I’ve been working behind the scenes with a very talented group led by Dave Gershon, an over-qualified MD/JD who’s spent time on Wall Street. Dave has putting together an organization called The National Institute for Pharmaco-Economics & Healthcare Policy. The goal of the Institute is to start asking and answering the really hard questions that have been hitherto mostly avoided.

• What pharmaceutical and medical technologies and processes work best in the real world?
• What costly new technologies are justified in terms of savings elsewhere in the system and improvements in health and the economy?
• How can the right therapies at the right time be made available to those who need them?

To answer these questions is to provide a guide to some of the most important questions that will be facing us as we create the health care system for the next ten to thirty years. In my view, saying that we can do everything is not realistic, but saying that we can’t do anything is equally untrue. Anyone reading THCB (or the newspaper) has seen far too many articles about unnecessary care variation, marketing-driven prescribing, and unevenly applied medical technologies.

We can do better and we can do it with integrity. And we can advise decision makers in the public and private sectors how to cooperate on doing the right thing, while maintaining innovation.

That’s the underlying concept of this new Institute, and I encourage you to go take a look at the web site, at http://www.healthcare-economics.org and give me your feedback.

There’s a pretty long article by Malcolm Gladwell in the New Yorker called High Prices in which he essentially places much of the blame for big pharma’s current state on the other actors in the system being too dumb to stop them. To quote his conclusions.

For sellers to behave responsibly, buyers must first behave intelligently. And if we want to create a system where millions of working and elderly Americans don’t have to struggle to pay for prescription drugs that’s also up to us. We could find it in our hearts to provide all Americans with adequate health insurance. It is only by the most spectacular feat of cynicism that our political system’s moral negligence has become the fault of the pharmaceutical industry.

There is a second book out this fall on the prescription-drug crisis, called "Overdosed America", by John Abramson, who teaches at Harvard Medical School. At one point, Abramson discusses a study that he found in a medical journal concluding that the statin Pravachol lowered the risk of stroke in patients with coronary heart disease by nineteen per cent. That sounds like a significant finding, but, as Abramson shows, it isn’t. In the six years of the study, 4.5 per cent of those taking a placebo had a stroke versus 3.7 per cent of those on Pravachol. In the real world, that means that for every thousand people you put on Pravachol you prevent one stroke–which, given how much the drug costs, comes to at least $1.2 million per stroke prevented. On top of that, the study’s participants had an average age of sixty-two and most of them were men. Stroke victims, however, are more likely to be female, and, on average, much older–and the patients older than seventy in the study who were taking Pravachol had more strokes than those who were on a placebo.

Here is a classic case of the kind of thing that bedevils the American health system–dubious findings that, without careful evaluation, have the potential to drive up costs. But whose fault is it? It’s hard to blame Pravachol’s manufacturer, Bristol-Myers Squibb. The studys principal objective was to look at Pravachol’s effectiveness in fighting heart attacks; the company was simply using that patient population to make a secondary observation about strokes. In any case, Bristol-Myers didn’t write up the results. A group of cardiologists from New Zealand and Australia did, and they hardly tried to hide Pravachol’s shortcomings in women and older people. All those data are presented in a large chart on the study’s third page. What’s wrong is the context in which the study’s findings are presented. The abstract at the beginning ought to have been rewritten. The conclusion needs a much clearer explanation of how the findings add to our understanding of stroke prevention. There is no accompanying commentary that points out the extreme cost-ineffectiveness of Pravachol as a stroke medication–and all those are faults of the medical journal’s editorial staff. In the end, the fight to keep drug spending under control is principally a matter of information, of proper communication among everyone who prescribes and pays for and ultimately uses drugs about what works and what doesn’t, and what makes economic sense and what doesn’t–and medical journals play a critical role in this process. As Abramson writes:

When I finished analyzing the article and understood that the title didn’t tell the whole story, that the findings were not statistically significant, and that Pravachol appeared to cause more strokes in the population at greater risk, it felt like a violation of the trust that doctors (including me) place in the research published in respected medical journals.

The journal in which the Pravachol article appeared, incidentally, was The New England Journal of Medicine. And its editor at the time the paper was accepted for publication? Dr. Marcia Angell. Physician, heal thyself.

