Monthly Archives: October 2018

Holistic Disease Treatment Solution: Critical For Pharma Success

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The speculation over quite some time has ended now. The most important C-suite office of the world’s top pharma company will find a brand-new occupant at the dawn of a brand-new year, on January 01, 2019. Albert Bourla will now be on the saddle to lead Pfizer moving towards a new horizon of success, in place of Ian Read.

What makes this change interesting to me, is the new leader’s not just shaking up the top team at Pfizer, but his simultaneous announcement for another brand-new C-Suite role in the company – The Chief Digital Officer (CDO). She will ‘lead the company’s digital efforts across research, discovery and business processes.’

Merck & Co. also joined ‘the chief digital officer parade’ on October 17, 2018 when it announced the appointment of chief information and digital officer, also as a member of the company’s Executive Committee. Notwithstanding a few global pharma companies’ have already started creating this role, the timing of this initiative by the top global pharma player, sends an interesting signal to many. Undoubtedly, it is a strategic move, and is surely backed by a profound intent. In this article, while exploring this point I shall try to fathom whether or not any fundamental change is taking shape in the strategic space of pharma business.

A fundamental change is taking shape:

This fundamental change, I reckon, is driven by realization that just discovery of new medicines, high quality manufacturing and high voltage marketing can no longer be regarded as success potent in the industry. There emerges a palpable and growing demand for holistic solutions in the disease treatment process, for optimal clinical outcomes and reduction of the burden of disease.

That several top global pharma companies have recognized this fact, is vindicated by what the Sandoz Division of Novartis acknowledged on its website. It quoted Vas Narasimhan – CEO of Novartis saying: “We are on the verge of a digital revolution across every aspect of the healthcare sector, from the lab bench to the patient’s bedside.”

Interestingly, pharma stakeholders’ interests and expectations, including those of patients, are also progressing in the same direction. This, in turn, is changing the way of leading and managing a pharma business – requiring a kind leadership with specific expertise in several new areas. The new C-suite position for a CDO is a proof of this change gathering strong tailwind.

What prompts this change?

As I see it, besides scores of other associated factors that digital technology offers to all, a single characteristic that stands out is the changing patients’ expectations for optimal clinical outcomes out of an affordable and involved disease treatment process.

This has always been so, but is now changing from mere expectations or just a hope, to patients’ demand, from both physicians and the pharma companies. This is a clear writing on the wall in the days ahead, and all concerned should take note of it, seriously. Does it mean that the broad flowchart of the disease-treatment-process, as I call it, has changed? Before delving into that area, let me briefly explain what exactly I mean by saying so.

A flowchart of the disease-treatment-process:

The broad flowchart for most of the disease-treatment-process, have primarily 6 ‘touchpoints’ or points of references, as I see it, which may be summarized as follows:

Patients – Signs & Symptoms – Doctors – Diagnosis – Medicines – Clinical outcomes

This means, patients with signs and symptoms of a disease come to the doctors. With various diagnostic tests, the disease or a combination of diseases is diagnosed. Then, doctors prescribe medicines or any other required medical interventions for desired clinical outcomes.

Has it changed now?

There doesn’t seem to be any fundamental change in this flowchart even today. But, the way the pharma players cherry-pick their areas of focus from its various touch points, is undergoing a metamorphosis.

As it stands today, to sell medicines – innovative or even generic pharma companies primarily focus on the doctors and off-late on patients – but just a few of them, to offer clinical outcomes better or same as others. In the evolving new paradigm, a successful drug companies would need to focus on each of these six elements of the flowchart with great expertise and sensitivity, from the patients’ perspective.

The position of CDO is expected to be a great enabler to facilitate the process of integrating all the touchpoints in the disease-treatment-flow. This will, in turn, offer a holistic treatment solution for patients – selling more medicines being the endpoint of this objective. If it doesn’t happen, the touchpoints where pharma is not focusing today would be captured soon by the non-pharma tech players. This will make achieving the financial goals of the organization even more difficult.

Let me illustrate this point by adding just one important area from this flowchart to the traditional pharma focus areas. This touchpoint goes hand in hand with the prescription of medicines – medical diagnosis. Providing patient- friendly disease prevention and monitoring tools may be yet another such area.

Current accuracy of medical diagnosis – ‘only correct in 80 percent of cases’:

The above was quoted by Sandoz (a Division of Novartis) in its website. It highlighted that the researchers at John Radcliffe Hospital in Oxford, UK found that several medical diagnoses based on a limited range of factors are only correct in 80 percent of cases. It means ‘a diagnosis may miss imminent heart attacks, or it may lead to an unnecessary operation,’ it said.

The January 31, 2018 article published by Futurism.com - the publishing arm of Futurism, based in New York City, also underscores some interesting facts in this regard, including the above example. Some of these are fascinating, as I quote hereunder:

  • Researchers at the John Radcliffe Hospital in Oxford, England, developed an AI diagnostics system that’s more accurate than doctors at diagnosing heart disease, at least 80 percent of the time.
  • At Harvard University, researchers created a “smart” microscope that can detect potentially lethal blood infections with a 95 percent accuracy rate.
  • A study from Showa University in Yokohama, Japan revealed that a new computer-aided endoscopic system can reveal signs of potentially cancerous growths in the colon with 94 percent sensitivity, 79 percent specificity, and 86 percent accuracy.
  • In one study, published in December 2017 by JAMA, it was found that deep learning algorithms were able to better diagnose metastatic breast cancer than human radiologists when under a time crunch. While human radiologists may do well when they have unrestricted time to review cases, in the real world a rapid diagnosis could make the difference between life and death for patients.
  • When challenged to glean meaningful insights from the genetic data of tumor cells, human experts took about 160 hours to review and provide treatment recommendations based on their findings. IBM’s Watson took just ten minutes to deliver the same actionable advice.

