Latest Drugwonks' Blog

Expediting Complex Geneics

  • 04.06.2017
  • Peter Pitts
It's not about speed, it's about predictability.

The way to expedite complex generics is by making the process predictable. Predictability = more development programs = competition = lower prices.
European, national, and regional authorities should invest in awareness-raising campaigns to increase public knowledge about medicinal safety and adverse drug reaction (ADR) reporting.
This is one of the main findings of the study “Pharmacovigilance in the European Union: Practical implementation across Member States” from the University of Duisburg-Essen which assesses the functioning of EU pharmacovigilance legislation.
The report focuses on adverse drug reaction (ADR) reporting of biologicals in six EU Member States - the UK, Finland, France, Poland, Portugal, and Germany. Since the 1990s, legislation at the EU level has strengthened medicinal safety in general, and particularly the reporting of ADRs. However, transposition problems remain in some EU Member States when it comes to medicinal safety.
ADRs account for 5% of all hospital admissions, cause around 200,000 deaths per year in the EU, and cost roughly €80 billion.
Almost 85% of EU rules are not transposed on time, and occasionally come with a delay of more than two years. Although patients are given a strong role within the new EU pharmacovigilance legislation, they lack awareness, and this leads to ADRs going unreported.
The report argues that ADR reporting should be viewed as a key responsibility for healthcare professionals and not as a failure or lead to reputational damage. They should also be properly trained and targeted by awareness-raising campaigns to ensure they are aware of the importance of medicinal safety to public health and feel comfortable in reporting ADRs without fear of liability and/or failure.
Patients also have a critical role to play, and Member States should enable patients to report ADRs online, and connectivity of IT systems between general practitioners, hospitals, pharmacies, and the national competent authority should be improved.
A key solution identified by the report is to put in place awareness raising programmes aimed at both patients and healthcare professionals to increase knowledge about medicinal safety and highlight the role it can play to ensure public health.
The report will be shared with EU Member States, the EU Institutions, and key stakeholders, with the aim of ensuring the recommendations are taken up by governments, and that the EU legislation can be properly implemented across Europe.

Scott STAT!

  • 04.05.2017
  • Peter Pitts
“I think Scott is very much for good regulation, and very much against bad regulation,” Pitts said. “Importantly, he recognizes where FDA core mission stops, and where mission creep begins — and that’s an important finesse he’d bring to the commissioner’s chair.”
Via STAT News:
 Gottlieb’s pledge to uphold ‘gold standard’ raises red flags
When Dr. Scott Gottlieb pledged at his confirmation hearing to uphold a “gold standard of safety and efficacy” at the Food and Drug Administration, he raised an important question:

What exactly does he mean by that?
Traditionally, “gold standard” refers to robust, randomized controlled clinical trials. But there’s enormous pressure on the FDA — from pharma companies and Congress, for starters — to accept other kinds of evidence, perhaps even patient anecdotes, to determine whether experimental drugs work. And President Trump is promising to speed drug approvals.
So when Gottlieb said: “I think there are ways to modernize clinical studies without sacrificing the gold standard,” he raised red flags.
“I don’t think he was using the phase ‘gold standard’ in the way that most of us who think about the agency for a living understand it,” said Rachel Sachs, an associate professor of law at Washington University in St. Louis.
“I think he views adaptive clinical trial design as in keeping with that gold standard,” Sachs said.
And that’s the rub, because modifying clinical trial standards has many people concerned. Reshma Ramachandran, co-chair of the National Physicians Alliance’s FDA task force, says she, too, doesn’t know what Gottlieb meant by “gold standard” — but isn’t optimistic about his interpretation.
She pointed out that Gottlieb has criticized the use of adequate and well-controlled Phase 3 trials in the past, saying they’ve needlessly delayed access to important drugs.
“That seems to indicate that his idea of ‘gold standard’ means sacrificing safety and efficacy you’d expect from FDA in favor of expediting an approval pathway,” Ramachandran said.

Joshua Wallach, a research fellow at Yale’s Collaboration for Research Integrity and Transparency, had similar worries.

