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Eli Lily's John Lechleiter tells it like it is. And as John Adams said, "Truth is a pesky thing,"

Debunking The Five Big Myths About 'Big Pharma'

If you are a regular reader of politically oriented commentaries on the pharmaceutical industry then you are familiar with, and perhaps even subscribe to, what I call “the Big Five”—myths about this industry that routinely poison debates, obscure genuine problems, and distort policy recommendations on health care. These myths have been all over the public arena again recently, and it’s time to confront them systematically.

Myth #1 Pharmaceutical companies exaggerate the costs of developing new medicines to justify high prices. In fact: The research and development (R&D) expenditures of this industry are staggering—and since they are matters of public record there is no way and no need to exaggerate them.

In the U.S., the member companies of the Pharmaceutical Research and Manufacturers of America (PhRMA) alone spent more than $51 billion on R&D in 2014. That total is based on the same audited financial statements that appear in our annual financial reports to shareholders. In my own company’s case our R&D spending last year was $4.7 billion. In fact, the pharmaceutical industry accounts for 21 percent of all R&D spending by all U.S. businesses—creating and sustaining hundreds of thousands of jobs while serving as a the engine of biomedical progress for the entire world. This level of investment is what is required today to bring forth new medicines.

Myth #2 Industry does not develop most new medicines; they come from government and university laboratories. In fact: Government and academic research contribute in essential ways to biomedical progress—but the complex and expensive process of turning insights on diseases and promising leads into approved treatments for patients occurs almost entirely in private industry.

A recent academic analysis helps to tease out the key distinctions. Looking at the patent applications of all of the drugs approved by the U.S. Food and Drug Administration (FDA) from 1988 to 2005, the study found that nearly half of the new drugs cited either a public-sector patent or a government publication in their patent applications—demonstrating that publically funded research often contributes indirectly to the discovery and development of new medicines. But fully 91 percent of the approved drugs themselves were patented in the private sector—demonstrating that they were substantially discovered and developed by private firms.

Myth #3 Prescription medicines are the main driver of health-care cost increases. In fact: Expenditures on prescription medicines have been a stable component of health-care spending over time and often contribute to overall cost savings rather than to increases.

Only about 10 cents of every U.S. health-care dollar is spent on retail prescription medicines—which is the same share that was spent on prescriptions in 1960. While the overall use of medicines to treat many diseases has increased dramatically in that same period of time—and average life expectancy at birth in the U.S. has increased by more than nine years—the share of spending accounted for by prescription medicines is the same as it was 55 years ago. That comparison makes pretty clear that medicines are delivering value to the system rather than driving unsustainable cost increases.

A study published in the journal Health Affairs provides a good example of how this has worked. The researchers compared total medical expenditures for patients with four major diseases who faithfully used the medicines prescribed by their doctors versus those who did not. The “adherent” patients incurred somewhat higher prescription-drug costs, of course, but savings in their overall health-care expenses exceeded the extra drug costs by wide margins.

The fact that nearly nine out of 10 U.S. prescriptions are filled with generic medicines (which originated in the innovator sector, by the way) also has a lot to do with the overall stability of drug costs. The impact of generics has been especially positive for senior citizens and the programs that insure them. Looking at the top 10 prescription classes by volume used by Medicare Part D beneficiaries, the average daily cost of these therapies declined from $1.50 in 2006 to well under a dollar in 2013, and is headed much lower still.

Much discussion about pharmaceutical quality at the FDA of late (Drug Quality: If you can’t measure it, it doesn’t count, The silent “n” of PDUFA) – and specifically about a more 21st century view of bioequivalence.

And appropriately so. But is the agency doing the right thing the right way? Consider Concerta. Will the courts follow the chevron deference route or tell the FDA to put it on paper?

Here’s the skinny from the Wall Street Journal:

FDA and Mallinckrodt Lock Horns Over the Right to Sell Generic Concerta

By Ed Silverman

To what extent should the FDA be allowed to reclassify a generic drug when the agency believes it is no longer equivalent to the brand-name version?

