Latest Drugwonks' Blog
Here’s the article abstract:
Question What is the nature of industry funding of patient advocacy organizations (PAOs) in the United States?
Findings This survey study found that 6 percent of a national sample of patient advocacy organizations, virtually all of which were not for profit, reported receiving funding from for-profit companies. Twelve percent received more than half of their funding from industry; a median proportion of 45 percent of industry funding was derived from the pharmaceutical, device, and/or biotechnology sectors.
Why is this fake science?
The authors skew the survey results to prove that industry contributions to patient advocacy organizations are a conflict of interest. Here’s how the survey results are presented in the article:
At first glance, the results do not reflect the assertion that “evil company” money is corrupting patient groups. In fact, less than 20 percent of groups reported receiving ANY funding from evil private companies. Here’s the survey data formatted to reflect this fact.
As the chart below shows, most of the patient advocacy organizations received less than 25 percent of their revenue from companies.
The authors then go on to conclude from this data that companies have undue influence on patient groups. Yet the survey shows that only 7.7 percent felt pressure to conform to a specific policy position (which are not provided by the survey).
From this anthill of evidence, the authors conclude:
“Such dependence on the financial support of companies whose interests may not always align with those of the organizations’ constituents has important implications for PAO.”
Nowhere do the authors identify what those interests are and how they may diverge with industry positions. Rather, the proof they provide is this claim:
Some groups have “been the focus of media investigations regarding their ties to industry and the integrity of their activities.”
“Their large numbers and credibility with policymakers and the public likely give even small PAOs extensive influence in specific disease areas. At the other end of the spectrum, large PAOs that receive considerable for-profit support and have sophisticated public relations and government affairs departments likely have a substantial effect on policies relevant to their industry sponsors.”
Again, no evidence.
For instance, the 21st Century Cures Act was developed by Fred Upton and Diane Degette. Only after the legislation was drafted did the two legislators seek out the support of a small group of patient organizations. Where is the evidence that patient groups took their lead from evil companies? And how statistically significant is that association given that more than 80 percent of funding for all groups comes from bake sales, individual contributions, etc.?
No matter. The article concludes that: “Financial relationships between PAOs and industry demand effective steps to ensure that these groups serve their constituents’ interests while minimizing risks of undue influence and bias. “
The JAMA article is fake science AND fake news. It is an exercise in confirmation bias against industry support of patient groups. It is not evidence. It is closer to libel than it is truth.
FDA has released two new documents that address off-label communications about medical products. A draft guidance outlined questions and answers regarding communication with payers about healthcare economic information, including information concerning unapproved uses of medical products. A separate memorandum described the agency's position on sharing information about off-label use of approved drugs.
In the guidance, FDA described "truthful and non-misleading" healthcare economic information that is acceptable for product sponsors to share with payers or formulary committees. The agency said it is acceptable to share information that "relates to" a product's approved indication, with some variance allowed about factors such as dosing, patient subgroups, and practice settings beyond what is included in the product's label. The guidance said certain other information, such as analyses of patient populations not included in a label, would not be acceptable. The document said economic analyses provided to payers should specify the type of analysis performed, including modeling techniques, patient populations, outcome measures, cost estimates and any underlying assumptions. The guidance said terms of value-based contracts between manufacturers and payers lie outside the scope of FDA regulation.
It said FDA "does not intend to object" to sharing certain information with payers prior to products' approval, including factual and non-misleading statements about product information, indications sought, estimated approval timelines, and clinical or preclinical results. In separate draft guidance released Tuesday, FDA recommended ways to convey truthful, non-misleading information that is "consistent with" a product's label, but not included in the label. In the memorandum, FDA outlined its concerns regarding promotion of unapproved uses of approved drugs. The agency said it must balance public health needs with First Amendment protections, and described potential approaches to doing so. The agency asked stakeholders to comment on the memorandum's proposals, as well as both draft guidances.
Per a report in BioCentury, the agency said it will "generally" require switching studies to show interchangeability between any biological products that are dosed more than once. Switching studies should evaluate pharmacokinetic and pharmacodynamic measures as primary endpoints, while also assessing immunogenicity and safety. The agency specified that the studies should include at least three switches between a reference product and proposed biosimilar; the last switch should be a transition to the proposed biosimilar from its reference product.
