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Matthew’s health care tidbits: Drug prices

Each week I’ve been adding a brief tidbits section to the THCB Reader, our weekly newsletter that summarizes the best of THCB that week (Sign up here!). Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt

For my health care tidbits this week, I am going to talk drug pricing. Anyone who gets basically any health policy newsletter has seen some of the cash PhRMA has splashed trying to make it seem as though the American public is terrified of drug price controls. But as Michael Millenson on a recent THCB Gang pointed out, when Kaiser Health News asked the question in a rational way, those PhRMA supported numbers don’t hold. 85% of Americans want the government to intervene to reduce drug prices.

Big pharma whines about innovation and how they need high prices to justify R&D spending but health care insiders know two things. First, for ever Big Pharma has spent about twice as much on sales and marketing as it’s spent on R&D. This was true when I first started in health care thirty years ago and it’s still true today. Second, the “R” done by big pharma is resulting in fewer breakthrough drugs per $$ spent now compared to past decades. Which means that they should be increasing that share spent on R&D and need to improve the “R” process. But that’s not happening.

Finally, pharma is very good at increasing prices of branded products and extending their patent protection. Lots of dirty games go on here. Look into it and you can expect a lot of discussion about insulin pricing or discover how Humira is still raking in $16bn a year in the US, despite the fact its original patent expired in 2018. With 85% of the American public in favor, you’d think then that a Democratic Congress would leap at the change to pass a bill that might save the taxpayer $50bn a year in drug costs. But of course that’s not going to happen. There is about $30bn a year in savings in the House version of Build Back Better that passed last week, but there’s little chance of much of that being in the Senate version given Joe Manchin’s daughter’s role running a drug company, and Krysten Sinema being a recent recipient of PhRMA’s largesse. And that’s assuming any version of #BBB gets through the Senate.

Instead hope something small happens to help desperate patients, and wonder how we ended up in a political system that apparently disregards what 85% of the public wants.

We Use Too Many Medications: Be Very Afraid of Interactions

By HANS DUVEFELT

I happened to read about the pharmacodynamics of parenteral versus oral furosemide when I came across a unique interaction between this commonest of diuretics and risperidone: Elderly dementia patients on risperidone have twice their expected mortality if also given furosemide. I knew that all atypical antipsychotics can double mortality in elderly dementia patients, but was unaware of the additional risperidone-furosemide risk. Epocrates only has a nonspecific warning to monitor blood pressure when prescribing both drugs.

This is only today’s example of an interaction I didn’t have at my fingertips. I very often check Epocrates on my iPhone for interactions before prescribing, because – quite frankly – my EMR always gives me an entire screen of fine print idiotic kindergarten warnings nobody ever has time to read in a real clinical situation. (In my case provided by the otherwise decent makers of UpToDate.)

I keep coming back in my thoughts and blogging about drug interactions. And every time I run into one that surprised me or caused harm, I think of the inherent, exponential risks of polypharmacy and the virtues of oligopharmacy.

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Leading Innovation in Dermatology | Francesca Wuttke, Chief Digital Officer, Almirall

BY JESSICA DAMASSA, WTF HEALTH

Almirall is a dermatology-focused pharmaceutical company based in Spain, and its investment in R&D for developing new therapeutics leads the way as the largest within the country’s pharma industry. It’s no surprise, then, that Almirall has also adopted a digital therapeutics and digital health strategy to augment it’s molecular innovations with a ‘beyond the pill’ approach. We sat down with Almirall’s first-ever Chief Digital Officer, Francesca Wuttke, to hear about the pharma company’s digital strategy which is centered on laying the framework for advanced analytical platforms that gather more health data about patients and skin health. For help and fresh ideas, Francesca has opened Almirall’s doors to health tech startups, launching a brand-new accelerator program cutely called ‘Almirall’s Digital Garden,’ to ‘seed’ and ‘grow’ innovative solutions. Are there lots of health startups out there that focus on treating psoriasis, acne, and other dermatological conditions? Francesca tells us what she hopes ‘reap’ from the Digital Garden and how she hopes her broader digital strategy will flourish at the boutique pharma company.

Filmed at Barcelona Health Hub Summit in Barcelona, Spain, October 2019.

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Price-Fixing Case Reveals Vulnerability of Generic Drug Policies

By ANDREW MULCAHY

A massive lawsuit filed in May by 44 states accuses 20 major drug makers of colluding for years to inflate prices on more than 100 generic drugs, including those to treat H.I.V., cancer and depression. If true, the alleged behavior is not just a violation of antitrust law, but also a betrayal of the government policies that created and defended the entire generic drug industry. 

