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Today Robert Hariri, one of the pioneers in the development of stem cell therapy, launched Celularity a company with a mission to make regenerative medicine as affordable and as convenient as the polio vaccine. 

To give you an example of what Hariri (full disclosure, who is a good friend) envisions, consider the excitement over immunotherapy medicines that,"harness the power of the body's immune system to fight cancer" and chimeric antigen receptor (CAR) T cell therapy in particular such as those developed by Novartis and Kite. 

CAR-T is not a pill.  Or a shot you can get at Walgreens.  Instead, it is a very complex and expensive process where immune cells are removed from someone with cancer and then armed with new proteins that allow them to recognize cancer.  Then large quantities of these cells are injected into the patient.  These cells persist in the body, becoming “living drugs.”

Put another way, CAR-T is the ultimate hand-crafted therapy.   

They are true miracles.  But the cost, complexity and the need to carefully administer CAR-T at a handful of academic cancer centers means that making them available to everyone who might benefit will not be easy. 
 
Further, the laborious customization characterizing CAR-T is due to its dependence on using one's own cells and then engineering them to avoid an immune response that shuts downs every organ. Donors for bone marrow transplants are hard to come because of the danger that cells from another body will be viewed as invaders by our immune system. 

Democratizing cell therapy requires a reliable source of cells that can be mass produced and used off the shelf in any physician's office.  Only one scientist on the planet has developed a nearly inexhaustible source of stem cells that overcome the immune system's lethal resistance.  

That is Bob Hariri.  And there is only one company on the planet that can broadly manufacture, develop and distribute cell therapies of all kinds - including CAR-T - on an everyday basis. And that's Celularity. 

Many of the media accounts of Celularity's launch note Hariri's distinguished career as a scientist and the fact that he holds more cell therapy patents than any other researcher.  

In an ironic sort of way, this is not surprising.   Hariri, like his hero Thomas Edison, does not consider himself just a discoverer of new gadgets.  As Sir Harold Evans wrote in "They Made America: "Thomas Edison is thought of as America's foremost inventor, with 1,093 patents in his name, but his most important work was translating the insight of invention into the practical reality of innovation through the long process of development and commercial introduction."

"Edison's transcendent innovation was to understand that the lightbulb he invented would be a mere novelty unless he could find a way to integrate it into an economical and safe electrical system. The simple act of flicking a light switch in offices and homes depended on a complex of dynamos, cables, and numerous connections that all had to be devised, costed and manufactured. Edison had also to fulfill the entrepreneurial role of raising the money, arranging the legal rights-of-way and cultivating the market. Edison was a supreme innovator."

So too is Hariri, who in many ways is the Edison of regenerative medicine.  Over 15 years ago, he demonstrated that it was possible to collect 10 times as many stem cells from a single post-birth placenta as have been gathered from any other single source. He then promptly told the rest of the scientific world the recipe for doing so.  His hope was that stem cells would be democratized, and be broadly available to researchers, doctors, and patients instead of being controlled by a handful of well-connected scientists who used their dominance to stifle other forms of stem cell research.   

But incredibly, very few researchers seized the moment.  So, Hariri - while at Celgene - invested nearly a decade and $500 million on democratizing stem cells. 

First, he had to develop a process of procuring placentas under tight quality-control systems and with a high level of predictability. 

Second, he had to create a manufacturing scheme that's necessary for economies of scale and quality control. Both were and are necessary for cell therapy to be a realistic clinical tool.

Third, he had to find the right "light bulb."  (There were other lighting technologies that use electricity before Edison.  And Edison himself develop dozens of light bulbs that worked.  The challenge was developing a product that was not just affordable, but reliable.  And to demonstrate that, Edison, as Sir Harold points out, had to create a whole system of distribution and uses.) 

One of those "light bulbs" were, in fact, CAR-T.  At the time, Hariri build CAR-T to see how they stacked up against placental-derived stem cells is delivering cancer-fighting instructions to the immune system.  The placenta is unique in that it is not rejected by the body.  Rather, a placenta can modify the host immune system and evade any host immune detection. As Hariri told me: "That was the premise behind our searching the placenta for these cells, and it served as the basis for our product development and, ultimately, clinical development, which has shown that allogeneic transplant is accepted without problems."

