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That's a nice narrative but it is history rewritten by those who want to claim that every company in the drug or vaccine business should cut their prices or give away their products.
It is true that when Edward R. Murrow asked Jonas Salk who owned the patent to the polio vaccine Salk said: “Well, the people, I would say. There is no patent. Could you patent the sun?"
Since then, Salk's statement has been use as trump card by individuals who claim that protecting the intellectual property of medicines is immoral or greedy. As an article in Slate notes: One critic of the big pharma called Salk “the foster parent of children around the world with no thought of the money he could make by withholding the vaccine from the children of the poor.”
Let's set aside the fact that solar energy companies have, in effect, patented the sun. There was a reason the Salk and the Sabin vaccines (more on that later) were not patented. The National Foundation for Infantile Paralysis was the beneficiary of a massive campaign to eradicate polio that makes the ALS Foundation Ice Bucket Challenge and Standup2Cancer efforts seem anemic (which they are NOT.)
"In the single year that the polio vaccine was unveiled, 80 million people donated money to the National Foundation for Infantile Paralysis, which spearheaded the vaccine effort.... Schools, communities, and companies joined in a remarkable display of unity against the disease. Even Walt Disney’s cartoon characters contributed their talents, appearing in a film that adapted the Snow White and the Seven Dwarfs’ song “Heigh Ho” to an anti-polio ditty. In the 13 years leading up to the vaccine’s roll out, the budget of the National Foundation for Infantile Paralysis swelled from $3 million to $50 million.
In today's dollars that's about $500 million. The need for IP was removed because the passion capital had already been raised.
Further, it is true that a vaccine (an inactivated virus) does occur in nature as does the sun. But we patent both. How many solar energy companies have repurposed the sun's power with patented technology. A lot. And a lot more than vaccine companies have.
Then there is the myth that the Salk vaccine eliminated polio. In fact as Angela Matysiak noted in a review of a Salk biography:
"In 1959, epidemiologists reported findings on the pattern of the disease. These suggested a shift in incidence according to age, geography, and race. By 1960, less than one-third of the population under 40 years of age had received the full course of three doses of the Salk vaccine plus a booster. Most of those who had were white and from the middle and upper economic classes. The disease raged on in urban areas among African Americans and Puerto Ricans and in certain rural locales among Native Americans and members of isolated religious groups."
There were several reasons for the lag. Most important was the limited effectiveness of the Salk vaccine which was killed version of the polio virus required several shots. Matysiak oberves that Sabin put the point most succinctly: “The need for inoculating large amounts and the need for repetition are bad.” In contrast, an oral vaccine with a small dose of the attenuated versions of each of the three strains, administered once, would give lifelong immunity.
The Sabin vaccine was cheaper and easier to administer. But it became clear that both vaccines were needed because each protected certain subgroups that the other could not protect. The Salk vaccine could be used in people with compromised immune systems while the Sabin vaccine could not.
Both were required to eradicate polio. Ironically, the Sabin vaccine could be considered a me-too vaccine by the same ilk who claim patents don't matter.
And the same anti-patent crowd ignore another inconvenient truth: That Alexander Fleming, who discovered penicillin, regretted that he had not secure a patent because the lack of funding and private investment postponed it's development and commercialization by a decade and cost the lives of millions around the world.
Here’s the headline -- The GPhA now acknowledges the importance of differential nomenclature for biosimilars.
And now here’s the spin
The Generic Pharmaceutical Association (GPhA), out-flanked, out-thought, out of its league, and on the wrong side of history, has proposed a bizarre naming scheme for biosimilars – and shared it with the FDA last January. The agency agreed to the meeting on the condition that it was a ‘listening session’, meaning that the FDA would be unable to answer questions or expand on any issues beyond what is in the public domain and what they have stated in the published draft guidance documents.
Wink and a nod.
Officially, the GPhA requested the meeting to discuss the dialogue held at a recent World Health Organization (WHO) meeting regarding non-proprietary names of biosimilars and the possible addition of identifiers (specifically a three-letter random alphanumeric suffix) to the INNs of originator biologicals in order to name biosimilars.
