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Paradigm shift in Pharma – a mythical creature…?

A few days ago I spotted (and tweeted about) an article published in the New York Times:

This year alone, because of patent expirations, the drug industry will lose control over more than 10 megamedicines whose combined annual sales have neared $50 billion.

This is a sobering reversal for an industry that just a few years ago was the world’s most profitable business sector but is now under pressure to reinvent itself and shed its dependence on blockbuster drugs.

This is, in of itself, not news – this ‘patent expiry cliff’ has been expected for some time now. What was interesting for me was a discussion that I got into with @DanBax76 on Twitter. In response to my comment to the piece, namely that a paradigm shift in the Pharma industry is due, Dan’s response was that such a change is already underway.

The question is: what constitutes a paradigm shift in the context of the Pharma industry? To be sure, major changes are underway – clearly the era of the blockbuster brand is coming to an end. From the NYT article cited above:

“We have to fix our innovative core,” Pfizer’s new president, Ian C. Read, said in an interview recently. To do that, the company is refocusing on smaller niches in cancer, inflammation, neuroscience and branded generics — and slashing as much as 30 percent of its own research and development spending in the next two years as its scientists work on only the most potentially profitable prospects. 

Does cherry-picking only the most profitable therapeutic areas and drugs constitute a paradigm shift in the industry?

An article on the same topic in Motley Fool sees the industry shifting wholesale from pharmaceuticals to biologics, and a re-focus on emerging markets:

So is this an industry doomed to a slow, lingering death? Well, actually, no. There is a future for the pharmaceutical sector. But it will be a future quite different from its past.

The future lies in biologics. Whereas most drugs of today are chemical medicines, biologics are biological medicines such as, for example, antibody treatments, vaccines, and stem cells.

These drugs are expensive to produce but they are highly effective and are often used to treat diseases with no cheaper alternative. They tend to be sold at a very high price, and thus at a considerable margin.

Does switching from pharmaceutical products to biologics, which attract much higher margins and – quite helpfully – are not straight-forward to copy by competitors once your patent expires (note the lack of any change in the underlying business model here) constitute a paradigm shift in the industry?

Perhaps the rapid and quite exciting changes that we are seeing in terms of how social media is redefining the healthcare landscape constitute a paradigm shift? Well, maybe, but I am not convinced that things will change that much while we still have a monolithic, state-run healthcare system like we have in the UK; by its very nature the system prevents patients from exercising the personal choice in how they want to be treated that will result from the increased education and awareness that social media is fostering among patients.

In my opinion, none of the above constitutes a paradigm shift in Pharma, or the healthcare industry in general for that matter. Obviously, this is the place where I would jump up and say “I have the answer!!”, which would be a big lie. That said, there are some people out there who have questioned the status quo. For starters, what would happen if we got rid of patent law?

What about pharmaceuticals? Some people argue that we need pharmaceutical patents because drugs require expensive R&D to develop, but then can be cheaply reverse engineered. So, the thinking goes, if we don’t give drug makers patent protection, they won’t bother to produce drugs in the first place.

Numerous facts undermine this argument. Boldrin and Levine have found that the pharmaceutical industry historically grew “faster in those countries where patents were fewer and weaker.” Italy, for one, provided no patent protection for pharmaceuticals before 1978, but had a thriving pharmaceutical industry.

Another fact the conventional view overlooks is that patentable drugs are not the only medical innovations possible. Boldrin and Levine looked to a poll of the British Medical Journal’s readers on the top medical milestones in history, and found that almost none had anything to do with patents. Penicillin, x-rays, tissue culture, anesthetic, chlorpromazine, public sanitation, germ theory, evidence-based medicine, vaccines, the birth-control pill, computers, oral rehydration theory, DNA structure, monoclonal antibody technology, and the discovery of the health risks of smoking — of these top 15 entries, only two had anything to do with patents. Similarly, nothing on the US Centers for Disease Control’s list of the top ten public-health achievements of the 20th century had any connection to patents.

