Sometimes the little guy wins. Sometimes it pays to stand up and fight back. That's what has happened in the case of KV Pharmaceutical and its Makena, a form of progesterone indicated for preventing premature birth and approved by the FDA recently under the Orphan Drug Act. This blog has addressed this twice recently, here and here (scroll down). The injectable form of the drug, for which no one holds a patent including KV, has been available for decades from compounding pharmacists at a cost of $10-20 per week for weekly injections during critical weeks of gestation. Under the Orphan Drug Act, KV Pharma was able to augment the available clinical research with some additional clinical data and obtain approval for sale under accelerated review, and receive considerable government assistance (read: tax breaks), plus 7 years' market exclusivity, for a product on which they don't hold a patent and in which their development investment was relatively low. Meanwhile, KVeliminated the competition - the compounding pharmacists - by sending them letters stating that under the terms of their approval, the FDA would no longer 'exercise enforcement discretion with regard to compounded versions of Makena." KV priced the product at a whopping $1500 per weekly injection - and neither the FDA nor any other arm of the US government controls drug pricing in this country - made some weak noises about providing assistance to certain women, and thought that was the end of that.
Not so fast, say the patients and their physicians. Public response to this story has been swift and loud. A sampling of coverage of the outcry is at the bottom of this post. Patients and physicians were outraged at KV's wantonness in so drastically inflating the price by a hundred fold, and their rationalization that weekly dosing would still cost less than a stay in the NICU fell on unsympathetic ears.
Not so fast, also says the FDA. In a statement released today on FDA's web site, the FDA makes it clear that while it cannot tell KV how much to charge for their product, it indeed can exercise its enforcement discretion and will not come after pharmacists that "compound hydroxyprogesterone caproate based on a valid prescription...unless the compounded products are unsafe of substandard quality", or not compounded according to proper technique.
According to FiercePharma, KV has yet to comment on the FDA's statement and it is not yet clear what effect if any this will have on pricing.
http://www.fiercepharma.com/story/payers-may-balk-makena-pricing-kv-says/2011-03-23
http://www.fiercepharma.com/story/senators-demand-ftc-probe-kvs-makena-pricing/2011-03-21
http://www.fiercepharma.com/story/kvs-makena-delivers-1500-sticker-shock-docs/2011-03-10
Wednesday, March 30, 2011
Sunday, March 27, 2011
KV Pharma and the Drug Price Wars
At the bottom of my last post I looked at the recent case of KV Pharma and its new drug Makena, which was approved last month by the FDA under the Orphan Drug Act for prevention of premature birth. Makena is a form of progesterone that has been available for decades at a cost of $10-20 per week from compounding pharmacies, but now KV Pharma, which went to the trouble of registering their version of the product has a 7 year monopoly on sales of the product (thanks to the Orphan Drug Act), which they have priced at $1500 per injection. The drug is dosed weekly from weeks 16 through 20 of gestation. The penalties associated with trying to provide the compound the old way should give any pharmacist reason to think twice.
Two US Senators (Amy Klobuchar, D-Minn and Sherrod Brown, D-Ohio) have asked the Federal Trade Commission to look into the pricing matter and investigate whether the $1500/injection price tag constitutes anti-competitive behavior. The senators also charge that KV Pharma's patient assistance program is insufficient. You can see the press release and letter, which uses words like 'price gouging', here.
As is often the case, Pharmalot is all over this. This week they asked for an explanation from Jamie Love of Knowledge Ecology International. Love points out a number of issues stemming from the use of the Orphan Drug Act to secure this approval along with its exclusivity. The Orphan Drug Act was originally enacted to incentivize manufacturers to make otherwise unprofitable medicines available for diseases that strike relatively few patients. In the case of Makena, the compound was already available to pregnant women since the 1950's. So even though KV Pharmaceuticals did perform clinical trials, and the rest of the research was done by the NIH (see here for the full list of trials), and KV does not hold the patent on the progesterone compound (hydroxyprogesterone capoate, apparently no one does according to the Orange Book), they still receive the seven-year market exclusivity under the law. The Pharmalot Q&A with Love is here, which includes links back to their earlier coverage of the story. Love's blog noting how the Orphan Drug Act could be improved is here.
Two US Senators (Amy Klobuchar, D-Minn and Sherrod Brown, D-Ohio) have asked the Federal Trade Commission to look into the pricing matter and investigate whether the $1500/injection price tag constitutes anti-competitive behavior. The senators also charge that KV Pharma's patient assistance program is insufficient. You can see the press release and letter, which uses words like 'price gouging', here.
