drug prices

Caution: 2009 prediction lists ahead

Tracy Staton — Tue, 02 Dec 2008 10:24:50 -0500

Brace yourselves for the onslaught of pharma predictions for the new year (including ours). Today brings the first, at least the first we've seen, and at Dec. 2, it's a tad early. But maybe CNBC's Mike Huckman wanted to beat the rush. Mike Huckman offers nine prognostications for 2009 (nine in 09, get it?); here are a few to whet your appetite.

M&A of all kinds: Pharma buying out pharma, pharma buying out big biotech, pharma buying out little biotech. Some of this is just common sense; as the economy contracts, industries tend to consolidate. Plus, with biotech companies facing capital shortages--and stock prices on the decline--they become motivated sellers at a price that can really motivate buyers. "Schering-Plough CEO Fred Hassan (photo) told me in a recent interview that biotech is cheap and compelling," Huckman writes. And Hassan is far from alone.
Pricing pressure: The big news may be the new U.S. administration and its vows to negotiate drug prices, but the same sort of downward push on prices is going on all over the globe. U.K.'s National Institute for Health and Clinical Excellence is the poster child of this movement. Look for lots of countries to play pharma hardball.
Continued generic ascendance: About two-thirds of scrips are now generics, Deutsche Bank analyst Barbara Ryan told CNBC. That's up from about one-half not so long ago. Don't expect the trend to reverse.
More vaccines: This burgeoning market will continue to grow. GlaxoSmithKline may actually get approval for Cervarix, its HPV vaccine this year, pitting it against Merck's Gardasil. But Gardasil could be one step ahead with a new indication for young men as well as young women. And this is only one vaccine space.

You'll have to check out the rest for yourself. Are there any additional ones you'd like to see in our 2009 preview? Let us know.

- read the story at Seeking Alpha

Cheaper drugs don't always drive out brands

Tracy Staton — Mon, 01 Dec 2008 10:58:16 -0500

We've heard a lot about insurers and other payers pushing patients to use generics rather than brand-name meds, and how that pressure hampers Big Pharma. But there's a flip side to that coin. Sometimes, getting patients and doctors to switch is well nigh impossible.

Take a federally funded study pitting old blood pressure meds--the diuretics--against newer, more expensive drugs such as beta blockers. Published in the Journal of the American Medical Association in 2002, the study clearly showed that patients with high blood pressure and other heart risks did better on the older, cheaper drugs. And the researchers mounted an all-out effort to promote those findings.

But, according to the New York Times, that research created only a tiny ripple in the drug market. Diuretic use increased initially, but then it leveled off. Researchers said drugmakers fought back against their publicity efforts, trying to discredit the study. Plus, pharma continued to roll out new meds, which weren't available for the comparative effectiveness study, robbing diuretics of their head-to-head advantage.

So, if Congress actually goes through with setting up a comparative effectiveness bureau of some kind, will that really end up reining in healthcare costs? We'll have to wait and see. But if this study is any indication, the WSJ Health Blog notes, skepticism could be in order. Particularly if that bureau produces FYI-type data, rather than info that government payers, such as Medicare and Medicaid, are required to act upon.

- read the Health Blog post
- see the article in the NYT

Pharma plots Democratic course

Maureen Martino — Thu, 20 Nov 2008 11:32:04 -0500

With Democrats in control of the White House and Congress, Big Pharma leaders are busy planning how the industry will work with this new wave of politicians. President-elect Obama and other Democrats are looking to overhaul the country's healthcare system, which they say has grown far too costly and leaves over 45 million people uninsured. Democrats aren't pleased with the pharma industry's high drug prices, aggressive marketing and drug safety problems either. But leaders like Schering-Plough CEO Fred Hassan (photo) and Bayer CEO Arthur Higgins (photo) are stressing the need for Pharma to strengthen ties with the Democrats.

"[W]e're working very hard to build bridges...all we're asking for is we have some points to make. You don't have to accept those points, but we just ask you to listen. That's the beginning of a dialogue," noted Higgins. Pharma already laid the groundwork by donating heavily to Democrats during the campaign process.

An expanded healthcare system would benefit drug companies because it would give patients greater access to prescription drugs. On the flip side, however, the government could place pricing pressure on these drugs, which would cut into Big Pharma's bottom line. Industry group PHrMA is already planning a PR campaign touting the benefit of free-market healthcare system.

