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Event Transcript
March 18, 2004

Managing the Cost of Drugs in Medicine:
Is Restricted Access the Answer?
Center for Medical Progress Forum
Speaker: Michael Weber, MD, Associate Dean for Research at the SUNY Downstate Medical Center

MR. ROBERT GOLDBERG: My name is Robert Goldberg and I’m the Director of the Center for Medical Progress at the Manhattan Institute. The mission of the Center is to show how new drugs and medical devices allow people to live longer and healthier lives while make health care more affordable. We want to show how the next generation of medical breakthroughs are the product primarily of research being conducted in the private sector and supported by private investment.

Today we’re going to discuss something called evidence-based medicine. The logic behind evidence-based medicine is that large clinical studies can tell us what the best medicine is for all patients with a given pathology. The presumption driving this approach—or rather the hope—is that in most cases the oldest and cheapest drugs will work as well, or better than, newer, more expensive medicines. The impetus behind evidence-based medicine is part of a political backlash against drug prices and the increasing use of new drugs.

This backlash has culminated in several proposals now being discussed in Congress. Some have advocated for price controls on the next generation of new medicines and to cut the price of existing drugs by up to 70%. Others are demanding that the FDA allow pharmacies to import drugs from overseas. Evidence based medicine is of a piece with these other proposals insofar as the government would ration access to expensive new medicines based on studies that justifyin placing patients on older drug first.

There is a lot of controversy surrounding evidence-based medicine. Nonetheless, as Mark Twain said, “We plan to give people all the facts first and then they can distort them as they please.” I would like you to consider some of these facts today.

The idea that one drug fits all patients—that is, all patients with heart disease or hypertension—is a strange one in that physicians have recognized for decades that individual patients can metabolize the same drug in vastly different ways. Evidence-based medicine ignores the newest and most intimate evidence of all, genomic evidence that tells us that drugs and diseases work uniquely in each and every individual based on that individual’s genetic profile.

Nonetheless, the government recently came up with a study that the media has reported as showing that the cheapest and oldest blood pressure drug (a diuretic) is more effective in reducing stroke and heart attacks than newer medicines. The authors of this study have gone so far as to say that people prescribed new medicines should be switched to the older drugs and that new patients should be prescribed older drugs as a first- line treatment.

Ourr speaker today, Dr. Michael Weber, helped to conduct research in that now well-known study. Today, based on his first-hand experience, he is going to explain why evidence- based medicine is not the gold standard of clinical care but is, in fact, a faulty standard of medicine.

Dr. Weber’s career has been focused primarily on the treatment of hypertension and preventive cardiology. He has published numerous research articles in the medical literature and has authored and edited ten books. Together with Dr. Suzanne Oparil, he is responsible for the widely used reference volume Hypertension. He was one of the founders of the American Society of Hypertension and has also served as its president. He is currently chair of the Society’s Hypertension Specialists Program.

He is also a Fellow of the American College of Physicians, the American College of Cardiology, and the American Heart Association. His main research interests include the role of the renin-angiotensin system and the genesis of hypertension as a major factor in cardiovascular prognosis. He was a pioneer in the technique of outpatient blood pressure monitoring, and he currently serves on the steering committee of several clinical outcome trials in high risk cardiovascular patients. Last, but certainly far from least, he is the Associate Dean for Research at the State University of New York Downstate Medical Center.

Nonetheless, even with his impressive credentials, proposals currently pending in Congress would use evidence- based medicine to sharply limit his ability to prescribe patients the medicines he thought best for their individual needs.

DR. MICHAEL WEBER: It is true that there are many people who feel they can tell physicians how we should be practicing medicine. But before begin discussing how physicians should prescribe drugs and how society should pay for them, and how we’re going to distribute them, I should mention that I do have a vested interest in this subject—actually, several interests.

