Pharmaceuticals

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Do the elderly need help managing their prescriptions?

January 10, 2011 in Pharmaceuticals | No comments

According to this study, I would certainly say yes!

“The study reviewed pharmacy claims from the CVS Caremark pharmacy benefit management (PBM) book of business for 1.83 million patients taking statins, and 1.48 million patients taking angiotensen converting enzyme inhibitors (ACE inhibitors) or rennin angiotensen receptor blockers (ARBs) between June 1, 2006 and May 30, 2007…

During a three-month period, patients filled prescriptions for an average of 11 medications representing an average of six different drug classes, the researchers said.  ’More striking, during this 90-day time frame, 10 percent of these patients filled prescriptions for 23 or more medications . . . and 11 or more different drug classes, had prescriptions written by four or more prescribers, filled these prescriptions at two pharmacies and made 11 or more visits to those pharmacies,’ they said.”

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User Fees: A solution to decrease wait times for FDA approval of generic drugs?

October 21, 2010 in Pharmaceuticals, Regulation | 3 comments

The Consumer’s Union used Medicare.gov to show that many people could save $3,500-$5,000 by switching to generics.  Why don’t more people do so?  One reason is the long delays for FDA approval of generics.  The FDA’s Office of Generic Drugs is understaffed and thus generic drug approvals takes much longer than it should.

Brand name pharmaceuticals pay user fees to the FDA to speed up approval time.  Is this a good idea to apply for generics as well?

A Consumer Reports (Nov 2010) editorial states the following:

“In general, we oppose user fees that allow a regulated industry to fund the regulators.  A government agency can become dependent on the companies it’s supposed to objectively regulate , which can influence decision. In a 2006 survey…many FDA employees said they felt pressured to hastily and perhaps improperly approve user-fee drugs.  And at least one felt the agency viewed industry, not the American public, as its client.“

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Patents, Regulation, and Fake Drugs

September 13, 2010 in Pharmaceuticals, Regulation | No comments

The Economist notes that counterfeit drugs are a growing problem.

“Counterfeit drugs can kill. Many are shoddily made, containing the wrong dose of the active ingredient. Taking them instead of the real thing can turn a treatable disease into a fatal one. It can also foster drug resistance among germs.”

Do patents cause and increase or decrease in the provision of unsafe, fake drugs?  Most people will say that patents help protect drug safety.  Drugs sold under patent require FDA approval and are generally safe.  However, these drugs are expensive and many people–especially those without insurance–cannot afford them.  Thus, these individuals may turn to less reliable vendors who promise to provide the same drugs at a lower price.

With shorter patent lengths, reliable companies can begin to produce affordable generics.  Companies can build a reputation for high quality generics, while still selling customers through low prices.  Eventually, these “generic” companies could build a brand name as worthwhile as Pfizer.

Just decreasing patent lengths is not a cure all, however.  People have been selling, drugs, tonics and potions which falsely purport to cure all types of ailments since the beginning of mankind (e.g., snake oil salesmen).

Additional drug safety regulation could improve the safety of marketed drugs, but it would also likely drive up prices, thus forcing more individuals to buy medicines on the black market.  Additional regulation also stymies new treatment innovation due to the extra costs regulation imposes.

Fake drugs are a serious problem; a problem without a simple answer.

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Do Acid Blockers pose health risks

September 10, 2010 in Pharmaceuticals | 2 comments

In 2008, Americans spend over $14 billion on proton pump inhibitors.  These heartburn treatments such as Nexium, Prevacid, and Protonix may put millions of patients at risk.

According to Scientific American, long-term use of these medicines has been linked to “withdrawal symptoms, an increased risk of bacterial infection, hip fracture and even possible nutritional deficiencies.”  Additionally, Doctors sometimes give PPIs to prevent gastrointestinal bleeding or stress ulcers, even though such prescribing is of questionable medical value.  On study by a professor at the University of Michigan Hospital found that their facility spent over $100,000 per year on unnecessary PPI prescriptions.

Surprisingly, a 2009 study in Gastroenterology found that “long-term use of PPIs may cause the very symptoms the drugs are designed to treat.”  After 12 weeks of treatment, 22% of the treatment group receiving PPIs experienced heartburn compared to 2% of the group receiving a placebo.  In fact, St. Paul’s Hospital in Vancouver cut daily medication costs in half by redcing PPI prescribing patterns and did not worsen clinical outcomes whatsoever.

Why are PPIs so popular if they are ineffective?  One doctor claims that they may be addictive.

Should PPIs be prohibited?  I would say not.  However, given the evidence of the ineffectiveness of PPIs, private insurance companies, Medicare and Medicaid should not cover these types of medicines.  Under this logic, patients could still take the medicines if they wished, but this would come at their own cost.  This is one case where President’s Obama’s push for the use of more cost-effectiveness analysis within government health insurance programs could bear cost savings without harming patient health.