The issue is being raised in an unusual lawsuit claiming the agency overstepped its bounds by deciding two generic drugs used to treat ADHD should no longer be substituted for the widely used Concerta treatment.

And the outcome of the case may have implications for generic drug makers and the FDA.

Here’s what happened: After reviewing side effect reports indicating some patients were not getting the expected benefit, the FDA analyzed the generics, which are made by Mallinckrodt and UCB, and found the drugs were not bioequivalent. This meant the drugs were not absorbed in the body in the same way as Johnson & Johnson’s Concerta or an authorized version also made by J&J, but sold by Actavis.

So last November, the FDA changed the ratings for the two generic versions, which contain the same active ingredient as Concerta. As a result, the two generics could no longer be automatically substituted for Concerta at pharmacy counters. The agency also gave the drug makers six months to provide data showing bioequivalency to Concerta or their drugs should be withdrawn from the market.

The deadline passed this week, but the generics remain available and it is unclear how the FDA will proceed. An agency spokeswoman would not comment. A spokeswoman for UCB says its Kudco unit, which sells generic Concerta, is working with the FDA to meet its requirement. Mallinckrodt, however, is a different story. The drug maker is not showing any signs of complying with the agency mandate.

Why? In its lawsuit, which was filed last November, Mallinckrodt challenged the authority of the agency to reclassify its generic by arguing the FDA failed to provide sufficient notice of its decision and violated its Constitutional rights. Moreover, Mallinckrodt notes the FDA acknowledged there are no safety issues and patients should continue taking the generics if they are not experiencing problems.

As a result, Mallinckrodt chief executive Mark Trudeau told Wall Street analysts last week that, while his company is talking to the FDA, the drug maker plans to sell its generic for the “foreseeable future.” A Mallinckrodt spokeswoman reiterated his remarks in response to questions, and an FDA spokeswoman would not comment, citing litigation.

Meanwhile, the generics can still be found in plenty of pharmacies. CVS and Rite Aid, for instance, stock the drugs, say spokespeople for the retailers. As Trudeau noted, the Mallinckrodt generic can be prescribed in “virtually every state in the nation,” depending upon state regulations.

As a result, new ADHD patients may also be prescribed a drug that is not therapeutically equivalent to brand-name Concerta. This is especially likely at a time when generics are valued as lower-priced alternatives.

This is not the first time the FDA has reclassified generic drugs over equivalency. In 2012, the agency changed ratings for some generic antidepressants. But the Mallinckrodt challenge is a first. Whether the drug maker succeeds is unclear.

But for now, the episode poses a dilemma, because the showdown has inadvertently produced another category of generic Concerta. A key issue is the extent to which the FDA can serve the public interest and retain the confidence of the American public.

“In a broad sense,” says Kurt Karst, an attorney who specializes in FDA regulatory matters, “this raises questions about the integrity of the generic drug system in the U.S.”

Express Scripts new ‘study’, “Super Spending: U.S. Trends in High-Cost Medication Use” diverts attention from the fact that it profits by discriminating against Americans who need affordable and open access to new medicines.

To maximize profits Express Scripts and health insurers are systematically placing most or all drugs that treat these and other conditions on the highest cost tiers to discourage enrollment by individuals based on age or based on health conditions. HHS notes such practices make those plan designs discriminatory.

To be sure 1 percent of all patients do use a considerable amount ($50000 or more) of medications.  But it is also true that the 1 percent of the most costly patients also consume about 22 percent of all health care spending.

Using Express Scripts data we find that the drug costs of super spenders is a little over 7 percent of the total spending of the 1 percent most costly cohort of patients. 

As the number of people using new medicines increases, their health care costs as a percent of total health care spending has declined.

