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From the pages of the Morning Consult.
Stepping Towards Failure
By Robert Popovian
As healthcare professionals, we should always do what is best for the patient. This includes practicing evidence-based medicine. Unfortunately a growing practice of the healthcare ecosystem ignores this principle: the institution of payer policies that try and curb pharmaceutical utilization. One such policy is “Fail First” or “Step Therapy”. This “utilization management” strategy is when a payer, often a Pharmacy Benefit Manager, decides that a patient must first try and fail on one or more medicines that their physician did not select. This can mean forcing the patient to take a drug that had been previously tried – and failed to work – or even mean a patient is forced by the payer to take a medicine that does not have an FDA indication for their disease. The patient suffers through weeks, if not months, of inappropriate therapies all in the name of cost-effectiveness. There are instances when this type of policy is truly cost saving such as when an AB rated generic is required first, and greater use of real world evidence including the patient’s treatment history could target the right patient for this type of intervention, but applying the policy broadly means that patients needlessly experience substandard treatment.
Today, 70 percent of employer-sponsored insurance plans use this approach to control medication costs. Payers assert that by mandating physicians to follow a certain prescribing algorithm that the “per member per month” pharmacy costs will be lowered. However, payers don’t consider whether it will also result in overall reductions in healthcare costs or an improvement in patient outcomes or even long term savings in pharmacy expenditures. In addition, no consideration is given to the indirect costs incurred by physicians who now have to shuffle patients in and out of their offices for additional visits to ensure that they will eventually get to use the appropriate drug the physician had selected for them in the first place.
More importantly, payers don’t define what “failure” means for a patient. Is “failure” simply a lack of efficacy of the payer’s drug choice? Is “failure” a hospitalization incurred because of the payer’s pre-determined algorithm? Or worse, is “failure” a patient who is now seriously ill because they had to endure an ineffective therapy? As Dr. Brenda Motheral pointed out in her findings published in The American Journal of Managed Care, 17 percent of patients on step therapy algorithms end up without any treatments as they get left behind in the administrative maze.
Another interesting point is that when patients reach the zenith of their fail first/step therapy regimen and have the opportunity to utilize the drug that was chosen initially by their provider, they are hit with significant out-of-pocket costs because such medications are usually in higher copay or co-insurance tiers. So not only did the patients have to endure months of ineffective or at times hazardous therapy, they now have the burden of paying higher out-of-pocket costs.
Remarkably, there is absolutely no evidence that fail first/step therapy provides a reduction in overall healthcare costs and improvements in patient outcomes short or long term. There is no empirical data published in peer reviewed journals that demonstrates definitively that there are both health benefits and cost savings from these policies. In fact, despite evidence of potential harm (i.e., patients ending up on no therapy), payers have not been required, nor have they taken the initiative, to demonstrate that fail first/step therapy policies are safe for patients. Payers quite often and at times rightfully ask biopharmaceutical companies to provide safety and efficacy data or ever-expanding pharmacoeconomic product dossiers for their products. Payers also demand that physicians justify every single intervention they utilize through mounds of paperwork. Isn’t it time to make payers provide a similar level of evidence for their policies?
As Dr. Motheral pointed out, “Adoption of step therapy is quickly outpacing decision makers’ understanding of the clinical, humanistic, and economic value of these programs.” In other words, we have no idea what the outcomes are but payers continue to demand patients should trust their decisions rather than those of their own doctors.
Utilization management is an important part of ensuring that this country’s significant investment in healthcare is used efficiently. However, policies without clear clinical rationale that achieve short term cost savings at the expense of long term health isn’t efficient. Let’s use the growing wealth of real world patient experience data to ensure the right people get the right treatment as quickly as possible, and that money isn’t wasted in the wrong places. This should apply not just to medicines but other parts of the healthcare system.Read More & Comment...
By Robert GoldbergOctober 16, 2014 | 8:30pm
How the feds block Ebola cures
We have technology to potentially control Ebola and other viral outbreaks today. But the federal bureaucracy refuses to catch up with 21st-century science.
For example, diagnostic startup Nanobiosym has an iPhone-sized device that can accurately detect Ebola and other infectious diseases in less than an hour.
Two other companies, Synthetic Genomics and Novartis, have the capacity to create synthetic vaccine viruses for influenza and other infectious diseases in only four days. Both firms can also share data about outbreaks instantaneously and make real-time, geographically specific diagnosis and vaccine production possible.
These companies could start producing Ebola vaccine/treatments tomorrow — except that the Food and Drug Administration’s insistence on randomized studies and endless demands for more data means firms have to spend millions on paperwork instead of producing medicines.
And for every small company drained by such tactics, many others conclude it’s not even worth trying.
These advances aren’t available because the FDA is using 19th-century science to decide which medical technologies should be used in the 21st century.
Two years after 9/11, Congress created Project Bioshield to speed up the commercialization of vaccines, drugs and diagnostics. A key part of the plan: Get the FDA to evaluate innovations quickly by using the same scientific advances that were used to discover them.
The agency balked.
Pandemic vaccines and drugs don’t move through the FDA approval process faster. Instead, drug- and device-development times actually increased more than 70 percent over the past decade because the FDA keeps demanding more studies and more data using outdated techniques.
And, no, the FDA is not using the best science to ensure safety. Time and again, it has waived regulations when politically expedient.
Back in 1984, at the start of the AIDS epidemic, the FDA claimed that reviewing HIV treatments would take at least six to eight years.
Only after loud, large and sustained demonstrations did it state that new AIDS drugs could be OK’d in two years or less and that most people who wanted to try them could. Millions of lives were saved as a result.
In 2008, it took Synthetic Genomics scientists a month to sequence the genes of every strain of the meningitis virus and engineer a vaccine that protects against them all. In Europe, Canada and Australia, the vaccine was approved for use in children (the group most likely to get meningitis and die from it) in 2010.
But the FDA demanded another study in the United States. Only after meningitis hit Princeton University and UC-Santa Cruz this year did the agency allow the vaccine to be imported and given to students on both campuses.
And the agency still hasn’t approved its general use.
Ebola is the same story. Take ZMapp, a combination of antibodies designed to block the virus from replicating.
Citing safety concerns, the FDA ordered the drug’s maker, Mapp Biopharmaceutical, to stop testing in July — just days before the Ebola outbreak. Now, of course, the FDA is letting people use it.
The same goes for an anti-viral drug (TMK-Ebola) made by Tekmira Pharmaceuticals. The FDA suspended research in January because of safety concerns. It changed course only after Ebola killed thousands.
Part of the problem: FDA scientists receive no reward for approving breakthroughs, but suffer public anger if but one person dies because a drug is misused. The price we pay for this culture of caution rises every day.
Africa will have to spend billions to treat those infected, rebuild health systems and bury the dead. Here at home, public officials find themselves a step behind Ebola.
As they lose our confidence in their ability to respond to biological threats, they blame the Ebola crisis on — what else — budget cuts.
Asked why there is no Ebola vaccine, National Institutes of Health Director Francis Collins claimed we’d have one if not for NIH budget cuts. Nonsense: NIH funding for infectious diseases has doubled since 2001. But in 13 years, it developed three (ineffective) vaccines.
