Gleevec was the first drug that targeted a cancer. The way it was priced helped create a mindset.
When I entered medical school, in 1958, aside from nitrogen mustard derivatives, chemotherapy for cancer, was virtually nonexistent. In the subsequent decades a number of drugs that attacked rapidly growing cells, malignant or otherwise, were developed. In the 1960s doctors started using combination of several of these drugs to cure some lymphomas and leukemias. The drugs also commonly cured specific malignancies—like some metastatic testicular cancers and choriocarcinoma.
They were toxic and often caused major side effects, but they worked. When used in people with widespread cancers the medications caused tumors to shrink, and extended some lives.
They were later used to destroy potential metastases. We knew that malignant cells from some of the surgically removed cancers had already seeded parts of the body. The “seeds” were not visible, not detectable; but we could identify the cancers that were at risk, the tumors that would statistically benefit from chemotherapy. Our toxins eradicated some of these microscopic implants.
Then Gleevec (Imatinib), a drug conceived and fully developed over many years in the labs of big Pharma—was introduced, and our approach to fighting malignancies underwent a sea change.
At $26,000 a year (in 2001) Gleevec’s introductory price was deemed “high but fair” by the Chairman and CEO of Novartis. Then its price rose and kept rising.
One of the first drugs that attacked cancer cells and left the rest of the body unharmed, Gleevec was the product of decades of research at the Ciba-Geigy labs in Basel Switzerland. A research team funded by big Pharma spent millions of dollars chasing a dream, a theory, a hypothesis. Alex Matter, a Swiss M.D. advocated looking for a small molecule that would get inside cancer cells and stop them from growing.
“Inspired by the likes of Louis Pasteur and Marie Curie”, Matter was 12 years old when he began dreaming that he would one day be involved in the discovery of important new medicines.” I don’t know if he ever practiced medicine, there’s not much written about his private life, but in 1983 he became a Ciba researcher in Basel Switzerland. At the time he was apparently wondering what happens when the offspring of a normal cell turns out to be cancerous. Could it be that one of its numerous tyrosine kinase enzymes, proteins that “function as an “on” or “off” switches, gets stuck in the “on” position, and causes the cell to grow and grow”?
Each part of the body is made up of cells. Within each of these small units, traffic is directed down various metabolic pathways by enzymes called kinases. These enzymes establish the functions of cells. At the appropriate time they cause them to “grow, shrink, and die.” Malignant tumors are often created when one of the kinases gets stuck in the pro-growth position. The cells don’t die when they are supposed to, and the collection of abnormal cells gets bigger and spreads.
What if we could block the corrupting kinase without harming a cell’s other 90 or so kinases? Could we cure cancer? That was the dream.
Kinases have inlets on their outer surfaces. When these are filled–plugged by a small molecule that “fits,” the cell dies. Locating the bad kinase and plugging it with the appropriate small molecule, is a little like finding a needle in a haystack. But that’s what the Swiss Geigy team lead by Alex Matter and Nick Lydon set out to do. They started with a small molecule that they knew would selectively inactivate one and only one of the 90 or so kinases found in each cell. Repeatedly altering the protein, they creeated new molecules and tested them one by one. A few seemed promising. Gradually they made dozens of blockers, each of which inhibited the activity of one and only one kind of kinase. The project took years and must have been quite costly. Geigy funded the studies “reluctantly;” at the time Matter’s was told to keep investigating other approaches to cancer; the kinase program was supposed to be “very very small…hidden in plain sight. “
In the 1980s Lydon went to Boston in search of a cancer that might be susceptible to one of his kinase inhibitors. He met Bryan Drucker, a physician who was studying chronic myelocytic leukemia. For technical and legal reasons—lawyers for the drug company and the Dana Farber institute “could not find agreeable terms”–it took a few years before Drucker, then in Oregon, was able to obtain and test the kinase inhibitors. When he did, he found a blocker that caused chronic myelocytic leukemia (CML) cells to die.
Most cases of Chronic Myelocytic Leukemia (CML) are caused by a genetic accident. The tips of two chromosomes have “broken off”, switched location, and fused. The resulting “hybrid” gene, called the Philadelphia chromosome, causes the abnormal cells to keep reproducing themselves. The defect had been elucidated and explained a decade earlier by a hematologist named Janet Rowley.
