May 2018 – THE WONDERS WE CREATED AND THE POTHOLES WE DUG

SHORTAGES

May 8, 2018February 13, 2021 by stevefredman

On one level we’re talking supply and demand–the quantities of a medication that are required and available at various price levels.

When a drug is needed for a non life-threatening conditions and it costs too much, people who don’t have the money don’t buy it. In “developed” countries, doctors and patients who are facing a life threatening illness expect the needed drugs to be accessible when they need them.

Climate is what we expect. Weather is what we get– Mark Twain.

“With the proper drugs” 90 percent of the 3.000 children a year who are afflicted by T-cell acute lymphoblastic leukemia are curable. “Between 2009 and 2019, nine of the eleven medications doctors used to treat the disease were intermittently hard to get.⁵” In 2019 two companies were producing Vincristine and one of them, Teva, stopped. “This is truly a nightmare situation,” one pediatric oncologist complained. “Vincristine is our water. It’s our bread and butter.” Another doc added: “You either have to skip a dose or give a lower dose, or beg, borrow or plead.” We will still be able to cure childhood leukemia but it’s harder “with one hand tied behind your back.¹⁴”

Bruce Chapner, an investigator at the National Cancer Institute, wrote about the limited availability of “workhorse cancer drugs”: and the astounding short supply of generic drugs: antibiotics, blood pressure meds, anesthetic agents and electrolyte solutions.²¹

56 percent of hospitals surveyed by the FDA reported they had changed patient care or delayed therapy in light of scarcities: 36.6 percent said they had rescheduled non-urgent or emergent procedures. “In Europe, the past five years have seen global shortages of at least ten essential oncology drugs. Two of five European doctors surveyed said the problems occurred on a weekly basis and typically last a few months.”²⁰

After a new pharmaceutical is created it can’t be marketed until it’s shown to be beneficial and relatively safe. In the U.S. its creator is then given a multiyear monopoly. When that ends others can fabricate and distribute the medication. Most of the drugs people take are generics, and many are made by one of the planet’s three top generic manufacturers:

Teva, an Israel based company that has $9 billion in sales, and factories in many countries,
Sandoz—a Swiss company that is the generics division of Novartis and has $8.5 billion in sales, 25,000 worldwide employees and 30 manufacturing sites, and
Actavis, a $70 billion company that is headquartered in Dublin Ireland and has 10,000 employees.¹

More than 50% of our generic drugs are supplied by one or two manufacturers. Some medications have “Thin profit margins that can lead to shortfalls, manufacturing delays, or decisions to discontinue a drug altogether.¹⁶” When several companies manufacture a medication, competition can lead to a “race to the bottom.”– A destructive drop in the prices.

In the 21^st century U.S. more than 100 meds were hard to get “at any given time” Sixty three% of them were generic sterile injectable drugs.¹⁵

As meds became less profitable, manufacturers often don’t upgrade. They keep producing the drugs in “older and less efficient production facilities.” When contamination leads to plant closures manufacturers don’t always rebuild.³ Companies with factories that need updating “need predictability– incentives in the form of guaranteed-volume contracts to mitigate the risks of making investments.” “Without accurate information about the expected demand for low-volume, low-margin medications, companies have been reluctant to create additional manufacturing capabilities.²”

Limited availability is also affected by business difficulties. In December 2017, facing falling profit margins, Teva laid-off 14,000 workers and closed a few manufacturing facilities. 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.^4”

In June 2018 after 31 senators wrote a letter to the head of the FDA “requesting his assistance with the availability problem” The agency task force suggested using “incentives” to encourage drug makers to produce scarce products. They wanted the FTC– federal trade commission to “review drug company mergers and acquisitions.⁵”

In 2011 there were 257 new drug shortages. The next three years there continued to be 250 shortfalls a year, and in 2019 the number of meds in short supply started rising. In 2015, acting on Obama’s executive order, the FDA published a number of rules to help alleviate the problem. Before companies stop making any or enough of a needed drug, (within the limits of the law) they are supposed 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 from manufacturers who were interested in starting new production.

The agency was also told to bend a few rules: “Exercise temporary enforcement discretion for new sources of medically necessary drugs;” help affected manufacturers identify the reason there wasn’t enough of the needed medication. They developed risk mitigation measures, like using sterile filters, to allow individual batches of a drug product initially not meeting established standards to be released.¹⁷

Currently the FDA says it has 4 “officers” and others working on the shortage problem. 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 agency was toothless. They couldn’t require manufacturers to do anything.

In 2017 “Due to the ongoing critical lack of injectable drugs used in critical care” the FDA extended the expiration date of a number of Hospira injectable medications.⁶

“The effectiveness of a drug may decrease over time, but much of the original potency still remains even a decade after the expiration date. Excluding nitroglycerin, insulin, tetracycline and liquid antibiotics, most medications are long-lasting”. So: why are drugs dated? A law passed in 1979 requires drug manufacturers to stamp an expiration date on their products. It marks the final month and day the company can guarantee the full potency and safety of the drug. In August 2018 the FDA reported on a stockpile of expired drugs that was tested for the military. As long as 15 years after their expiration date, 90% of the hundred prescription and over-the-counter medications “were perfectly good”.⁷

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.

Global demand is increasing, and some shortages are worldwide. In Brazil, a three-year shortage of benzathine penicillin G (BPG) occurred at a time when the country was having an outbreak of syphilis, a disease linked to severe malformation in babies. Benzathine penicillin G is the only long acting antibiotic known to cross the placenta and prevent mother-to-child transmission of syphilis. Worldwide, “just four companies produce the active ingredient for penicillin. The medicine offers little profit, and those companies keep production levels low.⁸”

In the US, the number of people with syphilis has grown. In 2019 more than 115,000 cases were reported to the CDC. The drug that best treats the disease, Procaine Penicillin, is produced for the U.S. by Pfizer. It was in short supply prior to March 2019. It’s currently available.

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 with 3 manufacturing plants in Puerto Rico. (They also have “12 manufacturing sites in the continental U.S. and eleven in Latin America and Canada.”); Bags are also manufactured by B.Braun Medical–The American branch of a German company that has operations in 64 countries: and Hospira (a Pfizer owned company).

The supply of sterile solutions in the U.S. had been borderline for years. In September 2017 Hurricane Maria with sustained wind of 155 mph blew through Puerto Rico and knocked out the islands power. When we visited San Juan the following January the warm Caribbean sun and the gentle island breezes masked the destruction. The hotels that functioned were filled with construction workers and there were no tourists. The power in Ponce had been turned on the very day we visited a shop and spoke with the tanned, smiling proprietor. If someone in an apartment building had a generator electric wires from other apartments hung from windows and were plugged in. Some houses were roofless. For others blue tarps kept the rain out.

