More information on the consolidation of the companies and the agencies involved in launching the new corporate brand and the new product will appear in the Business department of Med Ad News’ December issue. I spoke with Mark Iwicki, president and chief operating officer of Sunovion, to get more insight into the rationale for the new corporate identity and the organization’s plans for the future.

Mark Iwicki, president and chief operating officer of Sunovion

Med Ad News: What was the strategy behind bringing Dainippon Sumitomo Pharma America and Sepracor together under the Sunovion name, and what efficiencies have been achieved?

Mark Iwicki: The whole idea behind it was a strategic opportunity that DSP [Dainippon Sumitomo Pharma] saw. The history of the company is, they’ve been in Japan for many, many years. The Dainippon part goes back around 100 years. Then they merged with Sumitomo chemical about five years ago and realized that although a major strength in Japan, as many of the other companies have done – Takeda, Astellas, all the predecessor companies, Yamanuchi Fujisawa – that in order to truly be a world class company, they had to expand globally.

The opportunity to do that was around this product lurasidone, Latuda, which we just recently got approved. One of the things that is great about our story is that it’s much more around the strategy of building a global company, whereas a lot of the mergers or acquisitions are purely about synergies. Which corporate infrastructure can we reduce and save some money? That was never the focus for us.

Of course there was a little bit of that that occurred, but in the U.S. there was very minimal overlap, truthfully. The DSP America organization was set up as a CNS research and development group that brought Latuda through Phase II, Phase III, and now the approval. Of course, we have some other indications we’re working on, like bipolar, and some other products. But that organization still exists today. In fact, we’re excited to keep building that out. It’s in Fort Lee, N.J.

Sepracor is an organization that was built on CNS and respiratory history. We have six products in the market, now seven with Latuda. It was a great match because DSP wanted to expand globally, they had Latuda, this great organization in Fort Lee developing the product, but also needed a strong commercial organization to be able to launch that product. They looked at three different opportunities: build it out themselves, partner with a big pharmaceutical company – do a co-promote or something like that as a way to get into the marketplace – or merge or buy a company to expand. And, of course, we’re thrilled that they looked at Sepracor and subsequently purchased us.

Our strength in the commercial area is, I think, the major reason that they wanted to purchase us, and our research and development was very synergistic with what they were doing. We have CNS expertise both in the research area as well as development. We developed lurasidone, we’ve had several other CNS products in development. So, it turned out to be a great fit. Now, with the launch of Latuda, we have a tremendous opportunity to build a new company, Sunovion, and have a really strong presence in the U.S. In some ways, we’re a fully operational and integrated pharmaceutical company with research, development, commercial, everything right here in the United States, and then we have this wonderful backing support and resources from one of the strongest Japanese pharmaceutical companies that also has a great research and development pipeline.

Med Ad News: How have the corporate cultures of DSPA and Sepracor aligned?

Mark Iwicki: I think there’s a very nice influence. This is a very strong company in Japan, and what I’ve come to realize over my first year of being with the new organization is that as much as there are some cultural things that are a bit different, the language of business and of pharmaceuticals is so similar. And the way that DSP Japan has gone about its business was a great fit for how we do it here in the U.S. as well. The real focus is on the long-term vision for the company. They’re very committed to becoming a global organization. Back at Sepracor, that was one of our long-term visions. We were mostly a U.S.-focused organization and were in the process of developing our plans to decide how we wanted to expand globally.

Culturally, the first thing I look at is, are our business philosophies aligned? And they very much are. The second piece of that business philosophy is that DSP and Sepracor, now Sunovion, are both focused on differentiated, specialty-focused brands. Earlier in both companies’ life cycles we both had more of the marginally differentiated blockbuster profile of products, just like many big pharmaceutical companies had. For us it was the isomers, with Xopenex, Brovana, and Lunesta. For them, they had hypertension products and diabetes products.

They realized that the future is in the highly differentiated products and also moving toward higher unmet need areas. Those areas are not always the multi-billion dollar opportunities. It’s always good to have a couple like that in your portfolio, but also where there are the higher unmet needs, you have the chance to do great science and improve the lives of patients.

That’s the same strategy we were embarking on here at Sepracor. So, from a cultural standpoint, it’s been a great fit. We were both independently moving in the same direction toward the specialty-focused products. We ourselves had started to reorganize our own portfolio toward these areas, and so had DSP. And now together, we have a chance to get focused using both R&D pipelines and highlight those products we think will create the biggest differentiation and make the biggest benefit for patients.

We’ve had a great opportunity culturally to blend the best of both companies. They also have been very excited about learning the American way of doing business, and we’ve tried to reciprocate by doing the same thing, to learn the Japanese way of doing business. This is where we found there are way more similarities than there are differences, and they’ve enabled Sunovion to continue in large part to be run fully as an American organization. The vast majority of our management has a lot of American experience. Even our CEO, Saburo Hamanaka, was 35 years with Takeda, and a large part of his experience at Takeda – he started TAP and then started Takeda Pharmaceuticals in the U.S. – was helping Takeda start their U.S. businesses.

Its been very good for us, the way they’ve approached the U.S. market, and allowing us to run our business and grow, I would say in a very measured way, bringing our two companies together so that we both built on each other’s experiences rather than having to concede to one way of doing things or another.

Med Ad News: With that in mind, a very important part of career growth for executives is getting overseas experience. Will there be opportunity for some of your executives to work abroad in Japan or other global markets?

Mark Iwicki: Yeah, we’re really excited about that. In fact, we’ve already started to integrate some of our senior leaders in with the Japanese team. One of our top attorneys has gone over and will probably stay there for a year or longer. We’ve had several of the Japanese executives come over to our organization. Our head of R&D is Nobuhiko Tamura. He’s been in the U.S. for four years already. He was one of the people that started that R&D organization down in Fort Lee, N.J. I’ve mentioned already Saburo Hamanaka. We have three or four other Japanese leaders who are here, and we think there is more opportunity for our American leaders not only to go to Japan… I think the bigger opportunity actually is to start forming global teams. Global R&D teams, global business development teams are probably where we have the most synergy, and that gives a chance, rather than someone having to move from one country to the next, but the chance for us to work together and share learnings and become a much stronger team between the two organizations.

In the corporate development and licensing area, this is a big focus for the company. We very much want to continue to bring products into the pipeline. We’re active in all stages. We’re looking at research collaborations. We announced one a couple of weeks ago with SanBio. We’re very interested in Phase II assets and even look at Phase III oriented assets.

This has been right from the beginning a global effort. So, there are members from Japan, there are members from our Fort Lee R&D organization, and there are members from Sunovion here in headquarters. I think that has been one of our biggest successes so far, working together. That is creating more opportunities for these global teams to emerge.

Med Ad News: The intention has been stated to expand the Sunovion brand in certain strategic international locations. Can you elaborate on those plans at this time?

Mark Iwicki: Right now we have operations in China for DSP. And there’s a DSP operation in Europe right now. And we’re still, I’d say, working on a strategy, but the intent is to use Sunovion and our U.S. headquarters as a way to expand in Europe and South America. I think that’s where our global CEO and the board feel that the U.S. strength can be leveraged to expand in those markets.

