Patient Assistance Programs Are a Response To Government Interference in Drug Pricing

08/10/2016 03:58 PM | Robert Goldberg

Jeff Myers wrote a thoughtful response to my post on a Bloomberg article claiming drug companies use patient assistance programs to launder money that is used to pay for new medicines. Jeff suggested I am wee bit naïve to ”suggest that life sciences companies are contributing to these PAPs without regard to the impact it will have on their bottom line because they are altruistic organisms. “

Well, first of all, drug companies are altruistic, providing billions in support for community activities, basic research and yes, ensuring that patients have access to their medicines.

And yes, discounting or covering the cost of a product is a fairly standard way to find a price acceptable to consumers.

And I think Jeff’s point is that instead of using charity to make drugs affordable, why not just reduce the price to patients.

It’s a damn good question.

Consider the confusing and convoluted way government sets prices: The PAP's assistance on behalf of the PAP enrollee does not count towards a Part D beneficiary's true-out-of-pocket cost (TrOOP).. But when Pharmaceutical industry is paying 50% of a brand-name drug cost while you are in the Donut Hole this 50% of retail cost is counted toward your TrOOP or Donut Hole exit point. 

Jeff notes that “PAP spending DOES IN FACT cover the deductible/copay in most commercial or ERISA plans, which ultimately allows for the large pricing increases evident in the life sciences sector to get to 3rd party payor coverage.”

But this cost sharing in commercial plans is more of the same. IMS reported that new prices net of rebates declined. About 70 percent of the price increases went to covering rebates. Why don’t rebates, in commercial or government plans, go to patients. Why instead of rebate reduced prices are PBMs and insurers hiking copays for new drugs based on a retail price? Instead of using the money for patient focused pricing, PBMs and insurers (as well as some employers) are redistributing rebate dollars that can be used for anything, including Anthem’s alleged use of rebate dollars to buy back it’s stock in 2009.

Those rebated new drugs are not always available for $70 a month. As a bunch of lawsuits have shown, PBMs and insurers pocket rebates and then place the rebated drug on the highest cost sharing tier.

Drug companies respond to this situation by covering patient out of pocket costs as a percentage of the price set by the PBMs, NOT the rebated price. Or the discounted price.

On the Medicare side of things, the situation is even more of a snafu. Discounts to offset part D out of pocket costs are on top of the rebates drug companies provide. The GAO noted: “The PBMs we interviewed also told us they observed that some manufacturers decreased the amount of rebates for the brand-name drugs they offered, which they believe occurred as a result of the Discount Program.

In comparison, most of the plan sponsors did not observe manufacturers decreasing rebate amounts and most manufacturers reported no effects on their rebate negotiations as a result of the Discount Program.”

Hence, PAP is a subsidy provided indirectly to patients by drug companies after rebates are paid and discounts are provided. Note that the rebates and discounts are based NOT on the rebated price. The whole arrangement is parasitic and idiotic. But it ain’t criminal.

Jeff writes: “If PAP spending were truly altruistic without regard to whether or not getting into the wallets of 3rd party payors was an issue, PAPs would cover those that cannot get medications but are eligible for government assistance…. it would cover those that cannot access a specific medication in a government program like Medicaid.”

But PAPs are mostly prohibited from providing assistance.  That's to ensure states and HHS get the maximum amount of rebate dollars.  I agree with Jeff that PAP should extend to Medicaid. There is no good reason why they shouldn’t (the rebate revenue government gets by limiting PAP support notwithstanding).

Often government programs don’t cover drugs that are needed. Under Obamacare, PBMs have pocketed rebates, charge patients a share of a retail price to discourage use. So PAPs fill that gap.

By comparison, Langreth and Elgin seem to think that society would be better off if patients were forced to abide by rebate driven practices of PBMs as enabled by Medicare part D regs and the ACA. More to the point, they want to criminalize charity unless is comports with the cost containment goal they believe should be the primary objective of government regulation.

What I think Jeff is ultimately saying, and to which I agree, is that 1) currently charitable support for drug coverage should be extended to really needy patients and 2) rational drug pricing would consist of replacing rebate dollars and discounts paid here and abroad with net prices and charitable support that directly support those who need new medicines but are denied them due to profit driven formulary games (including Express Scripts and CVS eliminating dozens of drugs from their formulary in exchange for bigger rebates from the one or two drug companies whose medicines remain covered).

Tevi Troy at the American Health Policy Institute has formed a Health Transformation Alliance including larger employers who are tired to the rebate shell game. That group is focusing on policy changes to improve access to medicines in order to reduce long term costs and improve quality of life.

 Langreth and Elgin ignore the dark underside of rebate driven treatment decisions.  Instead they seek to criminalize a charitable activity that provides people who need a medicine the support that PBMs and part D plan sponsors should have provided in the first place. 
  Read More & Comment...

Interchangeability and the Totality of Evidence

08/04/2016 02:10 PM | Peter Pitts

When it comes to biosimilar interchangeability, can "totality of evidence" be in the eyes of the beholder?

Consider that, now consider a new study in the Annals of Internal Medicine on biosimilars.

The study specifically looks at biologics that treat inflammation for patients with rheumatoid arthritis and inflammatory bowel syndrome, called TNF-alpha inhibitors. They systematically reviewed 19 studies to determine how these biosimilars compared with the brand-name drugs, focusing on safety and efficacy. According to a story on the Kaiser Health News (KHN) site, “They concluded the biosimilars are “interchangeable” with the original versions, such as Remicade and Humira … We examined one very costly and commonly used class of biologic therapy,” said study author Dr. Caleb Alexander, codirector of the Johns Hopkins Center for Drug Safety and Effectiveness. “The totality of evidence strongly supports the comparability of the biosimilar and branded product.

The Annals paper couldn’t have been that comprehensive since it ignored a well-publicized study from Mercy University Hospital, University College Cork, Centre for Gastroenterology, Mercy University Hospital, Cork, Ireland on … Remicade!

Titled, “Biosimilar but not the same,” the Irish research was presented at the European Crohn’s and Colitis Organisation. It studied the clinical impact of an innovator biologic (Remicade) and its EMA-approved biosimilar (Inflectra). The findings are important.

* 80% of the Inflectra group required hospital readmission versus 5% of the infliximab (Remicade) group. (p=0.00004). 60% of patients in the Inflectra group needed steroid augmentation of standard steroid tapering protocol with 50% requiring multiple increases in steroid dose versus 8% of patients in the Infliximab (p-value = 0.0007). Over the course of 8 weeks, 93% of patients in the Inflectra group had an increase in CRP with 7% remaining unchanged whereas 100% of patients in the infliximab group had a decrease in CRP (p=<0.001).

The conclusion of the Mercy study is not ambiguous, “Our results suggest that biosimilars may not be as efficacious as the reference medicine. The results found reflect the ECCO statement position that the use of most biosimilars in IBD will require testing in this particular patient population and cannot be extrapolated from other disease populations."

Per KHN, “Pharmacist Donald Miller, a professor at North Dakota State University, said the analysis is important because it is the first of its kind for these biosimilars. But the finding that the biosimilar drugs were “interchangeable” with the originals is interesting because the FDA has not yet awarded this designation to either Inflectra or Zarxio. “It is very important to realize that interchangeability of biosimilars has a specific meaning under U.S. law and [the] FDA has not yet issued guidance for any product to define itself as interchangeable to date,” he said.

Miller said many physicians worry that insurance companies will force patients to switch from biologics to biosimilars to save money, risking reactions to the tweaked drug molecules. Indeed, the American College of Rheumatologists’ position statement says that patients should be informed if they’re switched to biosimilars to cut costs and their physician should sign off on it. “Over time, biosimilars can save the health system billions, but only if they’re adopted and only if patients and clinicians and policymakers develop and support mechanisms that promote their adoption,” Alexander said.

Totality of evidence, indeed.  Read More & Comment...

Bloomberg News Launches Fictional Series: Drug Companies Using Charities to Launder Money

08/04/2016 11:06 AM | Robert Goldberg

Bloomberg fiction writers Robert Langreth and Ben Elgin are pushing the idea that contributions from a pharmaceutical company to a patient assistance programs (PAPs) run by non profits operate on the edges of anti-kickback law or outright illegal.  Or put another way:  they craft a compelling story that drug companies are using poor patients to launder money and reap profits. 

