	At the request of the Senate Finance Committee, the Government Accountability Office (GAO) has looked into FDA’s management of postmarketing commitment (PMC) trials, specifically those under which a drug was approved using surrogate endpoints to define efficacy, rather than full-blown clinical trials. GAO doesn’t like what it found: out of a universe of 319 requested or required PMCs, over a span of time reaching back to 1992, 42% were still “open,” meaning that the drug sponsor hadn’t completed a study that met FDA’s requirements.

The poster child for slow response is ProAmatine (midodrine hydrochloride), a drug for which Shire Pharmaceuticals was granted approval in 1996, sold through 2003 when it went generic (and is now sold by five generic manufacturers). Despite a requirement (rather than a request) for the PMC, the drug’s efficacy is still unresolved, after 13 years. 

GAO says that FDA has “not fully utilized its authority” to regulate drugs lacking the PMCs, even though has the authority to withdraw the drugs’ approval. Moreover, it lacks a consistent method for evaluating how long to wait for studies’ completion. And its own recordkeeping systems for tracking PMC is lax, with start dates or milestones unrecorded. 

FDA counters that the use of the surrogates (which began in 1992, under an accelerated NDA process intended to get needed drugs out to market faster) has been effective in getting many lifesaving drugs approved and in use, and that at the very least, the drugs lacking certain efficacy have been shown not to be unsafe for patients. Even ProAmatine can be defended: The drug, a treatment for low blood pressure called orthostatic hypotension, remains the only approved treatment; some clinical data shows a “trend” for efficacy; and in the final analysis, “FDA must carefully balance exercising its regulatory authority versus considering the best interests of patients.” 

Under the 2007 FDA Amendments Act (FDAAA), FDA’s authority to require PMCs—and specifically risk evaluation and mitigation strategies (REMS) was expanded. FDA also asserts that its DARRTS (document archiving and records retention system) program will improve overall program management. And Booz & Co. has been retained since 2006 under a contract (recently renewed) to evaluate and make recommendations for its PMC programs. 

The report, "New Drug Approval: FDA Needs to Improve Its Oversight of Drugs Approved on the Basis of Surrogate Endpoints," is available at 

Articles

FDA counters that the PMC program balances drug efficacy study with patient need

GAO criticizes FDA's management of postmarketing commitments for drug efficacy

	They are not quantitative measures of actual environmental performance, but they are significantly more than a vanity prize: by two separate scoring indexes, Bristol-Myers Squibb and Roche Holdings lead in this year’s corporate sustainability indices. BMS won the No. 1 ranking at the Pacific Sustainability Index, compiled by the Roberts Environmental Center at Claremont Colleges (Claremont, CA), and Roche was declared the “sector leader” among a number of healthcare companies tracked by a SAM, a Zurich, Switzerland, boutique investment firm. SAM works with the Dow Jones organization to compile the Dow Jones Sustainability Index, and with STOXX Ltd., a European-based indexer (and partly owned by Dow Jones).

Properly speaking the Pacific Sustainability Index (PSI) is a measure of the quality of sustainability reporting, as evidenced by annual reports that include coverage (and measurement of) a growing list of criteria, including environmental accountability, resources utilization and emissions data, and social responsibility issues such as policies, labor management and human rights principles. Data that are mentioned in companies’ annual reports are evaluated and scored, and an overall figure is obtained.

	Roberts Environmental Center uses the Fortune 500 as its starting point, and limits its list to the 30 largest in each of a variety of sectors. For pharma, the 2009 leader is Bristol-Myers Squibb. 

	The Dow Jones Sustainability Index is used nationally and internationally by several investment companies to provide investors with a list of publicly traded stocks by which the performance of better “corporate citizens” can be measured. Like the PSI, it uses social-responsibility as well as environmental-impact criteria. There is not a company-by-company ranking, and healthcare providers are mixed in with pharma in a “healthcare” sector. Pharma companies currently in the healthcare sector (in alphabetical order) are: Abbott, AstraZeneca, Bayer, Genzyme, GSK, J&J, Sanofi-Aventis, Roche, Novartis, Novo Nordisk and Becton Dickinson. As a last step, SAM declared Roche as the sector leader. Genzyme and J&J were 2009 additions to the list. 

Do the DJSI companies actually perform better than economy-wide stock indices? The evidence seems to indicate so. Since its inception in 1999, the DJSI index has had an annual return of 13.08%, while the MSCI World Index (a compilation of global stocks) has had an annual return of 8.41%. 

“When SAM started the assessments for the DJSI ten years ago, even a significant number of the best performing companies had only vague and ad-hoc processes in place to target sustainability objectives,” says the latest DJSI report. “Today, companies embrace corporate sustainability as a key source of competitive advantage. Management realizes that the implementation of sustainability practices helps mitigate risks and seize opportunities arising from long-term economic, environmental and social trends.” 

Annual surveys rank public companies by environmental, social criteria

Bristol-Myers Squibb, Roche Lead on Environmental Sustainability Scoring

	The Drug Enforcement Administration (DEA) turned their screws on several major wholesalers last year for failing to properly monitor “suspicious orders”—those that, by their frequency, size or source indicate that abuse of controlled substances might be going on. Under DEA rules (21 CFR Part 1301.74b), manufacturers and distributors must carry out some level of monitoring. For that purpose, SOMLink, from e-SupplyLink (Traverse City, MI), maintains a database of client ordering history, and then flags suspicious orders, which are supposed to be held up until a manual check is completed. The package includes a variety of statistical analytical tools to identify out-of-the ordinary ordering patterns, according to Ronald McCreery, sales manager.

The SOMLink package runs on a Windows operating system, and can be linked, via XML, to a client’s ERP system, warehouse management system (WMS) or EDI-based financial reporting systems, according ot the company. E-SupplyLInk has a decade’s experience as a developer of EDI transaction software, shipping-label generation and order fulfillment; its flagship product is called ComplyLink. 

