Wednesday, April 23, 2014

The slippery slope between academia and pharma

I want to be very careful about how I present the following information, as I mean to suggest no improper or illegal behavior on the part of any individual.  Instead, consistent with my previous columns on these matters, I mean to suggest that it is a slippery slope when people in academic medical centers join the boards of directors of pharmaceutical companies. The issue is not their honesty or expertise.  The issue is that we lose the expertise of key people in helping us resolve thorny public policy debates.  A further issue is that, in serving two masters, they contribute to the erosion of public confidence in the research and clinical activities of the health care sector.

We start with a story by Andrew Pollack in the New York Times.  The lede:

Record sales of a new hepatitis C drug pushed the first-quarter earnings of Gilead Sciences far beyond expectations, the company reported on Tuesday, but could also heighten concerns about the high cost of the drug, known as Sovaldi, and the ability of the health care system to pay for it.

He explains:

The rapid uptake of Sovaldi to some degree reflects pent-up demand, as many patients were holding off treatment until it was approved in December. The drug, a pill taken once a day, has a higher cure rate, a shorter duration of treatment and fewer side effects than previous treatments.

But Sovaldi, which has a list price of $1,000 per pill, or $84,000 for a typical course of treatment, has become a flash point in a debate over drug prices.

Paying for Sovaldi for all the patients who need it could put financial strain on insurers, state Medicaid programs, the Department of Veterans Affairs and prison systems. UnitedHealth Group, one of the largest insurers, said last week that its first-quarter earnings had declined in part because it had spent more than $100 million on hepatitis C treatments, including Sovaldi, far more than it expected.

Some doctors say there is a benefit to treating even early stages of the disease, to prevent scarring of the liver.

“If cost were not a factor, we would want to treat the entire population,” said Dr. Rena Fox, a professor of medicine at the University of California, San Francisco. She said it was frustrating that “we finally get this great treatment and then we withhold it.”

Now, let's look at the membership of the Gilead Board of Directors.  It is not atypical in including luminaries from many fields, and among the group is Professor Richard Whitley, from the University of Alabama at Birmingham. His compensation from Gilead has been reported as $425,000.  A truly impressive physician, Dr. Whitley is:

Distinguished Professor of Pediatrics, Professor of Microbiology, Medicine and Neurosurgery; Loeb Eminent Scholar Chair in Pediatrics; Co-Director, Division of Pediatric Infectious Diseases; Vice-Chair, Department of Pediatrics; Senior Scientist, Department of Gene Therapy; Scientist, Cancer Research and Training Center; Faculty, Gene Therapy Center; Associate Director for Drug Discovery and Development and Senior Leader, Pediatric Oncology Program, Comprehensive Cancer Center; Director, UAB Center for Emerging Drug Discovery; Co-Founder and Co-Director, Alabama Drug Discovery Alliance. 

He is also "responsible for the National Institute of Allergy and Infectious Diseases Collaborative Antiviral Study Group whose role is to perform clinical trials of antiviral therapies directed against medically important viral diseases of children and adults including viruses considered as threats to human health." 

A more detailed description follows:

Through the NIAID-CASG we perform clinical trials of antiviral therapies directed against medically important viral diseases of children and adults. These include studies of neonatal herpes simplex virus infection, herpes simplex encephalitis, herpes zoster, enteroviral infections of the newborn, therapeutic interventions for congenital cytomegalovirus infections, hepatitis C, and respiratory virus diseases in the immunocompromised host. Work in these areas includes protocol design, assessment of efficacy and toxicity endpoints, application of contemporary clinical trial methodology and monitoring principals, and evaluation of biologic specimens obtained from volunteers in these studies.  [Emphasis added.]

According to this report, Dr. Whitley is an Editor of Antiviral Research, and is a member of the Editorial Boards of the Journal of Infectious Diseases, Sexually Transmitted Diseases, Reviews in Medical Virology, Antimicrobial Agents and Chemotherapy, Antiviral Chemistry and Chemotherapy, Infectious Diseases Watch for Pediatricians, Seminars in Pediatric Infectious Diseases, Gene Therapy, and Medscape Infectious Disease.

