Latest Drugwonks' Blog
The Wall Street Journal has disclosed an interesting way that research-based and generic companies are settling patent disputes. Rather than duking it out in court, the research-based company agrees to let the generic company compete after a certain number of years. For example, if a drug’s patent has 10 years to run, but a generic company alleges that the patent is invalid, the inventing company will agree to let the generic manufacturer compete in 5 years. Is this collusion or co-operation that benefits the public? I’d say the latter. It’s certainly better than what was (allegedly) happening before.
Patents on prescription drugs are handled a little differently than patents on mousetraps, because they involve the FDA and not just the courts. If a generic competitor can prove that a patent is invalid, the FDA gives that first generic competitor the exclusive right to sell it’s version for 6 months, before it licenses other generic competitors’ copies. This gives a generic competitor with a strong case an incentive to attack the weak patent, which it would not if it had to share the spoils with other generic manufacturers.
A while back, it was alleged that these generic competitors would then negotiate payoffs from the research-based competitors, in return for which they would promise actually not to launch their versions for some time. Obviously, this simply transferred wealth from one company to another, with no benefit to public welfare. When this came out, I thought that a good solution would be to require a generic first mover who earned such a license to start shipping its products within a short time of the FDA approval, or lose its exclusivity.
This new situation is better, because it saves money otherwise spent on litigation, reducing costs to both generic and brand-name competitors. Although not immediately apparent, these savings result in lower drug prices. (I promise!) Of course, whether the generic would have been able to sell its medicine tomorrow, instead of 5 years from now, will never be known - nor whether it would have lost and been forced to wait for 10 years.
Although there are dazzlingly complex theoretical models of the welfare effects of patents, I’ve never been convinced that there is a satisfactory, empirically tested hypothesis demonstrating the optimal length of a patent. (Actually, I don’t think there ever will be. We don’t actually know how much money is spent on patent litigation, which would be necessary data for such a test.)
Nevertheless, the benefit of such negotiated agreements is that the parties with the best information decide the strength of the patent, not courts or government agencies. That, in itself, is a good sign that it improves public welfare.
Ref.:
Abboud, Sheila. 2006. “Branded Drugs Settling More Generic Suits,” Wall Street Journal, January 17, p. B1.
One DC truism is that the most dangerous place to be in Washington is between Senator Charles Schumer and a camera. With that as our point of departure, this news item:
Senator Charles Schumer has sent a letter to federal officials calling for more oversight of the tissue transplant industry and for a full accounting of how possibly tainted tissue may have ended up being used in patients. The New York Democrat said in a letter to the acting head of the Food and Drug Administration, Dr. Andrew von Eschenbach, that he was “deeply disturbed” by reports of a Brooklyn funeral home selling body parts without proper consent to a New Jersey firm, Biomedical Tissue Services, which then sold it to five other tissue banks. “There are so many unanswered questions,” Schumer said yesterday. “We’re turning the heat up on the specific cases and on how the industry is regulated. I would like the FDA to provide a full accounting of where the breakdown in the system occurred in each of these cases.”
Followed, of course, by the unfortunately inevitable “no comment” from the FDA.
Why unfortunate? Because the FDA is already on these gravediggers (the FDA in October issued a letter recalling the tissue, saying it was improperly screened) and the right and appropriate comment would have been something like, “We aim to pursue these people with everything we’ve got” — or something to that effect. Because, truth be told, both FDA’s resources and authority are limited.
Mr. Schumer said he also wanted to see more FDA oversight of the estimated $1 billion tissue bank industry, which he said in the letter “is especially subject to impropriety due to the profitability of tissue trade.” Well, amen to that. Rather than allowing Senator Schumer to grab some quick headlines with an FDA-bashing story, the agency should applaud his call for greater resources and authority — and then ask him to make it happen.
I’m sure the senior Senator from New York wouldn’t mind sharing the spotlight.
Yeah, sure.
The FD&C Act clearly gives the FDA the authority to decide whether or not a product, when used properly, is safe, effective, and properly labeled. As former FDA chief counsel (and my former colleague) Dan Troy said, “You want the FDA to have the last word if you believe in the FDA’s expertise.”
I, for one, believe that a product, used as described in FDA-approved labeling, should be considered safe and effective throughout the United States. And a majority of Americans are of the same opinion. According to the most recent AP poll on the matter, over 3/4 of Americans have confidence in the FDA.
