Can We Afford –and Do We Want—Every New Drug That Comes Down the Pike?

Business Week has just published an excellent piece exploring the pros and cons of Amgen’s new drug for osteoporosis.  It illustrates how drug-makers—and Wall Street investors—view new products.  It also demonstrates why government regulators should begin  taking a close look at pricey “me-too” drugs before committing billions of tax-payer dollars to pay for those new products.

You’ll find my comments below the story. .
(The original story from  is found here)

An Osteoporosis Blockbuster for Amgen?

Its bone-loss treatment denosumab, which could bring in $2 billion to $3 billion a year, is closer to FDA approval. But not all experts are sold on it

By Arlene Weintraub

Wall Street has set an exceptionally high bar for Amgen (AMGN)'s new bone-loss treatment. Shares of the world's largest biotechnology company have jumped 27% in the past three months, to 60, largely on news of clinical trials that showed the drug is as at least as effective, and sometimes better, than standard osteoporosis treatments when it comes to preventing and treating dangerous fractures. On Aug. 13, an advisory board of the U.S. Food & Drug Administration is expected to recommend that the agency approve the drug, known as denosumab, in October.

Bone loss is a huge and growing medical problem: . . . Amgen has requested that the FDA approve denosumab not only for treating osteoporosis but also for preventing it in post-menopausal women and some cancer patients. If the agency concurs, the drug could bring in $2 billion to $3 billion a year, analysts predict.

At a time when the country is focused on reforming health care, however, some health experts are asking an important question: Can the U.S. afford to shield the bones of millions of aging baby boomers? On Aug. 11, the New England Journal of Medicine published a critical editorial penned by Mayo Clinic professor of medicine Dr. Sundeep Khosla. He isn't convinced Amgen's drug is that much better than older, affordable alternatives, such as Merck (MRK)'s Fosamax, now available as a generic for as little as $100 a year. Amgen won't reveal its pricing plans yet, but analysts are assuming that because denosumab is a biologic drug, it will cost significantly more than the $2,000-a-year price tag on Fosamax's most expensive rivals. "If there's only a marginal difference, you really need a reason not to use those older drugs," says Khosla, who neither participated in the Amgen trials nor has financial relationships with companies that market rival treatments.

Reducing the Hassle Factor

In two denosumab studies, the results of which also were published in the NEJM on Aug. 11, the drug performed admirably against a placebo. In post-menopausal women with osteoporosis, it decreased the risk of hip fractures by 40% and spine fractures by 68%. Men with prostate cancer who were on a treatment that can cause bone loss experienced a 62% lower risk of spine fractures. But Amgen has done just a handful of trials comparing denosumab to currently marketed bone-loss drugs. And in osteoporosis, those trials only measured bone density—not fracture risk. That worries some physicians. "I have 14 years of experience with Fosamax, so when something new enters the field, I need to know: Does it work better?" says Dr. Harold Rosen, director of the osteoporosis prevention and treatment center of Beth Israel Deaconess Medical Center in Boston.

Amgen executives are confident they can market denosumab based on its ability to reduce "the hassle factor," said Dr. Roger Perlmutter, Amgen's executive vice-president for research and development, in a June interview. Unlike Fosamax, which is a daily or weekly pill—or other drugs that require intravenous infusions—denosumab is a twice-yearly injection that's as easy to administer as a flu shot, Perlmutter says. Side effects sometimes seen in the older drugs, such as stomach problems and jawbone deterioration, seem rare with denosumab. As for the potential price, he says, "We don't intend to be exploitative. We want the value proposition to be clear."

The biotech company's ability to communicate that value proposition could be complicated by the FDA, which is likely to zero in on side effects. Denosumab is an antibody that attacks bone loss in a completely new way—by blocking a protein that normally stimulates bone-destroying cells. The long-term implications of interfering with that pathway are not yet clear, but some patients in the studies suffered serious skin infections, and others came down with cataracts. If the FDA requires physicians to monitor patients closely and report side effects, that could discourage widespread prescribing of denosumab.

