|Selected news articles which highlight important policy issues.||
News: Weekly Archives
News for the week of 08-16-2005
Access to Prescription Assistance Programs Widened
There is one lesson that policymakers never seem to learn: price controls create shortages. Take for instance, the pharmaceutical industry, which is under enormous political pressure to lower drug prices to help uninsured Americans purchase prescription drugs. The implied threat is that if the industry doesn't lower prices to "acceptable" levels, Congress and/or the states should step in and mandate some form of price controls. If this happened, investment in the biopharmaceutical industry would plummet—as it did in 1993, when the Wall Street Journal noted that "the fear of price and cost controls [in the Clinton health plan] hurt the biotech business."
Industry, consequently, is trying avoid the specter of price controls by expanding access for uninsured, low-income Americans through its "Partnership for Prescription Drug Access." The program is even tailoring access for specific states, like Connecticut:
Starting today any [Connecticut] state resident who needs assistance paying for prescription drugs will be able to access information on hundreds of such programs with one toll-free telephone call or a few clicks on the computer. Nationwide, about 475 programs offer assistance with medication costs. About 180 are sponsored by pharmaceutical companies. Others are government subsidies, such as ConnPACE, or discount programs offered by chain drug stores or generic drug makers.
This is a noble effort, and well worth pursuing on its own merits. But the core problem facing policymakers—lack of affordable health insurance—can't be fixed by industry alone. In the meantime, haranguing the industry over prices can only lead to less investment in this critical industry—hampering the development of tomorrow's life-saving new medicines.
Wholesale drug prices top inflation in general, AARP says
The AARP is one of the groups lobbying for lower drug prices and for the government to use its purchasing power to "negotiate" with industry. Recently the AARP released the latest in a series of studies showing that drug prices are outstripping the inflation rate. This is a particularly odd metric to use since industries set prices to maximize profits—not target the inflation rate. The AARP study found that
Wholesale prices for the brand-name prescription drugs widely used by older Americans rose at more than twice the rate of inflation during the year that ended March 31, the AARP says. The price charged by manufacturers climbed 6.6 percent for a sample of 195 drugs. That's down from the 7.1 percent increase in the year that ended Dec. 31 but still well ahead of the 3 percent general inflation rate, the organization said in a report for release Tuesday.
The AARP's study is particularly questionable, however, because most Americans pay only a small co-pay for their prescriptions, with insurers (both public and private) and pharmacy benefit managers negotiating significant discounts from manufacturers. In other words, retail prices are only relevant for Americans without health insurance—which is, as we noted above, not a problem that can be laid at the doorstep of the pharmaceutical industry.
Vioxx Jurors Sought to Send a Message
Sending a message to corporations through jury verdicts has practically become an American cliché.
Jurors who found Merck & Co. liable Friday for the death of a Texas man said they expected pharmaceutical companies to get the message from their $253.4 million verdict that consumers need safe drugs.
"They needed to be held accountable for putting a drug out there that shouldn't be out there," said Stacy Smith, a 21-year-old child care provider who stood with the majority in the 10-2 vote in favor of the man's widow, Carol Ernst.
"I want them to listen," said Marsha Robbins, a 53-year-old homemaker who was the presiding juror and the oldest of the panel. …
Listening, in other words, means doing what this jury in this jurisdiction wants them to do. This case is only the latest evidence that the tort system (through multi-million or billion dollar verdicts) has evolved to the point where a handful of juries can set rules for national industries.
This is a travesty because jurors—who hear a narrow range of evidence on a narrow topic brought by interested parties—cannot weigh or balance all of the evidence and interests affected by their verdicts. Patients who benefited from Vioxx, the mounds of complex scientific evidence open to conflicting interpretation, and the delicate balancing tests employed by the FDA during drug approval can all be safely ignored by juries in their quest to pin blame on a convenient target.
Reaction from the legal community to the Merck verdict has been split—straight down party lines. Defense attorneys seem to be adopting a wait-and-see approach, while plaintiff’s attorneys thought that the Texas case would set a precedent for future trials and that Merck should start settlement negotiations post haste.
[Thomas Kline], one of the lead attorneys in the consolidated federal litigation in New Orleans, said that while each Vioxx suit would be tried individually, much of the same evidence would be presented as in the Texas case. "I would expect to see that finding replicated repeatedly in future jury verdicts," Kline said.
Defense attorneys cautioned against reading too much into a single verdict, particularly one from Texas, which is viewed as a "plaintiff-friendly" venue.
"You can't draw conclusions about what is going to happen in litigation overall from any one individual case," said John Lavelle, head of the product-liability practice of Ballard Spahr Andrews & Ingersoll in Philadelphia. He said Merck had strong grounds for an appeal and that the punitive damages would be automatically reduced under Texas law.
Merck said it was examining four aspects of the trial that its lawyers believed were grounds for an appeal.
Wall Street, however, has already started to discount Merck’s stock as a result of the verdict: it declined nearly 8 percent on Friday.
For many, Vioxx verdict may mean more suffering; Lawsuit torrent could deter return to market
As we noted above, there were many patients who took Vioxx and found it more effective than other painkillers. Some patients even swear that it was the only drug that gave them relief from unremitting pain. Whether those patients will ever have access to the drug again, however, is an open question.
