Reform Rodeo

1. Big Pharma: The pharmaceutical industry is threatening to reverse their support of the health care reform legislation if the bill calls for a reduction in the number of years that a company’s biologics are protected from generics.

2. The Caddy Conundrum: NPR reports that organized labor appears to be on board with taxing Cadillac plans, with some movement in their favor regarding the thresholds triggering the tax.

3.  Health Insurance Exchanges: The Commonwealth Fund and the Alliance for health reform moderated a discussion on health insurance exchanges. Fantastic materials that outline the House and Senate plans can be found at the bottom of this page, which includes the extraordinary paper which Professor Timothy Jost presented.

4. Health Reform Discussions: The Health Care Blog has rounded up many of the discussions on health care reform.

5.  Play-or-Pay Problems: The NEJM has a thorough analysis of the “play-or-pay” provisions in health reform legislation, and the problems that may arise.

6. Multimedia: Atul Gawande chats with Charlie Rose on January 5th about health care, as well as Gawande’s new book “Checklist Manifesto”.

The Price of Sausage in Nebraska (and elsewhere)

“Laws, like sausages, cease to inspire respect in proportion as we know how they are made.” The quote, and a number of variants thereof, is most often attributed to Otto von Bismarck. The Boston Globe/A.P. does a nice job taking us through the cost– the spoils, if you will– of the votes requisite thus far to have taken the Senate’s Health Reform bill to its present status. The picture is not particularly pretty– with sizable benefits inuring to the holdout Senators and their constituents. The cost of 60 votes– filibuster-proof critical mass– is, one might say, the cost of doing business. But it is a risky business. By virtue of being so, the 60th vote,  Senator Ben Nelson of Nebraska, brought home the following pieces of bacon home for his constituents:

the federal government will pay the full cost of a proposed expansion of Medicaid, at an estimated cost of $100 million over 10 years; Blue Cross Blue Shield of Nebraska will be exempted from an annual fee on insurers; supplemental Medigap policies such as those sold by Mutual of Omaha are exempted from the annual fee on insurers; and a physician-owned hospital being built in Bellevue, Neb., could avoid a new ban on referrals from doctors who own such hospitals.

And what does the 23rd vote tell his constituents who will have to shoulder the costs of their state’s expansion of Medicaid?

The Boston Globe/A.P.  list is partial but telling. You can see it here.

For a more thorough look at the cost control and program implications of the bill, Professor Timothy Jost’s latest article in Health Affairs is a must read. In addition to a wealth of other information, Jost provides the following:

…the bill provides a cures acceleration program” to fund research for “high need cures” for which incentives in the commercial market are unlikely to result in timely development.  The Food and Drug Administration, the National Institutes of Health, and a new Cure Acceleration Network Board are supposed to work together to facilitate the discovery of such cures and to translate them from bench to bedside.  Grants can be made under the project of up to $15 million a year to eligible entities such as academic medical schools, biotech companies, and drug companies, who need only meet a $1 to $3 matching requirement.  $500 million is appropriated for this program for 2010.

This is all well and good and a great idea.  But nothing that I can see in the legislation gives the taxpayer any stake in this investment.  A drug or biotech company that in fact discovers a blockbuster drug or biologic through the federal government’s investment (perhaps for an off-label use) owes nothing in return.  Shouldn’t we the taxpayers get some return on  our investment, or at least the promise of reasonable prices?

Bismarck also is said to have said,  “Politics is the art of the possible.” To see that, you’ll want to read the rest of Professor Jost’s article.

Pharma Marketing, Advanced

With the Senate’s bill clearing late night hurdles, the coverage in the mainstream media is, at least for the moment, broad. But there was a segment on NPR’s All Things Considered in the midst of all that Health Reform bill coverage that is well worth a listen. The segment, “How A Bone Disease Grew To Fit The Prescription,” (transcript linked, audio below) functions as a sort of biography of the evolution of both a drug and a disease– which was not, it seems, an entirely independent process.

The drug is Merck’s Fosomax, the disease is Osteopenia. Fosomax had sales in 1996 of $281.8 million; by 2005, on the heels of what qualifies as a comprehensive and wildly successfull marketing effort, the drug had sales of $3.2 billion.  Osteopenia derives its origin as somewhat of an afterthought, when in 1992 “a group of osteoporosis experts gathered under the auspices of the World Health Organization” and drew a somewhat arbitray bright line to determine what level of bone mass loss was normal and what amount constituted a disease. The term “Osteopenia” was coined, on the spot, to give clinical researchers a term which described those whose bone loss was considered normal, but was close to the line. They never imagined that Osteopenia would come to be considered a disease in itself, but it did. Millions of women are said to have it; millions treat it with Fosomax. The story of how this came to be (and the implications regarding the role of Pharma in health care) is fascinating.

