Drugs, Generics, Puts, Iraq

DRUGS

Walter Kirn, guest-blogging for Andrew Sullivan, nails it:

SURE I INHALED. This morning on C-SPAN a caller asked me, after I’d told my seeing-Ted-Kennedy-soused tale, if it bothered me that George W. did cocaine once, or has been alleged to, or whatever. And I said it did, to the caller’s apparent surprise. It also bothers me that Al Gore could admit to marijuana use the way he did while running for president. My problem has nothing to do with the drugs themselves, though, or the use of them, but by the hypocrisy. How come candidates get to admit to crimes that, when they’re elected, they put others in jail for but have not been punished for themselves? The idea of guys who’ve slipped the noose, and are willing to publicly admit it, putting others in the noose — by the thousands and thousands — turns my stomach. To my mind, there’s no more vivid demonstration that the drug laws are a cruel farce.

The next time a presidential candidate makes his ritual drug confession, I think they should be given a choice: serve out the prison term or pay the fine that applied when they offended or recuse themselves and their administration from enforcing the same laws. Better yet, let them commit to changing the laws that they were fortunate enough not to have been caught breaking. Fair? I think so.

GENERIC DRUGS

So I’m brushing my teeth listening to WCBS and hear an ad from the Food and Drug Administration touting generics and urging us to visit the FDA website and learn more. E.g.:

A generic drug is identical, or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price. According to the Congressional Budget Office, generic drugs save consumers an estimated $8 to $10 billion a year at retail pharmacies. Even more billions are saved when hospitals use generics.

Which brings us, of course, to . . .

NTMD

The stock slipped to $19.06 Friday, giving it a market cap of ‘only’ $590 million.

Big-name full-service brokerage firms still like it. For example, it is recommended by UBS Securities, whose research department issued an assessment Thursday with a target price of $28. In part:

We are beginning daily tracking of BiDil IMS prescriptions: While we recognize the shortfalls of daily prescription monitoring, we believe this research may offer some visibility into BiDil’s initial uptake. That said, NTMD expects to distribute 350,000 samples and 20,000 vouchers for BiDil, which we believe may cloud early IMS data. We believe a more accurate picture of BiDil’s prescription run-rate could develop in late 3Q or early 4Q.

Current 7-day rolling TRx and NRx Averages: As of 8/15, the 7-day rolling averages for BiDil total and new prescriptions (TRx/NRx) are 16.7 and 15.9, respectively. Assuming 180 pills per TRx and $1.80 per pill, this equates to an annual sales run-rate of $1.98 MM. BiDil was launched on 7/1.

So six weeks after launch, doctors nationwide are prescribing BiDil for an average of about 16 new patients a day. (Not 16 new patients per doctor, mind you, which would be staggeringly good – 16 new patients for the whole country.)

What we don’t know is how many of those 16 prescriptions are going to low-income, uninsured patients, to whom Nitromed has promised the drug free; nor how many may ultimately be switched by insurers from BiDil to its generic equivalent.

The stock’s proponents are unconcerned about the generic alternative for three reasons:

First, they note rightly that people are more likely to ‘comply’ with their doctors’ orders if they have to take only one pill rather than two. And because we are talking about a potentially fatal disease like congestive heart failure, where it’s important to have the best possible compliance, they believe money will be no object.

But I read the other day that General Motors is the nation’s largest health care provider, covering 1.1 million employees and retirees – and that GM is in rough financial shape largely because of the cost of health care. Are they – to take this one example – going to say, ‘Sure, we’ll cover the $2,000 a year combo pill instead of the $300 a year generic alternative?’ Or might they say, ‘Sorry. Times are tough. You need to take two pills instead of one.’

I don’t profess to know, but I think it’s a fair question.

Second, bulls point out that only one of the two generics is currently available in exactly the same dosage as contained in the combo pill. For the other, your doctor might either have to settle for a slightly higher or lower dosage, or tell you something like, ‘take a whole one in the morning and evening, but at mid-day, take just half.’

But might the generic drug manufacturers not simply start offering this drug in the same dosage as BiDil?

I don’t profess to know, but I think it, too, is a fair question.

Finally, they believe that the company’s patent will prevent people from being switched from BiDil to the generic alternative.

I know almost as little about law as I do about medicine, but my guess is that this may be a stretch.

Yes, the patent might hold up against a generic drug manufacturer that itself started combining these two pills into one. I can imagine how NTMD’s patent could deter that.

But it’s hard for me to see that doctors will have any practical liability for patent infringement if they choose to prescribe the combo. Or that health insurers will balk at substituting perfectly legal generics that are already on the market and have been widely prescribed in combination for quite a while now.

UBS seems to assume there is zero risk of widespread generic substitution. All 16 new patients a day will be paying full price.

And maybe they will. And maybe there will one day be enough patients on BiDil for the company to break even – or make a profit sufficient to justify the $590 million market cap. But I’m holding on to my puts.

AND IT’S ONE, TWO, THREE, WHAT ARE WE FIGHTING FOR?

It seems women and others may be worse off under the new Iraqi Constitution than they were under Saddam. We appear to be creating a fundamentalist Islamic state. Doug Ireland writes:

If the Bush administration brokered a deal in Occupied Iraq to enshrine Islamic law as the guiding principle of the new Iraqi Constitution, you’d think it would be headline news in the U.S. media, wouldn’t you? Well, that’s what has happened — yet you can search the Sunday papers in vain to find this sell-out to the Islamists clearly portrayed — or, in some cases, even mentioned. . . .

Tomorrow: A Great New TV Gadget