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Friday, July 20, 2012

Anemia Drug Scam

A must-read article in the Washington Post today: Anemia Drug Made Billions, But at What Cost?

Another example of what we have long known to be the case -- Drug companies persuading doctors -- by means of enormous financial incentives -- to overprescribe extremely expensive (and in this case quite possibly useless and even harmful) medications, at great cost to taxpayers and patient health.  But, like my discussion of the LIBOR rate manipulation, this is simply capitalism at work -- the temptations to act immorally (or, most charitably in this case, to convince oneself that one is acting the the patient's best interest) -- is almost certainly irresistible to those who have to face it.  If I were an oncologist who stood to gain something like $500 every time I injected someone with this particular medication, I'd probably err on the side of over-medication too.  Who among us wouldn't?

If I'm a pharmaceutical rep and my compensation and promotions depend on how much my efforts contribute to drug sales, then I'll do everything I can to increase drug sales.

And that's why this isn't just a problem with the doctors or the pharmaceutical companies.  It's a fundamental problem with the "socialized capitalism" that we call a health care system.  This is the sort of thing that SHOULD have been addressed by ObamaCare, but simply wasn't.  

To recap -- the socialization aspects of health care -- the fact that drug companies get patents and market exclusivity in exchange for coming up with new drugs, as well as the fact that many of the drugs are sold though socialized programs -- medicare, medicaid, and even health insurance -- distorts the market in a way that prevents market forces from working.  If there were a true market here -- with perfect information -- patients would know whether this stuff is good for them or not.  Doctors would compete with each other so that they would not be making enormous profits for every dose.  And pharmaceutical companies would not have patents -- the most socialist of all programs.

Elsewhere, I will discuss the obvious "counterargument" that the drug companies need patents to make the inventions that they do, and I'll offer alternatives.  But for now, please just admit that giving a company the ability to charge $2500 for something that costs just a few dollars to make is a NOT capitalism is antithetical to free markets and is therefore is a kind of government intervention that might (in the bipolar nomenclature of the times) well be labeled socialism (although of course, it gives socialism a bad name). 

Below are the most troubling excerpts from the article:


Then a nurse said he needed another dose of anemia drugs.
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The shots, which his cancer clinic had been billing at $2,500 a pop, were expensive.
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Hours later, Lenox was dead.

The article goes on to say that these drugs -- Epogen, Procrit and Aranesp -- generated more than $8 billion a year for Amgen and Johnson & Johnson, and that for several years, U.S. taxpayers put up as much as $3 billion a year for the drugs (the original sentence was ambiguous -- this is probably just Medicare payments, and it might even be limited to Epogen only).  Apparently, the benefits (which supposedly included “life satisfaction and happiness” per the FDA-approved label) were greatly exaggerated while the side effects -- cancer and strokes were ignored.  After many years of these drugs being on the market, Medicare researchers last year issued a study declaring that among kidney patients (the biggest market) "there was no solid evidence that they made people feel better, improved their survival or had any 'clinical benefit' besides elevating a statistic for red blood cell count."

The article explains that unlike prescription medicine that the patient will pick up at CVS, doctors can make big bucks off of the "spread" between what they pay the drug company and what they charge patients for a drug.  Here, drug companies helped ensure large spreads -- offering discounts to doctors who used more of the drug, and overfilling vials, which allowed doctors to further widen the spread even more.  And of course, they lobbied Congress to ensure that Medicare would foot the bills for much of the spread, and somehow they managed to get private insurers to reimburse even more than Medicare (I wonder how that particular component of the "free market" failed here; that's one thing insurance companies are supposed to be good at).

The article says that in 2007, more than 80 percent of 175,000 dialysis patients on Medicare were receiving the drug at levels beyond what the FDA now considers safe (and those are just the patients we have good records for).  The result was that an an oncologist could make an extra $100,000 to $300,000 a year simply by administering this drug.

The drug itself is a man-made version of erythropoietin, a natural hormone, which stimulates red blood cell production.  This then seemed like a "natural" and improved way of treating anemia (where the body doesn't produce enough red blood cells (needed to carry oxygen from the lungs to the rest of the body)), where the old method involved a four-hour transfusion of red blood cells.

Dialysis patients became the core market, since they often have anemia, and studies showed that giving the drug to these patients increased their red blood cells and reduced their symptoms of anemia.  No question there were significant benefits for some patients.  Amgen assured the FDA that any risks associated with the drug were minimal.

The drugs were first approved in June 1989, which suggests that patent applications were on file (if not granted) even before that.  Although the article doesn't mention patents, it's worth noting (and remembering) that the original patent for erythropoietin expired in 2004.  So at some point, I'll figure out and report what sort of patent manipulations left us in a situation where in 2007 and beyond, the drug companies were still making blockbuster profits.  Doubtless they received various follow-on patents, and somehow convinced people that simply practicing whatever the original patent taught was simply not good enough (or worse, infringed the follow-on patents).

