Latest Drugwonks' Blog
From today’s edition of the Detroit News …
Doctor-industry lunches are good for you
Drug firms have discovered a powerful new mind-control technology that threatens to topple our healthcare system: a free slice of pizza. That’s the implication — but not the actual findings — of a new study in JAMA Internal Medicine.
The report finds that physicians who accept complimentary meals of under $20 in value from pharmaceutical representatives are more likely to prescribe certain brand-name medications to Medicare patients. The more frequent — and more expensive — the meals, the greater the effect on doctors’ prescribing rates.
Is the drug industry corrupting America’s medical practitioners through a cunning use of appetizers? Not quite. The study fails to mention that doctors voluntarily attend these meetings to stay informed about new medicines — not new recipes.
What’s more, the article never bothers to ask a basic question: are doctor-industry interactions bad for the health of patients? To date, there is no evidence to suggest that they are.
In reality, meals are often provided as part of educational events hosted by drug companies. The point of these meetings is to convey technical information to doctors about a particular drug. Doctors who attend the meeting and learn about a medicine’s clinical effectiveness are obviously more likely to prescribe that drug than physicians who didn’t go to the meeting and have never heard of the medicine. Similarly, doctors who already prescribe a company’s medicine are more likely to receive lunch invites than doctors who aren’t in sales reps’ rolodexes.
In other words, it’s hardly surprising or scandalous that doctors who meet with salespeople are more likely to use what they’re selling — once they’ve learned about the value of the medicines being discussed.
Complaints about drug-company influence would be a lot more credible if researchers could show it harmed patients’ well-being. For instance, do free meals compel doctors to prescribe a brand-name drug when a cheaper generic would suffice? Do they persuade physicians to use one particular treatment when a different therapy would be more effective?
There’s simply no way for physicians to stay current on every pharmaceutical product at their disposal. By one estimate, some 1,700 articles are published on the top 25 medicines each year. Drug producers use a variety of promotional efforts to cut through this information glut.
Dennis Ausiello, chief of medicine at Massachusetts General Hospital, and Thomas Stossel, a professor at Harvard Medical School, have made this point. According to them, “company salespersons complement physicians’ information derived from many sources. They tell physicians about a limited range of products about which their employers train them under strict FDA regulations.”
Since when did transmitting accurate medical information to doctors become a bad thing?
To be sure, pharmaceutical firms are motivated by profit. But improving patient health and boosting sales aren’t mutually exclusive ends — especially when the product in question addresses a genuine public health need.
Moreover, it’s simplistic and insulting to assume that highly-educated doctors are selling out their patients for the price of a slice. In a 2008 survey of physicians conducted by KRC Research, only 11 percent reported being greatly influenced by pharmaceutical representatives. Clinical knowledge, a patient’s specific circumstances, and insurance restrictions all played a larger role in determining prescribing practices.
Let’s hope misinterpreted studies and manufactured media outrage don’t lead to further restrictions on these meetings. If that were to happen, doctors might go without a free lunch — but patients would go without the best treatment plans possible.
Peter Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest.
Doctor-industry lunches are good for you
Drug firms have discovered a powerful new mind-control technology that threatens to topple our healthcare system: a free slice of pizza. That’s the implication — but not the actual findings — of a new study in JAMA Internal Medicine.
The report finds that physicians who accept complimentary meals of under $20 in value from pharmaceutical representatives are more likely to prescribe certain brand-name medications to Medicare patients. The more frequent — and more expensive — the meals, the greater the effect on doctors’ prescribing rates.
Is the drug industry corrupting America’s medical practitioners through a cunning use of appetizers? Not quite. The study fails to mention that doctors voluntarily attend these meetings to stay informed about new medicines — not new recipes.
What’s more, the article never bothers to ask a basic question: are doctor-industry interactions bad for the health of patients? To date, there is no evidence to suggest that they are.
In reality, meals are often provided as part of educational events hosted by drug companies. The point of these meetings is to convey technical information to doctors about a particular drug. Doctors who attend the meeting and learn about a medicine’s clinical effectiveness are obviously more likely to prescribe that drug than physicians who didn’t go to the meeting and have never heard of the medicine. Similarly, doctors who already prescribe a company’s medicine are more likely to receive lunch invites than doctors who aren’t in sales reps’ rolodexes.
In other words, it’s hardly surprising or scandalous that doctors who meet with salespeople are more likely to use what they’re selling — once they’ve learned about the value of the medicines being discussed.
Complaints about drug-company influence would be a lot more credible if researchers could show it harmed patients’ well-being. For instance, do free meals compel doctors to prescribe a brand-name drug when a cheaper generic would suffice? Do they persuade physicians to use one particular treatment when a different therapy would be more effective?
There’s simply no way for physicians to stay current on every pharmaceutical product at their disposal. By one estimate, some 1,700 articles are published on the top 25 medicines each year. Drug producers use a variety of promotional efforts to cut through this information glut.
Dennis Ausiello, chief of medicine at Massachusetts General Hospital, and Thomas Stossel, a professor at Harvard Medical School, have made this point. According to them, “company salespersons complement physicians’ information derived from many sources. They tell physicians about a limited range of products about which their employers train them under strict FDA regulations.”
Since when did transmitting accurate medical information to doctors become a bad thing?
To be sure, pharmaceutical firms are motivated by profit. But improving patient health and boosting sales aren’t mutually exclusive ends — especially when the product in question addresses a genuine public health need.
Moreover, it’s simplistic and insulting to assume that highly-educated doctors are selling out their patients for the price of a slice. In a 2008 survey of physicians conducted by KRC Research, only 11 percent reported being greatly influenced by pharmaceutical representatives. Clinical knowledge, a patient’s specific circumstances, and insurance restrictions all played a larger role in determining prescribing practices.
Let’s hope misinterpreted studies and manufactured media outrage don’t lead to further restrictions on these meetings. If that were to happen, doctors might go without a free lunch — but patients would go without the best treatment plans possible.
Peter Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest.
From Drugchannels: “Ronny Gal, Ph.D., a senior analyst at the investment bank Sanford C. Bernstein & Co., just published a great client note on the Mylan EpiPen pricing brouhaha.”
Gal’s note should be read and memorized by every reporter, editorialist, talking head so that it is seared into their frontal cortex when writing about drug prices. I have helpfully italicized and placed the critical indights in bold. And I have given these important observations their very own paragraphs.
Thus spake Gal:
“We received multiple questions from investors about Mylan rolling back price increases.
The problem is that this would not necessarily help consumers much.
The price charged to consumers is set by payors.
(NB Repeat silently to yourself: The price charged to consumers is set by payors. The price charged to consumers is set by payors. The price charged to consumers is set by payors. )
Thus, to reduce consumer prices, Mylan would have to renegotiate increases, discounts and rebates to the payors; this will take some time and we suspect payors are not too unhappy seeing Mylan swinging in the wind a bit. Further, they will demand some steep discounts to help Mylan off the hook."
(NB: Note that in order to reduce prices to consumers, Mylan would have to also pay PBMs and insurers a discount, just because)
My next post will explain why Mylan’s authorized generic strategy, while risky, is also inspired and could launch a movement of companies who will refuse to payoff PBMs, insurers, hospitals and government agencies and use the money to cover drugs at point of care.
But for now, I hope everyone takes Ronny Gal's insights to heart and applies them when writing, talking or debate about drug prices.
Failing to do so is tantamount to lying.
Gal’s note should be read and memorized by every reporter, editorialist, talking head so that it is seared into their frontal cortex when writing about drug prices. I have helpfully italicized and placed the critical indights in bold. And I have given these important observations their very own paragraphs.
Thus spake Gal:
“We received multiple questions from investors about Mylan rolling back price increases.
The problem is that this would not necessarily help consumers much.
The price charged to consumers is set by payors.
(NB Repeat silently to yourself: The price charged to consumers is set by payors. The price charged to consumers is set by payors. The price charged to consumers is set by payors. )
Thus, to reduce consumer prices, Mylan would have to renegotiate increases, discounts and rebates to the payors; this will take some time and we suspect payors are not too unhappy seeing Mylan swinging in the wind a bit. Further, they will demand some steep discounts to help Mylan off the hook."
(NB: Note that in order to reduce prices to consumers, Mylan would have to also pay PBMs and insurers a discount, just because)
My next post will explain why Mylan’s authorized generic strategy, while risky, is also inspired and could launch a movement of companies who will refuse to payoff PBMs, insurers, hospitals and government agencies and use the money to cover drugs at point of care.
But for now, I hope everyone takes Ronny Gal's insights to heart and applies them when writing, talking or debate about drug prices.
Failing to do so is tantamount to lying.
