FDA's new drug-safety proposals that made front-page headlines last week illustrate the delicate dance that the agency is performing in an effort to please--or at least appease--its competing constituencies: Congress, industry, its own staff, and, last but possibly not least, the public. Pharma, for its part, won't find many surprises in the proposed initiatives, which are less agency overhaul than image booster.

The three umbrella proposals--essentially extensions of initiatives already underway covering science, communication, and management--respond to a scathing evaluation the agency got in September from the Institute of Medicine (IOM), which gave FDA failing grades in particular for its drug-safety monitoring.

The science recommendations are primarily an outgrowth of the Critical Path Initiative--the agency's ambitious attempt to modernize the pre- and post-approval by incorporating new tools like genetic screening, proof-of-concept studies, and high-tech adverse-event reporting databases. So, too, with communication--FDA is building on its "transparency initiative" launched in the aftermath of the Vioxx (rofecoxib) recall, when it pledged more direct communication with the public about drug risks. Finally, the management piece consists of hiring consultants to advise the agency on getting its staff--particularly its reviewers and drug-safety monitors, two distinct groups--to work more in sync.

"What's interesting [about the FDA's response to the IOM report] is not what it contains but what it doesn't contain," said Paul Kim, a food and drug attorney at law firm Foley Hoag. "It's a question of degree and it's a question of specificity and it's a question of language."

What the FDA reform doesn't contain is most of IOM's 25 sweeping recommendations--many of which have been trumpeted by senators like Michael Enzi (R-WY) and Edward Kennedy (D-MA). They called on FDA to undertake a major post-market safety-surveillance initiative, restrict consumer advertising, and include black triangles on new drug labels during a product's first two years on the market in order to alert the public that the drug lacks long-term data backing it up. Another recommendation called for mandatory disclosure of clinical-trial results in a public web database, to prevent industry from hiding negative results from scrutiny.

What industry doesn't want, however, is for the approval process to become so laser-focused on adverse events that it ignores the larger risk/benefit picture. "FDA realizes that they have to be out in front on safety," said Peter Safir, a partner at law firm Covington and Burling. "The bigger risk is that Congress is going to pass legislation" ranging from marketing restrictions to mandatory Phase IV trials.

Yet even these requirements are similar to those in countries like the Britain, and drug companies are likely to support--or at least pay lip service to--the changes. "These are global companies that think globally," Kim said. "This is not a threatening scenario." FDA also needs to have the teeth and the authority to compel compliance from companies.

But there's little question about the timing of FDA's proposals, which is all about the upcoming reauthorization of the Prescription Drug User Fee Act (PDUFA). In December the agency called for the PDUFA redo to the tune of $392.8 million, an $87.4 million jump. Congress is likely to rubber-stamp that amount but may tweak specific applications, according to Kim. As of now, FDA has directed the lion?s share of the increase--$29.3 million--toward monitoring drugs that have already received regulatory approval. Since FDA can only oversee treatments during their first three years on the market, the agency is also calling for more authority to assess safety throughout a product's life cycle.

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FDA drug safety proposals don't represent major overhaul.

Facelift or Saving Face?

AstraZeneca, whose pipeline woes have made it a poster child for the problems facing the industry, is cutting 3,000 jobs and redoubling efforts for quicker, cheaper drug development. But don't expect any announcements of quaking Pfizer-like reorganizations from the Brit-based company, which has already undertaken its "major transformation," according to Michael Zbinovec, an analyst at Fitch Ratings. The downsizing will affect less than 5 percent of the AstraZeneca's workforce compared to 20 percent of Pfizer's.

"We recognize the environment remains tough, as AstraZeneca and the rest of the industry face a strong headwind of patent expirations and the continuing pricing pressures from government and private payers," said CEO David Brennan during an earnings call. "We're taking these actions from a position of strength with our business growing."