Job number one for us is to make sure Latuda is successful. That we keep building our pipeline here, that we grow Latuda as quickly as we can. That will be the springboard, then, to start looking at Europe, South America, and other emerging markets as well. We of course are working hard to see if Latuda can be a viable product in other markets, and that activity is going on and can be a stepping stone for future expansion.

Med Ad News: Obviously a corporate brand is important on the customer-facing side. What does the launch process for the new corporate identity involve?

Mark Iwicki: One of the most exciting things was to create a new brand image for our new company, not only internally, which helps build a culture and spirit of starting something new – this really is a new company – but also for our customers, for them to understand that there is a new brand in the marketplace. For us to build new equity in that brand for what we stand for, our new launch of Latuda. We realized it was very important for us to do it before Latuda was approved, and we did it just in time. We thought that Latuda had a great chance for a first-cycle approval, and of course it did receive that first-cycle approval. About two weeks before that approval, we officially launched the name Sunovion – the strength of the sun and the power of human innovation.

We ran advertisements in Boston. We ran advertisements in the Newark Star Ledger. We’re going to run advertisements in trade journals and other publications. Our sales force is out there already. We have almost 1,200 sales reps. They’re out there now with materials about Sunovion, who are educating the physicians on our vision and what we want to do in the future as Sunovion.

And just to be really simplistic about it, there is nothing better than launching a new product. That gives us a great chance to launch the new product and new name at the same time. So, we’ll be working on that over the next six to nine months. We’re changing all of our packaging as we speak, and we’ll roll that out over the next year or so. We’ve rebranded all of our corporate headquarters. So far, I’d say it’s gone very nicely. Our employees are excited. We’ve had nice feedback from our thought leaders and customers. Our reps are excited to talk about the new company, the new culture. And of course the new approval.

Med Ad News: What are your personal priorities for the organization?

Mark Iwicki: Right now, first and foremost, we are doing everything we can to have a great launch for Latuda. We think the product is going to help millions of patients. We received a very strong label from FDA that is a good representation of all the hard clinical work that was done for the product. We had four trials that demonstrated efficacy for the product. We have a favorable safety and tolerability profile. So, the majority of the company right now is focused on doing a great job with the Latuda launch.

We of course have the rest of our six brands in the marketplace. Lunesta and Xopenex are our biggest brands. And then we have some brands that we launched over the last couple of years: Brovana, Omnaris, Alvesco. We’re focused on growing those brands as well. This is a chance for us to make a mark on the pharmaceutical industry with Latuda but also show what we can do with some of our other brands.

Right along with that comes the job of nurturing our new culture. When we think about our values, it’s doing the right thing for patients first, and it’s making sure we do the right thing for the company and for the employees. So, this has just been a great chance for all of the Sunovion employees to come together, build not only a new culture externally, but a great new spirit.

We try to do things a little bit differently at Sunovion. We launched a new commercial model in 2009. As you know, many pharmaceutical companies use mirrored sales forces where they send three or four reps into the same doctor about the same product. We broke from that. We think we were the first or among one of the first mid-sized to large companies to break away from that model, recognizing that it was a bit outdated.

We have single accountability for our brands with our reps that inspired our company, starting in the beginning of 2009. Our performance on key brands actually improved. We reduced the number of multiple reps selling a brand, improved our performance, and that put wind in the sails for Sepracor and now for Sunovion.

This is a great chance for us to keep building the spirit with our employees. Just bringing the company together has created a lot of development opportunities.

Do a great job launching Latuda, manage our business, and take care of our employees and build this great new company together: those are the things I focus on the most.

In the past, healthcare has followed consumer-marketing trends. Although the only major healthcare recall headliner so far in 2010 has been Johnson & Johnson/McNeil Consumer Healthcare’s massive recall of OTC drugs including Tylenol, Motrin, and St. Joseph’s aspirin because of a moldy smell that made people ill, there has also been the banning of Abbott Laboratories‘ controversial obesity drug Reductil across Europe due to cardiovascular safety concerns; Nipro Medical Corp.’s voluntary recall of All GlucoPro Insulin Syringes; the Class I recall of ev3 Endovascular Inc.’s Trailblazer Support Catheter; and BD’s worldwide voluntary recall of BD Q-Syte Luer Access Devices and BD Nexiva Closed IV Catheter Systems.

So, being the marketing-minded pharma gal that I am, of course, my first question was: ‘Where are all the pharmaceutical recall incentives?’

The Med Ad News Insider corresponded with Rob Peters, VP, professional strategy, MicroMass Communications Inc., and Nancy Drescher, VP, account director, AbelsonTaylor, to glean healthcare ad agency insight into the idea of pharmaceutical recall incentives.

According to Mr. Peters, with increased publicity on product recalls — whether in consumer goods or pharmaceuticals — the question of whether competitors can use the situation exists.

In the pharmaceutical industry, this has already been occurring, though in a much less visible way than the GM example, he says. In most cases, short-term gains may be possible, but those often come at the expense of higher scrutiny on remaining products and more difficult market entry for developmental compounds.

There are several reasons why branded products disappear from the market. Usually this is the result of patent expiry or a withdrawal related to a negative event or safety concern. When something like this happens, remaining market competitors may be able to use the situation to their advantage. Mr. Peters believes as a result of the complexity of FDA and regulatory issues, however, competitors can not usually adapt quickly enough to take advantage of the immediate situation, but can change strategy to accommodate the new market dynamic that evolves in the wake of the withdrawal.

Competitors faced with this opportunity have to assess whether there are actions they can take, or whether they should let market forces work on their own. If the withdrawal of a product results in a small market with little competition, remaining players may choose to stay the course.

“For example, when Novartis’s Zelnorm was taken off the market, Takeda’s Amitiza was suddenly the biggest branded player in the IBS market,” Mr. Peters told the Med Ad News Insider. “Since HCPs and patients had few other options, Takeda let market forces turn the tide rather than to respond.”

On the other hand, he says, if a highly competitive market remains, a company may react by shifting the messaging to focus on other competitors to establish its points of differentiation. In some cases, this may necessitate a company’s distancing itself from any perceived class effects before differentiating.

“When Vioxx was pulled from the market, for example, the response from Celebrex was not to also pull its product from the market, but to stop promotion, ride it out, and then come back with stronger language around the appropriate patients and the safety concerns for Celebrex,” Mr. Peters says.

In a similar manner, when the statin Baycol was taken off the market in 2001, safety became a more sensitive issue for competitors, and as a result, a point of differentiation in promotion. This was beneficial for in-market products, but made entry of later competitors like Crestor more difficult.

In certain cases, regulatory bodies play a key role in opening opportunities for potential gain. Recently, Genzyme’s manufacturing problems with Cerezyme prompted FDA to ask Shire and Protalix to submit new drug applications for their experimental drugs so that physicians could use them before formal approval. Shire and Protalix will likely benefit from that action, but there is nothing they themselves can initiate.

