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After announcing its quarterly earnings and a 24 percent increase in 2011 profits, AstraZeneca (AZ) today made public its decision to eliminate another 7,300 jobs. Earlier this week there was speculation that job cuts were likely but the exact numbers were not disclosed. 

The reasons given for the layoffs despite increased annual profits? Government spending cuts for healthcare and stiff generic competition for several of its blockbuster drugs including Seroquel XR (depression), Atacand (hypertension) Crestor (cholesterol-lowering) and Symbicort (asthma); all of which have lost or will be losing patent protection in the near future. According to a company press release generic competition cut revenues by $2.0 billion in 2011 whereas government price interventions cost the company another $1.0 billion. The announced job cuts are expected to save AZ $1.6 billion by 2014—great news for shareholders but not so much for the employees who are losing their jobs!

Most of the cuts will take place in R&D. To that end, the company will close its facility in Montreal and layoff staff at its Soedertaelje site in Sweden. Interestingly, the company plans on focusing more on neuroscience and intends to hire 40 to 50 scientists in its new Innovative Medicine unit which is partly based in Boston, MA and Cambridge in England.

While layoffs at AZ were expected, the size of the current layoff does not bode well for other pharmaceutical employees. It is becoming increasingly clear that big pharma companies are getting out of R&D and focusing their efforts on M&A and licensing deals to fill their thinning pipelines. Also, while shedding R&D and sales jobs in developed markets, big pharma companies are investing heavily in building facilities and hiring thousands of R&D and sales personnel in emerging markets. From my perspective, it appears that big pharma has consciously decided to abandon developed Western markets where sales growth is in the single digits in favor of emerging ones where double digit growth is expected for the next decade.

Until next time...

Good Luck and Good Job Hunting!!!!!!!!!

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Depending upon the source, the cost of bringing a new prescription drug to market these days ranges from roughly $1.2 to 1.5 billion. While there is no question that clinical studies represent the most costly aspect of getting new drugs approved, the hidden costs—mainly promotion and marketing—are what actually inflate the costs of new drug development. Not surprisingly, drugmakers fail to disclose that these costs are included in the estimates for new drug development. If these costs were eliminated from the total, then the cost of developing new drugs will be significantly less than the current $1.2 to $1.5 billion price tag.

I suspect that many BioJobBlog readers—mainly those who work in the drug industry—will likely write me off as someone who doesn’t know what he is talking about. But, an interesting tidbit that I found in an article in today’s New York Times entitled “A Fight Over How Drugs are Pitched” suggests that my claims ought not be summarily dismissed simply because I am a “left-leaning histrionic democrat.” To wit, according to IMS Health (a competitive intelligence firm that tracks physician prescription rates) in 2009 alone, the branded prescription drug industry spent about $6.3 billion on marketing visits to doctors! This amount does not include costs associated with marketing and advertising that support direct-to-consumer (DTC) advertising campaigns that are run by companies that sell approved prescription drugs. DTC costs are generally much higher than those spent on direct marketing to physicians.

It is important to remember that a drug maker’s main goal is to convince physicians to prescribe “their” drugs. After all, physicians not patients write prescriptions! That said, physician prescribing behaviors are vitally important to the success or failure of a marketed prescription drug. Consequently, it should come as no surprise that marketing costs are factored into the cost associated with new drug development. Obviously, if less money was spent on marketing than the cost of bringing new drugs to market would likely be substantially less.

Interestingly, the States of Vermont, New Hampshire and Maine recently enacted laws to limit the uses of a doctor’s prescription records for marketing. On Tuesday, the US Supreme Court will hear arguments in a case, Sorrell v. IMS Health that tests whether Vermont’s prescription confidentiality law violates the free speech protections of the First Amendment. The federal government, the attorneys general of several dozen states, AARP, professional medical associations, privacy groups and the New England Journal of Medicine have filed briefs in support of Vermont’s law. The National Association of Chain Drugstores, the Association of National Advertisers and news organizations like Bloomberg and The Associated Press have filed briefs aligning themselves with the data firm.

Although a Vermont federal district court upheld the law after a lawsuit challenging the statute brought by IMS Health and the Pharmaceutical Research and Manufacturers of America, an appellate court overturned the decision suggesting that it violates free speech provisions afforded by the First Amendment of the US constitution.

It will be interesting to see how the “Supremes” adjudicate the appeal given the growing recognition that laws and regulations designed to control medical costs and minimize safety risks associated with newly approved drugs are becoming increasingly necessary.

Until next time...

Good Luck and Good Job Hunting!!!!!!!

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Sunday marks the beginning of “American Education Week”, the observance which was started back in 1921. It was created by the National Education Association (NEA) and other groups because 25% of World War I draftees were illiterate.

