Latest Drugwonks' Blog

California State Assemblyman David Chiu (D-San Francisco) has introduced a bill in that would require the manufacturer of any drug priced higher than $10,000 per year to report operational costs and profits associated with the product. 

The bill would require drugmakers to report profits attributed to drugs as well as expenses for R&D, clinical trials, acquisition, manufacturing, marketing, advertising and patient prescription assistance programs.

Companies would also have to report grants associated with high-priced drugs.
The Office of Statewide Health Planning and Development (OSHPD) would collect the information into an annual report, submit the report to the state legislature and post it online

Chiu said the bill is meant to provide transparency as drug prices rise.

Really? What about the cost of failure – which represents the lion’s share of pharmaceutical spending? Perhaps Mr. Chiu hasn’t been properly informed of the basic tenets of drug discovery. And maybe it’s time that was corrected.

Or maybe he’s just looking for an easy headline.

Hagap Kantarjian wants lower drug prices and he's willing to let people die to get them. 

In a conversation with Ed Silverman who runs Pharmalot, Kantarjian noted he is launching a online crusade to get 1 million people to support  his plan to lower cancer drug prices.  

Here's the 5 point plan he shared with Ed:

"First, allow Medicare to negotiate drug prices. Two, allow the Patient-Centered Outcomes Research Institute [which was created as part of the Affordable Care Act to assess treatments] to put the prices of drugs in their evaluations of benefits. Three, allow importation of drugs across borders. Prices in Canada are half of what they are in the U.S., so insurance companies would save money, patients would save on out-of-pocket costs and drug companies would make money because the patient who can’t afford the drug here would then make a purchase. Fourth, we should prevent drug companies from making deals to protect patents, like pay for delay, and prevent patent evergreening [which allegedly involves tweaking a patent to extend its life]. And fifth, we should encourage organizations that represent patients with cancer to develop treatment pathways that incorporate drug prices – what they call drug value or treatment value.

If we put these in place, it will allow market forces to work in a more favorable way."

In fact, under Obamacare, health plans are already doing much of what Kantarjian desires.  Recently HHS issued a final rule on drug coverage to address "benefit designs that we believe would discourage enrollment by individuals based on age or based on health conditions, in effect making those plan designs discriminatory, thus violating this prohibition. " The final rule goes on to cite “placing most or all drugs that
treat a specific condition on the highest cost tiers” as an example of discrimination." 

A review of these plans found that many patients have no affordable or low cost options. “Even if they are willing to switch drugs, many of the drugs have a high coinsurance cost…”

It should be noted that this redlining of sick people is based on the evaluation of drug prices and the pathways Kantarjian endorses.  PBMs say they are cutting drug prices but in fact they are just extorting rebates from innovator companies and pocketing the cash.  But I guess that's ok too as long as the drug companies are screwed to Kantarjian's satisfaction.  

Not suprsingly,  AHIP is claiming it wouldn't have to ration drugs if the prices weren't so damn high.  That's what Kantarjian claims too.   

That's just a lie, which since it is repeated often enough, passes as fact in Beltway discourse.  

In fact,  innovative cancer medicines represent 0.6% of total healthcare spend.  If every new medicine prevented or controlled disease, theeby eliminating hospitalization and physician visits and increasing healthy life span, spending three times what we currently spend on drugs would be a great bargain.   More immediately, a Milliman study has shown it would cost health plans less than $1 a month per health plan member to cover the cost of new oral cancer drugs.   

So what if we acheived Kantarjian's dream, not allowing any new cancer drug to the market until it the price was cut in half and stayed there.  America would save a grand total of $15 billion a year out of the $2.8 trillion spent on health care.  That's about 50 cents a day per cancer survivor.  That's something close to what the United Kingdom and Canada do with regard to prices.  

The UK, despite spending about the same amount on cancer drugs as the US, has the worst 5 year survival rates and mortality rates for many cancers.   The same with Canada.  Mortality from cancer is declining and has been declining more quickly here.  The reason?  Faster access to new medicines.   Just the time it takes to review new medicines is deadly.  A Frasier Institute report concludes that delaying access to just five new cancer drugs to get the price down cost the total federal and estimated would cost 1696 life years with estimated value of extended survival of between between $339.2 and $559.6 million.   There are many other studies confirming the connection between the Kantarjian cure for drug prices, increased health care spending and more people dying sooner. 

