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Three articles in the December issue of Pediatrics provide fascinating and at the same time disturbing reading. Angus et al,1 from Pittsburgh, Pennsylvania, studied the cost-effectiveness of inhaled nitric oxide (iNO) in the treatment of neonatal respiratory failure, and Field et al2 provide a commentary on their article. The third article that caught my attention was "Annual Summary of Vital Statistics—2002,"3 which shows that, in spite of its huge investment in health care, the United States continues to lag behind most of the industrialized world and even some developing countries as far as infant mortality rates.
The study by the Pittsburgh group1 and the Field et al commentary2 are fascinating, because they show that, even in science, it is possible to look at facts from such different vantage points that the realities one perceives are literally "worlds apart." These 2 articles are deeply disturbing also because they document that accepting support from industry sources, as appropriately acknowledged both by Field et al and Angus et al, can so narrow your field of vision that the forest disappears and all you see is a lone tree.
The Pittsburgh group concludes that "from a US societal perspective, iNO has a favorable cost-effectiveness profile...,"1 whereas Field et al conclude that the Pittsburgh study "goes some way to justifying the use of NO at the present price."2 To wit, the cost of the iNO they are talking about is INOmax from INO Therapeutics. I suspect champagne corks were flying at INO Therapeutics' headquarters when these 2 articles appeared. The rest of us, as I shall discuss, may have less reason to be pleased.
Field et al2 provide some critique of "assumptions that are not entirely sound." However, they fail to identify and discuss the crucial statement without which the entire Pittsburgh study would be meaningless: "However, iNO therapy is expensive."1 Yes, indeed. If INOmax were not so outrageously expensive, the entire exercise in number crunching by the Pittsburgh group would have been seen clearly to be unnecessary, and their energies might have been devoted to worthier causes. What both the Pittsburgh group1 and Field et al2 fail to discuss is the fact that NO is really quite cheap. We've been using NO in our hospital for >10 years to treat pulmonary hypertension, and our annual expenditure for NO has been a fraction of a day's costs for INOmax. We have 3 gas titration units for NO, and the cost of acquiring these some years ago was less than 1 week's worth of INOmax. Indeed, NO has been available and in clinical use for more than a decade, manufactured and sold by a number of different companies, and the same is true for the technical equipment used to titrate NO to the required parts per million. The near-miraculous effects of iNO on many infants with persistent pulmonary hypertension of the newborn has been one of the true joys in the life of this neonatologist during the last decade.
So how is it that the Pittsburgh group1 and Field et al2 fail to even mention the fact that the only reason why NO is now so expensive as to pose a reason for the study is corporate greed? There is no evidence that INOmax is in any way superior to NO from any other source or supplier. Therefore, I am also curious as to why the concept of marginal cost is so totally absent from a study of health economics. Marginal cost, of course, is the additional cost incurred in order to achieve additional improvement in therapeutic outcome. Because the therapeutic advantage of INOmax over "ordinary NO" in terms of survival or other outcome criteria is most assuredly nil, the marginal cost of INOmax to treat persistent pulmonary hypertension is astronomical!
We find ourselves in a situation in which 1 corporation has obtained a patent to a therapy that for a number of years was available at moderate cost and from several different suppliers both as far as NO and technical equipment. I understand that the patent has been disputed before courts both in Europe and the United States, but I have no information as to how those cases currently stand. I do not know how the original patent application was approved but would dearly love to see someone with expertise in patent law take a close look at how this process was run and what safeguards, if any, were taken to make sure that the rights of the patients and the public were protected. I take the liberty of suggesting that this might be a suitable undertaking for the American Academy of Pediatrics.
However, let me for the remainder of this discussion assume that the patent for iNO as a therapy for persistent pulmonary hypertension has been obtained as ordained by law and will be sustained by the courts. In my view, the holder of a patent has been issued certain privileges by representatives of the public. When a patent creates a monopoly on a potentially life-saving treatment, it places a heavy responsibility on the patent holder to behave with a certain basic decency and restraint. In my view, if a patent holder behaves greedily and with flagrant disregard for the public good, the public should retain the right to rescind the patent.
Currently, INO Therapeutics as a representative of the patent holder (The General Hospital Corporation) seems to be holding a monopoly control over the use of iNO for the treatment of pulmonary hypertension in many industrialized countries. In my view, which is shared by many colleagues on both sides of the Atlantic with whom I have had the opportunity to discuss this issue, they are abusing the privilege granted to them by the public. They are forcing those who desire to offer this treatment to their sick infants not only to buy their gas by the hour of open valves but indeed to lease an entire package consisting of their titration units, technical maintenance, and personnel teaching. Last year the Norwegian media wrote about INOmax and NO treatment. INO Therapeutics was asked if it would not be possible to sell us the gas by the bottle because we had our own titration units, which our staff were well instructed in how to use and were maintained by our own medical technology division. The answer was that we could buy the gas, but they would have to install their meters and still charge us at the hourly rate as for the full package.
