Pharma Industry

Over the past few years, a rise in counterfeit versions of name-brand drugs has generated a fair amount of concern within government and the drug industry. (The growing scandal over tainted heparin, while a separate issue, hasn’t helped.) And yet drugmakers have balked at current plans to track genuine drugs from factory to pharmacy.

So it’s no surprise that Congress is now thinking about legislating a nationwide tracking system. The recently introduced “Safeguarding America’s Pharmaceuticals Act“ (HR 5839) would preempt state efforts at building such systems (such as those of California and Florida) while putting the Department of Health and Human Services in charge of regulating a federal tracking program into existence and determining exactly how drugs are to be tracked — via bar codes, radio-frequency tags (RFID),  some form of nanotechnology identifiers, or something else — by 2012 or so.

The proposed legislation would also offer grants to small pharmacies that might have trouble paying for the necessary technology and lets drugmakers request exemptions from the tracking requirement under limited circumstances.

It’s impossible to know at the moment how much support this measure might command in Congress, although it seems unlikely that the drug industry will be lobbying heavily for it. In California, for instance, the drug industry has asked for a second two-year extension in order to comply with a 2005 state law intended to curb the distribution of counterfeit drugs. Pharmaceutical makers and distributors complain that changes required by the law cost too much and are more complex than the state believes.

On the other hand, companies with technology that might support drug tracking are pushing harder to boost public interest in the issue. One of the latest signs: The recent launch of the Drug Safety Hub group blog, which features no fewer than 11 contributors, including three from the blog’s sponsor, SupplyScape, which describes itself as “the leading provider of software to secure the safety and value of the pharmaceutical supply chain.” (Drug Safety Hub, of course, has already weighed in on the merits of HR5839 — unsurprisingly, it’s all for it.)

(Hat tip: Pharmaceutical Executive)

Image by Flickr user Orin Optiglot, CC 2.0

Wonder no further whether the recent litany of drug-safety problems would make the Food and Drug Administration more cautious about approving new drugs. In just the past four days, the agency has thrown some serious sand into the industry’s drug-development works, delaying or derailing three separate programs of widely varying merit.

Consider:

• Earlier today, the FDA told Merck that its newish cholesterol-lowering drug Cordaptive was “not approvable,” and said the name wouldn’t pass regulatory muster either. Cordaptive is a combination of niacin (a form of vitamin B3 known to lower LDL, or “bad” cholesterol, while raising HDL, or “good” cholesterol) and laropiprant, a new compound designed to prevent the hot flashes and uncontrollable blushing people often experience when taking niacin. Per its usual procedure, the FDA isn’t offering the reasons behind its decision, and neither is Merck; instead, the drugmaker says it plans to submit additional data to the agency. This is quite likely bravado on the drugmaker’s part, as “not approvable” decisions tend to be very difficult to reverse. Still, if Merck was planning on distancing itself from its partner Schering-Plough in the wake of their mutual Vytorin scandal, this development was not at all helpful.
• Merck also got whacked by the agency last Friday when the FDA rejected its request to sell a combination allergy pill consisting of its drug Singulair and Schering-Plough’s now-generic treatment Claritin. Again, both the FDA and the companies have been mum, although according to the In Vivo Blog, Merck says the FDA didn’t raise any “safety or tolerability issues.” That leaves the door wide open as to what issues FDA did find with the combo pill.
• Also last Friday, the FDA told Genzyme and Isis Pharmaceuticals to submit additional data for their experimental cholesterol-lowering drug mipomersen. The decision amounted to a one-two punch: The companies must complete cancer studies in animals before requesting approval of mipomersen as a treatment for a rare high-cholesterol genetic disease, and then have to prove that mipomersen can reduce the risk of heart attacks or similar diseases before marketing it more broadly.

Of course, not all new drugs are created equal, and in at least two of these cases, you can make a pretty good argument that neither proposed drug is that much of a loss. Nothing currently prevents anyone with a Singulair prescription from also taking Claritin if they want to, for instance, so the need for a combination drug doesn’t seem particularly pressing. Similarly, the actual benefits of Cordaptive — or whatever Merck ends up calling it, assuming it survives — appear to be pretty small, particularly once you consider the fact that laropiprant hasn’t been extensively studied and may have side effects of its own.

