Category Archives: Patents

Drug Costs Outstripping the Ability to Pay

Health Affairs’ blog had an interesting discussion of the problems of our drug patent system and it’s costly consequences.

One critical incentive for ongoing drug discovery and development is the temporary monopoly pricing that manufacturers can command for novel drugs. Yet this incentive, embedded in current patent and regulatory policy, does not guarantee that manufacturers will deliver novel products with clinically meaningful benefits. Indeed there are many diseases—including Alzheimer’s disease and Amyotrophic lateral sclerosis (ALS)—that pose significant patient, family, and societal burden but have not benefited from meaningful treatment advances.

Meanwhile, the American public appears increasingly wary of the unintended consequences of these market-based incentives. Since the early 2000s, regulatory actions have focused increasing public attention on shortfalls in the efficacy and safety of already marketed drugs — including the withdrawal of celebrated “blockbusters.” Recently, patient and insurer attention has focused on the list prices of novel specialty drugs, including those to treat cancer, that commonly exceed $50,000 per treatment course — these drug prices have also grown faster than all other medical spending.

Medicynical Note:  In the U.S. the medium and average family incomes are about $50-60,000/year.  So we are talking drugs that cost multiples of the annual incomes of families.  A few of these drugs have miraculous effects but most offer slight improvement in patint’s outcomes. 

Other countries try to control these expenditures by providing strong guidelines on expensive medications use; negotiating prices with the manufacturers and suggesting equally or more effective alternatives.   Their costs are significantly less than ours.  The Affordable Care Act has started this process but whether or not it’s political overseers (under the influence of  drug companies contributions)  will allow a rational implementation remains to be seen. 

It’s NOT a Health Care System

The Times reports on bribes given to health care providers to prescribe their patent protected product.  In this case it’s a addicting medication.

Dr. Judson Somerville, a pain specialist in Laredo, Tex., received $67,000 in speaking fees, travel and meals in 2013 to promote a powerful and addictive painkiller called Subsys, according to a new federal database of payments that drug companies make to physicians.

But while Insys Therapeutics, the Arizona company that makes the product, was paying Dr. Somerville to promote it, he was under investigation by the Texas Medical Board. Last December, the board ordered him to stop prescribing painkillers after it found that he had authorized employees to hand out pre-signed prescriptions to patients and after it learned that three of his patients had died in 2012 of drug overdoses, most likely from drugs that he had prescribed.

Read the article and weep!

Medicynical Note:  Health care in the U.S. is not systematically provided and the way it is delivered is not a “system” to provide it.   Rather what patients received is carefully designed “system” to maximize revenue for providers, hospitals, insurers, technology developers and pharmaceutical manufacturers.  The well-being of their stock holders and investors are much more important to them than the well-being of patients. 

A Modest Proposal: Eliminate Patents on Drugs

I’ve heard from my libertarian friends of the beauty and efficacy of an open unfettered marketplace.  They maintain that regulation causes inefficiencies and the less there is the better.  In medicine there are necessary protections to assure safety (if not efficacy) of medical interventions.  But also there is a regulation that assures excess profits for drug developers, i.e. patents. 

The recent article in the New Yorker Ebolanomics highlights the costs of drug development and offers a new model for drug development. 

When pharmaceutical companies are deciding where to direct their R. & D. money, they naturally assess the potential market for a drug candidate. That means that they have an incentive to target diseases that affect wealthier people (above all, people in the developed world), who can afford to pay a lot. They have an incentive to make drugs that many people will take. And they have an incentive to make drugs that people will take regularly for a long time—drugs like statins.

Read the article for more.

In addition to trying to develop drugs that are used by “everyone” as noted in Ebolanomics, gouging the sickest patients to increase drug company revenue seems to be the alternative model of the drug development.  The excessive prices appear to be unlinked from development costs or  efficacy and are solely dependent on how desperate the patients are, the more malignant the disease the higher the cost.   Drug costs for cancer patients since the 90’s have increased by a factor of almost 100.  I recall new drugs in the early 90’s in the range of a few hundred dollars/dose.  By the end of the 90’s that cost was $1000/dose and with the advent of targeted drugs that cost is over $100,000/year. 