Risks to Directors and Trustees of Health Care & Life Sciences Companies: Corporate Compliance in a Distressed Economy

“Risks to Directors and Trustees of Health Care & Life Sciences Companies: Corporate Compliance in a Distressed Economy,” was sponsored by Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy, Epstein Becker & Green P.C., and Navigant Consulting, Inc. The program urged profit and nonprofit health care organizations to prioritize effective corporate compliance programs, particularly in today’s economy.

Moderated by Professor Kathleen Boozang, the program featured keynote speaker Mark Anderson, the New Jersey Medicaid Inspector General, as well as presentations by Lynn Shapiro Snyder and Hervé Gouraige of Epstein Becker & Green P.C. and Sandra Piersol and Geoffrey Kaiser of Navigant Consulting, Inc.

The participants focused on the financial challenges and potential exposure for board members of health care and life sciences entities in maintaining an effective compliance program in order to minimize noncompliant behavior and corporate liability risks.  Current trends in HHS Corporate Integrity Agreements (CIA’s) have shown a movement toward imposing personal liability on boards of directors for failure to ensure that a company has an effective corporate compliance program.

Inspector Anderson first addressed the 2007 statute governing the New Jersey Office of Medicaid Inspector General, focusing in particular on the statute’s broad definitions of “fraud” and “abuse,” which allows his office broad discretion.  Asking the key question, “is your compliance compliant?”, he emphasized that effective compliance programs go beyond simple written policies and procedures, but are specific to the entity’s need to prevent fraud and abuse, and are supported at every level of management — with the tone set “at the top.”  He concentrated on one specific element of compliance programs — self-disclosure of problems within one’s own organization — and stressed that self-disclosure is essential to compliance and is in the company’s best interest, as his office provides incentives to health care entities to self-disclose.  These incentives include forgiveness or reduction of interest payments, waiver of penalties and/or sanctions, timely resolution of overpayment, and a decrease in likelihood of imposition of an OMIG Corporate Integrity Program.

Lynn Shapiro Snyder, Co-Chair of the Health Care Fraud Practice Group at Epstein Becker & Green, spoke about the looming threat of enforcement activities aimed at board members of health care and life sciences entities, and noted that, until recently, the risk has been reputational rather than legal.  She highlighted the blurred line between governance and management obligations, and questioned whether boards need their own consultants to determine whether to sign off on a company’s compliance program.  Later, suggesting a simple, cost-effective way to examine the effectiveness of a compliance program, she recommended that compliance officers file (and follow) a “dummy report” within their own organization, thereby bringing to light gaps and issues in the company’s program.

Sandra Piersol, a Director with the Healthcare Disputes and Investigators practice at Navigant Consulting, addressed how directors and trustees can determine whether they have an effective corporate compliance program.  Discussing the seven elements of an effective compliance program, she emphasized ensuring that the compliance officer has direct access to the board of directors, setting the “tone at the top,” and the need for ongoing training and communication.  She provided a list of structural and operational questions to be considered when examining whether an entity’s corporate compliance program is effective, and concluded with the recommendation that boards should request the performance of an objective and comprehensive review of the program activities performed by persons independent of the compliance program.

Hervé Gouraige, Co-Group Leader of the National Litigation Practice at Epstein Becker & Green, spoke about the risk to board members of personal liability for an ineffective compliance program.  After an overview of the law as it relates to board oversight of compliance, Gouraige discussed the requirement that companies have a process established to address compliance risks within the organization.  Second, he underscored that the process must be executed by the chief compliance officer and monitored by the board.  Finally, he explained that the board must be involved in the selection of a chief compliance officer who is capable of, and willing to, stand up to the board.  He stressed that the chief compliance officer should not also be the general counsel, due to the conflicting duties and obligations of those positions.  He also suggested that there be a separate board committee — which includes the CEO, general counsel, and chief compliance officer — to monitor the compliance program.  Annually, this committee should meet without the CEO and general counsel as well.  Finally, Gouraige suggested that in order to learn about — and address — problems before a prosecutor does, compliance officers periodically spot check internal emails between employees.

