Latest Drugwonks' Blog

Soul Searching on Sole Sourcing

  • 03.16.2016
  • Peter Pitts
National Public Radio’s Marketplace program reports:

The Food and Drug Administration recently said it’s going to prioritize any generic drug application when there’s currently just one manufacturer.

Here’s why:

At the University of Utah Healthcare, pharmacist Erin Fox said in about a year, the heart medication Isuprel went from $50 a dose to $1800 after Valeant purchased the drug.

She said they had always stocked on crash carts.

“Basically, it’s the kind of [drug] you might see on TV, code blue, cardiac arrest, everyone is rushing around,” she said. It’s the kind of medication that can save a life, she said.

But at $1800 a dose, it got pulled off the carts, only to be used in extreme emergencies.

This is what happens when a company has a lock on a given drug.

Some estimate there are 500 generic drugs – for everything from cancer, to multiple sclerosis to heart disease – that currently have virtual monopolies. And companies like Valeant and Turing have taken advantage.

“This is a good circumstance of the FDA actually getting out in front of a problem before it becomes serious,” said Peter Pitts, a former associate FDA Commissioner. “I think this is a program that’s going to have significant impact.”

Pitts said cutting the application process from 2-3 years to as short as six months will help clamp down on some of the price gouging. The FDA says it has 125 current submissions for drug approvals that will be expedited. 

Former industry CEO George Zorich wondered if that’s enough of an incentive.

“If I’m a manufacturer, I’m hard pressed just to drop everything without some discussion from the FDA and some real frank discussions with the [FDA],"  he said.

Some major generic manufacturers – and the industry trade group - declined interview requests. In statements, several simply said competition is important.

Perhaps an indication that speeding up the FDA process is just one step needed to drive more competition.

The NPR story can be heard here.

My conversation with the reporter also included the issues related with inadequate CMS reimbursement policies as a cause for single source products – but it didn’t make it into the brief radio report.

We need to focus on the perverse economic incentives of Average Sales Price (ASP) as a key factor behind the problem.

We need legislation to deal with:

* Price Stability — Change the Medicare reimbursement rate for generic injectable products with 4 or fewer active manufacturers from Average Sales Price (ASP) + 6% to Wholesale Acquisition Cost (WAC) in order to achieve market price stability.

* Medicaid/340B Rebate Exemption — Exempt generic injectable products with 4 or fewer active manufacturers from Medicaid rebates and 340B discounts in order to achieve market price stability.

The FDA has done its part. Now it’s time for Congress to step up to the plate.

Incentivizing ADF Opioids

  • 03.15.2016
  • Peter Pitts
To paraphrase Peter Drucker, the information revolution will shift from the generation of data to figuring out the meaning and purpose of the data with the patient’s perspective in mind.

Nowhere is this more pertinent than in the discussion of the future of opioid pain medicine and the role of the FDA when it comes to Category 3 and 4 labeling opportunities for abuse deterrent formulations (ADF) Labeling is the basis for articulating the value proposition of a product. And, in the case of Categories 3 and 4 – that value is likely or proven abuse deterrence. It’s harder than it sounds.

Category 3 products, based on pre-approval clinical trials are “expected to reduce abuse.” A Category 4 product, based on real-world evidence “has been shown to reduce abuse” – the Holy Grail of ADF labeling language.

Data definition and generation for categories 3 and 4 are very much still a work-in-progress – as is their relationship to clinical relevance. No absolute magnitude of effect can be set for establishing ADF characteristics. And the FDA continues to talk about the ambiguous totality of evidence standard – which really means using their best regulatory judgment.

The path forward is unclear. Is real world data reliable and robust enough? Should the FDA define and then assign various statistical weights to ADF comparison and population studies? And what about REMS reporting? At the end of the day, the agency can’t only look to REMS for risk mitigation but must also seek out data that supports more aggressive abuse deterrent labeling language. Nobody said it was going to be easy.

The challenge is that, when it comes to categories 3 and 4 (and especially 4), there’s limited data and (at present) no numerical threshold to define “meaningful reduction” in abuse. Obviously, more work needs to be done in order to refine optimal data sources, study design, statistical methods, and epidemiologic outcomes of interest both developers, regulators, physicians, and patients – and payers.

Payers, at least to date, have been unwilling to aggressively tier existing approved ADF opioids on their formularies. While nearly 60% of branded opioids contain ADF properties, only 2% of generic products do. The numbers are staggering -- 240,120,330 non-ADF generic opioids were prescribed in 2015 (nearly a quarter of a billion tablets) versus 5,068,398 branded opioids with ADF properties.

Would more aggressive Category 3 and 4 labeling help to change this shortsighted, cost-driven criterion? Stay tuned.

And this raises another FDA question, how will the agency assess ADF generic formulations. Beyond traditional AUC bioequivalence, how will the agency measure “abuse equivalence?” FDA guidance has been promised and is anxiously awaited.

