, services," says Jeff Greene, partner and transaction executive at Ernst & Young. "You need M&A to accomplish this." 

Yet for a variety of reasons, pharma has put the brakes on its M&A activity this year. For the first three quarters of 2008, the volume of M&As was $28.9 billion, a dramatic   decrease from last year's total of $79.5 billion, according to Young & Partners. Q308, at $6.2 billion, was especially slow. M&As done by biotechs are up, however: $4.2 billion for the first three quarters, compared to last year's total, $3.97 billion. The number of deals is also on track: 16 and 21, respectively. 

Says Young & Partner president Peter Young: "The need to acquire biotech companies has not slowed down because the business logic is still strong, and Big Pharma has the cash. The slowdown in pharma acquisitions, however, comes as many companies focus on cost-cutting and other deals—alliances, biotech acquisitions, in-licensing, and operational improvements on the ethical pharma side. The generic consolidations and Japanese pharma's efforts to break into the US markets are the only things fueling the current level." (See "The Top 15 Deals of 2008".) 

With that in mind, here are the highlights of the year in deals. Warning: Every deal mentioned, with the exception of Roche/Genentech, has been agreed to by both parties, but many of them have yet to close—and some may not survive the FTC and other hurdles to approval. 

GlaxoSmithKline likely set some kind of record during a recent eight-week a spree. Starting in late August, the British drug giant inked, among other deals, a $1.5 billion collaboration with the privately owned Cellzome, whose technology is used to identify small molecule inhibitors of specific kinase targets in inflammatory diseases; an $820 million collaboration with Valeant to develop its Phase III epilepsy drug; a $553 million licensing deal for Affiris's experimental Alzheimer's vaccines; a $210 million acquisition of BMS's Egyptian drug business; and a $57 million buyout of Genelabs, developer of hepatitis C technology.  

In October, after reporting third quarter earnings that beat analyst estimates, GSK CEO Andrew Witty told the 

 that he was reducing stock buybacks and using those savings for acquisitions. "We're not reserving capital for a rainy day that may, or may not come," says Witty. "Opportunities are surfacing with some frequency on the small to medium scale." 

And GSK isn't even the year's top shopper. According to Datamonitor, the firm was outpaced in M&A activity by both Pfizer and Roche, and tied with Johnson & Johnson. 

In its self-proclaimed drive to become the leader in personalized medicine, formerly mild-mannered Roche emerged this year as the leader in the hostile-takeover category. The new bully on the biotech block, the Swiss drug and diagnostics maker forced medical-device maven Ventana to knuckle under in January, albeit for $3.4 billion. Six months later, the firm offered $43.7 billion for the 41 percent of Genentech that it doesn't already own. But the San Francisco–based firm is not surrendering without a fight—or at least a bigger paycheck. (For more, see "Deal or No Deal".)  

At press time, global painkiller producer Alpharma announced that rather than girding for a threatened proxy battle, it would accept King Pharmaceuticals' $1.6 billion buyout bid, after twice rebuffing specialty drugmaker's previous offers. 

For years, biotechs have been fetching ever-higher prices from Big Pharma, but that trend was thrown into reverse this year as the credit markets seized up amid the Wall Street meltdown. Investors flew from high-risk biotech stocks, reversing the dynamic from a sellers' to a buyers' market. The financing raised this year by these entrepreneurial spirits plunged to $8.2 billion through September, down more than half from $17.9 billion in 2007—the lowest  tally in a decade, according to Burrill & Company. In October, Rodman & Renshaw announced that 113 biotechs, or one-third of the publicly traded shops it tracks, had less than a year's worth of cash. At least five biotechs went belly up.  

Meanwhile, Big Pharma is perched on piles of cash. Pfizer has $26.2 billion; Novartis, $16.2 billion; and Lilly, $5.2 billion—or it did until it took on debt to buy ImClone. Although more than a third of this wad is hiding from taxes in off-shore reserves, that still leaves a lot of liquidity to grease the wheels of consumption.  

"With biotechs running out of money, everyone expects a huge amount of acquisition activity over the next months or even years," says Lulu Pickering.  

