Experts: High Drug Price Trend Has “Infected” Generics

 Authors Highlight Concern That Pharmaceutical Companies Use Strategies to Delay Patient Access to Affordable Generic Drugs

Newswise, January 29, 2016 – An article published online today in Blood, the Journal of the American Society of Hematology (ASH), suggests that pharmaceutical companies use several strategies to keep affordable generic drugs from the market, illustrating an emerging trend that authors say is becoming as harmful to consumers as high-cost brand-name drugs.

The market price of pharmaceuticals, some costing patients more than $100,000 per year, increases public health spending and sometimes forces patients to make life-or-death decisions when they cannot afford their medications. The authors write that approximately one in five Americans admit they do not fill their prescriptions because of cost. 

From an economic standpoint, in 2013 the United States spent nearly 40 percent more per capita on pharmaceuticals than the second highest spender, Canada.

Generic drugs, which by law may enter the market once the patent on a brand-name drug expires, are intended to offer an affordable option for patients without sacrificing the efficacy and safety of the original formula. 

From 2004-2013, generic drugs saved the U.S. health system nearly $1.5 trillion, according to the authors. However, for many patients generic drugs are inaccessible.

“The timely availability of affordable generic drugs is the difference between life or death for patients with cancer and other diseases who cannot afford brand-name pharmaceuticals, the majority of which are priced at monopoly levels and protected by 20-year patents,” said lead author Hagop Kantarjian, MD, of The University of Texas MD Anderson Cancer Center. 

“Unfortunately, these sorely needed generics are increasingly out of reach. As we sought to understand what keeps these affordable drugs from the market, we identified several specific strategies that pharmaceutical companies use to extend their patents and eliminate competition.”

In this Blood Forum article, a feature of the journal designed to present well-documented opinions on issues important to the science and practice of hematology, Dr. Kantarjian and colleagues assert that pharmaceutical companies use a variety of strategies to delay, prevent, and suppress the timely availability of affordable generic drugs. 

Among them, the authors detail "pay-for-delay," in which the company that owns the patent pays a generic company to delay entry into the market. The Federal Trade Commission estimates that the pay-for-delay settlements cost taxpayers, insurance companies, and consumers approximately $3.5 billion per year. In other cases detailed in the article, the patent-holder deters competition by creating its own version of drugs at generic prices. 

While this practice may reduce costs for consumers by 4-8 percent in the short-term, the authors suggest that companies often use the authorized generics as a bargaining chip in pay-for-delay deals, pledging not to release their own drugs in return for the true generic company promising to delay market entry.

Other strategies the authors discuss include investing heavily in advertising the brand-name drug (often spending more on marketing than on research and development) and lobbying for laws that prevent patients from importing cheaper generics from other countries, which the authors write can cost as little as 20-50 percent of U.S. prices. 

The authors also highlight some drug companies that they allege buy out competitors and then increase the price of a newly acquired generic drug by several fold overnight.

In addition, the authors also describe a strategy they call “product hopping,” which involves switching the market for a drug to a reformulated “new and improved” version with a slightly different tablet or capsule dose that offers no therapeutic advantage over the original but has a later-expiring patent. 

The company then heavily advertises the new brand-name drug in an effort to convince patients and physicians to switch. As a result, when the generic version of the original becomes available, pharmacists cannot substitute it for the new branded version because state laws allow substitution only if certain characteristics, such as dosing, remain the same.

In recognition of the harm and expense that the authors suggest these strategies impart on both patients and the economy, they propose several solutions that would support timely access to affordable generic drugs, including allowing Medicare to negotiate drug prices, monitoring and penalizing pay-for-delay deals, allowing transportation of pharmaceuticals across borders for individual use, and challenging weak patents.

“Each day in my clinic I see leukemia patients who are harmed because they cannot afford their treatment, some risking death because they cannot pay for the medicine keeping them alive,” said Dr. Kantarjian. “Overall, these strategies demonstrate that the trend of high brand-name drug prices has recently infected generic drugs, as companies value profit at the expense of long-term utility to society. We must be vigilant in recognizing these strategies and advocating for solutions that will allow companies to accomplish their dual mission: make reasonable profits and help save and/or improve patients’ lives.”

Blood (www.bloodjournal.org), the most cited peer-reviewed publication in the field of hematology, is available weekly in print and online and has been serving the hematology community for 70 years. Blood is the official journal of the American Society of Hematology (ASH) (www.hematology.org), the world’s largest professional society concerned with the causes and treatment of blood disorders.

ASH’s mission is to further the understanding, diagnosis, treatment, and prevention of disorders affecting blood, bone marrow, and the immunologic, hemostatic, and vascular systems by promoting research, clinical care, education, training, and advocacy in hematology.

blood® is a registered trademark of the American Society of Hematology. Follow @BloodJournal on Twitter.

