Thursday, September 22, 2005

Catching up with the news

Much has happened since my last post. Headlines include the Vioxx verdict, medical device fraud with Guidant, many interesting articles about pricing lawsuits.

But I wanted to focus this evening on issues that are away from the news. One has to do with my criticisms of Medicare Part D and pricing.

A reader criticized my writing about government drug pricing (even accusing me of being a lawyer - what a cheap shot!). He referred me to a book on economics, and briefly explained how government interference in pricing distorts markets.

He was completely correct about the interference of government, but was too limited in his critique of government as a purchasing agent. He reminded me (and I can't believe that I haven't already mentioned this to you) that the Feds require that pharmas sell to them at their lowest price. This is true, and does indeed distort markets. I remember when my company was concerned about their Indigent Patient Program - if we gave away drugs for a few bucks in co-pay to the poor, would that constitute a price? And the TogetherRX program required a waiver from the pricing policy as well, according to my reader.

I am for market pricing - I haven't complained to anyone about the recent gas prices, for example, and found merit in the Wall Street Journal article "In praise of price gouging" or whatever is was called. But there is much more distorting the price of pharmaceuticals than the VA supply schedule. The three largest contributors to price distortion are the patent system for drugs, the regulatory burden of pharmas, and the enormous scientific subsidies they receive.

I'm not going to argue for the abolition of patents or regulations. Hello 1902. No, instead I want to give some perspective to help explain why exempting Medicare Part D from any pricing regulations rubs me the wrong way. The factors that drive up pharma pricing are almost overwhelming, and call for a restraining hand. For example, there is no such thing as a start-up garage-based drug company. Pharma CEOs do not look over their shoulders at lean and hungry start-ups the way Bill Gates has to. Also, you can't look at a drug patent, figure out a quick way to come up with an approved product, and have it on the market in weeks or months. Finally, there are huge gaps between the consumer, the learned intermediary (the doctor) and whoever is paying for the drugs. For most consumer transactions, these three elements are the same.

Think about the impact these elements have on pricing. And think what a small counterweight it is to have regulated pricing for programs paid for with tax dollars.

I've Done This Before...
but I can't help myself. There was a large ad for this item in the coupon section of my Sunday paper a couple of weeks ago, and I almost snarfed my cornflakes. I think I've mentioned before that I know many people who work for McNeil Consumer Products, and it's fun to call them and tease about this. Five years ago, this would never have happened, or so my friends like to believe. Get a real drug company, guys.

You had to know I would mention this item, about the atypical anti-psychotics versus perphenazine. It's important to keep in mind that the headline writers are missing a big point revealed by the studies. While perphenazine performed well, it had a large number of patients who had to discontinue, like the rest of the drugs. So a large armamentarium for anti-psychotics is more important than, say, adding another statin or non-sedating anti-histamine to the market.

By the way, I wouldn't lose too much sleep (har har!) if I worked at AstraZeneca, makers of the maligned Seroquel (maligned in this article, at least). The drug is the market leader in prescriptions, but not sales. Why? Because most of the use is for sedation ("Sleepoquel") at sub-therapeutic doses. Let's just hope they aren't promoting it that way. T'would be bad.

Gardening away
Yep, the movie was awesome. I also watched City of God recently, by the same director, and found it somewhat over-rated. But watch this space in December for shameless promotion of "The Constant Gardner" for Oscar consideration. I cried like three times.

Interesting note - check out this post on, concerning the movie poster. Kind of bizarre. I was struck by the fact that Ralph Fiennes appears with an outstretched arm holding a gun on the movie poster, which never occurs in the film. Also, in the movie's trailer, there's clearly a scene that was set in a snowy area, presumably in Western Canada, where part of the book is set. This is also not in the film.


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seroquel said...

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