Pharma, big pharma (17)

 Big Pharma. The Money Behind the Pills

Contents:

Chapter 1

Big Pharma’s New Deal: Acquisition and Little Innovation

Blockbuster Drugs Are So Last Century BY ALEX BERENSON

When Academia Puts Profit Ahead of Wonder BY JANET RAE-DUPREE

Grant System Leads Cancer Researchers to Play It Safe BY GINA KOLATA

Are Doctors Too Wary of Drug Companies? BY PAULINE W. CHEN, M.D.

Valeant’s History of Deal-Making BY WILLIAM ALDEN

Roche to Buy InterMune for $8.3 Billion BY ANDREW POLLACK AND MICHAEL J. DE LA MERCED

Why Are So Few Blockbuster Drugs Invented Today? BY DAN HURLEY

$2.6 Billion to Develop a Drug? New Estimate Makes Questionable Assumptions BY AARON E. CARROLL

Stop Subsidizing Big Pharma BY LLEWELLYN HINKES-JONES

Ways to Fund Research on Rare Diseases THE NEW YORK TIMES

AstraZeneca to Acquire Majority Stake in Acerta Pharma BY CHAD BRAY

Explaining Valeant: The Main Theories BY STEVEN DAVIDOFF SOLOMON

Chapter 2

Monopolies and Exclusivity Drive Price Spikes

Runaway Drug Prices BY THE NEW YORK TIMES

Costly Hepatitis C Drugs for Everyone? BY THE NEW YORK TIMES

New Cholesterol Drugs Are Vastly Overpriced, Analysis Says BY ANDREW POLLACK

Inflated Drug Prices THE NEW YORK TIMES

Drug Goes From $13.50 a Tablet to $750, Overnight BY ANDREW POLLACK

Big Price Increase for Tuberculosis Drug Is Rescinded BY ANDREW POLLACK

Valeant Under Investigation for Its Drug Pricing Practices BY ANDREW POLLACK

Senators Condemn Big Price Increases for Drugs BY ANDREW POLLACK

No Justification for High Drug Prices BY THE NEW YORK TIMES

Another Drug Pricing Ripoff BY THE NEW YORK TIMES

The EpiPen, a Case Study in Health System Dysfunction BY AARON E. CARROLL

The Complex Math Behind Spiraling Prescription Drug Prices BY KATIE THOMAS

The Lesson of EpiPens: Why Drug Prices Spike, Again and Again BY ELISABETH ROSENTHAL

Chapter 3

Disease Branding and the Profusion of Diagnoses

Ritalin Wars BY JUDITH WARNER

Disease Branding BY BEN SCHOTT

Still the ‘Age of Anxiety.’ Or Is It? BY DANIEL SMITH

Ruling Is Victory for Drug Companies in Promoting Medicine for Other Uses BY KATIE THOMAS

A.D.H.D. Seen in 11% of U.S. Children as Diagnoses Rise BY ALAN SCHWARZ AND SARAH COHEN

Is It Really A.D.H.D. or Just Immaturity? BY KJ DELL’ANTONIA

Overselling A.D.H.D.: A New Book Exposes Big Pharma’s Role BY STEVE SILBERMAN

A Profusion of Diagnoses. That’s Good and Bad. BY DHRUV KHULLAR, M.D.

Chapter 4

The Money Behind Epidemics: Preventing, Treating and Healing

For Profit, Industry Seeks Cancer Drugs BY ANDREW POLLACK

F.D.A. Advisory Panel Backs Preventive Use of H.I.V. Drug BY DENISE GRADY

Advocating Pill, U.S. Signals Shift to Prevent AIDS BY DONALD G. MCNEIL JR.

Painkillers Resist Abuse, but Experts Still Worry BY ALAN SCHWARZ

The C.E.O. of H.I.V. BY CHRISTOPHER GLAZEK

The Insanity of Taxpayer-Funded Addiction BY THE NEW YORK TIMES

F.D.A. to Expand Medication-Assisted Therapy for Opioid Addicts BY SHEILA KAPLAN

As Opioid Prescriptions Fall, Prescriptions for Drugs to Treat Addiction Rise BY ABBY GOODNOUGH

Chapter 5

The Trump Administration vs. Big Pharma

The Real Reason Medicare Is a Lousy Drug Negotiator: It Can’t Say No BY MARGOT SANGER-KATZ

The Fight Trump Faces Over Drug Prices BY KATIE THOMAS

Trump Vows to Ease Rules for Drug Makers, but Again Zeros In on Prices BY KATIE THOMAS

Drug Lobbyists’ Battle Cry Over Prices: Blame the Others BY ERIC LIPTON AND KATIE THOMAS

Draft Order on Drug Prices Proposes Easing Regulations BY SHEILA KAPLAN AND KATIE THOMAS

Lower Drug Prices: New Proposals Carry Lots of Promises BY KATIE THOMAS AND REED ABELSON

What Big Pharma Fears Most: A Trump Alliance With Democrats to Cut Drug Prices BY ROBERT PEAR

Trump Proposes to Lower Drug Prices by Basing Them on Other Countries’ Costs BY ROBERT PEAR

Stimulating ideas for drug development and pricing

New Health Technologies. Managing Access, Value and Sustainability

This new OECD report sheds light over several issues in an heterogeneous way, but the pharma chapter has a box that I want to highlight. It is really suggestive:

Future scenarios about drug development and drug pricing

These disruptive scenarios result from an expert consultation led by ShiftN and commissioned by the Belgian Health Care Knowledge Centre of Expertise and the Dutch Health Care Institute. The aim of the consultation was to imagine disruptive ways to finance R&D that could potentially better respond to public health needs.

