As the US grapples with an ailing economy, the notion of cost effectiveness of medicines has entered the Republican primary race. Although some people were concerned about rationing when the Obama administration introduced health care reform, Republican presidential contender Rick Santorum this week expressed support for the idea during what was billed as a major address on health care.

The ABC News clip does not show you everything he said, but his remarks were made during a brief, but heated exchange with the mother of a young boy, who asked Santorum what he would do to lower the cost of medicines. He responded that drugmakers are entitled to charge whatever the market will bear and certain meds may not be available to everyone if they are not cost effective.

“People have no problem going out and buying an iPad for $900. But paying $200 for a drug they have a problem with - that keeps you alive. Why? Because you’ve been conditioned in thinking health care is something you should get and not have to pay for. Drug companies, health care companies need to have a profitability, because if they don’t, then how are we going to regulate costs? We’re going to ration care,” Santorum said in response to the boy’s question, according to NBC News (read here) . “And you may be someone who gets that care, but this little boy, because of his condition, or because of his life expectancy may not. Why? Because it’s not cost effective.”

That prompted a sharp retort from the mother of the boy, who ABC News reports is taking Abilify, a Bristol-Myers Squibb medication for schizophrenia and bipolar disorder. She responded that she could go bankrupt paying for the drug, although she did not specify whether she has health care coverage or how much she pays for the medication. Santorum, who has a three-year-old daughter with a rare genetic disorder, replied that drugmakers need to make a profit in order to fund research and development, and innovative medications would not become available without such incentives.

“You have that drug, and maybe you’re alive today because people have a profit motive to make that drug,” he told her, according to ABC News. “There are many people sick today who, 10 years from now, are going to be alive because of some drug invented in the next 10 years. If we say: ‘You drug companies are greedy and bad, you can’t make a return on your money,’ then we will freeze innovation.”

“I hear these and sympathize with these very passionate cases,” he continued. “Look, I want your son and everybody to have the opportunity to stay alive on much-needed drugs. But the bottom line is, we have companies with the incentive to make those drugs. And if they don’t have the incentive to make those drugs, your son won’t be alive and lots of other people in this country won’t be alive. We either believe in markets or we don’t.”

A form of rationing occurs elsewhere, of course. In the UK, for instance, the National Institute for Health and Clinical Excellence, or NICE, uses a measure of cost effectiveness called Quality Adjusted Life Year, or QALY, to determine whether the government will pay for medications. NICE is regularly criticized by patient advocacy groups, although a columnist for The Independent argues the UK National Health Service would go bankrupt without such measures (see here).

Recently, some drugmakers have begun experimenting with money-back guarantees - improved outcomes or a refund - in hopes of enticing governments to provide coverage. Three months ago, Roche began offering hospitals and insurers in Germany a money-back guarantee for its Avastin cancer med, for instance (read this). In 2007, a Johnson & Johnson unit offered NICE a refund for the cost of its Velcade treatment for bone cancer multiple myeloma if results were unsatisfactory.

Santorum, however, did not suggest creating such an entity. Rather, he argued the marketplace - not the government - should determine availability. This would preclude drugmakers from having to haggle with an agency that has the authority to decline coverage. For the record, the pharmaceutical industry was the 15th-largest contributor - among industries - to his presidential campaign, according to the Center for Responsive Politics. Pharma contributed approximately $17,000 of a total of nearly $2.2 million that he collected through December 31, 2011 (see here).

Hired someone new and exciting? Promoted a rising star? Finally solved that hard-to-fill spot? Share the news with us and we’ll share with it others. That’s right. Send us your announcements and we’ll find a home for them. Don’t be shy. Everyone wants to know who is coming and going, especially with all the layoffs. Despite the downsizing, there is movement. Here are some of the latest changes. Recognize anyone?

And here is our regular feature. Send us a photo and we will spotlight a different person each week. This time around, we note that United BioSource promoted Jonathan Morris to senior vp and chief scientific officer. He jointed last year after UnitedBioSource acquired ProSanos Corporation, where he was ceo and president for nine years.