Others disagree — most notably trial lawyers. Quoted in the Wall Street Journal, Thomas R. Kline, a plaintiffs’ attorney with Kline & Specter (a “key player,” according to The Journal, in Vioxx litigation), “If the proposed changes were to be enacted, drug-product safety in the US would suffer a major setback at a time when the conduct of pharmaceutical companies and the FDA have been called into question.”
But consider this, comprehensive studies by the Rand Corporation and others demonstrate that only a small fraction of lawsuits that result in settlement payments or jury verdicts actually involve low-quality care. Rather, the hallmark of big awards is bad outcomes.
Unjustly, only a small fraction of patients who are injured negligently get compensation. And when they do, most of it goes to lawyers and the very high costs of administering our inefficient, unfair, broken system. The system needs to change so that it will deter bad care, not reward bad lawyers.
When public health is put before private gain, tort law and the lawyers who practice it play a very important role in protecting and enhancing America’s health. Tort law, appropriately applied, helps patients get redress for truly negligent care. When product manufacturers provide fraudulent information to the FDA, or deliberately withhold information about safety problems associated with their products, they should be held accountable. The dedicated members of our legal profession have always provided, and continue to provide, vital protection against those who would prey on consumers or intentionally try to pass off harmful products. The threat of litigation can be an important disincentive to many predatory behaviors.
The problem is that the current liability system doesn’t reward lawyers who focus on these real public health concerns. Instead, the most experienced and well-financed law firms know that the biggest payouts regularly go to those who take advantage of the FDA’s best efforts to promote the safe and effective use of medications. More and more often, these “mass tort” firms specialize in taking a new product-warning label or withdrawal decision by the FDA and viewing it as a signal to go forward with all guns blazing. Their bullets, unfortunately but not unpredictably, hit multiple innocent targets and result in a wounded American health-care system. These lawyers who hold up pharmaceutical DTC advertising as an example of inappropriate behavior by industry have no similar compunction about using DTC ambulance-chasing commercials for their own nefarious purposes.
But that’s another issue for another time.
The FDA has the authority, the ability, the means, the mission, and the mandate to manage the health care risks and benefits inherent in the products it regulates on behalf of the American public.
In the latest New England Journal of Medicine, Professor Wayne Ray and Mr. C. Michael Stein further develop a proposal for an independent drug safety board. Along with many editorialists in medical journals, they fear that the pharmaceutical companies have way too much influence over the FDA.
If so, that would be in accord with the notion of “regulatory capture” (a facet of the economic school of public choice theory) whereby companies in regulated industries take control of their regulators, causing them to confuse corporate interests with the public interest. Obviously, drug companies would attempt to take over the FDA, but I don’t see evidence that they have succeeded.
Ray & Stein point to PDUFA (the Prescription Drug User Fee Act), which critics contend turn the industry into the FDA’s customer, because the agency now relies on revenues from industry rather than just taxation for its existence and meaning. However, the FDA is a government monopoly. Drug companies must pay the user fees if they hope to sell their meds in the U.S. They can’t shop around for a better licensing body. So, it is incorrect to describe the drug companies as customers.
Furthermore, although the FDA has sped up its approvals as a result of PDUFA, it is still very slow and inefficient. In a recent paper I argued that the FDA, despite improving its timeliness, is grossly unproductive versus the British regulator, for example, in determining safety and efficacy.
Ray & Stein’s proposal has both good and bad elements, but I’d like to address its Achilles’ heel: that this new regulator will be funded solely by pharmaceutical sales. Many people confuse “independent” with “taxpayer funded”, but this is not the case. The more likely result is “unaccountable”, not independent.
In either the status quo or Ray & Stein’s proposal, the drug company (or, ultimately, the prescription buyer) finances the agency. However, under PDUFA, only drug makers with confidence in their new products pony up for the FDA’s review. There is some transparency between input and outcome. Under Ray & Stein’s proposal, companies’ pipelines are irrelevent because sales taxes are obviously levied on already approved products. If pipelines are full, but current sales weak, we’ll get no timely approvals. If pipelines are empty but current sales booming, we’ll get a bunch of regulators twiddling their thumbs on the taxpayers’ dime. (You can bet they’re not going to lay themselves off!)
References:
Graham, JR. 2005. A Lethal Guardian: The Canadian Government’s Ban on Prescription Drugs. Vancouver, BC: The Fraser Institute.
