dominating the market

When companies spend billions to control the sale of a drug, we all pick up the bill

In recent decades large pharmaceutical companies have spent billions of dollars purchasing small startups to gain control of a drug.  If the medication lacks FDA approval, the large company does the testing and paper work necessary.  When it’s approved, the buyer charges a lot for the medication and markets it aggressively.

In 2011 Gilead bought Pharmasset for $11 billion.  I assume they desired to be the company that eradicated hepatitis C—or they wanted the media to take notice–or maybe the CEO wanted to show he was exceptional —or perhaps they thought they could reap a big profit when they sold their product.

Pharmasset’s drug (taken with a second less effective medicine) cures Hepatitis C quickly and with minimal side effects.  That was great news for the 2.7 to 3.9 million Americans who carry the bug, and for the 71 million people worldwide who are chronically infected with Hep C and might someday develop cirrhosis or liver cancer.  The disease is responsible for the deaths of 400,000 people each year.

The virus was isolated in the 70’s by researchers in at the Emeryville startup called Chiron.  It’s one of several that inflames the liver, makes people yellow and drains their energy.  It becomes chronic in 70-85% of those infected when they are adults.  A third of the continual carriers develop liver inflammation and die within 20 years.  A third never have significant problems. And, in a third the liver becomes slowly and progressively inflamed

By contrast, hepatitis A doesn’t become chronic.  Hepatitis B usually causes a self limited illness in adults, but becomes a lifelong problem for infants who acquire the disease from their infected mother.

For decades “C” was treated and often cured with interferon.  A year long ordeal, the treatment consisted of weekly injections that caused fever and exhaustion.  The bad effects usually lasted a few days and people recovered before it was time to get their next shot.

The doctors who developed the curative drug were scientists at Emory University.   One of them, Raymond Schinazi was a Jew who was born in Alexandria Egypt.  In 1956 Israel and Egypt fought a war and Egyptian Jews became personae non grata.  His family moved to Italy, then the UK.  He studied in Boston and learned about “chemicals similar to Nucleosides.” When the world learned HIV was caused by a virus, Schinazi was a professor of Pediatrics at the VA hospital in Atlanta.  As he explained (in interviews) he “couldn’t just sit around and do nothing.  We had the tools, the brains and the information” (He had done research on the Herpes Virus.)  He wanted to attack the virus with nucleoside analogues.  The VA resisted then assented, and Schinazi helped develop two of the more significant anti HIV drugs.  Profits from the sale of the medication went to his university.

Encouraged by his success Schinazi wanted to try to develop an anti Hepatitis C drug.  The NIH, allegedly, turned down his application for the project.  He got venture funding, founded Pharmasset, and developed Solvadi. In 2011 Gilead bought Pharmasset for $11bn.   (Schinazi received $440 million and went on to do further research.)

Gilead now had to sell and charge a lot for the medication.  The original list U.S. price for the company’s two drug combination, Harvoni, was $94,000.

For most of those infected treatment wasn’t urgent, but Gilead had to move a lot of their product before competitors developed a drug combination that worked as well as Solvadi.  The company spent $60 to $80 million on TV ads in which people said they were “ready” to be cured.

In August of 2017 the FDA approved a second combination of anti Hepatitis C drugs.     Mavyret, sold by AbbVie it will reportedly sell for $26,400 for 8 weeks.   (People with certain “genotypes” of the virus are usually cured in 8 weeks.)  12 weeks of the drugs sell for $39,000.

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In 1999, as part of a hostile takeover Pfizer paid $90 billion and swallowed Warner Lambert–the corporation that owned/controlled Lipitor.  Pfizer went on to sell a lot of the medication–Lipitor became the world’s best selling drug.  In a 12 year span (1997-2009) Pfizer sold more than $80 billion of the pharmaceutical for $5-$6 per 20mg pill.

To understand the drug’s appeal we have to remember that one in three deaths in this country are the result of a heart attack or stroke:  800,000 people die annually.  92 million adults are living with heart disease or the after effects of a stroke.  Vascular disease isn’t preventable, but it’s more likely to occur in people with a family history, high blood pressure, diabetes, or to those who smoke or have a high serum cholesterol.

Since the 1950s doctors have believed that if they could lower the level of cholesterol in the blood they could prevent some heart attacks.

In 1973 a researcher in Japan, Akira Endo, after years of effort, extracted a statin from a blue-green mold.  When taken by a human it caused the blood cholesterol level to drop.  After confirming Endo’s findings, Merck scientists, used an aspergillus (and Endos methods) to create the cholesterol lowering drug Lovastatin.  (Robert Hauser, Heart Stories, chapter 11) A 1994 Scandinavian study showed that statins “led to a sharp drop in fatal heart attacks for patients with heart disease.”  The following year Merck sold more than 4 billion dollars worth of Simvastatin and Lovasatin.

Many tried to make a superior statin.  Bruce Roth, a researcher at Warner Lambert in Ann Arbor synthesized Lipitor and showed it was very potent –the strongest available.

After it was tested and FDA approved, Warner Lambert joined forces with Pfizer, and the drug was “aggressively” priced and promoted.

Then (apparently) something went wrong and Warner sought to be acquired by someone other than Pfizer.  Pfizer wasn’t having it.  In 1999, as part of a hostile takeover Pfizer paid $90 billion, swallowed Warner Lambert, and went on to sell lot of Lipitor.  When Pfizer’s monopoly ended their profits dropped and the company attempted to avoid U.S. taxes by moving their headquarters to Ireland.

“To sustain a $20 billion-a-year business (a firm like Pfizer”) needs to add one new blockbuster medication to its portfolio each year”…” to maintain their revenue base large companies need four “$1 billion-per-year drugs…,”  (That’s the conclusion of  Bernard Munos, a leading thinker.)  He says the pharmaceutical industry of the 1980s was a “haven” for creative scientists whose work was based on “cutting edge discoveries coming mostly from academia.” Proceeding at their own pace and pursuing clues as they went, these researchers steered their own course and pace.  Industry assumed they would eventually create a commercial product.  The approach was “risky”– but it led to a lot of innovative medications.

In the 1990s business savvy CEOs became the leaders of most of the large corporations.  They tended to be scientifically untrained or illiterate, and they were troubled by the apparent disarray in their R and D divisions.  Scientists kept changing course.  There were no deliverables.   “To them (what they saw) epitomized mismanagement.”  So the CEOs changed the culture.  Researchers were now expected to be “responsive to the marketplace”.  A “process” driven–goal driven culture was created, and true innovation was largely “destroyed.” Munos believes leading edge innovators aren’t focused on the existing customers and markets.  They want to make something that “transforms—obliterates” the status quo.

https://cen.acs.org/articles/95/i5/year-new-drugs.html

https://www.youtube.com/watch?v=ZKHEARXDFKo

 

Introduction

Introduction

march 20, 2018 by stevefredman

For most of us pricey drugs are not a major political issue.  Medicare, Medicaid, and insurance premiums supply the bulk of the dollars.  Out of pocket co-pays are small.  And pharmaceutical costs are not on our radar –until we learn that cancer has invaded the body of a relative or friend, and the drugs they take are costing more than $100,000 a year.

The pharmaceutical market place is “a bunch of rules about what can be owned and traded, the length of patent protections, what’s private and what’s public, and how to direct taxpayer dollars.  They are human creations and governments organize and maintain them.

45% of global pharmaceutical sales come from the United States.  Per capita Americans spend twice as much as people do in Europe and Japan.  And we “account for more than half of the industry’s revenue growth and for the lion’s share of their profit.”

Marcia Angell (2005) and Phillip Lee (1974) wrote impressive books that talked about the influence, power, and “deception” (Angell) of big Pharma. 

A number of fiscally “responsible” politicians are troubled by drug costs and want to do something.  But they won’t attempt a “fix” if the public isn’t interested.  So they talk about negotiating with drug companies or buying medications from Canadian Pharmacies–approaches that won’t make a major impact.  Reporters writing about the situation hash and rehash prices and trends.  Pharmaceutical manufacturers point out how much they spend on research, and they like to complain about the FDA and the expense of testing new candidates.   Even when they don’t fashion an innovative medication, these companies produce and distribute the creation of others. They have research labs, and they take risks.  They need to earn a reasonable profit.

Many, but not all generic drugs are manufactured by two or more companies.  Production costs and the presence of absence of competition determine their price.  (Generics are dealt with in the chapters on negotiation and drug shortages.)

The 2 decade long upward drift in the prices of many relatively new medications is best understood by scrutinizing one drug at time.  The stories of some of these creations are a large part of the blog.   

