Pharma's Margin Call

11/17/2008 06:35 PM |

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PS/ The faucet leaks

11/17/2008 01:33 PM |

In what he referred to as a “note on the desk” to the next Secretary of Health and Human Services, Mike Leavitt, the current inhabitant of that seat released “The Personalized Health Care Initiative.”  Personalized health care should be an "explicit goal of health care reform,'' Leavitt said.

According to the HHS website, “The Personalized Health Care Initiative will improve the safety, quality and effectiveness of healthcare for every patient in the US.  By using “genomics”, or the identification of genes and how they relate to drug treatment, personalized health care will enable medicine to be tailored to each person’s needs. Healthcare that is proactive, instead of reactive, gives the patient the opportunity to become more involved in their own wellness.”

HHS seeks to advance this Initiative through two guiding principles:

(1) Provide federal leadership supporting research addressing individual aspects of disease and disease prevention with the ultimate goal of shaping preventive and diagnostic care to match each person’s unique genetic characteristics.

(2) Create a “network of networks” to aggregate anonymous health care data to help researchers establish patterns and identify genetic “definitions” to existing diseases.

Oh well, better late than never. (The complete report can be found here.)

Hopefully there is a longer memo (perhaps with the keys to the backdoor and the security code to the secretarial washroom) on the urgent need to fund the Reagan/Udall Foundation.

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Lewis Black: Equal Opportunity Offender

11/14/2008 07:00 PM |

The great Lewis Black expounds on why politics is a renewable resource for comedians...

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NICE Birthday Wishes to Prince Charles

11/14/2008 12:31 PM |

Yesterday I had an op-ed in the Washington Examiner, “Obama, Congress Should Learn from Britain’s Healthcare Failings,” where I make the point that “NICE’s failings indicate that government is liable to misuse drug approval power, and they should arouse suspicion about the merits of additional government intervention in the healthcare market. The British government is finally giving patients and physicians the freedom they need to best combat disease. American lawmakers should follow their lead.”

But what I’d like to share with you is a comment that was posted in response to my discussion of NICE and its implications for US healthcare reform.

Here it is:

“Pitts cannot hope to cover all of the NHS's sins in a short piece. They also instruct doctors to lie to patients, informing them that life-saving treatments do not exist, when the NHS has merely decided the procedures are too pricey. It is better, in the view of the NHS, that people die rather than complain. Also, thousands die in their hospitals each year because staff cannot be bothered to wash their filthy hands. A trip to the NHS is often a death sentence, pure and simple."

And to that all I can add is, “Happy 60th Birthday, Prince Charles.”
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Health Policy Shocker: Commonwealth Survey Finds US Healthcare Worst in World Yet Again

11/13/2008 05:59 PM |

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Pearls from the Tevi Fountain

11/13/2008 12:15 PM |

Congratulations.  You’ve survived the “valley of death,” emerged from the “tar pit of safety," successfully forged the Critical Path and received FDA approval.  Mazel tov.  Now you’ve earned the privilege of fighting with CMS and a potential AHRQ comparative effectiveness review.

And it’s been ambiguity all the way down the line.

So here’s some welcome news: Tevi Troy, the HHS DepSec will host a series of conferences over the next two months to discuss how different HHS agencies can help improve the process.  And is there anyone out there who feels improvement is not required?

The first conference takes place this Friday, November 14th at HHS HQ (aka the Hubert Humphrey Building) in Washington, DC. December forums are being scheduled for the west coast and Midwest.

At this first meeting, senior officials from NIH, FDA, CMS, and AHRQ will discuss (and likely have to defend) their agencies’ roles in facilitating the development of innovative medical technologies. 

Topics include:
          
* The role of basic and clinical research conducted and supported by the NIH in the development of new products;

* FDA's efforts to use state-of-the-art science in support of medical product development, as well as to promote consistency and efficiency in medical product review;

* CMS’ perspective on the challenges innovators face in current reimbursement and coverage processes and how innovators can better navigate the system and;

* AHRQ’s role in promoting quality research and value exchanges and how these benefit innovators.

For more details, contact the HHS press office at (202) 690-6343.