In the absence of a marrow transplant Chronic Myelocytic Leukemia (CML) was usually lethal. If a person had an HLA identical sibling, and if they underwent a stem cell transplant, they subsequently had a 60-80% chance of surviving and being disease free five years out. Without someone else’s’ bone marrow, half of the affected were dead in 3 years; less than one in 5 lasted 10. http://www.bloodjournal.org/content/bloodjournal/82/3/691.full.pdf?sso-checked=true
But now a dream was being realized. A small molecule could selectively inhibit an enzyme and control or cure cancer. Turning the protein into a drug a human could use required proving its safety in animals, then people. Several hundred million dollars needed to be spent before the company could market the medication. And it would only help a few thousand people.
Novartis (the company created by the Ciba-Geigy—Sandoz merger) decided to give the chemical a shot, to see what it did to the cancer in question. It proved to be amazingly effective. Chronic myelocytic Leukemia wasn’t cured but it became a chronic disease, and an entirely new era of research was launched.
The first clinical trial of Imatinib mesylate (Gleevec), took place in 1998. In 1991 the FDA approved the new medication and granted Novartis a 5 year monopoly.
Initially marketed for $26,000/year, its price was defended by the CEO of Novartis as being “high but fair”. It then crept up by 10 to 20% each year.
When it first came out the company knew that CML patients who took a Gleevec pill each day were alive and well three years out. But they worried because most cancers eventually become resistant to therapy. And they were pleasantly surprised. Gleevec and a slightly altered later iteration “changed the natural course of chronic myeloid leukemia (CML). In 2015 a study of people who had taken the drug for 10 years found that 82% of them were alive and progression-free.” Leukemia. 2015 May;29(5):1123-32.
Each year an additional group of people develop CML, and they, too, started taking a pill a day for the rest of their lives. The cohort grew and by 2018 “an estimated 8,430 people in the United States” were living with the diagnosis.
initially (in 2001) costing $2200 a month, $26,400 a year, Gleevec’s annual price increases initially paralleled inflation. In 2005 yearly boosts started exceeding inflation by 5 percent, and In 2009 they took off. Gleevec’s annual cost was “$3,757 a month ($45,000 a year) in 2007,” passed $60,000 in 2010, and exceeded the $100,000 a year mark in 2013. (Carolyn Y. Johnson, Washington Post; March 9, 2016. http://ascopubs.org/doi/full/10.1200/JOP.2016.019737 )
The company, no doubt, spent millions, maybe more than a billion dollars over the years bringing a great drug to market. But even if the initial price reflected their research and development costs, it clearly had little bearing on the subsequent annual increase in the price point. (Jessica Wapner: 2013 The Philadelphia Chromosome)
In 2015 Novartis sold $4.65 billion of the drug.) Between 2001 to 2011, sales of Gleevec world wide totaled $27.8 billion. . Its 2015 price in the U.K. was “$31,867, France paid $28,675 and Russia spent $8,370.” https://www.theguardian.com/business/2015/sep/23/uk-cancer-patients-being-denied-drugs-due-to-inflated-prices-say-experts
In the U.S the 2014 annual list price for Medicare and American insurance companies was close to a $100,000. Medicare is (by law) not allowed to negotiate. Insurers and pharmacy benefit managers can bargain,; they sometimes obtain significant rebates and discounts. However, more than half of a drug’s co-pay, the out-of-pocket money that comes directly from the person who need a medication, “is based on the full list price.” High list price do create a burden for many. https://www.policymed.com/2017/05/new-analysis-shows-out-of-pocket-spending-based-on-list-price.html
India started allowing companies to patent drugs when the country joined the World Trade Organization. That year, 2005, Novartis filed a Gleevec patent. It was challenged. “In order for a patent claim to be valid, it must propose a concept, idea, or item that is useful, novel, and non-obvious.” India accused the company of evergreening,extending the life of the patent by making ever-so-slight adjustments to the compound, altering it just enough to warrant patent extensions without changing the underlying mechanism of the drug.” The courts ruled the patent invalid on technical grounds. Indian judges seem to be more in tune with the needs of their nation’s people than they are with the tricks used by the world’s wealthy to further enrich themselves. https://smallbusiness.findlaw.com/intellectual-property/idea-must-be-useful-novel-or-non-obvious.html
