This is part 2 in a series; read the first part, “Discarded Drugs: Infrastructure Bill Leaves Cancer Patients by the Wayside.”
Five years ago, a study published in a medical journal alleged that drug companies were systematically overcharging for some of the world’s most expensive medicines, including drugs for cancer.
The headline-grabbing study said manufacturers were packaging intravenous medicines in vials containing much more medicine than the average patient would need — and profiting from the excess. According to the study, patients, the federal Medicare program, and other health plans were paying billions of dollars for medicine that got thrown away.
One potential solution, the study said, was to require drug makers to refund the cost of the amounts that went to waste.
Sign up to stay informed!
Find out how you can get involved and stay up to date with our work.
Congress, concerned, asked for a second opinion. It tasked the National Academies of Sciences, Engineering, and Medicine, a scholarly organization chartered and funded mostly by the government, to study the issue.
This year, the National Academies delivered its advice, and the result must have been music to the ears of drug makers. In a February report, a committee convened by the National Academies concluded that it would be a mistake for the government to try to recoup the allegedly wasted spending.
What’s more, the report advised the government to stop tracking the waste.
The report included a wealth of biographical information about committee members, but on one subject it was oddly and strikingly silent.
It said almost nothing about their connections to the pharmaceutical industry.
At least seven of the 14 committee members had past or current financial ties to drug companies that went unmentioned in the report, a Project On Government Oversight (POGO) investigation found.
For example, committee members had served on drug company boards of directors, consulted for drug companies, and performed research funded by drug companies.
While he was serving on the committee, one of the seven, Dr. Anupam Jena, was also serving as an expert witness for Merck in a lawsuit. At a rate of $875 per hour, he provided research and testimony as part of Merck’s defense. The company was accused of illegally delaying competition that would drive down the price of a drug.
Beyond the seven committee members with unmentioned connections to industry, two other committee members had what the report called “Unavoidable Conflicts of Interest.” The report said the National Academies appointed those two to the committee despite their conflicts because they provided needed expertise. One of them was employed by a pharmaceutical company while serving on the committee.
Further, the committee appears to have been influenced by a Harvard professor who spoke at one of its public meetings. The report drew extensively from the professor’s presentation. But the report didn’t mention that the professor had direct and indirect connections to pharmaceutical companies.
He chairs a Harvard program on healthcare policy funded in part by drug companies.
In a statement for this story, a National Academies spokesperson defended the committee’s composition.
“We believe the committee had the appropriate balance of expertise and perspectives necessary to meet its charge,” said William Kearney, executive director of the organization’s office of news and public information.
Kearney did not explain why the National Academies left readers in the dark about members’ connections to drug companies.
A Vast Web
The pharmaceutical industry has a vast web of financial connections to people in positions to influence public policy on prescription drugs — for instance, lawmakers, regulators, and groups that claim to represent patients.
As POGO’s reporting illustrates, when policymakers weigh issues that involve the industry’s fortunes, that web is often lurking in the background.
Today, Congress is engaged in a battle over whether Medicare, a government health insurance program, should be allowed to negotiate with pharmaceutical companies over drug prices, a proposal the industry fiercely opposes. The battle shows the industry’s political power.
But the story of the National Academies reveals something subtler and more pervasive. In the world of medicine, many people regarded as independent policy experts have careers entwined with industry.
This article expands on a recent story by Kaiser Health News.
In August, while POGO’s investigation was in progress, Kaiser Health News reported that, since 2015, the National Academies itself has received at least $10 million in contributions from major drug companies. Those included companies potentially affected by the National Academies’ report on discarded drugs. Citing information on donors listed in the National Academies’ annual treasurer reports, Kaiser noted that the contributions were not disclosed in the February report.
Kaiser also described industry connections of two members of the National Academies committee: Dr. Anupam Jena and Dr. Kavita Patel.
POGO found that the committee’s relationships with the pharmaceutical industry were more extensive than Kaiser reported.
For example, POGO’s reporting sheds light on several additional committee members, on the Harvard professor who addressed the committee, on a venture capital firm where Patel is a partner, on Jena’s association with two consulting firms that were serving pharmaceutical clients, and on his work as an expert witness for drug companies.
The National Academies has taken a narrow view of what could pose a conflict of interest.
The somewhat fuzzy policy it had in place when the committee on discarded drugs issued its report appeared to give the organization flexibility to appoint committee members with the kinds of relationships POGO found.
For instance, the policy said serving as an expert witness in litigation might pose a conflict of interest — if the litigation was directly related to the subject the committee was studying. Similarly, the policy said accepting research funding from an interested party would pose a conflict of interest — if the research itself was directly related to the subject the committee was studying and the funder controlled the research.