The GPhA’s brainstorm is, rather than the WHO concept (also supported by the US The Pharmacopeia), attaching the company name as a suffix to the INN without changing the INN as a way to distinguish between products. They also proposed that this then also apply to the originator product, e.g. filgrastim Amgen.
Really? What happens when a biosimilar manufacturer merges with another firm or sells a product line to another company? And since when are drugs named “for a company.” That’s why FDA regulations stress names that are designed to avoid confusion. Using a “company suffix” makes things more confusing, not less. (For example, what happens when one company has more than one drug is any given therapeutic category?)
The GPhA stated that it does not disagree with ‘distinguishability’, but believes that this can be done without changing the INN.
That’s a start.
Without context, Sunshine Act's health care 'transparency' is useless
The biopharmaceutical industry is buying off America's doctors.
That's the bogus conclusion from some who have examined new data from the Centers for Medicare and Medicaid Services. The data set shows that from August to December of last year, drug and device manufacturers paid $3.5 billion to physicians and teaching hospitals.
Those payments were real, but there were no payoffs. The truth behind the numbers is that industry-physician collaboration is one of the main drivers of medical innovation today.
The purpose of the publication of this data is at least partly well-intentioned. As part of the "Physician Payments Sunshine" provision of the Affordable Care Act, it aims to increase transparency in the healthcare industry and help patients make better informed decisions.
The provision requires CMS to provide information on the financial relationship between doctors and the pharmaceutical industry. The data covers all payments and gifts provided to doctors and teaching hospitals from drug and medical device manufacturers. This includes meals, travel expenses, and speaking fees. Disclosure here is all to the good.
But for some, publication of the data was designed to produce exactly a "gotcha" moment: It was intended to embarrass the pharmaceutical industry and healthcare professionals, hopefully leading to a diminution of the supposedly undue influence the industry has on medical practice.
If that's the main impact of the release of the data, it will be doing more harm than good. First, the data reported by CMS is incomplete. Nearly 40 percent of the records aren't actually connected to a specific doctor or teaching hospital. Considering that the information is supposed to help empower patients, this gap is critical.
The data also come with little context. Industry-physician collaborations drive research and development in medicine. Pharmaceutical companies work together with doctors in clinical trials to create novel, lifesaving drugs. In fact, $1.5 billion of the payments reported by CMS were for research. These companies are merely reimbursing doctors for their professional services.
Biopharmaceutical companies and doctors bring separate skill sets and knowledge bases to the research table. Doctors working in the field have a better sense of what types of treatments patients need. And those in the biopharmaceutical industry are better versed in the drug development process. According to a recent survey, 94 percent of physicians say that the role of pharmaceutical and biotech firms in sponsoring clinical trials for new treatments is useful.
Thanks to these partnerships, there are currently 3,400 drugs being developed in the United States. These are drugs that will combat diseases like diabetes, heart disease and Parkinson's.
Currently, 93 medicines are undergoing clinical trials or awaiting FDA approval for Alzheimer's and dementia alone. For the more than 5 million Americans with Alzheimer's, one of these treatments could be the key to higher quality of life.
Physician-industry partnerships are also on the forefront of medical research. Take the collaboration between the University of Alabama at Birmingham and drug manufacturer rEVO Biologics. The two are conducting Phase III clinical trials for a therapy that could prevent dangerous pregnancy complications.
These collaborations are especially critical considering that federal research dollars are quickly drying up. In fiscal year 2013, burdened with the sequestration and budget cuts, the National Institutes of Health (NIH) - the country's main source of biomedical research funding - awarded 722 fewer grants than the previous year.
If the data released under the Sunshine Act continues to present the financial relationship between physicians and industry without this crucial background information, these collaborations could be in jeopardy. Doctors may end up resisting them in order to avoid sensationalist claims that their medical judgment is for sale to the highest bidder. Patients will be the real losers.
The Sunshine Act aims for transparency in healthcare, but fails to be transparent itself. CMS must present a more detailed view of the relationship between doctors and the biopharmaceutical industry. Doing so could even help patients choose doctors who are leading innovators in medicine.