FDA emphasized that an imbalance in adverse events or immune responses reported at any point during a switching study will "raise concerns" as to the biologics' interchangeability, because it may be difficult to determine which product caused the event. The agency also encouraged powering studies to accommodate patient dropouts, noting that an imbalance in dropout rates may also suggest that compounds are not interchangeable. The agency encouraged companies to first seek a candidate's approval as a non-interchangeable biosimilar if there is "residual uncertainty regarding interchangeability" based on adverse events. The sponsor could then conduct postmarketing studies to show interchangeability.
FDA suggested a two-part study design for sponsors seeking evidence of both biosimilarity and interchangeability. The agency said that after an appropriate measure of clinically meaningful differences between two biologics, a second stage of an integrated study could re-randomize patients into a switching study. The study should be powered to adequately measure both PK and PD, as well as clinical effectiveness.
The guidance said sponsors seeking to extrapolate data supporting interchangeability to additional indications "need to provide sufficient scientific justification" that addresses factors such as immunogenicity risk, PK and mechanism of action.
FDA will accept comments on the draft guidance through March 19. In a Federal Register notice accompanying the guidance, FDA asked stakeholders to address how the agency should consider additional indications approved for a reference product after approval of its interchangeable product, and if the agency should change or add to its comparability assessments for post-approval manufacturing changes of interchangeable products.
Price controls would kill innovation, which would kill people just as rent controls in New York City hurt development. What Trump wrote in The Art of the Deal about rent control applies to government limits on drug prices. (Rent control) forced landlords to subsidize tenants. The costs of fuel, labor, and maintenance rose steadily, but the city refused to let landlords raise their rents to keep pace with inflation, much less the market itself. When landlords simply couldn’t make ends meet anymore, they began abandoning—or torching—their buildings. Between 1960 and 1976, approximately 300,000 housing units in New York were abandoned. Whole neighborhoods in the South Bronx and Brooklyn turned into ghost towns. The city, in turn, lost hundreds of millions of dollars in real-estate taxes.
Price controls would create a similar wasteland in our healthcare system. And contrary to claims that drug companies can charge the government whatever they want, Medicare, Medicaid (including ACA enrollment), VA, the Public Health Service have negotiated an average reduction in list drug prices by up to 60 percent. Unfortunately, for the most part, these discounts are not passed onto consumers.
However, it is possible to reduce what Americans pay for medicines now and in the future by changing the way new drugs are created and financed.
First, cash rebates that drug companies give to discount products are now pocketed by insurance companies or used to subsidize other line items should go directly to patients. Rebates now make up 30 percent ($115 billion) of total drug spending. Indeed, 77 percent of the retail price increase in drugs since 2006 goes to rebates.
When auto companies offer new car rebates, the cash is applied to reduce the price of the car in the dealership. In our health care system, the cash rebates go to the insurance companies and pharmacy benefit management firms. And when we pay for our prescription at the drug store, we are charged the list price.
That’s because PBMs and insurance companies use their control over our drug choices to maximize rebates and discounts. Most of the rebates are generated by medicines for about 5 percent of Americans (including seniors fighting cancer, multiple sclerosis, Parkinson’s and other complex diseases). Most, if not all, Obamacare and Medicare drug plans place most or all drugs that treat such patients on the highest cost formulary tier. So the sickest patients wind up paying up to 50 percent of the retail price of the drugs they depend on even as billions of rebate dollars are being racked in. This targeting is profitable, but it is also discriminatory.
President Trump could sign an executive order banning such discrimination and allow companies to directly pass through rebates and out of pocket assistance to patients for any drug doctors prescribe as part of a broader. The goal should be to eliminate cost sharing completely and encourage health plans to compete on the quality of care. The over $100 billion in rebates and discounts could be used to make this possible.
