The last few days have seen a storm of outrage because the Patient Protection and Affordable Care Act (AKA Obamacare) will require all health insurance plans to cover contraceptive and sterilization methods, including the morning-after pill. Of course, Catholics and those who support the First Amendment's religious protections rallied against this new mandate.

Ignore for a moment the religious implications of this mandate and instead focus on the logic used by President Obama and three U.S. senators--Shaheen, Boxer, and Murray--in its defense. They argue that insurers "should" provide birth control for free because contraception actually reduces overall costs for insurers by preventing expensive pregnancies. They quote a statistic that it costs about 15% more for employers to exclude birth-control coverage.

These politicians are saying that profit-seeking organizations have missed an area to reduce costs and therefore increase profits. And so the government should force these insurers to take such cost-saving steps. This logic assumes:

(1) These politicians know more about the insurance business than the insurance companies themselves.
(2) The insurance companies are either stupid or biased against birth control to the extent that they are willing to forgo additional profits.
(3) Force, through government mandates, is a good method to enlighten the insurance companies and to achieve the optimal outcome.

I can't imagine how point #1 would be true. Regarding point #2, I make my business consulting with companies and, yes, there are some companies and individuals that make conceptual mistakes. However, marketplace pressures eventually steer companies toward good decisions. If not, these companies eventually lose to better managed companies. Point #3 could justify a whole shelf of books just by itself. Suffice it to say that government mandates bring with them a slew of unpleasant baggage that needs to be factored into the equation.

Lauren Neergaard at the Associated Press reports President Obama will ask Congress for $80 million in new money to spend for Alzheimer's research in 2013. Right now the National Institutes of Health spends $450 million a year on Alzheimer's research compared to the $3 billion spent annually on AIDS research.

The L.A. Times offers more details on studies showing that the use of Avastin may help shrink tumors in early stage breast cancer.

The FDA approves a new drug to treat metastatic kidney cancer - the seventh medicine approved since 2005, according to the FDA.

A study of nearly 200,000 women and girls shows that Gardasil, the HPV vaccine designed to prevent cervical cancer, does not cause autoimmune disorders.

Censoring influenza research: good for national security, or bad for public health? The Economist weighs the issues.

AEI scholar Joseph Antos offers a review of the Wyden-Ryan proposal for Medicare reform in the New England Journal of Medicine.

The Washington Post reports that FDA staff are suing the agency over surveillance of some personal email accounts.

Roche already has a diagnostics division, so they don't need the acquisition to help drive any of their targeted medicines. After all, once you know the "target" for a personalized cancer drug (like Herceptin) and get it on the FDA-approved label you don't need to know anything else about your patient's genome.

So why the Illumina bid? (Besides the fact that the stock is way off its high.) This Bloomberg Businessweek article gives a lot of good background on the bid, and asks a lot of good questions.

Analysts also point out that the market for the expensive gene-sequencing machines - primarily academic scientists with government grants - is a shrinking market right now, so Roche's bid has got to be about the future market for genomic technologies more than the present one.

What is the next market for super-fast, cheap gene sequencing? It's hospitals, doctors offices - heck, maybe even the CVS drug store down the street. That's the future of genome sequencing: fast enough and cheap enough to become a consumer commodity.

(I think that Roche is betting that if you're willing to pay $500 or $600 today for a tablet to play Angry Birds, you'd pay the same - or more - out of pocket to know your or your children's genetic future. For instance, what diseases to watch out for, what drugs or vitamins to take - or avoid - etc.)

The problem I see is that we don't have a health care system, or a regulatory system, that is prepared to interpret the flood of genomic information from Illumina's superfast machines and then turn it into actual clinical knowledge. The FDA has already signaled that it's very leery about consumer genomic services, and without that approval the technology isn't going anywhere. (And even then, it still has to be translated into plain English for physicians and patients.)

Roche, I think, has the complete play here. They're intimately familiar with the regulatory hurdles at the FDA, and know how the agency thinks and what kind of data they will be looking for in terms of regulatory approval for genomic applications. They've got marketing channels into physician and hospital offices, and the science research base to help translate emerging genomic discoveries into clinical information and - better yet - personalized treatments coming out of Roche's labs.

If personalized medicine is going to expand beyond specialized cancer treatments, companies like Roche will lead the way since they have all the tools to translate the genome into mainstream medicine.

The question is, how long will it take (5, 10, 15 years?) for the transformation to become complete, and how much (or how little) regulators will slow the revolution down - in the name of protecting consumers from themselves.

Hopefully, innovative companies will be allowed to lead the way, with the FDA just validating the underlying methodologies.

Two new studies suggest that Avastin may have some additional benefit for small groups of patients with metastatic breast cancer. In particular, patients with HER-2 negative metastatic breast cancer showed "signifificantly higher rates of pathologic complete response when [Avastin] was added to neoadjuvant chemotherapy."

Translation: when given to women with localized breast cancer prior to surgery, Avastin helped produce a "pathological complete response" or pCR (so that the tumor was no longer detectable) somewhat more often (about 20%) than with chemotherapy alone.

