I always seem to be writing about GSK in my blogs but this is a much more sombre subject compared with the recent news of GSK CEO Andrew Witty’s knighthood. This week’s attention on GSK is focused on the COMPAS (Clinical Otitis Media and PneumoniA Study) study, which involved almost 24 000 children and was completed in Argentina in June 2011. The fine issued by the Argentinean National Administration of Medicines, Food and Medical Technology (ANMAT) related to administrative procedures in place for the study in 2007 and 2008. According to media reports (Sky News, CNN), some consent forms were signed by illiterate parents or people who did not have custody of the children. Claims have also been made that some children feeling unwell after vaccination were not seen by doctors.

Fourteen children are reported to have died during the study. Because the trial involved children, it is an extremely sensitive and emotional topic that has evoked strong reactions from some media sources that accuse GSK of “killing” babies and “experimenting with humans”.

But there are two sides to every story. Personally, I don’t believe that any reputable pharmaceutical company would experiment on humans.

GSK emphasised in a press statement that the fine relates to administrative procedures and “does not question the safety of the study vaccine”. Indeed, according to the statement, any deaths in the study were thoroughly investigated and both an independent data monitoring committee and ANMAT both concluded that none of the deaths were related to the vaccine.

The administration irregularities with obtaining informed consent were identified by GSK in 2007 and 2008 as part of routine monitoring, which takes place at 6-week intervals.

“The company proactively reported these findings to ANMAT and immediately put in place a corrective action plan which involved reconfirming informed consent of patients in the study and retraining doctors… where necessary,” explained GSK’s press statement. “The safety of patients participating in the study was not put at risk and ANMAT agreed that the study could continue as planned.”

Some media sources have also accused GSK — and other Western pharma companies — of taking advantage of developing countries to experiment with new treatments. In the case of GSK’s Synflorix, however, developing countries are a logical choice for a clinical trial. Estimates from the World Health Organisation claim that more than 500,000 young children die each year from pneumococcal infection, with the vast majority of these deaths occurring in developing countries. The GAVI Alliance also explains that although a vaccine against pneumococcal disease has been widely used in Europe and the US since 2000, it was not optimal for developing countries because it lacked different strains of pneumococcal bacteria that are common in developing countries.

Although Argentina is not really considered a developing country, it still has a large number of people living in poverty and pneumococcal disease is a significant health burden.

GSK says that it “respectfully disagrees” with the court ruling in favour of ANMAT and will appeal to the Supreme Court of Argentina. However, if unethical practices did take place during the trial then GSK has said it will pursue the matter.

“We are also concerned by allegations that treatment was delayed for some children in the trial if they were unwell and, if true, these events are shocking… we will be looking into this further,” said the GSK statement.

First, Eli Lilly Chairman, President, and CEO John C. Lechleiter urged that biopharmaceuticals be included in transatlantic trade and economic discussions under the Transatlantic Economic Council (TEC). The TEC was initially proposed by German Chancellor Angela Merkel in 2007 to strengthen transatlantic economic cooperation between the United States and European Union.

“The TEC is an additional important forum which we should use to foster the growth of biotechnologies and promote biopharmaceutical innovation,” said Lechleiter, in a Eli Lilly statement. “An increased focus on biotech and innovative pharmaceuticals would complement the TEC’s existing efforts to advance the transatlantic harmonization of regulatory regimes affecting key future growth industries.” Lechleiter made his comments at the American Council on Germany’s conference on “The Transatlantic Partnership in the 21st Century.”

In his comments, Lechleiter noted that biopharmaceutical innovation is very susceptible to the political environment, both nationally and internationally. He cited that responses to short-term cost pressures by government payers are hampering the sector, noting recent reforms in Germany as an example. “We must ensure that healthcare reform in our countries will help promote biopharmaceutical innovation and not undermine it,” he said  “Healthcare reform should focus on creating value through the system—and that means promoting innovation and efficiency. Even the absolute requirements of our sector in global markets—intellectual property protection, supply-chain security and anticounterfeiting measures—are far from secure.”

To spur transatlantic trade in pharmaceuticals and maintain medical innovation, Lechleiter called for consistent regulatory policies, intellectual property protection, and harmonized systems to deal with common issues such as counterfeiting. In addition to the TEC, he noted certain positive developments, including the recent Falsified Medicines Directive of the EU, which seeks to create a comprehensive anticounterfeiting system across the supply chain in Europe.