Nobel Laureate microbiologist Joshua Lederberg noted, “The single biggest threat to man’s continued dominance on the planet is a virus.” The second-biggest threat: a federal culture that rewards the delay of medical progress.
Ultimately, Congress must change the FDA’s mission and bureaucratic culture. Reviewers shouldn’t be allowed to use science to keep new technologies from doctors and patients.
We must force the FDA to focus on accelerating innovation and stop “protecting” us to death. Read More & Comment...
Abuse deterrence will take many forms.
In advance of the FDA’s upcoming two-day meeting on opioid pain medicines and abuse-deterrent technologies, some good news. The agency has approved an updated label for the opioid pain medicine Embeda to include abuse-deterrence studies.
Embeda’s updated label states that it has properties that are expected to reduce abuse via the oral and intranasal (i.e., snorting) routes when crushed. However, abuse of Embeda by these routes is still possible. The updated label also includes data from a human abuse potential study of intravenous (IV) morphine and naltrexone to simulate crushed Embeda. (It is unknown whether the results with simulated crushed Embeda predict a reduction in abuse by the IV route until additional post-marketing data are available.)
Per Bob Twillman, Director of Policy and Advocacy, at the American Academy of Pain Management. “Prescription opioids are an important treatment option for people with chronic pain. However, misuse and abuse of opioids in the U.S. is a serious societal concern, which is why the development of abuse-deterrent formulations of these medicines is a high priority,” said “All opioid medications, including morphine products, have the potential for abuse. We believe that anything that can be done to reduce this risk is a significant development for healthcare providers and their patients.”
Embeda capsules consist of extended-release morphine sulfate and sequestered naltrexone hydrochloride, an opioid antagonist. Naltrexone is intended to remain sequestered when the product is taken as directed. The in vitro and pharmacokinetic data demonstrate that crushing Embeda pellets results in the simultaneous release and rapid absorption of morphine sulfate and naltrexone hydrochloride.
Per Pfizer, “More than one-third of extended-release opioids prescribed are morphine, and Embeda is the first extended-release morphine with the potential to reduce abuse via the oral and intranasal routes when crushed,” said Dr. Steven Romano, senior vice president and head, Medicines Development Group, Pfizer Global Innovative Pharmaceutical Business. “Pfizer believes that abuse-deterrent products, like Embeda, are important to help address the growing public health problem of opioid abuse in the U.S.”
It’s an important step in the right direction.
I’ve just returned from Dubai (no, I didn’t do any shopping) where I was honored to speak at the Economist’s conference on Health Care in the Middle East: Evolution and Reform. My talk was on “Enhancing Public Health Through Innovation.”
One of my main points is that innovation doesn’t happen in a vacuum. People make it happen – and it’s an ecosystem: academics, manufacturers, physicians, patients, pharmacists, hospitals, caregivers, and government. If we allow ourselves to believe that innovation happens in bursts of “eureka” moments, we do a disservice to those who advance progress through a lifetime of work and through important failures. Innovation happens incrementally – and it’s expensive. The myth of “eureka innovation” is dangerous science fiction.
In the majority, the role that government plays in advancing innovation isn’t, as many think, the science that comes from institutions like the National Institutes of Health (although the NIH makes important contributions), it’s in being a public health partner across the board – and that includes medicine regulatory policy.
So, what is the role of regulators in advancing healthcare innovation? Regulators can be partners in innovation three ways: Through robust oversight. Through active collaboration. And, most importantly, by being an innovation enabler
And regulatory predictability is Step 1 in being an innovation enabler. And one aspect of predictability is an even playing field when it comes to quality. There can be only one level of quality for medicines – whether they be of the innovator or generic variety.
There must also be a dedication across the healthcare ecosystem to safety and quality in the post-market environment – more robust and actionable pharmacovigilance.
There must be the recognition that new medicines enhance, extend, and save lives and, as such, should be reviewed and licensed with all due speed.
There should be a recognition that medicines regulation must never be an arm of domestic industrial policy.
And, finally, that government’s role as an innovation enabler must go beyond words to deeds.
In the words of the American poet, John Andrew Holmes, “Speech is conveniently located midway between thought and action, where it often substitutes for both.”
The most important role government can play in supporting and advancing innovation is to enable action.Read More & Comment...
In addition to the complicated question of FDA regulation of Non-Biologic Complex Drugs (NBCDs), there's the legal morass of patent legislation. Per the latest on that front, BioCentury reports thatU.S. Supreme Court justices on Wednesday voiced skepticism about arguments from both sides in the petition by Teva to overturn an appeals court decision that invalidated the company’s process patent for multiple sclerosis blockbuster drug Copaxone.
The high court will decide whether the U.S. Court of Appeals for the Federal Circuit (CAFC) overreached by reviewing de novo certain questions of fact in Teva's lawsuit against the Sandoz International GmbH generics unit of Novartis AG, rather than deferring to the findings of the U.S. District Court for the Southern District of New York.
Teva’s suit alleges Sandoz’s ANDA for generic Copaxone infringed on Teva's patents. The district court ruled in favor of Teva in 2012. In 2013, the CAFC reviewed the facts of the case and instead invalidated the process patent for Teva's daily formulation of Copaxone, set to expire on Sept. 1, 2015.
In Wednesday’s arguments, Justice Stephen Breyer repeatedly challenged Sandoz representative Carter Phillips to explain why the case should provide an exception to civil procedure rule 52(a) that “fact-finding of the district court should be overturned only for clear error.”
Justice Samuel Alito suggested to Teva representative William Jay that the company was asking CAFC to “to struggle to determine” which factual questions have resulted in clear error, and “is it worthwhile as a practical matter?”
Justice Sonia Sotomayor also asked: "Why don't we defer, as has been done now forever, to the Federal Circuit and let them review these things de novo?"
The SCOTUS decision is due by the end of June 2015. Any generic competitor entering the market before the patent expires would have to pay damages to Teva if it is upheld.Read More & Comment...
We are not afraid of competing against mail-order pharmacies': Portland firm thrives in specialty medication market
By Darren Fishell, Bangor Daily News, Maine
McClatchy-Tribune Information Services
It's rare to hear a business praise its state's regulations, but a Portland pharmacy is relying in part on Maine law to gain a stronger foothold in the growing market for specialty medication.
By volume, the market is dominated by major national mail-order pharmacies, but the founders at Apothecary By Design see things shifting in their direction, making Maine one battleground between regional and national pharmacies selling specialty pharmaceuticals.
"The model of what is the right way to manage specialty pharmacy... that's a story that's not played itself out yet," said Mark McAuliffe, one of the pharmacy's five founders. "We would argue that it's critical to have a regional presence."
Specialty pharmacy is to retail pharmacy as the surgeon is to primary care. It's the fastest-growing segment of the pharmaceutical industry, driven by new treatments for conditions like Hepatitis C, cancer and multiple sclerosis.
That's part of what's driven Apothecary to grow more than threefold, to 64 employees, and increased revenue more than 21-fold since opening in 2008, the year it began with a focus on filling retail prescriptions in Portland'sEast Bayside neighborhood.
"We want to own specialty pharmacy in Maine," said Catherine Cloudman, another of the pharmacy's founders.