Baxter asserted that their “3 Puerto Rico sites were minimally damaged and that they had resumed “limited production activities within a week using diesel generators”; but the U.S. needed bags; and the FDA acted. The agency can’t require a manufacturer to make more. But in March they “checked out Fresenius Kabi, Norway’s 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.⁹

The world will soon face a shortage of antibiotics that treat drug the resistant bacteria that, according to the CDC, infect at least 2.8 million Americans a year and contribute to 35,000 deaths. In the last decade at least two start ups created a drug that destroys resistant organisms. The FDA approved their use, and they are available. But the involved companies aren’t selling enough medicine, and they are considering bankruptcy.²²

https://www.thebalance.com/top-generic-drug-companies-266311
http://www.pewtrusts.org/en/research-and-analysis/reports/2017/01/drug-shortages
http://www.nejm.org/doi/full/10.1056/NEJMp1112633#t=article
https://www.nytimes.com/2017/12/14/business/dealbook/teva-pharmaceuticals-generic.html
https://www.fda.gov/media/132058/download http://www.ajhp.org/content/early/2018/03/14/ajhp180048?sso-checked=true
https://www.wisc-asc.org/news/382129/FDA-Approved-Drug-Extended-Use-Dates-List-.htm
https://www.health.harvard.edu/staying-healthy/drug-expiration-dates-do-they-mean-anything
https://www.aljazeera.com/indepth/features/2017/05/world-suffering-penicillin-shortage-170517075902840.html
http://www.jhconline.com/iv-shortage-tests-providers-and-suppliers.html
(N Engl J Med 2014: 371: 1761-1763)
https://www.kccllc.net/achaogen/document/8851500190415000000000003
https://www.in-pharmatechnologist.com/Article/2019/06/10/Achaogen-sells-remaining-assets
https://www.fiercebiotech.com/special-report/30-xerava
https://www.nytimes.com/2019/12/25/health/antibiotics-new-resistance . https://www.sec.gov/Archives/edgar/data/1373707/000119312513048887/d441172ds1.htm
https://www.nytimes.com/2019/10/14/health/cancer-drug-shortage.html
causes and non causes of drug shortages by Albert Brill. http://getmga.com/wp-content/uploads/2017/04/HSCA-drug-shortages-Jan-2017.pdf Drug Shortages: Root Causes and Potential Solutions A Report by the Drug Shortages Task Force 2019 a report chaired by the FDA https://www.fda.gov/media/131130/download
The generic drug industry has brought huge cost savings. That may be changing.By Carolyn Y. Johnson Washington Post. August 1, 2017 https://www.washingtonpost.com/business/economy/the-generic-drug-industry-has-brought-huge-cost-savings-that-may-be-changing/2017/08/01/ee128d0a-68cf-11e7-8eb5-cbccc2e7bfbf_story.html
Third Annual FDA Report to Congress on Drug Shortages for Calendar Year 2015 https://www.fda.gov/media/96113/download
file:///C:/Users/User/Documents/Bipartisan%20letter%20to%20FDA%20on%20Drug%20Shortages%20from%20the%20Senate.pdf
https://www.pewtrusts.org/en/research-and-analysis/articles/2020/01/16/antibiotic-sales-for-animal-agriculture-increase-again-after-a-two-year-decline
https://cancerworld.net/spotlight-on/shortages-of-generic-cancer-medicines-are-harming-patients-so-why-cant-we-fix-it/
Bruce A. Chabner, M.D.December 8, 2011N Engl J Med 2011; 365:2147-2149 https://www.nejm.org/doi/full/10.1056/NEJMp1112633 \
For a startup to be financially successful they have to develop a very expensive medication (see gene therapy), create something that is truly innovative, or sell a lot of product. Vis-à-vis antibiotics, if physicians start giving one of the new antibiotics to every sick person whose infection might be caused by resistant bacteria, the drugs will be over used. With regard to the companies that developed the medications we need: Achaogen, incorporated in 2002, “developed and commercialized an “antibiotic treatment against multi-drug resistant gram negative infections.” Their research was funded “in part by a $124.4 million contract” with BARDA, part of the government agency that “was established to secure our nation from biological threats…as well as emerging infectious diseases.” Investors apparently hoped their drug, Plazomycin –Zemdri, would bring in millions. (It’s reported revenue was $800,000 during the last 6 months of 2018)–‘Unfortunately the new antibiotic is not a true innovation. It is an altered version of a drug that was developed in 1963 by scientists employed by Schering. They worked with a naturally occurring product of a bacterium, a micromonospora, and they produced the antibiotic gentamycin.. Scientists were later able to chemically modify it and produce other antibiotics: neomycin—then Amikacin– and now plazomycin. All are aminoglycosides and can harm a person’s kidney or hearing. Doctors mainly use them when they are really needed.¹¹

Another new antibiotic in financial trouble, the tetracycline Xerava—Eravacycline was developed by a start up using technology pioneered at Harvard. A legit medical advance, the drug was launched in 2018 at an announced wholesale cost of $175 per day. It effectively treats a variety of Gram-positive and Gram-negative bacteria, including multi-drug resistant strains, such as MRSA and a resistant enterobacteriae.

The medication apparently got off the ground when Congress was convinced that its creation would have biotech signficiance. In 2011 and 2012 Congress authorized $67 million for the development of eravacycline “for the treatment of disease caused by bacterial biothreat pathogens.” Currently the government money is running out; doctors are using the medication appropriately–only when indicated. Its developer, Tetraphase, has investors and it’s struggling.¹²

There’s a nonprofit at Boston University that’s working on the antibiotic resistance problem. It’s called CARB-X and it claims to be “the world’s largest pre-clinical and early development pipeline of antibiotics and other therapeutics. Since it was established in July 2016, it has invested $160.6 million in 52 projects in seven countries.” (Like an average of $3 million per project to develop a next generation drug. Hmm.) It is funded by the US Department of Health and Human services, The Wellcome Trust, A UK Innovation Fund, and the Bill & Melinda Gates Foundation.¹³

GOUGING

May 7, 2018February 13, 2021 by stevefredman

To be audacious with tact you must know when you’ve gone too far. Jean Cocteau

When I started learning about Martin Shkreli I expected to find a canary in a coal mine– the Edward Snowden of drug prices– an in your face rebel trying to force the country to stare hard at its absurd drug pricing system. But that wasn’t who he was. Shkreli, the son of immigrants, went to business school and worked on Wall Street. He allegedly (when young and new) exaggerated or lied to some of his hedge fund clients. He insists the people who stuck with him all made a profit, so no harm done. He later became the head of a pharmaceutical company and overpaid for a drug called Daraprim.

The medication was developed 75 years ago and was originally used to fight Malaria. It was one of many drugs developed by Nobel Prize winner Gertrude B. Elion, a woman who rose to the top in a discipline dominated by men. The daughter of a Lithuanian dentist who was bankrupted by the 1929 stock market crash, she graduated from tuition free Hunter College, and worked as a lab assistant to earn the money needed for her graduate studies. When she was finally able to study advanced chemistry she noticed she was the only female in the class.

The medication she created, Daraprim was owned by Glaxo Smith Kline. It had been around for decades and couldn’t have been very profitable. In 2010 the drug was sometimes used to treat Toxoplasmosis, a parasite transmitted by cats that can damage the eyes and brains of newborns.

In people with advanced AIDS, people whose immune system has lost its ability to protect them from the microscopic organisms that live harmlessly and unobtrusively in our bodies, the parasite can invade the central nervous system. After it gets a foothold it can cause focal cranial lesions and encephalitis, a potentially lethal inflammation of the brain. Daraprim, also known as pyrimethamine, plus sulfadiazine and anti viral therapy is the treatment of choice for the infection.

