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Interview with ZixCorp’s Peter Wilensky

by David Williams

ZixCorp is a leading provider of e-prescribing and secure email services. Peter Wilensky is the company’s VP of Corporate Communications and Investor Relations, but he’s a lot more on the ball than your typical corporate mouthpiece. With degrees from Harvard and Wharton and a close relative who ran Medicare and Medicaid, he’s got deep knowledge of health care, technology and business.

Peter and I discussed the benefits and challenges of e-prescribing, the role of health plans in paying for it, and the relationship between e-prescribing and electronic health records.

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Here’s the transcript.

David Williams: This is David Williams, co founder of MedPharma Partners and author of the Health Business Blog.

ZixCorp is a leading provider of e prescribing and secure email services. Peter Wilensky is the company’s VP of Corporate Communications and Investor Relations. He’s a lot more on the ball than your typical corporate mouthpiece. With degrees from Harvard and Wharton and a close relative who ran Medicare and Medicaid, he’s got deep knowledge of health care, technology, and business.

Peter and I discussed the challenges and benefits of e prescribing, the role of health plans in paying for it, and the relationship between e prescribing and electronic health records.

Peter, tell me a little bit about ZixCorp.

Peter Wilensky: We have two core businesses. One is email encryption, which is really how the company was founded, back in the late ’90s. And initially, we focused the email encryption on health care for HIPAA compliance, so we’ve been a health care IT focused company, really, almost since the inception of the company.In 2003, we acquired a startup called PocketScript, which was an e prescribing vendor, and then entered the e prescribing space, which is our second core business today. And both of them run as a managed service, hosted in our SysTrust certified data center in Dallas. They’re both a high volume of sensitive transactions that we manage on behalf of our users, and that’s kind of what links the two businesses together.

David
: And the platform, the client is a mobile solution? Or is there a desktop component or service..?

Peter
: Yes. There’s both, actually. We view both businesses as platforms. One’s the data center. Specifically, with e prescribing, it is the real time connection to the doctor at the point of care. So our typical deployment would be giving a doctor the handheld, and also there’s a browser version that the office staff uses so that they’re able to efficiently work with the system as well.

But mobility is a very important aspect of providing that information. When they’re in front of the patient, in the exam room, that’s really how you get the value from e prescribing. We actually started with Blackberries…
Because anywhere the doctor was –he could be in the office, out of the office, at home– would be great. We found, however, that Blackberry basically ran over a cellular network, and then you always had coverage issues.

David
: Yeah. Inside, especially.

Peter
: Exactly. One exam room to the next, even one part of the exam room to the next, could have bad coverage. And if doctors didn’t get a connection right when they wanted it, they were likely to put the device down. So we’re now all WiFi, on a PocketPC based handheld, and that way we completely address the coverage issue, it’s faster; and those are important aspects for the doctors to keep using the device.

David
: And when the physicians use the device, are they mainly writing out new prescriptions, or what about renewals? Is that what the desktop is for?

Peter
: The desktop helps facilitate the renewals. Most of the doctors would write new prescriptions from the device. The patient comes in, they can pull up eligibility, which gives them their formulary. We can pull up a dispensed drug history for interaction check, and you can send it right to the pharmacy.

A renewal works slightly differently, depending where the request for the renewal comes from…If it’s the patient in front of the doctor, and they’re just going to renew it during the visit, then the doctor can pull up the medication history and basically click the same drug and send it, and that’s that simple. You can do that from the handheld.

A lot of renewals would actually come either from the pharmacy or someone calling into the doctor’s office. That would most likely be a charge nurse at a desktop, who can pull up, electronically, the record, if it’s the same prescription, same form factor and all that, can click “yes, ” and he or she approves it. The doctor gets a signal at the bottom that says, “Nurse so and so has approved this refill. Do you approve?”

And the doctor can just click “yes.” So, rather than doing a chart pull and reviewing everything, it’s a couple seconds. Most doctors, I think say, “If a charge nurse reviewed it and OK’ed it, then I’m probably going to OK it.”

David
: Yeah. And the renewal, though, is coming from, it’s a phone interface, right? So the nurse still has to listen to it?

Peter
: It may or may not be. If it comes into the pharmacy, the pharmacy can send it EDI. So the same EDI that sends a prescription to the pharmacy can receive a request from the pharmacy, pops right into the application, and the nurse can click through and just hit it, and it goes right to the doctor’s handheld. So it can all be electronic.

David
: Now, I understand that a lot of the so called e prescriptions actually have a fax component in them somewhere.

Peter
: They do.

David
: Is yours a faxed solution?

Peter
: We do both. So if there is an EDI connection, we work with a partner, SureScripts, which you’re probably familiar with as a connectivity partner for vendors like us. If they’ve established an EDI, we’ll send it EDI. If they don’t, then it will go by fax.

