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June 10, 2002, 8:45 a.m. Bitter Pill The truth about drug spending. By Robert Goldberg

recent ABC News special darkly titled "Bitter Medicine: Pills, Profit and the Public Health" claimed that there is little evidence that increasing drug spending is dramatically improving the health of Americans. It just so happens that it got most of its evidence from a screed against medical progress — put out by an insurance-industry-run organization called the National Institute for Health Care Management — which concluded that most prescription drugs now on the market are more expensive, no better than older drugs that are a lot cheaper, and no safer than generic medicines that have no advertising behind them. The HMO- and insurance-industry-written study claims that most of the money spent on prescriptions are for drugs that aren't truly innovative.

But the ABC News special and NICHM, in defining the health-care crisis as a problem of rising drug costs, failed to tell the truth about drug spending and its real role in promoting human health. Their errors and distortions could fill a book, but here are a few of the most outrageous:

The NICHM claimed that the newest pain relievers, Celebrex and Vioxx, were no better than aspirin and did little to help relieve the stomach and intestinal bleeding that is the worst side-effect of taking non-steroidal anti-inflammation medicine over a long period. It explained that the revenue from the 55 percent of all pain-relief prescriptions that are going to these two drugs is paying for advertising rather than any real benefit.

Not surprisingly, ABC News simply parroted the HMO view of these drugs, ignoring the fact that more than 100,000 patients are hospitalized and 16,500 die in the U.S. each year as a result of NSAID-associated gastrointestinal side effects, such as ulcers and bleeding. It also ignored findings in the medical literature that patients who have to take pain medicine long-term are likely to reduce ulcers and bleeding by nearly half if they take these new pain medicines — and the consensus view of most pain specialists and gastroenterologists that Celebrex and Vioxx are the way to go.

Worse, NICHM never mentions the studies showing that using older NSAIDS was actually three times more expensive after the cost of hospitalizing and operating on people with bleeding ulcers was taken into account. The fact is, HMOs and insurance companies have made an economic decision that it is cheaper to let people bleed — sometimes to death — than to spend the money reducing the risk of such complications ("at most 4 percent," said one HMO rep on the ABC special). And people would keep on dying and bleeding if not for those profit-hungry drug companies and their manipulating ads telling them otherwise!

Then there is the claim that while we're spending more on prescription drugs than we did in 1995, the majority of drugs approved by the FDA are simply modifications of old drugs. Both the NIHCM study and ABC News seem to suggest that, because the majority of new drugs are simply modifications that can't or aren't dramatically improving health despite the increase in drug costs.

But: Take the claim that most drugs approved by the FDA are simply modifications of old drugs. That conjures up the image of companies simply rolling out 1972 Chevys with new paint jobs or headlights and calling them 2002 models. Most of the drugs approved since 1995 are new drugs designed to treat HIV, cancer, mental illness, heart disease, Alzheimer's, arthritis, migraines, etc., more effectively and with fewer side effects than older drugs. But not all people respond to the same pill, and many companies enter the market to fill these gaps and meet the demand. Simple modifications — or essential medicines?

Moreover, as drugs gain widespread use and physicians attain a deeper understanding of diseases, researchers find they can be useful for treating illnesses that require different doses and formulations. This happens with drugs for cancer, depression, and heart disease all the time. Then, too, doctors see the need for — and the FDA requires — different formulations in order to gain approval for new uses. Simple modifications, perhaps, but they result in significant improvements in health.

The claim made by the NICHM study's author — that there are fewer innovative drugs being developed — is, at best, a modification of the truth. To deflate the innovation average, NICHM did the following: it used the total number of all drugs approved by the FDA (including the modifications made in response to medical progress) as a denominator and then listed only one measure the FDA uses to acknowledge the medical importance of a drug, priority review, to qualify it as innovative — while ignoring other forms of expedited review. It also ignored all the biotech products under review at the FDA. In fact, the total number of drugs and biotech products receiving either Orphan Drug, fast-track, priority, or accelerated-approval status has nearly increased fivefold, from approximately 120 drugs in such categories to about 500 in 2002.

Ultimately, this wave of innovation is what the HMOs and insurance companies fear. Biotech and drug companies invent new drugs and they, in turn, invent NIHCM to create the specter of rising drug costs doing little to improve public health. Except that their own study argues against them. Most of the marketing dollars are spent on innovative medicines, but most of the drug spending is a result of increased use of what the NICHM folks would call standard drugs, which are cheaper and often marketed less aggressively. The fact is, the insurance companies just don't want to spend any more on drugs, period, because they reap fewer of the cost-saving or life-enhancing benefits of new drugs than do consumers. There is no doubt that the increase in drug spending — only 10 percent of what America spends on health care — has led to dramatic improvements in health.

Two studies by Frank Lichtenberg of Columbia University show what happens when people consume new drugs instead of old ones — both the breakthroughs and the simple modifications. Lichtenberg found that, between the years of 1980 and 1992, increased new-drug consumption reduced death rates, increased well-being, and reduced the rate of spending on doctors and hospitals. A follow-up study of drugs from 1992-1996 found the same relationship held up.

This may not persuade those people who simply see any gain in public health as too high a price to pay if drug companies are to turn a profit. And the HMOs and insurance companies think they have a solution to making them less profitable and — as a result — less able to develop new drugs: cut patent life and other patent benefits. In the past, NICHM has proposed eliminating Orphan Drug designation from many drugs and biotech products, citing it as yet another unfair dodge drug companies use to make money without adding to people's lives. Lest the misinformation persist, readers should consider yet another study Lichtenberg conducted where he found that before the Orphan Drug patent protection, mortality from rare diseases grew at the same rate as mortality from other diseases. Five years after the Orphan Drug patent law was created, mortality from rare diseases grew more slowly than mortality from other diseases.

Patent protection is essential to saving lives. So is spreading the real truth about medical progress. "Bitter Medicine" is only a symptom of the larger problem facing the biotech and pharmaceutical industry and our health care system. Investing in medical progress has been made tantamount to a criminal activity: Unless a forceful defense, based on the truth, is mounted and the blame is shifted to those who want to limit life by limiting patent life, our health-care system and our health are in for dangerous times.