Why Is The Media Sticking It to the EpiPen

08/24/2016 04:08 PM |

Now a few words about the outrage over EpiPen prices. 
 
The EpiPen’s list price has increased before.  And the list price of other generic drugs had been increasing even more.  A lot more as the chart below (courtesy of the wise and charming Adam Fein from his wise and charming blog Drugchannels) shows. 
 


In general, these list price hikes reflect increased cost of production and the fact that the only way to increase revenue is to increase prices to account for federal price controls on Medicaid prices, rebates, discounts, etc.
 
EpiPen’s price hike was modest compared to others on the list.
 
Meanwhile, the spike in generic prices have abated as the FDA cleared the backlog of generic drug approvals. 
 
So why the outrage now? And why Mylan’s EpiPen?
 
First, last November Sanofi ($SNY) pulled the main competitor for EpiPen--Auvi-Q--from the market, a turn of events that at time looked as if it “should keep Mylan dominating the epinephrine injection field.”
 
Mylan already had 85 percent market share.
 
It’s been running ads for EpiPen ever since.  In fact, Mylan ran so many EpiPen commercials during the Olympics I started to wonder if self-injection was a new competitive sport.  (It’s not.) 
 
Meanwhile CVS and Express Scripts removed another competitor, Andrenaclick, from it’s formularies.   Andrenclick retails at $141 while EpiPen retails at around $600.  You tell me why Express Scripts and CVS tossed it from it’s formularies.
 
At the same time, CVS and Express Scripts moved EpiPen from the lowest cost sharing tier to the highest cost sharing tier most likely to extract rebates from Mylan.   Mylan could have said no, which led the PBMs to retaliate.  Mylan could have responded by just increasing the amount of money going to patients directly to reduce out of pocket costs. And for the most part, it did as Consumer Reports points out:
 
“Such is the case for Tracy Bush, of Pfafftown, N.C., whose 14-year-old son relies on EpiPen for his allergies to nuts, eggs, and other foods. Bush has watched the price of EpiPen increase over the past nine years from $146 for a two-pack to more than $600. The total cost of Bush's recent prescription for three EpiPen two-packs came to $1,819.08.  Fortunately for Bush, her insurance along with the co-pay coupon she gets through the drug's manufacturer, Mylan, covers a large portion of the costs.”
 
So what changed was the out of pocket cost of the EpiPen vs the acquisition price of the injectable which can be as low as $240 per two pak (the federal Medicaid price limit).   
 
Mylan offers a coupon that reduces co-pays for insured patients by up to $100 per prescription (for up to a maximum of three two-pack cartons per prescription). Patients without insurance can apply to get EpiPens for free through Mylan’s patient assistance program.
 
So why the outrage?  And why is it only directed at Mylan.
 
Because it fits the narrative, which is: Big Pharma has monopoly power to jack up prices as a high as they want and force people to go without life saving medicines. 
 
 And we are in a season of silliness in which economic illiterates propose price controls and patent seizures to cut costs.  (See the incredibly stupid article in JAMA by a bunch of doctors masquerading as real economist entitled The High Cost of Prescription Drugs.  There is a reason such crap is published by JAMA and other medical journals.  Because the research and approach is so shoddy that it could never pass a peer-review threshold in a real journal of economics.  But then again, the media is not interested in differentiating between real economics and propaganda. )
 
The truth is the EpiPen was probably priced too low to increase capacity fast enough to handle the fact that it’s main competitor’s product tanked.   (I think many medicines are price too low given the unmet medicical needs and the huge investment it will take to tackle diseases with innovative medicines. ) And it was price too low in 2007 ($60) for value it delivers, namely saving a child from a potentially fatal anaphylactic shock.   The prevention is a bargain for insurers too who otherwise would be required to pay for 1000 times more than the cost of an EpiPen 2-pak in hospital, rehab services. 
 
Further, Mylan is now in the innovator pharma space.  In 2014 Mylan invested in a Theravance Biopharma product called Revefenacin, a once-daily, nebulized long-acting muscarinic antagonist (LAMA) to treat chronic pulmonary obstructive disorder. 
 
You see, the improved quality of treatment via EpiPens, reducing the use of high cost medical services and sparing parents the terror of seeing their child choke to death before their eyes.  And some of the profits have gone to executive bonuses.  So what?  Most of it is going into new medicines.
 
Meanwhile, competitors have seen the market for injectable ephrinefrine explode.  Other companies are developing products to compete with Mylan.  FDA regulation is a bitch, requiring time and money.  But eventually there will be more than one EpiPen competitor.
 
