PHARMA: Reimportation, corporate villains and the likely outcomes

So it’s become apparent to THCB readers and anyone else following the reimportation issue that Pharma is, as the Christian Science Monitor puts it, the new corporate villain. And it isn’t playing its hand very well. The one person in big pharma who has gone off the reservation is the Pfizer exec Peter Rost. Here’s his very positive review of Marcia Angell’s book on Amazon. (BTW before they start I can dispel the rumors–Peter Rost is not The Industry Veteran!). But Pfizer’s lawyers have already visited Rost in a way that really didn’t show much subtlety.

To be fair, those attacking the pharma industry are also being a little over-aggressive. Marcia Angell was on a NPR radio show last week in which she attacked the pharma business over the creation of me-too drugs. (The drug discussion is about 5 minutes into the show here). Rost makes a cameo appearance and a flack from PhRMA also defends their touch position. The show is well worth a listen, but it’s worth trying to distinguish among the “me-toos” that Angell is attacking.

There are “me-toos” that are second to market for whatever reason, but usually because of the research process (e.g. Crestor developed later in the race after Lipitor). It may or may not be OK to have another statin on the market, but that type of competition in development is the American way. Furthermore, as the Vioxx mess shows, not all “me-toos” have identical clinical effects (or at least Pfizer is hoping like hell that that’s true!)

The thing that Angell should be going after is the set of other “me-tooisms”, such as

While much of this bad behavior is in the past, it doesn’t exactly help that DCI, a lobbying group for pharmaceutical companies (and by the way the publisher of the supposedly academically neutral Tech Central Station) was reported by The Hill a few days back to be “offering healthcare consultants almost $4,000 each to find senior citizens who are willing to speak out in favor of the Medicare drug discount card and write letters to Congress thanking members for saving them money on pharmaceuticals.” So I think it’s helpful to try to distinguish between the bad behavior and the market failure. My problem with Angell is that she sees no good in the industry at all, and that leads to the industry just circling the wagons and saying “screw you” to other approaches.

However, there are some vague signs that calmer heads may be able to prevail, even if they aren’t close to doing so yet. Most of this really bad behavior on the pharma industry’s part is in the past. Meanwhile, an interesting but very small survey being conducted on the Pharma-Marketing List-Serv suggests that a big section of that pharma audience realizes that reimportation is a) inevitable and b) not likely to be that harmful. Last week the NEJM had an article that more or less agreed with the CBOs analysis that reimportation won’t have that big an impact on prices. The author, Richard Frank a Harvard health economist, argues that:

The Congressional Budget Office has also suggested that direct negotiations would have a “negligible effect on federal spending.” But direct government negotiation may realize savings on brand-name drugs that have little competition — cases in which prescription-drug plans would be unable to negotiate lower prices by taking advantage of competition among similar products for positions on drug formularies. Paying VA prices for the drugs used by Medicare beneficiaries would benefit the federal budget. Of course, lower prices would also affect the revenues of pharmaceutical companies. For drugs that are unique, prescription-drug plans will have little ability to negotiate prices. Thus, higher prices would most likely be paid for the most innovative products. Yet it would not be politically acceptable simply to let the industry name its price. Thus, at a minimum, some direct price negotiation by the government is likely to occur regardless of which candidate is elected.

He goes on to suggest that as a consequence of re-importation prices will lower here and increase sharply in Europe, but that we’ll get to a place where we can have a rational discussion about how to fund the research for innovative products.

So is it too much to see if we calmer heads can start that conversation, as after the election it’ll have to happen anyway? Well tonight I’m going to see Angell talk live, so I can report back as to whether there is any middle ground. I actually have a spare ticket, so if any locals are looking for a hot date, let me know quick. (You think I jest? I actually took a date to see my colleague Paul Saffo once. It was pretty much our last date!)

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