"Me-Too" Products — Friend or Foe?
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《新英格兰医药杂志》
A second drug-eluting coronary stent. Another drug for erectile dysfunction. A sixth statin (or seventh, counting cerivastatin). Medical journals seem filled with research articles that induce a sense of déjà vu. Readers wonder, "Have I read this paper before?" No, that was a similar study of a similar product.
Critics of the pharmaceutical and medical-device industry argue that "me-too" products cause problems for medicine beyond confusion. They assert that these market latecomers often differ trivially from earlier products and that the billions of dollars spent marketing me-too products could be spent in better ways, such as developing orphan drugs for rare diseases. Instead, critics say, these products add little to physicians' arsenal, while driving up the costs of health care.
There is another side to the story. Me-too products reflect and create competition among drug and device manufacturers, and that competition is also a powerful driver of better quality and lower costs. Any unplanned economy produces galling examples of waste, of course. But health care leaders who struggle to provide good care with limited resources see me-too products not as the problem but as an important part of the solution. In fact, what they really want are me-three and me-four products. Here is why.
The health care "value equation" is usually summarized as follows: value = benefit ÷ cost.
To physicians, this "equation" may seem a not-so-useful abstraction or a ploy to get them to put financial issues ahead of the interests of their patients. But this equation is actually quite useful for understanding how drugs and devices enter the market — or why attempts to bring them to market may fail.
The first product in a new class defines the base-line value equation. For example, the sirolimus-eluting coronary stent was approved for sale in the United States in the spring of 2003. Because of low rates of restenosis and subsequent cardiac events in patients who received these devices, as compared with those who received bare-metal stents,1 demand for these stents immediately outstripped supply. The manufacturer set a high price for the stent — so high that it forces hospitals to choose between losing money on cases in which these stents are used and losing the loyalty of physicians and patients because of lack of access to first-rate care. The manufacturer is having no trouble selling its stents at its asking price.
When a second product comes along in the same class, its manufacturers must offer better value. That means that the product must lead to better patient outcomes, or it must be less expensive. Data presented by Stone et al. in this issue of the Journal (pages 221–231) on a paclitaxel-eluting stent indicate that this device is associated with low rates of restenosis and coronary events that are quite similar to those reported with the "first-in-class" sirolimus-eluting stent. Is the new stent safer? The Food and Drug Administration (FDA) recently issued a warning because of more than 290 reports of subacute thrombosis associated with the sirolimus-eluting stents, but neither type of drug-eluting stent was associated with an increased risk of stent thrombosis in clinical trials. As Stone et al. note, no one can say with confidence at this point that either drug-eluting stent is better than the other.
That means that the manufacturers of the paclitaxel-eluting stent should have to compete on price if they want more than a sliver of the market. Unless there is a compelling clinical or fiscal argument, hospitals will resist stocking a second drug-eluting stent, for a simple reason: most hospitals do not have inventory space to add new drugs or devices without taking something else off the shelf. Physicians also have limited psychological "shelf space" and want to learn how to use a new drug or device only if they must. The nudge to do so often comes from health insurers, who have a strong incentive to promote the use of lower-cost, equally effective me-too products.
Evidence that such market forces are at work in U.S. health care can be found in the lower prices for products introduced after the first-in-class drugs or devices. The current monthly costs of statins at doses that are expected to reduce the levels of low-density lipoprotein cholesterol by 45 to 49 percent are lower for products that received FDA approval more recently (see Table). Lower costs for me-too drugs are also seen in other commonly used classes of drugs.
Table. Costs of Various Drugs.
Why, then, don't we see real price wars driving health care costs much lower? The biggest reason is the rapid rate of medical progress, which causes value to increase through steady increases in the top half of the value equation. When a drug class or technology is new, the second and third entrants often offer real advantages. Even if clinical outcomes are similar, the me-too products may improve satisfaction through more convenient dose schedules or smaller device size.
