Tag: Pharma

PHARMA/POLICY/QUALITY: Cost-effectiveness in drug approval

I’ve been hanging with the libertarian Canada-bashers from PRI! They and the California Health Institute (the Cal biotech and drug company industry group) invited me to a very, very nice dinner last night. I assume that they used the drug companies’ money rather than the Scaife’s so I can keep my lefty credentials! Then they had a meeting Friday morning, intended to scare the world about the prospect of an Australian-type cost-benefit analysis requirement for drugs coming here.

IMS put out a report saying that access to drugs in the US would be massively restricted if an Aussie style system was imported here; Randy Frankel from IMS gave the talk (although I sat next to him at dinner and he has a varied and interesting background including setting up disease management at Medco and he basically agreed that we were out of easy targets for drugs and had to decide what to do about biotech drugs that cost $100K for an extra year of life).

Ruth Lopert, adviser to the Australian system gave it a somewhat vigorous, but also defensive defence. She said a few things

  • Government doesn’t set prices…price is proposed by the drug co, but then accepted if it makes it under the cost-benefit analysis (i.e. better come into line!) so prices for me-too drugs are lower than for first movers
  • She says prices for innovative drugs are higher in Australia than they are here! (Gleevac, Embrel)
  • She says it’s not a mechanism for cost containment, Australia’s drug costs are going up 12% a year. (to which I should almost asked, but didn’t, why bother at all then!)
  • And if it’s not reimbursed by the state, you can pay out of pocket! And for most patients in Australia paying out of pocket costs less than the average payment me for drugs by a typical patient on Medicare Part D!

Marjorie Ginsburg, from Sacramento Healthcare Decisions, talked very entertainingly about their report in which they found that people where in general happy to say no to funding certain technologies (including Aricept for Alzheimer’s).  There is a subset of people who believe that if it saves one life (such as an implantable defibbilator) it’s worth it, but once you get past direct life saving technology, they don’t care. Only 12% said cost effectiveness should never be considered. 50% said it should always be. Other things they want — 67% wanted price controls, 56% wanted cost benefit analysis, 49% want more oversight. Her message is that this is acceptable—but don’t do it just by itself. It will have to be part of a whole package of how to deal with health- are. The way to get this done, she says, is to present as getting it best value, not cost savings.

Meryl Comer who’s been caring for her husband with Alzheimer’s for 12 years gave a harrowing talk about the impact that’s coming from that disease. She said that there’ll be 13.9m Americans with Alheimers by 2010. 650K are diagnosed while still under 65. Make it to 65 and there’s a 1 in 10 chance that you’ll get it; by 85 it’s 1 in 2. Still no cure, even though the disease was discovered in 1906. She wants to make sure that the access to successful cures is not prevented, because it’ll save so much.

Kwabena Adubofour, a diabetes care clinic director from Stockton gave a long talk about how EBM analysis for drugs is largely irrelevant while care is generally problematic, and that there’s massively unequal treatment based on ethnic origin, poverty, et al. His concern is that limiting pharmaceuticals via cost containment in this environment is a double hit on minority health care. He points out that there’s a huge gap in care for blacks compared to whites (much fewer rates of referral) women only got 60% of the referrals that men did, blacks only got 60% that whites did. He thinks formulary redesign is irrelevant—there’s lots more to do first. His long list of stuff included DM, pay for Improvement, reducing unnecessary care, etc, etc). He thinks that no one (as far as he can tell) is against rational thinking about how to tackle pharmaceutical costs (Can’t say that I agree with him about that!) But we should only be doing that in the context of this other stuff.

Peter Pitts, ex-PRI, ex-FDA, claims that the problem is that one size doesn’t fit all in health care (or anything else) because EBM is a regression to the mean. And the studies ignore the massive patient based variation. (and he’s right….) So his answer is no formualries. He says that restrictive formularies cause higher costs later. Genomics/personal medicine will fix all this. At least I think that’s what he’s saying. He’s saying we need innovation? (Are we opposed to that over on the EBM supporting side….I’d guess he’d say we are!)