All told, denosumab may prove to be the biggest marketing challenge the 29-year-old biotech has ever faced. The market for osteoporosis drugs is about $5 billion a year, estimates Lazard analyst Joel Sendek, but it's shrinking as insurers push patients to switch to generic Fosamax. That has sparked a marketing war: In 2008, Roche (RO) spent $92 million advertising its osteoporosis drug Boniva, with spots featuring actress Sally Field, according to TNS Media Intelligence. Novartis spent $53 million pitching its rival drug Reclast. "Amgen is going to have to convince patients, doctors, and third-party payers that this is a good drug to have in the armamentarium," Sendek says. "It won't happen overnight, especially in a cost-constrained market."


First, notice that from Wall Street’s point of view, this is a story about a stock, rather than a story about a drug.  The stock has spiraled 27 percent in just three months on hopes that Amgen will be approved by the FDA. 

That’s the lead—how much the stock has climbed, and how much money investors might make—not how much good denosumab might or might not do for patients.  Indeed, in the very first paragraph, the reporter makes it clear that this exciting new drug is only “ as effective, and sometimes better” than existing treatments. What makes the new product  exciting is that, if it’s approved, the company stands to make a handsome profit, because denosumab will be very, very expensive.

The stock’s swift rise tells us that investors have large sums riding on the FDA’s decision.  When you read about lobbyists pressuring the FDA to approve a product—and lobbying Congress men to make sure that Medicare pays for it—keep in mind that these lobbyists represent  the company and its wealthiest investors. Only rarely are they patient advocates. (Small investors may also be concerned about the FDA’s decision, but the big players have gambled the big bucks—and they also have the wealth to influence what happens in Washington.)

Business Week’s reporter acknowledges that, in this case, no one really knows whether the drug is better than older, much less expensive medications because the FDA did not demand head-to-head comparisons.  The FDA only requires that manufacturers test the drug against a placebo and Amgen did that—so we know the drug is better than nothing.

But that’s all we know. As the reporter points out:  “Amgen has done just a handful of trials comparing denosumab to currently marketed bone-loss drugs. And in osteoporosis, those trials only measured bone density—not fracture risk.” The risk of fr
acture is, of course , what we care about.

Denosumab seems a prime candidate for the “comparative effectiveness research” that the President funded in the fiscal stimulus package that Congress passed earlier this year. The Institute of Medicine (IOM) already has appointed a panel of  physicians medical experts to oversee unbiased studies that measure the benefit of new product such as denosumab against alternatives already on the market.

Business Week quotes a professor of medicine at the Mayo clinic who has no financial interest in denosumab—or its rivals—expressing his concern that Amgen’s product is, at best, “marginally better.”  Meanwhile, it will cost more than 20 times as much as a generic treatment now available for just $100 a year.

In other words, we’re looking at a minimal benefit, and a huge price tag.
If the FDA approves the drug, chances are Medicare and private insurers will cover it, and we’ll all pay for it in the form of higher Medicare costs—and higher insurance premiums.

Moreover, patients who take the new drug may face some serious risks. On the one hand, “Side effects sometimes seen in the older drugs, such as stomach problems and jawbone deterioration, seem rare with denosumab”—apparently no one is sure. But Amgen’s product poses other dangers: “Denosumab is an antibody that attacks bone loss in a completely new way—by blocking a protein that normally stimulates bone-destroying cells. The long-term implications of interfering with that pathway are not yet clear, but some patients in the studies suffered serious skin infections, and others came down with cataracts.”

Why would I pay more than twenty time as much for a drug that may be slightly better—and risk both nasty skin infections and  the chance of developing cataracts?

Because Amgen gives my doctor free samples—and convinces him to “try denosumab”—or persuades me, via TV ads,  that denosumab represents a “medical breakthrough.”

This is why many health care reformers believe that drug-makers should not be allowed to run Direct-to-Consumer ads on television until a drug has been on the market for at least three years. It’s worth keeping in mind, that when it comes to new drugs and devices, we always know less about risks. The company and its investors will always push to get a new product on the market as quickly as possible—while it’s still the “ new, new thing” that everyone is raving about it—and before we learn  too much about  risks and side effects.

What’s interesting is that Amgen isn’t trying to sell denosumab by marshalling evidence that it really is more effective—or less risky. Instead, executives confide that they are confident they can market it based on the notion that it “reduces the hassle factor.” Wile l patients have to take its rival, Fosamax, weekly, or even daily, they receive denosumab as a twice-yearly injection.

