WHO biosimilars naming proposal divides industries
What’s in a name? A lot, apparently, if the name applies to a biosimilar medicine.
Responding to requests from some countries’ regulatory agencies, the World Health Organization is mulling a proposal for a global identification system for biosimilar drugs that it says will help distinguish biosimilar and original biotech products, and avoid potential confusion among prescribing physicians and healthcare agencies. But the proposal is spawning debate among pioneer and generic drug companies worldwide, and opposing reactions from industry trade groups representing both sides of the debate.
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Specifically, the WHO’s new naming plan has raised concerns among companies that produce biosimilar medicines that their products could be elbowed out of the biotech market through neglect if they carry a different name than that of the original bio-engineered drug they’re designed to mimic. Industry groups like the Generic Pharmaceutical Association fear that creating distinct, separate names for biotech products and their biosimilar counterparts would confuse prescribing doctors and pharmacists, thus discouraging substitution of cheaper me-too biologic medicines and giving an unfair market advantage to branded biotech firms.
The issue revolves around the continued use of the same International Non-Proprietary Name for original, brand name biologics and their biosimilar counterparts. The WHO, which oversees that identification system, is proposing a nomenclature system that maintains the current practice by many developed countries of using the same INN to identify both the pioneer and follow-on biologic drug. But the global health group also is proposing the adoption of a secondary, voluntary identification code, dubbed a biological qualifier, to be attached to each drug to complement the INN identification system and “avoid proliferation of separate and distinct schemes developed by individual regulatory authorities.”
“This voluntary scheme is intended to provide a unique identification code (biological qualifier), distinct from the INN, for all biological substances that are assigned INNs,” the WHO noted in a statement. “The code will consist of four letters … assigned at random.”
Reaction was mixed, and generally broke along the divide between the pioneer biotech industry and biosimilars manufacturers and interest groups. The Biotechnology Industry Organization, representing branded biotech makers, endorsed the WHO proposal for the BQ identifier, “under which nonproprietary names of biological products that are similar to each other in structure and function are distinguishable,” noting that “distinguishable nonproprietary names enhance patient safety.”
The generic and biosimilars industries were less than enthusiastic, however. While supportive of the use of the INN for both biotech and biosimilar medications, they view the proposal for a second BQ marker as simply a tool that could be wielded by the biotech industry to head off competition from follow-on biologics.
“A biosimilar that is designed to be chemically and pharmacologically identical to the reference product should not have a different INN,” GPhA asserted. “Unique INNs … would divorce the biosimilar from its shared regulatory history with the reference originator product on which its approval is fundamentally based.”
GPhA concluded that a separate naming system would confuse prescribers, “thwart competition” and “make the collection of post-approval data and its analysis for adverse events … much more difficult.”
Protecting personal healthcare data
The adoption of personal medical devices and healthcare kiosks that capture consumer health data — like blood pressure and glucose — coupled with data points with a patient’s health record at the pharmacy represents a significant opportunity to enhance disease state management programs.
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However, that same functionality also represents an issue concerning patient privacy as it relates to HIPAA, especially given the ongoing rise in breaches of healthcare data. The number of breaches this year is already close to 12 million records, noted Dan Munro, a Forbes contributor who has covered HIPAA breaches extensively, including the breach of 4.5 million records at Community Health Systems last August. “At this rate, we’ll probably get to 14 million or 15 million records this year alone.”
Hackers aren’t interested in the innocuous personal healthcare measurements generated by personal medical devices or healthcare kiosks. But the devices that capture that data provide a possible entry point to patient health records. “Any device, any endpoint becomes a vulnerability,” Munro said. “The issue isn’t the data itself, the issue is the device as a gateway into the network, which is typically secure.”
And upon accessing those records, hackers can use them to hijack a person’s medical profile. “What they’re looking for is two things,” Munro said. “One is the potential to leverage that [data] quickly for fraud, and the second is for illegal drug use. Prescriptions become another mechanism for which the data has supreme value.”
It’s an issue of significant concern to manufacturers of the devices and healthcare kiosks that capture those data points. “In this day and age if you store data all in one place, it’s not a matter of if you’ll get hacked but when,” said Khan Siddiqui, chief technology officer and chief medical officer for Higi, a kiosk manufacturer. “There are best practices [regarding] how you store [the data] and build the infrastructure to make it extremely difficult for anybody to create a breach,” he said. Higi employs monitoring systems that look for any malicious programming or viruses, he added. “So from an infrastructure point of view, we’ve [implemented] a lot of security layers to really understand what is happening to the data to prevent these kinds of breach scenarios.”
PharmaSmart has a comprehensive program linking the clinical data points captured by their healthcare kiosks to a pharmacy’s patient profile, but the patient data submitted to the profile is de-identified data, which keeps the system in compliance with HIPAA regulations. “The only data PharmaSmart has access to is de-identified data,” Ashton Maaraba, COO and general manager of PharmaSmart, told Drug Store News. And it’s a one-way submission of data, Maaraba said; PharmaSmart does not have access to the pharmacy’s patient profile.
Protecting medical devices from hackers is also an issue for the Food and Drug Administration, which in October finalized recommendations to manufacturers for managing cybersecurity risks to better protect patient health and information.
The final guidance, titled “Content of Premarket Submissions for Management of Cybersecurity in Medical Devices,” recommends that manufacturers consider cybersecurity risks as part of the design and development of a medical device, and submit documentation to the FDA about the risks identified and controls in place to mitigate those risks. The guidance also recommends that manufacturers submit their plans for providing patches and updates to operating systems and medical software.
