Results for “fda”
324 found

The Vioxx Hex

It’s a real thrill when the editorial page of the Washington Post starts to sound like, well, me (e.g. here and here).

Politicians and regulators should be asking themselves whether a system of
massive cash awards to people who may or may not have been adversely affected by
Vioxx is a logical, fair or efficient way to run a drug regulatory system. They
should also be asking whether juries that scorn medical evidence are the right
judges of what information should or should not have been on a prescription
label. After all, Vioxx was produced and sold legally. The drug was approved by
the Food and Drug Administration, and its label did warn of coronary side
effects. It is possible, even probable, that Merck was negligent in its decision
to ignore early warnings of the cardiovascular risks of Vioxx. But the company
has already paid a price for that negligence, in the losses it has suffered
after abruptly taking Vioxx off the market. Fair compensation for the injured
needn’t entail disproportionate financial punishment as well.

In the long term, using the courts to "send a message" to Merck isn’t going
to help consumers. If the result is an even more cautious FDA approval system
and a more cautious pharmaceutical industry, that will keep innovative drugs off
the market for much longer. More people will die waiting for new treatments. The
cost of producing new drugs will rise dramatically. Already, there are whole
areas of medicine — women’s health during pregnancy, for example — that are
made so risky by liability issues that companies may stop doing research in
them.

The first principle of reforming this system should be that a company that
follows the FDA’s rather extensive guidelines should be protected from punitive,
if not compensatory, damages.

Dollar decline: optimism vs. pessimism?

Read Brad DeLong (the best econ post this week; for better or worse, no one gets impeached).  My view is simple: I don’t much trust any very specific macro model.  So I look at current market prices and I ask two questions.  First, does the country in question have relatively sound fundamentals, relative to other parts of the world?  Despite the erosion in the quality of governance in the U.S., I still answer yes.  Second, I try to develop a crude but intuitive "theory" of what the market hasn’t taken into account.  I don’t have a strong guess here but the Setser-Krugman pessimistic view seems well enough known that it doesn’t fit this bill.  That gives me a second reason not to be a pessimist.

More specifically, I am not what Brad calls an "international finance economist":

International finance economists, by contrast, look at the asset markets. A 40% decline in the dollar over four years is a decline at the rate of 10% per year. Once financial markets convince themselves that such a decline is coming and that they need to be compensated for it, that ought to drive a 400 basis point wedge between U.S. and foreign long-bond expected returns.

I would be surprised if a dollar decline led to such consistently high interest rates in anticipation.  Uncovered interest parity is an unreliable relationship and often the relevant variables behave more like random walks, whether or not they should according to theory.  Also read this Economist article on why interest rates may not skyrocket if the dollar dives; links to specific papers are at the bottom of the article.

Addendum: I don’t think I have had any influence on his specific subsequent views, but I am proud to have had Stephen Jen as an undergraduate in the first class I ever taught at UC Irvine.

No Pain Relief for Tort Sufferers

James Hamilton takes a look at one of the key studies on Vioxx and heart attacks.  He is not greatly impressed.

I took a look at one of the studies on which the decision was
justified, written by Dr. David Graham and co-authors and published in Lancet
in February. This study looked at 8,143 Kaiser Permanente patients who
had suffered a heart attack and had also at some point taken a
nonsteroidal anti-inflammatory drug (NSAID), of which Vioxx (rofecoxib)
is one. Of these patients, 68 were taking rofecoxib while 4,658 were
receiving no medication at the time of their heart attack, a ratio of
(68/4658) = 1.46%. For comparison, the study looked at 31,496 other
patients who had also at some point taken an NSAID, matched for
characteristics like age and gender with the first group, but who
didn’t have a heart attack. The ratio of rofecoxib users to those with
no current medication was slightly lower (1.05%) in this second group,
which one might summarize as a (1.46/1.05) = 1.39-fold increase risk of
heart attack from taking rofecoxib compared to no NSAID. Is that
statistically significant, in other words, can you rule out that you’d
see a difference of that size just by chance? Yes, the study claimed,
but just barely.

On the other hand, this was not a controlled experiment, in which
you give the rofecoxib randomly to some patients and not others in
order to see what happens. Rather, something about either these
patients or their doctors led some of them to be using rofecoxib and
others not. Dr. Graham and co-authors looked at a variety of indicators
that suggested that the rofecoxib patients already had slightly
elevated risk factors for coronary heart disease. Once they controlled
for these with a logistic regression, their study found an elevated
risk factor of heart attack for rofecoxib takers of 1.34, which was not
statistically significantly distinguishable from 1.0.