To demonstrate that capacity, Dr. Hariri has developed and used placental stem cells to treat several diseases at every stage of life. He has shown it is possible to use placental cells to update our biological software, upgrade the cellular 'processors' that create the connections and share the information that regeneration requires. 

Now with Celularity he is poised to manufacture stem cells that as Hariri told me, can be "easily deployed, readily adoptable like a medicine, and could integrate into the existing healthcare system, where practitioners are most comfortable with traditional pharmaceuticals".

That means millions, if not billions, of people, will live longer free from disease and disability.  By anyone's estimation, the lightbulb's impact on humanity would pale in comparison to that accomplishment if Hariri and Celularity succeed in commercializing stem cells. 

 
Express Scripts (ESI) reports that drug spending increased at the slowest pace in 25 years.  Or, as the headline from the PBM’s press office touts: “Express Scripts Reduces Employers' Annual Prescription Drug Spending Growth Rate to Historic Low in 2017”
 
That may or may not be a good thing for patients.  A closer look at how the PBM achieved this suggests that it is almost entirely due to a significant reduction in the number of new patients with HIV, Hepatitis C and treatment-resistant high cholesterol for the year before.  From 2016-17 generic drug use in those categories declined as a percent of drugs dispensed while the use of new meds increased.  If the ratio is tilting towards brand drugs it means the total number of peoples being treated for these conditions declined. 
 
It could be a yearly anomaly due to fewer people needing treatment.  Or it could be the result of increased patient cost sharing, the use of drug exclusions, step therapy, etc.  Indeed, Express Scripts credits its SafeguardRx program which uses all these tools for the reduction in the rate of drug cost.   
 
Moreover, the low rate of growth does NOT translate into lower costs for patients.  Indeed, as noted, the increase in cost sharing through separate drug deductibles, higher copays, co-insurance means that the decline is a result of an increased burden on consumers.  The fact that specialty utilization declined in Medicaid and ACA plans, while Medicare specialty spend increased more slowly than in commercial plans suggests that higher cost sharing and restrictive access played a key role in reducing the rate of increase.
 
Further, it appears that Express Scripts is not counting the rebate dollars shared by plans in the estimates.  Yet member cost is what is paid at retail.  ESI backs out rebates from the unit and total costs but includes cost sharing of patients.  Drug mix is another element calculated in coming up with unit cost.  As noted, the mix of generic and specialty spend – as well as the mix of traditional and specialty is moving towards specialty drugs. That means most of the increase in unit cost apart from certain drug categories where utilization dropped, is the result of increased member cost since cost is net of rebates. And as for ESI’s claim they are more than happy to pass rebates to patients instead of plans, it ain’t happening as Drug Channels points out.
 
Bottom line: Fewer people with chronic or complex conditions are getting access to new medicines while others are paying a bigger sharing of the increase in drug costs.
 
Does this translate into better health and lower health care costs overall?  And what or who is SafeguardRx protecting?  My guess is it’s ESI’s failing business model, not patients.
 
 
Patients for Affordable Drugs (P4AD), the wholly-owned group advocating on behalf of the Laura and John Arnold Foundation campaign to reduce the number and price of new drugs and limit their access, has produced what it regards as the real cost of developing Kymriah, “the first gene therapy available in the United States, certain pediatric and young adult patients with a form of acute lymphoblastic leukemia (ALL)”.  The therapy is a cure for most patients.  Kymriah’s costs about $475000 but only if it works.  And Novartis is financing the acquisition cost of the medicine in many cases.
 
But P4AD, run by David Mitchell (whose firm – GMMB -- was responsible for running over a billion dollars’ worth of campaign commercials for the Obama ’12 and Clinton ’16 campaigns, is using the price as a target for the ads its 501c4 (P4ADNow)  will be running (using LJAF money) supporting price controls on prescription drugs and attacking congressional candidates who don’t agree with them.   (Most patient groups help patients with their daily lives and support research.  P4AD simply collected stories and names through the 501c3 and is now using them for their political attack on Novartis.)  
 
