So poor impoverished Sir Tom McKillop, CEO of Astra-Zeneca, a man knighted for his services to British industry, is upset.  Now just because his main achievement in life is to replace one purple pill with another that is more or less identical but continues to be patent protected, doesn’t mean you shouldn’t hear him out.  Apparently those pesky Europeans are not paying enough for their drugs, and that has forced, forced, innocent European drug makers to move all their R&D operations out of Europe to the US. I’m frankly a little curious as to why this has happened,and why all research into pharmaceuticals in Europe has stopped — even if it’s true (which it probably isn’t). After all you can do the research for a product anywhere and sell it anywhere, and most research is done by teams in multiple countries anyway. Quite what the connection is between when a product is developed and where it’s sold is beyond me. McDonalds sells millions of cheeseburgers a year in Japan and China, but the hamburger was invented in the good old US of A (or Germany–take your pick).

But let’s give Sir Tom his due. He says that AZ sorta moved its research out of Europe to America because America pays the highest price for drugs.  This allegedly encourages innovation, although one might point out that plenty of innovation has come from companies developing products outside of the US aimed at the American market. Tom may himself have heard of Sony, Toyota or even Glaxo–all of whom have had a bit of success here with stuff invented and built there.

But no matter, here’s the next logical leap. If those pesky American politicians want to import drugs from Canada, just the way those pesky Brits and Germans did parallel imports from Spain and Greece, then gawdammit, we’re moving all our research shops to India and China! Well hang on a sec. Ignoring the fact that imports from Canada are less than $2bn of a $240bn US drug market, isn’t the innovation that makes research here so vibrant due to the high prices for drugs here?  And now the innovation is all going to move to China and India presumably because the price of drugs is going to be higher there, after ours here come crashing down to Canadian levels. Given average spending on drugs here is roughly $1,000 per head per year which is not a lot less than average GDP per capita there, someone better quickly tell the Chinese and Indian governments that they need to quickly increase the price of drugs in those countries to what is effectively the point that the entire national income is spent on pharmaceuticals!  That would please Sir Tom.

On the other hand, perhaps it’s not the price of drugs that would encourage Sir Tom to move his research shop to India or chin.  Perhaps it’s the price of PhD research slaves? On the other hand, after he’s moved his R&D to India and China, surely Jupiter or Mars will raise drug prices to tempt him there?

Good salacious stuff for a Friday.  Apparently the scuttlebut inside the FDA is that reason that the FDA acting commissioner Crawford’s nomination is being held up is because he’s favoring an FDA staffer. What this means, according to a much more frank article in FDA Webview is that he’s hoofing his secretary and taking her on lots of "business" trips.

FDA Webview has learned that the investigation into FDA commissioner-nominee Lester M. Crawford requested by Senate HELP Committee chairman Mike Enzi (R-WY) involves an anonymous allegation that Crawford has been having an affair with his special assistant, Susan Bond. A close confidant has denied any affair exists, however. According to well-placed sources, the investigation Enzi asked FDA’s Office of Internal Affairs (OIA) to conduct involves allegations of waste of government resources in unnecessary travel expense and irregular promotion of Bond to her present position. OIA, which has a long history of ineptness, secrecy and bullying, reports directly to Crawford, raising questions as to why Enzi turned to it instead of the HHS Office of the Inspector General, which has a much better record. Personnel issues, however, especially those involving improper use of government resources, are within OIA’s charter.

I’m of the opinion that what you do with your private parts in your private life is private, and that so long as you’re doing your job well who cares? But I suspect several of the Republican Senators on the confirmation committee don’t agree with me, and I suppose a government official shouldn’t play favorites (although of course they all do).  What with holding back on Plan B, it does appear that Mr Crawford’s "family values" planning is a little awry.

Patients don’t take their pills properly. Some estimates are that 30% of written scripts are never filled.  Now there’s a new Harris study out showing that 33% of patients are actively non-compliant. Of course if all these patients took all the pills that they were supposed to, then pharma costs would be much higher — Datamonitor is quoted as saying that’s $30 billion a year higher (or 15-ish percent).  And of course if they all took all their pills properly overall health costs would be much lower, right? Right? (Where is the echo from PhRMA when you need it?).  Still the cost impact of non-compliance is something to ponder.

PS "Complieant" was my add to the "just-off" definitions list run on THCB a few weeks back.

Over at the Pharma Marketing Blog and on the Pharma Marketing list-serv John Mack is confused about Pfizer’s real intentions.

