Medical Progress Today
  Volume 1, Number 20
  December 10, 2004


In the Spotlight

Race and medicine can mix without prejudice
How the story of BiDil illuminates the future of medicine.


Sally Satel, MD, 12-10-04

A research team at the University of Minnesota School of Medicine recently unveiled the results of a medication tested only in black patients. The drug, called BiDil, is expected to receive FDA approval next year and will be marketed for use in African American patients with heart failure.

Continue reading . . .

Featured News:
NIH licensing performance under par
Nature, 12-7-04
Featured Commentary:
Medical progress; Health breakthroughs worth the price
Robert Goldberg, Ph.D., Washington Times, 12-7-04
Featured Research:
Are Drug Price Controls Good for Your Health?
Carmelo Giaccotto, Rexford Santerre, John Vernon, Center for Medical Progress Report, 12-7-04

News

No Relief Seen In the Growth Of Employers' Health Costs
The New York Times, 12-2-04

Through the first two quarters of 2004, health care costs rose at about the same rate as in 2003, 7.5 percent. The growth was “largely driven by the growth in hospital costs,” “both for overnight stays and outpatients,” along with new hospital construction. This has led some industry observers to the belief that shifting more responsibility for health care spending to consumers won’t have much effect on overall cost trends.

Exactly how they come to this conclusion isn’t stated, so we’re left to guess. But the upshot is that the only force capable of moderating health care spending is the federal government, presumably through universal insurance coverage combined with price caps. This may cut costs, but not accomplish much else – rationing health care leads to reductions in health care quality and access that drives overall societal costs up, not down.

Michael Porter, director of the Institute for Strategy and Competitiveness at Harvard University, puts the problem this way: competition in health care is at the wrong level. Everyone – insurers, physicians, providers, etc. – competes on the basis of cost, not quality or efficiency. Overall, the system “wrangles over the wrong things, in the wrong locations, and at the wrong times. System participants divide value instead of creating it....[stakeholders] shift costs onto one another, restrict access to care, stifle innovation, and hoard information - all without truly benefiting patients.” Government control over health care would merely amplify the current emphasis on cost controls and crowd out incentives for innovation and efficiency.

Health care may never be cheap, but before we give up on the market, we might try having one first. Cost pressures and competition in every other industry drives innovation and efficiency that result in better outcomes for consumers. However, health care remains one of the few industries where bad outcomes are rewarded without batting an eye. Until this changes, and health care providers directly compete for customer dollars based on quality, our national obsession will remain health care costs, which is the wrong outcome to measure.

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U.S. drug safety system shaky, experts say; Recently, troubling news about several high-profile drugs has sapped confidence in the system charged with exposing dangerous medicines.
The Miami Herald, 12-2-04

According to a 2001 report from the national Institute of Medicine, approximately 100,000 people die every year due from preventable medical errors. Does this mean that America’s physicians are evil, greedy, unrepentant killers?

No, but it does seem to be the attitude engendered towards the pharmaceutical industry in the wake of Vioxx’s market withdrawal and other high-profile safety issues at the FDA (pediatric anti-depressants, Baycol, and the flu vaccine shortage).

Some pause for rational reflection would seem to be in order. We need to remember that adolescent suicide has been in a decade-long decline, even as prescriptions for anti-depressants have risen dramatically. Rates for cancer, stroke, and heart disease mortality have all fallen since the early 1990s, when the FDA allegedly was scooped up into the pocket of the pharmaceutical industry and released a flood of unsafe drugs into the nation’s medicine chest.

Is the nation’s drug safety system in need of an upgrade? Yes, but let’s keep the problem in perspective: Americans have access to more of the world’s new drug launches than any other nation, and benefit from that both in terms of health outcomes and economic growth. Instituting a jihad against industry and the FDA is unmerited based on the facts and will have real consequences as valuable new drugs are kept off the market longer or are scrapped altogether by risk-averse FDA regulators.

Safety – in terms of medical errors or prescription drugs – means creating a system wherein the right incentives are aligned for both providers and consumers, and health care information is divulged and shared among providers in a timely fashion. That is, basically, a structural problem, not a fatal flaw in the way we approve and market new medicines. Let’s concentrate on fixing the real problems rather than making political hay with misguided corporation-bashing.

