In the Spotlight
Small Businesses are Saving Money and Insuring More People Today With Health Savings Accounts
Newt Gingrich, Vince Haley, 11-1-04
As the nation narrows its focus on domestic issues in this last week before a national election, there may be no more important domestic issue than making healthcare insurance more affordable. Because the small business sector represents the single largest segment of the uninsured population, removing the obstacles that keep employers and their employees from being able to afford coverage represents the most significant opportunity to solving the problem of uninsured employees working for small businesses.
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A New Way to Save on Premiums
Kiplinger's Personal Finance, 10-28-04
Kiplinger delivers a very detailed and helpful primer on Health Savings Accounts (HSAs) for those curious about the option and concerned about their rising health insurance premiums. Kiplinger's conclusion about HSAs: "The high deductible policy will cut your monthly premiums while the savings account will cut your taxes." Perhaps best of all, HSAs promise to return power to consumers for their own health care spending and treatment. While these plans are just now taking hold with employer health care plans and sparking interest amongst the self-employed, Kiplinger predicts that "by this time next year, HSAs will be widespread."
Novartis Sets Deal To Seek New Drugs For Fighting TB
Wall Street Journal, 10-27-04
Tuberculosis is the second leading cause of death worldwide - second, in fact, only to AIDS. The two diseases actually operate in a grim synergy, with TB and AIDS infecting many of the same patients, "weakening their immune systems and hastening death." Like AIDS, TB proliferates in developing nations that have inadequate health care infrastructure and are seen as poor markets by pharmaceutical companies who have to recoup their staggering drug research costs. As a result, research on new drugs to treat infectious diseases in the developing world has slowed to a crawl.
To bridge the gap between first world medicines and the patients who need help most, foundations like the Global Alliance for TB Drug Development are forming partnerships with drug manufacturers like Novartis to underwrite drug research and use private sector expertise to produce enough cheap drugs to meet the needs of developing nations.
In this case, the Novartis Institute for Tropical Diseases has formed a partnership with the Global Alliance to develop a new family of TB medicines. "Novartis has pledged to make [these treatments] available without profit to poor patients in developing countries." The first drug in the pipeline is PA-824, which will enter Phase I testing in 2005. The drug "differs from existing treatments by killing both fast-growing and slow-growing strains of TB bacteria." It may also be effective against drug resistant strains of TB that are particularly dangerous. For more information on how (and why) industry and researchers are struggling to develop new treatments for infectious diseases, see Bad Bugs, No Drugs
, published by the Infectious Diseases Society of America.
The Latest Birth-Control Battle: Having Won Coverage for the Pill, Employees Now Press for Insurance to Pay for Newer Alternatives
Wall Street Journal, 10-26-04
There is a widely used, safe, highly effective contraceptive available for women: the pill. In fact, the technology behind the pill is over 50 years old and it has proven itself to be the contraceptive of choice for many women based on its reliability and convenience. Today, some version of the pill is used by 80 million women around the globe. In the U.S., the pill is so popular that over 80% of employer based health insurance plans covers the purchase of birth control pills – meaning that for many women, prescription birth control is effectively free.
And yet, more birth control options continue to enter the market in response to ongoing demands for newer, safer, and more convenient birth control options. Today, women can choose from many available options: hormone patches, injectible hormone implants, new IUDs, or sterilization - with more products still to come.
However, what is astonishing is that the drug companies haven't been pilloried for heaping new birth control options onto consumers and insurance companies. After all, aren’t most of these new medications really "me-too" drugs, copycats of the same basic technology, repackaged by an industry eager to capture profits rather than creating new medicines of real value? Why aren’t industry critics demanding that the FDA only approve birth control methods that are significantly better than the pill and withdraw these other products from the market? Wouldn't women be just as well off with two or three birth control options, as opposed to 10?
The irony is that if this was any other drug category companies would face withering criticism for marketing this many so-called "me-too" drugs, with critics discounting claims that large numbers of women react differently to the pill or just want another option. But if convenience, consumer choice, and competition are good for contraceptive drugs, why not for painkillers, statin drugs, or impotence treatments?
A world of difference: A nonprofit drug company works to wipe out diseases that plague developing nations but are ignored by Western pharmaceutical giants
Los Angeles Times, 10-25-04
Drug development is so expensive and unpredictable that drugs for rare diseases that afflict small numbers of patients (or even large numbers of patients in developing nations) are often seen as unprofitable by drug manufacturers who, after all, must make a profit to survive and keep their research pipelines flowing with other, more viable medicines. Still, public health suffers most in countries that can least afford the additional financial and human costs of epidemics from AIDS, TB, or malaria.