Second, he can encourage different ways to pay for medicines. Many new medicines generate value and reduce spending over a long period of time. Yet much of the cost is either upfront or recurring. To address this problem drugs could be financed as are cars, college education, homes and construction projects, etc. Drug companies could use cash flow to set up such long-term financing or create financial instruments backed by profits and savings generated by medicines to increase liquidity.
Third, drug discounts the government negotiates on behalf of hospitals in poor communities are pocketed by the institutions instead of going directly to those in need. These discounts (called 340 B discounts for the section of the law creating the program) are as high as 60 percent. Hospitals now receive these 340B discounts on almost half of their drug purchases. In turn these institutions markup drug prices and pocket the profit. The 340B statute doesn’t require that the discounts go directly to their customers. That must change.
Finally, Mr. Trump should remove reduce barriers that limit competition between companies. During his press conference, Trump noted “We have to get our drug industry coming back. Our drug industry has been disastrous. They're leaving left and right. They supply our drugs, but they don't make them here, to a large extent. “Nearly $350 billion in biopharma profits are held overseas because the 35 percent US corporate tax rate can be five times higher than elsewhere.
That’s in part because pharmaceutical research and development efficiency, measured by the number of new drugs brought to market, has declined compared to the amount of money invested. Thanks to regulation, the cost and time needed to developed new medicines have climbed to $1.5 billion over a decade. And a Deloitte study concludes that the pharmaceutical industry's return on its current portfolio of approved products has declined from 10.1 percent in 2010 to 3.7 percent in 2016. The industry's cost of capital is about 8.4 percent. That is not sustainable.
Fracking reduced the time and cost of discovering and safely producing new sources of energy. New biomedical tools and technologies can yield the same benefits in biomedical innovation. He can encourage the return of profits and investment with regulatory reforms of the Food and Drug Administration needed to unleash such potential.
Without new medicines, our lives would be shorter, more painful, less productive. Our economy would be smaller, and health care would be less efficient and more expensive. We need to produce more medical innovations more quickly and at a lower cost. Price controls won’t make it happen. Instead, the way medicines are developed and paid for has to be changed.
The question for companies is not whether they must do so, but when and how. The rebate system is rigged against consumers. The FDA cannot keep up with the geometric pace of change. Failure to address these challenges will, I'm afraid, will lead to the kind of regulation that will undermine innovation.
We've called for this from the start and now it's reality. In final guidance released Thursday on naming of biologic drugs, FDA reiterated that each biologic should receive a non-proprietary "core name" plus a unique four-letter suffix that is devoid of meaning. Each biologic and biosimilar would receive a hyphenated "proper name" joining the core name with the suffix.
The convention is designed to differentiate among non-interchangeable reference products and biosimilars. The agency said it is also still considering the suffix format for interchangeable products.
In an agenda released Wednesday, FDA said it plans to publish guidance this year addressing "considerations in demonstrating interchangeability with a reference product." FDA said it intends to apply the naming system prospectively, and will "communicate with companies that have pending applications to discuss implementation."
In the final guidance, FDA said it is "continuing to consider" how to implement the naming convention for existing biologics, and "in the near term, intends to assign distinguishing suffixes to a limited group of these products."
FDA said the unique suffixes should prevent "inadvertent substitution" among biologics and clarify adverse event reporting. The agency encouraged "routine use" of designated suffixes in ordering, prescribing, dispensing and pharmacovigilance of biologics, independent of a product's approval pathway or time of approval.
Well done FDA.
Trump is not the only celebrity who buys into the vaccine-autism link. But he is also going to be President. Asking Kennedy to chair a panel to ‘study’ the issue who claims drug companies are covering up what he called a vaccine holocaust for the sake of profits is troubling.
But Trump is not alone in his unscientific anti-vaccination views. Dozens of celebrities and politicians have continued to promote unfounded assertions about vaccine safety for years. And we can thank the same media outlets that now are condemning the president elect for vaccine denialism for promoting fake science peddled by what infectious disease expert Paul Offit calls autism’s false prophets.
