Over the last three years, pharmaceutical companies have mounted a public relations blitz to tout new cures for the hepatitis C virus and persuade insurers, including government programs such as Medicare and Medicaid, to cover the costs. That isn’t an easy sell, because the price of the treatments ranges from $40,000 to $94,000 — or, because the treatments take three months, as much as $1,000 per day.
To persuade payers and the public, the industry has deployed a potent new ally, a company whose marquee figures are leading economists and health care experts at the nation’s top universities. The company, Precision Health Economics, consults for three leading makers of new hepatitis C treatments: Gilead, Bristol-Myers Squibb, and AbbVie. When AbbVie funded a special issue of the American Journal of Managed Care on hepatitis C research, current or former associates of Precision Health Economics wrote half of the issue. A Stanford professor who had previously consulted for the firm served as guest editor-in-chief.
At a congressional briefing last May on hepatitis C, three of the four panelists were current or former Precision Health Economics consultants. One was the firm’s co-founder, Darius Lakdawalla, a University of Southern California professor.
“The returns to society actually exist even at the high prices,” Lakdawalla assured the audience of congressional staffers and health policymakers. “Some people who are just looking at the problem as a pure cost-effectiveness problem said some of these prices in some ways are too low.”
Even as drug prices have come under fierce attack by everyone from consumer advocates to President Donald Trump, insurers and public health programs have kept right on shelling out billions for the new hepatitis C treatments, just as Precision Health Economics’ experts have urged them. With a battle looming between the industry and Trump, who has accused manufacturers of “getting away with murder” and vowed to “bring down” prices, the prestige and credibility of the distinguished academics who moonlight for Precision Health Economics could play a crucial role in the industry’s multipronged push to sway public and congressional opinion.
While collaboration between higher education and industry is hardly unusual, the professors at Precision Health Economics have taken it to the next level, sharpening the conflicts between their scholarly and commercial roles, which they don’t always disclose. Their activities illustrate the growing influence of academics-for-hire in shaping the national debate on issues from climate change to antitrust policy, which ultimately affect the quality of life and the household budgets of ordinary Americans — including what they pay for critical medications.
The pharmaceutical industry is digging in, with one of its trade groups raising an additional $100 million for its “war chest.” For years, it has spent millions of dollars lobbying politicians, hoping to enlist their support on a wide range of legislation. It has similarly wooed doctors, seeking to influence what they research, teach and prescribe. Now, it’s courting health economists.
“This is just an extension of the way that the drug industry has been involved in every phase of medical education and medical research,” said Harvard Medical School professor Eric G. Campbell, who studies medical conflicts of interest. “They are using this group of economists it appears to provide data in high-profile journals to have a positive impact on policy.”
The firm participates in many aspects of a drug’s launch, both advising on “pricing strategies” and then demonstrating the value of a drug once it comes on the market, according to its brochure. “Led by professors at elite research universities,” the group boasts of a range of valuable services it has delivered to clients, including generating “academic publications in the world’s leading research journals” and helping to lead “formal public debates in prestigious, closely watched forums.”
Precision Health Economics may be well-positioned to influence the Trump administration. Tomas Philipson, an economist at the University of Chicago and the third co-founder of Precision Health Economics, reportedly served briefly as a senior health care adviser for the Trump transition team. He did not respond to requests for comment. Dr. Scott Gottlieb, reported to be a candidate for commissioner of the Food and Drug Administration, is a clinical assistant professor at New York University School of Medicine and a former “academic affiliate” of Precision Health Economics, according to its website.
Although it’s hard to gauge the firm’s precise impact, associates of Precision Health Economics have often waded into the political fray. Last fall, big pharma spent more than $100 million successfully defeating a California referendum that would have controlled the prices of both generic and name-brand drugs. Testifying in September at a state Senate hearing on a generic drug, co-founder Goldman steered the discussion to name-brand drugs, such as the hepatitis C treatments, arguing that their prices should not be regulated.
“We have to ensure access to future innovation, and that’s going to require some recognition that if someone develops an innovative drug, they’re going to charge a lot for it,” Goldman said.
Prescription drugs on average cost more than twice as much in the U.S. as in other developed nations. That’s mostly due to name-brand drugs. They represent 10 percent of all prescriptions but account for almost three-quarters of the total amount spent on drugs in the U.S. Their prices have doubled in the past five years.
The U.S. grants drugmakers several years of market exclusivity for their products and remains one of the only industrialized countries that allows them to set their own prices. These protections have allowed the pharmaceutical industry to become one of the economy’s most profitable sectors, with margins double those of the auto and petroleum industries.
To justify the value of expensive drugs, the professors affiliated with Precision Health Economics rely on complicated economic models that purport to quantify the net social benefits that the drugs will create.
For one industry-funded hepatitis C study, Lakdawalla and nine co-authors, including three pharmaceutical company researchers, subtracted the costs of the treatment from the estimated dollar value of testing all patients and saving all livers and lives. By testing and treating all patients now, they concluded, society would gain $824 billion over 20 years.
Critics have at times questioned the assumptions underlying the consultants’ economic models, such as the choice of patient populations, and suggested that some of their findings tilt toward their industry clients. For example, some have tried and failed to reproduce their results justifying the value of cancer treatments.
Precision Health Economics allows drugmakers to review articles by its academics prior to publication in academic journals, said a former business development manager of the consulting group. Such prior review is controversial in higher education because it can be seen as impinging on academic freedom.
“Like other standard consulting projects, you can’t publish unless you get permission from the company,” the former employee said. Carolyn Harley, senior vice president and general manager of the firm, said that pre-publication review was not company policy, but “in some cases, client contracts provide them the opportunity for review and comment before submission.”
“I have never published anything that I am not comfortable with or prepared to defend, nor have I ever been asked to,” said Lakdawalla about his firm’s research.
Goldman says the firm’s research is independent, and its clients don’t influence its findings. “From my perspective it’s very clear: I say things that piss off my sponsors, I say things that piss off the detractors,” he told ProPublica. “People are coming to us because they have an interest in sponsoring the research that’s generated. These are our ideas. This is how you get your ideas recognized.”
He said his consulting work does not involve setting prices of specific drugs, and his academic research focuses only on categories of drugs, rather than on particular brands.
Originally published as “Big Pharma Quietly Enlists Leading Professors to Justify $1,000-Per-Day Drugs” on ProPublica