Pfizer Marketing Scheme Stirs Concern_NYT / Corporate Responsibility Movement Puts PhRMA on Notice_ ICCR
Mon, 7 Mar 2005
The New York Times reports that Pfizer is planning to lock up the market for heart treaments by bundling its new drug (toretrapib, which is still in experimental stage of development) to the company’s best selling cholesterol lowering drug, Lipitor – if the FDA goes along and allows Pfrize to combine the two drugs – thereby extending the patent of Lipitor.
Pfizer’s marketing scheme can be readily stopped if the FDA requires the company to test the drug alone against placebo – not in combination with Lipitor, as Pfizer would like.
The Times reports that “Pfizer’s plan might seem to violate antitrust law, which can prohibit companies from “tying” products together or refusing to sell one unless customers buy another. But antitrust lawyers said the company’s plans were legal, as long as the F.D.A. approved the drugs in combination.”
A similar marketing scheme was approved by the FDA when Saondoz Pharmaceuticals, (then) the manufacture of the first ‘atypical’ drug for schizophrenia, Clozaril (clozapine), marketed Clozaril in combination with a blood monitoring service – stipulating that just a single distributor of the drug would also provide blood monitoring services. Sandoz was stopped by a clause in the Budget Reconconcilliation Act of 1990 which said that Medicaid did not have to reimburse for a drug bundled with a service and a single service provider.
The pharmaceutical industry’s penchant for evading fair competition and concealing hazardous drug effects from physicians and the public – thereby putting patients at risk of harm to increase profits, has caught the attention of the Interfaith Center on Corporate Responsibility (ICCR), a coalition of 275 faith-based institutional investors with approximately $110 billion in assets.
ICCR sent a letter on March 1, 2005, to more than 2,750 institutional investors – among these are the 2,000 largest public pension funds, about 400 faith-based investors (including many non-ICCR members), the 30 largest mutual fund families in the nation, and proxy voting services. The ICCR letter states: “–Following in the footsteps of the tobacco industry, pharma companies may have had knowledge of hazards of their products that they did not disclose to consumers or investors.”
SocialFunds.com reports (below) that the letter highlights three shareowner resolutions filed by ICCR members aimed at reforming pharmaceutical industry conduct. The letter names nine major US pharma companies, including Abbott Laboratories (ticker: ABT), Bristol-Myers Squibb (BMY), Eli Lilly (LLY), Merck (MRK), and Wyeth (WYE).
“One resolution seeks to split CEO and board chair roles, one asks for a report on the impact of the HIV/AIDS pandemic on the company and its response, and the third requests disclosure of corporate political contributions calling the pharmaceutical industry to task for its practices.”
The resolutions by the Interfaith Center on Corporate Responsibility do not provide solutions to the specific problems they address. But they intertwine along lines of accountability and transparency. The ICCR letter puts the blame for this industry’s unconscionable practices and unseemly indifference to loss of human lives squarely where the blame lies:
“in the absence of comprehensive disclosure on corporate political contributions, the [pharmaceutical] industry is widely perceived as lobbying its way out of trouble.”
Contact: Vera Hassner Sharav
THE NEW YORK TIMES
March 7, 2005
Pfizer Stirs Concern With Plans to Sell Heart Drugs Only as Pair
By ALEX BERENSON
A drug that could be one of the most promising new heart treatments in a decade is generating controversy even before it is approved, because its maker, Pfizer, plans to sell it only in combination with the company’s best-selling cholesterol treatment, Lipitor.
At a cardiology conference in Orlando, Fla., today, researchers sponsored by Pfizer are expected to present positive new results about the drug, which has been shown in preliminary studies to substantially raise levels of what is known as good cholesterol, a novel approach to preventing heart disease.
The new drug, called torcetrapib, still must clear many hurdles before it is approved, including concerns that it may raise blood pressure, a serious side effect for a heart medicine. It would not reach the market before 2007, at the earliest. Still, scientists say the medicine could be an important new treatment, while Wall Street views its success as crucial for the future of Pfizer, the world’s largest drug company.
