Is Anti-Counterfeiting A Health Economics Activity?

After three days of conference presentations, intensive discussion and rubber chicken, I am on my way home from unusually chilly Florida with a case full of business cards, brochures, white papers etc. One of the difficulties expressed by several pharma industry speakers was obtaining the budgets necessary to do a comprehensive job. Putting patient protection programmes together costs money and these brand protection teams are often minimally funded.

It occurs to me that "product protection" is really just another way of ensuring that the patient gets the maximum benefit from the medical intervention that the drug represents. In this respect, it is effectively a branch of health economics and outcomes research (HEOR).  Companies are happy to spend shedfuls of money on these disciplines because they give insight into how their medicines can best be used and how they can get optimal reimbursement levels. Is it time to view patient benefit more holistically and include the avoidance of harm?

In this case, and to take a purely local example, maybe the UK's National Institute for Health and Clinical Excellence (NICE)  should review the effectiveness of anti-counterfeiting solutions?

I'm only partly joking here.  One of the difficulties that we face in highlighting the issue of fake drugs is the lack of established protocols for sampling fake drugs, for compiling statistics, and for quantitively evaluating the effectiveness of countermeasures.

Until we standardise our methods and use rigorous statistics (or as stringent as the data will allow) then we will struggle to make our case as effective as it could be.  By using the methods (and budgets) of our colleagues in HEOR, maybe we could find the elusive financial returns-on-investment for product protection, and improve patient outcomes at the same time at the same time.

Le Plus Ca Change...

...Le plus c'est la meme chose.  Today is the last day of the Florida anti-counterfeiting conference.  It has been well organised and attended by a good mix of interesting and senior people with a lot to say about counterfeit medicines. There have been new developments in tactical approaches to anti-counterfeiting which will make a difference in the detection of fake drugs. But, strategically-speaking, I feel as if I've seen this deja vu somewhere before.  In recent years things have not moved on at the pace that the increasing risk to patient safety warrants.

There are some noble exceptions.  Nigeria, for example, is doing great work.  Dr Paul Orhii, Director General of their drug regulator NAFDAC , gave a good insight into how his country is tackling the counterfeit threat using hand-held devices to differentiate real from fake drugs in the field.

The real quantum leap in approach will only come when a global, or at least multi-regional, approach is decided upon, authorised, funded and rolled out.  At the moment we are still in the realm of individual, relatively small pilot studies which show the potential of Technology X in a controlled environment.  We need to take a deep breath and implement a drug verification system on a wide scale, exposing it to the real world threats of criminal attack and realising that it may not be perfect first time.  Only by road-testing and refining such systems can we start to make a real difference.  The current drug traceability projects, though laudable, are the equivalent of learning to drive on a private road.  We know how to work the car, but we need to get used to traffic on the highway before we can go very far.

Seek And Ye Shall Find

Interesting stuff yesterday at the Florida conference I'm attending on pharmaceutical anti-counterfeiting.  A drug company explained their process for risk assessment.  They use thirty-six questions to get managers to drill deeply into possible product vulnerabilities, but the most important are the first three:

1. Has this product ever (to your knowledge) been counterfeited?
2. Has this product ever (to your knowledge) been diverted (ie sold in unauthorised channels or markets)?

And here is the killer question:

3. Have you ever checked 1 and 2 thoroughly (by market surveys etc)?

Many of the operating companies and managers that answered yes to 1 and 2 could not say yes to 3.

Question 3 is the critical point here.  Unless you really look hard, you don't know whether you have a counterfeiting and/or diversion problem.  If you dont know what your problem is, you can't begin to address it and patients will remain at risk. 

Florida

This week I am in Florida for the 5th Global Forum on Pharmaceutical Anti-Counterfeiting .  Held every two years or so, it brings together industry, regulators and vendors to discuss the issues around fake drugs and countermeasures. Unlike the last two events, I'm not presenting or exhibiting this time, so I'll have chance to stand back and take in the mood of the industry.

Florida is the setting for Katherine Eban's expose of the fake drug scandals in "Dangerous Doses" (well worth a read if you havent done so) so it's fitting that we are here.  After the stasis of the last few years, I hope that we will have something to report other than earnest hopes this time.  The drug industry and western governments have dragged their heels for far too long on the issue of drug supply chain safety.  Things are now starting to move, but its time we got on with it.

Groundhog Days for Pharma

A little late in February (Groundhog Day is 2 Feb) I am struck by the applicability of the "life repeats itself" idea to the pharmaceutical industry.  We are currently in the early phase of the movie, where Bill Murray is depressed and trapped by being forced to wake up and relive the same day every day.