Many people, myself included, criticized Mitchell for asserting that NIH invested $200 million in Kymriah and that all Novartis did was manufacture the cells and hand them out.   Now, along with academics like Aaron Kesselheim – another LJAF money recipient, he has come out with a ‘study’ posted in a Health Affairs blog that purports to show that Kymriah’s price should be about $160,000.
 
The simulation is pure fantasy.  It is an exercise in ideological accounting carried out to justify the Arnold supported agenda to cut drug prices, including seizures of patients, step therapy, price controls, etc.     A few months ago, another Arnold funded individual, Vinay Prasad published an article that overstated the profits of cancer biotech firms and understated R&D and concluded that cancer drug development yields a 10-50 fold return on investment.  That study was the source of a lot of deserved derision.
 
Mitchell and Kesselheim apply Prasad’s LJAF funded methodology to Kymriah in the Health Affairs blog.  They presume that the development of Kyrmiah carried no risk. (I wonder if the models John Arnold’s used at Enron used the same assumption about energy exploration and distribution.)  The authors claim that the NIH assumed all the cost at the riskiest part of development, preclinical work.  This is nonsense.   The fact that fewer than 1 in 10000 pre-clinical projects become commercialized products underscores the fact that translating biology into products is the most costly and riskiest of enterprises.  
 
To paraphrase an article in Nature: The authors' calculation ” imply that each clinical trial was a guaranteed success. Instead, clinical drug development should be regarded as a series of high-risk wagers where success in the first wager.”
 
For example, Novartis began clinical trials in 2009.  It did not earn any revenue for almost a decade.  The authors assume away the risks of drug development and the opportunity cost of tying up billions for ten years. 
 
Further using cash flows from operating income only (which include revenue and costs), presents unrealistically high valuations for biotechnologies.  “Risk is mitigated as biotechnologies progress through development. When this increasingly mitigated risk is taken into account, the risk-adjusted cash flow can be discounted to arrive at the risk-adjusted NPV.” 
 
In the real world, the present value of each risk-adjusted cost is subtracted from the present value of the risk-adjusted payoff to arrive at the rNPV.   Only by adding together all of Novartis’s costs and risks and then discounting for time, is the true rNPV is finally revealed.   Mitchell does none of that.
 
Finally, the internal cost of capital (6 percent) is ridiculously low.   The internal cost of capital is based on what the market for investment bears and reflects the fact that over time returns will be quite low or non-existent.  In the real world of biotech, especially projects for small groups of patients, the internal cost of capital is estimated at 20% or higher.  As Ian Coburn notes:“This reflects investors’ expectation of a return sufficient to compensate them for taking on extraordinary risk. Permanently lowering realized returns will lead to lower investment in a critical component of the life sciences industry.”
 
In their fantasy world, the authors claim that expected returns could be 60 percent lower and offer investors a rate of return that is lower than US treasury notes.   The cost of capital increases with risk. The authors assume no risk is being taken by Novartis or any other entity in undertaking clinical development.   Indeed, the authors claim at reducing operating income and profits because it’s not fair and Novartis can afford to make less.
 
Even if we accept the notion that Novartis is not charging a fair price, most companies developing cell therapies are NOT Novartis.  They are smaller firms and their costs of capital will be even higher.  The authors seem to think that it is possible to reduce rates of return without affecting how much a company or VCs need to “pay” for outside capital.  (See Prasad piece for another example of this absurd assumption. and a good laugh.)
 
If they think it possible, then by all means start up a company that can reduce prices.  One of Mitchell’s co-authors, Paul Kleughten, was the CEO of a generic drug company.  Let him enter into a partnership with the NIH that gives the agency control over prices.  Let him try to raise capital or find a partner for a firm that presents financial projections and a research plan consistent with their assumptions.  
 