Peter J. Pitts, a former Food and Drug Administration associate commissioner, is president of the Center for Medicine in the Public Interest.
I have previously asked Peter Bach to answer his own question in a different way: What if his idea of how high prices have to be winds up killing off drugs and vaccines that save peoples lives? What if the price he thinks is too high induces lots of companies to develop an Ebola vaccine. What is morally more reprehensible, drug prices higher than what Bach prefers or drug prices that he likes but kills off Ebola vaccine development? t I have asked Bach to discuss or debate this issue to no avail. . Perhaps Matt Herper could arrange for this to happen since Bach has been ducking me for months.
In this recent post Bach actually argues that prices that he regards as too high are bad for innovation. He never explains why. Instead he complains that there is too much innovation designed to treat rare diseases and specific cancer mutations. You tell me if he makes a strong case. Maybe I am missing something.
1. Bach – an oncologist – misrepresents the research activity of companies pursuing drugs to “target lung or and/or other cancers caused by an acquired genetic abnormality called the ALK rearrangement.” He claims that seven drugs targeting the ‘same cancer causing mechanism’ is too much.
In fact, there are at least seven ALK gene rearrangement variants that are involved in NSCLC alone. And he wants us to believe that one drug targeting ALK will do the job. In fact, most patients who have used the first 2-3 ALK inhibitors (let’s call them Bach’s Enough Bunch or BEBs) undergo a relapse…In particular, the central nervous system (CNS) is one of the most common sites of relapse in patients with ALK-positive NSCLC.
For this reason, most cancer doctors who understand the limits of the first generationof drugs welcome the development of new ALK inhibitors that have greater potency and different kinase selectivity compared with the BEBs.
Bach alludes to that fact that other cancers are caused by ALK mutations. Indeed, there are several. Genomic aberrations in ALK are involved in lymphoma, renal cell carcinoma, rhabdomyosarcoma, thyroid
carcinoma, colorectal cancer, and some rare melanomas.
2. His economic reasoning is circular when it’s not silly. He claims that there is a price high enough to induce companies for 2-3 companies to develop products, but not 7 or 8. Bach presumes that if the prices were at levels he deemed appropriate companies that would otherwise invest in such a small group of patients would invest in yet another small subgroup of patients, presumably at a price not too high, which would in turn lead to companies investing in other small groups of patients where the prices are lower than the ‘right ‘ number of drugs.
I defy Bach to could come up with one example – any example – of a pricing system that generates just the right amount of innovation while inducing and moving capital to other important medical condition. Can he show, for instance, that lower prices for drugs for Pompey’s disease (a rare pediatric condition) stimulated investment in Huntington’s disease or Ebola? Indeed, most orphan diseases are priced well above $100K a year. According to Bach, a lower price would only discourage companies that are developing medicines that are superfluous AND cause them to tackle another small disease group where prices are capped.
Failing logic and empirical evidence, Bach resorts to the use of a red herring: that drug prices are too high because they are lower elsewhere. He asserts, “When the FDA approved a drug this month” (called Ebriet for a previously incurable disease, idiopath pulmonary fibrosis or IPF) “Roche announced a $94K per year price tag, more than twice what the drug costs in Europe. Simple math – if they ever could achieve full market penetration Roche would make back their entire investment in a single year. “
Except it won’t. Because IPF also has several mutations involved. Only 10 percent of patients with the disease have the mutation Ebriet targets. According to Bach then, charging $46K per year for the drug is a sure fire way to induce the development of treatments for the 90 percent of patients that have one or more other mutations.
Let’s set aside the real value of a drug that delays the progression of a previously fatal and untreatable disease for a small and neglected group of patients as Bach does. Or that new cancer drugs and treatments for other rare diseases have saved more money and generated more life expectancy than the half-way or hopeless treatment they replaced. Those are two very good reasons why a new medicine should have a high price.
And let’s set aside the facts that lay waste to his unstated conclusion: the high drug prices are driving American health care spending into bankruptcy. In fact, apart from the value they generate and money they save, drug costs for such illnesses are less than 2 percent of total health care spending and have been that level for decades. Let’s ignore all that, as does Bach. How about applying his Euro-pricing to what he makes or Memorial Sloan Kettering where Bach works. MSKCC generates about $3 billion a year in revenue. It pays 6 executives in excess of $1 million a year. Doctors and hospitals also cost more than twice that they do in Europe. MSKCC is probably even more.
