Latest Drugwonks' Blog

ICER Unveils New Value-Based Drug Pricing That Includes Additional Cost of Living Longer
     Calculates How Drugs Increase Health Spending By Increasing Life Expectancy


Boston, Mass. April 1, 2016 – The Institute for Clinical and Economic Review (ICER) has posted an updated version of its value based pricing benchmark that takes into account whether new medicines, by allowing people to live longer, contribute to health care spending growing faster than the overall economy. 

Currently, ICER establishes a price range within which all patients could be treated with reasonable long-term care value without adding short-term costs to the health care system and increasing health spending more rapidly than growth in GDP.  

The new ICER benchmark will include the price of drugs for cancer, HIV, rare childhood diseases and Alzheimer’s and any cost generated by increasing life expectancy. 

“We need prices that make sense,” said ICER President Steven Pearson, MD. “Right now, it’s often a black box: we don’t know if we are getting good value with new drugs at these higher prices.  A drug even one that saves money in the short term could, by keeping people alive longer, actually wind up costing us more.  Our value benchmark currently looks only that whether or not drug spending exceeds an arbitrary cap that maximizes PBM and insurance profits.  The new benchmark now measures the value of drugs in terms of how longer life eats into those profit margins.”

“ICER’s new program will make a huge difference by providing what is sorely needed: a source of information about how much rebate money we can pocket before people die,” stated Steve Miller, MD, Chief Medical Officer of Express Scripts, the nation’s largest pharmacy benefits manager. “We look forward to using it to help us improve the ability of patients to get access to new, innovative drugs that keep them alive as little as possible and at a price that maximizes our profits.”

ICER, funded by a $5.2 million grant from the Laura and John Arnold Foundation (LJAF), ICER will produce public reports on new drugs that have the potential to significantly change patient care and health system budgets. As LJAF Vice President Kelli Rhee explained: 

“Death is the most cost-effective way of lowering medical costs.  If we can find drugs that are good at keep people alive for just a teeny, tiny bit – at least until they pay the next month’s insurance premium – we can make great progress to reining in unsustainable drug spending.”

The new benchmark will be used in developing reports that determine how to ration new drugs. Many of the reports produced will be discussed at the public meetings of ICER’s two core programs, the New England Comparative Effectiveness Public Advisory Council (CEPAC) and the California Technology Assessment Forum (CTAF). ICER tells the media that CEPAC and CTAF are  independent, regional bodies of practicing physicians, methodological experts, and leaders in patient advocacy and engagement that provide objective, independent guidance on the application of medical evidence to clinical practice and payer policy decisions in New England and California.  But that’s bullshit.  They are no more independent of ICER than Crimea is independent of Russia. 


 
In case you didn't know...The press release is an April Fools joke.  Just one of many I have seen and received. April Fools’ Day 2016: Round-up of the best (and the worst) joke and prank headlines

Read more: http://metro.co.uk/2016/04/01/april-fools-day-2016-round-up-of-the-best-and-the-worst-5788075/#ixzz44axY1sL6


 

At long last (biosimilar) labeling

  • 03.31.2016
  • Peter Pitts
After much anticipation the FDA has issued draft guidence on labeling for biosimilar products.

In two words, no surprises – which for some is better news than for others.

The top of Page 8 will get a lot of attention:

SPECIFIC RECOMMENDATIONS ON CONTENT OF BIOSIMILAR PRODUCT LABELING

FDA recommends that biosimilar product labeling incorporate relevant data and information from the reference product labeling, with appropriate product-specific modifications. The relevant data and information from the reference product labeling that should be incorporated into the biosimilar product labeling will depend on whether the applicant is seeking approval for all conditions of use (e.g., indication(s), dosing regimen(s)) or fewer than all conditions of use of the reference product for the biosimilar product
.

And further:

In sections of the biosimilar product labeling that are based on the reference product labeling, it is anticipated that the text will be similar. Text based on the reference product labeling need not be identical and should reflect currently available information necessary for the safe and effective use of the biosimilar product. Certain differences between the biosimilar and reference product labeling may be appropriate. For example, biosimilar product labeling conforming to PLR and/or PLLR may differ from reference product labeling because the reference product labeling may not be required to conform to those requirements at the time of licensure of the biosimilar product. In addition, biosimilar product labeling may include information specific to the biosimilar product necessary to inform safe and effective use of the product, which could include differences such as administration, preparation, storage, or safety information that do not otherwise preclude a demonstration of biosimilarity.

