by Justice lover
The author of the following AHRP report is very impressed by the article below written by Dr. William Haseltine which calls for"Radical restructuring, not merger mania, is the need of our time." I am not impressed, and neither should be the readers, because without prosecuting Big Pharma bosses for their crimes against humanity, the Big Pharma rackets will still go on, not matter what "Radical restructuring" would take place. However, until then any Big Pharma merger must be opposed and outlawed, of course.
ALLIANCE FOR HUMAN RESEARCH PROTECTION
Promoting Openness, Full Disclosure, and Accountability
http://www.ahrp.org/ and http://ahrp.blogspot.com/
FYI
Below, one of the most insightful pithy analysis that I have read aboutwhat's wrong with the pharmaceutical industry and the current destructivedriving force behind drug development and drug approval. The article waswritten by Dr. William Haseltine and is published in The Atlantic, calls for"Radical restructuring, not merger mania, is the need of our time."
Dr. Haseltine, founder and former CEO of Human Genome Sciences, and former professor at Harvard Medical School, is not pharma basher, but rather a clear headed scientist who understands the essential flaw that has derailed the drug development process from fulfilling medical needs to bottom-line,marketing agendas:"most clinical trials are designed to optimize sales, not to optimize the chance that a new drug will be approved for its most effective, if limited,use."
"The results of this strategy are evident. Fewer than one in 100 new ideas reach clinical trials, and fewer than 10 percent of these are approved forsale."Dr. Haseltine notes that:* the current mergers of so many drug companies "reflects the failure ofeach company to discover and develop its own replacement pipeline."* despite the fact that the past 20 years have been a golden age forbiomedical research, there has been a decline in productivity of thepharmaceutical industry."
I believe that it is not a failure of science but rather the context inwhich such science is practiced. The process of drug development is long andarduous, and throughout the entire process, a candidate is continuallyevaluated for market potential. At large companies, products that are technically promising are terminated if the marketing potential is thoughtto be too small. And the height of that market hurdle has risen as theprofits of the large companies have grown.
Today, programs that are thought to have an annual sales potential of less than $1 billion are usually stopped in their tracks. Some companies have abandoned their work in entire areas of medicine, such as antibiotics, because they believe the markets are too small to make a difference to their total sales."This emphasis on the bottom line even influences the way clinical trial sare designed. Companies are in a position to choose how each new drug is deployed, and drugs that are approved for limited use have limited marketpotential. Therefore, most clinical trials are designed to optimize sales,not to optimize the chance that a new drug will be approved for its most effective, if limited, use."
"The results of this strategy are evident. Fewer than one in 100 new ideasreach clinical trials, and fewer than 10 percent of these are approved forsale."The solution is clear: research and development of new drugs should beseparated from marketing organizations."In summary, the current wave of mega-mergers does not solve but ratherexacerbates the deeper problems of the pharmaceutical industry. Despite theindustry's appetite, its emptying product supply will never be filledwithout a reliable research-and-development engine. Radical restructuring,not merger mania, is the need of our time."
Contact:
Vera Hassner Sharav
veracare@ahrp.org
212-595-8974
http://business.theatlantic.com/2009/03/why_big_pharma_mergers_magnify_failures.php
Atlantic Blog
Mar 11 2009
Why big pharma mergers magnify failures
by William Haseltine
This week, Merck announced a $41 billion offer for Schering-Plough. Lastmonth Pfizer agreed to purchase Wyeth for $68 billion. Roche is negotiating to buy the part of Genentech it does not already own. Rumors of other impending mega-deals swirl. I believe that this current wave of mergers reveals a disease at the heart of the pharmaceutical industry.The fact that so many companies are now merging reflects the failure of each company to discover and develop its own replacement pipeline. To maintain growth, a pharmaceutical company must either produce enough new products to replace those that have gone off-patent or acquire rights to distribute drugs created by others. This is clearly not happening on a large enoughscale.
A small number of patented drugs, each with annual sales of $1 to $5billion, accounts for most of the profits of the large pharmaceutical companies, and these profits are vanishing as the patents expire. Meanwhile,the number of new drugs approved for sale annually has steadily decreased over the past 15 years.What has gone wrong? Are today's unsolved medical problems more difficult than those of previous generations? Are regulatory barriers higher? Such is the common wisdom. However, my 30 years of experience as a consultant, and as the founder and CEO of several biotechnology companies, suggests adifferent primary problem: the marketing-driven demands of the global giants.
