Why this title? Well, the Opioid crisis has actually turned Big Pharma into a villain (for all the right reasons).

So has Martin Shkreli become a poster boy for outrageous drug price hikes.

Shkreli, a former hedge fund manager and CEO of Turing Pharmaceuticals, bought a drug called Daraprim used by cancer and AIDS patients and raised its price by 5,000% overnight

This article is not to malign Pharma’s name (;/) but to point out that that ‘things are never black and white, things are very much shades of grey

So What do Pharmaceutical and Biotech Companies do? Well, they research and develop drugs, market it to customers (physicians, organizations, patient), lobby to shape drug policies AND make a ton of PROFIT!

If you are here for details, read on…..

Take a look at Pharmaceutical Industry’s drug Sales:

List of top selling drugs: The high profits and tight regulatory environment has also transformed it into a top research intensive industry.

Despite extreme regulation, pharmaceutical companies are known to have expensive valuations (high Price/Earnings ratio) in comparisons to other industries.

List of top selling drugs

Top selling blockbuster drug has already sold $17.6 Billion dollars!

Pharma and Biotech broadly conduct the following activities (not including lobbying)

The task of Distribution of drugs is completely handed over to wholesalers such as Mckesson, AmerisourceBergen & Cardinal. I have not included ‘Deals with Regulatory Bodies’ as it’s prevalent across all pharmaceutical Companies. The activities are explained below

Biotech & Pharmaceutical Company Activities

Biotech & Pharmaceutical Company Activities

I. Responsible for Product Research and Development

Since Food and Drug Administration (FDA) regulates the manufacture and sale of drugs, the regulatory process for drug development is rigorously tested for safety and efficacy.

The amount spent on clinical trials can range up to ~$800 Million. The high cost of clinical trials adds price pressure on the healthcare industry.

Pharmaceutical Drug Development Life Cycle

Drug Development Life Cycle

 

Doctors, patients and activists have raised questions on the high cost of drugs. It is a matter of scientific evaluation and debate whether high costs of therapy justify the medical outcomes. Enter ‘Health Economic and Outcomes Research’ (HEOR). More on that in later posts.

Generic Drugs: Many Pharmaceutical companies also seek FDA approvals to manufacture generic versions of drugs, whose patents have expired. The companies are required to submit summary of bio equivalence data for filing of ANDA (Abbreviated New Drug Application).

Abbreviated New Drug Application (ANDA) Application for Generic Drug Product

Abbreviated New Drug Application (ANDA) Application for Generic Drug Product

 

Mergers & Acquisitions: Pharmaceutical Companies also acquire Intellectual property by acquiring laboratories and small sized pharmaceutical companies that are looking to commercialize a potential molecule/drug.

The Pharma & Biotech M&A activity in 2017 is sluggish compared to 2014.

Column Chart depicting Pharma & Biotech M&A transactions by quarter

Pharma & Biotech M&A transactions by quarter

 

Partnerships & Collaborations: The extent of research and marketing partnerships are quite prevalent in pharmaceutical industry.

The companies strive and compete to discover potential molecules or seek to fail fast and look for the next blockbuster drug. The collaborations occur either for a molecule or for all the molecules being tested in a therapeutic area.

Cytokinetics Collaborations for every drug in pipeline
Cytokinetics Collaboration for Drug Development

Cytokinetics Collaboration for Drug Development

 

II. Manufacturer of (approved) medical drugs, devices and/or procedures

Pharmaceutical Companies must produce drugs in accordance with strictest of guidelines enforced by FDA, in the form of Current Good Manufacturing Practices (cGMP). The Food & Drug Association is known to inspect and penalize companies that do not maintain accurate and secure data collection procedures or manufacturing and storage facilities.

Food & Drug Association's Current Good Manufacturing Practices (cGMP)

Food & Drug Association’s Current Good Manufacturing Practices (cGMP)

 

III. Sales & Marketing Activities

Pharmaceutical Sales & Marketing strategies have evolved to be more specialized, targeted and aggressive. Targeting physicians, despite access issues have transformed Pharmaceutical Sales Forces into specialists that talk only about certain indications and therapeutic area.

The most prevalent Pharmaceutical Sales Pharmaceutical Sales & Marketing include:

  • Detailing (face-to-face sales and promotional activities)
  • Direct to Consumer Advertising (Patient Support Programs & Discount Cards)
  • Promotional Mailings
  • Educational & Promotional Meetings
  • Managed Care Contracting
  • Advertisements
Pharmaceutical Sales & Marketing Activities

Pharmaceutical Sales & Marketing Activities

 

AND NOW This:

 How does Pharmaceutical Industry Shape Drug Policy? Birth of Drug Mafia

 

Drug Industry's Triumph over the DEA

Drug Industry’s Triumph over the DEA: Illustration by Eddie Alvarez/The Washington Post; Photos by Jahi Chikwendiu/The Washington Post, U.S. Senate, DEA, iStock

 

The recent lobbying efforts by Drug Companies to sway the Drug Enforcement Agency away from connecting Drug Companies and Wholesalers to Opioid Deaths was highlighted in an article by Washington post.

Several DEA agents actively involved in investigation were pushed out (of DEA/Investigation) while there were others who were hired by the Big Pharma to help draft the new Drug Policy and safeguard its interests.

Pharmaceutical Industry Lobbying Expenses

Pharmaceutical Industry Lobbying Expenses

In conclusion, The Pharmaceutical industry has its pros and cons, grey and black areas. It is certain that the business of managing disease will continue to be one of the most profitable and powerful businesses to be in.

Noam Chomsky Quote

Noam Chomsky Quote

References:

  1. America’s Bitter Pill by Steven Brill
  2. The Innovator’s Prescription: A Disruptive Solution for Health Care by Clayton Christensen
  3. http://phrma-docs.phrma.org/sites/default/files/pdf/biopharmaceutical-industry-sponsored-clinical-trials-impact-on-state-economies.pdf?
  4. https://cytokinetics.com/pipeline/#
  5. https://www.brainyquote.com/topics/pharmaceutical
  6. http://money.cnn.com/2015/10/09/investing/drug-ceo-daraprim-price/index.html?iid=EL
  7. https://www.fda.gov/drugs/developmentapprovalprocess/manufacturing/ucm169105.htm
  8. https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/default.htm
  9. http://www.asq509.org/ht/a/GetDocumentAction/i/86200
  10. https://www.washingtonpost.com/graphics/2017/investigations/dea-drug-industry-congress/?utm_term=.62e270117bef
  11. http://money.cnn.com/2015/10/20/investing/drug-price-hikes-martin-shkreli-valeant/index.html
Categories: Healthcare

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