Now Gladwell may have caught Angell out here, albeit at a remote distance, and I haven’t always been too kind to her on the pages of THCB. But there is a battle going on for the soul of big pharma with one side urging the best pharmaceutical be used at the best time, creating the real information behind that, and accepting that a generic may be more cost-effective than a brand. On the other side is the decision to beef up the sales force, fudge the details of the science at the marketing margins, and financially smother physicians and politicians. The disinterested observer would not incorrect in noticing that whenever big pharma has had the choice to go down the former road, they’ve almost always taken the latter. The Industry Veteran, it may not surprise you to know, has limited time for Caldwell’s analysis:

It’s ostensibly a review of Marcia Angell’s book but it’s actually a New Yorkerized version of the PhRMA boilerplate. His major argument rests on his assertion that volume of drug usage (due to an aging population and greater awareness) is the principal driver of increasing pharmaceutical cost, not unit pricing. The reason this Gladwell fellow is a shill is that he completely ignores the malevolent DTC advertising by the drug companies and their role as the principal provider of continuing therapeutic education for physicians. It is Big Pharma’s propaganda that drives patients and physicians toward the ever more costly, branded me-too’s and away from the vastly cheaper generics.

Gladwell then takes a flying leap into the arms of the Bush ideologues when he defends the me-too’s, claiming that their proliferation drives down prices. Perhaps that obtains in an ideal world or in some Friedmanite wet dream, but in reality the oligopolistic behavior of product competitors in a therapeutic drug category almost never restrains prices.

Next, Gladwell gets all dreamy eyed and rhapsodic over PBMs and how their role in the Bush Medicare scheme, starting in 2006, can restrain prices by pushing people to generics and less costly brands. Were it only so. In his eagerness to exculpate Big Pharma, he completely ignores the fact that they try to subvert the very algorithms and step formulary approaches he suggests through mutli-therapy bundling, volume incentives and rebates that require the exclusion of competitors.

Gladwell then finishes with a minor anecdote, claiming that the sleight-of-hand conclusions that appeared in a journal article on Pravachol were not the fault of Bristol-Myers Squibb. Instead he blames the investigators and the journal’s editor: Marcia Angell. Someone’s got to take this guy out back and beat the crap out of him.

In general I agree with The Veteran although probably not about the crap beaten out of him part. There’s almost no evidence to show that multiple "me-too" drugs in a class lower the overall costs. Lipitor is much costlier than Crestor, and bang for the buck wise, much much much costlier than Mevacor which is now generic. So which one is the most prescribed drug? I don’t have to tell you. PBMs have been co-opted by pharmas and made far too much of their money by playing favorites among brand-managers, with their rebates from manufacturers exceeding their income from medical management. Finally, while the NEJM article might have been in dispute, that’s not how doctors really get their news. I’m sure that the BMS detail babes gave a fair and balanced discussion of what was in effect quasi off-label use for Pravachol in the few minutes they got in front of a doctor, but let’s face it, that session rather than academic probing of journal articles is where doctors get their information, and what drives the prescribing decisions.

But, and I’m sorry to harken back to this, I think that there is both a middle ground here, and the inevitability that pharma must change in and of itself, whether the health care purcasing market demands it or not. Atlas, who is on the other end of the political spectrum from The Veteran comes to much the same conclusion in this article in which he bashes Angell and all those socialists, but more importantly notes that the party can’t go on forever.

Marcia Angell and her Harvard/Martha’s Vineyard/New England Journal of Medicine fellow travelers live in a worker’s paradise that is in permanent denial of the evident failures of socialism and communism. For years, they have been pushing for a national healthcare system to no avail, because, thankfully, most Americans are not fooled by their well meaning naivete into believing that there is a free lunch. We all wish we could get something for nothing but we can’t so we work. This sort of commonsense eludes the overeducated hothouse flowers who promulgate such wishful thinking on the unsuspecting electorate.

All that having been said, is there room for improvement in the pharmaceutical business? You bet. And it will come soon. The next decade will be then Gotterdamerung for the deities of big pharma. It will not kill them (hopefully) so it will make them stronger. Bye bye DTC. Bye bye salesforce. Bye bye CME. Bye bye sampling. Hello efficient, effective marketing like real businesses do–direct marketing, business to business advertising,and al the good old fashioned stuff that has been replaced by six figure deliverymen bearing so much free product that the typical group practice sample cabinet is better stocked than most Wal Mart pharmacies.

The recent Rx marketing orgy isn’t sustainable and nobody knows that better than its perpetrators. Somebody has to blow the whistle and fill the penalty box, and it will be surely be Kerry if he’s wearing the striped shirt. But even a Bush II administration will be giving big pharma a buzz cut, although they may use a scissors instead of a razor.

So it’s a fair bet that many of the bad excesses will be driven out by a combination of regulation and market forces. I agree here too, which yet again puts me in the wishy-washy political middle ground! And at that point the system (hopefully prodded by some sensible bodies acting something like the UK’s NICE) will begin to determine what drugs really work at what cost overall, and those with the desire to play the "full cost of care" argument within the pharmas will take over from those who’ve been running the "marketing orgy".