BNET Pharma

It must be awful to work at the FDA right now. There you are, sitting in your cubicle, trying to make sure the pharmaceutical industry cures more people than it kills. But every five minutes some investigator from the Government Accountability Office calls you into the conference room for a “word” about how you do your job.

Perhaps not every five minutes, but that’s what it must feel like according to this story in the Wall Street Journal. There have been 20 investigations into the FDA launched by Rep. John Dingell (D-Mich.) and Sen. Chuck Grassley (R-Iowa) and their colleagues.The pair want to overhaul the agency in 2009, when the Democrats are more likely to control Congress and the White House.

The story doesn’t describe many of those probes, or their results, so I went digging. It turns out that the probes shine as much negative light on the industry as they do on the FDA. Here’s a selection:

Drug advertising is out of control: “FDA’s oversight has not prevented some pharmaceutical companies from repeatedly disseminating … misleading advertisements for the same drug, and some pharmaceutical companies have failed to submit all newly disseminated advertisements to FDA for review.”

Post-market monitoring of drugs such as Arava, Baycol, Bextra, and Propulsid is slipshod: “FDA lacks clear and effective processes for making decisions about, and providing management oversight of, postmarket safety issues. The process has been limited by a lack of clarity about how decisions are made and about organizational roles, insufficient oversight by management, and data constraints. … There is a lack of criteria for determining what safety actions to take and when to take them.”

Most illegal off-label drug promotion goes undetected: If the FDA sends warning letters to offending companies, it takes “an average of 7 months to issue these letters from the time it [FDA] first drafted them. In addition, drug companies that were cited for more serious violations took an average of 4 months to take the corrective actions requested.”

Foreign drug manufacturing plants don’t get inspected much (a major problem given that most major pharma companies offshore their manufacturing): “FDA had difficulties in determining whether the scope of other countries’ inspection reports met its needs and these reports were not always readily available in English. … FDA inspected relatively few foreign establishments each year. … the agency still inspects far fewer of them than domestic establishments.”

The approval of next-day contraceptive Plan B for over-the-counter was a political mess: “The Plan B OTC switch application was the only one during this period that was not approved after the advisory committees recommended approval. … there are no age-related marketing restrictions for any prescription or OTC contraceptives that FDA has approved, and FDA has not required pediatric studies for them … FDA identified no issues that would require age-related restrictions in the review of the original prescription Plan B … GAO found that high-level management’s involvement for the Plan B decision was unusual for an OTC switch application and FDA officials gave GAO conflicting accounts about when they believed the decision was made.”

Drug companies don’t provide enough data on how drug affect elderly people, and the FDA doesn’t check this out enough: One third of new drug applications don’t include a discussion of drug safety in the elderly, who process drugs more slowly than younger people. Plus, “We found that about [only!] one-quarter of the medical officer clinical review summaries that we reviewed documented the medical officer’s review of the sufficiency of representation of elderly persons.”

And these are only the investigations that are finished. Coming down the pike are battles over whether the FDA should oversee imported drugs and new generic pills.

Half a dozen drug companies are simultaneously pursuing anti-obesity pills. The WSJ summarizes these efforts, but doesn’t mention that Pfizer also has an anti-obesity drug in late-stage development that was expected to see daylight in 2009. But the estimated launch date for the drug, currently known only as CP-945598, has been pushed back to 2011.

With America’s obesity problem getting worse by the day, there’s plenty of money to be made fighting fat with new drugs. So what’s the problem?

Drug companies have been down this route many times before, and always failed to find success. A safe and effective weight-loss pill is like Big Pharma’s El Dorado — a lost city of gold that no one can find.

GlaxoSmithKline, for instance, is currently marketing the weight-loss drug Alli — but since its launch, it’s sold only about $169 million, according to IRI, which tracks drugstores. At the same time, GSK has spent $141 million advertising the product –  and that doesn’t count all the back-office and sales staff costs. Alli may not even have broken even yet.

