Peter Bach Values PBM Profits Over Patient's

05/11/2016 05:17 PM | Robert Goldberg

The American Journal of Managed Care ran a Q&A with Express Scripts and ICER consultant Peter Bach about his " DrugAbacus, the importance of using value frameworks, and using the European market as a model to recalibrate the healthcare system in the United States.

Bach likes to claim that he trying to reduce the mismatch between value and price.   That is a presumption without much basis in fact and is largely shaped by his Malthusian definition of value.   
 
Let's once again prove that Bach has an ideological axe to grind that has nothing to do with reality.  

In his interview, Bach claims that "it’s impossible to convince yourself that we are getting any incremental value, period, let alone any incremental value of the excess spending. If we compare ourselves with other countries, there does not seem to be any rationale, except that we simply spend more for all units of healthcare"  

I will get to his inaccurate assertion about other countries in a bit.  But first, let's look at his claim about incrementalism, one he has been repeating for several years.  Today and yesterday, Bach has ignored how cancer survivorship and life expectancy steadily increased over the past 20 years.   More recently, new drugs for lung cancer have doubled response rates and increased survival by 45 percent.  The total drug cost per patient (which includes the part of the price going to PBM rebates, etc.) is estimated to be between $36000-98000.   

He may believe that the  additional increment of average survival (which ignores genomic variation) is not worth spending money on.  But that ignores the fact that treatments are targeted to smaller populations that have fewer options than previous generations.  And he decidely believes that being able to live long enough to benefit from future medicines is a waste of time and money.

Bach knows better.  After all, one of his co-authors in the paper he cites in his NEJM oral hallucination about new drugs not adding more survival despite higher prices, makes that very point in another study: " In the absence of significant pricing and total oncology outlay flexibility by payers, our analysis suggests that private sector investment in small oncology segments, and in stratified medicine generally, may not prove economically sustainable, thus endangering the translation of scientific advances into bedside medicines. Beyond increasing reimbursement, decreasing development cycle time and costs, or both, would most directly improve the economic incentives facing developers. By contrast, extending exclusivity periods, or initiating advance market commitments and awarding prizes would likely have less impact and involve greater implementation challenges." (Trusheim, Berndt "Economics of Stratified Medicine" Personalized Medicine (2012) 9(4), 413–427)  
 
2.  Bach's main point: "The reality is that the drivers of healthcare spending in the US are unit price, not volume."
 To prove his claim Bach asserts: So, if we want to manage healthcare spending, you can make the argument that the excess price above that, which is being paid ambiently in European countries, is actually wasted dollars. It does not make the pill any better by paying 4 times as much for it."

That is untrue on two levels with respect to drugs. 
 
In developed markets, most growth is from new brands and increased volume, not price.  As the chart (from the IHI Oncology Trend Report: 2015) 
 

 
The IHI report notes: "Oncology drug spending has risen slightly as a percentage of total drug spending over the past five
years in all regions, most notably in the EU5 countries where oncology now represents 14.7% of total
drug spending, up from 13.3% in 2010, while the U.S. has seen oncology increase more modestly from
10.7% to 11.3% of total drug spending over the same period."


Indeed, the US rate of spending was lower compared to Europe even though  US adopts new medicines more quickly than Europe and other developed countries.  
 
 
 
 Yet the share of oncology of total drug spend is lower and increased more slowly in the US.
 
  
The IHI report estimates total spending on cancer drugs in the US is $42 billion.   Forty eight percent of that spend is for targeted therapies ($20 billion)   Total drug spending was $425 billion (without rebates) so new therapies are about 4.7 percent or that amount, which is unchanged since 2010.    Cancer drugs as a percent of total health care spending remains at about 1 percent.    

But Bach claims cancer drugs cost four times as much here than in Europe.  
 
As an aside, Bach’s claim that drugs are 6 times more expensive in the US than in Europe is an absurdity.   I can find a drug on the UK NHS formulary that has been subject to price concessions and price controls for a decade and compare it retail price here.  But that ignores the fact that in most cases the US is using generic drugs that are less expensive than the brand drug Bach has selected.   And with respect to cancer drugs the acquisition price of new products are about the same.   For instance, the retail price of a 50ml vial of Keytruda in the US is about $2200.   In the UK it is $1900.   A year supply of 40 mg crestor is (US dollars) is $4300 and the retail price in the US is  $2280.   A year’s supply of Januvia in the UK is 3326 pounds or $4800 while the retail price in the US is $4552. 
 
 
Finally, he glosses over the inequities of applying a QALY to a class of drugs or indication without regard to genomic variation or the severity  of the tumor being treated.  That's because he has a vested interest in using QALY to devalue new medicines which in turn allows the PBMs and insurance companies he consults for to rake in billions more in rebates.  And this devaluation will also hurt and even cause cancer patients to die. 
 
As I noted in a previous blog reviewing another work of fiction by Bach, "In an article published last year in the Journal of the American Medical Association, he suggested that in an indication-specific arrangement, the monthly price for Eli Lilly & Co.’s cancer drug Erbitux (cetuximab) would plummet from $10,320 a patient to about $470 a patient for its least effective use, treating recurrent or metastatic head and neck cancer. The drug also is used to treat locally advanced head and neck cancer, as well as colorectal cancer."
 
 Bach claims that the use of Erbitux for head and neck cancer is a "least effective use".  Let's set side the curious math used to arrive at the $470 figure.  It is more important to note that Bach ignores not only individual differences in response but the impact of Erbitux relative to existing need and treatment protocols.     Bach uses an average 2.3  months more of survival as his benchmark.   
Here's what we know about pre-Erbitux treatment of recurrent, metastatic squamous cell carcinoma of the head and neck (SCCHN):
 
"None of the trials performed in the past, even those with a reasonable sample size, have shown that aggressive platinum-based combination chemotherapy leads to survival benefit when compared to single agent methotrexate, cisplatin or 5-fluorouracil.
 
What difference does Erbitux makes?  
 
After decades without real progress, a recent European randomized trial showed that adding cetuximab, the first clinically available EGFR-directed monoclonal antibody, to a standard chemotherapy regimen (platinum/5-fluorouracil) leads to an important survival benefit and this, with support of an additional smaller study in the US, has changed practice."  J. B. Vermorken and P. Specenier Optimal treatment for recurrent/metastatic head and neck cancer. Ann Oncol (2010) 21 (suppl 7): vii252-vii261 doi:10.1093/annonc/mdq453
 
Hence, the Bach pricing approach would whittle away payment for the hardest to treat cancers for patients that have had no real advances in care for decades.  Maybe Bach supports paying doctors less for people who are the farthest gone because the relative health gains are well, not worth it??

Bach never comes clean about who benefits from the discounts he proposes.  In the US, it's the PBMs and insurers.  Currently, these special interests rake in about $4-8 billion in rebates on targeted oncology drugs.   Meanwhile patients are forced to use drugs that generate the most rebates and have to pay a large portion of the retail drug cost on top of everything.  

I guess that's linking prices to one set of interests -- PBMs and insurers -- that Bach values more than what is best for patients.    Read More & Comment...

Purple Reign

05/11/2016 06:57 AM | Peter Pitts

Much ado about an article in Morning Consult by Ronald T. Piervincenzi (Chief Executive Officer of the United States Pharmacopeia) and Thomas E. Menighan,  Executive Vice President & Chief Executive Officer of the American Pharmacists Association).

According to their commentary, Legislation Threatens Patient Confidence in Biologics, Slows Biosimilars, legislative language in the Senate’s FDA and NIH Workforce Authorities Modernization Act would impede “the one issue uniting policymakers” -- the need to improve our system for getting low-cost quality-assured therapies to patients quickly.” How? “… by exempting biologic medicines – including biosimilars, insulin, blood thinners, cancer treatments and other drugs – from having to comply with public standards for quality.”

That’s a pretty strong statement and a lot of people should (rightly) take offense. But it raises an important issue – why the vitriol? 

It’s a complicated issue with many moving parts, all of them worth serious debate. For those in on the issue, the under-current renews the continuing tension between USP and FDA on many matters relative to biosimilars.

It’s important that these two institutions work together in many places and understand each other’s individual efforts -- not the least of which is the continuing evolution of the FDA’s new Purple Book.