Geoffrey Kaiser, Managing Director in the Healthcare Dispute, Compliance and Investigations Practice at Navigant Consulting, focused on the benefits of having an effective compliance program.  He noted that, although it is difficult to quantify the harm avoided by any program, an effective program can reduce or mitigate the risk of violations, particularly through education, which is a cost-effective way to sensitize employees to risk.  Second, having an effective voluntary information and reporting system allows a board of directors to introduce corrective measures proactively.  Third, having an effective corporate compliance program in place can influence prosecutorial discretion.  In addition, having an effective compliance program can reduce the severity of penalties facing an organization at sentencing — not only affecting the amount of the fine, but also the range in which the fine will be imposed.

Overall, each speaker highlighted the cost-effectiveness and benefits of devoting resources to an effective compliance program.  Inspector Anderson, stating that the economic environment cannot dictate compliance policies, emphasized that cutting such programs is short-sighted and a future compliance violation could potentially decimate a company in the long run.  Gouraige explained that it would be a terrible mistake to cut compliance, due to the “wisdom of the long-term investment.”  The speakers, in a question and answer session moderated by Professor Boozang, addressed effective ways to increase board attention to corporate compliance, including focusing on corporate compliance as one of the many legal requirements required by boards and underscoring the investment — rather than the cost — of implementing an effective corporate compliance program.  As attendee Eve Costopoulos of Merck aptly stated, “if you don’t pay today, you’ll pay tomorrow.”

All Photos by Sean Sime

A Hat Tip to Pharmalittle

Health Reform Watch wishes to congratulate the folks over at Pharmalittle for being named one of the Top 100 Pharma Blogs. They deserve it–and if you’ve never checked out their site– I highly encourage you to do so. Upon the dissolution of Ed Silverman’s Pharmalot, which was hosted here in Newark by the Star Ledger, a group of contributors and commenters banded together to pick up the mantle. For those of you who have a keen interest in Pharma (and who doesn’t?), you’ll find truly insightful and often witty commentary over at Pharmalittle. As an example, this post of theirs announcing their Top 100 status is classic:

HAT TIP TO OURSELVES….

Pharmalittle to be Honored at White House

OK, so we lied. It’s all part of the same strategy. As the impressive badge on the left (suitable for framing) shows, this blog has been named one of the top 100 pharma blogs. Did anyone know there were that many pharma blogs?

Anyway, a lot of people out there will wonder how we accomplished this. It’s simple. We followed basic marketing principles:

1. We promoted the blog for off-label uses. For example, it makes a great eye chart and may help slow the growth of cataracts.

2. We gave kickbacks to everyone on the internet. Really.

3. We buried studies 34, 57, and 105.

4. We changed the endpoints in study 35 and left out the last six months of data.

5. We delayed the appearance of generic Pharmalittle (liloxazorx) through a bunch of nuisance suits.

6. We intimidated people who read other blogs.

7. We hired Key Opinion Leaders like Anonymous to talk us up.

8. We funded studies showing all the dangers of other pharma blogs.

9. We convinced people that failure to read Pharmalittle will result in the end of innovation in the industry and the complete dissolution of life-saving medications.

10. We avoided being bought by Pfizer.

11. There is no evidence reading Pharmalittle leads to weight gain, morbid obesity, and diabetes. And anyone who thinks differently will never find Study 57 anyway.

12. We don’t believe in morbid obesity. If you’re going to be obese, at least be up-beat about it.

And stuff like that.

Read more from Pharmalittle here.

Under the Radar: Health Care Reform & Drug Advertising & Marketing

At the Food and Drug Law Institute’s 21^st Annual Advertising & Promotion Conference John Kamp of the pro-industry Coalition for Healthcare Communication discussed four proposals addressing drug advertising and marketing issues that may be incorporated into the final health care reform bill but have not been widely debated.  Mr. Kamp’s presentation is available here.  

Off the Table (For Now)

Of most concern to industry is an oft-floated proposal to eliminate the tax deduction for drug advertising.  (See, for example, bills sponsored by Representative Jerrold Nadler (D-NY) and Representative Daniel Lipinski (D-IL) here and here.)  Most recently, on September 11, 2009 Senator Bill Nelson (D-FL), a member of the Senate Finance Committee, announced his plan to put forth an amendment to the Baucus Bill that would eliminate the “tax break drugmakers get for TV advertising.”