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Americans Relying More on Prescription Drugs, Report Says
The New York Times, 12-3-04

This is true, but it is also true that life-expectancy is climbing (to 77.3 years, a record), and there are continuing declines in heart disease, cancer, and stroke – the nation’s leading causes of mortality.

Overall, “more than 40 percent of Americans take at least one prescription drug, and 17 percent take three or more.” Americans are also spending more on health care across the board – up 9.3 percent in 2002 – but any anxiety over cost has to be offset by the improvements in many health categories. The question is, how much bang is the nation receiving for its health care buck? Assuredly there is some waste in the system, but there are also many diseases that are, by most clinical standards, undertreated. Studies consistently show that increased spending on pharmaceutical innovation generate returns to society that far outweigh their costs.

Even so, we are only at the very first stages of new technologicial developments that will allow us to deliver health care more efficiently and effectively on an individual basis. Empowering consumers to spend their own health care dollars would help to accelerate this revolution and remove the unease that now surrounds prescription drug spending.

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New Leukemia Drugs May Prove More Potent Than Gleevec
Wall Street Journal, 12-6-04

Gleevec is a miracle drug that provides hope for patients with a rare and deadly form of blood cancer called chronic myeloid leukemia (CML). However, the drug isn’t perfect – some genetic variants of CML are resistant to the drug, and some patients who have initials success with the it may see their cancers re-emerge months later, as their cancers develop drug resistance.

However, thanks to new forms of molecular imaging and DNA sequencing, scientists can test for genetic variations in Gleevec-resistant cancers and discover exactly how the disease differs from its standard version – and then design new drugs to attack other vulnerabilities in the disease.

Two new drugs, one from Bristol-Myers Squibb, the other from Novartis, do just this. “These drugs emerged from a new line of research that examines the molecular structure of resistant tumors to see how they evolve to defy Gleevec. Scientists say the findings provide compelling evidence that such research could lead quickly to the next generation of precisely targeted weapons against a variety of tumors.” One drug, developed by Bristol-Myers, has shown remarkable success in small, early stage human trials. “Of 36 CML patients in the so-called chronic phase of their disease, 31, or 86%, had a complete remission after up to nine months on the Bristol-Myers drug. In addition, 13 of 29 patients evaluated had reductions in the number of cells containing the genetic defects that cause the disease.”

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Celebrex Less Risky Than Vioxx
Wall Street Journal, 12-7-04

The war against so-called “me-too drugs” and Cox-2 inhibitors, the poster children for the me-too phenomenon symbolizing drug company greed and cynicism, may have hit a snag. Researchers are discovering that the class of Cox-2 inhibitors (including Vioxx ) “don’t all carry the same risk for heart attacks” according to findings from a study involving more than 8,000 people.

Researchers at the University of Pennsylvania have found that “Vioxx was almost three times as likely to be associated with a nonfatal first heart attack as Celebrex”. In fact, Celebrex users had a “57% lower risk of a heart attack” than nonusers, which raises the question (unanswered in this article) of whether or not this particular Cox-2 drug might actually be cardio protective. Pfizer, the maker of Celebrex, is currently funding its own study to see if, in fact, the drug protects users from heart disease.

This finding explodes the myth of the “me-too” drug, which clinicians and researchers have long suspected is really baseless. The fact is that different patients can respond very differently to similar drugs because genetics and small molecular difference in drug composition produce different responses across patient groups. If Celebrex does turn out to be cardio protective, it might just be the silver lining in the Vioxx cloud hanging over the FDA and industry.

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Early Warning: A New Way To Find Cancer - Blood Test Detects Beginnings Of Disease, Suggesting Possibility Of Treatment Before Tumors Grow
Wall Street Journal, 12-7-04

A new tests holds the promise of identifying the earliest signs of cancer in the human body – well before tumors even begin to form. The test looks for “substances in blood platelets that indicate cancer is in the works. Armed with such information, the researchers involved say, doctors could potentially offer cancer therapies that would prevent tumors from developing – and save patients from having to undergo much more toxic and aggressive treatment [later on].”

The research holds even more promise given the ongoing proliferation of targeted drugs that specifically attack cancer proliferation mechanisms without harming normal tissue. These drugs – Gleevec, Tarceva, Iressa – and other drugs may even have cancer preventative properties (like aspirin or statins) could then be taken by patients who are at very high risk of cancer or cancer recurrence after initial treatment.