From today’s edition of the Sacramento Bee …
Rising drug prices the fault of insurers, not drug companies
By Peter J. Pitts
Special to The Bee
Republican voters hate Obamacare, but they hate high prescription drug prices even more. Health care scholar Avik Roy recently pointed to the polls as a reason the GOP must develop a “clear plan to tackle the high and rising price of branded prescription drugs.” He proposed a number of measures aimed at reining in supposedly greedy pharmaceutical firms.
But Roy, like many others who have weighed in on the cost of medicines, overlooks two key points. First, the very real financial pain many Americans feel at the pharmacy counter is the fault of insurers – not drug companies. Second, the obsessive focus on cost obscures the vastly higher value of new drugs.
For most Americans, the price of drugs means the co-pays or co-insurance they fork over when picking up prescriptions. Insurers, not drug manufacturers, set those rates and they’ve been increasing cost-sharing requirements for years. Of those who buy individual health plans through their jobs, a record 46 percent must pay their first $1,000 of medical expenses.
The insurance industry has managed to pull the wool over Americans’ eyes and convince them that drug prices aren’t tied to the pharmaceutical industry’s investments in research and development. That’s intuitively and factually wrong.
Since 2000, drug firms have spent more than $500 billion developing new medicines. Research costs last year alone totaled almost $59 billion, up from $15.2 billion in 1995. The pharmaceutical sector spends five times more on R&D than aerospace, and two and a half times more than the software industry.
Much of this money goes toward the hundreds of potential treatments that never make it to market. Of those few medicines that enter human testing, just 12 percent win federal approval. The high failure rate is why creating just one FDA-approved medicine costs nearly $2.6 billion.
Drug companies don’t have “infinite pricing power,” as critics claim. Just look at the fierce competition among the makers of hepatitis C treatments. Gilead, the first company to enter the market, priced its two cures, Sovaldi and Harvoni, at $84,000 and $94,500 for full courses of treatment.
Soon other firms entered the market, sparking a fierce price war that led to 50 percent discounts for insurers. Hepatitis C drugs now cost less in the U.S. than in Europe.
Most patients don’t know this – and how would they? Insurers largely pocketed the discounts instead of passing them along to consumers.
Critics’ single-minded focus on drug prices ignores the immense value that modern medicines deliver to patients. Pegasys – the previous “best practice” treatment for hepatitis C – required weekly injections for as long as 48 weeks. Since few patients completed treatment due to severe side effects, much of the drug was wasted. The newer treatments are vastly more effective, curing 90 percent of patients in just 12 weeks, with mild side effects.
And let’s not forget the price of not using these drugs. One in three patients with the hepatitis C virus eventually develops liver cirrhosis, which can require a transplant. A “routine” liver transplant costs close to $300,000.
New and better drugs aren’t a problem; they’re the solution to America’s worsening chronic disease burden. Demonizing the creators of these medicines will do nothing to bring down patients’ skyrocketing co-insurance payments and deductibles. But it would sap investors’ enthusiasm to pour money into expensive research that ultimately saves lives.
Rising drug prices the fault of insurers, not drug companies
By Peter J. Pitts
Special to The Bee
Republican voters hate Obamacare, but they hate high prescription drug prices even more. Health care scholar Avik Roy recently pointed to the polls as a reason the GOP must develop a “clear plan to tackle the high and rising price of branded prescription drugs.” He proposed a number of measures aimed at reining in supposedly greedy pharmaceutical firms.
But Roy, like many others who have weighed in on the cost of medicines, overlooks two key points. First, the very real financial pain many Americans feel at the pharmacy counter is the fault of insurers – not drug companies. Second, the obsessive focus on cost obscures the vastly higher value of new drugs.
For most Americans, the price of drugs means the co-pays or co-insurance they fork over when picking up prescriptions. Insurers, not drug manufacturers, set those rates and they’ve been increasing cost-sharing requirements for years. Of those who buy individual health plans through their jobs, a record 46 percent must pay their first $1,000 of medical expenses.
The insurance industry has managed to pull the wool over Americans’ eyes and convince them that drug prices aren’t tied to the pharmaceutical industry’s investments in research and development. That’s intuitively and factually wrong.
Since 2000, drug firms have spent more than $500 billion developing new medicines. Research costs last year alone totaled almost $59 billion, up from $15.2 billion in 1995. The pharmaceutical sector spends five times more on R&D than aerospace, and two and a half times more than the software industry.
Much of this money goes toward the hundreds of potential treatments that never make it to market. Of those few medicines that enter human testing, just 12 percent win federal approval. The high failure rate is why creating just one FDA-approved medicine costs nearly $2.6 billion.
Drug companies don’t have “infinite pricing power,” as critics claim. Just look at the fierce competition among the makers of hepatitis C treatments. Gilead, the first company to enter the market, priced its two cures, Sovaldi and Harvoni, at $84,000 and $94,500 for full courses of treatment.
Soon other firms entered the market, sparking a fierce price war that led to 50 percent discounts for insurers. Hepatitis C drugs now cost less in the U.S. than in Europe.
Most patients don’t know this – and how would they? Insurers largely pocketed the discounts instead of passing them along to consumers.
Critics’ single-minded focus on drug prices ignores the immense value that modern medicines deliver to patients. Pegasys – the previous “best practice” treatment for hepatitis C – required weekly injections for as long as 48 weeks. Since few patients completed treatment due to severe side effects, much of the drug was wasted. The newer treatments are vastly more effective, curing 90 percent of patients in just 12 weeks, with mild side effects.
And let’s not forget the price of not using these drugs. One in three patients with the hepatitis C virus eventually develops liver cirrhosis, which can require a transplant. A “routine” liver transplant costs close to $300,000.
New and better drugs aren’t a problem; they’re the solution to America’s worsening chronic disease burden. Demonizing the creators of these medicines will do nothing to bring down patients’ skyrocketing co-insurance payments and deductibles. But it would sap investors’ enthusiasm to pour money into expensive research that ultimately saves lives.
Great article by Elura Nanos of Law Newz capturing the various viewpoints and thoughts about EpiPens. (She quotes me in the piece)
What's Behind the Outrageous Cost of EpiPens
It’s back-to-school time, and for many parents, that means stocking up not only on #2 pencils and pocket-folders, but also replenishing their EpiPens. Parents of children with allergies face the exhausting tasks of obtaining and filling prescriptions, complying with school rules, checking expiration dates, monitoring schools’ use and storage of this medication, and of course, sending their reaction-prone children to school without much more than anxiety-filled hopes that they’ll return home without having an anaphylactic incident. Mylan Pharmaceuticals, the company that produces the EpiPen, makes over $1 billion a year from this life-saving product; but apparently, that’s just not enough. Mylan has now raised the price of a dual-pack of EpiPens to over $600. For those of you keeping score at home, that’s a 500% increase since 2004. Last year alone, Mylan raised the price of EpiPens by over 30%.
Deborah Solomons, Food Allergy Awareness Activist spoke with LawNewz today:
“1 in 13 children suffer from allergies – many of them facing potentially fatal reactions if allergens are ingested. Right now, EpiPen is our best insurance against a life-threatening reaction. We rely on our children’s having access to multiple EpiPens at all times – including in school, at sporting events, and when traveling. Paying hundreds of dollars out of pocket is just not an option for all families.”
Solomons, who is also a licensed clinical social worker, continued on to discuss the global impact such pricing has on families: “It’s stressful enough to deal with the allergies, and the financial burden just compounds the stress.”
The price hike might not feel so offensive had it not come on the heels of Mylan CEO Heather Bresch’s having taken a 600% pay increase, bringing her grand total to $44.7 million over the past two years. There’s also more to hate: Mylan recently did what’s commonly called a “corporate inversion.” The basic concept is that Mylan purchased a smaller pharmaceutical company that is headquartered in the Netherlands; as a direct result of that acquisition, the company is now taxed primarily as a foreign corporation. It will pay taxes at a lower tax rate on some income, and skip out completely on taxes for other income. Bresch’s take on squeezing Mylan through this tax loophole has been “it’s not me, it’s the tax code;” in the competitive pharmaceutical marketplace, Mylan had no choice but to minimize its tax exposure.
Other companies have attempted to take their place within the epinephrine market, but have failed. Most recently, Sanofi voluntarily recalled their Auvi-Q, leaving Mylan with an effective monopoly. Whether Mylan has had a hand in squelching its competition remains to be seen – but is certainly the suggestion made by a variety of media outlets and political critics.
Heather Bresch herself has also been involved with a scandal or two – like the time when she got an MBA from West Virginia University, only to have it revoked after an investigation concluded that her transcripts had been falsified by school officials. At the time, Bresch’s father, Joe Manachin, (who was then the governor of West Virginia, and who is now a U.S. Senator) and the family had close ties to the university’s administration; two top-ranking members of which promptly resigned on the heels of the scandal.