The question that will obsess researchers now is whether or not the surrogate marker will translate into an overall survival benefit - and thus might lead the FDA to put metastatic breast cancer back on Avastin's label in this particular subgroup.

See also this article from ABC, and this article in the Washington Post.

But the most interesting story is what is - or isn't happening at the molecular level that makes the drug more potent in these subgroups. If we can identify that marker, doctors can target the drug at patients who are most likely to benefit, especially since both studies also showed that Avastin produced some serious side effects in patients who used it.

The National Venture Capital Association and PricewaterhouseCoopers released a report on VC biotech investments for the 4th quarter 2011 and all of 2011 in a new report released late last week.

The good news is that "venture capitalists invested significantly more money in biopharma companies during the fourth quarter of 2011 and all of [2011] compared to a year earlier."

The bad news is that there was also less funding for the earliest (and thus riskiest) biotech investments, which may mean "fewer new drugs and technologies coming to market over time."

At least one commentator took the glass-is-half-empty approach to the latest data:

"This decline in first-time funding speaks to the precarious state of life sciences venture funding and with it the entire medical innovation paradigm in this country," said Jonathan Leff, a partner and managing director with Warburg Pincus, during a conference call with reporters. "We continue to see great potential in life sciences innovation. However, like other investors in the space, we have found that the life sciences investment environment has grown significantly more challenging in recent years."

Challenging enough, he said, that VCs continue to shun riskier early-stage startups in order to keep more capital for follow-on financings in existing companies, for later-stage investments, and for investments in companies overseas, especially in China. ...

"Unless this trend is reversed and unless the capital begins coming back into new formation and supporting new innovative products and technologies, this will result in a real decline in the number of new innovative drugs and medical devices that will come to market in the years and decades ahead," Leff declared. "VCs are finding that the cost, time, and uncertainty involved in developing innovative drugs and medical devices have all escalated to the point where increasingly, the economic math just doesn't work."

Queue up the dirge music. Leff holds out some hope that PDUFA V may smooth out some of the unpredictability in the FDA's drug approval process, and eventually coax VC investors back into the market for early stage funding, but also concedes that it may "take a decade" to gauge how any changes at the FDA affect the VC environment.

Of course, by that time, a more attractive investment and/or regulatory climate in China, Singapore, or the E.U. may make the whole issue moot by sending the lion's share of VC funding abroad.

Every year pundits announce the word-of-the-year. In 2010 the winning word was austerity; in 2009 the winner was admonish. I predict that for 2011 (or maybe 2012, or for sure by 2013...) the winning word will be value.

Questions about value in the healthcare industry have largely been missing, and getting individuals (and companies) focused on value is one of the milestones on the path of a more efficient and effective healthcare system.

Individuals have largely abdicated their responsibility as consumers to ask about economic and clinical value.

Questions have been left to employers and insurance companies who make the rules about what products we can and can't have and how much we'll pay. The system has come to take for granted the lack of a 'consumer reflex' that characterizes virtually every other purchase we make.

Part of the explanation for this missing consumer orientation is that patients historically haven't paid for much of their drugs and devices themselves, although this is changing rapidly. Another part of it has to do with the reluctance of patients to assert themselves and to believe that they're capable of playing a meaningful role in the clinical decisions that affect them.

Part of Government's 'grand plan' to fix healthcare, embedded in the 2,700 page regulatory nightmare titled the Patient Protection and Affordable Care Act of 2010, was the ACO -- Accountable Care Organization, which proposed in some vague fashion to make providers more accountable for the care they provided. As I've written in other posts, this approach will be unsuccessful for a variety of reasons.

Yet ironically, more accountability is needed, and it's up to patients -- healthcare's consumers -- to demand it; to become engaged, to ask the questions that matter to us about the economic and clinical value provided by the drugs, diagnostics and therapies we receive, regardless of whether or not we're paying for them directly. If we're serious about creating market based solutions to healthcare, then consumers will be key to making it happen.

For more information on a market based solution to the healthcare crisis, see my white paper: Why Accountable Care Organizations Won't Deliver Better Health Care -- and Market Innovation Will.

In a USA Today op-ed, Dr. Marc Siegel explains why the 2010 Affordable Care Act (aka "Obamacare") doesn't seem to be winning many friends among physicians.

The Hill reports that the CBO has found that Medicare demonstration programs designed to slash spending while improving quality "have mostly failed," undercutting hopes among supporters of the Affordable Care Act that similar demonstration projects included in the law will bear fruit. In fact, CBO analyzed "six programs designed to improve care coordination for patients with chornic diseaseses [and found that] they either made no difference or were actually more expensive than the traditional payment system. (Here's the Director's blog with more details.)

Is health care the next frontier for big data, Ben Rooney asks at the Wall Street Journal. Yes, but why is it taking so long for datasharing to become the new normal for doctors and patients?

When did "Big Pharma" get so big and bad and how might it recast its reputation, asks Han Zhong at the American Action Forum.

Reuters explains how combining targeted skin cancer drugs may produce better outcomes and fewer side effects for patients.

