Pharmaceutical Research Expenditures and Industrial Policy

Anyone familiar with pharmaceutical industry restructuring will not be surprised by this prediction from the FT’s John Gapper for 2011:

A drugs company will drop early-stage research. Big Pharma has struggled for a decade with a dearth of potential blockbusters. Companies such as GlaxoSmithKline have restructured and slimmed down their research arms but the sector remains troubled, as the departure of Jeff Kindler, Pfizer’s former chief executive, on the grounds of “exhaustion” indicates.

The obvious course with something that is not working is to drop it. Shire Pharmaceuticals pioneered a strategy of outsourcing early-stage research to smaller companies and focusing on developing and trialling promising drugs. This will be the year when one of the industry’s biggest takes a similar tack.

Gapper seems pretty unworried about this transition, and perhaps from the standpoint of pure economic theory it makes little difference whether research is conducted in-house or purchased from other, smaller firms. But as a matter of public relations and political economy, this is a troubling development.

The Post-R&D PR and Jobs Crises

First, the pharmaceutical industry has long justified its profits by arguing that it invests in research and development. For those who favor a market-based approach to drug research, this is a vindication of laissez-faire. Rather than relying on the heavy hand of government to try to direct the research done at pharmaceutical firms, we can expect the “invisible hand” of the market to spin off solutions for everyone’s problems–from the richest to the poorest. Innovations eventually filter down from the highest-income individuals to those with fewer resources. Spending by the wealthy on health care leads to investment in research infrastructure that ultimately redounds to the benefit of all.

But to the extent that the industry spins off its research and development, shouldn’t policymakers be more concerned about the health of research firms than the continued thriving of Big Pharma? I suppose one could make the argument that big Pharma is evolving toward a Walmart or Google style of value creation via skilled intermediation. Its key role in that scenario is to identify the most promising researchers, CROs, marketers, distributors, and advertisers.

If that evolution occurs, it reminds me of another of Gapper’s predictions for 2011:

As China tries to make itself a hub for environmental [and energy] innovation, the US is retreating. Silicon Valley venture capital groups that identified green energy as a big opportunity are playing it down and turning to social media. China has the market, the cash and the science to stick with it.

In other words, Big Pharma’s moves toward becoming virtual companies, mere hubs of certifications, trademarks, tax dodges, and contractual obligations, mirror a longer-term hollowing out of the US economy. Whereas a nation like China has an industrial policy that encourages production of useful goods and full employment, US capital is migrating toward “platform plays” that merely redistribute bargaining power and information about goods and services. One can imagine all sorts of clever entrepreneurial ploys that fall out from this strategy—think Groupon for cheap pills! What remains unimaginable is how social networking leads to viable occupations for all but the most connected and tech-savvy.

Top US economic strategists used to claim that offshoring didn’t matter, as US citizens’ superior productivity, technological skills, and education would attract high-value jobs to the country. Given America’s massive failures in educational policy, we no longer hear much about the “high value” jobs that a global division of labor was supposed to deliver to us. Instead, we see ever higher unemployment and no plausible plan to keep decent jobs in the country, or to be sure that those that remain are paid decently. Andy Grove has also helpfully demonstrated the necessary connections between ongoing manufacturing capacity and research designed to make production better. As he puts it:

Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter. The scaling process is no longer happening in the U.S.

You could say, as many do, that shipping jobs overseas is no big deal because the high-value work—and much of the profits—remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work—and masses of unemployed? . . . .

Finally, the increased outsourcing of R&D may menace existing cross-subsidization of research for neglected drugs and tropical diseases. To be sure, not much of this is going on presently; of the 1300 compounds tested for safety and effectiveness by major drug companies from 1992-2005, only 1% were directed toward diseases that predominate in the developing world. And a recent conference at BU gave me some hope that humanitarian research efforts could be distributed among small teams of researchers. Still, I worry that the ongoing shrinkage of Big Pharma will have results in the medical field similar to the gradual dissipation of Bell Labs.

Pharma as Part of a Larger Industrial Policy

Are there any solutions to be offered? The key to effective policy here is to recognize the extensive role the US government plays in the pharmaceutical industry. Epic battles over the scope of patent rights in the US are routinely fought in the US Congress. The US Supreme Court has recently opined on a number of fundamental issues in patent law in rapid succession. Legislation like the Hatch-Waxman Act prescribes a regime of protections and obligations for drug manufacturers that is extraordinarily complex, and continually contested. The FDA is involved in every step of a drug’s approval and marketing process. Medicare Part D legislation also significantly increased the US Government’s involvement in the pharmaceutical sector, providing an enormous amount of funding for spending on drugs for the elderly. International treaties like TRIPS also play a very important role in the pharmaceutical sector. In short, if there is one sector where state action is not simply a side constraint on “the market,” but rather serves to constitute it, that is the pharmaceutical sector.

Therefore, the US government needs to be much more involved in shaping both the output and the business practices of the industry to reflect national and humanitarian needs. On the humanitarian side, there are many excellent ideas in the book Incentives for Global Public Health. On the industrial policy side, perhaps there are lessons to be learned from this article on Chinese practice:

Foreign companies have been teaming up with Chinese ones for years to gain access to the giant Chinese market. Now some of the world’s biggest companies are taking a risky but potentially rewarding second step—folding pieces of their world-wide operations into partnerships with Chinese companies to do business around the globe.

Several earlier joint ventures inside China have soured over concerns that Chinese partners, after gaining access to Western technology and know-how, have gone on to become potent new rivals to their partners. “Foreign partners are seeing they will have to sometimes sacrifice or share the benefits of the global market with the Chinese partner,” says Raymond Tsang, a China-based partner at consultancy Bain & Co. “Some of the [multinational corporations] are complaining. But given the changing market conditions, if you don’t do it, your competitors will.”

To the extent that big Pharma is a truly global industry, US policymakers should be just as aggressive as Chinese ones in assuring that present private profits leave behind infrastructure that meets national needs for both quality healthcare and a balanced and highly skilled workforce. To neglect these imperatives is to declare unilateral economic disarmament vis-à-vis a competitor to which we are already massively indebted, and which has shown no qualms about taking US-developed intellectual property. If China wants certain concessions from multinationals for the good of its citizens, the US should demand no less.

Seton Hall Law Online Graduate Certificate in Pharmaceutical & Medical Device Law & Compliance - Class Begins January 23, 2011

APPLY NOW!
First Class begins January 23, 2011. Submit your application now.

What is the Online Graduate Certificate in Pharmaceutical & Medical Device Law & Compliance?

The Online Graduate Certificate in Pharmaceutical & Medical Device Law & Compliance is a non-degree program designed for individuals who seek in-depth knowledge about legal, regulatory, and ethical issues related to the pharmaceutical and medical device industries.  Taught exclusively online, it offers students a targeted immersion in key substantive issues along with the practical skills necessary to research and communicate effectively about the law.  It is an intensive program geared to students who want to cover a significant amount of material in a relatively short period of time.

Who should consider enrolling in the program?

The Online Graduate Certificate is open to students who have earned a baccalaureate degree from an accredited college or university.  It is specifically designed to meet the needs of mid- to senior-level professionals in the pharmaceutical and medical device industries, but highly motivated students from other backgrounds are also welcome to apply.  It is not necessary to have prior academic or work experience in the pharmaceutical or medical device industries in order to do well in the program.

Why distance learning?

Many professionals in the pharmaceutical and medical device industries are eager to learn about the legal aspects of their professions but cannot realistically commit to spending time attending live classes on a set schedule.  Online education offers the ideal solution because students can do their coursework at any time that is convenient for them, day or night.  In addition, many students find that they enjoy the interactivity and individualized feedback available through an online educational experience.

Why study pharmaceutical and medical device law at Seton Hall School of Law?

Seton Hall Law School has specialized in health law for more than a decade, and its health law program is consistently ranked among the top ten in the nation by U.S. News & World Report.  The Law School’s health law faculty specialize in a wide range of health law topics, including healthcare organizations, nonprofit governance, healthcare financing, healthcare fraud and abuse, food and drug law, research with human subjects, genetics and the law, public health law, and bioethics.  In addition to training future lawyers, Seton Hall Law offers a Master’s of Science in Jurisprudence degree for individuals working in the health care industry, as well as an innovative compliance certification program for pharmaceutical and medical device professionals.  Seton Hall Law is also a center for scholarship and public policy development related to health care, particularly through its Center for Health & Pharmaceutical Law & Policy, whose mission is to foster informed dialogue among policymakers, consumer advocates, the medical profession, and industry.