HIV destroys T cells, immune cells that protect us from invaders. Over years untreated people with HIV have fewer and fewer of these defenders. When their CD4 count, the number of circulating T cells, drops below 200, the person affected has the full blown disease– “AIDS”. Creatures that were barely surviving start to wreak havoc. When the CD4 count goes below 100, the parasite that causes Toxoplasmosis can become a problem.

A little over a million Americans are living with HIV. The majority are taking drugs every day. The virus is suppressed and is not destructive. 15% of those infected are unaware. A little over 6000 U.S. deaths annually are attributed to HIV. I don’t know how often Toxoplasmosis contributes to their demise.

Made in a few places in the world, Daraprim had long been available and cheap. Glaxo Smith Kline couldn’t or wouldn’t raise the drug’s price for practical, philosophic, and public perception reasons. So it was kind of a financial loser. One of several drugs that was sold or dumped by GSK, Daraprim was briefly owned by a drug company called Tower holdings. After a series of drug company acquisitions and mergers the drug became the property of Impax of Hayward California.

The company (allegedly) claimed they sold $9 million dollars worth each year and made little or no profit. In August 2015 they got rid of the product. They convinced Turing Pharmaceutical to buy it for $55 million. At the time Turing was a privately held start up with offices in Switzerland and New York. According to its LinkedIn page, the company once had 50 to 200 employees.

After the drug was acquired, Turing tried to start campaign to make mothers aware of the possibility of transmitting Toxoplasmosis to their fetus. I’m not sure why. Toxoplasmosis in newborns is uncommon. Of the 4 million children born in the U.S. each year, an estimated 400 have Toxoplasmosis. That’s .01 percent. When Daraprim (pyrimethamine) is fed to pregnant animals many of their offspring are born with abnormalities. So we avoid giving the medication to pregnant women.

Once Daraprim was part of Turing’s arsenal, the company’s CEO, Shkreli, raised its price from $13.50 to $750 per pill. A self professed Republican he chose to not explain the price hike. It was legal. Drug companies raise their prices all the time.

“You can get away with high drug prices if you do it right,” Barrie Werth once said. “If he had raised the price 30 times instead of 5,000 times, he could have gotten away with it.¹“

Because of its high cost, pharmacies and hospitals were reluctant to stock the medication, and it was hard to obtain on short notice. Then a person with AIDS was hospitalized with a Toxoplasmosis brain infection. His doctor found it difficult to get the drug and Dr. Judith Aberg, the head of infectious disease at a New York medical center got involved. Outraged by the price she told the person’s story to the New York Times and Shkreli was vilified.¹²

And he wasn’t contrite. When he later appeared before a congressional committee he refused to answer questions. He took the fifth. The amount charged for the drug was legal, and Shkreli was not apologetic. He was interviewed repeatedly by Journalists and became infamous.

His company, Turing was sued by Impax. They no longer owned the drug but, reportedly, still owed the government $30 million for Daraprim related Medicaid requirements. Impax wanted Turing to pay, but a judge found it wasn’t part of the contract. Then the department of justice indicted Shkreli for alleged misconduct as a hedge fund manager. He was found guilty on 5 of 8 charges, he lost his job, and the company laid-off a lot of people.

As Shkreli said on an internet talk show (edited) “in life you can play the game or you can give up the fakeness and be yourself. It has drawbacks. We saw a major insider trading case that was settled by the SEC. Big banks take millions in fines. No one gets arrested. There was a security charge that I manipulated stock price and another that I defrauded investors. They all made money.”

“People with insurance or under Medicaid don’t pay for their drugs. They pay co-payments”…. (which can be quite significant.) Much of the cost of Daraprim, like most expensive drugs, is borne by the tax payer or it becomes part of the rising cost of health insurance. And that wasn’t Shkreli’s problem. He wasn’t a rebel. He had no cause.

I don’t know what Daraprim costs today. Shkreli, who was out on bail was rearrested for a stupid internet prank, and the judge had him imprisoned. I have no idea what makes him tick, but I know his antics have little to do with the high cost of many drugs in this country.

Numerous Americans are bothered by the cost of the medications they take, but they don’t usually focus their ire on the big pharmaceutical companies. Instead they talk about “the gougers”—the notorious few who dramatically jacked up the price of the drug that helped a few people who were dying of AIDS or Epipen. Their antics grabbed the headlines. Congress held publically televised hearings, and in the eyes of many Martin Shkreli, and Heather Bresch, became public enemy number one and two.

When Heather Bresch appeared before Jason Chaffetz’s congressional committee in September 2016, the congressmen and women probably assumed she would quietly accept their outrage and verbal reprimand then continue “getting filthy rich at the expense of their constituents…and have no remorse.” As a leader at Mylan Pharmaceuticals she was in charge of a product, EpiPen. Her company had purchased the contrivance from Merck in 2007. There was a marketing campaign. The awareness of the device’s importance as an emergency treatment for severe allergic reactions had grown. The company “had pushed through legislation that made EpiPen a main stay in schools.” And the sale and price of EpiPen grew dramatically.

After her congressional appearance, in at least one subsequent TV interview Bresch, a mother of 4, and the daughter of West Virginia Senator Joe Manchin, appeared thoughtful and concerned. She answered questions like a well schooled politician–with her talking points: The system incentivizes higher prices for brand named products. Too many schools did not stock Epipens. They were underserved. The company spent a billion dollars improving access and awareness about severe allergic reactions and how to treat them.

The Autoinjector, the device that automatically squeezes the drug into a person’s body, was invented in the mid 1970’s The FDA approved its use in 1987. It is presumably no longer patented.

The drug, epinephrine, was one of the world’s first hormones. Isolated from the adrenal glands of animals in the late 1800s, it was purified and patented in 1902 by Jokichi Takamine, a Japanese chemist liing in the U.S., and has long been the antidote for a severe allergic reaction. (13). When a susceptible individual senses his or her body reacting to an allergen, when they develop hives, wheezing, or become faint because their blood presure is dropping–if they are severely allergic to bees, have just been stung, and are starting to react, they take out their device, remove the top, put the needle end against their thigh, and press a button. A sharp painless needle bursts out of the syringe, pops through their clothes and skin, and enters their thigh muscle. Then the “plunger” automatically pushes the drug into the person’s body.

Between 2007 and 2016 the list price of a two-pack went from $94 to $609, an increase of 500%.²EpiPen generated $184 million in net sales revenue in 2008, and Mylan thought they would take in $1.1 billion in 2016. That was a fivefold increase in gross income. At the time of the Congressional hearings two prefilled syringes were selling for over $600. A Congress person derided company’s “simple corrupt business model.” Find an older cheap drug that has virtually no competition and raise the price over and over, taking advantage of the monopoly.

Bresch was repeatedly asked how much of the money was profit, and she kept changing the subject. The FDA representative sitting next to Bresch said the agency would review new applications for epinephrine injectors within 10 months.

The rapid rise in price had created a stir. Representatives and reporters needed to express their indignation. And they did. The publicized outrage also alerted a few entrepreneurs who were watching or reading about the hearing. Some saw a way to earn a quick buck. If EpiPen could bring Mylan hundreds of millions in profits each year, and if there was nothing keeping other companies from making and selling an identical product, why not get a piece of the action.