Thus, the bottom-line is: Medical or clinical diagnosis is a crucial area where the tech savvy environment can add significant unmet needs to save lives of many. Consequently, this space is emerging as an Eldorado, as it were, for all those who are seriously interested in diving deep in search of a golden future in the related business.

Technological players are making forays:

Several tech companies have sensed the reward of a pot of gold in the above space, despite the journey being quite arduous. Consequently, many of them are coming up with user-friendly and disease-specific digital tools and health apps, compatible with smart phones or smart watches. These help patients monitoring their own health data, independently, and be aware of the disease progression, if any. Simultaneously, it also enables physicians not only to accurately diagnose a disease, but also to keep a careful vigil on the progress of the treatment.

To illustrate the point with an example – say about Apple. The company began making inroads into the healthcare space with health apps and fitness-tracking via iPhone and Apple Watch. Interestingly, riding on partnership and acquisition initiatives, it is now carving a niche for itself to provide complete health records of the users by capturing relevant disease-specific clinical data.

Apple Watch Series 4, for example, has ECG feature and the ability to detect irregular heart-rhythm, which is US-FDA approved. Reports indicate the company is also in the process of developing a non-invasive glucose monitoring tool, besides many others. Curiously, the company has already given a signal to extend the usage of iPhone to a reliable diagnostic tool for many disease conditions. Most important to note is, this concept is fast gaining popularity.

Calls for of a holistic approach in the disease-treatment process-flow: 

As this trend keeps going north, many pharma companies are realizing the underlying opportunity to adopt a holistic strategic business approach to move into the new frontier. This would encompass the entire disease-treatment-process-flow with digital technology, across the organization. Before other non-pharma companies firmly position themselves on the saddle while entering into this area, pharma needs to move fast. This calls for an urgent action to collaborate with tech companies in all the critical touchpoints of this flow, including diagnosis. That this realization gas dawned in pharma is evident from a number of related developments. Let me quote just a couple of examples, as follows:

  • Onduo, a US$500-million diabetes-focused joint venture between Sanofi and Verily Life Sciences, an Alphabet company was founded in September 2016. Onduo recently launched its first product – an app plus, a continuous glucose-monitoring device plus an insulin pump that are all linked together. The Onduo app has a built-in coach (i.e., an electronic assistant) to help patients better manage their diabetes and accomplish their health goals.
  • GlaxoSmithKline (GSK) and Verily (formerly Google Life Sciences) have formed a joint venture to develop and commercialize bioelectronic medicine – miniaturized nerve implants that modulate electrical impulses to treat certain diseases.

Lack of digital leadership talent within the pharma industry?

It is interesting to note that both the Pfizer and Merck CDOs were recruited from non-pharma companies – Pfizer’s from Quest Diagnostics and Merck’s from Nike.  Earlier, in mid 2017, former Walmart CIO was named the Chief Digital and Technology Officer of GlaxoSmithKline. This trend probably brings to the fore, the lack of top digital leadership talent within the pharma industry.

Conclusion:

Increasingly pharma companies are realizing that enormous efforts and money spent in just marketing a drug, is producing a lesser and lesser yield, as the new paradigm unfolds. As we move on, patients no longer will want to buy just a medicine from the pharma players. They will want an integrated solution for prevention, cure or management of a disease.

At the same time, strong technology players, such as Apple, Google, IBM’s Watson are on the verge of capturing a sizeable ground, offering a gamut of patient-friendly offerings in the healthcare space. This would eventually make prescription of digital therapy a new reality. These tech companies are now entering through several virtually open doors in the disease-treatment-flow process, as I call it, primarily covering – diagnosis, disease monitoring and preventive care.

To effectively compete and grow in this environment, drug companies have to cover all the touchpoints of this process, not just the selective ones as are generally happening even today.

Creation of a new C-suite position of Chief Digital Officer to address this issue in a holistic away, across the organization, gives a clear signal to this realization. Thus, I reckon, offering a holistic treatment solution, covering all the touchpoints in the disease-treatment-flow process will be a new normal for pharma, not just for excellence in business, but for a long-term survival too.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Trees Die From The Top: Apt For Pharma Leadership Too?

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The Management Guru of all-time – Peter F. Drucker once said: “The spirit of an organization is created from the top… If an organization is great in spirit, it is because the spirit of its top people is great.” As “Trees die from the top”, no one should ever become a strategist unless he or she is willing to have his or her character serve as a model for subordinates – Drucker emphasized.

Decades after this assertion from Drucker, meant for management practitioners, it is discernible even today how irrefutable these axioms are.  In the contemporary times, as well, particularly when reality bites a company hard, being caught on the wrong side of ‘generally acceptable’ ethics, value and compliance standards.

While zeroing in to pharma, soundbites usually generated at that time, especially from the top echelon of the management, seem to hint that employees down the rung are responsible for such misdeeds, besides, of course, the legacy factor.

At this moment of truth, it is also not unusual for them to romancing the utopia, as it were. Senior management comes out with several ideas, which are squeaky clean in terms of optics. Some of them also talk about introducing behavior metric on ethics and values in employee performance appraisal before releasing any performance related pay out. In this article, I shall focus on this leadership issue in view of some latest developments in this area.