“I’m concerned: I don’t want a complete erosion of the quality of clinical trial evidence that’s required from industry,” Wallach said. “There’s definitely a movement still toward deregulation — and lowering of evidentiary standards.”
Wallach is afraid, in particular, of changes to clinical trial endpoints. Modernizing the clinical trial process might force trials to lean on surrogate endpoints. That could mean assessing an experimental drug based on whether it has some interim effect (like improving a dementia patient’s performance on a memory test) rather than whether it meets more significant long-term goals (like prolonging that patient’s ability to complete daily tasks). It could also open the door to pharma companies scouring their clinical trial data to find metrics that look good — and presenting those to the FDA, even if the trial was originally designed to answer an entirely different question.
“I’m worried about seeing more small, crappy trials that don’t actually tell you anything about efficacy and safety — which are extremely important before drugs can be approved or marketed,” Wallach said.
Part of upholding the FDA’s gold standard could involve respecting and keeping on career staff, Sachs said. And for that, she gives Gottlieb high marks.
“I think he understands the importance of a strong, well-resourced FDA,” Sachs said. “I don’t think he will burn it all down. I don’t think he’s inclined to destroy the agency from within.”
Peter Pitts, president of the nonprofit Center for Medicine in the Public Interest, saw another glimmer of good news in the confirmation hearing: He said he thinks Gottlieb’s definition of “gold standard” includes keeping FDA funding strong.
“The president and his team understand that you can’t get more for less — and that’s especially true on staffing,” said Pitts, who was a former associate commissioner of FDA and worked with Gottlieb at the agency for two years. “And Scott came pretty close to saying he was against a reduction of budget.”
Pitts added that he was impressed by Gottlieb’s performance at the hearing.
“I think Scott is very much for good regulation, and very much against bad regulation,” Pitts said. “Importantly, he recognizes where FDA core mission stops, and where mission creep begins — and that’s an important finesse he’d bring to the commissioner’s chair.”
Arizona is first state to pass a law allowing drug makers to promote off-label uses

Ed Silverman @Pharmalot

In what some observers are calling a misguided effort, Arizona has become the first state in the nation to pass a law allowing drug makers to promote their medicines for so-called off-label uses — so long as the information given doctors is truthful.

Interestingly, the law was hatched by the Goldwater Institute, the same think tank that spearheaded the controversial Right to Try laws designed to give patients early access to experimental medicines. And the think tank is vowing to duplicate that campaign by introducing off-label bills around the country.

This move comes amid rising pressure on the Food and Drug Administration to loosen regulations for off-label promotions, which is one of the most contentious issues to roil both the agency and the pharmaceutical industry. At issue is a fierce debate over patient safety and free speech.

Doctors can prescribe a medicine for an off-label — or unapproved — use, but drug makers have battled restrictions on their ability to distribute such information, such as reprints of medical studies. The companies believe free speech is being curtailed and have lobbied Congress and the FDA to loosen regulations. For its part, the FDA worries public health can be jeopardized by promotions that go too far.

Significantly, drug makers were emboldened by a pair of court rulings in recent years that determined companies can disseminate off-label information, so long as it is truthful and not misleading. However, one of those decisions, which was issued by a federal appeals court, only extends to Connecticut, New York, and Vermont, creating uncertainty about whether the issue would be tested elsewhere.

The FDA, meanwhile, has not yet taken any action.

In fact, the agency held a two-day, public meeting last November. But two months ago, the FDA issued a memo that, instead of suggesting possible solutions, simply summarized key points framing the long-running debate and carefully rebuffed many of the suggestions made by drug makers and others that support expanding pharmaceutical marketing.

And so the Goldwater Institute is trying to force the issue with the Free Speech in Medicine Act.

“Curbing the exchange of information about off-label treatments by those with the most knowledge about the drug’s uses, risks, and side effects not only prevents patients from receiving the best possible care; it violates the constitutional right to free speech,” said Christina Sandefur, the executive vice president of the Goldwater Institute, in a statement.

While the Goldwater Institute plans to take its “model law” to other state legislatures, so far, similar bills have not yet been introduced elsewhere, according to Richard Cauchi, health program director at the National Conference of State Legislatures.