Lest anybody be in doubt as to the calculations that form the basis for the prices charged by INO Therapeutics, I need to mention a visitor that came into my office about 3 years ago. As it turned out, he was doing market research for INO Therapeutics. His questions, to make a long story short, had 1 focal point: What would be our "pain threshold" as far as an hourly rate for iNO? My protestations that his questions were irrelevant because we had no interest in buying NO at an hourly rate apparently found no slot on his questionnaire. There is no doubt in my mind that the main basis for the hourly rate currently charged by INO Therapeutics is whatever the market will bear.
It is therefore extremely unfortunate that the study from the Pittsburgh group1 and the accompanying commentary2 can serve only one purpose: to legitimize the tactics used by INO Therapeutics. I believe that Pediatrics has done its readers a disservice by allowing this study to be published with a commentary that lacked the necessary distance. The fact that both the study group and the main author of the commentary are beholden to the 1 company that stands to benefit from their conclusions should have made alarm bells go off in the editorial offices. Although I do not for a moment believe that the Pittsburgh study group or the authors of the commentary had any intentions of misleading or misrepresenting, it is obvious that they failed to maintain an objective attitude to the subject matter.
Although the NO story concerns a small number of patients and thus will hardly make a blip on the screen as far as US or world health expenditures are concerned, I believe we would be unwise to disregard the possible long-term consequences. In reality, INO Therapeutics has invented a new way to siphon off health dollars. Who's to say that other gases that impact on pulmonary blood flow will not be next to be forced down our throats as an all-or-none package? What about new drugs as a "package deal," with the infusion pump attached and charged by the hour of infusion? I think we would be extremely naive to believe that success for the INO Therapeutics approach will not translate into other attempts both from them and other corporations.
As for the societal perspective, the conclusions of the Pittsburgh study are true only in the narrowest possible perspective of number crunching. In reality, the authors have focussed on their single tree and been oblivious to the indiscriminate logging of the forest around it. The larger societal perspective meets us in the pages of the "Annual Summary of Vital Statistics—2002,"3 in which we are told that the rates for prematurity and low birth weight in the United States continue to climb, the infant mortality rate for the United States may be up in 2002, compared with 2001, and the United States continues to rank poorly in international comparisons of such measures. For US society to expend tens of millions of dollars annually on INOmax (over and above the cost of "conventional" NO) just to fill the coffers of INO Therapeutics and its owners, when the same amount of money could have bought basic healthcare for a large number of children and pregnant women with significantly greater health benefits to society as a whole, makes no sense at all "from a US societal perspective."
REFERENCES
Charles Normand, DPhil, FFPM
Department of Health Economics
London School of Hygiene and Tropical Medicine
London WC1E 7HT, United Kingdom
Diana Elbourne, MSc, PhD
Medical Statistics Unit
London School of Hygiene and Tropical Medicine
London WC1E 7HT, United Kingdom
In Reply.—
We have considerable sympathy with the views expressed by Dr Hansen but are unhappy with his suggestion that our commentary1 reflects any lack of objectivity on our part. While acknowledging the very limited support from commercial sources for 1 of the 3 of us, it is not reasonable to suggest that the focus of our (mainly publicly funded) work is influenced by this support. Indeed, we have already gone into print2 to agree with Pierce et al,3 who expressed anxiety about the high costs of nitric oxide (NO) after the license for term infants was granted. We particularly stressed the need to look at real costs (not just the price from a single company) and to take a broader view of costs, such as those to parents.
In writing our commentary, we took our remit as being to comment on the methods used and the source data for this exercise. We pointed out that the finding of the "favorable" cost-effectiveness profile may not be robust, given the currently limited data on long-term outcomes and costs. We also pointed out that, although the use of charges as a proxy for cost is in line with normal practice, it may introduce biases, because these charges do not always reflect opportunity cost. We also questioned if reduced use of extracorporeal membrane oxygenation is necessarily of benefit to patients and therefore if consequent savings are worthwhile.
In sum, although we have little argument with the methods used by Angus et al,4 we did question the data used and therefore the conclusions drawn. There are, of course, wider questions around the ways patents and licenses are granted and how new health technologies are priced, but we do not think it is possible to do justice to these issues in a short commentary.
Our commentary focused on infants born at or near term. We also are concerned that any extension to the existing license in relation to NO use for these infants to include preterm infants should be based on good evidence, including long-term outcome and cost-effectiveness. Hence, we are currently involved in a publicly funded trial (www.innovo-trial.org.uk) to assess not only the clinical effectiveness of NO for neonates but also its broader cost-effectiveness. We hope to report these results in 2004.