Direct-to-consumer advertising is a prime target because, as the New York Times put it, for many “the ads are a daily reminder of a health care system run amok,” which “prompt people to diagnose themselves with chronic quality-of-life problems like insomnia or restless leg syndrome; lead people to pressure their doctors for prescriptions for expensive brand-name drugs to treat these conditions; and steer people away from cheaper generic pills.”   There is also concern that DTC ads do not present an accurate picture of drug risks and benefits and that they drive uptake of new drugs before their safety is fully known.

Another obvious driver is the need to pay for health care reform.  Senator Nelson echoed a claim made earlier this year by Congressman Charles Rangel (D-NY) that eliminating the tax break for TV ads would free up $37 billion over the next ten years.  Industry representatives contest the $37 billion figure, arguing that drug companies spend far too little on direct-to-consumer advertising to achieve that level of additional tax revenue.  They contend that Congress would have to eliminate the tax deduction for physician advertising and other marketing expenditures to garner $37 billion.

Less than a week after he announced it, Senator Nelson backed off his plan, perhaps under pressure from other members of Congress who come from districts with a strong media presence and have spoken out against eliminating the deduction.  According to Mr. Kamp, however: “Somebody else will raise this again before it’s over, you bet … Baucus says the reforms will cost $850 billion, the Congressional budget office $750 billion. Three-quarters of a trillion dollars is a lot of real money in Washington. The $37 billion will continue to be in the buffet of options as they try and figure out healthcare.”  

Still on the Table

Three proposals related to drug and device promotion are still on the table, with varying chances for inclusion in the final health care reform bill.

First, health care reform bills in both the House and the Senate contain transparency provisions akin to those in the Physicians Payments Sunshine Act of 2009 introduced in January by Senator Chuck Grassley (R-IA).  Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy recommended that disclosure of drug and device company payments to doctors be federally mandated in its January 2009 white paper.  As the Sunshine Act has widespread support, including from industry, transparency provisions are likely to be included in the final bill.

Second, Section 138 of the health care reform bill reported out of the House Education and Labor Committee   bans the commercial use of “prescription information containing patient identifiable and prescriber identifiable data,” essentially adopting as federal law New Hampshire’s ban on prescription data mining which survived a First Amendment challenge in the First Circuit.  If passed, Section 138 would end drug reps’ current practice of tailoring their sales messages to each doctor’s prescribing history, which many believe creates undue pressure on doctors to prescribe newer more expensive medications.

Third, a bill sponsored by Senator Jack Reed (D-RI) would authorize the FDA to evaluate whether use of a “drug facts box” format for presenting a drug’s benefits and risks would improve healthcare decision making and, if so, to promulgate regulations requiring that drug facts boxes be added to drug labels.  Senator Reed’s bill also empowers the FDA to set standards for comparative clinical effectiveness information included in drug labeling and advertising.

It is difficult to predict whether the data mining ban or Senator Reed’s bill will be included in the final health care reform bill.  Mr. Kamp calls Senator Reed’s bill’s chances a “toss up;” regarding the data mining ban, he has “no idea.”

Medical Education & Health Reform

[Ed. note: As noted in the post above, we are very pleased to welcome Associate Dean & Professor of Law Kathleen M. Boozang, J.D., LL.M., to Health Reform Watch today.]

The news has been much absorbed by the “scandals” associated with physician conflicts of interest arising out of their relationships with the pharmaceutical and medical device industries. Concerns include the potential biases created by industry funding of continuing medical education, the impact on patient care of physician activities as paid industry consultants and promotional speakers, as well as the impact on the integrity and patient safety of industry-funded research.  Analogous issues emerge from industry funding of medical schools themselves.

A pervasive conception of systemic health care reform would provide the opportunity to address many of these problems.  Academic medicine’s drive for money arises not only from the amount of uncompensated care they provide to the under- and uninsured, but from the structural flaws of the funding mechanisms for medical education and research in the United States.  According to the June MedPac Report on medical education,  it is unclear how much it actually costs to train new physicians, partly because of the multiplicity of funding sources.  While it could be that the funding is sufficient, medical school faculty and deans nonetheless find themselves under tremendous pressure to raise money from government grants, industry relationships, and clinical practice to support themselves. This pressure increases as constrained state budgets contribute less to public universities. Income from physician practice plans is leveling off as academic medical centers become unappealing participants in managed care plans — they too frequently focus insufficiently on primary care, and managed care increasingly balks at contributing to the costs of medical education which are built into academic hospital rates. Further, many academic medical centers are less nimble and efficient than the multi-practice plans and surgi-centers pervasive in many communities.

