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Pharmaceutical Sales & Marketing Legal and Ethical Considerations

Distribution

Distribution Related Regulatory Authority


Prescription Drug Marketing Act 1988/92 State licensing of drug wholesalers Required pedigree of drugs to trace prior sales (authorized distributors exempted) Restricted importation to manufacturer Restricted re-sale of drugs by end-users and charities State Model Practice Act model rules for licensing of wholesale distributors

Source: FDA

Sample Tracking and Management

The Business Problem


Approximately $6.7 billion in drug samples are distributed by sales reps each year Prescription Drug Marketing Act (PDMA) of 1987 - 21 CFR 203:
FDA regulation governing the distribution of drug samples Impacts pharmaceutical sales reps and wholesalers Strict requirements on manufacturers to ensure that:
1. 2. 3. 4. 5. The recipient of the samples is licensed by the state Whatever is shipped to the sales reps is accounted for Safety and security of the samples is ensured Samples distributed to physicians are recorded and continuously accounted for Manufacturers are responsible for sample tracking and detecting potential diversion, misuse or abuse

Increased government concern about drug diversion (e.g., Oxycontin) Heavy fines and criminal penalties for PDMA violations
Source: IMS Health; FDA

PDMA Compliance Failures The Impact

10 years in prison or a $250,000 fine $50,000 for each sales rep. violation (2 strikes maximum and permanent barring from industry)
Third violation is a $1 million fine to be paid by the company over 10 years

$100,00 fine for failing to report a violation Whistle-blowers get the penalty imposed by FDA

Source: IMS Health; FDA

Is the FDA Serious About Monitoring Compliance?

On December 4, 2000, FDA announced plans to hire more than 100 investigators to focus on PDMA violations and the diversion of prescription products In January 2002, President Bush asked for an 8 percent increase in FDA's 2003 budget for inspectionrelated activities FDA.gov announced that this will add 600 new investigators just to focus on PDMA violations and will conduct 520 additional inspections per year on PDMA-related compliance

Source: IMS Health; FDA

PDMA Compliance Failures The Experience

1998 290 convictions; $29 million in fines 1999 375 convictions; $56 million in fines 2000 580 convictions; $96 million in fines 2001 - $290 million in fines collected through the action of whistle-blowers

Source: IMS Health; FDA

PDMA Impact on Pharmaceutical Sales


Samples must be labeled Samples must be properly requested and receipted Contents of requests and receipts must follow FDA requirements Internal controls for request/receipt noncompliance Inventory and reconciliation processes Investigation of falsified records/diversion Distribution of samples to charitable organizations
IN SHORT A TREMENDOUS ADMINISTRATIVE BURDEN!
Source: IMS Health; FDA

PDMA Impact on CRM


21 CFR 203 and 205 directly impact CRM systems as they are used as the principal means by which pharmaceutical samples are provided to doctors CRM software programs must include an audit and security process that governs sample delivery, distribution, and tracking and must be validated to comply with PDMA requirements Companies must document that all sales professionals handling pharma products understand PDMA regulations. To ensure that they do, companies must test reps and keep on file a signed acknowledgement of a compliance waiver in the event of sample diversion or an FDA audit of the sales force
Source: IMS Health; FDA, Pharmaceutical Executive

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PDMA Information Requirements


TOPIC
Receipting Samples

CURRENT
Office address Medical designation Name Specialty Date Product description Configuration (tablets, etc.) Manufacturer Signature

PROPOSED
State license number DEA identifier Name of distributor Bar code

Scanning

Not acceptable for replacing paper signatures

Must satisfy all security requirements and electronic signature requirements under 21 CFR Part 11 Required including knowing which lot numbers have been distributed to a specific practitioner

Lot Numbers

Not required

Source: FDA

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PDMA Information Requirements


TOPIC
Annual Inventories

CURRENT
Annual count required Reconciliation is not required

PROPOSED
Must be conducted independent of person in direct supervision or chain of command of the representative. Must provide last inventory, current inventory, distributions to reps, all distributions, transfers, returns, adjustments since last inventory All investigations while in progress that involve suspected diversion or falsification must be reported to FDA in 5 days Regardless of whether electronic, paper or both, must be linked and retrievable in 2 working days

FDA Reporting

Significant loss. Theft. Convictions. Conclusion of investigations Not mentioned

Data Storage and Retrieval

Source: FDA; The Franklin Group, Inc.