The only problem for drugmakers may be when to schedule the shopping spree for the best fire-sale prices. "The challenge is to decide when the bottom in the biotech industry will hit. There may be increased turmoil over the next 18 months, so we may not see a big rise in transactions yet," says Jeff Greene.  

Only biotech powerhouses like Genzyme, Biogen Idec, Gilead, and Cephalon maintain their high valuations as potential takeover targets. But their profits are likely to turn them into buyers, too. In November, Genzyme continued its acquisitive ways with a $1.4 billion milestone alliance with Osiris, whose adult stem cell platform is on course to deliver the first ever FDA approved treatment, Prochymal, currently entering Phase III in several categories. "Genzyme's strategy of using acquisitions to fuel long-term growth is proving to be where the entire sector is moving," says Deutsche Bank biotech analyst Jenn Chao. 

Also grabbing headlines was the new Japanese wave of global M&A. Even before the market's collapse, foreign drug companies were taking advantage of the weak dollar by snatching up US shops. "Half of the top deals involved Japanese companies because Japan was hit a little later by all the financial turmoil," says Jeff Greene.  

Facing no growth, price cuts, and increased competition at home, four of the nation's five biggest drugmakers executed some of the year's most ambitious deals, spending a total of more than $20 billion over the past 12 months on US-based biotechs. Last December, Eisai bought oncology biotech MGI Pharmaceutical for $3.9 billion. Three months later, Takeda upped the ante with its $8.8 billion takeover of Millennium, maker of cancer blockbuster Velcade—in cold, hard, yen-leveraged cash. "It's a deal that would have been impossible from any US player," wrote In Vivo blogger Derek Lowe. In September, Shionogi paid $1.4 billion for Sciele's cardiovascular and diabetes portfolio.  

Declaring itself a global threat, Daiichi Sankyo chose instead to go its own way, furthering its diversification strategy with a 64 percent stake in Indian generics giant Ranbaxy for up to $4.6 billion, in June. 

Other top 15 market-expansion deals were aimed at grabbing US and European consumers, too. In July, Fresenius, a German firm that sells products and services to hospitals and home healthcare groups, paid $3.7 billion for Los Angeles–based APP Pharmaceuticals, the developer of the first ever nanotech cancer drug, Abraxane. At press time, biotech Celgene, which resurrected thalidomide as the cancer treatment Revlimid, announced its first big acquisition: a $2.9 billion buyout of Pharmion, which sells Revlimid in Europe. 

Biotechs with even a single approved drug can still demand pretty exorbitant prices if a company's need for fast revenue is sufficiently desperate. Exhibit A: Millennium.  

Exhibit B: ImClone. Crafty activist-investor Carl Icahn scored again in 2008; after Bristol-Myers Squibb offered $4.5 billion for the oncology biotech, Icahn strung BMS CEO Jim Cornelius along by courting one or more secret bidders in a very public effort to trigger a bidding war. No slouch at such ploys, Cornelius refused to up his bid, and in October, the press-dubbed "mystery suitor" was revealed to be Lilly's new chief, John Lechleiter, who inked the deal for $6.5 billion. 

Most analysts agreed that Lilly was overpaying (and then some) for the biotech, which markets only one product, Erbitux, with BMS, and is developing some uncertain Erbitux follow-ons. "That price indicates that Lilly is almost desperate for revenue," says Michael Russo of the Bruckner Group. "It could have bought a whole bunch of smaller biotechs with promising products rather than putting so much faith in a single pipeline." 

It's still a sellers' market for the makers of late-stage compounds, few of which remain. "Pharma's cherry picking of biotechs has driven the valuations higher and higher," says Frost & Sullivan analyst Barath Shankar Subramanian. "Since drugmakers have little R&D that they can really call their own, the demand just keeps going up."  

In a sign of how inflated the prices have become, in September both GlaxoSmithKline and Pfizer inked big deals for single products. GSK dished out a record-breaking $3.2 billion for Actelion's first-in-class insomnia drug, almorexant—pending good data from its Phase III trials. Meanwhile, Pfizer paid $775 million in milestones to Medivation for 60 percent of the potential US profits and for total potential foreign sales of Dimebon, which is set to enter Phase III trials this year in Alzheimer's and Huntington diseases. 

