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Health Care Reform: Decisions Made Behind Closed Doors

Well, you knew it was only a matter of time until the press started covering the court of public opinion – meaning polls. This story came out last night from the Houston Chronicle entitled, “Poll shows falling support for health care reform.” It seems as if the University of Texas Health Science Center at Houston and Zogby International – have found that public support for congress and health care reform seem to be declining.

The authors conducted an online poll that found 50 percent of respondents oppose a bill introduced by U.S. House Democratic leaders this week that would overhaul the system and pay for it by raising the taxes of the wealthiest Americans. Forty-two percent said they support the bill.

Now, I know what people say at this point – it’s bad data – who was the polling sample of – blah, blah, blah. One poll says this and another poll says that – who do you believe? It doesn’t matter who you believe. It matters who the people inside the beltway believe as they start to see these numbers come out.

The poll shows there is strong support for providing insurance for all Americans, but little for increasing taxes to pay for it. Increasing cigarette taxes was favored by 50 percent of respondents, the only tax option favored by at least half of respondents. Less than 20 percent favored increased co-pays and deductibles, rationing care, eliminating Medicare Advantage plans and decreasing home care reimbursement.

Does anyone really think that this will all be done by the August recess? As usual, the strategy is to push something through the House, something through the Senate, and the real bill be decided behind closed doors in conference committee. It worked with the so-called “stimulus” bill. But reading the quotes coming out of the Senate, a lot of people, on both sides of the isle are uneasy with this time frame. Each day gets more interesting, and not in a good way.

*This blog post was originally published at Doctor Anonymous*

Congressman Paul Ryan’s Speech To Medical Bloggers At The National Press Club

Congressman Paul Ryan (R-WI)

Congressman Paul Ryan (R-WI)

*** Congressman Paul Ryan addressed the crowd at Better Health’s “Healthcare Reform: Putting Patients First” event. This is a transcript of his speech: ***

This event is a landmark in how we get discussion and debate going in the 21st century.  We are communicating with the grass roots, with medical bloggers here in this room and across the country.

Let me tell you this: I don’t want government interfering in the relationship between doctors and patients…and I don’t want insurance companies interfering either!  I want a vibrant health care market that lets patients choose the health care options that are right for them and their loved ones.  I want a free market democracy that puts patients first.  We can have this, and I’ll say something more about that in a minute.

Right now Congress is rushing through a health care overhaul that goes in the opposite direction.  It’s important to analyze the relative financial costs and benefits of these proposals, but our greater challenge is not the dollars and cents.  It goes to the issue of continuing the tradition of excellent health care that medical practitioners now provide.  It’s about the equal dignity of each human person…and the future of America as a free society.  The American character, and the principles of freedom & democracy which protect & preserve it, may be lost beyond recovery if Congress chooses the wrong path on health care reform—the path down which I believe the Obama Administration seems determined to lead our country.

Public health has always been a government priority.  Our Constitution’s Framers saw every individual as having a “right of personal security” which includes being protected against acts that may harm personal health.  This right is part of the natural right to life, and it is government’s very purpose to secure our natural rights to live, to be free, and to pursue happiness.

Now here is where believers in big government make their big mistake.  The right of each person to protection of health does not imply that government must provide health care.  The right to have food in order to live doesn’t require government to own the farms and raise the crops.  Government’s obligation is normally met by establishing the conditions for free markets to thrive.  Societies with economic freedom almost always have a growing abundance of goods and services at affordable costs for the largest number.  When free markets seem to be failing to meet this test – and I’d argue today’s health care delivery is an example – government should not supply the need itself.  It should correct its own interventions and liberate choice and competition.

We know from survey after survey that a vast majority of Americans are personally satisfied with the quality of their own health care.  The problem is really with health care delivery, which is growing too costly and leaving many people without coverage.  The proponents of government-run health care claim there are only two alternatives: either enact their plan or do nothing.  This is false. Government bureaucracy is not the answer to insurance company bureaucracy.