The latest developments:  

Let me now come straight to the latest developments in this area, as I see around.

“Novartis links bonuses to ethics in bid to rebuild reputation” – was a headline of Reuters on September 18, 2018. It reported: “Swiss drug maker Novartis has revealed its employees only get a bonus if they meet or exceed expectations for ethical behavior as it seeks to address past shortcomings that have damaged its reputation.”

Some interesting points stand out from this report on the ownership of such alleged malpractices. These reconfirm that the reasons for the same, including the repeated allegations of such nature, are being passed on to others by the top management. For example:

  • To past practices or the legacy factor, even if the current CEO has been a part of that corporate environment, since long.
  • To employees responsible down the line, and a new system is being adopted to address the issue.

In this case, as Reuters reports: “Chief Executive Vas Narasimhan has made strengthening the Swiss drug maker’s ethics culture a priority after costly bribery scandals or legal settlements in South Korea, China and the United States.”

Interestingly, as reported by the media, “the company was also this year embroiled in a political controversy over payments it made to U.S. President Donald Trump’s ex-attorney.”  Previously, even in the clinical trial area, Japanese authorities, reportedly “uncovered serious misconduct during a trial of its leukemia drug, Tasigna.”

As I said above, in response to such incidents, the General Counsel of Novartis, reportedly expressed: “This allows us to look at the behavior metric before any money leaves Novartis and catch potential misconduct before there is any risk to our reputation.” The official further added, “You can expect us to continue focusing on resolving the legacy issues that we read about in the press, ensuring we address any remaining underlying behaviors.”

Such steps not taken for the first time by a pharma company: 

EvenGlaxoSmithKline tried something akin in the past.

“GSK scraps sales rep targets after scandal,” was the headline of December 17, 2013 edition of the Financial Times. It reported: “GlaxoSmithKline is to scrap individual sales targets for its commercial staff as it seeks to repair its image and reform working practices in the wake of allegations in China that its staff paid officials up to $500m in bribes. The move comes amid concerns over aggressive marketing across the pharmaceutical industry and follows a series of damaging regulatory probes leading to a record $ 3bn fine in the US last year.”

However, later on GlaxoSmithKline, reportedly “altered the plan when its sales began to suffer in the world’s largest market.”

Where is the real issue lying?

As“PwC‘s 21st CEO Survey: Preparing for disruption” found, 71 percent of CEOs surveyed said that their organizations face greater pressure to deliver business results in less time.

There isn’t an iota of doubt, I reckon, that pharma CEOs are under constant performance pressure from the investors and other stakeholders to deliver expected financial results. This makes them keep their eyes primarily glued on to the grindstone for churning out expected profits from the business. This also means that they expect management efforts to be generally directed to deliver ‘values’ at the least possible cost.

On the other hand, the same PwC survey findings reiterated that with rising drug costs, the demand for the drug companies to demonstrate the treatment efficacy, is increasing by manifold. Thus, “to remain competitive, Big Pharma will have to do things faster (like drug development) and cheaper for the patient, add more value for the same money, and become more proactive partners with patients and doctors in both wellness and cure” - one of the findings of this study emphasized.

It is quite common for most large to medium sized pharma companies to have in place a well-articulated organizational ‘ethics, compliance and values’, together with requisite checks and balances in the form of rigorous rules, regulations and other guidelines.

Most often these adorn the respective websites too, for public knowledge. The question, therefore, surfaces what could then possibly go wrong in the organization and where exactly does the real issue lie, while effectively managing the organizational growth?

“Non-compliance – A serious challenge to growth”: 

Serious malpractices and their related fallout in pharma business – not just in marketing, but clinical trials, manufacturing, quality assurance and other areas, are not usually due to any lack of requisite processes or expertise. These are generally serious consequences of non-compliance of various organizational norms. At times, with the indirect support of senior management, or senior management keeps their eyes closed on such non-compliances, under demanding obligation for delivering expected financial results and business growth.

Tweaking areas, such as employee performance-incentive norms, as happened in the cases of GSK or Novartis, can’t fetch a long-lasting solution in such a situation, as I see it. Nonetheless, the survey report findings of Deloitte, titled “Non-compliance – A serious challenge to growth,” are interesting to get a sense of the reasons behind the same.

Key reasons for non-compliance: 

The Deloitte report identifies some key contributors to malpractices and non-compliance in the pharma sector, indicating the percentage of survey respondents involved against each, as follows:

  • Lack of an efficient internal control/ compliance system:  61 percent
  • Weak regulatory enforcement / action taken against fraudsters:  55 percent
  • Inadequate utilization of technology tools available to identify red flags:  45 percent
  • Lack of a zero-tolerance approach towards malpractice and regulatory non-compliance:  45 percent
  • Inadequate due diligence on employees/ third party associates:  36 percent
  • Unrealistic targets/goals linked to monetary compensations:  33 percent
  • Senior management override of controls:  24 percent
  • Inadequate oversight by the Board/ Audit Committee:  06 percent

As I mentioned before, most key contributors to malpractice and non-compliance point towards a lack of senior management efficiency in internal controls, systems, and “inadequate utilization of technology tools available to identify red flags.” Curiously, no one mentions about the requirements for any fresh measures or systems to curb such incidents, in the future.

