Of all media sources you don’t usually expect in depth, balanced features from USA Today. But Tuesday’s USA Today has an excellent article by Julie Schmit on how Warner-Lambert (and now Pfizer’s) Neurontin went from being a minor epilepsy drug to a major CNS blockbuster. In 2004, the last year before it goes off patent, Neurontin will do over $3bn. Not Lipitor, but a pretty respectable number.

The answer is that Warner-Lambert promoted the off-label use of Neurontin from 1994, when it was introduced, to 2002, when it was given an additional approval for pain from shingles. The story:

Warner-Lambert’s offense was marketing Neurontin to doctors for purposes other than as a supplemental anti-seizure medication for epileptics. That was the only use approved by the Food and Drug Administration during Neurontin’s early years, when prosecutors say Warner-Lambert’s illegal marketing took place.

The Justice Department says that’s what Warner-Lambert did from shortly after introducing Neurontin in 1994 until 2000. Prosecutors alleged that Warner-Lambert lied to doctors about the drug’s effectiveness, paid doctors to allow a sales representative to sit in on sessions with patients and paid doctors, some up to $250,000, to unethically talk up Neurontin to other doctors. In fact, the list of ailments that Warner-Lambert claimed Neurontin alleviated was so long — covering pain, headaches, bipolar disorder, attention-deficit disorder, alcohol detoxification — that some Warner-Lambert employees dubbed it the “snake oil” list, government documents say.

The strategy worked. In 2002, 94% of Neurontin’s sales were for off-label uses, up from 40% in 1995, the government estimates, citing company documents and independent market research. Wall Street firm Lehman Bros. estimates that 90% of Neurontin sales are currently off-label

So Pfizer, having got Neurontin as a side dish to what it really wanted (Lipitor) when it bought Warner-Lambert, inherited the good and the bad with it. By 2002 the horse had left the barn and Neurontin was being prescribed for virtually anything that doctors and patients felt it might work for. Now that’s not necessarily a bad thing, and its very common. As PhRMA likes to point out, the FDA tends to be over cautious, but the same drug works differently for different people, and if a drug is doing some people some good who’s to blame them for using it and doctors for prescribing it. As one quoted patient says: “If it doesn’t work, then why do I feel better?”.

But that’s exactly the same argument made for medical marijuana. And while DOJ is massively over-zealous in enforcing its perception of the law in that case (at great cost to patients and society), fining Pfizer $430m for violating marketing practices over 8 years (although the admission is only up to 1996 not 2002) on a drug which is probably dropping more than $2 billion to the bottom line this year is not exactly vigorous retribution. But that is the typical state of play. It’s how the pharma business has worked for a long time and it’s unlikely to change any time soon, even if the DOJ chief’s name in February 2005 is Spitzer.

So after Marcia Angell rips the pharma industry a new one in the LA Times last week, the official comeback from Alan Homer, President of PhRMA is nothing short of pathetic. Is this really all that big pharma feels it needs to respond to? Go after her credibility (as Atlas did in THCB last week). Go after her facts, if you can. Or do something positive. Try to explain how drugs have reduced other health care costs over the years, and how they’ve improved life expectancy and that we have to pay for that. But apparently the only thing that Holmer can come up with is that his mom had fewer side-effects on a me-too? That absolutely justifies the sixth statin on the market to rise in price by 15% each year.

I don’t know if they can’t do any better or if they just don’t care what people think of them. Maybe the tobacco companies’ place at the bottom of the reputation list isn’t safe after all.

Well the radical communist moderate social democrat nature of this blog has been somewhat shattered by recent contributors, and this post continues that trend. Mark McClellan (the ex-FDA commissioner and now CMS head), Cato and more radical wingnuts libertarian think tanks like the Institute for Policy Innovation (founded by ex-House GOP leader Dick Armey and funded by corporations, the Scaife family and the rest of Hillary’s VRWC) continue to think that the problem is that drugs in the rest of the world are too cheap. IPI’s latest press-release claims that prices in Canada ought to be 82% of the US level but in fact they’re only 59%. So they think of course that Canadians should voluntarily increase their payments by some 35%. I assume the IPI also thinks that WalMart should start paying its suppliers a ton more every year, or is using your purchasing power only OK if you’re in the private sector? For that matter I don’t think WalMart lets its suppliers get away without innovating, but they certainly don’t let them raise prices to do it!