While a lot has change in the US since 1921 and the literacy rate has drastically improved, the quality of the American education system, especially in math and science, continues to be suspect and in many instances is failing its citizens. Much of this failure is rooted in skyrocketing college tuition costs which prevents many Americans access to an adequate post secondary education. 

Most politicians contend that education costs are too high and spending on education must be capped. However a quick look at some facts (provided by an article in USA Today written by its founder Al Neuharth) paints a much different picture

• Families are spending an average of $64 billion annually to send 13.9 million students to public colleges and universities
• For the past 10 years, the US has spent $1.1 trillion per year on wars in Iraq and Afghanistan; an annual average of more than $110 billion

As Mr. Neuharth aptly points out: $64 billion annually for higher education versus $110 billion per year for wars!

Is it any wonder that American students continue to lag in science and math preparedness as compared with much smaller countries where higher education is free or heavily subsidized by their respective governments? Think about this the next time you hear politicians and conservative talk show hosts about America’s dwindling competitiveness in math and science.

Until next time…

Good Luck and Good Job Hunting!!!!

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Most scientists fantasize about that so-called eureka moment when, after years of hard work, academic challenges and mental anguish, it all makes sense. While I have experienced these moments from time to time during my career as a scientist, it has happened less frequently as a lay person. This morning, while reading a Science Times article on Thomas R. Friedan , former New York City health commissioner and current head of the Centers for Disease Control in Atlanta, GA, I had one of those moments.

After reading the passage:

campaigns to ban trans fats, post calorie counts in chain restaurants, reduce salt in processed food and tax high-calorie sodas. He had a supportive boss in Mayor Michael R. Bloomberg and a receptive populace in New York, but if he were to try anything similar at the C.D.C., tough Congressional hearings could be in his future because conservative lawmakers on Capitol Hill often oppose such measures

it finally dawned on me that conservatives, in general, don’t give a damn or care about human health. Or perhaps, the underlying message may be: “don’t tell me how to eat or take care of myself; it’s my life and I know what is best for my health and me.” Unfortunately, since over half of the American population is obese or overweight and the incidences of diabetes and hypertension among younger and older adults has reached unprecedented epidemic proportion it is becoming increasingly evident that most Americans, regardless of their political affiliations, don’t know how to adequately manage their health.  And, to make matters worse, the inability or unwillingness of these individuals to maintain their health increases the cost and may block access of otherwise healthy Americans to adequate healthcare.

As an American, I strongly believe in individuals’ rights and freedom of expression. However, I also believe that summarily opposing unobtrusive measures to improve human health—based almost exclusively on political philosophy or personal financial gain—is morally bankrupt and overtly un-American!

Until next time…

Good Luck and Good Eating!!!!

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The economic crisis is having an adverse effect on enrollment at four year colleges and universities. Most four year institutions are reporting record low enrollments. While things are spiraling downward at many four year colleges and universities, business is booming at two year technical schools and community colleges. Seemingly, this ought to be good news for two year institutions. Unfortunately, statewide funding cuts and faculty shortages are making it difficult for community colleges and technical schools to accommodate burgeoning enrollment.

The rising enrollment at community colleges can almost exclusively be attributed to the current cost of attending 4 year colleges and universities. The cost differential between attending four year institutions and community college is stunning. For example, tuition at Miami Dade Community College, the largest community college in the US, is $1,000 per semester for Florida residents. In marked contrast, tuition at the University of Florida—a public institution— is roughly $5,000 per year and a whopping $42,000 at the University of Miami which is private.

Undergraduates are flocking to community colleges simply because many can’t afford to pay tuition for 4 or more years at most colleges and universities. The new paradigm for undergraduate education is to complete the first two years of college at a community college and then transfer to a 4 year college to finish a degree. Unlike other post secondary education institutions, there are no entry requirements at community colleges—open enrollment is the norm. This means that these schools are obliged to allow anybody with a high school diploma or GED to register for classes. In marked contrast, four year colleges and universities can regulate the size of their incoming freshman classes to deal with financial difficulties. For example, because of budget cuts in Florida, the state's 11 public universities have imposed caps on freshman enrollment. This has put increasing pressure on community colleges in Florida and other stacks to “pick up the enrollment slack.”

While attending community college may be an economical way for students to earn undergraduate degrees, two year colleges have been overwhelmed by the massive enrollment increases. "As it stands right now, we have almost 39,000 students registered for the fall term, and we began fall registration only two weeks ago," says Dulce Beltran, registrar at Miami Dade College. "And a quarter of the courses are already closed with almost two months to go before fall term begins." Not surprisingly, Miami Dade officials say that enrollment is 60 per cent higher than last year’s pace. School officials have been hiring new instructors and adding new courses to handle the enrollment surge.

