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Bucks Blog: Taking Risks to Cut Drug Costs

September 28, 2011 by Leave a Comment

Associated Press

Americans are spending less money out of their own pockets each month on prescription drugs, probably because of greater use of lower-cost generics, the third annual drug survey from Consumer Reports finds.

But even so, strapped consumers, many of whom take multiple medications, are cutting costs on pills in ways that are unsafe.

The average monthly out-of-pocket spending for people regularly taking prescription drugs is $59, down from $68 two years ago. This is likely driven by greater use of generics due to “household budget constraints,” the survey found. Major chain pharmacies offer many $4 generic prescriptions, and some popular prescription drugs are losing patent protection and becoming available in generic form.

But in tough times, the savings from generics is still not enough for some patients. This year’s survey found that nearly half of the people taking prescription drugs took some action to save money, compared with 39 percent last year, likely due to the tough economy. Steps included putting off a doctor’s visit or ordering drugs from outside the country.

And, roughly a third failed to take their prescriptions as directed. Steps included skipping filling prescriptions (16 percent over all, and 30 percent among those whose monthly drug bill topped $50); taking an expired medication (13 percent); skipping a scheduled dose without checking with their doctor (12 percent); cutting pills in half (8 percent) and sharing a prescription with someone else to save money (4 percent).

Lower-income people, those without drug benefits and those with monthly drug costs of more than $50, were most likely to take such steps.

“We’re having more people say they’re struggling with drugs costs and cutting corners,” said Dr. John Santa, director of the Consumer Reports Health Ratings Center. “I think this is an interesting barometer of the economy and the recession, especially for lower- and middle-income people.”

Half of adults take prescription drugs, and the average number of prescriptions they take is 4.5. But 16 percent of them take seven or more, the survey found.

And despite concerns about costs, few patients–just 5 percent–hear about a drug’s cost from their doctors. Two-thirds first learn about cost when picking up their medication at the pharmacy.

The Consumer Reports National Research Center conducted the survey by telephone in June, using a nationally representative sample of 1,226 adults who currently take a prescription drug.

Do you take multiple prescriptions? What steps have you taken to cut costs?

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Its Gene Patents Upheld, Myriad Genetics Moves to Protect Its Secrets

August 24, 2011 by Leave a Comment

But it is only a matter of time before the company’s business faces severe challenges, some experts say, because that $3,340 test is already technologically outmoded, incomplete and too costly.

“Science has moved beyond what these folks do,” said Mary-Claire King, a professor of genome sciences and medicine at the University of Washington. “It’s not good for the science and it’s not good for the patients and their clinicians if they cannot have the most complete, up-to-date information.”

Myriad sequences the two patented genes, known as BRCA1 and BRCA2, for mutations that raise the risk of a woman getting breast and ovarian cancer.

But newer DNA-sequencing techniques are far faster and only a fraction of the cost of the 1990s technology that Myriad uses. Indeed, it will soon be possible to sequence a person’s entire genome, all 22,000 or so genes, for less than Myriad charges for just two genes.

Executives at Myriad say they are preparing for changes. Although its major patents start expiring in 2014, the executives say the company’s patent protection should last until at least 2018.

They say that will give the company time to adopt new technology and to diversify beyond the breast cancer test, which accounted for $353 million, or 88 percent, of Myriad’s $402 million in revenue in the fiscal year that ended in June.

The company also plans to rely less on patents and more on trade secrets. Because it has done so much more testing than anyone else, Myriad has more information on which of the thousands of possible mutations in the two genes actually raise the risk of getting cancer.

Myriad used to share such information with a public database maintained by the National Institutes of Health, and it cooperated with academic scientists trying to analyze the mutations. But a few years ago, the company quietly stopped contributing and cooperating, in favor of building its own database.

An academic consortium, relying on data from European labs or from individual patients, is trying to catch up, but “it’s kind of slow going,” said Sean Tavtigian, a former Myriad scientist who is now an associate professor of oncological sciences at the University of Utah and is involved in the consortium.

Myriad, which is based in Salt Lake City, is hoping to use that advantage first in Europe, where it will open a testing laboratory next year.

