Prescription drug prices discussion

[TwiceHorn 31283]

14 minutes ago, Anastasis said:

There is definite merit to this. I think that to some extent the various issues inter-relate, but your point is well made. 

Thank you.  I like explaining shit, I hope I have done it reasonably well.  There is a bizarre interrelationship between the FDA drug approval process and the patent system.  What I have seen of it is that just about everything the FDA touches is rife with unintended consequences, whereas the patent system is mostly fairly predictable if you are appropriately knowledgeable of it.  It should be, it is one of the few federal agencies actually provided for in the Constitution and one of the oldest.

 

[hayden_horn 11360]

this has been a really interesting discussion; thanks to twice and anastasis.

one thing i think is missing from this discussion is the margins pharma companies regularly experience.  it's ridiculous, and anyone stating that our high domestic pharmaceutical prices are necessary for R&D is disingenuous at best, i think. 

what do the two of you think about those margins, as well as the amount of money spent on DTC advertising? 

[Anastasis 23394]

1 hour ago, TwiceHorn said:

Thank you.  I like explaining shit, I hope I have done it reasonably well.  There is a bizarre interrelationship between the FDA drug approval process and the patent system.  What I have seen of it is that just about everything the FDA touches is rife with unintended consequences, whereas the patent system is mostly fairly predictable if you are appropriately knowledgeable of it.  It should be, it is one of the few federal agencies actually provided for in the Constitution and one of the oldest.

  

Good points as well.  I will note that in my litany of policy proposals up thread I explicitly tied my comment about reform to both the FDA and the patent process.  I don't know enough on the patent law side to flesh out the inter-relationship in play, but my core argument is that single source exclusivity (i.e. single source pricing) should be tied to a scientific determination that the product is innovative and that we should not provide single source protection to a drug that only represents a strategic play to double dip your return on a past R&D investment. Now maybe there is a way to do that by creating a new class of drug approval that the FDA would manage, andthat would not cause major disruption to established patent process/law. I would be open to any way that can get us to the place where we reward true innovation, and remove incentives to create derivative product lines that do not demonstrate clear progress and only inflate cost of care.   

[Anastasis 23394]

1 hour ago, hayden_horn said:

this has been a really interesting discussion; thanks to twice and anastasis.

one thing i think is missing from this discussion is the margins pharma companies regularly experience.  it's ridiculous, and anyone stating that our high domestic pharmaceutical prices are necessary for R&D is disingenuous at best, i think. 

what do the two of you think about those margins, as well as the amount of money spent on DTC advertising? 

I don't like DTC advertising. Depending on how you slice it up, Pharma spends as much (if not more) on marketing as they do on R&D. Pharma margins are among highest in healthcare. I don't have a problem with people making money square. I start to have a problem with they manipulate the system to extend their margin even further and to the point that we have a healthcare financing crisis on our hands. And while we are focused on aspect of the problem, there are plenty others as well.  I don't know the ins and outs of the hospital issue to the same extent as the pharma side, but there is lots to address there as well. 

Edited August 1, 2018 by Anastasis

[elfenix 34172]

Please no.  We can't stop granting patents for shitty inventions.  There are more than 10,000,000 US Patents.  I'd estimate that 9,500,000 of them are for shitty, useless inventions, and probably only about 100,000 ever amounted to a commercially significant invention during the term of the patent.  The problem is that you must file a patent application before you know how good an invention really is.  The alternative of delaying patent applications until commercial or other viability is proven is unacceptable.

Drugs that provide only incremental improvements over prior standard of care need to be exposed as such and doctors need to stop prescribing them.  That isn't addressed by the patent system.

Also, that article contains a lot of misinformation and misapprehension of patents.  Primarily, it assumes that any patent granted actually "covers" a commercial product, which is a gross error.

Fun fact: it took 155 years to go from patent number 1, issued in 1836, to patent number 5 million, in 1991.

 

 

[Nice Guy Eddie 13414]

I found these videos instructive on the costs and downsides of orphan drugs.  I believe they're more than 10% of the prescription costs in this country but help a relatively small percent of patients.

 

 

 

[TwiceHorn 31283]

6 hours ago, elfenix said:

Fun fact: it took 155 years to go from patent number 1, issued in 1836, to patent number 5 million, in 1991.

 

 

Yuup.  And only 27 years to double it.  Perhaps not coincidentally, the year I was admitted to practice before the USPTO. 

Edited August 2, 2018 by TwiceHorn

[TwiceHorn 31283]

31 minutes ago, Nice Guy Eddie said:

I found these videos instructive on the costs and downsides of orphan drugs.  I believe they're more than 10% of the prescription costs in this country but help a relatively small percent of patients.

 

 

 

Interesting series.  Orphan drugs are a kind of isolated case, though, it seems to me.  They're always going to be super-expensive because there's a limited market.

[Nice Guy Eddie 13414]

6 minutes ago, TwiceHorn said:

Interesting series.  Orphan drugs are a kind of isolated case, though, it seems to me.  They're always going to be super-expensive because there's a limited market.

Yes but it’s projected to grow up to 20% of the prescription market over the next 5-10 years.  The drugs get so much protection that the manufacturers can charge any price they want without fear of competition.   If someone needs a drug that costs 300K per year for the rest of their life, do the rest of us need to foot that bill?    

[Bama Chick 28596]

Y’all should check out a new documentary on Netflix called “Bleeding Edge”.

It’s about medical devices and how they are even more poorly regulated than pharmaceuticals.

I’ve worked in pharma and healthcare for 20+ years and it was an eye opener.

Shit’s wack, yo.