Novartis researchers, looking for a molecule that was as effective as or better than Gleevec, modified the protein and tested some of their creations. One of the new molecules, Niltotinib (Tasigna), did a better job at targeting the kinase in question. It rescued some people whose disease no longer responded to Gleevec. In new patients it more rapidly and effectively reversed the biochemical markers of chronic myelocytic leukemia. It was not better than Gleevec at halting disease progression–but it wasn’t worse. In 2007 the FDA released Tasigna and Novartis started selling it. A few years later a Canadian study showed that 5-6% of people treated with the new medication developed an arterial disease and had a heart attack, stroke, or some other “atherosclerosis-related disease.” And the FDA put a black box warning on the drug insert. https://www.drug-injury.com/druginjurycom/2018/02/tasigna-atherosclerosis-peripheral-arterial-disease-ischemic-heart-cerebrovascular-events-adverse-drug-side-effects.html https://www.nejm.org/doi/full/10.1056/NEJMoa0912614
The year Niltonib was approved it was costing people $6900 a month. (Median monthly payment). 7 years later, a month of medicine was costing $8806. According to the watchdog web site FiercePharma, generic Gleevec was selling for as little as $40 to $50 a month in 2018. That year Niltotinib was expected to revenues in excess of $2.5 billion.
Researchers for Bristol Myers Squibb created another drug that successfully controlled CML: Sprycel (dasatinib). Like Niltonib it “produced a faster, deeper response” but didn’t make people live any longer. When approved by the FDA it sold for $5477 a month. In 2014 it’s monthly list price was $9300.
In the years following Gleevec’s release the culture around drug pricing evolved. Repeatedly challenging the market—boosting their bottom line step by step– the Swiss corporation showed that prices could be raised significantly each year and no one in power was doing anything abut it. Others followed their lead.
Pharmaceuticals were never cheap. It always cost a lot of money to develop one of the century’s life altering drugs (or a me-too biosimilar) and get it to market. The process is financially risky and the path to discovery is strewn with strike outs, slumps, and near misses.
When a company got a medicine to market they needed to make a profit. That’s what businesses do. And everyone wanted pharmaceutical companies to succeed. We keep yearning for their next creation –the next great cure.
Congress passed laws and rules that motivated and helped Pharma. And in the decades following the Second World War companies kept coming up with medications and pricing them in a responsible manner. Some entrepreneurs and leaders of industry got wealthy along the way, but most were not driven by money. They wanted to make a difference. When Roy Vagelos was head of Merck, the company “vowed to only increase prices in line with the Consumer Price Index, plus or minus one percent. About half the industry followed suit.” When some companies used loopholes in the drug laws to extend the patents of their successful drugs, Vagelos refused to join in.
Vagelos, a physician and academic lipid researcher, had become the company’s CEO in 1966. Under his leadership Merck developed Lovastatin and Simvastatin, the first drugs that limited the body’s production of cholesterol. The company then sponsored studies that proved that the drugs lowered the risk of heart attacks and death.
The company had started in Germany in the 1800s and opened its U.S. branch in 1891. In its early days it made medicinal morphine and codeine, and it had been the birthplace of one of the first medical books for the masses, the Merck Manual. While Vagelos was in charge one of the company’s labs developed a drug that killed a number of the worms that attacked cattle, sheep and horses. Called Ivermectin it was marketed as a means of preventing heartworm in dogs, but it didn’t do much for hookworm or the parasites that attacked man. Its commercial value was limited. Further research on the chemical was suspended, and it was shelved until the day that Mohammed Aziz, a staff researcher, met with Vagelos and got permission to perform additional studies. Aziz had been in Africa and had seen people infected with the filariae that caused river blindness. 100 million Africans were at risk for the condition and the parasite had blinded 18 million of them. The invading worm existed in two forms: adults, which can be 6 to 15 inches long and exist as lumps under an infected person’s skin; and the filariae, a small organism that infiltrated the skin and caused intense itching. The black fly that lived in the river spread the parasites from one person to the next.
People who had the problem were constantly scratching themselves. When kids scraped their skin, then touched their lids, the microfilaria got into their eyes. The subsequent eye inflammation, lead to scarring and blindness. In some villages 25% of the inhabitants couldn’t see. In an attempt to escape, many moved away from the river to less fertile ground and suffered from malnutrition.