Ray, WA, & CM Stein. 2006. “Reform of Drug Regulation - Beyond an Independent Drug Safety Board,” New England Journal of Medicine 354, 2 (January 12): 194-201.
Bob Goldberg versus the Luddites. See below. Most current Vegas line is Goldberg 3-to-1 over Luddites.
Recently the FDA announced a new and better way to establish drug safety that solves a one of the more serious problems in drug development, namely that animal studies are often a poor and inaccurate substitute for what happens in human. For example, aspirin causes birth defects in mice but failed to do so in thalidomide. Penicillin failed to work in rabbits and was used in a sick patient as a last resort. Molecular genetics have allowed scientists to take microdoses of drugs and model the pharmacokinetics of a drug — how well the body will absorb, metabolize and get rid of a drug — with amazing accuracy — and the FDA has established a process for using these results gleaned from a small group of patients, rather than a less reliable animal studies, as a starting point for taking drugs through development.
Leave it to the feckless media to let the Luddites have the last word though without putting their reactionary perspective in context. Take for instance the article about the new approach in the LA Times … “Last time they speeded up the process of drug approval it led to the approval of lethal drugs,” said Vera Sharav of the Alliance for Human Research Protection, a patient advocacy group based in New York. “Now they are trying to fiddle around with the [earliest phase of] trials? Those, by definition, are the highest-risk.”
The FDA already has a system for accelerated approval of drugs that show promise in the course of full clinical trials, said Dr. Sidney Wolfe of Public Citizen, a consumer advocacy group that frequently criticizes the FDA. He questioned whether the agency had a strong enough scientific argument for speeding the early stages of drug research.
Let it be noted, since the LA Times did not do so, that Vera Sharav works closely with the Scientologists of Tom Cruise fame who believe that tuning into Thetans will cure all and that Sid Wolfe has opposed every effort to speed drugs to dying patients since he has been on his anti-patient jihad starting in 1970. According to a study conducted by MIT economist Ernst Berndt who looked at the impact of faster review times on patient health, there would be 50 fewer drugs on the market today if Sid Wolfe and his ilk had his way and those on the market would have taken 30 percent longer to reach patients. Wolfe has a self-interest in trashing new medicines since his organization makes money by hawking a book Worst Pills, Best Pills that argues the most drugs are dangerous.
Advances in diagnosis and treatment mean that a once deadly childhood blood cancer will soon be curable in nearly 90 percent of cases, experts report.
The use of gene-based diagnosis and treatment, more effective use of existing drugs, and the adoption of emerging disease-management strategies will continue to increase the cure rate for childhood acute lymphoblastic leukemia (ALL), according to a report by researchers at St. Jude Children’s Research Hospital, in Memphis, Tenn. In 1962, the cure rate for this disease was just 4 percent, they note.
This is terrific news, but unless and until insurance companies decide to reimburse for these tests only those with the means to pay out-of-pocket will benefit. And that’s shameful.
It’s really part of a bigger problem — insurance firms are willing to cover acute expenses, but panic over chronic care that, in the long term, would save trillions — and save lives.
If the folks running the big insurance companies think preventive genetic testing is expensive, they should compare it to the costs of the disease.
This announcement is what is called “stepping up to the plate.” Not a homerun — but a solid lead-off single.
FDA Issues Advice to Make Earliest Stages Of Clinical Drug Development More Efficient
The Food and Drug Administration today announced steps to advance the earliest phases of clinical research in the development of innovative medical treatments. FDA’s goal is to improve the process for bringing safe and effective drugs for potentially serious and life-threatening diseases, such as cancer, heart disease and neurological disorders, to the market.
In guidance documents released today, Exploratory IND Studies and INDs — Approaches to Complying with CGMP During Phase 1, the FDA lays out specific approaches for researchers who are planning to conduct very early clinical studies in people and offers approaches for performing appropriate safety testing and producing small amounts of drugs safely. In line with the aims of FDA’s Critical Path Initiative to modernize the drug development process, these changes will enable U.S. medical researchers to evaluate much more efficiently the promise of scientific advances discovered in their laboratories.
“Currently, nine out of ten experimental drugs fail in clinical studies because we cannot accurately predict how they will behave in people based on laboratory and animal studies,” said Health and Human Services Secretary Mike Leavitt. “The recommendations announced today will help more researchers conduct earlier, more-informed studies of promising treatments so patients have more rapid access to safer and more effective drugs.”
