PhRMA Changes Leaders: A Dozen Candidates We Bet Won’t Get The Job

PhRMA CEO Billy Tauzin is stepping down at the end of June. We pointed out in our first post that he leaves some pretty big shoes to fill--so, naturally, we want to do our part to help.

We’ve come up with a list of 12 potential replacements for Tauzin. But before we tell you who they are, we should also say that we bet none of them gets the job.

Yeah, our tongue is firmly in our cheek on some of the candidates. But more importantly, we bet PhRMA will go in a different direction this time and look for someone less high profile than Tauzin (or almost any of the potential replacements we suggest).

PhRMA has traditionally preferred a leader who is not a nationally known political figure, someone with specific expertise in critical areas. Before Tauzin, its two heads were IP attorney Gerry Mossinghoff and international trade lawyer Alan Holmer.

In part that’s because PhRMA’s members recognize that, while national politics dominates the headlines, their business is built on the fine points of intellectual property, regulatory nuance and complex pricing/reimbursement policy.

But its also because—let’s face it—Big Pharma CEOs don’t want someone telling them what to do. Tauzin was hired to lead the board, and that’s what he did. But we’re betting the PhRMA board isn’t going to look to be led again any time soon.

Still, we can’t help imagining different national figures who might help PhRMA improve or adjust its position in Washington, and so offer you the follow list of possible candidates for the top job at the trade association….

Former Senate Majority leader Tom Daschle: Why not go all in on the Health Care reform deal by hiring the man who was supposed to run health care reform in the White House? Just don't forget to pay the driver!

Connecticut Democratic Sen. Chris Dodd: Probably the biggest name PhRMA could go after among current Dems in Congress. Dodd is retiring rather than face a tough reelection battle, and has a good relationship with Pfizer, a big Connecticut employer.

Pennsylvania Sen. Arlen Specter: He hasn’t been a Democrat for long, having pulled a Billy-Tauzin-in-reverse and changed parties last year. Pennsylvania is a big pharma state, and Specter has a strong record in support of R&D and intellectual property.

Richard Gephardt: The former House Democratic leader has done a lot of work with PhRMA on issues like supporting science in America. He also has pull with the labor unions. He’d be great--at least until November.

A health system CEO: Glenn Steele (Geisinger) and Dan Cortese (Mayo) both got consideration as potential heads of the Centers for Medicare and Mediciad Services because their respective institutions are viewed as models of innovative payment and delivery networks. Selecting someone like that would show PhRMA is serious about delivery reform in health care.

Biotechnology Industry Organization CEO Jim Greenwood: PhRMA lost a big member when Roche acquired Genentech and decided to follow Genentech’s decision to maintain a membership in BIO only. Since then, PhRMA has stepped up longstanding efforts to recruit smaller companies--even modifying its tagline in ads to brand itself as “America’s pharmaceutical and biotechnology research companies.” And its biggest members have been steadily bioteching themselves. So why not just merge the two groups?

America’s Health Insurance Plans CEO Karen Ignagni: If Tauzin’s health reform dealmaking is the problem, then Ignagni's refusal to deal must make her the solution. Plus she’s shown a Tauzin-like political flexibility, having once been a single-payor advocate before taking the reins of the group most committed to protecting private health insurance in the US.

Bill Thomas: Too many Democrats? Then why not tack Republican. The long-time Ways & Means Committee Chairman was the key architect of Medicare Part D-- which may be all the health reform PhRMA needs (or gets) in the end. Downside: Amgen would quit the association right away. (Or is that an upside?)

Former HHS Secretary Michael Leavitt: The former head of HHS under George W. Bush is a well respected former governor who has pull with his old constituency, a definite advantage over other candidates who would have that missing from their resumes. Leavitt has long held that you can’t have health reform without Medicare reform.

Mark McClellan: While we’re on the subject of former Bushies and skilled candidates who could play both sides of the aisle, how about former FDA Commissioner, former CMS Administrator, former Clinton Administration health economist, and current head of the Engelberg Center for Health Care Reform Mark McClellan. McClellan implemented Part D and would be the kind of detail-oriented CEO that Tauzin was not.

Former Senator John Breaux: He lost out to Tauzin the first time around for the PhRMA job, how’s about a second go around? He’s a moderate Democrat with friends all over Washington.

Maine Republican Senator Olympia Snowe: Give us the 60th vote for health reform and we will give you Tauzin’s old job! That would never happen…would it?

PhRMA Changing Leaders; Will It Change Tack in Health Care Reform?

The sense of uncertainty surrounding the impact of health care reform on the biopharmaceutical industry just went up with the news that Pharmaceutical Research & Manufacturers of America CEO Billy Tauzin will step down at the end of June.

The timing of Tauzin's departure should have been perfect. If health care reform had made it through as planned ahead of President's Day, now would be the perfect time for Tauzin to take a bow and leave the implementation to his successor. After all, Tauzin is 66, he has been with the association for just over five years--and is also past the five-year milestone in his recovery from intestinal cancer. If only health care reform was done, it would all seem so right.

But health care reform, to put it mildly, is in a state of flux, and so is PhRMA’s famous (or is it infamous?) $80 billion dollar deal for health care reform (or was it a $90 billion dollar deal, or more?).