David
: And what’s the proportion of faxes to electronic these days?

Peter
: It varies by location. Really, it seems like certain regions kind of come up together.

David
: Right.

Peter
: So I believe there are certain regions, probably Massachusetts, who are heavily EDI. Other locations are a probably a majority faxes and kind of working toward that all the time. And as you probably know, if the whole thing’s electronic and you still have faxes, then you have transcription errors, and you lose a lot of the potential efficiency.

David
: I know CMS has taken a dim view of e prescribing uses faxes and has proposed a new rule recently. Are you involved with that? What’s your view on whether that’s a good idea or not?

Peter
: We think it’s a good idea, because, again, if it’s more efficient, both for the doctor and the pharmacist, everyone’s better off, more likely to be safer because fewer transcription errors or other sources of error. So we think it’s a good thing. We weren’t involved. My guess would be that someone like SureScripts or the retail pharmacy industry was really driving the change, but we support it.

David: What’s the adoption rate for e prescribing?

Peter
: Our model is to first approach the insurance companies, or the payers, and get them to sponsor, on behalf of the doctor, the use of e prescribing. So we never approach the doctor and ask them to pay. It’s always free to the doctor.

David
: OK.

Peter
: So once we approach a payer and they say ‘I’ll pay for 500 doctors or 1, 000 doctors’ then we work with those payers to identify who the highest prescribers are on their patients. And then we approach the doctor. So, we get the list started from the insurance company. When we get those lists we have a telesales staff that will try to set up appointments for a separate field staff that just calls on the doctors. When we get in front of them, we get about 50 percent sign up. We have 3,200 physician users.

So we have a pretty good ratio. And then, of the people who go through and complete the training, we have about 60 to 70 percent that become active users and regularly use the device afterwards.

David
: OK.

Peter
: We don’t actually think physician adoption is the big issue; it’s funding. That’s really the issue. Our model is approach the payers. They, from the purely economic benefits, have the lion’s share of the economic benefits. And we think it’s only fair for them to kind of pay the freight there. And so, for us, if the funding issue were solved, I think adoption would really take off.

David
: Right, OK. 3,200’s a respectable number, but it’s still a pretty low percentage of the overall physicians…

Peter
: Yeah, so we target the highest prescribers, which are generally primary care. There are 131,000 primary care physicians that are office based in the US.

And so, yeah, 3,000’s a pretty small portion of that.

David
: What do you find, in terms of the pattern of adoption? You’ve got a lot of people who probably have access. And then some are going to be writing all their prescriptions, or virtually all. Some are going to be writing one or two and drop off. Are there ones, also, in the middle, and how do they tend to shift around?…

Peter
: We find that most people who adopt adopt pretty much all the way. We look at 70 or 75 scripts as a key benchmark, or milestone for a doctor. Once they’ve written 70 or 75, we think they’re hooked. So there’s a learning curve. There is a change in workflow that’s involved. That’s where, to the extent that there is, a lot of resistance comes from doctors, because the highest prescribers are generally more established. They’ve been doing it for 15 or 20 years a certain way, and convincing them that it could be better a different way is sometimes a challenge.

Once we can get them these 70 to 75 scripts, then they’re pretty much hooked. We found once they’re there, they’re writing the vast majority. If they practice in multiple locations for whatever reason, they’re in the hospital and they didn’t want to use it there, then maybe those prescriptions would be written by hand. But most of our doctors primarily office based, and they write the vast majority of theirs electronically.

David
: And what happens if there is a prior authorization requirement? Does the system kick out a form for that, or…?

Peter
: Yeah, it can kick out a form. We work with the individual payer, depending on how they want to do it. In Massachusetts we’ve worked to develop a prior authorization form, and we’re working with other ones to see how they want to approach it. Ultimately we’d like to get to an electronic prior authorization, which would kind of work integrated into their back office systems. But we’re not really there yet, and mostly because the insurance companies aren’t there yet.

David
: You talked about a lot of the benefits accruing to the payer. Can you describe maybe what the benefits are, and why they accrue to the payer, as opposed to somewhere else?

Peter
: It’s particularly the economic benefits that accrue to the payer. There are really two sources of economic benefits. One is lower drug spend, and the other is patient safety benefits. On the lower drug spend, what the application does is when you’re in front of a patient, and you know their specific formula already, when a doctor goes to prescribe a drug, we can show alternatives that are maybe higher up on the formulary, and therefore a lower cost, both to the plan and to the patient, or generics, as another example.

Many doctors, when they’re presented with that information, will say, “Oh, sure”. Cheaper for the patient, they’re more likely to take it, they’ll go ahead and select a generic drug that obviously is going to end up saving the insurance company a lot of money. Or, I said, being more compliant with the formulary. In Massachusetts, they have about 3 or 3.5% savings on their drugs spend per doctor who uses e prescribing versus those that don’t use e prescribing. And also a $20 to $25 savings from the patient’s point of view in their co-pays.