The marketplace has gone wild and it’s time to get a clearer picture of what’s going on. 

http://robertreich.org/post/61406074983

https://www.theatlantic.com/business/archive/2009/09/does-the-us-really-account-for-so-much-pharma-profit/24465/

Game changers

Game changers

Many medical advances dramatically impacted the lives of a limited number of individuals.

A few were “game changers”:  Two of these helped all humans.  Others altered the futures of substantial clusters of sick people.

People born after 1977 know little about the ravages of small pox.  A contagious viral infection, the ailment has plagued the human race for at least 10 centuries.  It’s claimed that as many as three in 10 of those infected died, and many who survived were permanently scarred.  Commonly occurring in epidemics, the viral disease was brought to the new world by Columbus and his followers.  It subsequently played a major role in the deaths of hundreds of thousands of Native Americans.  In 1796 an inventive British physician named Jenner heard that dairymaids were protected from smallpox after they were infected with a harmless virus called cowpox; he decided to check it out.  He inoculated an 8 year old with the mild virus, and then exposed him to small pox.  Cow pox, it turned out, was indeed protective.  It took years- decades before people believed Jenner and even longer before they started vaccinating their young with an attenuated strain of cowpox called Vaccinia.  In the 1800s vaccinations became increasingly common, but the disease survived.  It’s claimed that in the 20th century smallpox took the lives of “an estimated 300 million individuals.”  In The second half of the last century a world wide effort to eradicate the curse was undertaken.  Most of the planet’s young were vaccinated, and the bug’s last known victim was infected in 1977.  Medical visionaries are currently trying to similarly eradicate polio, and they’re close.

In the years following the Second World War Penicillin and a large number of other antibiotics turned infections that were once lethal into treatable, usually curable, conditions.  They’re such a part of the modern world that it’s hard to imagine what life was like beore they became commonplace.

And In the last half of the 20th century two classes of drugs—each in their own way– altered the futures of huge swaths of the planet’s ill.  I call these medications “game changers.” 

The immune industrial complex.

The immune system (and our skin, and intestinal wall) protects us from micro creatures that live in and on our body.  It recognizes protein that doesn’t belong, tries to destroy cancerous cells, and it mounts a defense when we encounter the flu bug, a vibrio that causes cholera, or the tuberculosis bacillus.

At times our defense system thinks that a part of us is an enemy, and it attacks joints (rheumatoid arthritis) bronchial tubes (asthma), intestines (colitis) the brain (multiple sclerosis).

We can temporarily control many of the body’s immunologic assaults with cortisone derivatives, but our body pays a price.  In recent decades a number of immune modulators have emerged.  Some have huge annual revenues: like Humira at $14 billion a year, or Enbrel at $8 billion–and most of the new innovative creations are quite pricey.

Then, on more than 34,000 occasions in 2017, foreign tissue from donors dead and alive —livers, kidneys, hearts and lungs–were implanted into the body of someone in the United States–and the immune system was challenged.

We learned organ transplant was possible in 1954 when an identical twin successfully gave his brother a kidney.  That’s as far as it went for decades because we weren’t very good at keeping a body from rejecting someone else’s organ.  Our original attempt to control the immune system, our “three drug anti rejection regimen”, according to Thomas Starzl, “wasn’t very effective or safe.” Starzl, a transplant pioneer, performed close to 200 dog transplants before he came to the University of Colorado.  “After surgery his dogs were normal for almost a week; then they began to reject their liver.”  As late as 1978 “Graft survival was unsatisfactory and patient mortality high.” (Starzl-the puzzle people. P.208)

Then Cyclosporine burst onto the scene and everything changed.  In the subsequent decades over 700,000 people in this country lived part of their lives with someone else’s liver, kidney or heart.  Kidneys, on average, last 12 to 15 years; livers had a shorter lifespan.  That’s going to change now that hepatitis C (a frequent cause of liver destruction) can almost always be cured.  (When a person with hepatitis C was transplanted, the new liver was always infected, and had a relatively brief lifespan.)

After a person receives a transplant, they (almost always) reject the intruder if they don’t take an immunosuppressant daily for life.  A few different anti rejection drugs are currently available.  There’s a marketplace and competition.

In 2012 Pharma spent $3 billion on consumer ads and “$24 billion marketing directly to health care professionals.” (John Oliver numbers) The promotion budget is almost always much higher than the amount spent on research.  The biggest spender in 2013, Johnson and Johnson, “shelled out $17.5 billion on sales and marketing, and half as much, $8.2 billion for research and development.”

Cyclosporine, the first truly effective anti rejection drug, was developed by Sandoz, a Swiss chemical company that, in the 1800s, manufactured dyes and saccharine.  In 1917 the company hired a chemistry professor, and created a pharmaceutical department.  His group isolated ergot from a corn fungus and turned it into a drug used to treat migraine and to induce labor.

In 1958, the company asked employees to take a plastic bag with them when they went on vacation or business trips, and to periodically collect “soil samples that might contain unique microorganisms.” (They were looking for the next great antibiotic.) A fungus in a sample of Norwegian dirt produced a metabolite (Cyclosporin) that lowered the immune response of lymphocytes.  It seemed to be relatively safe, and some, apparently, thought it could potentially become an anti rejection drug.

That’s as far as Sandoz was willing to go.  By 1973 the lab’s supply of fungus derived cyclosporine was largely depleted.  Large sums of money (around $250 million,) would be needed to create more, evaluate its anti-rejection potential, develop a drug, and obtain approval from the FDA.  There wasn’t much of an organ transplant market, and the investment didn’t make much sense.

In 1976, J.F. Borel, the Sandoz researcher who discovered the immune modulating effect of cyclosporine, presented his findings to the British Society of Immunologists.  A transplant surgeon in the crowd, Sir Roy Calne “asked Borel for samples”.  Calne used them to try to prevent the destruction of organs transplanted in rats and dogs.  The drug’s effect was dramatic.  With Borel’s help, Calne presented his findings to decision makers at Sandoz.  “The pharmaceutical company agreed that the drug looked more promising now that there was evidence of its effectiveness.”  In the early 1980s, an American transplant surgeon named Starzl used it successfully on liver transplant recipients.  With his results in hand the FDA fast tracked approval of the medication, and it became available for use in the U.S. in 1983.  (Currently made generically by a number of countries Cyclosporine’s (Wikipedia) wholesale price is not outrageous.  $106.50 a month in the developing world—GB £121.25 per month in the United Kingdom, and about $172.95 per month in the U.S. (if generic drugs are prescribed.)

Pharma scientists can produce great results.  But to create a truly innovative medication, in addition to money they need a modicum of serendipity, imagination, and stubborn determination.

http://www.sciencedirect.com/sdfe/pdf/download/eid/1-s2.0-S0269915X98801006/first-page-pdf

Read more: http://www.discoveriesinmedicine.com/Com-En/Cyclosporine.html#ixzz4ocaXJCDC

The second major, now widely used, anti rejection drug was Tacrolimus (Prograf).  Originally isolated from the fermented broth of a streptomyces bacteria”, it was discovered and developed in the 1980s by Japanese chemists working in a big Pharma lab. (At Fujisawa, a company that later merged and became Astellas, the world’s 14th largest).  In renal transplant recipients Prograf led to improved graft and patient survival, and that lead to it’s routine use in U.S. renal and pancreas transplant recipients.  the FDA made it official in 1994.  The year before Prograf had a generic competitor, Astellas sold up to $2.1 billion dollars worth of the medication.

It’s claimed that the annual cost of U.S. transplant immunosuppressive therapy averages $10,000 to $14,000.  If true then the 33,000 transplant recipients in 2016 are (directly or indirectly) paying $330 million to $462 million a year.  That becomes $3.3 billion to $4.6 billion over ten years if drug prices don’t rise or fall.

In India (where the culture surrounding pharmaceutical prices is quite different from ours), the amount paid for Tacrolimus was slashed 65 percent in 2016.  The average recipient now pays $235 to $314 a month for anti rejection medications.

On October 30, 1972 President Nixon signed a bill that (apparently as an after thought) added chronic dialysis to Medicare.  Kidney failure wasn’t part of the bill the Senate debated during a rare Saturday morning session on September 30, 1972.  Nor was it part of the legislation passed earlier by the House of Representatives.  The amendment that added dialysis to the Medicare bill was introduced late that Saturday morning.  There was 30 minutes of debate before it was accepted by a 52 to 3 vote.  Weeks later a House, Senate Committee discussed the kidney amendment for 10 minutes, and left it in the bill.  Nixon, who was a pro health care president, signed the legislation with a flourish a week before he was re elected.