- read this Pharmalot article

Cephalon hikes prices to fight generic

Tracy Staton — Tue, 18 Nov 2008 10:53:37 -0500

Today's Wall Street Journal dissects a familiar drug-pricing strategy: pre-patent-expiration sticker shock. On the table is the Cephalon narcolepsy treatment (and sometime cognitive booster) Provigil. That drug faces generic competition in 2012. Naturally, Cephalon doesn't want to say goodbye to all that brand-name revenue; the drug brought in $707 million during the first nine months of this year, or about half of the company's year-to-date sales of $1.43 billion.

So Cephalon is developing a longer-acting version of Provigil, to be dubbed Nuvigil. The new formulation is set to launch next year. In preparation for that launch, Cephalon has been ratcheting up the price of Provigil, to give users reason to switch to the less-expensive new version. "You should expect that we will likely raise Provigil prices to try to create an incentive for the reimbursers to preferentially move to Nuvigil," the WSJ quotes a Cephalon VP as saying.

And here's how those numbers are shaking out so far: Provigil is now 28 percent more expensive than is was in March and 74 percent costlier than it was four years ago, according to DestinationRx. And Cephalon plans to continue raising that price, the WSJ says.

The idea is that, by the time 2012 rolls around, most Provigil users will have switched to the cheaper Nuvigil, which will be under patent through 2023. Firmly entrenched as Nuvigil users, they'll have less reason to adopt the cheaper generic. Or so Cephalon hopes.

- read the WSJ story
- check out the post at the WSJ Health Blog

NHS widens access, relaxes drug fees

Christe Bruderlin-Nelson — Wed, 05 Nov 2008 09:40:09 -0500

The UK's National Health Service will now allow patients to receive NHS care even if they privately pay for drugs, and will implement measures to increase access to NHS-covered treatments.

Alan Johnson, the UK's health secretary, overturned a rule that had previously banned patients from receiving services if they paid for their own medications. At the same time, Michael Richards, the National Cancer Director, published a report that showed government plans to work on new pricing arrangements for new drugs as well as speed up the appraisal and approval process for new medications.

As a result, the public will have greater access to drugs for cancer and other terminal conditions. The move ends what some have called a "cruel practice" that prevented individuals from purchasing certain medications by removing other NHS benefits.

- see the full story at the Financial Times

Tories propose NICE approval reforms

Tracy Staton — Mon, 03 Nov 2008 10:51:14 -0500

U.K. politicians are promising big reforms for the National Institute for Clinical Health and Excellence. The drugs watchdog--which decides which meds are used by the National Health Service--has been under fire in recent months for refusing some costly cancer meds and for an approval process that can take 18 months. Well, the Tories are pledging to cut that time frame to three to six months---an improvement of up to 15 months.

How so? The conservative party wants to remove the final step off NICE approval: a ministerial sign-off. And the Tories say they'll shift the burden of proof onto the pharma companies, so that drugmakers have to prove a drug works rather than NICE proving it doesn't.

In potentially the biggest shift, however, the party is proposing that NICE consider not only the bare cost-effectiveness of a drug, but the softer "social cost" of denying its approval as well. That means the agency could be more responsive to societal outcry when certain meds are rejected. That sort of calculus could have paid off for the makers of costly kidney cancer meds that NICE recently nixed, for instance.

Who'll foot the bill for this kinder, gentler approach? The Tories haven't answered that question.

- read the story in The Telegraph

Big pharma, big politicking

Christe Bruderlin-Nelson — Wed, 29 Oct 2008 08:14:19 -0400

Whether we see Obama or McCain become the next U.S. president, the message is clear: The pharmaceutical industry can expect whoever wins to find ways to cut drug prices and to be far less friendly to the industry overall.

Obama says he will "take on the drug and insurance companies and hold them accountable for the prices they charge and the harm they cause" and McCain showed equal disdain. In fact, in this heated presidential race, going after big pharma to reduce overall health care spending is one of the few areas about which the two agree.

Following two presidential terms where the industry has been welcomed to influence both the Bush administration and Congress, the industry will have a tougher road to everything moving forward.

The industry itself seems to predict a shift in power towards the Democrats, however, as has the industry's main trade association, the Pharmaceutical Research and Manufacturers of America, has upped contributions to 57 percent, up from only 21 percent in 2006. The trade group has also spent $13.2 million on ads supporting 28 Congressional candidates, 25 of whom are Democrats. For the first time in six election cycles, donations to both parties are about equal.

How will things change? Either Obama or McCain--and a Democratic Congress--will likely support the approval of more and more generic drugs, price cuts for Medicaid recipients and seniors overall and support greater importation from other countries.