Relying mostly on unsealed documents from a private case brought by an ex-Celgene employee, the duo cite an expert witness that the donations “were actually illegal kickbacks designed to hide the fact that Celgene was contributing these payments to the foundations to get Medicare patients to use more” of Celgene’s cancer drugs, Thalomid and Revlimid.’

Their reporting is, as the movie disclaimer goes: “Inspired by a true story” which begins here:

First, PAP’s  have been around for decades to help patients with limited financial ability to pay for out of pocket health care costs, including medicines. 

In 2006, the Medicare Part D benefit kicked in.  Beneficiaries no longer qualified for assistance under traditional PAP eligibility criteria whereby companies provided support directly to patients because they could run afoul of federal anti-kickback statutes and other law.  But many patients who did not qualify for low income subsidies still needed financial help.  Hence, the Department of Health and Human Services Office of Inspector General drew up regulations to allow cost-sharing subsidies provided by bona fide, independent charities unaffiliated with pharmaceutical manufacturers… even if the charities receive manufacturer contributions.”  These regulations have been continually updated and PAPs are strictly regulated by HHS.   

Elgin opines that such arrangements are a ‘grey area.’   He might tell that to HHS and the Department of Justice since they are not a party to this private lawsuit.  (More on the intricacies of the suit later. )

Second, drugs not covered on the Medicare Part D plan formulary or drug list are not counted towards the out of pocket costs. The PAP's assistance on behalf of the PAP enrollee does not count towards a Part D beneficiary's true-out-of-pocket cost (TrOOP).  In other words,  PAP assistance would not fill the donut hole and push patients into the catastrophic part of Part D where the program pays 95 percent of all drug costs.  

Third, there are many other patient assistance programs that have also been around for decades to help people with HIV,  Hepatitis C and many rare diseases.  Apparently the dynamic duo also believe these are “schemes” to gain billions. 

Fourth, in addition to ignoring that PAP assistance does NOT boost catastrophic drug spending, Langreth and Elgin rely heavily on the expert testimony provided on behalf of the plaintiff who makes these sweeping claims.   (More on the inventive path the expert took to estimate Celgene raked in $19 billion in excess sales over the last decade in another post.)  

Fifth, they also ignore the vast body of evidence that co-pay assistance often helps patients whose drugs are not covered and who’s copay or cost sharing have increased much faster than drug prices net of rebates.  And often these rebates are generated agreements that specify a “competitor’s drug must have a higher copayment than that of the rebated drug. Other agreements require the sponsor to exclude a competitor’s drugs from its formulary altogether. Rebates were often larger when fewer competitors’ drugs were given preference on the formulary. For example, one sponsor received a 35-percent rebate when the drug was one of two preferred drugs in its class, but a 40-percent rebate when the drug was the only preferred drug in its class on the formulary. “

But I guess helping patients who are powerless to fight such decisions should suffer and die.   Perhaps Langreth and Elgin feel that's a small price to pay to strike a blow for tort lawyer settlements.  

Here’s what Mick Kolassa, one the world’s experts on drug pricing and reimbursement (and a great blues artist) concludes: “Insurers can argue that these offset programs drive patients to use costlier branded drugs (in lieu of cheaper branded options or generics), but studies have shown that more than 40% of the time, in the absence of a copay-offset program, if the patient cannot pay the OOP expenses, they won’t switch to a cheaper drug—they will simply forgo the medication.  The insurance industry will end up losing considerably more money over the long run, in terms of covering related medical expenses that arise when the patients don’t control their conditions through the use of medication.”

To sum up, Langreth and Elgin allege that drug companies and PAPs are colluding to evade anti-kickback laws and overbill Medicare.   So they are alleging that the relationship is nothing less than money laundering and racketeering. 

I am sure that the article has gotten a lot of clicks.   Call me old-fashioned, but I’d trade clicks and self-serving media exposure for being fair and truthful.    Read More & Comment...

PhRMA and BIO put Off-Label on the Table

07/28/2016 06:57 AM | Peter Pitts

In a set of joint principles, BIO and PhRMA emphasized that companies should be able to communicate "truthful, non-misleading" information outside of an FDA-approved label to insurance providers, PBMs and government healthcare programs as they consider reimbursement decisions.

“To exercise sound medical judgment in treating patients, health care professionals must understand the full range of treatment options, including both established and emerging information about available medications. Biopharmaceutical companies are uniquely positioned to help health care professionals achieve the best outcomes for patients, because companies can provide timely, accurate, and comprehensive information about both approved and unapproved uses of the medications they research, develop, and bring to patients. PhRMA, BIO and their members believe that the availability of a wider range of truthful and non-misleading information can help health care professionals and payers make better informed medical decisions for their patients, which in turn will benefit patients.”

According to the principles, a company should be able to describe to payers its pipeline, the status of FDA applications, the anticipated uses of products, relevant clinical trial data, pharmacoeconomic information and applicable treatment guidelines. Further, a company should be able to discuss analyses of real-world data derived from "sound and well-described" research methods.

Communications should be tailored to the sophistication of the intended audience, and should provide "scientific substantiation" for information not included in FDA-approved labeling, the document said. A company should provide details on the design and implementation of studies that generated data, including patient populations and statistical analysis plan.

BIO and PhRMA also said that when applicable, companies should inform healthcare professionals that other research led to different results.

No word from White Oak … yet. What is needed from the FDA is though bold action and … clarity.

This is urgent for many reasons: different federal agencies (FDA, FTC, DOJ) with different views on pathways and jurisdiction, and the extreme danger of allowing federal judges dictate regulatory policy. If existing policy has evolved to protect the public from snake oil, the recent Amarin decision is precarious precedent for communications about fish oil – and beyond.  Read More & Comment...

CDRH and Real World Evidence

07/27/2016 06:08 AM | Peter Pitts

In draft guidance released Tuesday, FDA outlined its thinking on the use of real-world evidence in making regulatory decisions about medical devices.

The agency described factors it would consider when evaluating the relevance, reliability and quality of real-world evidence, and suggests when it might use such data to make decisions about devices.

To evaluate the reliability of data, FDA will assess how they were collected, their adequacy for answering relevant questions, and whether they were collected in a manner that minimizes bias. The guidance says a prospective protocol is "essential to ensure reliability" of real-world evidence.
The guidance says FDA might use such evidence to expand a device's approved indications, for postmarket surveillance, and as a control for studies of subsequent devices.

Per BioCentury, “FDA's Center for Devices and Radiological Health also has been in the vanguard of the agency's efforts to solicit patient preference data and use it to support approval decisions.” Last year, CDRH used patient preference data to approve the Maestro Rechargeable System from EnteroMedics Inc.

   Read More & Comment...

Associated Press Excludes Facts in Medicare Drug Spending Article

07/26/2016 01:06 PM | Robert Goldberg

The AP’s “exclusive“ report on Medicare drug spending excluded many facts that challenge the news outlet’s conclusion that “the rapid rise in spending for pricey drugs threatens to make the popular prescription benefit financially unsustainable.”

By exclusive, AP means selective, since it focused only on 2014-2015 drug spending -- which increased by 15 percent -- and over looked historical and projected changes in drug costs.  

Here's some information AP excluded:

Part D spending grew by 15 percent in 2015 and is expected to grow annually, on average, by 10.9 percent between 2015 and 2020.  And from 2010-2013 gross drug spending (not including rebates and other expenses) grew 10.1 percent.

A 2013 CBO analysis found that Part D drug costs between 2007-2010 “increased by just 1.8 percent per year per beneficiary, growing more slowly than total per capita drug costs.”  From 2010-2013 per capita costs increased by 1.6 percent. 

Specialty drugs accounted for only 6.7 percent of total drug spending per beneficiary in 2007 and 9.1 percent in 2011.   I estimate that

And AP also failed to note just how much “pricey” new drugs were as a percent of total Medicare spending.   In case you’re interested spending on brand drugs for 2015 was $52 billion, around 8 percent of total Medicare spending.  Which is about what it is projected to be for the next 20 years. 

