[Ip-health] NYT LTE re Biogenerics: Cost of Living: Who Gets New Drugs?

[Sarah Rimmington]

Published at The New York Times, December 8, 2008
http://www.nytimes.com/2008/12/08/opinion/l08health.html?scp=3D1&sq=3Dsarah=
%20rimmington&st=3Dcse

To the Editor
Re =93British Balance Benefit vs. Cost of Latest Drugs=94 (=93The Evidence
Gap=94 series, front page, Dec. 3):

It is not surprising that several of the drugs found by a British
government agency to be not worth the cost for prolonging lives, or
whose use is limited, are biotech drugs (known as =93biologics=94), like
Avonex, Biogen=92s blockbuster treatment for multiple sclerosis.

Biologics, drugs made from living proteins, are extraordinarily
expensive, thanks to brand-name company pricing decisions. In some
cases, the cost is more than $100,000 annually.

The first biologics are now losing the patent protection that permits
companies to charge high prices, but there is no process for the United
States Food and Drug Administration to approve generic versions. Generic
competition typically results in price reductions as steep as 80 percent.

An efficient system for approval of generic biologics could save
taxpayers and consumers tens of billions of dollars. But the terms of
such a process =97 like whether brand-name companies are given new
monopoly protections =97 are critical. Let=92s hope Congress gets it right.

Sarah Rimmington
Washington, Dec. 3, 2008

The writer is a lawyer for the Access to Medicines Project at Essential
Action.

---

This letter responds to a Gardiner Harris story, pasted below. There
were several letters published in response to this story. To read them,
go to: http://www.nytimes.com/2008/12/08/opinion/l08health.html?_r=3D1

http://www.nytimes.com/2008/12/03/health/03nice.html
The New York Times
December 3, 2008
The Evidence Gap
British Balance Benefit vs. Cost of Latest Drugs
By GARDINER HARRIS

RUISLIP, England =97 When Bruce Hardy=92s kidney cancer spread to his lung,
his doctor recommended an expensive new pill from Pfizer. But Mr. Hardy
is British, and the British health authorities refused to buy the
medicine. His wife has been distraught.

=93Everybody should be allowed to have as much life as they can,=94 Joy
Hardy said in the couple=92s modest home outside London.

If the Hardys lived in the United States or just about any European
country other than Britain, Mr. Hardy would most likely get the drug,
although he might have to pay part of the cost. A clinical trial showed
that the pill, called Sutent, delays cancer progression for six months
at an estimated treatment cost of $54,000.

But at that price, Mr. Hardy=92s life is not worth prolonging, according
to a British government agency, the National Institute for Health and
Clinical Excellence. The institute, known as NICE, has decided that
Britain, except in rare cases, can afford only =A315,000, or about
$22,750, to save six months of a citizen=92s life.

British authorities, after a storm of protest, are reconsidering their
decision on the cancer drug and others.

For years, Britain was almost alone in using evidence of
cost-effectiveness to decide what to pay for. But skyrocketing prices
for drugs and medical devices have led a growing number of countries to
ask the hardest of questions: How much is life worth? For many, NICE has
the answer.

Top health officials in Austria, Brazil, Colombia and Thailand said in
interviews that NICE now strongly influences their policies.

=93All the middle-income countries =97 in Eastern Europe, Central and South
America, the Middle East and all over Asia =97 are aware of NICE and are
thinking about setting up something similar,=94 said Dr. Andreas Seiter, a
senior health specialist at the World Bank.

Even in the United States, rising costs have led some in Congress to
propose an institute that would compare the effectiveness of new medical
technologies, although the proposals so far would not allow for price
considerations. At the present rate of growth, medical costs will
increase to 25 percent of the nation=92s gross domestic product in 2025
from 16 percent, with half of the increase coming from new drugs and
devices, according to the Congressional Budget Office.

