Latest Drugwonks' Blog
STAT News is one of my favorite sites for medical and health news. The reporting is great and the journalists are open, thoughtful and smart.
Every once in a while there will be clunker like the following article about Scott Gottlieb:
Trump’s FDA nominee pledges to untangle his ties to 25 biopharma companies
"President Trump’s pick to lead the Food and Drug Administration has promised to recuse himself from agency decisions on more than 25 companies to which he has ties.
Dr. Scott Gottlieb, who is deeply entrenched in the industry he may soon regulate, plans to resign from his roles in investment banking, venture capital, and as a consultant to drug companies within 90 days of his Senate confirmation. At the same time, he’ll sell off his shares in a host of biotech companies.
And for one year after those resignations, Gottlieb will stay out of any FDA deliberations related to those companies, which include GlaxoSmithKline, Bristol-Myers Squibb, and Vertex Pharmaceuticals."
Deeply entrenched? Untangling of ties? From 25 -- count em, 25 -- companies? Sounds suspicious. Should we ask Carrie Matheson to get to the bottom of Gottlieb's consulting activities?
A less breathless and narrative driven article could have noted that Scott's recusals and divesting of industry related investments and associations are no different than what any other nominee for FDA commissioner has done, including Rob Califf and Peggy Hamburg. And no one was keeping score of how many companies they consulted for or held stock in. Or that Gottlieb has made increasing the number of generic drugs that compete against medicines made by companies he advised a top priority?
To be fair, when I wrote to STAT News editor Rebecca Robbins raising my belief that the article was more narrative than reporting she responded that the intent was not to reinforce a narrative peddled those who regard Dr. Gottlieb as a pharma pawn.
But there is this as well: "The 44-year-old physician has traced an unusual career path, pivoting from Wall Street to a role at the FDA and then embarking on a lucrative career as an investor and adviser."
Who else thinks that this article will spur more attacks and spawn similar pieces from other news outlets that will include quotes from anti-industry critics such as Public Citizen who have already smeared Scott?
Every once in a while there will be clunker like the following article about Scott Gottlieb:
Trump’s FDA nominee pledges to untangle his ties to 25 biopharma companies
"President Trump’s pick to lead the Food and Drug Administration has promised to recuse himself from agency decisions on more than 25 companies to which he has ties.
Dr. Scott Gottlieb, who is deeply entrenched in the industry he may soon regulate, plans to resign from his roles in investment banking, venture capital, and as a consultant to drug companies within 90 days of his Senate confirmation. At the same time, he’ll sell off his shares in a host of biotech companies.
And for one year after those resignations, Gottlieb will stay out of any FDA deliberations related to those companies, which include GlaxoSmithKline, Bristol-Myers Squibb, and Vertex Pharmaceuticals."
Deeply entrenched? Untangling of ties? From 25 -- count em, 25 -- companies? Sounds suspicious. Should we ask Carrie Matheson to get to the bottom of Gottlieb's consulting activities?
A less breathless and narrative driven article could have noted that Scott's recusals and divesting of industry related investments and associations are no different than what any other nominee for FDA commissioner has done, including Rob Califf and Peggy Hamburg. And no one was keeping score of how many companies they consulted for or held stock in. Or that Gottlieb has made increasing the number of generic drugs that compete against medicines made by companies he advised a top priority?
To be fair, when I wrote to STAT News editor Rebecca Robbins raising my belief that the article was more narrative than reporting she responded that the intent was not to reinforce a narrative peddled those who regard Dr. Gottlieb as a pharma pawn.
But there is this as well: "The 44-year-old physician has traced an unusual career path, pivoting from Wall Street to a role at the FDA and then embarking on a lucrative career as an investor and adviser."
Who else thinks that this article will spur more attacks and spawn similar pieces from other news outlets that will include quotes from anti-industry critics such as Public Citizen who have already smeared Scott?
ICER recently had a meeting to discuss its latest study: "Targeted Immune Modulators for Rheumatoid Arthritis: Effectiveness & Value." It is no different than any other ICER report: It concludes no medicine is cost effective and it uses methodology that no economist can replicate. ICER reports are the cold fusion experiments of health care economics.
I have released a report discussing the impact of ICERs approach on patients. It concludes that applying ICER's cost-effectiveness standard to all biologics developed for RA since 2000 (none are cost-effective according to ICER) would have harmed a lot of people with RA.
Between 1999 and 2014 there would have been 46689 more deaths under an ICER regime. Additionally, research suggests that since 1999 the life expectancy of people with RA who used new medicines could expect to live 10 years longer than those not treated. Hence under an ICER regime people with RA would have 466894 fewer life years (46689 x 10).
Going forward, ICER claims new RA drugs are not cost effective either.
ICER estimates that only 97000 people year for five years (486000) with RA would get two new drugs it reviewed: baricitinib and sarilumab. Both medicines were tested in people with RA whose disease didn’t respond to any other treatments or couldn’t tolerate any other medicines.
ICER fails to disclose how they arrived at the estimate that 97000 people a year would use new drugs. Further, it assumes – without any support – that 70% of new users on baricitinib would come from patients using sarilumab and 30% would come from another biologic -- adalimumab--that it claims isn't cost effective either.
In doing so, ICER assumed that 50% of these patients were moderate-to-severe cases, and 50% of this subset had failed initial treatment with non-biologic RA drugs such as methotrexate. ICER states: "Applying these proportions to the projected 2016 US population resulted in an estimate of approximately 486,000 patients in the US over a five-year period.”
But this assumption is flawed. A recent study found that 50 percent of all RA patients failed to respond to their second-line biologics. Further, many other patients will stop responding to any therapy. Finally, ICER did not consider that many people with RA do not benefit from any other medicines. So, there is little basis to assume that two new medicines would not be used more widely as well as claim that one would replace the other.