An authentic solution to the problem of affordability should be guided by the principles of moral and political freedom… respect doctor and patient privacy…restrain spending…and channel the energy of our free market system, not dry it up.   There is no lack of sensible alternative solutions proposed by Republicans to put patients first. Senators Coburn and Burr, and Congressman Nunes and I have offered one, called “The Patients’ Choice Act.”  It’s an example of how to eliminate government-driven market distortions that exclude many from affordable health care delivery.  More uninsured Americans can be covered by spending current dollars more wisely and efficiently than by throwing trillions more at the problem.  Our health care delivery alternatives are based on timeless American moral and political truths.

In essence, we believe that the dollars and decisions should flow through the individual patient, not from the government.  I want to see a market where providers truly compete against each other for our business as consumers and patients – not a bureaucratized system where health care providers vie for government favor as patients wait in line. Read more »

Rushing Healthcare Legislation Through Without Consensus

I belong to a terrific organization that brings together C-level executives, once a month, to discuss issues each of us face.  It’s called Vistage.  One of the subjects we talked about yesterday was health care.  It was like a focus group made up of seasoned, senior executives from many different industries.

The discussion revealed the tremendous divide between what ordinary Americans think about health care and what policy makers in Washington are doing.  It’s a combination that is almost certain to ensure that whatever reform passes may make our problems worse, rather than better.

At the meeting were about 30 executives, representing everything from financial services, commercial real estate, manufacturing, high technology, pharmaceuticals, insurance, retail, non-profits, travel and others.  Although all thought health care costs were in a state of crisis in America, I did not hear anyone say this was the case in their business.  To be sure, some complained that health costs were high, and that there were few alternatives available.  But others described changes they had made to their plan designs that had actually reduced their corporate health expenses.

We talked about the proper role of government, the comparative worth of systems in other countries, the responsibility of people to take care of their own health, end-of-life care, over-treatment, the uninsured, access to care, comparative effectiveness, and our own expectations of what the system should do for all of us.  There was no consensus among this group of 30 business leaders as to these subjects and what we should do about them, other than that they are important topics that we need to address.  I suspect this is true outside of this group, too.  Indeed, the huge collection of issues that fall under the category of health care reform is something I’ve pointed out before.

But the President and leaders in Congress want debate on health care to end.  They want a a bill to pass in the next couple of weeks.

Most of the group members were surprised to hear that Congress had already drafted legislation and was getting ready to vote on it.

It’s a remarkable thing.  We are in the midst of trying to redesign the largest health care system in the world, and we’re barely debating the merits of it.  How many members of Congress will have read the 1,1018-page bill once they vote on it?  How many Americans will understand what implications it has for their health care if it — or something like it — becomes law?

The President often says that the status quo in health care is “not an option.”  The trouble is, the status quo in health care is a rapidly changing thing.  Today, every day, employers and doctors and so many others are busy making real, meaningful changes to our health care system.  Not by waiting for committees of Congress to pass legislation, but by getting together and doing things that improve the quality and cost of care and the lives of patients.  We need to be listening to their stories, and learning from them.  Congress hasn’t done this, and can’t now.

There is an opportunity to build a real consensus around the important issues we talked about yesterday.  We can transform our health care system in ways that make all of us proud.  But it can only happen by working through these hard questions, not by hurrying to pass a bill before the August recess.  Those who say we have a once in a generation chance to reform health care today may be right, but not for the reasons they think.  By passing bills without consensus on this deeply important and emotional issue, they are ensuring that no one will really want to try to reform health care again for a very long time.

Which leaves us very much where we started.  I will continue to do my part to share the important stories of how real people are making real reform.  The political attention to reform may end sometime this year, but the reality of people trying to figure out what to do when sick will continue.

*This blog post was originally published at See First Blog*

Generic Biologic Drugs: What Are They And Will They Save Billions Of Dollars?

Much has been made of the recent pressure on the FDA to create a pathway for follow-on biologics. On June 9, 2009, Rep. Henry Waxman, chair of the Energy and Commerce committee, sent a letter to President Obama imploring him to approve a pathway for generic biologics: “I urge the administration to consider what steps can be taken under existing authority to prepare and even begin to use a pathway for generic biologics.”

Six days later, President Obama, in his June 15, 2009 speech to the AMA, followed Waxman’s lead, asking the FDA and industry “to introduce generic biologic drugs into the marketplace.” He continued: “These are drugs used to treat illnesses like anemia. But right now, there is no pathway at the FDA for approving generic versions of these drugs. Creating such a pathway will save us billions of dollars.”