The Genzyme/Isis drug, by contrast, represents an entirely new way of lowering cholesterol by “silencing” the genes responsible for producing and shuttling LDL around the body. The problem these days is that finding innovative ways to lower bad cholesterol isn’t enough, thanks to — you guessed it — a recent large study of Merck and Schering’s drug Vytorin, which lowered cholesterol but failed to show any signs of reducing heart-attack danger.

None of these actions are surprising in and of themselves, and even taken together they don’t reveal much more than the fact that the FDA does react to public concerns about drug efficacy (think Vytorin and the shenanigans Merck and Schering pulled in an apparent attempt to bury those findings) and safety (think GlaxoSmithKline’s diabetes drug Avandia or Merck’s Vioxx).

Pretty much everyone in the industry knows that the FDA’s concerns about drug safety ebb and flow depending on what sort of drug problems seem to be dominating the headlines. The agency, however, can’t ever bring itself to admit that, even though it’s very clearly a political football these days. And the result of its failure to set clearer safety standards and stick to them over time, instead of reacting episodically to crises, creates real problems for the industry and the public. Companies and their investors never know exactly where they stand with FDA, which in turn fuels criticism that the agency is capricious (which it sometimes is) or that it’s unfairly impeding innovation (which it usually isn’t).

A big part of the problem is FDA’s insistence that the companies submit to the agency must be considered proprietary information. That’s what’s behind the agency’s silence in its recent drug rejections, and it’s one of the single biggest obstacles to restoring a proper balance between approving badly needed new medicines and drawing the line against those whose benefits or risks haven’t been fully studied.

Look no further than the emerging scandal involving experimental blood substitutes, which appear to increase the risk of death by 30 percent and triple the danger of heart attacks. Researchers say the FDA should have known about the safety issues eight years ago, although the agency instead approved further trials without sharing the data it already had in its possession. For another, consider a case in which Glaxo apparently cherry-picked data from a study of its antidepressant Paxil to show the drug was safe and effective for teenagers, when in fact a full analysis of the data linked it to serious nervous-system disorders and other side effects.

The FDA has a tough enough job on its hands without a self-imposed gag order that shields its regulatory decisions from scrutiny and informed analysis. Cloaking its activities in proprietary obscurity doesn’t do the agency — much less public safety — any favors.

Image by Flickr user PPDIGITAL, CC 2.0

By some reports, direct-to-consumer (DTC) drug advertising is beginning to stagnate — a trend suggested by Sepracor’s recent decision to cut back on TV spots involving its Lunesta moth. Stepping into the breach: More direct-marketing advertising, particularly involving the Internet.

According to a recent report from the Direct Marketing Association, which admittedly has a vested interest in the subject, spending on pharma direct marketing should rise 35 percent in the next four years. The DMA estimates that drug companies will spend $1.39 billion on direct marketing in 2012, up from $1.03 billion this year.

The DMA’s definition of “direct marketing” doesn’t seem to include DTC. Although there doesn’t seem to be a single authoritative figure on how much Big Pharma spends on DTC, a January report in the journal PLoS Medicine puts it at $4 billion in 2004.

Instead, those direct-marketing figures apparently include a great deal of doctor-directed mailings, magazine and journal inserts, Internet outreach, patient “starter kits” and “loyalty cards,” and assistance in designing conventions and continuing medical-education programs. (Although I have to admit it’s hard to know for sure how the DMA defines pharma direct marketing, since I don’t have access to the full report — it’s available online, but it costs $240, or $135 for DMA members.)

The fastest-growing part of drug-related direct marketing, unsurprisingly, involves the Internet. The DMA report predicts that Internet drug advertising will almost double in four years, rising to $173 million in 2012 from $93.6 million this year. According to a recent report by Cegedim Dendrite, a consultant and data provider to the pharmaceutical industry, two-thirds of pharma marketers want to see more spending on targeted Internet marketing, including email, Web sites and search keywords.

(Hat tip: Modern Healthcare)

Image courtesy of Flickr user jbcurio, CC 2.0

Since I’ve just spend close to a half-hour flipping through Big Pharma proxy filings, I figured I’d take just a little longer and put together a quick table of the best-paid chief executives in pharma and biotech. Enjoy.