Suspicious Order Monitoring (SOMLink) tracks ordering history with statistical analysis of baseline activity

IT vendor offers a package for compliance with DEA monitoring requirements

	Back in 2006, FDA was on the verge of implementing a national requirement for restricting pharmaceutical distribution to “authorized distributors of record” (ADRs) who would be exempt from passing pedigree information among themselves to complete a sale, something that had been part of revisions to the Pharmaceutical Drug Marketing Act (PDMA) since the late 1990s. But, in an eleventh-hour ruling, and against the expectations of most in the pharma business, an injunction against FDA was upheld—and on appeal, FDA was forced to back down from implementing it at all (Pharmaceutical Commerce, June-August, p. 8).

The litigant in that suit was RxUSA, a relatively small distributor in Port Washington, NY, owned by Robert Drucker. While RxUSA is an authorized distributor for some pharmaceuticals, much of its business was derived from secondary wholesaling—buying product from some other source (often, another distributor) and then reselling it. It would need pedigree documentation to make legitimate sales of this product to customers. By winning the suit, RxUSA enabled hundreds and possibly thousands of small, non-ADR distributors to remain in business.

	Simultaneously with the FDA litigation, RxUSA sued the Big Three distributors, Bellco Drug Co. (now a part of AmerisourceBergen) and HD Smith, along with 16 pharma manufacturers, including most of the top companies. RxUSA claimed that, by withholding pedigree information for sales to RxUSA, the industry was engaged in a trust and in allegedly illegal restraint of trade. The lawsuit alleged damages of $2.3 billion.

	In a late September ruling, the US Court for the Eastern District of New York threw out the suit (RxUSA Wholesale Inc. v. Alcon Laboratories Inc. et al., case number 06-03447), asserting that RxUSA failed to show that there was a monopoly or illegal restraint of trade. In essence, the ruling validates the defendants’ right to choose with whom to do business. Last spring, a related lawsuit against AmerisourceBergen alone was also thrown out, more or less for the same reasons, according to ABC’s annual report.

	Drucker has not commented on the outcome, other than to say that an appeal is planned. But according to a writeup of the case at Law360 (New York), the US Court ruling is “without leave to amend.”

	Much of this case revolves around wonkish details of commercial contracts and FDA regulations. The bigger picture is that FDA, with the support of larger pharma companies and distributors, has wanted to shut down secondary wholesaling altogether for years. The ADR requirement (which exempts ADR holders from passing pedigree information in mostny state pedigree rules) along with the efforts to establish a national pedigree program, has been part of this effort. Ironically, however, many secondary wholesalers have invested in the IT systems needed for passing pedigree documentation, and are supportive of a national pedigree—provided that pharma companies and big distributors convey the necessary pedigree data. The National Council of Pharmaceutical Distributors (Washington, DC), a trade group of secondary wholesalers, is on record as supporting current legislation to develop a national, electronic pedigree system, but this legislation has taken a back seat to the larger debate over healthcare reform. Stay tuned. 

RxUSA loses its $2.3-billion lawsuit against big distributors and pharma industry; vows to appeal

	Comparative effectiveness—the mostly clinical study of how one medication works against another (or against placebo)&mdash;jumped in recognition at the beginning of this year, when the Obama Administration funded $1.1 billion worth of 

, to be conducted over the next several years. Although that effort has been vastly overshadowed by the broad-based debate over healthcare reform since then, NIH and the Agency for Healthcare Research and Quality (AHRQ) are proceeding with their planning. Congress, meanwhile, attempting to appease Obama critics who want to “keep the government out of healthcare” (as if!), stipulated in deliberations this summer that any comparative effectiveness results would only be advisory, and not mandated, for physicians.

Now, however, private enterprise is stepping in. Giant PBM Medco Health Solutions announced the initiation of a new study making a head-to-head comparison of Bristol-Myers Squibb’s heart drug Plavix (clopidrogel)—a years-old blockbuster drug&mdash;and newly introduced Effient (prasugel) from Eli Lilly, which was approved this summer. According to Medco, most people are genetically programmed to take advantage of Plavix, but 25% are not (and Effient may be the better choice for them). Medco will enroll more than 14,000 patients and, in a two-year trial, determine whether the patients who can take advantage of Plavix show any benefit over those taking Effient. 

Why is Medco undertaking this effort? Dr. Robert Epstein, Medco chief medical officer, is unusually blunt: “Plavix is going generic in 2011 and if found to be equally effective as Effient for patients [with a particular gene], the study provides the evidence that would allow these patients to opt for a lower cost treatment.” Sales of Plavix were almost $4 billion in 2008. Ironically, a few days before the Medco announcement, market research firm Cutting Edge Info noted that Eli Lilly and Daiichi Sankyo used its own comparative effectiveness study (the Triton study) to justify a substantially higher price for Effient vs. Plavix. 

Drug-to-drug comparisons are not new (but they are not all that common either). But it is rare for the economics of the drugs to be the motivation for the trial. And, if you think about it, this trial is as much about targeted therapies as about drug efficacy—also a rare situation for such a widely prescribed drug. Although the Medco news release didn’t say anything about the cost of the trial, I’m betting that it will be fairly economical: Medco simply enrolls a sufficient number of existing customers (my emphasis), gets the genetic profile, and then tracks their outcomes in the same systems that they would use to send out reminder notices. Lilly’s Triton trial involved over 13,000 patients at 707 trial sites in 30 countries. 

Medco continues to pioneer innovative healthcare practices. Earlier this year it gave some results of its 

, which monitor patient adherence and medical conditions (Pharmaceutical Commerce, June, p. 14) for a variety of diseases states. This new trial is part of what Medco calls the Genetics for Generics strategy—which hints at more such studies to come. 

As IT technologies and healthcare reimbursement-processes advance, the ability to draw meaningful patient outcomes from the systems used to deliver medicines gets easier. And the economic incentives get stronger. Expect more of these comparative effectiveness studies to originate in the benefit or payer community. 

The desire to compare drugs’ efficacy is shifting from a purely medical decision to a financial one

Comparative Effectiveness with the Gloves Off

	There is enough industry attention being paid to product serialization and pedigree, apparently, that a new group can form up to try to move the technology forward. The group is called 

, and is being founded by Excellis Consulting (Devon, PA) and Axway (Scottsdale, AZ). A first-time “Leadership Forum” will be held on Nov. 5 in Newton Square, PA.