Just tweaking the present system may not help:

Just for changing the optics, tweaking the present system often doesn’t help. Many similar instances in the past, such as GSK’s example, as cited above, would vindicate this point. In the GSK case, at least, it’s the then CEO – Sir Andrew Witty expectedly realized that ‘unrealistic targets/goals linked to monetary compensations’ lead to such corruptions.

But total delinking of the core responsibility of any sales staff, namely ‘generation of top-level numbers both in volume and value’, with performance incentive, could throw some future challenges. Similar reason, presumably prompted GSK altering the plan when its sales began to suffer, at a later date.

Similarly, Novartis is, reportedly introducing a new behavioral metric as qualifying criteria for its employees to earn bonuses or incentives. Intriguingly, despite the existence of rigorous rules, regulations, guidelines and associated punitive provisions for not complying with the company ethics and values for a long-time, malpractices are still being reported today.

Thus, I wonder, how will an additional system of similar nature prevent recurrence of such incidents in the future? Anyway, only the future will tell whether a tweaking of this nature in the present system that did not work in the past, will work in this particular case effectively.

Conclusion:

The reasons for less than adequate internal controls of an organization, I reckon, fall squarely on the senior management, especially for repeat offences. Passing the blame to employees down the line or tweaking their performance appraisal system by introducing a ‘behavioral metric’, is likely to be short term, finger-pointing on the legacy factor notwithstanding.

On the contrary, these may likely to be construed as manifestations of knee-jerk reactions, and not so well-thought-out strategic measures. Neither do such repeated malpractices demonstrate a great spirit of the organization, nor do these evince astute leadership qualities of its top management.

Coming back to where I started from, quoting what the management guru Peter Drucker once said: “The spirit of an organization is created from the top… If an organization is great in spirit, it is because the spirit of its top people is great.” He also reiterated, no one should ever become a strategist unless he or she is willing to have his or her character serve as a model for subordinates This is certainly not the situation for those pharma players mired with alleged malpractices, repeatedly – not just in marketing, but in other operational areas too.

As the good old saying goes: “trees die from the top,” so is also an organization when its senior management lacks a moral compass on ethics, compliance and values. Considering what is being often reported on business malpractices within the drug industry, isn’t the saying equally apt for pharma leadership, as well?

By: Tapan J. Ray   

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Pharma Policy Execution Gap Limits Access To Affordable Medicines?

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“The cost of new drugs is putting increasing pressure on people in both rich and poor countries”- was eloquently expressed in an article, titled “Why do new medicines cost so much, and what can we do about it?”. This was published by “The Guardian” on April 09, 2018.

Almost synchronically, expressing concern on this issue, the World Health Organization (W.H.O) advised the world leaders ‘to take bold new approaches’ for increasing access to medicines for all. A UN high-level panel on ‘access to medicines’ spent almost a year deliberating over related issues. The panel members were from pharma companies, as well as civil society and academics. The final report coming in September, backed de-linkage of the costs of R&D from the eventual price of the drug. Notably, the author who is also the health editor of the above publication, feels that any positive outcome in this direction is unlikely to materialize soon.

The majority of big pharma constituents, with the possible exception of GSK, whose then chief executive Sir Andrew Witty was unenthusiastic about the UN report. Probably because, it supported governments’ right to invoke ‘a get-out’ from the World Trade Organization’s TRIPS agreement. This is to bypass drug patents and make cheaper versions of the respective generic equivalents, in the interests of public health, in accordance with the 2001 Doha declaration. However, the author is hopeful that, “as happened with AIDS, each new crisis over access to medicines – whether concerning a common liver disease or a rare cancer, and particularly over the antibiotics that are under threat and vital to all our lives – is likely to put pressure on companies to find ways to bring the costs of medicines down.”

Stakeholder pressure for increasing access to medicines continues. Even in smaller developed countries, such as Switzerland, a section of the public demands that “Swiss authorities must act to make lifesaving drugs more affordable by introducing compulsory licensing.” Or, one can now see reports saying,“Irish patients are being denied access to nine drugs that are widely available across Europe, largely, on cost grounds.”

Nevertheless, regardless of mounting pressure for drawing a reasonable symmetry between cost of, especially new drugs and their improved access to patients, ongoing status-quo continues. In this article, I shall dwell on this concern from the Indian perspective, focusing on an agonizingly stark implementation-gap related to the current Indian pharma pricing policy.

Under pressure, pharma now recognizes the need for affordable drugs:

Coming under intense pressure of patients and other stakeholders, even the largest trade association of Big Pharma has recently changed its stance on this issue, though clearly sharking any responsibility for the same. It just recognized the need for affordable medicines for improved patient access to treatments by saying: “Too often patients have to fight to access breakthrough medicines that are revolutionizing how we fight disease.” It also accepted the fact that “many Americans are struggling to afford their medicines.”

“We can improve patient access and affordability by moving toward a system that prioritizes results for patients. Biopharmaceutical companies are working with insurers to develop innovative and flexible ways to pay for medicines that focus on results, lower out-of-pocket costs and enable patients to access the right treatments the first time” – it added.

What it really means: 

What it really means ‘treatment outcomes-based drug pricing’ or ‘value-based drug pricing (VBP)’. In other words, a situation where drug prices are set in line with their real and demonstrated clinical and economic value to patients, against other available products. This model will also ensure that patients’ money doesn’t get wasted from drugs that aren’t effective on them. The VBP model is, thus, significantly different from product pricing, based on ‘undisclosed’ cost of ongoing innovation for new drugs.

Is this Big Pharma’s new way to change optics?