I have spent my life doing research in cardiovascular disease and heart failure, coronary disease, stroke, and, of course, hypertension. I’m a clinician, I have been regularly seeing patients for decades, and so I naturally tend to see these issues from a clinical perspective. However, I also sit on the advisory boards of many pharmaceutical companies, and I share some of their concerns as well.

For over 12 years I have also been a consultant to the Food & Drug Administration, and I remain very interested in that organization. Perhaps most relevant for our discussion, I serve on the Formulary Committee for one of the biggest pharmacy benefit managers in the United States, though to preserve the confidentiality and integrity of that process I shall not reveal its name here today. As you know, PBM’s get to choose the drugs that many of the health plans that you’re familiar with offer to their patients, and we even help to determine exactly how those drugs are paid for.

Having a stake in several very different medical communities gives me a sense that we are in many ways talking about the wrong issues. First of all, why is it that drugs are so expensive? There’s no question that if you get a prescription and go to a drug store and pay for it yourself you will most likely pay generously. But before consumers become indignant they need to understand that the cost of pharmaceutical research and development has become astronomical. It’s now safe to say that every new drug that’s approved costs, on average, about a billion dollars to take to market.

How do we know that this number is accurate? People calculate the amount of research that is done by the major pharmaceutical companies, which is all revealed accurately in their financial statements, and divide it by the number of drugs that were approved last year by the FDA, which is only about 20. That produces an average expenditure of approximately a billion dollar per drug.

It is very expensive to run the clinical drug trials you might read about in the Wall Street Journal or The New York Times. For example, trials with drugs like Lipitor or other cholesterol or blood pressure lowering drugs that are designed to look at their effects on major clinical events and mortality, typically cost between $100 million and $200 million to carry out. They are an enormous commitment on the part of the companies that sponsor the trials, and, of course, that money together with the original original research costs has to be amortized over the relatively short period of time that the manufacturer has an exclusive patent on their drug.

A second issue driving drug costs is the need to prove that a given drug is safe. It takes a very long time with a new drug to show that it’s safe; and that in turn eats into the effective patent life of a drug, which means that the manufacturer has to amortize the investment over an even shorter period of time.

As you might know, the FDA has been highly cautious in the last few years, not surprisingly, because four or five major drugs that had been approved subsequently had to be withdrawn because of serious safety issues. This was not all the FDA’s fault by any means, but you can see an obvious reluctance at the FDA to approve new drugs without even more extensive safety testing.

One of the issues that Mark McClellan, the former FDA Commissioner who is now responsible for Medicare, had taken on during his tenure was the issue of who should pay for the development of new drugs. Dr. McClellan made the point that we Americans pay far more than our fair share to develop the world’s next medical miracles. We’re the only country in the world that doesn’t have some sort of price controls on drugs, which means that our neighbors in North America, and certainly throughout Europe and the rest of the world, are benefiting from a public good that we in this country have paid for and continue to pay for. McClellan has promised that this is a battle that he’s planning to fight, and I wish him every success.

If you read Time Magazine, you will have seen in February a whole cover article entitled, “Why We Pay So Much For Drugs,” an article that was unsurpassed in its emotional manipulation. I have never seen a major news magazine stoop to load the argument as they did in this piece. They argued that health care in this country is basically a lottery run by an irresponsible and uncaring Congress, and that happened to be one of their more kindly remarks.

Let me point out one example of Time’s work, not because it’s terribly relevant but because it shows climate that we are operating in. They talk about a woman from New England who went with a group of other people to Canada to buy drugs inexpensively. It turned out that Lipitor, the cholesterol drug was of them. Time Magazine said that, in Canada, a six months supply of Lipitor cost her $500. It also claimed, in bold print, that in the States it would have cost her $1,900, four times as much. Think about it: four times as much, $1,900 for a 180 day supply, or a little over $10 a day.

However, if you looked into these numbers you would discover that, as any doctor knows, Lipitor costs between $2 and $3 a day. The truth of the matter is that a similar supply purchased in the U.S. would cost only about $600, not $1,900. Somewhat more than in Canada, but not dramatically so.

