SEPTEMBER 2010 • Contents

Making Pharmacovigilance Work: Key steps for implementing a proactive, business-critical safety model

Welcome to the PharmaVOICE Webcast Network and this episode of the Industry Vision.

I’m here today with Dr. Uwe Maennl, Vice President and Worldwide Head of Pharmacovigilance of PAREXEL International and Godi Saarony, Corporate Vice President and Worldwide Head of PAREXEL Consulting.

Today, our conversation is going to concentrate on Pharmacovigilance and the key steps for implementing a proactive, business-critical safety model.

So let’s dive right in with a question for Uwe. Uwe, can you tell us what is the new safety model, and why is a proactive Pharmacovigilance strategy important to commercial success?

UWE:Sure, today, Pharmacovigilance is a major factor to commercial success in the biopharmaceutical industry.

This means three things: Keeping time to market as short as possible; keeping products on the market; and avoiding expensive litigation.

This is where the new safety model comes into the equation: This new safety model provides corporate-wide, highly visible Risk Management. The model is integrated into each stage of product development and every area of company operations. It is a company-wide responsibility. This means more than just having a competent Pharmacovigilance group. This is a risk management strategy. It helps companies avoid product failures and litigation because it aligns safety with business goals.

I’ll give you an analogy:

From a business management perspective, companies wouldn’t start the financial year without having a business strategy, a plan, and a budget in place. Yet, on the safety side quite a few companies still conduct business without an integrated Pharmacovigilance and risk management strategy. Traditionally, many companies focused on compliance and safety alone.

Today this is rapidly changing. Leading companies now convert Pharmacovigilance capabilities into high performance as well as sustainable competitive advantages. The results are clear. By being proactive in safety, companies can increase product value from early stage development throughout the product lifecycle.

MARAH: Gadi, with your in-depth expertise in risk management and strategic compliance, what would you say are the greatest costs of not adopting this model?

GADI: At the end of the day, all companies, especially public companies, care about one thing: Maximizing shareholder value.

To me, safety -- putting the right safeguards in place -- is one way to protect and grow shareholder value. Not having the right safeguards in place carries a real cost to the corporation. These costs are either opportunity costs or accounting costs. Opportunity cost is more difficult to quantify, such as lost good will and credibility with key stakeholders, including patients, physicians, and payers. An example of an accounting cost is the settlement cost for
civil charges.

In 2003, a company had to pay $92.4 million in settlement costs alone for not reporting safety failures. Bear in mind, this did not include other costs incurred such as legal and PR fees. Other examples include the cost of a delay in product approval or product failure in Phase III due to unforeseen safety risks.

This could mean having the Regulatory Authorities request post-marketing studies a company didn’t budget for or, having a product recalled once approved. All that can cost companies hundreds of millions or billions of dollars -- a real material impact on shareholder value. So certainly a sound safety strategy is a critical business need.

MARAH: Gadi, Can you tell me who the stakeholders are in the new Pharmacovigilance model. And how should this model be integrated throughout companies?

GADI: First and foremost, every corporate officer needs to be a stakeholder in Pharmacovigliance. Sarbanes Oxley dictates that any material event, such as a safety event, that is not reported on the financials is a liability to corporate officers.

So, who should be involved and accountable for safety management?

Well, in the old paradigm, safety was a back-office function. Today, safety management has to be an integrated senior management effort all throughout the organization. It should involve any function with responsibility for getting and keeping a product on the market. To this end, leading companies should establish a Safety Management Committee headed by a Safety Executive. The committee needs to develop a sound safety strategy and drive its implementation across the organization. The committee should also oversee safety performance.

MARAH: So Uwe, you defined the new safety model earlier. What are the major components of this model?

UWE: Of course, the ultimate performance benchmark is to bring safe and effective products to the market, and actually, to keep them on the market. There are four main determinants of operational success: People, Process, Technology, and Governance.

Let me give you a few examples.

It is critical to attract safety experts with in-depth experience. They must be assigned to key safety functions and motivated to provide maximum performance. Safety processes must be integrated throughout the product lifecycle. Process design should allow a company to identify a safety signal as early as possible - and to act upon it.

Technology, of course, is a truly critical enabler of key safety systems. A critical component in the new safety model is Governance. Governance means that there should be company-wide accountability for safety, led by a Chief Safety Officer. The output of all investments in Pharmacovigilance must be truly maximized.

MARAH: Thank you Gentlemen for sharing your insights on these important topics.

If you'd like more information about this new safety model, and incorporating a pharmacovigilance
strategy into your drug development program or you'd like to learn more about PAREXEL’s expertise,
visit www.PAREXEL.com.

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