A new study conducted by the research organization Patient View confirms something many of us already knew: the pharmaceutical industry's corporate reputation is pretty dismal -- even among the patients and patient advocates who rely on innovative new medicines. Top scoring individual firms are, as you might expect, touting their positive reputations, defined as "meeting expectations of patients and patient groups." But, that should be cold comfort even to the winners since -- unlike say new car buyers -- pharmaceutical consumers don't generally shop for medicines on the basis of what they think of various manufacturers.

Reputation in the drug industry matters much more in the political sphere than in the retail sphere because, as Ed Silverman at Pharmalot points out, "patient groups are not only growing in number, but increasingly trying to influence regulatory and payer decisions through assertive lobbying." And regulation isn't imposed at the firm level, but at the industry level. A drug firm with a sterling reputation will suffer from regulation motivated by the public's attitudes regarding the entire industry. So, even top scoring firms need to be worried about these results -- and they need to think more strategically about how the entire industry can begin to burnish its reputation.

The study is available only to Patient View subscribers, selected news media, and other readers willing to cough of £750. But via Pharmalot and the Pharma Times, we learn that the survey included 500 patient groups from 61 countries, and respondents were asked about their views regarding the drug, biotech, and generic industries generally, and of the 30 largest companies specifically (The full list of companies can be viewed here.). The study used six indicators to measure company performance: "Whether the company has an effective patient-centred strategy," "The quality of the information that the company provides to patients," "The company's record on patient safety," "The usefulness to patients of the company's products," "The company's record of transparency with external stakeholders," and "Whether the company acts with integrity."

So, what did they find? Just 42 percent of respondents said "they believe the multinational pharma industry has a 'good' or 'excellent' corporate reputation, while for biotech and the generics sector the equivalent figures are 44% and 41%, respectively." And fewer than 30 percent believe pharma's reputation has improved over the past five years. In addition, "while 66% of the respondents believe that pharmaceutical companies are 'good' or 'excellent' at being innovative, only 13% consider them to be 'good' or 'excellent' at adopting fair pricing strategies which ensure that they do not make 'unseemly' profits. Just 31% consider that companies act with integrity, with only one-third believing that drugmakers run ethical marketing practices and 23% considering them to be transparent in their corporate activities."

Leading the pack of individual drug firms was Novartis, coming in first overall as well as in four of the six individual indicators: having an effective patient-centred strategy, the quality of information for patients, its record on patient safety, and the usefulness of its products. Pfizer and Lundbeck came in second and third respectively. For a full list of the results you'd have to read the full report, to which I don't have access.

One caveat worth pointing out is that "patient groups" are not the same thing as individual patients. It's entirely possible for patients, even in the aggregate, to have a higher or lower opinion of individual firms or the entire industry -- largely because patients will have more individualized experience with some companies and little or no experience with others. And, though I think patient groups generally do a good job representing the interests of their members, the professional representatives will tend to be much more attuned to questions related to a company's willingness to share information and work with the organizations.

Perhaps more importantly, as I noted above, the organized patient groups will be more active -- and more effective -- at influencing the development of laws and regulations. And, because even the most respected companies can't escape regulations implemented to rein in or punish the entire industry, the views of the organized patient lobby matter tremendously. So, while a company like Johnson & Johnson might be ranked in the top 20 of the "World's Most Admired Companies," that reputation won't necessarily help it fend off predatory or debilitating regulation if the view of the entire industry remains low -- particularly among the most active advocates.

Since over 80 percent of the respondents in this survey faulted the industry for its pricing practices, one of the first things the industry must do is debunk the belief that it is reaping huge profits on the backs of suffering patients. With soaring drug prices at the top of every pharma industry critics list of complaints, it does appear unseemly for drug firms to consistently return double-digit profitability. But, as the Congressional Budget Office has pointed out, "those figures misrepresent the industry's actual profits." Standard accounting measures overstate profitability for R&D intensive industries by treating most research spending as an expense rather than as a capitalized investment that increases the company's value. "Not accounting for that value overstates a firm's true return on its assets."

Ultimately, the high retail prices of pharmaceuticals reflect the vast expense of developing those products and getting them approved for sale. Without correspondingly high prices to enable the recoupment of those costs, few investors would willingly take the risks inherent in supplying capital to the pharmaceutical industry. The result would be fewer and fewer lifesaving medicines. We scholars may keep pointing that out. But if the drug industry itself doesn't figure out how to do a better job convincing patients and organized patient advocates of that fact, its reputation isn't likely to recover any time soon.

Analogies can be powerful tools to help us think and act clearly. However, we need to ensure that our analogies are faithful, or they may do more harm than good. Consider the following statement by the FDA's Dr. Steven Hirschfeld in 2002.

"We don't want to put a weapon into the hands of a soldier until it has been tested, and tested under stress." He was comparing weapons to medicines, both of which have benefits and risks, and was saying that both weapons and drugs should be tested to ensure safety before they are used.

If someone is shooting at a target, his/her weapon had better be pretty safe. Since target practice is just a pastime, the benefit is relatively low and so should the risk.

If someone is in a dire situation in the middle of a war or crime scene and death is imminent, the benefit of a functioning weapon is substantially higher and therefore the acceptable risk can be higher, too.