And tell them Drugwonks sent you.

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A Baucus Caucus

11/13/2008 11:46 AM |

Senator Baucus, in his white paper, "A Call to Action," says that "his door is open."  That's good news -- because when it comes to something as crucial and complicated as healthcare reform, a welcome mat beats a baseball bat.  To view the Senator's document, click here.  There's not a lot of detail -- more of a conceptual blueprint.  And that's the right way to begin.
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A Ray of Hope

11/12/2008 10:41 PM |

My candidate for FDA commissioner, Ray Woosley, (I said that to ensure he stays right where he is!) once again demonstrates that productive public-private partnerships are critical to promoting a new era of personalized medicine. Ray's leadership and dedication has sustained the Critical Path Intiative and supported the vision of Mark McClellan, Janet Woodcock and others at th FDA who launched it nearly 4 years ago.

 

C-Path Expands Partnerships to Speed Development of Critical New Drug Therapies

 

Dear Friend of C-Path:

Thanks to Arizona supporters, C-Path was created in Tucson four short years ago and we have been very successful in bringing drastic improvements to the methods used to evaluate new drugs and diagnostic tests; changes that are advancing personalized medicine. In addition, Arizona’s Governor, The Honorable Janet Napolitano, along with our state and federal legislators, have been very supportive of our work and our mission.

One of the state’s truly innovative new programs is Science Foundation Arizona (SFAz) which provides highly competitive grants to support meritorious collaborations between scientists and businesses in Arizona. Last year we were fortunate to receive one of the first of these highly competitive awards.

And again, I am extremely pleased to tell you that we have just been awarded a four year SFAz grant for $9 million. With this award, we will be able to expand our work and form additional industry-FDA consortia. These new consortia will improve our understanding of major diseases such as Alzheimer’s and Parkinson’s so that, when effective treatments are discovered, they can be developed in less than three years and with a 95% chance of success; not the current situation, 15 years and a 5% chance of success.

Thank you for your friendship and interest in C-Path.

Best wishes,

 

Ray Woosley

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Kaiser Builds the Case for Part D Price Controls

11/12/2008 08:22 PM |

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Healthcare to the Max

11/12/2008 03:20 PM |

Senator Max Baucus, (chairman of the Senate Finance Committee) is proposing legislation to “cover the 47 million uninsured.” 

But …

Neither he nor his staff are offering any cost estimates. The plan proposed by President-Elect Obama during the campaign was estimated to cost about $100 billion a year.  Any savings from healthcare IT (another urgent need) or follow-on biologics (the price differentials from which will look nothing like small molecule generics) are but a glimmer of future hope in the eyes of the OMB.  How are we going to pay for this?  Stock options?

One of Senator Baucus’ recommendations is to reduce healthcare costs is via comparative effectiveness.  In global health policy circles this is generally referred to as “HTA” – Healthcare Technology Assessment.  To physicians and patients in Canada, Great Britain and elsewhere it is generally referred to as “rationing.”  According to Sir Michael Rawlins, chairman of Great Britain’s National Institute for Health and Clinical Excellence (NICE), "Rationing is a necessary evil. We have to do it. There will be losers and winners." Ouch.

In the last session of Congress, Senator Baucus and Senator Conrad introduced the “The Comparative Effectiveness Research Act of 2008 (CERA).” This legislation would create a Health Care Comparative Effectiveness Research Institute.  Comparative effectiveness centralizes clinical decision-making, and replaces the judgment, variation and response of doctors and patients with a handful of Beltway-appointed elites who, despite transparent procedures, impose standards and use methods that are cost-based rather than patient-centric.

It is urgently important to engage early and in a robust manner in this debate.  The philosophy behind comparative effectiveness (using the current blunt, short-term, price-centric tools used in Europe and Canada) is a giant first step towards healthcare rationing and, ultimately, price controls.  This would spell an end to pharmaceutical innovation as we know it – and to what end?

The most likely immediate result of 20^th century cost-effectiveness in a 21^st century world would be the reduction of on-patent reimbursement and, ergo, a physician’s ability to practice medicine according to her patient’s individual therapeutic needs.  That’s the trade-off -- a short-term decrease in a line item (on-patent medications) that represents only 7% of the entire American healthcare spend for the future of healthcare innovation.  It’s a bad choice – a Hobson’s Choice.

