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Selected news articles which highlight important policy issues.

News: Weekly Archives

News for the week of 07-12-2004

Trade Agreement May Undercut Importing of Inexpensive Drugs
The New York Times, 7-12-04

One of the stated goals of the current U.S. administration is to address the imbalance in the prices that U.S. consumers pay for prescription drugs compared to other industrialized nations. Since the U.S. is the last developed market without price controls on prescription drugs, and since the U.S. is also responsible for the lion's share of global drug development and sales, U.S. consumers effectively underwrite global R&D-leaving other countries to effectively free-ride on the U.S. market.

With high drug prices an enormous issue in American politics, the U.S. has responded by making price controls in other nations the subject of bilateral trade negotiations-in this case, with Australia. Critics have responded by saying that the U.S. is trying to interfere in the domestic politics of other nations, but the reality is that the U.S. cannot single-handedly continue to serve as the engine and primary funder for global drug development. The developed world must find a way to more fairly distribute global pharmacuetical costs and benefits-unless the U.S. intends to implements drug price controls first, which some American policymakers are openly advocating.

Adopting price controls would have two effects: it would slow down global drug development as R&D plummeted, and it would drive investment and research dollars out of the U.S. to nations like India and China, both of which possess a tremendous base of highly skilled low-cost labor. This would be a set-back for global health and effectively cede leadership in this critical technological sector to America's economic competitors.

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New, Lower Goals Set for Bad Cholesterol -- Amid Evidence of the Benefits Of Drastically Lowering LDL, Government Urges Levels Below 70
Wall Street Journal, 7-13-04

As doctors take advantage of new statistical and diagnostic tools in their battle against heart disease, they are starting to revise cholesterol lowering treatment guidelines for patients who are at higher risk for heart attacks.

The latest "therapeutic option" (a notch below an actual recommendation) was issued by an NIH panel from the National Cholesterol Education Program and suggest that high risk patients lower their LDL cholesterol to 70-30% belowing the current recommentation. The panel also recommended that patients at moderate risk should consider drug therapy to lower their LDL levels below 100.

These recommendations could conceivably affect 29 million patients and their doctors; the problem is that most high risk patients are already on statin therapy, and of those only about half have managed to reach LDL levels below 100. More incremental gains can be achieved by increasing the statin dosages, since the drugs are widely considered safe. Nonetheless, there is still a real concern about side effects, and the potential cost, of significantly increasing statin dosages or combining statins with other cholesterol lowering drugs. One solution being considered is a new drug, Zetia, that blocks LDL from being absorbed by the body in the first place. A new combination pill with both Zocor (a statin drug) and Zetia is awaiting approval at the FDA.

Patients at risk for heart disease are benefiting from a growing array of therapeutic options, and will benefit more in the future as researchers continue to fine tune clinical guidelines and personalize drug treatment regimens.

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Lack of AIDS Doctors In Poor Countries Stalls Treatment
Wall Street Journal, 7-13-04

A shortage of health care workers in poor nations struggling with the AIDS epidemic is slowing the effective distribution of cheap anti-retroviral drugs. For instance, in Cambodia, there are only 50 doctors trained to properly treat AIDS patients, or one for every 3,140 people who are HIV positive.

However, since inexpensive AIDS drugs are available, some patients are "self-treating, under-medicating, splitting prescriptions with infected family members, or just dropping out of treatment." The risk with self-medication is that, as with antibiotics, an incomplete or improperly administered course of treatment with anti-retroviral drugs can create drug-resistant disease strains-increasing the likelihood that current combinations of AIDS drugs will become useless in relatively short order.

The shortage of trained health care workers-particularly doctors and nurses-is primarily due to poverty and a lack of educational opportunities in poor nations; an aggravating factor is the ongoing exodus of medical personnel from developing nations to wealthier countries (like Britain, New Zealand, and Australia, among others), where pay and benefits are significantly better.

