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The weight of evidence - the stories that changed pharma in 2004

Published on 04/01/05 at 11:37am

Ticking time bombs

In 2004, countries around the world faced up to some home truths about the health of their populations - and the ability of the healthcare system to cope in the future.

Despite their shortcomings, healthcare systems in the developed world are victims of their own success, and have to care for populations which are living longer than ever before - many with serious long-term health conditions which are expensive to treat.

This issue is not only a top priority for governments but for pharmaceutical companies as well, since the industry's medicines are a primary contributor to the longer lifespans, but also a primary reason for increasing costs.

Faced with increasing healthcare costs, governments have had to confront people's bad habits which are some of the greatest preventable causes of disease - smoking, poor diet, physical inactivity and risky sexual behaviour.

In the UK - and especially in the US - a government raising these issues has been considered virtually taboo. The accusation of a 'nanny state' is feared by governments of any political persuasion in the UK, but Labour broached the issue in 2004 with its White Paper Choosing Health.

The government succeeded in making the most of huge media and public interest in issues such as obesity, smoking in public places and binge drinking in 2004, and through its consultation largely escaped charges of nannyism.

Indeed, many groups felt the final compromise on smoking in public places was a missed opportunity, as Scotland and New Zealand followed Ireland in declaring plans for outright bans on smoking in public places.

The implications of the new public health drive for the pharmaceutical industry are not entirely clear. On one hand, medication is frequently seen as a diversion from tackling poor lifestyle but on the other, the ability of drugs such as statins, as primary prevention of heart attacks and strokes, look set to continue greater uptake.

A number of new treatments to help people lose weight and stop smoking are in the industry pipelines, including Sanofi-Aventis' Acomplia (rimonabant) which could tackle both problems simultaneously.

Phase III trial data showed the drug helped patients lose an average of 9kg (20lb) in a year, while a separate trial showed it doubled the chances of smokers quitting in the short-term. Meanwhile, GSK hope to market Xenical (marketed by Roche on prescription) over-the-counter in the US by 2006.

In March, US Health Secretary Tommy Thompson launched a national education campaign and a research strategy to tackle death caused by poor diet and physical inactivity, which have risen by 30% in a decade.

"Americans need to understand that overweight and obesity are literally killing us," he said. "To know that poor eating habits and inactivity are on the verge of surpassing tobacco use as the leading cause of preventable death in America should motivate all Americans to take action to protect their health.

"We need to tackle America's weight issues as aggressively as we are addressing smoking and tobacco." The US government has now launched its own national strategy to tackle diabetes, which affects over 18 million Americans, but compared to the UK has relatively little direct means of influencing public health  through its healthcare system.

The pharmaceutical industry is unlikely to lose out significantly in the longer term switch towards  a greater a focus on  prevention in healthcare systems, but must keep up with radically changing conceptions of what healthcare systems should and can provide

Fakes and false reasoning

The industry escalated its battle against counterfeit medicines and parallel imports in 2004 - two problems fundamentally linked from the industry's perspective because they both represent loss of control of their supply chain.

Parallel imports, long a feature of Europe's pharmaceutical market, has entered the US healthcare debate in  recent years, as consumers refuse to pay increasing prescription costs.

The year's presidential race focused attention on the practice with consumers, politicians and pharma companies taking a keen interest in the debate.

Illinois governor Rod Blagojevich declared plans to import cheaper drugs from Canada, the UK and Ireland but Pfizer scuppered the scheme by restricting supplies to UK wholesalers.

Blagojevich said: "Pfizer's actions in the UK, on the heels of what they've done in Canada, strike me as ironic. Pfizer is a company that espouses the free market, except when it comes to the price of their products."

The US industry and the FDA have always closely identified the practices of re-importation with counterfeiting, claiming they suffer from the same problem of unknown provenance.

But Peter Rost, a vice-president of marketing at Pfizer in the US, broke ranks and said the link between the two trades was false.

"This [parallel trade] has been proven to be safe in Europe," said Rost, adding he was speaking in a personal capacity.

"The real concern about safety is about people who do not take drugs because they cannot afford it. The safety issue is a made-up story."

Parallel trade, which is entirely legal under EU law is often linked to counterfeiting activity by the industry because of the re-packaging involved.

Director general of the ABPI, Dr Richard Barker, said he didn't consider there to be a direct link, but that the two activities were of a "similar nature" because they didn't come through the conventional supply chain.

