Drug Cost Effectiveness, Tracking and Safety

(5/13/17)- About one-third of all drugs approved for sale in the U.S. over a 10-year period were subject to post approval “safety events” according to a report from the Yale School of Medicine that was published in the Journal of the American Medical Association.

Those “safety events” were twice as high among drugs that received accelerated approval, compared with drugs that were approved through the regular process.

The Yale researchers found that of 222 new drugs approved by the FDA from 2001 through 2010, 1 were the subject of later advisories, including boxed warnings and safety notices. Three of the drugs were withdrawn from the market.

The FDA is reviewing the findings of the report.

(3/9/15)- We recently received the following e-mail from Alex Thompson of the Consumer Justice Foundation-

Alex Thompson <>

Feb 23 (12 days ago)

Dear The Rubins,
My name is Alex Thompson and I'm the National awareness coordinator for Our site informs consumers about defective drugs and medications that are currently being prescribed to patients, and information regarding previously available drugs and products.

The Consumer Justice Foundation is thoroughly committed to educating the public about the dangers of prescriptions and defective products. The CJF has a strong commitment to it’s daily blog section regarding current drug and consumer recalls, product dangers and more.

The CJF also features updated information concerning current developments in the medical field. With your help, we can help spread awareness of these consumer recalls and threats to the public. Please consider mentioning the Consumer Justice Foundation on your links page ( Please let me know if you have any questions regarding our organization.

Alex Thompson
National Awareness Coordinator
Consumer Justice Foundation

(12/12/14)- Katie Thomas and Rachel Abrams, in their NY Times article dated 12/9/14, entitled “Paid to Promote Eye Drug, and Prescribing It Widely” discuss the fact that: “Half of the (eye) doctors who received the most money from Genentech to promote Lucentis in 2013 were among the higher users of the drug in 2012, billing for higher amounts of Lucentis than 75 percent of their peers.”

Genentech is the manufacturer of the drug Avastin, which costs about $50 a dose, and is used to treat macular degeneration, and is also the manufacturer of Lucentis, which treat the same disease, but costs about $2,000 a dose. Lucentis came onto the market in 2006, and was intended to replace Avastin, which had been the “gold standard” for treating the same disease.

Lucentis costs the federal government about $1 billion a year for Medicare and Medicaid patients.

The 20 doctors who received the most money earned $8,500 to $37,000 over 5 months in 2013 from Genentech for consulting fees, speaking fees, as well as travel expenses and meals. The company said it has an annual cap of $50,000 a doctor for speaking fees.

(5/21/14)- A recent study conducted by researchers at the University of Michigan, the results of which were published in a recent edition of the Journal of the American Medical Association indicated that about 25% of U.S. adults checked online physician-rating sites. About one-third of those who checked went to a physician or avoided one based on the ratings.

The three largest online physician-rating services are Healthgrades, RateMDs and Vitals.

(4/13/08)- The California State Board of Pharmacy voted to delay until January 1, 2011 a requirement that all prescription drugs sold in the state be electronically tracked. California enacted the legislation requiring the tracking system in 2004 after some incidents in which counterfeit or adulterated versions of the cholesterol-lowering drug Lipitor, the anemia drug Procrit and some other products made their way into local pharmacies.

The delay is the second one for the California program, which was initially expected to be operating by January 1, 2007. No board member voted against the delay.

The state plan would require that drugs be tracked electronically from the manufacturer through the wholesaler to the pharmacy. Each bottle of pills sold to a pharmacy would have to have a unique serial number, encoded in a bar code or radio frequency identification tag.

Florida has a tracking plan that requires the wholesaler, but not the manufacturer to utilize an electronic tracking system. Drug manufacturers argued for the delay because they would have no way of separating pills that were sent to California, and thus would have to have a nationwide system in place which was very costly and impracticable at this time.

The manufacturers favor a nationwide system rather than a system devised by each of the 50 separate states.

(1/21/06)- The William J.Clinton Foundation has helped to lower the cost of second-line AIDS drugs by helping obtain cheaper ingredients to manufacture the drugs. The price reductions involve nine companies from five countries, and covers two AIDS drugs usually used on patients who have become resistant to first-line medications.