Although there are other cancer biomarkers currently used by physicians (such as the PSA count for prostate cancer) they are very unreliable, and often require a biopsy to confirm the disease. The platelet test could avoid this problem because it identifies a specific substance involved establishing new blood vessels that feed tumors. Currently, “more than 30 drugs that specifically try to inhibit the process of making more blood vessels [for tumors] are working their way through clinical trials to get Food and Drug Administration approval.”

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NIH licensing performance under par
Nature, 12-7-04

If a company stumbles on a promising anticancer compound, you can bet your last venture-capital dollar that it would rush it into testing and clinical trials. If the government stumbles over that same compound – it may sit on a shelf for years before ever seeing the light of day.

One argument frequently touted by critics of industry is that the government could – and should – perform the bulk of drug development, and could do so much more cheaply than the profit-driven industry. But the problem is that without the incentive of profits, government researchers and bureaucrats are more likely to ration time and resources rather than bet them on promising new drugs. For instance, in September, a biotech startup licensed a “class of anticancer compounds called macrocyclic lactones” originally discovered by the National Institutes of Health (NIH) more than 7 years ago. Why the long wait? “They have fallen through the cracks multiple times”, says one of the former NIH researchers who originally discovered the compounds.

At the NIH’s Office of Technology Transfer (OTT), the director, Mark Rohrbaugh, said that “Given the resources that we have to put to bear on technology licensing, I’m satisfied with the expeditiousness of our efforts.” Of course, if new compounds aren’t reaching patients for years after they are first identified, lives are lost waiting for government resources and “expeditiousness” to improve.

Academic research universities, with their own OTT offices, fare much better – presumably because universities directly profit from licensing and have powerful incentives to market and develop promising compounds as aggressively as possible. For instance, in the last five years, NIH’s OTT has seen its licenses grow by 11.1%. Impressed? During that same period, the University of Wisconsin – with a research budget less than a third that of the NIH – has seen its licenses grow by 294%. The University of California – with a slightly bigger budget than that of the NIH – is also a lagging performer compared to Wisconsin, but still comes in at five year growth of 33.7%, more than 3 times the NIH rate.

The market may not be perfect – and people are always trying to game markets (because, let’s face it, human nature will cheat when it can), but for the improvement of human health and well-being there is no better mechanism than private initiative.

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Importing of drugs approved by AMA; Support increases pressure on FDA
Chicago Tribune, 12-7-04

The AMA is supporting price controls on the pharmaceutical industry. Wait – isn’t this argument about importation of medicines, not price controls?

Well, the reason that drugs from other industrialized nations are cheaper than in the U.S. is because those nations impose price controls on them. Importing drugs therefore means importing price controls. Besides, Canadian drug importation is a red-herring at best, since the Canadian government has already announced that it won’t – and can’t – become America’s drugstore. The problem is that the Canadian market for prescription drugs is miniscule compared to the U.S., and couldn’t accommodate American demand without denying Canadians access to their own supply.

So what the AMA is really fronting for is price controls. Fair enough. However, to test their sincerity on this issue, everyone should take a doctor out to lunch and ask them how they like the reimbursement schedule for Medicare and Medicaid. Chances are the doctors will grumble that the government chronically underfunds them for the work they do, and that they’ve had to drop Medicare patients from their practices just to survive. In other words, when applied to them, doctors hate price controls.

The time has come for Americans – and their policymakers – to ask themselves if they want price controls on prescription drugs. We suspect the answer will be no, but having a frank debate is better than trying to slip Americans a Mickey Finn called “drug importation” when they’re not looking.

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Report warns of drug price controls
Washington Times, 12-8-04

On Tuesday, the Manhattan Institute for Policy Research (the parent organization for Medical Progress Today) released its first original Medical Progress Report, cataloging the effects that increased government influence on drug prices has on pharmaceutical innovation and R&D. The report takes its bearings from the fact that the largest expansion of a government program in nearly 50 years, the Medicare Modernization Act of 2003, which gives prescription drug coverage to seniors starting in 2006, has a non-interference clause that prohibits the government from negotiating with drug manufacturers – a clause that has drawn quite a bit of fire from critics who see it as a give-away to industry.