This is a debate so fraught with emotion and ideology that it is almost impossible to get the facts into the public debate at all. We have to acknowledge, however, that drug costs are highly visible. Even though the cost of drugs represents only about 10% of total health care spending, for the consumer they represent closer to a quarter of their out-of-pocket expenses. That is why there’s so much talk about drug costs and why they are a uniquely sensitive political issue. In general, most people don’t see the costs they impose on the system when they go to a hospital and build up $25,000 or $30,000 in expenses due to a common condition like heart failure. Yet, when they finally leave the hospital and have to pay $150 for a drug to help keep them from returning to the hospital they are suddenly shocked and outraged.

There’s no question that our total bill for drugs is going up and is going to keep on going up because we have an aging population. We’re in a situation where about 12 percent of our population is over 65, and increasing numbers of people are going to be living well into their 80s and 90s. Naturally, these people are going to demand a higher quality of life and will wind up taking multiple drugs—all of which are supported by powerful evidence to show that in fact they do contribute to longevity and help to prevent strokes, heart attacks, and many other potentially fatal or debilitating ailments. There is no escaping it. We, along with Europe, are an aging population and there is no easy solution to the demands that will come about as a result.

Of course, people point out that we spend a fair part of our health care budget on drugs to treat conditions like baldness or erectile dysfunction. But I would argue, and I think most of us would agree, that things that may seem at first frivolous are in fact very important to quality of life for many people.

Time magazine and others have argued that the pharmaceutical industry has enjoyed high profits, though they’re really only somewhat higher than the average profit level for American corporations. If, in fact, we were to reduce the profits of the pharmaceutical industry to minimal levels we would save only pennies on our prescriptions. That’s not where the problem lies.

The problem may lie partly in the glamorizing of new brands and of new drugs. We see on television whenever we watch sporting events, or even news programs, advertisements for a whole array of relatively expensive drugs; and it’s very difficult for physicians and equally difficult for health plans, once people come in armed with that sort of information, to deny access to an apparently innovative treatment.

What are the solutions? That’s what we’re here to talk about. Well many politicians say it’s easy. We should simply import cheap drugs from Canada. In fact, this strategy was even part of the recent Medicare bill, but somehow got lost in a House—Senate Conference. Even so, the original bill proposed to legitimize and legalize the importing of drugs from Canada. That is by no means an easy task.

First of all, they call it “reimporting” as though, in the first place, we had exported these drugs to Canada. The fact is we only export enough drugs to Canada to support the needs of Canada. So where do these extra drugs come from when they come back to the United States? Well, some of them may come back at the expense of Canadian consumers who now may have a shortage and be forced to have to pay higher prices to deal with that shortage; but, in fact, many of these drugs may have nothing to do with Canada. They may be routed through Canada, they may have Canadian names attached to them, but some of them come from factories in Bangladesh and Pakistan, many of them are made in China, or even places like Saudi Arabia. These drugs may not have gone through the sort of quality control that we would expect and demand for medicines that we ourselves would want to take.

The FDA, in doing spot checks late last year, found that 80% of drugs that came into this country had some sort of a problem with their labeling, including inaccurate descriptions of their contents. It didn’t mean they weren’t sometimes the drugs they were supposed to be, but in many cases people would have been misled in knowing exactly what it was they were taking; and there were variations in exactly how much drug was in each pill or capsule. Certainly, if so called re-importation is to take place, it has to be done under FDA supervision.

Many state governments are talking about preferred drug lists. Patients cared for by the state agencies would be limited to drugs selected for the formulary on the basis of clinical trial evidence. Presumably, this would limit the use of newer but still unproven expensive drugs. But which evidence will be used? And, who will be chosen to interpret the typically complex data?

A more focused approach has already been made by the Veterans Administration, or the Department of Veterans Affairs as it’s now called; and it’s often discussed – Senator Kennedy likes to talk about it and it appears in a lot of the newspapers. There have been editorials in The New York Times along the lines of – why can't the Medicare authorities and other health plans learn from the VA system?