Is Seton Hall University accredited?

Seton Hall and its online programs are accredited by the Middle States Association of Colleges and Schools.  Seton Hall is a member of the Sloan Asynchronous Learning Network Consortium, an association of accredited institutions offering online degree or certificate programs committed to quality distance education, and is recognized by the U.S. Department of Defense’s education network of Defense Activity for meeting military requirements for Non-Traditional Education Support (”DANTES“).

Seton Hall is fully accredited by the American Bar Association (”ABA”), although, in accordance with Standard 308 of the ABA Standards for Approval of Law Schools, the ABA does not approve any law school program other than the first degree in law (JD).  Thus, the ABA accreditation does not extend to any program offered by the Law School other than the JD degree.

APPLY NOW!
First Class begins January 23, 2011. Submit your application now.

Continuing [Surgical] Education Poses Compliance Challenges

While the drug and device industries are frequently lumped together, there are differences that can pose challenges for compliance professionals and regulators.  I was reminded of this while watching an interesting video interview of Damon Marquis, the Director of Education & Member Services for The Society of Thoracic Surgeons, conducted by Murray Kopelow, the Chief Executive of the Accreditation Council for Continuing Medical Education, in which Mr. Marquis discusses the steps his organization takes to protect the continuing medical education (CME) they provide from undue industry influence.

On the drug side, it is relatively easy for specialty societies and other providers to accept industry support for CME while maintaining at least the appearance of independence and objectivity.  Once the check is cut, there is no need for the funding company to have any further involvement with the funded program, which typically follows a lecture format.

Things are quite different on the device side.  As Mr. Marquis explains, a core part of The Society of Thoracic Surgeons’ mission is to provide “education on procedures using … devices.”  The CME offered at the Society’s annual meeting includes 12 “wet labs.”  (While Mr. Marquis does not define wet lab, a browse of the web suggests that the surgeons are given the opportunity to practice procedures or techniques on animal or human organs.)  Each wet lab is taught by two experienced surgeons with, ideally, expertise in different devices; the Society’s goal is “to incorporate all the products or as many of the products as we possibly can that are available for that procedure.”

Overall, the 12 wet labs use products from over 40 device companies, all provided at no cost to the Society.  And industry involvement extends beyond this in-kind support.  Before the meeting, the companies are asked to weigh in on what devices and materials are needed for each procedure to be demonstrated.  At the meeting, “industry will come in and set up their devices and their materials.  We don’t know how to set that up.  They do.  They have the technical skills.”  One company representative is permitted to remain in the lab area once the set up is complete to observe; Mr. Marquis does not explain why.  More than one representative may remain if they are needed to run a device or devices.  (The representatives are not permitted to do any teaching; they wear a different colored gown from the participating surgeons to aid enforcement of this rule.)

At the conclusion of the interview, Mr. Marquis discussed the Society’s efforts to comply with the ACCME’s commercial support reporting requirements.  The Society relies on its industry sponsors to provide prices for the devices used, but “most of the companies have not added into there the staff time that they literally donate for setting the product up on site.”  Mr. Marquis posits that, from industry’s perspective, the time donated is de minimis, because “they bring people off of the exhibit hall floor … so they think well they’re going to be there already.”  This scenario — sales reps moving from the exhibit hall floor, where their job is to sell their device, to the wet lab, where they are asked to use their technical expertise in support of the surgeons’ educational experience, and then back to selling again — is just one of many examples of compliance challenges unique to the device side.

Human Farming & the Limits of Medical Research

A Museum of Modern Art exhibit by Michael Burton once proposed that human beings themselves would be the soil for a “future farm:”

Future Farm predicts that the emerging pharmaceutical research in harvesting adult stem cells from fat tissues and its convergence with future nanotechnologies, will bring with it scenarios that reconsider the body as income. We live in a world where industries exist to offer financial rewards for those willing to sell a kidney or produce hair to beautify others. Industries have grown to facilitate transplant tourism as a result of the success of contemporary surgery. And scientific and technological advances continue to bring new possibilities for the practice of farming the body.

This may seem like an overly dramatic or even science-fictionalized description of desperation due to poverty and larger economic trends. But the global economic race to the bottom has now so influenced medical research that Burton’s dark vision is coming closer to realization.

A recent article by Bartlett & Steele and a book by Carl Elliott describe the rise of “contract research organizations” that organize the initial phases of drug trials. Bartlett and Steele choose a provocative metaphor to describe the trend:

To have an effective regulatory system you need a clear chain of command—you need to know who is responsible to whom, all the way up and down the line. There is no effective chain of command in modern American drug testing. Around the time that drugmakers began shifting clinical trials abroad, in the 1990s, they also began to contract out all phases of development and testing, putting them in the hands of for-profit companies.

It used to be that clinical trials were done mostly by academic researchers in universities and teaching hospitals, a system that, however imperfect, generally entailed certain minimum standards. The free market has changed all that. Today it is mainly independent contractors who recruit potential patients both in the U.S. and—increasingly—overseas. They devise the rules for the clinical trials, conduct the trials themselves, prepare reports on the results, ghostwrite technical articles for medical journals, and create promotional campaigns. The people doing the work on the front lines are not independent scientists. They are wage-earning technicians who are paid to gather a certain number of human beings; sometimes sequester and feed them; administer certain chemical inputs; and collect samples of urine and blood at regular intervals. The work looks like agribusiness, not research.

Because of the deference shown to drug companies by the F.D.A.—and also by Congress, which has failed to impose any meaningful regulation—there is no mandatory public record of the results of drug trials conducted in foreign countries. Nor is there any mandatory public oversight of ongoing trials.

Therefore, it is up to journalists like Bartlett & Steele to uncover problems. And they are legion:

The Argentinean province of Santiago del Estero, with a population of nearly a million, is one of the country’s poorest. In 2008 seven babies participating in drug testing in the province suffered what the U.S. clinical-trials community refers to as “an adverse event”: they died. . . . In New Delhi, 49 babies died at the All India Institute of Medical Sciences while taking part in clinical trials over a 30-month period. . . . In 2007, residents of a homeless shelter in Grudziadz, Poland, received as little as $2 to take part in a flu-vaccine experiment. The subjects thought they were getting a regular flu shot. They were not. At least 20 of them died.

Bartlett and Steele also discuss problems in research in the US. Exploitation probably should not be a surprise in a country where unpaid prison labor appears to be a strategy to boost productivity. US companies are also driving the “initial stages of distributed human computing that can be directed at mental tasks the way that surplus remote server rackspace or Web hosting can be purchased to accommodate sudden spikes in Internet traffic.” (Such “human intelligence tasks” can be purchased for as little as a penny each on Amazon’s Mechanical Turk.) But the slow infiltration of less developed countries’ standards into US drug testing should be a concern for the FDA.

The system also appears to give drug companies a wide latitude to manipulate results, leading to the rise of “rescue countries” that are particularly prone to produce positive results:

One big factor in the shift of clinical trials to foreign countries is a loophole in F.D.A. regulations: if studies in the United States suggest that a drug has no benefit, trials from abroad can often be used in their stead to secure F.D.A. approval. There’s even a term for countries that have shown themselves to be especially amenable when drug companies need positive data fast: they’re called “rescue countries.” Rescue countries came to the aid of Ketek, the first of a new generation of widely heralded antibiotics to treat respiratory-tract infections. . . In 2004—on April Fools’ Day, as it happens—the F.D.A. certified Ketek as safe and effective. The F.D.A.’s decision was based heavily on the results of studies in Hungary, Morocco, Tunisia, and Turkey. The approval came less than one month after a researcher in the United States was sentenced to 57 months in prison for falsifying her own Ketek data.

Massive global inequalities render populations around the world vulnerable to exploitative testing conditions.

Carl Elliott’s book White Coat, Black Hat covers similar terrain, as well as the conflicts of interest and other issues we’ve addressed at Seton Hall’s health law center. His review of recent books on medical research described a “mild torture economy.” His piece “Guinea Pigging” suggests that “rescue counties” in the US may complement the “rescue countries” of Bartlett and Steele:

This unit was in a university hospital, not a corporate lab, and the staff had a casual attitude toward regulations and procedures. “The Animal House of research units” is what [one research subject] calls it. . . . Although study guidelines called for stringent dietary restrictions, the subjects got so hungry that one of them picked the lock on the food closet. “We got giant boxes of cookies and ran into the lounge and put them in the couch,” Rockwell says. “This one guy was putting them in the ceiling tiles.” Rockwell has little confidence in the data that the study produced. “The most integral part of the study was the diet restriction,” he says, “and we were just gorging ourselves at 2 A.M. on Cheez Doodles.”

