pharmaceutical industry


Economist Heidi Williams, Genius Award Winner, On Invisible Drug Industry Incentives

Last week, as she was sitting in her office at MIT, 34-year-old economist Heidi Williams got an unexpected phone call. It was from the John D. and Catherine T. MacArthur Foundation, telling her that she had just been awarded a so-called “Genius Award” — a no-strings-attached $625,000 grant that celebrates “the creative potential” of its fellows.

Williams, an assistant professor of economics at MIT, researches how invisible economic incentives affect the kind of cures that the medical industry produces. Her research has found that researchers are more likely to develop cures for late-stage cancer patients than early-stage patients, for instance, and that intellectual property law can limit innovation in genome research.

Radio Boston’s Anthony Brooks spoke with Williams about her research and her award (the interview airs in an upcoming show). Their conversation, edited:

AB: Tell us how you got the news about this award, and your reaction to it.

HW: I got a phone call from an area code that I recognized as a Chicago number. And I was just completely speechless when I answered the phone and talked to them. I’m very early in my career, and I was just completely overwhelmed to hear that I had received a fellowship.

Talk to me about these invisible economic incentives that affect the cures that the medical industry produces. Can you explain how this works?

Researchers working on drug treatments often come up with a lot of ideas, but if you talk to them, many of those ideas just never reach patients. Sometimes you hear anecdotes about the reason why those products never got developed — because of misaligned incentives in the patent systems or because of misaligned incentives in the policy system more generally. I try to explain why some promising scientific leads never get developed into new drugs or medical technologies that consumers or patients actually have access to.

Why are there incentives for late-stage cancer treatment for example, but few for early-stage cancer, or even cancer prevention? What incentives control that?

When new drugs come to market in the U.S., they need to show the U.S. government evidence that the drugs are safe and effective by showing evidence that the drug improves survival. When you need to show that a drug improves survival for patients that are very sick and will die relatively quickly, you can show that in a randomized clinical trial much more quickly than if you need to show evidence that a drug improves the survival of patients that have a longer life expectancy.

Longer clinical trials take more time and cost more money, but also, biotech and pharmaceutical companies almost always file for patent protection before they start their clinical trials. And so every additional amount of time that they’re spending in clinical trials is less time that they have for their patent to actually be generating profits for them once their drug is on the market. Continue reading

Cancer Drug Mark-Ups: Year Of Gleevec Costs $159 To Make But Sells For $106K

A new study finds that a year's supply of Gleevec (imatinib), a leukemia drug, costs about $159 to make, but the yearly price tag is $106,322 in the U.S. and $31,867 in the U.K. (Wikimedia Commons)

A new study finds that a year’s supply of Gleevec (imatinib), a leukemia drug, costs about $159 to make, but the yearly price tag is $106,322 in the U.S. and $31,867 in the U.K. (Wikimedia Commons)

By Richard Knox

The rocketing cost of prescription drugs garners almost daily attention lately. Polls say it’s high on the list of Americans’ health care worries; presidential candidates are calling for sweeping reform; a storm erupts when one company jacks up the price of an HIV drug by 5,000 percent.

And now, research reveals the yawning gap between the price of widely used cancer drugs and their actual cost.

The true cost — what drug makers have to spend to get those pills to your local pharmacy — is made up of the active ingredient and other chemicals, their formulation into a pill, packaging, shipping and a profit margin.

British researchers, in a report to be delivered this weekend at a European cancer conference, say the price of five common cancer drugs is more than 600 times higher than they cost to make.

For instance, the analysis figures the true cost of a year’s supply of Gleevec (generic name imatinib), used to treat certain kinds of leukemia, at $159.

“This is a ginned-up pricing structure that isn’t a product of careful analysis. It’s not a bunch of guys in green eye-shades but a bit of dart-throwing and chutzpah.”

– Dr. Peter B. Bach

But the yearly price tag for Gleevec is $106,322 in the U.S. and $31,867 in the U.K. A generic version costs about $8,000 in Brazil.

“We were quite surprised just how cheap a lot of these cancer drugs really are,” pharmacologist Andrew Hill of the University of Liverpool said in an interview. “There’s a lot of scope for prices to come down.”

Hill’s team got the ingredient costs from a public data base called The Liverpool group did the same analysis for four other drugs in the same class, called tyrosine kinase inhibitors, or TKIs. They’re used to treat lung, breast, liver, pancreas and thyroid cancer as well as leukemias. Their names are Tarceva (erlotinib), Nexavar (sorafenib), Tykerb (lapatinib) and Sprycel (dasatinib).

