Pharma Critics Ignore HHS Sec. Azar Call for Value in Favor of Forging Facts About Drug Prices

05/02/2018 12:05 AM | Robert Goldberg

Health and Human Services Secretary Alex Azar will give the keynote at the World Health Care Congress this morning.  In remarks prepared for delivery, Azar focuses on how HHS is “working to transform our healthcare system into one that pays for value. A value-driven healthcare system will look dramatically different from what we have today: Such a system will pay for health and outcomes rather than sickness and procedures. It will deliver better, cheaper healthcare for the people we serve, and it will support the next generation of cures to diseases once considered terminal.”
 
All of which will be ignored by the critics of the pharmaceutical industry, most of whom are now paid for by the Laura and John Arnold Foundation.  Rather, they will use Azar’s speech as a pretext to flood Twitter with statements about the skyrocketing rate of price increases, how drug companies are making medicines unaffordable and how marginally effective there high priced products really are.
 
Critics only want to talk about value in terms of how they would set prices and limit access of new medicines based on their measure of how much a life is worth.  Using ICER guidelines, the experts defend hepatitis C drug limits that have cut cure rates from 99 percent to 80 percent or assessments of drugs for cystic fibrosis and treatment resistant high cholesterol that would cut prices by 80 percent but still require patients to pay thousands out of pocket.  As a study I am wrapping up will show:  If they had their way, none of the new medicines introduced since 2000 would be considered valuable at their initial prices.
 
To be sure, newer drugs are a growing part (46 percent) of total drug spending.  But the critics ignore the reason such novel therapies are a bigger part of treatment for more diseases: they are not just worth it; they are indispensable in making staying healthy more affordable and easier:
 
Prescription drug spending has reduced the cost of treating disease.  Every dollar spent on new medicines reduces expenditures on costlier and less effective care by $6. 
The more we spend on prescription drugs as a percent of health expenditures to treat or the less we spend on that condition overall.  Nearly 100 percent of health expenditures on polio, measles, pneumonia tuberculosis, HIV, etc., is spent on prescription drugs.  In their absence, the cost of treating each patient with those diseases would be much more if we were spending less on medicines.   Recent studies have found that in the absence of new medicines, health insurance premiums would be on average 15-20 percent higher each year than they are now. 

The newer medicines the healthier we become, the more productive we are and the less expensive health care becomes.  Critics claim that new medicines, especially for cancer, cost more and more yet they do not add much to people living longer and healthier lives.  This ignores the cumulative effect of medicines.  The first and second generation of HIV medicines, measured in isolation, did not seem to increase well-being or life expectancy.  The same goes for new drugs for a wide variety of tumors and rare diseases.  So how do people with HIV live a healthy life with the same life expectancy as someone without the disease?  How has the average life expectancy of someone with cystic fibrosis increased from 20-60 in two decades?  And how has the number of cancer survivors increased from 9.8 million in 2001 to over 16 million in 2017? 
It is true that the sticker price of new drugs has increased, so has the price of lots of things, including other medical procedures and services that prescription drugs have eliminated.  The cost of being hospitalized with breast cancer has increased 200 percent since 2004.   The cost of an allogeneic bone marrow transplant has increased from $750K to $900K between 2008 and 2016.  

At the same time, the out of pocket cost for most medicines has remained the same or declined because 90 percent of our drugs are generic.  

A small percentage of Americans who use new medicines pay more out of pocket each year. But that is largely because health plans and PBMs are collecting rebates while charging the sickest patients a bigger and bigger share of higher retail prices.   The net price of newer medicines has increased less than 2 percent a year since 2013, yet the average out of pocket patient cost has jumped 53 percent due to higher list prices and higher cost sharing.  

Last year I published a study showing that 2 percent of all patients, using 2 percent of prescriptions, paid nearly 25 percent of all out of pocket costs and generated 30 percent -- $39 billion of the nearly $130 billion in rebates.  Critics like to claim that eliminating the out of pocket cost of the newer drugs will do nothing to reign in drug prices.  But they ignore that out of pocket spending has increased by over 50 percent even as the rate of increase in net spending for the most expensive medicines (meaning net of rebates) declined. 

It begs the question of why cost sharing for drugs goes up even as it stays the same for other procedures and services that cost more over time.
 
And most important, it boggles the mind and the conscience, that they only care about controlling drug prices rather than ensuring access to new medicines, the proven source of value in health care, is made affordable.
 
Count how many times the critics mention these facts.  It will take a minute at most.  By comparison, counting the number of tweets that ignore the value of medical innovation and distort the data, ignore the context or outright lie to do so, could take months.  Read More & Comment...

Drug Prices Increase Below the Rate of Inflation

04/30/2018 04:57 PM | Peter Pitts

Surprised?

It may not suit the cognitive mapping of some pols and pundits (or people at ICER), but, in 2017, the net price increase for branded products was lower than the Consumer Price Index.  And, according to IQVIA, the overall US drug spend (including generics) increased just 0.6%.

Consider the facts:

* Prescription medicine spending increased 1.3% between 2015 and 2016
* Overall National Health Expenditure (NHE) increased 4.3% during the same period
* Total NHE spend grew to $3.3 trillion in 2016.  Approximately 10% of total, $329 billion, was spending on prescription drugs

Here’s the headline you won’t see in the New York Times or the Washington Post,

“Prescription Medicine Spending Growth in the U.S. is Less Than the Rate of Inflation.”

Let’s have inclusive and honest debate. As the Japanese say, “Don’t fix the blame. Fix the problem.”  Read More & Comment...

“It’s not only a cost, it’s an investment.”

04/25/2018 09:06 AM | Peter Pitts

I’ve just returned from Beirut, where I had the privilege of attending the Future Health conference. My panel was titled, “Value Innovation for the Patient, the Healthcare Ecosystem, and the Economy. I was doubly honored that one of my co-panelists was Mr. Ghassan Hasbani, Lebanon’s Deputy Prime Minister and Minister of Health.