Elliott’s litany of poorly controlled or ramshackle studies gives us one more item to add to Dr. John Ioannidis’s many reasons for doubting medical research:

Ioannidis [has] laid out a detailed mathematical proof that, assuming modest levels of researcher bias, typically imperfect research techniques, and the well-known tendency to focus on exciting rather than highly plausible theories, researchers will come up with wrong findings most of the time. Simply put, if you’re attracted to ideas that have a good chance of being wrong, and if you’re motivated to prove them right, and if you have a little wiggle room in how you assemble the evidence, you’ll probably succeed in proving wrong theories right. . . .

When a five-year study of 10,000 people finds that those who take more vitamin X are less likely to get cancer Y, you’d think you have pretty good reason to take more vitamin X . . . But these studies often sharply conflict with one another. Studies have gone back and forth on the cancer-preventing powers of vitamins A, D, and E; on the heart-health benefits of eating fat and carbs; and even on the question of whether being overweight is more likely to extend or shorten your life. How should we choose among these dueling, high-profile nutritional findings? Ioannidis suggests a simple approach: ignore them all.

For starters, he explains, the odds are that in any large database of many nutritional and health factors, there will be a few apparent connections that are in fact merely flukes, not real health effects—it’s a bit like combing through long, random strings of letters and claiming there’s an important message in any words that happen to turn up. But even if a study managed to highlight a genuine health connection to some nutrient, you’re unlikely to benefit much from taking more of it, because we consume thousands of nutrients that act together as a sort of network, and changing intake of just one of them is bound to cause ripples throughout the network that are far too complex for these studies to detect, and that may be as likely to harm you as help you. . . .[S]tudies rarely go on long enough to track the decades-long course of disease and ultimately death. Instead, they track easily measurable health “markers” such as cholesterol levels, blood pressure, and blood-sugar levels, and meta-experts have shown that changes in these markers often don’t correlate as well with long-term health as we have been led to believe. . . .

And these problems are aside from ubiquitous measurement errors (for example, people habitually misreport their diets in studies), routine misanalysis (researchers rely on complex software capable of juggling results in ways they don’t always understand), and the less common, but serious, problem of outright fraud (which has been revealed, in confidential surveys, to be much more widespread than scientists like to acknowledge). . . .If a study somehow avoids every one of these problems and finds a real connection to long-term changes in health, you’re still not guaranteed to benefit, because studies report average results that typically represent a vast range of individual outcomes. Should you be among the lucky minority that stands to benefit, don’t expect a noticeable improvement in your health, because studies usually detect only modest effects that merely tend to whittle your chances of succumbing to a particular disease from small to somewhat smaller. “The odds that anything useful will survive from any of these studies are poor,” says Ioannidis—dismissing in a breath a good chunk of the research into which we sink about $100 billion a year in the United States alone.

To summarize: Ioannidis casts some doubt on even the best of studies, and Elliott, Bartlett, and Steele show that bad studies may be far more common than we suspect. It’s a troubling set of observations for all concerned. We should at the very least insist on much more systematic monitoring of global drug trials.

FDA and CMS Propose Parallel Review of Medical Products

On September 17, the Centers for Medicare and Medicaid Services (CMS) and Food and Drug Administration (FDA) announced their consideration of a parallel review “process for overlapping evaluations of premarket, FDA-regulated medical products,” and their intention to create a pilot program for parallel review of medical devices.

According to the request for comments published in the Federal Register, the new process would be initiated when “the product sponsor and both agencies agree to such parallel review.”  This collaboration is among the first fruits of a June memorandum of understanding between both departments of Health and Human Services (HHS),which is intended to “promote initiatives related to the review and use of FDA-regulated drugs, biologics, medical devices, and foods, including dietary supplements.”

Among the goals set out by the agreement, the FDA and CMS sought to “[b]uild infrastructure and processes that meet the common needs for evaluating the safety, efficacy, utilization, coverage, payment, and clinical benefit of drugs, biologics and medical devices.”  The proposed parallel review process would do just that.

The proposed process is intended to reduce the time delay between “FDA marketing approval or clearance decisions and CMS national coverage determinations.”  Currently, medical products are first reviewed by the FDA for safety and effectiveness; then, CMS begins the process of making its coverage determination and payment rate, which can take up to a year.  Although CMS is only one of many third-party payors, many others follow CMS’ lead in making their own coverage decisions.  A reduction in the approval-to-payment time by CMS will positively impact the rate at which all coverage decisions are made.

The parallel process will potentially benefit patients and sponsors.  A parallel process that reduces the “approval-to-payment” time will produce savings for sponsors and lead to timely patient access to new products.   Furthermore, by reducing the time to return on investment, the parallel process may be an incentive for increased investment in innovation.

Hurdles to a Parallel Process

There are significant differences between FDA and CMS review that must be overcome.  The FDA generally reviews safety and effectiveness through various application processes (premarket approval, premarket notification, etc.).  CMS, on the other hand, must make multiple decisions regarding a medical product under the “reasonable and necessary” standard, including: “what items and services it can and should pay for; how it should accomplish the payment; and how much to pay.”

Because the FDA and CMS apply different standards in their review processes, a clinical study that demonstrates the FDA requirements of safety and effectiveness may neglect to address CMS’ “questions concerning the impact of the technology on Medicare beneficiary health outcomes.”  Ideally, the parallel process will guide sponsors to design clinical studies that simultaneously address both FDA and CMS questions.

Moving from a serial to parallel process must be carefully staged in order to preserve agency resources.  There is the potential for CMS waste if coverage decisions are begun (or even worse, completed) for products that are subsequently denied approval or clearance by the FDA.

The Call for Comments

The FDA has asked the public to comment on seventeen different issues, including:

• How parallel review should be implemented and when in the FDA review process it should start
• Whether anyone other than the product sponsor should be able to initiate a request for parallel review
• Which classes of products would benefit most from parallel review
• Whether there exist regulatory, legal or scientific barriers to review, and how they may be overcome.
• The criteria for granting a parallel review request

The FDA and CMS will publish their decisions regarding the proposed parallel review process after December 16, when the comment period closes.

The Downfall of Mammography?

Mammography’s reputation as gold standard in breast cancer screening took another hit this past month.  As the New York Times reported last week, research studies demonstrate that the radiation emitted by mammography can actually increase the incidence of cancer. Two nuclear technologies, breast-specific gamma imaging (B.S.G.I.) and positron emission mammography (P.E.M.), expose “patients to a risk of radiation-induced cancer that is comparable to the risk from an entire lifetime of yearly mammograms starting at 40.”

While digital mammography has an average lifetime risk of inducing 1.3 fatal breast cancers per 100,000 women aged 40 at exposure, a single B.S.G.I. exam was estimated to involve a lifetime risk 20 to 30 times greater in women aged 40, and the lifetime risk of a single P.E.M. was 23 times greater.

Moreover, mammography only increases a woman’s risk for breast cancer while B.S.G.I. and P.E.M. increase the risk of cancer in other organs, such as the intestines, kidneys, bladder, gallbladder, uterus, ovaries and colon, the study said.

That’s right, the risk of breast cancer is greater in those women that regularly receive mammograms.  At a November 30, 2009 conference, researchers reported that “for young women who have a high risk of breast cancer because of genetic mutations or family history, the radiation from yearly mammograms may make the risk even higher.”  Meta-analysis of prior research pertaining to high-risk women (0.5 - 1% of the population) with a median age of 45 found that “those women who had had mammograms or chest X-rays (which use a lower radiation dose than mammography) were more likely to have breast cancer.”

Researchers Question the Value of Mammography

The great mammogram debate began on October 21, 2009, when a Journal of the American Medical Association article stated that mammography is not as effective as anticipated:

[S]creening may be increasing the burden of low-risk cancers without significantly reducing the burden of more aggressively growing cancers and therefore not resulting in the anticipated reduction in cancer mortality… There are several reasons that may help to explain why screening has not led to a more significant reduction in deaths from these 2 diseases in the United States. First, screening increases the detection of indolent cancers. Second, screening likely misses the most aggressive cancers.

