Industry Aims to Defeat Discount Drug Initiatives

[Guest guest]

http://www.truthout.org/docs_2005/032805C.shtml

 

Industry Aims to Defeat Discount Drug Initiatives

By Jordan Rau

The Los Angeles Times

 

Monday 28 March 2005

 

Sacramento - Facing pressure from many states to provide cheaper

prescription drugs, the pharmaceutical industry has launched its most

aggressive counterattack in California, where the issue is threatening

to explode on the ballot as early as this fall.

 

The industry already has raised an unprecedented $8.6 million to

defeat a ballot initiative being readied by Health Access California,

an Oakland-based nonprofit, even before the authors have gathered

enough signatures to qualify it for the next election.

 

The Health Access measure would compel drug makers to offer

discounts to 6 million to 10 million Californians - making a

substantial dent in the industry's profits and offering what it

considers an unwelcome model for other states to follow.

 

The companies are treating that approach, which is paralleled by

Democratic legislation pending in the state Assembly, as far graver

than last year's press to allow the importation of Canadian drugs.

 

Drug firms also are threatening retaliatory initiatives aimed at

trial lawyers and unions, which are most likely to be donors to Health

Access' ballot measure. And they have hired three of Sacramento's

best-connected Democratic strategists - including former Assembly

Speaker Willie Brown - to cut a deal with the Democrat-controlled

Legislature and avert a ballot battle.

 

Drug makers say the California fight comes at a critical time.

Though the industry faces little danger from Congress, manufacturers

are on the defensive in places such as Washington state and Rhode

Island as legislative interest mounts to control the growing cost of

medicine. " We take it as such a serious threat to the health and

welfare of the pharmaceutical industry that we have to make a stand

here " in California, said Jan Faiks, a vice president of the

industry's trade group, the Pharmaceutical Research and Manufacturers

of America. " It's a very bad precedent. You're the leader in the

country, and there are 26 states that allow ballot initiatives. "

 

Despite industry challenges, Ohio and Maine recently have launched

their own discount plans for low-income people. But so far, the

industry has been able to prevent any state from punishing individual

manufacturers that decline to lower prices voluntarily. They are

trying to do the same in California. The pharmaceutical trade group

and Gov. Arnold Schwarzenegger have negotiated a voluntary discount

plan called California Rx. It calls for manufacturers to agree to

provide discounted drugs to anyone earning less than three times the

federal poverty level ($28,710 for an individual or $58,050 for a

family of four). Almost 5 million Californians would qualify.

 

The administration projects that, including rebates from

manufacturers and pharmacies, Californians would be offered drugs that

on average were 40% cheaper than retail. The nonpartisan legislative

analyst's office says, however, that would " still be significantly

below the 60% to 65% savings " that California's Medi-Cal program receives.

 

" Our concern about the governor's plan as envisioned is that it

doesn't seem like they would get the lowest prices, " said Assembly

Majority Leader Dario Frommer (D-Glendale), who has proposed

legislation that Health Access used as the basis for its ballot

initiative. " They wouldn't even be as good as you can get at Costco. "

 

The administration has not yet negotiated any deals with

individual manufacturers. The state envisions that, if approved by

legislators, its plan could begin next year, and says the drug

industry has agreed not to fight it in court, as it would be sure to

do with the Health Access initiative and Frommer's legislation.

 

" We believe ours is the only pending proposal that not just

promises the rhetoric of discounts, but actually delivers the reality

of discounts, and it does so in the near term, " said Kim Belshe, head

of the state Health and Human Services Agency.

 

Drug makers consider the governor's plan far more preferable than

the Health Access and Frommer approaches. Their plans would cover more

people than Schwarzenegger's, requiring discounts for anyone earning

less than four times the federal poverty level ($38,200 for an

individual or $77,400 for a family of four). People with incomes above

that who spend a disproportionate amount on medical expenses also

would be eligible.

 

Most disturbing to the industry is that under the Health Access

and Frommer proposals, drug companies that do not consent to the

discounts could be shut out of a prized market: the state's huge

Medi-Cal program, which annually buys $3 billion worth of drugs for

the poor.

