Latest Drugwonks' Blog
Maybe it’s just age, but I’m starting to pay attention to the pharmaceutical ads I read. In the latest Forbes (January 9), there’s a supplement of 5 sides that addresses benign prostatic hyperplasia (BPH). Like most men of a certain age, one of the things that spooks me is prostate cancer, but I’ve never heard of BPH. Basically, it effects urination: in extreme cases, you can’t control it. One of the 5 sides has a patient questionnaire from the American Urological Association to help men determine whether they should seek a diagnosis. (No, I’m not in the risk zone. If I was, do you think I’d be blogging about it for the world to see?)
Yes, there is a pill: it’s called Flomax® (tamsulosin HCI) and it’s made by Astellas Pharma, a Japanese firm, and marketed in the U.S. by Boerhringer Ingelheim. And, yes, the companies paid for the ad. However, the pill is not mentioned until the third side, and only in a box taking up less than a quarter of the page. The fifth side, of course, is taken up with the reams of small print that the government requires: too small, detailed, and technical for most laypeople to follow, and a waste of resources by government diktat that could have been invested elsewhere.
The rest of the supplement consists of the urologists’ patient questionnaire and a sober description of symptoms, diagnosis, and a variety of treatments ranging from “watchful waiting” to surgery.
So, the chances of my taking this pill are zero, but I know a heck of a lot more about this ailment than I did before. Boehringer Ingelheim helped me become better informed even though it does the company no good. Of course, that’s not what it wanted to achieve, but it’s what economists call a “positive externality”. For a classical economist, this implies that direct-to-consumer pharmaceutical advertising should not be banned; it should be subsidized!
I wouldn’t go that far, but I am more determined than ever to resist government control of communication between drug makers and patients.
Comments from Grace-Marie Turner …
The AARP started the New Year with a big surprise, issuing a study that concluded the new Medicare drug benefit provides a better deal for most seniors than importing drugs from Canada, which the organization has long supported.
“How is this possible? Everybody knows that Canadian drug prices are usually far lower than American ones,” the AARP Bulletin asks. “That remains true. But Medicare drug coverage is insurance, so enrollees are charged copayments instead of full price … And the private plans that provide it have been scrambling to win over customers with good deals for 2006.”
It’s important to remember that the AARP did support enactment of the drug benefit — amidst much criticism from its liberal friends — and it does offer Medicare drug plans in partnership with UnitedHealth. So they do have a bias.
But the AARP used a variety of examples, from seniors with plans that have low monthly premiums/a $250 deductible/and no coverage in the doughnut hole, to those with higher premiums/no deductibles/and full coverage in the gap. In all but one instance, seniors did better with the Medicare plan than with drugs imported from Canada. (In that one example, the senior needed a low-cost maintenance drug that didn’t reach the deductible.)
Further, the AARP study didn’t include seniors with low incomes and those who have selected integrated Medicare Advantage plans, both of whom would certainly do better than with Canadian imports. The AARP study concluded: “Nearly all of our interviewees would be better off financially, by varying amounts, under a Medicare plan, with those using the most drugs potentially reaping the greatest savings over the year.”
The Canadian Internet drug industry is fighting back, saying their drugs are still cheaper than Medicare’s. But they are missing a key point that the AARP emphasized: The new Medicare drug benefit provides insurance coverage against the risk of high drug expenses, which the Canadian pharmacies can’t offer. (And BTW, does it need to be said again, that importing drugs from Canada is dangerous and illegal?)
A story on the story that appears in the 1/06 AARP Bulletin.
AARP edges away from drug imports
Kelly McCormack and Bob Cusack, The Hill, January 4, 2006
In a move that is already attracting criticism from some lawmakers, AARP last week softened its support of drug reimportation legislation by saying that the new Medicare drug benefit saves senior citizens more than buying pharmaceuticals from Canada.
The powerful consumer group has previously endorsed reimportating drugs, but its revised position could severely damage momentum for legislation pending in Congress.
It could also alleviate political pressure on the White House and the
pharmaceutical industry, which have opposed reimportation even though it is supported by a majority of members of Congress.
The group has enormous clout on Capitol Hill, playing a crucial role in passing the Medicare drug bill in 2003 and thwarting the GOP effort to reform Social Security last year.
AARP’s press release on the matter, released over the holidays, did not get much attention last week. But the ramifications of it could be
significant in the debate on the affordability of prescription drugs.