The strongest evidence from this study was a claimed dose-effect
relation. Of these 68 rofecoxib-using heart-attack patients, 10 of them
were taking doses above 25 mg per day. Only 8 patients in the much
larger control group were taking so high a dose, implying an elevated
risk factor of 5 to 1 for high-dose patients. Again observable risk
factors could explain some of this, with the conditional logistic
regression analysis bringing the implied drug-induced risk down to 3 to
1. According to the study, this elevated risk factor was still
statistically significant, even though the inference is based on the
experience of just 10 patients.

The obvious question here is whether in fact the authors were able
to observe all the relevant risk factors. The study openly acknowledged
that it did not, missing such important information as smoking and
family history of myocardial infarction.

…[E]ven if
there actually is an elevated risk of the magnitude the studies suggest
but can’t prove, the question is whether I might want to accept a 1 in 4,000 risk of dying from a heart attack in order to get the only medication timt makes my pain bearable and a mobile life livable.  And if I say no to the Vioxx, I may end up taking something that is less effective for my pain but has risks of its own.

…. How did we arrive at a
system in which 12 random Texans are assigned responsibility for
evaluating the scientific merits of statistical evidence of this type,
weighing the costs and benefits, and potentially sending a productive blue-chip American company into bankruptcy protection?

See also my op-ed Bringing the Consumer Revolution to the FDA.

Rx for OTC

I went to the doctor yesterday.  I told him that to avoid altitude sickness in Peru I wanted a prescription for Diamox.  He used to be surprised when I self-diagnosed but he knows me now.  He wrote the prescription and I was done in less than four minutes.  I like my doctor but this visit took an hour of my time and probably cost the insurance company at least $100, my deductible was $25.  No big deal for me but a non-trivial expense for someone without insurance.

Why aren’t more pharmaceuticals available over the counter?  In other words, why must we pay the priestly caste known as physicians for the right to treat ourselves?  "Safety," we are told (second only to "for the children" as an excuse for giving up liberty).  But, as Sam Peltzman pointed out long ago, safety runs both ways.  Not getting a pharmaceutical because it’s too expensive and time consuming to go through a doctor has adverse safety consequences and there is no evidence that the costs of potential mistreatment outweigh the costs of undertreatment.  (In anycase, politics not safety is often the reason for restrictions on OTC drugs e.g. the morning after pill.)

In fact, there are many countries where prescriptions are not required for legal medicines and they appear to do just fine.  Writing in Reason, Kerry Howley points out (online version, the print version is longer and I am quoted) that in this respect if no other Myanmar is a bastion of rationality and liberty compared to the United States.

Last year, while living in the Southeast Asian nation of Myanmar,
my phones were tapped, my journals were read, my work was censored, and
for the first time in my life, I was given the authority to care for my
own body.

There is no prescription drug system in Myanmar, but there are plenty of illnesses waiting to befall an effete Western immune system.  My expatriate colleagues and I were free to treat our ailments as we saw fit.
We staved off food poisoning and bouts of malaria with frequent trips to
the local pharmacy, consulting doctors when necessary, but ultimately
responsible for our own medical decisions. We formed doctor-patient
relationships that were partnerships rather than paternalistic
hierarchies, and each of us lived to tell the story.

Coming back to the States in the midst of hand-wringing about direct-to-consumer advertising, the restriction of life-saving cholesterol drugs, a wrenching process to make the morning-after-pill readily available, and now a push to put Sudafed behind the counter, it’s increasingly hard to understand why Americans cede crucial health decisions to the bureaucratic dithering of the FDA. In an age of empowerment through information, it is mind-boggling that patients are still willing to be silent spectators while their doctors call the shots.

The War on Drugs

Becker and Posner both argue against the War on Drugs.  Becker writes:

After totaling all spending, a study by Kevin Murphy, Steve Cicala, and
myself estimates that the war on drugs is costing the US one way or
another well over $100 billion per year. These estimates do not include
important intangible costs, such as the destructive effects on many
inner city neighborhoods, the use of the American military to fight
drug lords and farmers in Colombia and other nations, or the corrupting
influence of drugs on many governments.

The best economics piece on this issue is Drug War Crimes a short book by Jeffrey Miron published by Independent Institute where I am the director of research.  Miron demonstrates that the war on drugs greatly increases the violent crime rate (just as it rose during alcohol prohibition) and that the policy is not very effective in reducing consumption.

