Most Americans haven’t see drug costs as “their problem.”  They have good insurance, or they don’t have a costly illness, or they’re too proud to complain.  Then a few individuals got control of an old, little used drug and jacked up the price.  Newspaper headlines and T.V. commentators were on it.  And the average guy and gal was so incensed that Congress had to hold publically televised hearings..

Public enemy number one was Martin Shkreli.  When I started learning about him 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 what I found.  Martin 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.  One of many drugs developed by research genius and Nobel Prize winner, Gertrude B. Elion, it was owned by Glaxo Smith Kline and couldn’t have been very profitable.

In 2010 Daraprim 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, the parasite can cause serious brain disease—encephalitis and focal brain lesions.

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 drops below 200 the person affected has the full blown disease– “AIDS”.  Creatures that were harmlessly living in the person’s body multiply, and start wreaking havoc.  When the CD4 count goes below 100 the parasite causing Toxoplasmosis becomes a problem.

A little over a million Americans are living with HIV.  Most are taking drugs every day and their virus is suppressed, harmless.  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.

Daraprim, also known as pyrimethamine, is the treatment of choice for the brain diseases caused by Toxoplasmosis. Made in a few places in the world, it 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 acquisition/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—convinced Turing Pharmaceutical to buy it for $55 million.  At the time Turing was a privately held company with offices in Switzerland and New York.  According to its linked in 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.

Turing’s CEO, Shkreli raised the price of Daraprim 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 the price 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.”

Because of its high price pharmacies and hospitals were reluctant to stock the medication, and it was hard to obtain on short notice.  The press started publishing stories of sick people who had difficulties getting the drug and who were outraged by its price.  Shkreli was vilified.  And he wasn’t contrite.  He appeared before a congressional committee and refused to answer questions.  He took the fifth.  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.  The price rise was legal and Shkreli was not apologetic.  Then the department of justice decided to indict Shkreli for alleged misconduct as a hedge fund manager.  He was found guilty on 5 of 8 charges and he lost his job.  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.  (In other words, 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 his 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 drugs in this country.


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.

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 first synthesized in 1904, and has long been the antidote for a severe allergic reaction.  When a susceptible individual senses his or her body reacting to an allergen—when they develop hives, wheezing, or become faint because their blood pressure 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 their syringe, pops through their clothes and skin, and enters their thigh muscle. Then the “plunger” automatically pushes the drug into the person’s body.

At the time of the congressional hearings two prefilled syringes sold for over $600. (Between 2007 and 2016 the list price of a two-pack went from $94 to $609, an increase of 500%.) http://www.businessinsider.com/epipen-price-increases-2016-8.  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.  EpiPen 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.

Bresch was repeatedly asked how much of the money was profit, and she kept changing the subject.  The FDA representative sitting next to Breach 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 a fourth epinephrie 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 their syringes.


In October 2010 GSK (Galaxo 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.   And they 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—an awful chronic disease.  GSK proudly proclaims 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.  Invented by Robert J. Gyurik and Vassilios J. Theodorides and assigned to SmithKline Corporation, It was introduced in 1977 as an antihelminthic for sheep in Australia.  Humans used it after 1982.  (Helminths live in the intestines of 1.5 billion people. Usually acquired in childhood, the parasites are ingested with tainted food and water, by children who play in the contaminated soil, then eat, and by kids who go barefoot in certain parts of the world.)

Amedra is a subsidiary of Impax, a publically held pharmaceutical company that buys drugs.  In 2016 they purchased “a portfolio of 15 generic drugs from Teva and Allergan for about $586 million. Their website says they are “engaged in the development of propriety pharmaceuticals.”

People who live in places that have poor sanitation commonly carry worms in their intestine, creatures most modern day westerners never heard of—tapeworms like Cysticercosis and echinococcus—Nematodes like pinworms, ascariasis, and hookworms.

The parasites are so common in the guts of U.S. bound refugees that the center for disease control recommends we treat these newcomers presumptively with Albendazole and other drugs.  In India the medication commonly sells for $18 and, according to Wiki, in some countries it costs a penny to 6 cents a dose.

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 increased spending is the result of increased demand.

The year after Amedra bought Albendazole, Teva the generic drug company that later sold 15 drugs to Amedra, stopped manufacturing the drug’s only U.S. competitor,  Mebendazole (brand name-Vermox), for “business reasons”  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.”

Amedra does have a program that supplies the medication to the impoverished, “but these programs often have complicated enrollment processes”  High-Cost Generic Drugs: Alpern et al, N Engl J Med 2014 Nov 13, 2014

The FDA has approved Albendazole as a treatment for—sorry if I bore you–: Neurocysticercosis (pork tapeworm; Taenia solium) and Hydatid disease (dog tapeworm; Echinococcus granulosis)*

It’s also used in most of  the world for a number of other parasites:  Ancylostoma caninum (eosinophilic enterocolitis); Ascariasis; Chinese liver fluke (Clonorchis sinensis); Cutaneous larva migrans (dog, cat hookworm); Enterobius vermicularis (pinworm); Filariasis (Mansonella perstans); Gnathostomiasis; Hookworm (Ancylostoma duodenale, Necator americanus); Microsporidiosis; and Visceral larva migrans (toxocariasis).  And it is also used by vetenarians.

Amedra as a corporation is a legal entity.  It has a duty to be profitable and enhance stockholder value.  Customers who take Albendazole are usually poor and powerless.  So if the leaders of Amedra don’t get too “ambitious”, don’t raise their prices too much, their price increase will probably be ignored.

A few years back a Philadelphia drug manufacturer got exclusive FDA rights (a 5 or 7 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. (Aust N Z J Med 1987; 17:301-304.)  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.   (Outside the U.S. colchicine still costs 9 cents a pill.)

On May 6th 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 a pituitary hormone.  The pituitary is a small gland located at the bottom of the brain.  Some of the hormones it makes stimulate the thyroid or adrenal gland.  (Acthar induces the adrenal gland to make cortisol.)  ACTH—the hormone– is extracted from slaughtered pigs; it was used in the early 1950s as a means of giving patients cortisone. In 1955 prednisone became available and over many decades 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 aid 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.      https://www.nytimes.com/2012/12/30/business/questcor-finds-profit-for-acthar-drug-at-28000-a-vial.html?module=ArrowsNav&contentCollection=Business%20Day&action


The Swiss take control


The Swiss take control 

“Pharma companies 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.”  http://fortune.com/2015/07/28/why-pharma-mergers-are-booming/

By 2009 the 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 the company acquired a lot of debt and three antibodies that were used to fight cancer:  bevacizumab, herceptin, and rituximab.

The cost of their acquisition virtually cemented their 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 produced hormones.  The existence of these important proteins  was unknown before the 20th century, and before the 1970s they had been extracted from the glands of dead animals and human cadavers,then purified and manufactured.  Contaminants were always a concern.  In the 1970’s scientists at UCSF and Stanford discovered how to alter molecules of DNA found in bacterial plasmids.  (Plasmids are small molecules of bacterial DNA that are not part of the nuclear DNA.)  The Genentech founders figured out how to splice new genes into plasmid DNA and put the altered DNA back into the bacteria.  When everything went according to plan, the new gene survived and continued to exist in future generations.  The “right” Implanted genes could then tell  bacteria to make a desired protein or a hormone.  In the early decades of its existence Genentech made hormones and vital proteins.

At some point (according to one account) Genentech didn’t have a hormone or factor it wanted to produce, and had researchers who knew how to create antibodies.

In the wild (and in the lab) antibodies are made by white cells called B lymphocytes.  Much as millions of ear hair cells work together to create a unique sound, and much as millions of retinal photo receptor cells act in concert and allow us to discern subtle differences in color, the intensity of light, a face, butterfly— similarly “B” cells work as a team.  Each B cell has a unique sensor (membrane bound antibody) on its outer layer and can recognize one and only one protein complex.  As a group all the B cells in the body can recognize almost 10 billion foreigners.  After a B cell recognizes and bonds to a protein it makes antibodies and starts cloning itself—making large numbers of B cells that recognize the same protein and that make the same antibodies.

Man learned how to make our version of monoclonal antibodies in Cambridge England In 1975.  A researcher from Argentina and a German scientist injected an antigen into a mouse and waited for the creatures B cells to clone themselves and make antibodies.  Then they stuck a needle into the mouse’s spleen and removed blood.  It contained a lot of the B cells that were making the desired antibody.  They added cancer cells –myeloma cells—cells that don’t die.  And they poured in some polyethylene glycol.  Some of the B cells and myeloma cells fused, creating a hybrid.  They called it a hybridoma. The scientists then identified and collected the new breed of cells, and put them into a nourishing medium.  The cells survived, thrived, and they kept producing the desired antibody.

The Roche drug with sales in 2010 of $7.4 billion, Bevacizumab, Avastin, is a monoclonal antibody that slows or stops the creation and development of new blood vessels.  By so doing it interferes with the enlargement of some tumors.

It was developed by a Genentech researcher named Napoleone Ferrera.  Joining the company in 1988 he and his group spent years characterizing the protein and developing the humanized antibody that became the drug.   The years of research were costly and privately funded, and the company was ultimately richly rewarded.  The drug 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.

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

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.  Back then he was approached by a researcher on his staff named Mohammed Aziz.  Aziz had been in Africa and had seen people infected with the filariae that caused river blindness.  100 million Africans were at risk for the condition and the parasite had blinded 18 million of them.  The invading worm existed in two forms: adults, which can be 6 to 15 inches long and exist as lumps under an infected person’s skin; and the filaria, a small organism that infiltrated the skin and caused intense itching.  The black fly that lived in the river spread the parasites from one person to the next.

People who had the problem were constantly scratching themselves.  When kids scraped their skin, then touched their lids, the microfilaria got into their eyes.  The subsequent eye inflammation, lead to scarring and blindness.  In some villages 25% of the inhabitants couldn’t see.  In an attempt to escape, many moved away from the river to less fertile ground and suffered from malnutrition.

