Transcript NHI & the Drug Industry - Physicians for a National Health Program

National Health Insurance
and the Drug Industry
why and How Should Single Payer
Advocates be Critical of Drug Industry
Gordy Schiff MD
Attending Physician Cook County Hospital
Professor of Medicine Rush Medical College
Associate Director Center for Patient Safety Research & Practice
Brigham & Woman’s Hospital
Outline
1. Principles of Conservative Prescribing
• Multiple principles directly conflict w/ profit imperatives
• Why NHP is “good medicine;” need to chose side of patient
2. Drug Costs
• Overview and ammunition
• To understand and illustrate way violating public trust
3. Special Role Industry in Undermining NHI
• Toxic links between NHI and pharmaceutical industry
• Medicare Part D
24 Suggestions for More
Conservative/Cautious/Mindful/Careful Prescribing
 Directly conflict with interests and
messages of pharmaceutical companies
 Physicians need to choose sides
--their patients or the industry
 More than personal moral ethical issue
• Scientific vs. commercial practice
• Future of the profession and practice of
medicine
• Need for collective action
• Abdication by professional organizations
U.S. Deaths from Vioxx
More than Vietnam War
 1/1999--9/2004: 106.7 million rofecoxib prescriptions in US
• 17·6% were high-dose, mostly to older patients
 In 2 Merck-sponsored randomized trials: 2,25 relative risks for AMI
• 5x for high-dose rofecoxib and 2x for the standard dose
• Background rate AMI control NSAID users varied from 7·9 per
1000 person-years in CLASS1 to 12·4 per 1000 person-years in
TennCare.
 Using Merck studies relative risks w/ these background rates
88,000– 140,000 excess cases serious coronary disease in US
 Using US national case-fatality rate-44%,suggests thousands of
deaths attributable to rofecoxib use (~38,000-61,000)
Graham Lancet 2005
COSTS HUMAN and
FINANCIAL
Drug expenditure per capita, public and
private expenditure, OECD countries, 2004
Sager FDA Testimony 4/04
Are Drug Costs Too High?
Drug Prices Too Low!
 Academic economist defending monopoly pricing for
lifesaving drug:
“Because the patients who used the drug had no
alternative, the drug company had a fiduciary
responsibility to its shareholders to raise the price to
the highest level the users considered their lives to be
worth. Because the drug’s current price was clearly
below this amount, the company was in fact
underpricing the product.”
cited in Korten, Post-Corporate World 1999
Arguments for high drug prices
“The cost of medicines reflects
their enormous value to patients,
to society, and to the health care
system. If we focus too much on
cutting the cost of medicines
without recognizing the growing
role that medicines play in
creating affordable health care,
we may lose sight of their value
and jeopardize future
pharmaceutical research and
development.”
What goes into the Price of Prescription Drugs, PhRMA, June 2005
 Pharmacuetical cos counter that drugs are
expensive to produce and they add
precious time:
“It’s hard to put a value on extending lives,
which these drugs do”
• Nicky Levy Genetech Manager Corporate Relations
Drug Costs Too High: Multiple Yardsticks
Any Way You Look at it…..too high to swallow
1 Too expensive for patients to afford
Much is out of pocket for sick, chronically ill.
2 Relative to inflation: general inflation, health inflation
3 Profits--extreme outlier compared to other industries
4 What it really costs to produce
• % production, marketing, profits vs." research”
• paying for therapeutic advances vs. “me-too” drugs?
