May Provide Useful Data, But Not Downward Pressure on Prices
It
was undoubtedly a coincidence that Novartis subsidiary AveXis announced
“innovative access” programs on May 24, 2019, for its new drug
Zolgensma (the highest-priced ever) three days after the House Energy
and Commerce health subcommittee was considering new bills to rein in
costs of new and existing drugs. Zolgensma (onasemnogene
abeparvovecxioi) is the latest entrant in the expensive gene-therapy
category; the onetime treatment for a fatal early childhood disease is
projected to cost somewhere around $2 million. This price is based on
the fair-price analysis that the Institute for Clinical and Economic
Review carried out, and which Avexis cited in its May announcement
(although they didn’t include the dollar amount). Avexis argued that
Zolgensma’s one-time cost will be 50% lower than the current 10-year
cost of spinal muscular atrophy (SMA) therapy.
Novartis’ agreeing to some form of value-based pricing with severalhealth insurers
is unlikely to silence criticism of the $2 million pricetag, however.
What’s more likely is that Zolgensma will become a topic of
congressional rhetoric as Sovaldi and Firdapse did during the May 21
hearings. Those hearings featured two competing drug price
“transparency” bills, which Democrats are pushing as part of their
effort to reduce high prices.
One bill––Stopping the Pharmaceutical Industry from Keeping Drugs Expensive Act, aka the “SPIKE Act” (H.R. 2069)––has already passed the House Ways and Means Committee. The Energy and Commerce health subcommittee also considered the Fair Accountability and Innovative Research Drug Pricing Act or “FAIR Drug Pricing” Act (H.R. 2296).
The two bills are similar, as both require companies to notify the Department of Health and Human Services (HHS) when the price of an existing drug increases by a certain percentage, or when a new drug is introduced whose price exceeds some threshold (SPIKE Act only). That notification must include certain information, including total expenditures on R&D, as well as revenue and profit for the applicable drug. Neither bill limits price increases.
Mark Miller, until recently the executive director of theMedicare
Payment Advisory Commission, said the bills might produce some useful
information, “but in and of themselves [they] won’t be enough to affect
the drug price issues you’re facing now.”
Fred Isasi, Executive Director of Families USA, was particularly critical of Sovaldi and Firdapse’s makers. Gilead ended up with Sovaldi after purchasing Pharmasett, which had undertaken substantial R&D in 2011. Isasi stated that Gilead asked someone on Wall Street how it should price Sovaldi, got an answer, and then quadrupled the recommended price. Sovaldi, used to treat hepatitis C, was originally priced around $84,000.
Raymond Schinazi, who is now a professor at Emory University and Co-Director of the HIV Cure Scientific Working Group within the Emory University Center for AIDS Research, was co-founder of Pharmasett and did some of the early research on Sovaldi. Schinazi says, “Gilead bought Pharmasset for $11.4 billion but made more than $15 billion selling Sovaldi in the next 12 to 14 months after launch. Pretty impressive! I wasn’t involved in any way in the pricing, but I do feel it was somewhat excessive [as] this isn’t an orphan disease... more than 71 million people are infected globally.”
He adds, “When Gilead bought Pharmasset, the drug wasn’t perfect [because] it had to be combined with something other than interferon and/or ribavirin. There was no guarantee the drug was going to be approved. Gilead did do a lot of R&D and sponsored many clinical trials that led to Sovaldi’s approval.”
Firdapse, which is used to treat a rare neuromuscular disease, was acquired last year by Catalyst Pharmaceuticals from Jacobus Pharmaceutical. Its cost increased to $375,000 per year, after having been free through the FDA’s compassionate-use program for people who needed it. Extraordinary price hikes for long-existing generic drugs such as insulin have also been the subject of previous congressional hearings.
The consulting firm KEI submitted a paper to the health subcommittee noting that many developed countries limit annual price increases for drugs. Canada limits increases to the consumer price index increase (CPI). “It should be noted that the United States is an outlier regarding the freedom to increase prices beyond the general rate of inflation,” KEI reported.