Is this true? Are follow-on biologics, biosimilars, or generic biologics (all names for the same concept) truly the path to healthcare savings? And what are they, anyway? To clear up the confusion, this post aims to explain what biologics are, what generics are, and what the challenges are in the creation of an approval pathway for generic biologics.

What are biologics? How do they differ from traditional small-molecule therapies?

When you think of a drug, you probably think of a pill like Tylenol or Lipitor. You may not be as familiar with biologics, which are attracting a great deal of attention from policymakers and media. Biologics represent a different set of drugs, distinguished by their size, their informational and manufacturing complexity, and their therapeutic advantages.

If you were to look at most drugs under a microsope, you would find that they are actually rather small relative to a typical biologic. Acetaminophen, which is the active ingredient in Tylenol, weighs 150 daltons (a dalton is a unit of atomic mass). Enbrel, on the other hand, which is a top-selling biologic indicated for several autoimmune diseases, weighs 150,000 daltons. To put that thousand-fold difference in visual terms, if Tylenol weighed as much as your mountain bike, then Enbrel would weigh as much as an unfueled 12-passenger private jet. Hence you will often hear people in the pharmaceutical industry refer to “small molecule” drugs and “large molecule” drugs — because these are two truly distinct classes.

Biologics are often designed to closely mimic the body’s own specific natural processes. Because of this higher specificity, biologics tend to bind to drug targets in the body more precisely than do traditional drugs, which may bind to other unintended targets in the body, placing the patient at greater risk of side effects.

On top of it all, there is currently no defined pathway at the FDA for companies to develop generic versions of biologics, so biologic manufacturers retain data exclusivity over their products. Not surprisingly, the therapeutic and market advantages of biologics have caused pharmaceutical companies to focus their efforts on developing or acquiring biologics over small-molecule drugs. In fact, according to a recent forecast, by 2014, seven of the top ten drugs in America will be biologics, including every single one of the top six.

Unfortunately, while biologic therapies provide a great deal of therapeutic benefits, they are also extremely challenging for biopharmaceutical companies to develop and manufacture, because they are composed of entire proteins, carefully grown through recombinant DNA methods which are newer and less practiced than traditional drug chemistry methodologies. A traditional drug is usually derived through a set of chemical reactions. It’s a lot like following a recipe. Synthesizing a biologic, however, is a bit more like cloning a cat. In order to synthesize a biologic, host mammalian cells, usually Chinese hamster ovary cells, must be implanted with a gene that codes for the desired drug. The host cells are maintained in a special bioreactor that is designed to keep the cells alive as they translate, synthesize and excrete the drug. The broth of cells must then be harvested from the cells, modified, purified, and tested. The solution is finally packaged into vials or pre-filled syringes for distribution.

This manufacturing process is unusually challenging to reproduce consistently, even within a company. For example, Johnson & Johnson manufactures epoetin alfa, an anemia therapy, under the name EPREX in Europe. In the late 1990s, J&J changed its manufacturing process for EPREX at the request of the EMEA (the European version of the FDA). The process change caused some patients to develop pure red blood cell aplasia, a serious adverse reaction. Rather than receiving the benefit of the anemia therapy, these patients actually lost their ability to make red blood cells because they produced an antibody (triggered by the faulty EPREX) that inactivated both the EPREX and the body’s natural protein that is essential for red blood cell production. J&J eventually determined the cause of the adverse reaction and corrected it, but only after a lengthy and expensive investigation.

Because of the intense development and manufacturing process, biologics are also significantly more expensive than traditional therapies. Herceptin, an effective treatment for some forms of breast cancer, can cost as much as $48,000 for one year’s worth of treatment. It’s important to keep in mind, however, that virtually every drug company provides programs to help underinsured or uninsured patients get financial assistance in the form of co-pay cards, co-pay grants, or free drug programs. Simply contact the drug manufacturer.

Why have biologics gotten so much attention from healthcare reformers such as Rep. Waxman and President Obama?

The high cost of biologic therapies has attracted attention from both private payers, such as Aetna and UnitedHealthcare, and public payers, such as Medicare, Medicaid, and state health insurance programs. While payers agree that the therapeutic benefits of these treatments are important, they are still anxious to limit their exposure to the high price tags. Most insurers require several other therapeutic steps before allowing a physician to prescribe a biologic therapy.

