Pharmaceutical Industry: Dedication to Life

Anastasia Stanislawa Malicka

October 23, 2014 / Re-Visited on November 9, 2020

Introduction:

Pharmaceutical industry is one of the most dynamic industry sectors in the United States fueled by commitment to new scientific discoveries to reduce mortality and morbidity rates across entire population.  Since the beginning, it is the industry that takes tremendous pride in what it stands for, and that is, protecting and preserving lives of people afflicted by illnesses and disorders. It is the industry that is currently going through major transformation. Its future depends on the ability to continue commitment to innovation while increasing the access to new treatment options for people, not only in the United States but globally. This in turn has to be accomplished by generating revenues that provide the industry with the ability to continue support their innovation efforts, not only in the scientific discovery in highly specialized areas, but also as it relates to providing access to more basic care that is needed in developing countries. Despite these contrasting challenges, there is tremendous opportunity to leverage new technologies to achieve equilibrium in care and continue to advance our scientific discoveries in highly specialized therapeutic areas.  

Part I. Pharmaceutical Discoveries – A New Way Forward.

The biggest value of the pharmaceutical industry is in extending our life expectancy and improving the quality of life of people afflicted with acute and chronic medical conditions. New pharmaceutical treatments eliminated major causes of death and stopping major epidemics from spreading. Antibiotics and vaccines almost eradicated diseases such as syphilis, diphtheria, whooping cough, measles, and polio. The death rates due to influenza and pneumonia has been reduced by 85 percent since 1920s. Cardiovascular treatments have contributed to a 74 reduction in the death rates due to atherosclerosis.  More than 1 million of American lives are saved each year due to progress in reducing death rates from heart disease and stroke. Today, there are 3 million more cancer survivors than were a decade ago. This is all accomplished by the scientific and business community recognizing social need to improve and preserve lives of millions of people and making commitment of time and resources to achieve this goal.  

As our success rates improve in combating major disease states that have claimed millions of lives each year in the past, our focus also needs to shift toward addressing current changes in markets. To achieve it, we need to recognize the key factors that contributed to our past successes and build upon it to provide even more innovative approaches, not only to pharmacological intervention but also toward improving access to quality of care. We also have to recognize that now we need to expand our scope to include developing countries as well, since their health challenges are starting to impact us directly. More recent outbreak of Ebola epidemic is an unfortunate example why we need to pay attention and get involved in how other countries are managing their health care systems.   

The United States remains the world’s largest R&D investor with projected $465 billion spending in 2014, equal to 2.8 percent of our GDP. Our investment in research of the biopharmaceutical sector is projected to reach about $78 billion in 2014, which is about half of the investment we make each year in Information and Communication Technology R&D ($146.5 billion). Traditional pharmaceutical companies continue to struggle with reduced product pipeline and reduced revenues, further declining their investment in R&D. There is also increasing expectation for accountability and ROI. In-house developments are still representing more than half of innovations, however academic research is increasing in importance.

Despite increase in globalization, international collaboration in R&D is still not very common, with 60 percent of U.S. industry representatives having no plans for specific foreign engagement in a near future. Furthermore, U.S. represents over half of all global sales of new chemical entities (NCEs). There are other factors that put greater financial pressure on the U.S. funded R&D efforts, such as introduction of Affordable Care Act and provision that will regulate the pricing of prescription drugs, as well as restricted access to Medicare and Medicaid, reducing their access to almost 60 percent of the market. In order to continue support our investments in scientific discoveries, we need to look at the opportunities to continue grow our business and find new markets.

Emerging markets are estimated to generate over 55 percent of pharmaceuticals market value growth through 2018. The market penetration of new chemical entities across those markets remains very low since they need more basic and older products. However, that is untapped opportunity not only to generate revenues to support our research in more specialized areas but also help developing countries to catch up to our standards in care, and prevent for future spread of epidemics due to drug-resistant organism. For example, in Nigeria half of people with malaria do not seek medical treatment. In Bangladesh and India, most of poor people are treated by informally trained village doctors, where antibiotics are prescribed in over half of the time, and half are prescribed inappropriately, increasing risks for emerging treatment-resistant organism.

The use of counterfeit drugs is spreading rapidly, as drug resistance is growing. In one study conducted in Southeast Asia, 50 percent of antimalarial drugs are found to be counterfeit drugs.  Sales of these products reached almost $75 billion in 2010 alone!!!  We can provide them with access to higher quality medicines and assistance to improve their infrastructure, especially as it relates to distribution of pharmaceutical products. In addition, we can help them shape their regulatory approach to make their care more secure and more effective. However, this will require for strong collaboration across industry sectors, as well as improvement in relations between private sector and government regulatory bodies.

Part II. Evolution of Pharmaceutical Industry: Triggers of Innovation and Its Decline.