Unfortunately, solutions to this problem are equally scarce. There is no central coordination of efforts to increase the supply of physicians who can treat AIDS patients, nor are there enough Western physicians available to bridge the gap. Training and donor outreach efforts are also hindered by political strife and crime in many host nations. Still, without a sustained effort to expand health care capacity in host nations, access to cheap AIDS drugs may not be enough to stem the rising tide of AIDS victims.

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Pressure Points: Attacking Rise in Health Costs, Big Company Meets Resistance: Pitney Bowes Finds Culprits, But Can't Beat Them All; $11,447 Knee Arthroscopy; Marketplace 'Wasn't Working'
Wall Street Journal, 7-13-04

Pitney Bowes is a company whose efforts to control health care costs and improve employee health has drawn widespread praise. Still, the company is barely treading water in its efforts to control runaway costs. For instance, last year employee hospital use (as measured by the average length of hospital admissions) was unchanged from 2002 levels-and total employee admissions were flat. Nonetheless, hospital costs rose nearly 10%, and average hospital costs per day rose a staggering 17%.

Why? In California, and throughout the nation, hospitals have consolidated into large groups to gain leverage in negotiating fees with HMOs and other insurers. In San Francisco, one hospital chain, the Sutter Health network, increased its average price for one service, knee arthroscopy, by 36%. Other culprits: "entrepreneurial doctors prescribing costly MRIs and CT scans" and new expensive drugs.

The problem facing Pitney Bowes is endemic to U.S. healthcare-patients are funneled by insurers into networks of providers who don't compete on quality. This basically means that employers looking to change providers shift from one network to another based on volume discounts, without being able to access any underlying improvements in productivity. But as providers consolidate, employers have less and less ability to even negotiate effective volume discounts. Until providers are forced to compete on quality of service, they will have few incentives to economize their operations and improve productivity. Without productivity gains forced by real competition, prices will continue to rise much faster than the overall rate of inflation.

One solution to this problem would to broaden the use of health savings accounts so that individuals have incentives to seek out the best care at an affordable price, regardless of a provider's network affiliation, and also make it easier for physicians to set up innovative clinics focused on treatments for specific conditions like diabetes or heart disease, where treatment specialization can radically increase productivity and drive down costs. More suggestions for consumer driven health care reforms can be found in this article by Regina Herzlinger: http://www.manhattan-institute.org/html/_jfsp-consumer.htm.

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Generic AIDS Pill Gets Patent in Africa
Wall Street Journal, 7-13-04

Cipla, one of the world's leading manufacturers of generic drugs, is patenting its combination AIDS drug, Triomune, in South Africa and 17 other African nations grappling with the AIDS epidemic. Triomune contains a combination of three other drugs (lamivudine, stavudine, and nevirapine) that are under patent by, respectively, GlaxoSmithKline, Bristol-Myers Squibb, and Boehringer Ingelheim.

This is an interesting development, because anti-patent AIDS activists have long argued that patents on AIDS drugs have prevented them from being sold cheaply in developing nations. Apparently now that Triomune has become the combination of choice for leading AIDS donors supplying anti-retroviral therapy in Africa, Cipla has decided to protect its drug from competition from other manufacturers using the same formula, i.e. positioning itself as the monopoly supplier for this particular combination therapy.

It will be interesting to see how critics of the pharmaceutical industry respond to this development; perhaps they will argue that Cipla needs a patent to protect and recoup its investment in Triomune's development. Perhaps they will argue that Cipla's profits on its patented AIDS drug will help fund Cipla's pipeline for future AIDS treatments. Perhaps they will argue that patents spur innovation by encouraging entrepreneurial investment. All of these things may be true, and good arguments. But they apply to all drug manufacturers, not just those generic companies favored by industry critics. Cipla's move to patent Triomune smacks of rank hypocrisy--but at least hypocrisy is the tribute vice pays to the virtue of intellectual property.

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Pfizer chief's speech disrupted by AIDS activists carrying mock corpses
Associated Press Newswires, 7-13-04

The visceral reaction of some anti-globalization activists against drug patents is driven at least in part by the belief that prices on patented drugs are arbitrary, based on nothing by corporate greed. At the recent international AIDS conference in Thailand, anti-globalization activists stormed the stage during a speech by a pharmaceutical industry executive and dumped mock bodies on stage symbolizing all of the people supposedly killed by the high prices of HIV drugs produced under patent.

