Drug Pricing, Shame, and Shortages

By Nicholson Price

Drug prices have been making waves in the news recently.  The most recent case is the huge price hikes of the EpiPen, which provides potentially life-saving automatic epinephrine injections to those with severe allergies.  Mylan, which makes the EpiPen, has raised its price some 450% over the last several years.  The EpiPen is a particularly problematic—and media-friendly—story because the emblematic use case is the kid in school who can’t breathe because she came into contact with peanuts.  Jacking up the price on something that’s not optional—for parents and for schools—seems heartless.  Thoughtful pieces have pointed out how the EpiPen price increases demonstrate problems with our health care system and drug/device approval system in general.

Other big recent cases that have hit the news include huge increases in the price of insulin, and, of course, Turing Pharmaceuticals’/Martin Shkreli’s ~5000% price hike on the drug Daraprim.  The EpiPen and Daraprim are especially notable because patents mostly aren’t involved—the effective monopoly appears to come from the delay or challenge in getting generic products approved by FDA (although the EpiPen itself also seems tough to make).  And, of course, drug prices aren’t regulated in the US the way they are in much of the world.

These stories seem crazy, cruel, and fascinating.  And they raise (for me, anyway) the question: what’s changed?  This seems like a relatively new phenomenon.  But FDA’s had a backlog for a while, and drug prices have long been unregulated. Continue reading

The 21st Century Cures Act, HIPAA, Big Data, and Medical Research

By Nicholson Price

The 21st Century Cures Act is a big deal; the House passed it handily, and we’re still waiting to see what the Senate does.  A lot has been written about what it does in terms of changing FDA review processes, and a fair bit about the lovely increase in funding for NIH (see Rachel Sachs’ blog posts here, here, and here).  These are tremendously important.

But another provision in the bill has been getting much less play: the way it changes HIPAA to enable large-scale research, which is also a big deal all by itself. Continue reading

#BELHP2014 Panel 3, Behavioral Economics and Health Care Costs

By Nicholson Price

[Ed. Note: On Friday, May 2 and Saturday, May 3, 2014, the Petrie-Flom Center hosted its 2014 annual conference: “Behavioral Economics, Law, and Health Policy.”  This is an installment in our series of live blog posts from the event; video will be available later in the summer on our website.]

Our third panel, moderated by PFC Academic Fellow Matthew Lawrence, addresses the use of behavioral economics techniques to control health care costs.  Speakers are Christopher T. Robertson, Brigitte Madrian, Ameet SarpatwariAnupam Jena, and Jim Hawkins.  (Many projects are co-authored, but I’m only listing the presenters here)

The first speaker is Professor Christopher T. Robertson, coming from Arizona Law but visiting Harvard and the PFC this year, speaking on Cost-Sharing as Choice Architecture.  He starts by talking about the cost side of cost sharing, which we know works in reducing consumption from empirical evidence; from the RAND study, it reduced use without reducing health.  More recent studies also confirm this.  But cost sharing presents four problems:

  1. Underinsurance relative to ability to pay
  2. Indiscriminate reductions in health care (more of an ax than a scalpel)
  3. An unfair tax on sickness (more tentative if we can solve the first two)
  4. The burden of deciding.

Continue reading

Liveblog of 4/2 panel on Hot Topics in European Bio-Patent Law, Part IV

By Nicholson Price

Finishing up the event today is Tom Kowalski from Vedder Price, giving a US perspective on section 101 on patentable subject matter.  This post will encompass his presentation and general questions afterward.

Kowalski starts with a brief review of patentable subject matter, and states his view that after Prometheus and Myriad, “the fabric of the patent system has been torn.”  His view is that isolated DNA is a separate chemical entity, and that the Supreme Court simply got it wrong.  Continue reading

Liveblog of 4/2 panel in European Bio-patent Law, Part III

By Nicholson Price

Third up is Dr. Maaike van der Kooij, discussing medical use claims at the EPO.

In general, methods of medical treatment aren’t patentable under Art. 53(c) of the EPC, but the way around is to claim a relevant product either for medical use (if the substance is known but not medically used (Art. 54(4)) or for a specific medical use (Art. 54(5)).  (From my point of view, this seems like another way that the EPO is trying to address its innovation mandate by working around what appears to be pretty clear language in the EPC, a pattern which we certainly see in the US in both PTO and Federal Circuit practice). Continue reading

Liveblog of 4/2 panel on Hot Topics in European Bio-Patent Law, Part II

By Nicholson Price

Next up is Dr. Anja Schmitt, comparing Myriad and Mayo to EPO practice, and describing gene patents and diagnostic method patents in the EPO.