AstraZeneca reported 11 percent sales growth and 28 percent operating-profit growth in the fourth quarter. Yet while its top-five products continued to outperform expectations, its pipeline is notoriously rusty. Recent high-profile failures included diabetes drug Galida (tesaglitazar), blood thinner Exanta (ximelagatran), and a Phase III stroke drug that marked the end of research into neuroprotection.

"Almost everyone in pharma is restructuring--that's one trend you'll see for a while," said Les Funtleyder, an analyst at Miller Tabak. "Maybe Pfizer's cuts offered some political coverage to the rest of the industry. There is a point where you can cut too much, but I don't think we're there yet."

Speed and cost are top priorities in the coming year, according to John Patterson, AstraZeneca's executive director of drug development. The company has set a goal to reduce its development time to a median of eight years, one of the fastest rates in the industry. This continues an acceleration that was 10 percent faster last year than in 2005, he noted. In addition, the company is both exploring more proof-of-concept studies in order to kill no-go projects faster and conducting more efficient clinical trials that are up to 60 percent smaller than usual.

AstraZeneca is also exiting development programs in therapeutic areas that were former growth drivers, like hypertension and gastrointestinal disorders. Instead it's ramping up in areas with more promising returns on investment like diabetes, respiratory, obesity, pain, and infection. It's also investing in biologics, biomarkers, and imaging.

The drug giant was also busy last week making deals, acquiring Arrow Therapeutics, which specializes in anti-infectives, and signing with Palatin Technologies to co-develop anti-obesity compounds.

"Costs have more than doubled, outputs are decreasing, you have a very conservative regulatory environment," said Arjun Bedi, a partner in Accenture's health and life-sciences practice. "Time is of the essence--the point of inflection has been reached."

Drug giant cuts jobs, vows to speed up drug development.

Faster, AztraZeneca! Pills! Pills!

Otsuka Pharmaceuticals, already one of the top-50 largest drug companies, is angling to become an international powerhouse--or at least get its remarkably far-flung act together--by deploying its pipeline globally rather than from region to region.

The Japanese company has formed a new division in Princeton, New Jersey, to focus on global strategic development and commercialization with the goal of lifecycle management. Once products are brought to market, that strategy will be executed on a local scale.

"Otsuka had traditionally focused on regional development and marketing," said Dean Haubrich, vice president of corporate management. "That turns out not to be a very effective or productive way to do business."

The new division will focus on a range of activities, from finding additional indications for a drug to global branding with "one trade name, one message, one label" no matter where a product is launched, according to Haubrich. "We can start planning for the commercialization very early in the development process," he said. "We view this as the engine that can generate new products."

Otsuka is not the first company to move to a franchise model in an attempt to beat the competition in tight primary-care fields. Such mighty firms as Pfizer and Merck have organized their companies around core therapeutic areas. Yet Otsuka's units operate as autonomous businesses, according to Haubrich.

The strategy also calls for pursuing new therapeutic areas. The company is hoping to submit a compound for congestive heart failure for regulatory approval in the United States later this year, and is also working on drugs for gastrointestinal, respiratory, ophthalmic, and central nervous system disorders.

The new division is the sum of the merger of Otsuka's Maryland Research Institute and the global development and commercialization unit. Unlike such divisions in other companies, it will operate independently of the rest of the company with its own executive structure. Kazumichi Kobayashi will serve as chairman and CEO, and Taro Iwamoto, as president and COO, of the new Princeton division.

"Our future vision is to make Otsuka a bigger player in the pharmaceutical market," said Joan Butler, vice president of project management. "We believe we'll enhance both our development and commercialization activities."

Otsuka's US products currently include peripheral artery disease drug Pletal (cilostazol) and schizophrenia and bipolar drug Abilify (aripiprazole), which is co-marketed with Bristol-Myers Squibb and had sales of $362 million in the fourth-quarter of last year, a 62 percent increase.

Otsuka forms new strategic unit that will focus on development, commercialization.

Pharmaceutical Executive-02-07-2007

Facelift or Saving Face?

Faster, AztraZeneca! Pills! Pills!

Rx for Global Domination