[TwiceHorn 31283]

9 hours ago, Nice Guy Eddie said:

Yes but it’s projected to grow up to 20% of the prescription market over the next 5-10 years.  The drugs get so much protection that the manufacturers can charge any price they want without fear of competition.   If someone needs a drug that costs 300K per year for the rest of their life, do the rest of us need to foot that bill?    

Well, the statutory exclusivity period is 7 years notwithstanding any patent.  But as we have discussed at length here, there are other reasons for monopolistic pricing than statutory monopolies.

And that statutory grant has increased the number of orphan drugs, which is what they set out to do.  Perhaps a shorter period of monopoly is appropriate, I don't know. 

Because the market for orphan drugs is so small, I'm not sure removing the statutory monopoly would have the effect of drawing competition and lowering prices.  These may be one of those cases where a natural monopoly is unavoidable.

 

The fundamental problem with healthcare is the nearly perfect inelasticity of demand.  It virtually requires some form of rationing.

 

[TwiceHorn 31283]

Other drug fuckery unrelated to patents.  https://www.pbs.org/newshour/amp/health/why-a-patient-paid-a-285-copay-for-a-40-drug

Quote

nsurance copays are higher than the cost of the drug about 25 percent of the time, according to a study published in March by the University of Southern California's Schaeffer Center for Health Policy and Economics.

 

[TwiceHorn 31283]

Here's another assbag gouging drug prices.  http://www.latimes.com/business/hiltzik/la-fi-hiltzik-drug-prices-20180911-story.html

Quote

In the category of saying the quiet parts out loud, consider this statement by Nirmal Mulye, the chief executive of drug company Nostrum Laboratories: “I think it is a moral requirement to make money when you can ... to sell the product for the highest price.”

Mulye was responding to questions posed by the Financial Times about his quadrupling the price of an essential antibiotic to $2,392 per bottle. The drug, nitrofurantoin, is used to treat urinary tract infections. It has been on the market since 1953 and is listed by the World Health Organization as an essential medicine for “basic healthcare systems.”

Again, the drug is unpatented.  Other market forces create the exclusivity that permits this.

The problem is not patents.  The problem is a business moral climate that confuses morality with profit motive.

[Anastasis 23394]

10 hours ago, TwiceHorn said:

Here's another assbag gouging drug prices.  http://www.latimes.com/business/hiltzik/la-fi-hiltzik-drug-prices-20180911-story.html

 Again, the drug is unpatented.  Other market forces create the exclusivity that permits this.

The problem is not patents.  The problem is a business moral climate that confuses morality with profit motive.

Wow.  That's fucked up.  Nitro at $2k a bottle.  Jesus. The types of maneuvers are fucked up, but far outweighed by some of the other situations discussed previously upthread in terms of adverse impact on total US drug spend. 

[Anastasis 23394]

HHS proposes a new rule to revise the way that rebates flow. Will be interesting to see how this plays out.  There is a complex dynamic at plan in terms of financial impact to CMS. This will likely have impacts on out of pocket (positive), premiums (negative), and CMS expenditures (negative). Should bring gross prices down, more in line with net prices. Pharma loses a major tool that they use to negotiate formulary placement, which may impact access. All in all, I think that this is a good move as it could remove one of the big clouds in Rx price transparency to the consumer.  

Proposed rule: https://s3.amazonaws.com/public-inspection.federalregister.gov/2019-01026.pdf

Reuters: https://www.reuters.com/article/us-usa-healthcare-rebates/u-s-government-proposes-rule-overhauling-drug-industry-rebate-system-idUSKCN1PP30W

NEW YORK/WASHINGTON (Reuters) - The U.S. government on Thursday proposed a rule to end the industry-wide system of after-market discounts called rebates that pharmacy benefit managers (PBMs) receive from drugmakers, a practice that has been under increased scrutiny.

 

If finalized, the rule would change a system that has been in place for decades and that has been criticized for obfuscating the real price of prescription medicines.

The administration of U.S. President Donald Trump has been promising to lower the cost of prescription drugs for consumers, who have seen their out-of-pocket expenses rise each year with higher list prices of pharmaceuticals.

The proposed rule from the U.S. Department of Health and Human Services (HHS) would apply to companies like Cigna Corp’s Express Scripts and CVS Health Corp, as well as companies like Humana Inc that manage Medicare prescription drug benefits, and Medicaid managed care organizations.

“This proposal has the potential to be the most significant change in how Americans’ drugs are priced at the pharmacy counter,” HHS Secretary Alex Azar said in a statement.

Eliminating rebates on prescription drug purchases is a key element of the Trump administration’s plan to lower prescription medicine costs. Trump made lowering drug prices a major priority during his 2016 presidential campaign.

 

PBMs administer drug benefits for employers and health plans and also run large mail-order pharmacies. Drugmakers say they are under pressure to provide rebates to the few PBMs that dominate the market in order to gain patient access to their products by having them included on preferred coverage lists.

Drugmakers say that PBMs do not pass on enough of those savings to patients - a contention the PBMs dispute - and that the rebates force them to raise the list price of medicines over time to preserve their profits. They argue that the net revenue they actually see has little relation to list prices.

Democratic Senator Ron Wyden, ranking member of the Senate Finance Committee, said in a statement that industry middlemen, such as PBMs, “have no accountability and consumers don’t see any savings at the pharmacy counter,” adding that he also wants drugmakers to lower their list prices.

The Pharmaceutical Care Management Association, the main PBM trade group, said eliminating rebates would drive up drug costs and out-of-pocket expenses for consumers. The group said drugmakers alone set prices.

Express Scripts said it was evaluating the proposed rule, but said rebates help keep premiums low for Medicare beneficiaries.