As we view all of this, we can only imagine the extent of Dr. Whitley's personal commitment to eradicating disease.  This is truly an outstanding record.  I'd bet, too, that he would strongly support expanded access to Sovaldi for humanitarian reasons.  But in all the searches I have done, I can find no public statements from him concerning the financial issue raised in Andrew Pollack's story.  Indeed, it would be very difficult for someone on the Gilead board to make a statement about such matters, as it would be viewed as inconsistent with the duty of loyalty and care required of corporate directors.

I note that Gilead has made the drug available at a dramatically lower cost in some other countries in the world.  As reported here,

The company’s reduced prices came after the World Health Organization worked with Gilead directly to help spread the drug's usage. So what determines who gets a discount and who doesn't? It's simple. Gilead admits their “global pricing model is based on a country’s ability to pay.”

As for the $1,000 a day American price for the extremely effective (and life-saving) medication, Gilead is holding firm that they “think the price is fair. It’s a one-time cost that is your lifetime cost.”

So, there we have the nub of the issue. An extremely respected scientist with Dr. Whitley's credentials could be among the most qualified in society to "referee" this kind of issue--to help us understand and balance the legitimate financial needs of the pharmaceutical industry with the equally important humanitarian concerns about a drug's availability and cost in America.  He cannot do so while on the board of the company producing the drug. The loss to society is that someone of Dr. Whitley's expertise and compassion is taken out of the public debate on these matters.

Beyond that, what does his silence on this issue say to the country about his duty to two masters, a federally subsidized drug research effort and a pharmaceutical company? What message does that send to the public about how they should view the relationships between academic medical centers and industry? I think it doesn't help either sector retain the public's confidence.
Distinguished Professor, Loeb Scholar Chair in Pediatrics, Professor of Pediatrics, Microbiology, Medicine, and Neurosurgery, University of Alabama at Birmingham - See more at:
Distinguished Professor, Loeb Scholar Chair in Pediatrics, Professor of Pediatrics, Microbiology, Medicine, and Neurosurgery, University of Alabama at Birmingham - See more at:
Distinguished Professor, Loeb Scholar Chair in Pediatrics, Professor of Pediatrics, Microbiology, Medicine, and Neurosurgery, University of Alabama at Birmingham - See more at:


Anonymous said...

Your points, as always, are well taken. The medical community, of course, would argue vociferously that collaboration between industry and medicine benefits patients, which indeed it does. There is also the inescapable fact that, in an era of continual government funding cutbacks for research, industry is quite frankly 'where the money is.'
However, such collaboration does not have to extend to highly paid board membership, by any means. In fact, it raises the question of a quid pro quo, among the other questions you have raised.

The real crime in my opinion is the utter failure of national leadership in medicine to acknowledge, much less address, these issues in considered and thoughtful fashion and to formulate a policy for physicians to follow which is beneficial to all of us and eliminates this sort of criticism.

nonlocal MD

Barry Carol said...

Sovaldi is only the latest example of excessive pricing of new drugs in the U.S. market. I wonder what goes on inside of these drug companies. Do any Board members or members of senior management ever ask themselves just how profitable do we need to be to provide our investors with an adequate risk-adjusted investment return after covering the cost of failures as well as the cost of developing successful new drugs? Instead, they seem to ask how much will the traffic bear? Just because Gilead thinks it can charge $84,000 for an 84 pill course of treatment with Sovaldi in the U.S. doesn’t mean that it should. I would view the business culture throughout much of the prescription drug industry as ethically challenged when it comes to new drug pricing.

I’ve read that it only cost somewhere between $0.80 and $1.60 per pill to manufacture this drug so even the $10 per pill Gilead plans to charge in Egypt will make a meaningful profit contribution, especially at high volumes. The $1,000 per pill U.S. price tag is obscene.

