Latest Drugwonks' Blog
California voters will be confronted tomorrow with two ballot initiatives on pharmaceutical pricing: Proposition 78, promoted mainly by the pharmaceutical industry, and Proposition 79, promoted mainly by the public employee unions.
The bottom line: Prop. 78 will increase drug access and reduce drug prices for those in need precisely because it will enable the drug producers to make more money, by discounting drugs for those less fortunate without being forced to offer the same discounts to the federal government. Prop. 79 explicitly would reduce drug access for the needy in an effort to subsidize the middle class, and would engender a tidal wave of litigation.
Consider a drug that costs, say, 20 cents per pill to produce after the enormous investments in research and development have been made. A wealthy patient might be willing to pay, say, $1 for each pill; but someone less fortunate might be able to afford, say, only 25 cents. Is it profitable for the drug producer to sell the drug to the poorer patient for 21 cents? The answer is yes, as long as the producer does not have to give the same price break to the wealthier patient.
Beginning in 1990, federal law in effect made it illegal to offer that price break to the poorer patient, because then the drug producers would have been required to give that same price to the feds. And so the need to cover large research and development costs prevented the drug producers from using such differential pricing to increase access to medicines for the poor.
The Bush Administration has changed the rules so that the producers now may give such discounts to those less fortunate through Patient Assistance Programs, without being forced to offer those same low prices to federal drug programs. Prop. 78 enables the producers to engage in such discounting in California by creating a legal gateway to the producersÃ¢ Patient Assistance Programs. Therefore, as counterintuitive as it may seem, the voluntary approach underlying Prop. 78 yields far greater benefits for those in need precisely because it allows the pharmaceutical producers to make more money.
Prop. 79 attempts to force sharp price discounts for over half the California population by threatening to remove from the Medi-Cal preferred drug list the drugs produced by those pharmaceutical firms not agreeing to the discounts demanded by a new California Prescription Drug Advisory Board. In other words, Medi-Cal patients would be denied the newest and most effective medicines if a given drug producer refused to offer sharp discounts to the middle class, unless a new state bureaucracy granted prior authorization for a given prescription.
That is why Prop. 79 almost certainly would never be implemented: The federal government has made it clear (in a 2002 letter to the state Medicaid directors) that it will not approve state programs that threaten the benefits of Medicaid patients in efforts to reduce drug prices for those not poor. And that is why the original program in Maine—-quite similar to Prop. 79—-was never implemented; after years of litigation, the state promised not to put drug access for poor patients under the Maine Medicaid program at risk. And so the actual program implemented in Maine is a voluntary one, as is the more successful program in Ohio, similar to Prop. 78.
Under Prop. 79, Ã¢profiteeringÃ¢ would be a civil offense, Ã¢definedÃ¢ as Ã¢unconscionable pricesÃ¢ or Ã¢unjust or unreasonable profits.Ã¢ This is a blatant attempt to conduct Ã¢negotiationsÃ¢ with a gun held to the heads of the drug producers. Any attorney could file a lawsuit, with damages of $100,000 plus costs per prescription. It entirely accurate to say that Prop. 79 would take from the poor and give to the lawyers.
Why is it that the political Left in California is supporting something as preposterous as Proposition 79, a blatant attempt first to politicize pharmaceutical pricing not only in California, but nationwide, second to create a litigation lottery that only the lawyers can win, and third to use political and regulatory processes to confiscate private property? The answer simultaneously is both subtle and crude: Proposition 79 would have the effect of making not only the poor but the broad middle class as well dependent upon government, and that is the overriding central goal of the Left. That is something that all freedom-loving individuals should fear and oppose.
Much of the media buzz that preceded last week’s FDA Part 15 hearing on DTC focused on words like “bans” and “restrictions” and “enforcement.”
But when the presentations were over and the auditorium was empty, the storyline had changed to “how can the existing system be made to work better.” Successful but not sexy.
Despite churlish howling from the likes of Peter Lurie, slanted research from Kaiser Permanente, a healthy dose of self-important academics, off-topic videos, and the “usual suspect” apocalyptic tales of DTC causing the demise of Western Civilization, it was a pretty good meeting. But you’d never know it from the almost complete dearth of media reporting (at least from the members of the Fifth Estate who work for daily newspapers). I’m sure that’s because the underlying theme from the FDA panelists (and the deliciously sassy comments from Bob Temple) made it pretty clear that the agency wants to find ways to help make DTC a more potent public health tool — not to eviscerate it as a tool altogether.
My suggestion — How about a standing FDA Advisory Committee on Patient Communications?