Kantarjian's silence on this disparity exposes him as nothing more than a second rate publicity hound.    (Similarly,  Kantarjian has said nothing about the fact that MD Anderson, where he works, increased what it charged for cancer surgery by 400 percent or marks up the price of cancer drugs discounted for the poor by 700 percent.   )

He and other critics of drug prices fail to support policies that reduce the time and cost of bringing new medicines to market and refuse to discuss ways to change how new therapies are paid for.  Amortizing the cost of a medicine over a period of years and providing patients and providers 'upgrades' as new technologies emerge would help frame the value of innovation.  

But these are serious proposals.  Kantarjian is not serious.  He is a demagogue who distorts the facts, ducks debates and hides the truth.  

When it comes to the patient voice (or any voice), the plural of anecdote isn't data. But the plural of data is science.

One of the hallmark pieces of FDASIA enshrines the concept of patient-focused drug development. Per the FDA’s own website:

Patients who live with a disease have a direct stake in the outcomes of the drug review process and are in a unique position to contribute to the entire medical product development enterprise.  Under FDASIA, the FDA will increase patient participation in medical product regulation.

  • Patient Participation in Medical Product Discussions under FDASIA. Sec. 1137 of the new law will assist the agency in developing and implementing strategies to solicit the views of patients during the medical product development process and consider their perspectives during regulatory discussions.  This will include:
    - Fostering participation of FDA Patient Representatives as Special Government Employees in appropriate agency meetings with medical product sponsors and investigators; and,
    - Exploring means to provide for identification of potential FDA Patient Representatives who do not have any, or have minimal, financial interest in the medical products industry.
  • Patient-Focused Drug Development under PDUFA V. The PDUFA V agreement provides for a new process enhancement under a commitment that will provide a more systematic and expansive approach to obtaining the patient perspective on disease severity or the unmet medical need in a therapeutic area to benefit the drug review process.  In other words, the patient perspective will provide context in which regulatory decision-making is made, specifically the analysis of the severity of the condition treatment and the current state of the treatment armamentarium for a given disease.

But patient input needs to be more than anecdotal – it needs to be data-driven so that divisional decisions can be more scientifically-driven by the patient community. And nowhere is that more urgently needed than in discussions over risk/benefit calculations.

Steve Usdin’s cover story in BioCentury, “Calming the Pendulum,” makes the case in the first sentence, Regulators and drug developers have converged on the idea that enhancing and broadening patient engagement is a key to improving drug development and adjudicating controversies over benefit-risk decisions and the value of medicines.

Absolutely right. But that’s not patient-focused drug development (after all, isn’t all drug development patient-focused), it’s patient-driven drug development. PD3. It’s time to change the name to properly fit the task. PD3 places the patient voice squarely in the middle of the drug development ecosystem.

Usdin quotes Dr. John Bridges (senior fellow at the Center for Medicine in the Public Interest and Associate Professor at the Johns Hopkins Bloomberg School of Public Health) who says that the FDA’s use of decision-based preference data “changed the world.” If only it were that easy.

Usdin writes, “Patient engagement provisions in the 21st Century Cures discussion draft were written based on input from patient groups, industry and FDA. They are intended to create regulatory certainty around the use of patient perspectives, including formal pathways for patient groups and companies to submit information about patient preferences, as well as defining how FDA will incorporate these submissions into approval and other decisions.

In Bridges’ new paper, Identifying the Benefits and Risks of Emerging Treatments for Idiopathic Pulmonary Fibrosis: A Qualitative Study (The Patient, DOI 10.1007/s-40271-014-0081-0) he provides important qualitative evidence on stakeholders’ views as to important issues associated with emerging therapies for idiopathic pulmonary fibrosis.

Bridges, et al., identifies multiple issues were identified spanning the impact of emerging therapies, including the need to document the patient experience with treatment, and factors associated with disease progression.

The paper discusses the value of qualitative research both in understanding the benefits and risks of emerging therapies and in promoting patient-centered drug development.

Patient passion is important to share. When combined with data and a more dispassionate understanding of regulatory paradigms, a patient-driven pathway can is, and must evolve into a tool used to impact regulatory decision-making.

A new BIO survey finds that more drug sponsors are not seeking special protocol assessment for drug development because they do not believe it improves their chances of getting a product approved. (The survey represents 165 companies and 240 individual clinical development programs.)