This doesn’t mean, however, that industry is just sitting on it hands and watching people die. Public-private partnerships are springing up to merge the expertise of private companies with the philanthropic backing of large foundations. One example is the relationship between OneWorld Health, a not-for-profit drug company, and the Bill and Melinda Gates Foundation. OneWorld Health approaches established drug companies and convinces them to "donate the rights to promising therapies languishing in their laboratories in exchange for generous tax write-offs – and valuable public relations benefits." In this model, the private sector identifies promising new treatments and then donates the rights to develop the compounds to OneWorld Health, which then focuses on transforming the compounds into viable drugs, thereby avoiding "the huge expenses of developing medications from scratch."
Recently, OneWorld Health was able to take a grant for less than $5 million from the Gates Foundation, and work with the WHO to develop a new antibiotic, paromycin, that has proven 97% effective against a parasitic disease (leishmaniasis) that kills 200,000 people every year in India, Nepal, Bangladesh, and elsewhere.
Blaming pharmaceutical companies for doing what they are supposed to do – protecting their investors and developing profitable medicines – is a recipe for failure when it comes to global health. Instead, activists should promote more public-private partnerships like this one, that bring first world medicines to the developing world at a price those nations can afford, without crippling the property rights that undergird medical progress.
"Off-Label" - And Out Of Bounds? When drugmakers promote products for unproven uses, they may be courting trouble
Business Week, 10-18-04
The FDA mandates that pharmaceutical companies use large, double-blind clinical trials to prove that new drugs are safe and efficacious. This is an effective strategy in many ways, but these trials are cumbersome, tremendously expensive, and offer physicians little evidence for what works in the real world – where patients often have multiple pathologies and are on multiple treatments simultaneously. Also, since these trials are very narrowly tailored to collect a very small subset of data, they don’t tell us anything about what potential uses a drug might have for treating other medical conditions.
As a result, physicians will often use a drug approved for one condition to treat another disease that it has not been approved for, generating new, "off-label" uses that manufacturers will then promote. This is, much of the time, all to the good. Drug manufacturers have powerful financial incentives to show that their drugs can treat as many conditions as possible, expanding the boundaries of medical science and giving patients and physicians valuable new treatment options.
Still, there are concerns that companies use selective research on off-label uses to push drugs on physicians and patients when there is dubious evidence of effectiveness. This has led some observers to call for companies to conduct new clinical trials before a drug can be prescribed for any new indication; however, this added cost would cripple off-label use and lead to less, not more, medical innovation.
The solution is to turn to newer and less expensive statistical technologies like Clinical Practice Improvement, or Delphi Panel analysis, that utilize a wide range of physician expertise and patient variables to extrapolate with remarkable accuracy how drugs can be used effectively off-label. The FDA and drug manufacturers could then use the results of statistical modeling to isolate small groups of "high responder" patients to test these drugs on, proving off-label efficacy and safety at a fraction of the cost of larger clinical trials. This approach would be a true win-win innovation: it encourages companies to find new uses for medicines already on market and ensures that when physicians are using drugs off-label they do so based on reliable evidence.
Vioxx ads topped $500M Drug maker Merck spent heavily against rival Pfizer
The Star-Ledger, 10-24-04
The Vioxx recall has generated fresh anxiety about direct to consumer advertising for prescriptions drugs. Critics allege that drug companies use advertising to create demand for expensive "copy-cat" drugs that offer little benefit to consumers over cheaper generic alternatives; critics are also worried that the advertisements don't offer enough information about potential side-effects.
However, critics fail to note that advertising creates competition between drug brands, forcing companies – as Merck did in the case of Vioxx – to study and document real benefits versus their competitors. In its zeal to prove that Vioxx had cancer preventative properties, Merck launched a long-term study of the incidence of colon polyps in patients taking Vioxx, and also collected information about heart disease incidence in the same patient group. Data from this study led directly to Merck's recall of Vioxx, and helped physicians focus on why some Cox-2 inhibitors seem to increase the risk of cardiovascular events, while others may not. Pfizer, the maker of Celebrex, is now starting its own 2 year study that it hopes will prove that Celebrex doesn’t pose an elevated risk of cardiovascular events in patients who take it long-term.
