Intro. [Recording date: February 6, 2020.]
Russ Roberts: Today is February 6, 2020, and my guest is Hematologist, Oncologist, and Professor, Vinay Prasad of Oregon Health and Science University. He studies cancer drugs, health policy, and evidence-based medicine, and hosts the oncology podcast Plenary Session. The author of over 200 academic articles, co-author of the book Ending Medical Reversal, which was the subject of an EconTalk episode with co-author Adam Cifu, his latest book and the subject of today’s conversation is Malignant: How Bad Policy and Bad Evidence Harm People with Cancer. Vinay, welcome to EconTalk.
Vinay Prasad: Thanks for having me so much, Russ.
Russ Roberts: We’re going to be talking about cancer today–the system that tries to fight it, the cost of that system, its effectiveness. Listeners who want background on the issues we’re going to be discussing and listen to past episodes with Vincent Rajkumar, Robin Feldman, Jacob Stegenga, and Azra Raza–we’ll link to those episodes and I encourage you to check them out.
Now, Vinay, in your book, Malignant, you write the following:
For the most part, cancer drugs cost too much and deliver too little. Because of this, their value is poor.
Why do you say they cost too much and deliver too little?
Vinay Prasad: Well, thanks for having me. It’s great to be on this podcast that I’ve loved listening to over the years.
I guess I’d say the answer to that question is, although it’s easy to fixate on the exceptional stories in cancer medicine, a drug called Imatinib, which has really revolutionized the disease, chronic myeloid leukemia. Some other really successful drugs are, like, Rituximab and Trastuzumab. And, I think it’s easy and natural to gravitate to the success stories. But if you look soberly–sorry–if you look empirically and broadly at many, many cancer drugs, you will find that they offer very marginal or modest benefits.
A paper that comes to mind is a paper by Fojo and colleagues in JAMA Otolaryngology. They looked at 71 consecutively-approved drugs for solid tumors. Whey found that the median improvement in overall survival is 2.1 months.
So, I think many of us will recognize that 2.1 months is a marginal or modest improvement in survival. And that’s the median. That’s the typical drug.
And you pair that with drug prices that are often $12-, $14-, $16,000 per month of treatment for drugs taken indefinitely that are not curative, and you get value propositions that are quite poor. Listeners of your podcast will know ‘dollars per quality-adjusted life year.’ I won’t need to explain that, but by the–
Russ Roberts: Well, you should remind them. Yeah, remind them, go ahead.
Vinay Prasad: All right, I will explain it, then.
So, I mean, you know, one metric that health economists and policy analysts use to evaluate value is: How much does it cost to add one good year of life to society? One healthy year of life? And, we discount life if it’s in a state of disease or disability, and that’s the quality-adjusted part of a quality adjusted life year.
And, typically, wealthy industrialized nations have different cut offs on what they think a reasonable dollar per quality figure is.
Maybe, the United Kingdom, they’d say something like $60-, $70,000 per quality is the ceiling of what we think is cost effective. In our country, I think there’s some persuasive economists who argue it should be as high as maybe $200,000 or $250,000. But that’s kind of the upper limit as what we see people endorse.
But in cancer medicine, because our drugs offer such marginal benefits in ideal settings and they cost so much, we see dollars per quality that approach a million dollars. Regraph[inaudible 00:04:03] says it is[?] $900,000 per quality-adjusted life year for colon cancer.
We see some drugs that may even be infinite, because they cost more than alternatives and they deliver nothing more, such as Aflibercept in colon cancer.
So, you know, there’s some examples where we are reaching a stratospheric amount of cost per benefit in cancer medicine and the value is, you know, clearly poor.
Russ Roberts: One of the many things I liked about your book is that you actually are aware of trade-offs. That’s usually the economists’ theme. Some might respond to this idea of quality, this quality-adjusted life year, as saying, ‘Well, life is infinitely valuable. So what if it costs $250,000 to add a year of life? Or $500,000? Every day of life is–you shouldn’t put a price tag on it.’ How do you respond to that?
Vinay Prasad: And, I guess, you know, you and I will think similarly on that. That sounds lovely. I wish we lived in a world where we did not have to make those kinds of choices where we could simply have any treatment that offered any incremental benefit, no matter how small and at no matter what price.
But, you know, as you and I know, the reality is that there is only so much money that we can spend on human endeavors. There’s only so much we can spend on health. And what we’re doing in medicine is not paying for these low value practices: We are actively not paying for higher value practices.
So, there are things we could be doing that would deliver far more per dollar spent, whether it’s blood pressure reduction, taking care of people who have maybe cardiovascular disease, things in primary prevention–a number of different strategies that would be better use per dollar spent. And we don’t do that.