And, of course, in order to maintain maximum regulatory, um, flexibility --

FDA acknowledges that there will be variations on the general concepts outlined in this section because the approach to product identification will depend on the specific statements.

 (Note – highlights are mine, not FDA’s.)
 
An update article in Modern Healthcare makes an interesting point, “Federal regulators are likely trying to simplify physicians' understanding of the products' efficacy and safety. By definition, a biosimilar product has no clinically meaningful difference in terms of safety, purity and potency.”

If what practicing physicians understand about biosimilars is anything akin to the knowledge scale of the FDA’s Arthritis Advisory Committee -- as demonstrated during the meeting that considered the biologics license application for a proposed biosimilar to Remicade (infliximab) – then the agency’s attempt at “simplification” may result in some very serious unintended consequences. From the very beginning of the adcomm, it was clear the expert members of the committee didn’t understand what biosimilars really are, nor the pathway the agency uses to review them. Not good.

Can you spell “immunogenicity?”

Per being upfront that the product is a biosimilar, the agency is unambiguous:

FDA recommends inclusion of a statement, on the line immediately beneath the initial U.S. approval date in Highlights, that the product is biosimilar to the reference product. It should read as follows:

[BIOSIMILAR PRODUCT’S PROPRIETARY NAME (biosimilar product’s proper name)] is biosimilar to[ REFERENCE PRODUCT’S PROPRIETARY NAME (reference product’s proper name)] for the indications listed
.

Although the FDA notes that the labeling does not need to be identical to information based on the reference product, it’s a pretty safe bet that manufacturers of biologics will likely take issue with competitors using their data for a product that is not exactly the same.

Gentlemen, start your engines.

The Abuse Deterrent Opioid Ecosystem

  • 03.22.2016
  • Peter Pitts
I've said it before and I'll say it again, addressing opioid abuse and addiction isn't just a formulation problem ... it's a systems problem.

Consider Utah Attorney General Sean Reyes' op-ed on opioid abuse (A smart way to counter prescription drug deaths). There are a few things that need to be added – and amended.

The vast majority of patients using non-abuse deterrent opioids do so safely and as directed. A subset, approximately four percent, abuse. And government statistics show that 78.5% of those who abuse prescription pain medication did not obtain the drugs from a physician in the first place.

Should non-abuse deterrent opioids ultimately disappear from the marketplace? Absolutely. But removing an entire category of generic products when there are no generic abuse deterrent alternatives not only does eradicate the abuse and addiction problem (since even abuse deterrent opioids can be abused) but punishes the millions of Americans who need opioids to address their chronic pain. Insurance companies are not ready to regularly reimburse for new, abuse deterrent formulations – despite steep discounting by manufacturers. 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.

Further, payers often implement barriers to the use of branded, on-label non-opioid medicines, relegating these treatments to second line options. 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 even though there are FDA-approved, non-opioid medicines specifically designed and labeled to treat these conditions.

Payers should step up to the public health plate and do the right thing right now.

Should the FDA, as General Reyes suggests, “… commit to following recommendations made by its advisory committees?” No. That is not the role they play. FDA Advisory Committees advise. It is (and should remain) up to the experts at the FDA to make the final decision. Ultimate responsibility must always reside with the regulator. (The FDA advisory committee that reviewed the controversial opioid Zohydro voted 11-2 that there was no evidence to suggest it had greater abuse or addiction potential than any other opioid.) 

Most importantly, a smart public health strategy would be a robust effort to better educate physicians on appropriate prescribing – something the FDA has been calling for regularly. Today the agency announced it will require short-acting opioid pain medications to carry a boxed warning about the serious risks of misuse, abuse, addiction, overdose and death. It’s a good next step.
 

Proto thoughts on 21st Century Cures

  • 03.21.2016
  • Peter Pitts
From the pages of Mass General’s Proto Magazine

Should Congress Pass the Cures Act?

