The Good News on Generic Drugs

by on February 22, 2016 at 7:28 am in Economics, Medicine | Permalink

Who could resist the story of Martin Shkreli and Turing Pharmaceuticals?  Shkreli is like a villain straight from central casting; having made millions, perhaps fraudulently, as a hedge manager, he turned to pharmaceuticals where, as CEO of Turing, he bought up the marketing rights to Daraprim (pyrimethamine), a drug used by pregnant women and AIDS patients (natch), and jacked up the price from $13.50 a pill to $750 a pill. Not content with monopolizing pharmaceuticals, Shkreli also aimed to monopolize hip hop music. Shkreli on his own was a great story but add some big price increases for a handful of other generic drugs and Shrekli became an irresistible lead to a story about seemingly widespread increases in generic drug prices.

If we dig deeper, however, the big news about generic drugs is good news. Generic drug prices are falling. Three recent studies of generic drug prices all point in the same direction. Express Scripts, a large prescription drug manager, found that:

From January 2008 through December 2014, a market basket of the most commonly used generic medications decreased in price by 62.9%.

In an excellent overview the Department of Health and Human Services concluded that:

…drug acquisition costs fell for a majority of generic Medicaid prescriptions measured by both volume and total generic expenditures.

Finally the AARP studied the prices of generic drugs used by older Americans and found that:

Between January 2006 and December 2013, retail prices for 103 chronic-use generic drugs that have been on the market since the beginning of the study decreased cumulatively over 8 years by an average of 22.7 percent.

— The cumulative general inflation rate in the U.S. economy rose 18.4 percent during the same 8-year period.

Patented drugs are increasing in price so to evaluate the benefit of price decreases for generics it’s important to know that between 80 to 90 percent of all prescriptions in the United States are for generic drugs.

Tomorrow: The Good News on the FDA and ANDAs.

There are several ways of thinking about economic distress. One is inequality. Utah is the most equal state, then Alaska, Wyoming and New Hampshire. In terms of median family income, Maryland is the richest state, then New Hampshire. So the Granite State is in a sweet spot, both very rich and relatively equal. But its drug deaths exceed the national average.

That is from Scott Sumner.  And this:

In contrast, the 5 states with the lowest rate of drug deaths are all in the northern plains area. (Note that the 4 most equal states and the 5 lowest drug deaths states are mostly white, but their drug death rates are vastly different.) Interestingly after the 5 plains states you have Virginia, followed by four very unequal states, with lots of poverty; Texas, New York, Mississippi and Georgia rounding out the top 10 for fewest drug deaths.

Economics isn’t everything, nor is inequality.

This one is new to me, and I cannot vouch for it.  Nonetheless I wondered if this report from Melinda Beck at the WSJ might be a positive sign:

Not long ago, hospitals routinely charged uninsured patients their highest rates, far more than insured patients paid for the same services. Now, in the Alice-in-Wonderland world of health-care prices, the opposite is often true: Patients who pay up front in cash often get better deals than their insurance plans have negotiated for them.

That is partly due to new state and federal rules aimed at protecting uninsured patients from price gouging. (Under the Affordable Care Act, for example, tax-exempt hospitals can’t charge financially strapped patients much more than Medicare pays.) Many hospitals also offer discounts if patients pay in cash on the day of service, because it saves administrative work and collection hassles. Cash prices are officially aimed at the uninsured, but people with coverage aren’t legally required to use it.

Here is the full story.

The Right to Try

by on February 8, 2016 at 7:25 am in Economics, Law, Medicine | Permalink

Here is a powerful video from the Tomorrow’s Cures Today Foundation on the right to try experimental medicines. I sometimes worry that we hold out too much promise to patients. Tomorrow’s drugs are rarely cures. Tomorrow’s drugs are a little bit better than today’s and that is how progress is made. What really matters is not the right to try per se but speeding up the process, reducing costs, and increasing investment in pharmaceutical R&D.

Nevertheless, I support the right to try. Watch the video.

Addendum: I have no direct connection to the Foundation but Bartley Madden is on the advisory board, as is Nobelist Vernon Smith, so I am delighted to promote.

