Latest Drugwonks' Blog

A Virtual Ounce of Prevention

  • 02.21.2017
  • Peter Pitts
The best way to reduce opioid abuse is to reduce the number of opioid tablets being dispensed. That means we need smarter physician prescribing habits. According to the results of a Columbia University Medical Center (published in American Journal of Psychiatry), “people with moderate or more severe pain had a 41 percent higher risk of developing prescription opioid use disorders than those without, independent of other demographic and clinical factors.”

In other words, it’s not just fewer opioids for patients with less severe pain or with conditions for which there are non-opioid alternatives (such as fibromyalgia and diabetic neuropathy). It means we need better ways of tracking the patient experience. One solution to narrowing the gap between prescription and outcomes measurement are mobile apps. The gathering and appraisal of real world evidence can expedite identification of problems before they become deadly. If we can identify misuse earlier, we can help eradicate abuse and addiction.

Apps present us with just that opportunity – a virtual ounce of prevention.

ICER CEO Steve Pearson has tried to salvage what's left of the organization's shredded credibility by claiming ICER's mission is to help patients.  Specifically, ICER argues that it all it wants to do is "spur discussion among stakeholders to ensure that patients have access to the medications at prices that are aligned with the value they bring to patients.” 

In fact, ICER was established to evaluate whether the price of drugs reflected value from the perspective of PBMs and health insurers.  As ICER notes, it uses a "US health system perspective (i.e., focus on direct medical care costs)."  

So when Pearson told MS patients today at an ICER meeting that the institute cannot quantify the benefits of new drugs to MS, it was just another evasion.   In fact, ICER excludes the patient perspective because its mission to maximize the benefits to insurers and PBMs.  Indeed, if spending exceeds that cap and therefore hurts the health system, ICER recommends changes in which MS patients would get medicines and how many would benefit.   Of course none of these components of the ICER analysis were discussed.  The same goes for the impact of limiting spending on each new drug to $915 million.   The goal is to hide ICER's real face, which it shows to a fawning media and its PBM and insurer constituency. 

Similarly, every time discussion turned to step therapy, how patients pay a share of the list price of a drug even as PBMs and insurers grab more rebates through price increases,  Pearson steered the conversation in a different and self-serving direction.   Instead, Pearson reminded everyone how drug prices rose and asserted that if MS drug prices had remained the same, then all of the medicines would be cost-effective.  

Let's deal with this claim before turning to how ICERs value framework affects MS patients

To be sure,  since 2011 the list price for Copaxone, Betaseron, Avonex, and Rebif have risen substantially to keep pace with the launch price of newer MS drugs in an apparent effort to maximize revenue as these injectable products lost market share.   It also turns out that since 2011, rebates and discounts (which go to PBMs and insurers) were 60 percent of the price increase of these older products.  

Further, since 2011 the primary driver in MS drug spending was the introduction of new medicines and greater use of oral MS medications. As the IMS study of drugs use notes: "Oral medicines now account for half of new treatment starts in 2015, steadily increasing since the introduction of these new treatment options six years ago and up from 26% in 2011."   

But here too, rebates and discounts whittled down the actual increase in spending by about 30 percent according to my estimates based on Credit Suisse rebate data. 

Further, even though ICER now attempts to calculate drug prices net of rebates, it is silent about the fact that these savings are pocketed by PBMs and insurers.  (Indeed, Pearson is afraid to raise the issue.)  And ICER is quiet about the fact even as payors rake in cash rebates that reduce the cost of medicines; they continue to charge patients up to 50 percent of the list price of medicines.  

And price increases don't change the fact that If ICER had been in place 15 years ago, not one of the medicines used today would be considered cost effective at $150K per QALY  

Between 2000-2015 the combined deficit in life years lost (those that would not be saved and the additional years lost) would have been 59000 with a loss of $17 billion in value.

Similarly, ICER claims not one MS drug developed since 2015 is cost effective.  I estimate that between 2017-2022 limited use of these medicines would cost patients 11300 life years and $3.9 billion a year.

ICER’s public relations campaign to portray itself as the voice of the patient is deadly deception.   It cannot be trusted to protect patients or fully include the value of new medicines to the people who are most in need of medical innovation. 