Minister Hasbani is revamping the medicines tendering program for Lebanon and one of the key tenets being weighed in the new national decision-making process is value. As His Excellency said from the podium, “It’s not only a cost, it’s an investment.”

Bravo.

And, as with any investment, it’s impossible to understand the cost without proper consideration of the return.  Read More & Comment...

EMA Self-Immolation

04/19/2018 09:53 AM | Peter Pitts

From the Cutting Off Nose to Spite Face Department …

Industry fears disruption as EU excludes UK from drug approvals

LONDON (Reuters) - A European decision to exclude Britain from the EU’s drug approval system from March 30 2019 - the day after Brexit - has raised alarm among drugmakers, who fear the abrupt change could disrupt medicine supplies to patients.

The move confounds hopes for continued joint cooperation via the European Medicines Agency (EMA), at least during a transition or implementation period until the end of 2020 when the UK will remain closely tied to the European Union.

Prime Minister Theresa May said in a speech on March 2 that London wanted to explore ways to keep Britain a part of EU agencies, such as the EMA.
The highly regulated drugs industry is particularly susceptible to Brexit, given the EU’s centralized system for approving and monitoring medicines. Brexit is already forcing the EMA to relocate from London to Amsterdam.

Now the EMA has appointed experts from other European countries to take over work currently undertaken by Britain’s Medicines and Healthcare products Regulatory Authority (MHRA) from next March.

Since the MHRA assesses around a fifth of EU medicines, drug industry leaders fear this sudden handover will cause disruption.

“Removing key expertise and reallocating work to other agencies who are not yet able to take on the work, and expecting them to increase their capability overnight is an increasingly reckless course of action proposed by the (European) Commission,” said BioIndustry Association CEO Steve Bates.

“In the interests of patients on both sides of the Channel, it is important that the EU retains access to UK expertise in a post Brexit medicines regulatory framework and that regulatory alignment is maintained to ensure continuity of medicines supply.”

Maintaining timely approvals for new drugs is crucial for pharmaceutical and biotechnology companies, which have dozens of experimental medicines due to be assessed by the EU regulator in the next couple of years.

Global drug companies, including UK-based GlaxoSmithKline and AstraZeneca have been vocal in calling for continued close EU-UK ties after Brexit. The issue is also important to many Japanese drugmakers that have made Britain their European base.

The MHRA confirmed it would no longer act as a so-called “rapporteur” for EU drug licensing or safety monitoring, although there has been no decision on long-term relations.

“It is important to note this only applies to the implementation period and there is no decision yet on the future relationship,” a spokesperson said. “The UK’s position on medicines regulation remains clear. We want to retain a close working partnership with the EU.”

The Association of the British Pharmaceutical Industry said it was clearly in the EMA’s interest to continue to draw on the expertise of the MHRA and it urged London and Brussels to come to an early agreement “in the interest of patients and public health”.  Read More & Comment...

SPA Go!

04/16/2018 09:55 AM | Peter Pitts

The FDA finalized guidance on the special protocol assessment, which is the process by which sponsors of drug or biologic applications can meet with the agency to discuss the design and size of clinical or animal studies to determine if they can adequately support marketing approval. The guidance highlights procedures for submitting an SPA request, the content needed to make a request, FDA assessment process, what happens if FDA and the sponsor do not agree on protocols, and when changes can be made to SPA agreements.  Read More & Comment...

Kaiser Health News, Attacks Patient Groups, Twists the Facts To Fit Arnold Foundation Political Agenda

04/10/2018 10:38 AM | Robert Goldberg

Over the past two years the Laura and John Arnold Foundation has spent $56 million grooming a handful of academics, interest groups and media outlets for the job of deciding who gets access to what medicines.   In particular, LJAF gave $3 million to Kaiser Health News to report on pharmaceutical pricing.  As a recent article in STAT revealed, KHN -- whose articles are syndicated widely by the Washington Post, USA Today and other news sources -- has no problem running articles that cite or cover the other groups who received the remaining LJAF $40 million.  And it has no problem doing so with acknowledging that KHN and its sources both get funding from LJAF or that it runs articles that fit the LJAF agenda. 

So why would it break an ethical sweat when producing, "Pre$cription For Power" (Get it?): Investigating the relationships between patient advocacy groups and Big Pharma."  As deliberately misleading hit jobs on patient groups go, this latest KHN piece reaches a new low. 

Here's Kaiser's (mis)leading question: "Patient advocacy groups campaign to raise awareness of diseases, to fund research and to promote policies favorable to their causes on Capitol Hill and at the Food and Drug Administration. But do they represent patients or Big Pharma?"

Note that KHN ignores another important patient group function: providing patients and their families with counseling, referral services and financial support for expenses not covered by insurance.  Also note that most patient advocacy group, including those listed by KHN, have neither the need or resources to "promote policies favorable to their causes on Capitol Hill and at the Food and Drug Administration".

All the better to make the following slimy insinuation: "Some drugmakers gave seven-figure donations to patient advocacy groups whose communities depend on blockbuster medicines made by those companies. This relationship could inhibit patient advocates from calling for lower drug prices, watchdogs say."

So KHN, without any evidence of a quid or a pro quo, alleges that patient groups do not call for lower drug prices or more precisely, do not call for policies to lower drug prices supported by groups funded by the Arnold Foundaiton, 

The goal of is to silence these organizations through collective guilt.  But both the math and methods miss the mark.  Which is typical of much of the Arnold funded material. 


First, nearly 90 percent of the funding that KHN claims is real pharma influence buying goes to paying for the out of pocket costs of medicines charged by PBMs and health plans despite receiving billions in rebates.   LJAF opposes programs that provide patients discount coupons or copay assistance to help patients pay for those medicines that are not favored by PBMs.   So do most of the LJAF funded groups that KHN crowns as "watchdogs."  But you wouldn't know that since KHN has stated it is under no obligation to disclose if their funder is advancing a specific agenda. 