In 2011, 11.4 percent of total cancer expenditures were for prescription medicines as compared with 3.6 percent in 2001.  The proportion spent on inpatient hospital stays declined from 47 percent in 2001 to 35 percent in

Meanwhile, the claim that drug spending is unsustainable is itself unsustainable

The share spent on medicines will remain flat for the rest of the decade.

Express Scripts claims that patients who used $50000 or more of medicines paid from $1773-2782 out of pocket in 2014.  This estimate also includes Medicare patients who pay only 95 percent of the cost of a drug after an out of pocket maximum is met and Medicaid patients who have a nominal co-pay of $3-5 for all medicines.  Thus, the Express Scripts study masks the burden on consumers in health exchange plans. 

Moreover, HHS estimates that out of pocket spending for drugs, as percent total drug expenditures will actually increase 27 percent over the next decade. 
This shift began a decade ago when PBMs and insurers created formulary tiers of increasingly higher cost and placed newer medicines for chronic conditions on the highest cost-sharing tier.

Despite overwhelming evidence that higher co sharing reduced use of new medicines and leads to higher treatment costs, PBMs and health plans have placed drugs for cancer, rheumatoid arthritis, and multiple sclerosis in the highest cost-sharing tier.  The number of Silver plans in the health exchange that charge patients 30 percent or more has increased to 41% in 2015 from just 27% in 2014.

Such practices have been singled out as violating the civil rights of patients. As the Department of Health & Human Services has stated: “placing most or all drugs that treat a specific condition on the highest cost tiers discourages enrollment by individuals based on age or based on health conditions, in effect (is) making those plan designs discriminatory.”

The fulll CMPI report:  Super Misleading: Express Scripts Super Spenders Study will be available Monday..

FDA puts it's money (actually, our money) where it's mouth is per pharmaceutical quality.

From the pages of Drug Industry Daily --

FDA Grants Seek to Further Quality Metrics Approach

The FDA is offering two grants of up to $600,000 each over three years in exchange for data to establish statistically based pharmaceutical quality standards — a further sign of the agency’s commitment to using quality metrics.
The proposed projects, announced Friday, will evaluate batch-to-batch and unit-to-unit variability of companies’ products, capturing data on such quality chemical and physical attributes as tablet weight, assay, content uniformity and dissolution.
The data will be used to create a risk-based lifecycle approach that measures quality over every step of the manufacturing process, Peter Pitts, president and founder of the Center for Medicine in the Public Interest and a former FDA associate commissioner, tells DID.
CDER plans to use the information to develop data-based guidance on the use of statistical tools and standards to improve drug quality.
Grantees should look at factors such as the range of product dosage forms, manufacturing complexity, types of manufacturing, inter- and intra-batch variability and analytical method variability. The goal is to be able to statistically characterize manufacturing variability, whether across the entire pharmaceutical industry or defined by subsets identified through analysis, the FDA says.
Down the line, collected variability data could be used for bioequivalence testing, Pitts says. It also could be used by OPQ to help support quality-based inspections.
The agency will award $200,000 per recipient in fiscal year 2015, with additional allotments of $200,000 possible over the next two years.
Applications are due July 7, and the FDA encourages applicants to apply early to allow time for any corrections.
Read the announcement at

Statistics are like a bikini. What they show you are interesting, but what they conceal is essential.

Late last month the FDA’s Bioresearch Monitoring (“BIMO”) Program released its annual report on inspections from the previous fiscal year. 

In light of many key issues and initiatives, some of the results are, well … thought provoking.

For example:

·      Following well-publicized recalls of bioequivalent but therapeutically unacceptable generic versions of Budeprion and Metoprolol, the agency reported a 7% decrease in bioequivalence inspections (205 in FY13 and 190 in FY14). Something for the new Office of Pharmaceutical Quality to think about.

·      Can you say “Ranbaxy?” BIMO shows only paltry changes in international inspections from the drug side (CBER down 1 inspection – 24 in FY13 and 23 in FY14 and CDER up a dozen -- 202 in FY13 and 214 in FY14). It’s not the “n” it’s only the beginning.