Since Sovaldi does produce a cure for 90% of patients with Hepatitis C, it’s harder for payers to just say no as compared to a new cancer therapy that only provides an extra couple of months of low quality life. It does seem, though, that there is an enormous opportunity for medical tourism here. Why can’t a patient just fly to, say, India and fill a prescription for 84 pills for $2,000 vs. the $84,000 U.S. price? Even if you had to stay for a few days or a week in a nice medical center to ensure that you were tolerating the medication, the savings would be enormous.

Josh said...

I agree it sounds like a foolish move for Gilead to price Sovaldi so high, but isn't that their prerogative, to make dumb business decisions? It's the old lemonade stand conundrum: at $100 per glass, you only need to sell one, right? If Gilead finds that their pricing stinks and nobody can buy, they would have to lower the cost to meet the market. The medical tourism idea sounds fabulous.

Even dumber is the fact that UnitedHealthcare couldn't predict spending so much on Sovaldi. Really? In this era of preauthorizations for everything? They would have had up-to-the-minute data on usage of this expensive new drug. That's just incompetence playing into incompetence. The "health in numbers" people let the numbers get away from them...

Anonymous said...

I've got an about all employers decide not to cover Sovaldi, and shift all of the cost to the consumer. Then, when zero people can afford it, and thousands of companies don't go bankrupt from these Pharmaceutical crooks, the price comes down. This is the problem with our Health Care system; The demand is high, but the consumer isn't on the hook for the the price can be whatever the seller wants. As long as the employers are flipping the bill and don't take any action, there is no incentive for anything to change. In order for capitalism to actually work, and for price to be driven by supply and demand, large and small companies spending a million or more dollars a year on health care costs have to become more proactive. As of right now they are just the whipping post caught in the middle of parties abusing both sides.

Barry Carol said...

I would be somewhat more tolerant of the Sovaldi pricing if it were for a condition covered under the 1983 Orphan Drug Act which is intended to create incentives to develop drugs that treat relatively rare diseases and conditions which I believe the Act defines as affecting 200,000 or fewer people. I’m not sure if that’s a U.S. or a worldwide number. Hepatitis C, by contrast, affects roughly 3 million people in the U.S. and 150 million worldwide. The issue here is more the volume and the potential aggregate cost vs. the price for a course of treatment per se.

The other aspect of this issue that’s unclear is how many people with Hepatitis C are really legitimate candidates for the drug in the short term. People can live with it for quite some time before they suffer harm. Even if there is evidence of liver damage, if this drug can provide a cure, maybe the liver damage would reverse or not cause enough harm to significantly affect quality of life adversely. I don’t know.

As for United Healthcare, Sovaldi was just recently introduced and the first quarter of 2014 was the first full quarter it was available. United could not be expected to be able to accurately forecast how many people would get the drug nor could any other healthcare payer.

More generally, I’m also tired of drug companies pricing drugs to U.S. patients at the maximum they think they can possibly get while agreeing to sell the same drugs in other relatively wealthy developed countries for 25%-50% less. The other countries are basically free riding on the U.S. market and that needs to stop. Selling cheaply in Third World countries is actually fine by me.

Anonymous said...

Barry, years ago I went to an infectious disease education meeting monthly at NIH. They'd serve dinner first. It was sponsored by, guess who - pharma. The rep would sit next to me (a pathologist, who never prescribed anything) and the propaganda would begin - a relentless drone on how much their R and D cost them and how the prices they charged only reflected their ability to recapture those costs. It's really like water torture, drip drip drip. Gilead I'm sure would have the same comments, but really yes, they are charging what they can before their monopoly goes away. Remind you of a certain medical device company that Paul is fond of???

nonlocal MD

akhan13 said...

Asking other countries to pay more or pharma (who never know when they're next blockbuster drug will become available) to lower prices isn't really fair, they each have legal obligations to their citizens/shareholders and are acting within the law. It is on our country to establish common sense public policy to allow our government and CMS to negotiate drug prices and use cost-effectiveness research in planning outlays of taxpayer funds. The real death panels are the ones that have promoted this kind of health system, not ones that would have sought to provide cost-effective treatments.

Barry Carol said...