If the 97000 limit is applied, 398000 people with RA a year would be denied medicines that improve their condition and could likely increase their life expectancy. ICER limits would cost RA patients up to 250900 life years over that time.
You can access the entire study here.
Nothing is more illustrative of the price/value discussion than PCSK9s. Just what are they worth? What's innovation worth?
At a recent Galen Institute forum, cardiologists, patient organizations, and policy wonks sat down to discuss the relative merits of PCSK9s both as a therapeutic choice and a reimbursement imbroglio. Issues ranged from physicians’ frustration with pre-authorization, to best practice beyond familial hyperlipidemia. What value should be assigned to PCSK9s for patients who are non-compliant with their statin therapy? Providers want to have the freedom to deliver the best clinical outcomes. How can payers become a more symbiotic part of that therapeutic journey?
Galen Institute President Grace-Marie Turner commented, "As I travel the country, I have become increasingly concerned as doctors say that their hands are being tied by bureaucrats who second-guess their clinical decisions. At this critical moment in the health care debate, I believe policymakers need to hear the physician point of view." She noted that, typically, physicians are so busy caring for patients that they do not have much opportunity to take part in discussions of health care policy. "For this reason, we decided to bring this group together to begin a national conversation about this crisis in the medical profession, and ensure that policymakers and patients alike understand the barriers doctors are facing as they attempt to deliver the best care possible to their patients."
According to Dr. Seth Baum, fellow of the American College of Cardiology, the American Heart Association, the American College of Preventive Medicine, the National Lipid Association, and the American Society for Preventive Cardiology, "Patients should not have to wonder who is deciding which medicines they take -- their doctor, or their insurer … In my case, I am forced to complete intricate, 17-page documents so that insurers will allow my patients access to lifesaving new cholesterol medications, only to see them turned down, repeatedly."
Baum also pointed to "fail first" policies, which require doctors to prescribe older, cheaper medicines for patients until those patients "fail" on those drugs, before being allowed to prescribe breakthrough treatments that would be more effective. "These decisions are best made between doctor and patient, not by bureaucrats," he added. "Insurance should help ease health care worries, not tie doctors and patients up in red tape."
Another speaker at the conference, Dr. Hal Scherz, a pediatric urologist, said, "Third-party interference has become endemic in the U.S. health care system, and is increasingly destructive to the patient-physician relationship. A recent survey by the Physician's Foundation found that 53.9% of physicians surveyed claim that some of their decisions are compromised due to their current level of clinical autonomy. I am glad to take part in this discussion, and hope it will increase public awareness of the restrictions doctors encounter in their daily work."
Disease is the enemy. Practicing physicians know this, but their professional association -- the American Medical Association -- seems in need of some education. The AMA's new program, "truthinrx.org," is entirely silent on the actual metrics of healthcare spending and the value of pharmaceutical innovation. Ignorance is not bliss.
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.
The current 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.
Healthcare innovation saves lives, saves money, promotes economic growth, and provides hope for hundreds of millions of people (both patients and care-givers) in the United States and around the world. It deserves respect -- or at least honest reportage.
Does this sound naïve? Perhaps, but as Schopenhauer said, "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
How’s that for a tweet?
At a recent Galen Institute forum, cardiologists, patient organizations, and policy wonks sat down to discuss the relative merits of PCSK9s both as a therapeutic choice and a reimbursement imbroglio. Issues ranged from physicians’ frustration with pre-authorization, to best practice beyond familial hyperlipidemia. What value should be assigned to PCSK9s for patients who are non-compliant with their statin therapy? Providers want to have the freedom to deliver the best clinical outcomes. How can payers become a more symbiotic part of that therapeutic journey?
Galen Institute President Grace-Marie Turner commented, "As I travel the country, I have become increasingly concerned as doctors say that their hands are being tied by bureaucrats who second-guess their clinical decisions. At this critical moment in the health care debate, I believe policymakers need to hear the physician point of view." She noted that, typically, physicians are so busy caring for patients that they do not have much opportunity to take part in discussions of health care policy. "For this reason, we decided to bring this group together to begin a national conversation about this crisis in the medical profession, and ensure that policymakers and patients alike understand the barriers doctors are facing as they attempt to deliver the best care possible to their patients."
According to Dr. Seth Baum, fellow of the American College of Cardiology, the American Heart Association, the American College of Preventive Medicine, the National Lipid Association, and the American Society for Preventive Cardiology, "Patients should not have to wonder who is deciding which medicines they take -- their doctor, or their insurer … In my case, I am forced to complete intricate, 17-page documents so that insurers will allow my patients access to lifesaving new cholesterol medications, only to see them turned down, repeatedly."
Baum also pointed to "fail first" policies, which require doctors to prescribe older, cheaper medicines for patients until those patients "fail" on those drugs, before being allowed to prescribe breakthrough treatments that would be more effective. "These decisions are best made between doctor and patient, not by bureaucrats," he added. "Insurance should help ease health care worries, not tie doctors and patients up in red tape."
Another speaker at the conference, Dr. Hal Scherz, a pediatric urologist, said, "Third-party interference has become endemic in the U.S. health care system, and is increasingly destructive to the patient-physician relationship. A recent survey by the Physician's Foundation found that 53.9% of physicians surveyed claim that some of their decisions are compromised due to their current level of clinical autonomy. I am glad to take part in this discussion, and hope it will increase public awareness of the restrictions doctors encounter in their daily work."
Disease is the enemy. Practicing physicians know this, but their professional association -- the American Medical Association -- seems in need of some education. The AMA's new program, "truthinrx.org," is entirely silent on the actual metrics of healthcare spending and the value of pharmaceutical innovation. Ignorance is not bliss.
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.
The current 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.
Healthcare innovation saves lives, saves money, promotes economic growth, and provides hope for hundreds of millions of people (both patients and care-givers) in the United States and around the world. It deserves respect -- or at least honest reportage.