Further, the AP misreports the impact of rebates.  It looks at rebates across the entire program, which includes spending on generic drugs.  AP states: “Rebates for individual drugs…averaged nearly 13 percent across the entire program in 2013, according to government figures, and were estimated at about 17 percent for 2015.”

And AP could have also found that both rebates and administrative costs are increasing faster than part D per capita cost trend.  

Profits plus administrative costs per beneficiary were higher relative to drug costs in 2010 and in 2015 than in 2007.  Which means not all of the slow growth in drug spending was passed back through plan bids

The slow growth in drug spending coincided with a huge increase in the number of Medicare consumers paying thousands out of pocket for drugs deeply discounted under part D.   An Avalere report found:

“The average percentage of covered drugs facing coinsurance has risen sharply from 35 percent in 2014 to 58 percent in 2016 among PDPs. While most PDPs have historically applied coinsurance to high-cost drugs on the specialty tier, plans have extended coinsurance to drugs on lower tiers in recent years, including those covered on preferred and non-preferred brand tiers. “

This is important because increased cost sharing reduces the use of medicines and the use of medicines reduces other spending.  The Congressional Budget Office notes that a 1 percent increase in the number of prescriptions filled by beneficiaries would cause Medicare’s spending on medical services to fall by roughly one-fifth of 1 percent for all patients.  However, the impact on the use of new medicines in reducing other treatment related costs in patients with a diagnosis of a chronic disease without access to a new drug is more significant:

In fact, “improved medication adherence associated with expansion of drug coverage under Part D led to nearly $2.6 billion in reductions in medical expenditures annually among beneficiaries diagnosed with CHF and without prior comprehensive drug coverage, of which over $2.3 billion was savings to Medicare.

Other studies came to the same conclusions: "Implementation of the Medicare prescription drug plan in 2006 was followed by significant decreases in spending on nondrug medical expenditures among beneficiaries who previously had limited drug coverage. After Medicare Part D started, nondrug medical spending in this group was about $1,200 per year less than expected. The savings were driven principally by seniors making less use of hospitals and skilled nursing facilities."

Another study found that part D spending reduced hospitalizations generally by 4.1 percent.  

Among beneficiaries with limited or no prior drug coverage Part D reduced the number of overnight hospital stays by about 12%, and among beneficiaries with generous prior drug coverage Part D reduced the number of hospital nights by about 21%.

By contrast, the increase in cost sharing – even as rebates and PBM profits increase and net drug prices rise below the rate of inflation – makes people sicker and increases health spending. 

Beneficiaries with higher OOP costs for the more expensive oral cancer drugs were more likely to discontinue or delay drug therapy.

More generally, a survey of all articles that” evaluated the relationship between changes in cost sharing and adherence found that 85% showed that an increasing patient share of medication costs was significantly associated with a decrease in adherence. For articles that investigated the relationship between adherence and outcomes, the majority noted that increased adherence was associated with a statistically significant improvement in outcomes.”

Hence, AP’s exclusive access to Medicare part D data was used to confirm a pre-established claim that new drugs will make the benefit unsustainable.  In AP’s world, at least when it comes to drug prices, exclusive means being selective in what information is published to affirm a previously established prejudice.

Shame. 



  Read More & Comment...

RWE: The times they are a (slowly) changin'

07/25/2016 03:44 PM | Peter Pitts

Per the FDA’s PDUFA VI "commitment letter," the agency will face some real world deadlines to advance the use of real world evidence. But, since we’re dealing with the real world, let’s get real – guidance is unlikely until the end of 2022 at the earliest. (That's the timeline agreed to via the PDUFA VI negotiations.)

Step One towards these new 21st century rules of the regulatory road will be a series of public meetings and regulatory workshops. It will be curious to see who shows up at the table.

PDUFA VI User fees will support agency policy development in the area, and FDA has pledged to meet the following benchmarks:

* End of FY 2018 – Convene one or more public workshops with key stakeholders, including patients, biopharmaceutical companies, and academia, to gather input into issues related to real world evidence (RWE) use in regulatory decision-making.

* End of FY 2019 – Initiate (or fund by contract) appropriate activities (e.g., pilot studies or methodology development projects) aimed at addressing key outstanding concerns and considerations in the use of RWE for regulatory decision-making.

* End of FY 2021 – Publish draft guidance on how RWE can contribute to the assessment of safety and effectiveness in regulatory submissions, for example in the approval of new supplemental indications and for the fulfillment of post-marketing commitments and requirements. FDA will work toward the goal of publishing a revised draft or final guidance within 18 months after the close of the public comment period.

Ground Zero for a real-world evidence regulatory pathway will be Sentinel, the existing public/private program aimed that uses a variety of databases to track, collect and analyze adverse event reports about drugs, vaccines and medical devices.

Modeled after successful programs such as the Centers for Disease Control and Prevention’s Vaccine Safety Datalink, Sentinel allows FDA to conduct safety surveillance by actively querying diverse data sources, primarily administrative and insurance claims databases but also data from electronic health record (EHR) systems, to evaluate possible medical product safety issues quickly and securely.

Sentinel, mandated under the Food and Drug Administration Amendments Act (FDAAA), will get a $50m boost over five years under PDUFA VI. Sentinel currently has information on over 100 million patients.

Similarly, efforts are underway to establish a National Device Evaluation System (NDES). As currently envisioned, the NDES would be established through strategic alliances and shared governance. The system would build upon and leverage information from electronic real-world data sources, such as data gathered through routine clinical practice in device registries, claims data, and EHRs, with linkages activated among specific data sources as appropriate to address specific questions.

As FDA Commissioner Rob Califf and Deputy Commissioner Rachel Sherman recently commented:

Creating knowledge requires the application of proven analytical methods and techniques to biomedical data in order to produce reliable conclusions … There must be a common approach to how data is presented, reported and analyzed and strict methods for ensuring patient privacy and data security…  Rules of engagement must be transparent and developed through a process that builds consensus across the relevant ecosystem and its stakeholders … To ensure support across a diverse ecosystem that often includes competing priorities and incentives, the system’s output must be intended for the public good and be readily accessible to all stakeholders. 

When it comes to the regulatory science of real world evidence, we are still in early days, but the times they are a changin.’ (And you better start swimmin' or you'll sink like a stone.)  Read More & Comment...

ICER Hires More Human Shields For Rationing

07/22/2016 02:51 PM | Robert Goldberg

As I have previously discussed,  ICER's initiative to revisit the representatitiveness and scientific validity of his QALY based assessments of drug prices and access is really a crude political makeover.  The recent appointment of so-called patient and consumer advocates to his board is example of ICER advertising itself as becoming more open and patient centered when the truth is much different:

"The Institute for Clinical and Economic Review (ICER) has announced the appointment of two new members to its Governance Board. Ellen Andrews, PhD and Frances Visco, JD both join the Governance Board with extensive experience in patient and consumer advocacy....
“These two leaders bring to ICER’s Governance Board tremendous skills honed through years of experience fighting for access to high-quality health care and for the evidence that patients need to participate fully in their health care decisions,” noted ICER’s President Steven D. Pearson, MD, MSc. “This is part of our long-standing plan to augment this perspective among the members of our Governance and Advisory Boards as ICER grows. I know that Ellen and Fran are superbly prepared to join with other Board members in assuring that ICER’s strategic direction and all our efforts are informed by the patient voice.”

They are superbly prepared if by preparation one means that they share Pearson's twisted use of QALYs and budget caps to set drug prices and limit access.

Dr. Andrews was already an advisor to ICER and has written in defense of it's current approach.  She has also spouted the party line that insurance companies don't get to vote on ICER decisions (they just fund the organization).   

She has also written favorably about Canadian drug price controls and was part of a working group tasked with finding ways states and provinces could could control drug prices.  

Fran Visco is also a supporter of using longer, larger clinical trials to slow down access to new medicines.  

She is opposed to expanding compassionate use pathways, claiming: The problem is that the expectations for these drugs are unreasonably high. The public has this unrealistic faith in what these new drugs are going to do."

Here's what she said about accelerated approval: "The F.D.A. should learn a lesson and re-evaluate the accelerated approval process itself. The goal is to save lives, not rush to get drugs to the public."   She also believes that "public policy should discourage access to investigational drugs
outside of clinical trials. "  So much for access.