The company sees itself as part of a shift away from large mail-order pharmacies, whose promise of savings are a matter of ongoing public health policy debate at the national level.
The debate deals with the largely behind-the-scenes decision-makers who determine which patients on which health plans can qualify for coverage for which drugs. The discussion involves issues of health care cost, quality of care and choice for patients and doctors.
For patients, what's at stake is the range of choices a doctor has for treatments. That is, which drugs a given insurance plan will cover. But another aspect of choice comes in which pharmacies can provide drugs for a certain insurance plan.
Maine law requires that any certified pharmacy willing to meet an insurer's terms can fill a prescription.
"That's not true in a lot of other states," McAuliffe said. "We're not afraid of competing against mail-order pharmacies, we are afraid of not being allowed to compete."
But hurdles for getting into that market for specialty pharmacy are a little higher.
That's part of why, in August, Apothecary got accreditation from the group URAC and next spring will pursue approval for its specialty pharmacy from the Accreditation Commission for Health Care. The company's principals said the accreditation is a badge of honor in itself, but the signs of approval will also satisfy an all-important group of decision-makers in the pharmacy world: pharmacy benefit managers, or PBMs.
Generally, PBMs act as middlemen between health insurers and pharmacies, negotiating over which drugs an insurance plan will include, pricing and other details that make up what's called a formulary. Some of the largest PBMs, like Express Scripts, want two certifications.
With those certifications in hand, the integrated pharmacy expects to grow its share of the estimated $400 million market for specialty drugs in Maine. Last year, Apothecary invested $800,000 in an 8,700-square-foot expansion, growing its specialty pharmacy and adding a compounding pharmacy across the street from its first location.
The company's founders project they'll bring in around $85 million in revenue this year, up more than 160 percent from last year. About 95 percent of that will come from specialty drugs.
Still, the company expects to face continued challenges from PBMs apparently unaware of Maine law limiting how narrow a PBM can make its network. Cloudman said the company earlier this year spent time correcting letters sent out by insurers, telling patients that they were not able to cover prescriptions filled at Apothecary and instead need to use their affiliated mail-order pharmacy.
"We have to stay hypervigilant on that all the time," Cloudman said.
It's something Peter Pitts, president of the nonprofit Center for Medicine in the Public Interest, said happens often because of the structure of the system.
"The large PBMs are both judge and jury," Pitts said. "By denying a claim, they are often benefitting their own bottom line."
In recent years, consolidation of PBMs and mergers between them and pharmacies and drug manufacturers have raised antitrust concerns at the national level.
The issue received particular scrutiny in 2012 with the merger of Express Scripts and Medco Health Solutions, creating a PBM the Federal Trade Commission said would control at least 40 percent of the market. Opponents of the deal, including principals at Apothecary, said that number is closer to 60 percent, giving the PBM strong influence over pharmacies and drug manufacturers.
That influence became clear this year. The New York Times reported in June that more PBMs have started to exclude from their formularies certain expensive specialty drugs to treat conditions such as cancer and multiple sclerosis in an effort to curb rising costs.
PBMs manage drug benefits for about 210 million people in the United States, and that market is dominated almost entirely by the three largest PBMs that also operate mail-order pharmacies to fill prescriptions.
Advocates of that system argue that centralizing drug purchasing through PBMs lowers costs. Critics say it has economic consequences for small pharmacies and health consequences for patients.
David Balto, a Washington, D.C.-based attorney and former policy director at the Federal Trade Commission, has argued a number of cases raising concerns about what he's called one of the "least regulated and least understood aspects of the health care delivery system."
"PBMs were formed to negotiate the best arrangements for insurance companies and employers with pharmacies and drug manufacturers," Balto said. "But when a pharmacy is owned by a PBM or a drug manufacturer is owned by a PBM, there is a conflict of interest and there's really a fox guarding the henhouse."
Principals at Apothecary said they share the concern that such joint ownership opens the door to conflicts of interest, though there is supposed to be a firewall in place to prevent collusion between PBMs and affiliated pharmacies.
Pitts, at the Center for Health Care in the Public Interest, contests that the PBMs provide cost savings in the health care system, arguing that limiting treatment options for doctors and patients incurs costs elsewhere for patient treatment.
"When you centralize distribution and when you remove choice, bad things happen around the margins and you have to keep a close eye on those," Pitts said. "There's a difference between medicines and commodities like air conditioners: certain [medications] work better for some people than others."
While smaller pharmacies like Apothecary have been concerned about being elbowed out of the game, those larger PBMs have recently started facing new pressures in their own market as well.
The Wisconsin-based Navitus Health Solutions is one of many so-called "transparent" PBMs, handling prescriptions for about 4 million people.
Instead of making a profit margin on each prescription filled, PBMs like Navitus charge insurers a flat fee and "pass-through" the cost of drugs directly from the manufacturer.
It is the PBM for Maine Community Health Options, the insurer for the majority of people getting coverage through the Affordable Care Act in Maine that recently announced that it will open plans to all of New Hampshire. Apothecary has contracts for specialty drugs with Navitus.
Brent Eberle, a vice president at Navitus, said that there's greater transparency in pricing with introduction of the Affordable Care Act and some employer groups looking to know more about the cost of drugs, especially for specialty pharmacy where the average cost of a prescription is about $2,000. And some of the larger PBMs are starting to offer transparent pricing options as well, he said.
In the end, pharmacies like Apothecary hope the growing demand for specialty pharmacy and the greater attention that requires gives them a niche for bringing pharmacy back down to a smaller scale while becoming a bigger part of the health care system.
"Even in the eyes of physicians, pharmacists are viewed as a commodity," Cloudman said. "We're having a lot of success changing that."Read More & Comment...
NIH budgets have increased since 2001 except for 2011.
The NIH - through the National Institutes for Allergies and Infectious Diseases -- has received $11 billion for research and development to find diagnostics, drug and vaccines for Ebola and other lethal pathogens. In fact in 2010, NIAID received an additional $304 million when Congress diverted money for buying vaccines from the Bioshield procurement fund. And each year the budget was never cut, except for 2011.
If you go to clinicaltrials.gov and type in Ebola, Marburg or other viral hemorrhagic fevers and limit your search to NIH sponsored trials here's what you get.
The only study completed that actually reported results was a test of yellow fever vaccine on people with excema
The NIH developed 7 Ebola vaccines.. None of which worked. $11 billion. 7 vaccines. No results.
There are several drugs that do work. TKM-Ebola and three drugs from a company called Sarepta. AVI-7537 has already shown effectiveness in non-human primates against the Zaire Ebolavirus, the species implicated in the current outbreak. Moreover, Sarepta had been conducting Phase 1 safety trials with the drug alone and together another Ebola-directed PMOplus molecule (AVI-7539, with the combination called AVI-6002). Sarepta's work was being funded by the Department of Defense, NOT NIH. The administration and Congress could have transferred the money from Bioshield to the DOD work under a cooperative research agreement but it did not. The dough went to NIH.
According to a recent article in Forbes, Sarepta " does indeed have clinical trial-quality drug on hand. The Marburg program that has continued “uses the same backbone chemistry,” so the safety studies that are continuing with that drug at higher human doses could be applied to AVI-7537.