Consider Cristy Kessler, a University of Hawaii associate professor who was suffering from three rare autoimmune diseases and was "preparing to die." She received an unapproved stem cell transplant in Turkey (i.e., an "untested weapon"). We can think of her as being in the middle of a bloody military battle. What is the value to her of safely getting off the battlefield? Incredibly high. And since she was in mortal danger, it didn't matter much whether her own defective weapon or her enemy's weapon delivered the final, fatal blow.

The real issue is the relative risks. Are we, as Americans in 2012, facing a target shooting situation or a battlefield situation? It's a battlefield--but even worse. One single disease, lung cancer, kills more Americans each year than the combined U.S. casualties from battle in the Revolutionary War, the War of 1812, the Mexican War, the Spanish-American War, World War I, the Korean War, the Vietnam War, and the Persian Gulf War.

China appears to be taking the art of corporate espionage to a who new level of sophistication and outright brazenness. (Hat tip: Derek Lowe) From Bloomberg Businessweek:

"They are stealing everything that isn't bolted down, and it's getting exponentially worse," said Representative Mike Rogers, a Michigan Republican who is chairman of the Permanent Select Committee on Intelligence.

"What has been happening over the course of the last five years is that China -- let's call it for what it is -- has been hacking its way into every corporation it can find listed in Dun & Bradstreet," said Richard Clarke, former special adviser on cybersecurity to U.S. President George W. Bush, at an October conference on network security. "Every corporation in the U.S., every corporation in Asia, every corporation in Germany. And using a vacuum cleaner to suck data out in terabytes and petabytes. I don't think you can overstate the damage to this country that has already been done."

Experts estimate that U.S. losses from economic espionage in the last year alone - to China, Russia, and other IP hungry countries - may total as much as $500 billion.

High tech industries - like pharmaceuticals and biotechnology - appear to be among the most frequent targets.

As I noted yesterday, the Wyden-Ryan plan on Medicare reform has elicited quite a bit of commentary, which continues today. The reaction from Dems in Congress and the White House is fairly predictable: they see Medicare as the third rail of American politics and are happy to electrocute any Republicans who try to reform it, no matter that Medicare begins going bankrupt in 2020.

The response on the right has been more nuanced. There, analysts are wondering if the plan compromises too much, and how much of an effect it will really have on Medicare spending.

Peter Suderman, writing at Reason notes that:

...the option [Wyden-Ryan] describe as "traditional" Medicare wouldn't quite be Medicare as-we-know-it. Seniors would have to buy in using capped premium support payments (similar to vouchers, but with the federal government serving as a go-between for seniors and insurers). If "traditional" Medicare couldn't hold down costs and premiums, seniors might have to spend some of their own money in order to stay in the program. The idea is to create savings through competition, on the assumption that seniors will pick plans that represent the best value for their own health needs. And, at least in theory, that's how this plan restrains the growth of Medicare: The value of the premium support payments is capped at GDP plus 1 percent, meaning that spending on the program grows only a little faster than the economy.

The political advantages of a plan like this should be obvious: Leaving a government-run Medicare option in the mix insulates the proposal from the sort of you're-killing-granny! criticism that Ryan's earlier reform plans drew. Cosponsoring the plan with a popular, health-policy focused Democrat (Wyden offered a health policy overhaul during the late Bush years that Obama mostly ignored) further insulates the plan from partisan criticism, and may even help make it politically plausible--which even the most compromised version of Ryan's plan never was--at some point in the future. More importantly, it isolates President Obama, who can be accused of ignoring a genuine bipartisan reform option if he doesn't support the joint proposal.

Peter also picks up on the same issue that I noted yesterday. Politically, the Wyden-Ryan plan muddies the water by creating a frawework for seniors that mirrors Obamacare's state based exchanges:

But there are political complications as well, for both Republicans and Democrats. The Ryan-Wyden plan looks a lot like ObamaCare with the addition of a public option. That makes it somewhat harder for Republicans to oppose last year's health care overhaul, but it also makes it more difficult for Democrats to oppose, given that they passed a law essentially doing for the middle class what Ryan-Wyden would do for seniors.

In a follow on post, Peter qualifies that even more:

Passing legislation usually requires compromise, but this one gave up a lot of ground in hopes of sparking bipartisan support for reform. And after making the sacrifice play, Ryan may not even end up with much to show for it. Senior Democratic staffers are already issuing anonymous sneers at the plan. And despite Wyden's assurances, House Minority Leader Nancy Pelosi has taken to warning her Twitter followers that the plan is just a sneaky attempt to kill traditional Medicare completely.

Over at NRO's the Corner, my colleague Josh Barro weighs in as well:

House Budget Committee Chairman Paul Ryan (R) and Senator Ron Wyden (D) are out today with a joint proposal on Medicare reform, and structurally, the plan makes a lot of sense. The plan is built much like the "premium support" plan that Ryan has been advancing for the last year.