As far as the National Academies was concerned, receiving money from a party with a stake in the committee’s work was not necessarily a conflict in and of itself.
Moreover, the policy said only current interests could be considered conflicts, dismissing financial relationships that end only months, weeks, or days before a committee goes to work.
Still, taken literally, the policy gave the National Academies grounds to rule a variety of connections out of bounds. It said, in essence, that research funding and consulting could pose a conflict if those relationships could be affected by the outcome of the committee’s work.
If committee members bit the hands that fed them — say, drug companies — is it hard to imagine that those companies might bite back? Is it hard to imagine they might find other consultants to hire and other research to sponsor?
On September 7, after Kaiser published its story, the National Academies changed its policy. At first glance, the new policy might appear to promise much greater disclosure.
However, a close reading of the new policy suggests that, in the future as in the past, many industry relationships of people working on National Academies reports could go undisclosed.
The National Academies and Discarded Drugs
The National Academies describes itself as independent, objective, and indispensable.
The National Academies “provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions,” the organization’s website says.
“The National Academies’ service to government has become so essential that Congress and the White House have issued legislation and executive orders over the years that reaffirm its unique role,” the website says.
In 2020, the organization received $190.5 million from contracts with the federal government.
It also received contributions from corporations in an array of industries — such as ExxonMobil, Google, Lockheed Martin, and Procter & Gamble.
Major pharmaceutical donors included Johnson & Johnson, Eli Lilly, Merck, Novartis, and Sanofi-Aventis, each of which gave between $100,000 and $499,999.
The drugs at issue are distributed in vials that are each intended to deliver a single dose. The amount of medicine administered to the patient is typically based on the patient’s body size. What’s left over from each vial is generally considered unsafe to save or use on another patient and is therefore thrown away.
Drug makers routinely fill single-dose vials with more medicine than many patients need, researchers at New York’s Memorial Sloan Kettering Cancer Center and the University of Chicago wrote in the 2016 study that focused attention on the issue.
The drugs can cost thousands of dollars per vial and tens of thousands of dollars for a course of treatment.
Patients on Medicare can be billed for up to 20% of the cost.
Members of Congress have accused drug companies of using oversized vials to enrich themselves at public expense.
“Patients in America should not face higher drug costs because these Pharma Fleecers choose to sell their expensive cancer drugs in excessively large drug vials,” Senator Dick Durbin (D-IL) said in a 2019 news release.
“What makes this even more appalling is that pharmaceutical industry titans actually sell the same drug in smaller containers in other countries, but not in the United States. Here, we are forced to buy the largest container, and throw away the difference,” Durbin said.
POGO asked organizations that represent pharmaceutical and biotech companies, PhRMA and BIO, to address that criticism but received no response.
A spokesperson for one such company, Takeda, said that, in the United States, for a drug that Durbin used as an illustration, the company “partnered with the FDA” to choose the vial size. The choice ensured “that one vial … will provide an adequate amount of the drug for a patient of almost any size,” Takeda’s Sara Noonan said.
A spokesperson for another company, Merck, told POGO that changing vial size can take years.
“Changing the vial size requires manufacturing changes, stability testing, and regulatory approval,” Merck’s John Cummins said.
Durbin co-sponsored a bill that would enable Medicare to recoup from drug makers money spent on the discarded medicine.
While the bill idled, the National Academies went to work.
Preparations unfolded in 2019. One committee member recalled being contacted by the National Academies in November 2019 and, after submitting confidential disclosures, being formally invited to serve on the committee in December 2019.
The committee met for the first time on January 30, 2020.
The committee members included Dr. Gary Lyman, a professor at the University of Washington School of Medicine and a researcher at the Fred Hutchinson Cancer Research Center. In a biographical profile, the report notes his past and current associations with a long list of institutions and organizations.
The report does not mention that, during 2020, while the committee was working on the report, Lyman received thousands of dollars of consulting fees from E.R. Squibb & Sons, Sandoz, Jazz Pharmaceuticals, and Merck, which have all marketed drugs that fall within the scope of the committee’s report. It does not mention that, during 2020, he received research support from Amgen, another company that markets medicine in single-dose vials. It does not mention that, during 2020, Amgen also provided funding to the Fred Hutchinson Cancer Research Center for research Lyman was conducting.
That information can be found in the federal Open Payments database, which was created in part to shine a light on financial relationships between doctors and pharmaceutical companies. According to Open Payments, the payments described above were among 151 industry payments associated with Lyman from 2014 through 2020 totaling about $3.4 million.