The new analysis, titled “The New Math” Cheaper than Canada? The drug
benefit may be the better deal,” used the government’s Medicare plan
finder to compare “stand alone” plans that cover all of a senior’s
prescription needs to the cost of acquiring drugs across the border. It concluded that seniors who enroll in a low-cost Medicare
prescription-drug plan would save more in drug costs this year than if
they were to buy the same drugs in Canada.
While Canadian drug prices are still cheaper than prices in the United
States, AARP found that when a senior includes all out-of-pocket costs — premiums, deductibles and payments for medications — the price is lower.
AARP stressed that it continues to support reimportation legislation.
“The bottom line is drug prices are too high,” said AARP spokesman Mark Kitchens. “The two ideas [reimportation and the Medicare drug benefit] are not mutually exclusive. Many Americans that are not on Medicare would benefit from reimportation. Medicare Part D is a tool that would make prescriptions more affordable.”
But AARP CEO Bill Novelli adopted a different tone in the group’s Dec.
29 release, saying, “Jan. 1 is truly a watershed day for many Americans who face the high cost of presciption drugs. Millions of Americans who have never had drug coverage can now save more money through Medicare Part D rather than turning to Canada to get their prescriptions.”
Some congressional Democrats are still upset with Novelli for his role
in AARP’s backing of the GOP drug bill more than two years ago.
The AARP release added, “In conversations with potential enrollees, AARP is hearing that the focus has shifted from the legislation to choosing the best plan to suit their needs.”
These statements triggered strong reactions from both sides of the
“AARP is selling Medicare drug coverage, so it’s not surprising that
they’re pushing their own product,” said Rep. Sherrod Brown (D-Ohio).
“Now they are making an apples-to-oranges comparison between Medicare
drug coverage and Canadian drug prices. Seniors deserve decent drug
coverage, and every American deserves lower-priced drugs. That’s the
AARP is working with the insurance company UnitedHealth Group to offer
prescription-drug coverage. More than two million seniors have signed up for drug plans offered by the AARP-backed insurer.
Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said that the AARP study “drives home the point that the new Medicare
prescription-drug benefit can help beneficiaries save some serious money on their prescription-drug bills.” But he emphasized that the savings will not be realized by all beneficiaries.
“We need to continue to work on other ways to lower prescription drugs
costs for all Americans,” said Grassley. “We can’t let up on making
prescription drugs more affordable.”
“Saying that Medicare drug plans ‘cost less’ than buying prescription
drugs from other countries is misleading,” said Jon Yarian, a spokesman for Rep. Gil Gutknecht’s (R-Minn.). “The cost of the prescription drugs hasn’t changed. The only difference is who bears the burden of the expense. American taxpayers will be paying for these savings.”
Rep. Jo Ann Emerson (R-Mo.) said, “The fact remains that we still lack a comprehensive policy to address high prescription-drug prices in America when identical, safe and affordable medicines are readily available to Americans just over our borders.”
The pharmaceutical industry was more optimistic about the potential
savings in the Medicare prescription-drug benefit.
“Seniors shouldn’t have to gamble with their lives by importing
potentially dangerous, counterfeit prescription medicines,” said the
Pharmaceutical Research and Manufacturers of America Senior Vice
President Ken Johnson. “Instead they should opt for a safer, more
affordable option offered by Medicare.”
The New Math
Cheaper than Canada? The drug benefit may be the better deal.
By Patricia Barry
Full story can be found at http://www.aarp.org/bulletin/medicare/new_math.html
If you were looking for a very last minute Christmas gift a couple of weeks ago, a full page ad in the December 25 issue of the New York Times Review of Books might have prompted you to check out The Karasik Conspiracy. According to the blurb, this is “the novel the pharmaceutical industry tried to commission, then control, and finally kill.” Good heavens: what have they done this time?
An employee of the Pharmaceutical Manufacturers of America (PhRMA), the trade association representing the research-based drug makers, at the prompting of an external consultant, offered a couple of authors $300,000 to write a book about a terrorist plot against America that uses unsafe, counterfeit drugs to poison and kill Americans who order lower priced medicines from overseas.
Unfortunately, PhRMA and related folks did not like the first draft. Because they believe that most Americans ordering overseas prescriptions via the Internet are women, they wanted more of a love story to attract female readers, whom the novel would scare off buying those meds.
