PharmaEdge: August 2007 Archives

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August 29, 2007

Joint Ventures - Insurance Without the Hefty Price Tag of a Merger or Acquisition

As many companies in the pharmaceutical world look with more than a touch of concern at their drug development pipelines, Schering-Plough hopes to find solace in a combination of two products - neither of which is currently under a Schering-Plough patent. The FDA has agreed to consider the company's application for a product that would be the combination of Claritin - a Schering-Plough drug whose patent expired in 2002 - and Merck's Singulair, which is still under patent.

And it will be for some time: Singulair's patent is good until 2012 unless the generic companies can produce a legal miracle. So, why would Merck let Schering-Plough undermine its drug with so many years of solid growth to go? The answer lies in a joint venture agreement crafted in 2000, when both drugs were still under patent. This agreement allows both companies to share equally in the profits of a combination drug treating allergies or high cholesterol using properties from each company - even if they are expired.

Merck has been profiting handsomely from this agreement already. The company has overseen Vytorin, a combination of Merck's Zocor - patent long expired - and Zetia, a jointly-developed drug itself between the two companies. While Schering-Plough is entitled to a majority of the Zetia profits, however, they're only entitled to 50% of Vytorin's profits. Merck's addition of Zocor to the mix costs them almost nothing since it is off patent, but those sales of Vytorin over Zetia are netting them millions. It's now Schering-Plough's turn to profit from the venture. "The combination product will compete with Singulair," Merck spokesman Ian McConnell told the WSJ Health Blog. He did add that the combination pill will "provide another alternative for patients and caregivers." Tellingly, Schering-Plough will be leading sales, marketing, and regulatory activities.

Still, this agreement points to an alternative to the radical acquisition suggestions floating around like the Pfizer-Wyeth merger rumor recently discouraged by Fortune writer John Simons. As companies' patents begin to sunset, they should look at their portfolios in search of a combination product in their primary therapeutic areas. If they can't find one, maybe they should look in someone else's portfolio. After all, their patent isn't going to last forever, either, and it's better to share half of the profits of a combination drug than trying to compete with a half-dozen generic companies who slash the price of the drug by over 80 percent of its value.

While these joint ventures limit the potential windfall, they also don't have all the potential danger of an acquisition. And with so many significant patents expiring in the next few years, a disaster is less desirable than ever. Pfizer must have gotten the message, as the announcement this week to collaborate with Bristol-Myers-Squibb on diabetes and obesity has them both sharing in the expenses - and also the profits.

Posted by Jeremy Spivey at 09:50 AM | Comments (0)

August 24, 2007

Pharma & DTC: Continuing to Refine

Direct-to-consumer advertising is one of the pharmaceutical industry's top promotional tactics. Television advertisements, in particular, have in the past fueled public and regulatory criticism for some brazen messages as well as perceived opportunism. Nonetheless, advertising agencies and pharmaceutical companies have become more self-regulated and more conscious of advertisement messages, viewing audiences, and the need for more balanced discussion of indications and side effects.

The debate about whether DTC advertisements are beneficial to pharmaceutical companies without a corresponding benefit for patients' health has existed since the inception of pharma DTC advertisements. However, according to the recent article, "Direct-to-Consumer: Creativity Through Understanding," in the July 2007 Pharmaceutical Executive, the Kaiser Family Foundation conducted a study five years ago which found that DTC advertising influenced people suffering from significant conditions who were not getting diagnosed and treated to get help.

The study also found that there were mistakes made by the pharmaceutical industry and some opportunism. However, as Mel Sokotch explained, "At the end of the day, more people get treated as a result of communication that informs consumers that a disease or symptoms can be dealt with effectively if they talk to their doctor."

So while there is room for the pharmaceutical industry and advertising agencies to make improvements in terms of their DTC campaigns, there is a lot of good coming from these efforts. In particular, the non-branded disease awareness campaigns can be instrumental in helping patients learn about their diseases and symptoms as well as to encourage further discussion and exploration with their physicians.

As the Pharmaceutical Executive article pointed out, even with all the regulations and standards pharma advertisements need to adhere to, there is still a lot of opportunity to be creative and have a positive impact on patients' lives. It is no secret that DTC advertising makes business sense for pharmaceutical companies - obviously the returns are there, but the truly valuable advertisements are those that deliver results for companies but also keep patients' well-being at the forefront as that is the most important thing.

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Posted by Amanda Zuniga at 11:56 AM | Comments (0)

August 06, 2007

Importation and Pricing Issues Not Limited to the US

Drug importation from Canada remains a hot topic in the US pharmaceutical and public policy sectors, but has subsided somewhat since the introduction of Medicare Part D brought domestically acquired medications within reach of millions of elderly patients who found them difficult to attain previously. Manitoba, for instance, once had most of Canada's 50 to 60 internet pharmacies but is now down to 11.

PharmaTimes reports on two stories which indicate that drug companies would be wise to keep their attention on pricing and drug importation issues for a little longer even if the continental focus has shifted somewhat. First, the United Kingdom's Department of Health on the 3rd of August signaled its intent to revisit the Pharmaceutical Price Regulation Scheme, originally developed in 2004 and anticipated to last through this decade. According to the Office of Fair Trade a few months ago, the former system, which capped profit on drugs and provided price-cuts to the government, did not properly take into account the efficacy of the drug with respect to its price, leading to hundreds of millions of dollars of waste. Both sides are approaching the issue with caution, but it's possible that pharmaceutical companies serving the United Kingdom will leave with a deal less satisfactory than the one they currently have.

Separately, the European Commission has launched a "broad public debate" on pharmaceuticals, hoping to ensnare the opinions of small and medium enterprises in the pharmaceutical sector. Specifically, they're looking to improve the safety of EU drugs (preventing counterfeits getting inside of the supply chain) and reducing needless regulatory barriers which prevent some drugs from even making it to smaller countries at all. "The lack of transparency and harmonisation with regard to pricing, reimbursement and relative effectiveness remains a challenge, it emphasises," PharmaTimes reports.

It's as least as much of a challenge for the pharmaceutical industry as it is for the European governments, and even with the attention given the issue by the EC, it's unlikely to subside anytime soon. In the mean time, it seems like their focus will be on Britain, where they'll need all the luck they can get.