The following data is all taken from 2007 proxy statements issued by the industry’s largest U.S. companies; I’ve linked to the proxies in the following list. (I’d have included European pharmas as well, but they don’t appear to file proxies in the U.S.)

1. Miles White, Abbott Laboratories: $33.3 million (proxy)
2. William Weldon, Johnson & Johnson: $31.9 million (proxy)
3. Fred Hassan, Schering-Plough: $30.3 million (proxy)
4. Kevin Sharer, Amgen: $19.9 million (proxy)
5. Richard Clark, Merck: $19.9 million (proxy)
6. Arthur Levinson, Genentech: $18.2 million (proxy)
7. Henri Termeer, Genzyme: $14.6 million (proxy)
8. Sidney Taurel, Eli Lilly: $13.0 million (proxy)
9. Bernard Poussot, Wyeth: $12.7 million (proxy)
10. James Cornelius, Bristol-Myers Squibb: $11.3 million (proxy)
11. John Martin, Gilead Sciences: $10.8 million (proxy)
12. Jeffrey Kindler, Pfizer: $9.5 million (proxy)
13. James Mullen, Biogen Idec: $9.0 million (proxy)

(Image by Flickr user velo_city, CC 2.0)

Schering-Plough has had a fairly miserable year so far, thanks to its apparent efforts to keep bad scientific news about the cholesterol pill Vytorin out of the public eye. CEO Fred Hassan, however, is still living off last year’s glory — even if it might well have been far less glorious had Schering and its partner Merck published that Vytorin study promptly.

As it stands, though, Hassan pulled in an astonishing $30 million in 2007 compensation, according to Schering’s just-released proxy statement. That includes his $1.7 million salary, stock awards worth $13.5 million, $9 million in options awards, and a $4 million cash bonus. Oh, there’s also the $75,000 for use of the corporate jet, $146,680 for “personal security services, and a $292,250 corporate contribution to Hassan’s executive savings plans.

All in all, Hassan’s compensation rose 2.2 percent over the previous year’s level of $29.7 million. That puts him pretty much in the same ballpark as Johnson & Johnson CEO William Weldon, who had a much better year and earned $31.9 million in 2007, and well ahead of his Vytorin cohort, Merck CEO Richard Clark, who pulled in only (!!) $19.9 million, or a full third less than Hassan. And the Schering chief received three times the $9.5 million salary paid to Pfizer head Jeffrey Kindler.

To be sure, Hassan could still forfeit about $8.7 million of his 2007 stock awards if he doesn’t meet various “performance conditions.” And Schering sounds just a bit defensive about Hassan’s giant paycheck, taking the unusual step of including in its proxy a “special note about 2008″ that’s the closest thing to an official apology for overpaid executives that I’ve ever seen:

In the pharmaceutical industry today, media firestorms about complex drug safety and efficacy concerns are frequent and intense. Often, these events impact stock price. Sometimes these events also impact prescriber and patient preferences, which can impact future sales. These impacts frequently occur whether or not there is medical and scientific support for the concerns publicized in the media.

[…]

Schering-Plough is currently facing such a challenge, which began in early 2008 relating to a Merck/Schering-Plough cholesterol joint venture clinical trial, called ENHANCE. That clinical trial included the drug VYTORIN and was initiated (and designed earlier) by the Merck/Schering-Plough cholesterol joint venture in 2002, before Hassan and the new management team joined Schering-Plough. Details of the matter are discussed in Schering-Plough’s 2007 10-K which was filed with the SEC on February 29, 2008. This challenge has pressured the stock price, which has dropped since year end.

The pay-for-performance elements of Schering-Plough’s executive compensation program have been designed to closely link the interests of senior management with that of the shareholders and the creation of shareholder value. Even in the current situation, where the Board believes management has handled the challenge well, because the stock price has declined, the named executives have lost significant net worth, and potential future compensation for each of them is at risk.