The fact is, their model will reduce investment and drive up the cost of capital needed to support biotech.   Price controls will steer investment into other sectors.  Voluntarily capping profits means less money for other potential cures and will deprive millions of people in the future of their wellbeing and lives.   That’s the reality P4AD and their LJAF funding compatriots offer. 
The latest federal funding bill could issue a huge blow to beneficiaries of Medicare Part D, the government program that subsidizes the cost of prescription drugs for 42 million seniors.
 
The bill restructures how costs are divided between beneficiaries, insurers, and drug manufacturers once Medicare recipients' prescription costs hit a predetermined limit -- or what's known as the "donut hole." It's a terrible change, and it stands to raise costs for seniors, particularly those whose drug expenses already are through the roof.
 
Medicare Part D provides seniors with access to affordable prescription drug coverage offered by private insurers. There are more than 780 unique Part D plans available in the country, but each requires patients to follow the same payment plan.
 
First, patients must pay for their own medications until they meet a deductible -- $405 in 2018. Then, insurance kicks in and patients pay about 25 percent of their drug costs.
 
After patient's total drug spending hits $3,750, they enter the "donut hole," where they're responsible for 40 percent of brand-name drug costs.
 
Congress gets that the donut hole burdens patients. So they're trying to phase it out. Under current law, patients' cost-sharing would drop to 25 percent by 2020. Insurers would chip in the same percentage and manufacturers would cover the leftover 50 percent.
 
Now, Congress wants to shift the insurers' costs to drug makers. The new proposal would force manufacturers to front 75 percent of the cost of brand-name prescriptions in 2020, reducing insurers' cost-sharing to zero.
 
That change doesn't explicitly affect the percentage fronted by patients. But it will still affect the amount they pay for medications.
 
With their cost-sharing down to zero, insurers will have no reason to keep patients' drug costs low. Instead, they'll have an incentive to increase it -- and they'll put patients on the fast-track to the donut hole.
 
Proponents of the proposal say that it will save Medicare billions of dollars annually. But Part D already is economical. Its costs are 45 percent lower -- $349 billion less -- than initially projected for its first decade. And seniors like how Part D works. Nine in 10 report that they're satisfied with the program.
 
Part D is one of the highest-functioning branches of healthcare. Its performance and the care it secures for America's seniors should not be jeopardized because insurance companies want to shift some costs to drug makers.

Mail Order Confusion

  • 01.31.2018
  • Peter Pitts
The recent announcement by Bezos, Buffett and Dimon that they're teaming up to address health care costs is interesting. They certainly bring a lot to the table. But there seems to be some confusion.

USA Today reports that one of the things that Amazon can bring to the table is "shipping products to consumers." True. But there's a problem. According to the article, "Since drug companies rely heavily on mail orders, Amazon's long-rumored entry in the pharamcy world could introduce price-lowering competition."

Good idea -- except that drug companies don't send a single pill to patients. That's the job of PBMs and insurance companies.

Maybe the Big Three (and and the media covering this story) should get a 100 level course in the pharmaceutival supply chain.
 

ICER Joins the Walking Dead

  • 01.25.2018
  • Robert Goldberg

Despite receiving another $14 million from the Laura and John Arnold Foundation, ICER is turning into the walking dead.     

The recent spate of ICER reports all come to the same premature and prejudged conclusion: that every new medicine that does not cure is not worth paying for at almost any price.  Overextended and overexposed, ICER is slowly being destroyed by its ideological rigidity and analytic obsolescence.  At a time when the use of data to match people to the right treatments over time and pay for performance at the patient level, ICER has doubled down on one size fits all reports that focus on saving insurers money by cutting drug prices.   It roams the health care policy terrain in search of new targets to devour, guided by the same research methods and beliefs that shaped the eugenics movement.  Like that movement, ICER is finding itself ridiculed and rejected by the same stakeholders that feared it just a year ago. 

Of course, the unspoken but clear assumption behind ICER reports -- the same assumptions informing those who wanted to use eugenics to save society  -- is another reason that Steve Pearson and company have jumped the shark:  ICER assumes the use of new drugs siphons money from healthy people, wage increases, roads, potholes, etc. and that we need to put a limit on how much we pay and how much we spend for new medicines for people, most of whom, are not receiving many benefits from existing treatments. 