The true yearly cost of these four drugs ranges from $236 for Tarceva to $4,022 for Tykerb. But their U.S. sticker prices range from $78,797 to $135,679.

The analysis has implications beyond the United States. Hill says more than a million cancer patients around the world meet criteria for taking the five TKI pills. “Very few of them are being treated now,” he says, because the drugs are so expensive.

A 100-Fold Rise

And the implications stretch way beyond these specific cancer drugs. Overall prices for cancer medications have been going up at a fast clip. Dr. Peter B. Bach of Memorial Sloan Kettering Cancer Center in New York has documented a nearly 100-fold increase in cancer drug prices since 1965 after adjusting for inflation.

“The rate of rise exceeds the rise in benefits from these drugs,” Bach says. “This is a ginned-up pricing structure that isn’t a product of careful analysis. It’s not a bunch of guys in green eye-shades but a bit of dart-throwing and chutzpah. And if there’s a critical Op Ed piece or a Twitter avalanche [in response to a high price] they’ll lower it.” Continue reading

Voices: The Hunt For Elusive ADHD Drugs

Some attention deficit disorder drugs are running short around the country, and Massachusetts is no exception. In our report on the shortage and its possible causes, a leading ADHD expert, Dr. Edward Hallowell, says that the recent deficit of the drug Adderall “seems crazy.” He can prescribe substitutes, but otherwise, he doesn’t know what to tell his patients other than, “I guess, ‘Go shopping.’

Around the state, people are indeed going shopping — or perhaps “hunting” is a better word for the quest that many must undertake for the stimulants prescribed to offset Attention Deficit Hyperactivity Disorder.

Some need the medications for themselves, some for their children. Our initial post describes the oddly patchy shortages that one shopper encountered when calling around to various pharmacies in Brookline and Newton. In search of the bigger picture, I turned to Lisa Lambert, executive director of the Parent/Professional Advocacy League, which advocates for children with mental illness. She could teach Facebook a thing or two about social networking, and she kindly sent out our query to listservs run by Mass Family Voices and MassPAC. Nearly a dozen responses immediately rolled in from people struggling to find ADHD medications. Here’s a sampling:

From a Mansfield father of two daughters with attention deficit disorders:
“Just recently, I was getting the prescription filled for one of my daughters, and the doctor had written the usual prescription plus one that was faster-acting, and CVS didn’t have that one in stock — they’ve been backlogged for quite a while.
I pulled up to the drive-through window and the lady told me that for that particular Adderall, they were on back-order; they didn’t have any and they’re finding it’s universal, I probably wouldn’t find it at another drugstore either. I drove away thinking, ‘My God, why would it be a universal drop in that availability?’ There
is an incredible demand for this stuff. How, or in what way, or if at all that plays a role in the lack of its availability I don’t know.”

[Note: His experience jibes with the FDA list of drug shortages, which shows the current crunch largely in immediate-release stimulants rather than longer-acting ones.]

From a mother in Bridgewater, whose daughter takes a 40-milligram dose of long-acting Ritalin — no supply problems with that one — and then in the afternoon, a 20-milligram dose of immediate-release Ritalin. Continue reading

The ‘Oreo Problem’: When Drug Marketers Know Too Much About Doctors

Imagine you’re shopping in the supermarket cookie aisle and a gorgeous, charming salesperson for Nabisco comes up to you and says, “We’ve noticed that you used to buy Oreos, but lately, you’ve switched to Nutter Butters instead. We’d really like to get you back to Oreos. May I offer you these free samples?”

I don’t know about you, but I’d feel a pretty deep sense of offensive intrusion. Yet that is pretty much how it works with prescription drugs: salespeople have immensely detailed information on the prescriptions written by each doctor, and they can use it to make their marketing as specific and effective as possible. Only in the drug industry, it’s much more concerning than the cookie industry.

Prof. Kevin Outterson, co-director of the health law program at Boston University School of Law, points out: “If it’s Oreos, it’s only a snack and I’m buying them for my family. What we worry about for physicians is that they’re making an important medical decision for somebody else. We’re trusting the physician to make the right decision, without inappropriate influence from drug companies.”