Pharmaceutical industry attracts individuals with very diverse talents and backgrounds. Initially, it is primary scientific community focused on discovery of effective treatments of acute conditions and diseases. As the acute diseases are more effectively combatted by the industry and medical community, the industry changes its focus to address chronic conditions that emerged due to changes in lifestyle and increase in lifespan of the population. This change also requires more sophisticated approach to manufacturing, distribution, education, and marketing of new classes of products that emerge from discovery. In addition, the company needs to have strong understanding of the process to secure favorable approval outcome, and negotiate label with regulatory agencies that would provide access and reimbursement. This time period is sometimes referred to as the “Golden Age” of pharmaceutical industry, characterized by explosion of new chemical entities that treat large number of populations, changing the course of many diseases in therapeutic categories such as cardiovascular, metabolic, immunology, pain management, oncology, gastrointestinal, and mental disorders. It also helps to increase awareness of medical conditions previously unrecognized and untreated, promoting prevention and earlier intervention.

The key factor that contributes to this successful transformation is driven by changes in needs and population, but also by unique competencies that are developed by the industry. However, the foundation of all of the activities is rooter in a strong ethical and moral conduct. Many of the organization develop their Code of Conduct or Credo, outlining to their employees and shareholders their primary responsibility and focus. The classic example of Tylenol crisis resolution by James Burke clearly illustrates the dedication and strong commitment to improving and preserving health of people they serve. It is that image that is recognized by the public that leads to trust and respect for the industry.

The industry is also learning on developing effective organization structure, and attracting very diverse set of talents. The requirement for scientific background remains in high demand, as well as for individuals with excellent communication and marketing skills. Again, high ethical standards are mandatory regardless of the job function and/or seniority. The industry has strong commitment to training and development of their employees. It also strongly encourages obtaining field sales experience to gain stronger appreciation and understanding of products, customers and markets. Individuals are rotated through many departments and generally promoted within the company. There is high level of transparency and collaboration across various departments. Medical teams are able to attend commercial meeting and there are no restrictions on internal interactions between commercial teams and medical teams. Decisions are made quickly yet following all of the regulatory requirements.

There is also a strong balance on generating insights, especially relating to market understanding. Some companies specialize more in qualitative research where some put more emphasis on quantitative data. Regardless, there is strong understanding on the applications and uses of data, and the value it brings to the organization. The exploration of development of new solutions or approaches resides within the primary market research domain, whereas validation and optimization of promotional, distribution, or manufacturing efforts depends on application of quantitative and statistical approaches, residing within marketing sciences teams.

There is also a standard approach that is developed to effectively support introduction of new product, leveraging the best methodologies and achieving consistency in generating market understanding. This helps to align organization on key trends and areas for improvement. Customer interfacing is extremely important, and it generates many new solutions to further strengthen products, services, improve educational and marketing efforts, and resolve any issues relating to distribution. It is though this type of interactions that initiative such as “free product samples” and “Patients Assistance Programs” are formulated. This becomes very important to patients as more and more Americans are becoming uninsured.

Initially, the primary reason why the industry introduces “free product samples” is to help doctors evaluate patient’s tolerability to medications. The industry partners with physicians to make sure that patients who can’t tolerate treatment are not incurring any cost due to purchasing medication. The intent is for patient to receive one-to-two weeks of treatment for free. It encourages good social responsibility, as well as good medical practice. It also helps to build strong relationship with medical community and their patients. Eventually the industry adopts a philosophy that states: “no samples – no business” establishing free samples as the cost of doing business in pharmaceutical industry.

Cross industry collaboration leads to development of patients’ assistance programs (PAP) or sometimes referred to as medical assistance program (MAP) to provide uninsured patients with supplies of medications at no cost. In 2004, it provides 22 million of prescriptions free of change at the value of more than $16 billion. It demonstrates more than good medical practice. It also demonstrates humanistic approach to treatment and practice of medicine endorsed by pharmaceutical industry. It is known to the industry that patients’ inability to afford their medicine negatively impact their adherence and affect disease, resulting in escalating the health care cost. Some companies donate as much as 30 percent of their products to supply PAP programs and free clinics and other charitable institutions.

In early 2000s, the industry started to consolidate to achieve greater returns on investments and sustain double-digit growth rates. In the process, many compounds in early development are discontinued and the focus is shifting from chronic conditions to more life-style drugs and medical categories that would generate higher likelihood of success. It triggers many companies to abandon therapeutic areas where they have established strong experience, and start to pursue new categories creating significant disruption in core competencies and established practices. There is increasing focus on quantitative evaluation to streamline and optimize operating costs, promotional activities and marketing efforts. As some of the brands, generating billions of dollars in revenues, start to lose patent protection, losing 80 percent of their market shares to generics within the first six-to-eight months, the wave of downsizing and layoffs sweeps through the industry, again causing disruptions to processes, competencies and established relationships. This adversely impacts organizational knowledge, decisions-making processes and new scientific discoveries. There are fewer discoveries of new chemical entities, slowing our medical research progress.