“Past efforts to move this technology forward have suffered because the players involved—manufacturers, distributors, retailers and government&mdash;often were focused on their own agenda,” says Greg Cathcart, president of Excellis (and a former executive at SupplyScape, the now-defunct pioneering company that developed some of the original drug-pedigree methodology). “By bringing trading partners together in an open forum, we hope to get them talking about common goals.” 

“Our expectation is that this will be more about deriving business value from serialization, and less about meeting a regulatory deadline,” says Sia Zadeh, director of business development at Axway. He also emphasizes that serialization needs to be looked at in a global context; in fact, serialization activity is more active now in 

The GS1 organization, coordinator of product identification technology standards, and AMR Research, a market research company, will also be involved in the initial meeting. 

Globaltrackandtrace.org will try to build industry consensus on pharma security, traceability

New effort on collaboration over product serialization

	Pharma recently won a small battle in the long-running war over parallel trade in Europe, when Europe’s highest court said regulators need to reconsider GlaxoSmithKline’s request for an exemption allowing it to apply different pricing to drugs destined for export from some EU countries.

Resellers have exploited the differences in pricing between different EU countries by buying drugs in southern European countries where prices are lower, such as Spain or Greece, and selling them in Northern Europe where prices are higher. This reimportatation is legal in Europe, unlike the US. In 1998, GSK attempted to squash that practice by slapping higher prices on drugs sold in Spain that were being purchased for export. 

That kicked off a lengthy legal battle: First the European Commission ruled that the company’s practice was restricting competition, then a lower court overturned the decision in 2006, saying the commission had failed to consider Glaxo’s evidence properly. In the latest development, the European Court of Justice upheld that ruling, saying that “The commission must reconsider whether GlaxoSmithKline’s general sales conditions in Spain may be exempted from the community competition rules.” 

The latest ruling doesn’t by any means mark the end of the war; however a legal expert says that it means EU regulators now need to carry out a more detailed analysis of the evidence required by the courts. 

The growth in legitimate parallel trade doesn’t directly affect US sales unless the domestic political tide turns in favor of reimportation. However, it’s another reason for accelerating the introduction of drug tracing technologies, which can be used not only to identify whether a drug is counterfeit, but also where it was first sold. 

European Court of Justice affirms a lower-court decision in a case dating to 1998

A small victory for Pharma in EU parallel trade war

	Last summer, a collection of manufacturers and supporters formed an organization to address these issues, the Alliance for Regenerative Medicine, which is now beginning to take shape.

In September, the Alliance held its first official meeting and appointed executive officers. John Walker, CEO of stem cell company iPierian (San Francisco), will chair the organization. Charter members include Johnson & Johnson and Pfizer Inc. as well as research institutes, foundations, venture capital firms and makers of regenerative treatments. 

The overall goal is to lobby for favorable policies in three areas: research, regulation and reimbursement. One aim is to ensure that researchers can gain access to funding, says Michael Werner, executive director at the Alliance and a partner at law firm Holland & Knight in Washington. 

Though stem cells and other regenerative medicine techniques hold enormous promise, they also face an equally large set of obstacles, ranging from research funding to reimbursement

Regenerative medicine coalition gets organized

	Systech International (Cranbury, NJ) has just released a new version of one of its family of “packaging execution systems” (PESs) that manage the process of data collection, operational effectiveness and overall packaging-line management. The application, Serialized Product Tracking (SPT), enables packagers to execute and then verify serialization processes occurring on the line, and then make those data available to the enterprise-level databases that might, for example, generate pedigree documentation or be the start of a track-and-trace process down a supply chain.

“Manufacturers are taking advantage of the configurable nature of the Systech solution,” says Joe Ringwood, COO of Systech. “Our unique approach allows customers to deploy consistent software and take advantage of new software releases throughout their global packaging operations. For example, SPT can support a blister line in China, a vial line in France and a bottling line in North America, all of which may have very different regulatory requirements.” 

	Systech calls these applications “near-line” functionality, in that while they are not directly tied to running the packaging line, are becoming more critical elements of overall supply chain visibility, brand protection (via anti-counterfeiting measures) and regulatory compliance. The new release includes functionality that helps test integration between enterprise systems and packaging without jeopardizing line utilization, says Systech. This capability, which emulates the line environment for testing purposes, helps customers address bi-directional communications between packaging and enterprise information technology environments. 

Systech has been part of the “California Express Solution,” a grouping of vendors (including label and carton converter Nosco [see p. 34], and SupplyScape, the originator of drug-pedigree software now owned by TraceLink). Last spring, it announced a collaboration with Wolke Inks & Printers GmbH (Hersbruck, Germany), a supplier of inks and services for industrial printing. 

In that the Systech technology is now in use (or about to be deployed) at over 150 packaging lines worldwide, it effectively becomes a cornerstone of an evolving set of standard capabilities for serialization or drug-tracking applications globally. The company says that its software is compliant with 21 CFR Part 11 (the federal requirement for validating electronic data), cGMP and GAMP standards, and “supports” the EPC Global standards, which have been promulgated by the GS1 organization for product identification, especially for RFID-enabled tags. The Systech capability, however, includes barcode (linear or 2D) and other serialization techniques. PC 

With new serialization-software release, Systech promotes ‘near-line’ applications

Systech Expands Functionality of its Serialized Product Tracking Application

	As school doors opened across the country in the past few weeks, the drumbeat of public concern over the H1N1 flu and its prevention began rising in pitch. While manufacturers have been busily producing the vaccine, and state and federal public health officials making extensive preparations, the fact is that the actual administration of vaccine to nearly 160 million Americans will proceed in a novel way, and under a compressed time frame (technically, flu season has already started, but the vaccine won’t be available until October).

Last spring, seeing the rapid spread of the flu, the Centers for Disease Control opted to purchase all available capacity for the vaccine. In the summer, under existing emergency-planning procedures, it chose McKesson as the primary distributor of the vaccine. Manufacturers will ship to four DCs of McKesson, which had already been the designated distributor for CDC’s Vaccines for Children program. 