Other committee members included:
Dr. Alastair Wood. The report lists positions Wood held at Vanderbilt University, among others. But it does not mention that, more recently, Wood spent about a dozen years as a partner at Symphony Capital LLC, a private equity firm “dedicated to investments in the clinical development of novel biopharmaceutical products,” as described in a 2013 news release. Nor does the report mention that Wood has served as a director of and consultant to pharmaceutical companies. The National Academies noted the consulting last year in a different context. “He has also periodically consulted for pharmaceutical companies (AMAG, Sanofi, etc.) in the past 12 months,” it said in a 2020 publication. AMAG and Sanofi have marketed drugs in single-use vials.
Ya Chen Tina Shih. Shih is a professor at the University of Texas MD Anderson Cancer Center. A conflict of interest disclosure accompanying a 2020 publication Shih co-authored in the journal Cancer said, “Ya-Chen Tina Shih received personal fees from Pfizer Inc for acting as a paid consultant for a review panel in 2019 and received personal fees from AstraZeneca for serving on an advisory board in 2019 for work performed outside of the current study.” The National Academies report made no such disclosure. Pfizer and AstraZeneca have marketed drugs of the type the National Academies committee was studying.
K. Robin Yabroff. Yabroff was identified as senior scientific director at the American Cancer Society. A 2019 publication Yabroff co-authored in the journal JAMA Oncology included a conflict of interest disclosure saying the American Cancer Society “received a grant from Merck Inc for intramural research outside the submitted work.” The National Academies report made no such disclosure. POGO found that the American Cancer Society has ties to other drug companies. The American Cancer Society’s website lists as “partners” of the organization drug makers Genentech, Novartis, Amgen, Pfizer, and Merck. The organization’s 2019 annual report, the most recent posted on its website, thanks Amgen and Merck, among other companies, for giving more than $1 million.
Dr. Deborah Schrag. Schrag was described as a professor at Harvard Medical School and an official at the Dana-Farber Cancer Institute. She has since been named chair of the Department of Medicine at Memorial Sloan Kettering. A September 2021 paper she co-authored said she received funding from Pfizer for participating in a 2019 symposium. A November 2020 publication she co-authored said she received grants from Pfizer, the American Cancer Society, and the Alliance for Clinical Trials in Oncology, among other sources. The Alliance for Clinical Trials in Oncology acknowledges support from a long list of pharmaceutical companies. The Open Payments database says Schrag received seven payments from Pfizer in 2016 and 2017 totaling just over $15,000. According to Open Payments, those included a consulting fee, an honorarium, food and beverage, and travel and lodging.
The Kaiser Health News story focused exclusively on two other members of the committee, Dr. Kavita Patel and Dr. Anupam Jena. POGO’s reporting adds to Kaiser’s reporting on them.
Dr. Kavita Patel, a veteran of the Obama administration, makes frequent media appearances to comment on medical issues. She is an NBC News contributor, an MSNBC commentator, and a member of the editorial board of the journal Health Affairs. At the front of the National Academies report, she is identified simply as a fellow at the Brookings Institution.
A more expansive profile of Patel toward the end of the report includes what may be the report’s clearest mention of industry connections — other than those of the two committee members for whom the National Academies cited unavoidable conflicts. The report says Patel previously “consulted for biopharmaceutical companies,” and it says she “advises health care technology and services organizations through New Enterprise Associates.”
It does not explain that she is a partner at New Enterprise Associates, a venture capital firm, or that NEA has investments in many biotech and pharmaceutical companies.
According to the Open Payments database, from 2014 through 2019, Patel received 122 payments totaling almost $2.2 million from companies such as Tesaro, E.R. Squibb & Sons, Genentech, AbbVie, Pfizer, and Novartis. (Tesaro, a biopharma company focused on cancer treatments, accounted for 92 of the payments and $2.1 million of the total for that period.)
The report also does not mention that Patel was on the board of Tesaro from 2016 until the company was acquired by GlaxoSmithKline in 2019. Based on the Tesaro stock options, shares, and other equity she had been awarded, she stood to receive almost $1.5 million when the Glaxo deal was completed, a Tesaro regulatory filing cited by Kaiser Health News said.
Nor does the National Academies report mention that Sigilon Therapeutics, a partner of Eli Lilly, appointed Patel to its board in 2020. According to Sigilon’s April 2021 proxy report, during 2020, Sigilon paid her $2,935 in cash and awarded her stock options valued at $368,996.
Kaiser discussed Patel’s relationships with Tesaro and Sigilon, further noting that Patel received a speaking fee in 2015 from Pharmaceutical Research and Manufacturers of America (PhRMA), an industry lobby, of $5,001 to $15,000.
