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 |

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 |

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 |

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 |

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...

Malpractice Prescriptions

04/04/2016 12:23 PM | Peter Pitts

Interesting article via Bloomberg BNA’s Health Law Reporter, Health Law Experts Outline Best Practices For Staving Off Medical Malpractice Litigation. It’s not a new story – but certainly a timely one. Some snippets ...

Physicians can take a number of steps to avoid being sued for malpractice, including educating themselves about what contributes to claims, improving lines of communication and building solid patient relationships, according to health law specialists and recent research.

Peter J. Pitts, president of the Center for Medicine in the Public Interest (CMPI) and a former Food and Drug Administration associate commissioner, told Bloomberg BNA the findings are ‘‘not surprising. When a physician is dealing with highly acute patients in a stressful environment, with limited resources and finite knowledge—and with lives literally on the line, mistakes in diagnosis, treatment, and follow-up are inevitable and the opportunity for post-treatment patient education and follow-up is limited,’’ Pitts told Bloomberg BNA March 8 in an e-mail. "Hospitals must be focused on both medical as well as systems solutions that may at first be viewed as ‘cost centers’ but will ultimately result in both better patient outcomes and fewer cases of medical malpractice.’’

Pitts added that regular and open communication is always a best practice when it comes to a mutually respectful physician-patient relationship. ‘‘It is also the best way to prepare a patient for the entire spectrum of potential side-effects and clinical outcomes they may experience over the course of treatment,’’ Pitts told Bloomberg BNA. "Silence and surprise are the enemy of mutual respect and understanding."
 
The complete article can be found here.  Read More & Comment...

ICER Unveils New Value-Based Drug Pricing That Includes Additional Cost of Living Longer

04/01/2016 10:15 AM |

ICER Unveils New Value-Based Drug Pricing That Includes Additional Cost of Living Longer
     Calculates How Drugs Increase Health Spending By Increasing Life Expectancy


Boston, Mass. April 1, 2016 – The Institute for Clinical and Economic Review (ICER) has posted an updated version of its value based pricing benchmark that takes into account whether new medicines, by allowing people to live longer, contribute to health care spending growing faster than the overall economy. 

Currently, ICER establishes a price range within which all patients could be treated with reasonable long-term care value without adding short-term costs to the health care system and increasing health spending more rapidly than growth in GDP.  

The new ICER benchmark will include the price of drugs for cancer, HIV, rare childhood diseases and Alzheimer’s and any cost generated by increasing life expectancy. 

“We need prices that make sense,” said ICER President Steven Pearson, MD. “Right now, it’s often a black box: we don’t know if we are getting good value with new drugs at these higher prices.  A drug even one that saves money in the short term could, by keeping people alive longer, actually wind up costing us more.  Our value benchmark currently looks only that whether or not drug spending exceeds an arbitrary cap that maximizes PBM and insurance profits.  The new benchmark now measures the value of drugs in terms of how longer life eats into those profit margins.”

“ICER’s new program will make a huge difference by providing what is sorely needed: a source of information about how much rebate money we can pocket before people die,” stated Steve Miller, MD, Chief Medical Officer of Express Scripts, the nation’s largest pharmacy benefits manager. “We look forward to using it to help us improve the ability of patients to get access to new, innovative drugs that keep them alive as little as possible and at a price that maximizes our profits.”

ICER, funded by a $5.2 million grant from the Laura and John Arnold Foundation (LJAF), ICER will produce public reports on new drugs that have the potential to significantly change patient care and health system budgets. As LJAF Vice President Kelli Rhee explained: 

“Death is the most cost-effective way of lowering medical costs.  If we can find drugs that are good at keep people alive for just a teeny, tiny bit – at least until they pay the next month’s insurance premium – we can make great progress to reining in unsustainable drug spending.”

The new benchmark will be used in developing reports that determine how to ration new drugs. Many of the reports produced will be discussed at the public meetings of ICER’s two core programs, the New England Comparative Effectiveness Public Advisory Council (CEPAC) and the California Technology Assessment Forum (CTAF). ICER tells the media that CEPAC and CTAF are  independent, regional bodies of practicing physicians, methodological experts, and leaders in patient advocacy and engagement that provide objective, independent guidance on the application of medical evidence to clinical practice and payer policy decisions in New England and California.  But that’s bullshit.  They are no more independent of ICER than Crimea is independent of Russia. 


 
In case you didn't know...The press release is an April Fools joke.  Just one of many I have seen and received. April Fools’ Day 2016: Round-up of the best (and the worst) joke and prank headlines

Read more: http://metro.co.uk/2016/04/01/april-fools-day-2016-round-up-of-the-best-and-the-worst-5788075/#ixzz44axY1sL6


   Read More & Comment...

At long last (biosimilar) labeling

03/31/2016 01:54 PM | Peter Pitts

After much anticipation the FDA has issued draft guidence on labeling for biosimilar products.

In two words, no surprises – which for some is better news than for others.

The top of Page 8 will get a lot of attention:

SPECIFIC RECOMMENDATIONS ON CONTENT OF BIOSIMILAR PRODUCT LABELING

FDA recommends that biosimilar product labeling incorporate relevant data and information from the reference product labeling, with appropriate product-specific modifications. The relevant data and information from the reference product labeling that should be incorporated into the biosimilar product labeling will depend on whether the applicant is seeking approval for all conditions of use (e.g., indication(s), dosing regimen(s)) or fewer than all conditions of use of the reference product for the biosimilar product.

