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Pfizer's Specialty Product Business Unit leader discusses his vision for the drug giant's specialty business; now the largest in the industry.
Specialty medicines are the mainstay of today's pharmaceutical pipeline, with companies betting big on prospects for a few pearls to emerge from the sludgy drain of high costs, missed targets, and thwarted expectations. No other company is making a bigger commitment to leadership in the specialty class than Pfizer, which is managing a diverse portfolio of biologics and vaccines through a uniquely autonomous business unit (BU) structure that many regard as the organizational equivalent of targeted therapy.
To explore the Pfizer strategy in detail, Pharm Exec sat down with the Specialty Care Business Unit's President and General Manager, Geno Germano. A pharmacist by background, Germano, 49, is an import from Wyeth, where he ran the US pharmaceuticals business from 2007 until the merger. What follows is a conversation covering the complexities and emerging challenges of building a successful franchise in this still lucrative—but increasingly crowded—sector. Will Pfizer's sheer size trump the competition and win critical provider and payer support in a line of business that prizes niche-driven focus and an intimate connection to the patient?
—William Looney, Editor-in-Chief
Pharm Exec: Let's begin with an overview of the business segment you are vying to serve. In a word, what's so special about specialty care?
Geno Germano: Because of the broad diversity within the category, it is difficult to provide one simple definition. Commonalities across Specialty Care typically include medicines that are innovative, sometimes difficult to manufacture and possess clinical profiles of high value to small, but well differentiated customer bases, such as hemophilia or kidney transplant patients. But we also have large customer bases as with our psychiatry and ophthalmology businesses. Leveraging the therapeutic assets of these medicines depends on extensive commitments to clinical exploration, strong, field-based medical support, well trained and knowledgeable sales capabilities and sophisticated deployment of evidence and outcomes data. The entry hurdles are high, often requiring extensive investments in complex biologic manufacturing processes and expertise working with targeted distribution channels. It is also critical that we be deeply engaged with physicians, many of whom dispense our medicines directly to patients, and that we demonstrate a strong commitment to patient education and support.
PE: How well is Pfizer positioned to compete in this segment?
GG: Specialty connotes an image of smallness but the skills and resources required to compete successfully in this segment are actually quite significant. Size and scale count, and Pfizer has these assets in abundance. The combination with Wyeth moves us from number five in revenues in this category to number one. The Specialty Care BU is itself a $15 billion business; standing alone, we'd rank 15th in the league table of the Big Pharma top 20. The combination with Wyeth has already helped us achieve an 84 percent boost in revenues on a year on year basis, reflecting the impact of leading-edge therapies like Enbrel for the treatment of rheumatoid arthritis and psoriasis, and Prevnar for the prevention of pneumococcal disease. And assuming expansion of our pipeline, we are poised for further growth.
PE: What about the reputational pressures associated with the high price of specialty products? Is it fair to state that specialty is a litmus test for how society supports innovation?
GG: The factors I mentioned do add to the cost base, so specialty medicines are frequently priced at a premium compared to other drugs. Nevertheless, specialty medicines have traditionally been seen as an enormous driver of benefit to the healthcare system because of the therapy options they provide for patients with life-threatening conditions, where there are few other treatments. This rich vein of value—still largely untapped—is a distinctive characteristic of the specialty class that Pfizer is putting front and center as we develop the business.
PE: The barrier is clearly being placed higher in terms of establishing differentiation and securing access to the reimbursement rolls.
GG: Higher prices coupled with the life-extending impact of many such drugs can attract critical attention, typically raising three key questions. What is the real value of a drug that allows for an improvement in quality or longevity of life? Can the price be justified when compared to existing therapies? And does use of the drug lead to a reduction in overall health costs, for the long term?
Payers expect Pfizer to provide metrics that can answer these questions. This in turn is driving a revolution in information and new diagnostic technologies. Specialty is where the key experiments are taking place to anticipate and bend the cost curve, such as targeting therapy toward the cohort of patients most likely to benefit from a drug, or building economic models to drive outcomes that improve patient status and enhance public health.
PE: The specialty segment casts a long shadow in the effort to make healthcare more efficient and responsive to the patient. Is that your point?
