A Talk With Billy Tauzin: PhRMA’s CEO Discusses What Industry Is Doing Right – And Still Doing Wrong

Billy Tauzin became president of the Pharmaceutical Research & Manufacturers of America in January 2005 after serving as a congressman from Louisiana for more than two decades. His immediate focus was on communications - to "rescue and restore the reputation of our companies" - and his efforts included programs to enhance patient assistance efforts and reform direct-to-consumer advertising. Editors from "The Pink Sheet" met with Tauzin late last year to discuss the association's agenda and the future of the industry.

Tauzin: First of all, it's to continue an effort we've started this year which is to refocus PhRMA on a central mission of seeing all we do, all our activities through the eyes of patients....For example, Jan. 1 is the implementation of our code of conduct on DTC advertising. I think if you were to sit down most of our board members in this room with you, they would all conceive that while DTC advertising has done some very important positive things, particularly in encouraging patients to talk to their physicians about disease and learning that they in fact have diseases that were going untreated, that the other side of that has been rather negative for the industry. It's also created negative impressions among the American public about what the industry is all about.

And it's changed America's perception of the industry from a healthcare partner to a huckster of products, and it's sort of commoditized what otherwise was considered to be miracle drugs and important new discoveries. We've got to turn that back around. So implementation of the code is going to be extremely important because if done correctly it will be hopefully the first big sign to the American public that the industry is refocusing its attention to the fact that it serves patients most importantly, that it's doing its best to produce the medicines that save lives and extend lives. That it's a scientific-based industry and that it works as a partner to healthcare providers, to doctors and pharmacists and nurses, rather than as a single player sometimes in contrast with the work the caregivers do. That's a big change, if we can accomplish that successfully next year, that's probably the most important thing.

The second thing will be our efforts to extend access and affordability initiatives in the next year. We launched the PPA [the Partnership for Patient Assistance] program this year but it's to extend those initiatives into a whole series of important directions. For example, healthy living; the fact that medicines are only part of good health...they're not the only answer. You really have to combine the appropriate use of medicines with other healthy living objectives, otherwise Americans will continue to suffer from obesity and diabetes levels unheard of in the world.

"The Pink Sheet": What's your biggest challenge? What's going to be hardest about doing that?

Tauzin: While I think we've stabilized what had been a downslide in public opinion about the industry, we still continue to work in a relatively poisoned atmosphere, and we've got to change that....The first time we had a meeting with press, somebody asked me 'Billy, are you going to change the spending that PhRMA has on politics?' I said, 'Of course we will,' but we're not going to stop defending ourselves. We have to be prepared to defend ourselves against assaults and attacks on the industry that we believe are unfair or they're going to damage our capacity to complete our central mission.

But our hope would be that we could improve the atmosphere in which we work so there are fewer attacks, so the balance here is trying our best to re-earn, recapture public appreciation, rebuild reputation so we don't have to be constantly on the defensive.

For example, all of us know...we've all got to be working on the problems of the uninsured. We have too many people that don't have access to medicines in the way that people who are insured have access to them, and we need to work on that. We need to spend a lot more time thinking through how the model by which investments are made in discoveries might continue to work even in the face of the pressure to be much more accurate about what we know and what we don't know about medicines as we go through the approval process. We have to literally work on the problem we have in this country about the lack of investment in vaccines and antivirals that obviously are going to be important to protect our country, not only to protect us from pandemics but from potential terrorists' assaults on our country. All of those positive agendas require a lot of time and a lot of assets that unfortunately have been diverted to defending ourselves against bad initiatives like there were in California just recently....

I was very fortunate to come to PhRMA at a time when things were bad enough that the timbers were kind of shaking. They had already figured out we really need to create a new accessible point of entry for patients who can't afford our medicines to get a hold of the programs that can help them...but nobody knew it was going on. I didn't know it was going on. I had no idea the industry was $4 bil. into providing free medicines in this country. And I'll bet you most members of Congress still don't know that. So we have a job to do: not only to keep pushing the program but also to tell our story.

"The Pink Sheet": So what is the next initiative on the uninsured or access?

Tauzin: I can tell you we're already on the point. We are working with outside groups to begin thinking through models. We're going to be engaged with our federal team with members on the Hill of both parties to see if we can't come up with concepts and ideas to deal with the uninsured in America. We're going to be working, as I said, on the concepts of healthy living and cost management and outcome-based initiatives to make sure that we're part of cost-containment solutions and not part of the problems.

We're going to be discussing how do you approach it, how do you attack it, but obviously the successful registration of seniors into the Medicare prescription drug program will be a good first step. That will reduce a big number of uninsured Americans and put them under prescription drug insurance which is critical I think for the new Medicare program but also a step forward in dealing with a large uninsured population.