Having a real debate on pricing for AIDS drugs-and making them affordable for developing nations-means recognizing that companies cannot invest in discovering new medicines without significant financial incentives. Research can be subsidized through public-private partnerships that reduces the costs of drug development and consequently lowers market prices, or the distribution of critical drugs can be widened through differential pricing, i.e. charging more for AIDS drugs in rich nations than poor ones.

But the issue of pricing cannot be brushed aside with a sneer or ignored by wishful thinking. Private sector innovation is the engine of wealth creation-and human health. Wealthy nations are healthy because they are wealthy: they can afford to spend lavishly on health care infrastructure, including R&D for drug development.

Unraveling intellectual property rights for patented drugs entirely would mean sabotaging the free market incentives that created the very drugs that activists want to appropriate. Corporations who make critical medicines have a responsibility to make those medications available at affordable prices to poor nations-but they also have a right to protect their inventions and recoup their investments. Jeremiads against corporations, which inevitably neglect these underlying facts, will only undermine research on new AIDS treatments.

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Bush Seeks Policy Fix For Drug Imports
The Boston Globe, 7-13-04

Is it wrong for companies to charge different prices in different markets? Obviously not. The price a company charges in New York-or Calcutta-for a given product depends on a variety of factors, including competition, consumers' ability to pay, and currency exchange values. Differential pricing means that some products-for instance prescription drugs-are significantly cheaper in many poor nations than they are in rich countries.

The picture is further complicated in countries with price controls on drugs, where governments have monopsony power and can set prices or overturn patents if drug manufacturers refuse to sell at the price the governments are willing to buy. In other words, a company's choices-in Canada, Australia, or Europe-is basically limited to selling their produce very cheaply or abandoning the market altogether.

National governments, through price controls, subsidize their citizens use of prescription drugs-but this policy is not without its drawbacks. Countries with price controls often receive new medicines later than in the U.S., and use fewer state of the art medications overall. Restricting corporate profits also pushes research, development, and marketing of new medications to the U.S., which is more than happy to benefit from the infusion of high tech, high wage companies and their employees.

Nonetheless, this also means that the U.S. disproportionately funds global drug development, and U.S consumers pay more for prescription drugs than almost anywhere else in the world. The U.S. has reacted to this disparity by pushing for new bilateral trade agreements that would give companies more leeway to challenge price controls, and expand some intellectual property protections. This way, the costs of drug development would be shared over a wider base, hopefully lowering U.S. drug prices and encouraging more of a global market for prescription drugs.

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Massachusetts Lawmakers Approve Constitutionally Protected-Health Care
Associated Press Newswires, 7-14-04

A joint session of the Massachusetts legislature voted 153-41 to approve an amendment to the state constitution mandating that "it shall be the obligation and duty of the Legislature and executive officials to enact and implement such laws as will ensure that no Massachusetts resident shall lack comprehensive, affordable, and equitably financed health insurance coverage for all medically necessary preventive, acute, and chronic health care and mental health services, prescription drugs and devices." If it is approved again during the next session of the Massachusetts legislature (2005-06) the amendment will be presented to voters in a referendum in 2006.

Whether or not the amendment ever gets to the voters is anyone's guess, but the scope of the amendment (and its price tag if passed) beggars the imagination. What would be considered, for instance, on the list of "medically necessary" preventive, acute, chronic, and mental health care services, to say nothing of prescription drugs and devices? Who would draw this list up? Once the list was in hand, does anyone think that it wouldn't be instantly challenged in state court by consumer and provider groups anxious for their rightful share of "medically necessary" funding?

Government mandated access to health care is bureacrat-ese for saying that the government will impose price controls on health care services to subsidize access - and since demand at artificially low prices always outstrips supply the result is, inevitably, long lines and substandard care.

Middle class and employer angst over rising health care costs is certainly real enough, but state attempts to mandate what services insurers must cover and how they must cover them have substantially increased health care costs and priced millions of Americans out of insurance markets.