The whole project crashed on the rocks of literary freedom and PhRMA withdrew its (secret) sponsorship. Piqued, the authors secured the publisher’s commitment and did two things to punish the research-based pharmaceutical industry. First, they re-wrote the novel so that the terrorists were acually financed and managed by a pharmaceutical company. Second, they published their e-mail correspondence with PhRMA and its consultant on their website, www.karasikconspiracy.com.
The easy way to blog about this is to marvel at PhRMA’a misstep in funding this venture - but that’s already been done at Arianna Huffington’s website, amongst others.
Nevertheless, this bizarre episode invites consideration of at least two issues.
1) The pharmaceutical industry’s influence is not as great as we thought. It failed to kill this book, and its public relations now look more absurd than evil.
2) The pharmaceutical industry’s almost exclusive focus on the safety angle of the parallel trade issue has led it far down the wrong track, even into sensationalism. There are exactly zero good arguments in favor of parallel trade: it is a theft of intellectual property; will not reduce prices in the U.S. but increase prices overseas; will reduce scentific R&D in the U.S., etc.
Nevertheless, polls indicate that Americans strongly want the ability to buy cheaper drugs from overseas. However, when pollsters frame the question to suggest that the so-called “Canadian” drugs are actually from Pellucidar, or Azkaban, or somewhere else, support drops significantly.
This has caused the pharmaceutical industry to focus its opposition to parallel trade on the safety element almost to the exclusion of everything else, perhaps to the point of obsession.
2006 began with a burst of sanity from the Washington Post editorial page which concluded its January 2nd editorial with the following statement, “Scientific judgments about the risks and advantages of drugs are not black and white — which is why they are best made by scientists and by the regulatory agency that employs them, not by jurors through the lens of hindsight.”
In medias res!
An important perspective …
By THOMAS P. STOSSEL
December 30, 2005;
The Wall Street Journal
Recently I was working in a Zambian orphanage when a young woman with worsening shortness of breath and chest pain asked me for help. Armed only with a stethoscope, I could do nothing other than diagnose a probable lethal tuberculous infection of the heart. Without devices and drugs developed by companies, doctors are not very useful. It was therefore discouraging to return to my Boston-based medical center and witness leading medical journals sanctimoniously demonizing not only the technologies developed by drug companies but also the companies themselves.
The Journal of the American Medical Association has declared industry-sponsored research categorically untrustworthy, and, to publish it, demands that an academic researcher be an author and take responsibility for its integrity, and also that an independent academic statistician analyze its data. This and other journals rail obsessively against “financial conflicts of interest” of academic researchers working with companies and conduct inquisitions to identify every possible financial motive that might corrupt researchers’ objectivity.
The ongoing Merck situation is a case in point. The New England Journal of Medicine wants the company to correct a five-year-old paper that, they allege, inappropriately excluded three late-breaking adverse events associated with the painkiller Vioxx. The company has correctly responded that published research projects always have defined beginnings and endings, and that it reported all adverse events to the FDA. With the drug off the market and Merck mired in litigation, what problem this correction would solve is unclear. Nevertheless, a Dec. 11 New York Times editorial excoriated Merck for “manipulating a journal article” and informed doctors “that they will need to take the findings of industry-backed studies with skeptical caution.” The message in all this is clear: Medical academics are saints — devoted selflessly to patient care — and corporate people are sinners, morally blinded by greed. But having worked in academic medicine for over 35 years and consulted for companies, this Manichean duality is inconsistent with my experience and a woeful distortion of reality.
In a Sept. 8 article in the New England Journal of Medicine, I reported that no systematic evidence exists that corporate sponsorship of academic research contributes to misconduct, bias, public mistrust or poor research quality. On the other hand, many academic colleagues working in my field of basic biological research (I study how your body cells crawl around, which has no obvious commercial value) would run over their grandmothers to claim priority for a discovery, impose their pet theory on the field, obtain a research grant, win an award or garner a promotion. It’s the same in other scientific fields, and no wonder, because for relatively modest remuneration we compete for scarce resources and labor in obscurity to achieve small advances few understand or appreciate. We exercise our ambitions by publishing research papers in high-profile journals. The research journal revolutionized scientific communication in the 17th century. But until the scientific enterprise grew larger than the first journals could accommodate, no peer review restricted publication. Once restrictions arose, human competitiveness established a journal prestige pecking order that grew in importance as research became more prevalent and complex. The more obscure one’s research, the greater the premium on publishing it in a prestigious journal, where those who administer limited rewards might see it, and where the news media are more likely to hype it.
