Latest Drugwonks' Blog

WSJ reporters Jonathan Rockoff and Peter Loftus suggest how PBMs and health plans pocket rebates while charging patients list price even as pharma limits price increases ("Facing Criticism, Drug Makers Keep Lid On Price Increases" 2/16/2017) At the same time, the American Cancer Society Cancer Action Network warns that under the ACA “most plans place many, or even all, covered cancer drugs on the highest cost-sharing tier.”

Specifically, Rockoff and Loftus report:  most of the increases in list prices are not paid by insurers.  PBMs and insurers have their drug costs reduced by rebates and discounts, while consumers (patients) pay the full price.   Here's the chart that demonstrates this fact.

Source IMS Health

In addition to pocketing rebates, PBMs and insurers make money by charging consumers of the newest drugs up to 50 percent of the list – not rebated price of the drug.  Indeed, Rockoff and Loftus try to skate past this ripoff by blandly noting: "regardless of discounts to middlemen, patients who have high-deductible health plans may have to pay close to full price for at least part of the year.   Indeed, patients who have high deductible plans are not paying anywhere near full price for any other medical service except prescription drugs. 
The article notes: "The discounts mean that manufacturers must share the increased revenue with others, but they can still leave buyers such as insurers paying the higher price, or most of it. And regardless of discounts to middlemen, patients who have high-deductible health plans may have to pay close to full price for at least part of the year."

As if on cue the American Cancer Society Cancer Action Network released its most recent review of drug cost sharing for cancer patients on Obamacare plans and concluded:

 "Unfortunately, most plans place many, or even all, covered cancer drugs on the highest cost-sharing tier. Among the formularies we studied, even generic cancer drugs appeared on the most expensive tier with regularity (41 percent of the time in the case of Etopside, and 61 percent for Imatinib Mesylate). Most of the time, the highest cost-sharing tier requires coinsurance rather than a flat copayment; but it is very difficult for consumers to manually estimate their coinsurance costs because the negotiated drug price on which coinsurance is based is not shown.”

So if drug companies are keeping the lid on drug prices, why aren't cancer patients seeing any difference at the pharmacy?  

Mooning Healthcare

  • 02.27.2017
  • Peter Pitts
An interesting post at OhMD discusses a new study showing that “96% of patients report leaving their doctor’s office with limited knowledge of how to use the patient portal. Of the 40% of patients who said they had attempted to use the patient portal in 2016, 83% said it was too complicated to use.” That means only 7% of patients find it simple enough to use, and actually care to use it.

As the folks at OhMD quip, “As a point of reference, 7% of the American population also believes the moon landing was faked, if that helps give you some perspective.”

Why? Consumer technology (the apps we all use in our daily lives) typically solve a problem in a very simple way.

As I’ve said before – healthcare app-ens.

ProPublica, although calling itself "journalism in the public interest,” remains silent about its own funding and conflicts of interest while it brazenly challenges others. 

A recent article, " Big Pharma Quietly Enlists Leading Professors to Justify $1,000-a-Day Drugs," questions the credibility of respected academic experts who explain and defend the high cost of developing new treatments and cures, simply because they get funding from the pharmaceutical industry. 

Yet, ProPublica receives funding from Arnold Foundation, dedicated to attacking drug pricing, drug spending and by extension the pharmaceutical industry.

Since 2013 ProPublica has received $4 million from the Arnold Foundation.  The support is part of nearly $20 million in multiyear grants to organizations that are being paid by the foundation to develop new policies to attack drug prices in a way that will reduce the development of new treatments and cures.  

In addition, the foundation is funding news outlets like ProPublica to report on the organizations it is funding, and to support a group called Patients for Affordable Drugs who advocate for policies the other Arnold entities are creating and publicizing.  So ProPublica is part of what the foundation calls a 'portfolio of investments' in attacking drug pricing and drug spending. That's journalism in ProPublica's financial interest, not in the public interest.

The piece claims that the scholars (who have a firm called Precision Health Economics of PHE) enlisted by drug companies to defend prices didn’t regularly disclose funding, In fact, the economists who  such as Tom Philipson, Dana Goldman and Darius Lakdawalla have been conducting such research for nearly 20 years and they have been disclosing their funding when required or relevant.  In any event their relationship with companies was well known to everyone in the field.  

Ironically, ProPublica alleges monkey business because of PHE’s failure to disclose in an article But Propublica has also has conflicts which,unlike PSE, it doesn’t disclose at all.

That’s not just being “quietly enlisted: That’s keeping quiet to avoid being criticized for hypocrisy. 

Indeed, Annie Waldman, the author of the article, interviewed several individuals and discusses alternative value frameworks who disagree with the PHE methodology and belittle their assertions about prices reflecting values.   