So, the net effect is, in the United States, if you have certain cancer diagnoses, you may be able to get all of the new drugs, but our life expectancy is falling and far less than other industrialized nations.
So, I think, it is a trade off, and the choices we make, inevitably take money away from other sectors of healthcare. And we see that. We don’t do a good job in many fronts.
Russ Roberts: So, we’re going to talk about this for a minute, but before we do, I want to clarify one technical point, because as a person outside of medicine and until this last year or so when I became increasingly interested in these questions–and listeners are probably aware that, know that we’re going to do even probably a few more.
When I hear a number like 2.1 or 2.5 months months of extra life life, it’s such a shockingly small number.
And then, combined with the fact that, as our episode with Azra Raza pointed out, there’s a bunch of people who don’t get any benefit. At least half of them, for example, are getting it less than 2.5 months. And they’re going to endure some of the most horrific side effects that these drugs sometimes produce.
Is that actual number–and of course, it’s sometimes overstated because it’s, as you point out and others have pointed out, it’s often tested on, that number comes from a population that isn’t really similar to the actual population that’s going to take the drug.
So, does that literally mean that half the people live an extra time that is less than 2.5, say, and that half live more? And of the half that live more, how many of them live 3.5 or 4.5? Do any of them live 10 years longer? I mean, what does the right-hand tail look like? What’s the 80th percentile? A question you raise toward the end your book for cancer patients when they’re talking about treatment: We often focus on that median number. You might be in the right hand tail if you’re lucky. You’d want to know how big that is, too.
Vinay Prasad: Yeah, that’s a great point. So, I guess I would say that–a couple of things. I guess I’d say one is, strictly speaking, it is impossible to know the counterfactual for any individual. So, if you know somebody lived six months while taking the drug, and you want to say that, let’s assume the hazard ratio is constant in this study–it’s like 0.8 or something. And so–
Russ Roberts: What does that mean? Explain that?
Vinay Prasad: Yeah, so hazard ratio is like the instantaneous risk of an adverse event at any point in time. It’s sort of a metric of the relative benefit a drug provides. And, you know, some statisticians believe that, you know, 2.1 months, that’s the absolute benefit. That’s because the drug is providing an 80% benefit and the average survival is, you know, something like six, seven, eight months and that’s how you get to that 2.1 month figure.
But if you were going to live only two, three months, that 80%, or that 80% survival value, that 20% benefit, that might be even smaller–on the order of a couple of weeks.
Alternatively, if you were going to be living a year, because you had a natural version of sort of slow growing biology, that 20% is even a little bit bigger, a few more months.
So, that’s one way to view it. But, I think that’s a naive way. Nobody knows the true counterfactual. And by that, I mean that there may be some people who are destined to live two months without treatment, who might live 10 months; but if you were to assume that, and you know the median is about two months, you have to assume there are people who are going to live 15 months who end up living three months, and it shortens life in some people.
So, I think you can take all these kind of different ways in which to think about it.
One way to think about it is your idea is sort of an idea that I endorse, which is: What is the 20th and 80th percentile without treatment and with treatment? So, that’s the kind of way I often present it to patients. I say something like, ‘We have this new drug. We know that people on average experience something between the 20th and 80th percentile. So, they live between perhaps two months and 11 months without treatment, but with treatment that might be four months and 17 months.’ Something like that. I find that that can kind of be a helpful way for individuals to make these choices.
But, coming back to your question, your question is really about tails. Is there a subset of people who demonstrate really profound benefit from these drugs? And I think that might be true for certain classes of medication, like immunotherapy, which is maybe a hot topic that you’ll probably talk to some of your other guests about. That might be true, that there’s a subset of people who demonstrate a longer-than-average benefit.
But for many of these drugs, it really is kind of an incremental benefit, no matter where you are on that continuum of what your cancer experience might be like. That there doesn’t appear to be long lasting, durable remissions. And so, there might not be that sort of tail.
And then the last point I’ll make is that, again, we’re talking really about idealized clinical trials, and everything we know about idealized clinical trials is that the people on these clinical studies, they live longer than people in the real world.
You know, I give some examples where people in the real world taking the active drug live half as long as people in the control arm, taking the sugar pill.
The people in the real world who are older, have co-morbidities, who are like you and I, people who are not Olympians who are sort of participating in these clinical trials, we, they tend to have shorter survival. And what that means is, that almost surely the benefit of these agents is even smaller, sort of an absolute sense.
Russ Roberts: And by comorbidity, you mean other things wrong with them besides the thing the drug’s supposed to treat. We talked with Jacob Stegenga about that, this problem: that, it’s in the interest of the drug pharmaceutical companies, obviously, to find patients that are healthy and look good; and they tend to be younger, less chronically troubled by other things than the actual people who are going to end up taking the drug.
