Latest Drugwonks' Blog

The ASCO Value Task Force attacks the very patient preferences it has pledged to respect and integrate into it’s tool by claiming that the ‘crisis’ of cancer drug spending is being driven by “sometimes unrealistic patient and family expectations that lead clinicians to offer or recommend some of these services, despite the lack of supporting evidence of utility or benefit.”

If it hasn’t made its view clear by now, the Task Force also asserts cancer patients “ also overestimate the benefits of treatments that sometimes extend life by only weeks or months or not at all. “ Oncologists are generally aware of this conundrum but uncertain about whether and how the cost of care should affect their recommendations. Although raising awareness of costs and providing tools to assess value may help to manage costs while maintaining high-quality care, some oncologists see this as being in conflict with their duty to individual patients.”

This amounts to a tacit effort to encourage assisted suicide, a cause Task Force chair Lowell Schnipper has promoted for 20 years. 

Here's the best response to this cold calculus

Take any article on the cost of hepatitis C drugs -- doesn't matter -- they are all numbingly the same and one dimensional and replace sovaldi with ebola vaccines and hep c with ebola.   Then see if $84K for a cure  -- the possibility of which was widely reported and retweeted  -- is worth it.   

I chose a most recent article by Michael Hiltzik of the LA Times for this exercise.. Here's a link to the original un-original article about Sovaldi and here it is with the disease and cures swapped out....

How a hugely overpriced Ebola Vaccine helped drive up U.S. health spending

There's one especially eye-catching number in a new report by Medicare actuaries about U.S. healthcare spending: 12.6%. That's the leap in prescription drug spending last year over the year before. How sharp an increase is it? It was five times as much as the increase for 2013 over 2012, which was a mere 2.5%. The actuaries have no doubt what's driving the increase. It's "a result of expensive new treatments for ebola ," they write in their report for the journal Health Affairs.

And more than any other drugs, that means the Ebola vaccine, which cost about $84,000 for a 12-week treatment, or about $1,000 per once-a-day pill.

The increase in prescription costs was a sizable contributor to an increase in U.S. healthcare spending growth last year of 5.5%, a spike up from the previous year's increase of 3.6% and the first time growth exceeded 5% since 2007; if not for the drug spending, the overall increase would have been only 4.8%. But the major driver, the actuaries reported, was the expansion of healthcare coverage under the Affordable Care Act, which brought new insurance coverage to 8.4 million Americans.

That expanded coverage had clear benefits to the newly insured: the nationwide growth in out-of-pocket spending slowed to just 1.3% last year from 3.2% in 2013, because so much more healthcare was covered by health plans or Medicaid.

The major cloud on spending patterns was drug pricing. As we reported in June, the Ebola vaccines are the closest thing in years to miracle drugs. Their cure rate of ebola , exceeds 90%, with almost none of the horrific side effects caused by their predecessor treatments. Those side effects had kept many with ebola , which progresses slowly and often invisibly, from seeking treatment.

But the new drugs' arrival brought thousands of patients out of the woodwork; new patients leaped from 17,000 in 2013 to 161,000 last year. The caseload and the cost stunned commercial insurers and public programs such as Medicare and Medicaid alike; many refused to cover the new drugs except for patients with advanced liver disease. That defeated the purpose of the drugs, which would prevent those advanced, costly-totreat conditions from developing in the first place.

But even with those restrictions, the drugs drove prescription drug spending through the roof. That's bound to intensify questions over why the Ebola vaccines are so expensive for U.S. patients.  The profit margins on the drugs are stupendous. In the first half of this year, it recorded profit of $8.8 billion on $15.3 billion in sales, a net profit margin of nearly 58%. For the full year, the company projects gross profit margins of up to 90%. After the release of its second-quarter financial results Tuesday, Gilead's executive vice president of commercial operations, Paul Carter, groused that "there still are a lot of (payer) restrictions in place in the U.S.," according to the San Francisco Business Times. But although Gilead has offered discounts to some payers in return for more liberal patient approvals, the company plainly has pursued a calculated strategy that the success of its drugs will force insurers to pay for them at a large fraction of the list price. Gilead has taken enormous heat for its pricing strategy.

Its list price for the Ebola vaccine is more than twice the $36,000 the drug's original developer, Pharmasset, had planned to charge before that company was acquired by Gilead in 2011 for $11 billion. It was also vastly out of line with Pharmasset's research and development costs, which the Senate Finance Committee has estimated at less than $63 million in 2009-11. One pharmacy management executive has termed the pricing an act of "unmitigated gall."

As we observed last month, Gilead's ability to charge what the U.S. market will bear reflects a broken, overly indulgent, drug pricing regime in the U.S. In Canada and Britain, which don't allow unfettered drug pricing, the cost of a full Ebola vaccine treatment is $55,000. In Egypt, it's only $900.

