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Monday, June 29, 2015

Antibiotic Incentives - Marketing vs. Education


“What have you been doing for the last two weeks?” you ask. I’ve been waiting for news on the antibiotic front.  The G7 came out with a completely lame statement that has no specific commitments.  They suggest they meet together again to share ideas for “best practices.”  What we really need is money.  But again, no one wants to talk about that. 

More recently, Consumer Reports published an article that concentrates on aspects of antibiotic stewardship.  While we all agree that physicians and patients should not misuse or abuse this precious resource, Consumer Reports spends almost no time on the issue of animal antibiotic use nor does it discuss measures to improve the antibiotic pipeline.  To be fair, there is another installment yet to come – hopefully these deficiencies will be addressed there. 

In the meantime, I have been giving serious thought as to how to implement the O’Neill incentives in some realistic manner. One area I have been concentrating on is related to the educational component I mentioned in my previous blog.  Here, while respecting de-linkage of marketing from profit, someone must provide education to physicians and caregivers about the new product such that they understand how to use it appropriately.  

One example I will never forget is related to Wyeth’s Prevnar vaccine to protect infants and children from pneumonia, bacteremia and meningitis caused by Streptococcus pneumoniae.  When the marketing group first polled pediatricians as to the need for such a vaccine, only a very small percentage agreed that such a vaccine would benefit their patients.  This was apparently because in any given pediatric practice, the number of cases of such disease each year was very small.  Therefore, individual pediatricians could not see the larger picture.  Wyeth partnered with the Centers for Disease Control in the US as well as with pediatric infectious disease physicians to educate clinicians as to the actual impact of the disease within the US population of children.  With these data, they could then make an educated guess as to the favorable impact of the vaccine that was at that point still undergoing its late stage trials.  At the time of launch, following the educational campaign, something like 70% of pediatricians understood that such a vaccine would benefit their patients. In point of fact, the vaccine and its later improved versions have had an enormous impact on the disease in the US and around the world and are recommended as a routine vaccination for children universally. Prevnar was also the largest dollar volume launch of a product in the history of the pharmaceutical industry at the time. I would say that this was a win-win for everyone. 


While the marketing aspect of the campaign might make people feel queasy, I think that the educational component was clearly necessary and valuable in getting the new vaccine delivered to physicians and patients who then benefited from prevention of a serious and life-threatening disease. Part of any contract for implementation of the O’Neill upfront incentive payment must include a commitment for such an educational effort. This effort could be carried out in concert with professional societies to make sure educational boundaries are respected.  The regulatory agencies will also insist, as always, that the label be respected in any official company-released document.

Friday, June 12, 2015

Pharmaceutical Companies are not Public Health Agencies

A recent article in the New York Times aroused my ire (it happens more and more often these days). The article is about the stance of the pharmaceutical industry on world drug pricing in the context of the ongoing negotiations for a Pacific Trade Partnership deal. An Australian lecturer in public health was quoted as saying that the annex in question should not even be on the table. The annex, it is said, will raise global drug prices by allowing pharmaceutical companies more control over the prices they can charge in participating countries.  The companies want to make countries like Australia more like the US in terms of the pharmaceutical market. No wonder.  The US accounts for about half of all pharmaceutical profits worldwide.  Drug prices are an average of 30% higher in the US compared to the rest of the world. While I don’t agree with the industry that making the world more like the US is necessarily a good idea, I also do not think that using Australia as a model for drug pricing is good for the public health either.

When I was at Wyeth, I remember debates within our commercial organization as to whether it was even worthwhile to market certain products in Australia at the prices the government would allow. The population of Australia is 23 million – smaller than Canada’s 36 million and less than one-twentieth the size of Europe. Some drugs might only be used by a very small number of patients in Australia in any given year. The return on any marketing investment might be quite minimal. Why bother?  Higher prices might make the difference in some cases.  And, admittedly, for some products, a concern for the public health frequently motivates the pharmaceutical industry despite a general view to the contrary. Australia has a particular way of valuing drugs where less frequent dosing, better activity, and greater safety only provide marginal price increases compared to cheap generics. Only “truly innovative" drugs (as they define them) get higher prices.  As such, Australians have some of the lowest drug prices in the world, but lack some therapies that could provide better public health.  For a nice overview on world health pricing, see the WHO report here.

The US is the only country (essentially) that does not have (nor does it allow) national negotiations for drug prices.  Medicare is not allowed to negotiate and neither is the Veterans Administration. This probably explains our higher prices.  It’s the Wild West out there.  Only the large, private, managed care organizations and payers can carry out such negotiations.  What this means, though, is that US dollars drive innovation within the pharmaceutical industry.  Why should the US taxpayer bear this burden compared to the rest of the world? OK – some countries are poor and should not be expected to pay the same prices as in the US.  I agree.  See what Gilead did about that recently. But compared to Europe, which, in spite of austerity and the economic crisis, is not poor, we still pay about 30% more for drugs. 