Patent expiry presents another interesting opportunity for companies to profit from a branded product leaving the market. In these situations, branded companies may choose to enter into a supplier partnership with a generic company and provide product in return for a greatly reduced, but enduring, profit. One example of this may be seen in a current online campaign by Merck in the hypertension market.

“The campaign is aimed at informing HCPs about the impending generic form of Cozaar, however, the campaign includes a message recommending that patients be put on branded product so that they can continue uninterrupted use of the drug—and at a lower price—once generics are available this spring,” Mr. Peters says.

Two possibilities exist for this strategy: 1) Merck may be trying to head off another drug from that class that goes generic a few months before they do,or 2) the company may have an agreement with a generic supplier to manufacture its drug.

Ms. Drescher says there have been examples of products and companies in the pharmaceutical space benefiting from the misfortune of competitors. The actions taken in response to the negative press associated with pharmaceutical brands, however, have typically come from other players in the space versus the pharmaceutical companies themselves.

“The most recent analog that best mirrors this example is the failure of Vytorin/Zetia to affect atherosclerosis progression by failing to slow the growth of plaque in the carotid arteries in the ENHANCE trial,” Ms. Drescher explains.

Soon after, Vytorin/Zetia suffered another blow when the SEAS trial delivered disappointing results. Not only did the brand fail to affect outcomes in aortic stenosis patients, there was an observed increase in the risk of cancer.

“Physicians were quick to turn to generic simvastatin as a result,” Ms. Drescher says. “Astra Zeneca’s Crestor also benefited as the product was already indicated for the treatment of atherosclerosis and had just demonstrated an impact on cardiovascular outcomes in the JUPITER trial. Managed care companies were additionally quick to promote the lower cost — and lower co-pay — alternative simvastatin directly to patients in their plans taking Vytorin and Zetia.

Ms. Drescher cites an example that dates back to the ’90s, which took place in the highly competitive antihistamine market. Claritin had been held up for review for several years with FDA. With Seldane on the market and Hismanal already under review, FDA viewed Claritin as a me-too drug. It was classified as a low priority review, calling into question its efficacy — which was slightly better than placebo — and safety — concern with increased liver tumors in animals — given the two other nonsedating alternatives.

When serious cardiovascular adverse events were reported with Seldane, FDA required Dear Doctor letters to be issued regarding its impact on QT interval prolongation and ventricular arrythmias. As the number of incidences increased, FDA updated the Seldane and Hismanal labels and required their promotions and packaging to include a black box warning. In addition, the agency recognized the benefit of having an alternate safe, nonsedating antihistamine on the market, and approved Claritin not long after.

“Given the negative publicity around Seldane and Hismanal, physicians and patients turned to Claritin and it quickly became the market leader,” Ms. Drescher says.

In both cases, other forces — whether physician, patient, managed care or FDA — were responsible for pushing a competitive brand, she says. In the case of branded competitors, the pharmaceutical companies used promotions and messaging to reinforce their brand benefits, but the push, and desire, for an alternate choice was already in play.

“In the case of generics, managed care organizations typically have the most to gain from a move to a generic competitor, so they tend employ aggressive marketing tactics to generate a switch,” Ms. Drescher says.

OneKey is a telephone-verified database that provides customers with healthcare practitioner and organization data including affiliations for group practices and hospitals. Following the acquisition, the OneKey service will now also allow customers to benefit from updates by SK&A research associates who make 6,000 telephone calls each day verifying and maintaining healthcare data.

“Customers will receive a strong combination of access to high-quality data with continual proactive updates to the data,” says Bill Buzzeo, VP and general manager for compliance and OneKey Solutions, Cegedim Dendrite.

According to Mr. Buzzeo, SK&A has stood out from its competitors as the only U.S. data provider to pharmaceutical companies that uses this type of model.

“It is generally recognized that between 15% and 18% of healthcare professionals will change locations in a 12-month period,” Mr. Buzzeo told Med Ad News. “By adding SK&A’s healthcare contact and site data and unique, proactive methodology utilized to ensure the high quality of this data, Cegedim Dendrite has a strong complement to our existing U.S. OneKey service offerings, further solidifying our customers’ effectiveness in the market.”

Founded 26 years ago, SK&A researches and maintains contact profiling information for more than 2 million healthcare practitioners, including 800,000-plus prescribers. Executives believe that the integration into the Cegedim Group will enable SK&A to significantly expand its market opportunity within the life sciences industry.

The newly acquired company will be commercially branded as SK&A, A Cegedim Company, and will be integrated into Cegedim Dendrite’s OneKey business unit. Dave Escalante, SK&A’s current president and CEO, will continue to lead the unit. SK&A will maintain its current operations headquartered in Irvine, Calif.

“Based on the opportunities and business plans ahead, we don’t anticipate any major or large scale changes to the number of staff,” Mr. Buzzeo told Med Ad News. “However, as with all companies, certain limited actions may occur to avoid duplication of roles as the business landscape changes and the operations of the two companies become integrated.”

The deal was finalized Jan. 7, 2010 by internal financing. These activities represent annual revenue of about $15 million and will be part of the consolidation scope of Cegedim Group for 2010.

As future business leaders, today’s children are primed to work and collaborate in a real-time, 3D virtual setting. ProtonMedia is laying the groundwork for that future as the developer of ProtoSphere, a virtual social environment in which users’ computer avatars can meet for online teaming and collaboration. ProtonMedia’s customers include such life sciences companies as AstraZeneca, Johnson & Johnson, and Merck.

Although Ms. Kittrel acknowledged that as of now, interest in the possibilities of virtual collaboration far outstrips actual adoption, as her examples demonstrate, for the next generation of life sciences CEOs, researchers, and sales people, a second life will be second nature.

Microsoft’s Sam Batterman, who goes by the title “business intelligence evangelist,” spoke today about how these virtual collaboration environments function as far more than just the “N” drive on a company’s network. For example, in addition to document and application sharing, ProtoSphere provides the tools teams need to collaborate socially online, including holographic virtual spaces with interactive avatars and bots, VoIP audio conferencing, text chat, presence awareness, video streaming, blogs, wikis, feeds, role-playing simulations, content workflow, and enterprise social networking. For the life sciences industry, Mr.  Batterman suggests uses such as constructing virtual data rooms, a chemistry plaza, or innovation and ideation networks.

The big question is, why do all this in a virtual environment? Why transform the collaboration companies do every day into a massively multiplayer online role-playing corporation? The answer, according to panelist and ProtonMedia CEO Ronald J. Burns, is that in a virtual collaboration environment, it’s not just the charts and graphs and documents housed in the online environment that have value; the avatars themselves have value. The skills and expertise held by the real-world personalities behind the avatars are available and accessible.

But that’s not the only reason, according to panelist Tony O’Driscoll, a professor of the Practice of Business Administration at Duke University. He believes that virtual collaboration online represents the third generation of the Web, the point where the user is enveloped within the content.

The author of Learning in 3D: Adding a New Dimension to Enterprise Learning and Collaboration, Mr. O’Driscoll highlights the value of learning in 3D environments with the equation I x I = E. That is, Interactivity times Immersion equals Engagement. His research has found that bringing people together in virtual learning environments can have a positive impact on the learner’s engagement with the material. According to Mr. O’Driscoll, learning leadership is not only possible in the virtual environment, it’s an ideal venue in which to do so.

