PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug Costs, Drug Pricing and...
-
Upload
cason-skelding -
Category
Documents
-
view
214 -
download
1
Transcript of PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug Costs, Drug Pricing and...
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Drug Costs, Drug Pricing and Pharmacoeconomics
Sayeh Nikpay
Gordon Schiff
PMAD 385 – April 16, 2007
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Patient case study
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Ms. C’s Drugs
• What have been costs?
• What has been burdens?
• How has managed to deal with it?
• Her thoughts about expensive drugs
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Drug Costs are high and on the rise
• U.S. costs roughly double those rest of world
Overall Rising Costs-- 3 components: • 1. Increased per capita drug use
– Some related to aging population– But some pure increase in drug #s/use
• 2. Increased prices of individual drugs – Rising significantly higher than inflation rate
• 3. Shift to newer more expensive drugs
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
International Comparison Antidepressants & Antipsychotics
Drug HighestCost
Country
LowestCost
Country
Avg CostOther
Countries
U.S/AvgCost
Clozapine $317(U.S.)
$52(Spain)
$111 2.9
Olanzapine $324(U.S.)
$79(Spain)
$163 2.0
Risperidone $247(U.S.)
$123(France)
$148 1.7
Fluoxetine $72(U.S.)
$26(Spain)
$34 2.1
Sertraline $64(U.S.)
$30(Austria)
$37 1.8
Sasich, Public Citizen HRG 1998
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
March 2007
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Brand-Name Prescription Drug Products with Highest Percentage Change inManufacturer Price, 2006
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Index of Average U&C Prices for 96 Drugs Frequently Used by BCBS FEP
Enrollees, by Month, 2000 through 2004
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Year
Pro
po
rtio
n
Proportion of Total Prescription Drug Spending
Out of Pocket Prescription Drug Spending 1960-2005
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Year
Pro
po
rtio
n
0
20
40
60
80
100
120
140
160
180
Co
nst
ant
'05
$
Out of Pocket Prescription Drug Spending 1960-2005
Proportion of Total Prescription Drug Spending
Per Capita Spending
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Drug expenditure per capita, public and private expenditure, OECD countries, 2004
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Indexes of Average U&C Prices for 50 Brand and 46 Generic Drugs
Frequently Used by BCBS FEP Enrollees, by Month, 2000 through 2004
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Market “Logic”Drugs are Under-priced
“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 under-pricing the product.”
-quoted in Korten, Post Corporate World, 1999
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
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
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Justification for High Drug Costs
1. New drugs innovative and valuable to society
2. Drug R&D costs are high
3. Producing drugs is risky
4. Drug companies donate millions dollars of free drugs
5. Good value; impossible to put a value on good health
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
1. Are drugs that innovative?
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Mostly “Me-Too” Drugs
• FDA categorization of new drugs– Priority vs. Standard Reviews
• Priority = significant improvement over currently marketed products
– NME vs. new dosage, formulation, combination etc..
• What is innovation?– Angell: new compound (NME) that is a significant improvement over
marketed products (Priority Review)
• 123 drugs approved in 2006– 11 priority review 9%– 18 NME 15%– 6 Priority + NME 5%
Source: CDER Drug and Biologic Approvals for Calendar Year 2006, http://www.fda.gov/cder/rdmt/InternetNDA06.htm
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
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
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
2. How much does Pharma really spend on R&D?
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Drug Companies Claim:Spend more on R&D than on Promotion
What goes into the Price of Prescription Drugs, PhRMA, June 2005
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
The Evidence 2004 U.S. Pharmaceutical Firms in the Top 200 Corporations
Dollars in MillionsSource: The Choice: Health Care for People or Drug Industry Profits, Families USA, 2005
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
The Evidence 2004 U.S. Pharmaceutical Firms in the Top 200 Corporations
Dollars in MillionsSource: The Choice: Health Care for People or Drug Industry Profits, Families USA, 2005
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Marketing, Advertising and Administration
32%
14%18%
36%
Research & DevelopmentProfits (net income)
Other
Source: Families USA, The Choice: Health Care for People or Drug Industry Profits, 2005
2004 Revenue Allocation for Top 7 US Pharmaceutical Companies
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Questions about $$ spent on R&D
• 14% may be an overstatement• Based on proprietary information
– Categorization of spending is unknown
• Marketing infiltrates other categories– R&D includes Phase IV, seeding trials, other?
• Tax-payer’s contribute heavily – Through publicly-funded research– Tax breaks
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Industry Estimates for R&D• Tuft’s Center for the Study of Drug Development
– Non-profit, 55% funded by industry– Strong industry bias
• “Classic” 2003 paper by DiMassi et al – Analysis to determine cost of R&D for a new drug– Conclusion…
$802,000,000• Widely quoted for 2 years before methods released
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Tufts Study Biases• Confidential, voluntary data
– 10 firms and 68 drugs – who? It’s a secret!