Rather, KHN claims that it "decided to include drug copay assistance groups as patient advocacy groups, based on reporting about these groups. "

Based on what reporting? 

Certainly not KHN reporting.  A google search of Kaiser Health News articles on copay assistance groups reveals a series of articles that are fairly objective and if not favorable at least note that such groups are a necessary workaround to Medicare law and a response to formulary practices. At least until 2017, which is when KHN was using LJAF money to report on drug prices. 

KHN claims that patient assistance groups are really lobbying on behalf of pharma and not calling for price controls because, "some copay groups have faced criminal probes based on allegations that they help drug companies skirt anti-kickback statutes that prohibit copay assistance to Medicare and Medicaid patients, according to investigators with the U.S. Attorney’s Office for the District of Massachusetts and the Justice Department."

This last statement is barely true and mostly bullshit.

Patient assistance programs (PAPs) "provide financial assistance to patients in a variety of forms, including free or discounted products, product coupons, and copayment assistance, to provide assistance to patients with limited financial means. These programs are generally administered through independent charitable organizations or by foundations established by medical product manufacturers. The U.S. Department of Health and Human Services (“HHS”) Office of the Inspector General (“OIG”) has continually acknowledged that properly structured PAPs can provide important “safety net assistance” to patients with limited financial means who cannot afford necessary drugs."

Moreover, the articles KHN links to in defense of defining such groups as advocacy entities mention only one patient assistance organization has been involved in a Justice Dept. investigation of a pharma company.  Not one of the patient assistantance programs listed by KHN has "faced a criminal probe" let alone been caught up in one because of what drug companies do.  Only one group,  Patient Services, Inc., was "contacted in a connection with a federal investigation into drugmakers' financial support of non-profits like itself. "   The focus of every investigation is whether or not companies are using charities to cover the cost of their medicines only.  NONE have been accused of violating a federal law because of their participation.   

KHN falsely maligns charities to support their flimsy claim that they are pharma pawns and therefore should be included in the amount it has tracked.  If we accept their argument it turns out that of the $116 million pharma companies have provided,  51 percent or $59 million of that amount goes to 6 patient assistance groups identified by KHN.   And these groups are not allowed to use donations for patient assistance for lobbying. 

As for the other groups blacklisted by KHN,  the average donation to patient organizations is $98400K.   The top 20 recipients receive an average of $1.7 million each.  But nearly all of these groups devote most of their time, money and resources to sponsoring research or providing patients and their families social services and referrals.  Nevertheless, of that top 20 nearly all have taken action or made statements in support of lower drug prices.  For instance, the American Diabetes Association has launched a grass root campaign because, as it notes, "the cost of insulin is increasing at an alarming rate. It's time for change. More than 308,422 people have joined the American Diabetes Association in calling for action."  The American Heart Association has developed a program to identify drugs with the most value per dollar.  The American Cancer Society has continually criticized high drug prices.  The same goes for the Elton John AIDS Fund, the International Myeloma Foundation and the Leukemia and Lymphoma Society.  There are others, but you get the idea.  

To be sure, these groups are not advocating against high drug prices full time.  There are many groups doing so.  Nearly all of them are funded by LJAF.  And every LJAF funded group is involved in developing, advocating, publishing and promoting the LJAF agenda: government price controls,  longer and more expensive clinical trials for new drugs for rare diseaese,  government seizure of pharmaceutical patents and using LJAF funded groups such as ICER to determine which drugs are worth paying for. 

LJAF provides 14 nonprofit or academic institutions $47 million for activities relating to these issues.   

LJAF provides 3 media outlets, HealthNewsReview.Org, Propublica and KHN $8.1 million to report on the activities and quote the experts receiving the $47 million.

LJAF provides one group, Patients for Affordable Drugs about $500k for its nonprofit advocacy of price controls, patent seizures and adoption of ICER guidelines and an estimated $10 million to a PAC that will run TV ads attacking drug prices that is also operated by the same group leading Patients for Affordable Drugs.    

Every one of these LJAF funded groups works full time on advancing and implementing an agenda set by LJAF.   

None of them lift a finger to help a patient in need of financial or emotional support, or fight to help patients get the medicines their doctors think they need.  None spends one dime on research that had lead to breakthroughs as has the Multiple Myeloma Research Foundation, the Cystic Fibrosis Foundation or the National Psoriasis Foundation. 

Ultimately, the KHN piece is part of a sustained effort to silence patient groups and increase the influence of LJAF funded organizations.  

Years ago, PBS returned a grant from LJAF underwriting a series on public sector pension reform after it was revealed LJAF was also funding other organizations to advance its agenda.  Back then, it was PBS ultimately determined that the LJAF grant flunked PBS’s “perception test” guidelines (that) prohibit accepting funding for public affairs programs if “there exists a clear and direct connection” between the interests of a proposed funder and the program’s subject matter, even if the funder has no editorial control.

That same sense of decency or journalistic integrity no longer exists at KHN.    Rather, KHN has pimped itself out to silence any groups that might pose a threat to the imagined power of its paymasters.   





   Read More & Comment...

Buckeye State Eyes PBM Practices

04/05/2018 09:50 AM | Peter Pitts

The Ohio Department of Insurance is now requiring insurers and pharmacy benefit managers to remove so-called “gag order” clauses that prevent pharmacists from disclosing to consumers the most affordable prescription drug option. They would also be prohibited from charging customers a higher amount for prescription drugs than what it would otherwise cost without insurance coverage. Pharmacists can face significant penalties if they disclose the difference. A trio of U.S. senators recently introduced a pair of bills to eradicate gag clauses that payers may use to pocket the difference.  Read More & Comment...