In the gaming world, roles change quickly and decisions must be made rapidly, on the fly. Gamers must assimilate numerous sources of input to develop strategies and put plays into action. The gamer must then quickly develop new skills in order to advance through the game. The same principles of learning, advancement, and reward can be transferred to the business world, according to the proponents of virtual 3D collaboration technology.

Before virtual collaborations can gain traction in the business world, however, a critical mass will need to be reached of senior leaders ready to adapt to new technology, according to panelist Tom Kaney, managing partner, MKP Partners.

It may just be a matter of time. Today’s 13-year-old 7^th level mage fighting orcs in Azeroth is tomorrow’s pharmaceutical sales rep or oncology researcher. She’ll be ready to bring the power of virtual collaboration to the workplace, if companies like ProtonMedia don’t succeed in getting there first.

Although there is guarded optimism all around, Mr. Butler believes that we can expect any shock to the system to cause major trauma. “Perhaps if ee get through the next several months we will do okay,” he says. “There are a lot of IPO discussions ongoing among some really good-quality companies. If they are priced right, they should perform well and enable other companies to possibly do the same.”

Right now, liquidity remains the No. 1 issue. Poor liquidity is forcing short-term actions that otherwise would not occur, according to Mr. Butler. “We cannot fault that, as firms need to preserve and make difficult decisions even though good companies and technologies will get squeezed out of existence,” he says. “Long term, I would say most believe we come through in good shape but leaner. The industry will employ fewer as fewer companies are started.”

The conference saw quite a bit of offshore presence, and according to Mr. Butler, there seems to be money looking to invest in U.S. technology and expertise. He speculates that this may help fill part of the liquidity void.

“All in all it was a solid, well-attended event and the best harbinger of the current state of the industry,” Mr. Butler reports.

In his previous update, Mr. Butler reported good spirits among the attendees. However, there seems to be an East Coast/West Coast divide.

“The West Coast people seem much less upbeat while the East Coast is acting more positive,” Mr. Butler says. “One East Coaster called the attitude ‘cautiously optimistic’ while a few Westerners said things are slow. My bet is that the advantage of having big companies out East is an edge that will be exploited.”

Meanwhile, the Midwest companies seem strongest of all. Mr. Butler speculates that it’s their conservative style playing to their advantage.

Additionally, Mr. Butler has seen signs of hiring among companies such as Cardinal Health, Covidien, and even some smaller players. “It’s not a lot, but it’s like Spring with the first sign of good weather returning after winter,” he says.

Mr. Butler has spoken with a few deal makers who admitted they have had one of their best years in 2009. “That means deals were done,” Mr. Butler reports. “These weren’t ‘junk’ deals either, and they confided they are still busy.”

Upon arriving yesterday, January 11, Mr. Butler reported that the event was in full swing with a good crowd as expected. Many deal makers are in attendance and seem in good spirits.

“Morale is pretty high,” Mr. Butler says. “Many need money, but either they are less worried or they have come to accept events.”

Last night the conference gave way to the usual parties and receptions. Spirits remained high with the money guys.

“If they are sincere, we should see a slew of financing announcements in the coming weeks or months,” Mr. Butler reports. “If not, it will be a sure signal that all is not well. And these were game faces.”

Back on the conference floor this morning, Mr. Butler reports that while companies are still looking for money, a number are getting traction with big pharma. Whether that results in funding remains to be seen.

“I sense there has finally been some solid thinking about the future, dealing with healthcare reform and lack of pipelines, such that the themes discussed are different and better focused,” Mr. Butler says. “Cardinal’s CEO is presenting some thoughts on their new paradigm. Also, the genetic diagnostics sector is gaining momentum and a ‘legitamacy’ I don’t think they’ve had in the past.”

Venture continues to look for less risk without surrendering their upside. Mr. Butler wonders whether the venture model will go through a major change. “They may need to since their old approach may not enable them to deliver expected returns in today’s world,” he says.

Stay tuned for additional updates as the event progresses.

As we don’t yet know what that final compromise will look like, it remains unclear precisely how healthcare reform will affect the pharmaceutical industry. What is clear, however, is change is coming to the landscape in which pharmaceutical companies must operate, a landscape defined by the myriad challenges that pharmaceutical executives are struggling to resolve. These challenges include a drop in R&D productivity; a new, vocal group of stakeholders who are driving change; and the promise of high-quality, accessible products and treatments.

Whatever form healthcare reform takes, it will force most midsize and big pharma companies to modify their long-term strategy, says Gary Gabrielsen, VP, business development, Astellas Pharma US Inc.

“Whether it’s good or bad, it’s inevitable healthcare reform is going to occur to some extent,” Mr. Gabrielsen says. “We just have to make sure that we, as an industry, are flexible and can adjust with whatever the outcome is.”

As the government looks to control healthcare costs, increased importance will be placed on preventative medicine. Mr. Gabrielsen believes that preventative medicine will continue to be a focus for the industry and presents a major opportunity.

“It’s certainly more cost effective to utilize a pharmaceutical product effectively and safely than it is to not use it or use it incorrectly and wind up with increased morbidity and mortality and increased hospitalization,” Mr Gabrielsen says. “While many products are focused on symptom management, more are focused on disease management and modification, which really is preventative medicine.”

Healthcare reform will spur a fairly substantial change in how a new commercial model is defined in the marketplace, according to Terry Hisey, vice chairman, U.S. life sciences leader, Deloitte LLP. The inevitable changes in reimbursement and insurance companies will affect the way the industry engages with private payers and government.

Funding for healthcare reform will likely result in a higher tax burden for pharmaceutical manufacturers, according to Michael Swanick, global pharmaceutical and life sciences tax leader, PricewaterhouseCoopers. “Somehow this healthcare reform has to be funded,” Mr. Swanick says. “So you see the administration and the government, particularly in this country, looking to raise revenue and drive up taxes, and we think that trend could continue. We’ve got a request for more coverage and better quality coverage in this sector. Those things come with a cost, and nobody wants to pay for it. We’ve got a nation that doesn’t want to have their taxes increase. That seems like you’re going to find yourself migrating toward the corporate taxes.”

John Doyle, practice leader, managed markets, Quintiles Consulting, suggests the industry sharpen its focus on three platforms: expand access, focus stakeholders on value, and catalyze health information technology.

“These three platforms have the potential to propel and transform the biopharmaceutical companies into a leaner, more innovative industry,” Mr. Doyle says.

Similar to when the Medicare Part D benefit went into effect in 2006, the anticipated extension of healthcare insurance to an additional 45 million people in the United States will represent an expanded customer pool for biopharma companies. Mr. Doyle believes that these new patients will amplify the economic pressure on public and private payers, who in turn will scrutinize budgets in the hope of controlling costs.

“Drugs will of course be caught in the cross-hairs, but this time the second paradigm shift to healthcare value will change the nature of the economic exercise,” Mr. Doyle says.