In short, ICER’s policy prescriptions will cripple MS patients. 


Vaccine Denial: The Original Alt Fact

  • 02.16.2017
  • Peter Pitts

President Trump will ask prominent vaccine safety skeptic Robert F. Kennedy Jr. to lead a planned commission to study vaccine safety, Kennedy said Wednesday. Commission members will include "household names" who "have not taken a position on the issue" of vaccine safety, he said.


Kennedy said that in a Jan. 10 meeting, Trump told him he expected an "uproar" from the pharmaceutical industry concerning vaccines, and that the industry "would try to make him back down and he wouldn’t back down.” Immediately after the meeting, Kennedy told reporters that Trump had asked him to lead a vaccine safety commission, a claim Trump staff quickly denied.
At a press conference Wednesday, Kennedy said he has since spoken with Trump staffers twice.

"They say they are still going forward with” a commission, he said.
Kennedy spent much of the press conference repeating widely discredited theories about links between thimerosal in vaccines and neurological disorders in children. In fact, almost no pediatric vaccines contain the preservative, according to an FDA document.

Kennedy also vilified the CDC as a “cesspool of corruption,” and accused FDA, the drug industry, and the scientific and medical establishment of colluding to poison American children.

Actor Robert De Niro, who was also in attendance, said he "agreed 100%" with Kennedy’s comments. Kennedy and De Niro said they are not "anti-vaxxers," but they remained silent when Tony Muhammad, a representative of the Nation of Islam, told reporters that polio vaccines had caused 95 million cases of cancer in America.

Considering Mr. De Niro’s macho man video aimed at the President during the election, he’s come a long way – except that he hasn’t.

Shame. Shame. Shame.

How about a Presidential commission on how to educate the American public (and particularly the parents of young children) on the safety and urgency of vaccinations?

Psst -- Wanna see some DNA?

  • 02.16.2017
  • Peter Pitts
Via Forbes

The Privacy Delusions Of Genetic Testing
BY: Peter Pitts

Mr. Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest.

Genetic testing promises a revolution in healthcare. With just a few swabs of saliva, diagnostics can provide an unprecedented look into a person’s family history and potential health risks. Within a decade, global sales of genetic tests are expected to hit $10 billion. Direct-to-consumer companies such as 23andMe and Genos have proven particularly popular, with tens of thousands of people purchasing at-home testing kits every year.

But the industry’s rapid growth rests on a dangerous delusion: that genetic data is kept private. Most people assume this sensitive information simply sits in a secure database, protected from hacks and misuse.

Far from it. Genetic-testing companies cannot guarantee privacy. And many are actively selling user data to outside parties.

The problem starts with the Health Insurance Portability and Accountability Act (HIPAA), a 1996 federal law that allows medical companies to share and sell patient data if it has been “anonymized,” or scrubbed of any obvious identifying characteristics.

In 2013, 23andMe CEO Anne Wojcicki speaks at an announcement for the Breakthrough Prize in Life Sciences on UCSF’s Mission Bay. In 2015 the Google-backed genetic testing company pledged to reintroduce some health-screening tools that regulators had forced off the market, due to concerns about accuracy and interpretation.

The Portability Act was passed when genetic testing was just a distant dream on the horizon of personalized medicine. But today, that loophole has proven to be a cash cow. For instance, 23andMe has sold access to its database to at least 13 outside pharmaceutical firms. One buyer, Genentech, ponied up a cool $10 million for the genetic profiles of people suffering from Parkinson’s. AncestryDNA, another popular personal genetics company, recently announced a lucrative data-sharing partnership with the biotech company Calico.

Customers are wrong to think their information is safely locked away. It’s not; it’s getting sold far and wide. Many testing firms that generally don’t sell patient information, such as Ambry and Invitae, give it away to public databases. Such transfers, as privacy consultant Bob Gellman puts it, leave a “big gap in protections.” Hacks are inevitable. Easily accessible, public genetic depositories are obvious targets.

If genetic data does fall into the hands of nefarious actors, it’s relatively easy for them to de-anonymize it. New lab techniques can unearth genetic markers tied to specific, physical traits, such as eye or hair color. Sleuths can then cross-reference those traits against publicly available demographic data to identify the donors.