Ivermectin, a Merck drug that had been one of the large pharmaceutical company’s financial failures, destroyed the filariae that attacked horses. Aziz suggested it might have an effect on the creatures that blinded so many Africans. Merck produced a quantity of pills, and Aziz went to Senegal to study their effect. Pinch biopsies of the skin of infected people showed huge numbers of the filariae. Half of the people who were infected got a pill and the other half didn’t. A month later a second biopsy showed the filariae had been eradicated from the people who had been treated.
Based on the positive results Merck spent years performing tests that proved Ivermectin was safe and effective. Then they went to the African leaders and tried to sell it for a dollar a pill. The government had no money. OK, 50 cents a pill, a dime, the Merck representative said, but the government really didn’t have enough money. The World Health Organization was spraying rivers with insecticides (though the black flies were already becoming resistant to the spray). The WHO wasn’t interested. Officials in the U.S. State department and at the White House were excited but “the government was broke.” (Ronald Reagan was president.) The French were about to approve the drug. (There were cases in Paris that had originated in colonial Africa), but in the U.S. the FDA wasn’t interested.
Merck was in business to make money and to enrich its officers and stockholders. But the drug was ready; these were the 1980s, and Roy Vagelos was a doctor as well as a business man. The leadership at Merck decided they would provide the medication free of cost to anyone who would use it. They had spent millions to develop the medication. Providing it gratis would cost the company (and its shareholders) tens of millions of dollars, but Vagelos made the announcement and waited to see how the stockholders would react. He claims he received a lot of positive feedback but he didn’t get one negative letter. For years, thereafter, the best of the best researchers in the country wanted to come to and work for Merck. And Vagelos stayed on as head of Merck for an additional 6 years.
When he reached the mandatory retirement age in 1994, Merck “was number one in sales, size, and marketing force”. As a successor Vagelos recommended a number of Pharma savvy colleagues, but the world was changing. The board chose a real business man—a non-scientist, Harvard MBA, and former CEO of a medical device company named Ray Gilmartin. (The Merck Druggernaut)
In 2006 Novartis became the sole owner of Chiron. “Novartis, the company that owned 42 percent of Chiron shares, paid $45 a share for the remaining 113 million shares”. And the now Swiss corporation started acting like a real business. The company had been led by Bill Rutter, Chairman of Biochemistry at the University Of California Medical School in San Francisco. His researchers discovered, sequenced and cloned the Hepatitis C virus and developed a genetically engineered vaccine for Hepatitis B. https://www.sfgate.com/business/article/Novartis-to-buy-Chiron-Swiss-pharmaceutical-2598690.php
In 2017 Roy Vagelos, former CEO of Merck took part the great debate on the ethics of drug pricing and he wasn’t pleased with the way Pharma had changed. He maintained that “The industry has a lousy image and it should, until it reforms itself”—and “He attributed Pharma’s failings to “a lack of understanding of what people respect, and a lack of respect for human beings.” https://www8.gsb.columbia.edu/leadership/ethicsofpricing By Samantha Marshall March 7, 2017.
Some think the astronomical increase in drug prices was the result of greed. Others blame the trust that pharmaceutical companies built during the early post world war 2 decades. The healthy didn’t seem to detect the dramatic rise in medication fees, and the ill were too demoralized to speak up. Too few of the people in power seemed to be paying attention. Unlike the frog that, if placed in boiling wate would have jumped out, the populace of the U.S., was plunked into cold water and we didn’t realize the liquid was slowly being brought to a boil.
I don’t believe the leaders of industry are to blame. They just did what comes naturally.
During the early years of the pharmaceutical revolution, some industry leaders were former doctors and researchers. Most were conscientious, and the public developed a hunger for more and more miracles. Congress passed laws, and lobbyists for the industry fashioned loopholes that could be exploited.
Then companies became corporations with stockholders. CEOs reported to boards of directors. Pharmaceutical companies acted more and more like real businesses. In house investigators with quirky innovate ideas and notions were reigned in. Researchers were increasingly tasked to focus; to develop marketable products.