Unlike Medicare and Medicaid, which added primarily older and less healthy new participants to the system, the version of healthcare reform now making its way through Congress will add millions of participants from every social and demographic segment. Kelly Andrews, director, strategic marketing, MicroMass Communications, says this will present a host of new opportunities for savvy marketers.

“With a huge population of younger citizens insured, pharma’s traditional ways of reaching primarily older audiences will need to be adapted to reach a more diverse audience,” Ms. Andrews says. “Many in this younger group shun traditional media channels and approaches, making it necessary to meet them where they are with messages that reflect the reality of their experiences.”

Because younger audiences have a different relationship with the healthcare system in general, and with physicians in particular, pharmaceutical marketers will also need to employ different educational approaches to get them actively involved in their healthcare. According to Ms. Andrews, all of these changes will necessitate a change in how healthcare communications are conceived and executed.

The influx of previously uncovered patients into the healthcare system will also bring certain challenges to marketers in terms of the nature of the patient pool. “In many cases, such as with inner-city poor, there’s ethnicity and language issues that would have to be dealt with and overcome,” says Matt Giegerich, president & CEO of CommonHealth.

Having millions of previously uninsured Americans eligible for reimbursement of medical and pharmaceutical care will increase the demand for prescription products, but will also likely be accompanied by strong influences to restrict branded prescription drug use in favor of generics for patients in government-backed plans.

“Payers will successfully use prior authorizations, step edits, increased co-pay amounts, and other techniques to convert branded prescriptions to generics, and physicians, pharmacists, patients, and caregivers will become increasingly more aware of the specific costs of different prescription medications,” says Jay Bolling, president, Roska Healthcare Advertising. “The need for pharmaceutical companies to show a distinct ‘value’ of every branded prescription will increase, and the need for ‘added-value’ services, resources, and support will be critical components of the 2010 marketing mix. The availability of patient support programs, co-pay discounts, easy access to disease/product information (e.g., mobile delivery) and disease management tools/resources will also make it more and more important to differentiate prescription brands and justify the additional patient investment versus lower-priced alternatives.”

Lynn O’Connor Vos, CEO of ghg, acknowledges that healthcare reform will bring pressures for more generic usage, but she believes that there are also people who are appropriate for branded products who have not been treated before or been treated intermittently. “With them actually having access to coverage, it can only benefit us,” Ms. O’Connor Vos says. “That being said, the industry will change, and as it changes it will still be a great business. It just won’t be the same model we had before.”

As the healthcare debate progresses, Mark Armstrong, partner with Epstein Becker Green, notes three key areas to watch for activity. “I would not be surprised if there were some discounts that were given during the coverage gap or the donut hole in Medicare Part D,” Mr. Armstrong says. “I wouldn’t be surprised if there were some increased rebates that were directed toward the Medicaid program, both for the brand name drugs and the generic drugs. And there may be provisions that would pass giving the government greater enforcement opportunities in fraud, waste, and abuse as it pertains to healthcare providers, including pharmaceutical manufacturers.”

Clearly, drug prices are not the only target when it comes to lowering costs. The Obama administration is already making efforts to seek other cost reductions in healthcare, and those efforts will accelerate in 2010, according to Jay Carter, senior VP, director of client services, AbelsonTaylor Inc.

“Recent discussions about the need for mammography and pap smears are just the opening salvos in a debate about how much healthcare Americans need to consume,” Mr. Carter says. “The debate will be heated, politically charged, and arduous. In the end, cost reductions will be achieved at the expense of some patients who will get less care than they do today.”

Not everyone is as negative. Ms. O’Connor Vos notes that healthcare reform is starting to take the shape of health insurance reform. “If the Obama administration had started out describing it that way, it probably wouldn’t have had such huge public backlash,” she says. “But without really knowing exactly what’s going to happen or if it’s going to fully go through, being the ultimate optimist and bullish on the fact that healthcare is always going to be a great business, I’ve got to believe that the influx of patients who haven’t been insured will benefit the industry.”

Mr. Doyle believes that instead of a simple analysis of price, putting the focus on value may bring a new era of value-based coverage and reimbursement. “Similar to the European Union, a wave of new evidence requirements for market access will originate in the public sector and cascade to the private sector,” Mr. Doyle says.

According to Mr. Doyle, the expected investment in health information technology that will likely come from healthcare reform will expand the collection, analysis, reporting, and, ultimately, the harmonization of patient-level data.

“These data can be used to evaluate patient populations to optimize the risk-benefit and cost-benefit profile of biopharmaceutical products – in essence, allow patients to receive a medicine that has the greatest benefit and value,” Mr. Doyle says. “As companies adapt this downstream target earlier in drug development, they will improve their efficiency and effectiveness of their business model.”

The healthcare reform debate has revealed interesting shifts in the allies of the pharmaceutical industry. According to Roderick Cavin, managing director, Health Strategies Group, commercial payers are becoming important not only for drug product access, but also as partners in the development of market-based solutions to healthcare delivery at a time when government-based solutions are gaining more visibility.

“At the same time, the gap is widening between the goals of the pharmaceutical industry and the physician community,” Mr. Roderick says. “This is evidenced by the decline in physician influence in drug treatment decisions and the competition for healthcare dollars playing out in Medicare and Medicaid debates about physician fee schedules and drug pricing. The challenge for the pharmaceutical industry is how to partner with commercial payers on healthcare delivery changes – and thereby avoid draconian government solutions – while retaining physician support, which is essential to drug market growth.”

Although predicting how healthcare reform will affect people, the industry, and marketers is a difficult task, one thing is clear. The issue is a major topic of discussion across the social media universe.

“Blogs and micromedia, things such as Twitter, tend to show the most activity with posts and replies – with the mainstream media sites providing only a fraction of the ongoing conversation,” says Ken Johns, senior VP, strategy and planning, Brunner, a full-service advertising agency. “While it might be a while before the impact of the reform on the country and the industry is known, the impact in the social media space is fairly large right now and something to keep an eye on.”

Yesterday, PricewaterhouseCoopers announced a new report called “Pharma 2020: Taxing times ahead – Which path will you take?”, which looks at the forces that are driving up the effective tax rate for pharmaceutical and life sciences companies. The company calculated the effective tax rate of the top pharmaceutical and life sciences companies and found significant differences, which may make the industry as a whole or sub-sectors of it a likely target for increased taxes.

The report identifies several market forces making tax issues more complex. For one, the global recession has made tax authorities hungry for new revenue sources to overcome growing budget deficits and potential new costs associated with healthcare reform initiatives. As a result, they are focused on the use of tax havens that allow multinational organizations to move profits offshore.

Second, drug and device makers are shifting from a purely product-centric focus to a service model aimed at improved patient outcomes and prevention or cure, versus ongoing treatment, of disease. Pharmaceutical and life sciences companies not only could face new and higher taxes as a service provider, but they will have less ability to allocate profits to lower-tax rate locations.

Third, the need to fill the shrinking drug pipeline has fueled a resurgence in mergers and acquisitions, in-licensing arrangements, and formation of partnerships and joint ventures, which all come with significant tax implications, depending on how a company accounts for acquisition-related items, structures royalty payments, and shares profits and losses among different legal entities and locations.