Meanwhile, though, one former FDA official, who has publicly urged the FDA to loosen its regulations, believes such state laws would be useless, because they would be preempted by federal law that allows the FDA to issue guidance documents and rules about various activities and requirements.

“It’s nice that the Arizona legislature thinks disseminating off-label information is a good thing, but it’s not their jurisdiction to say so,” said Peter Pitts, a former FDA associate commissioner who heads the Center for Medicine in the Public Interest, a think tank that is funded, in part, by the pharmaceutical industry. “I don’t think a challenge in court would last more than five minutes.”

Nonetheless, one consumer advocate, who opposes widening the ability of drug makers to promote off-label uses, fully expects the Goldwater Institute to persist.

“I don’t think the law will change the landscape, but they’re seeking to gin up public attention and become a stepping-stone to try to get Congress to pass laws that would accomplish the same thing on a national level,” said Michael Carome, who heads Public Citizen.  “I suspect that’s the ultimate goal.”

As for the Right to Try campaign, 33 states have so far passed such laws and, recently, bills were introduced in the US House and the Senate. Critics say these bills are wrongheaded for trying to cut the FDA out of the process, since regulatory oversight would be removed and drug makers are actually the ultimate gatekeepers for deciding access to their drugs.
STAT News is one of my favorite sites for medical and health news.   The reporting is great and the journalists are open, thoughtful and smart.   

Every once in a while there will be clunker like the following article about Scott Gottlieb:

Trump’s FDA nominee pledges to untangle his ties to 25 biopharma companies

"President Trump’s pick to lead the Food and Drug Administration has promised to recuse himself from agency decisions on more than 25 companies to which he has ties.

Dr. Scott Gottlieb, who is deeply entrenched in the industry he may soon regulate, plans to resign from his roles in investment banking, venture capital, and as a consultant to drug companies within 90 days of his Senate confirmation. At the same time, he’ll sell off his shares in a host of biotech companies.

And for one year after those resignations, Gottlieb will stay out of any FDA deliberations related to those companies, which include GlaxoSmithKline, Bristol-Myers Squibb, and Vertex Pharmaceuticals."

Deeply entrenched?  Untangling of ties?  From 25 -- count em, 25 -- companies? Sounds suspicious.  Should we ask Carrie Matheson to get to the bottom of Gottlieb's consulting activities?  

A less breathless and narrative driven article could have noted that Scott's recusals and divesting of industry related investments and associations are no different than what any other nominee for FDA commissioner has done, including Rob Califf and Peggy Hamburg.   And no one was keeping score of how many companies they consulted for or held stock in.  Or that Gottlieb has made increasing the number of generic drugs that compete against medicines made by companies he advised a top priority? 

To be fair,  when I wrote to STAT News editor Rebecca Robbins raising my belief that the article was more narrative than reporting she responded that the intent was not to reinforce a narrative peddled those who regard Dr. Gottlieb as a pharma pawn.  

But there is this as well: "The 44-year-old physician has traced an unusual career path, pivoting from Wall Street to a role at the FDA and then embarking on a lucrative career as an investor and adviser." 

Who else thinks that this article will spur more attacks and spawn similar pieces from other news outlets that will include quotes from anti-industry critics such as Public Citizen who have already smeared Scott?


ICER recently had a meeting to discuss its latest study: "Targeted Immune Modulators for Rheumatoid Arthritis: Effectiveness & Value." It is no different than any other ICER report:  It concludes no medicine is cost effective and it uses methodology that no economist can replicate.   ICER reports are the cold fusion experiments of health care economics. 

I have released a report discussing the impact of ICERs approach on patients.  It concludes that applying ICER's cost-effectiveness standard to all biologics developed for RA since 2000 (none are cost-effective according to ICER) would have harmed a lot of people with RA.

Between 1999 and 2014 there would have been 46689 more deaths under an ICER regime.   Additionally, research suggests that since 1999 the life expectancy of people with RA who used new medicines could expect to live 10 years longer than those not treated.   Hence under an ICER regime people with RA would have 466894 fewer life years (46689 x 10).  