BTW if you’re a former governor, you still have to show up at things like this. At least Pete Wilson is here. Another disincentive to run for public office!

The Q&A pretty much was a fight between Pitts and Lopert.

The audience was very amusing. 2 doctors asked random questions. One said “why is the government establishing these guidelines, shouldn’t a 100 flowers bloom”. Another decried cookbook medicine and said that “Evidence-based medicine is creating Alzheimers in doctors brains…” (i.e. it’s stopping doctors from thinking). Randy Frankel smacked them both down by explaining the variability in medical practice, and showed that it takes 17 years for a guideline to come into being.

Peter Pitts answered my long long rambling question/comment trying to figure out what the panel was about by (essentially) saying that he’s opposed to formularies, and that third party payers should pay for whatever the doctor wants to prescribe. Kwabena Adubofour says that in cost containment with pharmaceuticals, it’s always the cheapest drug that gets pushed—not the best “value” overall.

From the audience The medical director of Safeway (didn’t catch his name) and Anthony Barrueta VP of government relations at Kaiser Permanente both essentially said that EBM is about changing physician behavior and we need to do that. Because, for example, per capita we do 19 times the rate of back fusions than they do in Denmark. That’s some practice variation for you! That’s what happens when there are no guidelines…the Safeway med director says that when Australia is spending 9% of GDP and we’re spending 17% it’s crazy to think that we don’t have a problem.

An interesting session, but I don’t really know what it was about! We’re going to get some level of practice guidelines and EBM incentives via P4P, they’ll be fought tooth and nail, and cost-effectiveness analysis will be part of that process. But it ought to be done in the context of wider health care reform, because this is not the biggest problem in our health care system. And you know what is, with more evidence just last week

PHARMA: Maybe the Dems are serious about drug pricing

Das Kapital

It’s hard to see how Medicare Part D as constructed can easily be changed for the government to go after prescription pricing, no matter how much Pete Stark et al may want to. But there are other drugs that Medicare buys directly under Part B, mostly for cancer and kidney care. And notice has been served that the tallest of those poppies may find itself trimmed a little — U.S. payments for Amgen drug criticized at hearing.

And if you thought you understand Part B’s “new” pricing schema, take a hint from JD Kleinke. You probably don’t

PHARMA: That can’t have been a fun management call, with UPDATE

Pfizer’s next big drug for heart disease (torcetrapib which was slated to replace Lipitor) has bombed in trials, causing sufficient deaths that the trials have been ended early and development has been stopped. This is obviously dreadful news for Pfizer, and I assume that the stock will be well done on Monday. But that’s how the pharma business is supposed to work—big bets on new blockbusters may not pan out, but others will do so.

But beyond that it is also a pointer that some of the easy “targets” such as heart disease and diabetes may be nearing their natural limits for medication therapy, and that lifestyle changes, the old “diet and exercise” may really be the best way to deal with them—allied of course with the generics which were the blockbusters of yesteryear. Almost all the growth in the drug business in the last few years seems to be in niche and very expensive biologics for virtually orphan diseases.

Which all means that the cuts in the sales-force that Pfizer announced last week are likely to be the first of many. Big Pharma is going to have to figure out how to get to a model beyond hitting every doctor and every patient on behalf of a few big blockbusters. The challenge for the rest of the system is to figure out how to use both the new niche drugs and the old blockbusters in the most effective manner.

UPDATE: Pfizer stock is off 12% in relatively early going, down to $23 and change. Ouch! Although it’s still above the lows of a year ago (Just). If you are a bitter shareholder this morning, you should thank the lobbying dollars sunk into Part D’s passage in 2003 for the industry profit recovery that’s kept it afloat this far in 2006. You should also worry about what comes next on that score!

POLICY/POLITICS/PHARMA: PhRMA sends the D out on the field

Even thought the White House will likely veto any change to Part D, the WSJ has started playing desperate defense on behalf of PhRMA.