Does this sound naïve? Perhaps, but as Schopenhauer said, "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
How’s that for a tweet?
Policy development by sound bite is becoming a chronic disease. Exhibit A: “Pharma spends more on marketing and sales than on R&D.”
The Washington Post wrote about it.
John Oliver talked about it.
Legislators are fixated on it.
Letters to the Wall Street Journal complained about it.
Let’s look at the record – because the devil is in the details – and it starts with what “sales and marketing” means.
When pundits, politicians, and policymakers speak about “sales and marketing,” the picture they are painting is of direct-to-consumer pharmaceutical advertising – the public face of Big Pharma. So, let’s set the record straight on that straight away. In 2016 $5.6 billion was spent on DTC. Same period R&D spending is roughly $70 billion. Amorous middle-aged couples in claw foot bathtubs are a lot sexier than excel spreadsheets, but facts are pesky things. Surprised?
Here’s another eye-opener, the category of “marketing and sales” also includes product sampling and communications to physicians, legal and accounting fees, salaries, rent and utilities, and all post-licensure programs deemed necessary by the FDA. Nuts and bolts aren’t cheap. It’s also important to understand that the R&D reported investment is only for pre-approval investment and doesn't take into consideration post approval R&D expenditures, which were $20 billion in 2011 and most likely, much higher today.
But let’s address the elephant in the room – DTC advertising. Yes – it’s good for business (otherwise it wouldn't exist) but it’s also good for the public health. And, no, it doesn’t make medicines more expensive.
The good news is that an informed healthcare consumer is a healthier citizen. And while information comes from many sources outside of the physician’s office – one of the most pervasive channels is through direct-to-consumer advertising.
Properly done, pharmaceutical advertising helps to de-stigmatize certain diseases and encourages people to talk with their doctors about problems previously considered taboo -- like depression. Other research demonstrated little or no correlation between a brand's DTC spending and it's cost. In other words, brands that spend more heavily on DTC advertising do not necessarily cost more than their less-advertised competition.
FDA research, of patients who visited their doctors because of an ad they saw, and who asked about that prescription drug by brand name, 87 percent actually had the condition the drug treats. And in 6 percent of those DTC-generated visits, a previously undiagnosed condition was discovered. Why is that so important? Because earlier detection combined with appropriate treatment means that more people will live longer, healthier, more productive lives without having to confront riskier, more costly medical interventions later on.
Only 7 percent of doctors said they felt "very pressured to prescribe" a particular advertised drug. When the FDA panel probed into the question of "pressure to prescribe," what we found out was that the real pressure was time pressure. More patients are coming in armed with more questions. A study in Health Affairs arrived at a similar conclusion. According to the study, ad- inspired doctor visits resulted in the advertised medicine being prescribed in only about 47 per cent of cases. Put another way, patients didn't get a prescription for the medicine they came in to discuss on more than half their visits. Even with advertising, doctors exert appropriate judgment when they prescribe drugs.
According to the FDA study, a majority of doctors feel that DTC advertising increases patient awareness and involvement, improves compliance, and enhances the overall doctor-patient relationship. But we can - we must - do better. Health care information is the consumer's Rosetta Stone, and the FDA, public policy institutes, pharmaceutical firms, communications professionals, health care providers, disease organizations, patient advocates, academics along with state and federal legislators must help design 21st century DTC advertising that not only helps to sell product, but also advances the public health.
The Washington Post wrote about it.
John Oliver talked about it.
Legislators are fixated on it.
Letters to the Wall Street Journal complained about it.
Let’s look at the record – because the devil is in the details – and it starts with what “sales and marketing” means.
When pundits, politicians, and policymakers speak about “sales and marketing,” the picture they are painting is of direct-to-consumer pharmaceutical advertising – the public face of Big Pharma. So, let’s set the record straight on that straight away. In 2016 $5.6 billion was spent on DTC. Same period R&D spending is roughly $70 billion. Amorous middle-aged couples in claw foot bathtubs are a lot sexier than excel spreadsheets, but facts are pesky things. Surprised?
Here’s another eye-opener, the category of “marketing and sales” also includes product sampling and communications to physicians, legal and accounting fees, salaries, rent and utilities, and all post-licensure programs deemed necessary by the FDA. Nuts and bolts aren’t cheap. It’s also important to understand that the R&D reported investment is only for pre-approval investment and doesn't take into consideration post approval R&D expenditures, which were $20 billion in 2011 and most likely, much higher today.
But let’s address the elephant in the room – DTC advertising. Yes – it’s good for business (otherwise it wouldn't exist) but it’s also good for the public health. And, no, it doesn’t make medicines more expensive.
The good news is that an informed healthcare consumer is a healthier citizen. And while information comes from many sources outside of the physician’s office – one of the most pervasive channels is through direct-to-consumer advertising.
Properly done, pharmaceutical advertising helps to de-stigmatize certain diseases and encourages people to talk with their doctors about problems previously considered taboo -- like depression. Other research demonstrated little or no correlation between a brand's DTC spending and it's cost. In other words, brands that spend more heavily on DTC advertising do not necessarily cost more than their less-advertised competition.
FDA research, of patients who visited their doctors because of an ad they saw, and who asked about that prescription drug by brand name, 87 percent actually had the condition the drug treats. And in 6 percent of those DTC-generated visits, a previously undiagnosed condition was discovered. Why is that so important? Because earlier detection combined with appropriate treatment means that more people will live longer, healthier, more productive lives without having to confront riskier, more costly medical interventions later on.
Only 7 percent of doctors said they felt "very pressured to prescribe" a particular advertised drug. When the FDA panel probed into the question of "pressure to prescribe," what we found out was that the real pressure was time pressure. More patients are coming in armed with more questions. A study in Health Affairs arrived at a similar conclusion. According to the study, ad- inspired doctor visits resulted in the advertised medicine being prescribed in only about 47 per cent of cases. Put another way, patients didn't get a prescription for the medicine they came in to discuss on more than half their visits. Even with advertising, doctors exert appropriate judgment when they prescribe drugs.