At some point, however, technology matures. Implantable defibrillators stop getting smaller, or the side-effect profile of new entrants in a drug class represents only a minimal improvement. At that point, the top part of the value equation is frozen, and the action shifts to the bottom. Then manufacturers can succeed with a me-too product only by competing on price.
A logical question is why manufacturers of first-in-class drugs tend to stay with their initial high prices, even if insurers punish them by placing their products in the third tier of formularies, which means higher copayments for patients. Pharmaceutical manufacturers have learned that physicians and patients are usually reluctant to switch from a medication that is working. The manufacturers make larger profits by selling their drug to fewer patients at a high price than they would with more patients paying less.
The reason that this strategy of maintaining high prices for first-in-class products works is that we have not actually had a true market in health care — at least so far. The physicians who write the prescriptions or choose the devices and the patients who receive them have not been saddled with much or any of the cost. As a result, some me-too products have made money for their manufacturers mostly because of clever marketing, without improving outcomes or lowering costs. The lesson: for market forces to really work, physicians have to choose products as if costs matter. As patients bear more of their health care costs, we can expect that they will pressure their physicians to do so.
Me-too products do not mean that imitation has replaced innovation in health care. Developing a product takes decades; the product that reaches the market first is the one that won the race, not necessarily a reflection of who had the original or best idea. Even if products yield similar outcomes, the concepts behind them might be quite different. Drug-eluting stents might share a delivery technology, but their embedded drugs will ultimately determine their efficacy. The pressure on the manufacturers of the third and fourth entrants into the drug-eluting–stent marketplace to come up with a product that really improves outcomes or lowers cost will be tremendous. As a clinician and health care manager, I can't wait.
Source Information
From Partners Healthcare System and Harvard Medical School, Boston.
References
Morice M-C, Serruys PW, Sousa JE, et al. A randomized comparison of a sirolimus-eluting stent with a standard stent for coronary revascularization. N Engl J Med 2002;346:1773-1780.
Related Letters:
"Me-Too" Products — Friend or Foe?
Frothingham R., Relman A. S., Lee T. H.(Thomas H. Lee, M.D.)
Critics of the pharmaceutical and medical-device industry argue that "me-too" products cause problems for medicine beyond confusion. They assert that these market latecomers often differ trivially from earlier products and that the billions of dollars spent marketing me-too products could be spent in better ways, such as developing orphan drugs for rare diseases. Instead, critics say, these products add little to physicians' arsenal, while driving up the costs of health care.
There is another side to the story. Me-too products reflect and create competition among drug and device manufacturers, and that competition is also a powerful driver of better quality and lower costs. Any unplanned economy produces galling examples of waste, of course. But health care leaders who struggle to provide good care with limited resources see me-too products not as the problem but as an important part of the solution. In fact, what they really want are me-three and me-four products. Here is why.
The health care "value equation" is usually summarized as follows: value = benefit ÷ cost.
To physicians, this "equation" may seem a not-so-useful abstraction or a ploy to get them to put financial issues ahead of the interests of their patients. But this equation is actually quite useful for understanding how drugs and devices enter the market — or why attempts to bring them to market may fail.
The first product in a new class defines the base-line value equation. For example, the sirolimus-eluting coronary stent was approved for sale in the United States in the spring of 2003. Because of low rates of restenosis and subsequent cardiac events in patients who received these devices, as compared with those who received bare-metal stents,1 demand for these stents immediately outstripped supply. The manufacturer set a high price for the stent — so high that it forces hospitals to choose between losing money on cases in which these stents are used and losing the loyalty of physicians and patients because of lack of access to first-rate care. The manufacturer is having no trouble selling its stents at its asking price.
