Wednesday, December 3, 2008

Why Americans Hate Pharma Almost As Much as They Hate Oil Companies: The Case of Cephalon

Today, I'd like to introduce a guest posting by Harry Tracy, the writer and publisher of NeuroInvestment, a monthly online journal providing cutting edge of analysis of developments in the neurotherapeutics industry. Dr. Tracy often publishes essays evaluating the marketing tactics of the pharmaceutical industry, and in his current issue, he tackles the particularly unsavory price gouging strategy used by Cephalon in order to lay the groundwork for its newest me-too product, Nuvigil. I've published his essay below, by his generous permission.

It's not news that pharma companies try to 'switch' patients to a revamped version of a drug prior to the introduction of a generic competitor in order to pre-empt that advent. And it's not news that one of the levers available is to raise the price of the original drug, in order to shift patients to the revised edition. The assumption that they make is that prescribers are too busy to notice that the revamped drug may offer little value over the original version, and thus will keep patients on the new one even when the generic arrives, at lower cost. When a new version is genuinely better, as was the case for Adderall XR, the merit of the molecule drives the market, as it should. But as Adderall XR's patient life dwindled, Shire tried to repeat the trick with Vyvanse, whose superiority to Adderall XR is confined to slightly reduced abuse risk. They stated quite openly that, if necessary, they would raise Adderall XR's price to drive users to Vyvanse before the generic Adderall XR hit the market. We do not track Adderall XR's pricing, so we don't know to what degree Shire implemented that tactic.

But Shire possessed the subtlety of MI5 compared to Cephalon, whose SWAT-team pricing tactics for Provigil hit the Wall St. Journal on November 18. Cephalon has raised the per-tablet price for Provigil, now in billion-dollar per year revenue range, by 74% over the past four years (that's one way to get there), 24% in just the past year. And they are open about the fact that they are boosting Provigil's price in order to shift people to Nuvigil, which will not be available until 2009, (if then) and displays no significant advantages over its racemic forebear.

To summarize: In anticipation of generic competition in 2012, they are raising prices four years ahead. Since there really aren't any desirable alternatives to Provigil, they are gouging a captive audience.

Cephalon already has its picture up on the Post Office Wall as a perpetrator of the first order when it comes to regulatory reckless driving. Earlier this year, they paid a $444 million fine for violating rules on off-label marketing, which they brushed off as if it were just a traffic ticket. It's not as if it has not been obvious for years that Cephalon likes to skate on the thinnest edge of the law; when we pointed out just such an instance of skirting the rules in 2007, their response was to have their Legal Department send NI [Neuroinvestment, Dr. Tracy's journal] a letter of reprimand. If it was a threat, it was a hollow failure, since what they had done was in front of an audience of about two thousand.

NI has previously written of our disappointment with Cephalon's squandering of its potential: Greater contributions to medical care and ethical responsibility have been exchanged for hard-nosed marketing and incremental improvements. But this has implications beyond that, because of the times in which we live. Greed is no longer seen as being as good as it once seemed. The mercenary excesses of the banking industry have led to chaos in global macroeconomics, and scapegoats are welcome. Now, a new Administration is about to come to power in the US, with healthcare reform high on its agenda. Cephalon's strategy seems to be one of trying to stuff as much loot into their sack as they can before the vault door swings closed, much as some banking executives voted themselves bonuses as their corporate vessels began to founder. This is a policy of plunder which only provides ammunition to anyone who considers price controls to be a valid option for reining in healthcare expenses. Not that Cephalon is alone--the media is awash with reports of health risks concealed, benefits exaggerated. But this is another nail in the coffin of Pharma's public image.


brewboy said...

The question is will an Obama administration really do anything about this unethical and I believe, unpatriotic bahavior?

Supremacy Claus said...

As a patient, I am puzzled by the idea that I hate Pharma. Where does it show the public hates Pharma?

The high prices stem from the patent system, and the FDA drug approval process.

Shorten the term of drug patents to five years, from twenty. Which patent duration would promote real innovation? You get one guess.

In exchange, the FDA gets closed. All data gets published to the internet, including data from approval in other countries. Patients and doctor judge for themselves.

James M. La Rossa Jr. said...