But the Pharmaceutical Research and Manufacturers of America (PhRMA), the main U.S. lobbying group for drugmakers, said the proposal, if enacted, would “fix the misaligned incentives in the system.”

 

The HHS proposal would allow rebates on prescription drugs to be offered directly to patients, and allow PBMs to establish fixed fee service arrangements with drugmakers that could replace lost revenue from rebates.

An anti-kickback law makes it illegal to pay an incentive for drugs or services that Medicare, Medicaid or other federal healthcare programs cover. The government has been considering removing the safe harbor protection for rebates from the anti-kickback law since last year.

[TwiceHorn 31283]

Interdasting. 

[Anastasis 23394]

Lawsuit by AGs of number of state against generic drug manufacturer Teva for price fixing.

https://assets.documentcloud.org/documents/5997883/GENERIC-DRUGS-COMPLAINT.pdf?mod=article_inline

https://www.nytimes.com/2019/05/11/health/teva-price-fixing-lawsuit.html

Teva and Other Generic Drugmakers Inflated Prices Up to 1,000%, State Prosecutors Say

[zork 629]

With the Bayer losses from their takeover of the Roundup maker, will Aspirin be next to have prices explode?  If not, look at what little ole Aspirin can do for you:

Quote

...

With respect to aspirin, in basic research this drug irrepressibly acetylates the active site of cyclo-oxygenase in platelets which inhibits thromboxane A2, a powerful promoter of aggregation. In randomized trials of secondary prevention and their meta-analyses, aspirin reduces risks of myocardial infraction (MI) by about one-third, stroke by about a quarter, and CVD death by about one-sixth. In randomized trials of primary prevention and their meta-analyses, aspirin significantly reduces risk of first MI by about one-third and all important vascular events by about one-sixth. The US Preventive Services Task Force and the American Heart Association (AHA) have recommended aspirin for all apparently healthy individuals whose risk of a first coronary heart disease (CHD) event is 6% or 10% respectively.

...

https://www.uscjournal.com/articles/Aspirin-Statins-Cardiovascular

Something to consider, having Aspirin around.  Statins as well if you can afford it.

[TwiceHorn 31283]

Anastasis might be interested in this, among others.  I finally figured out what pharma is doing to abuse the patent system currently (from that brief discussion we had on the health care policy thread).

They are patenting/claiming "new uses" and dosages for "old" (meaning already patented) drugs.  An example would be this, fictional, but using seroquel:

1988 Patent for Seroquel granted for treatment of psychosis and bipolar disorder in humans.

1995 Patent granted for Seroquel with the following type of claims:

"A method of treating schizophrenia comprising the steps of administering 40-60mg of Seroquel twice daily."

This befuddles me a bit because in all other technological areas, including straight chemistry, a new use of an old or known material is not patentable.  The thought is, once a material or compound is made or synthesized, even if it is initially for a single or limited number of purposes, finding new things that it is useful for is in the nature of discovery and not invention, and/or the new use is an inherent property of the material or compound.  In either case it is not patentable.

Anyway, massive patent reform isn't necessary to fix this.  Plus, I'm a little skeptical that this is really that important to drug availability and pricing, as the claims remain fairly narrow, meaning they only preempt treatment of one condition.  There are some scenarios where it could be problematic.

[TwiceHorn 31283]

4 hours ago, Anastasis said:

Lawsuit by AGs of number of state against generic drug manufacturer Teva for price fixing.

https://assets.documentcloud.org/documents/5997883/GENERIC-DRUGS-COMPLAINT.pdf?mod=article_inline

https://www.nytimes.com/2019/05/11/health/teva-price-fixing-lawsuit.html

Teva and Other Generic Drugmakers Inflated Prices Up to 1,000%, State Prosecutors Say

Another data point indicating that it's Pharma, not the patent system, that is really driving drug prices.

[Anastasis 23394]

42 minutes ago, TwiceHorn said:

Another data point indicating that it's Pharma, not the patent system, that is really driving drug prices.

You've moved my thinking wrt to the specific extent that the patent system itself plays a pivotal role, it's more of a broad legal strategy that pharma deploys to protect market share. Patent system abuses are maybe, in the grand scheme of things, a small and less consequential aspect relative to others.  See guys, productive exchanges in the CR are possible.  I appreciate the perspectives that you have shared Twice.  

Edited May 13, 2019 by Anastasis

[Message Board User 12389]

If you didn't watch the 60 Minutes story on generic drug pricing, you really should.  But be forewarned - it will make you ragey.  

The question for me - is there anyone in the pharmaceutical industry who is not pure scum?

 

[TwiceHorn 31283]

53 minutes ago, Anastasis said:

You've moved my thinking wrt to the specific extent that the patent system itself plays a pivotal role, it's more of a broad legal strategy that pharma deploys to protect market share. Patent system abuses are maybe, in the grand scheme of things, a small and less consequential aspect relative to others.  See guys, productive exchanges in the CR are possible.  I appreciate the perspectives that you have shared Twice.  

As a general rule, patents don't confer a sufficiently broad or ironclad monopoly to be as bad as commercial monopolies.  This is because they cannot encompass prior technologies, they are themselves usually much narrower in scope than an entire market (they tend to cover one product or product line), and finally, they are often easy to "second best" or design around, actually stimulating competition.  Further, they are limited in time.

It may be a bit different in pharma where the FDA is involved. but, as I have maintained all along, the distortions introduced by the FDA tend to swallow the distortions introduced by the patent system.  That is, join a patent's monopoly with the exclusive right to market a drug with huge barriers to entry (FDA approval) and it's the latter that poses the real problem.  Add in generic rules and manufacturing certification and even unpatented (generic) drugs become a huge issue.

Finally, I suppose there are few or no "ethical" pharmas because they will be eradicated by the ruthless ones.

