November 2011 Archives

OTC Lipitor is a Bad Idea

It certainly had a nice run. In fact, the nicest of any drug ever. But the Lipitor party ends today and while Pfizer's attempt to derail generic sales by selling the drug over the counter might be a good business move, it is a bad medical move. And not even original.

In 1999, Warner-Lambert was in talks to merge with Wyeth (then American Home Products) when Pfizer swept in the next day, making Warner-Lambert an offer they could not refuse. They ended up paying $90 billion for Warner-Lambert, substantially more than the Wyeth deal was worth. They were essentially paying $90 billion for Lipitor, which, despite being launched only two years earlier had already become the leading statin on the market, passing its four competitors at lightning speed. By 2009, Lipitor was earning over $12 billion per year, accounting for about one-quarter of Pfizer's sales.

Now, with Pfizer losing a very big chunk of its revenue, they are trying quite hard to hang on to whatever they can. This makes sense, but one of their strategies does not--selling Lipitor over the counter. Merck tried to do the same thing in 2008, after Mevacor had lost patent protection. The FDA shot this down, and they should do the same here.

Some have argued that selling former prescription drugs OTC is fine, citing off-patent acid reducing drugs like omeprazole (Prilosec) and ranitidine (Zantac). This would eliminate the cost of a visit to the doctor and may save consumers some money. But this analogy doesn't add up. There is a big difference between the two.

Here are the issues involving the OTC acid reducers:
Swallow pill. Stomach feels better.

But here are some for Lipitor:
Do you really need to take it?
If so, what is the right dose?
Are you taking them to improve your HDL ratio, triglycerides, both?
What are your target numbers?
How well is your liver functioning before you start?
Does the drug cause elevated liver enzymes, and if so, what do you do?
What do you do if your muscles start to ache?

Not so simple, is it? Which is why I believe statins should only be used under the supervision of a physician. Just like antibiotics, blood pressure and asthma medications, and many others. I strongly suspect the FDA will agree with me.

If Pfizer wants to regain dominance in the statin market, they will have to invent something better.

Today Lipitor, the world's best selling drug and Pfizer's single most profitable product, loses patent protection and goes generic. If Lipitor (generic name atorvastatin) holds true to form for other generic transitions, Pfizer can expect to lose much of its market share and the price of atorvastatin will eventually plummet by as much as 80%. But while everyone is celebrating the "birth" of yet another cheap generic from an expensive blockbuster, it would be good for policymakers and the press to pause and reflect on where generic drugs come from.

The stork doesn't bring them to your local pharmacy. They are often the products of years or even decades of enormously expensive and painstaking research by innovative (and yes, profit-driven) companies.

What is the proper response to Lipitor going generic? Thank God for blockbuster drugs.

Because without those drugs we wouldn't have the tremendous health gains from statins and other widely used drugs to treat stroke and hypertension - or the cheap generics that the health care system gains once those drugs lose patent protection.

Cardiovascular disease has been the leading killer in the U.S. every year since 1900, except for 1918 (pandemic flu?). Mortality peaked in 1950, but declined by 60 percent between 1950-1999. Undoubtedly, much of that decline was driven by changes in population health (i.e, declining smoking rates, etc).

However, as the chart above shows, declines in cardiovascular disease - with the exception of a slight uptick for hypertension - continue in the most recent data. For instance, U.S. age-adjusted mortality rates (per 100,000 population) for coronary heart disease fell by 35% from 1999-2007 (from 194.6 to 126); for stroke by 31% (from 61.6 to 42.2); and by 43% for myocardial infarction (from 73.2 to 41.4). Those gains are not all attributable to statins - stents, better drugs for hypertension, better surgeries and diagnostics all play a role - but medical innovation is a central part of the story.

Those gains are even more remarkable considering recent and rapidly rising obesity rates in the U.S., since obesity is a known risk factor for cardiovascular disease (particularly through complications like diabetes). This massive decline in mortality rates from cardiovascular disease is one of the most astonishing phenomenons of modern American medicine - and yet it goes largely unnoticed.

Fifty-something year-old men dying of heart attacks used to be unremarkable. Now, it is considered a terrible tragedy.

Statins were not developed by the U.S. government, or the NIH. As Zycher, Dimasi, and Milne wrote in a 2008 Manhattan Institute report:

Beginning with the ongoing Framingham Heart Study, which has been conducted by the National Heart, Lung, and Blood Institute of the NIH since 1948, the causal relationship between elevated cholesterol levels and cardiovascular disease has become widely recognized.

In 1976, Akira Endo and other researchers at the Sankyo Company and at Beecham Research Laboratories independently isolated mevastatin from fungi, after having screened more than 8,000 microbial extracts. Further research by Endo and colleagues showed that mevastatin reduced cholesterol levels in the liver; subsequently, Endo and researchers at Merck separately isolated lovastatin from a different fungus.

Lovastatin was shown to be more potent than mevastatin and was the first HMG-CoA reductase inhibitor approved by the FDA, in 1987, for the reduction of plasma cholesterol. Further research by private-sector laboratories has yielded additional statin drugs more potent and/or with fewer side effects than lovastatin: pravastatin, simvastatin, atorvastatin, and others, the newer of which have been synthesized in laboratories rather than isolated from natural materials. Private-sector research, in short, developed compounds exploiting new knowledge of a specific disease process, and developed improvements in terms of potency and side effects.

The development of statins also depended on the passionate belief of industry scientists that they had discovered life-saving medicines, and who championed their development even when bad data suggested that they probably should give up. As Harvard Medical School Professor Thomas Stossel wrote in the Boston Globe in 2008:

When Endo published his findings in scientific journals, other companies started searching for statins. One of these companies was Merck, whose researchers demonstrated by the early 1980s that a statin could lower LDL cholesterol in the blood of healthy volunteers without side effects.

But Merck discontinued statin development upon learning that Sankyo abandoned its statin program after discovering what seemed to be cancerous changes in experimental animals fed large statin doses. Despite a well-established association between high LDL cholesterol levels and cardiovascular complications, researchers worried that reducing blood cholesterol would cause side effects, because cholesterol is an essential component of body cells.

Statin development stalled for three years until Edward Scolnick assumed a research leadership role at Merck. Scolnick devoted a large fraction of Merck's research budget to overcoming concerns about statin toxicity, and the results convinced the Food and Drug Administration that the findings that killed Sankyo's program were not really cancers and that proceeding with human trials of stain therapy was reasonable.

Prior to the discovery of statins, the only way to lower blood LDL cholesterol was to combine an unpalatable diet with medications causing unpleasant side effects. A clinical trial had concluded that this regimen could reduce cardiovascular complications of high LDL cholesterol, but few believed patients would stomach it. When the FDA approved Merck's statin in 1987 simply on the basis of its ability to lower cholesterol safely, the stage was set for a revolution in the treatment of heart disease.

A subsequent clinical trial completed in 1994 confirmed that Merck's statin also reduced cardiovascular events. This watershed study set the stage to demonstrate subsequently that more potent statins could lower LDL cholesterol even further, with greater clinical benefits.

The development of statins required luck, perseverance, and great expense; but, above all, a passionate champion and a willingness to take risks. Without Akira Endo, and later Edward Scolnick's, passionate research into statins, hundreds of thousands more Americans would have lost their lives to heart attacks and strokes. In that light, Stossel's conclusion should be incredibly sobering:

The controversy surrounding Merck's painkiller Vioxx so empowered anti-industry critics that imagining any company (or the FDA) taking similar risks today is difficult, given the toxicity data that came close to killing the industry's work on statins. Critics vilified the same Edward Scolnick and Merck for developing Vioxx after it unexpectedly promoted the very same cardiovascular problems prevented by statins. One has to wonder if medical product companies are shelving potentially life-saving products because industry critics are pushing policymakers and regulators to near zero tolerance for rare adverse events.

Stossel's concern is sadly warranted. Policymakers and the media need to be continually reminded that there is still much about human biology that we do not understand, or understand incompletely, but that ignorance should not be taken to be an indictment of industry or cause to embrace a precautionary principle that penalizes innovation through risk-averse FDA regulations or reimbursement strategies that limit physicians to prescribing cheap generics.

Several years ago, Pfizer lost over $800 million dollars when their attempt to improve on statins by raising "good" HDL cholesterol through a new drug called torcetrapib imploded in a late stage clinical trial. Companies continue to take those enormous risks because of the tremendous good they can achieve when they are successful, and because the financial rewards of success still (at least for the time being) compensate them for their many failures.

Patent expiration - for Lipitor or any other drug - is part of a virtuous cycle of innovation than can take decades. Losing sure cash-cows like Lipitor pushes companies to invest billions of dollars in the hope that they will uncover even better drugs for treating heart disease and stroke, or cure Alzheimer's. Some of these drugs may be blockbusters that treat large populations, and others will be "niche busters" that treat patients who don't respond (for genetic or other reasons) to those blockbusters.

But we must continue to defend and explain the virtuous cycle of innovation if we want companies to find the next public health breakthrough, like statins. Even though, in time, we'll take those miracle drugs for granted too - and cheer loudly when they become cheap generics.

Remember those old Western movies in which the US cavalry comes from over the hill to save the day? Well, the modern-day equivalent of such dramatic rescues could be happening in medicine, as the US military steps in to save civilians from the public-health consequences of their own befuddlement.

Wired magazine reports that the Defense Advance Research Projects Agency (DARPA) is working on a new approach to antibiotics--or post-antibiotics. As Wired's Katie Drummond writes, DARPA is seeking proposals that could completely replace traditional antibiotics with a whole new kind of bacteria killer:

Darpa wants researchers to use nanoparticles--tiny, autonomous drug delivery systems that can carry molecules of medication anywhere in the body, and get them right into a targeted cell. Darpa would like to see nanoparticles loaded with "small interfering RNA (siRNA)" -- a class of molecules that can target and shut down specific genes. If siRNA could be reprogrammed "on-the-fly" and applied to different pathogens, then the nanoparticles could be loaded up with the right siRNA molecules and sent directly to cells responsible for the infection.

Drummond allows that it might seem hard to believe that DARPA could pull off something like this, but in fact, the theory has already been proven. Last year, she notes, researchers were able to engineering siRNA and put it into nanoparticles that were injected into four primates infected with the Ebola virus, thereby arresting the killer disease.

But wait--there's more. Not only does DARPA seek to bring about this whole new approach, skipping past familiar modes and mechanisms, it is also seeking ways to time-compress the timeline of new cures, from years down to mere days.

So it's a daunting, if enticing, prospect. DARPA does, indeed, have a big vision. At a time when most healthcare "experts" talk only of finance and bean-counting and rationing--that is, on the demand-side of medicine--the DARPA wants to jump in on the supply-side of medicine; that is, the creation of actual cures; it's the Pentagon, not the Department of Health and Human Services, that wants to decisively intervene in the course of disease and save lives. Audacious? Sure. Impractical? Maybe. Popular? Absolutely, if it works. But as Drummond concludes:

If anybody can design a new paradigm for medicine, and a new way to mass-produce it, our money's on the military. After all, we've got them to thank for figuring out how to manufacture the medication that got us into this mess in the first place: penicillin.

Indeed, the military, British and American, was the impetus for the serious development of antibiotics. The medicinal qualities of the blue-green mould penicillium notatum had been observed as far back as the Middle Ages, but those positive properties were not recorded in a scientific treatise until 1875. Yet serious scientific inquiry did not begin for another five decades after that. Alexander Fleming had been a British military doctor during World War One, working in the mud and filth of the trenches, observing firsthand the lethality of infected wounds. For the next decade, Fleming kept seeking a remedy for infection--until that fortuitous moment in 1928, when he noticed that bread mould was inhibiting bacteria growing in a petri dish. He called it penicillin.

Yet in the following years, progress remained slow, as Fleming and others at St. Mary's Hospital in London struggled for a decade to purify and extract the antibiotic agent and turn it into a usable drug. It was not until World War Two that urgent military necessity led to increased funding for Fleming--and to the rapid acceleration of penicillin research and development, mostly in the US. This heroic story was ably told by Lauren Belfer in her 2010 novel, A Fierce Radiance.

Vannevar Bush, the director of the Office of Scientific Research and Development--DARPA's predecessor agency--ordered that penicillin research be a national priority second only to the atom-bomb project. And it worked. By 1944, penicillin was being produced in the millions of doses by Pfizer, working on a government contract. As a result of this public-private partnership--this medical-industrial complex, if one prefers--more gains were made in the battle against deadly infection than in all the previous years of human history.