The “increasing burden of low-risk cancers” can be characterized by the high rate of false positive tests, resulting in over-treatment. As a prior HealthReformWatch post reported:

The recent analysis of all the available evidence from multiple studies published in the British Medical Journal shows that if 2,000 women are screened with mammograms regularly for ten years, only one single woman’s life will be prolonged, but 500 will have at least one false positive and ten will be diagnosed with a “cancer” that would never have become a real disease if it had been left alone.

The New York Times reports that since the mammograms became widely used in the 1980s, the diagnosis of ductal carcinoma in situ (D.C.I.S.), what many believe to be a breast cancer precursor, has increased significantly with more to more than 50,000 women in the U.S. each year.  However, the diagnosis of these borderline breast legions has raised concerns that 17 percent of diagnoses are false positives.

Researchers at Dartmouth College succinctly summed up the deficits of mammography.  In addition to the discomfort of x-ray mammography:

• The rate of false negatives from x-ray mammography range from 4% to 34%
• X-ray mammography is less sensitive in women with dense breast tissue (a common among trait among young women who are at high-risk for developing the most aggressive breast cancers)
• Seventy-five percent of biopsied lesions resulting from suspicious mammogram findings turn out to be benign (a false-positive)

It would be surprising if the Food and Drug Administration (FDA) approved an imaging modality with such poor results today.  However, the FDA never approved x-ray mammography for the diagnosis of breast cancer; it was grandfathered by the Medical Device Amendments of 1976 because it was already in clinical use.  The mammogram does not detect cancer directly, but is a measurement of tissue abnormalities such as microcalcifications, architectural distortions, masses, and asymmetrical densities.

The only mammography device to pass the pre-market approval (PMA) process is the T-Scan 2000 ED by Mirabel Medical Systems, a form of impedance imaging.  Research into impedance imaging has received attention because it does not emit radiation, can more accurately image dense breast tissue, and can differentiate between tissue types without biopsy.  Despite producing greater sensitivity in clinical trials than x-ray mammography or ultrasound, it has not become a primary imaging method.

So When Should Mammography Be Used?

The rumblings of debate turned into a roar when the U.S. Preventive Services Task Force (USPSTF) changed its breast cancer screening recommendations.  The Task Force listed many of the foregoing problems, including false positives, overdiagnosis, and radiation exposure, in support of its decision.  Despite the evidence that more effective screening measures are needed, the response in support of x-ray mammography was overwhelming.  As HealthReformWatch reported:

A number of professional and advocacy groups have responded to the Task Force’s November 16 recommendation.   The ACS continues to recommend annual screening using mammography and clinical breast examination for all women beginning at age 40.  The American College of Radiology issued a frankly titled statement, “USPSTF Mammography Recommendations Will Result in Countless Unnecessary Breast Cancer Deaths Each Year” and labeled the recommendations “cost cutting.”  And the American Congress of Obstetricians and Gynecologists continues to recommend a screening mammography every 1-2 years for women aged 40-49 years and every year for women 50 and over, as well as to recommend BSE.

The editors of Annals of Internal Medicine, which published the Task Force recommendations, responded in an editorial titled, When Evidence Collides With Anecdote, Politics, and Emotion: Breast Cancer Screening.  ”Although prevention is vital to public health, none of the previous guidelines grabbed the public’s attention as much as the Task Force’s recommendation against “routine screening mammography in women aged 40 to 49 years.”  Results of an Annals‘ website survey suggested that clinicians are more likely than the general public to be influenced by the Task Force recommendations.  In response, the editors took a position in support of the new recommendations:

Unfortunately, only a fraction of abnormalities initially detected on mammography and subsequently treated truly represents a life saved rather than unnecessary or premature treatment. Sadly, it is also true that many women who have cancer detected by screening die of the disease despite early detection and treatment… Breast cancer prematurely claims the lives of many, but it is wrong to mislead women about the effectiveness of current screening methods. Women deserve to make decisions about screening for breast cancer armed with the best available information about potential benefits and harms.

One survey respondent wrote, “This Task Force has performed a vital service for years. It brings a welcome dose of science to the politics of screening.” The editors heartily agree… Because the USPSTF issued recommendations that were politically unpopular among some constituents, there have been calls to curtail this independent body’s work. If the USPSTF sinks in turbulent waters whipped up by emotion, anecdotes, and politics, Americans should mourn its loss.

Politics and Science in the Breast Cancer Screening Debate

But what role do politics actually play in breast cancer screening?  According to Dr. Barron Lerner of Columbia University College of Physicians & Surgeons, a big one. In an interview with Kaiser Health News, he recounted:

In the late 1990s, Congress passed a bill that mandated that women who had a mastectomy would have their reconstructive surgery paid for. If you think about this, this really doesn’t happen in most areas except for breast cancer, where Congress would act, and say, “This is something we’re forcing insurance companies to do.” But it speaks to the powerful nature of the breast-cancer lobby.

One other time a report came out criticizing mammograms… the House voted 430 to nothing [ed. note: it was 424-0] — to rebuke that scientific report. So, politics is always intruding into the world of breast cancer….

In the early 1990s, there was some suggestion that if you did something called a bone marrow transplant, or stem cell transplant — which was a very aggressive treatment for metastatic breast cancer — that women live longer… The power of that lobby was so strong that insurance companies began to pay for the procedure, even though it was still experimental and its value hadn’t been proven….

It turns out that when the randomized studies came through and we got good data — at the end of the 1990s — that treatment was, in fact, no better than standard chemotherapy and caused more harm along the way. So it was not indicated at all. But, again, this was an example of Congress, or the government, sort of sticking its foot where it shouldn’t — trying to do the right thing, trying to insure access for all women who have a serious disease. But if you don’t look at the data and you’re acting based on your heart, or your gut instinct, you often make the wrong decision.

In supporting some breast cancer treatments, some lobby groups divert important resources away from important goals (e.g., development of an x-ray mammography alternative) and waste them on every promise of hope (e.g., extensive x-ray screening despite evidence of its negative effects).  The most recent example involves the new drug Avastin.

As the Fiscal Times reports, the FDA gave “accelerated approval” for the marketing of Avastin in 2008.  Two confirmatory trials submitted earlier this year led an FDA advisory committee decision to withdraw agency approval.  The first study showed that Avastin did not delay patient death and a second study indicated that patients on Avastin actually died more quickly than those on chemotherapy alone.  In spite of these findings, Susan B. Komen for the Cure chief Nancy G. Brinker and Sen David Vitter, R-La, have called upon the FDA to continue its approval of Avastin.  The FDA has yet to issue a decision.

Renewed Efforts to Reduce Industry Funding of CMEs

Last week’s Journal of the American Medical Association (JAMA) reported on the challenges that certain medical schools and medical centers across the country are facing as they decrease or eliminate industry funding of their continuing medical education (CME) programs.  These institutions have shown concern over the potential conflicts of interest when pharmaceutical and medical device companies fund educational programs which could bias future prescribers/customers toward their targeted products.  The adoption of industry-free CMEs could help filter out any potential marketing messages, and leave behind a balanced and evidence-based perspective.  After all, as the New York Times has reported, there are over 700 accredited CME providers in the United States and CME spending hovers around $2.5 billion per year, nearly half of which is paid by pharmaceutical and medical device companies.

Last year, three medical schools declined industry support for their CMEs: the University of Missouri-Kansas City School of Medicine, Nova Southeastern University College of Osteopathic Medicine, and Touro University Nevada College of Osteopathic Medicine.  This past June, the University of Michigan Medical School (UMMS) announced an actual policy change, effective January 1, 2011, whereby the school will no longer accept industry funds, which presently comprise almost 45% of its total CME funding.  UMMS believes contributions from various departments will help offset this sizable loss, as will higher CME registration fees and “less glamorous venues.”  UMMS is the first medical school to introduce such a policy and does so noting “we should take pride in our position as a national leader on this issue.”