What do they do in the VA? First of all, they use generics whenever they’re available. When they are forced to use brands – in other words drugs that are still under patent and made by the large pharmaceutical companies – they select only one brand in each class, based on aggressive competition. Some newer classes are not included at all. So patients who want to get access to innovative drugs must first “fail” on one of the older types of drugs. Typically, if older drugs have side effects, only after the side effects become intolerable can patients be switched to a newer brand.

Of course, this works reasonably well in the VA because they have a captive audience that by and large finds it difficult to complain. Veterans get their treatment free of charge or for modest payments, and they’re smart enough not to make a big issue out of getting a choice of treatments. But there’s no question that this approach reduces the flexibility of physicians to treat patients in the way they would like to. And what do the physicians do? Like most people, they fight for a while, and then give up.

On a broader scale, if we expand this VA approach to Medicare and to other very large formularies, I believe it’s going to hurt us in areas that I think are very important, in particular because it might kill competition. Articles we have all recently seen in the Wall Street Journal and The New York Times were based on clinical trials done by manufacturers of competing products to determine whether their drug was better than another brand. In so doing, however, they have also taught us how to reduce heart attacks better, how to keep people out of the operating room better, and how to make people live longer.

I think those are the benefits of competition in the pharmaceutical industry. Only sometimes are claims based on lower price. Rather, it is superiority in preventing major events and prolonging life that is being tested. Much of our whole attitude towards diabetes was created by Bristol-Meyers Squibb with their early ACE inhibitors. Just about everything we know about protecting the kidney in diabetes came from their studies and studies done by their competitors. The whole concept that there is such a thing as quality of life during the taking of medicines for a whole variety of conditions came from pharmaceutical industry studies, again done for competitive purposes. Advances in heart failure, cancer prevention, stroke depression, so many areas, have been driven by this process. To now discourage this type of research and development in favor of cost-cutting strikes me as an unfortunate step backwards.

Evidence, though, is a strange thing. Evidence is what’s presented to a jury, and then two sets of lawyers argue that diametrically opposite conclusions can be reached from the same set of information. Hillary Clinton has recently announced a bill that she is sponsoring to control the costs of Medicare drugs, and she is basing this on what is known as cost effectiveness. Cost effectiveness, when it comes to therapy, is a strange concept because we’re in a situation where, first of all, we can't measure costs and where we can't accurately measure effectiveness.

There is a danger of getting into the realm of statistical fantasy when we talk about cost effectiveness. But what is more especially worrisome in that bill is that we’ll have “evidence-based reimbursement” and it will favor drugs “deemed as effective as others.” What does “deemed” mean? It sounds ominously like the judgment of so-called experts brought together based on their proclivities for cost cutting.

One of the most controversial clinical trials ever carried out was called ALLHAT. It’s an acronym, A-L-L-H-A-T, and it stands for Antihypertensive and Lipid Lowering, that’s the ALL, Heart Attack Trial -- HAT stands for Heart Attack Trial. It was announced about 15 months ago with big headlines in the Wall Street Journal and The New York Times, which seem to be our major medical journals these days, and they said that a cheap generic drug beats expensive newer brands in people with high blood pressure. In case anyone missed the point, there were side articles in both papers making the point that pharmaceutical companies have armies of sales representatives who take doctors out for dinners, put on symposia, and do all sorts of things to persuade physicians to prescribe expensive drugs. Now, according to ALLHAT, these pricey drugs are actually inferior to diuretics, the old-fashioned diuretic drugs that you can get for a penny a pill, in treating hypertension and preventing heart attacks. Fortunately, according to the New York Times editorialists, the National Institutes of Health, which sponsored ALLHAT, has set us straight.

Three days later the New York Times, somewhat embarrassingly on its second page, printed a small item called a correction, acknowledging that the earlier articles forgot to mention that the endpoint of the study, which was preventing heart attacks, in fact was not superior with the diuretics. Meanwhile, a whole spate of commentaries and editorials in the medical literature castigated the people responsible for this study, not for doing poor science but because they reported their results in a misleading fashion.