Drug pipelines were always a problem. After a specified number of years best selling drugs would lose their exclusivity and generic competitive products would enter the market. If the company didn’t have an emerging replacement, revenues and the price of the company’s stock would fall.
To maintain the bottom line industry leaders started raising prices. “Dr. Vagelos traced the pricing problem back to the early 21st century when biotech firms first came out with targeted treatments for diseases that were otherwise deemed untreatable,”
The initial price increases must have pleased stockholders and boards of directors. If industry leaders wanted to keep their jobs or get bonuses they had to raise prices the subsequent year, and the year after that. If a CEO wasn’t willing to charge substantially more each year he or she could easily be replaced.
In addition there were loopholes in the laws rules that, if exploited, would give a company a few more years of exclusivity. For a blockbuster drug that would mean at least an additional billion dollars of revenue per year. Legal teams proved they were worth the big bucks when they took advantage of these cracks in the system. (If a football team is losing by a touchdown and its coach doesn’t try an onside kick or a Hail Mary pass during the last seconds of the game –he’s not trying to win, and he will be fired.) Corporations were in the business of making money. Failure of a corporate lawyer exploit the available legal gimmicks was akin to misconduct.
The increases started at companies with targeted treatments for cancer. They “set the bar” that led to prices that “were many times more than most people’s yearly salaries, prices that were not necessarily related to value.”
The next few cancer fighting drugs were created and developed in the labs of pharmaceutical companies. The skilled researchers had a general blue print, but their research involved a lot of trial and error. The true costs, if they really matter, are a black hole. But the market was established. Competition based on price was not a serious option. The cost of a successful drug was set at about $100,000 a year.
The success of Imatinib-Gleevec showed researchers that it’s possible to develop small molecules that are highly specific to one of the hundreds of tyrosine kinase inhibitors…molecules that can inactivate a specific critical enzyme in chosen targeted cell. There were a few known targets—so called low hanging fruit– and researchers in startups and in the labs of big Pharma started making thousands of molecules and testing them with their biologic assays. Not that it was easy. Developing a molecule that targeted a specific genetic alteration took time, luck, optimism, and money.
The two initial genetic alterations researchers around the world targeted were the ALK Fusion gene and EGFR:
The ALK fusion gene had been identified by Japanese researchers at the Division of Functional Genomics, Center for Molecular Medicine. Jichi Medical University, Tochigi Japan. The mutation is the cause of 5-7 percent of non small lung cancers. The first tyrosine kinase inhibitor that targeted the gene was marketed by Pfizer. It kept the cancer from progressing for an average of 4 months, but it didn’t make people live any longer. Called crizotinib, (Xalkori) it was initially priced at $11,000 a month and its price didn’t rise much its first two years on the market. But it was too much for the Canadians and Brits, and they decided it wasn’t cost effective. (Do our politicians really want to negotiate with drug companies? Can they take the political heat if government negotiators get tough and walk away from the table?)
The second tyrosine kinase inhibitor that targets this gene, alectinib was approved by the FDA in 2013. Developed in Japan by Chugai (which is majority-owned by Roche) it “originated from the company’s screening program.” It does, on average, make people with metastatic cancer live longer, and is often effective when criznotinib stops working. It also crosses the blood brain barrier and can affect the growth of brain metastases. Its current price is more than $13,000 a month.
The recently approved second generation Novartis ALK inhibitor ceritinib (Zykadia) was approved by the FDA in 2014, and, not surprisingly, costs $11,428 a month. ($8100 to $13,500 depending on dose.)
I have no reason to believe that pharmaceutical companies price fix. But they all seem to know that charging less than $100,000 a year for a new cancer drug is foolish. Politicians and the media have grown accustomed to the $100,000 plus a year price point. Some may complain and wonder aloud how the price was set. But in the end they must know. New targeted cancer drugs always seem to cost about the same as the other similar drugs on the market. And companies seem to choose a price that is the maximum they think they can (more or less hassle free) get away with. (The web says a month’s worth of alectinib costs $13,589.)
The other known cancer causing target…EGFR–(epidermal growth factor receptor) was discovered decades earlier and was known to cause uncontrolled cell division. When it was found in some lung cancers, it too became a target for the right kinase inhibitor.