As it happened, the timing of the announcement (late in the evening on a snowbound week in Washington) took a lot of people by surprise.

So naturally, everyone is wondering the same thing: Are things about to get REALLY bad for Big Pharma?

There are certainly good reasons to worry. First, as we pointed out here, the Democratic leadership appears to be convinced that one of the critical factors in the sour public mood for reform is frustration with the process—and, at least among some prominent Democrats, the PhRMA deal is a case in point.

And its not like Republicans are any happier with the PhRMA deal. Indeed, we are hearing something close to glee at the prospect that the industry will be asked to make the $80 billion contribution to fund other priorities before the year is through.

No question. It could get ugly. But it is far too soon to press the panic button.

Right now, no one can say for sure what will happen on health care reform. It is still possible that a bill very close to the one that looked ready to move in mid-January can make it into law. Failing that, big things could still move through Congress: things like filling in the Medicare Part D donut hole, follow-on biologics legislation, or health insurance reforms that would make expensive drugs more affordable for many people.

What Tauzin’s announcement does is give PhRMA flexibility: if things go well, they can keep the deal, either by working through the last steps of the process during Tauzin’s final months, or by sticking with it under his successor. And they can do so while fending off critics who claim it was a sweetheart deal all along: after all, the guy who cut the deal is out of a job, right?

On the other hand, Tauzin’s departure makes it much easier to turn to a scorched earth strategy if it comes to that. If the focus shifts from reform to punitive taxes, new rebates, populist measures like reimportation and price negotiation, then PhRMA will find it much easier to just declare the deal dead and take the gloves off in return.

We do think, however, that it’s a shame about the timing. Tauzin’s five plus years at PhRMA were a remarkable time, with the association pulling off the nearly impossible feat of transitioning from a quintessentially Republican organization into one that, if anything, may find itself too closely aligned with the suddenly not unstoppable Democratic majorities in DC.

You don’t have to agree with the policy to appreciate the skill it took to pull that off, building alliances across the spectrum of advocacy organizations in DC and across the aisles in Congress.

Sure, Tauzin wasn’t perfect--in the wake of the departure announcement, we’ve heard the rumbling that he didn’t focus enough on the details to translate the framework of “the deal” into the fine print that would make it work.

But we’d bet anything that PhRMA would be much worse off today if he hadn’t built bridges with organized labor, universal coverage advocates and other groups that don’t always see eye-to-eye with Big Pharma.

And we can honestly say that, while we know plenty of people who don’t agree with Tauzin’s positions, we’ve never met anyone who didn’t like him personally.

Those will be some pretty big shoes to fill. And in our next post, we’ll offer our thoughts on who PhRMA might pick to try….

Tauzin Stepping Down at PhRMA

Word came last night that Billy Tauzin, the 13-term Louisiana congressman who took up the reigns as head of the Pharmaceutical Research and Manufacturers of America after a bout with cancer, will step down from his post.

Interestingly PhRMA has commissioned an adaptation of the famous Stewart-Adams-Strouse musical to commemorate Tauzin's five-year tenure as the head of the industry lobbying group.**

An official announcement from PhRMA is expected today, and "The Pink Sheet" will have all that covered. Meanwhile, who's going to play Tauzin in the musical? Our money's on Pierce Brosnan. Have you seen "Mamma Mia"?

**Not really.

Financings of the Fortnight’s Pot Luck Supper vs Food for Thought from Tauzin and Kindler

This week we’ve got a little bit of everything out there for you FOTFanatics. Corporate Venture? Of course. Meaty FOPO? You got it. Odd restructuring? Why not. Sexy SEDA? Your wish is our command. And unlike last fortnight’s Eurolicious entourage, this week we feature some All-American talent. And a Canadian.

These guys--and their investors--obviously didn’t get the memo from PhRMA honcho Billy Tauzin and Pfizer CEO Jeff Kindle, who spent their podium time at yesterday’s Partnering For Cures meeting publicly worrying about the state of the States’ hospitality to the biopharma industry.

Tauzin woke us up as he railed at the state of the Food and Drug Administration, noting the regulator was no longer the premier drug agency in the world (that’d be EMEA, if you’re wondering); FDA didn’t take all the blame of course, to Tauzin some of its ineptitude was the fault of Congressional indifference. Meanwhile, someone please buy Margaret Hamburg and co. a DVD player, or maybe a TiVo?

"12:00 is blinking on a VCR at FDA, they are that far behind technologically," observed Tauzin. (No word on whether FDAers were sporting neon leg warmers while listening to Whitesnake while wearing out their Betamax copy of Top Gun on said VCR, but that’s what we were thinking.)

[NOTE: Keep your eyes peeled for coverage out of Windhover's ongoing FDA/CMS Summit in Washington, where FDA's John Jenkins just coincidentally unpacked and disputed the argument that FDA is more 'conservative' than EMEA.]

Other panelists at the breakfast session walked back the criticism. Bob Beall, president and CEO of the Cystic Fibrosis Foundation, commended FDA for its progress in clinical trials in the rare diseases space, noting that any path forward with the agency should begin with direct dialogue and not with confrontation, and not with Congress passing laws to tell it what to do.