One problem: Even Steven Burton, the exec in charge of marketing the drug, suffered from the diarrhea that often occurs while taking Alli. Such stories are pretty common — GSK says roughly half of people taking the drug experience what it delicately refers to as “treatment effects.”

GSK isn’t alone in seeing minimal returns from diet drugs. Before it was called Alli, Roche sold the drug as a prescription brand called Xenical, and its sales stank. A year or so ago, Sanofi Aventis attempted to launch another diet pill, Acomplia, but the FDA turned it down because of side-effect worries. And, of course, Wyeth had to pull its fen-phen combination off the market more than a decade ago because of reports of heart damage.

Drugs generally attack a single biological mechanism, but our appetite and digestive system rely on a multitude of such processes — all of them overlapping in such a way that one frequently steps in when another is disabled. Derek Lowe of In the Pipeline described the problem to me this way in an email:

Evolutionary pressures have been too strong - our metabolisms try to make absolutely sure that we have plenty of reserves against the lean times, because over most of the history of our species, it’s been nothing but lean times….

So many of the weight loss drug attempts have been in the area of appetite suppression — stop the problem before it develops. But you run into those multiple pathways there, too — any animals whose feeding behaviors can be easily shut down are long dead. We’re the descendants of the opposite population: the ones that scrambled for food no matter what.

Which raises some interesting questions about what, exactly, all these companies think they have got in the obesity pipelines.

Image via Flickr user colros, CC 2.0

In what is becoming a sadly common ritual, Wyeth and Elan are pressing forward with an expensive, large-scale “phase III” trial of a risky drug based on wishful thinking and shoddy statistical analysis.

The drug in question is bapineuzumab, a monoclonal antibody intended to treat Alzheimer’s disease by clearing the protein beta amyloid from the brain. Beta amyloid is often — but not always — found clumped together in “plaques” throughout the brains of Alzheimer’s patients. Conventional wisdom in the field holds that these plaques cause the disease, although that theory has never been proven, and some scientific critics believe that the plaques are either irrelevant or even possibly a defensive reaction by brain tissue to the disease’s neural assault.

Earlier today, Wyeth and Elan disclosed detailed results of the drug’s phase II trial, which found that bapineuzumab failed to improve cognitive function in a test of 234 Alzheimer’s patients after 18 months of treatment. You could be forgiven for not gleaning that from the companies’ joint press release, however, as Wyeth and Elan chose instead to highlight post-hoc analyses that purported to demonstrate the drug’s efficacy in a subset of patients who don’t have a gene variant called ApoE4, which increases the risk of Alzheimer’s.

To put it bluntly, this is magical thinking on a truly impressive scale. A few points:

• Prospective measures of success are the only accurate way to judge trial results. Honest clinical trials require researchers to specify in advance what they’re looking for — and by that measure, the bapineuzumab trial was a failure.
• Post-hoc subgroup analyses amount to lying with statistics. By contrast, a post-hoc analysis involves mining the trial data in order to identify some group of patients who appeared to benefit from the drug. It’s tantamount to moving the finish line after the race is over — or, as FDA’s Richard Pazdur memorably put it, firing an arrow into the wall and then drawing a target around it.
• Such findings in subgroups rarely hold up under further study. Or, as the old computer-science saying goes, “Garbage in, garbage out.”
• Drug companies will do and say almost anything to boost the promise of a potential blockbuster. Wyeth and Elan don’t expect data from the phase III trial in patients without the ApoE4 gene variant until 2010. A lot can happen in that time, including the possibility that the FDA will once again warm to the idea of approving drugs based on marginal evidence. It’s like the old story in which a prisoner staves off execution by promising to teach the king’s horse to sing within a year, reasoning: “A year is a long time. The king might die. The horse might die. I might die. And maybe the horse will learn to sing.”

Without doubt, there’s a huge need for effective Alzheimer’s treatments. But companies like Wyeth and Elan do themselves — and patients — no favors by torturing their data and hyping all-but-meaningless results this way. (Of course, analysts and gullible investors do themselves no favors by believing these ginned-up results, either.) No one should be surprised if, two years from now, bapineuzumab ends up as dead as Myriad Genetics‘ recently failed Alzheimer’s drug Flurizan.