Edited May 14, 2019 by TwiceHorn

[HRSchenker 2259]

CMS failed to act on DIR fees at pharmacies so this fight isn't over. DIR fees are required payments pharmacies make to PBMs that are supposed to offset the costs of prescription drugs but they've gone out of control. Lots of pharmacies are going out of business because their net margin gets wiped out through these fees. Our industry is essentially subsidizing Medicare Part D patients but the PBMs keep all of the money. Ask yourself why a benefit manager who "negotiates" with companies is always in the top 10 list of earners in the United States. It would be like the winner of a Chinese-United States trade war being the negotiators at the table.

It's only a matter of time before pharmacies either go out of business (enjoy the long lines at your local CVS pharmacy, they'll be filling 1000 rx a day with a pharmacist and a technician) or refuse to accept Part D plans altogether. This is a bubble ripe for bursting.

[Anastasis 23394]

6 minutes ago, HRSchenker said:

CMS failed to act on DIR fees at pharmacies so this fight isn't over.

Yep, apparently final rule issued yesterday. Didn't touch the handling of rebates. Some other aspects of the proposed rule were implemented. 

https://www.pharmacytimes.com/resource-centers/reimbursement/cms-action-aims-to-lower-prescription-drug-prices-increase-cost-transparency

I don't read a lot of final rules, but this looks like they just punted wrt addressing the content of the comments they recieved on rebates/DIR and don't provide any meaningful justification or analysis.

F. Pharmacy Price Concessions in the Negotiated Price (§ 423.100) In the proposed rule, we sought comment on a potential policy approach for requiring that all pharmacy price concessions be applied to drug prices at the point of sale under Part D. We received over 4,000 comments on this potential policy approach. We thank the commenters for their detailed responses. We will carefully review all input received from stakeholders on this issue as we continue our efforts to meaningfully address rising prescription drug costs for seniors

[Horn Under a Bad Sign 20345]

Globally, there are around 14 million cases of cancer diagnosed every year. The total economic impact of cancer is 1.14 trillion dollars. The cancer therapy market is roughly 140 billion dollars. Suppose that tomorrow Pfizer discovered the "cure for cancer": Would it make *economic sense* for them to hide it?

[TwiceHorn 31283]

On 7/3/2019 at 7:29 PM, Horn Under a Bad Sign said:

Globally, there are around 14 million cases of cancer diagnosed every year. The total economic impact of cancer is 1.14 trillion dollars. The cancer therapy market is roughly 140 billion dollars. Suppose that tomorrow Pfizer discovered the "cure for cancer": Would it make *economic sense* for them to hide it?

Probably not.  They would be missing out on 20 years of profit (a patent plus a term extension for FDA delay would yield a 20 year term).  

The only reason to hide such a drug would be to believe that it will stay "dead" permanently and no other research entity would come across something similar.  And, that for some reason, the drug would supplant something (a "second best") technology that they are selling the living shit out of, which would not be the case, AFAIK.

Even if the drug was not patentable, being first to secure FDA approval provides an effective monopoly for a few years.

[Anastasis 23394]

On 7/3/2019 at 7:29 PM, Horn Under a Bad Sign said:

Suppose that tomorrow Pfizer discovered the "cure for cancer": Would it make *economic sense* for them to hide it?

No. They would make a shit load of money throughout the world and would have a halo effect around their brand for the rest of time. 

[Anastasis 23394]

https://www.wsj.com/articles/trump-administration-drops-plan-to-curb-drug-rebates-11562845155

Behind the tag

The Trump administration is dropping a plan to curb billions of dollars in annual rebates that drugmakers give middlemen in Medicare, a proposal it had said would drive down the prices consumers pay for prescription drugs.

The decision reflects months of tension between the White House and the Department of Health and Human Services over the proposal, which also spurred a backlash from pharmacy-benefit managers that administer prescription-drug programs. It was a centerpiece of President Trump’s blueprint to lower drug costs.

The plan had been to curtail the rebates worked out between drugmakers and third parties that manage benefits for Medicare as well as Medicaid managed care, where states contract with insurers to deliver benefits. The government sought instead to redirect those discounts toward patients.

The effort could have disrupted the U.S. pharmaceutical industry. Under the current system, pharmacy-benefit managers, or PBMs, negotiate confidential rebates and discounts on many branded prescription drugs. Those deals aren’t always passed along to customers at pharmacies.

Health and Human Services Secretary Alex Azar, who backed the idea, had clashed with senior White House advisers who had sought to delay or water down the proposal, according to four people familiar with the discussions.

“This proposal has the potential to be the most significant change in how Americans’ drugs are priced at the pharmacy counter, ever,” Mr. Azar said in January when the proposal was released.

The turnaround is likely to be cheered by the largest pharmacy-benefit managers, includingCigna Corp. ’s Express Scripts, CVS Health Corp. ’s Caremark and UnitedHealth Group Inc.’s OptumRx. Axios first reported the administration’s decision to drop the plan.

 

 

“Based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule,” Judd Deere, a White House spokesman, said Thursday in a statement. “The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline.”

The decision to end the proposal follows a federal judge’s ruling Monday that blocked a Trump administration plan to require drugmakers to put prices in television ads, another central part of the president’s push to lower the cost of prescription medications.

Last week, President Trump said he would issue an executive order aimed at getting the U.S. to pay the same price for drugs as other countries. Two people familiar with the discussions said at the time that they believed he was referring to a proposal already in the works. But he directed staff to begin working on the executive order after the rule on drug prices in television ads was blocked, according to one person outside the White House.

