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Funding R&D: High Prices, Overuse A Failed Strategy

May 14, 2012
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Much has been written about the travails of the pharmaceutical industry. Generic competition is reducing profitability as leading blockbuster drugs like Pfizer’s Lipitor lose patent protection. Biotech generic competition is on the horizon.

The industry’s sleazier marketing techniques are in decline. Physicians are turning their backs on fancy dinners and sham consulting contracts, and not just because the companies were forced to fork over billions of dollars to settle government anti-kickback suits. Starting in 2013, patients of every physician who takes money from a drug or medical device company will be able to find that fact and the amount in a publicly available internet database, courtesy of the Affordable Care Act, a.k.a. Obamacare.

Meanwhile, the udders on the cash cows that for decades made the industry the most profitable in America are running dry. The insurers who manage Medicare and Medicaid’s drug plans are watching every penny. They are forcing generic substitution wherever possible and will soon have a growing body of comparative effectiveness research to fend off charges they are rationing drugs when they turn down payment for expensive new products that are no better than the ones that are already on the market.

Over in the firms’ R&D departments, the pipeline for blockbuster products – defined as drugs that generate over a billion dollars a year – is running dry. To justify their huge research infrastructures, companies are now charging $100,000 a year and more for new drugs, which often deliver only a marginal improvement in health, especially in cancer treatments.  Industry officials publicly fret about where they are going to find revenue to develop the next generation of cures.

Last week’s news from the frontiers of medical science highlighted the problems facing an industry tripping over its existing business model, which funds R&D by getting more and more people to use its older yet still on-patent drugs. Read more »

Consumers Lose in Latest FDA User Fee Bill; COI Restraints Disappear

May 12, 2012
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Over the angry protests of consumer groups, Congress is moving rapidly – and in bipartisan fashion – to give drug and medical device companies an easier path to Food and Drug Administration approval for some products in exchange for sharply higher user fees to fund the agency.

The five-year user fee reauthorization bill, which includes new fees on companies working to bring generic drugs and biologic products to market, passed the House Energy and Commerce Committee by a unanimous 46-0 vote Thursday. The legislation, which previously passed the Senate Health Education Labor and Pensions committee, will raise over $3 billion from industry over the next five years – about twice as much as was raised over the last five years.

But the fees come with a price: In sections of the bill that deal with regulations at the agency, Congress plans to give companies working on drugs for life-threatening conditions an easier pathway to accelerated approval, a classification created in the early 1990s during the AIDS crisis. Accelerated approval, which is based on so-called surrogate markers that are likely to lead to better outcomes, postpones definitive clinical trials proving effectiveness until after the drug hits the market.

“It allows smaller trials with surrogate markers which may or may not affect the ultimate outcome,” said Michael Carome, deputy director of Public Citizen’s Health Research Group, the nation’s leading drug safety group. “They’re pushing the envelope to gee the FDA to use the process more and more.” Read more »

Food Stamps or Guns — Which Do You Think the Public Prefers?

May 12, 2012
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House Republicans last week passed legislation that would slash billions of dollars from domestic programs like food stamps and health care to free up money for defense. The goal, driven by the Republican party-wide vow to never raise taxes, was to avoid the mandatory $55 billion in cuts to military spending that are slated for early next year as part of sequestration.

Since the GOP plan is given no chance of passage in the Democratically-controlled Senate, the Republican move raises an interesting question. Do Speaker John Boehner, R-Oh., and Budget Committee chairman Paul Ryan, R-Mich., think shifting money from domestic programs to the military is what the public wants at this moment in the nation’s history?

The “no new taxes” part of the Republican Party platform, when isolated from other issues, remains popular with voters. But the latest opinion surveys suggest the broad public is ready for a shift in spending priorities after a decade of war and fast-rising military spending, which more than doubled in the past decade. Read more »

Patent Pools Pushed to Make Drugs Affordable in Developing World

May 8, 2012
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Amid a growing crisis in financing treatments for AIDS, tuberculosis and malaria in the developing world, an arm of the World Health Organization will meet in Geneva later this month to consider alternative ways of producing lower-cost drugs, vaccines and diagnostic tools to fight the those diseases in poor countries.

A background report issued last month by a working group of the World Health Assembly called for establishing a global research and development treaty that would beef up research into cures for so-called neglected tropical diseases. It also called for the treaty to create mechanisms for ensuring the next generation of drugs for fighting those diseases could be produced by generic firms at prices barely above the cost of manufacturing.

In calling for governments to double their investment in research and development, the report identified not just the “big three” of AIDS, tuberculosis and malaria, which have received significant research attention over the past decade, but also the so-called “neglected diseases” like Chagas or leishmaniasis, which kill or debilitate millions of Africans, Latin Americans and Asians annually. The intellectual property created by the new global research fund would be made available through a patent pool to any company or state-run firm willing to produce the drugs on a cost-plus basis.

The idea is already gaining traction at some hard-pressed international institutions, which are seeing their funding cut by U.S. and European nations because of their long-term budget crises. Read more »

Navigating Payment for High-Priced Drugs

May 7, 2012
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By Michelle Andrews (Kaiser Health News):

When Kathi Ryness’s multiple sclerosis worsened in 2000, she began taking Avonex, a drug that helps slow the progression of the disease and reduces the number of relapses. At the time, her health plan covered the drug in full.

But in 2009, she and her husband, Gary, were forced to switch plans. Under their new coverage, the Alamo, Calif., couple owed $660 every four weeks for the weekly Avonex injections, 30 percent of the $2,200 cost. Within a year, the cost went up again, leaving Kathi, who is now 62, and Gary, 66, on the hook for $800 every four weeks.

The coinsurance was killing them. “It was a choice between that and eating,” says Gary Ryness.

Working with an insurance consultant, they switched from a preferred provider organization to a health maintenance organization that didn’t have coinsurance charges for self-injectable drugs such as Avonex. Now, they pay nothing for the drug.

“Everybody has different ways of classifying these drugs,” Gary says.

In coming years, experts say, more people will have to navigate the confusing and expensive terrain of such “specialty” medications.

While most drugs are made from chemicals and can have generic as well as brand-name versions, a typical specialty drug is biologic — that is, derived from living organisms — and has no substitute. In addition to treating MS, these drugs are used for such complex, serious conditions as cancer, rheumatoid arthritis and Crohn’s disease. Growth in spending on specialty drugs is far outpacing spending on traditional drugs, and many new ones are in the pipeline.

“In the next five to 10 years, the consensus of all the experts we spoke to was that a much larger proportion of consumers will be eligible for some kind of specialty drug,” says Ha Tu, a senior researcher at the Center for Studying Health System Change. She was the lead author on a recent report about managing spending on specialty drugs.

Health plans’ spending for each patient using these drugs often exceeds $1,200 per month, according to the center’s report. Although they account for just 1 percent of prescriptions, specialty drugs make up 17 percent of drug spending, according to IMS Health, a health-care information and services company.

Employers that provide their workers with health insurance are struggling with how to manage these costs. Read more »

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