Ivermectin, a Merck drug that had been one of the large pharmaceutical company’s financial failures, destroyed the filariae that attacked horses.  Aziz suggested it might have an effect on the creatures that blinded so many Africans.

The company was, at the time, doing quite well.  It had started long before as a German company.  In its early days it made medicinal morphine and codeine; it had also been the birthplace of one of the first medical books for the masses, the Merck Manual.  In 1966 Roy Vagelos a physician and academic lipid researcher, became the company’s CEO.   Under his leadership the company developed Lovastatin and Simvastatin, the first drugs that limited the body’s production of cholesterol.  The company then sponsored studies that proved that the drugs lowered the risk of heart attacks and death.

At the same time scientists at one of the company’s labs discovered a drug that killed a number of the worms that attacked cattle, sheep and horses.  Called Ivermectin it was marketed as a means of preventing heartworm in dogs, but it didn’t do much for hookworm or the parasites that attacked man.  Its commercial value was limited.  Further research on the chemical was suspended.  It was shelved until the day that Aziz met with Vagelos and got permission to perform additional studies.

Merck produced a quantity of pills, and Aziz went to Senegal to study their effect.

Pinch biopsies of the skin of infected people showed huge numbers of the filariae.  Half of the people who were infected got a pill and the other half didn’t.  A month later a second biopsy showed the filariae had been eradicated from the people who had been treated.

Based on the positive results Merck spent years performing tests that proved Ivermectin was safe and effective.  Then they went to the African leaders and tried to sell it for a dollar a pill.  The government had no money.  OK, 50 cents a pill, a dme, the Merck representative said, but the government really didn’t have enough money.  The World Health Organization was spraying rivers with insecticides (though the black flies were already becoming resistant to the spray).  The WHO wasn’t interested. Officials in the U.S. State department and at the White House were excited but “the government was broke.”  (Ronald Reagan was president.)  The French were about to approve the drug. (There were cases in Paris that had originated in colonial Africa), but in the U.S. the FDA wasn’t interested.

Merck was in business to make money and to enrich its officers and stockholders.  But the drug was ready; these were the 1980s, and Roy Vagelos the guy in charge was a doctor as well as a business man.  Vagelos and others at Merck decided they would provide the medication free of cost to anyone who would use it.  They had spent millions to develop the medication.  Providing it gratis would cost the company (and its shareholders) tens of millions of dollars, but Vagelos made the announcement and waited to see how the stockholders would react.

He claims he received a lot of positive feedback but he didn’t get one negative letter.  For years, thereafter, the best of the best researchers in the country wanted to come to and work for Merck.  And Vagelos stayed on as head of Merck for an additional 6 years.

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 $5billion.

The second drug Roche acquired, herceptin, as also an antibody.  Once injected antibodies float through the body and recognize cells containing the targeted protein-the gene.  Most cancer causing genes “are sequestered deep in the cell.”  The gene in question, neu, by contrast, is connected to the cell membrane and “a large fragment hangs outside.”)

Genes are strings of DNA in the nucleus.  They direct the cells: make them grow, die, and function.  Every human cell has the same 21,000 genes.  One of Genentech’s scientists, Axel Ulrich made an antibody that targeted a previously ignored gene.  His target, neu, had caused cancer in the brains of rats.  It was discovered in the 1970s when a researcher (working with Robert Weinberg at MIT) had injected the “DNA from neurological tumors in rats, into normal mouse cells.  The injected cells had turned cancerous.”  After the gene was discovered it was seldom used and “more or less forgotten.” ” http://www.nytimes.com/books/first/b/bazell-her.html

Ulrich’s antibody would attach to neu and create 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 doesn’t belong, and clean up the “mess.”….obliterates the antibody and the cell that it’s attached to.

Once created, the antibody to neu, was intriguing, but 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.  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 and 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. Their prior monoclonal antibodies had produced something the body needed: insulin, clotting factors for hemophiliacs, growth hormone.  A drug that interfered with cancer was a reach.

Salmon kept working the project.  They shouldn’t use the standard mouse monoclonal antibody.  It could trigger an immune response.  They found a Genentech scientist who knew how to produce humanized monoclonal antibodies.  In the summer of 1990 he successfully created Herceptin.  Women with breast cancer became experimental subjects.  15 were studied in 1992.  900 were tried on 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 in 2013.

The research and development costs were part of the overall lab costs of Genentech.  Before Genentech found a useful antibody the company scientists probably produced a lot of duds.  So the overall cost of creating a new drug was significant.  Testing, development, and getting FDA approval costs 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 don’t pay for the drug so there’s usually not much of a public outcry.  If one company charges 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 Roche had a need 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.  In an unsubstantiated 2011 blog a person with rheumatoid arthritis said that one hospital charged $11,288 for his 6 infusions and another charged $18,544.

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 if 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 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.

The drug was developed by a San Diego start up called Idec.  Its founders included a San Diego immunologist and several Stanford university researchers.  From the start (1985) they 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.  They were also trying to develop a monoclonal antibody that would improve some autoimmune and inflammatory diseases.  Their efforts consumed millions of dollars.

In 1991 they needed more money and had an initial public offering of stock.  The proceeds gave them enough to get through FDA phase one testing–(toxicity– dose) and phase 2—treating patients and seeing if the drug worked.  They had allegedly spent $80 million to this point.  They did not have the money necessary to perform the phase 3 studies the FDA requires before they approve a drug.  The startup couldn’t get the drug 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.


Insurance companies are not allowed to deny coverage to anyone who has a pre existing condition nor can they impose lifetime or annual coverage limits.  That’s driven up the cost of health care.  Its financial impact has been evaluated by budget people and decried by some politicians, but it’s the law and for now at least, we’re dealing with it.

It’s bringing a new kind of drug into focus.  Treatments are emerging that are novel, needed, and (given our current drug pricing system) will, no doubt, be extremely expensive.  Best I can tell politicians, insurance executives… the world, has no idea what we’re about to get into and how we’re going to pay for it.

Each year 100 American babies are born with Pompe’s disease.  The children are floppy, their muscles barely work, and their heart is enlarged.  Few survive infancy.   A genetic, recessive condition, the disease is only seen when both parents carry the defective gene.

The malady is the result of an enzyme deficiency.  The kids’ cells don’t make enough lysosomal acid alpha-glucosidase, a protein that’s used to convert stored glycogen into glucose—energy.

We eat carbohydrates and sugar, and we turn what we don’t use into a storage polysaccharide called glycogen.  We stockpile the excess fuel in our muscles and liver.   Between meals, when we need sugar to keep going, we use enzymes like lysosomal acid alpha glucosidase to turn glycogen back into glucose.

Much as children with juvenile diabetes need insulin to survive, babies who lack the enzyme won’t stay alive long.

The condition was “characterized” by and named for a Dutch pathologist–Joannes Pompe.  A member of the Dutch resistance, he was executed by the Nazis in 1945.   The absent enzyme, Lysozyme, was isolated in Belgium in 1955, and the responsible GAA gene was identified in 1979.  (It differs a little from one family to another.)

The needed enzyme was first made at Duke University by a dedicated team of researchers.  Their leader, Dr. Chen, the chief pediatrician, started his quest after he went to the funeral of an infant who died of the disease.  God, the pastor said, must have given the child life for some reason.  Chen took the message to heart, and decided to assemble a team of Duke University researchers and go to work.

The inspiration came at the right time.  Researchers knew how to clone genes—how to isolate the DNA fragment that are the gene and make copies of it.  Scientists with genetic engineering training could plant the gene into a special kind of cell.  If everything went well the implanted DNA would then direct the cell to make the desired protein.

Using cells from the ovaries of Chinese Hamsters—“the workhorse behind many biotech drugs” –it took the Duke team three years to make enough special protein for their early tests.  The juice they produced was injected into a quail that had been bred to be enzyme deficient.   The poor bird was in bad shape.  It couldn’t get off its back, much less fly.  Post injection the creature stood and even flew a little.

After 6 years of successful research, the Duke scientists got some manufacturing help.  Production rights were licensed to Synpac, a British/Taiwanese company with a presence in Durham, Dukes home.  Synpac, in turn “used experienced contractors to manufacture the enzyme.”  (Having done the heavy lifting, the Duke scientists gave a lot away, but they retained some royalty rights.)

Once the company had produced enough enzyme, physicians at Duke infused the protein into three kids with Pompe’s disease.  Lysozyme replacement worked.

In 2006 Synpac made a deal with Genzyme…a “15 year royalty sharing agreement that was potentially worth $821 million.”  At the time Genzyme was huge.  Based in Boston, their 2010 revenue was $4 billion.  The company planned to spend more than $500 million dollars creating production facilities for Myozyme (their name for the enzyme).

The following year Genzyme was acquired by the French Pharmaceutical giant, Sanofi for $20 billion.  As part of the process Duke University was paid $90 million, and relinquished its royalty rights.   In 2016 Sanofi sold $800 million worth of the needed enzyme.

Now called Lumizyme, the enzyme s currently made in large sterile factories.  Babies with the disorder get an injection of the protein every two weeks.

In this country “according to Sanofi, the average annual cost of treatment is $298,000.”   If it works the first year it’s needed the second and third year.  By the time a young person is 10 years old—if no one develops a less expensive generic product, the system (insurance companies and Medicaid) will have shelled out $1 to $3 million dollars per child, and big Pharma will have been handsomely compensated.

Every so often a child is born with one of over 2000 really bad genetic diseases, and his or her family has to love, raise, and deal with a disabled infant who will die young. 

Researchers are hard at work on the problems.  In recent decades they have developed drugs/injections/treatments that supply or teaches the body to replace a vital protein. As a result the number of children currently alive with each disorder has gradually increased.  

The companies that market these life saving products charge a lot, too much for most people, so the government or private insurers are billed.  Or charities kick in.  Or kids die.   “At the current forecasted growth rate, the revenues generated by the $100+ billion orphan drug market is expected to almost double in the next 6 years.”  Since the law no longer allows insurers to limit their liability or deny coverage—the companies that stay in the market and continue to offer policies—and ultimately the taxpayers– have new flood of costs they will increasingly have to deal with.   