It’s a particularly bad choice for the severely ill, commercially-insured population. A recent study published in Health Affairs found that the costs of medical services to this population account for more than 75% of health plan costs. Hospitalization costs accounted for half of this amount. In contrast, medications accounted for just over 20% of health spending for this group, whose annual costs are more than nine times higher than the overall plan population. The authors concluded that medication costs “do not seem to be the driver of health care costs for these members.” And among the 2.5% of members with the highest spending, specialty medicines (defined in this study as "biologic-derived agents that target specific immune processes and proteins”) were used by 45% and accounted for 32% of spending on medicines and just 6.6% of total plan spending.

Que CERA sera. Or as Aldous Huxley said, “Facts do not cease to exist because they are ignored.”

We often talk about “first principles.”  According to Senator Baucus’ website, “The first principle is universal coverage.”  Rhetoric is important here.  “Universal” healthcare means “Government” healthcare. And that certainly doesn’t mean “Free” healthcare. 

And that “47 million uninsured” number really has be addressed honestly. 

What is Senator Baucus’ position on the scores of healthy young people — close to 20 million, by some accounts — who elect not to buy health insurance even though they can afford it? They voluntarily choose not to have health insurance — which is quite different from not being able to get health insurance.  Would they have to pay a penalty to electing not to have health insurance?  President-Elect Obama was asked if his healthcare plan would penalize the decision not to be insured.  He was asked it directly.  And he said “no.”  You can look t up.

Or what about government-paid care for the 10 million uninsured illegal aliens. Every politician calling for “universal care” has been silent on this topic – except to include them in the count.

And what about the 12 million people (half of whom are children) who currently qualify for SCHIP but are not signed up?

These are facts and must be part of the debate.

The good news is that Senator Baucus is a smart and savvy guy, a terrific legislator. – and he really understands healthcare. According to his office, the Senator wants to begin meetings next week with the members (of both parties) of the Finance Committee and the Senate Health, Education, Labor and Pensions Committee – where Senator Kennedy (chairman of the HELP Committee) is expected to play a major role.

There are some things we can all agree on and use as valuable and non-partisan points of departure:

(1) “We cannot address the health care system, and leave a growing portion of the country behind. Though this must be a public and private sector mix.”

(2) “By making prevention the foundation of our health care system, we can spare patients needless suffering. We can avoid the high costs of treating an illness that has been allowed to progress.”

(3) “Health coverage is a shared responsibility and all should contribute.”

Note: These three quotes come directly from Senator Baucus' website.

The one thing we should all be able to agree upon is that there are no easy solutions … America’s SiCKO apologists notwithstanding.

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Is the RPM Blog on the Nissen Commissioner Bandwagon?

11/11/2008 02:52 PM |

I love the RPM eletter.

Read more here

But.

What's with the "Steve Nissen isn't so bad" and "would be good for industry" rationalization en route to claming he has the inside track because he's been "vetted" by the Obama campaign to be FDA commissioner?

Sorry for all the quotation marks. Let's go to the RPM post and deconstruct.

"We have no idea if Nissen will end up at FDA—but as an Obama advisor he has already been vetted in case he is picked for some kind of government post. "

Nissen was not an Obama advisor. He was an Obama surrogate and contributed to the Obama campaign and might have sent some materials in as part of a cast of thousands. But "vetted" like a nominee would be vetted? Hardly.

Here's more:

"First, as commissioner, Nissen can’t just lob grenades as products the way he has been in recent years. Sure, he might pull Avandia outright, rather than cripple it commercially—but as commissioner he also has to set some constructive public health agenda that doesn’t simply involve taking potshots at individual products."

Pull Avandia? Can we say conflict of interest? If I am at his confirmation hearing that would be the first question I ask. Would he recuse himself in every drug he has worked on, commented on or is working on?