While espousing the same general view, new THCB contributor Atlas turns his rather entertaining guns on the motivations of Marcia Angell and her colleagues at the New England Journal:

Marcia is no angel when it comes to this. She and fellow traveler Arnold Relman have been biting the hand that fed them for years. The NEJM, unofficial voice of Man’s Best Medical School (Harvard) and Man’s Best Hospital (Mass. Gen.)(reference: Samuel Shem, House of God) is perhaps the only paid subscription medical journal with a circulation of 130,000 plus physicians. However it has for many years accepted pharmaceutical advertising support. Yet somehow it has managed to maintain Brahmin-like integrity and the respect of physicians worldwide. So it is for many of the physicians condemned by Angell. If not, why publish them? Shills don’t make it through peer review. If the pharma companies don’t subsidize these studies, who will? The government, of course. Talk about mega conflict of interest! What incentive will a weasly, rationing American National Health Service as Angell and Relman and fellow Brahmin Kerry advocate have to publish objective research about costly new therapies? and how will NEJM keep its sub price affordable when the only ads they get are PSA’s from their new patron, Uncle Sam?

Ah, the road to serfdom is paved with fool’s gold, and Ms. Angell and Mr. Relman are skipping along it hand and hand, off to meet the Wizard in the worker’s paradise. Wait until they meet the man behind the curtain. He will make Big Pharma look like Dicken’s old Fezziwig compared to Uncle Scrooge

.

Now Atlas points out a very big dilemma–how can journals remain objective while taking money from those they are reviewing. Really only Consumer Reports (with its no advertising, subscription only model) can claim that level of objectivity. Funnily enough the issue is one that I found in an email sent to me from The Industry Veteran late in 2003 (hitherto unpublished in THCB). Concerning the then controversy about Crestor and The Lancet, and in response to a suggestion that the Lancet was attacking A-Z’s Crestor purely on the desire to cuddle up to Pfizer The Veteran wrote:

I don’t for one minute think that the Lancet’s editors are impervious to the pressures of their publishers, and Reed-Elsevier’s business ethics are similar to Tony Soprano’s. Saying that, it remains a fact that only a fool would believe an unscrupulous company always takes the rotten course of action. If the editors are mere henchmen for a corrupt publisher, then I have to question why a company with so many business entities dependent upon the promotional spending of pharmaceutical manufacturers would go out of its way to antagonize a drug maker with an announced $1 billion promotional budget for its Crestor launch. Prestige journals such as Lancet and the New England Journal, and thought leaders in academic medicine, earn their money in the manner of whores by going to bed with every big spender they can. Reed-Elsevier can squeeze more ad pages out of Pfizer for Lipitor and Caduet (as well as Merck/Schering for Zocor-Zetia) in the event of a lavish Crestor splash rather than in the absence of one. Of course Noam Chomsky (and David Hume way before him) is correct in pointing out that the media manufacture consent. That just means we have to rely on diverse outlets and know how to read them instead of thinking reflexively and without context.

The careful TCHB reader may notice a strange confluence between Atlas’ and The Industry Veteran‘s views on medical journals. I assure you that these are two very different people but it warms the cockles of my heart to see that cynicism is very much alive on the right as well as on the left!

Terry Nugent, who’s a frequent contributor to the Pharma-Marketing list serv was not too impressed by my recent post about Cato and how pharma companies might have to live in a world where their margins were much smaller but they still had to do real research: He writes:

Ironically, Cato has hoisted the industry on the Republican free trade petard. However, there are a few caveats to your comparison to the high tech and auto industries. In the case of the former, copyright protection is a powerful moat to competition (e.g., Microsoft: there’s no generic Windows to separate Bill Gates from our $50 billion). In the latter instance, what’s missing is profits (as evidenced by the dismal PE ratios of auto stocks). The automobile business market is almost as unsustainable as the airlines’.

Unrestricted reimportation has some substantial downsides, including the inevitable counterfeiting that has already come to light to an extent that surprised even industry friends and allies. The pharmaceutical industry is probably the best generator of the high wage, high tech jobs its critics claim to champion, which reimportation will in effect outsource.

Profit diminution will inevitably reduce investment capital in what is a notoriously risky business. Already, pharma PE ratios are lower than their historical levels due to shortened patent windows, litigation exposure, and a clear and growing public policy hostility that amazingly lumps the cure with the cause by putting big pharma in the same docket as big tobacco, hounded by the dogs of demagoguery and the trial bar.

