Posts Tagged ‘pharma’

lunch with the most hated man in America

Friday, October 28th, 2016

This week the FT invited the personification of US corporate greed to lunch. He is Martin Shkreli, a 33-year old American entrepreneur. Some background is useful for this FT interview. I culled the following from Wikipedia.

Mr Shkreli was born in Brooklyn, NY, to Albanian and Croatian immigrants who worked as janitors. He dropped out of high school before his senior year, and managed to earn a BA in business administration from Baruch College in 2004. He was a very successful businessman, co-founding two firms (a hedge fund and a biotechnology firm) before founding Turing Pharmaceuticals.

In September 2015, as CEO of Turing Pharmaceuticals, Shkreli obtained the manufacturing license for Daraprim, a life-saving drug for AIDS and cancer patients, and immediately raised its price from US$13.50 to US$750 per tablet. This lead him to be known as the “most hated man in America”. (more…)

tax avoidance vs tax evasion

Wednesday, December 2nd, 2015

Last week I posted a TdJ on the ‘takeover’ of Pfizer, the US pharmaceutical giant, by Dublin-based Allergan, a move that allows Pfizer to move its company headquarters to Ireland. British economist John Kay (born 1948) has since published a column explaining that the planned merger is legal tax avoidance rather than illegal tax evasion.

Allergan (formerly known as Actavis and before that as Watson) describes itself as pioneering a new model in the drug sector. This model appears to be that of an investment company trading pharmaceuticals businesses.

Dublin-based Allergan is as authentically Irish as an empty bar on a Saturday night; its operational headquarters are in New Jersey.

The planned merger is a tax inversion, a device that enables a US company with accumulated profits overseas to use them more freely without incurring US tax liability.

John Kay, “The fine line between tax evasion and avoidance“, Financial Times, 2 December 2015 (metered paywall).

There is much more in the full column. In a few days it will be possible to download a free, ungated version of the column from Mr Kay’s home page.

 

tax avoidance by Pfizer

Friday, November 27th, 2015

Why did Pfizer, the huge US pharmaceutical company, merge with Allergan, a company registered in Ireland? The answer is simple. The merged company, now domiciled in low-tax Ireland, becomes more profitable at the expense of US taxpayers. There is no other reason for the two companies to merge.

At the request of a loyal TdJ reader, here is information that I gleaned from an editorial published yesterday in the Financial Times. Why do companies do such things? Because they can get away with it. Why do they get away with it? Good question. I suspect it is because they have a lot of money, and politicians need money to finance their expensive campaigns for election.

America’s pharmaceutical companies sometimes seem to be on a one-sector mission to alienate the entire US public. After a summer during which groups such as Gilead and Valeant regularly hit the headlines for charging eye-poppingly high drug prices, attention has now turned to the neuralgic practice of tax avoidance.

It follows the announcement this week by Pfizer of a $160bn merger with Allergan, an Irish-registered pharmaceuticals company. The deal, while vast in scale, has but limited industrial logic. Its principal purpose is to allow the US giant to cut its tax bill by re-domiciling overseas.

So-called “inversions” have long been a dirty word in the US. …. Drug companies are among the biggest practitioners of inversions. ….

Drug companies’ enthusiasm for tax arbitrage sits uncomfortably with the sector’s dependence on official support. This goes beyond the US legal framework and the protection it offers for intellectual property. Pharma companies benefit from taxpayer-funded research through such bodies as the National Institutes of Health and the National Science Foundation. Drugs purchases worth billions of dollars each year are funnelled through federally funded buyers such as Medicare and Medicaid.

Obama should close Pfizer’s tax loophole“, Financial Times editorial, 25 November 2015 (metered paywall).

big pharma payments to physicians

Monday, August 19th, 2013

Two professors from the Rady School of Management, University of California-San Diego, joined by an economist from the University of Washington School of Public Health, have analysed data of  “Dollars for Doctors: How Industry Money Reaches Physicians”, hosted by ProPublica, a consortium of independent journalists .

