Oh dear.  The Industry Veteran was not pleased about what he read from Brian Towell in THCB two days ago.  And he’s in a particularly feisty (not to mention rude) mood about it! So send the women and children outdoors before you read this:

The quality of THCB took a precipitous decline yesterday with your decision to print Brian Towell’s display of excrement.  The substantive content of his long, tedious wail consisted largely of his claim that he possesses wiser approaches to drug discovery than the clinicians and bench scientists now working for the pharmaceutical companies.  Maybe so, and maybe he also has a direct line to the Almighty, but somehow I doubt the likelihood that either condition obtains.  The drug discovery wisdom he chooses to impart in messianic tones consist of such claims as: organizing development by therapeutic category limits opportunities for serendipitous discoveries in basic science; blockbusters dontt necessarily come from targeting big patient populations; combinatorial chemistry isn’t the pat answer for drug discovery and; the one pill per genotype approach has major holes.  Well, a dog has four legs and if your parents don’t have any kids, there’s a good chance that you won’t either.  Simply put, anything of value that your countryman says about drug discovery is not new.  Pharma companies big and small are all trying the approaches he suggests to one degree or another.  All senior R&D managers know that we’re dealing with gambling probabilities here and they’re all smart enough to hedge their bets.  Anything that Brian says outside the common practice possesses the value of a three-dollar bill.    I find Brian’s evangelical tone especially annoying.  By turns he adopts postures that are prophetic, beleaguered, resentful and beatific.  It’s charming that you may want to buck up the prospects for a fellow Brit, but this guy reminds of the transplants satirized by Evelyn Waugh.  After leaving the motherland and landing in a country with a looser social structure, he thinks he has arrived over the rainbow.  Like Humbert Humbert at the end of Lolita, Brian probably figures he might as well drive on the wrong side of the road too.     What are you doing giving so much space anyway to a soothsayer on drug discovery?  Let him peddle his shopworn ideas over to DB Medical Rants or some other such site.  I thought THCB focuses on issues involving healthcare access, quality, cost, marketing and ethics.

When it’s a sample and a legitimate consulting contract, of course. So despite the fact that their employer had settled with the government to the tune of $875m back in 1991 on related charges, eight TAP pharma executives were today aquitted on charges that they bribed physicians. This is great news for those in the murkier end of marketing in the pharma business, as they can go back to business as usual knowing that prosecutors likely won’t bring charges against them personally.

It’s probably also good news for Fastow, Skilling, Lay et al as they try to convince their juries that so long as "that’s how business is done" it can’t be illegal or unethical. It’s probably even better news for Bush, Cheney, Rumsfeld, Wolfowitz et al (and maybe also Michael Moore, although he only created a movie not an occupation) in that lying, cheating, stealing and using selective evidence is now fine so long as you can convince enough people that that’s the way things are done.

I assume a few of my regulars who’ve posted about this case before will have something to say soon enough!

John McCain’s version of the reimportation bill is worrying the drug industry according to Forbes. I don’t think reimportation is the big problem for much the same reasons that an E&Y consultant quoted in the piece doesn’t:

Critics point out that it would be impossible to supply the huge American market from Canada. "The problem is, it’s not going to make a big difference," says Carolyn Buck-Luce, a consultant at Ernst & Young. There simply aren’t enough drugs in Canada, she argues, to significantly bring down prices in the United States: "You can’t force the manufacturers to sell ten times the number of drugs in Canada that they currently sell."

But that won’t help much to improve McCain’s tenuous relationship with PhRMA and the rest of the Republicans’ "haves and have mores" base. (BTW the "haves and have mores" comment was made by Bush in jest before the 2000 election. But many a true word spoken….)