The new report by the actuaries of the government's Centers for Medicare and Medicaid Services, suggests that pressure on Gilead and other manufacturers of high-priced drugs may force prices down. The actuaries project that rebates for the ebola  drugs will cut Medicare spending growth for prescriptions to 9% this year from 17.3% in 2014. That's good news, but it's only a reminder that the price in 2014 reflected not merely profit, but profiteering.

Pessimists vs. Progress 

If the latter part of the 20th century was the era of the sustainable planet, the 21st century will be the age of the sustainable human. It will be an era of cures characterized by the accelerating capacity to diagnosis, stop, and prevent diseases. Infant mortality rates will plummet. Cancer, immune disorders, and illnesses such as Alzheimer’s will be preventable or manageable.

Living well past 90 or 100 will be commonplace across the planet. Our cognitive, physical, and cosmetic vitality will not erode as the years pass, because wellness will be sustained and enhanced through better nutrition and regenerative medicine. As people remain active and energetic for decades, both the absolute number and percentage of people retiring in the old fashioned way will decline. And as TEDMED curator Jay Walker observes "There is going to be a trillion-dollar business in keeping us healthy."

We have the scientific knowledge, the wealth and the imagination to achieve this vision. The exponential technologies—the tools to continually double performance and slash the cost and time required to produce innovations by half—either exist or are being developed. Cures could become America’s leading industry and principal export, and yield enormous economic and political benefits.

And yet, our nation lacks a cure strategy (a term coined by Jim Pinkerton) to achieve these benefits. On the contrary, most health care experts warn that a tidal wave of new medicines will have a tsunami effect across our entire health care system and that far from improving health and reducing the cost of disease, medical innovation stands in the way of solving a public health crisis. Others, such as Ezekiel Emanuel, proclaim that after age 75, we begin to fall apart, and that living longer imposes a huge financial burden on society: “This manic desperation to endlessly extend life is misguided and potentially destructive.”

Pessimists are actively campaigning against cures. Even as some elected officials seek to reform the scientific institutions that support or govern innovation, pessimists are warning against doing too much, too fast. Indeed, they want even more government control over how research is done, how quickly new cures can get to people, and at what price.

To create a social movement for cures, the prevailing pessimism must be overcome. This enterprise is critical to progress because social and political movements are essential to sustaining medical innovation.  In the past, progress occurred because social movements overcame the pessimistic resistance of the time and turned a demand for cures into a national strategy. Franklin Roosevelt called upon the nation to support a national war against disease at home with the same vigor and resources dedicated to turning scientific insights into products that helped win World War II. FDR also launched the National Foundation for Infantile Paralysis, an advocacy group to advance research on and publicize polio.  It inspired the formation of the March of Dimes campaign, which raised $1 billion of today’s dollars.

Mary Lasker, Sidney Farber and others organized a sustained lobbying and public relations effort to create the National Institutes of Health and provide it with significant funding. They went on to launch the first war on cancer in the 1940s and were responsible for Nixon’s war on cancer too. The organized outrage of HIV activists compressed the time required to develop and broadly distribute medicines to stem the epidemic. Breast cancer activists stormed the gates of Genentech to demand immediate access to Herceptin, leading President Clinton to direct the FDA to put cancer drugs on the faster tracks established for HIV. Craig Venter and Lee Hood’s resourcefulness and resolve captured the imagination of the world and demonstrated that sequencing the human genome opened yet another frontier for America. Without the leadership and vision of Bill Gates’ efforts the campaign to cure polio, measles, malaria, and TB would not be possible. 

Why have cure campaigns made progress possible? Because they are the catalyst and conduit for the ideas needed to solve problems. They force systems to adapt and change.  They spur and accelerate the exchange of ideas and the creation of networks, creating what Friedrich Hayek called ‘catallaxy’—the spontaneous order created by exchange and specialization in order to solve problems with collective intelligence. In today’s techno-terms, they created network effects before the Internet was born.

Ironically, past cure movements produced progress and benefits the pessimists of the time thought impossible. During the Depression, poor health was considered by many Depression-era Americans to be a matter of fate. The gains in health care between 1900 and the present have been spectacular. Life expectancy at birth in the Western world grew from a mere 45 years at the beginning of the 20th century to nearly 80 years at the dawn of the 21st century. More than 100 infants, and about an equal number of mothers, died for every 1,000 live births in 1900. Both the infant mortality rate and deaths of women during childbirth have become rather negligible. The incidence of contagious and other diseases also drastically declined, especially during the second half of the century. Death rates in the U.S. from heart disease are less than half of what they were in 1950, and survivor rates from many forms of cancer have improved during the past two decades.

The cost of health care has actually declined as new treatments replace more expensive and less effective services, particularly surgery and hospitalization. Each time new medicines are introduced, the ‘pessimistas’ shriek about how they will bankrupt our health care system. Hospitalization rates for cancer, heart disease and HIV have dropped dramatically from their peaks in the 1990s. It would cost an additional $10 billion a year to hospitalize people with HIV at the 1995 peak rate of 57 per 100000. Breast cancer hospitalization rates have been cut by nearly 70 percent, saving $5 billion per year. And the cost of medicines? It’s remained at about 10 percent of total health care spending since 1960. 

