The Co-Pay Coupon Controversy: Time for Detente?

By Kate Greenwood

Cross-Posted at Health Reform Watch

At the end of last month, the Secretary of Health and Human Services Kathleen Sebelius made headlines when, in a letter addressed to Representative Jim McDermott (D-WA), she announced that “[qualified health plans], other programs related to the Federally-facilitated Marketplace, and other programs under Title I of the Affordable Care Act” were not “federal health care programs under section 1128B of the Social Security Act”.  One implication of the Secretary’s interpretation is that the “anti-kickback act”, which is found in Section 1128B, does not apply to qualified health plans.  And that, in turn, means, among other things, that individuals insured under those plans, unlike individuals on Medicare or Medicaid, will be able to use drug company coupons to defray the cost of their prescription drugs.

Prescription drug coupons have been a source of controversy, favored by branded manufacturers and patients, and opposed by generic manufacturers, health insurers, third party payers, and pharmaceutical benefit managers.  Joseph Ross and Aaron Kesselheim studied a large number of coupons advertised on the website www.internetdrugcoupons.com and found that “62% (231 of 374) were for brand-name medications for which lower-cost therapeutic alternatives were available.”  Ross and Kesselheim argue that the coupons are costly at the population level, but also for individual patients.  This is because the coupons are nearly always time-delimited and the short-term savings do not typically outweigh the long-term cost of taking a branded drug.  On the other hand,  in an article in last week’s JAMA, Leah Zullig and colleagues pointed out that reducing co-payments has been proven to improve medication adherence, a problem which there “is an increasing business case for addressing[.]”

The coupon controversy has carried over into the courts.  On March 7, 2012, seven lawsuits were filed in district courts by third party payers against a number of drugmakers, alleging that prescription drug coupons violate antitrust, commercial bribery, and racketeering laws.  (This post at FDA Law Blog includes links to the seven complaints, and this one provides an update on the status of the litigation as of late June 2013.)

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Neil Flanzraich on Responsibility and Integrity in the Pharma Industry

This afternoon, the Petrie-Flom Center welcomed Neil Flanzraich for a lunchtime talk on responsibility and integrity in the pharmaceutical industry.  Mr. Flanzraich is the Chairman and CEO of Cantex Pharmaceuticals, Inc. and Executive Chairman of Kirax Corporation. He was previously Vice Chairman and President of Ivax Corporation, Chairman of North American Vaccine, Inc., chairman of the life Sciences legal practice group of Heller Ehrman White & McAuliffe, and Senior Vice President and General Counsel and a member of the Executive Committee of Syntex Corporation. He is also a member of the boards of directors of Chipotle Mexican Grill, Inc. and Equity One, Inc., among a variety of other positions.  Mr. Flanzraich was appointed by Harvard Law School Dean Martha Minow as an Expert-In-Residence at the Harvard Innovation Lab (i-lab) in the fall 2012, and we were thrilled to have him join us to share some his experiences.

During today’s lecture, Mr. Flanzraich focused on the need for integrity and accountability in all areas of life, but especially in the pharmaceutical industry. At the broadest level, he emphasized that consistent honesty requires motivation and commitment, and in the business world, it is incumbent upon company leadership to set the right example, reinforced by frequent and sincere messaging encouraging honesty and discouraging dishonesty.  This is the way for companies to be truly successful over the long term, even if it means possible sacrifices over the short term. Mr. Flanzraich suggested that leaders must establish the right corporate culture of trust, but also verify compliance through audits and other types of oversight.

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TOMORROW: Neil Flanzraich, “Responsibility and Integrity in the Pharmaceutical Industry”

Please join the Petrie-Flom Center for a lecture by Neil Flanzraich on responsible pricing strategy, access to care, clinical trial design, outsourcing, and other topics that raise thorny but crucial issues for pharmaceutical and biotechnology companies.  There will be substantial time for Q&A.

Mr. Flanzraich graduated from HLS in 1968, and was appointed by Dean Martha Minow as an Expert in Residence at the Harvard Innovation Lab (i-lab) in fall 2012. He is the Executive Chairman of Kirax Corporation and the Executive Chairman of ParinGenix, Inc., both of which are privately owned biotech companies. He previously served as the Vice Chairman and President of Ivax Corporation, an international pharmaceutical company, which was sold to Teva in 2006 for an enterprise value of $10 billion.

For more information, please visit our website.

Should we Trust the New Cholesterol Guidelines?

By Christopher Robertson

The new American Heart Association and American College of Cardiology guidelines on how patients should manage their cholesterol are likely to dramatically increase the sales of statins.  (E.g., check out the bump to Pfizer’s stock price.)  Yet, the new guidelines have become instantly controversial, with prominent cardiologists calling them into doubt.  In addition to the substantive scientific dispute, there are also questions about whether the guidelines panel may have suffered from biases, due to conflicting interests.  As PharmaLot reports:

Of the 15 panelists that authored these new guidelines, six reported having recent or current ties to drugmakers that already sell or are developing cholesterol medications. And among the half dozen who disclosed these relationships was one of the two panel co-chairs, which contradicts an Institute of Medicine suggestion about managing conflicts on such panels.  Each of the six panelists disclosed they worked as a consultant and received funding for personal research. And among the 10 expert reviewers, half listed consulting relationships.

I, of course, do not know the right answer about statins on the merits.  As a layperson, I must use proxies and heuristics to decide, and to some extent busy non-specialist physicians must do the same.  That is the whole point of the guidelines — so that each individual physician does not have to review the science himself or herself.  They are supposed to be able to simply rely on the guidelines, as the state of the art.  Yet, the conflicts of interests undermine our confidence in the AHA/ACC guidelines, making them less impactful on our prior beliefs.  (My own research has documented this sort of discounting, among both physicians and laypersons).  That sort of discounting is perfectly rational.