For ADF innovators, a predictable regulatory pathway towards Category 4 labeling will incentivize continued investment and comprehensive reimbursement strategies. For generic manufacturers, defining best practices for for “abuse equivalence” programs will allow the Hatch/Waxman paradigm to take effect, driving prices down while also incentivizing further branded innovations.

As Dr. Douglas Throckmorton, the FDA’s point man on opioids said at the recent meeting of the Agency’s Science Board, “FDA will act within its authorities in support of our public health mission to help defeat the epidemic of opioid abuse through a science-based and continuously evolving approach by improving the use of opioids through careful and appropriate regulatory activities, improving the use of opioids through careful and appropriate policy development, improving the treatment of pain through improved science, and improving the safe use of opioids through communication, partnership and collaboration.”

The public health goal is safe, effective, and affordable access to opioid pain relief. Active partnerships between academics, developers, payers, patients, and physicians are crucial. And, as is often the case, the FDA is at the center of the ecosystem.
HHS’s report on drug pricing has been hailed as an yet more evidence of “skyrocketing” drug prices according to many reporters.
 
They should have taken the time to read the entire report instead of the press release.  Facts are stubborn things, even if a press release ignores them or if media outlets like Fierebiotech Emily Wasserman or WSJ reporter Stephanie Armour.  Here are 5 such data points that they and others in the media could have gleaned from the study and a short Google search instead of spending time getting quotes from Peter Bach.
 
1. Drugs as a percentage of personal health spending has remained the same since 2009 (12 percent) and is projected to increase at a rate that does not boost that percentage much. 
 

2.  It uses personal health spending vs total health spending to inflate the percentage devoted to drugs.  Drugs are 9.3 percent of total spending vs 11.8 percent of personal health spending

3.Drug pricing is less than 5 percent of total increase in spending.  New medicines contributed $20.3 billion to growth in 2014, including $11.3 billion from four new hepatitis C treatments as nearly ten times as many patients were treated in 2014 than in 2013.   Prices for branded products rose in 2014 at an average rate of 13.5% on an invoice basis, but were reduced to 7-8% taking into account off-invoice discounts and rebates which offset most of the increases.  (Medicines Use and Spending Shifts. Report by the IMS Institute for Healthcare Informatics. 2015)

4.Which means rebates as a percent of drug prices has grown faster than drug spending.

5  HHS claims that drug spending is additive but in fact it has reduced the rate of overall spending, as the CBO and other research outlets has shown.
 

 
 
 
 

More Drug Pricing BS From Fierce Pharma

  • 03.14.2016
  • Robert Goldberg



I thought it wasn’t possible for FiercePharma do be  less honest and inaccurate about drug pricing than it’s past track record.  But with “Hospitals Join Drug Pricing Battalion” the publication has reached a new low – or high – depending on your point of view.

FarcePharma editor Emily Wasserman asserts: “ U.S. hospitals are alarmed over rising drug prices, and like lawmakers, patients and doctors, they want to do something about them.”

Really?  So why is the American Hospital Association opposed to proposals to reduce Medicare reimbursement of they drugs they buy and bill but in favor of expanding discounts meant to make drugs affordable for poor people?  

We will answer that question in a moment.  But first, let’s take a look at how regulators are trying to curb drug prices.  Recently the  Obama Administration introduced a  proposal to cut a payment it makes to doctors who administer injectable drugs under Medicare. Specifically, , “Medicare Part B generally pays physicians and hospital outpatient departments the average sales price of a drug, plus a 6% add-on. The proposed model would test whether changing the add-on payment to 2.5% plus a flat fee payment of $16.80 per drug per day changes prescribing incentives and leads to improved quality and value.”

The goal is to encourage doctors to prescribe cheaper drugs, which Wasserman suggests is exactly what hospitals want.  But just how much of a problem is the 6 percent fee in determining what drugs are used and priced.   After all, doctors don’t set drug prices, the hospitals, health plans and PBMs do.  Doctors only get a percentage of what Medicare reimburses for Part B drugs, not the price set by the other interests.  So why the opposition? 

This is not the first time Medicare changed the payment model under part B.  

It changed in 2003 under the Medicare Modernization Action (MMA).  Prior to the MMA, under the Balanced Budget Act (BBA) of 1997, Medicare reimbursed physicians at 95 percent of the average wholesale price (AWP) for each drug that physicians billed or the actual charge, which ever was lower.[1] However, the BBA did not provide a clear definition, or uniform reporting requirements.

Medicare part B drug spending increased by 25 percent a year before reimbursement was changed to ASP plus 6 percent.  Since 2006 Medicare part B drug spending has increased by about 4 percent a year. 

But a lot of the decline is a result of the introduction of many oral formulations for cancer and autoimmune diseases.  So it’s unclear whether the shift in reimbursement had any effect. 

Further, the Budget Control Act of 2011 decreased Medicare reimbursement by two percent, impacting the thin margin available for cushion in Part B drug payments and reducing the ASP add-on from 6 to approximately 4 percent.   This also has had no effect on the use of Part B medicines. 
 