In the U.S. 49% of our health dollar is spent on 5% of the people.  The total cost of care in the 2 ½ decades between 1980 and 2004,”has gone from $1,106 per person ($255 billion overall) to $6,280 per person ($1.9 trillion overall).” 

In the first part of the chapter I’m going glimpse the current wave of orphan drugs.  I’ll review a few of the costly, life saving medications that insurance companies were probably beginning to fear.   In the second part I’ll suggest that gene editing will soon change the picture, and I’ll wonder how much the new treatments will cost.



There was a time when drugs for uncommon diseases had a difficult time getting FDA approval.  Tests involving large numbers of affected people were needed before the FDA would conclude a new drug was safe and effective.  That usually wasn’t possible when relatively few people were afflicted.  Families of kids with rare diseases tried to induce researchers to try to find a treatment or cure, but they weren’t very successful.   

Then parents got together, pressured members of congress, and the legislature acted.  In 1983 Congress passed and the president signed the Orphan Drug Act.  Companies that manufactured drugs for less than 200,000 Americans got a lot of goodies:  Their FDA monopoly lasted seven, not five years.  Companies got tax credits—they could write off half of the development costs.  If the disease was rare developers skipped the usual wait and joined the “fast-track” line.

            The law worked better than anyone could have predicted. There are 7,000 rare diseases affecting 25 million to 30 million Americans. In the first 20 years 249 orphan drugs were marketed. 

In 2012 the FDA approved an important cystic fibrosis drug and Vertex Pharmaceuticals priced it at $295,000 a year.  At the time insurance companies were already dealing with the cost of 7 super-orphan drugs that were more expensive than the newcomer.  Some allowed infants who once faced an early death to survive and thrive.   Life saving medications usually need to be taken periodically for a lifetime.  When 1000 infants with a fatal disease live on, they are joined by 1000 similarly afflicted newborns the following year.  As the number of survivors rise, the overall outlay by insurers increases.  As their annual expenditures go up insurers charge more.

Cystic Fibrosis had not been on the Vertex radar before 2000.  That year they purchased Aurora Biosciences Corporation, and paid $592 million in stock for a company that had a technology they wanted.  Aurora was able to screen large numbers of small molecules and find out what effect, if any, they had on target cells.

The acquisition came with a commitment.  The Cystic Fibrosis Foundation was going to give Aurora $47 million over 5 years.  The Gates foundation would kick in an additional $20 million.  In return Aurora would screen for “drug leads against four protein targets that they had identified as promising.” (The foundation’s “gene therapy” approach had been unsuccessful and they were looking for a new line of attack.  –this all happened before we knew about Crispr-Cas9–)

People’s bronchial tubes normally produce a watery secretion, and it collects bacteria and foreign particles.  Hair like cilia sweep it up and it’s swallowed or coughed out.  The lungs of kids with Cystic Fibrosis produce a thick, “glue like mucous.” It too collects foreign particles, and bacteria, but a body has a hard time getting rid of it.  People with the condition periodically develop pneumonia, and over time lose lung function.  A century or so ago, most weren’t treated with inhaled bronchodilators, physical therapy, postural drainage, and appropriate antibiotics.  Few survived childhood.

The Cystic Fibrosis Foundation has established 117 centers of excellence.  They are manned by experienced health care professionals and have guidelines, “best” practices, and public monitoring. As a result of their aggressive approach the average person with Cystic Fibrosis now lives an average of 35 years.

The foundation was looking for something better.  Aurora was going to help them decide if a pill could make a difference.

Vertex was not anxious to get into the Cystic Fibrosis business.  There were only 30,000 Americans with the condition.  If the company found a potential drug, it would cost $100,000 to test each person. As Vicky Sato, the company’s president explained to a group of business students:  “can we craft a deal that makes sense to us as a drug company?  If we commit to cystic fibrosis are we limiting our upside on drugs with bigger market potential?” (Victoria Sato, president of Vertex–Barry Werth, The Antidote. Page 69)

In the company’s mind the cost of getting involved was “prohibitive.” Richard Aldrich, a deal maker and advisor, thought Vertex should only work with the CF foundation “if they agreed to fund some of the early stage (drug) development.”

About this time Vertex hired Eric Olson and put him in charge of the project.  An experienced research biologist, he was interested in CF.  A Colleague/friend’s daughter had the disease.

The condition is genetic, and recessive.  If both parents are carriers, one of four offspring is afflicted.  The faulty piece of DNA, the cause of the disease, was located in 1989 by a group of Canadians geneticists working with Hong Kong born Lap-Chee Tsui.  The mutation responsible for most cases of cystic fibrosis occurs when three nucleotides are deleted from a gene on chromosome 7.  Called Cystic fibrosis trans-membrane conductance regulator (CFTR), the abnormal gene causes the cell to make a defective membrane protein, one that doesn’t “fold” normally.  Normally folded protein regulates the amount of chloride, salt and water that flows through the surface passage ways of the cell membrane.  In people with Cystic Fibrosis, salt accumulates outside the cell and secretions are thick.

Olson’s group isolated tiny pieces of cell membrane and “looked for electrical changes”- for a molecule that could increase the flow of chloride and liquids.   They analyzed tens of thousands of compounds before they hit on an effective molecule.  It wasn’t potent, but it increased the flow and validated their concept.  A chemical that helped the disease might be out there.  They needed to press on.

Research progressed and in May 2001 the Cystic Fibrosis Foundation gave the company “$21 million in direct research funding for the subsequent two years.”  More researchers joined the effort.  They looked for molecules that did something good to misfolded surface protein.  They sought “potentiators”, molecules that kept channels transporting chloride and liquids open longer.

In August of that year they found a potentiator that was “ten times more potent than the starting point.”  The discovery didn’t mean that a drug was around the corner, but it convinced them they were on the right track.”

By June of 2011 Vertex had two drugs that dropped the salt content of sweat.

(People with Cystic Fibrosis can’t push salt into their cells.  A drop in skin salinity meant fluids and chloride were crossing the surface membrane.)

Phase three drug trials started in 2009.  In January 2012 the FDA approved the monopoly status of Ivacaftor (Kalydeco).  A “potentiator” it increased CFTR channel open time.  In 2013 it was joined by a second molecule, VX-809, a “corrector”.  The drug does something to protein folding, and it increases the number of CFTR proteins that are brought to the cell surface.

In 2015, now marketing its Cystic Fibrosis drug, Vertex earned $1.01 billion.  In 2016 its gross profit was $1.49 billion.  For the first time in 20 years the company was making money.

Founded 28 years ago, Vertex was a corporation with great talent and ideas.  It became the focus of two books chronicling the problems of a promising startup.  In 2011, at age 22, the company was $3.6 billion in debt, and it hadn’t yet produced a significant product.  Much of its subsequent effort and money was spent developing Telaprevir.  An FDA approved drug, the medication increased the ability of interferon to cure hepatitis.    But people taking Telaprevir still needed to take interferon injections once a week for a year, and that’s hard.  When the recent generation of Hepatitis C medications hit the market, when the condition could be cured in weeks without interferon, Vertex stopped making Telaprevir. (In March of 2017 Vertex purchased another CFTR potentiator from Massachusetts based Concert Pharmaceuticals for $160 million.)

So how good are the drugs?  So far they seem to help.  Or to be technical:

The combination of two drug regimens:  either tezacaftor–ivacaftor or lumacaftor–ivacaftor “improved lung function in patients with cystic fibrosis who have the most common genotype.”  In the short run they decreased the exacerbation rate, and the unexplained “worsenings” that contributed to a more rapid decline in pulmonary function.  But the drugs’ “efficacy is suboptimal and falls within the range of established symptomatic therapies, such as nebulized inhaled hypertonic saline or recombinant human DNAse.” http://www.nejm.org/doi/full/10.1056/NEJMe1712335

 Founded in 1997 and based in San Rafael California, Biomarin is on a roll.  They’ve acquired 6 biomedical startups in the last 15 years, and in 2016 were marketing 5 orphan drugs.

One of them, Brineura, is a $700,000 a year replacement enzyme that, when injected into an affected child’s brain, gets them walking.  It was marketed in 2017.  Kids with the rare (20 American children a year) fatal (they usually die when they are 6-8) disease, can’t get rid of certain kinds of brain waste until it’s broken down, and they lack the enzyme that allows that to happen.

The responsible genetic defect was discovered in 1997 by two professors at Rutgers who had, for years, been studying lysosomal storage disease.  Using a genetically engineered mouse they produced some of the missing protein and tested it.  Replacement therapy worked, and they patented the protein.  Then they licensed BioMarin.  The company paid for the testing and marketed the drug.  The genetic defect is called Neuronal Ceroid Lipofuscinosis.


And now for the present/futureThe most common genetic cause of death in infancy, Spinal Muscular Atrophy “causes severe weakness by 6 months of age and inability to breathe by the age of two.”  The drug that saves the lives of 40+% of the one in 11,000 babies who are annually born with the condition costs $750,000 the first year.  The treatment’s creation was funded with private and public monies.

The recessive condition occurs when the gene that tells the cell to make a needed protein is “either deleted or mutated.”  There’s a backup gene.  It’s one nucleotide off– It has extra RNA nucleotides –and its RNA doesn’t work or work well. .  In normal individuals the unwanted fragments of RNA are routinely removed by splicing enzymes.  In afflicted kids they aren’t eliminated and the cell doesn’t produce enough of the needed protein.

Scientists didn’t know how to get rid of the “gibberish” nucleotides, but they developed a “patch” that allowed the RNA to function.  It was a great accomplishment and it wasn’t easy.

The basic research was performed at the Cold Spring Harbor Laboratory, a huge non profit facility in New York, by a team led by Adrian Krainer.  He’s a PHD researcher who has worked on RNA splicing off and on for 30 years.  First hearing about Spinal Muscular Atropy in 1999, his team developed a “method to correct the RNA defect in a test tube.” They applied for a patent and Isis Pharmaceuticals (now Ionis) contacted them.  In the subsequent years Krainer and Ionis worked together.