Their findings are interesting, but not surprising. Medical doctors are human and, like the rest of us, respond to incentives.

The ideal of healthcare provision is embodied in the Hippocratic Oath: “I will prescribe regimens for the good of my patients according to my ability and my judgment…” In this paper, we evaluate whether a physician’s judgment about prescriptions is in part influenced by non-patient sources: those of large, well-financed pharmaceutical companies. ….

Using data from twelve drug companies, more than 330,000 physicians and nearly one billion prescriptions, we find that when a drug company pays a doctor he is more likely to prescribe that company’s drugs. A payment from a pharmaceutical company corresponds to, on average, an additional 29 Medicare prescriptions per year, and this number rises to nearly 100 prescriptions if the payment is at least $1000. Our specifications are stringent, accounting for pharmaceutical firm, state, specialty, and even physician fixed effects. At least some of the evidence reflects rent-seeking behavior on the part of doctors. For example, we find that pay matters for prescribing behavior even among drugs with identical, generic alternatives. Moreover, the pay-for-prescription sensitivity is greater for doctors among high-corruption states and for male doctors. ….

Given that the balance of our evidence is best explained by either persuasive advertising from drug companies or rent-seeking behavior from doctors, to a less-cynical reader our findings should be a call to consider outside influences when taking in medical advice.

Joseph Engelberg, Christopher A. Parsons and Nathan Tefft, “First, Do No Harm: Financial Conflicts in Medicine“, University of California-San Diego, 13 August 2013.

fake science

Monday, April 2nd, 2012

The current issue of Nature contains a damning article on the unreliability of results from cancer research.

The scientific community assumes that the claims in a preclinical study can be taken at face value — that … the main message of the paper can be relied on and the data will, for the most part, stand the test of time. Unfortunately, this is not always the case. ….

Over the past decade, before pursuing a particular line of research, scientists (including C.G.B.) in the haematology and oncology department at the biotechnology firm Amgen in Thousand Oaks, California, tried to confirm published findings related to that work. Fifty-three papers were deemed ‘landmark’ studies [because they were published in prestigious journals and received multiple citations]. It was acknowledged from the outset that some of the data might not hold up …. Nevertheless, scientific findings were confirmed in only 6 (11%) cases. Even knowing the limitations of preclinical research, this was a shocking result. ….

[A]n attempt was made to contact the original authors, discuss the discrepant findings, exchange reagents and repeat experiments under the authors’ direction, occasionally even in the laboratory of the original investigator.

C. Glenn Begley & Lee M. Ellis, “Drug development: Raise standards for preclinical cancer research“, Nature 483 (29 March 2012), pp. 531–533.

Writing for Nature, the authors were careful to assert “These investigators were all competent, well-meaning scientists who truly wanted to make advances in cancer research”.

Conversing with a journalist, Begley was more candid:

Begley met for breakfast at a cancer conference with the lead scientist of one of the problematic studies.

“We went through the paper line by line, figure by figure,” said Begley. “I explained that we re-did their experiment 50 times and never got their result. He said they’d done it six times and got this result once, but put it in the paper because it made the best story. It’s very disillusioning.”

Sharon Begley, “In cancer science, many ‘discoveries’ don’t hold up“, Reuters, 28 March 2012.

Ms Begley, the reporter, is not related to C. Glenn Begley.

Publication of poor, non-replicable research results is not limited to medicine, or to biology. In may fields, researchers engage in sensationalism to get published in a high-profile journal and further their careers. At least in experimental sciences, there is the possibility in principle of attempting to replicate research results. In non-experimental quasi-sciences like economics, we don’t even have that luxury. Data-mining is rampant in econometrics. Caveat emptor.

HT Arnold Kling

superbugs from India

Saturday, March 31st, 2012

Overuse of antibiotics and poor sanitation in India have created a very nasty form of antibiotic-resistant bacteria against which even last-resort drugs are powerless. Thanks in part to medical tourism, these superbugs will be coming soon to a hospital near you.