“If I had my druthers, I would not want to go into a new market in a heavy-handed fashion, trying to enforce patents,” Peter D. Meldrum, Myriad’s chief executive, told analysts in January. Instead, he said the company would exploit its quicker turnaround time for testing and its “vastly superior information.”

Myriad executives have said that when a European laboratory finds a mutation in either of the two genes, 20 to 40 percent of the time it does not know if the mutation raises the risk of cancer. They say that Myriad’s rate of uncertain findings is just 3 percent.

Daniel B. Vorhaus, a New York lawyer and editor of the Genomics Law Report, a Web site, said there were ethical questions about whether Myriad should be withholding the mutation information, important for public health, that it has gathered by dint of its patents to essentially extend its monopoly beyond the life of the patents.

Mark C. Capone, the president of Myriad’s laboratory division, said in an interview that the company had invested heavily in characterizing the various mutations. He said that the company became uncomfortable sharing its information with a public database when it realized the information might be used to compete against it.

Ever since Myriad and its partner, the University of Utah, beat other researchers, including Professor King of the University of Washington, in identifying the BRCA1 gene in 1994, Myriad has been the target of those opposed to the patenting of genes.

In 2009, the American Civil Liberties Union and the Public Patent Foundation filed a lawsuit challenging Myriad’s patents on behalf of various medical researchers, medical societies and patients.

A federal district judge last year said genes could not be patented. But his decision was reversed in late July by a 2-1 decision from the Court of Appeals for the Federal Circuit. The plaintiffs are considering appealing to the Supreme Court.

The lawsuit contends that the patents, by giving Myriad a monopoly, have limited testing options for patients and led to lower-quality tests.

The latest controversy concerns a supplemental test that Myriad is offering.

In 2006, Professor King and colleagues published a paper showing that Myriad’s test, known as the Comprehensive BRACAnalysis, actually failed to detect a significant number of genetic alterations in the two genes.

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Pfizer Is Said to Pursue Nonprescription Lipitor

August 4, 2011 by Leave a Comment

Selling a version of the drug to consumers without a prescription would allow Pfizer to retain some of the $11 billion in annual revenue that Lipitor has been generating.

However, a nonprescription version would not be available immediately after the patent on Lipitor expires because Pfizer would first have to convince the Food and Drug Administration that consumers could take the drug without a doctor’s supervision.

That will probably be difficult. Merck failed three times to win the agency’s approval for over-the-counter versions of Mevacor, which, like Lipitor, is a statin. Bristol-Myers Squibb also failed to obtain approval for an over-the-counter version of Pravachol, another statin.

Pfizer declined to either confirm or deny its intention. “We can confirm that we have strategic plans in place for Lipitor’s loss of exclusivity and will comment no further at this time,” Raymond F. Kerins Jr., a spokesman for the company, said.

The person close to the situation, who would speak only anonymously because the discussions were private, said a nonprescription version of the drug was not the only option pursued by Pfizer. Another would be a so-called branded generic version. The company might pursue both options.

Pfizer announced last month that it was looking to sell or spin off animal health and baby formula businesses to streamline the company and help prepare for the loss of Lipitor sales to generic competitors.

But the company decided to keep two businesses that Wall Street had speculated might be sold: the generic drug business and the consumer business, which now sells products like Advil and Robitussin. That has led to speculation that the company was planning to sell generic and over-the-counter versions of Lipitor and other drugs that face a loss of patent protection.

Pfizer’s plans for the nonprescription Lipitor were first reported by The Wall Street Journal.

An over-the-counter version of Lipitor would no doubt be welcomed by insurers because it would cost less.

In the past, the F.D.A. advisers have been concerned that over-the counter versions of statins could not be used safely, that some patients who did not need the drugs would take them.

Others at significant risk of cardiovascular problems might take the over-the-counter drug and forgo seeing a doctor or getting other necessary care.

Since high cholesterol is a symptomless condition, consumers would not know whether the drug was working without having their cholesterol checked periodically.