The “Purple Book” lists biological products, including any biosimilar and interchangeable biological products licensed by FDA under the Public Health Service Act (the PHS Act). The lists include the date a biological product was licensed under 351(a) of the PHS Act and whether FDA evaluated the biological product for reference product exclusivity under section 351(k)(7) of the PHS Act.

The Purple Book will also enable a user to see whether a biological product licensed under section 351(k) of the PHS Act has been determined by FDA to be biosimilar to or interchangeable with a reference biological product (an already-licensed FDA biological product). Biosimilar and interchangeable biological products licensed under section 351(k) of the PHS Act will be listed under the reference product to which biosimilarity or interchangeability was demonstrated.

USP and FDA both have important roles to play. It’s a very small sandbox with very large public health implications.  Read More & Comment...

Medicare's Part B Experiment With Patient Lives

05/06/2016 04:21 PM | Robert Goldberg

Following the advice of Peter Bach, who holds the Express Scripts Chair for Rebate-Driven Outcomes Policy at Memorial Sloan Kettering, the Center for Medicare and Medicaid Services (CMS) has proposed paying cancer doctors less for administering the most expensive cancer drugs covered  under Medicare part B.  A lot of people -- including the oncologists themselves --have been complaining about the cut.  But nobody has talked about the most unethical part of the experiment:  As Drug Channel's Adam Fein explains:

"CMS wants to reduce reimbursement for buy-and-bill drugs—but for only half of the country's providers. The other half will retain current reimbursement levels. After five years, CMS will see what happened. .."

As only Adam has pointed out this is an unprecedented experiment on patients.   

Did anyone ask Medicare consumers if they wanted to participate?  Did CMS offer to pay moving costs to people who want to be in the control arm of this experiment?   

Did anyone ask if this was even ethical?  Here's what the NIH Office of Human Research Protection guidance on informed consent requires.  You tell me if the Medicare Part B experiment comes within a light year of this moral galaxy:

" Disclosing the reasonably foreseeable risks of research to prospective subjects recognizes the ethical obligation to give prospective subjects sufficient information to make a knowledgeable decision about whether or not to participate. This reflects the ethical principle of respect for persons, which recognizes the importance of giving individuals sufficient information during the informed consent process to make a considered judgment about whether to participate in research that could affect their health or wellbeing—for better or worse."


The CMS notice does not address any of these issues.  Indeed, the phrase informed consent doesn't even show up in the proposal.

Instead: 

"Providers, suppliers, and beneficiaries who are included in the model will have access to the existing claims appeals process, as well as a proposed Pre-Appeals Payment Exceptions Review process, to resolve disputes arising from the policies implemented by this model. "

In otherwords, no informed consent, not even passive consent.  Instead, patients are being hereded into an experiment that in my opinion, violates EVERY canon of the Nuremberg Code 

To be fair, my guess is the position of CMS is that of many people like Peter Bach who believe that price-driven treatment selection does not required informed consent as long as you create a website for your cancer abacus.  But even those who want limits on informed consent in comparative effectiveness trials would do so if patients were not assigned to the treatment arm.  

CMS informs no patient.  The guidance does not require doctors or  hospitals to do so. 

This is a deliberate attempt to side-step informed consent.  And the Part B human experiment is just one part of a larger effort to limit patient choices in what are actually natural experiments by dressing them up as comparative effectiveness research. 

I suggest anyone involved in the Part B human experiment read George and Catherine Annas' article on Therapeutic Ilusion to understand just how unethical the project is.  The authors note: 

"Historically, misleading and confusing terms such as “therapeutic research,” “experimental treatment,” and “invalidated
treatment” have been used to blur the distinction between research and treatment. Similar misleading terms are being deployed in an effort to make evidence-based medicine research (including comparative-effectiveness research) easier to do by dispensing with or watering down disclosure requirements."

By convincing themselves that the law of informed consent does not apply to treatment...The radically paternalistic result would be that physicians could not only set the “standard of care” for medical interventions—whether research or treatment—but also set the “standard of care” for informed consent for both. That quest is, we think, dangerous to the autonomy and dignity of patients and should be repulsed not only by patients, research subjects, and the public, but by physicians and researchers as well."

   Read More & Comment...

Califf's Inclusive "We"

05/06/2016 10:21 AM | Peter Pitts

At yesterday’s annual FDLI conference, FDA Commissioner Califf said that, “to achieve innovation, we must take risks.” And he wasn’t using the royal “we.”

He reiterated that one of his top priorities is to focus on staffing. (He also mentioned that he has about 100 “top priorities.”) There’s an important connection. The FDA’s ability to be an innovation enabler is directly linked to the issue of staff. Not necessarily more staff (although more is certainly better), but staff that is permitted, encouraged, cajoled, urged, directed, educated, and rewarded for taking risks – especially outside oncology and orphan diseases.

It’s slow going. There was solid momentum in the creative thinking of divisional staff in the early days of the new millennium, the McClellan years. But this nascent trickle of “entrepreneurial regulation” hit treacle in the face of the Vioxx imbroglio. It was a battle worth fighting – and winning. The agency is still recovering.

The good news is the agency has come a long way back. New pathways for approval are on the books with some notable clinical successes. New thinking on clinical endpoints and biomarkers, the patient-focused drug development initiative (with the patient voice evolving from tellers-of-sad-stories to allies in clinical development), and more robust programs on quality and pharmacovigilance have infused some inside the FDA to think outside the regulatory box. But entrepreneurial regulation must be more than the “some” of its parts. Proposed legislation could help advance and encourage these and other initiatives but, as the Commissioner commented at the FDLI event, new laws mustn’t allow drugs to enter the market that don’t provide therapeutic benefit. Amen and words to the wise.

Embracing the risks of expedited pathways and other aspects of 21st century entrepreneurial regulation requires better internal agency communication, collaboration, and coordination. If victory in that realm becomes the Califf legacy, it would be a hugely important one for both the FDA and the public health. Success rests, as FDA Chief Counsel Liz Dickinson so eloquently phrased it, “on the infusion of new people and novel ideas.”

The policy of being too cautious is the greatest risk of all. -- Jawaharlal Nehru  Read More & Comment...

Opioids put LA Times in a World of Hurt

05/06/2016 07:13 AM | Peter Pitts

How the mighty have fallen.

Once a newspaper of national importance, the Los Angeles Times has become a shadow of its former self. Consider it’s latest Page One investigation into Purdue Pharma. The drug manufacturer's malfeasance? Promoting on-label claims.

Really.

Here’s a link to the article and here’s a link to Purdue’s response.

According to Purdue, “In an attempt to resurrect a long-discredited theory, the paper ignores the clinical and regulatory data that directly contradicts their story.”

And they have the facts and citations to prove it. All of it.

Further, “Over the course of two years, Purdue Pharma provided the LAT with more than a dozen hours of briefings and discussions regarding the clinical evidence supporting OxyContin’s 12-hour dosing and the regulatory requirement that we promote the product as such. Unfortunately, the paper disregarded this information, instead publishing a story that’s long on anecdote and short on facts.”

Two years and the Times got the story so wrong? That’s bad news for the paper’s readers who expect and deserve better. Maybe it’s good news for the salivating tort bar. But before they start filing lawsuits, they better get the rest of the story.

For example (per Purdue):

CLAIM: OxyContin has a 12-hour dosing “problem” that puts patients at risk.

FACT: Nearly a decade ago, the FDA cited a lack of clinical evidence when it formally rejected the “fundamental premise” that patients receiving OxyContin at intervals more frequent than twice-daily are at increased risk of “side effects and serious adverse reactions.” In doing so, the agency reinforced the twice-daily labeling for OxyContin. The LAT omitted the findings of this report from its story.

Oops.

And my favorite:

CLAIM: Purdue should tell physicians to prescribe OxyContin for eight-hour use.

FACT: The FDA prohibits pharmaceutical companies from promoting their products for uses, including dosing, not approved by the agency. Given FDA has not approved OxyContin for eight-hour use, we do not recommend that dosing to prescribers. In fact, a State Attorney General recently cited a peer company for falsely claiming that OxyContin was an eight-hour drug. The LAT omitted this piece of information from its story, falsely claiming that OxyContin was an eight-hour drug. The LAT omitted this piece of information from its story.

Is there a fact checker in the house?  Ouch.

There are so many serious issues surrounding opioids that the lack of professionalism by the LA Times is astounding.

I guess the Times ace I-Team can forget about that Pulitzer.  Read More & Comment...

