Pharmaceuticals
Monday, July 7, 2008Governments to Dictate Drug Development?By John LaPlanteCategories: Pharmaceuticals, Single-Payer FolliesIs this the direction of health care? GlaxoSmithKline, a leading pharmaceutical company, says it will ask the British government to look into its product pipeline and give its opinion on what products should be developed next. Why would Glaxo do something like this? Because the National Health Service is such a large purchaser of the company's products. Today's Wall Street Journal has more (subscriber link), suggesting that this step is just the first: "Knowing the preferences of state health-care systems, which pay for the vast majority of all drugs sold in Europe, could make a big difference." Novartis has already taken similar steps. The actions of the companies are understandable. Any smart business wants to know what its customers want. But when the only, or even chief customer is government, health is put at risk. How so? In brief, it concentrates economic and scientific energies in one organization, potentially shutting down progress that can come from having multiple sources of intellectual energy.
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Thursday, July 3, 2008The Upside for Health of Population GrowthBy John LaPlanteCategories: PharmaceuticalsWill the rest of the world kill us and take our jobs? Back in the 1970s--and in some quarters still today--the great concern was the "population bomb" that would destroy the human race and the population to boot. A more current source of anxiety is the rapid economic growth of China and to a lesser extent, India, and trade with those countries. Such concerns have even gone down to the state level. (The Mackinac Center for Public Policy addressed such concerns a few years ago. Michigan is especially prone to anti-trade populism.) The economic benefits of trade and economic growth elsewhere are well known. But Alexander Tabarrok of the Oakland-based Independent Institute, sees health benefits as well. In short, rising prosperity in China and India offers a larger market to support increased pharmaceutical development. It also offers the world more intellectual capital with which to find medical breakthroughs. He says "Amazingly, there are only about 6 million scientists and engineers in the entire world, nearly a quarter of whom are in the U.S. Poverty means that millions of potentially world-class scientists today spend their lives trying to eke out a subsistence living, rather than leading mankind’s charge into the future. But if the world as a whole were as wealthy as the U.S. and were devoting the same share of population to research and development, there would be more than five times as many scientists and engineers worldwide."
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Monday, June 30, 2008The Private Sector and Drug DevelopmentBy Grace-Marie TurnerCategories: PharmaceuticalsIs the private sector or government more important in bringing new drugs to market?Ben Zycher and colleagues investigated whether new and improved medicines are the fruit of research financed or conducted by public agencies, the National Institutes of Health foremost among them, or by the pharmaceutical companies that produce and market the drugs. The authors investigated 35 important drugs currently being prescribed and found that the scientific contributions of the private sector were crucial for the discovery and/or development of virtually all of them. Private-sector research was responsible for central advances in basic science for seven, in applied science for 34, and in the development of drugs yielding improved clinical performance or manufacturing processes for 28. In short, all or almost all of the drugs and drug classes examined in this study would not have been developed -- or their development would have been delayed significantly -- in the absence of the scientific or technical contributions of the pharmaceutical firms.
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Friday, June 20, 2008New York's Discount Prescription Drug Plan: Medicaid Hammer With A Twist?Have Empire State Pols Learned Nothing From the Failure of Maine Rx? By John R. GrahamCategories: Medicaid, New York, PharmaceuticalsA bill to provide discounts on prescription drugs to low-income New Yorkers recently passed the Assembly and has moved over to the Senate. A03848 seeks to give the state the power to "negotiate" discounts for prescription drugs for Empire Staters who earn up to 350% of the Federal Poverty Level, but are not eligible for Medicaid or other programs. Although the bill initially appears to reflect lessons learned from failures in other states, it has not quite solved one problem. When a drug maker provides a discount to a private patient, it must seek and receive a waiver from the federal Centers for Medicare & Medicaid Services (CMS), so that the discount is exempted from CMS' "best price" or "most favored customer" rule. If not, CMS can use the discount to ratchet down prices that government programs pay. Because government programs are such huge buyers of prescription drugs, their forcing overly aggressive discounts results in higher prices in the private market. Obviously, this can