Overshadowed by big biotech deals, the year's few noteworthy pharma M&As were driven by the growing trend to diversify outside of the high-risk branded drug business.  

Novartis, arguably already both the most diversified and successful Big Pharma, acquired a 25 percent share of Alcon, the world's most profitable eye-care company, for $11 billion, with an option to buy an additional 52 percent in 2010 for another $28 billion. Although Novartis CEO Daniel Vasella acknowledged that Alcon makes a strong fit with his own contact lens and ophthalmologic drugs portfolio, he cited consumer healthcare's relative lack of pricing pressure as the deal's biggest bonus: "The margins are higher than our pharma business, and are obviously very attractive." 

Meanwhile, the generics business saw some consolidation when Teva, the global leader, bought rival Barr Pharmaceuticals, the world number four, for $7.5 billion.  

Spreading the risk around through diversification into generics drove not only the Daiichi/Ranbaxy deal but Sanofi-Aventis' purchase of Zentiva for a revised $2.6 billion after the Czech generics firm snubbed a lower offer.  

The main trends that have lately come to define pharma's M&As, licensing deals, and other strategic alliances generally deepened in 2008.  

Cancer remains the hot disease, followed closely by CNS; together, these two therapeutic areas attracted more deals than all other diseases combined. In third place is the autoimmune and inflammatory market (monoclonal antibodies in development for oncology not infrequently show benefit in this secondary area). Most of the year's biggest acquisitions, including number one Roche/Genentech (pending), number two Takeda/Millennium, number five Lilly/ImClone, and number six Eisai/MGI, involved biotechs with cancer drugs on the market and more in the works.  

In the mean time, pharma is exiting cardiovascular and diabetes R&D. "Both markets are already well served with lots of treatment options, and getting payers to reimburse for a new product would require a major scientific advance," says Lowe.  

This year, Pfizer announced its exit from the cardiovascular space after spinning off Espirion, the biotech with an experimental "good" cholesterol-lifting candidate that the drug giant bought for $1.4 billion four years ago when that approach was showing promise. 

Playing for the highest stakes, the top drugmakers are deploying all their risk/reward expertise to the deal-making endeavor. From Takeda's all-cash $8.8 billion purchase of Millennium to GSK's multiple-milestone development deals, the agreements are growing increasingly elaborate and diverse. "Pharma is negotiating very complex, sophisticated deals in an attempt to spread the risk around," says Stan Bernard of Bernard Associates. And with biotech financing increasingly hard to find, "we're seeing more flexibility in what sellers are willing to accept," Greene notes. "Pharma is able to offer more stock and less cash." 

Big Pharma is also getting more sophisticated in its M&A decision-making, using a team approach that includes not only business development, R&D, and legal, but also regulatory and marketing. Mindful of their poor track record at partnering, the top drugmakers have created strategic alliance management arms to oversee integration and advocate for biotechs. Preserving the shop's autonomy—and keeping top talent with generous retention packages—is the new industry standard, at least officially. 

Everything you wanted to know about the year's most important deals-and what to watch for in the future

The New Deals

The European Union is currently revising its rules governing animal testing, but industry is not entirely happy with the proposed new Directive. The current Directive, which has been in force since 1986, was designed to harmonize the rules for animal testing across the whole EU. However, some member states have implemented more stringent standards, while others stick to the bare minimum. 

The revised Directive aims to address this discrepancy, and ensure that companies engaging in animal testing face the same rules EU-wide. After eight years of discussion, the proposal has now been adopted by the European Commission. In coming months it will be discussed and voted on by the European Parliament and the EU Council; a final decision is likely to be made late next year. 

Every year, about 12 million animals are used in scientific procedures within the EU. While 90 percent of R&D for medicines does not use lab animals, there are still some areas where animal research is essential. However, the Registration, Evaluation and Authorization of Chemicals legislation that is currently being implemented expands the requirements for chemicals to be tested before they are allowed on the EU market. This almost certainly will lead to a rise in the number of animal tests carried out in coming years. 