Apparently if we impose government price controls, it’ll cripple R&D and no new drug will ever be developed. On the other hand, they also trot out the “fact” that Part D as constructed now means that the private sector has the ability to lower prices below those that the government could get. Of course we’ve heard all this before, and we all know who wrote Part D and in whose interests it was written.

But what I wonder is how can the WSJ’s Jane Zhang hold those two contradictory thoughts in her head without smoke coming out of her ears?

Meanwhile, here’s the NY Times on big Pharma’s attempts to buy its way out of the problem. It’ll certainly make some former Democratic staffers much richer!

TECH/PHARMA: McCall aquitted

I must admit that I didn’t even know he was on trial, but it appears that he was and he just got away with it. Yup Charlie McCall who guilt up HBOC based on fraudulent accounting, and sold it to McKesson back in 1998 whereupon the fraudulent shit hit the fan, was acquitted on one charge and the jury was deadlocked on the others. Proving that you can get away with it even today (or perhaps that the Justice system works perfectly!).

PHARMA/POLICY/POLITICS: More rational behavior from big Pharma

Exactly as happened in 2000, and 2002 a late surge of money is coming to help Republicans from the PACs of New Jersey’s finest.

According to a report published Wednesday in the Wall Street Journal, drug-industry dollars are helping to fuel the campaigns of Republican candidates like embattled incumbent Sen. Rick Santorum, R-Pa., who faces a tight race against Democratic challenger Bob Casey Jr., who calls the Part D program a “giveaway to Big Pharma.” The Santorum re-election bid has drawn $454,500 in contributions from pharmaceutical companies, WSJ said.Part D has drawn fire from Democrats in congressional races in part because it doesn’t permit the federal government to negotiate with drug companies on drug prices, and Democratic challengers have vowed to change that if elected, the report said.

While the concept of science-based companies backing Rick Santorum (the one who took his stillborn child home to meet his kids, and thinks that the earth is 6,000 years old) may be odd, it’s completely rational. Essentially now that there is a Medicare drug benefit, eventually price controls will be introduced. It’s in Pharma’s interest to delay that day as long as possible. Anyone can see that including big Pharma, who as Joe Paduda reminds us have seen profits rise with their volume now that Part D has cut in

However, it therefore exposes the whole McClellan/Ignagni line about how the private market in Medicare Part D has lowered drug costs more than direct negotiations would have done for the lie it is. After all, if Part D as written is so much worse for big Pharma than government negotiations/price controls, why would they be fighting so hard to protect it?

PHARMA (well sort of): Jim Edwards having a little too much fun

800x600Jim Edwards of Brandweek has been writing about “Bob” the (fictional) recipient of the Enzyte male enhancement pill (John Mack likes Bob too!). As you might have guessed, the pills a crock and the company behind it is a bunch of fraudsters. One hopes this isn’t true of prescription ED drugs. It may not exactly be as insightful as his normally extremely aggressive investigative reporting, but on the other hand Jim may have produced one of the corniest headlines of the year:

Enzyte Executives Stay Firm Despite Growing Troubles

PHARMA/POLICY: Price negotiations coming?

Joe Paduda is puzzled that drug company prices and profits are going up, yet the NY Times thinks that we can’t get a better deal on drug prices for Medicare. But in some ways that’s a little irrelevant, as the introduction of price negotiations are a political not an economic question. And despite the fact that in 2003 negotiations were politically unacceptable to Tom Delay et al, it appears that (as quoted in Krugman’s column today), the politics of negotiation are all one way.

This is clear from the latest Newsweek poll, which shows overwhelming public support for the agenda Nancy Pelosi has laid out for her first 100 hours if she becomes House speaker. The strongest support is for her plan to have Medicare negotiate with drug companies for lower prices, which is supported by 74 percent of Americans — and by 70 percent of Republicans!