The US industry body PhRMA has made a similar connection between counterfeit drugs and parallel imports. Commenting last year on the issue of drug imports from Canada, PhRMA spokesman Jeff Trewitt said: "Every federal regulatory agency has condemned re-importation as unsafe and risky for patients. Two secretaries of Health and Human Services, one a Republican and one a Democrat, have declined to certify the safety of imported medicines.

"We should all be concerned about the threat of sub-standard and counterfeit medicines," he added.

Counterfeiting is a growing problem around the world for the industry, although the World Health Organisation which is trying to bring agreement on an international definition of 'counterfeit' admits the extent of the trade is not known.

The discovery of fake Cialis tablets in the UK in September was the first discovery of counterfeits in the UK since a case involving Azantac (ranitidine) in 1994 but is nevertheless worrying for manufacturers whose revenues and reputations are at stake.

Erectile dysfunction drugs have been among the favourite targets for counterfeiters who often generate business through unregulated internet 'pharmacies'.

Pfizer, manufacturer of bootlegger favourite Viagra, launched a crackdown on the online traders in August, with US law enforcement agencies, in an effort to block sales of counterfeit and illegal 'generic' versions of the drug.

The company has also launched a new US public awareness advertising campaign and online resource on www.viagra.com to help educate consumers about how to avoid illegitimate websites, safely purchase genuine Viagra online, and help minimise Viagra spam.

Pfizer and GlaxoSmithKline are among the pioneers of a new tracking technology, Radio Frequency Identification (RFID) tags, for some of their products most at risk from counterfeiters.

The tags allow products to be tracked the entire length of the supply chain from manufacturing plant to retail pharmacy by placing electronic tags on product packaging.

Pfizer will use RFID tags on all Viagra products in the US next year at a cost of several million dollars. Given its high public profile the drug has been a favourite with counterfeiters and Pfizer said there has been three cases of counterfeit version of the drug so far this year in California pharmacies.

The FDA recommended that by 2007 most pharma companies should be using the technology.

Expanding Asian markets

The rich pickings of Asia's rapidly expanding markets, cheaper research and labour costs led the pharmaceutical industry to accelerate its investment in the continent in 2004, but concerns about patents and reimbursement remain tricky obstacles to further expansion.

Novartis chief executive Daniel Vasella, made a pointed contrast between the dynamism of China's economic miracle with the sluggish growth and unresponsive pricing and regulatory environment in Europe.

Vasella said of China: "I've never seen a country with this economic growth, this drive to be internationally competitive, with the personnel to do it and the ambition."

The allure of selling medicine to the world's most populous nation is made even more appetising for big pharma due to the potential savings they can make in developing drugs there.

"Testing in China cuts the costs of clinical trials which can top $1 billion by as much as a third," said Robert Pollard, director of market researcher Synovate Healthcare China. It is these heady forecasts that have led many to predict that China, where 20 out of the 25 leading multinationals are represented, may well be the world's largest drug market by 2020.

Yet pharma's mission to gain access to China's lucrative market on favourable terms will not be easy, as the new Asian powerhouse struggles to build a new healthcare system around a new nation.

In June this year the Chinese authorities ordered price cuts of as much as 56% for antibiotics in an attempt to lower health costs - meanwhile, the patent on Pfizer's impotence blockbuster Viagra was overturned.

The company's chief executive Hank McKinnell, made his feelings clear on the matter to reporters after opening a $350 million manufacturing plant in the country.

"The basis of fair trade is respecting intellectual property rights," he said. "The decision to now withdraw the patent is further evidence that the Chinese government needs to be a lot more serious about respect for intellectual property rights."

Pfizer continues to underline the importance of patents but knows it must remain patient with an economic culture in which the concept of intellectual property has hitherto held little currency.

GlaxoSmithKline also found itself in conflict with Asia's superpower-to-be in its efforts to patent diabetes drug Avandia, which it hopes could be a big earner in a country increasingly mirroring western lifestyles and diseases.

Chinese officials ruled that similar products from mainland drugmakers used a different salt compound - a key ingredient - and GSK chose to concede, given that it still held several other key patents on the molecule.

A more dangerous side-effect of inadequate intellectual property enforcement is counterfeit medicines. According to US industry organisation the Pharmaceutical Research and Manufacturers Association, counterfeits account for 10-15% of lost drug sales in China, but the fake medicines pose a serious safety threat to patients and their confidence in the companies' drugs.

Yet companies know, if they are to better the competition and develop the market, they must establish themselves in this formative period and build relationships in the region.