Obama's beef is not with pharma; it's with the insurance industry, which contributed to the speedy demise of his Mother, and is responsible for so much of the presentday mess in medicine. Pharma is hugely important to America's GDP, employs thousands of physicians and researchers, and spends an overwhelming amount of its operating expenses on R & D! (How they market product is the question...) Obama is smart enough to know that should his administration torture the American pharma industry, we will lose these companies to European competitors.

Anonymous said...

Disclosure: I am a speaker for Shire (Vyvanse).

I would take objection to the assertion that Vyvanse is not much of an improvement over Adderall XR. Briefly, there are many areas in which, both in study data and in my clinical experience, Vyvanse offers significant advantages over Adderall XR:

1. As a prodrug, it is true that abusability is greatly reduced. This is a significant advance.

2. Duration of action is greatly improved from an average of 8 hours (XR) to 12-13 hours. I had a lot of XR patients who were also taking Adderall tablets in the afternoon to keep them from crashing, and this is not necessary with Vyvanse.

3. Consistency of action is much improved. With XR, I had a lot of patients who swore it only lasted 4 hours - the second bead didn't kick in, or else kicked in too soon. You get a lot more smoothness and better patient-to-patient reliability with Vyvanse.

I do agree that Pharma has issues with patent games, isomers, metabolites, etc. There's still plenty of cynic in me - I haven't druck all the corporate Kool-Aid. However, picking Shire as an example in the original story really wasn't that fair, as you sort of pointed out, Dan.

Keep up the good work, and I'll keep reading. Cheers!

J.P. Swing MD
Fredericksburg, VA

Anonymous said...

I'm glad that Vyvanse has found a niche of utility. But I stand by my original comment:

1) Nonoral abusability is greatly reduced, but the case for lesser oral abusability being markedly reduced has been exaggerated--which is why the FDA kept it on schedule II. As I wrote in mid-2006 (NRP104 was the original name for Vyvanse) about NewRiver's very skewed and selective use of comparisons to make their case:
"NRP104 has matched up well in terms of efficacy, when given in the necessary ratio of 2.5X the dose of the comparator amphetamine. The second question is much more ambiguous, and in our view, the data presented thus far does not fully support the company's hypothesis. In their recent release of abuse liability data--separate from some statements that were unclear, there were some relatively clearcut indications that at higher doses, NRP104 has abuse risk. The most central point comes up around the highest dose used, 150mg, which by their own algorithm, should be roughly equivalent to 60mg of amphetamine. New River seemed to emphasizing the nonsignificant 'liking' response from abusers from the 50mg and 100mg doses, which would translate into 20mg and 40mg equivalents of amphetamine. In reporting that the abuser 'taste-test' panel did in fact find the 150mg dose to be subjectively reinforcing (and hence, abusable), New River commented that this was 50% above the amphetamine equivalent offered by their 100mg dose (not an enormous surprise, given the ability to multiply), as if this were a clinically irrelevant dose. But in fact, a paper by Biederman et al in 2003 noted that 43% of the patients assessed did best at a 40mg dose of Adderall XR, 44% did best at 60mg--or the equivalent of New River's highest dose tested.
New River's testing compared NRP104 to a short-acting, rapid Tmax of 2-3 hrs (rate of plasma level rise) amphetamine, and a bupropion relative used as an anorectic. Neither of them are relevant to the current world of ADHD treatment options. Citing NRP104's 3-4 hr Tmax is less impressive when one considers that AdderallXR's Tmax is 7 hours."
2) The great boon of Adderall XR was that it allowed kids to get through the school day without the stigma of having to go to the school nurse to get a midday dose. In terms of compliance and social adjustment, this was huge. Extending the duration to 12 hours may be convenient, but one could argue that this could have been achieved by having an AM Adderall XR followed by a generic Adderall later in the day. Less convenient, yes, but not of the magnitude of the schoolday interruption that was cited above.
3) Consistency of drug delivery--this may be an advantage, I don't have access to that kind of anecdotal information.

But Shire paid $2.6 BILLION to obtain the extension of duration and possible dose consistency. Plus there is the yet-to-be-calculated cost of continuing on Vyvanse once a generic Adderall XR is available. I would argue that this cost, which will come out of the users of both Adderall XR and Vyvanse, was not worth it in the larger pharmacoeconomic context.

Anonymous said...

Geez, Daniel. I haven't visited for a while, but don't you think this is a little over the top?

"Why Americans Hate Pharma Almost As Much as They Hate Oil Companies: The Case of Cephalon"

How about you use some "I statements," dude? I know plenty of people who THANK big pharma and the scientists who work to develop medications that elevate people's lives.