A few companies joined the fray and by the summer of 2017 EpiPen must have been feeling the heat. In Canada and the U.S. the price of EpiPen and a recently approved self injecting epinephrine Allerject sold for $130 a syringe.

CVS Health had a deal with epinephrine syringe provider Impax Labs, and was selling their authorized generic product, Adrenaclick, for $109.99 for a 2-pack.

And by 2011 a fourth epinephrine auto injector Symjepi, produced by San Diego’s Adamis company had been approved but had not yet been priced.

Bresch may have been unashamed, but the massive price hike opened a few eyes; and they saw gold in them there syringes.

THE PRODUCT NO ONE WANTED

In October 2010 GSK (Glaxo Smith Kline) dumped/sold a loser–the U.S. marketing rights for albendazole. Amedra, a small American drug company picked them up. The details of the deal were not disclosed (or at least I couldn’t find them on the web.)

As part of the agreement GSK agreed to continue manufacturing the drug for Amedra in the short run. They also renewed their pledge to the world health organization. They would continue to give the organization 600 million tablets per year as their contribution to the struggle to free the world from Lymphatic Filiariasis. A condition caused by microscopic thread worms that block the flow of lymphatic fluid the “neglected tropical disease” can cause an arm, leg, or testicle to swell and disfigure. As explained by the CDC the mosquito-borne condition affects 120 million people in 80 countries.” The Global Alliance is trying to rid the planet of the parasite by annually giving albendazole and ivermectin to all of the occupants of communities that are at risk.³

GSK proudly proclaimed their company “is committed to improving the quality of human life by enabling people to do more, feel better and live longer.” (I suspect GSK didn’t seriously consider raising the U.S. price, in part because they didn’t want to deal with the publicity such a move would engender.)

Albendazole was patented in 1975. It was invented by Robert J. Gyurik and Vassilios J.Theodorides, after Vassilios, a biochemist working for GlaxoSmithKline, read an article and had an insight. Raised in a small Greek village near the Macedonian border, the drug’s inventor never forgot the morning when German soldiers surrounded his town and marched its occupants to the village center. He was 10 years old. The soldiers told everyone to bring out their guns. Then they searched the houses. Finding shotguns in two homes they publically shot the men who had not obeyed. After the war Vassilos was briefly a shepherd. One day when he was 14 he left his flock of 200 lambs grazing in the public pasture and walked 11 kilometers to take a high school entrance exam. He was in another village studying the day in 1947 that Communist soldiers burned his village and killed 48 people. Some of them were relatives. Schooling was easy—natural. After he finished high school, planning to become a mathematician he visited the university office and asked where the mathematics school was. The clerk asked: what’s wrong with the Veterinary school? And he checked it out. As a veterinary student he developed an interest in research. Deciding he needed a PhD and knowing his future wife’s family had emigrated to Boston, he came to the U.S. and earned a PhD. As a young struggling postgraduate he worked for Pfizer in Terra Haute Indiana for two years. The town had a total of two Greek families. The mayor was Greek, and Vassilos wife was unhappy. So they moved to Pennsylvania for a research job at Smith Kline and French laboratories. One day, years later he read an article, and he had an “aha” moment. Unexplainably he somehow “knew” how to design the chemical that became Albendazole. (He quotes Pasteur: “God helps the minds that are prepared.”) Introduced in 1977, the medication was initially given to animals in Australia and New Zealand, but it was not approved for people in the U.S. because someone at the FDA decided it was carcinogenic. Vassilios met with people at the agency and showed them that their “mathematical approach in evaluating its potential carcinogenicity was incorrect.” They agreed, and humans started using the medication in 1982.

The bugs Albendazole kills exist in the intestines of 1.5 billion people. Most of the people who carry the parasites live in places that have poor sanitation. The bugs enter our bodies in childhood, with food that’s not thoroughly cooked or when we drink tainted water. Some penetrate the skin of a child or adult who walks “barefoot on contaminated soil.”

They come in a variety of sizes and shapes: tapeworms, long, flat, segmented ribbons that enter when we don’t cook the animals we eat. Pinworms, half an inch long nematodes that cause anal itching; ascaris, tiny snake like creatures. hookworms that suck our blood, and many more.

One day when my grandson, who had never lived in a third world country, was 3 or 4, he passed a worm. My daughter checked the internet, identified the creature and put it in a jar. When she showed it to her doctor he was taken aback, amazed. His nurse who had grown up in a village in the Phillipines merely shrugged. We still have no clue as to where or how the worm got in the kid’s body.

In India Albendazole commonly sells for $18. According to Wiki, in some countries it costs a penny to 6 cents a dose. In 2016 Amedra purchased the medication as part of “a portfolio of 15 generic drugs from Teva and Allergan for about $586 million.” A subsidiary of Impax, the publically held pharmaceutical company’s website says they are “engaged in the development of propriety pharmaceuticals.

”With the U.S. rights in their pocket Amedra raised the price pretty dramatically. In late 2010, the average wholesale price for the medication was “$5.92 per typical daily dose”. By 2013 it had jumped to $119.58. Medicaid spent less than $100,000 per year on Albendazole in 2008, and more than $7.5 million in 2013. Doctors in this country are prescribing it more often because the CDC thinks we should presume that refugees that come here from poor countries have parasites in their intestines, and we should treat them. Part of the stepped up spending is the result of increased demand.

The year after Amedra bought Albendazole, Teva, stopped manufacturing the drug’s only U.S. competitor, Mebendazole (brand name-Vermox). That made Amedra the only U.S. player in the intestinal parasite business.

“U.S. antitrust laws protect consumers only from anticompetitive strategies such as price fixing among competitors.
Manufacturers of generic drugs that legally obtain a market monopoly are free to unilaterally raise the prices of their products.
The Federal Trade Commission will not intervene without evidence of a conspiracy among competitors
or other anticompetitive actions that sustain the increased price.¹⁰”

Amedra does have a program that supplies the medication to the impoverished, “but these programs often have complicated enrollment processes.⁴”

A few years back a Philadelphia drug manufacturer got exclusive FDA rights (a many year U.S. monopoly) to a drug I had been using for 40 years. The medication, Colchicine, is a plant extract that was used to treat gout before Jesus was born. It is one of a handful of ancient cures that withstood the test of time. The flower that produces the alkaloid was introduced to the new world by none other than Ben Franklin, an innovative guy who used the ancient remedy to treat his painful joints. I learned about the medication in medical school, and have advised many to take it. It has its share of side effects, and over the years has helped many of my patients, while making a few sick. The books back then told doctors to give repeated doses to people with acute painful joints. We didn’t stop till the pain subsided or the patient became nauseated or developed loose bowels. That turned out to be too aggressive for a few of my patients, and I quickly adjusted my approach.

For centuries physicians have successfully used it, but no one did a double blind controlled study. Most docs would have thought withholding the drug from the control group would neither be necessary nor ethical. Then, 23 years ago, doctors in New Zealand did the study. Their 1987 paper was titled: Does colchicine work? The results of the first controlled study in acute gout.⁹ Half the people with an acutely inflamed joint took the real drug; the other half a placebo (an inert look alike pill.) People taking colchicine improved more rapidly and more completely.

