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Adopt A Hybrid Business Model For Better Sales – Not A Large Field Force

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For aggressive business expansion or to attain greater market access, creating a large sales force has been the thumb rule in the pharma industry, since long. To meet the challenge of changing market dynamics, going for a thorough re-engineering of even a rattling sales and marketing machine, is still considered a risky proposition.

Many studies have captured the common reasons of such hesitations. For example, the McKinsey article titled, ‘Cutting sales costs, not revenues,’ finds that field force being a major growth engine for sales, since long, the thought of overhauling it fills senior executives with dread. Thus, to keep sales flowing, companies will make piecemeal ongoing repairs as long as they can – ‘no matter how patched up or spluttering that engine may be.’

Nevertheless, some compelling business reasons have now prompted several pharma players to accept the ground reality – fast-evolving over the last one and half decades. Many of them have realized that in today’s changing market dynamics, a leaner and smarter sales force (or field force or medical rep, or MR) will fetch the desired results than ‘flabby’ and larger ones.

In this article, I shall not discuss the obvious reasons of downsizing, such as to record profit under trying circumstances, or when per rep productivity keeps declining consistently, or during a change in the promoted product-mix, or a decision to reduce focus on volume intensive-low margin generic brands. But, what I shall discuss is, the reasons for an urgent need of creating a hybrid sales and marketing model, during this changing paradigm.  

It begins with accepting a change in the business environment: 

If the objective of sales force size reduction remains limited to cost-cutting for short-term improvement of the bottom-line, it could be grossly counterproductive, possibly with many unforeseen consequences. Field staff will continue to remain one of the key growth drivers in pharma and biotech business, but not the sole mechanism to increase brand prescriptions. Finding a well-integrated alternative model would begin with acceptance of a significant change in pharma business environment.

Undoubtedly, a perceptible change is noticeable today in pharma stakeholders’ mindset. This change is being further fueled by rapid increases in their usage of various digital platforms and networks. For example, many patients are trying to be reasonably informed of even various disease treatment options and the cost of each, much before they visit a doctor’s clinic or a hospital. The nature and quality of their interaction with health care providers, including doctors, are also changing. Patient-experience during a treatment process, and the value offerings that come with a pharma brand, will have increasing relevance to business performance – more than even before. Anything going against the patient-interest will possibly be shared with all, mostly in social media, which has a potential to precipitate serious consequences.

As this trend keeps going north, pharma market dynamics would change, commensurately, making pharma’s key business success factors significantly different with medical reps no longer being the sole prescription generators. A new hybrid – digitally empowered sales and marketing model is, therefore, the need of the hour. In this new ball game, as a growth driver, the role and size of the field staff will be quite different, where the senior management warrants a new vision for pharma business.

The situation warrants a new vision for pharma business:

In this changing situation, to generate more prescriptions from doctors by deploying a large field force, could prove akin to swimming against a strong tide. Whereas for achieving business success at this time, pharma players would require creating a well-oiled augmented value delivery system for enhanced customer experience, primarily for patients during their entire treatment process.

While creating this sleek and effective system, it would be necessary to cut unproductive or less productive flab in the frontline, with great precision. However, this process must be dovetailed with implementation of other communication and customer engagement platforms, mostly digital, to achieve the set objectives.

The new strategy being augmented value delivery to customers, the process would entail, besides innovative and modern tools, a different genre of field staff members, possessing some critical skill-sets. The goal of need-based field force downsizing complemented by new synchronous measures for operational synergy, must not only be clear to senior management, but also be explained to all concerned.

What would ‘augmented value delivery’ to customers lead to?

Another McKinsey article titled, ‘The few, the proud, the super-productive - how a smart field force can better drive sales,’ articulated: ‘Indeed, our perspective on the past five years is that leaders that used field reductions to actually rethink the commercial model – rather than taking a “blunt instrument” approach to cuts – are reaping rewards.’

As the current pharma sales and marketing models are undergoing a metamorphosis, globally – this transition phase throws several tough challenges – from defining new roles and capabilities for field staff to creative use of various interactive communication platforms.  As the McKinsey article underscores: ‘new capabilities need to be added even as we continue to use the tried and true current model, albeit with less success.  It further adds: ‘The inconvenient truth: we will have to sweat the current model and build the capabilities for the future in parallel. Those hoping for a ‘flip the switch’ transition, are likely to be disappointed.” With his, I reckon, will emerge a robust ‘augmented value delivery system’ for the business leading to:

  • Higher profitable sales through satisfied customers
  • Increase in sales per employee ratio
  • Containing/reducing sales and marketing spend as a percentage of total revenue.

Several initiatives to translate this concept into reality is now palpable, globally. A few examples may suffice to drive home this point.

Downsizing field force complemented by new measures for synergy pays:

Here also there are several research studies to bring home this point. One such is the paper titled, ‘Big pharma proves that oncology pays as workforces shrink,’ published in ’Vantage’ of Evaluate on July 23, 2018. The researchers touched upon this area while discussing the workforce productivity for Bristol-Myers Squibb (BMS). It found that a substantial shrinking of its workforce, alongside some other important measures, has given BMS a big boost in sales, with a dramatic impact on its overall performance. As the study indicated, even investors will find this fact hard to ignore. Let me hasten to add that ‘downsizing workforce’ mainly involved sales and R&D staff in this analysis.

The article further highlighted, during the period of 2007 to 20017, the management teams of some other pharma majors, as well, such as GlaxoSmithKline), AstraZeneca and Eli Lilly, either reduced their workforce significantly or kept flat. According to this study the changes in the workforce of these 4 companies are as follows:

Workforce Bristol-Myers Squibb GlaxoSmithKline AstraZeneca Eli Lilly
2007 42,000 103,483 67,400 40,600
2017 23,700 98,462 61,100 40,655

However, even in the year 10, all the four companies - Bristol-Myers Squibb, GlaxoSmithKline, AstraZeneca and Eli Lilly posted not just sales growth, bit all-round performance improvement, as may be seen by clicking on each.

Having deliberated on the impact of downsizing field force, let me now focus on powerful complementary measures for augmented value delivery to customers.

Today’s reality for pharma business in India can’t be wished away:

The EYstudy titled, ‘Reinventing pharma sales and marketing through digital in India,’ captures the current situation quite well. I am quoting below just a few of those:

  • Today’s tech-savvy physicians are relying far less on reps and more on digital devices for healthcare information. Only 11 percent of healthcare professionals in India prefer in-person visits from a company representative, according to a 2016 study by Health Link Dimensions. Likewise, many patients arming themselves with medical knowledge available online, gradually relying less on only physicians’ decision-making. Thus, the rules of engagement need to be redefined.
  • With a shift in focus toward more complex or specialty medicines, pharma companies continue to add new layers of MRs to increase geographic coverage. The increasing number of MRs and the number of brands under each of them have drastically reduced the time and quality of sales pitches – from being scientific to mere brand name reminders.
  • Physicians’ place at the center of the pharma ecosystem as almost the sole-decision makers, is very likely to become a thing of the past with the emergence of a broad array of customers with a new mindset.
  • New tech-based entrants providing information platforms, analytics, e-consultation services and access to medicine online are challenging pharma’s value creation story.

Enhancing customer experience needs a hybrid business model:

The new market dynamics, demands cutting-edge brand-value augmentation measures, enhancing customer-experience with some tangible benefits. These telltale signs can only be ignored at one’s own peril. Let me also illustrate this point with the findings from another research study.

According to 2015 Oncology Customer Experience Tracker of ZS, “Oncology companies can add USD 50 – USD 75 million in incremental sales for every USD 1 billion in current sales by delivering a better customer experience.”

This vindicates that creating a better customer experience should be the key goal of pharma’s augmented value delivery system – going much beyond the traditional communication of key product features and its clinical benefits. This new concept is fast emerging as the fulcrum – not just for creating a strong brand pull, but also enhancing the public image of the organization. And can be achieved with a right blend of:

  • ‘Must do’ mindset of top management,
  • Expertise in well-targeted – multi-channel content making,
  • Expertise on data-science and analytics to churn out the right information from a large pool of data,
  • Wherewithal for effectively using the right digital platforms, either directly to customers or through a leaner and digitally-skilled sales force having a ‘can do’ attitude, as the situation will demand.

Some companies are testing the water:

Conventional ways to improve Sales Force Effectiveness (SFE), especially with soft skills, besides, of course product knowledge, is not new to the pharma players. What they need to do is change the primary focus of increasing sales through delivering mostly the key intrinsic value of the brand, to increase profitable sales by delivering augmented brand value, leading to enhanced customer satisfaction.

This is a major shift from the traditional paradigm and would surely entail application of digital technology and data science. As I wrote before, many companies have started adopting this approach – mostly with one baby step at a time, right or wrong.

Observation and findings of an India specific study: 

Noting that ‘Indian pharma’s journey to a digital world has just begun,’ the same EYstudy, as quoted above, reported the following findings, among a few others:

  • Lack of a clear digital strategy/value proposition and change management are the two key barriers to embracing digital.
  • Whatever was being done manually earlier is now being done digitally. But we are not adding additional value. On the other hand, companies globally are now cautiously moving toward being digital practitioners.
  • Indian pharma majors will need to grow into integrated health care providers – offering both products and services, forging patient-centric partnerships and demonstrating value to a broad array of customer groups.

