Business Strategies, Regulation and Code of Ethics Converge in Shaping Drug Maker Practices

Controversy surrounds drug manufacturer's business practices at home and abroad. In the U.S. promotional strategies and pay for delay arrangements remain controversial. Agreements between drug makers intended to coordinate the introduction of new generic drugs, maximizing profits, are viewed critically. The Federal Trade Commission has been asked to better manage these arrangements. In turn, the FTC has asked for legal backing to minimize deals that might delay introduction of lower cost alternatives to expensive brand name drugs. First Report Now  considers the patent situation. In the meantime, drug manufacturers' ethics in foreign business deals are being scrutinized, and some significant financial penalties for drug makers  have resulted as allegations of bribery surface. Read more on that in the Wall Street Journal.

Our Take:  Over the past several years so much emphasis has been placed upon drug promotional strategies being utilized by drug manufacturers that this article in Biopharm International caught our attention. IMS a data marketing firm will be providing the drug maker with access to records it says will help the drug maker better understand and demonstrate drug utilization patterns and reasons for which prescription medications are actually being prescribed and used. AstraZeneca indicates it will utilize the data to guide future R& D efforts.

The figure represents an all-time high, compared with 211 shortages in 2010 and 58 in 2004 according to the Washington Post.

Our Take:  Last year's presidential order requiring drug makers to notify the FDA of imminent drug shortages has been credited with helping to avoid the shortage of an additional 100 drugs.  Read more on this matter in the Washington Post.

The release of a report by the Federal Trade Commission this fall is highlighting the financial impact of these agreements.

Our Take: This is noteworthy timing. Lipitor is losing patent protection on December 1st and many suspect the FTC expedited the release of this data to make information regarding these agreements available during the deliberations of the deficit reduction panel. Estimating these agreements between brand and generic drug manufacturers are costing Americans about $3.5 billion annually, the FTC is hoping to get support in limiting these arrangements.

The story is gaining attention as sources such as the New York Times discuss strategies being employed by Pfizer to sustain demand for Lipitor. Essentially, Pfizer made a deal with generic drug maker, Ranbaxy several years ago. In exchange for "incentives" Ranbaxy would market the generic formulation of the product beginning December 1, 2011. In the meantime, the New York Times reports on an agreement between Pfizer and some pharmacy benefit management firms to continue to fill prescriptions with Pfizer's product for the next six months. The consumer group, Pro-Publica offers further details on this arrangement.

The Pharmaceutical Giant agrees to a $3billion payment to the federal government to address sales and marketing practices.  

The UK based drug manufacturer issued this press release  regarding the settlement, to be finalized in 2012.

Our Take:  The settlement is triggered by a US Attorney investigation initiated in 2004. Glaxo leadership contends the company has made fundamental changes to the marketing of its products in the U.S., including altering its compensation system. The firm indicates sales personnel are being incentivized differently as the bonuses are now based on quality of service delivered, rather than attainment of sales goals.

While the details of Glaxo's compensation plan are not available, the statement and settlement underscore the changes in the promotion of prescription drugs that the industry has, and continues to undergo. Read more about this in Biopharm International

Our Take:  The growing problem and the impact of drug shortages upon health outcomes have been increasingly in the news. Over the past several weeks, the number of stories exploring the shortages of critical drugs and the clinical implications of those shortages has surged. In the meantime, the growing awareness of counterfeiting, gray markets and issues with supply and quality has driven manufacturers and regulators to disagree over how various factors are contributing to the current market situation.

This Reuters news article explores the shortages and the dynamics surrounding the situation.

Our Take: It's no secret that brand name drug makers are invested in protecting the patent exclusivity of drug products for as long as possible. In recent years, multiple law suits, and pay for delay deals have made headlines. The most recent attempt by the manufacturer of an acne medication to stave off competition triggered much discussion. In this instance, the firm added an additional "score" line, theoretically increasing dosing flexibility. The tablet, contains 150 mg of active ingredient and had been marketed with a single score line throughout the early phase of its product life cycle. The addition of the second score line would permit patients to split the tablet into thirds, which the firm asserts improves safety by increasing dosing accuracy and flexibility. The change occurred days before a generic alternative would have been eligible to hit the market. The Wall Street Journal considers the issue.

The House Oversight and Government Reform Committee will be investigating the limited availability and high prices of certain drug products that are in short supply.

Our Take: The committee has requested documents from five firms regarding their purchase and acquisition practices. Recent shortages of some critical drug therapies have been paired with "gray market" middleman companies with supplies of the drugs made available at inflated prices. The Wall Street Journal offers some background on the market dynamics and objectives of the House investigation and a recent National Public Radio story highlights the issue as well. Of interest, the Pink Sheet recently published several articles on the drug industry, drug shortages, and the dynamics between the agency and the FDA which impact drug supply.

Our Take: A recent column in Pharmaceutical Executive  considered the drug development process and identified opportunities for the drug industry to better coordinate with payers.

The panel discussion, focused upon measuring "value" in therapeutic innovations. Speakers gave consideration to coordination of efforts in an attempt to enhance the quality, nature and relevance of data sought in the drug research and development process. The subject, while theoretical in nature, has implications for the future. Clearly, costly specialty drugs will drive the drug cost curve in the future. Research supporting the value and demonstrating the relative cost effectiveness of various treatment strategies will become invaluable as the struggle to manage health care costs continues.