An important basic reform that would make health insurance more affordable would be for states to de-regulate insurance markets, making basic health insurance significantly less expensive - and accessible. (For an eloquent discussion of this problem see David Gratzer, Less Is More.)

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Pfizer AIDS drug has good early trial results
Reuters News, 7-14-04

A new compound in the struggle against HIV/AIDS has shown promise in early clinical testing. The new compound, UK-427,857, is the first in a class of drugs that prevents the HIV virus from entering human cells, as opposed to protease inhibitors, which disrupt the virus' activity within cells. It is hoped that compound will have fewer side effects than current treatments and offer an alternative to patients who are infected with drug resistant virus strains.

UK-427,857 was unveiled at last week's international AIDS conference in Bangkok by Hank McKinnell, Pfizer CEO, who reminded the conference that advances in HIV therapy were dependent on pharmaceutical companies underwriting new research through profits and strong intellectual property rights.

Naturally, Mr. McKinnell's defense of property rights was greeted with catcalls from AIDS activists, who have attacked pharmaceutical companies relentlessly for putting profits before patient health. However, while they make the legitimate point that AIDS drugs ought to be affordable in poor countries, they should take note of the fact that an industry that cannot make a profit on a product will not make that product. Keeping the AIDS pipeline full of new drugs for generic manufacturers to copycat and sell in Africa or Asia at cut-rate prices means letting Pfizer enforce its IP rights and engage in differential pricing - selling dearly in rich countries and cheaply in poor countries. Demonizing the pharmaceutical industry may make for good press in some circles, but it doesn't pay in the long run to bite a helping hand.

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The Informed Patient: Help Is on the Way For Your Skeleton - Coming Drugs and Treatments For Osteoporosis Rebuild Bones Instead of Just Slowing Loss
Wall Street Journal, 7-15-04

Slowing or stopping the progression of disease and disability is one thing - but reversing it is the holy grail of medical research. Patients with osteoporosis can see some hope on the horizon that one day bone loss can be reversed, freeing them from the constant fear of debilitating or even fatal bone fractures.

Everyone, but especially women, loses bone density as they age. Researchers are racing to improve on the current arsenal of drugs that ameliorate bone loss, and produce medications that can actually stimulate new bone formation. Six new drugs are slated to go on market in the next several years, with over 600 more osteoporosis trials waiting in the wings. This research couldn't be more timely: by 2010, it is estimated that more than 52 million women and men will be afflicted with some degree of osteoporosis.

The first bone-building agent, Forteo (a synthetic hormone), was approved in 2002 after trials showed that it reduced the risk of moderate or severe spinal fracture by as much as 90% over placebo. Additionally, 70% of patients showed an increase in spinal bone density (5% or more, and nearly half (44%) showed an increase of 10% or more. However, Forteo can only be prescribed for two years due to concern over potential side-effects. Other promising drugs should reach market soon, and researchers are also looking into whether or not exercise programs or other physical interventions can stimulate bone growth as well.

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Fixed-Dose Mixtures of Generic AIDS Drugs Prove Effective
The New York Times, 7-15-04

The humanitarian group Doctors Without Borders presented evidence at the 15th International AIDS conference in Bangkok that fixed-dose combination (FDC) generic AIDS drug can be as effective as patented, brand name drugs. While encouraging, these findings shouldn't take all of the onus away from proving the safety of generic AIDS drugs: after all, these drugs came from only two Indian generic manufacturers, while there are at least 27 companies in Asia making generic anti-retrovirals, only a few of which have been fully vetted by the WHO.

Critics of international IP agreements should be aware that opening the floodgate to generic manufacturers will help to drive down prices, to be sure, but it also means that it will be harder to control the quality of AIDS drugs reaching market - raising the specter that poorly made drugs will accelerate the growth of drug-resistant strains of the AIDS virus, an issue that activists have yet to fully address. Doctors Without Borders should also note that one of their favorite generics, Triomune, made by Cipla, is not a generic any more: it has been patented in South Africa and 17 other African nations.