The good news is, some of the key observations of the study also include the following:

  • Some are using digital technology to capture untapped and unstructured data, to make their sales and marketing decision making process more agile and robust.
  • Powerful apps with dynamic, meaningful content and the right value proposition are gaining popularity.
  • Several players, while staying within the realms of regulatory boundaries, are enabling patients to actively manage their care. 

Conclusion:

As we look around, many drug companies, especially in India, continue to remain focused on the age-old transactional sales and marketing models, delivering the intrinsic brand values, irrespective of the changing pharma market dynamics, especially disregarding what today’s customers in the knowledge economy look for. Traditional training and incentivizing a large, and often flabby, sales force on product and rupee value territory-sales against the target, are the general ways to achieve these. The focus on achieving the internal sales targets, regardless of the processes being contentious or not.

Modern time warrants a different conversation altogether – creation of a unique customer experience – with augmented value delivery systems. Achieving this goal would entail astute applications of modern technology, complementing the reach and impact of the right-sized field staff efforts, and leading to improvement in ‘sales per employee ratio.’

Thus, I reckon, higher sales or the need for an expanded market access, may not necessarily entail a larger field force, but a new breed of leaner and especially skilled MR to deliver the needs of the changing healthcare landscape.

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.

How Creative Is Pharma Industry?

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“Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business,” said the management guru of all times – Peter Drucker, decades ago. He further added, “The aim of marketing is to know and understand the customer, so well the product or service fits him and sells itself.” What needs to be underscored in this visionary articulation of Drucker is, effective marketing should create such a strong pull for a product or service that renders hard selling less relevant.

The word ‘innovation’ is used frequently within the pharma industry, and more by the multi-national players on a specific context. The purpose is mainly to douse stakeholder concern on high prices of innovative drugs – building a narrative around expensive, complex and time-intensive drug innovation process. That said, just as creativity is necessary to discover new drugs, creative minds also help in effectively reducing the cost of innovation – creating more customers for the company.

Curiously, in this debate the other key business function – ‘marketing’, often takes a back seat, with its usage getting generally restricted to product features and benefits, including ‘freebies’ of various kinds. Neither is there any palpable effort to make the culture of ‘creativity’ and ‘innovation’ prevail across the organization, for overcoming several critical growth barriers that keep looming over all functional areas.

Is it happening because of a hubris, as it were, within the pharma and biotech industry? This article will try to figure out why this has been happening over decades and would also ponder whether the time is ripe for changing the charted path of the business model. For a clear understanding of all, let me start with the difference between creativity and innovation from the business perspective.

Creativity – a fundamental requirement in a business, is different from innovation:  

This was examined in the article titled, ‘The Importance of Creativity in Business,’ published by Northeastern University, Boston, Massachusetts, on November 09, 2017. It emphasized, although “creativity” and “innovation” are often used interchangeably, these are two separate concepts. “Creativity is different because it is a mechanism to being innovative. You can have great ideas, but not be innovative,” the paper underscored. It brought to the fore that ‘creativity’ – being the fundamental ingredient for being ‘innovative’, is essential in the highly competitive business environment. It fuels big ideas, challenges the employees’ way of thinking, and opens the door to new business opportunities.

The IBM study also confirms this fact:

The study titled, ‘‘Capitalizing on Complexity: Insights from the Global Chief Executive Officer Study,’ led by the IBM Institute for Business Value and IBM Strategy & Change, also confirmed the above fact. The study is the fourth edition of IBM’s biennial Global CEO Study series, involving more than 1,500 Chief Executive Officers from 60 countries and 33 industries worldwide.

The study reported, CEOs selected creativity as the most important leadership attribute and the number one factor for future business success. It added: ‘Creative leaders invite disruptive innovation, encourage others to drop outdated approaches and take balanced risks. They are open-minded and inventive in expanding their management and communication styles, particularly to engage with a new generation of employees, partners and customers.’ Importantly, ‘creativity’ ranked higher than rigor, management discipline, integrity or even vision, as each of these will require creativity. According to the study, successfully navigating through an increasing complex world of ‘accelerated industry transformation, growing volumes of data, rapidly evolving customer preferences, can be overcome by instilling ‘creativity’ throughout an organization.

‘Necessity is the mother of invention’ – does it apply to pharma, as well?  

In today’s complex business environment, pharma’s business challenges are spreading rapidly across many areas. Besides innovation of new drugs, following are four broad, but critical areas, where fostering of creativity, innovative thinking and invention of game changing ideas, across the organization, I reckon, can fetch a sustainable return, in a win-win way:

  • Intense ‘pricing pressure’ to make innovative drugs affordable for greater access to patients: Just as innovative ideas are of fundamental importance to develop new drugs; disruptive innovative ideas in this area, can help resolve this issue, effectively – not any incremental measure.
  • Declining corporate image and eroding public trust: Placing patients’ interest at the center of the business model, and then effective marketing of the same, can reverse this trend, with better business outcomes.
  • Lack of business transparency: Make business processes, including pricing, sales and marketing more transparent, by leveraging the power of data with modern technology.
  • Declining per dollar marketing productivity: Move away from the old and traditional business models to find a new pathway for success, using the process of simulation, on an ongoing basis.

While above are some of the pressing needs for steering the course of pharma and biotech industry, the business keeps charting the same patch, with a bit of tweaking, here or there. Thus, the good old saying – ‘necessity is the mother of invention,’ still doesn’t work in pharma.  The question, therefore, is why? We shall discuss it in just a bit. Before that, let me explore how creative the pharma industry, joining some critical dots.

How creative is pharma and biotech industry?

To explore this area, I shall try to touch upon the following two points:

  • Is there any perceptible financial impact on pharma sales revenue, net profit and gross operating margin, for not creatively resolving some critical growth barriers, as stated above?
  • Where does pharma and biotech industry stand in global ‘creativity ranking’?

For this purpose, when I look at the following four major areas, some interesting findings emerge:

  • Top 10 in sales revenue.
  • Top 10 in net profit
  • Average Gross and Operating Margin
  • Creativity ranking of some major pharma and biotech companies

Top 10 in sales revenue:

The overall sales revenue of the pharma/biotech companies remains healthy. On the face of it, there doesn’t seem to be any storm signal.  According to Market Research Reports, Inc. the top 10 companies on 2018 sales revenue, are as follows:

  1. Pfizer Inc.: USD 53.647 Billion
  2. Novartis AG: USD 51.90 Billion
  3. Roche Holding AG: USD 45.5896 Billion
  4. Johnson & Johnson: USD 40.734 Billion
  5. Sanofi S.A: USD 39.288 Billion
  6. Merck & Co., Inc.: USD 37.689 Billion
  7. AbbVie Inc.: USD 32.753 Billion
  8. Amgen: USD 23.7 Billion
  9. GSK: USD 22.968 Billion
  10. Bristol-Myers Squibb: USD 22.600 Billion 

Top 10 in net profit:

There isn’t any storm signal visible in this area, either, as it is seen in isolation. According to Statista, the 2018 ranking of the top 10 biotech and pharmaceutical companies worldwide, based on net income, as appeared in the Financial Times 2018 equity screener database, is as follows:

Rank

Company

Net income ($ Billion)

1.

Johnson & Johnson (USA)

15

2.

Novartis (Switzerland)

13.8

3.

Pfizer (USA)

11.9

4.

Roche (Switzerland)

10.5

5.

Amgen (USA)

8.5

6.

Gilead (USA)

7.7

7.

AbbVie USA)

6.8

8.

Novo Nordisk (Denmark)

6.0

9.

Bayer (Germany)

4.3

10.

Biogen (USA)

4.1

Let’s now look at the average gross and operating margin in the pharma and biotech industry.

Average Gross and operating Margin – still the best:  

This also looks healthy, as compared to others. According to the January 2018 study by New York University’s Stern School of Business, average gross margin of 481 biotech and 237 pharma and biotech companies was reported at 70.71 percent and 68.60 percent, respectively. And their operating margins were at 25.45 percent and 24.89 percent, severally – against 12.32 percent of all the 7209 companies surveyed.

Creativity ranking of some commonly known pharma and biotech companies:

Here there seems to be an issue. When I look at the 2018 Forbes list of ‘The World’s Most Innovative Companies,’ it will be challenging to find any of the above top names of the pharma and biotech companies within the Top 100 ranking. Just to illustrate the point, let me reproduce below some commonly known names of our industry:

Rank Company Country 12-month sales growth% Innovation Premium%
#7. Incyte USA 38.93 70.59
#14. Celltrion S. Korea 45.25 62.3
#16. Regeneron Pharmaceuticals USA 20.82 61.11
#17. Vertex Pharmaceuticals USA 46.2 60.93
#22. Alexion Pharmaceuticals USA 17.32 58.04
#82. Allergan Ireland 9.4 37.59

Some interesting possibilities:

The above data, points towards some interesting possibilities:

  • Because of its sales and profit margin remaining generally lucrative, the focus on innovation of most pharma and biotech companies, get restricted to new drug discovery and development processes.
  • Top management’s encouragement of creativity across all functions of the organization appears inadequate, to successfully navigate through the key growth barriers, to maintain future business sustainability.