Fleming and two fellow researchers were awarded the Nobel Prize for Medicine in 1945. As Bush observed in that same year:

The death rate for all diseases in the Army, including the overseas forces, has been reduced from 14.1 per thousand in the last war to 0.6 per thousand in this war. Such ravaging diseases as yellow fever, dysentery, typhus, tetanus, pneumonia, and meningitis have been all but conquered by penicillin and the sulfa drugs, the insecticide DDT, better vaccines, and improved hygenic measures. Malaria has been controlled. There has been dramatic progress in surgery.

So while we don't yet know if DARPA's new plan for siRNA will truly work, history tells us that if the military really puts its mind to work on a challenge, that challenge can often be overcome. Why? Because the military has a strong claim on national resources--and not just tax revenue. In the past, to achieve an urgent objective, the military has black-boxed its budgets, dragooned brain power, and bulldozed any and all obstacles.

To cite one germane non-medical example, Gen. Leslie Groves, leader of the Manhattan Project, did not pause over Environmental Impact Statements when he occupied Oak Ridge, Tennessee, and set up a nuclear bomb factory that brought in 75,000 people, and he certainly did not hold public hearings in advance of the 1945 atomic tests at the Trinity site in New Mexico. Such military mobilization of resources is a hard and Hobbesian process, but it has one virtue: It works. If the goal is important--and theoretically, at least, the wartime military doesn't have any goals that are not important--then the Manhattan Project sums up the way the process can work to shorten the war, reduce casualties, and guarantee victory.

Similar tales could be told about the wartime (including the Cold War) invention/acceleration of such 20th century inventions as radar, synthetic rubber, aviation, electronics, nuclear power, the internet, and GPS. As an aside, the fact that each these inventions contributed not only to military victory but also to civilian wealth is yet another bonus of constructive public-private partnerships, and a reminder that the US military has been one of the principal drivers of the American economy all through our history. And so, too, in the case of DARPA's siRNA project; if it works, we will all owe those defense nerds yet another huge debt.

By contrast, the results for innovation and the economy in the absence of military mobilization can be painfully slow--even deadly slow. In a free and pluralistic society, every economic activity is eventually surrounded by claimants and rent-seekers of various kinds; these claimants and rent-seekers can be variously described as remoras, barnacles, or lampreys. That is, they can be mildly symbiotic, a slight burden--or they can be lethally parasitic.

The dismal economic consequences of runaway pluralism were ably described by the economist Mancur Olson in his 1982 book, The Rise and Decline of Nations; Olson went so far as to suggest it was more economically beneficial to lose a war than to suffer the endlessly cumulated sedimentations of special-interest encrustation. The non-catastrophic solutions to such "demosclerosis"--to recall Jonathan Rauch's encapsulation of the Olson argument--are relatively straightforward; csh solutions include deregulation and an overall opening up of clotted economic arteries. But as we have seen in our time, it's easier to prescribe those solutions than it is to implement those solutions.

Typically, what's needed is at least some kind of crisis--some wake-up call; a default, if not a defeat. Civilian leaders can sometimes make the most of a sense of urgency and crisis--but military leaders always can.

As we have seen in recent decades, bad news on the medical front has not been in any way galvanic--the situation gets worse and worse. Indeed, the worsening seems to be part of a deliberate policy of looting the medical industry to achieve other governmental goals.

No wonder, then, that we have been losing the war against infection for some time now, and nobody in the US government, other than DARPA, seems to have noticed. Yes, it might seem to be a strange world when all the agencies and committees that have the word "health" in their title have been allowing the problem to worse, to the point where the number of new antibiotics has fallen by more than 80 percent over the last quarter century, even amidst louder warnings about the rise of deadly "superbugs." Yet as the historical record shows, even well-meaning civilians have not been able to overcome the cumulative blockages of the trial lawyers, the FDA, and the overall brain-drain and capital-drain out of the pharma sector.

Enter the Pentagon and DARPA, coming from a different world, pursuing different goals. By no means is the military always a paragon of efficiency, but mission-focused command-and-control does have its bottom-line virtues. For the most part, the military is able to fend off civilian predations and Olsonian sclerosis, because generals and admirals can invoke national security--and, at a more gut level, the well-being of our fighting forces--in order to push its projects through.

"Compared to war," General George S. Patton said during World War Two, "all other forms of human endeavor shrink to insignificance." War is, indeed, catalytic; it does unleash vast amounts of public exertion and public forbearance. But war, of course, is also tragic, even if, as in World War Two, the larger benefits of improved medicine save lives during and after the war.

In a better world, advocates for Serious Medicine, such as a new kind of instantaneous bacteria-killer, would be able to act just as decisively in the fight against microbes as generals can in the fight against men. That is, we would enjoy the benefits of saving lives without predicating the effort on taking lives. Until then, however, we can conclude that those generals and admirals care more about the well-being of their men and women than our elected politicians care about the well-being of us civilians.

So yes, someday, we should have a MARPA, for Medical Advanced Research Projects Agency, as a more mission-focused version of the NIH. We should mimic the military's sense of purpose on the civilian side, without firing a shot.

But until that happens, we should be thankful that we have a DARPA.

As Paul Howard recently noted, FDA's removal of Avastin's indication for breast cancer is a lagging indicator - the FDA was just picking up on what the market had already realized. One could even argue that the revoked approval was redundant, since the market had responded to post-approval studies, as indicated by the fact that use of the drug for treating metastatic breast cancer had plummeted as more data about the drug's limitations became available.

Since the market behaved as it should, this supports the case for expanding the Accelerated Approval process to other therapeutic areas. But here lies the dilemma: Which therapeutic areas get to be a part of the accelerated process?

Lilly is facing a $13 billion dollar patent cliff in the next three years - but CEO John Lechleither explains to Xconomy that increasing R&D spending, rather than chasing mergers, will better help the company weather the storm in the long run.

U.S. Senator Claire McCaskill (D, MO) is calling for the Department of Health and Human Services to investigate the Obama's Administration's award of a $433 million dollar sole source contract to a company owned by billionaire Ronald Perelman, who also happens to be a "major democratic donor." The company, Siga Technologies, is set to make an antiviral drug for smallpox that cannot be tested or approved for use in humans, according to the FDA. For more on this, see my earlier commentary here and the L.A. Times, here.

Robert Samuelson looks at recent OECD data comparing health care costs and outcomes in the U.S. to other wealthy nations, and says the data paints a "devastating picture" of U.S. health care. For another view of the OECD data, at least on life-expectancy, see Avik Roy's excellent post here.

The A.P. reports a sobering picture of more parents "opting out" of having their children vaccinated for school. Health officials fear that the trend could lead to a resurgence of diseases that haven't been seen in the U.S. in decades, like polio.

(Cross-posted from The Apothecary on

It's one of the most oft-repeated justifications for socialized medicine: Americans spend more money than other developed countries on health care, but don't live as long. If we would just hop on the European health-care bandwagon, we'd live longer and healthier lives. The only problem is it's not true.

Wealth begets health

Benjamin Disraeli, British Prime Minister under Queen Victoria, once said, "There are three kinds of lies: lies, damned lies, and statistics." Nowhere is this more true than in the debates about health-care policy.

Life expectancy is an appealingly simplistic, but deeply flawed, way to think about the quality of a country's health-care system. After all, shouldn't good health care make you live longer? Well, yes, but. The problem, of course, is that there are many factors that affect life expectancy.

One is wealth. It's gross domestic product per capita, and not health-care policy, that correlates most strongly to life expectancy. Gapminder has produced many colorful charts that shows the strong correlation between wealth and health. Here's one from Lane Kenworthy of the University of Arizona:

Measuring health outcomes at the point of intervention

If you really want to measure health outcomes, the best way to do it is at the point of medical intervention. If you have a heart attack, how long do you live in the U.S. vs. another country? If you're diagnosed with breast cancer? In 2008, a group of investigators conducted a worldwide study of cancer survival rates, called CONCORD. They looked at 5-year survival rates for breast cancer, colon and rectal cancer, and prostate cancer. I compiled their data for the U.S., Canada, Australia, Japan, and western Europe. Guess who came out number one?

U-S-A! U-S-A! What's just as interesting is that Japan, the country that tops the overall life expectancy tables, finished in the middle of the pack on cancer survival.

Car accidents and homicides don't tell us much about health care quality

Another point worth making is that people die for other reasons than health. For example, people die because of car accidents and violent crime. A few years back, Robert Ohsfeldt of Texas A&M and John Schneider of the University of Iowa asked the obvious question: what happens if you remove deaths from fatal injuries from the life expectancy tables? Among the 29 members of the OECD, the U.S. vaults from 19th place guessed it...first. Japan, on the same adjustment, drops from first to ninth.

It's great that the Japanese eat more sushi than we do, and that they settle their arguments more peaceably. But these things don't have anything to do with socialized medicine.

America doesn't have one health care system, but three

Finally, U.S. life-expectancy statistics are skewed by the fact that the U.S. doesn't have one health-care system, but three: Medicaid, Medicare, and private insurance. (A fourth, the Obamacare exchanges, is supposed to go into effect in 2014.) As I have noted in the past, health outcomes for those on government-sponsored insurance are worse than for those on private insurance.

To my knowledge, no one has attempted to segregate U.S. life-expectancy figures by insurance status. But based on the data we have, it's highly likely that those on private insurance have the best life expectancy, with Medicare patients in the middle, and the uninsured and Medicaid at the bottom.

If we look at Switzerland, a country with private-sector, market-based universal coverage, we see very good health outcomes data. Put another way: if we compared the life expectancy of Americans on private insurance with that of centrally-planned Europeans, I'd bet that the U.S. would come out on top. And if that's true, the argument that socialized medicine leads to longer life evaporates.

Who needs a Super Committee? It seems the Food and Drug Administration has a plan to close the budget deficit all on it's own. Yesterday, the agency announced it had reached an agreement with Merck to pay $950 million in order to settle criminal and civil charges that the company illegally promoted Vioxx for off-label uses and for misrepresenting the drug's risks. That comes on the heels of a $3 billion settlement by GlaxoSmithKline earlier this month.

Now, with all due respect to the memory of Everett Dirksen, a billion here and a billion there isn't even real money in this day and age. But with Pfizer, Eli Lilly, AstraZeneca, GSK, and now Merck all having paid at least half a billion dollars in fines for off-label promotion in the past three years, it seems as though the FDA is on a one-agency revenue raising mission. And if that happens to also put a beat down on the pharmaceutical industry, I'm sure there are folks in the agency who feel that's all well and good too.

"Well, wait a second there!" you might be tempted to say. Doesn't the FDA have good reason to ban off-label promotion? After all, those ARE uses that the agency has never certified as safe and effective.

The problem is that FDA bans not just false or misleading claims about an off-label use's safety and efficacy. That is, it's not just preventing snake oil salesmen from peddling quick fixes that don't work. The agency bans all promotion of off-label uses, even if those uses have been proven to be safe and effective in clinical trials. Even if those uses are considered to be the standard of care for a given ailment. And even if a physician could be liable for malpractice for not administering a drug off-label.

In a 1998 court case, the FDA argued in federal court that off-label promotion was inherently false or misleading because physicians would never be able to tell whether there was sufficient evidence supporting the safety and efficacy of a given drug use unless the agency approved that use. The judge laughed off the claim by writing that the "FDA exaggerates its overall place in the universe." After all, the court continued,

"the FDA does not question a physician's evaluative skills when an article about an off-label use appears among a group of articles in the New England Journal of Medicine, or when one physician refers a peer physician to a published article he recently perused, or even when a physician requests a reprint from a manufacturer. Why the ability of a doctor to critically evaluate scientific findings depends upon how the article got into the physician's hands . . . is unclear to this court."

24 years and $1.2 billion in red ink: That's how long and how much money it burned before biotech company Regeneron Pharmaceuticals produced its first FDA-approved drug (Eylea) likely to turn a significant profit, according to a recent article in the New York Times. Eylea is expected to compete head-to-head with a more expensive drug from Genentech, Lucentis. Both medicines treat the "wet" form of macular degeneration, one of the leading causes of blindness among the elderly (1.7 million cases in the U.S. today, and rising thanks to an aging population).

Once you've shouldered that much risk - and convinced your investors to stick it out for that long - you have to compensate them for their investment. High risk+high cost = high drug prices.

The Times story should allay several myths about drug companies:

Drug companies don't do any real science, they just re-package and market discoveries from the NIH. If that was true, there'd be a lot fewer biotech companies bleeding red ink. Regeneron started out chasing new treatments for Lou Gehrig's disease, and then obesity. Neither of those projects panned out. They did manage to market one drug for a very rare disease, Arcalyst, in 2008 (2011 revenues: just $15 million dollars). Looking ahead, they're developing what may turn out to be an entirely new class of cholesterol inhibiting drugs, along with other medicines for colorectal cancer and gout.

