Latest Drugwonks' Blog
From the always graceful pen of the always graceful Grace-Marie Turner …
As you will recall, the Galen Institute worked hard, along with AEI and Heritage, several years ago to promote an idea for a Medicare prescription drug benefit that would be based upon a funded drug discount card coupled with insurance coverage for large drug expenses. Our idea was adopted in part with the enactment of the temporary drug discount card. The Medicare Modernization Act created a program to allow private plans to offer Medicare-approved discount cards to all beneficiaries and also provided $600 a year to those with low-incomes to help with drug expenses. This was a transitional program designed to provide help in 2004 and 2005 until the permanent drug benefit could be implemented. Opponents of the drug benefit did everything they could at the time to criticize the temporary assistance program, actively discouraging seniors from signing up — and disadvantaging their constituents in the progress. So now, Rep. Henry Waxman asked the Government Accountability Office for a study of the program, and The New York Times reports that “Congressional investigators … found serious, widespread problems.” This is outrageous for a number of reasons:
The GAO’s findings were overblown by Rep. Waxman and the Times. Medicare Administrator Mark McClellan told the Times and the GAO that the number of problems and complaints was relatively small, given the size of the program and how quickly it had to be up and running. “Millions of prescriptions have been filled, with only a tiny fraction of complaints and compliance issues,” McClellan said.
Opponents of the drug benefit discouraged their constituents from signing up, and surprise, surprise, enrollment was much less than it could have been (6.4 million beneficiaries, including 1.9 million who received the $600 annual credit).
The temporary program provided an important learning experience both for the Medicare agency and for private plans now enrolling beneficiaries in the permanent benefit plan. When administrators learned of problems, they acted to correct them. Reports like this feed the other side’s mantra that the permanent drug benefit is too complicated and offers too many choices, with the implication that seniors simply won’t be able to figure out how to pick a plan that provides them the drugs they need at the best prices for the lowest premiums. This is frustrating, but perhaps these are the growing pains of implementing a new entitlement through a system of choice involving private plans. The unspoken alternative — a one-size-fits-all government plan — would simply have been unable to meet the complex and diverse needs of seniors. If there is howling now over choice, imaging the howling there would have been over no choice!
The following entry from Bob Goldberg …
Geeta’s Self-Promoting Genzyme Jihad
Geeta Anand is a Pulitzer winning reporter for the Wall Street Journal who has made her mark as a clone of former WSJer Gardiner Harris who now owns the “hate the drug company” corner at The New York Times, otherwise known as the print media’s version of Lord of the Flies. That is, Geeta connects the dots in breathless fashion about misdeeds and dangers aplenty in the pharmaceutical industry, particularly self-dealing financial conflicts that place profits ahead of the public health. One of her more famous articles involved revealing that Sam Waksal who headed up Imclone, had overstated his medical credentials. The point she tried to make at the time: both the drug (Erbitux) and the company’s chief were overpromoted to bilk shareholders. Ms. Anand has never written a follow up story about how effective Erbitux has turned out to be. But I digress.
Now she is going after Genzyme for charging too much for their drugs. (Through Charities, Drug Makers Help People — and Themselves, The Wall Street Journal. 12/1/2005). Genzyme is a fairly diversified biotech concern that started out and is still involved in develop biotech products for rare diseases. Most recently she pounded Genzyme for charging $250,000 a year for Fabrazyme, a disease that less than 100,000 people in America have. Genzyme recently became profitable and is still investing in drugs for other rare diseases. But Anand ignores these two facts in her most recent screed against Genzyme. More interesting, (I can breathlessly connect the dots too!) Anand did a piece on how a father with two daughters suffering from another orphan illness called Pompe Disease, created a biotech firm and needing more funding to develop a drug for the illness, sold the company to none other than Genzyme for about $140 million. Genzyme has taken the drug through clinical trials and has invested hundreds of millions in developing production processes required to produce the drug (if it is approved) on a mass scale.