In the company’s defense, clinical experience is sometimes misleading. On occasion useful drugs fail or people get well in spite of us. But colchicine has been used a lot over the centuries, and if the test of time means anything, the medication has always passed with flying colors.

The drug was available, cheap, on the pharmacy shelf. No one had to go to the FDA to bring it to market. Then some whiz kid figured out how his company could get exclusive rights to the old herbal remedy. They ran a trial where neither the investigator nor the patient knew what substance was being used. (Though, frankly, it’s hard to not know when the pill you are testing causes nausea and diarrhea at high doses.) Colchicine, of course, worked. The results were presented to the FDA and the whiz kid’s company got exclusive rights to sell the herb extract in this country. “After the FDA approved Colcrys, the manufacturer brought a lawsuit seeking to remove any other versions of colchicine from the market; and it raised the price by a factor of more than 50, from $0.09 per pill to $4.85 per pill.” Since this is a widely used medication they apparently stand to take in an additional 50 million dollars a year during the next 7 years. (The manufacturer received 3 years of exclusivity for gout and 7 years for Familial Mediterranean Fever, although no new FMF studies were conducted). (Outside the U.S. colchicine still costs 9 cents a pill.)

On May 6^th 2018 the TV show 60 minutes explored Mallinckrodt Pharmaceutical’s decision to sell Acthar Gel for $40,000 a vial. (7 years earlier the same vial was priced at $40.)

The product is one of many hormones made in the pituitary, a small gland located at the bottom of the brain. Acthar, the brand name for a hormone called ACTH, is extracted from slaughtered pigs, and it tells the adrenal gland to make cortisol. In the early 1950s it was a means of giving some patients cortisone. In 1955 prednisone became available and doctors largely stopped using Acthar. The product was left with but two “accepted” indications: It uniquely helped a rare seizure disorder– infantile spasm; and it was used to help diagnose the cause of adrenal insufficiency. By 2001 doctors were only prescribing Acthar now and then, and it was a money loser. But some kids needed it, and its manufacturer, Aventis, apparently felt someone should keep producing it. That year the French pharmaceutical company managed to sell the drug to Questcor, a California “pharmaceutical company” that was losing money. Questcor paid $100,000 for the medication, raised the price, promoted the hormone for a few additional “indications”, and turned a profit. In 2013 Forbes named Questcor the best small company of 2013; and in 2014 Mallinckrodt paid 5.6 billion for Questcor and its money maker, Acthar.

In 2018 the FDC charged Mallinckrodt with price fixing. To keep the price high the company paid Novartis $135 million dollars and acquired the rights to Synacthen, a drug that is biologically similar to Acthar and was Acthar’s only competition. “Then they put the drug on the shelf.” At the time Synacthen was selling for 33 dollars in Canada.¹¹ Mallinckrodt was charged with antitrust and, admitting no wrong, settled the case for a hundred million dollars. The company makes more than a billion dollars a year on Acthar alone. With only 2000 cases a year of infantile spasm, the company then started marketing their hormone stimulator for a few additional diseases, like rheumatoid arthritis. And they were successful. According to 60 minutes, in 2015 “Medicare was spending half a billion a year on Acthar⁶.”

In April 2017 Maryland passed a price gouging law. It empowered the attorney general to indict companies if they “shocked the conscience” by dramatically raising the price of an off patent drug. The following year the Court of Appeals ruled the law was unconstitutional, and the Supreme Court did not weigh in. Absent a new amendment to the Constitution, Americans who “shock the conscience” have the inalienable Right to Gouge.⁷

9. Aust N Z J Med 1987; 17:301-304.
10. Excessive Pricing in Pharmaceutical Markets. Organization for economic co-operation and development https://www.ftc.gov/system/files/attachments/us-submissions-oecd-2010-present-other-international-competition-fora/excessive_prices_in_pharmaceuticals_united_states.pdf
11. Rockford Illinois lawyer Dan Havilland https://www.businessinsider.nl/rockford-mallinckrodt-express-scripts- drug-pricing-lawsuit-2018-5/
12. https://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-raises-protests.html By Andrew Pollack Sept. 20, 2015
13. epinephrine https://digital.sciencehistory.org/works/5x21tf430

SWISS MOVE IN

May 7, 2018February 13, 2021 by stevefredman

SWISS MOVE IN

The Swiss take control

Thirty percent of the money spent on pharmaceuticals is used to purchase a relatively small number of very expensive “designer” drugs. The medications are often extremely pricey (in large part–I believe) because the company that produces and markets them needs to recoup the billions they paid to acquire the drug and/or the company that created it.

Novartis and Roche, two of the top 4 Pharma companies, with gross incomes in 2018 of $35 and $46 billion–are headquartered in Switzerland. I have no doubt they are two of the many “Pharma companies that seem to believe acquisitions are the only way to keep their revenues growing as fast as investors expect. With today’s complex breakthrough medicines, it’s often cheaper for a company to acquire the next blockbuster drug than to develop it in-house.¹”

In 2006 Novartis paid $5.4 billion, took over Chiron, and planted its feet solidly on American soil. The company they bought was 25 years old and had been created by Bill Rutter, a visionary biochemistry professor.

The son of a Mormon elder from Liverpool England, Rutter was born and educated in Malad a small town in southern Idaho. His grandfather had been a British Army officer in India and had told William about the poverty and exotic parasitic diseases he had witnessed. As a youth William wanted to go to the school of tropical medicine in Calcutta. At age 15 he spent a year at Brigham Young University then lied about his age and joined the navy. World War Two was raging. When the conflict ended Rutter went to Harvard and was drawn to science. After he graduated he was accepted to Harvard medical school, attended a few medical school classes with a cousin, and realized he wanted to be a scientist, not a doctor. He earned a Ph.D. at the University of Illinois and spent a decade as a researcher and professor at the University of Illinois, Stanford, and the University of Washington.

In 1968, after refusing the job offer three times, he agreed to become the chief of the biochemistry department at the University of California in San Francisco. The unit had been leaderless for six years and (he once quipped) “every good scientist in the United States had probably been asked to take that job and turned it down.” He claimed he accepted the post because twenty faculty positions were open, and that was a “bonanza for recruiting^1”Rutter gathered top notch researchers and got them to work collaboratively. In academia investigators don’t always cooperate and share. He knew “science was competitive. “Everyone is trying to beat you and will use every trick in the book. You try to cover your bets in many different ways.⁸”His associates shared their knowledge.

In 1981, deciding NIH would not allow him to use genetic engineering to develop a hepatitis B vaccine, he acquired venture funding, hired great researchers, and formed Chiron. “It was not an issue of damn the torpedoes, full speed ahead. The business of the company initially was research, pure and simple–understanding the potential of a set of technologies. The major pharmaceutical companies didn’t want to become polluted by something that was “controversial” like genetic engineering, and they stayed on the sidelines. He had great confidence he’d be able to do things that helped human beings.”¹⁴

. The disease he wanted to put a stop to, Hepatitis B was caused by a virus. It was present, though usually inactive, in the livers of over 200 million people, 1.2 million of whom were Americans.⁸

Maurice Hilleman at the pharmaceutical company Merck had developed a vaccine that prevented the disease, by inactivating live viruses. His creation was safe and effective but people were afraid to use it. They recalled how, in 1955, the Cutter lab was making the Salk vaccine and failed to adequately kill the polio virus. Two hundred children were partially paralyzed and 10 died. I remember British Liver Professor Sheila Sherlock giving a lecture to a group of doctors back then and asking how many had taken the B vaccine. When but two hands went up she said: “Shame on you. Shame.”