Many companies are focusing now on highly specialized disease states. It provides them with extended patent protection through Orphan drug status that is granted to product in the disease states with prevalence of less than 200,000 people. In addition, new biological entities offer highly differentiated solutions, however they also are associated with higher risks that mandate risk management programs (REMs). Therefore, the companies are using more aggressive pricing strategies to offset their developmental cost, higher risks and higher manufacturing cost associated with biologics.

In a short span of less than one decade, an industry sector that was the backbone of U.S. economy and major source of innovation experiences crisis. The changing demographics and regulatory environment are going to make more difficult for companies to replenish their pipelines and re-establish positive public opinion. According to latest white paper issued by IMS/IQVia, it requires all of the stakeholders to reassess their contribution to healthcare and focus more on evidence-based models to improve patients’ outcomes.

Part III. Access and Affordability of New Treatments.

In addition to downturn in scientific research discoveries, a new problem is emerging. Shortages of pharmaceutical products are starting to occur frequently in medical practice, especially among generic drugs, on which the US healthcare system is relying to constrain pharmaceutical cost. The number of annual drug shortages triples from 61 in 2005 to 178 in 2011. As of July 2012, there are more than 200 medications that experience shortages. Unfortunately, these drug shortages impact people with life-threatening conditions. These events may result in increase in drug prices during the time when government is trying to contain cost and potentially reduce the quality of many generic medications. Neither scenario is acceptable or ethical since it would prevent people for obtaining necessary healthcare and/or expose them to new risk due to poor quality of medications.

Again, one factor that negatively impacts availability of medication is attributed to consolidation of generic drug market. It reduces the number of both buyers and manufactures. It occurs during the time when there is a high generic penetration in the pharmaceutical market. According to FDA, nearly 80 percent of prescriptions in the United States are filled by generic drugs, which is exactly the opposite of market conditions from about ten years ago when branded drugs dominated the market. In addition, there is an increased dependency on outsourced drug products. They are either chemical ingredients or manufactured drugs coming from countries where inspections are difficult to conduct.

There are several solutions that are being considered, including lowering the standards of quality of generic products, which could place millions of people at risk. The obvious solution is to improved communication between federal agencies and manufactures, and developing win-win strategies.

Coordination of manufacturing and managing demand is a challenging task even for big and established pharmaceutical companies. It requires constant reassessment of forecasts and close monitoring of the market conditions. The pharmaceutical industry has proven practices to manage some of the changes in demand, without causing shortages. This also presents new opportunities for information technologies to help develop better models to coordinate, plan, manage, and anticipate future changes in demand. 

Furthermore, if provided with appropriate incentive, pharmaceutical companies could expand their manufacturing capacity to supply not only the US market with high quality medications, but also developing countries. It would open new markets for them and help establish appropriate infrastructure to provide quality of care. It is the capability they have developed over the years in the U.S. which they could easily adopt in other markets as well.

Conclusion:

We are currently witnessing major transformation that is not only going to impact the delivery of care in the United States but around the world. People are more connected than ever before, and there is wealth of information that is unexplored and poorly leveraged. The learning from the evolution of pharmaceutical industry can provide us with very valuable lesson that we can apply to come up with successful and more importantly, sustainable solutions to the global crisis.  

However, first we need to commit to our universal goal of healthcare, which is to protect and preserve life from conception to natural death, in accordance with the first and universal/global Biomedical Ethics Principle: DO NOT HARM!!! This needs to be our principle that guides our decisions and actions across the world. If we do not have this universal agreement that human life is precious, our efforts to achieve universal quality of care will be fruitless and unsustainable. In addition, healthcare system will quickly become a tool of oppression rather than a basic human right.

We also need to achieve an alignment on the changes in market dynamics and future gaps in care that we need to address. Our future progress will be greatly influenced by how quickly we can standardize the quality of care for people around the world. It can provide us with new source of revenues that could be leveraged to advance our research in specialized areas, as we expand the basic care to other developing countries. Again, this could easily result in win-win outcome and long-term economic prosperity.

Lastly, we also need to recognize the value and need for appropriate level of experience that we need to attract to healthcare. It requires more than technical expertise. The healthcare needs to continue to attract individuals with unique sets of qualifications. They need to have strong balance between experience and strong values that is based on protecting the weakest of our society. Most of all, our mission needs to be aligned with that of the rest of medical community, and that is “DO NO HARM”. This will help us to overcome our differences across the globe and achieve positive outcomes.

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