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.

New Jersey Medical Marijuana Legislation Update: Poised to Pass?

Supporters are hopeful that before Governor-Elect Chris Christie takes office next month, the New Jersey legislature will pass — and current Governor Jon Corzine will sign — medical marijuana legislation.  In February 2009, the “New Jersey Compassionate Use Medical Marijuana Act,” which would allow patients suffering from “debilitating medical conditions” to treat their symptoms with marijuana without fear of state criminal reprisals, passed the state Senate.

In June 2009, Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy issued a position paper calling on the full legislature to pass the Act, arguing that it would “allow New Jersey residents with debilitating medical conditions access to marijuana to ease their suffering without creating an undue risk of abuse or diversion.”  Soon thereafter, the Act cleared the Assembly Health, Human Services and Senior Citizens Committee, albeit with a number of amendments, including several bolstering the Act’s already strict safeguards against abuse and diversion.  (For a detailed summary of the differences between the Senate and Assembly versions of the Act, see below.)

According to an article in the New Jersey Law Journal, a legislative aide “says they are trying to get the [Act] posted for a floor vote on Dec. 7, Jan. 7 or Jan. 11, the remaining voting sessions in the current term.  The Assembly is expected to pass it.”  Due to the amendments added by the Assembly Committee, the Senate would need to pass the Act again before it would reach the Governor’s desk.  Even if the Act is not passed during the current lame-duck session, however, there is hope for its passage in sessions to come. Governor-Elect Christie has indicated that, with sufficient restrictions in place, “he would be supportive of such legislation.”

Summary of Differences between Assembly and Senate Versions

Change to definition of “bona fide physician-patient relationship.”

The Senate’s version of the Act (S119) requires that patients who wish to use medical marijuana obtain a “written certification” from a physician with whom they have a “bona fide physician-patient relationship.”  Such a relationship is said to exist whenever a physician has completed a full assessment, including a physical examination, of a patient.  The Assembly’s version (A804) includes a significantly narrower definition, providing that only the physician with “ongoing primary responsibility” for treating a patient’s “debilitating medical condition” can approve that patient to use marijuana.  Such a physician must be “board-certified, if available” in the specialty appropriate for caring for the condition which qualifies the patient to use marijuana.

Changes to list of eligible “debilitating medical conditions.”

• Whereas S119 would have granted eligibility for marijuana to patients suffering from “severe and persistent muscle spasms, including, but not limited to, those characteristic of multiple sclerosis or Crohn’s disease,” A804 limits eligibility to those with “intractable skeletal muscular spasticity,” which would, it would seem, include some patients with multiple sclerosis, but exclude those with Crohn’s disease.
• Whereas S119 made all patients with cachexia or wasting syndrome, severe nausea, or severe or chronic pain eligible, under A804 patients with those conditions are only eligible if their symptoms are the result of AIDS or cancer. Concomitantly, neither AIDS nor non-terminal cancer render a patient eligible unless they cause cachexia or wasting syndrome, severe nausea, or severe or chronic pain.
• A804 adds to the list of those eligible for marijuana, patients suffering from amyotrophic lateral sclerosis and multiple sclerosis. Patients with cancer that is “terminal” and glaucoma that is “resistant to conventional therapy” are also eligible; under S119 all cancer and glaucoma patients were eligible.
• Notably, both versions include a provision allowing for additional medical conditions to be added by regulation.

Changes to rules governing “medical marijuana alternative treatment centers.”

Under A804, eligible patients will no longer be permitted to grow marijuana.  The statute’s protection will only apply to patients who obtain marijuana from New Jersey Department of Health and Senior Services-approved “medical marijuana alternative treatment centers.”  A804 adds as a requirement of approval that such centers be operated on a nonprofit basis.  They do not have to be recognized as such by the IRS but they do need to comply with all state nonprofit laws.  Perhaps in an effort to mitigate hardship that might arise as a result of these, more restrictive, provisions, A804 exhorts DHSS to “seek to ensure the availability of alternative treatment centers throughout the State, including, to the maximum extent practicable, at least two each in the northern, central, and southern regions of the State.”

Other potentially-significant changes.

• Unlike S119, A804 does not protect patients and others from arrest or prosecution; its protection is limited to waiver of applicable “civil or administrative penalties.”
• A804 also eliminates protection for caregivers who assist patients with medical marijuana use. Instead, it provides that “[t]he commissioner shall adopt regulations to: (1) provide for the use by a registered qualifying patient of a designated individual in an emergency situation to transport marijuana to the patient who is otherwise unable to obtain marijuana from an alternative treatment center[.]“

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 Science Liaisons: Walking the Line between Scientific Exchange and Promotion

[Ed. note: As noted in the post above, we are very pleased to welcome Kate Greenwood, J.D., to the blog today.]

