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PHARMA: Squaring the circle on Pfizer’s job cuts

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!!)

PHARMA: FDA orders Pfizer to withdraw Bextra

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.

POLICY/POLITICS: Wanna be physician of the year? Pay Bush $1,500

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AwardIn a hard hitting investigation ABC news is shocked, shocked(!) to find out that such an honorable profession as that of physicians is not above creating lots of phony awards so that everyone can win one.  The joke is that the hundreds of physicians who won the "Physician of the year" award found that the title came not from a fake medical college or diploma mill, but straight from the Republican National Committee. Well if they’re dumb enough not only to pay up but also to go to Washington DC for a couple of days to collect, why shouldn’t Tom Delay take their money — after all the half mill or so he needs to pay his wife has to come from somewhere? (Hat tip to Kevin MD & John P for this one)

BLOGS: Orac hosts Tangled Bank

Over at his Respectful Insolence (a.k.a. "Orac Knows") blog that usually focuses on public health, Orac is hosting The Tangled Bank XXV, which is kind of a Grand Round for scientists.  While frankly I don’t care too much for basic science (spot the guy who got kicked out of physics class and retreated to history at age 15), the writing — in the style of a very pissed off author submitting his work to an academic journal — is hysterical.  And if you check the links closely you’ll see one with a most unlikely concurrence of scientists and babe-models.

POLICY/PHYSICIANS: Beauty Contest

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Modern Physician is running a poll where you can go and vote for the
best looking, err…most powerful physician executive in American
health care.  It’s actually quite a tricky call. For example is Tom Frist from HCA the most powerful doc because he and his family own the biggest hospital chain and have a sibling who runs the Senate? (For that matter why isn’t Bill on the list as overall he’s obviously by the far the most powerful MD in the nation even if it hasn’t got much to do with his increasingly dubious behavior when he claims to be using his medical training). Is Jack Rowe from Aetna or Bill McGuire at United Health the most powerful because everyone at one the biggest insurers has to do what they  say (plus Bill’s probably got the most money!)? But maybe as the doc preaching the word of disease management at the single biggest insurer Sam Nussbaum (Wellpoint) is now the most powerful?

But then again while I don’t think Carolyn Clancy (AHQR) is that powerful, and that’s a bad thing for American health care, Mark McClellan (CMS) has got the biggest stick and seems to be prepared to use it in the interest of promoting "the right things" from Medicare in the years to come.  On the other hand Don Berwick (IHI) or Jack Wennberg (Dartmouth) have probably had more influence in promoting P4P and the quality movement that McClellan’s now espousing than anyone else.  Influence?  For sure. Power?  Well in some ways they wouldn’t have had the time they’ve had to build up their influence if they’d had the power to achieve their goals!

Maybe it’s some new fangled IT whiz who’s got the most power — readers in one poll last year called David Brailer the most powerful man in all of health care — then he didn’t even get $50m from the Congress to fund his office so I’m not convinced that he has any real power.  Maybe Blackford Middleton at Partners is the most powerful, showing that real EMRs can be brought into the ivory tower (Well I met a bunch of his serfs last night and they all seemed real scared of him!!). Molly Coye is great, but for all Healthtech’s influence with the big hospitals her days of real power were back when she struck fear into the heart of Medi-Cal managed care plans (or at least would have done if they’d figured out what she was up to!).

Is Jack Lewin at the CMA (the largest state medical association) the most powerful? Hmm…you don’t hear much about Michael Maves at the AMA either for that matter.

So my vote this year for the first and last time will be for someone who’s not in the mainstream.  David Graham, the FDA gadfly, is pretty much responsible for destroying Vioxx and crippling Merck, and has had a hand in causing problems for the rest of big pharma. I can’t vote for him as he’s not on the list, but Sid Wolfe shares the same views so I can vote for him and call it a team vote. That’s real power even if its effervescent and more destructive than constructive (although something constructive may yet come out of all their work).

But overall this tells me that physicians are just not that powerful in health care as big names. It’s not the star power here that counts. It’s the collective behavior of all the doctors in practice and the power they exert in decisions they make every day that still more than anything else really determines what happens in American health care.

 

POLICY: Uninsured number will rise, but maybe not enough

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In an article in Health Affairs today called It’s The Premiums, Stupid Gilmer and Kronick project the numbers of the uninsured through 2013. Kronick, BTW was a co-author with Alain Enthoven of some of his market-based consumer choice articles, though he seems to have moved leftwards since the early 1990s.   Essentially they forecast that there will be a continued price effect with low and middle-income workers continuing to be squeezed out of insurance as the costs go up.  For the human side of this, take a look at the LA Times article which assessed this phenomenon yesterday. For the numbers, Kronick and Gilmer say:

Based on the
projected growth rates for health spending and personal income, we
estimate that the rate of uninsured non elderly workers will increase by
4.0 percentage points to 27.8 percent in 2013. We estimate that the
uninsurance rate among all nonelderly Americans will increase by 3.3
percentage points to 20.5 percent in 2013. With an expected population
of 271 million people under age sixty-five in 2013, we estimate that
there will be fifty-six million uninsured Americans in this age group,
an increase of thirteen million over the CPS estimate for 2002. Of this
estimated increase, 8.6 million occurs because of the expected increase
in the proportion of the population that is uninsured, and 4.4 million
because of an increase in population size.