But unbeknownst to the media, the journals at the top got there because of herd behavior by researchers, not because they are better than lower-tier journals at vetting research quality. Here’s why: Researchers submit their best work to the top journals, which can therefore afford to maintain their prestige by rejecting, not publishing, many high quality papers. That’s brand creation — not science. Most of their editorial effort goes into deciding which submitted papers are sufficiently newsworthy. Anonymous peer review by jealous competitors has its merits, but it has a tendency to select for fashionable if relatively unoriginal and inoffensive papers. Top medical journals compete for papers describing large clinical trials reporting small effects of treatments for diseases affecting many people, although these reports often do not substantively advance scientific knowledge, and many subsequently are invalidated. And no description of medical research in a medical journal comes close to the detail level or intense scrutiny imposed by the FDA on companies’ documentation of drug or device development before approval. Space constraints for readability and cost-savings preclude journals from publishing detailed information on the order of what companies file with the FDA, and unpaid journal peer reviewers, not to mention practicing doctors, would never read it anyway. The recent Korean cloning fiasco, in which the leading science journals published blatantly fraudulent papers, wasn’t the first such incident to afflict prestige journals, and it could never happen under conditions of FDA review. Indeed, doctors should take all studies published in “prominent medical journals” with “skeptical caution.” The lower stringency of journals compared to the FDA is a good thing, because academic biomedical research would come to a screeching halt if subjected to anything even approximating FDA examination.
Scientific knowledge advances reasonably efficiently, and new technologies emerge, despite the looseness of journals. And researchers’ craving for prestige goads them to greater efforts.If reporters understood that journals are magazines, not Holy Scripture, we might not be witnessing ever more onerous regulations inhibiting interactions between academic and industry science. Prestigious biomedical journals are good for our health — provided they stick to their core business of facilitating imperfect communication between researchers. Leave drug and device monitoring to the FDA — and theology to theologians.
Mr. Stossel is American Cancer Society Professor at Harvard Medical School and co-director of the division of hematology at Brigham and Women’s Hospital.
According to an article in The Times of London by Health Editor Nigel Hawkes (“Delay Over Top Cancer Tratment for Women”, Dec. 29), there is wide disparity of access in England’s National Health Service’s (NHS) 32 cancer networks to three new medicines for breast cancer: Femara (letrozole), Aromasin (exemestane), and Arimidex (anastrozole). According to the article, research recently published in the New England Journal of Medicine argues that Femara results in 30% greater chance of avoiding a recurrence after surgery.
The medicines are available in Scotland, and some English cancer networks, but others ration or don’t offer them at all.
This is another example in a long list that shows how so-called “public” health care fails in its primary objective: eliminating disparities in access to health services.
Furthermore, English patients do not have a choice of NHS trusts or cancer networks to use: the government has established them geographically, resulting in a “postcode lottery” , as Mr. Hawkes puts it. An Englishman’s home is his castle, but it’s also an Englishwoman’s prison if it’s within the boundaries of a cancer network that doesn’t provide her with the best treatment.
Fortunately, people in the United Kingdom have the freedom to buy private health insurance to make up for shortcomings in the government’s system (a freedom the Canadian government still denies to its subjects). The major competitor in the private insurance market in the U.K. is BUPA, a non-profit outfit whose standard benefits include “access to new, effective drugs and other treatments that may not yet be available on the NHS, including those for early stage breast cancer, bowel, and lung cancer.” (See www.bupa.co.uk/heartbeat.)
Advocates for breast cancer victims are lobbying hard to get greater access to new medicines via the NHS. Maybe they are aiming too low. Perhaps it’s time for the British government to give the people’s health money to the patients who need it, so that they can buy superior coverage in the private market.
A federal judge has ruled that a District of Columbia law designed to reduce the price of prescription drugs is unconstitutional and blocked its implementation. U.S. District Judge Richard J. Leon said the law, passed this fall, violates constitutional protections of interstate commerce and goes against the will of Congress.
Under the measure, the manufacturer of a drug that cost 30 percent more in the District than in four designated countries (Germany, Canada, Australia, Great Britain) would have to prove that the price was not excessive. The drug company could seek to justify the price based on research-and-development costs, its profit margin or other factors. If the manufacturer failed in that effort, a court could impose civil penalties.
