Novartis: “Zero Tolerance” Bribery Policy

In the wake of a spate of fines and sanctions against drug-makers and the embarrassing headlines that follow, Novartis has issued a stern and highly public message to its employees. The message, although carefully worded, is clear: “Bribery will not be tolerated here”

The move comes just three weeks after Pfizer was charged with violating the Foreign Corrupt Practices Act. Apparently Pfizer employees and agents in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia made improper payments to foreign officials to obtain regulatory and formulary approvals, sales and increased prescriptions for its medicines. Worse still, they tried to conceal the bribes by improperly recording payments in accounting records as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences, and advertising.

Pfizer is by no means alone. Earlier this year, Teva Pharmaceuticals and Bristol-Myers Squibb received subpoenas in relation to overseas bribery. And last year, Johnson & Johnson was fined $70 million for bribing European doctors and paying kickbacks to Iraq to illegally obtain business.

Clearly David Epstein, who heads Novartis Pharmaceuticals has been taking note. In a recent blog post he states that the company has “zero tolerance for bribery – it’s illegal, unethical and goes against the integrity and transparency we stand for.”

To ensure every Novartis employee fully understands what bribery is and how to avoid it, they’ve developed an updated version of their Global Anti-Bribery Policy.

“This does not introduce new standards, but is meant to clarify, with simple language, the principles already set forth in our Code of Conduct, focusing on day-to-day situations where bribery issues may arise. This includes guidance on ensuring third parties we engage for certain common business activities operate under similar standards and principles as we do,” continues Epstein.

And just so everyone is completely clear, the policy spells it out: “Employees must not bribe and they must not use intermediaries, such as agents, consultants, advisers, distributors or any other business partners to commit acts of bribery. Novartis does not distinguish between public officials and private persons so far as bribery is concerned: bribery is not tolerated, regardless of the status of the recipient”

While we applaud Novartis’s integrity, other commentators have been quick to point out that the Novartis missive amounts to little more than a smoke and mirrors.

Pharmalot’s Ed Silverman called it a smart legal move. He observes that should any trouble arise later, Novartis can point to its efforts to spell out specifics to employees.

What do you think?

The biggest-selling drug in 2018 will be…

EvaluatePharma, a UK based company specializing in pharma and biotech analysis has been gazing long and hard into its crystal ball.

Having scrutinized the world’s leading 3,500 pharmaceutical and biotech companies they have come up with a list of what, they believe, will be the top 10 selling drugs in 2018.

1. Januvia       (diabetes) – $9.7 billion
2. Humira        (arthritis) – $8.2 billion
3. Avastin        (cancer) – $7.5 billion
4. Enbrel          (arthritis)  – $7.2 billon
5. Revlimid     (myelodysplastic syndrome) – $6.75 billion
6. Prevnar 13  (pneumococcal vaccine) – $6.72 billion
7. Rituxan         (cancer) – $6.3 billion
8. Lantus           (diabetes) – $5.9 billion
9. Remicade     (arthritis) – $5.8 billion
10. Advair            (COPD)  – $5.7 billion

Surprised?  No conventional molecules, no cholesterol lowering agents, no blood pressure meds and not a single new drug among the top ten.  However, they predict the #11 best seller will be GS-7977 – the much anticipated oral hepatitis C drug from Gilead Sciences .

Not so surprising, given the obesity epidemic sweeping the western world that 2 of the front runners are diabetes drugs. Likewise, given the globally aging population – 3 are for arthritis.

#5 may be a surprise to many. Few people had ever heard of myelodysplastic syndrome before ABC news anchor Robin Roberts announced last week that she has the disease.  Still, it’s predicted number 5 status doesn’t mean that an epidemic is expected – it’s still relatively rare with only 10,000 or so new cases detected each year. Its lofty status on the list is more to do with the price. It costs a staggering $10,000 or so for a 28 day supply of the pills.