However, there are two key differences from Ryan's original proposal. One is that traditional fee-for-service Medicare would be retained as a "public option" that seniors could choose, using their premium support payments to buy insurance from the government instead of from a private insurer. The other is that the plan does not include Ryan's aggressive cap that would have held the growth in the value of Medicare benefits to CPI. As I wrote at the time, this was an implausibly low target, especially because the plan lacked accompanying cost-control measures. Wyden-Ryan aims to hold overall Medicare cost growth to GDP growth plus 1 percent, which is still ambitious but plausible.

I like this proposal structurally. What I don't like about it is another feature it keeps from Ryan's original plan-it wouldn't be effective until 2022, and then only for new retirees. That means, like Ryan's proposal before it, it saves no money this decade and almost no money in the next decade. I understand the political impulse-it avoids impacting anybody now, so maybe Ryan and Wyden won't get beaten up for taking away Granny's benefits. But this delay is still a serious mistake-reforms should be effective immediately, and for current participants as well as new ones.

Finally, Reihan Salam, notes that:

It happens that the Wyden-Ryan proposal does two things: it sets a global budget and it creates a plausible mechanism, though obviously not an assured mechanism, for introducing constructive competition that can restrain cost growth.

At its heart, Wyden-Ryan is a version of the defined benefit proposal first advanced by a (bipartisan) group of health economists, Robert F. Coulam, Roger Feldman, and Bryan E. Dowd. This post from August offers some background on the concept. Like Yuval Levin's Medicare reform proposal, however, it matches premium support to the second-cheapest plan in a market area, so that Medicare beneficiaries will have at least one cheaper plan that will offer cash back. ...

To be clear, Wyden-Ryan is a gamble that competition in urban markets will reduce costs with a global budget as a backstop. As for quality, Wyden-Ryan guarantees a certain benefit and then allows Medicare beneficiaries to pay an additional amount if they seek services of higher quality. If the gamble succeeds and the new premium support structure is able to hold down the cost of today's benefit, it seems plausible that many Medicare beneficiaries will be willing to pay top-up fees for plans that offer richer benefits.

The response to Wyden-Ryan seems to parallel the earlier response to the Simpson-Bowles deficit recommendations. From the right, a cautious embrace; on the left, lots of consternation.

The theme on the left is that any significant changes to Medicare will "end the program as we know it". Well, Medicare is unsustainable in its current format, and so ending it "as we know it" will be the only way to save it.

The right is edging towards compromise. The left doesn't see any need for compromise, at least not until after November 2012.

Way back in September 2009, the Food and Drug Administration announced that it would begin using the social media site Twitter to share news and other information about drug safety and regulation. "Messages on Twitter provide consumers, healthcare professionals, the pharmaceutical industry, and others with timely information on new drug approvals, safety alerts, compliance actions, and consumer information," the announcement said. It was nice for FDA to mention the pharmaceutical industry. But, unfortunately, the drug and device industries have been feeling their way around the Internet and other new media, including Twitter, for several years without substantive guidance from the FDA on what is and is not permitted.

As Ed Silverman at Pharmalot explains in an op-ed posted today, the agency has been promising for years that it would develop of a formal policy on the matter. As early as 1996, the FDA held a public meeting (see reference here) to discuss issues related to the advertising and promotion of medical products on the Internet. Then, in November 2009, the agency held another public meeting, with the promise that it would soon thereafter develop guidance or other policies that addressed Internet promotion and social media. But, as Silverman notes, "the guidelines didn't appear in the wake of the meeting. And they didn't appear by the end of 2010, despite an unofficial FDA deadline to push something out by New Year's Day. And then the agency missed another deadline, this one on March 31. By mid-year, FDA officials said they would stop setting deadlines."

Unfortunately, this is not a case of benign neglect. On April 2, 2009, FDA's Division of Drug Marketing, Advertising, and Communications (DDMAC) issued 14 Notices of Violation to drug manufacturers for their use of sponsored links on web search engines that included the name of a drug and a brief statement about the disease it treats, while directing users to a separate website that contained complete benefit and risk information. Under existing FDA rules, if an ad contains the name of a drug or device and any affirmative statement about the product or the disease it treats, then all of the mandatory risk information must also appear in the ad. According to DDMAC, that means that a sponsored link or other web ad may not read something like, "Learn How Spiriva May Help You Manage Your COPD" or "Online Resource for Women with Breast Cancer. www.Femara.com," unless the full risk disclosure also appears in the sponsored link. Having the risk disclosure "one click" away via the hyperlink is not enough.

Since sponsored links resulting from key word searches are generally limited to a total of 70 individual characters, this policy effectively precludes the use of sponsored link drug ads. But the policy has far broader implications for other Internet and social media fora. Is it legal for a drug manufacturer to host a Facebook page or web discussion group in which patients and doctors discuss medicines they're taking or prescribing if every single page does not also include the complete risk disclosure? What about user generated tweets aggregated in a Twitter stream that's embedded on a company-sponsored website? No one really knows for sure how the FDA would treat those issues. And that's a problem.

Again, Silverman points out that, "With the advent of patient-centered 'participatory medicine' poised to become one of the century's great trends in health care, it's more vital than ever that consumers have access [to] well-vetted health information, available via where they live, online. The biopharma industry has recognized this, which is why so many companies have opted to take the risk to push ahead despite the lack of guidance."