To arrest this trend, the United States needs to adopt at least some of
NICE=92s methods, said Dr. Mark McClellan and Dr. Sean Tunis, who served
earlier in the Bush administration as, respectively, administrator and
chief medical officer of the Center for Medicare and Medicaid Services.
Dr. Tunis said he spent a lot of time in government =93learning about NICE
and trying to adopt the processes and mechanisms they used, and we just
couldn=92t.=94

That=92s because the idea of using price to determine which drugs or
devices Medicare or Medicaid provides has provoked fierce protests. But
Dr. McClellan said the American government would soon have no choice.

Drug and device makers, which once routinely denounced the British for
questioning product prices, have begun quietly slashing prices in
Britain to gain NICE=92s coveted approval, especially because other
nations are following the institute=92s lead. Companies have said that
they will consult with NICE to help determine which experimental
compounds enter the final stage of clinical trials, so the British
agency=92s officials will soon influence which drugs enter the market in
the United States.

The British government created NICE a decade ago to ensure that every
pound spent buys as many years of good-quality life as possible, but the
agency is increasingly rejecting expensive treatments. The denials have
led to debate over what is to blame: company prices or the health
institute=92s math.

Dr. Michael Rawlins, chairman of NICE, blames the industry, saying that
some companies raise prices =93to get profits up so their executives can
get better bonuses.=94 Dr. Karol Sikora, a prominent London oncologist,
said that the institute=92s math was flawed and that Dr. Rawlins had a
=93personal vendetta=94 against cancer treatments.

Drug company executives who were interviewed uniformly promised to
cooperate with NICE, but industry advocates were not so kind. Robert
Goldberg, vice president of the Center for Medicine in the Public
Interest, an advocacy group financed by drug makers, likened Dr. Rawlins
and his institute to terrorists and said their decisions were morally
indefensible.

Developing a Method
It all started with Viagra.

Pfizer=92s introduction of the drug in 1998 panicked British health
officials, who feared it would wreck the government=92s health budget. So
they placed restrictions on its use. Pfizer sued, claiming the
government=92s decision was arbitrary. To defend itself against similar
claims, the government needed a standard method of rationing. The
following year, NICE opened.

Asked whether he thought the institute would succeed, Frank Dobson, the
Labor health minister at the time, famously said, =93Probably not, but
it=92s worth a bloody good try.=94

Britain=92s National Health Service provides 95 percent of the nation=92s
care from an annual budget, so paying for costly treatments means less
money for, say, sick children. Before NICE, hospitals and clinics often
came to different decisions about which drugs to buy, creating
geographic disparities in care that led to outrage. (Such disparities
are common in the United States, even for federal Medicare patients.)

Now, any drug or device approved by the institute must be offered to
patients. The institute has also written hundreds of treatment
guidelines in hopes of improving, and making more consistent, basic
medical care.

The institute has analyzed the cost-effectiveness of surgical
operations, cancer screening tests and medical devices. For example, it
found that drug-coated cardiac stents were worth only $450 more than
bare-metal ones. In the United States, stent price differences are often
far wider.

Five years ago, the British health institute recommended more emergency
room CT scans of patients suffering from head trauma =97 forcing hospitals
to buy more machines.

But the decisions that get the most attention are those involving new
drugs. Any drug that provides an extra six months of good-quality life
for =A310,000 =97 about $15,150 =97 or less is automatically approved, whil=
e
those that give six months for $22,750 or less might get approved. More
expensive medicines have been approved only rarely. The spending limits
represent the health institute=92s best guess for how much the nation can
afford.

After consulting a citizens group, the institute decided that the nation
should spend the same amount saving or improving the life of a
75-year-old smoker as it would a 5-year-old.

=91Muddling Through=92

The institute=92s decision-making process involves a series of independent
assessments, consultations with manufacturers, committee meetings,
comment periods for outsiders and appeals that, taken together, Dr.
Rawlins described as =93procedural justice,=94 or =93muddling through
elegantly.=94 While the institute provides advice, decisions are made by
one of three committees made up of doctors, nurses and economists from
outside the government.

