Friday, October 20, 1995
3727 Colesville Road
Silver Spring, Maryland
- Peter J. Neumann, Sc.D.
- John E. Calfee, Ph.D.
- David R. Henderson, Ph.D.
- Dale A. Bultemeier, Ph.D.
- Questions for the Panel
PANEL 4 PROCEEDINGS
DR. NEUMANN : Thank you. My name is Peter Neumann. I am deputy director of the program on the Economic Evaluation of Medical Technology at the Harvard School of Public Health, and a visiting scientist at the Center for Risk Analysis at the Harvard Center for Public Health.
My funding comes from the Center for Risk Analysis, which in turn receives funding from a variety of sources, including government grants and contracts and some unrestricted funds from different industry sources for research and training, including a portion from the pharmaceutical industry. I have no direct interest with any managed care organization or pharmaceutical manufacturer. And Harvard is, I hope, reimbursing me for my travel today, and I speak solely on behalf of myself.
I would like to begin by thanking you for the opportunity to speak and to commend you for holding these hearings. I would like to focus my remarks today on the likely costs and benefits of regulating pharmacoeconomics, and then turn to the evaluation of pharmacoeconomic information by the private sector and the ability of the private sector to impose its own self-interested regulatory discipline.
In assessing the oversight of pharmacoeconomics, the key question is not whether any need exists to provide oversight. Rather, the issue is one of extent. The FDA obviously has a legal obligation to protect society from the adverse consequences of misleading information and material.
At the same time, it has a responsibility not to impinge on the free and fair exchange of information used in the promotion of trade. The challenge is to identify a policy that strikes an appropriate balance.
Too much oversight may impose unnecessarily high costs for several reasons. The major concern is that it may stipulate in too much detail the content and nature of information that would be needed to support pharmacoeconomic claims.
Even if these specifications are grounded in standard methodologies of cost effectiveness analysis promulgated in well-known books and papers on the subject, the dangers in the FDA prescribing them are clear. Most of all, it creates a higher standard of evidence for cost effectiveness information than decisionmakers probably need for practical purposes, and raising the standard risks limiting the information that is made available, and ultimately driving up costs to consumers.
In fact, as we heard from some of the speakers yesterday, there may be many worthwhile and less expensive configurations of pharmacoeconomic information that could be used to support claims, including epidemiological and cost analysis based on a variety of data sources and a number of decision-analytic models.
Of particular concern would be any predisposition towards randomized controlled trials as a requirement for pharmacoeconomic analysis. Any inclination might be understandable, since RCTs have long been the gold standard by which the FDA judges safety and efficacy of new drugs, but cost effectiveness should not be held to the same standard.
As several of the speakers emphasized yesterday, the risks involved and the nature of the information is different, and as a consequence any guidelines should be more flexible in their requirements. Overly prescriptive guidelines are also likely to be costly to administer.
Existing instruments for assessing quality of life or for valuing health benefits and measuring costs are imprecise and continue to undergo development. Whether a product is cost effective depends on the perspective of the user and a host of attributes that are important to him or her. It will likely be difficult to discern whether any claim is valid in any particular circumstance.
On the other hand, the risk of under-regulating is probably less of a problem. The chances of making unwise choices have diminished in recent years.
As we heard this morning, pharmaceuticals are increasingly sold to and evaluated by large and more sophisticated purchasers. They have the leverage and expertise to negotiate with manufacturers and are better positioned to evaluate pharmacoeconomic claims. In fact, this is precisely why the use of pharmacoeconomics is increasing.
Moreover, there is evidence that in the absence of FDA intervention, interested third parties have taken up much of the slack. The New England Journal of Medicine, as one example, has outlined rigid standards for publication of cost effectiveness analyses in their journal.
Various private task forces have developed guidelines to govern the independence of researchers in the field. Moreover, the federal government has convened its own panel which is developing standards for cost effectiveness methodology, as we heard yesterday.
All of this suggests, it seems to me, that having established the foundation for comparative analysis and dialogue, and while maintaining its vigilance over the general accuracy of communications, the FDA should allow pharmacoeconomic information to flow as freely as possible.
Now let me turn to the private sector and the ability of the private sector to evaluate pharmacoeconomic information.
Curiously, much of the debate over pharmacoeconomics thus far has focused on developing appropriate methodological standards and appropriate protocols to ensure the independence of researchers. The guidelines introduced earlier this year, the draft guidelines, I should say, are part of this trend.
The notion underlying them is that the establishment of more rigorous rules will by themselves legitimize the field of pharmacoeconomics and lead to proper uses of the techniques, but guidelines can only accomplish so much. Even with the most prescriptive instructions for pharmacoeconomic claims, the FDA would still function as a policing and enforcing authority, attempting to ensure that promotional materials were not misleading.
It would not, however, evaluate the cost effectiveness claims themselves, but such an evaluation is precisely what buyers need in order to make prudent purchasing decisions. Ideally, the private market will develop this ability, and I believe that it will. Managed care plans or PBMs could determine for themselves the validity of PE claims, and to some extent, as we heard this morning, they are doing that.
Alternatively, private organizations could emerge whose sole function is to evaluate pharmacoeconomic information and package it in a useful form for consumers, but market forces and not regulators would dictate the appropriate format and content of the information, and the sole criterion would be the usefulness of the information in assisting decisionmakers. The market would impose its own regulatory discipline. In fact, this model works well for a number of other industries, and let me mention some of them.
Products marketed in the U.S. come under varying levels of government regulation, reflecting the degree to which consumers are believed to be able to make informed decisions about them. In general, the government establishes and enforces standards for manufacturers and ensures that promotional claims are not false and misleading, but a host of private organizations evaluate the products for consumers.
Consider two examples: the securities and consumer markets industry. The regulatory authority and manner in which products are evaluated are displayed in Table 1. Slide, please. There are obvious differences between pharmaceuticals and consumer products and securities, but there are a number of useful parallels that I think can be drawn, especially in the regulation of information.
Take the market for financial securities. There are a number of similarities between securities and pharmaceuticals, including complexity of product, a disagreement even among experts about appropriate performance standards, informational asymmetries between buyers and sellers, large institutional purchasers.
The Securities and Exchange Commission serves as a policing and enforcing agency, ensuring that the markets operate smoothly. The SEC also maintains minimal reporting standards, for example, requiring investment firms to tell consumers that their products are not ensured by the federal government. And with regard to promotional claims, the SEC guards against fraud and regulates the format and dissemination of the bond issuer's prospectus.
The SEC, however, does not evaluate the quality of the security. That task has been left to the private sector, which over the years has evolved an efficient means of producing information in a useful form for the consumer.