As is often the case, Pharmalot is all over this. This week they asked for an explanation from Jamie Love of Knowledge Ecology International. Love points out a number of issues stemming from the use of the Orphan Drug Act to secure this approval along with its exclusivity. The Orphan Drug Act was originally enacted to incentivize manufacturers to make otherwise unprofitable medicines available for diseases that strike relatively few patients. In the case of Makena, the compound was already available to pregnant women since the 1950's. So even though KV Pharmaceuticals did perform clinical trials, and the rest of the research was done by the NIH (see here for the full list of trials), and KV does not hold the patent on the progesterone compound (hydroxyprogesterone capoate, apparently no one does according to the Orange Book), they still receive the seven-year market exclusivity under the law. The Pharmalot Q&A with Love is here, which includes links back to their earlier coverage of the story. Love's blog noting how the Orphan Drug Act could be improved is here.
Thursday, March 10, 2011
What Price Drug Development?
UPDATE 3/18/2011 - see links to Tufts Center response and PharmaExec's op-ed at the end of of the post.
There have been several pieces in the trade and popular press this week about the cost of clinical development of new drugs. This discussion is really about drugs, not devices, as not only the costs but the way devices are researched, evaluated and cleared can be quite different. Here is a rundown:
Slate published a piece by Timothy Noah on March 3rd called The Make Believe Billion, which takes a critical (does that surprise you?) look at Big Pharma's oft-quoted and not-often challenged claim that it costs $800 million (in 2000 dollars) and takes 12 years to bring a new drug to the patient. These figures, adjusted upwards for inflation, are used by the Big Pharma lobby with roaring success to justify the high cost of brand-name prescription medicines. The two numbers come from this 2003 study published in the Journal of Health Economics. The lead author is economist Joseph DiMasi who was working for the Tufts University Center for Drug Development, an academic, non-profit study group that welcomes corporate sponsorship. Because of the Tufts connection of DiMasi, most of the time that you see the $800M/12 year figures cited, the source of the data is often cited as the Tufts Center.
The Slate piece discovers a new challenge to the $800M claim in a study (PDF) published last month in the London School of Economics' BioSocieties journal by Princeton's Donald Light and University of Victoria's Rebecca Warburton. Following along in the vein of The $800 Million Pill by Merrill Goozner, the Light study takes apart the source data the Tufts group used to develop their results, citing various problems.
First, the Light paper challenges the sampling of data used to feed the model. In the Tufts study, financial information was requested from 24 companies, 10 of whom ultimately submitted data via confidential survey. Because the data were collected in a confidential form, they are unverifiable by independent means, say the Light group. And because the results are based on data submitted by self-selected companies that agreed to share their data, there is no true random sampling from a larger population of data. The Tufts study does not describe any efforts to verify the reported data, so there is no way to determines whether the R&D costs are uniformly reported from sponsor to sponsor. Additionally it is not clear whether or how much of the data reported are R&D costs for self-originated new chemical entities (NCEs), which according tot he same Tufts group are 4.4 times more costly to develop than in-licensed NCEs, which are in turn 3.4 times more costly than non-NCE variations on existing drugs. Only 35% of new drugs developed during the reporting period (1990-2000) were NCEs, and even fewer were self-originated, or developed in-house.
The second challenge of the Light paper comes from the exclusion of discovery costs reported as part of the R&D figures used for the $800M calculation. The reasons for this are multiple: discovery costs are much harder to tease out as discrete portions of R&D budgets because there are no recognizable chunks of work like phase 1, 2 or 3; often several compounds or targets are researched together under one budget line item; basic research is often carried out by entities other than pharma companies, like universities or the government; and sometimes new therapies are discovered quite by accident, like penicillin. To solve this problem, the Tufts group simply factored in an average cost of $121 million and 52 months of development time, without any data to support the figures.
Thirdly, the Light group argue against the Tufts claim that tax breaks and taxpayer subsidies for pharma companies should not be discounted from the total R&D cost. The Light paper argues that this might be reasonable if R&D were depreciated over time like over long-term investments, but they are not: R&D costs are deducted from profits each year that they are incurred. This effectively creates a 100% tax deduction every year. According to a 1993 US Office of Technology review of pharma research costs, the net savings was nearly 50%, and this was at a time when the top marginal tax rate was 46%. Now that the top rate is 35%, the Tax Policy Center puts the average tax savings on R&D per year at about 39%, yet these discounts do not appear in the Tufts study.