Do you forget there are dedicated scientists behind many of these medications? These medications can't ALL be marketing creations; they simply would not last.

Case in point: Strattera was pushed as the Next Big Thing for ADHD, and it flopped miserably. Why? Because people weren't getting relief from their symptoms, at least to the degree that it was hyped to MDs (again, it comes down to physicians being willing to dig for some facts and take Rep Talk with a grain of salt).

Even so, Strattera does help to some degree with ADHD, and it is one of the few with 24-7 coverage. So, it's still a great tool to add to the toolbox.

Please speak for yourself when it comes to Americans Hating Pharma.

And no, I receive not one dime from pharma. I could, but I won't. Precisely because of the ridiculous witch-hunts around anyone who is the slightest big "pro-medication."

Keep going, folks. You think the world is crazy now. Keep pushing until we have even more restricted access to these medications. As we will soon, as more people lose their jobs in this economic meltdown and, with it, their insurance.

Note that this congress had to be brought to its unfocused knees in order to accept Mental Health Parity. In other words, to accept that the brain is a physical organ! Talk about a collective national disorder. But go ahead, feed the science-phobe flames, but be ready for consequences you won't like.

Anonymous said...


It's not just a matter of "convenience." It's a matter of avoiding the jagged ups and downs associated with taking multiple pills throughout the day.

And generic Adderall???? Please learn about the intricacies of ADHD titration before you recommend such a thing. Short-acting Adderall is bad enough for some people, but to add the variability of generic Adderall is NOT advised unless that is a sheer economic necessity.

When physicians don't understand how these medications work -- how delicate the balance can be -- that's what creates so much unnecessary hardship and drama for patients and loved ones.

Anonymous said...