Consider the following paradox: despite the declining productivity of the pharmaceutical industry, the past 20 years have been a golden age for biomedical research. We have decoded the entire human genome as well as those of most of the viruses, bacteria, and parasites that have plagued us for centuries. Our ability to understand the differences between normal and disease states has increased exponentially. New opportunities to treat hitherto intractable diseases such as Alzheimer's, cancer, and heart diseaseabound. Advances in imaging permit us to detect diseases that were previously hidden, often at a stage early enough for life-saving intervention.
Computer models have given us powerful new tools for linking biological causes, disease effects, and probable consequences of specifictreatments, while computer-driven robots allow us to sort though librariesof new drug candidates at a vastly accelerated rate. In fact, the research departments of each large pharmaceutical company produce hundreds of ideas for new drugs each year. Why, then, the slowdown in bringing these drugs tomarket?I believe that it is not a failure of science but rather the context inwhich such science is practiced.
The process of drug development is long and arduous, and throughout the entire process, a candidate is continuallyevaluated for market potential. At large companies, products that aretechnically promising are terminated if the marketing potential is thoughtto be too small. And the height of that market hurdle has risen as theprofits of the large companies have grown.
Today, programs that are thought to have an annual sales potential of less than $1 billion are usuallystopped in their tracks. Some companies have abandoned their work in entireareas of medicine, such as antibiotics, because they believe the markets aretoo small to make a difference to their total sales.This emphasis on the bottom line even influences the way clinical trials aredesigned. Companies are in a position to choose how each new drug isdeployed, and drugs that are approved for limited use have limited market potential. Therefore, most clinical trials are designed to optimize sales,not to optimize the chance that a new drug will be approved for its most effective, if limited, use.
The results of this strategy are evident. Fewer than one in 100 new ideas reach clinical trials, and fewer than 10 percent of these are approved forsale. In the meantime, 10 to 12 years have typically elapsed betweendiscovery and approval, consuming half the twenty-year patent life of eachdrug candidate. And when drugs are approved, problems often arise in the quest for ever-larger markets. In worst-case scenarios, the side-effects ofapproved drugs--perhaps tolerable in small treatment populations--areinappropriately minimized as the product is brought to mass markets.
In onesuch instance, the drug Vioxx, approved as painkiller rather than atreatment for a smaller group of aspirin-intolerant patient, had to bewithdrawn five years after it was approved by the FDA.Mergers will not solve any of these underlying problems. In fact, as thesize of the companies increase, the long-term problems will become worse.Many large companies have looked to biotechnology for solutions. For years,the hope has been these new companies would produce enough new drugs to meetboth their own needs and those of the large of the pharmaceutical companies.
But despite such obvious success stories such as Genentech, Amgen, Biogen,and Gilead, recent history has proven otherwise. Most biotech companies lackthe management expertise and capital required to bring new drugs to market.At some stage, they hand over development and marketing to establishedorganizations that then apply the same market-driven selection criteria tothe biotech products as they do their own. New drug candidates that don'tmeet the market requirements are terminated.
The solution is clear: research and development of new drugs should be separated from marketing organizations. The cost of drug development must also be dramatically reduced. The electronics and computer industries haves hown us how this can be done: new products are initially invented anddeveloped by small companies that provide innovation and judgment.
These small companies in turn establish well-defined, process-based contracts with service companies. Once developed, the products are then sold by globalmarketing organizations.It is time to do the same for the early stages of drug development. During the past decade, more and more process-based companies--mostly located inEastern Europe, India, and the Far East--have arisen to provide specializedservices for each step of the drug-development and clinical-trials process.
At the same time, a new generation of biotechnology companies has arisen to provide the innovative science and judgment necessary to guide productdevelopment. Their semi-virtual design processes may allow many more drugs,each developed for its optimal use, to reach the market. Once approved, some of these new drugs may even become blockbusters--the initial salesprojections for most of today's best-selling drugs were small, and bytoday's standards, most would have never made it to the market. In summary, the current wave of mega-mergers does not solve but rather exacerbates the deeper problems of the pharmaceutical industry. Despite the industry's appetite, its emptying product supply will never be filled without a reliable research-and-development engine. Radical restructuring,not merger mania, is the need of our time.