Scenario 1: Needs-oriented Public-Private Partnerships
Public actors and drug developers are tackling public health priorities in vigorous and pragmatic partnerships. The public actor identifies indications representing high public health needs; specifies criteria for the performance levels of drugs to be developed for those indications; and indicates his willingness to pay. Through procurements with enforceable contractual commitments, the public actor enters into a partnership with drug developers to
find solutions for these needs. Developers are prepared to enter into the partnership and to give price concessions for a pre-negotiated fixed agreement on price and volume, and speedier access to market, which reduces their development risk. This drug development and pricing model is close to existing governmental procurement practices in researchintensive areas such as public transport, defence and space exploration.

Scenario 2: Parallel Drug Development Track
EU member states set up a parallel, not-for-profit drug development track that exists alongside, but independent of, the pharmaceutical and biotechnological industry. The aim of the parallel track is to develop cheaper drugs without compromising safety and effectiveness. After having made up an inventory of the public health gaps and priorities in health care, EU member state authorities ask leading public research institutes which
discoveries, assets, tools and capabilities they possess to develop solutions addressing (some of) the needs that were identified. Starting from the match between demand and available expertise, coalitions are built between these (not-for-profit) research institutes, payers, authorities and patients’ organisations. All these partners make the commitment to participate in an open and transparent way in clinical research projects. Intellectual
property (IP) rights are acquired early on in the development process by the partners of the consortium, and ownership is shared. Alternatively, the parallel research infrastructure can completely deprioritise ownership; i.e. inventions and developments in the parallel track are not protected and are in the public domain.

Scenario 3: Pay for Patents
A consortium of European countries join forces and establish a “Public Fund for Affordable Drugs”. Each of the participating countries deposits a fixed annual percentage of what it currently spends on drugs into the Fund. Private payers (including insurance companies) can also join the Fund. The Fund continuously screens the research market for “interesting” drugs that are being developed in Phase II or in Phase III for indications with clear health priorities. The Fund buys the patent from developers, conducts or commissions the last phases of research in public research institutes or subcontracts to private partners (with strict public oversight), and guides the submission process for market authorisation. Because the drug is then put on the market at a relatively low price, substantial savings are generated for the public payer. Once the system is functioning “at cruising speed”, these
savings can (partly) serve to replenish the Fund. The “Pay for Patents” model delinks R&D from manufacturing and sales. The prices decrease because the partners in the Fund consider medicines as public goods that should not be financed through monopoly prices.
Hence, once the patent is owned by the public sector, after a successful development and authorisation trajectory, the rights to produce, distribute and sell the drug can be licenced to manufacturers and distributors that provide the best deal in terms of quality, safety and accessibility for the lowest cost. As a rule, various private partners compete with each other, with the result that “new drugs enter the market at generic prices”.

Scenario 4: Public Good from A to Z
Drug development is essentially a public enterprise, and is radically re-oriented from serving private profits towards serving the public interest and patients’ needs. In a drug development system that is essentially a public enterprise, private drug companies still have a role, albeit with a completely different business model. They mainly manufacture drugs and deliver services to the public provider on a competitive basis. With drugs and other health technologies essentially public goods, patents and monopolistic prices have no role.
Patients and public health providers, not corporations, choose which unmet needs research should address. Public authorities regularly publish lists of research priorities, based on objectively established and patient-informed unmet medical needs. Governments organise and fund that research through a variety of mechanisms, including requests for proposals based on well-defined targets that any research team, public or private, can compete for, or milestone compensation, and active management of the innovation process. By paying directly for R&D and active management of the drug development pipeline, nations and health care systems pay much less than the patent-protected prices of the past. Ultimately, drug prices are set on the basis of the real costs of manufacturing, quality control and distribution, which are decoupled from R&D.
Source: Vandenbroeck, Ph. et al. (2016), “Future Scenarios About Drug Development and Drug Pricing”, Health Care Knowledge Centre (KCE) Report 271, D/2016/10.273/59, Health Services Research (HSR), Brussels.

Drug pricing 101 (2)

The New Drug Reimbursement Game. A Regulator’s Guide to Playing and Winning

In my former post I was backing a complete review of current drug pricing regulation. Any official that has to perform this task needs some fresh ideas and knowledge and this is precisely what a new book provides. In The New Drug Reimbursement Game by Brita A.K. Pekarsky you'll find the economic foundations for a new drug pricing regulation.
The basic argument:

Higher prices today mean increased economic rent for the pharmaceutical industry (Pharma) otherwise firms would not lobby for them. It is in Pharma’s interest to protect and seek these economic rents. Whether higher prices and more R&D today increase future health remains an empirical question. If higher prices also mean a higher net present value of the population’s health, then it is in the institution’s interest to increase prices. Given the institution’s objectives, the most effective strategy Pharma can use to protect these rents is “the Threat”: lowering prices is against the interest of health funders because it will reduce a population’s future health.

Therefore,

 The regulator’s challenge is to answer the following question:
• “How should rational institutions respond to the Threat?” (A rational response is one that is consistent with a given institution’s stated objective function, whatever this may be.)
This introduction places this research question in the context of current evidence and research, by addressing the following three questions.
• Is it plausible that the Threat exists and that it influences the price of new drugs?
• Is there rigorous empirical evidence that suggests that lower drug prices will result in reduced future health?
• Are economists in agreement as to the value of a decision threshold for new  drugs that accommodates characteristics of the health budget such as allocative and technical inefficiency?