"Second, Nissen is not a drug safety gadfly at heart. Believe it or not, he wants to see industry succeed at developing innovative products. After all, he does drug development himself, and has spoken out in favor of products like Lilly’s prasugrel. As commissioner, you can bet Nissen would work just as hard to encourage the types of products and studies he likes as he would to discourage those he doesn’t."

Ah yes Lilly's prasugrel. Which is a good drug. But so is Plavix. But Plavix was developed by BMS. And BMS made Pravachol which was trashed by Nissen in the REVERSAL study. BMS also was the target of Niissen's wrath with respect to Pargluva. The question is: Did Nissen first offer to use his ultrasound study to cast Pravachol in a good light only to be rejected? That's happened before according industry and academic insiders. And the REVERSAL study? It gave credence to Nissen's research for Esperion Therapeutics ("a mere 47 patients showed that the company's injectable drug, ETC-216, decreased artery plaque by a statistically significant 4%, ten times the decrease seen with Lipitor." ) http://www.forbes.com/2003/11/12/cx_mh_1112pfe.html On the basis of that study, Nissen peddled the sale of Esperion to.....Pfizer! ETC-216, like many other drug development programs Nissen has participated in, have gone nowhere. But to assert "that you can bet Nissen would work just as hard to encourage the types of products and studies he likes as he would to discourage those he doesn’t" is inconsistent with how Nissen has used his research as a protection racket.

"Last but not least, there is the Kessler effect: the last time a commissioner was appointed who defined himself by making enemies in industry, he also gave the agency the credibility it needed to establish accelerated approval and the user fee program. Kessler was never popular with industry, and drug companies celebrated his departure. But drug approvals have been in steady decline ever since. Coincidence or not, those were the good old days."

User fees were a Dan Quayle and David McIntosh idea. Accelerated approval under Kessler? He was forced to it under pressure by AIDS activists and the Gingrich-led Congress in 1994. The Clinton administration couldn't re-invent the drug approval process fast enough. He didn't give the industry any credibility. And to suggest that Nissen's demand for mandatory safety trials prior to approval for cardiovascular risks for all drugs and the elimination of surrogate endpoints (except for those he has developed) would somehow advance the public health is absurd.

There are many other individuals outside of the FDA who could be superior stewards of the public health, who would regard the reforms and post market safety activities as a platform for effective leadership and not for the self-promotion and self-dealing that is the hallmark of Nissen's career.

This is -- and should not be -- a "fight" between industry and some annointed enemy of the companies.

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Greetings from JUPITER

11/10/2008 06:20 PM |

The JUPITER study puts a whole different spin on statins in the wake of all the trash talk that went on with regard to Vytorin. But just as the media went overboard attacking the ENHANCE results, lead by Steve Nissen who called for a "moratorium" on it's use in the wake of that study, it has gone overboard in claming that the same statins they were dissing are now to be used in nearly everyone, led again by, Steve Nissen who told his Boswell, Forbes' Matt Herper, that JUPITER is “potentially a game-changer. There could be a much larger population of patients that may benefit than are currently treated."

For the record, Nissen was rejected to conduct the athero measures for ENHANCE and is now doing a study to compare Crestor, the subject of JUPITER with Lipitor, two drugs made by two companies he has done work for in the past. And this is the man who would be FDA Commissioner.

http://www.forbes.com/healthcare/forbes/2008/1117/036.html

So what are scientists saying about JUPITER?

According to Eric Topol, JUPITER shows that people with ver high C-Reactive Protein levels get a very strong benefit from Crestor. People in this study were considered to be "healthy" but in fact 40 percent had metabolic disorder, smoked or were overweight. Topol asks: Is this a CRP or a metabolic story? The JUPITER study gives doctors something new and important to discuss with patients and something that can be used to tailor treatments to the individual.

Which is why Topol raises another important issue. While the relative risk of all cause of death declined by 25 percent the absolute absolute risk was cut by 1 in 120 treated for two year period. Meanwhile 1 in 200 developed diabetes.