The proposed Directive covering these tests includes several new measures, such as a near-total ban on experiments on great apes, including chimpanzees. (This fits the current regime, as great apes have not been used in the EU for six years.) Work with monkeys will still be permitted. Meanwhile, breeding, accommodation, and care standards for all animals will have to be improved.  

"It is absolutely important to steer away from testing on animals," says European environment commissioner Stavros Dimas. "But where alternatives are not available, the situation of animals used in experiments must be improved." 

One positive aspect is that the work pharma had achieved in the replacement, reduction, and refinement of animals in testing is being enshrined in the new Directive. Replacement involves using procedures that don't involve live, sentient animals; reduction seeks to minimize the number of animal experiments carried out; and refinement entails methods that minimize the amount of distress an animal suffers. 

While parts of the Directive simply formalize the rules that industry has been working under for some time, there are serious concerns with some of the proposed revisions. These include a perception that it will impose unnecessary regulatory burdens on scientists, and do little if anything to improve animal welfare. Another concern is that the Directive will encourage research to be done outside the EU, in countries where animal-testing rules are less stringent.  

The UK BioIndustry Association is disappointed with some of the new proposals. "One would expect that the proposed Directive would take into account the most up-to-date scientific and ethical practices. However, this does not seem to be the case," claims UK BioIndustry's chief executive, Aisling Burnand.  

The Association of Medical Research Charities is also concerned that policymakers do not necessarily understand the complexities of achieving the right balance of what is and is not allowed. "While animals must never be used where there are alternatives, aiming for blanket reductions in numbers may be an overly simplistic approach that enables our sector to be seen to act, while  [remaining] incompatible with progress in medical research," says head of external relations, Sophie Petit-Zeman. "This Directive needs to proceed in ways that are good for animals and patients." 

Animal welfare groups generally welcome the proposals, according to the European Coalition to End Animal Experiments (ECEAE). However, they want assurance that the sentiments are not just abstract, and that there will be increased investment in alternative research and binding targets on the reduction of animal use. "We applaud the Commission for taking this opportunity to address the suffering caused to animals," says ECEAE Chief Executive Michelle Thew. "We must not lose this chance to ensure that the final law delivers mandatory targets for the rapid reduction of animal use by member states." 

's global correspondent. She can be reached at 

Global Report

The new EU directive looks to reduce, refine, and eventually replace animal testing

Animal Humanity

With the number of e-marketing campaigns currently being conducted, it's a wonder that pharmaceutical marketers are still scratching their heads about how to acquire viable data. The power is literally in their hands. Invaluable marketing data can be had simply by knowing what you're looking for, how to ask for it, and working with the right provider. Creating a self-fueling machine that produces data—which steers the marketing channel and in turn produces more data—represents the necessary evolution for the survival of pharmaceutical e-marketing. 

There are two types of e-marketing: transactional and relational. Transactional e-marketing is focused on short-term results, and looks for low-hanging fruit. It works well as a promotional tool for retail commodities (think Amazon pre-orders) or general broadcast announcements. Tagged as "batch and blast" campaigns, recipients are faceless database records used to meet volume and frequency goals. Targeting and messaging are based on generalized assumptions distilled from aggregated focus group results and market research. Transactional marketing uses a lowest-common-denominator approach, rather than a targeted message strategy, to reach as many customers as possible. Data gleaned from this is rudimentary, at best. But, unfortunately, that's all that  many marketers expect from their campaigns.  

Frank Leontis is a marketing manager for a large, New Jersey–based pharmaceutical company and a regular speaker at e-marketing conferences. He has a history of recognizing and supporting marketing innovations, and knows the current benchmarks all too well.  Just as the pharmaceutical industry is beginning to seriously rethink the traditional field sales force model and look for alternative, non-personal channels, Leontis is reviewing data that shows that the average Web user receives 70 spam messages a day. Additionally, 69 percent of recipients report email as spam-based solely on the subject line, and 30 percent of subscribers change email addresses annually.  

Leontis is rightfully concerned that the industry's reliance on transactional campaigns is choking it to death. How can a pharmaceutical product marketing team expect to build a business on such a fickle online channel? There's another way.  

