MPT WWW
Selected news articles which highlight important policy issues.

News: Weekly Archives

News for the week of 11-10-2004

Keeping us alive is good business: PERSONALISED MEDICINE: Targeting small groups who will benefit most from a drug can be more profitable than first thought
Financial Times, 11-10-04

Personalized medicine - driven by the new science of pharmacogenomics - is the future of the pharmaceutical industry. By targeting the genetic basis of disease, companies that produce targeted drugs like Gleevec or Tarceva can provide higher treatment response in screened patient groups than traditional drugs. As many other commentaries have pointed out, targeted therapies will also help to insulate companies from the kinds of adverse effects (and liability exposure) that occur when drugs are used in very large, unscreened populations.

Take Genentech’s cancer drug Herceptin, which targets the HER/neu protein present in some breast cancers. To see if a patient can benefit from the drug, “physicians perform a genetic analysis of the disease before recommending it, because it has been shown to work well only in patients with a specific profile.” If the patient’s disease has the right protein, they get Herceptin - which also has fewer side effects than traditional chemotherapies.

Are targeted therapies good for a company’s bottom line? So far, the answer is yes. Herceptin “has become a best-seller, generating $450 million last year.” Analysts note that Herceptin, Gleevec and other targeted drugs are extremely effective in screened patients, “and the market will support a higher price for life-saving treatments.” Last, but not least, pharmacogenomics should help to lessen the time and cost involved in drug development, since targeted drugs can be tested in very select patient groups and should show definitive results relatively quickly. The real question is whether or not industry and the FDA can adapt quickly enough to the reality that there is no such thing as a generic disease that is the same in all patients.

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Diet Drug Helps Patients Maintain Lower Weight: Sanofi Pill, Which Blocks 'Munchie' Receptor, Shows Other Health Benefits, Too
Wall Street Journal, 11-10-04

Don't throw away your sneakers yet (or ever, really), but an experimental weight loss drug has shown early evidence that it can not only help patients lose weight, but it may help also them keep the weight off, control "bad" cholesterol, and moderate blood sugar levels. Since both cholesterol and blood sugar are significant risk factors for heart disease and diabetes - which are epidemic in the American population - the drug could turn out to be an enormous boon for patients and physicians. Patients in the latest clinical study of the drug lost an average of 17 pounds the first year of treatment, and "maintained their weight for an additional year."

Researchers say that "the drug blocks receptors in what is called the endocannabinoid system in the brain", "which also reside in fat cells and in nerves in the stomach, [and] play a critical role in regulating appetite." The drug, from Sanofi-Aventis, will be up for FDA drug approval by late 2005 or early 2006.

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Firm offers discounted generic medicine to low-income families
The Cleveland Plain Dealer, 11-10-04

Express Scripts, a pharmacy benefits management company that “runs drug benefit programs for millions of Americans” has introduced its own program for low-income individuals (Rx Outreach) and families without health insurance. The program offers “generic drugs as next-to-nothing prices” which, in some instances, will even be lower than those offered across the border in Canada.

Express Scripts will offer the plan in the 10 states in which it has operations and will offer “any of 54 generic medicines made by 17 pharmaceutical companies”; Express Scripts will offer the generics at $18 for a 90-day supply, or $30 for a six-month supply, provided the drugs are purchased through mail order. Express Scripts claims that they are offering this benefit as a public service, not as a marketing or public relations ploy.

Six of one, half-dozen of the other if they both have the same effect. As we move towards full implementation of the Medicare drug benefit in 2006, companies like Express Scripts have every incentive to compete for Medicare customers on issues like price, quality, and, of course, its stature as a good corporate citizen. This is certainly the kind of competition that we all benefit from and the nation can use more of it.

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Support for Cholesterol Regimen
The New York Times, 11-11-04

Call it the one-two punch against heart disease. A new drug regimen combining a traditional cholesterol lowering drug (a statin) in addition to a B vitamin (Niacin) has shown that it can “slow the progression of heart disease more effectively than either medicine alone” according to a new study.

While statins lower “bad” or LDL cholesterol, the vitamin Niacin has long been known to raise the amount of HDL or “good” cholesterol in the bloodstream, “which helps remove fats from the blood.” However, high doses of the vitamin have adverse effects that have made it unworkable as a drug - until now. The Niacin drug used in this study, Niaspan, is an extended release form of the vitamin that reduces the incidence of adverse effects. In the study quoted here, patients “who had suffered a heart attack or who had other signs of hardened arteries” received either Niaspan and a statin or just a statin. After a year, the combined Niaspan/statin group had “fewer heart attacks, strokes, and deaths” than the group receiving only statin treatment.

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Dosanjh threatens to cut off Web drugs
The Globe and Mail, 11-11-04

The Canadian Federal Health Minister, Ujjal Dosanjh, has announced “that he will ensure the safety of the Canadian drug supply, even it if means choking off the flow of cheap Internet drugs to the United States.”

The Canadian government is even considering restrictions on doctors who write prescriptions that allow Internet pharmacies to ship drugs to the U.S. “Mr. Dosanjh said it is unethical and unprofessional for Canadian doctors to sign prescriptions for cross-border shoppers from the United States without seeing the patients themselves.” The central problem, according to the minister, is that the Canadian market is too small to indefinitely sustain a large demand for imported drugs in the U.S. In short, “Canada cannot be the drugstore for the U.S.”

