Category Archives: Patents

Campath, a drug used for chronic lymphatic leukemia, has been found to have some activity in multiple sclerosis. The manufacturer, Genzyme Corp., is under pressure of a hostile buyout and is in discussions with Sanofi regarding the liklihood of future profits for this drug, as noted here. In the article the difference in pricing for Campath as a leukemia drug and as a potential MS treatment was noted:

Most MS drugs, such as Biogen Idec Inc’s (BIIB.O) Tysabri, cost more than $40,000 a year. A new oral drug made by Novartis AG (NOVN.VX) called Gilenya costs roughly $50,000 a year.

Campath sells for a fraction of that. As a result, Genzyme has to persuade governments and insurance companies to pay a higher price for the drug as a treatment for multiple sclerosis than it does as a treatment for cancer.

Genzyme says it is confident it can find a way to do it — possibly by withdrawing the drug from the market as a cancer treatment and providing it for nothing.*

Medicynical Note: Drugs costing tens of thousands of dollars per year trade on the desperation of patients with serious illness and are part of reason our health care expenses are soaring. (17% of GDP) From the above it’s clear that Compath was profitable at the lower price charged chronic leukemia patients. Seeing an opportunity to charge more for a larger patient population the company of course does what any for for profit enterprise would do, gouge their customers.

Shouldn’t health care be different? Can such market manipulation be legal, after all these drugs are protected by a government provided monopoly (patents)? Or perhaps should this type government intervention in “free” markets (patent protection) be done away with?

*Addendum: I note on December 22 that the above discussion of pricing has been removed from the Reuters article. Why? Too embarrassing?

However, the quote can be found on the CNBC site here. (and also on other sites by googling the text)

Compare the revenues and profits of these companies : (Data from Fortune 500 2010)

Medicynical Note: Using profits as a percent of total revenue the pharmaceutical industry may well be the most profitable sector in the Fortune 500. For example, Walmart offers a paltry 3.51% of revenue as profit, Exxon 6.77%, Apple a mere 15.6%. Drug companies and these are not the foreign based big earners garner Johnson and Johnson 19.8%, Pfizer 17.6%, Merck 47.2% and Abbott 19.1%, Lilly 19.8%, Bristol-Meyer Squibb 49.05%.

You gotta feel sorry for the poor drug companies. Guess who pays?

Very strange article in the Atlantic arguing all sides of health/cost debate. Virginia Postrel apparently believes that Heceptin, a costly ($60,000 for a course of treatment) biological drug that is used for breast cancer, saved her life. This despite the fact that at one year after diagnosis it is much too early to declare victory.

She indeed has a bad form of breast cancer, 6 lymph nodes positive. She was told there was a 50% chance of surviving.

The statistics she provides are vague and not well documented in the medical literature. For example she states:

“Adding the biological drug Herceptin, approved by the FDA in 2006 for use in early-stage cancers like mine, could increase my survival odds from a coin flip to 95 percent.”

There is no data to support this contention. Herceptin appears to delay recurrence and probably improves survival but how much is still unclear. 95% is a number that greatly exaggerates the benefit.

The New England Journal article cited by the Atlantic piece reported:

“1694 women assignedto one year of trastuzumab, and 1693 women assigned to observation.We report here the results only of treatment with trastuzumab for one year or observation. At the first planned interim analysis(median follow-up of one year), 347 events (recurrence of breastcancer, contralateral breast cancer, second nonbreast malignantdisease, or death) were observed: 127 events in the trastuzumabgroup and 220 in the observation group. The unadjusted hazardratio for an event in the trastuzumab group, as compared withthe observation group, was 0.54 (95 percent confidence interval,0.43 to 0.67; P<0.0001 by the log-rank test, crossing theinterim analysis boundary), representing an absolute benefitin terms of disease-free survival at two years of 8.4 percentagepoints. Overall survival in the two groups was not significantlydifferent (29 deaths with trastuzumab vs. 37 with observation).”

Not nearly as impressive.

The data Ms Postrel herself provides is that chances of recurrence were 1 in six without Herceptin and 1 in 12 with it after two years. Just to be clear, consider that the 1 in 6 recurrence rate means that 16.6% would recur in the non Herceptin treated group. And 1 in 12 (8.3%) would recur in the treated group.

This is a considerable improvement but an exceptionally costly one. It means that out of 100 people treated 8 or so get a benefit. 84 were not going to recur with or without treatment. And around 8 would recur regardless of the treatment used.

At $60,000/patient for Herceptin, 100 patients treated would cost 6 million dollars to treat. Out of the 100 treated, 8 patients would have an improved outcome, a cost of $750,000/patient who benefits.

This is an unimaginable amount for a health care system to spend and it is no wonder that systems think twice before implementing routine use of Herceptin.

The question is whether any health care system can afford this unless they more carefully select patients.

Medicynical note: Our costly pharmaceutic industry prices drugs for cancer patients an order of magnitude higher than drugs developed for less severe illness. Their development costs are a “trade” secret so one can only guess whether the pricing is justifiable. A medicynical guess is that this is a very profitable cost-plus business and that frugality and efficiency are not in these companyies lexicon. They charge based more on the desperateness of the patient’s situation than by the cost of development or even effectiveness of the drug. For example they spend more on drug promotion and advertising than on research.

These drugs are priced high despite the fact that many of them were financed with public funds. Even very effective drugs that required little clinical testing because of their obvious efficacy (admittedly an unusual occurrence) are priced over $50,000/year.