If someone on dialysis receives a kidney transplant (at a cost of hundreds of thousands of dollars) the operation and three years of anti rejection drugs are fully funded by the federal government.  At the end of those years the patient is removed from Medicare, and they have to pay for their own anti rejection drugs.  About 22 % of people on anti rejection medications stop them:  because of side effects, or they cost too much, or for other reasons.  When a kidney transplant recipient stops their immunosuppressive drugs they almost always reject their kidney, and they are forced to go back on dialysis or die. This is not theoretical.  It happens.  And it’s a problem.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2991087/

http://timesofindia.indiatimes.com/life-style/health-fitness/health-news/Anti-rejection-drug-prices-cut-by-65/articleshow/52320897.cms

As newer anti-rejection compounds hit the market, and generic medications started competing, the cost of these drugs has waxed and waned.  The price seems to have little to do with the original research and development costs and much to do with current market forces.

Adjusted for inflation and expressed in 2012 dollars the U.S. cost to keep a kidney or liver alive was $9000 in 1993.  It climbed to more than $33,000 in 2007, and went down to $18,000 (twice the original price) in 2011.

http://www.renalandurologynews.com/american-transplant-congress/immunosuppressive-drug-costs-decline-but-still-expensive/article/293973/

The lure of riches versus the “better angels of our nature”.

In the 1980s hospitals were full of young men and women who had HIV and were afflicted with a devastating infection.  When an immune system is no longer able to control the host of bugs that hang out in our body, one or another will emerge and cause a severe illness.  For over a decade almost everyone who had HIV died.

Then scientists developed drugs that, when used in combination, turned a killer into a chronic, controllable malady.  And the entrepreneurs and corporations who made the life saving medications had to deal with their desire or need to make money and enhance stockholder value, while at the same time facing the desperate needs of millions of sick and dying people.

After they identified the virus, scientists methodically, learned how the HIV virus attaches to the cell and “punches” its way through the outer membrane, sheds its protective coat, and uses a special enzyme it brought with it, (reverse transcriptase), to make a DNA copy of the viral RNA.

Each phase the virus passed through was a potential area of vulnerability, a moment or point where a drug developed by a researcher could block the progress of the evildoers.

The counter attack started when scientists at Burroughs-Wellcome synthesized compounds that might obstruct the activity of the reversetranscriptase enzyme.  In 1985 they sent eleven promising compounds to researchers at the National Cancer Institute, and people at the NIH identified a chemical that worked in the test tube. The drug was given to people with HIV, and their lives were prolonged.

25 months later the FDA approved the drug, and it was marketed by GlaxoSmithKline.  The company sold 225 million dollars worth in 1989.

In the late 1980s and in the 1990s manufacturers started cranking out (and selling) anti HIV drugs.  Some of the agents targeted an enzyme the virus brought with it when it entered the cell.  Called protease the chemical was “essential to viral replication”. The first Protease inhibitors became available in 1996.

Nucleoside reverse transcriptase inhibitors, drugs that work against the enzyme that copies HIV RNA into new viral DNA were invented by Emory university professors.    They discovered FTC (emtricitabine) and a chemically similar compound, 3TC (lamivudine) “Everyone was intrigued but skeptical about our work—no one realized the importance of what we had found,” Schinazi (the physician who developed the drug) said. He “pushed Emory University to file patent applications.  They did and less than ten years later the University was paid $540 million…a lot of money but considerably less than big Pharma often pays to control a significant drug.     .

.A recent therapeutic manual for doctors listed drugs that block the virus at several transitional sites.  We now have more than 10 reverse transcriptase inhibitors, 9 protease inhibitors, 2 entry inhibitors and an integrase inhibitor.  All drugs have side effects.  People who can’t tolerate one reverse transcriptase inhibitor often have no problem taking a different one.   When a combination of medications is used, the viral biochemical assembly line is blocked in more than one location, and resistant viruses are uncommon.  Refractory HIV can develop when a person stops and starts the medications.  That happens when people can’t afford their co-pay, when they live in a remote part of the world and don’t have access, or if they merely decide to take a “drug holiday”.

In the U.S. combinations of the two or more drugs that are needed to control a person’s HIV usually costs between $1500 and $3000 a month.  People with “decent” health insurance are commonly required to pay two thirds of the needed dollars.

http://www.gtp.autm.net/story/view/76

In 2004 a small percentage of the people with HIV lived in high income countries.  In the U.S. HIV was becoming a well controlled chronic disease.  People in the rest of the world kept dying. More than 36 million people (close to 2 million of whom are children) are infected.  Over 25 million HIV carriers live in Sub Sahara Africa.

Drug companies tried to guard their exclusivity with all the money and influence they could muster.  In 1995 the World Trade Organization was formed.  It required members “to honor 20 year patents on drugs”.   Poor countries were given until 2005 to comply with the mandate.  (Half the big drug makers are headquartered outside the U.S.)

Poor countries couldn’t and wouldn’t comply with the WHO directive.  HIV was a killing their people.  143 countries favored relaxation of patent protection.  The Bush administration initially thought the constraints should stand.

In 2001 Indian generic drug manufacturer, Cipla, announced that it would sell a generic copy of a triple-therapy antiretroviral for US $350 per patient per year.  The following year Shanghai’s Desano pharmaceuticals started producing a three drug regimen.  The cocktail was sold for $350 a year.  Other countries were ready to join in.

The South Africa Competition Commission found two drug companies guilty of anti competitive behavior.  Facing fines and maybe jail time the corporations struck a deal.  Several big pharmaceutical companies, including Glaxo, agreed to allow generic manufacturers to make and sell HIV drugs.  The company took a 5% fee.

Prior to 2003, the U.S hung tough. Then the Irish singer Bono got together with one of the day’s more important Republican senators, Jesse Helms, and attitudes changed.  When they met the Senator was 80 and walked with a four-pronged cane.  He was a rightwing evangelical Christian who had exploited racial prejudices in his election campaigns and had called homosexuals “weak, morally sick wretches”.

Bono, by contrast, had publically supported Greenpeace, Amnesty International, and had joined Jubilee 2000, a 40 country movement that advocated cancelling third world debt for the millennium.  At one point the Jubilee campaign asked Bono to get the Baptist Nigerian President to write a letter to Baptist churches across southern US states.  He was supposed to explain the Biblical principles behind debt cancellation.

The Baptist leaders listened, and Bono suddenly had access to a lot of strongly Christian Republicans.  That’s why he was able to meet and speak with Jesse Helms.  Helms had been very tough on the concept of foreign HIV drug assistance.  “He’s a religious man”, Bono said, “so I told him that 2103 verses of scripture pertain to the poor, and Jesus speaks of judgment only once – It’s not about being gay or sexual morality, but about poverty. I quoted that verse of Matthew chapter 25: ‘I was naked and you clothed me.’ He was in tears. And later publicly acknowledged that he was ashamed…”

After the meeting vice president “Dick Cheney walked into the Oval office, and told President Bush that, ‘Jesse Helms wants us to listen to Bono’s idea.”  That led to negotiations and Bush’s 2003 plan.

That January in his State of the Union message President Bush announced his policy towards HIV had changed.  He would ask congress to spend $15 billion dollars over 5 years to combat the disease.  Since its creation in 2003, the “President’s Emergency Plan for AIDS Relief (PEPFAR)” received more than $70 billion in congressional funds …$6.56 billion in fiscal 2017.  The Trump budget plans to cut  the amount the government contributes in 2019  by a billion dollars.

In 2017, per the U.N., 19.5 million people, more than half those infected, are being treated.  The UN thinks they can end the epidemic if 90% of those infected know they are infected.  And if 90% of them take anti retroviral drugs; and if 90% of people being treated take enough medicine to suppress the virus.   Seven countries, one of which is in Africa, have achieved the 90/90/90 goal.

In the U.S. people are treated with one of many combinations of drugs.  Most have not been generic.  (But that’s changing.   3 major drugs were FDA approved in recent years, and in 2016 the agency authorized a generic version of Truvada—the pill that when taken daily by high risk individuals cuts the risk of infection by over 90%. ) The CDC recently estimated the average annual cost of HIV drugs was about $20,000 ($360,000 lifetime.)  Most Americans with HIV get their medication through their insurer, but they have to pay deductibles, and copayments.  That can be a problem.  In the appropriate age and income situations Medicare and Medical supply the meds.  The non-profit Ryan White Foundation helps when health plans are incomplete and people can’t afford the drugs.  There are federal programs that help needy women and children.  For the right population the Indian Service and the VA get involved.

 

 

 

hello-world-2

(Researched and penned by Steve Fredman M.D.)

hello-world-2

(Researched and penned by Steve Fredman M.D.)

