The Pharmaceutical Industry and SmartPharma

Even as a past employee at Perrigo, a generic drug company, I still have a lot to learn about the pharmaceutical industry. This became especially apparent to me last evening.

Katie MacFarlane, co-founder of the pharmaceutical consulting firm, SmartPharma, and Chief Commercial Officer at the pharmaceutical company Agile Therapeutics, received her Doctor of Pharmacy degree from Purdue University in 1989. Last evening, she took time to speak with the few third professional year students who are interested in going into the pharmaceutical industry. There is a lot that I learned from her.

In order for Dr. MacFarlane to explain what she does at SmartPharma, she had to explain a little bit about how the pharmaceutical industry works. There are many start-up biotech companies and pharmaceutical companies that have one or two promising drug candidates. These small companies take their new ideas and pitch it to venture capitalists for funding. They use that funding on phase 1 and phase 2 clinical trials. Then, they submit their ideas to big pharmaceutical companies, like Pfizer or Eli Lilly. The big pharmaceutical companies buy these ideas and take the drug candidates through phase 3 clinical trials and submit their approval to the FDA if the clinical trials are successful.

Venture capitalists fund the small start-up companies because they think that the big pharmaceutical companies will buy their drug candidate and they will have a large return on investment. The small pharmaceutical companies sell their drug candidates to the big pharmaceutical companies because a lot of resources are required to run phase 3 clinical trials. Big pharmaceutical companies simply buy good drug candidates from small pharmaceutical companies because most drug candidates fail phase 1 and phase 2 clinical trials. It is expensive and takes a long time to complete phase 1 and phase 2 clinical trials.

SmartPharma comes into this picture by consulting with the small pharmaceutical companies. First, they help them get funding from the venture capitalists. They do so by conducting market research and evaluating the clinical need for the drug. Also, they help the small drug companies prove if their drug candidate is an orphan drug to the FDA. An orphan drug is a drug that is used for a disease that is very rare and will not make the pharmaceutical company much money after it is developed due to the small market. Orphan drugs receive special funding from the government for this reason. Once the small pharmaceutical companies finish phase 1 and phase 2 clinical trials, SmartPharma then helps the small pharmaceutical companies pitch their ideas to big pharmaceutical companies.  

One of SmartPharma’s recent drug candidates is a vaccine for HIV. This vaccine is not a preventative measure. It is used in patients who are already infected with HIV to cure the disease. It does so by inserting genetic material into the virus in order for it to kill itself. The drawback to this idea is that the patient must be off of antiretroviral therapy for at least 6 months in order for the virus count to be high enough for the vaccine to work. Apparently, the drug company did studies on people in Sierra Leone, and the vaccine seemed to work very well. Then, conflict broke out in Sierra Leone, and they lost all the patients that they treated. Now the small pharmaceutical company must start their research from the beginning.

In class, we spoke about how the pharmaceutical industry does studies in countries outside of the United States, and then if the drug is passed by the FDA as safe and effective, the countries that the studies were done on never have access to the drug because it is so expensive. For this particular vaccine, I can understand why they did not do the studies in the United States. It is certainly an ethical dilemma because the patients must come off of their life-saving antiretroviral therapy for 6 months for a therapy that might not even be effective. I feel that this is a great example of both neoliberalism and structural violence.