Latest Drugwonks' Blog
Whenever politicians and pundits want to trash the MMA’s federal non-interference clause (originally drafted, FYI, by Senators Kennedy and Daschle for the Clinton health care reform plan), they point to the rock-bottom prices charged by the Veterans Administration. What these folks always fail to mention is that the VA doesn’t have to add any additional costs for pharmacist services — often upwards of 30% or more of a drug’s cost to the average consumer. Facts are stubborn things and war is hell.
Despite a scary headline, “Poisonings from a Popular Pain Reliever Are Rising,” (The New York Times, November 29) is a good example of solid journalism raising consumer awareness of an important public health problem. At last! In this instance, the topic is the increase in unintentional poisoning from too much acetaminophen. It’s an issue the FDA has consistently tried to promote (most recently in partnership with the National Consumers League) — but to a collective yawn from most media. The New York Times article will reach more consumers, pharmacists, and physicians than any well-intentioned (and under-funded) government outreach program. What is, unfortunately, surprising is that the story relies on (gasp!) balanced reporting! No hyperbole. No blaming “Big Pharma.” No political posturing. Just a newspaper article that will reach millions of people with an important health message, “use as directed.” Well done.
Yesterday’s story in the New York Times about pharmaceutical firms hiring university cheerleaders as sales reps left out an important fact — what did these women major in? Marketing? Pharmacology? Biology? English? Why the omission? Was it to make the women look like bimbos and position the pharmaceutical firms that hire them as pimps? I guess that the newspaper that coined the phrase “All the news that’s fit to print” didn’t have enough room to fit in some relevant facts.
From cuckoo clocks come cuckoo criticisms. Here’s only the latest example of the Precautionary Principle run amok. Over the weekend, Swiss voters decided to tighten restrictions on genetically modified farm products, a divisive topic in a country that already prohibits most of such technology from being used in agriculture. More than 55 percent of participants in the national referendum voted for the initiative to place a five-year moratorium on all genetically modified animals and crops, except for use in certain research and to produce medicine. Sunday’s referendum was forced by environmentalists and consumer groups, which easily gathered 100,000 signatures to oppose a 2004 law that would have permitted cultivation of genetically modified crops once they passed a “multiyear testing procedure,” whatever that means. The groups said the government’s law did not go far enough. They claimed it threatened Swiss farmers while benefiting multinational agricultural businesses and would have forced products onto the market that people are not interested in buying. The campaigners also needed to gain a majority in more than half of the country’s 26 cantons. Voters in all 26 cantons approved the ban.
Heidi Ho — or as they say in Switzerland, “Oy Gevalt!”
Here is Ben Zycher’s important new article on Federal non-interference, courtesy of the 11/22 edition of The Hill.
To preserve supply and innovation, don’t let feds negotiate drug prices
By Benjamin Zycher
With growing political pressures to find savings in the budget, many now argue that the federal government ought to negotiate the prices to be paid for prescription drugs under the Medicare Modernization Act (MMA), claiming that the law as now written prevents such negotiation.
And there is no doubt about the likely effects on price discounts: Unlike, say, lowly Wal-Mart, the federal government is really, really big, a reality made obvious by the federal purchasing program for childhood vaccines and by the pharmaceutical price “negotiations” — price controls — conducted by the Department of Veterans Affairs.
So substantial price savings undoubtedly are there to be had. What are we waiting for?
Well. Let us first clear up one important bit of misinformation widespread in the public discussion. The MMA does not prevent price negotiations on drugs; discounts are arranged in negotiations between the pharmaceutical firms and the pharmacy benefit managers (PBMs), that is, Wal-Mart, the pharmacy chains, the insurance companies, the healthcare delivery organizations and the like. The MMA prevents the feds from “interfering” in those negotiations by, say, mandating minimum discounts or formulary restrictions or other such constraints.
But if the feds are able to obtain discounts bigger than those yielded through negotiations between the drug producers and the PBMs, why not have the Beltway do the negotiating?