And the earlier that dialogue begins, the better. With regards to personalized medicine, for example, he noted that a company can’t wait ‘til Phase III, or even IND stage, to start a discussion about biomarkers. He did lament the status of inter-agency harmonization between EMEA and FDA, but in the end with a wave in Tauzin’s direction said “I’m optimistic about the FDA.”

Founder and CEO of the Multiple Myeloma Research Foundation Kathy Giusti agreed with Beall. FDA, she said, had been “phenomenal.” And using an age-old technique she later suggested if only foundations could get academic and industry attorneys on the same page with contract language “we can all start using,” things would be so much better. As with most remarks that blame the lawyers, those words received a round of applause.

But in any case we shouldn’t be surprised when everyone relocates to Singapore, seemed to be part of the message from Tauzin. That’s something Pfizer’s Jeff Kindler alluded to as well.

During Partnering for Cures' lunch-time session, Kindler, fresh off the “pharma needs to own up to its mistakes to regain public trust” circuit of interviews and talks, sat down with FasterCures founder Michael Milken to discuss Pfizer’s attempts to shorten the timeframe of the drug discovery-development continuum.

Along the way he discussed some of Pfizer’s impressive feats—the creation of HIV specialist ViiV Health Care with competitor GSK, for example, or this week’s deal with Israeli biotech Protalix for its Gaucher’s disease treatment (we’ll leave it til tomorrow’s Deals of the Week to get in-depth on that one).

But he repeatedly invoked the strides made in emerging markets and industry hubs like China and Singapore to speed up clinical trial recruitment, for example. We in the US “have to be mindful of the fact that there are a lot of advances being made in other countries that are very interested in having those clinical trials done there, and that’s where a lot of innovation is going to occur. I think that’s where the big opportunity for speeding up bringing medicines to patients is.”

He later noted that governments in some emerging markets “are very ambitious and aggressive” in beginning to meet the unmet medical needs of their populations and “in encouraging innovation and research and providing incentives for companies like ourselves to locate manufacturing, research and clinical trials in those countries.” In case the message wasn’t clear he added: “And are doing so I might add in many cases with a coherent government/business collaboration that quite candidly we’re not seeing as much of in the United States as we’d like.”

He went on to talk about how China has headhunted Chinese-born young, ambitious, and eager scientists based in the US and elsewhere to return and set up shop in places like Shanghai’s Zhangjiang Park and elsewhere. This migration is “something we need to take account of as US policies are adopted that can have an impact on our ability to support what I consider to be a very important American industry,” he said.

Read more about Kindler’s remarks in today’s Pink Sheet DAILY (and for more on Pfizer's activity in China, see this IN VIVO feature). Then fly the flag for the companies below, this fortnight’s fancy financing phenomena. It’s …


Forma Therapeutics: It’s not that often you see a start-up raise more than $50 million in venture capital and pen two notable alliances with pharma companies within one year, but Forma Therapeutics has managed to do just that. The biotech—which according to this recent profile in START-UP may be onto a winner with its combination of structure-guided cancer drug discovery and proprietary cell-based screening capabilities—pulled in $25.5 million through a Series B financing led by Lilly Ventures (more corporate venture!), announced on December 1. Also participating were Novartis Option Fund and Bio*One Capital, investors in Forma’s January 2009 $25 million Series A. Forma has deals with Novartis (in oncology, signed shortly after it’s A round) and Cubist Pharmaceuticals (antibacterials). The latter deal included a note that converted into stock in the current Series B.—Amanda Micklus

Receptos: The $25 million Series A financing for newly formed Receptos is not as simple as it first appears. The San Diego firm targets GPCRs and described its initial financing as a two-tranche deal, $17 million now, maybe $8 million later. The full story is that Receptos purchased Apoptos, which had raised $28 million in its own relatively recent Series A in January 2008 (so it's more of a reinvention). Roughly $5 million left from that financing was included as part of the first tranche of Receptos’ round – along with $12 million from the company’s venture backers, explained Jim Schmidt, VP of finance and administration. Receptos can qualify to receive the second tranche of $8 million upon the filing of an IND for its lead candidate – a sphingosine-1-phosphate receptor candidate for multiple sclerosis. That filing is expected by the fourth quarter of 2010, says Chrysa Mineo, VP of corporate development. Participants in the new round were Venrock, ARCH Venture Partners, Flagship Ventures and Lilly Ventures. (There’s that corporate venture again!) Each of those funds received a seat on the Receptos board, with Venrock’s representative, former Biogen Idec Executive Chairman William Rastetter, serving as CEO and chairman.—Joseph Haas