Every few months we hear that one bloated and inefficient company is merging with another one.  Each time, an almost identical press release is issued promising "significant economies of scale" and "research synergies" due to the "complementary pipelines" of the combined behemoth. 

The merged company is still inefficient, but the numbers are a bit bigger now. Support functions are merged and streamlined, sales reps are culled, R&D projects terminated, manufacturing sites mothballed. This generates fake numbers that make it look like the merged company is addressing the real issues, but underneath it is still the same animal. It soon has to look for another company to swallow to keep generating the momentum its investors demand.

Until we move to the "late phase" of the movie, and start adapting to the healthcare situation in the 21st century, pharma's Groundhog Day is destined to repeat itself.  There are huge opportunities to do good things, explore new business models and break the cycle, but we have to start thinking differently.

If we are ever to develop economic healthcare for all, from cradle to grave, Utah to Uganda, it will involve more than just finding a few blockbusters.  It will need more than just drugs. The "drug industry" needs to start providing a genuine service to its customers, and to focus on keeping them in good health, not just medicalising and treating any deviations from optimum well being.  Pharma must engage with patients much more directly, and learn to love health as much as illness, if it is to have relevance in the next hundred years.

Have We Passed "Peak Pharma"?

Peak Oil
The world output of oil has been increasing ever since we first figured out how to get it out of the ground. But oil isn't produced, in the sense of a sustainable conversion of one thing to another, it is extracted from a finite reservoir. Peak Oil is the point at which oil extraction volumes start to go down not up. The date of Peak Oil is controversial, but the consensus is that it is very soon or may even already be behind us.

This is a healthcare-focused blog so why am I dwelling on energy issues? There are health consequences of Peak Oil - health services and products in developed nations are heavily oil-dependent. As oil prices rise with decreasing supply, healthcare will have to adapt itself to the new reality. But it is more the Peak Oil concept itself that interests me, and I think the mountain metaphor works for the medical sector as well.

Peak Pharma
I wonder if the world has passed "Peak Pharma", at least in the sense of drug profits per patient?  Have we passed the most lucrative era for medicines? As companies move into developing markets and de-emphasise high-priced blockbusters their average prices, and therefore their revenue and profit per sale, will decrease and they will have to work harder and harder to make the same returns. Price pressure from local politicians, higher levels of authorised and unauthorised copies, increasing levels of counterfeits - all of these will mean that pharma cannot just translate its Western model to the developing world at a slightly lower price and hope to succeed.

Very basic market analysis shows that in 2007 the top 100 blockbuster drugs generated sales of $252.5 billion, accounting for 35.5% of the total global pharmaceutical market. As these drugs fall away, it will take a whole lot of work to just maintain the current business model. Companies who try to maintain their position and merely adjust the status quo slightly will fail.

The industry needs to accelerate its move to diversify away from a rigid, product-led model to a flexible, service/product hybrid. Relying on revenues from drugs alone is a sunset strategy.

UK Medicines Shortages: Supply, Demand and Danger

The weaknesses of the legal parallel drug trade in the EU have exposed again, as drug shortages threaten to hit the UK.  The weak pound is seemingly providing a temptation for wholesalers to make money by diverting UK drugs, bought at National Health Service-controlled prices, to other European markets where they can get a higher price.


The BBC reports a Royal Pharmaceutical Society call for action, which has oddly now been deleted from the RPS press releases page.  The UK Health Minister has condemned the resale of NHS drugs for higher prices abroad and has called an emergency summit for next month to discuss the issue.  The UK pharma trade body, the Association of British Pharmaceutical Industries, told the BBC that there is enough medicine to go round and distribution is to blame, although again no mention on theABPI press release page.
 
Supply and demand: the basis for all commerce. Unfortunately, if the drug shortage becomes a sustained issue then the UK will become a target for counterfeiters and criminals looking to make a quick buck by filling the hole.

Google's VIPPS-Accreditation Requirement for Internet Pharmacy Advertisers

The US National Association of Boards of Pharmacy, as well as the Partnership for Safe Medicines and others, have welcomed Google's decision to require accreditation for internet pharmacies wishing to advertise on Google.

The VIPPS scheme for accreditation goes a long way to stamping out rogue pharmacies and Google's decision is a major step forward. It won't stop bogus phamacies appearing in search results, but it will stop them getting on the sponsored slots at the top and side of the screen.

My recent post on parallel universe issues applies here and we need to careful that criminals don't spoof the VIPPS online accreditation symbols. Nevertheless, this is a big step forward.

