WASHINGTON _ Merck & Co., Inc. and Medco. Rhone-PoulencRorer Inc. and Caremark International. Pfizer Inc. and Caremark.Pfizer and Value Health.Like the marriages of convenience that allied ancient nation states, themodern unions of pharmaceutical titans and health care plan giants willnot only consolidate power, but may keep biotechnology upstarts out ofthe game.For biotech companies, that means FDA approval _ once the finalbarrier to product approval and profit _ now represents only the startof the quest. Gaining access to the marketplace will prove the toughestchallenge of all.Policy-makers, drug company executives and health lawyers saidTuesday, at a Food, Drug and Law Institute seminar (part ofPharmaceutical Update '94), that biotech firms must begin to thinkbeyond the short-term goals of filing an investigational new drug(IND) application and finding a partner to share the cost, risks and therewards of developing a potentially beneficial new treatment.Now they must also find a pipeline to a market in which an ever-shrinking circle of people are selecting therapies for a steadily growingpopulation of patients.The gatekeepers are pharmacy benefits managers at companies that buypharmaceuticals for many of the 5,000 health plans in the U.S. Theytend the formularies for the managed-care companies that arerelentlessly gaining ground in today's cost-conscious marketplace.While merging with health plans does not protect pharmaceuticalcompanies from the substantial discounts these plans are nowdemanding, the mergers give the pharmaceutical companies access tomillions of patients.Ultimately, the pharmaceutical companies, which may pay up-front forinclusion on a formulary's list, hope to make up in volume what theylose in price.In return, the health plans agree to list at least some of themanufacturers' drugs on their formularies.Other mergers enable drug companies to offer formularies a completelist of "preferred drugs" to serve patients' every need. Washingtonhealth lawyer Andrew S. Krulwich, of Wiley, Rein & Fielding, saidbiotechnology firms would find it particularly hard to compete in thisclimate."A new biotech firm may find it impossible to raise the money to evenbegin its program, unless it already has significant data to convincepotential investors that this is a drug that the formularies will considerto be a `breakthrough,'" Krulwich said.`Money And Data May Not Be Enough'Even money and data might not be enough, said Cheryl F. Graham,senior technical advisor for the Biometric Research Institute, aWashington contract research firm."If you don't have something beyond the safety and efficacy data thatgets you FDA approval, you don't get into the market place," Grahamsaid. "Many of them [biotech firms] are naive about this. They have avery short time-line, whether it involves getting an IND filed or gettinga partner _ those are very short-term goals."Safety and efficacy studies do not yield another category ofinformation that could prove crucial to a product's success: studiescapable of convincing a health plan that a drug is more cost-effectivethan a competitor's version.Joseph Jackson, executive director of outcomes research for Bristol-Myers Squibb Co., said that although the field of cost effectivenessresearch is in its infancy, its stature will grow in proportion to thenational push for cost control.Krulwich pointed out that pharmaceutical giants that forge linkageswith health care companies will have an advantage in this arena aswell.For instance, Caremark will give Rhone-Poulenc Rorer and Pfizer druguse information from its database on more than 28 million patients.Caremark will also provide data on hospital costs, home care costs andthe costs of treating various illnesses."The databases they are obtaining through these alliances," he said,"permit a far more focused effort in future research" and in assessing"physician and patient needs and the cost effectiveness of theirrespective products in a variety of different clinical settings."This information will place them in a far more advantageous positionto compete on the basis of providing quality medical care to a largenumber of patients _ a basis that will provide some shield against theinexorable emphasis on price."
-- Steve Sternberg Special To BioWorld Today
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