Iowa has opportunity to direct National Attention to Pharma pricing abuses

January 19, 2016--Iowa voters have a unique opportunity to help shape policy to end the price abuses of Pharma which have moved the high cost of vital prescription medicines to the national spotlight by demanding that candidates in the upcoming caucuses explain their programs to lower prices,   and to disclose what donations they have received from Pharma-related industries or front groups that might have an impact on their stands, says the publisher of a blog dedicated to prescription drug issues of cost and Pharma’s undue influence upon policy-makers.

In a blog posted on RxforAmericanHealth, Daniel Hines says that while much of the national attention focus on Iowa deals with the candidate matchups, the focus should instead be on real issues such as the unfavorable impact of Pharma’s ‘charge what the traffic will bear’ philosophy.

In his blog, Hines points out the extent of Pharma influence, noting Pharma-related contributions of thousands of dollars to virtually all of the leading candidates. He also lists specific contributions made by Pharma to candidates, and examines the relationships of the candidates with Pharma.

He calls the silence on the issue, especially in Iowa among Republican contenders as “ironic” since long-time Senator and Chair of the Senate Judiciary Committee Charles Grassley is a ‘long-time supporter of personal importation of prescription medicines’ as a strategy to lower the cost of vital prescription medicines.

“As Chair of the Senate Judiciary Committee, he has joined Senator John McCain (R-AZ) in appealing to Health and Human Services Secretary Burwell requesting waivers to permit personal importation of prescription medicines under the provisions of 21 U.S. Code § 384,” Hines notes.

“Iowa offers a chance to remind the American public of the impact that Pharma has on elections and politicians, and that it (Pharma) has the deep pockets to protect its goal of making the U.S. into its ‘safe haven’ for the highest drug prices in the world,” he continues.

“Let’s hope that the voters of Iowa use these last weeks before the caucus to call out the candidates and demand answers as to where they stand on prescription drug costs, as well as defining their relationships with Pharma. And, let’s hope that the rest of the election will demand more of the candidates of both political parties…and the people of Iowa can say that it all started with them, “  he concludes.

Iowa has opportunity to direct National Attention to Pharma pricing abuse

January 18, 2016--The Iowa Caucus is now two weeks away.  While much of the nation’s focus will be upon the outcome among the GOP Candidates and the surging threat by Senator Bernie Sanders to Hillary Clinton’s campaign, and the emerging GOP battles of Trump-Cruz and Bush-Rubio,  the final week might better be focused on demanding that the candidates make a record of their stands on healthcare policy to ensure that Americans have access to safe, affordable prescription medicines.

Senator Sanders and Ms. Clinton have taken a stance that would include but not be limited to price negotiation for Medicare as well as other strategies.

This includes the role of patent policy that allows Pharma to benefit so greatly. 

The fact is that there is a tremendous public investment of Americans whose taxes help support the Research and Development of medicines.

But patent protection virtually guarantees Pharma a market place in which it can charge what it believes the traffic will bear, even to the allowing of extended patent protection of ‘new’ medicines, such as ‘The Little Blue Pill” which is the result of merely changing the color of the pill and doing nothing that requires any R&D.

Add to this the calls for ending direct-to-consumer advertising, a move supported by the American Medical Association.

Significantly, both Sanders and Clinton support a role for personal importation of safe, affordable medicines from Canada, which almost certainly would lead to Congressional action to expand the concept to brand-name medicines from licensed registered pharmacies in Tier One Countries, whose standards of efficacy and safety meet or exceed those of the U.S.

Or would it?

It is troublesome that Ms. Clinton was the ‘favorite’ of Pharma contributions in the first six months of the 2016 campaign, accepting $164,315 as of October 2015 according to The Hill.

The Republican silence in Iowa is ironic since polls reflect that the public believes the cost of healthcare to be a primary issue.

Add to this, Iowa Republican Senator Charles Grassley has been a long-time supporter of personal importation of prescription medicine. 

As Chair of the Senate Judiciary Committee, he has joined Senator John McCain (R-AZ) in appealing to Health and Human Services Secretary Burwell requesting waivers to permit personal importation of prescription medicines under the provisions of 21 U.S. Code § 384.

Why then the silence from the GOP? The answer lies in the Pharma donations to and relationships with the candidates of both parties.

We have already mentioned Ms. Clinton's position as the early largest recipient of Pharma donations.

On the Republican side,  New Jersey Governor Chis Christie laments that ‘you have to drill a lot of dry holes before you strike oil…’ He even went so far as to ask “Does anybody out there think that giving Washington, D.C., the opportunity to run the pharmaceutical industry is a good idea?” 