On June 23 2006 Krainer, his fellow inventors, and Ionis pharmaceuticals inc. filed the first of two patents.  (The second patent added Cold Spring.)  In their application they described “a complex process that requires a multitude of signals and protein factors to achieve appropriate mRNA splicing.”

A lot of time, effort, and money was spent developing an RNA sequence that could be injected into the spinal fluid and could save the children’s nerves and muscles.

In 2008 Cold Spring Harbor lab granted Ionis an exclusive royalty-bearing license.  The company was allowed to develop, make, have made, use, sell, offer for sale, have sold, import and export …   and Ionis agreed to provide additional funding.

I don’t know how much Ionis paid for the license and what portion of the royalties were promised to Cold Spring.   During the development phase Ionis partnered with Biogen.  There was a fifteen-month study.  126 non-ambulatory patients with later-onset SMA were treated, and the drug worked.

In 2015 Biogen paid: $75 million for an option on the drug; $150 million “in regulatory milestones”; and 10% to 15% royalties.   Biogen also paid for all development subsequent to taking the license.  (The Biogen agreement included licenses to intellectual property that Ionis had acquired from Cold Spring Harbor and University of Massachusetts.)

In December 2016, the Ionis’ drug, nusinersen, (Spinraza) was approved by the FDA.  Biogen decided to charge $125,000 for each dose.  $750,000 per child the first year.  $375,000 each subsequent year.  (it’s given 3 times the first month, once at 2 months, then every 6 months.)  N Engl J Med 2017; 377:1723-1732

Hundreds of millions of public and private dollars were spent developing and producing the drug.  Before they even started working on Spiranza, Ionis had, over the years, gone down a few blind alleys and had developed drugs that didn’t sell well.

In her 2004 book Marcia Angell says “drug companies claim drugs are so expensive because they need to cover their very high research and development costs,” and she picks their numbers and logic apart.

The cost of the Spiranza flustered a physician at the University of Utah:  “We follow about 150 SMA patients. If each were treated with nusinersen, the cost would be $113 million the first year and $56 million thereafter (not accounting for newly diagnosed patients). Nusinersen’s extreme price is a challenge for any health care system, particularly those with an accountable care organization responsible for large numbers of patients (200,000 children in our case).”

He outlined a few solutions to high prices, none of which could come close to solving his dilemma.  His suggestions include:

Panels of experts


Making sure insurance companies understanding how valuable a drug is.

He mentioned but didn’t endorse the United Kingdom’s approach.  Before a drug is approved, the National Institute for Health and Care Excellence (NICE) has to determine its cost effectiveness or value–using quality-adjusted life years.

And he wrote about the Institute for clinical and economic review (ICER), a small Boston-based nonprofit with a NICE-like model.

In November 2017 AveXis, a (now) Dallas based company told the world about a different approach to SMA.  They placed a gene that promoted the production of the needed SMN protein into the nuclear DNA of an adenovirus.  Then they infused the virus into kids with SMA.

The 12 treated children were at least 20 months old at the time.  Kids were followed for two years.  At some point “eleven were able to sit unassisted for at least 5 seconds, 10 for at least 10 seconds, and 9 for at least 30 seconds.  11 achieved head control, 9 could roll over, and 2 were able to crawl, pull to stand, stand independently, and walk independently.  Eleven were able to speak.  Gene editing—seems to have come to the rescue.

AveXis was founded in 2010 and claims it has $75 million in funding.  This, its first product, may be a long term solution to SMA. “Two years out there was “no waning of effect or clinical regression of motor function.”  N Engl J Med 2017; 377:1713-1722.


The arrival of Gene therapy will, potentially be as transformative as penicillin was for strep throat,

OR the drugs that turned HIV, into a chronic, survivable condition,

OR the immune modulating medications that allowed transplanted organs to survive.

Each of our cells has 22,000 chains of DNA that are our genes.  Their lengths are variable, and they are scattered amidst the 6 billon DNA nucleotides.  Commonly identified by their initials: A, T, C, and G, pairs of the nucleotides—our biologic code– line up in one of the 23 chromosomes in the nucleus.   Genes are recipes – sets of instructions that tell cells how to correctly assemble proteins from amino acids.  Proteins are the workhorses and building blocks of the cells.

Much as we arrange a few of the 26 letters of the alphabet to create words, genes use arrangements of the 4 nucleotides to send instructions to RNA and on down the chain.  A misplaced letter can cause a serious problem.  For example, the mutation that causes Sickle cell anemia, a severe genetic disease, is caused by the misunderstanding caused by a single misplaced nucleotide.  There’s a T where there should be an A—(like he ate a pea not he ate a pet).

Over the years many genes were identified.  When, in 2001, the human genome project was completed, scientists started examining the 3 billion pairs of nucleotides one by one.  They detected “over four thousand different kinds of DNA mutations that can cause genetic diseases.”

The discovery of the way we currently edit genes was the result of curiosity based research performed in numerous locations.

Currently scientists seem to be using two gene editing procedures:

the “stand alone” method uses the natural inclination of viruses to enter cells, become part of their DNA and force them to crank out thousands of baby viruses.  In this case a missing gene is planted in an adenovirus, and the concoction is injected into a person.  Viral capsids enter human cells, and “use the “cell’s machinery” to “deliver a single stretch of DNA into the nucleus.  The cell’s repair mechanism sends the DNA to the targeted area—and (I’m not sure this is technically correct) the strand of DNA –the good gene—attaches and goes to work.  ”https://www.horizondiscovery.com/gene-editing/raav

Researchers are also using adenoviral vectors to deliver the genes with the tool known as CRISPR/Cas9.  http://blog.addgene.org/adenoviral-delivery-of-crisprcas9-aims-to-expand-genome-editing-to-primary-cells

Since CRISPR will probably be widely used in future gene editing, I thought I’d try to explain it.  The investigators who did many of the studies and developed the concept were publically funded and were—at the time—trying to learn how bacteria defend themselves from assaulting viruses.  They were trying to understand CRISPR.

(The following theory of how CRISPR came into being helped me understand the process.) When a bacteria is assaulted by a virus, the invader enters the cell, takes over its DNA, and directs the bacteria to make billions of viral particles.  Most of the bacteria are enslaved, then destroyed.  A few mount a defense, survive, and create a “DNA memory file.”  The identifying characteristics of the bad viruses are stored in the DNA’s CRISPR area, and it becomes one of the “genes” that are passed on to future bacteria.  In subsequent generations the memory DNA creates strands of RNA that float around inside the bacteria.  When a segment of RNA recognizes an invading virus it latches on.  Then it cuts the virus apart with an enzyme called Cas9.)

After they understood how bacteria identify and destroy unwanted viruses, a group led by UC Professor Jennifer Doudna tried to use the system to edit genes.

They chose a target–a “twenty-letter DNA sequence” that was part of the gene they wanted to delete; and they “converted” a collection of nucleotides “into a matching 20 letter strand of RNA.”

They planted the genetic instructions for making Cas9—the knife—into one plasmid.   Plasmids are segments of DNA that “exist naturally in bacteria but are not part of the nucleus.”

They put the genetic instructions for “guide RNA” –-into a second plasmid.

Doudna’s group merged the CRISPR—RNA (the RNA that targets the specific segment of DNA)—with the tracRNA (the RNA that attaches to the Cas9 nuclease–the “knife”.)

Their concoction was able to search a cell’s DNA—3 Billion pairs of nucleotides—and find the targeted segment of DNA.  Then the RNA unwound the DNA and used its Cas 9 to cut both of its strands.  In other words they irreparably damaged the gene.

In June 2012 Doudna and Charpentier published a study that showed how RNA and Cas9 could be used for “site-specific DNA cleavage and RNA-programmable genome editing”.  Investigators around the world took notice and got busy.

Scientists already knew how to add a new, good gene.  Mario Capecchi, years back learned that genes intuitively know where, amidst the 3 billion pairs of DNA nucleotides, they belong.  If good genes are developed and put into cells, they migrate and attach to “their place.”  (Mario Capecchi of the University of Utah made the discovery in 1982, and won the Nobel prize in 2007).

After Doudna’s paper was published Kevin Esvelt (currently at MIT) explained how using CRISPR + selfish genes in the germline can create changes that will be inherited by future generations of cells.

In the early 1990s, Ronald Crystal, a physician at the NIH and Cornell, first showed “adenovirus vectors were effective at transferring genes to most organs” Since that time the technique– created and developed with public monies– has been widely used.

Everything was in place.  There are a lot of genetic diseases that need to be cured.   Sensing that there wasn’t time to write grants and get government funding, Doudna and other scientists formed a venture capital company– Editas Medicine.  Charpentier and others founded CRISPR therapeutics.  (Both firms, according to their web sites, are trying to cure Sickle Cell disease, cystic fibrosis, and a few other genetic conditions.)

One of the problems tackled by other researchers was hemophilia.  It’s a genetic condition that “occurs in approximately one in 5000 live births.”  The defects are sex linked, which means that women carry the gene and their sons get the disease.  The males have one of several mutations in the genes responsible for factor 8 or factor 9.  They can’t make any or enough of one of the proteins –ingredients–that are needed to form a blood clot.

Without the needed factor injured people don’t stop bleeding.  Their joints periodically and very painfully fill up with blood.  Over time they develop joint deformities.  People with hemophilia are treated with transfusions and with infusions of the missing factor.  Some develop antibodies to the proteins, and they stop working.

Researchers at the University College London recently figured out how to fix one of the genes.  They put a factor 8–concoction into AAV5, an adeno-associated small virus.  The virus doesn’t seem to cause disease and it’s not highly immunogenic.  The details of their infusate have not been revealed.  We only know its name:  AAV5-hFVIII-SQ.  In 6 of 7 patients receiving a high dose of gene therapy “factor 8 increased to normal level and stayed there for a year.  None of the 7 treated patients bled during that year.”  It’s too early to be sure it will last, but it looks like hemophilia is curable.  After they developed their haemophilia gene treatment, UCL licensed it to the U.S. biotech company Biomarin. “The licensing led increased investment in the research and the acceleration of clinical trials.”  Nejm Dec 28, 2017.