Just how difficult is it to take a pill weekly—or even daily? Clearly, Amgen faces a marketing challenge. That’s why drug-makers pour so much money into advertising —rather than research and development. These days, selling a drug that is only a little better than competing treatments is all about how well you promote it.  Indeed, we’re told, the manufacturers of osteoporosis drugs are now engaged in a “marketing wear”:   “In 2008, Roche (RO) spent $92 million advertising its osteoporosis drug Boniva, with spots featuring actress Sally Field, according to TNS Media Intelligence. Novartis spent $53 million pitching its rival drug Reclast.”  Guess who pays for all of that advertising?

At this point, Amgen seems to be winning the battle to convince the FDA that denosumab should be approved.  And as soon as the FDA gives its stamp of  approval, Medicare  will probably agree to cover the drug –unless healthcare reform gives Medicare ( or an Independent Medicare Advisory Panel),  the clout to question the effectiveness of new products–and the power negotiate for discounts. In that case, Medicare would probably refuse to pay top dollar when the benefits appear minimal—and the risks unknown.

The bottom line is that someone needs to protect the patient. That’s one reason why we need the Independent Medicare Advisory Council that the administration has proposed—and a strong public sector insurance plan that will have just one concern: what is best for the patient.

Too often, for-profit insurers are reluctant to say “no” to widely-touted new products because they do not want to lose market share.  After all, they are required, by law, to do their best to maximize profits for their investors. Protecting customers from the risks of a popular new drug is not really the private insurer’s responsibility.

Government, on the other hand, is charged with promoting “the public good.”  And a public sector insurance plan would have no shareholders to worry about.   It’s only goal would be to offer customers the best, most affordable care.

19 thoughts on “Can We Afford –and Do We Want—Every New Drug That Comes Down the Pike?

  1. Proving that a drug designed to treat a serious illness is superior to a placebo is an unacceptable criterion for two reasons. First, unless it is superior to known effective treatments, there is no compelling reason to use it, and in fact no reason to know that it might not even be inferior to those established treatments. The second reason is that it is unethical in a clinical trial to assign patients to a placebo arm of the study when an established treatment is known to be beneficial. This FDA practice has been condemned many times, but unfortunately persists today.
    Fred Moolten

  2. I personally believe that we are on that part of the technology curve in pharmaceutical science where excessive investments prohibit any reasonable return on investments.Hence it does NOT serve the common good.
    So instead drug companies dupe us and the FDA into believing in their “breakthrough” drugs (often for a very small number of people.)
    They are rarely breakthroughs but the sufferring undertandably buy the overly hyped message and overly hyped science.
    Often it is a very cruel hoax.
    Dr. Rick Lippin

  3. Take home lesson needs to be simplified: Direct to consumer pharmaceutical ads are bad.
    The message must be straighforward and clear.
    We need a list:
    Direct to consumer pharmaceutical ads -> BAD
    Public Insurance Option -> GOOD

  4. More for the list:
    Physician Pay by Salary -> GOOD
    Incentives to Treat More -> BAD
    Tort Reform -> GOOD
    Loosing Lawyer Pays Legal Fees -> GOOD

  5. To my earlier comment, I would add that denosumab is not the most egregious example of unnecessary expenses inflicted on consumers by drug companies, because strictly speaking, it is not a “me too” drug. Rather, it approaches osteoporosis from a novel angle that distinguishes it from fosamax or other treatments. It may turn out to be simply a very expensive alternative to fosamax, but its developers did not know that when they started to pursue this new path, and can’t be faulted for pursuing it. In contrast, many “me too” drugs involve trivial modifications of the molecular structure of existing modifications that can be predicted to do little more than gain market share for the company that develops them.
    Finally, if more drug development were assigned to NIH or other public scientific endeavors that already do the basic research underlying most drugs, we would still see efforts like those that produced denosumab, but far fewer intended simply to make cosmetic changes in existing medications.

  6. It seems the straighforward way to fix me too’s is to address patent law:
    No patent protection for “Me too drugs” -> GOOD

  7. Agree with Fred’s points. In addition, you could probably take care of 85% of medical conditions with only a carefully selected list of just a few dozen drugs. Most of these would be veteran and inexpensive medicines. Many new and expensive drugs are aggressively marketed to MDs and to the public without having any significant incremental clinical benefit. Anti-hypertensive drugs are a prime example of this. In addition, the public often has an exaggerated view of a drug’s benefit. Using Fosamax as an example, the actual benefit that an individual user receives is very modest. The drug’s benefit becomes apparent when large groups of patients are studied. These latter results generate seductive headlines and sound bites that promise more than they deliver to an individual patient.