These assumptions are laughable, and everyone knows it.  Better medicines reduce the cost of treatment and staying healthy longer.  Longer and better lives generate happiness and wealth, which in turn makes spending on everything -- including health care -- sustainable.  ICER,  now includes, but does not calculate, those goods, services, and actions we enjoy and product because we live longer and healthier.  By listing those virtues but not measuring them, ICER has exposed how superficial and irrelevant it is. 

Beyond that, ICER is unable to close the gap between a new generation of personalized medicines and finding a way to pay for them in order to "enhance health, prevent disease, track its development, intervene early, and manage disease most effectively if it occurs."  Such treatments are based on a deep understanding of what causes disease as well as the individual differences in disease risk and response to medicine. As result, illnesses such as cancer, heart disease, and multiple sclerosis are being treated with greater effectiveness, while many rare or fatal diseases - such as cystic fibrosis, Hepatitis C, and HIV --now have treatments where none existed. 

Simply put, personalized medicine is a powerful tool for extending life and making the delivery of great health, simple, convenient and more affordable.  Yet ICER, captive of it paymasters and increasingly outdated approach, can't produce information to let consumers and everyone else determine which treatments work best for them to live healthier, longer.  Rather, as the ability to deliver personalized medicine grows, ICER only proposes ways to reduce prices for PBMs and limit access.  Meanwhile, PBMs are expanding step therapy, prior authorization and increasing cost sharing as more personalized or precision medicines become available.  That means they are keeping people sick when they should be healthy and forcing them to spend more time and money on substandard care. 

The rebate driven approach to drug benefits is under siege and intelligent stakeholders are seeking other ways to provide patient-centered coverage.  That does not include ICER.

In addition to its need to carry out the societal rationing agenda of the Arnold Foundation, ICER lacks the bandwidth to help promote personalized medicine. The digitalization of medical data and the rapid increase in computing power now permits identifying what treatments work and measuring outcomes and analyzing such evidence to determine the links between the use of medicines and outcomes.  Traditional analytical approaches employ manual, time-consuming, single hypothesis algorithms.  As a result, ICER is limited in its ability to integrate multiple data types and are often limited to population averaged approaches. 

For example, ICER makes all sorts of assumptions about the condition of patients and treatment patterns based on models it develops from clinical trial data.   Such assumptions - including the selection of the treatment it uses to compare new medicines - are based on correlations that lack any basis in the reality of the life of every patient. 

ICER will become increasingly irrelevant.  Other stakeholders could accelerate that process by ignoring ICER's request for 'input' and invest the millions of dollars into creating models that capture personalized treatment response.  

Such models would be based on the probabilistic and causal relationships between disease progression and treatment response (unbiased by methodological and data choices that characterize much of ICER's work) for each patient.  They are less expensive to produce because the machine learning supporting it is automated.  They are quicker to produce and more useful.  

Indeed, personalized medicine models can be used to demonstrate and qualify an approach for using real-world evidence.  The Food and Drug Administration is required to create a guidance and/or pathway for integrating real-world evidence into their approval processes. If the FDA encourages the use of real-world evidence to measure and predict clinical benefit at the individual level, it will force payors to rely more on such analyses and less on those developed by ICER and other groups.  Speedily in our time. 
Important advance at the FDA (courtesy of the Washington Post). WWPT? (What will Pharma think?)

FDA to release more clinical trial information for newly approved drugs

The Food and Drug Administration is taking steps to make it easier for doctors, patients and researchers to get access to clinical trial data amassed during the process of approving new drugs, Commissioner Scott Gottlieb said Tuesday.

Gottlieb announced the actions just before a speech on FDA transparency at a Washington forum. The meeting, attended by researchers and academics, focused on 18 recommendations for making the agency's decision-making less opaque. The suggestions were part of a report called Blueprint for Transparency.

The FDA has long said it is sharply limited in what information it can release because it often is dealing with drug companies' proprietary material.
Gottlieb, in his statement and in remarks to the forum, said the agency is starting a pilot program this month to release clinical study reports for recently approved drugs. These summaries, which are generated by drug-company sponsors of the treatments, spell out the methods and results of clinical trials. The data don't include patient-identifiable information.