Patent law does create one incentive for researchers: to pursue more of the kind of research that will lead to patentable drugs, and less of the kind of research that might lead to other types of breakthroughs that cannot be patented — even though, as we’ve just seen, the latter kind may be some of the most important. If patent law were abolished, we would probably see fewer artificial chemical drugs and more discoveries related to remedies from natural substances such as vitamins, minerals, and plants. Given the harmful side effects of many prescription drugs, it is not at all obvious that this would be a bad thing.

Boldrin and Levine also show that patents are not essential to success in the pharmaceutical industry by pointing to the analogous paint and dye industries (which also depended on chemical formulas) in the 19th century. Germany offered no patent protection for paints and dyes at all until 1877, and even then only for the process involved in producing them, not for the products themselves. Nonetheless, German companies’ market share rose from next to nothing in 1862 to 50 percent in 1873 and 80 percent in 1913. Britain and France, on the other hand, had patent protection for both products and processes all along and saw their market shares fall from about 50 percent and 40 percent, respectively, in 1862 to between 13 and 17 percent in 1873.

Much more topical bearing in mind what is going on in the US with Obamacare at the moment, and the raging controversy in the UK over the proposed reforms of the NHS, is the proposal to actually create a proper free healthcare market (i.e. with no Government regulation, with the customer as ‘king’).

A third idea would be reform – if not abolishment – of the FDA/EMA, in favor of complete transparency of clinical data and online peer-to-peer review [UPDATE: Much better link included here]?

All quite challenging ideas, I’m sure you’ll agree, but perhaps necessary to include in the ongoing debate about where our industry goes from here. The status quo perhaps does not cut it any more…

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  1. 2011-03-12 at 04:30

    >Hey Manu,While I agree with the sentiment concerning the supposed paradigm shift, I'm slightly dismayed by a few points in the post. I realize the fifth to last paragraph is a quote, but assuming the emphasis is yours, do you really agree with the naturalistic fallacy – synthetic drugs are bad, natural things are good?I'm all in favor of transparency of data and I'm aware of the flaws in peer-review as an author and reviewer myself. Yes, crap gets published but good science eventually wins, as the crap cannot be independently verified. I find it strange you would link to James Delingpole when talking about reform. My understanding – admittedly weak and based on a single BBC Horizon documentary [1] – is that Delingpole has never published a single peer-reviewed article in a scientific journal. How is he a credible authority on any scientific matter? Moreover, I don't consider myself a climate change alarmist and try to approach it rationally, but Delingpole seems to be a crackpot denialist almost on par with Christopher Monckton.Antti[1] http://www.youtube.com/watch?v=V89AeCLCtJQ

  2. 2011-03-12 at 17:15

    >Hey Antti,Thanks for the comment! Looking back at the quote you query, no, I certainly do not subscribe to the 'natural is best' viewpoint myself. My emphasis was more to highlight the fact the author was making in that the focus of research would change, not fall apart, with the loss of IP protection. I agree with you that he has a rather silly view on constitutes an 'artificial' drug…The link to Delingpole was a bit lazy on my part – note to self: should never rush finishing a lob post! Having spent a bit more time on this, I've re-discovered the proper link and have updated it.I would not use the BBC as a credible source to decide whether or not Delingpole is worth reading (or for much else for that matter). Clearly, he is not a scientist – and has never claimed to be; that said I have followed his blog [1] for a while now and I do agree with most of what he says. For what it's worth, Delingpole's version of events re the Horizon programme can be found here [2].Finally, what is a 'crackpot denialist' in your view? I must admit that I have not seen/read a lot from Monckton, but what I have seen seems pretty well researched and reasonable… Can you point me to any video/articles that show him otherwise? [1] http://blogs.telegraph.co.uk/news/author/jamesdelingpole/%5B2%5D http://blogs.telegraph.co.uk/news/jamesdelingpole/100073116/oh-no-not-another-unbiased-bbc-documentary-about-climate-change/