Will JUPITER Change Pharma's View of the World?

On Monday, the U.S. Food and Drug Administration approved Astrazeneca's  cholesterol-lowering medication Crestor (rosuvastatin) for some patients who are at increased risk of heart disease but have not been diagnosed with it. The decision was based on results from the JUPITER study, which compared over 15,000 patients - half of whom received Crestor for two years and half received placebo.  
The study looked at men over 50 and women over 60 who had an elevated amount of high sensitivity C-reactive protein (a known risk factor for inflammation and atherosclerosis) and at least one additional factor such as smoking, high blood pressure, a family history of premature heart disease, or low amounts of HDL ("good") cholesterol.

Crestor is a statin in the same class as drugs made by Pfizer, Merck and others, but the first to be licensed for such widescale "primary" (ie  before disease onset) preventative use. We can expect the sales of statins generally to increase on the back of this data, and it will be a big boost to AZ in particular.

Some will be critical of the trend to mass medication of the apparently healthy, but if there is solid evidence of benefit then I don't see the objection.  The challenge will be "adherence", the industry term for persuading people to keep taking the medication long-term. When the patient feels healthy and all they see is the drug cost, there is a temptation to stop medication, or to skip doses to make it last longer. 

This is where other patient support and testing services come in.  On a wider level, the move to large-scale primary prevention may mark another step in the integration of the drug industry with life-long healthcare services - what I have previously called "Healthcare as Total Service", or HaTS. It's not always possible (eg cancer) but, as a commercial model, keeping people healthy makes a whole lot more sense than only treating them when they get sick.

Counterfeit Drugs and the Parallel Bogus Universe

The worldwide growth in mobile phone use has now reached even the poorest consumers. Cellphones are the first electronic product verification method to reach a majority of the world’s people, and the internet will soon follow. Some brands are taking advantage of this trend to help them combat counterfeit products, by offering consumer authentication of their products via text messaging, websites, or visible serial numbers. Some companies hit hard by counterfeits sold on the internet have now even decided to sell their products directly to consumers via the web, with their own additional security.

These systems allow the consumer to be directly involved in the verification of their product, and give the opportunity for the brand owner to send marketing messages whilst verifying their product's authenticity. Unfortunately, many of the consumer-based verification systems which rely on telephone helplines or websites are vulnerable to the “parallel universe” problem.

In many of the parts of the world where counterfeit drugs are a major problem, for example in Africa and South East Asia, the use of technology is still relatively new. If a consumer is told that they can verify their product by calling a helpline or sending an SMS text message with a serial number, they are unlikely to doubt, or to check, the authenticity of the system itself.

Criminals do not stand still and will continually look for ways to get around security systems. To circumvent "phone-in", website or SMS-based systems they can, and do, print counterfeit packaging complete with bogus versions of the serial number, telephone helpline, product website etc. The criminal can then put in place their own "authentication" system (either automatic or simply a poorly paid worker answering manually) which will return a reassuring answer to the customer that the product is genuine. The customer thinks they have validated their product with a foolproof method.  In fact the whole system is a parallel, counterfeit world.

The immediate objection to my argument is that serial numbers or codes on products prevent criminals from conducting their business on a large scale, by denying them access to legitimate distribution channels.  However, to break an anti-counterfeiting system the counterfeiter does not have to integrate his criminal business activities into it. He merely has to disrupt the official system so that consumer confidence is undermined and it ceases to be credible. As the genuine system falls into disuse, the criminal is free to go about his business as before.

For this reason, physical verification (based on visible and invisible security features) and digital authentication (based on unique serial numbers, codes etc) should still always go hand in hand, however efficient and high-tech the tracking capability becomes.

GSK Cuts Neuroscience & Outlines Strategy For Growth

In an earnings call today, GSK Chief Executive Andrew Witty set out his vision of the future for the drugs giant.

He didn't confirm the number, but it is thought that 4,000 staff will lose their jobs, including scientific researchers as well as sales reps.  Many of these cuts will be in GSK's major neuroscience research locations, as Witty announced that GSK will cut many CNS research programmes including those in depression, pain and anxiety.  Staff are being told today.

GSK also announced that their commercial strategy will shift away from Western markets and towards developing markets, as widely reported previously (and blogged by me earlier this week). Last year, for the first time, they had more sales reps outside USA and Europe than inside those regions.

Dementia and Cancer Funding

Further to my last post, there is an interesting BBC report on Alzheimer's disease funding, based on a study called Dementia 2010.  The study finds that Alzheimers costs much more to manage but attracts much less research funding than cancer, stroke or heart disease.