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House Passes Bill to Finance Development of Bioterrorism Antidotes
The New York Times, 7-15-04

U.S. legislators have passed the Project Bioshield Act, which allots $5.6 billion over the next decade for pharmaceutical and biotech companies to develop defenses against bioterrorism. By guaranteeing that the federal government will supply a steady revenue stream to develop medicines and vaccines in the event of a bioterror attack, the government has reassured industry that any investments it makes in developing new treatments will not founder for lack of a buyer. The bill also speeds up FDA approval for vaccines and lets the government distribute some treatments before FDA approval in the event of an emergency. All in all, this a good first step in the right direction. (More information on the Bioshield bill, and suggestions for improving it with follow-on legislation can be found on Senator Joe Lieberman's Senate website.)

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U.S. Official Defends Focus Of AIDS Prevention Policy
Washington Post, 7-15-04

When it comes to the fight against global AIDS, the U.S. is the leader in two categories. The first is funding. The second is as a convenient target for activist outrage.

The outrage is, on its face, mostly puzzling: this year, the U.S. is spending $2.4 billion on fighting the epidemic, which is about twice a much as all other donor governments combined. The President has also made an epic commitment to fight global AIDS by promising to spend $15 billion over the next five years. Nonetheless, when Randall Tobias, the U.S. global AIDS coordinator, spoke at the recent international AIDS conference in Bangkok, he was soundly heckled by protesters.

Activists have taken aim at the administration's promotion of abstinence in addition to condom use, which critics deride as "denying people access to life-saving information and technologies." Reputable studies suggest otherwise: Uganda's success in cutting HIV infection rates from 21 percent to 6 percent succeeded largely by teaching abstinence. Other evidence from Africa shows that the availability of condoms doesn't necessarily lead to decreased HIV transmission rates. In South Africa, "reported rates of teenage sexual activity have fallen for three years straight, disproving the notion that there's no point in telling youths to change their behavior." Rather than recognizing that there are many paths to AIDS prevention (including tested abstinence programs), activists have allowed their dislike of the U.S. conservative agenda (to say nothing of American pharmaceutical companies) to blind them to evidence that might save lives.

Or, as Randall Tobias put it, "There are some people here who have the objective of the U.S. being a global whipping boy."

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Offshore firms selling diluted, fake drugs as Canadian; FDA warns in battle over cheap imports
The Globe and Mail, 7-15-04

FDA associate commissioner William Hubbard testified to the U.S. Senate Committee on the Judiciary that "rogue Internet pharmacies in distant places such as China and Belize" are impersonating Canadian online pharmacies and selling Americans "potentially dangerous fake and unregulated drugs."

FDA officials continue to express worrying concerns about their ability to monitor drug importation plans on the scale that Congress is currently considering. A glance at the numbers reveals why: Americans bought about $1 billion in Canadian drugs this year, while the total U.S. prescription drug market is about 200 times as large. While everyone agrees that Canadian drugs are safe, no one ought to labor under the illusion that Canadian resellers could meet even a significant fraction of U.S. demand. The only alternative, then, is to extend importation to a broad range of countries, vastly increasing the scope and difficulty of monitoring imports. The amount of money at stake in opening the U.S. to global drug re-importation would undoubtedly make the U.S. market an even more attractive target for counterfeiters, organized crime, and, possibly, terrorists.

There is one glaring omission in current debates over drug importation. Drugs are expensive because the pharmaceutical industry is one of the most heavily regulated industries in the world. Regulation contributes to drug safety, but it also radically increases the cost of drug development (over $800 million at last count). In other words, being good at navigating your way through a labyrinth of expensive government regulations does not necessarily lead to better treatments for patients. Everyone from the FDA to industry agrees that the regulatory status quo is particularly bad at moving drug targets from the lab bench to market, but no one whose feet aren't in the fire seems to draw the right conclusion: if there are fewer and more sensible regulations, drug development will become cheaper, and competition, prices, and quality will all improve as a result.

