Tag: PhRMA

03/26/19

Runaway Pharma Gravy Train

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The Pharmaceutical Research and Manufacturers of America (PhRMA) spent $27.5 million on lobbying in Washington last year. This was a new record, surpassing the previous high set in 2009, when PhRMA spent over $27 million. “The new record also topped 2017’s lobbying spend—$25.43 million, at a time when Trump was taking office and pricing was often on the airwaves—by about 8%.” The increases parallel steadily increasing prices for several years. For example, Medicaid drug costs nearly doubled to $31 billion.

Rep. Elijah Cummings initiated an investigation of 12 pharmaceutical companies in an effort to uncover pharma pricing practices. Cummings sent letters seeking information and documents about the companies’ pricing practices. This is the first step of the Committee on Oversight and Reform’s review of pricing practices. The Committee will also hold hearings in order to hear from experts and patients affected by rising drug prices.

The Centers for Medicare and Medicaid Services projects that spending on prescription drugs will increase more rapidly than spending on any other health care sector over the next ten years.  The federal government bears much of the financial burden of escalating drug prices through Medicare Part D, which provides drug coverage to approximately 43 million people.  The government is projected to spend $99 billion on Medicare Part D in 2019.  In 2016, the 20 most expensive drugs to Medicare Part D accounted for roughly $37.7 billion in spending.

The hearing was held on Tuesday, January 29, 2019, just two weeks after Rep. Cummings sent out his letters. There also seems to be bipartisan support to rein in drug prices.  FiercePharma wondered whether this was real bipartisan unity or just talk. Rep. Mark Meadows, A Republican from North Carolina, said President Trump asked him to make sure the House knew on this issue, “He’s serious about working in a bipartisan way to lower prescription drug prices.” At the hearing Cummings acknowledged Trumps support, but said: “But tweets are not enough—we need real action and meaningful reforms.”

STAT News reported that Cummings is asking for “10 years worth of sales, revenue, pricing, rebate, discount, and commercialization data.” Additionally he’s asked for information detailing research and development expenses; information on patents and indications; employee compensation and bonus details; each company’s interaction with federal agencies; and details of company’s contracts with PBMs (pharmacy benefit mangers). Although his probe already includes most of the country’s largest pharmaceutical companies, he’s not finished. “There’ll be more.” Other congressional committees, such as Energy and Commerce and the Senate Finance Committee, are planning to do their own investigations.

The ten most expensive brand-name drugs accounted for $15.6 billion of spending in the catastrophic coverage phase of the Medicare Part D benefit in 2015. While the number of prescriptions fell by 17%, the Part D payments for brand-name drugs increased by 62% from 2011 to 2015. The payments for about 94% of commonly used medications more than doubled. The percentage of Medicare Part D beneficiaries who paid at least $2,000 out-of-pocket for their drugs almost doubled from 2011 to 2015. Cummings is focusing his inquiries on drugs that are among the costliest to Medicare Part D. If you’re curious, there is a link in the article to a list of the companies and drugs for conditions ranging from arthritis, cancer and cholesterol to diabetes.

An NPR and Center for Public Integrity investigation found drug companies have penetrated almost all aspects of the process that determines how their drugs are covered by taxpayers. Doctors on obscure committees advising state Medicaid programs receive free dinners and consulting contracts with the pharmaceutical companies. Speakers who don’t disclose their financial ties to the pharmaceutical companies are asked to testify about the companies’ drugs. State Medicaid officials are invited to attend all-inclusive conferences for free where they mingle with drug representatives.

Beyond that, drugmakers use other tactics to get their products paid for by the Medicaid programs: lobbying state lawmakers to achieve their goals or helping doctors fill out extra paperwork to get Medicaid to pay for the costlier drugs as Warner Chilcott did. The result is that Medicaid sometimes spends more than necessary and may pay for medicines inappropriate for patients.

The drug companies say they are not responsible for the problems. A spokesperson for PhRMA said: “As an industry, our priority is ensuring that patients have access to the medicines they need . . . . States should consider changes to Medicaid that are in line with the intended goal of ensuring robust access to medically necessary drugs.” Pharmaceutical companies have strong incentives to be included on states’ lists of approved drugs. Doctors are far more likely to prescribe an approved drug to Medicaid patients and may encourage other insurers to do the same. To gain a spot on the coveted lists, drug makers offer the states “supplemental rebates,” which are on top of other price concessions required by federal law. “The drug committee meetings where those list decisions are made are a frequent destination for drug company representatives — and those who benefit from their largesse.”