Going forward, ICER claims new RA drugs are not cost effective either.  

ICER estimates that only 97000 people year for five years (486000) with RA would get two new drugs it reviewed: baricitinib and sarilumab.  Both medicines were tested in people with RA whose disease didn’t respond to any other treatments or couldn’t tolerate any other medicines.  

ICER fails to disclose how they arrived at the estimate that 97000 people a year would use new drugs. Further, it assumes – without any support – that 70% of new users on baricitinib would come from patients using sarilumab and 30% would come from another biologic -- adalimumab--that it claims isn't cost effective either. 

In doing so, ICER assumed that 50% of these patients were moderate-to-severe cases, and 50% of this subset had failed initial treatment with non-biologic RA drugs such as methotrexate.  ICER states: "Applying these proportions to the projected 2016 US population resulted in an estimate of approximately 486,000 patients in the US over a five-year period.”

But this assumption is flawed. A recent study found that 50 percent of all RA patients failed to respond to their second-line biologics. Further, many other patients will stop responding to any therapy.   Finally, ICER did not consider that many people with RA do not benefit from any other medicines.  So, there is little basis to assume that two new medicines would not be used more widely as well as claim that one would replace the other.  

If the 97000 limit is applied, 398000 people with RA a year would be denied medicines that improve their condition and could likely increase their life expectancy. ICER limits would cost RA patients up to 250900 life years over that time. 

You can access the entire study here

Limpid Lipids

  • 03.28.2017
  • Peter Pitts
Nothing is more illustrative of the price/value discussion than PCSK9s. Just what are they worth? What's innovation worth?

At a recent Galen Institute forum, cardiologists, patient organizations, and policy wonks sat down to discuss the relative merits of PCSK9s both as a therapeutic choice and a reimbursement imbroglio. Issues ranged from physicians’ frustration with pre-authorization, to best practice beyond familial hyperlipidemia. What value should be assigned to PCSK9s for patients who are non-compliant with their statin therapy? Providers want to have the freedom to deliver the best clinical outcomes. How can payers become a more symbiotic part of that therapeutic journey?

Galen Institute President Grace-Marie Turner commented, "As I travel the country, I have become increasingly concerned as doctors say that their hands are being tied by bureaucrats who second-guess their clinical decisions. At this critical moment in the health care debate, I believe policymakers need to hear the physician point of view." She noted that, typically, physicians are so busy caring for patients that they do not have much opportunity to take part in discussions of health care policy. "For this reason, we decided to bring this group together to begin a national conversation about this crisis in the medical profession, and ensure that policymakers and patients alike understand the barriers doctors are facing as they attempt to deliver the best care possible to their patients."

According to Dr. Seth Baum, fellow of the American College of Cardiology, the American Heart Association, the American College of Preventive Medicine, the National Lipid Association, and the American Society for Preventive Cardiology, "Patients should not have to wonder who is deciding which medicines they take -- their doctor, or their insurer … In my case, I am forced to complete intricate, 17-page documents so that insurers will allow my patients access to lifesaving new cholesterol medications, only to see them turned down, repeatedly."

Baum also pointed to "fail first" policies, which require doctors to prescribe older, cheaper medicines for patients until those patients "fail" on those drugs, before being allowed to prescribe breakthrough treatments that would be more effective. "These decisions are best made between doctor and patient, not by bureaucrats," he added. "Insurance should help ease health care worries, not tie doctors and patients up in red tape."

Another speaker at the conference, Dr. Hal Scherz, a pediatric urologist, said, "Third-party interference has become endemic in the U.S. health care system, and is increasingly destructive to the patient-physician relationship. A recent survey by the Physician's Foundation found that 53.9% of physicians surveyed claim that some of their decisions are compromised due to their current level of clinical autonomy. I am glad to take part in this discussion, and hope it will increase public awareness of the restrictions doctors encounter in their daily work."

Disease is the enemy. Practicing physicians know this, but their professional association -- the American Medical Association -- seems in need of some education. The AMA's new program, "," is entirely silent on the actual metrics of healthcare spending and the value of pharmaceutical innovation. Ignorance is not bliss.