 

" The prescription drug companies have admitted with their

initiative that their drug prices are too high, " said Anthony Wright,

executive director of Health Access. " The question is, should the

state use its leverage to bargain for better prices, or should it just

rely on the goodwill of the industry? "

 

The experiences of other states suggest caution on both

approaches. Schwarzenegger's plan is modeled on one in Ohio that began

operating this year, but its discounts so far amount to just 26% off

retail prices.

 

As in California, the industry agreed to Ohio's plan as a more

palatable alternative to a ballot initiative that was being launched.

(Also as in California, the industry had assertively tried to block a

ballot fight, filing lawsuits in 41 counties to challenge voter

petition signatures.)

 

But now some of that plan's supporters say the compromise was not

ideal, blaming the relatively low discounts on a decision to use state

employee drug prices as the basis for negotiations. " We were in fact

negotiating from a weakened position, and not negotiating for a best

possible price, " said John Gallo, a Cleveland activist who worked on

the initiative campaign. Schwarzenegger's plan would base its price on

the lowest net cost available commercially.

 

Maine's Rx Plus program - the inspiration for Frommer's

legislation - claims to save patients up to 15% off retail prices on

name-brand drugs and up to 60% on generics. Maine's program was

delayed for years when the drug industry filed legal challenges. The

case went to the U.S. Supreme Court in 2003, where a splintered

opinion failed to clarify whether states could use their Medicaid

programs as leverage. Maine's program is operating, but the state has

yet to punish any companies. The industry says that such penalties are

illegal because they would unfairly penalize Medicaid participants by

potentially denying them the full range of medicines. The industry is

expected to make the same arguments in court should the Frommer or

Health Access measure become law.

 

Some efforts at establishing voluntary discount programs have

flopped. A plan in Iowa collapsed when only three of 20 drug makers

that the state approached agreed to participate. The Schwarzenegger

administration says Iowa has so few poor people that it can't be

compared to California. Only one generic drug maker and 13 brand

manufacturers agreed to participate in California's Golden Bear State

Pharmacy, created in 2001 to offer discounted drugs for the elderly.

The Schwarzenegger administration was forced to abandon that approach

last year, but blames the plan's design - not the drug companies - for

its failure. " There haven't been great success stories - at least in

the past - with voluntary rebates, " said Kimberly Fox, senior policy

analyst at the Rutgers Center for State Health Policy in New Jersey.

 

Still, the pharmaceutical manufacturers group has stepped up its

efforts to set up voluntary programs in other states that, like

California, are ripe for more coercive legislation. Officials of the

trade group say they are negotiating with labor leaders and

politicians in Washington state, Rhode Island and Illinois. Other

states are taking different tacks. West Virginia lawmakers are trying

to get companies to offer drugs for the same low price they offer

veterans hospitals and the military.

 

" Some of these things are really spreading out across the states, "

said Sharon Anglin Treat, executive director of the National

Legislative Assn. on Prescription Drug Prices, a Maine-based group

that advocates for those measures.

 

" A lot of the innovation has come in states like West Virginia and

Maine, which have citizen legislators who meet over a short period of

time. Someone can put in a bill and it becomes law in two months, "

said Treat, who helped pass the Maine law while Senate majority leader

there. " It's possible legislation can fly through without a lot of

attention from the drug companies. "

 

There is no chance of that in California, where the industry is

threatening retribution.

 

Not only are drug companies bankrolling Schwarzenegger's plan as

an initiative, but they also are offering two companion ballot

measures aimed at the heart of Democrats' donor base. One would slash

trial lawyers' contingency fees and the other would require public

employee unions to obtain members' permission before spending their

dues on political activities.

 

" It certainly is a signal to the unions that they're not going to

engage in a one-handed attack, that the industry is going to fight for

its interests and the interest of the patients that it serves, " said

Frank Schubert, who is managing the initiative campaigns for the

pharmaceutical manufacturers group.