From 2005 to 2011 CBS aired nearly a dozen stories that included extremist views of vaccines and autism. In 2015 Kennedy cited a CBS Atlanta segment that reinforced the claim that the government was covering up the truth about vaccine dangers. The Huffington Post, which pontificated about Trump’s anti-science views yesterday has been the soapbox of anti-vaccine types – Kennedy included -- for several years.
But the irony does not end there. Recently, Kennedy has been claiming that recent research links industrial exposures of lead, mercury and arsenic to the prevalence of autism spectrum disorder (ASD). But he is not alone, dozens of mainstream outlets have published these claims –– as settled fact.
For instance the Fox News website published uncritical article about the connection headlined: “Number of chemicals linked to autism and other disorders doubled in past 7 years, study shows.”
The piece quotes Dr. Philip Landrigan, of the Icahn School of Medicine at Mount Sinai in New York City the co-author of the study: “the increase of later diagnoses of these disorders tracks very nicely with increased production and release into environment of synthetic chemicals over last 40 or 50 years,” Landrigan said.
Except that, the amount of heavy metals, fertilizers and air pollution in our food, water, air, consumer goods have been falling for 20 years. Moreover, as Emily Willingham, the co-author of "The Informed Parent: A Science-Based Resource for Your Child's First 4 Years notes about claims air pollution cause autism: “ You can see an overall decline, sometimes steep, something that doesn’t fit with the increased autism prevalence over the same period, whether you consider the mounting numbers an “epidemic” or a more accurate reflection of primarily stable values over time. Turn to some of the world’s most air-polluted cities, and you will fail to find autism rates that correlate.” The same goes for chemicals alleged to cause autism.
Why is claiming vaccines (or how we administer them) cause autism anti-science but asserting that climate change and pollution have the same impact is unchallenged?
Asking if the president-elect’s views on vaccines and autism are based on fake science is more than fair. But the same questions should be raised when media outlets run uncritical stories claiming (declining) pollution levels damages infant brains.
We all choose the information that confirms our view of the world. Science is shaped by the exact opposite impulse.
The media did not report on the science of vaccines decades ago and it isn’t doing so now. Removing preservatives from vaccines was intended to calm fears, but it only led to more concern and less immunization.
Our children have been endangered by this hijacking of science. In 2013, 87 percent of pediatricians surveyed said they encountered vaccine refusals from parents of their patients, up from 75 percent of pediatricians who said the same in 2006.
After Andrew Wakefield’s claims about vaccines causing autism were finally retracted: The British Medical Journal observed: “The damage to public health continues, fueled by unbalanced media reporting and an ineffective response from government, researchers, journals and the medical profession.”
Mr. Trump’s trust in Robert F. Kennedy Jr. is a product of this fake science.
Sometimes PBMs and health insurers don't even bother with step therapy or high cost-sharing to limit access to drugs that give them the biggest rebates.
Now they are just switching what drugs they cover without telling consumers.
Swapping drugs to save money is unsafe and unhealthy:
Patients who were switched to another SSRI for non-medical reasons after being stabilized on escitalopram used more resources and had higher health care costs within 3 months of switching than patients who did not switch.
Non-medical switching of drugs for patients treated for heart conditions, diabetes, rheumatoid arthritis, ulcers, menopause, and pain "was more often associated with negative or neutral effects than positive effects on an array of important outcomes. Among patients with stable/well-controlled disease, non-medical switching was associated with mostly negative effects."
Switching may expose heart patients to a higher risk of therapy discontinuation or substitution.
This isn't just a case of switching from a brand to generic or from one brand to another. Switching from one generic to another can cause problems:
After switching their generic phenytoin, 33 out of 80 patients with epilepsy (41%) suffered from increasing seizure events. The number of medical visits for acute seizure significantly increased in the post-interchange period.
These are just a few of the studies that associate when insurers and PBMs switch drugs to save money, they can hurt patients.
Incredibly, the Medicare part B study was going to non-medically switch the cancer drugs seniors gets without telling them. Proponents failed to acknowledge the risks of such a study. In this content, it should be pointed out that ICER's decision to limit access to new drugs based on how it affects the bottom line of health plans is non medical drug switching writ large.