“There is no such thing as a threat-proof medical device,” said Suzanne Schwartz, director of emergency preparedness/operations and medical countermeasures at the FDA’s Center for Devices and Radiological Health. “It is important for medical device manufacturers to remain vigilant about cybersecurity and to appropriately protect patients from those risks.”
The FDA’s concerns about cybersecurity vulnerabilities include malware infections on network-connected medical devices or computers, smartphones and tablets used to access patient data; unsecured or uncontrolled distribution of passwords; failure to provide timely security software updates and patches to medical devices and networks; and security vulnerabilities in off-the-shelf software designed to prevent unauthorized access to the device or network.
The agency is planning a public workshop this fall to discuss how government, medical device developers, hospitals, cybersecurity professionals and other stakeholders can collaborate to improve the cybersecurity of medical devices and protect the public health.
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Balancing growth with tight fiscal focus
David Tehle, EVP and CFO, Dollar General
Organizational capacity.” That’s Dollar General’s shorthand for the discipline and rigorous financial modeling that the company applies to its rapid store expansion and remodeling program. It sums up Dollar General’s remarkable and sustained ability to balance cash flow and rational capital spending plans with the most determined and aggressive new-store construction and renovation program in all of retailing.
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“We’re very big on organizational capacity,” said David Tehle, Dollar General’s EVP and CFO. It serves as a motto, he said, for “how we decide how many stores to open or remodels we can do successfully” without sacrificing profitability, sound investment principles or sustained sales momentum.
That wasn’t always the case. Tehle, a 10-year Dollar General veteran, remembers a time when the company “pushed too hard” with its store-expansion schedule, and ended up overextended and shuttering many stores in 2006. Given the rigorous financial disciplines and new information technology Dollar General has embraced since the management overhaul of 2008, however, “we’re not going to make that mistake again,” Tehle promised.
What hasn’t changed is Dollar General’s commitment to organic growth — whatever the outcome of its bidding war with rival Dollar Tree to purchase the Family Dollar chain. “In terms of our capital, our No. 1 priority is investing in the stores,” Tehle told DSN. “And that means opening new stores, doing remodels and relocations, and having the capital necessary to make those stores look like we want them to on the inside.”
It also means “putting capital into organizational infrastructure,” said the CFO. “We’ve got to feed those stores [with] distribution centers. And when we’re opening 600 or 700 stores a year, we’re going to have to look at opening a new DC maybe every two years.”
“We’re targeting about a 6% to 7% sq footage growth in stores each year,” Tehle added. “And we have to make sure we have the right systems … and the right people. So that’s where we’re putting our capital.”
Whatever cash is left each year — and “we always have cash left over,” said Tehle — recently has been invested in repurchasing shares of company stock. “We started our stock buyback program in December 2011, and we’ve bought back $2.3 billion worth,” he noted. “Our investors have supported this move.”
With cash flow strong and the market for dollar stores continuing to expand, Tehle sees years of growth potential ahead for Dollar General. “We’ve identified 14,000 opportunities [for new stores],” he said. “We went public in 2009, and at that time we identified 10,000 opportunities. So it’s actually grown since then.”
There are two reasons for that, said Tehle. “A lot of that has to do with the economy, which is creating new customers. Also, we’ve got better real-estate software, which has helped us pinpoint locations in a lot more detail. So we feel there’s a huge growth trajectory yet to come.”
It comes down to “a very robust store location process,” agreed Todd Vasos, COO, based on proprietary software and IT systems that analyze a slew of factors, such as local demographics, traffic patterns, local competition and population density to sift out new locations.
The rich potential for new openings across the United States offers plenty of opportunity for domestic expansion, without having to look beyond the nation’s borders for the time being, said Tehle. Although a move into Canada, Mexico or some other country could come down the road, he said, “right now, we’re sticking to our knitting. There are so many opportunities domestically.
‘A lot of magic’ in a small box
To keep close tabs on sales and profitability, Tehle and his team monitor same-store sales performance early each morning. Other key performance metrics tracked by the financial team include gross margin trends, along with sales, general and administrative costs as a percentage of sales. Tehle also focuses daily on operating profit and EBITDA. “When we went private, we began to focus more on EBITDA,” Tehle explained. “That’s the measure that really captures your business, so we take a hard look at that.” In fiscal 2013, Dollar General reported a 3.3% rise in same-store sales and a 9.2% hike in overall revenues, to $17.5 billion. Net earnings topped $1 billion in the face of severe winter weather and a torrid store-construction strategy that saw the opening of 650 new units, and the company also generated enough cash flow to repurchase another $620 million of its own stock.
Those numbers make a telling case for Dollar General as a good investment: Its stock performance in recent years has eclipsed that of both the S&P 500 index and a much smaller index of retail company stocks. Behind that performance, said the CFO, is a winning combination of savvy, responsive merchandising, operating disciplines that control costs effectively and a solid reputation among tens of millions of Americans for providing good everyday value on the products they need.
“There’s a lot of magic to our box,” Tehle declared. “It’s a small box — about 7,500 sq. ft. — and you can open them in rural America and small towns. It doesn’t take that many people for one of our stores to be profitable. We don’t have to be in big cities.”
The other “secret sauce” to Dollar General’s success, said Tehle, is the quality of the management and store people. “I’ve never seen anything like the team that [CEO] Rick Dreiling brought in with him in 2008. It changed the whole nature of who we are and what we’re doing, and allowed us to go public a lot quicker than [former owner and investment firm] KKR planned on. We went private in July 2007, and went public again in November 2009. And it’s all based on performance.” Another benchmark: Dollar General went public in 2009 at $21 per share. As of mid-September, the stock had reached $63 per share.
Thanks to company stock buybacks, Dollar General also has reduced its publicly traded shares from roughly 340 million to 303 million over the past several years, boosting earnings per share and reducing stock dilution.
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