Health News Daily
January 22, 2009
Small Biotechs Could Suffer Under State Bans On Selling
Physician Rx Data, BIO Says
Small biotech companies could face a more difficult financial
future should more states succeed in adopting bans on
data-mining of physician prescribing data, the Biotechnology
Industry Organization's Patrick Kelly said.
"Limiting access to this data will actually put smaller
companies at a competitive disadvantage to the other companies
that have been in the space for a period of time," Kelly, VP
of state government relations at BIO, said in an interview.
When smaller biotech companies come to market with a new
product, Kelly noted that they usually have "these very paltry
and bare-bones sales forces," making data that help these
sales forces target physicians treating a specific disease or
even certain geographic information a valuable resource.
In contrast, larger, more established biotechs stand to be
less affected because they likely will have larger sales
forces as well as established relationships with physicians,
giving them an upper hand in the market, he added.
A ban "has this kind of a sweeping, we think unintended,
effect on smaller, more innovative companies coming to market
with products, and they're just not going to be able to
compete," Kelly said.
The data-mining ban returned to the forefront in November 2008
when the First Circuit Court of Appeals reversed an April 2007
district court decision that struck down a New Hampshire law
banning the sale of physician prescribing data (1"The Pink
Sheet," Nov. 24, 2008, p. 13).
The data-mining firms that had sued to block the law, IMS
Health and Verispan (which was bought by SDI in July 2008),
now are hoping the U.S. Supreme Court will take up the case.
A similar law in Vermont, under the jurisdiction of the Second
Circuit Court of Appeals, is still undergoing judicial review.
More than a dozen other states considered similar legislation
last year and a positive signal from the courts could
encourage them and others to continue the legislative pursuit.
Only the large survive?
But the financial woes may not stop there. Being at a
competitive disadvantage could create a ripple effect when it
comes to smaller companies trying to sell their products to
larger ones. The mere fact that they will not necessarily be
on a level playing field could force the smaller company to
sell its product.
"That's a concern," Kelly said. "Are we creating an
environment where only the largest pharmaceutical companies
are going to be able to sustain the market controls that are
being put in place with regard to limiting access to this
data? The small companies that are just coming through with a
product are not going to be able to compete, they're not going
to have the information they need to target their sales and
target their relatively meager sales resources to the doctors,
and they'll just have to sell out."
However, Kelly added that the kind of product a small company
develops also will be a determining factor in how
significantly small companies could be affected by the ban.
"If it's a first-in-class, novel therapy, I think the smaller
companies will probably have a much better chance at creating
a market because there will be so much information about that
product that the physicians will be clamoring to get it, so
the phones will be ringing," Kelly said. "But if it's a
follow-on, or if it's a second-generation product manufactured
by a company, I think it's going to be very difficult for
those companies to have a product in the marketplace."
Tensions between the promotional strategies of small and large
firms also have been on display as the Pharmaceutical Research
and Manufacturers of America presses BIO to adopt its
marketing code (2"The Pink Sheet" DAILY, Nov. 18, 2008).
Unintended consequences of disclosure
In the coming year, Kelly said another trend is likely to be
more states limiting sales and marketing activities in the
wake of a recently-passed law in Massachusetts. The law
requires that any drug company that employs a sales force in
the state file an annual report listing "the value, nature,
purpose and particular recipient of any fee, payment, subsidy
or other economic benefit with a value of at least $50" to
"any physician, hospital, nursing home [or] pharmacist."
(3"The Pink Sheet" DAILY, Aug. 11, 2008).
"Initially, we were concerned that it was going to have a
sweeping impact on whether or not physicians were going to
participate in clinical research projects with companies
because they would have to disclose as a financial transaction
that they were involved in a research project," Kelly said.
"It had nothing at all to do with selling or marketing a
Kelly said Massachusetts physicians were uncomfortable with
the idea of having their names appearing on a state-run Web
site if they were in a contractual relationship with a
biologics company researching a cancer drug, an unintended
consequence of the law. He said BIO was able to prevail in
getting some protections in the final legislation.
But he noted that the intended consequence of this type of law
is to make the relationship between sales and marketing
personnel and physicians more transparent, something BIO does
"The question is how much further down the line does it affect
the physicians and the manufacturers or even the companies
that are not yet manufacturers, the companies doing research?"
Friday, January 23, 2009
at 11:51 AM