Rutter had worked with Herbert Boyer and others at the University of California. He knew how to genetically engineer yeast and make it grow the shell of the virus. Researchers could then use the viral surface protein to create the vaccine. The idea of using implanted genes frightened some politicians, and the NIH might not fund the research. “Some portion of scientists was genuinely concerned. Others enjoyed the debate and the public controversy.”

There was a Senate hearing on the topic of genetic engineering and Bill Rutter attended. Margaret Mead arrived wearing a huge long robe and carrying a shepherd’s staff. “Adlai Stevenson, a Senator and a lawyer who would later run for the presidency of the U.S., ran the proceeding and introduced Margaret Mead as a world-renowned scientist who could give guidance on these issues.” Mead was an anthropologist who became famous after she spent 9 months in Samoa and learned that “adolescence on the island was not a stressful time for girls because their cultural patterns were different than those in the U.S.”¹⁸

At the hearing stood and repeatedly said something like, “You’re going to hear today from these scientists that this (genetic engineering) is not dangerous. I’m here to tell you it is dangerous.” After each repetition of her statement she pounded the floor with her staff for emphasis. “Boom! Boom!¹⁶” To Rutter “A social anthropologist with her shepherd’s staff giving advice on molecular, microbiological, and physiological science’” seemed incongruous. Observing the theatrics and attitudes Rutter realized that if he wanted to make the hepatitis B vaccine his way he would have to give up his job as chief of biochemistry and go private.

Growing the hepatitis B surface antigen in yeast, Rutter’s team “demonstrated how to do it in the laboratory.” Working with Merck, Chiron marketed a successful “B” vaccine. Then, since the company had money and talent, their researchers solved a whodunit that had eluded investigators for years. They identified the virus responsible for Hepatitis C, and we learned 200 million people worldwide and more than 2 million Americans were carrying the intruder in their liver. Some of them would develop cirrhosis and liver cancer.

Located in the right upper abdomen just under and below the ribs the liver is the body’s largest organ. Blood carrying nutrients from the intestine, filters through it before it enters the circulation. The organ metabolizes, detoxifies and produces needed proteins. It dumps unwanted wastes into the yellow bile that it secretes. It’s also commonly infected by several viruses, two of which, Hepatitis B and Hepatitis C often set up shop and become lifelong inhabitants.

Over the next few years Chiron acquired a number of European and U.S vaccine businesses and became one of the world’s largest vaccine makers. With a second company Chiron commercialized DNA and RNA tests that allowed blood banks to make transfused blood safer. The process they developed could detect minute amounts of live hepatitis and HIV viruses in donated blood. Chiron had a biopharmaceutical division, and to the displeasure of their Swiss partner Novartis, often participated in joint ventures with other pharmaceutical companies. In 1984 their scientists worked on the first sequencing of the HIV genome, and in 1987discovered, sequenced, and cloned the Hepatitis C virus.⁸

In 2006, already owning 49 percent of Chiron, Novartis bought the other 51%, started wearing the mantle of a U.S. corporation, and began to act more like a commercial business. In 2015 the company marketed and charged a little less than a competitor for the first U.S. biosimilar, Zarxio. It’s a medication that stimulates the bone marrow to produce more neutrophilic white cells. In 2018 Novartis paid $8.7 billion for the therapeutic gene that treated and hopefully prevented the worsening of spinal muscular atrophy, a lethal genetic disease. (As mentioned earlier they plan to sell the treatment to Americans for $2.1 million for a course of therapy.)

By 2009 the other Swiss giant, Roche, had a 15 year history pharmaceutical company acquisitions–like Syntex in 1994 and Chugai Pharmaceuticals in 2002. Their CEO was an Austrian born economist. Married with three children he skied, hiked, and made movies in his spare time. Initially thought of as shy he led the company when it plunked down billions and entered the cancer drug fray. Buying California based Genentech for $46.8 billion, Roche acquired a lot of debt and three antibodies that were used to fight cancer: bevacizumab, herceptin, and rituximab. They also had to deal with a “clash of cultures between a freewheeling Californian biotech company and a buttoned-up Swiss multinational.” There was plenty that could go wrong. The California innovator “was full of smart people who were very upset and worried about the idea of another company coming in and making the decisions.⁶”

The cost of their acquisition virtually cemented Roche’s need to charge high prices and to sell a lot of these drugs. If, at the time, some companies were uncomfortable charging a lot for anti cancer drugs, seems to me that they now no longer had much of a choice. Their shareholders would (no doubt) expect little less than a $100,000 a year price tag for significant products.

The entity Roche purchased, Genentech had started as a company that used genetic engineering to produce hormones. Hormones are molecules that are made in glands. They travel to, turn on and off, and adjust the activities of target organs in various parts of the body.

The existence of these important proteins was unknown before the 20^th century. Prior to the 1970s they had been extracted from the glands of dead animals and human cadavers. They were then purified and manufactured. Contaminants were always a concern.

The seed that grew into Genentech was planted during a meeting that took place in 1973. A scientist from UCSF and one from Stanford discussed the small collections of DNA in the cell’s cytoplasm. They met at a conference in Hawaii and at the end of a long day “took in the balmy evening air as they strolled and talked.”¹²

One of them, Herbert Boyer, “blue jean clad, with a cherubic face; outwardly relaxed and unassuming”, grew up in a small railroad town near Pittsburg. As a college student he had at times hitchhiked to classes at a nearby college. Majoring in biology and chemistry he was “really taken with the Watson-Crick structure of DNA”, and he earned his PhD in bacteriology. At age 37 he was a researcher at the University of California in San Francisco when one of his graduate students isolated an important enzyme. It sliced DNA at a specific position. The raw exposed nucleotide ends were sticky. Lengths of DNA could be attached.

The other man who walked leisurely in the warm air that evening was Stan Cohen, a 36 year old “trim, bald, bearded” Stanford hematologist. When he was young he wrote a pop song that made the hit parade. He was studying circles of DNA in the cytoplasm of bacteria that were spreading antibiotic resistance from one germ to another—plasmids.

The two investigators wondered if it was possible to use Boyer’s enzyme to hook a DNA fragment, a gene, onto the sticky ends of a plasmid’s DNA. Would the gene then tell the bacteria what to do and make? Would the transformed plasmid survive and clone itself?

It took a few months to do the research, but the following March they tested their idea and it worked. In November 1974 both medical schools filed a patent application, and the academic world debated the potential hazards of genetic engineering.

Over the next few years, surviving on money gathered by a venture capitalist named Bob Swanson, Boyer formed a company and called it Genentech. In its early years the company made somatostatin. A peptide that reduces secretory diarrhea and that blocks the action of some hormones like insulin and growth hormone. The product was not a big money maker.

Genentech then produced genetically engineered human insulin. At the time people were using purified animal insulin. It’s chemically a bit different from human insulin, but it works well. Genentech also produced genetically engineered human growth hormone. It too was not a big money maker.

