[Ip-health] Aidan Hollis: Off-label prescribing and rewards based on observed value

[James Love]

http://www.cptech.org/blogs/drugdevelopment/2006/07/off-label-
prescribing-and-rewards.html

[Drug Development (with access)]
Off-label prescribing and rewards based on observed value

NY Times, July 22 2006 has a story by Alex Berenson -- who is doing
very worthwhile reporting on drugs -- on off-label prescribing.

=93The case has put the spotlight on the murky financial relationships
between drug companies and the physicians they use to promote their
medicines. Companies cannot directly advertise drugs for purposes not
approved by the Food and Drug Administration. But getting drugs
prescribed for unapproved uses can increase a drug=92s sales, so
companies often skirt the rules by sponsoring seminars where doctors
are paid to make presentations promoting their drugs, including the
=93off label=94 uses.
For doctors, these and other payments they receive for discussing
drugs can be very lucrative. Dr. Gleason acknowledges that he
received more than $100,000 last year alone from Jazz
Pharmaceuticals, which makes Xyrem, the narcolepsy drug he has
promoted.=94

There is nothing illegal off-label prescribing =96 doctors are entitled
to prescribe drugs for a condition even when official labeling does
not include that condition =96 but it is not legal in most
jurisdictions for a company to promote a drug for off-label purposes.

Off-label prescribing is one way that firms and doctors find out
about the possible uses of a medicine. I have the impression that it
is particularly common for drugs treating mental health.
When drugs are used off-label the firm makes profits, and this gives
incentives for promotion of off-label uses. This is particularly
problematic if the off-label uses are in fact of low value,
comparatively. For example, suppose that drug A is approved for
condition X, and is reimbursed accordingly. But a doctor prescribes
it for condition Y, which already has an available treatment. Perhaps
drug A is slightly better for condition Y, or perhaps not. The price,
however, basically relates to the use of drug A for condition X.

An insurer may refuse to reimburse, since not for the approved use,
or it may reimburse at a price which has little to do with the value
of the drug in use Y.

How would a prize system treat off-label prescribing? The obvious
approach is simply to reimburse according to incremental therapeutic
value, given the evidence on the uses for which the drug has been
prescribed. If the evidence on the value of the drug for treating
condition Y is weak, the reward for the times the drug was used for
condition Y would be accordingly small, but need not be zero. The
trick is that the reward is determined based on the value of the drug
in the way that it has actually been used.

This highlights a general advantage of a reward system: it rewards
based on observed therapeutic value, rather than based on a price
which is set before it is observed how much value the drug actually
generates.

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Posted by Aidan Hollis to Drug Development (with access) at 7/24/2006
01:44:00 PM

---------------------------------
James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org /
tel. +1.202.332.2670 / mobile +1.202.361.3040

"If everyone thinks the same: No one thinks."  Bill Walton