Last week I published a piece on the future of pharma marketing that included a segment copied from another list-serv by Brian Towell from Doghouseonline that was critical of pharma’s reticence. Regular THCB contributor The Industry Veteran was critical of both the industry and Brian for going too far. With a bit of time to consider, here is Brian’s response (Unlike me, Brian’s an unreconstructed Brit–hence the dodgy spelling):

My points of view, although presented with a level of ‘passion’ that many in the big Pharma arena will be unfamiliar with (although I am surprised that one respondent appears ‘rudely offended’), requires some context to be fully understood. Much of the work that Doghouse does with its clients is aimed at unwrapping the conventions and strategy traps that are ‘heritage-based’ behaviours, and using our branding processes to realise a portfolio of marketing/business strategies that provide new opportunities and reveal new value and meaning for the brand. My ‘rant’ was directed specifically at the procurement practices of Big Pharma, but the frame for our work is far more profoundly connected to an industry that is clearly entering a period of crisis, where the big themes like ‘leadership’ and ‘direction’ are being challenged more than ever. And old-school thinking (like the Industry Veteran’s) will get the industry nowhere. So here is some context that should help old codgers reconsider their unpleasantness before they pass judgement.

A classic cue for being locked within a strategic box is the situation that Andy Grove of Intel characterises as a "strategic inflection-point", a "time in the life of a business when its fundamentals are about to change. That can mean an opportunity to rise to new heights". With the current paradox of increasing R&D budgets and inexorable decline in the number of launched New Chemical Entities, is it the case that the pharmaceutical industry is at such an inflection-point? An inflection-point where its greatest danger might be to become efficient at driving a strategy with noticeably decreasing returns at a time when we should respond to the productivity signals that require a move into more effective, alternative strategies? What kind of paradigm-trap may we be in, and how could we escape?

Let’s review some of our assumptions. Many of these assumptions are implicit within our strategic choices and need to be revisited regularly to prevent them becoming hidden strategy-traps that consume investment to little return. We need to actively consider our hidden, and often tacit agenda of assumptions and constraints. We need to articulate these assumptions and explore their current validity. How valid are some of these assumptions?

Assumption 1: It makes sense to organize our research by Therapeutic Areas.

Reality-Check 1: Knowledge networks within any Pharma company are more like a map of the London Underground than the straight, linear tramlines of TA portfolios. Alternative strategies can be found in the mechanism-based Discovery paradigm; elements of this mechanism-based approach can be found in Novartis’ new discovery strategy and Pharmacia’s approach to its COX2 franchise. Whilst an analysis of Paul Janssen’s strategy (the single most successful drug discover of all time) could lead one to adapt a chemo-centric evolutionary model of Discovery.

Assumption 2: Blockbuster drugs come from targeting big patient populations

Reality-Check 2: A significant number of New Medical Entities are aimed at orphan diseases. Many of these, ultimately turn out to be unanticipated blockbusters, (e.g. Glivec) whilst many drugs aimed at large GP markets fail to make ROI due to lack of differentiation in an already crowded marketplace. Interestingly it has not gone unnoticed that many innovative first-in-class drugs target orphan diseases, whilst it is not uncommon for the rate of innovation in many mature major disease markets to be as low as one new blockbuster class a decade. Could these orphan opportunities be reassessed relative to efficacy? A drug bringing a significant health benefit to a small patient population maybe have blockbuster potential as much as a drug delivering a differentiating, but small health difference, to big patient population.

Assumption 3: Marketing ability to know the value of drugs should guide our research.

Reality-Check 3.1: What objective research has compared historic, anticipated market assessment figures with actual returns gained? How much learning has been integrated into the models deployed, as a result of such research?Reality-Check 3.2: Is it fair to load Marketing with unrealistic expectations as to its ability to determine potential market value? Do we not need to at least understand the limitations of this gate-keeper role to market access by bearing in mind the famous examples of 3M’s Post-Its being deemed as having no definable customer, and Honda’s mistaken attempt to go head-to-head with Harley Davidson in the 70’s leading to the introduction of the moped as an unancticipated market leader? Reality-Check 3.3: Have we learnt all the lessons from Viagra? Innovation can lead to the creation of new, market value that redefines the existing market by a new standard or creates an entire new market. Shouldn’t we be both market creators as well as market followers?