REFERENCES
Walter T. Linde-Zwirble
Health Process Management
Doylestown, PA 18901
In Reply.—
We thank Dr Hansen for his provocative letter. Of the several issues he raises, some are of direct relevance to our article, and we offer these comments in response.
Dr Hansen suggests that "accepting support from industry sources" has narrowed our vision. Although it is true that INO Therapeutics sponsored our study, they had no editorial input and did not explicitly fund this manuscript. The study was executed under a grant from INO Therapeutics, Inc, to the University of Pittsburgh. As part of the financial contract for this grant, INO Therapeutics signed and abided by the University of Pittsburgh Office of Research Publications Agreement, which protects the authors from company interference. We do not minimize the potential for conflict of interest. We have attempted to be forthright in our disclosure of such potential but believe we have felt free to operate in all aspects of this work.
More specifically, Dr Hansen believes we should have appreciated that inhaled nitric oxide (iNO) is quite inexpensive, and the current pricing by INO Therapeutics is therefore inappropriately high. Although it may be true that iNO is obtained and administered inexpensively in Norway, that is not the case in the United States. We are well aware that the current pricing of iNO has raised considerable consternation among clinicians and hospital administrators alike. The reasons for the current pricing are myriad, but 2 factors are crucial. First, the Food and Drug Administration decided to regulate iNO as a pharmaceutical. This makes the administration of "home-grown" systems based on welding gas or other nonpharmaceutical-grade iNO products an illegal activity. Presumably, the Food and Drug Administration was considering patient welfare when making this decision. Second, as noted by Dr Hansen, iNO falls under patent law protection. Under patent law, the patent holders and/or their licensees (INO Therapeutics in this instance) have broad protections regarding their ability to operate unchallenged in the marketplace for a certain period of time.
INO Therapeutics, therefore, is presumably pricing iNO with license fees to the patent holders, the costs of doing business, and shareholder value in mind. Their internal business considerations might include production costs, efficiencies of scale with regard to the volume of gas produced and distributed, recuperation of sunk investment costs, other overheads, drug-development pipeline, customer relationships, and short- and long-term profit and growth goals for the company. Whether their final decision represents "corporate greed" is obviously both relative and speculative. Regardless of current price, we anticipate that, on expiration or successful challenge of the patent, other vendors may offer pharmaceutical-grade iNO. Under such competition, both INO Therapeutics and its competitors will now add each other's position into their price equations, which typically results in a drop in price.
Although many of these factors may seem irrelevant, or even unpalatable, they are the core realities of a health care system that allows the provision of pharmaceuticals to operate as a competitive marketplace with patent protection for new discoveries. As argued by many, including Nobel laureates, although there are drawbacks, competitive marketplaces are likely the most efficient systems for delivery of goods and services over the long term.1
Given the above, our base case modeled the current drug price. To do otherwise would fail to follow best practice guidelines for the conduct of cost-effectiveness analyses.2,3 However, we also considered in sensitivity analyses the consequence of a wide variation in the market price (see Table 3 in our article4), ranging from "free" to double the current price. Because our base-case analysis already suggested that, despite the cost of iNO, overall hospital costs would decrease, modeling a reduced price only increased the savings. In other words, the current price was already under the United States’ willingness-to-pay threshold. Moreover, by modeling drug price as free, we contest that we considered a very inexpensive delivery system.
Dr Hansen also suggests that the larger problem missed in our work is that there are far greater societal concerns and that tolerating the dissemination of a new therapy at an inappropriately high price while failing to address rising prematurity and infant mortality rates is tantamount to social injustice. We agree with this point. In general, efforts focused on the prevention of health problems are more attractive than treatment interventions and, if successful, can reduce health care costs significantly. However, cost-effectiveness analyses inform policy; they do not make policy. Furthermore, although we have obviously incurred the wrath of Dr Hansen, we presume he is not holding us responsible for all US health care and social policy.
In conclusion, we are sensitive to Dr Hansen's concerns. iNO seems to offer great benefit to a select group of sick neonates. Given that NO is a widely available, naturally occurring product, that it now seems only to be available at great expense rankles and feels "wrong." However, the current price is driven by a set of economic and commercial realities. Although we appreciate persisting consternation among clinicians and administrators, these same economic realities may have helped drive the development and dissemination of iNO in the first place, as well as myriad other medical therapeutics. The intent of our analysis was to objectively quantify the costs and consequences of iNO therapy in the current market. Again, although the price may seem excessive, we still conclude that neonates, and the health care system, are better off with iNO, commercial "lumps and all," than without it.
REFERENCES
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