Human gene patents

The basic question of human gene patents–as will be familiar to those who followed the Myriad litigation–is whether isolated DNA is a product of nature/mere discovery, or a man-made product with technical character.  In the Myriad case, claims covered isolated DNAs for the BRCA1 and BRCA2 genes which are useful for identifying a predisposition to breast cancer.

At the EPO, on the other hand–using the same sources of law as Dr. Nichogiannopoulou mentioned before–genes are patentable as long as they disclose the industrial applicability and the function of the gene and/or its encoded protein. Continue reading

Liveblog of 4/2 panel on Hot Topics in European Bio-Patent Law, Part I

By Nicholson Price

I’ll be liveblogging today’s panel on Hot Topics in European Bio-Patent Law (co-sponsored by the Broad Institute), with several guest speakers from the European Patent Office (EPO).

Ben Roin, Heiken Assistant Professor of Patent Law here at HLS, is moderating.  Speakers will be Dr. Aliki Nichogiannopoulou on stem cells, and Dr. Anja Schmitt on gene patents, Dr. Maiake van der Kooij, all of the EPO, followed by Tom Kowalski of VedderPrice.

Dr. Nichogiannopolou begins by talking about stem cells, and opens with a few background points about the EPO.  The agency has its own implementing legislation separate from the EU, and includes 38 member states – 10 more than the EU itself, including industry-important Switzerland.  The EPO supports innovation, competitiveness, and economic growth for the benefits of European citizens, and has the mandate to grant European patents for inventions. Continue reading

More on taxing egg “donation” payments

By Nicholson Price

Dov Fox had a terrific post about taxes on compensation for those who donate eggs and sperm a few weeks ago in reaction to Perez v. Commissioner.  I don’t have any particularly new thoughts on this area, but for those of you who haven’t already seen it, I wanted to share the excellent mini-symposium that recently concluded over on the Faculty Lounge on this topic.  Kim Krawiec organized, and there’s a series of great posts by several scholars, pointing out, among other things, the strangeness of the fact that there’s still quite a lot of uncertainty about these issues, even though they’ve been around for a while and are not particularly rare.  In any case, it’s very much worth reading, even for those who aren’t normally tax wonks.

FSMA Conference Part 2: FSMA and Risk Regulation Strategy

[Ed. Note: On Friday, the Petrie-Flom Center, the Food Law and Policy Clinic (a division of the Center for Health Law and Policy Innovation), the Food Law Lab, and the Harvard Food Law Society (with support from the Top University Strategic Alliance and the Dean’s Office at Harvard Law School) co-sponsored a conference at HLS called “New Directions for Food Safety: The Food Safety Modernization Act and Beyond.”  This week, we will be sharing a series of blog posts from the event, and video will follow shortly.]

After Peter Hutt’s teriffic keynote speech, our first panel addresses the Food Safety Modernization Act and risk regulation strategies.  The speakers are Professor Jake Gersen of Harvard Law School, Director of the Food Law Lab, and Professor Michael Roberts, Founding Executive Director of UCLA Law School’s Resnick Center on Food Law and Policy. Continue reading

Patent trolls/Monetizers/PAEs/NPEs and Bio/Pharma

By Nicholson Price

There’s recently been a lot of focus on patent trolls (so called by those who dislike them; they’re also known as patent assertion entities, nonpracticing entities, and monetizers, each with slightly different definitions; I describe them a bit more after the fold*): there have been Congressional hearings, a bill passed in the House, White House statements, state legislation, and quite a bit of academic attention.  Most attention, though, assumes this is mostly an issue for the high-tech and software industries; in particular, it’s usually assumed that the biotech and pharmaceutical industries are insulated from the phenomenon.  Robin Feldman (at UC Hastings) and I decided to reexamine that assumption, and argue in this piece that the conventional wisdom is wrong, and that biopharma is a relevant target for monetizers.