• Focuses exclusively on most expensive and least common type of drug – Self-Originated, New Molecular Entities
• Uses unusually high rate of return for opportunity costs of investing in R&D – 11% compounded
– Some debate whether it is appropriate
• Fails to account for significant tax deductions and credits for R&D
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Other Estimates
• Public Citizen $110 million
• Marcia Angell $266 million
• Earlier Tufts estimate $237 million
• New Tufts estimate for biologicals $1.2 billion
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
3. Is the drug industry that risky?
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PROFIT “FEVER” CURVE
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Drug Industry Concerns about risk and profitability
• Generic competition
• Reduced patent protection time
• Rising costs to produce
• High #s of failed compounds
• Possible re-importation from abroad • Rising regulatory costs
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Patent Protection: Billions in Profits for Drug Companies and high Prices for Consumers
• The longer the monopoly rights the higher revenues for branded manufacturers.– 1999, Claritin® sales topped $2.2 billion– 2000, Cipro® sales were $1 billion– 2000 Paxil® sales were $1.4 billion
• No incentive for branded manufacturers to lower prices
• Results in higher drug prices
Patent Protection Means Billions for the Industry and High Prices for Consumers, Families USA, 2002
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Benefits to Generic Market Entry
• Increases consumer choice• First marketed generics typically priced 20 to 30
percent below branded comparators• On average, branded drugs cost 3 times more than
generics• Generics accounted for approximately 42 percent of
all prescriptions dispensed in 2000• The more generics in market, the lower prices drop
Patent Protection Means Billions for the Industry and High Prices for Consumers, Families USA, 2002
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Generic Competition and Drug Prices, FDA CDER, 2006
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Extended Patent Life
• Brand name patents increased by 50 percent in the last 20 years
• Average of 8.1 years in 1980s
• Between 13.9 and 15.4 years 1990s
Patent Protection Means Billions for the Industry and High Prices for Consumers, Families USA, 2002
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Extension of Exclusive Marketing Rights
• Drug companies take advantage of key legislation granting extended patent time– Bayh Doyle Act, Hatch-Waxman Act, Orphan Drug Act, Pediatric
Equity in Research Act etc..
• Drug companies exploit key loopholes to gain extra patents time– Filing for multiple patents on active and non active ingredients
(staggered over time)– Use aggressive legal tactics to discourage the competition
• Drug Companies use anti-competitive deal-making to keep competitors out of the market– Pay offs to generic companies to delay production
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
4. Are the drug companies that generous?
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Medication Assistance Programs
• In 2003, PhRMA members provided free drugs to 6.2m U.S. patients.
• Saves County ~ $7.5m bureau-wide– At the CORE ~$30,000/month
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Free Samples: Real StoryMostly given to Higher Income Patients
• Analysis of 2002 Medical Expenditure Panel Survey (MEPS)– 39,165 U.S. residents
• 125 million samples given to 37.2 million Americans• Poor people were least likely to receive free samples
– Only 10.3% of recipients below 100% poverty level– 14.6% earned 4400% poverty level
FREE PHARMACEUTICAL SAMPLES: CHARACTERISTICS OF US RECIPIENTS IN2002, Cutrona et al. 2003
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Pitfalls to relying on samples/MAP
• Promotes new expensive drugs over drugs of choice• Financially jeopardizes patients
– Stuck paying after initial sample period
• Facilitates drug rep entry, exposure• Makes MDs and institutions beholden to drug cos• Tax write-off means not free because public pays• Serious patient safety issues• Makes it easier to rely on drug vs. non-drug therapy
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Norvasc at County-“Free” Drug Ends Up Costing Millions
• #1 prescribed antihypertensive nationally • Forced its way onto Formulary
– Manipulation/interference w/ formulary decision-making– Argued “it’s free” under Pfizer Share-the-Care Program – Previously Committee had decided expensive and unnecessary
• Only for Pfizer branded products– Cook County-largest “free clinic”– Drugs not actually free--credits for future Pfizer drugs– Massive free sampling
• Left holding bag for millions (>5) of $$– When demanded individual bills/proof
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
5. Drugs are a good value;plus good health doesn’t have a $ value?
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
What is the value of the smile of a child no longer feeling the pain of cancer?
What is the value of giving a grandfather with congestive heart failure the energy to go camping with his grandson?