GG: Yes. The complexity of the science that bring these medicines to market and the importance of a "high touch" approach to administering the medicine to patients means that we have to do more than supply the pill. The potential for these drugs depends on a networked approach, covering not just the right therapeutics but also a service infrastructure that can be mobilized to support the provider and the patient in managing his condition. This has led to many industry-led innovations in coordinating care, educating around patient compliance, mitigating adverse event risks, and finding the right price points to accommodate the significant variety in how, where and when these medicines are used.
PE: Can you provide an example of Pfizer leadership in building this necessary service infrastructure?
GG: One Pfizer "best practice" is the International Growth and Metabolic Data Bases programs we have developed for children and adults with growth hormone deficiencies treated by our endocrine franchise therapies, Genotropin and Somavert. It contains evidence on key drug performance and outcome indicators drawn from a 60,000-member patient file across 50 countries, compiled over 20 years. The two programs are a link between Pfizer, prescribing physicians, and national health authorities in monitoring not only the safety and efficacy of the two medicines but also other broad outcomes measures like health services utilization, quality of life, and productivity.
PE: The specialty segment is increasingly crowded, with more than 800 new compounds in various stages of commercialization. Market leadership thus requires a high degree of differentiation. What is unique in the way Pfizer is approaching the business?
GG: We confront competition from three sources: other large, diversified pharma companies; mid-size players with a focus on niche products; and smaller biotech companies dependent on licensing and other forms of partnership. Building market share depends on providing a distinct advantage to the customer base. Pfizer's unrivaled market reach—Jeff Kindler calls it the "spirit of small and the power of scale"—is actually something that sets us apart. Our product portfolio is the largest in the industry, with 24 medicines and vaccines in 11 different disease areas, including top-selling global products for inflammation, infectious disease, hemophilia and ophthalmology. Another 25 new compounds or indications are in various stages of development.
Pfizer's broad portfolio means we can provide customers with integrated solutions rather than one-off sales. There is no single delivery or payment model in specialty—there is a big injectible/infusion delivery component, administered in-hospital or by physicians; and there are primary care–like products dispensed through pharmacies, for example our antipsychotic medicines. Vaccines require a direct distribution approach. Because we operate through several different business models, we work to leverage the expertise across the business, finding and adopting best practices to tailor a comprehensive value proposition serving the needs of each of our customers. This, I believe, separates us from the competition.
Additionally, Pfizer management is challenging us to extend our capabilities to customers by filling the "white space" that exists between Pfizer's nine BU's, covering biopharmaceuticals and the diversified businesses like consumer health and nutritionals. For example, there are new personalized medicine tools whose development can benefit from our contacts with the Oncology BU. With the Emerging Markets BU, we are exploring how specialty medicines can address the distinct patterns of disease in Asia and Latin America—as incomes in these regions rise, so too is their ability to pay for innovative treatments. The tolerability and effectiveness of many specialty drugs can also be enhanced with products that influence diet or maintain standard indicators of good health. Overall, the idea is to share resources and creative approaches that provide additional value to the customer.
PE: How does Pfizer's Business Unit structure create the high level of product differentiation that customers expect?
GG: It's built into the model from the start. My team is responsible for the entire life cycle of our products, from proof of concept right to the end of the patent term. Our BU's asset teams frame and conduct Phase II and III clinical trials to establish the clinical basis for our products while also devising plans to build a market for the medicine and ensure access for patients at appropriate prices. It's an outward, "customer facing" structure, designed to integrate customer insights and health technology considerations into the development process.
In the past, the key barriers to creating a strong market rationale for a medicine in development were more internal. Clinical development, which was separate from the business, tended to focus more on regulatory requirements for approval with less focus on the perspectives of the prescriber, the patient or the payer. I've had to confront that perception.
Market forces dictate that it is no longer sufficient to set the prospect of FDA approval as the only marker of success in investing in a new drug; instead, the metric is how that drug is likely to appeal to customers in a competitive healthcare marketplace. Critical exclusivity time is lost if you cannot show value to the customer right from the start. It means you have to demonstrate to multiple stakeholders an improvement over the current standard of care and how the medicine is going to be used in clinical practice.
One of my goals, which I'm excited about, is to create more clarity and transparency around this value metric. Whatever we do, it will be for a deliberate purpose: to prioritize value as seen through the perspective of the customer. We can only build the business if we meet customer expectations in serving the patient. If we are not clear on that, then we all lose.