According to BIO’s Executive VP for Emerging Companies Section, Cartier Esham, “The reason cited is that they don’t see any objective evidence that utilization is improving chances of success.”

Question: Does that speak to a problem with the pathway or in the design of any given clinical program? One cannot be blamed for the other. SPAs were never meant to promise speed-to-market. Could it be a case of inappropriate sponsor expectations? Just asking.

BIO’s survey also found that the majority of respondents have not utilized FDA’s enhanced communications program, and that the reason people give for not using the program is that they are not aware of its existence or what purpose it serves.

Really? Or is the reason that what the program offers isn’t what sponsors want – or want most – direct communications with their agency review team.

You can't always get what you want
But if you try sometime you just might find
You get what you need.

And, according to the BIO survey, smaller companies often don’t take advantage of FDA meeting opportunities. That’s truly unfortunate since the FDA said its own analysis shows that companies that have milestone meetings with the agency across all phases of development experience shorter clinical development (by a year or more) than those that did not engage at all milestones.

Blame the FDA? What about blaming shortsighted corporate regulatory strategies?


High Noon At The Pharma Pricing Corral
A wrangle over costly hepatitis C drugs portends a transformation in health care reimbursement
By Rick Mullin


Reorganize R&D in pharmaceuticals? Not a problem. It hurt, but faced with petering pipelines and patent expirations on top-selling drugs, major drug companies moved quickly over the past three years to consolidate operations. They closed labs, slashed research staff, and sold off noncore ventures. They replaced those operations by forming partnerships with academic labs and licensing or acquiring promising drug candidates from small biotech firms, hardly skipping a beat on innovation.

Reorganize getting paid in the drug industry? That’s a problem. In fact these days, the business appears to be at crisis point, as the first entries in a new generation of high-priced, highly effective drugs raise alarm and generate pushback from patients, insurance providers, and Congress.
Much of the attention is on two expensive new drugs for hepatitis C—Gilead Sciences’ Sovaldi and AbbVie’s Viekira Pak. Also of concern is a related deal between AbbVie and Express Scripts, a pharmacy benefits management firm, or PBM. Rebelling against Sovaldi’s $84,000-per-treatment price tag, Express Scripts said it would offer Viekira Pak at a significant, but undisclosed, discount and exclude Sovaldi from its formulary. In response, Gilead cut a similar deal with the drugstore chain CVS.

The U.S. Senate, also startled by Gilead’s asking price, convened a committee last year to investigate the drug’s cost. Meanwhile, patient advocates have come forward with concerns over the steep price of highly effective new drugs not only for hepatitis C but also for cancer and a variety of rare diseases. Moreover, they view the likelihood of formulary exclusion via deals between drug companies and PBMs as threatening access to treatment.
It can be argued that nothing out of the ordinary is happening. Products that differentiate themselves from others in any market command high prices—consider the furor over a new smartphone—and two such products will often battle head-to-head for market share. Vying for exclusive deals with payers is a time-honored means of doing battle in many industries.

Indeed, Gilead’s disclosures about such deals in its recent earnings statement led stock analysts at Morgan Stanley to estimate the firm’s average price for Sovaldi and Harvoni, another hepatitis drug, at $51,000 to $52,000 when discounts are taken into consideration.

The monthly costs of cancer drugs at the time of FDA approval has soared. SOURCE: Peter Bach of Memorial Sloan Kettering Cancer Center
But drugs are not smartphones. Their critical role in people’s lives, the means by which their value is calculated, the method established for payment, and drugmakers’ outsized expectations for return on investment define a unique economy of access and reimbursement—one that industry watchers claim is no longer sustainable and is in need of change.

The cost of developing and commercializing a new drug has risen to $2.6 billion, a 145% increase, corrected for inflation, over the past 10 years, according to a recent report from the Tufts Center for the Study of Drug Development. And drug companies want to recoup that investment.
But the price of new therapies is increasingly determined by estimates of savings to the health care system over an extended period of time, a calculation that often yields a significantly higher figure than the mere investment cost. In short, if an effective new drug cures a patient of a chronic disease, the cost benefit of not having that person as a patient is factored into the treatment cost. As drugs impacting underserved therapeutic areas emerge, some fear that price and volume will combine to overwhelm the annual budgets of insurance companies and other payers.