The fourth large challenge to the Tufts study is in the assumption that half of R&D costs are accounted for by the 'cost of capital', in other words, returns that did not materialize from investing that same money in the market instead of using it for research, assuming an 11% return in the period under study. Calculating the cost of capital is a common method for corporations to decide whether to pursue new projects, but the Light authors claim it is a bit ingenuous for the pharma industry to then claim that the cost of capital, what the pharma company would have made on the market instead of a new drug, should be considered part of the cost of R&D, especially when developing a new drug is the business of the pharma company, not to invest money. And when that cost of capital calculation ends up as half of the claimed $800 million R&D costs.
There are some other challenges in the Light paper too, about inflation of individual per-patient trial costs, exaggerated time for total development (52 months preclinical, 72 months for trials and 18 months for review, or 11.8 years), and the claim that only 1 in 10,000 compounds ever make it to the marketplace, the use of median costs instead of means to counter the shifting effect of outlier data points, i.e., more expensive or large trials. When all is said and done, the Light group claim that the average cost of the "D" part of bringing a drug to market is more like $59 million based on the 2000 data in the Tufts study. In today's dollars that would be $75 million average, or $55 million median.
Not so fast, says research scientist Derek Lowe in his blog In the Pipeline. He challenges that it is a lot harder than people think to come up with compounds and targets that actually have some potential clinical benefit while remaining safe enough for human use, and that you can't simply not count discovery research costs simply because they are harder to identify. From my own perspective on the clinical side of things, during the time represented by the Tufts study, we were routinely running $20 million/year clinical budgets to develop an antiretroviral medication for CMV, and the study sizes were relatively low, just a few thousand patients. The clinical development period of that product was around 5 years if memory serves, and of course it was an accelerated program since it was largely developed for HIV+, full-blown AIDS patients.
Later this week we saw two other articles make the rounds: one from CenterWatch that pleaded the pharma manufacturers case that if only they could get longer data exclusivity, companies would be able to innovate again and patients would live longer. Extending data exclusivity to 12 years would net the pharma companies 5% additional profits, resulting in 228 new drugs over the next 50 years and increasing the average person's lifespan by...wait for it...1.7 months. The article is here.
And lastly, today's paper had a piece that got some pretty strong reactions from all sides, where KV Pharma announced that injections of their drug Makena, which now cost $10-$20 per dose, next week will cost $1500, the total cost to the patient ranging from $27,000 depending on length of gestation. The company's CEO defends the price increase by pointing out that PICU care can cost $51,000 or more, and Makena can defray some of that cost. The reason for the change? Makena is a newly approved form of progesterone that until now was provided by compounding labs for literally a few cents worth of chemicals. Compounding will no longer be legal now that an approved version is available. KV Pharma has had all kinds of problems recently, having entered into a consent decree for making and distributing adulterated and unapproved drugs, pleading guilty to two criminal fraud for failing to report oversize tablets to the FDA, but all that seems to be in the past now. Their stock is up from $1.50 in early February to close at $12.64 today.
3/18/2011 - Tufts Center response is here; an op-ed on the PharmaExec blog is here.
There have been several pieces in the trade and popular press this week about the cost of clinical development of new drugs. This discussion is really about drugs, not devices, as not only the costs but the way devices are researched, evaluated and cleared can be quite different. Here is a rundown:
Slate published a piece by Timothy Noah on March 3rd called The Make Believe Billion, which takes a critical (does that surprise you?) look at Big Pharma's oft-quoted and not-often challenged claim that it costs $800 million (in 2000 dollars) and takes 12 years to bring a new drug to the patient. These figures, adjusted upwards for inflation, are used by the Big Pharma lobby with roaring success to justify the high cost of brand-name prescription medicines. The two numbers come from this 2003 study published in the Journal of Health Economics. The lead author is economist Joseph DiMasi who was working for the Tufts University Center for Drug Development, an academic, non-profit study group that welcomes corporate sponsorship. Because of the Tufts connection of DiMasi, most of the time that you see the $800M/12 year figures cited, the source of the data is often cited as the Tufts Center.
The Slate piece discovers a new challenge to the $800M claim in a study (PDF) published last month in the London School of Economics' BioSocieties journal by Princeton's Donald Light and University of Victoria's Rebecca Warburton. Following along in the vein of The $800 Million Pill by Merrill Goozner, the Light study takes apart the source data the Tufts group used to develop their results, citing various problems.
First, the Light paper challenges the sampling of data used to feed the model. In the Tufts study, financial information was requested from 24 companies, 10 of whom ultimately submitted data via confidential survey. Because the data were collected in a confidential form, they are unverifiable by independent means, say the Light group. And because the results are based on data submitted by self-selected companies that agreed to share their data, there is no true random sampling from a larger population of data. The Tufts study does not describe any efforts to verify the reported data, so there is no way to determines whether the R&D costs are uniformly reported from sponsor to sponsor. Additionally it is not clear whether or how much of the data reported are R&D costs for self-originated new chemical entities (NCEs), which according tot he same Tufts group are 4.4 times more costly to develop than in-licensed NCEs, which are in turn 3.4 times more costly than non-NCE variations on existing drugs. Only 35% of new drugs developed during the reporting period (1990-2000) were NCEs, and even fewer were self-originated, or developed in-house.