Russ Roberts: But the bottom line is this–and this is the hard part to face–is that and so I want to start with this fundamental question, now that we got this other background information out of the way: Who would be crazy enough to spend, let’s say $100,000–and that’s at the low end for many of these treatments. Some of them are much more expensive–$100,000 for an extra two months of life, let’s forget about the median–two months of life that are not going to be so great, by the way. You’re going to have side effects, almost always from these treatments. Why would anyone pay $100,000 for that year of treatment, or $10- or $12,000 a month for that treatment, when it is so relatively ineffective and brings a lot of pain?
And of course, the simple answer is: Because you’re not paying for it.
Vinay Prasad: Exactly right. I would say that if you were actually paying for it, very, very few people would choose to do that with their own money.
But, we live in a system that has been constructed in a way that you are not paying for it. That society is paying for it. You are indirectly paying for it through your lost wages for a lifetime of employment where you’ve been paying into high premiums. So, you are–
Russ Roberts: Or your taxes.
Vinay Prasad: Your taxes, yeah. You’ve been indirectly paying for it for your life. And by choosing not to take it, you know, you’re helping a diffuse group of people and their future premiums and their future taxes and it doesn’t really affect you in the pocketbook. And so, I think you’re absolutely right: that if people had to pay that money, the system would be very different. That companies might not pursue these drugs, certainly if they were going to cost so much to pursue them.
Russ Roberts: And you say, “The difficult conclusion is that cancer drugs simply are priced at what the market will bear.” And then you go on to say that “the market,” you put in quotes, “is a broken, convoluted system that exerts nearly no downward force on cancer drug prices.” I think a lot of observers to that system draw the wrong conclusion, which is, ‘Well, of course, people pay a lot for drugs, because who wouldn’t pay anything to save their own life?’ The answer is: Well, people all the time forego money to save their own life because they want to, say, leave money for the children or spend it on other things, or care about something else or knows that it might not help or that the risk of other–isn’t perfect–the probabilities are uncertain.
So, what’s really going on here–I just want to make this clear, because it’s really important. It’s not a market. And it’s not a market, not just because these are often monopolists through the patent system. That would be fine.
Russ Roberts: It’s a great thing. It would be fine to give companies who discover wonderful things, the chance to charge, “what the market will bear.” But it’s really what the political system will bear in many cases or a convoluted insurance-company, pharmacy-benefit manager, subsidized through the tax system, employee-benefit system–which is also messed up.
But the point is–here’s the part that I’ve, I’ve asked this question before. I just want to make this clear, because it’s so shocking. It’s really whatever they think they can get away with. And we sometimes think that’s what the market will bear. But there’s sort of a social contract or norm or weird thing that, ‘Well, since we’re curing cancer, we can charge a lot and we’ll set a price that Medicare will kind of swallow.’ And, of course, Medicare is not allowed by law to negotiate that price. So, it just gets paid.
Vinay Prasad: Yeah. I think you’re hitting the nail on the head. I mean, just to kind of push on the fact that this is not a market. It’s not a market that you’re familiar with; it’s not a market that I’m familiar with.
To push on that, there are a couple of perverse policies in cancer medicine. One, Medicare has to pay for any approved cancer drug by the U.S. Food and Drug Administration. They must pay for it for the approved indication. They cannot negotiate the price.
So, nothing stops a company from coming tomorrow with an approved drug and saying it’s going to be $2 million a pill. I think literally the only thing that stops them from doing that is the fact that they’re going to be on “60 Minutes” if they do that.
Russ Roberts: Yeah, it’s just social pressure, and once that price is established, let’s say they start off at $100,000 a year for the drug, raising it 10, 20, 15%, the second year, 4%, leaving it the same–there’s no rhyme or reason for that other than what they think they can do without getting put on “60 Minutes.”
Vinay Prasad: Right. The frog doesn’t jump out of the pot when you heat it slow, heat the water slowly; and that’s what they’re doing.
And in addition to this problem that every drug approved has to be covered by Medicare, there’s another bit of policy that people may not know, which is that many years ago, we allowed groups of experts, who often are in financially conflicted relationships with drug companies to create registries of off-label drug use. And we have wedded Medicare to pay for off-label drug use as recommended by experts at certain levels of evidence. And Medicare here, too, cannot negotiate price; cannot say no. They must pay for these off-label uses of drugs. And that’s yet another way in which the market is not a real market–where the payer cannot say no, even if the evidence is inconclusive, flimsy, uncertain, unsound, broken, flawed, as I detail throughout the book.
Russ Roberts: Explain what you mean by the off-label use, why that’s a problem.