Relationship marketing is based on the rules of reciprocity, in which there is a two-way, balanced value interchange that yields information as well as imparting messages. Relational email marketing allows the marketer to identify, differentiate, interact, and customize, using the channel as a way to listen, learn, and respond in ways that are both relevant and value-driven. It takes traditional market research as a starting point, and then layers email interactions as opportunities to refine the research at the level of the individual customer. Asking insightful questions gets to the heart of a customer's need, allowing marketers to sharpen their interactions and focus their messaging. 

To think about email marketing as a market research channel requires rethinking both activities. It means broadening the definition of email marketing, using it more as a social networking tool than as a direct marketing tool. It also means opening the constraints on valid market research by capturing and analyzing response data as a way to improve individual interactions and provide tailored value.   

At the heart of a relational email marketing campaign is the database. Campaigns can be run using an in-house database, or more often, a third party service provider. The key to success, however, is building a marketing model to capture everything and consider every piece of data as an asset: it's not enough to get typical reach and frequency reports (deliverability, opens, and click-throughs). Relationship marketing collects data from the email campaign at the individual level and allows for analysis at the individual level. Here's an example of how it works.   

 sends out a short email focused on a single business issue, and invites subscribers to take a short survey with the promise that all participants will receive the aggregate report within a week. The topics are timely, the surveys are well written, and there is often an additional offer of a recent white paper from their business journal as a thank you. This is classic relationship marketing, and over the past several years, McKinsey has built rich profiles of its members' interests, perspectives on business, and responsiveness to email as a communication channel. The rules of reciprocity are in effect, with both parties receiving value from the ongoing conversation.  

A large global pharmaceutical firm has been experimenting with this approach for a new product with a unique mechanism of action. By incorporating attitudinal, behavioral, and practice-management questions over the course of several email campaigns and Web site visits, the brand has been able to capture valuable insight into its target physician audience. For example, one question asked if a physician's willingness to try a new therapy was based on whether there were samples in the office. Although the average response was that samples were not important, more than 25 percent of the physicians admitted that they were critical. The marketing team gained information at an individual level and were able to demonstrate this value to those physicians, thereby increasing trust and confidence in the brand.  

Here are three steps to turn your email marketing campaign into a market research channel: 			

Audit your email marketing provider and determine whether it has the capability and willingness to help you build a custom database. This database will hold the proprietary market research data that will come from your email marketing campaign, and it shouldn't be shared or available to your provider's other customers. Your provider should have the capability to analyze the data and provide you with detailed profiles of individual customers.  

Create the master list of "Golden Questions" that will help to fill in research gaps, or that can be used when market research shows a lack of unanimity on a particular issue and you need to know how individual physicians feel. Golden Questions can cover beliefs about a disease state or treatment options, practice habits, or attitudes about novel therapies. You might ask eight to 10 questions in the course of a multi-wave email marketing campaign, but you should only ask one or two at a time.  

Develop a pilot project that includes sales management, market research, and managed markets leadership. By leveraging an existing email marketing budget to ask questions of your customers, these various stakeholders will get value from your efforts and help to shape sales and marketing messages so they are more relevant and valuable to your physician audience. 

Be careful when developing a sophisticated program like this.  Do not move too quickly, and make sure you've found the right email provider.  Providers who compete on the size of their database or the speed of getting an email drop out the door are not selling the qualities you need. True relationship marketing involves not only recognizing customers when they return, but also capturing and analyzing their responses. Your campaigns can evolve into this self-fueling research/marketing cycle through careful application of these techniques and examples.  

 is the CEO of Closerlook, a relationship-marketing firm specializing in healthcare. He can be reached at 

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How to extract valuable market research from e-marketing campaigns

The Self-Fueling Marketing Machine

Google the name of any well-known drug, and in addition to a brand Web page, a Wikipedia entry, and listings in a handful of directories, you'll see dozens, if not hundreds, of online pharmacies offering to send you the product in discreet packaging at rock-bottom prices. This raises a scary question: If you send in your money, what will you get? 

Not long ago, MarkMonitor, a brand-protection firm known for its annual "brand jacking" report, decided to find out. To give the online pharmacies a fair shot, the company searched for legitimate-looking sites—the ones that ranked high in keyword searches, and purchased legitimate online advertising—and attempted to place orders through five such sites. 