New Jersey is, of course, home to more pharmaceutical companies than any other state in the US and the Governor or groups he has represented have been the beneficiaries of Pharma’s deep pockets. An example:  Reports that “Celgene's current CEO, Robert Hugin, donated $100,000 to a super PAC promoting Christie's presidential bid.” 

Donald Trump talks about how his opponents that take money from businesses are indebted to their support, but he has not offered a plan to address the impact of the horrendous pricing abuses by Pharma we witnessed in 2015.  For the record, Zack’s reports that he received $50,000 in dividends from Bristol-Myers Squibb Company.

Senator Marco Rubio has expressed concern, as he should since Florida is home to so many elderly who must bear the burden of high prescription medicine costs.

Instead he has opted to make foreign policy and national security the mantra of his campaign and had not offered any in-depth insight into what his policies might be on reducing prescription drug costs.  This is troublesome since according to The Hill, he accepted $52,430 in Pharma contributions as of October 2015.

Senator Ted Cruz, a skilled debater, has successfully defended Pharma (Pfizer) before the U.S. Supreme Court against charges of ‘overcharging’ so it would be doubtful that he would support anything that Pharma opposes.  Also, according to The Hill, he had accepted $96,045 in Pharma donations as of October 2015.

Much of this is stating the obvious or the already known or suspected.  But, Iowa serves as a chance to remind the American public of the impact that Pharma has on elections and politicians, and that it (Pharma) has the deep pockets to protect its goal of making the U.S. into its ‘safe haven’ for the highest drug prices in the world.

Let’s hope that the voters of Iowa use these last weeks before the caucus to call out the candidates and demand answers as to where they stand on prescription drug costs, as well as defining their relationships with Pharma. 

And, let’s hope that the rest of the election will demand more of the candidates of both political parties…and the people of Iowa can say that it all started with them.

RxforAmericanHealth publisher supports Task Force on Lowering prices, calls for additional Congressional leadership

Publisher's note:  The following is a copy of a letter sent today (January 12, 2016) by RxforAmericanHelath Publisher Daniel Hines to members of the Democrat Task Force designed to lower prescription drug prices.  In the letter, we support the intent of the Task Force, but urge them to expand their scope from the spike in generic drug prices to more comprehensive, bi-partisan legislation that will address the 'public (and Congress) be damned attitude of Pharma as it continues to charge whatever it wishes for medicines. This is the launch of what we believe will be a 'watershed year' that could finally end the pricing abuse of pharma,  with Congressional action that recognizes that a medicine that is unaffordable is, in and of itself, unavailable.  As many have noted, a medicine that is denied is of no health benefit. The letter follows:

I am writing in my capacity as publisher of the TodaysSeniorsNetwork group of nationally followed and read blogs,  including RxforAmericanHealth, to support your of  Congressional efforts with the formation of the Affordable Drug Pricing Task Force to lower prescription medicine prices for Americans.

It is time for Congress to pass comprehensive, bi-partisan legislation that will direct the Food and Drug Administration to act in a manner to facilitate access to safe, affordable medicines for Americans and to end the pricing abuses we continue to witness from Pharma in complete disregard of criticism from policy-makers the media and, yes, even Congress. This is a leading issue of the 2016 elections , and can be expected to grow in importance, as increasing numbers of Americans face the reality that a medicine that is unaffordable is, in and of itself, unavailable. 

I am a supporter of personal importation of safe, affordable brand-name prescription medicines from licensed, registered pharmacies in Tier One Countries whose standards of safety and efficacy meet or exceed those of the U.S.  However, I, and a growing number of Americans, realize that rather than a reliance upon a single solution, what is needed is a comprehensive approach to lowering prescription medicine prices.  This includes:

1.  Price negotiation;

2.  A ‘stakeholder’ role for the American public that supports so much of Pharma R&D,by an increased presence of consumer advocates and private citizen in policy development, hearings, and opportunities for public comment;

3.  A  revised patent policy that ensures the public investment in R&D is protected in legislation that will provide penalties if Pharma is abusive in its pricing practices;

4.  Reciprocal Memorandums of Understanding between regulatory agencies of Tier One Countries as validation of the safety and efficacy of the oversight of personally imported medicines from those countries;

5.  Criminal penalties for abuse of pricing practices based on a ‘what the traffic will bear’ philosophy;

6.  Greater transparency in Pharma pricing practices;

7.  An end to direct to consumer advertising for prescription medicines.

I am including links to three articles I hope you and your staff will find helpful.  I am sending this to your office via fax so you shall have a ‘hard copy’ for your consideration,.  I am also emailing it to your healthcare legislative aide. 