• Estimates for R & D costs
5 Relative to generic alternatives
6 Relative to other countries, VA
7 High social costs-harm from inadequately studied and
inappropriately over-prescribed medication
2004 Revenue Allocation for Top 7 US Pharmaceutical Cos
Marketing, Advertising
and Administration
Other
32%
36%
18%
14%
Research & Development
Profits (net income)
Source: Families USA, The Choice: Health Care for People or Drug Industry Profits, 2005
2004 Revenue Allocation for Top 7 US Pharmaceutical Cos
Marketing, Advertising
and Administration
Other
32%
36%
18%
14%
Research & Development
Profits (net income)
Source: Families USA, The Choice: Health Care for People or Drug Industry Profits, 2005
MEDICAL-PHARMACEUTICAL
INTERACTIONS
GIFTS
MEALS
TRIPS
HONORARIA
LIMO RIDES
TICKETS TO EVENTS
SPA OUTINGS
PROFESSIONAL SOCIETY
SUPPORT
 SAMPLES
 IMPROVING MD SELFESTEEM
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DETAILING
CME EVENTS
STAGE 4 TRIALS
GRANT SUPPORT
SPEAKERS BUREAUS,
CONSULTANCIES
 INVESTMENTS
 ACADEMIC-INDUSTRY
PARTNERSHIPS
 CONTRACT RESEARCH
ORGANIZATIONS
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MD’s and Drug Industry
Summary of Evidence
 1. MD’s are influenced by industry
promotion, although they believe they are
not and also believe their colleagues are
 2. Marketing efforts are highly sophisticated
package of activities including educational,
surveillance, predictive, and ideological
measures.
MD’s and Drug Industry
Summary of Evidence
 3. Extent and nature of relationships tying
MDs and Industry raise serious ethical and
public concerns.
 4. Significant proportion of inappropriate
drug use linked to above 3 issues.
 5. Problems are getting worse
Prescriptions for Gabapentin by Diagnostic Category
Steinman, M. A. et. al. Ann Intern Med 2006;145:284-293
Senior Marketing Executive John Ford 5/6/1996 Teleconference call
44/115 (38%) Neurontin Detail Visits
“Main Message” was Unapproved Uses
80
70
60
50
40
30
20
10
0
Unapproved
Uses
Approved
Uses
Steinman et al SGIM 5/2006
2004 Revenue Allocation for Top 7 US Pharmaceutical Cos
Marketing, Advertising
and Administration
Other
32%
36%
18%
14%
Research & Development
Profits (net income)
Source: Families USA, The Choice: Health Care for People or Drug Industry Profits, 2005
PROFIT “FEVER” CURVE
Public Citizen Congress Watch 2003
Kaiser Family Foundation Health Poll Report Survey(conducted Feb. 3-6, 2005)
Kaiser Family Foundation Health Poll Report Survey(conducted Feb. 3-6, 2005)
2004 Revenue Allocation for Top 7 US Pharmaceutical Cos
Marketing, Advertising
and Administration
Other
32%
36%
18%
14%
Research & Development
Profits (net income)
Source: Families USA, The Choice: Health Care for People or Drug Industry Profits, 2005
Even this 14% ….
is a misleading drug claim
 Up to 80% of “new drugs” are for “me
too” drugs: new formulations or products
developed to grab a share of existing
markets
 Figures claimed for research and
development costs are grossly inflated
 Ignores public dollars that contribute to
new drugs
The term “innovation” covers 3 concepts :
- the commercial concept
- the technological concept
- the concept of therapeutic advance
A clear difference between:
 newly marketed
substance, or
indication, or
formulation, etc.