Assumption 4: We can serve our TA strategy with oral drugs derived from combinatorial chemistry.

Reality-Check 4: Looking at the chemical structures of FDA approved drugs over the past few years, leads a chemist to realise how few of these drugs (some years as low as 25%), would fit within the industry’s current discovery paradigm of deriving drugs from diverse synthetic combinatorial chemistry. Many launched drugs appear to have been discovered from unfashionable approaches of modifying endogenous ligands or natural products, or derived from recombinant biologicals and antibodies. If delivering on a TA aligned strategy is our mission, this maybe hindered by a limited range of core technology competencies.Assumption 5: One gene to one pill for one disease.

Reality-Check 5: The complexities of biology counters the dogma that every disease may be attributed to a single gene defect. Advances in many fields of medicine, such as oncology and cardiology are as reliant on discovering new combinations of existing agents as well as new agents. Large scale, gene "knock-out" studies in mice reveal the scale of redundancy in biological pathways and the robust nature of phenotype. Polypharmacology has been a key feature of many successful drugs. Psychiatric drugs often work precisely because they target multiple receptors. In addition, new indications for existing drugs account for a significant fraction of the revenue of blockbuster drugs and provide as many new treatments per a year as the number of first-in-class New Chemical Entities.

Assumption 6: The wealth of drug targets from the Genome demands only large-scale research organisations will succeed.Reality-Check 6: The 25,000 genes in the human genome, is a significantly smaller number than was expected only a few years ago. Our increasing understanding of the psycho-chemical limits of drugs and drug targets and the redundancy in biological systems points towards there many only be a several hundred high quality targets tractable by means of traditional oral drugs — roughly equivalent to the number of projects in our Discovery portfolio. In addition the industry has launched on average one new blockbuster class per year yet 80% of our research portfolio is predicted to have a potential success rate as low as 1 in 51.

We are challenging ourselves to be more efficient in delivering on our strategy. However all strategies have a sell-by date. Effectiveness requires a portfolio of strategic choices. The trick is to recognise and anticipate the cues for strategic entry and exit: the moment that diminishing returns appear. It’s all about timing and choices. The traditional Knowledge Management approach is to manage knowledge around what we currently do, to make us more efficient, whereas we need to manage knowledge around what we are going to have to do in the future; to make us more effective. We need a new portfolio model that exploits our tendency to populate empty boxes and draws us into creating new capabilities and exploring real and imagined constraints, preparing us for radical shifts.

Branding (which we define as ‘managing for meaning’) helps to unlock new strategic options, within the holistic context of the capacity and capabilities of the business. It reverses the legacy-based, unsustainable paradigm by releasing new and valued ways of becoming more effective (returns/profits to the business) with radically rationalised efficiencies (less wasted effort and duplication, and greater connectivity). Our starting point is always solution neutral, as only when the brand has been formed into a ‘vehicle for meaning’ do the new, more valuable strategies reveal themselves. Part of that process involves changing the way the marketing culture thinks, and then encouraging overcommitment to the inevitable change and managed decision-framing and risk that new activities bring.

Unfortunately the industry is largely managed by individuals who do not have the capacity (or strength of will) to accept change, and are largely risk-averse. This is almost certainly why the general public’s view of Big Pharma tends to be suspicious and unresolved. Our experience tells us that Leadership and Direction are both ‘side effects’ of well managed branding activities.

Without meaning, you cannot have leadership or direction. As the Cheshire Cat famously advised Alice, "When you don’t know where you’re going, every path takes you there".

I promised yesterday to look at the NY Times article about the Australian free trade act which may undercut importation of inexpensive drugs, including those from Canada. I’ve written about this many times at TCHB but it looks like it’s coming down to the wire in both countries.