Meanwhile the economic value of longer and better life—not counted in our GDP —has soared all across the world. Between 1960 and 2000, economic welfare from health care expenditures appear to have contributed as much to economic welfare as the rest of consumption expenditures, as measured by GDP, or about $9 trillion.

A recent government study looked at the economic value of reducing just disease related disability for 30 diseases between 1990 and 2010. It concluded that it generated $1 trillion.  The Pessimistas claim that particularly in cancer, the cost of innovation is too high because most new medicines, for the most difficult to treat and advanced forms of cancer, add only a few months of life on average. In fact, the BEA study found that cancer treatments were responsible for nearly 80 percent of the total decline in disability plagued life years in the United States between 1990-2010.  That generated nearly $800 billion in health value. And as Columbia University economist Frank Lichtenberg found: the cost of new cancer drugs (developed in 1995) is less than 1% of the nearly $5 trillion health value of the mortality reduction.

In fact, if we can apply this ‘cure’ for medical spending to more people as they age, we can create what Dan Perry and Jay Olshansky call ‘the longevity dividend’. As they note: “Slowing the aging process by an achievable three to seven years would simultaneously postpone all fatal and nonfatal disabling diseases, produce gains in health and longevity equivalent to cures for major fatal diseases, and create scientific, medical, and economic windfalls for future generations that would be roughly equivalent in impact to the discovery of antibiotics in the 20th century.”

Medical innovation has already become the main reason that Medicare spending has been declining for 40 years, as more people live healthier, longer lives. Disability has fallen by about 2 percent a year, saving nearly $1 trillion over the past two decades. And after age 65 people are working more and are more productive. If the decline in disability remains 2 percent, by 2030 people over 65 would add $6 trillion in annual income and $1.9 trillion in tax revenues (assuming tax rates are held constant).  Medicare would spend $500 billion less each year.

The economic gains are likely to be even greater. For instance, just delaying the onset of Alzheimer’s by 5 years would generate $17 trillion of health value over 20 years. As Jim Pinkerton put it: “Do you want to make a dent in future health-care costs? Cure Alzheimer’s. That's where the cost will be as the health of the baby boomers falter. Insurance isn't the key. It was never the key. It's a product. Cure and care are the words of the future.

The Future: The Network Effect Disrupts Medical Innovation
The pace of innovation is accelerating exponentially.  Systems biology—which deciphers the networks of interaction between and within cells that regulate health and disease—is the Internet of Things for cures. Lee Hood, the co-founder of the Institute of Systems Biology and the inventor of the automated DNA sequencer and synthesizer, has pioneered the network of network concept and applied it to medical innovation. 

Similarly, Hood is harnessing the dramatic pace at which genomic, transcriptomic, metabolomics, and proteomic technologies have digitized biological data and its analysis. He has turned every cell into a ‘device’ that can share and process information.  In essence, he has created a network of billions of devices sharing information in digital form. Every cell is a little computer that shares and creates information that creates a series of intra and interconnected networks. Genetic networks communicate with molecular and cellular networks that in turn create organ networks. We can now see how the networks change over time and with perturbations or distress, as well as how these networks functions to produce disease or healthy phenotypes.

Hood predicts: “Within the next 10 years, we should be able to sequence entire genomes in less than an hour’s time at the cost of a few hundred dollars. This will provide crucial insights into optimizing our wellness. In 10 years, we may have a little hand-held device that will prick your finger, make 2,500 blood measurements, and will longitudinally follow the organ-specific proteins for 50 different organs. This will allow us to detect many diseases at the earliest detectable phase - weeks, months, and maybe years before symptoms appear.

But more importantly, as Hood points out, systems medicine reduces the time and cost required for creating the social networks that demand and undertake the sharing of data needed to produce cures.  Eric Topol observes that just as the printing press led to the rapid diffusion and sharing of knowledge far beyond a small elite, smartphones and the digitization of our biology is allowing “..Consumers to take that data and learn from it, read it, and get facile with it. It extends to genomics and understanding the drug interactions with one's own genome. It's going to extend in every which way where there's a data information domain in the hands of consumers.”

Patient-activated social networks are already using big data and analytics as Topol describes.  The democratization of data is converging with systems medicine. This synergy is leading to what Hood defines as P4 medicine, medicine that is predictive, preventive, personalized, and participatory. Medicine will focus on each individual. It will become proactive in nature. It will increasingly focus on wellness rather than disease.

Hood notes, “instead of medicine focusing on disease as it does today, the focus in the future will be on wellness. Regular check-ups will allow the physician to longitudinally follow each patient and an individual’s wellness can be preserved without the disease state ever occurring.  Individuals will be their own control in establishing a wellness baseline, monitoring the progression to disease state, and monitoring treatments that will perturb the systems back to a healthy state.

P4 medicine will be able to reduce sharply the escalating costs of health care to the point where we will be able to export it to the developing world.  That will lead to a democratization of health care, a concept unimaginable five years ago.” 