Drug prices are probably low on the list of the problems you’d like solved.  But it is an issue we really should deal with.  Over time most of us will be taking pills to lower our cholesterol or blood pressure, supplement our thyroid gland or help control a medical condition like arthritis, diabetes, Parkinson’s disease, atrial fibrillation, cancer, multiple sclerosis, glaucoma, HIV, hepatitis C or B, cirrhosis…  Some of us will have a friend or relative who needs one of the hundred thousand dollar a year medical innovations.   And “nearly one in five Americans between the ages of 19 and 64 – 35 million people – won’t fill their prescriptions because they don’t have enough money.”

Drug prices have drained assets and marginalized the lives of some and have an impact on the cost of our health insurance and medical care in general.  This blog is my attempt to understand where we went wrong and to propose solutions to our predicament.

 

The century that transformed medicine

The century that transformed medicine

Homo sapiens, human beings, people with brains as talented and competent as ours, have walked the earth, often struggling to subsist, for at least 150,000 years—1500 centuries.  It’s only “recently” during the last 250 years—that our world was transformed.  We increased our ability to communicate, travel, and feed our people. We vastly expanded our numbers, warmed the planet, and began to deplete the resources that sustain us.  And we learned how to fight and cure many of the ailments that afflicted and shortened the lives of our grandparents and great grandparents.   My wife has two uncles who died in the 1930s from a strep throat, an infection that’s currently rapidly healed with a few doses of an antibiotic.  A family member had an asthma attack so severe she was almost intubated—placed on a breathing machine. Another was stung by a bee and developed anaphylactic shock.  Either would probably have died a century ago.

When I was an intern (in 1963) we treated people with new myocardial infarctions with “quiet and rest.”  One fateful night, as I entered a room to do an admission history and physical, the patient –a man who just had heart attack– was confused, pale, and dripping wet—sweating.  He barely had a blood pressure and was in cardio-genic shock.  I started an IV and infused the available drugs.  Nothing helped and he died.  Nowadays heart attack victims who don’t instantly die are rushed by ambulance to a nearby hospital where a cardiologist and team are waiting to catheterize their coronary arteries and to unblock and “stent” the occluded vessel. (Some of the improvements in care are not due to better drugs.)

When I entered medical school in 1958, the drug industry was in its infancy.   Europe and Japan were still recovering from the devastation wrought by the Second World War, antibiotic treatment of infection was relatively recent, and enthusiasm for the potential of new medications was high.  (We had learned a huge amount in the preceding hundred or so years.)  

Before 1700 humans didn’t know the world was full of tiny micro organisms.  They were invisible to man before the Dutch scientist Van Leeuwenhoek developed potent glass lenses, lined two up in a tube, and created a powerful microscope.  When he looked into a drop of water he visualized creatures whose existence, until that moment, was unknown. 

The source of contagious diseases was a mystery before the Frenchman, Pasteur, hypothesized that they were caused by various micro bugs.  (A few decades earlier the Hungarian Semmelweis had shown that child bed fever was brought about by doctors who went from the autopsy room to the delivery room without first washing their hands.)  The British surgeon, Joseph Lister, started performing surgery under antiseptic conditions in the late 1800s and others followed his lead.

The first antibiotic, sulfanilamide was created by scientists at the Bayer Company in Germany in 1935.  They were unable to patent their drug and it was produced in small factories throughout the world. 

In the 1920s, A Scot, Alexander Fleming, realized that fluid coming from a penicillium mold growing in one of his Petri dishes killed the bacteria in the container.  He tried to isolate the juice—which he called penicillin– but he was only able to collect a small amount.  A decade later a group of Brits led by Howard Florey and Norman Heatley got interested in the fluid and extracted enough to treat a few lab animals.  In May of 1940 “they infected eight mice with a fatal dose of streptococcus.  Four of the creatures were then injected with penicillin.  Hours later “the untreated mice were dead and the penicillin-treated mice were still alive…. Penicillin’s spectacular possibilities were obvious.”  More needed to be done, but Britain was at war and Florey’s research could not proceed.   That’s why he and Heatley brought some of the mould to the U.S.  They convinced scientists at the agricultural research lab in Peoria Illinois to help them search for a Penicillium mold that would produce more than a trickle of the magic juice.  One of the labs mycologists, Kenneth Raper, found the super mold growing on a cantaloupe in a nearby store.  It was “50 times more potent than anything previously tested, and it became the primogenitor for almost all of the world’s penicillin.”  The group then looked for companies that could produce the antibiotic in large amount, and Pfizer stepped up big time.  The chemical business was, at the time, fermenting large amounts of mold and using it to produce citric acid.  They now started producing penicillin in their huge deep tanks and were quite successful.  Eventually Pfizer produced most of the penicillin that went ashore with Allied forces on D-Day.  After the war Pfizer used deep-tank fermentation to manufacture a second antibiotic, streptomycin, and later a third antibiotic, Terramycin. 

            The penicillin experience woke up the scientific community and helped create a sense that it might be possible to create drugs that would cure or help many of the diseases of man.

In 1958, when I started medical school, aside from antibiotics doctors had (in retrospect) relatively few medications to work with.  We had aspirin, barbiturates, and a number of treatments that were largely the derivatives of plants, minerals and animals.  (like Colchicine, a drug used to treat gout (and a few other maladies) that was extracted from Colchicum autumnal…the meadow saffron.)  We worked with glass syringes and hypodermic needles made of steel.  After they were utilized, the needles were washed, sharpened, sterilized and reused. 

Chloral hydrate, the first synthetic hypnotic was introduced in 1869, in 1884 the profession learned that topical cocaine numbed our membranes and skin.

A number of vital replacement hormones became available in the first half of the 20th century: Thyroid pills 1915; cortisone in 1948 and hydrocortisone in 1953.  (Cortisone saved Jack Kennedy’s life.)  Insulin was extracted from animals in 1923; prior to that juvenile diabetes was a lethal disease. 

Wright’s 1959 book told of all the antibiotics that existed at the time, and there were quite a few.   In addition to sulfa (1930s) and penicillin (1940s) doctors could prescribe Terramycin (the first tetracycline), Chlorampenicol, streptomycin, erythromycin, neomycin, nystatin and a few antituberculosis drugs including isoniazid.  Antibiotics were already being “overused” and bacterial resistance was an emerging problem.

 Narcotics including Demerol and methadone (late 1930s) were available for pain control; and we could alter blood clotting with heparin and dicoumeral (similar today’s Coumadin.)  For diseases of the heart we had digitalis, quinidine, nitrates and not much more.  Excess fluids could be flushed by an injection of a mercury based diuretic, though there was a new promising diuretic called chlorothiazide. 

 During my more than 40 years as a practicing doc I witnessed medicine’s ability to diagnose and treat improve in a step wise manner. 

Conditions that would have killed or disabled a century ago are now handled routinely, and we live, on average, twice as long as our great grandparents.  Doctors replace knees and hips, clouded eye lenses, and damaged kidneys, livers, hearts and lungs.  They balloon open and stent narrowed arteries.  Tumors are removed and major surgery is often performed through tiny openings in the skin.  Our innards are visualized with CAT scans, MRI’s, and ultrasound machines.  Primary care physicians, through regular exams, problem solving, adjusting medications, and encouraging healthy “habits” have made a major contribution to the quality and quantity of our lives

Newer and better drugs were discovered and developed and, in at least five instances, they have “changed the game.” 

–Immunization banished small pox and has nearly eradicated polio

–Penicillin and antibiotics gave us the ability to fight many of the infections that once killed people in their prime. 

–Transplanted organs survive thanks to our ability to prevent rejection, and we are getting better at controlling  an overzealous immune systems.

–Drugs turned a once uniformly lethal infection–HIV– into a controllable, chronic disease.  

–CRISPR and other gene “editing” techniques have recently emerged, and they are on the verge of curing a number of mankind’s inherited “curses”.  Disorders like hemophilia.    

By Atul Gawande’s count we have isolated and named 60,000 conditions and diseases.  Doctors perform over 4000 “medical and surgical procedures and techniques”, and there are thousands of drugs doctors can prescribe.  Some of them are special, different, and really change medicine’s ability to cure or control illness.  Others are me-too drugs, and are minimally different from one another  Many of the medications we use are expensive.  A few—in the absence of great insurance– are unaffordable. 

As Gawande points out, sometimes doctors can’t fix or help some sick people because we don’t know how…. metastatic cancer and dementia top the “lack of knowledge” list.  But (Gawande again) too often “the knowledge exists but– we don’t deliver.”  The cost of medications can be a major contributor to our “ineptitude.”