[…]

The Compensation Committee, the Board and the management of Schering-Plough (including Hassan and the other named executives) take pride in the performance-based compensation system, and they remain committed to maintaining the integrity of the system in good times and bad. Accordingly, should the current (or future) challenges result in lagging performance in 2008, as measured by the applicable sales, earnings and actual and relative total shareholder return metrics, then compensation to executives in 2008 will be significantly reduced from the compensation reported in this proxy statement, which relates to performance periods where performance - measured by those same metrics of sales, earnings and actual and relative total shareholder return - was strong.

Meanwhile, Hassan is also getting some positive PR by finally buying $2 million worth of Schering stock, as he’d promised to do back in January. Of course, the share price is down about 14 percent since Hassan made his pledge, so that’ll yield him a nice profit if the stock turns around. Plus, as the Shearlings Got Plowed blog notes, Hassan is essentially buying shares with half of his unearned $4 million cash bonus, so he’s sort of playing with house money here.

A close reading of the Merck and Schering-Plough first-quarter conference calls suggests that Merck is distancing itself from its joint-venture partner — who is, in any event, in a much worse position to weather the storm over their cholesterol-fighting pill Vytorin.

Vytorin, of course, is a combination of Merck’s generic statin Zocor and Schering’s newer cholesterol drug Zetia. It’s been in the news recently because the two companies appear to have sat for nearly two years on the results of a major clinical trial, since published, that suggested Vytorin was no better at reducing arterial plaque — and thus, presumably, at preventing heart attacks — than Zocor alone. Last year, Zetia and Vytorin racked up more than $5 billion in sales, although usage of both drugs has plunged since January, when the trial results first finally emerged.

Both companies are blaming market “confusion” for the drugs’ problems, but so far only Merck is willing to put a number on how much the confusion is costing it — $700 million in “equity income” from the joint venture for the full year. Schering, by contrast, has opted to try to bull through without giving specifics, although in a peculiarly dishonest way. In the company’s own conference call earlier today, Schering CEO Fred Hassan claimed that “we really have no model” for figuring out how much the Zetia/Vytorin sales drop will cost the company, although in a Form 8-K filed yesterday with the SEC, Schering acknowledged:

The Merck/Schering-Plough cholesterol joint venture developed potential scenarios about the 2008 equity income. Merck chose an estimate that is within the ranges established in those scenarios.

Schering’s disinclination to talk numbers is in keeping with its general practice, but probably also reflects the fact that it’s far more vulnerable to the Zetia/Vytorin losses then Merck. Exacerbating things is the fact that Merck also has another anti-cholesterol iron in the fire — an experimental drug called Cordaptive, a form of niacin coupled with another compound designed to reduce the hot-flash style flushing that niacin alone can cause. Cordaptive could be approved as early as next week, and if that happens, it will immediate emerge as a competitor to Zetia as a cholesterol-fighting drug that can be combined with statins like Zocor.

Cordaptive isn’t without its own critics, who call its anti-flushing component untested and its potential heart effects unknown. Schering VP for global pharmaceuticals Carrie Cox, meanwhile, tried to play it down as a niche product. Still, the two companies really don’t need any additional sources of tension, particularly given how two lower-level executives were caught referring to one another in Vytorin-related emails recently released by the House Energy and Commerce Committee:

(Hat tip to the blog Schearlings Got Plowed.)

You can’t fault GlaxoSmithKline for temerity. The U.K. drugmaker’s unexpectedly large $720 million bid for Sirtris Pharmaceuticals represents a gutsy bet that the Massachusetts biotech really has a handle on a class of drugs that slow aging. Not that anyone at either company is eager to describe their work that way, of course.

Late in 2006, Sirtris got a big boost when a team led by its scientific co-founder David Sinclair reported in Nature that resveratrol, a compound most commonly found in red wine, extended the life of mice on a high-calorie diet, much the way it had in yeast, worms and flies. A year later, the company announced that it had developed a new series of compounds that activate the same gene as resveratrol, only with roughly 1,000 times resveratrol’s original potency.

That’s pretty heady stuff for your average biotech. In fact, Sirtris has tended to shy away from public discussion of the potential anti-aging properties of its drugs, and instead describes them as ways to combat “diseases of aging” such as diabetes. For instance, it’s been testing its original resveratrol analogue as a treatment for type 2 diabetes in an early-stage, “phase I” trial in human volunteers.