And the conclusion:

When the Institution buys this new drug, it buys the health effects from this drug and the health benefits from future innovation. This is not the case with other health programmes. Therefore, unless the Institution pays a premium for the health effects from the new drug, the population will be worse off because innovation will be suboptimal and the future drug will not be produced.

Unfortunately, when you get to the end you'll miss any consideration about what innovation means. If you look at recent patterns of effectiveness of new drugs, you'll see that the value of innovation is under scrutiny, and most drugs would not pass the test. In my opinion, the regulator has to send signals about the value of health improvement in certain diseases and pharmaceutical companies should focus R+D on such fields and avoid others.
Therefore, a new companion to this book should be written. This is only a regulator's guide to play, but not to win. Take it only as a starting point.

PS. Just FYI, you'll not find the term "Budget impact analysis"  in the book, a close term Programme budgeting marginal analysis PBMA is what you'll find. It is suggested a price effectiveness analysis as a previous requirement for any PBMA, otherwise it makes no sense. This approach seems quite different to  yesterday's news.

Thomas Piketty speech at UPF Oct 2014, it starts at min 8:10. My post, last May.

Pharma, Big Pharma (2)

 Government, Big Pharma, and The People. A Century of Dis-Ease

A book to read, with this Table of Contents:

Dedication
Acknowledgements
Preface
Chapter One – Introductions
Health
Woman as a Biological and Social Entity
A Different Paradigm
Health Care and Rights
Drugs and Their Role in Society
Drug Policy
Big Pharma
Drug-Related Problems
The People
What’s Ahead
Conclusion
Chapter Two – The Four "P’s"
Introduction
Marketing as an Actualizing Process
The Marketing Mix/The Four "P’s"
Government and the Four "P’s"
Conclusion
Chapter Three – Investigators and Investigations
Introduction
The Hearings
The Grand Inquisitor
Gaylord Nelson – Son of Torquemada
The Fountain Hearings
Senator Kennedy Joins the Fray
Small Business Problems – Dingell
Drug Efficacy Problems – Fountain
Moss on Drug Abuse
Fountain Redux
Congressman Rogers on Transition
Senator Humphrey and the Literature
A Newcomer – Congressman Van Deerlin
Senator Fountain – "One More Time"
Senator Kennedy Returns
FDA Under the Microscope Again
Kennedy – Not Too Tranquil
Gore on Pharmaceutical R & D
Senator Fountain Again
Claude Pepper for the Old Folks
Zomax in the Spotlight
A Pryor Engatement
The Task Force on Prescription Drugs
Research Findings and Recommendations
Conclusion
Chapter Four – Legislators and Legislation
Introduction
Laws and Policy
Bills and Sponsors
The Process
Conclusion
Chapter Five – Regulators and Regulations
Introduction
The Food and Drug Administration
Other Regulators and Regulations
Federal Trade Commission
Federal Communications Commission
Drug Enforcement Administration
Centers for Medicare and Medicaid Services
Patents and Trademarks
State Regulations
Drug Names
Conclusion
Chapter Six – Non-Government Influence
Introduction
Self-Regulation
Third Parties – Managed Care Controls
Formularies and Prescription Limitations
Lawyers
Advocates and Adversaries
Mail Order Pharmacy
Pharmacy Benefit Managers and Outcomes Management
Conclusion
Chapter Seven – The People and Their Drugs
Introduction
The People as Patients
Health Belief Model
Case – Health Belief Model
Attitudes and Evaluation of Drugs
The Sickness Career
The Sick Role
The Sick Role in Acute and Chronic Illness
Compliance with Medication Regimens
Other Influences on Medication Use
What to Do
Death or Maybe Not
Conclusion
Chapter Eight – Response of Big Pharma
Introduction
Response to Government
Big Pharma Speaks
Response of Big Pharma to the People
Some Ideas for Big Pharma
PMA Monographs
Statesmanship
Conclusion
Chapter Nine – Little Pharma and Friends
Introduction
Generic Pharma – Not So Little
Big Bio
What is Special about Specialty Drugs?
Little Boutiques
Back to the Future – Compounding Pharmacists
Friends
Conclusion
Chapter Ten – Greedy Big Pharma
Introduction
Two Parts of Greedy
AARP and Greedy Big Pharma
Congress and Greedy Big Pharma
Risk vs. Reward
Greedy Big Tech
Conclusion
Chapter Eleven – Whence the Drugs?
Introduction
Origins of Drugs
Drug Product Development
Marketing in the Last Century
Invention, Discovery, Development
Curiosities and Surprises
Recommended Reading
Conclusion
Chapter Twelve – Drugs of the Future
Introduction
But Seriously
Drugs in an Aging Society
Future Drugs for the Aged
Lifestyle Drugs
Conclusion
Chapter Thirteen – The Non-Prescription Products Market-Dr. W. Steven Pray
Introduction
Patent Medicines
Laws That Regulated Non-Prescription Products
FDA’s Review of O-T-C Products
The Prescription to O-T-C Switch
A Third Class of Drugs
Quackery – Lacking Proof of Efficacy
Quackery – New Names Confer False Respectability
Conclusion
Chapter Fourteen – Issues and Studies in Pharmacoeconomics
Introduction
The Emergence of Pharmacoeconomic Research
The Cost of Illness
Quality of Life Assessment
The Economics of Non-Compliance
Economic Epidemiology
Conclusion
Chapter Fifteen – On Drug Prices – Dr. E. M. "Mick" Kolassa
Pricing: The Forgotten "P"
The Growing Importance of Pharmaceutical Prices
Prices, Politics and Problems
Pricing Terminology
What is a Pharmaceutical Price?
Price Decision Making
The Value of Pharmaceuticals
The Future of Pharmaceutical Pricing
Chapter Sixteen – Summary, Ruminations and Apologia
Introduction
Ruminations
Trends
What If’s
Apologia

El pensament il·lusori sobre els preus de les teràpies genètiques

Sources of Innovation in Gene Therapies — Approaches to Achieving Affordable Prices

Miro el NEJM  i em trobo un article sobre com pagar la innovació farmacèutica que ve, tema molt important del que no s'en parla prou. I allà es recorda el seu origen: 

All gene therapies approved in the United States thus far have their origins in academic institutions or spinoffs from such institutions that developed indispensable know-how and underlying forms of  technology

 I també recorda l'alt preu pagat per l'adquisició d'aquestes noves empreses amb l'expectativa de preus desorbitats.

