Charges in Ontario for Drug resale plot

Yesterday , the Ontario government announced that charges were being laid against a number of Generic companies, pharmacies and drug wholesalers.  There is a good story at the Star.com   This once again points to the need for changes in the way we deliver pharmaceuticals in this country.  Transparency is necessary if we are to deliver the best value.  The rebating system in the US causes them to have the highest brand name pricing in the world and these rebates of generic drugs have the same effect here.   

The Power of Personal Contact

In this age of twitter, facebook, text messaging, e-mail, media, and all sorts of IT and high tech ways of communicating with one another, what has happened to face-to-face contact?  Who, in business still uses this ancient method to communicate with clientele or customers and is it still effective?

 

In sports, it is about the personalities.  Just look at how hockey has Wayne Gretzky and now Sidney Crosby. One could say they are the face of hockey. Most of us would love to meet them and for those fortunate enough to do so, it only reinforces their perspective and love for the game. The clubs know they have to do things for the fans to keep the sales up at the gate, and it is why, early on, in the careers of hockey players, programs and awards are set up for community involvement.  Wayne or Sid are well versed in Media and fan support techniques and so are their fellow players. These fan face-to-face exchanges are an integral part of sports.

 

 

Love them or hate them, politicians are experts at the art of personal contact.  If this is an election year in your province, you certainly will see efforts by the political parties to take every advantage of getting in front of a camera, a podium, or a group gathering.  Door to door contact is still a big undertaking even if the candidate themselves can't get out. Representatives will knock at your door and ask for support. In an effort to sway voters, these face-to-face contacts are as much about listening to the concerns of the electorate as it is about getting your platform across.  This is because often voters have not all made up their minds and just want to be heard by the politicians.  Some of these folks will vote based on the candidate that seams to listen the best, or said the right response to the concerns.  It is often the defining moment in how a voter will vote.  In the American election last year of President Obama, this face-to-face, eye-to-eye contact was visible each and every day. Obama certainly used the Internet as an effective tool to augment his efforts but it was his face-to-face efforts, and on the ground support where they really added shine.

 

One industry that most people know little about is the Brand Pharmaceutical Companies.  This group has taken the art of personal contact to levels that perhaps Obama could learn from.  The marketing efforts of these companies utilize, all of the typical media, Internet, and other support initiatives but the power of personal contact is the cornerstone to their success.  The industry may have pushed this contact to the extreme in the last few years which has lead to a bit of a backlash by physicians, academics, and politicians. They essentially had so many personal contacts that physicians began to see fewer representatives.  However the industry is adjusting to more acceptable levels, and make no mistake about it, personal contact remains the focus of these companies. They implement numerous face-to-face, eye-to-eye contacts with the physician to build business.  After all, it is the physician that will cast the vote (in this case a prescription).   These contacts are positive in nature and the companies listen to the needs of the physician much the same as the politician looking for support.

 

A recently released Report by the Canadian Institute for Health Information, “Drug Expenditure in Canada 1985 to 2008”  stated  “Over the last 20 years, drugs have consistently remained one of the major cost drivers in health care,” says Michael Hunt, Manager of Pharmaceutical Programs at CIHI. “Spending on pharmaceuticals has more than doubled over the past 10 years, outpacing growth in health spending by hospitals, physicians and other health professionals.”

 

This certainly points to the success of the Pharma business model and to the success or power of personal contact.

 

 

 

In an effort to control these rising costs, individual benefits groups have focused on a defensive strategy of adding restrictions, slowing authorization of drugs, cost shifting to members, plan management, and reduction of benefits where possible.  From the above report, this defensive strategy has not attained the desired effect.  We have all heard the old adage, “The best defense is a good offence”.  I suggest that the strategies currently in place neglect the prime decision maker the physician (who is equivalent of a voter or fan) and do little or nothing to garner their support.   To bring this back to hockey, this strategy is like having two teams in a constant rivalry and one team has a number of high scoring forwards and the second team has mostly defensive players and may include the best goalie in the league and perhaps some goon players.  The fans are supporting the team which continually is shooting at the net, winning the most games, constantly looking to please the fans,  .   Go Sid Go. 

