Pharma’s Cutting Edge

It’s a sign o’ the times, as I’ve said countless times in these pages. Payors are attempting to squeeze every last penny from between the links of the prescription-drug value chain. I single out the case of IBX (that’s Independence Blue Cross, the Philadelphia Region’s largest insurer with coverage of ~3.5 million lives) only because I’m a customer–hurray! The same thing is happening everywhere; there’s no place to hide. Recently, IBX announced two “cost-saving” initiatives that will limit consumer choice of new drugs (by limiting reimbursement and/or raising co-pays for innovative medicines) and hit innovator Pharma in the bottom line.

The first initiative is called FutureScript. It’s a PBM run by IBX (IBX is ending its relationship with Caremark for in-person Rx purchases; they will continue using Caremark for mail-in scripts) that will initially manage IBX’s commercial Rx drug program and soon thereafter its Medicare program as well. Basically, IBX argues that having its own PBM allows it to better control costs. What that means for consumers, however, is that owning its own PBM allows IBX to offer less choices at higher co-pays for its customers compared with Caremark, which faces the pressure from a larger, less-captive customer base.

The second initiative is the Select Drug Program formulary. This is an aggressive formulary management program that automatically excludes all new branded drugs from from Tier 1 and 2 co-pays (IBX uses a three-tier co-pay structure) and subjects new drugs to pre-authorization (case-by-case; nothing new there). Generics are automatically added to the formulary at the first tier (i.e. lowest co-pay) and the innovators they replace are automatically consigned to the third tier (i.e. highest co-pay). Again, that’s not new.

What is new is a practice that IBX describes as a convenience to some consumers: shifting some self-injected meds from medical benefits to drug benefits (and from doctor’s offices and hospitals to retail drug-store shelves). These drugs can now be conveniently picked up at the pharmacy, where they might or might not be covered with a Tier 3 co-pay. How convenient (use Dana Carvey’s Church Lady voice for maximal impact when reading the foregoing).

In addition, IBX is clamping down on the practices of docs who routinely inject meds in their offices by hooking up with vendors who will monitor the use and cost of such injections to provide IBX with the most “cost-effective” purchases. If you’re a doc in the Philly area, you may read this as further invasion of your practice for the sake of saving insurers money. But don’t bother complaining, lest you risk insurers exhorting you to climb down from your big blue cross.

I again refer you to this important review of the DERP in this special online issue of Health Affairs. The articles highlight many of the important issues involved in evaluating drug effectiveness. One issue, highlighted in the Pfizer editorial by Newell et al., is the issue of extrapolating population-based evidence to individual patient care. This has been an interest of mine for the past few years ever since I discovered at a gathering of pharmaceutical industry clinical scientists that a majority of them, even those with many years of experience, believe that the randomized, controlled clinical trial is not only the gold standard for gathering evidence of a drug’s effectiveness in a selected clinical-trial population but is also the best way to determine a priori whether an individual patient will benefit from a therapy. The first time I heard this argument raised (in objection to a comment I made off-handedly to the contrary) I was so surprised that I found myself unwilling to undertake a debate with the gathered group before me; I was literally left speechless. This article reminded me of my shock that day. I can’t do the topic justice in a blog post, so I will add it to my list of topics for a future paper, perhaps one for peer review and publication, perhaps just a white paper. If you’re interested in the topic and would like to debate it in print, let me know. Otherwise, I wanted to let you know that I soon will publish a white paper on the topic of evidence-based, science-driven strategy for the pharmaceutical R&D manager. The paper draft suggests a final work too long for PCE, but I’ll try to condense it down for the June PCE post. I’ll also publish on my company’s website at http://www.pharmagrowth.com/library.html

Just last week I called for J&J to do the right thing and get to work on its Natrecor safety study or pull the drug off the market. Well, it looks like they’ve decided to get going on a $100M study. No steering committee has yet been named, according to the Wall Street Journal, but the Journal reported that J&J plans to ensure that the study is independently run. Congratulations are owed to J&J for this decision. Let’s hope it’s followed up soon with some action.

Whither J&J? Still held forth to business school students as an example of the benefits of “doing the right thing” even when it adversely affects short-term profits (viz the Tylenol tampering incidents), J&J is now the subject of criticism from some of its most important customers–academic medical opinion leaders. The charge? Failure to “do the right thing” regarding Natrecor, the natriuretic peptide approved several years ago as an acute treatemnt for CHF. As this article describes, J&J has taken a year (so far) to implement a large study that would address a gap in the safty signature of this once-promising therapy. I have no excuses to offer on J&J’s behalf.

I was surprised when Natrecor was first approved (I later learned from a former high-ranking FDA official involved with Natrecor’s FDA review that it barely passed muster then and would never be approved in a climate similar to today’s). As a then-employee of J&J, I was displeased with Chris Poon’s public pronouncements of a potentially large market for Natrecor in the near future, despite its narrow approved use. She was right, of course. Is it because she knew, as J&J’s chief drug marketer, that J&J was going to push Natrecor hard with clinicians not initmately familiar with its marginal efficacy and questionable safety but eager to have a new billable infusion therapy for their outpatient CHF clinics? I’m just wondering.

I’m sure the business case for the proposed Natrecor safety study is looking pretty bleak, perhaps with a high likelihood of negative NPV. If so, what will J&J do? I know the right thing to do. If the business case for the large safety study is decidedly negative, withdraw Natrecor from the market now and restate J&J’s commitment to discovering and developing more promising CHF treatments. If there’s a decent chance, even if it’s small, of recovering the cost of the study eventually, then do it. Do it soon. Involve the opinion leaders and all of the clinicians that prescribed Natrecor in its early days. Allow it to run largely independent of J&J. Use your influence and money to make sure its the best-run CHF study ever. And when its over, act humbly regardless of the outcome. Thank the participants heartily for their patience, guidance and participation. Publish the results quickly. And make sure everyone knows that although you were slow out of the gate, in the end J&J came through and did the right thing.