The General Accountability Office notes that, “New Part B drugs are more likely than new non-Part B drugs to have used an FDA expedited program or to have received an orphan designation which applies to drugs that treat rare conditions and are received by a relatively small number of people. “

Expenditures for new Part B drugs were concentrated among a small number of drugs and conditions, and most new Part B drugs were costly for beneficiaries. GAO identified expenditures in 2013 for 75 of the 83 new Part B drugs. Expenditures for these 75 drugs in 2013 were concentrated among 3 drugs—Lucentis, Eylea, and Prolia—which accounted for 53 percent of the $5.9 billion Medicare and its beneficiaries spent on new Part B drugs. The 20 highest expenditure drugs accounted for 92 percent of 2013 expenditures on new Part B drugs and for 26 percent of total expenditures for Part B drugs

 But even then, new part B drugs did not drive up total part B drug spending as a percent of Medicare spending.  

 



Meanwhile, the ‘battalion’ is all in favor of expanding the number of Medicare Part B drugs qualifying for deep discounts.  “Hospitals and its beneficiaries paid $3.5 billion for 340B-purchased drugs in 2013. In the aggregate, Part B payment amounts were 58 percent more than the statutorily based 340B ceiling prices that year, which allowed covered entities to retain approximately $1.3 billion. The 340B statute does not restrict how covered entities may use these funds.  ”

That’s the GAO’s way of saying that hospitals pocket the difference.  

Indeed, as Adam Fein notes in Drugchannels, “the  discounted purchases hospitals  made under the 340B Drug Pricing Program hit $12 billion in 2015. That’s a whopping 67% higher than the 2013 figure. I estimate that the undiscounted value of these purchases exceeds $17 billion.

Most 340B purchases are made by hospitals. My exclusive number-crunching below reveals that hospitals now receive 340B discounts on more than 44% of their drug purchases. As I predicted two years ago, the 340B program is taking over the hospital market.”

So of course hospitals want cheaper drug prices!   They are betting that deeper discounts will fatten their margins.   



Jimmy Carter is cured of advanced melanoma.  The former president was given Keytruda right off the bat.  

But he would have been denied that medicine if Peter Bach and his cancer pricing abacus and the PBMs that have him on their payroll have their way.  The same goes with orphan drug deniers over at ICER who use essentially the same model Bach deploys.  That’s because Bach calculates that Keytruda adds no more benefit than two generic drugs that were standard of care in treating melanoma.   

Why do we care if Bach fiddles with his Abacus?

Recently both CVS and Express Scripts announced they were rolling out plans to determine the price and access to cancer drugs based on the value per indication as set by Peter Bach’s hedge fund funded cancer abacus.  And health plans are using the abacus to determine what drugs to pay for when setting up one size fits all pathways.

To top it all off, Bach and ICER get money from the same hedge fund guy.  ICER is stacked with PBM and health plan types.  And they all sit around setting prices in ways that should be of some interest to the career attorneys in the Department of Justice Anti-Trust Divison.  But more on this price control superPAC in another post. 

For now, let’s see how Jimmy Carter – who received Keytruda as first line therapy for his advanced and metastatic melanoma – would have fared under Bach’s abacus guided price. 

1.     Bach would pay only $2000 for a month supply (4 vials) of Keytruda instead of the Medicare price of $9200.   Essentially Bach pegs the price to the average overall survival of a drug compared to standard of care.  So apparently Bach believes that Keytruda is not much better than interleukin-2 and dacarbazine unless you cut the price to match those two generic drugs.   
2.    In general, Bach pays less for less overall survival even if a new drug or combination has produced the first clinical benefit in years.   Hence, Bach would pay $470 to use Erbitux in an indication specific arrangement for advanced head and neck cancer (compared to about $10000 for colorectal cancer.)   Yet Erbitux was the first drug in decades to increase overall survival.   In other words, as a disease becomes more difficult to treat the less Bach pays for it.    Innovators are being told they will get paid below generic prices to help patients with greater needs.
3.    Both CVS and Express Scripts put Keytruda in it’s highest cost sharing tier.   Assuming a 40 percent cost share (based on the retail price and NOT the rebated price) patients would pay $3600 for the first month of treatment.  
4.    Anthem’s so called Cancer Quality Pathways (which pays doctors to use only certain drugs) excludes Keytruda from it’s list of medicines.  

The reliance of the Abacus for indication specific pricing pre-empts a more ethical approach to treatment selection.

The Abacus accepts the one size fits all survival response when genetic and tumor variation affects outcome.   The Abacus ignores the fact that better information of the variation in patients and treatment response translates into more life years and better quality of life.  

Indeed, the value of identifying cost-effective treatments at the individual level for cancer patients is more than 100 times annual value of identifying the cost-effective treatment on average for the cancer population.  THE ABACUS EXCLUDES THAT VALUE. 


The Abacus completely ignores that many medicines are used in combination to treat melanoma.