When Bach proposes the same cut in price for MSKCC I can take his conviction about drug prices seriously. He will still be misguided or misleading. And I bet he will still be afraid to debate me.
From the pages of the Morning Consult.
Stepping Towards Failure
By Robert Popovian
As healthcare professionals, we should always do what is best for the patient. This includes practicing evidence-based medicine. Unfortunately a growing practice of the healthcare ecosystem ignores this principle: the institution of payer policies that try and curb pharmaceutical utilization. One such policy is “Fail First” or “Step Therapy”. This “utilization management” strategy is when a payer, often a Pharmacy Benefit Manager, decides that a patient must first try and fail on one or more medicines that their physician did not select. This can mean forcing the patient to take a drug that had been previously tried – and failed to work – or even mean a patient is forced by the payer to take a medicine that does not have an FDA indication for their disease. The patient suffers through weeks, if not months, of inappropriate therapies all in the name of cost-effectiveness. There are instances when this type of policy is truly cost saving such as when an AB rated generic is required first, and greater use of real world evidence including the patient’s treatment history could target the right patient for this type of intervention, but applying the policy broadly means that patients needlessly experience substandard treatment.
Today, 70 percent of employer-sponsored insurance plans use this approach to control medication costs. Payers assert that by mandating physicians to follow a certain prescribing algorithm that the “per member per month” pharmacy costs will be lowered. However, payers don’t consider whether it will also result in overall reductions in healthcare costs or an improvement in patient outcomes or even long term savings in pharmacy expenditures. In addition, no consideration is given to the indirect costs incurred by physicians who now have to shuffle patients in and out of their offices for additional visits to ensure that they will eventually get to use the appropriate drug the physician had selected for them in the first place.
More importantly, payers don’t define what “failure” means for a patient. Is “failure” simply a lack of efficacy of the payer’s drug choice? Is “failure” a hospitalization incurred because of the payer’s pre-determined algorithm? Or worse, is “failure” a patient who is now seriously ill because they had to endure an ineffective therapy? As Dr. Brenda Motheral pointed out in her findings published in The American Journal of Managed Care, 17 percent of patients on step therapy algorithms end up without any treatments as they get left behind in the administrative maze.
Another interesting point is that when patients reach the zenith of their fail first/step therapy regimen and have the opportunity to utilize the drug that was chosen initially by their provider, they are hit with significant out-of-pocket costs because such medications are usually in higher copay or co-insurance tiers. So not only did the patients have to endure months of ineffective or at times hazardous therapy, they now have the burden of paying higher out-of-pocket costs.
Remarkably, there is absolutely no evidence that fail first/step therapy provides a reduction in overall healthcare costs and improvements in patient outcomes short or long term. There is no empirical data published in peer reviewed journals that demonstrates definitively that there are both health benefits and cost savings from these policies. In fact, despite evidence of potential harm (i.e., patients ending up on no therapy), payers have not been required, nor have they taken the initiative, to demonstrate that fail first/step therapy policies are safe for patients. Payers quite often and at times rightfully ask biopharmaceutical companies to provide safety and efficacy data or ever-expanding pharmacoeconomic product dossiers for their products. Payers also demand that physicians justify every single intervention they utilize through mounds of paperwork. Isn’t it time to make payers provide a similar level of evidence for their policies?
As Dr. Motheral pointed out, “Adoption of step therapy is quickly outpacing decision makers’ understanding of the clinical, humanistic, and economic value of these programs.” In other words, we have no idea what the outcomes are but payers continue to demand patients should trust their decisions rather than those of their own doctors.
Utilization management is an important part of ensuring that this country’s significant investment in healthcare is used efficiently. However, policies without clear clinical rationale that achieve short term cost savings at the expense of long term health isn’t efficient. Let’s use the growing wealth of real world patient experience data to ensure the right people get the right treatment as quickly as possible, and that money isn’t wasted in the wrong places. This should apply not just to medicines but other parts of the healthcare system.