The intent for imbibing VBP, as expressed by the above pharma association, throws open the door for discussion of its core intent. Is the intention real, or another Big Pharma way of changing general optics on the sensitive issue of new drug pricing? This doubt creeps in from the findings of some important studies on this issue. One such is an interesting paper, titled “Pricing for Survival” from KPMG. The analysis highlighted very limited application of VBP concept, and also why it is not yet viable – despite the hype being created around it.

According to KPMG, “there were 25 drugs engaged in various types of VBP with payers in the fragmented United States market as of September 2017. The problem is, these models appear to be limited in applicability to disease states with more standardized protocols and dominated by drug therapies with single indications – notably osteoporosis, diabetes and hepatitis C.” To date, VBP models seem to be facing several constraints, such as it is appealing mostly to payers that are fully integrated with healthcare delivery i.e., closed-loop payer-provider health systems or integrated delivery networks.

“The takeaway is, when it comes to specialty and orphan drugs, outcomes-based pricing simply faces too many barriers at present” – the article elaborated. Be that as it may, let me now explore the relevance of VBP in India.

Any relevance of VBP in India?

VBP has been tried in a health care environment where payers and drug companies are two critical players for access to affordable medicines, as we see in the KPMG study. Under any value-based pricing agreements for pharmaceuticals, both payers and pharma companies agree to link payment for a medicine to the value achieved, rather than volume.

Whereas, in the Indian healthcare scenario, as we are experiencing today, payers are mostly individuals.  Despite various well-publicized health schemes, expenditure on health, including drugs, remains by and large ‘out of pocket (OoP)’ – for a large Indian population. Hence, copying western framework for implementation VBP in India, would call for scores of ‘pharma – individual payer agreements.’ This would be a daunting task, if not impractical, to even try it out.

In this context, let me touch upon the Ayushman Bharat scheme that was launched by the Prime Minister on September 23, 2018, but just in one of the 29 states of India – Jharkhand. If, or as and when it will cover the entire country, the scheme is expected to bring 107.4 million families and more than 550 million people under health insurance coverage. However, the work seems to be still in progress.

There are three financing models for this scheme – insurance model, trust model and hybrid model – and the 19 states that have come on board for the scheme’s implementation in the country, have chosen a trust model, according to the Union Health Minister. The minister also reiterated: “Things are still unfolding. Only when the letters reach the beneficiaries will they understand and react.”

Nevertheless, the Union Health Minister himself, just like his counterparts in the previous governments, exhibited confidence that the country is “moving towards universal health cover with Ayushman Bharat scheme,” – as was the headline of the above media report.

Going by the past and current outcomes of several such government schemes in the country, and what the minister himself articulated on September 17, 2018, a large section of the Indian population still remains  apprehensive on the fast pan-India rollout and overall success of this ambitious health scheme. Hence, at this stage, I reckon, it may not be relevant to discuss the application of VBP model on Ayushman Bharat project. I wrote about such apprehensions in this Blog on June 18, 2018.

Having said that, VBP still remains relevant when we look at the government’s intent captured in the National Pharmaceutical Pricing Policy (NPPP) 2012,’ as I shall discuss below.

VBP and the policy implementation gap:

For making the point clearer, let me keep the Ayushman Bharat scheme aside because of its associated uncertainties. Even in the current health care environment of high OoP expenditure on drugs, especially on high priced new drugs, if one tries to make use of the VBP model, it is very much possible.

This is because, the National Pharmaceutical Pricing Policy 2012, under point 4 (XV) on ‘Patented Drugs, categorically states:  “There is a separate Committee constituted by the Government order dated February 01, 2007 for finalizing the pricing of Patented Drugs, and decisions on pricing of patented drugs would be taken based on the recommendations of the Committee.”

Curiously, even 6 years down the line, no meaningful decision has been taken on patented drug pricing in India by the successive governments. As I wrote in this Blog on December 12, 2016, Price Negotiation For Patented Drugs: Still A Policy Paralysis.

Parliamentary Standing Committee intervenes:

Six years after the constitution of the committee by the Department of Pharmaceutical (DoP), the long-awaited report was eventually submitted with a vague formula for pricing patented drugs in India. Intriguingly,the issue remained as such, until the Parliamentary Standing Committee’s August 2016 report was placed before the parliament. It strongly criticized the DoP’s efforts to recommend measures in regulating prices of life-saving patented drugs, despite government assurances for the same.

On September 23, 2016, media reported: “Upbraided by the parliamentary standing committee for its gross negligence and lackadaisical attitude, the department of pharmaceuticals has set about seeking suggestions from different ministries on price regulation of patented drugs.”

According to reports, a new inter-ministerial committee was formed thereafter, under the chairmanship of one of the Joint Secretaries of the DoP to suggest a new mechanism to fix prices of patented drugs in the country.
The other members of the committee are Joint Secretary – Department of Industrial Policy and Promotion (DIPP); Joint Secretary – Ministry of Health and Family Welfare; and Member Secretary – National Pharmaceutical Pricing Authority (NPPA). But, the saga continues – at the cost of patients’ health interest.

Conclusion:

As it appears, there still lies a clear opportunity for Indian drug pricing policy makers introduce VBP concept for patented drugs in the country. Following this model, the prices of new and innovative drugs under patents can be set in line with their real and demonstrated clinical and economic value to patients, over the available existing products. Health Technology Assessment (HTA), for example, could be an effective tool in this process.