Medicines lower health care costs by improving patient health and warding off more serious complications, government interventions that discourage drug development will increase health care spending, not cut it.

The current inquisition of the pharmaceutical industry is meant to justify government restrictions on drug pricing. If facts still matter, free-market competition will be exonerated and upheld as the best way to contain health care spending while delivering quality care. If they don't matter, and legislators insist on imposing innovation-killing price controls, future health care savings will go up in smoke.

Healthcare innovation saves lives, saves money, promotes economic growth, and provides hope for hundreds of millions of people (both patients and care-givers) in the United States and around the world. It deserves respect -- or at least honest reportage.

Does this sound naïve? Perhaps, but as Schopenhauer said, "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."

How’s that for a tweet?
Policy development by sound bite is becoming a chronic disease. Exhibit A: “Pharma spends more on marketing and sales than on R&D.”

The Washington Post wrote about it.

John Oliver talked about it.

Legislators are fixated on it.

Letters to the Wall Street Journal complained about it.

Let’s look at the record – because the devil is in the details – and it starts with what “sales and marketing” means.

When pundits, politicians, and policymakers speak about “sales and marketing,” the picture they are painting is of direct-to-consumer pharmaceutical advertising – the public face of Big Pharma. So, let’s set the record straight on that straight away. In 2016 $5.6 billion was spent on DTC. Same period R&D spending is roughly $70 billion. Amorous middle-aged couples in claw foot bathtubs are a lot sexier than excel spreadsheets, but facts are pesky things. Surprised?

Here’s another eye-opener, the category of “marketing and sales” also includes product sampling and communications to physicians, legal and accounting fees, salaries, rent and utilities, and all post-licensure programs deemed necessary by the FDA. Nuts and bolts aren’t cheap. It’s also important to understand that the R&D reported investment is only for pre-approval investment and doesn't take into consideration post approval R&D expenditures, which were $20 billion in 2011 and most likely, much higher today.

But let’s address the elephant in the room – DTC advertising. Yes – it’s good for business (otherwise it wouldn't exist) but it’s also good for the public health. And, no, it doesn’t make medicines more expensive.

The good news is that an informed healthcare consumer is a healthier citizen.  And while information comes from many sources outside of the physician’s office – one of the most pervasive channels is through direct-to-consumer advertising.

Properly done, pharmaceutical advertising helps to de-stigmatize certain diseases and encourages people to talk with their doctors about problems previously considered taboo -- like depression. Other research demonstrated little or no correlation between a brand's DTC spending and it's cost. In other words, brands that spend more heavily on DTC advertising do not necessarily cost more than their less-advertised competition.

FDA research, of patients who visited their doctors because of an ad they saw, and who asked about that prescription drug by brand name, 87 percent actually had the condition the drug treats. And in 6 percent of those DTC-generated visits, a previously undiagnosed condition was discovered. Why is that so important? Because earlier detection combined with appropriate treatment means that more people will live longer, healthier, more productive lives without having to confront riskier, more costly medical interventions later on.

Only 7 percent of doctors said they felt "very pressured to prescribe" a particular advertised drug. When the FDA panel probed into the question of "pressure to prescribe," what we found out was that the real pressure was time pressure. More patients are coming in armed with more questions. A study in Health Affairs arrived at a similar conclusion. According to the study, ad- inspired doctor visits resulted in the advertised medicine being prescribed in only about 47 per cent of cases. Put another way, patients didn't get a prescription for the medicine they came in to discuss on more than half their visits. Even with advertising, doctors exert appropriate judgment when they prescribe drugs.

According to the FDA study, a majority of doctors feel that DTC advertising increases patient awareness and involvement, improves compliance, and enhances the overall doctor-patient relationship. But we can - we must - do better. Health care information is the consumer's Rosetta Stone, and the FDA, public policy institutes, pharmaceutical firms, communications professionals, health care providers, disease organizations, patient advocates, academics along with state and federal legislators must help design 21st century DTC advertising that not only helps to sell product, but also advances the public health.