From various other studies, and math we can do based on information we get from the payers, we think there’s a $4 to $5 per click savings for the insurance company when you factor in that they continue to get the savings on the refills. The other real source of savings is on patient safety.

One of the things that we can check in the prescribing process is an interaction with another drug, or allergies, or things like that. Again, in Massachusetts, which is our most established program, in December there were 8600 alerts where a doctor actually changed the prescription based on the alert. That’s on a basis of about 2000 doctors, so it’s a little over four per doctor per month, in terms of these changes.

There are various estimates on what a severe ADE, Adverse Drug Event, could cost, but I think the Institute of Medicine estimated $2000 to $2500 per instance. All 8600 probably wouldn’t have been that severe, but we know that if we’re preventing an adverse drug event that could result in a hospitalization or surgery, ultimately that’s going to end up saving the insurance company money for not having to pay for that.

We’ve also found with e prescribing that there’s a higher fill rate and compliance with their drug therapies. Therefore, over time, healthier patients cost their insurance companies less if they’re really taking their medicine.

David
: Why would there be a higher fill rate?

Peter
: I’m not exactly sure. We’ve seen it…, but we don’t know why. I don’t know if there’s a certain amount of patients that just lose their scripts, and that’s why they don’t fill it. Obviously if it goes right to the pharmacy, that’s not an issue.

David
: Right.

Peter
: If it’s a convenience factor that they want to go there, and it’s a half hour before they can pick it up, they say forget it. But here, it’s already filled when they get there. It could be those kinds of things, but we’re definitely seeing a reported higher fill rate.

David
: Electronic health records are getting a lot of attention. When people talk about e health these days, that’s mostly what you hear about. Pretty much every EHR would incorporate e prescribing. How does that play into your plans, or your business model?

Peter
: We look at it in two ways. First, there’s the near term. That’s three to five years. We focus particularly on the smaller end of the market. We don’t think there’s going to be a significant penetration of EMR’s, EHR’s, in the one or two doctor practices. They don’t have the time, they don’t have the infrastructure. You know, IT staff. They don’t have the money.

It’s significantly more expensive. For us right now, there’s kind of a greenfield. Most of the people who do e prescribing don’t do e prescribing on the small end of the market. So we think we can offer a lot of benefits to doctors and insurance companies, and get a good share of the market before the EMR really starts the penetration on the low end. Longer term, everyone will probably end up on an EMR or EHR.

We can integrate with anybody, but we’ll evolve, and continue to offer additional features, which maybe will be consider an EMR, EHR over time. Or, we’ll just partner with people, and integrate, and be able to trade information. So even the EMRE/EHR vendors who say they offer e prescribing, in almost every case, it’s a “jack of all trades, master of none”. So they’re e prescribing application is inferior to those of us who are really standalone e prescribing and are really focused on that. So we think there’s continued value we could add even just partnering with them.

David
: Have you been doing partnering actively today?

Peter
: Today we haven’t. Today we’re focused on just getting to doctors, and trying to get it out there as much as possible. Over time, it’s something we continue to look at, and we’ll evaluate opportunities. Right now, it’s not a key part of our strategy.

David
: What’s the state of play in terms of being able to present a patient specific formulary?

Peter
: We have partners with PBMs through RxHub, which is a consortium, originally started by the three major national PBMs. Others have joined over time. So the primary mechanism… we have some direct connections to insurance companies, especially if they’re their own PBM, as well that we can show. So if the information’s available, we can obviously show it. I’m not sure what the percentage of times we’re able to show it. A lot of it is finding a match for the patient. The match is defined by five specific fields. It’s first name, last name, date of birth, gender, and zip code to uniquely identify one patient. So if you don’t have a match –somebody misspelled it, or one of the data fields is missing– then we may not get a match when there’s really a match to be found. The other aspect is if they’re with an insurance company, or have Medicaid coverage, or are not covered at all, that’s not part of this consortium, then we wouldn’t be able to locate them.

David
: But if you find a patient, you can present the formulary?

Peter
: We can present the formulary, right, and the dispensed drug history. I believe we’re the only one that is also working with SureScripts to present pharmacy dispensed drug history. So we get, for the PBM, to show claims based dispensed drugs, and then we can show from the pharmacy. And there’s a large overlap. If you paid cash for a drug, or it’s not covered by the insurance company, the pharmacy would have the information that the insurance company doesn’t have.

If it’s mail order, it may not have it. The retail pharmacy may not have it. So we think going to multiple sources gets the most complete dispensed drug history to show the doctor, which obviously benefits everybody.

David
: What’s the role of the pharmacist in all of this?