After Friday's $253 million verdict against Merck & Co. in the nation's first Vioxx-related civil trial, Lisa Stringer is worried that the loss will stop the company from bringing the only painkiller that gives her relief back to the market. Stringer, 38, of Chicago, suffers from a spinal condition that causes nerve pain, particularly in her hands. She lives with pain all of the time and gets little relief from other drugs. She is saving her last three precious Vioxx tablets for the really bad days. "Some people say other drugs work just as well, but they don't understand pain," Stringer said in a telephone interview last week from her home on Chicago's Northwest Side. … Stringer is among thousands of patients who swear by Vioxx despite its recently publicized health risks.
More than 20 million people took Vioxx for relief of arthritis and other types of pain. An estimated 75 million Americans, or one in four, are living with chronic pain, according to The National Pain Foundation. Stringer and others cannot obtain more Vioxx now because Merck pulled the arthritis drug off the market in September after a study linked its steady use with increased risk of heart attack and stroke.
Unfortunately, the voice of patients like Lisa Stringer will probably be lost in the ensuing flurry of Vioxx litigation.
Europe's slow gears pushing scientists away
Our second (and last) article on Europe’s floundering pharmaceutical industry highlights one aspect of the U.S. market that is typically left out of the discussion: how the U.S. attracts human capital—scientists who come here because they both want to do well for themselves, and do well for others. It is, you might say, a prescription for the American dream.
The struggling European pharmaceutical industry has lost more than jobs and investment money. Scientists have been leaving Europe, too. German biologist Katherin Jansen is one of them.
Jansen took a job with Merck & Co. at its sprawling campus in West Point, Montgomery County, in 1992, and soon launched a program to develop a vaccine against human papilloma virus, the cause worldwide of hundreds of thousands of cervical cancer deaths each year. She doubts she would have ever been able to do that in Europe. "There was too much hesitancy to go forward with anything that was new," Jansen said. "They were way too conservative."
The relatively swift development of the vaccine, which is expected to win final approval from the federal Food and Drug Administration later this year, shows why companies increasingly choose the United States as the place to develop new drugs. Merck scientists who worked on the HPV program say that critical to the drug's development was an FDA practice, begun in the early 1990s, that emphasizes speedy approval. Merck's interest and the FDA shift took place when Jansen's career was just starting - and worked to her advantage. Now one of 400,000 European scientists in the United States, Jansen landed her first job in Switzerland after completing her postdoctoral work in the late 1980s at Cornell. But when a former colleague mentioned that there was a position with Merck's vaccine program in the United States, she jumped at the chance. …
Speedier approvals and close consultation between the FDA and drug companies seeking approval for new medicines were mandated by the Prescription Drug User Fee Act. Under the law, drug companies pay hundreds of millions of dollars a year in fees to the government; in exchange, the FDA has added staff and accelerated its reviews. It is one reason that drug approvals in the United States are much faster than they are in Europe. And one reason why scientists such as Jansen work in the United States.
Jansen’s story is certainly encouraging. Many scientists in the industry often labor their entire careers without shepherding a single new drug through FDA approval. It is a vastly complicated science, and failure—not success—is the prevailing outcome.
What ultimately attracts European scientists to American pharmaceutical companies is the same quality that attracts poor laborers from Mexico: the opportunity to pursue a dream.
Germany, a cautionary tale: Price controls cited as one harm to the industry
Americans are worried about unknown drug side effects—and they certainly want industry and the FDA to be as forthcoming as possible about what those risks might be. But Americans also demand that our doctors provide us with the latest and best medical technologies available—and that won’t happen if companies and investors face a market dominated by price controls or by drugs imported from countries with price controls.
The roots of the global pharmaceutical industry are European, with a proud history of science-driven drug research stretching back into the 19th century. In recent years, however, Europe has, by and large, made a conscious decision to under-invest in new medicines as a cost cutting measure, forcing patients to make do with older, less expensive drugs. The result is that Europe’s pharmaceutical industry is in steep decline, and investment is fleeing the continent in favor of U.S. markets.
Throughout Europe, pharmaceutical research and development are in retreat as companies and investment firms shift money to the United States, including the Philadelphia region. Nowhere is the trend more pronounced than in Germany, the world's third-largest market for prescription drugs. Here, price controls, importation of cheaper medicines, industry missteps and investor timidity have combined to undermine an industry that was once a global leader, said analysts, government officials and industry leaders.
As the U.S. government debates proposals to limit the cost of prescription drugs, some experts cite the German experience as a cautionary example of how price controls can backfire, causing an exodus of jobs and a decline in the introduction of new medications. "What people tend to forget is what a big deal the German pharmaceutical industry used to be. More than anyone else, they invented the pharmaceutical industry," said Jack Calfee, an economist with the American Enterprise Institute, a conservative think tank based in Washington. "Twenty-five years ago, our auto industry and our pharmaceutical industry were both trying to keep up with the Germans. Now, we are still trying to keep up with them on autos, but we are way ahead on pharmaceuticals."
Let’s consider it this way. Developing a new drug to treat diabetes—or cancer, or Alzheimer’s—is enormously risky and unpredictable. The drug might fail in clinical trials after tens (or even hundreds) of millions of dollars are spent on research. The drug might succeed in clinical trials but not get FDA approval. The drug may pass clinical trials and get FDA approval, but in the end be beaten to the market by a competitor with a similar drug who locks up market share.
Or a clever trial lawyer in Alabama might sue your company into oblivion on account of rare (or even hypothetical) side effects.
By refusing to place price controls on drugs, the U.S. has created a vital and powerful market for new medicines that add value to patients’ lives and encourages a steady stream of research and investment.
The German’s wouldn’t dream of putting price controls on Mercedes-Benz—and we shouldn’t impose them on pharmaceuticals.
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