And further:

In sections of the biosimilar product labeling that are based on the reference product labeling, it is anticipated that the text will be similar. Text based on the reference product labeling need not be identical and should reflect currently available information necessary for the safe and effective use of the biosimilar product. Certain differences between the biosimilar and reference product labeling may be appropriate. For example, biosimilar product labeling conforming to PLR and/or PLLR may differ from reference product labeling because the reference product labeling may not be required to conform to those requirements at the time of licensure of the biosimilar product. In addition, biosimilar product labeling may include information specific to the biosimilar product necessary to inform safe and effective use of the product, which could include differences such as administration, preparation, storage, or safety information that do not otherwise preclude a demonstration of biosimilarity.

And, of course, in order to maintain maximum regulatory, um, flexibility --

FDA acknowledges that there will be variations on the general concepts outlined in this section because the approach to product identification will depend on the specific statements.

 (Note – highlights are mine, not FDA’s.)
 
An update article in Modern Healthcare makes an interesting point, “Federal regulators are likely trying to simplify physicians' understanding of the products' efficacy and safety. By definition, a biosimilar product has no clinically meaningful difference in terms of safety, purity and potency.”

If what practicing physicians understand about biosimilars is anything akin to the knowledge scale of the FDA’s Arthritis Advisory Committee -- as demonstrated during the meeting that considered the biologics license application for a proposed biosimilar to Remicade (infliximab) – then the agency’s attempt at “simplification” may result in some very serious unintended consequences. From the very beginning of the adcomm, it was clear the expert members of the committee didn’t understand what biosimilars really are, nor the pathway the agency uses to review them. Not good.

Can you spell “immunogenicity?”

Per being upfront that the product is a biosimilar, the agency is unambiguous:

FDA recommends inclusion of a statement, on the line immediately beneath the initial U.S. approval date in Highlights, that the product is biosimilar to the reference product. It should read as follows:

[BIOSIMILAR PRODUCT’S PROPRIETARY NAME (biosimilar product’s proper name)] is biosimilar to[ REFERENCE PRODUCT’S PROPRIETARY NAME (reference product’s proper name)] for the indications listed.

Although the FDA notes that the labeling does not need to be identical to information based on the reference product, it’s a pretty safe bet that manufacturers of biologics will likely take issue with competitors using their data for a product that is not exactly the same.

Gentlemen, start your engines.  Read More & Comment...

The Abuse Deterrent Opioid Ecosystem

03/22/2016 10:18 AM | Peter Pitts

I've said it before and I'll say it again, addressing opioid abuse and addiction isn't just a formulation problem ... it's a systems problem.

Consider Utah Attorney General Sean Reyes' op-ed on opioid abuse (A smart way to counter prescription drug deaths). There are a few things that need to be added – and amended.

The vast majority of patients using non-abuse deterrent opioids do so safely and as directed. A subset, approximately four percent, abuse. And government statistics show that 78.5% of those who abuse prescription pain medication did not obtain the drugs from a physician in the first place.

Should non-abuse deterrent opioids ultimately disappear from the marketplace? Absolutely. But removing an entire category of generic products when there are no generic abuse deterrent alternatives not only does eradicate the abuse and addiction problem (since even abuse deterrent opioids can be abused) but punishes the millions of Americans who need opioids to address their chronic pain. Insurance companies are not ready to regularly reimburse for new, abuse deterrent formulations – despite steep discounting by manufacturers. The numbers are staggering -- 240,120,330 non-ADF generic opioids were prescribed in 2015 (nearly a quarter of a billion tablets) versus 5,068,398 branded opioids with ADF properties.

Further, payers often implement barriers to the use of branded, on-label non-opioid medicines, relegating these treatments to second line options. 52% of patients diagnosed with osteoarthritis receive an opioid pain medicine as first line treatment as do 43% of patients diagnosed with fibromyalgia and 42% of patients with diabetic peripheral neuropathy even though there are FDA-approved, non-opioid medicines specifically designed and labeled to treat these conditions.

Payers should step up to the public health plate and do the right thing right now.

Should the FDA, as General Reyes suggests, “… commit to following recommendations made by its advisory committees?” No. That is not the role they play. FDA Advisory Committees advise. It is (and should remain) up to the experts at the FDA to make the final decision. Ultimate responsibility must always reside with the regulator. (The FDA advisory committee that reviewed the controversial opioid Zohydro voted 11-2 that there was no evidence to suggest it had greater abuse or addiction potential than any other opioid.) 

Most importantly, a smart public health strategy would be a robust effort to better educate physicians on appropriate prescribing – something the FDA has been calling for regularly. Today the agency announced it will require short-acting opioid pain medications to carry a boxed warning about the serious risks of misuse, abuse, addiction, overdose and death. It’s a good next step.
   Read More & Comment...

Proto thoughts on 21st Century Cures

03/21/2016 09:49 AM | Peter Pitts

From the pages of Mass General’s Proto Magazine …

Should Congress Pass the Cures Act?

Two experts face off on new legislation that aims to speed up the approval process for drugs and medical devices.

IN JULY 2015, the United States House of Representatives approved the 21st Century Cures Act with broad bipartisan support. The legislation, which aims to “save more lives and keep this country the leader in medical innovation,” provides $8.75 billion in funding for the National Institutes of Health and accelerates approval processes for drugs and medical devices. But as the bill heads to the Senate for approval, critics argue that pharmaceutical and biotechnology interest groups will benefit at the expense of patient safety.

Yes. The act will allow the FDA to approve effective drugs and devices faster while maintaining high safety standards, says Peter Pitts, a former FDA associate commissioner and president of the Center for Medicine in the Public Interest. 

Where you stand depends on where you sit. If you’re a patient with a life-threatening disease, the FDA is often viewed as a roadblock to innovation. If you’ve suffered a serious side effect of an FDA-approved medicine or device, you may view the process as too swift and cavalier. Both positions fail to take into account a basic truth—there is no such thing as a drug or medical device that is 100% safe. 