- read the story in the Wall Street Journal
- here's what the Daily Record said

Docs: Use cheap diabetes meds first

Tracy Staton — Tue, 28 Oct 2008 12:00:59 -0400

A new study could spell lower sales for newer, more costly diabetes meds. Americans with diabetes nearly doubled their prescription drug spending over the past six years, with the 2007 total reaching a whopping $12.5 billion. Though there are more people in treatment for the potentially deadly disease, the increase has been driven mostly by new, more expensive drugs.

The study comes just a week after experts issued updated treatment advice for Type 2 diabetes, saying doctors should try older, cheaper medications first. And another study adds heft to an older, cheaper drug metformin, a generic in use for decades; researchers found that it may prevent deaths from heart disease while the newer, more expensive Avandia didn't show that benefit. (And as you know, there's been a variety of safety questions about GlaxoSmithKline's Avandia over the past 18 months or so.)

"If you can achieve the same glucose control at lower cost and lower side effects," Dr. David Nathan, diabetes chief at Massachusetts General Hospital told the Associated Press, "that's what you want to do."

If doctors take this advice to heart, GSK and Avandia wouldn't be the only ones to suffer. Other newer, more costly meds include Takeda's Actos, Eli Lilly's Byetta, and Merck's Januvia.

- read the AP story

Obama plan could whack Big Pharma

Tracy Staton — Fri, 24 Oct 2008 10:54:58 -0400

Big Pharma may have been buttering up the Democrats lately with big campaign contributions, but Barack Obama's healthcare plan looks primed to hit drugmakers. According to Boston Consulting Group, Obama's plan to let the feds negotiate Medicare drug prices could take a big bite out of industry revenues. A $10 billion to $30 billion bite, to be exact.

But, according to the Wall Street Journal Health Blog, that loss could be offset at least partly by the Democratic candidate's efforts to cut the number of uninsured people. If his plans come to fruition, more people will be able to afford prescription drugs to begin with.

On the other hand, Obama's move toward negotiated Medicare drug prices could start a domino effect, inspiring private insurers to demand price cuts, too.

John McCain doesn't mention whether he'd empower Medicare to negotiate drug prices. But he does favor saving money via re-importation of drugs. And of course he's on the record with his characterization of Big Pharma as "big bad guys."

- read the WSJ Health Blog post

NICE snubs Glaxo's pay-for-performance plan

Tracy Staton — Tue, 14 Oct 2008 10:25:10 -0400

Britain's National Institute for Clinical Excellence isn't backing off its tough stance on cancer meds. The cost-effectiveness watchdog yesterday straight-armed GlaxoSmithKline's breast cancer treatment Tyverb--for the second time--despite an innovative pricing proposal from GSK. According to NICE, the drug shouldn't be used by the UK's National Health Service except in clinical trials.

Glaxo has been working to persuade NICE of Tyverb's cost-effectiveness since the agency first indicated it would recommend against the treatment, which is aimed at women with advanced HER-2 cancer. Glaxo even offered to treat eligible patients for free for 12 weeks, collecting payment only for those helped by the drug after that.

But as Glaxo announced today, NICE remained unmoved. "Given our involvement, it is difficult to comment without the appearance of self interest," Glaxo's UK general manager said in a statement. "[H]owever, we strongly believe that the wrong decision has been made for patients, doctors and the NHS." But hope is not lost: This is a draft recommendation; the final decision is expected sometime next month.

- read the GSK release

Have cancer drugs hit a cost ceiling?

Tracy Staton — Mon, 13 Oct 2008 10:45:32 -0400

Ask any Big Pharma CEO these days which drugs offer the most promise for future earnings, and the likely answer will be oncology meds. Indeed, as the patents on other blockbusters expire, there's been a headlong rush toward cancer treatments to fill in the revenue gaps. It's not just that these meds bear big price tags, but also because there's less need for advertising and marketing support. As one analyst told Business Week, to sell oncology drugs, "You don't need thousands of sales reps, you just need good data."

But drugmakers may find themselves rushing headlong into a wall. Witness the reluctance of British regulators to pay for expensive treatments that often add only months to a patient's life. As you know, Roche recently slashed the price of its lung cancer treatment Tarceva, just to get the Brits to pay for it. Experts say this pushback against prices is just the beginning. "At some point--and that point will come sooner rather than later--payers are not going to approve spending $100,000 for someone to live an extra six months," Erik Gordon, director of biomedicine at Stevens Institute of Technology, told BW. Another expert said that as insurers increasingly scrutinize cancer drugs, "many will never reach their markets."