While greed and poor judgment are certainly factors driving some physicians’ relationships with industry, academic medicine’s over-reliance on “alternative revenue” streams can also be explained by the irrationality of the extraordinarily complex mechanisms for funding medical education and research. More frustrating is Medicare is spending $9 Billion annually to new train physicians to function in a health care system that is hopefully short-lived in its current form.  Meaningful healthcare reform will rest on reform of the delivery and finance systems — new health care professionals must be educated to perform in this reformed environment, which should involve increased collaboration between physicians and allied healthcare professionals; treatment of patients outside of the hospital; and knowledge of comparative effectiveness of alternative therapeutic options.

Health care reform should condition future financing of medical education on the absence of collaborations that create conflicts of interest that threaten the integrity of the medical profession.  It should also jumpstart radical reform of the content, methodology and quality of educating medical students, residents, and physicians, who are the linchpin to changing how we deliver healthcare.  The plan for systemic reform should compel a reconceptualization and expansion of allied health care professionals’ roles in health care delivery to address cost, access, quality, and error avoidance.  Finally, the vision for the future should commit to resolving the inequities in the health care status of all who live in the United States, an issue whose solution is inextricably linked to producing a sufficient number and variety of health care providers available in every part of the country who have a broader conception of health care, with the knowledge and skills to achieve the goals of health for all.

Health Care Reform, Lobbyists and the Importance of “Being There”

“Since it cost such a lot to win,
And even more to lose….”

J. Garcia & R. Hunter, “Deal”

This last week NPR’s All Things Considered ran an interesting story focused on lobbyists in the Health Care reform debate. NPR reports that

Between 1998 and 2008, the number of registered lobbyists on health care more than doubled, to 3,627, according to the Center for Responsive Politics. The statistic doesn’t include players who don’t engage in lobbying as defined by federal law - among them, grass-roots organizers, producers of TV campaigns and former members of Congress who remain in Washington as senior advisers to corporate clients.

And that

Spending on lobbying jumped even higher over the past decade. Organizations lobbying on health care spent $484.4 million in 2008, more than two and a half times the spending in 1998.

There is no reason to think that this year’s figure will not easily surpass that. More than 15% of the nation’s GDP is “on the table” so to speak, and an ox gored now will suffer a long long time. According to an informative, very well charted, but not widely reported (a big thank you to “Blue Bunting” over at Care2), recent report from Common Cause

The major health interests have spent an average of $1.4 million per day to lobby Congress so far this year and are on track to spend more than half a billion dollars by the end 2009. That comes out to about $2,600 per day per member of the House and Senate. The pharmaceutical lobby alone spent $733,000 per day in the first quarter of 2009. Since 2000, the industries have spent over $3 billion on lobbying, with the total increasing every year and rising more than 142 percent over the course of the decade. In each of the past four years health interests have been the number-one lobbying force in Washington, measured in expenditures, and have averaged over $1 million per day.

This Common Cause chart below, which like NPR utilizes data from the Center for Responsive Politics, illustrates these numbers rather well (I highly recommend taking a quick look at the report itself, there are a number of charts showing the amounts received by Congressman, Health Committee, and Party).  $1.4 million per day is a lot of money. And as that was the average expenditure from the first three months of this year, one might think that as the debate heightens, so may have the money– which is to say that the $513 million estimate for 2009 may be conservative. The question of course is why. All Things Considered offers the following:

Why spend so much? Three words: return on investment. While a drug company might spend a few million dollars lobbying, it stands to gain, or lose, billions in the outcome.

One big example: the 2003 Medicare drug legislation, under which Medicare began covering prescription drugs. One provision shifted poor, elderly consumers from Medicaid to Medicare - more bluntly, from a program where the government can negotiate with drug companies over prices, to a program where the new legislation prohibited such negotiations.

Most estimates find that the Medicaid-to-Medicare shift was worth billions of dollars for the drugmakers. Meanwhile, the Center for Responsive Politics puts the pharmaceutical industry’s 2003 lobbying expenditures at $126.1 million.

That would seem to be a bargain.