Most prescriptions in the U.S. today — 9 in 10 — are filled with generics, which are just as safe and effective as their brand-name equivalent. And yet generics account for only 22 percent of U.S. prescription drug spending. These prices are so low because of competition between makers of different versions of the same generic drug. The more competing generic alternatives, the lower the price, theoretically right down to the marginal cost of manufacturing the pill. 

This success is the result of decades of careful federal and state policymaking, all geared towards introducing competition in prescription drug markets. The entire generic industry has its origins in the Hatch-Waxman Act of 1984. Prior to Hatch-Waxman, a company that wanted to sell a competing version of a drug whose patents had expired had to conduct lengthy and expensive clinical trials to get approval from the U.S. Food and Drug Administration. Hatch-Waxman established a quicker, less-expensive path to FDA approval that leans on the scientific research supporting the already approved brand-name drugs.  

Hatch-Waxman also created incentives for generic drug makers to challenge drug patents that prevent competition. Successful challengers win a 180-day period of exclusivity during which their generic is the only one allowed to compete with the brand-name drug. The floodgates open and additional competition pushes prices down further after the 180-day period.  

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A Bizarre Claim of Right to Try

Kelly McBride Folkers
Andrew McFayden
Arthur Caplan

By ARTHUR CAPLAN, KELLY MCBRIDE FOLKERS, and ANDREW MCFADYEN 

A patient with glioblastoma recently received an experimental cancer vaccine at the University of California, Irvine. Notably, this is being hailed as the first case of someone utilizing the Right to Try Act of 2017. ERC-USA, a U.S. subsidiary of the Brussels-based pharmaceutical company Epitopoietic Research Corporation, says it provided its product, Gliovac, to the patient at no cost. The vaccine is currently undergoing Phase II clinical trials. A handful of people in Europe have received access to it through “compassionate use.” This patient did not qualify for ongoing clinical trials in the U.S. The patient, who remains anonymous, is the first known individual to receive an experimental medicine that has not been approved by the FDA, as permitted under the federal right to try law.

Glioblastoma is a nasty cancer – John McCain and Ted Kennedy passed away after battling the disease for just over a year. We believe that patients with terminal illnesses, like those with glioblastoma, should have every reasonable tool at their disposal to treat their disease.

That being said, we’ve argued before that right to try laws are not the best way to help desperate patients. They still aren’t. The number of cases claimed to date is exactly one. And, further examination of what we know about this case does not make a strong argument for the widespread usage of the right to try pathway.

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Saying No to the Drug Crisis

By BRIAN KLEPPER

In a recent essay, VIVIO Health’s CEO Pramod John guides us through four sensible drug policy changes and supporting rationales that could make drug pricing much fairer. Reading through it, one is struck by the magnitude of the drug manufacturing industry’s influence over policy, profoundly benefiting that sector at the deep expense of American purchasers. As Mr. John points out, the U.S. has the world’s only unregulated market for drug pricing. We have created a safe harbor provision that allows and protects unnecessary intermediaries like pharmacy benefit managers. We have created mechanisms that use taxpayer dollars to fund drug discovery, but then funnel the financial benefit exclusively to commercial interests. And we have tolerated distorted definitions of value – defined in terms that most benefit the drug manufacturers – that now dominate our pricing discussions.

The power of this maneuvering is clear in statistics on health industry revenues and earnings. An Axios analysis of financial documents from 112 publicly traded health care companies during the 3rd quarter of 2018 showed global profits of $50 billion on revenues of $636 billion. Half of that profit was controlled by 10 companies, 9 of which were pharmaceutical firms. Drug companies collected 23% of the total revenues during that quarter, but retained an astounding 63% of the profits, meaning that the drug sector accounts for nearly two-thirds of the entire health care industry’s profitability. Said another way, the drug industry reaps twice the profits of the rest of the industry combined.

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Health in 2 Point 00 Episode 59

Today on Health in 2 Point 00, Jess interviews me all the way from London. In this episode, she asks me about Google, who hired Geisinger CEO David Feinberg to lead its health care initiatives, Driver, a startup which ran out of money just weeks after their launch, and HealthifyMe, which has recently raised $6 million.