Update: As it turns out, Wall Street was disappointed by bapineuzumab anyway — but mainly because the drug didn’t show a dose effect (more wasn’t better, even in the “subgroup”) and because of side effects such as fluid build-ups in the brain. That apparent toxicity may or may not be serious — unsurprisingly, the companies believe it can be managed — but it’s almost beside the point. Whenever companies start talking up after-the-fact subgroup results, it’s time to hold onto your wallet.

Update redux: In the Pipeline’s Derek Lowe offers some characteristically trenchant thoughts on the bapineuzumab trial.

MRI scan of an Alzheimer’s brain via Wikimedia Commons

Given all the trauma the drug industry is currently going through, you can hardly blame executives for cutting costs wherever they can. Unsurprisingly, outsourcing is a big part of Big Pharma’s repair toolkit these days. Pfizer, for instance, says that 17 percent of its manufacturing and active ingredients are currently outsourced, and that it plans to boost that to 30 percent in the next few years. Merck is going even farther with plans to outsource 35 percent of its manufacturing, ingredients, packaging and the like by 2010.

But not all cost cuts are created equal, and with the memory of tainted Chinese heparin still fresh, it was probably only a matter of time before politicians jumped in with uncomfortable questions. Jump in they now have, with Sen. Sherrod Brown, an Ohio Democrat, leading what is rapidly turning into a new probe of pharmaceutical outsourcing:

In explaining his reason, Brown cites a January 9 interview with Merck’s Richard Spoor, senior vp of global procurement, who said the drugmaker is “moving in the direction of externally sourcing approximately 35 percent of the overall manufacture of active pharmaceutical ingredients, intermediates, formulated pharmaceuticals, sterile products, vaccines, and packaging by 2010..This would represent a two-fold increase over what we currently source from external manufacturers.”

So Brown wants to know the mechanism Merck uses to track the chain of custody for each ingredient in its drugs and biologics; procedures used to ensure every facility in the chain operates in a manner consistent with its quality and safety standards; the percentage of its external sourcing that has been contracted out to US-based companies; the top ten countries to which it outsources by the percentage of business outsourced; and estimated average and median wages paid at companies producing active pharmaceutical ingredients for Merck, according to a letter sent Merck.

It’s far from clear where Brown intends to take the issue, but absent much tougher FDA oversight — which would, of course, push up costs further for embattled drugmakers — it’s hard to see how anyone can stuff the outsourcing genie back into the bottle.

Raw materials and drug factories aren’t the only functions the drug industry is moving overseas as fast as possible — a fair bit of drug research seems to be headed out of the country as well. Over at In the Pipeline, Derek Lowe has hosted an interesting discussion on research-outsourcing trends and their effect on U.S. scientists.

It’s not just layoffs anymore. The market-research firm Industrial Info Resources notes in a recent report that pharma plans to shutter 26 plants and research facilities across North America, in addition to the tens of thousands of sales reps, scientists and manufacturing-plant workers big drugmakers are letting go. Those closures also follow the shutdown (or notification thereof) of 77 other industry sites since 2007, which together employed 14,000 people.

From Pharmalot’s Ed Silverman, who apparently shelled out $9.95 for the full report:

Among the 26 that are still scheduled to be shuttered is an AstraZeneca facility in Ontario; a pair of Biovail plants in Puerto Rico; a Bristol-Myers Squibb facility in Puerto Rico, and a Barr Pharmaceuticals plant in New Jersey. And here’s another Biovail plant that will go.

“Some of the plants targeted for closure will undoubtedly be reopened by others. With companies eager to shed the buildings, and often the equipment inside, some good deals come on the market…Others, like Pfizer in Michigan, are donating buildings and equipment to local colleges, universities and economic development boards to bolster education and, ironically, new job creation for emerging companies,” according to IIR.