Opioids Auth-orization

05/05/2016 07:18 AM | Peter Pitts

Yesterday I had the pleasure of attending and participating at the joint meeting of the FDA’s Drug Safety & Risk Management and Anesthetic and Analgesic Drug Products advisory committees.

The topics under discussion were the successes and failures of REMS programs for extended release (ER) and long-acting (LA) opioids. Many important presentations and discussion. Two statements that stood out as directional:

“REMS modifications shouldn’t unduly restrict patient access.” (Doris Auth, REMS Assessment Team Leader, Division of Risk Management, CDER)

“Education is not an event, it is a process.” (Graham McMahon, President & CEO, Accreditation Council for Continuing Medical Education)

In short – it’s important to move forward, weighing the risks and benefits of REMS programs not just for prescribers – but for patient too. Bravo.

I was chosen to offer public testimony, and here’s what I had to say:

To paraphrase Peter Drucker, the information revolution will shift -- from the generation of data, to figuring out the meaning and purpose of the data with the patient’s perspective in mind.

Nowhere is this more pertinent than in the discussion of the future of opioid pain medicine and the role of the FDA – and advancing both the science and regulatory approaches to appropriate pain care management. But cutting the Gordian Knot of what “appropriate” means demands more than current REMS programs. It requires working with the providers of continuing medical education to develop better curricula. It means ever better-validated risk evaluation and mitigation strategies with more thoughtful purpose.

 It means enhanced and validated reporting tools for post-marketing surveillance. It means using real world data to provide real world advice. And it means using the tools of the 21st century century such as patient and physician apps.

The FDA can play an important role in working to develop and share (with a broad constituency) validated tools for physicians to use in determining which patients may be more prone to slide into abuse so they can choose their therapeutic recommendations more precisely.

One improvement will be to improve the accessibility of the ER/LA Opioid Analgesics REMS website, so that interested healthcare providers can more easily access accredited REMS-compliant material.

We must also work to continue expanding the to include the extended healthcare team. Education of team members beyond analgesic prescribers is critical for implementation of REMS learnings.

We should revise the FDA Blueprint for Prescriber Education to reflect stakeholder input and feedback

We should link Schedule II and Schedule III Narcotics DEA registration and re-registration to either completion of prescription opioid education or other acknowledgements, such as board certification in pain medicine. We should include IR opioids in the REMS modification discussion. It’s where the overwhelming volume is.
 
With the data collected from REMS programs, a logical next step is to utilize that real world data to amend product-specific labeling to indicate lessons learned outside of the rarified world of the randomized clinical trial environment to assist physicians in using the right product for the right patient. Real world evidence doesn’t just mean recognizing new risks, but also communicating new benefits learned through patient outcomes. And such evidence is both available and exciting.
 
Beyond the REMS programs discussed during the course of this meeting, the FDA has required all sponsors of brand name products with approved abuse-deterrent labeling to conduct long-term epidemiological studies to assess their effectiveness in reducing abuse in practice.

And then there’s the thorny question of FDA labeling. Product labeling is the basis for articulating the value proposition of a product. As you are aware, data definition and generation are very much still a work-in-progress – as is their relationship to clinical relevance. No absolute magnitude of effect can be set for establishing product characteristics. And the FDA continues to talk about the ambiguous totality of evidence standard – which really means using their best regulatory judgment.

One crucial question that deserves more conversation is the nature of the evidence used to decide whether or not a given product “works” to reduce abuse in the “real world.” Given the data challenges, it may be almost impossible to ever demonstrate a causal link between a new formulation and an impact on patient abuse – but is that because the product didn’t have an effect or our current measurement methodologies and data systems are inadequate to detect it?

The path forward is unclear. Is real world data reliable and robust enough? Should the FDA define and then assign various statistical weights to comparison and population studies? At the end of the day, the agency can’t only look to REMS for risk mitigation but must also seek out data that supports more aggressive labeling language.

Obviously, more work needs to be done in order to refine optimal data sources, study design, statistical methods, and epidemiologic outcomes of interest to developers, physicians, patients … and regulators. No one group can do it by themselves. We need a more, aggressive, creative, and collegial approach to the pain management ecosystem.

At the end of the meeting, the joint committee recommended mandating continuing education for doctors who prescribe opioids, ignoring American Medical Association calls for such requirements to be voluntary. The committee, which held no formal vote on the issue, also urged FDA to update its education materials by incorporating the new CDC guidelines on opioid prescribing and other material on alternative pain treatments. The committee suggested education be required for doctors seeking DEA registration to prescribe controlled substances.

The committee also urged the agency to update its risk evaluation and mitigation strategy to include shorter-acting opioids, amid criticism from some members that opioid manufacturers have too much influence over the strategy. The committee voted 30-0 to urge FDA to make changes to its entire opioid drug safety program. Some of the advisers said there was little evidence the current safety plan has had any effect, adding that it needed a greater emphasis on the drugs' risks.  Read More & Comment...

Confirmation Bias Distorts Drug Price Research and Reporting

05/03/2016 05:43 PM | Robert Goldberg

 

 
Francis Bacon was perhaps the first scholar to note that we are all guilty of confirmation bias. He observed that “the human understanding when it has once adopted an opinion (either as being the received opinion or as being agreeable to itself) draws all things else to support and agree with it.”
 
Confirmation bias explains the synergistic relationship between so-called studies that look at drug pricing, the media attention paid to these articles and the virtual absence of reporting on studies looking at the ecosystem for treating cancer.
 
Two articles on the price of oral cancer drugs – one in JAMA and the other in Health Affairs  are examples of this disease.
 
The articles look only at the list price of cancer drugs over 10 years. 
 
They could have looked at the increase in the list price of non-drug cancer care (which has increased as well) but they didn’t. 
 
Nor will you find any discussion of the fact the over the time periods studied, increased use of oral cancer drugs was associated with a decline in hospitalization and outpatient spending associated with increased use in oral oncology.  
 
There are hundreds of articles reporting on these studies that with rare exception (Ed Silverman at STAT) note that the ‘studies’ do consider drug prices in context.  In particular, confirmation bias has lead researchers and reporters alike to ignore other economic and clinical factors impacting the cost – and – value of cancer drugs:
 
A recent IMS Oncology report – largely ignored by the same journalists writing about the two articles -- found that utilization, not price, was the main driver of spending on cancer drugs with longevity of patients a key driver of use. 
 
Targeted therapies (not including rebates, patient assistance support, etc. ) now account for almost 50% of total spending and they have been growing at a compound average growth rate of 14.6% over the past five years
Overall therapy treatment costs per month have increased 39% over the past ten years in in inflation- adjusted terms, similar to the 42% increase in overall response rates and 45% increase in months that patients are on therapy, which also contribute to higher overall spending levels associated with improved survival rates. http://www.imshealth.com/imshealth-web-aux/controller/getReport
 
2.   The increase in use of targeted therapies w diagnostics are associated with  an increase in duration of response and survival.  In fact, the use of oral cancer drugs is associated with a 150 percent increase in treatment duration.
 

 
3.   Neither article accounts for the fact that newest oral cancer drugs are targeting smaller groups of patients based on tumor subtype and mutational status.
 


4.  Neither article noted that over the same period they were obsessing about drug prices, cancer costs increased at the same rate as overall health spending.  Another well-ignored Milliman study found
 
Over the entire 2004 to 2014 study period, the average annual increase in cost was essentially the same in the actively treated cancer population and the non-cancer population.

Cancer prevalence increased from 2004 to 2014 more than the contribution of cancer patients’ cost to the total population spend.

For patients being actively treated, the portion of spending for cancer-directed pharmaceuticals increased from 2004 to 2014 while the portion of spending for inpatient care declined. 
 
 Finally, the articles ignored yet another study showing the increase in rebates as a percent of price increases. The chart below shows the rebates as a percent of gross sales for Bristol Myers as it introduced immunotherapies for cancer.
 

 
 
“As people's opportunities to succumb to confirmation bias increases online - only seeking out information that confirms their prejudices - ignorance, extremism and close-mindedness have continued to rise unabated.” Maajid Nawaz


   Read More & Comment...

Getting Real World About Outcomes Data

04/29/2016 08:40 AM | Peter Pitts

I’ve just returned from a cold, blustery and wet London where I attended the annual Pharma Access Leaders Forum.

But the meeting was hot.