Gene therapy for hemophilia B was developed by Spark researchers.  (Spark is a Pennsylvania startup that works with scientists from the Children’s Hospital of Philadelphia.)  10 men with hemophilia B whose blood had less than 2% of the needed clotting factor were infused with an adeno virus containing a replacement gene-technically speaking a bioengineered capsid, liver-specific promoter and factor IX Padua (factor IX–R338L) transgene.)

During the subsequent 49 weeks their clotting level rose and stayed at a mean level of 33 %.  Bleeding virtually stopped.  Only 2 patients needed a factor infusion.  NEJM Dec 7, 2017.  Again, it sounds like we’re talking cure.

In 2015 supported by NIH grants doctors introduced “The gene encoding RPE65  into the retina of patients with RPE65-associated Leber’s congenital amaurosis—a genetically caused, childhood onset, autosomal recessive blindness.  Many showed Improvement then Decline in Vision.  N Engl J Med May 14, 2015

In subsequent trials “27 of 29 young people (93%) gained vision and maintained it for at least three years.” http://www.cnn.com/2017/10/12/health/fda-gene-therapy-blindness-vote/index.html



Investigators at Emory University in Atlanta have “snipped a gene that produces toxic protein aggregates in the brains of 9-month-old mice that are used as a model for Huntington’s disease.”

People who lack the CCR5 gene are not harmed by HIV.  The virus uses the CCR5 derived cell wall protein” when it invades cells.  When the protein is absent it’s hypothesized that the virus doesn’t enter and destroy T lymphocytes, and people with HIV don’t become susceptible to a slew of organisms.  The gene is present in Africans and most Europeans.  That’s bad.  And so far no one, to my knowledge, has developed a CRISPR concoction that will destroy the CCR5 gene in people with HIV.  It’s still just a potential target.

It’s too soon to say we’ve cured hemophilia or childhood blindness.   CRISPR derived gene therapy is new and exciting and not fully developed.  We need a few more years under our belt.  In the meantime, given our current experience with the price of drugs we should start thinking about how we’re going to pay for stand alone AAV and CRISPR treatments.

(“Stuart Orkin, MD, and co-author Philip Reilly, MD, JD, of Third Rock Ventures, tried to “catalyze the discussion” by suggesting several new models for valuing, pricing and developing gene therapy.”  Good luck.

  1. H. Orkin, P. Reilly. Paying for future success in gene therapyScience, 2016;)



Some of our leaders bemoan the fact that Medicare isn’t allowed to negotiate price with drug manufacturers.  They want to change the law.  Do they realize what they are asking for?

A leading thinker wants to develop a pricing formula that links price to the “value” of a drug.”  Suppose a drug only extends a person’s life for a few months.  It’s expensive and deemed “not cost effective”.  Would U.S. authorities dare say “no” we won’t pay for it?  Remember the 2009 “death panel” hysteria brought about by people who opposed health care reform.

Some people with incurable metastatic disease believe they can “beat” the cancer.  Understanding the risks and benefits, a few push for an aggressive approach.  If their insurance won’t pay, they’ll go into hock and risk a medical bankruptcy.  How should the system deal with a person who wants to try a dangerous drug in the hope that he or she can live long enough to see his/her daughter walk down the aisle?

Peter Bach concluded: “If we try to build a separate pay-for-performance structure for each new drug, we will quickly discover that we can’t come up with a practical one for most drugs.” A New Way to Define Value in Drug Pricing. Nejm Feb 24, 2016.

Insurance companies have formularies and regularly bargain.  Some put drugs in tiers–levels.  If the producer gives the insurer a better price, the drug goes into the low co-pay basket.  If the manufacturer hangs tough, the insurer can add the medication to the more expensive co-pay list.

Formulary management works for the Veterans Administration.  They, for example, only carry one or two beta blockers.  Companies bid for the contract.  All the VA business goes to the brand that provides the best price.

Industry wide it’s estimated that, on average, programs pass back over 90 percent of total rebate dollars negotiated with pharmacy manufacturers.    Pembroke Consulting https://www.ahip.org/8-facts-about-high-drug-prices/

A 1990 law ties the costs of drugs provided by Medicaid– to the bargains obtained by insurance companies and the VA.  The man responsible for the link was Senator David Pryor.  As the Chairman of the Senate Special Committee on Aging, he once apparently believed “the high cost of prescription drugs was one of the biggest problems burdening seniors.” He held hearings and “attacked drug Industry leaders,”  Then he decided to help Medicaid—the government program for the poor and disabled, that also covers the cost of nursing homes for many.  Medicaid is funded by the state and federal government.  (The feds on average, pay 57%, of the costs: 50% in wealthier states: up to 75% in states with lower per capita incomes.)  The program provides health coverage to about 64 million Americans.

In the late 1980s many states were in financial trouble.  They tried to limit people on Medicaid from using prescribed drugs by creating “restrictive formularies, co-pays, and monthly maximums.”  But the states’ costs remained high– in part because Medicaid–the government– paid full sticker price for prescribed medications–at a time when insurance companies and the VA were often given discounts of 30% to 40%.

Two states tried to bargain with Pharma and were attacked by industry.  (To successfully negotiate, to have any leverage, a state had to be willing to walk away.) Pharma argued that if states withheld “brand-name drugs without generic equivalents from a Medicaid enrollee (they would be) endorsing “second-class medical treatment for the poor.”

In the late 1980s President George H.W. Bush and his White House staff decided to “shrink the budget deficit by about $50.5 billion.  The legislation they produced was “massive”– 533-pages long—“the 5-year Omnibus Budget Reconciliation Act (OBRA 1990)”.  Its size and scope allowed Pryor and colleagues to add their “Medicaid Prescription Drug Rebate Program” to the bill.  It granted Medicaid “most-favored customer” status, and required drug manufacturers to sell their meds to Medicaid at the “best price” available to any other purchaser.  When a company accepted the pricing provisions they were assured that their products would be covered under each state’s Medicaid prescription drug program. “

The law had a glitch.  Industry had been giving voluntary discounts to a few needy hospitals.  After the bill was passed some of these price reductions were discontinued; in some hospitals drug costs rose “dramatically.”

During the 7 years after the act was passed “Medicaid outpatient prescription drug costs increased at an average annual rate of 14.8 percent.  In years 7-10 they increased 18% a year.”


In 1992 Congress created the 340B program.   That law protected specified clinics and hospitals (“covered entities”) from drug price increases and gave them access to price reductions.  Manufacturers agreed to provide discounts on “covered outpatient drugs” that were purchased by the government-supported facilities that served the nation’s most vulnerable patient populations.”  15 years later 340B is still the law.  It’s popular, relatively widely used, and is once again under attack.

Discounted Drugs for Needy Patients and Hospitals — Understanding the 340B Debate.  Walid F. Gellad, M.D., M.P.H., and A. Everette James, J.D., M.B.A.  N Engl J Med 2018; 378:501-503


Medicare D plans can’t bargain.  “D” is government sponsored drug insurance for citizens older than 65.  It’s offered—at a price–to people enrolled in Medicare A. To help control costs “D” insurance plans use formularies.

Medicare A is free and almost automatic for individuals who have been a legal U.S. resident for five years and are over the age of 65.   It’s paid for by a payroll tax; it’s not a hand out.  We bought it.  It pays for “medically necessary hospital, skilled nursing facility, home health, and hospice care.”

Costs not covered by A are either paid for by the individual, or by a supplemental –privately purchased– policy–(Medicare B).

Available since 2006, (Medicare D), drug insurance is also voluntary.  People have to sign up; there’s an initial fee and a monthly payment that tends to vary.  (In 2017 the monthly charge was as low as $17 in some places, and as high as $72 in others.  Nationwide it averaged $42 a month.)  “D is only provided through private insurance companies that have contracts with the government.

The regulations say the amount of money a person pays for a policy is in part, income based.  The government provides a low income subsidy for people whose annual income is “below $18,090”–$24,360 for a married couple living together.”  In “2016, the feds directly subsidized nearly 75% of the premiums,”

About half of the insured elderly own a combined B and D policy.  The other half has stand alone prescription drug plans. (PDP).

All plans assemble the medications they cover in groups.  They charge a large amount for very expensive medications and have a minimal co-pay for cheap generic drugs.

The formulary of the University of Maryland Health Advantage, for example, has 5 drug levels and 5 co-pays—amounts of money the person taking a medicine must pay.  From their web site—the 30 day co-pay for each filled subscription runs as follows:

$4 for preferred generic drugs. (And there are many.)

$15 for generics that don’t make the preferred list.

$47 for preferred brand name medications.

$100 for brand named products that don’t make the preferred list.

And 33% of the retail/mail price for “specialty drugs.”

A large number of high-priced drugs are in the most expensive group.  They include: combinations of anti retroviral (HIV) drugs, multiple sclerosis modifying agents, and orphan drugs—medications that are not in high demand for people over 65.  A number of the very expensive, cancer fighting medications are also on the list; 33% of their retail price is a lot of money for most Americans…and Medicare D insurers are not allowed to bargain.

Pharmacy committees that place the drugs in tiers meet regularly.  When the drug insurer (D) also covers a person’s general medical care, (B) the committees must deal with the fact that some expensive prescriptions are not being filled.  If a person doesn’t buy a needed medicine and decompensates, the insurer will be on the hook for at least part of the costs of the resulting medical care.  Thus these committees need to walk the tight rope between keeping their plan solvent and avoiding prices that make people choose between—their money or their health.

https://www.brookings.edu/wp-content/uploads/2017/05/wp28-formatted-new_.pdf http://files.kff.org/attachment/Issue-Brief-Medicare-Part-D-A-First-Look-at-Prescription-Drug-Plans-in-2017

 The European Union, EU, represents 25% of the global drug market.  Its agency –the EMA –gets help evaluating new drug submissions from a number of EU nations.  The U.K. has contributed to the process, but its role may be phased out thanks to BREXIT.