PhRMA Shows Its Committment to Transparency With Revised Principles on Conduct of Clinical Trials

The Pharmaceutical Research and Manufacturers of America (PhRMA) Board of Directors announced yesterday their unanimous endorsement of revised principles to increase transparency in medical research through their newly revised PhRMA Principles of Conduct of Clinical Trials and Communication of Clinical Trial Results.  The revised principles are part of an effort to encourage behavior that benefits the healthcare community and the public through objectivity in research and strengthened transparency in medical studies.

PhRMA states that the Principles of Conduct, which are to take effect on October 1, 2009, will:

Fortify our commitment to patients and healthcare professionals by increasing transparency in clinical trials, enhancing standards for medical research authorship and improving disclosure to manage potential conflicts of interest in medical research.

The pharmaceutical and biotech industries have been under recent pressure to become more transparent, specifically concerning the disclosure and publication of clinical trial results, the disclosure of physician payments/reimbursement for conducting clinical trials, and authorship standards.

Read more

Unpublished 1997 Study Linked Drug to Weight Gain and Diabetes, Now Thousands Sue Claiming They Were Not Warned of Side Effects

The Washington Post reported today on the “silenced drug study” of AstraZeneca’s antipsychotic drug, Seroquel.   The study, known as Study 15, was conducted in 1997 and showed an increase in weight gain and diabetes among Seroquel users.  The results were never published and the information was not released to the public or physicians.  The study was, however, provided to the FDA but they did not have the authority to publish the results.  Seroquel was approved by the FDA in 1997 after they received the study’s findings.

AstraZeneca contends that they did disclose the drug’s health risks on the label, as required by the FDA.  Spokesperson Tony Jewell wrote in an email to The Washington Post that the results of Study 15 “did not identify any safety concerns.”  Study 15 compared Seroquel to another similar drug, Haldol.  Jewell also wrote that “A large proportion of patients dropped out in both groups, which the company felt made the results difficult to interpret.”

Over 9,000 lawsuits have been filed against the drug by patients who experienced weight gain, hyperglycemia and diabetes.  It is through these lawsuits that internal documents and details regarding the buried study have emerged.  Internal documents show that AstraZeneca was well aware of the results indicating significant weight gain and worked to spin the results favorably.  The company presented information that Seroquel caused patients to lose weight at two meetings in 1999. This data was based on a much smaller company-sponsored study even though AstraZeneca had concerns with the study and the doctor who conducted it.

The Washington Post says:

The saga of Study 15 has become a case study in how drug companies can control the publicly available research about their products, along with other practices that recently have prompted hand-wringing at universities and scientific journals, remonstrations by medical groups about conflicts of interest, and threats of exposure by trial lawyers and congressional watchdogs.

An obvious concern with unpublished or silenced studies is that they may lead physicians to make medical decisions without all the information that should be available to them.  As the Center for Health and Pharmaceutical Law & Policy recommends in its recently-released whitepaper:

All those engaged in medical research and publication, including medical professionals and institutions, medical journals, and industry, should undertake reforms to ensure the integrity of the medical literature.  Transparency in the relationship of industry and physicians would be critical tool in this effort.

The Life Cycle of Objectionable Drug Marketing Practices

[This is a guest post by Nathan Cortez, assistant professor of law at the Dedman School of Law at Southern Methodist University. Cortez has published in the peer-reviewed Food and Drug Law Journal and teaches international health, pharmaceutical and administrative law. I've learned a lot from his work, and I'm happy he's agreed to let me post this here.]

By Nathan Cortez

The pharmaceutical industry spends some serious coin on sales and marketing-anywhere between $30 billion and $57 billion per year. And this money funds much more than the ubiquitous ad campaigns to which we’ve grown accustomed (sing along if you know the “Viva Viagra” jingle). Over the years, sales and marketing departments have conjured up increasingly creative marketing practices of questionable legality. For example, drug companies have funded “research” and “educational” grants of questionable validity, sponsored continuing medical education (CME), paid ghost writers to generate favorable journal articles, provided free gifts, meals, and entertainment to prescribers, paid prescribers as speakers, consultants, or preceptors, and even hired former college cheerleaders to gain access to prescribers. Most of these practices have been condemned, and many have been prosecuted, resulting in billions in settlements for federal and state governments. The pharmaceutical industry can’t even give away free drugs without being punished.