As the Wall Street Journal recently reported, at a time when the ranks of pharmaceutical sales representatives are thinning, the number of medical science liaisons (MSLs) is (or was until very recently) growing.  MSLs are doctors, pharmacists, or scientists employed by drug companies to disseminate scientific information about the companies’ drugs — including information about off-label uses of those drugs — usually to physicians who are key opinion leaders.  MSLs are, at most companies, part of the medical affairs or research and development departments and, unlike sales reps, they are not typically evaluated or compensated based on increases in market share or prescription volume in their regions.  Still, as suggested by this PharmExec article on permissible metrics for measuring the value to companies of both MSLs and the thought leaders they court, it is not always clear how the work MSLs do differs from that of a sales rep.

FDA regulations ban companies from “represent[ing] in a promotional context that an investigational new drug is safe or effective for the purposes for which it is under investigation” but explicitly allow companies to engage in “the full exchange of scientific information.”  Sales reps cannot take advantage of the scientific exchange safe harbor to discuss off-label uses with physicians, but MSLs can, as long as they do so in response to a physician’s unsolicited request.  Jeff Patrick, who holds a doctorate in pharmacy and is Director of Medical Scientists at the biopharmaceutical company Dyax, explained to the Wall Street Journal that, unlike a sales rep, he could respond to a question like “Were there pediatrics in your trial?” even if the drug being evaluated was not approved for pediatric use.

Because MSLs are out in the field engaging doctors in free-ranging and difficult to police discussions, they present evident compliance challenges for companies attempting to follow the rules regarding off-label promotion.  On the other hand, their scientific expertise and established relationships with thought leaders may also present compliance opportunities.  For example, earlier this year, the FDA approved the use of MSLs in the Risk Evaluation and Mitigation Strategy (REMS) for UCB’s Cimzia, a drug used to treat Crohn’s disease and rheumatoid arthritis which carries with it a risk of serious infection.  The Cimzia REMS requires as part of its communication plan that the company’s MSLs make a presentation about the drug’s risks to all of the nation’s approximately 500 gastroenterology key opinion leaders.

Common Denominator in Failed State Health Reform: Budget Woes

But the states may be a different story.  A round up of failed– or at least disappointing– health reform state initiatives over the past two weeks shows a consistent factor in the process: budget woes.  Many states have shown themselves to be not willing to overlook state budget crises in favor of immediate health reform.

Case in point: Washington State.  The state’s House approved a bill last week that would remove thousands of beneficiaries from basic state health care.  State officials would have authority to remove residents receiving separate benefits from the state’s Department of Social and Health Services, as well as discretionary removal of residents based on income, perceived access to private insurance, and how long a particular resident has received basic state health care.  The bill, according to the AP/Seatle Post-Intelligender, is likely to save the state $250 million (of the $9 billion annual budget gap that the state hopes to close).  The proposal is currently awaiting a vote in the state Senate.

Washington also recently imposed a new rule that would cut Medicaid reimbursements for brand-name prescription drugs– an intended savings of $1 million dollars a month.  However, two weeks ago the AP/Seattle Post-Intelligencer reported that a federal judge imposed a ban on enforcement of the new measure over concerns that it would restrict access to prescription drugs.  A hearing on May 18^th will determine whether the ban will be lifted or stayed.  Read more

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

Free Healthcare for the Newly Uninsured?

In a move that has garnered both praise and criticism, Walgreens is offering free health care at its in-store Take Care clinics to patients (and their uninsured children and spouses) who have lost their jobs.  This program, called the Take Care Clinic Take Care Recovery Plan, is designed to assist current and future patients who lose their jobs and health coverage on or after March 31, 2009.

Free services do not include full spectrum preventive care, but do include routine screening and treatment for respiratory illnesses, seasonal allergies, urinary tract infections, etc.  Quest Diagnostics has teamed up with Walgreens to provide free laboratory testing services associated with the care of qualified patients.   A significant item not covered by the program is the cost of any prescription necessary to complete treatment for any of these conditions.

Walgreens warns that “[t]he Take Care Recovery Plan is in no way intended as a substitute to COBRA health benefits or any other insurance” and advises patients to carefully consider all forms of coverage that may be available to them given the limitations of care available for free through a Take Care Clinic.