Fourth, pharmaceutical and life sciences companies are interested in locating intellectual property development in areas that offer economic and tax incentives and to expand their presence in emerging markets that promise growth potential. International competition is intensifying to attract new investment by pharmaceutical and life sciences companies, particularly from emerging markets, such as China. According to PricewaterhouseCoopers, this trend may drive profit growth to the East, but companies will need to balance increased income with higher tax rates and potential price controls.

As part of PwC’s Pharma 2020 series examining key forces reshaping the pharmaceutical marketplace, this latest report looks at trends projecting out over the next decade. I’m in the process of preparing my Agenda 2010 feature for the January issue of Med Ad News, so I spoke with Michael Swanick, PwC’s global pharmaceutical and life sciences tax leader, to learn more about the tax trends that will affect the industry with a particular focus on some of the shorter-term implications. My conversation with Mr. Swanick follows.

Med Ad News: What particular trends will have tax implications for the industry heading into 2010?

Michael Swanick: One of the challenging issues in the short term is the combination of the economic crisis, at least in this jurisdiction, and healthcare reform. It begs the question about financing and funding those reforms.

We’re seeing it clearly in some of the examples that are coming through Washington as we speak, and we think that collectively, it probably translates into higher taxes for companies in this sector. It almost seems to us inevitable. Somehow this healthcare reform has to be funded, and they’re going to anyplace they can, to be honest with you. It seems that policy has been shelved, and everything is focused on where can we get revenue to fund these healthcare reforms.

We’re seeing it in some of the proposals where you’ve got specific taxes on the pharma companies and the medical device companies that they’ve been tagged to fund, in the case of pharma, something like $2.5 billion a year, and the medical device those numbers are around $2+ billion that they’ve been hit with. Excise taxes and things like that. And you saw it with some proposals on insurance plans, where you have these Cadillac plans where they’re being hit with taxes if the plans are too rich.

So you see the administration and the government, particularly in this country, looking to raise revenue and drive up taxes, and we think that trend could continue. We’ve got a request for more coverage and better quality coverage in this sector. Those things come with a cost, and nobody wants to pay for it. We’ve got a nation that doesn’t want to have their taxes increase. That seems like you’re going to find yourself migrating toward the corporate taxes.

Med Ad News: Is this trend across industries, or is it unique to pharma?

Michael Swanick: To answer your first question, the legislation that’s being proposed does not necessarily, in general, focus on pharma and life science companies. It’s changes to our tax code that will capture all corporate groups. With one exception I mentioned: they specifically targeted pharma and life sciences companies for those specific taxes to fund a portion of the revenue in there. So that’s one exception to what I just said.

The other thing that becomes particularly challenging if not punitive for the pharma and life science companies is that these companies, particularly the large corporate groups, tend to be very international, and the biggest fund-raising piece of the proposal are focused on international provisions, which will impact this sector the most.

So, it’s going to affect all big companies and international companies, but given that most of the major pharma companies are international, they’re going to feel the pain particularly because they’re doing business overseas and some of the biggest revenue raisers are focused on that structure. That is, companies that are doing business that have a lot of earnings and profits off shore, and what the administration is trying to get at is, if you’re going to leave the money off shore, we’re going to tweak our tax code to defer some of your expenses until you repatriate that money to the U.S. And that will particularly hit the multi-national groups, including the pharma companies.

Med Ad News: Are the smaller specialty and emerging companies more insulated from tax increases?

Michael Swanick: I would say so. I would say the smaller, wholly domestic companies. We’re seeing some proposals in the R&D, for example. I think they created a special R&D credit for small start ups who have less than 250 employees and things like that. The administration is still trying to be benign and helpful to these companies to promote growth, to increase investment and intellectual property here in the U.S. So from that perspective, they are probably a little bit protected from some of these big revenue-raising provisions.

The other point too that’s worthy of mention is that you just got an administration in Washington, you have the G20 group that’s very focused on this concept of tax havens. It seems that a lot of the governments are very concerned about the use of low-tax jurisdictions. That includes countries that the pharma company invests heavily in. They’re taking advantage of the environment in Ireland, Singapore, and Puerto Rico and places like that. It’s not clear and there’s not consensus among all those governing bodies and leaders as to what’s a tax haven, but it seems that anybody that has a low rate is being characterized as a tax haven.

So, for example, we’ve seen such traditional countries like Switzerland and Ireland being tagged in some lists as tax havens. Those are very normal and traditional countries that the pharma companies have operated in that have been flagged, so there’s a lot of concern about whether they’ll continue to be included in that group, and if so, what does that mean from a corporate, commercial, and tax perspective.

Med Ad News: In terms of what the industry can do about all this, your report lays out some suggestions, but in terms of timing, are these things that should be thought about in the short term? Or are they more longer-term fixes?

Michael Swanick: As we speak, most of the corporate groups are very concerned about the trend in the administration and the policy and proposals on taxes at the moment. And very concerned meaning that they are trying to do a lot about it. Number one, they have their people studying the proposals very hard and quantifying the impact on their taxes and in general their income statements and financials, etc. Which is a logical reaction. But they’re maybe more proactive than they historically have been in terms of communicating the impact of these proposals to their representatives in Congress in trying to make a compelling argument about competition and leveling the playing field.

On that latter point, I would say the argument is that their competitors, i.e. the Swiss pharmas, UK pharmas, and a number of other non-U.S. based pharmaceutical companies have a much more benign tax regime to oversee the taxation of overseas profits, for example. It seems the U.S. is probably saying, if you’re going to keep your profits offshore, we’re going to penalize you by up ticking your taxes a little bit by deferring these taxes. So therefore you might say the effort of lobbying and communication and communicating with the representatives has escalated to a great degree. That’s something we’re seeing a lot.

Then, thirdly, they’re asking themselves, maybe they need to change the way they’re doing business. The historical, let’s manufacture offshore and then sell into the U.S. model with the blockbuster driving a lot of the profits there might need to change. And if the blockbuster model is expiring and there’s this escalation of personalized medicine, these companies are probably saying we need to abandon the historical model of operating and move toward a change.

There is a holistic look at where do we want to do our R&D, where do we want to own our IP, how do we get closer to the market. How do we service in this personalized medicine arena better than we’ve historically done? What we’re seeing is corporations reassessing the way they structure themselves, what’s their strategy for everything from R&D to sales and marketing to their ownership structure. And knowing that change is coming and they have to be out in front and planning for it.

Med Ad News: These efforts they’re undertaking, is it important for them to publicize the fact that they are making these changes to prevent the fear among their shareholders that a report like yours might generate?

Michael Swanick: That’s interesting you say that, because there is a lot of discussion in the financial realm about disclosure. Everybody is trying to be more transparent and avoid the surprise, particularly to their shareholders. And we have seen disclosures and some financial statements about the proposed legislation in Washington clearly just as a heads up, if you will, to give their shareholders and investors an upfront notification that if this is enacted, it could have a pretty negative impact on the bottom line vis a vis increased taxes. But I haven’t seen any requirement to do so other than just good financial reporting standards. But I don’t know that we’ve seen any U.S. GAAP changes or anything that would require such disclosures. But good governance folks are looking at it and asking themselves, is this impactful to such an extent that we should disclose it to our shareholders?

