Johnson & Johnson’s year did not get off to a great start. Not that last year was any better. I mean the company report lagging sales in its medical device’s market. But the start of 2016, led off with the Brunswick-N.J.-based company reporting that it would lay off about 3,000 people from its medical device division. Or about 6 percent of all medical device jobs and about 2.5 percent of J&J’s global workforce - for those of you that dig percents instead of raw numbers.
Most of the layoffs would come from the orthopedics, surgery and cardiovascular segments and result in an annual savings of nearly $1 billion.
The situation with J&J’s medical device segment has been a bit bleak to say the least. Within the first nine months of 2015, sales for the firm’s medical devices dropped 2.9 percent.
After J&J’s second quarter earnings were released, Glenn Novarro, an analyst with RBC Capital Markets pointed out the company needs more differentiated products for the medical devices segment (Medical Device Daily, July 16, 2015).
During the 2Q15 earnings call, the company revealed that it struggled in spine, trauma, diabetes and vision care. J&J said medical device sales fell 12.2 percent in 2Q15 to $6.36 billion, following the sale of the company’s Ortho-Clinical Diagnostics business to the Carlyle Group (Washington) for $4 billion. That unit had generated annual sales of almost $2 billion. Analysts said the $6.36 billion in device revenue was about $80 million below consensus.
Slumping sales were blamed by the firm’s inability to keep up the pace with competitors like Medtronic plc., Boston Scientific Corp. and Abbott Laboratories (Abbott Park, Ill.).
The company has been in repair mode with its device’s segment for quite some time in my opinion. The company, once an innovator and a leader in the drug-eluting stent market, got out of the business all together and sold its Cordis unit to Cardinal Health Inc. for $1.944 billion in cash, or roughly $1.594 billion, net of the present value of tax benefits (MDD, March 3, 2015). Talk about a red flag.
J&J needs to put itself on a path of redemption now. It needs to get serious about med-tech and medical devices. Some strong acquisitions are sorely needed to boost the ailing segment and get it back on the right path.
[caption id="attachment_4630" align="alignleft" width="239"]Who is advising whom?[/caption]
It’s often interesting to see and hear the things that go on at FDA advisory hearings, and the Feb. 18 hearing for leadless pacemakers proved to be no exception. I’ll admit at the outset that I’ve always been of the view that these advisory committee members are charged with making up their own minds about the questions the agency poses to the panel, but maybe I’m just naïve, yes?
One of the questions the agency posed to the panel was whether a post-approval study for a leadless pacemaker could include patients who had participated in the pivotal study for that device. One member of the panel remarked that this was common practice, but FDA’s Bram Zuckerman, no model of reticence by any measure known to humankind, advised the panel that his “personal inclination would be no,” that pivotal study enrollees would not be permitted to participate in a PAS.
Now I’ll grant that this was in the context of a discussion about early adverse events associated with this class of devices, so the agency is perfectly at its right to want additional information on that score. And it’d require someone better versed in these matters than yours truly to assess whether there’s a legitimate need for a PAS with 1,700 fresh enrollees to sort out all the safety signals associated with this kind of device.
But let’s not forget that FDAers are also perfectly within their rights to ignore the advice of an advisory committee. Otherwise, the Boston Scientific Watchman would have made it to market quite a bit sooner than it actually did. Incidentally, representatives of Medtronic and St. Jude Medical were in attendance, too, and I seriously doubt whether they missed Zuckerman’s ham-fistedness.
Some might argue that this is small potatoes, but the problem I have with this is that Zuckerman’s conduct is akin to having a judge instruct a jury to find the defendant guilty. I doubt that Zuckerman’s expression of his “personal inclination” violated a law, but it is ethically out of bounds, or at the very least contrary to the whole idea of an advisory hearing.
After all, if what FDA wants is a rubber stamp, those can be had for a lot less money and inconvenience at the local office supply store. Otherwise, FDA should consider playing by the rules instead of introducing the kind of bias the agency purports to loathe in clinical trials.
[caption id="attachment_4599" align="alignleft" width="243"]Cancer moonshot; more than one small step required[/caption]
It was interesting to hear the President become archly ambitious about the oncological equivalent of a moonshot during his most recent State of the Union address. The President said veep Joe Biden would take the lead on an effort to break down "silos of data," which Biden said recently would halve the time needed to make advances in cancer care, and those in the private sector might be wondering how much of this talk of silos has to do with NIH's draft clinical trial data disclosure rule.
By some accounts, that $264 million bolus the National Cancer Institute received as a result of last year's budget deal is accompanied by a $350 million shot for research into Alzheimer's disease, so it's nice to see these neurodegenerative states get a little attention. My initial impression regarding this moonshot talk was that the White House would inevitably call for more money for NIH cancer research, and as has been widely reported in the past couple of days, the President wants Congress to agree to pony up $1 billion for the cancer moonshot.
The Congressional Budget Office is sending a distinct set of signals about the affordability of all this. According to the agency's most recent projections, mandatory spending is already set to rise by $168 billion during the current fiscal year, while discretionary spending is predicted to jump by $32 billion. That net $200 billion increase will go a long way toward raising the federal deficit to $544 billion, an increase of more than $100 billion from the previous fiscal cycle, according to CBO.
Granted that $200 million of the President's $1 billion is already in the hopper, but let's not forget a few things we learned about the departure of House Speaker John Boehner. Boehner had grown fed up with trying to corral a fractious GOP, which has a lot of very hawkish members where the deficit is concerned. The new speaker, Paul Ryan, vowed that a lot of things – including budgets – would revert to normal order, meaning more input from the rank and file.
Now that the CBO report has detailed that the U.S. government's debt levels have hit a record (and whopping) $19 trillion, deficit hawks have even more reason to be up in arms. As the saying goes among those who would shoot the moon, "Houston, we have a problem."
Data sharing and academe
Speaking of silos of data, the notice of proposed rulemaking from NIH regarding clinical trial data disclosure is not necessarily the darling of device makers for obvious reasons, but it's interesting to hear about the concept of data sharing generally from physicians involved in academic research. They're not sure they like it, but it might not be politically advantageous to give voice to any such misgivings.
The International Committee of Medical Journal Editors (ICMJE) penned a piece recently in the Annals of Internal Medicineannouncing a policy that would require academic researchers to disclose de-identified, patient-level data within six months of a study's appearance in a member medical journal. The list of member journals includes the New England Journal of Medicine, the Journal of the American Medical Association and the Lancet, so this is a big deal.
The subject came up in the second half of January in an editorial in NEJM in which two of the journal's editors expressed reservations about the policy, although they were clearly not adamantly opposed. Among the concerns expressed in the NEJM piece were that secondary users of the data might not have the context for the decisions made by the clinical researchers in designing the trial, but they also opined that a new class of "research parasites" could emerge that would use the data in ways that might be seen by the study's organizers as potentially problematic.
That editorial sparked quite a bit of blowback, apparently, and Jeff Drazen, one of the authors of the first NEJM editorial, walked back the remarks in an editorial dated only four days later, stating that NEJM would of course comply with the policies spelled out in the Annals piece.
The NPRM dealing with disclosure is still up in the air, but one wonders if device makers will be in a big hurry to see their study results in the journals affected by the ICMJE policy. It's one thing to publish the results of a pivotal trial in a journal because you presumably have your PMA ready to go at FDA, but what about first-in-human and other early feasibility studies? Will device makers demand that trialists find other journals for publication of the results of these studies?