 

The drug industry's new slate of strategists is well-positioned to

help it find some common ground in the Capitol. Along with Brown, a

legendary figure in Sacramento, the consultants include Jason Kinney,

a former speechwriter for Democratic Gov. Gray Davis now advising Don

Perata, the Alameda Democrat who leads the Senate; Steve Smith, who

was Davis' labor commissioner and a chief campaign advisor; and Bob

White, a key architect of Schwarzenegger's campaign in the 2003 recall.

 

The donations that companies have already made dwarf the

industry's previous contributions in California politics or in any

other state. From 2000 through 2003, the industry gave $2.2 million in

California, according to the Institute on Money in State Politics, a

nonpartisan analyst in Montana.

 

The industry has increased its generosity since Schwarzenegger's

election, giving him more than $300,000, backing GOP candidates for

the Legislature he has supported and holding a fundraiser for him in

Washington, D.C., earlier this month. The industry has pledged $10

million toward its initiatives and another $10 million to help

publicize existing free drugs offered by individual manufacturers.

Faiks, the drug makers group executive, said the industry would spend

" whatever it takes " to defeat the Health Access initiative. " We are

(1), trying to get out of harm's way, " she said, " and (2), trying to

help people. "

 

Drug Donations

 

The pharmaceutical industry has pledged to donate at least $10

million in California to fight proposed ballot initiatives that would

mandate lower drug prices. These are the companies that have each

given more than half a million dollars toward the effort, which has

raised $8.6 million so far.

 

Company: Donation

 

Johnson & Johnson: $1,300,000

 

Pfizer: $1,300,000

 

GlaxoSmithKline: $1,300,000

 

Abbott Laboratories: $650,000

 

Amgen: $650,000

 

AstraZeneca: $650,000

 

Eli Lilly: $650,000

 

Novartis: $650,000

 

Wyeth: $650,000

 

--------

 

Source: California Secretary of State.

 

 

 

Go to Original

 

Miracle Malpractice

By Kelly Hearn

AlterNet

 

Monday 28 March 2005

 

A new book explains how the medical industry, pharmaceutical

companies, the media and politicians all prey on the public's fears to

sell them new drugs and the latest technology.

 

Medical technologies are a main driver for escalating drug costs,

helping put health coverage out of reach for millions of Americans. In

a new book, Hope or Hype: The Obsession with Medical Advances and the

High Cost of False Promises, two medical professionals explore

disturbing practices and trends that lure consumers into thinking that

" new " drugs and technologies are equivalent to or better than old ones.

 

The authors are professors at the University of Washington. Dr.

Donald Patrick is a Ph.D. researcher in Health Services who has held

appointments at Yale and St. Thomas' Medical School in London and has

taught at the University of North Carolina. He is a member of the

Institute of Medicine. Dr. Richard Deyo received the 2004 John M.

Eisenberg Award for Career Achievement in Research from the Society of

General Internal Medicine and is a fellow of the American College of

Physicians. Dr. Deyo recently spoke to AlterNet about regulatory

failures, marketing hype and the need for patient empowerment.

 

Kelly Hearn: You write that some people believe medical ethics, as

currently structured, makes bad public policy. The argument is that

huge financial outlays go to paying for medical technologies that,

say, extend a single life by a week. Instead, those funds could be

better spent improving needed social services or extending health

insurance coverage. If Americans are to engage in this debate, what

are the major considerations that need to be addressed?

 

Richard Deyo: I think the most fundamental thing is perhaps the

hardest psychologically for people to make. We have to acknowledge

that resources available for medical care are limited. They are not

infinite. The problem is that individuals, physicians and patients all

behave as if resources are infinite and cost is no obstacle. You hear

doctors say cost shouldn't be an object. They say, " We have to do

everything that might possibly benefit the patient. "

 

The patients feel like there is no limit because insurance picks

up the tab up to a million dollars, sometimes two. Now health

insurance is becoming unaffordable to many people and Medicare is in

trouble financially. I argue we should be trying to get the most

health care for the most people as opposed to getting every last

minute of life for an individual who may have a terminal illness. But

words like " rationing " are taboo. We can't talk about it. It is almost

as bad as being liberal in today's political debate. The truth is, if

we reflect, we acknowledge that we'll have spent hundreds of thousands

for one patient to prolong a week of life in an intensive care unit as

opposed to spending that on other things like prenatal care and

preventive services, on things that might save more lives.