spiral out of control, as I have described elsewhere (see pp. 9-10). Apparently recognizing this, A03848 gives the state the authority to seek a waiver from CMS for this new program. Unfortunately, "seek" does not always mean "get", and the New York discount plan would be able to start before it gets such a waiver - if ever. Furthermore, the NY legislation comes very close to swinging the so-called "Medicaid hammer", a tactic that has failed in Maine. Basically, the hammer is the state's threat to kick a drug maker out of Medicaid if it does not play along with the plan to discount meds for the non-Medicaid eligibles. A03848 gives the state the power to "seek supplemental rebates from manufacturers consistent with those rebates provided to the Medicaid program for drugs on the Preferred Drug List". This bill reminded me of Maine Rx Plus, a failed program that I last visited in 2005, when I wrote a paper on two California ballot initiatives, one of which would have replicated Maine Rx Plus' government price-fixing. At the time, Maine Rx Plus had stumbled through years of lawsuits and very few pharmacies were participating. Back in 2005, I thought Maine Rx Plus would continue to struggle. Sure enough, it looks like it is still in nowheresville. Its website has the same "fact sheet" that it did when I wrote my paper in 2005! Is this where A03848 will take New York? There is an alternative, about which I also wrote in my previous analysis: Ohio's Best Rx, which relied on voluntary collaboration with drug makers and attracted over 90% of Ohio's pharmacies to participate. I figured Ohio's Best Rx would prove more attractive to patients, and it looks like that's the case. Ohio's Best Rx website is up to date, with very detailed annual, quarterly, and monthly reports. The latest announces that the program has enrolled over 360,000 people since January 2005. I hope, for the sake of New Yorkers who need prescription drugs, that the Empire State's politicians will choose the path of co-operation rather than conflict.
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Thursday, June 19, 2008Does Families USA Know What's Up in Its Own Backyard?Ranks states by NIH funding while condemning pharmaceutical investment By John R. GrahamCategories: PharmaceuticalsFamilies USA seems to be really polishing up its business of putting out publications that rank states according to dubious criteria. They're coming fast and furious. This latest one is a real howler - but for what it ignores, not what it measures. In Your Own Backyard purports to measure the economic impact of National Institutes of Health (NIH) funding in each state. It notes that NIH funding (which comes via Congress) has been pretty flat and losing pace to inflation since 2003, and argues that an immediate increase of 6.6% would get the NIH back on track to full funding. Families USA condemns the federal government for not increasing NIH funding according to Families USA's preferences, and uses the U.S. Department of Labor's RIMS II model to estimate the "multiplier" for NIH grantmaking in each state. Very simply put, "multiplier" refers to the fact that if you spend money in an area, the recipients who earn it will then spend it themselves, etc. Overall, Families USA estimates that NIH grants multiply by a factor greater than two. That is, $23 billion of grants, nationwide, generated almost $51 billion of business activity last year. So far, so good: I don't know many folks who would advocate complete withdrawal from government funding of scientific R&D. (Well, I know of at least one, an English scientist named Terence Kealey who wrote an impressive libertarian book, The Economic Laws of Scientific Research, which argued exactly that.) Families USA demands a funding increase of $1.5 billion (6.6%), which will result in new business activity of over $3 billion. Well, OK, but Families USA also has the gall to point out that much of the new business activity and employment would be in the biotech industry (pp. 12-13). Meanwhile, Families USA maintains an entire collection of anti-pharma screeds on a special webpage. (The title of one paper, The Choice: Health Care for People or Drug Industry Profits, gives you the gist.) So, while Families USA thinks it's ok for the government to fund projects that give rise to biotech activity, it doesn't think it's OK for the biotech entrepreneurs who actually invent something to profit from their success! If Families USA was concerned with inadequate NIH funding, it might have looked around to see who else is funding scientific R&D. According to PhRMA (link is in PDF), the trade association for the brand-name pharmaceutical industry, drugmakers invested $59 billion in R&D in 2007, up from $48 billion in 2004. That's an annual increase of 7% over three years, far greater than the rate of inflation. So, investors are still willing to put their savings at risk in pharmaceutical enterprises, despite attacks by Families USA and fellow travelers. I am confident the increased jobs, which Families USA ascribes to NIH funding, could also be credited to the pharmaceutical companies, which invest almost three times as much in R&D as the NIH does. So, Families USA, how about calculating that multiplier?