This is all well and good, but in light of the enormous industry contributions, the $64,000 question really becomes: “Is Industry-free CME a Sustainable Model?“  And that’s exactly what speakers and attendees asked at the June 25, 2010, PharmedOut Conference entitled “Prescription for Conflict: Should Industry Fund Continuing Medical Education.” The conference was held at Georgetown University (PharmedOut is a Georgetown University Medical Center project funded by the Attorney General Consumer and Prescriber Education grant program.  Its team of physicians and academics lecture on the physician-pharma relationship, and provide access to online and industry-free CMEs).  Dr. Robert Wittes, Physician-in-Chief at Sloan-Kettering’s Memorial Hospital for Cancer and Allied Disease (”Memorial Hospital”), told his colleagues during the Conference that:

[t]here is life in CME after you do something like this.  But you have to be willing to prioritize the activity, such as putting institutional funds toward the balance [previously covered by commercial funds] and/or charge registration fees for CME activities that involve outside physicians.

Memorial Hospital stopped accepting industry money for its CMEs in 2007.  Dr. Wittes acknowledged that “[w]e don’t have these things in hotels in mid-Manhattan anymore; we have them on our own premises.”  Yet he cautioned against any institution from completely severing ties with the industry because there are positive interactions which can result in improved products and commercial science.

For further reading, check out Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy’s whitepaper on “Drug and Device Promotion: Charting a Course for Policy Reform.”  The Center makes several recommendations for overhauling the CME funding mechanism.  It also points out that accountants, lawyers, and other professions pay for their continuing education programs.   Be sure to check out Michael Ricciardelli’s post on industry funding of CMEs for nurse practitioners and Kate Greenwood’s post on ACCME Standards for Commercial Support too.

We May Need More Than A Spoonful Of Sugar To Help Our Medicine Go Down

Today CNNMoney reports that drug recalls quadrupled from 426 in 2008 to a record 1,742 in 2009.  The recalls have been attributed to “manufacturing lapses” in raw material quality, labeling and packaging, and contamination.  Generic and over-the-counter drugs have been affected the most.  CNNMoney notes that the race to put generic products on the market and the pressure to cut costs have caused drug companies to

sometimes fail to spend enough time learning how best to make the drug….  And since generic and over the counter drugs aren’t as lucrative for drugmakers as prescription drugs, companies may not be investing enough resources to make high-quality, safe products.

One such cost-cutting measure involves outsourcing production to foreign manufacturing sites and this measure seems to have received the most attention.  (Check out fellow blogger Jae W. Joo’s post on outsourcing.)

Earlier this month, Senator Michael Bennet (D-Colorado) introduced the Drug and Safety Accountability Act of 2010 which seeks to ensure the safety and efficacy of drugs sold in America, regardless of their manufacturing location.  The bill would require, among other things, that:

• manufacturers have quality management plans which the FDA can inspect;
• manufacturers maintain supply chain documentation;
• the Secretary of Health and Human Services track facilities manufacturing drugs or active ingredients for the American market; and
• the FDA be given more power to ensure drug safety, including the authority to enact mandatory recalls for batches of drugs that pose risks and to assess civil penalties for violations of the Federal Food, Drug, and Cosmetic Act.

Click here for more details about the bill and here for Sen. Bennet’s own promotion of it.  Sen. Bennet has lamented how:

[f]or too long, the FDA has lacked the proper authority to adequately safeguard our drug supply.  Americans need to be able to trust that the drugs in their medicine cabinets are safe, no matter where they’re made.

A father of three, Sen. Bennet has said that the recent McNeil recall of over-the-counter children’s medicine spurred him into action.

Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Ken Johnson has issued a statement in response to the bill, saying that:

[t]he lifeline of America’s biopharmaceutical research companies is the safety and integrity of the products they develop.  Brand-name pharmaceutical companies make tremendous investments in quality control systems and take extensive measures to help protect patient safety and to help prevent adulterated ingredients from entering into America’s prescription drug supply.

In addition, drug manufacturing for the U.S. market — regardless of where it occurs — is regulated under Good Manufacturing Practices (GMP) by the Food and Drug Administration (FDA).  These GMP requirements help to assure the safety, quality and purity of drug ingredients that are used in the U.S. prescription drug supply.

The U.S. regulatory system for prescription drugs is the toughest and safest in the world….

Okay.  But other people here don’t think so.  (Click here to read a good opinion by Dr. Lynn Parry, Chair of the Colorado Prescription Project, on why this bill should pass.)

According to a recent Pew Prescription Project poll, less than 10% of Americans feel confident about medications manufactured in India and China.  89% of Americans support Congressional action to introduce new drug safety measures.  How many of those people realize that approximately 80% of the materials used to make or package drugs sold in America comes from foreign sources?  I didn’t, but then, is such high a percentage really that surprising?

Reading through the CNNMoney report, I was reminded a little of a scene from a seventh season episode of Friends:

Phoebe: It’s amazing! My headache is completely gone! What are those pills called?
Monica: Hexadrin.
Phoebe: Oh, I love you, Hexadrin!  Oh look!  It comes with a story!
Monica: No, Phoebe, those are, like, the side effects and stuff.
Phoebe: Say what?
Monica: You know, the possible side effects.
Phoebe: Oh my God!  Dizziness, nervousness, drowsiness, facial swelling, nausea, headache…  Headache! Vomiting, stomach bleeding, liver damage!  Now, okay, I don’t recall any of this coming up when you gave me these little death capsules! Oh, I’m sorry, extra-strength death capsules!

Admittedly, the scene concerns how potential side effects can be worse than the problem being treated (and that’s a whole other blog post).  Yet it’s also a reminder of how we can forget about the other potential hazards of these potent drugs, delivered in easy-to-swallow capsules/tablets/liquids, if there are quality control or other manufacturing issues.  It’s as easy to forget as it is to pop them, well, like candy.

Would You Like Statins With That?

As we wrote on this blog the other day about research which raised questions about the efficacy of statins for those who have not yet experienced a heart attack– an off label prescription–the WSJ pointed to a new paper in the American Journal of Cardiology from authors at  Imperial College, London, U.K., which suggests that  statins should be made available free of charge to consumers along with the purchase of fast food. The press release from Imperial College can be found here.

Low level doses of statins may be purchased over the counter in England.

In a prior post, I  wrote about meeting with a cardiologist who suggested I commence taking statins because of my various cardio risk factors. A point, however uncomfortable at the time, made ultimately moot by the favorable results of my stress test, echocardiogram and calcium scoring. I had, prior to my surprisingly clean bill of cardiac health, relented mentally to the prospect of what would become a life long prescription. Of statins, I wrote:

“If one has risk factors, it is prophylactic and is prescribed to reduce the risk of heart attack, stroke and other heart diseases. It is doubtful whether once I start taking this drug I will ever stop. There is no foreseeable time (while alive) that I will wish to stop reducing the risk of heart attack or stroke. And that I suppose is the essence of the onset of age– piling up prescriptions. A daily regimen that will follow one to the grave–only the dosages or the brand names changing as each day welcomes a regimen of pills. In short, this prescription feels like the onset of dependence. The forward guard, if you will. A harbinger of a pharmaceutical future.”

One might say I didn’t take the news well. But crucial to my decision to relent were the words of my cardiologist and another heart doctor. I wrote:

Seeing my, shall we say, chagrin, the cardiologist told me that, like over 50% of the cardiologists he knows, he takes a statin. “We’ve seen the data.” Another recently told me  “Yeah, I take it. They should put it in the water.”

And now, apparently, in burgers.

But, we wrote of some  important (and conflicting) recent findings regarding statins here at HRW last week:

A LA Times article has recently highlighted the problems of off label prescriptions.  In the article, it has come to light that the off label use of statins, one of the world’s most prescribed medication, may not have the efficacy that many doctors had previously thought.  The LA Times reports,

Statins were initially approved by the Food and Drug Administration for the prevention of repeat heart attacks and strokes in patients with high cholesterol who had already had a heart attack. And used for that purpose - called “secondary prevention” - the drugs are powerful and effective medications, driving down patients’ risk of another heart attack or stroke by lowering their levels of LDL (or “bad”) cholesterol.

Then physicians came to believe statins could also reduce the risk of a first heart attack in people who have high LDL cholesterol but are nonetheless healthy. This use of statins - called “primary prevention” - has driven the growth in the market for statins over the last decade.

Statins certainly decrease rates of heart attack in people who have clear signs of cardiovascular disease but it’s not so clear they work that way in people who are healthy. In spite of that uncertainty, statins’ use for primary prevention has sky rocketed.