Visco also support the reimportation of drugs into the US from overseas.  She claims that drug importation can be "adequately regulated and can provide immediate cost savings for consumers."  As long as you don't mind counterfeit cancer drugs such as fake Avastin. 

I have no problem with Pearson packing his boards and committees with true believers or getting financial support from insurers.  But don't claim ICER is an objective and trusted organization that uses independent assessments to " evaluate the value of costly, new interventions – whether they are worth what they charge."   When you rely upon the QALY and budget caps to set prices across all disease areas, it leads to price controls and rationing.    Andrews and Visco believe in both, as does Pearson.   Again, ICER can meet and talk all it wants.  But it is not patient-centered and it is not trusted or independent.   Andrews and Visco are just another couple of human shields to protect Pearson  while he runs his anti-patient enterprise

This latest move is another example of why we should let ICER melt away and develop a method of measuring value that reflects the needs and preferences of of patients, their families and communities. 

   Read More & Comment...

Roy Misses the Value Proposition

07/20/2016 06:29 AM | Peter Pitts

During a Presidential election cycle, facts are often the first casualty.

Avik Roy argues that the GOP needs a “clear plan to tackle the high and rising price of branded prescription drugs.” He calls it a Republican “blind spot.” And he’s right – but for the wrong reasons (“The GOP Needs to Tackle the High Price of Prescription Drugs").

According to Roy, “Even 66% of Republican voters said high drug prices should be a top policy priority, compared to 60% who said the same of repealing Obamacare.” What he doesn’t share (or more likely doesn’t know) is that for most Americans, “the price of drugs” means the co-pay they hand over at the pharmacy when they pick up their prescriptions. That’s not a drug-pricing problem; it’s an insurance industry problem. It’s so easy to blame Big Pharma. That’s the real blind spot.

Mr. Roy quotes from a recent Kaiser Family Foundation poll which says 72% of their sample find “drug prices” generally unreasonable. But he doesn’t share that the same exact percentage (72%) said they find their drugs affordable. If Mr. Roy is reporting one he should report the other. It’s an issue of probability versus reality.

Mr. Roy discusses consumer purchasing of iPhones and compares it to healthcare. His assumption that consumers can make choices through transparent pricing is false since, in healthcare, there are pesky things called therapeutic outcomes. Even if consumers have pricing information its not good enough to make an appropriate “purchasing decision” since they don't necessarily have or understand the information which drives positive outcomes. This is despite pharmaceuticals being the only segment of healthcare (compared to physician and hospital services ) where pricing and outcomes are the most transparent.

Also, Mr. Roy fails to mention that pharmaceuticals are the only segment of healthcare where the costs plummet after a period of time (brand vs. generics). Today’s expensive medicines are tomorrow's very inexpensive generics. Today’s hospitalizations, alas, are tomorrow's even more expensive hospitalizations. Modern medicines continue to provide value in perpetuity - what value does a site of care, like a hospital or an insurer or PBM provide?

Mr. Roy fails to mention that hospitals actually manipulate and increase drug costs by buying up physician practices and shifting site of care. According to Sloane Kettering data, a medicine administered in a hospital setting is 150% more costly that one administered in physician offices.  Hospitals make more money by shifting site of care while vilifying drug companies! They also artificially pad their bottom lines by taking advantage of the 340B program - but he fails to mention that as well.

Of course, drug pricing is a complicated matter -- which is why the pharmaceutical industry should focus on a few basic points when making its case.
Roy argues there’s no relevant connection between the pharmaceutical industry’s investments in R&D and pricing. That’s intuitively and factually wrong.

Since 2000, drugs firms have spent over half a trillion dollars developing new medicines. And research costs for the last year alone totaled more than $51 billion. That’s up from $15.2 billion in 1995.

These are extraordinary spending levels, even compared to other research-intensive industries. In fact, the pharmaceutical sector spends five times more on R&D than aerospace, and 2 ½ times more than the software and computer industry. This is the kind of investment that pharmaceutical innovation demands, and it’s reflected in the economics of advanced drugs.

Big Pharma also needs to do a better job explaining just how many failures firms endure searching for the next breakthrough medicine. Drug companies must develop hundreds of compounds until they find one suitable for testing on humans. Of those rare compounds that make it to phase-1 human trials, fewer than 12 percent win approval from the FDA.

That’s why bringing just one drug to market costs an average of nearly $2.6 billion and takes more than 10 years, according to researchers at Tufts.
If drug companies were open and honest about their frequent and expensive failures, they could quash the myth that pharmaceutical research is obscenely lucrative.

Consider the controversy surrounding the hepatitis C drug Sovaldi. When the medicine came on the market, it quickly became known in the press as “the $1,000 pill.” This may be a great sound bite, but it’s hardly accurate.

In reality, insurers and benefit managers negotiated discounts that reduced the price of Sovaldi by 20 to 50 percent. But they didn’t pass the full discount on to the consumer. Instead, insurers and pharmacy benefit managers pocketed the money to pad their bottom lines and executives’ wallets. Last year, CVS Caremark Corporation, one of the biggest benefit managers, paid its CEO over $32 million.

For many patients, particularly those without insurance coverage, Sovaldi’s manufacturer supplied a coupon ensuring that co-pays for the drug wouldn’t exceed $5.

But Mr. Roy’s key error is focusing on price as the denominator of the conversation. That’s wrong too, in fact it the fundamental error that allows people like Hillary Clinton and Donald Trump to blame for the biopharmaceutical industry for rising health care costs. The true denominator is value.

Consider one pre-Sovaldi “best practice” treatment for Hepatitis C, the drug Pegasys. This requires one injection a week for 48 weeks — and very few patients see the treatment through to completion, so much of that treatment, both physician time and drug cost, is wasted. Nor is it that much cheaper: At about $7,000/month, the full course of treatment is over $70,000 — barely less than cost of the three months needed for Sovaldi to work a cure.
And the price of not using Sovaldi is very high. One in three patients with the Hepatitis C virus eventually develops liver cirrhosis, and managing these patients is costly. A “routine” liver transplant (where the liver is from a cadaver) costs close to $300,000; a “living donor” transplant is even more expensive.

Thanks to Sovaldi, a pill that cures the disease when taken once a day over 12 weeks will eradicate the need, the risks and the costs of liver transplantation. Such radical innovation deserves to be both lauded and rewarded.

But it’s so much easier to place blame than say thank you. When it comes to pharmaceuticals, we have to learn to understand the value proposition. It’s not just the price of the product –it’s the price relative to the value the product provides to individuals and society.

In short, drugs aren’t the cause of rising health-care costs — they’re the solution. Demonizing new treatments distracts from the real problem in the US biopharmaceutical industry: top-down cost-centric policies that focus on the near-term, short-changing long-term patient outcomes, and so endanger “sustainable innovation” by denying fair reimbursement for high-risk investment in R&D.

But it’s so much easier to just place blame. Easy and wrong.  Avik Roy should know better.  Read More & Comment...

Avik Roy is Wrong on How to Reduce Drug Prices

07/14/2016 01:41 PM | Robert Goldberg

Avik Roy wants congressional Republicans to enact free market policies to reduce drug prices.    So do I. Unfortunately, Roy begins with a misleading case against drug companies and ends up endorsing Bernie Sanders proposals to regulate the industry. 

Let’s start with his statement that spending on medications is closer to 20 percent of health spending instead of 10 percent.  So what?  I wish it were 100 percent, as with polio, measles, hepatitis B, etc. Spending more on drugs means less spending on other costlier services. 
If we were treating heart disease and cancer with the services available even 20 years ago, we’d be spending a lot less on drugs but spending twice the amount we are now with less effective treatments.   

Instead of recognizing that most of the increase in drug spending is due to more use and longer life, he claims it’s all due to drug companies charging whatever they want. He dismisses the claim that price increases in part reflect the rising cost of drug development:

“But it doesn’t follow that high R&D costs should lead to infinite pricing power. For example, Gilead didn’t discover its blockbuster hepatitis drug, Sovaldi. Instead, Gilead purchased the company that did—Pharmasset—for $11 billion, after key clinical trials had been completed, and then proceeded to charge unprecedented sums to insurers and patients in order to recoup their acquisition costs.  An even better example is Avonex, a multiple sclerosis drug from Biogen that was launched in 1996 for less than $10,000 per patient per year. In 2015, Biogen was charging $60,000 for exactly the same drug, even though numerous, more effective medicines had been launched in the intervening two decades.”