Pharmaceutical manufacturers have actively participated in latest age clinical development and testing of the approved gene therapies, and a few have played major roles in expanding the market for these therapies, often by buying smaller companies. The costs associated with these acquisitions and licensing agreements can be very high. For example, Gilead was reported to have acquired Kite Pharma (which had rights to axicabtagene ciloleucel and brexucabtagene autoleucel) for $11.9 billion, and Novartis acquired AveXis (which had rights to onasemnogene abeparvovec) for $8.7 billion. The costs of such intellectual property are largely driven by the absence of limits on drug prices in the U.S. market. The resulting high prices can impose an enormous acute financial burden on patients and payers.

I després explica què fer. Una primera opció seria produir acadèmicament teràpies genètiques. L'exemple CAR-T ens sonarà familiar, i cita Suïssa però s'oblida l'Hospital Clínic i de l'Hospital de Sant Pau:

 The cost to produce tisagenlecleucel, for example, was estimated at approximately $70,000 — a fraction of the therapy’s current prices in the United States and Europe. One approach would be for academic and other research institutions to conduct or contract out late-stage development activities — such as managing clinical trials, corresponding with and submitting applications to the FDA, and manufacturing — for publicly funded treatments that they discover. University hospitals in Switzerland have formed an alliance to manufacture gene therapies in-house to reduce costs and improve accessibility.

L'altra opció seria, llicenciar:

 Regulators and policymakers could encourage institutions that receive federal funding to engage in nonexclusive licensing for certain key platform innovations that are part of the gene-therapy processes they have developed, in keeping with their mission and in recognition of the public funding that supports such discoveries. Licensing to multiple manufacturers would spur competition, which could help improve the technology over time and contain treatment prices.

I la tercera, compra conjunta

A third approach would be to facilitate systemwide price negotiation for gene therapies. In industrialized countries that have mechanisms for drug-price negotiation, prices for such therapies are high but still generally lower than prices in the United States 

Més que opcions possiblement són desitjos. La darrera seria la mesura més definitiva de totes.  Les multinacionals són globals, els mercats locals. Però tot i així ens enfrontaríem a gestionar amb transparència la discriminació de preus per part dels pagadors i reguladors. Implica un govern planetari inexistent, i si existís potser l'altra part no voldria negociar...

En definitiva, d'això s'en diu "wishful thinking", pensament il·lusori. D'il·lusió també en viu el NEJM.

Imatge per guardar i ensenyar quan calgui explicar d'on venen les innovacions...

PD. Fa uns cinc anys vaig fer una conferència on vaig explicar com la farmàcia hospitalària s'enfrontava a un canvi en la funció de producció. I aquest canvi seria provocat inicialment pel receptor antígen quimèric per a les cèl·lules T, CAR-T. Es van sorprendre força. Els temps passa i confirma el que vaig dir. El que sorprèn és que no s'hagi formalitzat com a tal aquest canvi i no es plantegi un canvi organitzatiu profund on s'analitzin les economies d'escala i aprenentatge possibles.

Exposició a Barcelona

The farce of confidential drug prices

We are approaching the end of cost-effectiveness as we have known. If you can't use the price of the drug because it is confidential, then there is no possibility of cost-effectiveness analysis. As far as Pfizer has sued a public agency because its officials have leaked the prices, then everybody that uses such information is at risk of being sued. I had already said that some time ago, when in our country we moved to confidential prices. This trend is ridiculous, getting better discounts comes at the price of opacity. And opacity is an extraordinary arm to prevent competition and constrain prioritisation. Qui prodes? It's up to you to get the answer, for me it's clear. If money comes from taxes, the citizens have to know the final price paid. The time to finish such farce has come.

PS. On why external reference pricing is meaningless (p.36):

The practice of lowering list prices through discounts, rebates and similar financial arrangements15 between public payers and the MAH is wide-spread. 22 countries reported that discounts, rebates or similar financial arrangements (e.g. managed-entry agreements such as risk sharing schemes) – either statutory (i.e. based on a law) or confidential (based on agreements) – are in place. As will be discussed later in more detail (cf. Chapter 4.1.2), the widespread use of the discounts and similar provides financial benefits to the country using it, but the other countries referencing to that country do not benefit from the lower prices since they refer to undiscounted higher prices.

Rembrandt. Self portrait

Current exhibition in Caixaforum - Barcelona



The bill of new drugs

The Contribution Of New Product Entry Versus Existing Product Inflation In The Rising Costs Of Drugs

In the US there is a huge concern over drug prices. The question is what's driving expenditure growth, new product entry or inflation? In new product entry we have two categories, generic drugs and innovations (in specialty drugs). The answer appears in the latest issue of Health Affairs.

In this retrospective study of pharmaceutical pricing data for 2005–16, we found that increases in the costs of specialty and generic drugs were driven by the entry of new drug products, but rising costs of brand-name drugs were largely due to inflation in existing medication prices.