These sources are funded by the Arnold Foundation as well. 

To discredit the claim that new drugs cost a lot to develop Waldman cites Dr. Aaron Kesselheim who states: “There is substantial evidence that the sources of transformative drug innovation arise from publicly funded research in government and academic labs.” Kesselheim is “an associate professor at Harvard Medical School whose research looks at the cost of pharmaceuticals. Pharmaceutical pricing, he says, is primarily based on what the market can bear.”

And Kesselheim also gets funding from the Arnold Foundation.  

Waldman also discusses the role of ICER in setting drug prices based upon its opinion of value.  She describes ICER as an organization vigorously attacking US drug prices. Waldman states that: “Some patient groups have contended that ICER emphasizes cost savings because it receives funding from health insurers. However, foundations are ICER’s biggest source of funding, and it is also supported by the pharmaceutical industry and government grants. “

ICER does NOT get money from the drug industry. Waldman fails to mention funding from California Blue Cross Blue Shield Foundation or that ICER receives most of its funding -- $4.6 million from the unmentioned Arnold Foundation.

It is perfectly acceptable to criticize PHE approach on substance.  But as a colleague of mine observed: “foundation money is no different than pharma money if the purpose is the same: to support advocacy-driven research.” I applaud the Arnold Foundation for supporting groups that advance its drug pricing agenda and I am grateful to receive funding to advance other ideas about how to make medical innovation accessible and affordable. 

However, if you are going to make funding sources an issue, it should apply to thee and me.   And more to the point, if you are a media outlet receiving money from an organization that also funds the groups you cite in your article and use to research your piece, you should at least tell the public that.   That’s not just nondisclosure.  That’s misleading.   It certainly isn’t journalism.  
Jayne O' Donnell believes that patient groups that get money from biotech and pharma are corrupt.  Her USA Today article: "New patient group focuses on drug prices amid bipartisan concern" starts off with this guilt by association meme:

"A new patient advocacy group launches Wednesday that distinguishes itself by focusing only on drug prices and eschewing money from the pharmaceutical industry at a time when drug makers are pouring millions into a campaign fighting efforts to regulate them."

In otherwords,  groups that get money from biopharma companies are not legitimate.   O' Donnell claims the new group -- Patients For Affordable Drugs -- is the only organization tackling policies to bring down drug prices because they are pharma free.   That is untrue.  What is true is that most patients groups -- and not PAFD focusing on the rigged system wherein PBMs, insurers and government health programs that set drug prices to maximize rebate revenue.  Those are the prices that matter.   If you want to reduce launch prices and price increases of drug companies, change the way drugs are paid for and the cost of drug development.  PFAD ignores both.  Why?

They focus on the immoral practice of getting $100 billion in rebates (that reduce drug prices) and then forcing the sickest patients to pay up to 50 percent of the retail price of the same drugs.  (That's another $30 billion from less than 3 percent of all patients)   But PFAD is perfect because it doesn't take 'drug' money.  So what if it ignores the rebate games, the forced drug switching, fail first step therapy, etc.  So what if it ignores the fact that by passing through rebate dollars the patient share of any drug cost could be zero, without raising premiums.  

PFAD is perfect because it doesn't get drug money and supports government negotiated drug pricing for Medicare without acknowledging that such practices have hurt patients in Medicaid, the VA and everywhere price controls are used around the world. 

Guess what other organizations share the same approach or seek to promote it?  ICER,  the drug pricing group at the   Oregon Health & Science University, and several others.  And they all get money from the John and Laura Arnold Foundation which has publicly stated it wants to build a network of groups attacking drug prices and the 'grass roots' entities to lobby for the policies and approaches the other entities produce. 

So the real debate is how to best increase the pace of medical innovation and ensure that they are accessible.   The Arnold-funded family of groups pursue administrative approaches and regulations to limit price and the pace of drug development.   No mention of PBMs, insurers, etc.   Patient groups are focusing on the system as a whole.  And patient groups are less likely to support more government control over prices and access.  They want a patient-centered drug development process.  Arnold-funded 'experts' want more randomized trials where patients are exposed to placebos half the time. 

To assert that Arnold foundation money is less tainted than money from a biotech company is ridiculous.  If patient groups got money from the Merck Foundation instead of Merck for instance, would it pass O'Donnell's purity test?

(Many companies fought against eugenics in the early part of the 20th century.  Foundations supported eugenics, accusing corporations of simply wanting more immigrants to work in their factories. ) 

It is time to stop branding patient groups as tainted because of their funding sources.  Let's focus on the issues.   The Arnold Foundation is seeking to change policy.   So are patient groups. 

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!


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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