Pfizer’s critics, who include prominent cardiologists, say the company should offer torcetrapib as a stand-alone pill, so that patients can take it either with Lipitor or with similar drugs not from Pfizer that may work better for them. For some patients, torcetrapib might even work best by itself, they say.
The company says that selling torcetrapib and Lipitor in one pill makes sense because the two drugs work in complementary ways, and that it has the right to market its medicines as it sees fit, especially given the huge cost of developing torcetrapib.
The existing cholesterol drugs, called statins, work by cutting so-called bad cholesterol, which can cause fatty plaques to build up in the arteries and lead to heart attacks. In contrast, the good cholesterol that torcetrapib increases may actually stop the buildup of plaque.
“That’s an unfortunate decision on Pfizer’s part,” said Dr. Michael Crawford, the chief of clinical cardiology at the University of California, San Francisco, referring to the company’s decision to only sell the drug in combination with Lipitor. “It’s not going to sit well with people. But, you know, they’re going to be just crying all the way to the bank.” Dr. Crawford said that he thought Pfizer was combining the drugs mainly to protect Lipitor from competition. Lipitor, which loses its patent protection in 2010, is the world’s top-selling medicine, with sales of almost $11 billion last year.
Pfizer also says it has worked closely with the Food and Drug Administration to design its clinical trials, on which the company is spending $800 million in tests involving 25,000 patients. In the tests, Pfizer is examining whether the torcetrapib-Lipitor combination reduces heart disease more effectively than Lipitor alone. A spokeswoman for the F.D.A. said the agency had a policy of never discussing drugs that have not been approved.
But authorities on drug development say that the F.D.A. may have no choice but to approve a combination treatment if it proves more effective at preventing heart disease than Lipitor by itself. When the F.D.A. reviews a new medicine, its main concerns are safety and efficacy. The agency has little authority over the cost of new drugs or ability to encourage competition among drug companies.
If further trial results are promising, Pfizer could apply for federal approval to sell the drug by late 2006, although analysts say an application in 2007 is more likely. Other companies are working on similar drugs, but Pfizer is many years ahead, the analysts said. “We’re talking about a combination of molecules that could have a great effect,” said Dr. John L. LaMattina, the president of Pfizer’s worldwide research and development division. Dr. LaMattina said he believed patients and doctors should be happy to use torcetrapib with Lipitor, which some studies have shown to be the most effective statin.
Pfizer has tested torcetrapib on its own in small trials, including the ones to be presented today in Orlando. According to an abstract of that presentation, which was posted on a Web site about the conference, the studies showed similar results for both torcetrapib alone and for the torcetrapib-Lipitor combination.
But in the large trials now under way, Pfizer is testing the drug only in combination with Lipitor. And the company plans to submit only the combination treatment – not torcetrapib alone – for approval from the F.D.A. F.D.A. approval of the combination pill would automatically protect Pfizer from antitrust laws that might otherwise bar the company from linking the drugs, legal specialists say. Drug makers are offering more combination products but they usually consist of two medicines that are independently available. By planning to offer only a combination pill, Pfizer is taking the marketing strategy one step further, analysts said.
The controversy threatens to overshadow torcetrapib’s promise for stopping heart disease. In small trials so far, the drug has sharply increased levels of HDL, the so-called good cholesterol. The only existing treatment for raising good cholesterol is the vitamin niacin, which is also available as prescription slow-release drug. But neither the basic vitamin nor the drug is widely used because of side effects that can include dizziness and flushed skin.
Long-term studies have shown people with higher levels of good cholesterol have lower risks of heart attacks and strokes. Some heart researchers say that raising good cholesterol may eventually be viewed as important as lowering LDL, or bad cholesterol, as Lipitor and other statins, like Zocor and Pravachol, do. Raising good cholesterol and lowering bad cholesterol together could reduce the risk of heart disease by more than 50 percent, they say.
“There’s a lot of building evidence that HDL and LDL changes are equally important in reduction of risk,” said Dr. Greg Brown, professor of medicine in the cardiology division, University of Washington School of Medicine at Seattle. Torcetrapib raises good cholesterol by as much as 55 percent, depending on the dose, according to two studies covering 336 patients that researchers will present today in Orlando, at a conference of the American College of Cardiology.
