by Barry Werth
The next week, the board held a retreat. Boger led a three-hour discussion with charts and slides to determine the criteria for the next CEO. Ever since the subject of succession first came up three years earlier and Boger advanced Emmens as his “get-hit-by-a-bus guy,” the directors had supported his basic proposal: they should be on the lookout for someone with “a deeply experienced commercial sensibility married to a sincere appreciation for, if not mastery of, the R&D side.” Now they fleshed out the description in greater detail: a great speaker; someone who could project equally well the image of a fast-paced scientific company to Wall Street and a solid, progressive business entity to scientists.
“You weren’t going to find a lot of these lying around,” Boger recalls. “The board arrived at a profile which seemed to be unmeetable, but it was sincerely put together. But there wasn’t any search firm. I wanted their input on it—if we see the right person, then we should move, rather than a clock clicks, and it’s time to go do it. I said, ‘We’re not ready for the transition, but we’d better be ready intellectually for the transition if the right person comes along.’ Most of the board thought Kurt needed years of seasoning but that he had the right DNA and the right background. Kurt fit the profile except that he hadn’t been tested in a growth situation.”
Boger thought he might step down someday, but he saw no more than the same routine urgency for a thought-out, scalable leadership plan that had been there all along. Few modern CEOs lasted a decade, still fewer almost twenty years, as he had, and Boger knew that Emmens, for instance, the only serial CEO among the directors, thought that five years was the optimal tenure: long enough to take a company to the next stage or turn it around but not so long that you begin to think, like a professor or a judicial appointee, that the job should be yours as long as you want to do it. Taking seriously the dispensability of everyone in charge, including himself, Boger directed the head of human resources, Lisa Kelly, to develop succession plans for the entire ET. In parallel with Garrison, Kelly began to identify those within Vertex who seemed best equipped to move up quickly in the organization if anyone in senior management left suddenly.
Boger and Sachdev huddled with small groups in Cambridge and Washington over the conundrum of having a blockbuster molecule for an underrated and undervalued disease. With diabetes or incontinence or depression or the other ailments depicted in the ubiquitous ads that now, because of demographics, saturated the nightly newscasts, there were few mysteries about the size of the problem or the market. The same was true with horrors such as CF and AIDS, where activists drove home the message. But hepatitis C was a true orphan disease—not by the FDA’s numerical definition but in the sense that it was dispossessed, without a home.
Drugmakers don’t invent diseases, but they do define how governments and people think about an illness by offering hope through treatment. The history of hepatitis C had none of the hallmarks of an emergency, an issue that would readily enlist a politician or an agency to get involved. Unlike AIDS, it rose from the shadows, a furtive infection resulting from shared blood that, in most cases, showed up only decades later, when it was too late to do anything about it. As it spread rapidly during the 1960s, 1970s, and 1980s—before the virus was discovered and the blood supply could be secured—it became stigmatized, a social disease. As disease historian Jacalyn Duffin writes in her book Lovers and Livers: Disease Concepts in History, sufferers “took on special identities or ‘types’ that became part of the disease concept.
“Infectious hepatitis affected the poverty stricken, the lax, the institutionalized and the unclean; it was a disease of beatniks, ‘street people,’ and ‘hippies.’ Those likely to develop serum hepatitis were a mélange of the ‘guilty’—self mutilators and needle-sharing drug users—and of the ‘innocent’—recipients of blood or the heroic nurses and surgeons who had cared for them.”
The marketing of peg-riba elevated awareness but elicited little sympathy. Schering’s Pegintron and Roche’s Pegasys were effectively the same drug, but Schering initially dominated, largely by sending doctors unsolicited checks for $10,000 to prescribe its product and paying others enormous fees to run clinical trials that weren’t much more than marketing gimmicks. It sponsored unblinded, sloppily monitored, head-to-head trials with Pegasys for which the doses of ribavirin were altered to favor Pegintron’s cure rate. Doctors who strayed or even spoke favorably about Pegasys “risked being barred from the Schering-Plough money stream,” according to the Times.