After eight panels and thirty-eight panelists (I was the 37th), the consensus take-away was that DTCA (“A” = Advertising) can be improved by embracing a concept that can be best described as DTCC (“C” = Communication), or DTC Squared. But you’d never know it by reading the newspapers.
I leave you with this quote from Mark Twain, “Be careful about reading health books. You may die of a misprint.”
Merck Scores Major Victory
In the Second Vioxx Trial
By HEATHER WON TESORIERO, BARBARA MARTINEZ and PAUL DAVIES
Staff Reporters of THE WALL STREET JOURNAL
November 3, 2005 11:07 a.m.
ATLANTIC CITY, N.J. — Merck & Co. emerged entirely unscathed from the second high-stakes trial over its Vioxx painkiller, marking a critical comeback from a big loss in the first trial and giving the drug giant some momentum as it faces a wave of lawsuits related to its former blockbuster. A state court jury concluded that Merck fairly represented the safety risks of its Vioxx painkiller, and further found that the drug played no role in the heart attack of the 60-year-old plaintiff. In addition, it determined that Merck didn’t commit consumer fraud, meaning that it fairly marketed the drug to doctors and patients. Merck stock rose sharply after the news. Its shares jumped 7%, or $1.99, to $30.40 after the verdict was announced. The jury of three men and six women deliberated for a little more than a full day before delivering its sweeping exoneration of Merck. Frederick “Mike” Humeston had alleged that Merck had failed to warn the public about its safety concerns over Vioxx, which he claimed had caused his heart attack after he took the drug intermittently for two months. The jury, which heard seven weeks of testimony, had to consider two charges: failure to warn and consumer fraud. In deciding against Mr. Humeston on the first question, it concluded that Merck either did not know that Vioxx carried cardiovascular risks at the time that Mr. Humeston was prescribed it in 2001, or that the company adequately warned physicians about those risks. It further determined that Vioxx was not a substantial factor in causing the heart attack. In considering the claim of consumer fraud, the jury examined whether the company had misrepresented Vioxx’s risks or otherwise used “unconscionable practices” in marketing the drug to physicians. It decided Merck had not done so.”We’re very pleased with the jury’s verdict,” said Jim Fitzpatrick, a spokesman for Merck. “This confirms our strategy” to fight each case individually based on the science. “I think the science is very clear that there is no short-term risk.” Merck pulled Vioxx from the market in September 2004 after a long-term study showed the drug doubled risk of heart attack or stroke if taken for 18 months or longer. At its peak, Vioxx brought Merck about $2.5 billion in annual revenues.
Inside the Case
A cornerstone of Merck’s defense has been that low-dose, short-term use of Vioxx wasn’t found to cause heart attacks. Mr. Humeston said he took the painkiller intermittently for only two months. Unlike the central figure in the Texas trial, who died, Mr. Humeston survived and is back at work.
Mr. Humeston’s lawyers and expert witnesses said the clinical studies gave warning signs about its risk and that the company failed to adequately investigate them before introducing Vioxx in 1999. The Food and Drug Administration approved Vioxx as “safe and effective” for treating different types of pain four separate times over the years, the last time a month before Merck pulled it off the market, Merck has said. Agreeing with Mr. Humeston’s lawyers that the best evidence in the case was Mr. Humeston himself, Merck’s defense tean insisted his physical condition — he had elevated blood pressure, was overweight and was under stress from a dispute with his U.S. Postal Service bosses — triggered the Sept. 18, 2001 heart attack, not Vioxx.
Mr. Humeston had been given a 30-pill Vioxx prescription in May 2001 but didn’t use it all because he said it wasn’t working for him. But he got a second prescription two months later. Mr. Humeston and his wife, who also testified, remembered that he had taken the last pills in the bottle the night he was stricken, but she couldn’t remember when his last dose was when she was asked at the hospital later.
The judge overseeing thousands of federal lawsuits said that an effort by plaintiff’s lawyers to keep their cases in state courts was “counterproductive” to his desire to eventually settle all claims. “There’s a movement afoot to work outside” multidistrict litigation, U.S. District Judge Eldon Fallon told lawyers at a status conference. “I think that’s counterproductive.”
The first federal Vioxx trial opens Nov. 28 in Houston.
The judge said thousands of state trials counteract his goal of reaching a global settlement of all Vioxx cases. He wants state cases folded into the same pot that holds the consolidated federal cases under his purview so he can preside over a few trials and determine a proper resolution to all the litigation.
