Buck Naked Politics

Again, FDA Promotes Pharma's Interests

By D. Cupples   |  In a letter Friday, House Oversight Committee Chair Henry Waxman (D-CA) asked the U.S. Food and Drug Administration (FDA) to reconsider a move that could prove dangerous to the public. This is not the first time the FDA has seemed to prioritize drug companies' interests over public safety.

According to Center for Responsive Politics data, incidentally, the pharmaceutical/health products industry spent $108+ million on lobbying this year alone; during the 2000-2006 election cycles, the industry gave $67+ million to candidates for federal office.  In part, Rep. Waxman's letter states:

Private Insurers Milking Medicare (i.e., Seniors & Taxpayers)

Posted by D. Cupples |  If nothing else, that the 2003 so-called "Medicare Modernization" Act barred Medicare from negotiating discounts from drug makers was a sign that private companies would end up slurping down tax dollars like a kid with an Oreo milkshake.

Yesterday, the House Oversight Committee released a report about the costs of allowing private insurance companies to handle Medicare Part D (prescription drugs for seniors).  In part, the report said:

"Taking into account the costs to the government of monitoring the private insurers, total administrative expenses, sales costs, and profits will reach $4.6 billion in 2007, with the profits of the Part D insurers alone accounting for $1 billion." (Report overview and  full report.)

Private insurers' expenses are six times higher than those of traditional Medicare, according to the report. Consider just the $1 billion in company profits: how many prescriptions could that money buy for seniors if it weren't funneled to insurance companies?...

Why Drug Prices are so High: GAO & Other Sources

Posted by D. Cupples |  Yesterday, the GAO released a report on rising retail drug prices based on samples prices in New York and Pennsylvania for commonly used drugs (report # 07-1201R). Prices increased an average of 4.3% per year from Jan. 2004 - Jan. 2007, out-pacing inflation by about 43%.

From Jan. 2004 - Jan. 2007, brand name drug prices went up 21.2% -- while generic drug prices went down 12.8%. Are generics cheaper to make?  That seems unlikely, given that they are chemically equivalent to brand-name counterparts.

Have costs gone up?  Not all of them.  From 2005 - 2006, for example, drug giants Pfizer, Merck and Eli Lily cut costs by laying off thousands of workers (NY Times and Sarasota Herald Tribune).  If labor costs went down, why did some drug prices rise faster than inflation?

Pharma TV commercials imply that concerned drug makers devote overwhelming amounts of money to developing new, life-saving drugs.  That claim seems grossly exaggerated.... 

 

FDA Faces Bipartisan Criticism Over Bureaucrats' Bonuses

Apparently, FDA managers (affectionately known as "bureaucrats") think  managers are more useful to the public than FDA scientists are, which is why managers have been giving higher retention bonuses to managers. Yes, it does sound self-serving.

According to the Washington Post,

"The bonuses have disproportionately gone to those who already have large salaries. The House committee's analysis of FDA bonus data shows that 33 of the most senior career managers -- who earn more than $165,000 a year because of their special talents and experience -- received a total of $900,000 in bonuses last year."

For example, an FDA manager who deals with lobbyists got $178,000 in cash bonuses in 4 1/2 years.  All she had to do to was sign a statement saying she would likely take a private-sector job if she didn't get a retention bonus. She didn't even have to prove that she had a job offer, though the rules state that retention bonuses are generally used to match competing offers from non-federal employers.

Meanwhile, an award-winning FDA chemical engineer got a mere $2,500 bonus.

Politically speaking, it's a bad time for bonuses, given the scandals over the FDA's repeated failure to promote drug safety -- one of FDA's primary functions (read about Viagra, Vioxx, Ketek and Avandia at BN-Politics).

Rep. Joe Barton (R-TX) said:

Threats to Doctors: Was it Pranksters, Patients, or Peeved Biotech Investors?

Debates over the experimental prostate cancer vaccine Provenge (made by small biotech firm Dendreon) have become so intense that two doctors requested bodyguards after receiving threats following their advising the FDA to delay approval (Washington Post).

