Ineffective Plavix Ads Cost US Taxpayers A Bundle
12 CommentsBy Ed Silverman // November 24th, 2009 // 8:25 am
The price Medicaid paid for the bloodthinner rose 12 percent “immediately” after direct-to-consumer ads began in 2001, and those higher costs added $207 million to Medicaid spending in 27 states during the next four years, even as prescriptions rose at a constant rate, according to a study in the Archives of Internal Medicine.
Pharmacy data from Medicaid programs in 27 states revealed that Plavix sales rose steadily since it was launched and the trend remained constant between 1999 and 2005. But the cost to Medicaid rose by $207 million after ads started running in 2002. And guess what? The price of Plavix was hiked price 12 percent, or 40 cents a pill, when a $350 million ad campaign began.
“Payers and policy makers should be very concerned about the potential for drug advertising to increase health-care costs,” Michael Law, an assistant professor at the Centre for Health Services and Policy Research at the University of British Columbia in Vancouver and one of the authors, tells Bloomberg.
The study was designed to test the effects of DTC ads on sales of the bloodthinner, which is sold by Bristol-Myers Squibb and Sanofi-Aventis and was initially marketed without a DTC campaign aimed at patients. Sales three years before and four years after DTC ads began were analyzed in order to isolate the effect of the ads from promotions to physicians or free samples distributed when the drug was new.
Atlex
Wow! It’s amazing what can make it into journals these days. First, and foremost, the study uses a case study of a single drug in an attempt to suggest that the pharma company raised prices in order to pay for DTC advertising. Nowhere in the study do they actually prove anything beyond the fact that the company took a significant price increase at the same time as they started DTCA. Of course, one can just as easily draw the conclusion that the company undertook DTCA in order to sustain its price increase. After all, price sensitivity would suggest that a significant price increase alone would yield a reduction in sales. Of course, one could also draw the conclusion that the price increase and initiation of DTCA are coincidental.
In addition, the authors readily admits that they don’t account for Medicaid pricing dynamics (ie, rebates) which limit effective price increases to CPI. Since, pharma company’s tend to raise prices at or above CPI each year, and given that utilization trends did not change, the ultimate conclusion is that there was no marginal impact from Plavix DTCA on Medicaid costs.
Atlex
David
Why does one hold the drug company responsible for the behaviors of physicians? It is not the manufacturers who are determining what to prescribe to medicaid beneficiaries. If the government wants to take complete ownership of dictating care, they should make that effort.
Regardless, pointing the finger at manufacturers who are promoting within guidelines is only looking to blame pharma for a system it did not create.
Evelyn Pringle
The Plavix ads represent the worst type of DCA. There is no way a consumer can watch the ad and comprehend the risks and benefits of that drug.
I remember how difficult it was to understand Plavix when I first started investigating the problems with it about 3 years ago.
Every time I see a commercial for that drug I get ticked off to the max.
Doc
One tiny fact is missing in this story.
Since Plavix was approved in the U.S. almost 11 years ago, it has had NO competition, until the last 4 months from Effient (Lilly).
Bristol-Myers and Sanofi have raised the price of this necessary medication (for cardiac stent patients) unmercilessly for over 10 years.
WE taxpayers pay for over 40% of all Plavix in the U.S. via Medicare/Medicaid/ VA/ DOD - why should WE pay these exorbinant prices when WE taxpayers provide 40% of their business?
Discounts on Plavix to VA & DOD are miniscule.
James Cornelius, the BMS CEO, had total compensation of $25 million dollars for 2008.
There is the stench of greed in the air, coming from New York and France.
Plavixer
Thanks for the word, Doc. Here’s a further example. I had a PCI over the summer. Two 300 mg Plavix were given to me at the end of the procedure.
The hospital was charged $300 per _pill_. (Why I wasn’t just given 8 x 75 mg. is anyone’s guess.)
In my own case, private insurance paid it. But I assume DOD/VA, et. al. are paying the same.
atlex
Doc,
You are incorrect about discounts to the VA and DoD, as well as Medicaid; they are quite significant. By law, the baseline discount/rebate on all brand drugs to Medicaid programs is a minimum of 15.1%. If the brand manufacturer gives any private payer a discount in excess of 15.1%, Medicaid must also receive this “best price.” In addition to this, any price increase above CPI must be returned to the state in the form of a rebate. The VA also has federally mandated rebates, but its rebate starts at 24% and has CPI adjustments, as well.
Thus, if a large percentage of Plavix’s price is based on excessive price increases, there is little doubt that Sanofi/BMS are paying substantial rebates to the states.
Atlex
doc
Atlex,
Nice try, but the discounts are minimal relative to the cost of Plavix, which I re-state has been increased significantly over the last 10 years. Remember, this has been a market place with no competitor for 10 years. Sure the feds get best price, but the AWP has been pushed so high, the “discount” is based on outrageous increases in AWP.
atlex
Doc,
I don’t think you understand the Medicaid rebate law for oral products. If a product is priced at $1.00 in the year it is launched, Medicaid automatically gets the product for a net cost of ~$0.85. If the price is increased to $2.00 in year two, while CPI is say 4%. For a Medicaid program, the net cost has only increased to ~$0.89. The pharma company is essentially paying a rebate of $1.11. This is the LAW. The overall change in AWP doesn’t matter; the only increase that is important to Medicaid is up to to level of CPI.
Atlex
Doc
Atlex,
The pricing law is fine, but the donut hole impacts pricing for the majority of seniors that take Plavix, if they need Plavix, they are typically on multiple meds, which takes them into the donut hole earlier in the year. Many, many Medicare patients pay full retail price for much of their Plavix. There is no justification for the price of the drug at this point - but hey, it’s America.
You’ll love this article:
http://www.pressdemocrat.com/article/20091125/OPINION/911249889?Title=PD-EDITORIAL-Big-Pharma-offers-savings-but-only-after-increasing-prices
Plavixer
I’ve lost the relevance of the debate. So the VA gets a better deal. If the price is already through the roof, who cares?
Even the PhRMA guy quoted only had to say that the drugs kept people out of the more expensive hospital (for which, btw, there is no evidence whatsoever as far as Plavix is concerned).
I’ve saved people’s lives directly in my work. Do I now deserve their first-born child?
Doc
Plavixer,
Exactly my point. Of course the Govt gets best price, but the price has gone through the roof over 10 years and the CEO continues to pull down outrageous compensation.
The makers of Plavix never saw the popularity of the drug coming. The advent of drug eluting cardiac stents requiring Plavix therapy for extended periods made the market for Plavix. Virtually none of the company research was done in that setting, the stars aligned perfectly for the drug.
It was hailed in the marketing industry as the best marketed pharma product for 2008. For what? The marketing team had no real impact on usage. The DTC ad campaigns were never needed.
So you have a captive patient population with no competition for 10 years - what do the companies do? Raise the hell out of the price, always in the name of R&D costs.
My only hope is that the general public is beginning to see the bogus arguments made by pharma on pricing.
Plavixer
I see Atlex’s argument if one is not in the donut hole. But, beyond that….
BTW, if someone wonders about my argument that Plavix does not reduce hospitalizations, that is my understanding of current research: no change in hard endpoints including MIs, strokes, and cardiac death. Same is true for DES in general.
Future research, with finer grained distinctions among pt. groups, may show more promising outcomes.