Vertex Pharmaceuticals: According to Elsevier’s Strategic Transactions database, follow-on public offerings have increased substantially from a low of $3 million in the fourth quarter of 2008 all the way up to $1.6 billion in the third quarter of this year. While final fourth quarter numbers are not yet available, it looks to be on pace to beat Q3 thanks to a few big FOPOs completed this fortnight by Salix Pharmaceuticals ($128 million), Human Genome Sciences ($415 million), and namely yesterday’s $442.8 million stock sale by Vertex Pharmaceuticals. The small-molecule drug developer, which focuses on several therapeutic areas including infectious diseases, offered 11.5 million shares at $38.50, a price on par with what the company has been trading at for the past few weeks. The stock jumped 8% to $36.15 on November 2--and has been gradually increasing since then into the high $30s/low $40s--following news that 83% of HCV patients in each arm of Vertex’s C208 study had achieved a sustained-viral response with twice-daily telaprevir. Vertex is planning an NDA for the HCV protease inhibitor in the second half of 2010. Less than two months ago, the company monetized future European milestones it would have gotten from telaprevir partner Janssen in a deal with four investment funds, which bought $120 million in Vertex convertible debt and paid another $35 million cash in exchange for $250 million in regulatory and launch milestones. Earlier this year, Vertex completed another huge follow-on offering, which netted $314 million. Since 2008, the company has raised $1.4 billion through four FOPOs.--AM

Labopharm: The public markets are slowly warming to biotech—note Vertex and HGSI’s monster $400 million public offerings, UCB’s €500mm bond offering and Movetis’s announcement that it closed its IPO, bringing in €85m (with the overallotment yet to be determined). But for many of the smaller players capital is still a scarcity, making alternate financing arrangements like Labopharm’s $25 million standby equity distribution agreement (add SEDA to your bin of acronyms to name drop this holiday season) with Yorkville Advisors, an attractive prospect. Under the terms of the agreement, YA will provide up to $25 million during the next three years, available at Labopharm’s discretion via the purchase of new shares, issued at a predetermined discount (that maxes at 5%) to the prevailing stock price. In addition, limits prevent YA from owning more than 19.9% of Labopharm’s issued and outstanding common shares at any one time. The control offered by the SEDA—in addition to the biotech determining when to pull the trigger, it also determines the amount to draw down, with a built-in minimum price—is clearly attractive to smaller biotechs or specialty pharmas who might have cash-generating milestones on the horizon while simultaneously lacking the in-house resources to reach those events. The Quebec, Canada-based Labopharm fits the bill. The company had just over $14 million in cash and cash equivalents at the end of its third quarter, as well as roughly $21 million in long term debt payable starting in 2012. In addition, the company is preparing for the 2011 launch of its second product, DDS-04A, which is a once daily-formulation of the serotonin antagonist reuptake inhibitor traszadone that is currently awaiting a regulatory decision from FDA. In the SEDA-world (it’s not an obscure planet in a galaxy far, far, away) Yorkville has been an active player. This year alone, the company has inked SEDAs with Advanced Life Sciences, RXI Pharmaceuticals, Pharming, and Achillion. –Ellen Foster Licking

image from flickr user Jamie Anderson used under a creative commons license.

Lyndon Baines Obama?

This week’s White House meeting between President Obama and a coalition including insurers, the Pharmaceutical Research and Manufacturers of America, physicians, hospitals and others on health reform reminded us of how another president used his PR skills and White House platform to push a key health issue forward in the direction he wanted.

In 2009, the industry groups came to the White House with the idea of expressing their commitment to health reform and to contribute their share toward a goal that health reform would eventually save as much as $2 trillion over 10 years.

Somehow, by the time they got home, there was a widely reported perception that the associations agreed specifically to reduce their costs to the health system by $2 trillion. The president asked them to come back in June with proposals for how they will do this. Since then, there has been a bit of backpedaling, and differing reports of whether the President misspoke in describing their agreement (see the full account in the May 18 issue of “The Pink Sheet”).

Now, we’re not sure how the confusion arose or who is spinning who. But we wonder if Mr. Obama learned a few presidential wiles from Lyndon Johnson and Medicare. LBJ managed to push through legislation creating the Medicare program in July 1965, despite vociferous opposition from the American Medical Association. He knew the program would never get off the ground without physician support. Here’s how he got it, as recounted by historian Robert Dallek in Lyndon B. Johnson, Portrait of a President:

Some members of the Administration were so worried about winning the cooperation of the AMA that they urged a meeting at the White House with AMA leaders at which the President appealed to doctors to support a law favored by the people and worked out “in the most pain-staking way in accordance with the exacting rules of our democracy.”

Johnson did not think that the AMA and most physicians would find it easy to oppose Medicare without serious damage to their public standing. But he was worried enough to invite AMA leaders to the White House, where he could compel a public acknowledgement of their support. In a July 30 discussion with eleven AMA officers, Johnson asked the physicians for help in getting doctors to rotate in and out of Vietnam for a few months to serve the civilian population. Appealing to their patriotism, Johnson declared, “Your country needs your help. Your President needs your help.” The doctors responded almost in unison with promises to start a program immediately.

“Get the press in here,” Johnson told [presidential Press Secretary Bill] Moyers. When they arrived, Johnson described and praised the AMA’s readiness to help the Vietnamese. But the reporters, undoubtedly primed by Moyers, wanted to know whether the doctors would support Medicare. Johnson, with mock indignation, said: “These men are going to get doctors to go to Vietnam, where they might be killed. Medicare is the law of the land. Of course they’ll support the law of the land. Tell them," Johnson said, turning to the head of the delegation. “Of course, we will,” the AMA president responded….A few weeks later, the AMA announced its intention to support Medicare.