According to the FDA study, a majority of doctors feel that DTC advertising increases patient awareness and involvement, improves compliance, and enhances the overall doctor-patient relationship. But we can - we must - do better. Health care information is the consumer's Rosetta Stone, and the FDA, public policy institutes, pharmaceutical firms, communications professionals, health care providers, disease organizations, patient advocates, academics along with state and federal legislators must help design 21st century DTC advertising that not only helps to sell product, but also advances the public health.
Yesterday, four former FDA commissioners warned that proposals to allow importation of pharmaceuticals would create serious risks for consumer and patients, and would produce only minimal savings.
While importation proposals are intended to "make lower-cost but genuine, safe and effective drugs available to U.S. consumers," in practice they would "harm patients and consumers and compromise the carefully constructed system that guards the safety of our nation’s medical products," the former commissioners wrote in an open letter to Congress. Robert Califf, Margaret Hamburg, Mark McClellan, and Andrew von Eschenbach signed the letter.
The former commissioners note that in exceptional circumstances, limited importation has been permitted, but wrote that when they were in office, none of them was "able to conclude that a wider policy of routine importation would increase access to safe and effective drugs for the American public."
The letter directly addresses legislation that seeks to assure the safety of imported drugs by limiting importation to drugs made in FDA-inspected plants. "Allowing importation of drugs purported to be manufactured overseas in FDA-inspected facilities and drugs purported to be manufactured domestically for export to other countries and re-imported from those countries to the United States can not meet the requirements under the existing closed drug manufacturing and distribution system because the drugs could not be tracked and certified by the manufacturer."
Sales of illicit, ineffective, or adulterated products are a lucrative business for organized crime, the letter warns. It would be practically impossible to screen and verify the authenticity of massive quantities of imports, the group wrote, adding that "if spot-checking discovered a dangerous or counterfeit product, in the absence of the closed system currently in use, there would be no way to trace that product to its origin or intervene to protect other consumers before irreparable harm occurs."
The letter also challenges assumptions about cost savings from importation, noting that drugs are allotted to countries based on the needs of their populations, leaving little extra inventory for export to the U.S. It states that importation "would likely have only a small, incremental effect on cost and access for drugs in the U.S. market; further, these small savings might not be passed on to patients, even if consumers are able to obtain a legitimate imported drug."
The letter concludes: "We urge Congress and the many others concerned about the cost of drugs to deal directly with the issues driving the cost of medicines and not to place false hope in measures that will place patients who need treatment at risk and jeopardize public health.
While importation proposals are intended to "make lower-cost but genuine, safe and effective drugs available to U.S. consumers," in practice they would "harm patients and consumers and compromise the carefully constructed system that guards the safety of our nation’s medical products," the former commissioners wrote in an open letter to Congress. Robert Califf, Margaret Hamburg, Mark McClellan, and Andrew von Eschenbach signed the letter.
The former commissioners note that in exceptional circumstances, limited importation has been permitted, but wrote that when they were in office, none of them was "able to conclude that a wider policy of routine importation would increase access to safe and effective drugs for the American public."
The letter directly addresses legislation that seeks to assure the safety of imported drugs by limiting importation to drugs made in FDA-inspected plants. "Allowing importation of drugs purported to be manufactured overseas in FDA-inspected facilities and drugs purported to be manufactured domestically for export to other countries and re-imported from those countries to the United States can not meet the requirements under the existing closed drug manufacturing and distribution system because the drugs could not be tracked and certified by the manufacturer."
Sales of illicit, ineffective, or adulterated products are a lucrative business for organized crime, the letter warns. It would be practically impossible to screen and verify the authenticity of massive quantities of imports, the group wrote, adding that "if spot-checking discovered a dangerous or counterfeit product, in the absence of the closed system currently in use, there would be no way to trace that product to its origin or intervene to protect other consumers before irreparable harm occurs."
The letter also challenges assumptions about cost savings from importation, noting that drugs are allotted to countries based on the needs of their populations, leaving little extra inventory for export to the U.S. It states that importation "would likely have only a small, incremental effect on cost and access for drugs in the U.S. market; further, these small savings might not be passed on to patients, even if consumers are able to obtain a legitimate imported drug."
The letter concludes: "We urge Congress and the many others concerned about the cost of drugs to deal directly with the issues driving the cost of medicines and not to place false hope in measures that will place patients who need treatment at risk and jeopardize public health.
Liz Szabo wrote what I predict will be the worst (as in most deceptive and inaccurate) article on prescription drug costs to be published by a so-called mainstream media outlet in 2017.
"As Drug Costs Soar, People Delay Or Skip Cancer Treatments" claims that high drug prices are causing cancer patients to go bankrupt. To make that point distorts and omit facts in ways that let PBMs and health plans off the hook for imposing high out of pocket drug costs on a small group of patients.
Szabo overstates the problem and then fails to support her claim:
"We're talking about huge numbers of patients," says Dr. Scott Ramsey, director of the Hutchinson Institute for Cancer Outcomes Research at the Fred Hutchinson Cancer Center in Seattle. "It's an epidemic. And it's not going away."
While a huge problem for anyone in that situation, the good news is that the percentage of patients that must pay thousands of out of pocket is very small. Nearly 95 percent of cancer patients are not exposed to high out of pocket cancer costs. The other 5 percent often have supplemental insurance or receive cost sharing assistance.
Szabo claims that between 168,000 to 405,000 ‘ration’ their prescription use because of cost. This a sloppy use of the word made even sloppier because Szabo defines rationing as delaying the use of cancer drugs. Moreover, the studies she relies on to generate her guesstimate looks only at the small group of patients that –because of a low income or lack of insurance coverage – cite cost as a barrier to care.
