Thoughts on Big Pharma

It was a full ten minutes before I remembered why I never go to networking events.

The first person I met asked me what I did.  I said I ran a small consulting business that helps drug companies sell their drugs better.  She stepped back and using her index fingers formed a cross in a mock warding-off-Satan gesture.

It had been a while.

Let's leave aside that I was at a corporate networking event intended to allow small players like me to exchange ideas about how to better supply products and services to larger organisations.  Maybe the woman's revulsion was no more than a baseline response of someone who had yet to embrace the pretty obvious idea that if you want to make money you have to find people or entities who are happy to exchange theirs for whatever it is you do.  It was no surprise that she was setting up a quasi-charity that would subcontract services usually provided by the government.

It's somehow better for your soul to work with the public sector and being around me was killing her buzz.

For the last twenty years I've divided my time between small-scale performance (improv and stand-up) and marketing consulting to Big Pharma.  I would routinely encounter actors and writers who had the networking woman's knee-jerk reaction to my other life.  The thinking was usually something like: Big Pharma is evil.  It's evil because it exploits science or because it exploits the environment or because it profits from illness or because it makes extraordinary returns or because it exploits the developing world or because it ignore that world altogether or simply because it's big and corporate.

Certainly the industry doesn't get a lot of good press.  It misses out on the sexy medical breakthough story, which is usually attributed to the university where the research was done.  Instead Big Pharma gets the nasty side-effect story, the extraordinary profits story and the callous disregard of Africa story.  Not that the industry seems to care much.  Mostly it gets on with the business of commercialising that sexy medical breakthrough via years of additional research and hundreds of millions of dollars in the hope of making those extraordinary returns.

Still, the industry has developed a structural flaw that in the coming years will not only make it harder to defend but also hurt all of us who rely on its products.  The pipelines are slowing down and fewer new drugs are making it to market.  Megan McArdle sets out the issue in The Atlantic Magazine: -

In 1996—arguably the peak of pharmaceutical productivity in the past two decades—the FDA approved 53 NMEs (new molecular entities). These days, breaking the 20 mark is rare; last year 19 were approved, plus six “biologics,” substances such as vaccines and antibodies that are based on proteins made by living cells. Most analysts seem to think that U.S. companies just aren’t turning out as many valuable new drugs as they used to. 

The article describes a growing culture of risk aversion amongst the industry and the US Food & Drug Administration.  This is brought about by the drastic consequences of American class action litigation and a global 'merger mania' that dates back at least fifteen years.  Of the two issues, I think that the mergers are the more serious and the problem here is organisational rather than scientific.  Consider this: -

Regardless of size few institutions can competently complete more than one big task at a time.  Successfully launching a drug is a huge task.

My clients expect to launch one product a year.  So whenever two pharma companies merge we should reasonably expect the annual number of new products to drop by one.  It's the bigness of Big Pharma that hurts us*.

There are a few encouraging signs.  A few smaller companies, not operating under the pressure of Pfizer's overheads and Wall Street expectations, are now actively marketing orphan drugs.  This is good news for sufferers of certain rare but remediable diseases and a clear example of the industry doing what it should: transforming those scientific breakthroughs into a tangible improvement in the human condition.

The diseases in question are incredibly rare.  I helped launch a product that cured a very nasty disease that only affects 14 people in every million; that's less than 900 possible patients across the UK.  The drug is breathtakingly expensive and most of us would shy away from our taxes being spent on it.  Unless of course we knew someone with the disease who will die if untreated.  Insisting that the drug be made available at a cheaper price is an incomplete and naive response to the problem.  The compound sat undeveloped in a larger company's pipeline for years, these things are called 'orphans' for a reason.  Even so, the start-up that bought the rights was taking a massive risk and only did so in expectation of a decent return on investment.  Reduce that ROI and everyone loses, especially the guy with the disease.

The networking woman had flitted on before I got to explain any of this to her.  She'd found someone who knew someone at the Department of Work & Pensions with an unspent budget.

*  It especially hurts me as my business specialises in getting these product launches right