Rebates that drug manufacturers pay to Medicare plans have long been permitted because they aren’t barred under statutes prohibiting kickbacks to secure federal business. The now-shelved rule would have eliminated that protection by potentially subjecting the rebates to review under anti-kickback statutes.

 

In its place, the Trump administration would have created a protection for discounts offered directly to patients, as well as fixed-fee arrangements between drug manufacturers and PBMs, which administer prescription drug plans.

The existing anti-kickback rule would only have applied to certain federal health programs, not the private market. But because Medicare and Medicaid are such big purchasers of drugs, their policies can influence the private market and cause private plans to follow suit.

Under the proposal, individuals’ premiums within Medicare Part D—a program that pays for drugs for some seniors—could have increased by $3 to $5 a month. The savings on drug purchases, however, would have exceeded the amount of the higher premium, administration officials said when releasing the proposal.

Write to Stephanie Armour at stephanie.armour@wsj.com

Edited July 11, 2019 by Anastasis

[Anastasis 23394]

And generally related to drug pricing/regulatory/clinical...

In the US, we need the FDA to require comparative effectiveness research as a condition for drug approval.  Require that they tack an active comparator arm onto the registration trials.   

 

Summary: https://www.iqwig.de/en/press/press-releases/early-benefit-assessment-reveals-weaknesses-in-the-development-of-new-drugs.12351.html

Full BMJ article: https://www.bmj.com/content/366/bmj.l4340

Abstract:

Early assessment of benefit of new drugs in Germany

On 1 January 2011, Germany introduced early benefit assessment (Frühe Nutzenbewertung) of new drugs through the reform of the market for medicinal products act (AMNOG). Its aim is to determine whether a new drug has any added benefit over standard care. The Federal Joint Committee (G-BA), the main decision making body within the German statutory health insurance system, is responsible for the assessment procedure and ultimately decides on the added benefit.

The G-BA specifies the standard care based on criteria laid down in the law. According to these criteria, standard care is an approved and reimbursed intervention that is established in clinical practice and for which a benefit has been proved according to the standards of evidence based medicine (predominantly based on studies with patient relevant outcomes). If appropriate, standard care might also be watchful waiting or best supportive care.

The added benefit of the new drug is primarily determined by a direct or a suitable indirect comparison (only adjusted indirect comparisons using appropriate common comparators are accepted10) with standard care using the outcomes of mortality, morbidity (including adverse events), or health related quality of life.

The assessment is performed for the authorised use of both the new drug and standard care. There is a special procedure for orphan drugs with a revenue below €50m (£45m; $57m) a year and these drugs are not included in the current analysis.

Procedure

When a newly approved drug enters the German market, the drug company responsible must submit a standardised dossier containing all available evidence of the drug’s added benefit over standard care to the G-BA. The G-BA generally commissions IQWiG to assess the evidence contained in the dossier within three months after market entry. The results of this assessment serve as the basis for G-BA’s decisions on the added benefit. After publication of IQWiG’s assessment report, the G-BA conducts a commenting procedure and hearing, during which the drug company and other specified parties may submit comments. After evaluation of these comments, the G-BA issues a decision on the probability and extent of added benefit. The final decisions therefore sometimes differ from IQWiG’s assessment. For the 216 assessments described in this article, the G-BA’s decision was as follows: no added benefit: 115/216 (53%), major added benefit: 1/216 (<1%), considerable added benefit: 55/216 (25%), minor added benefit: 33/216 (15%), non-quantifiable added benefit: 12/216 (6%), less benefit: 0/216 (0%) (https://www.g-ba.de/informationen/nutzenbewertung/).

The conclusions on added benefit are used to inform pricing negotiations between the umbrella organisation of statutory health insurance and the drug company. Even if the G-BA concludes that a new drug has no added benefit, the drug is permitted to stay on the market. However, in general, a new drug with no added benefit should not cost more than standard care. The conclusions on added benefit can also have an important effect on provision of healthcare, as they can also be used for clinical practice guidelines and individual treatment decisions by patients and physicians.

 

[TwiceHorn 31283]

Interesting. It seems that Germany has one of the best handles on all of the health care angles. 

I see your point on this and it's quite valid just not something that the patent office could or should handle. 

[Anastasis 23394]

40 minutes ago, TwiceHorn said:

Interesting. It seems that Germany has one of the best handles on all of the health care angles. 

I see your point on this and it's quite valid just not something that the patent office could or should handle. 

I think that it should be addressed by the FDA during the registration process.  Perhaps you give the FDA a certain ability to control aspects of assigning the period of market exclusivity. 

 

BTW, I have another good example of lifecycle extension fuckery by Pharma.  Essentially adding a full yr of exclusivity by gaming the system. I am waiting for some public reporting, and will post it.  Not sure what if any intersection there is with the patent system, or if this is totally on the regulatory side.

 

Edited July 11, 2019 by Anastasis
rolling back some detail

[TwiceHorn 31283]

On 8/1/2018 at 2:28 PM, hayden_horn said:

this has been a really interesting discussion; thanks to twice and anastasis.

one thing i think is missing from this discussion is the margins pharma companies regularly experience.  it's ridiculous, and anyone stating that our high domestic pharmaceutical prices are necessary for R&D is disingenuous at best, i think. 

what do the two of you think about those margins, as well as the amount of money spent on DTC advertising? 

Damn, I missed this nearly a year ago in my colloquy with anastasis.  Good question.

First, patents do confer a monopoly and that implies the power to set prices, to include rapacious margins, potentially.  But, the ability to do so conferred by a patent is frequently overrated.  Because a patent covers the invention, not all alternatives.