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Sample Management Functional Requirements


Sample Ordering Order Fulfillment Sample Receipting Inventory Management Electronic Signature Management Exception Management FDA Reporting

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Example PDMA Sample Compliance Program


1. 2. 3. 4. 5. Define all business rule requirements to identify specific performance responsibilities as well as to establish various thresholds Follow standard operating procedures. PDMA requires written SOPs for all activities related to sample accountability. Complete training for sales reps and operating staff on regulatory requirements for PDMA and 21 CFR Part 11 Establish a baseline inventory of all samples Monitor shipments. Reps must acknowledge receipt of the samples and identify the quantity of each received Sales reps must distribute samples to licensed practitioners via CRM or paper forms and must document the practitioner's signature at the time of the drop Get physician validation and ensure DEA numbers are correct Perform random signature audits Report lost or stolen samples When one sales rep transfers samples to another, both parties must follow strict protocols that document the quantity of samples transferred Document sample returns The law requires that field reps take a physical inventory of samples on hand at least once a year
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6.
7. 8. 9. 10. 11. 12.

Source: Pharmaceutical Executive

Sample Accountability
TRACKING AND REPORTING CHANNELS

ACCOUNTABILITY SILOS

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Sample Management Technologies


The Internet The Sampling Process Sales rep arrives at practitioner office Rep scans bar codes of samples to be distributed using a PDA or fills in a preprinted form Rep conducts detailing session Physician signs for samples on PDA or on pre-printed form Signature validated with biometric scan At end of day the rep: Syncs the PDA with a laptop or enters data from form Laptop connects via wireless web and updates company SFA/CRM databases Inventory management records updated for replenishment and PDMA compliance Analysis of sampling patterns and reports generated

PDAs

Bar Coding

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Sample Tracking Vendors


Dendrite (integrated with SFA) IMS Health (SampleTrak) Stayinfront Integrated Pharma Technologies Lscan Technologies Triplefin (web-enabled fulfillment services) Siebel Software Associates International (SAI) Pyxis (subsidiary of Cardinal Health) NOTE: Systems collecting sample distribution data must be compliant with 21 CFR Part 11
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Physician Detailing

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Detailing and Ethical Issues


Negative publicity surrounding the pharmaceutical industrys use of gifts and other perquisites to physicians to influence prescribing habits
According to the Journal of the American Medical Association, pharmaceutical companies target $8,000 - $15,000 of sales effort per physician in an attempt to influence the choice of drugs they prescribe for their patients. 80,000 marketing and sales people in the U.S. pharma companies (75 sales people per physician) up from 35,000 people in 1994!

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Promotion and Prescription Linkage


The linkage between promotion and prescription has been well-documented:
1992 study by the Cleveland Clinic documented a significant increase in prescriptions for a firms drugs that flew doctors to Sun Belt resorts for conferences 1994 study published by JAMA showed that doctors prescribing certain drugs from a hospital formulary had recently attended firmsponsored events or had been asked to speak at conferences run by these firms

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PhRMA Code on Interactions With Healthcare Professionals


Effective July 1, 2002 Completely voluntary Dealings between sales representatives and health care professionals must relate primarily to patient care
Discussing companys products Providing scientific or educational materials or supporting medical research

Interactions should not take place on a golf course, at an expensive restaurant, or at other venues that PhRMA described as unsuitable for the exchange of scientific information Only certain types of gifts are permitted (stethoscopes, anatomical models) if under $100 Golf balls, sporting event tickets, show tickets are not permitted Gifts of minimal value, such as pens and notepads, are allowed under the code as long as the items are intended for use at the health care provider's practice site