Wait, what exactly is a generic? And what’s all this talk of bioequivalence?

The Hatch-Waxman Act of 1984 established a pathway for generic versions of small-molecule drugs to be offered to the public. Once the patent ends on a drug, generic drug makers may manufacture and sell the same drug without repeating the research, expensive clinical trials, or marketing efforts conducted by the original patent holder. These savings allow generic manufacturers to sell their versions for a lot less.

In order to gain approval, the maker of the generic must still show bioequivalence to the original drug, called the “reference listed drug” in the generic drug maker’s application. In a bioequivalence study, the reference listed drug is administered to one group of healthy volunteers, and the generic is administered to a second group. The blood concentrations of the active ingredients are measured over time and graphed. If the generic drug’s graph lies between 80% and 125% of the graph of the reference listed drug, then the two are deemed bioequivalent, and the generic drug is approved. Once approved for the market, it may be sold and independently substituted by a pharmacist for the branded medication without telling the physician, assuming the doctor has not expressly forbidden generic substitution. This last permission is referred to as the “interchangeability” of the drug.

Why can’t Congress just duplicate the same approval process used for generic small-molecule drugs?

In theory, Congress could. In practice, however, there are several technical hurdles that remain to be cleared. As discussed above, the processes used to create biologic therapies are extremely sensitive to manufacturing changes, as in the EPREX case. If a generic biologic manufacturer develops its own process, there is a good chance that the quality of the product would differ from that of the reference listed drug. Furthermore, no one has yet confidently measured bioequivalence for a biologic.

Frank Torti, Chief Scientist of the FDA, summarized these issues very well in a September 2008 response to a Congressional inquiry about follow-on biologics:

Because of the variability and complexity of protein molecules, current limitations of analytical methods, and the difficulties in manufacturing a consistent product, it is unlikely that, for most proteins, a manufacturer of a follow-on protein product could demonstrate that its product is identical to an already approved product. Technology is not yet sufficiently advanced to allow this type of comparison for more complex protein products.

All is not lost, though. The FDA could still create a pathway for generic biologic manufacturers to develop “biosimilars,” which are products that are intended to be close to a reference listed drug but cannot be shown to be the same. Because they are not the same, biosimilar manufacturers would likely have to conduct clinical trials to show that their version is safe and effective for human use, and can be manufactured consistently.

What are the realistic cost savings?

Because of the added cost of clinical development, testing, and marketing of a biosimilar product on top of the difficult manufacturing process, and competition, generic biologic pricing is more likely to resemble brand-to-brand biologic competition than the generic-to-brand competition seen in the small-molecule drug marketplace. Therefore, it’s not yet clear how much more affordable a FOB would be for health insurers. Without being able to show that the products are truly identical and therefore interchangeable, physicians are also likely to be reluctant to try what is essentially a “new” drug that does not truly share the established track record of the original drug. Payers and patients may be excited about the lower cost but skeptical of potential safety issues. As a result of these factors, generic biologic manufacturers may ultimately fail to capture enough business to make up for the upfront expenses of clinical testing, as well as the ongoing manufacturing and marketing expenses.

The Federal Trade Commission recently published a report that studied and called out these limitations. The consequences of the market dynamics imply that only two or three companies with large biologics manufacturing capabilities will even bother to get involved in this field, because only those companies will already have the plants and people to compete effectively. Ironically, the FOB manufacturer for a given reference drug will probably be other biologics innovators who already have the manufacturing capabilities but don’t normally compete in that particular market.

What would be some of the other implementation challenges for the government?

For one, CMS would need to decide how to bill and code for the new products, a subtle referendum on how identical the biosimilars will really be. If they give the generic versions the same codes as the originals, interchangeability is easier and the cost savings are more likely to materialize. On the other hand, it’s important for both the FDA and CMS to track adverse events with these new products (an activity known as “pharmacovigilance”), which is easier to do if the codes are different.

Where does the policy debate stand? What are the Eshoo and Waxman proposals?