Vinay Prasad: Yeah. So, I guess I want to say, you know, I just want to point out that doctors do a lot of thing off-label. It’s not necessarily a problem to prescribe off-label.
So, what is on-label, off-label? On label means you’re prescribing the drug as the FDA [Food and Drug Administration] said it ought to be used. So, the drug is approved for a certain cancer with certain genetic mutation, maybe in a certain age group: You’re prescribing it in that range. But inevitably, drugs are prescribed, perhaps for people who might not fit that label, maybe in a disease that wasn’t studied. And this is the so called off-label use.
Russ Roberts: There’s some good things about that, as you point out, because it means that, something wonderful that maybe we didn’t know about works, and let’s do it.
Vinay Prasad: Yeah. In fact, I would say that this idea that you need experts to recommend off-label use, that’s also well-intentioned. Throughout most of cancer history, some of these drugs were older, cheaper, cytotoxic drugs, off patent. There may not be a sponsoring company making a lot of money from these drugs, and there might not be an incentive to go through formal regulatory approval, which is a very costly process.
So, this system that was well-intentioned, that works for older, cheaper drugs, kind of has been taken over by newer $100,000-, $200,000-drugs that are extremely lucrative to the manufacturer. And, what it has allowed is companies to get sizable market share from expert panels recommending the drug for off-label use.
I guess I want to say one more thing. I like to say there’s off-label use, and then there’s off-label use. There’s off-label use that has a clinical study that kind of supports it, and then there’s off-label use that really has nothing–anecdote, maybe a faith that it’s going to work and nothing more than that. In medicine, we often drift to that latter, off-label use–this kind of really kind of on a wing and a prayer use. And even some of that is codified in the guidelines that mandates Medicare to pay.
And if you put all that together, that’s the recipe for a non-functioning market.
Russ Roberts: So, I want to make a subtle point about this ‘Medicare can’t negotiate prices.’ I’m really glad on one level that Medicare can’t negotiate price. I don’t want the U.S. government deciding what the profitability of drug companies should be. At least in the abstract. Unfortunately, we don’t live in the abstract. We live in a world where almost every other country–certainly all the rich countries–have negotiated prices with the drug companies.
So, what it means is, is that the United States taxpayer is–mostly; there are some other contributors, but it’s mostly the U.S. taxpayer–is funding innovation and drugs for people around the world.
A lot of people, when I say that if we got rid of the profitability of U.S. drug companies, people say, ‘Well, but there’s a lot of foreign companies.’ Yeah. They’re profitable because they sell in our market that is relatively unconstrained, where they can charge our prices.
I think in your book you pointed out, I’ve seen a similar number that about half–half–of the world’s pharmaceutical revenue is in the United States. Now, I don’t know about profit–profits might be even higher, but I’m not sure. It could be lower, too, I don’t know.
But, we’re an enormous driver of innovation.
That’s glorious, that there’s all this innovation. Some of it isn’t worth it, a lot of it. That’s the tragedy. And it shouldn’t be happening. The only reason it’s happening is because of this lack of feedback loops where people with skin in the game would normally say, ‘Well, that’s not worth it.’ Instead, pharmaceutical companies–and God bless them, they’re trying hard to solve cancer and there’s wonderful people in them, as I like to point out–but the current system allows them to put their hand in my pocket as a taxpayer to pay for the drugs at a price they decide, and only they decide, other than through this social pressure.
I know this sounds so bizarrely implausible, that they just get to set the price at whatever they want–again, not what the market will bear: What the taxpayer will bear, unaware that this is happening.
It’s just–I want to get that out of my system.
Vinay Prasad: But, I want to ask you a question of this topic that I wonder how you think about. There’s an analysis in the last couple years, I think by Peter Bach, who has a Health Affairs blog; and they looked at the difference the United States pays on drugs than the rest of the world. And there’s a difference. We’re paying more than, I think, the rest of the world put together. And the amount we pay more than the rest of the world is enough to fit the entire global R&D budget, and then some.
So, then, their argument is that the premium we’re paying in the United States, it’s more than enough to sustain all of the innovation globally. That’s the argument. What do you think about that as an economist?
Russ Roberts: Well, I think it’s an interesting question. There is, always–there are two kinds of errors you can make. You can produce too much of something and too little. We have made the mistake in the United States of, I think, providing too much–seems impossible, but I think we provide too much innovation, both in pharmaceuticals and medical devices.
Because, as you point out, and as you pointed out in your book, and as you pointed out a minute ago, once something is considered the standard of care and is efficacious, according to the FDA, Medicare is going to pay for it.
And, so, that’s a mistake. That’s just, to my mind, a fundamental policy error.