“I think of this as pressure building up,” says Glen Giovannetti, global life sciences leader at the consulting firm Ernst & Young, of the attention garnered by the hepatitis C drugs in recent weeks. Although Giovannetti sees nothing fundamentally new in dealings between the drug companies and insurers, he says there is cause for concern over the rise of formulary exclusion as more breakthrough drugs enter the market. According to Giovannetti, Express Scripts is “clearly sending a message” that it is also looking to form exclusive pacts with drugmakers over future cancer treatments.

But the battle over drug pricing may also be a distraction from a more important issue, according to Robert M. Goldberg at the Center for Medicine in the Public Interest, a health care policy research organization. “Discussions about what is best for patients always circle back to outrage over high prices,” Goldberg says. “But this is nothing new. We have been fighting about drug prices since the snake oil salesmen pulled their wagons to town. We rarely have a discussion about value.”

Some of today’s new drugs, he says, are delivering more value to patients and their families than the drugs of 10 years ago did, which means big changes across the health care landscape. “There is less and less economic return going to the traditional institutions, like the insurance companies and the hospitals,” Goldberg says. “These medicines are doing to this business model what digital information did to the recording industry. They are decimating it.”
Goldberg is optimistic that genomics, big data, systems biology, and information technology—what he calls the digitization of the industry—will lead to transformative change in health care, but pricing and reimbursement need to accommodate them and ultimately facilitate patient access to new drugs. “We may need to change the way things are paid for,” he says.

Patient Distress
Whatever the causes, the cost of new treatments is a source of increasing alarm for patient advocacy groups. The Fair Pricing Coalition, a network of patient advocacy groups focused on HIV and hepatitis C, characterizes the high prices of new hepatitis C drugs and the deals between drug companies and PBMs as indicative of heightened obstacles to patient access ahead.

“Hep C is the canary in the coal mine,” says David Evans, director of research advocacy at Project Inform, a member of the coalition. Sovaldi and Viekira Pak are perceived by patient groups as the first in a wave of high-tech, high-cost drugs, he says. They are concerned about the prices of such drugs and how squabbles among corporate giants impact availability.

“As an organization whose first goal is to ensure access to quality and affordable medication for people living with chronic diseases, we have a tremendous fear that the giants involved in this battle are going to try to crush each other to the harm of people with those diseases,” Evans says. “What we see is King Kong versus Godzilla. The pharmaceutical industry is very powerful, as is the insurance industry. And they are playing hardball over price.”

Cancer patient advocates are similarly concerned. “On the very positive side, especially in blood cancer, there has been a tremendous amount of innovation. The options available have increased dramatically,” says Brian Rosen, chief policy and advocacy officer for the Leukemia & Lymphoma Society (LLS). “On the other hand, the price of innovation is very high.” And the current reimbursement model requires patients and payers to pay up front for drugs priced according to estimates of long-term value to the health care system.

Drug companies and payers, Rosen contends, are both reluctant to engage in discussions of altering the pricing and reimbursement model in health care. “But if there come barriers that prevent a product from reaching a patient, then the model becomes unsustainable,” he says. “Currently, it’s our belief that barriers to patient access are increasing.”

LLS hosted a forum a year ago to which it invited drug producers, payers, economists, and data experts. “We came away with the perspective that in order to inform the value equation, we need the patient’s perspective,” Rosen says. “And it is lacking.”

Producers’ Perspective

Cara Miller, vice president of public affairs at Gilead, argues that the savings to the health care system justify the cost of Sovaldi and Harvoni. “Unlike long-term or indefinite treatments for other chronic diseases, Harvoni and Sovaldi offer a cure at a price that will significantly reduce hepatitis C treatment costs now and deliver significant health care savings to the health care system over the long term,” she tells C&EN.

AbbVie makes a similar argument for its hepatitis C drug. “In determining the price of Viekira Pak, we took a number of factors into account including the overall market dynamics, the benefits of the therapy to patients, the cost-effectiveness of treatment, and the value that the product brings to offsetting short-term and long-term costs,” says Stefanie Prodouz, the firm’s senior manager of public affairs. She adds that the deal with Express Scripts is indicative of the company’s efforts to ensure that patients other than just the sickest are able to get Viekira Pak.