UPDATE: OK, this expanded piece didn’t make it in Monday’s blog but it’s worth looking at this a little more. The free trade pact is an attempt by the Aussies to get access for their agricultural goods to the US, and in return they are reducing tariffs on American manufactured goods. This article from The Melbourne Age in February gives a few more details. Of course the whole deal is payback from the Bush administration for the support that John Howard’s Liberal government (Liberals are right wingers in Australia BTW) gave to the Americans in Iraq–including a couple of thousand troops. While the Aussies were happy to get access to markets that they’ve been shut out of for a while, they were not particularly amused about the insistence by the US trade negotiators that they bascially dismantle their domestic prescription drug policy–the Pharmaceutical Benefits Scheme. For more about that look at this piece from January which quotes University of Newcastle (NSW) professor David Henry, an opponent of the pact. The article says:

The 50-year-old PBS subsidy scheme guarantees drug companies access to a larger market — mostly poorer consumers — while allowing the government to negotiate ‘price-for-volume’ discounts on approved drugs. However, to the annoyance of the major U.S. drug companies, new drugs are only included in the subsidy scheme if they are found to deliver health advantages and are cost-effective compared to already listed drugs.

In a December 2003 report on foreign trade barriers, the Pharmaceutical Research and Manufacturers of America (PhRMA), the peak U.S. drug industry association, complained that Australia’s requirement for a cost effectiveness analysis before a drug is listed on the PBS is part of a ”draconian regulatory and budgetary cost control” scheme.

But in a long interview back in November 2003 Tony Abbot the health minister (who’s sister is randomly a friend of mine) said to this question:

INTERVIEWER”A quick final issue. The proposed free trade agreement with the US, which John Howard discussed with George Bush. Are you insisting that we tell the Americans hands-off the Pharmaceutical Benefits Scheme?” TONY ABBOTT: Indeed we are. The Pharmaceutical Benefits Scheme will not be a bargaining chip in these negotiations, and frankly, it shouldn’t be, because the Pharmaceutical Benefits Scheme does not discriminate between overseas and locally produced drugs. It is not a trade instrument. It is an instrument for ensuring that Australians get reasonable access to affordable drugs.

As you might imagine the left in Australia is not exactly trusting of the Howard government, and is virulent inoppositionn to changing the PBS–for example take a look at this speech from the President of the Australian Publichealthh Association. The Australian government is though swearing blind that there has been no change to the PBS. However, they do say that that there will be changes to the review process and that “the details of how the review process will operate are yet to be worked out, but stakeholders will be consulted as part of the process”. In other words there will continue to be subsidies for poor Australians and price controls on drugs, but the current demand that a drug be innovative while showing improved cost-benefit performance before it gets on the list probably goes away.

Of course, this is all wrapped up in Australian domestic politics, which is heading into an election sometime very soon–possibly as soon as August. And the Liberals fear being exposed by Labour as being opposed to national health care and favoring increasing drug prices by gutting the PBS, or it will have to see a lot more articles like this one suggesting that it favors the interest of American drug companies over poor Australians. Lahos and Henry in an opinion piece in the BMJ last month claim that the PBS will come under pressure as Australia tries to enforce other parts of the free-trade pact with the US.

Which brings us to yesterday’s NY Times article.which essentially says that not only will prices rise in Australia, but that stronger IP protection in the agreement will essentially ban drugs imported from Australia by protecting “the right of patent owners, like drug companies, to ‘prevent importation’ of products on which they own the patents”. The clear hint is that the Bush adminstration is going to pursue similar IP agreements with Canada and the EU, in the process squelching the ability to import cheaper drugs.

Realistically, I don’t think this will have much impact. Politically the Australians are not going to back down on price controls at home, especially if Labour wins the next election, and probably a Kerry Administration won’t pursue the matter with too much vigor. Furthermore, if they are to be a big deal, which right now they are not, far more imports are likely to come from Canada and southern Europe (where drugs are cheaper) than from the smaller Australian market. However, it’s all an interesting study in how much influence pharma companies are having in the current Adminstration and really how far they have averted their gaze from the real world of their unpopularity with the American public.