All this is truth.  But it conflicts with the evil Pharma narrative that can be recycled again and again without any originality to generate clicks.  The increasingly banal and predictable reporting at Forbes, Bloomberg, the New York Times and WSJ are cases in point.  And the reporting is banal and predictable because it is not truthful.   As Jonah Goldberg once observed: Journalists define the powerless and powerful based on their own preferred narratives. When the truth interferes with the narrative, the truth must be bent or jettisoned.


 
 
 
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Mylan's "Perfect Storm of Stupidity"

08/24/2016 03:53 PM | Peter Pitts

It’s as though Turingfreude never made it to Mylan HQ.

Dramatically raising prices on Epipen during a political cycle?  Really? That’s the new dictionary definition of (among other things) being tone deaf.
And to make matters even worse, the head honcho at Mylan, Heather Bresch is the daughter of US Senator Joe Manchin (D, WVA). That’s gotta be embarrassing.

The naivity is … Breschtaking.

Have a look at my comments during CNBC’s Power Lunch.

Folks -- you just cannot make this stuff up.
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If you’re taking a biologic, you’ve got a friend in Pennsylvania

08/17/2016 11:06 AM | Peter Pitts

When it comes to protecting and advancing the public health, some states are leaders, others laggards. Consider biosimilars.

On July 20, Pennsylvania Governor Tom Wolf signed into law Senate Bill 514, which allows pharmacists to substitute for a brand name biological product a less expensive biosimilar product that has been deemed interchangeable by the FDA. Pennsylvania is one of 25 states and territories to enact such a law.

Under the Pennsylvania law, a pharmacist may substitute a biosimilar for a prescribed biologic product only if (1) the biosimilar has been determined by the FDA to be interchangeable with the prescribed product, (2) the prescriber does not designate verbally or in writing on the prescription for that product that substitution is prohibited, and (3) the person presenting the prescription receives notification of such substitution. 

A pharmacist must also communicate the substitution to the prescribing physician, unless it is a refill prescription of the same previously dispensed interchangeable biosimilar. 

It’s important to note that none of the biosimilars currently approved by the FDA have been approved as “interchangeable.” At least not yet – but as soon as the FDA completes its regulatory pathway, there will be – and there will be many. Those states with Pennsylvania-like legislation in place will recognize larger savings and sounder patient safety faster. That’s a potent public health double play that the folks in Harrisburg have already figured out. It’s time for every state to pay attention.
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Embracing Satan's PDUFA

08/16/2016 08:23 AM | Peter Pitts

Yesterday’s public meeting on the FDA’s PDUFA VI Commitment Letter was a love-fest (mostly) – but as Theresa Mullin, Director of CDER’s Office of Strategic Programs, wisely noted, “the devil is in the details. Indeed.

The meeting was in three panels: Pre-Market Review and Post-Market Safety, Regulatory Decision Tools, and Administrative Enhancements.

A few highlights and comments.

Opening up the day, CDER Director Dr. Janet Woodcock commented that, since the introduction of the first PDUFA in 1993, “It’s a brave new world.” That’s certainly true, but some have been braver than others. As Aldous Huxley wrote in his novel, A Brave New World, ““Most human beings have an almost infinite capacity for taking things for granted.”

Janet (and later on others) spoke about PDUFA VI building a Patient-Focused Drug Development (PFDD) “Bridge.” In other words, moving from holding meetings to developing “fit-for-purpose tools to better reflect the benefit/risk calculus of patients.” A key point, via Janet, is that by doing this the FDA will not be the PFDD “bottleneck." The devil is in the details.

She also pointed to a fully operational and funded Sentinel program as a linchpin not just for advancing safety (specifically pharmacovigilance) more broadly, but also for accelerating the ecosystem of Real World Evidence. RWE was a major focus of the meeting. More to follow. Albeit to say – the devil is in the details.

The factoid of the day was that in FY2015 (to date), the FDA has held over 3000 PDUFA meeting requests. Don’t even bother doing the math, because that doesn’t include the intense meeting preparation division staff must undertake prior to any actual face-to-face (or teleconference) encounters. This is a highly significant statistic insofar as there was much discussion on enhancing sponsor-agency communications. Is more always better? It depends. As Walter Gropius said, “Less is more. But more tastes better.” Communications must now be more about quality than quantity but, from a PDUFA perspective, how can that be measured?