On the one hand, fewer profits to the industry will translate to less innovation in drug discovery and development.  This is clear – its just a matter of how much of their profits companies invest in research. On the other hand, it seems unfair that the US should bear the brunt of this burden.  Trade negotiations should bring this into balance.  This might involve a greater ability for national drug price negotiation in the US, and less stringent controls in the rest of the world.


Since, on the US side, any change here would require legislation.  And legislation that involves the US government actually spending money probably has as much chance of passing as snow in Miami in August. But one thing is clear to me – the US should not become Australia!

Wednesday, June 3, 2015

Implementing Antibiotic Incentives

OK.  Let’s say that somehow, someone, somewhere comes up with several billion dollars to provide the upfront payments for new antibiotics to fight resistant pathogens. How will this incentive be implemented?  Here are a few considerations in this regard.  I’m sure I have missed many other issues that some of you may be able to point out.

1.     If this is to be a one-time upfront payment of a lump sum as suggested by O’Neill’s report, what is the term of obligation of the pharmaceutical company to supply the new product at low price or free of charge? 
a.     The term should be linked to the exclusivity of sales of the product in some way.  At the same time, therefore, there must be a way for the company to transition to charging some price once exclusivity has expired.  This will incentivize generic companies to produce the product and will help keep prices low after the period of exclusivity.
2.     Who will be responsible for distributing the product to hospitals and other healthcare facilities?
a.     The pharmaceutical company.  They have the systems in place to provide this service whereas governments are generally not equipped to take this on.
3.     Who will decide what kinds of antibiotics are needed and which might be candidates for the incentive payment?
a.     I think that this question will have to be dealt with within each market individually.  In the US, it might be a committee of experts including the Infectious Diseases Society of America, the FDA and perhaps others. In Europe, there might be different answers from different markets within Europe.  For example Greece and Spain might have different needs than the Netherlands.  Here – Europe would actually have to hang together on the financial front (good luck on that).
4.     De-linkage?  I agree with many that the idea of de-linkage could be a good thing.  With an upfront payment for a new antibiotic, the need for marketing to garner sales and perhaps encouraging unnecessary over-use of antibiotics is no longer present or is at least greatly diminished. But no one is talking about education.  That is, when a new product, especially a pharmaceutical product, hits the market, there is a considerable educational need such that physicians understand how and when it is appropriate to use the new product.  With no incentive for the pharmaceutical company to carry out this important educational function – who will do this and how? Will this be left to professional societies like the Infectious Diseases Society of America?  Will the CDC take this on?  If they do – who is paying for that effort? As much as I admire these lofty and important organizations, I do not think they are prepared for this.  And if this is the plan, will these organizations be held to the same restrictions on what they can say (don’t stray from the regulatory label) as a company would?  And how will they reach all the US physicians?  In the US, almost 80% of US hospitals have less than 200 beds and over 50% have less than 100 beds. Who will reach out to those hospitals and how?  Did I hear you say, “Webinars?”  That won’t work in my hospital (less than 100 beds).  In my hospital, someone will actually have to come and provide a continuing education seminar.  Then there will have to be follow-up contacts with the ID physician and the pharmacy. Who is doing that? I don’t have this answer.  Do you?


I am vehemently in favor of the kind of incentives included in the O’Neill report. But I do not yet see a clear path to implementing them. Lets have some help here.

Tuesday, May 26, 2015

Antibiotic Opportunities

Since the appearance of Jim O’Neil’s last report, there has been a surge of international (virtually all ex-US) thinking about how to approach the problem of antibiotic resistance. Most recently, the WHO approved a plan to combat antibiotic resistance that included a plan to develop a plan to support new investment in antibiotic research – if you see what I mean. Germany, holding the presidency of the G7 Summit this year, will introduce a plan to provide international funds to support the development of new antibiotics to combat resistance. Part of this plan will be to designate these antibiotics as orphan drugs – a topic they have already raised with the European Commission and upon which I reported recently in this blog.

All of this is nothing but good news. But I still have a problem with seeing, in a practical way, how any of these good intentions will turn into the effective use of dollars (or more likely Euros) as an incentive that will attract companies (back) to antibiotic R&D. Whatever the plan is, it must be crystal clear and must lack the usual bureaucratic intricacies of the usual WHO and EU funding mechanisms. It must also involve large sums of money as noted in the O’Neill report - $1-3 billion per antibiotic aiming for around 10 new antibiotics over the next twenty years.  That’s a lot of money.  Of course, compared to O’Neill’s worst-case scenario of no working antibiotics and a $100 trillion hit to the world economy, it’s a drop in the bucket.

It seems likely that something involving actual funding will come out of all this. How it will work in reality right now is anyone’s guess. 