"Dragon-Quality" Generics

04/04/2018 09:44 AM | Peter Pitts

The Chinese government issued an ambitious statement about plans to encourage further research and availability of higher quality generic drugs, according to this statement by the State Council. Toward this end, the government plans to bolster intellectual property protections and antitrust legislation, reform the regulatory approval process, and enhance manufacturing and tracing systems. Generic drugs will also be placed in official procurement lists and in interchangeable lists with innovative drugs.  Read More & Comment...

Lower Drug Prices Will Lead To Higher Drug Costs for Patients

04/03/2018 03:36 PM | Robert Goldberg

President Trump is readying proposals to reduce what many people pay for their medicines. Many of his critics complain that instead of reducing out of pocket costs, the President should force companies to cut drug prices. But what if lower drug prices cause people to pay more?  

This is exactly what’s happening when biosimilars -- ‘generic’ versions of biological medicines such as immunotherapy, vacccines, recombinant proteins –hit the market.   

Biologics are used to treat a wide range of diseases, especially cancer and autoimmune conditions. They are effective medicines that cost tens of thousands a year.  And increasingly insurance companies and pharmacy benefit management (PBM) companies such as Express Scripts and CVS (which will both merge with health insurers) are charging people a percentage of the retail price of these drugs, which can amount to thousands of dollars a year.

Both Express Scripts and CVS have asserted replacing biologics with biosimilars would allow them to reduce out of pocket costs. 

Last year, Express Scripts CEO Tim Wentworth said, biosimilars “can help mitigate the impact of high-cost drugs and support broader access as more affordable alternatives for patients.”  Similarly, CVS stated that using biosimilars will make” prescription drugs more 
more affordable and accessible for our patients and clients.”

Last year a study from health consulting firm Avalere found that 81 percent of plans report they are covering a biosimilar product.  Nearly all companies said that the lower cost of biosimilars spurred that decision.  So far so good.  

But biosimilars use has lagged. For example, Inflectra and Renflexis two biosimilars of Remicade, a biologic used to treat people with rheumatoid arthritis, Crohn's disease and ulcerative colitis, were launched in 2016 and 2017 at a lower price than Remicade.  The average price of both products declined further in 2018.  Yet Remicade’s selling price has increased 6-9 percent during that time and the product actually maintained market share. 

Indeed, a recent Drugchannels blog dryly notes, “Remicade benefited from favorable payer coverage. Investment research firm Sanford C. Bernstein & Co. studied the top 40 commercial formularies. It found that for 36% of covered lives analyzed, Inflectra is either not covered or providers are required to use Remicade first. Inflectra was preferred over Remicade for only 2% of the covered lives.”  (The biosimilar imbalance is even greater in Medicare Part D plans where 90 percent of Medicare Part D plans do not cover Inflectra or Renflexis.) 

PBMs and insurers are, in fact, choosing the cover drugs with the lowest net price for them. Most of that time, price ‘cuts’ materialize the form of cash rebates and other fees PBMs drug companies fork over in exchange for getting plans to cover their products. 

Even cutting prices doesn’t matter.  Inflectra launched at a 15 percent lower price than Remicade.  Renflexis launched at 25 percent and Pfizer counter by cutting Inflectra’s price by 35 percent.  Doctors don’t like switching biologics so most of the people using biosimilars are likely to be new patients.  But rather than letting products compete on price, PBMs used the competition to extract even bigger rebates in exchange for giving Remicade an even more favorable position relative do biosimilars.  Remicade’s list price increased but the net price to PBMs actually fell:  Nearly 90 percent of the price hike went to pay rebates. 

PBMs correctly point out that as a result of the competition, average prices and price increases have come down.  But they haven’t been used to lower out of pocket costs for biologics.  Remicade sales are about $5 billion a year and generate more rebates than most other medicines.  Instead, health plans, employers, and PBMs have maximized revenue from the biosimilar-biologic spread by making many patients wait longer or pay more for medicines other than Remicade. 

For example, many PBMs and health plans require patients to pay the same out of pocket cost or more for a biosimilar as they do for Remicade. Additionally, many plans require patients have to try the rebate rich drug before getting access to a medicine that may be less expensive or more effective.  And incredibly, often some plans don’t cover biosimilars at all depending upon the deal they cut.  Express Scripts covers biosimilars with the same out of pocket share as Remicade. CVS and United Health/Optum don’t cover Inflectra or Renflexis at all. 

Hopefully, the administration will eliminate barriers to affordable access to the medicines that work best for each individual.  Requiring that rebates eliminate out of pocket costs is a start. Many people will respond well to biosimilars.  That frees up money for people who need different medicines.  Combining net price competition with delivering the right treatment to each patient will increase well-being and save money.  For now, lower drug prices mean higher drug costs for patients. More biosimilars will generate more rebate dollars, not better access or better care.  
  Read More & Comment...

Former VA Chief David Shulkin:It shouldn’t be this hard to serve your country

03/29/2018 03:02 PM | Robert Goldberg

Newly ex VA Secretary David Shulkin, a dedicated and effective advocate for veterans, was forced out of his job, ostensibly because of a misuse of travel money.  This a flimsy reason for firing someone.  In other administrations, a Secretary’s use of department resources for first class travel or to promote a political candidate (that was found to have violated the Hatch Act), with no consequence.   

So, why was really Dr. Shulkin fired?

As he noted in a recent NY Times op-ed,  “advocates within the administration for privatizing V.A. health services… saw me as an obstacle to privatization who had to be removed. That is because I am convinced that privatization is a political issue aimed at rewarding select people and companies with profits, even if it undermines care for veterans.”