By Robert GoldbergOctober 16, 2014 | 8:30pm
How the feds block Ebola cures
We have technology to potentially control Ebola and other viral outbreaks today. But the federal bureaucracy refuses to catch up with 21st-century science.
For example, diagnostic startup Nanobiosym has an iPhone-sized device that can accurately detect Ebola and other infectious diseases in less than an hour.
Two other companies, Synthetic Genomics and Novartis, have the capacity to create synthetic vaccine viruses for influenza and other infectious diseases in only four days. Both firms can also share data about outbreaks instantaneously and make real-time, geographically specific diagnosis and vaccine production possible.
These companies could start producing Ebola vaccine/treatments tomorrow — except that the Food and Drug Administration’s insistence on randomized studies and endless demands for more data means firms have to spend millions on paperwork instead of producing medicines.
And for every small company drained by such tactics, many others conclude it’s not even worth trying.
These advances aren’t available because the FDA is using 19th-century science to decide which medical technologies should be used in the 21st century.
Two years after 9/11, Congress created Project Bioshield to speed up the commercialization of vaccines, drugs and diagnostics. A key part of the plan: Get the FDA to evaluate innovations quickly by using the same scientific advances that were used to discover them.
The agency balked.
Pandemic vaccines and drugs don’t move through the FDA approval process faster. Instead, drug- and device-development times actually increased more than 70 percent over the past decade because the FDA keeps demanding more studies and more data using outdated techniques.
And, no, the FDA is not using the best science to ensure safety. Time and again, it has waived regulations when politically expedient.
Back in 1984, at the start of the AIDS epidemic, the FDA claimed that reviewing HIV treatments would take at least six to eight years.
Only after loud, large and sustained demonstrations did it state that new AIDS drugs could be OK’d in two years or less and that most people who wanted to try them could. Millions of lives were saved as a result.
In 2008, it took Synthetic Genomics scientists a month to sequence the genes of every strain of the meningitis virus and engineer a vaccine that protects against them all. In Europe, Canada and Australia, the vaccine was approved for use in children (the group most likely to get meningitis and die from it) in 2010.
But the FDA demanded another study in the United States. Only after meningitis hit Princeton University and UC-Santa Cruz this year did the agency allow the vaccine to be imported and given to students on both campuses.
And the agency still hasn’t approved its general use.
Ebola is the same story. Take ZMapp, a combination of antibodies designed to block the virus from replicating.
Citing safety concerns, the FDA ordered the drug’s maker, Mapp Biopharmaceutical, to stop testing in July — just days before the Ebola outbreak. Now, of course, the FDA is letting people use it.
The same goes for an anti-viral drug (TMK-Ebola) made by Tekmira Pharmaceuticals. The FDA suspended research in January because of safety concerns. It changed course only after Ebola killed thousands.
Part of the problem: FDA scientists receive no reward for approving breakthroughs, but suffer public anger if but one person dies because a drug is misused. The price we pay for this culture of caution rises every day.
Africa will have to spend billions to treat those infected, rebuild health systems and bury the dead. Here at home, public officials find themselves a step behind Ebola.
As they lose our confidence in their ability to respond to biological threats, they blame the Ebola crisis on — what else — budget cuts.
Asked why there is no Ebola vaccine, National Institutes of Health Director Francis Collins claimed we’d have one if not for NIH budget cuts. Nonsense: NIH funding for infectious diseases has doubled since 2001. But in 13 years, it developed three (ineffective) vaccines.
Nobel Laureate microbiologist Joshua Lederberg noted, “The single biggest threat to man’s continued dominance on the planet is a virus.” The second-biggest threat: a federal culture that rewards the delay of medical progress.
Ultimately, Congress must change the FDA’s mission and bureaucratic culture. Reviewers shouldn’t be allowed to use science to keep new technologies from doctors and patients.
We must force the FDA to focus on accelerating innovation and stop “protecting” us to death.
Abuse deterrence will take many forms.