The basic argument of our piece is as follows: conventional wisdom holds that pharma need not worry about monetizers: even though patents are very important for drug companies, each drug is usually covered by just one or a few patents, and the company either owns them or has licensed them; otherwise it wouldn’t make the drug.  So there just aren’t patents out there that can be asserted; ergo, no monetizer problem.  And indeed, there hasn’t been much action so far.  We point to three challenges to this wisdom: (1) regulatory oversight increases the costs of inventing-around an asserted patent; (2) monetizers are spreading past low-hanging fruit; and (3) the business of selling drugs involves much more than just coming up with an active chemical compound, so that “much more” is still vulnerable to monetizers.  But the main thrust of the paper is against the assumption that there aren’t assertable patents out there.

We thought the patent holdings of universities would likely include lots of patents that might be used by monetizers against pharma, and we were right.  In a deliberately light skim across patent holdings of 5 major research university systems, we easily found many such patents.  The paper describes multiple different categories of patents that could be used, and provides examples of each.  We didn’t aim to be exhaustive, just to point out that the issue is a relevant one to biopharma (whatever you think of trolls), and that that industry should be taken into account–and should participate–in the policy debates about what happens next.  Continue reading

More on drug quality: India

By Nicholson Price

The New York Times had a troubling piece this weekend about major problems in drug quality in India, where FDA Commissioner Margaret Hamburg is visiting to discuss safety issues. India makes 40% of the U.S.’s generic prescription and over-the-counter drugs.

Quality issues seem to be unfortunately common (though of course there are many top-quality manufacturers and plants as well).  Half of all the FDA’s drug-related warning letters last year were issued to Indian plants, and recently popular drugs (including Neurontin and Cipro) have been banned from the United States if they’re manufactured in India.  Part of the explanation is differing standards for different markets; manufacturing standards are higher for the U.S. than for India, but the same companies are doing the manufacturing, sometimes at the same plants. Problems aren’t just about quality control in the plants – there are also major concerns with fraud.  In a particularly harrowing situation, “One widely used antibiotic was found to contain no active ingredient after being randomly tested in a government lab. The test was kept secret for nearly a year while 100,000 useless pills continued to be dispensed.”

(If you’re interested in pharmaceutical counterfeiting and are in New England, there’s what promises to be a terrific conference on pharmaceutical counterfeiting at UNH School of Law in Concord, NH on February 19 and 20; details are here.) Continue reading

Drug shortages continue: new report

By Nicholson Price

The GAO released a report yesterday on the continuing problem of drug shortages, which unfortunately seem like they’re becoming a permanent part of the U.S. healthcare system.  Hundreds of drugs have at least temporary shortages–456 in 2012. The majority of drugs facing shortages are sterile injectable drugs, including some cancer drugs which have become part of the standard of care and other staples like nitroglycerin and basic IV fluids.

Although the FDA has increased powers to deal with drug shortages under the Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA), those powers are still quite limited.  Manufacturers are now generally required to report shortages in advance to the FDA (previously only some types of manufacturers were so required), and the FDA can try to help.  But the FDA cannot require manufacturers to make drugs if they choose not to, and can offer little in the way of incentives to encourage them to continue making drugs or to increase production.

The causes of drug shortages are complex, and include regulatory, technological, and economic aspects.  A 2013 paper by FDA officials identified manufacturing quality problems as the single biggest proximate cause of drug shortages, and I’ve argued elsewhere that these quality problems stem from a lack of innovation in drug manufacturing.  Though FDA will do what it can to try to decrease shortages, it seems to me that without addressing the root causes (poor quality and relatively uncontrolled drug manufacturing, in addition to challenging–and linked–economic dynamics), we’re likely to see drug shortages continuing for a long time.

Three Parents and a Baby

By Nicholson Price

There’s an interesting post up on the New York Times’ Well Blog about children with three biological parents—in this case, three genetic parents.  Here, a mother and a father provided chromosomal DNA (i.e., the standard 23 chromosomes from each leading to the diploid 46 chromosomes), and another woman provided the egg, which included DNA found in the mitochondria (the “powerhouses of the cell” which are found in the cytoplasm of the egg).  The idea behind this practice is that women with problems in their mitochondria can still have healthy children with their own genetic material.  While it’s not that unusual to talk about children with three biological parents (two genetic and one gestational, as happens frequently with a surrogate mother or egg donor), we don’t often think on examples with three genetic parents (and the potential for a fourth biological (gestational)).