  3. 2011-03-12 at 21:15

    >Hey Manu,Thanks for the response! I'm glad to know you did not fall for the 'Argumentum ad Naturam' 😉 I also like the new peer-review link better, though I find it hard to believe that any scientist would think "that papers are of such high quality that no commentary is needed" after publication. It's too easy for people like Delingpole to deride peer-review, as they don't have to find the gems from the vast number of publications and try to replicate the poorly described experiments. I see there may be a particular problem in medical research when a MD would have trouble to stay on top of the latest research and wrong decision may have horrible consequences. Personally, I would be worried if my physician/GP recommended something based on a recent study. I might be more comfortable if it were a large scale systematic review from the Cochrane Collaboration :)After reading Delingpole's response to the BBC Horizon documentary, I'm still not convinced about his credibility when it comes to climate science. He still claims there has been no warming since 1998, although it has been thoroughly debunked; for example here [1]. Moreover, I don't find the intergovernmental conspiracy mongering plausible given the many well funded interests on the skeptics' side of the politics [2]. Peter Hadfield – under a Youtube pseudonym potholer54 – has a pretty well researched and rational series on climate change. He also debunks the Climategate pretty thoroughly [3,4].I would define a crackpot denialist as someone who deliberately pretends to be a scientist while misrepresenting the facts and even contradicting oneself. Christopher Monckton clearly falls under this definition [5,6,7,8].Sorry about going off topic. I admit I may be an idealist but I believe good science wins in the end. I'm not so optimistic about politics, though :/Antti[1] http://www.youtube.com/watch?v=_PWDFzWt-Ag%5B2%5D http://www.davidbrin.com/climate2.htm%5B3%5D http://www.youtube.com/watch?v=7nnVQ2fROOg%5B4%5D http://www.youtube.com/watch?v=uXesBhYwdRo%5B5%5D http://www.youtube.com/watch?v=fbW-aHvjOgM%5B6%5D http://www.youtube.com/watch?v=PTY3FnsFZ7Q%5B7%5D http://www.youtube.com/watch?v=fpF48b6Lsbo%5B8%5D http://www.youtube.com/watch?v=C3giRaGNTMA

  4. 2011-03-12 at 23:29

    >Hey Antti,Thanks for the links – I've just read/watched them all. Interesting stuff…The anti-Monckton videos are certainly compelling, so I will definitely evaluate stuff that I see from him more critically in future. To be fair though, Monckton is merely one of the most visible AGW skeptics rather than the most credible…Unfortunately, I was not impressed by the rest of Peter Hadfield's videos. For example, video #1 does not 'debunk' the 'no cooling' claim; it merely calls the Daily Mail on misquoting Jones from an interview. From articles on 'serious' sites such as Watts Up With That, it would appear that the graphs from the main sources showing recent warming have been 'adjusted' (including the infamous 'Hockey Stick' chart) to show warming that simply wasn't there in the raw data.Neither does Hadfield 'debunk' climategate. In one video he cherrypicks a couple of emails and makes out on the basis of these that nothing else was of any import. What he fails to mention is the computer code that was also released at the same time, showing quite clearly that the raw data on which one of the IPCC's major datasets was based was 'adjusted' to show warmer temperatures (something which has been shown again very recently in datasets from New Zealand, for example). There are also major issues with the number and placement of temperature sensors, from which the raw data is derived in the first place…I was faintly amused that Hadfield rails at the Mail, and takes great delight in presenting outspoken US radio show hosts as the 'face' of those who would question AGW. A quick Google search pulled up that he has worked for New Scientist and the BBC, and selected the Guardian as the vehicle for an interview-type piece. The David Brin piece laments that AGW has become a classic left vs. right issue; it's a shame therefore that Hadfield quite clearly falls on one side of the divide…To finish, what are the well-funded interests on the skeptics' side? This may or may not be the case (I don't know), but what about the on the alarmists' side? Isn't it convenient that the proposed 'remedy' to AGW will make Gore, the head of the IPCC, a large number of international corporations and Goldman Sachs an absolute fortune…? Oh, and apparently will also form the basis of a new (unelected) World Government? [1] As always, it's worth looking into the motivation/vested interests of all of the major players in this debate…I feel that this could run and run… ;-)[1] http://www.un.org/esa/dsd/agenda21/