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New Cholesterol Guidelines Face Criticism Over Conflict of Interest
Wall Street Journal, 7-16-04

Are studies or recommendations published by researchers who have at one point worked for, or received funding from industry inherently tainted? The question begins and ends with the quality of the research and a strong system of peer review. The article in question notes the outcry by some consumer groups that guidelines issued by the government and the American Heart Association that patients at high risk of heart attack consider lowering their "bad" or LDL cholesterol from 100 to 70 were issued by a panel whose members had ties to industry.

But, it should be noted, the consumer groups who decry industry ties have not actually called the underlying science into question - they just trumpet the fact that the members of the panel had not (recently) disclosed their industry ties. On the same grounds, one might also question the motives of some consumer advocacy groups, like Public Citizen, who have long-standing financial ties to trial lawyers - who make a very handsome living suing corporations vilified by advocacy groups.

There is a legitimate concern that there should be more transparency in the medical research community - particularly in the publication of clinical trial results - but transparency is no substitute for good research. The recommendations on lowered cholesterol discussed here had been reviewed by 80 other researchers before they were finally released. The damage done here is that patients who might benefit from the findings will cynically ignore them. Accusation by affiliation doesn't help the public sort out the underlying facts, nor does it advance the public health.

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FDA to Set Up New Cancer Drug, Products Review Office
Wall Street Journal, 7-16-04

The FDA has consolidated its cancer offices in order to "more quickly [review] drugs and other cancer treatments." The unit, the Office of Oncology Drug Products, will be integrated into the FDA's Center for Drug Evaluation and Research (CDER), "which is charged with reviewing, evaluating, and monitoring drugs." Dr. John Jenkins, CDER director, thinks that the consolidation will make the FDA's already speedy cancer treatment approval process even faster - one very successful drug, Gleevec, was approved in a mere 42 days.

The FDA ought to be commended for its commitment to advancing cancer research, and continually looking for better ways to approve meaningful treatments. One question that arises, however, is why can't the entire organization be as nimble as its cancer research divisions?

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Next to the Express Checkout, Express Medical Care
The New York Times, 7-18-04

Streamlined medical clinics, staffed by experienced nurse practitioners, are starting to pop up in malls and department stores, offering patients convenience, speed and affordable basic medical treatment. The clinics "aim to diagnose and treat about a dozen common ailments - like strep throat, sinus and ear infections and seasonal allergies - in about 15 minutes. They also provide vaccinations and offer screenings for cholesterol and blood pressure problems." At one chain, the computer system is programmed to watch out for patients who present repeatedly with the same symptoms, indicating that a referral to a doctor is necessary.

The clinics can offer significant cost savings versus a traditional doctor's office: at one clinic, "a test for strep throat costs $44 versus an average of $109 at a doctor's office or $328 in an emergency room." Patients with insurance pay even less.

This is a great example of what the market can do when government regulation lets a really innovative idea slip through the cracks. Policymakers should take a good look and think hard about how we can outsource more healthcare services from expensive settings (hospital rooms, doctor's offices), into more nimble and effective operations like this one.

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Alzheimer's Association, National Institute on Aging Seek to Expedite Prevention Trials for Alzheimer's
News Release, 7-18-04

The 9th International Conference on Alzheimer's Disease and Related Disorders (ICAD) is being held in Philadephia this week (July 17-22), and one of the most important topics under discussion will be how to reduce the cost and complexity of trials that test new Alzheimer's therapies. Alzheimer's trials can be particularly expensive and hard to conduct because elderly populations must be followed for long time periods, and cognitive testing requires either cumbersome visits to clinics or trips by researchers to homebound patients. Also, "frail older participants are often more prone than younger patients to drop out of a study or stop taking the medicine. They may also pass away during the study." Researchers are working to develop better home-based and web-based cognitive testing models, as well as biomarkers for identifying patients who are at high risk for developing Alzheimer's. ICAD's call for faster, less expensive clinical testing models is emblematic of the problems facing the pharmaceutical and biotech industries - and another reason why the FDA and federal policymakers should spend less time worrying about drug importation and more time on improving the drug discovery process.

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