The pilot is expected to ultimately include nine drugs volunteered by their sponsors for the effort, Gottlieb told Joshua Sharfstein, a Johns Hopkins Bloomberg School of Public Health professor, in a question-and-answer session at the forum.

The release of the study reports, which can run hundreds of pages, will allow researchers and others “to do more analysis around our decision-making,” especially on the safety and efficacy of new drugs, Gottlieb said. Some of the information is already released by the agency but in a format that is difficult for lay audiences to use, he said.

The commissioner also said the agency will make it easier to track clinical-research information by adding a study's identifier number from ClinicalTrials.gov to all FDA materials for a specific product. ClinicalTrials.gov is the database of studies maintained by the National Institutes of Health.

On another transparency issue, Gottlieb said the agency is exploring whether there is a “subset” of “complete response letters” that can be released. Such letters to drug companies detail why their drugs were not approved. He said the FDA is looking at possibly releasing information involving safety issues. Critics of the pharmaceutical industry have long complained that the companies don't always give the public accurate and comprehensive explanations of why their products were rejected.
Speaking of opioids and lawsuits, something very interesting just happened in the MDL (Multi-District Litigation) National Prescription Opiate Litigation case (MDL No. 2804, Case No. 1:17-CV-2804) – Presiding United States District Judge Dan A. Polster  (United States District Court, Northern District of Ohio Eastern Division) made it clear to all parties that he intends to focus on fixing the problem, not the blame.

According to Judge Polster:

I don't think anyone in the country is interested in a whole lot of finger-pointing … People aren't interested in depositions, and discovery, and trials. People aren't interested in figuring out the answer to interesting legal questions like preemption and learned intermediary, or unraveling complicated conspiracy theories.

My objective is to do something meaningful to abate this crisis and to do it in 2018. … We've got all the lawyers. I can get the parties, and I can involve the states. So we'll have everyone who is in a position to do it. And with all of these smart people here and their clients, I'm confident we can do something to dramatically reduce the number of opioids that are being disseminated, manufactured, and distributed … and make sure that the pills that are manufactured and distributed go to the right people and no one else, and that there be an effective system in place to monitor the delivery and distribution, and if there's a problem, to immediately address it and to make sure that those pills are prescribed only when there's an appropriate diagnosis, and that we get some amount of money to the government agencies for treatment.


The full Transcript of Proceedings can be found here.

Stay tuned.
In a rush to find “pay fors” to balance the budget package that Congress is working to pass by January 19th, some lawmakers are pushing forward the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act.

It’s a bad idea with dangerous unintended consequences. It’s time to take a breath – because the CREATES Act won’t speed a single drug to market or lower the cost of medicines for a single American. What it will most certainly provide is a windfall for the trial lawyers, raising legal costs for the pharmaceutical industry and threatening the incentives to invest in development programs for new medicines.

The CREATES Act aims to provide a series of new legal provisions that will make it easier for drug companies to introduce generic alternatives, thus spurring competition and bringing down prices. It’s well intentioned. Unfortunately, it’s worded poorly – and would lead to dangerous unintended consequences. Instead of bringing generics to market sooner, these bills could endanger patients’ lives and encourage costly, needless litigation.

CREATES strips the FDA of its watchdog role. Under its proposals, generic manufacturers won’t be required to outline testing and safety protocols for the FDA to approve. Even if a generic drug maker’s proposed risk evaluation and mitigation strategies are inadequate, the FDA has no authority to reject or halt the transfer of medicines to the generic company for testing. Whatever happened to “safety first?”

CREATES contains ambiguously worded liability provisions that subject innovators to unfair legal risk. Generic drug companies often obtain brand-name drug samples and ship them off to third-party research firms to perform clinical trials. If the third party is negligent with the samples, patients could get hurt. Under the bill’s terms, patients would be able to sue the brand-name drug company, even though it had no control over the testing or safety protocols. Higher legal fees for drug companies ultimately result in higher costs for everyone else.