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Wednesday, June 18, 2008Let Go of Your Hats: A Good Health Bill Will Not Pass In CaliforniaBill to Allow Educational Mailings to Patients Killed Stone Dead By John R. GrahamCategories: California, PharmaceuticalsHas it been only a few days since I advised readers to "hold on to your hats: a good health bill might actually pass in California"? Although it got through the Senate at the end of May, the Assembly Health Committee killed it unanimously. My previous post responded to a critical examination of the bill by David Lazarus of the Los Angeles Times. SB-1096 would have allowed pharmacies to perodically send mailings to patients, reminding them about their medicines. As Mr. Lazarus pointed out, this would actually be funded by the brand-name drug makers, who would recruit the mailing company and pay the costs. Needless to say, this is what disturbed the legislators and people who somehow think that it is an invasion of privacy for drug makers to know who is using their products - especiallly because the law provided an "opt out" rather than an "opt in." Mr. Lazarus celebrated the bill's defeat in today's column, quoting Republican Assemblyman Alan Nakanishi, MD, as favoring "opt in"; but Democratic Assemblywoman Mary Salas dismissing any bill "about opening the door for the pharmaceuticals. The pharmaceuticals want to be able to communicate directly with patients." Well, ain't that a horrible crime! I suppose it's true that patients using the most profitable drugs will get the most frequent and convincing "reminders" in the mail, as claimed by Jeff Krinsk, a San Diego attorney with a business interest in stopping the bill. But so what? As I discussed in the previous post, non-adherence to prescription therapy is rampant, and if the profit motive will increase adherence, so much the better. And what about those politicians who are upset that drug makers advertise directly to consumers via TV and print ads? Wouldn't they be happier to see more targetted communications? I spoke the other day with a physician who strongly opposed the bill, and is no doubt cheering its defeat. He was concerned about the doctor-patient relationship. Well, fair enough, but if the physician is treating the patient properly, why is he afraid of a pharmacy mailing a letter? Actually, most doctors I know shun responsibility for what patients do, which is appropriate because doctors don't and can't control patients' behavior once they've left the office. Plus, we are talking about information here, and it's not obvious to me that the information, morally, is the sole property of the doctor and/or patient and/or pharmacy. Are they really telling us that the firm which put its investors' capital at risk to create this intellectual property should be uniquely forbidden by the state from knowing who is using its products? And what about post-marketing surveillance - observing and measuring side effects of a new medicine that had not been detected in pre-approval trials? That "process" (and I use the term very loosely) is a mess (largely due to inadequate incentives), and it seems to me that the drug makers could be in a better situation to address this, if they had better information about how their medicines were used in the population. On the other hand, patients do have a right to privacy, and I fear that if they are forced to "opt out," pharmacies induced by drug makers to keep them "opted in" to mailings will not be overly forthcoming about the choice to opt out. Perhaps the law could allow a pharmacy or drug maker to require a deliberate "opt in" or "opt out" before dispensing a prescription. Of course, that might have the unintended consequence of unnecessary bureaucracy and patients refusing to make either choice, so not getting their meds. Perhaps there is no perfect answer. What else is new?
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Sunday, June 15, 2008No Free Drug Samples?New Mexico hospital kicks pharmaceutical reps out By Paul GessingCategories: New Mexico, PharmaceuticalsAccording to a story in this week's Albuquerque Alibi, UNM's Health Sciences Center, which includes UNM Hospital and the medical school, has adopted new restrictions to eliminate drug advertising in the university's medical buildings. While those who see drug companies as evil subversives working to snooker doctors and their patients into purchasing their latest and greatest drug, it would seem that this is yet another effort by a university to stifle free speech. After all, who is going to tell doctors what new drugs and treatment possibilities are out there? Are they supposed to hunt these treatments down on the Internet? How about patients? Are drug companies' advertisements (also under attack by those who dislike the pharmaceuticals industry) now the only way they can find out about new treatments? The fact is that if we had a health care system that functioned more like a market with consumers able to price various options (using a consumer-directed mechanism like an HSA) rather than being shielded from them by health insurance or government programs, the so-called "problem" with drug advertising would largely disappear. After all, if it is patients who decide whether to use a generic drug or the latest name brand drug, they should be able to use it since they are paying for it. In fact, opponents of drug advertising justify their position due to the higher cost associated with name-brand drugs.