Medications have become the most expensive part of medical care.   A drug now costs more than that Mercedes you’ve been eyeing.  And if it were developed for cancer treatment as often as not it provides just a few months of benefit. 

Drug company costs are hidden behind a veil of secrecy and obfuscation.  Ironically the drugs that are really effective have the shortest development cycle and lowest cost to bring to market.  Consider for example the first targeted agent for chronic myelogenous leukemia,  imatinib (Gleevac).  The drug was developed with government provided research funds.  In it’s first clinical trial it’s efficacy and safety were immediately evident and it’s use revolutionized therapy.  It was immediately taken private and quickly became the most expensive drug on the market.  That despite the government funding and the short drug development cycle.  Charging $100,000 or so/year for it is not based on cost but rather greed.

On the other hand consider the numerous drugs with limited efficacy, i.e. drugs looking for an indication.  These agents are tested and tested and tested and eureka when a one or two month benefit is found, even if it’s a delay to progression with no survival benefit, it is heavily marketed as the second coming and sold for the same price as the truly effective agents, if any.  In this case costs are driven up by the drug’s lack of efficacy and need for many many many trials to find a use for it.

Medicynical Note:  Patents appear to have outlived their usefulness when it comes to drug development.  There is no incentive in the system  to provide value or for that matter efficiency.  Pricing has been delinked from development and marketing rules the roost.  Drug companies interest is in revenue, not healthcare.

Encouraging competition by eliminating patents will do away with the marketing nonsense.  A path to new and innovative drugs would need a new paradigm and the approach offered in Ebolanomics offers one approach.

Primum Eruere patiente (First gouge the patient)

It’s fascinating to watch the business of medicine work diligently to assure continued high prices and profits for medical “advances”—even long after earning back the cost of development.  The well-being of patients and affordability are considered least when profit and monopoly are involved.  Consider these recent examples, first

The language buried in Section 632 of the law delays a set of Medicare price restraints on a class of drugs that includes Sensipar, a lucrative Amgen pill used by kidney dialysis patients.

The provision gives Amgen an additional two years to sell Sensipar without government controls. The news was so welcome that the company’s chief executive quickly relayed it to investment analysts. But it is projected to cost Medicare up to $500 million over that period.

Read the rest of the article for details on Amgen’s recent illegal activities and the extent of it’s political bribery lobbying.

The second example, paying to delay a generic’s release

It would seem a business executive’s dream: legally pay a competitor to keep its product off the market for years.

Congress has failed to stop it, and for more than a decade generic drug makers and big-name pharmaceutical companies have been winning court rulings that allowed it.

Or lastly the extension of the patent because of a technicality as in the  Viagra

If you live in the United States and you have been waiting for generic Viagra to hit the market it looks like you will be waiting quite a while yet. Pfizer, the makers of Viagra, just had a crucial patent validated in a federal court of law.
It all started when the Israeli medical giant Teva received a tentative approval by the FDA for a pill using sildenafil, the active ingredient in Viagra. Teva were intending to start selling the pill in March 2012 when Pfizer’s sildenafil patent runs out.

Pfizer responded by suing Teva for patent infringement, based on a second patent. This patent runs until 2019 and is a so called method-of-treatment patent, meaning that even though sildenafil comes up for grabs in 2012 it would be until 2019 before anyone but Pfizer could market it as an impotence drug.

Medicynical Note:  As long as our system is dedicated to providing more protection to patent holders than patients we’ll continue to be gouged.  It should be noted that other countries don’t put up with such nonsense and they pay less for the patented drug as well as not allowing frivolous extensions. 

Drug Costs: If Not Patients, Who Pays?

The NY Times had an article earlier in the week bemoaning the increasing costs of expensive drugs for patients.  Insurers are increasing the co-pays and deductibles in an attempt to control their costs and perhaps decrease utilization.