In order to answer that question, we must ask what our policy goals are. We want to help those less fortunate obtain needed medicines at prices that they can afford. Were that the only goal, the appropriate course for the feds would be: Negotiate as hard as possible.
But we have three other goals. First, we want those needed medicines to be available to patients in the respective formularies.
Since the PBMs must compete for customers, they have incentives to balance the objective of low prices with the countervailing objective of formulary availability. If a given PBM demanded too steep a discount, the drug producer would refuse to sell, and patients would have to do with other drugs in the given pharmaceutical class, with less effectiveness, more adverse side effects or both. And so competitive market forces would perform their usual function of establishing appropriate trade-offs.
The federal government, on the other hand, does not have “customers.” It has interest groups, the demands and preferences of which are satisfied in greater and lesser degrees; and it has voters, the happiness of whom is registered not in dollars spent every day, but instead in votes delivered every two or four or six years.
With powerful incentives to reduce budget costs, and the very great unlikelihood that patients will move to France if given drugs drop out of a government Medicare formulary, federal incentives to satisfy the pharmaceutical preferences of patients are weak. In no other context does the admonition “Write your congressman” fall quite so flat.
Second, we want to preserve efficient incentives for the research and development that yields new and improved medicines, and reduced human suffering, over the long term.
The incentives of federal decisionmakers to put the squeeze on suppliers mean that the long-run supply problems created by federal negotiation will be left to future officials to confront, just as in the ongoing case of the vaccine market, with respect to which substantial budget costs now will have to be borne as a means of compensating for the adverse effects of past “negotiations.” The losers will be those in the future who will suffer more than otherwise would have been the case, and for the most part they will not know who they are because they will not know about the drugs that will have failed to have developed. And in any event, many of them do not vote today. So much for the children.
Finally, we want — or we ought to want — to preserve property rights and the constitutional protections against both takings and the efforts of political majorities to impose losses upon unpopular groups.
Modern medicines are substantially the product of huge investments in intellectual property, and coercive “negotiations” yielding confiscatory prices represent a taking — in every relevant sense of that term — of much of the value of that intellectual property. And make no mistake about it: It is the protection of property rights that is the foundation of a free-market economy and the long-term alleviation of human misery. Therefore, it is not merely pharmaceutical producers to whom federal price negotiations over drugs represent a looming threat. They are a fundamental danger to all.
Thanksgiving Update: There are three branches of government. Thought this might serve as a useful reminder since some members of Congress think they can legislate powers reserved to the Executive. Specifically Senator Debbie Stabenow, Representative Anne Northup and the always-respectful Representative Rahm Emanuel. The issue is the non-issue of drug importation and the specific action is the Congress’ attempt to tell the US Trade Representative how to do his job. An amendment, sponsored by Ms. Stabenow and Ms. Northup and vociferously supported by Mr. Emanuel, would bar the U.S. Trade Representative from crafting trade agreements that block such unsafe importation. Recent agreements with Singapore, Australia and Morocco effectively prevented drug importation by requiring the consent of drug patent owners. Can you imagine that? The US standing up for IP rights? How devilish! If Ms. Stabenow, Ms. Northup or Mr. Emanuel had taken the time to consult either a highly paid DC constitutional attorney or a 5th grade civics book, they would have to agree with the White House’s comment that, “The executive branch shall construe as advisory the provisions of the Act that purport to direct or burden the Executive’s conduct of foreign relations.” On a day when most Americans are dealing with leftovers anyway, this is just another example of reheated stuffing. In any event, the amendment sunsets in 12 months, so go back to the couch and enjoy the rest of the long weekend.