In 1978 the start-up leased a 10,000 square foot section of an airfreight warehouse near the San Francisco Airport.

In 1980 the company’s technology was up and running and Genentech had a public stock offering. It was wildly successful and Swanson, one of the founders, called gene cloning “the cornerstone of a future billion dollar business.”

During the next decade Genentech developed TPA, Tissue Plasminogen Activator, protein that dissolves clots. It was used to treat “massive pulmonary embolisms” –blood clots that traveled from a person’s legs to their lungs.”

They also developed several cancer fighting medications. One of them, the antibody Avastin, inhibited the growth of the blood vessels that nourished tumors. In 2010 it generated $7.4 billion in revenue for its new Swiss owner, Roche.

The concept that tumors produce a gene that stimulates the growth of the blood vessels that nourish it–wasn’t originally Genentech’s. It was conceived of by Judah Folkman, a surgeon who would later quip that science goes where you imagine it. As a boy, Judah accompanied his rabbi father when he visited people in the hospital. “His father would pray through oxygen tents and Judah would sit in a chair and be very quiet. About age seven to eight he noticed doctors could open the tents and do things, and he told his father he wanted to become a doctor not a rabbi. He thought his father would be upset, but has dad wasn’t. He said you can be a rabbi-like doctor, and Folkman knew he thought it was fine”.²¹

He served in the navy for two years, went to med school, and became a surgeon. In the 1950s “he developed the first implantable pacemaker that targeted the atrioventricular region of the heart, and he “pioneered the first implantable polymers that allowed drugs to be released slowly. And at age 34 Folkman was “the youngest ever Harvard Professor of surgery.¹⁷” He had a research lab and studied the blood supply of tumors. By 1971 he had learned about the way cancers develop their blood supply and he shared his findings in an article in the New England journal of Medicine.

“The growth of solid neoplasms is always accompanied by vigorous new capillaries that come from the host.” Time-lapse movies of an animal experiment demonstrated vessels advancing towards and penetrating a tumor implant and establishing blood flow. If new vessels don’t develop, most solid tumors stop growing when they are 2 to 3 mm in size. They don’t die but the growths become inactive. Folkman’s lab isolated a factor that stimulated rapid formation of new capillaries in animals, and his people tried to develop an antibody to the factor. They were not successful.¹¹”

Folkman kept promoting the concept of cancer enlargement being slowed by blocking a factor that stimulated blood vessel growth.¹⁹ In the years that followed Folkman’s paper he noticed that when he rose to speak at medical meetings a number of doctors in the audience filed out. Some physicians thought his idea was farfetched and were apparently tired of hearing his pitch. Believing there’s a fine line between persistence and obstinacy Folkman kept at it.⁹

In 1989, a Genentech investigator isolated and cloned 3 isoforms of“vascular endothelial growth factor” (VEGF), a gene that caused blood vessels to grow. Then they developed an antibody to VEGF. Subsequently a slew of additional vascular stimulating factors have been discovered.

The researcher in charge of developing the antibody, Napoleone Ferrara, was born in Catania, a Sicilian town near the Mediterranean Sea and not far from the highest volcano in Europe. His interest in science was ignited by his grandfather, a high school science teacher who had a 5000 book library. The Sicilian went to medical school. Then he heard the fascinating lectures of a charismatic Professor of Pharmacology named Umberto Scapagnini, and he decided to become a researcher. Joining Genentech in 1988, Ferrara and his group spent years characterizing the protein and developing the humanized antibody that became Avastin. The years of research were costly. They were funded by Genentech, and the company was ultimately richly rewarded. Ferrara was lecturing in Sienna the day he learned that a pivotal study had shown that his antibody successfully helped treat colon cancer. He recalled he celebrated by drinking a whole bottle of Chianti.

Avastin remains pricey and is not always covered by insurers. Using it can create an additional burden for people who are living on a tight budget and have widespread disease.⁷

In 2008 Roy Vagelos, the chief executive of Merck commented on the price trend. His remarks were reported in the New York Times. He said he was troubled by an unnamed drug (thought to be Avastin) that “costs $50,000 a year and adds four months of life. He called it a shocking disparity between value and price.²”

Vagelos was 79 at the time. His attitude and remarks were influenced by what he did when he was the CEO of Merck in the 1960s. In his New York Times quoted speech he said the high prices charged for Avastin were, “not sustainable.” He was wrong.

Keeping the price of Avastin high has been a struggle. That year (2015) the British National Health Service and some insurance companies were disturbed by the thought of spending tens of thousands of dollars for the extra months of life the drug could provide. Headquartered in Switzerland, Hoffman La Roche–According to “The Street’—had to resist an effort by many European countries to lower the price of their expensive, cancer fighting drugs. “A bid to push down drug prices by the Swiss health ministry “infuriated drugmakers”.. and the company warned that such a move would hurt employment and would have a “negative impact on their future contribution to the Swiss economy.” In the years subsequent to its release Avastin’s annual revenue always topped $5 billion.³

The second drug Roche acquired, herceptin, was also an antibody. Most cancer causing genes “are sequestered deep in the cell.” By contrast, the gene in question, neu, is connected to the cell membrane and “a large fragment hangs outside.”

It was discovered in the 1970s after a researcher (working with Robert Weinberg at MIT) injected the “DNA from neurological tumors in rats, into normal mouse cells. The injected cells turned cancerous.” After the gene was discovered it was “more or less forgotten,⁴” and largely ignored before one Genentech’s scientists, Axel Ulrich made an antibody that targeted it.

After Ulrich’s antibody attached to neu it created an abnormal complex. A macrophage, a white cell that “engulfs and rids the body of cellular debris” would float by. It would sense the antigen-antibody combination, know it didn’t belong, and clean up the “mess,” obliterate the antibody and the cell that it’s attached to.

Once created, the antibody to neu might have intrigued some people but it was not really useful. Ulrich talked about it when he gave a seminar at UCLA in 1986. One of the attendees, Dr. Dennis Salmon, was interested.

A university hematologist, Salmon grew up in a coal mining town and, as a boy, had been impressed by the doctors who came to the house to tend to his father. His dad survived two mine cave-ins, then lost a leg in an auto accident. The doctors making house calls “made people feel better.” Salmon “saw the respect my parents gave them. So (he) always thought it would make a pretty cool profession.” In high school he “developed a keen interest in biology.” and in college he spent summers working in a steel mill. The job was tolerable for a few months, but the experience showed him what his life as a factory worker could be like and it “cemented his resolve. This wasn’t what I wanted to do with my life.” After med school Salmon had offers, but took a job at UCLA because “It wasn’t ossified, and if you had some resources and a good idea, you could pursue it.¹⁵”

According to Mukherjee, Salmon thought he and Ulrich should collaborate. Ulrich gave UCLA a DNA probe that identified neu, and Salmon checked his array of cancer samples to see if any of them were, perhaps, driven by the gene. Until that time it had only been found in mouse brain tumors. There didn’t seem to be much chance that it would turn up in a human tumor.