Smoking in bed while the house is on fire, indeed. The World of DTC Marketing blog concurs:

Marketing budgets are being cut by blue chip marketers, DTC budgets are being cut and if you think this is the worst “you ain’t seen nothing yet!” With the pharma industry in black hole of transition to new business models that will finally work and Genentech blind sided by Roche’s bid to buy the whole company many marketing people had better start updating their resumes as rumored deep cuts in marketing may finally become a reality with an industry struggling to be profitable and develop new drugs….

What is so sad is that pharma’s addiction to blockbusters is partially responsible for this mess. With the huge revenues of these products pharma could spend money like a drunk monkey in a banana store. However the dark side is that blockbusters lead to an addiction for more blockbusters and they don’t appear out of thin air. Fasten your seat belt it’s going to get a lot more bumpy.

Image via Flickr user Keith JM G, CC 2.0

A quick recap of major deals in the week that was, with a big hat tip to the In Vivo Blog:

• Obviously, the big kahuna of the week was Roche’s $43.7 billion bid for Genentech. But Roche wasn’t close to finished: The Swiss drugmaker also paid C$191 million ($189.3 million) for the Canadian biotech Arius Research, a developer of antibody-screening systems, and $125 million for Mirus Bio, a Wisconsin biotech with a proprietary RNA-interference technology. The Mirus deal also marks Roche’s second foray into RNAi in the past year.
• Sanofi-Aventis offered £276 million ($548.4 million) to acquire vaccine-maker Acambis, with whom Sanofi has been working for roughly a decade.
• BioMarin Pharmaceutical agreed to pay $7 million upfront and up to $136 million in possible milestone and royalty payments to Summit for a drug intended to fight muscular dystrophy.
• GlaxoSmithKline struck a deal with South Africa’s Aspen to break into the generic-drug market across the developing world.

Image via Flickr user mobilestreetlife, CC 2.0

A quick roundup of recent developments in Roche’s dramatic $44 billion bid takeover bid for Genentech:

• Genentech established a committee of three “independent” directors to evaluate the Roche bid. The especially odd thing here is that one of them is Genentech’s co-founder Herbert Boyer. I’m sure Boyer somehow fits the definition of “independent” for SEC purposes — he’s no longer an employee, although he still owns 112,000 shares — but it’s kind of hard to imagine just how independent he can be in evaluating the sale of his own child (now all grown up, of course) to a Swiss monolith.
• Genentech is sending out mixed signals about its options for resisting the Roche offer. As the WSJ Health Blog pointed out last week, the company’s latest proxy notes that Roche has the option to set an acquisition price by requesting valuations from two “nationally recognized” investment banks and averaging them. (The only catch: Genentech’s “independent” directors get to select the banks.) In its most recent public statement, however, Genentech waffles on that point and argues that “does not obligate Genentech or the special committee to agree to any specific process or any price based on valuation assessments provided by investment banks.”
• Anyone who doubts whether Roche is willing to play hardball needs to remember that it spent seven months waging an ultimately successful takeover of the diagnostics maker Ventana Medical Systems for $3.4 billion. That deal, too, was the brainchild of Severin Schwan, then head of Roche’s diagnostics group and now CEO of the entire company.
• For some far-out speculation, turn to the In Vivo Blog, where Kate Rawson argues that the Roche bid is actually a defensive play against the future approval of biogeneric competition to Genentech’s leading biotech drugs. It’s a complicated thesis that doesn’t totally hold up so far as I’m concerned, but if you’re a pharma-deal junkie, it’s worth a look.

Everyone seems to be ganging up on high drug prices these days. In two separate hearings last week, Congressional committees took after drugmakers for big markups on specialty treatments and a pharma “windfall” created by the Medicare prescription-drug benefit, while the WSJ took a hard look at the opacity of drug pricing via pharmacy-benefit managers. All these stories have a common thread, in that they underscore how there really is no “market price” for drugs in the common sense of the term — just a free-for-all of special side deals and arbitrary price increases.

