Archive for category Drug Marketing
Should the US privatize the Veterans Administration hospitals and clinics? Let’s put the assumptions in the question on the table:
- Bureaucracy is bad
- US health care is good
- The US is in continuous war
- Treating the wounded is too expensive
This blog is about healthcare, not geopolitics, yet the temptation to see war as a disease is difficult ignore. Let’s not go there. Instead, compare the VA system with the proposed replacement.
|VA Healthcare||Private US Healthcare|
Would a veteran actually want private healthcare? Perhaps veterans living a long distance from a VA facility would choose private care. But, if VA facilities are close who would want to enter a private system that is hugely expensive, not focused on war injuries, poorly managed, and has low quality ratings?
The real answer to the initial question is that private US healthcare needs to improve tremendously. If and when that happens then the need for the VA would naturally disappear. And, by the way, less war would help.
New drugs need to be compared to something. And, at a very minimum that something is the placebo, a sugar pill. When you see an advertisement claiming some product is 80% better, a reasonable person would ask, “better than what?”
A comparison group is hugely important in all of science. One of the biggest flaws in all research is not picking an appropriate control or comparison which makes the research worthless.
Erik Vance of the Washington Post reported on 12/2/16: “People susceptible to the placebo effect may be keeping us from getting new drugs.” The idea is many drugs can’t be proven to be better than a placebo. The FDA prevents those poor drug companies from marketing those drugs and making tons of money.
So here is the anti-scientific conclusion Mr. Vance reported: only use people that are unaffected by placebos in the control group. Sadly, that would exclude most conscious human beings. The control group would be strange people that could feel the tiny effects of the drug and ignore any psychological impact of taking a pill. And, voilà drug approved. A drug that most people would find no better than eating a sugar cube could be marketed at $800 per pill. And, advertisements could fool most practicing physicians into prescribing it.
This idea is totally nuts. The FDA would be within its authority to only allow the drug to be prescribed to that small group of strange people, not the whole world. Assuming the FDA was reasonably competent the idea and the huge profits should go down the drain.
Do you want to take a medicine that fails to work as well as a sugar pill? Probably not. Expect good science. Demand honest comparison with placebos.
The Affordable Care Act (ACA) does have some teeth to reduce drug prices. The ACA formed a 15 member group intended to restrain the growth in cost of Medicare without reducing benefits. The Independent Payment Advisory Board (IPAB) has powers to improve efficiency and prevent Medicare from being victimized by business interests.
Mergers of large pharmaceutical companies have created near monopolies for setting prices — the new specialty drugs are a case in point. Also, by repeatedly suing smaller companies and generic manufacturers the competition is under siege if not defeated. The huge rise in drug prices have become a national disaster because individuals and Medicare just can’t afford the price gouging.
The IPAB has some power to help the problem — hopefully they will act to implement reference pricing of new drugs. It forces drugs with a similar effect to charge the same amount — old drugs and new. So if a new wonderful drug “Neximabob” is no better for arthritis than ibuprofen then the prices must be the same.
The Federal Drug Administration can not require drug-comparison research. This has been a wonderful marketing loophole for big pharma. It’s time consuming to do comparison research. By the time “Neximabob” is found to be a sham, billions of prescriptions have been filled,billions of dollars have been paid and Medicare has lost billions. But, you will be happy to know, the FDA says “Neximabob” is safe and effective.
The IBAP can act on expert opinion rather than wait for full comparison research. One option for drug companies is to do the comparison research (which they fight) or do more lobbying (more that the hundreds of millions they already spend).
Guess where the money for drug lobbying comes from? the very tax payers and Medicare recipients who pay for the medications in the first place — it’s just not fair. Next time you hear the IBAP is so so bad you will know who is speaking — it’s not consumers!
Note: According to the Congressional Research Service the IBAP is not currently active because the rise in Medicare cost in 2015 is not enough to trigger actions by the committee. There is some thought it may become active in 2017 unless repealed by Congress.
The purple pill tops the list of the most expensive drugs for government health programs in 2013. No, your first reaction to blame the government is wrong — the drug is prescribed by health care providers — and, the government is prevented by law from negotiating drug prices. Why is this a problem? –there was a perfectly fine OTC generic substitute available in 2013 at only 6% of the cost.
WHAT??? Prescribers wrote prescriptions for a drug that could have been substituted by an equivalent drug and saved 94%. OK, at the margins of the argument, at the fringes of reality, at the level it makes no clinical difference, big pharma says it might not be a perfect substitute. A good example where the “perfect” is the enemy of the very good.
But, how could prescribers and patients have the wool pulled over their eyes? — fantastic marketing. And, by the way, if you take this drug, send me your name, address, social security number, and bank account number, I have a nice bridge to sell you.
The magnitude of the problem became crystal clear when CMS published prescription data. The following data is widely reported from CMS as the spending on drugs through Medicare’s Part D prescription-drug program in 2013:
|Rank||Brand Name||Generic Name||Number of Claims||Cost in Billions|
Omeprazole is a very good substitute for Nexium for heartburn and reflux. Despite the cloud of industry generated studies many pharmacists say the two drugs have equal effects. As the table above shows omeprazole was prescribed 4 times as often as Nexium but the providers who chose Nexium created a vastly larger and unnecessary cost. Why Nexium is even be on the Medicare Part-D formulary is a mystery. Who pays the bill? — taxpayers, of course, and the patients who paid a co-pay higher than the full cost of an equivalent.
In 2015 Nexium became an over the counter drug (OTC) and just as you might suspect it now costs about the same as OTC omeprazole — about $32 for 56 pills (at Costco) rather than $300.
Where is the oversight? Where is the cost control? Why is US healthcare so expensive? Need more examples? Just look at the other medications on the list.