In France drugs are evaluated and the price is negotiated before the medicine hits the market.   The Health Products Pricing Committee reaches a deal and signs contracts with various companies.  Their rules favor better and cheaper medications.  “Drugs that offer considerable improvement over existing therapies” can’t raise their price during their first five years on the market.

Israel introduced its national health insurance in 1995.  Before that each of its many sick funds had its own formulary.  The decision to include or exclude a medication was the result of negotiations between a fund and the commercial sponsor of a drug.  After deciding which brands could be prescribed, insurers would get discounts and would force doctors to only order approved drugs.

Over time Israel created a “basket of drugs” that was periodically updated. Prices were “linked” to those charged in certain high-priced European countries.  New meds were chosen on the bases of “therapeutic advantage.”  Israelis say that price was not part of the decision process.  When they reject a drug they don’t say why.

Some claim industry has “access and influence over the Israeli government on this issue – access not afforded to other interest groups. “  On at least one occasion politicians and lobby groups pressured decision makers to add certain cancer drugs, such as Herceptin (trastuzumab) and Avastin (bevacizumab).

“Most European countries use External reference pricing (ERP) to set the amount paid for publically reimbursed medications.  They use the average price of a medicine in a specified group of countries as a benchmark or reference price.  The general average price of reference countries was used in Austria, Belgium, Cyprus, Denmark, Iceland, Ireland, Portugal, Switzerland, and the Netherlands. The average of the three or four lowest prices of all the countries in the basket, was used in Greece, Norway, Slovakia, and Czech Republic. The lowest price among all reference countries was used in Bulgaria, Hungary, Italy, Romania, Slovenia (for original drugs and biosimilars), and Spain.  Many countries around the world use the ERP as a basis for their negotiation with pharmaceutical companies.”


“The British national health service—NHS– is the main buyer of pharmaceutical products in the UK. Prices for prescription drugs in the NHS are currently set through discussion between manufacturers and the Government.  The U.K. Department of Health and drug makers reached a five-year voluntary agreement called the Pharmaceutical Price Regulation Scheme, or PPRS, to regulate the cost of brand-name medicines.  The accord took effect January 2014.  It keeps the bill for branded medicines flat for two years; they will then rise by about 1.8 percent annually in 2016 and 2017 and 1.9 percent in 2018. Government spending on medicines in excess of these levels will be reimbursed by the drug companies.  Prices for generic drugs are negotiated separately.

In March 2017 the U.K. government announced it would limit payments for any drug that could cost the health system more than 20 million pounds annually in its first three years of use. Any drugs over the 20-million-pound limit will have to go through an additional negotiation process between the NHS and the company.  The spending limit was introduced after a 2015 decision by NHS England to curtail access to the hepatitis C treatment Sovaldi, made by Gilead Sciences Inc.  This was despite NICE’s recommendation in support of the drug.  In other words in the UK the government is “rationing” medications.

The British National Institute for Health and Clinical Excellence—NICE– evaluates the clinical and cost effectiveness of drugs, health technologies and clinical practice for the NHS. It does not negotiate drug prices. Currently around 40% of drugs new to the UK market are evaluated by NICE every year.”

“NICE uses a metric known as “quality adjusted life-years,” The agency assess the value of medicines in extending and improving patients’ lives. It usually only approves drugs that cost less than 30,000 pounds ($39,000) per quality adjusted life-year, which is equal to a year of life in perfect health.”

So how much is a few months of life worth?  Sometimes even Brits refuse to keep a stiff upper lip.

Enzalutamide and arbiraterone are expensive drugs.  Each of them can stop the growth of castration resistant prostate cancer for months.  They work in different ways and it’s possible that when one fails the other might still be effective.

Enzalutamide was approved by the NHS in October 2013.  The following January NICE tried to prevent the government from paying for Enzalutamide if a man in England or Wales had already been treated with abiraterone.  Men in Scotland could still receive Enzalutamide.

There was an outcry and a petition.  Political leaders and “Tackle Prostate Cancer”, (an organization) protested.  And NICE changed its guidance saying:  “there is not enough evidence to make a recommendation about how the two drugs should be used.”

Negotiating drug prices is a can of worms.  Crafting a bill that would make it possible is tricky at best.



The Pharmaceutical Journal21 APR 2017 .



UK:    http://www.dailymail.co.uk/health/article-2702145/NHS-limits-use-prostate-cancer-drug-Guidelines-mean-life-prolonging-medicine-not-given-men-received-new-treatment.html#ixzz4ruOLMLao








The government does a lot of things that we approve and disapprove of, but the FDA is not responsible for high drug prices.

Not that drug companies don’t charge more so they can recoup the costs of proving a drug safe and effective.  Or that some don’t believe that a medication should be made available after it’s been shown to cause a lab test—a “marker” of disease–to improve.  Not that U.S. President Donald Trump’s didn’t “vow to roll back government regulations at least 75%” (Reuters March 13, 2017)

If the critics were correct, if it once took too long for new drugs to be evaluated and approved, that’s no longer the case.  If anything, the FDA is tilted in the other direction.  Drugs are often approved when their long term effect won’t be known for years.  Cancer drugs that may or may not make people live longer are marketed.  There’s a mechanism that allows physicians to legally use an experimental medication.  Called the IND, it started in 1987.  If a therapy is needed urgently and a manufacturer has an experimental product that might help, a doctor can apply.  Over 100,000 IND’s have been granted.

The TV is full of ads for diabetic drugs that lower the A1C.  That’s a marker for how good a person’s average blood sugar is.  Tight control may or may not lead to a better outcome.  In a study of the frail elderly, an emphasis on lowering the blood sugar led to more deaths.  Hypoglycemia, a blood sugar that’s very low, can cause irrational behavior, falls, and even death.  N Engl J Med June 12, 2008; 358:2545-2559

The FDA protects us from harm and misrepresentation.  That’s what they’re there for.  And they like to illustrate how important this can be by retelling the story of Thalidomide.

When it was introduced in 1958, thalidomide was hailed as the tranquilizer of the future.  It put you to sleep without the expectation of a hangover, could be used for “over tired” children, and wasn’t fatal, even in a massive overdose.  Chemie-Gruenenthal, the manufacturer quickly found acceptance for its product thorough out the world.  Three countries held out against approval:  France cited “technical reasons”; Israel kept delaying without giving a reason.  And in the United States there was Dr Frances O. Kelsey.

The FDA at that time was required to pass on a drug within 60 days or it would automatically be approved.  By chance, a new medical officer, Dr. Kelsey was assigned to the thalidomide case.  It would be marketed by Merrell under the name Kevadon.  As the sixty-day period came up Dr. Kelsey routinely rejected Merrell’s application as “incomplete.  She had suspicions.  A side effect, tingling of the nerves, brought back memories of research she had done 15 years earlier when neuritis of this kind in pregnant animals was often accompanied by an unusual result when they gave birth: the newborn was deformed.  Yet the German company’s tests on experimental animals showed nothing of the kind.

Within a year of the introduction of Thalidomide a very rare deformity in newborn babies began to appear in Germany.  It was called phycomelia.  In the place of arms and legs babies were born with something like fins.  From 12 cases in 1959 the number grew to 83 in 1960 and 302 in 1961.  Near the end of 1961 a Hamburg pediatrician made a statistical connection between this ominous health problem and mothers who had taken Thalidomide while pregnant.  The manufacturer was sufficiently concerned, and just as Israel was about to approve the drug it was withdrawn from the Market.  According to the FDA 10,000 people in 20 countries were victims of the simple sedative.

Senator Estes Kefauver was, at the time, investigating “the escalating expense of lifesaving prescription drugs “pharmaceutical executives were openly berated for profiteering and doctors were portrayed as dupes of pharmaceutical companies.  He unsuccessfully tried to require newly approved drugs to “generate competitive markets after 3 years.” He also failed to eliminate the promotion of “me-too drugs” and “molecular modifications”.  https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4101807/

But, thanks to thalidomide, the Kefauver-Harris amendments to the Food, Drug, and Cosmetic act of 1938 became law in 1962.  Proving a drug was safe in mice and a rat was no longer enough.  A drug had now, to be shown effective as well as relatively safe.

The drug companies fought back in the courts.  The Supreme Court, in 1974, allowed the FDA to rule that drugs in use before 1962 were no longer protected by a “grandfather clause.” It gave the FDA full authority to demand double-blind studies.”

A federal agency with more than 22,000 employees, the modern FDA does much more than give marketing approval to drugs and monitor their side effects in humans.  Among other tasks, it ensures “the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices.” It’s also responsible for the safety of our food supply.

It was created in 1906 when Congress passed the original Pure Food and Drugs Act.   The law “prohibited misbranded and adulterated foods, drinks and drugs in interstate commerce.” After spending time as a subdivision of the department of agriculture, the FDA emerged in 1930.

The agency’s next boost in responsibility came after Bayer developed, but was unable to patent mankind’s first antibiotic, Sulfanilamide.  It was made and sold in pill form by manufacturers throughout the world, and it was widely used.  Then a company in Tennessee created an elixir.  Their chemist dissolved the medication in diethylene glycol, a compound normally used as antifreeze.  It turned out to be toxic, causing kidney failure and death.  Following a public outcry over the death of 107 men, women and children from the “wonder drug”, congress passed, and President Franklin Roosevelt signed the Federal Food, Drug, and Cosmetic (FD&C) Act of 1938.  “For the first time, manufacturers were required to show a drug was safe before it could be marketed.”

In 1980 congress passed the Bayh-Dole act.  At the time when research was paid for with government (tax payer) moneys, discoveries were available to all comers.  They were in the “public domain.”

The legislation changed the rules.  After 1980 universities and the NIH were allowed to patent their discoveries, and they could sell licenses to drug companies.  With the license in hand the drug companies could use the “taxpayer funded research” as a basis for pharmaceuticals.