The company's CEO Chris Garabedian told Forbes: “We’re here to raise awareness that we do have a technology that might be helpful, and that we do have drug substance on hand if we received a request from a government agency,” said Garabedian. “We, of course, would have to get the appropriate waivers and approvals from the Department of Defense who supported the development of this compound as well as the FDA in terms of an emergency use authorization.”
Read More & Comment...
Actually it's the small biotech startups and medical innovation that would be screwed if Towns has his way
My late colleague John Vernon Jr. explains why cutting IP protections to biologics will hurt Americans (from is article EXPLORATION OF POTENTIAL ECONOMICS OF FOLLOW-ON BIOLOGICS AND IMPLICATIONS FOR DATA EXCLUSIVITY PERIODS FOR BIOLOGICS. )
"A minimum of 17 years of data exclusivity or data protection is required to provide the necessary incentives for continued biotech R&D investments...evidence suggests that these incentives are in fact inadequate for pharmaceuticals in light of the social rate
of return to both pharmaceutical and medical R&D."
Vernon concluded that at present, the U.S. is under-investing in new medicines. "One study suggests that for every $1,345 invested in pharmaceutical R&D, a U.S. life year is gained, on the average. "
This return could be even higher if FDA regulation did not ratchet up the cost and complexity of drug approvals. We can find common ground on this important point! Read More & Comment...
In 1992, Congress created a program -- known as "340B" -- to help caregivers serving disproportionately large numbers of low-income beneficiaries and uninsured patients. Under 340B, drug manufacturers are required to sell their products at a discount to such institutions. The discounted prescriptions are dispensed either through the caregiver's in-house pharmacy or through a contractual arrangement with an outside pharmacy.
340B has a noble cause. And many of the medications discounted through 340B do in fact go to clinics, hospitals, and medical facilities providing care almost exclusively to uninsured and poor patients.
However, some 340B participants are exploiting the program and the vulnerable patient populations 340B was intended to help are often still stuck struggling to gain access to affordable pharmaceuticals.
To wit, Pharmaceutical Research and Manufacturers of America (PhRMA) Executive Vice President and General Counsel, Mit Spears has issued the following statement:
“PhRMA strongly supports the 340B program, which is intended to help vulnerable and uninsured patients obtain access to life-saving medicines. We are committed to working with all stakeholders to improve the program to ensure it benefits those it was intended to help. To achieve this important objective, it is critical the program operate in a manner consistent with the clear direction of Congress.
“At issue is the Health Resources and Services Administration’s (HRSA) interpretation of the 340B orphan drug exemption, enacted as part of the Affordable Care Act (ACA). The ACA significantly expanded the type of entities that can access 340B discounts for prescription drugs. To preserve incentives to invest in research and development of new treatments for rare diseases, the ACA expressly exempts manufacturers from having to provide these discounts on orphan drugs to newly eligible providers.
“After the Federal District Court of the District of Columbia vacated the HRSA July 23, 2013 rulemaking regarding the 340B orphan drug exemption, in July 2014, the agency issued the exact same rule, but labeled it ‘interpretive.’ HRSA’s action in this regard is unlawful.
“While we value the hard work and efforts of all agencies, it is important federal agencies recognize and work within the bounds set by Congress. PhRMA is therefore filing suit against the U.S. Department of Health and Human Services to challenge its second attempt to issue a rule conflicting with the plain language of the statute.
Go get’em, Mit!Read More & Comment...
In case you missed the FDA’s Viewpoint commentary in JAMA, here it is:
And it’s not about banning Zohydro:
“The risk in singling out a single drug like Zohydro ER in this complex, multidrug epidemic is that resulting policy is unlikely to have an effect on the underlying causes—the abuse of multiple opioids and other drugs and inappropriate prescribing.”
The first sentence of the concluding paragraph says it all, “The problem of opioid overdose demands well-informed policies.”
Not knee-jerk. Not political. Not bowing to threats. Well-informed policies.
Attention must be paid.Read More & Comment...
Leading medical innovation think tank claims CBS is ‘dead wrong’
New York, NY (PRWEB) October 08, 2014
The Center for Medicine in the Public Interest (CMPI.org– a non-profit research organization specializing in promoting medical innovation) criticized CBS’ “60 Minutes” segment on cancer treatment prices as not just distorted but ‘dead wrong.’ “‘60 Minutes’ ignores the contribution new medicines make in reducing health care costs, improving wellbeing and saving lives,” said Robert Goldberg, Vice President for Research of CMPI. “Featuring physicians that argue that treatment prices are too high does not change the fact that the cost of cancer drugs are about 12 percent of what health insurers spend on cancer or that new cancer drugs actually save health insurers money. Yet insurers are increasing oral therapy cost-sharing requirements to actively encourage patients to use infusible products.
While a Milliman study found that shifting to co-insurance would only add about $2 per member per month in private health plans, 60 Minutes never discusses this solution. Instead, 60 Minutes remains silent about the cost shifting and has never advocated for co-pay reforms that could relieve the burden on patients.
Spending on cancer treatments has climbed from $24 billion in 2004 to about $40 billion today. But such treatments represent only 0.6 percent of U.S. healthcare spending, and that proportion has been fairly consistent for the last several decades.
Such medical innovations were largely responsible for a 40 percent increase in cancer survivors (from 9.8 million to 13.6 million) since 2004. Since 2004 the use of new therapies saved $188 billion on hospitalizations, and avoided nearly $100 billion in lost productivity each year. Since 1990, new cancer drugs have helped generate 51 additional years of life, worth nearly $5 trillion.
A doubling in the use of new-targeted therapies will raise the amount spent on medicines as a percentage of total health care spending. But that increase must always be compared to what would be spent on healthcare, disability, unemployment and rehabilitation in the absence of medical innovation.
Peter Pitts, the President and Co-Founder of CMPI noted, “New medicines almost always reduce the cost of living longer and healthier lives and increase the value of such improvements. It is disappointing that “60 Minutes” failed to investigate why some health plans have deliberately made these innovations unaffordable by requiring patients to pay up to half their costs. And it is disheartening to know that doctors are more interested in attacking innovators than in defending patients from such cost shifting.”
Pitts also remarked, “We are happy to talk about the prices of cancer therapies, but only in the context of value and the rising cost and prices of other healthcare services that constitute a substantially bigger portion of total spending. In addition, the discussion should only be in the context of what can and should be done to cut the cost of developing new therapies through smarter, faster regulation.”
CMPI has a website—valueofmedicalinnovation.org—that provides a balanced view of the role new medicines play in our lives.
Read More & Comment...
The Center for Medicine in the Public Interest is honored to join the US Pain Foundation and other patient-centered organizations in offering our support to the FDA in general and Commissioner Hamburg specifically for savvy and strategic management of pain medicine regulation.
Why now? Well for starters because of the unfair, unbalanced, ad hominem and just plain erroneous attacks on the agency’s efforts.
It’s all spelled out in this letter of support just sent to HHS Secretary Burwell. It’s designed for impact.
Have a look and please share. This issue is too important to allow the lunatic fringe to drive the agenda.Read More & Comment...