Two experts face off on new legislation that aims to speed up the approval process for drugs and medical devices.

IN JULY 2015, the United States House of Representatives approved the 21st Century Cures Act with broad bipartisan support. The legislation, which aims to “save more lives and keep this country the leader in medical innovation,” provides $8.75 billion in funding for the National Institutes of Health and accelerates approval processes for drugs and medical devices. But as the bill heads to the Senate for approval, critics argue that pharmaceutical and biotechnology interest groups will benefit at the expense of patient safety.

Yes. The act will allow the FDA to approve effective drugs and devices faster while maintaining high safety standards, says Peter Pitts, a former FDA associate commissioner and president of the Center for Medicine in the Public Interest. 

Where you stand depends on where you sit. If you’re a patient with a life-threatening disease, the FDA is often viewed as a roadblock to innovation. If you’ve suffered a serious side effect of an FDA-approved medicine or device, you may view the process as too swift and cavalier. Both positions fail to take into account a basic truth—there is no such thing as a drug or medical device that is 100% safe. 

FDA review is based on a benefit/risk balance. What’s new is that the patient’s voice is now being considered in that calculation. And it’s about time. The FDA has also recognized the urgency of a more comprehensive, strategic program for tracking performance once a product is on the market. A focused, more risk-based approach provides important balance to sophisticated cutting-edge scientific techniques, particularly as we move toward a more aggressive effort to validate biomarkers, that now make it possible to truncate the traditional clinical trial process. Shorter review cycles on the front end are being matched with more rigorous, real-time post-market surveillance.

The draft legislation will allow the FDA to approve a groundbreaking drug if it proves effective after a phase II trial. That will deliver treatments to patients much sooner and eliminate the need for some phase III trials, which take years and account for 90% of the total development costs for drugs that eventually gain FDA approval. The 21st Century Cures Act will also spur new drug development by helping innovators to “fail faster” through earlier and more regular meetings in the review process. Identifying even 5% of eventual failures in phase I instead of phase III will save at least $15 million per drug—allowing drug companies to redirect billions toward promising new treatments.

Victory will result in the FDA bringing new products to market both more quickly and with more information about their safety. Initiatives such as 21st Century Cures will transform the FDA from a perceived roadblock to an innovation enabler.

No, because the act will lower the bar for approval of certain therapeutics, says Ameet Sarpatwari, assistant director of the Program on Regulation, Therapeutics and Law, in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital.

Two sets of provisions are particularly alarming. The first concerns medical devices. The act would prompt the FDA to treat case histories and peer-reviewed studies as valid scientific evidence and would also loosen regulations controlling the safety and effectiveness of alterations to the devices that take place after their initial approval. The creation of a novel pathway would also enable FDA approval of high-risk medical devices on the basis of “clinically significant” surrogate measures, such as their effect on a biomarker, and would also require the agency to complete its review within six months. 

Each of these changes could open the door to patient harm. Making approval decisions based on scant data increases the risk of adverse events once a device is widely used, and many surrogate measures have proved to be poor predictors of actual clinical outcomes. Case histories and peer review, meanwhile, are plagued by quality concerns. Additionally, even small changes to medical devices can prove deadly, as several high-profile recent cases can attest. It is better if such changes are reviewed by the FDA, rather than by the company itself or a third party paid by the company.

The second set of provisions involves antimicrobials. To combat the growing threat of multidrug resistance, the act would also authorize the FDA to approve certain antibiotics and antifungals on the basis of preliminary, uncontrolled clinical trials as long as those medications carry a disclaimer that explains their “indicated use in specific populations of patients.” However, evidence suggests that disclaimers on drug labels are inconsistently read, let alone heeded.  

These measures collectively represent a fundamentally flawed attempt to promote medical innovation. They would lower the bar for therapeutic approval in several respects, threatening to take us back in time to the patent medicines era in which unsafe and ineffective products flooded the market. The Senate would be wise to start anew in determining what, if any, changes to the regulatory apparatus are necessary as prescription drug and device development expands in the 21st century.

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.  
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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