Plaintiffs’ lawyers Mark Lanier of Houston and Perry Weitz of New York say they have assembled a legal “dream team” of 10 law firms and 350 lawyers to push all future Vioxx lawsuits into state courts. Federal courts are generally considered more defense friendly. Plaintiffs allege the company knew Vioxx was dangerous years before withdrawing the drug but downplayed those concerns to push sales.
After the Nov. 28 Vioxx trials, the next federal Vioxx trials will be in February, March and April next year.
Jury verdicts on the specific counts in Frederick Humeston et al v. Merck & Co. Inc.
Counts regarding failure to warn of Vioxx risks:
* Did Merck fail to adequately warn physicians of the link between Vioxx and higher risks of heart attack and stroke, which it knew or should have known about before Frederick “Mike” Humeston’s heart attack?
Jury: NO by an 8-1 vote.
Counts regarding failure to warn of Vioxx risks:
* Did Merck commit consumer fraud “by using unconscionable commercial practices” when marketing Vioxx to physicians?
Jury: NO by a 9-0 vote.
* Did Merck “make misrepresentations that had the capacity to mislead concerning the cardiovascular risk of Vioxx” while marketing Vioxx to physicians?
Jury: NO by a 9-0 vote.
* Did Merck “intentionally suppress, conceal or omit material information about an association between Vioxx” and increased risk of heart attack and stroke?
Jury: NO by a 9-0 vote.
Say bye-bye to Canadian drug buys (PawtucketTimes.com)
Jim Baron, Times staff reporter
PROVIDENCE — Rhode Island’s brief experiment with licensing Canadian
pharmacies to dispense cheaper prescription drugs here is apparently
over before it started. “It’s more or less a dead issue,” Don Williams, the state Department of Health’s associate director for health services regulation said on Tuesday.
The General Assembly passed a measure in 2004 allowing DOH to license
drug stores from Canada to sell pharmaceuticals in Rhode Island and Gov. Donald Carcieri allowed it to become law without his signature. But regulations promulgated by DOH to assure the quality and safety of the medicines made it too burdensome and expensive to be worthwhile to any pharmacies north of the border. “It was impossible to implement,” Williams said.
Initially, four pharmacies from various Canadian provinces applied for
licenses, Williams said. But when he returned the applications with
information about the new regulations, he said, none sent their
applications back. Williams said the law gave DOH a charge to ensure that drugs being re-imported to Rhode Island from Canada were as safe and effective as those bought in the United States. Since different Canadian provinces have different regulations, he said, “By the time we put on all the requirements we needed to put our blessing on it, it didn’t make sense for the Canadian pharmacies to try to get a license.”
“We were afraid that was going to happen; we hoped we would get proved
wrong,” said Jessica Buhler, project director for the Senior Agenda
Consortium, a group that fought the regulations when they were proposed. “That was the whole point of doing the regulations, that the pharmacies wouldn’t apply.” Buhler said the consortium and the Gray Panthers are considering what to do about the problem of the regulations making the cost of doing business here prohibitive for Canadian pharmacies. Richard Bidwell, president of the Gray Panthers of RI, said, “the Health Department went out of its way to create regulations that would kill the law. I don’t think they should have done that.”
Williams said DOH has “made a policy decision” not to try to stop
individual Rhode Islanders who by mail, phone, the Internet or other
means try to obtain prescription drugs from Canada. “If individuals want to assess the situation and think it makes sense to buy drugs from Canada and they are happy with the safety, we are not going to impede that,” Williams said. “But if someone tries to establish a retail outlet, that we would go after.”
Bidwell says he buys his prescriptions in Canada through a storefront
office called Canadian Direct Discounters on Post Road in Warwick. “They will give you prices and handle the paperwork,” he said, put purchasers pay the pharmacy directly with a credit card. There is a similar business called Canada Drug Service on North Washington St. in North Attleboro, he said. Bidwell said he has yet to determine whether it will be cheaper to continue buying prescriptions from Canada once the new Medicare Part D drug program is implemented. “I’m not sure what the dollars and cents are going to add up to,” he said Monday. “It may well end up costing more to be on Medicare Part D than buying medicine in Canada.”
Secretary of State Matt Brown set up a website, www.rimeds.com, that
offers prescription drugs from international pharmacies at a savings of 30 to 65 percent under the retail price. Prescription drugs are cheaper in Canada and certain other countries because the governments there have implemented price controls that have not been imposed in the United States. In many cases, drugs manufactured in America and sold to foreign countries that have price controls can be re-imported and still be cheaper than the prices charged in U.S. drug stores.