We just hope Obama doesn’t have any appendectomy scars to show us.

- Denise Peterson & Cathy Kelly

Smoke Signals Look Good for Biopharma

The smokeless backrooms of politics in Washington 2009 are looking like a good environment for the biopharma industry -- better even than the deals that emerged from the smoke-filled rooms of lore.

This could very easily have been a year of multiple political threats to the industry with the drug business portrayed as a scapegoat for out-of-control health costs, but it is emerging instead as a year offering reasonable compromises and proposals to protect pharma pricing and give the industry access to significant new markets.

The first signs that the biopharma sector may have crawled out of the bulls-eye as a target for health reform are (1) the Obama Administration's decision to turn back to the tobacco industry as the number one health villain and (2) relatively small financial contributions expected from the biopharma sector to pay for health care reform.

As we have written recently, tobacco regulation is next on Capitol Hill agenda for the Democrats. Getting rid of cigarette smoke has become a core issue for the new administration despite the fires incinerating the other parts of the economy. The campaign against smoking is more accurately a "Corr" issue for the administration, supported by the HHS Deputy Secretary-designate, William Corr, a long-time ally of House Energy & Commerce Chairman Henry Waxman (D-CA) and long-time critic of the tobacco industry.

No matter how the anti-smoking campaign found its way into the packed Obama agenda, the fact that it is there means that pharma immediately becomes a lesser evil on the list of industries affecting US health care.

Pharma is well aware of the smoke-screen and regulatory/political cover that the tobacco industry presents. Even before the 2009 legislative season was underway, Pharmaceutical Research & Manufacturers of America President Billy Tauzin was expressing full support for the government to go aggressively after tobacco regulation.

"Any work" the government could do "to prevent people from smoking is good work," Tauzin declared, saying "tobacco is not our friend." It is a point not lost on a political pro like former House Energy & Commerce Chairman Tauzin that pharma experienced its best years of growth and new product introductions while the Food & Drug Administration was absorbed in its fight against the tobacco companies in the late 1990's.

The anti-smoking position allows Tauzin to talk positively about health reform. He took his prevention rhetoric to the White House Summit where he talked about the importance of healthier lifestyles. He claimed that 67 percent of cancers could be avoided if people did not smoke, ate properly and exercised.

Tobacco regulation can be a distraction for FDA's senior management and take up a lot of the agency's resources, but it creates a less pressured atmosphere for drug regulation.

The second sign of a developing positive atmosphere for biopharma is the relatively small $29 billion that the industry will be expected to contribute to the $634 billion down payment fund for Obama's health care reform initiative. That is the amount the federal government will collect from increased Medicaid rebates. Pharma will actually face additional payments to the states of about $12 billion more (for a total of $41 billion). The full negative impact on the industry including cost reductions in the private market is estimated at $70 billion over ten years.

Compare that to $117 billion that the health insurers are being asked to give up from reductions to Medicare Advantage payment rates and you can see why the health insurers are crying "foul" and complaining that the pain of health reform is falling disproportionately on them. It also becomes clearer why biopharma leaders are accepting the proposed payments more stoically: they are being asked for less and have a lot to gain if insurance coverage can be more widely extended to the currently uninsured and under-insured -- a potentially large new market for pharmaceuticals.

The fact that cuts to pharma revenues are within the tolerable range combines with the industry's position against smoking to create a good climate for working with the White House, HHS and Congress on two key industry objectives: (1) a well-crafted follow-on biologics bill and (2) control over patient co-pay levels for drugs and biologics.

By supporting Corr's anti-smoking effort, pharma improves it relationship with a key figure for the FOBs bill. Corr was the staff architect for Waxman behind the original Waxman-Hatch generics bill 25 years ago. He is likely to be the driving force behind getting a follow-on deal done this year. He is no friend of pharma; but having the smoking issue as background is very convenient for the industry.

Legislative control over co-pays is getting less public attention but could be the big money issue for pharma in the current legislative season -- especially as specialty drugs and biologics become more important to the industry.

Both BIO and PhRMA have identified efforts to restrict the amount of out-of-pocket expenditures that patients will have to make for drugs as important to their policy agendas. This is an access issue for patients that offers an indirect price protection to the industry. If pharma can avoid high co-pays, that will permit them more flexibility for high prices.

The objective is to make sure that health insurers and Part D Medicare plans cannot set co-pay levels so high as to act as a de facto barrier against patient use of the products. The drug industry senses that controls on co-pays are politically viable in a Democratically-controlled Washington because they can be presented as a patient/beneficiary access issue.

The Democratic victories did not seem like good news for pharma in November and it still could turn out badly, but things have started out pretty well.

Health Reform Summit: BIO's Invitiation Lost in the Mail

We've written plenty about the parallels and contrasts between health care reform vintage 2009 and the last big go 'round in 1993 with ClintonCare.

Today's health care reform summit definitely fits in the "contrast" category. And not just because it was broadcast live on the web, in self-conscious contrast to the Clinton task force's closed door policy.