Now firms -- for example, Moody's, Standard and Poors -- evaluate and rate bonds, in a sense conducting a cost effectiveness analysis for investors. The private market also produces a host of other informational products, from journals to financial newsletters, which vary in their content and level of sophistication but also constitute cost effectiveness analysis of sorts.
A similar situation exists for a number of consumer products, though with different institutional arrangements. The government establishes and enforces minimal safety standards.
As one example, the National Highway Traffic Safety Administration mandates and enforces air bag standards for new cars, and the FTC oversees truth-in-advertising laws, but private organizations have emerged to evaluate the quality of the products. Examples include Underwriter Labs and Consumer Reports, which also rate products and in a rough sense perform a cost effectiveness analysis.
The integrity of these markets stems from three conditions: number one, the existence of informed buyers and sellers; number two, the free exchange of information; and number three, importantly, the existence of a government entity establishing minimal laws and enforcing truth-in- advertising standards.
Notably, if these conditions are satisfied, the source of funding for the evaluator becomes secondary. In several of the examples I mentioned, for example, Consumer Reports, the funding is provided by the purchasers themselves, but in some of the other examples, Underwriter Labs or Standard and Poors, the evaluators derive funding from the industry they evaluate.
But the evaluator retains a powerful incentive for maintaining the reputation for integrity. Consumers look to the UL label, as one example, as a signal of quality and safety. In the example of Standard and Poors or Moody's, the integrity of the evaluations are further ensured because they compete with one another for business.
But can this work for the pharmaceutical industry? In a very real sense it already is starting to, as we have heard this morning and yesterday. The rise of more sophisticated managed care purchasers provides cause for optimism. The existence of informed buyers will help to ensure that the evaluators are independent and objective.
The FDA might still formalize minimal standards over pharmacoeconomic claims, requiring for example that all communications contain appropriate disclosures or disclaimers, and we heard some examples of how they might be worded yesterday. But one reasonable question is why such evaluations don't already exist.
One explanation is that uncertainty about FDA policy has hindered their development. A second, more likely, is that the fledgling evaluation industry has not yet had time to flourish.
In fact, a number of new publications either publish cost effectiveness analyses themselves or summarize the results of other studies. Other publications evaluate drugs and even include information on cost, though they do not yet conduct evaluations on the quality of existing pharmacoeconomic evaluations.
Part of the problem may be that purchasers have not yet gained the expertise necessary to appreciate the value of the new analytic techniques, or that existing pharmacoeconomic analyses are not being conducted in the most useful form for consumers. A less charitable explanation is that existing pharmacoeconomic evaluations have not proven themselves a useful tool for managed care plans, but the dramatic rise in the number of studies being done and the increased leverage of plans would suggest that the studies can and are playing a useful role.
So, in conclusion, while the FDA has an obligation to protect society from the adverse consequences of misleading promotional material, it also has a responsibility not to impede potentially useful information. It seems to me there is a need for caution and flexibility. And, above all, any regulation needs to recognize the usefulness of pharmacoeconomic analyses in a variety of forms to assist decisionmakers in making clinical and resource allocation choices.
Thank you very much.
MS. PEDERSEN: Thank you, Dr. Neumann.
DR. CALFEE : Thank you. It is a pleasure to be here. My name is Jack Calfee, and I am a resident scholar at the American Enterprise Institute.
Our institute does take contributions from a number of pharmaceutical firms. One of the things I have learned in the short time I have been at AEI, that if you pick out a prominent regulatory issue in pharmaceuticals, you will discover our clients disagree with each other, and I don't even know what most of their views are on the issues at hand here.
I have on occasion taken honoraria and very tiny consulting funds from pharmaceutical firms. I used to be at the Bureau of Economics of the Federal Trade Commission, where I was engaged in the economic analysis of advertising regulation, advertising cases, and a lot of my experience comes from there and from my own research on the roles of competitive forces in advertising and other information in markets.
I have no expenses of significance that were covered for my travel here.
I would like to outline --
MS. PEDERSEN: I'm sorry. Before you -- are these your views or --
DR. CALFEE: These are my views.
MS. PEDERSEN: Thank you.
DR. CALFEE: Sorry. Yes, these are my views only. No one at AEI even knows what I'm going to say.
That is not quite true.
I want to outline what I see as a few basic principles that, at least in my opinion, cannot be avoided. They are principles that almost are at the level of facts that have to be taken into account. And then I will talk a little bit about what I see as the implications for FDA's role in regulating cost effectiveness claims in pharmaceuticals, and maybe a few other issues.
So to the fundamental principles, and the first one, I think, which I really think is hard to avoid, is that if someone asks a question of how good or how valid or how high quality a particular cost effectiveness study or claim should have, there isn't any one answer. There is no one standard that applies to claims, and the reason is not because it is so hard to get a consensus among scholars and practitioners. The reason I think is much deeper than that.
The problem is that a cost effectiveness study itself has to pass a cost-benefit test because these studies are expensive. The benefits of the information that comes from one of these studies are not the same for all the recipients of the information.
Some managed care organizations know more about certain kinds of costs than other managed care organizations do. Some organizations know more about the effectiveness of different therapies. They have had more experience. Maybe they have reviewed the literature more thoroughly. Maybe they have a different patient base.
For a given study, it is very easy for a study to pass a cost-benefit test for one managed care organization and fail it for another managed care organization because of the different information they bring to the table, as it were. Or, to put it another way, the value of a cost effectiveness study often depends on factors that are internal to the managed care organization that will receive that information.
For that reason alone, if not for other reasons, it is impossible for an outside authority to specify exactly what standard a cost effectiveness study ought to meet. Or, to summarize it as concisely as possible, some managed care organizations are willing to pay more than others are for a given increment in value or validity or quality of a study.
The second general principle, which is really a larger point that one arrives at after thinking about the first one, and that is that cost effectiveness claims are part of a marketing process, something we have heard a lot about in this conference. It is a two-way marketing process.
There are a lot of markets out there involving risky products, health and safety and so on, and there is a lot of transmission of information. I have been looking at these markets, many different nations, many different products, for a long time, and there are certain elements you always find in these markets.
One of them is a profound consumer skepticism towards advertising and promotional claims of any sort whatsoever. Consumers simply start out with a baseline credulousness, we could say, of zero, in the sense that they are prepared not to believe anything unless they are given a reason to believe advertising claims.
A second element of these markets, everywhere and at all times, is that the recipients of information are not above taking advantage of the competitive nature of the people who are trying to provide information. That is, they will exploit competition amongst the providers of information as well as amongst the providers of products and services.
And so I assume, without having talked to anyone in a managed care organization about this, that if Pfizer comes in and they give their pitch on how a managed care organization can save money by switching to a certain drug and making a certain restriction on the formulary, that the organization will be very polite, listen to all this information, look at it, and after the Pfizer guy leaves, they will call up someone else at Eli Lilly and say, "I just got a great pitch on why we should dump your drug. What do you want to say about that?"