In the latest New England Journal of Medicine, online today, Kevin writes here about Vermont’s recent attempt to fix what we could call “the oreo problem” in drug sales. Vermont passed a law that barred pharmacies from selling doctors’ prescribing data to data miners and drug companies — unless the doctors themselves opted in. (Names of patients are protected by HIPAA, the federal medical privacy law, but names of doctors are not.)

The Supreme Court recently shot down that Vermont law, so drug companies remain free to buy information that helps them market their drugs better to each doctor. Kevin’s article analyzes that decision and looks ahead at its implications. We asked him to explain.

Q: Why is this issue important enough to merit inclusion in a top medical journal?

The medical profession has been interested for a while in how pharmaceutical companies are marketing to doctors. They’ve devoted a lot of articles and commentary over the years to whether doctors are making correct clinical decisions or whether they’re being inappropriately influenced by advertising and marketing and promotion.

Being able to identify prescribing patterns is very powerful to the companies. If they send in a drug detailer with a certain tactic, or if they meet with the doctor at a convention, or if they hire the doctor to give speeches, the company can track in real time, every day, the impact of all these activities. If a certain doctor is given free samples of a drug, they can then track over the next weeks or months whether the doctor has written new prescriptions for the drug. If the doctor doesn’t, they can go in and try to modify their behavior. They can ‘punish’ doctors who are not writing the scripts and reward those who do. If they know a doctor has recently switched and is prescribing more of a rival drug, they can go in and say something negative about the rival drug. Continue reading

Peter Kramer: ‘In Defense of Antidepressants’

Dr. Peter D. Kramer

As we’ve noted here and here, The New York Review of Books just ran a two-part essay by Dr. Marcia Angell, former editor of The New England Journal of Medicine, on the ills of modern American psychiatry, with its heavy reliance on sometimes dubious drugs.


Now comes a response, a piece by Dr. Peter Kramer, of “Listening to Prozac” fame, that dominated the front of the SundayReview section in The New York Times. Peter opens with the recent bad press that antidepressants have been getting, including in Marcia’s writing, then asks:

Could this be true? Could drugs that are ingested by one in 10 Americans each year, drugs that have changed the way that mental illness is treated, really be a hoax, a mistake or a concept gone wrong?

This supposition is worrisome. Antidepressants work — ordinarily well, on a par with other medications doctors prescribe. Yes, certain researchers have questioned their efficacy in particular areas — sometimes, I believe, on the basis of shaky data. And yet, the notion that they aren’t effective in general is influencing treatment.

Peter walks the reader through a broad swath of recent research on antidepressants, and writes: Continue reading

What To Watch Out For When Meds Are Discussed Online

The good news: The Internet reaches many patients who are otherwise isolated, and can draw them into helpful communities. Online patient forums are booming on the Web, helping millions connect.

The bad news: Those otherwise isolated patients are also the most vulnerable to biased information that may be propagated online by, say, companies hoping to sell more of their drugs.



That worries Dr. Harold J. Bursztajn, co-founder of the Program in Psychiatry and the Law at Harvard Medical School, an expert in clinician-patient decision making, and a researcher on the pharmaceutical industry’s financial influence on psychiatry. He has served as an expert retained by the plaintiffs in Seroquel-related lawsuits. He has also served as an expert retained by the defense in other pharmaceutical liability lawsuits. He recently gave a talk at the University of Haifa Faculty of Law on the dangers of online marketing of psychiatric drugs, and kindly agreed to help convert it into this guest post combining warnings and tips for the general public.

Dr. Harold J. Bursztajn (Courtesy of HJB)

Readers, have you seen any examples of biased information about prescription drugs in ads or the online patient communities where you hang out? Please share in the comments below.

What to watch out for:

Buried risks — In their official information about medications, some companies may bury the information about risks very far down on the first page, in small print, or a click or two away. For example: this advertisement for Seroquel SR that comes up when you Google depression.

The more the risks appear on your laptop screen or your smartphone on the same page as the benefits, the more likely you’re being given the straight story.

Hidden industry ties — On some online forums, ranging from psychopharmacology listservs for clinicians to consumer groups, members give personal recommendations about drugs without mentioning their industry ties. It is best to trust recommendations from people who explicitly state that they have not had any industry ties rather than people who omit mentioning anything about such ties. In fact, it may be safer at times to trust people who explicitly say they do have industry ties rather than omit any mention of such ties.

Indirect tiesContinue reading