Transparency recently became a high priority, but gaps in the idea of
openness remain. At the institute=92s first public decision-making
appraisal meeting in September, staff members handed a reporter a stack
of documents, only to snatch them back moments later. The committee=92s
chairman, Dr. David Barnett, was so intent on keeping the meeting brief
that he told a committee member: =93This must be the last question. It
must be relevant. Otherwise, you will feel my wrath.=94

To analyze the value of the drug that Mr. Hardy, the kidney cancer
patient, wanted, and the value of three other kidney cancer medicines,
the British institute hired a university group that considered how many
months the drugs delayed cancer=92s progress.

Firestorm of Protest
The academics got drug prices and calculated the costs of administering
them and treating their side effects. Not one of the drugs came close to
being worth their expense, the group suggested. In a preliminary ruling
in August, a committee from NICE agreed.

The decision caused a firestorm. Twenty-six prominent British
oncologists wrote a letter to The Sunday Times saying that the institute
assessed cancer treatments poorly and that patients were remortgaging
their homes to buy drugs freely available in other countries.

Given that fewer than 6,000 people per year in England and Wales are
diagnosed with kidney cancer, =93Why put ourselves through so much
heartache for very little money?=94 Andrew Dillon, the institute=92s chief
executive, asked in a September interview. =93The answer is that if we
don=92t apply the same criteria even to small groups of patients, there=92s
little value to what we do at all.=94

Dr. Sikora, who helped organize the August protest, predicted in a
September interview that the institute would buckle under political
pressure.

Flooded with anguished comments, the institute beat a hasty retreat. A
preliminary consultation posted Nov. 5 said that the institute would
instruct its appraisal committees to consider approving highly expensive
life-saving drugs for terminal illnesses affecting fewer than 7,000
patients per year =97 a policy that seems tailor-made for Sutent and the
three other kidney cancer drugs.

Negotiations with companies on possible discounts are continuing, and a
committee is scheduled on Jan. 14 to make public this nascent compromise.

NICE has stood fast in other areas, though, rejecting Kineret for
rheumatoid arthritis and Avonex for multiple sclerosis. In 2001, NICE
ruled that Aricept and two other drugs used to treat Alzheimer=92s disease
were worth their costs only if patients=92 conditions had increased from
mild to moderate severity.

The analysis put a value on patients=92 improved thinking skills, and
possible savings from delayed entry into nursing homes. Instead of
pills, the institute suggested more counseling.

Advocates for patients with Alzheimer=92s disease called the decision
heartless.

Dr. Rawlins said he was frustrated that his institute had been censured
instead of the drug company executives who set sky-high prices. Take the
case of Celgene, the maker of Revlimid, a drug for multiple myeloma, a
bone-marrow cancer, that in a preliminary ruling on Oct. 28 the
institute said was too costly.

Celgene=92s first big seller was thalidomide, a decades-old medicine now
used as a cancer treatment, which is so cheap to manufacture that a
company in Brazil sells it for pennies a pill.

Celgene initially spent very little on research and priced each pill in
1998 at $6. As the drug=92s popularity against cancer grew, the company
raised the price 30-fold to about $180 per pill, or $66,000 per year.
The price increases reflected the medicine=92s value, company executives sa=
id.

In 2005, the company introduced Revlimid, a derivative of thalidomide
that is supposed to be less toxic, but may be no more effective. Celgene
priced it at about $260 per pill, or $94,000 per year.

Offering Discounts
Private and public insurers in the United States must pay whatever
Celgene and other makers of unique cancer medicines decide to charge, so
prices are soaring. Spending on cancer drugs and other such specialty
medicines rose 9 percent last year and now represents 24 percent of the
nation=92s drug bill, according to Health Strategies Group, a New Jersey
consulting company. Drug expenses in 2006 grew faster than any other
part of the nation=92s health bill except home care.

But because of the institute, Britain=92s National Health Service has been
among the first to balk at paying such prices, which has led many
companies to offer the British discounts unavailable almost anywhere else.

