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PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug Costs, Drug Pricing and Pharmacoeconomics Sayeh Nikpay Gordon Schiff PMAD 385.

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Presentation on theme: "PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug Costs, Drug Pricing and Pharmacoeconomics Sayeh Nikpay Gordon Schiff PMAD 385."— Presentation transcript:

1 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug Costs, Drug Pricing and Pharmacoeconomics Sayeh Nikpay Gordon Schiff PMAD 385 – April 16, 2007

2 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Patient case study

3 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Ms. Cs Drugs What have been costs? What has been burdens? How has managed to deal with it? Her thoughts about expensive drugs

4 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug Costs are high and on the rise U.S. costs roughly double those rest of world Overall Rising Costs-- 3 components: 1. Increased per capita drug use –Some related to aging population –But some pure increase in drug #s/use 2. Increased prices of individual drugs –Rising significantly higher than inflation rate 3. Shift to newer more expensive drugs

5 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP International Comparison Antidepressants & Antipsychotics Sasich, Public Citizen HRG 1998

6 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP

7 March 2007

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10 Brand-Name Prescription Drug Products with Highest Percentage Change in Manufacturer Price, 2006

11 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Index of Average U&C Prices for 96 Drugs Frequently Used by BCBS FEP Enrollees, by Month, 2000 through 2004

12 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Proportion of Total Prescription Drug Spending Out of Pocket Prescription Drug Spending

13 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Out of Pocket Prescription Drug Spending Proportion of Total Prescription Drug Spending Per Capita Spending

14 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug expenditure per capita, public and private expenditure, OECD countries, 2004

15 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Indexes of Average U&C Prices for 50 Brand and 46 Generic Drugs Frequently Used by BCBS FEP Enrollees, by Month, 2000 through 2004

16 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Market Logic Drugs are Under-priced Because the patients who used the drug had no alternative, the drug company had a fiduciary responsibility to its shareholders to raise the price to the highest level the users considered their lives to be worth. Because the drugs current price was clearly below this amount, the company was in fact under-pricing the product. - quoted in Korten, Post Corporate World, 1999

17 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Arguments for high drug prices The cost of medicines reflects their enormous value to patients, to society, and to the health care system. If we focus too much on cutting the cost of medicines without recognizing the growing role that medicines play in creating affordable health care, we may lose sight of their value and jeopardize future pharmaceutical research and development. What goes into the Price of Prescription Drugs, PhRMA, June 2005

18 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Justification for High Drug Costs 1.New drugs innovative and valuable to society 2.Drug R&D costs are high 3.Producing drugs is risky 4.Drug companies donate millions dollars of free drugs 5.Good value; impossible to put a value on good health

19 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP 1. Are drugs that innovative?

20 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Mostly Me-Too Drugs FDA categorization of new drugs –Priority vs. Standard Reviews Priority = significant improvement over currently marketed products –NME vs. new dosage, formulation, combination etc.. What is innovation? –Angell: new compound (NME) that is a significant improvement over marketed products (Priority Review) 123 drugs approved in 2006 –11 priority review 9% –18 NME 15% –6 Priority + NME 5% Source: CDER Drug and Biologic Approvals for Calendar Year 2006,

21 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP 23 Years Ratings New Drug Advances by Prescrire ( )

22 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP 2. How much does Pharma really spend on R&D?

23 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug Companies Claim: Spend more on R&D than on Promotion What goes into the Price of Prescription Drugs, PhRMA, June 2005

24 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP The Evidence 2004 U.S. Pharmaceutical Firms in the Top 200 Corporations Dollars in Millions Source: The Choice: Health Care for People or Drug Industry Profits, Families USA, 2005

25 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP The Evidence 2004 U.S. Pharmaceutical Firms in the Top 200 Corporations Dollars in Millions Source: The Choice: Health Care for People or Drug Industry Profits, Families USA, 2005

26 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Marketing, Advertising and Administration 32% 14% 18% 36% Research & Development Profits (net income) Other Source: Families USA, The Choice: Health Care for People or Drug Industry Profits, Revenue Allocation for Top 7 US Pharmaceutical Companies

27 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Questions about $$ spent on R&D 14% may be an overstatement Based on proprietary information –Categorization of spending is unknown Marketing infiltrates other categories –R&D includes Phase IV, seeding trials, other? Tax-payers contribute heavily –Through publicly-funded research –Tax breaks

28 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Industry Estimates for R&D Tufts Center for the Study of Drug Development –Non-profit, 55% funded by industry –Strong industry bias Classic 2003 paper by DiMassi et al – Analysis to determine cost of R&D for a new drug – Conclusion… $802,000,000 Widely quoted for 2 years before methods released