Drug competition doesn't benefit consumers. Eylea, like Lucentis, is a VEGF inhibitor, but it will also be much less expensive. Regeneron reports that it will charge $16,000 a year for Eylea, compared to $29,000 for Lucentis. Assuming those numbers hold up, Eylea will also save the health care system money because it is injected less frequently, requiring fewer paid doctor's visits. If Genentech starts to lose market share to Eylea, expect them to either cut their prices or find other ways to reduce their own dosing schedule to stay price competitive.

The FDA is just a patsy for industry to churn out "me-too" drugs. Again, if the agency was a toothless watch dog, it would be much easier for companies like Regeneron to bring new products to market. Instead, the FDA is almost certainly too stringent and risk averse both when it reviews new medicines, and in the slowness with which it adopts new procedures for evaluating new medicines. The combination of excessive caution and regulatory inertia drives up the cost and time required to bring drugs to market, which makes them much more expensive.

Still, even though drugs like Eylea or Lucentis carry a high price tag, they are cheap compared to the alternative: disabling blindness that severely reduces quality of life for millions of seniors and exposes them to a higher risk of serious accidents, or being moved into a (even more expensive) nursing home.

The Supreme Court's recent announcement that it would examine the constitutionality of PPACA in the spring was not surprising; in fact, bloggers and pundits were predicting the announcement for quite some time. So by this time next year, the Supreme Court may have overturned the law because Congress has exceeded their constitutional authority by mandating that U.S. citizens must purchase particular products or face financial penalties.

But regardless of what happens on Constitutional grounds, PPACA has heralded a new level of bureaucracy (approximately 2700 pages worth) only adding complexity and cost to a system desperately needing reform. While PPACA took on the insurance sector and attempted to create 'access' for uninsured Americans and coverage for pre-existing conditions, it did so at great cost, and didn't deal with the fundamental issues of delivery and payment reform. Ironically, and predictably, costs rose 9% in 2010 and are projected to continue down this path.

Until we address fundamental business model changes in healthcare -- focused on transparency, accountability and market based innovation centered on the consumer -- nothing will really change for the better. Everyone agrees on two things... the system is broken... and someone else needs to fix it.

Healthcare is an industry in transition -- globally. It faces sweeping regulatory change, changes in competition, technology and market expectations. At these times, innovative companies able to challenge base assumptions about their business -- their consumers, the products and services they offer and how they go-to-market -- will be the winners.

Whatever happens in the Supreme Court, we need to finish the job and do it right.

(This post originally appeared on Avik's Forbes blog, The Apothecary.)

On Friday, FDA Commissioner Margaret Hamburg announced that the agency was revoking its approval of best-selling cancer drug Avastin for breast cancer. This decision is no surprise, coming on the heels of advice from the agency's panel of outside experts last August, which itself was triggered by Genentech's failed phase III trial of Avastin in breast cancer. I continue to fail to understand why conservatives are up in arms over the FDA's decision. If anything, the way FDA has handled Avastin should be a model for future regulatory decisions.

Avastin's FDA history

First, some background. In 2004, the FDA approved Avastin for first-line treatment of patients with metastatic, or malignant, colorectal cancer. The tremendous success of Avastin turned Genentech from a biotech also-ran into the sector's most-valued company. The drug eventually gained additional approvals for second-line metastatic colorectal cancer (2006); first-line non-small cell lung cancer (2006); metastatic HER2-negative breast cancer (2008); second-line glioblastoma, a form of brain cancer (2009); and metastatic renal cell carcinoma, a form of kidney cancer (2009). The drug's mechanism of action--starving tumors of the blood supply they need to grow--proved effective in a wide variety of cancers, and Avastin became one of the most successful cancer drugs in history.

The FDA takes a leap of faith on Avastin

The 2008 approval in breast cancer was based on encouraging results from a 2005 phase III study, the E2100 study sponsored by the Eastern Cooperative Oncology Group. ECOG-E2100 compared Avastin in combination with Taxol (paclitaxel), an older chemotherapy drug, with Taxol alone. While the ECOG study wasn't blinded--patients knew what treatment they were getting--the study showed that patients on the Avastin-plus-Taxol did better on an endpoint called "progression-free survival," which measures how long patients live without a growth in the size of their tumors. Avastin-plus-Taxol patients had a median PFS of 11.3 months, versus 5.8 months for Taxol.

On the basis of ECOG-E2100, the FDA granted "accelerated approval" to Avastin in breast cancer, despite the fact that the trial wasn't up to traditional FDA standards: it wasn't blinded such that doctors wouldn't know which treatment they were giving, and such that patients wouldn't know which treatment they were receiving (what statisticians call double-blinding). In addition, the FDA strongly prefers not to approve drugs on progression-free survival, which is a somewhat soft endpoint, preferring instead to approve a drug on overall survival: the most objective endpoint there is. (Did you live, or die, after taking the drug?)

The FDA's accelerated approval of Avastin was conditioned on Genentech conducting a proper, double-blinded study comparing Avastin to the standard of care. The study would need to show that patients on Avastin lived longer than those who weren't on Avastin.

The FDA's decision aids biomedical innovation

In other words, the FDA did exactly what I and other FDA-watchers are always asking the agency to do: get drugs out there quickly, put them in the hands of doctors and patients, and let the clinical evidence pile up over time.

The FDA only pulled its approval of Avastin for breast cancer after that blinded phase III trial was finished, a trial that showed that patients on Avastin didn't live longer than those not on it. Because Avastin is already approved for other diseases, doctors are free to prescribe it "off-label" for breast cancer if they want to. Medicare has promised that they will continue to pay for it, even though it's debatable as to whether or not they should.

The Wall Street Journal, and others, have denounced the FDA's move as "a chillingly blunt assertion of regulatory power." But Paul Howard is the guy who gets it right:

If you think (as I do) that the FDA should be expanding the accelerated approval pathway and allow more drugs to get to market based on promising early studies. rather than waiting for large Phase III clinical trials that can take years to complete, you can argue that this outcome actually strengthens AA. Critics have charged that AA is sop to industry, and that companies never do the follow up studies to support AA. Avastin proves them wrong.

This is exactly the point. If you want the FDA to approve more innovative, new drugs based on promising but early clinical results, you have to give the FDA a way to revoke those approvals later on, should larger trials prove that those drugs aren't as safe or effective as they first seemed. This is why the FDA should be congratulated for the way it has handled the Avastin breast cancer saga, and why I hope we will see the FDA handle more cases like this one, not less.

In addition to the great MPT posts by Charley Hooper and Jim Pinkerton and myself, Saturday's Wall Street Journal weighed in decisively against the FDA's decision:

The risks of Avastin are real, but they're also well-understood and manageable, especially in end-stage oncology where there are no good options. The FDA's real goal was to send a warning to the rest of the drug industry about who is in charge of drug development. The FDA withdrew Avastin's breast cancer approval last year--leading to Genentech's unprecedented appeal and a two-day trial in June. ...

In her decision denying that appeal, Dr. Hamburg concedes that there are groups of "super responders" who experience dramatic improvements when treated with Avastin. But she then says those patients don't count because "it is not possible to determine if there is some subset of patients within the population as a whole that may have had a meaningful benefit." Dr. Hamburg also concedes that Avastin may produce better results when used with different chemotherapies, but that those prospects haven't been sufficiently tested. ...

All of this suggests that Avastin should remain on the market as one treatment alternative as knowledge about the drug grows--which is all that Genentech requested in its appeal. Looking at the same studies, the European Medicines Agency (the FDA's continental equivalent) continues to approve Avastin for breast cancer. The National Comprehensive Cancer Network, a highly respected consortium of U.S. oncology programs, has four times reaffirmed its recommendation that Avastin is "an appropriate therapeutic option."

Read the whole thing.

If you were HIV positive, would you treat yourself with daily doses of drain cleaner? No, you wouldn't. You would instead use a drug like Atripla (efavirenz, emtricitabine, tenofovir) from Gilead Sciences. If you suffered from gastroesophageal reflux disease (GERD), would you use electroshock therapy or Nexium (esomeprazole) from AstraZeneca to treat it? Clearly, you would use Nexium.

These two examples are black and white and virtually all reasonable people agree that the drugs mentioned above are better for those conditions.

Not all assessments are black and white, of course; some are shades of gray. We need to realize that the FDA works primarily in unclear, gray areas, with some reasonable people saying a drug works and others saying it doesn't.

On Friday the FDA revoked the approval for Avastin (bevacizumab) for metastatic breast cancer and this is controversial because many people, including breast cancer patients, oncologists, the European Medicines Agency, and the National Comprehensive Cancer Network believe that Avastin is an important therapy for breast cancer.

The government's solution is to say that one and only one judgment will prevail--the judgment of the FDA. Here's a simple solution: Let us find our own path to the truth.

You might like Ford and I might like Toyota. You might like New York and I might like California. You might like Thai and I might like Mexican. Instead of being limited to the other's choices, you and I are both better off eating our favorite foods and driving our favorite cars, just as all breast cancer victims are better off having some real therapy choices.

Black and white situations are obvious and uncontroversial. Gray situations are not obvious. It is exactly in these unclear, gray situations that the FDA should step aside and let reasonable people follow their own judgment.

The Food and Drug Administration's decision to restrict the use Avastin for breast cancer has attracted some cautious supporters in unexpected places. MPT's own Paul Howard, for example--not generally regarded as a fan of the contemporary FDA--writes,"This is one case where I think the FDA did the right thing."

Well, here's another perspective: This is a case where the FDA did the wrong thing. It's wrong for patients, wrong for the country, and wrong even for the long-term cause of saving money. We need to do more against cancer, not less. And paradoxical as it may seem, if we do more, we will not only save more lives, but we will ultimately spend less money. Indeed, medical history tells us that only when we do more--that is, increase innovation and productivity--do we end up spending less. That's the lesson of polio from the 50s, of AIDS in the 80s and 90s, and of heart disease over the last half-century. And it could be the lesson of breast cancer, too--but only if we take the same dynamic pro-science, pro-innovation approach.

Today, the FDA, echoing the thinking of the larger federal government, seems content to fight mere skirmishes in the war on cancer. Yet absent any sort of strategy for victory, the casualty toll will continue to mount. Last summer, at an FDA hearing in Washington, one woman, Priscilla Howard, declared, "Despite the potential side effects from Avastin, metastatic breast cancer has only one--death." She added that Avastin had controlled her cancer for 32 months: "I want every available weapon in my arsenal as I fight this devastating disease." But now, thanks to the FDA's action against Avastin, that arsenal has been depleted. Indeed, it's a safe bet that the future arsenal will be depleted even more; Uncle Sam has just sent a clear signal to researchers and developers: Don't assume that the government is interested in financing future progress against cancer. If you develop a new drug, the burden is all on you. In addition, you will confront both implicit and explicit price controls.

In fact, the FDA's Avastin decision should be seen in the context of overall public policy in the last few decades, which can be summed up in three points:

First, the dominant healthcare policy elites, influenced by the environmental movement, have adopted a generally skeptical view of technological advancement in medicine. Since the 60s, technology has been seen by many as a source of alienation, pollution, and even, in a metaphorical sense, mutilation. In 1984, Dick Lamm--who had led the fight against the proposed Denver Olympics before going on to serve two terms as Colorado's Democratic governor--struck an elitist chord when he applied the same limits-to-growth ethos to healthcare. Older Americans should pass from the scene sooner, rather than later, he said, for the sake of future generations: "We've got a duty to die and get out of the way with all of our machines and artificial hearts and everything else like that and let the other society, our kids, build a reasonable life." With the conspicuous exception of the fight against AIDS--which was treated as an all-out war, thanks to the intervention of figures from the popular culture, as opposed to the policy culture--this go-slow approach has dominated the chattering classes. Indeed, the Kaiser Family Foundation has noted this gulf between the elites and the masses; the elites want less healthcare as a matter of national policy, and the public, by contrast, wants more.