AstraZeneca is predicting drug sales figures of $98 million for 2004 and $23 billion by 2012 in China and has made its enthusiasm for the market quite clear.

Bev Salt, vice president for international planning at AstraZeneca, said: "China is our single most exciting business opportunity."

Meanwhile, Roche, already one of the leading suppliers of prescription medicines in China, laid the foundations for a new production plant in Shanghai this year, declaring its long-term commitment to the country.

Novartis' latest venture in the continent is a tie-up with the Shanghai Institute of Material Medical Research. In the next three years, the collaboration aims to identify 1,500 compounds from the natural ingredients in traditional Chinese medicines for possible synthetic reproduction in European laboratories.

Meanwhile, investment in China's neighbour India is also growing rapidly. From 2005, the country will recognise patents, and the industry is already setting up R&D facilities to exploit the country's well-educated, English speaking and low-cost workforce to develop drugs for local and international markets.

India's generics manufacturers - most notably Dr Reddy Laboratories - are already making inroads into international markets but are now looking to develop their own research bases, adding further urgency to US and European investment.

AstraZeneca increased its presence in India in 2004, extending its R&D facility in Bangalore, to provide new process R&D laboratories with the required scale-up facilities and associated equipment.

The scale-up of operations is indication that the London-based company wants to make India a crucial part of their global R&D organisation. Novartis' dynamism in the Far East includes the targeting of Singapore as a key strategic centre for the production of high-value pharmaceuticals, with the building of a $180 million plant.

The plant, scheduled to be fully operational by 2008 and employing more than 150 people, follows hard on the heels of Pfizer's $350 million plant to make the key ingredients for two medicines, Neurontin and Lyrica, both used to treat epilepsy and pain.

A biological manufacturing park on reclaimed land is now home to the biggest names in the industry, including Merck Sharpe and Dohme, Wyeth, Schering-Plough and GlaxoSmithKline.

The global distribution of the industry's focus and investment is already shifting, and could eventually alter pharma beyond all recognition within a decade or so.

While many of the challenges remain constant - the need for new medicines, at a price acceptable to both sides - the industry will undoubtedly meet unexpected pitfalls, but must negotiate them in pursuit of the region's potential.

Vive le merger

Sanofi-Synthelabo's takeover of Aventis in 2004 proved three things: one, that the momentum towards mega-mergers to satisfy pharma investors continues apace; two, a media and communications strategy are vital for success to win over shareholders; and three, France continues to defy (with few ill-effects) the Anglo-Saxon economic rule with a French name: laissez-faire.

Rather than leave the markets to their own devices, the French government was determined to see Paris-based Sanofi-Synthelabo and Strasbourg's Franco-German Aventis remain in French hands and intervened at crucial moments to eventually secure their marriage.

Sanofi-Synthlabo, the smaller but more upwardly mobile of the two companies took the initiative in January by placing an E47 billion bid for its rival, an offer immediately dismissed by Aventis as "inferior value' to its current stand-alone strategy".

But Sanofi-Synthelabo, itself the product of a 1999 merger, did not relent, keeping its eye firmly on the assets of Aventis, including the considerable US salesforce the company had built up over the last four years.

Relations between the two companies became more political when Swiss pharma company Novartis emerged as a potential 'white knight' bidder for Aventis.

France's Prime Minister Jean-Pierre Raffarin indicated that his government would favour Sanofi-Synthelabo's hostile bid, despite its strong rejection by Aventis' management.

The inevitable job losses of any merger were of great concern in France and Germany, but Sanofi launched a slick marketing campaign to persuade investors and the public a consolidation would be in everyone's interest. Aventis fought back with its own spoof medicine label adverts which declared: 'Warning! This medication may be harmful to Aventis shareholders and employees."

"The French government is following developments in the global pharmaceutical industry with particular vigilance. The construction of a large European pharmaceutical group that is profoundly marked by Franco-German relations is strategic for France," the Prime Minister said in a statement.

He added: "We will be particularly vigilant in ensuring that these developments do not prejudice our national interest."

The message was loud and clear and Novartis withdrew its interest within days, complaining of the government's 'strong intervention', leaving the way clear for an improved offer from Sanofi-Synthelabo.

The bitterness between Sanofi and Aventis dissipated swiftly when Sanofi raised its offer with the Aventis management board agreeing to the bid, increased to E55.3 billion.

The new Sanofi-Aventis ranks as the third biggest pharmaceutical company in the world behind second placed GlaxoSmithKline and industry leader Pfizer. Significantly, it calls itself Europe's biggest pharma company - dismissing GSK's British credentials and classifying it as a largely American affair company, albeit one led by a French man, Jean-Pierre Garnier.