Peter
: So, I think the pharmacist obviously benefits from, especially when it’s EDI.

It saves them time. There are fewer call backs, fewer potential errors, call backs for legibility, call backs because there’s a higher likelihood it’s on formulary or they’ve already prescribed a generic and so I think it makes the pharmacist’s job easier. Obviously, we need pharmacies to be connected and able to accept and process electronic scripts. I believe that the pharmacy chains, the major chains, have a much higher percentage than the community pharmacies, so if there’s a role for the community pharmacy, it would just help kind of build out the infrastructure so that everyone could get online and working.

David
: Right. But in terms of taking an active role, like in patient counseling or anything like that, does it tie into the prescribing, or it just gives them more time, and they don’t have to be calling back..?

Peter
: Exactly. It gives them more time to spend with the patient.

David
: Yeah.

Peter
: So, e prescribing, it’s not good for answering questions of “How do I do this? What do I have to watch out for?”

So I think there’s still a major role. And as you said, to the extent they have more time to spend with their patients and less calling doctors’ offices, I think they’ll benefit.

David
: What have you found in terms of the physician acceptance? It sounds like the physician appreciates being able to give something to the patient that’s going to match their formulary and save them time and all that. But compared to just sort of scribbling something on a pad and then letting somebody else deal with all those issues, that’s been one of the complaints.

Peter
: Yeah. So I think, initially, a lot of people think, “It takes me a half second to scribble something completely illegible on a pad, and they’ll figure it out.” Although, that’s really kind of, I won’t say short sighted, but it doesn’t really think of the whole process, because someone’s going to call back.

David
: Yeah.

Peter
: And a lot of times, even the nurse or the front office will have to go back to the doctor and say, “What is this?”
So it is good for the doctor, overall. What we found, really, is doctors who kind of take the plunge and use it, they love it. They say, “We’re never going back.” It’s Stone Age to be writing it on a pad of paper, when it can be so easy, and it gives you the added benefit of knowing that there are these safety checks going on, because a lot of doctors, if you rely on the patient to give you their medication history, they know that’s unreliable.

David
: Yeah.

Peter
: In particular practices we’ve seen other benefits. Pediatricians, for instance, say they love to kind of have a cool factor, where their patients appreciate the fact that it’s going electronically.
It’s kind of an ease of use and a knowledge of a safety net that, for doctors, once they’ve adopted it, the thought of, “I can scribble it in a second, ” is really some of the resistance we would get up front. Once they’re using it, then I think most of them say, “I’m never going back.”

What we’d like to do is go approach other payers in a given market and say, “Here, we have this capability to both save you money and improve the safety of your patients.”

“If you would pay just for the scripts for your members… So we don’t want you to subsidize anyone else, but I think it’s only fair for you to contribute for the scripts for your members.” We think that’s a viable model, and we’re working on, basically, in markets where we are, approaching other payers in those same markets, who then don’t even have to sponsor the deployment of the device. It’s already been taken care of. All they have to do is pay to play, right?

David
: At the scale where you are now, a big player, like Massachusetts Blue Cross Blue Shield, they’re not so worried about if somebody else is going to get some benefit, because they’re going to learn about it. But there is kind of a free rider problem, it sounds like.

Peter
: There is. Now, I think there’s a lot more value added functionality we can show to our customers.

David
: Like what?.

Peter
: We provide basic functionality. The doctor can use it for any patient that comes in, but there’s certain value added information we can show the doctors that will benefit an insurance company. Massachusetts was an anomaly, I would say. They have always been kind of leading edge. And from the very start, Blue Cross Massachusetts partnered with one of their biggest competitors, Tufts Health Plan and then added another one, Neighborhood Health Plan, over time. We’re not going to compete on e prescribing. Let’s make everyone safer. We’ll compete on other aspects; and they’ve been kind of forward thinking in that aspect.

Blue Cross of Illinois was another one that’s kind of taken that same approach. They say, “We’ll pay to get it up and running. We want all the other payers…”
In the model I was talking about, you pay for your own members, and we’ll help build the infrastructure. And I think that’s a model that’s going to be successful as well. It’s relatively recent, so we’re really just getting it deployed, but it’s another model that I think is a way to go.

And I think these collaborative approaches make a lot of sense, because you want to get the broadest coverage, be able to show information on the broadest amount of patients that you can, and that requires participation from all the various payers in a given market.

David: What about patient adherence?

Peter: Until there was e prescribing, there was no electronic record of what was prescribed. You can get what was dispensed. If you have an electronic record of what was prescribed, you can look for the delta, and that identifies areas of non compliance.

David
: Right.

Peter
: So we’ll be able to give a message to a physician, or to a patient or to a health plan, to say, “David didn’t pick up his insulin, and therefore is probably not being compliant with his therapy.”
There are other things… Prior authorization we discussed earlier. Online disease management program enrollment, so certain indications or certain prescriptions will trigger, “Let’s send you information and get you into a disease management program for, say, diabetes.”