When a second product comes along in the same class, its manufacturers must offer better value. That means that the product must lead to better patient outcomes, or it must be less expensive. Data presented by Stone et al. in this issue of the Journal (pages 221–231) on a paclitaxel-eluting stent indicate that this device is associated with low rates of restenosis and coronary events that are quite similar to those reported with the "first-in-class" sirolimus-eluting stent. Is the new stent safer? The Food and Drug Administration (FDA) recently issued a warning because of more than 290 reports of subacute thrombosis associated with the sirolimus-eluting stents, but neither type of drug-eluting stent was associated with an increased risk of stent thrombosis in clinical trials. As Stone et al. note, no one can say with confidence at this point that either drug-eluting stent is better than the other.
That means that the manufacturers of the paclitaxel-eluting stent should have to compete on price if they want more than a sliver of the market. Unless there is a compelling clinical or fiscal argument, hospitals will resist stocking a second drug-eluting stent, for a simple reason: most hospitals do not have inventory space to add new drugs or devices without taking something else off the shelf. Physicians also have limited psychological "shelf space" and want to learn how to use a new drug or device only if they must. The nudge to do so often comes from health insurers, who have a strong incentive to promote the use of lower-cost, equally effective me-too products.
Evidence that such market forces are at work in U.S. health care can be found in the lower prices for products introduced after the first-in-class drugs or devices. The current monthly costs of statins at doses that are expected to reduce the levels of low-density lipoprotein cholesterol by 45 to 49 percent are lower for products that received FDA approval more recently (see Table). Lower costs for me-too drugs are also seen in other commonly used classes of drugs.
Table. Costs of Various Drugs.
Why, then, don't we see real price wars driving health care costs much lower? The biggest reason is the rapid rate of medical progress, which causes value to increase through steady increases in the top half of the value equation. When a drug class or technology is new, the second and third entrants often offer real advantages. Even if clinical outcomes are similar, the me-too products may improve satisfaction through more convenient dose schedules or smaller device size.
At some point, however, technology matures. Implantable defibrillators stop getting smaller, or the side-effect profile of new entrants in a drug class represents only a minimal improvement. At that point, the top part of the value equation is frozen, and the action shifts to the bottom. Then manufacturers can succeed with a me-too product only by competing on price.
A logical question is why manufacturers of first-in-class drugs tend to stay with their initial high prices, even if insurers punish them by placing their products in the third tier of formularies, which means higher copayments for patients. Pharmaceutical manufacturers have learned that physicians and patients are usually reluctant to switch from a medication that is working. The manufacturers make larger profits by selling their drug to fewer patients at a high price than they would with more patients paying less.
The reason that this strategy of maintaining high prices for first-in-class products works is that we have not actually had a true market in health care — at least so far. The physicians who write the prescriptions or choose the devices and the patients who receive them have not been saddled with much or any of the cost. As a result, some me-too products have made money for their manufacturers mostly because of clever marketing, without improving outcomes or lowering costs. The lesson: for market forces to really work, physicians have to choose products as if costs matter. As patients bear more of their health care costs, we can expect that they will pressure their physicians to do so.
Me-too products do not mean that imitation has replaced innovation in health care. Developing a product takes decades; the product that reaches the market first is the one that won the race, not necessarily a reflection of who had the original or best idea. Even if products yield similar outcomes, the concepts behind them might be quite different. Drug-eluting stents might share a delivery technology, but their embedded drugs will ultimately determine their efficacy. The pressure on the manufacturers of the third and fourth entrants into the drug-eluting–stent marketplace to come up with a product that really improves outcomes or lowers cost will be tremendous. As a clinician and health care manager, I can't wait.
Source Information
From Partners Healthcare System and Harvard Medical School, Boston.
References
Morice M-C, Serruys PW, Sousa JE, et al. A randomized comparison of a sirolimus-eluting stent with a standard stent for coronary revascularization. N Engl J Med 2002;346:1773-1780.
Related Letters:
"Me-Too" Products — Friend or Foe?
Frothingham R., Relman A. S., Lee T. H.(Thomas H. Lee, M.D.)