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Future Biotech Winners Will Help Nurses Clean up Less (Stuff), Says Roger Longman

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in the era of cost-containment, Longman says.

Biotech and pharma companies should now expect more pressure from the payers, from people like Rob Epstein, the chief medical officer of Medco Health Solutions. Epstein, who Longman calls “one of the most important guys in the pharmaceutical business,” looked at the new anti-clotting agent from Lilly as an option for about 15 to 20 percent of patients who aren’t good candidates for Plavix. That’s because most people do fine on Plavix. Since generic competitors are becoming available in 2011, there’s a reason to switch them to a generic version of the same product, not another costly brand-name drug.

“They have an incentive to find people to take Plavix, not Effient,” Longman says.

The really bad news is that if biotech and pharma companies complain about how the FDA is unpredictable, the territory is even more uncertain with payers, Longman says. Payers themselves are still trying to figure out which things they should be measuring, and what matters most in their decision to reimburse a product. Reducing physician time, nurse time, or hospital length of stay are just a few of the factors in this equation.

Some of these questions—like quantifying nurse time spent cleaning up vomit—aren’t really easily answered in a clinical trial. You could practically hear some of the CEOs in the room groaning in their chairs about how their clinical trials are complicated enough to run as they are.

Still, Longman had some good news for his audience. Healthcare reform has provided special protection for companies that make drugs for rare “orphan” diseases, which is where biotech toils more often than Big Pharma. New rules on risk evaluation and mitigation strategies are likely to create more predictable regulatory pathways for biotech drugs. And the new path for copycat “follow-on” biotech drugs reduces the risk that a generic company will swoop in and steal away market share from an innovative company during the most lucrative phase of a product’s life cycle.

Longman closed by quoting a line from GlaxoSmithKline CEO Andrew Witty about how to go forward in this new environment. The important thing, Witty said, is that big companies like GlaxoSmithKline come up with three to five different products per year, regardless of how much they sell, in order to create a situation “which in many ways creates the quantum of growth opportunity that you would anticipate from those one or two blockbusters in the past,” Witty said at a Goldman Sachs investment conference earlier this month.

Where will those new products come from? As Longman put it, “The only place you’ll get them is from biotech.”

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