Prices may go down, but at what price to our progeny, much less ourselves? Our unborn children will be the ones to suffer from the absence of undiscovered drugs, aborted by the shortsighted "savings" that are the price of populist politicians’ purchase of power.

Believe it or not I’m not entirely unsympathetic to the pharmas on this issue. They live in an odd industry, where production costs are low and market entry is relatively cheap once the IP is known and exposed (unlike autos), installed bases don’t count for much (unlike operating systems) and where they do only have a few years to make the huge profits before those revenues go away (a la Claritin whose demise almost destroyed Schering Plough). But over the last decade the bigger pharmas via mergers have become more like other corporations that have the diversity to survive the disappearance of one product line or another. And their profitability is such that it can’t go up much more, and their sales and marketing expenses can certainly come down. And like it or lump it that will have to happen, lest they provoke that excessive demagoguery that Terry fears or worse that intervention from populist politicians.

And I tried to promise Terry that I wouldn’t mention the fact that the auto manufacturer’s profits would be much higher if they were paying Canadian prices for their employees’ drugs. But I failed!

Yesterday’s WSJ had an article on the increasing use of polypharmacy in psychiatric treatment of bi-polar disorder, depression and schizophrenia. It’s controversial because there have been no clinical trials to prove its value, and due to the nature of those conditions it can be hard to measure outcomes which in any case may vary dramatically between different patients. As the article is behind a firewall I’m going to quote somewhat liberally from it:

Psychiatrists are increasingly crafting drug cocktails of multiple medicines to treat depression, bipolar disorder and schizophrenia. The approach, called polypharmacy," aims to help people who don’t respond to a single drug by putting them on several drugs that target different brain chemicals. The approach — driven in part by the shortcomings of many available medications — is psychiatry’s answer to HIV/AIDS drug cocktails and combinations of cancer drugs. But there are some key differences. Unlike HIV and cancer — whose underlying cell biology is fairly well understood and that have been the subject of clinical trials involving drug combinations — the causes of mental illness remain largely a mystery. Little research has been done about how to administer polypharmacy or whether it even works in some cases. Multiple drugs also mean multiple side effects — and multiple prescription bills. Doctors arrive at the right mix by tinkering with a sequence of different drugs based on past experiences, word of mouth and drug-company marketing that informs them about the strengths and weaknesses of each drug.

(snip)

Some psychiatrists question whether more drugs are necessarily better. Gabor Keitner, professor of Psychiatry and Human Behavior at Brown University in Providence, R.I., thinks polypharmacy has gone too far. Patients are plied for years with a dizzying sequence of drugs that have side effects ranging from insomnia to lack of libido to weight gain. "I think we are overmedicating people," he says. Dr. Keitner, who directs the inpatient mood-disorder clinic at Rhode Island Hospital, also worries that patients are getting the false hope that some magic combination of drugs will cure them. It may be better, Dr. Keitner says, to teach patients how to manage their conditions and emphasize continuing therapy. "This is leading us down a path that may not be good for patients or the profession," he says.

Still, for many, the cocktails provide long sought-after relief. Noreen Fraser, a 50-year-old mother of two from Los Angeles, was treated for depression with multiple drugs during her three-year battle with breast cancer. The powerful cancer drugs she took abruptly halted her body’s production of estrogen, sending the normally animated television producer into a deep depression. "I couldn’t even help my children with their homework," Ms. Fraser said. Her psychiatrist, Andy Leuchter of the UCLA Neuropsychiatric Institute, tried combining two antidepressants. That worked only for a while. Then last fall, Dr. Leuchter added a low dose of the antipsychotic medication, Zyprexa, into the mix. Within two days, Ms. Fraser felt better than she had in years. "It was like a cloud lifted," she said.

(snip)

Using multiple drugs to treat mental illnesses has become controversial partly because of the cost involved — especially with schizophrenia. The standard therapy for schizophrenia today is the use of "atypical" antipsychotics, which have milder side effects than older drugs, but are relatively expensive. A month’s worth of Bristol-Myers Squibb Co.’s atypical antipsychotic Abilify, for instance, costs $352 whereas generic clozapine, an older drug, costs $152. If a schizophrenic patient doesn’t improve on one drug alone, doctors may add another atypical antipsychotic or one of the older "typical" drugs. In some states, public-health programs have balked at paying for combinations of psychiatric drugs without evidence that the treatment actually works.

Insight on how to use combinations of drugs to treat resistant cases of depression may be provided by a large government-funded trial just completed that tested various prescribing strategies. But results of the trial, conducted with 4,000 depressed people in 13 states, aren’t expected until May 2005.