But if you’re not careful, you’ll go too far in the other direction, also. And so, I’m not saying, I would never say, ‘Well, let’s leave the current system alone,’ because I think it’s wicked actually, and not just wasteful. I think there are other parts of it, we may or may not get into, that are really horrible.
It’d be one thing if it said, ‘Well, we have great medical care in the United States, we spend a little too much.’ My bottom line is we have great medical care in the United States for a good chunk of the population. For a small but non-significant part of the population, they have trouble getting access to medical care at a reasonable price because the subsidies and system we’ve talked about, it pushed up the price for them and made it almost impossible.
And then there’s a bunch of other people who are getting stuff that really doesn’t work very well and actually has negative effects, but since they’re not paying for it and don’t have incentive always to look for the full effects, and that information is rare, because we don’t see ourselves as consumers and we trust our doctors–we’re going to get to that later about trust; we make some mistakes in that direction. But I think we have to be careful in saying, ‘Oh, well, they’ll still produce a lot of great drugs, if they make half as much, or a third as much.’ I don’t know.
I would like to see the profitability of the drug industry emerge once the right incentives are set, rather than trying to steer it from the top down, which is what we do now. And when we do that–of course, the pharmaceutical industry has a lot of say in it through the political process, which is a separate problem. Maybe we’ll get to that later.
Vinay Prasad: I guess, on this topic, I’ll just say one thing, which is that: My criticism here is, and I hope I try to persuade the reader through the book, is that it’s my view that some of these drugs, it’s not just that they’re marginal. I actually think that they’re ineffective. That they really don’t work. I think that they’re marginal only in the contrived way you’ve studied them against a control arm that’s not the standard of care, with a design that’s flawed in many respects.
They’re marginal in that setting, in a population that’s not typical. But they’re actually probably ineffective in the real setting.
And what I would like to see, kind of along the lines of what you’d like to see, is I’d like to see the incentives incentivize people to make drugs that help people with cancer in the United States; and that’s what I think the goal is.
Russ Roberts: Woohoo! Yeah, that’d be good. It’s weird that that’s not the goal now, and having said that, I like to always mention I have friends in the pharmaceutical industry. They’re desperately eager to cure cancer.
Vinay Prasad: Yeah, and they’re good people who work there, I think. Absolutely.
Russ Roberts: So, there’s nothing, I think one of the problems that free marketers like myself sometimes make is that they think that the enemy of their enemy is their friend. So, ‘If the interventionists hate the pharmaceutical companies, therefore, as a free marketer, I must support them.’ That’s a mistake.
A second mistake is the other mistake, which is to say, ‘Yeah, they’re just totally wicked, they’re horrible. They’re evil.’ They’re not. And certainly the players in them are not; and they’ve done glorious things to improve human health. Just, not as many as we might have liked for the amount of money that got spent.
Vinay Prasad: Exactly. I couldn’t put it better. And I don’t blame them at all. I really do blame–it’s though it’s the structure that has allowed the incentives to incentivize ineffective or marginal drugs at tremendous revenue. That’s the failure. It’s the structure of the system.
Russ Roberts: Yeah. So, let’s talk about some of that, and you have some fantastic examples in the book. Unfortunately, I didn’t–I learned too much, as I like to say sometimes: There are things in this, even increasingly cynical, me, didn’t know. We’ll get to some of those. But, what are some of the conflicts of interest that decision makers in this space are confronted with and often ignore, and that you want to bring front and center?
Vinay Prasad: You’re probably referring to the couple of chapters on financial conflict of interest. And I guess–I discussed that as kind of a broader section of the book where I talk about societal forces that distort the narrative on cancer. I think one of the most problematic parts of cancer and the narrative around cancer drug policy is that it appears to me that many of the players, many of the people who could speak on behalf of their constituents in an honest and independent way, many of these people are very conflicted with the pharmaceutical industry.
And so, I go through, kind of, ‘Where does the money flow?’ And the money flows of course from the pharmaceutical industry to, “patient advocacy groups.” I put them in quotes because many of them have policies and recommendations that appear to run counter to what patients would really want. One of which is that they’re often quite quiet about the out-of-pocket expenses of these cancer drugs and the actual price of the drugs.
And that’s kind of the devil’s bargain. If you are funded by Pfizer, you can talk a lot about a lot of things that matter to patients but you probably want to be quiet about the price of the new Pfizer drug. And you see that reticence in this group.
I also talk about the “thought leaders,” and I put them in quotes. And, I think it’s kind of cliche to call them ‘thought leaders.’ But there’s some truth to the idea that in cancer medicine, a disease that really is hundreds of diseases, there’s no one doctor who can know everything about every condition. And in each condition, there are few people whose voice carries tremendous weight.