 

So with all of the new technology and communication techniques , it appears from the above examples that the power or personal contact still reigns supreme.  If personal contact wasn’t so powerful, Hockey would ignore the fans, Politicians would only do advertising, and Brand pharmaceutical Companies would not spend detailing efforts on Physicians.

 

 

 

The new CIHI Report

Drug spending estimated at $30 billion in 2008 was released today  by the CIHI.  Clearly this report validates my earlier post (A Quick comparison of Canada and the US ). 

Canada ranks #2 behind the US in a per Capita spending on drugs.  This makes perfect sense when one compares the drug mix differences between the countries .  In another earlier CIHI document  there was a pie chart showing  that Canada was 3.8 % of the global spend on drugs .  I wonder if that now  has increased? That same report showed Britain as having 4.2% of the global pharmaceutical spend .  Considering the population of Britain is about 66 Million vs Canada's 33 Million , it clearly  displays  something is  not working.   

Drug pricing confussion

Back in February, Mike Sullivan had an article in Benefits Canada that centered around drug pricing issues in Canada and the wide swings in charges to plans vs the more stable pricing to the public plans here in Canada.   Dr. Adam Fein  had an article yesterday in his Drug Channels blog discussing pricing concerns in the US.  He demonstrates a wide variation in drug pricing.  So it appears that both in Canada and the US , consumers must shop around to find the best pricing.  However , I really don't know of too many people in my area that do this. Am I wrong?  In the first place, the patient or consumer usually has a pharmacy that they frequent and never really question the bill.  Here in Canada , I'm not aware of any site which posts comparative pricing for local pharmacies like Dr. Fein references in his article.  Most physicians here in Canada are not that aware of drug pricing  .  So we have a situation where a patient or consumer is diagnosed and given a prescription and neither knows the cost or comparative cost between alternatives.  If you are a Senior on the government plan or an employee with coverage, the actual cost may not be important as they just look at how much is out of pocket at that time.    In fact I had a recent discussion with a few seniors that said exactly that.  They were going to pay the same amount out of pocket if they got a drug for $150 as they would have if they shopped around and got it for $100.  Added to this was that the store they frequented offers a reward point system that kept them coming back.  So to their point, why would they even care about the cost, they pay the same amount, get reward points, and don't have to worry about anything and the Government picks up the bill.  We should learn something about the positive incentives vs using negative incentives to control costs.  

So, the question maybe this.  Which is the point of sale?  Is it at the physicians office when pen is put to paper, or is it at the retail Pharmacy when  the patient presents the prescription?   Brand name manufacturers concentrate on the pen to paper point of sale, generic companies concentrate on the Pharmacy and ignore the physicians.  Close 80% of our pharmaceutical expenditures are on Brand name products and 20 % on generic drugs.   

The PolyCap

Further to my last post, here are some considerations about the Polypill, which is five drugs combined into a single capsule. Firstly, the man behind the phase  2 testing of the drug.  Dr. Salim Yusuf, his bio can be found here, is a very, very respected investigator and physician in Canada.  In fact, it was through his work with the HOPE study (I think every physician in Canada knows this study inside and out), that lead to Ramipril becoming the #1 Ace Inhibitor in Canada.  Of course with a lot of marketing by the manufacturer.  Actually this points to another difference between Canada and the US.  The Number of total prescriptions for Ramipril in Canada was 4,736,000 for the one manufacturer that made the top 20 list from my previous post.  There are of course other manufacturers so that number is even higher.  It is the only ACE to make the list.  If you look at the US data you see that Lisinopril is the only ace to make their list and has 75.5 M prescriptions.  So the marketing efforts in the US for Ramipril were not as good. Two different companies had the marketing rights for Canada and the US.  