De-Commissioning Drug Importation

  • 03.17.2017
  • Peter Pitts
Yesterday, four former FDA commissioners warned that proposals to allow importation of pharmaceuticals would create serious risks for consumer and patients, and would produce only minimal savings.

While importation proposals are intended to "make lower-cost but genuine, safe and effective drugs available to U.S. consumers," in practice they would "harm patients and consumers and compromise the carefully constructed system that guards the safety of our nation’s medical products," the former commissioners wrote in an open letter to Congress. Robert Califf, Margaret Hamburg, Mark McClellan, and Andrew von Eschenbach signed the letter.

The former commissioners note that in exceptional circumstances, limited importation has been permitted, but wrote that when they were in office, none of them was "able to conclude that a wider policy of routine importation would increase access to safe and effective drugs for the American public."

The letter directly addresses legislation that seeks to assure the safety of imported drugs by limiting importation to drugs made in FDA-inspected plants. "Allowing importation of drugs purported to be manufactured overseas in FDA-inspected facilities and drugs purported to be manufactured domestically for export to other countries and re-imported from those countries to the United States can not meet the requirements under the existing closed drug manufacturing and distribution system because the drugs could not be tracked and certified by the manufacturer."

Sales of illicit, ineffective, or adulterated products are a lucrative business for organized crime, the letter warns. It would be practically impossible to screen and verify the authenticity of massive quantities of imports, the group wrote, adding that "if spot-checking discovered a dangerous or counterfeit product, in the absence of the closed system currently in use, there would be no way to trace that product to its origin or intervene to protect other consumers before irreparable harm occurs."

The letter also challenges assumptions about cost savings from importation, noting that drugs are allotted to countries based on the needs of their populations, leaving little extra inventory for export to the U.S. It states that importation "would likely have only a small, incremental effect on cost and access for drugs in the U.S. market; further, these small savings might not be passed on to patients, even if consumers are able to obtain a legitimate imported drug."

The letter concludes: "We urge Congress and the many others concerned about the cost of drugs to deal directly with the issues driving the cost of medicines and not to place false hope in measures that will place patients who need treatment at risk and jeopardize public health.

The Worst Drug Cost Article of the Year

  • 03.16.2017
  • Robert Goldberg
Liz Szabo wrote what I predict will be the worst (as in most deceptive and inaccurate) article on prescription drug costs to be published by a so-called mainstream media outlet in 2017.  

"As Drug Costs Soar, People Delay Or Skip Cancer Treatments" claims that high drug prices are causing cancer patients to go bankrupt.  To make that point distorts and omit facts in ways that let PBMs and health plans off the hook for imposing high out of pocket drug costs on a small group of patients.

Szabo overstates the problem and then fails to support her claim: 

"We're talking about huge numbers of patients," says Dr. Scott Ramsey, director of the Hutchinson Institute for Cancer Outcomes Research at the Fred Hutchinson Cancer Center in Seattle. "It's an epidemic. And it's not going away."

While a huge problem for anyone in that situation, the good news is that the percentage of patients that must pay thousands of out of pocket is very small.  Nearly 95 percent of  cancer patients are not exposed to high out of pocket cancer costs.   The other 5 percent often have supplemental insurance or receive cost sharing assistance.  

Szabo claims that between 168,000 to 405,000 ‘ration’ their prescription use because of cost.    This a sloppy use of the word made even sloppier because Szabo defines rationing as delaying the use of cancer drugs.  Moreover, the studies she relies on to generate her guesstimate looks only at the small group of patients that –because of a low income or lack of insurance coverage – cite cost as a barrier to care.

The burden of out of pocket cost is not a small matter to those who must bear it.   But to address the problem you have to identify the cause.  Szabo strenuously avoids doing so. 

She insinuates that the most important factor is the price of medicines. In fact, it is extreme drug cost sharing imposed by PBMs and insurers on the sickest 1 percent of patients with cancer, MS, rheumatoid arthritis, cystic fibrosis and other rare diseases.   