The EpiPen pricing issue has even united political foes against Mylan. Senator Chuck Grassley (R-Iowa), the chair of the Senate Judiciary Committee, began an inquiry into Mylan’s pricing earlier this week. Senators Amy Klobuchar (D-Minn) and Richard Blumenthal (D-Conn.) have also been active in demanding a price reduction. Even infamous pharmaceutical gauger Martin Shkreli described Mylan as a group of “vultures.”
Food Allergy Research & Education (“FARE”) released the following statement today:
“For the millions of Americans at risk for anaphylaxis, epinephrine is a lifeline. It is the only drug that can counteract a potentially life-threatening allergic reaction. FARE believes no individual in need of epinephrine should ever be without this life-saving drug due to a lack of affordable access to the drug. Even a single life lost due to lack of access to this drug is one life too many. We are deeply concerned about the challenges our community face related to the accessibility and affordability of epinephrine, which have become increasingly difficult for various reasons.”
And let’s not be naïve about the radius of impact here. Mylan’s pricing doesn’t affect only allergy sufferers. As Senator Grassley pointed out, with 40 percent of children publicly insured. “taxpayers are picking up the tab for this medication.”
It’s certainly tempting to blame Big Pharma for business practices motivated by greed at the expense of children’s health. But after speaking with Robert Goldberg, Vice President for the Center for Medicine in the Public Interest, I think there may be a far more complex web of avarice at play. According to Goldberg, pharmaceutical companies have little choice but to consistently and drastically increase the list prices for drugs; the combination of government-imposed price controls and drug shortages (resulting from the increasingly small pool of generic drug manufacturers willing to take the financial risk of producing certain medications) effectively mandates companies like Mylan to charge sky-high list prices for its products. Context is important too. Goldberg pointed out that the cost of other drugs, such as Albuterol and commonly-used antibiotics, have gone up as much as 3500%.
Goldberg shared with me his take on the underlying reason for EpiPen pricing having suddenly become a controversial issue:
“Mylan didn’t do anything illegal. This is pre-election hoopla. Mylan is in the hotseat because it ran ads endlessly during the Olympics. At times, I didn’t know whether I was watching an EpiPen documentary or women’s gymnastics.”
But media hype or no, $600 is a lot to spend on this product. If it’s not Mylan’s fault, what’s the real cause of the outrageous cost of EpiPens? According to Goldberg, this is a “great example of crony-capitalism. Everyone knows the joke –you raise prices, you get beaten up, but then everyone pockets the money. If you lift up the rock on the rhetoric, you find a series of incestuous relationships between manufacturers, insurers, and the government that focus on dividing up discounts and cash rebates and passing the cost onto consumers.”
The outrageous pricetag on EpiPens, after all, is the “list price.” That means that when the manufacturer issues “rebates” (which is standard practice), those rebates are lining the pockets of pharmacies and health insurers – but not those of consumers. The EpiPen issue can be framed as “Big Pharma and the Government Watchdogs Trying to Protect Us” as easily as “The Predatory Tale of Healthcare Companies and the Politicians Who Enable Them” – it’s all in the telling. While we, the consumers, are left to sort it all out, the prices of EpiPens will likely continue to rise.
What's Behind the Outrageous Cost of EpiPens
It’s back-to-school time, and for many parents, that means stocking up not only on #2 pencils and pocket-folders, but also replenishing their EpiPens. Parents of children with allergies face the exhausting tasks of obtaining and filling prescriptions, complying with school rules, checking expiration dates, monitoring schools’ use and storage of this medication, and of course, sending their reaction-prone children to school without much more than anxiety-filled hopes that they’ll return home without having an anaphylactic incident. Mylan Pharmaceuticals, the company that produces the EpiPen, makes over $1 billion a year from this life-saving product; but apparently, that’s just not enough. Mylan has now raised the price of a dual-pack of EpiPens to over $600. For those of you keeping score at home, that’s a 500% increase since 2004. Last year alone, Mylan raised the price of EpiPens by over 30%.
Deborah Solomons, Food Allergy Awareness Activist spoke with LawNewz today:
“1 in 13 children suffer from allergies – many of them facing potentially fatal reactions if allergens are ingested. Right now, EpiPen is our best insurance against a life-threatening reaction. We rely on our children’s having access to multiple EpiPens at all times – including in school, at sporting events, and when traveling. Paying hundreds of dollars out of pocket is just not an option for all families.”
Solomons, who is also a licensed clinical social worker, continued on to discuss the global impact such pricing has on families: “It’s stressful enough to deal with the allergies, and the financial burden just compounds the stress.”
The price hike might not feel so offensive had it not come on the heels of Mylan CEO Heather Bresch’s having taken a 600% pay increase, bringing her grand total to $44.7 million over the past two years. There’s also more to hate: Mylan recently did what’s commonly called a “corporate inversion.” The basic concept is that Mylan purchased a smaller pharmaceutical company that is headquartered in the Netherlands; as a direct result of that acquisition, the company is now taxed primarily as a foreign corporation. It will pay taxes at a lower tax rate on some income, and skip out completely on taxes for other income. Bresch’s take on squeezing Mylan through this tax loophole has been “it’s not me, it’s the tax code;” in the competitive pharmaceutical marketplace, Mylan had no choice but to minimize its tax exposure.
Other companies have attempted to take their place within the epinephrine market, but have failed. Most recently, Sanofi voluntarily recalled their Auvi-Q, leaving Mylan with an effective monopoly. Whether Mylan has had a hand in squelching its competition remains to be seen – but is certainly the suggestion made by a variety of media outlets and political critics.
Heather Bresch herself has also been involved with a scandal or two – like the time when she got an MBA from West Virginia University, only to have it revoked after an investigation concluded that her transcripts had been falsified by school officials. At the time, Bresch’s father, Joe Manachin, (who was then the governor of West Virginia, and who is now a U.S. Senator) and the family had close ties to the university’s administration; two top-ranking members of which promptly resigned on the heels of the scandal.
The EpiPen pricing issue has even united political foes against Mylan. Senator Chuck Grassley (R-Iowa), the chair of the Senate Judiciary Committee, began an inquiry into Mylan’s pricing earlier this week. Senators Amy Klobuchar (D-Minn) and Richard Blumenthal (D-Conn.) have also been active in demanding a price reduction. Even infamous pharmaceutical gauger Martin Shkreli described Mylan as a group of “vultures.”
Food Allergy Research & Education (“FARE”) released the following statement today:
“For the millions of Americans at risk for anaphylaxis, epinephrine is a lifeline. It is the only drug that can counteract a potentially life-threatening allergic reaction. FARE believes no individual in need of epinephrine should ever be without this life-saving drug due to a lack of affordable access to the drug. Even a single life lost due to lack of access to this drug is one life too many. We are deeply concerned about the challenges our community face related to the accessibility and affordability of epinephrine, which have become increasingly difficult for various reasons.”
And let’s not be naïve about the radius of impact here. Mylan’s pricing doesn’t affect only allergy sufferers. As Senator Grassley pointed out, with 40 percent of children publicly insured. “taxpayers are picking up the tab for this medication.”
It’s certainly tempting to blame Big Pharma for business practices motivated by greed at the expense of children’s health. But after speaking with Robert Goldberg, Vice President for the Center for Medicine in the Public Interest, I think there may be a far more complex web of avarice at play. According to Goldberg, pharmaceutical companies have little choice but to consistently and drastically increase the list prices for drugs; the combination of government-imposed price controls and drug shortages (resulting from the increasingly small pool of generic drug manufacturers willing to take the financial risk of producing certain medications) effectively mandates companies like Mylan to charge sky-high list prices for its products. Context is important too. Goldberg pointed out that the cost of other drugs, such as Albuterol and commonly-used antibiotics, have gone up as much as 3500%.
Goldberg shared with me his take on the underlying reason for EpiPen pricing having suddenly become a controversial issue:
“Mylan didn’t do anything illegal. This is pre-election hoopla. Mylan is in the hotseat because it ran ads endlessly during the Olympics. At times, I didn’t know whether I was watching an EpiPen documentary or women’s gymnastics.”
But media hype or no, $600 is a lot to spend on this product. If it’s not Mylan’s fault, what’s the real cause of the outrageous cost of EpiPens? According to Goldberg, this is a “great example of crony-capitalism. Everyone knows the joke –you raise prices, you get beaten up, but then everyone pockets the money. If you lift up the rock on the rhetoric, you find a series of incestuous relationships between manufacturers, insurers, and the government that focus on dividing up discounts and cash rebates and passing the cost onto consumers.”