Thereafter, a new process begins. Each state’s public health authority will designate a group of distributors and healthcare providers; McKesson will ship to them, and any secondary distribution will occur within each state. McKesson normally ships to around 40,000 sites for the Vaccines for Children program; H1N1 could involve 90,000 sites.

	All this would seem to work well provided that the vaccine distribution more or less follows the pattern of conventional (seasonal) flu distribution. CDC has established a priority list, led by young children and the elderly, for receiving vaccine. If there is a rush to receive vaccine as soon as possible, the system could be overwhelmed, and so public health authorities will try to keep the population calm as the distribution (which will continue until early next year) progresses. In early September, SDI Health (Plymouth Meeting, PA) reported that its pharmacy surveys showed that over 477,000 seasonal-flu vaccinations have been performed—up 237% over the year before. 

	H1N1 vaccine is but one of three flu season distributions: seasonal vaccine will also be handled, as will antiviral drugs (Roche’s Tamiflu and GSK’s Relenza). Many distributors (including Cardinal Health and AmerisourceBergen) will handle these, as well as masks, syringes and related equipment. 

All of this will be a “very challenging situation,” says Pat Schmidt, president of Temecula, CA, distributor FFF Enterprises, which also operates a vaccine administration unit called VaxAmerica. “This will be a new way to access vaccines, and there’s a lot of uncertainty around it.” 

CDC has led numerous coordination meetings over the past several months, as has the Healthcare Distribution Management Assn. and RxResponse, the coordinating council for disaster planning that includes healthcare providers and manufacturers. “One result of our discussions with CDC officials is the development of a system for sharing information about the supply of antivirals,” says Jeff Van Ness, communications director at HDMA. “So we’ve developed a simple ‘green light, yellow light, red light’ system, based on voluntary reporting from distributors, to make information about supply easy to understand.” PC 

CDC is depending on a new distribution process for ‘the largest vaccine distribution in history’

Flu Season Promises to Put a Spotlight on Vaccine Distribution

	The 2009-2010 Chain Pharmacy Industry Profile is a valuable compilation of data on retailing, business functions and healthcare services coming from pharmacies. NACDS, the sponsor of the publication, also includes detailed data on employment and tax revenues, state-by-state, making the not-too-subtle point to state governments of the value of its members’ business.

By NACDS calculations, the number of pharmacy stores (of all types, not just chains) has dropped to 53,658, continuing a trend that started last year (Table 2). In 2008, unlike 2007, almost every type pharmacy category declined. However, NACDS notes that store counts have been changing (mostly because of the decline of independent pharmacies); back in the early 1990s, the count of all pharmacies peaked at 58,600. 

See Table 1 for the ranking of top chains (along with a count of the number of stores they have).

The back-end/front-end sales ratio for chains is now prescriptions, 68.5%, non-prescription, 32.5%. 

The average pharmacy reimbursement across all payers in 2008 was $71.69 per prescription. Of that, manufacturer net profit is $9.02 (12.6%); retail net profit is $0.86 (1.2%); and wholesaler net profit is $0.41 (0.57%).

The report is available for purchase at the NACDS website, nacds.org. PC 

At 28% pharmaceutical sales, chain pharmacy still represents the single largest channel for delivering prescriptions to patients

NACDS Annual Profile Tracks Declining Number of Stores

	Here’s what executives need to know about marketing regulations: compliance is core to the very culture of your company. Underestimate its importance at your peril. The training of executives on marketing compliance is an art form all its own. The minutiae implied in the word “regulations” would seem fundamentally to exclude the strategy-minded highest organizational levels. But this is one art program they need to attend.

New laws and legislation in process, as well as industry codes and practices, are placing increasing education requirements on sales reps just to get in the door to see prescribers. Beyond that fundamental is the increasing scrutiny of regulators on both product labels and post-approval adverse events that can lead to label revisions. These and other issues have forced compliance out of the realm of the tactical and into the strategic. 

It may sound like compliance has become a quagmire, but not necessarily. “We say, ‘use it as an excuse to be great,’” says Brian Lee, founder and CEO at Custom Learning Systems (Calgary, AB) a provider of on-site training, coaching, and service education in the healthcare industry. “It’s not a hard argument to swallow. Our clients need to determine how to meet the expectations of government while getting closer to their customers.” 

Michelle O’Connor, senior VP for learning strategy and innovation at CMR Institute (Roanoke, VA), sees it this way: “In any regulated industry it’s easier to be reactive rather than proactive. The challenge is to take a long-range and strategic view of regulatory compliance.” CMRI is an independent, not-for-profit organization offering unbranded education to pharmaceutical, medical device, and biotech professionals. 

	Compliance is “a reflection of an organization’s culture,” she says. The obligation to comply and behave ethically has to be driven from the top down. “Executives have to set the tone.” 

And Celeste Mosby, VP for life sciences at Wilson Learning Worldwide (Edina, MN), says that knowing regulatory requirements helps executives develop integrated marketing materials. “Some companies are traditionally very siloed in structure, and decisions are made in a siloed way. As we work with organizations now, we put a big emphasis on collaboration and driving a seamless approach to strategic development,” she says. When they do so, the end product is much more in line with regulations. 

Whether siloed or collaborative, compliance is having a major effect on the way pharmaceutical business gets done. And interpretation of requirements can sometimes force that effect into the “difficult” category, according to researchers. 

Take the recently revised codes of conduct issued by the Pharmaceutical Research and Manufacturers Assn. (Washington). The codes, issued late last year, revise principles implemented in 2002. Many companies began training on it early this year, beginning its real test, says Steve Mack, project director at PharmaForce International (Reading, PA), a research organization focused on pharmaceutical sales and marketing benchmarking. Executives sometimes need help in interpreting regulations and developing operational procedures that meet them. 

	Mack provides one example of a revised code that actually could not be put into practice by the interpreting company: Bringing a snack item for the healthcare provider’s office is still permissible, he explains. But by the code-complying company’s interpretation, the gesture of a drug rep bringing a bag of M&Ms to an office became quite complicated. The rep would have to stay to see the M&Ms consumed by office staff in a meeting, to ensure that the candy was not taken by a doctor and eaten at home. 