But Steven Francesco of Francesco International, a consulting firm that specializes in converting brand name drugs to over-the-counter products, said technology such as prescription cards used at the drug store would better allow patients to be monitored without physician supervision.

“There’s any number of ways to insure that the consumer can use the drug,” said Mr. Francesco. “Lipitor will be one of the first of many drugs that will attempt to switch between now and 2016.”

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DealBook: Takeda in Talks to Buy Nycomed for Up to $14 Billion

May 12, 2011 by Leave a Comment

The Takeda Pharmaceutical Company of Japan is in talks to buy the Swiss drug maker Nycomed for 8 billion to 10 billion euros, or about $11 billion to $14 billion, a person with direct knowledge of the matter said on Thursday.

A deal with Nycomed would bolster Takeda’s presence in treatments for gastric, respiratory and inflammatory disorders. The Swiss pharmaceutical company has a presence in 70 countries, with Europe accounting for 50 percent of sales and emerging markets 38 percent.

Since taking the helm at Takeda in 2003, Yasuchika Hasegawa, its chief executive, has been active in gaining footholds in technologies and markets through acquisitions and alliances.

After a flurry of smaller purchases, Takeda acquired the American biotechnology company, Millennium Pharmaceuticals, in 2008 for $8.8 billion, the largest foreign acquisition ever by a Japanese pharmaceutical company.

An acquisition of Nycomed would top that deal, and make it the third-largest overseas purchase by a Japanese company, behind Japan Tobacco’s purchase of Gallaher in 2007 and Softbank’s acquisition of Vodafone’s Japan unit in 2006.

Takeda’s approach has provided a blueprint for other Japanese drug companies, most of which remain small and inefficient compared with their much bigger American and European rivals. Even Takeda, Japan’s biggest drug maker, had annual revenue of just 1.4 trillion yen ($17 billion) last year, about a quarter of Pfizer’s $68 billion.

Since then, other Japanese drug makers, including the Daiichi Sankyo Company and Astellas Pharma, have also actively pursued overseas acquisitions.

Takeda said on Wednesday that net profit slumped 17 percent in the fiscal year that ended in March, its bottom line hurt by the expiration of patents on its ulcer drug, Prevacid, and the strength of the yen. The company faces the loss of patent protection this year on another top-selling brand, the Actos diabetes drug.

“We will continue to pursue the acquisition of rights to drugs in late-stage development and the acquisition of companies,” Mr. Hasegawa told reporters.

Nycomed’s sales are getting crimped by expiring patents, too. It has lost patent protection in several countries on its biggest product, Pantoprazole — a drug sold in the United States as Protonix that inhibits the production of acids in the stomach. Last year, worldwide sales of the product declined 27.8 percent.

The company is looking to Daxas, a treatment for chronic obstructive pulmonary disease, to help make up some of the lost revenue. The drug, which has been approved in the European Union and Canada, has been introduced in four European countries.

Still, Nycomed reported 3.2 billion euros in revenue last year, down 2 percent from 2009. The company posted a loss of 229.1 million euros in 2010, compared with a profit of 232.7 million euros a year earlier.

The person close to the deal said that Deutsche Bank was advising Takeda on the purchase of Nycomed, a closely held company based in Zurich. The private equity firm Nordic Capital owns 41 percent of Nycomed, Credit Suisse’s private equity arm DLJ Merchant Banking owns 26 percent and Coller International Partners nearly 10 percent.

Nordic Capital has owned parts of Nycomed on and off since 1999. In 2002, Nordic sold the drug maker to a group of investors led by DLJ Merchant Banking and Blackstone, and three years later bought back a controlling stake. At the time, Nycomed was valued at 1.8 billion euros.

Nycomed, which was founded in Norway and relocated to Denmark before moving its headquarters to Zurich, is lead by Hakan Bjorklund, a Swedish executive and neuroscientist that Nordic hired to lead the company when it first invested in 1999.

No agreement has been reached and the talks may end without a deal, the person said. The news was earlier reported by Bloomberg News.

Representatives of Nordic, Credit Suisse, Coller, Deutsche Bank and Nycomed declined to comment.

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