Which brings up the big point.  In most cases, as Anastasis argues, there are alternatives, and frequently more (or as) efficacious alternatives, to a patented drug.  Just because it's patented doesn't mean it's the best.  An example is insulin.  Insulin is old, and no longer patented.  The latest version of insulin, however, is patented.  But there's little evidence that it offers any benefit over "plain ol" insulin, or one of the prior versions.  However, doctors tend to prescribe the latest, "greatest," patented and expensive version.  And this stems largely from pharma marketing.  If docs would continue to prescribe the equally, more, or slightly less efficacious unpatented alternatives, the price of patented drugs would be driven down.  But that doesn't happen for a variety of reasons, including marketing and the FDA (manufacturer certifications can preclude market entry and availability of alternatives).

Which leads us to possibly the biggest point.  People are uninformed consumers of healthcare.  They rely on doctors to close that gap (and insurers to a degree).  And docs, fueled by pharma, have become a bit too credulous of pharma's claims about their latest, greatest, patented, high-margin drugs.  So they get prescribed to the exclusion of much cheaper unpatented alternatives for no good reason.  So price competition, which does exist for patented drugs in most cases, is reduced or eliminated.

So the German thing of establishing efficacy in a public and ostensibly neutral way goes a way toward curtailing that and increasing competition for patented drugs.

tl;dr.  Yes pharma margins are probably excessive on patented drugs (unpatented too).  The reason isn't the patents, though, it's a lack of robust competition from unpatented alternatives, which derives mostly from sources other than patents.

Edited July 11, 2019 by TwiceHorn

[triplehorn 2664]

Justice Department Obtains $1.4 Billion From Reckitt Benckiser Group in Largest Recovery in a Case Concerning an Opioid Drug in United States History

" [...]

According to the indictment, Indivior—including during the time when it was a subsidiary of RB Group—promoted the film version of Suboxone (Suboxone Film) to physicians, pharmacists, Medicaid administrators, and others across the country as less-divertible and less-abusable and safer around children, families, and communities than other buprenorphine drugs, even though such claims have never been established.

The indictment further alleges that Indivior touted its “Here to Help” internet and telephone program as a resource for opioid-addicted patients. Instead, however, Indivior used the program, in part, to connect patients to doctors it knew were prescribing Suboxone and other opioids to more patients than allowed by federal law, at high doses, and in a careless and clinically unwarranted manner.

The indictment also alleges that, to further its scheme, Indivior announced a “discontinuance” of its tablet form of Suboxone based on supposed “concerns regarding pediatric exposure” to tablets, despite Indivior executives’ knowledge that the primary reason for the discontinuance was to delay the Food and Drug Administration’s approval of generic tablet forms of the drug.

The indictment alleges Indivior’s scheme was highly successful, fraudulently converting thousands of opioid-addicted patients over to Suboxone Film and causing state Medicaid programs to expand and maintain coverage of Suboxone Film at substantial cost to the government. [...]"

[TwiceHorn 31283]

5 minutes ago, triplehorn said:

Justice Department Obtains $1.4 Billion From Reckitt Benckiser Group in Largest Recovery in a Case Concerning an Opioid Drug in United States History

" [...]

According to the indictment, Indivior—including during the time when it was a subsidiary of RB Group—promoted the film version of Suboxone (Suboxone Film) to physicians, pharmacists, Medicaid administrators, and others across the country as less-divertible and less-abusable and safer around children, families, and communities than other buprenorphine drugs, even though such claims have never been established.

The indictment further alleges that Indivior touted its “Here to Help” internet and telephone program as a resource for opioid-addicted patients. Instead, however, Indivior used the program, in part, to connect patients to doctors it knew were prescribing Suboxone and other opioids to more patients than allowed by federal law, at high doses, and in a careless and clinically unwarranted manner.

The indictment also alleges that, to further its scheme, Indivior announced a “discontinuance” of its tablet form of Suboxone based on supposed “concerns regarding pediatric exposure” to tablets, despite Indivior executives’ knowledge that the primary reason for the discontinuance was to delay the Food and Drug Administration’s approval of generic tablet forms of the drug.

The indictment alleges Indivior’s scheme was highly successful, fraudulently converting thousands of opioid-addicted patients over to Suboxone Film and causing state Medicaid programs to expand and maintain coverage of Suboxone Film at substantial cost to the government. [...]"

This could be regarded as a case-in-point, as this isn't a patent-driven thing, but a lying-ass pharma gaming the FDA thing.

I'm kind of confused about the tablet/film thing.  I can't say I'm an authority on FDA proceedings though.  I guess if a manufacturer withdraws an approved drug for an approved indication, that fucks up ANDAs for similar/same generic drugs.

[TwiceHorn 31283]

27 minutes ago, TwiceHorn said:

Damn, I missed this nearly a year ago in my colloquy with anastasis.  Good question.

First, patents do confer a monopoly and that implies the power to set prices, to include rapacious margins, potentially.  But, the ability to do so conferred by a patent is frequently overrated.  Because a patent covers the invention, not all alternatives.

Which brings up the big point.  In most cases, as Anastasis argues, there are alternatives, and frequently more (or as) efficacious alternatives, to a patented drug.  Just because it's patented doesn't mean it's the best.  An example is insulin.  Insulin is old, and no longer patented.  The latest version of insulin, however, is patented.  But there's little evidence that it offers any benefit over "plain ol" insulin, or one of the prior versions.  However, doctors tend to prescribe the latest, "greatest," patented and expensive version.  And this stems largely from pharma marketing.  If docs would continue to prescribe the equally, more, or slightly less efficacious unpatented alternatives, the price of patented drugs would be driven down.  But that doesn't happen for a variety of reasons, including marketing and the FDA (manufacturer certifications can preclude market entry and availability of alternatives).