That is the topic of a new paper by Meyer R and Desai SP, here is the abstract:

News of the successful use of ether anesthesia on October 16, 1846, spread rapidly through the world. Considered one of the greatest medical discoveries, this triumph over man’s cardinal symptom, the symptom most likely to persuade patients to seek medical attention, was praised by physicians and patients alike. Incredibly, this option was not accepted by all, and opposition to the use of anesthesia persisted among some sections of society decades after its introduction. We examine the social and medical factors underlying this resistance. At least seven major objections to the newly introduced anesthetic agents were raised by physicians and patients. Complications of anesthesia, including death, were reported in the press, and many avoided anesthesia to minimize the considerable risk associated with surgery. Modesty prevented female patients from seeking unconsciousness during surgery, where many men would be present. Biblical passages stating that women would bear children in pain were used to discourage them from seeking analgesia during labor. Some medical practitioners believed that pain was beneficial to satisfactory progression of labor and recovery from surgery. Others felt that patient advocacy and participation in decision making during surgery would be lost under the influence of anesthesia. Early recreational use of nitrous oxide and ether, commercialization with patenting of Letheon, and the fighting for credit for the discovery of anesthesia suggested unprofessional behavior and smacked of quackery. Lastly, in certain geographical areas, notably Philadelphia, physicians resisted this Boston-based medical advance, citing unprofessional behavior and profit seeking. Although it appears inconceivable that such a major medical advance would face opposition, a historical examination reveals several logical grounds for the initial societal and medical skepticism.

File under “@pmarca bait.”

Hat tip goes to Neuroskeptic.

“Unemployment is really hard to handle,” said U Saw Tha Pyae, whose six elephants have been jobless for the past two years. “There is no logging because there are no more trees.”

Myanmar’s leading elephant expert, Daw Khyne U Mar, estimates that there are now 2,500 jobless elephants, many of them here in the jungles of eastern Myanmar, about two and a half hours from the Thai border. That number would put the elephant unemployment rate at around 40 percent, compared with about 4 percent for Myanmar’s people.

“Most of these elephants don’t know what to do,” Ms. Khyne U Mar said. “The owners have a great burden. It’s expensive to keep them.”

Adult elephants, which each weigh about 10,000 pounds, eat 400 pounds of food a day and, other than circuses and logging, have limited job opportunities.

Logging is arduous. But elephant experts say hard work is one reason Myanmar’s elephants have remained relatively healthy. A 2008 study calculated that Myanmar’s logging elephants, which have a strict regimen of work and play, live twice as long as elephants kept in European zoos, a median age of 42 years compared with 19 for zoo animals.

Here is the full NYT story, via Michelle Dawson and Otis Reid.  The story is interesting throughout, you will note the elephants had strong labor law protections:

The military governments adhered to a strict labor code for elephants drawn up in British colonial times: eight-hour work days and five-day weeks, retirement at 55, mandatory maternity leave, summer vacations and good medical care. There are still elephant maternity camps and retirement communities run by the government. In a country where the most basic social protections were absent during the years of dictatorship, elephant labor laws were largely respected.

Interesting throughout — I wonder what is the natural rate of unemployment for elephants in a freer labor market…?

German Lopez at Vox reports:

If you look at the data, there’s no evidence to support the idea that Europe, in general, has a safer drinking culture than the US.

According to international data from the World Health Organization, European teens ages 15 to 19 tend to report greater levels of binge drinking than American teens.

This continues into adulthood. Total alcohol consumption per person is much higher in most of Europe. Drinkers in several European countries — including the UK, France, Belgium, Denmark, Sweden, and Iceland — are also more likely to report binge drinking than their US counterparts.

Younger teens in Europe appear to drink more, as well. David Jernigan, an alcohol policy expert at Johns Hopkins University, studied survey data, finding that 15- and 16-year-old Americans are less likely to report drinking and getting drunk in the past month than their counterparts in most European countries.

File under Wisdom of the Mormons.


I found the article and its photos interesting throughout.  Here is commentary from Robin Hanson.

Fragments of note

by on January 19, 2016 at 1:25 pm in Current Affairs, Law, Medicine | Permalink

…OxyContin abuse kills three times more people than gun homicides yearly.

That is from Scott Alexander, USA only, and here is Scott’s earlier post on guns, follow-up here.

Addendum: Do note the comment from GregS, this comparison may not be correct.  Here is an update.

Wow!! Remember that increasing death rate among middle-aged non-Hispanic whites? It’s all about women in the south (and, to a lesser extent, women in the midwest). Amazing what can be learned just by slicing data.

I don’t have any explanations for this. As I told a reporter the other day, I believe in the division of labor: I try to figure out what’s happening, and I’ll let other people explain why.