Hospitals suffer (and consumers pay the price) when drug companies price medications with usage targets and drug baskets. These techniques are euphemistically called “Guerrilla Marketing” but should be called ILLEGAL Pharmaceutical companies should be restricted to selling or pricing drugs one drug at a time.
What’s going on? The drug companies take advantage of the difficulty hospitals have to convince doctors to stick to a limited group of hospital drugs (a formulary). When the hospital convinces (by internal marketing) the staff to accept certain drugs it’s hard to reverse course.
- Usage Targets: a hospital gets a better price using one company’s drug 90% of the time. So good in fact, even if a less expensive competitor shows up hospitals don’t change — because the hospital pharmacy does not want to contradict the internal marketing they already did to reach that 90% target. And, when the usage falls below 90% a huge price increase hits. If they could totally stop using the drug things would be ok but they can’t.
- Drug Baskets: a hospital gets a sweet deal on a blockbuster drug by agreeing to exclusively use a few of that companies low cost drugs. Later, the drug company raises the wholesale price of the low cost drugs but still gives the hospital the same sweet deal. It looks like the whole basket of drugs is even a better deal. But, when the blockbuster drug goes generic it’s hard to figure out what to do. The basket deal seems good unless the hospital looks for substitutes to the formerly low cost drugs. Many hospitals stumble on the complexity. And the staff doctors complain about changes to several drug at once.
When hospitals stumble with these deals who do you think pays the price? Consumers (that means you). Guerrilla/Gorilla not much difference.
Brand-name or patented medications cost much more than generic medications. One would think some other inventor would dream up an alternative to sell at a lower price. One would also think once the patent expires generics would be be quickly shipped to pharmacies. But, as usual, it’s more complicated than you think and compounded by corporate deals not really in the consumer’s interest.
Patents are for “novel, useful and not obvious” inventions and the exclusive right to sell the item lasts for 20 years in the U.S.. Unless, someone invents something similar that the original patent owner did not think of. Also, the the patent owner can request an extension for various reasons (adjudicated in the courts which usually takes at least a year). Drugs are such inventions. Some of the patented drugs are very profitable (blockbuster drugs) making millions and sometimes billions of dollars.
Big pharmaceutical companies depend on patents for their very existence. The high cost of drug development and FDA approval is recovered during the 20 years of a new drug sales — some say it is often recovered in just 10 years. The patents have become so expansive that other inventors are only able to find a bio similar product that can withstand intense legal action for patent infringement about 15% of the time. But, those 15% spend so much money in legal matters they hardly see any advantage to marketing early.
When the patent runs out the price of a drug can drop 1000% as generic manufacturers enter the market. All patients wish this would happen sooner.
Megan Thompson of PBS presented a video segment about the practices of drug companies on 6/28/14. She told about “pay-for-delay” which is a method of preventing bio-similar products from being marketed by paying generic makers millions of dollars a year to delay marketing until the patent runs our (or longer). She also told about “evergreening” which is a technique used near the end of a patent: the drug price is increased substantially while a patented bio-similar product made by the same company is marketed at a slightly lower price. Doctors trying to help lower cost change patients to the similar product and the patient never knows that in a short time the original drug becomes generic and much less expensive.
According to the FTC the combined “pay-for-delay” and “evergreening” cost consumers billions of dollars and make billions of dollars in drug company profit.
What needs to be done:
- Start a linear profit limitation starting at drug patent year 1 (20% above manufacturing cost) and ending at year 20 (5% profit limitation).
- Notification of patients by pharmacies about lower cost bio-similar products as soon as they come out.
- Eliminate “pay-for-delay” and drug patent extensions.
Elisabeth Rosenthal wrote the lead story for The New York Times today (10/13/13) “The Soaring Cost of a Simple Breath“. This is another blockbuster exposé of drug costs that are crippling US health care. Sadly, not a story about what is being done to correct the problem.
Here are some of her key points:
- The average brand name prescription has risen from 1995 at $40 to 2013 at $170
- The average generic prescription has risen from 1995 at $20 to 2013 at $45.
- A common asthma medication Pulmicort costs $175 in the US but only $20 in the UK and $25 in France.
- Drugs account for 10% of the $2.7 trillion annual health bill.
- Americans take more generic medications than people in other countries (they just can’t afford branded or new medications)
- Other countries set the wholesale price of drugs to make drugs affordable.
- US pharmaceutical companies have used the FDA to restrict manufacturing rules to favor large companies and have used the judicial system to bankrupt competitors.
- US pharmaceutical companies have paid generic companies not to sell their products in the US.
- Medicaid, paid for by taxes, pays millions of dollars to drug companies for high priced medications.
- Asthma medications have been the target of profiteering drug companies. Not a single inhaler is available as a generic. Despite the fact that inhaled medications have been available for over 30 years. The effect on people with this condition is a tremendous burden.
- Drug companies spend about 50% of funds on marketing and only about 20% on drug research. Other advanced countries prohibit marketing prescription medications directly to consumers.
- Medicare is prohibited from negotiating prices.
- Drug prescribing guidelines published by the government are prohibited from considering cost.
Rather than just be angry about the sorry state of drug costs, what can be done? Just take a lesson from other countries, this is not rocket science:
- The US government should set the prices for all drugs
- The FDA needs to loosen the rules for generic manufacturing — for goodness sake, an inhaler is an inhaler, not the space shuttle.
- Comparative effectiveness research should be required, and the results published for doctors as in the UK. Drug cost is important to all US citizens, so restricting the government from considering cost borders on insanity (perhaps giving psychiatric medications to Congress is currently too expensive).
- Finally, there is no excuse for the current drug cost problem — other countries have solved the problem, the US needs to do the same.