According to Te Smith, vice president of communications at MarkMonitor, the process didn't go as smoothly as expected. At four of the five sites, technical glitches made it impossible to use online shopping carts. "It's possible that some of these pharmacies are [virtual] storefronts for the same back-end Web site," Smith told 

. "A scammer could put up a variety of 'storefronts,' each emphasizing a different drug or condition in order to maximize overall traffic, but funnel those purchasers to the same back-end shopping cart to process the transaction." 

The one successful purchase was a global affair. The site, 

, claimed to be located in the United States, and used a phone number with a Southern California area code. However, the IP address of the site was Russian, as was the accent of the operator who took the order. The credit card, meanwhile, was billed from Israel, and the pills, which arrived eight weeks later, were shipped from India. 

Police and pharma companies have turned up counterfeit pharmaceuticals produced under deplorable conditions in unsavory environments. The lab above was discovered by Pfizer during a raid in China. The company is cracking down on rogue drug plants by constantly changing its packaging and responding to every call.			

And what were they? MarkMonitor was not able to determine that definitively, because the sample proved too small. The active ingredient was a generic in the same class of drugs, possibly legitimately produced for some other market. But one thing was certain. "They were not the same brand that we ordered," Smith says. 

As of November, Interpill is still an active Web site with a fairly slick home page. However, the site appears on dozens of lists  of fraudulent Web sites, and has received hundreds complaints from customers. Requests for an interview were denied. 

MarkMonitor's experiment—one purchase, resulting in one fake—is obviously anecdotal, but it matches a growing body of experience. Repeated FDA mail intercepts over the past few years have turned up masses of counterfeit drugs going to individual consumers, while there have been at least two highly publicized cases in which counterfeit Lipitor and Procrit have entered the US drug distribution system. Though no one expects it to be easy to trace the effects of counterfeit pharmaceuticals on the health of consumers, there has been one well-documented fatality—a Canadian woman poisoned by counterfeit sedatives that contained dangerous metals, including uranium, strontium, selenium, aluminum, and arsenic.  

While it's hard to quantify how much illegal prescription medicine changes hands each year, no one—not FDA or the pharmaceutical industry—is downplaying the threat. According to the Center for Medicine in the Public Interest, counterfeit drug sales are expected to reach $75 billion globally in 2010, an increase of more than 90 percent from 2005. 

"There are millions and millions of packages trying to come into the United States each year. We have no idea what those millions and millions equate to, and it's very hard and resource intensive to actually get a good count; but the trend is that the numbers have been going up," says Ilisa Bernstein, FDA's director of pharmacy affairs.  

One estimate of the scale of the problem comes from Rep. Steve Buyer (R-IN). In one day, he says, up to 360,000 packages containing counterfeit drugs enter the 12 international mail facilities. That's up to 10 million packages a month, and 130 million counterfeit drug packages in a year. 

In the case of drugs, the word "counterfeit," includes far more than products made by someone other than the patent holder. Many of the products identified by FDA as counterfeit are authentic products that have been diverted from some other part of the drug distribution system. One key form of diversion: product intended for sale in countries, where prices are low, that is illegally reimported to the US as  an exercise in illegal arbitrage—in order to gain a profitability advantage. Another type of counterfeit: Short-dated drugs intended for humanitarian efforts, long term care, group purchasing organizations, or specialty clinics that are smuggled back into the US, often with the expiration date altered. 

"Many believe that diversion is often the catalyst for counterfeiting," says Dean Hart, executive vice president of NanoGuardian. "[They think] 'If I can get this diverted product through as easily as I can, if I really want to maximize my profits, maybe I go to that counterfeited level.'" 

Ironically, one company that is renowned for hunting down counterfeiters is also known for having the most forged drugs. Pfizer's heads of security have seen just about everything when it comes to counterfeiting, and the company is doing what it can to get a stranglehold on brand-jackers. 

Since 2004, Pfizer's security crew has discovered approximately 42 million counterfeit products—mostly Viagra, but also Lipitor, Norvasc, and Celebrex. In addition, Pfizer has unearthed enough active pharmaceutical ingredient to manufacture probably another 63 million more tablets. 