The article cites the case of a hemophiliac boy with drug costs exceeding $100,000/year.  His family cannot afford increased payments of up to 1/3 of the drugs price.

State lawmakers are stepping in:

Spurred by patients and patient advocates like Ms. Kuhn, lawmakers in at least 20 states, from Maine to Hawaii, have introduced bills that would limit out-of-pocket payments by consumers for expensive drugs used to treat diseases like cancer, rheumatoid arthritis, multiple sclerosis and inherited disorders.

Needless to say drug companies who reap excessive profits from these expensive drugs are ecstatic at the notion of lowered copays, anticipating an increase in utilization. 

The article notes that these patent holding companies take advantage

Such drugs account for only 1 percent of total drug use, but 17 percent of drug spending by private insurers, according to IMS Health.

And costs are soaring as more such drugs come to market and as manufacturers raise prices. In 2010, spending on specialty drugs jumped 17.4 percent, compared with only 1.1 percent for other drugs, according to Medco Health Solutions, a pharmacy benefits manager that merged this month with Express Scripts.

Medicynical Note:  The issue here is monopoly, and not the board game.  Our government in hopes of spurring “innovation” provides a generation long monopoly to drug manufacturers who develop  new drugs.  In the past such exclusivity was used judiciously  by drug companies.  Prices for patented agents were high but not so high that they were unaffordable.

In the late 80’s and early 90’s, after the passage of the  Dole-Bayh act, manufacturers were allowed to take private new drug advances developed at universities with government funds.  Everyone, the researchers, the universities and the drug companies became owners of the patent and drove the price of advances up.  More entities on the patent means more people wanting a share of the profits.

The free for all has indeed resulted in new drugs, some very effective, the medication cited for hemophilia and imatinib mesylate (Gleevec) for chronic myelogenous leukemia for example.  But the patent protection afforded  allows companies to apply monopoly pricing to their agents.

Before the 90’s no drug approached a yearly cost of even 1/3 the median U.S. income.  Now on a regular basis for a variety of serious illnesses, drug companies price their agents in the range of $100,000/year and more.  An amount that is almost twice the U.S. median income.  It should be noted that just a few of these new drugs are major advances.  Most offer an incremental benefit  for a small proportion of the patients treated.  But all are marketed to desperate patients willing to try anything to ameliorate their symptoms and/or live longer

The irony is that we’ve developed a new medication “system” that we can’t afford.  Insurers, patients and our government are going broke trying to accommodate drug company pricing. 

It’s a little like trees falling in the woods.  If you have a drug that you can’t afford, is there really a drug?

Entering La La Land— Cancer Drug Costs Abirateron (Zytiga) vs Sipuleucel-T (Dendreon)

The recent approval of abirateron by the FDA for use in metastatic prostate cancer highlights the otherworldly practice of cancer drug pricing. 

Sipuleucel-T purported to be an immune stimulator in early trials was reported last year to improve survival of patients with metastatic prostate cancer about 4 months  (median) when compared with placebo.  Similarly the recently approved abirateron shows a 2 months delay in progression, 3.9 months improvement of median survival.

Sipuleucel-T (Dendreon) you will recall is priced at $97,000 for a course of therapy.  The new drug abirateron is a relative “bargain” at $5,000/month.

The industry’s view is that this is a “fair” price.  Meaning it is competitive and will earn the company money:

The pharmacy strategy blog notes:

  This gives a treatment price of ~ $40K, which I think is very fair, although some patients will obviously take it for longer than that.

In U.K. however NICE (National Institute for Health and Clinical Excellence) notes:

In draft guidance the watchdog said that Zytiga could increase survival by more than three months compared to placebo, but its annual cost of £35,160 was too much for the NHS in England.

Janssen has offered a patient access scheme for the drug that would discount its list price, but NICE said even with this in place, the drug was still not cost effective.

NICE suggests that conventional chemotherapy offers a more cost effective approach.

