Latest Drugwonks' Blog

David Mitchell is the founder of a group called Patients for Affordable Drugs.  He claims he is a consumer advocate crusading against high drug prices.  In fact, Mitchell's organization received a large grant from the Laura and John Arnold Foundation.  P4AD is part of a syndicate of think tanks, advocacy organizations and media outlets the Arnold Foundation is funding to the tune of $25 million.  (For the record, CMPI receives funding from pharmaceutical and biotech firms. )

As for attacking drug companies, it turns out Mitchell took $12 million from pharmaceutical companies to run campaigns in support of the Affordable Care Act.   

Perhaps because he is running a political operation like he did for Obamacare, he cares little about facts or context.  But I do.  And I hope the reporters that now have Mitchell on their Twitter feed do are asked to buy his deceptive narrative do so as well. 

And the fact is Mitchell's sob story about Revlimid doesn't add up. 

He claims his co-pay for Revlimid - the myeloma drug Mitchell takes went from $42 to $250 over the last few years while the list price of Revlimid jumped from $8,000 to $10,691 for a four-week supply over the same time period.  Ergo, his co-pays climbed in response to the price increase. 

But that means the list price increased by 33 percent while the copay increased 500%.   The list price is set by Celgene, but the copay is set by health plans.  So the co-pay increase exceeded the list price increase by a factor of 15.  

Also, since Medicare covers a large portion of spending novel cancer therapies, PBMs also generate rebates and other fees not passed on to the patient.   Such Medicare rebates are about 15-20 percent of the retail price according to recent estimates. 

That means that the PBMs got another $536 per month from Celgene.  Remember that the co-pay increased to $250.  So that means the PBMs did not pass on the rebate and indeed collected more co-pays while pocketing the rebate money.   Moreover, Celgene offers copay assistance to people who can't afford the increase in out pocket cost.  In fact, a study found that "after financial assistance, 86.2% of patients had a direct cost of less than $50 per prescription. That money goes to the PBMs too.   Either way, the PBMs collect an additional $9432 a year from people in Mitchell's plan.    

And yet all Mitchell can think of doing is suing Celgene? 

Mitchell is claiming Celgene is blocking the production of a generic form of Revlimid by refusing to provide generic companies with samples to base production on.  Mitchell also claims that as a result,  his co-pays would go down. 

Let's deal with latter claim first. Indeed, if Revlimid went generic, there is no guarantee that it would reduce out of pocket costs.  PBMs have placed several generic cancer and HIV drugs on the highest cost sharing tier in the past.  Moreover, PBMs -- who set the price of generics when they sell them at drug stores -- mark up the prices.  In addition, they charge a co-pay that often exceeds the cost of the medicine.  Again, Mitchell is silent on these practices.  

Secondly, and contrary to Mitchell's claim, Celgene HAS been working with generic companies to provide their medicines.  As Erika Lietzan Associate Professor of Law, University of Missouri School of Law wrote: "Notwithstanding the rigorous REMS protocol, Celgene has provided Thalomid to generic drug companies that want to develop and test generic copies of the drug and that agree to Celgene’s risk mitigation policies. Celgene has done so when those companies provided documentation and information confirming steps and safeguards that would not only prevent fetal exposure but also minimize the risk for Celgene’s business and reputation, such as risk from products liability litigation. Mylan—one of the generic companies—has declined to provide information requested by Celgene, however, and instead filed an antitrust suit that is still pending in federal court."

Suing Celgene is just a publicity stunt to Mitchell.  But wiping out patent life  would eliminate any future investment.  Over the past few years, Celgene was investing hundreds of millions of dollars in clinical trials to demonstrate the clinical benefit of Revlimid to newly diagnosed myeloma patients.  That will stop when the product goes off patent.   Generic companies don't invest in the future, only the past.  If Mitchell were honest, he would acknowledge that and much more. 