Dr. Shulkin had taken concrete steps towards expanding veteran access to private health services.   Specifically, he had to upgrade the VA’s electronic medical records system and create a culture of accountability that was sorely lacking.  And then there was the de facto rationing that plagues the VA health delivery system:  When he became secretary the hepatitis C cure rate was 70 percent.  That’s because the VA PBM following ICER recommendations withheld cures from HCV patients until they had advanced forms of the disease.  Within a year, the cure rate was up to 90 percent.  

Ironically, while Shulkin’s tenure was being questioned by privatization advocates, he was also being undermined by VA bureaucrats who opposed his actions on privatizing services as well as his holding agency and hospital directors directly accountable for meeting quality and customer service benchmarks.   

It is perfectly understandable when someone is replaced for political or strategic reasons.  Great baseball managers are fired all the time and resurface elsewhere.  The same goes for people in senior management.   But why orchestrate a campaign of personal destruction while doing so?

Ben Wattenberg, who was one of America’s go to political commentator until his untimely death in 2015, once told me that “Washington is a carnivorous town.”    He meant that the political establishment enjoys cannibalizing other people and devote much of their time and effort on doing so.  Nothing personal mind you.  

Shulkin wondered aloud: It shouldn’t be this hard to serve your country.   Unfortunately, it seems it will become even harder in the years ahead.  So, while I am disappointed that Dr. Shulkin is no longer running the VA, I am happy knowing that he will continue to make an impact in a position that appreciates his passion for patient care and his talents.  And I am happier still that he and his family will enjoy Passover together, freed from innuendoes and character assassinations.  
  Read More & Comment...

The Facts Always Missing in Drug Pricing Reporting

03/28/2018 12:54 PM | Robert Goldberg

Two articles, one in Axios and the other on CNN.com repeat the drug prices are unsustainable narrative without providing the following facts necessary for balanced reporting:

1.  As drug spending has increased since 1990, the rate of increase in spending on other health services has declined. 



2.    As drug spending as a percent of health care spending has increased, out of pocket drug costs have declined




3.    Increases in drug spending are strongly associated with the introduction of new medicines with significant health benefits. 



3.    The consumption of new medicines is associated with a decline in the rate of spending for other health care services. 



The chart above shows that as new medicines are introduced the rate of spending on other services goes down. 

In sum,  we are spending more on prescription drugs and reducing the rate of spending on other services while out of pocket drug costs (except for a significant minority being exploited by PBMs and plans) has substantially decreased.   Read More & Comment...

Anti-Claw Law

03/21/2018 09:52 AM | Peter Pitts

A group of House lawmakers introduced a bill that would prohibit pharmacy benefit managers from using gag clauses to prevent pharmacies from telling consumers that paying cash for a prescription might cost less than a health insurance co-payment. The trade group for pharmacy benefit managers, which can pocket the difference, maintains only "outliers" impose such clauses. Gag clauses are criticized for keeping drug prices high at the pharmacy counter. Last week, a similar bill was introduced in the Senate.  Read More & Comment...

Boston Globe Washington Bureau Chief Chris Rowland Teams Up with Generic Lobby To Smear Myeloma Survivor From Afar

03/20/2018 12:04 AM | Robert Goldberg

The generic drug lobby, the Alliance for Affordable medicines, has gotten desperate in recent weeks as the chances for including the CREATES Act into a congressional spending bill fade. 

As almost no one knows, the CREATES Act (short for CREATES Act) is supposed to create generic competition by allowing generic drug companies to sue innovator firms if they don’t hand over samples of their products outside of a strict chain of custody the FDA requires to ensure safe drug use under Risk Evaluation and Mitigation Strategy or REMS. 

There is broad agreement that REMS shouldn’t be used to keep generic drugs off the market.  FDA Commissioner Scott Gottlieb has made it easier for generic and brand companies to use the same REMS program to both share samples for testing and for distribution. Gottlieb wants to establish a single shared REMS system.  In facilitating such cooperation, the FDA will “have a stronger basis to issue a waiver that will allow the generic drug makers to go their own way if they have to and develop their own REMS.” 

There is concern that CREATES takes the FDA authority (in fact, it says nothing about the FDA)  to overrule REMS and hands it over to  trial lawyers (who make up what amounts to the R and D budget of most generic firms) and courts.  My partner Peter Pitts explains why REMS reform is necessary but that CREATES only creates more torts, not more competition. (Which might explain in part why CREATES may not be part of the spending bill.)

But instead of debating or addressing these issues, AAM wants to blame one person in particular for CREATES demise: My friend Bob Tufts a myeloma survivor.  AAM is launching a smear campaign against him, claiming via Twitter and to anyone willing to listen, that Bob is taking pharmaceutical money to oppose CREATES.  

Apparently, they have used their connections to the media to support their smear campaign. Yesterday, the Boston Globe’s Washington ‘Bureau’ Chief, Christopher Rowland, took time out from almost everything else that needs coverage to repeat the slurs and assaults that AAM has thrown at Bob and Patients Rising for the past weeks.  In his article,” Everyone wants to kill generic drug loophole — except drug makers and some GOP leaders” Rowland writes:

“The use of myriad groups gives the appearance of a broad-based, grass-roots movement against the bill. An example of the rhetorical strategy came just last week.
 
“What I worry is that in pursuit of budget cost savings, Congress may jeopardize the safety of life-saving medications patients depend on for treatment,’’ wrote Bob Tufts, a former Major League Baseball pitcher and now a business school professor at Yeshiva University in New York.
 
His op-ed article appeared in The Hill, an inside-the-Beltway publication. Tufts said he wrote the article after conversations with representatives of the nonprofit group Patients Rising, which discloses direct funding from Amgen, Celgene, Pfizer, and other big drug companies. Tufts, who said he came under attack on Twitter after his article appeared, said he does not receive any money from Patients Rising or industry.”
 
You might wonder why someone with the awesome responsibility of WASHINGTON BUREAU CHIEF focused his reporting skills on what amounts to a twitter tussle. Or why, in his attention to detail, Rowland left out that the Twitter attack on Tufts was almost exclusively from AAM.  