The Exploratory IND Studies guidance will facilitate very early exploratory scientific studies in people before the standard safety studies (phase 1) begin. Because only small amounts of drugs are used in these early studies, they represent fewer potential risks for people in these trials. In the final version of the guidance Exploratory IND Studies, FDA makes recommendations about safety testing, manufacturing, and clinical approaches that can be used in these very early studies. The guidance explains how medical researchers can take full advantage of the flexibility built into existing regulations in the amount of data needed when asking the FDAé¾ permission to proceed with such a study, enabling more rapid delivery of innovative products to patients.
“One of the biggest barriers research and academic institutions face is the ability to get discoveries made in the lab into clinical testing. The new Exploratory IND guidance emphasizes the flexibility available to researchers when conducting early clinical testing of these cutting-edge treatments,” said Andrew von Eschenbach, MD, Acting FDA Commissioner of Food and Drugs. “As we enter the era of personalized medicine, these exploratory approaches enable scientists to take full advantage of new technologies to target the development of more individualized therapies.”
In related draft guidance, INDs — Approaches to Complying with CGMP During Phase 1, the FDA outlines a suggested approach to complying with current good manufacturing practice (CGMP) requirements for drugs intended for use solely in phase 1 studies. With this new guidance and an accompanying regulation, FDA formally recognizes specific standards for the manufacture of small amounts of drug product for phase 1 studies and formulating an approach to cGMP compliance that is appropriate for the particular stage of drug development.
“The problem is that researchers conducting very early studies were required to follow the same manufacturing procedures as those companies that mass produce products for broad scale distribution,” said Janet Woodcock, MD, FDA Deputy Commissioner for Operations. “These requirements are so burdensome for early phase 1 studies that many leading medical research institutions have not been able to conduct these studies of discoveries made in their laboratories. Today, for the first time, medical researchers are getting specific advice from the FDA about how to safely prepare products for exploratory studies.”
The documents released today are part of FDA’s commitment to modernize existing CGMP regulations to streamline clinical development. These efforts are part of the Agency’s Critical Path Initiative, launched in a March 2004. The goal of the Critical Path Initiative is to reduce the time and resources expended on candidate products that are unlikely to succeed, by creating new tools to distinguish earlier in the process those candidates that hold promise.
Who’d have thought there was a parallel between the illegal piracy of prescription medicines into the U.S. and a soft drink? The Wall Street Journal reports on Coca-Cola’s campaign to prevent Mexican bottlers from shipping their Coke into the U.S. This is not fake Coke, but it is exported in violation of distribution agreements into which those bottlers voluntarily entered, that restricted them to territories in Mexico. Obviously, Coca-Cola’s U.S. bottlers are upset.
In an interesting twist, the Mexican Coke is actually more expensive than the U.S. Coke, apparently because it contains cane sugar instead of corn syrup, and is sold in the old, curvy bottles instead of cans. Nevertheless, Coca-Cola wants to stop the trade because it earns a larger share of the wholesale price (versus the bottlers) in the U.S. than in Mexico.
Coca-Cola has successfully prosecuted cases of this illegal trade in its trademarked product. Coca-Cola’s enforcing its property rights is uncontroversial in America, where we believe that the inventor of a product has the right to decide how it’s sold.
Except, of course, when it comes to prescription drugs, where California Governor Schwarzenegger is the latest politician to advocate international prescription piracy. Once again we see the hypocrisy of American politicians who advocate using government power against research-based drug makers, by destroying a legal right enjoyed by competitors in all other industries.
See: Chad Terhune, “U.S. Thirst for Mexican Cola Poses Sticky Problem for Coke”, Wall Street Journal, January 11, 2005, p. 1.
If you like EuroDisney then you’re gonna love Euro-DTC.
Advertising restriction represents a health hazard
By Jacob Arfwedson and Alberto Mingardi
The Financial Times, January 10, 2006
Patients want more information. With ageing populations and higher
standards of living, patients’ concern for their future drives a growing supply of information in various forms. Television programmes, books and newspapers and the internet focusing on health are proliferating at terrific speed. But the advertising of prescription drugs is banned across the European Union through a directive dating from 1992 that restricts such pluralism in the supply of information.
