Sam (the Sham) Waksal Gets a Really Bad Idea

I had to read something twice yesterday to convince myself that someone didn't spike my Cap'n Crunch with LSD. Turns out they didn't. Which is for the most part good, except that I'm still having trouble explaining what I saw.

Sam Waksal, the founder of ImClone, probably best remembered for the insider trading scandal of 2002, yesterday published an opinion piece in The New York Times, entitled "Pay Only for Drugs That Help You," in which he suggested an "interesting" way of making drug companies more innovative.

While his idea certainly gets high marks for creativity and novelty, it also ranks near the top of the "You Must Be Kidding Me" scale.

Citing the $2.6 trillion that the US spends on health care with little to show for it (which I don't buy at all) Waksal proposes that individuals and insurance companies should only be held responsible for paying for drugs that "work" for them. Waksal calls this a "pay-for-response model."

He cites as an examples cancer drugs, which would have to meet criteria established by the FDA for any given patient, or the company would not be paid for the drug. He also applies this standard to new drugs for hepatitis C, which would have to cure the patient for the companies to be paid.

While the concept behind this idea might be intruiging to some, to me it is simply insane. Here are a few reasons why.

First, response to cancer therapy is not a simple measurement. It involves multiple factors, including tumor growth, or shrinkage, increased survival time, increased time without disease progression (these two are not the same), and ancillary issues, such as pain relief, weight gain and time in the hospital. Good luck trying to come up with a set of standards at all, and even better good luck trying to apply them to individual patients.

If a tumor shrinks by 30% instead of a theoretically required 35%, is there really a difference? What do you do then? Yet, some numbers will need to be used to make this call. What will you do if the tumor grows, but the patient survives a few months longer than expected. One could spend hours arguing about whether the response of one patient meets criteria to determine if something "works." Now imagine trying to do this on a national scale. Nightmare.

And if Waksal thinks that this will spur innovation by drug companies, he couldn't be more wrong. Things are bad enough right now. It is impossible to determine how well a drug really works until it is marketed and widely taken. But if you add this subjective measurement to the mix why on earth would a company spend $1.3 billion and 15 years to get something approved, and still not have the slightest idea if they'll get compensated for their efforts.

No- this would not spur innovation. It would spur the end of drug discovery entirely.

And why apply this concept solely to drugs? If a neurosurgeon removes a herniated disk from my neck and I still experience some pain later on, should he be paid? If my investment adviser fails to meet my expectations for my portfolio, do I get me fees back? If I go to a lousy Broadway show or the Yankees lose, do I get my money back?

Aside from being medically counterproductive, this concept is illogical at its roots. There are no guarantees in life, especially in the medical world. You pays your money, you takes your chances.