But it did. The oncogene, now called Her-2/neu, was found in some breast cancers, and it turned out to be an important reason for their rapid growth. Some breast cancers made and used it in large quantities. Scientists implanted Her-2 containing cancers in a mouse and watched them grow wildly. Traztuzumab, the antibody that inactivated Her-2 caused the cancer cells to die.

The scientific findings were intriguing, but it took a while before Genentech was fully committed to the idea of making a cancer drug. It would be a first for them. A drug that interfered with cancer was still a reach.

Salmon kept working the project. They couldn’t use the standard mouse monoclonal antibody. It could trigger an immune response. They found a Genentech scientist who knew how to create a mouse that produced monoclonal antibodies that a body would think came from a human. In the summer of 1990 they successfully created Herceptin. Women with breast cancer became experimental subjects. 15 were studied in 1992. 900 were given the drug in 1996. It kept making a difference. When, in 1998, the drug application was submitted to the FDA it was quickly approved. Its initial monthly price was $3,208. It rose to $4,573–$54,000 a year in 2013.

The research and development costs were part of the overall lab costs of Genentech, and before the company found a useful antibody their scientists probably produced a lot of duds. The overall cost of creating a new drug was significant. Testing, development, and getting FDA approval cost a lot. I suspect hundreds of millions of dollars were spent in the process.

But the reward, $6 billion plus a year, dwarfs the expenses. The high price tag has little to do with research and development and much more to do with the way the market works. The pharmaceutical manufacturer has a five year monopoly. During that time they have no competition and can charge whatever they think they can get away with. People with insurance often have a co-pay, and it can be substantial. But no company would price compete. They wouldn’t want to charge less for a new cancer medication. Others might follow suit, and that might upset the apple cart. To enhance stockholder value prices need to stay high. And of course once they owned the drug the Swiss company Roche “needed” to recoup the $46.8 billion they paid when they bought Genentech in 2009.

When Roche announced their revenues in 2016, the third antibody they had acquired from Genentech, Rituximab topped the list. With $7.3 billion in annual sales worldwide and $3.9 billion in the U.S., the drug was on fire.

When pharmaceutical spokes people justify the high price of drugs they commonly invoke the cost of research, but are unable to supply details. Rituximab provides a window into how much it really costs to create an innovative medication when researchers have a strong sense of where they are going and how they are planning to get there.

Approved by the FDA in 2012 the injectable antibody has revolutionized the treatment of some lymphomas. It targets a unique protein called CD20 that is found on the surface of only one kind of human cell: the B cell. Part mouse and part human (chimeric) in origin, the antibody was first tested for dose and toxicity in 1994. After rituximab is infused it circulates and “tends to stick to the side of B cells that’s rich in CD20. Natural killer cells then destroy up to 80%of a body’s B cells.”

The drug was developed by a San Diego start up called Idec. Its founders included several Stanford university researchers and Ivor Royston, a San Diego immunologist.

The son of a Polish sheet metal worker who entered Great Britain via the beaches of Dunkirk, Royston always remembered the summer when he and his mother lived in the castle his father was re-roofing that was once the home of Henry VIII and Anne Boleyn. In 1954 the family moved to America. In the U.S. Ivor, a good student, went to medical school, and married. His first wife’s father was a successful business man who liked to “challenge the young man with business problems.” If the son-in-law couldn’t solve the problem, his father-in-law would tell Ivor how stupid he was.” Years later when he was running Idec, Royston “wasn’t afraid to get involved with business people because “if I could deal with my father-in-law, I could deal with anybody.”

After medical school Royston carried out research at the NIH, became board certified in oncology and tried “to understand how the body recognizes cancer cells, and how can we get the body to make an immune reaction to cancer cells.” When he was a low level research doc at Stanford, Royston was stirred when he learned how to make monoclonal antibodies. “You could produce antibodies by fusing lymphocytes with myeloma cells and create a cell that don’t die and keeps making antibodies.” A colleague went to England, contacted the physicians who made the discovery, brought back cells from the “the myeloma line, the immortalizing cell line” and gave a few of the precious “hybridomas” to Royston. Ivor spent the next 22 years trying “to figure out how to make antibodies against cancer cells.¹³”

From the outset (1985) Idec researchers were looking for a monoclonal antibody that could be used to treat B-cell lymphomas. There are about 240,000 cases of the disease in the U.S. each year. The antibody they were trying to develop could also be used to improve some autoimmune and inflammatory diseases. Their efforts consumed millions of dollars.

In 1991 they needed more money and had an initial public stock offering. The proceeds netted enough money to get through FDA phase one testing–(toxicity and dose) and phase 2: treating patients without a control group to see if the drug seemed to work. The company had allegedly spent $80 million to this point. But they did not have the money necessary to perform the phase 3, the double blind, control versus treatment group, studies that the FDA requires before they approve a drug. The startup couldn’t get the medication to market.

In 1995 their CEO, a former Genentech guy, signed a collaboration agreement with his former employer, Genentech. The giant chipped in $60 million and acquired “a majority of the sales and profits that Rituxan would generate if it earned FDA approval.”

It was initially approved in 1997. Out of the gate Genentech charged $3475 for a month’s worth of the infusion. In 2002 $1.47 billion of the drug was sold. Genentech got most of the money. Idec got $370 million. By 2013 the average 30 day cost of infusions had gone up to $5031.

Vis-a-vis the price having something to do with the cost of development, Idec spent $80 million and walked away with $370 million. Genentech spent $60 million and hit the jackpot. The cost of research, development and getting the drug to market was $140 million. In 2017 it brought in over $7000 million—$7 billion.

In 2017 the antibodies Roche acquired with Genentech accounted for more than half of the company’s revenue. That year they sold $7 billion worth of Avastin; $7.4 billion worth of Herceptin; and $9.2 billion worth of Rituxan.⁵

1 http://fortune.com/2015/07/28/why-pharma-mergers-are-booming/

2. http://www.nytimes.com/2008/07/06/health/06avastin.html

3. Switzerland takes on its top drug makers in price row Reuters Sept 16, 2014. https://www.reuters.com/article/us-swiss-medicine-prices/switzerland-takes-on-its-top-drugmakers-in-price-row-idUSKBN0HB0XA20140916

4. http://www.nytimes.com/books/first/b/bazell-her.html

5. https://www.genengnews.com/a-lists/the-top-15-best-selling-drugs-of-2017/

6. https://www.ft.com/content/ee986108-e689-11e3-b8c7-00144feabdc0

7. https://www.jci.org/articles/view/77540 Siddhartha Mukherjee, The Emperor of All Maladies. Scribner 2010

8. https://www.strategy-business.com/article/16383?gko=6321f https://www.cdc.gov/mmwr/preview/mmwrhtml/mm5251a3.htm https://www.ft.com/content/313c6abe-5628-11e9-a3db-1fe89bedc16e
http://cws.huginonline.com/N/134323/PR/200604/1045686_5_2.htmlh ttps://history.library.ucsf.edu/rutter.html

9. https://tvst.arvojournals.org/article.aspx?articleid=2503070 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2268723/ https://www.scientificamerican.com/article/quiet-celebrity-interview/ https://news.harvard.edu/gazette/story/2008/01/m-judah-folkman-biomedical-pioneer-dies-at-74/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5541201/

10. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1383764/

11. Tumor Angiogenesis by Judah Folkman, NEJM, 197112.