Continue reading

Great piece on ER pricing

By Nicholson Price

The New York Times has posted another installment of its excellent series, “Paying Till it Hurts,” by Elisabeth Rosenthal, this time on the astonishingly high costs of emergency room visits.  The piece is worth a read in full for its infuriating detail—really, I think the whole series is—but the message is pretty clear.  I’d also be remiss in not noting that the basic message, with its own set of excruciating details, was laid out in Steven Brill’s piece in Time magazine back in March.  But it’s such a big issue that it deserves this kind of attention.

The basic point is that the costs charged by hospitals are incredibly high, highly variable, and invariably opaque.  Hospitals price procedures, products, and everything else based on the typically secret (but not in California!) “chargemaster,” which lists sticker prices for everything.  Hospital executives speaking about the chargemaster say no one pays sticker price.  That may be true, but the discounts from sticker are almost totally opaque, which hampers the market’s cost-checking role (the Times piece describes Sutter Health contracts as having “gag clauses” so that insurers who negotiate with Sutter can’t tell the employers who are paying for the insurance what rates have been negotiated).  In addition, lots of locales are dominated by one or two hospital systems, which consolidate then raise prices without worrying much about competition.  Finally, most people aren’t comparison shopping for an ER visit anyway – even if they could.

The effect of opacity and consolidation looks to be pretty regressive—even if no one plays the sticker price, the people paying closest to it are those without insurance, who have no prenegotiated discounts and no one to argue on their behalf.  Cal. Pacific’s CEO, Dr. Warren Browner, argues for opacity for pseudo-progressive goal of fleecing rich foreigners (“You don’t really want to change your charges if you have a Saudi sheikh come in with a suitcase full of cash who’s going to pay full charges.”), but that seems a lot rarer than near-poor coming in to ERs uninsured and getting billed full fare (especially if, a la a certain recent presidential candidate, ERs are our health care system for the uninsured).

As in the rest of the US health care system, higher costs appear to be totally divorced from quality of care or outcomes (national variation here (pdf), international comparison here).

It’s hard to see what effect PPACA/ACA/Obamacare might have on this problem.  The Independent Payment Advisory Board has lots of power (or will once it has members), but is still Medicare-focused.  Cost-savings in Medicaid or Medicare payments might spill over into the private insurance market, but if the opacity and market power mechanisms remain, it’s not obvious to me how and why that would really happen.  Medicare is already paying by care episode much more than private insurers, who are still usually fee-for-service.  More competition and transparency might help (More vigorous antitrust enforcement?  Required disclosure of billed/paid costs? (maybe, but maybe not)).  Maybe the fact that more people will be insured will make a difference; if the biggest burden is borne by the uninsured, who have little leverage, lowering that numbermight lower the burden.  But it could also just make it even more unfair for those who remain outside the system.

[UPDATE 12/5/13: I missed Section 9007 of the act, which requires charitable hospitals to publish their chargemasters and prohibits charging chargemaster rates to individuals who qualify for financial assistance (instead, they’d be charged insurer-negotiated rates).  Unfortunately, the implementing regulations haven’t been promulgated by HHS or Treasury, so these provisions aren’t yet applicable.  But eventually they may help, once they’re implemented.  Steven Brill has a piece on this here, and Sarah Alder here.]

In any case, the Times piece is worth a read.  And so are the previous four entries (on colonoscopies, pregnancy, joint replacement (with a nice discussion of medical tourism), and prescription drugs).

Significant paper on GMO food risks retracted

By Nicholson Price

In the debate over whether genetically modified organisms should be allowed in the food supply or labeled when they’re used, a central question is whether GMOs are any more dangerous to people eating them than other foods.  This is far from the only concern raised by GMOs—that list includes things like the dangers of pervasive monoculture over diversity, intellectual property issues about crop ownership, the loss of traditional food sources, and the unintentional spread of modified organisms—but it’s a big one, and a major lever of consumer engagement.

In this debate, a significant piece of evidence frequently cited by the anti-GMO camp was a 2012 study by Seralini et al. that rats fed Roundup-ready corn were more likely to develop cancers (Roundup-ready corn is sold by Monsanto and is resistant to its popular herbicide Roundup).  I say was because the journal, Food and Chemical Toxicology, has just retracted the paper.  The paper was hugely controversial—which certainly isn’t justification for retraction—but that controversy prompted the editors to take a closer look at the raw data, after which they concluded that the number of rats studied was too low to justify the paper’s conclusions.