Not all dialysis patients need blood transfusions -- only about 16 percent do.  But the use soon spread to nearly all dialysis patients.  Although that's an enormous market already, the incentives to sell this kind of treatment to a broader market resulted in the drugmakers pushing for and gaining approval for additional uses and larger doses (average dose size tripled), for milder anemia and other illnesses.for patients with a wider array of illnesses.  The FDA approved it for treating anemia in patients with cancer and AIDS, as well as those getting hip and knee surgery.

Ad campaigns touted the drugs as providing "strength for life," which was essentially what the FDA label said, until the FDA tightened its standard of proof for such claims.

Although the FDA required Amgen to do safety studies, the studies were done only belatedly (if at all), and apparently at least one of them was "misfiled."is currently lost.  One incomplete study suggested that small-cell lung cancer patients given a placebo had a better chance of survival than those given the drugs, although the data was (according to Amgen) "sparse."  Another study was due in 2004, extended to 2008, and now won' be complete until 2017.  By which time, of course, it won't matter for the drug's bottom line, since any possible patent on the treatment will have expired.inally completed in 2008, which, per the above, is longer after the original patent expired.  Another study among dialysis patients having heart disease was designed to answer the question whether it made sense  to bring these patients' hematocrit up to normal levels.  The study was stopped after an increased rate of heart attack for reasons that were reported as "unknown."  The results were reported somewhat favorably in the New England Journal of Medicine by four Amgen employees, two Amgen consultants, and two others.  This report left out the important fact that those with smaller doses of the drugs experienced just as much enhanced quality of life as those with larger doses, and suggested that the increased risk of heart attacks was not significant.  It took 3.5 years for the FDA to respond to a FOIA request for the actual data underlying the study, without which the discrepancies noted above would not have been known.

Anyway, read the original article for more details on the reports.  The health issues concern me (and on a human scale, they might well be more concerning than the "price" concerns), but in my role as PriceFixer I must focus on the price issues.

But they are certainly connected -- the whole point of the "normalize hematocrit" study was to produce data that would support additional treatments on a massive scale -- i.e. by showing that anyone with low red blood cell count could benefit from the drugs.  Even after the study was stopped due to fatalities, the New England Journal of Medicine published the afore-mentioned misleading study, and one of the non-Amgen authors of that study continued to promote hematocrit normalization in the press.

Bottom line is that Amgen continued to push -- and get (from both FDA and doctors) -- higher doses, all on the basis of unsubstantiated claims that these doses promoted better "quality of life," and without any mention of the increasingly known potential dangers.  This resulted in huge profits to Amgen.

And it should come as no surprise that Amgen manged to infiltrate the National Kidney Foundation, which issued dosing guidelines (for which Amgen was "founding and principal sponsor") for doctors, recommending doses at the high end of the FDA recommendations.  10 of the 16 members of the panel that created the guidelines had received consulting fees, speaking fees or research funds from Amgen or Johnson & Johnson’s subsidiary, Ortho Biotech.

Predictably, we learn that Amgen spent $2.4 million in one year on lobbyists -- including C Boyden Gray and Haley Barbour -- to fight a proposed policy by HCFA to reduce reimbursements when dosages significantly exceeded FDA recommendations.  Arlen Specter, for a paltry $7000 from Amgen plus $2000 from Johnson & Johnson, led the Congressional charge gainst HCFA, and HCFA apparently backed down, and even raised the limit to a level proposed by Specter.

The nation’s dialysis clinics -- which received something like 25 percent of their revenue from using the drugs -- likewise promoted higher dosages and helped to block reform (even offering a bonus to its chief medical officer if he were to do so).

And patients were recruited to help out as well -- both companies set up websites to combat a 2007 Medicare proposal ( and  Amgen became Nancy Pelosi's biggest contributor ($42K) and managed to get the majority of both houses to sign a letter to Medicare that warned that the proposed Medicare limits on the drugs could have a “broad range of unintended health consequences.”  Defending this approach, one of the Congressmen (Rogers) said “The federal government should not be in the business of dictating the practice of medicine.”

During this time, the OIG issued at least seven reports recommending either that the reimbursement price be reduced or the incentives (for prescribing the drugs) changed, and the GSA an the Medicare Payment Advisory Commission made similar recommendations.  None of these proposals were acted on (Clinton proposed a change of incentives a couple of times, unsuccessfully).  Instead, for years, the profit margins remained wide. The result was that as late as 2009, dialysis clinics were still making a 9 to 17 percent profit on pushing the drugs.

Finally, the health warnings overcame everything else.  Studies started coming in linking higher doses to higher risks of hospitalization, strokes, tumor growth, and death, as well as tumor growths.  FDA finally took action and prohibited use of the drugs in curable cancer patients and slightly anemic cases, and lowered its recommended doses. And when it took a second look at the supposed benefits, it found that they had been grossly oversold.  Finally, Medicare stopped reimbursing per dose, but shifted to a per patient (bundling) basis.

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