Saving animals, dooming people

Earlier this month, neurobiologists in Milan had their lab broken into in a deliberate attempt to slow their research.

As the Wall Street Journal reported:

The lab was targeted because its work, like just about every other medical advance and effort of our time, involves mice. Hundreds of small, cute, furry mice, which in this case had been genetically modified for protein mutations meant to model, as [Dr. Michela] Matteoli puts it, "what goes wrong in the synapse."

The animal-rights crowd decided it had better plans for the mice. So on Saturday five members of Italy's "Stop Green Hill" group (initially formed to protest a nearby dog-breeding facility) broke into the Milanese lab and "occupied" the area housing 800 animals, mostly mice but also some rabbits. They chained themselves by their necks to the facility's doors, Ms. Matteoli says, ensuring that any attempt at forced entry by the police could "harm them really seriously. They could kill them, break their necks."

The researchers lost mice, and others were scrambled such that it was impossible to associate a specific animal with a given experiment. The damage is estimated to cost a year of work and hundreds of thousands of euros. The research is intended to develop drugs “that might arrest neuron destruction in Alzheimer's patients, or avoid the synaptic dysfunctions apparent in autism.”

Columnist Anne Jolis concluded:

[C]onsidering the zealousness of the people who have a problem with their work, Ms. Matteoli and her colleagues may hit on the cure for Alzheimer's before they convince any "Stop Green Hill" types that studying the caged mice and bunnies is worth it. Even Ms. Matteoli, polite to a fault, admits that she has been "impressed" with some of the "really completely crazy" online comments about news articles on the lab attack.

"One guy wrote that you should only study mice if you're developing medicine for mice. I mean, this is the level of—it's very hard to understand." Here's hoping she doesn't try too hard—and can get back to her regular work soon.

I realize I’m a species bigot, but I never got why people valued primitive animals over human life. (Dolphins and chimps I understand — at least up to a point.) The advances will come too late to help me, but perhaps they could help my in-laws (in another decade) or people of my generation (in 30-40 years).

The biopharma industry will continue to have these sorts of problems unless it can find a way to persuade the public of the necessity of their research and research methods. The anti-capitalist, anti-science challenge seems greatest in Europe, but the U.S. is far from exempt.

Myriad: does it matter?

Today marks the Supreme Court hearings in the Myriad patent case. It is no exaggeration to say this is the most closely watched life science patent case in more than a decade.

In one sense, the case has the potential to be as significant as Diamond v. Chakrabarty. That is the 1980 Supreme Court decision that (to quote a 2005 review) “held that a live, man-made microorganism is patentable subject matter” under the patent code.

There is more than a little posturing on both sides. The patients’ rights, open IP crowd is promulgating op-eds in the Washington Post and Los Angeles Times asserting that no company “should own our DNA”. Not surprisingly, the news pages of the New York Times are promoting sympathetic stories on the anti-IP crowd.

In response, the CEO of Myriad Genetics submitted an op-ed to Forbes and letters hoping to rebut these op-eds. The argument is summed up by the title of the Forbes piece: “We're Not Patenting Your Genes, But Our Research.”

We used the HBS case on Myriad in my Innovation Management class at KGI this semester. The students really enjoyed it. It provided very interesting discussion questions at the intersection of genomic medicine, patent law and public policy. It didn’t hurt that this is a high-profile unsettled question of the law.

For the legal issues, a great place to start is the PatentlyO blog. For example, a December 3 article listed the conventional wisdom among legal scholars. A February 11 article lists the questions to be addressed by the two parties:

1. Are human genes patentable?
2. Did the court of appeals err in upholding a method claim by Myriad that is irreconcilable with this Court's ruling in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)?
3. Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court's decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), that petitioners who have been indisputably deterred by Myriad's "active enforcement" of its patent rights nonetheless lack standing to challenge those patents absent evidence that they have been personally threatened with an infringement action?

The arguments on each side were highlighted in an August 17 summary of the appeal at the Genomics Lab Report, as well as a blog posting the same day on Derek Lowe’s “In the Pipeline” blog.