Some individual EU member states are even more tightly regulated. In
France, any information supplied direct to the public by manufacturers
is considered to be advertising, while Italy bans the advertising of
prescribed medicines. Hence, health consumers depend predominantly on
their family doctors for information concerning new therapies and
products.
Although it is generally agreed that freedom of information is
beneficial to consumers, pharmaceutical advertising is considered too
dangerous to be handled by the primary constituency: health consumers.
Nevertheless, recent surveys in EU countries, such as the
Populus/Stockholm Network survey of 2004, show that patients
increasingly want more influence over their treatment and drugs.
Patients may care deeply about equality of access, but healthcare
systems are finding it hard to cope with the consumer approach to
services that have so far been managed through waiting lists and the
shifting priorities of political expediency. The situation has become
more complex with recent European Court of Justice rulings that EU
member states must reimburse patients for treatment in other countries
if their national health service is unable to meet demand.
In order to be interested in any product, consumers need first to be
aware that such a thing is available. This is why entrepreneurs and
companies invest in communication and marketing. Companies like
advertising because it alerts consumers to their products, but this does not mean it is not also providing information. Entrepreneurs are well aware information is an essential factor of production.
However, there are many objections when prescription drugs are involved. A common claim is: “Drugs are not like other products.” In fact, drugs are exactly like other products to the extent that they are produced in order to fulfil a need. It is also said that “drugs are dangerous”. True, but so are any number of products that are handled without proper information and advice. Automobiles are highly dangerous and expensive. Hence, purchasing a new car involves consumer cost-benefit analysis,including of safety features. Indeed, this is literally an issue of life and death. Advertising is one important source of information among others, but that does not mean consumers will buy a new car only because they have seen an advertisement.
Another objection is that “advertising downplays safety.” In
justification of strict government regulations, producers are regularly accused of stressing the benefits and minimising the risks associated with their products. But an important difference is that companies suffer immediate sanctions through financial loss if they neglect their consumers, unlike bureaucrats whose income does not depend directly on their services. In addition, this view assumes that companies are the sole providers of information, whereas pluralism demands a much wider array of suppliers. The fact that publishers rely on advertising does not imply that books are getting positive reviews.
It would be no more useful in terms of consumer information to condemn
advertising in principle than it would be to cite possible deficiencies of campaign materials as evidence of manipulation of voters in democratic elections. Only a competitive market for health consumer information (including patient and consumer organisations and companies) can improve choice for individuals.
Advertising practices for prescription drugs, where authorised,
certainly leave room for improvement, but this is more a question of
reviewing regulations to make more information available to consumers
than of tightening restrictions. The basic issue remains the free access to information, commercial or otherwise, for the benefit of health consumers as sovereign decision-makers. In this context, the EU ban on advertising is a big obstacle to the quest for more and better information on medicines.
Jacob Arfwedson is associate researcher at the Institut Economique
Molinari (Brussels) and Alberto Mingardi is executive director of the
Istituto Bruno Leoni (Milan)
According to a story in today’s Chicago Sun-Times, Illinois resident Craig Schmidt ordered two prescription drugs over the Internet. Relevant Fact: He ordered them without a doctor’s prescription. Actually, to be more precise, he got an “on-line” prescription. They came in the mail and he took them
What was the next thing he remembers?
“Waking up in Elmhurst Hospital two weeks later,” he testified Monday in his lawsuit in U.S. District Court.
Schmidt suffered brain damage after taking Xanax and Ultram,
anti-anxiety drugs that depress the central nervous system, said his
attorney, Edmund J. Scanlan.
Had the doctors followed the recommended guidelines of the American
Medical Association and the laws in most states, they would not
prescribe medicine over the Internet without examining patients and
getting their medical histories.
But Schmidt found, as have countless other Internet users, how easy it
is to order drugs online with only perfunctory completion of a questionnaire, Scanlan said. Illinois is among the minority of states with no law against prescribing drugs over the Internet, according to the Federation of State Medical Boards’ Dallas-based National Clearinghouse on Internet Prescribing.
Since 1999, Illinois has suspended the licenses of three doctors and
issued a cease-and-desist order against a pharmacy dispensing drugs over the Internet. But that was before Governor “Wrong-Way” Rod Blagojevich went on his crusade for foreign drugs — sending Illinois residents the signal that it’s not only okay but preferrable to order prescription drugs over the Internet from foreign sources.
Actions have consequences. And Governor Blagojevich should be considered an unindicted co-conspirator.
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.