The outrageous pricetag on EpiPens, after all, is the “list price.” That means that when the manufacturer issues “rebates” (which is standard practice), those rebates are lining the pockets of pharmacies and health insurers – but not those of consumers. The EpiPen issue can be framed as “Big Pharma and the Government Watchdogs Trying to Protect Us” as easily as “The Predatory Tale of Healthcare Companies and the Politicians Who Enable Them” – it’s all in the telling. While we, the consumers, are left to sort it all out, the prices of EpiPens will likely continue to rise.
Now a few words about the outrage over EpiPen prices.
The EpiPen’s list price has increased before. And the list price of other generic drugs had been increasing even more. A lot more as the chart below (courtesy of the wise and charming Adam Fein from his wise and charming blog Drugchannels) shows.
In general, these list price hikes reflect increased cost of production and the fact that the only way to increase revenue is to increase prices to account for federal price controls on Medicaid prices, rebates, discounts, etc.
EpiPen’s price hike was modest compared to others on the list.
Meanwhile, the spike in generic prices have abated as the FDA cleared the backlog of generic drug approvals.
So why the outrage now? And why Mylan’s EpiPen?
First, last November Sanofi ($SNY) pulled the main competitor for EpiPen--Auvi-Q--from the market, a turn of events that at time looked as if it “should keep Mylan dominating the epinephrine injection field.”
Mylan already had 85 percent market share.
It’s been running ads for EpiPen ever since. In fact, Mylan ran so many EpiPen commercials during the Olympics I started to wonder if self-injection was a new competitive sport. (It’s not.)
Meanwhile CVS and Express Scripts removed another competitor, Andrenaclick, from it’s formularies. Andrenclick retails at $141 while EpiPen retails at around $600. You tell me why Express Scripts and CVS tossed it from it’s formularies.
At the same time, CVS and Express Scripts moved EpiPen from the lowest cost sharing tier to the highest cost sharing tier most likely to extract rebates from Mylan. Mylan could have said no, which led the PBMs to retaliate. Mylan could have responded by just increasing the amount of money going to patients directly to reduce out of pocket costs. And for the most part, it did as Consumer Reports points out:
“Such is the case for Tracy Bush, of Pfafftown, N.C., whose 14-year-old son relies on EpiPen for his allergies to nuts, eggs, and other foods. Bush has watched the price of EpiPen increase over the past nine years from $146 for a two-pack to more than $600. The total cost of Bush's recent prescription for three EpiPen two-packs came to $1,819.08. Fortunately for Bush, her insurance along with the co-pay coupon she gets through the drug's manufacturer, Mylan, covers a large portion of the costs.”
So what changed was the out of pocket cost of the EpiPen vs the acquisition price of the injectable which can be as low as $240 per two pak (the federal Medicaid price limit).
Mylan offers a coupon that reduces co-pays for insured patients by up to $100 per prescription (for up to a maximum of three two-pack cartons per prescription). Patients without insurance can apply to get EpiPens for free through Mylan’s patient assistance program.
So why the outrage? And why is it only directed at Mylan.
Because it fits the narrative, which is: Big Pharma has monopoly power to jack up prices as a high as they want and force people to go without life saving medicines.
And we are in a season of silliness in which economic illiterates propose price controls and patent seizures to cut costs. (See the incredibly stupid article in JAMA by a bunch of doctors masquerading as real economist entitled The High Cost of Prescription Drugs. There is a reason such crap is published by JAMA and other medical journals. Because the research and approach is so shoddy that it could never pass a peer-review threshold in a real journal of economics. But then again, the media is not interested in differentiating between real economics and propaganda. )
The truth is the EpiPen was probably priced too low to increase capacity fast enough to handle the fact that it’s main competitor’s product tanked. (I think many medicines are price too low given the unmet medicical needs and the huge investment it will take to tackle diseases with innovative medicines. ) And it was price too low in 2007 ($60) for value it delivers, namely saving a child from a potentially fatal anaphylactic shock. The prevention is a bargain for insurers too who otherwise would be required to pay for 1000 times more than the cost of an EpiPen 2-pak in hospital, rehab services.
Further, Mylan is now in the innovator pharma space. In 2014 Mylan invested in a Theravance Biopharma product called Revefenacin, a once-daily, nebulized long-acting muscarinic antagonist (LAMA) to treat chronic pulmonary obstructive disorder.
You see, the improved quality of treatment via EpiPens, reducing the use of high cost medical services and sparing parents the terror of seeing their child choke to death before their eyes. And some of the profits have gone to executive bonuses. So what? Most of it is going into new medicines.
Meanwhile, competitors have seen the market for injectable ephrinefrine explode. Other companies are developing products to compete with Mylan. FDA regulation is a bitch, requiring time and money. But eventually there will be more than one EpiPen competitor.
All this is truth. But it conflicts with the evil Pharma narrative that can be recycled again and again without any originality to generate clicks. The increasingly banal and predictable reporting at Forbes, Bloomberg, the New York Times and WSJ are cases in point. And the reporting is banal and predictable because it is not truthful. As Jonah Goldberg once observed: Journalists define the powerless and powerful based on their own preferred narratives. When the truth interferes with the narrative, the truth must be bent or jettisoned.
The EpiPen’s list price has increased before. And the list price of other generic drugs had been increasing even more. A lot more as the chart below (courtesy of the wise and charming Adam Fein from his wise and charming blog Drugchannels) shows.
In general, these list price hikes reflect increased cost of production and the fact that the only way to increase revenue is to increase prices to account for federal price controls on Medicaid prices, rebates, discounts, etc.
EpiPen’s price hike was modest compared to others on the list.
Meanwhile, the spike in generic prices have abated as the FDA cleared the backlog of generic drug approvals.
So why the outrage now? And why Mylan’s EpiPen?
First, last November Sanofi ($SNY) pulled the main competitor for EpiPen--Auvi-Q--from the market, a turn of events that at time looked as if it “should keep Mylan dominating the epinephrine injection field.”
Mylan already had 85 percent market share.
It’s been running ads for EpiPen ever since. In fact, Mylan ran so many EpiPen commercials during the Olympics I started to wonder if self-injection was a new competitive sport. (It’s not.)
Meanwhile CVS and Express Scripts removed another competitor, Andrenaclick, from it’s formularies. Andrenclick retails at $141 while EpiPen retails at around $600. You tell me why Express Scripts and CVS tossed it from it’s formularies.
At the same time, CVS and Express Scripts moved EpiPen from the lowest cost sharing tier to the highest cost sharing tier most likely to extract rebates from Mylan. Mylan could have said no, which led the PBMs to retaliate. Mylan could have responded by just increasing the amount of money going to patients directly to reduce out of pocket costs. And for the most part, it did as Consumer Reports points out:
“Such is the case for Tracy Bush, of Pfafftown, N.C., whose 14-year-old son relies on EpiPen for his allergies to nuts, eggs, and other foods. Bush has watched the price of EpiPen increase over the past nine years from $146 for a two-pack to more than $600. The total cost of Bush's recent prescription for three EpiPen two-packs came to $1,819.08. Fortunately for Bush, her insurance along with the co-pay coupon she gets through the drug's manufacturer, Mylan, covers a large portion of the costs.”
So what changed was the out of pocket cost of the EpiPen vs the acquisition price of the injectable which can be as low as $240 per two pak (the federal Medicaid price limit).
Mylan offers a coupon that reduces co-pays for insured patients by up to $100 per prescription (for up to a maximum of three two-pack cartons per prescription). Patients without insurance can apply to get EpiPens for free through Mylan’s patient assistance program.
So why the outrage? And why is it only directed at Mylan.
Because it fits the narrative, which is: Big Pharma has monopoly power to jack up prices as a high as they want and force people to go without life saving medicines.
And we are in a season of silliness in which economic illiterates propose price controls and patent seizures to cut costs. (See the incredibly stupid article in JAMA by a bunch of doctors masquerading as real economist entitled The High Cost of Prescription Drugs. There is a reason such crap is published by JAMA and other medical journals. Because the research and approach is so shoddy that it could never pass a peer-review threshold in a real journal of economics. But then again, the media is not interested in differentiating between real economics and propaganda. )
The truth is the EpiPen was probably priced too low to increase capacity fast enough to handle the fact that it’s main competitor’s product tanked. (I think many medicines are price too low given the unmet medicical needs and the huge investment it will take to tackle diseases with innovative medicines. ) And it was price too low in 2007 ($60) for value it delivers, namely saving a child from a potentially fatal anaphylactic shock. The prevention is a bargain for insurers too who otherwise would be required to pay for 1000 times more than the cost of an EpiPen 2-pak in hospital, rehab services.
Further, Mylan is now in the innovator pharma space. In 2014 Mylan invested in a Theravance Biopharma product called Revefenacin, a once-daily, nebulized long-acting muscarinic antagonist (LAMA) to treat chronic pulmonary obstructive disorder.