FDA review is based on a benefit/risk balance. What’s new is that the patient’s voice is now being considered in that calculation. And it’s about time. The FDA has also recognized the urgency of a more comprehensive, strategic program for tracking performance once a product is on the market. A focused, more risk-based approach provides important balance to sophisticated cutting-edge scientific techniques, particularly as we move toward a more aggressive effort to validate biomarkers, that now make it possible to truncate the traditional clinical trial process. Shorter review cycles on the front end are being matched with more rigorous, real-time post-market surveillance.

The draft legislation will allow the FDA to approve a groundbreaking drug if it proves effective after a phase II trial. That will deliver treatments to patients much sooner and eliminate the need for some phase III trials, which take years and account for 90% of the total development costs for drugs that eventually gain FDA approval. The 21st Century Cures Act will also spur new drug development by helping innovators to “fail faster” through earlier and more regular meetings in the review process. Identifying even 5% of eventual failures in phase I instead of phase III will save at least $15 million per drug—allowing drug companies to redirect billions toward promising new treatments.

Victory will result in the FDA bringing new products to market both more quickly and with more information about their safety. Initiatives such as 21st Century Cures will transform the FDA from a perceived roadblock to an innovation enabler.

No, because the act will lower the bar for approval of certain therapeutics, says Ameet Sarpatwari, assistant director of the Program on Regulation, Therapeutics and Law, in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital.

Two sets of provisions are particularly alarming. The first concerns medical devices. The act would prompt the FDA to treat case histories and peer-reviewed studies as valid scientific evidence and would also loosen regulations controlling the safety and effectiveness of alterations to the devices that take place after their initial approval. The creation of a novel pathway would also enable FDA approval of high-risk medical devices on the basis of “clinically significant” surrogate measures, such as their effect on a biomarker, and would also require the agency to complete its review within six months. 

Each of these changes could open the door to patient harm. Making approval decisions based on scant data increases the risk of adverse events once a device is widely used, and many surrogate measures have proved to be poor predictors of actual clinical outcomes. Case histories and peer review, meanwhile, are plagued by quality concerns. Additionally, even small changes to medical devices can prove deadly, as several high-profile recent cases can attest. It is better if such changes are reviewed by the FDA, rather than by the company itself or a third party paid by the company.

The second set of provisions involves antimicrobials. To combat the growing threat of multidrug resistance, the act would also authorize the FDA to approve certain antibiotics and antifungals on the basis of preliminary, uncontrolled clinical trials as long as those medications carry a disclaimer that explains their “indicated use in specific populations of patients.” However, evidence suggests that disclaimers on drug labels are inconsistently read, let alone heeded.  

These measures collectively represent a fundamentally flawed attempt to promote medical innovation. They would lower the bar for therapeutic approval in several respects, threatening to take us back in time to the patent medicines era in which unsafe and ineffective products flooded the market. The Senate would be wise to start anew in determining what, if any, changes to the regulatory apparatus are necessary as prescription drug and device development expands in the 21st century.  Read More & Comment...

Soul Searching on Sole Sourcing

03/16/2016 04:38 AM | Peter Pitts

National Public Radio’s Marketplace program reports:

The Food and Drug Administration recently said it’s going to prioritize any generic drug application when there’s currently just one manufacturer.

Here’s why:

At the University of Utah Healthcare, pharmacist Erin Fox said in about a year, the heart medication Isuprel went from $50 a dose to $1800 after Valeant purchased the drug.

She said they had always stocked on crash carts.

“Basically, it’s the kind of [drug] you might see on TV, code blue, cardiac arrest, everyone is rushing around,” she said. It’s the kind of medication that can save a life, she said.

But at $1800 a dose, it got pulled off the carts, only to be used in extreme emergencies.

This is what happens when a company has a lock on a given drug.

Some estimate there are 500 generic drugs – for everything from cancer, to multiple sclerosis to heart disease – that currently have virtual monopolies. And companies like Valeant and Turing have taken advantage.

“This is a good circumstance of the FDA actually getting out in front of a problem before it becomes serious,” said Peter Pitts, a former associate FDA Commissioner. “I think this is a program that’s going to have significant impact.”

Pitts said cutting the application process from 2-3 years to as short as six months will help clamp down on some of the price gouging. The FDA says it has 125 current submissions for drug approvals that will be expedited. 

Former industry CEO George Zorich wondered if that’s enough of an incentive.

“If I’m a manufacturer, I’m hard pressed just to drop everything without some discussion from the FDA and some real frank discussions with the [FDA],"  he said.

Some major generic manufacturers – and the industry trade group - declined interview requests. In statements, several simply said competition is important.

Perhaps an indication that speeding up the FDA process is just one step needed to drive more competition.

The NPR story can be heard here.

My conversation with the reporter also included the issues related with inadequate CMS reimbursement policies as a cause for single source products – but it didn’t make it into the brief radio report.

We need to focus on the perverse economic incentives of Average Sales Price (ASP) as a key factor behind the problem.

We need legislation to deal with:

* Price Stability — Change the Medicare reimbursement rate for generic injectable products with 4 or fewer active manufacturers from Average Sales Price (ASP) + 6% to Wholesale Acquisition Cost (WAC) in order to achieve market price stability.

* Medicaid/340B Rebate Exemption — Exempt generic injectable products with 4 or fewer active manufacturers from Medicaid rebates and 340B discounts in order to achieve market price stability.

The FDA has done its part. Now it’s time for Congress to step up to the plate.  Read More & Comment...