In advance of the FDA’s upcoming two-day meeting on opioid pain medicines and abuse-deterrent technologies, some good news. The agency has approved an updated label for the opioid pain medicine Embeda to include abuse-deterrence studies.
Embeda’s updated label states that it has properties that are expected to reduce abuse via the oral and intranasal (i.e., snorting) routes when crushed. However, abuse of Embeda by these routes is still possible. The updated label also includes data from a human abuse potential study of intravenous (IV) morphine and naltrexone to simulate crushed Embeda. (It is unknown whether the results with simulated crushed Embeda predict a reduction in abuse by the IV route until additional post-marketing data are available.)
Per Bob Twillman, Director of Policy and Advocacy, at the American Academy of Pain Management. “Prescription opioids are an important treatment option for people with chronic pain. However, misuse and abuse of opioids in the U.S. is a serious societal concern, which is why the development of abuse-deterrent formulations of these medicines is a high priority,” said “All opioid medications, including morphine products, have the potential for abuse. We believe that anything that can be done to reduce this risk is a significant development for healthcare providers and their patients.”
Embeda capsules consist of extended-release morphine sulfate and sequestered naltrexone hydrochloride, an opioid antagonist. Naltrexone is intended to remain sequestered when the product is taken as directed. The in vitro and pharmacokinetic data demonstrate that crushing Embeda pellets results in the simultaneous release and rapid absorption of morphine sulfate and naltrexone hydrochloride.
Per Pfizer, “More than one-third of extended-release opioids prescribed are morphine, and Embeda is the first extended-release morphine with the potential to reduce abuse via the oral and intranasal routes when crushed,” said Dr. Steven Romano, senior vice president and head, Medicines Development Group, Pfizer Global Innovative Pharmaceutical Business. “Pfizer believes that abuse-deterrent products, like Embeda, are important to help address the growing public health problem of opioid abuse in the U.S.”
It’s an important step in the right direction.
I’ve just returned from Dubai (no, I didn’t do any shopping) where I was honored to speak at the Economist’s conference on Health Care in the Middle East: Evolution and Reform. My talk was on “Enhancing Public Health Through Innovation.”
One of my main points is that innovation doesn’t happen in a vacuum. People make it happen – and it’s an ecosystem: academics, manufacturers, physicians, patients, pharmacists, hospitals, caregivers, and government. If we allow ourselves to believe that innovation happens in bursts of “eureka” moments, we do a disservice to those who advance progress through a lifetime of work and through important failures. Innovation happens incrementally – and it’s expensive. The myth of “eureka innovation” is dangerous science fiction.
In the majority, the role that government plays in advancing innovation isn’t, as many think, the science that comes from institutions like the National Institutes of Health (although the NIH makes important contributions), it’s in being a public health partner across the board – and that includes medicine regulatory policy.
So, what is the role of regulators in advancing healthcare innovation? Regulators can be partners in innovation three ways: Through robust oversight. Through active collaboration. And, most importantly, by being an innovation enabler
And regulatory predictability is Step 1 in being an innovation enabler. And one aspect of predictability is an even playing field when it comes to quality. There can be only one level of quality for medicines – whether they be of the innovator or generic variety.
There must also be a dedication across the healthcare ecosystem to safety and quality in the post-market environment – more robust and actionable pharmacovigilance.
There must be the recognition that new medicines enhance, extend, and save lives and, as such, should be reviewed and licensed with all due speed.
There should be a recognition that medicines regulation must never be an arm of domestic industrial policy.
And, finally, that government’s role as an innovation enabler must go beyond words to deeds.
In the words of the American poet, John Andrew Holmes, “Speech is conveniently located midway between thought and action, where it often substitutes for both.”
The most important role government can play in supporting and advancing innovation is to enable action.
In addition to the complicated question of FDA regulation of Non-Biologic Complex Drugs (NBCDs), there's the legal morass of patent legislation. Per the latest on that front, BioCentury reports thatU.S. Supreme Court justices on Wednesday voiced skepticism about arguments from both sides in the petition by Teva to overturn an appeals court decision that invalidated the company’s process patent for multiple sclerosis blockbuster drug Copaxone.