Across the country, drugmaker representatives and pharma-friendly clinicians with industry ties swarm these low-profile drug committees, a review of meeting minutes shows. Center for Public Integrity and NPR reporters saw similar dynamics play out this spring in meetings in Arizona, Washington, D.C., and Louisiana. The committees, usually known as pharmacy and therapeutics committees or drug utilization review boards, are typically made up of volunteer pharmacists and doctors.

Critics of the practice say when pharma companies target these committees, the states don’t get good deals. They also can make bad decisions for their patients. Three out of five doctors voting on state Medicaid decisions received perks from pharmaceutical companies. There are at least 38 states with doctors serving on their Medicaid drug committees who collected more than $1,000 from pharmaceutical companies while they served on the committees. Consider that while this amount may point to how money influences Medicaid decisions, a study in JAMA Internal Medicine, “Pharmaceutical Industry-Sponsored Meals and Physician Prescribing Patterns for Medicare Beneficiaries” found that when doctors get as little as a $20 lunch, they are more likely to prescribe the company’s drugs.

As compared with the receipt of no industry-sponsored meals, we found that receipt of a single industry-sponsored meal, with a mean value of less than $20, was associated with prescription of the promoted brand-name drug at significantly higher rates to Medicare beneficiaries. The differences persisted after controlling for prescribing volume and potential confounders such as physician specialty, practice setting, and demographic characteristics. Furthermore, the relationship was dose dependent, with additional meals and costlier meals associated with greater increases in prescribing of the promoted drug.

The NPR article told of a nonprofit organization, the American Drug Utilization Review Society (ADURS), whose mission is to provide a forum of leadership and support for its members. It hosted a free conference for Arizona state Medicaid officials in Scottsdale, where Michael Magnotti, an endocrinologist, gave a talk on diabetes. He was paid $1,545 for the talk by Sanofi-Aventis; and he received more than $108,000 in consulting fees from pharmaceutical companies for that year.  Sanofi S.A. is the world’s fifth-largest multinational pharmaceutical company. And it was one of the companies to receive a letter from Rep. Cummings.

A more disturbing ADURS conference took place in 2003 when Purdue Pharma helped to fund it. A speaker told his audience that addiction from the medical use of opioids was rare, and he then described a phenomenon called “pseudoaddiction.” A slideshow of the presentation (linked in the STAT article) said pseudoaddiction included “appropriate drug seeking behavior” such as demanding doses before they are scheduled. In support of his claims, he referenced a letter published in the New England Medical Journal back in 1980: “Addiction Rare in Patients Treated with Narcotics.”

This article has been repeatedly misused by pharmaceutical companies (like Purdue) as they assert that the risk of addiction from the medical use of opioids is almost nil. The potential influence of pharmaceutical companies like Purdue on opioid prescribing and the opioid epidemic has received significant attention in the media. Currently 24 states and Puerto Rico have sued Purdue for downplaying or concealing the risks of its painkillers. See the book by Barry Meier, Pain Killer for more on this issue. Also see “Doublespeak in the Opioid Crisis,” Part 1 and Part 2 for more about the misuse of the 1980 article. See “Giving an Opioid Devil Its Due” for more on Purdue Pharma. This concern is now being looked at in the research literature.

A new study released on January 18, 2019 in JAMA Network Open suggested there may be a link between aggressive marketing, drug company money and overdose death rates. The researchers found that counties receiving pharmaceutical marketing of opioids to physicians subsequently experienced increased mortality rates. Commenting on the study, Science Alert said while the study did not demonstrate a cause-and-effect relationship, it did suggest that frequent trust-building visits, like lunches sponsored by drug sales reps, did more to promote prescribing the company’s drugs than high-dollar payments to physicians. One of the researchers said: “What seems to matter most wasn’t the amount of money doctors were paid, it was the number of times they were paid.”

Our findings suggest that direct-to-physician opioid marketing may counter current national efforts to reduce the number of opioids prescribedand that policymakers might consider limits on these activities as part of a robust, evidence-based response to the opioid overdose epidemic in the United States.