An article in today's Wall Street Journal by Jonathan Rockoff revisits the Epipen price furor.  The main point of the piece is found midway:
“But more than seven months after the introduction of the generic, the more expensive brand-name EpiPen still accounts for more than one-quarter of the market, according to Bernstein Research, even though a brand-name drug’s sales usually shrink after low-cost competition arrives.
One reason, according to multiple people familiar with the drug industry, is that a middleman can profit from the sale of pricier
medicines, such as EpiPen. In the murky world of the U.S. drug-supply chain, higher prices can mean a bigger piece of the pie for middlemen such as pharmacy-benefit managers. There is no way to know exactly how much, however, because the amount a PBM makes is laid out in confidential contracts.”
Rockoff wonders aloud if there is a connection between EpiPen’s market share and rebates.
There is.  And here’s how I think it went down:
First, EpiPen has a lot more of the injectable epi market than what Bernstein reports:
According to a Fortune magazine article: Epipen “controlled about 95% of the epinephrine auto-injector market. But that figure has dwindled to just over 71% as more and more doctors opt for rival products, according to a new report from athenaHealth.” 

In addition, some of the switches may be due to a Mylan’s voluntary Epipen recall in March of 2017 due to potential injector malfunctioning.  However much of the shift is to cash payment of alternatives which, when combined with coupons, reduce the cost of other injectors to near zero.
So what have PBMs done in response? 
Cash paying customers don’t generate rebate revenue.  So as Mylan’s market share has dropped from monopolistic to dominant, the PBMs have carved out a monopoly for EpiPens on their formularies, excluding all other competitors from their national drug lists. 
And that kind of monopoly is a cash cow for PBMs.
Consider that last August, the EpiPen had a monopoly in the epi injector market because of PBM machinations:
In November 2015 Sanofi ($SNY) pulled the main competitor for EpiPen--Auvi-Q--from the market, a turn of events that at the time looked as if it “should keep Mylan dominating the epinephrine injection field.
Mylan already had 95 percent market share.
CVS and Express Scripts had removed another competitor, Andrenaclick, from its formularies.   Andrenclick retailed and still retails at $141 while EpiPen retails at around $600. 
The PBMs helped sustain the monopoly because they could generate more rebate dollars.
But later in the year, PBMs demanded higher rebates for the privilege of being the only drug that it covered. They were getting about $400 rebates per EpiPen pack.
When Mylan balked, CVS and Express Scripts moved EpiPen from the lowest cost sharing tier to the highest cost sharing tier causing patients to scream.  The media and political storm followed.
The shift in out of pocket prices, the result of PBM manipulation, led to the uproar over the EpiPen.
So where are we today?
The leading PBMs- Express Scripts, CVS, OptumRx, and Prime - have excluded all competitors from their formularies and EpiPen is again the monopoly provider.   
Mylan gets a monopoly in exchange for deeper rebates and other concessions (perhaps closer coordination with the PBMs to give them a cut of point of sale coupon revenue) including not covering any other competitors, regardless of cost, ease of use or other factors.
Indeed, other companies were quite willing to meet the PBM demands for retail price and co-pay levels.  But because they didn’t have Mylan’s volume, the rebate volume would, in turn, be less.  Instead of subsidizing PBMs, the other companies are largely subsidizing consumers directly with lower point of sale prices, often at a huge loss.
It sounds confusing but the result is crystal clear:
A year ago, Mylan had a monopoly and didn’t pay up.  It was left twisting in the wind by the PBMs. 
This year they have the monopoly. Again. Because the PBMs said so.
Rebates are part of a rigged system that provides cash for big insurers, PBMs, and hospital systems while patients wind up paying more, not less. Manipulation of the quantity, acquisition cost and fixing the sale and resale price of products are classic aspects of a cartel. 
It’s time for a change. It’s time to bypass the PBMs.  When a business model is so broken, trying to fix it with legislation is a waste of time.  We need to build a new model.  

CORRECTION:  I wrote: "PBMs have carved out a monopoly for EpiPens on their formularies, excluding all other competitors from their national drug lists. "

In fact, as Adam Fein's drugchannels points out: "For 2018, the EpiPen AG and Adrenaclick AG will continue to be treated as tier 1 generics in CVS Health’s 2018 Standard Control Formulary. EpiPen (brand) remains on the formulary as a preferred brand product. AuviQ is excluded.