Despite the strength of its French and European identity, Sanofi-Aventis will, like GSK and other companies in the sector, be relying on the US market to deliver the increased rate of growth it has promised its shareholders.

Vioxx

Merck's chief executive Raymond Gilmartin has always insisted that ethics and the interests of patients are core principles for the company.

In a speech in June this year, he harked back to a 1952 Time magazine cover story featuring the company's founder George Merck. Underneath his picture the caption read: 'Medicine is for people, not for profits'.

Speaking months before the cataclysmic withdrawal of Vioxx on the last day of September, Gilmartin used the vintage magazine to illustrate how far popular opinion had shifted towards distrust of the industry.

After Vioxx's withdrawal, scepticism about the industry practices, the safety of its drugs and the ability of regulators to police is greater than ever.

Vioxx's withdrawal will undoubtedly be a landmark in the history of the pharmaceutical industry, potentially having the greatest impact on regulation since the thalidomide scandal of the 1960s.

But how the industry will be judged, and how the risky business of drug discovery can be balanced against demands for greater pre and post-marketing safety monitoring is yet to be seen.

Merck now faces lawsuits from patients around the world claiming the company knew Vioxx raised the risk of heart attack and strokes in long-term users before September, but that it concealed the fact from regulators, and suppressed independent research with threats of legal action.

Giving evidence to a probing US Senate committee in November, Gilmartin maintained the company had followed scientific procedure rigorously.

"Over the past six years, we have promptly disclosed results of numerous Merck-sponsored studies to the FDA, physicians, the scientific community and the media," Gilmartin said.

He added: "My wife was taking Vioxx, using Vioxx, up until the day we withdrew it from the market."

This remarkable admission will have reassured all but the most cynical investigators that Gilmartin thought the drug was safe but only serves to reinforce the central question about how Vioxx's risks had not registered on the radar of the company's chief executive or regulators such as the FDA.

Vioxx's cardiovascular side-effects had in fact been noticed, but evidence from observational data and meta-analyses had been dismissed by Merck and the FDA, who both said the evidence was inconclusive compared to the gold standard of the clinical trials carried out by the manufacturer.

Critics say a system which relies on pharma companies to fund trials to uncover safety problems in their own products is a fundamentally flawed one and this view had been gaining decisive support even before the Vioxx withdrawal.

Concerns about the safety profile of GlaxoSmithKline's antidepressant Seroxat/Paxil had been mounting for years but reached critical mass by the summer of 2004 when New York State Attorney Eliot Spitzer alleged the company had committed "repeated and persistent fraud" by withholding data which showed the drug did not help children, and suggested a possible increased risk in suicidal thoughts and behaviour.

Spitzer's attention had been drawn to the case by the investigation into the drug by the UK regulator, which has now launched a formal investigation into whether or not GSK deliberately concealed the evidence from its experts.

GSK eventually settled out of court with Spitzer, shortly after announcing that it would make full clinical trial data from all of its marketed products freely available online becoming the first company to make this pledge.

Eli Lilly and Forest both followed with similar corporate policies to make their clinical trial data available, but demand for a single industry-wide resource now seems unstoppable, and 2005 is likely to see such a plan formulated.

GSK's head of research was under no illusions that such measures would be enough to satisfy safety concerns.

"Prescribing information approved by regulatory agencies must continue to guide appropriate use of our medicines," he said.

Parliamentary investigations are now ongoing in the UK and the US into the country's respective regulators, with both inquiries hearing allegations of a 'cosy' and closed culture existing between agency and industry - a closeness alleged to have obstructed the watchdogs from making independent decisions on the balance of benefit and risk in drugs.

The FDA quickly and rigorously defended itself against the charges made in the US hearings, and has already announced significant changes to its procedures.

In the UK, the MHRA has just published the conclusion of an 18-month investigation into the safety of the SSRI antidepressants. The low-key report recommends a number of small but significant changes to the prescribing of

the drugs, but chief executive, Professor Kent Woods, offered no indication that the agency's day-to-day policy would change after the affair.

Asked about whether the agency could have uncovered the problems associated with the use of the drugs in children and young people in routine investigations, he indicated it would be 'logistically impossible' to scour clinical trial data for small clues to side-effects which could be turn out to be significant in the larger population.

This conclusion has been mirrored in similar remarks made by AstraZeneca's chief executive Sir Tom McKillop recently, yet industry leaders generally acknowledge something needs to be done to restore confidence in drug safety.