Incentivizing ADF Opioids

03/15/2016 04:25 AM | Peter Pitts

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 when it comes to Category 3 and 4 labeling opportunities for abuse deterrent formulations (ADF) Labeling is the basis for articulating the value proposition of a product. And, in the case of Categories 3 and 4 – that value is likely or proven abuse deterrence. It’s harder than it sounds.

Category 3 products, based on pre-approval clinical trials are “expected to reduce abuse.” A Category 4 product, based on real-world evidence “has been shown to reduce abuse” – the Holy Grail of ADF labeling language.

Data definition and generation for categories 3 and 4 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 ADF characteristics. And the FDA continues to talk about the ambiguous totality of evidence standard – which really means using their best regulatory judgment.

The path forward is unclear. Is real world data reliable and robust enough? Should the FDA define and then assign various statistical weights to ADF comparison and population studies? And what about REMS reporting? 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 abuse deterrent labeling language. Nobody said it was going to be easy.

The challenge is that, when it comes to categories 3 and 4 (and especially 4), there’s limited data and (at present) no numerical threshold to define “meaningful reduction” in abuse. Obviously, more work needs to be done in order to refine optimal data sources, study design, statistical methods, and epidemiologic outcomes of interest both developers, regulators, physicians, and patients – and payers.

Payers, at least to date, have been unwilling to aggressively tier existing approved ADF opioids on their formularies. While nearly 60% of branded opioids contain ADF properties, only 2% of generic products do. The numbers are staggering -- 240,120,330 non-ADF generic opioids were prescribed in 2015 (nearly a quarter of a billion tablets) versus 5,068,398 branded opioids with ADF properties.

Would more aggressive Category 3 and 4 labeling help to change this shortsighted, cost-driven criterion? Stay tuned.

And this raises another FDA question, how will the agency assess ADF generic formulations. Beyond traditional AUC bioequivalence, how will the agency measure “abuse equivalence?” FDA guidance has been promised and is anxiously awaited.

For ADF innovators, a predictable regulatory pathway towards Category 4 labeling will incentivize continued investment and comprehensive reimbursement strategies. For generic manufacturers, defining best practices for for “abuse equivalence” programs will allow the Hatch/Waxman paradigm to take effect, driving prices down while also incentivizing further branded innovations.

As Dr. Douglas Throckmorton, the FDA’s point man on opioids said at the recent meeting of the Agency’s Science Board, “FDA will act within its authorities in support of our public health mission to help defeat the epidemic of opioid abuse through a science-based and continuously evolving approach by improving the use of opioids through careful and appropriate regulatory activities, improving the use of opioids through careful and appropriate policy development, improving the treatment of pain through improved science, and improving the safe use of opioids through communication, partnership and collaboration.”

The public health goal is safe, effective, and affordable access to opioid pain relief. Active partnerships between academics, developers, payers, patients, and physicians are crucial. And, as is often the case, the FDA is at the center of the ecosystem.  Read More & Comment...

The Five Facts About Drug Pricing HHS (and the media) Missed

03/10/2016 02:50 PM |

HHS’s report on drug pricing has been hailed as an yet more evidence of “skyrocketing” drug prices according to many reporters.
 
They should have taken the time to read the entire report instead of the press release.  Facts are stubborn things, even if a press release ignores them or if media outlets like Fierebiotech Emily Wasserman or WSJ reporter Stephanie Armour.  Here are 5 such data points that they and others in the media could have gleaned from the study and a short Google search instead of spending time getting quotes from Peter Bach.
 
1. Drugs as a percentage of personal health spending has remained the same since 2009 (12 percent) and is projected to increase at a rate that does not boost that percentage much. 
 

2.  It uses personal health spending vs total health spending to inflate the percentage devoted to drugs.  Drugs are 9.3 percent of total spending vs 11.8 percent of personal health spending

3.Drug pricing is less than 5 percent of total increase in spending.  New medicines contributed $20.3 billion to growth in 2014, including $11.3 billion from four new hepatitis C treatments as nearly ten times as many patients were treated in 2014 than in 2013.   Prices for branded products rose in 2014 at an average rate of 13.5% on an invoice basis, but were reduced to 7-8% taking into account off-invoice discounts and rebates which offset most of the increases.  (Medicines Use and Spending Shifts. Report by the IMS Institute for Healthcare Informatics. 2015)

4.Which means rebates as a percent of drug prices has grown faster than drug spending.

5  HHS claims that drug spending is additive but in fact it has reduced the rate of overall spending, as the CBO and other research outlets has shown.
 

 
 
 
   Read More & Comment...

More Drug Pricing BS From Fierce Pharma

03/14/2016 04:53 PM |

I thought it wasn’t possible for FiercePharma do be  less honest and inaccurate about drug pricing than it’s past track record.  But with “Hospitals Join Drug Pricing Battalion” the publication has reached a new low – or high – depending on your point of view.

FarcePharma editor Emily Wasserman asserts: “ U.S. hospitals are alarmed over rising drug prices, and like lawmakers, patients and doctors, they want to do something about them.”

Really?  So why is the American Hospital Association opposed to proposals to reduce Medicare reimbursement of they drugs they buy and bill but in favor of expanding discounts meant to make drugs affordable for poor people?  

We will answer that question in a moment.  But first, let’s take a look at how regulators are trying to curb drug prices.  Recently the  Obama Administration introduced a  proposal to cut a payment it makes to doctors who administer injectable drugs under Medicare. Specifically, , “Medicare Part B generally pays physicians and hospital outpatient departments the average sales price of a drug, plus a 6% add-on. The proposed model would test whether changing the add-on payment to 2.5% plus a flat fee payment of $16.80 per drug per day changes prescribing incentives and leads to improved quality and value.”