Using this process, one MIT scientist was able to identify the people behind five supposedly anonymous genetic samples randomly selected from a public research database. It took him less than a day. Likewise, a Harvard Medical School professor dug up the identities of over 80% of the samples housed in his school’s genetic database. Privacy protections can be broken. Indeed, no less than Linda Avey, a cofounder of 23andMe, has explicitly admitted that “it’s a fallacy to think that genomic data can be fully anonymized.”

Once genetic data has been linked to a specific person, the potential for abuse is vast and frightening. Imagine a political campaign exposing a rival’s elevated risk of Alzheimer’s. Or an employer refusing to hire someone because autism runs in her family. Imagine a world where people can have their biology held against them. Such abuses represent a profound violation of privacy. That’s the risk inherent in current genetic-testing practices.

For their part, direct-to-consumer testing companies have been less than forthright about these dangers, usually burying privacy disclaimers deep in their contracts and refusing to disclose how long they keep customer data or how it can be used.

23andMe customers have to wade through pages of fine print before finding out that their information may be “shared with research partners, including commercial partners.” AncestryDNA’s contract claims a “perpetual, royalty-free, worldwide, transferable license to use your DNA.” New research published in the journal Nature found that genetic-testing companies frequently fail to meet even basic international transparency standards.

Genetic testing has tremendous benefits. We are provided a closer look at our own biology. Medical researchers develop a deeper understanding of the origins of disease and can create powerful new treatments. But today, far too many donors are operating under a false sense of security, handling profoundly intimate data without appropriate protections.

Panicking PBMs

  • 02.15.2017
  • Peter Pitts
No wonder PBMs are scared. When their profits and practices are made transparent they should be afraid – very afraid. BioCentury reveals the extent of their panic.

PBMs launch attack on drug companies

PBMs have launched an aggressive campaign to persuade the Trump administration to attack drug company profits while leaving the PBM business model untouched. The strategy was outlined in a leaked email and documents sent by Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt to the organization's board on Feb. 6.

PBMs want to discourage the Trump administration from replacing private sector drug price negotiations with government negotiations. Much of the industry’s strategy is aimed at countering messages from PhRMA and its members that drug price complaints are the result of a bloated supply chain and insurance plan designs that place too much financial burden on consumers. 
PCMA, a trade association for PBMs, has sent the Trump administration a list of proposals for lowering drug prices.

With a few exceptions, it reads like a drug industry nightmare. The list includes reducing biologic exclusivity to seven years, eliminating pay-for-delay deals and ending tax deductions for expenses related to direct-to-consumer advertising.
PCMA also wants CMS to eliminate protected classes from Medicare Part D, create a competitive acquisition program for Part B drugs, and sharply limit the use of manufacturer coupons. PCMA estimates that over a ten-year period, ending tax deductions for direct-to-consumer ads would save $37 billion, while reducing the biologics exclusivity period and implementing the Part B acquisition program would each yield $4 billion in savings.

Merritt wrote that PCMA was rolling out the new strategy before key Trump administration health officials were in place because quick action was needed, "given the political uncertainty, headline risk, and other unique challenges that come with a President more inclined toward quick, instinctive action than the traditional, deliberative decision-making process."

He outlined efforts to build relationships with top White House staff to counter drug companies' influence, and said PCMA may try to reach the president through television. "Given the President’s interest in a select number of news programs, PCMA will also explore other forms of advertising that target those particular venues."

The trade association also plans to use a "grassroots" coalition it created with “more than 73,000 recruited allies who can be leveraged as needed to help drive our message in key districts around the country,” Merritt wrote.
PCMA declined to comment on the leak.

PhRMA and PCMA are also operating from the same advertising playbook. In massive campaigns targeting policymakers and key opinion leaders, both have promoted their messages online, in print and through video. As of Feb. 6, PCMA said it was attracting 1,100 viewers a day to its website, and digital ads launched on Jan. 16 had received 14 million views, including three million who watched video ads. 
PCMA and drug companies share some common ground. The PBM industry is pushing to exempt insurance plans in Affordable Care Act exchanges from the Medicaid best price requirement in order to allow value-based pricing. Like PhRMA and BIO, PCMA also has proposed an FDA safe harbor for drug companies and payers to discuss drugs prior to approval.