"We've also found ingredients that you would not normally want to ingest, such as boric acid; or people who take Viagra when it actually contains amphetamines or too much of the active ingredient, which can increase the possible side effects," says Rubie Mages, director of policy communications and programs at Pfizer. "While a number of these [drugs] do come in through the Internet, I think you need to take a look at the overall picture, which includes counterfeits that have been able to breach the security of even the most regulated of supply chains." 

Mages is clear that even though the US pharmaceutical supply chain is one of the safest in the world, it isn't impenetrable. In 2003, 18 million pre-packaged Lipitor tablets were recalled from the legitimate supply chain after counterfeits slipped into the US. In that case, counterfeit product manufactured in Costa Rica was commingled with authentic product intended for another market—also smuggled into the United States—and then repackaged and delivered to pharmacy shelves throughout the country. 

Pfizer has discovered counterfeit products in the supply chains of 26 other countries, including Canada and the UK. "While it's relatively safe, I think counterfeiters would love to get their product into our legitimate supply chain," says Patrick Ford, Pfizer's senior director of security for the Americas. 

Pfizer's security team believes that the key defensive measure is conspicuous counterfeit protection on all packaging to help pharmacists and distributors distinguish counterfeit packaging from the real thing by simply looking for markers. "Counterfeiters, generally speaking, are very good at recognizing our overt authentication, and within six months they generally have counterfeited it," Ford said. "We've had other technologies that have lasted three years, four years, but we're always changing our overt features, depending on the product and whether or not it's been counterfeited." 

For James Christian, head of security for Novartis, the best way to stop counterfeiters is the old-fashioned way—keep your ears to the floor, answer every report, and kick in the door in when necessary. 

Novartis has a multi-pronged approach. First, it has developed an early warning system consisting of intelligence sources that report any time there's a counterfeit problem, even if it's not a Novartis product. "We monitor what the other companies are doing and the problems they're having, because if somebody's having a problem in a particular country, we can guess that we're going to have a problem, too, eventually," Christian explains. 

To avoid last-minute complications when a situation arises, Christian has developed contacts with law enforcement, regulatory, and health authorities in countries with known counterfeiting operations. "In many countries, the authorities don't devote the manpower to the situation," he says. "But if you come in after a three-month investigation with the clandestine lab, print shop, and suspects identified, you can get a prosecutor and the law enforcement to come in and make the case, and get some headlines and pictures in the paper." 

In addition, Novartis tries to support the judiciary all the way through "because the worst thing that a company can do is walk away after the arrest or seizure, and not worry about the prosecution," Christian explains. "We try and hold their hands through the whole process."  

In 2004, FDA freed industry to experiment with and pilot new labeling systems using radio frequency identification (RFID) to track product through the supply chain. RFID systems served two purposes: They permitted authentication of product on the item and package level and made it easy-to-establish an electronic pedigree. 

Pfizer, Purdue, and a handful of other pharma companies tested RFID on expensive and highly counterfeited drugs such as Oxycontin and Viagra, touting the system as the future of security. At the same time, states such as California and Florida began mandating item- and package-level tracking, and the establishment of an electronic pedigree system to account for all packages as they move through the supply chain. The form of serialization to be used was not stated, but RFID did gain support as an easy, albeit expensive, means of scanning large quantities of drugs at one time. 

There was just one hiccup—industry could not retool its entire distribution chain in time to meet California's January 2009 deadline. Now pharma has a few more years to get ready, and while some companies are well ahead of the curve, others are praying that the federal government will jump  in with a national standard for e-pedigree 

"I don't personally have much confidence in RFID," says Christian. "Back in 2004, the FDA task force was looking for an answer to satisfy Congress.They didn't really have one, so they came out and said RFID will solve all our problems in a couple of years. It hasn't, and it won't. It's an inventory management tool. It may help with the security of products from a diversion point of view, but 99 percent of [RFID] out there is not on the product, it's on the packaging." 