Geeta ignores all these facts in her attack on Genzyme’s pricing policies. She does so not only to fit her jihad against drug companies as price gougers. She also has a book and movie deal based on her article about Genzyme’s involvement in the search for a Pompe cure. (Insideré¾ note: Harrison Ford is slated to play the father.) Given the politics and inner workings of Hollywood — it makes sense to have the author of the book upon which the movie is based to portray Genzyme — which didn’t have to invest in the drug — as evil. And of course, it doesn’t hurt to pick on Genzyme in the run-up to the book’s release next June. Finally when was the last time Hollywood or Geeta ever portrayed a drug company that made money in a favorable light? I wonder if she will give her advance back if the film/book doesn’t turn a profit? Then again, I am sure am missing something because I am just connecting the dots!
Whenever politicians and pundits want to trash the MMA’s federal non-interference clause (originally drafted, FYI, by Senators Kennedy and Daschle for the Clinton health care reform plan), they point to the rock-bottom prices charged by the Veterans Administration. What these folks always fail to mention is that the VA doesn’t have to add any additional costs for pharmacist services — often upwards of 30% or more of a drug’s cost to the average consumer. Facts are stubborn things and war is hell.
Despite a scary headline, “Poisonings from a Popular Pain Reliever Are Rising,” (The New York Times, November 29) is a good example of solid journalism raising consumer awareness of an important public health problem. At last! In this instance, the topic is the increase in unintentional poisoning from too much acetaminophen. It’s an issue the FDA has consistently tried to promote (most recently in partnership with the National Consumers League) — but to a collective yawn from most media. The New York Times article will reach more consumers, pharmacists, and physicians than any well-intentioned (and under-funded) government outreach program. What is, unfortunately, surprising is that the story relies on (gasp!) balanced reporting! No hyperbole. No blaming “Big Pharma.” No political posturing. Just a newspaper article that will reach millions of people with an important health message, “use as directed.” Well done.
Yesterday’s story in the New York Times about pharmaceutical firms hiring university cheerleaders as sales reps left out an important fact — what did these women major in? Marketing? Pharmacology? Biology? English? Why the omission? Was it to make the women look like bimbos and position the pharmaceutical firms that hire them as pimps? I guess that the newspaper that coined the phrase “All the news that’s fit to print” didn’t have enough room to fit in some relevant facts.
From cuckoo clocks come cuckoo criticisms. Here’s only the latest example of the Precautionary Principle run amok. Over the weekend, Swiss voters decided to tighten restrictions on genetically modified farm products, a divisive topic in a country that already prohibits most of such technology from being used in agriculture. More than 55 percent of participants in the national referendum voted for the initiative to place a five-year moratorium on all genetically modified animals and crops, except for use in certain research and to produce medicine. Sunday’s referendum was forced by environmentalists and consumer groups, which easily gathered 100,000 signatures to oppose a 2004 law that would have permitted cultivation of genetically modified crops once they passed a “multiyear testing procedure,” whatever that means. The groups said the government’s law did not go far enough. They claimed it threatened Swiss farmers while benefiting multinational agricultural businesses and would have forced products onto the market that people are not interested in buying. The campaigners also needed to gain a majority in more than half of the country’s 26 cantons. Voters in all 26 cantons approved the ban.
Heidi Ho — or as they say in Switzerland, “Oy Gevalt!”
Here is Ben Zycher’s important new article on Federal non-interference, courtesy of the 11/22 edition of The Hill.
To preserve supply and innovation, don’t let feds negotiate drug prices
By Benjamin Zycher
With growing political pressures to find savings in the budget, many now argue that the federal government ought to negotiate the prices to be paid for prescription drugs under the Medicare Modernization Act (MMA), claiming that the law as now written prevents such negotiation.
And there is no doubt about the likely effects on price discounts: Unlike, say, lowly Wal-Mart, the federal government is really, really big, a reality made obvious by the federal purchasing program for childhood vaccines and by the pharmaceutical price “negotiations” — price controls — conducted by the Department of Veterans Affairs.
So substantial price savings undoubtedly are there to be had. What are we waiting for?
