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Pharmacoeconomics Coming Soon To An Insurance Plan Near You...


You think I'm worth more than a bull or bear, don't you?


Do drugs cost too much? The knee-jerk reaction likely has most of you saying "yes", particularly since readers who pay for their prescriptions in the US subsidize health care research and development for the rest of the globe.

An article in today's Wall Street Journal puts a fine point on drug rationing, the logical conclusion when any payor includes pharmacoeconomics into their payment decisions.

"Pharmacoeconomics" is a big word you'll read much more about before this decade is out. It essentially is the study of how a drug performs on an economic basis. Pharmacoeconomics is common in the US only for counter-marketing purposes and, sometimes, to convince formularies and insurers to list a drug.

The US FDA is specifically prohibited from considering pharmacoeconomics when approving or rejecting drugs. Nevertheless, it seeps into the discussion with fair regularity at advisory board meetings. I've never seen or heard of a FDA staffer quashing such discussions, and Oncology Division's Dr. Richard Pazdur regularly brings up price comparisons during ODAC meetings where drugs are being compared to one another. This indicates to me we're not far away from formal considerations of pharmacoeconomics in the approval process.

In Britain, they take their pharmacoeconomics seriously. They pull drugs from their prescription lists if they do not meet defined measures of economic advantage. Their experience is worth watching because I believe it will become increasingly common.

Back when there was some doubt President Bush would be re-elected, I opined that a Democrat in the White House would likely introduce the concept of pharmacoeconomics to FDA approvals. While I did not believe then, and do not believe now, that the economics of a drug would be an approve/reject metric, I do believe an FDA requirement for drug sponsors to perform pharmacoeconomic analyses and perhaps even put the results of those analyses on the drug label is likely in a government run by Democrats.

Like any science, pharmacoeconomics has its issues. As the WSJ article points out, it is difficult to attach numbers to intangibles like the ability to read a book to your 3-year-old grandson. Same thing with the psychological impact on a family when you have to "put" grandma in an assisted care facility.

My other big issue for pharmacoeconomics is the translation from a societal to a personal level - from theory to practice. For example, let's say we have a cancer drug like Avastin that rings the register at $100,000 year. Let's take a police officer in her 30's. If Avastin can send her disease into remission, the $100,000 for Avastin pales in comparison to the 30-40 years of lifetime earnings and public service ahead of her.

Now let's look at an 85-year-old woman with grown kids and grandkids. She's already past the peak of her life expectancy and is probably, to put a fine point on it, a monetary drain on society. Is it worth $100,000 to keep her around?

If your blood pressure just rose and you started madly searching for my contact information to send an angry retort, welcome to the dark side of pharmacoeconomics.

How about if I told you our little old lady was a poet laureate? Would it make a difference if I told you she was a major figure in the civil rights movement? That she was instrumental each year in her church's effort to send knitted clothes and food to starving children in Africa? That she single-handedly saved three children from drowning when she was in her teens?

Some people dismiss such "complications" out of hand, but that doesn't get us anywhere. Computer programmers and mathematicians are perfectly capable of assigning dollar values to such contributions. The problem is whether their ranking of those contributions matches what my rankings or your rankings would be.

There is no escaping the fact pharmacoeconomics is a judgment on an individual's worth to society because the removal of a drug from the market affects individual people. Nobody employs it on a person-by-person basis because it represents a level of judgment on a single person's life most societies recoil from.

That said, I remain convinced pharmacoeconomics will become a larger component of drug approvals and reimbursements than it is today. The WSJ article and, hopefully, this piece should serve as a cautionary tale to those who link the knee jerk reaction to soaring drug costs with promises that pharmacoeconomic studies can help solve the problem.

Where do I stand on the issue? I believe adding pharmacoeconomic data to the label of a drug that is third or fourth to market for a particular indication is useful. I would even go so far as to say I would support using pharmacoeconomics as an approve/reject mechanism in such cases where the sponsor is attempting to get a third me-too drug approved.

I believe such a rule would:
• Broaden the focus of research as companies would not spend so much time looking for the next me-too drug;
• Preserve competition by preserving financial incentives for second-to-market drugs;
• Reduce overall prescription costs because rapacious pricing for first and second to market drugs would make a third-to-market drug easier to justify on a pharmacoeconomic basis
• Encourage drug makers to uncover exactly which sub-populations benefit most from their drug (targeted therapy) which would reduce side effects and wasted money giving drugs to people who get little to no benefit.

Should the use of pharmacoeconomics go beyond this limited use and govern what Medicare, Medicaid, and our nation's insurers reimburse for? I will say "no" unless and until we commit as a society to building a model that recognizes not only easy things like potential earnings, but less tangible items like service to society (past, present, or future) etc. I admit that is a bit of a straw man because I think there is no way our society could manage that task, but I also believe the application of pharmacoeconomics on a societal level requires such considerations be made.

Until we're prepared as a society to say whether a 35-year-old cop's life is more valuable than an 85-year-old grandmother's - and perform a similar task hundreds of thousands of times each year - any adoption of pharmacoeconomics should be done sparingly.

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