I know there were instances in the past when CMS and, perhaps, state Medicaid programs successfully pushed back against initial drug company proposals for pricing new drugs. I can envision a number of alternatives that payers could use in paying for Sovaldi. They are (1) refuse to pay for it which is probably unlikely, (2) pay for it for up to a certain number of patients per year on a first come first served basis, (3) use reference pricing and let the drug company try to bill the patient for the remainder and (4) try to negotiate a lower price that would be paid for all patients for whom the immediate need for the drug could be justified.

A Kaiser spokesperson reportedly said that if it were to pay for Sovaldi for all of its hepatitis C patients in the same year which probably numbers between 75,000 and 100,000 people, it would double Kaiser’s drug spending on behalf of its current membership base of 9 million people! I think it’s an untenable situation.

I spent my 40 year career in the money management business so I know something about risk and investment returns. I also personally own stock in a large pharmaceutical company, a health insurer and a drug retailer so I benefit financially when they do well. The fact is, though, that there is more to corporate life than maximizing shareholder value. There are other significant interests that need to be balanced here.

Barry Carol said...

I just want to make two more points about Sovaldi pricing. First, since it has a 90% cure rate, Gilead argues that it could prevent the need for a liver transplant in the future. The problem is that there are currently “only” 17,000 people on a waiting list in the U.S. for a new liver and roundly 6,000 procedures are performed each year. Those are small numbers in the context of three million people infected with hepatitis C in the U.S. and 150 million worldwide.

Second, many of the infected adults contracted hepatitis C as a result of drug use or HIV. Some healthcare workers got it accidentally and others got it as a result of a transfusion with contaminated blood before 1992. The drug users and the HIV patients are expensive users of the healthcare system independent of hepatitis C and will likely remain so even if they were cured of hepatitis C according to one health insurer.

Aside from the potential for medical tourism to get treatment at much lower cost in a country like India, I can envision setting dollar limits on how much Medicare, Medicaid and private insurers are prepared to spend for a drug like this. We already ration organ transplants because there aren’t enough organs to go around. We have elaborate protocols to determine who can even be placed on a waiting list and who will benefit most from a transplant. We could, in theory, do the same thing with Sovaldi because instead of a shortage of organs, we will have a shortage of dollars to pay Gilead’s price. Then, to the extent that there are patients who could benefit from the drug but can’t get it because it’s being rationed, let Gilead’s CEO and BOD defend why they priced it at over 600 times the cost of making it and 100 times what they’re willing to sell it for in Egypt and 158% of per capita GDP. It’s grossly excessive by any standard, in my opinion.

Anonymous said...

it isn't just pharma that has managed to steer academic medicine to its wishes. This week the LA Times reported on a 10 MILLION dollar settlement with the former head of Orthopedics who sued over retaliation after objecting to ties between researchers and the medical device industry. See,0,3924175.story

Anonymous said...

Here's a link to an article in the UCLA school paper about the ties between industry and researchers:

A quote: "The multifaceted relationships between UCLA Health officials and the private donors funding their research have drawn scrutiny recently from experts and members of the university community worried about inherent or ostensible conflicts of interest.

At the forefront is billionaire couple Stewart and Lynda Resnick, two of the university’s most prominent donors and owners of pomegranate juice company Pom Wonderful.

UCLA Health President David Feinberg was on the Resnicks’ payroll as a consultant during a period some funded research took place, earning more than $100,000, according to state disclosure forms.

UCLA maintains that it is dedicated to supporting the public trust.

The FTC mentions several UCLA professors’ studies or comments in its evidence that Pom’s advertising was misleading, including a study released in 2006 conducted on pomegranates and prostate cancer by Dr. Allan Pantuck, the director of the Genitourinary Oncology Program Area at UCLA’s Jonsson Comprehensive Cancer Center. The Resnicks financed Pantuck’s study for almost $480,000."

Anonymous said...

UCLA was also in the news for settling with the former head of their Orthopedics department over a whistleblower situation having to do with undue influence of industry on the department.,0,3924175.story?page=1#axzz2zvmohJWE