A Cure Strategy: Capitalizing on the Network Effect
A cure strategy should foster the democratization of medical innovation and support the creation of the catallaxy that is the crucible of progress.

1. Promote crowd curing
While proposals to reduce the time the FDA takes to review and approve a new product are welcome, they still regard randomized clinical trials as the heart and soul of medical progress.  In fact, RCTs achieve a ..false certainty…neutralizing patient-specific variation in studies that include as many people as possible.

While the FDA and academic researchers are using new tools to measure individual differences they have not tapped into collective and interconnected data cloud around each individual patient.

A cure strategy would increase the bandwidth required to expand and accelerate connectivity to take on noncommunicable diseases such as Alzheimer’s, cancer, and heart disease. Why not invest $50 billion to support the hundreds of crowd curing communities that already exist? Studying the real world experience of millions of people using digital tools, and sharing the data and real world experiences of patients using Big Data analysis, allows systems biology and crowd sourcing technologies to more quickly match people to the best treatments.

2. Pay for Cures
Project Bioshield also established a fund for making multi-year purchases of new vaccines, devices, and medicines if and when they were developed. This increased the research and development of such products. Unfortunately, the agency in charge of this effort, The Biomedical Advanced Research and Development Authority (BARDA) saw this money diverted to other uses by politicians. BARDA only has $400 million a year to spend on cures. Why not allocate billions to innovations that eradicate cancers, Alzheimer’s, or other illnesses that, left untreated, cost Medicare and Social Security trillions?

3. Make Cures a Centerpiece of Foreign Aid
Why not make the purchase and donation of cures as centerpieces of foreign aid and development assistance? For instance, the United States currently spends x billions a year in foreign aid, mostly for military, etc. Purchasing cures and re-selling them at a cost competitive in global markets would bolster American leadership in biomedical innovation. Further, we should fund capacity to use cures. Organizations such do an effective job in building cure capacity in developing countries, but struggle for resources and lack of partners. 

4. Add The Value of Health To Our Measurement of GDP
Pessimism about medical innovation is also due to policymakers and the media focusing exclusively on the cost of new technologies and ignoring the value to consumers and stakeholders.

As University of Chicago health economists Tomas Philipson states: “Health care insurance ensures access to health care; stated another way, this insurance provides access to medical innovations already developed. It is the innovations in treatment over the past century that partly protect us against the loss of actual health when disease hits.

Medical innovation, therefore, is the key to true health insurance since it is the primary method by which the future risk of losses in health itself is reduced over time, and can thus be viewed as serving the role of insuring future health. In essence, medical innovation reduces the true price of health.”

Philipson has called for measuring how much innovation reduces what it costs to stay healthy longer. Indeed, The U.S Department of Commerce Bureau of Economic Analysis established Health Care Satellite Accounts to do just that. Years in the development, the accounts measure output “provided to patients as the treatment of disease (for example, cancer or diabetes) rather than the specific types of medical care that individuals purchase (such as visits to a doctor’s office or the purchase of a drug), as is currently published.”

Congress and every executive agency should be using the new health satellite accounts to measure health care consumption on disability, productivity, and premature death from disease.  And health plans should be required to provide data on the impact of their practices on these social indicators.

5. Make Access To Cures A Civil Rights Issue
Increasingly, insurers are making it harder for people to access cures. They require chronically ill people to fail first on older medicines (i.e., have their condition get worse.  Insurers have also placed most or all medications for cancer, HIV/AIDS, multiple sclerosis, and many other chronic diseases including generics, on the highest cost-sharing tier health plans. Finally, health plans are refusing to pay for the kind of systems medicine information that is crucial to finding the right treatments for the most advanced and complex illnesses.

Together, these practices amount to a systematic effort to discriminate against people with pre-existing conditions, violating the spirit and letter of the provision of the ACA that makes such policies illegal. In time, the health insurance business model will be destroyed in favor of a wellness industry based on P4 medicine. But for now people are being denied access to cures because they are chronically ill. That is immoral and it should be illegal.

Can A Cure Strategy Succeed?
In “The Emperor of all Maladies” Siddhartha Mukherjee’s history of the war on cancer notes that the turning point in the battle came when Mary Lasker and Sidney Farber “stumbled upon an unshakable, fixed vision of a cure—and they would stop at nothing to drag even a reluctant nation toward it.”

Farber wanted to attack all cancers but everywhere he turned the pessimists prevailed.  Pediatricians at the Children’s Hospital in Boston where Farber was treating patients claimed that he was wasting time and money on children who were going to die anyway.  His paper describing the remission was received, as one scientist recalls, “with skepticism, disbelief, and outrage.” Farber was undeterred.  As Mukherjee writes: “He needed a larger drive, a larger platform, and perhaps a larger vision for cancer. ” He established a social movement to carry out his cure strategy. 

Our nation is at a similar inflection point. Today new therapies are curing Hepatitis C and beating the most advanced and deadliest cancers into long-term remission. Yet the pessimists are launching an assault on the development and use of medical innovation, just as the previous generation of pessimists did when Farber wanted to expand the use of cancer drugs to anyone dying.