One factor that drove the ALLHAT conclusions more than anything else was the unexpected 15% higher stroke rate in patients treated with the newer ACE inhibitor drug as compared with the diuretic. But, on close inspection, it turned out that this result was due entirely to a 40% excess stroke rate in black patients. In fact, well before ALLHAT, it was known that blood pressure in African Americans responds poorly to ACE inhibitors, so that the excess stroke rate in these patients was not only predictable, but also highlights the ethical issue of exposing these patients to the high risks of an inappropriate treatment.

Very recently, the principal investigator of ALLHAT has publicly acknowledged that white patients do at least as well on ACE inhibitors as on diuretics, perhaps somewhat better according to an even more recent trial published in the New England Journal of Medicine. But it is hard to undo the damage caused by the early hype, and some guidelines still advocate universal use of diuretics, largely fueled by their supposedly cheap costs, in defiance of the now better understood evidence.

I left on your chairs a short editorial I just wrote because the National Institutes of Health, not happy to leave this alone, has now announced they’re going to hire 600 doctors to be quasi sales representatives and go round making sure that other physicians should be prescribing diuretics for everybody at a penny a pill. I hope they will point out that, in fact, we already are prescribing diuretics for a great many of our patients because diuretics are built into just about every other drug that is now on the market. I hope they will also take the trouble to point out that when we do prescribe diuretics as the primary drug for treating hypertension, one year later fewer than 20% of people are refilling those prescriptions, as compared with over 50% with modern drugs likes ACE inhibitors, angiotensin blockers and calcium blockers. This is a great example of patients voting with their feet and making it clear what they like and don’t like taking.

Let me just finish by mentioning one other area that I have been involved in. The health plans that are likely to be a big part of Medicare, the various HMO or quasi HMO or PPO options, are interesting because they will offer drug plans that are different from simply subsidizing medication purchases from drug stores. They use so-called tiered plans. Simply put, prescriptions for generic drugs cost patients only a $5 to $10 co-payment when they go to the drugstore. If the prescription is for a branded drug that has been selected for the plan’s formulary the co-payment will be around $15 to $20. But if the physician prescribes a drug that is not on formulary, perhaps because it is too new to have been fully evaluated, or possibly because it’s more expensive than other brands, it becomes a third tier drug that can cost patients $30 to $40 or even more.

I agree that this approach makes sense, but at the same time I acknowledge that a big saving that health plans make is not just in getting the co-payments, it’s because when patients are asked to pay that kind of premium they often don’t fill their prescriptions at all. It is this type of non-compliance, which drives many people out of health care, that is saving money for the plans. This, obviously, is very troubling as far as health care is concerned.

Even so, we have to accept that health plans are going to be shifting costs. One of the ways they will do it is to get more and more drugs to go to so-called over-the-counter status. The cholesterol drugs, for instance, now cost $2 to $3 a day to the plans. If they were over-the-counter, we could say to patients that no prescription is needed, just go down to the drug store and buy it yourself. That way, the patient spends the $50 or $60 for the month’s drug supply. This might be happening more and more. Think of Claritin which went over-the-counter recently. There will be other examples soon.

Plans can throw other hurdles in the way of physicians. They make them call up and seek prior authorization from the plan if they want to prescribe en expensive drug. This strategy works; a lot of doctors give up and don’t do it. Some plans give incentives and actually give bonuses to doctors who prescribe cheaper drugs; and at the same time, they hold back some payments from doctors who prescribe expensive drugs. Some staff-model HMOs refuse to let pharmaceutical representatives into their facilities and will not accept some journals into their libraries. Presumably, if doctors don’t hear about and don’t read about new drugs, it’s less likely that they’ll want to prescribe them.


Center for Civic Innovation.


Michael Weber, MD, Associate Dean for Research at the SUNY Downstate Medical Center

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