It’s hard to read any news about prescription drugs these days without wondering if you’ve somehow fallen into a Philip K. Dick novel. Just look at some of these titles over the past week:
- “2 new studies show the FDA is rushing more drugs to market based on shoddy evidence”
- “The True Cost of an Expensive Medication”
- “U.S. drug company sues Canada for trying to lower cost of $700K-a-year drug”
- “Outrage could lead to lowering price of high-cost drugs”
All of these stories are about different drugs, but the common theme among all of the stories is, of course, money. The Mayo Clinical Proceedings recently found “In the United States, the average price of cancer drugs for about a year of therapy increased from $5000 to $10,000 before 2000 to more than $100,000 by 2012, while the average household income has decreased by about 8% in the past decade. Further, although 85% of cancer basic research is funded through taxpayers’ money, Americans with cancer pay 50% to 100% more for the same patented drug than patients in other countries.”
We’re getting ripped off. These days, the public interest isn’t even an afterthought in the prescription medication industry. That’s how the FDA could approve flibanserin, a failed antidepressant, as the “women’s Viagra,” even though the drug is more likely to make women pass out than to improve their sex life. The drug’s effectiveness is questionable at best, whereas the risks are considerable, and the one and only study examining its effects in conjunction with alcohol included — and this isn’t a joke — just two women. Meanwhile, the drug industry continues to dump dangerous drugs on the public, like Nexium, which is a reformulation of Prilosec, Xarelto, which is no better than warfarin but also more dangerous, Levaquin, an unnecessary antibiotic linked to everything from tendon rupture to aortic aneurysm, and Invokana, another unnecessary diabetes drug.
The concerns about prescription drugs generally break into three categories: (1) unreasonably high prices for effective drugs; (2) the incentive manufacturers have to sell and push doctors to prescribe drugs that don’t work as well as cheaper drugs; and (3) the potential for drugs causing unexpected side effects.
There are a variety of potential solutions, as Health Affairs recounted three weeks ago, with two of the most common ideas including allowing Medicare/Medicaid to negotiate drug prices and regulating the prices of drugs.
Let me float another idea: litigation.
In theory, when one person or company wrongs another and causes a financial or physical harm, then the aggrieved person or company should have the ability to go into court and demand compensation. What could be more obvious than, say, a claim by a health plan that it was misled by a pharmaceutical company into paying for an expensive treatment that did no better than a cheap one?
In practice, however, it’s not so simple. Consider this case, in which two union health plans sued the manufacturer of Plavix:
Plaintiffs allege that Defendants misrepresented Plavix as being more effective than aspirin for certain indicated usages, namely treating patients who recently experienced myocardial infarction (“MI”) or stroke. Specifically, Plaintiffs claim that Defendants mischaracterized scientific studies as supporting these efficacy claims, when in fact such studies do not actually show Plavix’s superiority. Plaintiffs allege that the marketing campaign surrounding Plavix influenced doctors’ decisions in prescribing the drug. While each Plavix pill costs approximately $4.00, an equivalent dose of aspirin costs approximately $0.04. Given this price difference and Plavix’s lack of superiority over aspirin, Plaintiffs—as third party payors (“TPPs”)—allege that they suffered damages by reimbursing Plavix prescriptions on behalf of their insureds.
Employer Teamsters-Local Nos. 175/505 Health & Welfare Trust Fund v. Bristol Myers Squibb Co., 969 F. Supp. 2d 463, 466 (S.D.W. Va. 2013). One would think that those allegations, if true, would certainly warrant some type of compensation, and the plaintiffs alleged a variety of legal claims, including unjust enrichment and consumer fraud.
But that’s not what happened. In fact, the complaint was dismissed on legal grounds before the union health funds could even take discovery to gather evidence in support of the allegations.
Unfortunately, that case wasn’t an anomaly. Consider the situation with Intron A and Temodar, which are approved for limited uses in hepatitis and oncology patients. The drugs’ manufacturer, Schering–Plough, went wild in its marketing campaign, pushing the drug so heavily for unapproved uses that it prompted an FDA warning and a DOJ indictment. The company eventually paid a $180 million fine and $255 million to settle the government’s claims that it defrauded U.S. Government health benefit programs, including Medicare, Medicaid, and the Veteran’s Administration.
Two class actions were filed against Schering–Plough, one on behalf of individual patient-consumers who were defrauded, and one on behalf of “third party payors” like union health plans which were defrauded. They lost in the District Court, then lost on appeal:
Both groups of plaintiffs claim that the defendants pursued illegal marketing campaigns to persuade physicians to prescribe certain drugs for off-label uses. The District Court found that both groups of plaintiffs lacked standing because, inter alia, they did not allege a plausible nexus between the assailed marketing campaign and the physicians’ decisions to prescribe certain drugs for off-label use. Having carefully considered the parties’ contentions in the context of the entire record, we agree that dismissal of both actions for want of standing is warranted.
In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 238-39 (3d Cir. 2012). It’s hard for me to understand the Court’s conclusion — if it wasn’t “plausible” that an improper marketing campaign would lead to additional improper sales, then why did the company do it, and why did it work so well?
There are some exceptions, like In re Neurontin Mktg. & Sales Practices Litig., 712 F.3d 21 (1st Cir. 2013), which upheld a $140 million jury verdict for a health plan provider and insurer as a result of its payment for off-label Neurontin prescriptions which had been induced by a fraudulent scheme by Pfizer, the manufacturer of Neurontin. But that’s the exception. Most courts hold, for example, “The absence of data or evidence affirmatively proving that a drug is safe and effective in treating a particular condition, without more, does not support the conclusion that the drug is actually ineffective or unsafe for that use.” Travelers Indem. Co. v. Cephalon, Inc., 32 F. Supp. 3d 538, 547 (E.D. Pa. 2014) aff’d, No. 14-4261, 2015 WL 4717929 (3d Cir. Aug. 10, 2015)(opinion here).
Read that last quote again until it sinks in: even if there’s no evidence proving that a drug is “safe and effective in treatment a particular condition,” a defrauded patient or health plan still can’t bring a lawsuit. In other words, just to open the courthouse doors, it seems patients or health plan have to run their own studies proving that the drugs aren’t safe or don’t work — an absurd result that, in far too many cases, grants legal immunity to manufacturers who sells prescription drugs that are unsafe and ineffective.
It doesn’t have to be this way. One of the big problems is the lack of any clear cause of action for our messed up health care market. Most of the legal claims available, like consumer fraud, unjust enrichment, and RICO, are premised upon a direct transaction. That’s why so many of the cases lists above failed, i.e., because the plaintiffs lacked “standing” to pursue the claims. Our health care market is so messed up that a simple prescription drug purchase passes through five or six middlemen between the patient and the drug company, and our tort laws passed down centuries ago from English common law aren’t really well-suited for that situation.
Congress could, in a blink, create a cause of action for patient-consumers or third-party payors whenever they pay for a drug that hasn’t been proven to be safe and effective for the condition it was prescribed. That would go a long way towards fixing the broken incentives in our prescription drug system, in which companies have an incentive to market drugs for improper purposes, and instead create a system where drug companies have an incentive to discourage inappropriate and overpriced uses of their products.
That’s just one of several options available. The key is a change in mindset: “litigation” is not a dirty word, it’s a necessary part of our society, the primary way we have to hold people and companies responsible for the financial and physical harm they cause to others.