This is the kind of process that will always take place and which has always taken place in the business of selling, which is what this is all about.
Firms begin with a credibility problem, and they have to solve the credibility problem, and much of what we have been hearing about, about market forces and the innate correctives in these markets, has to do with the fact that businesses have to solve their credibility problem. The way they do that is by working very hard at providing the kinds of information with the kinds of foundation that managed care organizations are willing to accept. It is not easy to establish this credibility and, as anyone in selling can tell you, it is very easy to lose the credibility.
And I mentioned it yesterday in one of the panels, two people presented the results of a survey they had done on managed care organizations. And it was striking to someone who has studied competition and advertising for a long time, because what they were talking about were exactly the same pet phrases you hear in any survey of consumers of any market, which is skepticism to the point of, as they put it, "disdain" for the claims that come from sellers.
A third general principle applies to any market in which the main issues are creation and dissemination of pure information. That is what we are concerned about here. There is always a problem of free-riding with information.
It is very costly to compile information about how to save money by using different pharmaceuticals. Once you have compiled that information, it is difficult to recoup those costs, because once it is out there anyone else can use that information without paying you for it.
This is always a problem with the creation and dissemination of information, and we always need to respect the efforts that are necessary for the market to solve this problem. We also need to respect the ease with which ill-advised regulation can eliminate the incentives to produce this information.
Because if we ask ourselves, who is it who has an incentive to create and disseminate information on how to do health care cheaper, then one of those parties obviously is the health care providers themselves, the managed care organizations, but that is not what we are concerned with. We are concerned about the information that they don't produce with themselves, information they get from someone else, and of course they have a free-riding problem. If they figure out how to do it cheaper, someone else can free ride over what they figured out, whether it is pharmaceuticals or anything else.
Then there are the specialists, the intermediaries, the pharmaceutical benefit management companies, who also can figure out cheaper ways to do things and also have to worry about free-riding, because again, if they do some very careful research demonstrating that a certain drug can save a certain amount of money in certain conditions, they have a problem of maintaining property rights to that information, getting a recoup for the investment that they have made, and that poses problems which I assume are faced every day and thought about constantly by anyone who is in the business of providing this kind of information.
And then there are the pharmaceutical firms. What is different about them is, they have a much stronger incentive than other firms do to solve this problem because they can do something that most people can't do. That is, if they can figure out a way to save money by using a particular pharmaceutical, then what would happen normally is, the one whose pharmaceutical promises to save money, they are the ones that have an incentive to do the research, to document the results, and then they can sell the information because they can attach the information to the drugs themselves, and they can recoup their expenses by selling the drugs instead of just selling pure information.
So the pharmaceutical firms are in a position to solve an incentive problem, to solve a free-riding problem that is normally very difficult to solve. And one of the problems with over-regulating this market is that you can get in the way of the solution to a problem which I think really needs to be solved, that is, the free-riding problem.
Those are what I see as three fundamental principles that have to be respected in thinking about cost effectiveness claims and whether and how to regulate them.
What does this say about the FDA's role? Well, obviously the central question is, can the FDA help? If they regulate these claims, if they monitor cost effectiveness claims, can they make the health care market better than it would be otherwise? I would like to suggest that they cannot do that, that it is essentially impossible for the FDA to improve this market by monitoring and regulating cost effectiveness claims, and let me try to explain why that is.
First, the first issue and the first problem is something that I have mentioned before, which is the fact that there is no one standard for the quality or validity of a cost effectiveness study. It is essentially a market in which we have flexible standards, that a given study may be satisfactory for one environment and not satisfactory for another.
Again, I emphasize the problem is not getting experts to agree with each other. The problem is that the value of a piece of information, the value of a study, depends strongly upon the internal characteristics of the organization that will be receiving that information.
In order for the FDA to reach a conclusion as to whether or not a given study is good enough to use, they would have to know a great deal about the internal characteristics of the managed care organization receiving this information. They can't do that. They will never be able to do that. For that reason alone, I will suggest it is inherently impossible for the FDA to do a good job regulating this kind of information.
A second problem, distinct from the first, has to do with the fact that most of the issues here are issues that have to do with the marketing process and with the economics of competition, the competitive dynamics that take place in these markets. And I would submit -- and there are a few people in the room, including some people over there on the panel, with whom I have had these discussions and whose mind I am not going to change, at least not right now -- but I would submit that the record shows the FDA simply has not had an institutional ability to understand how marketing actually works and how competition actually works when it comes to information.
They come, I think, from the perspective of pharmaceuticals and the efficacy of pharmaceuticals, medical aspects. They do not come at this thing with expertise and a background that equips them to understand how marketing and competition works, and I think the record demonstrates that.
A third problem -- let's assume that the first two problems I mentioned don't even exist -- if the FDA were going to assess these issues, they would have to do it from the standpoint of deception. In other words, are these communications deceptive? This I think poses real problems in the FDA regulation because the fact is, the FDA, although it has regulated advertising for many years, has systematically avoided any kind of reasoned assessment of the issue of deception in its regulation of advertising.
As far as I can tell, and I have looked at a lot of these aspects, the FDA has never been involved in careful and detailed and reasoned assessment of whether or not specific communications are actually misleading or deceptive to the recipients of those communications. Let me give one central example that is central to this as well as to other areas, and that has to do with off-label uses.
The FDA's written, hard letter, black letter policy -- and here I am quoting from an article -- is that communications to physicians should provide a balanced account of all clinically relevant information, the risks and benefits that can affect a physician's prescribing decision. I doubt that anyone in this room thinks that as a general rule FDA-approved labels and communications actually achieve that standard. As a general rule they leave out off-label uses, no matter how well established those uses are.
What that means is that many of these communications labels are inherently deceptive because they leave out important information for a physician's prescribing decisions. Information that does, communications that do include this kind of information, off-label information, are regarded by the FDA as inherently deceptive, and I would argue that they are not inherently deceptive.
The problem is, there has always been a tension between the FDA's quite valid concern about the pharmaceutical approval process, between that on the one hand and the issue of deception on the other hand. There is a tension between the two.
The FDA as an organization has always come down on the side of devoting primary attention to the issue of the approval process rather than the issue of deception in communications. As long as they do that, they are not going to be able to give adequate attention to the issue of deception, and they are not backing off.
As most people know, in the issue of pharmacoeconomic claims and other issues, they have repeatedly said, "If we were to go in a certain direction, it would disturb our review, the approval process, and that's something that we can't do." This tension cannot be resolved, at least not by the institution as it takes care of things right now.
Implications of all this. Well, obviously I think that basically when it comes to cost effectiveness claims, there are two ways to go. One is a reliance upon market forces. The other is a reliance upon FDA jurisdiction.