Dr. Anupam Jena is a professor of health care policy at Harvard Medical School and a doctor at Massachusetts General Hospital. This year, he started a podcast through the Freakonomics Radio Network.
The National Academies report mentions three prizes Jena won, but it doesn’t say anything about his industry connections. According to the Open Payments database, from 2014 through 2020, those relationships involved more than $153,000 of general payments, more than $37,000 of research payments, and almost $75,000 of associated research funding. (In Open Payments, associated research funding includes payments made to an institution such as a hospital to support a doctor’s research.)
In all, the payments listed for Jena in the federal database number 177. The companies that made the payments include Celgene, Eli Lilly, Novartis, E.R. Squibb & Sons, Sanofi, Pfizer, Janssen, and Amgen.
According to Open Payments, Jena received consulting fees from Amgen on January 16, 2020, from Eisai on January 16, 2020, and from Otsuka Pharmaceutical Development & Commercialization on March 16, 2020.
Those three companies produce drugs of the type the committee was studying.
Nor does the National Academies’ report say anything about Jena’s work for two consulting firms, Precision Health Economics and Analysis Group.
Both appeared on a May 2020 disclosure form accompanying an article Jena co-authored for BMJ. The form said they paid him consulting fees. It didn’t say who, if anyone, paid the consulting firms for his services.
Precision Health Economics, which is now PRECISIONheor, and Analysis Group did not respond to lists of questions for this story.
Anupam Jena’s Consulting Work
Precision Health Economics
POGO asked Jena and the National Academies for information about his consulting work for Precision Health Economics and Analysis Group.
When they provided none, we took a closer look.
In 2017, a ProPublica article said the firm had “counted at least 25 pharmaceutical and biotech companies and trade groups as clients.” Drawing on the prestige and credibility of distinguished academics, ProPublica said, the firm helped pharmaceutical companies defend drug prices.
In a brochure ProPublica posted, Precision Health Economics boasted of “generating academic publications in the world’s leading research journals.”
According to Open Payments, Amgen paid Jena in 2015 for a study named, “Supporting the Value of Evolocumab.” Jena later co-authored an article with employees of Precision Health Economics concluding that medicines like Amgen’s evolocumab, also known by the brand name Repatha, “would generate net positive social value” for patients in different scenarios as long as the annual price fell below $18,000 or $12,000. The article acknowledged support from Amgen.
In 2018, Jena co-authored a commentary in Health Affairs with two PhRMA employees. Amid concern about the affordability of prescription drugs, the commentary suggested that society was undervaluing drug companies’ innovations. According to a disclosure accompanying the commentary, Jena was a consultant to Precision Health Economics, and PhRMA — the industry group — provided financial support to Precision Health Economics. (Kaiser noted the article but didn’t go into the consulting firm’s role.)
Jena co-authored a 2019 article with employees of Precision Health Economics and drug maker AbbVie. The article said providing treatment for people with chronic hepatitis C could benefit other patients by helping to alleviate the shortage of organs available for transplant. “Financial support for this research was provided by AbbVie to Precision Health Economics,” a disclosure at the bottom of the article said.
AbbVie makes the drug Mavyret for treatment of chronic hepatitis C. According to drugs.com, the list price for an eight-week course of treatment is $26,400.
Then there’s Analysis Group.
That firm provides litigation support for, among others, drug companies. It helps to connect legal teams with expert witnesses, and Jena is one of the experts on its roster.
In October 2020, while the National Academies’ report was in the works, Analysis Group held a webinar apparently intended to introduce Jena to attorneys and showcase his credentials. As the firm’s website put it, Jena “discussed the unique perspective the physician economist can bring to consulting and testifying.”
In July 2020, Jena and an Analysis Group employee co-authored an article arguing that a California law was “improperly subjecting some manufacturers to antitrust rulings.”
And, while the National Academies’ study was unfolding, Jena was helping to defend Merck against claims that it illegally stifled competition.
The case involves Merck’s cholesterol-lowering drug Zetia. Providers of health benefits for police, firefighters, and other workers sued Merck, alleging that the company secretly conspired with another drug maker to delay by years the introduction of generic versions of Zetia.
Blocking competition from generics enabled Merck to sell its brand-name product at inflated prices, likely costing victims of the scheme hundreds of millions of dollars, the lawsuit said. The average retail price of the medicine dropped from $10 per pill when Merck’s brand-name version was the only form available to less than $1 per pill after several generic versions emerged, the lawsuit said.
Jena produced a report for use in the litigation dated February 28, 2020, about a month after the National Academies’ committee held its first meeting. The document was no trifle: It fills 79 pages, not including the table of contents and various appendices.
A copy entered in the court record is marked, “HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY.”