While Pharma’s spending on lobbying and advertising to doctors (and consumers) continues to rise, so do the negative consequences. Pharma knows marketing has a tremendous potential to grow its profits. So spending on lobbying has increased alongside that of marketing to doctors and consumers. The public pays a price by permitting these activities to continue unhindered. Unchecked greed seems to have helped facilitate the opioid crisis. Hopefully the efforts of legislators like Elijah Cummings will make it out of their respective committees and into law. We need to stop the runaway Pharma gravy train.

07/13/18

Pharma Problems Defy Solutions

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In January 2017, President-elect Donald Trump said the pharmaceutical industry’s practices were disastrous and suggested the federal government should negotiate drug prices. He characterized the industry with getting away with murder. He said: “Pharma has a lot of lobbies, a lot of lobbyists, a lot of power. And there’s very little bidding on drugs.” The response from the industry’s top trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), was to increase its lobbying expenditures from $20 million in 2016 to $25.4 million in 2017. The biggest jump occurred in the first quarter of 2017. Only the U.S. Chamber of Commerce and the National Association of Realtors outspent PhRMA lobbying in 2017.

Writing for The Hill in January of 2018, Jessie Hellmann commented that despite the president’s tough talk, “his administration has yet to take action toward lowering drug prices, and some of his policies have even been viewed as being favorable to the industry.” Danit Felber noted the same thing in the first article of her two part series for Vision Magazine. She added how President Trump selected a former Eli Lilly executive as his Secretary of Health and Human Services. “There’s no doubt that the pharmaceutical industry is growing rapidly, as are its donations to political campaigns.”

Between the years 1997 to 2016, the U.S. population grew by 21% but the number of prescriptions (to both adults and children) grew by 85%. One in every six Americans takes a psychiatric drug (antidepressants, anxiety relievers, antipsychotics, etc.) – many of the conditions treated with these drugs can be treated in whole or in part by lifestyle changes and/or therapy. And in 2014, close to 1.3 million people went to the emergency room for adverse drug effects and about 124,000 of those died (U.S. government data cited by Consumer Reports).

An infographic linked by Vision Magazine reported in 2012, 46% of American adults took prescription drugs. 11.5% of American adults take 3 or more prescription drugs; 6.5% take 4 or more. There were 4.2 billion prescriptions written in 2011—an average of 13 per average American. The amount of money spent on prescription drugs increased from $208 billion in 2001, to $234 billion in 2008, to %325 billion in 2012. Among older adults, 46% above 55 are on a prescription drug; 12.6% above 65 take 4 or more prescription drugs.

Danit Felber noted how the U.S.  is only one of two countries globally that permits direct-to-consumer advertising for prescription drugs. She also pointed out that Congress passed a bill restricting the DEA from addressing the black market prescription drug trade the same way they go after the illicit drug trade. See “Head of a Snake” for more information on this. Tom Marino withdrew his name from consideration as the “drug czar” for the Trump administration when it was revealed he had spearheaded efforts to get that legislation through Congress.

The drug companies may be full of brilliant medical researchers and lawyers but it doesn’t take much brilliance to see that the American public is being exploited so pharmaceutical executives and politicians can get rich. It’s no exaggeration to say that human lives are at stake and it’s time the people understand our own place in this billion-dollar industry.

In part 2 of her series for Vision Magazine, Danit Felber reported that nine out of ten members of the U.S. House of Representatives received campaign contributions from pharmaceutical companies; as did all but three of U.S. senators. She referenced an October 2017 article in The Guardian that called out lobbying efforts of Pharma in 2016, which spent $152 million attempting to influence legislation that year; $20 million went directly to political campaigns. Reportedly, about 60% went to Republicans. Paul Ryan received $228,670. Pfizer gave $1 million towards President Trump’s inauguration.

Scores of attempts by some members of Congress to introduce legislation to bring down the price of prescription medicines or to let people buy them from Canada, where they are often cheaper, have failed to make it out of committee.

Bloomberg reported the industry’s lobbying trend continued into 2018. PhRMA spent $9.96 million on federal lobbying in the first quarter of 2018, an increase of almost $2 million from the same quarter in 2017. Several pharmaceutical companies, including Bayer Corp., AbbVie Inc, Sanofi US and Novo Nordisk all had new highs for their lobbying expenditures. PhRMA successfully stopped legislation that would have permitted generic-drug companies to study patented pharmaceutical products in order to bring low cost alternatives to market.