Douglas Paul, a partner at Medical Marketing Economics, an Oxford, Miss.-based consultancy to the pharmaceutical industry, agrees that pricing needs to take a drug’s efficacy into account. “Historically with hepatitis C, we paid $30,000 for a 30% cure, $60,000 for a 60% cure, and now we are paying $90,000 for a 90% cure,” he says.

Moreover, Paul contends, the flash point between Gilead and payers over Sovaldi occurred not because of the high price of the drug but because of the high volume of patients seeking access.

“What made this one different is that it was a very accessible drug,” he says. “You had all these people who were warehoused, waiting for this highly efficacious, low-side-effect drug. The price per cure didn’t get the payers; it was the number of people seeking a cure.”

Paul views the recent developments in hepatitis C as normal market activity—two highly differentiated products came on the market at the same time, and price competition led to deals with insurers. He does not view such deals as restricting patient access because the drugs are of equal efficacy. Nor does every hepatitis C patient need the new drugs right away, he adds.

Paul also expresses frustration over payers’ failure to prepare for Sovaldi, which the Food & Drug Administration approved in December 2013, in their budgets for 2014. He and others point to Gilead’s $11 billion acquisition of Pharmasset—which discovered Sovaldi and had taken it through Phase III clinical trials—and the drug’s strong clinical results as sufficient indication that something big was due in hepatitis C.

A PBM Responds
David Whitrap, corporate communications director at Express Scripts, begs to differ. “Nobody anticipated that the $11 billion purchase price of Pharmasset would lead to an $84,000 price of Sovaldi,” he says. “When Gilead did ultimately price Sovaldi at that level, they were able to recoup the entire Pharmasset investment in only one year—far sooner than acquisitions of that level generally pay off.” He adds that budgets for payers are generally set long before the December immediately preceding the benefit year.

Express Scripts also challenges the contention that drug companies and insurers are vying for position at the expense of patients. “We put clinical profile and clinical efficacy first,” says Steve Miller, the firm’s chief medical officer. “Access is an enormous factor,” he says. “And access is proportional to price. It doesn’t matter if you bring great drugs to market if no one can afford them.”

He points out that some patient advocacy groups, including the AIDS Healthcare Foundation, applauded Express Scripts’ deal with AbbVie. Indeed, the group issued a strongly worded statement condemning Gilead for its pricing of Sovaldi.

Miller notes that the issues of drug pricing and reimbursement have garnered interest on both sides of the aisle on Capitol Hill in the wake of the Senate investigation of Gilead and Express Scripts’ deal with AbbVie. Democrats, who have long pushed for price controls, are glad to see the pressure on Gilead, he says. Republicans like that free-market forces are being applied.

Express Scripts also favors free-market mechanisms over price controls and pays for much more expensive drugs than Sovaldi, Miller points out. “We have drugs on our formulary that are $300,000-plus for kids with cystic fibrosis,” he says. “You haven’t heard us complain about this because this is truly adding great value.”
Despite new products such as Sovaldi, Miller faults big pharma on innovation. “Let’s be honest,” he says. “When it comes to the hepatitis drug, Pharmasset was the innovative company. What Gilead did was financial innovation. Pharmasset indicated in public filings that they would have sold the drug at $36,000-per-treatment cost.”

The Push For Change
The American Enterprise Institute, a conservative policy and economics think tank, is among the voices suggesting alternatives to the current payment system. Scott Gottlieb, a fellow at AEI and former FDA deputy commissioner for medical and scientific affairs, coauthored a report last year suggesting various means of spreading payments over time, including reinsurance and amortization.

According to Gottlieb, such a change would be the second shoe dropping on a reengineered drug industry. “They have changed their whole R&D model, but they haven’t changed their payment model,” he says.

But he considers the entire system primed for changes that will impact payers, care providers, and patients alike. “You haven’t seen a lot of financial services sophistication in the market for these transactions,” he says of the recent agreements between drug companies and payers. “I think we are going to have to think about how to bring real financial services constructs into these transactions. And one of these is amortization.”

Although it is unclear why the health care industry has lagged others in adopting such standard financing instruments, Gottlieb points to unique aspects of the industry that set it on its own course. “There is a lot of churn,” he says. “How do you amortize the cost when by the 10th year, you still have the cost but you no longer have the patient?”