In the report, under the heading “Assignment,” Jena said he was asked by defense counsel to evaluate the market for Zetia.
“I am being compensated for my work in this case at the rate of $875 per hour. In addition, I receive a portion of the fees paid to Analysis Group, Inc. for this work,” Jena wrote.
“Professional staff at Analysis Group, Inc., under my direction, assisted me in preparing this report,” he wrote.
In an appendix to the document, Jena listed other clients for whom he had provided expert testimony: drug makers GSK (GlaxoSmithKline), Teva, Ranbaxy, Momenta, Sandoz, and Genentech, and, in a national case over liability for the opioid epidemic, the pharmacy company Rite Aid.
For Merck, Jena argued that the Merck drug Zetia faced competition from a variety of other treatment options. In other words, even in the absence of a generic version of the drug, doctors and patients had alternatives.
On April 22, 2020, a week before the National Academies committee met for the second time, Jena gave a deposition in the Merck case. It was no trifle, either. The transcript is more than 400 pages.
In August 2020, plaintiffs filed a motion to exclude Jena’s proposed testimony from the case.
“The Court Should Exclude Dr. Jena’s Testimony Because His Methods Are Fundamentally Flawed and Differ from Those in His Non-Litigation Academic Work,” they said in a court filing.
“In short, Dr. Jena admitted that he did not use the same rigor in his litigation work as he does in his work outside of litigation,” they said, characterizing his testimony in the deposition.
In a court filing, Merck disputed that interpretation. “Dr. Jena’s Opinions Are Relevant And Reliable,” the company said.
From 2017 through 2019, according to an analysis of government data posted by Health Affairs, Medicare paid Merck at least $92.7 million for discarded medicine.
The National Academies Ducks Questions
POGO sent the National Academies extensive questions for this story.
Weeks later, the National Academies sent POGO a statement that largely ignored them.
The committee on discarded drugs reached consensus on its findings and recommendations, and the report “underwent our rigorous external peer-review process before it was approved for public release,” Kearney, executive director of the organization’s office of news and public information, said in the statement.
Corporate grants were not used to fund the study, he said.
Kearney noted that the report disclosed that two committee members had “unavoidable conflicts of interest” and were allowed to participate despite them.
“At the time the committee was convened, no additional current financial conflicts of interests were determined among the committee members,” he said.
That wording focused on what the National Academies knew then — as distinct from anything it learned later.
What Committee Members Say
POGO also asked several committee members about their financial connections to drug companies.
Shih said her work for Pfizer took place on July 25, 2019, and her work for AstraZeneca took place on November 16, 2019 — 10 days before she was asked if she was interested in serving on the National Academies committee.
“If I had ongoing relationship [sic] with drug companies or pharmaceutical industry organizations at the time I was contacted to serve on the committee, I think these ongoing relationships would (and should) disqualify me from serving on the committee,” Shih said in an email to POGO.
In an email to POGO, Lyman said he “disclosed all current, relevant relationships to the National Academies during the project at the outset of the study.”
“I will defer to the Academies as to their procedures for such studies and reports,” Lyman said.
Lyman said his research and consulting did not influence any statements he made to the committee or the recommendations the committee made in its report.
(Lyman said that, based on errors by Amgen, the Open Payments database incorrectly described two of the payments Amgen made in 2020 as general payments to him. Those payments went to his institution, he said, and he provided correspondence from Amgen supporting that account. Those payments are separate from the Amgen payments summarized above from Lyman’s profile in Open Payments.)
“None of my research or consulting relates in any way to the topic of the Academy Report,” Lyman said.
Patel told POGO that the National Academies “have an extensive and rigorous process to evaluate conflicts of interest.”
“I fully and transparently participated in this process and provided all of the information requested by them as part of their detailed policies and procedures,” Patel said by email.
“Throughout my participation in the consensus report, I was objective in all of my contributions,” she said.
The National Academies “is the publisher of the report and determines what its reports will include,” she added.
Patel did not answer some of POGO’s questions. For example, what organizations has she advised through New Enterprise Associates? Does she anticipate receiving any future payments from pharmaceutical companies? Does she rule it out?
Reached by phone, Wood referred POGO to the National Academies.
Schrag did not respond to emails.
Yabroff did not respond to an email. A spokesperson for the American Cancer Society, where Yabroff is now listed as scientific vice president, Health Services Research, contacted POGO and said Yabroff’s research has not received any funding from pharmaceutical companies. “She has no conflicts of interest related to that industry,” spokesperson Charaighn Sesock said by email.
Asked how she defined conflicts of interest and whether Yabroff had any by virtue of her position at the American Cancer Society, Sesock did not respond. Nor did Sesock answer questions about the organization’s relationships with drug companies.