The payoffs stopped, but since the 2006 Medicare drug benefit took effect, Washington now paid for almost half of all medicines sold in the United States, and government interest in the pharmaceutical market had spiked. Federal and state prosecutors across the country were aggressively targeting the drug industry, investigating alleged payoffs, Medicare and Medicaid fraud, and off-label marketing. Earlier in the year, Schering agreed to pay $435 million to settle charges including that it lied to the government about drug prices and promoting Intron A and another drug for cancers for which they weren’t approved.
Sachdev arranged for Boger to meet with Dr. Steven Galson, a top public health physician who directed the FDA’s Center for Drug Evaluation and Research (CDER). The problem Vertex needed to solve was what it would take to bring the issue of hepatitis C to the forefront. The disease was a time bomb, affecting a tight cluster of largely poor baby boomers whose medical care was paid disproportionately by Medicaid and Medicare. The older and sicker they got, the more the government would pay to take care of them. Within a decade, the costs would be enormous, dictated by what treatments were available. Yet because only one in four people infected with HCV knew they had it, the greatest savings would come by identifying them before they needed treatment. “That was the premise we took forward,” Sachdev recalls. “The system was designed to push the problem along, not solve it. How can we incentivize people to say, ‘You know what? We should solve this problem while it’s solvable.’ Steve told us, ‘You’re not ready to trumpet to the world that everyone should be screened. In all the noise of health care, what’s the urgency to solve your problem? Why do you have to solve this problem now?’ ”
Here was the necessity of Boger’s outside game writ large. Vertex, a company that almost no one in or out of government knew, held the lead against a major public health threat. Once telaprevir made it to market, decisions would be made across the country and at every level of government to decide whether to pay for it and how much to pay. This was not a disease where prescribers and payers could be bought off, not that Boger saw any need—or value—in operating that way. To get its drug to patients, Sachdev believed, Vertex needed to entice Washington and the states to look at their contributions, then convince them: “You actually can put your money where your mouth is in terms of cost effectiveness.”
In October Bush named Galson, a retired rear admiral in the public health service, acting US surgeon general. Adopting the company’s preference for data, Sachdev began to assemble Vertex’s case. He commissioned a health care consultant, Milliman, to conduct an actuarial study of the consequences of HCV and the costs of a baby boomer epidemic of liver disease, to prove the disastrous cost impact on government and private payers over the next twenty years if better alternatives to peg-riba weren’t advanced quickly. Vertex needed to reintroduce hepatitis C to politicians who might not have an HCV epidemic in their districts but might appreciate the economics. In political terms, there wasn’t much time. “The message was not for the whole world,” Sachdev recalls. “I designed this for the government.”
As Vertex developed telaprevir, telaprevir remade Vertex. The molecule needed a powerful company behind it, and the people who joined to get the drug out had to work fast, improvise, pull together the pieces they were responsible for, think on their feet, and depend on networks being assembled at the same time by new people who were in the same boat as they were. In Cambridge, the company couldn’t hire fast enough. “We have had to build half of a company
that we didn’t have to have before,” Lisa Kelly told the Globe. A well-oiled machine it was not; instead, it was an assembly of like-minded smart people who felt day to day as if they were building a boat while trying to sail it, in rough seas.
Mueller hired a quality engineer and operations manager named John Condon from Millennium to assemble the supply chain and oversee manufacturing. With no time for a lengthy search, Mueller was as usual Teutonic and to the point, offering Condon the job after an evening of dinner and drinks at a restaurant. Mueller sketched out the overarching goal and the company’s urgency with little guidance and few details: a globally integrated, FDA-approved process for getting telaprevir tablets to market fully up and running within two years. “Peter said, ‘So are you interested?’ I said, ‘Yeah,’ ” Condon recalls.
