Or sensationalist journalism to sell more magazines? Maybe both?
Probably both. Yep. It’s both.
In the May 8 issue of Forbes magazine, the feature article is about Big Pharma and their marketing efforts. Stories like this are nothing new, nor do they really have anything contructive to say on the topic except to shine a bright light on a problem that has popular appeal. Big Pharma does spend a lot of money on marketing, but is it too much? I don’t think so, and consequently I can’t resist going through the article and picking out bits and pieces that’re off the mark, and the ones that are right on. Yes, this is my idea of fun while being stuck in the lounge of a car dealership, waiting to get my car back…
This article is about 2000 words short, so you may wish to get a coffee before you start reading. Or, you know, go to the bathroom or something.
- The balogna
- Contradictions and lifestyle drugs
- Science or marketing?
- “Me-too” drugs
- Marketing and the game of deception
- Short term profits, long term value and calculated risk
- HMOs to the rescue?
- The problem of medical journals
Novartis employs some of the best medical researchers in the world, and they have created such lifesavers as Gleevec, which treats a deadly form of leukemia. But what is the fourth-biggest seller in the Novartis medicine cabinet? No lifesaver. It’s Lamisil, a pill for–horrors!–toenail fungus. The main effect of the fungus is that it turns the toenail yellow; it can hurt, but no one has died of this inconvenience.
I don’t really see the relevance. Toenail fungus is a heck of a lot more common than the cancers that Gleevec treats. While Novartis could probably jack up the prices for Gleevec to inflate sales figures, there’s really no point. In any event, while Lamisil may only be effective in 38% of patients, there’s no reason that people with toenail fungus should suffer if they are willing to pay what Novartis charges. That’s the great thing about living in a wealthy first-world country: we don’t have to put up with things like toenail fungus if we don’t want to.
In 2005, Lamisil accounted for $1.2 billion in sales. They spent $100 million on advertising which amounts to 8% of the revenue from Lamisil. That’s just good business — and make no mistake, medicine is a business.
Lifestyle drugs, like Viagra and Lamisil sell, and they sell well. They don’t save lives, but there’s nothing wrong with a drug that doesn’t save lives, implying that there is is totally ridiculous. Comparing Lamisil to Gleevec is absurd as well: drugs like Gleevec are already enormously expensive, and they catch lots of flak because they ARE expensive, by the same mainstream media that basically whines that they aren’t bigger sellers.
So which is it?
So the MSM is wishy-washy, now what about Big Pharma? Well they’re hardly innocent — they’re worse than the media, in many cases. At least from a moral standpoint — that nebulous ideal that we’d all like to think is the real driving force behind medical innovation. From a business standpoint, Big Pharma are some of the most conscientious, respected, philanthropic publicly-traded companies out there.
“Absolutely, marketing doesn’t trump science–this is a science-driven industry,” says Scott Lassman, a lawyer for Phrma, the industry trade group.
In theory medicine is a science-driven industry, and while R&D spending regularly trumps marketing spending, this isn’t an especial shock — marketing is inherently less expensive than employing hundreds of scientists and paying for clinical trials and researching new therapies. And while Lassman is probably telling the truth, there has certainly been a greater emphasis on marketing since the direct-to-consumer (DTC) advertising restrictions were lifted about a decade ago. And I have lamented just yesterday that drug pipelines are indeed running drier than they have in the past.
This emphasis on marketing isn’t ocurring in market bubble, either. The entire market has begun shifting its focus to quarterly earnings rather than long-term health. The recent Microsoft stock downgrade by several analysts because it was going to spend more money on R&D and shoring up its product lines is a perfect example of this. Despite this money being spent to strengthen the company it would hurt quarterly earnings, so it was downgraded by analysts. Absurd. But this is the market that Big Pharma plays in too, and they feel the same pressures that other publicly-traded companies feel. When you’re a large pharmaceutical company with a huge market cap, analyst ratings have more of an effect on stock price than does releasing the next blockbuster. Analysts look at more than just drug pipelines, and some of the things they look at have nothing to do with the overall value and health of the company they’re looking at. Buy and hold investment strategy is largely a thing of the past.
The article goes on to talk about Levitra and Cialis: me-too drugs in their own right without a doubt. It should be noted that the drug that these meds are modelled after was an accidental find — sildenafil citrate, the active ingredient in Viagra, was originally developed for pulmonary arterial hypertension (PAH), not erectile dysfunction. It just so happened that just about every male suffered from prolonged erections not related to sexual excitement during drug trials, so the emphasis was shifted to ED because the severity of such a side effect would render it unmarketable. And it certainly has been a success in this regard.
Creating Levitra and Cialis meant easy money for their respective makers, because they were capitalizing on the success of a trailblazer. Not creating me-too versions would have been a disservice to their shareholders. Why throw away easy money when it’s staring you in the face? And easy money isn’t necessarily bad — businesses are in business to make money, and that’s what they do, and Big Pharma is certainly no exception.