Achillion Pharmaceuticals promoted Joe Truitt to sr vp, business development;
Sunesis hired Adam Craig as chief medical officer;
Sunesis promoted Eric Bjerkholt to exec vp, corp development & finance;
Methylgene added Henry Fuchs to its board;
Affymax promoted Cynthia Smith to vp, market access & commercial development;
Anergis named Jacques-François Martin as chairman;
Savient Pharmaceuticals named David Norton interim ceo;
Savient Pharmaceuticals promoted Louis Ferrari to prez, No America commercial ops;
United BioSource named David Arciszewski as vp and counsel;
Array BioPharma added Gwen Fyfe to its board;
Veracyte hired Mark Spring as cfo;
Walgreens hired Robyn Peters as group vp of managed market sales;
Roche Diagnostics named Dan Zabrowski to run applied science;
Venable added Brenda Tranchida as of counsel in its Washington office;
Icon Medical Imaging named David Raunig as vp of informatics;
Acadia Pharmaceuticals added Bill Wells to its board;
PBS Biotech added Robert Baltera Jr. to its advisory board;
Entelos hired Mark Hovde as vp of sales and marketing;
Entelos hired Will Frederick as cfo;
Napp Pharmaceuticals named Dietmar Leitner as managing director;
Intellipharmaceutics hired Ira Baeringer as vp business development;
ImmunoGen added Kristine Peterson and Dean Mitchell to its board;
Pharmaceutical eConsulting added Shylendra Kumar as senior principal consultant;
Profil Institute for Clinical Research added John Amatruda and Jerrold Olefsky to its board;
Patheon named Antonella Mancuso president, global commercial ops and chief manufacturing officer.

Ladder shot thx to Robert CB on Flickr Creative Commons

And so, yet another working week is about to draw to a close. As you know, this is our treasured signal to daydream about weekend plans. And we have a great deal on our list: spending time with Mrs. Pharmalot; hosting a dinner for friends in the Pharmalot corporate cafeteria and, sadly, visiting still other friends who have lost someone special. And you? What will you do? Perhaps this is a good time to curl up with an e-book or take a nap. Or maybe watch that football game. Whatever you do, have a grand time, but be safe. See you soon…

Drugmakers Have Spent Less On TV Advertising (New York Times)

Abbott And Hospira Win Ruling Over Employee Benefits Plan (Bloomberg News)

Allergan Halts Lap Band Sales To 1-800 Clinics (Los Angeles Times)

J&J Hid Studies To Boost Risperdal Sales, Lawyer Tells Jury (Bloomberg News)

Health Care Reform Cut Senior Rx Spending By $2.1 Billion (Pharma Times)

M&A Winners And Losers Among Japanese Drugmakers (Wall Street Journal)

Merck Wins FDA OK For Extended Release Janumet (Associated Press)

Gilead Drug Posts Positive Hepatitis C Results (Bloomberg News)

Merck KGgA Signs $500M Cancer Pact With Threshold Pharma (Pharma Times)

Six months after telling Congress that the FDA may loosen conflict of interest rules because finding qualified experts to serve on advisory committees has become increasingly difficult, FDA commish Margaret Hamburg has issued an about-face and now says the rules should remain intact. She confessed her change of heart before a House committee hearing yesterday on user fees.

Why the reversal? For months, FDA data has actually shown that the percentage of conflict of interest waivers granted for advisory committee members has remained below targets. At the same time, the FDA vacancy rate for advisory committees has remained low (see here and here). In other words, finding qualified experts is not a problem.

Yet, Janet Woodcock, who heads the FDA’s Center for Drug Evaluation and Research, last year was openly pushing to relax the rules, which include barring participation for any individual who has potentially conflicting financial interests totaling more than $50,000 (you can read more here). Two years ago, the agency tweaked its procedures for granting waivers (see this).

The effort by FDA officials to roll back the rules, which were passed in 2008 after an arduous campaign to promote greater transparency at the agency, alarmed some consumer advocates, who argue that the concerns expressed by Hamburg and Woodcock have more to do with pressure from the pharmaceutical industry than actual difficulties finding unconflicted experts for panels.

Last fall, three US Senators introduced a bill to reverse FDA regs that bar experts with financial ties to drug or device makers from serving on committees without a waiver. The impetus has been a heated debate over the FDA approval process for devices, although drugmakers share the sentiment. “Our view is there a need to improve the process of the advisory committees, particularly in areas where there is a paucity of experts,” Geno Germano, who heads the Pfizer specialty care and oncology unit, told the House Energy & Commerce Committee yesterday.

But in recent months, Hamburg and Woodcock were undermined by their own data, as has been reported more than once (see this and this). Consequently, Hamburg could no longer - at least, not easily - that the FDA was truly having difficulty finding qualified experts.

“At the present time, we are not bumping up against our cap in terms of waivers,” she told the committee. “We don’t, at the moment, see major areas where a legislative fix is required.” Of course, Hamburg would have known this last summer if she had reviewed agency data before issuing her earlier statements.