You see, the improved quality of treatment via EpiPens, reducing the use of high cost medical services and sparing parents the terror of seeing their child choke to death before their eyes. And some of the profits have gone to executive bonuses. So what? Most of it is going into new medicines.
Meanwhile, competitors have seen the market for injectable ephrinefrine explode. Other companies are developing products to compete with Mylan. FDA regulation is a bitch, requiring time and money. But eventually there will be more than one EpiPen competitor.
All this is truth. But it conflicts with the evil Pharma narrative that can be recycled again and again without any originality to generate clicks. The increasingly banal and predictable reporting at Forbes, Bloomberg, the New York Times and WSJ are cases in point. And the reporting is banal and predictable because it is not truthful. As Jonah Goldberg once observed: Journalists define the powerless and powerful based on their own preferred narratives. When the truth interferes with the narrative, the truth must be bent or jettisoned.
It’s as though Turingfreude never made it to Mylan HQ.
Dramatically raising prices on Epipen during a political cycle? Really? That’s the new dictionary definition of (among other things) being tone deaf.
And to make matters even worse, the head honcho at Mylan, Heather Bresch is the daughter of US Senator Joe Manchin (D, WVA). That’s gotta be embarrassing.
The naivity is … Breschtaking.
Have a look at my comments during CNBC’s Power Lunch.
Folks -- you just cannot make this stuff up.
Dramatically raising prices on Epipen during a political cycle? Really? That’s the new dictionary definition of (among other things) being tone deaf.
And to make matters even worse, the head honcho at Mylan, Heather Bresch is the daughter of US Senator Joe Manchin (D, WVA). That’s gotta be embarrassing.
The naivity is … Breschtaking.
Have a look at my comments during CNBC’s Power Lunch.
Folks -- you just cannot make this stuff up.
When it comes to protecting and advancing the public health, some states are leaders, others laggards. Consider biosimilars.
On July 20, Pennsylvania Governor Tom Wolf signed into law Senate Bill 514, which allows pharmacists to substitute for a brand name biological product a less expensive biosimilar product that has been deemed interchangeable by the FDA. Pennsylvania is one of 25 states and territories to enact such a law.
Under the Pennsylvania law, a pharmacist may substitute a biosimilar for a prescribed biologic product only if (1) the biosimilar has been determined by the FDA to be interchangeable with the prescribed product, (2) the prescriber does not designate verbally or in writing on the prescription for that product that substitution is prohibited, and (3) the person presenting the prescription receives notification of such substitution.
A pharmacist must also communicate the substitution to the prescribing physician, unless it is a refill prescription of the same previously dispensed interchangeable biosimilar.
It’s important to note that none of the biosimilars currently approved by the FDA have been approved as “interchangeable.” At least not yet – but as soon as the FDA completes its regulatory pathway, there will be – and there will be many. Those states with Pennsylvania-like legislation in place will recognize larger savings and sounder patient safety faster. That’s a potent public health double play that the folks in Harrisburg have already figured out. It’s time for every state to pay attention.
On July 20, Pennsylvania Governor Tom Wolf signed into law Senate Bill 514, which allows pharmacists to substitute for a brand name biological product a less expensive biosimilar product that has been deemed interchangeable by the FDA. Pennsylvania is one of 25 states and territories to enact such a law.
Under the Pennsylvania law, a pharmacist may substitute a biosimilar for a prescribed biologic product only if (1) the biosimilar has been determined by the FDA to be interchangeable with the prescribed product, (2) the prescriber does not designate verbally or in writing on the prescription for that product that substitution is prohibited, and (3) the person presenting the prescription receives notification of such substitution.
A pharmacist must also communicate the substitution to the prescribing physician, unless it is a refill prescription of the same previously dispensed interchangeable biosimilar.
It’s important to note that none of the biosimilars currently approved by the FDA have been approved as “interchangeable.” At least not yet – but as soon as the FDA completes its regulatory pathway, there will be – and there will be many. Those states with Pennsylvania-like legislation in place will recognize larger savings and sounder patient safety faster. That’s a potent public health double play that the folks in Harrisburg have already figured out. It’s time for every state to pay attention.
Yesterday’s public meeting on the FDA’s PDUFA VI Commitment Letter was a love-fest (mostly) – but as Theresa Mullin, Director of CDER’s Office of Strategic Programs, wisely noted, “the devil is in the details. Indeed.
The meeting was in three panels: Pre-Market Review and Post-Market Safety, Regulatory Decision Tools, and Administrative Enhancements.
A few highlights and comments.
Opening up the day, CDER Director Dr. Janet Woodcock commented that, since the introduction of the first PDUFA in 1993, “It’s a brave new world.” That’s certainly true, but some have been braver than others. As Aldous Huxley wrote in his novel, A Brave New World, ““Most human beings have an almost infinite capacity for taking things for granted.”
Janet (and later on others) spoke about PDUFA VI building a Patient-Focused Drug Development (PFDD) “Bridge.” In other words, moving from holding meetings to developing “fit-for-purpose tools to better reflect the benefit/risk calculus of patients.” A key point, via Janet, is that by doing this the FDA will not be the PFDD “bottleneck." The devil is in the details.
She also pointed to a fully operational and funded Sentinel program as a linchpin not just for advancing safety (specifically pharmacovigilance) more broadly, but also for accelerating the ecosystem of Real World Evidence. RWE was a major focus of the meeting. More to follow. Albeit to say – the devil is in the details.
The factoid of the day was that in FY2015 (to date), the FDA has held over 3000 PDUFA meeting requests. Don’t even bother doing the math, because that doesn’t include the intense meeting preparation division staff must undertake prior to any actual face-to-face (or teleconference) encounters. This is a highly significant statistic insofar as there was much discussion on enhancing sponsor-agency communications. Is more always better? It depends. As Walter Gropius said, “Less is more. But more tastes better.” Communications must now be more about quality than quantity but, from a PDUFA perspective, how can that be measured?
In a small but important improvement, the FDA will provide 72-hour notice to all manufacturers whose products will appear in the quarterly FDAAA-mandated Public Notification of Emerging Postmarket Medical Device Signals (921 Safety Notices).
Per Sentinel, it was mentioned a number of times (including on an FDA slide) that it will be used to “inform important regulatory decisions.” Does this mean Sentinel data will be used “beyond risk” to also “inform” FDA thinking on potential new benefits? Will Sentinel become a tool for validating Real World Evidence? That was not discussed – but maybe it’s time for it to be put on the table, perhaps at one of the RWE meetings promised in the agency’s commitment letter.
As promised, the FDA will publish an updated version of its Structured Approach to Benefit/Risk Assessment in Drug Regulatory Decision-Making. It’s been an arduous journey. It’s important to remember that the key tenet of the PDUFA philosophy isn’t speed, but predictability, and the ability to understand regulatory decision-making (and, ultimately reproducibility) is crucial. This is important for many reasons, not the least of which is the ever-increasing costs of drug development.
There was (Finally! At last!) much discussion about “staff capacity.” Not just more, but better. Not just quantity, but quality. One specific conversation focused on the need for better reviewer understanding of and training in adaptive clinical trial design models. Let’s face it, there aren’t a lot of people inside the FDA considered expert in (among other things) Bayesian statistical design. Better MAPPS and SOPPS (Manual of Policies & Procedures, Standard Operating Policies & Procedures), that were promised and they will help. There have to be internal rules of the 21st century regulatory road as well as external guidance but – the devil is in the details.
Some positive forward motion on biomarker prequalification. Among other things, the FDA will create a website listing the biomarkers it’s working on. Per the agency's presentation, this is designed to help stimulate further development. It’s a start and more needs to be done. (More, always more!) But without the internal expertise, how is the FDA to parse its expert resources? Maybe it’s time for a more serious discussion of intramural cooperation. FDA needs adequate resources – beyond PDUFA funding -- to provide advice and oversee review and decision-making. One solution is to partner with an external entity (perhaps an Intramural Biomarker Consortium-IBC) to develop early advice and serve as an expert sounding board for nascent biomarker efforts. The IBC could be a required or voluntary resource in the review process, especially for initial data package reviews. This approach would allow FDA staff to focus on their primary role of product review and regulatory oversight.
PDUFA is an important path, but it isn’t the only one.
All present (FDA staff, patient groups, industry representatives) were very excited about the opportunities of PFDD next steps and Real World Evidence. But how to get there? As BIO’s Kay Holcombe said, “We cannot put anecdotes on the drug label.” Real World Evidence is the new star on the precision medicine horizon. But the tool set for using this treasure trove of healthcare information is nascent and the tasks as are daunting as the opportunities. Patient passion is important to share. When combined with data and a more dispassionate understanding of regulatory paradigms, a patient-driven pathway can and must evolve into a tool used to impact regulatory decision-making. The devil is in the details.
