National Health Insurance and the Drug Industry w hy and How Should Single Payer Advocates be...

National Health Insurance and the Drug Industry

why and How Should Single Payer

Advocates be Critical of Drug Industry

Gordy Schiff MD Senior Attending Physician Cook County Hospital

Professor of Medicine Rush Medical College

Sayeh Nikpay Project Coordinator, Formulary Leveraged Improved Prescribing, Cook

County Hospital

Outline

1. Principles of Conservative Prescribing Multiple principles directly conflict w/ profit

imperatives Why NHP is “good medicine;” need to chose sides

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

4. Antidotes to best Treat Problem

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 Future of the profession and practice of

medicine Need for collective action

Abdication by professional organizations

24 Suggestions for More Conservative/Cautious/Mindful/Careful Prescribing

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 randomised 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

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

Drug Costs Too High: Multiple Yardsticks Any Way You Look at it…..too high to swallow

1 Too expensive for patients to affordMuch 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.”reasearch” 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

32%

14%18%

36%

Research & Development

Profits (net income)

Other

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 SELF-

ESTEEM

DETAILING CME EVENTS STAGE 4 TRIALS GRANT SUPPORT SPEAKERS BUREAUS,

CONSULTANCIES INVESTMENTS ACADEMIC-INDUSTRY

PARTNERSHIPS CONTRACT RESEARCH

ORGANIZATIONS

MD’s and Drug IndustrySummary 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 IndustrySummary 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



32%

14%18%

36%



Other


PROFIT “FEVER” CURVE

Public Citizen Congress Watch 2003

Kaiser Family Foundation Health Poll Report Survey(conducted Feb. 3-6, 2005)



32%

14%18%

36%



Other


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

BRAVOThe drug is a major therapeutic advance in an area where previously no treatment was available

A REAL ADVANCEThe drug is an important therapeutic innovation but has certain limitations


OFFERS AN ADVANTAGEThe drug has some value but does not fundamentally change the present therapeutic practice

POSSIBLY HELPFULThe drug has minimal additional value, and should not change prescribing habits except in rare circumstances


NOTHING NEWThe drug may be a new substance but is superfluous because it does not add to the clinical possibilities offered by already available treatments

NOT ACCEPTABLEDrug without evident benefit but with potential or real disadvantages


JUDGEMENT RESERVEDThe 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 7 0.2%

A real advance 77 2.7%Offers an advantage 217 7.6%

Possibly helpful 455 15.8%Nothing new 1,913 66.6%

Not acceptable 80 2.8%Judgment reserved 122 4.2%

Total 2,871 100

Other Estimates Me-Too #’s

2002: FDA approves 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

Farnacia Hospitalaria 2006

2005--No Better

But all these great new drugs do cost big bucks

to research and develop

?

$802,000,000

Tuft’s center study, DiMassi 2003“Sophisticated” analysisIndustry Funded

“Evidence” for high prices and patent protectionWidely quoted for 2 year 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 disclore 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 industriesHigher than official rates recognized by the

government.

Light Jl Health Economics 2005

Alternative Estimates

Jamie Love - calculations vary based on drug

Public Citizen $110Marcia Angell - $266 millionDon’t factor in capitalized

(opportunity) cost

U.S. Drug Companies Budget only 7.1% of Sales, Net to R&D

PhRMA NSF

Myth Reality

Taxpayers’ Contributions 4.7%

Net Corporate Cost 7.1%

R&D11.8%

R&D18.4%

D.Light

U.S. Drug Companies Budget less than 1.5 cents per dollar sales to Basic Research for Breakthrough Drugs, after taxes

Net R&D Budget (7.1% of sales)

Applied Research and Testing, 5.8% of Sales

Basic Research, 1.3% of Sales

D.Light

Taxol - Taxing Us AllRare glimpse into dealings NIH & Industry

Public Citizen sued, denied info; GAO finally gotDeveloped @ taxpayer expense

NIH $138 million over 20 yrsPlus 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 2004Public 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

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?