And I think that the record pretty clearly shows that if the FDA plays a significant role in this area, it is going to suppress valuable information, for the reasons I described earlier. It is going to interfere with the market's ability to resolve the free-riding problems. It is going to interfere with the ability of a managed care organization to choose for themselves which kinds of information are useful for them.
Reliance on market forces, obviously, I think in my opinion would be far superior, even though it wouldn't be perfect. I think that you have to look at the net effects in both issues.
Finally, since I have 90 seconds left, I believe yesterday that Alan Hillman and maybe some others suggested the idea of the FDA establishing a panel to review studies and to specify disclosures and so on, and just let me mention that it is a very interesting idea, it is a very fascinating idea. It has been tried over and over again in other markets, such as the FDA's putting together standards for tar and nicotine ratings, R-value of insulation, amplifier ratings, et cetera, et cetera.
These are all areas in which the problem of specifying whether or not something meets a certain standard are much easier than what is being done here, and I think anyone who has looked at those areas know that there have been very, very serious problems with that. It is not something that works out well. Just on a free market basis, if the FDA does this and other organizations do that, that is fine. I would predict that the FDA panel would fall behind the other organizations and would cease after a short time to play a significant role.
That concludes my remarks.
MS. PEDERSEN: Thank you, Dr. Calfee.
DR. HENDERSON : Good morning. My name is David R. Henderson. My address is 944 Forest Avenue, Pacific Grove, California 93950. The views I am expressing are solely my own. Well, that's not true. They are my own. I think some people actually agree with them.
Even though I am not presenting on behalf of anyone, the entity that paid my expenses -- and I think that entity agrees with me -- is the Center for the Study of American Business at Washington University in St. Louis. They paid my fee. My employer is the Naval Post Graduate School, where I am an associate professor of economics. I am also, by the way, an adjunct fellow at the CSAB.
I do have a financial interest in drug companies, both through mutual funds and through ownership of stock in one particular drug company. My background is that I was the senior health economist for -- the senior economist for health policy with the President's Council of Economic Advisors under President Reagan.
Should we patients be free to take drugs that our doctors think will help us, or should the government be able to prevent us from taking such drugs? Should drug companies be free to inform doctors about various beneficial uses of those drugs, even if those uses are not approved by the FDA, or should the government have the power, which it now claims and exercises, to suppress such information?
Behind much of what the FDA does are their answers to those questions. The FDA's answer is that patients should not be free to take drugs that the FDA has not approved, and that drug companies should not be free to inform doctors about so-called off-label uses. No matter how much evidence is found that a drug works for an off-label use, drug companies are not allowed to advertise that use. They are not even allowed to send out reprints of medical journal articles that discuss the positive effects of such uses.
For example, millions of people are unaware of the strong clinical evidence that aspirin can reduce deaths caused by heart disease. But because the FDA has never approved aspirin for preventing heart disease, drug companies are legally prohibited from advertising that information. As Paul Rubin, an economist at Emory University, has said, "The ban on aspirin advertising causes tens of thousands of needless deaths per year." This is all thanks to regulation by the FDA.
If a drug is approved for short-term treatment of a disease, it is not too surprising that practicing doctors also find it effective in long-term treatment, but a drug company had better not tell doctors that. The FDA won't let them. Just ask Eli Lilly and Company, manufacturer of the drug Axid.
One of Axid's key approved uses is for short-term treatment of gastroesophageal reflux disease. To get FDA approval of the drug in the first place, Eli Lilly had to do studies that the FDA found adequate. Eli Lilly did so. Then an Eli Lilly employee, Dr. Michelle Cloud, and some of her colleagues published the research results in the June 1992 issue of "Digestive Diseases and Sciences," a medical journal.
In the article's introductory remarks about the disease, Cloud and her co-authors mentioned that long-term therapy at full dosage is frequently required to prevent relapse. This was not simply her opinion. She backed it up by citing an article in "Gastroenterology," another medical journal.
Eli Lilly proceeded to send out reprints of the Cloud article to doctors. According to Charles Perry, Eli Lilly's director of pharmaceutical communication and compliance, the Cloud article is "one of the pivotal studies" of Axid. Therefore, getting this information to doctors is very important. Though Cloud's mention of long-term treatment was simply an introductory comment and not even the main point of the article, the FDA refused Eli Lilly permission to distribute this article to doctors.
The harm is magnified when most of the uses of a particular drug are off-label. Take Leukine, a drug produced by Immunex. According to Dr. Ed Zimney, director of medical regulatory affairs at Immunex, most of Leukine's uses are other than those approved by the FDA. Zimney recounted to me a typical conversation between an Immunex drug representative and a doctor.
Doctor: "What's happening today? What are the new uses for this drug?"
Drug Rep: "I can't tell you."
If this sounds like a Monty Python skit, you can thank the FDA's "division of silly talk," otherwise known as DDMAC.
Ironically, the FDA doesn't allow companies to advertise even the off-label uses for drugs that the federal government's own National Institutes of Health recommend. Consider this statement in a letter from DDMAC regulator Maureen Knippen to Mark Shapiro, an attorney at Glaxo:
"Although recent research and NIH guidelines may indicate that some patients require bronchodilation and anti-inflammatory therapy, Glaxo as a manufacturer and distributor is prohibited from promotion of combination therapy until and unless a supplemental request for combination therapy is submitted to and approved by the FDA."
In a letter to Ciba-Geigy, the FDA informed the company that it wished to have the company submit its video news releases, VNRs, prior to dissemination. The FDA's legal basis? Here is what the FDA regulator, Dr. Louis Morris, wrote:
"Your VNR was not part of a launch campaign. However, given the controversial nature of VNRs as part of direct-to-consumer promotion of prescription drugs, and the fact that there is no health professional `gatekeeper' for this dissemination channel, we believe it would be in the public interest to allow for pre-dissemination review by FDA."
In other words, who needs a legal basis? No one else is regulating this particular form of communication, says the FDA, and so the public interest, as we interpret it, means that the FDA should.
Moreover, the FDA explicitly requires drug companies to mislead drug users. In describing the FDA's regulations, Dr. David Kessler and co-author Wayne Pines wrote: "If the advertisement stresses the drug's benefits, it must stress the risks with equal weight, to permit a balanced evaluation."
This matter-of-fact statement means that if a drug has a 999,999 chance in 1 million of curing you, but a 1 in 1 million chance of killing you, both pieces of information must be given equal weight. This does not lead to a balanced evaluation at all, especially for enumerate people, but to a highly unbalanced one.
Not even the Federal Trade Commission, which regulates most advertising, requires that General Motors push Ford cars. But the FDA does the equivalent for drugs. Listen to these words from that same letter by Louis Morris, who is fast becoming the poster boy for FDA excesses:
"Thus, while there is no requirement that you explicitly name and fully describe each and every alternative therapy available, we believe that the explicit mention of alternative treatments is essential to avoid misleading inferences."