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Wednesday, June 11, 2008Hold on to Your Hats: A Good Health Bill Might Actually Pass in CaliforniaSB 1096 would improve patient adherence to medication By John R. GrahamCategories: California, PharmaceuticalsNew bills in the New York legislature are designed to prevent inducements to switch prescriptions. But what about a bill to improve patients' likelihood of sticking with the therapy they were first prescribed? According to a recent literature review in the Archives of Internal Medicine, 20% to 50% of chronically ill patients do not adhere to their prescribed medical therapy. You would think that the government would want to get out of the way of anything that might improve that. So, California state senator Ron Calderon (D-Montebello) has introduced a bill, SB 1096, that would allow pharmacies to use third parties (bulk mailers) to mail information to patients that would remind them to take their medications appropriately. To allay privacy worries, the information would go no farther than that. Sounds like a no-brainer, right? Wrong: David Lazarus of the Los Angeles Times reports concerns that the real pushers of this bill are brand-name drugmakers, who would actually pay the pharmacies to do this. Why? According to Mr. Lazarus, this would short-circuit competing drugmakers' attempts to switch patients to their medicines. So, if you are an innovative drugmaker or pharmacy benefits manager (PBM), you are increasingly out of luck. The states don't want you to induce patients to switch from a competing medicine, but they also don't want you to induce patients to stick with your medicine. I guess patients and doctors are just supposed to face "inducements" from the state itself! But generic drugmakers and pharmacies are having a grand old time with consumer-driven health care: Safeway just announced it's following its rivals' offers of $4 prescriptions for 30-day supplies of generic meds. Brand-name drugmakers cannot compete on price like this. They have invested billions in inventing their medicines, and they can only compete on information. SB 1096 will improve patient communications, adherence to therapy, and maybe even reduce health costs. I can't believe it's about to happen, but the California legislature might actually pass one good piece of health care legislation this year!
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Tuesday, June 10, 2008I'm From the Government and ...New York State to Regulate continuing ed, PBMs By John LaPlanteCategories: New York, PharmaceuticalsYesterday I noted that two bills (A.10877 and A.7468) working their way through the New York Assembly are feel-good pieces of legislation that could pose mischief for the market-based advancement of science. If you liked those, you'll love another one, A.11187 (summary and text). Among its provisions:
The Business Council of New York says that the bill "would have a significant, adverse impact on the ability of these manufacturers to market their goods and services, as well as on clinical research in New York." For one thing, it effectively establishes one particular way of paying participants for their help with research trials, which could reduce the number of such projects. There's a lot of language in the bill that attempts to sell its PBM provisions as being in the great interest of health plans, and eventually patients. But it's all so much speculation, along the lines of "How many angels can dance on the head of a pin?" What's a fair price? Whatever two parties agree to. To borrow from the academic discourse of centuries ago, it also reminds me of the followers of the astronomer Ptolemy as they added rule after rule and hypothesis after hypothesis in an attempt to prop up a failing system. In this case, each political distortion of health care causes outrage, which is addressed by yet more distortions.
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Monday, June 9, 2008New York to Drug Companies: Drop DeadBy John LaPlanteCategories: New York, PharmaceuticalsThe State of New York is considering legislation (A. 7468--summary; text) requiring any drug company that gives a doctor or other health care practitioner a gift worth $75 or more to disclose that fact to the Department of Health. Sounds OK, right? I mean, who wants their doctor to be bought off by kick backs? Look into the specifics, and you’ll find that it’s a roadmap for getting state government into the business of developing prescription drugs. It requires companies to tell their business secrets (that is, marketing plans and budgets) to the state department of health. The "Justification" section of the official summary reveals the weakness of the bill. It's based on the old saw: drug spending is going up, that's a problem, and marketing (a normal function of any other product) to influential people must be a problem, which regulation can solve. But drug spending can be going up for a number of legitimate reasons: the population is getting older (so it may need more drugs); it’s getting wealthier (so it’s more willing to spend in the pursuit of cures); and, well, those very expensive costs of developing a new drug must be recouped. I had to chuckle when I read that one reason for the bill is that industry spends money on "direct marketing to health care providers." Last time I heard about it, the problem was all those direct-to-consumer ads. Maybe we're supposed to wait for wise, benevolent and omniscient public officials to tell us what drugs to use and when? (Oops. I think we're already going to try that, under the guise of "evidence-based medicine," though that's another post.) The Business Council of New York offers some other reasons for concern. It cites impaired communication between pharmaceutical companies and doctors--which helps doctors know the benefits and limits of various new drugs--and says that the U.S. Department of Health and Human Services already provides guidelines for such communications.
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