CREATES would allow generic drug manufacturers to sue brand-name manufacturers if they fail to hand over their drug samples for testing within 31 days, or if the companies do not reach an agreement on shared risk evaluation and mitigation strategies for risky drugs. Such subjective wording is music to trial lawyers’ ears.

Congress deserve praise for trying to find pay-fors that bring generic medicines to market faster, relieving consumers from high drug prices. Yet good intentions don’t change the fact that the CREATES ACT, as currently constructed — is deeply flawed.

Congress could help consumers by reworking the legislative language to end bad behavior without gutting safeguards for patients or enabling unscrupulous trial lawyers to file costly, pointless suits. Whether it’s the practice of medicine or the development of public healthcare policy two rules apply – first, do no harm and, second, be wary of trial lawyers bearing gifts. The CREATES Act as a budget pay-for would be a Pyrrhic victory.


Cary Gross and Abbe Gluck of Yale University get the Billy Madison award for the most incoherent and idiotic article about drug pricing.  The piece: Soaring Cost of Cancer Treatment: Moving Beyond Sticker Shock published in the Journal of Clinical Oncology). There was a lot of competition but the authors managed to synthesize every pedestrian and inchoate assault on drug companies into an editorial that took the genre (if I can use this word without disparaging real scholarship) to a new level. 

The failing heart of the article, entitled can be obtained by reading one paragraph: ( I am sparing you the painful waste of time required to slog through the entire article and endure the smell of decomposing bromides) 
“We know that the cost of cancer drugs has increased dramatically, even though most drugs are brought into the market without compelling evidence that they prolong survival or improve quality of life. We know that these high costs render state-of-the-art cancer treatment unaffordable to patients without insurance and even to some patients with insurance. Furthermore, financial distress associated with paying for cancer treatment is common and is associated with stress, decreased adherence, bankruptcy, and worse outcomes. Finally, we know that the cost of new drugs is not well correlated with their effectiveness, nor with the presence of competing products.”

The authors then conclude that price controls and stricter formularies are the only way to control prices and help patients. 

I won’t take on every citation Gross and Gluck (Gross-Gluck sounds like a Borscht Belt act) use to assert perfect knowledge about the havoc price increases have had on society.  It is enough to say that once again, they all are written by people on the Arnold Foundation payroll.   Or maybe not.  As I and Peter Pitts pointed out, the most prolific of the paid hacks, Vinay Prasad, had an article published that was brazenly misleading and inaccurate.  (Shame on the medical journals that continue to publish any anti-pharma crap if it fits the narrative.)

So here is my fact-based response to the fictional claims to support government regulation of access to new medicines. 

1. As the number (and price) of targeted treatments have increased the percent of health care dollars devoted to cancer spending has remained at 4.6 percent.  How? New cancer drugs reduce spending on more expensive medical services.   In 2001, 64 percent of cancer care went to hospitals and only 3.6 percent to drugs.  By 2016 drug spending ‘skyrocketed’ to about 25 percent of cancer costs but hospitalizations dropped to 38 percent of care.  That’s why a government study concluded, “The net value of (cancer) treatment has grown substantially, consistent with medical technology improving over time and leading to better health outcomes at a lower cost per patient.”   All these benefits have been generated by new medicines that are only .7 percent of health spending.  This relationship – newer, initially expensive medicines (that go generic by the way) reducing the cost of care by letting people live longer and eliminating the need for other medicines -- has held up for nearly half a century.

2. GrossGluck enable the PBM payoff racket by remaining silent on the role PBMs and insurers play in setting cost-sharing levels. 

As scientists find the shut-off switch for specific cancer-causing genes, they can make pills that go after cancer cells and block the specific biological mechanisms that produce them. These pills are not only less toxic than conventional IV chemotherapy; they've turned once-incurable cancers such a myeloma, breast cancer, and even pancreatic cancer into manageable diseases.  They reduce the cost of cancer care over time but PBMs and insurers have responded by making these medicines more expensive and shifting patients to drugs that pay the most rebates. 



Sadly, several studies show, 25 percent of patients don't even fill their initial prescriptions for cancer pills when the co-pays exceed $500. Even more will stop or interrupt treatment.