The deal reduces by 30% or more the cost of already cut-price drugs offered in poor countries. Second line drugs in the battle against AIDS are many time more expensive than first-line drugs, according to Doctors Without Borders.

The foundation helped to get the lower prices in several ways. In connection with the manufacturing of the drug abacavir, the foundation found an alternative supplier willing to slash prices for one of the chemical ingredients that accounted for most of the cost of the drug. The foundation got a university researcher to find a cheaper way to synthesize one of the main ingredients for the drug efavirenz.

Four companies will manufacture HIV "rapid tests", which can determine a person's HIV status in less than 20 minutes for between 49 cents and 65 cents per test for the foundation. The companies are Chembio Diagnostics Systems, a unit of Chembio Diagnostics of Medford, N.Y.: Orgenics Ltd of Yavne, Israel, owned by Inverness Medical Innovations of Waltham Mass.; Qualpro Diagnostics of India, and Shanghai Kehua Bio-Engineering Co. of Shanghai.

(7/10/05)- The State of Georgia became the first state to hit its 640,000 employees, their families and retirees with a $100 co-pay if they use one of the more expensive brand name drugs. In fiscal year 2004, the state spent $405 million on prescription drugs, up from $338 million in 2003. The state was projecting a deficit of $466 million for drug costs in 2006.

A spokeswoman for the state said that if the co-pay exceeds the drug's cost, employees pay only the cost. The state has a three-tiered structure for prescription drug payment by its employees, their families and retirees. Employer drug costs have risen over 83% in the last five years, an average of 16.7% each year, according to Mercer Human Resource Consulting, New York.

More and more employers are switching to the system where the employee pays a percentage of the drug cost instead of a fixed dollar amount. Under this type of system the employee is in effect going to be careful not to look at cost alone in determining whether or not he/she will use a particular drug.

For a list of drug alternatives, go to . It is a free site that gives both generic and brand name alternatives, and explains how it differs from the drug your are comparing it to.

(11/10/04)-Recent history has shown that just because a drug that has been approved by the FDA, and has been on the market for several years, doesn't necessarily mean that it is "safe". Merck's pain killer Vioxx and Bayer AG's cholesterol lowering medication Baycol (cerivastatin)were instances of where approved drugs had to be withdrawn either by the company itself or because the FDA found that the drug was not safe.

In the case of Baycol, which was withdrawn from the market by the Bayer Pharmaceutical Division of Bayer AG, the German company, the withdrawal from the market was done voluntarily by the company in August 2001. The statin lowering medication was found to have caused the death of 31 patients because of fatal rhabdomyolysis. Like Merck's Vioxx, the drug had been on the market for several years before it had to be withdrawn.

The FDA announced that it would be taking certain steps to deal with the outcry about unsafe medicines. The agency will hire the Institute of Medicine- a part of the Congressionally chartered National Academy of Sciences, the government's scientific reviewer-to study how well the FDA assesses the dangers of unexpected side effects of marketed drugs. The agency also announced that it would be holding several public sessions to take public opinions in regards to how it deals with the after market for approved drugs, which come into question.

The FDA has only limited authority to order companies to do safety studies once a drug is approved and on the market. It can force a company to put a warning on the drug's labels or to pull a product off the market. In granting approval to market a drug the FDA often requires that a company do follow-up studies as to the safety of the drug. An FDA report issued in March 2004 found that almost two-thirds of the company commitments to do post-approval studies had not been started as of September 2003.

Internally the FDA intends to set up a new "adjudication" procedure under which a staffer who has a concern over a drug can have his/her concern reviewed by an internal panel that would include an outside expert and a representative chosen by the staffer. The ultimate decision on the matter would be made by the drug center director, as is typically the case now.

The agency will also finalize three -guidance documents that it proposed in May 2004. One deals with how drug makers can figure out risks during the process of developing a medication. The second proposal would focus on detecting drug risks after the drug is on the market, through reports from doctors and other medical professionals.