That is from Andrew Gelman, there is more at the link.


Economists on FDA Reciprocity

by on January 14, 2016 at 7:05 am in Economics, Law, Medicine | Permalink

Daniel Klein & William Davis surveyed economists about whether it would be an improvement to reform the FDA so that “as soon as a new drug is approved by any one of five [FDA approved international] agencies, that drug automatically gains approval in the United States.” They report:

Of the 467 economists who answered the question and did not mark “Have no opinion,” 53 percent agreed that the reform would be an improvement, while 29 percent disagreed. (The remainder said they were “neutral.”) Moreover, those favoring the reform were more likely to say they held their belief “strongly.” Hence, the balance of economist judgment certainly leaned in favor of the liberalization.

Economists are not the only ones in favor of reciprocity. Others are also coming around, at least partially. In Generic Drug Regulation and Pharmaceutical Price-Jacking I argued in response to the massive increases in the price of Daraprim (generic name Pyrimethamine) that we ought to allow importation:

Pyrimethamine is also widely available in Europe. I’ve long argued for reciprocity, if a drug is approved in Europe it ought to be approved here. In this case, the logic is absurdly strong. The drug is already approved here! All that we would be doing is allowing import of any generic approved as such in Europe to be sold in the United States.

In a paper in JAMA discussing the same case, Drs Jeremy Greene, Gerard Anderson, and Joshua M. Sharfstein agree, writing:

A second option is to temporarily permit the importation of drug products reviewed by competent regulatory authorities and approved for sale outside the United States. For example, Glaxo, the original manufacturer of pyrimethamine, sells a version of the drug approved for use in the United Kingdom at less than $1 per tablet.

Dr Sharfstein by the way was Principal Deputy Commissioner of the US Food and Drug Administration from March 2009 to January 2011.

Addendum: I will be discussing/debating pharmaceutical policy with Dr. Sharfstein at on event sponsored by the Council on Foreign Relations in Washington, DC the morning of Monday January 25. Invitation only but email me if you want an invite.

I don’t think climate change is the right framing for this effect, nonetheless this is an interesting result, with the subtitle “Evidence from a billion tweets.”  Here is the abstract:

What is the welfare cost of environmental stress? The change in amenity values resulting from temperature increases may be a substantial unaccounted-for cost of climate change. Because there is no explicit market for climate, prior work has relied on cross-sectional variation or survey data to identify this cost. This paper presents an alternative method of estimating preferences over nonmarket goods which accounts for unobserved cross-sectional and temporal variation and allows for precise estimates of nonlinear effects. Specifically, I create a rich dataset on hedonic state: a geographically and temporally dense collection of updates from the social media platform Twitter, scored using a set of both human- and machine-trained sentiment analysis algorithms. Using this dataset, I find limited evidence of temperature effects on hedonic state in low temperatures and strong evidence of a sharp decline in hedonic state above 70◦F. This finding is robust across all measures of hedonic state and to a variety of specifications.

That is the job market paper (pdf) by Patrick Baylis, a job candidate from UC Berkeley.

And here is a new result that Canadians are more polite on Twitter, I wonder what happens if you control for temperature…

For the pointer I thank Samir Varma.

Arbel, Ben-Shahar, and Gabriel have a newly published paper on this topic, here is the abstract:

Research findings show that disabled persons often develop physical and psychological mechanisms to compensate for disabilities. Coping mechanisms may not be limited to the psychophysiological domain and may extend to cognitive bias and loss aversion. In this study, we apply unique microdata from a natural policy experiment to assess the role of loss aversion in home purchase among nondisabled and disabled households. Results of survival analysis indicate that the physically disabled are substantially less loss averse in home purchase. Furthermore, loss aversion varies with other population characteristics and attenuates with degree of disability. Findings provide new evidence of diminished cognitive bias and more rational economic decision-making among the physically disabled.

There are alternative versions of the paper here.

For the pointer I thank the excellent Kevin Lewis.

Obamacare in 2016

by on January 6, 2016 at 2:25 am in Current Affairs, Economics, Law, Medicine | Permalink

During the election season Democrats can’t admit Obamacare is broken and Republicans can’t admit it won’t be repealed.

An excellent post from Robert Laszewski, read the whole thing.

Death trends

by on December 22, 2015 at 2:09 am in Data Source, Law, Medicine, Political Science | Permalink


So, once you get past the mood affiliation, where is the big story?

Link here.