About Elizabeth Cornell

With the mid-term US elections behind us, the politically minded are wondering whether the Democrats will tackle the contentious issue of health care reform. Some legislators have decided the country is ripe for new policy, and they’re not waiting for their cohorts to argue otherwise at the national level. They’re taking the issue to the states.

The Milwaukee Journal Sentinel reported recently that several congressional leaders — from both sides of the aisle — have proposed allowing novel health care programs to be initiated and funded on the state level to see which work best. Lawmakers would then float proposals for the most effective and efficient programs up to Congress.  

A few states have already introduced innovative programs — from the notable get-everybody-insured-now program (Massachusetts) to subsidized insurance for low-wage earners and sliding-scale medical fees (Vermont and New York), with a variety of initiatives in between. Several states have also passed provisions providing health insurance for children who reside there. Will the programs work? And, even if they’re effective and affordable within a state, will the programs translate nationally?

This wouldn’t be the first time that programs have been started by states and then successfully risen to the national level, but normally such ideas flow in one direction.  Ironically, for all of the political posturing going on, the experiments at the state level could indicate that congressional leaders within both parties are more ready to collaborate on health care reform than even they recognize. 

Industry analysts have been issuing warnings about the depletion of Big Pharma’s drug development pipelines for some time now. The business media also have been reporting the story of the research slowdown.

But there’s a new urgency in the industry today as a result of rapidly approaching patent expirations and the threat of generic companies encroaching on patent coverage (e.g., Apotex’s short-term release of its generic form of Bristol-Myers Squibb/Sanofi Aventis’ Plavix). While increased advertising has boosted the revenues of some drug companies, sales from the blockbusters forecast to enter the market this year have fallen short of expectations.  (There a are a few exceptions, such as Merck’s cervical cancer vaccine, Gardasil.)

To make up for it, Big Pharma companies have been cutting costs as well as looking outside and acquiring niche biotech research firms and generics makers to fill in the R&D gaps. Recently, for example, Merck KGaA announced plans to acquire Serono; Sanofi-Aventis is rumored to have anonymously bid on ImClone; and Merck is in the process of acquiring Sirna Therapeutics.

Meanwhile, generics makers have been gearing up, consolidating within the industry in order to better compete with Big Pharma. Barr Pharmaceuticals recently acquired Pliva d.d., after competing with Actavis, to secure the #3 spot in the world. Teva earlier this year bolstered its power with the acquisition of Ivax. Indian generics giant Ranbaxy has been accumulating size, with the 2006 purchases of GlaxoSmithKline’s Italian and Spanish unbranded generics divisions and generics maker Terapia.

With all this movement within the drugmaking industry, it remains to be seen whether drug prices will be driven down by competition or up to absorb costs. What role legislative changes affecting Medicare (that may or may not affect price protection for Big Pharma) will have are also big questions to be answered over the next year or two.

No one could possibly deny that Bernard (“Barry”) Sherman is a brainiac among brainiacs. The guy does, after all, have a doctorate in astronautics from MIT. He’s also the wealthiest CEO of a pharmaceutical company in Canada. But he’s best known today as the mastermind behind Big Pharma’s current Big Shakeup: Apotex, his generic drug company, snuck a generic version of Bristol-Myers Squibb/Sanofi-Aventis’ Plavix on to the market and was making a killing — until an injunction stopped distribution last week.

Apotex’s generic drug, clopidogrel, was released in August, before the expiration of the patent on brand-name Plavix, a widely used drug that prevents recurrences of heart attacks and strokes. Under certain conditions involving a patent dispute, a generic manufacturer is allowed a 180-day period to distribute its drug without intervention. Big pharma companies often buy off generic producers to ensure the generic version remains out of the public’s hands.

Sherman’s Apotex  negotiated a typical settlement agreement with BMS/S-A, in which the latter would pay the former $40 million to keep its generic drug off the market. Sherman was so confident that the US Department of Justice wouldn’t approve the deal that he directed Apotex to begin manufacturing clopidogrel nearly a year in advance.