In fact, piping hot when you consider the tectonic changes being felt in the world of healthcare technology assessment (HTA) and their implications on both patient access and innovation. And the linkages couldn’t be more profound.

Wither HTA in the EU? A key red thread through a series of potent discussions was real world evidence (aka, “outcomes data”). Head honcho HTA officials from across Europe (including England and Scotland – both still in Europe as of last report) returned again and again to the value of outcomes not just for the evolving world of Risk Sharing Agreements, but for the acceleration of reimbursement science.

Reimbursement science? In July 2012, when Sir Michael Rawlins was chairman of NICE, he told the House of Commons that value, “is based on the collective judgment of the health economists we have approached across the country. “It is,” Sir Michael said, elusive.”

When it comes to HTA – the times they are a-changin'.

One key insight came from Finn Børlum Kristensen, Chairman of the Executive Committee, European Network for HTA (EUnetHTA), who reminded the conference of JM Eisenberg’s advice, “Globalize the evidence, localize the decision.”

Just as we’ve finally come to realize the urgency of regulatory science (adaptive clinical pathways, imaging, bioinformatics, biomarker validation, 21st century bioequivalence, etc.) to the future of healthcare, so too must we understand and encourage the development of reimbursement science. And high up on the list of items to consider is the validity and utility of outcomes data. We’ve come a long way from the 2007 NICE/Velcade risk-sharing arrangement. Today the stakes are higher and the battle has ratcheted up to a higher level.

When it comes to reimbursement science, we are still in early days. For example, while many HTA bodies in Europe have moved beyond accepting evidence exclusively “the old fashioned way” (via the traditional RCT “gold standard”), there are exceptions – such as Germany. As Detlef Parow (Head of Care Management at DAK-Gesundheit) pointed out, IQWiG will only look at outcomes data “only in exceptional cases.” (This is in keeping with the IQWiG “Principle of Prohibition,” where “Everything is forbidden if it is not expressly permitted.”)

The always-insightful Francois Meyer (Advisor to the President, Director of International Affairs for HAS -- France’s Haute Autorité de Santé) wisely suggested more formal early dialogues on scientific advice – similar to the regulatory science initiatives that drive the conversations between FDA and innovators. This would give HTA bodies the opportunity to identify key issues and receive draft company positions, discuss divergent views and try to reach consensus before any final submissions or decisions are made. Sometimes the most common-sense recommendations are the toughest to implement.
 
But, as with FDA and the advancement of regulatory science, much depends on willingness and ability to implement based on infrastructure, capabilities, and trust. The end goal is the same for all stakeholders -- ensuring optimal use of resources for healthcare systems; improving access to value-adding medicines for patients; and appropriate reward for innovation.
 
In a 2009 white paper, I wrote, “We need to develop proposals that modernize the information used in the evaluation of the value of treatments. Just as the key scientific insights guiding the FDA Critical Path program are genetic variations and biomedical informatics that predict and inform individual responses to treatment, we must establish a science-based process that incorporates the knowledge and tools of personalized medicine in reimbursement decisions: true evidence-based, patient-centric medicine.”

Today, right now, we need a Critical Path for Healthcare Technology Assessment to begin the process of developing a similar list of ways new discoveries and tools (such as electronic patient records) can be used to improve the predictive and prospective nature of clinical outcomes. In an era of personalized medicine, one-size-fits-all treatments and reimbursement strategies are dangerously outdated. Accepting real world evidence does not mean discarding the randomized “gold standard” – it means augmenting it.
 
It’s a complicated proposition—but such a goal is as simple as it is essential -- cost must never be allowed to trump care, and short-term savings must not be allowed to trump long-term outcomes. Just as we need new and better tools for drug development, so too do we need them for HTA.
 
A health technology assessment model for the 21st Century should reflect and measure individual response to treatment based on the combination of genetic, clinical, and demographic factors that indicate what keep people healthy, improve their health, and prevent disease. A rapidly aging society demands a new healthcare paradigm capable of providing for its needs in the 21st Century. Equality of care must be matched with quality of care.
   Read More & Comment...

Buffalo Wings

04/28/2016 10:50 AM | Peter Pitts

From the pages of the Buffalo News:

Insurers have incentive to keep plans affordable

A recent editorial called the provision that prohibits the government from negotiating Medicare Part D drug prices “a ruinously bad decision.” (“Panel offers a blueprint for dealing with ruinous cost of prescription drugs,” April 22 News.)

Yet keeping the feds out of price negotiations between private insurers and drug companies has worked wonders. Surveys indicate nine out of 10 seniors are satisfied with their Part D coverage; 96 percent report that their coverage works well. And because insurers have a financial incentive to attract enrollees by keeping plans affordable, the program cost $349 billion less than initially projected during its first decade.

With satisfaction and savings like that, it’s a shame the government doesn’t make “ruinously bad decisions” more often.

Peter J. Pitts
President, Center for Medicine in the Public Interest; Former Associate Commissioner, FDA  Read More & Comment...

PBM and Insurer Funded Front Group Demands Bigger Rebates and Less Medical Innovation

04/25/2016 10:39 AM | Robert Goldberg

If you’re interested in pocketing billions more in drug price rebates what do you do?  Fund a front group that claims to make prescription drug prices affordable and propose policies that would give a cartel of PBMs, health plans and unions control over the development, pricing and access of new medicines.   Call for transparency but then refuse to share how those rebates are generated and distributed and how they fatten your profit margins. 

The Coalition for Sustainable Drug Pricing -- an offshoot of the National Healthcare Coalition -- will once again propose 'market-based' solutions to reduce drug prices.   These proposals are actually slightly reworked versions of proposals made by the Center for American Progress, as well as Bernie Sanders.  

The Coalition is once again waving the red herring of speciality drug costs.  It's expert panel is silent about all the rebates being pocketed by their institutions.  

The Coalition is actually a front group for health plans, PBMs and the Washington offices of many liberal interest groups who are all interested in reducing pharmaceutical and biotech profits.  The proposals would do that by transferring even bigger rebates to the aforementioned insurers and PBMs and giving these groups more control over access to new medicines, which in turn would increase their short term profit margins. 

Here's what the Coalition is calling for today:

•    It would force drug companies to a minimum percentage of their revenue in R&D. Companies failing to do so would be subject to fines and possible federal prosecution
•    A price that exceeds a price set by federal advisory committee by more than 20 percent would be presumed to be unreasonable and to harm public health.  Under current law, designating something or someone a public health threat the government has the power to immediately seize products, patents, set prices and throw people in prison for price gouging, just like in Venezuela. 
•    It would allow government health plans, private insurers, hospitals, union health programs and prescription drug benefit companies like CVS to form a cartel set ‘fair’ prices and decide which patients get what medicines based on how much the ‘private’ panel decided how much our lives are worth and how much more should be spent on drugs each year. Drug companies that fail to comply with the prices would be prohibited from sell all of it’s products to any government program. 
•    It allows the same cartel to keep $100 billion in rebates that are supposed to go to patients but instead are pocketed by these special interests

It also wants to weaken and eliminate FDA regulations established to protect patients against serious and life threatening adverse events from the use of new medicines.  

The Coalition also claims that their policies will actually increase innovation by forcing companies to only invest in truly innovative drugs.  Instead is asserts that R and D is an essential expense for a drug company, not an optional investment, if at some point it doesn’t invest in research and development, it won’t be a drug company anymore.

That’s like saying health insurers will have to stay in business even if they can’t raise premiums because otherwise it wouldn't be a health plan anymore.   Ask United Healthcare how that business model would work.  

Nobody's going to offer health insurance if they'll lose money selling it. The same goes for life saving medicines.  

There are better ways to make medicines more valuable by making them more affordable.  The first is to use rebate money to reduce out of pocket cost sharing of actual patients.

The second is to cut the time, cost and risk of bringing new medicines to market.  We can do that by building on proposals included in the 21st Cures Act and on efforts developed by the FDA and groups such as Friends of Cancer Research.   Bringing more medicines to patients more quickly at lower cost will increase competition and encourage innovators to shift investment into more discovery.  

We should all be on the same side in fighting against disease.    Stoking populist anger in order to fatten short term profits doesn't advance that alliance.  
   Read More & Comment...

TheStreet.com's Feurstein Fast and Loose With Remicade Pricing Truth

04/20/2016 03:52 PM | Robert Goldberg

Is telling just some of the facts to make a point contradicted by all of the facts good journalism?  Is it honest?