Additionally, the VBP model could also minimize, if not eliminate the risk of patients paying a high a price for new drugs coming through incremental innovation, adding too little clinical and economic value over existing drugs. There may, of course, be some teething trouble or even important issues in arriving at consensus on value-metrics for VBP. But, this can be sorted out through meaningful engagement with concerned parties.

Strikingly, even after 6 years since the NPPP 2012 was announced, nothing tangible has been made known to stakeholders on the execution of ‘patented drug pricing policy’ in India. An avoidable policy execution gap continues, limiting access to affordable new medicines to a vast majority of the Indian population, even today.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Exigency of Cybersecurity in Digitalized Pharma

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Digitalization – as it unfolds and imbibed by most drug companies, is presumed to herald a whole new ballgame in the Indian pharma business. Equally significant is the quantum benefit that the process will deliver to pharma stakeholders – right from drug companies to patients. It has already hastened the process of new drug discovery and will also help charting newer ways to meaningfully engage with stakeholders, besides enhancing treatment outcomes for patients, appreciably.

However, the flip side is, more benefits a company accrues from digitalization, greater will be the risks of cyber-attacks. Thus, preventive measures should also be equally robust. Otherwise, hackers can bring a company’s digital system to a standstill, causing not just a temporary loss in revenue and profit, but also valuable data leak, with considerable impact on even long-term business.

Strangely, associated risks of digitalization to pharma companies are seldom outlined in any discussion, leave aside alternatives for salvaging such untoward situation, if or as and when it comes. Unless, it is felt that the scope of such discussion doesn’t cover the implementors and falls totally on cybersecurity experts.

Nonetheless, it is intriguing in the pharma space. The reason being, pharma industry believes, while talking about the efficacy of any drug, its vulnerability in terms of side-effects, contraindications or drug interactions, should also be known to its users. That’s the purpose of a packaging leaflet. It’s a different reason though, that most drug companies in India have virtually jettisoned this practice as a cost saving measure, even for drugs that are not under price control. That apart, in this article, I shall explore the relevance of cybersecurity in the digitalized pharma world.

A question that help understand its implication:

During organizational transformation through digitalization in pharma, just like any other business, all crucial documents get transferred from paper to digital formats. The key question that follows in this regard is – what happens to these digital documents post cyber-attacks, if any? Any attempt to answer this question holistically will help people realize its implication – that ‘cybersecurity must be more than an afterthought.’

‘Cybersecurity must be more than an afterthought’:

The article, ‘Cybersecurity in the Age of Digital Transformation,’ published by MIT Technology Review Insights on January 23, 2017, stressed upon this critical point. It highlighted: “As companies embrace technologies such as the Internet of Things, big data, cloud, and mobility, security must be more than an afterthought. But in the digital era, the focus needs to shift from securing network perimeters to safeguarding data spread across systems, devices, and the cloud.”

Thus, while discussing the need to digitally transform a company’s business, cybersecurity must be part of that conversation from the very start – the paper underscored in no uncertain terms. That’s exactly what we are deliberating today - ‘as companies embark on their journeys of digital transformation, they must make cybersecurity a top priority.’

The cybersecurity threat may cripple innovation and slow business:

Cisco explored the concept of Cybersecurity as a Growth Advantage by a thought leadership global study. While assessing the impact of cybersecurity on digitalization, it surveyed more than 1,000 senior finance and line-of-business executives across 10 countries. Some of the key findings, as captured in the Cisco report, may be summarized, as follows:

  • 71 percent of executives said that concerns over cybersecurity are impeding innovation in their organizations.
  • 39 percent stated that they had halted mission-critical initiatives due to cybersecurity issues.

Interestingly, 73 percent of survey respondents admitted that they often embrace new technologies and business processes, despite cybersecurity risk. However, as we shall see below, pharma executives are quite confident of cybersecurity, probably because of inadequate experience in this area, as on date.

Companies are struggling with their capabilities in cyber-risk management:

The paper published in the May 2014 issue of the McKinsey Quarterly journal, titled “The rising strategic risks of cyberattacks”, also flagged this issue. It said: “More and more business value and personal information worldwide are rapidly migrating into digital form on open and globally interconnected technology platforms. As that happens, the risks from cyberattacks become increasingly daunting. Criminals pursue financial gain through fraud and identity theft; competitors steal intellectual property or disrupt business to grab advantage; ‘hacktivists’ pierce online firewalls to make political statements.”

McKinsey’s research study on the subject, conducted in partnership with the World Economic Forum also upheld that companies are struggling with their capabilities in cyber-risk management. As highly visible breaches occur with growing regularity, most technology executives believe that they are losing ground to attackers. Its ongoing cyber-risk-maturity survey research also ferreted out the following important points:

  • Large companies reported cross-sector gaps in their risk-management capabilities.
  • 90 percent had “nascent” or “developing” ones.
  • 5 percent was rated “mature” overall across the practice areas studied.

Interestingly, the research found no correlation between spending levels and risk-management maturity. Some companies spend less, but do a comparatively good job of making risk-management decisions. Others spend vigorously, but without much sophistication. Even the largest firms had substantial room for improvement – McKinsey reiterated.

‘Corporate espionage’– a prime reason behind cyberattack on pharma:

An interesting article appeared in The Pharma Letter on July 18, 2017 on this subject. The paper is titled “Cyber-attacks: How prepared is pharma?” It said:“The pharmaceutical industry is a prime target for hackers. In 2015, a survey of Crown Records Management revealed that nearly, two-thirds of pharma firms had experienced breaches in data, and that one fourth of these same companies had been victims of hacking.”The paper also highlighted ‘corporate espionage’ as one of the prime reasons behind hacking.