In a small but important improvement, the FDA will provide 72-hour notice to all manufacturers whose products will appear in the quarterly FDAAA-mandated Public Notification of Emerging Postmarket Medical Device Signals (921 Safety Notices).

Per Sentinel, it was mentioned a number of times (including on an FDA slide) that it will be used to “inform important regulatory decisions.” Does this mean Sentinel data will be used “beyond risk” to also “inform” FDA thinking on potential new benefits? Will Sentinel become a tool for validating Real World Evidence? That was not discussed – but maybe it’s time for it to be put on the table, perhaps at one of the RWE meetings promised in the agency’s commitment letter.

As promised, the FDA will publish an updated version of its Structured Approach to Benefit/Risk Assessment in Drug Regulatory Decision-Making. It’s been an arduous journey. It’s important to remember that the key tenet of the PDUFA philosophy isn’t speed, but predictability, and the ability to understand regulatory decision-making (and, ultimately reproducibility) is crucial. This is important for many reasons, not the least of which is the ever-increasing costs of drug development.

There was (Finally! At last!) much discussion about “staff capacity.” Not just more, but better. Not just quantity, but quality. One specific conversation focused on the need for better reviewer understanding of and training in adaptive clinical trial design models. Let’s face it, there aren’t a lot of people inside the FDA considered expert in (among other things) Bayesian statistical design. Better MAPPS and SOPPS (Manual of Policies & Procedures, Standard Operating Policies & Procedures), that were promised and they will help. There have to be internal rules of the 21st century regulatory road as well as external guidance but – the devil is in the details.

Some positive forward motion on biomarker prequalification. Among other things, the FDA will create a website listing the biomarkers it’s working on. Per the agency's presentation, this is designed to help stimulate further development. It’s a start and more needs to be done. (More, always more!) But without the internal expertise, how is the FDA to parse its expert resources? Maybe it’s time for a more serious discussion of intramural cooperation. FDA needs adequate resources – beyond PDUFA funding -- to provide advice and oversee review and decision-making. One solution is to partner with an external entity (perhaps an Intramural Biomarker Consortium-IBC) to develop early advice and serve as an expert sounding board for nascent biomarker efforts.  The IBC could be a required or voluntary resource in the review process, especially for initial data package reviews. This approach would allow FDA staff to focus on their primary role of product review and regulatory oversight.

PDUFA is an important path, but it isn’t the only one.

All present (FDA staff, patient groups, industry representatives) were very excited about the opportunities of PFDD next steps and Real World Evidence. But how to get there? As BIO’s Kay Holcombe said, “We cannot put anecdotes on the drug label.” Real World Evidence is the new star on the precision medicine horizon. But the tool set for using this treasure trove of healthcare information is nascent and the tasks as are daunting as the opportunities. Patient passion is important to share. When combined with data and a more dispassionate understanding of regulatory paradigms, a patient-driven pathway can and must evolve into a tool used to impact regulatory decision-making. The devil is in the details.

The most decidedly unsexy but most honest and important part of the meeting came last – a discussion of “administrative enhancements” including electronic submissions and data standard activities, hiring capacity, and financial management. It’s important to note that PDUFA VI is the first time that “hiring capacity” has been directly addressed – and it’s about time. The FDA must have the firepower to not only retain but to aggressively recruit the best and the brightest. Again, it’s not just about body count (quantity) but quality. Quality is not what you put in. It’s what you get out. “Staff capacity” means more (a lot more) than PDUFA-measurable hiring numbers. We need a PDUFA quality metric.

In the immortal words of Admiral Hyman Rickover, “The devil is in the details, but so is salvation.  Read More & Comment...

Why ICER Can't Be Trusted

08/15/2016 11:31 AM |

ICER has come out with a response to what it defines as myths about it’s funding, approach and mission.  The rejoinder is an excellent example of President Kennedy’s observation that “the great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic.”

ICER wants to be perceived as trusted non profit organization that is identifying the best medicines at prices patients can afford.  As ICER puts it: “How can we make sure that we can afford the innovation we want for patients in the future?” 

And it believes, led by Steve Pearson, ICER’s believer in chief, tha unless ICER rolls up their sleeves to determine the prices of new medicines and who should get them  drug spending “would contribute to an increase in overall health care costs at a rate greater than growth in the overall national economy, (and) health system value would be diminished.”

ICER’s publication takes issue with several so-called myths. Some of them address criticism about their belief that an additional year of life is at maximum worth $150K.  Another deals with how little ICER includes patient perspectives of health value.  I will deal with those in another post. 

