This morning I lost my cool somewhat and called into the local KQED Forum radio show, where they were discussing reimportation. One of the guests, Stephen Chang, a biotech CEO and head of a new group called Californians United for Research, Economic Development and Saving Lives (which I’d never heard of and that doesn’t seem to have a web site) was making my blood boil.

He claimed that he had patients in his group and that they opposed reimportation on safety grounds. I congratulated him on getting patient support for this canard as poll after poll shows 80% of seniors are massively opposed to the ban on reimportation. He then said that the FDA is non-political. Yet the FDA could very easily certify pharmacies in Canada or in the US that import drugs from Europe. The only thing stopping them is the absence of instruction from their political bosses, which might actually arrive soon anyway.

OK. Then after I spoke — and included the share of revenue of pharma companies given to sales and marketing (c. 30%), R&D (11%) and profits (c.18%) in my talk — Chang went on a long rant about the fact that R&D was really expensive and cost “hundreds of millions of dollars”. Actually the real number is tens of billions of dollars, but he never referred to the percentages of revenue pharma spends on what –it was just empty rhetoric. There was a similarly uninforming letter from the President of PhRMA in the LA Times last week. Chang’s opponent on the show, Jerry Flanagan, a lefty consumer advocate from the Foundation for Taxpayer and Consumer Rights, was overly kind to him. Jerry knew his stuff but hardly knew how to answer the bombast coming from Chang–I think he was looking for something more traditional to get his teeth into. He did though quote some GAO studies on how much current R&D amounts are overstated.

Big pharma was best represented on the show by a caller who said that he wanted pharma margins to stay high and that he thought foreigners should pay higher prices and Americans should pay lower prices. Well at least there’s the basis of a rational argument. He also pointed out that pharma stock prices have fallen in the last few years. True enough, but that’s because of the relative lack of success of all that R&D in producing replacement blockbusters for those going off patent–sorry, Schering!

This all drives me mad. I don’t mean to be critical of any one individual, but big pharma is in real trouble over this reimportation issue and has to get its PR into shape. Pharma innovation is responsible for curing many previously debilitating and fatal diseases and has reduced other health care costs. But no one, including Chang, even mentioned that on the show. (Note: not true, on relistening, I did!) So I’m not a basher of the industry but I do think it has to take a long hard look at itself, and the more I see of its current behavior the more self-destructive it seems to be–especially given the political vulnerabilities of the Republicans in Florida and Pennsylvania.

Somehow big pharma has to in the short-term get better PR out there — being at war with its main customers (the elderly) is no place to stay. Longer term, big pharma has to work out how to reorganize itself so that it’s spending less on marketing (but doing it more efficiently), spending the same or more on R&D and still maintaining decent margins. That’s a real challenge, and for the good of itself and the greater good too, it needs to get working on it.

UPDATE: The audio archive of the show is here. My dulcet tones appear about halfway in. You’ll notice that I was put off from my main point by something Stephen Chang said while I was on hold, and if you’re very attentive you’ll notice that I’m stalling while I try to remember what that main point was! (It was that pharmas could maintain margins by reducing marketing spending)

Meanwhile to add fuel to this fire, a group of pharmacists are suing the drug companies for overcharging them–while they claim they are losing business to pharmacies in Canada and Mexico.

It’s worth having a quick look at this USA Today article about the increasing trend of clinics and health systems keeping drug reps away from their doctors. For example:

The University of Wisconsin and their clinics in Madison also have developed a common disciplinary database. Drug representatives with three violations — for offenses such as giving out food or loitering outside doctors’ lounges — may lose their hospital access across the city for six months.

In my day “loitering with intent” meant something altogether different. But there’s still no question that physicians get most of their information about new drugs from their detail reps, and counter-detailing is still in its infancy. But for most of America, unlike those systems who are at risk for their drug budget, there is no incentive for physicians to keep out the drug reps. And samples are a key part of the reason why drug reps are in general welcome.

However, the back-up of detail reps queuing to get into the physicians’ office will have to be cleared up. Pharma is spending too much on its sales teams and with a combination of using technology for remote detailing, and better understanding of targeting of sales reps, expect the number of drug reps to be reduced over time. But bear in mind that the number of detail reps has quadrupled over the last 10 years, as everyone has fought to catch up with Pfizer. Don’t expect a repeat of that.

Cox-2 inhibitors (Merck’s Vioxx and Pfizer’s Celebrex being the leading products) were introduced a few years back as being as effcective as older painkillers but without the stomach problems that affect about 30% of aspirin, ibuprofen or NSAID users. The most common ailment these drugs are targeted at is arthritis, but any long term low-grade pain is a candidate. Of course, they have been widely prescribed and used by people who either hadn’t been proved to have stomach problems on non-Cox-2 painkillers or are taking aspirin anyway. Additionally Celebrex has been alleged to actually not be as helpful for those with GI problems as it has been marketed to be. None of that news, almost all based on studies by PBM Express Scripts, seemed to affect the sales of Cox-2 inhibitors much, and it reamins a $6bn market.

But today a study from Kaiser Permante has a study out based on its own members data that suggests that Vioxx creates a three-fold risk of heart attacks compared to other NSAIDs and Celebrex. Merck’s stock price is down nearly 2% as a consequence, as presumably if this study gets come currency with physicians they might start switching patients to Celebrex or one of the newer Cox-2’s coming on the market later this year. If Merck is lucky those Cox-2s will include Arcoxia, Meck’s replacement for Vioxx which is undergoing FDA approval here, but is already on sale in Canada and Europe.