Here's the headline from TheStreet.com Adam Feurstein:

Ignoring Criticism, Drug Companies Still Raising Prices, Making More Money 

"Everyone is screaming about drug prices. They're too damn high! Drug spending is going to bankrupt the health care system. Raising the price of drugs multiple times per year is unconscionable and unsustainable.

How are biotech and pharmaceutical companies responding to all the criticism? They're raising drug prices even more.

And increasingly, nearly all of the surplus revenue generated from those price hikes is staying with the drug companies instead of being extracted by insurers and pharmacy benefits managers in the form of higher rebates, said Leerink Partners analyst Geoff Porges.

"The price increases for established brands across our coverage have been substantial indeed. To the surprise of many investors, it now appears these price increases are likely to flow through to actual sales growth, with such growth more than offsetting any volume weakness in 1Q, and resulting in significant positive revenue surprises for these companies when they report 1Q results," Porges wrote in a research note Wednesday.

In other words: Take that, Hillary Clinton!

Porges analyzed J&J's first-quarter sales results, particularly for its specialty pharmaceutical drugs Simponi, Stelara and Remicade, and found 70%-90% of list price increases taken over the past year are flowing through to reported sales. In some cases, J&J captured 100% of the price increase as sales.

In other words, efforts by insurers and PBMs to negotiate higher discounts or rebates on specialty pharmaceutical products isn't keeping pace with the price increases pushed through by drug and biotech companies. Likewise, politicians ranting about outrageously high drug prices aren't having a moderating effect on industry practices -- at least not yet.

The net result should be better-than-expected sales, Porges said...."

Here's the rest of the story.

If Remicade is reporting 70 percent sales, that's a 30 percent rebate.  Pretty, pretty good considering the drug didn't face biosimilar competition until this year.  Neat trick to turn the percentages around but still 30 percent is a lot.  


Oops.





Then there is the Remicade rebate picture 



On top of that, as my last blog demonstrated industry-wide a big chunk of revenues -- $100 billion or so -- goes to PBMs, insurers, hospitals, employers. Everyone but patients.

There's a reason for the phrase, "the truth, the whole truth and nothing but the truth."  You see, telling the truth, but not the whole truth and nothing but is considered lying.  



   Read More & Comment...

Wither "Cures?"

04/17/2016 07:24 PM | Peter Pitts

When a man says he approves of something in principle, it means he hasn't the slightest intention of putting it into practice. -- Otto von Bismarck

Is the cure worse than the disease?

A thoughtful and comprehensive overview in BioCentury (by one of our favorite industry cognoscenti, Steve Usdin), Can “Cures” be Cured, presents a blunt appraisal for either measured optimism or realpolitk pessimism.

Some tantalizing snippets:

After almost two years of effort, it is still not clear whether a path can be cleared to put a 21st Century Cures bill on President Obama’s desk, or what measures would be included if and when legislation is turned into law.

It is certain that anything that could get through Congress would not come close to matching promises made by the legislation’s sponsors to radically transform the way medicines are discovered and to dramatically accelerate the creation of cures.

According to Usdin, Cures legislation, would be a disappointment to anyone hoping Congress will attempt to squeeze more science from the tens of billions taxpayers provide to NIH, or for fundamental changes in the kinds of science NIH supports and conducts.

The Cures bills do not address concerns about the effectiveness of NIH’s translational research, perceptions that NIH’s peer-review process rewards consensus science rather than innovation, or the inefficiency of allowing hundreds of millions of dollars to be siphoned off research grants for “indirect” costs such as administrative support and facilities.

The White House Statement of Administration Policy released in July noted the “new responsibilities for FDA outlined in H.R. 6 exceed the resources provided in the bill and the President’s FY 2016 Budget and as such, FDA will be unable to fully implement the programs established in the bill, while maintaining its current performance levels.”

FDA also thinks H.R. 6 would unleash a flood of applications for qualification of biomarkers and other drug development tools, and it estimates that reviewing these applications would cost $940 million over five years.

In the absence of a substantial increase in FDA funding, the administration, congressional Democrats and regulated industries are likely to push to have many of the FDA provisions stripped from the 21st Century Cures Act.

As the window for passing a bill in the Senate and negotiating a final version narrows, pharmaceutical industry lobbyists who worked hard to shape H.R. 6 and Senate Cures legislation are now sitting on the sidelines.

Pharma companies are unwilling to push for legislation they feel does little to benefit their companies, and they are cautious about supporting a political process that could exacerbate battles over pricing. At the same time, the industry doesn’t want to be seen throwing sand in the gears. Public opposition to Cures legislation would antagonize powerful members of Congress, along with influential patient advocates who have invested immense amounts of time in the Cures process.

Industry and FDA will call for a “clean” reauthorization of PDUFA, but Congress is unlikely to resist the temptation to attach legislation to PDUFA VI. If Cures legislation is enacted this year, any FDA elements that were considered but didn’t make the final cut will be in play as a PDUFA companion bill is drafted.

If Cures doesn’t pass, there will be strong political pressure to include the measures that would have made it into a final bill, along with some of those that were discarded, plus mandatory funding for NIH and FDA.

Ladies and Gentlemen, place your bets.  Read More & Comment...

Most of the Increase in Drug Spending Pocketed By PBMs and Insurers

04/15/2016 02:32 PM | Robert Goldberg

Most of the Increase in Drug Spending Pocketed By PBMs and Insurers:
What the Media Missed in Covering The IMS Drug Cost Study

By Robert Goldberg, PhD


Media coverage of the The IMS Institute for Health Informatics study: “Medicines Use and Spending in the U.S. – A Review of 2015 and Outlook to 2020” focused mainly at the change in top-line drug spending from 2014-2015.  That approach, as I have suggested in the past, is uniquely unrevealing. 

Spending on drugs in the outpatient, hospital and nursing homes was $425 billion.  However, the drug and biotech companies made $310 billion of that total.  Where did the other $125 billion go?  The vast majority of articles don’t tell.  

In fact, that spread – which has gotten larger in both total dollars and as a percentage of the increase in drug spending flows directly to insurers, pharmacy benefit managers, hospitals and other large customers, not the patient.


Follow the Money and the Prices 

To find out why such rebates aren’t going directly to the consumer, you have to follow the money and the difference in prices net of rebates and the invoice or retail price.   The amount of prescription drug revenue pouring into such ‘stakeholders’ has increased since Obamacare began taking effect.  Net price increases have actually dropped by half since 2011.  As the IMS study observes: “The average net price for brands already in the market is estimated to have increased by 2.8% in 2015, down from 5.1% in 2014 and significantly lower than seen in prior years.”

Meanwhile, the increase in rebates as a share of price growth surged.  As the charts above and below reveal, rebates as percent of total price growth increased ten fold since 2011.  








Further analysis shows that rebates were $10.8 billion (40 %) of the total increase in specialty drug spending between 2014-15.   As a percent of all brand medicine spending, rebates were 71 percent of the total increase from 2014-2015.  This means much of the price increase imposed on patients reflects the cost of rebates that PBMs and other claim make medicines ‘affordable’.



Patient Cost Sharing Increases as Rebate Revenue Soars

Even as the share of drug spending as a percent of rebates has soared and the contribution of net price increases to spending has declined, PBMs and insurers have increased cost sharing by more than 25% since 2010.  

Patient cost sharing is a percent of the ‘invoice’ or retail price, not the net or rebated price.  This suggests that rebate dollars are not passed through directly to patients. 

As IMS points out…”in response to this rising level of patient cost exposure, brand manufacturers are steadily increasing their use of “buy-downs” through patient savings programs such as coupons or vouchers, to help patients offset these costs. 

Even after coupons are applied, patients with pharmacy deductible plans are still facing high cost exposure.”

Even worse, 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.  

A recent Avalere study found that many insurers – with help from the PBMs that design drug formularies and cost sharing “….placed all drugs in a class on the specialty tier. Specifically, in the Protease Inhibitor and Multiple Sclerosis Agents classes, 29 and 51 percent of plans respectively place all drugs, including available generics, on the highest tier. There are no generics in the other three classes of drugs listed below.”