Meanwhile, The Society of Chemical Manufacturers and Affiliates (SOCMA) offered its support of three pending free-trade agreements (FTAs) with South Korea, Panama and Colombia following actions by two Congressional committees that supported the FTAs, a key step in the process  to gain full Congressional approval. SOCMA is the US-based trade association representing custom and batch manufacturers, including contract manufacturers of fine chemicals, pharmaceutical intermediates, and active pharmaceutical ingredients.

SOCMA supports the free-trade pacts as a means of boosting the chemical industry. It also said that pacts are important for showing support for other FTAs, such as the Trans-Pacific Partnership (TPP). The TPP Agreement is an Asia-Pacific regional trade agreement currently being negotiated among the United States and eight other partners: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. In May 2011, The Pharmaceutical Research and Manufacturers of America issued its support for Senate consideration of intellectual property protection measures in the TPP.

Macroeconomic factors, whether in the form of fiscal policy that affects drug-reimbursement levels from national governments or tax and trade policies, have an effect on the current and long-term health of the pharmaceutical industry and its suppliers. As national governments seek to balance the need for revenue-generation and their domestic agendas with business and economic growth, free-trade issues will continue to be an area of continued focus for the pharmaceutical industry

“Without good quality, safe medicines to treat diseases such as HIV/AIDS, malaria and tuberculosis, the impact of other health initiatives may be weakened. The PQM program focuses on this critical aspect of combating these diseases,” Gloria Steele, USAID acting assistant administrator for global health, said in a press release.

“The lives of patients are put in serious jeopardy when they take substandard or counterfeit drugs,” Roger L. Williams, MD, chief executive officer of USP, said in a press release. “Such ‘medicines’ have health as well as economic implications. Moreover, substandard medicines contribute to the development of drug-resistant strains of infectious diseases. Such strains are a leading challenge in the fight against malaria, HIV/AIDS and tuberculosis.”

The PQM program is an expansion of a previous collaborative effort between the two organizations called the Drug Quality and Information (DQI) program. Like the DQI program, PQM will be managed by Patrick Lukulay, PhD, director of drug quality and information at USP, who will work with USAID’s Office of Health, Infectious Diseases, and Nutrition, under the direction of Anthony Boni.

Lukulay told Pharmaceutical Technology that the goals of the PQM program are to build capacity in developing countries to improve quality of pharmaceuticals and quality-control testing, to raise awareness of the importance of drug quality and advise people on how to safely buy medicines, and to conduct research in developing countries on the quality of drugs available on the market.

Lukulay also discussed some future projects of the program, such as the upcoming publication of the results of a study about the quality of malaria drugs in Sub-Saharan Africa and the development of a program that would provide reference material at a reduced cost to African countries to aid in quality testing. PQM is also working on the development and promotion of technology to detect counterfeit drugs using hand-held spectroscopic devices, which provide a nondestructive method of finding fake drugs that is significantly faster than traditional wet-chemistry methods. He also discussed the group’s work in creating adverse-drug-reaction data sheets for use in developing countries and PQM’s efforts to gather pharmacovigilance data.

“We are excited about PQM because it is going to give us the opportunity to expand on the work we started over the past decade,” Lukulay said. Some examples of DQI initiatives include the establishment of large-scale continuous monitoring program for quality in Latin America, Africa, and Asia, which led to the seizure of counterfeit versions of the antimalaria drug Coartem (Novartis) from pharmacies in Ghana in July 2009; increasing the capacity of quality control and testing systems in Asia after finding a significant amount of substandard drugs in the Greater Mekong Subregion in 2003; and helping the Global Drug Facility to increase the availability of good quality second-line anti-tuberculosis medicines at affordable prices. Through the DQI’s work in Latin America, Africa, and Asia, he said they are “starting to see an impact.” The new PQI program will allow work to expand into Eastern Europe as well.

“This program allows us to finish the job we have started,” Lukulay said.

That’s why news from Ecuador made me do a doubletake.

Last Monday, Ecuadorean President Rafael Correa gave local officials the power to issue compulsory licenses that enable Ecuadorean companies to bypass patents and produce inexpensive versions of various drugs. Correa’s decree did not specify which, or even how many, drugs’ patents could be bypassed. The licenses, issued according to the World Trade Organization’s rules, are intended to expand access to medications and improve public health.

To my surprise, Pfizer (New York), GlaxoSmithKline (GSK, London), Bayer (Leverkusen, Germany), and others reacted to the announcement with equanimity. In a statement, these and several other companies said, “We accept the democratic decision … to use this extraordinary legal measure, observing the rights and responsibilities” laid out in international law. “No legal right of any kind can take precedence over the interests of public health,” they added.