Sherman was right. When the government nixed the deal, Apotex was ready to distribute its version of the anti-platelet drug. It was a huge gamble on his part, but it paid off handsomely in sales and immediate market share. Sherman’s bold move also found a seam in the seemingly unbreakable glass wall that Big Pharmas have erected around their best-selling drugs.

However, the complicated story continues: The close of the month brought with it an injunction barring Apotex from distributing its generic, at least for now. Only Sherman knows whether he has any other tricks to pull out of his hat that will help his company come out on top. The good news is that BMS/S-A have pledged to lower the consumer cost of Plavix to that of the generic, for the duration of Plavix’s patent dispute anyway.

The newest tiny trend in business strategy: Allowing consumers to choose the region where their products, or their components, are made. (”Made in USA? Now, Customers Get to Choose,” published recently in The Wall Street Journal.)

Interestingly, the article appeared in the health section of the paper — implying that this type of consumer choice, when applied to medical devices and implants, adds an extra cartoonish dimension, at least for me. Picture, potentially, someone born and bred in the U.S. of A., but with body parts that were manufactured in numerous regions of the world. No longer would Americans themselves be 100% made in ‘merica.

And does “made in America” necessarily imply higher quality anyway? Would the price ranges also come with estimates of product value: Made in America (94% quality), made in Falkland Islands (84% quality), or made in Indonesia (27% quality)? That gradation would obviously vary by product, but who would be in a position to make such a value call?

Add to that the possibility of insurance companies making that sort of judgment. Would Aetna and others continue to cover medical devices whose components were not manufactured in the US? Or, conversely, would consumers have to absorb the added cost of medical goods manufactured “locally”?

It could also become another opportunity for us to redefine “patriotism.” Would the “Buy Buy American! or it’s Bye Bye America” sentiment be strong enough to overcome the cheapskate mentality that allowed Wal-Mart to dwarf local enterprise nationwide?

Either way, I have to admit that I like the idea of being able to choose where certain products originate. I’d like to have my hairbrush manufactured in Harare, for example. My magnets would come straight from the Pole (or at least Poland). I’d also like my candy direct from Candyland.

When The New York Times last week ran an article about one doctor’s arrest over the promotion of secondary uses (read: not approved by the FDA) of pharmaceuticals, it touched on a subject that has been colored a very flat grey– that is, exactly between black and white– for the past few decades.

Pharmaceutical companies have long engaged doctors in secondary uses of drugs approved by the FDA for other, often unrelated, applications. Until recently, the debate stopped right about here: either doctors were putting their patients at risk by using potentially dangerous treatments, or they were helping scientists discover the efficacy of new therapies. Or both. (By the by: either way, the practice is not legal.) From one perspective, it’s a noble pursuit (think cancer patient willing to risk everything for the chance to stay alive), while from another, questionable (think distribution of adult antidepressants to children, causing a rash of unexpected suicidal tendencies in the young patients).

However, the issue of the safety concerns over patients being prescribed off-label use has been eclipsed recently; today these same doctors, who claimed to be using off-label applications on their patients in the name of furthering medicine, are being paid a great deal of money in the name of research. Goodwill takes on a distinctly greyish hue when a doctor receives thousands of dollars in the form of research grants, directly from the manufacturers, for prescribing a particular medication.  

And holy cash cow!, pharmaceutical companies have used this type of relationship to create an enormous grey market for themselves. Despite their peers (Serono, Taketa-Abbott Pharmaceutical, AstraZeneca, Gambro, and GlaxoSmithKline) having been penalized a total of more than $3.5 billion over the last decade under the two legislative acts meant to thwart such practices (the False Claims Act and the Prescription Drug Marketing Act), pharmaceutical companies brazenly continue to contribute giant payoffs to doctors who promote their goods.

Today, however, it’s the doctors who take the money who are starting to be held accountable for their side of the collusive acts.  Perhaps it’s partly the Department of Justice taking a “follow the money” approach to the payoffs, but if it helps curb junkets, it’s probably healthier for medicine.