Those are things that we’re working on.

David
: When you start to talk about things like adherence and compliance, certainly the ears of the pharmaceutical industry perk up as well.

Peter
: Right.

David
: Is there a potential role of working both with health plans and with pharma companies?

Peter
: Historically, the pharma companies and the health plans are a little at opposition on a lot of issues, so right now, we’re focused on the health plans. I think, as you say, pharma would definitely benefit. I mentioned earlier, we’re seeing a higher fill rate on our electronic prescribing, so they ought to be happy with that.

At the same time, by providing doctors information on different drug therapies, that is maybe a counterbalance to all the direct to consumer marketing, so maybe they’re not quite as happy about that.

David
: Yeah.

Peter
: Because of that tension, maybe, between pharma and insurance companies, we don’t want to get in the middle of that, at this point.
So, I think there’s a benefit, but I don’t know how much that will work. People have said e detailing, for instance, is maybe something we could do. That’s something we haven’t wanted to get into yet. Down the road, there are all kinds of possibilities.

David
: I’ve been speaking today with Peter Wilensky, ZixCorp’s Vice President for Corporate Communications and Investor Relations. Take care.



Will We All Become “Drug Addicts”?

by Scott MacStravic

With the clear worldwide “obesity epidemic” a major concern for practically everybody, and a major contributor to increased diseases of many kinds and increased sickness care costs, it is understandable that it has also become a major market opportunity for many entrepreneurs.  Weight loss products and services have sprung up all over the U.S. for example, and charges that many of they are over-hyped, with only short-term effects soon “reversed” by relapses into old bad habits are rife.

Perhaps the biggest market opportunity exists for pharmaceutical manufacturers.  What could be better, from a money-making perspective, than coming out with an expensive drug that would be taken by the majority of the population for their entire lives?  And there are a number of weight-control drugs already available, working on the body’s processing of fat, on appetite suppressing, energy expenditures, or almost anything that affects body weight and mass.

All will undoubtedly cause side effects, such as the gastro-intestinal problems and occasional embarrassments associated with GlaxoSMithKline’s Alli, and headaches, nausea, insomnia, anxiety and dry mouth effects of Orexigen Therapeutic’s experimental Empatic. [T. Somers “Obesity Drug Shows Promise in Testing” SignOnSanDiego.com July 25, 2007] But given consumers’ almost universal presence for a pill over personal effort to control their weight, all will probably sell well.

When obesity is added to the host of diseases and risks that people will want to avoid, reduce, or eliminate from their lives, including a variety of “disorders” (eating, sleeping, emotional, etc.), “dysfunctions” (erectile, for example), “syndromes” (restless leg, metabolic, etc.), there is almost no limit to the market potential.  And this threatens to create the kind of world envisioned in the novel “Brave New World”, where everyone is forever “on drugs”, with all the social and economic consequences thereof.

In the worst case scenario, it may turn out that employers and insurers will be willing to pay enough to make such lasting and widespread “addiction” affordable, once they learn whether they are better off in terms of labor and sickness care cost reductions to pay for such addiction, while consumers decide they are also sufficiently better off in terms of health, appearance, out-of-pocket sickness care costs, etc.  I may be a good case example, taking over twenty pills a day for a variety of digestive, physiological, and health protection reasons, though, fortunately, only one is a prescription drug, and it costs only $11 for a 90-day supply.

It may be odd and ironic that we will become dependent on a host of drugs, some OTC and others prescription, some inexpensive and some really challenging to pay for, in pursuit of independence from health problems, particularly in later life.  We can hope that the drugs on which we come to depend will be affordable for us as individuals and for payers who help, and will not create so many side effects as to make life unbearable.  But we can also choose to make lifestyle change an alternative to addiction in the first place.

There are already programs available to help us make “permanent” lifestyle changes that reverse diseases such as diabetes and heart disease, and may even work with prostate cancer, in the sense of not only controlling the disease, but doing so independently of pharmaceutical dependence.  And most of the health risk conditions and behaviors can be reduced or avoided through lifestyle/behavior changes, without using drugs to help, even though there are drugs available to help in most cases.

It may become a personal balancing act that most of us will have to address on our own – how much we are willing to spend on drug dependence to address risks, disorders, dysfunctions, syndromes and diseases.  It will certainly require tough decisions on how much we are willing to depend on outside dependence compared to the time and effort costs of do-it-yourself personal health management.

There have often been indications that pharmaceutical drug manufacturers, despite the long use of the term “ethical drug industry” to describe them, have been somewhat unethical, or at least mostly entrepreneurial in promoting use of their products.  Examples have included paying other manufacturers not to come out with generic competing products, “bribing” physicians to prescribe them, “medicalizing” problems, questionable advertising to consumers, questionable support of research to support their own or raise questions about competing options, withholding information about side effects, etc.