The Abacus, as used, will enrich PBMs and insurers.   CVS has openly stated that it will use indication pricing to maximize spreads between acquisition cost and retail prices.  For instance, CVS VP and Head of Specialty Client Solutions Surya Singh told the National Business Coalition on Health said "I think we want to pay more for drugs that work better...to push [manufacturers] to think about pricing things that have a better impact on survival at a higher price point and pricing things that don't have as much impact on survival at a lower price point," 

Singh used the Bach abacus to claim:  "Herceptin has gotten a lot of attention for being very good in breast cancer. It's very well studied and has great benefits...It's also used in gastric cancer. The benefit in gastric cancer is minimal, but [the indication] is on label. Should we pay the same for the drug on a unit costs basis when it's used for something where it doesn't work as well? I don't think so."

Except that prior to Herceptin, people with advanced gastric cancer had NO other treatment options.  It was originally given to the 15 percent of gastric cancer patients that had ERBB2 overexpression and/or amplification.  Overall survival was modest (2.7 months) , but significant because of dearth of other therapies to keep people alive.  Now there are  large initiatives   to identify subsets of gastroesophageal cancer based on patterns of immune response.   That's how innovation evolves.  Cutting the price of taking on the most challenging tumor types cheapens the lives of those seeking to survive. 

Finally, the Abacus – like many other value frameworks including ICER – ignore the value of hope and quality of life that patients place on better therapies.  I regard the use of the Abacus to make reimbursement decisions without patient consent or to use the Abacus to convince patients that certain drugs are not as valuable as others is unethical.    

As a former president, Jimmy Carter was able to get the best care for his melanoma.   There is a chance that he’d be dead if Peter Bach’s abacus was used to guide treatment and access.

Unfortunately, it looks as though Bach’s deadly calculation will be used to ration new cancer drugs and demean their value in helping patients with most advanced tumors.   

Which raises another, broader question:  Who put Bach in charge?  How are PBMs able to determine what drugs we get and how much we pay for them based on how much profit they can generate?  

Why aren’t payors and PBMs using a more holistic and patient-centered approach to treatment selection (one that measure total economic value)?

I am happy to hear of President Carter’s cure.  I am afraid that PBMs, powered by an abacus deliberately indifferent to patient differences and tumor complexity, will deny more Americans of the same opportunity to survive and thrive. 

The Single Payer Fantasy

  • 03.08.2016
  • Peter Pitts
From today’s edition of the Philadelphia Inquirer --

Single-payer health care unworkable, too costly

In an attempt to halt Bernie Sanders’ rise in the polls, Hillary Clinton is waging a campaign against his single-payer health plan. Remarkably, one of Clinton’s main criticisms is that Sanders’ scheme would undermine the cause of federally controlled health care by giving too much power to the states. Yes, we must be in an election year.

As Clinton has put it, Sanders “wants to roll Medicare, Medicaid, the Children’s Health Insurance Program, the Affordable Care Act program, and private health insurance into a national system and turn it over to the states to administer.”

The real problem with a single-payer system, however, is much simpler: The approach has failed everywhere it has been tried — from Europe to Canada to Sanders’ own state of Vermont. In almost every instance, government-run health care has suppressed medical innovation and made it harder for patients to get the treatment they need at a price they can afford.

Both candidates ought to be discussing practical ways to fix our health system’s most serious flaw — too much government intervention. Instead, they’re quibbling over the many faults of a single-payer program that would dramatically lower the quality of care for all Americans.

While he has yet to provide many serious details, Sanders’ proposal creates a single-payer health program that would “cover the entire continuum of health care,” from inpatient care to hearing, vision, and oral health.

Sanders tends to frame his plan as a way to “join every other major industrialized nation on Earth and guarantee health care to all citizens.” But one need only look at these other nations to understand why Sanders’ vision is a step in the wrong direction. As anyone who has ever stood in line at the Department of Motor Vehicles can understand, government-run systems are invariably wracked by inefficiencies. When it comes to health care, one size doesn’t fit all.

For instance, Canadian patients hoping to see a specialist physician can expect to wait more than 18 weeks. An MRI scan in that country takes more than 10 weeks. Waiting times have grown so long in Sweden’s single-payer system that one in 10 citizens has opted for private coverage.

In order to contain health costs, Sanders promises to “stand up to drug companies and negotiate fair prices for the American people.” But again, the disastrous effects of drug price controls have been clearly demonstrated throughout Europe.

To take one example, the United Kingdom’s National Health Service (NHS) consistently denies patients access to the most up-to-date treatments if they are deemed too expensive by regulators. These decisions often lead to avoidable suffering for those in need of care. Last summer, in fact, British health administrators refused to pay for a breakthrough ovarian cancer drug until patients had undergone three rounds of chemotherapy.

Drug price controls also come at the expense of medical innovation, as they weaken the incentive for pharmaceutical firms to invest in research and development. In the 1970s, four European countries invented 55 percent of the world’s new drugs. Decades of increasing price controls in Europe pushed drug development efforts — representing hundreds of billions of dollars of investment and economic activity — to the United States. Between 2000 and 2010, those four countries accounted for a third of pharmaceutical innovation, while the U.S. share rose to 57 percent.

