Author Archives: Alycia Hogenmiller

States Fight to Control High Drug Prices

On Friday, April 13, 2018, the Fourth Circuit ruled 2-1 that Maryland law HB 631, prohibiting price gouging by generic pharmaceutical companies, is unconstitutional because it violates the dormant commerce clause by directly regulating transactions that occur outside of the state.

The Maryland law prohibites generic drug manufacturers or wholesale distributors from making unconscionable increases to the price of an essential off-patent or generic drug. The Association for Accessible Medicines (AAM), a trade group of generic drug manufacturers, sued the Maryland Attorney General to stop implementation of the law because they said the law violated the dormant commerce clause and the law is impermissibly vague, violating the Fourteenth Amendment Due Process Clause. The Commerce Clause allocates power to the federal government to regulate interstate commerce and constrains states from enacting legislation that interferes with or burdens interstate commerce. The dormant commerce clause limits states from enacting legislation that controls the price of goods outside of the state. The AAM appealed the District Court for the District of Maryland’s decision that granted the State of Maryland’s motion to dismiss AAM’s challenge and denied AAM’s motion for injunctive relief.

The Fourth Circuit found the law unconstitutional because (1) the law is not triggered by conduct that happens inside the state of Maryland, (2) even if it did, the law seeks to control transactions that occur outside of the state, and (3) if other states enacted similar laws, this would impose a significant burden on interstate commerce. The Court did not address whether the statute violated the Fourteenth Amendment because it ruled it unconstitutional under the commerce clause.

Maryland is not the only state working to control high drug prices through legislation. In March of 2018, Oregon passed the Prescription Drug Price Transparency Act, HB 4005. The Oregon law would create new reporting requirements for drug manufacturers related to price increases and patient assistance programs. In 2017, Louisiana, Nevada, California, Maryland, and New York all enacted transparency bills related to drug prices. In 2016, Vermont enacted SB 216 to identify the top fifteen drugs that the state spends the most money on. These states join others that have already put in transparency laws related to prescription drugs like the District of Columbia’s AccessRx law, which requires reporting on gifts to healthcare providers in the District from pharmaceutical companies.

Similar to the Maryland law, laws in other states have been challenged by pharmaceutical and device manufacturer trade groups. The Pharmaceutical Research Manufacturers Association (PhRMA) and Biotechnology Innovation Organization (BIO) have challenged Nevada statute, SB 539, for infringement on patent and trade secrets. The Nevada law requires manufacturers of essential diabetes drugs to report manufacturing costs of the drug, a list of sales representatives who market the drug, payments or donations to nonprofit organization, and other information. In California, PhRMA filed a complaint seeking declaratory and injunctive relief against implementation of SB17, which imposes reporting requirements on pharmaceutical companies for certain price increases on their products sold to state purchasers in California.

The Maryland law was unique because it was the first state law that went beyond reporting and instead explicitly prohibited price increases. The Fourth Circuit decision might scare other state legislatures from passing more aggressive laws to stabilize or lower drug prices. Transparency laws, like the ones passed in 2017, are important because policy makers cannot know there is a problem without the data to examine whether there is one. But there also needs to be more policy action towards potential solutions to keep drug prices down. The Fourth Circuit majority opinion did note that they were sympathetic with consumers who have been affected by high drug prices and that the decision is is not meant to suggest that Maryland and other states cannot enact legislation to secure lower prices for prescription drugs for citizens within their state. Hopefully patient advocacy groups keep pushing for similar state laws and other policy changes to shift the landscape of drug pricing.

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Cozy Bedfellows – Journalism and the Pharmaceutical Industry

Announcing LeapsMag: a magazine created and funded by Bayer, the German pharmaceutical company that is covering Alzheimer’s diagnostics, gene therapy, and CRISPR. Bayer started the magazine with the goal of publishing a variety of stories and opinions – as long as the stories do not criticize Bayer initiatives, such as the Bayer-Monsanto merger. Both Bayer and their editor, Kira Peikoff, assert that the company does not have any editorial influence on the content of the magazine. Peikoff even published a statement of independence on the LeapsMag website. But before publishing the statement, she ran it by Bayer because she was “worried that it might ruffle some feathers.”

How do we ease the problem of pharmaceutical (or any commercial) sponsorship of news stories and publications? When I tweeted this article out, biotech reporter, Alaric DeArment asked, “Would journalists take these kinds of roles if the job market in news was better? My guess is that most company-sponsored publications would be staffed by PR and marketing people and not journalists if it was.”  I agree with him. As news consumers, we need to be more cognizant of the price we pay, when we don’t pay for our news or media.