Unfortunately, school officials estimate that 20,000 to 30,000 students won't get all the classes they need; 5,000 may not be able to sign up for any classes in the fall. Similar scenarios are playing out in other states including Arizona, California, Washington and others. Officials in those states are fearful that hundreds of thousands of prospective new students will be turned away this year.

There is no question that the recession is taking a toll on the ability of American students to attend college. However, the cost of an undergraduate education has been steadily increasing for the past decade. Rising overhead costs, higher faculty salaries and over expansion have all contributed to the increases. Something will have to give soon. Don’t be surprised if the education bubble is the next one to burst!

Hat tip to NPR!

Until next time....

Good Luck and Good Learning!!!!!!!

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I read today in the New York Times that healthcare costs are expect to ease slightly in 2009 for employers. According to Mercer, a healthcare consulting firm, healthcare benefit costs are expected to rise only 5.7% in 2009. Since 2005, annual increases in healthcare spending have hovered around 6.1%.

At first glance, this ought to be good news for the millions of workers employed by American companies. But, like most other reports and survey conducted during the disastrous Bush Administration, the numbers don’t tell the real story. In reality, employers are aggressively shifting the healthcare burden to employees by raising premiums and pushing deductibles and co-payments to all time record highs. For example, I learned the other day that my good friend Pete, who works as recruiter in the hospitality business, has to pay $50 each time he or any member of his family (he has 5 children) goes to the doctor. Unlike other people who have less onerous co-pays, Pete has to pick and choose which family aliments really require medical attention. These decisions must be extremely difficult and stressful for Pete, who had prostate cancer surgery less than a year ago.

Regardless of your political persuasions, it is obvious to me that healthcare reform is long overdue in the US. I hope that Barack Obama begins to address this ongoing, serious problem shortly after he is elected President in November, 2009.

Until next time….

Good Luck and Good Job Hunting!!!!!!!!!

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Unlike many other countries with national healthcare systems, US healthcare and prescription drug costs are primarily shouldered by employers. As healthcare costs continue to rise, many American employers are calling for the US government to assume more of the costs through nationalized healthcare. The opposite situation is unfolding in the rest of the world, where overburdened nationalized healthcare systems are forcing employers to pay for workers supplemental health care costs.

A recent survey conducted by Watson Wyatt found that in countries like India, China and Russia healthcare is the number 1 benefit desired by a majority of workers. Globally, companies are projecting large year-to-year increases in medical and healthcare costs. In many places, medical and healthcare costs are rising faster than inflation.

Contrary, to popular belief, it appears that the US is not the only country struggling with skyrocketing healthcare and prescription drug costs. The graph below shows the expected increases in national healthcare costs from 2007 to 2008 (source Watson Wyatt).

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Health care spending in the United States grew 6.7 percent in 2006 to $2.1 trillion, or $7,026 per person. This represents a slight increase over the 6.5 percent rate in 2005 (which was the slowest growth since 1999). Health spending accounted for 16 percent of US gross domestic product in 2006, outpacing overall nominal GDP growth by 0.6 percent. However, total health care spending in the US is not the real story here.

The federal government reported that the new Medicare drug benefit called Part D, which was implemented in early 2006, contributed to an 18.7 percent increase in Medicare spending that year, the fastest rate of growth since 1981 and double the rise in 2005.  In 2006, Medicare spending rose to $401.3 billion, up from $338.0 billion a year earlier, according to the government’s annual health spending report.

The impact on funding sources that paid for prescription drug benefits varied. The public share of spending (federal and state)  increased from 28 percent in 2005 to 34 percent in 2006, while funding from private sources (insurers) fell from 72 percent to 66 percent.  The shift in funding was most dramatic for Medicare and Medicaid. Medicare’s share of total retail prescription drug spending surged from just 2 percent in 2005 to 18 percent in 2006, following Part D implementation. Meanwhile, Medicaid’s share fell from 19 percent to 9 percent.

At present, the US government cannot negotiate prescription drug pricing with drug companies that produce the medications–only drug distributors and third party insurers can do that! As the baby boomer retirement continues, the amount of government spending on prescriptions drugs will increase exponentially and ultimately cause healthcare costs in this country to explode. In my opinion there are two options: impose price controls on prescription drugs or provide all US citizens with a national healthcare system that allows the government to negotiate drug pricing directly with drug manufacturers. And for those of you who think national healthcare is a fantasy–over 60% of all healthcare claims in the US are currently handled and paid by Medicare–a federally finaced and run government healthcare system!  We are closer to a national health insurance program than you think!

Until next time...

Good Luck and Good Job Hunting!!!!!!

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