The goal is to encourage doctors to prescribe cheaper drugs, which Wasserman suggests is exactly what hospitals want.  But just how much of a problem is the 6 percent fee in determining what drugs are used and priced.   After all, doctors don’t set drug prices, the hospitals, health plans and PBMs do.  Doctors only get a percentage of what Medicare reimburses for Part B drugs, not the price set by the other interests.  So why the opposition? 

This is not the first time Medicare changed the payment model under part B.  

It changed in 2003 under the Medicare Modernization Action (MMA).  Prior to the MMA, under the Balanced Budget Act (BBA) of 1997, Medicare reimbursed physicians at 95 percent of the average wholesale price (AWP) for each drug that physicians billed or the actual charge, which ever was lower.[1] However, the BBA did not provide a clear definition, or uniform reporting requirements.

Medicare part B drug spending increased by 25 percent a year before reimbursement was changed to ASP plus 6 percent.  Since 2006 Medicare part B drug spending has increased by about 4 percent a year. 

But a lot of the decline is a result of the introduction of many oral formulations for cancer and autoimmune diseases.  So it’s unclear whether the shift in reimbursement had any effect. 

Further, the Budget Control Act of 2011 decreased Medicare reimbursement by two percent, impacting the thin margin available for cushion in Part B drug payments and reducing the ASP add-on from 6 to approximately 4 percent.   This also has had no effect on the use of Part B medicines. 
 
The General Accountability Office notes that, “New Part B drugs are more likely than new non-Part B drugs to have used an FDA expedited program or to have received an orphan designation which applies to drugs that treat rare conditions and are received by a relatively small number of people. “

Expenditures for new Part B drugs were concentrated among a small number of drugs and conditions, and most new Part B drugs were costly for beneficiaries. GAO identified expenditures in 2013 for 75 of the 83 new Part B drugs. Expenditures for these 75 drugs in 2013 were concentrated among 3 drugs—Lucentis, Eylea, and Prolia—which accounted for 53 percent of the $5.9 billion Medicare and its beneficiaries spent on new Part B drugs. The 20 highest expenditure drugs accounted for 92 percent of 2013 expenditures on new Part B drugs and for 26 percent of total expenditures for Part B drugs

 But even then, new part B drugs did not drive up total part B drug spending as a percent of Medicare spending.  

 



Meanwhile, the ‘battalion’ is all in favor of expanding the number of Medicare Part B drugs qualifying for deep discounts.  “Hospitals and its beneficiaries paid $3.5 billion for 340B-purchased drugs in 2013. In the aggregate, Part B payment amounts were 58 percent more than the statutorily based 340B ceiling prices that year, which allowed covered entities to retain approximately $1.3 billion. The 340B statute does not restrict how covered entities may use these funds.  ”

That’s the GAO’s way of saying that hospitals pocket the difference.  

Indeed, as Adam Fein notes in Drugchannels, “the  discounted purchases hospitals  made under the 340B Drug Pricing Program hit $12 billion in 2015. That’s a whopping 67% higher than the 2013 figure. I estimate that the undiscounted value of these purchases exceeds $17 billion.

Most 340B purchases are made by hospitals. My exclusive number-crunching below reveals that hospitals now receive 340B discounts on more than 44% of their drug purchases. As I predicted two years ago, the 340B program is taking over the hospital market.”

So of course hospitals want cheaper drug prices!   They are betting that deeper discounts will fatten their margins.   



  Read More & Comment...

Jimmy Carter's Cancer Cure Demeaned By Bach Cancer Abacus

03/08/2016 12:52 PM |

Jimmy Carter is cured of advanced melanoma.  The former president was given Keytruda right off the bat.  

But he would have been denied that medicine if Peter Bach and his cancer pricing abacus and the PBMs that have him on their payroll have their way.  The same goes with orphan drug deniers over at ICER who use essentially the same model Bach deploys.  That’s because Bach calculates that Keytruda adds no more benefit than two generic drugs that were standard of care in treating melanoma.   

Why do we care if Bach fiddles with his Abacus?

Recently both CVS and Express Scripts announced they were rolling out plans to determine the price and access to cancer drugs based on the value per indication as set by Peter Bach’s hedge fund funded cancer abacus.  And health plans are using the abacus to determine what drugs to pay for when setting up one size fits all pathways.

To top it all off, Bach and ICER get money from the same hedge fund guy.  ICER is stacked with PBM and health plan types.  And they all sit around setting prices in ways that should be of some interest to the career attorneys in the Department of Justice Anti-Trust Divison.  But more on this price control superPAC in another post. 

For now, let’s see how Jimmy Carter – who received Keytruda as first line therapy for his advanced and metastatic melanoma – would have fared under Bach’s abacus guided price. 

1.     Bach would pay only $2000 for a month supply (4 vials) of Keytruda instead of the Medicare price of $9200.   Essentially Bach pegs the price to the average overall survival of a drug compared to standard of care.  So apparently Bach believes that Keytruda is not much better than interleukin-2 and dacarbazine unless you cut the price to match those two generic drugs.   
2.    In general, Bach pays less for less overall survival even if a new drug or combination has produced the first clinical benefit in years.   Hence, Bach would pay $470 to use Erbitux in an indication specific arrangement for advanced head and neck cancer (compared to about $10000 for colorectal cancer.)   Yet Erbitux was the first drug in decades to increase overall survival.   In other words, as a disease becomes more difficult to treat the less Bach pays for it.    Innovators are being told they will get paid below generic prices to help patients with greater needs.
3.    Both CVS and Express Scripts put Keytruda in it’s highest cost sharing tier.   Assuming a 40 percent cost share (based on the retail price and NOT the rebated price) patients would pay $3600 for the first month of treatment.  
4.    Anthem’s so called Cancer Quality Pathways (which pays doctors to use only certain drugs) excludes Keytruda from it’s list of medicines.  