“If Apple today charged $10,000 for a 20-year-old computer, or Samsung $6,000 for a 20-year-old TV, citing the “high cost of innovation,” they’d be laughed out of Best Buy. And not because their costs of innovation aren’t high—but because it’s understood that consumers, in a free market, have no need to accept unaffordable prices.”


Similarly: 

“One thing you hear from defenders of the status quo is that drug companies need to charge high prices in order to continue to produce innovation. Well that’s not true in the rest of the economy. Google and Facebook charge nothing for the core products—search engines and social networks—and yet they are two of the most innovative companies in the world.”


These are truly ignorant assertions.  First, it’s not just the cost of innovation, it is the cost of innovation given the risk of regulatory uncertainty and clinical results.   I daresay that if it took Apple an average of 10 years to bring a new product to market knowing that only 1 out of 10 they invested in would make it to consumers, it wouldn’t have to worry about being laughed out of Best Buy:  Apple would still be selling Newton's and first generation Macs.    Imaging if fracking companies had to conduct randomized clinical trials each and every time the were going to drill.   

Second, as Derek Lowe points out, comparing the development of apps and social media to drug development ignores the fact that engineering and pharmaceutical R&D require  fundamentally different processes. Upgrading the core technology of a computer is a hell of a lot easier than developing an anti-body and modifying it to adapt to rapidly mutating cancer cells..

As Derek Lowe has pointed out “medical research is different than semiconductor research. It’s harder. Ever seen one of those huge blow-ups of a chip’s architecture? It’s awe-inspiring, the amount of detail that’s crammed into such a small space. And guess what – it’s nothing, it’s the instructions on the back of a shampoo bottle compared to the complexity of a living system.”

Even more troubling is Roy’s claim that “prices for drugs that do not reflect what their value would be in a truly free market.”   That is quite an assertion and suggests that Roy can tell us what that value would be or how that would be communicated through pricing information. 

My guess is, based on his article, he has no clue.   Take his claim that drug companies engage in  “infinite’ pricing.  He points out that the retail price of the multiple sclerosis (MS) drug Avonex increased from 1996 to 2015 by 500 percent.  True, but over the same period of time Avonex revenues and global market share actually fell by 100 percent as newer drugs were introduced.   Meanwhile, the aggregate cost of MS hospitalization increased 372 percent even as the number of hospitalizations remained essentially flat.  Which of these two trends reflect a truly free market?   The one where competition eats away at revenues or the one where you increase revenues by providing a service that is increasingly obsolete? 

Roy calls the price of drugs like Sovadli, that cure hepatitis C Sovaldi’s price unprecedented because Gilead bought the company that developed the drug instead of creating it, itself.   Apparently, free market principles have two separate rules about pricing: one if you acquire a company and another if you spend the same money to make a product.  That is sort of like President Obama telling entrepreneurs “you didn’t build that.”

In any event, Roy fails to consider that the price of drugs does reflect their value relative to current treatments.  With regard to Sovaldi:

“Although the cost of antiviral treatment increased with the availability of new therapies, the cost per survival (SVR) has decreased. As shown in Figure 2, the cost of treating HCV genotype 1 with peginterferon-ribavirin, first-generation protease inhibitors, and sofosbuvir-ledipasvir (at wholesale acquisition cost) increased from $43,000 to $103,000 per patient. However, the corresponding costs per SVR decreased from $213,000 to $108,000. After applying the recent discounts (46%), the cost of treatment decreased to $56,000, which is less expensive than boceprevir- and telaprevir-based therapies, and the cost per SVR decreased to $58,000.” Moreover, in addition to reducing what it costs to save a life, drugs like Sovaldi will eliminate the risk of premature death for people with HCV. 

To create a free market Roy suggests “ending federal and state prohibitions on the ability of private insurers to jointly negotiate drug reimbursement rates. And they can eliminate regulations, like those in Obamacare, that force insurers to pay for expensive branded drugs even when more cost-effective alternatives are available.”

In essence, Roy wants to create a government led cartel to control drug prices.  Indeed, his proposals come straight out of the Bernie Sanders campaign.  Three large pharmacy benefit companies (Express Scripts, CVS Caremark and OptumRx ) control about 80 percent of all prescriptions in both private and public health plans.   Consolidating this control through a government cartel would reduce drug prices, but not for patients.  

That’s because, in the price regulated world of pharmaceuticals, rebates reduce what pharmacy benefit management companies, insurers and hospitals pay for medicines.  Patients wind up overpaying and find their choice of medicines restricted.  

All told, about 30 percent of the cost of medicines – about $135 billion – goes directly into the pockets of other health care business. 

Hence, even as drug prices decreased, the rebate-loaded prices – the one’s consumers are stuck with – surged.    Net drug prices (paid to PBMs and insurers) declined 200 percent between 2011 and 2015.   The rebate-loaded price increase by 33 percent over the same time period 




Data source: Medicines Use and Spending in the U.S. – A Review of 2015 and Outlook to 2020






And as the chart above shows over time rebates as a share of price increases has soared from 6.5% in 2011 to 77% in 2015. 

And very little if any of that rebate went to patients.  Rather, as a recent lawsuit against Express Scripts and Anthem reveals, Anthem used an additional $5 billion in rebates generated by raising retail prices to fund stock buybacks in 2009 and 2010 “during the low watermark” of Anthem’s stock price, which ultimately enriched Anthem’s stockholders and management. Anthem could have passed this money on to plan participants in the form of reduced drug pricing, but chose not to do so. “

In fact, the percent of patients facing cost sharing of up to 40 percent of a retail price has soared even as rebate revenue increased.  And the number of drugs with the highest cost sharing amount also generate the most rebates.   Roy calls PBMs collecting rebates market competition.  I think it’s government sanctioned extortion. 

Further, Roy’s assertion that Obamacare forces insurers to pay for expensive brand drugs is wrong.  Just the opposite has taken place: PBMs and insurers are using cost sharing and rationing to discourage using new medicines.

Insurers – with help from the PBMs that design drug formularies are increasing the use of step therapy, prior authorization, cost sharing to limit access.  As the chart below shows, the private companies Roy trusts to create a free market are increasing what consumers pay for a growing number of important drugs:


In 2016, that trend continues: A just published Avalere report finds that nearly 35% of Obamacare health plans use prior authorization and step-therapy for single-source drugs, a 5% increase in utilization management from 2015. From 2015 to 2016, Obamcare plans increased utilization management of hepatitis and mental health medications by more than 15% and oncology and immune medications by more than 10%.

The high cost of drugs is the result of such practices.  Republicans could provide immediate relief to consumers by capping cost sharing and allowing drug companies to provide rebates directly to people to use them to reduce the upfront cost of new medicines.   Instead, Roy would double down on policies that encourage overcharging and rationing by giving government and the three biggest pharmacy benefit companies even more power over the price of and access to new medicines.   

Does he really think that a government created cartel would make medicines affordable instead of enriching the syndicate members?  How does that create a freer affordable market?  His whole approach -- uninformed and pseudo populist – suggests Roy is motivated by political opportunity to join the anti-pharma bandwagon than in truly free markets. 

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Much Congressional ado about ADOs

07/14/2016 07:13 AM | Peter Pitts

Potent report language on Abuse Deterrent Opioids (ADOs) from the House Labor HHS Appropriations Subcommittee Report for Fiscal 2017.

Specifically, "The Committee directs HHS to submit a report to the Committee on Appropriations regarding beneficiary access to ADOs and actions that Congress and the Administration can take to reduce barriers.

ADOs can't help if patients don't have access to them. It's that simple.  Read More & Comment...

Incentivizing Antibiotics

07/13/2016 08:13 AM | Peter Pitts

From the pages of the Los Angeles Times ...

Can the government encourage the development of new antibiotics?