But, some critical signals do indicate: ‘shape up or ship out’:

But the real picture isn’t as rosy. Analysis of some key trends does capture several critical storm signals for the industry According to the July 09, 2018 study of EY (Ernst and Young): ‘Margins of pharmaceutical companies are continuing to decline – the future lies in new ecosystems.’ It further indicated: Although the margins of the 21 largest pharmaceutical companies in the world are declining, the businesses ‘are still growing, thanks to blockbuster drugs and new active ingredients against cancer. 40 per cent of the active ingredients that are currently being developed worldwide are cancer drugs.’

The paper concluded, the future lies in designing completely new types of ecosystems and business models. With the aim of providing comprehensive support for healthcare customers, including patients. “Data-driven business models will permanently change the pharmaceutical industry,” the paper articulated. The study forecasted, ‘life Science startups will take over between 30 and 45 per cent of the market by 2030.’ Isn’t this a clear signal, especially for large and longtime pharma players to ‘shape up or ship out?’

Conclusion: 

Let me now revert to what Peter Drucker said on two basic functions of a business – Innovation and Marking. None can question pharma on its consistently bringing to market innovative drugs to effectively tackle many diseases, including complex and life-threatening ones. Given, that ongoing new drug development is the lifeblood of growth of pharma business. Nevertheless, that aspect of innovation is mostly perceived as an exclusive internal business value for most companies. The majority of stakeholders perceives the value of drug innovation as inclusive, when it is made accessible to a large population of patients at an affordable price, along with a decent Return on Investment (ROI) for the corporation. This expectation cannot be wished away. Instead, its core concept should drive the other basic function of business – marketing

This stage can be attained by building an innovative organization, fostering the culture and process of ‘creativity’ – across its functions. It is now a fundamental requirement for pharma and biotech companies. Beyond new product development, innovation immensely helps organizations navigating through strong headwinds to achieve its financial goals and objectives, in an inclusive manner. When IT – another knowledge industry, can reduce the cost of innovation through creative processes, across all functions, making its product and services affordable to a large population, e.g. Reliance Jio, why not Pharma? In that sense, I reckon, pharma and biotech companies are yet to become creative – in a holistic way.

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.

Would ‘Connected Healthcare’ Catch Pharma Players Off-Guard?

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Rapid advancement of medical science is making several life-threatening diseases easily preventable, curable and manageable. For some conditions, such as, peptic ulcer even surgical interventions are no longer necessary. This results in the expansion of preventive and primary-care segments, with equal speed. Simultaneously, increasing complexity of many diseases, late stage disease detection, and better identification of rare diseases, are broadening the specialty hospital segment, as well.

On the other hand, the general mindset of people is also changing as fast. They dare to chart in the cyberspace, seek for more health-information, prefer participative care, expect a speedy treatment process – delivering better outcomes.

The cumulative impact of these are creating some brilliant sparks, confirming evolution of some disruptive health care business models. These are quite different from what we generally experience today.One such model is termed ‘connected healthcare.’ This is a unique business model, having potential to break the decades old status-quo – for the benefit of patients – closely involving doctors, pharma – medical device/diagnostic companies and of course the hospitals. In this article, I shall deliberate on ‘connected healthcare’ looking at its various aspects and examining whether pharma industry is ready for this change. Let me start this discussion with the role of Internet of Things (IoT), as an enabler for this process.

Internet of Things (IoT) – A great enabler for ‘connected health’:

‘Internet of Things (IoT)’ has opened new vistas of opportunities for providing healthcare with significantly better outcomes. According to Ecoconsultancy, by leveraging the IoT network, medical devices of everyday use can be made to collect, store and share invaluable medical data, providing a ‘connected healthcare’ system. Consequently, doctors, along with patients, can get speedy and deeper insights into symptoms and trends of diseases for prompt interventions, even from remote locations. The question that follows: what really is ‘connected health?’

‘Connected Health (cHealth)’ and a teething problem:

‘Connected health or (cHealth)’ refers to the process of empowering healthcare delivery through a system of connected and interrelated computing devices, mechanical and digital machines on an IoT network platform. It provides the ability for seamless data transfer and access between patients and providers, without requiring human-to-human interactions to improve both quality and outcomes of healthcare.

Two more articles, one titled ‘Connected health: How digital technology is transforming health and social care,’ and the other ‘Accelerating the adoption of connected health’, both published by Deloitte Center for Health Solutions also described ‘Connected health (cHealth)’quite eloquently.

One of the papers highlighted, being a technology driven network system, cHealth has its own teething problems. Some of its key reasons include: Many physicians ‘are often reluctant to engage with technology, partly due to the scale and pace of changes, and partly through lack of education and training, and concerns over liability and funding.’

Precise value offerings of a ‘Connected Health’ system:

The Accenture study titled, ‘Making the Case for Connected Health,’ established that ‘connected health’ approach creates value at three different levels, as follows:

  • Clinical efficacy and safety - Eliminating duplicate lab and radiology tests; improving patient safety through 24/7 access to comprehensive, legible medical records; and speeding up access to patient medical histories and vital information – the cost of treatment can be reduced, significantly.
  • Shared knowledge - Improves care quality, benefits with prompt safety alerts, such as drug interaction, enhances clinical decision-making through sophisticated tools along with evidence-based care protocols, and helps acquiring new capabilities in health care.
  • Care transformation - Advanced analytics help sharing clinical decision-making process, population health management, and facilitate building new care delivery models.

‘Connected health’ in managing chronic diseases:

‘Connected health’ is being practiced at different levels in many countries. These are particularly useful in treating or managing chronic ailments, such as cardiovascular (hypertension), metabolic (diabetes) disorders and COPD (Asthma).  Some examples are as follows:

Many hypertensive patients monitor their blood pressure and other related parameters, through self-operating digital instruments and devices. If the auto-flagged readings get transferred to the treating physicians through IoT system, physicians can promptly adjust the drug doses and offer other required advices over the same system online, and as and when required or periodically. This could avoid periodic personal visits to doctors for the similar purpose, saving time and money. At the same time, it ensures better quality of life through the desired level of disease management, always.

Similar results have been reported in the management of diabetes and Asthma with ‘connected health’ system.

 ‘Connected health’ in treating life-threatening diseases, like cancer:

The paper titled, ‘Smart technology helps improve outcomes for patients with head and neck cancer,’ published by the News Medical on May 17, 2018, which was also read at the June 2018 Annual Meeting of the American Society of Clinical Oncology (ASCO), highlights some interesting developments in this area. This federally funded, randomized clinical trial on 357 people receiving radiation for head and neck cancer, using mobile and sensor technology to remotely monitor patient symptoms, resulted in less severe symptoms related to both the cancer and its treatment.

It also noted: ‘Patients who used the technology – which included a Bluetooth-enabled weighing scale, Bluetooth-enabled blood pressure cuff, and mobile tablet with a symptom-tracking app that sent information directly to their physician each weekday – had lower symptom severity than participants who had standard weekly visits with their doctors. In addition, daily remote tracking of patient wellbeing, according to the researchers, enabled physicians to detect concerning symptoms early and respond more rapidly, compared to usual care.’

While treating serious ailments, medical images, such as computed axial tomography (CT), magnetic resonance imaging (MRI), digital mammography and positron emission tomography (PET), can be connected, stored and shared with cloud-based connectivity and online sharing platforms, as confirmed by several studies. This would enable physicians to build better and deeper referral networks, for better diagnosis and speedier treatment inventions to patients.

‘Connected healthcare’ is fast growing:

As the above Accenture study indicates, many countries have started implementing  ‘connected healthcare’ systems to deliver cost-effective, high-quality and speedy healthcare services to the population with better outcomes. Some of these nations are, Australia, Canada, England, France, Germany, Singapore, Spain and the United States.

According to the New Market Research report titled, “Connected Healthcare Market – Global Industry Analysis, Size, Share, Trends, Growth and Forecast 2018 – 2022,” published by Wise Guy Research: ‘Globally, Asia-Pacific region is one of the fastest growing markets for ‘connected healthcare’. It was valued at USD 2.65 billion in 2015, and is expected to reach USD 23.8 billion by 2022, at the rate of 30.6% during the forecast period.’ During this span, ‘The global connected healthcare market is expected to reach $105,337.5 Million by 2022 at a CAGR of 30.27%,’ with North America commanding largest market share of 36.7%, the report highlights.

‘Connected health’ shows a high potential in India:

The above report also indicates, ‘mobile-health services’ accounts for the largest market segment in the UK, Italy, Japan, China and India. E-prescribing is the fastest growing segment in Asia Pacific and is expected to grow at the rate of 31.27% CAGR during the forecast-period.

E-Health initiative of the Government of India, which is aimed at using of Information and Communication Technology (ICT) in health signals a good potential for ‘connected health’ in India. Fast penetration of mobile technologies even at the hinterland of India will facilitate this process.