Other predictions from the EvaluatePharma World Preview 2018 report:

• Worldwide prescription drug sales are forecast to total $885bn in 2018 an increase of 3.1% from 2011
• Over $290bn of pharmaceutical sales are at risk from patent expirations between now and 2018
• Pfizer was the top company for prescription drug sales in 2011, but  Novartis will top the list by 2018
• Global pharmaceutical R&D spend forecast will grow by 1.5% per year to $149bn in 2018
• Anti-coagulants (blood thinners) are set to record highest growth of major therapy categories to 2018

Interesting stuff. But the problem with such long term predictive models is that they are but a snapshot  trying to project out six years.

In reality, life is a movie, with a frequently changing plot. For example if J&J’s canagliflozin can reduce obesity and improve blood sugar levels better than Januvia then the projected No. 1 ranking is suspect, at best.

Time to Give Pharma a Break?

The pharmaceutical industry has been under attack again this week. It’s not unusual for people to complain about the price of medicines and the fat profits of pharma, yet even when the industry tries to reduce the payment burden, or provide educational assistance, it is criticized.

First, there was a series of lawsuits filed by several union health plans against eight large drugmakers. They charge that, rather than save consumers money, prescription drug coupons illegally subsidize co-pays for brand-name meds and can actually increase health insurance premiums.

Then the US Department of Veteran Affairs issued a tough ruling on how sales reps can promote drugs to VA medical facilities in the future. One of the new restrictions concerns educational programs. Starting next month, reps will have to submit educational materials for VA review 60 days in advance of any scheduled meeting.  Additionally, materials will be approved only if industry sponsorship is adequately disclosed; if industry-sponsored data is adequately compared with non industry-sponsored data and if materials do not contain a company name or logo.

Both of these developments are worrying.  The pharmaceutical industry is already the most regulated business in the world. Further restrictions will result in fewer incentives to bring new drugs to market and will further stifle innovation.

Not convinced that it’s time to give pharma a break?  Then consider this:

During the Super Bowl, a representative of Eli Lilly posted the on the company’s corporate blog that the average cost of bringing a new drug to market is $1.3 billion. A price that would buy 371 Super Bowl ads, 16 million official NFL footballs, two pro football stadiums, pay almost all NFL football players, and every seat in every NFL stadium for six weeks in a row. This is, of course, is ludicrous.

Ludicrous and wrong!   In fact, the average drug developed by a major pharmaceutical company costs at least $4 billion, and it can be as much as close to $12 billion.

Company	N° of approved drugs	R&D Spending Per Drug ($Mil)	Total R&D Spending 1997-2011 ($Mil)
AstraZeneca	5	11,790.93	58,955
GlaxoSmithKline	10	8,170.81	81,708
Sanofi	8	7,909.26	63,274
Roche	11	7,803.77	85,841
Pfizer	14	7,727.03	108,178
Johnson & Johnson	15	5,885.65	88,285
Eli Lilly & Co	11	4,577.04	50,347
Abbott Laboratories	8	4,496.21	56,202
Merck & Co Inc	16	4,209.99	67,360
Bristol-Myers Squibb Co.	11	4,152.26	45,675

Sources: InnoThink Center For Research In Biomedical Innovation; Thomson Reuters Fundamentals via FactSet Research Systems

However, in all fairness to our Lilly rep, the drug industry has been tossing around the $1 billion number for years. It is based largely on an industry sponsored study by Joseph DiMasi of Tufts University performed 12 years ago. It’s always been a nice number for the pharmaceutical industry because it seemed to justify the idea that medicines should be pricey without making it seem that inventing new medicines is so expensive an endeavor as to be ultimately futile.

But as can be seen from the table above, that figure is badly outdated.

The range of money spent is stunning. AstraZeneca has spent $12 billion in research money for every new drug approved, as much as the top-selling medicine ever generated in annual sales. Bristol-Meyers Squibb spent just $3.7 billion. At $12 billion per drug, inventing medicines is a pretty unsustainable business. At $3.7 billion, you might just be able to make money –assuming it can keep generating revenue for at least ten years.

So, why is the cost of drug development so high?  Well, a single clinical study can cost $100 million, at the high end. But the main expense, and the main reason for the differences noted above, is failure of potential new drugs during their development.

Has this blog helped to change your views on the industry? As always, SRxA’s Word on Health would love to hear from you.