The high court will decide whether the U.S. Court of Appeals for the Federal Circuit (CAFC) overreached by reviewing de novo certain questions of fact in Teva's lawsuit against the Sandoz International GmbH generics unit of Novartis AG, rather than deferring to the findings of the U.S. District Court for the Southern District of New York.
Teva’s suit alleges Sandoz’s ANDA for generic Copaxone infringed on Teva's patents. The district court ruled in favor of Teva in 2012. In 2013, the CAFC reviewed the facts of the case and instead invalidated the process patent for Teva's daily formulation of Copaxone, set to expire on Sept. 1, 2015.
In Wednesday’s arguments, Justice Stephen Breyer repeatedly challenged Sandoz representative Carter Phillips to explain why the case should provide an exception to civil procedure rule 52(a) that “fact-finding of the district court should be overturned only for clear error.”
Justice Samuel Alito suggested to Teva representative William Jay that the company was asking CAFC to “to struggle to determine” which factual questions have resulted in clear error, and “is it worthwhile as a practical matter?”
Justice Sonia Sotomayor also asked: "Why don't we defer, as has been done now forever, to the Federal Circuit and let them review these things de novo?"
The SCOTUS decision is due by the end of June 2015. Any generic competitor entering the market before the patent expires would have to pay damages to Teva if it is upheld.
We are not afraid of competing against mail-order pharmacies': Portland firm thrives in specialty medication market
By Darren Fishell, Bangor Daily News, Maine
McClatchy-Tribune Information Services
It's rare to hear a business praise its state's regulations, but a Portland pharmacy is relying in part on Maine law to gain a stronger foothold in the growing market for specialty medication.
By volume, the market is dominated by major national mail-order pharmacies, but the founders at Apothecary By Design see things shifting in their direction, making Maine one battleground between regional and national pharmacies selling specialty pharmaceuticals.
"The model of what is the right way to manage specialty pharmacy... that's a story that's not played itself out yet," said Mark McAuliffe, one of the pharmacy's five founders. "We would argue that it's critical to have a regional presence."
Specialty pharmacy is to retail pharmacy as the surgeon is to primary care. It's the fastest-growing segment of the pharmaceutical industry, driven by new treatments for conditions like Hepatitis C, cancer and multiple sclerosis.
That's part of what's driven Apothecary to grow more than threefold, to 64 employees, and increased revenue more than 21-fold since opening in 2008, the year it began with a focus on filling retail prescriptions in Portland'sEast Bayside neighborhood.
"We want to own specialty pharmacy in Maine," said Catherine Cloudman, another of the pharmacy's founders.
The company sees itself as part of a shift away from large mail-order pharmacies, whose promise of savings are a matter of ongoing public health policy debate at the national level.
The debate deals with the largely behind-the-scenes decision-makers who determine which patients on which health plans can qualify for coverage for which drugs. The discussion involves issues of health care cost, quality of care and choice for patients and doctors.
For patients, what's at stake is the range of choices a doctor has for treatments. That is, which drugs a given insurance plan will cover. But another aspect of choice comes in which pharmacies can provide drugs for a certain insurance plan.
Maine law requires that any certified pharmacy willing to meet an insurer's terms can fill a prescription.
"That's not true in a lot of other states," McAuliffe said. "We're not afraid of competing against mail-order pharmacies, we are afraid of not being allowed to compete."
But hurdles for getting into that market for specialty pharmacy are a little higher.
That's part of why, in August, Apothecary got accreditation from the group URAC and next spring will pursue approval for its specialty pharmacy from the Accreditation Commission for Health Care. The company's principals said the accreditation is a badge of honor in itself, but the signs of approval will also satisfy an all-important group of decision-makers in the pharmacy world: pharmacy benefit managers, or PBMs.
Generally, PBMs act as middlemen between health insurers and pharmacies, negotiating over which drugs an insurance plan will include, pricing and other details that make up what's called a formulary. Some of the largest PBMs, like Express Scripts, want two certifications.
With those certifications in hand, the integrated pharmacy expects to grow its share of the estimated $400 million market for specialty drugs in Maine. Last year, Apothecary invested $800,000 in an 8,700-square-foot expansion, growing its specialty pharmacy and adding a compounding pharmacy across the street from its first location.