BioCentury reports that the EMA's management board unanimously adopted its clinical data transparency policy, to be introduced in two phases starting Jan. 1, 2015. In the first phase, EMA will publish clinical reports supporting MAA submissions while excluding individual patient level data. The policy will apply to any MAA submitted after Jan. 1, 2015.The agency noted that as a practical matter, this would mean the first data for newly approved medicines would become available in 18 months, allowing for review time and approval by the European Commission. For line extensions and extended indications of approved drugs, EMA will publish clinical data for applications submitted as of July 1, 2015. EMA said the second phase, disclosure of individual patient level data, will follow a consultation with stakeholders to determine how such data can be made available in compliance with privacy and data protection laws.The agency said commercially confidential information will be redacted at its discretion with input from sponsors, noting "the starting point of the redaction principles is that clinical reports do not, in general, contain CCI." After reviewing stakeholder concerns that clinical data would only be accessible by viewing it on a screen, EMA amended the policy to allow identified users to download, save and print trial data for academic and non-commercial research purposes. The policy provides two permission routes for access, one for "general information purposes" by individuals and another for "academic and non-commercial research purposes." EMA also published a document addressing frequently asked questions relating to the policy.
Read More & Comment...
Speaking of opioids, here are three interesting items from today’s edition of DIA Daily. One thing, however, that remains absent in the debate over how to address the issue is the Hamburg Manifesto – enhanced physician education. Now it's time for the DEA to step up to the plate and mandate specific education as a must-have for prescribing rights.
So far, alas, only silence from the DEA on this topic. This must change.
Pharma Association CEO Offers Possible Reforms To Curb Prescription Drug Abuse.
Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, writes in the The Hill (10/2, Merritt) about options in trying to abate prescription drug abuse issue in the US. Merritt offers “two basic reforms”: first, a “safe pharmacy” or “lock-in” policy in Medicare in which “the small segment of patients who are at risk of abusing opioids would choose – along with their health plan – a single, convenient pharmacy to fill their prescriptions for controlled substances.” This eliminates the possibility of “drugstore shopping,” or “the practice of filling prescriptions for controlled substances...at multiple drugstores to avoid detection.” A recent HHS OIG report called for such an approach. A second option would be to “close the loophole in Medicare that prevents Part D plans from suspending payments to pharmacies suspected of fraud or diversion.” A second HHS OIG report outlined the benefits of this potential reform.
Neurologists Urge Caution With Opioids For Non-Cancer Use.
The Los Angeles Times (10/2, Healy) reports that patients on opioid painkillers for chronic pain unrelated to cancer, such as headaches, may face a situation where the risks of taking the medications outweigh the benefits. The paper notes that patients “are more likely to risk overdose, addiction and a range of debilitating side effects than they are to improve their ability to function,” citing the American Academy of Neurologists. In a new position statement released Wednesday, the group warned that even for patients “who do appear to benefit from opioid narcotics,” doctors “who prescribe these drugs should be diligent in tracking a patient’s dose increases” and should insist as a condition of continued use “that opioids are improving a patient’s function.”
Abuse-Resistant Version Of Controversial Painkiller Unveiled.
The Wall Street Journal (10/2, Burton, Subscription Publication) reports, Zogenix Inc., the maker of the controversial opioid painkiller Zohydro ER (hydrocodone bitartrate), disclosed Wednesday it filed an application with the FDA for a modified version of the medication that it says would be harder to abuse. According to the firm, the new version will be a capsule containing a gel, making it more difficult to snort or inject. Still, some doctors noted that it could be abused by addicts, who could choose to orally ingest the contents.Read More & Comment...
To the editor:
Per Detailing Financial Links of Doctors and Drug Makers (NYT, October 1, 2014), collaborations between physicians and industry are fundamental to advancing medicine. Without in any way diminishing the governmental and non-profit agencies that support research, it is the partnership between physicians and industry that has created many, if not most, of the major medical breakthroughs that have reduced the rates of death and other serious outcomes in recent years – as any literature search of major medical journals will quickly confirm.
Conducting clinical research has become so rigorous and sophisticated that those who serve as consultants and investigators to industry recognize it as a major commitment or even a primary career path. In addition, as studies are completed, physician researchers add to their professional commitment by becoming the teachers of this new information.
Critics of these collaborations see compensation of physicians as evidence of undue influence on medical practice. But doctors, like all professionals, should be paid fairly for their time and work. The truth is that physicians who are busy with these activities are not as well rewarded as their fellow specialists in full-time clinical practice. Adding to this remunerative divergence is that a key part of research, writing articles for publication, takes weeks of work -- often unpaid so as to avoid any suggestion of bias.
The Sunshine Act will create troubling misconceptions for and about physicians. Payments reported for physicians by industry will likely include funding they didn’t personally receive nor will they take into account costs incurred by these physicians in paying their own staff and covering overhead expenses. Doctors involved in industry-supported research and education may easily get discouraged and frustrated explaining these complexities to an audience already biased and sated by sensationalistic media reports of physicians “on the take.”
And yet the Sunshine Act, paradoxically, could have a positive effect. Despite the near impossibility of reliably interpreting all the reported data, this information might well serve as a yardstick of cooperative achievement --identifying those physicians at the forefront of medical innovation.
Peter J. Pitts
Pitts, a former FDA Associate Commissioner, is President of the Center for Medicine in the Public InterestRead More & Comment...
I recently had the pleasure of meeting with Captain Valerie Jensen, USPHS, who has led the FDA’s efforts to tackle the problem of drug shortages in the US over the past several years. (She is officially the Associate Director of the FDA’s Drug Shortage program.)
Alas, as the tabloid press reminds us, “if it bleeds, it leads.” The media frenzy surrounding drug shortages has vanished. Why? Because, due in no small measure to efforts from the FDA, the problem is being successfully addressed and ameliorated. Unfortunately, that’s not news – but it should be. Here are some interesting points.
The FDA’s strategy in addressing the issue is to enlarge and empower a drug shortage ecosystem. Rather than seeking more Federal dollars (a fool’s errand), the FDA undertook to combine the resources of the constituent players, manufacturers, hospitals, and large-scale purchasers such as GPOs. Combined with appropriate and savvy use of enforcement discretion, the FDA has taken leadership of the drug shortage ecosystem and is driving a sustainable solution.
The drug shortage ecosystem relies on more than just FDASIA-mandated notification requirements –it’s built on trust. Specifically, that the FDA wants to work with manufacturers to solve the problem rather than simply whack them with 483s. The agency is showing more regulatory flexibility when resolving manufacturing and quality issues.
Curiously, a new cause of shortages has arisen – poor corporate planning. Shortages, for example, in Sodium Chloride IV kits have hit the agency’s radar screen. The problem isn’t due to manufacturing quality, but rather lack of inventory. Hello?
Smart business projections must also be a part of the drug shortage ecosystem.
Speaking of business practices, there remains the 800-pound gorilla of the drug shortage dilemma -- artificially low prices are a major causational problem. And that’s not something the FDA can help fix.