Or why Rowland, in taking a cheap shot at Tufts  did not point out that AAM is second to none in seeking to choke off market-based competition or at least defending its members, many of whom are being sued by the Department of Justice for price fixing: 

Forty-five states and the Department of Justice are claiming that generic-drug prices are fixed and the alleged collusion may have cost U.S. business and consumers more than $1 billion.

In their complaint, prosecutors say that when pharmacies asked drugmakers for their lowest price, the manufacturers would rig the bidding process.
"The companies would work out in advance who would get the lowest price and then the other competitors may put in what we would call a cover bid," says Michael Cole, who heads the antitrust department at the Connecticut attorney general's office. (Such bids give the appearance of competitive bidding.)
Through subpoenas, Cole's team has assembled millions of texts, emails and phone calls between 2012 and 2015. The prosecutors say the records show executives divvying up customers, setting prices and giving the illusion that generic pharmaceuticals were transacted in an open and fair marketplace.

You would think a Washington Bureau chief, especially one that has time on his hands to cover the twitter account of AAM could devote a little time unpacking the irony of a group that proudly proclaims that its members mission is “to make more medicines more accessible to more people who need them” are being sued for doing just the opposite.  

Rowland makes it seem like the CREATES Act will lead to a flood of affordable drugs.  But it turns out that the generic drugs with the biggest price increases over the past 2-3 years are also medicines that have a REMS in place.   What if all CREATES does is transfer the ability to use REMS to restrict competition from companies that make innovative medicines to companies that are being sued for anticompetitive behavior?  Apparently, that narrative has never entered Rowland’s bureau though it sure sounds like the AAM team sure has. 

For someone who is concerned about fake broad-based support, I find it interesting Rowland has been and is silent about AAMs anti-competitive agenda but finds the time to write a piece against the one guy who appears to be driving the generic lobby crazy.

Bob has invited the AAM to meet for coffee to discuss his views.  Instead, the group continues to attack him.  My guess is that no one there has the guts to meet him face to face.  The same probably goes for the Boston Globe Washington bureau chief who happily piled on my courageous friend from afar. 





  Read More & Comment...

CREATES Act a Tort Torte

03/16/2018 10:45 AM | Peter Pitts

When members of the tort bar start to salivate over a piece of legislation, it’s worthwhile to find out where the red meat resides. In a rush to pass legislation to “lower drug prices” as a budgetary pay-for, lawmakers are pushing two pieces of parallel legislation, the Senate’s Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act and the House’s Fair Access for Safe and Timely (FAST) Generics Act.

 It’s time to take a breath – because neither bill will speed generic drugs to market or lower the cost of medicines for a single American. What they will most certainly provide is a windfall for the trial lawyers.  

Both bills aim to provide a series of new legal provisions that will make it easier for drug companies to introduce generic alternatives, thus spurring competition and bringing down prices. Both are well intentioned. But they are poorly worded and that is a serious matter: Instead of bringing generics to market sooner, these bills could endanger patients’ lives and encourage costly, needless litigation.

To protect consumers, the Food and Drug Administration requires that new drugs undergo a series of clinical trials to prove their safety and effectiveness before entering the market. Generic drugs must also complete clinical trials, but only to prove they’re clinically equivalent to the already-approved brand-name drug. The problem comes when some drugs are so potent, or have such dangerous side effects, that the FDA requires drug companies to develop and abide by specialized safety protocols called “risk evaluation and mitigation strategies,” when selling or dispensing these medicines.

Rather than keep these safety measures, both bills strip the FDA of its watchdog role. Generic manufacturers will be exempt from outlining testing and safety protocols for the FDA to approve. Even if a generic drug maker’s proposed risk evaluation and mitigation strategies are inadequate, the FDA will have no authority to reject or halt the transfer of medicines to the generic company for testing.

The ambiguously worded liability provisions of the two bills further subject innovators to unfair legal risk. The reason is many generic companies, after obtaining brand-name drug samples for testing, ship them to third-party research firms to perform clinical trials. If the third party is negligent with the samples, patients could get hurt. Yet, under the bill’s terms, patients could sue the brand-name drug company, even though it had no control over the testing or safety protocols. The higher legal fees for drug companies will result ultimately in higher costs for everyone else.

Additionally, the bills would allow generic drug manufacturers to sue if brand-name manufacturers fail to hand over their drug samples for testing within 31 days, or if the companies do not reach an agreement on shared risk evaluation and mitigation strategies for risky drugs. Fine concepts, but the actual administrative language is ambiguous and subjective wording is music to trial lawyers’ ears.
 
Over 60 percent of Americans want the government to take action to lower prescription drug prices — and Congress, for once, is listening to voters.

Unfortunately, the legislation before Congress will lead to dangerous unintended consequences. Instead of bringing generics to market sooner, these bills could endanger patients’ lives and encourage costly, needless litigation. Both houses of Congress deserve praise for trying to bring generic medicines to market faster, relieving consumers from high drug prices. Yet good intentions don’t change the fact that the legislation, as currently constructed, is deeply flawed.

Congress could help consumers by reworking the imprecise phraseology to end bad behavior without gutting safeguards for patients or enabling unscrupulous trial lawyers to file costly, pointless suits. Whether it’s the practice of medicine or the development of public healthcare policy two rules apply – first, do no harm and, second, be wary of trial lawyers bearing gifts.  Read More & Comment...

Contract Killers: Inside the Secret World of PBM Practices

03/15/2018 03:02 PM | Peter Pitts

AXIOS: Inside a drug pricing contract
By Bob Herman, March 15, 2018

A contract template used by Express Scripts, the largest pharmacy benefit manager in the U.S., provides a window into how pharmacy benefit managers — middlemen that manage drug coverage for businesses throughout the country — steer negotiations with drug companies to benefit their own financial interests.