Second, policy makers see the need to control healthcare costs as a way of making national health insurance more acceptable and affordable. To put it bluntly, if people die, that's cheaper for the system, at least in the short run. Such sentiments are rarely articulated in public, of course, but the public is nevertheless suspicious of what the elites are up to. And so, for example, when a panel within the Obama Department of Health and Human Services put forth new and more restrictive guidelines calling for fewer mammograms, the public rose up and the new rules were withdrawn, although not before the "death panel" meme was born. Interestingly, the same panel put forth similarly restrictive guidelines on prostate cancer screening, and those new rules have not been withdrawn--perhaps a reminder that prostate-cancer-minded men are not as organized and energized as breast-cancer-minded women. Meanwhile, the cost-controlling effect of the Independent Payment Advisory Board, part of the Affordable Care Act of 2010, remains to be seen. But here's a prediction: IPAB will be much more effective at controlling abstract costs, defined as future speculative research, than it will be at controlling tangible costs, defined as money flowing directly to patients and caregivers. In other words, IPAB will impose "savings" in exactly the sort of research that could ultimately save lives. In the past, the federal government has been good at making long-term investments, e.g., the railroads, aviation, and the Internet. But in the current political environment, the healthcare imperative is for immediate savings--in time for the next fiscal year, or the next election.

Third, we now see the additional pressure of the "deficit hawks," culminating in the so-called Super Committee, which has raised the static-analysis view of deficit-reduction to the pinnacle of national thinking. Official Washington will be happy if there's a deal in the next few days or weeks--any deal. It's not hard, of course, to find skeptics who believe that the spending restrictions will not be meaningful, but it would appear that the Establishment has settled on the idea that an agreement of some kind is desperately needed--if only, some might say, to save the same Establishment from losing face. Yet if and when those possible spending caps are broken, it's more likely that immediate costs--say, increasing payments to doctors or hospitals--will be accommodated, as opposed to longer-term research. So once again, cancer researchers and developers are on notice; the real money will be in treating cancer, not in beating cancer. And the same will hold true for other diseases, such as Alzheimer's. The care may ultimately cost more than the cure, but the feds are interested in paying only for the care. And as always, we get what we pay for.

Back to Avastin: If the drug is used less, that's a savings to the government, in the short run. Yet as the population ages, diseases such as cancer--as well as other illnesses, such as Alzheimer's--seem destined to become more prevalent, and the nation will have to bear the expense. So while the price-controlling approach to cancer research is likely to "work" in terms of restricting cancer drugs, it is ultimately doomed to fail as a means of controlling costs. Caring for increasing numbers of sick people for long periods of time is costly--and those people, by the way, are voters.

So how can prices for healthcare be lowered? The answer is the same for medicine as for everything else--improved productivity, getting more for less. That's been the secret of the Scientific Revolution over the last four centuries, and also for the Industrial Revolution over the last three centuries. As Adam Smith explained in The Wealth of Nations, developing a more efficient way to make something as simple as a pin could increase overall output by a factor of 240--that's 24000 percent. Such gains have been routine over these hundreds of years, accounting for the material abundance that we enjoy today. So it's perverse that all the aforementioned policy elites are following a different policy path when it comes to medicine. Instead of saying, "Push ahead, so that we can have more for less," the elites have taken an anti-Smithian stand; they have taken a neo-Malthusian stand, arguing for rationing and scarcity. And such neo-Malthusianism is the ultimate animating philosophy behind the FDA's decision against Avastin. If everybody "knows" that we need to cut back and make do with less, here is the FDA's opportunity to be on "the right side of history."

So the challenge for the rest of us is to rediscover Smith, and to reject Malthus yet again. We must apply Smithian wisdom to the systematized research, and mass production, of medicine. That is, apply the time-tested scientific and industrial principles of growth, and insist that they be applied to medicine. And if we do that, Avastin would be seen in a new light. The drug may or may not prove to be a great cancer treatment, but surely, at minimum, the use of the drug will save some lives, as well as help teach us about what works against cancer. Edison didn't get the the lightbulb right the first time he tried, nor did Einstein develop the theory of relativity in the first draft. The process of discovery can be lengthy--and expensive. But as we have seen, the cost of non-discovery is even greater, and ultimately more expensive.

This further point--that we learn by doing, as millions of actors set in motion a Hayekian process of discovery that no bureaucrat could plan for, or account for--is worth pausing over, because it speaks to what saves lives in medicine.

A powerful illustration of discovery in action comes from Harvard economist David Cutler, who describes the process by which heart disease has become vastly more survivable and vastly less expensive on a per-patient basis. Cutler recalls that in 1955, President Dwight D. Eisenhower suffered a heart attack.  His doctors prescribed . . . bed rest.  That was the best they could do, even for the commander-in-chief, the leader of the free world.   The remedy was certainly low-cost, although for the leader of the free world, no expense would have been spared. In fact, Cutler comments, the treatment Ike received was counter-productive: "We know today that bed rest is ineffective. It does not prevent further heart damage, and it can lead to other complications, such as blood clots in the veins and lungs." In other words, the treatment for the heart attack was making the president's condition worse. Early failure is a familiar enough phenomenon in any scientific inquiry, and medicine is no exception. So the challenge, therefore, is to keep pushing forward, figuring it out as one goes along. Such problem-solving is the basic method of all science and all engineering.

By the 1970s, Cutler continues, open heart surgery had become common.  Such procedures were an improvement, albeit with huge drawbacks; any patient who spends time in a hospital runs the risk, for example, of nosocomial infections--that is, infections acquired in the hospital.  Such infections are estimated to occur in five percent of all acute-care hospital stays, causing perhaps 70,000 deaths a year. But even as progress was being made for such surgeries, the development of alternatives continued.  In the 1960s, stents emerged, and in the following decade, the first angioplasties were attempted.  Drugs emerged, too, such as statins. Meanwhile, science became more aware of dietary and lifestyle issues as they affect heart disease, giving people new tools to help their own health and longevity. In addition, that old medicine-chest standby, aspirin, was now seen in a new light. So we can see that for many, the advance of science has led to some surprisingly simple and elegant solutions, based not on faith or superstition, but on a century of accumulated scientific wisdom. When a basic problem is solved, it stays solved, at minimal cost; for example, for as long as people want to use the wheel, the wheel will work, and for as long as people wish to avoid rickets, Vitamin D will work. And at the same time, we have developed the sort of heavy scientific machinery, including the pacemaker, that is keeping, for example, Dick Cheney alive. The cumulative wisdom of simple solutions, together with complex solutions, has worked: As Cutler observes, heart disease is three-fourths more survivable than it was in Eisenhower's time. And that's been a huge boost to our society and economy; unfortunately, the federal bean-counters have chosen not to notice, and so the positive-feedback impact of cures has never been factored into national budgeting.

So that means, unfortunately, that progressive scientific health solutions--as opposed to redistributive bureaucratic health semi-solutions--have never been taken seriously by the budget "experts." And so, absent that policy support, we haven't made as much progress on some other diseases. If the healthcare policy elites could forget their training and bring themselves to see medical progress as a fiscal winner, of course they would demand the sorts of changes in the legal and regulatory environment that would foster more and better medicine. But at the rate we are going, they won't change, and so the inhibitory environment won't change.

So the Avastin decision is a sign of the times, a part of the problem--and certainly not part of the solution.

On Friday, the FDA announced its decision to revoke Avastin's labeling indication for metastatic breast cancer, granted through the agency's accelerated approval (AA) program. The FDA and the Obama Administration are bound to take some heat for this one (as a prelude to Obamacare rationing) but this is one case where I think the FDA did the right thing by following its own rules for AA.

I wouldn't hesitate to criticize the decision if I thought otherwise. A few quick points:

First, the FDA's decision is a lagging indicator. After the most recent studies on Avastin's use in metastatic breast cancer came out, use of the drug plummeted as oncologists interpreted the data and decided that it wasn't working as well for patients as early data had suggested it would. The market, in other words, is working to incorporate information faster than the FDA. That's a good argument for shifting the agency to being more of an information conveyer than a pre-market gatekeeper.

Second, Avastin isn't going to be withdrawn from the market. Doctors can still use it off-label, as they always could, to treat metastatic breast cancer - and they can make that decision on a case by case basis. Medicare is still covering Avastin treatment for breast cancer, and the National Comprehensive Cancer Network still lists Avastin for use in metastatic breast cancer. (The NCCN affirmed this decision in July.) Private insurers like UnitedHealth, that follow the NCCN, will likely continue to pay for Avastin. Some insurers may stop covering Avastin, but this is a market decision, not the FDA's decision. Don't shoot the messenger.

Third, if you think (as I do) that the FDA should be expanding the accelerated approval pathway and allow more drugs to get to market based on promising early studies. rather than waiting for large Phase III clinical trials that can take years to complete, you can argue that this outcome actually strengthens AA. Critics have charged that AA is sop to industry, and that companies never do the follow up studies to support AA. Avastin proves them wrong.

Finally, this is far from the end of the story. Experts agree that some patients with metastatic breast cancer do very well on Avastin, but no one knows how to identify those patients ahead of time. Roche has already announced that's conducting a Phase III trial looking at a potential biomarker for identifying the patients who are likely to get the most benefit from Avastin.

That's exactly where cancer treatment is going: biomarker driven treatments that are given to the patients who are likely to get the most benefit and the fewest side effects (like Herceptin, a targeted breast cancer drug).

In the future, broad labels like "metastatic breast cancer" will mean less and less as drugs are built from the ground up to attack the molecular mechanisms of cancer. Avastin's use will undoubtedly be further refined and improved through the same process. The FDA's decision today won't stop that, and it might even help accelerate it.

For more background, here's a link to the New York Times article on Avastin, and to Commissioner Hamburg's 70 page memo explaining the agency's decision. You can find the report here.

The winner of today's "Too Little, Too Late" contest goes to the workers at Novartis' Nyon-Prangins site in western Switzerland. Upset by the announcement that Novartis would be closing the plant and firing more than 300 people, the plant workers went on a one-day strike, shutting down all operations at the site where consumer products OTC manufacturing and R&D are based. Even some of the scientists got involved. These job cuts are part of 2,000 announced worldwide layoffs, half of which will be in Switzerland.

You have to give them credit for trying. In fact, there is some chance it might even work. According to an interview on World Radio Switzerland, groups of efficiency experts as well as government representatives have been formed in order to explore options to keep the plant open.

The results so far are mixed. A gathering of 2,000 people, including local unions made enough noise that they at least got a response from management. Unfortunately, it was written in manager-ese, replete with beloved phrases such as "committed to the consultation process" and "[the strike was] complicating the dialogue." And, although demands to meet with CEO Joe Jimenez have not yet been fruitful, he has promised to meet with the employees to discuss whether the plant can be made "financially viable."

So, the hit parade continues across the industry, but at least this time someone put up a fight.

Unfortunately, they are probably fighting the tide. Part of the Novartis announcement was the plan to hire 700 new employees in "emerging markets." Wonder where that might be.

It is rather satisfying to see a bump in the road on the pharmaceutical expressway to China, however small it may be. Maybe some drug makers will some day at least consider outsourcing to a different foreign country. How about Brooklyn?

Some early reactions from the Web:

Derek Lowe thinks that this decision is right on the science, and has to happen if cancer treatments are going to improve.

Avastin doesn't work as well as we thought it did for this indication. If you're going to believe in medical progress at all, you have to believe in what multiple well-controlled clinical trials are telling you - trials carried out, keep in mind, by the drug company that has every interest in having them come out favorably. But they didn't. On medical grounds, on scientific grounds, this was the right decision.

Ed Silverman interviews Harvard Professor Daniel Carpenter at Pharmalot:

"This decision sets an important precedent: accumulated science has trumped politicized argument," says Daniel Carpenter, the Allie S. Freed professor of government at Harvard University and author of 'Reputation and Power: Organizational Image and Pharmaceutical Regulation at the FDA.' "The agency faced enormous political pressure from the company and from organized interest groups, and yet rendered a strong decision based upon a searching reading of the available evidence. ...

"In an ironic way, this decision actually allows the FDA to expand the accelerated approval program, as there is now a strong, visible and clear precedent for withdrawing an approval when postmarket experiments for an approved drug produce disconfirming efficacy evidence and perhaps problematic new safety signals," Carpenter says. "This is not an anti-innovation decision and could, in fact, assist pharmaceutical innovation in the years ahead...I predict its longer-term impact will be to help rebuild the agency's reputation for science-based decisionmaking and for independence from emotionally charged lobbying."

Earlier this week, U.S. Senator Al Franken (D, MN) and Senator Lamar Alexander (R, TN) released draft legislation that would, among other things, relax the FDA's conflicts of interest standards to better ensure that the agency can get timely access to the expert advice it needs to approve new medicines and medical devices.

From the press release:

"After speaking with countless patients, doctors, and members of the medical device industry in Minnesota, I've learned that certain barriers in the regulatory process are making it harder to get patients the medical devices they need," said Sen. Franken. "My legislation would remove unnecessary barriers so that these critical medical devices get to the patients that need them as quickly and safely as possible."

