Market Place
The
2016 United States Presidential election could have a huge bearing on the global
pharmaceutical industry. Democratic presidential candidate Senator Bernie
Sanders is leading Hillary Clinton
in initial polling. If
he comes to power, the pharmaceutical industry could witness a huge
transformation.
Earlier this month, Sanders proposed a new bill – The Prescription Drug Affordability Act of 2015 – which focusses on addressing the issue of “skyrocketing drug prices”.
Sanders’ target is the industry lobby whom he holds responsible for the higher drug prices Americans pay. According to his statement: “The pharmaceutical industry spent nearly US $ 230 million lobbying Congress last year, some US $ 65 million more than any other industry.”
“Americans should not have to live in fear that they will go bankrupt if they get sick,” says Sanders. With healthcare costs always seen as a burden, this statement will strike a chord with most voters.
What is The Prescription Drug Affordability Act of 2015?
The new bill proposed by Sanders has the following key changes:
- Congress should instruct the Secretary of Health and Human Services to negotiate drug prices with pharmaceutical companies on behalf of Medicare (for more clarity on this, read our previous analysis: The secret drug pricing formula)
- Penalize drug companies that commit fraud.
- End the collusion between drug companies when the holder of a brand-name patent pays another drug company to hold off on manufacturing a generic substitute, also known as ‘pay for delay’ (for more details, read our earlier post –Haunted: Teva’s $1.2 billion “pay for delay” penalty; which companies will get hit next).
- Demand
transparency from drug companies that have been concealing the true cost of
their research and development efforts.
- Make it easier to import cheaper drugs from other countries.
Amgen’s ill-timed price announcement
In the context of drug pricing, the pharmaceutical industry was definitely not helped by bio-tech major Amgen’s decision last week to announce its pricing strategy for its breakthrough cholesterol lowering treatment – Repatha (evolocumab).
Amgen announced its injectable cholesterol drug would be available in Europe “ for 50 to 60 percent of the price in the US” which Reuters believed is “a move likely to stoke controversy about the way Americans end up paying far more than others for new medicines.”
The newly approved class of cholesterol lowering drugs, known as PCSK9 inhibitors, are designed for patients with hard-to-control cholesterol. But can also be used in other patients who are currently on cheap, commoditized medicines called statins.
Payers have already started considering the event when PCSK9 inhibitors become widely prescribed to be “the next drug doomsday”, which could “cost the US as much as US $ 150 billion per year”
Another French paradox
There has been much talk about off-label use of drugs. When a doctor prescribes a medication not approved by the US FDA for the specific ailment, it is known as off-label use of a drug. For instance, a blood pressure pill can calm stage fright, or an antipsychotic drug can help you sleep.
While doctors have been held liable for promoting off-label use of products to promote the sales of pharmaceutical industry, last week saw a reversal of sorts. In Europe, the biopharmaceutical industry filed a complaint against a proposed French law that promotes “government-initiated off-label use”.
The bone of contention is the use of Roche's cancer drug Avastin for the off-label treatment of an eye disease called wet age-related macular degeneration (wet AMD). Novartis' Lucentis (ranibizumab injection) has had official approval for wet AMD for almost a decade.
However, Lucentis costs multiple times more (as much as 30 times more) than Avastin. The two drugs are thought to be similarly effective by several prominent health authorities like the World Health Organization (WHO), the International Council of Ophthalmology (ICO) and the National Eye Institute (NEI).
Roche's resistance to its own product’s use for an off-label indication has been controversial, since it owns a stake in both Avastin and Lucentis.
Genentech, which is wholly-owned by Roche since 2009, discovered both Avastin and Lucentis. But in 2003, Novartis was given exclusive development and marketing rights for Lucentis, outside the US.
The European pharma lobby is not very different
The European pharma lobbying has a lot of similarities with the approach in America. According to a report published last week by research and campaign group Corporate Europe Observatory (CEO), pharmaceutical companies spend tens of millions of euros on lobbyists every year to ensure “privileged access” to decision-makers in Brussels.
The report focused on the European Federation of Pharmaceutical Industries and Associations, or Efpia. “The influential Efpia had over 50 meetings with the EU’s executive body during Jean-Claude Juncker’s first four and a half months as head of the Commission,” the CEO report said.
The report highlighted Efpia’s “privileged access” to decision-making in the corridors of the European Commission office in Brussels and the increase in their lobbying expenditure “from € 50,000 in 2010 to more than € 5 million last year”.
Efpia is the same industry body which filed the complaint against the French government.
Our view
Sanders has been a long time pharma watchdog and has been pushing for drug re-imports for over a decade. Last year, he questioned the increase in prices of generic drugs and introduced a bill this year.
While regulatory scrutiny is something the industry has been accustomed to for years, Sanders will definitely leave his mark on how drug prices will be determined in the future, in case he wins the forthcoming US Presidential elections.
If drug prices are reduced in the US, or if re-import of drugs from other parts of the world is allowed into the US, the price of medicines in America will undoubtedly reduce. But that would also mean consumers in other countries would pay a higher price for drugs.
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Image Credit : AMERICA! by Michael Dougherty is licensed under CC BY 2.0
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