The second challenge of the Light paper comes from the exclusion of discovery costs reported as part of the R&D figures used for the $800M calculation. The reasons for this are multiple: discovery costs are much harder to tease out as discrete portions of R&D budgets because there are no recognizable chunks of work like phase 1, 2 or 3; often several compounds or targets are researched together under one budget line item; basic research is often carried out by entities other than pharma companies, like universities or the government; and sometimes new therapies are discovered quite by accident, like penicillin. To solve this problem, the Tufts group simply factored in an average cost of $121 million and 52 months of development time, without any data to support the figures.
Thirdly, the Light group argue against the Tufts claim that tax breaks and taxpayer subsidies for pharma companies should not be discounted from the total R&D cost. The Light paper argues that this might be reasonable if R&D were depreciated over time like over long-term investments, but they are not: R&D costs are deducted from profits each year that they are incurred. This effectively creates a 100% tax deduction every year. According to a 1993 US Office of Technology review of pharma research costs, the net savings was nearly 50%, and this was at a time when the top marginal tax rate was 46%. Now that the top rate is 35%, the Tax Policy Center puts the average tax savings on R&D per year at about 39%, yet these discounts do not appear in the Tufts study.
The fourth large challenge to the Tufts study is in the assumption that half of R&D costs are accounted for by the 'cost of capital', in other words, returns that did not materialize from investing that same money in the market instead of using it for research, assuming an 11% return in the period under study. Calculating the cost of capital is a common method for corporations to decide whether to pursue new projects, but the Light authors claim it is a bit ingenuous for the pharma industry to then claim that the cost of capital, what the pharma company would have made on the market instead of a new drug, should be considered part of the cost of R&D, especially when developing a new drug is the business of the pharma company, not to invest money. And when that cost of capital calculation ends up as half of the claimed $800 million R&D costs.
There are some other challenges in the Light paper too, about inflation of individual per-patient trial costs, exaggerated time for total development (52 months preclinical, 72 months for trials and 18 months for review, or 11.8 years), and the claim that only 1 in 10,000 compounds ever make it to the marketplace, the use of median costs instead of means to counter the shifting effect of outlier data points, i.e., more expensive or large trials. When all is said and done, the Light group claim that the average cost of the "D" part of bringing a drug to market is more like $59 million based on the 2000 data in the Tufts study. In today's dollars that would be $75 million average, or $55 million median.
Not so fast, says research scientist Derek Lowe in his blog In the Pipeline. He challenges that it is a lot harder than people think to come up with compounds and targets that actually have some potential clinical benefit while remaining safe enough for human use, and that you can't simply not count discovery research costs simply because they are harder to identify. From my own perspective on the clinical side of things, during the time represented by the Tufts study, we were routinely running $20 million/year clinical budgets to develop an antiretroviral medication for CMV, and the study sizes were relatively low, just a few thousand patients. The clinical development period of that product was around 5 years if memory serves, and of course it was an accelerated program since it was largely developed for HIV+, full-blown AIDS patients.
Later this week we saw two other articles make the rounds: one from CenterWatch that pleaded the pharma manufacturers case that if only they could get longer data exclusivity, companies would be able to innovate again and patients would live longer. Extending data exclusivity to 12 years would net the pharma companies 5% additional profits, resulting in 228 new drugs over the next 50 years and increasing the average person's lifespan by...wait for it...1.7 months. The article is here.
And lastly, today's paper had a piece that got some pretty strong reactions from all sides, where KV Pharma announced that injections of their drug Makena, which now cost $10-$20 per dose, next week will cost $1500, the total cost to the patient ranging from $27,000 depending on length of gestation. The company's CEO defends the price increase by pointing out that PICU care can cost $51,000 or more, and Makena can defray some of that cost. The reason for the change? Makena is a newly approved form of progesterone that until now was provided by compounding labs for literally a few cents worth of chemicals. Compounding will no longer be legal now that an approved version is available. KV Pharma has had all kinds of problems recently, having entered into a consent decree for making and distributing adulterated and unapproved drugs, pleading guilty to two criminal fraud for failing to report oversize tablets to the FDA, but all that seems to be in the past now. Their stock is up from $1.50 in early February to close at $12.64 today.
