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Health policy experts debate cancer drug prices at UH Law Center-sponsored event

Jenny Bryant, a senior officer with a pharmaceutical trade association, argues federal pricing caps would have a chilling effect on drug research during a discussion on the high cost of cancer medications. UHLC Professor Seth Chandler, standing, moderated the panel that included Dr. Hagop Kantarijian of M.D. Anderson Cancer Center, left, University of Texas School of Public Health student Jake Casanova, and Dr. Daniel McCoy of Blue Cross/Blue Shield of Texas.

Sept. 23, 2015 – Health care professionals, insurance and pharmaceutical industry representatives squared off recently to debate one of the most contentious issues in U.S. health care – whether drug companies are gouging patients on the cost of cancer drugs.

The half-day symposium, “Pharmaceuticals Without Borders,” was hosted by the Health Law & Policy Institute at the University of Houston Law Center and the University of Texas School of Public Health. The Sept. 9 event at the UTSPH campus in Houston’s Texas Medical Center was moderated by Professor Seth Chandler, former director of the Health Law & Policy Institute. Dr. Michael Ewer, a cardiologist at M.D. Anderson Cancer Center and a lawyer who is an adjunct professor at UH Law Center, was one of the leading organizers of the conference.

Ewer gave an historical review of how the pharmaceutical industry interacted with physicians in the past, including giving direct gifts and helping them write professional papers. Ewer also discussed what some see as excessive marketing or inappropriate marketing by drug companies, including directly to consumers.

Ewer advocated a proactive, rather than reactive, approach to the high cost of drugs that includes negotiating drug prices, maximizing price to a small increment above what is charged in other countries, and eliminating direct-to-consumer marketing.

Dr. Hagop Kantarijian, a leukemia specialist who teaches at UTSPH and practices at M.D. Anderson Cancer Center, who has been quite vocal in local and national media with his concerns about the high price of cancer medications, mentioned that he has begun an online petition drive calling for congressional intervention.

Kantarijian said that for wealthy people in the U.S., the cost of such medications is not a problem. But for people of moderate or low incomes, especially elderly people on fixed incomes, they present a Hobson’s choice.

“Once you get cancer, you’re going to waste all your resources because you need those drugs and you’re going to be humiliated by the system,” Kantarijian said. Patients face tough decisions between taking the medications and impoverishing themselves, he said.

Kantarijian refuted what he called the “tired and tiring” justifications posed by the U.S. pharmaceutical industry for high cancer-drug prices:  the high cost of research for successfully developing drugs; the relationship of cost to benefit; that market forces settle drug prices at a reasonable level; and that governmental efforts to cap drug prices will stifle innovation.

“There’s almost no correlation between the price of the job and the benefit,” he said. “There’s an oligarchy. There are a few major pharmaceutical companies that have decided not to compete on prices.

Dr. Michael Ewer, a physician at M.D. Anderson Cancer Center and a visiting professor at the UH Law Center, left, and UHLC Professor Seth Chandler, listen to M.D. Anderson's Dr. Hagop Kantarijian who has called for congressional review of the high cost of cancer drugs.

Kantarijian said the main obstacle to lower drug prices is what he called the “lobby-driven” Medicare Reform Act of 2003, which prohibits the federal program from negotiating drug prices. (It was pointed out by an audience member that another governmental entity, the Veterans Administration, can negotiate prices.)

Jenny Bryant, senior vice president for policy and research with the trade association PhRMA (Pharmaceutical Research and Manufacturers of America), advanced the case that any governmental efforts to cap drug prices would in the end be harmful, since they would stifle innovation.

“I think we can disagree about many specific policy proposals, while agreeing that we need to reduce health care costs in America and get to a system that matches payment with value for medicine,” Bryant said. “But I think that a lot of the proposals we’re talking about are so reckless and so dangerous that they would send a very deep chill into the market and the ability of researchers to bring new medicines forward.

“The pipeline in the prescription drug industry is bursting,” Bryant said, with about 7,000 drugs in development. But only about 12 percent of medications successfully make it all the way through trial stage to approval by the Federal Drug Administration, she added.

“The path is just littered with failures. And part of what we’re talking about is who should pay for the failures,” she said. “Somebody has to pay for the ongoing research and the setbacks that we learn from and are the building blocks of future breakthroughs, but that never make it to market.”

Bryant said the pharmaceutical industry invests approximately $50 billion a year in applied research, almost twice the amount spent by the National Institutes for Health, a federal agency, on basic research.

“That’s actually where a lot of the cost is and a lot of the risk is,” she said, adding that after many drugs get to market, they never achieve the sales necessary to recoup the cost of development.

Bryant said the cost of medications, including cancer drugs, should be considered in light of what it might later cost to not treat patients with medications, including increased hospitalization rates and nursing home stays,

“The question we could agree on is how do we make health care affordable for patients? How do we make sure benefits are generous enough to help patients afford what they need? How do we make sure health plans can manage the unpredictability of this and they have risk-adjustment systems so that they don’t have to discriminate to avoid sick patients? But there’s not a lot of evidence that drug costs are completely unsustainable,” she said.

In his own remarks, UHLC’s Chandler discussed a litany of problems associated with the pricing of drugs of all types, not just for cancer. Among the most prominent is the assignment of intellectual property rights on products developed with federal funding under the 1980 Bayh-Dole Act.

“While the (federal) agencies may be correct that they do not have the power under existing law to interfere with pharmaceutical pricing under that law, it would gall me if my tax dollars were being used for research only to find that the resulting drugs that were either priced out my reach or within my reach only because my insurance premiums or tax dollars have paid more than cost,” he said.

Dan McCoy, M.D., vice president and chief medical officer of the insurance carrier Blue Cross/Blue Shield of Texas, said much of the problems with the pricing of drugs, including cancer drugs, stem from political decisions made decades ago.

But while “specialty drugs have a significant financial impact,” he said, much of the “perfect storm” of spiraling drug costs has more to do with consolidation within the pharmaceutical industry.

“We do have to focus on total costs. I don't think it's sustainable. And price is a component of that,” he said.

Joel Lajeunesse, vice president of the pharmacy division of M.D. Anderson Cancer Center, said that “we haven’t really had a value discussion” about pharmaceuticals.

“Hospitals must look for strategies to manage the high cost of drugs,” he said.

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