"The Pink Sheet": Talking about outcomes, there is a lot of industry concern about how CMS and FDA might be using all of this new data from the Part D plans. Is that a concern of yours?

Tauzin: It's not a concern. We do have some concerns about how it's implemented. But frankly we support the notion that good databanks and information you derive from outcome studies and all of that, they're going to be important in terms of how you know caregivers use their medicines properly and how patients with their caregivers make good decisions and how plans make good decisions in terms of providing coverage for patients in the future.

So we don't have a problem with that. What we are concerned about...is the validity of the data and making sure that it's good data flowing out of those systems and not bad signals and background noises that could somehow influence bad decisions. The decision to stop taking a medicine that you ought to be taking is just as wrong as the decision to take a medicine that you shouldn't be taking. So the data ought to drive the right decisions is what we're saying, so you've got to be careful to make sure the databanks are correct.

"The Pink Sheet": What are the appropriate kinds of data sets?

Tauzin: My experts over here could probably give you more complicated examples, but the easy one to give you is: if you supposedly have a sample of Americans that includes a disproportionate number of people who are prone to a specific kind of disease, you're going to get some slanted data out of that group. So you have to know your dataset very well before you start making judgments about the data that flows from it. And unfortunately that doesn't always happen. A lot of data comes from groups that are not well understood and when that happens you're going to get bad data. Now having said that, I would much prefer that we work with authorities like the FDA and CMS than to have blogs in America being the source by which Americans will make judgments on medicines and healthcare decisions.

"The Pink Sheet": There have been some proposals that appeared in some medical journals recently about reforming the drug approval process. Is a new model needed for that, or for R&D?

Tauzin: There are studies out there we've looked at that tell us the current model of testing our drugs [is] out over this 14-year period, and that may be longer because the FDA appears to be asking for more studies. [The agency] is concerned, as it should be, about safety under this older model, but if that continues, if there's less and less time at the end of a 20-year patent process before you get to go out and actually market a drug, what you're going to find is that companies are dropping drugs out because there's no time left for them to market it.

"The Pink Sheet": Lilly seemed to be suggesting that there should be a fixed period of exclusivity after a drug is approved [ ¹ "The Pink Sheet" Nov. 14, 2005 , p. 11]. Is that something that needs to be considered?

Tauzin: We may get to that if we can't build a better model. Assuming you could build a model where you could test drugs out in a 8, 9 or 10-year frame, instead of a 14-year frame, that's one way to solve it, but if your model continues to require 14 years of testing and clinical trials now extended to 15, 16 and 17, the answer may end up being some guaranteed period of protection at the end of the approval process. There obviously would be hard fought political battles around that sort of a notion, but you've got to have one or the other.

You're either going to have a much more efficient approval process that allows you time to bring a drug to marketplace within your patent protection, or if that process continues to breakdown and the approval process time is longer and longer, then you've got to have a solution to the back end. When I tell people that 14, 15 years of a patent life is eaten up in its approval process, it surprises people. That's something most people in America don't know. That's one of the reasons why drugs cost as much as they do because you have so short a period of time to recover the cost of all those years of research and trial and discovery, that if you somehow were able to have a longer period of time of protection so that you could literally cover those costs...you could theoretically at least do something really meaningful about drug costs in America.

That's a hard political argument as you know, but the realities are that the current model is beginning to grind and to break down. I've seen companies dropping drugs out because they know that there isn't enough time anymore, within the 20-year process, to have a valid economic model around that drug, and that's not good. If it's a drug that's important to patients and it's being lost because of that, then we need to rethink the model.

So again, what we're doing is focusing on the front end. Is there a better scientific way of analyzing and learning everything you can know about a drug in a shorter period of time so that the model works again and that you still realize as much if not a better safety regime out of it? And if not, then we've got to start looking at other alternatives like this.

"The Pink Sheet": In terms of vaccines, is the Vaccine Injury Compensation Program the model that should be used to encourage development?

Tauzin: It's different for children. There was liability reform passed by Congress for children's vaccines and it's worked, I mean there's an availability of children's vaccines in America today that's very different from the availability of vaccines for the rest of the American population. So we know that liability reform can and does work....

Wouldn't you be willing to provide some resource to get that done in [a] private insurance program that was offered to you? I would. I mean most Americans who could afford it would. So maybe it's a combination. Maybe we need to be thinking about an insurance model that works like the government purchase model. The rest of us might have covered our risk by being part of an insurance program that can access the medicines when we need it for our families.

- John Rancourt