Bipartisan FDA reform efforts seem to be breaking out all over Congress.

Check your local zoo. The lions may be lying down with the lambs.

An enormous, no-bid government contract went to Siga, a small biotech company, one of whom's biggest shareholders just happens to be leading Democratic billionaire and donor, Ronald Perelman.

Courtesy of the L.A. Times:

Senior officials have taken unusual steps to secure the contract for New York-based Siga Technologies Inc., whose controlling shareholder is billionaire Ronald O. Perelman, one of the world's richest men and a longtime Democratic Party donor.

When Siga complained that contracting specialists at the Department of Health and Human Services were resisting the company's financial demands, senior officials replaced the government's lead negotiator for the deal, interviews and documents show.

When Siga was in danger of losing its grip on the contract a year ago, the officials blocked other firms from competing.

Siga was awarded the final contract in May through a "sole-source" procurement in which it was the only company asked to submit a proposal. The contract calls for Siga to deliver 1.7 million doses of the drug for the nation's biodefense stockpile. The price of approximately $255 per dose is well above what the government's specialists had earlier said was reasonable, according to internal documents and interviews.

More on this from Ed Silverman, at Pharmalot, and Michelle Malkin, at NRO.

I've been meaning to write about a very interesting Forbes article by Matthew Herper on Bill Gates' views of the pharmaceutical industry. Basically, the Gates Foundation has made a huge investment in vaccine development for major diseases in the developing world, like malaria and HIV, over the last decade. This engagement has given Gates an insiders' perspective on the industry, at least compared to other software or tech industry giants who've weighed in on the R&D challenges facing their pharma cousins.

Herper writes that:

After a conversation with Gates, one wonders if the drug industry has hurt itself by focusing too much on $100,000 cancer drugs and blockbuster pills that can be sold to millions, and not enough on products that are far more cost-effective. And then, of course, there's the fact that the entire $600 billion pharmaceutical industry has spent the past decade in a research drought, getting comparatively few new medicines to market. ...

When it comes to cancer drugs like Avastin and Erbitux, some of the biggest sales successes of the past decade, Gates seems unimpressed. "There's always this divergence between what's financially attractive and what has dramatic profit and the number of life years that you really save." Take for instance, Novartis' Gleevec, the crown jewel of targeted cancer drugs that can put chronic myelogenous leukemia and gastrointestinal stromal tumors into remission. "Do the math on that versus, says, preventing Parkinson's or preventing Alzheimer's. It's in a different universe."

It's hard to criticize a billionaire, but I think Gates misses a very big difference between pharma and the software industry: the FDA.

Microsoft doesn't have to go through any pre-market screening (as drug companies must do with the FDA) before it issues its next iteration of Windows, which is just a tweak on the last version. Generating safety and efficacy data for FDA approval for a new medicine can take upwards of $1 billion and the better part of a decade.

As for Gates' criticism of drug companies' development strategies...well, there's the FDA to think about again. The extraordinary risk and expense associated with drug development dictates what types of products companies can pursue, and still stay in business. Cancer drugs and other orphan indications (like Gleevec) benefit from a number of different accelerated regulatory pathways - Fast Track, Accelerated Approval, Priority Review, etc. that make it easier to get through the FDA. In short, the market has, not surprisingly, moved towards the regulatory path of least resistance.

Gates is certainly right, however, that the industry is competing against itself in the form of many "blockbuster" drugs from the 1990s that are swiftly losing patent protection and becoming cheap generics (like Lipitor will shortly). Public and private insurers are much more likely to grant premium reimbursements for drugs that treat serious and life-threatening diseases even for smaller populations when there aren't other good therapies available.

Still, there is tremendous unmet medical need for many widespread, chronic illnesses, like depression and Alzheimer's. But even in these instances, you've got lots of regulatory hurdles to worry about - and the costs of clinical trials for things like Alzheimer's can be astronomical.

If the costs and time required to develop new medicines could be significantly streamlined, using biomarkers or other tools, we might see an explosion of private investment not only for costly chronic illnesses, but also for the "neglected" diseases that the Gates Foundation focuses on.

This will entail something analogous to an Apollo program for FDA reform - setting ambitious goals and holding the agency (and the industry) accountable for making it happen. Kennedy didn't know how we'd get to the moon in 1960, but by 1969 Neil Armstrong was there. Today, we don't know exactly how we'd make a quantum leap in drug development - develop and approve a groundbreaking AD drug in 5 years - but we know that we need to do it.

It'll take a tremendous exercise of political vision and will to lead this kind of effort, and get the stakeholders and regulators to rally around it. If Gates wanted to leverage his own bet on vaccines, this is exactly the kind of project he should embrace.

Yesterday, I interviewed U.S. Rep. Paul Ryan, Chairman of the House Committee on the Budget, about the near complete absence of market signals in health care in the U.S., the future of medical innovation under the Affordable Care Act, and how providers - finally - might be coming around to the view that a market-based, patient-centered health care system is the only thing that will save them from gradual strangulation under IPAB's price control regime.

Chairman Ryan's summary of what life is going to be like under IPAB has the merit of being both true and funny:

"For providers in an [Independent Payment Advisory Board] price-controlled system, they're really just trying to pay their hostage takers to shoot them last, and that simply won't work. Providers are beginning to realize this. They're beginning to realize that hard-core price controls don't pay them based on quality. Even if they innovate, even if they work hard, even if they increase productivity, they're paid the same as anybody else who doesn't do that. They're not being rewarded in the way the market would reward them for [innovation]."

IPAB is fatally flawed in many different ways: it is entirely unaccountable, treats different providers differently (hospitals, for instance, are exempted from cuts for five years), can't change benefits or premiums for Medicare beneficiaries, and has to hit its budget targets annually, which will penalize innovations that may be high cost at first, but in the long run save the system much more money.

Switching to the defined contribution model for Medicare that Chairman Ryan advocates would have many benefits over the status quo. First, it would provide a true safety net for seniors, especially the sickest and poorest beneficiaries. Second, it would empower seniors to choose the insurance that best fit their individual needs. Third, private insurers would have a powerful incentive to coordinate care for beneficiaries, keeping costs down and improving overall quality. Finally, since Washington couldn't play favorites among providers any more, insurers would shift spending to whatever technologies or services truly offered the best outcomes at the least cost.

This is not throwing seniors to the wolves, or letting insurance companies run rampant - it simply adds much of what has been missing from health care markets up to now: price signals, transparency, and consumer choice. Competition and comsumer choice have already proven their worth in Medicare's part D drug program, which has come in more than 40% under initial budget estimates.

Chairman Ryan's plan has been portrayed as radical, but in reality it is merely a common sense approach to incorporating basic market principles into Medicare while still protecting seniors from catastrophic costs.

On the other hand, maybe common sense is a radical idea in Washington, D.C.

In the fury of the healthcare debate, most people have come to realize that we spend a lot of money on healthcare in this country. It's also generally recognized that we aren't getting our money's worth. "Better health outcomes at lower cost" has become the common theme for efforts to reform healthcare.

So, why is this? It's partly because neither the physician nor the patient -- the critical actors or decision makers in the equation -- are paying for it. As a result, neither has a direct stake in the cost side of the equation.

Now that the Supreme Court has agreed to hear a case challenging the Affordable Care Act's mandate that all uninsured individuals purchase insurance or pay a fine, we may finally learn whether Congress' constitutional powers under the Commerce Clause have any effective limits.

A recent New York Times article captured the question nicely:

If the federal government can require people to purchase health insurance, what else can it force them to do? More to the point, what can't the government compel citizens to do?

Critics of the mandate - and even judges who have found the mandate constitutional - seem to agree that this is a novel use of Congress' powers under the Commerce Clause. And, as the Times' points out, the Administration has had a tough time articulating what, if any, limits on these powers there might be.

On the left, the response has generally been: So what? This is a slippery slope argument, and there's just no way Congress would ever require Americans to, for instance, eat broccoli three times a day or buy GM cars under its Commerce Clause powers. As Walter Dellinger, former Solicitor General in the Clinton Administration put it to the Times:

"If it is within the scope of regulating commerce to set a minimum wage," he said, "one might argue, then Congress could set the minimum wage at $5,000 an hour." But that would never happen, he said, for practical, political and legal reasons.

Dellingers' point is (mostly) well taken: Congress won't do anything utterly ridiculous, because it is limited (at least sometimes) by the political consequences of its decisions.

But I'm not worried so much by the ridiculous legal implications as the utterly mundane policy implications. Upholding the mandate, and giving Congress a "blank check" on its Commerce Clause powers makes it even easier that it already is for policymakers to enact bad public policies.

The mandate itself is bad policy. Massachusetts enacted an individual insurance mandate in 2006 in the name of controlling costs and expanding coverage. It has managed to modestly expand coverage, but it has utterly failed to control costs.

And, you could argue, this is precisely because the mandate allows the state to continue to ignore the impact of state regulations on insurance prices because it now has a captive market. One of the key elements of good working markets is "exit", i.e., consumers should have the ability to refuse to purchase goods and services that they don't want. If they can't exit - or shop for other effective options - providers lose a powerful incentive to improve their services or operate more efficiently.

And because costs continue to rise at unsustainable rates, Massachusetts has had to impose price controls on insurance companies, and is currently considering global price controls on all providers. Price controls don't and can't work. They throttle innovation on the one hand, and drive rationing on the other hand.

The federal mandate also allows Congress to conveniently ignore the biggest cost drivers in the system: the open-ended tax deduction of employer provided health, and open-ended spending for Medicare and Medicaid. (Yes, they ACA contains some modest cost control provisions, but they boil down to more unsustainable price control schemes.)

If the mandate stands, consumers will be forced to purchase richer benefit packages than they might otherwise choose in a competitive market. The mandate, combined with rapid expansion of federal regulation of health insurance and federal subsidies, is a recipe for fiscal disaster.

One point that I'm sure that even Dellinger would concede is that minimum wages don't have to reach $5,000 per hour to become economically destructive. Economists seem to agree that the current minimum wage structure has at least some negative employment effects at current "low" levels, especially for some lower-income minorities.

The minimum wage law is, in fact, a great example of how the pursuit of bad policies under open-ended government powers is very much like the addition of sand into the gears of the economy: very few of Congress' decisions under the Commerce Clause are ever questioned (let alone overturned), and so while the economy easily shrugs off a few grains of sand (or a few bad regulations) tens of thousands of such "grains" eventually accumulate, causing markets to perform much less efficiently than they otherwise would.

And health care is one of the most extensively regulated (and subsidized) parts of the U.S. economy. Is it really any wonder that it's so dysfunctional?

I happen to agree with the criticism of the mandate that it's an impermissible regulation of "inactivity", i.e., it coerces individuals to purchase a product they might not otherwise purchase, at least under current arrangements. But I'll leave the legal arguments to the lawyers.

I'll just conclude by making the point that overturning the mandate - and imposing what is really a very modest restriction on Congress' Commerce Clause powers - would not restrict other, more constitutional options for health care reform. Congress would still have subtantial power to reform health care through its power to tax and spend for the general welfare. What it would do is force Congress to go back to the drawing board to try and find more incremental ways to expand coverage. From my perspective, that would be a great policy outcome.

If you're interested in how the arguments are likely to play out in the Supreme Court, this is a great primer.

Both Paul Howard and Charles Hooper have commented recently on the $3 billion payment that Glaxo was forced to cough up to settle charges of off-label promotion. I'm not familiar with the specifics of the Glaxo case, but I thought I'd add my two cents on the constitutionality issue that Paul and Charles raise.

It is true there are good reasons to believe that FDA's prohibition on off-label promotion is unconstitutionally over-broad. The U.S. Seventh Circuit Court of Appeals suggested in one recent case that the off-label promotion ban was "unconstitutional in at least some applications." But unlike Prof. Ralph Hall, I'm not optimistic about the U.S. v. Caronia case now being decided by the Second Circuit.

For one thing, Caronia presents what we lawyers would call "bad facts." Drug sales rep Alfred Caronia was prosecuted for participating in a face-to-face sales meeting in which Caronia's colleague told a physician about various off-label uses, but did not supply any scientific research supporting the safety and efficacy of those uses. Although we First Amendment purists might argue that even this kind of speech ought to be permitted, it's not a stretch for federal courts to justify restrictions on that kind of off-label promotion given current commercial speech case law.

Federal judges are more willing to find First Amendment protection when the speech involves distribution of published research findings or discussions of on-going research at scientific conferences. But in the Caronia case, a federal trial court judge has already held that a ban on the kind of promotion at issue could be justified because "some control over the off-label promotion of manufacturers does appear essential to maintaining the integrity of the FDA's new drug approval process." So, it's entirely plausible that the Second Circuit could agree that the off-label promotion ban is "unconstitutional in at least some applications" but constitutional as applied to Alfred Caronia.

