POLICY/POLITICS/PHARMA: Is Part D the begining of the end for Big Pharma? by The Industry Veteran

THCB’s favorite vituperative contributor, The Industry Veteran, is back with some New Year thoughts. He got what I was up to on NY Eve a little wrong, but may have a closer idea about what the long term effects of the New Year will bring to Big Pharma. The Veteran writes:

A healthy and prosperous New Year to you!! For some reason I have a picture in my mind’s eye of you sitting in a pub, raising many pints to toast in the New Year. At 2:00 a.m. I see you wearing a thick turtleneck sweater beneath a Harris Tweed sport-coat as the proprietor gives his inevitable call, “glasses, gentlemen.”


The following article from Tuesday’s Financial Times says some interesting things about plausible effects of Medicare Part D. The author maintains it will push the US closer to the rest of the world in terms of a national payer system, greater transparency in drug pricing and cost constraints. To advance that last objective, he sees the feds pushing IT and more rational provider management patterns, a sort of revenge-of-the-nerds that should delight you and a segment of your readership. I suppose since neither a Republican or a Democratic administration is likely to enact the sort of changes I would prefer (e.g., tumbrels, guillotines and iron maidens for the Hank McKinnells of the world), the sort of temporized-neuterized change from the back office is better than nothing.


The thing that strikes me as amusingly ironic about Medicare Part D is that it shows the folly of leaving economic planning to the monopolistic corporations.  The US throughout its history has disdained strategic economic planning by government because of the secular faith in the market among the country’s business leaders. So here we have the Medicare Modernization Act as developed by Big Pharma’s Pfizers, Mercks and their PhRMA lobby. They fashioned the MMA, with its confusing, competing PDPs, specifically to prevent Medicare from acting as a single payer that could make volume discount purchases. After all, if they could elect George by manipulating an electoral system to create the illusion that 3,000 elderly Jews in Florida voted for Pat Buchanan, a Rube Goldberg MMA could certainly boost their earnings at taxpayers’ expense. Now here we have consultants, journalists and equity analysts forecasting that by decade’s end, the MMA will do precisely what the CEO malefactors wanted to avoid. I dread to think what would happen if Big Pharma’s CEOs were half as bright as their sycophants in Pharmaceutical Executive and the other vanity rags claim.


Although as the Veteran has pointed out before, the crew running big Pharma in 2003 will be long gone counting their millions by the time those chickens come home to their successors’ roosts.

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  1. A Beneficial Side Effect of the Medicare Drug Benefit
    An unintended effect of the Medicare Part D benefit could be the creation of the world’s most valuable resource for understanding how drugs are used, especially by the elderly and the chronically ill, and their risks and benefits. This resource would be created by linking information on drug dispensing to patients’ other health information. Medicare data are available for more than 40 million people. These data can transform our ability to assess drugs under real-life conditions, particularly in this vulnerable population, which is often underrepresented in clinical trials. However, in order to realize this benefit, we must make it a priority, justify it to the public, and provide adequate funding.
    To understand the opportunity before us, it helps to understand how little we know now. The Food and Drug Administration (FDA) often approves a drug for long-term use on the basis of minimal long-term safety data: as few as 100 people may have been followed for adverse effects in studies lasting at least one year. Furthermore, the FDA rarely can compel manufacturers to conduct postapproval studies. The current mainstay for drug safety is the spontaneous reporting of adverse events to the FDA’s MedWatch program, which suffers from underreporting, variable data quality, and the lack of a mechanism to assess confounding risk factors. Spontaneous reports are a particularly poor instrument for detecting increased risks of common conditions, such as cardiac disease, that greatly affect public health.
    The lack of systematic collection and analysis of post-marketing data on the use of drugs and the outcomes of treatment has delayed the discovery of some serious problems until after millions of people have been exposed. For example, cisapride (Propulsid) was withdrawn because it had been prescribed to many people with contraindications, and several coxibs are now known to increase the risk of myocardial infarction.
    Two existing programs share features that can be adopted for Medicare data. First, the Vaccine Safety Datalink Project of the Centers for Disease Control and Prevention, which involves the use of linked data from health plans, is an invaluable source of data on vaccine safety. Second, the FDA makes some use of linked pharmacy and administrative records from health plans. These databases identify everyone who is eligible to receive a drug or vaccine, the starting and stopping dates of administration, and many outcomes and coexisting medical conditions. In addition to being useful for safety studies, these data sometimes allow assessment of the effectiveness of different therapies under conditions of actual use.
    There are important limitations to these data, however. They do not identify some conditions with sufficient specificity, contain no information on actual drug ingestion, lack important information such as smoking status and body-mass index, often lack historical information, and include only drugs covered by the health plan. Therefore, it is important to review patients’ full medical records in the small number of cases in which this information is critical.
    Some prerequisites already exist for using Medicare data linked with data from health plans to study the use, risks, and benefits of drugs. Most important, the Centers for Medicare and Medicaid Services (CMS) has proposed linking Medicare drug claims with diagnosis and procedure claims. In addition, the FDA has experience in working with linked data and in collaborating with expert groups such as the Centers for Education and Research on Therapeutics (funded by the Agency for Healthcare Research and Quality and administered by that agency in collaboration with the FDA).
    To take advantage of the opportunity at hand, the CMS must carry out its proposal of creating a fully linked data set and ensure that it remains current. The CMS, the FDA, and their designees will need the ability to review selected outpatient and inpatient records. These agencies will need to clarify their authority to perform these reviews and explain their purpose satisfactorily to clinicians and patients. Finally, the FDA and other agencies will need new sources of funding if they are to use this information meaningfully and to conduct research on new methods for using it optimally. Additional issues, such as a means of sharing these data with researchers and others, must also be addressed.
    Medicare data will offer a great opportunity to improve our ability to understand the balance of benefits and risks of drug treatment. If we take advantage of this opportunity, we will know much more about whether drugs are used as intended, whether they have their intended effects, and how risky they are.
    Source Information
    Dr. Platt is a professor in and chair of the Department of Ambulatory Care and Prevention, Harvard Medical School and Harvard Pilgrim Health Care, Boston, and principal investigator of the HMO Research Network Center for Education and Research on Therapeutics, Boston, and principal investigator of an FDA contract (HHSF 223200510010C) to perform post-marketing surveillance for drug risks and benefits. Dr. Ommaya is a senior staff member at the Institute of Medicine, Washington D.C.
    The New England Journal of Medicine

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