The Troubled Health Dollar by Steve Fredman

Immunotherapy and willie

Immunotherapy and Willie Nelson

Innovative discoveries are often the result of serendipity and curiosity based taxpayer funded research.  If and when “Pharma” recognizes a breakthrough—if a company then funds a drug’s testing, manufacture, distribution etc.  They get to set the price.  It’s often very high, and the company is allowed to keep a large portion of the profits.  That’s how the system currently works. 

And that’swhat Jim Allison had to deal with when he learned how to use the immune system to attack and sometimes cure metastatic cancer.  Allison was from a small town in Texas.  His father was a country physician and his mother died of lymphoma when he was still a boy.  Initially planning to follow in his father’s footsteps, he got interested in research as a high school student.  (In an interview he said that he was reluctant to become a physician because doctors have to be right almost all the time.  Researchers, on the other hand, develop hypotheses and test them.  If they aren’t wrong most of the time “they’re not on the edge.”)  He wrote poetry, liked to read, and played the harmonica.  At the University of Texas he studied biochemistry and earned a PhD.   After his post doc year he got a job in a small lab that the University of Texas/M.D. Anderson was operating in Smithville… close to Austin.  He loved country music and Willie Nelson.

While in Texas he worked out the structure of the T cell antigen receptor and gained some notoriety.  (T cells are one of the white blood cells that float around in our blood.  They are part of the immune system..one of our body’s protectors.)  At one time early in Allison’s education he recalls a professor who doubted there was such a thing as a T cell).   After his discovery Allison took a year sabbatical and became a professor at the University of California, Berkeley.

He considered himself an immunologist and his lab tried to work out the relationship between the T cell and cancer.  In animal studies T cells seemed to recognize and attack cancer cells.  They attached and, as Allison discovered, released a poison—a protein called CD28.  But the cancer survived.

There was another protein CTLA-4, that showed up after the CD28 was released.  What was it doing there?

A large pharmaceutical company had concluded it was another cell poison and they patented it—as a poison.

Allison wasn’t so sure so he developed an antibody to CTLA-4 and one of his fellows gave it to a mouse with cancer.  The results surprised Allison.  A few days after the mice were given the antibody the cancer disappeared.

Allison was dubious.  His fellow repeated the experiment, and since it was Xmas went on vacation.  Allison manned the lab and watched the mouse as the tumors grew for a few days.  Then they faded away.  Allison immediately realized he might have something big, but he had to be sure.  His group gave antibody injections to many different strains of mice, and the antibody destroyed one tumor after another.

Allison realized his success meant our understanding of cancer and the immune system was wrong.  “The biology was backwards”.

T lymphocytes, he hypothesized, recognized cancer cells, and they latched on.  They injected a “poison” that should have killed the malignant cell.  But cancer cells made an “antidote”.  It stopped the poison from working.  The antibody Allison injected into mice blocked the antidote and allowed the poison to keep killing the bad cells.  (The original “poison” was named CD28; the antidote was called CTLA-4.  The antibody blocked CTLA-4).

Bristol Myers Squibb had patented CTLA-4.  Their patent claimed CTLA-4 was the poison not the antidote.  It was wrong—backwards.  But the company had a patent and lawyers and money.

Allison was a valued scientist.  He had, years earlier, identified the structure of the T cell antigen receptor—the molecule on the surface of T lymphocytes that recognizes and binds fragments of antigens.  The discovery was big and people in the field respected him.  He was a full professor of Immunology at Cal Berkeley.  Bright ambitious students studied with him.

But he wasn’t an M.D.  His only interaction with sick people had occurred when he was a boy in a small Texas town.  He had gone on house calls with his father, the town doctor.

Allison wanted to try his antibody on patients, but he didn’t think he could take the next step without Pharma’s help.  He “spent almost two years going around and talking to big Pharma and a few small biotech firms trying to interest them in his idea.  There was a lot of skepticism.  And the fact that Bristol Myers Squibb had a patent put people off.  They claimed the intellectual property was “dirty.””

Eventually a small firm, Medarex, decided to give his antibody a shot.  It was a big investment.  “Niels Lonborg a scientist at GenPharm, a company that was purchased by Medarex (in 1997), had mice that had made fully human antibodies.   Lonborg created the antibody that later became the drug, Ipilimuab.

A drug trial was arranged.  As Allison explained in an interview, he “was totally committed” to the endeavor.    He moved to New York, to be near Sloan Kettering “to make sure nobody hurt his baby– Nobody screwed up.”   The biology of Ipilimumab was different than that of most cancer drugs.  “Usually you treat patients.  If the tumor grows in the face of treatment the drug is a failure.”  But in the treated mice the cancer grew for a while, then withered.  The tumor didn’t always regress but “there was overall survival.”

Metastatic melanoma had been uniformly lethal, and trials in multiple locations showed that Ipilimuab stopped it growth in some people.  Ipilimumab also prolonged survival.  In about 20% the effect turned out to be long term – perhaps permanent.  In March 2011 the FDA approved the drug for use in people with late stage melanoma.

In 1997 Medarex acquired GenPharm.  In 2009 Bristol-Myers Squibb paid Medarex $2.4 billion and the companies merged.   

Squibb charged people/insurers, the government $30,000 for an ipilimumab injection or $120,000 for a course of therapy.  During Ipilimumab’s first year on the market, Squibb sold $706 million worth; they took in $462 million through the first half of 2013.  And they think they will sell $1.54 billion worth of the drug in 2018.

In 1992 a few Japanese scientists found another poison/antibody combination.  The antidotes were called PD-L1 and PD-1.  Drugs that blocked them were created by Pharma researchers.  They were tested, approved by the FDA, and sell for about $150,000 a treatment.

 

Targeting cancer

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, 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 widespread 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 only 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 he became a Ciba researcher in Basel Switzerland in  1983.  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 thatfunction 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 fashioned and tested each of the new molecules they created.  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.

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 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.  (Chronic myelocytic anemia is an unusual kind of cancer.  It’s caused by two genes that switch locations and fuse.  The “hybrid” gene that is created causes these cells to keep reproducing themselves.)

The dream was realized.  A small molecule could selectively inhibit an enzyme and control or cure cancer.  Turning the chemical 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 a medication that would only affect 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.  Most cancers eventually become resistant to therapy.  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 are alive and progression-free.”  Leukemia. 2015 May;29(5):1123-32.)

Each year an additional group of people develop CML, and they, too, start taking a pill a day for the rest of their lives.

The annual cost of the drug reached $132,000 in 2014 and 146,000/year in 2016.  (The prices I’m quoting are estimates from one or another press report.)

In 2015 Novartis sold $4.65 billion of the drug. Medicare and American insurance companies were normally charged $101,000 a year.  The price in the U.K was “$31,867, France paid $28,675 and Russia spent $8,370.”  “from 2001 to 2011, sales of Gleevec world wide totaled $27.8 billion.

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.  “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 desire of the world’s wealthy to further enrich themselves.

It’s impossible to know how much Ciba Geigy spent creating the kinase inhibitors…  Geigy funded the studies “reluctantly;” at the time Matter’s was told to keep investigating other approaches to cancer; and the kinase program was supposed to be “very very small…hidden in plain sight. “

But the company, no doubt, spent millions, maybe more than a billion dollars over the years bringing a great drug to market.  “A year after its initial approval, in 2002, worldwide sales of Gleevec totaled more than $900 million.” 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 the years following Gleevec’s release the culture around drug pricing evolved.  Repeatedly challenging the market— the Swiss corporation (with a major U.S. presence) charged a little more each year or so.  They made as much money as they could—kept increasing stockholder value.   That’s what public corporations are supposed to do.

Hollywood tells us that charlatans used to sell snake oil from the back of their covered wagons for cash.  Visible money was exchanged.   Today doctors e-mail pharmacies and high priced medication/commodities are dispensed for a few buck co-pay.  Transactions for the highest prescription prices in the world are all completed out of sight and mind.  We aren’t bothered by the fact that the same drug for the same disease often costs more in the U.S. than it does in Europe or almost anywhere else in the world.   Our health insurance pays most of our drug costs, or if we’re on Medi-Cal or have Medicare D it comes out of our taxes.    

In the early years of the 21st century the Swiss company, Novartis (Gleevec) perhaps unknowingly, helped create the high priced U.S. market for cancer drugs.  Starting in 2001 at $2200 a month, $26,400 a year, Gleevec’s price increased annually.  Initially it rose in parallel with inflation; in 2005 yearly boosts started exceeding inflation by 5 percent.  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 passed 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 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)

 

 

 

your tax and donated dollars at work

Your tax and donated dollars at work

This chapter takes issue with the Pharmaceutical manufacturers claim that they charge astronomically high prices for new drugs because research is costly–that they need high profits if they are going to continue to play an important role in the development of the medical miracles of the future.