Extrapoliting from prior government interference in pharmaceutical markets, the report “predicted that lower prices…would reduce research and development spending in the industry by 39.4 percent, or $372 billion over the lifetime of the [MMA].” It is readily accepted by the vast majority of economists that R&D is a function of prices – reduced profits means reduced R&D. While this premise seems acceptable when it comes to classroom economics, it suddenly becomes fodder for the political mill when people start talking about prescription drugs.

The study only focuses on costs of price controls – not the benefits of the government lowering prices on all drugs for everyone now, which would presumably subsidize broader access to lifesaving medicines – that is, the medicines we have today.

However, additional research conducted by the same authors suggests that the gains from innovations in medical progress dwarf the benefits from subsidized access. In other words, consider this question: would you freeze prices and innovation in 2004 and relinquish discoveries that might otherwise happen in 2010? How about if you knew that you were at high risk of developing cancer in 10 years?

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Commentary

How to Improve Drug Safety
William B. Schultz, Washington Post, 12-2-04

Many of Mr. Schultz’s recommendations are sensible enough in theory, for instance expanding the FDA’s authority and access to postmarketing information on drug use and the frequency of side-effects. However, once we shift to an information driven system of postmarketing drug surveillance, we should limit pharmaceutical liability in a similar manner to the program in place at the National Vaccine Injury Compensation Program.

Timely reporting of adverse effects and better information for clinicians and payors would improve the quality of the system, but at the risk of an explosion of liability suits against manufacturers and slowdown in patient access to new medicines. We can overcome this problem by shielding companies from tort liability and creating a program with a set schedule of compensation for injuries that only come to light once a drug is already on market. This would help physicians keep drugs away from high risk payments, allow insurers and the government to target payments at the most effective treatments, and give incentives to companies that continually study and monitor the use of their treatments after FDA approval.

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In praise of Big Pharma's me-too drugs.
John Gapper, Financial Times, 12-2-04

There is probably no such thing as a me-too drug: even among the class of Cox-2 inhibitors different drugs have different benefit profiles (and risks) for individual patients. This means that doctors or the government can’t take a whole class of drugs and say which one is “best” for everyone, because any given drug may still not work for a substantial minority of patients.

The moral we should take from this lesson is that competition and variety is good for health care, especially for the evolving field of personalized medicine, where physicians will someday be able to offer the right drug, to the right patient, at the right dose, at the right time. Companies will have to adapt to this new reality by identifying high responder groups, and patients at high risk for adverse events throughout the drug discovery and marketing process.

This may mean that few (if any) drugs in the future will be prescribed ad hoc to tens of millions of patients the way some are now, but companies will be able to market treatments to “niche” populations with confidence that their treatments work and are worth every penny paid by consumers and insurers.

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Letters to the Editor: Patient Data Could Lead to Scientific Insights
Dr. Scott Gottlieb, Wall Street Journal, 12-3-04

We don’t normally carry letters to the editor, but since this particular letter replies to an op-ed we hilighted last week (Henry Miller, “The Curse of Too Much Caution, The Wall Street Journal) and is particularly interesting, we’ll make an exception. Mr. Gottlieb argues that right now, “there is plenty of incentive in the market...to look harder at the pros and cons of new drugs”. However, health insurers are trying to foist off responsibility for collecting this information onto the government, arguing that “if insurers generated studies showing that a certain drug doesn’t work well, or has certain side-effects, or is overused, then nobody will believe the results.” A more likely reason is that insurers don’t want to become inadvertent marketers for the pharmaceutical industry, or surrender control over their drug formularies to patients’ groups using their own studies against them.

The solution Mr. Gottlieb proposes is to “[provide] more pathways for practical data collected from these real patient experiences to be used for things like drug label changes inside the FDA and quick payment decisions by Medicare”, or even for new drug indications that would speed a drug or biotech company’s access to a new source of revenue. “That would align everyone’s incentives, insurers and drug developers alike, to work harder to learn more about new technologies more quickly after they are approved rather than waiting many years for veiled truths to emerge.”

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HillaryCare in Tennessee
Wall Street Journal, 12-6-04

One attempt at “universal coverage” in the state of Tennessee is about to end in dismal failure – thanks in part to America’s lawsuit culture. Whatever you can say about Canadian health care, at least it isn’t burdened by America’s bristling legions of trial lawyers.