The economics here is pretty straight forward: if demand in the U.S. rises significantly for Canadian drugs, the Canadian supply will tighten and prices will rise for Canadian consumers. And since Canadian politicians don’t have to worry about a backlash from American seniors, they won’t allow that to happen. Of course, U.S. policymakers who support drug importation have long known that large scale importation was really untenable – but they are using it as a very effective stalking horse for imposing price controls on the U.S. market.

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Pfizer chief urges new consensus on healthcare.
Financial Times, 11-11-04

“People are so angry and frustrated that they are reaching out to all sorts of wacky ideas.”

The debate over health care in America has become so volatile that the CEO of one of the largest global pharmaceutical corporations feels like he has to speak out lest “wacky ideas” become the order of the day.

Pfizer CEO Hank McKinnell is advocating for a bipartisan government commission that will “take a broad look at how treatment is provided, and its costs to patients and companies” and help the U.S. reach a consensus on how health care is paid for and delivered.

We understand his concern. Pharmaceutical companies are under fire around the world not really for their greed (although that is the buzzword in some circles), but for their efficacy. Drugs for AIDS, heart disease and dozens of other ailments have been wildly successful, and dozens more life-saving drugs are on the way. But the more effective these drugs are, the more patients demand them – and the burden falls heaviest on governments that have trained their citizens to think of health care as an entitlement that is or ought to be free. The consequence is that demand for health care is rising sharply as pharmaceutical companies become more adept at healing our aches, pains and anxieties – and governments gripe as their own health care costs spiral out of control because they have insulated patients from the only known way of adjusting supply to demand: prices.

Consider, for instance, the following anecdote. Pfizer and other drug companies are increasingly advocating for public health agencies to implement disease management programs “designed to show that preventive medicines and improved patient management can reduce illness and expensive [hospital] stays.” The idea is that these programs will show that drug treatment saves money for government programs versus other types of care, and thus is well worth the investment. In Florida, Pfizer is running an experimental disease management program that has already saved the state $41 million over two years by targeting “impoverished patients on state medical aid” and showing that “better patient management and medicine use could prevent long term problems.” In exchange for guaranteeing savings for the state, Pfizer has asked for a higher price on its medicines. Fair, right?

Florida has already said that it will demand price concessions no matter what the program’s outcome. And that’s the bottom line. Improved health care is a nice outcome for government agencies, but it doesn’t help them balance their budgets at the end of the day.

Consumers are the only group that directly benefits from improved health care quality, and if they experience that quality they will support it with their wallets and pocketbooks. Until that day comes, governments will rely on price controls, mandates, and other wacky ideas to support “free” health care.

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W.H.O. Panel Backs Gene Manipulation in Smallpox Virus
The New York Times, 11-12-04

There are only two laboratories in the world where the smallpox (variola) virus is known to exist: at the Centers for Disease Control in the U.S. and the Novosibirsk lab in Russia.

The operative word is “known”. Other countries are suspected of keeping clandestine stocks of the virus as a potential bioweapon, and there is ongoing evidence that terrorist groups (particularly Al Qaeda) have attempted to acquire or manufacture chemical and biological weapons. Given the murderous potency of smallpox, it is undoubtedly quite attractive to any terrorist group with an apocalyptic agenda.

In light of the real (albeit remote) chance of a smallpox attack, the World Health Organization has taken the unprecedented step of authorizing the U.S. and Russian labs to genetically alter the smallpox virus in an effort to speed up the search for drugs that can treat the disease. The research will be subject to “whole load of provisos and conditions” but it is indicative of how serious the threat of bioterrorism is that the W.H.O. authorized the work at all.

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NEWS AND ANALYSIS: Do New Drugs Always Have to Cost So Much?
The New York Times, 11-14-04

What is a price, really? Prices are the signals that markets use to determine how highly valued a given commodity is. Low-prices equal low-value; high-prices equal high-value. The milk that goes into your ice cream isn’t genetically destined to become a creamy dessert; it could also wind up in your coffee, or dozens of other alternative uses. But ice cream companies buy milk at prices that guarantee them a profit on their final product; if coffee drinkers are willing to pay more, more milk goes to them. If someone was to fix the price of milk for ice cream arbitrarily lower than milk for coffee (because ice cream is so valuable it ought to be cheaper), ice cream makers would inevitably stop making ice cream and start selling café lattes. Lower prices do no mean you get more of a valuable commodity; most of the time it means you get less.

This is usually what happens when policymakers start mulling about better ways the government can fix prices in health care markets. The money that goes into drugs can just as easily be used to finance hundreds of other investments. Lowering the price for drugs just tells the market: this isn’t that valuable. Spend your money elsewhere.

Still, hope springs eternal. Consequently, this article examines a number of ways researchers and governments can exert more influence on drug prices, from buying patents outright from companies, to doing the research themselves, to setting up a fund to compensate drug companies “based on how much their new drugs improve the quality of life and how often they are used.”

But this just returns us to the central problem with all government pricing: what is valuable to a bureaucrat is not necessarily (and not often) what is valued on an open market. What is more valuable to consumers: penicillin or Viagra? Depends on which consumer you ask.

But shouldn’t many drugs cost less? Perhaps. But that would entail letting consumers control more of their own health care dollars and letting them decide if they want to pay full price for Viagra, or Celebrex, etc. – and those drugs would have to compete with other consumer preferences for ice cream, Starbucks, and X-Box games.

Then we could save insurance or government funding for the really hard cases: cancer, AIDS, Alzheimer’s etc., where the drugs are very expensive – and very valuable.

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