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Getting Poor/Old People Drug Coverage: Part II

June 29, 2010 in Medicaid/Medicare | 1 comment

Yesterday, I mentioned that low-income individuals on Medicare can also qualify for Medicaid and, as full-beneift dual eligible beneficiaries, they have significantly lower cost sharing than the typical Part D beneficiary.  How does CMS identify these individuals?

For currently beneficiaries on Medicaid who ‘age’ into Medicare, this process is fairly easy.  CMS can auto-enroll these individuals prospectively into Medicare drug plans.  The “Medicaid–>Medicare” population makes up 25% of all new full benefit dual eligible (FBDE) individuals each month.

For individuals who are currently Medicare eligible who become poor, this process is more complex.  Oftentimes, these beneficiaries only receive the more generous coverage months after they are initially eligible.  Thus, CMS must retroactively reimburse these beneficiares for the additional incurred expense.

To eliminate the lag in identifciation of these new FBDE individuals, CMS has taken a number of steps such as: increasing the rate at which state data are reviewed and eligibility and provided additional guidance to states on how to backdate FBDE coverage already in Medicare Prescription Drug Plans (PDP).

In addition, a new demonstration aims to make the transition between regular beneficiary and dual-eligible state more transparent.  The Limited Income Newly Eligible Transition (LI NET) “will cover all claims during retroactive auto-enrollment periods for full-benefit dual eligible (FBDE) beneficiaries and Supplemental Security Income (SSI)-only beneficiaries plus immediate need claims for all Low- Income Subsidy (LIS)-eligible beneficiaries.”  Humana won this contract for 2 years.  In particular, the LI NET will do the following:

Read the rest of this entry »

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Getting Poor/Old People Drug Coverage: Part I

June 28, 2010 in Medicaid/Medicare | 1 comment

Health insurers face a conundrum.  Increased cost sharing helps to reduce patient utilization of medical resources and–at least inititally–lowers the cost of care.  Too much cost sharing, however, can lead to decreased patient adherence.  In this case, the patients may get sick and require hospitalization,  which will actually increase cost.  Cost sharing’s affect on adherence will likely be especially acute for low-income individuals.

To not discourage low-income individuals from receiving the care they need, Medicare significantly reduces the cost sharing provisions for low-income individuals.  For example, for Part D drug coverage, most beneficiaries face the following benefit structure as of 2008:

  • $275 deductible
  • 25% copay up to an initial coverage limit of $2,510
  • Doughnut hole coverage between $2,510 and $4050
  • Catastrophic coverage above $4050 where he pays the greater of $2.25 for generic, $5.65 for brand drugs, or 5% coinsurance, whichever is greater.

Many low income individuals, however, incur much less cost sharing.   Many of these low-income Medicare beneficiaries are known as dual eligibles since they are eligible for both Medicare and Medicaid coverage.  “…these beneficiaries—referred to as full subsidy beneficiaries—pay a small copayment (between $1.10 and $6.00 in 2009) and Medicare pays the difference between these amounts and the cost sharing required by the plans.”  Thus, by covering most of the cost of these poor, elderly individuals, Medicare hopes to avoid decreased adherence and–in the long run–save money and improve health outcomes.

Before January 2006, State Medicaid plans were responsible for paying for most drug coverage for these beneficiaries.  After this date, however, the drug costs for these beneficiaries was transitioned to Medicare’s newly enacted Part D program.

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Do Economists Support FDA Pre-approval of Drugs?

May 9, 2010 in Pharmaceuticals, Public Health, Regulation | No comments

Conventional wisdom holds that economists advocate for reducing regulation on most policy arenas.  Regulation imposes costs and businesses and is often ineffective.  Further, as technology and market conditions change, regulations which were originally welfare enhancing can now become archane.

The public generally views the FDA’s pre-approval as a worthwhile endeavor.  The goal of FDA pre-approval is to protect consumers against unsafe and/or ineffective drugs.  In the world of neo-classical economics, agents have perfect information about drug quality and the role for the FDA disappears.  Even if information is not perfectly observed, the FDA’s ability to restrict the entry of potentially useful drugs into the market can be welfare destroying.  Certifying drugs as safe rather than prohibiting them through regulations may be a preferable form of spreading information.

In a recent survey of 44 leading economists, 23 support or strongly support pre-market approval of new pharmaceuticals and devices while 15 where opposed or strongly opposed (6 were neutral).  The key rationale behind the support of pre-market approval was the problem of imperfect information and also the public goods aspect of knowledge.  Fewer economists supported the notion that the government has superior ability to assure safety and  efficacy.