There is a word for what the FDA is doing. The word is censorship. The FDA censors information that drug companies would like to provide to doctors and to potential drug consumers. Censorship generally hampers the free flow of information.
Censorship of what drug companies communicate is particularly damaging, because drug companies are the only entities that have both the information and the incentive, as Jack pointed out earlier, to provide important drug information. If the drug company cannot legally tell doctors about off-label uses, then those uses often will not occur. Not just the drug companies, but also the patients, lose.
Why don't the drug companies simply get the FDA's permission, once new uses for the drug are discovered, to list those new uses on the label? Here is why. To get permission, the company must demonstrate efficacy with two double-blind studies in which half a group of patients is given the drug and the other half is given a placebo. Such studies, given the large sample sizes that the FDA demands, typically cost millions of dollars. Often, therefore, getting permission is simply not worth the cost.
Take an example. Imagine that running such a test costs $26 million, a number that some sources told me is plausible. Then, for the test to be worth doing, the company would have to expect that the present value of its net revenue stream from this one use of the drug would be at least $26 million. If the drug manufacturer took in $50 from each consumer, net of production and advertising costs, and if 50,000 people were expected to use this drug each year, the company would collect $2.5 million a year. At a real interest rate of 4 percent, the company would break even on its investment in permission only after 13.7 years.
Studies like those needed to obtain permission take time, easily a few years. If the drug has been on the market for several years prior to the beginning of testing, its remaining patent life may already be less than 14 years. The time over which a drug company must realize a return on its added investment could possibly be only a few years. Add in the risk that a competitor may introduce a superior substitute during this period, and it is not at all hard to see why a drug company's management would decide not to seek permission for that new use.
Although my numbers are hypothetical, the point they make is not. A study begun in 1989 found Prozac to be effective in treating premenstrual syndrome, but the drug's manufacturer, Eli Lilly, has decided against seeking FDA permission to market the drug for this use. Doing the second study required for FDA approval would mean, realistically, that the earliest date for approval would be about 1998. The patent on Prozac expires in December 2001.
The FDA's current suppression of information about drug uses and about relative costs of drugs is consistent, in its effects and in its rationale, with the FDA's suppression of new drugs. Suppression of drug information, like suppression of drugs, causes needless pain and suffering and even deaths.
And behind both the suppression of new drugs and the suppression of information is the fear that someone, somewhere, somehow, might take the wrong drug. I guarantee that someone will take the wrong drug. Unfortunately, but predictably, FDA regulation prevents too many people from taking the right drug at the right time.
There is a simple solution to the problem of suppressing drug information: End that role completely. Take the FDA out of the business of regulating what drug companies may say in their advertising, and return that role to the Federal Trade Commission, where it resided before 1962. Drug companies would be subject to the same restrictions against false and misleading advertising that firms in other industries face.
But that reform does not go far enough. As long as the FDA has sole power over what drugs can be produced and what drugs cannot, it will have an inordinate say over what drug information is disseminated. If, for example, a drug company touts a particular unapproved use of a drug, the FDA could penalize the drug maker by slowing down its application for approval on its next drug. Censorship would still be in place, although subtle.
Therefore, the reform that goes to the root of the problem is to end the FDA's monopoly over drug approval. The way to do this, as Sam Kazman has proposed, is to have the FDA serve solely as an information agency. The FDA could still approve drugs, but its role in suppressing drugs would be eliminated. Drug companies would be free to sell, and drug consumers free to buy, unapproved drugs under two strict conditions: first, with clear labeling of their unapproved status and, second, only under strict medical supervision.
Think how this one reform would change the drug market. Drug developers who wanted the FDA seal of approval could seek it. Other drug developers who want to get other certifiers' seals of approval would also be able to do so, but would have to state on their packaging in bold letters that their drugs lack FDA approval. It is win-win. If you don't want to take the chance, you don't have to. You can go with the FDA's information, or you can go with other people's information.
What other people? What other certifiers? One that recently began for all of Europe is the European Medicines Evaluation Agency, EMEA. But this is not the only potential certifier. If the FDA lost its power to regulate production and sale of drugs, private certifying agencies, whose certification is now worth little, given the FDA's monopoly position, might also arise. After all, despite the fact that many of our electrical appliances and fixtures pose even more potential hazards than many prescription drugs, a private organization, Underwriters Laboratory, certifies them.
How would the FDA be affected? It would have to compete in the information business. The information revolution is dramatically lowering the cost to consumers of getting information about many products and services. The FDA's regulations are suppressing the spread of that revolution to drugs. The way to stop the counterrevolutionaries at the FDA is to take away their power to suppress information. Do FDA regulators think they have superior information? Then make them step into the marketplace of ideas and prove it.
MS. PEDERSEN: Thank you, Dr. Henderson.
DR. HENDERSON: Thank you.
MS. PEDERSEN: Let me just say, before we proceed to the next speaker, that I hope we can continue to discuss these important issues without any further ad hominem commentary.
DR. HENDERSON: What are you referring to?
DR. BULTEMEIER : Good morning. I am Dale Bultemeier. I am the assistant vice president of Physicians Health Plan, in charge of ancillary services, in Fort Wayne, Indiana. My address is 8101 West Jefferson Boulevard in Fort Wayne, Indiana 46804.
On occasion we have accepted support from manufacturers when we have had joint educational programs for our members. Our organization has, as well as I have had, some honoraria in consulting from the firms as well on occasion.
The views presented are those of myself and our organization in Fort Wayne, and my travel expenses were paid by Physicians Health Plan today.
MS. PEDERSEN: Thank you.
DR. BULTEMEIER: With that, I am a licensed pharmacist, and I have been with Physicians Health Plan for seven years. In your packet at page 2 there is some additional information for you about our plan, if you are curious, and you can peruse that at your leisure later. If you have any questions, please call me at the plan. We are a not-for-profit, IPA model HMO with open access, and we currently serve 51,000 members in the 10 counties in northeast Indiana.
With that, I would like to proceed that I don't feel at this point in time that it is necessary for the FDA to modify or change any of their current regulations regarding drug marketing or promotion, and I have got four bullets in the outline that I think will help support this statement.
The first one is, the medical community has standards of practice that vary from vicinity to vicinity. And what I mean there is, what takes place in Fort Wayne, Indiana is much different than what takes place in Indianapolis, Indiana, which is only two hours down the road, from the viewpoint of standards of practice.
And there is a big dispute today, even from West Coast to East Coast. A good example is days in the hospital when it comes to maternity stays, one day versus two days, and now state legislatures are getting involved in mandating some of that coverage. So I think one of the major concerns is that every region of the country practices medicine a little bit differently.