What caught our eye was the attendee list. The brand name pharmaceutical industry quite literally had a seat at the table--two in fact: Pharmaceutical Research & Manufacturers of America CEO Billy Tauzin and Pfizer CEO Jeff Kindler were among the 150 or so to score what President Obama called "the hottest ticket in town."

Then there is who wasn't invited. No one from the generic industry--and no one from the Biotechnology Industry Organization.

That is a huge contrast to 1993, when BIO (or at least, its predecessor organizations) offered the brand industry its only access to the Democratic leadership. Because, back then at least, everybody hated Big Pharma, but they just loved those spunky, innovative biotech companies.

The fact is that it has been tough going for BIO so far in 2009. The association has some ideas to help its members in the context of the stimulus plan. They were probably long-shots, sure, but nothing materialized.

And then the President put follow-on biologics in the budget proposal. Not really a surprise, but there was a lot of tough talk about "evergreening" that probably made some folks nervous.

Now, the kick off to the health care reform debate. And BIO literally didn't have a seat at the table...

How PhRMA’s Marketing Code Sells Itself

When it comes to marketing, packaging counts.

That also seems to be the case with marketing guidelines--at least, with the revised Code on Interactions with Healthcare Professionals from the Pharmaceutical Research and Manufacturers of America.

We've written a lot already about what the substantive changes to the code itself means, including its compliance mechanism, and new limits on pens, meals, speakers and CME. We’ve even offered three easy steps companies can take next to achieve a utopian future.

But beyond the message PhRMA is sending though the content of the code, there’s the image the association is projecting through the formatting of document itself. The precepts in the revised code are basically a progression from the 2002 code, but the layout is stunningly different.
The most obvious change to the code’s formatting is the color palette and design motifs. The blocks of black and red had been replaced by blues and grays in spiral patterns. What do those changes mean?

Well, we asked some of our designers their opinions. Overall, the design of the 2002 code is “forceful” and intense, they tell us, while the 2008 code is relaxed, though still “peppy.”

The new document also tones down PhRMA’s self branding. In the old version, the association’s acronym was the biggest thing on the cover page, and it towered over every question in the Q&A section. In contrast, the PhRMA logo only appears three times in the new version. Those changes may reflect an industry that now feels its size and strength make it a target for criticism. Blue is also a “loyalty color,” we are told, and the new code may in fact be bathed in Patone’s “Dispense As Written Azul.” The 2008 version also boasts a table of contents – how’s that for transparency?

Another formatting change may be evidence of industry belt tightening. Even though it contains more words, the page count of the 2008 code is 36 pages, while the old one weighed in at 58. Like marketing departments everywhere, it’s doing more with less.

Despite the reduced page count, the text in the revised version is larger and more readable than the previous version, but it uses a sans-serif font. While clean and easy to look at, a sans-serif font (like Helvetica) does not fit with the eye the way a serif font (like Times) does. According to the experts, when reading large amounts of text, people are better able to absorb it if it comes with the complex features at the tops and bottoms of the character strokes.

If that’s not an endorsement of industry’s shift towards biotech products, we don’t know what is.

– M. Nielsen Hobbs

Next Steps for PhRMA and Marketing (Part 3): Let the Sunshine In

Concluding our series of proposals for pharmaceutical marketing to reclaim the high ground. We've already suggested re-defining the mission and combining the Pharmaceutical Research & Manufacturers of America's various codes of conduct.

Today, step three: Let the Sunshine In

“Transparency” is now everybody’s favorite buzzword in Big Pharma. Merck CEO Richard Clark urged his colleagues to embrace the call to "create transparency" during his inaugural address as chairman of PhRMA.

Indeed, the immediate impetus for PhRMA’s effort to update the marketing code came when Congress got serious about pushing “sunshine” legislation. (And the Code is already a success, since that initiative did not make it into law this year.)

The problem with transparency: by definition, you can’t see it. Obstruction you can see. Transparency is invisible.

Since the calls for transparency are motivated fundamentally by mistrust of industry, how will the public (or at least its elected representatives) ever be satisfied that industry is in fact being transparent? Put another way, if industry chooses to hold anything back—for competitive reasons or otherwise—why wouldn’t the assumption continue to be that some ugly truth is being hidden away?

Our suggestion: invite the public in to those conversations. Every pharma company should appoint a transparency committee, a group of independent outsiders--preferably well-known critics. The transparency committee (though we prefer the name "sunshine band") would have carte blanche to review anything and everything related to the company's procedures on information disclosure. They would be empowered to make recommendations that the company would be obliged to respond to. (Not necessarily implement--but at least acknowledge and explain a decision not to implement.)

The transparency committee should report directly to the board—or even better, to a central transparency committee convened by PhRMA. We even have the perfect chairman: Cleveland Clinic Cardiologist Steve Nissen. (He may have bigger plans for his career that rule him out, but still.)

Nissen is a particularly articulate critic of industry on issues like publication bias and clinical trial result reporting. But he is also a clinical investigator and an experienced author of academic research, so he understands the importance of protecting information as well.

That whole idea may sound crazy, but give us a second, we're just getting warmed up.