As attorney Arnold Friede and I discussed in a short paper two years ago, "The FDA's approach to hyperlinked disclosures is particularly frustrating in light of the Federal Trade Commission's (FTC) more nuanced approach for advertising in other industries. The FTC does not categorically reject hyperlinked disclosures in determining whether an advertisement is misleading or not. Instead, when considering the adequacy of a required information disclosure, it examines the conspicuousness of the hyperlink, whether it signals the availability of risk information, and other contextual factors. Rather than ticking off arbitrary boxes, the FTC looks at an entire presentation and considers the 'net impression' that a 'reasonable man' would form when viewing the information aggregated on linked web pages."

Until April 2009, the pharmaceutical industry had assumed FDA would adopt this so-called "one click" rule for its own purposes. After all, the purpose of a sponsored link is to drive traffic to the web page where the reader can learn more information. But the agency seems to have rejected that common sense approach -- at least so far. Once the agency does settle on a formal policy for Internet and social media advertising, however, adopting the one click rule or some other policy that recognizes the unique limitations and added functionality of the Internet would not be unprecedented. After all, the FDA did something similar with television advertising.

In its "major statement" guidance for risk disclosures in television advertising, FDA acknowledges the inability of TV to carry contemporaneous and instantaneous disclosure of all risk information. Because TV ads are limited to just 30 or 60 seconds, the agency permits drug manufacturers to include just a brief description of the product's "most important risk information," while providing the full risk disclosure through alternative means, such as a toll-free telephone number, in print advertisements that appear concurrently in publications reaching the same audience likely to see the TV ad, or on the Internet.

What's that again? It's an important point, so let me repeat it: FDA's television advertising policy allows viewers of a TV ad to be directed to a drug or device's full risk disclosure on a website not intrinsically connected to the commercial. Under its current interpretation of the statute, however, drug and device manufacturers cannot direct readers of an Internet ad to another, hyperlinked, web page to see the full risk disclosure. It would be ironic -- not to mention downright absurd -- if the agency failed to establish an Internet and social media policy that recognizes the ease with which Internet users can navigate from one web page to another, and to access information linked directly from the one they're currently reading.

Today, U.S. Senator Ron Wyden and Representative Paul Ryan released a new Medicare reform plan that focuses on competition between private plans and traditional Medicare, built around competitive regional bidding and an insurance exchange for seniors.

Here's a link to the Wall Street Journal op-ed explaining the plan, along with links to additional commentary from around the Web:

A Bipartisan Way Forward on Medicare
Ron Wyden and Paul Ryan, Wall Street Journal

Our plan would strengthen traditional Medicare by permanently maintaining it as a guaranteed and viable option for all of our nation's retirees. At the same time, our plan would expand choice for seniors by allowing the private sector to compete with Medicare in an effort to offer seniors better-quality and more affordable health-care choices.

Under our plan, Americans currently over the age of 55 would see no changes to the Medicare system. For future retirees, starting in 2022, our plan would introduce a "premium support" system that would empower Medicare beneficiaries to choose either a traditional Medicare plan or a Medicare-approved private plan. Unlike Medicare Advantage, these private plans would compete head-to-head with traditional, fee-for-service Medicare on a federally regulated Medicare exchange.

Wyden: Medicare proposal doesn't erase GOP votes for earlier Ryan plan
The Hill

Wyden said he and Ryan (R-Wis.) want to move past the divisive politics of healthcare. But he said Republicans can't walk away from their support for Ryan's proposal to end the existing Medicare program.

 The Medicare proposal that Wyden and Ryan released Thursday would give seniors a choice between Medicare and private insurance, a departure from Ryan's earlier proposal to privatize the entire program. 



"Traditional Medicare will always be part of this program," Wyden said.

 The two lawmakers said both parties have been on the receiving end of intense healthcare attacks -- over President Obama's healthcare law and Ryan's Medicare proposal -- and cast their proposal an effort to start a new conversation.



What Wyden-Ryan hath wrought
Matt Miller, Washington Post

In this new plan, Wyden gets Ryan to sign onto a key component of that earlier reform. Though it has nothing to do with Medicare, Wyden-Ryan would allow firms with fewer than 100 employees the option of giving their workers (on a tax-advantaged basis) the cash the firms would have spent on their health coverage to buy, voucher-style, other policies. Since most small firms offer just one health plan, this is a huge victory for choice. It means that as many as a third of American workers could use the new health-care exchanges -- a fantastic expansion of access to the exchanges that was perversely killed by both big business and big labor in the Affordable Care Act endgame.

Ryan, Wyden Lay Out Medicare Reform Plan
National Journal

Rep. Paul Ryan, R-Wis., and Sen. Ron Wyden, D-Ore., laid out a bipartisan plan for Medicare reform on Thursday that would give seniors a choice of using their premium dollars to purchase private plans, or stay in traditional Medicare. Ryan proposed a simpler voucher system as part of his budget plan last year. He and Wyden said the key to success in the program will be the power of choice and the market to drive down health care costs by transitioning one large government payer into a series of smaller plans.