This episode unfortunately illustrates, among other things, the problems with intense media attention to early scientific reports, and with research-as-weapon rather than research-as-information.  Part of the hubbub came from the draconian embargo imposed on journalists before the article was published: because journalists weren’t permitted to seek any independent evaluation before publication of the article, many media reports ran enthusiastic coverage of the article before the scientific community started pointing out the many flaws in the research.  The eventual feedback from the scientific community—part two of peer review, when publications are criticized in the literature and addressed by letters and other publications—was certainly powerful, and led to the retraction.  But that doesn’t change the fact of its initial publication, and I’d bet quite a bit that the article will be cited for years to come as evidence that there’s not scientific consensus on this issue.  In fact, in a depressingly unsurprising development, Seralini is threatening to sue the journal over the retraction.

(For more on GMOs on Bill of Health, Kuei-Jung Ni just posted about the failure of the GMO-labeling initiative in Washington state, Glenn Cohen has written on the frankenburger, and I’ve written briefly about GMO crops spreading and intellectual property issues with GMO seeds.)

Losing antibiotics

By Nicholson Price

Antibiotics are a crucial aspect of modern medicine, and this fall has been filled with a number of hugely troubling reports about how we’re moving closer to an era where we can no longer take them for granted.  About a month ago, the associate director of the CDC told PBS in an interview that “We’ve reached the end of antibiotics.”  Frankly, this is terrifying. Continue reading

GIM: Informed consent for return of incidental findings in genomic research

By Nicholson Price

In the second installment of our new collaboration with Genetics in Medicine, we are highlighting an article released last week discussing informed consent for the return of incidental findings in genomic research.

As whole-genome and whole-exome sequencing become increasingly common in medical research, the potential grows for identifying genetic findings that are unrelated to the main focus of the study (often called “incidental findings,” or “IFs”).  There is substantial debate about the duties associated with incidental findings, including whether researchers should or must search for them under ethical or legal frameworks, and whether and how to return the results to research participants.  One understudied aspect of the issue, though, is how informed consent should be obtained for the return of such findings, and this paper begins the task of addressing that question. Continue reading

Foodborne illness and the government shutdown

By Nicholson Price

This story is still developing, so this post will just be a quick pointer.  You may have seen news stories about how FDA isn’t inspecting foods, and 90% of seafood isn’t getting inspected.  And these are all worries about problems that we think might happen.

Well, the problems have started.  Salmonella-contaminated chicken has sickened 278 people across 18 states.  The USDA’s Food Safety and Inspection Service (FSIS) is still operating as an excepted activity (pdf link, see page 2), and has announced the outbreak but the CDC may be unable to do interstate surveillance of the outbreak (exactly what CDC is able to do during the shutdown is a bit unclear).  And FSIS only covers meat, poultry, and eggs.  FDA, which inspects most other foods, won’t be doing so as long as the government is shut down.

And for folks who happen to go to the USDA site looking for answers (as opposed to linking right to the FSIS), they’ll get this message: “Due to the lapse in federal government funding, this website is not available.”

Praise for Price’s “Making Do in Making Drugs”

Check out this nice write up of PFC Academic Fellow Nicholson Price‘s paper, Making Do in Making Drugs: Innovation Policy and Pharmaceutical Manufacturing, over at the Written Description IP blog.  Says blogger , “Price’s paper leads to a host of new and interesting questions, and his thorough research revealing potential shortcomings of the FDA approval process is likely to be very useful . . . .”

HBR/NEJM online forum on health care innovation

By Nicholson Price

For those of you who haven’t seen it yet, there’s a great ongoing online forum over at the joint Harvard Business Review and New England Journal of Medicine Insight Center on Leading Health Care Innovation.  It’s online at HBR here, and will feature an ongoing series of posts about innovation in high-value health care through November 15.  Short articles from scholars in various fields will focus on three main areas: Big Ideas (foundational principles of high-value health care); Managing Innovations (organization and delivery); and From the Front Lines (stories of specific case solutions from practitioners).

They’re looking to host a lively forum, so comments seem both quite welcome and unusually thoughtful so far.