Drug Approval by Managed Care Agencies Crucial
By Jack Mixner
There is a new way to trip-up in the minefield of regulation surrounding pharmaceutical manufacturing. Having an approved drug is not enough. The new drug has to meet insurance companies cost guidelines as well. Called OBA - for out-comes based access - the guidelines can hurt, especially if the costs of research and development and the approval processes are already past. The drug may not make the huge revenues in the forecast. Some pharmaceutical companies are posting sales of only a fraction of their predictions.Strategic Implication
Drug manufacturers must heed not only the FDA in gaining approval for their drug. The new drug must show itself useful in the marketplace - i.e., at a minimum exceed significantly the efficacy of the older drug it replaces - or face failure.There are two sides to this one. Consumers will applaud. Investors and pharmaceutical managers need to verify the pharmaceutical company's entire strategy before release or face missed sales forecasts later.
Reference David Balekdjian and Michael J. Russo. Drugmakers: A Dose of Reality. Business Week. June 19,2006. Page 98.