[I]n 2010, a study of a New Delhi-area hospital found that 24 percent of bacterial infections there could resist the last-resort carbapenem antibiotics. Thirteen percent not only resisted carbapenem drugs, but overcame 14 other antibiotics, making treatment options exceedingly limited. The gene that conferred this extreme drug-resistance was dubbed “New Delhi metallo-beta-lactamase 1” or NDM-1. Scientists found that, unlike other drug-resistant bacteria, NDM-1 bacteria are able to quickly and prolifically spread their genes to other bacteria, easily jumping the barriers of species and genus. The pandemic potential of such a microbe is enormous. Indeed, according to Tim Walsh, a University of Cardiff medical microbiologist who has been chasing the dangerous gene, NDM-1 infections already turned up in more than 35 countries last year — often in the bodies of medical tourists, who had traveled to India or Pakistan for cheap surgeries and other procedures.  And NDM-1 bacteria have also been found in drinking water and in puddles around New Delhi. ….

[T]here are only two imperfect drugs that can treat NDM-1 infections. The first, an antibiotic called colistin, was first sold over fifty years ago and fell into disuse in the 1980s, when less toxic drugs were developed using more modern methods. The second, tigecycline, is a pricey intravenous drug approved only for soft-tissue infections, not the urinary tract infections and pneumonias that comprise the majority of hospital-acquired infections. With more frequent use of these two limited drugs, it will be only a matter of time before NDM-1 bacteria can resist them as well.

Sonia Shah “When Superbugs Attack“, Foreign Affairs, 28 March 2012.

Science journalist Sonia Shah is author of The Fever: How Malaria Has Ruled Humankind for 500,000 Years (Farrar, Straus and Giroux, 2010). You can view her slide show here.

subsidies for big pharma

Saturday, October 2nd, 2010

George W. Bush’s $600 billion subsidy of prescription drugs for seniors (Medicare Modernization Act of 2003) was a bonanza for pharmaceutical companies, but did it reduce expenditure on other health care services or improve the lives of seniors? Apparently not, concludes a study of the records of 12,000 nationally representative seniors who were interviewed four times a year from 2000 through 2007.

The authors find that … “gaining prescription drug insurance … was associated with [a] 63 percent increase in the number of annual prescriptions.” The increase in prescriptions filled had no discernable effect on the use of other health care services or on health status as measured by functional status or self-reported health.

Robert Kaestner and Nasreen Khan, “Medicare Part D and its Effect on the Use of Prescription Drugs, Use of Other Health Care Services and Health of the Elderly”, NBER Working Paper No. 16011, May 2010.

Summary by Linda Gorman.

kidney transplants and dialysis

Tuesday, December 15th, 2009

Outrageous news from the USA.

Although Medicare is primarily an insurance program for older Americans and the disabled, it has since 1973 covered those with end-stage renal disease, regardless of their age or condition.

The federal program now pays for most costs associated with dialysis and transplantation. But for patients younger than 65, coverage of the anti-rejection dugs — which can run from $1,000 to $3,000 a month — ends after three years. If patients cannot afford the medications, they may lose their donated kidneys and have to return to dialysis while awaiting another transplant.

The policy is widely regarded as pound-foolish. Medicare spends an average of $17,000 a year on kidney transplant recipients, most of it for the anti-rejection drugs, compared with $71,000 a year on dialysis patients and $106,000 for a transplant.

Kevin Sack, “Plan for Kidney Drugs Spurs Division”, New York Times, 15 December 2009.

House Democrats have tabled a proposal to extend Medicare coverage of transplant patients beyond the current limit of 36 months. To pay for the extra coverage, the proposal requires Medicare to “set a flat fee for dialysis treatments and related medications that some providers say would not cover costs”. Those in the business of providing dialysis are lobbying against the proposal. This “supporters of the measure fear … may make it easy for Congress to kill the provision altogether”.