And, those people are heavily, personally, and professionally conflicted with the pharmaceutical companies. And they often are uncritical: they’re not very good at statistical methods and critical appraisal. And they often appear to be cheerleaders for pharmaceutical products with tremendous uncertainty, marginal benefits. And, you put this together–you know, experts who are uncritical, who are also being personally paid by the companies; the patient groups who may be reticent about certain topics, always asking for lower regulatory hurdles to get drugs approved; journals, who are also deriving high revenue from the reprints of some of these studies that may be flawed; professional organizations that have large and undisclosed revenue streams from the industry. And, the worry is that all of the players in this dialogue are really kind of speaking on behalf of the industry, or at least part of them are speaking on behalf of the industry. And there is very little pressure the other way, towards sort of serious reform. And I think that’s the kind of argument I put forth in that section.
Russ Roberts: I’d like you to, it would be great if you could summarize the nature of that conflict because I think it’s subtle. It’s not that they work for the industry. It’s not that they get our check every month–although sometimes they do. But, it’s a whole wide range of stuff.
As a patient, I always find it interesting: There are two parts of being a patient; and thank God I haven’t had cancer, but my father is on his fourth. So, I know a little bit about it personally. As a patient myself, and you notice that this is just the most trivial examples, you notice that your doctor is writing up your prescription with a pen that has the name of a drug on it, and you think ‘Well, that’s a little weird.’ And then they’ve got all these free samples sometimes they give you and it’s like, ‘Oh, well, that’s nice. Oh, that’s wonderful. I don’t have to pay anything. I just get to it try to start out.’
So, those are trivial. Talk about the range of stuff that a doctor–and again, this is not your average, say, internist in your HMO [Health Maintenance Organization]: we’re talking about the leading researchers in the field at the top research institutions. What are some of the benefits they get from pharmaceutical companies, financially and otherwise?
Vinay Prasad: That’s a great question. So, I guess just one point about the ‘trivial’ thing. I think you’re right: I actually do think getting pens, the occasional dinner, I do think that those are trivial sums of money that are being passed out. Although, I will acknowledge that there’s a large literature that shows that even those trivial sums of money have been linked to prescribing patterns, brand-name prescribing for certain classes of medications and things like that. So, although trivial, the industry that’s funding that is smart, that they’re getting a little bit of return on investment, I think.
But, what concerns me far more is this latter category, which is: How much revenue and professional benefits are going to the key leaders in a field, who happen to also be cheerleading for lower standards of evidence and costly marginal products? Some of the ways in which we see that are: One, consulting payments. It is not unusual, and we document in the book, for people to be making $100-, $200-, $300,000 a year in personal financial payments from the industry. Maybe it’s $50-, $60-, $70,000, maybe it’s less, but there’s some people on the higher end who are making, you know, double the average household income in personal reimbursement from either drug talks or continuing medical education talks or that sort of thing, or consulting for the companies. So, that’s the personal pocketbook.
There are also huge amounts of money that get passed from companies to universities to conduct research. And a lot of that is necessary. That’s the only way you’re going to get clinical trials to go. But, we cannot discount the fact that many of this funding has significant slush on the top–that the actual cost of doing the research may be much less than what the institution is collecting from the company. And that leftover money often can get recycled in institutions, so that leaders who run certain groups that are very prominent, they may build up war chests of tens of millions of dollars of funding, which can fuel their laboratories, lead to them hiring staff, have luxurious business class travel when they go places, have a slew of assistants. It makes life more comfortable for the academic.
And then the final thing is: The companies have access to incredible statisticians and writers, and by working with the companies and collaborating so closely, researchers have many publications, some of which may be sort of gift-authored–not really authored by those researchers, but yet they’re getting the credit. These are the kind of ways in which academics benefit greatly from working with drug companies, I think.
Russ Roberts: Just got to have a little footnote, and we’ll come back to this, but: this idea that they have people writing their papers for them, I didn’t know about this. Explain what that is. That’s nuts.
Vinay Prasad: Well, people who listen to my podcast, Plenary Session, will know that this is something I love to beat on, which is: medical writers are ubiquitous; And in medicine, an author who is the first author of a New England Journal [JAMA] paper–which is sort of a career achievement, like publishing in one of the best journals in economics–that person may not have written much of the paper, that the paper is drafted by a corporate funded medical writer. Medical writers are people who I think are talented: they’re able to really concisely and clearly explain what happened in trials. Some studies even show that they’re more effective at communicating sort of core elements. But, I like to point out on my podcast, sentences that are written that are often ludicrous, that are spun, that are hype. And to me, those sentences can only be written by medical writers. So, I have sort of like a running list on my show.