Published on:
You Have Now Been Sampled
While the pharmaceutical industry’s image and reputation has and appears to continue to suffer, added damage has expressed itself with costly patent expirations with certain corporations within this industry. As the president of the lobbing group for the industry that is called PhRMA would likely concur to a degree if asked, the image of this industry has experienced noticeable trauma over the past two decades in particular, and for solid reasons. We will start with the issue of samples.
Quite remarkable, and apparently legal, is the ability of prescribers to request branded pharmaceuticals from the makers of certain medications if a prescriber obtains a request form on the internet, for example. This, of course, bypasses representatives from the various pharmaceutical companies. For possibly a number of reasons, this avenue is rare for obtaining samples, as it is not offered by most pharmaceutical companies.
So even though the value of requesting samples of medications by prescribers is, apparently, an authentic method of obtaining samples, it appears that most pharmaceutical companies prefer to have their own representatives dispense samples of their promoted medications. This also allows for the release of inducements to certain prescribers that are of a much greater value than drug samples, which they believe affects the image of their products and its preference for them related to the inducement they may have accepted from you, which does not seem to be the situation always when it occurs.
These sales forces of pharmaceutical companies have been examined more now than in the past due to their size, for one reason. The size of the sales forces of large pharmaceutical corporations tripled at one point, starting in the mid 1990s. Also, estimated total income for an individual pharmaceutical representative may exceed 200,000 a year. Overall, the amount spent on these reps exceeds 20 billion dollars annually.
Sadly, and with a high degree of confidence, most big pharma representatives are viewed and evaluated by their employers as it relates to their offering of prescriber inducements they may provide to targeted prescribers, as their ability as a sales representative is difficult to determine, since most with big pharma have several representatives visiting the same doctors with identical blockbuster promoted products. In fact, one could conclude that an individual representative in such a work environment is ultimately exonerated from any individual responsibility in regards to their vocation, which is one etiology of the premise that they are judged by their employers according to how much of their employer’s monetary surplus they dispensed in a certain period of time. This will be further addressed later. Yet the inducements are never described by what they actually are, which are bribes. Who receives these bribes is largely determined by the volume of scripts they write, as well as their loyalty to a particular pharmaceutical company’s products. This data of the prescribing habits analyzed by certain pharmaceutical companies is certainly available, and this will be further addressed below.
However, and empirically, the drug sampling of doctors may be considered an ultimate if not primary type of an inducement of certain representatives. Some pharmaceutical representatives are falsely led to believe that their territory’s performance is due in large part to their powerful ability to influence others. Although such pharmaceutical representatives want to believe such a false premise, it is samples of medications that determine the prescribing habits of health care providers. This is obvious now more than ever.
Many years ago, drug reps used their persuasive, yet ethical, abilities to influence the prescribing habits of doctors in an honest and credible manner, as they focused on the benefits for the doctor’s patients with particular drugs that the detailer may promote to such a doctor. However presently, most health care providers now simply preventing drug reps to speak with them. This is especially true when they are in clinic treating and assessing patients. More and more medical establishments are completely banning drug reps from their locations, and I speculate that this is occurring for many reasons, which may include the following:
The doctors lose money. Doctors are normally busy, so their time is valuable. As a drug rep, you are an incredible waste of their time. Yet they will accept your samples still. The credibility you possibly have thought you had and were perceived as such by doctors as a drug rep is no longer viewed to exist to any noticeable degree by the prescriber.
Based on information and belief, the prescriber’s perception of you as a drug rep is you only provide information that is presumed by them to be overall inaccurate and void of authentic objectivity related to your promoted products as a pharmaceutical representative. This view is due to the frequent statistical gymnastics the employers of drug reps engage in way too often in relation to the clinical benefits of their medication illustrated by what is likely biased data.
Doctors by their very nature seek answers objectively. And doctors do in fact find out about drugs through other methods besides the representative of the drug’s maker, such as the internet and experience with certain medications, because of their awareness of the lack of authenticity of certain medications combined by the absence of credibility of the representatives of such medications. This is further illustrated by reps being selected by pharmaceutical companies due to their perceived appearance and personalities judged by certain employers. Further trait desired is their candidate’s potential and complete obedience in relation to their directives to them, which is expressed by the displayed affinity for money from a potential candidate. Qualities related to anything of a scientific, medical, or clinical nature is of no concern to most pharmaceutical companies, quite apparently.
This is why pharmaceutical representatives have no interest or concern regarding public health, perhaps. This premise is further validated by their employers’ minimal concern regarding the medical knowledge of their sales representatives, as this is replaced with teaching their representatives on how to issue various inducements to select prescribers., yet are just shy of calling these inducements what they actually are, which are bribes. Examples may be creating a check from your company to a certain supporting doctor and handing this check to thank a doctor for supporting your company’s products for doing little, if anything, for your employer to justify this check. Knowing this, it seems to validate their apathy regarding the medical knowledge of their sales representatives, while emphasizing obedience of them instead, which does not allow them to examine what they are told to do by some pharmaceutical companies, which may be viewed as inappropriate inducements to select prescribers.
In relation to non-monetary inducements given to certain prescribers, they may be of a certain value and are possibly without any clear medical benefit, such as TVs or DVDs, perhaps. And the autonomy that exists with some pharmaceutical companies allows such activities of legal or ethical consequences to be applauded by them to certain representatives of theirs as examples of innovation or creation by representatives who implement these activities. This appears to eliminate the need to examine the consequences potentially of some activities and tactics encouraged by certain pharmaceutical companies.
Another issue is what is referred to as data mining, which is a determining variable as it relates to who a pharmaceutical maker may choose to support financially, as determined by this data available to them, which authenticates the prescribing habits of others. When a pharmaceutical company issues such a reward, that takes many forms, the pharmaceutical maker, which is often very large and lucrative, alters their relationship with certain prescribers into a pathological symbiotic relationship of one that is focused on the continued monetary gain presumed to be of one that is great benefit to the maker of such medications. By doing this, the maker has not even allowed in a conceptual sense to be of an entity of any medical benefit of others ho to reward via numerous financial incentives for supporting the medical products produced and marketed by the gift giver, as this product maker often manifests itself into a creator of a quid pro quo relationship through what could be considered a pathological form of symbiosis that becomes a destructive host upon its creation by such companies. The receivers of such corruption are determined by those pharmaceutical companies that analyze this prescribing data, which is available to them starting with the selling of various identifying numbers of certain prescribers that are made available through the selling of these identifiers for the monetary gain of the providers of this data, which starts with the American Medical Association. Further disturbing is the fact that this behavior is not prevented by our lawmakers. In addition to pharmaceutical companies determining the supporters of their medications, the data also allows these companies to select certain prescribers that are of high volume, both of particular disease states and overall frequency. Because this variable allows a pharmaceutical company to conclude who could potentially affect their business and therefore dispense their financial stimulus methods accordingly. This allows certain pharmaceutical companies to create reciprocal relationships in addition to the anticipated continued prescribing habits of known supporters of certain drugs provided by and promoted by their makers.
Conversely, if a prescriber is determined by a pharmaceutical company to be harmful or of minimal financial benefit to a pharmaceutical company in relation to its promoted products, such a prescriber is often determined by such a company to be ignored by such a company, which includes any items of benefit to the health of others become forbidden and without access to such prescribers, which could include samples to such a prescriber as well.
While such unethical activities may appear to be ridiculous and without reason to some, this does not mean they do not occur, as the apparently unethical behaviors of certain pharmaceutical companies seem to be unbelievable by others on occasion. Furthermore, such tactics may cause an outbreak of corruption by other similar organizations, perhaps.
For example, possibly as a response to some tactics of branded pharmaceutical companies, some managed care providers are giving financial incentive to prescribers if they choose a generic medication that is typically less expensive than the branded variety. While legal, this activity is overall unknown to most citizens. However, such activity makes them no different in their approach to health care than certain pharmaceutical companies, as both affect the sterility of the judgment of some doctors who accept these inducements.
It seems that external regulation is necessary to prevent the drug companies from allowing the autonomy of drug reps and their own often secretive tactics that are utilized by some of the companies in the pharmaceutical industry. To many, it is rather obvious that internal controls of companies that perform such wrongdoing, are void of self-regulation, and choose to be this way with deliberate intent. If regulation happens, then it may be possible to resurrect the ethical element necessary as a participant in the health care system. The importance of public health should be the apex of their existence as a company that participates in this system..
Overall, pharmaceutical representatives are good, intelligent people who perhaps do not realize the results of actions that many consider to be unethical. Yet they do as they are told in order to maintain their employment, yet may compromise their integrity at the same time- as at times these methods implemented by members of the pharmaceutical industry with progressive frequency may result in a toxic culture and environment of certain companies that create with force certain representatives who perform activities that may be against their desire as a person.
I believe most reps really WANT to do well for their employers, yet are prohibited from doing so now because of how their employers are now viewed in their medical community, in relation to any contributions they may appear to make, which is not in the best interests of the patients, overall. Ethics once associated with this industry have atrophied over the past decades, and the result is the pharmaceutical industry is no longer viewed as a segmented type of a corporation, yet is unfortunately viewed as one with the objectives of greed and profit, and there are no exceptions of this perception that has been known to members of the pharmaceutical industry, yet have refused to shift their own point of view regarding this accurate premise the public has of them