 industrial
innovation
(chemistry,
biotechnology)
 therapeutic
advance :
« a new treatment
that benefits the
patient when
compared to existing
options »
• (ISDB Declaration) -
ISDB Declaration on therapeutic advance
in the use of medicines (November 2001)
The 3 components of therapeutic advance
1- efficacy
2- safety
3- convenience
Prescrire’s rating system
BRAVO
The drug is a major therapeutic advance in an
area where previously no treatment was
available
A REAL ADVANCE
The drug is an important therapeutic innovation
but has certain limitations
Prescrire’s rating system
OFFERS AN ADVANTAGE
The drug has some value but does not
fundamentally change the present
therapeutic practice
POSSIBLY HELPFUL
The drug has minimal additional value,
and should not change prescribing habits
except in rare circumstances
Prescrire’s rating system
NOTHING NEW
The drug may be a new substance but is
superfluous because it does not add to
the clinical possibilities offered by
already available treatments
NOT ACCEPTABLE
Drug without evident benefit but with
potential or real disadvantages
Prescrire’s rating system
JUDGEMENT RESERVED
The editors postpone their judgement
until better data and a more thorough
evaluation of the drug are available
23 Years Ratings New Drug “Advances”
by Prescrire (1981-2003)
Rating
#
%
Bravo
A real advance
Offers an advantage
Possibly helpful
Nothing new
Not acceptable
Judgment reserved
Total
7
77
217
455
1,913
80
122
2,871
0.2%
2.7%
7.6%
15.8%
66.6%
2.8%
4.2%
100
Other Estimates Me-Too #’s
 2002: FDA approved 78 drugs
• 17 new active ingredient (22%)
• 7 improved treatments (9%)
 Over past 6 years FDA classification of
newly approved drugs
• 78% - “unlikely better than existing drugs”
• 60% - didn’t even contain new active
ingredients
Angell, AARP interview 2004
2005--No Better
Farnacia Hospitalaria 2006
But all these great
new drugs do cost
big bucks to research
and develop
?
$802,000,000
 Tuft’s center study, DiMassi 2003
 “Sophisticated” analysis
 Industry Funded
• “Evidence” for high prices and patent protection
• Widely quoted for 2 years prior to publishing data
• Inflated by key biases
• Capitalized (opportunity) cost included
Tufts Study Biases
 Confidential, Voluntary, Anonymous data
• 10 firms and 68 drugs
• Don’t disclose which firms/drugs?
• What is being called R&D?
• Like drug pricing in general: lack of transparency
 Estimates costs only for Self-Originated, New
Molecular Entities
• Most expensive kind of drug
• Only 22% of branded-drug market
 Pretax $
• Fails to include tax deductions and credits
• As high to 50% in the 1990’s (OTA-1993)
Light Jl Health Economics 2005
Also Included Capitalized Cost
 Roughly doubles simple cost calculation
• Like including interest on sticker price of car
 Widely misunderstood
• Need to recognize that this is true cost
• Commonly used financial tool
 But biases in applying this tool
• DiMassi used unusually high rate 11% compounded
• Higher than standard for commercial industries
• Higher than official rates recognized by the government.
Light Jl Health Economics 2005
Alternative Estimates
 Jamie Love - calculations vary based on
drug
 Public Citizen $110
 Marcia Angell - $266 million
 Don’t factor in capitalized (opportunity) cost
U.S. Drug Companies Budget only 7.1% of Sales, Net to R&D
R&D
18.4%
R&D
11.8%
Net
Corporate
Cost 7.1%
Taxpayers’
Contributions
4.7%
PhRMA
Myth
NSF
Reality
D.Light
U.S. Drug Companies Budget less than 1.5 cents per dollar sales to
Basic Research for Breakthrough Drugs, after taxes
Applied
Research and
Testing, 5.8%
of Sales
Basic Research,
1.3% of Sales
Net R&D Budget
(7.1% of sales)
D.Light
Taxol - Taxing Us All
 Rare glimpse into dealings NIH & Industry
• Public Citizen sued, denied info; GAO finally got
 Developed
@
taxpayer expense
• NIH $138 million over 20 yrs
• Plus NIH did 5/6 clinical studies used for FDA approval
 Gave to Bristol Meyers Squibb
• $35 million, w/ 0.5% royalty
• vs. 4.5% Florida State Univ cut of Taxol sales
• BMS sales from the drug $9 billion 1993-2000
• Medicare spent $687 million 1994-99 on Taxol
M. Angell Truth About Drug Cos 2004
Public Citizen Health Letter 8/2003
 Other public treasury rip-offs
Tax Pill-fering
How Merck Saved 1.5b paying itself for drug patents
Merck sets up subsidiary in Bermuda, in partnership w/ British bank
Quietly transfers patents for blockbuster drugs to new subsidiary
Merck pays royalties to subsidiary for licensing Mevacor, Zocor, etc.