With PDUFA reauthorization conversations getting under way, these and other metrics are going to be discussion starters and debate drivers. The complete report is worth a read.

Though medicines for cystic fibrosis are life saving,  insurers and pharmacy benefit managers force people with the disease to pay thousands of dollars out of pocket for them.  No new medicine has been approved for CF in nearly a decade.  Two years ago, one medicine called Kalydeco was approved.  It helps people with a specific genetic mutation causing their disease have been approved.  They are the only hope for the 2000 or so people with that mutation. 

Insurance companies and PBMs have responded by denying use of the drug altogether or forcing people to fail on other therapies or not covering the drug at all. 


The FDA is on the very of approving another medicine called Orkambi, which targets another rare mutation that causes CF patients to choke to death as their lungs fill up with mucus.   It will likely benefit another 4000 people.   And it will cost about $250K per patient per year.

This medical apartheid is justified by Steve Miller CEO of Express Scripts -- the biggest PBM in the US -- "we hope the product comes out at a more affordable price, because the burden to payers is extraordinary."

Except that it isn't.   The total market for CF drugs in the US is about $1.6 billion.  That's less than .001 percent of total health care spending.

Meanwhile Orkambi reduces pulmonary exacerbations.. which sounds nicer than it is.  They are described as a " period when lung disease worsens. This can include an infection, an increase in cough and sputum, a drop in lung function and weight loss. "

Exacerbations are linked to a higher risk of premature death, hospitalizations, and massive use of other medicines..all of which Orkambi would presumable prevent.  And the cost of an exacerbation can run into the hundreds of thousands.  That doesn't include the cost of lost productivity and reduced quality of life. 

So which is the bigger burden to payers and patients? 

But it appears that the PBMs and insurers don't care.  They will make Orkambi more expensive or  unavailable.

Such practices have been singled out as violating the civil rights of patients. As the Department of Health & Human Services has stated: “placing most or all drugs that treat a specific condition on the highest cost tiers discourages enrollment by individuals based on age or based on health conditions, in effect (is) making those plan designs discriminatory.”

Yet, insurers and PBMs have actually increased their redlining of the sick:  The number of plans engaging in discrimination has nearly doubled since 2012.  And this year they are charging 30 percent more for breakthrough medicines than they did in 2014.   PBMs are also increasing the number of medicines they won’t pay for at all by 35 percent.   Moreover, insurers are paying doctors bonuses to use cheaper drugs and not paying for medicines tailored to the specific ‘personality’ of their disease.

Understanding CDER’s “Super” Office of Pharmaceutical Quality and Its Effect on You
A One-On-One With FDA’s Dr. Janet Woodcock and Dr. Lawrence Yu

Wednesday, July 8, 2015  • 1:30 p.m. - 3:00 p.m. EDT

Sign up now for this exclusive question-and-answer webinar with FDA veteran Peter Pitts, President and Co-founder of the Center for Medicine in the Public Interest, as he speaks with Dr. Janet Woodcock, Director of CDER and the driving force behind the formation of the OPQ and Dr. Lawrence Yu, Acting Director of CDER’s Office of Pharmaceutical Science, to help you understand all the changes that will effect you.

They will discuss:

  • Why this new super office was formed and what offices goals are
  • How the formation will impact any pending business with the original eight offices
  • Whether or not you’ll need to set up new contacts with regard to review or quality issues
  • Are any changes coming to individual offices’ staffing or management?
  • The latest on the search for a permanent director to lead the new office

Plus, we set aside 30 minutes to give you the opportunity to have your own questions answered.