It tells the story of two recently marketed medications that improve the lives of people with metastatic prostate cancer.  Each drug was created with dollars (and pounds) supplied by taxpayers and charitable institutions.  The research labs of big Pharma were not part of the process– though Pharma did pay for most of the studies run on humans and for marketing.  Both medications have huge price tags.

I met the young man on the boat to the glass blowing island of Murano, in the Venetian lagoon.  We talked as the launch sped through the Grand Canal.  He finally, he explained, had enough money to bring his wife and child to Venice, thanks to a bonus he received.  He had recently acquired the rights to a new drug for the pharmaceutical company he worked for.  It was a treatment for prostate cancer and it was going to be big.  The prostate gland is small, round, and partially dams the flow of urine on the downhill side of the male bladder.  It tends to enlarge as men age.  Now and then a mutated cell reproduces more rapidly, lives longer, and its offspring form a cluster.  Over time there are additional mutations.  One of the abnormal cells can become cancerous, clone itself, and spread to other parts of the body.

Prostate cancer, one of the western world’s common lethal malignancies, was found in almost a quarter of a million American prostates last year.  It killed 33,000.  When advanced and widespread the disease is incurable, and when it grows in bones it can be quite painful.  Its growth and harm can be slowed or halted for a period of time by interfering with the hormone that fans the fire, by eliminating testosterone.

We’ve long known that male hormones cause prostate cancer cells to grow faster, and that surgical castration is therapeutic.  In recent years physicians have fought the malignancy with drugs that antagonize testosterone.  When the medications stop working and the disease becomes aggressive, the growth is usually stimulated by a protein inside the cancer cells, a molecule called the androgen receptor (AR).

And that’s what researchers at UCLA and Sloan Kettering tried to neutralize.  Funded by the government and people who donate money to prostate cancer research, the medical teams spent years developing a drug that could block the cancer cell’s androgen receptor (AR).  Starting with a protein that was known to have “a high affinity for the receptor, they spent years chemically altering it.” (Like– take a dress pattern and add one pocket or two pockets; a zipper or buttons.)  They added carbons, hydrogens, etc,; they came up with 200 candidate molecules ; and they tested them in the lab.  (..using “human prostate cancer cells that had been engineered to express increased levels of the receptor.”)

Two of the 200 potential drugs seemed promising.  They were well absorbed, not toxic, and were effective blockers.  UCLA patented the chemicals in 2006 and tested them on mice.  They worked, –stopped mouse prostate cancer from growing and spreading.

In 2005 Medivation, a San Francisco based “Biopharmaceutical Company” somehow learned about the drug.  They signed a license with UCLA, and walked away with a majority of the patent rights.  In return they agreed to fund all costs associated with the development and commercialization of MCV3100 (Enzalutamide).

The next big study was probably not funded by Medivation.  It was performed in 2009 by the U.S. department of defense, and it showed that MCV3100 had “significant antitumor activity.”

In October of 2009 Medivation got a partner–made a deal with Astellas, a large Japanese pharmaceutical company.  Medivation received $655 million…and Astellas, got global rights” to the drug.  The two companies then financed a huge international assessment —1600 men with metastatic disease got either the drug or a placebo.  The men who took Enzalutamide on average lived 5 months longer than those receiving placebo.  Treated patients had “a 37% reduction in the risk of death.”

FDA approved the use of Enzalutamide in men who had failed standard chemotherapy.  The initial planned price of Enzalutamide was $7450 a month— $59,000 for 8 cycles — $89,000 a year.

In 2014, based on a new study, the FDA approved the use of Enzalutamide as the first drug given to people with metastatic disease.  Patients didn’t have to first fail treatment with something else.  The new indication meant patients would live longer after they started therapy.  They would ingest more pills and buy more medicine.  A year of therapy in the U.S. would now cost $129,000.

Astellas had international rights and sold the medicine for a lot less in other countries.  A 40 mg pill, for example was sold in the U.S. for $88.  Medicare paid $69.  And the price for the same product in Canada, France, and the U.K, was $20, $27, and $36.  In the two years between 2012 an 2014, Medicare’s Enzalutamide cost went from $35 million to over $440 million annually.  The price Americans paid troubled some; there were editorials and the obligatory belt-way outcry.

UCLA owned of over 40 percent of the drug’s patent.  In 2016 they sold their residual rights to Royalty Pharma for $1.14 billion—paid over many years.  They then settled for an up-front cash payment of $520 million.

In 2015 Astellas sold $2.2 billion of the drug.  The following year Pfizer bought Medivation for $14 billion.  In the first quarter of 2017 Pfizer sold $131 million worth of the medication.

In the West you almost have to get industry involved.  It’s not that UCLA and Sloan Kettering didn’t know how to run a controlled trial.  They did.  But pharmaceutical companies have big bucks and are better equipped to coordinate the testing of over a thousand people in 15 countries.  They are experienced at moving drugs through the FDA and getting them approved promptly and efficiently.  And, of course, they know how to market.

Once corporations are involved, the price being charged has little to do with the cost of creating a drug.  In the case of Enzalutamide, before they could make a profit Pfizer had to sell enough high priced medication to recover their $14billion investment.

High prices for cancer drugs, often a hundred thousand dollars a year, have become the norm.  If a company charges much less stockholders will wonder why.  The goal of most corporations is to enhance stockholder value by charging as much as they can get away with.

In the Enzalutamide case everyone was happy.  The poor guy with prostate cancer got an extra 5 months of life, and according to Astellas, he didn’t have to go into bankruptcy to be treated.    ”80% of patients with Medicare or private insurance have a monthly co-payment of $25 or less. 2,000 men with poor or no insurance and household incomes of $100,000 or less received Xtandi free.”  UCLA got an infusion of cash.

The system we’ve created is not really “capitalism” and it’s not fair to call it “corporate welfare”.  It allowed the lead researchers to claim a”37.5% stake in the drug’s royalty interest.”  Private industry, investors, the Howard Hughes Foundation, and Medivation did well.

Few seemed  troubled by the fact that a drug developed with public and donated money ended up enriching a few and selling for a pretty penny—a price that was usually paid by a needy taxpayer’s private or public insurance.

Bernie Sanders claims that nearly one in five Americans between the ages of 19 and 64, (35 million people) – decided to NOT fill their prescriptions in 2014, because the drug cost too much.  At the same time spokesmen for the pharmaceutical industry were repeating their mantra:  the high costs are needed to support medical research.   If we want to cure Alzheimer’s and cancer we need Innovation.

Enzalutamide’s chief competitor, Arbiraterone (Zytiga), was created at Cancer Research UK, a charitable fund with its own research institute.  In 2012 an anonymous donor gave the organization ten million pounds, (13 million dollars) and asserted that “if you do what you’ve always done, you’ll get what you’ve always got.” Promoting scientists who “think differently,”  the huge concern finances “the work of more than 4,000 researchers, doctors and nurses throughout the UK, and supports over 200 clinical trials and cancer related studies.”  The drug its scientists created, Arbiraterone (Zytiga), is a bit cheaper than the U.S creation, but it’s pricey and not really affordable to a guy without good insurance.

Here again Pharma wasn’t brought in until the medication was created and was ready to be tested on humans.  And here again the enemy was testosterone.  The role of male hormones was firmly established in the 1940’s when  University of Chicago physician, Charles Huggins showed that metastatic prostate cancer could be controlled for a few years with surgical castration or female hormones.  During the subsequent decades orchiectomy– removing the testicles—commonly kept the cancer from growing for a period of time.  Then the malignancy started to expand.  Researchers wondered if the cells had lost their dependence on male hormones—or if they were responding to testosterone made somewhere in the body.   What would happen, they asked, if a drug totally impeded a person’s ability to make male hormones–androgens?

The body makes male hormones and cortisone from cholesterol.  (Raisins and wine are made from grapes.)  An enzyme, CPY17, is needed for the conversion.  The reaction can be blocked by an antifungal agent, Ketoconazole.  All this was known.

Ketoconazole is toxic.  In patients with prostate cancer it’s not useful as a drug, so investigators decided to modify it.   Using three dimensional models, an Institute of Cancer Research (IRC) team (working in a unit of Cancer Research UK) studied a number of compounds and eventually found one that worked.  It didn’t seem to be toxic and it “specifically and irreversibly” blocked CYP17.