"Traditional Medicare will always be part of this program, not something that's going to be shrouded in ambiguity," Wyden said at a breakfast event hosted by the Bipartisan Policy Center. "It will also offer a menu of private sector choices." People 55 and over now would be unaffected by the proposal. But starting in 2022, it would introduce a "premium support" system that would allow seniors to choose between enrolling in traditional Medicare or in a Medicare-approved private plan.

Ryan, Wyden back a new Medicare option
Politico

Wyden is the first Democrat on Capitol Hill to so strongly embrace a variant of Ryan's approach. And Ryan has accepted more flexibility than the Medicare approach in the House budget. Wyden insists the plan would be designed in ways that would preserve the safety net for the elderly.

"I will never do anything to shred that or weaken it or harm [Medicare] in any way," the Oregon Democrat said. "I simply believe that there is now an opportunity for progressives and conservatives to come together and to strengthen the program for the long term and particularly, deal with the costs and demographic challenges."

The Ryan budget plan would have moved seniors in the future into private health plans, with government subsidies known as premium support or -- to his critics, vouchers. Ryan and Wyden plan to release a white paper with more details Thursday at an event sponsored by the Bipartisan Policy Center.

I didn't have a chance to write about it then, but a few weeks back the Food and Drug Administration denied a citizen petition submitted by environmental activists asking the agency to forbid the "sub-therapeutic" use of certain antibiotics in food animals. The petition -- initially filed in 2005, and fundamentally identical to one submitted in 1999 and rejected in 2001 -- argued that using antibiotics for growth promotion, rather than to treat infected animals, contributes to the development of antibiotic-resistant bacteria that threaten human health.

The issue is a complicated one, with serious implications for medical treatment and consumer well-being more broadly. We know that development by human pathogens of resistance to medically important antibiotics poses serious public health concerns. And, although a clear link between animal antibiotics use and human disease has not been proven, there are good theoretical reasons to believe and some real world evidence suggesting that it does -- or at least could -- occur.

Nevertheless, I would still argue that FDA made the right call, but for an incomplete reason. In response to both the 1999 and 2005 petitions, the agency essentially said that going through the formal legal process to revoke the approvals for a drug is intensive, time consuming, and a poor use of FDA resources. And because the agency already monitors the development of resistance and has both voluntary and mandatory plans in place to restrict uses that may pose realistic threats to human health, FDA argued that beginning the revocation process isn't worth it.

I would further argue, though, that the agency simply does not have sufficient information on which to base a decision to revoke the approvals in question, but that it should begin a less formal investigation to shed some light on the matter. The agency has never before compared the risks that arise from animal antibiotics uses to those that would arise from restricting them. But doing so should be mandatory before any bans or further restrictions are put in place.

This entry is cross-posted from OpenMarket.org.

Back in March 2009, President Obama issued a memorandum on scientific integrity to the heads of executive branch agencies and departments. It announced that "[s]cience and the scientific process must inform and guide decisions of [his] Administration on a wide range of issues." And in a statement to the press, Obama insisted that "Our government has forced what I believe is a false choice between sound science and moral values." Previous administrations (and one in particular - nudge nudge, wink wink ... Know what I mean?) had let politics interfere with what should have been purely science-driven decisions by expert agencies. But that just wasn't going to happen in the Obama administration.

I guess Kathleen Sebelius didn't get the memo.

On Wednesday, HHS Secretary Sebelius publicly overruled a decision by the Food and Drug Administration to make the Plan B emergency contraceptive available to girls under age 17 without a prescription. According to The New York Times, "Dr. Margaret Hamburg, the F.D.A.'s commissioner, issued a lengthy statement saying it was safe to sell Plan B over the counter, while Ms. Sebelius countered that the drug's manufacturer had failed to study whether girls as young as 11 years old could safely use Plan B." Commissioner Hamburg's public letter on the decision explains that:

"Our decision-making reflects a body of scientific findings, input from external scientific advisory committees, and data contained in the application that included studies designed specifically to address the regulatory standards for nonprescription drugs. [FDA's Center for Drug Evaluation and Research] experts, including obstetrician/gynecologists and pediatricians, reviewed the totality of the data and agreed that it met the regulatory standard for a nonprescription drug and that Plan B One-Step should be approved for all females of child-bearing potential."

The United Kingdom's National Institute for Clinical Excellence (NICE) reviews applications to market new drugs in the U.K. based on their cost-effectiveness, and routinely recommends that Britain's National Health Service not pay for (i.e., refuse to cover) medicines that it thinks are too expensive - like Avastin for metastatic colorectal cancer. So NICE Chairman Michael Rawlins (who's led the institute since its foundation in 1999) is certainly no friend of the drug industry.

This made it all the more surprising this week when Rawlins told D.C. based BioCentury TV that the way that drugs are developed today creates "pervese incentives for companies to charge high prices."

"The first perverse incentive is the way that over the last 15 years the regulatory requirements for both the FDA and the EMA have increased hugely," he said.

"It is a huge increase with not much gain, not much benefit from these increased numbers. And of course, it puts up the cost of drug development hugely," he said. By Rawlins' reckoning, clinical trials drive well over half of the cost of new drugs."

