Welcome 2009 – What’s in Store for the Pharmaceutical Industry in the New Year

In our little world of the pharmaceutical market, the world has been rather quiet, relatively speaking, and perhaps little has changed to the naked eye.  For example, the number of new NMEs approved by the FDA is about the same as it was last year.  There were no game-changing breakthroughs in new treatments.  We still have the same FDA Commissioner and the agency still has the same problems it did last year.  But scratch the surface, and one can see immense possibilities for change.  

It is the events of the bigger world that stand to shape the future of the pharmaceutical market.  There are four key changes that occurred during 2008 that stand to have profound impact on shaping the pharmaceutical market of 2009:

1. Public Policy.  The overwhelming majority in Congress of the Democratic party substantially increases the ability and likelihood of success of those long-poised to initiate some sweeping reforms.   Those market reform proposals  are going to be aimed at Direct-to-Consumer advertising and are likely to include moratoria that will be in the form of years, not months.  It would be a mistake for trade organizations to believe that these proposals will be easily defeated – the game has changed.  By the end of the year, it is doubtful that DTC will look like it does today.  The marketing of drugs is perceived to be part of the cost problem – therefore policy makers are going to look to shave that bill.  With government being the largest purchaser of pharmaceutical products, there is a strong will not to be subsidizing DTC while purchasing those treatments.  Importation will be passed and signed into law, as will the ability of the government to negotiate pricing under Medicare Part D. Other marketing reforms will be aimed at the relationships companies have with physician organizations, payments, gifts and practices of expensive staffs of pharmaceutical sales representatives.  These will be at the national and state levels.  But it is important to note that the momentum is with change, not the status quo.  
2. Money.  The meltdown of the financial markets has set the stage for remarkable change in virtually every aspect of American life – from the way we shop, to where we shop and how decisions about spending money are going to be made – including spending money on drug treatments.  One effect of that is that employers will continue to shift the burden of cost of virtually everything to the employee – from ceasing contributions to 401(k)s to increasing the employee's share of cost for healthcare, including prescriptions while the employee's income is flat or worse.  That means the appeal of generics for the general public is going to rise as a matter of necessity on the part of the general population.  Brand names are going to have to fill highly unique roles or are not going to be able to sustain themselves.   And, with government now being the greatest purchaser, the government is going to look for ways to promote generics over brand names.  
3. Communications.  As noted above, DTC will be modified one way or another.  That will increase the reliance of companies on public relations in place of advertising.  But in addition, there are other changes in communications that will bear on the way that pharmaceutical products will be marketed.   There are two things of note in the newspaper industry – virtually every major newspaper has moved to blogs and even Twitter and nearly all newspapers have suffered crippling losses this year with some even cutting back daily publication.  Digital communications is the place where people turn for information generally and for healthcare information specifically.  People with chronic illnesses in particular are inclined to get information on treatment options from the Internet.  Physician on-line communities have sprung up on WebMD and Sermo that include tens of thousands of docs.   This demands of companies more than a Web site – it demands an integrated digital marketing strategy that takes into account all of the change that is occurring and moves to compensate.  If you can't reach physicians through sponsored CME programs, reach them on-line.  And while regulatory departments of pharmaceutical companies have concerns about the regulatory parameters of FDA and new, emerging media, they also have to understand that the company exists to sell product.  Without the sale of product, there is not company.  Period.
4. Risk.   The environment continues, as it has since 2002, to be focused on risk over benefit.  That is not going to change anytime soon.  In fact, risk will continue to be a driver of reform as well as pricing issues.  Congress is going to demand that companies be more proactive in getting adverse event information and new products have to offer very specific benefits when compared to existing treatments.  In addition, approval times are going to continue to lag, with many Complete Response Letters being issued, lengthening the approval process. That said, there will be less market time and less patent time on the market to recoup costs.    

We will, thankfully, see a change in leadership at FDA.   

In closing, wishing you the happiest for the new year in terms of safety, prosperity and contentment.  And know that each challenge opens immense opportunity.