POGO asked Jena in August for information about his work for Precision Health Economics and Analysis Group — including whether it was in any way related to clients in the pharmaceutical industry. At the time, he did not answer.
We also asked about payments shown in the Open Payments database and in the May 2020 disclosure form posted by the publication BMJ.
Those from Amgen, Eisai, and Otsuka in 2020 “summed to $1,750 and were made at the beginning of 2020 for work conducted in 2019, all preceding the committee,” Jena said in an email to POGO.
“None of my consulting work has involved the issue of weight-based dosing and waste,” he said.
“Moreover, as you noted in your email, these relationships are readily publicly available through Open Payments and journal disclosures,” Jena added.
However, information POGO subsequently found did not appear in Jena’s Open Payments profile or in the May 2020 medical journal disclosure. For example, Jena’s Open Payments profile does not show work for Merck in 2020, and the May 2020 disclosure form lists Analysis Group but not its client Merck.
His Open Payments profile shows three payments from Merck in 2019 totaling $700. That’s the equivalent of less than one hour of his time at the $875 hourly rate disclosed in his February 2020 expert report.
What’s more, for readers of a National Academies report, including policymakers, searching elsewhere for information about each member of a committee is a poor alternative to finding that information in the report itself.
As a general matter, searching can take a lot of time, and information can be hard to find. Some journal articles are behind subscription walls.
Open Payments relies on information reported by makers of drugs and medical devices. Manufacturers are required to report a variety of payments, but payments to doctors for serving as part of a legal defense are exempt from the reporting requirements.
Open Payments includes information about medical doctors, and, beginning January 2021, other medical professionals. Not all members of the committee on discarded drugs fall within its scope.
In October, POGO asked Jena follow-up questions about the information we gathered on his work for Precision Health Economics and as an expert witness for drug companies.
Jena said his relationship with Precision Health Economics ended years ago.
“I disclosed all financial relationships to the NASEM prior to being appointed to the committee,” Jena said by email, referring to the National Academies by its initials.
“The litigation work is confidential and I’m not at liberty to speak about individual cases,” he said.
Based on Intuition
A closer look at one of the people the committee consulted further illustrates the behind-the-scenes reach of drug industry money.
In its report, the National Academies committee embraced the reasoning of Amitabh Chandra, a professor at Harvard’s schools of business and government who delivered a presentation at an April 2020 committee meeting.
Chandra argued that drug prices depend largely on “payers [sic] willingness to pay for treatment,” as he put it in one of his slides.
Chandra used analogies to make his point. “A gallon of buttermilk sells for $2.84. I only need 1/4 gallon for recipe. So do we have $2.10 of waste?” he asked. “Wrong to value unused buttermilk at $2.10, because I can’t resell unused portion at this price,” he answered in his slide presentation.
The National Academies report includes a box summarizing that and other elements of Chandra’s presentation.
“The price of a drug is typically based not on how much is used but on the willingness to pay for the drug’s therapeutic benefit,” the report concluded.
Despite that analysis, prices for single-dose vials are listed based on the quantity of medicine in the vial, other experts told POGO. They cited references such as drug pricing files posted by the government’s Centers for Medicare & Medicaid Services.
POGO asked Chandra whether the prices charged for vials of medicine vary based on the quantity of medicine in the vial, and whether larger vials are priced higher than smaller vials.
In an email to POGO, Chandra didn’t say. He said his analogies were based on “intuition.”
“I was asked to speak about general economic principles at work when we talk about ‘size-based pricing’ for medicines, so I built intuition from the pricing of milk, airlines, and clothing to illustrate how we think about size-based pricing,” Chandra wrote. “I didn’t talk about size-based pricing of any specific medicine.”
Chandra heads the Healthcare Policy Program at Harvard’s Kennedy School of Government. Though the National Academies report didn’t mention it, that program receives support from the Harvard Healthcare Policy Leadership Council, a Kennedy School spokesperson told POGO. As of August, the council’s webpage listed 11 members, including four drug makers. Three of them — Amgen, Bristol-Myers Squibb, and Pfizer — have marketed drugs in single-dose vials.
Sign up for our weekly newsletter!
Get a roundup of POGO's latest work and announcements. Delivered Saturday mornings.
The council’s members “are primarily philanthropic actors” and do not make decisions about research projects, Kennedy School spokesperson James F. Smith said in an email.
Chandra received a speaking fee in 2019 from drug maker AbbVie, according to an August version of his Kennedy School webpage. AbbVie has marketed drugs dispensed in single-dose vials.