If we hold with Milton Friedman that the sole duty of publicly held corporations is to deliver returns for their shareholders, we can hardly expect any other pattern of behavior but doing whatever can be gotten away with to promote sales and profits.  But the prospect of a nation of drug-dependent consumers, even if they are “healthier” as a result, may be something.  And the only preventative for this threat may be consumers taking charge of their own health and health behaviors to prevent being “suckered” into such dependence to make a small number of shareholders richer.

In any case, we will likely all be challenged to balance the total benefits vs. total costs of opting for medication “solutions” to the wide range of problems that we face relative to our health and longevity.  There will surely be pharmaceutical and medical solutions available, but there are no medical problems, only problems to which there are medical solutions, among others in most cases.  Both preventing and solving such problems will almost always be possible at least partly through our own efforts, in addition to the option of drug dependence.  And payers, as well as consumers, themselves, may prefer lower-cost self-management options to lasting dependency.



Bashing big pharma on epilepsy drugs

by David Williams

A recent article in the Wall Street Journal, Pill Push; Industry Fights Switch To Generics for Epilepsy did a great job of explaining the behind the scenes maneuvering, but failed to elucidate the substantive issues.

In state legislatures across the country, the Epilepsy Foundation has been campaigning for bills that would make it harder for pharmacists to switch patients to inexpensive generic epilepsy pills. The effort is getting behind-the-scenes support from drug companies — a sign of how the industry, long a potent lobbying force in Washington, is increasingly looking to states to achieve its goals.

The article dissects in some detail how various interest groups are battling each other at the state level.

Ms. Byrd says several pharmaceutical-company lobbyists offered their support. Abbott lobbyist Guy Mosier “was extremely helpful working with legislators to help them understand the importance and that this piece of legislation was strictly for patient protection,” Ms. Byrd says. Mr. Mosier declined to comment.

Ms. Byrd introduced the bill in the Georgia House in January of this year. At a Feb. 7 hearing of the House’s health committee, Lasa Joiner, executive director of the Georgia Psychiatric Physicians Association, testified in support. Ms. Joiner was at the time also a Glaxo lobbyist, which she didn’t mention at the hearing. In an interview, she said she didn’t raise her tie to Glaxo because the company hadn’t asked her to lobby for the bill.

Two days later, epilepsy patients and parents of patients visited lawmakers’ offices to ask them to support the bill. The Epilepsy Foundation’s Ms. Thompson says drug-company lobbyists accompanied the visitors.

Kimberly Oviedo says her 6-year-old daughter had seizures last year after being switched to a generic version of the epilepsy drug Zonegran. She says she supported the bill because she wouldn’t “want any other person to have to go through what we’ve been through with our kids.” Ms. Oviedo also has a son who suffers from epilepsy.

The bill passed the Georgia House in a 161-0 vote on Feb. 28, but it stalled in the Senate after groups representing pharmacists and generic-drug makers mounted heftier opposition to it in that chamber. Pharmacies often earn bigger profit margins on generics than on branded drugs.

I was confused by this article. Whose side was I supposed to take? Were scientists selling out? Were patients being used as pawns by big pharma? (If you think patient activists are sheep, check the responses to my post on Bexxar and Zevalin.) So I asked an MD friend who has done research on the pharmacokinetics of epilepsy drugs (not for pharma companies, by the way). She told me:

This is great reporting on the potential conflicts of interest, but there isn’t a single word in the article explaining that epilepsy drugs are ones for which there is a narrow “therapeutic window” between the level needed for efficacy and the level that causes debilitating side effects. Epilepsy drugs are among the few drugs for which doctors test blood levels and titrate doses carefully. Furthermore, some epilepsy drugs such as phenytoin have zero-order kinetics, meaning that the body gets rid of the drug at a constant rate that is independent of the level of the drug in the body, making it very hard to maintain a therapeutic drug level. For these reasons it matters a lot whether the patient gets a particular dose of the drug, and 10% variations that are negligible with other drugs can be hugely important in treatment of epilepsy. This makes switches from brand to generic, generic to brand, or even generic to other generic medication potentially destabilizing.

That explanation helped me put things in context.