Another perceived difficulty: when reps bring in lunch to a healthcare provider office, they would have to monitor attendee job function. If someone shows up to the lunch who is not part of the mainstream medical profession—a file clerk, for example&mdash;the sales rep would have to ask them to leave. “They believed they would have to police who attended the lunch, and saw it as impossible,” says Mack. 

Other drug makers have reached erroneous conclusions about changes to the code. When reps and management from one company learned that they were no longer able to book monthly lunches in healthcare provider offices, as they were accustomed to doing, they came to believe that providing one meal for, say, 50 office staff members would entitle them to follow-up appointments where they could present detail. “That’s going to lead to problems,” says Mack. 

The PharmaForce findings are presented in a report updated in June, Competitive Benchmarking of Leading Pharmaceutical Companies’ Strategies for Leveraging the Medical Liaison Function. The report details the efforts of 13 drug companies in complying with the revised PhRMA codes. PharmaForce researchers surveyed a mix of companies: large, mid-size and small; PhRMA members and nonmembers; adopters of the code and non-adopters. The report, which costs $19,000, contains profiles of the 13 companies. 

The revised code does offer some wiggle room for competitive thinking. Regarding speaker honoraria, Mack notes that the rates charged by doctors per lecture are comparable, $1500 to $2000 for a specialist speaker. Increasing the honoraria budget allows for more talks by more speakers. He has seen $30,000 budgets at the low end vs. $150,000 budgets at the high end. “That’s a pretty big variance,” he says, noting that some companies still have not yet established how much they will budget. 

	Like the PhRMA code, the SafeRx Act adopted in Washington, DC, in early 2008 regulates rep interactions with healthcare professionals. SafeRx will require “detailers,” according to an announcement, doing business in DC “to be licensed and held to a professional code of conduct. Those who violate these standards will be fined and could have their licenses revoked.” The bill also requires reps to have an appropriate educational background. In addition, it created an academic detailing program “to educate doctors on the latest developments in pharmaceutical research,” the announcement says. And it prohibits members of the DC medical advisory committees from receiving gifts from pharmaceutical companies. 

What’s significant about the SafeRx Act is not so much its directness in singling out the sales rep function, but the speed at which it is spreading. 

“States are jumping on board and adding to the requirements,” says Mosby of Wilson Learning. “Unique legislation is being introduced that’s going to impact marketing in a big way. Executives have to know how it will impact their strategy this year and into the future.” 

Industry training and education providers have seized the opportunity. Wilson Learning has submitted ten courses for the approval of the District of Columbia’s Board of Pharmacy to satisfy SafeRx continuing education requirements. CMRI boasts 42 courses and one certificate program that have been approved. 

“We are focused on education, not regulation,” says O’Connor of CMRI. In fact, she says the Institute is opposed to some of the regulations proposed by states. “We believe education is the answer. That’s the viewpoint we take with all of our clients.” CMRI also provides research of physicians, she says, “to get a deeper dive on what they hope to see from reps and the pharmaceutical industry in general.” 

	A key component of marketing compliance education is accountability. “You have to teach accountability and its execution,” says Lee of Custom Learning Systems. “The trickle-down effect—from C-level on down&mdash;is not effective. Our goal is to get them excited about accountability that works.” 

Real accountability, he maintains, needs to rest at the C level and the director level. Its teaching requires several steps in the Custom Learning Systems model. The first step involves getting senior management off site and “spending quality time with them. This is budget and time dependent, of course, but we usually do it for two days.” During this Leadership College, trainers work to make sure that all members of the senior team are equal drivers. 

The Leadership College is followed by getting buy-in at the director/manager level during a leadership briefing. Lee says that accountability workshops for all leaders are next, during which the CEO leads the discussion and spells out the main expectations for performance. Having CEOs lead this discussion is important, he says, because “it helps them understand the significance of their unspoken power. We get a higher level of ownership when everyone is involved in setting the bar.” 

The accountability workshop is followed by education, which Lee prefers to call “leadership development,” and it’s conducted as just-in-time training. Next is the launch of performance improvement teams. “You can’t hope that busy executives can do the implementation. Unless there is a structure in place when you do the training, forget it—93% of what is learned in the classroom is forgotten in 14 days.” 

	The final steps are coaching and progress reports. Coaching begins with an assessment of how the leaders are performing relative to stated goals. “Coaching is crucial,” says Lee, in part to keep the momentum going. “The ability to execute after the training is where they fall down.” 

He convenes a summit for leader presentation of progress reports before their peers. “We give them a chance to brag and fine-tune ideas; to talk about what happens next.” That usually involves trainers training other employees, extending the reach to the front lines.

	Like the case with the Custom Learning Systems model, accountability at the executive level is also germane in the efforts at CMRI. “Government takes a broader view of accountability when it comes to compliance. It’s not just the rep who’s targeted,” says O’Connor. 

“The obligation to comply and behave ethically applies to everyone in the industry,” she says, “and it has to be driven from the top down. Executives have to set the tone, especially to those who report to them. They serve as role models.” 

	In the courses offered by CMRI, accountability and obligation are strongly tied to ethics. In one course, “Pharmaceutical Ethics and Compliance,” the instructor devotes time to the reasons for ethical and regulatory compliance and the range of activities affected by them. In addition, the course outlines key U.S. laws related to ethical behavior in all aspects of the pharmaceutical industry (from research and development to sales and marketing) and guidelines developed by professional and industry groups to promote ethical and compliant behavior. 

“Being ethical and behaving ethically is more than acting lawfully,” says O’Connor. “Executives have to understand the principles that underlie the regulations, and then be proactive about them.” CMRI offers courses on business ethics as well as medical ethics. “When you understand the rationale for behaving ethically, it’s easier to understand why you have to comply. It’s essential to build knowledge around regulations but also how they are applied, not just at pharma companies, but at the FDA and with the public as well.”

	O’Connor says that executives react very well to the ethics element. “It helps them take a broader view. Instead of saying ‘This is being forced on me,’ they see how it can benefit them.” 