Why it matters: These benefit managers have a lot of power over the prescription drug coverage people get through their employers, and they're supposed to negotiate discounts so coverage is cheaper for insurers and employers. If they're not making it cheaper, there's less chance people will get relief from high drug prices.

The details: Axios obtained a 36-page Express Scripts contract template from a source who works in the health care industry. Express Scripts and employers use the document as a starting point to determine how medications are paid for and how pharmacy networks work, but the contract usually is not in the public's view. Since it's a template, there are no hard numbers or terms of any specific agreements.

The big takeaway: There's nothing illegal about these contracts. But the language is clearly written with the PBM's financial interests in mind, and critics say those kinds of provisions can result in lost savings for everyone, especially for small companies and their employees.

Even some of the largest companies think they are protected because they have in-house and outside attorneys vetting contracts, yet that's not necessarily the case.

"That's a little bit like going to Las Vegas and consistently thinking you can beat the house at their own game," said one source who has worked in the industry for many years. "These PBMs have entire departments of lawyers where this is their game."

The other side: Express Scripts, which is in the process of being acquired by Cigna in a $67 billion deal, didn't dispute the contract template was its own. But spokeswoman Jennifer Luddy said in an email the document was "several years old," although some sources said it appeared to be current.
Luddy added that employers are "savvy purchasers of pharmacy benefits" and that these contracts are common: "It is industry standard terminology used by all PBMs, and is well-understood by clients and consultants."

In a follow-up email, Luddy said: "It is clear to us that there are several vocal PBM critics who are eager to provide their biased interpretations of this template contract to serve their own agenda."The details: These are some of the major provisions. The contract was explained in interviews with several people who work in or are familiar with the pharmacy benefit industry, most of whom asked not to be named given the sensitivity of the issue and to speak candidly.

Rebates

A primary function of a PBM is to negotiate rebates from drug companies. Most of those rebate dollars flow back to employers (not workers). But Express Scripts collects other rebate-like fees from drug companies that it doesn't have to pass along to employers.

The Express Scripts contract explicitly says "rebates do not include things" like "administration fees" from drug manufacturers, "inflation payments" and numerous types of "other pharma revenue."

"There are so many carve-outs of what they consider a rebate that it’s very murky of what’s being kept and what’s being passed through (to clients)," an industry source said.

The contract also says Express Scripts negotiates rebates "on its own behalf and for its own benefit, and not on behalf of sponsor."The brand/generic algorithm

Multiple people said the "proprietary" algorithm is one of the most important definitions, as it gives Express Scripts full authority to determine whether a drug is brand or generic without being transparent.

The algorithm allows Express Scripts to pocket the difference between a brand-drug discount and a generic-drug discount — a major tactic to maximize profits.

"This is why they don't miss earnings," said one person familiar with the industry.

Payment schedules

The "MAC list" and "maximum reimbursement amount" also permit Express Scripts to pay for drugs in a way that is "most advantageous to them," according to a source.

For example, using these different lists of drug costs, Express Scripts can charge its employer clients $15 for a particular medication but pay the pharmacy just $1 for the same medication — and keep the extra money for itself.Financial disclosures and auditing

The last two pages rehash some of the initial definitions, but also reiterate how Express Scripts can collect almost any type of revenue it wants and "may realize positive margin" — code for reaping big profits and not having to share with employers.

Employers can choose to have their agreements audited, but they have to get Express Scripts' approval on what auditor is used.

And sometimes they don't get it. Hayes, a pharmacy benefit consultant who agreed to review the document and speak on the record, said Express Scripts has not allowed her firm to conduct audits.  Read More & Comment...

Fighting Illini Fight Non-Medical Switching

03/15/2018 12:08 PM | Peter Pitts

Per this article in the Chicago Tribune, llinois lawmakers are considering a bill that would guard non-medical switching in the middle of a plan year. The proposed bill would prohibit commercial health insurers from modifying coverage of a drug during the plan year if it has previously approved the drug for a medical condition.  Read More & Comment...

Santa Claws

03/14/2018 02:45 PM | Peter Pitts

If drug manufacturers are giving such large discounts for brand name medicines to Pharmacy Benefit Managers (PBMs); while prices of commonly used generics keep going down, why aren’t co-pays going down and why, in some circumstances, are they going up – even for generic medicines?

In short, where’s the money going?

The answer, according to a new study just published in the Journal of the American Medical Association, Frequency and Magnitude of Co-payments Exceeding Prescription Drug Costs, is … from the purses of patients into the pockets of the PBMs.

Per the JAMA article:

Pharmacies collect patients’ co-payments and pass them to PBMs, who reimburse the pharmacy a negotiated rate to cover drug costs, dispensing fees, and any markup. Overpayments occur when the co-payment exceeds the negotiated reimbursement.

The scheme is called “claw-backs.”

Per JAMA:

However, drug co-payments sometimes exceed costs, with the insurer or pharmacy benefit manager (PBM) keeping the difference. Furthermore, some pharmacists are contractually prevented from alerting patients when their co-payment exceeds the drug’s cash price. Although some have argued that the practice is uncommon, a 2016 survey of independent pharmacists indicates otherwise.

No, you read that correctly, PBMs lock-in these claw-backs, going so far as to contractually gag pharmacists who want to help patients lower their drug costs.

Some of the study highlights include:

* Among 9.5 million claims, 2.2 million (22.94%) involved overpayments.

(That means that almost 1 out of 4 prescriptions involved a patient copayment that exceeded the average reimbursement paid by the insurer. The vernacular for this is – stealing.)

* The most commonly prescribed drug, hydrocodone/acetaminophen, involved an overpayment on 36.15% of claims.

(Could this explain why PBMs make time-consuming prior-authorization for abuse-deterrent opioids and non-opioid pain alternatives such common practice?)