The burden of out of pocket cost is not a small matter to those who must bear it. But to address the problem you have to identify the cause. Szabo strenuously avoids doing so.
She insinuates that the most important factor is the price of medicines. In fact, it is extreme drug cost sharing imposed by PBMs and insurers on the sickest 1 percent of patients with cancer, MS, rheumatoid arthritis, cystic fibrosis and other rare diseases.
Further, PBMs and insurers systematically target people with these conditions particularly in Medicare Part D and commercial plans provided under the Affordable Care Act. In those plans, insurers and PBMs have placed most or all new cancer drugs on the highest cost-sharing tier of drug benefit programs.
Net drug prices have been declining so the excuse that cost sharing has to increasse in step with increasing prices won't wash.
A Kaiser study recently found that “Payments for deductibles and coinsurance have outpaced increases in costs paid by the health plans themselves. Average payments toward deductibles more than tripled, rising 256 percent, and average payments toward coinsurance more than doubled, rising 107 percent. This is while average payments by health plans themselves only increased 58 percent. “
The real reason for the cost sharing discrimination Szabo ignores is that is where the money is.
The one percent of patients and the 1 percent of the drugs that are dispensed to them generate about $150 billion in drug sales at list price. PBMs and insurers extract $30-40 billion from drug companies in the form of rebatres. These rebates reduce the actual cost of drugs. But those savings are not fully passed on to patients.
Instead, most of these drugs are placed in the highest cost sharing formulary tier and patients then pay up to 50 percent of the list -- not rebated -- price of drugs. On average, the cost sharing is about 35 percent of the retail price of drugs. That's another $45 billion insurers and PBMs collect. Generating $75 billion on sales of $150 billion is a nice haul. But Ms. Szabo seems to think it's not such a big deal.
Did I mention that this practice is systematic?
A recent study found that insurers are increasingly designing benefits to maximize profitability and turn patients into revenue centers. The analysis notes for example that patients being treated for cancer or multiple sclerosis will cost an average of $61,000 but only generate $47,000 in revenue after accounting for the large risk adjustment and reinsurance transfer payments. The difference is made up by squeezing more profits out of drugs.
The researchers said this creates a large incentive to place such drugs on specialty tiers, where patients face high out-of-pocket costs and where drugs generate the most rebates.
This is certainly what has happened to cancer drugs. Since 2011 net price increases have declined for cancer medicines. Yet list prices have increased. The difference between net and list prices goes to rebates pocketed by health plans and insurance companies even as they hike cost sharing.
Further, even as rebates increase, more health plans are putting all cancer drugs in higher cost-sharing tiers, generic or not:
As a recent American Cancer Society study concludes: “Plans continue to place most or all oral chemotherapy medications on the highest cost-sharing tier, creating transparency and cost barriers for patients. The two generic oral cancer drugs we studied regularly appeared on the most expensive tier (41 and 62 percent of the time). The effect may be to inappropriately discourage enrollment by cancer patients.”
This is both unfair and inefficient. the use of new medicines lower treatment costs over time as well as substantially improving health over time.
In some case, insurers have recognized the dynamic contribution new medicines make to health and health systems and have protected cancer patients from high-cost sharing. A study of coverage for targeted drugs treating chronic myeloid leukemia found that their use of “was associated with lower spending on other types of healthcare services. CML patients on such targeted drugs ..”had roughly $12,000 less in nonpharmaceutical medical costs than did patients on alternative forms of therapy. This translated into a decline of more than 30% in medical spending and offset roughly 40% of the cost of the drugs...This result is consistent with prior work that suggested changing generosity for one healthcare service has both short- and long-term implications for spending in other areas.”
Instead, Szabo ignores the qualitative improvement in new cancer drugs and advantage of eliminating cost barriers for the most innovative treatments:
Spending on cancer has remained about 4 percent of health care spending since 1960 because drugs have been displacing hospitalization, which is more expensive. For instance, if people were being hospitalized for cancer in 2014 at the same rate they were in 1995, total hospital costs would be $60 billion a year more.
Additionally, whereas there were only 4 million cancer survivors in 1975, there are 14 million survivors today. The cancer death rate for men and women combined fell 25% from its peak in 1991 to 2014.
New cancer medicines have reduced health care spending and increased well-being and capacity to work. So, my question is: if the use of new medications makes cancer care more effective and affordable, why are health plans and PBMs making them more expensive?
Maybe another reporter will write an article about that.
"As Drug Costs Soar, People Delay Or Skip Cancer Treatments" claims that high drug prices are causing cancer patients to go bankrupt. To make that point distorts and omit facts in ways that let PBMs and health plans off the hook for imposing high out of pocket drug costs on a small group of patients.
Szabo overstates the problem and then fails to support her claim:
"We're talking about huge numbers of patients," says Dr. Scott Ramsey, director of the Hutchinson Institute for Cancer Outcomes Research at the Fred Hutchinson Cancer Center in Seattle. "It's an epidemic. And it's not going away."
While a huge problem for anyone in that situation, the good news is that the percentage of patients that must pay thousands of out of pocket is very small. Nearly 95 percent of cancer patients are not exposed to high out of pocket cancer costs. The other 5 percent often have supplemental insurance or receive cost sharing assistance.
Szabo claims that between 168,000 to 405,000 ‘ration’ their prescription use because of cost. This a sloppy use of the word made even sloppier because Szabo defines rationing as delaying the use of cancer drugs. Moreover, the studies she relies on to generate her guesstimate looks only at the small group of patients that –because of a low income or lack of insurance coverage – cite cost as a barrier to care.
The burden of out of pocket cost is not a small matter to those who must bear it. But to address the problem you have to identify the cause. Szabo strenuously avoids doing so.
She insinuates that the most important factor is the price of medicines. In fact, it is extreme drug cost sharing imposed by PBMs and insurers on the sickest 1 percent of patients with cancer, MS, rheumatoid arthritis, cystic fibrosis and other rare diseases.