The most decidedly unsexy but most honest and important part of the meeting came last – a discussion of “administrative enhancements” including electronic submissions and data standard activities, hiring capacity, and financial management. It’s important to note that PDUFA VI is the first time that “hiring capacity” has been directly addressed – and it’s about time. The FDA must have the firepower to not only retain but to aggressively recruit the best and the brightest. Again, it’s not just about body count (quantity) but quality. Quality is not what you put in. It’s what you get out. “Staff capacity” means more (a lot more) than PDUFA-measurable hiring numbers. We need a PDUFA quality metric.
In the immortal words of Admiral Hyman Rickover, “The devil is in the details, but so is salvation.
The meeting was in three panels: Pre-Market Review and Post-Market Safety, Regulatory Decision Tools, and Administrative Enhancements.
A few highlights and comments.
Opening up the day, CDER Director Dr. Janet Woodcock commented that, since the introduction of the first PDUFA in 1993, “It’s a brave new world.” That’s certainly true, but some have been braver than others. As Aldous Huxley wrote in his novel, A Brave New World, ““Most human beings have an almost infinite capacity for taking things for granted.”
Janet (and later on others) spoke about PDUFA VI building a Patient-Focused Drug Development (PFDD) “Bridge.” In other words, moving from holding meetings to developing “fit-for-purpose tools to better reflect the benefit/risk calculus of patients.” A key point, via Janet, is that by doing this the FDA will not be the PFDD “bottleneck." The devil is in the details.
She also pointed to a fully operational and funded Sentinel program as a linchpin not just for advancing safety (specifically pharmacovigilance) more broadly, but also for accelerating the ecosystem of Real World Evidence. RWE was a major focus of the meeting. More to follow. Albeit to say – the devil is in the details.
The factoid of the day was that in FY2015 (to date), the FDA has held over 3000 PDUFA meeting requests. Don’t even bother doing the math, because that doesn’t include the intense meeting preparation division staff must undertake prior to any actual face-to-face (or teleconference) encounters. This is a highly significant statistic insofar as there was much discussion on enhancing sponsor-agency communications. Is more always better? It depends. As Walter Gropius said, “Less is more. But more tastes better.” Communications must now be more about quality than quantity but, from a PDUFA perspective, how can that be measured?
In a small but important improvement, the FDA will provide 72-hour notice to all manufacturers whose products will appear in the quarterly FDAAA-mandated Public Notification of Emerging Postmarket Medical Device Signals (921 Safety Notices).
Per Sentinel, it was mentioned a number of times (including on an FDA slide) that it will be used to “inform important regulatory decisions.” Does this mean Sentinel data will be used “beyond risk” to also “inform” FDA thinking on potential new benefits? Will Sentinel become a tool for validating Real World Evidence? That was not discussed – but maybe it’s time for it to be put on the table, perhaps at one of the RWE meetings promised in the agency’s commitment letter.
As promised, the FDA will publish an updated version of its Structured Approach to Benefit/Risk Assessment in Drug Regulatory Decision-Making. It’s been an arduous journey. It’s important to remember that the key tenet of the PDUFA philosophy isn’t speed, but predictability, and the ability to understand regulatory decision-making (and, ultimately reproducibility) is crucial. This is important for many reasons, not the least of which is the ever-increasing costs of drug development.
There was (Finally! At last!) much discussion about “staff capacity.” Not just more, but better. Not just quantity, but quality. One specific conversation focused on the need for better reviewer understanding of and training in adaptive clinical trial design models. Let’s face it, there aren’t a lot of people inside the FDA considered expert in (among other things) Bayesian statistical design. Better MAPPS and SOPPS (Manual of Policies & Procedures, Standard Operating Policies & Procedures), that were promised and they will help. There have to be internal rules of the 21st century regulatory road as well as external guidance but – the devil is in the details.
Some positive forward motion on biomarker prequalification. Among other things, the FDA will create a website listing the biomarkers it’s working on. Per the agency's presentation, this is designed to help stimulate further development. It’s a start and more needs to be done. (More, always more!) But without the internal expertise, how is the FDA to parse its expert resources? Maybe it’s time for a more serious discussion of intramural cooperation. FDA needs adequate resources – beyond PDUFA funding -- to provide advice and oversee review and decision-making. One solution is to partner with an external entity (perhaps an Intramural Biomarker Consortium-IBC) to develop early advice and serve as an expert sounding board for nascent biomarker efforts. The IBC could be a required or voluntary resource in the review process, especially for initial data package reviews. This approach would allow FDA staff to focus on their primary role of product review and regulatory oversight.
PDUFA is an important path, but it isn’t the only one.
All present (FDA staff, patient groups, industry representatives) were very excited about the opportunities of PFDD next steps and Real World Evidence. But how to get there? As BIO’s Kay Holcombe said, “We cannot put anecdotes on the drug label.” Real World Evidence is the new star on the precision medicine horizon. But the tool set for using this treasure trove of healthcare information is nascent and the tasks as are daunting as the opportunities. Patient passion is important to share. When combined with data and a more dispassionate understanding of regulatory paradigms, a patient-driven pathway can and must evolve into a tool used to impact regulatory decision-making. The devil is in the details.
The most decidedly unsexy but most honest and important part of the meeting came last – a discussion of “administrative enhancements” including electronic submissions and data standard activities, hiring capacity, and financial management. It’s important to note that PDUFA VI is the first time that “hiring capacity” has been directly addressed – and it’s about time. The FDA must have the firepower to not only retain but to aggressively recruit the best and the brightest. Again, it’s not just about body count (quantity) but quality. Quality is not what you put in. It’s what you get out. “Staff capacity” means more (a lot more) than PDUFA-measurable hiring numbers. We need a PDUFA quality metric.
In the immortal words of Admiral Hyman Rickover, “The devil is in the details, but so is salvation.
ICER has come out with a response to what it defines as myths about it’s funding, approach and mission. The rejoinder is an excellent example of President Kennedy’s observation that “the great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic.”
ICER wants to be perceived as trusted non profit organization that is identifying the best medicines at prices patients can afford. As ICER puts it: “How can we make sure that we can afford the innovation we want for patients in the future?”
And it believes, led by Steve Pearson, ICER’s believer in chief, tha unless ICER rolls up their sleeves to determine the prices of new medicines and who should get them drug spending “would contribute to an increase in overall health care costs at a rate greater than growth in the overall national economy, (and) health system value would be diminished.”
ICER’s publication takes issue with several so-called myths. Some of them address criticism about their belief that an additional year of life is at maximum worth $150K. Another deals with how little ICER includes patient perspectives of health value. I will deal with those in another post.
For now, I will deal with the criticisms I have raised about ICER that it has tried to refute
Myth #5: ICER wants to take money from dying patients in order to “fix potholes.”
ICER claims “much of the more recent criticism has been fueled by a lack of knowledge about ICER or even willful mischaracterization by those who oppose a move toward pricing in alignment with the added value for patients. Some of these distortions have taken on a life of their own, threatening to make it more difficult for patient groups and others to engage constructively in our report development and in the broader debates now going on about value assessment and drug pricing.”
In particular, ICER is ticked off that I claimed that ICER wants to take money from dying patients in order to “fix potholes.” Let’s give Pearson and ICER the floor:
Truth:
This is one of the more remarkable and malicious mischaracterizations of our intentions.
In introducing the broader social and ethical questions that ICER reports are supposed to help address through public dialogue, we have shown data from the state of Massachusetts demonstrating that state spending on health care has risen nearly 60% in the last decade. We also show data on where that money came from: steep reductions in spending on every other major type of social service, including education, fire and police protection, housing, public health, and infrastructure. The same story is echoed in state houses around the country: health care costs are growing rapidly, severely impinging on the ability of states to maintain other services. This obviously does not imply that ICER wants dying patients to be denied treatment in order to fix potholes. What it does mean is that we hope that our reports and the public meetings we convene can lead to a more robust and honest discussion about the real choices and trade-offs that are being made in spending at the state and national level. If the shared hope is to be able to provide innovative drugs for all patients with serious illness, and to be able to also afford good education for our children and other services, then we believe that transparent discussions about whether prices for drugs and other health care services are reasonably aligned with the value they bring to patients are an important way to help us get there.”
It is true that I posted a blog “ICER's Moral Vision: Repair Potholes Instead of Rescuing Lung Cancer Patients”
I used that title because it seemed to capture Pearson’s moral vision. Here’s what he said about lung cancer treatments in article he wrote in 2012 entitled "Which Orphans Will Find a Home":
“Considering…the marginal impact on the length and quality of life, and the implicit opportunity costs of this level of expenditure, our framework would suggest that public and private insurers would be justified in refusing to pay for cetuximab (a lung cancer drug).”