Specifically, in 8 of the 10 classes, 2015 exchange plans were more likely than 2014 plans to assign all single-source branded drugs to the highest cost sharing tier. A single-source branded medication is a brand name drug without a generic equivalent. The practice was most common for some cancer drugs and drugs used to treat multiple sclerosis. Roughly 30 percent of plans also place all single-source drugs for HIV/AIDS on the specialty tier.



Conclusion: The Real Source of High Drug Costs

The real story about drug pricing is how PBMs like Express Scripts and health plans are pocketing about a bigger and bigger share of drug revenues while increasing what patients – especially those with the greatest need for the newest drugs generating the biggest rebates – are seeing their share of the invoice price of a medicine surge.   

The outrage about high drug prices is directed at biopharmaceutical firms. But the IMS study suggests that the $100 billion in rebates and discounts that could reduce the out of pocket cost of consumers is taken by $100 PBMs, insurers and hospitals.  And to add insult to injury, these organizations turn around and charge consumers retail price and require them to pay an increasingly greater share of that cost. 

The fact that such practices not only increase PBM, insurer, etc. revenues but deny people access to new medicines – that in turn increase the risk of staying sicker or getting sicker -- should be a big story.   Why aren’t media outlets and policymakers focusing on the real source of high drug costs?


   Read More & Comment...

Transparency isn't a one-way proposition

04/10/2016 08:25 PM | Peter Pitts

From the pages of the Deseret News ...

Transparency in medicine isn't a one-way street.

The transparent truth is that the prices patients actually pay aren't set by drug manufacturers — they're determined by pharmacy benefit managers, insurers, hospitals and pharmacies.

A majority of Americans believe increased health care transparency should be a top national priority. It's easy to understand why. Rising health care costs, coupled with high-profile stories of price-gouging at some small pharmaceutical companies, have left consumers feeling ripped off, especially when it comes to drug prices.

But most drug companies aren't whimsically increasing prices. In fact, if the health care industry was really transparent, people could see the truth: drug companies often aren't the culprits behind high costs. In fact, they're the best hope for dramatically lowering health care spending.

The transparent truth is that the prices patients actually pay aren't set by drug manufacturers — they're determined by pharmacy benefit managers, insurers, hospitals and pharmacies.

And these third parties frequently engage in … price-gouging.

Consider the "prescription price shell game" uncovered in Minneapolis, where a local CVS jacked up the price of a kidney medication to more than $6 per pill from 87 cents. Or the Levine Cancer Institute in North Carolina, which collected nearly $4,500 for a colon cancer drug that hospitals typically buy for $60.

Unfortunately, the media largely ignores such abuses, preferring to concentrate just on alleged misbehavior or greed by pharmaceutical companies. When one drug maker released a breakthrough Hepatitis C cure, headline after headline blasted the company for the drug's initial $84,000 price tag.

Few follow-up stories have noted that, because of competition from other drug makers, the manufacturer granted such big discounts — often in excess of 50 percent — that the medicine now costs less in the United States than in price-controlled Europe.

Even fewer stories put America's health care spending in perspective. Name-brand drugs accounted for just 7 percent of $100 billion increase in health care spending from 2013 to 2014.

That 7 percent accounts for some of the most promising advances in treatment in decades. By addressing once-untreatable symptoms and complications, these advances help patients avoid expensive surgeries and lengthy hospital stays — which account for a far larger share of health care spending than pharmaceuticals do.

Journalists crying page one crocodile tears over high drug costs aren't just ignoring hospitals' and insurers' roles in jacking up retail prices. They're ignoring the fact that massive decreases in health care spending will only come about due to pharmaceutical cures. Better MRI machines are not going to end the scourge of cancer. New drugs could — and do.

Of course, medicines aren't cheap to create. The average cost of developing an FDA-approved prescription medication is $2.6 billion, according to the Tufts Center for the Study of Drug Development. That represents a 145 percent increase over the past decade.

For every successful new compound, hundreds of others once deemed promising end up abandoned. Research chemists at pharmaceutical companies may spend an entire career in the lab without working on a single drug that gets to market.

Understandably, pharmaceutical companies don't love to publicize their frequent failures. As a result, everyday Americans only see the successful, profitable drugs — and the high price tags that stem from the cost of research plus the markups tacked on by third parties.

Consumers are justifiably mad about health care costs. But their anger is misdirected. If the health care industry was truly transparent, Americans would see who's really to blame for rising prices. With rare exception, it's not the companies creating lifesaving medicines.

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

In support of Pharma Pros -- not Pharma Bros

04/08/2016 11:36 AM | Peter Pitts

From the pages of the Detroit News:

Don’t burn drug execs at the stake

There’s a torch and pitchfork sale underway in the nation’s capital — or so it would seem from Congress’ recent witch hunt targeting the pharmaceutical industry.

The Senate Special Committee on Aging has called upon a long list of industry executives to explain their pricing practices. House Democrats recently launched a task force to investigate supposedly excessive drug prices and consider potential legislative remedies.

And a probe led by Sens. Ron Wyden, D-Oregon, and Chuck Grassley, R-Iowa, scoured 20,000 pages of emails from Gilead looking for evidence of wrongdoing.

The closest thing to a smoking gun was the senators’ meek conclusion that Gilead fulfilled its legal, fiduciary obligations to maximize shareholders’ returns. Oh, the horror!

But drug costs aren’t climbing faster than general health care inflation. In fact, robust market competition has helped drive down prices. Federal intervention is unnecessary and counterproductive to the goal of improving American health care.

Pharmaceuticals represent only about 10 percent of national health care spending — a share that’s remained remarkably stable since the 1960s.
That doesn’t mean medicines aren’t becoming more expensive. They are. But their prices aren’t increasing faster than health care services as a whole. Much media coverage has focused on last year’s 13 percent increase in the list price of brand-name drugs. Far fewer journalists and politicians bothered to mention that, factoring in rebates and discounts negotiated by insurers and pharmacy benefit managers, actual net drug spending has only increased 5.5 percent. That’s right in line with overall health care spending growth.

Sadly, Congress will probably ignore such facts. It’s much easier to score cheap political points by demonizing an entire industry based on isolated anecdotes. But even those misleading examples of bad behavior prove that government intervention isn’t needed.

Consider Turing Pharmaceutical’s recent price gouging on Daraprim, a seven-decade-old treatment that combats parasitic infections in people with weakened immune systems. Turing’s 5,500 percent price hike, from $13.50 to $750 per pill, prompted toothless outrage from the media and politicians — and a crippling response from a private sector competitor, Imprimis, which released a $1 per pill alternative.

Simply put, competition works.

New regulatory intrusions on drug pricing would undermine innovation. Firms would be less willing to risk billions creating new medicines.
And since medicines lower health care costs by improving patient health and warding off more serious complications, government interventions that discourage drug development will increase health care spending, not cut it.

For instance, anti-retroviral drugs have cut the HIV/AIDS death rate a stunning 85 percent since the mid-1990s. That didn’t just save tens of thousands of lives — it also saved the U.S. economy $615 billion by averting health care spending and increasing worker productivity.

Congress’ inquisition of the pharmaceutical industry is meant to justify government restrictions on drug pricing. If facts still matter, free-market competition will be exonerated and upheld as the best way to contain health care spending while delivering quality care. If they don’t matter, and legislators insist on imposing innovation-killing price controls, future health care savings will go up in smoke.

Peter Pitts is president of the Center for Medicine in the Public Interest.  Read More & Comment...

ICER Multiple Myeloma Cherry-picking Update: More People Killed

04/08/2016 10:02 AM | Robert Goldberg

Last night the Institute for Clinical and Economic Review (ICER) release its draft report “Treatment Options Relapsed or Refractory Multiple Myeloma: Effectiveness and Value.” The report can be accessed here. The draft voting questions can be found here. 

The bottom line results and approach confirm the wisdom of ignoring anything ICER puts out as self-serving, voodoo economics.  See Tom Philipson's excellent discussion of the shoddy short-sightedness of value frameworks here.

I also post a link to yesterday's blog with these updates: 

 ICER concludes that given that the QALY exceeds what they call the 'norm' of $150K only 1200 out of 32000 patients should be treated.   That's rationing.  And it has implications for any orphan disease (of which MM is one).   That's because in the short term, the use of these new medicines in combination will increase medical costs, not reduce them. 
Death and doing nothing is very cost effective. 

Further,  ICER is setting a trap on combination therapies.  That is, it is attempting to send off alarms about how to pay for 2-3 medicines all priced at $150K, etc.    