Given his moderate and understated views on the medical profession and its relationship with pharma manufacturers, regular THCB readers may be surprised to know that Industry Veteran has his suspicions about the science and the marketing behind the new polypharmacy.

1. The cocktail approach to therapy represents an emerging paradigm in psychiatry that a growing number of clinicians do not reserve as merely a last measure. At a recent meeting of the American Psychiatric Association, a clinical investigator gave me a synopsis of his thinking. "In neuropsychiatry," he explained, "since anything can cause anything, it’s wise to use everything for everything." In other words, throw as much s- – – on the wall as you can and see what sticks.
2. Advocates of early cocktailing not only lack an understanding of the pharmacological basis for their polypharmacy regimens, some even disparage such basic science and consider it an after-thought or a fig leaf. At various times, cocktailing exponents have told me that medical science need not advance "in textbook fashion" by moving from basic scientific understanding to clinical applications. If a drug or a drug combination appears to offer clinical benefit, according to this worldview, then the bench science guys can retrofit a mechanism to provide a soothing rationale for the clinicians.
3. More than a few colleagues have whispered to me their opinions that the cocktail approach in psychiatry represents a combined effort by psychiatrists and drug companies to grow their businesses. Entrepreneurial psychiatrists, frustrated by limited reimbursements and a median income that lags behind most of other specialties, promote cocktailing to create a niche for themselves as "medication specialists" (they actually use that term on their business cards). The drug companies subsidize this effort as a means of developing new, frequently off-label markets for their products.

Marcia Angell has been on a tear lately promoting her new book. She has a brutal interview in the LA Times which essentially summarizes all the complaints about drug companies made in the last decade. Here’s a sample:

Conflicts of interest are rampant. When the New England Journal of Medicine published a study of antidepressants, we didn’t have room to print all the authors’ conflict-of-interest disclosures. We had to refer people to the website. I wrote an editorial for the journal, titled "Is Academic Medicine for Sale?" Someone wrote a letter to the editor that answered the question, "No. The current owner is very happy with it." That sums up the situation nicely.

To my mind pharma companies need to understand two very important points here. First, while a few academics have been complaining about pharma company practices for several years, this is the first time that I remember one book about pharma having such a sustained impact. Angell has already been on 60 Minutes, this interview is not in some minor blog or academic journal, it’s in the main paper in the nation’s second largest metro area, and she’s also had a recent column in the Financial Times. And this is at a time when the reputation of pharma companies is already heading into uncharted low territory amongst the public. Second, pharma needs to both start making some new arguments about what it’s doing and how it’s trying to improve. Big pharma also needs to consider what life might be like in a world where HHS officials have not only decided that they can bargain about the price of the drugs Medicare is paying for, but one in which they’ve read Angell’s book. This is not necessarily a doomsday scenario, but a little bit of "what if" scenario planning wouldn’t hurt big pharma right now.

Roger Pilon from Cato, the thinking man’s libertarian think-tank (as opposed to AEI or Heritage) last week, decided that the US should give up on the reimportation ban. The basic reasoning is that it won’t be a big deal as the drug companies won’t let too much inventory go overseas, and if we let importation happen, the American market will force price rises abroad.video of this debate between Cato’s Pilon in favor of reimportation and an AEI staffer Jack Calfee who opposes it. Almost a doppler world here in which the AEI scholar is arguing that price controls are OK in poor countries because they keep drugs available in poor countries. Reimportation would, according to both of these "free-marketers", see higher prices abroad. They are of course both opposed to price controls here–such as happen abroad. But what that means in real life is monopsony purchasing by the government. That could happen here very easily by CMS, the VA and the states agreeing to negotiate with the drug companies, as the VA does and Medicaid sort of does. This type of "price control," PhRMA tells us all the time, would ensure that R&D for pharma would collapse, and we’d all be dying in the streets. Both Pilon and his AEI counterpart note that as government’s share of the drug market increases, these "price negotiations" are likely to happen anyway.

You can see a long

No one mentions the obvious question which is, in which industry would people invest their money if margins in pharma went down slightly? Seems to me that a blockbuster is a blockbuster and will find investment capital whether it’s returning 30% or 20% net margins. Of course that would mean that reductions in costs at pharma companies would have to happen somewhere, and the obvious answers are from the two biggest slices of the revenue pie at pharma companies–those being sales & marketing and profits. (R&D is the third biggest number). It’s also worth noting that many industries such as high-tech and autos spend large amounts on R&D without either patent protections or such high margins. And yet they manage to bring out new products all the time at continually lower prices.