Dendreon's stock prices quadrupled after the company submitted the application for Provenge, but prices nose-dived when the FDA delayed approval (WaPo). Blogger comments at ProvenceNow.org. (a website launched to support approval of Provenge) suggest that multiple interests are clashing:

Comment #7: "If you had cancer would you like to wait and see? I think not. You would be one of those patients that moan the loudest."

Comment #8: "Isn’t our country about free enterprise. If the FDA finds its role in profit protection, then what do small companies or individual researchers have as incentive to provide exceptional cures...."

Comment #9: "Anyone who really wants to try Provenge can do so right now with the phase III trial currently underway. Access is not a problem. I suspect you are mostly sour investors who lost your shirt in this. You should have taken profit in the 20’s and headed for the exits until final word came from the FDA...." 

Drug Companies Scammed Taxpayers, Cancer Patients, Others

Given history, drug companies' schemes are hardly shocking. Last week, a federal judge ruled against Astrazeneca, Bristol Myers Squib, and Schering Plough over "unfair and deceptive trade practices," costing government programs, insurance companies, and patients a bundle. (Wall Street Journal).

Basically, the companies published inflated "average wholesale prices" (AWPs) for certain drugs, knowing that taxpayers and others would pay for those drugs based on the AWPs (Washington Post).  Plaintiffs argued the drug companies charged doctors less for drugs while "secretly encouraging them to claim full reimbursement," which made the AWPs look legitimate (New York Times) 

This is not the first time Astrazeneca, Bristol-Myers Squib or Schering Plough were sued over illegal schemes....

Judge Determines that Three Drug Companies engaged in Unfair and Deceptive Pricing.

posted by Damozel | This sort of thing is more in The Crux's line than mine, but aspects of this case are really troubling me.

Applying Massachusetts state law, U.S. District Court Judge Patti B. Saris---who has evidently become "fed up" with the imaginative marketing schemes of Big Pharma--- held three companies liable in a nationwide class action lawsuit.  According to Judge Saris, Astra-Zeneca, Schering-Plough Corp., and Bristol-Myers Squibb Company "engaged in unfair and deceptive trade practices regarding some of their drug prices," (Wall Street Journal)  resulting in substantial injuries to patients, insurers, and the government. (Wall Street Journal2)    [She determined that the conduct of the fourth defendant, Johnson & Johnson, though "troubling", was not sufficiently egregious to violate Massachusetts law. (Bloomberg.com) ]   As to the remaining three, ""The different pharmaceutical companies unfairly took advantage of the system by setting sky-high prices with no relation to the marketplace,''" Saris wrote.  (The New York Times) 

The plaintiffs' lawyer, Steve Berman, stated:  "We found this case to be so disturbing because the pharmaceutical companies were running their business to benefit their bottom line, period," said Berman. "Because of the actions of these companies patients who rely on these drugs, often times to save their lives, have been critically injured through the grossly inflated prices." (Wall Street Journal2)

A Small Victory for the Public Interest

Posted by PBS Mind | Although they appear to have done it under pressure of threatened lawsuits, Kellogg has stepped up and taken a first step toward ceasing advertising of unhealthy products to children under 12, according to a report on ABC News. They're also embarking on a new, albeit flawed, labeling program for their foods that will give people nutritional information on the front of the box (I say flawed because the labeling information will be based on a 2,000 calorie [read adult] diet, even though many of the products are intended primarily for children, who require far fewer calories.)

Kudos to Kellogg for taking this first step without forcing a long court battle and without hiding behind the lack of federal regulation, of course, and like they, I hope other companies will jump on. But the darts and laurels procession doesn't stop there:

Tauzin: the Un-named Ex-Congressmen in Jefferson Indictment

Congressman William Jefferson's (D-LA) indictment has had two strange effects: 1) it sparked debate over which party is more corrupt; and 2) it reminded us of former Congressman Billy Tauzin (R-LA), a man who attracted coincidence like dogs attract fleas.