IRESSA™ (gefitinib), the first clinically available EGFR inhibitor, could slow the growth of lung cancer for months. Developed in house by Astra Zeneca, it was the product of years of tedious expensive work. It only helped 10% of afflicted Caucasians but 30 percent of Asians with lung cancer, especially non smokers, responded. As a result Astra Zeneca did most of its marketing in Japan and China. (The drug was available in 81 countries.) By 2015 the medication was bringing in $500 million a year. $23 million of the sales were in the U.S. Chinese with lung cancer paid 7000 Yuan–11,430 a week for the medication. After a decade the Chinese pharmaceutical company, Qilu, started making a generic version called Yiruike.
Cancer drugs outside the U.S. cost a lot and there are people, all over the world, who are willing to pay. I suspect Astra Zeneca recovered its development cost..which must have been substantial. I doubt that the drug made anyone rich.
Most of the targeted cancer drugs are made in the labs of big companies and we don’t know much about their research and development. The Tarceva story provides a window. An EGFR blocker, the medication was developed by OSI, a small pharmaceutical company located in Long Island, New York. When Collen Goddard became its CEO in 1989, it employed 20 people and had a biology and a small molecule discovery group. A Brit, its leader Goddard had previously been a researcher in Birmingham England and at the NCI (national cancer institute).
The startup was looking for a chemical that would modify EGFR. They had a relationship with researchers at a nearby mega company, Pfizer, and people at OSI persuaded investigators at the big company to screen a number of their small molecules. At the time Pfizer was evaluating molecules for a different cancer target: Her-2 neu, and they needed a “control.” When they checked the compounds for OSI, Pfizer scientists identified Tarceva early on. OSI subsequently kept the “lead rights” to the chemical and Pfizer had some ownership.
Pfizer agreed to give the drug to a few people with advanced cancer and see what happened. They bailed when they learned the drug caused a rash.
About this time Pfizer was buying the company that owned Lipitor. It was an expensive hostile takeover, and Pfizer gave their Tarceva ownership back to OSI—free. (They later went on to acquire the company that owned Lipitor.)
OSI raised $440 million, ran clinical trials, and found out their drug, in fact, made some people with cancer live longer.
A few years back an athletic, non smoking friend had a nagging back ache that kept getting worse. An MRI showed bony defects caused by metastatic lung cancer. His brain was involved, and it was radiated. The X-ray treatment caused terrible side effects–a month of no appetite or thirst. When he recovered he knew he was not interested in conventional, toxic chemotherapy. But he spoke of a dream– of sitting on a boat in the bay and fishing. Would that be possible? His tumor was positive for EGFR and he was given Tarceva. His back pain improved, he got stronger, and he was able fish and enjoy life for about a year. Then the tumors in his brain started growing.
Genentech and Roche bought $35 million worth of OSI stock and commercialized Tarceva.
The internet says Tarceva costs Americans $2600 a month. That’s more than the British National Health Service was willing to pay. In 2007 the Swiss drug maker Roche negotiated and agreed to cut the U.K. price from $2766 a month to $2133 a month. The Canadian online Northwest Pharmacy claims they get drugs from reputable factories in many parts of the world, then ship it directly to patients who mailed valid prescriptions. Their price for brand name Tarceva 150 mg per month is $3174. Their generic version goes for $1384 a month. Approved by the FDA in 2004, it became a $94,000-a-year drug. Genentech sold $564.2 million of Tarceva in 2011 and over a million dollars worth in 2016. (An article in the LA times questioned its effectiveness) http://www.latimes.com/business/la-fi-fda-tarceva-approval-20170204-htmlstory.html
In India, in 2012, the Cipla pharmaceutical company produced a generic version of Tarceva, and lowered the price of the medicine from $459 dollars a month to $182 dollars a month. The Delhi court ruled that the Swiss patent was valid, but that the generic product didn’t infringe. http://www.firstwordpharma.com/node/1031419?tsid=17#axzz4pCaI5OxA
http://www.medscape.com/viewarticle/830145 (peter Bach quote)
Some argue that pharmaceutical companies make the majority of their profit in the U.S; our high prices are subsidizing the rest of the world, and people in other countries aren’t paying enough.
Others contend that Pharma makes so much profit in America that they don’t have to bargain in good faith with other nations. When a company has a new important drug and there’s no competition they can hang tough. Negotiators can pay the asking price (with a small discount); or they can leave it.