Sheldon Kong, PhD Senior Director, Outcomes Research Merck & Co., Inc., NJ, USA December 17, 2002

1. Academia,Healthcare Providers, andthe IndustryThree Different Worlds?Three Different Sets of Goals? Sheldon Kong, PhD Senior Director, Outcomes Research Merck & Co., Inc., NJ, USA December 17, 2002 CHEBS Seminar, University of Sheffield

2. Outline • Introduction to Merck & Co., Inc. • Personal interpretation of Outcomes Research • Opportunities and challenges for collaboration among academia, healthcare providers & pharmaceutical manufacturers • Afterthought: • A pharmaceutical manufacturer’s perspective • 3win leads to better healthcare decision making

3. Merck & Co., Inc. • More than 70,000 employees worldwide • > 11,000 employees in Merck Research Labs • 2001 R&D spending - $2.5 billion (up 14% from 2000) • Conduct business in about 150 countries • Market more than 100 medicines and vaccines • Clinical trials: one protocol, one standard, worldwide 2001 Trials Countries Sites Patients U.S. 261 1 5,168 106,539 Int’l (ex-US) 74 59 3,637 49,504 TOTAL 335 60 8,805 156,043 • No. 1 corporate giver in US (e.g., Mectizan Donation Program, $100 million of Recombivax HB)

4. Our Values “We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear… How can we bring the best of medicine to each and every person? We cannot rest till the way has been found, with our help, to bring our finest achievements to everyone.” — George W. Merck, 1950

5. Our Mission • Provide society with superior products and services to improve the quality of life and satisfy customer needs • Provide employees with meaningful work and professional growth and development • Provide investors with a superior rate of return

6. Our Strategy for Growth • Discover important new medicines through breakthrough research • Demonstrate the value of our medicines to patients, payors and providers

7. Outcomes Research • Flourishing definitions and fields • Outcomes research • Pharmacoeconomics/Health economics • Health technology assessment • Understanding the inputs and end results (clinical, economic and quality of life value) of health care interventions

8. Personal Interpretation of Outcomes Research: Three Key Components Health Care Input Health Care Program or Procedure Output or Outcomes PROGRAM Surgery Hospital Drug Therapy OUTCOMES Clinical effects Quality of life Economic benefits COSTS (Resources consumed) Is this a better (or the best) program given the amount of money (resources) we spend and the outcomes we get? • What do we do? • How much does it cost? • What are the outcomes?

9. What Do Researchers Need to Support Outcomes Research Activities? • Research expertise • Data (new or existing) • Funding • Understanding of applications/impact of research projects • Advancement of science • Health care policies: national/regional • Clinical decision making • Marketing effort (capitalism system) • Self interest/actualization: e.g, curiosity, funding

10. Collaborations Among Different Parties: Not a New Phenomenon • Long history of collaboration between academia and pharmaceutical manufacturers on “basic” research (e.g., pharmaceutics) and clinical studies (e.g., clinical trials) • Examples of excellent collaboration exist among academia, healthcare providers & pharmaceutical manufacturers (e.g., Heart Prevention Study) • Barriers exist for close collaboration between healthcare providers and pharmaceutical manufacturers (e.g., legal, financial, cultural)

11. Collaboration Among the Three Parties: Perfect Match? • Pharmaceutical manufacturers need information to make decisions related to regulatory application, reimbursement and promotion • Healthcare providers have (potential) data to offer and need to analyze/interpret these data in the context of broader healthcare systems • Universities have skilled researchers and data processing capacity, and require research projects to provide revenues, research training and experience opportunities, and publications

12. Challenges Facing Academia(More Relevant in the US) • Pressure for grants amid increasing competition for federal funding • Need to accommodate academic/research freedoms • More federal money goes to “basic” research • Many outcomes research projects require large, longitudinal, up-to-date databases • Recruitment and employment opportunities for graduate students • Real life applications of research & influencing policy and clinical decision making

13. Challenges Facing Healthcare Providers(More Relevant to US MCOs) • Increasing competition for customers (US managed care organizations) • Improving quality of health care with affordable price (outcomes assessment) • Lack of expertise in outcomes research • Conflict between long-term commitment to research and short-term financial goals • Lack of well-built database infrastructure (e.g., clinical status, integration of different segments of information)

14. Challenges Facing Pharmaceutical Manufacturers • It’s getting more difficult to get innovative medicines to market and more resources are needed • Pressure for more data (beyond safety and efficacy for regulatory approval) at launch • Required before 'real life' usage data is available • Increasingly required for reimbursement or formulary listing • Formation of a "fourth hurdle" • Shift in medical decision making for selection of therapy: from primarily individual physicians to large payors/groups (with collective expertise)

15. Collaboration Among the Three Parties to Provide the Best Patient Care How to overcome barriers for a mutually beneficial collaboration? Challenges exist with such endeavors, but collaboration can be beneficial in satisfying the needs of all parties

16. How to Improve Collaboration • Understand each other’s “business” • Learn to communicate with each other (three distinct cultures) • Set reasonable expectations (funding, confidentiality, deliverables, publications, timelines) • Be clear and specific at the very beginning • Be proactive

17. Potential for Conflict of Interest • Outcomes Research is a new field & research results may have major impact on policy, formulary, and clinical decisions • Questions may arise regarding study conclusions due to lack of certain variables in provider databases • Perceived problems with decisions based on “clinical” versus “economic” considerations • Desire for publication versus need for proprietary information • Funding from different sources: different sets of conflicts of interests?

18. 3win Collaboration: A Pharmaceutical Manufacturer’s Perspective • Ensure patients access to innovative medicines • Quality of clinical evidence should be used as the key criterion in evaluating innovative medicines • OR studies can help in making decisions about more efficient healthcare resource utilization while also providing evidence for the importance of appropriate use of innovative medicines • Merck studies should be held to the same standards as any other studies in the peer-reviewed literature • Merck is committed to publishing results to contribute to the advancement of the field of OR • Undertake research using patient-centered outcome measures • Communicate with healthcare providers and regulators to enable understanding of available data

19. A Perfect Example of Collaboration:3Win Leads to Better Healthcare Decision Making Healthcare Providers Pharmaceutical Manufacturers Patients Academia (CHEBS)