David's New Book

Monday, June 29, 2015

Antibiotic Incentives - Marketing vs. Education


“What have you been doing for the last two weeks?” you ask. I’ve been waiting for news on the antibiotic front.  The G7 came out with a completely lame statement that has no specific commitments.  They suggest they meet together again to share ideas for “best practices.”  What we really need is money.  But again, no one wants to talk about that. 

More recently, Consumer Reports published an article that concentrates on aspects of antibiotic stewardship.  While we all agree that physicians and patients should not misuse or abuse this precious resource, Consumer Reports spends almost no time on the issue of animal antibiotic use nor does it discuss measures to improve the antibiotic pipeline.  To be fair, there is another installment yet to come – hopefully these deficiencies will be addressed there. 

In the meantime, I have been giving serious thought as to how to implement the O’Neill incentives in some realistic manner. One area I have been concentrating on is related to the educational component I mentioned in my previous blog.  Here, while respecting de-linkage of marketing from profit, someone must provide education to physicians and caregivers about the new product such that they understand how to use it appropriately.  

One example I will never forget is related to Wyeth’s Prevnar vaccine to protect infants and children from pneumonia, bacteremia and meningitis caused by Streptococcus pneumoniae.  When the marketing group first polled pediatricians as to the need for such a vaccine, only a very small percentage agreed that such a vaccine would benefit their patients.  This was apparently because in any given pediatric practice, the number of cases of such disease each year was very small.  Therefore, individual pediatricians could not see the larger picture.  Wyeth partnered with the Centers for Disease Control in the US as well as with pediatric infectious disease physicians to educate clinicians as to the actual impact of the disease within the US population of children.  With these data, they could then make an educated guess as to the favorable impact of the vaccine that was at that point still undergoing its late stage trials.  At the time of launch, following the educational campaign, something like 70% of pediatricians understood that such a vaccine would benefit their patients. In point of fact, the vaccine and its later improved versions have had an enormous impact on the disease in the US and around the world and are recommended as a routine vaccination for children universally. Prevnar was also the largest dollar volume launch of a product in the history of the pharmaceutical industry at the time. I would say that this was a win-win for everyone. 


While the marketing aspect of the campaign might make people feel queasy, I think that the educational component was clearly necessary and valuable in getting the new vaccine delivered to physicians and patients who then benefited from prevention of a serious and life-threatening disease. Part of any contract for implementation of the O’Neill upfront incentive payment must include a commitment for such an educational effort. This effort could be carried out in concert with professional societies to make sure educational boundaries are respected.  The regulatory agencies will also insist, as always, that the label be respected in any official company-released document.

Friday, June 12, 2015

Pharmaceutical Companies are not Public Health Agencies

A recent article in the New York Times aroused my ire (it happens more and more often these days). The article is about the stance of the pharmaceutical industry on world drug pricing in the context of the ongoing negotiations for a Pacific Trade Partnership deal. An Australian lecturer in public health was quoted as saying that the annex in question should not even be on the table. The annex, it is said, will raise global drug prices by allowing pharmaceutical companies more control over the prices they can charge in participating countries.  The companies want to make countries like Australia more like the US in terms of the pharmaceutical market. No wonder.  The US accounts for about half of all pharmaceutical profits worldwide.  Drug prices are an average of 30% higher in the US compared to the rest of the world. While I don’t agree with the industry that making the world more like the US is necessarily a good idea, I also do not think that using Australia as a model for drug pricing is good for the public health either.

When I was at Wyeth, I remember debates within our commercial organization as to whether it was even worthwhile to market certain products in Australia at the prices the government would allow. The population of Australia is 23 million – smaller than Canada’s 36 million and less than one-twentieth the size of Europe. Some drugs might only be used by a very small number of patients in Australia in any given year. The return on any marketing investment might be quite minimal. Why bother?  Higher prices might make the difference in some cases.  And, admittedly, for some products, a concern for the public health frequently motivates the pharmaceutical industry despite a general view to the contrary. Australia has a particular way of valuing drugs where less frequent dosing, better activity, and greater safety only provide marginal price increases compared to cheap generics. Only “truly innovative" drugs (as they define them) get higher prices.  As such, Australians have some of the lowest drug prices in the world, but lack some therapies that could provide better public health.  For a nice overview on world health pricing, see the WHO report here.