It's not enough to be against step therapy. All that will do is increase the amount of dangerous non-medical drug switching taking place in the dead of night, without notifying patients or worrying about whether such a switch will do more harm than good.
Importing drugs from Canada is exceedingly dangerous for a number of reasons. For starters, many Internet pharmacies based up north are stocked with drugs from the European Union. And while many people wouldn’t hesitate to take medicines purchased from countries like France, Germany and Great Britain, there’s plenty of risk involved.
The EU currently operates under a system of “parallel trade,” which allows products to be freely imported between member countries. This means that any drugs exported from the United Kingdom to Canada could have originated in an EU country with significantly less rigorous safety regulations, like Greece, Portugal, Latvia or Malta.
Just last year, EU officials seized more than 34 million fake pills in just two months. And in May, Irish drug enforcers confiscated over 1.7 million pounds of counterfeit and illegal drug packages. So if American customers start buying drugs over the internet from Canadian pharmacies, they could easily wind up with tainted medicines of unknown European origin.
It’s also important to note that drugs from anywhere in Europe aren’t even legal for sale in Canada. So when politicians say we can get “the same drugs” that Canadians get, they’re just plain wrong.
Even more worrisome is outright fraud — many “Canadian” pharmacies are actually headquartered somewhere else. Far too often, importing drugs of unknown quality from sketchy pharmacy websites ends in tragedy. Consider the case of one Texas emergency-room doctor, who suffered a stroke after importing what he thought was a popular weight-loss drug. The online pharmacy had actually substituted the doctor’s ordered drug for a counterfeit, stroke-inducing medication shipped in from China. If medical professionals can’t tell the difference between real and counterfeit drugs, regular patients don’t stand a chance.
A 2005 investigation by the Food and Drug Administration (FDA) looked at 4,000 drug shipments coming into the United States. Almost half of them claimed to be from Canada. Of those, fully 85 percent were actually from countries such as India, Vanuatu and Costa Rica.
As part of another investigation, FDA officials bought three popular drugs from two internet pharmacies claiming to be “located in, and operated out of, Canada.” Both websites had Canadian flags on their websites. Yet neither the pharmacies nor the drugs were actually from Canada.
The on-the-ground reality of state and local importation schemes has been dismal and politically embarrassing. Remember Illinois’ high profile “I-Save-RX” program? During 19 months, only 3,689 Illinois residents used the program — that’s .02 percent of the population.
Programs like this wouldn’t do any better on a national basis. A study by the nonpartisan Congressional Budget Office showed that importation would reduce our nation’s spending on prescription medicines a whopping 0.1 percent — and that’s not including the tens of millions of dollars the FDA would need to oversee drug safety for the dozen or so nations generally involved in foreign drug importation schemes. And generic drugs (which represent more than 85 percent of the medicines dispensed in the U.S.) are cheaper here at home than in Canada.
Calling foreign drug importation “re-importation” is a clever way to sell the idea to the American people. But the term simply doesn’t fit with the facts. In reality, in addition to importing foreign price controls, Americans would end up jeopardizing their health by purchasing unsafe drugs while not saving money.
A better policy for our new President and Congress to focus on is the issue of increasing insurance company co-pays. American patients who head up north or online are motivated by the cut-rate prices they see on the web. Health insurers could help patients avoid this temptation by reducing their co-pays for drug purchases, particularly for low-income patients.
Dropping drug co-pays would also help patients stick to their prescribed treatment regimes. All too often, people skip a dose, don’t get a refill, or stop taking their drugs prematurely in order to save money. In the long run, though, not adhering to a drug regimen leaves patients less healthy — and increases national medical expenses by an estimated $300 billion annually.
When consumers say, “My drugs are too expensive,” what they mean is that their co-pays and co-insurance are too expensive. And they’re right. Major insurance companies and pharmacy benefit managers (PBM) receive significant discounts from the manufacturers. So why doesn’t this result in lower co-pays for consumers? That’s a good issue for our new political leadership to debate.
Keep the Feds Out of Drug Pricing
Allowing the federal government to negotiate drug prices, as suggested by Minnesota Sen. Amy Klobuchar’s column “Let’s work with Trump to reduce drug prices,” would result in prices going up and patient choice going down.