Well. Let us first clear up one important bit of misinformation widespread in the public discussion. The MMA does not prevent price negotiations on drugs; discounts are arranged in negotiations between the pharmaceutical firms and the pharmacy benefit managers (PBMs), that is, Wal-Mart, the pharmacy chains, the insurance companies, the healthcare delivery organizations and the like. The MMA prevents the feds from “interfering” in those negotiations by, say, mandating minimum discounts or formulary restrictions or other such constraints.
But if the feds are able to obtain discounts bigger than those yielded through negotiations between the drug producers and the PBMs, why not have the Beltway do the negotiating?
In order to answer that question, we must ask what our policy goals are. We want to help those less fortunate obtain needed medicines at prices that they can afford. Were that the only goal, the appropriate course for the feds would be: Negotiate as hard as possible.
But we have three other goals. First, we want those needed medicines to be available to patients in the respective formularies.
Since the PBMs must compete for customers, they have incentives to balance the objective of low prices with the countervailing objective of formulary availability. If a given PBM demanded too steep a discount, the drug producer would refuse to sell, and patients would have to do with other drugs in the given pharmaceutical class, with less effectiveness, more adverse side effects or both. And so competitive market forces would perform their usual function of establishing appropriate trade-offs.
The federal government, on the other hand, does not have “customers.” It has interest groups, the demands and preferences of which are satisfied in greater and lesser degrees; and it has voters, the happiness of whom is registered not in dollars spent every day, but instead in votes delivered every two or four or six years.
With powerful incentives to reduce budget costs, and the very great unlikelihood that patients will move to France if given drugs drop out of a government Medicare formulary, federal incentives to satisfy the pharmaceutical preferences of patients are weak. In no other context does the admonition “Write your congressman” fall quite so flat.
Second, we want to preserve efficient incentives for the research and development that yields new and improved medicines, and reduced human suffering, over the long term.
The incentives of federal decisionmakers to put the squeeze on suppliers mean that the long-run supply problems created by federal negotiation will be left to future officials to confront, just as in the ongoing case of the vaccine market, with respect to which substantial budget costs now will have to be borne as a means of compensating for the adverse effects of past “negotiations.” The losers will be those in the future who will suffer more than otherwise would have been the case, and for the most part they will not know who they are because they will not know about the drugs that will have failed to have developed. And in any event, many of them do not vote today. So much for the children.
Finally, we want — or we ought to want — to preserve property rights and the constitutional protections against both takings and the efforts of political majorities to impose losses upon unpopular groups.
Modern medicines are substantially the product of huge investments in intellectual property, and coercive “negotiations” yielding confiscatory prices represent a taking — in every relevant sense of that term — of much of the value of that intellectual property. And make no mistake about it: It is the protection of property rights that is the foundation of a free-market economy and the long-term alleviation of human misery. Therefore, it is not merely pharmaceutical producers to whom federal price negotiations over drugs represent a looming threat. They are a fundamental danger to all.
Thanksgiving Update: There are three branches of government. Thought this might serve as a useful reminder since some members of Congress think they can legislate powers reserved to the Executive. Specifically Senator Debbie Stabenow, Representative Anne Northup and the always-respectful Representative Rahm Emanuel. The issue is the non-issue of drug importation and the specific action is the Congress’ attempt to tell the US Trade Representative how to do his job. An amendment, sponsored by Ms. Stabenow and Ms. Northup and vociferously supported by Mr. Emanuel, would bar the U.S. Trade Representative from crafting trade agreements that block such unsafe importation. Recent agreements with Singapore, Australia and Morocco effectively prevented drug importation by requiring the consent of drug patent owners. Can you imagine that? The US standing up for IP rights? How devilish! If Ms. Stabenow, Ms. Northup or Mr. Emanuel had taken the time to consult either a highly paid DC constitutional attorney or a 5th grade civics book, they would have to agree with the White House’s comment that, “The executive branch shall construe as advisory the provisions of the Act that purport to direct or burden the Executive’s conduct of foreign relations.” On a day when most Americans are dealing with leftovers anyway, this is just another example of reheated stuffing. In any event, the amendment sunsets in 12 months, so go back to the couch and enjoy the rest of the long weekend.