This reaction is 180° from the opposition that Brazil and Thailand faced in 2007 when they used this tactic. The International Federation of Pharmaceutical Manufacturers and Associations criticized Brazil for not collaborating with Merck (Whitehouse Station, NJ) before its government issued a compulsory license for the AIDS treatment Efavirenz. After Thailand issued a compulsory license for Abbott’s (Abbott Park, IL) Kaletra, the company said it would no longer register new drugs for sale in that country.

I could not find statements responding to Correa’s directive on these companies’ websites and I don’t know why they reacted differently than Merck and Abbott did in 2007. Maybe Pfizer, GSK, Bayer, and the other companies coordinated their response to improve their public images. Or maybe their statement reflects a changed attitude about the limits and ethics of patent protection.

Whatever their motivation, these companies’ endorsement of compulsory licenses will likely set a precedent that makes other drugmakers more willing to accept this legal measure. Compulsory licensing is sanctioned and regulated by international governments and trade organizations. I think it can be a valuable tool that saves patients’ lives, and I’m heartened by the thought that Big Pharma might be more tolerant of this measure in the future.

First the numbers. The US prescription drug market, the single largest national market in the world, grew only 1.3% in 2008 to $291 billion, according to IMS. For 2009, the US pharmaceutical market is projected to contract 1-2%, representing a historic low, according to IMS estimates issued in April 2009. The compound annual growth rate in the pharmaceutical markets of Canada, France, Germany, Italy, Spain, the United Kingdom, and Japan is projected at 1–4% during the next five years, according to IMS. Pharmaceutical industry growth in the seven “pharmemerging markets,” which include the BRIC countries as well as Turkey, South Korea, and Mexico, will collectively grow 13–16% through 2013 and will contribute more than half of global market growth in 2009 and sustain an average 40% contribution to the global pharmaceutical market through 2013. China, which is currently the sixth-largest pharmaceutical market, will become the third largest by 2011, predicts IMS.

Although it is clear Big Pharma will seek ways to increase its product positions in emerging economies, what is not yet evident is how it will align its manufacturing strategy with these plans. In considering the options, certain underlying fundamentals need to be considered. Although growth in emerging economies is strong, the product value mix is not comparable with that of Western countries. Higher per-capita spending on prescription drugs and higher-priced drugs in the West are matched against lower per-capita spending and greater penetration of lower-priced drugs, including generics and traditional medicines, in developing nations. In keeping with overall cost-savings plans, Big Pharma companies have recently rationalized their global manufacturing network, particularly in small-molecules and solid-dosage manufacturing, with large investments only in select biopharmaceutical projects.

Reflecting product mix and cost issues, new investment in greenfield manufacturing sites in emerging markets, therefore, is not likely. More likely are strategic alliances, a course recently pursued by GSK and Pfizer. Earlier this week, GSK announced a partnership with India’s Dr. Reddy Laboratories, one of India’s largest pharmaceutical companies, under which Dr. Reddy will manufacture and supply drugs to GSK, which will license and co-market the drugs in various countries in Africa, the Middle East, Asia-Pacific, and Latin America. The pact applies to more than 100 products in Dr. Reddy’s existing portfolio and pipeline. Last month, Pfizer announced partnerships with two Indian pharmaceutical manufacturers, Aurobindo Pharma and Claris Lifesciences. Under the deal with Aurobindo, Pfizer acquired the rights to 55 solid oral dose products and five sterile injectables in 70 emerging markets and will commercialize the products. Pfizer also acquired the rights to 15 generic injectables from Claris Lifesciences.

Joint ventures, alliances, or other forms of partnerships offer a far less risky path to emerging markets than outright acquisitions or resources for capital projects. Japan’s Daiichi Sanyko’s troubled acquisition for a majority stake in India’s Ranbaxy Laboratories shows such perils. Daiichi sought out Ranbaxy, one of India’s largest pharmaceutical companies, to provide it with a low-cost manufacturing base and an established network in emerging markets, particularly India. During the acquisition process, Ranbaxy was investigated by the US Food and Drug Administration for manufacturing violations. The agency later cited violations and imposed an import alert of products manufactured from some of the company’s facilities and halted review of drug applications from one of the facilities for allegedly using false data. It was surprising to see such problems coming from Ranbaxy, an established generic-drug manufacturer.

It is clear that emerging markets represent a significant part of future growth for the pharmaceutical industry, and how the leading pharmaceutical companies will position themselves into those markets is something of current and future importance.