For far more, see here

Yesterday I had a long post which touched on the malevolence of some pharma marketing, the alleged incompetence (or at least unoriginality) of other pharma marketing, and the possibility that efficiency in sales will be improved by better user of CRM and business intelligence. In theory that greater efficiency will in turn lead to sales force manpower reductions, cost-cutting and improved margins even as the overall pricing strategy of big pharma comes under more pressure. Needless to say The Industry Veteran is not swayed by the arguments presented….

I don’t believe that substantial reductions to salesforce sizes will appreciably reduce the unconscionable prices of drugs. Several sources are prompting greater scrutiny of promotions to physicians and the federal government is set to play a somewhat larger role in prescription drug benefits. Both trends mean that Big Pharma is begrudgingly accepting a wee bit of pricing constraint in return for more customers and the resulting cost-benefit of ever more sales people has approached its limit. Remember, the arms race in salesforce sizes really started in earnest during the mid-1990s. That’s when Pfizer showed the industry that two or three babes in short skirts, bending into the trunks of their cars to retrieve samples, can outsell one Health Science Associate or Medical Science Liaison with a Pharm.D. Prior to that time, when the salesforces were considerably smaller, Big Pharma had the highest ratios of earnings-to-equity, earnings-to-sales and earnings-to-assets of any industry in existence. Once again, deciding on what is to be done involves fundamentally changing the system.I understand and sympathize with the frustrations Brian Towell expresses as a marketing communications supplier. Big Pharma’s state of the art in marketing and marketing-support services remains decades behind consumer packaged goods and many other industries. Memo to Brian: get over it, understand that it’s intentionally that way, then either accept it or get into something else.Contrary to what some people believe (including my friend who teaches marketing and sends me daily missives of Big Pharma’s outrages that include the subject line, "new stupidity"), the Hank McKinnell’s and his malevolent cohorts are not dumb. Their economic model of patent protection, a gatekeeper system, long product development durations and the rest work for them. They don’t have to be nimble because they can’t sweeten the cola on Saturday and get it onto store shelves the following Thursday. They don’t have to target ever changing, ever more complex consumer segments (left-handed, unmarried women with small breasts who disdain mass merchandisers and prefer vegetables in aspic) because the universe of their US market consists of a share of 600,000 doc-whores. Big Pharma doesn’t need to spend $2 million for 30-second Superbowl ads in outmoded media such as network television to reach the lower-middle class. (TCHB editors note: But they do!) Nor do they need to send people into bars or use communication techniques that Brian may consider innovative to reach Gen Y’ers. Frankly, I’m happy that Big Pharma is stodgy in this area and I’d prefer to see a rollback of the 1997 legislation that expanded DTC promotions so that Pharma promotions become even stodgier. Brian, go peddle your promotions for discretionary bullshit to other industries. Healthcare is too important for asshole ad men.

In an article picking up on the Harris data TCHB shared with its stellar, avid readers (that’s you BTW) last week, the NY Times this morning places Pfizer’s decision to give cheap drugs to the uninsured next to the polling data about pharma’s unpopularity next to several examples of egregious price rises. They also quote extensively Roy Vagelos, scientist CEO of Merck in its 80s and 90s heyday, as basically saying that the industry has blown it.

It’s well worth reading the article because it shows that the mainstreaming of the anti-pharma opinion will have a political impact on the industry, and by extension on the election. (Need I remind you again that the two states with the oldest populations are Florida and Pennsylvania, both extremely close at the moment).

However, the Times lumps several reasons together as to why pharma is so profitable in the US:

The pharmaceutical industry earns nearly two-thirds of its profits in the United States since drug prices in the rest of the industrialized world are largely government controlled. Those profits rely almost entirely on laws that protect the industry from cheap imports, delay home-grown knockoffs, give away government medical discoveries, allow steep tax breaks for research expenditures and forbid government officials from demanding discounts while requiring them to buy certain drugs.