In 1984 the Hatch-Waxman act provided additional exclusivity to brand name drugs whose patents had not expired.  Called the drug price competition and patent term restoration act, it made it easier for generic drugs to come to market.  Companies making these medications had been forced to repeat clinical controlled trials, to start from scratch even though the drugs had been used for years and were relatively safe.  The law ended that requirement.  Now the people who made generic drugs just had to show the FDA they were using the same active ingredients.

The law also said that when a drug lost its FDA exclusivity, generic drugs couldn’t be marketed if the medication was still covered by a valid patent.  And that didn’t happen very often.  Patents were usually filed early in the drug development process, and they often expired shortly after the drug was approved.

Companies had to factor in the new generic rules when they were calculating the potential future value of a product they were working on.  The rule that extended patent protection shouldn’t have changed the numbers much.  But it did.  Sometimes long after a drug was on the market companies submitted additional patents that dealt with non essential ingredients, like the color of the pill or the starches used as filler.  These minor filings were usually granted (in part because the patent office didn’t have the resources to check out the plethora of applications, and probably, in part, because no one seemed to care.) When a drug’s years of exclusivity ended, the additional patents allowed a company to allege its product was “patent protected”.

After 1984, when a drug’s FDA granted exclusivity ended, a generic company could ask for permission to produce the medicine.  The first appropriate applicant was, by law, supposed to get a 180 day restricted head start on the competition…unless the product was covered by a “valid patent”.  If the drug was “protected,” the original manufacturer could file suit and allege violations.  And they did.

The legal filings were often capricious.  But that didn’t matter.  The law said that once the suit was filed, the FDA had to automatically delay the approval of the generic drug for 30 months “to permit litigation.”

At this point both manufacturers knew the generic drug maker would probably win; but lawyers know how to drag things out.  Court battles could be lengthy and expensive.  As a result lawyers got together before or sometimes in the midst of the costly litigation.  The original company typically made a proposal to the generic manufacturer.  They sometimes offered the new company millions of dollars a month.  All a generic drug maker had to do was delay producing and marketing their version of the drug for a number of years.  The practice, which is called pay-for-delay, became more and more common.  There were 33 such settlements in 2010.  In 2013 the Supreme Court by 5 to 3, ruled that pay-to-delay deals are subject to antitrust laws.  Two years later the government alleged the drug company, Teva, made a pay-to-delay agreement.  The company chose to avoid court and settled the case for $1.2 billion.  In 2012, 40 pay-for-delay law suits were filed.  The number dropped to 29 in 2013 and 21 in 2012.

After Congress passed the Prescription Drug User Fee Act (PDUFA) in 1992.), Two thirds of drug approval expenses were paid by big Pharma.  The fox was paying the regulators who were guarding the hen house.

Another well meaning law was added to the mix in 1997.  Drugs that had only been tested on adults were sometimes given to children.  That didn’t sound right and congress decided to incentivize drug companies.  A new law said that before a drug was given to kids, the medicine had to be proven safe and effective.  As compensation for the additional testing drug makers got another 6 months of exclusivity.

If a drug that brought in more than a billion dollars a year was about to expire, the company could give it to a few kids, write up a study, and shut generic drug makers out of the market for an additional 6 months.

The FDA uses a number of advisory boards, groups of physicians who are experts in the field.  The FDA officer makes the final decision, but, in tough situations, it must be nice and at the same time awful to have a group of M.D.’s who serve as a sounding board and buffer.

The 2007 decision about Avandia—a glitazone used to treat diabetes– is an example of how wrong these boards can go.  The first glitazone was approved by the FDA in 1997.  A few of the people who tried it developed liver failure, and it was pulled from the market in 2000.

The second, Rosiglitazone (Avandia) raised the level of cholesterol in the blood.  Since people with diabetes have an increased risk of heart attacks, reviewers at the FDA were appropriately worried.  An elevated cholesterol increases the risk of a heart attack, and Avandia caused the cholesterol level to rise.  To the casual observer the drug should have seemed to be risky.  Avandia was made by the British firm SmithKline Beecham.

The third, Pioglitazone (Actos) was produced by the Japanese pharmaceutical company Takeda.  It didn’t worsen blood lipids and therefore should not have increased the risk of a heart attack or stroke.

The FDA had advisory panels of physicians who were experts in treating diabetes.  They wanted to be able to use glitazones on patients who were no longer responsive to metformin.  .

In 1999 the FDA approved both rosiglitazone (Avandia) and pioglitazone (Actos), but they insisted that the companies monitor the drugs for problems.

In 2000 each of the drugs had sales of $500 to $600 million, and by 2006 they both grossed more than 1.5 billion dollars a year.

Pioglitazone (Actos) did not increase the risk of coronary disease.

Rosiglitazone did.  It also, sometimes caused heart failure, fluid in the lungs and legs.  FDA panels were convened.  The experts voted to keep the drug on the market, but black box warnings were added to the packaging.  Physicians on the panels hoped doctors would read them and use the drug sparingly.

They didn’t, and a 2007 a medical paper convincingly showed that Avandia caused heart disease.  After it came out the drug’s sales dropped dramatically, but a million prescriptions a year were still being written.

The panels of experts convened by the FDA agreed that Rosiglitazone “posed significant cardiovascular risk”.  Then they voted.  Twelve of the 33 doctors thought the drug should be removed from the market.

The chairman and 9 others voted for much stricter controls.  The doctor in charge explained his position in a piece that appeared in the New England Journal of Medicine.  He wrote that “several meta-analyses revealed a significant increase in the risk of myocardial ischemic events among patients taking rosiglitazone…  But a second analysis, failed to demonstrate a similar risk.”  Then he added a little gibberish:  “the results regarding the safety of rosiglitazone raised new questions about relative and absolute risks.”

Smith Kline Beecham was allowed to market and profit from a questionable drug.   The risk was unnecessary.  At the same time doctors could prescribe a glitazone that was as effective and known to be safe.

In July 2010 the manufacturer of Avandia settled a lawsuit for the harm the medication did for $460 million.  Compared to revenue of $1.1 billion dollars the prior year and much more in the years before the 2007 hearings, the monies paid did relatively little harm to the company’s bottom line.  Pioglitazone– Actos, is still being widely used.

In the early morning hours of June 27, 2003– (thirteen years after congress had granted Medicaid “most-favored customer” status, and required drug manufacturers to sell their meds to Medicaid at the “best price” available to any other purchaser)–  the leader of the House of Representatives managed to get a few reluctant congressmen to change their votes.  The chamber passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

The bill was touted as a means of providing cheap or free drugs for people on Medicare.  No new taxes were enacted.  The entitlement was not funded, though part of the cost was paid by enrollees.  Seniors paid $265 to receive the benefit, and then kicked in $25 + a month.  When the cost of a person’s drug exceeded $2400 a year the government stopped paying.  Enrollees had to shell out for the next $4000 worth.  If the drug cost more than $6400 a year, the government started paying.  The $4000 was called the donut hole, and it was eliminated by Obamacare.

The U.S. government which paid for more than 60% of the nation’s health care expenses is still not allowed to negotiate price with drug companies.

After the bill was passed the government accounting office claimed that American prescription drug prices rose 6.6% a year between 2006 and 2010.  By contrast the price of generic pharmaceuticals increased by 2.6 percent annually and overall medical costs rose 3.8% a year.

“Representative Billy Tauzin (R-La.), coauthored the bill while negotiating a $2-million-per-year job as a lobbyist for the drug industry’s trade organization.”  And Thomas Scully, a Bush Medicare official who misstated the program’s cost became a health industry lobbyist.”

At the time the law was passed “most European countries directly regulated the prices of prescription drugs”.  Canada had an “agency” that prevented excessive drug prices.  For some drugs people in those countries were paying as little as half as much as Americans.

Prior to 2003 there were situations where doctors would buy drugs, infuse or inject them, and charge Medicare and/or the patient.  The system was called buy and bill; and doctors sometimes charged a hefty amount for their services.

A 2003 law abolished that practice.  Doctors could still purchase the medication, but they could only bill the patient for the average selling price.  The doctor’s Medicare fee for administering the chemical was, by law, capped at 6% of the drug cost.  That meant that more expensive drugs generated a greater physician’s fee.

Enter “wet” age related macular degeneration, a disease that afflicts more than a million people in the country.  It can be controlled by the injection of a drug, Avastin, into the eye.  (The medication is an antibody.  It blocks a protein that stimulates angiogenesis– the development of new blood vessels.) FDA approved to help fight cancer, the remedy can be purchased and administered by a skilled ophthalmologist.

Before using it the doctor evaluates the patient.  He or she discusses the risks of injecting the drug, and explains downsides like bleeding and retinal detachment.  On the appointed day the patient is brought to the procedure room and checked.  The edge of the eye is injected with a numbing agent.  A second needle is then passed into the inner cavity of the eye, a chamber full of a gelatinous material known as the vitreous.  The medication is injected.  It raises the pressure in the eye for a brief period of time.  Vision is temporarily blurry.  After a period of observation the patient can go home.  For his or her efforts the doctor was paid 6% of the drug’s price.  The small amount needed to treat an eye had a cost of $50, so the fee Medicare paid for the injection and observation was capped at $3.

When the FDA approves a drug for one indication, the company can produce and market it.  Their representatives and ads are allowed to promote the drug for the approved indication, but they are not allowed to talk about other possible ways the drug can make a difference.  When a doctor reads the medical literature and learns a drug helps an additional, different condition, he or she doesn’t have to wait for the drug company or the FDA to act.  If the drug is available, the doctor has the legal right to use it.  Avastin is not FDA approved for age related macular degeneration, and the company does not want approval.

A second drug was developed by the same company.  This time they used a smaller protein, but vis-a-vis safety and efficacy the new medication is virtually identical.  It has FDA approval and sells for $2000 a shot.  Using it an ophthalmologist can charge $180 for his or her time.  Not surprisingly the expensive medication is outselling its inexpensive counterpart by a lot.