Lipitor’s importance to Pfizer is hard to overstate. The company had sales of $10.9 billion for the drug last year worldwide, and its pretax profits from the pill topped $8 billion, analysts say. Over all, Pfizer had sales of about $53 billion and profits of about $16 billion last year, after taxes but before certain one-time charges. The combination pill may also protect Lipitor from generic competition after Pfizer loses its patent on Lipitor in 2010. At that point, other companies will be able to introduce generic versions of Lipitor, whose active ingredient is a chemical called atorvastatin. But anyone who wanted to take torcetrapib along with atorvastatin could get the combination only from Pfizer.
Pfizer’s plan might seem to violate antitrust law, which can prohibit companies from “tying” products together or refusing to sell one unless customers buy another. But antitrust lawyers said the company’s plans were legal, as long as the F.D.A. approved the drugs in combination. It’s the F.D.A. that’s doing the tying,” said Herb Hovenkamp, a law professor at the University of Iowa. “Assuming the F.D.A. accepts Pfizer’s test results and certifies this drug only when it’s taken in conjunction with Lipitor, then that would then become the government’s restraint, not Pfizer’s restraint.”
In that case, the design of Pfizer’s clinical trials is crucial. The agency wants Pfizer to show that torcetrapib actually lowers the risk of heart disease, not just that it raises good cholesterol, Dr. LaMattina said. To that end, Pfizer has just begun two major trials. The first will examine whether a torcetrapib-Lipitor combination can slow the growth of the arterial plaques that can cause heart attacks. That trial covers 1,500 patients and should end by summer 2006. If the trial shows that the combination pill significantly reduces the growth of plaques, Pfizer may submit the drug to the F.D.A. for approval, Dr. LaMattina said.
Meanwhile, Pfizer has just finished entering 13,000 patients in a trial that will last five years to determine whether the combination pill lowers the number of heart attacks and strokes. In both trials, Pfizer is comparing the combination pill to Lipitor alone, not to torcetrapib alone. (An additional 10,000 patients are enrolled in various other trials.)
Pfizer’s decision to test the two drugs together will also protect patients from unexpected side effects that could result from the combination, Dr. LaMattina said. Last week, a multiple sclerosis treatment called Tysabri was pulled from the market after two patients taking Tysabri in combination with Avonex, another multiple sclerosis drug, developed a fatal brain disease. Scientists are now working to determine if the side effect resulted from the combination or from Tysabri alone. Of course, Pfizer’s plans for torcetrapib will be moot if the drug does not work or has unexpected side effects. Dr. LaMattina says Pfizer believes that torcetrapib is safe. “All of our studies at the doses that we’ve been using have shown there is no significant increase in blood pressure,” he said.
Dr. Allen J. Taylor, a cardiologist at the Walter Reed Army Medical Center, noted that patients who wanted to raise their HDL already had one proven alternative, the vitamin niacin. Studies have shown that niacin can raise HDL by more than 30 percent.
Despite niacin’s side effects, “it’s the most potent drug we have available right now to raise HDL,” said Dr. Taylor. “It’s a safe add-on to statins.”
In any case, Pfizer is not required to test torcetrapib against niacin. F.D.A. rules do not require that new drugs be tested against older ones.
Dr. Brown, of the University of Washington, said he wished that doctors would use niacin more often to raise HDL cholesterol – regardless of whether torcetrapib is eventually approved. “Torcetrapib is an unproven drug that has an interesting potential,” he said.
Copyright 2005 The New York Times Company
Campaign to Enhance Pharma Industry Accountability Broadens Shareowner Action
by William Baue
March 04, 2005
The Interfaith Center on Corporate Responsibility sent letters to over 2,750 institutional investors seeking support for three resolutions filed at nine pharmaceutical companies.