Industry could go yet one step further than letting its critics shape disclosure policies: it could ask them to review and approve its marketing plans in the first place. Now we know this sounds crazy. Pharma companies went ballistic over a provision in an early draft of the FDA Amendments Act that would have explicitly authorized FDA to review a company’s marketing plan in the context of assessing a proposed Risk Evaluation & Mitigation Strategy.

That provision came out--but the spirit lives on. In fact, we would argue that a suitably motivated FDA can and will demand access to marketing plans for drugs under the REMS authority. And even if FDA doesn't push that way on its own, the fact that Congress thought about it once means it is likely to come up again later.

More to the point: industry says marketing is about delivering valuable scientific information to doctors and patients. It is about education. So why not ask those being educated to review and respond to the curriculum? Who knows, they might even get excited about the new medicine...

Enough opining from us. What do you think?

Next Steps for PhRMA and Marketing (Part 2): Combine the Codes

Continuing our free advice for Big Pharma marketing groups on ways to reclaim the high ground. (And yes, you do get what you pay for...)

Yesterday, we suggested a new mission statement for marketing.

Today, step two: Combine the Codes

PhRMA has statements of principle governing professional promotion, direct-to-consumer advertising and clinical trial disclosure. But industry’s critics do not see them as separate issues. Neither should industry.

Let's start with the two "marketing" codes, one for DTC and one for interactions with physicians. It is easy to see why there are two: there are very real differences in the regulatory oversight of DTC and professional promotion, reflecting the fact that DTC is a "new" phenomenon (at least in the sense of broadcast television ads), while sales reps calling on doctors is a venerable industry institution.

But when it comes to defending marketing in the political realm, it is silly to try to differentiate. Indeed, association CEO Billy Tauzin acknowedges that many of the public perception issues facing the industry require addressing both DTC and professional promotion. So PhRMA is upgrading its principles of consumer advertising too.

In an era when informed patients often know more about their medical conditions than the physicians who treat them, it is also absurd to argue that there is a fundamental need to craft different messages based on who has the MD. (Different messages based on knowledge level yes, but sometimes that means dumbing it down for the docs and engaging more scientifically with patients.)

We might also highlight the danger for industry if doctors—not the biggest fans of DTC in the first place—begin to really get upset about it now that they spend more time in front of the TV and less time at industry sponsored dinners.

Updating the DTC code is a nice first step. But PhRMA and its members should go further. In age when Big Pharma is rethinking everything (or should be), it is time to challenge the mindset that professional marketing and consumer promotion are two different activities. A sales rep visit is indeed different than a TV commercial during the Super Bowl. But both are probably equally inefficient.

If industry wants to reclaim the high ground for marketing it must take a stand on who the marketing is supposed to benefit. The updated PhRMA code does that, by the way: "Our relationships with healthcare professionals are regulated by multiple entities and are intended to benefit patients and to enhance the practice of medicine."

If the goal is to benefit patients, then it is nonsensical to consider sales force activities and DTC as in any sense separate. If either the patient or the physician lacks the necessary information to make an informed therapeutic choice, then the marketing campaign failed.

The code of conduct for clinical trials is less obviously part of the same picture, but PhRMA would do well to look at it in that light. Industry bristles at claims that its big R&D budgets are really just to support marketing. But let’s face it: the questions asked and answered by clinical trials and other industry sponsored research are indeed the primary source of information about medicines—and so the very essence of all industry marketing.

Put another way: no one objects to industry sponsored research. They object to the perception that the results are skewed or hidden based on a commercial agenda. In other words, they think marketing trumps R&D.

PhRMA’s current clinical trial code covers issues related to reporting and disclosure, but Congress has already taken that issue much further. If PhRMA wants to reclaim the high ground, the association will need to take another look at that policy—especially in the context of even bigger steps to rebuild its reputation.

Tomorrow: Step Three—Let the Sunshine In

Next Steps for PhRMA and Marketing (Part 1): Define the Mission

Our hats are off to the Pharmaceutical Research & Manufacturers of America task force on professional practices. It is no simple matter to get three dozen companies to agree on anything—much less something as politically and commercially sensitive as the rules governing marketing to physicians.

And to do so in a way that addresses real-world, day-to-day operations is so much tougher. PhRMA’s updated Code on Interactions With Healthcare Professionals wrestles with the nitty gritty details of how physician marketing works, and doesn’t shy away from tough, specific directives on everything from pens to meals.

So no one can say PhRMA is hiding behind bland statements of principle rather than addressing the real world.

But perhaps you can say the opposite: that in getting into the weeds of how marketing works, PhRMA has lost site of some bigger principles. Debates over pizza and pens may help in that cause, but they don’t come close to justifying marketing as a vital, necessary activity for society.

In that spirit, may we suggest three modest proposals of our own?

Step One: Define the Mission

It is time (past time, perhaps) for PhRMA and its members to redefine the role of marketing and reclaim the high ground.

Every marketing organization should have a mission statement that it can embrace and brag about. The goal cannot be simply to increase sales. The goal should be to ensure the widest appropriate use of life-improving or life-extending medicines. Marketing done right means a medicine reaches more of the right people; it maximizes the benefit society receives from medical science.