Advocates of reform are garnering government backing. Last month, the U.S. Department of Health & Human Services stated a goal that by 2016, 30% of all Medicare provider payments will be transacted through alternative models tied to patient outcomes rather than how much care is provided. The target rises to 50% by 2018. Pharmaceutical Research & Manufacturers of America, a drug industry association, responded that it supports payment plans emphasizing patient outcomes and encouraged the agency to “incorporate clear mechanisms for recognizing the value of new treatment advances.”
Gottlieb doesn’t see any of the stakeholders stonewalling on exploring new modes of finance. Not even the drug companies. “They are not resistant to the idea of amortizing these costs and smoothing out their earnings,” he says.

Most PBMs are also receptive to changes that enhance their growing role as financial service intermediaries. That sector is ripe for change, in Gottlieb’s view. “Simply extracting discounts from drugmakers and passing on some of the discounts to payers is not a sustainable model where the ‘middleman’ sees his margins shrinking.”

At the moment, however, payers and patients are pointing their fingers at the drug companies in what Gottlieb characterizes as a cycle of recrimination that currently puts big pharma in the crosshairs.

“It’s all great theater, but is it good for patients? The answer is no,” Goldberg of the Center for Medicine in the Public Interest says, “because increasingly, patients will be forced to jump through hoops to get the medicine that is right for them and still pay thousands of dollars out of pocket for medicine that might not work in order to get a medicine that will work. There really isn’t a focus on what works best for the patient.”

He says disease advocacy groups such as LLS and the Multiple Myeloma Research Foundation are gathering data on patients that may provide a corrective force. Discrimination lawsuits brought by patient groups against PBMs may have an effect as well, he says.
The current concern over the cost of treating patients with the best drugs needs to be matched with a regard for the cost of not doing so, according to Goldberg. “The healthier the people in your risk pool, the lower your premiums are,” he says. “So why would you not want to use the best technology first to keep people healthy?”

The key, Goldberg argues, is to determine the value of drugs by focusing on their long-range benefit to the health care system and to patients—but to facilitate access up front.

“The faster you get medicines to patients, the lower the cost will be,” he says. “In the short term, patients are going to be whipsawed, but there will be changes made by drug companies and health plans well before legislation kicks in. Things are moving in a very good direction. The next generation of medicines will be priced differently, and cheaper.”  

Here’s a question you hear a lot, “Has Big Pharma figured out social media yet?”

That question lacks granularity.

Big Pharma marketers understand (and correctly so) that social media is a long-term play. It doesn’t deliver ROI in the same timeframe as DTC or couponing or any of the more traditional tools of the trade. “Mobile,” as crucial as it is to any successful marketing effort, isn’t social media. It is one platform on which social media exists.

Social media takes time, effort, patience, and investment. Unlike websites, social media isn’t a fire-and-forget proposition. Just because a platform is “digital” doesn’t mean it’s identical. For marketers, whose job it is to sell as much product as possible in the shortest time possible (no, not patent life – stock quarters), the perpetual, largely uncontrolled, multi-contextual aspects of social media are more of a headache than a new frontier. Yes, this is shortsighted – but that’s what the current reward structure assigns as “best practice.”

Have pharma brand marketers “figured out” social media? Yes. They have figured out that it is not ready for prime time in their 20th century "blockbuster" marketing primer. That which gets rewarded gets done.

Corporate communicators feel differently. They see social media as the wave of the present. They understand social media as an indispensible tool not just for crisis communications but for corporate identity, alliance building, and for being at the hub of the healthcare communications ecosystem.

They’ve figured it out – but don’t have the budgets to really make it happen to scale. More’s the pity.

And, of course there are those still “waiting for the FDA.” To those folks, here’s a question to ponder, what about the agency’s Correcting Independent Third-Party Misinformation About Prescription Drugs and Medical Devices draft guidance?

The FDA writes:

If a firm voluntarily corrects misinformation in a truthful and non-misleading manner and as described in this draft guidance, FDA does not intend to object if the corrective information voluntarily provided by the firm does not satisfy otherwise applicable regulatory requirements regarding labeling or advertising, if any.

Bueller? Bueller?

Will expanded government extortion result in fewer settlements? Will the NIH have to admit to its true role in drug development?

From today’s Wall Street Journal:

A “Swear Jar” for Drug Makers

By: Ed Silverman

Should drug makers that break the law be required to pay an extra penalty that would be used to fund the National Institutes of Health?