This is a point that industry, patients' groups, and even the FDA is beginning to recognize: that the enormous costs and delays associated with drug development has not just financial consequences for the health care system, but needlessly delays patient access to important new therapies.

And much of the information captured in lengthy and expensive pivotal Phase III clinical trials required for FDA approval could just as easily be captured in the post-market environment through electronic health records or patient registries that could confirm efficacy, monitor drugs for rare safety problems, and help make off-label use of drugs much more scientific.

One approach for speeding drug development while still minimizing safety risks is called progressive approval, an idea recently proposed by the Biotechnology Industry Organization, and in a bill from U.S. Senator Kay Hagan (D, NC).

I'll be writing much more about this in future posts, but the basic idea is fundamentally sound, and has been advocated by various groups for years. Indeed, the FDA already does something like this through it's accelarated approval process (for cancer, AIDs, and orphan drugs), and the BIO and Hagan progressive approvals pathway would merely build on this experience.

The rebuttle, of course, is that many drugs that look good in early stage testing fail in Phase III trials, so progressive approvals would merely expose patients to more "placebos". However, it is also true that many good drugs are never developed because of the enormous costs and time required to bring them to market. And many patients die or suffer waiting for effective drugs to be approved.

Even if some drugs wind up being withdrawn under a progressive approvals process - like Avastin for metastatic breast cancer - many more patients would benefit from early access to more effective therapies. And, in a plus for health care payers, as drug development costs decline drug prices should too. Wouldn't that be really NICE?

Our sister site, PointofLaw.com is hosting a friendly debate on medical malpractice damages. MI's own Ted Frank is debating Professor Shirley Svorny of the Cato Institute on whether med-mal damages hurt consumers. Svorny authored a report released by Cato earlier this fall arguing that existing empirical evidence suggests that "medical malpractice awards do track actual damages" and that noneconomic damage caps and other "policies that reduce liability or shield physicians from oversight by carriers may harm consumers." Frank finds her paper not only contradictory but counterproductive.

Read more on Frank and Svorney's featured discussion and be sure to follow the debate on Twitter at #POLdiscussion!

Merck announced this week that it's opening a new R&D center in Beijing, with 47,000 square feet of labs and 600 employees. And this isn't just for pre-clinical research, but for everything from drug discovery to clinical trials. Reuters reports that Merck isn't the only company ramping up investment in China:

Aiming to take advantage of China's lower costs and supply of scientists, global drug makers, including Pfizer, Abbott and Novartis, have made big investments in Chinese R&D operations in recent years.

Beijing is home to several of China's top universities as well as the country's food and drug regulator, whose approval is needed for medications to be sold in the country.

Now, on the one hand, this is all to the good. As China and other developing nations like India become more wealthy, and modernize their own R&D base, drug regulations, and improve patent protection, they naturally become more attractive markets for drug and biotech companies.

But this should also be a warning to U.S. policymakers and regulators: the R&D and manufacturing base of the biopharmaceutical industry doesn't have to stay in the U.S. It can - and will - move to other markets that offer a more attractive "ecosystem" for life sciences innovation.

To the extent that U.S. becomes less competitive in the biopharmaceutical sector, we'll lose those high paying jobs and tax revenues. And, to add insult to injury, because the U.S. taxes global profits of U.S.-based companies, American multinational firms are much less likely to repatriate profits generated abroad and reinvest them at home. In short, money and jobs that flow abroad are more likely to stay abroad.

This is exactly the point that former CBO Director Douglas Hotlz-Eakin and I make in our recent City Journal article, Liberating Medicine's New Frontier.

America is, and will likely remain for some time, the global leader in biomedical innovation. Of course, Detroit used to be the automobile capital of the world too.

I was talking to a reporter recently and, after I explained my background, she snidely replied, "Oh, you work for the pharmaceutical industry." In her mind, I was tainted.

The facts are clear. I did work for Merck & Co. and later Syntex Labs, and have spent the last 17 years consulting for biotech and pharma companies ranging in size from two-person startups to the largest of companies. It's still strange to hear someone disparage the industry I voluntarily selected. Other than the disagreeable business of animal testing, I'm proud to work in the pharmaceutical industry, which, by the way, has done more for the betterment of mankind than perhaps any other industry.

Here's just one example. Maurice Hilleman, a fellow Merck employee, might have saved more lives than any other person in history. You see, Hilleman almost singlehandedly developed 40 vaccines over his 60-year career. Of the fourteen vaccines routinely recommended in current vaccine schedules, he developed eight. What's more, his vaccines save primarily children--healthy people with a long life in front of them.

In 1963, when his oldest daughter developed the telltale fever and swollen glands of mumps, he made a late-night trip to his laboratory to retrieve some equipment to culture her virus.

Using the isolate from his daughter, Hilleman attenuated the virus and shepherded it through testing and production in his typical forceful fashion. His younger daughter was a subject in early clinical trials. Both daughters survived and his ubiquitous mumps vaccine has since brought a classic childhood disease to the verge of extinction.

Yes, I work for the pharmaceutical industry.