Further,  PBMs and insurers systematically target people with these conditions particularly in Medicare Part D and commercial plans provided under the Affordable Care Act.  In those plans, insurers and PBMs have placed most or all new cancer drugs on the highest cost-sharing tier of drug benefit programs. 

Net drug prices have been declining so the excuse that cost sharing has to increasse in step with increasing prices won't wash. 

A Kaiser study recently found that “Payments for deductibles and coinsurance have outpaced increases in costs paid by the health plans themselves.  Average payments toward deductibles more than tripled, rising 256 percent, and average payments toward coinsurance more than doubled, rising 107 percent. This is while average payments by health plans themselves only increased 58 percent. “

The real reason for the cost sharing discrimination Szabo ignores is that is where the money is.

The one percent of patients and the 1 percent of the drugs that are dispensed to them generate about $150 billion in drug sales at list price.    PBMs and insurers extract $30-40 billion from drug companies in the form of rebatres.  These rebates reduce the actual cost of drugs.  But those savings are not fully passed on to patients. 

Instead, most of these drugs are placed in the highest cost sharing formulary tier and patients then pay up to 50 percent of the list -- not rebated -- price of drugs.  On average, the cost sharing is about 35 percent of the retail price of drugs.   That's another $45 billion insurers and PBMs collect.    Generating $75 billion on sales of $150 billion is a nice haul.  But Ms. Szabo seems to think it's not such a big deal. 

Did I mention that this practice is systematic? 

A recent study found that insurers are increasingly designing benefits to maximize profitability and turn patients into revenue centers.  The analysis notes for example that patients being treated for cancer or multiple sclerosis will cost an average of $61,000 but only generate $47,000 in revenue after accounting for the large risk adjustment and reinsurance transfer payments.  The difference is made up by squeezing more profits out of drugs.

The researchers said this creates a large incentive to place such drugs on specialty tiers, where patients face high out-of-pocket costs and where drugs generate the most rebates. 

This is certainly what has happened to cancer drugs.  Since 2011 net price increases have declined for cancer medicines.  Yet list prices have increased.  The difference between net and list prices goes to rebates pocketed by health plans and insurance companies even as they hike cost sharing.  

Further, even as rebates increase, more health plans are putting all cancer drugs in higher cost-sharing tiers, generic or not:

As a recent American Cancer Society study concludes: “Plans continue to place most or all oral chemotherapy medications on the highest cost-sharing tier, creating transparency and cost barriers for patients. The two generic oral cancer drugs we studied regularly appeared on the most expensive tier (41 and 62 percent of the time). The effect may be to inappropriately discourage enrollment by cancer patients.”

This is both unfair and inefficient.  the use of new medicines lower treatment costs over time as well as substantially improving health over time.  

In some case,  insurers have recognized the dynamic contribution new medicines make to health and health systems and have protected  cancer patients from high-cost sharing.  A study of coverage for targeted drugs treating chronic myeloid leukemia found that their use of “was associated with lower spending on other types of healthcare services. CML patients on such targeted drugs ..”had roughly $12,000 less in nonpharmaceutical medical costs than did patients on alternative forms of therapy. This translated into a decline of more than 30% in medical spending and offset roughly 40% of the cost of the drugs...This result is consistent with prior work that suggested changing generosity for one healthcare service has both short- and long-term implications for spending in other areas.” 

Instead, Szabo ignores the qualitative improvement in new cancer drugs and advantage of eliminating cost barriers for the most innovative treatments:

Spending on cancer has remained about 4 percent of health care spending since 1960 because drugs have been displacing hospitalization, which is more expensive.  For instance, if people were being hospitalized for cancer in 2014 at the same rate they were in 1995, total hospital costs would be $60 billion a year more.   

Additionally, whereas there were only 4 million cancer survivors in 1975, there are 14 million survivors today. The cancer death rate for men and women combined fell 25% from its peak in 1991 to 2014.  

New cancer medicines have reduced health care spending and increased well-being and capacity to work.  So, my question is: if the use of new medications makes cancer care more effective and affordable, why are health plans and PBMs making them more expensive? 

Maybe another reporter will write an article about that. 

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.

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