At the height of the AIDs epidemic, activists protested the delay between a new drug’s submission and approval.  About that time the agency started making unapproved drugs available to people who had AIDS and were unable to enroll in clinical trials.   In 1988, the FDA created fast-track rules that sped up the development, assessment, and sales of new treatments– for life threatening conditions.  In the process phase three trials were sometimes eliminated.  In 1970 a strong demand for experimental cancer drugs led the FDA to adapt an early-access policy.

In 1992, the FDA started allowing speedy approval on the basis of end points that were seen as “reasonably likely to predict patient benefit.”

That year Congress passed the prescription drug user act.  It authorized the FDA to collect money from pharmaceutical manufacturers, and told the FDA to review special drug applications within 6 months.  Ordinary applications had to be assessed within a year.

When they need them doctors have long been able to get experimental medications.  Using the IND process, over 100,000 people have received investigational drugs for serious or life-threatening conditions.  As therapies were developed and authorized more quickly, the FDA started wondering how often they were endorsing drugs whose risks outweighed the benefits.  And they started “requesting” post approval studies. Under the 2007 FDA amendments act, congress said the FDA could now “require” studies after a drug was approved.  Milestones could be specified, and companies could be fined.

In spite of the law only half of the post approval studies were completed within 5 years.  20% had not been started and 25% were delayed or ongoing.

The head of the FDA is chosen by the president of the U.S.  Some of our leaders are philosophically soft on regulation and want to loosen the rules.  They think the government doesn’t work, and the market place should be trusted.  (Until the market gets in trouble and needs the government to bail them out.)

But the regulations do more than protect people.  They sometimes, also protect our pocket book.  Like when the FDA didn’t approve Solanezumab.  They thought the evidence was too flimsy.  And they were right.  In 2016 Eli Lilly announced that Solanezumab was a failure.  It did not slow the progress of Alzheimer’s.

“The drug binds the amyloid-B peptides that form plaques in the brain”.   Many believe amyloid plaques are the cause of Alzheimer’s dementia, and that the Solanezumab monoclonal antibody could help clear amyloid from the brain.

The company’s original placebo study, performed 4 years earlier, had shown Solanezumab didn’t work—“didn’t improve cognitive function in people with mild to moderate Alzheimer’s.”

At the same time “there appeared to be a statistically significant benefit for the subgroup of patients with mild dementia–a 34% reduction in cognitive deterioration” Maybe Lilly had something.  The company went to the FDA and sought tentative approval, and the FDA turned them down.  They demanded further testing.

In recent years, the FDA’s testing requirements have been under attack.  One section of a new law “allows the secretary of health and human services to rely more heavily on surrogate measures, or “drug development tools,”  Using these softer criteria, FDA leaders could theoretically have approved the drug.  It seemed safe enough.  The agency could have then required post marketing testing–studies that take years to perform.  But why would anyone with mild dementia risk getting a placebo rather than the real thing?

Lilly enrolled 2100 people with mild dementia and followed them for 18 months.  They learned their drug didn’t slow the disease.

The money saved by waiting was substantial.  People are desperate for something that can stop, prevent, or reverse Alzheimer’s.  2.5 million Americans would have been able to access the medication.  Drugs like this almost always cost more than $10,000 per patient per year.  So, using surrogate criteria, we would have paid billions for a useless drug.

FDA Regulation of Prescription Drugs: Edward Campion, M.D., N Engl J Med Feb 16, 2017

The U.S. made one-small-step towards lower drug prices when they passed the Biologics Price Competition and Innovation Act (BPCI Act) of 2009. (The Europeans took similar action in 2006).   Our country now allows companies to market “interchangeables”– medications that are “different chemically” but work as well and are just as safe as a currently marketed drug.

In fact, industry had been marketing biosimilars for years.  But– in the past they didn’t “price compete.”  Companies marketed biosimilars so they could charge higher prices.  Prilosec, a drug that stops the stomach from making acid, is chemically the mirror image of Nexium.  Their actions are the same and they are similarly safe and effective.  The milligram dose is a little different.  40 mg of Nexium has the same acid lowering effect as 20 mg of Prilosec.   The new drug was introduced at a time that Prilosec was losing its hold on the market.  The owner, AstraZeneca, funded a study that showed that in people with severe erosive esophagitis, 80 mg of Nexium was more effective than 20 mg of Prilosec.  In other words doubling the dose of the drug decreased the amount of acid a stomach makes a bit more.  (The idea wasn’t new.  We doctors had long been using double doses of Prilosec for severe esophagitis.)  The company marketed Nexium as a new drug, and they used clever marketing to gross over $5 billion a year for a few years.  For starters they sold their old drug, Prilosec over the counter for 75 cents to a dollar a pill.  That can be $30 a month.  Nexium was a prescription and was covered by most drug plans.  So it could be purchased with a low co-pay.  For people with good drug insurance Nexium was cheaper than Prilosec.

(People who take the Prilosec or Nexium for a period of time can’t stop easily.  The medications prevent parietal cells from making acid.  (That’s what the cells do—they make hydrochloric acid.)  Over time stomachs react to the absence of the normally produced acid by growing more and bigger parietal cells.  These cells are inactive as long as a person keeps ingesting a pill a day.  When or if a chronic user stops the drug for a day or two, the parietal cells wake up and go to work.  The stomach starts producing huge quantities of acid, and many people develop chest pain or severe heartburn. Digestive Diseases and Sciences, Vol. 41, No. IO (October 1996), pp. 2039-2047.)

The biosimilar approval law promoted price competition.  Drug companies could still charge a lot but in return for being able to market their drug they were expected to compete—to be a little cheaper than the established medication.  Novartis played the game.  The Swiss company discounted Zarxio, a neupogen biosimilar, by 15 percent.  Amgen, makers of Neupogen –the existing drug—wasn’t happy, and they sued.  Neupogen had been approved by the FDA in 1998.  Its exclusivity ended in April of 2003.  Amgen, its owner, had been selling more than a billion dollars worth of the medication a year.  But their competition, Novartis wasn’t playing by the old unwritten rules.  They were competing pricewise.  So AstraZeneca sued.  That slowed the process down.  Eventually the courts ruled against AstraZeneca.  Congress is still allowed to pass a law that aims to lower the price a little.




Canadian pharmacies

Canadian pharmacies

In 2017 Senator Bernie Sanders introduced a bill that would allow the importation of prescription drugs from Canadian pharmacies, as long as they meet certain safety standards.” It went nowhere. 

I’m a doctor and I have dealt with a Canadian Pharmacy a few times.

The eye drops I needed for my glaucoma would have cost $90 a month in the U.S.  Ordered through a Canadian pharmacy the thirty day price was $30.  I did my home work and chose a Canadian pharmacy that, best I could tell, was legit.  After speaking to a representative by phone, I placed my order, supplied proof that I was a licensed physician, and e-mailed a hand written prescription.  At the time I was able to pay with a credit card.  (That was three years ago and cards are no longer accepted.  I wonder why?)

The medication was shipped to my home.  It did NOT come from a Canadian pharmacy, but was mailed directly from a factory in Germany (once) and Turkey (once.)

Pfizer has been manufacturing in Turkey since 1957—The company recently opened a state of the art vaccine plant in that country.  Pfizer Turkey produces 75 percent of the country’s local sales volume and exports products to 22 different countries.   Pfizer Global Manufacturing operates 78 plants internationally with a workforce of approximately 33,000.


Under the Prescription Drug Marketing Act of 1987, it is illegal for anyone other than the original manufacturer to bring prescription drugs into the country.  My drops were mailed to my home by the original manufacturer, so they were brought into the country legally.

Prescription drugs cannot be legally mailed into the United States by foreign “e-pharmacies.”  My brand name eye drops didn’t come from a pharmacy—they came from the factories.

The FDA told a CNBC reporter that “Medicine bought from foreign sources such as internet sellers, from businesses that offer to buy foreign medicines for you are illegal.”

I agree, but that’s not how the Canadian Pharmacy I dealt with worked.

The National Association of Boards of Pharmacy claims “Rogue websites may be selling drugs that are counterfeit, contaminated, or otherwise unsafe.”


–“About 40 percent of the medications Americans use everyday are made outside the U.S.”FDA .Apr 25, 2014

“In 2007, there were over 100 registered drug manufacturing facilities in Canada, almost 300 in India, and over 500 in China.  The FDA has inspected 368 of them at least once.  http://www.naturalnews.com/034681_pharmaceuticals_foreign_factories_ingredients.html

Most of the North American supply of aspirin comes from China.  Over the counter Prilosec and cholesterol lowering drug Simvastatin often come from Puerto Rico and India.  Inspectors who actually visit plants are supposed to make sure they “are clean, follow proper manufacturing techniques and contain what is on the label (and nothing else)?”

An agency of the Canadian government that regulates “foreign-sourced drug products… “conducted 35 inspections at foreign sites in the last five years”   76% of drug products imported into Canada come from countries whose plants that Canadians (apparently) don’t inspect.

Drugs are made all over the world by generic manufacturers but even Novartis, a leading supplier of Canadian and American drugs, produces the pills we take in factories located in many countries:  Like– Barbera, Spain;  Barleben, Germany;  Basel, Switzerland;  Fort Worth, Texas; Grimsby, UK; Grosswallstadt, Germany; Holzkirchen, Germany; Houston, Texas; Johns Creek, Georgia;  Kundl and Schaftenau, Austria; Ljubljana, Slovenia; Puurs, Belgium; Ringaskiddy, Ireland; Rudolstadt, Germany; Stein, Switzerland; Strykow, Poland; and Wehr, Germany.

In most states drugs ordered through legit Canadian pharmacies are not paid for by insurance or Medicaid or Medical.  They require a lot effort by doctors and patients and take two weeks to get processed.  If they are newly released they often aren’t cheap.

A few of our legislators want to loosen the rules regarding these drugs, but that shouldn’t be necessary.  The problem is not the law or the rules.  It’s the hassle involved.

I suspect that easing the rules would only have a minor impact, and a struggle to change them would dilute efforts to substantially fix the drug price problem.