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Compliance with the PhRMA Code


Most, if not all, pharmaceutical companies have published statements of compliance with the PhRMA code on their websites and have incorporated it into their policies

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Off-Label Use

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Off-Label (Extralabel)Use of Prescription Drugs


Off-label (or extralabel) use refers to the use by doctors of FDAapproved drugs for purposes other than those approved by the FDA Off-label use is so high that most hospital inpatients receive at least one approved drug for reasons other than those for which it was approved

FDA regulations ban the promotion of such off-label uses


Drugmakers are barred from pitching doctors directly on unapproved uses of their drugs

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Off-Label Use: Regulatory Guidelines


Food Drug & Cosmetic Act The Pharmaceutical Worlds
Bible A drug or device is misbranded if its labeling is false or misleading in any particular Labeling is broadly defined as including any written or graphic material on or accompanying a drug

21 CFR 201.56(c): no implied claims or suggestions of drug use may be made if there is inadequate evidence of safety or a lack of substantial evidence of effectiveness.

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Off-Label Use Regulatory Issues


Suggestive selling by rep to physicians when there is no FDA approval:
Propulsid: J&J Retinol: J&J Topomax: J&J Thalidomide: Celgene Neurontin: Warner-Lambert/Pfizer Vioxx: Merck??

Doctor suggests medication to patient without pharmaceutical company approval


No supporting clinical trials performed
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Off-Label Use Violations: Retinol


Retinol developed by Ortho Pharmaceutical
FDA Approval for the treatment of Acne

Off-Label use marketed as Anti-Aging product


No Clinical Trials or FDA Approval for indication Ortho Sales Representatives and Marketing Organization promotes offlabel use of product

FDA Investigation of Off-Label promotion


Ortho Executives shred documents related to product promotional direction Three J&J Senior Executive Members removed from office J&J Fined by FDA for Label Indication Violations and Obstruction of Investigation (Document Shredding Incident) J&J Pharmaceutical Sector Companies scrutinized by FDA
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Off-Label Use Violations: Topamax


Ortho-McNeil Product:
Topamax: Eight out of 10 prescriptions for the epilepsy drug Topamax aren't for epilepsy Prescribed off-label for prevention of cluster headaches and migraine attacks

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Off-Label Use Violations: Thalidomide


Celgene Product: Thalidomide
Thalidomide: the notorious morning-sickness drug that caused horrible birth defects and ushered in today's FDA drug-safety rules, even is on the market, and 99 percent of its prescriptions are off-label Approved for Leprosy Off Label Use for Multiple Myeloma Cancer

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Off-Label Use Violations: Propulsid

J&J product FDA approved for relief of Heartburn in Adults Pediatric Studies failed to show benefits of drug
1998 prescription level at 500,000

$ 1 Billion Annual Sales by Johnson & Johnson Government and J&J negotiations for 5 years
Government report of 80 deaths and 341 injuries Propulsid pulled from market in 2000 J&J Legal settlement of $ 90 million (300 deaths 16,000 injuries)

Doctors Insisted on use of Medication after product pulled


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Off-Label Use Violations: Neurontin


Warner-Lambert product (later acquired by Pfizer) Warner-Lambert's strategic marketing plans, as well as other evidence, show that Neurontin was aggressively marketed to treat a wide array of ailments, including
Bi-polar disorder Various pain disorders ALS ADD Migraine Drug and alcohol withdrawal seizures Restless leg syndrome

Neurontin was promoted as effective for use as the sole drug for epileptic seizures, even after solo use had been specifically rejected by the FDA Warner-Lambert also used "medical liaisons," who represented themselves (often falsely) as scientific experts in a particular disease, to promote off-label uses for Neurontin Pfizer agreed to pay a fine of $430 million to FDA in July 2004
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Neurontin The Prosecutions Viewpoint