Some have argued that it is unrealistic to find experts who do not suffer from such conflicting interests.  But what if the AHA/ACC had just proceeded with the nine unconflicted panelists, and the five unconflicted reviewers?  Regardless of whether the panel reached the same outcome, it might have then better served the bona fide interests of the AHA and ACC, as well as the interests of public health.  If that panel did reach the same pro-statin outcome, which boosted Pfizer’s stock price, all the better.

PAPER NOW AVAILABLE for 11/18 Health Law Workshop w/Aaron Kesselheim

Aaron Kesselheim is a physician and an Assistant Professor of Medicine at the Harvard Medical School. He will be speaking at the Petrie-Flom Health Law Workshop on Monday, November 18, at 5:00pm, on “Do March-In Rights Protect Public Interests in Medical Products Arising from Federally-Funded Research?”

For more details on the workshop, including information on how to obtain a copy of the paper, please visit the Petrie-Flom Center’s website.

11/21: Neil Flanzraich on “Responsibility and Integrity in the Pharmaceutical Industry”

Please join the Petrie-Flom Center for a lecture by Neil Flanzraich on responsible pricing strategy, access to care, clinical trial design, outsourcing, and other topics that raise thorny but crucial issues for pharmaceutical and biotechnology companies.  There will be substantial time for Q&A.

Mr. Flanzraich graduated from HLS in 1968, and was appointed by Dean Martha Minow as an Expert in Residence at the Harvard Innovation Lab (i-lab) in fall 2012. He is the Executive Chairman of Kirax Corporation and the Executive Chairman of ParinGenix, Inc., both of which are privately owned biotech companies. He previously served as the Vice Chairman and President of Ivax Corporation, an international pharmaceutical company, which was sold to Teva in 2006 for an enterprise value of $10 billion.

For more information, please visit our website.

FDA Suspension of Ponatinib: Serious Problem, Wrong Solution

By Richard Epstein

Bad News On December 14, 2012, the US Food and Drug Administration granted an accelerated approval to the drug Ponatinib, which is used to treat patients with serious and life threatening forms of leukemia.  Unfortunately, the risks associated with the use of the drug have proved to be far greater than anticipated.  Thus on October 31, 2013, the FDA switched course and asked the manufacturer of ponatinib, Ariad Pharmaceuticals of Cambridge Massachusetts, to suspend marketing and sales of the drug pending the FDA’s further evaluation of the potential costs and benefits of ponatinib’s use.  The FDA wants to conduct that study so that it can better determine which patients are the ideal targets for the drug, and which patients are most likely to succumb to its grave negative side effects, “the risk of life-threatening blood clots and severe narrowing of blood vessels.”

Accordingly, the ever-prudent FDA immediately recommends the adoption of a three part program.  First, no new patients should begin treatment with the drug. Second, those who are using the drug who are not responding to it should immediately cease use. And third, those patients who are responding favorably to the drug should be allowed to continue its use if their health care professionals believe that the potential benefits from the drug use justifies their filing for a “a single-patient Investigational New Drug (IND) application or expanded access registry program while FDA’s safety investigation continues.”  Not surprisingly a recent New York Times Editorial takes the view that the FDA has set up the right process for dealing with this problem by allowing physicians and other health care professionals to go through a “streamlined” process to continue drug use where they think that the anticipated benefits exceed the anticipated costs.

Whose Cost Benefit Analysis?  Both the FDA and the Times have done the wrong cost benefit analysis.  For starters, all the information about the adverse effects of ponatinib are in the public domain, available to all professionals who prescribe the drug.  If the FDA had done nothing other than republish the conclusion of the recent studies, we can be confident that the serious risks associated with its use would quickly work themselves through the system.  The amount of the drug prescribed for established and new patients would drop, given the increased revelation of the risk.  Higher cost means lower use.

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Big relief for Big Pharma: Indian Patent Office rejects application for compulsory license

Aditya Gupta

By a detailed order passed last week, the Indian Patent Office rejected an application for compulsory license filed by a generic drug manufacturer BDR Pharmaceuticals International Pvt. Ltd. (“BDR”) seeking a license of Bristol Myers Squibb’s (“BMS”) Indian patent for an anti-cancer drug. The Indian Patent Office found that BDR had not made out a prima facie case for grant of a compulsory license since it had not made efforts to obtain a voluntary license from BMS on reasonable terms and conditions.

Though the Indian Patent Office did not go into the merits of BDR’s application and rejected it on preliminary grounds, this victory will help restore pharmaceutical companies’ faith in the Indian patent system.

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11/21: Neil Flanzraich on “Responsibility and Integrity in the Pharmaceutical Industry”

Please join the Petrie-Flom Center for a lecture by Neil Flanzraich on responsible pricing strategy, access to care, clinical trial design, outsourcing, and other topics that raise thorny but crucial issues for pharmaceutical and biotechnology companies.  There will be substantial time for Q&A.

Mr. Flanzraich graduated from HLS in 1968, and was appointed by Dean Martha Minow as an Expert in Residence at the Harvard Innovation Lab (i-lab) in fall 2012. He is the Executive Chairman of Kirax Corporation and the Executive Chairman of ParinGenix, Inc., both of which are privately owned biotech companies. He previously served as the Vice Chairman and President of Ivax Corporation, an international pharmaceutical company, which was sold to Teva in 2006 for an enterprise value of $10 billion.

For more information, please visit our website.