 

Kelly Hearn: Technology, you both point out, is only good to a

point, that eventually it becomes a cost without a benefit. Given the

American obsession with technological advances, what can be done?

 

Richard Deyo: More of us in the medical world need to be more

honest about the limitations of technologies we are providing and

realistic about what it provides. I think in many cases medical

professionals, corporations and the media portray every new medical

device as a breakthrough while failing to note that if a technology

has benefits it is often tiny and often at the expense of side

effects, complications and cost. We simply need to be more realistic

about what technology offers. In many cases, if patients understood

what the device does or doesn't do, they would make the kind of

decisions doctors are not willing to make. They might say, " You want

to prolong my life for a day for half a million dollars, that's not

worth it. "

 

Kelly Hearn: You note in the book that information technology is

helping in that respect by making doctors' charts and other patient

information accessible and understandable to patients.

 

Richard Deyo: I think we need provide patients better information

about what their choices are. In many cases, doctors are guilty of

presenting a treatment as the only choice. In fact, there are a range

of choices with benefits and costs associated with every one. If we

could convey this in a concise and easy fashion, and engage patients,

it would probably improve the quality of medical decisions. One way to

do that is with information technology and computers. It's not the

only way, but it is a good way.

 

Kelly Hearn: States such as California and Arizona are having

problems with " boutique hospitals, " those that only provide costly,

profitable procedures such as cardiac or imaging technologies. What

dangers does this trend present mainstream general hospitals?

 

Richard Deyo: Boutique hospitals skim the cream of patients, those

with good insurance coverage who are able to pay for services. They

provide only the most lucrative services, such as high-tech cardiology

and orthopedic services. The problem is that well-insured patients are

pulled away from community hospitals that offer a full range of

services and those hospitals may find it harder to stay in business.

Emergency room care, burn care, psychiatric care - those are less

profitable services that are at risk of disappearing.

 

Kelly Hearn: Hype surrounding new medical technologies and

products feeds on the American obsession with the next best thing. Yet

many people assume the FDA works to filter through hype and false

promises. But you cite a report showing that roughly half the experts

who serve on FDA's 18 drug advisory committees had direct conflicts of

interest in drugs and issues they were evaluating. This adds to a

growing public perception that our regulatory mechanisms are polluted

by industry money. How serious is this problem and what can be done to

addresses shortcomings?

 

Richard Deyo: I think this is a pretty substantial problem. Since

we wrote the book, we have seen the whole story of Vioxx and the

advisory panel that recommended that Vioxx be allowed to stay on the

market. That is a perfect example. In that case, something like 10

members had ties to the pharmaceutical industry. Absent their votes,

the decision would have gone the other way. So I think there is good

evidence that these kinds of ties do influence the advice panels give,

advice which is usually taken.

 

The FDA should be more vigilant in trying to eliminate conflicts

of interest on panels. They argue that these individuals have the best

knowledge of drugs, and that often is true, but it seems those who

have the knowledge and connections ought to be in a purely information

providing and not a voting capacity. With some effort, you could

assemble panels with fewer conflicts of interest.

 

Kelly Hearn: It seems much of the hype is wrapped up in the

problem of so-called " me-too drugs. " Could you explain how this

problem relates to rising prices for new drugs and technologies? Would

it be helpful for example to require the FDA to test new drugs against

other drugs on the market rather than against placebos?

 

Richard Deyo: This is terribly important. The problem with me-too

drugs is a big one. Me-too drugs are chemically very similar to other

drugs already available, yet they are typically marketed as if they

were important new breakthroughs, and typically with very high prices.

We found in many cases that new, expensive me-too drugs are not

necessarily better than older generic and less expensive drugs.

Because new and heavily marketed drugs seem like they must be better,

manufacturers can command higher prices. That is an important driver

of drug costs.