One interesting reason why the drug war reduces consumption less than people imagine is that prohibition reduces some costs.  Drug sellers, for example, do not pay social security taxes for their employees, they do not follow minimum wage laws and they do not obey costly FDA regulations.  On net prices are still pushed up by the threat of prosecution but the lack of taxes and regulations is a countervailing factor.

What determines foreign aid after a disaster?

When it comes to Uncle Sam doling out disaster
relief dollars to foreign countries, it apparently helps to be a friend
of the United States and to catch the eye of the New York Times.  That’s because each news story in the Times about a
natural disaster abroad produces more than a half-million dollars more
in U.S. disaster relief than what the stricken country otherwise would
have received, based on the magnitude of the calamity and other
factors, claim three political scientists who have studied the politics
of disaster relief.

A. Cooper Drury of the University of Missouri, Richard Stuart Olson of
Florida International University and Douglas A. Van Belle of New
Zealand’s Victoria University of Wellington compiled data on 2,337
natural catastrophes occurring between 1964 and the end of 1995,
including how often stories about a disaster appeared in the Times.

The Times, in this context, serves as a proxy for general media attention.  Furthermore:

…disaster assistance is awash in politics at every step of the process.
For example, basic foreign policy concerns have a huge impact on the
initial decision of whether to give aid. Allies of the United States
are about seven times more likely than non-allies or neutral countries
to win OFDA approval. And while the Cold War may have brought the world
to the brink of nuclear extinction, those were the salad days of
disaster relief: Awards were significantly larger during the Cold War
years than they are now…

Here is the story; scroll down further for an interesting but flawed discussion of social security and demography (what about birth control pills?).  So far I cannot find the paper itself on line.

Vioxx and Tort

We have two systems of drug regulation in the United States, the FDA and tort law.  Unfortunately, neither system works well.  FDA incentives push for excess delay and excess cost and the tort system appears random if not perverse in its operation with good claims receiving nothing and bad claims receiving billions.

Writing in the New Yorker, James Surowiecki discusses some relevant research from Kip Viscusi:

Merck would seem to have one big thing in its favor: the company
voluntarily withdrew Vioxx from the market. But while Merck executives
may have hoped to persuade people that they were acting responsibly,
plaintiffs’ attorneys have taken the withdrawal as an admission of
guilt…internal
company documents show that Merck employees were debating the safety of
the drug for years before the recall.

From a scientific perspective, this is hardly damning. The internal
debates about the drug’s safety were just that–debates, with different
scientists arguing for and against the drug….While that kind of weighing of risk and benefit may be medically
rational, in the legal arena it’s poison. Nothing infuriates juries
like finding out that companies knew about dangers and then “balanced”
them away. In fact, any kind of risk-benefit analysis, honest or not,
is likely to get you in trouble with juries….Viscusi has shown that
people are inclined to award heftier punitive damages against a company
that had performed a risk analysis before selling a product than a
company that didn’t bother to. Even if the company puts a very high
value on each life, the fact that it has weighed costs against benefits
is, in itself, reprehensible. “We’re just numbers, I feel, to them” is
how a juror in the G.M. case put it. “Statistics. That’s something that
is wrong.”…

Before a jury, then, a firm is better off being
ignorant than informed.

Are we spending our health care dollars effectively?

(I am quoting from Randall’s email here, Typepad won’t let me indent beneath the fold…)

"A) For anyone who is dying the lack of FDA approval should not prevent the use of a treatment.
   While I would favor complete revocation of FDA ability to keep drugs off the market that is not going to fly politically. But selling a more limited change where those with, say, a projected 12 month or 24 month life expectancy get a basic "I’m free of the FDA tyranny" card would accelerate drug development. Phase I and Phase II drugs would be more widely available….

D) The coercive power of the state should force a percentage of all income to go into medical spending accounts.
   The goal here is two fold:
      – Decrease the number of people who need state medical funding.
      – Also, increase the amount of medical treatment purchases that are paid directly by patients. That will increase market forces in medicine.

E) Self-employed people should be able to buy medical insurance pre-tax.

F) People should be able to make tax deductable donations into medical spending accounts for their future children before the children are conceived. Then the money should be usable to buy medical catastrophe insurance against the possibility of birth defects and also for more mundane medical care.