1. RxforAmericanHealth publisher calls for bi-partisan Consensus, Coalition legislation in Congress To lower prescription costs...The publisher of Rx for American Health is calling for a coalition of Senators and Representatives and their staffs to reach consensus on a single comprehensive bill incorporating major points of a number of disparate legislative proposals to lower prescription medicine prices, and to be prepared to offer their bill immediately with the reconvening of the  114th Congress in January 2016…

2    Why High Drug Prices require an Rx Bill of Rights for Americans…The publisher of RxforAmericanHealth has called for both the Democrats and Republicans to address the issue the impact of rising prescription drug costs by incorporating into their Party platforms an American Rx Bill of Rights…(continue) Time for A Congressional Caucus to support Congress moves on Personal Importation…

3.  The publisher of RxforAmericanHealth says that it is time for Congress to form a Congressional Caucus to support recently introduced legislative proposals on behalf of the personal importation of safe, affordable prescription medicines, and to act as a watchdog to prevent the potential of abuse by the Food and Drug Administration of Section 708 of the Food and Drug Administration Safety Innovation Act (FDASIA) with the unwarranted destruction of valid, safe medicines personally imported by Americans…(continue)

Thank you for taking the time to review these materials.  I shall look forward to your response.  If you have any questions, please feel free to contact me at the contact information listed at the top of this letter.
Daniel Hines

For Pharmaceutical Companies, More Marketing Equals Less Innovation

Newswise, January 6, 2016- Turn on a TV and be bombarded by ads for new medications. Yet, new research indicates that the firms that aggressively market these drugs are less likely to produce truly pioneering ones.

In studies published by UNC Charlotte faculty members Denis Arnold and Jennifer Troyer, research shows the more pharmaceutical firms spend on marketing drugs, the less likely it is that the firm will produce breakthrough drugs that offer major advances in treatment.

Conversely, the more pharmaceutical companies spend on research and development, the more innovative are the results in terms of the development of pioneering drugs according to FDA classifications, i.e. drugs that will improve public health.

The researchers present their findings in a paper entitled “Does Increased Spending on Pharmaceutical Marketing Inhibit Pioneering Innovation?” published in the Journal of Health Politics, Policy and Law on Jan. 5.

Arnold, Surtman Distinguished Professor of Business Ethics and a professor of management in the Belk College of Business, said the research has important policy and ethics outcomes.

“This article is the first using empirical data to demonstrate that aggressive marketing of pharmaceutical drugs and truly innovative new drug development are at odds. The current patent regime can be manipulated by firms to increase sales and drive up costs for society without improving public health,” Arnold said.

“The pharmaceutical industry benefits from equal patent protection for drugs regardless of their innovativeness. Rather than researching and developing the novel, pioneering drugs needed by society, many firms employ an alternative business strategy in which revenues are generated by aggressively marketing weakly innovative drugs that do not significantly enhance public health,” he noted.

He adds, “Many of the marketing schemes utilized by drug companies are deceptive, violating both pharmaceutical industry marketing ethics standards and federal regulations. The industry has paid billions of dollars in penalties for illegal marketing during the time period of our study.”

According to one study, overall pharmaceutical promotional, or marketing, expenditures increased from $11.4 billion in 1995 to $28.9 billion in 2005. Promotions included direct-to-consumer advertising (such as TV ads), promotions to physicians, journal advertising and free samples.

Troyer, associate dean for research and graduate programs and a professor of economics at UNC Charlotte, said the risk to public health is that firms with a strategy of spending heavily on marketing did so at the expense of truly groundbreaking new drug production.

“In our sample, the average publicly traded firm produced only one pioneering drug between 1999-2009. Our results indicate that a permanent 1 percent increase in marketing spending by an average firm with at least one pioneering drug would have been associated with a firm-level reduction in pioneering new drug approvals of approximately 1.25 drugs over the period examined – a 49 percent decrease,” she said.

“By contrast, the effects of increased spending on research and development are large for pioneering drugs. For firms producing at least one pioneering drug over the period, increasing permanent R&D spending by 1 percent results in an almost one pioneering drug approval per firm,” Troyer added.

The researchers point to major policy recommendations as a result of the research, including:
- Differential pharmaceutical patent lengths in the U.S. and in other jurisdictions such as the European Union. Currently, patent protection is 20 years from drug development, no matter how innovative the drug.
- Prohibiting the tax deduction of all drug marketing expenditures to reduce company incentives for developing and aggressively marketing weakly innovative drugs at the expense of more innovative drugs.
- Channeling pharmaceutical marketing tax resources into increased FDA oversight and Department of Justice enforcement of existing marketing regulations.
- Transparent disclosure of all drug company marketing expenditures to the public.

About the Belk College of Business
Accredited by AACSB International, the Belk College of Business at UNC Charlotte offers outstanding business education programs at the undergraduate, graduate, doctoral and executive levels. 

The Belk College is committed to building strong partnerships in the Greater Charlotte region and beyond as a vital part of our mission as North Carolina's urban research business school. www.belkcollege.uncc.edu/