	Like Lee at Custom Learning Systems, O’Connor sees implementation as one of the big challenges in marketing regulation compliance. Another is working across functions. Marketing compliance requires cross-functional collaboration, she says. “It’s to their benefit if they don’t take a siloed view.” 

CMRI works with all sizes of pharmaceutical company: the top 10, mid-size and small companies and biopharma. Although it varies from company to company, she says that in big pharma “the trend over the last couple of years is toward more of a non-siloed approach. They are taking the strategic view.” 

One driver is the aforementioned SafeRx Act, and the pending legislation at the state level. The drug giants are showing “recognition that we all need to work together,” says O’Connor. “There needs to be a cooperative, concerted effort.” 

Mosby of Wilson Learning concurs. Good results have come from times when marketing, sales and training have worked collaboratively with medical affairs, she says. “I’ve seen some best practices come out of that partnership. We encourage, yet executives drive, breaking down the silos. With the current regulatory environment it makes good sense to do this partnering up front rather than doing many reviews later.” 

	Mosby also finds that accountability is key to marketing regulation compliance. Along with teaching executives how to think strategically, it’s a hot topic, especially for marketing executives. “We help them build strategic alignment and get buy-in on strategy,” she says. “They have to think through processes to support goals.” 

Mosby also says that most of the Wilson Learning executive training is applications based, using a simulated environment. Participants are asked to tackle certain challenges. “There’s dissemination of content, then they get right into applications,” she says.

	Company size can make a big difference in training implementation. “A midsize company has fewer layers of management, so decision-making power is quicker and more fine tuned. In big pharma, decision-making is more complex; you might find standard operating procedures for marketing; a lot more process,” says Mosby. 

Building skills that help executives create shared vision and strategy is her goal. She wants to help executives lead organizational change, inspiring employees across functions. “Leaders must create the environment for inspiration,” she says. “They can’t force it.” PC 

Conventional training of sales forces is being complemented by executive-level training for corporate compliance

Training Executives for Marketing Compliance

	Today, specialty pharmaceuticals are special indeed: they are dominating pipelines, and their sales are forecasted to grow at twice the rate of traditional products for the next five years (Fig. 1.) By 2013, global revenue from specialty products will exceed $160 billion. But with such rapid growth comes equally rapid change...

The technological evolution behind this extraordinary surge and commanding market presence is driving the need for additional sites of administration and new distribution models. What should manufacturers consider as they navigate the complexities and nuances of their relationships with specialty pharmacies?

	Intensified cost pressure will challenge the degree of access granted to specialty products. What strategies can help companies sustain their commercial success?

	Economic challenges will chip away at patient adherence to these expensive therapeutic regimens. How can manufacturers counteract this trend and support strong patient outcomes?

	The following pages explore developments in specialty product distribution in the US and how they will affect the commercial choices that manufacturers make. This glimpse into the future is intended to help manufacturers as they bring new products to market and partner with specialty pharmacies throughout the lifecycle of specialty products.

	Initially, pharmaceutical products requiring special handling en route to physicians’ offices and hospitals in the US were distributed via specialty wholesalers—as they are still in much of Europe today. In the 1970s, a handful of pioneering specialty pharmacies were formed, primarily as a mechanism for cold-chain delivery and typically focusing on just one or two therapy areas such as cancer, HIV/AIDS, fertility or hemophilia.

	In the intervening years, the advent of biologics with new administration methods, and the rise of managed care, outpatient clinics and home health care have added to specialty distribution opportunities. During the 1980s, specialty pharmacies began to spring up to ensure that medications were handled safely and cost effectively and by the 1990s, even the large chains such as Walgreens and CVS, had established specialty pharmacies to serve the needs of patients with demanding health problems.

	Several of the largest specialty pharmacy providers (SPPs) are the result of a pairing with pharmacy benefit managers (PBMs) or large, retail pharmacy chains, so their dual role as clinical advisor to patients and cost controller for payers comes quite naturally to them.

	The largest SPPs have expanded their business models to include a wide variety of value-added services (Fig. 2). Most strive to provide a more holistic approach to improving health and managing costs by overseeing the individual patient’s pharmaceutical treatment and benefit. In this way, SPPs are becoming an important component in manufacturers’ ability to deliver on the “whole product concept,” a view that considers the product not as a pill or vial, but as a health outcome.

	Several conditions are coalescing to bring about changes in specialty distribution practices and SPP business models that have a bearing on manufacturers’ commercial activities. These include:

	Payers will increasingly look to PBMs—and by extension their subsidiary or partner SPPs&mdash;to apply drug utilization management techniques in order to control costs. Indeed, this expectation is why coverage for specialty products is so often “carved out” into a separate contract. Cost containment techniques include determining access based on diagnostic criteria (such as molecular diagnostic tests, for example), adhering to evidence-based clinical guidelines, seeking prior authorization, requiring step therapy, monitoring the duration of therapy, and minimizing off-label use. All of these techniques will clearly serve to constrict product sales.

	Manufacturers are already expected to demonstrate the value of their medicines to health technology assessors and, ultimately payers, through health economics and outcomes research (HEOR). But specialty pharmacy providers will soon be able to weigh in on this issue of a product’s value with feedback on its comparative effectiveness in the real-world setting. The benefit of this to a given manufacturer depends, of course, on how individual products compare. For better or worse, manufacturers must brace themselves for the availability of such information, because it is coming.

	To the extent that payers extract guarantees from manufacturers on product performance (such as when the National Health Service contracted with J&J to pay for Velcade [bortezomib] treatment in only those patients for whom it proved effective), SPPs can play a role. SPP programs that improve patient compliance and ensure that patients meet required diagnostic criteria prior to receiving treatment can clearly protect the manufacturer’s interests in such situations.

	Another financial issue is how plans manage drug versus medical benefits. There has been a trend, driven by the increased need for medical services, for the medical benefit to be a larger part of the overall benefit calculation. However, the development of more oral products with reduced medical-service requirements may slow this trend.