Closer relationships between regulators and the industry, developed in the last decade, have helped cut approval times, but these shorter time lines are now at risk if greater pharmacovigilance cannot be introduced without time-consuming checks and balances.

Once launched, new products could face far slower uptake if doctors feel it necessary to adopt a more cautious approach - which in turn would mean smaller revenues and less funding to invest in new research.

McKillop has suggested greater post-marketing surveillance could be the only solution to the current crisis, and the industry may soon have to concede some ground if confidence in its products is to be restored.

Bush's re-election

Pharma got the result it wanted in a US election where healthcare climbed the political agenda but concerns about the cost of prescription medicines weren't enough to shake the faith of many in President George Bush.

The second term victory for Bush buoyed pharma stocks on Wall Street and the shares of Pfizer, Merck and Johnson & Johnson all rose on the news.

The industry had been both a keen observer of the campaigning and a key fundraising lobby group, hoping to guarantee favourable policies in its single most important market in the world.

Presidential challenger Senator John Kerry had promised to reduce prescription drug prices by allowing the re-importation of prescription drugs from Canada and overhauling the Medicare drug plan to ensure cheaper drugs.

Some polls found that voters thought Kerry's message - which was frequently critical of the industry and Bush's links to it - to be the most credible, but Bush did more than enough to clinch victory on 3 November.

Kerry's measures would have had a negative impact on the industry and its profits. Drug imports from Canada have leapt to particular prominence in recent years against staunch industry opposition - in September Pfizer began restricting supplies of its medicines to UK wholesalers in order to block imports to US consumers eager to purchase cheaper medicines from wherever they could.

Two weeks after the close-fought election, Alan Holmer, president of US industry organisation PhRMA, said that patients should shop around for their medicines the same way they do for other products - but only within the US market.

"Shoppers are conditioned to look for a lower price on a pound of hamburger; they ought to be able to do so more easily for medicines, and transparency of retail pricing is the key," he told the Pharmaceutical Leadership Forum in Washington, DC.

Attempting to sound a conciliatory note, he agreed that Americans were entitled to go bargain hunting for their medicines, but having prescriptions filled by Canadian pharmacies was not the answer.

Both sides focused on the economy, the war in Iraq and terrorism and these issues emerged as the top three concerns in an analysis of 22 polls published in The New England Journal of Medicine. Not far behind in fourth place was health.

In April, a poll conducted by Harris Interactive for The Wall Street Journal asked over 2,000 adults what they thought were the most urgent healthcare issues - 39% said reducing the cost of prescription drugs, while the same percentage identified putting more people on insurance.

President Bush plans to expand the use of personal health savings accounts and allow smaller companies to group together to negotiate better prices. He also promises to make further savings for the system by tackling medical malpractice lawsuits.

Bush's newly expanded Medicare insurance system was launched in August helping 'seniors' to pay for prescription medicines for the first time ever. Public concerns remain, however, that the numbers without insurance continues to rise, and now stands at one in six.

Even for those with Medicare coverage, experts warn that bills will rise sharply over the next few years, despite the reforms.

Economists say that current reforms do not address the long-term financial problems facing the system, which they predict will need more drastic change within the next decade.

The strain on the system will mean the country's many and powerful consumer/patient groups will maintain their demands for cheaper medicines.

The industry has its work cut out to convince consumers its products are value for money but cannot contemplate failure in a market which represents over 50% of global sales.

Key launches of 2004

2004 may not have been a vintage year for new product launches, the industry's pipelines producing only a handful of drugs which could genuinely claim to be a clear advance in medicine.

In Europe the EMEA's advisory committee the CHMP has issued eight positive opinions on biotech products and 23 for traditional molecules, including new molecular entities (NMEs), so far this year, compared with seven and 17 respectively in 2003.

In the US, the FDA had approved a total of 16 NMEs by the end of September, compared to 15 in the same period in 2003.

The number of NME approvals in the US has fallen from a record 53 in 1996 to 19 in 2002 before recovering slightly to 21 in 2003.

Of all the companies working in the sector, Genentech was undoubtedly 2004's star performer, gaining European approval for no fewer than four breakthrough biologics - asthma treatment Xolair; lung cancer drug Tarceva; psoriasis treatment Raptiva and colorectal cancer drug Avastin.

The Californian biotech has licensed these drugs to Novartis, Roche and Serono in Europe, helping to bolster the image of these companies as marketers of cutting-edge medicines.

 

Andrew McConaghie

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