Leon’s opinion said the District law is in direct conflict with federal patent law, in which Congress designed a “carefully crafted bargain intended to provide pharmaceutical companies with incentives to develop drugs. Those incentives include exclusive sales rights for a certain period,” he said. Punishing the holders of pharmaceutical patents in this manner flies directly in the face of a system of rewards calculated by Congress to insure the continued strength of an industry vital to our national interests, Leon wrote.
“This is an important issue and one worthy of a fight,” said Council member and author of the legislation David Catania. “No one suggested it would be quick or easy.”
Or safe. Or sound. Or plausible. Or … legal. But never mind the details.
Catania vowed to continue the legal battle and keep an open mind about revising the law.
Another Council member, Vincent C. Gray, said, “If this [law] is not the instrument that can get it done, then we need to look at others.”
That’s nice too. May I recommend the councilman look at the recent experiences of Nevada, Texas, Vermont, Minnesota, and Illinois for starters.
After all, it’s nice to share.
As seen in today’s Wall Street Journal …
Europe’s Ailing Drug Industry
By GRACE-MARIE TURNER
December 28, 2005
Just a decade ago, more than two-thirds of all drug research was conducted in Europe. Now, 60% is conducted in the United States. Major European drug makers such as Aventis, Novartis and GlaxoSmithKline have shifted significant portions of their research operations from the Continent to the U.S. and beyond. And human talent continues to follow the research money: Some 400,000 European science and technology graduates now live in the U.S., with thousands more leaving every year.
For all this, European investors, scientists and patients have their own political leaders to blame. Deliberate government policy, in the form of price controls imposed by national health-care systems, is slowly choking off a once-thriving sector.
Europe’s government-run and dominated health-care systems are virtually monopsonies. As the primary buyers in their national markets, they have the power to set drug prices 40% to 60% lower than the free-market prices in the United States. These price controls have a serious impact on innovation.
Research and development are expensive. Researchers at Tufts University in Boston determined that drug makers spend at least $800 million just to develop a new medicine, and there is a high risk that a drug could fail after years of testing or flunk the government approval process. In the United States, companies are allowed to recoup their investments and make a profit by charging a price that incorporates their research costs. In Europe, that is seldom the case.
The loss to research caused by price controls was quantified in a recent study by the U.S. Department of Commerce. The study looked at the impact of pharmaceutical price controls in 11 countries, among them Holland, France and Germany, and found that price controls caused a $5 billion to $8 billion annual reduction in funding for drug research and development.
What could that amount buy? According to the study, it could lead to the discovery of three or four new potentially life-saving chemicals each year. So it’s no surprise that from 1998 to 2002 there were only 44 new drug launches in Europe, compared to 85 in the U.S.
But now is no time for Americans to be smug. Ironically, there is a bipartisan move afoot in the United States to implement the same policies that have dried up pharmaceutical research in Europe by having the government “negotiate” drug prices.
The U.S. Congress passed legislation in 2003 that added a new prescription drug benefit for the disabled and elderly participating in the country’s Medicare program. It also created a novel system to deliver the drug benefit, encouraging private, competing companies to negotiate the best prices they can with drug makers.
Congress included in its legislation a “non-interference” clause that preserves the right of these drug plans to negotiate prices freely with the drug companies, without intervention from the federal government. While Americans have mixed opinions about this gigantic government drug program, one thing is clear: Repealing non-interference would put the U.S. pharmaceutical industry on the European path, yet it is a top priority of liberals who plan to bring up this legislation next year.
If non-interference is reversed, it will allow the federal government to step in and set prices for all 40 million Medicare recipients. Since they consume almost half of all prescription medicines sold in the United States, this would effectively amount to nationwide price controls.
We’ve already seen such policies force drug makers out of Europe. Roche chairman Franz Humer has pointed out that the research-based pharmaceutical companies could just as easily move on to Asia, where technology and education are steadily improving. In fact, Roche has just opened a research center in Shanghai, while other drug makers are flocking to Singapore and India.
Of course, if the U.S. gives drug makers a reason to go on the move again, European governments could make their own pitch by eliminating the interventionist policies that have been undercutting drug innovation in their countries. They just might be able to lure talented drug researchers and pharmaceutical investments back home by recognizing the value of pharmaceutical research — not only in creating new medicines but in reviving a valuable industry.
Ms. Turner is president of the Galen Institute, a health-research organization based in Alexandria, Virginia.