Affordable FairEfficient Publically accountableSafe and high quality

Haunting (and Daunting) Parallels

2 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 >1/each member congress

~own full time deal-person

Industry actively opposing NHIKeep government out of medicine cabinet

High drug costs obstacle affordable NHIMedicare Part D



32%

14%18%

36%



Other


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

Block Medicare

Drug Benefit

Shape Medicare

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 convey their fears

Weren’t citizens…..weren’t for better medicare

“Worst Federal Health Legislation Ever to Pass”Ted Kennedy

Premiums Co-pays Deductibles Coinsurance Gaps CAPS Means tests

Discount cards Proven failures

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 CheerPaid Well to Protect High Prices

Particularly Problematic Areas

Enrollment mass confusionWebsite referralPenalty Forced/Involuntary plan assignment Donut holePublic hospitals penaltyDiscount 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-of-pocket 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

“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

Editorial:New England Journal of Medicine

IOM Report on FDA & Drug Safety

Reform FDA conflicts Panels Approval funded by industry Leadership revolving door

Shift emphasis toward post approval safetyMore oversight re: advertising

No direct to consumer ads 1st 2 years Black box warnings

More comparative efficacy information

Psaty NEJM 10/06

A few Simple Prescriptions Publish all the trials, not just + ones

Int’l Com Medical Jl Editors clinical trial registry

Compare drugs with standard therapy rather than just placebos Are they really any better than what we have

More meaningful trials and outcomes data Efficacy vs. effectiveness Full spectrum of patients and real interactions

More transparency of costs True cost of drug development Less secrecy about negotiated prices

Utopian Vision?

CME away from biased interestsSales reps out of offices and hospitals

Re-educating one peanut butter sandwich at a time Reclaim journals and research Ban direct-to-consumer advertisingMore transparency/data entire development

and pharmacotherapy processLiability for consequences of actions

Rearch and Development

Why Studies Biased towards Showing Sponsors’ Drugs Better?

Selectively fund trials for “promising” drugs Unlikely since often hard to predict in advance

Poor quality (sloppy, biased) research design Conflicting data, but also unlikely to explain

Inappropriate or biased comparator Too low a dose of competitor drug Many examples; Fluconazole vs. oral amphotercin

Publication bias: withold negative studies Multiple subtle and flagrant examples

Lexchin, Bero et al BMJ 2003

Withholding Research Results

Survey 3,394 researchers at 50 universities. 19.8% (410) reported delays of publishing

research results by > 6 months 46% to allow time for patent application 33% to protect financial value of results 28% to delay dissemination of undesired

results 26% to allow time for license agreement

Blumenthal JAMA !997;277:1224

Medicare Part D

“Too confusing”-translating this into policy understandings Implementation failure vs policy failure by design

Medicare Part D --Policy Failure

6m dual eligibles forced to switch ~14% of medicaid recipients Group accounted for 48% of Medicaid drug

spending

Shifted sickest people to costliest plans Cost more for government as well as

patients

Medicare Part DDrug Coverage??

The poorest of the poor, the dual eligibles, have worse drug coverage under Part D than they did under Medicaid!!! 6 million people (not small outlier group)

So much better coverage under medicaid more co-pay more drugs covered less

86% of pharmacists say that they understand Medicare Part D, but only 36% of doctors say that they do

Over 3 years, enrollees will, on average incur out-of-pocket expenses for 44% of their total drug spending. Those with higher spending could pay as much as 67%

Translates into: Over 3 years, Part D enrollees face an average out-of-pocket drug cost spending being 44% of their total spending!! % Total income (is this believable considering health costs were creeping to 25% before drug benefit)

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

Saving Medicaid Money - NOT 40 to 70 specific prescription drug plans the

Medicare recipient was automatically enrolled.

Previously automatic 15% rebate received by Medicaid programs

Examined top 25 brand drugs from 41 PDP in MN over 2 weeks

Overall . Most of the Medicare prescriptions were 20 to 30 percent above the Medicaid price for same drugs

Personal Prescription/Note

Take the ASMA pledge…….from Pharm-free day

12/8/03

Gingrich vows to make Medicare “wither on the vine”

Eight years ago, 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."

National Health Insurance and the Drug Industry w hy and How Should Single Payer Advocates be...

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