Ok, now back to the Polycap.  You can watch an ABC News story here to get more info, but I want to discuss what is next.   

They are suggesting a large follow up study.   This is a perfect time for Canada's Health bodies to get behind this world leader in his field and make the follow-up study happen.  It is most likely not a study that the BIG PHARMA group is going to fund.  These are drugs that have gone off Patent.  The Generic Industry most likely will not do this either.  One of the cornerstones of this product is that it can save $ and lives.  If, it saves dollars, then someone is not making as much.  That is a simple fact.  So who could see lost revenue from the introduction of such a pill.  I suspect the list includes the following, Big Pharma, Pharmacy (one prescription as opposed to 5), Insurance (if they are based on % of book of business), wholesalers, Generic companies (lost revenue of selling 5 products),  and perhaps even Consultants dependent on how their payments are structured.   So really it encompasses the whole supply chain.  But look at the masses that could potentially benefit.  Imagine, Benefit plans  and government plans could save money thereby  allowing more new break through drugs on their formularies.  The potential benefits may well be there in the end for the supply chain.  

The US Health structure promotes a desire to reduce pharmaceutical expenditures .   If a study is going to happen in the US , I hope we are getting behind Dr. Yusuf and helping him make this happen here in Canada. 

Something for future consideration is the following.... If the Study is done and indeed it proves that it saves lives, reduces expenditures, improves compliance,and makes it to market, how will it be promoted? Or Who will Promote it?  As from the Ramipril vs Lisinopril explanation, marketing is very very necessary.  

A Quick comparison of Canada and the US

IMS Health released the numbers last week for both Canada and the US .   It is interesting to compare some of the results as it gives a bit of insight into the differences between the two countries.   Firstly the US market as a whole is $291 B while Canada is $21.4 B.  So nothing startling there, Canada  is equivalent  7.3 % of US  Market.   

But we know that there are major differences in pricing between the US and Canada.  For example , US Brand pricing is the highest in the world and Canada is less due to our Price regulations.  The US has some of the lowest generic prices as seen with the Walmart introduction of $4 and $10 prescriptions which has lead most other retailers to follow suit.   In Canada, we have some of the highest generic prices in the world as there is little competition and a MAC pricing across the country.  So it is difficult to compare on $.  So lets look at Prescriptions.   ( I'll concentrate on statins here) 

If we look at Top 15 Drugs dispensed in the US you see 66.7 Million Prescriptions for Simvastatin (Primarily generic, trade name Zocor) and 57.9 Million Prescriptions for Lipitor.  Now compare this to The Top 20 Drugs Dispensed in Canada Table 6  .  Simvastatin is nowhere on that list, Lipitor has 14.8 Million Prescriptions and Crestor is there with 6 Million prescriptions.  My understanding is that Simvastatin has drastically declined in prescriptions in Canada while it has grown 39% in the US!   If you just look at Lipitor alone, as it is the only one with the high level data for both countries,  Canada is equivalent to 25% of the US usage. Think about that for a minute..... Canada is equivalent to 7.3 % of the total US Market in terms of dollars  but on a prescription basis for the #1 product in the world, Canada is equivalent to 25% of the prescriptions!!!!!  Obviously , Crestor has to have an even higher percentage and Simvastatin a really low number.     

So , some of the questions we need to ask are,  

1. Are all of these Americans at significantly greater risk than Canadians? 
2. Why is there such a difference? 
3. Why do Canadian governments and Industry not take advantage of the price reductions?
4. Can we learn from what is happening in the US ?
5. Are there ways the Canadian health Care system can save $?
6. etc. etc. etc

I've concentrated on Statins here but , we could have discussed other classes of drugs as well.  Perhaps my next post will be on the PolyPill .  You can read about it  here at the Lancet... 

Could save lives and money!