  8. fredmoolten,Dr Rick, Ed, Fredmoolten (second comment), Michael Kirsch
    Fredmoolten– I have to agree that testing new drugs against palcebos makes no sense.
    I would be very interested in the history of that rule. I suspect Pharma helped shape it.
    Dr. Rick– I agree that drugmakers are having a very hard time trying to find any truly new blockbuster ground-breaking drugs– so they are pouring their money into marketing . .
    You are right -the research shows that DTC ads do more harm than good.
    Paying doctors salaries rather than fee-for -service leads to better care at a lower cost. And the public insurance option is essential to lower costs and enhance quality.
    I totally agree with your second paragraph on NiH research.
    Re:what you say about Amgen’s product in your first paragraph: I agree it’s a unique solution. But I also know (from people inside the drug industry) that once a drug company has invested a certain amount of money in a truly unique solution, they spend whatever they must to bring it to market–even if they know that, in the end, it will fail.
    Too many careers, and too much money depend on making that product seem to succeed–if only for a few years.
    In other words, when they started, they didn’t know, but half-way through, they did know–but still they continued to develp, and began to create marketing plans, even before the product was approved by the FDA.
    Michael Kirsch–
    Yes, everything you say is, unfortunately, true.

  9. To Michael Kirsch – You’re not the only observer to make that point. About 150 years ago, Oliver Wendell Holmes concluded that “If the whole materia medica, as now used, could be sunk to the bottom of the sea, it would be all the better for mankind, and all the worse for the fishes.”

  10. Ideally drugs should initially be tested against a placebo to see if they are effective at all. Then they should be tested “head to head” against the existing treatment to see if they have any advantage or are merely equivalent.
    If they have an advantage, they should become the new standard treatment – assuming pricing issues can be worked out. (Personally, I will take the older, slightly less effective medicine if I can save a significant amount of money and I think most patients would too if they have the right incentives – higher copays for fancy new drugs?)
    Drugs that are merely equivalent in effectiveness should be kept around for those patients who for one reason or another cannot tolerate the standard treatment.
    I always allow generic substitution for myself and based on my recommendation my parents have “gone generic” as well.
    There are way too many “me too” drugs out there. Although I am not a biochemist, I think it is much easier to tack a hydroxyl group on to an existing known drug molecule, than to actually come up with a new molecule that has unique properties. However we need new approaches not more “me too” drugs.

  11. To Legacy – Testing a new drug against a placebo for a serious condition is ethical if there is no known remedy better than a placebo. In that case, it meets the ethical criterion of “equipoise”. If an established treatment exists, there is no benefit to patients from knowing whether the drug is better than placebo, because the critical question is how it compares with the known remedies. Testing against a placebo is statistically convenient. Head to head testing (“equivalence testing”) against a known treatment is a more serious statistical challenge requiring larger sample sizes. No drug company would ever wish to do both, and few wish even to do equivalence testing.
    One could argue, however, that even equivalence is unimportant unless the new drug was actually superior for at least a subset of the patient population – e.g., those who respond poorly to the established treatment or tolerate it poorly. Ideally, in my view, a drug that fails to surpass existing treatments should enjoy little priority over other uses of limited research funds unless it can prove itself superior for at least some patients.
    Fred Moolten

  12. Betsy McCaughey has gone on a real tear. Betsy McCaughey, a journalist of distinction and former Lieutenant Governor of New York state, has taken aim at Obamacare and especially Dr. Ezekiel Emanuel, MD, brother to White House Chief of Staff Rahm Emanuel, and in her op-ed piece that’s being billed as New York Post Deadly Doctors, she claims that the public health care plan will deny care to the mentally disabled and elderly. However, nothing in the bill has come to light that would indicate she’s correct, and the oversight agency for the program would be only be staffed by physicians. Regardless of criticism by Betsy McCaughey and others, most still need payday loans for the most basic of care. Visit this site to read more:

