DOMINATING THE MARKET

There are many reasons to question the widely held notion that high drug prices and innovative research are inextricably linked.9 EZEKIEL J. EMANUEL

For decades companies have been buying one another, combining, and attempting to control segments of the market.  Large pharmaceutical companies purchase small startups or large competitors to gain control of a drug and/or the technology that led to its creation.  Many acquisitions cost billions.  To survive the purchasing company has to sell a lot of product, so they market aggressively and charge as much as they dare.  And we all pick up the bill.

In 2011 Gilead bought Pharmasset for $11 billion and gained control of the company’s potent medication, sofosbuvir.  When combined with a second, though less potent anti – viral, Pharmasset’s medication cured most people quickly with minimal side effects. Gilead researchers had developed a drug ledipasvir, that suppressed hepatitis C, but when used alone it wasn’t curative. 

The drug combination was great news for the 2.7 to 3.9 million Americans and the 71 million worldwide who carry the bug.  Some of the people who are chronically infected with Hepatitis C develop cirrhosis or liver cancer; the virus is responsible for the deaths of 400,000 people each year.

Hepatitis C was identified in the 70’s by researchers in at the Emeryville startup called Chiron.  It’s one of several viruses that inflames the liver, turns a person’s skin and eyeballs yellow, and drains their energy.  It becomes chronic in 70-85% of those who acquire the disease when they are adults.   A third of the infected people aren’t visibly ill.  But the disease smolders, they develop cirrhosis, and they die within 20 years.  A third never have significant problems. And in a third the virus isn’t harmful for many years, but at some point, for some reason, their liver slowly and progressively becomes inflamed.

By contrast, hepatitis A doesn’t become chronic.  Hepatitis E can become a persistent problem in people who are immune-suppressed.  Hepatitis B usually causes a self limited illness in newly affected 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 cause fever and exhaustion.  The bad effects usually last a few days and subside before it is time to get the next shot.   As I once explained to a young man who developed a fever and had no energy for the first two days after he received interferon:  “If you get an injection on a Friday you will be sick on Saturday and Sunday, but will probably be well enough to go to work Monday.  Would you like to be treated that way?” 

 “And ruin my weekend?” he shook his head.  “I don’t think so.”   He requested and I wrote him a year- long excuse from work.

My colleagues and I treated hundreds of people using this regimen.  The process was emotionally trying, but the people who desperately wanted to be cured, endured the weekly draining days.  In a significant minority the treatment didn’t eradicate their disease.  And for many that was heartbreaking.  

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, and he later studied at Bath in the UK.  “As a student he lived on 100 English pounds a month, worked as a parking attendant to help pay his way, and didn’t have real money in his pocket until he won 3000 pounds in the Spanish lottery.”  After receiving his British degree he did his post doc work in Yale and spent three years making “chemicals similar to Nucleosides.” A bear-sized man who speaks bluntly, negotiates fiercely, and favors splashy, multicolored shirts, Dr Schinazi enjoyed the science but not the weather at Yale.” –. “We had two really cold winters in a row in New Haven, with tons and tons of snow.5” So he moved south.

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 and a partner got venture funding and founded Pharmasset.  One of their company chemists, Michael Sofia, developed Sofosbuvir, a drug that, with a little help, cured hepatitis C. “

“Pharmasset planned to sell the drug at a total cost for the treatment of around $30,000.4  

In 2011 Gilead  bought Pharmasset for $11 bn.   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.

During an interview with journalist Jon Cohn, Shinazi was asked about “Sofosbuvir’s price tag of $1000 per pill.”Shinazi pointed out that Gilead decides on the price, and he called it  “obscene” but not unreasonable. “Is it fair to pay $3 for a bottle of water when you’re thirsty? This is something that cures you from a disease.”

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.

Approved late in 2013, Gilead’s drug combination, Harvoni (ledipasvir/sofosbuvir) created revenues of more than $10 billion in 2014.  Then Gilead marketed two additional anti viral combinations. Each was made up of sofosbuvir plus one or two other drugs that suppressed Hepatitis C.  Each cured most people who had the disease.  Gilead’s revenue from the sale of the anti-virals neared $20 billion in 2015.

In August of 2017 the FDA approved a second combination of anti Hepatitis C drugs.  Called Mavyret, “It was initially priced at $13,200 per month, or $26,400 per treatment course, before discounts.” At the time a curative course of Gilead’s three Sofosbuvir combinations:  Epclusa, Solvadi, and Harvoni were priced at $74,760, $84,000, and $94,500 respectively.  Gilead sold $13 billion worth of anti virals in 2015.  In 2018 the company projected “$3.5 billion to $4 billion in U.S. sales.”

When companies spend billions to control the sale of a drug, we all pick up the bill.1

Gilead, the company that made the $11.9 billion gamble was founded in 1987 by John Riordan, a 29 year old M.D. and business major.  During its first 15 years the company created a few drugs,“took in 2 billion dollars from investors and lost ¾ billion dollars.” 