Medicynical Note:  Welcome to the alternative universe of drug pricing in the U.S.  This is the only situation where a consumer purchases a product costing many many thousands of dollars that has utility (effectiveness) of 4 months or less.  It’s like buying a Mercedes or Porsche that will last 4 months—rational people in rational situations wouldn’t buy such a product. 

Cancer patients however are desperate.  Drug companies price these drugs to take advantage.  Patient care?  Cost efficiency? Morality?  Not their department. 

I do look forward to further studies of these new agents and hope that the results are confirmed.  However, I would warn readers that the track record of drug sponsored first studies is that they often exaggerate benefits and minimize toxicity. 

Alzheimers: Bexarotene 1200/day (Please note retraction)

I’m a bit embarrassed.  While checking on comments which were critical of this post I inadvertently deleted the original.  It was not  intended  and I am chagrined that it vaporized into the ether.

In any case the questions raised by commenters on the $1200/day pricing for the drug that I posted, appear valid.   The drug may well  cost substantially less.

My source for that pricing was from an ABC news story  which quoted an “expert:”

“The drug will cost between $1,200 and $2,500 per day out of pocket,” said Dr. Sam Gandy, director of the Mount Sinai Center for Cognitive Health in New York. Gandy said families who said they have “nothing to lose” could risk money and “unexpected side effects of a dangerous treatment, and loss of the loved one rather than the gradual deterioration from the disease.”

As noted in the original post, there is no data that indicates this drug is effective at all in humans or that the Alzheimers model in rats behaves similarly to the disease found in humans.

That said I certainly would hope for a response to treatment.

Accountable Care Organization/Global Payments Hand in Glove–Explanation

Nice clear explanation of accountable care and global payments:

  It is widely acknowledged that continued growth in health care spending is threatening the viability of the U.S. health care system. Although there are no clear comprehensive solutions to this problem, most observers see payment reform as the next best hope for reining in out-of-control costs. Our current fee-for-service payment system provides incentives to physicians to increase the delivery of services, which results in excessive utilization. Moreover, neither individual physicians nor the patients receiving the services bear the brunt of these utilization decisions. Rather, they’re reflected in ever-rising health insurance premiums or tax-financed government expenditures shared by all. Many observers are therefore calling for fundamental redesign of the ways in which physicians and hospitals are compensated for the care they provide. Most options call for bundling payments to physicians; specific approaches range from prospective payments for discrete episodes of care (e.g., coronary-artery bypass surgery) to global payment or risk-based models of care.


Conceptually, global payment represents an important opportunity for changing the perverse incentives inherent in our current fee-for-service system. To be successful, however, ACOs must pass these incentives along to their member physicians, who continue to be responsible for most utilization decisions. Although organizations can implement various managerial strategies to influence physicians’ decision making (e.g., radiology decision support and prior authorization), ACOs are unlikely to reduce the rate of increase in health care spending without some essential changes in the behavior of member physicians — and therein lies the rub. The fundamental questions become how ACOs will choose to divide their global budgets and how their physicians and other service providers will be reimbursed. Thus, this system for determining who has earned what portion of payments — keeping score — is likely to be crucially important to the success of these new models of care.

Read the article to understand the ACO’s and our global payment future.

Medicynical Note:  What’s missing from these interventions is control of the constant upward pressure on health care costs from suppliers, often with patent protected monopolies. 

It’s hard to imagine a single diagnostic test costing thousands, single drugs of any sort, much less ones of questionable efficacy, costing more the average and median family income for a year.  Yet that is the reality in our current non-system.  Until these excessive and irrational cost issues are addressed the system will continue to fail.  Health reform is a start but reining in profit expectations at all levels and patent reform are additional needs. 

But, always a but, with our Congress in the pay of medical industrial complex real cost containment seems a long shot.

More on Avastin (bevacizumab) in Breast Cancer– $400,000/patient

There has been much written about the rather minor improvement in breast cancer outcomes with Avastin (bevacizumab).  My last post pointed out one theoretical problem with use of this drug in cancer.