Another item, I think, is that managed care organizations such as ours can only penetrate the local areas to the degree that the employers and the physician community will allow them to penetrate. For example, if you have an employer group who is not willing to send all their employees to one hospital, it doesn't do that managed care organization any good to have an exclusive arrangement with one hospital in the area. So if they are not ready for that, it does the managed care organization no good to do that.
As well as, another point is that the physicians will control some of what the managed care organizations do, as well. Our organization is a case in point. Twelve years ago our organization was formed and founded by physicians in the area of Fort Wayne because they wanted to avoid capitation, that "C" word. Today we are still a fee-for-service organization, and they are becoming more receptive to that, but 12 years ago that was taboo, and that is how we formed. So I think that the standards of practice in the medical community really do drive what happens in the local area.
Page 3 of the hand-out, we have over 600 physicians and 100 dentists on our plan. As you can see on the next slide, nearly 10 percent of them all participate in some way, shape or form, whether it is a utilization review process or a quality assurance committee. These are all subcommittees of the board of directors, which we get this good physician buy-in and involvement.
You can also tell -- well, you maybe cannot see it at the bottom left-hand corner -- down here our Pharmacy and Therapeutic Committee is composed of six physicians, two pharmacists, again from the local area, and we drive those decisions that take place in the formulary, not the PBM. They may make recommendations, but if our local physicians don't want to follow them, they object, and we do what is best for the local community.
On page 4 I want to show you that we also follow the guidelines of the package inserts that the FDA has created. Recently Toradol has come out, and Syntex has proclaimed that, in the lower left-hand corner there, that it is only effective now for or should only be used in a five-day treatment regimen.
So what did PHP do, but we put in a quantity supply limit, notified all of our physicians, did a drug usage evaluation and said how many patients are getting Toradol long-term, how many are getting it more than a 5-day supply, and there are a lot of people that were getting that. The physicians were not aware of the change, and we try to do the best we can to educate them through newsletters.
And if the FDA feels that we are not doing appropriate or they need to monitor the newsletters that come from our organization directly to the physician, I think that would delay the time that it would take us to communicate to our physicians and to the ultimate employee who might have an adverse effect, so I don't think there is any need to regulate information that comes from managed care organizations directly to physicians or to members. We are trying to do the membership good.
The next handout, page 5, is a sample that I sent out to our physicians on anti-hypertension. It was the ABC's, and all it did, it didn't talk about cost effectiveness. It said, "Here are what our costs are within our plan. Here is what our average calcium channel blocker prescription costs, here is what our beta blocker prescription costs, and here is what our ACE inhibitor prescription costs. Doctor, you know what is best for that patient, but if one can work and the cheaper one can work, let's go with that."
They have no idea as to what the costs of the medications were per prescription. They know it is the calcium channel blocker, "We will use that." They don't know that it might be three or four times more expensive than a beta blocker that might get the same outcome. So we try to provide good information and relate it back to our own database within the system.
The third point, state laws. In the State of Indiana it is illegal to substitute any medication therapeutically. The only thing that we can substitute in the State of Indiana is a generic substitution prescription.
What happens in an in-patient setting, the doctor goes down the hallway, sees his patient, writes on a chart, Zantac. He doesn't know what is on the formulary at the hospital. Well, when he leaves, if Zantac is not on the formulary and Pepcid is, that patient will get Pepcid. That switch is made automatically within those institutional walls, and it happens every day, and the doctor is okay with that. He knows it is going to be as effective or is going to treat the same thing that the Zantac would.
That is where I have problems, because I write letters to doctors and say, "Doctor, you" -- if, for example, if we had Zantac on our formulary and Pepcid was not, and he wrote Pepcid, I would send a letter to that doctor and say, "Dear Doctor, in the future can you try to write Zantac instead?"
He will say, "I don't understand, Dale. I have signed it on the right-hand side." In the State of Indiana we have two line signatures. "Dispense as written" is on the left, "May substitute" is on the right. And he says, "Dale, I don't understand. I wrote Pepcid but I signed it on the right. Why didn't the pharmacist at the retail outlet change it?" And I have to explain to them that is against the law. Our pharmacists cannot do that in the State of Indiana.
So there are already, I think, guidelines in place within states to protect consumers, and physicians really would like to see that switch take place if it is going to help the plan.
So the only thing that we can do from a plan standpoint is what we call brand, brand interchange, and that is where we take, for example, isinopril, one brand is Zestril and one is Prinivil. We do have a contract with one but not the other, so we will move our market in that direction, because if a physician does sign on the right, that is a generic substitution, and that takes place freely and the physicians feel great with that. They don't mind that at all.
The next graph, I would like to point out there was a big fear when PBMs were purchased in '93 and '94, that they would be driving their market share of their own products. I just saw this last week in one of the journals that came out and I put it into a graphical form to try to make a better point of it.
But I don't believe that the PBMs are converting their business within those that are owned, and on this slide you can see Diversified is owned by SmithKline Beecham, PCS is owned by Lilly, and Medco Containment is owned by Merck.
I pegged two categories here that are really driving my PM/PM and that is anti-ulcers and antidepressants. In the antidepressants, I pegged the SSRIs because that is the most costly one that we see today.
But if Diversified really wanted to move that market and SmithKline wanted that to happen, as you can tell here, they have only got 3.5 percent marketshare in Tagamet which is the lowest of the three PBMs out there. In Pepcid, if you look at that, Merck-Medco, they do have the highest percentage but I don't feel that it is anything that is significantly different from the other two PBMs.
So, at least in these two categories, where if they can really make a lot of money which is driving our PBMs, they are not really making any of those switches that everybody has feared would happen.
Then, Prozac is made by Lilly. Diversified has a higher percentage marketshare than PCS. So I don't feel that there is anything going on with in the PBMs that is unusual. I think it relates back to the standards of practice in the medical community.
They will practice what they have been practicing and will not change.
The fourth item that I just wanted to go on with is that our managed care organization feels that an informed consumer is a good consumer, that they will use the resources in the best way, shape and form. So we have education programs, we have health-wise handbooks that we give out to our members. It is probably a 200-page book that has got all the minor ailments, coughs and colds, what you can do to help alleviate some of the symptoms, as well as it talks in there of what questions to ask your physician. It also talks in there of how to partner with your physician so that they do get a better dialogue and not a monologue in the treatment situations.
We encourage patients to be very participative in their health, which is like pulling teeth sometimes. I do oversee the dental program, and it is like pulling teeth.
But we do stress health and fitness, you know, taking care of their body, courses on CPR, getting their family members involved, and workshops that are out there that are cheaper because they are a PHP member. So we are trying to get members out there to be informed consumers and participate in their health.