The nonpartisan National Bureau of Economic Research cautions that “cutting \[drug\] prices by 40 to 50 percent in the U.S. will lead to between 30 to 60 percent fewer R&D projects being undertaken.” Less research means fewer new medicines and fewer lives saved.

Then there’s the issue of cost. Sanders estimates his plan will cost the country a whopping $1.38 trillion a year — money he intends to raise through a variety of tax hikes. As Sanders knows, this is precisely the strategy that failed in his home state in 2014.

Vermont Gov. Peter Shumlin had planned to pay for a statewide single-payer system through significant tax increases. After realizing how expensive the program would be, Shumlin abandoned it, admitting that “the potential economic disruption and risks would be too great to small businesses, working families, and the state’s economy.”

Even in liberal Vermont, 64 percent of residents supported Shumlin’s conclusion that a government-run health system comes at too high a price. Yet, single-payer health care now dominates the conversation between the leading Democratic candidates. As the policy has no history of success and poses immense risk to our health sector, what is there to debate?

Peter J. Pitts is president of the Center for Medicine in the Public Interest and a former Food and Drug Administration associate commissioner.  





Peter Bach is the Donald Trump of health care policy.   I am not referring to his hair or hand size.  No, Bach – like the Donald – is a master of enchanting his followers with outrageous statements that scapegoat easy targets and unfairly attack them for acts of greed that you are actually guilty of committing.  And it helps to have megaphones in the media who agree with you to promote your false position.  (Bach’s newest mouthpiece is Gardiner Harris, who has returned to the NY Times to write fiction about the pharmaceutical industry.)

The most recent manifestation of Bach’s Trumpism is a ‘study’ he published in the British Medical Journal (I am assuming his co-authors were either blackmailed or brainwashed) claiming that US drug companies systematically increase the dose size of biologic injections for cancer and autoimmune disease even though smaller amounts are used for no other reason than profit.  Bach and company assert that firms should produce smaller vials of medicines because it would save the US health system $3 billion a year. 

But as with most of what Bach does, the BMJ article is a pseudo-economic exercise shorn of relevant facts that undermine his central argument.  In fact, the issue of what to do with remaining medicine is more complex.


1.     Most medicines – whether they are in injectable or pill form – come in a fixed number of doses.  Dose sizes are based on averages of weight, age, severity of disease.  They are NOT produced in the amount just right for you and me. 
2.    Dose size is almost always determined by what the FDA establishes is the safest and most effective dose for an average patient population.  Quantity is not driven by profit.  Rather, one of the biggest reasons drugs in development do not make it to market is the wrong dose size.  Even today, lots of clinical trials flop because companies because companies use the wrong dose in studies to measure clinical benefit. Failure to select an ‘optimal’ dose to show effectiveness is the single reason drugs are either delayed or rejected by the FDA.  
3.    To minimize risk, developers are often evaluating doses near the maximum tolerated levels.  And more to the point about drug waste, companies limit the number of dose sizes tested in order to avoid testing doses that don’t work and then force the company to do every trial over again. 
4.      Companies must also follow FDA and USP guidelines that govern how much of a drug can be in a vial. The FDA has urged companies to move away from a multiple number of smaller vials to a larger single vial. 
5.    In addition, many injectable products are now made by generic manufacturers.  The increase in the frequency and number of shortages for such drugs is due to a combination of increased production and formulation costs and government fixed prices.  The incentive for additional dosage amounts is therefore limited or non-existent.

Since Bach and co-authors are intent on accusing drug companies of simply going with larger doses to rake in profits, it is not surprising that they ignored these important regulatory and scientific factors. 

Nor is it surprising that Bach and friends note – incorrectly -- that many cancer drug doses are based on body surface or body weight.  In an exclusive New York Times interview timed to the release of their ‘study Bach says sarcastically. “Drug companies are quietly making billions forcing little old ladies to buy enough medicine to treat football players, and regulators have completely missed it,” said Dr. Peter B. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering and a co-author of the study. “If we’re ever going to start saving money in health care, this is an obvious place to cut.”


Bach increasingly makes statements that support his case and are quotable, that are also false or without substance.  (He recently claimed that new drugs that eradicated Hepatitis C virus were NOT a cure.)   Similarly, in asserting that drug companies are endangering frail elderly females by giving them enough of a drug to treat a defensive end, Bach fails to mention there is an absence of scientific evidence that such dosing is safer or more effective than flat fixed dosing.  The implementation of so-called genotyping and phenotyping strategies, and therapeutic drug monitoring, may probably be of more clinical value.

He also ignores how hospitals and oncologists can benefit from ordering bigger dose sizes.  Peter Ubel notes: “Oncologists purchase intravenous chemotherapy from pharmacies. Patients then receive these drugs in the oncologists’ offices, with outpatient chemotherapy being an increasingly common setting for cancer care. The oncologists then bill patients’ insurance companies for the treatments, including billing the payer for the cost of the chemotherapy PLUS a percentage based mark-up.