Cancer, though a very tricky research area, is a great example of the "treatment over prevention" preference of today's healthcare agenda. The cheapest way to cut the rate of cancers would be to persuade people to lose weight, eat more fibre (especially green vegetables), stop smoking and drink less alcohol.  Governments don't do this very aggressively, especially in the case of diet. Why not tax saturated fat like tobacco, for example?

Cancer has a ubiquity, emotive urgency and immediate devastating impact that makes it relatively easy to attract funding to the area, and I don't minimise the personal impact on those affected, but there is another, practical, reason why the drug industry has neglected dementia.  Oncology clinical trials are over in a short period of time, usually.  Results are measured in the weeks or months of extra life gained. Drugs can be tested and marketed within "reasonable" timeframes and budgets.

Dementia takes years to develop and progress, so clinical trials of new drugs also need to be long.  Worse than that, the effects of the disease and the treatments are subtle so the trials need to involve a lot of people if they are to show benefits with any statistical confidence. The costs are therefore huge for treatment studies and almost prohibitive for prevention studies.

As our society ages, the number of dementia sufferers in the UK may pass 1 million in the next fifteen years. Each of these patients requires expensive, long-term care which will be an expensive drain on state finances.  The situation is the same in all developed countries and will eventually be replicated globally as average lifespan improves.

Notwithstanding the difficulty and cost of the research, it will prove a good social investment to rebalance funding priorities and to work harder to prevent and cure dementia. In the drug industry, ROI is king (French speakers please pardon my pun). This one case where we need to find a better way of giving the drug industry that return-on-investment and bringing the risks down to acceptable and investable levels.

"HaTS" - Healthcare as Total Service (c)

"The blockbuster is dead" according to the current industry mantra. Big pharma is gearing up for the new reality by laying off many of the expensive sales reps they formerly used to saturate primary care markets with their now-ageing cash cow drugs.

GSK and others have stated that they are now going for growth in developing countries and pulling back from their traditional, high-priced-but-stagnant, Western markets.  This may bring higher growth opportunities but will also expose them to dangers.  These include commercial threats from local competition and corporate liability from the brand knock-off products which are rife in developing markets.  Furthermore, developing countries cannot support US prices, so the industry acknowedges that business models will shift from reliance on lucrative but limited markets in developed countries to a global, lower-priced model.  The price trend, at least for drugs which treat conditions where several brands are available, will (in my view) inevitably lead towards commoditisation.

It occurs to me that the pharmaceutical industry could pre-empt this process and take price reduction one step further.  Why not supply the drugs themselves for a nominal fee, and realign the pharma industry to a service model.  Health management, including prevention, diagnosis, and treatment, could be provided and charged on a life assurance business model, with the state assisting those who can't pay. The current imbalanced medical industry, which encourages cure over prevention by prioritising the development and prescription of drugs, could be altered to a more sensible model where health is managed, disease is avoided where possible, diagnosed early, and treated when needed. 

The idea is admittedly a bit simplistic but it doesn't have to be an unattainable vision of Utopia.  The drug industry becomes the healthcare services industry and still makes money and profits for shareholders - it just doesn't put all its eggs in the drug sales basket. Some companies are inching towards this scenario by developing diagnostics businesses, but I think there is a much more disruptive business model in there for anyone brave enough to go for it.  Maybe the current woes will push the industry to innovate commercially as well as scientifically.

The HaTS acronym is available for licence. My first idea, Pharmaceutical Research as Total Service, PRaTS, didn't work so well.

Drugs Companies Face Deeper Cuts in Research

More bad news for "big pharma" staff.
Drugs companies face deeper cuts in research - Times Online

I have to declare an interest here - I am an ex-GSK employee from the SmithKline Beecham part of the many-headed hydra. The dash for growth that has added headcount to big pharma in recent years is reversing and big layoffs are all around us. Most of the big companies are cutting thousands. It is a difficult time for those affected and will have ripples across the whole industry.

However, one of the long term trends mentioned by the article is that GSK is planning a move to branded remedies for curable disease in developing markets, and away from new drugs for tricky diseases that are only affordable in developed countries. This is laudable at one level, although only a profit-driven pragmatic necessity. It will, however, have the effect of exposing GSK to the full brand-eroding effects of counterfeiters and their knock-offs - which are rife in most developing markets. GSK will need to be on its toes to avoid revenue leakage and potential liability issues from other people using its brand equity but not its quality standards.