We also work together with our plan physicians to encourage this. This coming month, November 2nd, we are having an approaching menopause with confidence seminar, a free seminar to all of our members. We have limited seating, but if it is not filled up, we will put an ad in the paper to fill up the stadium, to get as many people in the community to learn about menopause that would like to. So we do encourage our physicians to participate. This one has a specialty in menopause and enjoys speaking to people. We also have quarterly newsletters that go out to our members, and in there occasionally we do talk about medicine taken correctly.
Just some closing remarks. It is October and October is Talks About Prescriptions Month. The button I am wearing says "Communicate before you medicate." I think that is very important. NCPIE puts that out. I just want to reiterate that I don't feel at this time there is any need to change any regulations that the FDA does have.
One final comment is old pharmacists never die, they just get refilled.
Thanks a lot.
DR. PEDERSEN: Thank you, Dr. Bultemeier.
Are there questions from the panel? Dr. Morris.
DR. MORRIS: I have two questions. One is to Dr. Henderson. Could you provide a reference to the letter that you quoted on B&R's, specifically just the date that it was sent? Could you put the entire in the record?
DR. HENDERSON: Sure. I assume you have it, but it is from you to Adrian Burch, December 7, 1992.
DR. MORRIS: The second question is to Dr. Neuman. You suggested that there could be kind of a third party of sorts, and it wasn't clear to me under the auspices of how this third party would work. Dr. Calfee also discussed this concept of a third party, perhaps suggesting it may not be effective. I am wondering if you, Dr. Neumann, can you describe how this third party would work and what they would do a little bit more thoroughly?
DR. NEUMANN: Sure. I think the critical element of any third party would be the market's demand for it and the nature of the third party, the nature of the information it produces and the way it disseminates it would solely be dictated by the demands of buyers and sellers. So it is a little premature for me to predict precisely what it would look like. In fact, if it doesn't emerge because the market doesn't want it to emerge, that is fine, too. But it really would be based on that criterion.
I think, though, there is a possibility for such a third party emerging and the examples I gave, consumer reports would be maybe on one range of the spectrum, simply producing information in a useful form for consumers. On the other hand, perhaps something much more sophisticated and much larger, I mentioned the two bond evaluators, Standard & Poor's and Moody's, and various organizational structures in between.
DR. MORRIS: Let me clarify the question. I guess what I was asking more specifically or meant to ask was how would the presence of such a body influence how FDA could or should operate in the marketplace. You know, if such a third party was to exist, which they do now in terms of some of your examples, for example, the FTC still exists, and how does that work and what effects would it have?
DR. NEUMANN: I think it should give the FDA confidence in the market's ability to evaluate its own information, and I think because of that confidence, the FDA should feel more comfortable with really very minimal regulations, perhaps, as I mentioned, only disclosure and disclaimer statements on advertising and labeling, but nothing more than that.
DR. CALFEE: For myself, what I had in mind mainly was the mechanism that Alan Hillman had discussed yesterday. Let's assume for the moment that I am representing his idea, because I just heard it verbally and I hadn't seen it written down. But my understanding is that it is an idea that often floats around and emerges in these situations, which is that some authoritative agency would review scientific matters -- let's assume these are all scientific matters -- and would reach some conclusions, not necessarily a thumbs-up/thumbs-down conclusion, but a set of conclusions that uses the quality of the data, the kind of analysis, the degree to which it takes into account alternative hypotheses and that kind of thing.
You get that kind of thing to some extent spontaneously, just like ECRI and other organizations, you know, will certify a medical device. You get that kind of thing spontaneously, but also some Federal agencies will get in ads they, instead of approving this or approving your product, they will simply review the product and they will issue information and then they may require manufacturers to disclose let's say a rating of that product, and then they let the market take over under the assumption that the consumers of the product want products that have high ratings, and so manufacturers will compete in order to produce products that have high ratings, and Alan referred to the invisible hand in this respect. That is the idea, and we would get really good research that way.
DR. MORRIS: Dr. Calfee, I thought you said as opposed to those types of government required or government specified disclosures or test ratings had not worked.
DR. CALFEE: They tend not to work very well, for several reasons. They can only work if you have something that inherently is quite simple, because it is always difficult to come up with one number, even a small set of numbers, and so it takes a long time to work out some kind of mechanism for doing this. Once you have done that, you have two problems. One of them is that technology changes.
For example, the FDC's amplifier rating rates wattage, but it turns out that is much more difficult to measure than people thought it was 20 or 30 years ago, and so it tends to get out of date and you get the problem that the companies will game the system, that is they will figure out what it is that produces a high rating, which over time may be different from what people really want -- that has certainly been a problem with the tar and nicotine ratings -- and so you get that problem. Then it takes as long time for agencies to resolve these kinds of things.
Now, what Alan had in mind is not the typical plan. What he had in mind is an outside independent committee sponsored or appointed by the FDA, and they would do this work. Presumably, that committee could be more flexible. It could react more rapidly to changes, maybe. I don't know how that would work out. It is just a warning that in situations where you have something that is inherently much simpler than the topic at hand, that there have been problems with the flexibility and with the applicability of this thing, and so I have doubts as to how well it would work in this particular case.
DR. PEDERSEN: Dr. Woodcock?
DR. WOODCOCK: Yes, I wanted to ask Dr. Bultemeier, does your organization -- first of all, are you a consumer of cost-effectiveness information from pharmaceutical companies?
DR. BULTEMEIER: Yes, I mentioned earlier that drug reps will come in and say we can save plan X amount of dollars if you switched to our product. Yes, they do come to me and try to market that.
DR. WOODCOCK: Would you find any sort of rating from FDA or other entity helpful in your assessment or not?
DR. BULTEMEIER: I don't know. When I look at numbers, I think that people can create the numbers to make them look however they want. And whether it is scrutinized by the FDA or any other public or third party, I am not sure. I would want to look at the study myself, and I usually make my own decisions from it.
DR. PEDERSEN: Ms. Baylor-Henry?
MS. BAYLOR-HENRY: Also for Mr. Bultemeier. Yesterday, the ASHP representative told us that there is very strong support among pharmacists for rigorous review of pharmacoeconomic claims by the FDA. Would that be consistent with your views and the views of your organization that the FDA should be rigorously reviewing these types of studies?
DR. BULTEMEIER: Not really. I feel that each organization will look at those studies and they may be applicable or not applicable to the standards of practice in that community. What may be pharmacoeconomic in Stanford and the way it was set up and the tests that were done there may not be the same. I guess when I see the clinical studies, it is like that is the best of both worlds. What is the real world answer? What really happens out there? Yes, there is as good outcome, but if my patient doesn't take it every other day like they are supposed to, what outcome does that lead me to?