 Medicare, for example, receives bills from oncologists that charge 106% of the cost of the chemotherapy. Many private insurers pay even larger mark-ups, especially from oncology practices that dominate their local markets and thus have pricing leverage.

This “buy and bill” practice creates an incentive for oncologists to prescribe expensive treatments.  After all, a $6 mark-up on a $100 treatment doesn’t do much for the bottom line. But that $600 mark-up on a $10,000 treatment? Give that treatment to enough patients and we’ll soon be talking about real money.”


Indeed, it is ironic that Bach and one of his co-authors, Leonard Saltz, became crypto famous by getting Sanofi to cut the price of a cancer drug by 50 percent and writing about it  a New York Times op-ed piece.  The duo asserted that they wouldn’t prescribe the drug because it cost twice as much as Genentech’s Avastin (bevacizumab), a competing biologic drug with similar expected clinical outcomes for colorectal cancer patients.  In response, Sanofi said they would reduce the price of the drug by 50 percent.


In fact, doctors and prescribing hospitals benefited hugely from Sanofi’s pricing move, while payers and patients did not.   Zaltrap was sold in a dose twice as large as Avastin, thus the price discrepancy.    Further, Sanofi didn’t cut the price of Zaltrap; it gave Memorial Sloan a 50 percent rebate.  The price charged to patients remained the same.  Which meant that MSKCC raked in even more dough.  As an article in Health Affairs noted at the time, “Meanwhile, in the near term, physicians and hospitals will likely enjoy additional revenue opportunities from ziv-aflibercept use. the spread may be considerable: equal to $250 per treatment dose (insurer + patient reimbursement ($750) – discounted acquisition cost ($500)) and for 340B eligible purchases, $450 per treatment dose (insurer + patient reimbursement ($750) – discounted acquisition cost ($300)).  Additional revenues may incentivize physicians and hospitals to favor ziv-aflibercept over bevacizumab to treat colorectal cancer among Medicare eligible patients, despite the treatments having equivalent expected clinical outcomes.  The strength of the incentive is based on comparing the magnitude of the spread obtained with the use of Zaltrap to that obtained with Avastin.

Finally, hospitals are profiting from the deep discounts they receive on injectable drugs under the previously mentioned 340 B program, a federal policy under which, “hospital outpatient departments can purchase oncology drugs using the deepest discounts available”.  

Adam Fein has skewered the 340 B program on a number of occasions.  In one article he discussed a study the concluded  that some 340B hospitals simply pocket the extra profits. The New England Journal of Medicine paper examined the behavior of “charitable hospitals.” As this summary notes:

“Only 42 percent notified patients of their eligibility for charity care before attempting to collect medical bills and only 29 percent had begun charging uninsured and under-insured patients rates equivalent to private insurance and Medicare rather than standard, higher charge master rates.”  

Indeed, another pricing expert noted that the use of drugs for the poor as a profit center is part of the broadere focus of hospitals, PBMs and insurers on generating “primary revenue being from the buying and reselling of drugs”.

That assertion was made by Peter Bach. 


So what about drug waste as if the facts mattered?

Many hospitals have robust programs consistent with FDA and USP guidelines to use to make up from lost  5 % of total anticancer drug expenditure   The economic loss due to their waste equaled 4.8% of the annual drug expenditure.   In particular, hospitals use dose rounding to generate significant cost savings by eliminating drug waste.

So Bach’s effort to blame drug companies for waste generated greed is, like many of his recent attacks on drug prices, largely free of facts and at odds with the reality.

 

FDA's Abuse-Deterrent Commissioner

  • 03.02.2016
  • Peter Pitts
Yesterday the FDA Science Board discussed the agency’s approach to opioids.

FDA presenters included agency point-man Doug Throckmorton (Deputy Director for Regulatory Programs, CDER), Janet Woodcock (Director, CDER), Sharon Hertz (Division Director, Division of Anesthesiology, Analgesia and Addiction Products), Gerald Dal Pan (Director, Office of Surveillance and Epidemiology) – and newly confirmed FDA Commissioner Rob Califf.

Califf was there at the beginning of the meeting (expected) and stayed through the entire length of the day-long affair (unexpected). An important signal that he intends to be a hands-on leader.

I was chosen to speak during the open public comment part of the hearing, and spoke about using real-world information to provide providers and patients with information beyond the limited world of pivotal trials. Here are my brief remarks:

Former Canadian Prime Minister Pierre Trudeau once said, “There's no place for the state in the bedrooms of the nation.“ But what’s the appropriate place for the state in examination rooms, pharmacies and medicine chests – particularly for opioids? There is no such thing as a medicine that is 100% abuse-proof. The only abuse-proof medicine is one that is never prescribed – and for the tens of millions of Americans suffering from chronic pain that isn’t a viable option.