PhRMA’s updated code on interactions with physicians suggests this mission in the preamble: “Appropriate marketing of medicines ensures that patients have access to the products they need and that the products are used correctly for maximum patient benefit.”

Hopefully, every marketing organization believes that already. The hard part is convincing the rest of the world to see it that way.

To do that, you can’t just say that’s what marketing is—you have to mean it. For example, do companies compensate marketing personnel based on “maximum patient benefit”? Its hard to say yes if sales reps get bonuses for boosting prescription market share in their territory: that is compensation based on maximizing revenue.

Of course, coming up with bonuses tied to maximizing appropriate use requires some real creativity, and probably a complete rethinking of the marketing effort.

But that’s only step one.

Tomorrow: Step Two--Combine the Codes

Preserving the Right to Advertise—No Matter How Dumb it May Be

James Madison's Legacy?

Score another one for the lobbyists at Big Pharma and their allies on Madison Avenue: the House is poised to join the Senate in passing legislation that will put new restrictions on direct-to-consumer advertising—but without putting any moratorium on the right to advertise new products.

The House followed the Senate in bowing to concerns that giving FDA the explicit authority to prohibit DTC ads for new products raises significant Constitutional issues. So, like the Senate, the House bill will now move forward with language allowing FDA to preclear ads, to require disclaimers to prevent false or misleading promotions, and--perhaps most significantly—to levy fines for ads it deems violative.

But the moratorium idea—initially supported by heavyweights like Senator Ted Kennedy and Representative Henry Waxman—is officially dead.

Am I the only one who doesn’t see what the fuss is about?

Don’t get me wrong. We here at the IN VIVO Blog are HUGE fans of the First Amendment.

I just think this ship has already sailed. FDA may not be getting the authority to prohibit DTC for new products, but does anyone in industry seriously expect to be running massive TV campaigns for new drugs again any time soon? Why would they want to?

The Pharmaceutical Research & Manufacturers of America has already conceded the principle behind the moratorium proposals. The association’s voluntary DTC code states that, “in order to foster responsible communication between patients and health care professionals, companies should spend an appropriate amount of time to educate health professionals about a new medicine or a new therapeutic indication before commencing the first DTC advertising campaign.”

The PhRMA code does not specify a minimum waiting period. A one-size-fits-all policy would keep patients from learning important medical information for products that can be safely advertised, PhRMA says. (Oh, and you will be glad to hear the code is working just great. At least PhRMA says it is.)

At first glance, it is easy to understand why Big Pharma would still resist legislative change. After all, a three-year moratorium (as proposed initially in the House bill) enacted by Congress is a lot stricter than the voluntary code adopted by PhRMA.

Except that there really isn’t a difference. The three-year moratorium is the maximum that FDA could require. The minimum would be no waiting period at all for new drugs where FDA saw no issues with immediate DTC.

Plenty of people worry—with good reason—that FDA would err on the side of caution and limit DTC routinely, and presumably put the maximum limit on as often as possible. Sponsors, in effect, would have the burden of proving to FDA that ads would do more good than harm.

The thing is, that sounds to me like exactly the situation industry is in today. FDA may not have the explicit authority to prohibit DTC for new drugs, but they have asked for and received “voluntary” commitments by manufacturers not to advertise as a condition for approval. Sponsors could just to ignore those commitments and FDA would probably be powerless to stop them—but anyone who does that better be ready for the backlash.

And it doesn't take a broken commitment to trigger a backlash.

When an FDA advisory committee recently met to discuss the safety of erythropoiesis stimulating agents in treating cancer patients, there was palpable anger on the committee about Johnson & Johnson’s advertising of Procrit. Committee members felt that J&J's commericials implied a quality of life benefit not found in product labeling. There is no way to prove it, but my hunch is the committee would not have been as tough in its recommendations to restrict ESA labeling if they weren’t so concerned about J&J’s ads.

Then there are the broader implications of the FDA legislation itself. The DTC moratorium may be gone, but the new law will still give FDA a much stronger hand to put restrictions on the roll-out of new products. The era of the billion-dollar blockbuster launch may not be over, but those products are already far rarer than they were, and the new law will make them rarer still.

Far more common will be slow builds, where products spend a year or two on the market in limited use. Only when FDA and the sponsor agree the safety profile allows for it will products break out into broad patient populations.

So why would anyone want to run big TV campaigns for new drugs right after they reach the market anyway?

One way or the other, sponsors need to be prepared to prove that their ads do more good than harm. FDA may not have the authority to demand proof, but the agency—or frustrated members of Congress—can still put advertisers in the hot seat any time they want.

PhRMA's DTC Verdict: it ain't broke, we're not gonna fix it

PhRMA's second Office of Accountability report on DTC advertising is out today (covering the second half of 2006) and, well, nobody is taking it very seriously.

They probably shouldn't. PhRMA is hardly a watchdog, as several commentators have pointed out today, and their report, which updates all of us on its constituents adherence to 15 'guiding principles' of DTC advertising, isn't exactly a model of transparency. Names were not named. Examples were not provided. But hey, nice charts.

Brandweek's NRx blog sums up the instrinsic conflict and comedy nicely (and hangs on to $50 in the process).