The news story raises a number of questions. Isn’t it possible for a country as wealthy as the USA to provide proper medical care for those who suffer from kidney disease? Why does provision of anti-rejection drugs to transplant recipients have to come at the expense of caring for those who lack a functioning kidney? Can’t US taxpayers afford to support both groups?

how big pharma prevents competition

Wednesday, December 9th, 2009

The Wall Street Journal‘s Health Blog has an article explaining how Abbott is able to prevent generic competition in its sales of TriCor, a cholesterol-reducing drug first marketed in Europe in 1975. The reason:

Abbott licensed the compound to sell in the U.S. in 1998, and has been jockeying to keep it patented ever since ….

In 1999, a generic drug company that was later acquired by Teva applied to market a generic version of TriCor. Abbott sued for patent infringement, changed the dosage of TriCor and changed it to a tablet from a capsule. Then the company filed for a patent on the slightly modified form of the drug and bought back the capsules that pharmacies still had on their shelves.

Because the company had changed the type of pill and the dosage, pharmacists couldn’t swap in the generic capsules Teva planned to introduce, because they were no longer identical to the tablets Abbott was selling. In 2002, Teva asked the FDA for permission to sell a generic version of the tablets, and Abbott again altered the dosage and formulation.

Jacob Goldstein, “How a Decades-Old Drug Is Still a Patented Blockbuster”, WSJ Health Blog, 1 December 2009.

In March 2011, Abbott’s new patent runs out, which might be good news for Teva and for patients. But don’t get your hopes up, since “last year, the FDA [Food and Drug Administration] approved a new Abbott drug called Trilipix, which is similar to TriCor but which is approved for use in combination with statins, a popular class of cholesterol drug. Now Abbott is busy trying to get patients to switch from TriCor to TriLipix before TriCor goes generic.” The generic name for TriCor, by the way, is fenofibrate.

Thanks to “Mike the Actuary” for the pointer.

marketing prescription drugs

Thursday, December 3rd, 2009

The US Congressional Budget Office (CBO) yeseterday released an 8-page report on how pharmaceutical companies promote prescription drugs.

The way that pharmaceutical manufacturers promote prescription drugs has changed significantly in the past decade. Until the late 1990s, pharmaceutical manufacturers confined their marketing efforts largely to physicians and other health care providers. In the late 1990s, however, drugmakers began marketing directly to consumers—a practice known as direct-to-consumer (DTC) advertising. …. In 2008, spending on DTC advertising totaled $4.7 billion, nearly one-fourth of pharmaceutical manufacturers’ expenditures for all promotional activities. Those developments may be having an impact on the functioning, cost, and effectiveness of the nation’s health care system.

Sheila Campbell, “Promotional Spending for Prescription Drugs”, Economic and Budget Issue Brief, Congressional Budget Office (CBO), 2 December 2009.

Here is some detail, shown in a chart taken from the report:

pharma

The CBO’s data set includes more than 2,000 prescription drugs, only 700 to 800 of which are promoted in any given year. Promotional expenditure almost always includes detailing, but DTC advertising is limited to fewer than 100 drugs in a typical year, and is inevitably accompanied by unusually heavy expenditures on detailing. “Although DTC advertising might spur a consumer to visit his or her doctor, the physician must prescribe the drug; therefore, manufacturers would seek to ensure that physicians were also informed about the drugs they advertised to consumers.”

The report contains much of interest. Especially interesting, to me, was the fact that DTC advertising is heaviest for drugs that have no direct competitors. At first glance, this seems strange. Why should a monopolist want to advertise its product? Two reasons are given. First, a monopolist can set its price above cost, earning monopoly profits on each additional unit sold. Second, if there are few (or no) competing drugs, there is little (or no) risk that advertising will spur demand for a competing product, rather than the advertised drug itself.

A tip of the hat to Catherine Rampell for today’s TdJ.