It’s been nearly 30 years since scientists have found a new class of antibiotics. But U.S. lawmakers tried to give the drug industry a boost in 2012.
That year, they passed the Food and Drug Administration Safety and Innovation Act. It included provisions — collectively known as Generating Antibiotic Incentives Now, or GAIN — aimed at streamlining the government approval process for new antibiotics. It also boosted financial paybacks to drug companies that develop them.

The law has spurred the introduction of several new medicines. But none so far represents a new class of antibiotic or treats a drug-resistant strain for which effective medicine does not already exist. They are called “me-too” drugs, created by engineering small changes in the chemical structure of existing antibiotics.

To foster the discovery of truly innovative medicines, drug companies may need to be offered more extensive inducements, including tax breaks or market guarantees, said Peter Pitts, president of the Center for Medicine in the Public Interest and former associate commissioner of the FDA.

The federal government may even need to do what it has done for antiradiation drugs and some vaccines, he said: Pay for their development and buy and stock these products itself  Read More & Comment...

If Brexit, whither EMA?

07/12/2016 05:56 AM | Peter Pitts

If Brexit, whither EMA?

Will Great Britain become like Norway and Iceland, attending committees such as the CHMP, where their views and votes are not of the same standing as those of members of the EU, or choose to follow a different route? There’s a lot at stake for the future of the MHRA and the British public health.

But what about the impact of removing MHRA expertise from EMA?

According to “Perplexit,” by BioCentury’s Steve Usdin, there’s a lot for EMA to worry about. “Since the start of EMA, MHRA has been a major supplier of resources and scientific expertise,” former EMA Executive Director Thomas Lönngren told BioCentury.

Of the 3,678 scientific experts listed in an EMA database, 281, or 8%, are from the U.K. “Taking a leading role in providing scientific and regulatory advice at the European level is a position the agency is familiar with and has maintained this year,” MHRA stated in its 2015 annual report. The U.K. drug regulator noted that in 2014-15 it was given 166 appointments to coordinate CHMP Scientific Advice Working Parties, a figure which represented “the highest number of any member state and reflects the high regard in which the agency’s scientific and regulatory expertise is held.”

MHRA also continued to “have the highest number of rapporteur/corapporteur appointments in Europe” in 2014-15. The agency said the workload is an acknowledgement of the “widely respected knowledge of the MHRA and its assessment processes.”

Since EMA’s creation, MHRA officials have served as rapporteurs for 16.5% of CHMP assessments and as co-rapporteurs for 10% of assessments.
MHRA experts have played a major role in pharmacovigilance assessments, serving as rapporteurs or co-rapporteurs for 29% of Pharmacovigilance Risk Assessment Committee (PRAC) safety investigations.

In addition to leading assessments of applications submitted under EMA’s centralized procedure, the U.K. and MHRA are a top choice for companies using the decentralized procedure to obtain marketing authorizations in several EU countries.

Applicants can select a reference member state (RMS) for decentralized authorizations. In 2014-15 the U.K. “remained the preferred RMS responsible for leading on 195 (45%) of all procedures in which the U.K. was involved,” according to the MHRA annual report.

The U.K. agency has taken a leading position in developing EMA regulatory policies, BioIndustry Association CEO Steve Bates told BioCentury. He cited initiatives to revamp the clinical trials directive into a regulation that will facilitate multisite, multinational trials, EMA’s policies on advanced therapies such as gene and cellular therapies, and the PRIority MEdicines (PRIME) initiative, EMA’s version of FDA’s breakthrough therapies program.

Whatever arrangement is negotiated, a Brexit will likely force EMA and its 890 employees to leave its base in London’s Canary Wharf. EMA employs 60 British nationals, and about 10% of its management positions are held by Brits.
 
With EMA moving to the continent, and MHRA’s loss of status within EMA, will pharmaceutical companies to move their regulatory hubs out of the U.K. To do otherwise, according to Grant Castle, a partner in the London office of the law firm Covington & Burling, “would be like having European marketing authorizations maintained by staff in the U.S., Switzerland or Japan.”
 
Warsaw here we come?  Read More & Comment...

Advancing Companion Diagnostics

07/07/2016 06:34 AM | Peter Pitts

Important news. FDA Commissioner Robert Califf outlined two draft guidance documents addressing regulatory approval of next-generation sequencing (NGS)-based diagnostics. The guidances were presented as part of an update on the White House's Precision Medicine Initiative, which is recruiting a cohort of 1 million volunteers for a longitudinal research study. 


The first guidance, titled "Use of Standards in FDA's Regulatory Oversight of Next Generation Sequencing (NGS)-based In Vitro Diagnostics (IVDs) Used for Diagnosing Germline Diseases," describes FDA-recognized standards to demonstrate test accuracy and provides recommendations for designing, developing and validating NGS-based tests for hereditary diseases. 


FDA said a second guidance, titled "Use of Public Human Genetic Variant Databases to Support Clinical Validity for Next Generation Sequencing (NGS)-based In Vitro Diagnostics" outlines "an easier path for marketing clearance or approval" of NGS tests that would allow developers to use genomic databases to support clinical claims.


Per a report in BioCentury, “Califf said the draft guidances are meant to strike a balance between encouraging innovation and supporting patient safety.” FDA will accept comments on the guidance for 90 days.  Read More & Comment...

For a more independent FDA

07/05/2016 06:58 AM | Peter Pitts

From the pages of the Boston Globe and reporter Ed Silverman ...

Independence would be good for the FDA and the public

 In a moment remarkable for its symbolism, six former Food and Drug Administration commissioners last month sat together on a stage and argued that their former agency needs more autonomy from Washington bureaucracy. The solution: make the FDA independent and maybe give it a cabinet seat at the White House, too.

The idea has been kicked around a few times over the years, but never gained traction. Yet the panel discussion at the Aspen Ideas Festival has refocused attention on the notion that the FDA — and by extension, the American public — would be better off if the agency’s status was elevated. And the suggestion carried still more weight since the former commissioners worked for both Republican and Democratic administrations.

Right now, the FDA is part of the US Department of Health and Human Services, which adds a big layer of officialdom between the agency and the White House. And in a legislative holdover, the FDA budget is overseen by House and Senate agriculture appropriations committees, which may not always be familiar with matters surrounding cutting-edge medical developments.

“An independent agency could work directly with Congress and the White House on a one-to-one basis and create dialogue that could lead to policy changes,” Andrew von Eschenbach, who was FDA commissioner from 2006 through 2009, and is now president Samaritan Health Initiatives, a think tank, told me. “This would put FDA in a much better position to execute its mission.”

To what extent the notion can become reality is uncertain, but it’s worth considering.

Here’s one reason. In December 2011, former HHS Secretary Kathleen Sebelius overruled the FDA and refused to allow an emergency contraceptive pill to be sold over the counter to young teens. This was the first time the HHS took such a step, but it was politically expedient because it allowed the Obama administration to avoid a contentious battle over birth control during a presidential election season.

The decision smacked of malfeasance, but reflected a long-running battle between politicians and scientists over whether the “morning after” pill should be available without a prescription. The Bush administration initially resisted such a move but later allowed over-the-counter access to women 18 and older. In 2009, the Obama administration lowered the age to 17 in response to a federal court order.

Of course, it’s true that even an independent FDA would still remain beholden to the White House, which suggests the potential for political interference will always exist. This is a fact of life in Washington. But cabinet-level status may confer an added benefit, because whoever heads the FDA would, presumably, have more opportunity for direct contact with administration decision makers.

“It may not entirely change the political dynamic, but I think it would be an improvement, because it could make it more difficult to meddle,” said Peter Pitts, a former FDA associate commissioner, who heads the Center for Medicine in the Public Interest, a think tank that is funded, in part, by industry. “You want to make it possible for a commissioner to stand firm and do the right thing,” added Pitts who wasn’t at the Aspen conference.

Toward that end, the top FDA job might also be structured so that there is a fixed term of say, six years, that doesn’t directly overlap with a president’s tenure. Yes, the FDA chief would still be a political appointee, but this approach may encourage a midterm president to find the best candidate, rather than use the appointment as a way to pay a political debt following an election.