  5. 2011-03-13 at 01:57

    >Care to back up your claims about the Climategate? After all, five inquiries have already cleared the scientists of misuse of data [1]. Oh yeah, unless everybody is in the New World Order's pocket :/ On balance, some interests rolling in cash are mentioned in Brin's piece (foreign petro-princes, Russian oil oligarchs, and Exxon) under "who are the more likely conspirators?" Darryl Cunningham adds another set of likely conspirators, the Koch brothers [2]. I find these more plausible than any global intergovernmental conspiracies. I'm pretty sure Goldman Sachs has hedged its bets and will make money no matter what.I still have not seen convincing evidence for the "no cooling since 1998" argument. The top-2 warmest years on record are 2005 and 2010 [2]. Moreover, I don't see how Hadfield's former employers make him partial in this issue. At least he backs up his claims with sources and points out flaws also in the alarmists' arguments. Do you think Delingpole is impartial?I'm not interested in the anomalies, motivation, or the vested interests. I care about the science and I'm mostly annoyed by the politically motivated attacks on scientists [4,5]. I also think the "follow the money" argument is flawed. After all, not all medical studies funded by Big Pharma are fraudulent or are they?I agree, this could probably go forever :)Antti[1] http://www.nytimes.com/2011/02/25/science/earth/25noaa.html%5B2%5D http://darryl-cunningham.blogspot.com/2010/12/climate-change.html%5B3%5D http://www.noaanews.noaa.gov/stories2011/20110112_globalstats.html%5B4%5D http://en.wikipedia.org/wiki/Merchants_of_Doubt%5B5%5D http://blogs.discovermagazine.com/badastronomy/2011/01/26/how-not-to-fight-antiscience-zealotry/

  6. 2011-03-19 at 15:22

    >Hi Antti,Apologies for the delay in responding – it's been one of those weeks… ;-)Anyway, before the 'meat' of this comment, I'll start by putting my hand up and saying that – having re-read my last comment – I was guilty of a Circumstantial Ad Hominem logical fallacy. Whatever Hadfield's political viewpoint, that is irrelevant to whether what he says is of merit. I still don't think his videos 'debunk' any of the core issues, but it was wrong of me to suggest that this has anything to do with what I believe his political perspective is…With that out of the way, in answer to most of your last points (and very much focusing only on the science!) I would recommend you go to these links, which I came across this week:http://wattsupwiththat.com/2011/03/18/you%E2%80%99re-not-allowed-to-do-this-in-science/http://www.climateaudit.info/pdf/mcintyre-heartland_2010.pdfThe key point of the clip (I have yet to watch the whole 52 min presentation) is the demonstration of what the raw temp data (which without climategate would never have been made available since the authors had refused all requests (FoI or otherwise) for its release) looked like before Mann et all made their 'adjustments'. Not just a slight alteration – they essentially sent the curve completely in the opposite direction…The PDF summarizes the whole issue in chronological fashion, and gives a pretty good overview (with full references) of what the problems have been. A description of how the climategate inquiries were all whitewashes is given. Note the very balanced tone of the summary paragraph…We are in complete agreement about how the science is what is important. Where I guess we will have to agree to disagree is the extent to which that science has been corrupted and essentially highjacked by vested political and corporate interests…Anyway, I look forward to our next discussion 😉