The company's founders project they'll bring in around $85 million in revenue this year, up more than 160 percent from last year. About 95 percent of that will come from specialty drugs.
Still, the company expects to face continued challenges from PBMs apparently unaware of Maine law limiting how narrow a PBM can make its network. Cloudman said the company earlier this year spent time correcting letters sent out by insurers, telling patients that they were not able to cover prescriptions filled at Apothecary and instead need to use their affiliated mail-order pharmacy.
"We have to stay hypervigilant on that all the time," Cloudman said.
It's something Peter Pitts, president of the nonprofit Center for Medicine in the Public Interest, said happens often because of the structure of the system.
"The large PBMs are both judge and jury," Pitts said. "By denying a claim, they are often benefitting their own bottom line."
In recent years, consolidation of PBMs and mergers between them and pharmacies and drug manufacturers have raised antitrust concerns at the national level.
The issue received particular scrutiny in 2012 with the merger of Express Scripts and Medco Health Solutions, creating a PBM the Federal Trade Commission said would control at least 40 percent of the market. Opponents of the deal, including principals at Apothecary, said that number is closer to 60 percent, giving the PBM strong influence over pharmacies and drug manufacturers.
That influence became clear this year. The New York Times reported in June that more PBMs have started to exclude from their formularies certain expensive specialty drugs to treat conditions such as cancer and multiple sclerosis in an effort to curb rising costs.
PBMs manage drug benefits for about 210 million people in the United States, and that market is dominated almost entirely by the three largest PBMs that also operate mail-order pharmacies to fill prescriptions.
Advocates of that system argue that centralizing drug purchasing through PBMs lowers costs. Critics say it has economic consequences for small pharmacies and health consequences for patients.
David Balto, a Washington, D.C.-based attorney and former policy director at the Federal Trade Commission, has argued a number of cases raising concerns about what he's called one of the "least regulated and least understood aspects of the health care delivery system."
"PBMs were formed to negotiate the best arrangements for insurance companies and employers with pharmacies and drug manufacturers," Balto said. "But when a pharmacy is owned by a PBM or a drug manufacturer is owned by a PBM, there is a conflict of interest and there's really a fox guarding the henhouse."
Principals at Apothecary said they share the concern that such joint ownership opens the door to conflicts of interest, though there is supposed to be a firewall in place to prevent collusion between PBMs and affiliated pharmacies.
Pitts, at the Center for Health Care in the Public Interest, contests that the PBMs provide cost savings in the health care system, arguing that limiting treatment options for doctors and patients incurs costs elsewhere for patient treatment.
"When you centralize distribution and when you remove choice, bad things happen around the margins and you have to keep a close eye on those," Pitts said. "There's a difference between medicines and commodities like air conditioners: certain [medications] work better for some people than others."
While smaller pharmacies like Apothecary have been concerned about being elbowed out of the game, those larger PBMs have recently started facing new pressures in their own market as well.
The Wisconsin-based Navitus Health Solutions is one of many so-called "transparent" PBMs, handling prescriptions for about 4 million people.
Instead of making a profit margin on each prescription filled, PBMs like Navitus charge insurers a flat fee and "pass-through" the cost of drugs directly from the manufacturer.
It is the PBM for Maine Community Health Options, the insurer for the majority of people getting coverage through the Affordable Care Act in Maine that recently announced that it will open plans to all of New Hampshire. Apothecary has contracts for specialty drugs with Navitus.
Brent Eberle, a vice president at Navitus, said that there's greater transparency in pricing with introduction of the Affordable Care Act and some employer groups looking to know more about the cost of drugs, especially for specialty pharmacy where the average cost of a prescription is about $2,000. And some of the larger PBMs are starting to offer transparent pricing options as well, he said.
In the end, pharmacies like Apothecary hope the growing demand for specialty pharmacy and the greater attention that requires gives them a niche for bringing pharmacy back down to a smaller scale while becoming a bigger part of the health care system.
"Even in the eyes of physicians, pharmacists are viewed as a commodity," Cloudman said. "We're having a lot of success changing that."