Today patient-activated social networks are increasingly connected in the effort to come up with cures. They are accelerating the spread of innovation at a pace Farber would find satisfyingly astonishing. Despite the best efforts of the pessimists, the direction and use of innovation is becoming democratized. As Schrage observes “the accelerating spread of innovation ultimately amounts to the greatest revolution in choice the world has ever known.”

In “Democracy in America”, Alexis de Tocqueville wrote “From the time when the exercise of the intellect became a source of strength and of wealth, we see that every addition to science, every fresh truth, and every new idea became a germ of power placed within the reach of the people.” The engine of progress was a free people sharing knowledge. It is today. Over the past 50 years, cure strategies in America have imagined a better world and turned social action into a potent tool for spreading medical innovation.

This power is stronger than ever, shared more widely and rapidly than at any time in our nation’s history. The pessimists will object, but their predictions will fade as they have before. The 21st century will be an era of cures, led by Americans.

Glass of water image credit: Yogesh Mhatre/Flickr
From the pages of the Orlando Sentinel ...

Foreign medications endanger Florida patients

In May, undercover investigators busted two Florida pharmacies for selling counterfeit medicines supposedly imported from Canada.

Those "Canadian" drugs actually came from India. They were rife with impurities and unknown ingredients.

Scams like this run rampant in Florida and across the United States. Yet some politicians — including presidential candidate Mike Huckabee — support legalizing the importation of cheap foreign medicines as a way to cut health-care spending. The facts say otherwise. According to a study by the nonpartisan federal Congressional Budget Office, drug importation would reduce our nation's spending on prescription medicines by a whopping 0.1 percent — and that's not including the tens of millions of dollars the Food and Drug Administration would need to oversee a transnational drug-safety program.

Drug importation is a deeply misguided idea. It exposes consumers to counterfeit drugs of unknown origins, and undermines the public's long-term health by weakening biopharmaceutical companies' incentives to invest in future treatments and cures. Congress should uphold laws that prohibit widespread drug importation.

The vast majority of imported "Canadian" drugs aren't made in Canada and often involve unreliable and unregulated Internet pharmacies. More than 96 percent of Internet pharmacies don't adhere to U.S. pharmacy laws and practice standards, according to a new study from the National Association of Boards of Pharmacy. Of these noncompliant pharmacies, 88 percent sell drugs without requiring a doctor's prescription.

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 FDA looked at 4,000 drug shipments coming into the United States. Almost half of them claimed to be from Canada. Of those, a full 85 percent were 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. And in laboratory analysis, every pill failed basic purity and potency tests.

Not only does drug importation put patients at risk, but it also disincentivizes domestic medical research. By importing Canadian price controls, importation would destroy biopharmaceutical companies' incentives to continue pouring money into the 3,400 potential new medicines currently under development in the United States — and cost many Americans their jobs. In the Sunshine State alone, the biopharmaceutical industry employs 22,000 people. Those positions pay workers an average salary of $73,000 — well above the state average of $47,000. All told, the industry adds $16 billion to Florida's economy.

Right now, American patients who head online to buy drugs are motivated by the cut-rate prices they see on the Web. Health insurers could help patients avoid this temptation by reducing co-pays for drug purchases, particularly for low-income patients. If drugs become more affordable in the states, patients won't feel the urge to look for a bargain abroad.

To protect Florida workers and patients, the Sunshine State's representatives in Congress must reject any initiatives supporting drug importation.

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

New biosimilar working paper from the WHO.

(PROPOSED ADDENDUM TO: WHO TRS 987, Annex 4. Guidelines on the quality, safety and efficacy of biotherapeutic protein products prepared by recombinant DNA technology  APPENDIX 7. REGULATORY)

Some important snippets:

Per clinical trials:

A head-to-head comparability exercise of a candidate similar biotherapeutic product (SBP) with a reference biotherapeutic product (RBP) is essential to justify a reduced nonclinical and clinical 26 package for licensing.

Studies should be designed to detect any potential difference in quality, nonclinical and clinical attributes between the SBP and RBP rather than simply to confirm safety and efficacy of the two products. It should be ensured that any detected differences have no clinically meaningful impact on product performance.

Per nomenclature and pharmacovigilance:

The ability of the pharmacovigilance system in the country should be considered to monitor and determine adverse reactions and/or efficacy problems (such as reduced clinical effectiveness) associated with the biotherapeutic product, should they exist.

With poor pharmacovigilance systems in many countries, as well as nomenclature difficulties, it may be impossible to obtain sufficient data to demonstrate that a particular product was the cause of an adverse reaction or that patients may be at risk from the use of products that are clinically untested or are tested with inadequately designed studies. Traceability is a key element in monitoring the safety and efficacy of biologicals as it enables pharmacovigilance measures to be put in place. 

This document is open for comments until September 14, 2015.