Bob Goldberg’s pre-Thanksgiving blog …
Selective misreporting and recollection on Medicare
Here’s how policy is made: You take a distorted, malicious and venal report about drug prices from Democrat staffers on the House Energy and Commerce Committee being 80 percent higher in the Medicare program being then they are in price controlled Canada or the Veterans Affairs program. This report is an example of how the hard left practices the American political form of insurgency — destroy any effort to democratize public sector programs even it means destroying the people that benefit in the process — and shoot it off to a reporter at the Washington Post who has no time before Thanksgiving to do anything but get a quick response from Bush administration staffers who themselves want to spend time with their families. Then that article gets picked up by ABC News who sends it to people like ME to show they are fair but also to the usual liberal suspects who will endorse the findings who will claim that seniors don’t like and don’t understand the drug benefit.
Problem is, seems that seniors liked and understood nearly the very same program about five years ago when Clinton was pushing it — even though it had no price controls. Here’s how the story played out five years ago …
Clinton’s Medicare Plan To Include Prescription Drugs WASHINGTON, Jun 29 2000 (Reuters Health) — President Clinton has upped the ante in the growing debate over whether to add prescription drugs to Medicare’s package of benefits by offering as part of his comprehensive Medicare proposal a drug benefit that would provide coverage to all of the program’s beneficiaries. The drug plan would be voluntary, and while less generous than some of the proposals offered by Democrats on Capitol Hill, would have no deductible, so that every beneficiary who fills a prescription would theoretically benefit.
While the drug plan would cost considerably less than comparable private coverage under Medigap plans, “it’s not by any extent a free lunch,” Clinton economic policy advisor Gene Sperling told reporters at a briefing Tuesday.
Sperling and administration health policy advisor Chris Jennings said that they expected Medicare would contract with private pharmacy benefits managers to run the program, and that beneficiaries would likely realize discounts on most drugs of approximately 10.%
It should be noted that the average discount under the Bush plan is much lower. It should also be noted that it took me 2 minutes on Google to find this article. Both the Bush and Clinton plans tried in varying degrees to avoid price controls. The hard left is salivating for them. Neither the Post or ABC News seems to address that issue.
Scott Hensley’s article in today’s Wall Street Journal appears under the headline, “Pfizer Tries Subdued TV Pitch for Viagra.” But that’s not right. The news is about a new, unbranded ad about erectile dysfunction. Not once does the word “Viagra” appear in the ad. Not once does the ad say that Pfizer manufactures a medicine to treat ED. It is, in FDA parlance, a disease awareness ad. But in Mr. Hensley’s article, as well as in other news reports, the letter “V” on the computer keyboard gets a whole lot of action. “But,” you ask, “aren’t these ads just slightly disguised Viagra promotions?” Well, they certainly increase awareness of the disease and point interested parties in the direction of their doctor — but there is (at least last time I looked) more than one drug in this therapeutic category. So, it’s very likely that these Pfizer ads will enhance, among other things, sales of the competition’s products as well as Viagra. If more men visit their doctor because of Pfizer’s disease awareness campaign, and since the “little blue pill” is the market leader, then Viagra will benefit disproportionately. That’s called smart marketing. But it’s savvy salesmanship combined with a more responsible message. It’s about disease awareness. No more men with horns. It’s also important to note that these disease awareness ads will not air before 8 p.m. or during programs that don’t attract an audience that is 90% or more adults — in strict adherence to the PhRMA DTC Guiding Principles. Pfizer could have tried to be cute and claimed that disease awareness ads aren’t covered under the PhRMA guidelines, that they found a loophole and could air them whenever they wanted. But the world’s largest pharmaceutical company is playing by the spirit as well as the letter of the protocols. And that’s laudable. That’s what a leader does. And, hopefully, a positive harbinger of things to come from other companies and other disease states.
An article from today’s WSJ that spells out in very stark terms the different social contracts at play in the UK and the US.
Britain Stirs Outcry by Weighing
Benefits of Drugs Versus Price
Government Arm Finds Pills
For Alzheimer’s Too Costly,
Angering Patients, Pfizer
Ms. Dennis, 80, Joins Protest
By JEANNE WHALEN
Staff Reporter of THE WALL STREET JOURNAL
November 22, 2005; Page A1
LONDON — Millions of patients around the world have taken drugs introduced over the past decade to delay the worsening of Alzheimer’s disease. While the drugs offer no cure, studies suggest they work in some patients at least for a while.
