Category Archives: Patents

Limits– Drug Pricing in the U.S.

Drug prices are a prime example of the monetization of medical care.  The price of drugs is currently based on the ability of the manufacturer to increase it (exclusivity and lack of competition) and the seriousness of the person’s illness (the more dreadful the illness the higher the price).  The cost of research of course is an issue, but when Pharma raises the price of generics hundreds percent you know that it’s all about profit and that the costs of drug development has nothing to do with it.

It is a fact that the fiduciary responsibility of the drug manufacturer is to the stock holder not to the patient.  So costs skyrocket and we in the U.S. pay more for everything medical than anyone else in the world.  Are we dumb or simply naive.  We seem to buy into drug company and politicians propaganda that we have the best of all worlds, when we don’t.

This in the JAMA gives some perspective

The rate of increase in drug prices has outpaced that of overall medical care every year since 2008. A recent survey found that retail prices of selected brand-name dermatological medications increased an average of 401% between 2009 and 2015 (363% in real terms, accounting for inflation), while prices of the generic medications increased an average of 279% between 2011 and 2014 (265% in real terms). These price increases for dermatological drugs are well above the national average for all drugs and payers—up 23% in real terms between 2009 and 2015. They do not reflect the possibilities that patients might switch to cheaper alternatives, or there may be slower growth in prices paid by insurers and public programs.

Retail prices have increased dramatically for other types of drugs, as well. The aggregate retail price of a basket of 477 widely used drugs doubled between 2006 and 2013, even though retail prices for generics decreased. Per life-year gained, new anticancer drugs prices have quadrupled in 2 decades and now exceed conventional levels of cost-effectiveness.

And

Constraining prices so more drugs are cost-effective—for example, below $100,000 per quality-adjusted life year—is one approach to managing drug price inflation. Although the political prospects for such a policy are poor, recent value-based contracts between manufacturers and insurers or pharmacy benefits management companies are similar in spirit. For example, Cigna’s payments to Novartis for the heart failure drug Entresto are linked to how effectively it reduces hospitalization.

Medicynical Note:  The article follows with a discussion of how much we as a society can pay for drugs.  Frakt seems to accept that $100,000/QALY is doable and posits that perhaps we can pay even more–though not much.  On the other hand one can reasonably argue that we’ve already exceeded our ability to pay and that for a QALY drugs for a year’s treatment should at a maximum cost no more than a our culture’s median or average income for a year –that is $50,000-60,000.  And that may be too expensive.  Read the article!

Advertisements

Poster Boy: In Defense of Martin Shkreli, the useful tool

Understand that Martin is the poster boy for the corruptish practices in what was once a self proclaimed “ethical” industry.  In fact the pharmaceutical industry, Big Pharma in the United States, has always run close to ethical boundaries.  Going back to my graduation from medical school, who was there to take the senior class to an expense paid weekend in New York? Why none other than that “ethical” company Ely Lilly.  Some might have called this a conflict of interest for both the new docs and the “ethical” company but when you are a poor struggling senior medical student you are easily bribed.  To this day doctors are targets of drug companies often receiving various forms of payments for either their continued use of products or for listening to the spiels of drug salesmen.  In this relationship there is a very narrow line between legitimate product education and payment for services.

Throughout the next 48 years of my professional life  this so-called “ethical” industry did everything to protect and improve its position.  They have one of the strongest lobbys in D.C., having most of the congress on their payroll—facilitated by our Supreme Court.   In that time we have seen medicine change from an ostensibly doing good industry into a doing well industry.  Patients no longer are viewed as sick people but rather customers for various product lines.  Drugs are no longer developed to help patients but rather to improve company’s bottom lines and yes the sicker the patient the more we can charge, regardless of the cost of drug development.

Getting back to our stooge Shkreli, he has been the focus of our ire for his raising the prices of medications that his company has bought the rights to.  He  gleefully accepted the criticism and cynically shows no contrition.  But consider that his behavior  is standard for the drug industry; that Big Pharma has been gouging U.S. consumers for years; that his companies governing boards have approved of his actions (only removing him because of his alleged earlier criminal behavior).

Some examples of drug company gouging and misbehavior can be found by simply reviewing Medicynic’s archives but to make it easy with a quick googling I came up with these examples.

http://www.businessinsider.com/john-oliver-takes-down-prescription-drug-industry-2015-2

https://projects.propublica.org/docdollars/

http://health.usnews.com/health-news/patient-advice/articles/2015/07/15/how-doctors-make-money-from-drug-companies

http://www.huffingtonpost.com/entry/americans-pay-more-for-drugs-than-anyone-in-the-world_561bda8fe4b0e66ad4c89449

http://money.cnn.com/2015/10/09/investing/drug-ceo-daraprim-price/

http://www.wsj.com/articles/pharmaceutical-companies-buy-rivals-drugs-then-jack-up-the-prices-1430096431

http://www.bloomberg.com/news/articles/2015-09-23/how-marketing-turned-the-epipen-into-a-billion-dollar-business