But that’s kind of like the proposed Washington legislation. In terms of the planning and anticipation that corporations are doing, perhaps in anticipation of these changes, I don’t think we’re seeing anything in that regard. Corporations are just doing their work and trying to handicapping the likelihood of passage of some of this legislation.

Currently, Relenza, marketed by GlaxoSmithKline, is approved to treat acute uncomplicated illnesses due to influenza in adults and children 7 years old and older who have been symptomatic for less than two days, and for the prevention of influenza in adults and children 5 years old and older. Tamiflu, marketed by Roche, is approved for the treatment and prevention of influenza in patients 1 year old and older.

The Emergency Use Authorizations allow for Tamiflu also to be used to treat and prevent influenza in children under 1 year old, and to provide alternative dosing recommendations for children older than 1 year old. In addition, under the Emergency Use Authorizations, both medications may be distributed to large segments of the population without complying with the label requirements otherwise applicable to dispensed drugs, and accompanied by written information pertaining to the emergency use. They may also be distributed by a broader range of healthcare workers, including some public health officials and volunteers, in accordance with applicable state and local laws and/or public health emergency responses.

These temporary extensions of the indication will terminate when the emergency no longer exists.

GlaxoSmithKline has received orders from several governments aiming to stockpile a new candidate A (H1N1) adjuvanted influenza vaccine as a precautionary measure. The company will manufacture the new vaccine once virus seed is made available by the World Health Organization. The first doses of the vaccine are expected to be available four to six months later, subject to regulatory approval. Since the outbreak, the company has been in continuous discussions with governments and public health authorities to help develop appropriate options to respond to the emergence of the new A (H1N1) influenza strain.

In May, the World Health Organization requested deployment of the “Rapid Response Stockpile,” which includes the 2 million treatment courses held by the WHO and the 3 million treatment course rapid response stockpile held by Roche. The stockpile is being deployed to countries in need at the discretion of WHO.

In addition, Roche is continuing to maximize manufacturing output of Tamiflu to meet the growing demand. Roche ramped up Tamiflu output at multiple points in the supply chain, and production ramp up will continue over time resulting in a continuous and increasing flow of Tamiflu.

According to analysts with research company Datamonitor, during the last five years governments around the world have invested significant amounts of money in establishing emergency stockpiles. The United States alone has built up a supply of 50 million courses of antiviral medicine on a federal level and a further 22 million courses on a state level. Datamonitor analysts believe that while even these amounts are not sufficient to protect the entire population, they should have a significant impact on protecting people working on the front line of a pandemic, such as healthcare workers, thereby limiting the spread.

In response to a National Institutes of Health request for assistance in combating the outbreak of swine flu, Blue Heron Biotechnology Inc. managed to deliver a synthetic DNA gene sequence in just three days.

“We were able to draw on our 10 years of gene synthesis expertise to come up with an approach to deliver this critical research tool to the NIH in far less time than usual” says John Mulligan, Blue Heron’s chief scientific officer. The synthesized gene was part of the H1N1 virus and was delivered using Blue Heron’s proprietary GeneMaker gene synthesis platform.

BioSante Pharmaceuticals Inc. plans to conduct additional pre-clinical studies to confirm its vaccine adjuvant, BioVant, can increase the efficacy of flu vaccines, including a potential new H1N1 swine flu vaccine. Previously presented BioSante data from three BioVant-adjuvanted flu vaccine pre-clinical studies using the M1 protein, H1N1 (similar to today’s swine flu), H3N1, and H5N1 antigens showed that BioVant effectively delivered flu vaccines while also enhancing the body’s natural immune responses to flu virus antigens, including the potentially pandemic swine flu.

Juvaris BioTherapeutics Inc. announced results demonstrating that its universal influenza vaccine produces robust antibody responses and complete protection in H1N1 and H3N2 pre-clinical challenge models. A universal vaccine would protect against both epidemic virus strains mismatched with the annual seasonal vaccine and new pandemic threats like the H1N1 swine flu and could be stockpiled. Juvaris’ universal flu vaccine is composed of conserved antigenic epitopes for both influenza A and B strains combined with its proprietary adjuvant, JVRS-100.

Vical Inc. has entered into a Cooperative Research and Development Agreement with the U.S. Naval Medical Research Center, a biomedical research organization within the U.S. Navy, for the expedited development of a vaccine against the H1N1 strain of influenza virus. The goal of the collaborative development program is to rapidly advance a Vaxfectin-formulated H1N1 DNA vaccine into clinical testing as quickly as possible. Vical would be responsible for securing regulatory approval of the vaccine for use in the United States and other countries.

Sinovac Biotech Ltd., a developer and provider of vaccines in China, has initiated preparatory activities for the development of a vaccine for swine flu. Sinovac has contacted various Chinese government authorities and other global health organizations in order to closely monitor the disease and evaluate strategies to control and prevent its transmission.

In 2008, following the receipt of a Chinese government grant, Sinovac expanded its annual manufacturing capacity for its pandemic influenza vaccine, Panflu, to 20 million doses. These facilities can also be used in the development of a swine flu vaccine. In April 2008, Sinovac received SFDA approval to produce Panflu. The approval of Panflu in China followed a fast track regulatory approval process.

Scientists at Baylor Institute for Immunology Research received a renewal of a multi-million dollar grant from the National Institutes of Health to design new vaccines to prevent influenza, including swine flu. The grant will also help BRI develop advanced technologies that could be used for early detection of many other diseases, such as cancer, autoimmune diseases, and infectious diseases.

Canopus BioPharma Inc. has commissioned a team of experts led by Dr. Akihiro Shimosaka, to assist with its plans for major collaborations to license, manufacture, and distribute its H1N1 swine flu statin antiviral. This team is in negotiations with the Office of Disease Control and Emergency Response, the CDC ,and the SFDA in China with a view to initiating large scale clinical trials and gaining marketing approval on behalf of Canopus BioPharma.

Canopus has patented and developed novel aerosol formulations of the widely used cholesterol lowering drugs statins, which Canopus has proved effective against all previous pandemic strains of influenza. The objective of Canopus’ newly appointed scientific and commercial panel is to launch aerosol statin formulations as viable antiviral medications to target all strains of influenza.

“We believe that statins hold the key to mass treatment of influenza pandemics in humans,” says Patrick Prendergast, chairman and CEO of Canopus BioPharma. “It is also expected that this aerosol formulation will demonstrate a high degree of efficacy against H1N1 Swine flu, as it is a broad spectrum influenza antiviral, having shown efficacy against not only H1N1, H3N2, and H5N1, but also against equine influenza, H3N8 in separate animal studies.”

Cannabis Science Inc. has extended its offer to provide its whole cannabis-extract lozenge to health and homeland security officials in Canada and Mexico. The company’s offer followed the World Heath Organization raising its pandemic flu alert level to 5, the last step before declaration of a multi-continent pandemic. Following April’s declaration of a public health emergency by U.S. Secretary of Homeland Security Janet Napolitano, the company offered to provide emergency cannabis formulations to the Department of Homeland Security for distribution.