It’s time for our lawmakers to revisit the legislative solution proposed in Senator Orrin Hatch’s Patient Access to Drugs in Shortage Act. There are three key codicils:
1. Price Stability
The Hatch language would change the Medicare reimbursement rate for generic injectable products with 4 or fewer active manufacturers from ASP + 6% to Wholesale Acquisition Cost in order to achieve market price stability.
2. Medicaid/340B Rebate Exemption
Exempt generic injectable products with 4 or fewer active manufacturers from Medicaid rebates and 340B discounts in order to achieve market price stability.
3. Extended Exclusivity
Manufacturers who hold an approved application for a drug that would mitigate a shortage can extend by 5 years any period of exclusivity, even if the drug is eventually moved from drug shortage designation.
So, kudos to Captain Val and her team at the FDA.
Now it’s time to enlarge the eco-system via timely and targeted legislation.Read More & Comment...
The U.S. Pharmacopeial Convention (USP) endorsed a draft World Health Organization (WHO) proposal to create a unique suffix for biologic drugs, including biosimilars.
A WHO working group proposed a voluntary scheme to create unique identification codes, called "biological qualifiers," that would be distinct from international non-proprietary names (INN). The BQs would be random four-letter codes that would be linked in a WHO-maintained database to the product's INN, trade name, name and address of the manufacturer, and regulatory status. According to the WHO, the scheme could facilitate decision making about substitution and interchangeability and help regulators and physicians track patients' responses to products with the same INN.
In comments submitted to WHO, USP suggested that the BQ system be applied to all biologics, not just biosimilars. BQ codes could be assigned retrospectively.
The endorsement comes as FDA is finalizing its biosimilars naming policy in anticipation of regulatory decisions on at least two pending biosimilar applications. Sandoz, a unit of Novartis AG (NYSE:NVS; SIX:NOVN), has submitted an application for a biosimilar version of Amgen's Neupogen filgrastim and biosimilar version of Remicade infliximab, a mAb marketed by Johnson & Johnson (NYSE:JNJ) and Merck & Co. Inc. (NYSE:MRK) Read More & Comment...
Superb analysis of the recent NICE draft technology appraisal against the use of Abraxane from the folks at Context Matters. Well worth the read.
NICE: Draft Guidance in Context
In early September, the UK’s National Institute for Health and Care Excellence (NICE) released a draft technology appraisal recommending against the use of Celgene’s Abraxane (nab-paclitaxel) for Pancreatic Cancer. NICE often releases drafts prior to their final reports, giving pharmaceutical companies and other stakeholders the opportunity to offer further information, evidence, and comments. This preliminary decision inspired a number of news articles—PMLiVE, Fierce Pharma, The Telegraph, PharmaTimes, and other news sources all added to the headlines about the agency’s initial report.
Although each of these articles states at least once that the appraisal is draft guidance, not a final decision, it is important to emphasize that NICE’s draft decisions are subject to change. This past May, for example, another Celgene drug, Revlimid (lenalidomide), received a negative draft decision for the treatment of myelodysplastic syndromes. Months later, in August, NICE released a new draft with a positive decision based on additional information provided by Celgene. In March, NICE issued a draft guidance against Alexion’s Soliris (eculizumab), but requested more information justifying the cost. At the beginning of September, NICE, satisfied with Alexion’s addendum, released new positive draft guidance. These three instances alone occurred in 2014; there are more in NICE’s history.
Publishing draft guidance brings up an important point about NICE in particular and HTA agencies in general. NICE’s efforts toward transparency are admirable, but decisions can change until the final guidance is released. Each of the above news articles represents a single data point—a single update in an ongoing process toward a final decision. Only the final decision is binding. Although following the news is certainly valuable, these brief updates do not tell the entire story. Furthermore, though influential, NICE’s decisions do not determine how other countries will make their decisions. NICE is a high-profile agency, but there are others that provide insight into global HTA and reimbursement policies and decisions.
Draft Guidance from NICE: Not the Last and Final Word
Indeed, NICE issued negative draft guidance about Abraxane; but the story does not end there. Abraxane has also been reviewed for Breast Cancer and Ovarian Cancer, and it has been reviewed multiple times by other agencies: HAS in France, PBAC in Australia, CCO in Canada, and SMC in Scotland have all reviewed the drug for at least one indication.
The Snapshot, generated here by the Context Matters Reimbursement Risk Tracker (RRT) database platform, shows that Pancreatic Cancer reviews currently comprise only a small percentage of all HTA reviews for Abraxane. The news about a NICE draft provides manufacturers and stakeholders an opportunity to present additional data and commentary, but it does not include the necessary and complete context to understand the market access status of the drug around the world, or for other disease conditions. Informed action requires more context than that included in the drafts alone.
Furthermore, the draft does not represent all that NICE has decided about Abraxane in the past. NICE recommended Abraxane for the treatment of Ovarian Cancer in 2005; but in 2006, the agency issued a negative decision for its use in Breast Cancer.
The Scottish Medicines Consortium (SMC) has already reviewed Abraxane for Pancreatic Cancer. The agency issued a negative recommendation, finding it more efficacious/effective, but less cost effective than its comparators.
To be sure, draft guidance reviews from NICE provide insight and are valuable issuances to read once published in the news. However, they do not guarantee future and final outcome, nor do they tell the whole story.Read More & Comment...
America's other drug war
By Philip Klein
Critics don't dispute the drug's effectiveness, they take issue with the cost: $1,000 per pill.
Winston Churchill famously described an appeaser as "one who feeds a crocodile, hoping it will eat him last." Today, in a very different context, his remark captures the plight of the American pharmaceutical industry.
Roughly five years after lobbyists for drugmakers worked to help pass President Obama’s healthcare law in hopes it would fend off greater government intervention, the industry finds itself under attack.
As the nation focused on Obamacare’s implementation this year, a civil war has erupted within the healthcare industry over a miracle drug named Sovaldi.
The medicine has been shown to cure about 90 percent of common cases of hepatitis C, a condition that affects roughly 3 million people in the United States and can lead to severe liver problems. Sovaldi achieves this with fewer side effects than any previously available treatment, and it works more quickly, too.
Critics don’t dispute the drug’s effectiveness. But they are taking issue with the sticker price: $84,000 for a 12-week course of treatment, or $1,000 per pill.
The seemingly simple question, "Is a pill worth $1,000?" has triggered a fierce debate over drug pricing and the future of American medical innovation at a time when the healthcare system is undergoing radical transformation.
Critics led by insurers and pharmacy benefit managers (which help administer drug plans) have argued that Sovaldi’s price is completely unreasonable, putting a strain on the budgets of individuals, businesses, and state and federal governments.
If half of the estimated population in California with hepatitis C were treated with the drug, it would increase spending on the disease within the state by $22 billion in a single year, according to a report from the insurance industry-affiliated California Technology Assessment Forum.
Critics argue that Sovaldi is just the beginning of a wave of new high-priced specialty drugs that will trigger an explosion in medical spending in the years to come.
"If [Sovaldi] is prologue to future pricing decisions, we are talking about blank-check pricing that is simply not sustainable," lamented Karen Ignagni, president and CEO of lobbying group America’s Health Insurance Plans, which has launched a furious public campaign intended to shame drugmakers.