PE: What is the Specialty Care BU doing to improve the quality and scope of evidence that customers can apply in evaluating the benefits of a Pfizer medicine?
GG: Good information is essential to driving sales of specialty products. To generate meaningful data, we have formed market access teams responsible for creating a specific "payer value proposition" for each of our products. The market access lead serves as one of my nine direct reports; placing the function at this level is rare in the industry. It also shows our BU's commitment to creating a comprehensive picture involving economics, stakeholder analytics, patient needs, and outcomes—in addition to the science—when we make our case to the customer.
We follow a threefold approach to developing and supporting the value proposition for our medicines. The first is proactive engagement, where for medicines in development we deliberately seek out a dialogue with payers at a very early stage. This involves frank discussions on what kind of therapeutic advances customers are willing to pay for, not only today but further down the road. It is also important to cast the net beyond payers to identify key "influencers" who understand the motivations of decision-makers and can act as third party advocates.
The second is building a strong database around the economics of treatment, linked to health outcomes. For example, we have amassed evidence to show that early use of our lead inflammation product, the TNF inhibitor Enbrel, results in an approximately 50 percent rate of remission in patients with rheumatoid arthritis. Likewise, since the introduction of our best-in-class Prevnar vaccine, the incidence of pneumococcal disease caused by vaccine serotypes in children has dropped by 98 percent. Both demonstrate a significant public health outcome that payers can accept as providing real value for money.
The third is negotiating pricing and reimbursement models that allow for some flexibility in how others pay for our medicines. Strategies involve tier copay positioning, rebates, patient access programs, and conditional reimbursement. This moves us beyond traditional contracting models: the emphasis is on linking price and reimbursement decisions to care guidelines that produce better outcomes.
In this regard, one of our principal objectives is to relieve the growing burden on the patient in paying for the cost of specialty medicines. Insurers are targeting specialty drugs for higher tiered copays and co-insurance, a strategy that we believe is self-defeating as it can force patients of limited means to forgo therapy or skew adherence to recommended treatment. The result is medical complications that raise expenditures on other health services.
We are committed to reversing this cycle through initiatives like our Pfizer Bridge Program (PBP). The PBP works with patients to help them navigate the complex reimbursement thicket for growth hormone products, providing our medicines free-of-charge until insurance coverage is secured. It also includes coaching, education and survey work to identify patients most at risk for non-compliance, with follow-up counseling to ensure they stay on therapy.
PE: How do you know your customer-facing efforts are working?
GG: We employ a number of analytical tools to ensure we are fostering alignment around each of these customer-facing approaches. Our Medical Differentiation Index (MDI), a sophisticated modeling program, can quantify precisely where our potential offerings improve on the current standard of care and channel new sources of value to the customer. It integrates a vast stream of market statistics, observational data, and stakeholder analysis. We've found it useful in sharing our findings in negotiations with Health Technology Assessment authorities and other decision-makers.
PE: Where do you see the Specialty Care BU in two years? What are your key metrics for success?
GG: A strong platform for organic growth is the goal. That entails maintaining sales momentum for our in-line portfolio while ensuring registration and uptake of our Phase III pipeline, led by three leading edge therapies: Prevnar 13 and its expanded adult indication, which we hope to file later this year; tasocitinib, a JAK inhibitor and the next generation oral treatment for rheumatoid arthritis; and bapineuzemab, our collaboration with Janssen AI, which represents a potential first-in-class treatment for the underlying causes of Alzheimer's disease. Real progress here is essential to fill the gap from patent expiries, maturing life cycles, and concluding partnership deals affecting some of our other medicines.,
My other priority is more subjective. It involves closer integration of the Wyeth and Pfizer clinical development and commercial pathways to make Specialty Care a truly cohesive business unit. We want an engaged, high-performing workforce operating at the highest level of integrity in delivering consistent results to our customers and patients—and superior returns to shareholders. In two years, I can count on you seeing us as not just the biggest specialty company, but the best. And it will be our customers who say that, not us.
PE: What do you see as the primary obstacles to successful execution of this vision?
GG: Making sure that our growth does not impair flexibility, speed, and accountability in decision-making. Bigness must not obscure our "line of sight" in responding to the accelerating pace of change in the specialty drug market.