When Marathon Pharmaceuticals announced the list price for deflazacort – a steroid that helps kids with Duchenne Muscular Dystrophy maintain muscle strength – I am betting it didn’t expect to be headline news for anything other than taking a generic medicine in short supply and making it widely available in an FDA approved form.  

After all, it explained that the $89000 list price would wind up being sold to PBMs for $54000 and that after additional discounts and cost sharing most patients would pay about $20 a month for the product.  And it explained that as a company that was making the drug available for free under an expanded access program during its development, that was not going to be profitable for year and was already repurposing other generic drugs for rare conditions, the money had to come from somewhere. 

Didn’t matter.   Marathon got hammered.  And worse, if the news accounts are accurate, the list price surprised and concerned the patient groups that it had been supporting and working with to identify medicines to bring to market.  

But Marathon has wisely decided to re-launch deflazacort with a different approach to pricing. 
Since the company has been receiving criticism for free, perhaps they would not mind being told – gratis – that it has a great opportunity to lead a drug pricing revolution.  Scrapping the initial pricing model was the first step.  Here are the rest:

1.    Pledge to make the drug available for $20 a month forever and with no price increases.
2.    Make the same pledge for any new medicines it develops
3.    Use the rebates, discounts and givebacks that cut the price to $54000 and use it to reduce consumer cost at point of sale.
4.    Use the rebates, discounts, etc., to give insurers and consumers a money back guarantee if the drug does not work.
5.    Partner with specialty pharmacies that get paid for dispensing the drug and helping patients stick to regimens, report outcomes, etc., vs paying off Express Scripts, CVS and the bunch.
6.    Partner with health plans and provider networks to come up achievable outcomes from using the drug.  Studies suggest that maintaining muscle strength in kids with DMD reduces other health care costs by about $40000 a year.   It gives the kids, parents and caregivers more independence.   Then figure out how factor in the cost of the drug.  Marathon could even finance part of the cost with the freed up rebates.
7.    Use the money raised from the sale of its FDA priority review voucher (a ticket that gets you to market faster) to invest in its other pipeline products.

In doing so, Marathon could break the chokehold rebates are having on access and how they skew drug pricing.  It could focus on making sure its medicine was used in ways that generate the most value to its customers.   And best of all, it could shut up Bernie Sanders (Love the Bern but less is more).  I’d pay real money for that!

The Pharmaceutical Care Management Association, the lobbying group for pharmacy benefit management companies, produced a memo outlining a strategy to fight back against efforts to disgorge them of the rebates that are the only reason for PBMs existing.

Here's the essence of the PCMA memo:  

Dear President Trump and Congress,

We save you money so give us even greater control who gets what drugs and at what price. 
Forget the fact that we will make you money in the following manner:
We will increase the use of switching meds on people without telling them, forcing them to stop using drugs that have worked for them for years. 
We will increase step therapy protocols that maximize profit and limit choice.  We will increase the number of patients begging for medicines that work.
And we will increase the cut of retail pharmacy profits we take.
If patients get sicker and cost more as a result, who cares.  That's not our problem. Or yours

We will provide you a cut of whatever we make.  Promise. 

Peace and love

The PBMs

No one can accuse the PBMs of not being transparent.  The memo is classic rent seeking.  

It still begs the question of the use of discriminatory benefit designs to extract $60-70 billion in rebates and patient cost sharing from the sickest patients.  

Express Scripts says that "the unit cost of specialty drugs, the most expensive category of medicines, rose by 6.2 percent after drugmaker discounts. That's the smallest increase in five years."  But list prices increased by about 11 percent from 2015-2016, the same increase in list prices for specialty Rx between 2014-105.   So if the 6.2 percent is net of rebates, that means Express Scripts just pocketed more rebate dollars.  Meanwhile, cost sharing for most specialty drugs increased.   