It is not the case that each of these "privileges" has equal weighting for the industry. The fact is that allowing personal imports would not have that big an impact on the overall market. Allowing Medicare to bargain as aggressively as say the VA (or worse, the Spanish or Australian governments) would bring what are called "price controls" by Americans talking about the EU or "discounts" by PBMs to a large section of the market.

That would certainly have a big impact on the industry’s margins. But the pharma industry can take note that, under a similar environment of strict price controls from Medicare and Medicaid, its colleagues on the inpatient, outpatient and ambulatory care side have seen their share of the overall economy grow dramatically in the past 40 years. So, if forced to, pharma companies could manage the potential change in their environment. As a potentially relevant example which also works under monopsony purchasing, the defense industry seems to struggle by OK.

Not that the industry would want to go there, and it will continue to do what it can to fight what is increasingly looking like a rearguard action. Of course in a rearguard action a strategic retreat can often work wonders. I stick by my guns and think that big pharma, looking out strictly for its own self-interest, should cave on the Canadian imports but try to continue to muddy the waters on discounts and price controls. After all 15 years of allegedly aggressive discount seeking by the PBMs hasn’t exactly reminded observers of the way Wal-mart treats its suppliers!

And in continuing rumblings from the pharma marketing corruption story THCB reported on a week or so back — Schering was mailing physicians checks to get them to prescribe their drug — a couple more missives have crossed my desk. They concern how pharma companies market both in terms of how they deal with physicians, and in terms of how they choose their sales force and marketing strategies. It appears that there is room for major change in the latter. And as I mentioned in passing in a previous article about margins in the drug business, this whole sales and marketing arena is ripe for cost reduction and efficiency enhancement.

The first piece was sent to THCB is from Random Contributor who writes in a somewhat scurrilous vein:

In short, pharma companies bribe physicians because it works, physicians expect it, and it doesn’t take much imagination. In a world in which there are many clinically similar drugs packed into each of a few high-return clinical categories – and a bunch of drug companies whose future rests on their performance in those clinical categories – docs can safely make prescribing decisions on things other than clinical performance. Prescribing Zocor instead of Lipitor won’t kill a patient,but it could enrich the doctor prescribing it…

It’s hard to argue that drugs aren’t "overpriced" if payoffs are built into their pricing schema. So how much would this drug cost if you didn’t pay docs millions to prescribe it?

As a quick aside, I was talking to my uncle (72 years old) who lives in Florida. His doc (internal med) recently gave up hospital privileges and malpractice insurance, but continues to practice primary care. He told me that his doc "plans to make up the difference through seeing more patients and prescribing more drugs." Don (my uncle) listed several of the drugs that he is taking (Plavix, Provachol, etc.) and I noticed that they were primarily from BMS… I wonder if there is a connection (or if his BMS rep is just really hot)?

While the Contributor is probably overstating the case–after all physicians don’t actually make money from prescribing drugs (unless they’re oncologists or in Japan), but it’s no secret that some doctors and some reps have particularly close relationships and that much pharma detailing is made very effective by leaning on those personal relationships. Meanwhile, the whole concept that pharma does it one way because it always has is also probably true. That’s partly why detailing and professional marketing only works effectively on less than half of physicians. The rest of all the reps in the sharp suits/push-up bras hanging out in the waiting room to get 30 seconds with the doctor is mostly waste motion.

But that might all be changing. Pfizer, which won the pharma arms race of the 1990s by building up its sales force when others were cutting back and trying to ingratiate themselves with managed care companies, or buying PBMs, is now looking to cut its global sales force, use CRM software to more accurately support its physician "customers" and eliminate the "significant number of calls where product market messages are not delivered and where there’s little to no value to the physician." In other words the Bludgeon needs to be replaced by the Rapier.