The problem is that while there are countless stories of misery behind these numbers, and some real costs to being uninsured in terms of both access to care and worse health status —  not to mention the corresponding increase in people being severely underinsured — this may not be enough to change things.  Vic Fuchs at Stanford always used to say that we needed a national crisis to change the health system.  Adding a couple more million people — and they are poorer, more marginalized people than the typical voter — to the uninsured numbers each year isn’t going to change too much.  If however, things are getting worse, and we see these numbers increase at a faster rate — particularly amongst white middle income males in their 50s (i.e. Republican voters) — then there might be some real change coming up in 4-8 years.  I think that’s an equally plausible scenario, but if Gilmer and Kronick are right, then it’s probably more of the dreary same.

PHARMA: Where are the orphan cancer drugs? by The Industry Veteran

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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.

POLICY: The high cost of health care

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I’m giving a talk this morning about consumer health care so not much time for a long post.  Kind of ironic that we’re entering the brave new world of consumer health care at a time when the price of insurance has got so high many people just cannot afford it. The LA Times today has an article called At what cost? which has some horrendous stories of low paid workers having to pay up to a quarter of their income in health insurance premiums. As IFTF/Harris has said for years, the empowered consumer is in general reluctantly empowered, and the basic ethos is pay more, get less.

POLICY/POLITICS: Congress acts in health care emergency

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Last week a young Florida child sank into a coma. Due to recent cutbacks, he
wasn’t eligible for the state CHIP program and with no health insurance and
precious little money available from her job at Wal-mart, his mother had skipped
on taking him to the ER until it was too late. With a sudden realization that
American health care was in crisis, late last Saturday night Congress passed a
bill completely changing the nation’s health care system. President Bush flew in
from yet another vacation to sign the new law, saying that the health care
system ought to preserve the culture of life. Evangelical religious groups
picketed Congress holding banners denouncing the impact of the lack of health
insurance and the high cost of health care for poor and middle class Americans.
Self-appointed moral values spokesmen denounced the nation’s courts for doing
nothing to improve the infant mortality rate, claiming that it was below that of
Cuba. Finally, all the cable news channels turned their networks over 24 hours a
day to covering the crisis. Even though there were bitterly opposing sides in the dispute and polls seemed
to show that most Americans didn’t agree with Congress or the President, the
politicians insisted that the moral imperatives made their action necessary. Sage editorials in the major newspapers explained that the Florida
tragedy had at least had the virtue of having families in the nation discuss
whether or not they wanted access to health insurance. Sadly the young boy died unaware that his fate had transformed a nation.

PHARMA/QUALITY: Can Cancer Care Get Better? by Greg Pawelski

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AP Biotechnology Writer, Paul Elias,  wrote an article this week that described how while the cost of cancer drugs have skyrocketed, the benefits are less apparent. It’s been more than 30 years since we declared a war on cancer and although there have been some real triumphs, and some great advances, the overall picture is not good. Tomorrow one of my closest friends is going into the local oncology center for the removal of what we all hope are some benign breast lumps. This post is dedicated to her, and to all those with cancer or at risk for cancer. Part of the issue is surely environmental, and we have much more to learn about what causes cancer and whether the toxins that we put into the planet are coming back to attack us.  Part of the issue, though, is how we approach cancer care.  THCB contributor Greg Pawelski has written before about the need for more chemosensitivity testing, and now writes on how we can use what we know to more effectively care for patients.


We have produced an entire generation of investigators in clinical oncology who believe that the only valid form of clinical research is to perform well-designed, prospective, randomized trials in which patients are randomized to receive one empiric drug combination versus another empiric drug combination. The problem is not with using the prospective, randomized trial as a research instrument. The problem comes from applying this time and resource-consuming instrument to address hypotheses of trivial importance (i.e. do most cancers prefer Pepsi or Coke?).

There are 60-80 different therapeutic drug regimens out there, any one or in combination can help cancer patients. The system is overloaded with drugs and underloaded with wisdom and expertise for using them. Government and academic clinical investigators have failed to support the individualization of chemotherapy through laboratory testing, in favor of attempts to identify "one size fits all treatments" through trial and error testing which has consumed tens of thousands of human lives. This entire effort has been a colossal failure and a colossal waste of human and financial resources.

One of the main problems in providing effective chemotherapy is the situation that every patient is unique. Tumors grow and spread in different ways and their response to treatment depends on these characteristics. The amount of chemotherapy that each patient can tolerate varies considerably from patient to patient. Therapeutic protocols currently in use are limited in their effectiveness because they are based on the results of clinical trials conducted on a general patient population, yet no two patients are alike. Chemosensitivity testing can help to improve the efficacy of cancer therapies on an individual patient basis.

Without the information provided by chemosensitivity testing, oncologists have the freedom to choose between multiple different drug regimens, all of which have approximately the same probability of working. Some of these regimens are highly profitable to oncologists. Other regimens are much less profitable. Pre-screen testing takes away a lot of this freedom to choose and narrows the selection to those drugs that have the highest probability to be successful but may have lower profitability for the oncologist. This cuts into the oncologist’s bottom line, though it benefits the patient.

The hallmark of the disease is heterogeneity, yet the powers that be insist on trying to homogenize it, rather than tailoring treatment to the individual nature of the disease. If we devoted 10% of the "one-size-fits-all" resources to developing and testing methods to individualize therapy, we’d have actually made some progress at lowering the costs of cancer drugs.

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