This has become an annual ritual. Each year, a shareholder activist organization called Ethos slams Novartis over Dan Vasella. Once again, his compensation is the issue, although in years past, Ethos has also criticized the drugmaker for allowing him to serve as both chairman and chief executive. Vasella and the board eventually relented and he is now only the chairman (see here and here).

The latest complaint focuses on his $14.8 million compensation last year, which Ethos says is inappropriate, given that Novartis profit fell 7 percent. Meanwhile, the drugmaker has recently announced plans to eliminate thousands of jobs. Hundreds of positions are being eliminated in Switzerland, where Novartis is based, and another 2,000 from the US (see this and this).

And so, Ethos believes Novartis shareholders should vote against re-electing board members who have responsibility for giving a bonus to Vasella. The initiative is part of an attack on Vasella for “earning a million Swiss francs a month, which goes too far,” Ethos director Dominique Biedermann told journalists in Zurich, according to Reuters.

Although Novartis conducted a say-on-pay shareholder vote two years ago, the drugmaker does not do so annually, according to Ethos, which is influential because it makes recommendations for Swiss pension funds. And so, the organization recommends shareholders vote against re-electing two Novartis board members, William Brody and Srikant Datar, who are on the compensation committee.

We asked Novartis for a comment and will update you accordingly. [UPDATE: A Novartis spokesman replied by writing that net income rose, the compensation of the executive committee is measured against profits, as well as other metrics, and that say-on-pay voting only takes place before significant changes in the compensation system are proposed. The complete response is lengthy, however, so you can read it after the jump…

Read more »

This may not come as a surprise, but the ongoing shortages of various prescription drugs - notably, injectables that are used to treat assorted cancers - are not only preventing patients from receiving timely or the most appropriate treatments, but patients are dying sooner than they would otherwise and tumors are recurring more often, according to a survey of oncologists.

“The consequences are real. The quality of cancer care has been materially impacted. It’s disheartening,” says Susan Schwartz McDonald, ceo of National Analysts Worldwide, a market research and consulting firm that queried 204 oncologists last month. “Unfortunately, the prevalence is not really surprising, because we know the shortages have been severe. But this really brings it home… And it’s particularly painful to think about the factors distorting what’s happening in the supply chain.”

Unless shortages are alleviated, half of the oncologists surveyed expected the situation will worsen, while only 14 percent foresee a reversal. The results come just as yet another bill was introduced on Capitol Hill to combat the problem. The legislation would require the FDA and drugmakers to develop a list of shortages and allow the Drug Enforcement Agency to transfer quotas, among other things.

The survey found little reason for optimism. For instance, 23 percent of oncologists reported that patients were dying a few times a year sooner due to shortages, and 14 percent say this happened every month, while 3 percent claimed this occurred each week. Conversely, 60 percent say they had not seen this happen. Just the same, 40 percent is a big proportion.

Meanwhile, 46 percent of the oncologists report that there were times in the past year when patients were unable to receive timely treatment due to product shortages, and 31 percent report this occurs each month. Another 15 percent said this happens each week and 3 percent lamented that the problem crops up each day.

Equally troublesome, 39 percent of the oncologists reported that patients were unable to receive the best treatment at all and 28 percent this problem occurred each month, while 15 percent complained this happens every week and 2 percent say it occurs every day. This means that just 16 percent of oncologists never encountered this problem.

And 32 percent of the oncologists say their patients experienced a tumor recurrence a few times last year, while 13 percent say this happened each month and 3 percent report the problem arose every week. One percent report the problem was noticed each day. So is the glass half full or half empty? Fifty-one percent reported this was not a problem.

To what extent the legislative efforts will stem the shortages is unclear. The bill that was introduced in the House this week by John Carney, a Democrat from Delaware, and Larry Bucshon, a Republican from Indiana, would require the FDA to take several steps to more aggressively monitor the problem and improve communication within the industry and the medical community. Congressional sources say the bill may be hitched to legislation renewing the Prescription Drug User Fee Act.

Besides developing a so-called critical drug list, which will identify drugs that are vulnerable to shortage, the legislation would require the FDA to notify distributors of an imminent critical shortage, but withhold notification to a distributor if the US Attorney General finds the distributor is involved in gray market shipments (read more here and here).

The bill would also requires the FDA to expedite the review of any application for approval of a drug that is vulnerable to shortage and on the critical drug list, as well as expedite reviews of any request by a drugmaker of a critical drug to approve a change to the manufacturing process or facilities of that drug or to approve an application for an alternate active pharmaceutical ingredient supplier (here is the legislation, which is called the Drug Shortage Prevention Act).