Express Scripts also became much more aggressive with epinephrine. Its 2018 formulary favors the three Mylan products: EpiPen, EpiPen Jr, and the EpiPen authorized generic (AG). "

Thanks Adam!!

Express Scripts excluded Kaléo’s AUVI-Q

You can watch Celgene's CEO discuss precision medicine and read his op-ed about Celgene's novel and proactive approach to helping patients access it here
From today's edition of Fierce Pharma ...

Hospital Impact—PBMs are worsening the opioid epidemic

For Americans younger than 50, the leading cause of death used to be injuries caused by accidents. Now, the biggest killer isn't car crashes or ladder falls—it's drug overdoses. Overdose deaths surged by 15% from 2015 to 2016, the largest annual increase in American history. Overdoses have pushed up death rates among all racial and ethnic groups

Policymakers and researchers are trying to make sense of this strange new reality. Some have pointed to rising rates of unemployment and disability. Others have blamed an increase in opioid prescriptions.

One overlooked culprit worsening the epidemic, however, comes straight from our healthcare system: pharmacy benefit managers (PBMs). To improve their bottom line, they're blocking access to prescriptions that can help prevent overdoses.

For years, the Food and Drug Administration has encouraged the development and use of "abuse-deterrent formulations" of prescription opioids. ADFs are more difficult to physically alter—i.e. crush for snorting or dissolve for injecting—than traditional pills.  

As a result, ADFs help curb abuse and overdoses. The ADF version of OxyContin, for instance, led to a 65% decrease in snorting, a 56% decrease in smoking and a 51% decrease in injection among patients with a history of abusing the drug, according to a report (PDF) by the Institute for Clinical and Economic Review.

Decreasing the availability of easily abused drugs leads to fewer overdoses. In the first three years after the introduction of ADF OxyContin, overdose deaths reported with a "mention of abuse-related behavior" decreased by 86%.

PBMs, however, refuse to cover the vast majority of ADFs. Their decision impacts more than 266 million Americans insured by employers, unions or government programs like Medicare Part D.

The three biggest PBMs in the country cover no more than three of the 10 ADF opioids approved by the FDA. CVS Caremark, which has nearly 90 million members, doesn't cover a single one. These pharmacies do, however, cover the cheaper, generic forms of opioids—exactly the ones that don't have ADF properties and are readily diverted to abuse. As a result, 96% of all opioid products prescribed in 2015 were non-ADF, according to a new study by the Tufts Center for the Study of Drug Development.

No patient with legitimate medical need would pay extra out-of-pocket for an ADF opioid that the patient has no intention of abusing. But would-be abusers will flock to PBMs where they can be sure they'll be able to convert pills for snorting or injection. By keeping abuse-deterrent medications out of reach, PBMs essentially put out the welcome mat for abusers.

Opioid abuse is often a gateway to even more dangerous substances, like heroin. Those who are dependent on or abuse prescription opioids have a 40-fold increased risk of using heroin, according to a report (PDF) from the National Institute on Drug Abuse.

Unfortunately, PBMs don't seem concerned by the consequences of refusing to cover ADFs and other specialty medicines. They often seem more interested in covering as few medications as possible.

In 2017, for instance, CVS Caremark removed 130 drugs from its formulary, while Express Scripts removed 85. Tasigna, a drug used to treat leukemia; Zepatier, a two-drug medication that treats hepatitis C; and Xtandi, a treatment for prostate cancer, were among the 200-plus drugs cut by the nation's leading PBMs.  

PBMs say that they exclude drugs from their formularies to save patients money. But these short-term savings come with a big cost. When patients can't access the medicine prescribed by their doctor, they get sicker, and the care they require in the long run can be much more expensive. A significant chunk of the cost of the opioid epidemic is a product of exclusion of ADFs from coverage.

