Thanks for taking the time to respond. The purpose of the Op-Ed was to generate discussion about the impact of DTC on drug utilization and what remedies, if any, could be applied at the State level.

Although i totally disagree with you, i still appreciate you\’re post. (but you\’re wrong here :) )…

I recommend the use of supplemental rebates for one major reason: States already receive basic and supplemental rebates for their Medicaid drug programs. Since the audit system is already in place, I believe it is relatively simple to add on to these programs rather than to create new systems.

On drug safety, I also recognize the FDA’s assignment of a black box is imperfect, but it carries the weight of an administrative assessment that is based on evidence. I propose the creation of trust funds to treat serious adverse events (hospitalization, prolongation of an existing hospitalization and events requiring intervention to resolve and events leading to death).

Finally, DTC advertising is protected commercial speach. It is highly biased, incomplete information and contains misleading content. We do not have a GERD, Restless Leg Syndrome, ED epidemic. Some of these drugs may be third-tier in private plans or under strict prior authorization review in public plans; however, physician visits result from these ads and some control (in this case, supplemental rebates) are necessary to offset inappropriate utilization of both the drug and physician utilization.

I like the idea of imposing a threshhold-driven licensing fee on sales reps and other field-based (MSLs, e. g.) emplyees. Sales reps, often within the same corporation, are tripping over each other in the physicians’ offices that are still open to them. In spite of the higher-level sales focus noted by Ed, pharma still believes that saturating doctor’s offices with reps will drive market share. The last estimates I saw for the annual cost of supporting a rep was $200,000 (compensation, sales budget, fringes, incentives, car, etc.) Implicit in my recommendation is the inclusion of contract sales organizations’ personnel.

The pharma market may be “free” but it is inefficient: a small number of sellers (oligopoly) interacts with a small number of payers/buyers (oligopsony). Rebates (volume-driven) are offered to buy market share. This is good, in my view, that you encourage price competition among patented products and thereby reduce monopoly profits. What concerns me; however, is that formulary decisions are cost-driven and, contrary to statements about the clinical rationale behind these decisions, it benefits the manufacturer and payer more than it does the consumer. I have an obvious bias against tiered formularies which, in fact, shift costs to the consumer. Given that tiered formularies are here to stay, I would argue that full disclosure of financial information between pharma companies and payers should be required.

Although this is a subject for another time, use of the tax code and patent law is a viable alternative to the market for incentivizing innovation. These strategies include 1)patent buy-outs (Kremer), prizes (The Edwards proposal), grants (which we do use) and tax credits equal to the social value of innovation (Lybecker-Freeman, to toot our own horn).

To those who dismiss my comments as tax and spend, I respect your position but ask what the alternative is to make the market more efficient? Structural imperfections exist and we have few options for meaninful reform. The Medicare Part D law is a train wreck waiting to happen and pharma will find very unpleasant future scenarios (price controls, reduced reimbursement levels) unless reform starts now.

I’m on holiday and my laptop’s wireless isn’t working so I’m relying on the kindness of a relative who’s letting me potentially crash her desktop. I’ll do my best to get back to you with a reasoned reply Tuesday.

Apologies for the delay

“If the industry wants a free market for pricing and access, it has to pay its fair share or at least make some concessions.”

How is it a free market if one of the players must make concessions? Or, to put it another way, why is it not enough for you that the producer of goods employ thousands of workers, place products on the markets that can turn out unprofitable and lose the company money, and, ultimately, provide products that people want? Seems to me that the producer is already taking on substantial risk with no guarantee of success.

Further, to complicate matters, this industry in particular already has to jump through multiple compliance hoops–FDA, EPA, DoJ, DEA, Medicare, Medicaid–I can’t think of an industry that is more regulated.

When will it be enough? If you had your way, what would be the environment for drug and medical device manufacturers?

“As a producer of social goods it is the perogative of the government to regulate that industry.”

On what grounds do you base that claim? Is there some element in the Constitution that deems government (the U.S. gov’t in particular) is A) A producer of social goods, and B) Is empowered to regulate the government as you describe?

If you would, could you please give a better defense than the Interstate Commerce Clause or the phrase “promote the general welfare” in the preamble. The ICC says nothing about the gov’t being a producer of social goods, and has been far too extensively applied to many aspects it was never intended to do. The general welfare defense is so vague as to be meaningless–one could interpret it to impose complete gov’t ownership of all industries.

Thanks!

I make no apologies for being on the left, some say the radical left, of the political spectrum. If the industry wants a free market for pricing and access, it has to pay its fair share or at least make some concessions. The patient is in no position to make rational choices driven by tiering so I am fundamentally opposed to shifting costs to patients.

As a producer of social goods it is the perogative of the government to regulate that industry.

Are these proposals likely to be enacted? No, pharma’s just too strong even at the States’ level. They may, though, in the face of a higher likelihood of regulation be more willing to make concessions.

I’m not suggesting that nothing needs to change, but this is absolutely not the way to do it.

The tiered co-pays have worked reasonably well in the insured market allowing a person to pay more if a specific item is wanted.

The same concepts need to be incorporated in the gov’t run programs (Medicaid, Medicare Part D). Higher co-pays on branded items will drive business to the cheaper item, when available.