The reliance of the Abacus for indication specific pricing pre-empts a more ethical approach to treatment selection.

The Abacus accepts the one size fits all survival response when genetic and tumor variation affects outcome.   The Abacus ignores the fact that better information of the variation in patients and treatment response translates into more life years and better quality of life.  

Indeed, the value of identifying cost-effective treatments at the individual level for cancer patients is more than 100 times annual value of identifying the cost-effective treatment on average for the cancer population.  THE ABACUS EXCLUDES THAT VALUE. 


The Abacus completely ignores that many medicines are used in combination to treat melanoma.

The Abacus, as used, will enrich PBMs and insurers.   CVS has openly stated that it will use indication pricing to maximize spreads between acquisition cost and retail prices.  For instance, CVS VP and Head of Specialty Client Solutions Surya Singh told the National Business Coalition on Health said "I think we want to pay more for drugs that work better...to push [manufacturers] to think about pricing things that have a better impact on survival at a higher price point and pricing things that don't have as much impact on survival at a lower price point," 

Singh used the Bach abacus to claim:  "Herceptin has gotten a lot of attention for being very good in breast cancer. It's very well studied and has great benefits...It's also used in gastric cancer. The benefit in gastric cancer is minimal, but [the indication] is on label. Should we pay the same for the drug on a unit costs basis when it's used for something where it doesn't work as well? I don't think so."

Except that prior to Herceptin, people with advanced gastric cancer had NO other treatment options.  It was originally given to the 15 percent of gastric cancer patients that had ERBB2 overexpression and/or amplification.  Overall survival was modest (2.7 months) , but significant because of dearth of other therapies to keep people alive.  Now there are  large initiatives   to identify subsets of gastroesophageal cancer based on patterns of immune response.   That's how innovation evolves.  Cutting the price of taking on the most challenging tumor types cheapens the lives of those seeking to survive. 

Finally, the Abacus – like many other value frameworks including ICER – ignore the value of hope and quality of life that patients place on better therapies.  I regard the use of the Abacus to make reimbursement decisions without patient consent or to use the Abacus to convince patients that certain drugs are not as valuable as others is unethical.    

As a former president, Jimmy Carter was able to get the best care for his melanoma.   There is a chance that he’d be dead if Peter Bach’s abacus was used to guide treatment and access.

Unfortunately, it looks as though Bach’s deadly calculation will be used to ration new cancer drugs and demean their value in helping patients with most advanced tumors.   

Which raises another, broader question:  Who put Bach in charge?  How are PBMs able to determine what drugs we get and how much we pay for them based on how much profit they can generate?  

Why aren’t payors and PBMs using a more holistic and patient-centered approach to treatment selection (one that measure total economic value)?

I am happy to hear of President Carter’s cure.  I am afraid that PBMs, powered by an abacus deliberately indifferent to patient differences and tumor complexity, will deny more Americans of the same opportunity to survive and thrive.   Read More & Comment...

The Single Payer Fantasy

03/08/2016 06:46 AM | Peter Pitts

From today’s edition of the Philadelphia Inquirer --

Single-payer health care unworkable, too costly

In an attempt to halt Bernie Sanders’ rise in the polls, Hillary Clinton is waging a campaign against his single-payer health plan. Remarkably, one of Clinton’s main criticisms is that Sanders’ scheme would undermine the cause of federally controlled health care by giving too much power to the states. Yes, we must be in an election year.

As Clinton has put it, Sanders “wants to roll Medicare, Medicaid, the Children’s Health Insurance Program, the Affordable Care Act program, and private health insurance into a national system and turn it over to the states to administer.”

The real problem with a single-payer system, however, is much simpler: The approach has failed everywhere it has been tried — from Europe to Canada to Sanders’ own state of Vermont. In almost every instance, government-run health care has suppressed medical innovation and made it harder for patients to get the treatment they need at a price they can afford.

Both candidates ought to be discussing practical ways to fix our health system’s most serious flaw — too much government intervention. Instead, they’re quibbling over the many faults of a single-payer program that would dramatically lower the quality of care for all Americans.

While he has yet to provide many serious details, Sanders’ proposal creates a single-payer health program that would “cover the entire continuum of health care,” from inpatient care to hearing, vision, and oral health.

Sanders tends to frame his plan as a way to “join every other major industrialized nation on Earth and guarantee health care to all citizens.” But one need only look at these other nations to understand why Sanders’ vision is a step in the wrong direction. As anyone who has ever stood in line at the Department of Motor Vehicles can understand, government-run systems are invariably wracked by inefficiencies. When it comes to health care, one size doesn’t fit all.

For instance, Canadian patients hoping to see a specialist physician can expect to wait more than 18 weeks. An MRI scan in that country takes more than 10 weeks. Waiting times have grown so long in Sweden’s single-payer system that one in 10 citizens has opted for private coverage.

In order to contain health costs, Sanders promises to “stand up to drug companies and negotiate fair prices for the American people.” But again, the disastrous effects of drug price controls have been clearly demonstrated throughout Europe.

To take one example, the United Kingdom’s National Health Service (NHS) consistently denies patients access to the most up-to-date treatments if they are deemed too expensive by regulators. These decisions often lead to avoidable suffering for those in need of care. Last summer, in fact, British health administrators refused to pay for a breakthrough ovarian cancer drug until patients had undergone three rounds of chemotherapy.

Drug price controls also come at the expense of medical innovation, as they weaken the incentive for pharmaceutical firms to invest in research and development. In the 1970s, four European countries invented 55 percent of the world’s new drugs. Decades of increasing price controls in Europe pushed drug development efforts — representing hundreds of billions of dollars of investment and economic activity — to the United States. Between 2000 and 2010, those four countries accounted for a third of pharmaceutical innovation, while the U.S. share rose to 57 percent.