But this year, an arm of Britain’s government health-care system, relying on some economists’ number-crunching, said the benefit isn’t worth the cost. It issued a preliminary ruling calling on doctors to stop prescribing the drugs.
The ruling highlighted one of the most disputed issues in medicine today. If a treatment helps people, should governments and private insurers pay for it without question? Or should they first measure the benefit against the cost, and only pay if the cost-benefit ratio exceeds some preset standard?
The U.S. generally follows the first course. Even the most cost-conscious insurers say they’ll pay the price if a drug works and there aren’t other options. Britain openly and unapologetically adopts the second course. If a drug or type of surgery costs a lot and helps only a little, it says no.
“There is not a bottomless pit of resources,” says Phil Wadeson, finance director for the National Health Service unit that oversees hospitals and doctors’ offices in Liverpool. “We reached the point a while ago where there is far more medical intervention available than any health-care system can afford.”
The decision on the Alzheimer’s drugs has sparked protests from pharmaceutical companies including Pfizer Inc. and Eisai Co., which co-market the leading Alzheimer’s drug, Aricept. They say Britain is using a flawed economic model and will end up spending more on nursing-home care. More than 8,000 patients and caregivers sent angry letters to the National Institute for Health and Clinical Excellence, or NICE, which made the cost-benefit analysis.
NICE “has this strange mathematical formula they put heaven knows how many numbers into and out comes: ‘Yes, it’s affordable,’ or ‘No, it isn’t,’ ” says Antony Dennis, a Web-site designer in the village of Ramsbury whose mother takes Aricept. “Things like the relationship my mum has with her grandson are probably not easy to put into that formula.”
NICE’s decision, first announced in March and reaffirmed in June, applies only to new Alzheimer’s patients and isn’t final. Following the protests, the institute set a meeting for next month at which drug makers will try to show that the Alzheimer’s drugs are cost-effective in at least some patient groups. Until then a previous directive from January 2001 that recommended the drugs remains in force.
NICE doesn’t have the power to force a doctor to prescribe in a certain way. Its decisions are officially just guidance. But in practice, if the institute chooses in December to reject the Alzheimer’s drugs, it is likely to choke off prescriptions for new patients across the United Kingdom (except Scotland, which has its own health system). That’s because most British doctors are employees of local units of the National Health Service such as Mr. Wadeson’s in Liverpool. The local units must keep costs within an annual budget. When NICE says a drug doesn’t pass muster, doctors are under pressure to avoid it and let the local funds be used elsewhere.
Since NICE was founded in 1999 it has reviewed 93 drugs, surgical procedures and other treatments, starting with those it feels are most in need of a rigorous cost-benefit analysis. In eight cases it has called on doctors to stop prescribing treatments because their benefits were judged not to be worth the cost. Rejected treatments include Kineret, a drug from Amgen Inc. for rheumatoid arthritis. In 57 cases it has recommended restricting use of a treatment. It said Eli Lilly & Co.’s Evista should be prescribed only for osteoporosis patients who can’t take another class of drugs.
In 28 cases NICE encouraged full use of a treatment, even if it costs more. Andrew Dillon, NICE’s chief executive, says this demonstrates that the institute’s aim isn’t to save money but to make spending more effective.
Still, Britain spends far less than the U.S. on drugs, not only because of usage restrictions but also because the government sets limits on the profits drug companies are allowed to make in the U.K. In 2004, the National Health Service’s drug bill, including Scotland, came to about $17 billion. Even after adding in out-of-pocket costs, Britain’s per-capita drug bill is less than half of that in the U.S. — about $340 a year per Briton versus about $800 per American based on IMS Health figures.