To give this pricing perspective consider that

• drug costs are increasing at double the rate of inflation
  
• incomes dropped several thousand dollars over the past few years
  
• the cost of these single drugs alone exceed the median income of U.S. citizens
• Medical care has superseded home and auto purchases as the most expensive purchases in a lifetime. Amazing

Ms. Postrel notes that we pay more/capita for drugs than New Zealand but what she doesn’t say is that the U.S. non-system spends twice as much as many industrialized nations on all aspects of care; that the U.S. is the only industrialized nation without some form of national health system; and that our outcomes in cancer are only as good as but not significantly better than many other industrialized nations.

As T.R. Reid noted recently:

“Which, in turn, punctures the most persistent myth of all: that America has “the finest health care” in the world. We don’t. In terms of results, almost all advanced countries have better national health statistics than the United States does. In terms of finance, we force 700,000 Americans into bankruptcy each year because of medical bills. In France, the number of medical bankruptcies is zero. Britain: zero. Japan: zero. Germany: zero.”

For people with cancer it’s truly your money or your life, and sadly most of these treatments in advanced disease do not cure and often don’t even improve patients’ outcomes.

Lastly I certainly hope that Ms. Postrel is cured.

It’s fascinating to watch our flawed legislative system “work.” Buy offs, illegitimate martinets demanding their 15 minutes, deals with money hungry corporate entities, bribery at every level, compromises until it’s hard to recognize what’s really been accomplished and complexity that violates the KISS principle. It’s certainly not pretty, efficient or effective.

Despite all that the resulting bill improves the current dysfunctional non-system and should be passed. This conclusion is more a comment on the current pathetic state of health care in America than an unqualified endorsement.

In a “two party” democracy one would have thought the opposition would have something to offer. But in this case the best they could do was maintain that free emergency room care was the answer to our health care problems. Incredible.

The bill allows insurers to rate on age but appears to stop the practice of varying rates according to illness.

‘‘(a) IN GENERAL.—With respect to the premium rate charged by a health insurance issuer for health insurance coverage offered in the individual or group market—
‘‘(1) such rate shall vary only by— ‘‘(A) family structure; ‘‘(B) community rating area; ‘‘(C) the actuarial value of the benefit; ‘‘(D) age, except that such rate shall not
vary by more than 2 to 1; and
‘‘(2) such rate shall not vary by health status- related factors, gender, class of business, claims ex- perience, or any other factor not described in paragraph (1).

The publicity on the bill claims no one can be denied coverage and that rates will not be increased (presumably after issuance) for a pre existing illness. It does sanction a 3:1 increase based on increasing age, hardly a people friendly policy. Considering that the average cost of insurance for a family is in the range of $10,000, such variation in charges are prohibitive. If this is so it’s hardly a benevolent system or one in which the health and well-being of those covered is the primary objective.

See this in LA Times

Companies in the exchanges would have to offer policies to all customers, regardless of their health status. Insurers could not charge older people more than three times what they charge their youngest customers, an unprecedented national restriction on what is known as age-rating.

It’s also unclear what the bill will do to decrease costs to a more reasonable level; to rein in corporate profits; or whether it will provide objective evaluations of the effectiveness of outrageously expensive therapies and improve efficiency.

Until we are more concerned with patients than corporate profits our health care will be costly and, for the amount spent, mediocre.

Medicynical Note: I’m in awe of a health care system that can charge $20 for a flu vaccine and then add $38 to the bill as a fee for the injection–as I was recently billed. We need to put the health care reform ball in play and make changes in its trajectory as we go.

The maybe in the title is because no one knows whether this new $30,000/month drug (Folotyn) works to prolong life.

And Folotyn has not even been shown to prolong lives — only to shrink tumors. The drug was approved by the Food and Drug Administration in late September as a treatment for peripheral T-cell lymphoma, a rare and usually aggressive blood cancer that strikes an estimated 5,600 Americans each year.

and later in the article:

But Dr. Newcomer said insurers would be obligated to pay for Folotyn because there were no alternatives.

Medicynical note: Even if this new drug worked perfectly in 100% of cases can any health care system afford such pricing? Think of it as sophisticated blackmail rather than health care and you get the idea.

Of course this is simply the most egregious example of drug company gouging. Pricing drugs proportional not to costs or benefit but on how desperate the patient is. A more cynical approach is hard to imagine.

This drug is a poster child for patent reform. We’ve argued that patent length (government sanctioned monopolies) should be dependent to some extent on responsible pricing. If a drug is priced ridiculously the patent should be of shorter duration. The more reasonably priced the advance, the longer the patent–a market solution to price gouging.

Nice article at TPM on pharmaceutical manufacturers manipulating the market. After all money is what it’s all about. Health care, pshaw!

Congress is thinking of doing something about it. PhARMA’s memorable response:.

• “Patent settlements between brand-name and generics companies can resolve expensive patent disputes to help foster innovation and improve access to medicines so that patients can live healthier, more productive lives.” Medicynic: Huh? Improve access by charging more?
• “Law and public policy have always favored settlements, including patent settlements. PhRMA continues to believe that legislation that would impose a blanket ban on certain types of patent settlements or otherwise prevent them could decrease the value of patents and reduce incentives for future innovation of new medicines. This is also unnecessary because the Federal Trade Commission (FTC) and others already have the authority to review and evaluate any patent settlement agreement between a brand name company and a generic company. The courts and enforcement agencies like the FTC are in the best position to review these settlements on a case-by-case basis to ensure that they are not harmful to competition. By imposing a general ban or imposing harsh disincentives, pending legislation would effectively remove the decision-making process from this appropriate venue.”

Medicynical note: So call “ethical” (they used to call themselves this) pharmaceutical manufacturers pay off generic companies, some would say bribe, to not market generics that compete with their branded drug. It’s apparently legal but highly disadvantageous to consumers. A free market, no! Guess who pays?