Voice mail transcription (to MSLs): Medical Liaisons, this is [the northeast Associate Director]. I am calling in regard to the you know, theres a Neurontin push thats supposed to be on. .So, what we need to do is focus on Neurontin. When we get out there, we want to kick some ass on Neurontin, we want to sell Neurontin on pain. All right? And monotherapy and everything that we can talk about, thats what we want to do. Cause Im embarrassed. But Im embarrassed about where we are with Neurontin. Weve got to take it into our own hands and really kick some ass on it, all right? Lets do it up.
Presentation by Boston AUSA (March 2005)
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Off-Label Use Dangers


Does not provide up-to date side effects or clinical research results on products benefits/harm to patient Potential for severe negative side effects Heightens the chance for future physician malpractice suits from patient ill effects resulting from doctors decision to write an off-label prescription Off Labeling means it is not approved by the FDA for the prescribed Medical Indication Treatment Usage Not tested and documented during product Clinical Trials

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Off-Label Use Penalties


Remedies
Regulatory letter (a/k/a notice of violation or untitled letter) Warning letter Other remedies:
Immediate cessation of all materials containing violative statements or graphics Dear Doctor letters Corrective advertising Pre-clearance

Enforcement Powers:
Injunction Seizure Consent decree Fines Criminal prosecution
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Allowable Off-Label Use


Doctors are well informed about the product Base its use on firm scientific rationale and on sound medical evidence Maintain records of the product's use and effects Inform patient of off-labeling usage

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Off-Label Use: Best Practices Develop policies requiring compliance with FDA rules
Materials must be consistent with approved product labeling May not engage in off-label promotion Responses to unsolicited requests for information

Consider policy requiring review of all voice mail and


e-mail messages to the field
Train appropriate personnel (Sales & Marketing) in FDA rules and appropriate use of voice mail and e-mail

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Fraud and Misrepresentation

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The Able Laboratories Case


Cranbury, NJ based pharmaceutical company (until August, 2005) Manufactured 1.3 billion tablets, capsules and suppositories that contained little or no product to be effective Supervisors and chemists actively forged records of tests and tampered with computer data to deceive FDA inspectors

Inexperienced and improperly trained chemists recruited from Asia and employed on work visas The scientists misrepresented the strength and shelf life of products because they were motivated to stay in the United States

New management of QA discovered the fraud when tests of inventory found low to non-existent levels of active compounds
Blew the whistle on the company

Able filed for Chapter 11 in July 2005 and FDA refused to let it reopen in August 2005

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Misleading Promotional Materials


Increased number of citations and Warning Letters by FDA for misleading or false:
Journal advertising TV/radio advertisements Package inserts/labels Instructional materials to doctors and patients (e.g., Roche was cited in 2003 for failing to reveal serious life-threatening safety-related information in a video cassette distributed to patients through doctors of Xeloda tablets to treat cancer) Overstatements of efficacy Unsubstantiated superiority claims Minimization of safety and tolerance risks

General issues:

How does Vioxx stand up to this scrutiny?


Source: FDA.gov

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Vioxx Detailing Practices


In Congressional hearings in May 2005 Merck sales practices for Vioxx were described using internal Merck sales manuals and other documents When asked by doctors about heart-related issues of Vioxx, Merck reps were instructed to provide physicians with a pamphlet from Merck marketing which stated that Vioxx was eight times safer for heart patients than similar painkillers Sales reps were forbidden to discuss Merck's own 2000 study linking the drug to heart attack risks five times greater than those with another painkiller Sales representatives were offered $2,000 bonuses for making Vioxx sales goals and encouraged to compare their efforts to the struggles of historical figures like Martin Luther King Jr. Those sales practices continued while Merck was resisting the FDA's efforts to include a warning on Vioxx's label about cardiovascular dangers, according to a Congressional analysis According to FDA, none of this was illegal. Was it ethical?

Source: FDA.gov, Sa n Francisco Chronicle

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