29 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Tufts Study Biases Confidential, voluntary data –10 firms and 68 drugs – who? Its a secret! Focuses exclusively on most expensive and least common type of drug –Self-Originated, New Molecular Entities Uses unusually high rate of return for opportunity costs of investing in R&D –11% compounded –Some debate whether it is appropriate Fails to account for significant tax deductions and credits for R&D

30 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Other Estimates Public Citizen $110 million Marcia Angell $266 million Earlier Tufts estimate $237 million New Tufts estimate for biologicals $1.2 billion

31 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP 3. Is the drug industry that risky?

32 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP PROFIT FEVER CURVE

33 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drug Industry Concerns about risk and profitability Generic competition Reduced patent protection time Rising costs to produce High #s of failed compounds Possible re-importation from abroad Rising regulatory costs

34 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Patent Protection: Billions in Profits for Drug Companies and high Prices for Consumers The longer the monopoly rights the higher revenues for branded manufacturers. –1999, Claritin® sales topped $2.2 billion –2000, Cipro® sales were $1 billion –2000 Paxil® sales were $1.4 billion No incentive for branded manufacturers to lower prices Results in higher drug prices Patent Protection Means Billions for the Industry and High Prices for Consumers, Families USA, 2002

35 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Benefits to Generic Market Entry Increases consumer choice First marketed generics typically priced 20 to 30 percent below branded comparators On average, branded drugs cost 3 times more than generics Generics accounted for approximately 42 percent of all prescriptions dispensed in 2000 The more generics in market, the lower prices drop Patent Protection Means Billions for the Industry and High Prices for Consumers, Families USA, 2002

36 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Generic Competition and Drug Prices, FDA CDER, 2006

37 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Extended Patent Life Brand name patents increased by 50 percent in the last 20 years Average of 8.1 years in 1980s Between 13.9 and 15.4 years 1990s Patent Protection Means Billions for the Industry and High Prices for Consumers, Families USA, 2002

38 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Extension of Exclusive Marketing Rights Drug companies take advantage of key legislation granting extended patent time –Bayh Doyle Act, Hatch-Waxman Act, Orphan Drug Act, Pediatric Equity in Research Act etc.. Drug companies exploit key loopholes to gain extra patents time –Filing for multiple patents on active and non active ingredients (staggered over time) –Use aggressive legal tactics to discourage the competition Drug Companies use anti-competitive deal-making to keep competitors out of the market –Pay offs to generic companies to delay production

39 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP 4. Are the drug companies that generous?

40 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Medication Assistance Programs In 2003, PhRMA members provided free drugs to 6.2m U.S. patients. Saves County ~ $7.5m bureau-wide –At the CORE ~$30,000/month

41 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Free Samples: Real Story Mostly given to Higher Income Patients Analysis of 2002 Medical Expenditure Panel Survey (MEPS) –39,165 U.S. residents 125 million samples given to 37.2 million Americans Poor people were least likely to receive free samples –Only 10.3% of recipients below 100% poverty level –14.6% earned 4400% poverty level FREE PHARMACEUTICAL SAMPLES: CHARACTERISTICS OF US RECIPIENTS IN 2002, Cutrona et al. 2003

42 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Pitfalls to relying on samples/MAP Promotes new expensive drugs over drugs of choice Financially jeopardizes patients –Stuck paying after initial sample period Facilitates drug rep entry, exposure Makes MDs and institutions beholden to drug cos Tax write-off means not free because public pays Serious patient safety issues Makes it easier to rely on drug vs. non-drug therapy

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45 Norvasc at County- Free Drug Ends Up Costing Millions #1 prescribed antihypertensive nationally Forced its way onto Formulary –Manipulation/interference w/ formulary decision-making –Argued its free under Pfizer Share-the-Care Program –Previously Committee had decided expensive and unnecessary Only for Pfizer branded products –Cook County-largest free clinic –Drugs not actually free--credits for future Pfizer drugs –Massive free sampling Left holding bag for millions (>5) of $$ –When demanded individual bills/proof

46 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP 5. Drugs are a good value; plus good health doesnt have a $ value?

47 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP What is the value of the smile of a child no longer feeling the pain of cancer? What is the value of giving a grandfather with congestive heart failure the energy to go camping with his grandson?