- read the BW article

E.U. to consider repackaging controls

Tracy Staton — Thu, 09 Oct 2008 11:11:24 -0400

Drug distributors who arbitrage the price differences across the European Union could see their $5.5 billion a year trade severely curtailed under proposed legislation set to be unveiled by the European Commission later this month. Report

Roche cuts Tarceva price for U.K.

Tracy Staton — Mon, 06 Oct 2008 10:19:16 -0400

Need more evidence that the U.K. is playing hardball on drug prices? Here it is: The National Institute for Health and Clinical Excellence agreed to pay for Roche's lung cancer med Tarceva--if and only if the drugmaker matched the price of an older, less costly remedy.

NICE had calculated that Tarceva was $3,700 more expensive than the Sanofi-Aventis treatment Taxotere. Roche proposed the discount, and NICE accepted; now, the drug-price watchdog will recommend Tarceva as an alternative to Taxotere in patients whose chemo has failed. Patients and their doctors will decide which drug to use.

Expensive cancer meds have become an explosive issue in the U.K. As NICE has taken a hard line on cost-benefit analysis, patients and advocacy groups have been demanding greater access to new, potentially life-saving or life-extending treatments. For example, NICE recently nixed four kidney cancer drugs--Roche's Avastin, Bayer's Nexavar, Pfizer's Sutent, and Wyeth's Torisel--saying they're not effective enough to warrant the big price tag. Patient groups were outraged. Then, last week, the government suggested that drugmakers should discount their prices if they want these costly meds to be adopted.

Apparently Roche took that advice. Will other drugmakers follow suit?

- read the story in the Wall Street Journal
- check out the WSJ Health Blog post

E&Y: Pharma neglects working capital

Tracy Staton — Thu, 02 Oct 2008 10:42:56 -0400

Could Big Pharma ease some of its ills if it just managed itself better? Ernst & Young says drugmakers could free up to $35 billion in working capital just by improving their management of payments and inventories. In fact, the majority of the 16 largest U.S. and European pharma firms "have a significant opportunity" to release cash to the tune of 3 percent to 7 percent of sales, or $17 to $35 billion.

We all know Big Pharma has been suffering under generic competition and pricing pressures. Companies have been cutting costs all over the globe. But, E&Y says, drugmakers haven't paid enough attention to their working capital; pharma lags other industries in working capital management. If drugmakers would just step up and start aggressively tightening payment terms, improving credit billing and collections, and so on, they could see full cash and cost benefits within 12 to 24 months, the firm says.

- see the release from E&Y
- read the story at Pharma Times
- check out the coverage at CNN Money

Specialty drugs getting more costly

Tracy Staton — Fri, 26 Sep 2008 10:15:07 -0400

We all know specialty meds are expensive, and that they're getting more expensive, too. But now we know how much--and it's triple the inflation rate, a full percentage point higher than the rise in overall drug costs. That's according to a new AARP report based on prices of more than 140 specialty drugs Medicare beneficiaries often use. The actual percentage increase in 2007 was 8.7 percent, compared with 7.4 percent for drugs in general. In 2004, the increase in specialty drug prices amount to around 5 percent.

Drugmakers blame the high price tags on the cost of R&D and on the cost of the complex manufacturing processes required to make these complex meds. Plus, the number of patients who'll use specialty meds is smaller than the number who take, say, a cholesterol-lowering statin drug. So that means companies can't make it up on volume.

But as AARP says, the high cost can price some patients out of treatment. "[E]ven the most miraculous drug is useless if a person can't afford to take it," an AARP executive VP told Pharmalot.

AARP plans to use its survey to lobby lawmakers for a mechanism to get generic biotech drugs--or follow-on versions--onto the market. And that's another thorny debate.

- here's the release
- check out the item at the Wall Street Journal Health Blog
- read the Pharmalot post

U.S. drug spending tops the globe

Tracy Staton — Thu, 25 Sep 2008 10:36:43 -0400

Quick now: Which country's consumers spend the most money on prescription drugs? You got it. U.S. patients shelled out an average of $792 each for their meds in 2005, almost double the overall average among all industrialized countries.

That average was $401, a number that not only depends on drug prices, but on per capita consumption of them. So while France and Spain paid below-average prices, their drug spending came in at third and fourth place--with $515 and $509, respectively--because their citizens use more meds. And though the U.S. posted the highest per capita spending, the highest actual prices were found in Iceland and Switzerland, where the price tags beat the average by almost 50 percent.

The rest of the countries' rankings--and tons more data--can be found in a 200-page report, Pharmaceutical Pricing Policies in a Global Market, from the Organization for Economic Co-operation and Development (OECD).