Here’s my testimony from today’s FDA Part 15 hearing on the future of DTC. My thesis — what does DTC want to be when it grows up — and how will FDA help?
And here is a video link to C-SPAN’s coverage of the hearing.
Bob Goldberg’s article on branded generics in last Wednesday’s Washington Times generated this reply from Kathleen Jaeger, President and CEO of the Generic Pharmaceutical Association. I thought the letter was foolish — Bob (not surprisingly) had a stronger reaction.
First Ms. Jaeger …
I read with interest Robert Goldberg’s views (“May Reagan GOP R.I.P.,” Op-Ed, Wednesday) on the Senate Medicaid proposal regarding brand products that are masquerading as generics, also known as “authorized generics.” To be clear, authorized generics are brand products marketed under a different label by the brand company or a third-party distributor. Mr. Goldberg is proposing a double standard for the brand industry. On the one hand, he wants authorized generics to be considered generics by the Centers for Medicare and Medicaid Services (CMS) for purposes of the agency’s best price calculation, which is the lowest price at which CMS purchases medicines. On the other hand, he wants authorized generics to be considered brand products so they can bypass the Food and Drug Administration’s rigorous generic drug approval system and take advantage of a loophole in the federal law known as the Hatch-Waxman Act. One provision in the Senate Medicaid proposal would clarify CMS’ treatment of authorized generics to ensure that the federal government is not overpaying for these medicines. Currently, brand companies obtain a major windfall by not including in their CMS best-price calculation brand products that are dressed up as generics to the detriment of the federal and state government programs. In other words, when it comes to federal reimbursement, the brand company benefits by calling the “authorized generic” a generic product. Mr. Goldberg’s views would indicate that this overpayment is an acceptable practice that taxpayers should embrace. While there are other issues of concern in the Medicaid bill currently under consideration in Congress, this provision would clarify the inconsistencies in the treatment of these brand products. The brand industry can’t have it both ways.
And here is Bob’s response …
Very interesting, a brand drug which has already received FDA approval after going through 15 years of review which then goes generic undergoes a less rigorous review than a copy of that product which only has to show that it shows up in the blood at the same levels in a handful of people a generic firm puts up in a hotel room? As for best price, once a generic version of a product hits the market, the brand product loses market share. The total cost to consumers — including the government, goes down. The only losers are the generic companies who, having spent a few hundred thousand suing drug companies to challege their patent, don’t get a crack at the six months of monopolistic pricing and the millions the Hatch Waxman law affords them for challenging the originator patent. The return on the investment the generic firm makes in lawyers is about 3000 percent. Generic firms who challenge patents get competition all the time and even share market exclusivity. They just don’t want more competition. Pretty amusing and hypocritical from an industry that prides itself on promoting competition in the first place. Ms. Jaeger’s letter is fiction masquerading as truth.
First the good news — congressional conferees approved the FY 06 Agriculture Appropriations conference report that includes $1.5 billion for FDA, $40 million above the current fiscal year. Now the bad news — that’s $10 million less than the President requested. Now the good news — missing from the conference report is House language regarding importation of prescription drugs. Now the bad news — retained in the conference report was (compromise Senate)language on conflict of interest waivers for FDA advisory committees. That amendment says none of the agency’s funds may be used to grant a waiver of a financial conflict of interest requirement for any voting member of an advisory committee or panel or to make a certification for any voting member. Now the good news (sort of) — the ban does not apply if (1) not later than 15 days before an advisory committee or panel meeting the HHS Secretary discloses on FDA’s Web site the nature of the conflict of interest at issue and the nature and basis of the waiver or certification, or (2) in the case of a conflict of interest that becomes known to the HHS Secretary less than 15 days before a meeting, the Secretary discloses it as soon as possible, but in no event later than the day of the meeting. In addition, none of the agency’s funds may be used to make a new appointment to an FDA advisory committee or panel unless the FDA Commissioner submits a quarterly report to the HHS Inspector General and the House and Senate Appropriations Committees on efforts made to identify qualified persons for such appointments with minimal or no potential conflicts of interest. That’s a whole lot more paperwork for an already overworked and understaffed agency that didn’t even get the full appropriation requested by the President. You want FDA reform? Show me the money.
Here’s a worthwhile article by Alec Van Gelder of the London-based International Policy Network (as seen in today’s Boston Globe).