According to the Congressional Budget Office, allowing Uncle Sam to negotiate Medicare drug prices would have a “negligible effect” on Medicare drug spending. Its report from 2009, reiterated this view, explaining that such a reform would “have little, if any, effect on (drug) prices.”
Allowing the feds to negotiate prices for the Medicare Part D drug benefit would likely have a negative effect on the program. The CBO predicts that when Health and Human Services forces pharmaceutical firms to lower the cost of a particular drug, this tactic brings “the threat of not allowing that drug to be prescribed.” In other words, price controls equal choice controls.
When consumers say, “My drugs are too expensive,” what they mean is that their co-pays and co-insurance are too expensive. And they’re right. Major insurance companies and pharmacy benefit managers (PBM) receive significant discounts from the manufacturers. So why doesn’t this result in lower co-pays for consumers? That’s a good issue for Sen. Klobuchar to take up with President-elect Donald Trump.
Peter J. Pitts, Center for Medicine in the Public Interest; New York
Elaine Schattner, a courageous and compassionate cancer survivor, physician and advocate has written a blog for Forbes entitled: “We Need To Tame The Price Of New Cancer Drugs” In the post she reports on a presentation by Peter Bach (who she calls a drug pricing theorist!) about the clear and present danger of cancer drug prices and how nothing short of government set prices will make medicines affordable. (I disagree with him on pricing but Dr. Bach is smart, articulate and creative. And he is a Red Sox fan. No one’s perfect.)
Dr. Schattner writes that: “U.S. healthcare costs will approximate $3.41 trillion. Drug prices are a big part of that, Bach emphasized.”
Not really. Even though cancer drugs are a bigger part of spending on cancer care, cancer spending as a percent of total health care spending has remained about 4.6 percent since 1965.
If drug prices are a big part of the rise in overall health care spending, why has the percent spent on cancer care remained the same over time? Similarly, spending on drugs as a part of all health care spending spiked in 1990 to about 11 percent (15 percent if you add drugs used in hospitals and outpatient settings) and has remained the same since then (with another spike due to Hep C drug spending in 2013). The retail spending amount in 2014 is about $429 billion according to IMS. Rebates and other discounts from drug prices are about $130 billion. Most of that does NOT go to patients.
Back to Dr. Bach:
“Although prescriptions drugs account for only 10% of national health expenditures, their prices are rising disproportionately. Bach showed a graph of cancer drug prices at the time of FDA approval, from 1965 to the present, demonstrating a 100-fold increase. “The y-axis is exponential,” he reminded the audience. The same graph indicates that since 1990, price tags for newly approved cancer drugs have gone up 10-fold.”
First, Prices are NOT rising disproportionately. Especially when you back out rebates. The chart below shows how most of the increase in drug prices driving Bach batty is in the form of rebates and discounts that do NOT go to patients.
In a reply to a tweet I sent to her about this trend, Dr. Schattner asked if it really made a difference if the price was set by insurers or drug companies.
Schattner writes: “Bach referred to data from the Kaiser Family Foundation on rising premiums and high deductibles that affect 150 million non-elderly Americans who get insurance through employment. Many can’t afford out-of-pocket cancer drug costs until they meet their insurance deductibles, so they don’t take their meds, skimp on doses or wait before filling prescriptions. Even then, when companies charge over $100,000 per year per drug, and insured patients with cost-sharing plans are expected to pay some fraction of that, steep prices limit use.”
But as the chart below shows, Insurers are not only pocketing rebates and using them for everything other than reducing patient out of pocket costs. They are increasing what patients have to pay as a percent of the retail drug price!
Second, Dr. Bach’s comparison of cancer drug prices in 1960 and today is out of context and made to make an impact vs. making a substantive point.
For instance, Harvard tuition has increased by 145 percent from 1970 until today.
Or more to the point, the cost per cancer hospital discharge has increased (in unadjusted dollars) from $1778 in 1970 to $73379 in 2014. That’s a 445 percent increase.
Hospitalization is a bigger contributor to health care cost. But the interest and moral outrage about inpatients costs is nil compared to the time and emotion devoted to drug prices.