Johnson & Johnson, for instance, agreed to charge for Velcade, another
drug for multiple myeloma, only if tests showed it was effective in a
particular patient. Novartis agreed to give free injections of Lucentis,
a drug for age-related macular degeneration, if patients needed more
than 14 shots. Dr. Rawlins said these deals were constructed by drug
makers to hide from other countries the discounts offered in Britain.

=93It=92s a good deal for us, but I can=92t see that it will work in the lo=
ng
run because I can=92t see that others countries will be so dim as to not
notice it,=94 Dr. Rawlins said.

A more prudent bureaucrat would never make such a remark. Dr. Rawlins
said that he delighted in controversy, =93although I=92ll admit that it
doesn=92t always work out.=94 He wears thick glasses and fine suits whose
pockets are stuffed with nicotine gum packages that rattle as he walks.
He laughs easily, plays the piano and viola, and moves effortlessly
between politics and medicine.

His criticisms of the pharmaceutical industry have sharpened.

=93I want them to produce new drugs for conditions we really need
treatments for, but I loathe their marketing practices, which corrupt
doctors in a dreadful way,=94 said Dr. Rawlins, who until recently
practiced general medicine and for years was chairman of the British
version of the Food and Drug Administration. =93And I=92m very conscious
that the prices the pharmaceutical industry charges are what they think
the market will bear.=94

In 10 years, the health institute=92s budget has grown to $50 million from
$13 million, and it is scheduled to rise to $142 million in four years.
NICE has 270 employees, who include doctors, economists and pharmacists.

Worldwide Impact
Agencies like NICE are popping up across the globe. Dr. Leonardo
Cubillos, Colombia=92s national director of insurance, said that Colombia
was using British methods to choose drugs for a national health
insurance package.

Membership in an international group of drug and device assessment
agencies grew to 45 last year from 8 in 1992. The British institute has
created a consulting group to advise foreign governments.

Much of the reason for this proliferation of agencies is that, while
prescription drugs represent just 10.3 percent of overall medical
spending in the United States, that share is 17 percent on average in
industrialized countries.

As spending on drugs soared in many nations =97 often haphazardly =97
overall health often showed little improvement. So international aid
agencies are advising governments to adopt British assessments and
deliberations to improve their public=92s health while lowering costs, and
officials are listening =97 a trend that is likely to accelerate during
the present global economic slowdown.

The health institutes in both Britain and Germany may soon suggest
prices for drugs, a strategy intended to deflect political pressure back
on the companies and shorten negotiations that now often take months.

=93We have been told that the price is the price, but the worm is turning
now,=94 Dr. Barnett said.

Company executives acknowledge that they are increasingly acceding to
British demands to slash prices.

But the most pressing question for the industry is what influence the
British institute will have in the United States. The United States
already spends more than twice as much per capita on health care as the
average of other industrialized nations, while getting generally poorer
health outcomes.

Michael O. Leavitt, the Bush administration=92s secretary of health and
human services, said in a September speech that, at its present growth
rate, health care spending =93could potentially drag our nation into a
financial crisis that makes our major subprime mortgage crisis look like
a warm summer rain.=94

And while there is fierce disagreement about how and whether to control
drug and device expenses as part of a broader reform of the health
system, many say some cost controls are inevitable. At a September
device industry conference in Washington, a seminar on the issue was
standing-room only and half of the questioners mentioned NICE.

John R. Dwyer Jr., a Washington lawyer who represents device makers,
said that many in the industry have believed that major changes to
control costs in the federal Medicare program were inevitable, and
=93people see NICE as the only workable paradigm.=94

Meanwhile, Mr. Hardy waits. In recent weeks his growing tumor has
pressed on a nerve that governs his voice. He can barely speak and is
increasingly out of breath. The Hardys are hoping that in January NICE
will approve the use of Sutent, allowing Mr. Hardy further treatment.

"It=92s hard to know that there is something out there that could help but
they=92re saying you can=92t have it because of cost,=94 said Ms. Hardy, wh=
o
now speaks for her husband of 45 years. =93What price is life?=94


--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: (202) 387-8030
Cell: (202) 422-2687
www.essentialaction.org/access/