Jess also tells me about her recent trip to Berlin for Frontiers Health. Apparently, there’s a lot that the U.S. can learn from European startups, which have mastered regulatory and really understand how to plug what they’ve got right into pharma. Next, we’re headed to Tokyo for Health 2.0 Asia – Japan, so catch us there on December 4-5. –Matthew Holt 

Last Month in Oncology with Dr. Bishal Gyawali

By BISHAL GYAWALI MD

Me-too deja vu

I read the report of a phase 3 RCT of a “new” breast cancer drug but I had the feeling that I had already read this before. Later I realized that this was indeed a new trial of a new drug, but that I had read a very similar report of a very similar drug with very similar results and conclusions. This new drug is a PARP inhibitor called talazoparib and the deja vu was related to another PARP inhibitor drug called olaparib tested in the same patient population of advanced breast cancer patients with a BRCA mutation. The control arms were the same: physician choice of drug, except that physicians couldn’t choose the one drug that is probably most effective in this patient population (carboplatin). The results were nearly the same: these drugs improved progression-free survival, but didn’t improve overall survival. In another commentary, I had raised some questions on the choice of control arm, endpoint and quality of data about the olaparib trial when it was published last year. This current talazoparib trial is so similar to the olaparib trial that you can literally replace the word “olaparib” with “talazoparib” in that commentary and all statements will stay valid.

The oncology version of half-full, half-empty glass

The PARP inhibitors olaparib and niraparib are also approved in ovarian cancer based on improvement in progression-free survival (PFS), without improving overall survival (OS). If a drug doesn’t improve OS but improves only PFS, it should also improve quality of life to justify its use. According to two new reports, these drugs do not appear to improve quality of life. The niraparibtrial reported that the patients were able to “maintain” their quality of life during treatment while the olaparib trial reported that olaparib did not have a “significant detrimental effect” on quality of life. I find it remarkable that a drug that isn’t proven to improve survival is lauded for not significantly worsening quality of life … at $10,000 a month!

It is also important to recognize that these drugs were tested as maintenance therapy against placebos. For “maintenance therapies,” as explained in this paper, improving PFS alone is not an important endpoint. That’s why I am also not excited about this new trial of sorafenib maintenance in ovarian cancer. A drug has to be very ineffective to fail to improve even PFS as a maintenance therapy against placebo.
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Barking Up The Wrong Tree: Affordability, Not Cost Growth, Is The Policy Challenge

A recent spate of commentaries on the continuing health spending moderation raise an important policy question:  If the cost curve is well and truly bent, why are we investing so much of our policy energy on bending it further, when the more pressing problem is the declining percentage of Americans that can afford our health system’s astronomical costs?

Health spending the past two reported years (2009 and 2010) have grown in the high 3 percent range, the lowest growth rates since Dwight Eisenhower’s last year in office (1960), five years before Medicare. Medicare’s actuaries have pointed to the recession as a root cause.  Yet even Medicare spending growth has subsided to about 5 percent in 2010, a development hard to attribute to recession since so few Medicare patients have first-dollar cost exposure. This analyst’s extensive industry contacts suggest no spending rebound in 2011 and 2012, despite an aging population and fee-for-service’s pernicious volume-increasing incentives in full force.

Pharmaceutical spending. The two most explosive cost problems of the 1980’s and 1990’s, pharmaceutical spending and imaging — which together now represent about 20 percent of total health spending — are now seeing low single digit growth, and seem likely to remain quiescent.  In the pharma case, the main contributor is the ruinous outflow of branded drugs from patent protection, and the failure to replace them with new protected drugs.  This outflow continues unabated until 2018.  Branded drug prescriptions are shrinking by 5 percent per year, and the only things preventing pharmaceutical sales from actually declining are brand price increases and growth in generics, which now represent almost 80 percent of prescriptions, according to IMS Health.  While specialty drugs (biologicals) remain a concern, those too begin losing patent protection in earnest in the next few years.

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The Latest Big Pharma Scandal

Imagine yourself in front of your computer, looking up information about a drug prescribed by your doctor. Your Internet search tells you that there is a cheaper, maybe even a generic version available, but you have just paid top dollar for the brand name drug. You also learn that another treatment may be safer than the prescription you just filled. Now imagine you discover that your doctor gets paid by the manufacturer to promote the drug to other doctors.

There are various words for this sort of financial transaction, when, say, a radio disk jockey is paid by a recording studio to play a song or a broker is paid to tout a stock — both of which, by the way, are illegal. In medicine it’s called a financial conflict of interest, although “pharmapayola” is in some ways more accurate. It’s perfectly legal, and it’s rampant. In a survey published in the Archives of Internal Medicine in 2010, 28% of physicians reported that they received some kind of payment from a drug company to serve on a speaker’s board, as a consultant, or on an advisory board. Other bennies handed out by companies included free drug samples, tickets to sporting events, meals at five-star restaurants and all-expenses paid trips to medical meetings in nice locales.

As of this year, doctors who accept gifts and payments from drug and device makers will see their names on the web, the result of the 2010 Physician Payment Sunshine Act, one of the most controversial provisions in the health care reform law. Companies will be required to report any gift or payment to a doctor or academic researcher over $10, whether it’s in the form of stock options, speaking fees, box seat tickets, knickknacks for the doctor’s office or travel to a medical conference. Doctors will also be required to disclose payments and gifts.

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