48 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Pharmacoeconomics

49 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Pharmacoeconomics -Useful Tool Takes into account broader costs beyond just the acquisition costs Allow modeling of clinical variables to make more choices more transparent and informed Important policy tool to ensure money is not wasted –Allows comparisons to other government expenditures that are most valuable for society Western European nations, Canada and Australia use pharmacoeconomic analysis –2003 Medicare Modernization Act included provisions for comparative efficacy and cost-effective analysis –Efforts were thwarted

50 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Pharmacoeconomics- Biases FLIP Side of Claims

51 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Frequency distribution of 1433 incremental cost effectiveness ratios for health interventions

52 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Australian Pharmaceutical Benefits Scheme: Problems & Biases Encountered in Submissions Evaluated 326 major applications to the Australian Pharmaceutical Benefits Scheme Problems w/ submissions were regarded as significant if both the evaluators and technical subcommittee considered that problem could have a serious bearing on the decisions made Serious problems found in 218 (67%) submissions –31 had more than one problem, giving 249 serious problems in total. Hill JAMA 2000

53 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Hill JAMA 2000

54 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP No randomized trials Identification of additional trials contradicting claims Trials of poor quality Trials too small Trials too short Trials not appropriate for indication Inappropriate sub group analysis Surrogate rather than actual outcomes Choice of comparator Economic models based on inadequate information Calculation errors Australian Pharmaceutical Benefits Scheme Examples of problems encountered

55 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Although the rules for cost-effectiveness analysis have been widely disseminated in the medical literature since Udvarhelyi et al in 1992, showed that these rules were widely flouted and the fundamental principles usually ignored. Pharmacoeconomic Analyses Making Transparent & Credible Rennie & Luft JAMA 2000

56 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Hillman based on their experience conducting 33 economic analyses for 15 pharmaceutical companies over 13 years, were the first to come to grips with the problems of bias posed by cost-effectiveness analyses funded by makers of the drugs being analyzed. They noted that pharmaceutical companies sponsored most such research, which was unregulated, unstandardized, and prone to subjective bias. The researcher often had the design of the analysis, choice of the comparison drug, and selection of what confidential proprietary data they were allowed to see decided in advance by the sponsoring company. Pharmacoeconomic Analyses Making Transparent & Credible Rennie & Luft JAMA 2000

57 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP The companies, which considered such analyses to be marketing tools to promote sales, had studies supervised by marketing divisions that had no trouble with the idea of selecting ineffectual drugs for comparison, making investigators accept favorable assumptions, terminating unfavorable studies early, blocking publication, and putting pressure on investigators to produce favorable results. Pharmacoeconomic Analyses Making Transparent & Credible Rennie & Luft JAMA 2000

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59 Common Methodologic Flaws in Economic Analyses Omission of important costs or benefits Inappropriate selection of alternatives for comparison Problems in making indirect comparisons Inadequate representation of the effectiveness data Inappropriate extrapolation beyond the period observed in clinical studies Excessive use assumptions rather than data Inadequate characterization of uncertainty Problems in aggregation of results Reporting of average cost- effectiveness ratios Lack of consideration of generalizability issues Selective reporting of findings Drummond Med Care 2005

60 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Drummond Med Care 2005

61 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Discussion Questions What to Do About High Drug Costs What can you as a pharmacist do to help your patients? What can our institution do to better control costs? What policies could help moderate drug costs? What role can the formulary play in these efforts?

62 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP

63 Formularies as the frontline of Cost Issues

64 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Many People Involved in Pharmaceutical Supply-Chain Wholesalers Generics Branded Drug Cos PBMS Insurers Clinicians Patients Providers Employers Govt

65 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP

66 Relevant County Example Give example from county of manipulation – glaucoma drugs switch around (tie to patient?)

67 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Fischer, M. A. et al. N Engl J Med 2004;351: Trends in the Use of NSAIDs and Spending for Coxibs by Medicaid from 1999 through 2003

68 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Cook County COX2 Approval Mechanism (via Pharm HELP Desk) GI Assessment Tool Scoring Age (1-18) Health Status (0-4) RA (2) Prednisone (5) Ever GI Bleeding (8) GI Side effects (2) Score > 20 Automatic OK Trial Salcylate

69 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP

70 COX2:NSAIDs %s Cook County vs. Medicaid 2001 N=431/17,259

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73 Slide of walgreens guy or Bills list of tricks or manipulations

74 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Annual Change in Average Usual and Customary Prices for Brand Generic Drugs Frequently Used by Enrollees in BCBS FEP, January through June 2004

75 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP Hill et al, 2000

76 PMAD 385 Spring 07 Critical Analysis of Pharmaceutical Marketing, FLIP


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