In my previous blog I estimated that ICER would treat only18000 patients, let 34000 people die.   ICER's draft report assumes 320000 patients of whom only 1200 would get treatment each year.  

As I predicted:  ICER didn't even try to set a price for combo therapy:

Indeed, ICER -- unlike previous studies -- refused to set a drug price because it knows that it would be absurdly low to meet it's QALY standard and would be attacked from all sides.   Read More & Comment...

Alexander's 21st Century Cures Band

04/07/2016 06:51 AM | Peter Pitts

According to a BioCentury report about yesterday’s Senate Health, Education, Labor and Pensions Committee (HELP) hearing on biomedical innovation legislation, Chairman Lamar Alexander (R-TN.) said he plans to bring companion legislation for the 21st Century Cures Act (H.R. 6) to the Senate floor if he can obtain bipartisan agreement on mandatory "surge" funding for NIH. Sen. Patty Murray (D-WA.), the committee's ranking member, said Democratic support for innovation legislation is contingent on mandatory funding increases for both NIH and FDA.

The remarks came at the HELP Committee’s third and final markup of biomedical innovation legislation. The committee voted to pass five bills.
The Promise for Antibiotics and Therapeutics for Health Act (S. 185) would create a new pathway for FDA to approve antibiotics for limited populations. The FDA and NIH Workforce Authorities Modernization Act (S. 2700) includes a proposal from Friends of Cancer Research to establish one or more “Intercenter Institutes” within FDA to coordinate activities among centers for drugs, biologics and devices to treat major diseases. It also would give NIH and FDA authority to pay salaries up to the level of the president.

The Promoting Biomedical Research and Public Health for Patients Act (S. 2742) would create five-year terms for NIH institute directors that are renewable at the NIH director's discretion, would remove restrictions on the National Center for Advancing Translational Science funding Phase III studies, and would reduce paperwork for NIH-funded researchers.

The Advancing Precision Medicine Act of 2016 (S. 2713) would authorize NIH to implement a precision medicine initiative. The Advancing NIH Strategic Planning and Representation in Medical Research Act (S. 2745) would require that NIH take steps to increase the numbers of women and ethnic minorities who participate in clinical research.

Alexander said the bills will be combined into a single bill with other biomedical innovation legislation HELP has passed. If agreement on NIH funding is reached and the HELP innovation bills reach the Senate floor, Alexander said several amendments will be offered on topics where the committee hasn’t reached a consensus. These include proposals to create a five-year conditional approval pathway for regenerative medicines and to regulate laboratory-developed tests.

Alexander also said the Senate would vote on an amendment based on the Orphan Product Extensions Now (OPEN) Act, which would grant six months of additional exclusivity to drugs that are repurposed for Orphan conditions.  Read More & Comment...

Amgen's Right, ICER Cherry Picks Who Lives Or Dies

04/06/2016 08:56 PM | Robert Goldberg

A lot of the health  media was surprised that Amgen decided to criticize ICER before it released it's draft decision about the price and access to new medicines for multiple myeloma including Amgen's Kyprolis.

I wasn't.  After all, Amgen had already dealt with ICER's 'methodology' when it recommended that Repatha be sold for $2600 a year and be limited to about 3 percent of patients with statin resistant LDL that could benefit.  

The surprise is a function of the fact that the media is buying into to ICER's well-funded – and extremely effective -- attempt to establish itself as the de facto price setting group.   It is not a function of the fact that ICER's findings were not pre-ordained. 

Amgen believes ICER is "using opaque methods to combine multiple, disparate trials to arrive at different estimates of efficacy, or make assumptions to create unrealistic “worst-case” scenarios. Results produced by independent organizations should be informed by experts, made fully transparent and available, and undergo complete and independent peer-review."

The company is right. ICER defines value as whatever doesn't exceed an arbitrary cap on drug spending as set by PBMs and insurers.   But it is clear that ICER is cooking the numbers ala Breaking Bad to get the desired outcome.  

Like NICE, the rationing body in the UK, ICER cherry picks data to achieve its desire conclusion.   If anyone needs an alternative to incarceration, they should flip through a NICE guidance to see how it picks and chooses what data to accept from companies and what data it uses to say yes or no.   It accepts what it wants and rejects what it wants.      


The sloppy, even sleazy, approach ICER takes is on full display in it's effort to compare newly approved drugs for multiple myeloma and compare them with the combinations of lenalidomide (Revlimid) plus dexamethasone (Rd) and bortezomib (Velcade) plus dexamethasone (Vd).   

Let's set aside that there is no standard treatment for myeloma patients who relapse at ANY stage of their disease.  In many cases the combination used is a function of what medicines were used before.  Myeloma is incredibly heterogeneous.   Yet ICER has no problem making comparisons and assuming every patient will respond the same.  The Mayo Clinic's Dr. Rafael Fonseca, on the country's experts in treating MM notes: "The value of these interventions can vary significantly by the presence of this various risk factors. For instance a patient who requires stem cell transplant and is considering maintenance should discuss with the treating physician the various options for treatment based on genetic heterogeneity. Patients with standard genetic factors could very well be treated with lenalidomide versus patients who have high-risk disease where the use of proteasome inhibitors it is highly recommended."

Not only does ICER ignore these important variations, it uses a statistical magic trick – called network meta-analysis -- to  turn highly different patients in different clinical trials into carbon copies of each other.   ICER never tells anyone how or why it achieves this transformation.  It never shares its methods or data and it never submits ANY of it's work to peer review.  Instead, a group of 'experts' that also happen to be dues paying members of ICER pass judgment.  

At least NICE has patients on their panels, ICER has none.  NICE has people who actually use the medicines they are evaluating on their panel, ICER has none.   ICER doesn't publish in academic journals: instead it issues it's 'findings' by sending around press releases which are then reported and repeated by medical journals and journalists.  

I could go on.  The number of scientific offenses that ICER commits could fill a book, a very boring book to be sure.   The most important thing to keep in mind, is that for all the statistical mumbo-jumbo, ICER establishes prices and access based upon a GDP+1% cap on the total spending on drugs as a percent of total health spending.  That cap, like ICER’s value measure, is arbitrary and set to, as ICER President Steve Pearson has observed, to “set off alarm bells” about drug prices.   To that point, ICER will only look at single drugs because it's trying to set the price of each drug so it doesn’t add more than $900 million a year to health spending.  Forget about what combination of treatments work best. 

So let me save you the time and effort of reading another ICER report and show you how they crank out their pharmaco-economic fairy tales.  (Trust me, my rough estimates follow the ICER formula without all the footnotes.)
 
Pick what you want to spend to extend someone's life from $50K-150K a year (ignoring consensus economics that it's more like $300K) 

2. Multiply the list price of a drug by the number of patients that could benefit.  

3. Divide that total by the amount you want to spend per QALY (always use $50K even though that number was pulled out of thin air in 1980 to establish the value of dialysis. If you haven't figured out by now, the cost and choice of a QALY cost is subjective.  In the case of ICER and Peter Bach's rationing calculator, it assumes insurers and PBM -- and both fund ICER and Bach --will choose the QALY ) 

4. If your cost per QALY for all patients is above $900 million a year you either reduce the price to meet the cap or restrict access. 

So with that in mind let's look at how ICER acts as judge and jury.

1. There are about 80000 people with MM.   A recent study estimated that 65 percent of patients will relapse each year.  That's 52000.

2. To spend $50k per each life of each of the 52000 would cost $2.6 billion.   

3. Which means we need to cut spending by $1.7 billion one of two ways:

Spend only $17000 per patient.   (By way of comparison, 20 mg Cialis has annual cost (at list price) of $16800. 

Treat only 18000 patients, let 34000 people die.  

I won't even discuss combination therapy because ICER won't, even though it's the best way to treat relapsed patients.  

You can’t blame the media for not taking a closer look -- or at least the same close look they have applied to pharma -- at how ICER measures value.  But that’s because the producers of medical innovation – pharma, biotech, medtech -- have failed to systematically explain the social, economic and medical consequences of the rationing ICER proposes.  

So while I agree with Amgen and other companies that ICER (and Peter Bach) is shortchanging value, I can admire how well they have defined the conversation about drug price.  ICER has done something pharma, biotech and medtech have the resources to do, but never done.   It has effectively and properly defined it's audience as the media, Congress and consumers.  It has been proactive and at least gives the appearance of being objective and ‘independent.’ 
 