Are Bexxar and Zevalin really held hostage by “market forces”?

by David Williams

The New York Times implies that cancer drugs Bexxar and Zevalin, which treat non-Hodgkin’s lymphoma, are being stymied by “market forces.” See Market Forces Cited in Lymphoma Drugs’ Disuse. The article shows stern photos of three patients who have been cancer-free after receiving one of the drugs and goes on to note that few patients receive the drugs relative to the potential market. The Times blames reimbursement policies that provide incentives for community-based oncologists to administer other drugs. (Reimbursement policies aren’t exactly my idea of “market forces” by the way.)
If you just look at the photos, read the headline and lead paragraph, you’ll be pretty mad –and also misled. To the Times’ credit, the same article presents a variety of compelling reasons why the drugs aren’t used more:

The drugs have not been clinically proven to prolong survival, compared with other therapies…

While Bexxar and Zevalin help many patients, only a minority become cancer-free for many years…

Because they are radioactive, they are almost always administered in hospitals, not doctors’ offices…

Doctors agree that Rituxan is an excellent drug with only minor side effects for most patients…

Prescribing Zevalin also requires oncologists to coordinate care with the hospitals that administer it. To get either Zevalin or Bexxar, patients first receive a low-radiation diagnostic dose, then imaging scans, then a high-radiation therapeutic dose, which comes a week after the first dose. Over the next weeks the patient’s red and white blood cell counts must be monitored.

The back-and-forth makes the treatment complicated to oversee, said Dr. Joseph M. Connors, a lymphoma specialist in Vancouver, British Columbia. “The doctors looking after people tend to turn to tools that they themselves know how to use and are familiar with,” he said.

So the story is a lot more complicated than it looks. And the Times is barking up the wrong tree by blaming market forces. The story is much more about lack of coordination of care among physicians and hospitals, plus the complexity of the supply chain for radioactive products.

These drugs are extremely difficult and costly to manufacture and distribute. The drugs have short half-lives, so the path from factory to patient has to be very well managed. You can be certain that the drugmakers aren’t making outsized profits on these drugs. The fact that they continue to supply them in light of their poor sales and high costs says more about the corporate responsibility of GlaxoSmithKline and Biogen Idec than anything else. If pure “market forces” were at work the products would probably be withdrawn.

As the Times reports, two clinical trials are underway to determine whether these drugs increase survival relative to Rituxan. The Times should revisit the topic once those results are in. If the drugs really are shown to be superior and still aren’t used, that’s a story.



Not unreasonable

by David Williams

From what I’ve been reading so far, the bipartisan Senatorial agreement on biogenerics sounds fairly reasonable. Apparently the bill would:

  1. Guarantee 4 years of exclusivity for the innovator firm, even if the patent is at or near expiration at launch. Seems reasonable
  2. Require a clinical trial, but allow FDA to waive that requirement. I like the second part
  3. Allow FDA to approve a drug as interchangeable –not just similar. That’s extremely important to the market’s development
  4. Provide one year of exclusivity to the first generic product. That’s ok, I suppose, but it means more time before prices drop significantly

The devil is in the details, so I’ll be interested to learn more. It’s also far from clear that this bill will ultimately be enacted. However, it’s better than what I expected to emerge.

I’m still in favor of my proposal for price regulation post-patent expiry. It’s more economically efficient and safer. Maybe someone will take up the idea if this current effort fails.



Wal-Mart’s $4 generics having an impact

by David Williams

Wal-Mart’s CEO, Lee Scott closed out the recent World Health Care Congress in Washington, DC. Now Wal-Mart’s PR folks have put together a 4 minute video on their $4 generic program. It has ‘real people’ talking about how Wal-Mart has helped by making drugs more affordable for them. The video ends with a bullet point summary of the program’s impact:

  • Includes 14 of the top 20 prescribed meds
  • Available at all 3810 Wal-Mart’s
  • Saved consumers ~$290 M since it was put in place last year

If anything, Wal-Mart is being too modest about the program’s impact. I’d add the following:

  • Improves medication adherence and health status by making it affordable for patients to take their medicine as directed, rather than stretching it out
  • Saves money for consumers who don’t shop at Wal-Mart, by encouraging other retailers to reduce prices
  • Saves money for purchasers of insurance, by resetting the baseline for what generics should cost


Pharmaceutical Reality

by Nick Jacobs

As the CEO of a Research Institute specializing in, among many things, genomics and proteomics, it has become very clear to me that the pharmaceutical industry, like healthcare in general is, in many ways, systemically stuck in the past.  The goal of big pharma still appears to be the magic pill and that pill is one that can be made available to the masses, the mega drug, the blockbuster.

As we determine the specific nuances generated by individual genetic profiles and phenotypes, it is also obvious that precise, individualized medicines could be developed and marketed to function like  laser targeted weapons to surgically strike the offending genes or proteins. Unfortunately, that goal does not seem to currently be appearing on the majority of the radar screens of our pharmaceutical companies.

Although this new world order has been a dream of ours, Big Pharma is not heading in that direction.  In fact, recent attempts to create more vaccines represent an interesting new twist on an old melody.  They still, like the flu vaccine, are aimed at the masses.

What will it take to change a comprehensive program that continues to work around the individual in favor of a product that could be added to the water supply?  Truly, it is my belief that this transition may not occur within my lifetime, but it is certainly an obsession around which dreams are built.

