The Soul of Biotech

Last week, I watched Big Bucks, Big Pharma, which is more or less what SiCKO would have been if Michael Moore had focused on pharmaceutical marketing, although BBBP’s criticisms are much more well-reasoned and well-researched. In fact, many of its facts are more or less right, although I question some of the business interpretations.

For example, one of the talking heads questions the pharma industry’s claims that R&D is what drives up the cost of medicine, rather than marketing, whose budget is often larger than that of R&D. He asks how that claim can be true if a drug company spends more on marketing than R&D each year.

What is missing from his position is an ROI analysis. Compare:

• A $1 million promotion that delivers $3 million this year with a 95% probability.

• A $1 billion drug development budget that delivers $5 billion spread out over the next fifteen to twenty years with a 30% probability.

Which is better? Well, it depends on the priorities of the company to raise cash now versus planning for the future. When measuring the near-term budget, the marketing option seems to cost almost nothing, because it pays back so quickly. On the other hand, if you only marketed drugs and didn’t develop anything in-house — well, you’d be Pfizer. Balancing the portfolio of projects across R&D and marketing is a major challenge for any company. Too little sales and marketing, and you can’t turn the lights on. Too little R&D, and you have to keep spending money buying other companies just to get their compounds.

Ok, I’m back, and I spent a lot my Sunday putting this together just for you! There are lots of spoilers in this post. There, that’s your warning. Now let’s dive in. I’ve decided to give a synopsis of the movie and intersperse my own comments and responses.

SiCKO starts out by focusing on a couple of individuals among the uninsured in America (about 45-50 million by current estimates) and how tough it is to have to deal with your own illness, whether by paying an enormous amount of money like Rick, or by suturing your own wounds (!) like Adam.
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I’m writing this about an hour before I head down the block to the sneak peek tonight. I’m very excited about SiCKO, because although I’m a strong proponent of the health and life sciences industry, I’ve never been a fan of managed care organizations (MCOs). I feel that, unlike doctors, nurses, pharmacists, and pharma / biotech companies, the core values of these organizations are not always the improvement of patient health. MCOs generally focus on denying access to care (especially innovative care) that can save lives, and are as hesitant as possible to pay for any therapy that can be avoided. It’s not their fault — it’s the only way they can make money.

Most consulting engagements for MCOs are about cost-cutting in some way or another. For example, one project (that I steadfastly refused to join) methodically identified cases where the patient was covered by both the client’s policy and by another form of insurance, so that it could diligently refuse any claims and send the patient elsewhere, while still collecting premiums. It works very well, it’s brilliant, it’s legal, and it makes the client a ton of money. But I found it difficult to admire the mentality behind that project, and thus I found it difficult to sign on.

Additionally, I’ve heard that Mr. Moore gives an ancillary indictment of the pharmaceutical industry, a stance that I’m looking forward to responding to.

More when I return…

Just bought tickets, and I’m going on Saturday with my friend K, who is finishing her EMT certification. I’m looking forward to a spirited conversation afterward.

Get your tickets here