Even assuming that the Dems don’t fumble their current advantage away (or more accurately that the Republicans don’t keep shooting themselves in the foot and the knees) and they take the House and Senate, we’re not getting negotiations tomorrow. First, it might not get past the Senate filibuster, although those poll numbers are pretty scary for Republicans and will take a boatload of PhRMA cash to overcome. Second, Bush will likely veto it, as the current MMA is basically what passes for his domestic legacy (unless he wants “I cut taxes for the richest people in the world and made the children of the middle class pay for it” on his tombstone).

But in any event Pharma needs to prepare for a world in which Medicare drug price “negotiations” are much more likely than they’ve expected heretofore.

PHARMA/POLICY: McLellan leaves offices with partisan and incorrect remarks about Part D

Someone should tell Mark McClellan that he was generally respected by everyone and that now that he doesn’t work for the White House there’s no need to become a Republican shill. But that’s what he’s doing by saying that Medicare drug costs are going down. There are two basic porkies in the statement. The first is that the cost he’s comparing it to is the inflated projection that was come up with well after the MMA was passed–not what Congress was told it was going to be. (I’ve written about how that number changed plenty before, but suffice it to say if you change it up enough and then it comes in lower, that’s not "savings"). If his optimism is correct, we’re back near the original projection, which was still way more than a proper drug benefit should have cost, and was based on more people being covered.

Second, claiming that premiums for seniors in Part D have gone down is not true, as Pete Stark’s office pointed out. Premiums have gone down on average only if you count Medicare HMO/Advantage premiums with those for Part D standalone plans. Medicare Part D standalone premiums have in many cases gone up. Joining a Medicare HMO is a much different thing than adding a Part D standalone plan–just ask anyone who was kicked out of their Medicare HMO in the late 1990s. And of course the HMOs were given a huge subsidy in the MMA legislation separate from the drug coverage part of the legislation, and that’s the money that they are using to reduce their premiums. And we’ve seen this movie before too, including the part when the subsidy is reduced and the private HMOs give up. Just ask anyone who was kicked out of their Medicare HMO in the late 1990s

By the way, you can tell what McClellan is saying here is a lie because Karen Ignagni agrees with him! No need to bother actually researching it, she’s that good a barometer of avoiding the truth! Here’s her quote, if you care:

"There’s no doubt that Medicare is providing valuable benefits for
seniors, and costs are far less than what was expected at the time
legislation passed" creating the new drug benefit, Ignagni says.

Finally, where did Medicare Part D really fall down on the job? It was in failing to enroll low income seniors who would actually have benefited from it. That’s because it was a confusing "market-driven" voluntary program, not a compulsory extension of traditional Medicare. And are low income seniors able to make sensible "market-driven" choices? Apparently not!

NEW YORK, Oct. 13 (UPI) — U.S. seniors with low incomes or no
prescription coverage are less likely to use generic cardiovascular
drugs than more affluent seniors, a study finds. Researchers at
the Mount Sinai School of Medicine in New York say that seniors with
low incomes or no prescription coverage were less likely to use generic
cardiovascular drugs than more affluent seniors and those with
prescription-drug coverage.The study, published in The American
Journal of Managed Care, is the first nationally representative study
that examines the association of income and prescription drug coverage
with generic medication use by Medicare beneficiaries, according to
lead author Dr. Alex D. Federman. Federman and colleagues
examined generic cardiovascular drug use in a nationally representative
sample of elderly Medicare beneficiaries with hypertension. The
findings showed that older patients with cardiovascular diseases often
used costly brand name drugs when equivalent but lower cost generic
versions are available. "The patients that we were concerned
about are low-income and underinsured seniors," said Federman. "Our
findings show this group in-particular are missing opportunities to
save money on prescription drugs without sacrificing quality of care."

But if we had put all seniors into a guaranteed drug benefit program that ensured that they got the best pricing on all drugs (a la VA) and actively managed them so that they were given generics where relevant, then both they and the taxpayer would have been better off. And don’t even start me on the subject of how much the whole benefit would have cost the taxpayer if it had been designed sensibly rather than by PhRMA and AHIP.

I just hope that now he’s out of the Administration McClellan can go back to realizing that there are many shades of gray.


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