Pharmaceutical companies marketing statins have done much the same thing, commissioning head to head studies, giving physicians a much better sense of which drugs work best for which patients and why. Absent the ability to reach out to consumers, companies would have significantly fewer incentives to engage in this type of comparative safety and efficacy research, which undoubtedly benefits medical research and patient health.
In other words, direct marketing ensures that information about drugs gets out faster, and, on the whole, tends to be more accurate than it would be if consumers were left in the dark entirely.
The Economist, 10-21-04
Vaccines often have to be refrigerated to keep them viable; if they reach too high a temperature they degrade and become useless. This may not be much of a problem in New York or Paris, where doctors have ready access to refrigerated storage facilities, but it is a huge problem in developing nations (for instance, in Africa) where finding a single cold soda is nearly impossible, let alone providing refrigeration for thousands or millions of doses of critical vaccines. As a result, "experts estimate that almost half of all vaccine doses are wasted because of temperature damage, which is cold comfort to the families of the 2m children in poor countries who die every year from measles and other vaccine-preventable diseases."
Scientists may have found a solution to this problem by studying how some plants and insects can hibernate for decades, or even hundreds of years, in the face of drought. The process, called anhydrobiosis, occurs when "[plant or insect tissues] produce sugars which turn into a syrup as they start to dry out, eventually forming a sort of glass which preserves them perfectly." When water is introduced into the environment, the sugars dissolve and the organisms spring back to life. Researchers at Cambridge Biostability are using this technique to coat vaccine molecules with a sugar spray that keeps them protected in small glass-like beads. When these microspheres are injected into the human body the sugary coating dissolves in the bloodstream and releases the vaccine.
This new technique appears to be as safe as standard vaccination techniques, is highly durable in high temperatures, and may even allow several different types of vaccine to be applied in the same injection. Perhaps best of all, "by eliminating the need for refrigeration, the technology could save up to $300m a year in global vaccine costs, which means another 10m poor children could be protected."
Health Care Coverage and Drug Costs - The Candidates Speak Out
George W. Bush, John F. Kerry, New England Journal of Medicine, 10-28-01
The New England Journal of Medicine submitted two questions to the presidential candidates, one on health insurance and the other on prescription drug costs. The ensuing replies indicate their governing philosophies: Senator Kerry, who wants widespread government intervention in health care markets to control costs and subsidize care, and President Bush, who favors a market response with relatively narrow, targeted government interventions. Must reading for any voters who may still be undecided at this late date.
Commentary: A Booster Shot For Vaccines: New technology could speed development and keep the medicine chest stocked
John Carey, Business Week, 10-25-04
Part of the problem - the global problem – haunting vaccine development is that vaccines are a public good that everyone benefits from, even those people who don't ever get vaccinated. For instance, every year the U.S. purchases millions of doses of flu vaccines for people who never receive them – and who probably wouldn't get very ill even if they do come down with the flu. The problem is that unless you reach a critical mass of vaccinations, vulnerable groups in the population – children, the elderly, those with compromised immune systems – will find themselves facing potentially devastating infections from the vast majority of people who might only get a bad cold. Thus what could be a minor nuisance could easily morph into a very costly and lethal epidemic. The combination of government unwillingness to lose money on vaccine production and general public apathy with vaccinations absent a public health crisis means that vaccines are a low priority for pharmaceutical and biotech companies. "Making vaccines is complex work, with lots of investment in manufacturing needed, along with special expertise. Yet weak pricing has left profitability low. That combination has scared many companies away from the market."
The solution is for the government to improve the risk-benefit ratio for industry: provide greater liability protection for the rare vaccine side-effects that can cripple or kill otherwise healthy people, and work to raise prices for vaccine manufacturers by scaling back the governments direct purchase of vaccine stocks. Once the government relaxes its death grip on vaccine prices, manufacturers can be lured back into this critical field.
Kerry's toxic drug plan
Robert Goldberg, Ph.D., Washington Times, 10-22-04
Robert Goldberg, a Senior Fellow at the Manhattan Institute, writes that Senator Kerry's indictment of the Bush Administration for the current flu vaccine shortage smacks of hypocrisy and worse – an unsustainable prescription drug policy. Currently, the government uses its purchasing power to push vaccine prices below cost, crippling vaccine R&D and driving producers out of the market. If he becomes President, Goldberg warns that Kerry would use the same failed policies to cripple the entire pharmaceutical industry: "price controls, bulk purchase, and importation of medicines are exactly the policies that have pushed the vaccine industry to the brink of extinction" and are the same policies that Kerry advocates for the entire healthcare sector.