But, it’s so different than–I did an undergraduate and one of the things I studied a lot was philosophy–it would be ludicrous for a philosophy professor to have a philosophy writer, or an economist to have somebody draft your articles for you. Yet in medicine, that’s considered to be okay, which is something that troubles me just from an ethical standpoint.
Russ Roberts: As you point out, and I think–economists point it out all the time, and I think it’s important–that many of these people are not nefarious. They don’t see themselves in a sinister light the way you and I see this behavior. They consider it that they’re doing God’s work. They’re trying to help people–and of course, along the way, they take some money, but ‘What’s the big deal? This is what I believe in anyway?’
And I think it’s a huge problem in general in life, that you fool yourself into thinking you’re an objective observer when you may not be. But as you argue, and as economists argue all the time, these have subtle influences on your behavior, whether you’re aware of them or not.
Vinay Prasad: I wholeheartedly agree. I believe that the academics who participate in these relationships, I believe that they don’t see them as problematic, and I actually believe that they’re good people. I know these people. They’re good people. And throughout the whole cancer system, there are good people. The beauty of, I think, policy, incentives, and economics is that people follow incentives, even good people. We all are good to rationalize why we ought to be pursuing our own interests. We all believe we’re ethical. And yet the net result may be something that is not in society’s best interest and that really does require reform.
And, I do think you get no traction by blaming individuals and asking them to resist incentives. That’s not the way to do it. You need to change the incentive structure so that you’re incentivized to do the right thing.
Russ Roberts: Well said. Wery reminiscent of Milton Friedman’s point that the goal of good politics, if we want good policies, we don’t want to have a system that requires good people to do the right thing. We want to have a system that encourages bad people to do the right thing.
Russ Roberts: Because we’re not going to reliably find good people all the time, and those incentives will work on them, even if they are good people.
Russ Roberts: There’s a–in Jewish law, it says a judge doesn’t take a bribe. And I think the idea of a judge taking a bribe, which I think you reference something like that your book, it’s despicable. We wouldn’t say, ‘Oh, well, it’s only a small amount. He probably won’t use that in determining his verdict,’ if one of the parties to the case is bribing the judge. No. It’s unacceptable. It’s immoral. It is unethical.
So, I think there’s an incredible problem that’s happened in all kinds of economic life, and I don’t want to pretend that economists don’t have a similar problem. I work for a think tank, which has an agenda. I have lots of liberty in that think tank. But I am, I assume, under some influence from that. I’m not a freelancer; It makes some kind of difference and you should take everything I say, of course, with a grain of salt.
And yet doctors, we’d like to think, ‘Well, they’re pure humanitarians.’ I think it reminds me–I recently interviewed, I think it’s probably going to air before this, our conversation, Vinay, so, I think it’s probably already out there. I interviewed Yuval Levin about his book, A Time to Build, and he talks about the loss of trust in institutions. And one way to think about that loss of trust is that people in positions of what used to be called authority, in the professions and the media and universities, politics–they had a role to play. And that role was affected by what the norms of the institutions they were embedded in suggested. And in the case of medicine, the idea that we trust doctors, because we assume they’re only looking out for our best interest; and when they’re not, it’s so destructive.
And at one point in your book, you talk about how important it is to find a doctor you can trust. That’s a tough question to figure out a doctor you can trust.
I’ve used this example before. My mom had a heart procedure done and in advance, I think it before she was having a done, she’s in her cardiologist’s office and she’s, ‘Oh, I can’t talk for a little bit. I’ve got to get my EKG done.’ I said, ‘Mom, didn’t you have that done two days ago?’ ‘Yeah, yeah; but they always do it when I come in.’ It’s like, ‘Yeah, well, they would.’
Vinay Prasad: Yeah; they do it before anything–
Russ Roberts: You give examples in the book–which shocked me–of the ability of doctors to get reimbursed for procedures that now are in their office rather than outside their office, under Medicare. I googled around and found frightening, depressing stories.
This is not fraud. These are people who are doing the things they claim. But since, ‘No, the patient–it’s probably better to have the procedure than not; better do the diagnostic tool than not.’ People are doing way too many of these; and they have a financial stake in it, and the patient never thinks about that. So, trust is constantly being eroded. What are your thoughts on that in terms of this conflict of interest in the role of eroding trust?
Vinay Prasad: Yeah. So I guess I would say, I mean, I share your feelings. I view it as somewhat of a tragedy because I am a physician, and I believe it is a noble profession; and it’s meant something for thousands of years. And survey after survey consistently shows physicians are still, although slightly diminished than prior surveys, we’re still on the top of trusted professions. And I want to keep us there.