In 1990, the head of Gilead embarked on a new approach.  He convinced John Martin, the Bristol Myer Squibb head of antiviral chemistry, to jump ship and come to his failing company.  When Squibb decided “they no longer wanted to develop” a promising antiviral that was created in Prague by the intuitive Czech researcher, Antonin Holy the rejection “hit like a ton of bricks”.  It came 2 years after Czechoslovakia had been allowed, by Gorbachev, to free itself from Russia’s grip.  John Martin, realizing Squibb’s error, because he phoned Holy and convinced him to sign a licensing agreement with Gilead….which they did a few months later—on a napkin–in a restaurant near the Eiffel Tower.12 (I tell this story in the chapter on HIV)  Gilead tweeked the nucleotide and it became the basis of several potent Gilead medications that are currently used to prevent and treat HIV and active hepatitis B.  They helped Gilead become solvent, and they, no doubt, added to the confidence and fire power it took for Gilead to purchase Pharmasset and later Kite, the company that is developing CAR-T therapy for lymphoma.8   In 1996 Martin became Gilead’s chief executive, replacing Riordan, who retired to Paris.10

————————————————————————————————-

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. It 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 800,000 people a year–one in three deaths in this country are the result of a heart attack or stroke.  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.  A low fat diet helps, but major dietary restrictions sometimes fail.  Our bodies require cholesterol.  It’s a component of cell membranes, hormones and much more.  And we produce it, mainly in the liver.  When we make too much our blood levels rise and we are at risk for heart disease.  Over a few decades researchers have unsuccessfully sought a molecule that would block the synthesis of cholesterol.  The chemicals they came up with were toxic or not very effective.

In 1973 a researcher in Japan, Akira Endo extracted a statin from a blue-green mold.  When taken by a human it caused the blood cholesterol level to drop.  Born in a rural northern Japan Endo “grew fascinated with mushrooms and other molds when he was young.”  As a college student he read and was inspired by a biography of Alexander Fleming, the man who discovered penicillin in a blue-green mold.  What other amazing juices do these growths produce? After a few years as a researcher he spent 2 years in the U.S and “was surprised by the rather rich dietary habits of Americans compared to those of the Japanese.” While living in the Bronx he recalled seeing ambulances that took people who had suffered a heart attack to the hospital. When he returned to Japan he became an investigator for a Japanese pharmaceutical company.  At one point he wondered if “fungi like molds and mushrooms could produce antibiotics that affected the synthesis of cholesterol.”  His company allowed him to choose his field of research, and over a number of years he studied the “juice”–the metabolites and toxins produced by over 6,000 types of fungi.  In the early 1970s he cultured the fluid produced by a blue green mold that was growing on a rice sample in a grain shop in Kyoto.13   It blocked the cholesterol synthesis pathway and became the first statin.  Endo’s discovery was huge.6 The recipe it provided was, over time, modified and tweeked by researchers who developed increasingly better cholesterol lowering medications.  

After confirming Endo’s findings, Merck scientists, used an aspergillus (and Endos methods) to create the cholesterol lowering drug Lovastatin.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.  Growing up outside Philadelphia and loving the night sky, Roth, initially wanted to be an astronomer.  He was in high school when he “realized” that “there were only like three jobs in the whole world for astronomers,” and he decided to become a chemist.  As he learned the craft he came to believe that “there really are true artists in organic chemistry.” He got his Ph.D. and played intramural softball at Iowa State University.  And when he was 30 he moved to Ann Arbor, Michigan, where he “used his skills” to create the statin molecule called Atorvasttin.14

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.3

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.7

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.2

http://fortune.com/2018/04/12/hepatitis-c-cure-300-dollars/https://www.goodrx.com/blog/fda-approves-mavyret-for-hepatitis-c/https://cen.acs.org/articles/95/i5/year-new-drugs.html https://www.youtube.com/watch?v=ZKHEARXDFKo

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

https://www.nytimes.com/2015/10/30/business/dealbook/allergan-pfizer-deal.html

p.115  Mistreated by Robert Pearl.  Public Affairs Press.  2017

https://joncohen.org/2015/05/08/king-of-the-pills /     https://www.ft.com/content/e7925e46-fc86-11e3-86dc-00144feab7de

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3108295/

https://www.researchgate.net/publication/40042500_Munos_B_Lessons_from_60_years_of_pharmaceutical_innovation_Nat_Rev_Drug_Discov_8_959-968

https://www.youtube.com/watch?v=fcgo2IOwkM4  https://www.radio.cz/en/section/panorama/belgian-virologist-de-clercq-remembers-czech-chemist-antonin-holy-and-their-work-on-revolutionary-hiv-drug

The Atlantic.  March 23, 2019.  https://www.theatlantic.com/health/archive/2019/03/drug-prices-high-cost-research-and-development/585253/

The Golden Age of Antiviral Drugs October 27, 2003 Forbes https://www.forbes.com/global/2003/1027/090.html#163387a0753b

Robert Hauser, Heart Stories, chapter 11

Cold War Triangle, by Renilde Loeckx, 2017.  https://books.google.com/books?id=jnw0DwAAQBAJ&pg=PT120&lpg=PT120&dq=michael+riordan+steps+down+at+gilead&source=bl&ots=6IGTV570g-&sig=ACfU3U0xOYfOTgJrU7RzsHhdWGBHloEL6Q&hl=en&sa=X&ved=2ahUKEwj2kaGUxuHoAhUvJzQIHVMRC5AQ6AEwCHoECAwQLw#v=onepage&q=michael%20riordan%20steps%20down%20at%20gilead&f=false

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3108

https://www.gene.com/stories/a-star-in-his-own-right

Margaret Mead https://www.loc.gov/exhibits/mead/field-samoa.html


There are many reasons to question the widely held notion that high drug prices and innovative research are inextricably linked.9 EZEKIEL J. EMANUEL