The current Waxman bill is remarkably similar to the Hatch-Waxman Act of 1984, which was originally designed for small-molecule drugs. It would not require any new clinical trials for generic biologics provided that the generic had a “highly similar molecular structures,” and allows a case-by-case determination on whether or not safety and efficacy data would be required before pharmacies could substitute generics for reference biologics without telling the physician, but the default would be to allow substitution on approval. The Waxman bill allows for five to nine years of data exclusivity for the original patent holder.

The current Eshoo bill would require clinical trials comparing the generic biologic to the reference biologic, unless the FDA waived them. Rather than automatically granting interchangeability upon approval, the FDA would have to publish guidance with data that describe the criteria required for interchangeability. The bill also recognizes the greater challenge in developing biologics by allowing for twelve to fourteen years of data exclusivity.

Can the healthcare system really save billions of dollars with biosimilars?

President Obama’s speech to the AMA suggested that billions of dollars would be saved by the creation of a biosimilars approval pathway. Several others to study the issue have cited fairly conservative numbers. Avalere Health put the federal savings at $3.6 billion over a ten-year period, while the Congressional Budget Office says $6.6 billion. Avalere’s model assumes moderate discounting, several entrants, slow uptake of biosimilars, and a ten-year data exclusivity period. The CBO report scores a bill that resembles the Eshoo option described above, but doesn’t account for some of the market dynamics discussed above and in the FTC report.

Finally, to keep pharmaceutical costs in perspective, policymakers should remember that prescription drugs currently make up only 10% of healthcare costs, while physician services make up 21% and hospital care makes up 31%. The CBO estimate also predicts that follow-on biologics would save $25 billion on national biologics expenditures over ten years. Even if correct, those savings still make up one-half of one percent of all national spending on prescription drugs, which is itself one-tenth of all healthcare spending in the United States.

Which option makes more sense?

Overall, the Eshoo bill appears to do the best job of reflecting the current technical challenges particular to biologic therapies. The need for clinical trials to insure the safety, efficacy and quality of FOBs ought to be non-negotiable. However, given the high cost of becoming a FOB manufacturer, and the small number of likely entrants, the optimal length of data exclusivity is a good open question. Henry Grabowski of Duke University studied the issue and concluded that an ideal breakeven point is 12.9 and 16.2 years, also suggesting that the Eshoo option is the most likely to drive economic growth. The European Union currently allows for biosimilars and permits ten to eleven years of data exclusivity. Let’s hope that policymakers work hard to thoughtfully strike the right balance that maintains both a stream of innovative therapies from scientific pioneers and a structure that wisely manages costs for payors.

Author’s bio:
Jonathan Sheffi is a summer intern in the FDA Office of Biotechnology Products. Before the FDA, Jonathan worked for Amgen, first as a marketing analyst and then as a biopharmaceutical sales rep. He will start at Harvard Business School in the fall of 2009, and is seeking an internship opportunity for the summer of 2010. Follow Jonathan’s blog at and on Twitter at @sheffi.

Thank you to Val Jones (Better Health), Niko Karvounis (The Century Foundation), and Kimberly Barr (UnitedHealthcare) for their comments and suggestions.

All included information has been derived only from publicly available sources. This blog post reflects the author’s personal opinions and do not represent the opinion of any other organization or individual.

The AMA And Congress: How To Cross The Cultural Divide

The AMA’s communications department kindly sent me a copy of a letter that they (and 9 other professional society CEOs or Presidents) recently sent to Barack Obama and 12 members of congress. I’ve been blogging about the fact that healthcare providers in general, and physicians in particular, do not seem to have much of a voice in healthcare policy. In fact, from what I can tell, Dr. Nancy Nielsen is carrying the torch almost exclusively. I don’t mean to belittle anyone’s efforts, it’s just that I’ve noticed that she is often the only physician at the highest level policy meetings.

So it was with great interest that I read the group letter to Obama et al., wondering what collective message our physician leaders were trying to get across. The writing was academic – using terminology familiar to those heavily steeped in medicine – and emphasized the creation of a patient-centered culture supported by evidence based medicine.

However, the letter raised an interesting question in my mind: Will members of congress read and understand it? I believe that the most effective letters to congress are likely to share three qualities: 1) they must be emotionally provocative 2) they must be written at about the 6th grade reading level 3) they must be brief.