The “team” filed a patent and licensed the drug to a German Pharma company, Boehringer Ingleman.  Phase one studies showed the drug blocked androgen production in people, but the pharmaceutical company’s scientists didn’t want to spend more money on a lost cause.   They believed that late stage prostate cancer no longer needed male hormones to grow.  Boehringer returned the drug’s license and IRC started over.

https://www.icr.ac.uk/news-features/latest-features/abiraterone-a-story-of-scientific-innovation-and-commercial-partnership

Arguing that they wanted to get the drug into needy people’s hands as soon as possible, the IRC next assigned the rights for commercialization to publically traded BTG, a UK-based healthcare company.  BTG, in turn, licensed the product to Cougar Biotechnology.  And Cougar “began to develop a commercial product”.  Studies proved the drug worked, helped cancer patients.  In May 2009 Cougar was acquired by Johnson and Johnson for about $1 billion.  Two years later the FDA approved arbiraterone’s use in combination with prednisone—a form of cortisone. (In addition to blocking the body’s production of androgens, Arbiraterone blocks the body’s ability to produce of cortisone, and cortisone is an essential hormone.)  Arbiraterone was sanctioned as a treatment for late-stage prostate cancer in men who have already received standard chemotherapy.  Called Zytiga, it costs $5000 a month in the U.S., and it’s not a cure.  After a mean of 8 months the drug stops working or the average patient has died.  Thus the cost of treating a patient averages about $40,000.

In the UK where it was developed by a charitably funded organization, the drug is marketed by Janssen.  Its original cost was 2930 pounds –$3820 a month, a price that British regulators (NICE) decided was not cost effective.  The National Health Service wouldn’t pay.  The company then negotiated.  The government was willing to walk away so negotiations worked.  The U.K. got a “deal.”  The NHS now pays 2300 pounds ($3000) a month “for the first 10 months of therapy.  For people who remain on treatment for more than 10 months, Janssen will rebate the drug cost of abiraterone from the 11th month until the end of treatment.”

 “A decade ago, cancer drugs cost around $5000 per month, but that has now doubled to more than $10,000 per month.  I think (companies) charge what they think they can get away with, which goes up every year,” Peter Bach, MD, Sloan Kettering, New York. 

 

Solutions

Solutions   

Capitalism, like the software on your computer or iPhone, should periodically be updated. (Trevor Noah—paraphrased)

  • Our goals include: Fairness to those who strive, create, and manufacture.
  • Avoiding actions that are likely to inhibit innovation.
  • Changing a culture that encourages big Pharma to charge a lot and keep raising prices because no one is looking and people with small drug co-pays don’t seem to care,
  • Not rewarding manufacturers who spend billions acquiring other companies so they can control a promising new drug.
  • Not having our attention diverted by the outrageous antics of the gougers.

Where the market place works I would tread lightly.  Negotiations, talking, bargaining, and reaching a deal is sensible.  It’s how the VA and private insurers establish the price they pay.

The dollar amounts they agree on also determine what Medicaid pays.  A special law asks manufacturers who want to sell to Medicaid to give each state program “the best price offered to any purchaser… (The negotiated prices companies give to private insurers).  In return, manufacturers who sign on can sell all the drugs in their arsenal to every state’s Medicaid program.”The legislation put a cap on price increases.  The cost of drugs sold to Medicaid can’t rise faster than inflation.

And it contains a complex formula of rebates–money given to states.  I suspect the funds are an attempt to plug a loophole that allows companies to give “discounts and concessions” to some insurers.   The rebates to states were increased by the affordable care act (ACA).  The minimal kickback rose “from 15.1 percent to 23.1 percent.”

Medicare:  People over 65 paid a payroll tax all their working years.  That money (incompletely) underwrites Medicare A, hospital insurance.

Once insured by Medicare A, people over 65 must still pay for– or buy a policy that covers– out of hospital health care (Medicare B) and/or drugs (Medicare D).

To receive medications under “D” people need to enroll, pay a monthly fee, and sign up for a plan.

The plans “help cover the costs for prescription drugs, may lower a person’s prescription drug costs, and may protect against future higher costs.” Then again they may not.

The Medicare D drug co-pay + the money the government kicks in, probably exceeds the co-pay + the insurance company cost for meds used by young people who have drug insurance.

Private insurers bargain.  D plans are not allowed to negotiate drug prices.

Easily fixed, you say.  Only if people care.

Most generics:  there’s a vigorous marketplace.  The demand is worldwide.  We face intermittent shortages of some drugs.  The production of sterile intravenous fluids and injectables can be costly.

As long as there’s more than one manufacturer and there’s competition, price is a secondary consideration.  We need to worry more about the availability of some medications and sterile fluids.  I’d ramp up the FDA’s ability to inspect and certify production facilities abroad.  And (as with purchases of weapon systems) I’d find a way for government to guarantee minimal purchases of needed fluids and drugs at a negotiated price.  In return I would want manufacturers to agree to build needed, state of the art factories—hopefully in the U.S. and Puerto Rico.

Gouging:  The examples in my blog are merely the top of the iceberg.  We need hearings where congressional legislators do more than express their outrage.  They need to create a law.

A recent article that demonstrates an ongoing need (and perceived permission) to exploit:  “Painkiller that once cost $138 is now $2,979. — An Irish drug maker has jacked up the price of a painkiller to nearly $3,000 a bottle. The drug is 22 times more expensive than when the company acquired it in late 2013.”  http://money.cnn.com/2018/02/15/investing/drug-prices-vimovo-horizon-painkiller/index.html )

For brand name high priced medications I can’t think of anything short of regulation that will work.    I realize the word “regulate” to some, is as onerous as gun control.  It’s easy when you’re young and healthy to claim to have no appetite for government “interference.

My “regulation” proposal:  When a new, drug gets approved by the FDA and each year thereafter, the manufacturer will fill out an IRS LIKE form.  As with the income tax—most filings won’t be scrutinized.  If and when a company is audited they will have to provide evidence that their figures were honest.

On the form:

REVENUES:  manufacturers will estimate first year revenue based on projected price and sales.  Each subsequent year they will use actual prior year revenues.

COSTS AND PROFITS:  manufacturers will list the following on the form:

Cost of actual research+ development for this drug– paid by the company.

Cost of invested money:   The Tufts—industry quoted– study assumed invested funds, placed elsewhere, would earn 10% a year.  Sounds high, but for now let’s use the company number.

Profit:  say 10 percent per year—max.  (Remember companies use the results of research paid for by taxpayers; new drugs get 5 years of exclusivity.  Public monies are (at times) used to develop and run the initial tests on new meds; many a drug’s niche has been established by University based researchers.  The tax payer’s helping hand may fall short of “corporate welfare”…but should our craving for innovation be rewarded with extravagant profits?)

Promotion costs:  10 percent years one and two.

Contribution to company’s overall research:  If the company spends 8 % of its revenue on research, add 8 %.

Moneys spent when one company buys another company:  no deduction

Money spent on research using NIH or charitable money:  no deduction

CALCULATE:  Revenue (projected the first year- actual thereafter) MINUS costs and profits.

AND DIVIDE REVENUE MINUS COSTS AND PROFITS BY 5 years.  After the first five years divide by the number of years the drug is on the market.    (The really expensive–billion + dollar a year drugs earn back their costs very quickly.)

The formula would establish the maximum companies can charge for each drug.  If a medication doesn’t sell because it’s too pricey, manufacturers can, of course, charge less.

PRICE INCREASES:  As a result of inflation and subtle hikes in production and distribution costs, manufacturers should be allowed to raise drug prices a certain percent each year.  The amount of an automatic increase needs to be worked out by our legislators. Manufacturers should also be permitted to increase a drug’s price (amortized over a few years) when they update their factory or if the cost of raw materials goes up.

(There is currently no limit on drug price increases and most drugs have relatively little marketplace competition.  That has created problems.  We need a drug pricing formula that is reasonable and fair to both sides. —Prices don’t always go up. Cheap imports from Asia have pushed the price of many consumer goods down, and American wages have, on average, been flat for decades.  The U.S. went through a period of deflation in the early 1930 and we lived through inflation rates of or above 10 percent when Jimmie Carter was president.  During the last five years the U.S. inflation rate was 2.1 percent or less and that’s bound to change.  )

Forms will be signed by the CEO and submitted annually.  A few will be audited.  Fraud will be punished with jail time.

All formulas have flaws.  Please point mine out.  Let’s refine an approach so when and if our leaders decide to deal with the problem they will have a road map.

 

Shortages of drugs

Even if we’re unwilling to fix the high costs of many drugs we have to deal with the other problem plaguing the pharmaceutical industry: shortages of needed drugs—especially sterile injectables.  it’s been  happening for close to a decade and it’s a serious problem.

 Doctors who can’t get the therapies they normally use are winging it–using alternative medications.

There’s a grey market.  Nobody wants to run out of needed medications or infusions, and some facilities have paid a premium and stockpiled them.  That’s illegal you say.  Tell that to the person with a serious infection who needs the right antibiotic now.