For now,   I will deal with the criticisms I have raised about ICER that it has tried to refute 

Myth #5: ICER wants to take money from dying patients in order to “fix potholes.”

 ICER claims “much of the more recent criticism has been fueled by a lack of knowledge about ICER or even willful mischaracterization by those who oppose a move toward pricing in alignment with the added value for patients.  Some of these distortions have taken on a life of their own, threatening to make it more difficult for patient groups and others to engage constructively in our report development and in the broader debates now going on about value assessment and drug pricing.”

In particular, ICER is ticked off  that I claimed that ICER wants to take money from dying patients in order to “fix potholes.”  Let’s give Pearson and ICER the floor:

Truth:

This is one of the more remarkable and malicious mischaracterizations of our intentions.
In introducing the broader social and ethical questions that ICER reports are supposed to help address through public dialogue, we have shown data from the state of Massachusetts demonstrating that state spending on health care has risen nearly 60% in the last decade. We also show data on where that money came from: steep reductions in spending on every other major type of social service, including education, fire and police protection, housing, public health, and infrastructure.  The same story is echoed in state houses around the country: health care costs are growing rapidly, severely impinging on the ability of states to maintain other services.  This obviously does not imply that ICER wants dying patients to be denied treatment in order to fix potholes.  What it does mean is that we hope that our reports and the public meetings we convene can lead to a more robust and honest discussion about the real choices and trade-offs that are being made in spending at the state and national level.  If the shared hope is to be able to provide innovative drugs for all patients with serious illness, and to be able to also afford good education for our children and other services, then we believe that transparent discussions about whether prices for drugs and other health care services are reasonably aligned with the value they bring to patients are an important way to help us get there.”


It is true that I posted a blog  “ICER's Moral Vision: Repair Potholes Instead of Rescuing Lung Cancer Patients”

I used that title because it seemed to capture Pearson’s moral vision. Here’s what he said about lung cancer treatments in article he wrote in 2012 entitled "Which Orphans Will Find a Home":

“Considering…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 (a lung cancer drug).”

Of note, Pearson claims that lung cancer patients aren't really that sick.  They are just louder than other groups.  Pearson claims just because an advocacy group creates awareness of a specific disease or need, that's no reason to cover new  medicines.  In the case of lung cancer drugs Pearson writes: demand is" driven largely by the heightened public consciousness" and that there is "no..obligation to rescue identifiable rare disease patients based on a duty of rescue within personal morality."

Which ties into another charge I have raised that ICER seeks to rebut: the use of QALY’s discriminates against the sickest patients is a myth. (So-called)  It claims:

“In fact, starting out with a lower quality of life, whether through a serious illness or disability, offers more “room” for improvement, giving treatments for patients with serious conditions more opportunity to show improvement compared to treatments for patients whose baseline condition is already near perfect health.”

But that is NOT how QALY is applied.  Pearson has stated “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 and ICER are clearly targeted what they believe are “ 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.” 

In addition, ICER and Pearson regards living longer, the result produced cumulatively by new drugs, as a cost which, if it exceeds a specific amount of spending per drug estalblished by ICER, would diminish health system value.  

Indeed, as ICER points out it's measurement of QALY is conducted " from a health system perspective, and so does not incorporate costs and effects that might be relevant from a societal perspective, such as productivity, transportation, or caregiver costs."

Moreover,  ICER measures costs as the combination of "new treatment on top of existing treatment, as is the case for multiple myeloma drugs.." That "means that to reach standard cost-effectiveness levels the entire regimen, including the older, existing drugs that are part of the regimen, would need to be deeply discounted, or certain costs must be considered “unrelated” and excluded from the economic evaluation.
Pearson's response: "At current wholesale acquisition costs, the estimated long-term cost-effectiveness of these regimens exceeds commonly-cited thresholds."  

In other words, myeloma treatments surge about the ICER QALY cap of $150K because people are living longer and have more options to increase survival.  They are therefore, from ICER's perspective (and the insurer's perspective a noted above) new drugs that extend life will NEVER be cost-effective. 

With regard to the pothole vs dying patient “myth" I was simply writing based on a FAQ that ICER had posted on it’s website until recently but is no longer available:

“When we’re paying for drugs and don’t know the drug’s value, individually, we may pay more out of pocket and more for insurance. While if we’re covered at work and our employer is paying more in premiums, we may not get as big a raise as we otherwise would have. We also pay more in taxes as the government (Medicare, Medicaid, and federal employees) has to pay more for health care.  We’re siphoning off resources for other things we need like better schools and more resources for local police, roads and bridges.”