Treading Lightly – A New Approach for Pharma

Last week, the Wall Street Journal reported on a dramatic change occurring in the pharmaceutical industry. The on-line article explored how many of the big pharma companies are changing their commercial model in response to the current economic and regulatory conditions. Most notably, drug reps are being encouraged to soften their sales pitches and re-position themselves as a trusted resource for the doctors they call upon. British drug giant GlaxoSmithKline (GSK) for example, has stopped evaluating salespeople based on the number of prescriptions written  Instead, they look at how well physicians rate their representatives. GSK, Merck and Lilly are also asking their representatives to switch from making forceful, tightly scripted sales pitches to acting more like a resource supporting physicians’ treatment. Companies hope to get a foot in the door by providing practical help, such as assistance educating patients about their diseases or navigating reimbursement. Why now?  Clearly, prescribers, who are under increasing pressure from health plans to curb costs, have less time for, and patience with, persistent sales representatives. Plus, the government has been cracking down on aggressive, and off-label marketing. For some, myself included, this is nothing new. Almost 20 years ago when I worked in pharma, I rarely “detailed” my products. Instead, I helped “my doctors” build websites for their own practices, helped to organize, and on occasions even moderate, their clinical meetings and assisted them with….well just about anything they wanted assistance with, be it product related or not. The strategy worked, sales grew and my competitors, even those with better products or prices were neutralized. “Increasing physician satisfaction, it turns out, is a much better way to promote a pharmaceutical agent than simply telling them to write more prescriptions or what the benefits are,” says David Ricks, president of Lilly’s global business unit. Unfortunately, salespeople still can’t provide the one thing many doctors want above all – time!  Even though pharmaceutical companies are attempting to engage prescribers in a more pleasant way, they still don’t always get a positive reception because nothing is being done to solve the doctors’ time problem. The bottom line is that physicians need to fit more patients – not sales reps – into their workday. Although it’s estimated that pharma sales reps  pay 115 million visits to 340,000 doctors each year, 23% of doctors surveyed by market research firm SK&A in 2010 said they don’t see drug reps at all. Eli Lilly decided to adopt its new approach after watching launches of new drugs fail. One problem the company identified was a mismatch between what doctors expected based on sales pitches, and what the products delivered. Before the change in tactics, psychiatrist Carey Cottle, MD says he was more likely to write prescriptions for a competing antidepressant like Pfizer’s  Effexor over Cymbalta, because Lilly representatives had a “high-pressure, car sales-type approach, and it was just not appropriate.” Now, surveys of doctors show that 85% are satisfied with Lilly, up from the 60% before the company changed ways. And business is up too. Sales of Cymbalta were >$450 million higher during the first nine months of 2011, than during the same period in 2010. We’d love to hear what doctors and sales reps think about this.

Drug Reps Set to Become Slaves to Their iPads

In recent weeks SRxA’s Word on Health has run a number of stories about iPads.  For the record, we don’t have shares in Apple, nor do we even have iPads, though we’re keeping our fingers crossed that Father Christmas might bring us one this year.   This latest iPad related post is particularly interesting as it could potentially change the pharmaceutical industry forever.

Last week, GlaxoSmithKline (GSK) sales reps were handed a lesson in “be careful what you wish for.”  If they win their ongoing U.S. Supreme Court appeal over overtime pay, their employers may well make them slaves to their iPads by introducing factory worker style rules for clocking in and out.

For our readers unfamiliar with the case, hundreds of GSK ’s pharmaceutical sales reps signed on to a class action lawsuit demanding overtime pay. The suit  was filed in 2006 by lead plaintiff Anthony Coultrip, who worked for GSK between 2003 and 2005 and hinges on a counter-intuitive definition of what a sales rep actually is. Under federal labor law, salespersons who earn commissions are exempt from protections requiring overtime pay for extra hours worked. Drug reps, however, don’t actually “sell” drugs – they merely promote them and the sale occurs later at the pharmacy. The GSK reps argue that makes them “promotion workers” whose work is so routine that they ought to get overtime.

Anyway…back to the story. If the Supreme Court rules in favor of Mr Coultrip and his colleagues, and institutes overtime pay, life for the nation’s 90,000 drug reps could change dramatically.  Instead of the relative independence and limited accountability that they enjoy today, the life of a pharma sales rep could become a nightmare  of check-ins, surveillance, time-sheets and electronic monitoring.