Our biomedical informatics scientists are creating algorithms that will, in short order, allow us to sort through the specific human subtleties to allow differentiation at an individual level.  Will the economic potential of these discoveries ever convert to a viable financial alternative for pharma? One can only hope.



How Will Pharmaceutical Firms Operate in Evidence-Based Pharmacy?

by Scott MacStravic

When I listened to the podcast interview by David Williams with Donato Tramuto of President of Physicians Interactive I was struck by the potential for a new and different relationship with both physicians and consumers that might emerge from “evidence-based medicine” (EBM) if it were fully applied to pharmaceuticals.  The purpose and result of “Evidence-Based-Pharmacy” (EBP) would be to first identify the “best” medicine for particular patients with particular conditions, a process becoming far more complicated as more discoveries are made regarding differences in people’s responses to medications and medical treatments in general.

When the best solution is identified, the aim of EBP would then be to promote the widespread, even universal adoption of that best solution for all patients whose condition and personalized predicted response to medical treatments make it the best option. Widespread variability among physicians in what they choose should be virtually eliminated, in contrast to the current situation where the best treatment is being used only a bit over half the time on average.

When personalized best choices for pharmaceuticals have been identified, there is a far greater likelihood that it will be a single, patented solution, whose manufacturer will enjoy a monopolistic advantage until generic alternatives are approved.  This will mean the manufacturer can charge whatever the market will bear, and with consumers so insulated from the full costs of drugs thanks to insurance, the limit on what can be borne may be quite high.  Since the manufacturer will have incurred huge research and development costs, not only on the drug for which it holds the patent, but for many other drugs that perhaps did not turn out well in clinical trials and never make it to market, but whose costs have to be covered as well to keep the manufacturer in business.

With EBM, where there is a single drug that is truly identified as the best treatment, the need to cover costs of drugs that may have been approved, but which are not selected as “best practice” will add to the costs that must be borne by those drugs that have been so selected.  This can add significantly to the “overhead” costs of the best drugs, and thereby the need and desire of manufacturers to charge as much as the market will bear.

Countering this, of course, will be the natural desire of third party payers to keep their drug, along with other healthcare costs, under control.  The “best drug” is likely to be selected on the basis of its cost-effectiveness, not merely its relative efficacy.  And certainly, payors are sure to urge the development and approval of generics as soon as possible when an expensive best drug runs out of patent protection.

What might be the most interesting scenario for the future will be learning whether pharmaceutical manufacturers will accept the verdict of whichever agencies select the best solutions.  If the FDA or some other “official” agency, for example, begins to analyze the relative cost-effectiveness of competing drugs, rather than simply their efficacy and safety, will manufacturers of those that rank only second-best or lower drop their promotion and sales of their drug?  In other words, will they put patients’ and payers’ interests ahead of their own?

The current “system” of direct-to-consumer advertising rarely even mentions relative effectiveness, much less cost-effectiveness of competing drugs.  If a respected agency began publishing relative cost-effectiveness to consumers who increasingly bear some share of the costs, there is far more potential for one drug to win most or all of consumers’ and physicians’ prescription business than is the case for hospitals and physicians doing so when similar “best provider” data are reported.  There is simply no way that every patient in the US could, or even would go to the Mayo Clinic, if it were selected as the best provider.  But that might happen with the best prescription.

As it is, pharmaceutical firms have enormous opportunities if their drug is chosen as either the most cost-effective treatment medication, and far greater if one of theirs is chosen as the most cost-effective disease or risk management medication.  As Mr. Tramuto mentioned during the interview, if corticosteroids can save asthma patients from ER and hospital costs, and save payers as much as $180 per month per patient, they should be used by far more than the 5% of asthma patients who take their drugs.  And if one pharmaceutical firm either owned the exclusive patent for it, or had its brand judged the most cost-effective choice, it could enjoy the equivalent of, if not a real monopoly for tens of millions of asthma patients, for as long as either patent protection of EBP superiority remained.

From a purely economic perspective, the pharmaceutical firm could charge close to $180 per patient per month for its drug, regardless of its costs, since payers would be saving that much.  More likely, something more like a $90 charge would be accepted, where the pharmaceutical firm and payers would share equally in the savings.  Since cost-effectiveness would determine which drug is best, the charge would have to compete with other drugs that might not be quite as effective, but cost less, of course.

Such a scenario depends, of course, on not only pharmaceutical firms, but physicians and patients abiding by EBP.  Physicians would have to prescribe the best drug in all cases where is has been found to be best, and patients would have to increase their adherence to the prescribed best drug, in order for the best results to be achieved.   But clearly, EBP could make major differences in the pharmaceutical landscape, and perhaps throughout the healthcare “system”.  It should be interesting to watch.