But the claim that spending money on drugs drains money away from other services is an outright falsehood.


Source: National Assoc. of State Budget Officers

As the chart above demonstrates, state Medicaid spending has increased slightly, while other expenditures have remained stable or increased slightly.  (Transportation being an exception.)  Doesn't look like a siphon to me. 

And here’s a look at the Massachusetts budget ICER claims is being savaged by the use of drugs that are expensive and not very valuable (like drugs for dying lung cancer patients, as Pearson suggested.) 


Source: Massbudget.org

Turns out Medicaid spending in Massachusetts declined as a percentage of total state spending from 2004-2014.


Finally, let me show that for all of ICER’s deception and spin, Medicaid spending on drugs has remained about the same percentage of total Medicaid spending for the past decade.   



(Source, CMS) 


Ask yourself this question: If we can't trust ICER to present accurate data about the impact of drug spending on our economy or governent expenditures, can we trust it, as it wants us to do, to determine patient access to new medicines?



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Bayer exonerated per Essure. Where's the MSM coverage?

08/12/2016 02:13 PM | Peter Pitts

Judge dismisses 1,225 cases against Bayer Healthcare

Fairfield County Business Journal

By Bill Heltzel

August 11, 2016
 
A federal judge in White Plains has dismissed 1,225 lawsuits against Bayer Healthcare Pharmaceuticals that were filed by women who claimed that the company’s contraceptive device injured them.

U.S. District Court Judge Cathy Seibel concluded that the absence of expert testimony made it impossible to prove that the device can injure women after it was inserted.

“No reasonable jury could find in favor of plaintiffs because there is no evidence in the record from which a jury could find that secondary perforation exists and is capable of causing plaintiffs’ injuries,” Seibel wrote in a July 28 opinion.

“The court reaches this conclusion reluctantly, knowing that it will doom hundreds of cases,” she said, “but in the court’s view it is compelled by the law.”

The U.S. Food and Drug Administration approved Bayer’s Mirena intra-uterine contraceptive device in 2000.

The small, plastic T-shaped IUD releases a continuous dose of a hormone that reduces the chances of pregnancy. A trained health care provider implants the device.

Mirena has been marketed as a convenient form of birth control. It is meant to last for up to five years and it can be removed if a woman wanted to become pregnant.

Women who sued Bayer complained of side effects, such as perforation of the uterus, pelvic inflammatory disease and ectopic pregnancy. Many said the device shifted and caused internal injuries.

The legal issues, Seibel said, are when perforations occur and whether the label adequately warned of all risks associated with perforation.

The Mirena label went through a few versions. For years, it said “perforation or penetration of the uterine wall or cervix may occur during insertion.” In 2014, the label said perforation “may occur most often during insertion.”

Bayer argued that the scientific consensus was that perforations cannot occur after the device is implanted. The plaintiffs contended that secondary perforations can occur.

In March, Seibel barred testimony from seven expert witnesses for the women, concluding that they were unqualified or unreliable to offer expert opinions on clinical issues, causation or regulatory issues.

A biomedical engineer, for example, had no experience with IUDs or hormonal contraception devices like Mirena and no particular familiarity with the anatomy of the uterus. His only experience with the hormone used in Mirena came from reviewing articles that the plaintiffs’ counsel gave him and that he copied and pasted into his expert report.

“This is not the level of rigor an expert in the field would apply and does not pass muster,” Seibel concluded.

A professor of physiology presented a theory on secondary perforation “without confronting scientific literature that refutes this notion,” casting doubt on her reliability.

The plaintiffs’ attorneys tried to salvage their cases by arguing that other evidence could prove their cases. But Seibel ruled that allowing such admissions to substitute for expert testimony would defeat state laws that require experts and would leave the jury to speculate about the cause of injuries.

In 2013, when about 40 cases were pending in 17 federal districts, the Judicial Panel on Multidistrict Litigation consolidated the lawsuits.

The cases shared common factual issues on the alleged risks of perforation and migration and on the adequacy of the product label, the panel said. Placing all cases under one judge would make it easier to accommodate everyone in the pretrial proceedings.

The panel chose the Southern District of New York because it is near Bayer operations in Connecticut, New Jersey, New York and Pennsylvania, where the primary witnesses and documentary evidence would likely be located. The district also is easy to reach for plaintiffs around the country.