The costs of oral and injectable brand-name drugs increased annually by 9.2 percent and 15.1 percent, respectively, largely driven by existing drugs. For oral and injectable specialty drugs, costs increased 20.6 percent and 12.5 percent, respectively, with 71.1 percent and 52.4 percent of these increases attributable to new drugs. Costs of oral and injectable generics increased by 4.4 percent and 7.3 percent, respectively, driven by new drug entry. The rising costs of generic and specialty drugs were mostly driven by new
product entry.

We would need similar data for our country. Nobody knows anything, prices are confidential.

PS. On drug pricing scams.

Count Basie and the beginning of swing

Are Pharmaceutical Companies Earning Too Much?

Are Pharmaceutical Companies Earning Too Much?

Estimated Research and Development Investment Needed to Bring a New Medicine to Market, 2009-2018

The debate about pharmaceutical companies earnings is a never ending story. Now you can find in JAMA an article that reflects the cost of a new drug: $1336 million. This is the summary:

The FDA approved 355 new drugs and biologics over the study period. Research and development expenditures were available for 63 (18%) products, developed by 47 different companies. After accounting for the costs of failed trials, the median capitalized research and development investment to bring a new drug to market was estimated at $985.3 million (95% CI, $683.6 million-$1228.9 million), and the mean investment was estimated at $1335.9 million (95% CI, $1042.5 million-$1637.5 million) in the base case analysis. Median estimates by therapeutic area (for areas with ≥5 drugs) ranged from $765.9 million (95% CI, $323.0 million-$1473.5 million) for nervous system agents to $2771.6 million (95% CI, $2051.8 million-$5366.2 million) for antineoplastic and immunomodulating agents.

Why this new figure is relevant? Because previous estimates said that it was the more than the double!

The mean estimate of $1.3 billion in the present study was lower than the $2.8 billion (in 2018 US dollars) reported by DiMasi et al,

And   my impression is that we have entered in a difficult world to estimate the real cost. Right now many firms are buying research (buying firms that have already a product close to be commercialised) and they are paying a premium for outsourcing research. Therefore, how to estimate the cost in this situations? Uncertain.

David Cutler asks about the earnings of pharma firms and says:

Ledley showed that from 2000 to 2018, the median net income margin in the pharmaceutical industry was 13.8% annually, compared with 7.7% in the S&P 500  sample. This difference was statistically significant, even with controls, although earnings seemed to be declining over time.

Is this positive return differential evidence of too high a return? Not necessarily. The economics of pharmaceuticals are important to consider. Like several other industries (eg, software and motion picture production), the pharmaceutical industry has very high fixed cost and very low marginal cost. It takes substantial investment to discover a drug or develop a complex computer code, but the cost of producing an extra pill or allowing an extra download is minimal. The way that firms recoup these fixed costs is by charging above cost for the product once it is made. If these upfront costs are not accounted for, the return on the marketed good will look very high.

 Paying more than a drug is worth clinically is not a good strategy. Even if a drug is worth a high price socially, pricing patients who need the drug out of the market is a real loss, even if it leads to more innovation in the future. In still another case, price increases for older, generic drugs serve no innovation purpose. But, as a general rule, it is important to be wary of blunt “lower all drug prices” policies.

Cutler doesn't say too much on price according value and about public funding of research. It leaves the initial question open and waiting for adhoc answers. That's it , it's a complicated issue, no general prescriptions, they need to be adjusted to specific conditions without a captured regulator. This last point is the most difficult one to overcome.

Prix Pictet

Preus raonables per a rics i pobres

Setting Cost-Effectiveness Thresholds As A Means To Achieve Appropriate Drug Prices In Rich And Poor Countries 

Sempre ens molesta que ens aixequin la camisa. Volem pagar un preu que es relacioni amb el valor que ens aporta i que sigui fruit de la lliure disponibilitat a pagar de cadascú. Però, això sabem que no és del tot així en molts mercats, hi ha problemes de tota mena i el més important el d'informació. Quan estem assegurats desapareix la barrera del preu i aleshores són les asseguradores públiques i privades que compren per nosaltres. A elles tampoc els interessa que els aixequin la camisa, però alhora volen garantir accés. I ja hi som. Com fer-ho?
La Patricia Danzon, Adrian Towse i  l'Andrew Mulcahy analitzen què està passant al món amb els preus dels medicaments i fan una proposta a HA (finançada per Lilly). Transcric un paràgraf clau:

Examining drug pricing, we found that in rich countries, insurance coverage can make consumers insensitive to price, which means that manufacturers' prices are largely unrestrained unless payers intervene. In middle- and low-income countries, where most consumers pay for drugs out of pocket, we found that the poorest countries face the highest prices, relative to their mean per capita income. We recommend that countries and payers set their own cost-effectiveness thresholds to reflect how much they are willing to pay for "health gain"-in other words, for a measured improvement in the health of a person or a population. Adopting this approach broadly should lead to appropriate price differences across and within countries, benefiting consumers and manufacturers alike.

A l'interior de l'article veureu l'èmfasi en un llindar cost-efectivitat per tal de fixar preus. Bé, aquest és un tema complicat. Crec que ens cal tenir-ho present però no sé si la seva aplicació ha de ser totalment prescriptiva o si cal que sigui només indicativa. Les febleses metodològiques d'aquest llindar són conegudes i cal anar en compte. Per tant, ens convé mesurar el valor que aporten els medicaments, i relacionar-ho amb el preu, però també cal tocar de peus a terra i admetre les limitacions.