Neither Medicare nor private health insurers are closing the gap between coverage and innovation. Instead, a survey of plans conducted by the Zitter Group found that insurers "recognize that oral therapy cost-sharing requirements actively encourage patients to use infusible products.

A Milliman study found that shifting to co-insurance would only add about $2 per member per month in private health plans.  GrossGluck never discuss this solution.  Instead, they remain true to the Arnold Foundation edict to give PBMs a pass.  By the way, neither has advocated for co-pay reforms that could relieve the burden on patients.  

3. They ignore the impact of government price controls on access and innovation.  But then again, those with perfect knowledge trust themselves to makes decisions on behalf of everyone else. They don’t mention the National Institute for Health and Clinical Excellence or NICE but they see it as a model for how experts would set prices and determine access for everyone. 

So, it is useful to know that NICE has turned down more new cancer drugs than other countries, even in Europe.  Hence, 5-year survival rates for all cancers are lower in the UK than in any other European country.   It’s mortality rates for many cancers, including breast, prostate, kidney, and others are higher.  A study published in Lancet Oncology on cancer survival rates in Europe found. 
“Cancer survival rates in Britain still lag well behind many other European countries, a study shows. Survival rates for nine out of ten common cancers are lower than the European average, despite improvements in diagnosis and treatment.

And the discrepancy is even worse among elderly sufferers. Patients with nearly all forms of the disease are more likely to die in Britain compared with patients in France, Germany, Spain, and Scandinavia.
For breast cancer, it found that British women have a 79 percent chance of surviving five years, compared with 86 percent in France, 87 percent in Finland, 85 percent in Norway and 82 percent on average.

Only 9 per cent of lung cancer patients in the UK live beyond five years, compared with the 13 per cent average, 17 per cent in Austria and 15 per cent in Sweden.
For prostate cancer, just under 81 percent of patients in Britain live beyond five years.  The rate is 90 percent in Finland and 89 percent in France. Around 68 per cent of over-75s with breast cancer survive beyond five years, compared with 75 percent across Europe. About 45 percent of men over 85 with prostate cancer live for at least five years. The average is 58 percent.”

The only evidence they cite for the effectiveness of their approach is the now old case of Peter Bach claiming he saved patients money by refusing to add Zaltrap to the formulary. 

(Indeed, it is ironic that Bach became crypto famous by getting Sanofi to cut the price of a cancer drug by 50 percent and writing about it in a New York Times op-ed piece.  )

The duo asserted that they wouldn’t prescribe the drug because it cost twice as much as Genentech’s Avastin (bevacizumab), a competing biologic drug with similar expected clinical outcomes for colorectal cancer patients.  In response, Sanofi said they would reduce the price of the drug by 50 percent.

In fact, doctors and prescribing hospitals benefited hugely from Sanofi’s pricing move, while payers and patients did not.   Zaltrap was sold in a dose twice as large as Avastin, thus the price discrepancy.    Further, Sanofi didn’t cut the price of Zaltrap; it gave Memorial Sloan a 50 percent rebate.  The price charged to patients remained the same.  Which meant that MSKCC raked in even more dough.  As an article in Health Affairs noted at the time, “Meanwhile, in the near term, physicians and hospitals will likely enjoy additional revenue opportunities from ziv-aflibercept use. the spread may be considerable: equal to $250 per treatment dose (insurer + patient reimbursement ($750) – discounted acquisition cost ($500)) and for 340B eligible purchases, $450 per treatment dose (insurer + patient reimbursement ($750) – discounted acquisition cost ($300)).  Additional revenues may incentivize physicians and hospitals to favor ziv-aflibercept over bevacizumab to treat colorectal cancer among Medicare-eligible patients, despite the treatments having equivalent expected clinical outcomes.  The strength of the incentive is based on comparing the magnitude of the spread obtained with the use of Zaltrap to that obtained with Avastin."

For this half-baked convoluted diatribe, GrossGluck get the Billy Madison award: 

Principal: Mr. Madison, what you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points and may G-d have mercy on your soul.

CMPI

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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