Last Monday, the New York Times highlighted yet another objectionable drug marketing practice: targeting medical schools. As the article explains, drug companies have long had ties to medical schools and their students by funding endowed chairs, faculty prizes, research grants, capital improvements, and even volunteering employees to teach classes. Students get showered with enough free pizza and trinkets to think that they might already have prescribing privileges. More recently, the Times reports that the faculty at Harvard Medical School has come under fire for its ties to drug companies that hire faculty as speakers, consultants, or even board members. More than 200 Harvard Med students have objected, leading the school to convene a 19-member panel to reevaluate the school’s conflict-of-interest policies (meanwhile, the University of Minnesota Medical School is loosening them).

In the “Life Cycle of Objectionable Drug Marketing Practices,” we’re currently at the “media coverage and public outrage” phase. Gradually, most of the practices listed in the initial paragraph have either disappeared or have lost their allure. Media coverage and public outrage is quickly followed by government outrage (possibly even Congressional hearings) and promises of self-regulation by the drug companies to preempt more stringent regulation. Self-regulatory efforts like the PhRMA Code and the AMA Ethical Guidelines provide some bright-line standards for complying with ridiculously broad laws like the federal anti-kickback statute and its complicated safe harbors. If companies still don’t get the hint, the government simply tells drug companies what not to do.

And if none of these events ends the Life Cycle of the Objectionable Drug Marketing Practice, litigation usually does. Pretty much every major pharmaceutical company has settled a Corporate Integrity Agreement with the government for violating federal drug marketing laws-the latest being a staggering $1.4 billion settlement paid by Eli Lilly to settle claims that it illegally marketed its anti-psychotic drug Zyprexa. By settling, companies thus avoid the “death penalty”–being excluded from Medicare and Medicaid.

Although the drug companies never die, the practices usually do, precipitated by an avalanche of government investigations, whistleblower suits, shareholder suits, and even marginally-related product liability suits. Federal and state lawmakers also pile on. In the last few years, nine states have enacted (and dozens have considered) pharmaceutical marketing laws, requiring disclosures of marketing payments made by drug companies to potential prescribers, in addition to caps on payments, disclosure of sales representative activities, and other prohibitions. Indeed, the Senate Finance Committee is currently considering a federal bill that would explicity preempt state laws.

Thus, the Objectionable Drug Marketing Practice dies a violent death. It can rest in peace, but the sales and marketing departments can’t. Because they have to find new ways to drive market share.

Biopharmaceutical Companies Continue to Advance and Invest In Rough Economic Times

A recent press release from the Pharmaceutical Research and Manufacturers of America (PhRMA) reports that pharmaceutical and biotech companies continue to invest substantial amounts of money into research & development, despite the dismal current economic situation.  Research from PhRMA and Burrill & Company shows that “pharmaceutical research and biotechnology companies invested a record $65.2 billion last year in the research and development of new life-changing medicines and vaccines — an increase of roughly $2 billion from 2007.”  There are almost 30,000 medicines in development in the country right now.

In a time when most other industries are struggling and the unemployment rate is the highest it has been in 25 years, it is encouraging to see that the biopharmaceutical industry, one whose existence and success directly impacts the health of our nation, is continuing to invest and advance.  For example, this week we saw Merck make a serious investment through its $41.1 billion merger with Schering-Plough.    In addition, as we posted in December, Merck announced its plan to enter the biosimilars market, which will cost an estimated $1.5 billion.

Biopharmaceutical companies are continuing to spend on R & D, and the great majority of their investments are within the US.  According to “The Biopharmaceutical Sector’s Impact on the U.S. Economy: Analysis at the National, State, and Local Levels”, a study out this month by Archstone Consulting and Dr. Lawton R. Burns, this industry creates millions of US jobs and contributed three times as much to the GDP than the average of other industries and sectors in 2006.

Besides the struggling economy, drug companies face other challenges.  As we recently reported, President Obama’s health reform plan may negatively impact pharmaceutical companies through an increased discount to Medicaid (from 15.1% to 22.1% of avg. manufacturer’s price).   Despite the economic crisis and health care reform changes, it is hopeful to hear the industry’s continued commitment to progress. Said PhRMA President and CEO, Billy Tauzin:

America’s pharmaceutical research and biotechnology companies are not immune to the challenges presented by our current economic crisis.  However, the important work that we do every day in the battle with disease cannot stop. The U.S. is the world’s hotbed of medical innovation, and throughout the country, we remain committed today to finding tomorrow’s cures, despite the incredible challenges that are posed by the current economy.