Is Pfizer eliminating up to 11,000 sales rep jobs or isn’t it? A WSJ article states: "In another cost-cutting plan, Pfizer plans to streamline its U.S. force of 11,000 sales representatives." Then in the next paragraph it also says "Chief Executive Hank McKinnell didn’t give details on the job cuts, but did say few jobs would be lost in the company’s sales division." (Significant cuts in a force with) 11,000 jobs seems like more than a "few" so I am at a loss to understand what Hank actually said or meant.

John asked for the list’s take on this.  Remembering this article from THCB regular The Industry Veteran in which he suggested that Hank made about $50m a year (even though Forbes says it’s closer to $17m), I suggested that the solution to John’s quandary is simple: If Hank makes give or take $50m a year (as The Veteran believes), and a sales rep makes $100K, then it takes 500 sales reps to equal one CEO.  So if you fire 11,000 reps you’re really only cutting  22 "real" jobs. They’re never going to cut the whole workforce so any amount is less than 22 and that’s just a "few" in Hank’s terms.

(You are all welcome to do the real math if you want, but I’m no good at dividing by 17!!)

This just in at the Health Care Blog’s New York Desk … The U.S. Food and Drug Administration has ordered Pfizer to withdraw Bextra from the market and urged "the possible strongest warning" for it’s fellow Cox-2 inhibitor Celebrex.   See the AP story for details.UPDATE: Read the FDA press release here.

Greg Pawelski’s recent posting here about whether cancer care could improve has drawn several responses, many of which I’m trying to redirect back into the comments section.  One, however,  that deserves its own posting is from our old friend The Industry Veteran who wonders whether the current model of big pharma itself can sustain itself in the kind kind of designer-drug world Greg is proposing:

Greg Pawelski makes a good point in his post, specifically, that the economic
model under which Pharma companies develop oncology products may be inimical to
the individualized treatment approaches required for the disease(s).  I suspect
that the figurative lumber rooms of the Big Pharma companies are stacked with
discontinued oncology compounds that proved wonderfully effective and tolerable
for 5%-10% of the target candidates but, sadly, they were terribly toxic or no
better than placebo for the others.  In fact, I know that’s the case.  Not long
ago I completed a study for a client to find why the companies are so reluctant
to out-license these moribund compounds.  The overwhelming answer, the one that
dwarfs all the others, is ego of the fiduciary executives.  The executives feel
they would invite serious job trouble by out-licensing an abandoned compound to
a small startup that proceeds to make it a successful brand.
While
Pawelski deplores the one-size-fits-all requirement, that constitutes the
standard among Big Pharma for launching a product. 

Today the Big Pharmas will
curtail development of a product with projected, peak year, global sales of less
than $850 million.  Anything less will not sustain their high fixed costs or
permit the economies of scale on variable expenses that represents their
comparative advantage.  When BusinessWeek asked Pfizer’s CEO Hank
McKinnell if the era of the blockbuster (and the giant Pharmas created to
support such megaliths) has passed, he replied, “Anybody who says that doesn’t
understand our business.”  A small company, however, can derive a large return
on equity/sales/assets from a product that successfully treats 5%-10% of a
comparatively small, target population.  The CEO of such a company probably
won’t receive $50 million annual compensation the way Mr. McKinnell does, but
its stockholders and a reasonable number of patients can benefit when a Celgene
takes an abandoned and despised compound (thalidomide, developed as a
tranquilizer for pregnant women) and brings it to market as a major therapy for
multiple myeloma.

I suspect this dilemma will resolve itself as the
pharmaceutical industry evolves into what Oracle’s CEO, Larry Ellison, once
called the Hollywood approach to drug development.  I’ve written about this
before and don’t wish to repeat myself, but basically this involves the Big
Pharmas limiting themselves to acting as sources for development funding and
distribution, while independent producers (biotechs? specialty companies?) buy
the properties and develop them.  Movies today can successfully reach smaller,
more segmented audiences than the big Hollywood studios ever could during the
Mickey Rooney, Judy Garland days.  Unfortunately a lot of people will needlessly
die of cancer before Andy Hardy grows up and tells Louis B. Mayer to go screw
himself.  But hey, in a country that twice elects a wannabe redneck as
president, the market is sacrosanct and its pace of Darwinian change is all we
can expect.

The guy who was mentioned in a THCB post a while back about writing a tell-all book about being a slacker Viagra salesman has found that his new employer, Eli Lilly, didn’t approve, and fired him. I assume he’ll do well in his new role as a consultant on the next Michael Moore movie.

Meanwhile, John Mack apparently has his sights set on a bigger challenge than turning around Merck, (chortle, chortle).