There were 257 new drug shortages in 2011; then the number started going down.  And there have been 250 ongoing shortages annually between 2012 and 2015.  Most were for generic sterile injectable drugs.

“89 % of the drugs we in the U.S. take are generic.”  Some are made in the U.S. but many are made abroad.  “The U.S.’s top 5 sources of pharmaceutical imports by “value” (in 2015) were Ireland, Germany, the U.K., Switzerland and India.” –Indian companies produce large volumes of cheap generics whose U.S. patent protection has expired. “They now make up eight of 10 prescriptions filled in the U.S.”   These medications are relatively inexpensive and only “account for 22 percent of spending, hence they are low on the value list.  China doesn’t sell many “finished drugs” here but they produce 40% of the global chemical components used for our medications.   https://www.bloomberg.com/news/articles/2017-01-17/where-the-u-s-actually-gets-its-drug-supply-quicktake-q-a

More than 50% of our generic drugs are supplied by one or two manufacturers. Some medications have “Thin profit margins…and that can lead to shortages, manufacturing delays, or decisions to discontinue a drug altogether.”

In the US, a year-long a shortage of benzathine penicillin G has made treating syphilis – a disease that is growing in prevalence – more difficult. In Brazil, a three-year shortage of the drug occurred when they were having an outbreak of syphilis, a disease linked to severe malformation in babies.May 21, 2017

The 2017 Hurricane in Puerto Rico, where mini bags for IV solutions are manufactured, led to temporary shortages.

In 2011 Bruce Chapner, an investigator at the national cancer institute, wrote about the scarce supply of “workhorse cancer drugs”,  various antibiotics, blood pressure meds, and electrolyte solutions.  Worldwide demand was increasing.

A number of the legal and bureaucratic hurdles were preventing large manufacturers from entering the market and keeping some of the drugs made elsewhere out.  The production of sterile injectables was also hampered by the FDA’s buy and bill rule.  “Reimbursement for injectable generics can’t be more that 6% higher than the average sales price the preceding quarter.”  So injectables were less profitable and, manufacturers made them “using older and less efficient production facilities.”  Contamination led to plant closures.  Cancer drugs made in the U.S. (he hypothesized) can be sold abroad for more money.  He didn’t say it’s happening, just that it makes sense.  http://www.nejm.org/doi/full/10.1056/NEJMp1112633#t=article

Companies told investigators for the pew trust that “they needed incentives, either in the form of guaranteed-volume contracts or the ability to retain contracts, to mitigate the risks of making investments.”  They needed predictability.  Without accurate information about the expected demand for a product, especially low-volume, low-margin creations, companies were reluctant to invest in setting up additional manufacturing capabilities to protect against future shortages.” http://www.pewtrusts.org/en/research-and-analysis/reports/2017/01/drug-shortages

In 2017, the top 3 generic manufacturers were Teva, an Israel based company with $9 billion in sales, and factories all over the globe.   Sandoz—a Swiss company that is  the generics division of Novartis: It has over $8.5 billion in sales, 25,000 employees worldwide, and 30 manufacturing sites.  And Actavis, a $70 billion company that is headquartered in Dublin Ireland and has 10,000 employees.  https://www.thebalance.com/top-generic-drug-companies-2663110

Trump promised to lower prescription drug prices.  His proposals seem to be mainly aimed at generics, even though,(according to the 2016  Government Accounting Office analysis) over a five year span—2010 to 2015– the price of “1441 established generic drugs “dropped about 10 percent and the price of “2,378 unique generic drugs” decreased 59 percent.   The report identified 351 established drugs that “experienced an extraordinary price increase”— 100 to 2000% .   (Some of the hikes were probably caused by higher manufacturing costs; and some were the result of a market system that allows companies to gain control of a medication and see what they can get away with.  The role of shortages was not discussed.)    https://www.gao.gov/assets/680/679022.pdf

Amidst the public outcry for lower drug prices, shortages could, at least theoretically, be affected by business difficulties.  In December 2017 Teva laid off 14,000 workers and closed a few manufacturing facilities.  Profit margins were falling and they were under pressure in the U.S. from “major chains, wholesalers and benefit managers who had gotten together and demanded discounts.”  To survive and be profitable they planned to discontinue some drugs and close or sell “a significant number of manufacturing plants in the United States, Europe, Israel and other markets.”  https://www.nytimes.com/2017/12/14/business/dealbook/teva-pharmaceuticals-generic.html

The suppliers of generic drugs and their facilities are scattered and can’t be regulated.  In 2015, acting on Obama’s executive order, the FDA published a number of rules to help alleviate the shortage problem.

Before companies stop making any or enough of a needed drug, (within the limits of the law) they have to notify the agency.  The government can then “determine if other manufacturers are willing and able to increase production”..The FDA “was told to expedite inspections and reviews of submissions from manufacturers attempting to restore production—and manufacturers who were interested in starting new production.

And the FDA was told to bend a few rules: “Exercise temporary regulatory flexibility for new sources of medically necessary drugs; help affected manufacturers identify the cause of the shortage; and develop risk mitigation measures, such as the use of sterile filters, to allow individual batches of a drug product initially not meeting established standards to be released.

As an example of the complexity and how it’s handled:

In 2017 “Due to the ongoing critical shortage of injectable drugs used in critical care” the FDA  reviewed Pfizer’s  stability data and extended the expiration date of a number of injectables.

According to the FDA approximately 20 million IV saline bags are used per month in the United States.  IV fluids are used to hydrate, as a vehicle for infusing medication, and much more.  In the U.S. they are largely supplied by:  Baxter, a U.S. company, B.Braun Medical–The American branch of a German company that has operations in 64 countries–, and Hospira (a Pfizer owned company).  the U.S. manufacturer, Baxter, has “15 manufacturing sites in the continental U.S., three in Puerto Rico, and eleven in Latin America and Canada.”   The supply of sterile solutions in the U.S. has been borderline for years.  In 2017 there was a shortage, and the FDA acted.  The agency can’t require a manufacturer to make more. But in March they “checked out Fresenius Kabi’s Norway, saline producing facility.  It passed inspection and the agency “temporarily allowed Fresenius Kabi to distribute normal saline in the U.S.”  In April 2017 the FDA allowed Baxter to temporarily import normal saline produced in Spain.  http://www.jhconline.com/iv-shortage-tests-providers-and-suppliers.html

Currently the FDA says it has 4 “officers” and others working on the problem.  They updated the ASHP—the American Society of Health System Pharmacists during a round table discussion in November 2017.  At the time the FDA was dealing with 170 newly reported shortages (down from 305 in 2012).  The typical drug remained the injectable product that was off patent and had few suppliers; shortages were still commonly the result of “quality problems during the manufacturing process.”

Most companies were notifying the FDA as required by law, and the FDA was encouraging, talking, strategizing—and increasingly relying on foreign inspection histories.  But the FDA was still toothless.  They couldn’t require manufacturers to do anything.

The conference ended with a number of recommendations (? To Congress; ? to the FDA’s rule makers)  They included “requiring” manufactures who faced impending shortages to establish contingency plans;  and creating “incentives” that would encourage drug makers to produce scarce products.  Then, noting that the numbers of generic manufactures were declining, the Pharmacists wanted the FTC– federal trade commission to “review drug company mergers and acquisitions.”

http://www.ajhp.org/content/early/2018/03/14/ajhp180048?sso-checked=true

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what can we expect in the future?  17 % of the 7.5 billion people on the planet live in India and 20 percent of them survive on, at most, $1.25 a day.  India’s large pharmaceutical industry (and their courts) seems to be more interested in serving the medical needs of locals than they are in enriching the coffers of big Pharma.   Drugs are relatively cheap and most are generic.

Newly created medications, some of which are major advances, are largely unavailable in their corner of the world during their first 5-7 years.  —After India joined the world trade organization in 2005, their government started allowing Pharma to patent drugs.  But their courts approach to the law is a bit different than ours.  As in the western world to be patentable an item must be new, useful, and non-obvious. The U.S. courts allow companies to patent new versions of drugs (long acting, capsule versus pill, different inactive ingredients.)  The courts in India tend to say changes of this type are not “new” thus not patentable.  They have also ruled that the recently developed drugs that cure hepatitis “are novel but similar to a known compound (sort of true) and that the new drugs didn’t show a significant improvement in efficacy. (wrong.)  Nonetheless when the U.S. patents expire, manufacturers in India tend to get to work.

18 % of the world’s inhabitants live in China.  Their pharmaceutical manufacturing sectors are also big and growing. No telling how the U.S. will solve it’s drug shortage problem in the decades to come.