Another article titled, ‘Why Connected health is the key to reducing waste and increasing efficiency,’ published in Healthcare India on July 25, 2017, brings to the fore some key benefits of ‘connected healthcare’ in the country. It says, ‘connected healthcare’, can bring path-breaking changes in the country. Following are a few examples:

  • Today when almost 70 percent of the medical expenses are borne by the patient, a ‘connected health’ ecosystem, would reduce admissions by early intervention and potentially deter surgeries.
  • Having access to a patient’s entire medical record, physicians’ will be able to minimize ‘over diagnosis’, amounting to multiple tests, over-medication and avoidable prescriptions, thereby reducing out of pocket health expenditure of patients.
  • When patients are referred from one doctor to the other, or from the rural medical centers to district hospitals, they often need to repeat all the tests, as there is no connected health ecosystem. In doing so, they lose time and sometimes don’t show up for follow up treatments and consultations with their treatment remains incomplete.

Leading private players in ‘connected health’ area:

Some of the leading market players in the global ‘connected healthcare’ market, reportedly, include Agamatrix Inc. (USA), Airstrips Technology (San Antonio), AliveCore Inc. (Australia), Apple Inc. (USA), Athenahealth Inc. (USA), Boston Scientific Co. (USA), GE Healthcare (UK), Honeywell Life care Solutions (UK), Medtronics (Ireland) and Philips Innovation Campus (Bengaluru, India).

Would ‘Connected healthcare’ disrupt pharma’s legacy commercial model:

McKinsey Digital’s March 2012 paper titled, “Biopharma in the coming era of connected health” explains, how ‘connected healthcare’ has started disrupting the legacy commercial models of pharma and Biopharma industry. One of the related examples cited in the article is, pharma’s less emphasis on large sales forces “selling” to physicians.

As this new system gathers wind on its sail, information transparency will allow customers, regulators, and competitors to understand and independently assess the performance of various drugs, often better than what the manufacturers present. These powerful new data sources would reveal true efficacy of medicines, in the real-world settings. No doubt, it will be a significant patient empowerment.

Would pharma be caught off-guard?

Despite such clear signs of changes, the way the pharma industry continues to operate, which as perceived by a majority of the population, is generally self-serving in nature. It has remained virtually unchanged over several decades. Another strong public perception is, patients often get trapped by a two-way financial interest, existing between doctors, hospitals, pharma, biotech – medical devices/diagnostic companies, in various forms. Notwithstanding, industry lobbyists pooh-poohing it, it remains a robust general perception, nonetheless.

That said, this situation can no longer be allowed to remain frozen in time. Today, time is making many things obsolete, including human behavior and business practices, much faster than ever before. This gets fueled primarily by two catalytic factors – one, rapid progress of technology, and the other, which is even more fundamental – the changing demographic profile and social fabric. Together, these are creating a new, informed, more assertive and expressive mindset of people – signaling their needs, preferred choices and processes, even for a health care solution. It’s for the industry now to shape up, soon.

Conclusion:

Joining all these dots, one gets a clear sign of ‘connected healthcare’ gradually evolving in India. Even if, it still takes some more time for an integrated ICT system to be in place, especially in India, it’s for sure that ‘connected healthcare’ will be a reality, surely.

As and when it happens, it will be a disruptive process. The process of sharing all requisite disease prevention, treatment and management related data, between patients, doctors and other care providers, including pharma companies – over regulatory approved, interconnected IoT enabled devices, machines and applications, will benefit all.

There will, of course, be several barriers to overcome, before this new era ushers in. One such hurdle being, many doctors still don’t express a favorable attitude towards adoption of ICT technology in their everyday practice. Alongside, the government with the help of regulators, should enact the requisite laws, and frame stringent rules to ensure enough privacy and security of confidential medical information of individual patients. In tandem, appropriate authorities must ensure that ‘connected healthcare’ system is effectively implemented by all concerned.

As strong environmental needs will hasten this process, public access to high quality healthcare with better outcomes – and all at an affordable cost, will improve by manifold. Thus, I reckon, days aren’t too far to witness ‘connected health care’ in India. But, the hundred-dollar questions still remain unanswered – Are most pharma players ready for the ‘connected healthcare’ regime, or will it catch them off-guard?

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.

Are Cancer Patients Victims of Pharma’s Payment to Doctors – For Prescriptions?

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In pharma industry, people of all socioeconomic backgrounds have no other choice but to visit doctors, to seek their expert advice for medical treatment. Patients expect them to prescribe the right and most affordable medicines for desired relief. Ironically, it appears to be the general industry practice to favorably influence the prescribing decision of doctors of all kinds of drugs, irrespective of any tangible product superiority, and price. This practice has been a decade old general concern of many that still continues unabated, especially in India.

There is nothing wrong, though, in pharma companies’ influencing doctors with unique product and associated service offerings over others, intended to benefit patients. However, when any marketing activity goes against the general patient interest, or may be construed independently as short-changing patients, must not be condoned, the least by any government.

This article will discuss how this menace is not sparing even those cancer patients who can’t afford expensive drugs but want to survive. I shall start with an overall perspective and sign off with the prevailing situation in India.

Are such practices transparent?

Obviously not, as these take place under several benign names and guise, and is an open secret to almost all stakeholders, including many patients. In several countries, India excluded, the government or the legal systems have intervened to make the drug marketing process more transparent, often with strong punitive measures. Curiously, adequate space is constantly being created by some players to hoodwink all these.

Today, one can, at best put two and two together to get a feel of what could possibly be the reality. It still remains a challenge to exactly quantify as to what extent it is going on, and with what impact on common patients, who mostly pay out of pocket to purchase medicines. But the good news is, studies on this particular subject has commenced, a few examples of which I shall in this article.

Some common influencing tools:

Pharma companies’ influencing tools for favorable doctors’ prescriptions are, apparently, directly proportional to a doctor’s prescription generating capacity. Once a doctor is influenced by such mechanism, high product price becomes irrelevant, even for those who find the drug difficult to afford.

The form of influence varies from gifts carrying different price tags, advertising in specific souvenirs or journals, sponsoring medical symposia of doctors’ choice, to arranging company’s own ‘Continuing Medical Education (CME)’ programs in exotic places, with travel, boarding and lodging expenses paid by the company, sometimes including their spouses. Hefty speaking, consulting fees and research grants may also be among these influencing tools. All are commonly done through a third party to avoid easy detection.

Some evidences of drug companies’ payment to doctors:

May 02, 2017 edition of the Journal of American Medical Association, published a couple of survey findings that can be summarized, as follows:

  • About half of U.S. doctors received payments from the pharmaceutical and medical device industries in 2015, amounting to USD 2.4 billion
  • Such payments and gifts very likely encourage doctors to prescribe pricey brand-name drugs and devices pushed by sales representatives.
  • Chances of receiving a general payment depended on the doctor’s specialty — 61 percent of surgeons got a payment, compared with 48 percent of primary care doctors.
  • Pharma companies earned more than USD 60 billion in 2010 for brand-name drugs included in the study. Generic drugs are 80 to 85 percent less expensive, which means hospitals can save lots of money, if doctors start prescribing generics instead of brand-name drugs.
  • Doctors at academic medical centers were more likely to prescribe cheaper generic drugs than expensive brand-name drugs after their hospitals adopted rules that restricted pharmaceutical sales visits, the researchers said.
  • “Many doctors would say they can’t be bought for the low amounts we’re talking about, but the amounts actually aren’t that low. Many, many doctors are getting thousands of dollars. It’s hard to imagine that is not influential,” the article underscored.

Quantification of increased prescription:

Another interesting study analyzed the prescription pattern of cardiologists who were taken out for a meal by sales representatives of Pfizer or AstraZeneca– makers of two expensive branded cholesterol-lowering statins, Lipitor and Crestor. They found that payment to physicians increases prescribing of the focal drug by 73 percent.

It is noteworthy,during the time period examined, which was between 2011 and 2012, there were several equivalent, lower-cost generic statin drugs available in the market. The paper’s findings confirm the general belief that drug companies’ business practices do influence doctors prescribing behavior while treating patients, in favor of the high-cost targeted brands.

Any relationship between soaring cancer drug price and pay for prescriptions?

Dr. Peter Bach at the Memorial Sloan-Kettering in New York City, with the help of a ‘cancer drug price chart from 1965 to 2016 period, established that treatment cost with cancer drugs is soaring. In another article, on the same issue, Dr. Bach commented: ‘Market pricing does not ensure access to new innovation.’ He reiterated:‘Profit maximizing price is not welfare maximizing. This is a policy failure, not a market failure.’

So far so good. However, everybody was surprised when on October 02, 2018, The New York Times reported about the same Memorial Sloan-Kettering that: ‘Dr. Craig B. Thompson, the hospital’s chief executive, resigned in October from the board of Merck. The company, which makes the blockbuster cancer drug Keytruda, had paid him about $300,000 in 2017 for his service.’

The same report further detailed: ‘Dr. Thompson, 65, received $300,000 in compensation from Merck in 2017, according to company financial filings. He was paid $70,000 in cash by Charles River in 2017, plus $215,050 in stock.’ This does not seem to be a solitary example from this hospital, as ‘another article detailed how a hospital vice president held a nearly $1.4 million stake in a newly public company as compensation for representing Memorial Sloan Kettering on its board.’

The question that arises now, how would such behavior of doctors adversely impact cancer patients’ health-interest? This was evaluated in an interesting article, as below.