Under the heading “Transparent Engagement,” Chandra’s Kennedy School webpage also said that between 2019 and 2020 he received fees from Leigh Speakers Bureau and served as an affiliate of Analysis Group, the same consulting firm for which Jena has worked.
The transparency of those engagements goes only so far. In response to questions from POGO, Chandra did not say who, if anyone, has paid the speakers bureau or the consulting firm for his services.
For 2021, another speakers bureau showed up in his Kennedy School disclosure: Washington Speakers Bureau. That firm lists Chandra’s speaking fee as “$25k - $40k.”
Kearney, the spokesperson for the National Academies, said the organization’s conflict of interest policy does not apply to people who make presentations to its study committees. Without a variety of perspectives, Kearney wrote, the National Academies would “risk limiting the breadth of scholarship that helps informs our reports.”
That ignores the issue of transparency.
Did the National Academies inquire about the professor’s industry relationships? Are readers of the National Academies’ report entitled to know that information?
Kearney didn’t say.
The National Academies has a history of being called out over conflicts of interest, and it omitted information from the discarded drugs study despite that experience.
The most recent flashpoint came in September. Members of a House oversight committee wrote to the National Academies demanding information about any conflicts of interest involving a committee examining the U.S. organ transplant system. The Washington Post reported that a former transplant surgeon had resigned from that committee after accepting a position with a consulting firm that caters to transplant programs.
Other entanglements predated the report on discarded drugs.
In 2011, the Institute of Medicine, part of the National Academies, published a report titled, “Relieving Pain in America.”
As opioid abuse was becoming a deadly epidemic, and as drug makers were pushing prescription opioids, the report made a case for expanding access to pain relief. “Regulatory, legal, educational, and cultural barriers inhibit the medically appropriate use of opioid analgesics,” the report said.
A 2014 investigation by the Milwaukee Journal Sentinel and MedPage Today found that, within three years of working on the report, nine of the 19 people on the panel that produced it had financial connections to makers of narcotic painkillers.
In 2016, the National Academies published a report on genetically engineered crops. That report concluded that “no differences have been found that implicate a higher risk to human health safety from these GE foods than from their non-GE counterparts.”
Six of the 20 members of the committee that produced the report had at least one financial conflict of interest that was not disclosed in the report, a study later published by PLOS ONE found. In addition, the report did not note that the National Academies received millions of dollars from agricultural biotech companies Monsanto, Dupont, and Dow, the study said.
The National Academies denounced the PLOS study.
“The National Academies of Sciences, Engineering, and Medicine have a stringent, well-defined, and transparent conflict-of-interest policy, with which all members of this study committee complied. It is unfair and disingenuous for the authors of the PLOS article to apply their own perception of conflict of interest to our committee in place of our tested and trusted conflict-of-interest policies,” the National Academies said in a March 2017 statement.
Within a couple of months of issuing that statement, the National Academies announced that it was revising its conflict-of-interest policy, according to news reports. The organization reportedly said it would begin disclosing committee members’ conflicts of interest in its reports.
However, the National Academies’ policy in effect this year when it published the report on discarded drugs was far from a model of transparency.
“The term ‘conflict of interest’ applies only to current interests. [Emphasis in original.] It does not apply to past interests that have expired, no longer exist, and cannot reasonably affect current behavior,” the National Academies said in disclosure forms that committee members were required to complete.
Medical journals commonly take a broader view of potential conflicts of interest. The International Committee of Medical Journal Editors asks authors to disclose three years of relationships.
Even if corporate relationships aren’t current, they can show patterns over time. They can show that a person’s career has been intertwined with industry. If a person has repeatedly consulted for drug makers, served on drug company boards, or performed industry-funded research, that could be a sign they might be interested in doing it again. It could show with whom they identify, and whose favor they might have reason to curry.
Several committee members contacted for this story did not rule out accepting payments from or doing work funded by drug companies in the future.
The National Academies’ definition of conflicts of interest as current interests only would help explain why people with extensive past financial connections to drug makers were allowed to serve on the committee that studied discarded drugs.
The near absence of industry-related career details from the report is another matter.
The New Policy
Now, the National Academies has again revised its policy.
The policy that took effect in September calls for members of advisory committees like the discarded drugs panel to disclose to the National Academies, and for the National Academies to disclose in reports, “relevant relationships” going back five years.
However, the new policy makes certain exceptions for research funding.
It requires disclosure of “research support for the individual.” It’s unclear whether that includes payments to an institution to support an individual’s research.
The policy also makes an exception for “research support that is awarded on the basis of merit without restrictions on the conduct of the research or the publication of the results.” It’s unclear how the National Academies will apply that standard.
We asked the National Academies for an explanation but received none.