Further, PBMs and insurers systematically target people with these conditions particularly in Medicare Part D and commercial plans provided under the Affordable Care Act. In those plans, insurers and PBMs have placed most or all new cancer drugs on the highest cost-sharing tier of drug benefit programs.
Net drug prices have been declining so the excuse that cost sharing has to increasse in step with increasing prices won't wash.
A Kaiser study recently found that “Payments for deductibles and coinsurance have outpaced increases in costs paid by the health plans themselves. Average payments toward deductibles more than tripled, rising 256 percent, and average payments toward coinsurance more than doubled, rising 107 percent. This is while average payments by health plans themselves only increased 58 percent. “
The real reason for the cost sharing discrimination Szabo ignores is that is where the money is.
The one percent of patients and the 1 percent of the drugs that are dispensed to them generate about $150 billion in drug sales at list price. PBMs and insurers extract $30-40 billion from drug companies in the form of rebatres. These rebates reduce the actual cost of drugs. But those savings are not fully passed on to patients.
Instead, most of these drugs are placed in the highest cost sharing formulary tier and patients then pay up to 50 percent of the list -- not rebated -- price of drugs. On average, the cost sharing is about 35 percent of the retail price of drugs. That's another $45 billion insurers and PBMs collect. Generating $75 billion on sales of $150 billion is a nice haul. But Ms. Szabo seems to think it's not such a big deal.
Did I mention that this practice is systematic?
A recent study found that insurers are increasingly designing benefits to maximize profitability and turn patients into revenue centers. The analysis notes for example that patients being treated for cancer or multiple sclerosis will cost an average of $61,000 but only generate $47,000 in revenue after accounting for the large risk adjustment and reinsurance transfer payments. The difference is made up by squeezing more profits out of drugs.
The researchers said this creates a large incentive to place such drugs on specialty tiers, where patients face high out-of-pocket costs and where drugs generate the most rebates.
This is certainly what has happened to cancer drugs. Since 2011 net price increases have declined for cancer medicines. Yet list prices have increased. The difference between net and list prices goes to rebates pocketed by health plans and insurance companies even as they hike cost sharing.
Further, even as rebates increase, more health plans are putting all cancer drugs in higher cost-sharing tiers, generic or not:
As a recent American Cancer Society study concludes: “Plans continue to place most or all oral chemotherapy medications on the highest cost-sharing tier, creating transparency and cost barriers for patients. The two generic oral cancer drugs we studied regularly appeared on the most expensive tier (41 and 62 percent of the time). The effect may be to inappropriately discourage enrollment by cancer patients.”
This is both unfair and inefficient. the use of new medicines lower treatment costs over time as well as substantially improving health over time.
In some case, insurers have recognized the dynamic contribution new medicines make to health and health systems and have protected cancer patients from high-cost sharing. A study of coverage for targeted drugs treating chronic myeloid leukemia found that their use of “was associated with lower spending on other types of healthcare services. CML patients on such targeted drugs ..”had roughly $12,000 less in nonpharmaceutical medical costs than did patients on alternative forms of therapy. This translated into a decline of more than 30% in medical spending and offset roughly 40% of the cost of the drugs...This result is consistent with prior work that suggested changing generosity for one healthcare service has both short- and long-term implications for spending in other areas.”
Instead, Szabo ignores the qualitative improvement in new cancer drugs and advantage of eliminating cost barriers for the most innovative treatments:
Spending on cancer has remained about 4 percent of health care spending since 1960 because drugs have been displacing hospitalization, which is more expensive. For instance, if people were being hospitalized for cancer in 2014 at the same rate they were in 1995, total hospital costs would be $60 billion a year more.
Additionally, whereas there were only 4 million cancer survivors in 1975, there are 14 million survivors today. The cancer death rate for men and women combined fell 25% from its peak in 1991 to 2014.
New cancer medicines have reduced health care spending and increased well-being and capacity to work. So, my question is: if the use of new medications makes cancer care more effective and affordable, why are health plans and PBMs making them more expensive?
Maybe another reporter will write an article about that.
Politico 3-15-17: TODAY: WYDEN INTRODUCES BILL TARGETING PBMs — The ranking member of the Senate Finance Committee will roll out a proposal today to lower drug costs by targeting prescription benefit managers (PBMS) — middlemen who negotiate discounts on drugs with pharma companies and administer prescription drug coverage for health insurance companies.
According to an email obtained by POLITICO, the bill would mandate that patient co-pays or co-insurance for drugs in Medicare Part D are based on the negotiated price of the drug, not the higher list price. The bill also requires more transparency by mandating that PBMs publicly disclose aggregate rebates and the amount of those rebates passed on to health plans, as well as the difference between what a PBM pays a pharmacy for a drug and what the PBM charges a health plan for the drug.
According to an email obtained by POLITICO, the bill would mandate that patient co-pays or co-insurance for drugs in Medicare Part D are based on the negotiated price of the drug, not the higher list price. The bill also requires more transparency by mandating that PBMs publicly disclose aggregate rebates and the amount of those rebates passed on to health plans, as well as the difference between what a PBM pays a pharmacy for a drug and what the PBM charges a health plan for the drug.
Dr. Scott Gottlieb
I have worked with Scott Gottlieb for over a decade on making drug development swifter by making it more scientific and increasing patient access to medical innovations. Scott played an important role in developing the Critical Path Initiative that has been the FDA's roadmap for moving the agency -- and our health care system -- towards predictive, personalized and participatory medicine. None of the advances in expediting approval of important new medicines would have been possible in the absence of The Critical Path Initiative.
I could discuss his accomplishments in the post. But many others will write about Scott's ability and experience in support of his nomination to be FDA commissioner. A handful will attempt to demonize him for that very experience.