Topol's point is not that Crestor use or use of statins should not be expanded. Rather his take is twofold. First, we should continue our search to tailor the use and development of statins to the right pathway and markers rather than pursue a one size or one mechanism fits all approach. Second, and more subtle, it is interesting how people flip out on the relative RISKs of medicines generated by meta-analyses of people like Nissen without looking at the absolute risk relative to the benefit generated or the cost of not taking the medicine.
http://blogs.theheart.org/topolog
Similarly, attacks Sid Wolfe launched against Crestor when it was first approved about liver damage, which proved to be bogus, has probably caused more deaths due to heart disease than high LDL levels have generated since that time. That is particularly the case with African Americans who seem to have responded particularly well to Crestor. Alicia Mundy and others in the media hail Wolfe as some sort of hero. Yet it is drug companies who by spending hundreds of millions of dollars on several large clinical trials have advanced clinical practice and provided researchers with more data that can be used to personalize the treatment of heart disease.

Who are the real heroes?


http://content.nejm.org/cgi/content/full/NEJMoa0807646

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SCHIP, Puppy Love, and the First Family

11/10/2008 01:11 PM |

Earlier this month a news story ran that discussed the issue of children and medications.  The story focused on the fact that American children are taking more medicines than ever before – with specific attention being given to childhood obesity, one of the most crucial public health problems facing our nation.

We will soon have a new First Family who can play an important role in communicating about this very important issue.  With young children in the White House the difficult conversation about childhood obesity, diet, exercise and parental responsibility can be addressed in a new and powerful way.  It’s a tremendous opportunity.  

This is also an important issue relative to SCHIP – certainly to be one of the first healthcare initiatives to be taken up by the new Congress.  And to that end, I wanted to share my letter that appeared in yesterday’s edition of the Baltimore Sun:

Give more children access to medicines
November 9, 2008

It's a shame that so many young Americans are struggling with obesity ("Many more children on medication, study says," Nov. 3).

But the fact that kids today have access to a range of prescription medications is a good thing. When I was a boy, the only remedy for the medical conditions associated with excessive weight was diet and exercise.

To increase access to these cutting-edge medicines, we must expand access to health insurance coverage.

That's why the new Obama administration should make it a priority to enroll qualifying children in Medicaid and the State Children's Health Insurance Program.

According to a recent Kaiser Family Foundation study, 75 percent of children without health insurance are eligible for these programs.

Peter Pitts, New York

There are a lot of contentious issues about SCHIP reauthorization – but one problem that is rarely discussed is that over six million children who currently qualify for the program have not signed up.  Achieving that goal should be a priority of our new President and Congress.  

And having two children on the White House lawn chasing a puppy might just be a good way to start.

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Soup Nazis in America

11/09/2008 07:50 PM |

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Honoring Change We Need

11/07/2008 03:37 PM |

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The Critical Path a toute vitesse

11/07/2008 01:29 PM |

Remember back in the day when there was a transatlantic “drug gap?” At the time it meant new therapies were approved first in the US and later on in Europe. That’s changed. It's reversed. And that’s unfortunate.

And here’s something that’s worse – we’re now playing catch up when it comes to advancing down the Critical Path. While the Reagan/Udall Foundation remains an unfunded and inactive shell, the European Union is making exciting and important progress.

The new program, funded by the French government, is called the Advanced Diagnostics for new therapeutic Approaches (ADNA) is a nine-year initiative aimed at developing personalized medicine for infectious diseases, cancer and rare genetic diseases by combining new diagnostic and therapeutic approaches.

That’s how you make drugs “safer.” That’s how you reduce costs. By getting the right medicine to the right patient in the right dose at the right time. All this at a time when many are arguing that the way to make drugs "safer" is to empower people to sue pharmaceutical companies. Sound familiar?

Funded by the French state-owned bank for small and medium-sized enterprises (OSEO), The ADNA program is funded to the tune €89.5 million. That is, at least in theory, what the Reagan/Udall Foundation is supposed to do. (And the ADNA program just part of the European Union’s bigger investment of almost €400 million in R&D over the 2008-2017 period.)

According to the partner companies (bioMérieux, Généthon, Transgene, GenoSafe), the ADNA will seek to identify and develop biomarkers that will allow new therapies to be targeted to patients who are most likely to benefit from them. Biomarkers can also help in making an early diagnosis, improving understanding of the progress of a disease, tracking a patient's response to treatment, and developing new diagnostic tests, they note. Sound familiar?