No time to comment much on this one, but this NY Times story is worth reading for insight into negotiations between pharma, health insurers (and PBMs) and Medicaid — How Schering Manipulated Drug Prices and Medicaid.

Hat-tip to Ross at the Bloviator for this one. I know I promised that I’d try to stop writing about pharma, but….. a synopsis of her thesis. Nothing here that you wouldn’t know if you’d been observing the industry for 20 years, but really interesting to see so may arguments put together in one place. Her main thrust is that:

Marcia Angell, former editor of NEJM has been working away on a damning book about big pharma. Her long article is presumably

a) Pharma is not innovative (mostly gets its products from NIH backed research, and from smaller biotech) b) The big money is spent on marketing not R&D c) They use monopoly protection to continually increase prices d) Pharma buys protection by huge contributions to politicians e) The major players are not trying to innovate their way out of the current situation

How is the pharmaceutical industry responding to its difficulties? One could hope drug companies would decide to make some changes—trim their prices, or at least make them more equitable, and put more of their money into trying to discover genuinely innovative drugs, instead of just talking about it. But that is not what is happening. Instead, drug companies are doing more of what got them into this situation. They are marketing their me-too drugs even more relentlessly. They are pushing even harder to extend their monopolies on top-selling drugs. And they are pouring more money into lobbying and political campaigns. As for innovation, they are still waiting for Godot.

Angell’s book is presumably going to be a hatchet job (albeit a justifiable hatchet job) on the industry. Her explicit intention is to make what insiders and observers know about the industry well understood amongst the public, hoping to get the political winds to change and reform the industry.

These are just two of many reforms I advocate in my book. Some of the others have to do with breaking the dependence of the medical profession on the industry and with the inappropriate control drug companies have over the evaluation of their own products. The sort of thoroughgoing changes required will take government action, which in turn will require strong public pressure. It will be tough. Drug companies have the largest lobby in Washington, and they give copiously to political campaigns. Legislators are now so beholden to the pharmaceutical industry that it will be exceedingly difficult to break its lock on them. But the one thing legislators need more than campaign contributions is votes. That is why citizens should know what is really going on. Contrary to the industry’s public relations, they don’t get what they pay for. The fact is that this industry is taking us for a ride, and there will be no real reform without an aroused and determined public to make it happen.

So what’s the likely impact of this book? There have been similar screeds about the pharma industry for over 20 years, many coming from academic docs like Angell. They’ve had zero impact on the industry or on its relationship with non-academic physicians. What may be different this time is that the polls are now showing the decline in the industry’s public image happening at a time when pipelines are drying up. Meanwhile the genomic and information revolutions are going to allow much better tracking and understanding of what drug works on whom. That in turn will begin to make more inevitable demands from payers for better understanding of what they are buying when they pay so much for drugs. So perhaps the pressure on pharma will finally be great enough that they’ll be forced into a change one way or another.   Some innovative people in pharma are planning for that day, trying to integrate the desire to intervene in care with the right cost-effective drug at the right time into their R&D activities. (On a personal note, I’m about to start working with a Foundation that is creating partnerships to promote that model). In the end, to paraphrase Craig Ventner, I believe the greatest days of the pill business are actually in front of us.  But they may not be quite so fantastically profitable, and they will probably not look like the business as usual approach that Angell excoriates.  However, this is an industry that is very conservative (big and small Cs). It’s primary need now is to ensure that it goes into the future on terms that are best for it and the system, rather than invite on itself the kind of dramatic regulation and intervention that Americans frankly do poorly.   Like their kissin’ cousins over at the AMA and their obsession with liability caps, PhRMA and its members need to start fighting the right fight, and their obsession with reimportation is not that.

So the Australian trade agreement passed the house and it includes the limits on reimporting drugs discussed in THCB earlier this week. Of course they passed it by swearing blind that it won’t impact the reimportation issue as apparently Australian drugs can’t be imported here anyway. Funnily enough the AARP is out with a new push poll survey that shows what Harris and others have been saying for a while now: 80% of seniors favor legalization of Rx re-importation. And for the gazillionth time; Florida, Pennsylvania — swing states, old populations.   Next week I’ll be ignoring pharma and trying to convert this from The Pharma Blog back to the THCB that you know and love (or at least some of you love).