It still begs the question of why not let price competition flourish under other business models.   The fact is, instead of PBMs pocketing rebates and clawing back revenues of retail and specialty pharmacies after the fact, why not let the price competition occur at the point of service with the goal of eliminating cost sharing.  Prices throughout the supply chain would still be proprietary but would be transparent and predictable at the consumer level.    
The memo all calls for joining forces with AHIP.  THat's a natural ally because the biggest insurers get the most significant cut of the rebates PBMs collected.   
They -- along with the drug companies -- should be paid for how well they do, not because they exist.  

Finally, as I noted in my last blog: It's NOT their money.  It's ultimately pharma's $.   Getting rid of PBMs won't help consumers if pharma doesn't use the rebate money to reduce prices and cost sharing!
The pharmacy benefit management lobbying organization and Express Scripts are running ads claiming that PBMs are reducing drug prices for consumers.

Express Scripts Fights Back Against Irresponsible Drug Pricing

"At Express Scripts, we put medicine within reach - making it more accessible and affordable for the employers and patients we serve. It's why we exist.

In a year where the high cost of prescription medications dominated headlines, Express Scripts delivered value beyond and practiced pharmacy smarter, protecting employers and patients by driving down costs and improving outcomes.

Our country needs affordable medicines, and Express Scripts is best positioned to deliver them. The proof is in the data."

That's false advertising.  Express Scripts didn't put medicines in reach.  Rather it manipulated prices and access to maximize rebates and out of pocket consumer costs. 

It's an incredibly rigged system.   Nearly $130 billion of drug spending goes to PBMs and insurers in the form of rebates.  And the spread between what PBMs get and what they pay for drug prices continues to soar:

Sources:  Berkley Research Group,  IMS-Quintiles

The industry says that amount reduces drug prices for consumers.

In fact,  the PBMs pocket the rebates and share them with insurers.  Very little, if any, of that money, goes to the patients whose prescriptions make the rebate revenue happen.

Even more,  the PBMs make the most rebate money on medicines for the sickest patients.   Of the $100 billion in brand rebates they get each year,  half are from medicines for cancer, MS, HIV, hepatitis C, etc. 

What's more, the spread between the net price increase of drugs and list price increase is growing.  

Source:  IMS, Express Scripts

In addition to pocketing these increasing margins, PBMs turn around and make the sickest patients pay up to 50 percent of the list price of a drug. 

Take diabetes for an example. Rebates for diabetes drugs average about 44 percent of list price. And they have been climbing as a share of list price since 2013.

The chart below shows how rigged the system is. The out of pocket cost of consumers is going up. Part of that increased is covered by drug companies. That means the drug companies give PBMs 44 percent of the list price of drugs in the form of rebates AND a percentage of the list price of the drug at the retail level.

The sickest one percent who use these specialty medicines pay about $10 billion a year.  That brings the total PMB revenue to $60 billion.  That's 60 percent of the price of the drug pocketed by PBMs.   
In essence, each patient (about 2.8 million) is being overcharged $23000.   That's delivering value to PBMs and their clients, not patients. 

Since cost sharing is associated with reduced use of medicines,  that means people are sicker than they should be and wind up costing more.

I estimate the medicines spent on the 1 percent are responsible for saving nearly 1 million life years since 2005.   We could have saved even more if drugs weren't put out of reach by rebate rigging. 

While PBMs should be criticized, it's important to note that they are playing with house money.  That is,  the rebates come from drug companies.  There is no reason why drug companies couldn't pass rebates directly to patients AND eliminate high-cost sharing.   

The proof is in the data. 


Trump Misunderstands Drug Pricing

  • 02.02.2017
  • Peter Pitts
From the pages of the Washington Examiner:

President Trump misunderstands what government drug price negotiations entail
By Peter J. Pitts

President Trump recently pledged to let federal officials negotiate the prices of drugs covered under Medicare. He claims this will save taxpayers billions of dollars.

Nobody doubts that Trump and his team are shrewd negotiators. But the sorts of "negotiations" that Trump refers to have nothing in common with haggling over a real estate deal. Instead, the action that Trump has proposed — repealing the non-interference clause, originally drafted by Democratic Senators Ted Kennedy and Tom Daschle — would result in Medicare drug prices going up and patient choice going down.