Bayer spent $3.45 million, AbbVie $2.89 million, Sanofi $2.03 million, Celgene $1.22 million and Novo Nordisk $1.46 million. In addition to the records, Pfizer Inc. spent $4.65 million, up from $3.79 a year earlier. Merck & Co. spent $3.31 million, nearly double its spending in the first quarter of 2017. Eli Lilly & Co. spent $1.34 million, down from $1.39 million a year earlier. Abbott Laboratories spent $790,000 in the first quarter, the same as it had in the same period in 2017.

Polls indicate high drug prices are one of Americans top health care concerns. During the 2016 presidential campaign both Hillary Clinton and Donald Trump attacked drug makers, so pharmaceutical companies stepped up their lobbying and nervously waited to see what action the President would take. One lobbyist said: “Anyone who thought the industry is fine because Hillary Clinton lost is naïve.” Companies, he thought, will want to talk with him, “particularly since his words have such an immediate impact on stock prices.”

So it was with some trepidation that Pharma faced the President’s announced plan to put “American Patients First” on May 11, 2018. In a speech given in the Rose Garden, he said:  “Everyone involved in the broken system — the drug makers, insurance companies, distributors, pharmacy benefit managers and many others — contribute to the problem.”  The President added that government—under previous leaders—was part of the problem by turning a blind eye to the abuse. “But under this administration we are putting American patients first.”

However, The New York Times quoted a securities analyst who said the president’s speech was “very, very positive to pharma. . . . We have not seen anything about that speech which should concern investors.” As a matter of fact,

Shares of several major drug and biotech companies rose immediately after the speech. Drugmakers’ stocks jumped immediately after the speech, as did the stocks of pharmacy benefit managers, the “middlemen” who Mr. Trump said had gotten “very, very rich.”Rather than take aim at the pharmaceutical makers, Mr. Trump said his administration would cut out the middleman, provide new tools to private benefits managers in Medicare’s prescription drug program to negotiate lower prices, stop limiting pharmacists from helping patients save money and speed up approval of over-the-counter medicines so that fewer will require prescriptions.

The Washington Post pointed out “American Patients First” suggested a number of policy ideas without a specific timeline for implementations. It excluded an idea Trump had previously proposed: “allowing the government to negotiate drug prices on behalf of the Medicare program.” It was silent about allowing Americans to import low-cost prescriptions from other countries like Canada. There was also evidence that some of the ideas spread by the pharmaceutical lobby took root. “Over the past year, drug companies have sought to deflect criticisms of their prices by blaming a secretive tier of middleman industries, such as pharmacy benefit managers that negotiate drug prices, for the role they play in prices.”

In addition to turning away from drug companies to condemn the “middleman” of PBMs—pharmacy-benefit managers—President Trump said he would make it a priority to stop foreign countries from getting drastically lower prices than in the U.S. Yet there isn’t a clear path to see that an increase in foreign prices would offset U.S. drug prices. Allan Coukell from the Pew Charitable Trusts commented: “I haven’t seen so far any manufacturers stepping forward to say how much they would lower prices in the U.S. if the U.K. and Germany paid more.” Rachel Sachs, an associate professor of law at Washington University School of Law, said: “With all the buildup the administration has given it, the president’s speech was deeply underwhelming. There is very little new in the administration’s plan, and little if anything that will make a difference in the near future, as the president has promised.” Gerard Anderson, a professor at John Hopkins Bloomberg School of Public Health, said: “He diagnosed the problems very well, and just didn’t have a solution.”

01/7/15

Pharma and Its Golden Hoard

© Chrisjeanes | Dreamstime.com - Smaug - The Hobbit Photo
© Chrisjeanes | Dreamstime.com – Smaug – The Hobbit Photo

The debate over the cost of drug development goes all the way back to the late 1950s. The then Chairman of the U.S. Senate’s Anti-Trust and Monopoly Subcommittee said that the pharmaceutical industry had: 1) predatory pricing and excessive margins related to their patents; 2) that extravagant increases in costs and prices were due to large expenditures in marketing; and 3) most of the industry’s new products were no more effective than the ones already on the market. It seems that little has changed over the past fifty-five years.