However, probably the most interesting article was in my Sunday morning paper here in San Diego, by Bradley Fikes, the longtime biotech reporter who’s one of the few North County Times reporters after it was acquired last year by the San Diego Union. His lead on the Union story captures it all:

No matter which way the Supreme Court rules on the Myriad Genetics BRCA breast cancer gene test patenting case, the importance of such patents is diminishing over time. Biotechnology is moving beyond patents derived from naturally occurring gene sequences. The most important biotech patents nowadays are becoming synthetic gene and RNA sequences, proteins and other indisputable contrivances of human ingenuity.

The article highlights the important pioneering efforts of Craig Venter (now in San Diego) who competed with the Human Gene Project.

In the long run, will Myriad matter? The experts consulted by Fikes think not, for two reasons. First, the relevant patents are expiring and thus at some point won’t be enforced anyway. Second, the IP strategies of biotech companies are getting more sophisticated, emphasizing synthetic organisms rather than isolated DNA strains from natural organisms. Meanwhile, as the New York Times reports, Myriad’s latest business model is using trade secrets for its database.

So in the end, this may be tempest in a teapot. In a decade or two, the industry will have moved on, and the patent lawyers will need something else to debate.

Beginning of the end for big pharma distribution?

Since taking my job at KGI nearly two years ago, one of the questions I’ve been asking is when the existing pharmaceutical distribution model is going to disappear. It’s an important question for graduates of our current school (School of Applied Life Sciences), and also for our newest school, the School of BioPharmacy, where I now spend some of my time. Both schools send (will send) many of their graduates to biotech and traditional pharma companies.

The existing commissioned sales force model is both expensive, and also a barrier to entry that separates traditional pharma from upcoming biotechs and the various generic producers. At the same time, in industry after industry over the past two decades, we have seen expensive distribution channels disrupted by e-commerce and other more efficient delivery mechanisms. Here we have both competition from more efficient channels and also the lost of margins as drug patents expire.

This week, Indianapolis-based Eli Lilly announced it would lay off “less than 1,000” sales representatives. But the Wall Street Journal reported that the total would be close to that ceiling, amounting to 30% of its US sales force. The changes will take effect by July.

The proximate cause is the company’s patent cliff for Cymbalta and Evista. The former accounts for nearly $5 billion annually, $3.9 billion of that in the US, and its patent expires at the end of 2013. Evista accounts for another $1 billion, and will face generic competition in early 2014.

So on the one hand, Lilly is losing the margin that supports this expensive sales force. On the other hand, it wouldn’t be firing nearly a third of the people promoting its products if they continued to be effective at generating sales. As the WSJ dryly noted:

[T]he influence of sales representatives has shrunk, as many physicians no longer have the time to take the calls and some doctors refuse to see pharmaceutical representatives out of concern about improper promotions. Growing numbers of doctors prefer digital marketing.

Lilly's U.S. sales force "will move to a smaller structure that is more directly aligned with our business realities—along with the realities our customers face, and the way they want to interact with us," a spokesman said.

Instead, big pharma is using computerized tools (such as iPad apps) to communicate with doctors.

This reminds me a lot of airlines, which used to have travel agents, ticket offices, customer support personnel and so on. When I started teaching strategy in 2002, I drew the distinction between full service and discount airlines, but after a few years the post-9/11 bankruptcies eliminated almost all of the distinction. (In a separate article this week, the WSJ noted that Pfizer and GSK cut free lunches and other doctor perks last year, in part to save money.)

The WSJ article on Lilly continued:

Today, there are about 60,000 pharmaceutical sales representatives, down from a peak 104,000 in 2006, according to ZS Associates, a sales and marketing consultant that advises many drug makers.

By 2020, I’m convinced that the traditional sales force will be a thing of the past. Those 60,000 employees will be under 10,000, with 90+% of the young salespeople (earning six figure compensation with commissions) looking for other work.

The industry needs to figure out another way to accomplish the same goal. How will doctors keep up with all the new medications — when they’re already having major difficulties doing so? Consistent with other trends, are they going to rely on pharmacists to stay on top of this and let others make the final decision on selecting therapies?