The nonpartisan National Bureau of Economic Research cautions that “cutting \[drug\] prices by 40 to 50 percent in the U.S. will lead to between 30 to 60 percent fewer R&D projects being undertaken.” Less research means fewer new medicines and fewer lives saved.

Then there’s the issue of cost. Sanders estimates his plan will cost the country a whopping $1.38 trillion a year — money he intends to raise through a variety of tax hikes. As Sanders knows, this is precisely the strategy that failed in his home state in 2014.

Vermont Gov. Peter Shumlin had planned to pay for a statewide single-payer system through significant tax increases. After realizing how expensive the program would be, Shumlin abandoned it, admitting that “the potential economic disruption and risks would be too great to small businesses, working families, and the state’s economy.”

Even in liberal Vermont, 64 percent of residents supported Shumlin’s conclusion that a government-run health system comes at too high a price. Yet, single-payer health care now dominates the conversation between the leading Democratic candidates. As the policy has no history of success and poses immense risk to our health sector, what is there to debate?

Peter J. Pitts is president of the Center for Medicine in the Public Interest and a former Food and Drug Administration associate commissioner.    Read More & Comment...

Peter Bach’s Latest Article Is A Trump-Like Waste of Time

03/07/2016 11:14 AM |

Peter Bach is the Donald Trump of health care policy.   I am not referring to his hair or hand size.  No, Bach – like the Donald – is a master of enchanting his followers with outrageous statements that scapegoat easy targets and unfairly attack them for acts of greed that you are actually guilty of committing.  And it helps to have megaphones in the media who agree with you to promote your false position.  (Bach’s newest mouthpiece is Gardiner Harris, who has returned to the NY Times to write fiction about the pharmaceutical industry.)

The most recent manifestation of Bach’s Trumpism is a ‘study’ he published in the British Medical Journal (I am assuming his co-authors were either blackmailed or brainwashed) claiming that US drug companies systematically increase the dose size of biologic injections for cancer and autoimmune disease even though smaller amounts are used for no other reason than profit.  Bach and company assert that firms should produce smaller vials of medicines because it would save the US health system $3 billion a year. 

But as with most of what Bach does, the BMJ article is a pseudo-economic exercise shorn of relevant facts that undermine his central argument.  In fact, the issue of what to do with remaining medicine is more complex.


1.     Most medicines – whether they are in injectable or pill form – come in a fixed number of doses.  Dose sizes are based on averages of weight, age, severity of disease.  They are NOT produced in the amount just right for you and me. 
2.    Dose size is almost always determined by what the FDA establishes is the safest and most effective dose for an average patient population.  Quantity is not driven by profit.  Rather, one of the biggest reasons drugs in development do not make it to market is the wrong dose size.  Even today, lots of clinical trials flop because companies because companies use the wrong dose in studies to measure clinical benefit. Failure to select an ‘optimal’ dose to show effectiveness is the single reason drugs are either delayed or rejected by the FDA.  
3.    To minimize risk, developers are often evaluating doses near the maximum tolerated levels.  And more to the point about drug waste, companies limit the number of dose sizes tested in order to avoid testing doses that don’t work and then force the company to do every trial over again. 
4.      Companies must also follow FDA and USP guidelines that govern how much of a drug can be in a vial. The FDA has urged companies to move away from a multiple number of smaller vials to a larger single vial. 
5.    In addition, many injectable products are now made by generic manufacturers.  The increase in the frequency and number of shortages for such drugs is due to a combination of increased production and formulation costs and government fixed prices.  The incentive for additional dosage amounts is therefore limited or non-existent.

Since Bach and co-authors are intent on accusing drug companies of simply going with larger doses to rake in profits, it is not surprising that they ignored these important regulatory and scientific factors. 

Nor is it surprising that Bach and friends note – incorrectly -- that many cancer drug doses are based on body surface or body weight.  In an exclusive New York Times interview timed to the release of their ‘study Bach says sarcastically. “Drug companies are quietly making billions forcing little old ladies to buy enough medicine to treat football players, and regulators have completely missed it,” said Dr. Peter B. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering and a co-author of the study. “If we’re ever going to start saving money in health care, this is an obvious place to cut.”


Bach increasingly makes statements that support his case and are quotable, that are also false or without substance.  (He recently claimed that new drugs that eradicated Hepatitis C virus were NOT a cure.)   Similarly, in asserting that drug companies are endangering frail elderly females by giving them enough of a drug to treat a defensive end, Bach fails to mention there is an absence of scientific evidence that such dosing is safer or more effective than flat fixed dosing.  The implementation of so-called genotyping and phenotyping strategies, and therapeutic drug monitoring, may probably be of more clinical value.

He also ignores how hospitals and oncologists can benefit from ordering bigger dose sizes.  Peter Ubel notes: “Oncologists purchase intravenous chemotherapy from pharmacies. Patients then receive these drugs in the oncologists’ offices, with outpatient chemotherapy being an increasingly common setting for cancer care. The oncologists then bill patients’ insurance companies for the treatments, including billing the payer for the cost of the chemotherapy PLUS a percentage based mark-up.

 Medicare, for example, receives bills from oncologists that charge 106% of the cost of the chemotherapy. Many private insurers pay even larger mark-ups, especially from oncology practices that dominate their local markets and thus have pricing leverage.

This “buy and bill” practice creates an incentive for oncologists to prescribe expensive treatments.  After all, a $6 mark-up on a $100 treatment doesn’t do much for the bottom line. But that $600 mark-up on a $10,000 treatment? Give that treatment to enough patients and we’ll soon be talking about real money.”