Advancing the manufacturing science of abuse deterrence is an important step in the right direction. According to the Journal of Pain, in a real-world study, abuse by snorting, smoking, and injecting prescription opioids declined by 66% after the reformulation of a drug with abuse deterrent properties. And the New England Journal of Medicine reported that a new formulation decreased abuse from 35.6% of respondents to 12.8% in 21 months.
But cutting the Gordian Knot of abuse means more than advancing the science of abuse deterrence. It means working with the providers of Continuing Medical Education to develop better curricula. It means more targeted Risk Evaluation and Mitigation Strategies. It means enhanced and validated reporting tools for post-marketing surveillance. And it means using real world data to provide real world advice. It means using that data for better social science tools that can assist prescribers in determining which patients are likely to abuse.

“Abuse deterrence” isn’t just a formulation question – it’s a systems question.

What about the issues surrounding opioid misuse – at present the poor public health stepchild of abuse? And how can better physician education defer or deter the prevalent “opioids first” prescribing philosophy of many practitioners? 

In the U.S., the use of opioids as first-line treatment for chronic pain conditions follows neither label indications or guideline recommendations. 52% of patients diagnosed with osteoarthritis receive an opioid pain medicine as first line treatment as do 43% of patients diagnosed with fibromyalgia and 42% of patients with diabetic peripheral neuropathy.

Payers often implement barriers to the use of branded, on-label non-opioid medicines, relegating these treatments to second line options – along with new abuse-deterrent opioid formulations. The result is a gateway to abuse and addiction.

Various pieces of state legislation are trying to correct this, but there has to be a better way.

The FDA can play an important role in working to develop and share (with a broad constituency) validated tools for physicians to use in determining which patients may be more prone to slide into abuse so they can choose their therapeutic recommendations more precisely.

The FDA has announced labeling changes and post-market study requirements for opioids, and the agency has signaled interest in using real world outcomes data to amend and update labeling. That’s not regulatory mission creep; it’s the appropriate application of the agency’s Safe Use of Drugs initiative. The way you make a drug “safer” is to ensure that it is prescribed to the right patient and used in the proper manner.
 
A logical next step is to utilize that real world data to amend product-specific abuse-deterrent labeling to indicate lessons learned outside of the rarified world of the randomized clinical trial environment to assist physicians in using the right product for the right patient. Such changes mark important steps in highlighting the value of individualized patient pain-management programs.
 
Abuse-deterrent technologies are an important step in the right direction. They are part of the solution, but they’re not the whole solution.
 
It’s important to remember that the vast majority of people who use opioids do so legally and safely. In fact, government statistics show that 78.5% of those who abuse prescription pain medication did not obtain the drugs from a doctor in the first place.
 
Abuse deterrence is a worthy goal and will only evolve when all the players work together in a more regular and synchronistic fashion. As the Japanese proverb goes, “Don’t fix the blame, fix the problem.”

An Off-Label Vortex

  • 02.29.2016
  • Peter Pitts
The Duke-Margolis Center working paper of off-label communications continues to provide forward motion on this urgent and feisty public health issue.

As BioCentury reports, PhRMA EVP and General Counsel Mit Spears said that while the Duke-Margolis Center paper does a good job of making the public health case for improving off-label communications policies, it “dances around” the single most important issue: how FDA defines the “truthful and non-misleading” standard the courts have set for corporate free speech.

“I don’t think you can resolve the issue without resolving the question of what constitutes truthful and non-misleading information,” Spears said. “That’s up to FDA or the courts to decide, and we think it is much better if it is FDA.”

He told BioCentury there is a danger that courts could back FDA into a corner, mandating communications policies that comply with the First Amendment to the U.S. Constitution, but that don’t take all of the nuances of public health into consideration.

Spears and PhRMA did not participate in the Duke-Margolis Center working group.

Speaking as a member of the Duke-Margolis working group, I could not agree more. As the BioCentury article reports, Speaking at the Duke-Margolis Center meeting, Peter Pitts, president of the Center for Medicine in the Public Interest, also warned that the courts or Congress could take the off-label policy debate in directions that could be bad for public health. “Unless FDA steps up to the plate to lead this conversation, but also looks to outside advisors to help it formulate its viewpoints, we are all going to be sucked into a very unpleasant vortex,” he said.

The complete BioCentury article, “Off-Label Options,” can be found here.
 



Today is Rare Disease Day.  You probably missed the media coverage because there was none. 

That will make Steve Pearson, the founder of the Institute for Clinical and Economic Review(www.ICER.org)  – the so-called drug pricing watchdog – very happy.

That’s because Dr. Pearson believes that public awareness of rare diseases leads us to invest in more and more treatments for even more rare diseases that – in his opinion – will make health care spending ‘unsustainable.’

Or has he put it in an article entitled, “Which Orphans Will Find a Home? The Rule of Rescue in Resource Allocation for Rare Diseases,” there is no apparent obligation to rescue identifiable
rare disease patients based on a duty of rescue within personal morality.”  Rather, he claims that while the impulse to save people with rare diseases is appealing, it is more ethical to restrain that policy because it forces us to spend more money on health care at a time of “permanent” resource scarcity.   