I don't mean to pick on the WSJ, but with regard to the recent article  "U.S. Health-Spending Growth Jumped to 5.5% in 2014," how difficult is it to put drug spending in context by looking at projected changes in totals, per capita and percent of Medicare spending??    LOUISE RADNOFSKY manages to find out that Medicare Rx spending increased 15.1 from 2014-2015, but couldn't seem to find the out years even through there were on the same chart in the Medicare Trustees Report.   So for those of you who care.. here's the rest of the story.  It took me a whole 15 minutes to put this together.  All by myself.

CMPI is proud to be part of this new effort to turn the phrase patient-centered drug development into reality.

Transforming Medicine: The Elizabeth Kauffman Institute Launched to Match People with Life-Threatening Illnesses to the Best Treatments in Real Time
--Founded by Biotech Pioneers and Health Data Innovators--

--Will Use Big Data and Artificial Intelligence to Match Patients with Best Treatment Options—

July 27, 2015 08:07 AM Eastern Daylight Time
NEW YORK & CAMBRIDGE, Mass.--(BUSINESS WIRE)--Transforming Medicine: The Elizabeth Kauffman Institute or “TMed,” was officially launched to match people with life-threatening illnesses to the best treatments for their specific condition. To accomplish this, the experts, leaders and innovators who founded “TMed” plan to create a knowledge base that evaluates individual patient characteristics, including genetic and molecular profiles, to determine the most effective marketed and research-stage therapy for each patient. “TMed” is a non-profit (501c3) organization.

“When big data analysis ‘turns the lights on’ to reveal which treatments will work for specific patients, babies are saved from premature birth, cancer patients live longer, chronic conditions are managed better, and billions of dollars are saved by avoiding treatments that do not work for given patients.”

“We formed this institute because over half the medicines used today do not work for half the patients. This is particularly true for people fighting the most complex and fatal diseases,” said “TMed” Co-Founder Lee Hood, M.D., Ph.D., President of the Institute for Systems Biology. “Our aim is to change the practice of medicine in a fundamental way.”

Stuart Kauffman, M.D., systems biology pioneer and “TMed” Chairman, added, “Our goal is to arm patients, caregivers and doctors with our tools and knowledge so they can transition to individualized treatments in real time.”

The institution is named for Dr. Kauffman’s late wife Elizabeth who succumbed to pancreatic cancer.

Other co-founders include Colin Hill, CEO of GNS Healthcare, a pioneer in computational healthcare analysis; Robert Goldberg, Ph.D., Vice President and Co-founder of the Center for Medicine in the Public Interest; and Kathleen O’Connell, an award winning journalist and patient advocate.

Colin Hill said, “When big data analysis ‘turns the lights on’ to reveal which treatments will work for specific patients, babies are saved from premature birth, cancer patients live longer, chronic conditions are managed better, and billions of dollars are saved by avoiding treatments that do not work for given patients.”

This group of pioneers and innovators will now combine their expertise to develop unique algorithms to predict the best combination of treatments for pancreatic cancer, brain cancer, sickle cell anemia and other difficult to treat diseases, based on evidence-based analytics and systems biology. When the data base is ready, “TMed” will work closely with providers, health insurers, patient groups and other stakeholders.

One of the “TMed” scientific advisers, Nicholas Schork, Ph.D., concluded “We have the ability to save lives now. Let’s get started.”

To learn more about Transforming Medicine, go to the institute’s website at

Kathleen O’Connell, 917-270-3279
Initiate PR
Stephen Gendel, 424-371-9600
Hank Campbell at the Science 2.0 blog does a great job of picking apart the most recent attempt by cancer doctors to make economic policy.

A group of academics have channeled their inner Bernie Sanders and written a wonderfully naïve op-ed about how to lower drug prices: Destroy the industry that made America the world leader in biotechnology.

It's simple. Let government control drug prices and then corporations will just do what they always do, but it will be a lot cheaper. It is so simplistic it could have been written by Paul Krugman in the New York Times. It is also in defiance of how science, creativity and medical advancement works, and would lead to a mass exodus of science jobs from America.

Writing about the piece in Mayo Clinic Proceedings, lead author Ayalew Tefferi, M.D., a hematologist at Mayo Clinic, says, "The average gross household income in the U.S. is about $52,000 per year. For an insured patient with cancer who needs a drug that costs $120,000 per year, the out-of-pocket expenses could be as much as $25,000 to $30,000 - more than half their average household income."

He and colleagues cite a 2015 study by D.H. Howard and colleagues in the Journal of Economic Perspectives, which found that cancer drug prices have risen by an average of $8,500 per year over the past 15 years. What has risen markedly in that time? Cancer survival rates.

They claim that by controlling the market, the free market will work better. If you are a California resident enjoying paying 50 percent higher utility rates compared to the rest of the country, you see how in the real world more government control does not make the free market more efficient. If you can do math, it is better to be skeptical. 