This webinar is of particular importance to anyone who has had dealings with any of the following offices, which the OPQ now incorporates:

  • Office of Program and Regulatory Operations (OPRO)
  • Office of Policy for Pharmaceutical Quality (OPPQ)
  • Office of Biotechnology Products (OBP)
  • Office of New Drug Products (ONDP)
  • Office of Lifecycle Drug Products (OLDP)
  • Office of Testing and Research (OTR)
  • Office of Process and Facilities (OPF)
  • Office of Surveillance (OS)


Your Expert Presenters

Janet Woodcock, M.D., is director of the Center for Drug Evaluation and Research (CDER) and also serves as acting director of CDER’s Office of Pharmaceutical Quality (OPQ). A prominent FDA scientist and executive, Dr. Woodcock has received numerous awards, including a Presidential Rank Meritorious Executive Award, the American Medical Association's Nathan Davis Award, and Special Citations from FDA Commissioners. She joined FDA in 1986.

Dr. Lawrence X. Yu joined FDA in 1999 as a team leader in CDER’s Office of Pharmaceutical Science’s (OPS) Division of Product Quality Research, and was later promoted to deputy director in the Office of Generic Drugs. He currently serves as Acting Director, OPS, adjunct Professor of Pharmaceutical Engineering at the University of Michigan, and Associate Editor of AAPS J.

Peter Pitts is President and co-founder of the Center for Medicine in the Public Interest. Prior to founding CMPI, Pitts was a Senior Fellow for healthcare studies at the Pacific Research Institute. From 2002-2004 Peter was FDA’s Associate Commissioner for External Relations, serving as senior communications and policy adviser to the Commissioner. He supervised FDA's Office of Public Affairs, Office of the Ombudsman, Office of Special Health Issues, Office of Executive Secretariat, and Advisory Committee Oversight and Management.

Webinar Details

When?  Wednesday, July 8, 2015

Time? 1:30 p.m. – 3:00 p.m. EDT

There’s just one low registration fee per site regardless of how many participate. Generous multi-site discounts are available, too. Simply call (888) 838-5578 in the U.S. or +1 (703) 538-7600 globally.


The U.S. House Energy & Commerce Committee staff have asked the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO) to offset some or all of the cost of the proposed 21st Century Cures Act, according to individuals involved in the discussions.

According to a report in BioCentury The trade associations adamantly refused to consider the proposal in a conversation with E&C staff this week.

A discussion draft of the legislation released last week included $10 billion over five years to create an “Innovation Fund” at NIH. The draft employed unusual language to bypass the standard funding process, avoiding the need for approval by House and Senate appropriations committees.
E&C Chairman Rep. Fred Upton (R-Mich.) has said the bill will be fully paid for, which means the committee will have to find revenue or savings to cover its costs and make the bill budget-neutral.

Industry objects to paying for the 21st Century Cures Act because companies feel the current discussion draft contains few provisions that would benefit them. Provisions in the first discussion draft that would have provided generous additional market exclusivity for many drugs were stripped out due to objections from Democrats.

Per BioCentury, Biopharma companies are also disappointed by language in the draft on biomarker qualification, a top priority for industry, because it codifies current FDA practice and is unlikely to increase the number of qualified biomarkers.
Companies also do not want to set a precedent for industry funding of NIH. Industry is already paying directly for numerous FDA programs through user fees, and will certainly be asked to increase its contributions to cover the cost of the Breakthrough Therapies program in PDUFA reauthorization negotiations.

In response to a May 4, 2015 story in the New York Times about Essure permanent birth control, Bayer submitted the following letter to the editor, which the New York Times refused to publish in its entirety.

The Gray Lady’s space considerations notwithstanding, this is an issue of both fairness and accuracy.

To the Editor:

Re: “Long-Term Data on Complications Adds to Criticism of Contraceptive Implant” (May 4, 2015), Roni Rabin mischaracterizes a recently published long term study on Essure. This well-designed, well-executed study reinforces the safety and efficacy of the device and the procedure. The side effects reported are consistent with numerous other scientific studies and the Instructions for Use on Essure – which the FDA approved in 2002 and then reevaluated in 2013.   