Interestingly, it wasn't the countries with pricing regulation that boasted the lowest prices, OECD found. Some price regulators tend to balance cost concerns with public health policies and so forth, which can hold prices higher than in other places where the market sets the price. So, OECD concludes, there's room for governments to drive a harder bargain for the pharmaceuticals they regulate.

- read the OECD release
- see the article at Seeking Alpha

Cash-poor patients cut back on meds

Tracy Staton — Mon, 22 Sep 2008 10:26:28 -0400

Pharma stock may be something of a safe haven for investors battered by the yo-yo markets, but as the turmoil continues to leak from Wall Street to Main Street, drugmakers themselves may suffer. In fact, cash-strapped Americans are already cutting back on healthcare. That's big news, because healthcare has historically been seen as a port for every recessionary storm.

Scrips fell by 0.5 percent during the first quarter, year-over-year, and almost 2 percent during the second. The first negative quarters in more than a decade, according to IMS Health. Plus, 11 percent of consumers surveyed by the National Association of Insurance Commissioners said they've cut back on prescription drugs to save money. They're also cutting back on elective surgeries such as hip and knee replacements--and along with them, all the anesthesia meds, painkillers, antibiotics, and other meds they'd be given in the hospital.

People are skipping pills, postponing refills, and switching to cheaper alternatives to their current meds. Will the trend continue long enough to make a big dent in Big Pharma's bottom line? Your reading of the economic tea leaves is probably as good or better than ours.

- read the Wall Street Journal story

AIDS foundation scolds Abbott

Christe Bruderlin-Nelson — Wed, 17 Sep 2008 05:40:09 -0400

"Shame on Abbott" said the AIDS Healthcare Foundation, which is loudly calling into question the pricing policies of Abbott Laboratories in Mexico.

Abbott, the Foundation claims, is picking on Mexico, charging the country five times what it charges other middle-income countries (the Foundation cites Brazil as an example) for Kaletra, a protease inhibitor used in combination with other drugs to treat infection with HIV. To raise awareness, the AIDS Healthcare Foundation is running ads in Abbott's headquarter state of Illinios. In the ad the foundation proclaims, "Abbott's price gouging in Mexico puts profits ahead of saving lives."

This is not the first time AIDS activists have taken Abbott's decisions on the AIDS medication to task. The company has previously raised controversy regarding a new version of Kaletra in Thailand and pricing issues in Colombia.

The Foundation operates free treatment clinics in Puerto Vallarta, Cancun and Tuxtla Gutierrez, Mexico, and has previously raised concerns about GlaxoSmithKline and Merck. Its first ads against Abbott Labs appeared September 6, 2008 in a regional daily paper in Illinois.

- check out the release
- read the Pharmalot blog post

UK politicians: Pay for drug performance

Tracy Staton — Thu, 11 Sep 2008 11:11:44 -0400

The flap over cancer-drug funding is heating up even more in the UK Politicians accused the National Institute of Health and Clinical Excellence (NICE) of spending more money on marketing "spin" than on evaluating drugs. (Sound familiar?) But really, the "communications" line item lawmakers cited as 13 percent of the budget largely covers clinical guidance for doctors. And the 10 percent cited as drug assessment doesn't include money spent by other R&D folk.

Typical political-speak, but given the ongoing battle over whether the National Health Service should pay for expensive drugs, politics could end up determining whether drugmakers get access to the UK market. And politicians might determine just how much money pharma gets for those costly meds: Tories are suggesting that the NHS pay for the cancer drugs--but only if they work.

It's true that Johnson & Johnson agreed to a deal where the government only pays for the cancer treatment Velcade if patients respond to it. But that sort of evaluation wouldn't necessarily work for all drugs. But given the penchant for pay-for-performance in business, we can expect this proposal to cause some serious debate.

- see the article in the Guardian
- read the Telegraph story

Medicare overpays for new generics

Tracy Staton — Thu, 28 Aug 2008 11:13:26 -0400

When generics hit the market, the price drops. That's conventional wisdom. But in the case of Medicare, it's not always true. According to a new report from the Health and Human Services inspector general, the formula Medicare uses to pay for certain drugs doesn't incorporate the new price for months.

Take Camptosar, Pfizer's cancer drug that went generic in February. In March, Medicare paid $126 per dose, despite the fact that the average generic price for it was only $41--and the average price for both the generic and branded versions the same month was only $52. Even now, Medicare is still paying $75.

The IG suggests that Medicare figure out how to pay less, sooner. Even if that means changing the laws that determine what Medicare pays for drugs.

- read the WSJ Health Blog item