In view of this, the author articulated that the need for pharma and healthcare companies to fortify their security systems has become clear in recent years. The best method of protection is to prevent cyber-attacks from happening, or at least reduce the risk of a hack, he advised.

Instances of cyber-attacks in pharma are many:

To drive home the point that when firms and other organizations fail to strengthen IT systems against attacks, they incur high costs -the above paper cited an example from the year 2016. It said: “The average global cost of data breach per stolen record was US$ 355 for healthcare groups, higher than losses in other fields such as education (US$ 246/record), transportation (US$ 129), and research (US$ 112).”

The author further emphasized that besides financial losses, pharma companies and other healthcare groups risk losing the trust of patients and other stakeholders. With the ongoing digitization in pharma, new threats may become even more pervasive and sophisticated. “Thus, investment in cybersecurity must be a priority, if pharma players are to protect their data and the data of their stakeholders”, he added.

Are pharma executives experienced enough on cybersecurity?

As reported by Pharma IQ on July 31, 2018, one of its recent surveys found that around 70 percent of senior pharma decision makers are “confident” or even “very confident” in their company’s IT security. But, digging deeper, the survey uncovered that:

  • 42 percent of respondents’ companies do not routinely follow IT security policies,
  • 49 percent said that the corporate risk profile is not firmly understood across all departments.

The survey concluded that this could potentially lead to gaps in the security process. To me it appears, this could, as well, be due to inadequate experience of pharma executives in this area.

But, investment in pharma IT is increasing:

The good news is, even in the current scenario, many pharmaceutical companieshave started making investments in IT solutions, in general. This is corroborated by the 2018 survey by Global Data. Some of its important findings are, as follows:

  • 79 percent of them are currently making investments in identity and access management (IAM) solutions
  • 72 percent are considering investment in the solutions over the next two years.
  • 75 percent of the respondents are currently deploying some form of backup, archiving, alongside content and web filtering solutions to store, as well as, preserve their online information. 

Conclusion:

In pharma perspective, digitalization of business promotes paperless culture. It radically changes the basic infrastructure of maintaining critical documents in the workplace. Digital document storage systems become the nerve center of information on the company. All data – strategic or related to operations – internally generated or acquired – right across all critical functional areas, such as IP, research, clinical trials, manufacturing, sales and marketing, finance, supply chain legal and even of the CEO’s office, find a space in this digital data sever.

Although, the benefits of digitalization are well known and much discussed, it has a contraposition, as well – related to the vulnerability of the system to cyber-attacks. This flags a demanding need for protection of digitally stored assets from cyber-attacks, or to frustrate even any misdemeanorfrom amateur hackers. Thus, creating an almost impregnable, well-firewalled digital data storage server assumes prime importance. Equally important is formulating and religiously implementing a robust digital policy for the same.

Creating strong awareness among employees and stakeholders regarding cybersecurity and involving them in tandem with a system-approach, sans an iota of complacency, is expected to mitigate such vulnerability, appreciably. Thus, a sense ofexigency for cybersecurity in the digitalized pharma world, I reckon, is very real.

By: Tapan J. Ray   

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Data: The New ‘Magic Wand’ For Pharma Business Excellence?

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Pharma companies focus more on defending their current practices, rather than doing things differently. A September 24, 2014 article by Bain & Company, titled ‘New Paths to Value Creation in Pharma’, made this observation.

This happens regardless of the credence that leaders who change too early, risk losing attractive cash flows from established business models, and those that move too late risk being disrupted by emerging competitors. However, analyzing the recent history, the authors observed that pharma leaders have more often erred on the side of holding on to old models for too long, leaving room for more aggressive players to disrupt them.

Analysis of the 10 companies in the above study also found: “With their sustained success, these companies refute the widely held assumption that serendipitous innovation is the key to success in pharma.” However, on the ground all 10 of these large global drug companies have prospered despite industry-wide trends such as declining R&D productivity and the demise of the primary care blockbuster model. The authors explained: “This is because they operate in a high-margin environment.”

Starting with this scenario, I shall submit in this article, why the importance of well targeted data-based decision-making process, across the pharma functional areas, is now more than ever before.

Rewriting notes in the business playbook, taking cue from new data:

Having charted in the high margin ambience, Big Pharma exhibit reluctance in recomposing notes in the business playbook, based on a new set of real-life data. This is essential for sustainable success in a fast-changing business, political and social environment. They keep maintaining a strong belief in what they have been believing, regardless of what a large volume of credible data overwhelmingly indicates. Ongoing near unanimity in their collective decision to further intensify expensive advocacy initiatives in the same direction, continues. Other pharma players follow the same course.

This vicious circle continues sans any positive outcome, neither for pharma, nor for the patients. Already dented reputation of the industry gets more dented. In my various articles in this blog, I deliberated on various areas that merit radical overhaul in the pharma business, including patient-centricity and transforming the business through digitalization.

Use of data and analytics leaves room for a huge improvement in pharma: 

Let me express upfront, I am not trying to say, in any way, that pharma companies, in general, are not making investments for customized data generation or in analytics for use in new drug discovery and development, aiming improved process productivity. But, in many other functional areas, such as drug marketing, stakeholder engagement or even in strategic corporate communication for greater effectiveness, usage of scalable data and modern analytics leave much room for improvement.