Representative Mark Pocan (D-WI) has introduced a bill that would limit price increases. The Stop Price Gouging Act (H.R. 1093) imposes an excise tax on companies selling prescription drugs that are subject to price spikes and that exceed the annual percentage increase in the Chained CPI.
Pocan’s bill wasn’t included in the May 21 hearing, and there was no response from his spokesman as to why.
Miller informed the health subcommittee about several options for Congress to rein in high drug prices, particularly regardingMedicare Parts
B and D. He has endorsed a number of initiatives that the Trump
administration has either proposed or accomplished via rulemaking.
However, the bills that the House subcommittee considered on May 21
touched on very few items on Miller’s list, if any.
Novartis’ agreeing to some form of value-based pricing with several
One bill––Stopping the Pharmaceutical Industry from Keeping Drugs Expensive Act, aka the “SPIKE Act” (H.R. 2069)––has already passed the House Ways and Means Committee. The Energy and Commerce health subcommittee also considered the Fair Accountability and Innovative Research Drug Pricing Act or “FAIR Drug Pricing” Act (H.R. 2296).
The two bills are similar, as both require companies to notify the Department of Health and Human Services (HHS) when the price of an existing drug increases by a certain percentage, or when a new drug is introduced whose price exceeds some threshold (SPIKE Act only). That notification must include certain information, including total expenditures on R&D, as well as revenue and profit for the applicable drug. Neither bill limits price increases.
Mark Miller, until recently the executive director of the
Fred Isasi, Executive Director of Families USA, was particularly critical of Sovaldi and Firdapse’s makers. Gilead ended up with Sovaldi after purchasing Pharmasett, which had undertaken substantial R&D in 2011. Isasi stated that Gilead asked someone on Wall Street how it should price Sovaldi, got an answer, and then quadrupled the recommended price. Sovaldi, used to treat hepatitis C, was originally priced around $84,000.
Raymond Schinazi, who is now a professor at Emory University and Co-Director of the HIV Cure Scientific Working Group within the Emory University Center for AIDS Research, was co-founder of Pharmasett and did some of the early research on Sovaldi. Schinazi says, “Gilead bought Pharmasset for $11.4 billion but made more than $15 billion selling Sovaldi in the next 12 to 14 months after launch. Pretty impressive! I wasn’t involved in any way in the pricing, but I do feel it was somewhat excessive [as] this isn’t an orphan disease... more than 71 million people are infected globally.”
He adds, “When Gilead bought Pharmasset, the drug wasn’t perfect [because] it had to be combined with something other than interferon and/or ribavirin. There was no guarantee the drug was going to be approved. Gilead did do a lot of R&D and sponsored many clinical trials that led to Sovaldi’s approval.”
Firdapse, which is used to treat a rare neuromuscular disease, was acquired last year by Catalyst Pharmaceuticals from Jacobus Pharmaceutical. Its cost increased to $375,000 per year, after having been free through the FDA’s compassionate-use program for people who needed it. Extraordinary price hikes for long-existing generic drugs such as insulin have also been the subject of previous congressional hearings.
The consulting firm KEI submitted a paper to the health subcommittee noting that many developed countries limit annual price increases for drugs. Canada limits increases to the consumer price index increase (CPI). “It should be noted that the United States is an outlier regarding the freedom to increase prices beyond the general rate of inflation,” KEI reported.
Representative Mark Pocan (D-WI) has introduced a bill that would limit price increases. The Stop Price Gouging Act (H.R. 1093) imposes an excise tax on companies selling prescription drugs that are subject to price spikes and that exceed the annual percentage increase in the Chained CPI.
Pocan’s bill wasn’t included in the May 21 hearing, and there was no response from his spokesman as to why.
Miller informed the health subcommittee about several options for Congress to rein in high drug prices, particularly regarding
Author bio:
Mr. Barlas is a freelance writer in Washington, D.C. who covers issues inside the Beltway.