Evaluation of association between industry payment to doctors and their prescribing practices:

Financial relationships between physicians and the pharmaceutical industry are common. This was analyzed in detail with deft and expertise in yet another very recent research paper titled, ‘Evaluating the Strength of the Association Between Industry Payments and Prescribing Practices in Oncology,’ published in the ‘The Oncologist’ on February 06, 2019. Two critical findings of the study may interest many, which are:

  • The association between industry payments and cancer drug prescribing was greatest among physicians who received payments consistently (within each calendar year).
  • Receipt of payments for compensation purposes, such as for consulting or travel, and higher dollar value of payments were also associated with increased prescribing.

Its implication on cancer patients:

To ascertain its implication on cancer patients by combining records of industry gifts with prescribing records, the study identified:

  • The consistency of payments over time, the dollar value of payments, and payments for compensation as factors.
  • This is very likely to strengthen the association between receiving payments and increased prescribing of that company’s cancer drug.

The outrageous cost of cancer treatment with innovative drugs:

As I said in my previous articles, new cancer drugs are increasingly becoming more innovative with greater efficacy. The fact that the 2018 Nobel Prize in Physiology or Medicine was awarded to James P. Allison and Tasuku Honjo “for their discovery of cancer therapy by inhibition of negative immune regulation,” provides a testimony to the high quality of innovation involved in the discovery and development of cancer therapy.

This progress is excellent, unquestionably! But who is getting benefitted by these innovative cancer medicines? The headline of the article, titled ‘The Nobel Prize is a reminder of the outrageous cost of curing cancer,’ published by the Vox Media Vox Media on October 02, 2018, captures the prevailing reality, succinctly. Articulating, ‘The Nobel Prize is a reminder of the outrageous cost of curing cancer,’ the author further elaborates the point. The paper underscores, for the first time ever, we’re living in a moment when many of our most promising medical advances, such as cancer immunotherapy, are far out of reach for the vast majority of people who could benefit from them.

Innovative cancer drugs are pricey only for the high cost of innovation? 

Let me deliberate this point based on data. Quite expectedly, pharma industry never accepts that prescriptions are bought. But, when get caught, they retort that these are some aberrations, keeping their much-publicized argument unchanged in support of jaw dropping cancer drug prices. They argue, innovative drugs are brought to market after incurring R&D expenditure of over a billion dollars, if not more.

The Vox article quotes the CEO of Novartis, the maker of the immunotherapy drug Kymriah, saying that the R&D costs of the drug were about USD 1 billion. But many experts don’t buy this argument. The article echoed one such expert - Ezekiel Emanuel, a professor of medical ethics and health policy at the University of Pennsylvania’s Perelman School of Medicine.

The professor countered by saying: ‘That’s certainly a big investment, but it is much less astounding when compared with the drug’s anticipated revenue. Based on Kymriah’s list price, treating just 2,700 patients would allow Novartis to recoup its entire investment. Even with significant discounts for many patients, it wouldn’t take many treatments to turn a considerable profit.’

According to researchers at the University of Pennsylvania, the total cost for removing, reprogramming and infusing the cells into each patient is less than USD 60,000—just one-sixth of the USD 373,000 price tag. Production costs do not seem to be driving the stratospheric drug prices, the researchers commented.

Has any remedial action been taken by the industry or the doctors?

Except one report, I reckon, this practice continues virtually unabated, even today.

‘The above conflicts at Memorial Sloan Kettering, unearthed by The New York Times and ProPublica, have had a rippling effect on other leading cancer institutions across the country’, commented ProPublica on January 11, 2019. It reported: ‘The cancer center will now bar top officials from sitting on outside boards of for-profit companies and is conducting a wide-scale review of other policies.’

Further, Dana-Farber Cancer Institute in Boston and Fred Hutchinson Cancer Research Center in Seattle, both of whose executives sit on corporate boards, are among the institutions reconsidering their policies on financial ties, the article said.

Conclusion:

Although, in many countries, at least, some action has been taken by the governments to curb such practices by framing appropriate laws, in India it is virtually free for all types of situation, as prevailing in this area.

A recent news report aptly summarized the Indian situation. It highlighted: “While Prime Minister Narendra Modi recently mocked doctors in a public interaction in London for going on foreign trips sponsored by pharma companies, his government has been unsuccessful in bringing in a law to punish pharma companies that bribe doctors. The Uniform Code of Pharmaceutical Marketing Practices (UCPMP), prepared by the pharmaceuticals department (DoP) to control unethical marketing practices in pharma has been in the work since December 2014, six months after the current government came to power. More than three years later, the code is stuck in the Niti Aayog after the law ministry rejected DoP’s draft.”

With the above global and local perspective, I reckon, even if some changes take place in the developed world, India is unlikely to fall in that category, any time soon. Consequently, a large number of Indian patients may continue to fall victims of common pharma practice – pay to doctors for prescriptions. It doesn’t seem to matter even for cancer drugs.

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.

Does ‘Patient-Centricity’ Now Sound Like A Cliché?

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Today, many pharma companies claim ‘patient-centricity’ as one of their primary focus areas in business. Many industry experts, as well, have been advocating so, over a period of time. A number of research studies, published during the last several years, also recommended that ‘patient centricity’ should be the key focus area for long-term sustainability of any pharma business, across the world, including India. In the fast unfolding scenario of date, this is absolutely essential to keep pace with the changing needs and aspirations of a new generation of well-informed patients.

Currently, one can easily spot inclusion ‘patient-centricity’ even in the corporate vision and mission statements of many drug companies, especially those with global footprints. But the question arises, how efficient is its implementation in the field?

In this article, I shall try to fathom whether patients are in sync with pharma’s claim of moving towards this goal, or the term ‘patient centricity’ just sounds like a cliché, at least, as of now. Let me start by giving a brief perspective of the subject to illustrate the point, why it represents a fundamental shift in the healthcare space.

‘Patient-centricity’ – a fundamental shift in healthcare space:

As I discussed in my article, titled ‘Increasing Consumerism: A Prime Mover For Change in Healthcare’: ‘Patients’ longing for better participative treatment experience at an affordable cost, has started gathering momentum as a major disrupting force in the healthcare space of India, as well.

This is a fundamental shift in the healthcare space, especially in terms of patients’ behavior, needs, aspirations and expectations while charting across any end-to-end treatment process. This change is taking place over the last couple of decades, pushing many pharma players to adopt a ‘patient-centric’ approach for greater sustainability in the business.

‘Patient-centricity’ has started occupying the center stage in the successful pharma business, as patients are becoming more and more informative. The reasons for this change are many. I have already discussed many of these, along with suggestions on corrective measures, in my various articles, published in this blog on the subject.

What’s happening on the ground?

Drug manufacturers’ various strategic communications aimed at stakeholders, signal that the ball has started rolling. According to a report, well-known pharma majors, such as Novartis, GSK, Janssen Pharmaceutical, UCB, LEO Pharma, among others, are actively participating in conversation on ‘patient-centricity.’ Apace with, a number of research studies also point towards a clear dichotomy, and a glaring disparity between drug companies’ claims and people’s perception of ‘patient-centricity’ in real life. Let me first touch upon the glaring dichotomy in this area.

A glaring dichotomy exists:

That more organizations are becoming more ‘patient-centric’, will get captured by the increasing trust of patients – both on the individual companies and also the pharma industry, in general. But today, what we witness is a clear dichotomy between the claims of many pharma companies of being ‘patient-centric’ and the declining patients’ trust, along with dented reputation and image of the industry, in general.

Declining public trust towards pharma industry is also evident from increasing consumerism in the healthcare space, besides stringent policy and price regulatory measures being taken by various governments, across the world. It also significantly increases their cost of advocacy with governments, through their own trade associations. Either patients pay for such avoidable costs indirectly, by paying higher drug price, or the pharma players absorb its impact with reduced margin, which is also avoidable.

This gets reinforced by another measure of disparity. It also points to the widening gap between drug companies’ claim on becoming ‘patient-centric’ – together with their employee perceptions on the same, and the reality as experienced by patients. Let me illustrate this point below by quoting from another recent research study.

Measuring disparity between the claim and reality:

Interestingly, the August 2018 annual benchmarking survey carried out by the Aurora Project, also finds a disparity in perception and reality related to the much often-used terminology – ‘patient-centricity’. Aurora Project is a non-profit group, founded by eyeforpharma and Excellerate. It is made up of more than 200 health sector leaders from around the world, with an objective ‘to move ‘patient-centricity’ from words to actions and outcomes’.

The study was conducted between July and November 2018. It covered 1,282 respondents, which include patients, HCPs and employees from biopharmaceutical and medical device companies. Expert perspectives were obtained from senior managers working with 10 of the world’s leading pharma companies, and views from specialists in behavior change and organizational psychology.

The respondents were asked to score the degree of ‘patient-centricity’ in pharma across 10 metrics, and patients consistently rated companies lower than industry employees. Some of the important findings that came out clearly while measuring the disparity between pharma’s claim and the reality, are as follows:

  • In total, 72 percent of employees agreed with the statement “my company communicates with care and compassion, transparent and unbiased information on diseases, treatment options and available resources”.

- Whereas only 32 percent of patients agreed with the equivalent statement.