Some examples:

• The Joint Economic Committee threw a spotlight on Ovation Pharmaceuticals and Questcor Pharmaceuticals, among others, for pushing up prices on newly acquired hospital drugs by a factor of ten or more. This seems to be an increasingly common practice, but it’s still something of a shock to see it in action. Ovation, for instance, recently acquired exclusive rights to Indocin, a drug used to treat breathing conditions in newborn and premature infants, from Merck and promptly jacked the price to $1,500 a dose — 13 times higher than its previous price of $108. Ovation did much the same thing with three other former Merck drugs. (It’s worth noting that big pharmas aren’t immune from this temptation, either. In a classic case, Abbott Labs quintupled the price of its already profitable AIDS drug Norvir in 2004 for no reason other than that it could in order, apparently, to boost demand for its new combination therapy Kaletra. Abbott weathered protests and calls for the federal government to void the company’s drug patent.)
• Meanwhile, the House Oversight Committee took aim at Medicare drug prices, which the committee argued are 30 percent higher than those paid by state Medicaid programs. Bristol-Myers Squibb, for instance, took in an extra $400 million over two years for its blood thinner Plavix thanks to Medicare’s higher prices, which Johnson & Johnson raked in an extra $500 million for its antipsychotic Risperdal, committee investigators said. Unlike Medicaid, which like any large buyer insists on discounted prices for volume purchases, Medicare allows health insurers and “pharmacy benefit managers,” or PBMs, to arrange its drugs prices. A minority report by House Republicans argued that Medicaid pays “below-market prices” and that limiting Medicare pricing would simply force drug companies to boost prices for the rest of the market.
• Speaking of those PBMs, the WSJ reported that many such outfits — which are supposed to be negotiating volume drug discounts on behalf of pharmacies and, ultimately, patients — are instead marking up discounted prices for generic drugs and pocketing the difference, with the costs passed along to insurers and, well, Medicare.

The interesting thing about this recent spate of attention is how it follows the successful passage — over President Bush’s veto — of cuts to a privatized part of the Medicare program. Congressional Democrats have made no secret of their desire to bring down Medicare’s drug costs. So while unhappiness over high drug prices isn’t exactly new, the possibility that the issue might finally have real political momentum certainly is.

What’s more, the government isn’t the only problem drugmakers face on this front. Growth in prescription-drug use is stalling out, and overall prescriptions may have actually fallen during the second quarter. Although there are plenty of reasons for this, high prices and the fact that many patients are paying more for drugs via deductibles and coinsurance undoubtedly play a big role. So, much like the health insurance industry itself, pharma now faces the possibility of having to push high-priced products to a shrinking — or at least slow-growing — base of customers. Which is not a pleasant place to be.

One of the best things the drug industry could do to ward off — or at least partially deflect — this looming political attack would be to create a true “market price” for drugs by making pricing more transparent. Along the way, it wouldn’t hurt for drug companies to stop treating effective monopolies in various drug markets as an opportunity to squeeze hospitals and patients for all they’re worth. The ill-will created by such tactics goes a long way toward explaining why Congress seems eager to whack the industry for all it’s worth.

And it’s not just Congress that recognizes the problem. As Billy Tauzin, the former House Republican who now heads pharma’s main trade group PhRMA, recently told drugmakers during a conference call: “Your house is on fire, and you’re still smoking in bed.” (Too bad PhRMA is still mostly trying to fight the blaze with squirt guns, but that’s a subject for another day.)

Update: Abbott didn’t get away totally unscathed, as  it’s about to face the first of seven civil suits filed over its Norvir price hike.

Roche’s $44 billion bid for the 44 percent of Genentech it doesn’t already own marks the end of an era in a number of ways. Genentech, the world’s oldest biotech, is a remarkable symbol of the industry’s success at turning innovative science into bestselling drugs. For it to vanish inside Roche much the way Chiron disappeared into Novartis a few years ago would be more than a little sad, even given the ways Genentech itself has started behaving much like the Big Pharmas it once challenged.