In fact, one study (PDF) found that the ADF version of OxyContin could prevent 4,300 cases of abuse and save $300 million in medical costs over a five-year period. But PBMs aren't concerned about long-term savings. They'd rather offer cheaper drugs—non-ADFs, in the case of opioids—and save money for themselves.

The Institute for Clinical and Economic Review, a private organization that suggests drug coverage and pricing, has recommended that PBMs do as much. Despite confirming the savings that ADFs could yield, ICER decided that ADFs did not provide any financial benefit. PBMs since have gladly accepted ICER's mistaken judgment.

CVS Caremark, among other PBMs, claims to understand the nation's drug crisis and to be "doing everything we can to help stop it." But until it starts covering all approved ADFs in its formularies, that's just not true.

Peter J. Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest. Follow him @PeterPitts.

Expanded Access App-ens

  • 07.25.2017
  • Peter Pitts
The Reagan-Udall Foundation has released an online tool to help patients and doctors find drugs that qualify for the FDA program called expanded access, or compassionate use. These are drugs that are not currently approved, but are being tested and may be suitable to help someone who has a fatal illness.

The Be-all, End-all solution to every issue surrounding expanded access? Hardly. But it's a move in the right direction. Mobile apps are an important tool in advancing all sorts of patient empowerment issues.
Former Sidley Austin partner and product liability specialist Rebecca Wood has been named FDA chief legal counsel. Wood represented multiple life science clients during her nearly 17 years at Sidley, and notably penned briefs in two highly watched U.S. Supreme Court product liability/federal preemption cases, Warner-Lambert v. Kent, Riegel v. Medtronic, Inc . and Wyeth v. Levine.

She replaces Liz Dickinson, who rose to that role through the ranks of the FDA’s Office of Chief Counsel. Dickinson directed the agency’s recent issuance of a controversial FDA memo defending the agency's oversight of off-label communication. Public Health Interests and First Amendment Considerations Related to Manufacturer Communications Regarding Unapproved Uses of Approved or Cleared Medical Products, issued in the final days of the Obama administration, reasserted FDA's stance against off-label communication, which has been opposed by industry and First Amendment advocates for years.

Does the appointment of Wood mean a turn-about on the agency’s views on off-label communication? Watch this space for more details.

Make PBMs Disappear, Not Just Transparent

  • 07.14.2017
  • Robert Goldberg

There have been many articles arguing that the way to reduce drug prices – especially out of pocket costs to patients – is to ensure transparency on rebates. 

For instance, an excellent article in Forbes by my colleague Grace Marie Turner entitled PRICE TRANSPARENCY IS CRITICAL TO DRUG PRICING SOLUTIONS, suggests that  forcing PBMs to disclose drug rebates would help ensure rebates would go directly to consumers and stop PBMs from requiring consumers to pay their share of their prescription drug bills based upon the retail price of the drug.

The fact is, there are already a lot of transparent PBM models.  For example, Medicare Part D requires rebate pass through and transparency. 

And yet, Medicare doesn't realize that the PBMs are socking away about $14 billion in rebates and so-called performance based fees -- esssentialy rebates in the form of claw backs after a drug is sold.  Interestingly, a study published by the pro-PBM trade group, The Coalition for Affordable Drugs revealed just how much of the rebate actually goes to Medicare under the so-called transparent or pass through model.  CMS reports a lot less than the PBMs collect.  

2014 DIR                                    Amount in billions

Rebates reported by PBM.                        $31.7
Rebates reported Medicare by PBM         $17.4
Amount PBMs didn't report to Medicare  $14.3

Where did that $14.3 billion go? 

When Adam Fein of DrugChannels asked Glenn Gliese, the lead author of the report, about the 'discrepancy', Gliese replied he "cannot really comment on what CMS is doing."

I bet.

If $14.3 billion in undisclosed rebate dollars doesn’t highlight the hollow promise of transparency, nothing will. 

The problem is NOT transparency.  The problem is the rebates themselves.  The problem is the existence and growth of PBMs that continually exclude retail community pharmacies that know the needs of their customers and the PBMs increasing use of one size fits all benefit designs and restrictive access to control costs and increase rebates (and prices).  