3/18/2011 - Tufts Center response is here; an op-ed on the PharmaExec blog is here.
Wednesday, March 2, 2011
Vulnerability and Informed Consent
I spent most of today discussing ethics in clinical trials at a conference produced by Leo Intelligence in San Diego with a fascinating group of people from IRBs, sponsor companies, and CROs. It was a really good small meeting, and I hope they put it on again next year and give it a chance to grow.
In the morning we reviewed how the relentless drive for new, willing, and preferably treatment naive patients is pushing clinical research out to farther and farther away places, countries that may have weak, stressed or crumbling health care delivery systems that struggle to serve their citizens' basic medical needs. We discussed some of the major ethical policy issues of international clinical research, especially in developing countries, such as placebo controls, clinical trials as treatment or even marketing, and vulnerability and consent. (The slide set for this talk can be found here.) Some countries have legislated and developed and invested, such as India and Brazil (and other South American countries), many countries of the post-WWII east. Some countries have grown a clinical research enterprise out of the opportunism of a health crisis, such as Russia and the Ukraine following the Chernobyl disaster. Even in these countries we see challenges in obtaining truly informed, voluntarily given consent. Cultural differences can take the standard western idea of consent and stand it on its head.
For example, the Belmont Report's first principal of respect for persons, usually defined as the autonomy of the individual, is considered a universal ethical truth, one which even the ethical relativists can accept as valid for all. Except that in many non-Western cultures where the collective is valued above individual - where "the needs of the many outweigh the needs of the few, or the one" - the idea of a patient making a decision to participate in a clinical trial based on her self-interest quite stretches the imagination.
Now consider this same patient, who has little experience making a decision that is not at least informed by or simply made outright for her by another member of her family, and add to that the fact that she cannot read; not her own language and certainly not English. Then add finally the factor that her physician is an even more powerful figure in her life than her husband or father, and whatever he (or she) says has the weight of the voice of God himself. Now the idea of slapping a 19 page consent form in front of that patient, getting her signature or mark, and going to sleep at night believing that we have met our obligation to obtain true, voluntary informed consent to participate in a study is truly laughable.
And yet that's what we do.
And this is not all. This afternoon's keynote speaker was Andy Mikulak, of Max's Ring of Fire, who gave a patient's perspective of participating in clinical trials. Andy is not a researcher, or IRB member. He is a father, and his son Max taught Andy much about participating in clinical trials - right up until the time he died of neuroblastoma at age 7. Since Max's death Andy has coped with his grief by becoming a patient advocate and raising money and awareness for pediatric cancer research. Check out the website and click on a couple of videos. Your eyes will not stay dry.
Andy gave a short talk intended to explain to us why patients go into clinical trials, and what we could do to make the experience better and more useful for patients. He said patients go into trials to live, to survive, and sometimes because they cannot get treatment for their serious disease any other way. He suggested to researchers that if they meet their patients' needs, their own needs for data and results will be met. He also admonished us for making informed consent forms too complicated. He said that he and other patient families routinely seek out other patients for 'true' information' about trials, because the sponsor/IRB provided documents are written "to protect the institution first, and inform the patient second". He said the language used in consents did not meet his needs or those of other patient families: the language was too obtuse and not intended to inform. There is too much protectionist, defensive language. And this is not a guy who cannot read beyond the 6th grade level; Andy had no problem discussing the preclinical data of various chemo agents his son was treated with, so the issue was not the level of the language, but that the language was not intended to inform.
This got a big response from the IRB members in the room, whose nominal role is protect patients, yet some IRBs seem to be a driving force behind the ever-lengthening consents in recent decades. When I have asked them why, the most prevalent reason seems to be: "we want to anticipate patient questions so in case they don't know what to ask, it's all there in the document." Fair enough; many patients don't know what to ask or are too timid to ask. But why then do we not train and then empower the investigator to provide information, to anticipate questions and prompt for them? Have we completely abandoned the investigator's role in providing risks and other information to patients? (For information about the learned intermediary and its rise and fall in the pharmaceutical world, as well as clues as to how we became so protectionist, see Perez v Wyeth Labs.) It seems that instead of using the consent form as the documentation of the consent conversation, and the basis for discussion, we are allowing the form to replace the process almost entirely.
And in the end, studies show that many patients - western and non-western alike - do not understand that they are involved in a study, that they have right to withdraw, what the risks are and that they may receive treatment with a comparator (or placebo). So clearly the answer isn't to be found by adding more pages to the consent form other than to make the institution's lawyers feel better.
The plane is boarding. Next post, some thoughts about where the low hanging fruit might be found; how we can minimize the mistakes that we make and better protect the patients we study.
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