A look back at Agenda 2007	January 2008

As 2007 opened, the Democrats’ retaking of control of Congress was at the top of mind for pharmaceutical industry observers.

by Steven Niles

As 2007 opened, the Democrats’ retaking of control of Congress was at the top of mind for pharmaceutical industry observers. Med Ad News’ Agenda 2007 focused on how the change in the political landscape could potentially affect the industry for good or ill. One year on, the impact appears to have been minor so far but could lead to incremental changes over time.

Having a less sympathetic Congress in Washington has been a contributor to the pressure the industry is feeling, according to Mike Luby, president and CEO, TargetRx Inc. (targetrx.com). “Pressure has definitely increased as a result of the change, but it would be hard to pinpoint specifically what that means,” he says.

The Democratic congress has had little impact, according to Sander Flaum, managing partner and CEO, Flaum Partners (flaumpartners.com). “Nancy Pelosi, the speaker, tried to alter the way drugs are reimbursed,” Mr. Flaum says. “They wanted government to negotiate directly with the pharma industry rather than having to go through third-party PBMs, and that was not passed. I don’t think there’s been much of a change at all.”

Mr. Flaum believes the real impact could be seen if one of the Democratic presidential candidates wins this year’s election. “Obviously Hillary Clinton is way out in front,” Mr. Flaum says. “There will be a healthcare bill if she wins ... that takes into account some of the errors she made in the past.”

One of the things the consulting company BearingPoint focuses on is helping its customers operationalize compliance and regulations that are increasingly levied on clients’ businesses.

“You look at things like the deficit reduction act and the burden that has placed on the business from a reporting standpoint,” says Karla Anderson, managing director within the life sciences practice, BearingPoint (bearingpoint.com). “Even at the state level, the burden is incremental and growing. You layer on top of that a significant amount of pressure related to price compression, both from the states and from the private sector. ... It’s incrementally changing in a pretty formidable way.”

New postmarketing surveillance requirements associated with the recently passed Food and Drug Administration Amendments Act of 2007 will place additional burden on pharmaceutical companies because there will be more required reporting. Companies will also be burdened by the need to provide transparency.

“It’s one thing to have to report on something, it’s another to be able to make your data open so that people can look at it,” Ms. Anderson says. “Just from a cost perspective, that’s significant.”

At both the state and local level, government has begun to crack down on direct-to-physician promotion. In September 2007, Senators Charles Grassley, R-Iowa, and Herbert Kohl, D-Wisc., introduced legislation to require manufacturers of pharmaceutical drugs, devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel, and other means.

The legislation, called the Physician Payments Sunshine Act, would apply to manufacturers with $100 million or more in annual gross revenue. Penalties for not reporting payments would range from $10,000 to $100,000 per violation. The legislation would require the Secretary of Health and Human Services to create a Website and post payment information in a clear and understandable manner.

At the state level, New Jersey Attorney General Anne Milgram has convened a task force to explore the issue of pharmaceutical companies and medical device makers giving gifts and other compensation to physicians, and to determine what impact, if any, such practices have on patient care in New Jersey. Known as the Attorney General’s Advisory Task Force on Physician Compensation, the panel was scheduled to meet for the first time in September.

As states tighten restrictions on honoraria for healthcare professionals, analysts with TGaS Advisors (tgas.com) see a variety of reactions. E-detailing remains the most popular online tactic to reach healthcare professionals. TGaS Advisors report 63% of benchmark brands had an e-detailing investment in 2007, with an average budget of more than a half-million dollars. This is down slightly from 2006 spend.

According to Donna Wray, management advisor, TGaS Advisors, some other effects of honoraria restrictions are use of more, smaller e-details, since they will each be seen by fewer physicians; increased use of e-sampling and greater integration between the field force and the e-detailing program; and a lot more interest in enterprise-level physician relationship management to ensure that every honorarium and every communication is as usefully employed as possible.

“Thirty-seven percent of the companies in our benchmark have a physician ‘portal’ already, and half are planning one,” Ms. Wray told Med Ad News.

In 2008, the industry will reduce field sales force and supportive staff such as medical liaisons while trying to do more to reach out to doctors through Webinars or other electronic means, according to Alan Bayham, president, Bayham Consulting, LLC (bayhamconsulting.com). The physicians themselves are limiting the number of drug reps that they will see at any given time, so they need to find new avenues,” Mr. Bayham says. “You’ll see this not just with prescribers, but with the payers, whether it’s large employers or managed care organizations. You’re going to see increased use of electronic means of getting in touch with the key decision makers or key influencers.”