Economics of COX-2 Inhibitors

Insurance companies have been restricting access to COX-2 inhibiting drugs even before any studies were released indicating long-term cardiovascular effects from taking such medications. According to Kaiser Permanente, Group Health and the U.S. Department of Veterans Affairs, such restrictions were because there was no proof that they were any easier on gastrointestinal system than the older, less expensive drugs used in the past.

A study of clinical useage patterns by Express Scripts, a pharmacy benefits managing company, found that patients taking these COX-2 inhibitors were more likely to also be taking a gastroprotective drug along with the painkiller. That means there was no offsetting savings justifying the higher costs of Vioxx®. At the same time Merck was saying that taking COX-2 inhibiting medication reduced the need to take gastroprotective drugs.

Merck continued heavy advertising of Vioxx®, putting pressure on doctors to prescribe it to their patients and adding counterpressure on the insurers to cover the costs. The cost of these medications can be up to $4 per pill, at least 100 times more than the over-the-counter alternatives. Based on the Express Scripts study, it’s not clear whether having to combine high-priced Vioxx® with another gastroprotective drug is any more beneficial than generic or lower-cost over-the-counter alternatives.

Tom McKillop, CEO of Merck & Co. competitor AstraZeneca, has said that the use of COX-2 inhibitors could be a source of further growth for it’s gastroprotective drug Nexium®. Also, TAP Pharmaceuticals has received clearance to sell it’s gastroprotective drug Prevacid® in the same blister pack with it’s COX-2 inhibitor Naproxen®. Those gastroprotective drugs can also run as much as $4 per pill.

Given those costs, it is understandable why, according to Deutsche Bank analyst Barbara Ryan, "Merck & Co. could pay out $2 billion a year for the next 10 years and still be able to pay its dividend."

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