One wonders how so many physicians came to believe that statins could also reduce the risk first time heart attacks.  Dr. John Abramson, from Harvard Medical School, attributes statins’ off label growth to a “conspiracy of false hope.”  He states, “[t]he public wants an easy way to prevent heart disease, doctors want to reduce their patients’ risk of heart disease and drug companies want to maximize the number of people taking their pills to boost their sales and profits.”

So, with all these interests pushing for statins’ off label use, it should not be a great surprise that extensive research has not been performed regarding statins’ primary preventive effects- and conflicting results have emerged.  The LA Times reports,

In the first of three studies published in the Archives last month, medical researchers found that, contrary to widely held belief, statins do not drive down death rates among those who take them to prevent a first heart attack. A second article cast significant doubt on the influential findings of a 2006 study, called JUPITER, that has driven the expansion of statins’ use by healthy people with elevated blood levels of C-reactive protein, a measure of inflammation. A third article suggested potential ethical, clinical and financial conflicts of interest at work in the execution of the JUPITER study and concluded the widely hailed trial was “flawed” and raises “troubling questions concerning the role of commercial sponsors.”

So??? Statins anyone?

Possible Repeal of Massachusetts Ban: A Gift to Prescribers, Patients or Industry?

Next month marks the second anniversary of the enactment of the Massachusetts Pharmaceutical and Medical Device Manufacturer Code of Conduct, a law requiring pharmaceutical and medical device manufacturing companies to designate a compliance officer and implement a compliance program reflecting the commonwealth’s regulations on meals, CME sponsorship, use of non-patient identified prescriber data, gifts and other payments, etc.  The law, which went into effect on July 1, 2009, builds upon the Pharmaceutical Research and Manufacturers of America’s revised Code  on Interactions with Healthcare Professionals (”PhRMA Code“) and the Advanced Medical Technology Association’s revised Code of Ethics on Interactions with Healthcare Professionals (”AdvaMed Code“), two voluntary codes intended to eliminate any influence — perceived or otherwise — of the industry over healthcare professionals with respect to gifts, entertainment, recreation, educational programs, professional meetings, scholarships, and the like.

The Massachusetts law is more restrictive, however, than its PhRMA and AdvaMed counterparts.  It prohibits companies from sponsoring continuing medical education programs that do not meet Accreditation Council for Continuing Medical Education guidelines.  The PhRMA and AdvaMed Codes do not.  It prohibits any company employee from providing meals outside of a hospital or office setting.  The PhRMA Code only restricts sales representatives and their immediate supervisors to a hospital or office setting.  The AdvaMed Code does not impose any restrictions on the location of meals.

Furthermore, starting on July 1, 2010, the law requires companies to annually certify their compliance with commonwealth regulations and, among other things, to disclose any gifts or payments valued over $50 and given to anyone who can prescribe, purchase, or dispense drugs or devices.  Effectively, it’s a ban on all gifts to prescribers (and in so doing goes a step further than the PhRMA and AdvaMed Codes which make an exception for educational gifts).  Companies must also submit $2,000, payable to the commonwealth’s Department of Public Health, with each annual disclosure report.  Violations can result in penalties up to $5,000 per occurrence.  The first round of disclosures were due 16 days ago and covered activities for the July 1, 2009 to December 31, 2009 period.  Next year companies will be expected to report on their activities for the January 1, 2010 to December 31, 2010 period.  Or will they?

The Massachusetts House recently passed an economic development bill that repeals the disclosure requirement/gift ban (the bill also establishes a sales tax holiday and consolidates commonwealth economic agencies).  The Senate version of the bill does not include the repeal.  It’s a wait-and-see as to how the two chambers will work out the final bill through their conference committee.

Opponents of the gift ban claim it has adversely affected pharmaceutical clinical research as well as the restaurant and convention industries.  Almost two years ago, PhRMA Senior Vice President Ken Johnson expressed his disappointment over the law, saying:

[it is] very likely damaging for medical partnerships, clinical research and patients in Massachusetts….

Public disclosure of a pharmaceutical company’s arrangements with principal investigators of its clinical trials also could reveal sensitive, proprietary business information to a company’s competitors.  This could erode the independent decision-making of companies trying to bring science from research facilities to patient care setting….

The disclosure requirements subjects all of the physicians, academic institutions and hospitals involved in such trials to publicity in a form that may be difficult to understand and likely will generate unwanted and unnecessary public scrutiny.  This could make Massachusetts an unattractive place for academic scientists to live and work — and for pharmaceutical research companies to do business.  Such a policy clearly is not in the best interest of public health — and it flies in the face of the ongoing efforts to further cultivate the life sciences industry within Massachusetts.

Indeed, the Wall Street Journal and Boston Herald report that some medical groups either have threatened to take their annual meetings elsewhere or have actually done so in protest of the law.

Supporters of the law say otherwise.  Health Care For All, a Massachusetts-based advocacy organization, views banning gifts as a step in the right direction.  According to the organization:

[t]he pharmaceutical industry gives gifts to promote their drugs and make a higher profit.  Under the guise of promoting welfare for all, the industry maximizes their own revenue….

Experts living within the guidelines of the gift ban find that it is not interfering with their work or professional relationships according to Dr. David Coleman, Boston University School of Medicine.

‘The Massachusetts Gift Ban legislation is an important step in the process of reducing both biases in therapeutic decision-making and healthcare costs.  The Ban has not adversely impacted the important relationships of our physician-faculty with the pharmaceutical and device industries….’

Health Care For All also maintains there is no connection between the decrease in restaurant revenues and the law as:

[t]he Massachusetts Prescription Reform Coalition has researched the decrease in restaurant profits, and found sales are down across the country — including in states without a gift ban.   According to the trade paper, Restaurants & Institutions, sales at the nation’s top 100 independent restaurants were down 10% in 2009….

Massachusetts Senators, who recognize the value of the gift ban legislation, also see that these lost profits mirror similar recession-caused losses in the restaurant industry across the country.

Georgia Maheras, Private Market Policy Manager at the Massachusetts Prescription Reform Coalition, considers the current House bill to be a “significant step backward” in the fight to curb medical costs.

Massachusetts is not alone in attempting to reform pharmaceutical and medical device marketing practices.  Neighboring Vermont has a similar, and in fact more stringent, law which even allows the Attorney General’s office to track free samples given to physicians (though a reporter for the Times Argus, a Vermont newspaper, worries how a repeal in Massachusetts might have a ripple effect).  California, the District of Columbia, Maine, Minnesota, Nevada, and West Virginia also have some form of a marketing code.  The federal government’s Patient Protection & Affordable Care Act includes the Physician Payment Sunshine Provision (”Provision”) requiring disclosure of payments made to physicians and teaching hospitals by manufacturers of products covered under Medicaid, Medicare, and SCHIP (click here to read a summary).

So who has it right?  It would seem as though PhRMA and AdvaMed opened the door for state and federal government to codify modified versions of these industry codes.  From a compliance perspective, it must be quite inefficient — and headache inducing — to wade through state marketing disclosure laws that lack uniformity.  Starting January 1, 2012, the Provision will preempt state disclosure laws except for where the state requires additional information.  Maybe this will help, maybe it will add to the headache, or maybe this particular episode will no longer matter.   For now, though, from a patient perspective, a repeal of the Massachusetts disclosure requirement/gift ban, or that of any other state, would feel more like a gift to the industry and prescribers than a service to the “best interest of public health.”

The Center for Health & Pharmacy Law & Policy here at Seton Hall Law has issued two white papers addressing these issues: Conflicts of Interest in Clinical Trial Recruitment & Enrollment: A Call for Increased Oversight,” in which the Center proposes legal and policy changes to address conflicts of interest in the relationships between industry and doctors that can create unwarranted risks to trial participants and to the scientific integrity of research; and Drug and Device Promotion: Charting a Course for Policy Reform,” in which the Center proposes legal and policy changes to address conflicts of interest in the relationship of medicine and industry– including the recommendation “that industry funding for continuing medical education should be phased out, and replaced by an educational process driven by physicians.”

The Center has also recommended “the adoption of federal legislation to ban the use of gifts, meals, and other perks to promote drugs and devices. The states have taken the lead to date–Massachusetts, California, Minnesota, and the District of Columbia have passed laws to limit or ban gifts and meals that are now routine in marketing practices. Concluding that industry self-regulation is not sufficient, the Center calls for national legislation to create uniform practices by industry and physicians. As urged by Professor Boozang, ‘the benefits of drugs and devices should drive promotion and physicians’ decision to prescribe, not a marketing model that depends on gifts and meals.’”

