Lesson 5 US Pharmaceutical Industry 2024-1.pptx

U.S. Pharmaceutical Industry Plake KS, Schafermeyer KW, and McCarthy RL(2017). Introduction to Health Care Delivery – A Primer for Pharmacists, 6th edition, Jones and Bartlett, Chapter 5. Objectives  Describe the three major components of the pharmaceutical industry (research and development; manuf...

U.S. Pharmaceutical Industry Plake KS, Schafermeyer KW, and McCarthy RL(2017). Introduction to Health Care Delivery – A Primer for Pharmacists, 6th edition, Jones and Bartlett, Chapter 5. Objectives  Describe the three major components of the pharmaceutical industry (research and development; manufacturing; and sales and marketing)  Describe how the sales and marketing strategies of pharmaceutical industry changed over the past 40 years  Describe what the pharmaceutical industry is doing to compensate for fewer blockbuster brand name block drugs Drugs  Definition: substances that produce a change in cellular or physiological functioning of humans  Manufacturers focus on a drug’s therapeutic effect (e.g., optimize biochemical activity, increase specificity, and limit negative effects) Drugs  Prescription – medication requiring a prescription by an authorized licensed health care provider.  Non-prescription – medication available to the general public without a prescription; may have some restrictions; also know as OTC (over-the-counter)  A third category because of COVID?? (Paxlovid)  Approved – medication or indication officially recognized by the FDA for marketing  Unapproved – medication or indication without FDA permission for marketing Drugs  Medicalization: redefining or relabeling of a personal or social problem as a medical condition, thus necessitating treatment in the health care system.  Conditions with physical pathologies have more complex mental, emotional, and social processes not effectively treated with medication: ♦ Anxiety/depression ♦ ADD/ADHD ♦ Eating disorders Consumer’s Perspective  Consumer beliefs often differ from beliefs of health care professionals  Consumer course of action for perceived health condition: ♦ Nothing (1/3) ♦ Act (2/3) Self-care (3/4) – some use OTC drugs Physician (1/4) – 2/3 receive an Rx 2015 Sales of Rx Drugs (Source: IMS Health, April 2016) Federal LTC Home Health HMOs facilities, 0.7% Other Independent 0.3% 0.9% 4.3% Care Drug Stores 0.8% 11.1% Clinics 12.6% Hospitals 8.6% Mail Order 19.0% Chain Drug Stores 27.7% Mass Supermarket Merchandiser s 7.2% 6.6% 2019 Retail Pharmacy Rx Drug Sales – 4.22 billion Rxs by type of store (Source: Statista, September 2021) Mail Order Superma 5.6% rket Chain 13.9% Drug Mass Stores Merchan 51.6% diser 9.8% Independ ent Drug Stores, 17.3% Rx to OTC Switches in Recent Years  Pataday® eye drops (2020)  Voltaren® Gel (2020)  Xyzal® (2017)  Differin ® Gel (2016)  Flonase® (2015)  Nexium® (2014)  Nasacort ® (2013)  Allegra® (2011)  Prevacid® (2009)  Zyrtec® (2007))  Zaditor® (2006)  Miralax® (2006)  Prilosec® (2003)  Claritin® (2002) Prescriber’s Perspective  Drug therapy is a ritual between MDs (and other prescribers) and patients ♦ Enhances and solidifies the patient-physician interaction as a symbolic component to healing ♦ Provides a sense of satisfaction Reduces uncertainty and frustration by reinforcing the MD’s power to cure Fulfills a need to take action against illness Factors Influencing Prescribing Behavior  Education ♦ Training in pharmacotherapeutics ♦ Preceptors prescribing habits  Colleagues  Control and regulatory mechanisms  Consumer/society demands  Drug manufacturer promotional activities ♦ To MDs ♦ To consumers Pharmacist’s Perspective  Volume and regulatory pressures have mounted  Pharmacists have less time to perform patientcentered services other than dispensing  Dissatisfaction lead to changes: ♦ Use of pharmacy technicians ♦ Robotics ♦ Increased clinical activities Vaccinations Patient counseling Computerized monitoring of drug therapy Medication Therapy Management (MTM) Pharmaceutical Industry  Two major Types of Manufacturers ♦ Brand name manufacturers ♦ Generic manufacturers  Three Main Areas ♦ Research and development ♦ Manufacturing and distribution ♦ Sales and marketing Pharmaceutical Industry – Brand Name Manufacturers (http://www.phrma.org/) Company U.S. Headquarters Abbott Abbott Park, IL Amgen Thousand Oaks, CA AstraZeneca Wilmington, DE Bayer Wayne, NJ Boehringer Ingelheim Ridgefield, CT Bristol-Myers Squibb New York, NY Genzyme Cambridge, MA GlaxoSmithKline Research Triangle Park, NC Johnson & Johnson New Brunswick, NJ Eli Lilly Indianapolis, IN Merck Whitehouse Station, NJ Novartis East Hanover, NJ Pfizer New York, NY Sanofi-Aventis Bridgewater, NJ Pharmaceutical Industry – Generic Manufacturers (http://www.gphaonline.org/) Company U.S. Headquarters Apotex Weston, FL Dr. Reddy’s Charlotte, NC Kremers-Urban Princeton, NJ Mylan Canonsburg, PA Paddock Minneapolis, MN Par Spring Valley, NY Pegasus Pensacola, FL Ranbaxy Princeton, NJ Taro Hawthorne, NY Upsher-Smith Maple Grove, MN Watson Corona, CA West-Ward Eatontown, NJ Research and Development  $83 billion spent on research in 2019 industry wide (up 40% from 2015)  55 new medicines approved in 2023 ♦ 28 orphan drugs*  More than 10,000 Rx meds available today  Safe and Efficacious! *An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease. In the US and EU it is easier to gain marketing approval for an orphan drug, and there may be other financial incentives, such as extended exclusivity periods, all intended to encourage the development of drugs which Research and Development  Of every 10,000 compounds tested, only 5 are tested as potential medicines in a clinical trial. Of these 5, only 1 is ever approved for patient use.  Once a drug is approved it can have market exclusivity (monopoly) for up to 20 years  U.S Food and Drug Administration (FDA) reviews all new products for safety and efficacy  Generic approval process is abbreviated FDA Functions (http://www.fda.gov/) 1. 2. 3. 4. 5. Premarketing clearance of all new products based on purity, safety, and efficacy Regulation of labeling and advertising Regulation of good manufacturing practices and recalls if necessary Regulation of bioequivalence standards Post-marketing surveillance for unanticipated problems after approval U.S. Drug Distribution System Manufacturers, Marketers, & Drug Manufacturers (marketers) Distributors Wholesalers Chain Warehouse Regional Wholesalers National Wholesalers Mass Chain Food & Drug Independent Mail Order Merchant Pharmacy Pharmacy Pharmacy Pharmacy Pharmacy Retail Pharmacy Mail Health Plan Pharmacy Clinic & Drs’ Office Outpatient Providers Pharmacy Long Term Care Pharmacy Hospital Institutional Providers Government Facilities & Other Sales and Marketing  Three phases since late 1970s ♦ Phase I: Fee for Service (FFS) ♦ Phase II: Managed Care (Market Penetration) ♦ Phase III: Managed Care (Mature Market) ♦ Specialty Drugs – Phase IV???  Phases occur as a result of the evolution of Managed Care since the mid 1980s Phase I: Fee for Service (before mid 1980s)  Commercial indemnity insurance  Patients accustomed to getting any product they wanted  Patients turned in the receipt for reimbursement  Lack of economic controls  Physicians autonomous  Physicians prescribed without regard for cost Phase I: Fee for Service (before mid 1980s)  Pharmaceutical Marketing (brand name products) ♦ Target market of was physicians ♦ Centrally developed marketing program that was presented to all physicians. ♦ Each drug company had a centrally developed message for each product. ♦ Marketing determined success--not medical need ♦ Message was efficacy relative to competition-ALWAYS CLINICAL Phase I: Fee for Service (before mid 1980s)  Pharmaceutical marketing ♦ Cost of drug product was rarely, if ever mentioned ♦ Repeated contacts with physicians ♦ Ads-- Medical journals bold headlines and striking graphics, designed to convey this centrally