Although Glaxo plunked down a big wad of cash for Sirtris — $720 million is not only a huge amount for a biotech whose first drug hasn’t even reached what the industry likes to call “proof of principle,” it represents an 84 percent premium over Sirtris’ closing value on Tuesday — the pharma is similarly reticent about the anti-aging potential of resveratrol and its derivatives, technically known as sirtuins. Here’s how Glaxo put it in its press release:

Through the acquisition of Sirtris, GSK will significantly enhance its metabolic, neurology, immunology and inflammation research efforts by establishing a presence in the field of sirtuins, a recently discovered class of enzymes that are believed to be involved in the ageing process. Sirtris Pharmaceuticals has established a drug discovery capability to exploit sirtuin modulation for the treatment of human disease, an approach that has the potential to generate multiple clinically and commercially important products. Their focus to date has been on the development of SIRT1 activators for the treatment of Type 2 Diabetes Mellitus (T2DM).

There are two reasons for this, one good and one, well, sly at best. The good reason derives from the fact that the Food and Drug Administration has made it clear over time that it hs no interest in approving drugs that don’t treat actual diseases. Anything designed to improve “normal” functioning — presumably including reducing the potential effects of aging — simply don’t fit the agency’s paradigm unless they’re dressed up as disease treatments. And so that’s exactly what Sirtris, and now Glaxo, intend to do.

The second reason, of course, follows directly from the first. Given the amount of press attention resveratrol has gotten over the past couple of years — everyone seem to have heard that red wine could help you live longer, right? — getting approval to sell a resveratrol-based drug would very likely create immediate, and potentially huge, off-label demand for it.

Managing that sort of situation can be dicey for a drugmaker, as off-label promotion is a pretty serious no-no in the eyes of the FDA. But so long as Glaxo let resveratrol’s enthusiasts do its talking for it, the returns could be tremendous — certainly enough to make $720 million look like pocket change. Assuming, that is, the drugs actually work, which is never, ever a given in this business.

The Food and Drug Administration rejected Genzyme’s request to sell a version of its drug Myozyme made in a new factory, a decision some journalists and bloggers insist on casting as a black mark against the very notion of generic biotech drugs.

There’s just one problem: These folks have it exactly backward.

First, some backstory. Genzyme initially won FDA approval for Myozyme, a new treatment for the rare genetic condition Pompe disease, based upon clinical trials that used doses of the drug made in a small test “bioreactor.” When Genzyme transferred production to a larger reactor, biochemical tests showed that the new version had a different carbohydrate structure, meaning that it might not be absorbed as readily by muscle cells. Genzyme argued the two versions should be considered equivalent. The FDA disagreed,  and now Genzyme has to produce additional human-testing data for the new version to ensure its safety and effectiveness.

What’s this have to do with biogenerics? The WSJ Health Blog argues it this way (my emphasis):

The bar likely wouldn’t be so high if Myozyme were a typical pill. But the concern with biotech drugs, which are made by living organisms rather than mixing batches of chemicals, is that they are harder to replicate. Biotech companies have been calling for clinical trials to prove that generic versions of brand-name biotech drugs are safe and effective, a higher bar than the typical process for generic approval. That sounds a lot like what the FDA just called for on the product made in the Allston plant, even though that one is from original manufacturer.

Does it? In fact, the FDA’s actions here are more or less exactly in line with the way biogenerics proponents would like it to handle copycat biotech drugs — and pretty much the opposite of restrictions the biotech industry industry has called for in its attempts to protect billion-dollar drugs from generic competition.

The biotech industry has long insisted that any biogeneric drug must undergo lengthy and expensive human testing to ensure its safety and effectiveness. Had the FDA followed such principles in the Genzyme case, there never would have been an issue in the first place, because the company would have been forced to conduct new trials just to qualify its new factory. Instead, the biotech industry has long relied on batteries of simpler tests intended to ensure that new production batches are equivalent to older ones.

(Genzyme isn’t the only company to have been tripped up when those tests turn up a difference. In 2001, Genentech also had to conduct new clinical trials to verify that new batches of its psoriasis drug Raptiva — then called Xanelim — were equivalent to earlier versions.)