Diagnostics company Osmetech has submitted a request to FDA for Emergency Use Authorization for its Respiratory Pathogen Test Panel test to be used to screen for the swine flu virus. Osmetech’s Respiratory Pathogen Test Panel test, which is expected to be launched as a research use only product next quarter, detects and differentiates between 18 common bacterial and viral infections, including the influenza A virus and its H1N1 subtype. Osmetech is developing an extension to the Respiratory Pathogen Test that will differentiate this H1N1 subtype between the human and swine forms of the virus.

DeltaTRAK Inc., a manufacturer of cold chain management solutions and life science products, has increased production of all products that help ensure product efficacy for vaccines and pharmaceuticals. All these products are designed to monitor and record temperature and can be used during transport and/or storage of vaccines and pharmaceuticals.

Many vaccines and pharmaceuticals have temperature sensitivity where they must be kept between two and eight degrees centigrade. If temperature limits are exceeded, these chemicals change to where they lose potency. For the transportation and temporary storage of vaccines, DeltaTRAK offers the FlashLink CT BioLogger, an electronic data logger with preset temperature alarm limits at two and eight degrees centigrade. These data loggers include ShadowLog, a feature that guarantees temperature data is collected even if an operator fails to start the device.

Rx Response, a partnership created to help ensure the continued flow of medicines to patients in a severe public health emergency, has been put on Alert Status as concerns grow over the health threat posed by outbreaks of swine flu in the United States. Rx Response is a single point of contact for the entire pharmaceutical supply system and relies on a network that allows federal and state emergency management officials to communicate with Rx Response regarding pharmaceutical needs and other issues that may affect the supply system. The communications are actively monitored by all segments of the pharmaceutical supply system to ensure the fastest possible resolution.

“Americans need to know that the medicines they rely on will be available even in an emergency,” says Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America, a member of Rx Response. “Rx Response provides federal and state crisis managers with the critical information they need about the pharmaceutical supply chain to help communities affected by an emergency return to normal as quickly as possible.”

Alert Status means that Rx Response members are now closely monitoring developing information regarding influenza cases detected in the United States and are working with local, state, and federal health authorities to help ensure the continued efficient functioning of the nation’s pharmaceutical supply chain.

Rx Response was developed more than two years ago in response to Hurricane Katrina and the threat of pandemic influenza.

The outbreak of influenza A (H1N1) is testing pandemic preparedness strategies around the world. According to analysts with Datamonitor, while widely implemented strategies seem to have prepared the world better than ever before for such an outbreak, important gaps regarding the logistics of drug and vaccine distribution remain.

Responding to growing fear of a flu pandemic over recent years, many governments around the world, encouraged by the WHO, have developed pandemic preparedness plans. Because influenza A (H1N1) has proved to be relatively mild with Mexico the only country to report significant mortality, however, the current outbreak has not yet tested the limits of global public health systems. The real test for pandemic flu preparedness will come if the virus spreads more widely or returns in a more severe form in the coming winter. While it is very hard to predict the future development and size of threat caused by H1N1, Datamonitor analysts believe that several key challenges remain in order to successfully tackle the possible pandemic if H1N1 regains momentum and severity.

“A timely re-assessment and implementation of anti-pandemic measures is our best hope to significantly reduce the impact of a pandemic, and avoid the millions of deaths observed in previous global influenza outbreaks,” says Datamonitor infectious diseases senior analyst Hedwig Kresse.

Fears do appear to be on the decline. According to SDI’s Vector One: National, for the week ending May 8, the number of new antiviral prescriptions dispensed at retail pharmacies was 118,578, a 59% drop compared with about 277,000 new prescriptions the week before. Tamiflu accounted for 90% of the market’s new prescriptions last week.

Unfortunately, some unscrupulous parties are taking advantage of the emergency. FDA and the Federal Trade Commission are warning the public to be wary of Internet sites and other promotions for products that claim to diagnose, prevent, mitigate, treat, or cure the 2009 H1N1 influenza virus. The agencies are also advising operators of offending Web sites that they must take prompt action to correct and/or remove promotions of these fraudulent products or face enforcement action.

“Consumers who purchase products to treat the novel 2009 H1N1 virus that are not approved, cleared, or authorized by the FDA for the treatment or prevention of influenza risk their health and the health of their families,” says Michael Chappell, acting FDA Associate Commissioner for Regulatory Affairs. “In conjunction with the Federal Trade Commission, the FDA has developed an aggressive strategy to identify, investigate, and take regulatory or criminal action against individuals or businesses that wrongfully promote purported 2009 H1N1 influenza products in an attempt to take advantage of the current flu public health emergency.”

Products that are offered for sale to the public with claims to diagnose, prevent, mitigate, treat, or cure infections caused by the H1N1 influenza virus that have not been proven to be safe and effective for these uses must be carefully evaluated. Many of these deceptive products are being sold over the Internet via illegitimate Websites. These fraudulent products come in all varieties and could include dietary supplements or other food products, or products purporting to be drugs, devices, or vaccines.

“The last thing any consumer needs right now is to be conned by someone selling fraudulent flu remedies,” says FTC Chairman Jon Leibowitz. “The FTC will act swiftly against companies that resort to deceptive advertising.”

Meanwhile, researchers are learning more from the previous flu scare. An in-depth analysis of blood from patients recovering from the H5N1 avian influenza virus has provided insights into how to combat the virus. The findings by FDA scientists and collaborators better explain what part of the “bird flu” virus is seen by the immune system once a person becomes infected. As one result of this research, a protein of the bird flu virus called PB1-F2 was identified as a potentially potent target for attack by immune systems to stop the spread of the virus.

“Analysis of blood from patients recovering from the H5N1 avian influenza virus can lead to new tools for testing the potential protective activity of vaccines under development,” says Karen Midthun, M.D., acting director of the FDA’s Center for Biologics Evaluation and Research. “The findings could also lead to new tests to detect infections, and improved therapies.”

Since 2003, more than 400 people worldwide have been infected with the bird flu virus. About 60% of them have died. No cases of avian flu have been reported in the United States. Most of the avian flu infections in humans involve people who have had direct contact with infected poultry. However, there is a potential risk for a global influenza pandemic should the virus acquire the ability to spread directly from person to person.

The researchers adapted an existing technique using genetically modified viruses (phages) to create a library of fragments representing all of the proteins found in the H5N1 virus. Scientists mixed these fragments with antibodies from five Vietnamese patients recovering from the H5N1 infection and observed which fragments attracted the patient’s antibodies.

Several targets that are likely to trigger strong antibody responses to the H5N1 virus were identified, including PB1-F2, a protein that researchers believe contributes significantly to the virus’s ability to cause disease.

“We believe this is the first evidence of the human immune system reacting this strongly against PB1-F2,” says Hana Golding, Ph.D., chief of CBER’s Laboratory of Retrovirus Research. “This is an indication that it may be a good target for a drug or vaccine.”