SocialFunds.com — On March 1, 2005, the Interfaith Center on Corporate Responsibility (http://www.iccr.org/ ICCR), a coalition of 275 faith-based institutional investors with approximately $110 billion in assets, sent a letter to more than 2,750 institutional investors urging pharmaceutical industry reform. The letter highlights three shareowner resolutions filed by ICCR members this proxy season at nine major pharma companies, including Abbott Laboratories (ticker: ABT), Bristol-Myers Squibb (BMY), Eli Lilly (LLY), Merck (MRK), and Wyeth (WYE). One resolution seeks to split CEO and board chair roles, one asks for a report on the impact of the HIV/AIDS pandemic on the company and its response, and the third requests disclosure of corporate political contributions.
“This is a huge push to inform the investment community of our efforts and demonstrates the connections between the resolutions,” said Dan Rosan, director of public health and access to capital programs at ICCR. “I think this kind of industry-wide push is a real innovation in the corporate responsibility movement.”
The letter illustrates two nascent trends in shareowner action: an industry-wide focus on inter-related issues, instead of a company-by-company approach on isolated issues, and an effort to broaden support for resolutions to a wide cross-section of investors.
The pharma industry is a logical sector to initiate these strategies, as the “industry’s long-term business model is under considerable stress,” as the letter states. Problems contributing to this stress include the following:
–Following in the footsteps of the tobacco industry, pharma companies may have had knowledge of hazards of their products that they did not disclose to consumers or investors.
–Public perception of industry indifference to HIV patients in developing nations was bolstered when 39 pharma companies tried to sue the South African government, pitting corporate intellectual property rights against rights of access to cheaper generic drugs.
–And in the absence of comprehensive disclosure on corporate political contributions, the industry is widely perceived as lobbying its way out of trouble.
The resolutions do not provide solutions to the specific problems they address, which intertwine along lines of accountability and transparency. Instead, they address how corporate governance structures, such as joint CEO/chairs, may contribute to the problems. The resolutions also ask for information allowing investors to assess corporate strategies on HIV/AIDS and political giving. In other words, they do not seek to micromanage, but rather to fulfill the fiduciary duty of due diligence on the soundness of corporate management procedures that affect long-term shareowner value.
ICCR sent the letter not only to socially responsible investment (SRI) practitioners, but also to the 2,000 largest public pension funds, about 400 faith-based investors (including many non-ICCR members), the 30 largest mutual fund families in the nation, and proxy voting services.
“The cross-section of investors receiving the solicitation is very broad, but there is a common theme: we are sending the letter to investors whose constituencies would benefit from the reforms we seek,” Mr. Rosan told SocialFunds.com. “For example, public pension funds are accountable to taxpayers and retirees, who suffer from lack of access to affordable medicines.”
This line of reasoning suggests that the issues addressed in the resolutions are signposts pointing to bigger issues of how the industry’s business model as currently constructed may not align with the long-term interests of those invested in the companies. Similarly, the resolutions’ requests for disclosure synchronizes with the new Securities and Exchange Commission (SEC) rule requiring mutual funds to disclose their proxy votes, allowing fund investors to better assess if votes align with their interests.
“Mutual funds have never been democratically accountable to their own stockholders because their proxy votes have been undisclosed,” said Mr. Rosan. “The new SEC rules change that, and already mutual fund constituents (perhaps primed by the scandals within the industry itself of recent years) are now paying very close attention to proxy votes.”
The invigorated attentiveness of mainstream mutual fund firms to their shareowners helps ICCR expand its potential base of support for resolutions. While the pharma campaign and letter represent a broadening of ICCR’s reach in terms of the number of companies approached, issues addressed, and potential allies contacted, the strategy is consistent with the approach ICCR has employed since its 1971 founding.
“This letter represents ICCR at its best because we are using our strength as a diverse coalition of institutions,” said Mr. Rosan. “No one institution could possibly file resolutions on three different topics across an entire industry, but ICCR has that capacity, and there are immense potential benefits to all shareholders and patients if our approach is successful over time.”
“So in that sense, what we are doing is new, but it draws on the strengths of a thirty-year history as a movement and the hard work done on other social issues, such as global warming, to broaden the corporate accountability movement to include an ever-wider variety of constituencies.”
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