MS. BAYLOR-HENRY: But assuming that there could be some way to use localized data and data, say, from the local HMO or something such as that, do you see a role for FDA?
DR. BULTEMEIER: I guess we could work hand-in-hand something along those lines, sure. We could partner to try to create something.
MS. BAYLOR-HENRY: Thank you.
DR. PEDERSEN: Further questions? Dr. Woodcock?
DR. WOODCOCK: I wanted to make a clarification of something that was said yesterday. I am not sure everyone understands in the room and on some of the panel exactly what we are talking about. We are really discussing here, as Dr. Henderson has eloquently pointed out, the dissemination of information by pharmaceutical companies.
We are not contemplating or discussing information that might be generated by managed care organizations, even if they were in a partnership with a pharmaceutical company, for example. So those types of arrangements and the ability to generate local cost-effectiveness studies of a particular drug, even financed by a particular firm or something, is not the matter under discussion here. We are really discussing handing out information of a generalized sort by a pharmaceutical company.
DR. BULTEMEIER: I guess I saw the potential that if it was from the pharmaceutical company, it could delineate down to the managed care organization, and I did not want to see that happen, so thank you for clarifying that.
DR. WOODCOCK: Yes, that is what I think is underlying some of this discussion, that is right, and there is not an intent for us in any way -- and I caught that drift in some of your remarks -- to regulate information that is disseminated by a managed care organization to physicians or to patients.
MS. BAYLOR-HENRY: Just as a point of clarity, I was discussing pharmaceutical companies working with your organization to collect local data and whether or not you envisioned a role for FDA in working with your organization in that regard.
DR. BULTEMEIER: You see, that is where I get the two tangled up, because if I am working with a pharmaceutical company, is the FDA going to regulate what I put out, or if I am working with a pharmaceutical company and because I put it out, then there is no regulation there. I mean it can become very muddied and I would like to be independent and put out what information I see within our plan, and if a pharmaceutical company wants to help with that, I don't want to be endeared by the FDA saying you can't put that out.
MS. BAYLOR-HENRY: Thank you.
DR. PEDERSEN: Mr. Braslow?
MR. BRASLOW: I frequently hear that the information available to physicians on the effectiveness of alternative pharmaceuticals is far better than that available for alternative surgical procedures. One plausible explanation is the FDA's standards for approval and for promotion, and I wondered if the panel would want to comment on that conclusion.
DR. CALFEE: Gee, that may be one reason or it may not. I mean the situations are quite different. Surgery techniques, I assume from someone who hasn't even received one, not to mention provided one, is a much more dynamic situation, partly because the techniques change, partly because the tools change, and people have different preferences and different techniques, and so on.
I can certainly imagine that information is much more difficult to get about. Whether or not the reason that information is more difficult to get about is because of regulatory issues, because of the nature of the information is a different thing altogether. But I think we should bear in mind that people have a lot of information about pharmaceuticals. That doesn't tell us how much information they would have had, had we had a lighter regulatory regime.
DR. PEDERSEN: Comments from other members of the panel?
DR. HENDERSON: Yes, I would. First of all, I would want to see the evidence of what you are saying to see if that is in fact true. Second, I would agree with Jack that if you have a regulation that suppresses information, it is not a big stretch to say there is less information, and that is what I am saying. I am saying there are all these uses out there, that the FDA is not allowing drug companies that have the biggest interest in getting information out to get that information out. It is not a big stretch to say therefore less information is getting out.
DR. PEDERSEN: Thank you. Other members of the panel? Any other questions? Ms. Wion?
MS. WION: Just a clarification question. Dr. Neuman, I think you were suggesting some kind of balancing approach, one you said that FDA should maintain vigilance over the accuracy of information. Getting back to the question that was just brought up, how can the recipients of the information best judge that information? That is, would it be helpful to an HMO to have someone other than FDA, in addition to FDA assess the accuracy of the information?
You talked about having FDA perhaps having too high a standard for information. Can you explain maybe a little more how you are trying to distinguish among levels of accuracy of information, and then I think it might be useful to have just a little more discussion of how HMO's or other recipients of the information can be expected to determine on their own or with others' help what is accurate and what is misleading.
DR. NEUMANN: Sure. I think I heard a few questions, so let me try to address them. Number one concerns balance. I do think balance is needed, although I would emphasize strongly I think that minimal oversight on pharmacoeconomics would be wise.
In the same way that the SEC debates what kind of disclosure is needed for financial information, I think that is where the debate should lie. I believe that much of this could be done in disclaimers and disclosures, but that would be a way to balance perhaps these competing factors.
Secondly, you asked about standards and we talked quite a bit yesterday about randomized control trials and standards for safety and efficacy and the need for standards for pharmacoeconomic information. Without repeating a lot of what was said yesterday, let me just say I agree with some of Alan Hillman's remarks, both about problems with existing randomized control trials, but perhaps more importantly for this debate about the ability of the market to discern for itself on the basis of lots of different types of information, not randomized control trials, but observational studies, secondary sources, even perhaps consumer surveys and not "validated instruments" in some cases still may be useful for decision-makers. I think as long as you have informed buyers and sellers, as I said in my remarks, I think the market, including HMO's, which gets to your third point, will be able to determine for themselves how to make decisions.
MS. WION: A quick follow-up question. One of the functions that government agencies sometimes perform with respect to accuracy is an auditing function. How in your view does the market perform that auditing function to make sure that the underlying data haven't been somehow manipulated?
DR. NEUMANN: Again, we heard quite a bit this morning about how competitive these markets really are. Now, perhaps someone in the short term can get away with some deception, and there are laws about disclosing financial information and so forth. It is simply not in a managed care company's interest to just accept information provided to it. They can look at data, even if there is no formal auditing process of the data. It is in their interest to make an informed choice, and I think they will scrutinize the in formation presented to them, and I think that should be sufficient.
DR. CALFEE: I would just add that there are just vast proportions of the American market and markets elsewhere in which a vast amount of incredibly detailed and latent information goes back and forth based upon unaudited things. Every time you buy a car, all these things involve a huge amount of information which no agency audits. They only audit little tiny bits on the very surface. The market is much deeper than that, though. Buyers and sellers have an ongoing concern with the integrity of the data and the kind of products they put out there, and that is what the market works on.
DR. HENDERSON: I would like to add that the idea that randomized control trials are the highest or best information is just not true. That was one of the main messages Alan Hillman had yesterday. It varies with context, and it is just not true that RCT's are always the best way to go to get the best information. It doesn't reflect actual usage of drugs, typically.
DR. PEDERSEN: Any final questions from the panel?
If not, thanks to all of our participants this morning. We will take a luncheon recess and reconvene promptly at 1:00 o'clock.
[Whereupon, at 11:55 a.m., the hearing was in recess, to reconvene at 1:00 p.m., the same day.]