In Britain, the Alzheimer’s drugs cost about $1,500 a year per person. The total cost to the National Health Service is a little over $100 million a year. The money goes mainly for three drugs: Aricept, Exelon from Novartis AG, and Reminyl from Shire Pharmaceuticals Group. All three are available in the U.S. and covered by most plans under the new Medicare drug benefit. Reminyl is sold in the U.S. by Johnson & Johnson under the name Razadyne.
The drugs are thought to work by maintaining supplies of a chemical involved in the brain’s information processing. Since Aricept went on the market in 1997, the drugs’ global sales have risen above $3 billion a year, according to IMS Health. However, they don’t address the still-unknown underlying cause of Alzheimer’s, which gradually destroys a person’s memory and ability to reason and carry out daily activities. Ultimately the disease is fatal.
While studies aren’t clear-cut or unanimous, they generally suggest the drugs have a short-term effect in delaying the worsening of the disease and may even improve cognitive function temporarily for a minority of patients. Over several years, the effect seems to wear off. One study published this year showed that patients with mild cognitive impairment who took Aricept had a lower risk of progressing to full Alzheimer’s disease than patients taking placebo during the first year of the trial. But after three years the Aricept patients were no better off.
For British health authorities, the combination of high cost and apparently limited efficacy made the Alzheimer’s drugs a natural target of a detailed investigation by NICE, the institute charged with determining whether drugs are worth the money. NICE had already done a cost-benefit analysis and concluded in January 2001 that the drugs were worth paying for. This time it used different methodology and took into account new clinical-trial data.
Last year NICE hired a group of health economists at Southampton University to create a financial model. Using data from clinical trials, the model sought to measure how much benefit patients taking medication would receive over a five-year period compared with those not taking medication. It looked at some of the main benefits medicated patients received — improved cognition, improved quality of life, and a delay in the need for nursing-home or other full-time care.
Following NICE’s standard procedure, the economists then converted those benefits into what is called a “quality-adjusted life year.” This measure, known as a QALY or “kwah-lee,” is used by health economists around the world including in the U.S. A QALY assigns a score between zero and one to a person’s health. A person at zero is dead. A person at 1.0 is in perfect health. If a drug that costs $1,000 extends a person’s life in perfect health for one year and then the person dies, the drug’s cost per QALY is $1,000. Toting up all the numbers, the economists concluded that the Alzheimer’s drugs each cost more than $100,000 per QALY. Typically, NICE believes that drugs shouldn’t cost more than $50,000 or so per QALY, although it doesn’t set a firm line.
Data in hand, the institute convened a panel of doctors and other medical professionals in January of this year to make a recommendation. The panel was sharply divided. Patients’ families and drug companies were arguing that the Southampton University team failed to include some intangible benefits in its analysis such as the reduced burden on caregivers. Patients taking the drugs, they said, were more sociable and less dependent.
Ultimately the panel voted 12-8, with one abstention, to reject the drugs. It concluded that they were “outside the range of cost effectiveness that might be considered appropriate for the NHS.” The decision was announced in March.
Mr. Dillon, NICE’s chief executive, calls it a “very difficult decision” but defends the process of measuring how much an improvement in someone’s life is worth in monetary terms. “NICE has got a responsibility to act on behalf of the whole community, to make decisions about the best way to allocate a finite resource,” says Mr. Dillon. “We have to step back and look at just how much benefit is being obtained from the money the health-care system would have to pay.”
Within weeks of the NICE ruling in March, the Alzheimer’s Society, a patient-advocacy group that receives drug-industry funding, mobilized more than 500 patients and their families to protest discrimination against dementia sufferers. Across from the Houses of Parliament in London, they assembled around a giant inflatable elephant — the society’s symbol — and shouted: “They say cut back, we say fight back!”
Among the protesters was the Dennis family, who traveled by train from a village in Wiltshire. Joan Dennis, 80, began taking Aricept after being diagnosed with Alzheimer’s in January 2003. She hasn’t improved since then, but her doctor and family credit the daily doses of the drug with staving off further decline.