http://www.wallstreetotc.com/serious-price-increase-for-generic-drugs/212724/

http://www.wallstreetotc.com/serious-price-increase-for-generic-drugs/212724/

Medicynical Note:  And it’s not just generics increasing in price.  New patented cancer drugs start their pricing now at $10,000/month and increase at rates often over 10% a year.  For example, Gleevac (imitinab), a drug for chronic myelogenous leukemia,  was released in 2000 at a price of around $40,000/year it’s now three times that price.  Drug  prices are based on whether there is an alternative and how sick the patient is, not the cost of development.  The fewer the options and the sicker the patient the higher the price.  And yes in the U.S., being the perfect fools, we pay much much more for drugs than anyplace else in the world.  Why?  Because Big Pharma has abused the system and induced  congress to ignore their abuses.

Instead of damning the clown Shkreli, we should be thanking him for bringing the price gouging of Pharma to our attention.  Will anything be done?  For good reason I’m a medicynic, so I don’t think our congress is capable of intervening.  They don’t bite the hands that feed them.  Sad, but that’s American Exceptionalism.

Daraprim/Turing Isn’t Alone, Shkreli learned from others

Health care is delivered  by an industry more interested in financial return than access, quality of care, efficiency or value.  It has become a financial play.  As an industry it offers a customer base that is desperate; products often with limited to no competition; and a market that’s protected by patents and a disinterested (paid off) congress.

But Shkreli isn’t the only abusive drug company CEO.  Consider these:

Gal pointed to three examples: Jazz Pharmaceuticals’ drug Xyrem, Questcor’s Acthar and Mylan’s EpiPen.

And

The company reported revenue from Xyrem of $29 million in 2006, the first full year after its acquisition. Last year, Jazz posted Xyrem revenue of $778.6 million.

While the company said it’s expanded the number of patients the drug treats, the cost also increased an average of 29 percent a year from 2011 to 2015, according to data distributed this week by Evercore ISI analyst Mark Schoenebaum.

And

H.P. Acthar Gel was initially approved in 1952, the year before Turing’s Daraprim, the subject of this week’s controversy. It treats infantile spasms and exacerbations of multiple sclerosis in adults, among other indications, and its price, as The New York Times reported in 2012, hopped from $1,650 to $23,000 a vial on a single day in 2007.

And

EpiPen, used in emergency treatment for life-threatening allergic reactions, is sold by Netherlands-based drugmaker Mylan. The price, according to data from Evercore ISI, increased 27 percent a year, on average, from 2011 to 2015, to more than $300 each dose.

Medicynical Note:  The only coherent explanation of what’s happening is that these robber barons have  cornered the market and are gouging for all they are worth…oh I mean all WE are worth.  Our health care non-system is uninterested in cost containment or for that matter delivering value because as the costs go up everyone’s share of the pie increases.

Except maybe for the doctors who are, ironically, the low men on the totem pole of the health care hierarchy.  It’s terrifying that the high men are hedge funders with only one interest, and it ain’t health care.


 

Health Care as A Market Play: (Daraprim, Shkerli) Nothing new here

People are outraged that a former hedge fund hack raised the price of a 62 year old drug that costs about a dollar to manufacture, from $13,50 to $750/pill.   He has now relented and will “decrease” the price–to an undisclosed cost.  Imagine that, arbitrarily pricing a drug to maximize profit?  Actually that is nothing new in the era of $100,000-$200,000/year for new drugs.

It’s difficult to conceive of a drug costing more than a luxury auto (a BMW or Mercedes for example)  or perhaps over a few years more than the cost of an average person’s home or even a multiple of the average yearly incomes of families.  But that’s what has happened in the U.S.  We have created a pricing monster that’s arbitrary and that’s  bankrupting individuals and the system.

Medicynical Note: This hedge fund refugee is not unique.  Drug company pricing is simply what they sense the market will bear.  Some of that is market economics but other aspects are the seriousness of the illness and the desperation of the patient. It’s your money or you life.

But at it’s heart we’re simple getting grifted by good ole capitalism.  Remember the goal of every capitalist no matter what they say about competition, is to eliminate it and have a monopoly.  That’s nirvana.   In pharmaceuticals this goal is facilitated by our patent law, aggressive often deceptive marketing practices and the need for safe drugs.  

Big Pharma has been pricing arbitrarily without regard for cost or value for years.  This clown simply said look here! the emperor has no clothes.  Gouge when you can. 

Our drug costs have predictably spiraled.  As to what would be a fair price for a drug costing $1 to manufacture and which has long established indications?  I’d say under $5.   But don’t bet on that!

 

Drug Companies: It IS the money, stupid

In case you were wondering,  drug companies business plans are designed to separate you from your money—not assure access to medications; provide value or promote good health.  In the case of medicine in the 21st century in the U.S. it truly is your money or your life.  This was again graphically illustrated by Turing Pharmaceuticals when it  raised the cost of a 62 year old medication from $13.50/ pill (over priced at that) to $750/pill. 