While many may view the program as an advertising stunt, it is hard not to take solace in the fact that families who might otherwise have to resort to a hospital emergency room, and potentially face an exhorbitantly high bill, may now take refuge in a local clinic.

As the economy continues to sour and the unemployment rate reaches levels not seen in more than a quarter-century (8.5%), the impact on access to healthcare and our economy could prove to be unprecedented.  One study indicates that for every 1% increase in unemployment, Medicaid and SCHIP enrollment would increase “by 1 million (600,000 children and 400,000 non-elderly adults) and cause the number of uninsured to grow by 1.1 million.” And as we noted in a post at the beginning of this year, there are those (including Jane Sarasohn Kahn of The Health Care Blog) who believe that even that dire metric will prove to be  somewhat understated for present conditions.

I am certain that Walgreens is concerned with its bottom-line in this effort: calling it an “experiment,” restricting the hours that non-paying patients can seek care, and noting that every patient who visits a clinic talks to about 8 other people about the experience.  Most people, I am certain, are aware that the move is a mere band-aid on a wound that is hemorrhaging.  But for the families the program helps, these points are probably irrelevant.  What is relevant is the fact that a company is using its own resources to provide free health care to a growing population who need it.

Health Care Costs for Retirees Equals Second Mortgage

Often, the costs of health care can seem abstract: we speak in the aggregate of billions and co-pays and deductibles and the labyrinth which is the “donut hole” formula for Medicare prescription drug payments. But sometimes we get to a number which instantly makes sense and allows us to have some grasp of the actual cost and the impact that health care costs can have. Fidelity Investments has just released such a number. Kaiser.org reports that

Couples Retiring This Year Need $240,000 To Cover Medical Expenses, Study Finds

A 65-year-old retired couple this year would need $240,000 on average to cover medical expenses, according to a recent study by Fidelity Investments, the AP/Long Island Newsday reports. The study assumed that the couple is covered by Medicare and has no employer-provided insurance. It also assumed that the male partner would have a life expectancy of 17 years, while the female partner would have a life expectancy of 20 years. The estimate includes Medicare deductibles, copayments and certain services that might not be covered by Medicare.

That’s out of pocket. That’s a house.

Or at least a house mortgage (not for a particularly big house here in metro New Jersey, but a house nonetheless). And to think that one would have to face that expense– equivalent to the mortgage on a whole other house–after presumably realizing (though the presumption is not as solid as it once may have been)  the American dream of having fully paid off that 30 year mortgage on the “first” house– is daunting to say the least, and arguably unconscionable as part of a social compact.

Kaiser reports that

The $240,000 estimate is a 6.7% increase from last year’s projection. Since Fidelity first released its annual report in 2002, projected medical expenses have increased by 50% (AP/Long Island Newsday, 3/31).

House Subcommittee Hearing Scheduled Today: The End of “Pay to Go Away” Deals Between Drugmakers?

A House Energy and Commerce subcommittee hearing was scheduled for today regarding the practice of brand-name pharmaceutical companies paying generic drugmakers to delay the launch of their drugs.  These agreements, sometimes known as “pay to go away” arrangements, allow the brand-name pharmaceutical companies to benefit by keeping the cheaper generic drugs off the market for a period of time,  and essentially holding a monopoly on the drug for longer.  The generic drug company also benefits, as they are paid to simply delay their drug’s entrance into the market.

The Wall Street Journal reported that the FTC has fought these payments for years, Democrats have discussed passing legislation to forbid such deals, and President Obama has promised to stop the arrangements in his budget.  Senator Herb Kohl (D-Wis.) introduced a bill in February to abolish these deals and Rep. Bobby Rush (D-Ill.) introduced a comparable bill in the House last week.

The WSJ states that generic drugs can cost as little as a quarter of the brand-name drug, which can ultimately save billions of dollars in drug costs.  Eliminating the deals that keep the generic drugs off the market would therefore create significant savings to the country’s health care system.  Scott Hemphill, associate Professor at Columbia Law School, told the WSJ that ten brand-name drugs with about $17 billion in annual sales are now protected by the agreements, including Pfizer’s Lipitor.  Pfizer said that this was not the case.