Bayer Healthcare once operated a facility in Tarrytown. The operations were moved in 2013 when the Bayer subsidiary opened a new U.S. headquarters in Whippany, N.J.

The panel chose Seibel because she was already presiding over three related cases, “and she is an experienced transferee judge who we are confident will steer this litigation on a prudent course.”
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Danger in drugs from Canada

08/11/2016 02:27 PM | Peter Pitts

Via The Washington Times:

Danger in drugs from Canada

Clinton and Trump are both wrong on importation


ANALYSIS/OPINION:

When it comes to health care reform, Hillary Clinton and Donald Trump have something in common — and it’s dangerously wrong. They support drug importation “from Canada.” It’s a sound-bite solution that won’t offer lower prices but will result in a public health calamity.

Importing drugs from Canada is exceedingly dangerous for a number of reasons. For starters, many internet pharmacies based up north are stocked with drugs from the European Union. And while many people wouldn’t hesitate to take medicines purchased from countries like France, Germany and Great Britain, there’s plenty of risk involved.

The EU currently operates under a system of “parallel trade,” which allows products to be freely imported between member countries. This means that any drugs exported from the United Kingdom to Canada could have originated in an EU country with significantly less rigorous safety regulations, like Greece, Portugal, Latvia or Malta.

Just last year, EU officials seized more than 34 million fake pills in just two months. And in May, Irish drug enforcers confiscated over 1.7 million pounds of counterfeit and illegal drug packages. So if American customers start buying drugs over the internet from Canadian pharmacies, they could easily wind up with tainted medicines of unknown European origin.
It’s also important to note that drugs from anywhere in Europe aren’t even legal for sale in Canada. So when politicians say we can get “the same drugs” that Canadians get, they’re just plain wrong.

Even more worrisome is outright fraud — many “Canadian” pharmacies are actually headquartered somewhere else. Far too often, importing drugs of unknown quality from sketchy pharmacy websites ends in tragedy. Consider the case of one Texas emergency-room doctor, who suffered a stroke after importing what he thought was a popular weight-loss drug. The online pharmacy had actually substituted the doctor’s ordered drug for a counterfeit, stroke-inducing medication shipped in from China. If medical professionals can’t tell the difference between real and counterfeit drugs, regular patients don’t stand a chance.

A 2005 investigation by the Food and Drug Administration (FDA) looked at 4,000 drug shipments coming into the United States. Almost half of them claimed to be from Canada. Of those, fully 85 percent were actually from countries such as India, Vanuatu and Costa Rica.

As part of another investigation, FDA officials bought three popular drugs from two internet pharmacies claiming to be “located in, and operated out of, Canada.” Both websites had Canadian flags on their websites. Yet neither the pharmacies nor the drugs were actually from Canada.

The on-the-ground reality of state and local importation schemes has been dismal and politically embarrassing. Remember Illinois’ high profile “I-Save-RX” program? During 19 months, only 3,689 Illinois residents used the program — that’s .02 percent of the population.

Programs like this wouldn’t do any better on a national basis. A study by the nonpartisan Congressional Budget Office showed that importation would reduce our nation’s spending on prescription medicines a whopping 0.1 percent — and that’s not including the tens of millions of dollars the FDA would need to oversee drug safety for the dozen or so nations generally involved in foreign drug importation schemes. And generic drugs (which represent more than 85 percent of the medicines dispensed in the U.S.) are cheaper here at home than in Canada.

Calling foreign drug importation “reimportation” is a clever way to sell the idea to the American people. But the term simply doesn’t fit with the facts. In reality, in addition to importing foreign price controls, Americans would end up jeopardizing their health by purchasing unsafe drugs while not saving money.

A better policy for both candidates would be to focus on the issue of increasing insurance company co-pays. American patients who head up north or online are motivated by the cut-rate prices they see on the web. Health insurers could help patients avoid this temptation by reducing their co-pays for drug purchases, particularly for low-income patients. If drugs become more affordable in the states, patients won’t feel the urge to look for a bargain abroad.

Dropping drug co-pays would also help patients stick to their prescribed treatment regimes. All too often, people skip a dose, don’t get a refill, or stop taking their drugs prematurely in order to save money. In the long run, though, not adhering to a drug regimen leaves patients less healthy — and increases national medical expenses by an estimated $300 billion annually.

• Peter J. Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest.  Read More & Comment...

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

08/10/2016 03:58 PM |

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 |

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 |

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 |

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 |

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. 

   Read More & Comment...

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...