PS. Salaris raonables per a docents universitaris. La decisió de reduir un 44% el sou als professors associats és molt més que el 5% que s'ha reduit als metges de la sanitat pública. És això una reducció salarial raonable?. Ho deixo dit aquí i qui ho vulgui llegir pot consultar LV. La mesura és per avui, l'impacte serà a llarg temini.

PS. La festa s'ha acabat però hi ha elements que encara volen continuar ballant amb els nostres impostos i els polítics els ajuden. Un altre exemple, la venda de la CAM

The farce of confidential drug prices (2)

Payers’ experiences with confidential pharmaceutical price discounts: A survey of public and statutory health systems inNorth America, Europe, and Australasia

Some months  ago I posted on confidential drug pricing. I said that this was the end of cost-effectiveness as we have known. Now a new article reflects the evidence of my words:

Confidential price discounts are now common among the ten health systems that participated in our study, though some had only recently begun to use these pricing arrangements on a routine basis. Several health systems had used a wide variety of discounting schemes in the past two years. The most frequent discount received by participating health systems was between 20% and 29% of official list prices; however, six participants reported their health system received one or more discount over the past two years that was valued at 60% or more of the list prices. On average, participants reported that confidential discounts were more common, complex, and significant for specialty pharmaceuticals than for primary care pharmaceuticals.

If confidential discounts are huge (>60%), as they are, any cost-effectiveness analysis is adhoc and its obsolescence undermines any result. This fact is the recognition that the pricing system is not working and we are under a procurement system. As I said some months ago:The time to finish such farce has come.

A lifetime fair drug pricing system

When Is The Price Of A Drug Unjust? The Average Lifetime Earnings Standard

Is there any measure for unfair pricing in drugs?. According to Ezequiel Emanuel prices should not

"exceed 11 percent of the average American’s disposable income. This suggests that current prices for many drugs are excessive and unjust."

Why?.

Currently, average lifetime costs for health care are estimated at 31 percent of disposable income. Drugs account for 17 percent of health care expenses. A threshold for medical care as a share of disposable income that is set 10 percentage points higher than the current average amount spent on medical care (at 41 percent, or $261,907) is generous, as is a threshold for drug costs as a share of medical costs set 10 percentage points higher (at 27 percent, or $70,715) than the current share. Using these standards, the costs for all of the drugs a person takes in a lifetime should not consume more than 27 percent of medical costs, or $70,715. This constitutes 11 percent of lifetime disposable income.

He achieves this conclusion after applying these principles:

1. Complete life. The unit of analysis should not be a year or other limited time frame, but rather the impact over a whole lifetime
2. Limited resources. The just price of a drug should reserve enough resources for people to pursue valuable life activities
3. Value. There should exist a close relationship between the actual benefits of an intervention and its price
4.  Comprehensiveness. Life activities other than health matter; in considering the benefits of a treatment, we should also consider how it affects education, employment, and other valuable life activities

This article represents a deep change of perspective on drug pricing. Cost-effectiveness of individual drugs are not enough, a lifetime and societal perspective is necessary. I agree in this part, however methodological implications are huge and uncertain.

Bonnard at Tate modern right now

Drug pricing 101

In his book "Reinventing the bazaar. A natural history of markets", John McMillan says:

Market design consists of the mechanisms that organize buying and selling; channels for the flow of information; state-set laws and regulations that define property rights and sustain contracting; and the market’s culture, its self-regulating norms, codes, and conventions governing behavior. While the design does not control what happens in the market—as already noted, free decision-making is key— it shapes and supports the process of transacting.

If we look at the pharmaceutical market, there are unique features. The government role is at the same time the "market designer" and mostly the monopsonist. The price setting mechanism relies on multiple regulations that evolve according to circumstances. For example, since 2012 there has been no information about patented drug prices accepted for public funding. It sounds quite weird in a moment that everybody is proud of boosting transparency. The debates over the new pricing decree are still more strange. The current mess was explained some months ago in this op-ed. The uncertainty now also embraces pharma-distribution, pharmacists complain about the system.
Such a pricing system is explained in  this presentation (details about pricing in p.6). As far as it is unsatisfactory for everybody, it needs to be rebuilt. My suggestion is that there is a need to start from scratch. John McMillan would say that we have to look for a clever market designer to reinvent drug pricing as soon as possible.

Fasten seat belts

We have entered into an unknown new world: drug prices -for innovative drugs- are on track to disappear. The NHS has agreed a cap on expenditure for a hepatitis C (sofobusvir) new drug in €125m without disclosing the unit price. Some people may consider it an opaque strategy in times that politicians claim transparency.
In my opinion, such a situation allows to understand better that the pharmaceutical market for innovative drugs is mostly a monopsony (one buyer) in a monopoly (one seller), it is not a competitive market - and this is what I have always considered. Therefore, resource allocation is the result of a bargaining between both parties, and the unit price is irrelevant. The buyer wants to maximize health,  the seller is maximizing income, this is exactly the struggle.
The key question is: How much is NHS willing to pay for better health?. As far as  the budget is limited, the number of treatments times the price is not the right way to proceed to maximize health under constrained resources.
Any government has to set priorities for expenditure according to expected health value created. This information should be public. In any case, when a new drug is available the government should clearly define which benefits are cancelled and which are acceptable. A responsible minister can't  agree new expenditures without any budget.
Therefore, innovative pharmaceutical market is not really a market -right now is clear- and governments should set priorities according to resources available -right now is also clear that they haven't done it-.
Fasten seat belts, we are entering into trying times without any political compass-gps. Citizens are expecting something different. I still remember when Victor Fuchs told long time ago: usually health economists discuss incremental cost-effectiveness in limited marginal terms, the real issue appears when such an amount is enormous. The case of hepatitis C is the example of such a situation, and only health policy and deliberative democracy are the tools to confront it. Unfortunately, this was not the strategy applied nearby.