Express Scripts, the nation’s leading pharmacy benefit manager, has also jumped into the fray. "We’ve taken a strong stand on Sovaldi, because it’s the canary in the coal mine," said Steve Miller, the company’s chief medical officer. "If we let this price stand unchallenged and we don’t fix the system ... the system will not sustain itself. And we will not stay the innovative country we are today."
The pharmaceutical industry counters by arguing that beyond the costs associated with researching and developing new drugs and going through the arduous federal approval process, there is the tremendous long-term value created by breakthrough medicines.
For a long time, criticism of pharmaceutical companies focused on the fact that they merely created "me-too" drugs and were interested only in treating symptoms. But that’s where Sovaldi is different.
"We’re curing people of a disease,” said Gregg Alton, executive vice president for corporate and medical affairs at Gilead Sciences, which manufactures the hepatitis C drug.
Sovaldi launched in December 2013 and the Foster City, Calif., company reported sales from the drug totaling $5.8 billion for the first six months of 2014. The company’s profit nearly quadrupled during those six months compared with the same period a year earlier.
Although Gilead isn’t a member of the Pharmaceutical Researchers and Manufacturers of America, the industry lobbying group has taken to defending the pricing of Sovaldi because of the broader principles involved. The group argues that by curing a disease that is the leading cause of liver cancer and liver transplants, Sovaldi is making a significant contribution to public health and eliminating long-term costs associated with more severe medical interventions.
Lori Reilly, PhRMA’s vice president for policy and research, noted that the stepped-up attacks on drug pricing are coming at a time when society should be focused on how science and technology could usher in a new era of treating, even curing, destructive diseases.
“We’re never going to get there if we have price controls in effect or if we send chilling signals to pharmaceutical companies that we’re not going to value innovation when innovation happens,” Reilly said.
Though there haven’t been any proposals for direct government intervention to hold down the cost of Sovaldi, public pressure has begun to be felt on Capitol Hill. In June, Rep. Henry Waxman, D-Calif., and Diana DeGette, D-Colo., ranking Democrats on the House Energy and Commerce Committee, called for a congressional hearing on Sovaldi's price.
In a bipartisan letter to Gilead Chairman and CEO John Martin in July, Senate Finance Committee Chairman Ron Wyden, D-Ore., and Sen. Chuck Grassley, R-Iowa, wrote that Sovaldi’s “pricing has raised serious questions about the extent to which the market for this drug is operating efficiently and rationally.” The senators directed their staffs to investigate the matter due to its potential impact on federal spending and made extensive document requests of Gilead.
Such moves do not suggest an immediate threat to pharmaceutical companies from the federal government. But they need to be seen as a warning shot because this conversation over price is occurring when government is becoming a much bigger player in the nation’s healthcare system.
With governments under constant pressure to cut costs, it could only be a matter of time before drugmakers find themselves targeted by lawmakers. And on this front, the pharmaceutical industry cannot avoid blame.
On June 3, 2009, fewer than five months into the Obama presidency, Nancy-Ann DeParle, then director of the White House Office of Health Reform, emailed PhRMA’s chief lobbyist. As healthcare legislation was still being drafted in Congress, DeParle reported that the administration had decided, “based on how constructive you guys have been, to oppose importation on this bill.” This was a reference to allowing the importation of cheaper drugs from Canada, something favored by many Democrats but strongly opposed by drugmakers.
The email, one of many unearthed by a 2012 investigation by the House Energy and Commerce Committee, exposed the deal-making between the White House and the pharmaceutical industry during debate over Obamacare. It involved a journey for both sides.
During his 2008 presidential campaign, Obama attacked the cozy relationship between the drug industry and government. In an ad titled “Billy,” Obama highlighted the fact that Billy Tauzin, who helped push the 2003 Medicare prescription drug bill through Congress as chairman of the House Energy and Commerce Committee, became the president and chief executive of PhRMA shortly afterward. “I don’t want to learn how to play the game better, I want to put an end to the game-playing,” Obama vowed.
But once in the White House, Obama changed tack. As administration officials crafted their strategy for pushing national healthcare legislation, they determined that co-opting health industry lobbyists was crucial if they were to get the bill across the congressional finish line and to the president’s desk for his signature. In 1994, fierce industry opposition had helped wreck the Clinton administration’s healthcare initiative, and Obama didn’t want history to repeat itself. So he played the game he had sworn to eschew, and made a deal with Tauzin after all. (PhRMA has undergone a leadership change since the passage of the healthcare law, and is now headed by John Castellani.)
The pharmaceutical industry has had its own complicated relationship with government. Its business model depends on a vigorous defense of capitalism — of the right of innovators to reap profits based on the value they bring to the free market. But government has the industry in a chokehold, given its control over patent law. Drugmakers enjoy a limited period of exclusivity for their inventions, an idea that is rooted in the vision of America’s Founders to promote the arts and sciences.
In the modern era, the Drug Price Competition and Patent Term Restoration Act of 1984, known as Hatch-Waxman, helped establish a balance between allowing drugmakers to profit from their innovations for a period of time and introducing lower-priced generic alternatives into the market.
During the Bush era, PhRMA lobbied for passage of the Medicare prescription drug law, which brought billions of dollars of business to the industry, but also made the federal government a larger purchaser of prescription drugs. Drugmakers lobbied successfully to prevent the government from directly negotiating drug prices.
When Obama came to Washington in 2009 after a landslide election victory that also cemented huge Democratic majorities in both chambers of Congress, he created an air of inevitability about the passage of a national healthcare plan.
Facing the prospect of a bill passing over its objections and without regard to its concerns, the drug industry decided it was better to cut a deal. PhRMA agreed to support the law, take out ads promoting it, and produce $80 billion worth of taxes and other savings to help finance it. In exchange, Obama would protect drugmakers from liberal Democrats who wanted the federal government to drive down drug prices by negotiating with the manufacturers and by allowing imports from Canada. The law produced millions of newly insured Americans who became customers for prescription drugs.
Peter Pitts, who served as an associate commissioner of the U.S. Food and Drug Administration during the Bush administration and is now president of the Center for Medicine in the Public Interest, has been defending the drug industry during the Sovaldi fight. But he said PhRMA’s short-term calculation to save itself from Obamacare complicates the industry’s arguments.
“By saying, ‘We support Obamacare’ and all the things it means, both in terms of what was on paper and what it means spiritually to a lot of people, they really gave away the high ground on a free-market healthcare system and what that means relative to the ability to exist and produce innovation and reap the rewards,” Pitts said.
He explained: “You can’t cut a deal with a group of people who are fundamentally against your business model and expect that it’s going to save your bacon.”
The pharmaceutical industry had also overestimated the inevitability of Obamacare’s becoming law. By the summer of 2009, there was a strong public backlash against it, and it barely passed. Had PhRMA waited to see how well it progressed, it might have been able step in at a later stage and tip the scales against passage. But hindsight is 20/20.
“A lot of people in the pharmaceutical industry right now are unhappy with the fact that a deal was cut and the federal government still has the long knives out pushed against their throats,” Pitts said.
In a slap to drugmakers, after the healthcare law passed, Obama pushed for slashing the exclusivity period on drugs produced using biotechnology to seven years from the 12 years that was assumed in Obamacare.