Quality of data-use – ‘the proof of the pudding is in the eating’: 

As the saying goes, the proof of the pudding is in the eating, let me give a couple of examples on the quality of data-use and their outcomes in the areas under discussion.

Sizeable data clearly establishes the wish of most stakeholders, including patients for transparency in drug pricing, alongside improved access to affordable medicines. However, Big Pharma and their associates trying to swim against the tide keep advocating how the expensive process of drug innovation merits high drug prices. Understandably, negative public perception towards the industry further intensifies. Assuming that data analytics are extensively put to use while developing such communication, can anyone possibly cite such efforts as examples of productive use data?

Similarly, if any pharma company, for example, Sanofi besides many others, claims that it aims at ‘promoting and sustaining ethics and integrity in all our activities’ and has developed a comprehensive body of policies and standards, to provide guidance on a range of challenges specific to pharma industry like anti-bribery. However, in practice, we hear and read, even very recently that ‘Sanofi to pay more than $25 million to resolve corruption charges’ and which is not a solitary instance, either. The question, therefore, surfaces, how can data play any role in the fight against corruption by uncovering, preventing and deterring corruption.

‘How data is changing the fight against corruption:’

There are many published research papers, which established that effective use of data can prevent such corruption, and surely in cases of alleged repeat or multiple offenders in the pharma industry. One such paper titled, ‘How data is changing the fight against corruption,’ published in the OECD Forum Network on February 13, 2018, also reconfirms this point. It says:Data – both big and open – is indeed changing the anti-corruption landscape, by uncovering, preventing and deterring corruption.

Is pharma leveraging the data power for holistic business success?

I am not sure, but available evidences suggest most of them are not – at least, aiming for holistic business success. This is because, in the pharma industry, including Big Pharma, as I wrotein the past, alleged corrupt practices are widespread and continue unabated. This is quite evident from the national and international business magazines and media reports, coming rather frequently. The Transparency International Report titled “Corruption in the pharmaceutical sector – Transparency International 2016”, discusses the raging issue across the various functions of many drug companies.

Besides pharma and biotech R&D, there are many other critical areas, where leveraging data power with expert application of analytics, pharma players can reap rich harvest in terms of sustainable long-term business growth. However, for that there are some prerequisites, like – an open mind, unbiased approach, a mindset to accept reality as they are, and then neutralize the unfavorable ones with cerebral power. Trying to rationalize what is not working makes the situation worse, more complex, creating stronger headwinds.

Many sources of data capturing, still limited usage:

There are many sources of abundant data availability of various kinds, for pharma players. However, targeted data gathering of scale and appropriate analysis of the same, still remain rather limited in pharma. For example, while marketing their brands, numerous drug players in India don’t venture going beyond limited sources for data capturing for broad analysis. Such data may usually include, syndicated retail and prescription audits, besides internal sales and marketing details together with associated expenses or productivity related statistics. Data mining for dip-stick analysis is done seldom, according to industry sources.

Additionally, there are copious others who operate predominantly on ‘gut feeling’ and hearsay, sans any customer related meaningful and real-time data. When we create hype on patient-centricity, and alongside witness the general outcomes of such approaches, it requires no rocket science to fathom how much intelligent data input has gone behind such strategies.

The present system itself generates an enormous amount of real-time data in various areas, though most are not effectively utilized for weighty payoff, especially in pharma. The ongoing process of data generation also includes, drug innovation initiatives, manufacturing, supply-chain, distributor–wholesaler-retailer activities, digital apps and different websites, besides scores of other sources. But, the information, as stated above, apparently, is hardly analyzed through analytics to obtain targeted strategic inputs. Leave aside, intelligent application of the same to scale newer heights of all-round business success.

Data generation for swimming against the tide of public perception:  

Although, it’s not yielding positive results, I understand, pharma keeps spending a lot, both at the company level or through their trade bodies, to rationalize what they want the stakeholders to believe. For example,’ drug price control limits access to drugs’. Various reports to this effect are made public and used for the aggressive advocacy campaigns, though hardly taken seriously by those who matter.

Any price control, I reckon, may not be supported in ordinary circumstances. However, drug price control has definitely helped India to improve access to drugs without impeding any reasonable growth of the industry. That 5 or 10-year CAGR of the drug industry comes in double digit, despite continuation of drug price control regime for the last 48 years, offers a testimony to this fact. It’s a different issue, though, that Indian public health care system remains in shamble, even in the present regime. The lackadaisical attitude of all governments on public health related areas, is held responsible for this failure.

Conclusion:

The bottom-line is, expensive data generation effort, when gets primarily driven by self-serving motives, becomes increasingly counterproductive, as cited above. More informed stakeholders of date, including patients, probably other than the stock markets, want to see pharma players more in sync with the ground realities, and are acting accordingly. Thus, for sustainable business success, saner senses should prevail to generate adequate amounts of credible and targeted data, analyze them properly through analytics and use these with cerebral power to create a win-win situation in the pharma business.

In my view, any comprehensive ‘Decision Support System’ of an organization should go beyond the generation of mammoth internal business-related data. It should be integrated with the same kind of targeted external data of scale, with the use of modern analytics. This needs to happen – both at the macro level – as an organization, and also at the micro level – with its various functions. The corporate illusion of always ‘operating in a high-margin environment’ in pharma, will not guarantee sustainable business success, any longer.

From this perspective, using well-integrated internal and external data as the bedrock of all strategic decisions in pharma, I reckon, would soon prove to be a ‘magic wand,’ as it were, for pharma business excellence.

By: Tapan J. Ray    

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.