Here's my take:  

In fact, new cancer drugs not only save and extend lives; they reduce the cost of treating cancer.  Cancer spending has increased in 1995 from $42 billion to about $130 billion today.  (Most of that is on doctors and hospitals, the cost of which the authors ignore.) Between 1995 and 2012 the share of cancer spending devoted to drugs increased from 3.7 percent to 9.3 percent while hospital spending declined from 62.4 percent of cancer costs to 41. 3 percent in 2012.   Meanwhile, cancer death rates declined by 30 percent and the number of people surviving cancer increased by 40 percent (9.8 million to 14 million).  Cancer costs as a share of total health spending declined from 4.7 percent to 4.4 percent.   Meanwhile new cancer drugs have remained at around 0.7 percent of total health care spending.

Further, the authors imply that out of pocket costs for cancer drugs are increasing because health insurers are being forced to because of higher prices.  This is inaccurate.  Studies conducted by health actuary Milliman, Inc., found that capping cost sharing at $100 a month would only increase premiums by an average of $2 a month.

The authors claim that most new medicines don’t improve average survival of the average cancer patient. But new drugs target much smaller groups of patients for whom other medicines do not work.   Averages don’t capture the benefit such small groups receive. Cumulatively, these new medicines are in fact, saving money and saving lives.

Meanwhile, the European style price controls the doctors prescribe are associated with faster increases in cancer costs and higher death rates compare to America.  While they allude to the fact that price controls on generic cancer drugs have caused persistent shortages,  they somehow believe that the development of new medicines which require substantially more money and entail significantly greater risk, would be immune to this outcome.  They also apply to cancer doctors who are also paid much more in Europe than here. If the oncologists who wrote the letter believe price controls are the right prescription, perhaps they should lead by example. 

As John Adams quipped, "Facts are pesky things."

First the story – and then the rest of the story.


Insurer Uses Clout to Negotiate Drug Prices; Critics Challenge Medicare Brand name Pricing

Jul. 27, 2015, Drug Industry Daily

UnitedHealth Group plans to use its market strength to negotiate prices to help consumers purchase expensive specialty drugs, adding to a growing press from doctors, patient advocates and lawmakers to rein in costs.

According to UnitedHealth, the acquisition of rival Catamaran by its Optum-Rx pharmacy-benefits business will give the insurer a new competitive edge in seeking payments or refunds based on whether drugs help patients.

The announcement — which underscores payers’ growing use of patient outcomes to determine drug pricing — comes on the heels of a report claiming Medicare pays 73 percent more than Medicaid and 80 percent more than the Veterans Administration for brand name drugs.

The report, by Public Citizen and Carleton University, claims $69.3 billion was spent on prescription drugs through Medicare Part D in 2013. The report points to research from Avalere Health showing roughly 58 percent of Part D spending in 2011 went to brand name manufacturers.

The report urges Congress to pass legislation allowing Medicare to reduce brand name drug prices to at least the level of Medicaid or the Veterans Health Administration and to introduce mandatory generic substitution for all plans under Part D. Currently, the federal government is prohibited from leveraging its Part D purchasing power even though private plans obtain substantial rebates from drug makers and pharmacies.

Critics of high drug costs have singled out the price of Gilead Sciences’ hepatitis C drug Sovaldi (sofosbuvir) as being particularly egregious. At $1,000 a day, the Veterans Administration has already exceeded the more than $400 million budgeted for hep C treatment in fiscal 2015, according to Sen. Bernie Sanders (I-Vt.), who recently called for wartime powers to break the patents on the drug (DID, May 15).

But it’s unclear whether the anger over drug prices is sufficient to fuel real change in the form of legislation.

Peter Pitts, president of the Center for Medicine in the Public Interest, says it’s artificial to compare drug prices with what the VA pays, since the agency gets the lowest possible prices by law. He also points to a 2014 Congressional Budget Office study that showed drug prices would be higher if the government negotiated Part D pricing.

Separately, more than 100 oncology doctors called for cutting the prices of cancer drugs. All new cancer drugs approved by the FDA in 2014 were priced above $120,000 per year of use, according to their article in Thursday’s Mayo Clinic Proceedings.

PhRMA was quick to respond to both reports, saying proposals to fundamentally alter the structure of the Medicare Part D program would hurt taxpayers and beneficiaries.

Read the Public Citizen, Carleton University report here — Jonathon Shacat


Let’s start with Sovaldi. The Public Citizen and Carleton University do not mention in their report that one pre-Sovaldi “best practice” treatment for Hepatitis C, the drug Pegasys, requires one injection a week for 48 weeks — and very few patients see the treatment through to completion, so much of that treatment, both physician time and drug cost, is wasted. Nor is it that much cheaper: At about $7,000/month, the full course of treatment is over $70,000 — barely less than cost of the three months needed for Sovaldi to work a cure. And the price of not using Sovaldi is very high. One in three patients with the Hepatitis C virus eventually develops liver cirrhosis, and managing these patients is costly. A “routine” liver transplant (where the liver is from a cadaver) costs close to $300,000; a “living donor” transplant is even more expensive. But why let the facts get in the way.

Data recently published by the PwC Health Research Institute suggests the reverse. The study shows that the use of Sovaldi will actually drive down overall spending within a decade.