The deal also has a funny smell to it. Roche CEO Severin Schwan claims the merger would save $800 million a year in administrative costs from merging commercial and manufacturing operations, but that doesn’t come close to justifying the cost. Obviously, Roche would also get 100 percent of the revenues from Genentech’s hit cancer drugs Avastin, Rituxan and Herceptin, instead of the (significant) fraction it receives by virtue of marketing the drugs outside the U.S.

But the greatest risk here for Roche is obviously that of killing the goose that lays the golden eggs. Genentech has thrived while operating at arm’s length from its majority owner Roche, but it’s hard to imagine that it will continue to do so once the California biotech is “integrated” with Roche’s New Jersey-based U.S. operation. Sure, Roche intends to transfer its U.S. commercial operation and its virology research group to Genentech’s South San Francisco campus, but you have to wonder just how well those teams are going to mesh.

Besides, Roche doesn’t mince words in describing its vision for Genentech, which it says “will operate as an independent research and early development center within Roche.” The company will keep the Genentech name for branding purposes, but apparently not much else. And apparently Roche will take over late-stage development of Genentech drugs, which could well spell the end of Genentech’s unusually rigorous late-stage clinical-trial program.

Generally speaking, it’s hard to get too excited about any drug-industry merger when the acquiring company says things like, “[T]he transaction will also unlock synergies by leveraging the scale of the combined operations in the U.S. and improving operational efficiency.” That’s a pretty far cry from the go-getter startup culture that has long characterized Genentech. I suspect that Roche — like other Big Pharmas who’ve taken the plunge into biotech — has vastly underestimated both the difficulty of managing biotech operations and the risk that Genentech’s scientists will simply walk away at their first opportunity.

So, why is Roche acting now? Chris Morrison over at the In Vivo Blog speculates that Genentech is likely to get a lot more expensive, particularly should the FDA approve Avastin for “adjuvant” use in colon cancer (that is, as a post-surgery drug intended to keep tumors from recurring). So for Roche, buying out its subsidiary is a now-or-never proposition.

In actuality, it’s more likely yet another big merger driven by fear and desperation — although not your typical fear and desperation related to looming generic competition. Recall that Roche has had Novartis looking over its shoulder for the past few years — Daniel Vasella’s outfit currently holds a whopping 33 percent stake in Roche — and the Genentech play begins to look a lot more like Roche’s effort to get big fast in order to fend off its Swiss rival.

The game’s not over yet, of course. Roche will probably have to raise its bid to convince Genentech’s independent directors that the deal is in the interests of shareholders, and that carries a different set of risks. It’s just too bad that the industry’s leading biotech — whatever its other faults — is going to get caught in the middle.

For all its rhetoric about advancing human health, the drug industry has never shown much interest in tropical diseases that kill or plague millions of people, for the very simple reason that poor nations can’t pay top dollar for new drugs. That may be changing, though, thanks to a new federal program that rewards companies who get drugs approved for malaria, tuberculosis and similar undertreated diseases.

What’s fascinating and potentially disturbing about this program, though, is the fact that the reward consists of a transferable FDA “priority review” for a new drug. At first, this seems like a no-lose proposition — the priority review doesn’t seem to cost the government anything, and it could be worth $300 million or more to the companies involved, since priority review cuts the length of FDA review to six months from an average of 18 months (at least in theory).

On the other hand, the list of currently marketed drugs plagued with safety problems or concerns about their efficacy just keeps growing, and at least one serious study suggests that the drugs approved most quickly are also most prone to serious side effects. So this tradeoff could be a dangerous one.

There’s also the fact that while handing out addtional priority reviews doesn’t seem to cost the FDA anything, it does disadvantage other companies waiting for the agency to review their drugs. It’s not as though FDA’s new-drug office has unlimited time and attention, after all, so giving someone a free pass to the front of the line inevitably slows up everything for those further back.

(Hat tip: the In Vivo Blog)

Image of spilled pills via Flickr user e-magic, CC 2.0