The €89.5 million in aid is broken down into €50.8 million in subsidies and €38.7 million in loans repayable in the event of success. Good model. Government and industry working together. Government as both regulator and colleague. Sound familiar?

Good for them. It will benefit us all. But shame on us for sitting on the sidelines and allowing political dithering to make us merely observers.

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RFK for EPA? OMG!

11/07/2008 07:38 AM |

This is change we can believe in?  Read More & Comment...

Show me the money!

11/07/2008 07:17 AM |

Read full article here
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Two Dumb Ideas Obama Should Avoid

11/06/2008 11:44 PM |

1. Picking Steve Nissen as FDA Commissioner

Apart from the fact that he will be a dart board for the stunts and ethical questions dogging him that we already know about, there are even more serious problems -- even legal problems -- that could be raised at or before his confirmation hearing, problems that his lapdogs in the MSM have eagerly ignored. I can assure those who went after Scott Gottlieb for his "conflicts" and quoted Nissen approvingly in trashing Scott, the good doctor from Cleveland has a lot of, uh, adverse events he has failed to report.

2. Following the advice of the health care experts at the Hamilton Projects

I wrote about this before: The bright idea of Harvard's Joe Newhouse and Richard Frank: "To address the stresses on the federal budget, prices paid for drugs purchased on behalf of beneficiaries previously covered by Medicaid should be reduced to near their former Medicaid levels. To limit the ability of manufacturers to name their prices of therapeutically unique drugs, a standby mechanism for establishing temporary administered prices should be developed."

Meanwhile, this from the WSJ:

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NJEM on NICE

11/06/2008 02:22 PM |

Volume 359:1977-1981  November 6, 2008  Number 19

Saying No Isn't NICE — The Travails of Britain's National Institute for Health and Clinical Excellence

Robert Steinbrook, M.D.

Britain's National Institute for Health and Clinical Excellence, known as NICE, is an independent, government-funded organization that advises the British National Health Service (NHS).1 Established in 1999, the institute has recommended coverage for hundreds of medicines. Since 2002, NHS organizations in England and Wales have been required to pay for medicines and treatments recommended in NICE "technology appraisals." The NHS usually does not provide medicines or treatments that are not recommended by NICE — although exceptions are possible.

NICE (www.nice.org.uk), however, has been criticized for the slow release of its appraisals, which has delayed the availability of some treatments that it eventually views favorably.2 Some of its decisions seem unfair, and the institute has been vilified for recommendations to limit or deny coverage for some high-profile medicines for cancer and other life-threatening diseases. Its decisions are often appealed (see table), usually by manufacturers, and one decision — that coverage of donepezil and other drugs for Alzheimer's disease should be restricted to patients with at least "moderate" (rather than "mild") disease — has been challenged in court.

NICE is often challenged for its decisions on cancer drugs that are very costly but extend life, on average, by only several months. In August 2008, oncologists, patients, and drug manufacturers attacked NICE's preliminary recommendation against coverage of four expensive drugs for advanced renal-cell cancer — bevacizumab, sorafenib, sunitinib, and temsirolimus. Although the institute considered the drugs clinically beneficial in specific situations, it concluded that they "were not cost-effective within their licensed indications." At a NICE board meeting in Plymouth, England, in September, a 57-year-old man with metastatic renal cancer described how sunitinib had stabilized his disease for more than 2 years, during which he had continued to work full-time. Although he had some pain and limited mobility, he said, "the quality of life this drug gives me is priceless."

In another recent appraisal, NICE recommended restrictions on coverage of drugs other than generic alendronate for the primary and secondary prevention of osteoporotic fractures in postmenopausal women. After rejecting an appeal, NICE released the final guidance in late October. After NICE issued a preliminary recommendation against the use of lapatinib plus capecitabine for previously treated HER2-positive advanced breast cancer, the maker of lapatinib offered to pay the cost of this drug for up to 12 weeks of therapy. The NHS would pay after 12 weeks. This offer is still under consideration.