The generics industry has pretty consistently called on the FDA to make such judgments about biogenerics on a case-by-case basis that takes the best possible scientific evidence into account. Now, it’s certainly true that biotech-drug molecules are a lot more difficult to characterize than their traditional-drug counterparts — but that won’t always be the case, which is why a case-by-case approach that would allow the FDA to find equivalence based on simpler tests if the evidence warranted makes a great deal of sense.

No one argues that biogenerics won’t be a lot harder to make than knockoffs of traditional name-brand drugs. There just doesn’t seem to be any reason to order up clinical trials in every case, particularly when the biotech industry itself doesn’t bother to do so.

(Photo of a “generic pharmacy” via Flickr user The Consumerist, CC 2.0)

The pharma blogosphere is buzzing about what appears to be a new “guerilla marketing” campaign for the over-the-counter allergy drug Zyrtec.

According to one blogger in Boston and another in New York, many of these seemingly handwritten flyers have been seen taped to telephone poles, scaffolds and other post-like structures over the past week. (Click on the image at left for a larger version, courtesy of PharmaGossip.) Some anecdotal sightings have even reported a few of the tabs torn off. The phone number connects to a recorded message touting Zyrtec’s advantages and eventually directs callers to a Zyrtec Web site.

In case it’s not immediately clear, this college-town-style flyer is actually a negative ad attacking rival allergy drug Claritin, which is also sold over the counter. No word yet on whether Zyrtec’s maker — Johnson & Johnson subsidiary McNeil-PPC — is taking responsibility for the campaign, although I’ll let you know if I can find anything out.

Whatever your feelings about consumer-directed drug ads, it’s hard not to admire the cleverness of this approach. Given the increasing pressure on drugmakers from generic competition, Congress and the FDA, it wouldn’t surprise me at all to see other pharmas exploring similarly creative alternatives to traditional drug marketing. Whether it will turn out to be effective is an entirely different issue, and there I have my doubts — although you have to admit that it certainly doesn’t cost much, either.

There’s one more catch: If this scheme is legal, it’s probably only because Zyrtec doesn’t require a prescription, which would necessitate a lengthy disclosure of side effects and other information in any ad. On the other hand, simply omitting the name of the advertised drug might get you around that requirement, too.

GlaxoSmithKline’s willingness to bet up to $600 million on a tiny biotech called Regulus Therapeutics kicks off the latest pharma land grab — this one for treatments that rely on tiny molecules called microRNAs, or miRNAs for short.

New drug technologies — or “modalities,” as the industry terms them — bloom like perennials in this industry, and often fade just as fast. But no one wants to pass entirely, only to find themselves on the sidelines whenever the technique finally proves itself. Think of the now-dead biotechs that gave up on monoclonal antibodies years before Genentech proved they could yield blockbuster drugs.

Thus the latest enthusiasm for miRNAs, a new way of “regulating” genes. In lab experiments, these tiny nucleic-acid molecules act as cellular dimmer switches that can turn beneficial genes “up bright” or “switch off” the activity of harmful gene mutants. (In this respect they resemble their cousins siRNAs — short for “small interfering RNAs” — the main difference being that miRNAs are coded directly by the genome instead of being produced as a side effect of other cellular processes, as I understand it.)

Since many miRNAs seem to be associated with cancer, researchers think it might be possible to use them as early-warning detectors for tumors. Making drugs that interfere with other miRNAs — kind of like hitting a bullet with a bullet — might yield useful treatments.

Glaxo’s deal with Regulus takes the form of a fairly standard pharma-biotech partnership, in which the big company puts up cash over time in exchange for an option to promising drugs as they emerge from development. Regulus gets $20 million up front, plus up to $144.5 million in milestone payments for each of up to four drug candidates.

This is Glaxo’s second deal in miRNA — last December, it reached a similar arrangement with the Danish biotech Santaris Pharma for new antiviral drugs that could be worth over $700 million. (Remember, though, that most partnerships of this sort never amount to more than a fraction of these headline numbers.) One other recent rumble: The Texas biotech Asuragen just spun out its miRNA operations as a new startup called Mirna Therapeutics and seeded it with $3 million.

With two potentially big deals on the table, expect other pharmas and big biotechs to be planting their own flags in this virgin territory before long.

(Photo by Flickr user mav.mbecker.net, CC 2.0)