Transparent PBMs still force the sickest patients to fail first.  And what the don't collect in rebates, the make up for in fees and higher base prices. (Remember, PBMs set the price of the drugs for pharmacies, health plans, patients, pharma.) The so-called pass through of rebates does not change that practice.  PBMs need to eliminate cost sharing, fail first, prior authorization and steering patients to drugs that benefit their bottom line.   Instead of making PBMs transparent we need to make them disappear.  And we need an anti-PBM business model to deliver the drugs that work best for patients at the lowest out of pocket cost.  

Although 10 new opioid products with abuse-deterrent formulations (ADF) have received regulatory approval in the United States, lack of willingness by insurers to reimburse patients for their use is seen as a primary challenge limiting ADF uptake, according to the Tufts Center for the Study of Drug Development.

According to Tufts CSDD, 96% of all opioid products prescribed in the U.S. in 2015 lacked abuse-deterrent properties, and only four of the 10 opioid products with abuse-deterrent properties thus far approved for sale by the Food and Drug Administration (FDA) have been launched.

"Developers are confronted with substantial payer reimbursement hurdles with respect to ADF products," said Joshua P. Cohen, associate professor at Tufts CSDD, who completed an analysis of the state of ADF opioid development and uptake by care providers. "In addition, lack of regulatory consistency regarding demonstrations needed to support labelling of abuse claims and lack of clarity regarding eligibility for three-year data exclusivity for ADF products is inhibiting their wider use."

Despite these obstacles, new ADF product development is moving ahead, as more than two dozen applications for new ADF drug products are pending before the FDA, Tufts CSDD said.

The findings were reported in the July/August Tufts CSDD Impact Report, released today, which also noted that:

* 36% of branded opioids prescribed in 2015 contained abuse-deterrent properties, but only 2% of generic opioids did.

* Medicare reimbursement of ADF products is often restricted, while coverage of non-ADF opioids is unrestricted.

* Drug developers face a special challenge in creating abuse deterrents for oral medications, as pills are the most common means by which pain medicine is administered.