Hardly surprising given that a huge sum of money is at stake here.  Since the litigation began, at least 19 pharmaceutical companies have been sued by sales reps demanding overtime pay.

To try to minimize overtime payment liability, industry analysts predict that clocking in and out of work via an iPad will soon become the most important act of a rep’s day. Failure to clock in and out may result in loss of pay for that period of time.  Repeatedly “forgetting to clock in or out” may result in disciplinary action including the possibility of termination.

Taking this to extremes, industry insiders predict a scenario in which:

• Reps will be GPS tracked to verify time and location for all work related time during the work day.
• The same tracking will also be used to verify mileage for business versus personal use of the company car.
• Any rep planning to take more than two hours of personal time during a workday may have to get prior approval for a vacation day.
• Drug reps work will not be allowed to work more than 8 hours per day or more than 40 hours per week without prior written approval from their manager.
• If reps receive emergency customer calls, outside of their work day hours, they will have to adjust subsequent work time so as not to exceed the 40 hours per week maximum.
• They will be required to clock out and back in for their mandatory 15 minute breaks, in the morning and afternoon.  They will not be allowed to skip breaks or to do work related activities during breaks.
• Because all work related travel time will count against the 8 hour work day, most company meetings will be by tele- or video-conference to avoid travel.

However, not all  reps believe they deserve overtime. On cafepharma , the anonymous bulletin board for drug industry gossip, some have suggested that reps don’t work the hours they are meant to work, let alone qualify for overtime.

What’s better?  Is overtime pay worth the loss of freedom and Draconian restrictions?  As always, we’d love to hear from you.

Pharma Reps being replaced by iPads and Portals

As previously reported here, industry downsizing has resulted in the loss of over 30,000 sales positions over the past 5 years.   Now, according to a recent article in the Wall Street Journal, big pharma companies have found a way to replace many of the sales reps they’ve been laying off in recent years.  Apparently the void is being filled by digital sales tools such as websites and iPad apps. Doctors can use the tools to ask questions about drugs, order free samples and find out which insurers cover certain treatments. The changes are designed to cut costs and to reach doctors in ways other than the traditional office visit, which many busy physicians say they find intrusive and annoying. In 2009, one of every five doctors in the U.S. was what the industry calls a “no see,” meaning the doctor wouldn’t meet with reps. Just a year later that jumped to one in four.  Currently about three-quarters of industry visits to U.S. doctors’ offices fail to result in a face-to-face meeting. Throughout the 1990s and early 2000s, drug companies dramatically increased their U.S. sales forces, an escalation most companies came to regret as the economy took a downturn.  Many of those same companies are now involved in this digital shift including Sanofi-Aventis, Merck, Pfizer, GlaxoSmithKline, Novartis and Boehringer Ingelheim . Citing data from market-research firms, Eddie Williams, head of Novo Nordisk‘s biopharmaceutical business in the U.S., said 72% of U.S. doctors own a smartphone, and 95% of them use it to download medical applications. Novo Nordisk has several applications available on iTunes, including one that helps doctors calculate blood-sugar levels and another iPad/iPhone application which offers tools to help doctors diagnose bleeding disorders. Other companies such as Eli Lilly  are now considering “on-demand portals” that will allow doctors to access information instantly as they are treating patients. Although some companies have yet to be convinced of the benefits of e-marketing, most agree it is the way forward. Following the launch of Pradaxa in the U.S., Boehringer Ingelheim put together a digital-marketing package to target doctors, but found that sales calls to doctors’ offices were still the most powerful tool for driving new prescriptions, says. “No doubt digital marketing does have an impact…but I don’t believe, however, the shift happens overnight,” said Wa’el Hashad, the company’s VP of marketing. SRxA can help pharmaceutical clients with all of their digital marketing needs. Whether it’s interactive e-learning platforms, webinars, podcasts, e-newsletters, e-surveys or website design and development our fully customized, physician approved offerings will exceed your expectations. Contact us today to learn more.

Pharma Philanthropy

All too often the pharmaceutical industry is portrayed as evil and greedy. In an attempt to correct this misconception or at least redress the balance a little, SRxA’s Word on Health is pleased to bring you news of its more compassionate side.