Since 2001, the FTC has filed six suits to stop these deals, with little success.  However, in February, FTC Commissioner Jon Leibowitz said that he believed Obama’s administration was going take action to stop the “pay to go away” deals.  According to Medical News Today:

Leibowitz said “The new administration does seem to recognize that this is a real problem.”  He added that “fixing it … would actually help pay for health care reform.” Leibowitz said FTC will take a two-pronged approach to stopping “pay-for-delay” settlements. First, the agency will challenge the most anti-competitive settlements in court, and secondly, it will support legislation against such deals. Leibowitz said he expects the Obama Department of Justice to be “much more supportive” of legal challenges to the settlements than the Bush administration. He added that it also is possible “the-pay-for delay settlement issue or problem will get resolved in health care reform, and … if that happens, then it will presumably get resolved more expeditiously.”

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.

Supreme Court Rules that Preemption Does Not Exist in Drug Labeling Case

The Supreme Court held today, in a 6-3 decision, that FDA federal approval of drug warning labels does not preempt state regulations and therefore does not prohibit claims of insufficient drug warnings brought under state law.  The ruling in Wyeth v. Levine upheld a $6.7 million award to Diane Levine, whose arm was amputated after a flawed injection of Wyeth’s anti-nausea drug, Phenergan.

The case centered on the drug’s labeling, as Ms. Levine argued that the label did not warn of the risks associated with administering the drug through “IV push” and that it must contain these warnings in accordance with Vermont law.   The NY Times reported that Wyeth wrote in their brief that they “could not change Phenergan’s labeling to comply with Vermont law without violating federal law.”   They argued that because the drug label was approved by the FDA, a federal agency, Levine’s state law claims were preempted by federal regulations.  The Supreme Court disagreed with this argument, holding that Wyeth could have complied with both state and federal regulations, and reaffirmed the ruling of the Vermont Supreme Court.

Senate Judiciary Committee Chairman Senator Patrick Leahy (D-Vt.) filed an amicus brief for this case in August, 2008.  Today he issued the following statement regarding the Court’s decision:

This decision to uphold the Vermont Supreme Court’s ruling in Wyeth v. Levine has far-reaching effects on the ability of countless Americans to seek justice in their courts. Diana Levine’s life and career have suffered irreparable - yet preventable - damage. The Court’s decision soundly rejects the anti-consumer position of the Bush administration, and reaffirms Congress’ primacy concerning the extraordinary power to preempt state law. Most of all, the decision reclaims for all American citizens the ability to seek justice in their courts of law.

In the 110th Congress, the Senate Judiciary Committee held several hearings to examine the way in which federal agencies have overstepped their authority in the area of preemption, and, given what I viewed as an untenable position by the drug maker and the former administration, I filed an amicus brief with the United States Supreme Court in Ms. Levine’s case. I am gratified that the Court has spoken so clearly on this issue. While recent Supreme Court decisions have shielded big business from accountability and have undermined stronger state consumer protections, this ruling alters that earlier course and affirms that Congress never intended to preempt state laws in the way claimed by Wyeth and the Bush-Cheney administration, claimed. This is a clear victory for Ms. Levine, and for all American consumers. It is also a clear vindication for our own laws and courts in Vermont.

Wyeth’s comments on the decision can be found here.

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.

HHS OIG Report Finds Part D Private Insurers Overcharged for Billions, Lack of CMS Oversight

According to a recent report by the Department of Health & Human Services, Office of Inspector General, private insurance companies that operate plans under the Medicare prescription drug benefit have overcharged Medicare beneficiaries and the program by several billion dollars since the program began in 2006.

According to the report, 80% of health insurers that operate plans under the Medicare prescription drug benefit overcharged the program by about $4.4 billion in 2006 alone. In addition, The McClatchy/Raleigh News & Observer reports that the Centers for Medicare & Medicaid Services (CMS) remains unaware of the total impact of the practice because of its failure to perform required audits.

Read more

New Bill to Create Prescription Drug Benefit Through Original Medicare as CMS Expansion of Off-Label Drugs for Cancer Treatment Draws Criticism

Yesterday, Congressional Democrats introduced legislation (HR 684, S 330) that would allow Original Medicare to establish one or more plans to compete with private plans under the Part D prescription drug benefit, according to CQ HealthBeat. The legislation would also require the Secretary of Health and Human Services to negotiate directly with pharmaceutical companies for the prices of medications under Part D.

Additionally, it would strengthen the ability of Medicare beneficiaries to appeal denials of coverage for medically necessary medications under all Medicare Part D plans.

The bill was sponsored by Senate Majority Whip Richard Durbin (D-Ill.) and Reps. Marion Berry (D-Ark.) and Jan Schakowsky (D-Ill.). According to Berry, the plans established by Medicare would have the ability to obtain discounts on medications that private plans could not match.

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