  • More than half (53 percent) of the employee participants said they were “actively looking for what to do and how to teach” patient centricity.

- Whereas only 22 percent said they knew “exactly what to do

- And 16 percent said they “didn’t know what to do or how to teach it”.

  • Only 36 percent of the patients surveyed indicate that they have “quite a bit” or “a lot” of trust in the pharmaceutical industry overall.

The survey brought to the fore, while people believe in the importance of pharma delivering on its ‘patient-centered’ mission, most are not confident in pharma’s ability to deliver.

Most companies focus sharper on meeting short-term goals than ‘patient-centricity’:

That most companies focus sharper on achieving short term goals than ‘Patient-centricity’, as also captured unambiguously in the above survey, as it noted:

  • 90 percent of survey participants employed by biopharmaceutical and medical device companies agree that a long-term focus is key to the success of patient- centric efforts. However, the need for a long-term view is sometimes at odds with business realities, and 53 percent agree that their companies are mostly concerned about results this quarter (9 percent) or this year (44 percent).

Thus, there is a clear need for not just of ‘patient-centricity’, but also an appetite for it among those best placed to make it happen. Therefore, the question to ponder for pharma companies is: How best to be ‘patient-centric’? While trying to ferret out a robust answer to this question, many domain experts suggest that ‘patient centricity’ demands a fundamental shift in the cultural mindset of the organization.

Demands a fundamental shift in corporate cultural mindset:

As I pointed out in several of my articles in the past, the need for creating an appropriate ‘patient-centric’ corporate cultural mindset is to reverse the organizational pyramid. This means transforming the business from being product focused to patient focused.

That ‘patient-centricity’ demands a shift in the corporate cultural mindset within the pharmaceutical industry, was also emphasized in the article published in the Journal of Therapeutic Innovation & Regulatory Science (TIRS) onMarch 28, 2017, titled ‘Patient Centricity and Pharmaceutical Companies: Is It Feasible?’

Elaborating this point further, the paper said that at the highest level, it involves listening to and partnering with the patient, and understanding the patient perspective, rather than simply inserting patient views into the established process. Aided by the top management, the answers to the following questions on ‘patient-centricity’ should be crystal clear to all employees:

  • Why are we doing this?
  • How should we do it?
  • What are the results we aim to achieve?

Conclusion:

Quoting the December 2012 NHS document, the essence of ‘patient-centricity’ may be expressed as – ‘making “no decision about me, without me” a reality, all along the patient pathway: in primary care, before a diagnosis, at referral and after a diagnosis.’ This is applicable to all in the healthcare space, equally, including the pharma industry. There doesn’t seem to be any alternative to it, either. Which is why, ‘patient-centricity’ is emerging as a ‘take it or perish’ type of a situation for all pharma players. It may not happen immediately, but eventually it would certainly form the bedrock of pharmaceutical business.

Probably due to this reason, ‘patient-centricity’ has become a new a new buzz word to demonstrate how a pharma player is keeping pace with time. Consequently, more and more companies are joining this chorus of informing the stakeholders that ‘I am game’. Be that as it may, the core concept of ‘patient centricity’ is still not yet getting properly translated into better patient outcomes, through actionable strategies on the ground.

There are several studies on the measurement of ‘patient centricity’. The Aurora Project, as discussed above, is one such. It clearly brings out that there is still a significant gap between words and actions of many drug companies on ‘patient-centricity’. Consequently, a large number of patients are still unable to reap the consequential benefits of ‘patient centricity’, the way it is publicized by several companies. Despite this, the terminology continues to be overused, sans proper application of mind to translate the pharma’s good intent into reality.

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’s Oncology Focus: Some Key Drivers With Pros And Cons For Patients

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Just in the first ten days of the brand-new year – 2019, three important oncology focused acquisitions were announced by three top global pharma companies.

On January 03, 2019, Bristol-Myers Squibb announced that it will acquire Celgene for a hefty sum of USD 74 billion to be a leading Biopharma player, focusing on high-value innovative medicines. As reported by BioSpace on January 04, 2019, the BMS CEO said, the combined might of the two pipelines will create “the number one oncology franchise” for both solid and hematologic tumors.

Just four days thereafter, on January 7, 2019, at the J.P. Morgan Healthcare Conference, Eli Lilly announced that it will acquire targeted cancer drug maker Loxo Oncology for USD 8 billion. This deal gives the company TRK inhibitor Vitrakvi – the first drug approved by the FDA to target tumors based on genetic abnormality, rather than the location of the cancer.

On June 08 2019, at the same J.P. Morgan Healthcare Conference, GlaxoSmithKline CEO Emma Walmsley, reportedly said that GSK has agreed to acquire already approved PARP inhibitor Zejula as well as a range of pipeline assets valued USD 5 billion.It’s noteworthy that Walmsley announced the company’s new focus on oncology just the last year and has now almost doubled its immuno-oncology pipeline.

Even in the last year – 2018, a significant number of oncology focused Merger and Acquisitions (M&A) took place. The acquisition values are also interesting – ranging from a few-hundred million to billions of USD. In this article, I shall examine what could be the main drivers of this emerging trend with its pros and cons from the patients’ perspective, in general. As a brief backdrop, let me start with a few examples of such M&As in 2018.

Some oncology focused M&As in 2018:

Following are examples of some oncology focused acquisitions that took place in 2018:

  • In January 2018, Celgene Corporation, which has now been acquired by Bristol-Myers Squibb, announced theacquisition of Juno Therapeutics for about USD 9 billion. This deal came shortly after Celgene’s deal for Impact Biomedicines valuing USD 1.1 billion.
  • In late-January 2018, the biggest deals this year were by Sanofi. It acquired Waltham, Massachusetts-based Bioverativ for about USD 11.6 billion. Bioverativ was a spinoff by Biogen. About a week later, Sanofi bought Ghent, Belgium-based Ablynx for USD 4.8 billion.
  • In April 2018, Roche completed its acquisition of Flatiron Health, an oncology-specific digital health company for about USD 1.9 billion.
  • In the same month of April 2018, Shire sold its oncology business to France’s Servier for USD 2.4 billion.
  • In May 2018,  Janssen Biotech, a subsidiary of Johnson & Johnson’s Janssen Pharmaceuticals, announced that it was buying Rockville, Maryland-based BeneVir Biopharma, in a deal of more than USD 1 billion.

Thus, the question that follows: what could be the primary drivers of this trend?

The primary drivers:

In my view, the primary drivers for focus on the oncology segment by pharma and biotech companies is a combination of the following factors:

  • Leading cause of death: The incidence of cancer is fast increasing across the world, making it the leading cause of death, says 2018 report of the International Agency for Research on Cancer (IARC).
  • High incidence: Cancer burden rose to 18.1 million new cases, with 9.6 million cancer deaths in 2018. IARC report further highlighted, one in 5 men and one in 6 women worldwide develop cancer during their lifetime, and one in 8 men and one in 11 women die from the disease.
  • The need for new treatment approaches is increasing: Various types of cancers are getting more and more complex.Genetic and epigenetic alterations in tumor cell populations are generating heritable variation, requiring new drugs along with novel treatment approaches.
  • High price: According to Journal of Oncology Practice, the average cancer drug price for approximately 1 year of therapy or a total treatment duration was less than USD 10,000 before 2000. This had increased to USD 30,000 to USD 50,000 by 2005. In 2012, twelve of thirteen new drugs approved for cancer indications were priced above USD 100,000 per year of therapy. For example, Keytruda (Merck) was launched in the US in 2014 at a price of reportedly USD 12,500 for each patient monthly or USD 150,000 annually. The drug is expected to be 30 percent cheaper in India than the global prices.
  • Longer product exclusivity period: As is often reported, many of the newer high-priced cancer drugs are for very specific types of cancer, with virtually no real competition. Consequently, they generally enjoy the benefits of a longer price exclusivity period, even after patent expiry. Humira of AbbVie is one such example.

The strategy is paying rich dividend to pharma players:

That this strategy continues paying rich dividend to concerned pharma players, gets reflected on the therapy group-wise performance of the global drug industry. Today, the global cancer therapeutics segment assumed mind-boggling size in value term. It was estimated at USD 121 billion in 2017 and projected to reach USD 172.6 billion by 2022. The top 10 oncology drugs accounted for revenue of USD 54.48 billion in 2017. Celgene, which has just been acquired by Bristol-Myers Squibb, dominates the oncology market, with its best-selling product – Revlimid.

Successive launches of a large number of high-priced novel cancer drugs, has pushed the oncology segment in the top slot in therapy ranking. It is expected to remain this way, at least for some time, as June 2018 report of Evaluate Pharma forecasts that the oncology therapy area will maintain the top ranking in the 2017-2024 period.

IQVIA report on ‘Global Oncology Trends 2018’ ofMay 24, 2018 also reconfirms that the number of approved cancer therapies continues to rise, with 63 cancer drugs launching within the past five years.’ Illustrating the point further, the report highlights that global spending on cancer medicines keeps rising with therapeutic and supportive care use at USD133 billion globally in 2017, up from USD 96 billion in 2013.

