This afternoon, the Petrie-Flom Center welcomed Neil Flanzraich for a lunchtime talk on responsibility and integrity in the pharmaceutical industry. Mr. Flanzraich is the Chairman and CEO of Cantex Pharmaceuticals, Inc. and Executive Chairman of Kirax Corporation. He was previously Vice Chairman and President of Ivax Corporation, Chairman of North American Vaccine, Inc., chairman of the life Sciences legal practice group of Heller Ehrman White & McAuliffe, and Senior Vice President and General Counsel and a member of the Executive Committee of Syntex Corporation. He is also a member of the boards of directors of Chipotle Mexican Grill, Inc. and Equity One, Inc., among a variety of other positions. Mr. Flanzraich was appointed by Harvard Law School Dean Martha Minow as an Expert-In-Residence at the Harvard Innovation Lab (i-lab) in the fall 2012, and we were thrilled to have him join us to share some his experiences.
During today’s lecture, Mr. Flanzraich focused on the need for integrity and accountability in all areas of life, but especially in the pharmaceutical industry. At the broadest level, he emphasized that consistent honesty requires motivation and commitment, and in the business world, it is incumbent upon company leadership to set the right example, reinforced by frequent and sincere messaging encouraging honesty and discouraging dishonesty. This is the way for companies to be truly successful over the long term, even if it means possible sacrifices over the short term. Mr. Flanzraich suggested that leaders must establish the right corporate culture of trust, but also verify compliance through audits and other types of oversight.
Mr. Flanzraich discussed several recent examples of society’s problems with integrity, from cheating in schools, to corruption in government, to personal experiences in court. He then honed in on medical research and historical examples of dishonest and unethical behavior. He described key principles of ethical research that must be upheld, including the requirement that research have social and clinical value, be scientifically valid, exercise fair subject selection, minimize risks and maximize benefits, be subject to independent review, ensure continuous informed consent, and exhibit respect for subjects.
Beyond aspects specific to subject protection, Mr. Flanzraich discussed potential conflicts related to how medical research is funded and how that may influence publication, fraud in clinical trials, and inadequate oversight of contract research organizations. He shared anecdotes reflecting potential problems with FDA advisory committees, post-marketing surveillance, and direct-to-consumer advertising. On the issue of ads, Mr. Flanzraich emphasized that DTC advertising is somewhat unique to the U.S. and has potentially serious consequences in terms of clinicians adopting new drugs more rapidly than might otherwise be the case, leading to huge jumps in use without gradual accumulation of more substantial safety data. Other problematic practices include facilitating doctor’s misuse of Medicare/Medicaid programs and off-label promotion.
To close, Mr. Flanzraich addressed the issue of drug prices and innovation. He argued that price controls in Canada and Europe limit profits in a way that would preclude sustained innovation, suggesting that the US system that allows high pricing may be essential. However, he emphasized that just because a company can charge high prices doesn’t mean they should in all cases; it is important to have programs to ensure access for the poor and uninsured. The American system for lowering prices while promoting innovation is the eventual competition spurred by generic entry, either upon expiration of patent protection or other exclusivity or via patent challenges. Mr. Flanzraich noted that the patent challenges encouraged by Hatch-Waxman have saved American payers billions of dollars.
For more on this great event, stay tuned for the video, which we’ll post here on Bill of Health shortly.