Which leads us to possibly the biggest point.  People are uninformed consumers of healthcare.  They rely on doctors to close that gap (and insurers to a degree).  And docs, fueled by pharma, have become a bit too credulous of pharma's claims about their latest, greatest, patented, high-margin drugs.  So they get prescribed to the exclusion of much cheaper unpatented alternatives for no good reason.  So price competition, which does exist for patented drugs in most cases, is reduced or eliminated.

So the German thing of establishing efficacy in a public and ostensibly neutral way goes a way toward curtailing that and increasing competition for patented drugs.

tl;dr.  Yes pharma margins are probably excessive on patented drugs (unpatented too).  The reason isn't the patents, though, it's a lack of robust competition from unpatented alternatives, which derives mostly from sources other than patents.

Also, this doesn't address the "blockbuster" drug, which tends to be one of a kind.  But even still, there's probably some "runner up" therapy that gets unjustly ignored by medicine, and which would tend to keep the price somewhat in check.  But then again, if it's really a blockbuster (say, the cancer cure), how do you justly curtail margins on it?

 

 

[Anastasis 23394]

40 minutes ago, TwiceHorn said:

Also, this doesn't address the "blockbuster" drug, which tends to be one of a kind.  But even still, there's probably some "runner up" therapy that gets unjustly ignored by medicine, and which would tend to keep the price somewhat in check.  But then again, if it's really a blockbuster (say, the cancer cure), how do you justly curtail margins on it?

I agree with this to a large extent.  True innovation should be rewarded.  The problem is that the vast, vast, vast majority of new entries are not blockbusters, they are not even novel.  The are derivative and bring nothing new to the table, until the marketing people juice up an angle.  That circles back to my comment previously that you need active comparator/standard of care arms in the registration trials.  Outside of a few therapeutic areas most of it is placebo controlled. 

[TwiceHorn 31283]

22 hours ago, Anastasis said:

I think that it should be addressed by the FDA during the registration process.  Perhaps you give the FDA a certain ability to control aspects of assigning the period of market exclusivity. 

 

BTW, I have another good example of lifecycle extension fuckery by Pharma.  Essentially adding a full yr of exclusivity by gaming the system. I am waiting for some public reporting, and will post it.  Not sure what if any intersection there is with the patent system, or if this is totally on the regulatory side.

 

Be interested to see this fuckery.  It is definitely true that the pharmaceutical system plays the patent system aggressively and very, very well.  Usually within the bounds of legality, but not always.  It appears that they do the same with the FDA, which shouldn't surprise anyone.

While another year of exclusivity does mean another year of "monopoly profits" for the patent or other exclusivity holder, I'm not sure how worked up we should get about it.  In theory, once a patent expires, half a dozen competitors are lined up to bring products to the market and the price plummets due to competition.  I'm not quite sure that happens in pharma. Yes, eventually, formerly patented drugs become less expensive but the fact that alternatives have to be FDA approved, along with their manufacturing facilities and processes, seems to slow that process down some, so that maybe a year isn't that material.  Plus, you see that even "generic" mfrs. gouge prices tremendously.

Maybe this will be a good case study of that.

[TwiceHorn 31283]

Stumbled across this article https://www.ipwatchdog.com/2019/05/20/affordable-prescriptions-patients-act-allow-ftc-prosecute-pharmaceutical-patent-thickets-product-hopping/id=109384/

The approach of this legislation is to scrutinize pharma practices respecting "patent thicketing" (entirely legitimate in other industries) and something akin to the Suboxone tablet/film thing mentioned above.  But rather than change the patent system, which would have vast unintended effects in other industries utilizing the patent system, charge the FTC with examining these practices for anti-competitive effect.  Seems like less risk of throwing the baby out with the bath water, which the last couple of rounds of changes to the patent laws have done.  Also would seem to permit examination of the gaming of the patent/FDA interface.  

Some of you might not get how messing with the patent system could have unintended consequences, but I bet you can get how changing up the FDA might, in terms of relaxing drug safety.

Here's another, more substantive article by the former Mr. Sonia Sotomayor. https://www.patentdocs.org/2019/06/ftc-to-the-rescue-regarding-high-drug-prices-and-patents.html

Edited July 16, 2019 by TwiceHorn

[TwiceHorn 31283]

Here's a little blurb from another patent blog, talking about a different form of drug price legislation.  https://patentlyo.com/patent/2019/07/drug-pricing-patents.html

It proposes an outright price control:  The Bill would also limit the “retail list price” of U.S. drugs to “the lowest retail list price for the drug among Canada, France, the United Kingdom, Japan, or Germany.”

That kind of thing makes me a little nervous in that price controls, like tariffs, are generally believed to be bad news.

[TwiceHorn 31283]

Over on the Kamala Harris thread, @Bama Chick explains that pharma no longer is able to "bribe" docs to prescribe their meds.  Instead, they ply their corrupt trade on PBMs.

I'd like to explore this some more, as I am quite convinced that one of the reasons for high drug prices is a lack of robust competition from off- or un-patented alternatives to high-priced patented drugs.  Insulin being a prime example of this.  Elaborating for those who havent read the thread:  Insulin was first made available to human patients in the 1920s, so any patent thereon would have expired in the 40s.  There have been a series of "improvements" in insulin over the years, any patents on which expired roughly 20 years after invention.  So that leaves roughly four generations (and likely many more) of unpatented insulin available for prescription, today.  Yet, as noted in the OP, the standard of care seems to be only the "latest and greatest" and patented insulin formulation.  But we don't know if it offers any advantages over the prior four-plus generations of insulin, let alone advantages justifying the price.

I understand that PBMs may, subject to quid pro quo, insure that the high-priced drugs are present in an insurance company's formulary, regardless of actual benefit, yet I am not aware that the formulary forbids docs from prescribing less-expensive, lower tech meds.