This new way of thinking might even extend to advertising and PR-type promotions. I am on a list-serv from Pharmaceutical Marketing Network, and recently this somewhat bitter screed about the sloth in thinking and consequent incompetence of pharma marketing was posted by Brian Towell from Doghouse, an online marketing agency. I repost it here because although I don’t agree with it all, it certainly puts the marketing strategies of pharma into sharp focus:

The operational procedures of the large drug companies never cease to amaze me, particularly at the level of procurement of medical communications (which includes vanity publishing aka MedEd, Advertising, Branding, Congress & Scientific Meeting Event management, Professional Relations and Public Relations, along with some other City/Stockholder targeted communications that none of us ever see or hear about.) All of these served by agencies with global and/or local expertise, and often with ridiculous levels of duplication, isolation and total lack of connection with the brand.

The procurement process is flawed for all, however you look at it. In America, ‘Global’ means everywhere else, whereas in Europe, ‘Global’ means everywhere, so US sited businesses are strangely infatuated by their own agencies, who are collectively useless at almost everything, but manage to hoodwink their clients into accepting dull and sub-standard creative work because that’s what everyone does in the US. In Europe, despite the rise and rise of the European community, the cultural and regulatory differences that exist on a country to country basis make it impossible to engage at head office level with a Novartis or a Roche on a ‘Global’ basis without some kind of network that allows differing cultures and medical legal systems to be managed profitably, and with due diligence.

Unfortunately, the problems of both major markets (US & Euro) conspire to produce an industry of communications service providers inadequate in creativity and strategic bravado (largely serving tactical briefs) who somehow manage to continue to exist and grow alongside a healthcare industry that is rotten with stagnant process, and trapped by its own strategic immobility.

The world is leaving Big Pharma behind. Agencies need to become smaller, more responsive, and more strategically driven, to help the industries that support them to make more responsive, dynamic choices and decisions, and to to open a portfolio of strategies that provide a meaningful escape route from the conventional, stagnant practice that all involved seek comfort in.

The idea that these companies set up rosters of ‘preferred providers’ is obscene, and simply appalling business. Even the Schering Plough reverse auction idea was only open to their cute list of favorites, who they get along with really well, who never surprise or challenge them, and allow the same stuff to keep rolling along like an endless roll of Magnolia tinted wallpaper. Sameness is a real issue for the industry that needs to be challenged, instead of propagated ad nauseam.

Thought innovators within the industry are now pointing to the reality of a ‘here and now’ strategic inflection point for big Pharma, where yesterday’s choices (strategic traps) and ‘already thought’ behaviors become not just redundant but unsustainable. Whatever the Big Companies continue to do in that vein are simply expressions of improved effectiveness at inefficiency.

It is a self-propagating world of publications and activities that is, under the sharpest magnifying glass, difficult to justify and difficult to benchmark in terms of any contribution to the business. Its poor quality, and it costs. But no-one measures that cost.

Novartis ask questions of providers that they must answer in a 10 slide powerpoint presentation, to get to 2nd base. But they don’t ask the right questions. What can you meaningfully contribute to our business? Show us. 2 questions. Tough call. That’s how it should be. Not a 45 minute display of last year’s work that fits our neat idea of how we have always done things here.

That’s all it should be. Then maybe the people who work in Healthcare Communications Services would wake up to some home truths about what they’re actually doing for their clients, instead of churning out the same ‘already thought’, safe, and largely generic tripe that no other industry would tolerate.

So following Sunday’s NY Times article on bribes being paid for prescribing and my comments yesterday, the Industry Veteran let me in on some email exchanges going on round his electronic watercooler. You’ll note that he and his colleagues do not ascribe most of the blame to pharma:

This morning a friend who teaches marketing at a local university e-mailed to me an article from yesterday’s NYTimes. The subject line of his e-mail read, "Just how stupid is Big Pharma anyway?" I am forwarding to you my reply to him. I think my reply will again tweak the noses of your physician readers who consider themselves healthcare’s good guys because I believe physicians hold equal or more blame for the system of pharma-to-prescriber payoffs now coming to light.