PS. Catalonia in contention, at Harvard Political Review. Must read, if you are interested on what's going on. Otherwise, try Bloomberg op-ed or LAtimes.

PS. Reading Francesc-Marc Alvaro op-ed I always learn something.

PS. Rating catalans' well-being by OECD.

Ricard Molina. Muntaner-Velódromo. Galeria Barnadas

A successful implementation of a bad idea

Since 2012 it hasn't been posible to know the price of new drugs funded by NHS. The government considers that they are confidential. This is a clear example of what exactly means transparency and the application of the rule of law. Meanwhile a new strategy has been put into place. Without public prices, the government has decided to set budget ceilings for several innovative drugs: pertuzumab, ivakaftor, telaprevir/simeprevir, abiraterona, pirfenidona y ruxolitinib. And the last one is new drugs for hepatitis C, defined as "therapeutic group" not as a specific molecule. Following this strategy there is a proposal to extend such a model of budget ceilings by ATC, therapeutic classification.
This is really a bad idea that is already being implemented. As you know sometimes there are good ideas badly implemented, and therefore criticized. But in this case, it is a bad idea with a scrupulous implementation. Some officials consider that if they set a budget ceiling, all decisions will be taken  to fit in with it. Clinical decisions follow a different path, not the mechanical and administrative way officials are used to.
The measure represents a tough hit to economic evaluation, because in the next future the government will not be any longer interested in it. Why? Their only concern is about the budget ceiling, the value doesn't matter. A missed opportunity for the development of priority setting under a rational scheme. Health economists should react to such a big mistake.
The saddest  issue is that nobody knows what will happen when the budget ceiling is surpassed. This will be the job for the next government, nobody cares about it right now. Democracy and rule of law are only words subject to interpretation.

PS. All the details about hepatitis C controversy at Boletín AES.

PS. Understanding the foundations of confidential drug pricing, in Forbes.

PS. Explained at Health Affairs:

International Best Practices For Negotiating 'Reimbursement Contracts' With Price Rebates From Pharmaceutical Companies

By: Morgan, Steven; Daw, Jamie; Thomson, Paige

HEALTH AFFAIRS  Volume: 32   Issue: 4   Pages: 771-777   Published: APR 2013

 Abstract

Reimbursement contracts, in which health insurers receive rebates from drug manufacturers instead of paying the transparent list price, are becoming increasingly common worldwide. Through interviews with policy makers in nine high-income countries, we describe the use of these contracts around the globe and identify related policy challenges and best practices. Of the nine countries surveyed, the majority routinely use confidential reimbursement contracts. This alternative to drug coverage at list prices offers benefits but is not without challenges. Payers face increased administrative costs, difficulties enforcing contracts, and reduced information about prices paid by others. Among the best practices identified, policy makers recommend establishing clear and consistent processes for negotiating contracts with relatively simple rebate structures and transparency to the public about the existence, purpose, and type of reimbursement contracts in place. Policy makers should also work to address undesirable price disparities within their countries and internationally, which may occur as a result of this new pricing paradigm.

The low marginal benefit of ultra-expensive drugs

 Assessing the Added Therapeutic Benefit of Ultra-Expensive Drugs

In US:

The number of ultra-expensive drugs and Medicare beneficiaries taking these drugs has grown significantly, resulting in a very high concentration of Medicare Part D spending on ultraexpensive drugs. Between 73% and 85% of these drugs assessed in France, Canada, or Germany received a low added  therapeutic benefit rating. Policy reforms to address drug prices in the United States should consider developing an assessment framework for added therapeutic benefit to incentivize and reward the development of drugs that offer a significant clinical improvement over the current standard of care. In the interim, use of international assessments would be possible.

However, it may seem weird to our eyes, but:

 Medicare Part D in particular has a problem with ultra-expensive drugs, since it pays nearly 80% of the cost of these drugs, and by law Medicare cannot directly negotiate the price for these drugs with the drug companies

Public funding without the possibility to set the contract for low marginal benefit drugs! The result:

Medicare Part D spending on brand-name drugs for these ultra-expensive drugs increased from 1.5% in 2012 to 19% in 2018

The answer is change the law and set benefits package according to added value. 

Helen Clockburn collection MOMA

Bidencare

 Which Way Will Biden Go on Health Care?

David Cutler says in JAMA:

The biggest choice for the Biden administration and Congressional Democrats is whether to continue with the Affordable Care Act (ACA) or start the transition to a single-payer system. Continuing with the ACA would involve making the recently enhanced subsidies in the ACA’s marketplaces permanent, enacting a public insurance option, providing stronger incentives for Medicaid expansion in recalcitrant states, and pushing for targeted savings in drug prices and administrative costs. A transition to a single-payer system would begin by lowering the age of eligibility for Medicare to 60 years or perhaps 55 years, possibly expanding benefits in areas such as vision, hearing, and dental care, and allowing Medicare to negotiate with drug companies. These 2 approaches are not incompatible; however, it is unlikely that there will be enough money for both.

Clear message to whom it may concern.