G) People should be able to bring their own medical insurance policies with them to a job and have their employers pay on those policies rather than on the employer’s group policy.
   That way a person could move around between jobs and never reach a state where their COBRA runs out and a pre-existing condition makes them uninsurable (assuming they can even afford to make COBRA payments while unemployed). The way things stand now the tax law forces people to go uninsured between jobs. When you have no income coming in you suddenly have to try to get coverage. That problem must be fixed.

H) Medical records should be made electronic and more widely shareable by researchers that most medical patients effectively become enrolled in "virtual" medical trials."

Soft landing or economic Armageddon?

Stephen Roach comes around to a more optimistic point of view

The constructive developments should not be minimized.  The recent plunge in oil prices is nothing short of stunning — 13% alone, for WTI quotes in the first three trading days of December.  I have no idea if this move is sustainable, but it has opened up a $7.50 gap from the $50 threshold that I have long felt would pose great risks to the global economy.  Moreover, the dollar’s weakness — despite the angst of the headline writers — fits the rebalancing script to a tee.  While euro and yen cross-rates are raising discomfort levels in Frankfurt and Tokyo, the dollar’s descent still looks like a well-managed soft landing to me.  In real terms, the Federal Reserve’s broad trade-weighted dollar index is down 15% from Febryary 2002 through November 2004 — a pace that equates to a decline of about 5% per year.  That’s a measured and encouraging adjustment path — provided, of course, the burden of currency realignment now spreads from Europe to Asia, including China. 

Furthermore the Chinese economy appears to be slowing in the appropriate, non-implosive fashion.  Roach’s bottom line?    

Even I have to concede that a number of positives have fallen into place recently.  I am on record of assigning a 40% probability to a global recession scenario in 2005…However, given recent favorable shifts in oil, the dollar, and China, I now believe that it is appropriate to reduce this risk to 25%.   

Note, however, that in his view (and mine) the U.S. still remains on a dangerous consumption binge when for demographic reasons more saving would be in order.  In my view the big problem lies in the long run, not the short run.  Now asset markets have a remarkable ability to compress long run problems into the here and now.  But how will this play out?  Most likely U.S. taxes in twenty or thirty years time will be much higher than today. Yes this will depress current asset prices but it should not, on its own, imply a current implosion or crash. Here is my previous post on economic Armageddon.

In praise of me-too drugs

Today’s Op-Ed in The Financial Times defends me-too drugs:

There is a tendency among the medical fraternity to tut-tut about the proliferation of drugs as unproductive and unnecessary. Marcia Angell, a former editor of the New England Journal of Medicine, argues in her book The Truth About Drug Companies that me-too drugs are symptomatic of Big Pharma’s intellectual bankruptcy.

Dr Angell says there is "almost no evidence of price competition in the me-too business" and trials "almost never compare me-too drugs with one another for the same condition at similar doses". One or two drugs would do: "I know of no rationale for, say, the seven brand-name Ace inhibitors that are sold to treat high blood pressure and heart failure."

There is something to her critique. One of the attractions of me-too drugs has been that pharmaceuticals companies have been able to market them heavily in the US – spending $3.3bn (£1.7bn) on direct-to-consumer advertising in 2003, and giving $16bn of free samples to doctors. This makes them look more like branded consumer goods companies than research-based scientific organisations.

But there are already signs of drug proliferation leading to falling prices. In Europe, the existence of alternative treatments has helped governments to cap prices. Pfizer is fighting a German proposal to pay the same for all cholesterol drugs, cutting the sum it gets for Lipitor by a third. Even in the US, drug companies increasingly have to compete to get their drugs on to approved prescription lists.

That means direct comparisons on both price and effectiveness. Despite the industry’s traditional resistance to "head-to-head" trials, they are becoming more commonplace. Bristol-Myers Squibb financed a head-to-head study of Pravachol and Lipitor in an effort to displace the market leader, only to find this year that Lipitor worked better.

…This may all sound terribly wasteful to a doctor, but it is the same thing that is good for consumers in other markets: open competition. The problem until now has not been too much of it, but too little. The last thing that a patient should want is a choice of only one drug. As the Vioxx withdrawal shows, me-too pills may inspire little affection, but they would be missed if they were not there.

Why have me-too drugs been so prevalent?  Are they an inefficient form of product mimicry?  An artifact of bad patent or FDA policies?  The long-run path to affordable medical care?  I don’t have the expertise to answer these questions, so in my spare time I bug Alex to write more about them.