In addition, the Caronia case also presents a couple of purely procedural issues that might permit the Second Circuit to reverse Caronia's conviction without having to reach the merits of the constitutional question. As it turns out, the FDA has been fairly successful in avoiding unambiguous court decisions on the First Amendment question, as it did in an earlier case litigated by the Washington Legal Foundation.

In that case, the federal District Court for the District of Columbia held that the off-label promotion ban was unconstitutional as applied to the distribution of peer reviewed medical journal articles. But the FDA changed its interpretation of the statute when it appealed to the DC Circuit, as I discuss in this article, thereby mooting the constitutional question and rendering the district court's decision invalid.

Similarly, after the biotech company Allergan sued in October 2009 for a declaratory judgment that the FDA's off-label promotion ban was "unconstitutional and inconsistent with the Food, Drug and Cosmetics Act," the FDA initiated a criminal case against Allergan for illegal off-label promotion. When Allergan settled in September 2010, it was forced to drop the constitutional challenge as a condition of the settlement.

Last month, however, yet another drug firm, Par Pharmaceutical, filed an almost identical action seeking a declaratory judgment that certain forms of off-label promotion were indeed protected by the First Amendment. With some luck, that case will actually be fully litigated, and we'll finally get a clean decision on the constitutionality of FDA's off-label promotion ban.

You can read more about my own thoughts on the constitutionality question here.

Not surprisingly, there's been a lot of commentary about the FDA's recent report touting a near-record 35 new drug approvals in 2011. As Paul Howard recognized, the FDA gladly taking credit for the increased rate of drug approvals in 2011 seems more than a bit disingenuous, especially after blaming drugmakers for the lower number of drugs approved over the last few years (21 in 2010, 24 in 2009, 23 in 2008, and 19 in 2007).

For years, the agency has claimed that the scarcity of new drugs approved was the result of lower quality applications, but now that approvals are up, they are singing their own praises. The FDA commissioner's statement about this apparent contradiction, "I think the point we're trying to make is that when high quality science, good applications come before us, we are able to act swiftly and surely," doesn't resolve this discrepancy. Nor does it address internal process delays that need to be addressed by the agency.

Even so, there are lessons to be learned from the types of drugs approved, rather than the total number:

Of the 35 approvals, two are theranostics -- personalized drugs approved for use in conjunction with a specific diagnostic test; seven are cancer drugs; 10 are for orphan diseases; and a total of 16 were approved under priority review. 2010, in contrast, only saw 21 approvals, and the outright rejection of two potential blockbuster weight-loss drugs. The argument I have been making in my last several posts now appears to be a reality. Increasing opportunities exist for drugmakers to pursue alternative research venues, particularly in the areas of theranostics and orphan drugs.

There have been number of high profile lawsuits alleging illegal marketing practices launched by the Department of Justice against pharmaceutical companies in recent years. Previous fines for illegal marketing practices (among other things) included $2.3 billion settlements from Pfizer and $1.4 billion from Eli Lilly. Now the Department of Justice and other government agencies are set to obtain $3 billion from Glaxo. I spoke to Ralph Hall, an attorney and Professor of Practice at the University of Minnesota Law School, and asked him how the case would affect the ongoing battle over industry marketing practices.

"The marketing issues" he explained, "include concerns over off-label promotion and company interactions with physicians." Under existing FDA regulations, companies are prohibited from communicating any information about potential off-label uses to physicians, even if the information has been previously published in peer-reviewed journals. Glaxo's settlement, however is unlikelty to settle the issue: "The FDA's legal basis for prohibiting truthful off-label promotion is currently being challenged in the 2nd Circuit in U.S. v Caronia. This case - a 1st Amendment challenge - may well settle the question whether truthful off-label promotion is considered protected speech."

Given the rapid advance of medical innovation, and the importance of off-label treatments for many diseases, from cancer to Lupus, a strong case can be made for allowing companies to present to physicians (who are, after all, experts) truthful evidence from peer-reviewed journals. The FDA might argue this would discourage companies form seeking additional label indications for off-label uses, but the real disincentive is the enormous time and cost associated with seeking FDA approval for new indications, which can cost billions and take over a decade. Some compromise would seem to be in order - perhaps with a qualification that the evidence hasn't been reviewed by the FDA, and may be disproved by additional research. Still, physicians already know this - and should be trusted to make their own educated decisions with all the evidence available to them.

I've seen some odd things in my career, but a November 7 report in Drug Industry Daily may be one of the craziest. Maybe "Looney Tunes" crazy.

The article reports on discussions being held between the FDA and representatives of PhRMA concerning the development and launching of badly needed new antibiotics to combat bacterial pneumonia.

It is not news that many antibacterial agents are no longer effective against the pathogen for which they were intended. Drug resistant strains emerge so quickly that only one year after penicillin was introduced, bacteria resistant to it were observed. The same scenario is virtually guaranteed any time a new antibacterial agent is introduced, forcing medicine to run a no-win race with the bugs: New drug, resistance. Repeat as necessary.

There are ways to slow this cycle, such as more careful use of antibiotics and improved hospital procedures (hand washing, segregation of patients with resistant infections). But in the end, evolution will prevail, and the bacteria will continue to mutate in ways that will make them less susceptible to any drug that previously killed them.

This makes the discovery of new antibiotics essential--something that has been obvious for quite some time. The science to do this is hard enough, but when combined with sometimes-irrational regulatory requirements and subsequent economic burden, it is not surprising that most drug companies have left the area entirely.

And the ongoing discussions between PhRMA and the FDA certainly won't help.

The groups have a "minor" difference of opinion on how to measure the clinical success of potential antibiotics. A 2009 draft guidance prepared by the FDA's anti-infective drug expert panel illustrates this perfectly.

The panel's recommendation for evaluating new drugs for pneumonia is mind boggling. In its present form it requires evidence that the new drug works (fair enough). But some panel members are insisting that sufficiently precise evidence can only be determined by excluding people that have ever taken any antibiotic. Yes--you heard me.

As if it weren't already difficult, expensive and time-consuming enough to run drug trials, now companies and clinical investigators will have to dig up a large group of people never treated with amoxicillin or erythromycin or all the others that pretty much everyone has taken at some point. Where will these people be found? Venus?

One of the PhRMA representatives put it bluntly: "To eliminate all prior antibiotics will virtually eliminate the US."

This is not the first time that the FDA has acted bizarrely in such matters. In the 1990s the antibacterial group at Wyeth was trying to get approval for a new antibiotic that we had discovered a few years earlier. This drug, later named Tygacil, was effective against a variety of resistant organisms, including MRSA.

But Wyeth ran into a moving target at the FDA, who all of a sudden insisted that the number of patients needed to show efficacy at a certain statistical level should be three-fold higher than expected, making the trials prohibitively time consuming and expensive. Wyeth decided to withdraw the drug.

It took a Herculean effort by Dr. David Shlaes, the former director of the infectious disease research section to convince the FDA that the additional statistical power (more patients) they were requiring was unreasonable and would not contribute anything to the study, except to stop it. The FDA relented, and Tygacil was launched in 2005.

Unfortunately, it is clear the controversy over new pneumonia drugs is not an isolated event--it is apparently a misguided and dangerous mindset that will virtually guarantee a continued exodus from the field. As Dr. Shlaes puts it, "In the decade since our discussion with FDA over Tygacil, they have abandoned the role of regulator to become a blocked door. The FDA needs to get back to rational regulation so that we won't face a time when people in Beijing have access to new antibiotics while those in Washington do not."

This sums it up perfectly. If we really want to have new effective antibiotics, "looney" regulatory policies must be avoided. Th-th-th-that's all folks.

Walmart is looking to join Walgreens and CVS' "Minute Clinics" as part of a growing number of retail health clinics nationwide. Many Americans don't have a primary care doc, or at least one they see regularly. To meet the need for quick and effective health services, big-box retailers have opened clinics within their own stores. Paul Howard, in his Manhattan Institute study, "EASY ACCESS, QUALITY CARE: The Role for Retail Health Clinics in New York," argues that retail clinics offer an affordable and efficient alternative to the doctor's office or in the case of the uninsured, the emergency room. Julie Appleby quotes him on Kaiser Health News today:

In-store medical clinics, such as those offered by Walmart and other retailers, could also be players in another effort in the health law: encouraging collaborations of doctors and hospitals who want to win financial rewards for streamlining care and lowering costs. Such collaborations, known as "accountable care organizations," might contract with in-store medical clinics, says Paul Howard, a senior fellow with the Manhattan Institute for Policy Research. He has studied retail clinics, some of which have recently expanded to offer services beyond simple tests and vaccinations, such as helping monitor patients with diabetes or high blood pressure.

Read Howard's study on retail clinics here.

Find Julie Appleby's article reposted at MSNBC, NPR, and National Journal.

In my last post (Orphan Drugs: A Shift in the R&D Paradigm), I alluded to how today's orphan drug could be tomorrow's blockbuster. Drugs initially may be approved for one indication in a small population, but later acquire additional uses after longitudinal studies and real world observations. These drugs present significant opportunity for innovation, while minimizing cost and time to market.

How many of you are familiar with the drug "Occulinum"? While this name may not universally resonate, it certainly represents the potential of orphan drugs.

Two years ago, in the middle of the "Obamacare" debate, a wise former Member of Congress told me, "The healthcare issue is a loser for whichever party is in charge." His point was that the party in power feels inspired/obligated to push its healthcare agenda on the nation--and then, inevitably, that agenda runs up against the rocks of public opinion. That wise House alum had a good point about the "loser-ness" of healthcare, but happily, he does not necessarily have the final word. There's still hope that the stuff of life can become the lifeblood of a winning political agenda.

Yet anyone wishing to turn healthcare into a positive issue should know that in recent political history, healthcare has, indeed, been a negative. In the early 90s, for instance, Bill Clinton and the Democrats found themselves controlling all the power-marbles in Washington, and so they dutifully pushed one of their staple issues, national health insurance--"Hillarycare"--to no avail in Congress. And then, of course, they suffered a calamitous result at the ballot box in the 1994 midterm elections. Fifteen years later, in 2009, Barack Obama and a new set of Democrats pushed what would become known as the Affordable Care Act; while the Democrats achieved legislative success in 2010, they again paid a huge price in the midterms later that year.

Next, in 2011, it was the newly empowered Republicans' turn to advance their healthcare agenda--and pay their own steep political price. House Budget Committee chairman Paul Ryan (R-Wisc.) persuaded his House GOP colleagues to push for a conservative-libertarian approach to Medicare; the resolution passed the House--it never had a chance in the Senate--but then the voters had their naysay in response. Thus the GOP promptly lost a special election in a once-safe Republican congressional district. Indeed, for a while, earlier this year, it seemed as if the Republicans could lose back the House to the Democrats in '12. And while that prospect has diminished, alongside the diminishing condition of the economy under Obama, Democrats are still hoping to attack the GOP for voting to "slash" Medicare. Such "Mediscare" campaigns have worked in the past.

So my friend the former Member has a point: For the most part, the voters show little interest in the nerdy details of healthcare policy--except when it looks as if one of the parties' agenda might actually pass. In that case, the voters step on the political brakes. And so during the early Clinton years and then the early Obama years, the Democrats were shattered by the accusation that they were going to bureaucratize, and even death-panel-ize, American healthcare. And then, this year, the Republicans over-reached with the Ryan budget plan and were brushed back by the voters.

But of course, there's something fishy about the idea that healthcare has to be a loser. After all, people want to be healthy, even if they don't always take care of themselves. They even want to consume healthcare, although, for reasons that Kenneth Arrow explained a half-century ago.

So how, today, could healthcare make for good politics? Newt Gingrich, now running for the Republican presidential nomination, seems to think that he has a better answer--and it is, indeed, a very different answer from that of most Republicans. Always the contrarian, Gingrich is focusing on the medical science of health, as opposed to the fiscal accounting for health. Gingrich is not disputing the need for budgetary austerity, he is simply pointing out a more sustainable and humane path to spending less.

In the long run--as, say, three centuries of the Industrial Revolution reminds us--the way to make things cheaper is to make more of them, and thus enjoy economies of scale. And so paradoxical as it may seem the more healthcare technology we have, the cheaper it will become over time. And so, thanks to the comparative "free lunch" of innovation, we can have our cake and eat it, too. We can have the budget savings that Ryan quite rightly seeks, without the prospect that the economizers will be tossed out of office after they make their cuts.