Fear ensures loyalty.” --- Author unknown
Dan Abshear (what has been written is based upon information and belief).

oh4real said...

I just came from Walgreens. Let me tell you exactly about the pricing history of Adderall XR.

I used to justify individual health insurance when:
premium$ + Adderall XR copay + Rx-deductible/12 == Adderall XR "out-of-pocket".

That equation went negative almost a year ago.

For several years, up until about 9 months ago (maybe 12), Adderall XR was listed at ~$140-150/30.

Around October 2008, I noticed it jumped to ~$200 with $50 instant discount - so that the list was somewhat 'inflated' and market price was kinda preserved.

Today, August 6, 2009, I went in to get my generic salt and asked about the generic Adderall XR - it's $150/30 of 15mg.

I was shocked as this was the 'inflated' February price of Adderall XR.

So, I asked about Adderall XR - $266/30 of 15mg.

$266!!! or 100% increase in 1 year.

As a former marketing/strat consultant and product manager, explain to me, aside from strategy/tactics/etc, how this is possible or remotely justifiable? A product that's been manufactured for years (and costs pennies-a-pill), has risen in price - despite NO CHANGES to the product - almost 100% in a year?

I don't know what the price is for Vyvanse (I take generic di-salt), but it seems crystal clear to me what is going on - market gouging:

1) Margin: They licensed XR to Barr/Teva and so if pax switch to generic for cost, they get mailbox-money (higher profit margins).

2) Momentum: If Docs prescribe A-XR refills and health insurance formularies continue to reimburse it, Shire will make heaps of money. I had to tell my Doc that there even WAS a generic XR.

3) Ignorance: If pax believe that Barr's generic isn't "the same" as A-XR, then pax won't even try the generic.

4) Deception: Charge less (?) for Vyvanse in the beginning - which has patent protection, then start raising Vyvanse price.

This isn't about serving a public need, this is about meeting Wall. St./shareholder expectations.