Why Letters Must Appeal To Emotion (“Cultural Competency”)

Dr. Nielsen said at a recent Medicare Policy Summit that speaking with Senators can be “pure theatre.” That has been my observation as well. Decades of experience speaking in large committee meetings have taught them that amusing sound bites or emotional outbursts get attention. In fact, it may be the best way to get things done in congress. For example, did you know that the reason why kidney care is the only disease-based eligibility under Medicare is that Shep Glazer testified before congress during one of his dialysis sessions?

Washington , D.C. , Nov. 4, 1971 – In the most dramatic plea ever made on behalf of kidney patients, Shep Glazer, Vice-President of NAPH, testified before the House Ways and Means Committee while attached to a fully functioning artificial kidney machine.

Minutes before, in the corridor outside the hearing room, Shep told reporters from the AP, UPI, and the Washington Post, “Gentlemen, I am going to tell the Committee that if dialysis can be performed on the floor of Congress, it can be performed anywhere.” As his wife, Charlotte , connected him to the machine, he continued, “Kidney patients don’t have to be confined to hospitals, where expenses are $25,000 a year and more per patient. It’s much cheaper in a satellite unit or at home. I want to show the Committee what dialysis is really like. I want them to remember us.”

My point is that in congress, as opposed to medical meetings, emotion is king. Physicians have a hard time speaking from the gut, since we’re trained to speak from data – because we know that the gut can be misleading. However, my plea to physician groups is this: let’s collect our data, understand the science behind our point of view, and then present our advice in a way that is persuasive to congress. That means we’d probably benefit from a few theatre classes (can we get CME credit for them?) I’m not suggesting that we become undignified in any way – I’m just saying that personal stories, case studies, and appeals to emotion are the currency on the Hill. If we want attention, we’ll need to find a way to make our points in their own language.

For example, I was listening in to a recent Senate hearing on healthcare finance, when a Republican senator began his introductory remarks about “out of control spending” with this:

I must tell you that I have major concerns about our current approach to spending. We’ve already sunk billions of dollars into all kinds of bailouts and programs without any clear benefits. But every time I bring up the excessive spending issue, you’d think I was a skunk at a picnic…

An amusing analogy, and one that resonated with his peers. This Senator understood the culture to which he was speaking. In other words, he had a “culturally competent” message.

Why Letters Should Be Written At About The 6th Grade Reading Level (Health Literacy)

Dr. Richard Carmona told me that one of the first things he learned as Surgeon General was that the American people understand health information at a 6th grade reading level. Thus, there is no point in making a 100+ page medical report on the health hazards of smoking the corner stone of a public smoking cessation campaign.

Health information must be written in a clear, and actionable manner – but it must also be delivered in such a way that it resonates with diverse communities. Letters to congress are no different – many of our congressmen and women do not have advanced medical or science degrees. We must be sensitive to that and write to them in a way that makes it easy for them to understand what we’re hoping to accomplish.

Why Letters Must Be Very Brief

Much has been made of the fact that many people who signed the recent 1000+ page stimulus bill hadn’t actually reviewed it. In fact, it is estimated that 306 members of Congress voted for a bill they had not read.

Of the 535 members of the United States House and Senate,  246 House members and 60 members of the august Senate voted for the $787 billion  stimulus bill without having read a single one of the bill’s 1,071 pages or having any idea of where all of this money borrowed from our grandchildren is going to be spent.

So if our members of Congress don’t read the stimulus bill, will they take the time to read long letters from professional societies? I think you know the answer.


The AMA should be applauded for their lobbying efforts on the part of physicians in Washington. However, my personal view is that letters to congress may be more effective if they are written in a concise, jargon-free, compelling way that respects the “culture” of congress. We physicians hear a lot about “health literacy” and “cultural competency” – and must remember to apply those principles to letter-writing campaigns.

Will any letter influence congressional decision-making? It’s hard to measure the “ROI” of group letters to congress – and certainly they’re only one part of a larger strategy. However, it behooves us physicians to find ways to reach across the cultural divide to speak to congress about the issues that trouble us all: the fate of patients. Letters may be helpful, but an increased presence in Washington, along with some heartfelt reasoning, may be our best shot. Perhaps the Broadway actors affected by the economic recession could help us out?

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