Obviously, the adoption of additional federal standards in this regard will lessen the ability of industry to pit one state against another and make compliance easier. The Physician Payment Sunshine Provision is a step in that direction, the Massachusetts development bill is a step back.

Are GPO’s Suppressing Safer Devices?

S. Prakash Sethi has called group purchasing organizations (GPO’s) an “undisclosed scandal in the U.S. health care industry.” Mariah Blake’s article in the Washington Monthly on GPO’s is a sobering “must-read” for those concerned about the future of health care in the US. She writes about the entrepreneur Thomas Shaw, who’s invented a syringe that drastically reduces the risk of bloodstream infections for patients and healthcare workers. (According to Barry Lynn, who’s also written on the issue, “each year about 6,000 medical workers come down with HIV or infectious hepatitis from such accidents, and dozens end up dead.”) Shaw’s brilliant innovation “added only a few pennies to the cost of production,” but it’s rarely used today. Blake traces the non-diffusion of this innovation to a complex set of deregulatory decisions relating to GPO’s.

GPO’s are supposed to use purchasing clout on behalf of buyers (like hospitals) to drive down prices from sellers. But it appears that these intermediaries, like large Wall Street firms, are often more interested in fees and payments from the sell-side than they are in helping the buy-side. As one analyst testified before the DOJ and FTC, “the compensation of most GPO management is almost always based on . . . fee income [from suppliers] rather than on the real savings to hospital members.”

Shaw’s bad luck was to enter the market shortly after a massive GPO, Premier, struck a multiyear deal with supplier Becton Dickinson. As Blake notes, “Premier signed a $1.8 billion, seven-and-a-half-year deal with Becton Dickinson [whereby its 1700 member hospitals] had to buy 90 percent of their syringes and blood collection tubes from” Becton Dickinson, which also “landed similar deals with all but one major GPO.” Lynn says that “many hospital buying agents won’t even dare to talk to Shaw for fear of upsetting their more powerful suppliers.”

How did the GPO-Supplier nexus grow so strong? Blake does a terrific job explaining developments that transmogrified many cost-cutting intermediaries into self-serving middlemen:

To keep costs in check, in the 1970s many medical facilities began banding together to form group purchasing organizations, or GPOs. The underlying idea was simple: because suppliers generally give price breaks to customers who buy large quantities, hospitals could get better deals on, say, gauze or gloves, if a group of them came together and bargained for ten cases, rather than each hospital buying a case on its own. . . . By decade’s end, virtually every hospital in America belonged to a GPO.

Then, in 1986 Congress passed a bill exempting GPOs from the anti-kickback provisions embedded in Medicare law. This meant that instead of collecting membership dues, GPOs could collect “fees”—in other industries they might be called kickbacks or bribes—from suppliers in the form of a share of sales revenue. (For example, in exchange for signing a contract with a given gauze maker, a GPO might get a percentage of whatever the company made selling gauze to members.) The idea was to help struggling hospitals by shifting the burden of funding GPOs’ operations to vendors. To prevent abuse, “fees” of more than 3 percent of sales were supposed to be reported to member hospitals and (upon request) the secretary of [HHS].

[This shift] turned the incentives for GPOs upside down. Instead of being tied to the dues paid by members, GPOs’ revenues were now tied to the profits of the suppliers they were supposed to be pressing for lower prices. This created an incentive to cater to the sellers rather than to the buyers. . . . Before long, large suppliers began using “fees”—sometimes very generous ones—along with tiered pricing to secure deals that locked GPO members into buying their products. . . .

This situation only grew thornier in 1996, when the Justice Department and the Federal Trade Commission overhauled antitrust rules and granted the organizations protection from antitrust actions, except under “extraordinary circumstances.” . . . Within a few years, five GPOs controlled purchasing for 90 percent of the nation’s hospitals, which only amplified the clout of big suppliers.

There are a few lessons here. Within the confines of competition law, the message should be clear: Einer Elhauge was right to state in 2003 that “Serious antitrust concerns remain about exclusionary agreements that charge higher prices to GPOs or hospitals that won’t commit to limiting purchases from rivals of dominant manufacturers to a small (often 5-10%) percentage of their purchases.” The broader lesson is that intermediaries in many fields are often tempted to put their own profits ahead of the entities they’re ostensibly serving. In the endless battle for compensation between providers, hospitals, and insurers, there are many profitable opportunities to shift alliances. Meanwhile, entrepreneurs like Thomas Shaw, patients, and thousands of medical workers are enduring unsafe conditions that could easily be remedied.

Pharmaceutical Outsourcing: Trading Quality for Lower Costs?

With the waning economy, outsourcing has never been a more popular route for businesses to take.  Why pay more when you can get a similar product or service for less overseas?  Traditionally, outsourcing has been limited to low-end, back-office type of work. However, in the recent years, more companies have been outsourcing complex services such as medical diagnostics.

So it should be no surprise that India, a country with an abundance of cost effective labor, has emerged as a hot spot for pharmaceutical companies to outsource their drug manufacturing.  The NY Times reports,

India’s drug industry — on track to grow about 13 percent this year, to just over $24 billion — was once notorious for making cheap knockoffs of Western medicines and selling them in developing countries. But India, seasoned in the basics of medicine making, is now starting to take on a more mainstream role in the global drug industry, as a result of recent strengthening of patent law here and cost pressures on name-brand drug makers in the West.

Not limited to just manufacturing, India is projected to further expand into more sophisticated aspects of drug making such as pharmaceutical research and development. Due to its cheap labor, Indian drug companies are able to “discover new drugs at a tenth of the cost” incurred in the United States, according to Ajay G. Piramal, the chairman of Piramal Healthcare.

This pharmaceutical boom in India has been relatively recent.  Initially, pharmaceutical companies were hesitant to outsource their internal operations.  Sujay Shetty, an associate director with PricewaterhouseCooper in Mumbai, described pharma as  “an incredibly arrogant industry” and predicted that “everything in the value chain will move to different parts of the world that are cheaper.”

But, what risks are these pharmaceuticals companies taking?  Outsourcing, in general, can be riddled with quality problems and pharmaceutical outsourcing to India has been no exception.  According to the NY Times,

Recent growth, though, has been shadowed by quality problems. The F.D.A. cited Ranbaxy [India's largest pharmaceutical manufacturer] for manufacturing violations several times in recent years, and in February ordered a review of the company’s global manufacturing operations.

In May, Sanofi-Aventis recalled vaccines made by Shantha Biotechnics that were distributed to the World Health Organization after users complained about white sediment in the vials. In June, after floating matter was found in some plastic IV bags, Pfizer recalled injectible drugs made by Claris Lifesciences and sold in the United States.

Maybe pharmaceutical companies were justified in being cautious, even to the point of arrogance, in deciding whether to outsource in the past.  Drug manufacturing is a complex process that needs proper review practices to prevent errors.

Fortunately, the Food and Drug Administration (FDA) has taken note of India’s growing influence in the drug industry and has been cracking down to prevent substandard and contaminated drugs from entering the United States.  In the past two years, the FDA has opened two new offices in India, one in Delhi and the other in Mumbai.  And just last month, as reported by The Wall Street Journal, the FDA stated that “it will propose stronger regulation for pharmaceutical companies that outsource manufacturing, putting more responsibility on the companies to ensure the purity and safety of the products…”

Whether or not the FDA’s crackdown improves the quality of the outsourced drugs remains to be seen.  But, with lower costs and regulation avoidance said to be the primary motivation behind pharmaceutical outsourcing, it’s uncertain whether the quality problems mentioned by the NY Times will be the last.

Nurses, Prescriptions and Pharma Influence– Under the Radar?

Very interesting point made over at Gary Schwitzer’s Health News Review Blog regarding Industry funding of Continuing Medical Education (CME) for Nurse Practitioners (if you’ve never visited Mr. Schwitzer’s blog you should, he is informative, well written and generally brief).

Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy issued a White Paper last year, “Drug and Device Promotion: Charting a Course for Policy Reform,” which called for a cessation of industry funding of CME. The Center noted:

Reforming Funding for Continuing Medical Education (CME). Most states require physicians to undertake continuing medical education to maintain their medical license. The drug and device industry currently funds over half of the accredited CME courses available to physicians. The Center recommends that industry funding for continuing medical education should be phased out, and replaced by an educational process driven by physicians.