The new policy discusses different categories of interests: conflicts that would disqualify someone from serving on a committee that makes public policy recommendations, and interests that require disclosure.
The new policy limits the former to current relationships and current financial interests. It says they include serving as an expert witness. It exempts financial assets, such as stocks or bonds, worth less than $15,000.
Under the new policy, both disqualifying conflicts and relationships requiring disclosure are generally confined to connections with entities that meet a particular description — those whose financial interests “could be directly and predictably affected by the outcome of the committee’s work.”
In contrast, the International Committee of Medical Journal Editors (ICMJE) has historically taken a broader view of financial relationships warranting disclosure.
The ICMJE’s current disclosure form for authors of journal articles defines related relationships and activities as any involving third parties “whose interests may be affected by the content of the manuscript.”
An ICMJE form in use until recently called for even greater disclosure.
“You should disclose interactions with ANY entity that could be considered broadly relevant to the work,” the ICMJE form accompanying the 2020 BMJ article said.
So, if the National Academies had applied its new policy to the committee that studied discarded drugs, what additional information, if any, would it have disclosed about committee members? And would any of them have been ineligible to participate?
We asked. The National Academies didn’t answer.
What the Report Says
The National Academies report on discarded drugs, issued in February, recommended that Congress refrain from trying to recoup money spent on discarded medicine.
The report also recommended that the government scrap a system used to track how much medicine is being discarded.
“Drug developers, health care providers, and payers should focus their efforts on reducing inefficiencies in drug development, delivery, and payment systems that lead to excess costs for both the health care system and for patients rather than on trying to recoup payments associated with the discarded drugs,” the report said.
“Based on the way drugs are priced and paid for in the United States, the committee concluded that when a drug is discarded, there is no money to recoup,” the report said.
The report said that efforts to recoup the money could be futile.
Drug makers “may respond by increasing the price of individual vials so that the profit margins they realize from a particular drug remain approximately the same.”
“In the United States, drug manufacturers set their own prices and can simply adjust their prices to maintain their revenues in response to efforts to lower the expense of using drugs,” the report said.
“If it was systematic policy to say that [the government] now only wants to pay for half of the vial that is used in patients, what do we think that drug companies are going to do? They’re just going to double the price,” Jena said in the webinar.
(Dr. Peter B. Bach, lead author of the 2016 study that quantified the cost of discarded drugs, spotlighted that quote in a July commentary for Health Affairs.)
However, any notion that drug makers can raise their prices at will and without tradeoffs seems to differ from Jena’s analysis in the Merck case.
In its defense, Merck was arguing that the market for its product was competitive. As Merck saw its options, “an increase in [Zetia’s] price would lead to a disproportionately large reduction in market share as patients substituted towards other medications,” Jena wrote.
As Merck summarized in a court filing, Jena showed that “sales of Zetia were sensitive to changes in prices.”
The National Academies’ report seems to have fallen flat where it matters most.
Though Congress commissioned and paid for it, Congress doesn’t seem to be buying it.
The Congressional Budget Office (CBO), which performs economic analysis for lawmakers, apparently disagrees with the argument that drug makers would offset refunds by raising prices.
The CBO estimated last year that a proposal to require drug makers to repay Medicare for discarded amounts would save the government $9 billion over nine years. In August, the CBO estimated that another proposal along those lines would save the government $3.2 billion over nine years.
Days later, the Senate defied the National Academies’ advice. When by a large bipartisan majority it sent the infrastructure bill to the House, it included a refund requirement.
Former POGO intern Zach Watson contributed research for this story.
Disclosure: In May 2020, Arnold Ventures granted POGO $800,000 over 2 years to support strengthening federal inspectors general offices in their oversight of pandemic spending, including by creating a COVID-19 spending tracker.
In December 2017, the Laura and John Arnold donor-advised fund at Fidelity Charitable granted POGO $300,000 over one year to track relief spending after Hurricane Harvey.
In November 2015, the Laura and John Arnold Foundation granted POGO $378,985 over two years to support stronger federal inspectors general processes to better detect and recover improper payments made by government agencies.
On its website, Arnold Ventures says it supports making prescription drugs and other therapies affordable and accessible for patients, employers, and taxpayers. The website explains that Arnold Ventures manages the giving for the various Arnold entities, including the Laura and John Arnold Foundation and the Arnolds’ donor-advised fund. According to a curriculum vitae for Dr. Anupam Jena, the Laura and John Arnold Foundation provided funding for a project on which Jena was co-investigator. In addition, as disclosed in annual financial reports for the National Academies, Arnold Ventures has given money to the National Academies. POGO has received funding from various organizations concerned about conflicts of interest and ethics in government. Information on POGO funders can be found in POGO’s annual reports.