“Without them we are totally convinced that mum would not be in a state to look after herself at all,” says her 43-year-old son, Antony, whom she calls “Ant.” Ms. Dennis will be able to keep taking Aricept because any NICE ruling would only apply to new patients.
Chatting in Antony’s kitchen on a recent afternoon, Ms. Dennis couldn’t remember whether she had eaten breakfast that morning. But she is still able to live on her own, in a row house a five-minute walk away, and cooks her own meals and pays her own bills. Little signs posted around her house help her keep life on track. After forgetting a pan of ground beef on the stovetop last year and burning it to a crisp, she taped several pieces of paper to the wall: “Make sure cooker is switched off.” Another sign stuck to a kitchen cabinet above the phone says, “Don’t call Ant unless it’s pretty urgent.” Before she posted that reminder, Joan says she would sometimes call Antony dozens of times a day to ask about “silly” things she was worried about.
Antony believes the drugs have given his mother the energy to spend time with her youngest grandson, Toby, who is 3. She often reads to him from a brown velvet sofa in her living room. During the protest march in London, Toby carried a placard that said, “I love my Grandma.”
In June, NICE gathered its panel of experts again. They heard officials from the Alzheimer’s Society give the results of a survey of 4,000 patients and caregivers. The survey found 73% of them felt the drug treatments had worked in their cases. The committee declined to change its decision. Later, though, it scheduled another meeting for Dec. 20.
A Hard Case
Pharmaceutical companies will have a chance at the December meeting to argue that their drugs offer especially significant benefits for some groups of Alzheimer’s patients. However, that is a hard case to make because studies offer little evidence for what type of patient does best on the medication. The panel may decide to issue a final rejection of the drugs at that meeting. Companies or patients could still appeal the decision to a separate appeals commission.
Some doctors say they’ll continue prescribing the drugs until local officials force them to stop. “As someone who’s actually seen patients — unlike the epidemiologists and health economists who see this as an incredible waste — I know these drugs work,” says David Wilkinson, a doctor who treats dementia patients in southern England. “If the drug companies hadn’t priced them as they have we wouldn’t be in this bloomin’ argument.”
Pfizer says it and its partner, Eisai, reduced the price of Aricept by 7% on Jan. 1, 2005, under an agreement with Britain’s Department of Health. Paul Hooper, managing director of Eisai in the U.K., points out that the drugs are the “same price as a pint of beer” per day.
Mr. Dillon, the NICE chief, notes that doctors were on the committee that declared the drugs not cost-effective. “This isn’t a bunch of technocrats in an office block in London making a decision,” he says.
Dead people are very cost efficient. They have no need for costly hospital procedures, pharmaceuticals, or home care. On the other side of the pharmacoeconomic spectrum are people who suffer non-fatal medical events like a heart attack or stroke — and survive due to every kind of help our health care system can provide. Such interventions are often both extensive and extended. But we are compassionate and civilized and value life. Individually and collectively we choose and support expensive care over expedient demise. That’s why it’s so urgent that we recognize the exigent issues surrounding our nation’s ill-placed focus on acute care while chronic care issues remain precariously in the background — in terms of both policy and press coverage.
The recent IDEAL study is only the most recent case-in-point. After a slamma JAMA editorial extolling the findings that Lipitor (80mg) provides incremental reductions in multiple endpoints including non-fatal heart attacks (a whopping 17% decrease in fatalities) and cardiovascular events in high-risk patients compared to simvastatin (20/40 mg) — the mainstream press played down the whole study as only marginally significant. Well, life is lived between such margins — and when it comes to CVD, those margins are pretty wide. In 2005, $393.5 billion was spent on CVD — nearly twice the amount spent on cancer care. Between 1970 and 1990 life expectancy in the US rose an astounding 6.2 years — due largely to new therapies for dealing with CVD.
Today we have the opportunity to further extend our ability not only to live but also to thrive at a high level of performance. And the impact on our health care system — not to mention our society will change the world … but only if we pay attention.