An often-quoted 2003 study on the cost of drug development by DiMasi et al., “The Price of Innovation,” concluded that it cost an estimated $802 million in 2000 dollars to bring a new drug to market. The 2014 profile released by PhRMA, the advocacy group for the U.S. pharmaceutical industry, estimated that it cost $1.2 billion to develop a new drug. PhRMA noted that: “some more recent studies estimate the cost to be even higher.” In contradiction of the higher R&D estimates of DiMasi and PhRMA, Light and Warburton suggested that: “R&D costs companies a median of $43.4 million per new drug.” This is less than 1/18th of the $802 million estimate by DiMasi et al.

Deciding whose figures to trust can be tricky. For example, Light and Warburton pointed out that the Tufts Center for the Study of Drug Development, where the DiMasi study was conducted, has received “substantial industry funding for years.” Among the concerns they had with the DiMasi study were: inflated costs for drug trials; exaggerated time for R&D; corporate financial risk for R&D was much lower than reported; average costs based on “means” and not “medians,” leading to inflated figures. Using the median trial costs reported by DiMasi (74% of the mean trail costs), they said: “the $802 million figure would have been reduced to $593 million had median costs been used.”

Scott Gavura in “What Does a New Drug Cost” part 1 looked at both the DiMasi study and its critique by Light and Warburton. Gavura said he found the Light and Warburton figure “implausibly small.” In “What Does a New Drug Cost” part 2, he elaborated, saying that he thought their estimates “were based on a sequence of highly implausible assumptions;” the average drug development cost would be higher in the real world. He asked if the low-hanging fruit in drug development is gone. “A growing concern with the pharmaceutical industry is its overall productivity in delivering new drugs.” Gavura concluded his article by stating that he thought criticism of the pharmaceutical industry was justified, if it was done for the right reasons.

Being skeptical of R&D estimates is wise. Data on individual drugs is not transparent, and estimates must incorporate a number of assumptions which have the potential to bias the conclusions.  This lack of transparency fuels suspicion of the process. But we should also be equally skeptical of arguments that dismiss or diminish the growing problems with R&D. There is good evidence to suggest that drug development is a risky, expensive endeavor, and that this work is getting harder.

In a 2008 article published in PLOS Medicine, “The Cost of Pushing Pills,” Gagnon and Lexichin explored the reported expenditures of the pharmaceutical industry and concluded that: “pharmaceutical companies spend almost twice as much on promotion as they do on R&D.”  Their estimate was made from highly reliable sources, one of them being IMS Health, a company relied upon by both the federal government and the pharmaceutical industry for information on the healthcare industry.

Their revised estimates for promotional spending in the US for 2004 was $57.5 billion, twice that of IMS Health. This compares to the $31.5 billion reported by the National Science Foundation for domestic industrial pharmaceutical R&D in 2004. “These numbers clearly show how promotion predominates over R&D in the pharmaceutical industry, contrary to the industry’s claim.”

Allen Frances, the chair of the DSM-IV, has become an outspoken critic of modern psychiatry, the DSM-5, and “Big Pharma.” He reported in Saving Normal that worldwide pharmaceutical sales exceed $700 billion each year. Half of that figure is spent in North America and another one fourth in Europe. Rick Newman reported that Pharma’s profit margin was 16.4 percent, the seventh highest among the industries tracked by Morningside, an independent investment research firm.

The justification of high prices and huge profits by pharmaceutical companies was “mostly fluff,” according to Frances. “Drug pricing has no relation to real cost or value and instead reflects Pharma’s monopoly position in the market and its dominance over politicians.”  At its worst, he said that pharmaceutical research is a “deceptive shell game” meant to seduce and mislead doctors and the public. “The claim that drugs are so expensive because they require so much research is pure smoke screen.”

In The Desolation of Smaug, the final scene shows the dragon Smaug rising up out of molten gold. Goaded by the unsuccessful attempt of the dwarves to destroy him, he flies off to take his revenge on the unsuspecting Lake-town of Esgaroth. Over the past sixty years we have allowed Pharma to gather a golden hoard through its profits from drug development. Like Smaug, Pharma jealously guards its hoard. If we take on a quest to right this injustice, we must be careful not to loose an angry, vengeful dragon upon an unsuspecting humanity by mistake.