* Overpayments were common in this data set, affecting 23% of all prescriptions, and 28% of generic prescriptions.

(Price gouging on generics! Shameful.)

* In 2013, total overpayments by patients amounted to $135 million in the sample studied

The authors conclude:

Cost-related nonadherence is common and associated with increased medical services use and negative health outcomes. By raising patient costs at the point of sale, overpayments may exacerbate these effects. To lower patient expenses, legislation addressing overpayments and gag clauses warrants further investigation.

Amen.  Read More & Comment...

FDA and the Digital Divide: The Battle of Proof & Predicate vs. Errors & Upgrades

03/13/2018 08:34 AM | Peter Pitts

There is a yawning divide between regulatory science and digital development. Digiratti view regulators as stodgy while regulators view digital developers as trigger-happy. There is an unproductive cognitive disconnect.

When we consider the integration of new and exciting digital technologies (ingestible, implantable, portable, app-based, diagnostic, etc.), it's likely that technologists are far more likely to be excited about the possibilities rather than considerate of the risks. The same cannot necessarily be said of regulators/reviewers who reside within a culture of proof and predicate. Technologists inhabit a planet of errors and upgrades. There is no "Beta" approval pathway for the FDA.

For the FDA, risk exists to be minimized while for digital developers risk is an opportunity. Fortunately, there is common ground – and it isn't the technology. It's the public health need for which the technology presents a safe and effective (within the FDA definition of that duality) solution. Interestingly, it's the drug developer who must now play the role of “learned intermediary” between regulator and technologist -- a new and uncomfortable role. But the pay-off is worth the effort for sponsor, regulator and public health advocate -- better patient outcomes through more evolved 21st century technology integration.

Consider Adherence/Compliance, a public health problem of brobdingnagian proportion nowhere more acutely felt than in patients with schizophrenia. That's why products that address new and innovative solutions (such as Abilify MyCite, a pill with a sensor that digitally tracks if patients with schizophrenia  have ingested their medication) are so exciting to developer, regulator and patient alike. It's a real world example that should provide momentum for continued development beyond this one therapeutic area.

As real world data becomes available, the FDA will hopefully feel increasingly comfortable expediting similar programs (specifically) and programs with more innovative uses of digital technologies (more broadly).

Positive signals from the FDA will send potent messages to developers that further investment in such clinical programs is worth the investment risk. And positive signals emanating from “the patient voice” will be crucial.  Read More & Comment...

Cratering CREATES

03/09/2018 09:46 AM | Peter Pitts

The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act will not be included in the pending omnibus budget bill, according to BioCentury, citing lobbyists. Although the bill has bipartisan support and is aligned with Trump administration policies, a combination of lobbying muscle and political calculation have scuttled efforts to have it included in the omnibus bill. The bill seeks to prevent brand-name drug makers from using Risk Evaluation and Mitigation Strategy programs to avoid selling samples that are needed to develop generic versions and block generic competition.  Read More & Comment...

Gottlieb call out "Kabuki Pricing"

03/08/2018 09:52 AM | Peter Pitts

FDA's Gottlieb blames industry 'Kabuki drug pricing' for high costs

WASHINGTON (Reuters) - U.S. Food and Drug Administration chief, Scott Gottlieb, criticized pharmacy benefit managers, health insurers and drugmakers on Wednesday for “Kabuki drug-pricing constructs” that profit the industry at the expense of consumers.

The comments, made at a conference organized by a leading U.S. health insurer lobbying group, stoked speculation over what steps the administration of U.S. President Donald Trump may take to rein in lofty prescription drug costs.

“Patients shouldn’t face exorbitant out-of-pocket costs, and pay money where the primary purpose is to help subsidize rebates paid to a long list of supply chain intermediaries,” Gottlieb said at the meeting of America’s Health Insurance Plans (AHIP). “Sick people aren’t supposed to be subsidizing the healthy.”

The remarks surprised meeting participants and spurred new accusations between leading members of the drug supply chain. Shares of top pharmacy benefits managers CVS Health Corp and Express Scripts Holding Co fell 1.4 percent and 2.4 percent, respectively.

He criticized the health industry for failing to promote access to so-called biosimilar versions of drugs, and for pricing practices that harm consumers.

Biosimilars are copies of original drugs that are supposed to be as effective but cheaper. Kabuki is a form of Japanese theater characterized by dramatization and elaborate costumes.

Gottlieb said practices in the healthcare industry “obscure profit taking across the supply chain that drives up costs” and discourage competition.

As FDA commissioner, Gottlieb has prioritized approving more generic drugs to help lower prices, allowing more than 1,000 copycat drugs into the market last year, he said.

Still, while the agency has approved nine biosimilar therapies to date, only three have reached the market, Gottlieb said. The rest have been mired in legal challenges brought by drugmakers such as AbbVie Inc to protect its multibillion-dollar rheumatoid arthritis treatment Humira.

Trump has vowed repeatedly that his administration will take more steps to lower drug costs, and included some potential actions in a proposed budget made public last month that Congress is not likely to accept.

Other regulatory actions could come directly from Health and Human Services Secretary Alex Azar, a former drug company executive, and through the department’s Centers for Medicare and Medicaid Services. Azar is scheduled to deliver remarks at the AHIP conference on Thursday.

Gottlieb noted that the top three pharmacy benefit managers - CVS, UnitedHealth Group Inc and Express Scripts - control more than two-thirds of their market. The top three wholesalers - AmerisourceBergen Corp, Cardinal Health Inc and McKesson Corp - control more than 80 percent; and the top five pharmacies more than 50 percent, he said.

AHIP responded by saying drug manufacturers were to blame for the high cost of prescription medicines. The Pharmaceutical Care Management Association, which represents pharmacy benefit managers, also said it was unfair to place blame on payers who cannot control the prices drugmakers set.  Read More & Comment...