The Veteran’s reply to his friend:

‘In this case I don’t think it’s a matter of stupidity as much as systemic incentives and culture. Whenever fiduciary gatekeepers (e.g., healthcare professionals) are inserted into a market system, there will always be an enormous temptation to influence their decision-making. It’s the same with company purchasing agents and government contract committees. From the NYTimes article, one might as easily admonish physicians as the pharma companies. If you were to speak with the marketing and sales people who develop these payoff programs, I’m sure they’d all say that the docs expect it and that if their company were to opt out the payoff system, their competitors would get all the business.I’d make the argument that over the past 40 years, the development of physicians’ unbridled avarice represents a bigger change than any supposed penchant for corruption on the part of Big Pharma. After years of attending scores of brand team meetings at all the Big Pharma companies, I’d go so far as to say that in most cases where baldfaced, baksheesh programs are developed, the driving force is usually one or more of the physicians in the room. As a curbstone assessment of their underlying psychology, I suspect that they typically seek to impress other team member with their machismo and their marketing acumen. Their payoff initiatives represent an attempt by arrogant ignoramuses to figuratively say, "What’s so tough about this marketing stuff? Hell, I’m not just a clinical nerd. I’ll show you marketing."’

A little later the Veteran copied some more correspondence into THCB

I wanted a reality check on the reply that I sent to my academic friend this morning. After sending it you (i.e THCB) I also forwarded it to an acquaintance who has worked for 20+ years in the industry. Unlike my dangerously subversive political views, his are hard core, Reagan-Bush right wing. He is, however, scrupulously honest and empirically open-minded. I pass along to you his comments in anticipation of the fusillade from the medical practitioners of negotiable virtue.

"I agree with your message back to _____: the $$ demands of MDs are just amazing. And having been in marketing most of my career (launched two products and Director of Marketing for a biotech company), I can tell you that most of the time pharma is in reactive mode. Those who are strong enough can resist the demands* of the purveyors of the Hippocratic Oath, but it is difficult for the very reason you mentioned: at some point, you know you’ll get left in the competitive dust. And one of the biggest jokes is biotech. Many, if not most of their top honchos are ex-academic researchers. In my experience the majority of them are not at all cognizant (nor do they care) about such trivialities as FDA guidelines or anything that they believe applies only to the dirty, big pharma companies. In their way of thinking, biotech is much too cerebral and pure to be lumped in with the pharma industry."

*Just look at how the cost per patient of legit clinical trials has zoomed the past 10-12 years; clinical investigators will take on any trial if the price is right.

If you missed this over the weekend, the New York Times reports on yet another example of very dubious marketing practices by certain pharma manufacturers. This time the charges are that Schering (more or less) paid doctors to prescribe drugs. Anyone watching the health care system for any length of time is used to this. It’s rare that it’s this overt, although it was when Caremark was paying for infusion referrals back in the early 1990s, but sweetening the route to ensuring the right drug ends up written on the prescription pad has always been a big part of pharma’s marketing approach. While there are some limits that since the late 1990s are supposed to be placed on what the local marketing teams can do, the pressure remains on to make the physicians happy, whether it be via Dine and Dashes, free goodies, consulting agreements, or simply having a rep show up that the doctor will enjoy meeting (and I’m not spelling that out for you!).

The NYT suggests that this will only get worse as more and more of the pharma dollar gets spent by the government, and hence more and more of this bad behavior will be punished by Federal fines. As it’s been an accepted cost of doing business by the pharmas for a long time, and as the government really hasn’t got the option of giving them the "death penalty" (i.e. banning them from the Federal marketplace), expect this cycle–bad behavior, then punishment, then official reform, then more local level bad behavior, more punishment, more reform, new bad behaviors, etc–to continue.

By the way, if (as reported in the article) anyone out there wants to send me a consulting agreement accompanied by a large check with a blank schedule of works to be performed at some unspecified time in the future, they will find that I have few fewer ethical qualms in accepting it than the anonymous physician interviewed by the NY Times!