Of note, Pearson claims that lung cancer patients aren't really that sick. They are just louder than other groups. Pearson claims just because an advocacy group creates awareness of a specific disease or need, that's no reason to cover new medicines. In the case of lung cancer drugs Pearson writes: demand is" driven largely by the heightened public consciousness" and that there is "no..obligation to rescue identifiable rare disease patients based on a duty of rescue within personal morality."
Which ties into another charge I have raised that ICER seeks to rebut: the use of QALY’s discriminates against the sickest patients is a myth. (So-called) It claims:
“In fact, starting out with a lower quality of life, whether through a serious illness or disability, offers more “room” for improvement, giving treatments for patients with serious conditions more opportunity to show improvement compared to treatments for patients whose baseline condition is already near perfect health.”
But that is NOT how QALY is applied. Pearson has stated “a sickest-first principle might require allocation of resources even when only minor gains can be achieved and the cost is very high, which is obviously inefficient…coverage decisions must not only incorporate consideration of the benefits gained but the opportunity costs incurred when covering expensive orphan drugs.”
And contrary to Pearson’s claim about not considering cost in recommending what drugs to use, he and ICER are clearly targeted what they believe are “ the growing number of expensive therapies that offer benefit only to small populations” to “ensure that an undue burden is not
placed on others for the sake of a few.”
In addition, ICER and Pearson regards living longer, the result produced cumulatively by new drugs, as a cost which, if it exceeds a specific amount of spending per drug estalblished by ICER, would diminish health system value.
Indeed, as ICER points out it's measurement of QALY is conducted " from a health system perspective, and so does not incorporate costs and effects that might be relevant from a societal perspective, such as productivity, transportation, or caregiver costs."
Moreover, ICER measures costs as the combination of "new treatment on top of existing treatment, as is the case for multiple myeloma drugs.." That "means that to reach standard cost-effectiveness levels the entire regimen, including the older, existing drugs that are part of the regimen, would need to be deeply discounted, or certain costs must be considered “unrelated” and excluded from the economic evaluation.
Pearson's response: "At current wholesale acquisition costs, the estimated long-term cost-effectiveness of these regimens exceeds commonly-cited thresholds."
In other words, myeloma treatments surge about the ICER QALY cap of $150K because people are living longer and have more options to increase survival. They are therefore, from ICER's perspective (and the insurer's perspective a noted above) new drugs that extend life will NEVER be cost-effective.
With regard to the pothole vs dying patient “myth" I was simply writing based on a FAQ that ICER had posted on it’s website until recently but is no longer available:
“When we’re paying for drugs and don’t know the drug’s value, individually, we may pay more out of pocket and more for insurance. While if we’re covered at work and our employer is paying more in premiums, we may not get as big a raise as we otherwise would have. We also pay more in taxes as the government (Medicare, Medicaid, and federal employees) has to pay more for health care. We’re siphoning off resources for other things we need like better schools and more resources for local police, roads and bridges.”
But the claim that spending money on drugs drains money away from other services is an outright falsehood.
Source: National Assoc. of State Budget Officers
As the chart above demonstrates, state Medicaid spending has increased slightly, while other expenditures have remained stable or increased slightly. (Transportation being an exception.) Doesn't look like a siphon to me.
And here’s a look at the Massachusetts budget ICER claims is being savaged by the use of drugs that are expensive and not very valuable (like drugs for dying lung cancer patients, as Pearson suggested.)
Source: Massbudget.org
Turns out Medicaid spending in Massachusetts declined as a percentage of total state spending from 2004-2014.
Finally, let me show that for all of ICER’s deception and spin, Medicaid spending on drugs has remained about the same percentage of total Medicaid spending for the past decade.
(Source, CMS)
Ask yourself this question: If we can't trust ICER to present accurate data about the impact of drug spending on our economy or governent expenditures, can we trust it, as it wants us to do, to determine patient access to new medicines?
ICER wants to be perceived as trusted non profit organization that is identifying the best medicines at prices patients can afford. As ICER puts it: “How can we make sure that we can afford the innovation we want for patients in the future?”
And it believes, led by Steve Pearson, ICER’s believer in chief, tha unless ICER rolls up their sleeves to determine the prices of new medicines and who should get them drug spending “would contribute to an increase in overall health care costs at a rate greater than growth in the overall national economy, (and) health system value would be diminished.”
ICER’s publication takes issue with several so-called myths. Some of them address criticism about their belief that an additional year of life is at maximum worth $150K. Another deals with how little ICER includes patient perspectives of health value. I will deal with those in another post.
For now, I will deal with the criticisms I have raised about ICER that it has tried to refute
Myth #5: ICER wants to take money from dying patients in order to “fix potholes.”
ICER claims “much of the more recent criticism has been fueled by a lack of knowledge about ICER or even willful mischaracterization by those who oppose a move toward pricing in alignment with the added value for patients. Some of these distortions have taken on a life of their own, threatening to make it more difficult for patient groups and others to engage constructively in our report development and in the broader debates now going on about value assessment and drug pricing.”
In particular, ICER is ticked off that I claimed that ICER wants to take money from dying patients in order to “fix potholes.” Let’s give Pearson and ICER the floor:
Truth:
This is one of the more remarkable and malicious mischaracterizations of our intentions.
In introducing the broader social and ethical questions that ICER reports are supposed to help address through public dialogue, we have shown data from the state of Massachusetts demonstrating that state spending on health care has risen nearly 60% in the last decade. We also show data on where that money came from: steep reductions in spending on every other major type of social service, including education, fire and police protection, housing, public health, and infrastructure. The same story is echoed in state houses around the country: health care costs are growing rapidly, severely impinging on the ability of states to maintain other services. This obviously does not imply that ICER wants dying patients to be denied treatment in order to fix potholes. What it does mean is that we hope that our reports and the public meetings we convene can lead to a more robust and honest discussion about the real choices and trade-offs that are being made in spending at the state and national level. If the shared hope is to be able to provide innovative drugs for all patients with serious illness, and to be able to also afford good education for our children and other services, then we believe that transparent discussions about whether prices for drugs and other health care services are reasonably aligned with the value they bring to patients are an important way to help us get there.”
It is true that I posted a blog “ICER's Moral Vision: Repair Potholes Instead of Rescuing Lung Cancer Patients”
I used that title because it seemed to capture Pearson’s moral vision. Here’s what he said about lung cancer treatments in article he wrote in 2012 entitled "Which Orphans Will Find a Home":
“Considering…the marginal impact on the length and quality of life, and the implicit opportunity costs of this level of expenditure, our framework would suggest that public and private insurers would be justified in refusing to pay for cetuximab (a lung cancer drug).”
Of note, Pearson claims that lung cancer patients aren't really that sick. They are just louder than other groups. Pearson claims just because an advocacy group creates awareness of a specific disease or need, that's no reason to cover new medicines. In the case of lung cancer drugs Pearson writes: demand is" driven largely by the heightened public consciousness" and that there is "no..obligation to rescue identifiable rare disease patients based on a duty of rescue within personal morality."
Which ties into another charge I have raised that ICER seeks to rebut: the use of QALY’s discriminates against the sickest patients is a myth. (So-called) It claims:
“In fact, starting out with a lower quality of life, whether through a serious illness or disability, offers more “room” for improvement, giving treatments for patients with serious conditions more opportunity to show improvement compared to treatments for patients whose baseline condition is already near perfect health.”
But that is NOT how QALY is applied. Pearson has stated “a sickest-first principle might require allocation of resources even when only minor gains can be achieved and the cost is very high, which is obviously inefficient…coverage decisions must not only incorporate consideration of the benefits gained but the opportunity costs incurred when covering expensive orphan drugs.”
And contrary to Pearson’s claim about not considering cost in recommending what drugs to use, he and ICER are clearly targeted what they believe are “ the growing number of expensive therapies that offer benefit only to small populations” to “ensure that an undue burden is not
placed on others for the sake of a few.”
In addition, ICER and Pearson regards living longer, the result produced cumulatively by new drugs, as a cost which, if it exceeds a specific amount of spending per drug estalblished by ICER, would diminish health system value.
Indeed, as ICER points out it's measurement of QALY is conducted " from a health system perspective, and so does not incorporate costs and effects that might be relevant from a societal perspective, such as productivity, transportation, or caregiver costs."
Moreover, ICER measures costs as the combination of "new treatment on top of existing treatment, as is the case for multiple myeloma drugs.." That "means that to reach standard cost-effectiveness levels the entire regimen, including the older, existing drugs that are part of the regimen, would need to be deeply discounted, or certain costs must be considered “unrelated” and excluded from the economic evaluation.