For coronary artery disease, NICE recommended the use of drug-eluting coronary stents only if the price difference between drug-eluting and bare-metal stents was no more than £300 ($516, at $1.72 per £1). For patients with neovascular age-related macular degeneration, NICE recommended covering ranibizumab but not pegaptanib; during the institute's review, ranibizumab's manufacturer agreed to cover the cost of the drug for people who need more than 14 injections per eye, starting with the 15th injection.

NICE can be viewed as either a heartless rationing agency or an intrepid and impartial messenger for the need to set priorities in health care. Insofar as it is the latter, its experiences may be instructive for many countries, including the United States, regardless of the differences in their health care systems. The U.S. Centers for Medicare and Medicaid Services may eventually gain the ability to negotiate drug prices, and Congress is considering the creation of a health care comparative effectiveness research institute, as proposed in a 2008 bill (S.3408). This institute would have a more limited scope than NICE has: it would develop evidence about what does and does not work in health care and would fund research but would not consider cost or factors of health plan design. Nonetheless, such an institute could help to improve quality and slow escalating costs only if it were able to make tough calls and remain independent of political and financial interests.

In the United Kingdom, the NHS funds and delivers about 95% of medical care. And although its budget has increased substantially in recent years, it is a tax-funded system with a finite amount to spend. During a recent visit to NICE, I was told by Michael Rawlins, the physician who has chaired the institute since its inception, that it has "to be fair to all the patients in the National Health Service, not just the patients with macular degeneration or breast cancer or renal cancer. If we spend a lot of money on a few patients, we have less money to spend on everyone else. We are not trying to be unkind or cruel. We are trying to look after everybody."

NICE has about 270 full- and part-time staff members and an annual budget of about £32 million ($55 million). It calls on about 2000 outside experts to help develop guidance. There is a comprehensive practice code regarding conflicts of interest; the directors of NICE, the chairs of its advisory bodies, and employees of the institute and its collaborating centers can have essentially no financial relationships with industry. Members of advisory bodies must declare their interests, and when a conflict is identified, they cannot take part in decisions.

In addition to technology appraisals, NICE offers public health guidance, clinical guidelines, and guidance about diagnostic and therapeutic procedures. The institute recently began to open part of the meetings of its advisory committees to the public; the committees, however, consider confidential commercial, patient, and academic data in private and deliberate in closed sessions. NICE's technology appraisals are prepared by three committees that the institute appoints but are otherwise independent. Although the NICE board may reject a committee's recommendation, it has never done so.

NICE formally appraises about 40% of new drugs and new license indications for existing medications, as well as some medical devices, diagnostic techniques, and surgical procedures. It does not license drugs, nor does it appraise unlicensed products or off-label uses; the Medicines and Healthcare Products Regulatory Agency is responsible for licensing drugs and devices and ensuring their safety and effectiveness. NICE reaches conclusions about whether treatments are clinically effective, as compared with relevant alternatives, and determines whether they are cost-effective by using economic analysis to compare their value-for-money with that of other treatments.3

NICE does not set or negotiate drug prices. However, some of the institute's initial evaluations, such as those of ranibizumab for macular degeneration and bortezomib for multiple myeloma, have led manufacturers to offer the NHS better deals, resulting in favorable recommendations. For example, if patients with multiple myeloma have a full or partial response to bortezomib, the NHS pays and treatment continues; otherwise, treatment is discontinued, and the manufacturer refunds the drug's cost.

Assessing cost-effectiveness is the most controversial aspect of NICE's work. The institute estimates an incremental cost-effectiveness ratio, or the cost per quality-adjusted life-year (QALY), gained through a treatment's use, which, despite its imperfections, is widely considered the best available method for assessing value for money in health care. This ratio provides a means for considering costs in the context of both the quantity and quality of additional life by assigning a value ranging from 0 (death) to 1 (perfect health) to the quality of life for a given period. However, the method is complex; the cost-effectiveness ratio applies to groups of patients, not individuals, and is commonly confused with the cost of the medication, which is only one of many costs that are considered — others include, for example, the cost of medical care related to the treatment. Of course, if pharmaceutical manufacturers charged less for their products, NICE would find more medications cost-effective. The analyses are also susceptible to bias, and the cost-effectiveness ratio can vary widely depending on assumptions made about clinical benefit and harmful effects or other factors. Although resource use is most inefficient when an expensive intervention provides little or no benefit, resources can also be squandered through wide use of less expensive but relatively ineffective medicines.4