"The U.S. opioid crisis is more pronounced than ever and, unfortunately, seems to be growing, increasing the urgency for ADF opioid products," said Cohen. "The FDA has adopted a flexible, adaptive approach to evaluating and labeling abuse-deterrent products, which will help. And the sooner developers can demonstrate ADF clinical effectiveness, the more likely payers will step up reimbursements for ADF products”
Medicare spending might increase enough to trigger the use of the Independent Payment Advisory Board to cut spending below the rate set in the Affordable Care Act (rate of inflation plus 1 percent).  Almost no one wants to convene the IPAB let alone serve on it.  However, there is one group that has sought to emulate IPAB and make decisions about price and access based on the IPAB budget cap:  The Institute for Clinical and Economic Review(ICER).
In determining drug coverage ICER explicitly limits spending per drug to the IPAB rate of increase.  To keep under the cap, ICER has helpfully advised that health plans “prioritize Rx populations to reduce immediate cost impact.”
While IPAB may never meet, ICER’s mission to ‘prioritize’ may be fulfilled elsewhere.  It turns out, the VA’s Pharmacy Benefits Management Services office (PBM) is partnering with the Institute for Clinical and Economic Review(ICER) set drug prices and limit veteran access to new medicines.
According to ICER, the VA will use its “drug assessment reports in drug coverage and price negotiations with the pharmaceutical industry.”
Why emulate IPAB when you can directly influence the VA?
In fact, the VA pharmacy benefit program is a match made in HTA heaven for ICER: It already sets prices and restricts access to new medicines.  Under federal law, drug companies must the VA a price at least 24 percent lower than the best private sector price.  They also must give the VA rebates if prices go up more than inflation.  
Excluding some drugs lets the VA get even lower discounts.  But such limits come at a great cost to patients.  A study by economist Frank Lichtenberg found that not only were 20 percent of drugs approved since 2000 covered by the VA and that the limited access was associated with lower life expectancy over age 65 compared to Medicare.  The innovation gap has grown since then.  
A recent Avalere study found that "The VA National Formulary covers 54 percent of drugs on the California public employee retiree plan formulary, including 46 percent of brand drugs (102 of 222) and 61 percent of generic drugs (174 of 287.) " And it covers 50 percent few medicines than most state Medicaid plans. 
ICER will only make the denial of timely, effective treatment worse, if that’s possible.   In the past, ICER reports have been used to limit access to cures for hepatitis C, drugs that reduce the risk of heart attacks and a wide variety of medicines for people with rare cancers.   ICER’s estimate of the value of medicine is so low that many of the drugs used to treat HIV would have been rejected by the group.
ICER’s involvement in VA drug selection will increase the damage being done by the department’s rationing of new medicines.
As an example of ICER’s impact on veterans, let’s assume a more effective treatment for post-traumatic stress disorder (PTSD) is developed. About 103000 veterans are diagnosed with PTSD.  Only a third seek care.  And those that do often stop treatment.
ICER’s asserts that on average a new drug should not cost a health plan more than $50K per QALY.  VA standard of care for someone with PTSD costs $10000 over four years and includes the use of antidepressants, therapy and some hospitalization. Presently, such treatments leads to complete remission in only 18 percent of veterans who seek care.  A better drug could reduce hospitalization but increase per patient and total treatment costs.  More patients who previously didn’t respond or had never been treated will be likely seek out care if an effective treatment was available.  There might be fewer suicides too.  So ICER punishes the use of new products that, because they work, also let people live longer and get more care.
Meanwhile, ICER ignores the value (and savings) of reducing non–mental health related medical costs, caregiver burden, strain on family relationships, domestic violence, substance abuse, crime, and homelessness.  In fact, a dead or untreated patient is a cost-effective one.
Even if the drug was used, ICER will limit the number of veterans getting treatment. For the US as the whole, ICER’s cap is $915 million per drug per year.  For VA health budget, the ICER cap would be $5.52 million per each new drug.  At $10000 per patient the VA would have to limit access to the new PTSD drug to 551 veterans a year.
I have not seen any independent confirmation from the VA that ICER has a formal role in designing drug coverage.  If so, veterans are in danger.

Cutting through the (Us)din

  • 06.26.2017
  • Peter Pitts
What a great combination – Steve Usdin interviews Scott Gottlieb. This lead article in BioCentury, “Health & Wealth” contains many gems. Here are some tidbits …

... Gottlieb believes that drugs “are priced to some measure of the cost of the capital -- including the investment capital -- that’s required to discover and develop them. And the risk and time and cost of the regulatory process are a big part of that equation.”
The Commissioner’s plan will include a “broad range of steps we’ll take to make sure that our own regulatory tools and policies are modern and risk based -- and designed to facilitate the development of potentially breakthrough new treatments.”

... “This new policy will address the issue of targeted drugs, and how we simplify the development of drugs targeted to rare disorders that are driven by genetic variations, and where diseases all have a similar genetic fingerprint, even if they have a slightly different clinical expressions.” The guidance will clarify circumstances in which FDA may approve a cancer drug based on its molecular mechanism of action rather than the specific tissue or organ where tumors occur. It will also help sponsors develop drugs for rare subsets grouped by laboratory testing, so they can be studied in a single clinical trial.

... Gottlieb also understands that regulatory transparency cannot be a “for thee but not for me” proposition. Per the Commissioner, “We should be making sure that we try to provide as much information back into the market of ideas as possible. There are places across this agency where we bottle up too much information.” He singles out complete response letters as a “place where we should ask hard questions because there’s some very important information in those communications.”

... FDA is holding a public meeting on July 18 to solicit ideas about ways to administer the Hatch-Waxman Act “to help ensure the intended balance between encouraging innovation in drug development and accelerating the availability to the public of lower cost alternatives to innovator drugs is maintained.” Gottlieb has said he hopes to hear ideas at the meeting about ways to prevent manufacturers of branded drugs from blocking competition.

The full article is well worth the price of admission.

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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