Pearson's response: "At current wholesale acquisition costs, the estimated long-term cost-effectiveness of these regimens exceeds commonly-cited thresholds."
In other words, myeloma treatments surge about the ICER QALY cap of $150K because people are living longer and have more options to increase survival. They are therefore, from ICER's perspective (and the insurer's perspective a noted above) new drugs that extend life will NEVER be cost-effective.
With regard to the pothole vs dying patient “myth" I was simply writing based on a FAQ that ICER had posted on it’s website until recently but is no longer available:
“When we’re paying for drugs and don’t know the drug’s value, individually, we may pay more out of pocket and more for insurance. While if we’re covered at work and our employer is paying more in premiums, we may not get as big a raise as we otherwise would have. We also pay more in taxes as the government (Medicare, Medicaid, and federal employees) has to pay more for health care. We’re siphoning off resources for other things we need like better schools and more resources for local police, roads and bridges.”
But the claim that spending money on drugs drains money away from other services is an outright falsehood.
Source: National Assoc. of State Budget Officers
As the chart above demonstrates, state Medicaid spending has increased slightly, while other expenditures have remained stable or increased slightly. (Transportation being an exception.) Doesn't look like a siphon to me.
And here’s a look at the Massachusetts budget ICER claims is being savaged by the use of drugs that are expensive and not very valuable (like drugs for dying lung cancer patients, as Pearson suggested.)
Source: Massbudget.org
Turns out Medicaid spending in Massachusetts declined as a percentage of total state spending from 2004-2014.
Finally, let me show that for all of ICER’s deception and spin, Medicaid spending on drugs has remained about the same percentage of total Medicaid spending for the past decade.
(Source, CMS)
Ask yourself this question: If we can't trust ICER to present accurate data about the impact of drug spending on our economy or governent expenditures, can we trust it, as it wants us to do, to determine patient access to new medicines?
Judge dismisses 1,225 cases against Bayer Healthcare
Fairfield County Business Journal
By Bill Heltzel
August 11, 2016
A federal judge in White Plains has dismissed 1,225 lawsuits against Bayer Healthcare Pharmaceuticals that were filed by women who claimed that the company’s contraceptive device injured them.
U.S. District Court Judge Cathy Seibel concluded that the absence of expert testimony made it impossible to prove that the device can injure women after it was inserted.
“No reasonable jury could find in favor of plaintiffs because there is no evidence in the record from which a jury could find that secondary perforation exists and is capable of causing plaintiffs’ injuries,” Seibel wrote in a July 28 opinion.
“The court reaches this conclusion reluctantly, knowing that it will doom hundreds of cases,” she said, “but in the court’s view it is compelled by the law.”
The U.S. Food and Drug Administration approved Bayer’s Mirena intra-uterine contraceptive device in 2000.
The small, plastic T-shaped IUD releases a continuous dose of a hormone that reduces the chances of pregnancy. A trained health care provider implants the device.
Mirena has been marketed as a convenient form of birth control. It is meant to last for up to five years and it can be removed if a woman wanted to become pregnant.
Women who sued Bayer complained of side effects, such as perforation of the uterus, pelvic inflammatory disease and ectopic pregnancy. Many said the device shifted and caused internal injuries.
The legal issues, Seibel said, are when perforations occur and whether the label adequately warned of all risks associated with perforation.
The Mirena label went through a few versions. For years, it said “perforation or penetration of the uterine wall or cervix may occur during insertion.” In 2014, the label said perforation “may occur most often during insertion.”
Bayer argued that the scientific consensus was that perforations cannot occur after the device is implanted. The plaintiffs contended that secondary perforations can occur.
In March, Seibel barred testimony from seven expert witnesses for the women, concluding that they were unqualified or unreliable to offer expert opinions on clinical issues, causation or regulatory issues.
A biomedical engineer, for example, had no experience with IUDs or hormonal contraception devices like Mirena and no particular familiarity with the anatomy of the uterus. His only experience with the hormone used in Mirena came from reviewing articles that the plaintiffs’ counsel gave him and that he copied and pasted into his expert report.
“This is not the level of rigor an expert in the field would apply and does not pass muster,” Seibel concluded.
A professor of physiology presented a theory on secondary perforation “without confronting scientific literature that refutes this notion,” casting doubt on her reliability.
The plaintiffs’ attorneys tried to salvage their cases by arguing that other evidence could prove their cases. But Seibel ruled that allowing such admissions to substitute for expert testimony would defeat state laws that require experts and would leave the jury to speculate about the cause of injuries.
In 2013, when about 40 cases were pending in 17 federal districts, the Judicial Panel on Multidistrict Litigation consolidated the lawsuits.
The cases shared common factual issues on the alleged risks of perforation and migration and on the adequacy of the product label, the panel said. Placing all cases under one judge would make it easier to accommodate everyone in the pretrial proceedings.
The panel chose the Southern District of New York because it is near Bayer operations in Connecticut, New Jersey, New York and Pennsylvania, where the primary witnesses and documentary evidence would likely be located. The district also is easy to reach for plaintiffs around the country.
Bayer Healthcare once operated a facility in Tarrytown. The operations were moved in 2013 when the Bayer subsidiary opened a new U.S. headquarters in Whippany, N.J.
The panel chose Seibel because she was already presiding over three related cases, “and she is an experienced transferee judge who we are confident will steer this litigation on a prudent course.”
Fairfield County Business Journal
By Bill Heltzel
August 11, 2016
A federal judge in White Plains has dismissed 1,225 lawsuits against Bayer Healthcare Pharmaceuticals that were filed by women who claimed that the company’s contraceptive device injured them.
U.S. District Court Judge Cathy Seibel concluded that the absence of expert testimony made it impossible to prove that the device can injure women after it was inserted.
“No reasonable jury could find in favor of plaintiffs because there is no evidence in the record from which a jury could find that secondary perforation exists and is capable of causing plaintiffs’ injuries,” Seibel wrote in a July 28 opinion.
“The court reaches this conclusion reluctantly, knowing that it will doom hundreds of cases,” she said, “but in the court’s view it is compelled by the law.”
The U.S. Food and Drug Administration approved Bayer’s Mirena intra-uterine contraceptive device in 2000.
The small, plastic T-shaped IUD releases a continuous dose of a hormone that reduces the chances of pregnancy. A trained health care provider implants the device.
Mirena has been marketed as a convenient form of birth control. It is meant to last for up to five years and it can be removed if a woman wanted to become pregnant.
Women who sued Bayer complained of side effects, such as perforation of the uterus, pelvic inflammatory disease and ectopic pregnancy. Many said the device shifted and caused internal injuries.
The legal issues, Seibel said, are when perforations occur and whether the label adequately warned of all risks associated with perforation.
The Mirena label went through a few versions. For years, it said “perforation or penetration of the uterine wall or cervix may occur during insertion.” In 2014, the label said perforation “may occur most often during insertion.”
Bayer argued that the scientific consensus was that perforations cannot occur after the device is implanted. The plaintiffs contended that secondary perforations can occur.
In March, Seibel barred testimony from seven expert witnesses for the women, concluding that they were unqualified or unreliable to offer expert opinions on clinical issues, causation or regulatory issues.
A biomedical engineer, for example, had no experience with IUDs or hormonal contraception devices like Mirena and no particular familiarity with the anatomy of the uterus. His only experience with the hormone used in Mirena came from reviewing articles that the plaintiffs’ counsel gave him and that he copied and pasted into his expert report.
“This is not the level of rigor an expert in the field would apply and does not pass muster,” Seibel concluded.
A professor of physiology presented a theory on secondary perforation “without confronting scientific literature that refutes this notion,” casting doubt on her reliability.
The plaintiffs’ attorneys tried to salvage their cases by arguing that other evidence could prove their cases. But Seibel ruled that allowing such admissions to substitute for expert testimony would defeat state laws that require experts and would leave the jury to speculate about the cause of injuries.
In 2013, when about 40 cases were pending in 17 federal districts, the Judicial Panel on Multidistrict Litigation consolidated the lawsuits.
The cases shared common factual issues on the alleged risks of perforation and migration and on the adequacy of the product label, the panel said. Placing all cases under one judge would make it easier to accommodate everyone in the pretrial proceedings.
The panel chose the Southern District of New York because it is near Bayer operations in Connecticut, New Jersey, New York and Pennsylvania, where the primary witnesses and documentary evidence would likely be located. The district also is easy to reach for plaintiffs around the country.
Bayer Healthcare once operated a facility in Tarrytown. The operations were moved in 2013 when the Bayer subsidiary opened a new U.S. headquarters in Whippany, N.J.
The panel chose Seibel because she was already presiding over three related cases, “and she is an experienced transferee judge who we are confident will steer this litigation on a prudent course.”
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.