Subsidiary loans money back to Merck to buy Medco.
Arrangement allows some of the profits to disappear into “Bermuda
triangle” between different tax jurisdictions.
 Merck avoids $1.5 billion in federal taxes over next 10 years.
 Later, Merck liquidates company & recovers its money
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Drucker, Wall St. Jl 9/06
$1.5 Billion = 3 New Cook County Hospitals
Sager FDA Testimony 4/04
“The American situation shows that high drug
prices are not inevitable: they simply reflect
political choices which, by definition, can be
modified”
Prescrire-The Drug Price Explosion 2/05
How is this all related to Single Payer
National Health Insurance?
Haunting (and Daunting) Parallels
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Affordable
Fair
Efficient
Publically accountable
Safe and high quality
Two Linked Challenges
 Can't have national health insurance
without drug reform.
 Can’t have drug reform without national
health insurance
 Gridlock?
...or Opportunity for real progress
Connections NHI and Drug Industry
 Lobbying, campaign finance corruption
• $100 million/yr lobbying, campaign contributions
• >1/each member congress
• Industry actively opposing NHI
• “Keep government out of medicine cabinet”
 High drug costs obstacle affordable NHI
 Medicare Part D
2004 Revenue Allocation for Top 7 US Pharmaceutical Cos
Marketing, Advertising
and Administration
Other
32%
36%
18%
14%
Research & Development
Profits (net income)
Source: Families USA, The Choice: Health Care for People or Drug Industry Profits, 2005
Drug Industry Lobbying
 $108.6m spent industry-wide- 2003:
 Total $750m spent 1997-2003
 Employed 824 lobbyists (2003)
• 8 lobbyist per member of senate
• 45% lobbying for Industry and HMOs have
“revolving door” connections
 Both sides of the aisle (2005-06)
• No. 1 recipient R.Santorum (R-PA) $977,000
• No.2 recipient H.Clinton (D-NY) $854,000
Shape Medicare
Block Medicare
Drug Benefit
Drug Benefit
Citizens for Better Medicare
 Sham grass-roots org
 $65m Television ads
 Director is former PhRMA
marketing director
 Multiple “independent” partner
groups largely industry funded
 Gave $10 phone cards to
seniors to call kids telling them
to convey their fears
 Weren’t citizens…..weren’t for
better medicare
12/8/03
Gingrich vows to make
Medicare “wither on the vine”
 Eight years earlier, then-House
Speaker Newt Gingrich outlined the
long-term plan
 In a speech to Blue Cross in October
1995, he said he didn't want to "get
rid of (Medicare) in round one"
because it wouldn't be "politically
smart." Instead Gingrich said
Medicare is going to "wither on the
vine."
“Worst Federal Health Legislation Ever to Pass”
Ted Kennedy
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Premiums
Co-pays
Deductibles
Coinsurance
Gaps
CAPS
Means tests
 Discount cards
• Proven failures
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Formulary restrictions
PBMs
For many cost more
Bans negotiation
How it passed
• Sorted details
Medical Economics
1/9/04
But Politicians Ones that Can Really Cheer
Paid Well to Protect High Prices
Particularly Problematic
Areas
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Enrollment mass confusion
Website referral
Penalty
Forced/Involuntary plan assignment
Donut hole
Public hospitals penalty
Discount cards (remember them?)
Donut Hole: Not only Bad Now But…..
Keeps Growing
“Roller Coaster” Part D Bumpy Ride
 In 1st year under the standard drug benefit
-38% will be subject to no-coverage gap ("doughnut hole,”)
-14% will exceed the threshold of catastrophic coverage
 Over three years, enrollees, on average, will incur out-ofpocket costs of 44% of their total drug spending. Enrollees
with higher spending could pay as much as 67% of total
costs.