  13. I have to wholeheartedly agree with you. The business of pharmaceutical industry and its investors is not necessarily aligned with what may be right for American healthcare.
    As a physician who activily screens for and treats bone loss, I can’t envision my patients climbing onto the bandwagon for yet another new osteoporosis drug. The word is out there that these drugs, all of them, have potential side effects. As a result, it is becominging increasingly difficult for me to convince any of my patients, even those with more severe osteoporosis, to take medication for it, especially since it is an assymptomatic condition until they fracture.
    One intervention that my patients readily accept is screening for and treating vitamin D deficiency, which is exceedingly inexpensive and in many cases, quite effective.
    In my opinion, Amgen will need a very aggressive DTC campaign to get their drug off the ground, and it will need to be loaded with lots of scariness about bone loss to be effective. The impact may well be a bump in prescriptions for fozamax and actonel generics, as patients become aware of the risks of osteoporosis but remain afraid of a new drug that is an antibody.
    Thanks for yet another great post. You are a gift.

  14. Legacy & Fredmoolten, Mickey M., Margaret
    Legacy & Fredmoolten:
    I agree wtih virtually everything you say.
    But I would point out that Fredmoolten makes a good point when he says:
    “Testing a new drug against a placebo for a serious condition is ethical if there is no known remedy better than a placebo. In that case, it meets the ethical criterion of “equipoise”. If an established treatment exists, there is no benefit to patients from knowing whether the drug is better than placebo, because the critical question is how it compares with the known remedies.”
    Mickey M– I agree. Betsy M. is simply lying.
    Welcome to the blog.
    And thanks very much for the generous words.
    Your experience as a physician tells us what we need to know: the public is becoming increasingly skeptical about what it hears about new drugs.
    In some ways, this is good–but it can mean that people will be wary of taking drugs that might well help them.
    We really need to get rid of the DTC television ads. So many people worry about the government “interfering in the patient-doctor relationship”–but drug-makers have already intervened in that relationship in very dangerous ways.

  15. Sidney Wolfe has long recommended that no new drug should be taken for 5 years after it hits the market, unless the patient is facing imminent death or permanent impairment. He bases this on the fact that most serious problems with a new drug will come to light during that time. Of course, this mean allowing your fellow citizens to basically continue the clinical trial period for you…but the system offers us little choice. The fact is that there is no real substitute for human trials, and the economics of the current system encourage rushing past those trials for the sake of profit. One more reason, to me, for why the free market is not an acceptable model for health care.

  16. Riggveda–
    I’ve seen that advice from
    Sidney Wolfe, and it makes sense to me.
    If your doctor recommensd s a drug, it might be a good idea to ask “how new is it?” And if he says it came out last year, you might well want to ask him about alternative treatments. . .
    We rarely know much about the long-term risks of brand-new drugs

  17. As someone who has been taking a lot of drugs and requires to do so. I can fully say that it is very important to look at the track record and studies that are associated with any drug you use.
    Some doctors will give you new drugs when there are existing ones that work well.
    Unless there is no other alternative, always get the one that has a better track record. The longer the better.

  18. Interesting. I see a lot of drugs advertised on American channels and it seems rather odd seeing as they always end with “talk to your dr”. My mother and grandmother are vehemently against newer drugs since my grandmother was prescribed a new anti-nausea drug in the UK that she never bothered to pick up at the pharmacy when she was pregnant. Then the babies of mother’s using the new drug were missing limbs. As long as I can remember at the dr’s office my mother would be asking how old the medication was. It needed to be at least 10 year’s on pharmacy shelves before she would let us have it.
    Thanks for the post. It was enlightening.

  19. Dennis & Canadian Emily–
    Dennis– Yes, I agree that asking about the track record is important. Adn if your doctor gives you a vague answer–he probably doesn’t really know.
    (It’s impossible for any doctor to keep up with the details of track records on all drugs. They tend ot rely on what pharma’s reps tell them and hte material they receive from the drug-maker which is not always complete.
    At the very least, you can Google when the Drug was approved by the FDA yourslef. The longer it’s on the market, the more we know about it.
    Canadian Emily–
    Yes the thailidomide story is a cautionary tale.
    Just one woman at the FDA stood up and prevented widespread use of the drug in this country–that’s how close we came.
    If I (or my daughter) were pregnant I woudl be very hestiant about taking any medication that I didn’t absolutely need–and then I would want to know that it had been around, and that pregnant women had been taking it, for a very long time.