“He said, ‘Here’s what we’ll do. You’ll come in. We’ll meet with the executive team, we’ll make you an offer that’s not embarrassing, and then you’ll start.’ ”
The obvious challenge was “trying to figure out how much we had to make and when,” Condon says. He did some preliminary calculations. Although Hurter’s team was still working on the final formulation and had just produced a 60-kilo batch for the Phase III trials, projections from the commercial team on dosing and numbers of patients told him that by 2009, when Vertex hoped to launch telaprevir, it would need 50 metric tons of drug per year. Pharma companies like Merck, which until recently had owned everything down to the railcars delivering raw ingredients to their factories, had grown up as towers of vertical integration and could afford to put $200 million into the ground to make one drug. Investing Vertex’s scant resources in a plant and equipment was out of the question.
Condon is lithe, grey haired, and athletic, an enthusiastic bike commuter with an up-for-anything, get-it-done vibe. On lab doors all around Vertex, there were VIP photos of him whaling beatifically on air guitar. He envisioned a “virtual supply chain” none of which Vertex would own: a flat global collaboration not just fully outsourced but also highly integrated, a “just-in-time” inventory system where supplies got from the Pacific Rim to Europe to North America precisely and only when they were needed. Hiring a small staff for the buildout, he began to pull together the pieces of a cross-border network that could churn out, in sections, the five major constituents of the drug substance; ship them halfway around the globe; synthesize them; ship them again overseas; and then formulate, manufacture, package, and deliver tablets of telaprevir to hospitals and pharmacies. “We were not going to build a manufacturing plant,” Condon says. “We would leverage the external world.”
Among the key raw ingredients—Condon’s group called them the Fab Five—two were especially complex and tricky to synthesize, and for the trials, Hurter’s team had contracted with two Chinese chemical companies to make them. This was an increasingly common, fiscally urgent, and politically controversial arrangement: Western drugmakers depending on the exploding Chinese industrial sector to produce pharmaceutical raw materials with an eye always on the larger prize, the exploding Chinese market. In 2006 Condon negotiated agreements with the two firms. Some ET and board members worried about the reliability of Chinese fine chemicals, as well as political interference and whether their manufacturing processes might not pass muster with the FDA. Condon overcame the pushback by instituting quality audits and collaborating with the companies in designing and building large reactors that were highly product specific.
Making the alliance attractive for the Chinese, Vertex placed significant orders for the materials in smaller lots that could be made with existing reactors, even though telaprevir still had to survive Phase III pivotal trials, and there were no guarantees that the substances would ever be needed. Spending months in China building relationships, Condon devised an overlap plan to ensure that telaprevir was available at launch. “In case there were manufacturing delays, we didn’t want to have all the product resting on the success of building two plants in China, bringing them up to speed, and then scaling up the chemical processes from fifty-kilo batches to five-hundred-kilo batches,” he says. “Between the two of them, we committed about thirty million dollars. That went a ways to encouraging them to take the risk.”
John Thomson also traveled more and more to Beijing and Shanghai, building a company presence there, leveraging relationships of other sorts. As head of strategic networks, Thomson was looking far ahead. What he saw were vast East Asian populations urbanizing rapidly, their governments unprepared to pay for Western medicine but woefully in need of new drugs and eager to learn how to discover and develop them on their own. This emerging pharmaceutical megamarket faced tremendous challenges as it moved inevitably to different payment systems, but some experts were more and more convinced that it would be hugely attractive sooner rather than later. The Mitsubishi deal precluded Vertex from selling telaprevir in China and the region, so Thomson had to devise a noncommercial strategy that drew on other needs and interests, creating other angles of approach.