Editorial: Flu Wars
Washington Post, 10-23-04
Partisan politicking aside, this year's flu vaccine shortage is a long-standing problem that "extends back over several administrations", Republican and Democratic, with plenty of blame to go around. But the lion's share of the blame goes to the federal government itself, which inevitably adopts a miser's attitude when purchasing vaccines from private manufacturers. Currently, the government buys about half of all vaccines nationwide, and uses its enormous purchasing power to drive down prices, pushing manufacturers out of the market and narrowing the field to the point where a single mishap – in this case the closing of a vaccine plant in the U.K. - cost the U.S. half of this year's planned vaccine supply.
The lesson to be learned from this fiasco applies to drug prices generally: prices tell the market how valuable a commodity is, and if the government wants to fix prices on prescription drugs (or vaccines) it is telling the market that drugs just aren’t that valuable to society. The result: fewer drugs and new medicines when we need them the most, exactly the problem we are facing now.
Tom Bray, Washington Times, 10-25-04
Mr. Bray adds another piece to the vaccine shortage debate: the impact of tort liability on vaccine manufacturers. In the 1960s, there were 26 companies making various vaccines in the U.S. Today, there are four, and none manufacturing the flu vaccine. One commentator traces the problem to a single case in 1955, when a little girl received a polio vaccination and was struck by a rare side effect. Although the manufacturer was not found negligent in the ensuing court case, the jury still awarded the family nearly $150,000.
Since vaccines are by definition given to people who are healthy, any side effects are bound to command multi-million dollar verdicts from sympathetic juries. As a result, companies would just as soon ignore the market altogether as expose themselves to bankrupting tort verdicts. Bray concludes that "in the name of safety and compassion, we have succeeded in creating a world that is actually more dangerous, not less dangerous, particularly, in the case of the flu vaccine, for the very old and the very young." America's tort system, in other words, is in many ways more dangerous than the problems it is supposed to prevent.
Kerry Win: Bad Medicine For Health Care
Dr. Scott Gottlieb, Forbes, 10-22-04
Some experts believe that a Kerry administration, much like President Clinton before him, would be forced to govern as a moderate by a staunchly Republican Congress. Kerry's rhetoric, however, leads one to expect the opposite: Kerry may claim to be many things, but a Clintonian New Democrat is not one of them.
Dr. Gottlieb points out that if Kerry's campaign rhetoric, much of it targeted against the pharmaceutical companies and the FDA, holds true to form, he could use strategic appointments to the FDA and the Centers for Medicare and Medicaid Services (along with stringent new regulations at both agencies) to substantially impede new drug development and slash industry profits. Gottlieb warns his readers "[not to] underestimate the impact that activist leadership inside the FDA and Medicare program can have on the industry, its prospect for profits and innovations for producing new medical products that improve the public health."
High Prices: How to Think About Prescription Drugs
Malcolm Gladwell, The New Yorker, 10-25-04
This is probably the best single article on prescription drug prices to appear in a mainstream publication this year – a cool, well-reasoned rebuttal to the recent industry broadside authored by Marcia Angell, M.D. Rather than blame pharmaceutical companies for being rational players in the system that consumers and government policy makers have created – a third party payor system that is dubiously attentive to quality – Gladwell thinks that we all have a responsibility to promote the use of better information and better decisions in health care markets. "In the end, the fight to keep drug spending under control is principally a matter of information, of proper communication among everyone who prescribes and pays for and ultimately uses drugs about what works and what doesn't, and what makes economic sense and what doesn't – and medical journals play a critical role in this process."
Assessing the Impacts of the Prescription Drug User Fee Acts (PDUFA) on the FDA Approval Process
Ernst R. Berndt, Adrian H. B. Gottschalk, Tomas Philipson, Matthew W. Strobeck,
NBER Working Paper No. w10822, October 2004
This study validates what many observers of the FDA had long assumed: that the Prescription Drug User Fee Acts (PDUFA,1992; renewed in 1997 and 2002), which mandated FDA performance goals in reviewing new drug applications in return for levying user fees from drug companies, significantly accelerated the downward trend in approval times for new drug applications (from 24.2 months in 1991 to 14.2 months in 2002) after it was enacted. The authors conclude that "of the total observed decline in approval times between 1991 and 2002, approximately two-thirds can be attributed to PDUFA." However, the study also noted that much of the decline occurred between 1992 and 1997, rather than during the ensuing 5 year period, 1997-2002.
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