When, in 1994, Tennessee passed the equivalent of Hillarycare (dubbed “TennCare”), costs (along with mismanagement) exploded. “TennCare now eats up one-third of the state’s entire budget and is growing fast.” The Governor, Phil Bredesen, is trying to avoid fiscal ruin while trying to return the state to a traditional Medicare model. The problem is that activist groups have hamstrung the legislature with lawsuits and consent decrees that mandate that the state pay for any and every form of medical care under the sun, including many over-the-counter drugs. “If TennCare denies a claim for a drug or any other type of care, an appeal can be filed for next to nothing. Fighting each appeal costs the state as much as $1,600 in legal fees. With 10,000 appeals filed every month, it’s often easier and cheaper to pay a claim, regardless of the merits.” This is, in miniature, a picture of what HillaryCare would look like on the national stage – and it’s not pretty.

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Medical progress; Health breakthroughs worth the price
Robert Goldberg, Ph.D., Washington Times, 12-7-04

Robert Goldberg is director of the Center for Medical Progress at the Manhattan Institute, as well as a frequent contributor to Medical Progress Today. Here he highlights a new government report showing that “44 percent of all Americans use medicines, an increase of about 5 percent from a few years ago.” This increase has less to do with marketing and more to do with efficacy, as prescription drugs turn out to be more effective and less costly than other forms of health care.

As a result, Americans are living longer and are less likely to die of heart disease, stroke, or cancer.

The problem is that Americans take this state of affairs for granted and are only too eager to “expand the role of government in running health care” and inflict price controls on prescription drugs. According to a study recently released by the Center for Medical Progress, “if the government applies Medicaid or VA price controls to the Medicare drug benefit, it will reduce real drug prices by 67.5 percent, reduce research and development spending by 39.4 percent, or $372 billion, over the next decade and cost Americans 277 million life-years.” Instead of crippling medical progress through price controls, “we need to spend more money on better medicines for the most expensive illnesses,” while improving access to information that allows us to spend our resources more wisely.

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Research

Are Drug Price Controls Good for Your Health?
Carmelo Giaccotto, Rexford Santerre, John Vernon, Center for Medical Progress Report, 12-7-04

Critics of the new Medicare drug benefit have called for the government to use its increased purchasing power to drive down drug prices. This study examines the effects of government pressure on pharmaceutical prices and R&D from 1960-2001. During that time, it finds that the government induced a loss of capitalized pharmaceutical R&D expenditures of $188 billion, resulting in 140 million lost life years due to the absence of new medicines. Applying this same analysis to the future, it finds that if the government tries to use its new buying power to reduce drug prices, R&D spending will drop by nearly 40%, resulting in a loss of 277 million life years. Consequently, policymakers should consider the trade-offs between lower drug prices now and the future health benefits of increased R&D spending.

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Medical Progress Today is published by the Center for Medical Progress at the Manhattan Institute for Policy Research.

For more information about Medical Progress Today, please contact the managing editor, Paul Howard, at phoward@manhattan-institute.org, or via telephone at 212.599.7000, x319.

Press inquiries regarding Medical Progress Today can be directed to Lindsay Young, executive director, communications at communications@manhattan-institute.org, or via telephone at 212.599.7000, x315.

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SPOTLIGHT

Race and medicine can mix without prejudice: How the story of BiDil illuminates the future of medicine.

NEWS

No Relief Seen In the Growth Of Employers' Health Costs
U.S. drug safety system shaky, experts say; Recently, troubling news about several high-profile drugs has sapped confidence in the system charged with exposing dangerous medicines.
Americans Relying More on Prescription Drugs, Report Says
New Leukemia Drugs May Prove More Potent Than Gleevec
Celebrex Less Risky Than Vioxx
Early Warning: A New Way To Find Cancer - Blood Test Detects Beginnings Of Disease, Suggesting Possibility Of Treatment Before Tumors Grow
NIH licensing performance under par
Importing of drugs approved by AMA; Support increases pressure on FDA
Report warns of drug price controls

COMMENTARY

How to Improve Drug Safety
In praise of Big Pharma's me-too drugs.
Letters to the Editor: Patient Data Could Lead to Scientific Insights
HillaryCare in Tennessee
Medical progress; Health breakthroughs worth the price

RESEARCH

Are Drug Price Controls Good for Your Health?
Center for Medical Progress 
Copyright Manhattan Institute for Policy Research
52 Vanderbilt Avenue
New York, NY 10017
(212) 599-7000
mpt@manhattan-institute.org