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Pharmacoeconomics
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Pharmacoeconomics -Useful Tool
• Takes into account broader costs beyond just the acquisition costs
• Allow modeling of clinical variables to make more choices more transparent and informed
• Important policy tool to ensure money is not wasted– Allows comparisons to other government expenditures
that are most valuable for society
• Western European nations, Canada and Australia use pharmacoeconomic analysis – 2003 Medicare Modernization Act included provisions for
comparative efficacy and cost-effective analysis– Efforts were thwarted
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Pharmacoeconomics- Biases FLIP Side of Claims
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Frequency distribution of 1433 incremental cost effectiveness ratios for health interventions
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Australian Pharmaceutical Benefits Scheme: Problems & Biases Encountered in Submissions
• Evaluated 326 major applications to the Australian Pharmaceutical Benefits Scheme 1994-1997
• Problems w/ submissions were regarded as “significant” if both the evaluators and technical subcommittee considered that problem could have a serious bearing on the decisions made
• Serious problems found in 218 (67%) submissions– 31 had more than one problem, giving 249 serious
problems in total.
Hill JAMA 2000
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Hill JAMA 2000
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
•No randomized trials •Identification of additional trials contradicting claims •Trials of poor quality •Trials too small •Trials too short •Trials not appropriate for indication •Inappropriate sub group analysis •Surrogate rather than actual outcomes •Choice of comparator •Economic models based on inadequate information •Calculation errors
Australian Pharmaceutical Benefits Scheme Examples of problems encountered 1994-97
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Although the rules for cost-effectiveness analysis have been widely disseminated in the medical literature since 1977. Udvarhelyi et al in 1992, showed that these rules were widely flouted and the fundamental principles usually ignored.
Pharmacoeconomic Analyses Making Transparent & Credible Rennie & Luft JAMA 2000
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Hillman based on their experience conducting 33 economic analyses for 15 pharmaceutical companies over 13 years, were the first to come to grips with the problems of bias posed by cost-effectiveness analyses funded by makers of the drugs being analyzed. They noted that pharmaceutical companies sponsored most such research, which was unregulated, unstandardized, and prone to subjective bias. The researcher often had the design of the analysis, choice of the comparison drug, and selection of what confidential proprietary data they were allowed to see decided in advance by the sponsoring company.
Pharmacoeconomic Analyses Making Transparent & Credible Rennie & Luft JAMA 2000
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
The companies, which considered such analyses to be marketing tools to promote sales, had studies supervised by marketing divisions that had no trouble with the idea of selecting ineffectual drugs for comparison, making investigators accept favorable assumptions, terminating unfavorable studies early, blocking publication, and putting pressure on investigators to produce favorable results.
Pharmacoeconomic Analyses Making Transparent & Credible Rennie & Luft JAMA 2000
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Common Methodologic Flaws in Economic Analyses
• Omission of important costs or benefits
• Inappropriate selection of alternatives for comparison
• Problems in making indirect comparisons
• Inadequate representation of the effectiveness data
• Inappropriate extrapolation beyond the period observed in clinical studies
• Excessive use assumptions rather than data
• Inadequate characterization of uncertainty
• Problems in aggregation of results
• Reporting of average cost-effectiveness ratios
• Lack of consideration of generalizability issues
• Selective reporting of findings
Drummond Med Care 2005
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Drummond Med Care 2005
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Discussion QuestionsWhat to Do About High Drug Costs
• What can you as a pharmacist do to help your patients?
• What can our institution do to better control costs? • What policies could help moderate drug costs?• What role can the formulary play in these efforts?
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Formularies as the frontline of Cost Issues
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Many People Involved in Pharmaceutical Supply-Chain
Wholesalers
Generics
Branded Drug Cos
PBMS
Insurers
Clinicians
Patients
Providers
Employers
Govt’Govt’
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Relevant County Example
• Give example from county of manipulation – glaucoma drugs switch around (tie to patient?)
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Fischer, M. A. et al. N Engl J Med 2004;351:2187-2194
Trends in the Use of NSAIDs and Spending for Coxibs by Medicaid from 1999 through 2003
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Cook County COX2 Approval Mechanism (via Pharm HELP Desk)
• GI Assessment Tool Scoring • Age (1-18)• Health Status (0-4) • RA (2)• Prednisone (5) • Ever GI Bleeding (8) • GI Side effects (2)
Score• > 20 Automatic OK 16-20 Trial Salcylate
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Medicaid Cook County1999 20% NA2000 46% NA2001 52% 2.50%2002 52% 4.10%2003 50% 3.40%2004 NA 2.80%
COX2:NSAIDs %’s Cook County vs. Medicaid
2001 N=431/17,259
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Total Dollars Saved
If 30% Ratio $1,074,560.21If 50% Ratio $1,870,530.73
Total Cardiovascular Events Prevented assuming 30% ratio
APPROVE Excess
7.5 43.81
VIGOR 4 23.36
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
• Slide of walgreens’ guy or Bill’s list of tricks or manipulations
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Annual Change in Average Usual and Customary Prices for BrandGeneric Drugs Frequently Used by Enrollees in BCBS FEP, January
through June 2004
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP
Hill et al, 2000
PMAD 385 Spring ’07 Critical Analysis of Pharmaceutical Marketing, FLIP