Pros and Cons of this trend for patients:

Interestingly, this trend has both pros and cons for patients, almost in equal measure. Some of the important pros are, as follows:

  • Advancement of cancer treatments at an accelerated pace in recent years, is offering notable improvements in clinical benefit to patients, comments the above IQVIA report.
  • Consequently, cancer incidence and mortality have been declining with an increase in the survival rate, especially in the developed countries, such as the United States, in recent times.
  • Nevertheless, decreased incidence and improved survival rate have also been attributed to both – reductions in smoking, as well as advances in early detection and treatments.

Alongside, examples of some of major cons are also bothering many patients, such as:

  • The real benefits of newer and novel high-priced cancer drugs have not been felt by most people in the developing world, which constitutes the majority of the global population.
  • The GLOBOCAN 2018 database, accessible online as part of the IARC Global Cancer Observatory, also highlights that countries with lower Human Development Index (HDI) have a higher frequency of certain cancer types associated with poorer survival. This is mainly because access to timely diagnosis and effective treatment is less common.
  • Although, the new generation of treatment is transforming the field of cancer, yielding more cures and long-term remissions than ever before, the healthcare systems worldwide continue to struggle to deliver the benefits of these drugs to deserving patients.
  • As the above IQVIA report says, the list prices of new cancer drugs at launch have risen steadily over the past decade, and the median annual cost of a new cancer drug launched in 2017 exceeded USD 150,000, compared to USD 79,000 for the new cancer drugs launched in 2013.
  • If the affordability of drugs is not addressed soon, many people with cancer might not be able to reap the rewards of cutting-edge therapies.This concern was also expressed by Nature in an article titled, ‘Bringing down the cost of cancer treatment,’ published on March 07, 2018.

Thus,access to cancer treatment, mostly with modern cancer drugs, is becoming a major challenge in all countries, but much more acute in the developing nations. A special article titled, ‘Facing the Global Challenges of Access to Cancer Medication,’ published in the Journal of Global Oncology on March 28, 2018, also broached the question of affordability of modern anticancer medication and commented, “the financial challenge presented by the rising cost of care will create a barrier to its delivery.”

Conclusion:

On the above perspective, the emerging trend of large pharma and biotech companies’ focus on novel oncology drugs is an interesting one. The key drivers fueling this ascending trend are also understandable. However, a deep-stick analysis of pros and cons of its impact on patients indicate, it has helped patients in the developed world, significantly more than those in the developing world, with affordability being the primary issue.

The article titled, ‘Bringing down the cost of cancer treatment,’ published in Nature on March 07, 2018, also reconfirms the current situation eloquently. It asserted, there isn’t an iota of doubt that new generations of cancer drugs are transforming the field of cancer treatment, yielding long-term remissions and even cure – more than ever before. Nevertheless, while medicine’s ability to tackle tumors increases by manifold, patients and healthcare systems worldwide are struggling to deliver their benefits to most cancer patients.

To address this situation, some drug players did try out ‘tiered pricing’, while a few others announced – ‘patient assistance programs’. Unfortunately, none of these measures seem to have benefitted majority of deserving patients, materially. Thus, echoing the above article from Nature, I would emphasize, if the affordability issue of new cancer drugs is not effectively addressed soon, collectively by all stakeholders, a vast majority of cancer patient won’t be able to reap expected rewards from such cutting-edge therapies.

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.

Should Pharma-Doctor Communication Be Also Gender-Specific?

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Regardless of situations, while selecting a suitable doctor for patients, or for that matter, pharma companies engage with them for commercial reasons, their gender doesn’t matter much to many.

What one generally looks for is, whether they are General Practitioners (GPs), General Surgeons (GSs) or Specialists in various disease areas, such as cardiac, metabolic, bones and joints, cancer and so on. This has been happening, despite several research studies pointing out a number of important gender-based behavioral differences between most male and female doctors, often leading to a significant difference in patient outcomes.

Before proceeding further, let me admit up front that there may be some exceptions to this general scenario. For example, certain female patients may prefer being examined by the female doctors only. Similarly, a few drug companies may be tailoring the content and the process of their communication based on the target doctors’ age.

In this article, I shall try to focus on this area based on a number of important research findings. The objective being whether medical communications of pharma players should also factor-in the gender-specific nuances among male and female doctors. This is because, such differences impact clinical outcomes and happens irrespective of whether they are GPs or specialists. Let me kick-start the discussion with the following question:

“Does gender matter when choosing a doctor?”

This interesting point was raised in an article, titled “Should You Choose a Female Doctor?”, appeared in ‘The New York Times (NYT)’ on August 14, 2018. Let me put across the essence of it, quoting from some large research findings.

The August 21, 2018 study, titled “Patient–physician gender concordance and increased mortality among female heart attack patients,” published in the Proceedings of the National Academy of Sciences of the United States of America (PNAS). This study covered more than 580,000 heart patients admitted to emergency rooms in Florida between 1991 and 2010. After a thorough scrutiny, the researchers noted that:

  • The mortality rates for both women and men were lower when the treating physician was female.

Consequently, it appears, gender does matter, while choosing a doctor for better treatment outcomes. Nevertheless, just one illustration in this regard may not possibly be enough to drive home this point. Thus, let me quote from another important study. This one is a Harvard study that included more than 1.5 million hospitalized Medicare patients and arrived at similar conclusions, with the finding as stated hereunder.

Lower 30-day mortality under female internists than male counterparts:

This large study, published in JAMA Internal Medicine on February 2017 also concludes:Hospitalized patients who receive care from female general internists have lower 30-day mortality and readmission rates than those patients cared for by male internists.

“The difference in mortality was slight – about half a percentage point – but when applied to the entire Medicare population, it translates to 32,000 fewer deaths,” reported the above NYT article while commenting on this subject. I shall come to this finding in just a bit.

Why patient outcomes are different under the care of male and female doctors? 

To get an answer to this question, just as several other previous studies, the findings of the above issue of JAMA Internal Medicine also suggest more studies in this area. The aim is to zero-in on the key differences in practice patterns between male and female physicians, which may have important clinical implications for patient outcomes.

The researchers observed, understanding exactly why these differences in care quality and practice patterns exist may provide valuable insights into improving quality of care for all patients, irrespective of who provides their care.

Curiously, this question was answered in a 2002 study published in the JAMA that found female doctors spend more times with patients.

Female doctors spend more times with patients:

The paper, titled “Physician gender effects in medical communication: a meta-analytic review” wanted to find out why patient outcomes are different under the care of male and female doctors?This study was published in the August 14, 2002 issue of JAMA. It found, “Female primary care physicians engage in more communication that can be considered patient centered and have longer visits than their male colleagues.”The average difference in time spent with patients between male and female physicians is about 2 minutes, or 10 percent, per visit.

The researchers also found that female physicians engage in communication that mostly relates to the larger life context of patient conditions. It includes addressing psychosocial issues through related questions and counseling, greater use of emotional talk, more positive talk, and more active enlistment of patient input. From this perspective, they commented: When taken together, these elements comprise a pattern that can be broadly considered ‘patient-centered’ interviewing.

Would tailoring pharma communication accordingly fetch better dividend? 

Such highly similar findings, as evidenced by many reports, over a considerable period of time, add much credence to an important fact. These vindicate the concept that ‘patient-outcomes are better when cared by female doctors as compared to their male counterparts.’ In the pharma context, the subsequent question that surfaces: Can this finding be put to use while developing a tailor-made communication strategy with appropriate content for female doctors, harvesting a rich commercial dividend?

No doubt, before doing so, more data need to be generated and analyzed to corroborate the utility of the same in the pharma business. That said, the good news is, the work has already started in this area.

Some interesting recent findings on pharma-doctor interactions:

As reported by Fierce Pharma on October 26, 2018, moving towards this direction, CMI/Compas ventured into testing the water. It planned to find out whether drug companies should develop male and female doctor-specific communication strategy and content for more productive engagement with them. After an elaborate data analysis, CMI/Compas found the following:

  • As the most important source of new product information 59 percent of older-male-doctors rank pharma sales reps much higher. Whereas, only 46 percent of older-female-doctors’ think so.
  • 47 percent of older-male-doctors were most likely to see sales reps without any restrictions. Whereas, less than 40 percent of the other group saw reps without placing any hurdles to their visits.
  • Female physicians of all generations were found more likely to rank medical websites and online drug reference guides as more important tools than their male counterparts.
  • Women doctors are also likely to encourage patients using websites, electronic medical records and patient support programs more frequently than their male counterparts.
  • After receiving requisite information from pharma source, especially younger women doctors, are more likely:

- To change a patient’s treatment (20 percent).

- Try a new product (22 percent).

- Conduct more research using other sources (40 percent).

Conclusion:

These research findings do provide a fresh food for thought for the pharma strategists to ascertain whether a new ground exists to further hone the conversation between drug companies and the doctors. More specific point to ponder is, whether an avant-garde, as it were, customer-segmentation strategy be put to use, while devising a sharply focused communication and content for the male and female doctors, separately for each.

Coming back to where I started from: Should pharma-doctor communication be gender-specific? In my view, enough credible evidences, as captured in several large studies, send a clear signal towards an affirmative answer. Nevertheless, individual company would still be required to meticulously vet it out internally, for the best possible results.

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.