Also, is anyone really paying “$1000 per pill?” Certainly nobody with insurance. And for those without coverage there are generous programs supplied by the manufacturer. What rates have large payers negotiated?  They won’t say. Hm.

Let’s tackle the VA next. The Veterans Administration’s national formulary covers 59 percent of the 200 most popular drugs in the country. (Medicare covers 85 percent of those drugs.) And a study from Columbia University found that just 19 percent of all new drugs approved since 2000 were covered by the VA and just 38 percent since 1990. Media reporting missed these facts too.

Per “negotiating prices” for Medicare Part D, allowing the Federal government to negotiate drug prices would result in prices going up and patient choice going down. That’s why the Non-Interference Clause, the legislation that prohibits Federal price negotiation was created in the first place. It’s interesting and important to note that the legislative language was drafted by Senators Ted Kennedy and Tom Daschle.

The Congressional Budget Office found that between 2004 and 2013, Part D cost an extraordinary 45 percent less than what was initially estimated and premiums for the program are roughly half of the government’s original projections. These unprecedented results are largely due to Part D’s market-based structure. Beneficiaries are free to choose from a slate of private drug coverage plans, forcing insurers to compete to offer the best options to American seniors. It’s hardly surprising that the program has led to low prices and satisfied customers. Through their own negotiations with drug makers, private insurance plans that operate under Part D have already had great success in keeping pharmaceutical prices down. In fact, the CBO has observed that Part D plans have “secured rebates somewhat larger than the average rebates observed in commercial health plans.” What’s more, the CBO has said that doing away with the non-interference clause “would have a negligible effect on federal spending.” In a report from 2009, they reiterated this view, explaining that such a reform would “have little, if any, effect on [drug] prices.” In fact, allowing the feds to negotiate drug prices under Part D would likely have a negative effect on the program. The CBO predicts that when HHS forces pharmaceutical firms to lower the cost of a particular drug, this tactic brings with it “the threat of not allowing that drug to be prescribed.”

And as far as Senator Sanders’ call for “wartime powers to break patents,” there is no such thing as a free lunch – let alone “free” innovation. While opaque and seemingly arbitrary drug pricing deserves immediate attention, the value of innovation must not be ignored. Innovation is hard. Today it takes about 10,000 new molecules to produce one FDA-approved medicine. This observation itself is disconcerting, but, further, only 3 out of 10 new medicines earn back their R&D costs. Moreover, unlike other R&D-intensive industries, biopharmaceutical investments generally must be sustained for over two decades before the few that make it can generate any profit. Innovation is slow. As any medical scientist will tell you, there are few “Eureka!” moments in health research. Progress comes step by step, one incremental innovation at a time.

As Abraham Lincoln said, “Patents add the fuel of interest to the passion of genius.”

But don’t all these wonderful innovations come from government-funded research? Nope. A study in Health Affairs by Bhaven N. Sampat and Frank R. Lichtenberg (What Are The Respective Roles Of The Public And Private Sectors In Pharmaceutical Innovation?) puts the issue in a data-driven perspective that gives the NIH its due – but in the proper frame of reference.

For example, according to Sampat and Lichtenberg, fewer than 10 percent of drugs had a public sector patent, and drugs with public-sector patents accounted for 2.5 percent of sales, but that the indirect impact was higher for drugs granted priority review by the FDA. (Priority review is “given to drugs that offer major advances in treatment, or provide a treatment where no adequate therapy exists.)

478 drugs in our sample were associated with $132.7 billion in prescription drug sales in 2006. Drugs with public-sector patents accounted for 2.5 percent of these sales, while drugs whose applications cited federally funded research and development or government publications accounted for 27 percent.

As Harvard University health economist David Cutler has noted, “Virtually every study of medical innovation suggests that changes in the nature of medical care over time are clearly worth the cost." When it comes to drug pricing it's important to look at the whole picture.

Per Drug Prices Soar, Prompting Calls for Justification (NYT, July 23, 2015), while opaque and seemingly arbitrary drug pricing deserves immediate attention, the value of innovation must not be ignored. Innovation is hard. Today it takes about 10,000 new molecules to produce one FDA-approved medicine. This observation itself is disconcerting, but, further, only 3 out of 10 new medicines earn back their R&D costs. Moreover, unlike other R&D-intensive industries, biopharmaceutical investments generally must be sustained for over 2 decades before the few that make it can generate any profit. Innovation is slow. As any medical scientist will tell you, there are few “Eureka!” moments in health research. Progress comes step by step, one incremental innovation at a time.

Biopharmaceutical companies more often profit by improving existing molecules and making processes more efficient than by revolutionizing the whole field with new miracle products. Discontinuous innovation (such as the recent breakthroughs in Hepatitis C) is a wonderful exception to the rule. As Harvard University health economist David Cutler has noted, “Virtually every study of medical innovation suggests that changes in the nature of medical care over time are clearly worth the cost." When it comes to drug pricing it's important to look at the whole picture.


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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