Donald Metz, executive editor of Health Affairs, said the journal followed its policy of leaving disclosure to the “authors’ discretion.” Its editorial staff did not exclude any information on conflicts or affiliations that the authors provided alongside their draft, he said.
As the cancer study gained national recognition, its methodology and findings came under fire. Researchers from Dartmouth College tried and failed to reproduce the results. Cancer care in the U.S., their research found, may actually provide less value than cancer care in Europe, considering cost.
“We know that [the U.S. health care system] is more disorganized and disorganization is more expensive, so it’s surprising to believe that the U.S. would perform better in a cost-effectiveness sense,” said Samir Soneji, one of the authors of the counter-study and an assistant professor of health policy at Dartmouth. The science in the original study, Soneji says, was “questionable.”
Soneji was not alone in his criticism. Aaron Carroll, a pediatrics professor at the Indiana University School of Medicine, reviewed the methodology and concluded that the Precision Health Economics researchers had used a measure that can frequently be misinterpreted. Instead of relying on mortality rates, which factor in a patient’s age of death, the study employed survival rates, looking at how long people live after diagnosis. Cancer screening, which can increase survival rates, is more frequent for some cancers in the U.S. than in other countries, Carroll says.
“When they wrote that paper using survival rates, they were clearly cherry picking,” Carroll told ProPublica. “If the arguments are flawed and people keep using them, I would be concerned that they have some other motive.”
The founders of Precision Health Economics defended their use of survival rates in a published response to the Dartmouth study, writing that they “welcome robust scientific debate that moves forward our understanding of the world” but that the research by their critics had “moved the debate backward.”
Precision Health Economics has become a prominent booster of a new way of setting drug prices — based on their overall value to society. Value is determined by comparing the drugs’ cost with their effectiveness in saving lives and preventing future health expenses.
Pharmaceutical companies have traditionally justified their prices by citing the cost of research and development, but recent research on drug pricing has challenged this argument. Many of the largest drug companies spend more on sales and marketing than on developing their drugs. And notably, one researcher has found that about 75 percent of new molecular entities, which are considered the most innovative drugs, trace their initial research funding back to the government.
“There is substantial evidence that the sources of transformative drug innovation arise from publicly funded research in government and academic labs,” said Dr. Aaron Kesselheim, an associate professor at Harvard Medical School whose research looks at the cost of pharmaceuticals. Pharmaceutical pricing, he says, is primarily based on what the market can bear.
Many early proponents of value pricing, including American health insurers, saw it as a way to rein in drug prices. Some nations, particularly those with national health systems, like the U.K., rely on official cost-effectiveness analyses to decide which drugs to pay for. Overpriced drugs are sometimes denied coverage. This powerful negotiating tool has helped keep drug prices down abroad.
Efforts to establish similar practices in the U.S., however, have been stymied by lobbying from patient groups, many of them funded by the pharmaceutical industry, contending that value pricing could lead to rationing of health care. More recently, though, the industry has used academic consultants to help it redefine the concept of “value” to justify its pricing.
At the congressional briefing on the new hepatitis C drugs, Harvard Medical School associate professor Anupam Jena, a Precision Health Economics consultant, suggested that part of a drug’s value is earning enough profit that pharmaceutical companies are enticed to develop treatments for other diseases. Otherwise, Jena said, “you don’t incentivize innovations that actually deliver value, and so the next cure … may not be developed.”
Princeton’s Reinhardt said pricing drugs based on this notion of value could give the industry carte blanche to charge whatever it wants. “If you did value pricing and say it’s OK for the drug companies to charge up to what the patient values his or her life to be, you are basically saying that the pharmaceutical companies can take your savings,” he said. “American society will not stand for that.”
Not long after the controversy over its cancer research, Precision Health Economics became embroiled in another academic spat related to a client’s product. This time, it was over a breakthrough treatment that, injected one to two times per month, could help millions of Americans with high cholesterol. At the $14,000-per-year price set by one of its makers, Amgen, the PCSK9 inhibitor could also hike the nation’s annual prescription drug costs by an unprecedented $125 billion, or 38 percent. Its price in the U.S. is twice as much as in the U.K.
The U.S. price of the drug has come under vigorous attack from the nonprofit Institute for Clinical and Economic Review. ICER, which began as a small research project at Harvard Medical School, studies the cost-effectiveness of drugs, balancing their value to patients against the impact of their cost on society. The Centers for Medicare and Medicaid Services proposed a new rule in March 2016 that includes the use of value-based pricing studies, specifically citing the work of ICER.
The industry has attacked many of the institute’s studies, particularly those that find a treatment is overpriced. Some patient groups have contended that ICER emphasizes cost savings because it receives funding from health insurers. However, foundations are ICER’s biggest source of funding, and it is also supported by the pharmaceutical industry and government grants. The pharmaceutical lobby has similarly attacked the Drug Effectiveness Review Project, a coalition of state Medicaid agencies and other payers, accusing it of using its studies to justify “rationing.”
ICER concluded in 2015 that the new cholesterol treatment, the PCSK9 inhibitor, should cost about one-fifth what Amgen is charging. A few months later, Philipson, the Precision Health Economics co-founder, and Jena wrote an op-ed in Forbes, citing the institute’s research and deriding its approach to value pricing as “pseudo-science and voodoo economics.” Only Philipson disclosed his ties to Precision Health Economics, and neither academic disclosed that Amgen was a client of the firm.
After being asked by ProPublica about the lack of transparency, Forbes added a disclosure statement to the op-ed. “Manufacturers of PCSK-9 inhibitors and novel treatments for hepatitis C, such as Amgen, Gilead, and Abbvie, are clients of Mr. Philipson’s consulting firm, Precision Health Economics, for which Dr. Jena also works,” the publication noted. “In general, the pharmaceutical and biotechnology companies which retain Precision Health Economics benefit from higher drug prices.”
Goldman, along with Precision Health Economics employees and two Harvard professors, including Jena, published their own study on the cholesterol drug in the American Journal of Managed Care, where Goldman serves on the editorial board. They found that the new cholesterol drugs were indeed cost-effective at the listed prices. The article disclosed the authors’ ties to Precision Health Economics and the source of funding: Amgen.
Originally published as “Big Pharma Quietly Enlists Leading Professors to Justify $1,000-Per-Day Drugs” on ProPublica