So let me tell you what I know about the human being who has been nominated to be FDA commissioner.
I know of Scott's calm courage after his cancer diagnosis, his devotion to his family and his dedication to the practice of medicine. For years (until he had children) he was an internist and hospitalist, seeing and healing patients on weekend, evenings and holidays, all the while performing his duties at FDA and CMS. He loves medicine and that emotion shapes his view about how to best use advances in science to improve the safety and effectiveness of medical technologies. He is not an ideologue. He is data-driven and his views and decisions are informed by the kind of robust discussion and debate that is increasingly rare in our public sphere.
Finally, Scott has never let the intricacies of policy or statistical hair splitting deter him from thinking about the FDA as an institution that has more control over life and death -- as well as how well we live -- than any other agency on earth. He knows that patients and their families have as much a right to weigh in on FDA decisions as any so-called expert. The great medical reformer, William Osler once noted: "The good physician treats the disease; the great physician treats the patient who has the disease."
Scott is a great physician and will be a great FDA commissioner who puts patients first.
At the recent abuse deterrent opioids summit, CDER Deputy Director for Regulatory Programs Dr. Doug Throckmorton presented the FDA’s position. He said, “We must move on from older to newer technologies. Amen. But how?
Per Dr. Throckmorton, “Ongoing and planned activities reflect the commitment by FDA to integrate the use of all of our available tools to achieve our goals related to the safe use of prescription opioids.” Two crucial aspects of moving forward are smart policy initiatives and regulatory clarity. We are inching our way forward on both. We can and must do better.
A key part of the FDA’s Opioid Action Plan is “Expand access to abuse-deterrent formulations (ADFs) to discourage abuse.” In order to achieve this worthy goal, the agency has issued numerous guidance’s – but actions speak louder than words – and the FDA’s actions have been, at times, confusing. When it comes to the development of new therapies to prevent opioid abuse and addiction, predictability is power in pursuit of the public health.
One of the FDA’s stated goals is to “Incentivize the development of opioid medications with progressively better AD properties and support their widespread use.” Bravo. But the devil is in the details. One area of regulatory clarity that could be improved is the agency’s views on differentiation between extended-release and long-acting (ER-LA) and immediate release (IR) opioids and how new products are tested for abuse-deterrent properties. This is a critical concern as IR opioids, with over 240 million scripts annual, represent nearly 96% of the entire opioid market. They are the “gateway” drug of prescription opioid abuse and do not have a single approved ADF formulation.
Believe it or not, abuse deterrence is largely defined and determined by how admitted opioid abusers “like” the product. (Abuse of IR opioid drugs is attractive to abusers because bypassing intestinal absorption and metabolism can lead to a higher Cmax and faster Tmax resulting in a more intense and more immediate high.)
Not surprisingly, abusers prefer immediate release products because they get their highs faster. But, as far as regulatory review is concerned, that also means that IR products under review by the FDA are determined to be less abuse-deterrent.
It’s an apples-to-oranges comparison that is resulting in an uneven ER-LA/IR regulatory playing field. And the unfortunate result is that it’s harder for immediate release opioids to pass FDA muster. Since IR opioids are designed to release “immediately” and last for a short duration (3-4 hours), measurements of drug exposure and “liking” should be taken at earlier, more IR-relevant intervals (when measured against existing, non-abuse deterrent comparator drugs). Measuring IR products by ER-LA standards is not a real world proposition. (When ER-LA’s are compared to IR’s by abusers – of course they like the immediate “high” better). The “clinic” experience needs to be reflective of real-world abuse.
Regulatory ambiguity and common sense are not allies. In fact, the agency has identified one of its major challenges as assessing the impact of individual formulations. Admitting the problem is important. Addressing it is urgent.
It’s time for the FDA to reflect on a more nuanced approach in measuring and determining appropriate standards for demonstrating abuse-deterrent properties of immediate release opioid. Small differences can lead to big benefits in the real world of deterrence. The key question remains not unanswered, but unaddressed – are the endpoints suggested in FDA’s “Guidance for Industry: Abuse-Deterrent Opioids—Evaluation and Labeling” the most relevant for demonstrating abuse-deterrent properties of an IR opioid?
While the public health imperative must drive the regulatory agenda, another important issue is how agency actions impact continued robust research and development. Minus more up-to-date and predictable FDA review criteria for abuse deterrent opioids, investment in their development is already becoming less attractive. Can we really afford to leave these decisions in the hands of admitted drug addicts? Actions (or inactions) have consequences.
As Dr. Throckmorton 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 time to focus on this issue is now. Lives are at stake.
Per Dr. Throckmorton, “Ongoing and planned activities reflect the commitment by FDA to integrate the use of all of our available tools to achieve our goals related to the safe use of prescription opioids.” Two crucial aspects of moving forward are smart policy initiatives and regulatory clarity. We are inching our way forward on both. We can and must do better.
A key part of the FDA’s Opioid Action Plan is “Expand access to abuse-deterrent formulations (ADFs) to discourage abuse.” In order to achieve this worthy goal, the agency has issued numerous guidance’s – but actions speak louder than words – and the FDA’s actions have been, at times, confusing. When it comes to the development of new therapies to prevent opioid abuse and addiction, predictability is power in pursuit of the public health.
One of the FDA’s stated goals is to “Incentivize the development of opioid medications with progressively better AD properties and support their widespread use.” Bravo. But the devil is in the details. One area of regulatory clarity that could be improved is the agency’s views on differentiation between extended-release and long-acting (ER-LA) and immediate release (IR) opioids and how new products are tested for abuse-deterrent properties. This is a critical concern as IR opioids, with over 240 million scripts annual, represent nearly 96% of the entire opioid market. They are the “gateway” drug of prescription opioid abuse and do not have a single approved ADF formulation.