The US is the only country (essentially) that does not have (nor does it allow) national negotiations for drug prices.  Medicare is not allowed to negotiate and neither is the Veterans Administration. This probably explains our higher prices.  It’s the Wild West out there.  Only the large, private, managed care organizations and payers can carry out such negotiations.  What this means, though, is that US dollars drive innovation within the pharmaceutical industry.  Why should the US taxpayer bear this burden compared to the rest of the world? OK – some countries are poor and should not be expected to pay the same prices as in the US.  I agree.  See what Gilead did about that recently. But compared to Europe, which, in spite of austerity and the economic crisis, is not poor, we still pay about 30% more for drugs. 

On the one hand, fewer profits to the industry will translate to less innovation in drug discovery and development.  This is clear – its just a matter of how much of their profits companies invest in research. On the other hand, it seems unfair that the US should bear the brunt of this burden.  Trade negotiations should bring this into balance.  This might involve a greater ability for national drug price negotiation in the US, and less stringent controls in the rest of the world.


Since, on the US side, any change here would require legislation.  And legislation that involves the US government actually spending money probably has as much chance of passing as snow in Miami in August. But one thing is clear to me – the US should not become Australia!

Wednesday, June 3, 2015

Implementing Antibiotic Incentives

OK.  Let’s say that somehow, someone, somewhere comes up with several billion dollars to provide the upfront payments for new antibiotics to fight resistant pathogens. How will this incentive be implemented?  Here are a few considerations in this regard.  I’m sure I have missed many other issues that some of you may be able to point out.

1.     If this is to be a one-time upfront payment of a lump sum as suggested by O’Neill’s report, what is the term of obligation of the pharmaceutical company to supply the new product at low price or free of charge? 
a.     The term should be linked to the exclusivity of sales of the product in some way.  At the same time, therefore, there must be a way for the company to transition to charging some price once exclusivity has expired.  This will incentivize generic companies to produce the product and will help keep prices low after the period of exclusivity.
2.     Who will be responsible for distributing the product to hospitals and other healthcare facilities?
a.     The pharmaceutical company.  They have the systems in place to provide this service whereas governments are generally not equipped to take this on.
3.     Who will decide what kinds of antibiotics are needed and which might be candidates for the incentive payment?
a.     I think that this question will have to be dealt with within each market individually.  In the US, it might be a committee of experts including the Infectious Diseases Society of America, the FDA and perhaps others. In Europe, there might be different answers from different markets within Europe.  For example Greece and Spain might have different needs than the Netherlands.  Here – Europe would actually have to hang together on the financial front (good luck on that).
4.     De-linkage?  I agree with many that the idea of de-linkage could be a good thing.  With an upfront payment for a new antibiotic, the need for marketing to garner sales and perhaps encouraging unnecessary over-use of antibiotics is no longer present or is at least greatly diminished. But no one is talking about education.  That is, when a new product, especially a pharmaceutical product, hits the market, there is a considerable educational need such that physicians understand how and when it is appropriate to use the new product.  With no incentive for the pharmaceutical company to carry out this important educational function – who will do this and how? Will this be left to professional societies like the Infectious Diseases Society of America?  Will the CDC take this on?  If they do – who is paying for that effort? As much as I admire these lofty and important organizations, I do not think they are prepared for this.  And if this is the plan, will these organizations be held to the same restrictions on what they can say (don’t stray from the regulatory label) as a company would?  And how will they reach all the US physicians?  In the US, almost 80% of US hospitals have less than 200 beds and over 50% have less than 100 beds. Who will reach out to those hospitals and how?  Did I hear you say, “Webinars?”  That won’t work in my hospital (less than 100 beds).  In my hospital, someone will actually have to come and provide a continuing education seminar.  Then there will have to be follow-up contacts with the ID physician and the pharmacy. Who is doing that? I don’t have this answer.  Do you?


I am vehemently in favor of the kind of incentives included in the O’Neill report. But I do not yet see a clear path to implementing them. Lets have some help here.