 

The story of calcium channel blockers for treating high blood

pressure is an example. There are new drugs such as nifedipine and

verapamil that cost 10 times more than old-fashioned diuretic drugs

used for treatment. But the new drugs were never compared with older

drugs. They were compared with placebos and indeed worked better. Two

years ago, when they were compared to diuretics, the diuretics were

equally good at lower cholesterol levels and more effective at

preventing complications at one tenth of the cost. Yet we saw a

proliferation of calcium channel blockers because they were being

heavily marketed. That is a perfect example of why we need

head-to-head comparisons.

 

Kelly Hearn: Many consumers would like to the see the government

clamp down on much of the costly hype being generated by Big Pharma,

especially in advertising. But in the 2000 election cycle, as Hope or

Hype points out, the drug industry spent $177 million on campaign

contributions and $65 million on issue ads. The massive profitability

of the drug industry and its willingness to throw so much money at

lawmakers gives many people a sense that the drug industry is beyond

control. Do you agree, and if so, are there any positive signs, any

hints that despite its wealth and power, the drug industry can be

reined in?

 

Richard Deyo: I agree the drug industry has enormous power and

influence in politics. In the current administration that is reflected

by lobbying and campaign contributions, but also by the fact that

people within the administration have come from the drug industry. For

example, a former pharmaceutical leader is head of Office of

Management and Budget (OMB).

 

Kelly Hearn: Is there any hope of bringing the industry under

better control? I don't imagine it will be easy but it seems there is

room for tighter regulation that would have some effect. In fact,

profitability has fallen somewhat in the last two years in part

because of negative publicity, in part because of a drying pipeline of

new drugs and the fact that companies have overspent on marketing and

underspent on genuinely innovative research.

 

Richard Deyo: Some changes that might help would be changes in the

regulatory processes in the FDA, the possibility of head-to-head

comparisons and of tighter regulation of advertising, for example.

Drug companies are not required to get approval for television or

print ads before they are aired. As the process works now, the FDA can

file a complaint about misleading ads but only after ads are already

on the air and only after a legal review that takes six weeks. That is

often enough time to complete an ad cycle for a new drug. And what

some drug companies do is simply replace one misleading ad with

another misleading ad, which takes another six weeks for a letter to

be generated. The advertising should be reviewed before it is aired,

not weeks after. This would be slower and more cumbersome and not

palatable to companies. But it would be a simple regulatory change.

 

We are the only country in world, by the way, other than New

Zealand, that allows direct-to-consumer advertising. New Zealand is

now considering a change to its law.

 

Kelly Hearn: Much of the hype generated by companies and the media

has to do with the glut of scientific studies that are often funded by

industry. Corporations and many researchers say this is an inevitable

consequence of modern science, of bringing the most experienced minds

to bear on a development project. Other say the problem depends on how

much of a researcher's income is from industry. How important is that

calculus?

 

Richard Deyo: That is a very important calculus. Dangers arise

when an academic physician doubles, for example, his or her income by

getting research funds from industry. It seems a variety of other

things could be done to help prevent current abuses. I would argue

industry should be paying for research demonstrating efficacy. How to

keep them honest is the question. One possibility is requiring they

report all the results and register every project before and after the

fact. It would be harder to hide things. It would be harder to stop a

study in midstream when it looked like the results were not going to

be favorable. It would also be harder to publish the same studies over

and over again, which sometimes happen in current practice. Another

important issue is that drug companies often analyze data and write

the articles. If academics are going to do the research, they should

analyze and write the results. Some journal editors are trying to

enforce that rule with only modest success.

 

--------

 

Kelly Hearn is a former UPI staff writer who lives in Washington,

D.C. and Latin America. His work has appeared in several U.S.

publications and web sites including The Christian Science Monitor,

The American Prospect and High Country News.

 

-------

 

Jump to today's TO Features:

 

(In accordance with Title 17 U.S.C. Section 107, this material is

distributed without profit to those who have expressed a prior

interest in receiving the included information for research and

educational purposes. t r u t h o u t has no affiliation whatsoever

with the originator of this article nor is t r u t h o u t endorsed or

sponsored by the originator.)

 

" Go to Original " links are provided as a convenience to our readers

and allow for verification of authenticity. However, as originating

pages are often updated by their originating host sites, the versions

posted on TO may not match the versions our readers view when clicking

the " Go to Original " links.