developed, single positioning for the product—most of the journals were drug ads ♦ Targeted high volume prescribers Pharmaceutical sales people made frequent personal calls to high volume prescribers Success was based on marketing—not necessarily on innovation or need ♦ No direct-to-consumer (DTC) advertising Phase II: Managed Care—Market Penetration (mid 80s-1990)  Evolution of managed care (MC) ♦ Growth of MC--more control over Rxs ♦ Electronic claims— “real time” claims processing by the Pharmacy Benefit Managers (PBM) PBMs stored the plans’ eligibility information for providers Managed Care plan also had benefit restrictions – Mandatory generic dispensing initiated – There was limited control over brand name products. That is, there was not a “preferred” PPI inhibitor in many plans. That level of formulary control would come later in the MC evolution ♦ Patients were learning what managed care was Phase II: Managed Care Market Penetration (mid 80s-1990)  Pharmaceutical Marketing ♦ Emphasis by companies on Managed Care Organization (MCO) as well as the MDs ♦ Special account managers to work with MCOs ♦ Access to MCO formularies was gained by contracts and rebates ♦ Traditional sales force—docs will always be important Expanded message--beside the drug information message, there was education of the physician about MCO plan preferred products in the physicians practice locale – message was no longer centrally developed – message was tailored to the region, MCOs, and the contracting issues between manufacturer and MCO. Phase III: Managed Care Mature Market (1990s-Present)  Evolution of managed care ♦ Managed Care exerts a tremendous influence on drug use ♦ Wide acceptance of restrictions by providers and patients ♦ MCO has great influence over prescribing Phase III: Managed Care Mature Market 1990s-Present (Data sales)  Pharmaceutical marketing ♦ Message is getting more customized to the plan ♦ Message changes as data warrants ♦ National representatives for MCO accounts ♦ Drug companies purchase data from PBM. Data provides prescribing patterns of physicians Drug manufacturers know which prescribers are high volume Target those high volume prescribers and docs who are not using the drug manufacturer’s products Phase III: Managed Care Mature Market 1990s-Present (research)  Pharmaceutical marketing ♦ Selling strategy is based on clinical and economic research ♦ Research is being done on disease prevention and treatment of chronic illness ♦ Direct-to-consumer (DTC) advertising (1997) shifting some of that vast advertising budget toward the consumer rather than the prescriber Biggest Threat to PhRMA  Fewer new innovative drugs on horizon that can be consumed by large numbers of people New Molecular Entities Year (FDA approval ) Number of New Chemical Entities approved 2010 27 (10 orphan) 2011 35 (12 orphan) 2012 28 (7 orphan) 2013 36 (17 orphan) 2014 41 (17 orphan) 2015 45 (21 orphan) 2016 22 (9 orphan) 2017 46 (18 orphan) 2018 59 (34 orphan) 2019 48 (21 orphan) 2020 53 (31orphan) 2021 50 (26 orphan) 2022 37 (20 orphan) 2023 55 (28 orphan) The Future of Big PhRMA  With fewer new chemicals, PhRMA spends a lot of time on new salt form, isomers and delayed release dosages ♦ Critics say this is simply to extend patent exclusivity  Refocus entire R& D focus strategy ♦ Switch “Specialty” pharmaceuticals most promising (and expensive!) Specialty Pharmaceuticals  Defined - high-cost drugs for people with rare or chronic conditions resulting in significant morbidity.  Importance of pharmacogenomics  Characteristics ♦ High cost: $1500 - $200,000+ per month ♦ Disease targets: cancer, MS, hepatitis C, hemophilia, Myasthenia gravis, etc. ♦ Customized dosing ♦ Complex delivery methods including IV, IM, and subQ ♦ Administration: infusion centers; home infusion ♦ Reimbursement complexities Specialty Pharmaceuticals  Key drivers in trend of specialty products ♦ High cost per patient ♦ Increasing utilization ♦ Marketing efforts Questions??