The drug, called Daraprim, was acquired in August by Turing Pharmaceuticals, a start-up run by a former hedge fund manager. Turing immediately raised the price to $750 a tablet from $13.50, bringing the annual cost of treatment for some patients to hundreds of thousands of dollars.

Turing’s price increase is not an isolated example. While most of the attention on pharmaceutical prices has been on new drugs for diseases like cancer, hepatitis C and high cholesterol, there is also growing concern about huge price increases on older drugs, some of them generic, that have long been mainstays of treatment.

And

While some price increases have been caused by shortages, others have resulted from a business strategy of buying old neglected drugs and turning them into high-priced “specialty drugs.”

Medicynical Note:  Kind of pathetic but that’s what happens when companies use their leverage on the sick and dying. 

It leads me to conclude that “medical ethics” and what was once known as the “ethical pharmaceutical industry” no longer exist.  It’s really all about money.

Health care/Insurance—We’re the worst

T.R. Reid’s book “The Healing of America” compares our non-system of  health care  with other countries solutions.  In a recent interview he noted:

In coverage, against all the countries like us, we’re the worst. There’s no other country that lets people go without health insurance. Quality on comparative measures…we rank pretty low among the rich countries. We’re better than the poor countries, but compared to Britain, Germany, Japan we rank pretty low on health outcomes. Cost–we’re the highest by far. We pay twice as much per capita  for health care and still leave 31 million people without coverage.

And

The first thing we need to do is make a moral commitment to cover everybody and we’ve never done that. It doesn’t have to be socialized medicine. Germany covers everybody with private insurance, private doctors and private hospitals and they still spend much less than we do.  We could do it through government, we could do it through private insurance, but you need to commit to cover everybody and once we do that we’ll get it done.

Medicynical Note:  The question is why don’t we formally commit to cover everybody.  We, the government,  already cover all people over 65, those who are disabled, some of the poor, the military and their retirees, government employees—probably half the country.

Meanwhile health care costs spiral.  Drug companies gouge the sick and infirm.  Insurers make certain to get their 20%.  An no-one really really is interested in curbing costs.  It’s amazing what we tolerate. 

The $153,000 Snake Bite and America’s Decline

The paradox of American capitalism is that we say it works best when there is a “free market” with competition.  But as we have seen time and again the goal of business, even in healthcare, is obtain monopoly status (i.e. eliminate competition) for your “product” and then gouge your customers–a great business plan, no?

This was brought home by the Washington Post article reporting a snake bite for which medical costs were $153,000.

The bulk of his hospital bill—$83,000 of it— is due to pharmacy charges. Specifically, charges for the antivenin used to treat the bite. KGTV reports that Fassler depleted the antivenin supplies at two local hospitals during his five-day visit. Nobody expects antivenin to be cheap. But $83,000?

There’s currently only one commercially-available antivenin for treating venomous snakebites in the U.S. — CroFab, manufactured by U.K.-based BTG plc. And with a stable market of 7,000 to 8,000 snakebite victims per year and no competitors, business is pretty good.

and

BTG has fought aggressively to keep competitors off the market. A competing product, Anavip, just received FDA approval this year and likely won’t be on the market until late 2018. This lack of competition is one reason why snakebite treatments rack up such huge hospital bills — $55,000. $89,000. $143,000. In May of this year, a snakebit Missouri man died after refusing to seek medical care, saying he couldn’t afford the bill.

Excessive costs  are nothing new to anyone with a serious illness.     New cancer drugs for example start at $100,000/year for the drug alone, whether they work or not.  As a matter of fact most don’t work at all for the majority of patients treated with them.

This article was almost immediately followed in my browser by the brief statistical review of the 12 economic signs that the U.S. is on the decline published in Fortune magazine  based on the academic article Is the U.S. Still the best Country in the World? Think Again by Hershey Friedman and Sarah Hertz.  Interestingly the thesis of the article is not that the U.S. has too many regulations but rather that unfettered capitalism really really does not work.

“Capitalism has been amazingly successful,” write Friedman and co-author Sarah Hertz of Empire State College. But it has grown so unfettered, predatory, so exclusionary, it’s become, in effect, crony capitalism. Now places like Qatar and Romania, “countries you wouldn’t expect to be, are doing better than us,” said Friedman.

Read the article for the 12 signs but consider that whether it’s incomes, poverty levels, internet speeds, education, health, or prison population the U.S. lags other countries in the world.  Hardly the position for a world leader.

Medicynical Note:  I would posit that the snakebite anecdote is the concrete example of the second article’s thesis.  Our costs lead the world (yes that is one area we are world leader) and that in turn affects access, quality and yes the economic well being of citizens.  The U.S. continues to lead the world in bankruptcy from health care costs–a category of bankruptcy unknown in other countries.

Even more damning is that patients almost never know the cost of a  health care service AND providers (hospitals and practitioners) have little certainty  as to what they will actually be paid for the service rendered.  And yes adding to the insanity,  people billed directly, those without insurance and least able to pay, are billed more, much more, for the same services.  That’s true predatory capitalism!