This isn’t the first (or only) instance of cozy relationships between journalism and pharmaceutical companies. Last year, Pfizer sponsored a story in the Boston Globe on a woman’s struggles with Parkinson’s disease, as narrated by her daughter to a scientist working on Parkinson’s research. This story was part of the Boston Globe’s Brand Lab – a section of the Boston Globe enterprise with the specific aim of engaging consumers, encouraging brand loyalty, and communicating a brand’s ideals without using explicit messaging. What the sponsored page fails to mention is that Pfizer has a drug for Parkinson’s in Phase II clinical trials.

In a more scandalous story, STAT News (a subsidiary of the Boston Globe) published an op-ed piece by a physician praising how helpful drug reps are to his practice. When the piece was initially published, readers complained that the physician’s conflicts of interest weren’t disclosed (the physician had received $300,0000 from the drug industry, which is easily searchable on Dollars for Docs). When the physician was interviewed about his disclosures, he admitted to the reporter that he did not write the op-ed piece at all. Instead, the piece was written by a PR firm. The physician was approached by an industry-sponsored group, Alliance for Patient Access, if he wanted to “publish” this op-ed. The physician did say that he “agrees with the spirit of the article” or he “wouldn’t have put his name to it.” After this was revealed, STAT News did retract the article and update their policies on authorship and conflicts of interest in response to this incident.

These three stories are only examples of a pervasive problem of corporate influence in journalism. Health news readers need to be cognizant of the potential conflicts of interest that are present when journalists learn about health news from industry sponsored conferences or when news publications are partially sponsored by healthcare companies. Readers also need to work to support the media so that the news can financially be corporation-free. Although digital subscriptions have been increasing, big traditional news outlets, like the New York Times, have had declining revenue. As people stop paying to support media outlets, these industries become more dependent on ad revenue and commercial support. Another important thing to do is to support organizations that work to expose bias in journalism, like my favorite organization, HealthNewsReview, which reviews news articles and exposes marketing messages in healthcare reporting.

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Pharma-Funded Charities v. Health and Human Services

The battle to control high drug prices between pharmaceutical companies, insurance companies, and the government continues to rage on. On January 8, Patient Services Inc. (PSI), a patient-assistance charity, launched the newest crusade by suing the Department of Health and Human Services (HHS).

What is a patient-assistance charity?

A patient-assistance charity works to help patients with expensive prescriptions pay for their medication. Though seemingly benign, patient-assistance charities get most, if not all, of their funding from pharmaceutical companies. These are the same pharmaceutical companies that have, since the heyday of Martin Shrekli, been criticized countless times by the media and dragged into Congress for raising drug prices.

This is where a patient-assistance charity comes in and provides a shield for badly bruised companies. Charities help quell public criticism for increased drug prices because companies, by pointing to the charities, are able to ensure critics that patients who need their drugs will be able to afford them. Shrekli even did this for Daraprim, the drug that he raised the price by 5,000%. Within days of raising the price, Turing, the company that manufactures Daraprim, called PSI and created a fund for patients with toxoplasmosis, the infection that is most often treated with Daraprim.

The good publicity is only icing on the cake. The real reason pharmaceutical companies donate to patient-assistance charities is because it is profitable. For every $1 million spent on a charitable donation, the company has the potential to generate $21 million in revenue. The company also receives a tax deduction for their donation. Companies profit because they only have to pay a couple hundred dollars to cover the patient’s co-pay and they will receive thousands of dollars for the remaining cost of the drug from the patient’s insurance company.

The funds also allow drug companies to get around anti-kickback provisions. Pharmaceutical companies cannot give patients enrolled in Medicare or Medicaid a co-pay coupon (coupons that help reduce or eliminate co-pay costs for a certain drug). However, companies are authorized to give to patient-assistance charities that help patients on Medicare or Medicaid.

There are rules governing the relationship between the companies and charities. Companies are not allowed to dictate how the donations are spent, but this doesn’t always play out in practice. An IRS analysis of the Chronic Disease Fund (CDF) found that almost all of the financial assistance went to patients taking drugs from their biggest funder, Genentech. In 2011, Celegene gave CDF $48.8 million to support a fund for multiple myeloma patients and 98% of the money from that fund went to patients taking drugs from Celegene.

Patient Services Inc v. Health and Human Services

In its suit, Patient Service Inc v. Health and Human Services, PSI alleges that the federal oversight of its charity violated its free speech rights by limiting its ability to communicate with donors. PSI says the oversight is burdensome and threatens the existence of the organization.

PSI might be going on the offensive in reaction to the Office of Inspector General (OIG) of HHS revoking its favorable advisory opinion of another patient-assistance charity, Caring Voice Coalition (CVC). OIG rescinded its favorable opinion because CVC gave drugmakers data that could help them see if their contribution was being directed for their own drugs, potentially giving the companies “greater ability to raise the prices of their drugs while insulating patients from the immediate out-of-pocket effects.” The coalition has since announced that it will no longer be able to offer any financial assistance in 2018. On top of this, patient-assistance charities are also feeling the heat from the U.S. Attorney’s Office in Massachusetts and the Internal Revenue Service.

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