Indeed, it is ironic that Bach and one of his co-authors, Leonard Saltz, became crypto famous by getting Sanofi to cut the price of a cancer drug by 50 percent and writing about it  a New York Times op-ed piece.  The duo asserted that they wouldn’t prescribe the drug because it cost twice as much as Genentech’s Avastin (bevacizumab), a competing biologic drug with similar expected clinical outcomes for colorectal cancer patients.  In response, Sanofi said they would reduce the price of the drug by 50 percent.


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

Finally, hospitals are profiting from the deep discounts they receive on injectable drugs under the previously mentioned 340 B program, a federal policy under which, “hospital outpatient departments can purchase oncology drugs using the deepest discounts available”.  

Adam Fein has skewered the 340 B program on a number of occasions.  In one article he discussed a study the concluded  that some 340B hospitals simply pocket the extra profits. The New England Journal of Medicine paper examined the behavior of “charitable hospitals.” As this summary notes:

“Only 42 percent notified patients of their eligibility for charity care before attempting to collect medical bills and only 29 percent had begun charging uninsured and under-insured patients rates equivalent to private insurance and Medicare rather than standard, higher charge master rates.”  

Indeed, another pricing expert noted that the use of drugs for the poor as a profit center is part of the broadere focus of hospitals, PBMs and insurers on generating “primary revenue being from the buying and reselling of drugs”.

That assertion was made by Peter Bach. 


So what about drug waste as if the facts mattered?

Many hospitals have robust programs consistent with FDA and USP guidelines to use to make up from lost  5 % of total anticancer drug expenditure   The economic loss due to their waste equaled 4.8% of the annual drug expenditure.   In particular, hospitals use dose rounding to generate significant cost savings by eliminating drug waste.

So Bach’s effort to blame drug companies for waste generated greed is, like many of his recent attacks on drug prices, largely free of facts and at odds with the reality.

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FDA's Abuse-Deterrent Commissioner

03/02/2016 09:08 AM | Peter Pitts

Yesterday the FDA Science Board discussed the agency’s approach to opioids.

FDA presenters included agency point-man Doug Throckmorton (Deputy Director for Regulatory Programs, CDER), Janet Woodcock (Director, CDER), Sharon Hertz (Division Director, Division of Anesthesiology, Analgesia and Addiction Products), Gerald Dal Pan (Director, Office of Surveillance and Epidemiology) – and newly confirmed FDA Commissioner Rob Califf.

Califf was there at the beginning of the meeting (expected) and stayed through the entire length of the day-long affair (unexpected). An important signal that he intends to be a hands-on leader.

I was chosen to speak during the open public comment part of the hearing, and spoke about using real-world information to provide providers and patients with information beyond the limited world of pivotal trials. Here are my brief remarks:

Former Canadian Prime Minister Pierre Trudeau once said, “There's no place for the state in the bedrooms of the nation.“ But what’s the appropriate place for the state in examination rooms, pharmacies and medicine chests – particularly for opioids? There is no such thing as a medicine that is 100% abuse-proof. The only abuse-proof medicine is one that is never prescribed – and for the tens of millions of Americans suffering from chronic pain that isn’t a viable option.

Advancing the manufacturing science of abuse deterrence is an important step in the right direction. According to the Journal of Pain, in a real-world study, abuse by snorting, smoking, and injecting prescription opioids declined by 66% after the reformulation of a drug with abuse deterrent properties. And the New England Journal of Medicine reported that a new formulation decreased abuse from 35.6% of respondents to 12.8% in 21 months.
But cutting the Gordian Knot of abuse means more than advancing the science of abuse deterrence. It means working with the providers of Continuing Medical Education to develop better curricula. It means more targeted Risk Evaluation and Mitigation Strategies. It means enhanced and validated reporting tools for post-marketing surveillance. And it means using real world data to provide real world advice. It means using that data for better social science tools that can assist prescribers in determining which patients are likely to abuse.

“Abuse deterrence” isn’t just a formulation question – it’s a systems question.

What about the issues surrounding opioid misuse – at present the poor public health stepchild of abuse? And how can better physician education defer or deter the prevalent “opioids first” prescribing philosophy of many practitioners? 

In the U.S., the use of opioids as first-line treatment for chronic pain conditions follows neither label indications or guideline recommendations. 52% of patients diagnosed with osteoarthritis receive an opioid pain medicine as first line treatment as do 43% of patients diagnosed with fibromyalgia and 42% of patients with diabetic peripheral neuropathy.

Payers often implement barriers to the use of branded, on-label non-opioid medicines, relegating these treatments to second line options – along with new abuse-deterrent opioid formulations. The result is a gateway to abuse and addiction.

Various pieces of state legislation are trying to correct this, but there has to be a better way.

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.

The FDA has announced labeling changes and post-market study requirements for opioids, and the agency has signaled interest in using real world outcomes data to amend and update labeling. That’s not regulatory mission creep; it’s the appropriate application of the agency’s Safe Use of Drugs initiative. The way you make a drug “safer” is to ensure that it is prescribed to the right patient and used in the proper manner.
 
A logical next step is to utilize that real world data to amend product-specific abuse-deterrent 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. Such changes mark important steps in highlighting the value of individualized patient pain-management programs.
 
Abuse-deterrent technologies are an important step in the right direction. They are part of the solution, but they’re not the whole solution.
 
It’s important to remember that the vast majority of people who use opioids do so legally and safely. In fact, government statistics show that 78.5% of those who abuse prescription pain medication did not obtain the drugs from a doctor in the first place.
 
Abuse deterrence is a worthy goal and will only evolve when all the players work together in a more regular and synchronistic fashion. As the Japanese proverb goes, “Don’t fix the blame, fix the problem.”  Read More & Comment...