Some of these ad-driven trials are skewed to pit the sponsor’s full-strength product against a weaker dose of a rival pill.
This is true, and seeing these games makes my blood boil. For instance, Prilosec is usually sold in its 20mg form, but when Nexium was released, the literature compared 20mg of Prilosec to 40mg of Nexium. A former AstraZeneca rep told me that this was done intentionally to make it seem more appealing. Milligram for milligram the two drugs are about equally effective, with only a percentage point or two difference — not enough to be statistically significant in the real world. (Nexium and Prilosec, for those who don’t know, are essentially the same drug — Prilosec is a racemic mixture (omeprazole), and Nexium is the isolated S half of that mixture (esomeprazole).)
“Everyone was doing the same thing, so the chances of success got smaller and smaller.” Big Pharma “said we were nuts” to test a cancer drug that targeted only 25% of breast cancer patients, Levinson recalls. Now the drug, Herceptin, is near $1 billion in annual sales. “If you are developing novel drugs, you don’t need sales forces of tens of thousands.”
This is certainly true, and it’s no surprise that it’s a biotech company (Genentech) demonstrating this principle. The next generation pharmaceuticals are going to be the highly-specific therapies that biotech companies can provide. Biotech still holds the promise that it did back during the bubble days; it just takes longer to get from A to B than early investors were willing to wait.
There needs to be a balance between short-term profits and long term value. This is a balance that I haven’t seen Big Pharma strike, yet. Eventually they will, because their long-term survival will depend on it. No analyst is going to give good ratings to a company with a dry pipeline. Schering-Plough lost two thirds of its market cap in the last several years for this reason. Beating the horse for that last burst isn’t going to matter when you try to begin the next lap and it dies under you. You need fresh products to perpetuate your survival. And the pharmaceutical industry hasn’t figured out the right balance yet. Just like the technology industry, the savior of Big Pharma will likely be licensing agreements with and acquisitions of smaller biotech companies that have developed new therapies. Smaller companies can innovate and change faster than large ones can, but they lack the massive infrustracture (marketing, manufacturing, etc.) that large companies can bring to the table.
Short-term thinking on the part of Lilly, specifically cited in the article as having given up on antibiotics, will lead to it having its lunch in that area eaten by Merck. Merck will have some rough days in the next five years, but they’ve also got one of the strongest, most well-diversified pipelines of any of the big drug companies, and that is what will ultimately power them through the mess they’ve created for themselves with Vioxx. Just about every significant breakthrough that I’ve covered here in the last month has been by Merck, many of them truly significant.
Ad spending certainly has an effect on demand. Patients do make requests and threaten to find new doctors if their current providers don’t cave to their demands. In this respect, DTC advertising is bad for consumers. Most of the time, a doctor is better-equipped to make therapeutic decisions than the patients they treat.
Ironically, it could be the insurance companies that end up shouldering the burden of the costly battle. Measures have already been put into place to curb unnecessary expenditures. Prior authorizations for non-step therapies, for instance. Doctors know what the rules are, but often don’t play by them because it’s more convenient for them (and the patient) not to. Why experiment with a low-cost H2 blocker when you can go right for a guaranteed PPI at twice the price? When a prior authorization for an expensive drug is denied, I truly don’t feel too bad for the doc or the patient — I’ve never seen a PBM deny a PA when there was a good reason for a patient to have it.
PBMs have goals that are almost diametrically opposed to those of Big Pharma, so their opposite pulls will hopefully eventually allow the insanity to stop. PBMs don’t make money when a patient fills a prescription for an expensive brand-name drug. They make money when the patient opts to do mail order pharmacy with generic drugs. (I hope to have an article on this breakdown in the next month.) So in a way, it’s almost a scenario where the enemy of the enemy is your friend. Who “you” is is still up for grabs, and how much of a friend a self-serving business can truly be remains to be seen. Past experience indicates that it only lasts so long as it benefits the corporation’s bottom line. To those who lament the greed of big business — it’s their job. It’s what they’re in business to do: make money. So save your ire for something worth it. Like medical journals.
Medical journals are a business as well. Ostensibly, their job is to disseminate clinically-significant data about new therapies to providers so they can make a well-informed decision. The reality is that journals make most of their money by selling thousands of reprints to Big Pharma so they can give them to their sales reps to give to doctors and other providers. In many cases they are just expensive, prestigious marketing tools. (The case of NEJM and Vioxx springs readily to mind.) But they have escaped the scrutiny of the media and even many medical professionals because their role is more passive, their motivations less obvious. They are loathe to issue retractions for many reasons (loss of credibility, loss of money on reprints for the articles retracted, etc.), and in a way their contribution to the problem of medicine and marketing is more nefarious: it’s no secret big drug companies are out to make a few bucks. But what about the journals that publish their findings and make these things possible? It would be nice to see the media shine its biased light in their general direction for a change.
[tags]Medicine, pharmacy, Big Pharma, marketing, journalism, advertising, consumer spending, economics[/tags]