The reason for that is we pay more of the retail price of a drug on a regular basis than we pay for hospitalization on a less routine basis.
Ironically, the use of new drugs has reduced the hospitalization (along with mortality rates and lost productivity) due to cancer as the
charts below demonstrate:
Schattner observes that “Prices are problematic at the group level, too. They’re a burden for public insurers such as Medicare. “These are serious numbers,” Bach said. In recent years, Medicare has been paying an increasing fraction of prescription drug costs. In private insurance networks, high medication prices drive up premiums and tend to reduce coverage for all participants. “Health insurance, although it’s been extended in the U.S., has beenstripped down in terms of what it delivers.”
Not true. The share of the decline in hospitalization is due to the shift to outpatient procedures and most of it comes from substituting medicines for surgery, a trend that is associated with an increase in cancer survival and life expectancy.
So how much could cancer cost if we had the same hospitalization rates in 2014 that we had in 1970 and at current charges per cancer hospitalization? (I use charges vs costs because Dr. Bach uses retail drug prices.) About $1 trillion dollars vs $100 billion:
Over time Frank Lichtenberg and others have shown that new cancer medicines explain from 60 to 90 percent of the decline in cancer death rates and is the main reason hospitalization costs have decline. If Dr. Schattner or anyone can provide evidence of another reason, I’d be happy to see it.
Finally, the increase in cancer costs matched the overall increase in medical expenditures during the last 20 years. The Bureau of Economic Analysis concluded that new medicines for cancer reduced the cost of treatment between 1990-2010. One can only imagine what insurance premiums would be if we were spending $1 trillion on cancer hospitalizations alone. So add profitability and lower insurance costs to the benefits new medicines generate.
Given what Bach presented, Dr. Schattner favors governments deciding what to pay for drugs based on a robust measure of value. Well, it turns out that when the value parameters she believes Dr. Bach’s estimate of drug value (as well as ICER’s) are counted it would increase the cost per QALY threshold to about $250-300K. That would make most, if not all cancer drugs a bargain, especially when rebates and discounts go to patients.
I haven’t done all the math, but I also estimate that the rebates and discounts on the $18 billion or so spent on the kind of targeted drugs Bach believes will drive us into bankruptcy are about $2.4 billion. Estimates derived from a recent Millman study of the drivers of cancer costs done for the Community Oncology Alliance suggest about 1.25 million people with cancer undergo active treatment each year. I assume that half of these patients are likely to get targeted or immunotherapy and that $2 billion of the rebates are generated from such products. That’s about $3800 per patient, enough to eliminate all but a few hundred dollars of out of pocket costs for those not protected from such a burden.
Yet, my guess is people still would want to solve for price by having the government negotiate prices. They support government price control (the euphemism is negotiation) of drug companies in the same of economic justice and are impelled by the feeling the industry as a whole generates excessive or windfall profits it doesn’t deserve. As I pointed out in my last blog, price competition does not lead to lower prices in the long run since innovation – which requires more investment and higher costs – is the kind of competition that matters.
In any event, it should be noted that at present the government already negotiates drug prices through the VA, Medicare, Medicaid, the Public health service and the Defense Department. (Average discount: 60 percent) And it should also be noted that such negotiations are always paired with limits on access (as they are in Europe) and that such limits on access such as cost sharing, step therapy and outright caps increase death and morbidity.
If Dr. Schattner wants a kinder, gentler version of the cancer Abacus, she should bear in mind that there is no value framework in the world that does NOT limit access to reduce prices and does not reduce the pace of innovation. Indeed, in the past Bach has argued against using higher priced drugs because they do not add more average survival to patients than older, less expensive drugs developed decades ago.
As the last chart shows, the impact of solving for price would be hundreds of thousands of additional cancer patients dying that are alive today. Note that the steep decline in life years lost began as targeted medicines were introduced compared to what would have happened without new drugs.
Source: The Impact of Pharmaceutical Innovation on Premature Cancer Mortality in Canada, 2000-2011
Solving for price exacts a high cost on society.