	The push to find lower-cost alternatives to expensive specialty therapies is motivating governments (particularly where governments are the primary payers of healthcare expenses) to create regulatory pathways for biosimilars. Many questions still surround how the availability of biosimilars will play out in the marketplace, including whether substitution will be permitted or even mandated. This concerns specialty pharmacy providers because the margin differential between brands and biosimilars will affect their profitability, which may, in turn, drive further cost-cutting measures.

	IMS also believes that there will be a movement to discourage (or outright prohibit) physicians from continuing to buy specialty products in bulk and then bill payers for them as they are administered to patients (the so-called buy-and-bill model). Payers contend that the practice represents a conflict of interest for physicians by affecting their prescribing choice. If payers are successful in overturning the buy-and-bill model, the effect will be to level the playing field for makers of medications that have not represented a revenue opportunity for prescribers.

	And, as more of the burden of healthcare costs is transferred to patients’ shoulders, we can expect adherence to expensive and inconvenient treatment regimens to deteriorate. In this respect, SPPs certainly are developing more strenuous interventions, and an SPP’s ability to bolster compliance will become a significant differentiator.

	The number of specialty products in the pipeline promises to strengthen the specialty distribution channel in the US and to drive adoption of the US model in European markets. Specialty products are being developed for new disease categories (such as pulmonary arterial hypertension, for example), adjunctive therapies that mitigate side effects or augment the efficacy of existing therapies are in development, and new technologies that will change the treatment paradigm for some disease states are on the horizon. These include therapeutic vaccines* and mechanisms for delivering personalized medicines. New drug delivery technologies, such as transdermal methods, self-administered infusion, or the longstanding drive of transforming injectable/infusible drugs into oral solids, factor into the industry’s future.

	We anticipate that many therapies, owing to new delivery mechanisms, will be able to be administered at different sites, and this will have a bearing on whether they fall under medical or pharmacy benefit plans. Thus, emerging drug-delivery technologies will drive changes in payer benefit designs—changes that manufacturers must take into account as they prepare to launch a product, develop competitive strategies, and create forecasts.

	Although we expect some new specialty products to be introduced in pill form (as opposed to injectable form, such as with some upcoming MS treatments), they will still carry a high-risk profile, and patients using them will continue to benefit from the disease management services that SPPs offer patients, in medium and “high-touch” categories.

	In the wake of the safety issues that have shaken the market in the past few years, the Food and Drug Administration (FDA) is requiring that more drugs have Risk Evaluation and Mitigation Strategy (REMS) programs. (And, many companies are voluntarily preparing them.) Specialty pharmacy providers can serve as a vital component in executing REMS by offering patient education, encouraging compliance, sending clinical check-up reminders and managing side effects.

	IMS foresees that due to the above market forces, the SPP segment in the US market will mature rapidly, leading to continued consolidation and partnering between players.

	Eventually, we expect the US business to be concentrated between just three to five major players, as is already the case with US wholesalers, retail chains, PBMs, and mail service providers.

	Many players may also pursue a strategy of vertical integration through ownership of a PBM, a clinical administration site, and an SPP. This would complicate the sales process for manufacturers on many levels. On the most elemental, it will become very important, but harder, to understand the web of connectivity between providers, benefit managers, and specialty pharmacies, in order to employ an account-based, or customer-driven, sales model.

	The potential for explosive growth within the segment is not lost on investors, and as SPPs in the US gain strength and mass, they will acquire the wherewithal to expand geographically into the major European markets. In April, 2008, Accredo, one of the nation’s leading providers of specialty pharmaceuticals, acquired a majority interest in Europa Apotheek Venlo, one of Europe’s leading mail-order pharmacies serving Dutch and German healthcare markets from its Netherlands operations—an action that may be an example to others.

	Manufacturers clearly have much to gain from maintaining healthy business relationships with SPPs. From a manufacturer’s standpoint, one of the greatest advantages of those SPPs that subscribe to the more evolved service model is their close and ongoing relationship with the patient. SPPs take over where physicians leave off in working with patients to manage their disease and benefit fully from their treatment. To manufacturers, SPPs are communication links to patients and strong influencers in the success of therapy.

	SPP services that directly serve manufacturers’ interests include:

	Nationwide shipping (overnight, if necessary) and delivery of products while maintaining cold-chain continuity as needed

	Coordinating patients’ participation in clinical trials

	Resolving access and reimbursement issues, thus paving the way for usage

	Encouraging compliance and persistence through refill reminders, patient education, and troubleshooting

	Delivering care to indigent patients, executing manufacturers’ patient assistance programs

	As the sector consolidates, purchasing contracts with SPPs will carry more weight, and market leaders will negotiate from a position of strength, both with non-owner PBMs and with manufacturers.

	Elements of the supply-chain strategy must be thought through early in a product’s development—long before launch plans are underway. Too often, companies stumble onto an approach, without the benefit of proper analysis and scenario planning. Companies must address such complex and wide-ranging questions as:

	What delivery technology will be approved by regulators?

	Will HEOR data be required by health technology assessors such as the National Institute for Health and Clinical Excellence (NICE) in the UK?

	Given the delivery technology and risk profile of the disease, where will the product be administered? Does the therapy require “high-touch” disease management to be successful?

	What will be the product’s competitive set? (Does your definition of competitors extend to products that are classified as earlier step therapies?)

	How will the product fare in comparative effectiveness studies?

	What types of partners will thus be needed in the supply chain?

	Based on its site of administration, will the product be covered by insurers/payers under a medical or pharmacy benefit? The answer has major implications for pricing and reimbursement strategies.

	What distribution channels are emerging in the geographies of interest?

	What type of distribution partner will offer the right balance between the conflicting needs of maximizing access and maintaining control over the distribution process?

	Do we have the expertise to use this channel advantageously, or would it be advisable to work with a partner who is more familiar with it?

	One of the most important considerations is how broad to make your distribution flow. Logistically and economically, the goal is to cover the most patient lives with the fewest partners, while avoiding payer obstacles. The breadth of the network is to some degree set by the form of administration; products that are administered by healthcare professionals allow for fewer partners in the channel, whereas oral agents require a slightly larger network of pharmacies and distributors. Companies often opt to launch with a restrictive channel strategy and then expand over time. (This is preferable than doing the opposite, which could offend those partners who were eliminated from the network for a specific product.)