That Gingrich difference became clear from a Monday headline atop Byron York's piece in The Washington Examiner, reading, "Gingrich's wonkish, unconventional campaign." Sort of a dud headline, wouldn't one say? Not a lot of razzmatazz, huh?

York's piece notes that last Friday, Gingrich held a meeting in Des Moines with three brain scientists to discuss cognitive illness: "What I am trying to do," Gingrich said in that session, "is initiate the idea that solving health problems is the best way to reduce costs." Not exactly the best material for a 30-second attack ad or a tweet, but it seems to be working for Gingrich; his candidacy, written off as dead as recently as last summer, has climbed into third place among Republicans in many of the most recent polls.

Certainly Gingrich's approach is fresh: Save money on healthcare by reducing poor health, as opposed to reorganizing healthcare delivery--reorganization either by the government, as the Democrats might wish, or by the private sector, as the Republicans might wish. After all, if Alzheimer's Disease (AD) is projected to cost the nation a cumulative $20 trillion by 2050, according to the Alzheimer's Association, then maybe Gingrich is on to something. Right now, we have zero treatment for AD, so if that dismal status quo continues, AD is going to be expensive--whether it's the public sector, or the private sector, handling the AD care. Indeed, even the tiniest positive development in the push for better treatment, to say nothing of a cure, could be an enormous savings over the coming decades.

Yet Gingrich has history on his side. York records Gingrich as saying:

Look at polio, he says. What if it had not been cured? What if one took the high cost of treating polio in 1950 and simply projected it through 2011? The numbers would be enormous. Without even considering the human benefits, curing polio was far, far cheaper than treating it over decades. Now Gingrich wants to approach Alzheimer's and other brain disorders the same way.

Indeed, as Gingrich notes, the savings for any significant improvement in AD--that might save money on dementia care, or that might even enable people to work longer--would dwarf the savings that could be derived from the Super Committee, even under the most optimistic scenario.

Gingrich is not the only Republican presidential candidate to talk like this: Michele Bachmann, too, has made many of the same arguments, that it's better to beat than to treat. Meanwhile, these forward-looking Republicans seem to have this particular field to themselves; Obama has pretty much given up on "hope" of any kind. Indeed, seems little interested in talking up his own Obamacare handiwork--proving, yet again, the veteran Member's wry point.

Over the next few months, we will find out if the argument that a cure is cheaper than care is resonating with the voters. If it does, there's hope that at least one of the parties can turn healthcare into a winner, by shifting the burden of the healthcare discussion from finance to science. And if that happens, the American people will be the biggest, and healthiest, winners of all.

In February, it looked like the field of developing drugs for obesity was dead. The FDA had rejected its fourth recent late-stage candidate for weight-loss therapy--Orexigen's Contrave--which led my Forbes colleague Matt Herper to declare, "The clear lesson is that weight-loss medicines simply do not have enough of a benefit to justify any risk--and that this makes getting them approved almost impossible."

Well, one of the small companies involved in this space--California-based Vivus--is trying again. Vivus' drug, Qnexa, had been rejected by the FDA a year ago, due to concerns that its two previously-approved components could increase risk of cardiovascular complications, and that one of those components--topiramate--could cause birth defects.

In the third quarter of 2011, Vivus resubmitted their New Drug Application to the FDA, this time specifying that the drug should only be used in men, women over 55 years of age, and sterile women under 55. Bank of America's Steve Byrne believes that these three groups comprise "roughly two-thirds of patients seeking weight loss drug treatment."

In addition, the company is conducting a retrospective analysis of insurance claims for women who have taken low-dose topiramate for the treatment of migraines, to see if any of those patients had children who suffered from birth defects. If that study, called FORTRESS, works out, the entire market could become available to Vivus.

But that would require the FDA's assent, and it's simply not clear if the FDA wants to approve any obesity drugs. Instead of taking this risk-averse approach, in which companies spend hundreds of millions of dollars on large clinical trials, only to get swatted down by a risk-averse government agency, there is another way: allowing companies to get on the market after mid-stage phase II trials, but with significant restrictions.

This would allow companies like Vivus to market their drugs to a narrow population, generating needed revenues and funding important research, while allowing the FDA to gain real-world experience with a drug's benefits and risks. The Biotechnology Industry Organization has come up with one such proposal, in which the FDA expands its program for approving drugs in earlier stages of development (progressive approval). I'll have more to say on that subject later this week.

Vivus should find out the FDA's final decision by mid-April of next year. But, under a progressive-approval system, Qnexa could have been on the market three or four years ago. It's time to think about how we can reorient the FDA towards innovation.

It was 20 years ago today that basketball great Magic Johnson shocked the sports world by announcing, at the peak of his career, that he had tested positive for HIV and would retire immediately. In 2004, ESPN ranked this announcement as the seventh most memorable moment of the past 25 years.

We can't forget that HIV was seen as a death sentence during that era. People in San Francisco and elsewhere were seen venturing out into public with visible opportunistic infections, as they inevitably wasted away from AIDS. Clouds of pessimism and fear hung in the air like San Francisco fog. Just consider what Oprah Winfrey said in 1987: "Research studies now project that one in five--listen to me, hard to believe--one in five heterosexuals could be dead from AIDS at the end of the next three years. That's by 1990. One in five. It is no longer just a gay disease. Believe me."

HIV is now treated as many other chronic conditions. What changed? At first, with a paroxysm of public outcry, AIDS activists convinced the FDA to be more lenient and expeditious and the agency approved Burroughs Wellcome's AZT (Retrovir/zidovudine) in an astounding time of seven days. (Duke University and the National Cancer Institute helped with some of the development of AZT.) Since then, we have Abbott, Agouron, Boehringer Ingelheim, Bristol-Myers Squibb, Gilead Sciences, GlaxoSmithKline, Merck, Pfizer, Roche, and Tibotec to thank for their alphabet soup of single-agent and combination products to treat HIV. Physicians now have nucleotide/nucleoside reverse transcriptase inhibitors, non-nucleoside reverse transcriptase inhibitors, protease inhibitors, integrase inhibitors, and entry inhibitors to choose from and HIV patients benefit daily.

Magic Johnson is as much alive today as he was twenty years ago, thanks to pharmaceutical companies and an FDA that saw the light.

One problem that has bedeviled drug development (and device development) after scandals surrouding Vioxx and a handful of other products is the perception that speed and safety represent a zero sum game. That is, if the FDA appproves new medicines or medical devices faster, it'll miss critical safety signals that may cost patients' lives. On the other hand, if the FDA persists in asking for reams of pre-market safety data patients will, in fact, die waiting until the FDA decides the product is "safe".

We know that this is a false dichotomy because no drug or medical device is safe for everyone, all the time, and that individual patients will have very different opinions about what risks they're willing to tolerate for relief from serious or life threatening (or even just life-disabling) conditions ranging from cancer to migraines. It's also a false dichotomy because no amount of pre-market testing will be able to identify all the risks - or benefits - of a new product before it's placed into the hands of patients and physicians.

That's why it's so refreshing to read this from the FDA's Center for Devices and Radiological Health:

...we [are moving] away from the traditional misperception that safety/effectiveness and innovation are incompatible. Rather than focus on more regulation or less regulation, we began to focus on smart regulation - how to effectively achieve both aspects of our mission as both a regulator and a facilitator. The FDA helps create a regulatory environment that allows innovation to thrive, by eliminating undue regulatory obstacles and assuring consumer confidence that medical technology in the U.S. is safe and effective.

Our goal has been to move away from the external perspective of a swinging pendulum and realign our activities on the premise that safety/effectiveness and innovation are complementary, mutually supporting aspects of our mission.

CDRH also noted that in a August 2010 review of it's pre-market review programs, it found that "the number one problem we found was insufficient predictability in our pre-market programs, which can create inefficiencies, increased costs for industry and the FDA, and delays in bringing safe and effective products to market. It also can create challenges for small start-up companies to get investor and venture capitalist funding for new, early-stage technologies, which are critical to assuring that new technology reaches patients safely and effectively."

This is a welcome admission from the FDA, and a promising sign that the agency recognizes that more innovative products are, in fact, safer and better for patients.

We believe that when it comes to innovation, information is king: the FDA can't and shouldn't assume that every problem has to be solved before a product is marketed. In fact, postmarket surveillance and communication of new information on risks and benefits can improve how patients and doctors use new drugs and devices without making them wait years to get them.

While historically on the margins of R&D spend, orphan drugs represent the wave of the future in drug development. As I discussed in my recent post, the blockbuster model is wearing thin. The pressure for lower cost drugs with better outcomes flies in the face of the "one-size-fits-all" approach to drug-making. Clearly, pharmaceutical companies must find a different way to be profitable.

Staying competitive in the 21st century means cost-cutting and targeting segmented markets. Cost-cutting has been significant in the industry recently. Pharma companies slashed commercial budgets and pulled back thousands of reps from the street, but they still have to make significant investments in R&D. The question is what and how. Here's where orphan drug development fits in.

Gardiner Harris had a nice article in the New York Times today on the FDA's report yesterday that it had approved a near record number of drugs in 2011. The headline pretty much sums it up: FDA Officials, Hoping to Stave Off Critics, Point to Increased Drug Approvals.

Harris makes a very good observation:

For years, F.D.A. officials said little about the declining number of new drug approvals. When some industry analysts blamed government rules for the slowdown, agency officials instead blamed a decline in high-quality industry applications and a general drought in industry labs.

Now that approvals are increasing, however, Dr. Hamburg is claiming some credit by saying that the agency has lowered some approval standards -- particularly for cancer drugs -- and speeded up many of its reviews.

Asked about this apparent contradiction, Dr. Hamburg responded, "I think the point we're trying to make is that when high quality science, good applications come before us, we are able to act swiftly and surely."

In other words, for years, the agency blamed productivity problems on the industry and said that scarcity of new drug approvals was beyond their capacity to do much to fix. Now that drug approvals are up significantly, with some very strong new products on the market, they're taking credit.

But FDA drug reviews are the last stage of the drug development process. The enormous testing - up to a decade or more - and money spent during that time is what delays patient access to new products. And that process has been getting more expensive and time consuming all the time. That process is also extensively regulated by the FDA.

So faster reviews are great, once a drug application gets to the FDA. But the FDA is also part of the problem, because the cost/time equation is so heavily defined by the FDA's demands for reams of data to prove a drug is safe and effective.

So don't take credit unless you're willing to take the blame as well. And the FDA should start to take more responsibility for the problem by telling us how it's going to start driving development times down as aggresively as it does with review times - with clear and measurable metrics that we can use to evaluate the FDA's commitment and success. Not just a new strategic plan talking about it.

The costs of delayed access to newer and potentially effective drugs, are, of course borne mostly by sick patients.

This article, on the importance of renewing the Prescription Drug User Fee Act, ran yesterday in the Washington Examiner:

Is America still a place where big ideas can move policymakers to slash red tape in drug development to save lives, drive innovation, and spur economic growth?

It certainly appears so. The Obama administration, industry, the Food and Drug Administration and patients' groups have all come together in recent months to highlight the need for regulatory reforms to help patients gain faster access to safer and more innovative medicines.

Streamlining innovation begins with improving the FDA's framework for evaluating the potential risks and benefits of new medicines -- and making it as transparent, predictable and science-based as possible.

For starters, policymakers should reauthorize the Prescription Drug User Fee Act, bipartisan legislation first passed in 1992.

Renewed by Congress every five years, PDUFA gives the FDA authority to collect user fees from companies when they submit new drug applications. The agency uses those fees to hire and train the staff it needs to review applications in a timely and predictable manner. (Note, however, that those fees have no influence on whether or not the FDA approves a product.)

PDUFA also sets timelines for the review of new products that can help evaluate the FDA's performance.

America's ecosystem for biomedical innovation is in dire need of an overhaul. Today, it can take over a decade and $1.3 billion to bring a single new FDA-approved medicine to patients.

Industry and the National Institutes of Health also spend nearly $100 billion annually on basic and applied medical research, but only about 20 new drugs manage to reach the market each year.

Venture capital for biotech is also being cut back, with investors citing an unpredictable and expensive regulatory process. American patients are also waiting longer for access to some new medicines and medical devices that have already been approved in Europe.

The FDA isn't the only stakeholder responsible for innovation, but it is effectively the "rate-setting" institution, since no medicine or technology can make it to market without first gaining FDA approval.

Yesterday the FDA released a report analyzing the "crop" of drug approvals for 2011 - and it's an impressive list. First, the FDA notes that 35 new drugs were approved in 2011, far above the total of 21 in 2010, and the highest total in the last decade except for 2009.

