E-drug: Is Big Pharma the next target for attack? (cont'd)
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[Materials copied as fair use. HH]
The following extracts came from an article which recently appeared
in the New York Times. See also my comments after the abstracts.
Dr Ken Harvey
Project Manager - Electronic Prescribing - Decision Support
Peter MacCallum Cancer Institute (www.petermac.org)
Board Member, Therapeutic Guidelines Ltd. (http://www.tg.com.au)
Council Member, Australian Consumers Association
(http://www.choice.com.au)
Senior Lecturer, School of Public Health (http://www.latrobe.edu.au)
La Trobe University, Bundoora, 3086, Australia
Tel +61 3 9479 1750, Fax +61 3 9479 1783, Mob 0419 181910
k.harvey@latrobe.edu.au
http://www.nytimes.com/2003/04/21/politics/21DRUG.html?
tntemail1=&pagewanted=print&position=
April 21, 2003
U.S. Limiting Costs of Drugs for Medicare
By Robert Pear
WASHINGTON, April 20 - In a fundamental change, the Bush
administration has begun to weigh cost as a factor in deciding
whether Medicare should pay for new drugs and medical procedures.
Most notably, in recent weeks, federal officials have adopted policies
to limit what Medicare pays for prescription drugs. These actions,
they said, set a significant precedent, illustrating how Medicare will try
to control spending if President Bush and Congress agree on a plan
to provide more extensive drug benefits to the elderly and the
disabled.
The officials said they were not imposing explicit price controls, but
stretching federal dollars to ensure that the government would be a
prudent purchaser, a goal endorsed by health policy experts.
But drug industry executives have strenuously protested the
administration's actions. The government, they say, lacks the legal
authority, the expertise and the clinical data to make such decisions.
"Medicare officials are increasingly injecting questions about cost and
cost-effectiveness into decisions about coverage," said Gordon B.
Schatz, a Washington lawyer who specializes in health care issues.
The new approach is illustrated by these actions:
The federal official in charge of Medicare and Medicaid told doctors
last month that they should not prescribe Nexium, a new heartburn
drug, saying it was identical to an older drug, Prilosec, which became
available in a cheaper generic form in December. The admonition
infuriated executives of AstraZeneca, the maker of Nexium and
Prilosec, who contend the new drug is superior.
Medicare refused to pay the full price for a new drug to treat anemia
in cancer patients, saying it was "functionally equivalent" to an older
drug with a lower price. Amgen, the maker of the new drug, Aranesp,
contends that it is more effective than the older drug, Procrit, sold by
Johnson & Johnson.
A federal advisory committee said last month that Medicare should
systematically weigh costs against benefits in deciding whether to pay
for new drugs, medical devices and other technology. Medicare
coverage decisions have an impact far beyond the federal program
because private health insurers often follow the government's lead.
From April to December of last year, Medicare paid hospitals $3.89
for each microgram of Aranesp given to a Medicare patient for
treatment of anemia in a hospital outpatient department. But this year
the Bush administration cut the payment by 39 percent, to $2.37,
after concluding that Aranesp was "almost identical" to Procrit and
should be paid at the same rate.
"Both products use the same biological mechanism to produce the
same clinical result, stimulation of the bone marrow to produce red
blood cells," the government said. Medicare spends more than $1
billion a year on the two drugs in hospital outpatient departments and
in doctors' offices. Doctors decide which drugs to prescribe, based on
information from many sources.
Under the Medicare law, federal officials say, they have broad
discretion to set drug payments for outpatients at whatever levels
they consider equitable. Moreover, they say, drug companies have no
standing to challenge such decisions in court because they are not
among the intended beneficiaries of the Medicare law.
Amgen disagrees with those conclusions. It says that Aranesp is less
expensive and more potent than Procrit, so patients do not have to
visit the hospital as often for treatments. That is a significant
advantage for patients who are elderly, disabled or terminally ill,
Amgen says.
Moreover, drug companies say, the concept of "functional
equivalence" cannot be found anywhere in the Medicare statute. They
say coverage decisions should be made by the market - doctors,
patients and private health plans - even when the government is
paying the bills. Alan F. Holmer, president of the Pharmaceutical
Research and Manufacturers of America, said he was deeply troubled
by the new standard of "functional equivalence" because it meant that
Medicare might not pay for incremental improvements needed to
achieve major advances in drug therapy.
"Such a policy will chill innovation," Mr. Holmer said.
The Bush administration surprised doctors last month when it bluntly
stated its preference for Prilosec over Nexium as a treatment for
heartburn.
At a convention of the American Medical Association, Mr. Scully told
doctors, "You should be embarrassed if you prescribe Nexium,"
because it increases costs with no medical benefits. "The fact is,
Nexium is Prilosec," Mr. Scully said. "It is the same drug. It is a mirror
compound."
Mr. Scully said he had no problem paying thousands of dollars a year
for an innovative drug that saves lives, like Gleevec, for certain types
of leukemia and gastrointestinal tumors. But he said, "Nexium is a
game that is being played on the people who pay for drugs."
Medicaid, the federal-state program for poor people, covers most
prescription drugs. But Mr. Scully told state Medicaid directors that
"there's no reason in the world" to pay for Nexium, at a time when
"drug prices are going through the roof" and many states are cutting
Medicaid benefits and eligibility.
David R. Brennan, president of AstraZeneca in the United States, met
with Mr. Scully on March 21 in an effort to answer his criticism of
Nexium. Several doctors also took issue with the criticism.
"Mr. Scully is wrong in saying that Nexium and Prilosec are identical,"
said Dr. Joel E. Richter of the Cleveland Clinic, a former president of
the American College of Gastroenterology. "Nexium is superior for
some patients, particularly those with more severe forms of disease."
Comment by Ken Harvey:
In Australia the above drugs have also been considered for listing on
our Pharmaceutical Benefits Scheme (PBS) with the following results:
1. Esomeprazole magnesium trihydrate (Nexium)was recommended
for listing on the basis that 20mg esomeprazole was equivalent to
20mg omeprazole in terms of effectiveness and safety in the
maintenance of healed severe refractory ulcerating oesophagitis and
that 40mg was more effective than 20mg omeprazole in healing of
severe refractory ulcerating oesophagitis.
2. Darbepoetin alfa (Aranesp) was accepted for listing on a cost
minimisation basis with 37.5 ug darbepoetin alfa weekly being of
similar safety and efficacy to 7275.9 units of epoetin alfa weekly.
It is interesting that the companies agreed to an Australian PBS
listing on the above basis but they are saying something different in
the USA.
PBS decisions and the relativity sheets used by the PBS Pricing
Authority are publicly available on the Australian Department of
Health Web site.
See:
http://www.health.gov.au/pbs/listing/pbacrec/pbacrecmar03.htm
and
http://www.health.gov.au/pbs/pricing/therelativity.pdf
Dr. Ken Harvey, Senior Lecturer, School of Public Health, La Trobe
University, Bundoora, 3086, Australia.
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