Edited July 30, 2019 by TwiceHorn

[elfenix 34172]

Over on the Kamala Harris thread, [mention=332]Bama Chick[/mention] explains that pharma no longer is able to "bribe" docs to prescribe their meds.  Instead, they ply their corrupt trade on PBMs.
I'd like to explore this some more, as I am quite convinced that one of the reasons for high drug prices is a lack of robust competition from off- or un-patented alternatives to high-priced patented drugs.  Insulin being a prime example of this. 

See post 79

[TwiceHorn 31283]

On 7/30/2019 at 9:30 AM, elfenix said:

 

 

See post 79

 

That explains how certain drugs make it onto the formulary, particularly expensive ones.  It doesn't precisely explain how it limits the freedom of docs to prescribe off-patent or "prior technology" drugs.  It's been a while since I had meaningful drug coverage (have little need, thank God), but usually you were interested in what higher-priced drugs were available at what cost and not about the drugs that were as cheap or cheaper than your co-pay.

[Anastasis 23394]

There is nothing preventing generic prescribing. Physicians can prescribe whatever they want. In fact, except for exceedingly rare one off situations, such as a single source generic that is functionally the same as a exclusive brand product, most formularies to going to incentivize the use of generics over brand name products with a favorable copay or coinsurance structure.   Increasing generic utilization is favored by everybody in the supply chain with the exception of pharmaceutical companies focused on on-patent products.  

[TwiceHorn 31283]

Here's an angle that doesn't get much attention.  Drug supply.

I read somewhere that continental Europe fears drug shortages after Brexit.  DIdn't go into much detail, but the UK is the second most pharmacologically innovative country in the world, I believe.

Canada facing a shortage of oncology drugs. https://www.cbc.ca/news/health/cancer-drug-shortages-1.5235432  At the end it says this:

 

Quote

The three drugs are no longer patented and there's little incentive for manufacturers to keep up inventories, Batist said.

This, along with Anastasis' last sentence, reflect what seems to be the problem to me.  Even if patent holders stop making unpatented drugs in favor of high-margin patented drugs, in a normal market, competitors step in and start making the unpatented products to compete with the patented ones, and prices fall all around.  Indeed, the expired patents give the competitors a leg up if not a production spec on the now-unpatented drug.  But this doesn't seem to happen in pharma with the regularity that it does in other markets.

[zork 629]

27 minutes ago, TwiceHorn said:

Here's an angle that doesn't get much attention.  Drug supply.

I read somewhere that continental Europe fears drug shortages after Brexit.  DIdn't go into much detail, but the UK is the second most pharmacologically innovative country in the world, I believe.

Canada facing a shortage of oncology drugs. https://www.cbc.ca/news/health/cancer-drug-shortages-1.5235432  At the end it says this:

 

This, along with Anastasis' last sentence, reflect what seems to be the problem to me.  Even if patent holders stop making unpatented drugs in favor of high-margin patented drugs, in a normal market, competitors step in and start making the unpatented products to compete with the patented ones, and prices fall all around.  Indeed, the expired patents give the competitors a leg up if not a production spec on the now-unpatented drug.  But this doesn't seem to happen in pharma with the regularity that it does in other markets.

Just  a guess:  are some or most or even all of the generic alternative drug making companies from the past X years still around or have they been swallowed/merged into other companies perhaps?  Are the regulations to be able to produce drugs different now/recently wrt onerous costs that might make it prohibitive to produce drug generics?

Does Medicare pay full price for generics when they are available or some %?  If the prices available to be paid from forced providers don't cover costs then you won't produce the products to fulfill those orders at a loss for very long if at all.

What can be done without Government causing a substitution effect that would potentially provide further disincentives  to companies to compete with a non-cost worried government entity? 

What can be done to do the opposite, what incentives for companies to provide cheap generics for drugs off the protective  patent schedule would be advisable to jump start the process?

The previous paragraphs are pure supposition on my part.

[TwiceHorn 31283]

8 minutes ago, zork said:

Just  a guess:  are some or most or even all of the generic alternative drug making companies from the past X years still around or have they been swallowed/merged into other companies perhaps?  Are the regulations to be able to produce drugs different now/recently wrt onerous costs that might make it prohibitive to produce drug generics?

Does Medicare pay full price for generics when they are available or some %?  If the prices available to be paid from forced providers don't cover costs then you won't produce the products to fulfill those orders at a loss for very long if at all.

What can be done without Government causing a substitution effect that would potentially provide further disincentives  to companies to compete with a non-cost worried government entity? 

What can be done to do the opposite, what incentives for companies to provide cheap generics for drugs off the protective  patent schedule would be advisable to jump start the process?

The previous paragraphs are pure supposition on my part.

I don't know.  Teva, one of the biggest generics, has bought up a lot of other generics.

I think one of the main things is that you have to have FDA approval to manufacture and market drugs that have been approved before.  It's not as onerous as a New Drug Application, but apparently is a significant barrier to entry.

And there could be some sort of collusion between "generic" and "non-generic" pharmas.

Edited August 13, 2019 by TwiceHorn

[Anastasis 23394]

Here's the new Medicare drug pricing implementation plan laid out. Ten drugs get negotiated pricing starting in 2026.

 

[Incredulity 11555]

It’s like they learned nothing from Obamacare.  I realize thing need some time to implement, but 4 fucking years.  Just the perfect amount of time for control in Washington to change hands and this get all carved up.  The simulation has a dark sense of humor.

[safe sex 11684]

Are you saying this is a good thing but Republicans will ruin it if/when they return to office? Are you becoming self-aware?