And that

• Ninety-four percent of physicians have some kind of financial relationship with industry, as reported in a major recent national study.

• Commercial support for accredited CME, nearly all of it from drug and device manufacturers, grew from $302 million in 1998 to $1.2 billion in 2006.

But what about nurse practitioners? Schwitzer, who attended the recent Georgetown Conference, “Prescription for Conflict: Should Industry Fund Continuing Medical Education?” noted that:

There are more nurse practitioners (147,000) than there are family physicians (100,000) in the US.

These advance practice nurse professionals can write prescriptions, and it’s estimated that the average nurse practitioner writes more than 6,000 a year.

And about 70-80% of those nurses who regularly attended lunch or dinner “continuing education” events sponsored by drug companies said they were more likely to prescribe the drugs that were highlighted in the lunch.

The presenter was nurse-researcher Elissa Ladd, PhD, RN, Asst. Clinical Professor, Massachusetts General Hospital Institute of Health Professions, who says the possible pharma influence on nurse-prescribers has largely flown “under the radar.”

A little quick and basic math will give us some inkling of just how much flies under that radar. We’ll use the minimum figure in all estimates. So…

147,000 Nurse Practioners each writing 6,000 prescriptions per year = 882,000,000 prescriptions. Yes, that’s 882 million prescriptions per year– conservatively estimated.

“More likely to prescribe the drugs that were highlighted in the lunch” we can estimate at 51%. We wind up with a potentially influenced 449,820,000 prescriptions. Again, conservatively estimated.

So now the only question is just what percentage or how many Nurse Practitioners “regularly attended lunch or dinner ‘continuing education’ events sponsored by drug companies?”

With a total pool of over 882 million prescriptions per year available– at least 450 million of them potentially swayed over lunch–my guess is that Pharma’s answer would be “As many as possible.”

Bad Ads and Doctor Deputies

Earlier this month, the FDA launched a new initiative — the Bad Ad Program — to “help health care providers recognize misleading prescription drug promotion and provide them with an easy way to report this activity to the agency.”  In an article appearing earlier this week in Advertising Age, advertising executives and others decry the program as a “publicity stunt” with the potential to lead to physician “vigilantism” and to become “unbridled and messy.”  Also quoted in the article is PhRMA Senior Vice President Ken Johnson, who states that PhRMA views the Bad Ad Program as “another step to help educate — and receive feedback from — healthcare providers about prescription drug advertising and promotion.”  The Advertising Age article, correctly I think, characterizes this statement as offering only “tepid support.”

There appear to be two central criticisms of the Bad Ad Program: (1) that it is not as low-cost as it seems because it will take up physicians’ time and create more work for the FDA’s already overburdened Division of Drug Marketing, Advertising, and Communications (DDMAC) and (2) that it will be an ineffective compliance tool either because doctors cannot tell the difference between compliant and noncompliant advertising or because doctors will “go on personal jihads on ads they don’t like - ads that very well might be in perfect compliance.”

Both concerns seem overblown.  Doctors do not have to participate if they do not have the time or inclination — it seems likely that most will not — and pharmaceutical companies have been reporting each other’s marketing abuses to DDMAC for years, so the Division has experience sifting through more and less credible information.  Doctors may well have difficulty discerning which ads are compliant and which are not — see, e.g., this study revealing that doctors could not accurately identify the FDA-approval status of a significant percentage of the drugs they prescribe — but this is not an argument against the FDA’s effort to educate them.

The bottom line is that while pharmaceutical companies track what happens in physician offices in multiple ways, including through sales rep call notes and sales message recall studies, they do not, at least not consistently and/or voluntarily, use the information gathered in service of compliance, as opposed to sales, goals.  In the words of Arnie Friede, to the extent that the FDA’s Bad Ad Program creates “an additional incentive for a company to closely monitor and control communications by their sales people” it is “an understandable, perhaps even brilliant move.”

Surety Bond Requirements for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)

By Rachel Jones

The final rule implementing surety bond requirements for DMEPOS became effective March 3, 2009.  The regulation implemented the surety bond requirements for DMEPOS set forth in section 4312(a) and (c) of the Balanced Budget Act of 1997 (BBA).  The Centers for Medicare & Medicaid Services (CMS) proposed a rule on January 20, 1998 (63 FR 2926) reflecting the BBA’s surety bond requirements and solicited comments.  Comments were solicited for advisability with respect to Section 4312(c) of the BBA, which further allowed CMS to require a surety bond from some or all providers or suppliers who furnish items or services under Medicare Part A or Part B and not solely Durable and Medical Equipment (DME) suppliers.  A substantial amount of comments were received and in the final published rule on October 11, 2000 (65 FR 60366), CMS decided to delay the final rule with respect to surety bond requirements for suppliers of DMEPOS in order to further study the issue.  However, in 2003 Congress enacted section 902 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173) (MMA) which prohibits the Secretary of Department of Health and Human Services from finalizing a proposed rule related to Title 18 that was published more than 3 years earlier except under exceptional circumstances.  In response to this CMS proposed a rule on August 1, 2007 (72 FR 42001) to implement the statutory surety bond requirements set forth in the BBA.  CMS received approximately 200 comments that were considered before they published the final rule on January 2, 2009. (FR 30802)

Surety bonds are a financial guarantee whereby a first party (obligee) contracts with a second party (principal) to perform duties in a contract that will benefit a third party (surety).  The first party guarantees that the second party will fulfill its obligation(s) under the contract and in the event that the obligations are not met, the first party will recover its losses via the bond.  CMS has imposed the rule in order to deter fraud and abuse by Medicare suppliers of DMEPOS.  CMS believes a surety bond requirement will (1) limit the Medicare program risk to fraudulent DMEPOS suppliers; (2) enhance the Medicare enrollment process to help ensure that only legitimate DMEPOS suppliers are enrolled or are allowed to remain enrolled in the Medicare program; (3) ensure that the Medicare program recoups erroneous payments that result from fraudulent or abusive billing practices by allowing CMS or its designated contractor to seek payments from a surety up to the penal sum; and (4) help ensure that Medicare beneficiaries receive products and services that are considered reasonable and necessary from legitimate DMEPOS suppliers.  CMS has also instituted other measures– including requiring accreditation for DMEPOS suppliers to deter fraud.

Who is affected by the surety bond requirements?

The regulation affects many healthcare providers; generally any DMEPOS supplier that is registered with the National Supplier Clearinghouse (NSC) may be subjected to the surety bond requirement.  Every DMEPOS supplier to Medicare patients must register with the NSC.  There are several exempt DMEPOS suppliers under the regulation:

I.      Government-owned suppliers,

II.       State-licensed orthotic and prosthetic personnel in private practice making custom made orthotics and prosthetics if the business is solely-owned and operated by said personnel and is billing only for orthotic and prosthetics, and supplies,

III.      Physicians and non-physician practitioners if the DMEPOS items are furnished only to his or her patients as part of his or her professional service, and

IV.      Physical and occupational therapists if: (1) the business is solely-owned and operated by the therapist, and (2) if the DMEPOS items are furnished only to his or her patients as part of his or her professional service.

The economic impact on non-exempt healthcare providers is significant since the regulation requires a minimum of $50,000 surety bond.  This bond amount is required for each National Provider Identifier (NPI).  Since DMPEOS suppliers must obtain an NPI by practice location, this amount can become quite significant for a supplier with multiple locations.  The estimated cost to DMPEOS suppliers is approximately $1200 per $50,000 surety bond, depending on the company’s financial stability.  The regulation also permits an additional $50,000 surety bond for high risk DMPEOS.  For example, if a DMPEOS supplier has an adverse legal action within the last ten years preceding enrollment, revalidation, or re-enrollment then an additional $50,000 surety bond is required per adverse legal action.  An adverse legal action includes: Medicare imposed revocation of any Medicare billing number, suspension of a license to provide health care by any State licensing authority, revocation or suspension of accreditation, a conviction of a Federal or State felony offense or an exclusion or debarment from participation in a Federal or State health care program.

CMS believes that the surety bond will deter fraudulent activity because a fraudulent DMEPOS supplier will not likely post a surety bond.   However, it is more likely the basis for this new requirement is to more easily allow CMS to recoup lost funds due to fraudulent activities.  In addition, the bond requirement allows CMS to track and reprimand those DMEPOS suppliers that have continuously violated the law and stayed in the Medicare

« Previous Page — Next Page »