This, Pitts argues, shows why it was naive for PhRMA to believe it could make a deal with the administration. “But in fairness to Billy Tauzin,” he acknowledged, “as the saying goes, if you’re not at the table, you’re on the menu.”
The drug industry now finds itself under fire once again. Though there have been more expensive drugs than Sovaldi, they have so far been treatments for relatively rare conditions. In contrast, an estimated 3.2 million people in the United States are afflicted with hepatitis C, a blood-borne illness most commonly transmitted through injection drug use. Many people aren’t symptomatic and do not get tested, so the actual number of people infected could be several million higher.
The release of Sovaldi "was an unprecedented event in the following way,” explained Miller of Express Scripts. “We’ve had higher-priced drugs. We’ve never had a drug priced this high for this many people.”
He added, “It’s a threat to healthcare economics that we’ve never seen before.”
Miller argued that the pricing of Sovaldi isn’t reasonable, especially because Gilead “didn’t invent this drug, they bought it. And so they didn’t have R&D costs sunk into it.”
Gilead’s Alton disputes this view and notes that although the company did acquire Sovaldi when purchasing Pharmasset for $11 billion in 2011, at that point the drug was still in the early part of Phase III trials (the largest and most expensive stage of drug testing). Thus, the drug required further development. “We did the vast majority of R&D on Solvaldi,” he insisted.
He also emphasized that Gilead isn’t claiming to have priced the drug based on research and development costs. “What we did was price it based on the standard of care that was used prior to Sovaldi,” he said.
Prior treatments for hepatitis C, he argued, took longer, and the overall treatment regimen cost the same. But those treatments weren’t nearly as effective and in many cases, couldn’t be tolerated by patients.
He also says it’s unfair to look at upfront costs without considering savings over time.
The California Technology Assessment Forum study concluded that if 50 percent of those estimated to have hepatitis C in the state were to take Sovaldi, after 20 years, the offsetting savings would recoup three quarters of the initial drug expenditures. But the study also found that if the drug were given only to those with advanced liver problems, the 20-year savings would exceed the costs by $1 billion. This is why several state Medicaid programs have restricted prescriptions of the drug to populations with more advanced liver disease.
Another factor weighing in congressional thinking is that, according to a survey cited by Sens. Wyden and Grassley, nearly a third of all people with hepatitis C are in prison, and treating prison populations with Sovaldi could pressure federal budgets.
Defenders of Sovaldi’s price note that the oft-cited $84,000 tag isn’t what people actually end up paying once the price has been negotiated down. Nor is everyone with hepatitis C going to get treated. Gilead estimates that Sovaldi will treat roughly 150,000 patients this year in the U.S.
But to Miller, this is all the more reason for a lower price. It would, he says, allow a national campaign to screen people for hepatitis C, and then get them cured. “If the cost were lower, wouldn’t you like to eradicate hepatitis C from the population?” he asked.
Gilead can make a substantial profit even with a lower price, he claims, because manufacturing costs are negligible. The company, he said, “should be able to make a great profit. But the profit shouldn’t be anything the market will bear.”
In other countries, Sovaldi is cheaper. In the United Kingdom, the 12-week course costs $57,000. On Sept. 15, Gilead announced a deal with generic drugmakers in India to produce a lower-priced version of the drug for poorer countries. This is an example of how Americans often subsidize global drug spending.
Sovaldi is expected to get more competition within the United States in the coming months, and its patent expires in March 2029.
Looking ahead, Miller said that other drugs, such as new cholesterol treatments called PCSK9 inhibitors, present an even more daunting payment challenge. He said the new treatments could theoretically be beneficial to 10 million Americans with high cholesterol who cannot tolerate current treatments and are expected to cost $10,000 per year. But unlike Sovaldi, these treatments would have to be repeated, meaning it could boost prescription drug spending by $100 billion annually.
In 2013, cumulative prescription drug spending in the United States was $272 billion, according to a report released in September by actuaries for the Centers for Medicaid and Medicare Services. As defenders of the industry point out, for all the criticism of drug pricing, it represents slightly more than 9 percent of all health spending, the same share that actuaries expect prescription drugs to take in 2023.
Critics of drug pricing from other health sector industries insist that they do not support government intervention, but rather, intend to pressure drugmakers to lower prices. In their comments, there’s an unstated warning to pharmaceutical companies to make their products more affordable or risk government meddling.
AHIP’s Ignagni said the insurance industry’s goal is “to find a private sector solution before anything arises on the public sector side.”
She argued that “hospitals that have pricing that is unsustainable and unaffordable have been challenged to reduce that pricing.”
She went on to explain that, with “everybody in the healthcare arena ... the conversation begins, ‘How can we work to reduce costs?’ ” But, she said, drugmakers represented “the only sector where that conversation is not occurring.”
Miller also pleaded with drugmakers to adjust their pricing voluntarily, before it’s too late.
“We think the market should fix itself,” he said. “But what we’re afraid of, remember, is the government becoming a bigger and bigger player in healthcare every year.”
In 2008, government at all levels accounted for 41 percent of total U.S. healthcare spending. That is projected to reach 48 percent by 2023, according to CMS.
“And so as the government becomes a bigger payer, what will happen is, if these prices keep going up, they’re going to go back to the playbook they understand, which is price control,” Miller warned. “And price controls would be a disaster for pharmaceutical innovation in this country.”
Gilead’s Alton agues that the long-term value created by Sovaldi is so apparent that it would “fare very well in a rational system that evaluates [drugs] on long-term value.”
Reilly of PhRMA said the concept of government interference is “always a concern” for the industry. She used Alzheimer’s as an example of a disease whose victims would benefit from a system that places a high value on innovation.
“If the signal that gets sent is, if you are the company that happens to solve that conundrum, or make significant progress against it, [you are] going to face government price controls, I’m not sure that there is the type of incentive or desire for companies to take that risk,” she said.
Obamacare didn’t pass in a vacuum. It passed after critics of private insurance spent decades pummeling insurers for imposing caps on coverage, denying coverage to individuals with pre-existing conditions, and dropping seriously ill patients. Now, insurance companies find themselves at the mercy of federal regulators who dictate the benefit packages they must offer and limit the amount of profit they may make after paying out medical claims, effectively treating them as public utilities.
Federal lawmakers have levers at their disposal that could pressure drugmakers. Congress could shorten patents, for instance, or allow the government to negotiate drug prices in public programs, or simply pass laws to control drug prices.
Politicians often cite the cost to public health programs when it comes to imposing nanny-state policies such as banning trans fats or smoking in public places. It’s easy to see how, with healthcare costs consuming a growing share of government budgets, there could be a powerful campaign against drugmakers who charge high prices for popular drugs. Drugmakers wouldn’t have much recourse against those in power who see medical innovations as public goods.
“You don’t know what you don’t have yet,” Reilly said. “And the promise of future innovation sometimes gets lost on people.”
For decades, drug companies have lobbied to have it both ways, to reap the benefits of a bigger government while enjoying the profits of the market. But the philosophy underlying big government is incompatible with a free enterprise system that allows innovators to price products based on their market value. And if the pharmaceutical industry hasn’t learned this lesson yet, it probably soon will.Read More & Comment...