In this week’s NEJM there  are two studies, reporting a small beneficial effect with bevacizumab in patients with early HER2-negative breast cancer.  The authors of one study  note:  (other study here)

The addition of bevacizumab to neoadjuvant chemotherapy significantly increased the rate of pathological complete response among patients with HER2-negative early-stage breast cancer. Efficacy was restricted primarily to patients with triple-negative tumors, in whom the pathological complete response is considered to be a reliable predictor of long-term outcome.

In the study 1948 newly diagnosed breast cancer patients were randomized to receive chemotherapy alone or with concomitant bevacizumab before surgery (neoadjuvant treatment).  The results showed that pathological complete response  was 18.4% in patients receiving bevacizumab and 14.9% without it.  A difference of 3.5%, hardly significant.  In patients with triple negative tumors (ER, PR and HER2 negative) the results were more impressive with 27.9% pathologic complete remission without bevacizumab and 39.3%   with it.  There was no difference in the 1262 ER PR positive patients.  (7.8 and 7.7%)

We don’t know at this time whether the improved CR rate in these patients will translate into improved survival and hopefully cures.

Medicynical Note:  What we can determine however is the cost of the intervention.  Consider the 663 patients that were triple negative.  I assume that about half (I don’t have full access to the article), let’s say 330 patients received bevacizumab.  Then lets take the 39.3% complete response rate,11.6% more than those not receiving the drug, and do a rough estimate of cost. 

39.3% of 330 is 129.69 patients achieved complete remission.  11.6% or 38.38 patients was the incremental benefit.  Assuming a cost in the range of $50,000 for a 3-5 month course of treatment, the total cost of treating these 330 patients with the best outcome in the study would be (paying market prices for the drug) in the range of 16 and a half million dollars.  Dividing that by the incremental benefit of 38.38 the cost of the benefit/patient  was $429,911.

Cost is a real problem for a health care non-system that spends 17% of GDP on health care,  almost twice that of other countries.  Can we afford an intervention that costs over $400,000/patient who benefits?  

I have no particular bias against Avastin (bevacizumab) except for the fact that it (and other similar drugs) appears to have very limited efficacy and is so expensive.  If it were a drug costing $5000-10,000 for a course of treatment I’d say give it a try.  At the present cost and level of efficacy it’s hard to find a strong argument for it’s use, except that it must make the manufacturers and their stockholder a great deal of profit.

Avastin (bevacizumab), Sutent (sunitinib)– Fundamental Problems in Cancer Treatment

There is wide documentation of the relative ineffectiveness of Avastin (bevacizumab) in breast cancer.  The drug simply doesn’t extend the lives of those treated significantly. 

Why?  It ‘s been an open question with the drug company maintaining that the drug costing between $75,000 and $120,000/year for treatments has some effect and that is enough to warrant it’s continued use.  The FDA differed and removed the breast cancer indication, though some insurers for some some reason continue to pay.

There is now an explanation why the drug failed.

Antiangiogenic therapy has been thought to hold significant potential for the treatment of cancer. However, the efficacy of such treatments, especially in breast cancer patients, has been called into question, as recent clinical trials reveal only limited effectiveness of antiangiogenic agents in prolonging patient survival. New research using preclinical models further suggests that antiangiogenic agents actually increase invasive and metastatic properties of breast cancer cells. We demonstrate that by generating intratumoral hypoxia in human breast cancer xenograpfts, the antiangiogenic agents sunitinib and bevacizumab increase the population of cancer stem cells. 

If the finding is confirmed it provides an explanation of the mediocre results in breast and other cancers for this drug.  It raises question about it’s continued use and certainly would argue against using it alone either as a primary treatment or maintenance therapy option.

Medicynical Note:  One hopes this is new information and that the drug company was not previously aware of the increase population of stems cell generated by presumed antiangiogenic caused hypoxia. 

More broadly, how can it be that our pharmaceutical industry sells drugs (sometimes even effective drugs) at twice the median and average income of citizens.  This is not a sustainable model either for business or for health care.

There’s obviously something wrong with our drug development system; drug patents: our non-system of health care; and our payment schemes.  If we ultimately want to reform health care these issues need to be addressed.