An Interesting demand: No Price Control For OTC Drugs

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Since over a decade, some pharma trade organizations operating in India, have been advocating for a separate regulatory policy for ‘Over The Counter (OTC)’ drugs, which can be legally sold without any medical prescriptions. Such a new policy initiative, if taken by the Indian Government, would call for inclusion of a separate Rule and a Schedule in the Drugs and Cosmetics Act, 1940 and Drugs and Cosmetics Rules, 1945.

In the midst of cacophony related to Intellectual Property (IP) related priority of the industry in multiple areas, OTC drug advocacy took a back-seat, temporarily. Some recent developments indicate, it has again been taken out of the trade associations’ archive, well-dusted, rehashed and re-presented. Today’s key driver is likely to be increasingly stringent drug price control measures of the government. An emphatic demand of the pharma trade associations that OTC drugs should be kept outside drug price control measures, vindicates this point.

In this article, I shall deliberate this issue, especially on raising the same old demand – yet again, and my concerns on the demand of free-pricing for essential OTC drugs, in the Indian context.

OTC drugs – no legal status in India:

Currently, OTC drugs have no legal status in India. However, those drugs which don’t feature under ‘prescription only’ medicines are construed as ‘non-prescription’ drugs and sold over the counter at pharma retail outlets.

Neither is there any concept currently existing in India, which is similar to ‘prescription only to OTC drug switch,’ unlike many developed countries, such as UK, EU and United States. Thus, before proceeding further, let me deliberate on the important point – why is ‘prescription only drug’ to ‘OTC drug’ switch. Let me briefly dwell on this issue, quoting from a neutral source – the World Health Organization (W.H.O).

‘The basic purpose of re-designation of a drug as an OTC product is commercial’:  

The Essential Medicines and Health Products Information Portal – A World Health Organization resource illustrates the point as: After a new drug has been in use as a prescription-only medicine (POM) for an agreed period after licensing – usually five years – and has proved to be safe and effective during that time, regulatory authorities are prepared to consider submissions for re-designating the product where appropriate so that it becomes available for non-prescription “over the counter” (OTC) use.

The article further states: “The basic purpose of re-designation of a drug as an OTC product is frankly commercial; the manufacturer requests the change in the hope that, without the need for a prescription, the sale of the drug will increase. However, the change also has a secondary effect in that the drug will no longer – at least in its OTC form – be primarily funded by a national health system or insurance fund; if he had obtained the drug by private purchase, the patient will pay for it in cash, and this will therefore result in cost savings to the health system.”

Benefits of OTC drugs to patients in the western world:

An article titled, ‘When Rx-to-OTC Switch Medications Become Generic’,published in the U.S. Pharmacist on June 19, 2008, highlights the key benefits of generic OTC drugs to patients, mostly in the western world as follows:

  • Prices for generic OTC versions are lower than those for the branded products.
  • The savings vary from product to product, but they can be as little as 11 percent (some omeprazole generics) to over 75 percent (some loratadine generics).
  • The cost savings can be critical in making self-care decisions.
  • For patients with a chronic, self-treatable medical condition, the addition of a new generic OTC with that indication expands the range of therapeutic options.

Endorsing the point that ‘OTC drug’ cost significantly less than the ‘prescription only drug’ other studies also point out the following:

  • Less lost work time and costs saved by not needing to visit a doctor are important considerations.
  • Growing sophistication and self-reliance among consumers, with increasing interest in and knowledge about appropriate self-medication.
  • Older adults in particular tend to experience increased minor medical problems, such as arthritis, sleeping difficulties, muscle aches and pains, headaches and colds. Thus, as the population ages the demand for non-prescription drugs escalates.

To illustrate the point of greater choice to patients, the article cited an example of allergic rhinitis patients. It pointed out that at one time, such patients had little to choose from other than older (first-generation) antihistamines. When loratadine (Claritin) and cetirizine (Zyrtec) switched from ‘prescription only’ to generic OTC drugs, price-conscious patients got the expanded option to choose from them based on their unique advantages and lower prices.

Benefits of OTC drugs for drug manufacturers:

Several studies concluded the following when it comes to benefits of OTC drugs for the drug manufacturers:

  • When an innovative drug loses patent protection, expanding into OTC segment with the same product can help a lot in the product life-cycle management.
  • Additional revenue with OTC drugs help increasing the concerned company’s both top and the bottom-lines.

Does ‘only prescription drug’ to ‘OTC drug’ switch help Indian patients?

The key benefit that patients derive out of any switch from ‘prescription only drug’ to ‘OTC drug’ switch, has been shown as cheaper price of generic OTC drugs. In India that question doesn’t arise, because an ‘OTC generic drug’ can’t possibly be cheaper than ‘prescription only generic drugs’ of the same molecule. On the contrary, if the demand for putting generic drug outside price control is implemented, it would likely to make ‘OTC generic essential drugs’ more expensive- increasing already high out of pocket (OOP) drug expenses, without benefitting patients, tangibly.

How would OTC drugs help patients in India?

According to reports, pharma trade associations claim that ‘OTC drugs will help Indian patients. Some of the reasons given by them are as follows:

  • Responsible self-medication: Empowers patients to make responsible and wise choices and self-manage their health outcomes.
  • Improves access to medicines: ‘Access to medicines’ in India has long ignored the critical role of the viability of OTC medicine, which could play a critical role in improving access to medicines in India, especially in the remote areas.
  • Help both health system and consumers saving money: OTC medicines save health systems valuable resources and can save consumers time and money.

While the basic purpose of re-designation of a drug as an OTC product is commercial – as articulated in the above article of the W.H.O, it is interesting to note, how it is being camouflaged in India by a trade association. The association demands a brand new OTC drug regulatory policy without any price control, and at the same time says, ‘the patient is at the core of all our activities.’ I wonder how – by increasing the burden of OOP drug expenses for patients? Let me try to fathom it raising some basic questions, in context.

Some basic questions:

While trying to understand each of the above three ‘patient benefits with OTC drugs’, as highlighted by the pharma trade association, I would strive to ferret out the basic questions in this regard, as follows:

  • Responsible self-medication:Fine. But again, won’t it make totally price and promotion deregulated OTC drugs more expensive than the existing equivalents of essential drugs – significantly increasing OOP for patients?
  • Improves access to medicines: Improving drug access comes with increasing affordability, especially in India. With OTC drugs being presumably higher priced than other generic equivalents, how would it improve access? Just to illustrate this point, one pharma trade association has cited examples of the following drugs, for inclusion in the OTC category:

“Paracetamol, Aspirin, Antacids, Topical preparations of certain NSAIDs (Ibuprofen, Diclofenac), Cetirizine, Albendazole, Mebendazole, Povidone‐Iodine preparations, Ranitidine, Ibuprofen (200mg), Normal saline nasal drops, Xymetazoline nasal drops, etc. In addition to all Drugs which are currently under Schedule K.”

If the prices of OTC versions of the above drugs are kept more than the prevailing ceiling prices for essential, would it benefit the patients and improve access to these drugs for them?

  • Help both health system and consumers saving money: Doesn’t the same reason hold good for this one too?

One may also justifiably ask, why am I presuming that OTC drug prices will be more than their non-OTC equivalents? My counter question will be, why is the demand for total regulation of price for OTC drugs? In any case, if a non-schedule drug is included in the OTC category, the question of any price control doesn’t arise in any way.

The current status in India:

Unrestricted sale of ‘prescription only drugs’, including all antibiotics and psychotropic drugs, is rampant in India, causing great harm to the Indian population. In tandem with strict enforcement of the drug dispensing rules in India, a separate patient-friendly category of OTC drugs would certainly help significantly. As a concept, there is no question to it. But the devil is in the detail of demand for the same.

Accordingly, in November 2016, the Drugs Consultative Committee (DCC) formed a sub-committee for charting a regulatory pathway for sale of OTC drugs in India, specifying punitive measures for any violation of the same. As I indicated above, currently, any drug that doesn’t not fall under a prescribed schedule could be sold and purchased without a medical prescription. This panel has sought all stakeholders’ comments and suggestions on the same. Some of the responses from pharma trade associations, as requested for, I have deliberated above. Nevertheless, the bottom-line is, nothing tangible in this regard has happened till date.

Conclusion:

As I envisage – if, as and when it happens, it is also likely to have an adverse impact on the sales and profits of many pharma players. This is primarily because, indiscriminate drug use – irrespective of self-medication or irrational prescription, do fetch good sales for them. But it shouldn’t continue any more – for the benefit of patients.

More importantly, the key argument showcased in favor of OTC drugs in India, seems to be a borrowed one – borrowed from a totally different pharma environment of the western world. Out of Pocket drug expenditure for patients, which is already very high in India, shouldn’t be allowed to go further north. Some of the India-specific intents of pharma trade associations also appear blatantly self-serving, such as total deregulation of price and promotion. It rekindles huge concerns, such as:

  • What could possibly be the key intent behind keeping essential OTC drugs outside existing price control?
  • If so, won’t it open yet another floodgate of hoodwinking price regulation of ‘essential drugs’ through crafty manipulations?

It would be a different matter though, if such OTC drugs do not fall under ‘essential drugs’ category.

Thus, in my overall perspective – ‘no price control for OTC drugs’, is an interesting demand of pharma players, but not surprising in any way – at all.

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.