As the Obama Budget Unfurls, Details About Health Care Reform Emerge

The New York Times has published an article, “Obama Offers Broad Plan to Revamp Health Care” which ably outlines the contours of the emergent health plan–and the way we’ll pay for it. Or at least the way President Obama proposes we’ll pay for it. According to the Times, “Mr. Obama asked Congress to set aside $634 billion in a ‘reserve fund for health care reform.’”

Suffice it to say, for the moment, that there are winners:

Cancer research, a multi-year plan designed to double it; Biosimilars (generic versions of biotech drugs), speeded approval through “a new regulatory pathway” at the Food and Drug Administration;” low-income women, increased access to family planning through Medicaid; and doctors, who will not be subjected to the Medicare cuts in payments scheduled to take effect in 2010 under current law (21% in 2010, 5% for a few years thereafter);

And there are losers:

Drug Companies, an increased discount to Medicaid (from 15.1% to 22.1% of avg. manufacturer’s price); Private Insurers, a cut in payments to Medicare Advantage providers; higher income Medicare recipients, increased prescription drug premiums; Hospitals, a decrease in Medicare payments for those hospitals with a high proportion of re-admits within 30 days of initial release (said to be indicative of  poor initial performance); home health agencies, a $37 billion cut over the next 10 years.

Of course, “loser” is a relative term; and sometimes a gored ox, if it lives, is better than no ox at all. And I would imagine that is easier to bear the loss of  some oxen than it is others: specifically, an increased discount in Medicaid prescription drug pricing, is not the ability of Medicare to bargain for the price of prescription drugs. A topic we wrote about in early January, and a reform which the Obama Health Care campaign plan promised:

“At present, Medicare is itself unable to negotiate drug pricing. In Obama’s campaign health plan, he stated that he would

‘Allow Medicare to negotiate for cheaper drug pricing. The 2003 Medicare Prescription Drug Improvement and Modernization Act bans the government from negotiating down the prices of prescription drugs, even though the Department of Veterans Affairs’ negotiation of prescription drug prices with drug companies has garnered significant savings for taxpayers. Barack Obama and Joe Biden will repeal the ban on direct negotiation with drug companies and use the resulting savings, which could be as high as $30 billion, to further invest in improving health care coverage and quality’ (footnotes omitted).”

My guess is that this is an ox the drug companies are trying to save.

Bill Would Require Transparency of Physician Relationships with Pharma, Medical Device Companies

Yesterday Sens. Chuck Grassley (R-Iowa) and Herb Kohl (D-Wis.) announced a bill (S 301) that would require pharmaceutical and medical device companies to publicly disclose any gifts and payments to physicians valued at $100 or more per calendar year, according to CQ Healthbeat.

The bill introduced yesterday requires companies to report such gifts and payments to the U.S. Department of Health & Human Services once per year. Similar legislation introduced last year would have required quarterly disclosure of gifts or payments over $25 per year.

Additionally, if passed, the legislation would pre-empt state laws that require disclosure of gifts and payments to physicians.

So far, the bill has gathered support from various sectors. Proponents of the bill argue that it will allow patients to “fully trust the relationship they have with their doctor.”

Representatives of the pharmaceutical and medical device industry have expressed support for a “uniform national standard . . . [as opposed to] a patchwork approach by all 50 states.”

It seems that the only group unlikely to support the proposed legislation is physicians. However, the bill allows for physicians to contest the reports made by pharmaceutical and medical device companies, which would be reviewed by Health & Human Services.

Genes, Drugs and Tests

Merril Goozner of Gooznews has written an excellent summary and commentary on what he refers to as the NY Times’ “‘mostly excellent’ story on ‘personalized’ drug therapy.” The “mostly excellent” story appeared on the front page of the Times yesterday. Goozner offers this summation

1. Most drugs only work on a subset of patients who take them.

2. Gene variations may determine some of that variable response.

3. DNA tests to determine those variations are poorly regulated by the Food and Drug Administration; many may be inaccurate.

4. Using knowledge about varying drug responses based on genetic differences will undermine the drug industry’s profit model, which usually depends on selling to everyone who has a particular disease.
Goozner also offers “two minor complaints” about the Times story. Both Goozner’s commentary and the NY Times story itself are well worth a read. Links below.

Gooznews, DNA-Driven Medicine
NY Times, Patient’s DNA May Be Signal to Tailor Medication

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