But, I think these kinds of activities, incentives, relationships, behaviors that are well documented, they show us: One, that physicians are still human beings like everyone else, which I think comes as a surprise to some people but, you know, physicians are human beings. They follow incentives and they rationalize why they’re doing what they’re doing.
Two, I think it really is a call to arms for us to consider reforming some of these things. People sometimes ask me, I do a lot of talk on conflict of interest, and it’s two chapters of this book. People ask me, like, ‘Would you ban it? Would you come up with these harsh punishments for conflict of interest?’ I actually wouldn’t ban it. I would incentivize people not to have it.
I think, in 2020, the reality is, you will have a more successful career if you engage in these financial ties to pharmaceutical industry.
I think we need to create a system where you can have a more successful career if you don’t.
And that might mean that there’s some opportunities in academic medicine that exist only for non-conflicted people. Such as one would be to serve on one of these guidelines that decides recommended off-label use. Perhaps that should be restricted to non-conflicted physicians. Perhaps the writing of editorials and review articles should be restricted in that way. And these would both be sort of badges or coins that are only given to people who avoid conflict; and I think we have to incentivize people to avoid it as well. That’s the real solution.
Russ Roberts: And of course, the problem with that is that, as I talked with Yuval Levin about, the institutions themselves are made up of human beings. The people who lead those institutions tend to suffer from groupthink. They benefit from the system themselves. The idea of imposing those kind of costs to incentivize better behavior is really hard for those people because they’re kind of part of the system too.
Vinay Prasad: Yeah. And in many cases, they are the ones who are benefiting the most from the current lax, conflict-of-interest, policies.
One thing you said stuck in my mind, which was the courtroom analogy. And, you know, in the book, in a couple of the chapters, I talk about something that is a lot like a courtroom, which is the Drug Advisory Committee meeting of the U.S. Food and Drug Administration. They don’t have it all the time. But, when a cancer drug is coming to market where the risk-benefit profile is truly uncertain–yeah, it has some potential upside, but yeah, there’s a lot of concerning downside–we have a Drug Advisory Committee meeting.
We have expert academic oncologists who serve as jurors or panelists. We have the U.S. Food and Drug Administration who gives an opening statement of why the drug should be considered but also have these serious caveats. We have the industry who comes and gives, you know, the defense: they say why the drug should be approved. The industry often brings a witness, which is an expert who’s typically heavily conflicted as we show in our Mayo Clinic proceedings paper. And then there’s a public audience that gets to ask questions.
And it’s a lot like a courtroom. Both sides have their say. There are people who vote.
But the difference between a courtroom is the money. And in the book I trace that every single person, every single entity that is speaking, has heavy financial ties to the pharmaceutical industry. Even the reviewers at the FDA–which is the one thing I’ll mention now–although by law they’re prohibited from current financial ties to the industry, which is reasonable and good, 60% of them go on to work for the industry when they leave the industry. And that’s the so called revolving door politics that has been criticized in many domains.
But, I think that that is concerning because if I knew there’s a 60% chance that I’m going to work at the University of Pittsburgh, I’m going to take it easy on the University of Pittsburgh when I see their actions. And I think you might see that a little bit in drug regulation.
Russ Roberts: Let’s talk about the FDA [Food and Drug Administration]. It’s interesting for me, as a older economist, because I’ve seen a lot of ups and downs in the FDA’s reputation and how economists look at it.
In the early days of this conversation, Sam Peltzman wrote a provocative piece that suggested the FDA was killing a lot of people, because they took a long time to approve drugs that could save lives. It’s a very tedious bureaucratic process. It’s very time consuming. And in response to that, the FDA and other political pressures, the FDA has things like accelerated approval, and there are people allowed to take drugs as part of trials if they’re near death.
So, there’s been some improvement in that. The irony is, is I think we’ve, and it’s hard for me to say this as a former TA [Teaching Assistant] for Sam Peltzman, but I feel we’ve gone in the other direction as well. The FDA approves almost everything, these things that have very marginal benefits. And I think their response would be, ‘Well, it’s not our job. Our job isn’t to decide whether things are worthwhile. Our job is just to figure out whether it’s works at all. Whether it’s harmful. How harmful. It just has to be safe and efficacious.’
The problem with that, of course, is that they’re embedded in a system where their stamp of approval means that a pharmaceutical company gets to put their hand into my pocket as a taxpayer.
Vinay Prasad: Exactly. Right.
Russ Roberts: So, now, so one of the challenge is then again–it’s an interlocking system. You don’t really want the FDA to go rogue and decide whatever they want. But, what might the FDA do differently? How might it be restructured? You have a number of suggestions in the book that would at least, given the current system, make them a better participant.
[More to come, 44:11]