According to figures just released by the Committee Encouraging Corporate Philanthropy poll, drug companies gave away more than $13 billion in cash and products last year.

More than half of the $2 billion increase in corporate philanthropy last year came from pharmaceutical companies donating medicine through their Patient Assistance Programs and investing in other initiatives.

While 40% of the 110 companies – polled annually for the past four years – boosted their giving last year by more than 10%, another 17% decreased their giving compared to 2009.

“One of the reasons we have seen for increased giving across the board has been increased funding to serve basic needs in communities where companies are working, and pharmaceutical companies, in particular, are in a really important position to do so,” said Alison Rose, the committee’s manager of standards and measurement.

Companies in the consumer staples, financial, industrials and information technology sectors also contributed to the increase in 2010 corporate philanthropy.

So where is all this pharma money going?  According to the websites of the Top 5 global pharmaceutical companies examples of corporate giving included:

• Johnson & Johnson contributed $588.1 million in cash and products towards 650 philanthropic programs in more than 50 countries

• Pfizer contributed to numerous charitable projects worldwide including > $47 million for cancer and tobacco control and $7.5 million to HIV / AIDS prevention

• Roche notes that as a result of some of their 2010 initiatives 47,000 patients received free medicines, 1,100,000 infants were tested for HIV, 11,000,000 doses of flu vaccine were donated and 2,000 orphaned children  were given primary healthcare and other services and assistance through support to the UNICEF & ECPP

• GSK among their many programs around the world, donated more than 1.6 billion tablets of a drug used to combat intestinal worms.  In the US, GSK supported numerous cancer charities and  provided health education in non-traditional venues for African Americans, Latinos and other ethnic minority communities and set up programs across six states to help high-risk and homeless children receive the specialist medical care they need.

• Novartis supports many programs both in the US and internationally. In the US alone, their patient assistance programs provided products worth $232 million to more than 100,000 patients in need. Additionally, they have provided free treatment for leprosy patients worldwide, leading to the cure of about 5 million patients since 2000 and has delivered more than 320 million treatments of its antimalarial drug without profit to several malaria-endemic countries

These are but a few examples of the type of corporate responsibility being shown by the pharmaceutical companies day-after-day.  Ladies and gentleman of the Industry we applaud you.

2010: Not such a good year for Politics , Physicians, Patients and Pharma

2010 may be one of those years that many of us in the US want to forget. Chief among those hoping for a better year ahead will be politicians, physicians and the Pharma industry.

In view of the festive season we’ve decided to leave the political review of the past 12 months to the excellent political satirists at JibJab.  They entitled their remorseless, but as usual, stunningly accurate review of the year Duet of Regret.  Word on Health is delighted to re-gift this to you. Enjoy!

It’s been an equally bad year for doctors.  In late November, physicians learned that the reimbursement they receive for Medicare patients would drop by 23%  in December and a further 2% in January. These cuts are the latest installment of the 1997 Balanced Budget Act and attempts to rein in spending on health care for the elderly.

This is not only bad news for doctors, many of whose practices are largely composed of Medicare patients but also for the baby-boomer patients just turning 65 who may find themselves without a doctor.  Critics predict, some physicians will see Medicare patients  less frequently, while others will stop seeing them altogether.  Cynics have gone so far as to call this “elder cleansing.”

Now, to top of the year, a report from Public Citizen found that pharmaceutical companies top the list when it comes to defrauding the government. In fact , over the past decade, the pharma  industry accounted for 25% of all federal fines charged under the False Claims Act.

According to the analysis, drug-makers were the focus of 165 major settlements and have paid $19.8 billion in fines and settlements since 1991.  Three-quarters of these charges occurring over the past five years. GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough accounted for $10.5 billion of all financial penalties imposed over that period.

Pfizer holds the record for the largest criminal fine in United States history, $1.3 billion, and the largest health care fraud case, $2.3 from a settlement last year involving its marketing of the painkiller Bextra and other drugs.
Another company joined the violators  list just last week. Irish drug maker Elan announced that it had agreed to pay $203.5 million, half in criminal penalties, half in a civil payment, to settle an investigation of its illegal off-label marketing of the antiseizure medicine Zonegran.