In the United States, a figure of $50,000 per QALY is often used as a threshold to assess the cost-effectiveness of an intervention. This threshold was recently criticized as "an arbitrary decision rule that lacks theoretical or empirical justification and is in any case outdated."5 Scott Grosse of the Centers for Disease Control and Prevention noted that although treatments that cost up to $200,000 per QALY are often adopted, it would "be very expensive if all interventions with a [cost-effectiveness] ratio at this level were regarded as providing good value for money."5

In general, NICE considers treatments cost-effective if their incremental cost-effectiveness ratio is £20,000 ($34,400) or less per QALY. This ratio, however, is not a rigid cutoff. On occasion, NICE accepts values between £20,000 and £30,000 ($51,600). On rare occasions, it accepts values beyond £30,000. This approach allows the appraisal committees to consider other evidence, to recognize that all cost-effectiveness ratios have uncertainty intervals, and to exercise their judgment in making decisions.

For example, in 2002 NICE was criticized for not recommending coverage of beta interferon and glatiramer acetate for treating multiple sclerosis. Subsequently, Britain's Department of Health decided to make the drugs available in the NHS as part of a 10-year trial. If the medications turned out to be less cost-effective than £36,000 ($66,600) per QALY, the manufacturers agreed to reimburse the NHS for their cost. However, an interim report has yet to be released; it is uncertain whether the study will yield reliable information or whether the NHS will ever receive any reimbursement.2

The highest incremental cost per QALY that NICE has accepted is about £49,000 ($84,000), for imatinib mesylate, when used in the blast-cell phase of chronic myeloid leukemia. By comparison, NICE calculated that the four treatments for advanced renal cancer that it evaluated had incremental costs per QALY of £71,462 ($122,915) for sunitinib, £94,385 ($162,342) for temsirolimus, £102,498 ($176,297) for sorafenib, and £171,301 ($294,638) for bevacizumab. A final recommendation on coverage is pending.

According to Rawlins, "The big problem is why we have chosen £20,000 to £30,000 per quality-adjusted life-year. I have always been very honest about this. There is really no empirical research that tells us where the boundaries ought to be. It is really a judgment of the economic community that has provided that sort of number."

In the months ahead, NICE has a full agenda. The institute is continuing to study its threshold ranges for QALYs and other aspects of its assessment methods. It has committed to publishing its appraisals of new drugs and other treatments as quickly as possible — ideally, within 4 months of their becoming available for general use. Fully achieving this goal will take several years and require the institute to begin its evaluations about 15 months before new medicines are approved for marketing. And as part of broader changes in the system for pricing drugs that are purchased by the NHS, the Department of Health may give NICE a formal advisory role.

NICE is also seeking permission from the House of Lords to appeal the April 2008 decision of the Court of Appeal in the Alzheimer's disease case. If the current decision stands, NICE will have to make public "fully executable versions" of its economic models, which would make it easier for manufacturers to challenge the underlying assumptions. The appellate decision could also make it difficult, if not impossible, for NICE to protect confidential information, such as unpublished research reports or the likely price of drugs not yet on the market. NICE is also facing three additional judicial reviews, one about its appraisal of osteoporosis treatments, another about a clinical guideline on chronic fatigue syndrome, and a third about the use of abatacept, which it did not recommend covering for rheumatoid arthritis.

According to Andrew Dillon, NICE's chief executive, when it appears that the institute cannot support coverage of a treatment given its current price, "we encourage companies to think about what they might do [to make their product cost-effective]. . . . We push the envelope just as much as we possibly can." Although the United Kingdom represents only a small percentage of the overall drug market, the institute's work has focused global attention on the importance of evaluating the comparative effectiveness and the cost-effectiveness of medical treatments. It remains to be seen, however, how many other countries will follow its lead. After all, saying no takes courage — and inevitably provokes outrage.

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