Believe it or not, abuse deterrence is largely defined and determined by how admitted opioid abusers “like” the product. (Abuse of IR opioid drugs is attractive to abusers because bypassing intestinal absorption and metabolism can lead to a higher Cmax and faster Tmax resulting in a more intense and more immediate high.)
Not surprisingly, abusers prefer immediate release products because they get their highs faster. But, as far as regulatory review is concerned, that also means that IR products under review by the FDA are determined to be less abuse-deterrent.
It’s an apples-to-oranges comparison that is resulting in an uneven ER-LA/IR regulatory playing field. And the unfortunate result is that it’s harder for immediate release opioids to pass FDA muster. Since IR opioids are designed to release “immediately” and last for a short duration (3-4 hours), measurements of drug exposure and “liking” should be taken at earlier, more IR-relevant intervals (when measured against existing, non-abuse deterrent comparator drugs). Measuring IR products by ER-LA standards is not a real world proposition. (When ER-LA’s are compared to IR’s by abusers – of course they like the immediate “high” better). The “clinic” experience needs to be reflective of real-world abuse.
Regulatory ambiguity and common sense are not allies. In fact, the agency has identified one of its major challenges as assessing the impact of individual formulations. Admitting the problem is important. Addressing it is urgent.
It’s time for the FDA to reflect on a more nuanced approach in measuring and determining appropriate standards for demonstrating abuse-deterrent properties of immediate release opioid. Small differences can lead to big benefits in the real world of deterrence. The key question remains not unanswered, but unaddressed – are the endpoints suggested in FDA’s “Guidance for Industry: Abuse-Deterrent Opioids—Evaluation and Labeling” the most relevant for demonstrating abuse-deterrent properties of an IR opioid?
While the public health imperative must drive the regulatory agenda, another important issue is how agency actions impact continued robust research and development. Minus more up-to-date and predictable FDA review criteria for abuse deterrent opioids, investment in their development is already becoming less attractive. Can we really afford to leave these decisions in the hands of admitted drug addicts? Actions (or inactions) have consequences.
As Dr. Throckmorton 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 time to focus on this issue is now. Lives are at stake.
Some snippets from an excellent article in the Pink Sheet.
Gottlieb Nomination As US FDA Chief Could Signal Changes To Generic Approval Process
Michael Cipriano
Former deputy commissioner will also likely push increased use of biomarkers and more flexibility in off-label communication, among other reforms. President Donald Trump's choice of Scott Gottlieb to head the US FDA could signal efforts to bring reforms among a variety of fronts, perhaps none more notable than how the agency approves generic drugs.
Peter Pitts, president of the Center for Medicine in the Public Interest and a former FDA associate commissioner, touted Gottlieb as "a great choice." Pitts, who worked with Gottlieb for nearly two years at the agency, tells the Pink Sheet that he "knows the people, he knows the process, and he understands how to make both work harder and smarter."
"He understands the need to bring generic drugs to the market faster," Pitts said. "He understands the importance of addressing the single-source generic issue from a competitive perspective. He also understands, probably most importantly, the need not just for things happening faster, but things happening with greater predictability."
Public Citizen, however, was not so rosy about Gottlieb's selection, citing his close ties to industry, as it similarly did when Robert Califf was tapped to head the agency under President Obama.
In a statement, Michael Carome, director of Public Citizen's Health Research Group, noted that Gottlieb is currently serving or has recently served on the boards of five pharmaceutical companies, including that of GlaxoSmithKlein, and that he received at least $413,000 from multiple drug and medical device companies for mainly consulting and speaking fees. Carome called on the Senate to reject his nomination.
"When Gottlieb served as FDA deputy commissioner, he was recused from many key meetings and decisions due to his close relationship with industry," Carome said. "If the Senate does not reject Gottlieb, he will have to be recused from key decisions time and time again, otherwise there is no way to be sure he will put the public’s health over industry profits."
Pitts, however, contended that close ties to industry "are incredibly important."
"FDA has to be both a regulator of and ally with industry," Pitts said. "And I think Scott is the right guy to practice that nuanced relationship."
Gottlieb Nomination As US FDA Chief Could Signal Changes To Generic Approval Process
Michael Cipriano
Former deputy commissioner will also likely push increased use of biomarkers and more flexibility in off-label communication, among other reforms. President Donald Trump's choice of Scott Gottlieb to head the US FDA could signal efforts to bring reforms among a variety of fronts, perhaps none more notable than how the agency approves generic drugs.
Peter Pitts, president of the Center for Medicine in the Public Interest and a former FDA associate commissioner, touted Gottlieb as "a great choice." Pitts, who worked with Gottlieb for nearly two years at the agency, tells the Pink Sheet that he "knows the people, he knows the process, and he understands how to make both work harder and smarter."
"He understands the need to bring generic drugs to the market faster," Pitts said. "He understands the importance of addressing the single-source generic issue from a competitive perspective. He also understands, probably most importantly, the need not just for things happening faster, but things happening with greater predictability."
Public Citizen, however, was not so rosy about Gottlieb's selection, citing his close ties to industry, as it similarly did when Robert Califf was tapped to head the agency under President Obama.
In a statement, Michael Carome, director of Public Citizen's Health Research Group, noted that Gottlieb is currently serving or has recently served on the boards of five pharmaceutical companies, including that of GlaxoSmithKlein, and that he received at least $413,000 from multiple drug and medical device companies for mainly consulting and speaking fees. Carome called on the Senate to reject his nomination.
"When Gottlieb served as FDA deputy commissioner, he was recused from many key meetings and decisions due to his close relationship with industry," Carome said. "If the Senate does not reject Gottlieb, he will have to be recused from key decisions time and time again, otherwise there is no way to be sure he will put the public’s health over industry profits."
Pitts, however, contended that close ties to industry "are incredibly important."
"FDA has to be both a regulator of and ally with industry," Pitts said. "And I think Scott is the right guy to practice that nuanced relationship."
Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.