Women deserve access to a wide range of contraceptive options, and Essure is an important non-surgical and non-hormonal option for women who have completed their families and want permanent birth control. However, no medical device, procedure, or even drug is completely free of side effects.

That's why the importance of the conversation between patients and their doctors cannot be overstated. Health professionals must appropriately counsel their patients about Essure, and women who experience any issues should immediately contact their OBGYN.

Moreover, while social media is a valuable tool for patient support, it should never be used as a substitute for medical advice from an experienced, board certified physician. Bayer has reached out to many women on social media who have said they’ve experienced problems with Essure, and we encourage any woman who has concerns to contact us at or 1-888-84BAYER so we can help her get the support she needs.


Philip Blake
President, Bayer Corporation

Unless the FDA takes control of the off-label conversation firmly and swiftly. Things are not going to be pretty.

Case in point -– a company jumping on the off-label bandwagon because of an FDA decision they didn’t like? Dangerous times.

Here’s the brief from the Wall Street Journal:

Drug firms challenge FDA over free speech

To what extent should drug makers be allowed to distribute information about unapproved uses for their medicines?

The question has been widely debated after a federal appeals court three years ago overturned the criminal conviction of a sales rep for promoting so-called off-label uses of a drug. The court ruled his actions constituted protected speech, since the information was truthful and not misleading.

Since then, the pharmaceutical industry has been lobbying the FDA to revise its guidelines, because the decision only applied to three states. The agency hasn't indicated when it will take action, but plans to hold a meeting this summer to review the topic.

Now, one drug maker is trying to force the issue. Amarin Corp. on Thursday filed a lawsuit hoping to convince a federal court that the FDA prohibition on off-label promotion violates the company’s First Amendment rights, and that its reps should be able to convey truthful and “non-misleading” information to doctors.

“It’s important the FDA does not have the power to stifle speech,” said Floyd Abrams, a constitutional lawyer who represents Amarin. “And FDA is effectively stifling speech, unless we get a firm ruling from a court, which is very important to ensure the public is well served.”

Amarin took action after growing frustrated with an FDA decision about its Vascepa prescription fish-oil pill. The medicine is approved to treat people with very high levels of triglycerides, a type of fat in the blood that can lead to heart disease, but Amarin sought to sell the drug to people with lower levels.

Late last month, the agency rejected that request and also decided Amarin couldn't include clinical trial data in Vascepa labeling about the extent to which the pill may effectively treat people with slightly lower levels of triglycerides. Data from the trial is in the labeling.

As far as Amarin is concerned, it now “finds itself in a bind,” according to its lawsuit in federal court in New York. The drug maker “may not freely communicate truthful and nonmisleading information about Vascepa to health-care professionals…without fear of criminal prosecution and civil liability.”


“This is a very big deal,” said Ira Loss, senior health-care analyst at Washington Analysis, a consulting firm. “If the court rules they can disseminate information as they would like to do so, It would open things up for much more promotional activity of pharmaceutical products.”

To what extent Amarin will be successful remains unclear. But the case is going to be very closely watched because it has the potential to dramatically shift the way the pharmaceutical industry markets medicines and interacts with physicians.

This “could bring to a head a lot of the issues we’ve all been talking about for a number of years,” said Alan Bennett, a lawyer who represents the Medical Information Working Group, several drug makers that petitioned the FDA to move faster to issue new guidelines about conveying off-label information.

But some worry a ruling that favors Amarin will weaken protections for patients. “This will undermine the drug-approval process and allow companies to bypass the FDA,” said Michael Carome, who heads Public Citizen Research Group. “There would be no incentive to seek FDA approval for new uses.”

The lawsuit, meanwhile, adds pressure on the FDA to move faster to issue guidelines. “It’s always better for the agency to control the pace,” said Peter Pitts, a former FDA associate commissioner for external affairs, who now does policy consulting for the pharmaceutical industry.


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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