Gladwell on Prescription Drugs

In the latest New Yorker, Malcolm Gladwell has an excellent article on prescription drugs. In a heartless and cruel post earlier this year I wrote:

People talk about the high price of pharmaceuticals as if high prices lasted forever. In fact, within a year of the expiration of a pharmaceutical’s patents, prices will typically fall by more than 50 percent as generic producers enter the market. Patents nominally last for 20 years but the effective patent life is much lower because patents are typically granted years before a product has cleared FDA review. The effective patent life of the average new pharmaceutical in the 1990s averaged just 12 years (see here for some references)….people who are demanding price controls are not simply asking for lower drug prices they are asking for lower prices on the newest drugs. Lower prices for drugs introduced 15 years ago are already here.

Gladwell gives a nice example:

If you are taking Mevacor for your cholesterol, the 20-mg. pill is two-twenty-five in America and less than two dollars if you buy it in Canada. But generic Mevacor (lovastatin) is about a dollar a pill in Canada and as low as sixty-five cents a pill in the United States…so many other drugs are going to go off-patent in the next few years–including the top-selling drug in this country, the anti-cholesterol medication Lipitor–that many Americans who now pay more for their drugs than their counterparts in other Western countries could soon be paying less.

Generics are often good substitutes for brand-name drugs but because neither the patient nor the doctor typically pay the costs we don’t choose the cheaper generics as much as we should (see here for more analysis).

Tyler asked why other institutions don’t arise to substitute for the cost-control of first party payment. Gladwell notes that such institutions are starting to evolve.

Pharmacy Benefit Managers, or P.B.M.s…build incentives into prescription-drug plans to encourage intelligent patient behavior. If someone wants to take a brand-name oral contraceptive and there is a generic equivalent available, for example, a P.B.M. might require her to pay the price difference. In the case of something like heartburn, the P.B.M. might require patients to follow what’s called step therapy–to try the cheaper H2 antagonists first, and only if that fails to move to a proton-pump inhibitor like omeprazole.

A good idea, especially if PBMs focus on pay for choice rather than restricting choice. I also worry that liability problems will plague PBMs just like they have HMOs and don’t forget that the lack of incentive to choose drugs with an eye to cost will get much worse when the new Medicare drug entitlement program kicks in.

A social experiment

Even outer-space aliens can see the effects of communism.

Koreas

Also check out North Korea’s creepy Ryugyong Hotel, built at a cost of some 2% of GDP the hotel towers over Pyongyang but it’s a shell that has never been completed because of stuctural problems due to poor quality. The North Koreans have gone so far as to remove it from some maps but there is no hiding the 7th tallest building in the world!
Ryugyong2

Thanks to Mahalanabois for the picture and Ted Frank for the hotel recommendation.

I do not approve

The headline in the Washington Post yesterday read “FDA Approves Artificial Heart for Those Awaiting Transplant.” The language annoys me – it sounds as if the FDA gave a Good Housekeeping Seal of Approval to the artificial heart. Consider how much clearer the tradeoffs of medical policy would be if instead the headline read, “FDA lifts ban on artificial hearts for those awaiting transplant.”

Thanks to Dan Klein, my co-author on FDAReview.org, who first alerted me to these issues.

Addendum: Unfortunately, as I wrote earlier, the artificial heart will not save lives and follow up here.

Tailor made pharmaceuticals

Better genetic information is beginning to reveal why some drugs work for some people but not for others. (Here’s a CBS Marketwatch story, requires free subscription). In addition to the heath benefits, there are some political-economic benefits to better understanding of how drugs interact with personal chemistry.

Drugs that benefit a minority of the population are sometimes not approved by the FDA because their side-effects for the majority are deemed to outweigh the expected benefits. But if we can identify more clearly who the drugs will benefit and who they will harm, more drugs will be deemed safe and will get through the FDA process. As a further result, the costs of drug development will be reduced.

Genetic information can also help to avoid the opposite error. It often happens that in a clinical trial a drug doesn’t look beneficial overall but does appear to work in some subpopulation (e.g. African-Americans with disease of type X that has progressed to stage y). The danger is that some results like this are bound to occur by chance alone and thus do not necessarily imply true efficacy. If we can show that the subpopulations do (or do not) have systematic genetic differences from the majority population, however, we can rule out (or rule in) chance as an explanation and better separate the wheat from the chaff.

Thanks to Jim Coomes (a long-time reader from Pattaya, Thailand!) for the link.