If I were a pharmaceutical company who was not active in antibiotic research today, I would be making plans to be there tomorrow. A couple of companies that come to mind are Vertex and Gilead – especially Gilead.

Vertex has dabbled in antibiotic research in the past and finally gave up the ghost several years ago.  Bad timing in my view – but, given their lack of productivity, maybe it was not the wrong decision at the time.  Maybe now is the time to rethink. 

With the entry of Gilead’s high-priced drugs for Hepatitis C to the market place over the last two years, their earnings have soared.  Analysts and investors are asking how Gilead will be able to continue to grow?  Will this require an acquisition?  And if this were to occur – in what area of pharmaceuticals should it focus?  Well Gilead, here is your answer – antibiotics. Of course, this is not so easy since the only large antibiotic franchise that might still be available for “partnering” if not a complete takeover is that of AstraZeneca.  But with their pipeline around the novel B-lactamase inhibitor avibactam, this would be attractive.  That is, it would be attractive if AstraZeneca is reasonable in its demands. Of course, AstraZeneca could do with some rethinking as well, as I have been saying for the last two years.
 

So, I remain skeptical that organizations like the G7, the EU and the WHO can actually get their acts together to come up with the kind of monies we are targeting. And importantly, a clear pathway to those monies must also be provided. Nevertheless, I believe that something good will happen in the near future. This is not the time for indecision in the industry.  This is the time for bold, pre-emptive action such that you are positioned to take advantage of the coming opportunities.

Friday, May 15, 2015

O'Neill's Latest - Antibiotics in Neverland

The latest installment of Jim O’Neill’s report for the UK government on securing a future for antibiotics has just appeared.  Like the other chapters of the report, there is much to like here.  But when it comes down to the key next step – money – his shot is wild.

Entitled, “Securing New Drugs for Future Generations,” it suggests three interventions to get us across the goal.  (1) Create a more predictable market for new antibiotics. (2) Provide focused funding for early research into new antibiotics. (3) Create centralized platforms for the efficient clinical development of antibiotics targeting resistant pathogens.  There is nothing new in any of these proposals – but its good to get confirmation from a task force with the stature of this one. In fact, we are already doing (2) and (3) – jut not enough and not very well.  Partly, this is a problem of training, something O’Neill does not discuss. What we are not doing at all is (1).

O’Neill suggests a global buyer provide somewhere in the range of $1-3 billion as an upfront payment for an appropriate new antibiotic.  The global buyer, by such a purchase, would immediately provide a significant return on investment to the company that developed the antibiotic.  The buyer would then distribute the drug according to demand and need and would monitor usage. Such a payment would immediately de-link marketing from sales or use of the antibiotic since the buyer would be the distributor. The obvious problem with this is to try and designate such a global buyer who could actually coordinate distribution and use on a global scale. The only entities I know who come close to this are pharmaceutical companies and they are not so good on the stewardship side of things. Governments are notoriously useless here to say nothing of WHO or the UN or the EU.

A hybrid approach includes an upfront payment that reimburses costs of development including prior failures – still in the $1-3 billion range – but that allows the company to sell and make its profit in that way.  But here, the price would remain low since the company no longer has to make up its research investment.  The de-linkage and stewardship components would not be the same, but would be much easier to manage since sales pressures would be lower.

O’Neill, for the most part, dismisses high prices as a way forward.  My own belief is that his other proposals are simply not implementable on this planet today.  Therefore, a model including high prices in some markets (US, I’m talking about you!) is inevitable.  Further, a global buyer is off the table.  Funds from governments where individual markets then work out their own distribution systems - probably involving the pharmaceutical company - is a much more realistic way forward. 

The report also includes a proposal on funding early research and here O’Neill takes a page from the Innovative Medicines Initiative in Europe and suggests that the pharmaceutical industry fund these efforts. Well . . . .I think maybe too much beverage from the northern reaches of the UK was available when the committee was thinking about this one.  There is a dearth of funding for research largely because the pharmaceutical industry has abandoned the area.  Why we think those companies who have abandoned antibiotics will now fund research in the area is beyond me.  Of course, if large, upfront payments become a reality, this might happen – but not before.

The final portion of the report is dedicated to centralizing the clinical development of antibiotics using centers designed to provide patients to participate in such trials.  There is also the requirement that regulatory requirements for trials be harmonized.  This, currently, is mostly the case for the US and EU – even though trial endpoints differ in the two jurisdictions.  But this issue is relatively easily handled through the use of two different statistical analysis plans, one for the EU and one for the US.  Its outside of these jurisdictions where things are getting stickier these days and O’Neill’s report does not go into those issues.


So, while I think that the report is a good one in terms of the monetary figures proposed, in terms of practical implementation, we seem to still be in Neverland. Sorry, Jim, but the UK is actually going to have to put up real money, as will its European (for now) colleagues.  I think the US will remain the land of high prices.