Another reason to consider a push for independence is the budget process. Since FDA is part of HHS, its budget is vulnerable to cuts and changes — even before Congress gets to decide what to leave in and what to leave out. By elevating the agency to cabinet-level status, the FDA presumably could have more sway over resources.

“In a way, the FDA has always been a stepchild,” said Ira Loss of Washington Analysis, a consulting firm that tracks the pharmaceutical industry and regulatory policy. “And it often gets trapped in the bureaucracy.”

The challenge is to make a good case for independence.

Right now, the odds seem long. A new administration would have to be convinced to make the idea a priority. And persuading Congress, which seems perennially critical of the FDA and is currently crafting legislation to remake some agency functions, would be a challenge. To speed things along, von Eschenbach noted that a few former commissioners may now consider drafting a joint white paper.

To be sure, there will always be bureaucratic hurdles. That’s the nature of government. But any effort that can recalibrate the balance between bureaucracy and resources should be pursued. The FDA deserves a seat at the table where decisions are made.  Read More & Comment...

JAMA and Pharma Freebies: Same Slander. Different Day.

06/29/2016 08:57 AM | Peter Pitts

From the pages of this morning's Morning Consult:

JAMA and Pharma Freebies: Same Slander. Different Day.

The truth is rarely pure and never simple. -- Oscar Wilde

Much ado about pharma freebies to physicians. Much ado about nothing medically and everything politically.

A new study published by JAMA Internal Medicine (Pharmaceutical Industry–Sponsored Meals and Physician Prescribing Patterns for Medicare Beneficiaries) makes it sound (as Meagan McArdle has written for Bloomberg), that your doctor is “willing to sell you out for the price of a sandwich.” It’s not that simple … or true.

The JAMA methodology:

Cross-sectional study of 279,669 physicians that received industry-sponsored meals (retrieved from Open Payments program) and wrote Medicare part D prescriptions in any of four drug classes: statins, cardioselective beta blockers, angiotensin-converting enzyme inhibitors and angiotensin-receptor blockers (ACE inhibitors and ARBs) and selective serotonin reuptake inhibitors (SSRIs)/serotonin norepinephrine reuptake inhibitors (SNRIs). Prescribing rates of promoted medicines were compared with in-class alternatives adjusted for volume, demographic characteristics, specialty and practice setting.

It’s important to note up front the JAMA conclusion stated that, “The findings represent an association and not a cause and effect relationship.” But you won’t find that in the media coverage. Also, the Open Payments data and Medicare Part D prescription data are not temporally linked. As John Adams points out, “Facts are pesky things.”

Mechanism of association cannot be extrapolated from the methodology of the study; systematic confounding variables such as physician self-selection to attend the educational event and the effect of education itself obscure interpretation of the results. The study design is cross-sectional, only 5 months of payment data may not be representative of a full year and beyond. And, importantly, branded medicines that are often newer may represent advances over older generic agents with regard to efficacy and tolerability.

This is not a new debate nor is it new to the pages of the Journal of the American Medical Association. A widely cited 2000 JAMA article in summarized 29 published studies critiquing the interaction between doctors and drug reps. Notable feature of these articles, as quoted in the summary paper: "No study used patient outcome measures." Absent in 2000 and in 2016 was any discussion of how diagnostic and dispensing decisions are often influenced by external cost-control measures. Both JAMA articles allowed politics to trump the public health. The polite term for this is “normative bias.”

Studies and commentary that discuss alternative findings are generally ignored. In the February 7, 2009 edition of The Lancet, Richard Horton points out that the battle lines being drawn and between clinician, medical research and the pharmaceutical industry are artificial at best -- and dangerous at worst.  Dangerous, because all three constituencies are working towards the same goal -- improved patient outcomes. His main point is that we must dismantle the battlements and embrace of philosophy of "symbiosis not schism."  It's what's in the best interest of the patient.

Information is an important lubricant for markets and yields numerous benefits to market participants. Open, honest, and regular communication is critical for alerting both doctors and patients as to what medicines are available, and for what diseases. No single person, especially a general practitioner, can keep up with all of the information available on drugs, let alone health care. By one estimate every year some 1,700 articles are published in each of 325 professional journals on the 25 top medicines. Drug producers use a variety of promotional efforts to stand out in this information flood. One may like or hate the industry’s tactics, but there is nothing illegitimate about them.
 
Per Dennis Ausiello and Thomas P. Stossel (both of Harvard Medical School):

The real intent of these critics goes far beyond food and trinkets, and its true purpose is to curtail strictly or even eliminate all contacts between physicians and private industry. We strongly oppose this agenda. Despite extensive training, physicians cannot know the details of all products, especially new ones. Therefore, company salespersons complement physicians’ information derived from many sources. They tell physicians about a limited range of products about which their employers train them under strict FDA regulations. We believe that the best approach to optimize cost effectiveness of product prescribing is to promote more, not less, interaction among all stakeholders involved in health-care delivery, including company marketing reps.

From a strictly free market perspective, if there were only one drug company, there would be for that entity to speak with physicians. But who marketed anything in the Soviet Union? Imperfect though the process might be, marketing promotes price competition and lowers prices.
 
According to Paul H, Rubin, Professor of Law and Economics at Emory University and former Chief Advertising Economist at the Federal Trade Commission and Chief Economist at the U.S. Consumer Product Safety Commission:

Drug company reps offer overworked doctors useful, lifesaving information in an efficient manner. The drug companies are of course motivated by profit, but economists have known since Adam Smith that the profit motive is the best way to induce someone to do something useful. Marketing and research are both information activities; they work together to get effective drugs to patients. The two activities are not in competition for resources. The denouncers of drug companies don't understand this. One of the senators sponsoring the bill suggests that "the millions of dollars these companies spend on marketing ... could be put into research." In fact, drug companies would not switch money from marketing to research. If they cannot market drugs in the best way, they will reduce spending on research. What's the point of inventing a new drug if doctors and patients don't know about it?
This is crucial -- in all of the medical literature on drug sales, there was no evidence of harm to patients caused by doctors and drug reps sharing a few slices of pizza. Physicians who, by their oaths put patient welfare first wrote these articles. Yet they were critical of the industry based on analyses that totally ignore the only measure that really counts – patient outcomes.

“Good for sales” and “Good for the public health” are not mutually exclusive.

A valuable takeaway from the new JAMA study should be that wide adoption of Open Payments reporting has led to transparent interactions and value exchanges of education, money and meals between the pharmaceutical industry and prescribers. These data are now available to inform and improve educational efforts to meet the treatment needs of patients using the latest advances in medicine and science. However, such data must be cautiously interpreted with full acknowledgement of study limitations and author bias.

In summary, the new JAMA study is devoid of any data regarding patient outcomes; omits all the variables physicians consider when treating their patients; assumes pharmaceutical sponsored meals are purely social gatherings in which no educational information is shared; and reduces complex prescribing decisions to a simple transaction.

“The best interest of the patient is the only interest to be considered.” -- William Mayo, MD


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Platform Prattle

06/28/2016 06:56 AM | Peter Pitts

Draft Democratic platform calls for both drug importation and direct Federeal negotiation for Medicare and Medicaid.

Populist rhetoric isn't good for the public health.

"Facts," as John Adams said, "are pesky things."

   Read More & Comment...

Frank and Honest Disucssion on the Value of Innovation

06/27/2016 10:26 AM | Peter Pitts

Pharmaceutical innovation has not only revolutionized the field of health care and significantly contributed to the fight against cancer, but it also allows Canadian governments to save billions of dollars. This is the general thrust of a Research Paper published today by the MEI, prepared by Frank R. Lichtenberg, Professor at the Columbia University Graduate School of Business and internationally renowned expert in this field of research.

Taking into account just the effects of new cancer drugs, Canadian governments registered savings of $4.7 billion in hospital expenditure in 2012 alone, whereas total spending on cancer drugs, old and new, was an estimated $3.8 billion that same year.

“If no new drugs had been registered from 1980 to 1997, the number of hospital days in 2012 would have been almost twice as high,” says Professor Lichtenberg, who has published numerous articles on the issue in a variety of scientific journals. “This represents in one single year net savings of at least $900 million for the Canadian health care system.”

The costs of new pharmaceuticals are often the subject of critical media coverage, but their benefits are rarely mentioned. Yet pharmaceutical innovation is responsible for a large part of long-term improvements in the health and longevity of patients.