The majority of economists also believe:

  • the effect of pre-market approval in suppressing would-have-been benefits is often or typically overstated in public discourse.
  • doctors do not systematically error when prescribing medicines.
  • replacing the current FDA system with a simple physician prescription requirement for new drugs and devices is a bad idea
  • The current FDA system increase the amount of knowledge available on new drugs.

Economists were split as to whether drugs approved by European, Japanese, and Canadian authorities should automatically be approved for use in the U.S.

This survey shows that economists do not have a clear consensus answer to the question of whether there is “a sound market-failure rationale for the banned-till-permitted policy for drugs and devices.“

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Drug Safety: FDA Approval vs. Product Liability

February 22, 2010 in Pharmaceuticals, Regulation, Vaccinations | 1 comment

Before a drug can come to market, it must receive FDA approval.  This involves 3 phases of testing with Phase I having 20-80 volunteers and Phase III often testing more than 1,000 people.  Despite the FDA approval, patients can sue drug companies if they are injured by a drug.  Patients can generally sue manufacturers under one of three theories of legal liability:

  • defective design (design of a drug or device was inherently unsafe)
  • defective manufacturing
  • defective warnings, the firm failed to provide sufficient warning of the possibility of an adverse event if it knew or shown have known about the risks.

Is it efficient to maintain a system of product liability in addition to government licensing or does this legal framework simply drive up the costs of pharmaceuticals?

A paper by Philipson, Sun, and Goldman (2009) argues that when FDA approval is binding, the removing the drugs product liability increases efficiency.  This is because the product liability “has no additional effect on the level of safety firms choose to provide, but raises prices and thus restricts access.”   I believe, this is the system adopted by the UK where drugs that are approved by NICE are not liable for lawsuits.  If the drug turns out to perform poorly in practice, NICE will pull it off the market (readers, can you confirms this is correct?).

The authors use American policy on vaccine liability to elucidate their point. “The National Vaccine Injury Compensation Program (NVICP) provides a useful case study. This program shielded vaccine makers from liability in exchange for a special compensation program funded by an excise tax on vaccines. This program therefore essentially mimicked pre-emption by lowering the cost of liability dramatically.”

However, the problem with the paper is knowing whether the FDA safety procedures are binding in practice.  For some drugs, the FDA approval provides firms with more than enough incentive to produce evidence of the safety of their projects.  On the other hand, for other cases FDA approval may not provide sufficient incentives to make the drugs safe.

In the larger view, if the FDA approval does a good job of monitoring safety, then product liability could be abandoned to increase safety.  However, if the FDA approval does not induce firms to make their drugs safe, the product liability acts as a costly but effective backup to insure the firms manufacture products that are safe for consumers.

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Cost of drug development: $1 billion

February 16, 2010 in Pharmaceuticals | 3 comments

A paper by DiMasi et al. (2003) found that the cost of drug development was $802 million.  This is a highly contentious number.  Drug companies have used this number to lobby regulators to loosen the FDA approval process.  The data used in the study, however, was confidential and could not be replicated by other authors.

A new paper by Adams and Branter (2010) replicates the methods of the older study with publicly available data and find that the previous number is an underestimate.  The paper claims that the cost of drug development is actually $1 billion.  This is not an absolute number, however, as there is a substantial variation drug development expenditure depending on the therapeutic category.

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The creation of a blockbuster drug

December 22, 2009 in Pharmaceuticals | 1 comment

NPR’s All Things Considers documents the creation of the blockbuster drug Fosamax.  Physicians use Fosamax to treat patients with osteoporosis and the less severe osteopenia.  To summarize what took place:

  1. Pharmaceutical companies start lobbying to expand Medicare coverage for bone density tests.
  2. Medicare expands coverage to include bone density tests.
  3. Physicians purchase equipment to test for osteoporosis.
  4. If the physicians find evidence of osteoporosis, they prescribe the drug.
  5. Pharmaceutical companies market the drug to people who do not have the disease (osteoporosis), but who have the potential for developing the disease (osteopenia).
  6. Physicians recommend that marginally ill or healthy patients with osteopenia take the drug.
  7. Patients notice their peers are taking the drug, physicians notice other physicians prescribing the drug, and a tipping point occurs
  8. A blockbuster drug is born.

“…drug companies produce incredible drugs that can greatly relieve suffering. But one way they profit from those drugs is to extend their use to as many people as possible, which frequently means that medications are used in populations with milder and milder versions of a disease, so that the risks of medicating can come to outweigh the benefits.”

People who hate the American health care system will say, look at all this wasteful spending.  There are no long-term studies that look at what happens to women with osteopenia who start Fosamax in their 50s and continue treatment long-term.  Those who like the American healthcare system will say that all the wasteful spending helped induce Merck to bring Fosamax to market and the drug truly does help patients with severe osteoporosis.

Neither camp is incorrect.

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