It is certainly an all star list of new medicines:

Seven of the new medicines provide major advances in cancer treatment.

Ten are for rare ("orphan") diseases which have few or no treatments because of their small patient populations.

Two new therapies, for lung cancer and melanoma, are breakthrough products for personalized medicine: each was approved with a diagnostic test that helps identify patients for whom the drug is most likely to bring benefits.

The agency also notes that 24 (70%) of these medicines were approved first in the U.S., and that half were approved under "priority review", a designation that requires the agency to review the sponsor's application in 6 months or less. All but one of the 35 applications were reviewed before their target date under PDUFA, and the majority were approved "on the first cycle".

The FDA says that this bumper crop reflects

...many improvements in FDA's drug approval process in the last several years. The agency has made great strides forward to speed the development and availability of drugs for serious or life-threatening diseases; it has launched the Critical Path Initiative to help streamline drug testing and review; and it has sharpened its focus on methods of efficiently identifying and resolving drug safety issues.

These results should probably be taken with a grain of salt: they may represent products that have been in development for years (or decades) and thus could easily represent an outlier in terms of new drug approvals. We could be back to fewer new drugs next year, and then 2011 looks like a blip on the radar.

Still, there are clearly some good stories here. Pfizer's Xalkori, for late state lung cancer was approved with a companion diagnostic to target the patients who are most likely to benefit, received an FDA "Fast Track" designation (where the FDA meets frequently with the sponsor), accelerated approval designation (which allowed approval of the drug based on a surrogate endpoint, in this case shrinking tumors), and priority review.

Overall, Xalkori was approved just 5 years after the first human clinical trials - nearly three years shorter than median clinical trial times for oncology drugs. Other important advances this year included the first drug to improve overall survival for late-stage melanoma patients.

Undoubtedly, the FDA is looking for some good press after facing a flurry of critcism from medical device makers and the venture capital community. So kudos to the FDA for a good year in 2011. (At least at first glance).

But the better question is, what are they going to do ensure even better trends for patients and personalized medicines next year, and for the next five or ten years after that? More on that in future posts.

You would think these ten simple words are clear enough: "Congress shall make no law...abridging the freedom of speech..." Apparently not. Congress did, of course, pass a law prohibiting pharmaceutical companies from promoting off-label uses for drugs and put the FDA in charge of that enforcement. Never mind that off-label prescribing is widespread, legal, and helps American patients. Never mind that Congress itself, Medicare, the Department of Veterans Affairs, the National Cancer Institute, and the National Institute of Health actively encourage off-label prescribing.

A drug's "label" is the drug's FDA-approved prescribing information--the package insert. Any approved use is considered on-label, while any use not listed on the insert is considered off-label, even though the off-label use may effectively treat a medical condition and reflect the best medical practices. Although the FDA tolerates off-label usage, it forbids companies from promoting such uses. Promotion is really just communication and communication is speech. So the FDA is in direct violation of the First Amendment. Something has to give.

This is not some academic issue, as pharmaceutical companies have been pressed into paying almost $12 billion in fines over the last decade. In fact, just today GlaxoSmithKline announced that it settled its case for a whopping $3 billion.

In other news today, pharmaceutical companies are mounting a concerted legal effort to overthrow or weaken this and similar rules. Their case got a boost this summer when the U.S. Supreme Court cited the First Amendment in striking down a related Vermont law. In its decision, the court wrote that speech used in drug marketing is a form of expression protected by the Free Speech Clause of the First Amendment. It's good that someone is actually reading the Constitution.

The New York Times has an long article today on how some federal health care panels creating new treatment guidelines have - gasp - experts on them who have work with or consulted for drug companies.

Critics like David Rothman believe that no one who works with companies to create better treatments for patients should have a voice in discussions over how to use those tools (and others) more effectively:

"Consciously or not, they may well be making decisions that fit their funders, their payers and not the patient's best interests," said David J. Rothman, president of the Institute on Medicine as a Profession, a nonprofit center affiliated with Columbia University. "If you want the public to really believe in the guidelines, why not have a committee that is conflict-free?"

So if you've worked for a company, "consciously or not", your expert opinion is automatically compromised. An interesting point of view, and certainly a very powerful rhetorical tool for disqualifying anyone who disagrees with you. I believe the Marxists would've called it "false consciousness."

Would the Times' definition of bias also extend to excluding teachers from curriculum design panels at colleges and universities (obviously they have a financial incentive to get more students in their classes), lawyers or judges from serving in Congress or advising on legal panels (creating more lawsuits, which they are then paid to litigate), or for that matter, having any practicing physicians serve on any health advisory committees at all (doctors make money by seeing sick people!).

The Times' definition of "bias" is strangely limited to "commercial" bias, i.e., working for corporations, and completely ignores other forms of bias: from profession, education, experience (or lack thereof), ideology, etc. Commercial bias is an important form of potential bias, but it is far from the only potentially significant one.

For instance, when the federal government decides not to cover mammograms or prostate cancer tests for certain groups of patients, it saves money. Isn't that a bias?

We live in a world of potential bias (is the New York Times reporter biased against corporations?), but we find ways of managing them - through disclosure, and through ensuring a diversity of viewpoints and experience like the committees organized by the NIH.

Of course, the goal of the crusaders against commercial bias isn't to rid the world of all bias...just the points of view that they might disagree with.

How biased is that?

At the Drug Channels blog, by Adam Fein. Here's the crisis explained in two short paragraphs:

•There are very few manufacturers for any individual injectable drug, demand is growing rapidly, and highly-specialized manufacturing capacity can't be quickly increased in the short-run.

•Any supply shock to the system, such as a manufacturing problem, can rapidly create a shortage because alternative capacity can't ramp up to meet demand.

In other words, when supply outstrips demand you get a shortage. But what about prices, you ask? Fein nails that down too: low prices discourage new manufacturers from entering the market, large bulk purchasers put more downward pressure on profits for existing suppliers, and some gray market wholesalers may be hoarding products to drive up prices, but those price increases are captured by the middlemen, not the producers, robbing the market of yet another incentive to boost production.

This is one of the best short explanations I've seen yet.

The quote is from Churchill, delivered after the Allies defeated Rommel at El Alamein in November, 1942. The war was far from over, but Churchill had correctly sensed that the tide was turning.

The quote came back to me as I was reading an article by Luke Timmerman, in Xconomy, The Cancer Drug Dark Ages Are Coming to an End.

Timmerman points out, correctly, that advocates of personalized medicine had relatively few groundbreaking cancer medicines to point to for most of the first decade of the 21st Century (aside from Gleevec or Herceptin). The tide, however, seems to be turning, with new targeted therapies for hard to treat cancers like melanoma, rare lymphomas, and non-small cell lung cancer. And the medicines have come from both biotech companies and pharma behemoth's like Pfizer.

Timmerman writes that: the BIO Investor Forum in San Francisco...Bryan Roberts of Venrock related a story about how one senior Genentech executive is so pumped about cancer drug development that he said it is getting to the point where scientists can basically move down a checklist, knocking out aberrant cancer pathways one-by-one.

Make no mistake: the war against cancer is far from over, and it is a devastatingly adaptive foe. Victory may still be decades away.

But the gigabytes and terabytes of information that we're gleaning about cancer genomics every day will eventually be turned into knowledge of how to contain or kill it, "moving down a checklist, knocking out" cancer's lines of retreat one by one.

The same way UN vaccination teams would surround and contain smallpox outbreaks until the disease had nowhere left to run.

We'll do that on the molecular level, one patient at a time. Today, we're just at the end of the beginning of the war on cancer.

But the end is at least in sight.

Xconomy reported last week that consumer genomics company 23andMe may have discovered a genetic variation that confers protection against Parkinson's disease:

Using genetic data drawn from thousands of 23andMe customers, the company says it has identified a gene that appears to protect against a genetic mutation associated with Parkinson's disease. Specifically, 23andMe says the gene serum/glucocorticoid regulated kinase 1 (SGK1) appears to be protective against a mutation known as leucine-rich repeat kinase 2 (LRRK2).

A specific mutation on the LRRK2 gene, known as G2019S, is recognized as a risk factor for developing Parkinson's. About half the people with the mutation develop the disease. Yet 23andMe says it has genetic data from a large number of people who carry the mutation, but who surprisingly don't have Parkinson's. In scrutinizing this group, 23andMe says it made the first-time discovery of the potentially protective nature of SGK1.

Expect the pace of these types of discoveries to accelerate as the cost of genome scans plummets towards $1,000 (or even $100) and millions more consumers opt to have their genomes sequenced. The potential is enormous not only to discover new therapeutic targets for drugs, or develop new tests for genetic diseases, but to create a wave of consumer demand for early prevention and monitoring to nip diseases like cancer or Alzheimer's in the bud years or even decades before they might become clinically manifest.

That is, if regulators don't strangle the new technology in red tape first.

Two more good articles on the growing shortages of generic cancer drugs. First from the Wall Street Journal editorial page:

Most sterile injectables have been off-patent for decades, but unlike other cheap generic drugs with low profit margins, production is complex and requires special facilities. Nonetheless, George W. Bush and the Republican majority decided that Medicare was "overpaying" for these cancer drugs and included a 6% cap on price increases every six months in the 2003 prescription drug bill. These new price controls (which apply to the providers that purchase the drugs) took effect in 2005, when the shortages began.

In a rational market, sterile injectable prices would now be rising to encourage more supply, since the demand for cancer drugs is inelastic. The old reimbursement system, called "buy and bill," was imperfect, but at least it allowed prices to float and wasn't producing the scarcity that central planning always does. The sterile injectables that are in short supply currently sell for $37.88 a dose on average, and modest price increases could make the market economic.

The Journal is right that modest price increases could do much to help bring (and more importantly keep) production online, and also encourage producers to upgrade existing manufacturing facilities before they run into problems.

Derek Lowe is also very skeptical that President Obama's executive order will do much of anything:

That's because the drug shortage problem is not something that can be solved by fiat. There are a number of factors that got us all into this fix: two big ones are changes in Medicare billing for generic cancer drugs, and manufacturing problems with overseas suppliers. (A low-margin business gives you even more incentive to source the bargain-basement options). None of these things can be fixed overnight.

And when you look at the executive order itself, you find that there's not much there. It directs FDA to expedite reviews of new suppliers and new manufacturing sites, but aren't they doing that already? And it also tells the agency to send out letters to all the companies, reminding them to remind the FDA about potential shortages, which is clearly the kind of decisive step this crisis has been waiting for. Oh, and it also calls for determining whether any of the shortages have led to "price gouging". Can't have the price of something going up just because there's a shortage - that's just basic economics, right?

All good points by Derek, as usual. Undoubtedly, the president's order is as much about the campaign optics as any substance.

But when it comes to the FDA, the optics is part of the substance. At the very least, the president's order will give the FDA much more political cover to be flexible in ramping up reviews of new generic drug applications, giving manufacturers more leeway to try and fix plant problems before shutting them down, etc.

Congress can, and should fix the underlying pricing problems, as I explained at National Review Online back in August.

One final point: the generic drug industry and the FDA recently reached an agreement on creating a generic drug user fee program. Generic drugs were the last category or products that require pre-approval from the FDA and lacked a user fee program, at a time when generic drug applications are skyrocketing at the agency. After Congress approves the legislation, the infustion of funds should help the FDA bring more staff resources online so that generic suppliers get their products reviewed and approved faster.

That won't happen until Congress approves the FDA's package of user fee programs next summer.

At National Review Online's Critical Condition blog, I have a long post explaining why imposing price controls on Medicare Part D in the name of deficit reduction will lead to less innovation and fewer American jobs:

Cost cutting would come in the form of laying off workers (or reducing pay and benefits), sending more jobs and manufacturing facilities to low-cost countries abroad, or reducing investment in discovering new medicines. None of these responses should count as a winner for the U.S. economy. One recent study found that the president's proposal could reduce direct and indirect employment in the pharmaceutical industry by up to 238,000 jobs by 2021.

Reducing research-and-development spending might seem like a clear "winner" for the supercommittee, since fewer expensive new drugs would come on the market. The government's drug tab would decline rapidly (aided by the expiration of existing drug patents), but as the U.S. population aged and more people became afflicted by cancer, Alzheimer's, and other expensive chronic illnesses, we'd just spend more money on hospital care and physician care -- actually increasing overall health-care spending. (Economist Frank Lichtenberg estimates that for every $1 that Medicare spends on newer medicines, it saves about $6 in other health-care costs, mainly from reduced hospital costs.)

As they say, check out the whole thing.

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