Drugmakers were keenly interested in China not just as a reawakened nation of more than 1.3 billion potential consumers, building frantically in advance of next year’s Summer Olympics amid worries about human rights protests and athletes competing in smog-shrouded Beijing. They coveted it also as a place to access naïve—previously untreated—patient populations for their clinical trials, which were drying up in the United States and Europe. Thomson, surveying the country’s technological prowess, concluded that Vertex could make fast inroads by pursuing parallel approaches. One was philanthropic, by working with Chinese and American public health officials, research hospitals, and drug companies to assemble a nonprofit network to develop new treatments against tuberculosis. The other involved partnering with local companies to codevelop a new Vertex antibiotic with a novel dual mechanism that had limited commercial potential in the West but could be highly useful against new infections arising across the region. Thomson:
With it being cheaper to develop molecules in China, and with their yearning to get their hands on advanced Western assets to show that they’re in the innovation sector, there are a lot of not-directly-commercial motives for people wanting to develop new innovative drugs in China. And therefore, this is an opportunity that gives us upside: new market, friends in high places, accessing naïve patients, working out which pharma companies we can work with and which we can’t, developing a drug that might otherwise sit on the shelf. Above all, the world desperately needs new antibiotics. We’ve just got a situation where it’s really difficult for economics to drive the development of narrow-spectrum antibiotics because they’re compared against the broad-spectrum antibiotics. So this is an opportunity that scratches a lot of different itches.
It was Alam more than any of the others who supplied the timetable by which all of the company building revolved. Still on point with the FDA, he pressed it to formally recognize Vertex’s work on Phase II and discuss its plans for Phase III. Two large midstage trials—PROVE 1 and PROVE 2—showed interim SVR rates of telaprevir-based combination therapy of 65 percent and 61 percent, respectively, after twenty-four weeks, compared with about 40 percent for forty-eight weeks with peg-riba alone. “That gave us a lot of hope that we really did have a drug,” Kauffman recalls. The most common side effects were fatigue, headache, nausea, and rash, sometimes severe, but dropout rates were low. Kurt Graves, as head of commercial, believed that with such overwhelming improvement, Vertex shouldn’t have to do Phase III trials at all. When Alam started introducing Graves in teleconferences and agency meetings, reviewer Russ Fleischer, a clinical analyst with deep experience with antivirals, considered it startlingly inappropriate—too pushy by half. “We played into their concept of us,” Alam agrees. “We were trying to leap ahead. I wanted to get this drug to patients, but I’m sure at the FDA it was perceived as all about advancing the company and making money.”
Alam frayed the relationship further by failing to control his impatience with Fleischer, who had trained as a
physician’s assistant, had a master’s degree in public health, and, not incidentally, was charged with providing guidance to drugmakers—the same job that Alam’s father had done for decades while Alam was growing up. Alam recognized the problem but seemed powerless to act any more than passingly, reluctantly collegial toward Fleischer. “I absolutely was the wrong person; the smart-guy physician,” he says. “His attitude was, ‘Fuck you, I’m not going to do what you want me to do.’ Both my scientific ability to connect the dots and leap ahead and my personal impatience and urgency absolutely did not fit with how the FDA wanted to move.”
In pharmaceuticals, time is money in an expanded sense: every delay ramifies across the organization, ratcheting up the pressure, especially in companies where everything depends on getting approval for one vanguard product. Frustration and impatience—the drivers behind much discovery and innovation—seldom help. The more Vertex was consumed by its urgency to push through to market, the more slowly and more carefully the FDA seemed determined to see it go.
In October, a few days before Vertex announced the PROVE findings, Schering-Plough disclosed preliminary, but positive, efficacy and safety data from a Phase II study of its HCV protease inhibitor, boceprevir. While Vertex had been pressing full speed ahead, Schering was moving at a slower pace, but the data showed that 70 percent of patients taking boceprevir and peg-riba went undetectable at twelve weeks—not a cure, but a strong indication of viral response. The company reported the drug was well tolerated—no rash, albeit significant anemia. Still hoping to push telaprevir into Phase III studies in early 2008, Alam and others at Vertex believed they remained eighteen months ahead of Schering’s drug. But for the first time since the demise of the original Boehringer molecule, they had a direct competitor: one with deep pockets, and a longtime commercial leader in hepatitis C. The announcement sent shares of Vertex down by 15 percent.