To put it bluntly, Pearson believes groups like ICER can use evidence-based policies to decide who shall live and die, who shall suffer and who shall thrive. 

Let’s set aside the specious assertion that we are running out of money to spend on health care.  Like many Malthusians, the underlying assumption shaping Pearson’s and ICER’s mission is the believe that there is a moral imperative to spend less on health care.  And Pearson, like his Club of Rome predecessors, is gripped by the belief that we can’t take care of all these sick, disabled people at any price otherwise we will have no money for anything else!

Here is Pearson with his pessimism in full flower:

“Increasing numbers of expensive orphan drugs are expected to come to market. In addition,
advances in pharmacogenetics will soon be able to separate many common diseases, such as hypertension, arthritis, cancer, and diabetes, into numerous small and distinct subpopulations of patients with specific genetic profiles. This movement toward “personalized medicine” will
produce increasing numbers of drugs that have been developed to treat small, identifiable patient groups.

Instead of a new blockbuster drug to treat millions with hypertension, new targeted therapies will treat only those few thousand with a particular genetic makeup. As the eligible patient
populations decrease in size, the arguments for accepting higher prices per treatment will turn manageable overall costs into unsustainable ones. As the eligible patient populations decrease in size, the arguments for accepting higher prices per treatment will turn manageable
overall costs into unsustainable ones.”

If everyone has a rare disease, there will be fewer people with a one size fits all diagnosis. So the number of people with an illness will not increase (holding population growth constant.)  That mathematical fact eludes Pearson who insists that all these new orphan drugs will crowd out spending for other health care services.

Similarly, claims of budgetary Armageddon have been overhyped by Pearson.   Between 2007 and 2014,orphan drugs have increased as a percentage of spending on drugs (from about 2 percent to 4 percent in Europe and 5 percent to 8 percent in the United States ) even as  the percentage spent on drugs has remained the same.

What about the impact of the ICER like restrictions Pearson wants to impose?  Indeed, “orphan drugs currently have more coverage restrictions than non-orphan drugs in the United States, United Kingdom, and Netherlands.”  And the United States is less restrictive than other countries. 

The rationing of orphan drugs  does increase suffering and cost lives.  Frank Lichtenberg concludes that between 1999-2007, new orphan drug approvals reduced life years lost to rare disease by 4.2 percent a year.  (Without these new drugs, the number of deaths would have climbed by about 1 percent a year)

In France, which took longer to pay for orphan drugs and paid for fewer relative to the US, the number of deaths declined by 1.8 percent.   

This loss of life is, according to Pearson, the price we have to pay for avoiding scarcity. 
And he believes that a “bright line between what constitutes a fair claim on health benefits and what does not will be difficult to draw.” 

Indeed, ICER sets the cut off point for the rationing required to avoid ‘scarcity.’  It has determined exact numbers of people who will be denied access to a growing array of new medicines. 

The media has hailed ICER’s effort to set drug prices.  But these limits are determined by how valuable ICER thinks a new drug is and by the amount ICER believes should be spent on each new drug a year.  This has led ICER to recommend limits on the use of new medicines – even when they are price at levels that would make their development economically impossible – that ensures some people will suffer and die in order to stick to an arbitrary budget threshold.  Indeed, ICER assumes that a new drug – even a cure – is of lower value to society if it increases cost beyond a certain limit. 

Indeed, Pearson’s bright line is drawn based on the number of people that can be treated and little more.   He says that paying $200K for a rare orphan drug is reasonable if it only helps a small number of patients.  But he concludes that people with the toughest cancers to treat, for whom a small average survival benefit is a breakthrough, are not worth treating.   He claims lung cancer patients shouldn’t stir our compassion because our feelings are simply a response to a patient led PR campaign.  Pearson states: “Although nonsmall cell lung cancer is technically a rare disease, 60,000 patients are diagnosed with the illness each year in the United States. The treatment costs for each individual patient average approximately $80,000, which translates into an expenditure of $4.8 billion dollars per year.  “

Pearson – and ICER – deliberately ignore the fact that average overall survival means very little at time when we can match people to combinations of treatments based on our understanding of how tumors thrive and progress.  But even if they did incorporate it, the cumulative spending on lung cancer patients -- $4.8 billion – is about $3.9 billion more than ICER wants to spend on each new drug.  New immunotherapy drugs double the percent of patients living a year or more with lung cancer.  To Pearson, that’s bad news indeed. 

He, like so many social engineers before him, have assumed that keeping more people alive longer will hurt society as a whole.  But incremental and cumulative advances in medicine, as they are diffused and adopted, leads to greater gains in well-being and economic growth.  
It is precisely our moral sense to save lives in immediate danger and at any expense that sustains humanity and economic progress.  We need more orphan drugs because we gain when more of us enjoy life and live longer. 

Pearson and his ICER are a threat to that prosperity and the remarkable advances in medicine that Rare Disease Day celebrates.  Do we really want to allow someone who belittles such acts of awareness to determine who gets what medicines at what price??


CMPI

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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