Sen. Elizabeth Warren (D-Ma.) believes this idea would not only provide needed money for medical research, but would help persuade drug makers to curtail bad behavior. Last month she introduced a bill, the Medical Innovation Act, that she has described as the equivalent of a swear jar.

Basically, drug makers that reach settlements with the federal government for paying kickbacks to doctors, defrauding Medicare or Medicaid, or illegally marketing medicines would have to pay 1% of annual net profits for each blockbuster medicine that originated with government-funded research. However, the law would only apply to drug makers with more than $1 billion in net profit.

The U.S. Department of Health and Human Services would be chartered with calculating payments, which would actually run for five years. Why? This is the same amount of time covering most settlements reached between drug makers and the Department of Justice.

No estimates were given on how much money might be raised for the NIH, but if the law had been in place five years ago, Sen. Warren claims the NIH would have gained an extra 20% in annual funding, or roughly $6 billion, on average, each year. This is real money.

 “We should make it easier for the biggest drug companies to help develop the next generation of cures, and harder for them to profit from breaking the law and defrauding taxpayers,” she told a conference last month. The payments, she noted, would be in addition to any settlement paid by a drug maker.

Not surprisingly, the pharmaceutical industry is having none of it. The trade group representing large drug makers slammed the proposal, calling it “misguided” and suggesting that needed money would be “siphoned” from research that develops new medicines.

Some also argue that Sen. Warren wrongly inflates the NIH’s role in creating drugs. She “should acknowledge the reality rather than trying to score political points that don’t match up with the facts,” says industry consultant Peter Pitts, a former FDA associate commissioner for external affairs.

Meanwhile, the amount of money the bill may generate is a question mark, since this depends on the number of settlements. Pat Burns of Taxpayers Against Fraud, a nonprofit funded by attorneys, says numerous cases are under way.

Drug makers are already grumbling that device makers are exempt, because the bill focuses on companies that sell blockbuster drugs. But any company that sells both products could be subject to a penalty. The real issue, though, is that the pharmaceutical industry is expected to fight back.

“This is a very powerful lobby,” says Paul Thacker, a former aide to U.S. Sen. Chuck Grassley (R-Iowa), who led investigations of drug and device makers. “We need more medical research funding, but I think she needs to make a case that these violations lead to poor outcomes that increase health costs. A swear jar sounds great, but this is going to be a tough.”

For more on this, see this story in The Hill.

This from ABCNews

Specialty Drugs Help CVS Health Meet 4Q Profit Forecasts

In a really, really big way: "growing demand for expensive specialty drugs helped increase revenue from its pharmacy benefits management, or PBM, business nearly 22 percent in the quarter to $23.9 billion."

But there is more to the surge in specialty pharmacy driven profits..It's how CVS and other PBMs are raking in big discounts from makers of specialty drugs and then making it harder for patients to get them.   From Rollcall

Study: Higher Share of Plans Charging Patients Higher Fees for Certain Drugs

"More health insurance plans on the exchanges are placing drugs to treat complex diseases at the highest cost-sharing tier in 2015 when compared to the previous year, according to a new analysis from the Avalere Health consulting firm."

I wrote about this pyramid scheme in my NY Post article.   WIth exception of Adam Fein, no one else seems to cover this issue or care.  

That's because it doesn't fit the narrative of BIG Pharma generating huge profits at the expense of patients..  Which is why no one writing about specialty drugs mentions that reduce total health care spending are only 5 percent of total health care spending. 

This week the FDA proposed cutting out the paperwork and cost required to submit a ' request' to use a medicine that hasn't approved but has demonstrated that it is relatively safe given the clinical benefit and urgency of the medical condition.   As the agency noted in a blog discussing the change: the previous request form called for 26 separate types of information and seven attachments. In fact, it was originally designed for manufacturers seeking to begin human testing, not for physicians seeking use by single patients."

This simple step could save thousands of lives and increase the number of people seeking to try a new medicine as early as possible. 

All of which begs the question of why we need compassionate use exemptions at all.  Why not turn Phase 2 and 3 into a study of people using medicines in the real world?  Joseph Cooper notes in "Regulating New Drugs that "the ultimate test of safety and efficacy is how man responds in significant numbers under diverse conditions over relatively long periods of time.  We have tended to substittue for that ultimate test one of the fads of the times -- the scientifically controlled double blind trial "

Cooper wrote that in 1972.  