According to Robin Koh, chief strategy officer at serialization company Supplyscape, one of the biggest problems with RFID is the cost/benefit ratio. Downstream supply-chain partners stand to benefit the most from RFID, but the manufacturer eats most of the costs. Still, Koh insists that pedigree is still one of the best methods of securing the supply chain. 

"The best thing about a pedigree component is that it doesn't travel together with the physical item," Koh says. "Even if you steal the physical object, you won't know what the certificate is." 

Merging serialization and security, labeling firm Mikoh has developed an adhesive label that supposedly cannot be defeated by heat, cold, or moisture. The label can be merged with an RFID tag, two-dimensional barcodes, or any other kind of pedigree tracking device. In order to open a box of drugs, the label must either be damaged or destroyed. The company is now working on a battery-powered label that records a time-stamp the moment the package is tampered with.  

"We thought we had some good traction going with the California pedigree people, then when Schwarzenegger signed the bill that pushed off the deadline, there was a collective sigh of relief," says Mikoh vice-president of business development Steven Van Fleet. "In my mind, it was the wrong answer, because we still have counterfeit and diverted gray-market drugs, and people are getting sick and dying, and we seem to get hung up on, 'Jeez, we just dodged a technology bullet.' We're not really addressing the key issues here, so we continue to plod along." 

A more future-forward approach to anti-counterfeiting is on-dosage security—the ability to add a layer of protection to the actual drug.  

Four years ago, the idea of on-dosage security was still in the hypothetical, neat-but-expensive stage of development. In Iselin, NJ, at a meeting of the International Society for Pharmaceutical Engineering, excipient manufacturer Colorcon hosted a forum about the benefits of designing tablets that are distinctive and can be protected by trademarks. 

One of the first tools Colorcon brought to market was high-definition printing using pharmaceutical-grade inks. Some companies investigated using of the process to print pills with 2-D barcodes that would be scannable and serialized—giving every individual tablet a distinct number. 

"Our technology is very useful for search-and-seizure evidence," says Mary Ann Hegedus, business development manager for brand-enhancement services at Colorcon. "If [the authorities] find a 55-gallon drum loaded with loose tablets, right there on the spot, the investigator can get the evidence he or she needs to say, 'Yes, this is counterfeit.'" 

Colorcon also pioneered work in color-shifting pigments that have a pearlescent effect and subtly change color when held at various angles to the light. Hegedus says that the advantage of the pigment is that it is difficult to reverse-engineer. "Because it is applied on top of a base coat, anybody who's looking to copy it must know the composition of the base coat, the weight gain of the base coat, the composition of the pearlescent top coat, and the composition of it," she explains. "It's easier to counterfeit a round white pill." 

And the idea of individually coding tablets is far from dead. An Illinois-based company called NanoGuardian is using a form of nanoencryption to add overt, covert, and forensic security markings to the tablet coating or the capsule gel. The technology offers three levels of protection, including a visible marking to authenticate the pill, a hidden marker for added authentication and protection, and a series of modifiable codes at the nanoscale level that can contain everything from the ingredients of the drug to the address of the plant that manufactured it.  

NanoGuardian also allows pharma companies to use different codes for different market segments. For example, if a particular distribution channel has been identified as corrupt, they can set up a special code for that particular sting, send the product through the channel, and then verify the product when it makes its way into the supply chain. 

"Not only can I tell if this product is real, but also if this product was diverted from a country where I sold it for X dollars, and now it's being [put] into authentic bottles and returned to me for US dollars," says NanoGuardian's Dean Hart.  

In the end, no matter what security is used to safeguard a drug, it all comes down to educating the consumer. "If there's no market out there for purchasing these products, then these folks will probably go ahead and counterfeit something else," FDA's Bernstein says. "But the market is out there, and the consumers and patients need to really understand how risky this is." 

In June, FDA published a list of red flags consumers should be aware of when purchasing medication, as well as a long list of fake cancer cures that are being touted on the Internet. In addition, with the passing of the Internet Pharmacy Consumer Protection Act in October, online pharmacies must register with the government in order to be able to sell drugs on the Web. If the companies aren't on the list, Internet hosting services have the go-ahead to shut down the sites without a warrant. 

Online pharmacies are touting more than just Viagra. Here's what pharma is hoping to do about it