For example, the premature (before age 75) cancer mortality rate declined by 8.4% from 2000 to 2011 in Canada. This rate would instead have increased by 12.3% in the absence of pharmaceutical innovation, implying that 105,366 years of potential life before age 75 would have been lost in 2011 alone.

“Although new drugs are expensive, this cost is small when compared with the benefits they provide for patients,” argues Professor Lichtenberg.

The publication also points out that financial incentives are a prerequisite for the industry to sustain a robust rate of pharmaceutical innovation. “It is important for drugs to be appropriately priced in order for manufacturers to have the proper incentives to invest in the development of new molecules, a very risky process that can be very expensive for the innovating company,” argues Youri Chassin, Research Director at the MEI.

The Research Paper entitled The Benefits of Pharmaceutical Innovation: Health, Longevity, and Savings was prepared by Frank R. Lichtenberg, Courtney C. Brown Professor at Columbia University Graduate School of Business and Associate Researcher at the Montreal Economic Institute. This publication is available here.
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ICER's Moral Vision: Repair Potholes Instead of Rescuing Lung Cancer Patients

06/23/2016 03:34 PM | Robert Goldberg

After concluding that because myeloma drugs keep people alive longer they cost too much to be cost-effective, ICER through it’s Midwest Comparative Effectiveness Public Advisory Council (Midwest CEPAC) is now looking at new drugs for treating people with non small lung cancer.

And ICER’s Steve Pearson wants you to know that he and his organization care about patients.   ICER’s website has a video of Pearson speaking before the Midwest CEPAC meeting entitled:  “Why we are here today” – Dr. Pearson underscores the moral vision of the Midwest CEPAC”   (Yes, that's the title


In proclaiming this moral vision Pearson said: “we really want to know from patients what outcomes matter most to them.”

He also claims that the quality adjusted life year does not mean a life is “less valuable if they have or disability. a gain is a gain wherever you are starting from.  Sometimes there are conditions where we have a serious condition and the first possible treatment, that’s an important consideration.”

These are outright falsehoods that hide Pearson’s real moral vision.  

Pearson – and ICER – are using a superficially low QALY measure that does NOT take into account what matters to patients, by overstating and misrepresenting the price of new medicines and by clearly using budget caps to cut off and ration care.

And ICER’s metrics and methods are indeed driven by Pearson’s moral vision which he stated clearly in an article entitled: “Which Orphans Will Find a Home: The Rule of Rescue in Resource Allocation for Rare Diseases” where he tells us what he really thinks about lung cancer patients: 

(Spoiler alert:  Pearson thinks lung cancer patients are underserving whiners. )

Before directly attacking lung cancer patients, Pearson argues “There is no apparent obligation to rescue identifiable rare disease patients based on a duty of rescue within personal morality.” 

But what about, as Pearson said, taking into account new treatments for people with the most serious conditions and few options?  

“In practice, however, a sickest-first principle might require allocation of resources even when only minor gains can be achieved and the cost is very high, which is obviously inefficient…coverage decisions must not only incorporate consideration of the benefits gained
but the opportunity costs incurred when covering expensive orphan drugs.

And contrary to Pearson’s claim about not considering cost in recommending what drugs to use, he clearly regards the growing number of expensive therapies that offer benefit only to small populations” to “ensure that an undue burden is not
placed on others for the sake of a few.” 


Then Pearson goes on to show that people with non small cell lung cancer aren’t worth spending money on based on his/ICER’s estimate of opportunity cost. 

First, he claims, contrary to his desire to engage patients, that patient advocacy is a pain in the ass that gets in the way of making cost-based decisions for the good of all:

“Publicity can be a powerful and important tool for advocacy groups, but it is not an appropriate ethical justification for coverage of particular orphan drugs over others.”  

Note that people said the same thing when AIDS activists were demanding faster and broader access to new medicines. 

And he singles out people with lung cancer as a patient group that is unethically using advocacy: the pressure to treat every (lung cancer) patient is a product of lobbying and driven largely by the heightened public consciousness surrounding lung cancer.”

With that bias, Pearson then applies ICER’s benchmark for limiting access to new drugs (in this case Erbitux or cetuximab) based on QALY and budget impact: 

“Lung cancer is often lethal, but the marginal benefits of cetuximab are quite modest. The average survival advantage from adding cetuximab to the standard treatment regimen is approximately five weeks. Cetuximab treatment is also associated with higher frequencies of rash, diarrhea, and febrile neutropenia, a condition that increases the risk of infection. And, lastly, cetuximab is expensive at both the individual and
population level.

Although nonsmall cell lung cancer is technically a rare disease, 60,000 patients are diagnosed with the illness each year in the United States. The treatment costs for each individual patient average approximately $80,000, which translates into an expenditure of $4.8
billion dollars per year. " (My note: In fact, Erbitux total revenues worldwide in 2015 were $2.2 billion)

Pearson concludes: “Considering the sources of identifiability (patient advocacy), the marginal impact on the length and quality of life, and the implicit opportunity costs of this level of expenditure, our framework would suggest that public and private insurers would be justified in refusing to pay for cetuximab.”

Pearson believes that unless someone like ICER decides what a life is worth and how much to spend on it, people with rare and fatal conditions – the sickest first -- will be “siphoning off resources for other things we need like better schools and more resources for local police, roads and bridges.”

That’s Pearson’s true moral vision.  Refuse to pay for lung cancer drugs and spend the dough on pothole repair.  

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CREATing a generic "get out of jail free" card

06/23/2016 03:03 PM | Peter Pitts

From the pages of Drug Industry Daily …

Lawmakers, Generics Companies Praise CREATES Act

Senate Judiciary Committee members and generics makers Tuesday both sung the praises of a bill aimed at preventing branded drugmakers from restricting access to their products. The bill is aimed at companies that restrict access to samples, thereby preventing generics companies from reverse-engineering a product, or requesting a distribution safety protocol and then blocking generic companies from participating.

Innovator drug companies came under fire during the subcommittee hearing, with both senators and generic drugmakers accusing them of using the FDA-mandated REMS process to block generic competition.

Beth Zelnick-Kaufman, assistant general counsel at generics maker Amneal Pharmaceuticals, said the CREATES Act “provides necessary remedies” when innovators refuse to provide samples of their product.

Zelnick-Kaufman cited an example of her company attempting to join a brand REMS with an unidentified drugmaker to launch a product designed to treat drug addiction. She said the brand made $1 billion as a result of delay tactics. The unnamed company’s effort to block generic access ended only after the FDA issued its first waiver of the REMS requirement, she said.

Robin Feldman, a professor at the University of California Hastings College Of Law, also applauded the bill. She cited a study she is currently conducting which has found the increase of REMS abuse to be “abundantly clear.” She said the result of REMS abuse delays has cost billions of dollars in savings in recent years.

Only one of the six panelists demonstrated some degree of opposition to the bill. Peter Safir of the law firm Covington & Burling expressed concerns over the consistency of the CREATES Act with the language of the FD&C Act.

Safir notes that FD&C Act includes several civil and criminal penalties that can be brought against drugmakers for violating a single REMS requirement, saying the CREATES Act fails to amend the FD&C Act to protect innovators. He says this can confuse the brand name drugmakers and expose them to enforcement.

Peter Pitts, president and founder of the Center for Medicine in the Public Interest and a former FDA associate commissioner, also expressed some reservations about the bill. He told DID that the bill significantly overreaches what it wants to accomplish, which could result in unintended consequences to patient safety.

Pitts also described the bill as a “get out of jail free card” for generics makers.

PhRMA spokeswoman Holly Campbell told DID that the drug lobby is currently reviewing the legislation, but that it would be concerned if it jeopardizes patient safety in regards to REMS.

The CREATES Act was introduced last week by members of the Senate Judiciary Committee, including Chairman Sen. Chuck Grassley (R-Iowa), ranking member Patrick Leahy (D-Vt.), Sen. Amy Klobuchar (D-Minn.) and Sen. Mike Lee (R-Utah).

The Senate Judiciary Committee did not return a request for comment by press time as to whether a date for a vote has been set.  Read More & Comment...