  7. 2011-03-21 at 14:24

    >Hey Manu,Thanks for the interesting links! There have been several unjust attacks against legitimate climate scientists before – for example, Roger Revelle [1] and Ben Santer [2] – but I have to accept the case against Mann. I have listened to Richard Muller's lectures and read his work before, and find his position hard to argue against. You should watch the entire video [3]. Only strange thing is his claim that 1998 is still the warmest year on record while saying he trusts NOAA temperature records. The recent NOAA press release claims 2010 tied for the warmest year on record since 1880 with 2005 [4]. Note, Muller accepts the scientific consensus on warming despite all the controversies in the 2007 IPCC Fourth Assessment Report.I have to admit I used the word 'debunked' carelessly but I still reject Delingpole's opinions. My position is based on the facts that carbon dioxide is a greenhouse gas and human activity has increased the carbon dioxide levels in the atmosphere. In addition, I accept the scientific consensus that the climate is warming and there are only a handful of scientists who reject it. If they can come up with convincing evidence and arguments against the consensus, I believe the scientific consensus would shift. There are powerful vested interests on both side of the political debate. In my view, this means that conspiracies are unlikely to be successful.Here's a couple of terms I like to use:- anyone who denies the facts or misrepresents the science against AGW is a denialist- anyone who exaggerates the consequences or misrepresents the science for AGW is an alarmistAs much as I am annoyed by the alarmists – Gore and Mann for example – I hate the denialists even more – Monckton and most Republicans.Let me know if you have any good arguments against Muller :)Antti[1] http://en.wikipedia.org/wiki/Roger_Revelle#Alleged_doubts_about_climate_change%5B2%5D http://en.wikipedia.org/wiki/Ben_Santer#Controversy%5B3%5D http://www.youtube.com/watch?v=VbR0EPWgkEI%5B4%5D http://www.noaanews.noaa.gov/stories2011/20110112_globalstats.html

  8. 2011-03-26 at 10:04

    >E-blogger is rubbish. Just spent half an hour writing a response to this and it wiped it when I tried to preview.In short:If you expect Pharma to vote for patent protection removal that seems like turkeys voting for xmas. What would happen? Pharma would simply invest in research into 'hard to copy' medications. Is this a good use of their research resources when they could be investing in stuff that better helps patients? The current system is not perfect but you better be damn sure if you're gonna turn it upside down that you are not creating greater imperfections.Change in Pharma is relative, you're talking about organisations with 10s of thousands of worlwide employees! As well as having a massive lag time from candidate molecules to successful marketing of a product. They don't turn on a sixpence, also tell that to the 51 of my colleagues that are currently facing redundancy.Drug costs are being driven down across the world but esp so in the big markets like UK and US. (uk gone from 2nd most expensive in EU to 2nd cheapest in my time in the industry). What is going to happen to all the fat, diabetic, CV risk patients in 10-15 years when the whole of pharma has buggered off to invest in biologics for cancer and 'rare diseases'?Just one final point, a few years ago we were speaking about 'personalised treatment' Now there is an area that something needs to be done about, perhaps by the regulatory bodies. It really seems to have not paid many dividends excpet perhaps for people with particular types of cancer. Why has it gone so quiet on this? I would think it is due to pharma shooting itself in the foot by automatically narrowing a market for one of its products. Anyway my first post was a bit more considered but I hope you get what i'm trying to say. Pharma is changing and I think the problems in the current system need to be ironed out (whether that is on the side of the reg authorities or Pharma) and it may well be that the future for pharma companies is as much in health technology as it is in drugs, which is great as thats what i'm interested in!

  9. 2011-04-06 at 12:42

    >Hey Dan,Thanks for commenting, and apologies for the belated response…Firstly, having lost numerous posts and comments myself thanks to Blogger, I wouldn't disagree with you. Suffice to say that I now by default always copy what I have written before hitting 'submit'… ;-)Regarding patent protection (and the idea of getting rid of it), I agree that what would replace it would have to be fully thought through, and clearly Pharma would never give its IP up without significant recompense in other areas. The way I see it, overbearing regulation together with huge spend on marketing makes developing any new drug utterly non profitable without IP protection being in place. As a thought experiment, what if – at the same time – IP protection, state regulation and marketing spend were drastically reduced (e.g. in favour of full open access to clinical data, online medical education, etc)? Could there be another way of doing business? This would definitely be a 'paradigm shift'…Regarding the rest of your comments, clearly I agree that pressure on the industry is intense and ever-increasing, with price controls and patent expiries leading inexorably to massive job losses, cuts in R&D, etc. I also agree with you re personalized medicine – in part, with this Pharma is attempting to maintain the status quu… However, I say again, where is the true innovation or fundamental shift in how the industry is run?Pharma is indeed changing, but only really in a reactive sense. Are the "problems in the current system" perhaps indicative of the fact that the whole system itself is unsustainable?Hmmm. Health technology, eh? I'll have to look into that… 😉

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