The biotech and pharma industry should support a competitor to ICER, one that -- in concert with patients and providers – uses a long term measure of value that takes into account individual differences in needs and response and outcomes that matter, like productivity, quality of life, physical and emotional independence, time spent with loved ones, caregiver burden.
 
I hope the biopharma industry ceases fiddling and responds to ICER’s cherry picking  of data and who lives and dies.  
 
   Read More & Comment...

How PBMs and Insurers Profit By Discriminating Against 4 Percent of Americans

04/06/2016 05:11 PM | Robert Goldberg

The Alliance for the Adoption of Innovations in Medicine (Aimed Alliance), a not-for-profit organization seeking to improve healthcare in the US, released a report today that concluded many of the barriers to treatment that prevent patients from receiving quality care as prescribed by their physicians, may be discriminatory cost-saving measures proscribed by current law.  These practices include:
 
•Fail first policies in which patients are required to fail on older, inferior treatment before getting the treatment their doctors prescribed;
•Adverse tiering in which most, if not all, medications, including generics, used to treat a condition, such as HIV or Hep C, are placed on the highest cost-sharing tier in which up to 50% of costs are passed on to the patient;
•Clinical pathways in which an insurer pays a practitioner to prescribe a cheaper medicine despite the patient’s needs;
•Prior Authorization in which practitioners can spend up to 20 hours a week on the phone with insurers trying to obtain approval for treatment they’ve prescribed for their patients; and
•Nonmedical switching in which insurers are forcing stable patients to switch to different cheaper medications without even informing the patients’ doctor.
 
Stacey Worthy, who directs the Alliance policy shop said, “These practices serve to financially exclude patients with a pre-existing condition, create a blatant conflict of interest for the physician, take up valuable physician time trying to obtain approval for the treatments, and in the end, just serve to save company money.”
 
I’d go a step farther and note that the discrimination is driven by profits.  The claim that such restrictions have to apply most drastically to the sickest patients practices to keep costs down is the opposite of the truth. 
 
We know that patients with HIV, Hep C, cancer, pulmonary disease, autoimmune disorders, comprise about 4 percent of everyone with health insurance.  Health plans state that drugs for these disease now make up 25 percent of all spending on medicines and about 11 percent total health spending.  So that means all the barriers to access described by the AIMED Alliance target 4 percent of patients who make up 11 percent of plan expenditures.
 
Why?
 
It’s not because the 4 percent are such a burden on our health system.  Rather, the growing number of new medicines is a cash cow for pharmacy benefit management companies, insurers and other health institutions.  And limiting access is a way to get biopharma companies to pay to play.
 
Many so-called experts, such as Peter Bach, claim that restricting access to extract discounts is just what we need to reduce drug prices (here he uses hep C drugs as an example):
 

"Saying no, or even the threat, works to lower prices.. More recently, Express Scripts, a company that manages pharmacy benefits, showed that approval was no guarantee. It was therefore able to play two makers of treatments for hepatitis C off against each other. 
 
Express Scripts, once it showed it could say no, got AbbVie to discount its product. It isn’t saying how much, but Steve Miller, a senior executive, said it had “significantly narrowed the gap between prices charged in the United States and Western Europe.” Sounds like the kind of progress we need."
 

Except that the discounts and rebates go to the PBMs and health plans instead of directly to the patients. 
 
Don’t believe me? 
 
Read what Credit Suisse reported about the amount of rebate money being pocketed by insurers and PBMs:
 
“ For 2014, our 20 company universe has shown net US drug sales of $202bn and reported total rebates of $98bn. We conclude that in 2014 US rebates rose 24% against just a 7% increase in net sales, reflecting continued formulary pressures... US rebates rose 24% against just a 7% increase in net sales, reflecting continued formulary pressures.”
 
 
Rebates of $98 billion is 32 percent of total US drug sales (for that 20 company group). 
 
That’s a lot of cash being divvied up by Dr. Bach’s noble warriors against drug pricing.
 
 Read Anthem’s lawsuit against Express Scripts, the PBM Bach hails as a pricing savior.   Anthem is suing the PBM for not sharing more than $13 billion in rebates over four-year period.  The $13 billion is on top of rebates already being given to Anthem.  
 
A good portion of those rebate dollars (I estimate nearly 40 percent) are extracted from the specialty drugs used by the 4 percent of all insured patients (about 11 million).   So “by saying no” as Dr. Bach urges PBMs and insurers are able to share – or squabble over -- $40 billion.  
 
That’s about $3600 per person that is going right to PBM, insurers, hospital systems, pharmacy chains.. everyone except the patient. 
 
Peter Bach says that it sounds like the progress we need.
 
I believe discrimination is not progress, it's illegal and it begs for a legal remedy.    Read More & Comment...

Facts About Cancer Costs: Orphaned and Ignored

04/05/2016 05:05 PM | Robert Goldberg

Let’s compare the claims that cancer costs – and drug costs in particular – are unsustainable with the facts:

“One of the fastest growing components of US health care costs is cancer care, the cost of which is now estimated to increase from $125 billion in 2010 to $158 billion in 2020.1 Although cancer care represents a small fraction of overall health care costs, its contribution to health care cost escalation is increasing faster than those of most other areas.”
                    
                        American Society of Clinical Oncology Statement: A Conceptual Framework to Assess the Value of Cancer Treatment Options


“The combination of increasingly unsustainable rises in the costs of cancer care, the accelerating pace of expensive innovations in oncology, and persistent hope for rescue in patients with life-threatening disease require solutions that incorporate and promote value.”

National Comprehensive Cancer Network® (NCCN®) Policy Summit: Value, Access, and Cost of Cancer Care


And now for the facts: 

“The increase in people living with cancer and the introduction of new therapies are associated with a rise in cancer care costs. Cancer care costs in the U.S. were estimated to be $124.57 billion in 2010, and are projected to increase to $158 to $173 billion by 2020.

The objective of this analysis was to identify trends in the overall and component costs of cancer care from 2004 to 2014 and to create comparisons to cost trends in the non-cancer population. 

We identified the following key dynamics: 

1. The percent increase in per-patient cost from 2004 to 2014 for actively treated Medicare fee-for-service (FFS) and commercially insured cancer patients has been similar to the corresponding increase for the respective non-cancer populations. 

2. The per-patient cost of chemotherapy drugs is increasing at a much higher rate than other cost components of actively treated cancer patients, driven largely by biologics, but the chemotherapy drug increase has been offset by slower growth in other components. 

3. The site of service for chemotherapy infusion has dramatically shifted from lower-cost physician office to higher-cost hospital outpatient settings. 

We have important observations on trends in prevalence, cost, and site of service, summarized below:

 _Over the entire 2004 to 2014 study period, the average annual increase in cost was essentially the same in the actively treated cancer population and the non-cancer population. 

 _Cancer prevalence increased from 2004 to 2014 more than the contribution of cancer patients’ cost to the total population spend. 

 _For patients being actively treated, the portion of spending for cancer-directed pharmaceuticals increased from 2004 to 2014 while the portion of spending for inpatient care declined. 
o In particular, the portion of spending for biologic chemotherapies increased from 3% to 9% in the Medicare population and from 2% to 7% in the commercial population. 

 _The portion of chemotherapy infusions being performed in generally more expensive hospital outpatient settings increased by at least 30%, from 2004 to 2014 with a corresponding reduction in the generally less expensive physician office settings. 

 _As explained in the body of the report, if the chemotherapy infusion site-of-service distribution in 2014 had been maintained at 2004 levels, the estimated Medicare FFS cost per infused chemotherapy patient in 2014 would have been approximately: 
o $51,900 per actively treated Medicare FFS patient instead of the observed $56,100 (7.5% lower) 
o $89,900 per commercial patient instead of the $95,400 observed (5.8% lower) 

    
 Cost Drivers of Cancer Care: A Retrospective Analysis of Medicare and Commercially Insured Population Claim Data 2004-2014 ,  Community Cancer Alliance 


The ASCO and NCCN value frameworks are based on false assumptions and generated tremendous press and discussion.   

My guess is that the Community Cancer Alliance study will be, like many stubborn facts that grate against the anti-pharma narrative, undervalued and ignored.  Why let truth get in the way of what we want to believe?
  Read More & Comment...