The third proposal discusses how drug manufacturers can develop plans to minimize the risks of drugs once they are on the market. The agency also announced that it would speed up its search for a new director of its Office of Drug Safety. That post has been vacant since October 2003. Health professionals have stated that it has been difficult to find anyone qualified to take this position since most pharmaceutical companies pay individuals in similar type positions more than the $125,000 salary that the job calls for.

FDA safety procedures also recently came into the limelight in connection with the British government's rejection of Chiron's flu vaccine as being unsafe that were manufactured in a plant in Liverpool England. British health authorities did not tell the FDA about their concerns about the plant where the vaccine was being produced till after the rejection had taken place. The FDA said that it had relied upon assurances from Chiron that all was proceeding well with the vaccine.

According to FDA Congressional testimony in 2000, over 80% of the ingredients in U.S. medications are manufactured overseas. The FDA has no agreement with British health authorities that requires the exchange of information between the two agencies. The FDA regulates and inspects all plants world-wide that manufacture drugs that will be imported into the U.S. In the fiscal year 2003 the agency conducted 22,543 inspections of food and drug plants, both foreign and domestic. It conducted almost 17,000 such inspections in 1999.

The FDA and the European Medicines Agency, the drug regulation agency for the European Union, agreed in 2003 to share information on new drug applications and swap inspection reports of manufacturing sites. Since individual European nations do the bulk of their own inspections, the FDA would need separate agreements with each individual European government in order to be able to have a complete picture of what is happening with an individual drug in regards to its safety.

The FDA stated in 2000 that the "globalization of the pharmaceutical industry is outpacing our resources to inspect pharmaceutical manufacturing plants worldwide." When Congress passed the new prescription drug law in 2003 it called for legalization of the re-importation of drugs from overseas if the head of the Health and Human Resources Department could attest to the safety of the imported drugs. This issue has become a major stumbling block in connection with the whole re-importation issue.

Consumers will encounter full-page ads in local newspapers touting a certain medication almost daily. Spot ads appear on TV. Banner ads appear on web sites. This media blitz provides the consumer with information (usually) about new medications, stressing their powerful propensity to treat the illness and the "cost effectiveness" of the advertised drug. The latter represents a statistic that tells how effective a drug is based on the cost. Consumers would like to know how do we insure that the information disseminated by drug manufacturers is accurate and not misleading. What regulations exist that monitor what is said about these medications?

The FDA has been concerned about this since the early 1990’s. In 1995 the FDA’s Division of Marketing and Communication issued draft guidelines which set out to define the parameters of drug ads. These draft guidelines called for "substantial evidence" typically "demonstrated by two adequate and well controlled studies" in order to call a drug "cost effective". An uproar followed from the pharmaceutical industry, decrying how expensive these studies were, the length of time needed to carry out such large studies and how it would add to drug costs. (They were quiet on how advertising would add to drug costs. See our articles on this topic "Prescription Drugs and the Cost of Advertising Them") As a result, the wording of the draft guidelines were changed to "competent and reliable scientific evidence directly related to an approved indicator." This was passed by Congress in Section 114 of the Food and Drug Administration Modern Regulation Act of 1997 (FDAMA P. L. 105-115). It became law in February 1998.

Section 114 codified rules as to what evidence drug manufacturers needed to support economic claims about their products. This would appear to be the end of the story, but no such happy conclusion can be written. To date, there are no definitions spelled out for words such as "competent", "reliable", "approved indicators" etc. These words sound good, but without adequate definitions, they allow for great latitude in what can be claimed about the new drug. From a semantic point of view, these terms have a minimum and maximum definition.

Some would argue that the government should allow the pharmaceutical industry to define the meaning of these terms. This is the very industry that fought hard for these terms without further clarification arguing that the drug manufacturers association would police the ads. Does this put the fox in charge of the chicken coop?

We would urge the FDA to get input from the pharmaceutical industry and the public and then operationally define these terms so that ads will be accurate and not misleading. We further urge them to do it sooner rather than later especially in light of the issue in the upcoming presidential election concerning drug plans for seniors.


Allan Rubin and Harold Rubin, MS, ABD, CRC, Guest Lecturer
updated May 13, 2017

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