 Hockney

L'eficiència de l'atenció no presencial

The COVID-19 Pandemic and the Future of Telemedicine 

Els fets són toçuts i fan canviar comportaments quan menys t'ho esperes. I això és el que va passar durant la pandèmia. Havíem d'accedir al contacte expert amb metges i estava limitat. La telemedicina es va presentar com a solució efectiva a un problema real. Però no és que no hi fos abans, moltíssima gent es va adonar que existia "La meva salut" just en el moment de la pandèmia (1,5 milions d'altes el 2020). La infraestructura havia costat molt bastir-la però estava apunt. Algú es pot imaginar com s'haurien pogut gestionar els 9,4 milions de contactes realitzats només mitjançant TIC l'any 2020?.  Si a això afegim els 18,6 milions de contactes telefònics, tenim 28 milions de contactes no presencials, en comparació als 24,7 milions de contactes presencials. El resultat és que les tecnologies de la comunicació van ajudar a resoldre el 53% dels contactes i van contribuir moltíssim a resoldre problemes de salut durant la pandèmia. Altres països de l'OCDE van fer una proporció inferior de teleconsultes, vegeu el gràfic de l'informe de l'OCDE:

El missatge és que la tecnologia ajuda però també complica les coses si no som capaços de gestionar-la. Ens cal donar una resposta acurada amb una nova organització de les tasques. Ara que tant es parla de la càrrega burocràtica dels metges, caldria donar-hi resposta precisament mitjançant una nova organització de les tasques, on precisament la tecnologia de la informació hi té molt a dir. Posar a l'abast l'accés a les  tecnologies de la informació en medicina sense modificar l'organització és motiu de desajust assegurat. 

Més enllà de la millora en l'accés a l'assistència que aporten les TIC, i per tant una major quantitat de contactes no presencials, caldria també comprendre quin és el valor que aporten, i per tant com contribueixen a una major eficiència. Caldria doncs separar el gra de la palla, allò que realment afegeix valor a la salut en l'assistència no presencial d'allò que és superflu i ens ho podríem estalviar i alhora suposa una càrrega evitable. I d'aquesta manera aclarir quina part tenen les TIC de substitutives o si són simplement additives. D'això en sabem poca cosa, només aquí en trobareu un exemple encertat. Ara ens en falten molts més exemples en temps fora de pandèmia.

PD. Avui toca llegir FT també. Big pharma groups rejoin battle with governments on drug prices. Si no hi teniu accés me'l podeu demanar per correu electrònic.

El missatge: 

When European health authorities head to the negotiating table, they will have to come to terms with a drug industry that is no longer focused on producing daily pills to pop.

Whereas drugmakers used to make a little from each patient in a large market, increasingly they are focused on charging more to treat small subsets of patients, with rare diseases, or in oncology, with a certain mutation in their tumour.

Governments have not been giving their health systems more money to cope with this change.

Tot d'una algú s'ha adonat que no hi ha mercat en els medicaments sota patent, sino que tenim un monopsoni. Ha tardat molt, però ha arribat el dia que han conegut el monopsonista que és qui mutualitza el risc poblacional d'emmalaltir. I ara només cal veure com es desenvolupen els escenaris, o captura del regulador/monopsonista o benestar social. 

Fasten seat belts (3)

In former posts I have argued that pharmaceutical pricing is forging a new trend. The summary is in this figure (US prices):

The latest FDA approved drug is Harvoni, for hepatitis C. This new drug will compete with Sovaldi, the best drug launch ever made by the same manufacturer, 9.000 million $ in sales in 9 months.
The soaring costs of drugs is also affecting the generics market in US. Have a look at this blog.
As far as the economy is not growing at the same pace, new resources are needed and this may come from reductions on current drug benefits (price or quantity) or less expenditures in non-pharmaceutical goods. Otherwise the option is to delay access. Is this an option for cost-effective therapies?

Pharma industry regulation: extracting or creating value

 The Global Pharmaceutical Industry. The Demise and the Path to Recovery

The pharmaceutical industry has reached a tipping point. Its business growth is predicated upon fagrantly raising drug prices (especially in the U.S.), thereby increasing the inability of patients to afford medications. The clinical trials that provide the basis for pharma’s new drug development rely on biased designs to favor approvable outcomes, even as sponsors selectively publish mainly the reports that contain favorable results for their test drugs. The industry’s research process exerts a corrupting infuence on medical researchers and the channels of medical communication, while its everyday product promotions involve regular payments of financial and other inducements to prescribers that effectively constitute bribes. Even its involvement in continuing medical education poses a confict of interest and a corrupting infuence on medical practitioners.

If pharma continues operating in this manner, it cannot complain when citizens worldwide demand their governments impose onerous restrictions. Each passing week sees the emergence of additional outrages that make such controls more likely.

Any generalization doesn't fit with an objective observation of reality. However, in chapter 5, you'll find proposals for a new regulation.  

Efficiency in drug patents buyout

Panning for gold: sourcing pharmaceutical innovation

Once upon a time there were pharmaceutical firms that invested mostly in internal R+D departments. Long time ago, the door was opened to contracting out, buying patents and licensing. The most recent step is to the acquisition of firms with promising molecules.
A short article in Nature sheds some light about the efficiency of recent mergers and acquisitions. And the summary is:

Our analysis suggests that most companies have a considerable opportunity to get better at deploying capital and resources efficiently when sourcing innovation externally. In our experience, we have found that the best performers develop robust forecasts for the key assets, are fiscally disciplined, and set up their innovation-sourcing teams and transaction capabilities to ensure that the right internal expertise is brought to bear and to ensure smooth hand‑offs through the life cycle of a deal.

The success lies within, the internal expertise is crucial. Have a look at the figure and you'll notice that the most efficient (defined as the commercial impact of the products acquired relative to capital deployed in M&As) is Roche. This is not by chance.

PS. Unfortunately, the study doesn't reflects any consideration to value in health or lobbying efforts in drug prices.
PS. FT's summer books 2015