Also, the FDA would be required to notify the DEA of any critical drug on the shortage list and provide info to the US Attorney General to determine whether quotas under the Controlled Substances Act should be increased. This would largely refer to ADHD meds, which have also been in short supply over the past year. Several House Democrats are probing two drugmakers (back story).

pic thx to joguldi on flickr

How does the FDA treat employees who blow the whistle? US Senator Chuck Grassley, a long-standing agency nemesis, wants to know. And so he has written FDA commish Margaret Hamburg to explain the circumstances surrounding a controversial episode in which several current and former agency employees say they were harassed and dismissed after complaining about device reviews to Congress.

Their charges were contained in a sensational lawsuit filed last month, in which they accused the agency of secretly reading their personal email accounts, while the agency maintained they illegally disclosed confidential business information after writing to Congress to complain they were being coerced to approve devices that posed unacceptable risks (back story).

For instance, the employees, who are all scientists and doctors and worked in the Center for Devices and Radiological Health, charged three devices could have missed signs of detecting breast cancer; one device risked falsely diagnosing osteoporosis, and an ultrasound device could malfunction while monitoring pregnant women in labor.

Their lawsuit charges the FDA repeatedly attempted to initiate formal criminal investigations and harmed their reputations, which has angered Grassley. “It is troubling me to see your agency actively pursue the dismissal of an employee against the advice of the OSC (US Department of Health & Human Services Office of Special Counsel) - not because they violated procedure and leaked genuinely confidential classified information - but simply because you “cannot trust him,” he writes Hamburg.

Moreover, he charges that the actions taken by the FDA contradict testimony from Hamburg before Congress in which she maintained that whistleblowers “serve a very important role in government in surfacing critical issues and concerns and making sure they’re addressed. As leader of FDA, I would very much want to create a culture that all enables all voices to be heard.”

Grassley goes on to note that interfering with a Congressional inquiry - the letter from the employees sparked Congressional interest in the review process - is a federal crime, as is preventing employees from providing information to Congress. And so, he wants Hamburg to explain not only how this episode occurred, but any steps the agency has taken to avoid a repeat (here is his letter).

pic thx to katerha on flickr

About nine months from now, a new phenomenon may appear at a hospital near you: the Pfizer baby. Why? The drugmaker has taken the embarrassing step of recalling 1 million packets of birth control pills due to a packaging error. Some blister packs may contain an inexact count of active ingredient tablets and, as a result, the tablets may be out of sequence. This may cause unwanted pregnancies (back story).

This is, of course, a potentially serious matter. For its part, the drugmaker is trying to be responsive, as the video clip featuring Pfizer chief medical officer Freda Lewis-Hall indicates. But the episode does raise several questions, including liability. Pfizer has already acknowledged a mistake. And after all, any pregnancy that occurs would have been unintentional - there was a reason that women were taking the pills and having a baby was, presumably, not on the list. Yet, we also know that some women will not get an abortion. Or if they are willing, they are unable to do so in certain places.

Already, lawyers have posted the news on their web sites and one lawyer tells Fox News there may be “very significant verdicts” against Pfizer. “In essence a person takes birth control pills so they don’t have to address issues that, as a result of the pill not working, they’re now going to have to address,” says Greg Gianforcaro, a litigation attorney in New Jersey. “We’re looking at, how do you put a price tag on a child’s education, a child’s upbringing and other costs – initially, for diapers, then for sneakers, and then 20 years later, college and marriage?”

Such lawsuits do get filed. For instance, a woman in Georgia last fall charged several companies, including Endo Pharmaceuticals, with being negligent for selling birth control pills that were incorrectly packaged. As a result, she is pregant and “has suffered, and may suffer, bodily injury resulting in pain and injury, mental anguish, loss of capacity for the enjoyment of life, expensive health care and treatment, loss of earnings, and loss of ability to earn money, according to the lawsuit.

However, liability may be modest, according to Slate, which writes that “damages in wrongful pregnancy cases are usually limited to replacement contraception, the cost of prenatal care, labor and delivery expenses, and sometimes a small award for emotional distress. If the woman chooses to terminate the pregnancy, courts usually won’t force the defendant to pay for an abortion.”

Why? For one thing, a birth control pill is not 100 percent effective (see this), which could make it harder to argue that an unwanted pregnancy was definitively caused by the Pfizer mishap. And the drugmaker could argue that women failed to take their pills on schedule, or missed some dosages, Gianforcaro notes.