We have not come very far since then.  In fact, the fad of that time has become Holy Writ.   Peter and I wrote a publication about how to use molecular markers and digitized real world data to accelerate all drug development and to turn medicine into a true learning system.   Very little of what has been written since then is more than a footnote to our original work.  And in turn, our work was shaped by the thinking of Cooper and others such as the late Nobel Laureate Josh Lederberg who wondered aloud "if innovation was possible" under the current regulatory regime.

We can learn more in less time using real world data than in a decade of clinical trials.   Kudos to the FDA.  By removing the obstacles to using new medicines in the real world and by encouraging the sharing of data from these experiences, it has given us -- and policymakers -- a look at how the agency can serve the public health in the century ahead.  And it has acknoweldged that patients should and will have more control over what medicines to use and has increased that control.  

From the pages of the Washington Examiner

Industry ties could be at issue for possible FDA pick

Respected cardiologist Dr. Robert Califf appears to be a top candidate to be the next head of the Food and Drug Administration but may face heated Senate queries over close ties to pharmaceutical companies if nominated for the post.

The Duke University cardiologist and researcher was appointed as the agency's deputy commissioner for medical products and tobacco by the FDA last month and will start in March.

At the time, several FDA and industry insiders believed the appointment signaled that Califf would be FDA Commissioner Dr. Margaret “Peggy” Hamburg's eventual successor.

Now that Hamburg officially resigned last week, insiders continue to believe Califf will be selected by President Obama to fill the position.

“I have a short list of one person, and that is Robert Califf,” Peter Pitts, president of the think tank Center for Medicine in the Public Interest, told the Washington Examiner.

Pitts, a former FDA associate commissioner, said Califf would have bipartisan appeal. He was interviewed for the top job during the Bush administration and the Obama administration.

Califf currently serves as vice chancellor of clinical and translational research at Duke University, and was founding director of the Duke Clinical Research Institute, which conducts clinical trials for several drugmakers. He will take a leave of absence from the university to fill the deputy director position.

Califf is a logical choice because he is an accomplished researcher who has more than 1,000 manuscripts to his name, which is a rare feat, Dr. Steven Nissen, chairman of cardiovascular medicine at the Cleveland Clinic, told the Examiner.

Nissen and Califf clashed at times while serving on FDA advisory committees, but Nissen said his colleague has a high degree of scientific integrity.

Califf was part of the Institute of Medicine committees that recommended Medicare coverage of clinical trials and the removal of the unsafe weight-loss supplement ephedra from the market, the FDA said.

While Califf has extensive research credentials, he also has extensive ties to the pharmaceutical industry.

He has received research grants from pharmaceutical giants Novartis, Johnson & Johnson, Lilly, Merck and Schering-Plough. He also consulted for Boehringer Ingelheim, Bayer, Bristol Myers Squibb, device giant Medtronic and other companies, according to a disclosure statement on the Duke institute website.

Califf was named to the board of directors for San Francisco drug manufacturer Portola Pharmaceuticals in 2012 but resigned soon after being appointed to the FDA post.

Nissen conceded that the ties could be a liability and may come up during a confirmation hearing.

The issue is “what if he is in the position to make decisions about companies with whom he has working relationships,” Nissen said. “I think his integrity makes that less of an issue, but that is in the eye of the beholder.”

Public advocates and some members of Congress have previously criticized the FDA for being too close to industry. The advocacy group Public Citizen noted recently that during Hamburg’s tenure the FDA grew even “more cozy with the industries that it regulates.”

Another potential focal point during confirmation could be Califf’s handling of a data fabrication scandal while at Duke. Califf was vice chancellor of Duke’s clinical research division when Dr. Anil Potti was caught in 2012 fabricating cancer research. Califf told CBS News that year he is responsible for retracting Potti’s various papers in medical journals and implementing new oversight procedures at Duke.

To be confirmed, Califf must first be vetted by the Senate Committee on Health, Education, Labor and Pensions.

The White House hasn’t announced a timeline for selecting a replacement. Press secretary Josh Earnest said during a briefing Friday the president will want someone with “impeccable medical and scientific credentials” that can also muster strong bipartisan support.

Califf did not return a request for comment as of press time. During a recent conference call with reporters on the deputy director appointment, Califf said that such a promotion “has not been a part of the discussion,” according to the Wall Street Journal.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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