This clause has been the key to Medicare's success. Between 2004 and 2013, the Medicare "Part D" prescription drug benefit program cost an extraordinary 45 percent less than initial estimates. Premiums for the program also are roughly half of the government's original projections. These unprecedented results are largely due to Part D's market-based structure. Beneficiaries are free to choose from a slate of private drug coverage plans, forcing insurers to compete to offer the best options to American seniors. This year, seniors can choose from among 746 plans nationwide, with an average monthly premium of around $35.

Such great choice and low costs have led to widespread support for the program. In fact, nine out of ten seniors report satisfaction with their Part D coverage, according to a recent survey.

Through their own negotiations with drug makers, private insurers that offer Part D plans have had great success in keeping pharmaceutical prices down. In fact, the Congressional Budget Office observed that Part D plans have "secured rebates somewhat larger than the average rebates observed in commercial health plans." The non-interference clause prohibits government officials from intruding in these negotiations.

Doing away with the non-interference clause, on the other hand, "would have a negligible effect on federal spending." In a report from 2009, the CBO reiterated this view, explaining that such a reform would "have little, if any, effect on [drug] prices."

In fact, allowing the feds to negotiate drug prices under Part D likely would have a negative effect on the program. The CBO explains that to achieve any significant savings, the government would have to follow through on its threats of "not allowing [certain] drug[s] to be prescribed."

In other words, the government might drop some drugs from Medicare's coverage. Patients who need those drugs would then be forced to pay for them out-of-pocket, which would make medicines vastly more expensive for the seniors that Trump wants to help.

If patients couldn't afford the prescription, then they might switch to a less effective drug or stop taking the medicine altogether. Their health would suffer.

Unfortunately, this isn't a hypothetical consequence. Just look at what's happening with the Veterans Affairs formulary, which permits government interference. The VA covers barely 80 percent of the 200 most popular drugs in the country. Medicare, which doesn't allow for government meddling, covers 95 percent of these medicines.

Letting Medicare go the way of the VA would be devastating for seniors. Senators Kennedy and Daschle knew what they were talking about. The president should pay close attention.

Peter J. Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest.
ICER released its proposed new value framework approach with the usual display self-congratulation and condescension. 

ICER stated, "To succeed in our mission, we constantly listen to patients and other stakeholders. This draft contains proposed updates to our Value Assessment Framework that are a direct result of the thoughtful input we have received, and of our ongoing conversations with all stakeholders.” 

Despite the conciliatory language, nothing's changed.   It's all smoke and mirrors and process,  a me-too version of ICER's anti-patient framework.  Cuba has changed more under Raul Castro. 

The update proposals will be open to further public comment for 60 days. But it doesn’t take even 6 hours to see that ICER’s clever combination of confusing statistics, assumptions and price controls remain dangerous and discriminatory.

1.    ICER will to ignore the value of new medicines to employers, caregivers, families, and patients. 

2.    ICER will continue to use the quality-adjusted life year (QALY) to measure the value of treatment for all patients. A QALY, often used in the UK where the availability of cancer therapeutics is limited by cost, equals one year in perfect health. That means anyone who is ill is measured as LESS than a QALY, diminishing the value of their treatment.  ICER uses the QALY, despite acknowledging that the QALY can vastly underestimate and devalue the quality of life and ignores patient perspectives.

3.    ICER claims that estimating rebates taken off of list drug prices will more accurately reflect cost.  It ignores the fact that rebates are pocketed by the PBMs and insurers funding ICER.  So under ICER's framework,  health plans and PBMs pocket rebates and the out of pocket share of the list price of a drug that patients must pay. 

4.     ICER still maintains that given the additional benefit these new drugs provide is worth no more than $150, 000 for each additional year of life,  an arbitrary ceiling on the cost of new therapeutics, no matter how much they achieve.

6.     ICER still assumes health systems shouldn't spend more than $900 million a year on each new medicine without cutting spending somewhere else. 

7.    ICER still assumes that new drugs will drive up insurance costs and crowd out pothole repair.  In fact, new medicines reduce the cost of treating disease over time and promote greater productivity and tax revenue. New therapeutics can save money AND save lives!

In short, ICER is therefore still a tool for discriminating against the sick.  The new ICER is the bad old ICER:


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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