While Word on Health sadly can’t fix politics or physician payments, SRxA can certainly help pharmaceutical companies stay out of trouble.  To find out how, make it your New Year’s Resolution list to contact us.

Big Brother may not be watching, but the FDA, it seems is!

Here at SRxA, we all know how much physicians like to put on their marketing hats. In future, it seems, they might have to reach for their safety helmets instead!

According to our fellow bloggers at Good Promotional Practices doctors are starting to be held accountable to the same promotional compliance standards as pharmaceutical companies.

As most of our readers know, when FDA approves a drug it does so for a given use or indication. However, physicians are still free to make their own decisions based on how a device is used based on their best judgment. When a drug, biologic, or medical device is used for some indication other than the one approved by the FDA it is said to be “off-label.”

In this almost perfect dichotomy, it is perfectly legal, in the United States, for a physician to use a drug or device for “off-label” but it is unlawful to market, advertise or otherwise promote the off label use of a device or drug. Furthermore, based on the flurry of DOJ, OIG and FDA activity, such as the massive fines leveled out to Allergan ($600M), GlaxoSmithKline ($750 M), Novartis ($422 M) and Pfizer (2.3 billion) companies must keep the practices of their marketing and sales department in check to ensure compliance.

Until now the “it is unlawful to market, advertise or otherwise promote off label use of a drug” has been aimed at Pharmaceutical companies and third parties acting on their behalf.  Now people are asking “What if the hospital or physician group is doing the marketing themselves, not the company?”

We’ve all seen the billboards and free in-flight magazine ads promoting the latest medical treatments from liposuction to joint and hormone replacement.  With physicians are competing harder than ever to bring patients to their doors, what’s to stop them from stepping over the same lines that the companies may have, either willingly or not?

Blogger Sean McCarthy uses the example of the irregular heart rhythm Atrial Fibrillation (AF, AFib).  While there are very few approved drugs or devices to treat atrial fibrillation, upwards of 2.5 million Americans suffer from this debilitating condition.  Not so surprising then, that physicians use an array of off-label drugs and devices to treat this disease. So, now the hospital or physician communicates their ability to help AFib patients by promoting their latest treatment for the disease on a billboard or newspaper article. Isn’t this the same thing as a company promoting off-label use?

State Attorney Generals, the DOJ and FDA must be taking notice. They drive by the same billboards we do and read the same newspapers.  McCarthy says he’s heard rumors of a state Attorney General investigating a doctor about his referral patterns and advertising activities.

Who better than the pharmaceutical industry to take the lead in providing education to physicians  to help them prevent compliance snafus.  After all we’ve been there, done this!

Contact SRxA today to see how we can get you started.

Broken promises & fresh starts

SRxA’s Word on Health can’t help but wonder how Abbott employees are feeling today after learning that 3,000 jobs are to be cut.  According to Bloomberg, the corporate axe will fall as part of the company’s restructuring plan following its acquisition of Solvay’s pharmaceuticals business.

How ironic and painful it must be each time they see their corporate mission statement:  “A Promise For Life.”

So who will stay and who will go?  According to the company, most of the positions to be eliminated will be in sales, corporate staff, manufacturing and research.  While we’re not quite sure who that leaves, we do know that there will soon be a lot more pharma people out there looking for jobs.

Though few Abbott workers will take comfort from the fact that the restructuring will result in savings of $810 to $970 million over the next two years, they are certainly not alone.

2010 has been a busy year for the pharma chopping block.  A Google search on “pharmaceutical sales job cuts + 2010” elicited 331,000 results.

In the last quarter alone, Astra Zeneca, Merck, GlaxoSmithKline, Pfizer, Roche, Takeda, and UCB have all announced significant reductions of their sales force.

It’s all a far, far cry from the pharmaceutical industry zenith of 2004 when roughly 105,000 sales reps were employed in the US.

These latest job cuts appear to support the notion that the pharmaceutical industry is moving away from transactional selling to more value-oriented or solution-oriented selling.  Without its traditional army of sales reps the pharmaceutical industry will need to come up with new and better ways of engaging the physicians.

SRxA is here to help.  Contact us today to learn how we can help you to create and deliver successful programs in these changing times.