Commonwealth Fund "Riding the Rollercoaster: The Ups and Downs in Out-of-Pocket Spending Under
the Standard Medicare Drug Benefit” (Health Affairs, July/August 2005)
Lower Part D Drug Costs?
Represent Policy Failures
 Shifting costs drugs from Medicaid to Medicare for dually-eligible
has actually raised costs for government payers.
 Study top 25 prescribed brand drugs from 41 PDPs in one
Minnesota zip code 1/06
 Prices 14% -50% above those Medicaid would have paid.
 Most Medicare D prescriptions 20%-30% above Medicaid prices.
 Not just implementation failures, but policy failures
 Competing PDP providers not likely to lower drug prices
• Patients shop for premiums; can’t shop for best drug prices
Schondelmeyer Congressional testimony 1/20/06
Medicare D for Disaster
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Higher Costs
Gaps in Coverage
Instability
Consumer Confusion and Marketing
Fraud:
 Higher Costs
• Lowest cost drugs Part D: 58% higher than VA
• More ½ of drugs 2x cost VA
• Loss of Medicaid discounts
 Gaps in Coverage
 Instability
 Consumer Confusion and Marketing
Fraud:
 Higher Costs
 Gaps in Coverage
• Donut hole
• No other insurance plan: suddenly pay 100% of cost
• Cancer
• Wild variations in cost (29x one colon cancer drugA)
• HIV
• Academy HIV Medicine:
• 83% say their pts having trouble
• 73% patients problems affording co-pays
• Appeals Process
 Instability
 Consumer Confusion and Marketing Fraud:
 Higher Costs
 Gaps in Coverage
 Instability
• “Random assignment” dual eligibles to
plans not covering their med
• Driving patients to low cost plans w/ issues
w/ risk pools, poor coverage, high copays
 Consumer Confusion and Marketing
Fraud:
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Higher Costs
Gaps in Coverage
Instability
Consumer Confusion and Marketing
Fraud
• Must choose from > 50 plans
• Each has different drugs, restrictions, costs
• Aggressive marketing;
• Bait and switch tactics esp prominent
IOM Report on FDA & Drug Safety
 Reform FDA conflicts
• Panels
• Approval funded by industry
• Leadership revolving door
 Shift emphasis toward post approval safety
 More oversight re: advertising
• No direct to consumer ads 1st 2 years
• Black box warnings
 More comparative efficacy information
Psaty NEJM 10/06
New FDUFA (FDA User Fee) Regs
9/27/07
Tipping balance toward protecting the public?
Pluses
 Registering clinical trials
 Modest increase in funding
for post market safety
monitoring
 Some tightening conflicts
on FDA panels
Negatives
 DTC Ads untouched
 3 month patient
extensions for doing
peds study
• Hundreds million $
giveaway
 Efforts to block right to
sue if harmed by FDAapproved drug (“duty to
http://www.gooznews.com/archives/000810.html
warn”)
Editorial:
New England Journal of Medicine
“An industry so important to the public
health and so heavily subsidized and
protected by the government has social
responsibilities that should not be totally
overshadowed by its drive for profits.
There is a need for a better balance
between the interests of the
shareholders and those of the public.
M.Angell 6/22/00 NEJM
Leveraging Formularies for
Improved Prescribing
Value-added role of formularies related to rational drug use:
A venue for the critical review of new drug claims
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Evaluation of comparative efficacy
Decreased bias and conflict in decision-making
Cumulative expertise reviewing new drugs
Experience with pitfalls and biases
Identification of potential misuse
Weighing of benefit vs. risks and costs
Assessment of institutional resource allocation
Highlighting of safety concerns
Dissemination of guidance and warnings
1. More rational prescribing
2. Enhanced appropriateness
3. Increased safety
3. Improved cost-effectiveness