Bob Goldberg’s pre-Thanksgiving blog …
Selective misreporting and recollection on Medicare
Here’s how policy is made: You take a distorted, malicious and venal report about drug prices from Democrat staffers on the House Energy and Commerce Committee being 80 percent higher in the Medicare program being then they are in price controlled Canada or the Veterans Affairs program. This report is an example of how the hard left practices the American political form of insurgency — destroy any effort to democratize public sector programs even it means destroying the people that benefit in the process — and shoot it off to a reporter at the Washington Post who has no time before Thanksgiving to do anything but get a quick response from Bush administration staffers who themselves want to spend time with their families. Then that article gets picked up by ABC News who sends it to people like ME to show they are fair but also to the usual liberal suspects who will endorse the findings who will claim that seniors don’t like and don’t understand the drug benefit.
Problem is, seems that seniors liked and understood nearly the very same program about five years ago when Clinton was pushing it — even though it had no price controls. Here’s how the story played out five years ago …
Clinton’s Medicare Plan To Include Prescription Drugs WASHINGTON, Jun 29 2000 (Reuters Health) — President Clinton has upped the ante in the growing debate over whether to add prescription drugs to Medicare’s package of benefits by offering as part of his comprehensive Medicare proposal a drug benefit that would provide coverage to all of the program’s beneficiaries. The drug plan would be voluntary, and while less generous than some of the proposals offered by Democrats on Capitol Hill, would have no deductible, so that every beneficiary who fills a prescription would theoretically benefit.
While the drug plan would cost considerably less than comparable private coverage under Medigap plans, “it’s not by any extent a free lunch,” Clinton economic policy advisor Gene Sperling told reporters at a briefing Tuesday.
Sperling and administration health policy advisor Chris Jennings said that they expected Medicare would contract with private pharmacy benefits managers to run the program, and that beneficiaries would likely realize discounts on most drugs of approximately 10.%
It should be noted that the average discount under the Bush plan is much lower. It should also be noted that it took me 2 minutes on Google to find this article. Both the Bush and Clinton plans tried in varying degrees to avoid price controls. The hard left is salivating for them. Neither the Post or ABC News seems to address that issue.
Scott Hensley’s article in today’s Wall Street Journal appears under the headline, “Pfizer Tries Subdued TV Pitch for Viagra.” But that’s not right. The news is about a new, unbranded ad about erectile dysfunction. Not once does the word “Viagra” appear in the ad. Not once does the ad say that Pfizer manufactures a medicine to treat ED. It is, in FDA parlance, a disease awareness ad. But in Mr. Hensley’s article, as well as in other news reports, the letter “V” on the computer keyboard gets a whole lot of action. “But,” you ask, “aren’t these ads just slightly disguised Viagra promotions?” Well, they certainly increase awareness of the disease and point interested parties in the direction of their doctor — but there is (at least last time I looked) more than one drug in this therapeutic category. So, it’s very likely that these Pfizer ads will enhance, among other things, sales of the competition’s products as well as Viagra. If more men visit their doctor because of Pfizer’s disease awareness campaign, and since the “little blue pill” is the market leader, then Viagra will benefit disproportionately. That’s called smart marketing. But it’s savvy salesmanship combined with a more responsible message. It’s about disease awareness. No more men with horns. It’s also important to note that these disease awareness ads will not air before 8 p.m. or during programs that don’t attract an audience that is 90% or more adults — in strict adherence to the PhRMA DTC Guiding Principles. Pfizer could have tried to be cute and claimed that disease awareness ads aren’t covered under the PhRMA guidelines, that they found a loophole and could air them whenever they wanted. But the world’s largest pharmaceutical company is playing by the spirit as well as the letter of the protocols. And that’s laudable. That’s what a leader does. And, hopefully, a positive harbinger of things to come from other companies and other disease states.
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.