ALEC VAN GELDER
Patent nonsense on avian flu
By Alec van Gelder
WITH ALL the hysteria surrounding the possible mutation of the Avian flu virus into a form that puts humans at risk, policymakers have subjected us to everything — except common sense. There are no easy solutions to the outbreak that is predicted, and more deaths are likely. Misleading the public and ignoring the outcome of myopic actions is simply not acceptable with millions of lives at stake.
At least 65 people have already perished from a strain of Avian flu called H5N1, contracted from close contact with poultry. A further 100 are believed to be infected. The virus has spread west from Southeast Asia to Turkey and Russia, carried by migrating birds. Those most at risk are people who work closely with poultry in unsanitary, cramped conditions: By definition, these people are poor.
So far, there is no proof that a strand of H5N1 can spread between humans, nor that it will. Yet the hysteria surrounding Avian flu far surpasses that which accompanies the yearly arrival of a new flu strand, which regularly kills hundreds of people. And it far surpasses the attention given to other diseases, such as diarrhea, which claim at least 3 million lives a year in poor countries.
The reason for this hysteria is the prediction that, if this virus mutates into a form transmissible between humans, tens of millions will be at risk — as in the 1918 pandemic that killed 50 million to 100 million people. But what is the rational response to such predictions?
We know that viruses mutate and strike in unpredictable ways. It is plausible that this virus might mutate as has been predicted and that an epidemic — or even a pandemic — might result. Since we cannot predict exactly how, where, or when the virus might mutate, we need a response that is both preventative and adaptive.
Preventative measures might include vaccinating those likely to become infected with both H5N1 and conventional influenza viruses. This would reduce the chances that H5N1 could acquire genes that would enable it to be transmitted between humans.
Adaptive measures might include identifying potential vaccines and treatments for H5N1 and ensuring that these are available for use when necessary.
So far only one medicine has proved effective in treating human cases of H5N1. That medicine, Tamiflu, was developed by the Switzerland-based pharmaceutical company Roche, which owns the patent. Because of the pressure to “do something,” politicians are considering breaking Roche’s patent on the populist premise that this will increase the availability of Tamiflu.
While it makes sense to build government stockpiles of Tamiflu in preparation for a possible outbreak of H5N1, it is far from clear that breaking the patent would be helpful — indeed the opposite is more likely to be the case for several reasons.
First, the raw ingredients for Tamiflu come from a Chinese herb which is in short supply. Unless production of the herb is increased, it will be impossible to increase production of Tamiflu. In this case, breaking the patent would have no impact on availability of the drug.
Second, Tamiflu is difficult to manufacture. Since Roche has developed the manufacturing expertise, it seems sensible to encourage Roche to increase production and/or to help other companies produce the drug under a voluntary license. Breaking the patent through a compulsory license would actively discourage Roche from either producing the drug or lending its expertise, which would be directly counterproductive.
Third, given that scientists have only a vague idea of what a human strain of H5N1 might look like, there is no certainty that Tamiflu will be effective. Even if Tamiflu does work on some people, widespread use would inevitably result in the development of resistant strains. So, either way, alternatives are clearly needed.
Yet if governments break the patent on Tamiflu, no pharmaceutical company is going to want to develop a new antiviral for fear that their expensively developed innovative medicine will simply be stolen without adequate compensation for the tens or hundreds of millions of dollars invested.
In light of the potential threat posed by a human strain of H5N1 or other similarly deadly viruses, there are constructive things that governments could do. First, they could offer to purchase large quantities of vaccines or antivirals that meet clearly defined criteria. Second, they might also offer tax breaks to companies that choose to invest in the development of relevant drugs.
But the most important role for government is to uphold private property rights and ensure that the rule of law applies — which means protecting rather than breaking patents. The alternative — the rule of the mob — would truly be devastating.
Alec van Gelder is a research fellow specializing in technology issues at the International Policy Network in London.
In case you’re not a regular reader the China People’s Daily, here’s an important story with potentially significant implications for DSHEA. Tongjitang Pharmaceutical Co. Ltd. of southwest China’s Guizhou Province signed a contract with Synarc, a US professional drug test service provider, in Beijing on Tuesday. Synarc will carry out clinical curative effect test on a traditional Chinese medicine to treat osteoporosis. It is for the first time a Chinese herbal medicine to be tested in line with western clinical curative effect standards, Qi Guomin, official of Ministry of Health, told Xinhua on Wednesday. Some of the Chinese traditional medicines have passed the FDA’s safety test and been sold as “health food” in western countries, Qi said. The test will be carried out in China under FDA’s criteria and the result will be released in 2006. Note to Congress: When contemplating FDA reform don’t forget the urgent need to reform DSHEA — it’s more than just a stadium in Queens.