	Decisions should be based on the following considerations:

	Type of channel: wholesaler, specialty distributor (via physician) or specialty pharmacy (collects co-pay and makes patient specific shipments) or

	Point of purchase: retail pharmacy, mail, physician’s office or clinic, medical center, specialty pharmacy

	Site of care: home: oral, self-injected or assisted: physician’s office or clinic, hospital, infusion clinic

	Other stakeholders: managed care organizations (MCOs), PBMs, government, employers

	Market environment: disease state, product attributes, competition, and market potential

	Applying a ‘specialty lens’ to commercial decisions

	In order to make effective commercial decisions, manufacturers operating in the specialty pharmaceutical market need a broad base of evidence on prescribing practices, sales and prescription activity, treatment pathways, and patient outcomes. They need access to:

	Sales and prescription volume and share in each relevant channel

	Anonymized, patient-level data tracked over time to reveal penetration patterns by patient characteristic, treatment pathways, dosing metrics, utilization history, and health outcomes

	Source-of-business metrics, uncovering market dynamics and competitive trends

	Health Care Relational Spheres (HCRS) to understand the affiliations between entities

	When advanced analytic techniques are applied to this foundational understanding of how specialty products are being prescribed, distributed, and used, it is possible to:

	Direct pipeline investments based on an accurate assessment of market opportunity by indication

	Develop sound distribution strategies early in the product lifecycle so that positioning within the channel becomes a competitive advantage

	Achieve optimal market access, relying on proof of health outcomes to support value demonstration

	Ensure that global launches follow the most advantageous pricing and reimbursement strategies

	Segment prescribers based on a true understanding of their treatment patterns and visibility into their patient populations

	Allocate promotional resources effectively, by indication

	Manage brands for optimal performance, mindful of competitive moves and market dynamics

	For manufacturers already in—or planning to enter&mdash;the specialty pharmaceutical market, the shifting landscape presents three key business challenges: understanding the dynamics of the market, demonstrating product value in terms that all stakeholders appreciate, and developing the best distribution strategy for each product in the portfolio. PC

	Specialty Distribution Evolving Outside of the US

	In other major world markets, the distribution channel is quite different (because the central government funds health care), but it is migrating toward the US model. Specialized pharmacies are only now emerging within the major European markets, and those in Canada are already patterned similarly to the SPPs in the US in terms of the breadth and sophistication of their offerings.

	In Europe, most specialty pharmaceuticals are administered in hospitals, but this is bound to change as cost-saving efforts accelerate. Alternative and less-expensive sites for administering specialty products (such as the patient’s home, infusion centers, and ambulatory clinics) are gradually taking hold.

	Home health care is already making inroads in the UK, and some specialty pharmacies are now operating in Germany and the Netherlands—although they do not yet offer the array of value-added services seen in the US. IMS believes that it is only a matter of time before EU markets mimic the US model for SPPs, either through the emergence of EU businesses, or through the geographic expansion of US entities.

Changing the Channel: Developments in US Specialty Pharmaceutical Distribution

Introducing a new pharmaceutical product into the highly competitive and cost-conscious market of today is a highly complex and risky process. Successful launches can “make” a small pharma company; an unsuccessful one could kill it. The life-or-death consequences of a product launch for large multinational biopharma companies are not as pronounced, but hundreds of millions of dollars in sales and net revenues are at stake. A product launch should, and usually does, focus the efforts of large parts of a biopharmaceutical organization.

	Product launches are, of course, the culmination of years of clinical research, market and healthcare-provider assessments, coordination with payors, and education among physicians and other healthcare professionals. This article focuses on the very last steps in this process: the physical distribution of products to distributors, pharmacies, hospitals and clinics, so that they can be dispensed and prescriptions filled as soon as final FDA approval (or other nations’ regulatory agencies) is granted. Ensuring that the product is physically available when prescriptions begin to be written is a critical aspect of a successful launch.

	Whether it’s brand or generic, prescription or over-the-counter, the product must arrive on store shelves precisely on schedule. A delay of even a few hours can result in millions of dollars in lost sales. Nothing less than 100% on-time delivery is acceptable. The delivery schedules are extremely compressed because the drug license holder is never absolutely certain that there will not be a last-minute change in a label, packaging component or other detail. For this reason, the products can rarely be “pre-shipped;” the risk of doing so and then being obliged to recall the products is too severe.

	Typically, the manufacturer or license holder works with a third-party logistics (3PL) company and/or directly with carriers to coordinate the distribution. 3PLs also work with major wholesaler-distributors when those organizations are called on to assist in the launch.

	Whether branded or generic, product launches generally share a set of key hurdles.

	Wide geographic area. A successful launch is measured by the product arriving on store shelves across a given country on the same day. To ensure neutrality, the product must arrive at every store of every retailer — from Wal-Mart and CVS to locally owned neighborhood pharmacies – on the launch day.

	Uncertain approval dates. If the launch is contingent on approval by a regulatory body, such as the Food and Drug Administration in the U.S., the actual launch date may not be known until the last minute. In some cases, a product must be launched to thousands of destinations within hours of final regulatory approval.

	Holiday launch dates. Depending on the date when a branded drug’s patent expires, a generic drug must be ready to hit the shelves immediately. That often requires launching products over holidays, so logistics providers and carriers must be prepared to staff a major project at a time when employees want to schedule time off.

	In addition, pharmaceutical manufacturers are challenged by the lack of global standards for getting regulatory approvals and bringing a new product to market. As a result, there is really no such thing as a “global launch.” While there are ongoing discussions about global standards, at this point manufacturers must work on a country-by-country basis.

	The “official” launch period is agreed upon between the manufacturer and its business partners. Typically, the launch of a branded product lasts eight to 10 months after launch day. After the six-month mark, the demand has usually stabilized, order patterns are set (or, the growth pattern is clear) and the product is generally put into the standard supply-chain circulation.

A collaborative working relationship gives launch day a better chance at success

Pharmaceutical Commerce - October 2009