And Slate rang two law professors who indicated that judges generally are unwilling to view life itself as a type of damage and that “the costs of raising a child are offset by the joys of parenting.” Or as Gianforcaro frames the point: “having children could be associated with inherent benefits that outweigh the costs.”

This suggests that Pfizer would not be on the hook for all those other expenses, such as clothes, child care, toys, food, lessons, camps and, in some cases, private school. Of course, such logic overlooks the fact that the women were using birth control pills because they did not want to get pregnant. But what do you think?

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And so, the drugmaker is, indeed, eliminating thousands more jobs, as reports indicated earlier this week. Where will they be coming from? Well, 3,750 jobs are being slashed from sales and marketing and assorted administrative operations. Another 2,200 positions are being eliminated from R&D and the remaining 1,300 will come from operations, as more supply chain outsourcing takes place.

The cuts, which are designed to save $1.6 billion annually, by the end of 2014, underscore the fallout expected from patent expirations on some of its biggest sellers, notably the Crestor cholesterol pill, the Nexium acid reflux med and the Seroquel antipsychotic. The drugmaker warned that profits will fall as much as 18 percent this year, but will buyback $4.5 billion in stock to appease investors (see here). The layoffs are in addition to 21,600 positions already eliminated since 2007.

The layoffs continue the recent acceleration of job cuts in the pharmaceutical industry. Recently, Takeda Pharmaceuticals announced plans to eliminate 2,800 jobs (see here), Teva Pharmaceuticals is shedding 1,500 positions (read this), Sanofi axing hundreds of workers (read here) and Novartis is slashing 2,000 jobs in the US (see this). This morning, Challenger Gray & Christmas noted that 4,071 pharma jobs were eliminated last month in the US, the third-highest industry tally, behind retailing and the financial sector (look here).

In recent weeks, AstraZeneca had already disclosed plans to eliminate 400 jobs in its commercial business and US headquarters, and another 1,150 jobs from the US sales force, as more use of ‘digital technology’ and call centers are made to reach physicians. Overall, the number of sales and marketing regions has been reduced from five to three, and smaller countries are being clustered as they share more services in order to lower costs.

In R&D, neuroscience is taking a big hit. The drugmaker is forming what it calls a ‘virtual’ neuroscience Innovative Medicines unit that will include a small team of around 40 to 50 scientists who will work on discovery and development externally with partners in industry and academia, such as the Karolinska Institute in Stockholm. They will be based in Boston and Cambridge in the UK.

As a result, an R&D site in Montreal, where 132 people work and that focuses on neuroscience, will be closed. And another in Södertälje in Sweden will also lose neuroscience jobs, although this facility is also the largest AstraZeneca manufacturing site and a base for commercial business covering the Scandinavian markets, so this remains open (see this).

The latest cuts amount to a third phase. Two years ago, AstraZeneca indicated plans to reduce its overall headcount by 10,400 jobs. Between 2007 and 2009, the drugmaker eliminated 12,600 positions, a move that saved $1.6 billion annually, although that figure rose to $2.4 billion by 2010. The cuts announced that year were designed to save $1.9 billion annually by 2014.

axe pic thx to brittgow on flickr

Hello, everyone, and good morning to you. Another fine day is unfolding here on the Pharmalot corporate campus, where the sun is shining and the official mascots are barking. Perhaps, this because they have spotted the groundhog. You never know. Whatever the case, we are digging in for another busy day and warming our engine with another cup of stimulation - Golden French Toast, in this case. So please join us. Meanwhile, here are some tidbits. Hope your day goes well. And if you see the groundhog, let us know…

Pathway Is Found For The Spread Of Azheimer’s (New York Times)

UK’s NICE Rejects J&J’s Zytiga Prostate Cancer Drug (Bloomberg News)

Drugmakers Scuttle FDA Approval Plan Push By Biotechs (Bloomberg News)

Is Lilly’s Alzheimer’s Drug Its Ace In The Hole? (Reuters)

New Depression Drugs Offer Hope For Toughest Cases (NPR)

FDA To Review Arena Diet Pill At Upcoming Panel Meeting (Dow Jones)

Glaxo Settles 20,000 Avandia Lawsuits, Lawyer Says (Bloomberg News)

Impax Labs Licenses AstraZeneca Migraine Drug (Reuters)

Can Ranbaxy Recover From Its Debacle? (Business Standard)

Pakistan Seals Drugmaker That Sold Tainted Meds (AAJ-TV)

EU Tells Italy To Comply With Generics Rules (Pharma Times)

EDITOR’S NOTE: Please check this post for updates throughout the morning