New contributor Gregory D. Pawelski writes for THCB about the changes in oncology and chemotherapy reimbursement. TCHB has posted several articles about those changes, notably from regular contributor Matt Quinn. Gregory writes from a slightly different viewpoint with considerable passion. As he wrote in this heartfelt article on the Johns Hopkins site, he nursed his wife through the agony of chemotherapy, and has since researched into chemotherapy and cancer treatment in depth. Passionate he may be, but Gregory has some important things to say that are well worth considering:

Some irate oncologists are angry and hope to turn patients into lobbyists, warning patients that they may face a return to hospitalization. And yes, some of them are threatening to refuse treating Medicare patients altogether. These kinds of threats are abhorrent! Even Medicare officials have denounced some of these oncologists as alarmist and untrue.

Some of them are telling their patients that because of the new reimbursement system, patients might have to “switch to older medications”. That may not be a bad idea! Presently used chemotherapy drugs have a high rate of failure, according to January 10, 2002 issue of the New England Journal of Medicine. Oncologists at a single institution may obtain a 40% – 50% response rate in a tightly controlled study, but when these same chemotherapy drugs are administered in a real world setting, the response rates decline to only 17% – 27%.

Real world setting after real world setting has been showing that presently used chemotherapy drugs have failed to show clinical advantage over standard (older, less toxic drugs) regimens. According to a multicentre Southwest Oncology Group study, there is no significant difference in survival, response rates or quality of life between standard (cheaper) regimen and dose-intense (more expensive) treatment arms.

The results of years of clinical trials on patient populations are considered enough indication on how an individual will respond. The percentage of patients that must respond to a drug before it is approved varies from as low as 20% to as high as 80%, depending on the type of cancer. Thereafter it is used routinely for all patients with the same form of cancer, though unfortunately a drug that helps one person does not necessarily mean that it will help all people with the same diagnosis.

One of the commonest methods to test a new drug is not against an already effective treatment but against a placebo. However, what matters most to patients is not whether a company’s drug is better than nothing, but whether it is better than established treatments. European regulators already require drug makers to compare new drugs with older ones (comparative drug testing), while the FDA simply asks that drug makers compare new drugs with placebos. When you look at the results, there is almost never a difference between active treatments.

Oncologists long avoided cuts forced on other specialists because the government allowed them to bill Medicare for cancer drugs in amounts that often far exceeded their actual costs. The system was widely criticized and the General Accounting Office found that doctors were able to get discounts as high as 86% on some drugs.

Even the American Society of Clinical Oncologists say, “we did not like the old system, even the perception that it set up inappropriate incentives we did not support.” Some studies suggest that American oncologists overuse cancer drugs, particularly in the last months of patients’ lives after the patients have failed to respond to treatment. Advocates for cancer patients say that Medicare’s reimbursement system encouraged overtreatment.

The January 1, 2001 issue of the Journal of Clinical Oncology revealed that in 1999 the average annual income of oncologists in private practice was $253,000. By comparison, oncologists in academic medicine earned “only” $142,000. Where does the bulk of a private oncologist’s income come from? The Journal of the National Cancer Institute (JNCI) commented that “private-practice oncologists typically derive two-thirds of their income from selling chemotherapy” (JNCI 2001;93:491).

An editorial from Dr. Larry Weisenthal, one of the very first medical oncologists to call attention to this issue at a Medicare Reimbursement Executive Committee meeting held in Baltimore, Maryland on December 8, 1999 states, “the new law was simply concerned about the indisputable fact that the ‘structure’ of the old reimbursement system was indefensible. It rewarded oncologists for administering chemotherapy. It did not reward oncologists for spending a half hour explaining to the patient why she/he is more likely to be harmed by chemotherapy than to be helped by it.”

The new system still has major flaws, in that it continues to provide incentives to administer chemotherapy, in the same way that surgeons have a financial incentive to recommend surgery. Additionally, it is a certainty that there will be large differences between the profit margins of administering different drugs, providing continuing incentives to base drug selection on profit margin. However, the new system is clearly an improvement from the standpoint of cancer patients, taxpayers, and advocates of basing drug selection on individual tumor biology, rather than on a least common denominator approach which invites conflict-of-interest medical decision-making.”

Office-based oncology practices derive most of their revenues from treating patients with chemotherapy. The practices are compensated both for delivering the drugs and for the drugs themselves. The Journal of the National Cancer Institute (JNCI) states that private-practice oncologists typically derive two-thirds of their income from selling chemotherapy.

Reimbursement of any kind is often lacking with oral-dose drugs because the patient purchases them directly. The oncologist simply writes a prescription and the patient goes to a pharmacy and obtains the product. There are no administration fees for office-based oncology practices unless they also dispense the drugs, because there is no involvement in their purchase.

The practice will realize almost no revenue from those patients who are treated entirely with oral-dose agents. The core activity in medical oncology is the provision of infusional chemotherapy. The entire structure of office-based practices revolves around this activity and is what distinguishes medical oncology from most other specialties.

Oral-dose chemotherapeutic agents are easy to use and offer the promise of less frequent visits to the physician’s office and their infusion rooms. This promise is not trivial, especially as we have come to realize that many forms of cancer may be managed with these drugs, especially when they offer the equivalent outcome as intravenous drugs.

The fact that medical oncologists receive no reimbursement for providing oral-dose therapy to patients had been the principal barrier to the availability of oral-dose protocol. The advent of oral agents ultimately means that medical oncology will need to change its identity, prior to the chemotherapy drug concession.

They will be reimbursed for providing evaluation and management services, making referrals for diagnostic testing, radiation therapy, surgery and other procedures as necessary, and offer any other support needed to reduce patient morbidity and extend patient survival.

Because oral-dose drugs ultimately deliver on their promise of combining equally efficacious therapy with better adverse event profiles and easier administration, they will rightfully gain their appropriate share of the marketplace, again.