Tauzin is reportedly not under investigation. Why the mention in Jefferson's indictment? According to The Hill, Jefferson allegedly solicited bribes:

"in order to wield influence on several companies’ behalf, including iGate Inc.... As part of his suspected influence-peddling, Jefferson convinced a previously unnamed lawmaker [Tauzin] to write an October 2002 letter to iGate’s chief executive, Vernon Jackson, and tout his company’s technology.... Tauzin possessed substantial clout on Capitol Hill; his signature on a letter praising iGate was significant for the influence it could wield."

In 2003, while chairman of the congressional committee that regulates the drug industry, Tauzin pushed a bill that banned importation of prescription drugs from Canada and prevented Medicare from negotiating prices with drug companies (USA Today).

During the 2002 election cycle, Tauzin received $119,000 in campaign donations from the pharmaceutical/health products industry (Center for Responsive Politics). About a year after Tauzin helped pass the pharma-friendly bill, the drug industry's chief lobby (PhRMA) reportedly offered Tauzin $2 million a year to become its CEO and president, a position he still has today.

Isn't coincidence fascinating?

Hearing Tomorrow: Did the FDA Endanger Diabetics?

It seems old hat--the U.S. Food & Drug Administration's protecting drug companies' interests at public safety's expense. Tomorrow, the House Oversight & Government Reform Committee will hear testimony on the FDA's role in evaluating the diabetes drug Avandia.

People taking Avandia have a 43% higher risk of heart attack than those taking other diabetes drugs or nothing, according to a study in the New England Journal of Medicine. Even studies by Avandia's maker, GlaxoSmithKline, showed a 30% higher risk.

According to the New York Times, an FDA scientist pushed for black-box warnings on Avandia's label; after complaints from FDA officials with ties to Glaxo, the scientist "was ordered to retract her approval of the warning, lost her power to approve such assessments and no longer supervised reviews of the safety of Avandia."

AFter investigating the scientist's claims, Senator Charles Grassley (R-Iowa) sent a letter to the FDA commissioner, saying "'I hope you recognized what is wrong with this picture.... I also sincerely hope that this is not standard practice within the F.D.A.'”

Grassley was being polite. For years, he has spotlighted the FDA's questionable drug-safety policies. Click here for examples (e.g., Vioxx, Viagra and Ketek).

 

Contractor Fraud: Driving up Healthcare Costs?

Posted by D. Cupples |  Every tax dollar devoted to waste or fraud is one less dollar for legitimate healthcare services. As the presidential candidates propose their healthcare plans, they should consider one of the root causes of America's skyrocketing healthcare costs: private contractors.

In 2003, the Department of Justice (DoJ) said that healthcare contractors' settlements were the "lion's share" of fraud-suit settlements from 2000-2003 (larger, even, than defense contractors' settlements). Since 2000, America's two largest for-profit hospital chains (HCA and Tenet) settled massive DoJ fraud suits over conduct that had allegedly occurred for years. Contractors tend to settle fraud suits without admitting guilt, because if contractors are found guilty of fraud, the government can bar them from receiving contracts.

It's not just the big fish who've been sued, and it's not just hospitals. Below are more than a dozen examples of healthcare contractors that faced lawsuits or prosecution, their alleged conduct, and the outcomes.

FDA's Latest Pharma-Friendly Sins

Diabetics beware, and don't count on the U.S. Food and Drug Administration (FDA) to cover your back. People taking the drug Avandia have a 43% higher risk of heart attack than people taking other diabetes drugs or no drugs, according to a study published in the New England Journal of Medicine. 

The FDA reportedly knew of the risks for years but refused to include them on Avandia's labels. Even studies by Avandia's maker, GlaxoSmithKline, have shown a 30% higher risk of heart attack.

Senator Charles Grassley (R-Iowa) sent a letter to the FDA, demanding explanations. For years, Grassley has pushed for FDA reform because this is not the first time the FDA has been molasses-slow in alerting the public to drug risks . . . .

Pharma-paid Doctors Write Risky Scrips for Kids

Are doctors who take money from drug companies more likely to prescribe drugs than doctors who don't take money?  Based on state data, a New York Times' analysis found a possible correlation:

"On average, Minnesota psychiatrists who received at least $5,000 from atypical makers from 2000 to 2005 appear to have written three times as many atypical prescriptions for children as psychiatrists who received less or no money.”