Have we finally turned a corner with drug pricing?

Drug developers, economists, and politicians are smart people. But maybe a four-year-old could have predicted this one: What goes up, must come down.

Are drug prices finally on the way down?

Looking at some of the major 2017 approvals thus far, there is some evidence to suggest the culture is slowly shifting.

Even Teva Pharmaceuticals appears to have turned a new leaf. On Tuesday, the Israeli company announced that its Huntington’s disease therapy Austedo (deutetrabenazine) had received an FDA nod. Rather than altering the course of the disease, it helps treat patients’ involuntary movements.

Leerink analyst Jason Gerberry reported that Austedo will be priced at around $60,000 a year. That compares to an older version of the drug called Xenazine (tetrabenazine), which sells for $152,000 per year. A generic version goes for $96,000.

Austedo caps off a progressive few weeks.

In late March, Roche subsidiary Genentech got the green light to market Ocrevus (ocrelizumab) for relapsing-remitting and primary-progressive multiple sclerosis (the latter being an industry first).

Genentech announced an intended list price of $65,000 — pretty reasonable given the drug delivered a 47 percent reduction in annualized relapse rates compared to Rebif, a first-generation MS therapy that sells for around $86,000.

On the same day, Regeneron Pharmaceuticals’ Dupixent (dupilumab) was approved for moderate-to-severe eczema. It got stamped with a list price of $37,000 a year, a significant discount on older drugs that sell for around $50,000 per year.

Based on EvaluatePharma’s predictions, Ocrevus and Dupixent will be the highest grossing drugs to enter the market in 2017. The pricing on those drugs matters.

Also in March, Newron Pharmaceuticals finally earned U.S. marketing authorization for Xadago (safinamide), an iterative MAO-B inhibitor for the treatment of Parkinson’s disease. The drug was already approved for sale in Europe.

Xadago doesn’t represent a huge therapeutic gain and Newron – to its credit –priced it that way. Without insurance, a 30-day supply of the drug will cost $670, to be marketed in the United States by US WorldMeds.

This all comes in stark contrast to Marathon Pharmaceuticals, the outlier in the conservative pricing trend. But the public, political and industry reaction to its proposed list price speak volumes too.

After receiving marketing approval for its Duchenne muscular dystrophy drug, Marathon slapped an $89,000 price tag on what is essentially a decades-old corticosteroid, available overseas for around $0.60 per dose.

Marathon eventually backed down after much outcry from the media and a harshly worded letter courtesy of Sen. Bernie Sanders (I-Vt.) and Rep. Elijah Cummings, (D-Md.). Marathon has since sold the franchise to PTC Therapeutics.

It seems there’s no longer any tolerance for the ‘how far can we push this’ approach. The smart players are instead asking ‘what is reasonable and sustainable in our current healthcare climate?’

But it’s early days. A handful of good examples doesn’t signal an industry shift. That will take many more years and wider changes to the healthcare system.

Photo: TAW4, Getty Images

Lawmakers wrestle with the promise and risk of drug importation

On December 8, 2003, President George W. Bush signed into law the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”).

The MMA sought to ensure access to medically necessary prescription drugs. This involved mandating the passage of regulations to allow importation of prescription drugs from Canada into the U.S. upon certification of the drugs’ safety and the prospect of significant cost savings. Since the MMA’s enactment, however, that certification has fallen short.  

Since the Clinton administration, legislative efforts to produce a single, comprehensive approach to legalizing imputation have stalled, often due to disagreement about the safety requirements and degree of government oversight necessary to ensure the safety and quality of drugs produced overseas.

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Now, in the wake of Congressional investigations into the affordability of Epi-Pen, naloxone, and other drug therapies, two proposals have emerged for accelerating drug imports. We explore both here. 

Proposal #1: Expediting importation in certain instances  

On February 14, a bipartisan group of U.S. Senators wrote to HHS Secretary Tom Price urging him to permit the importation of drugs from Canada under four circumstances:

  1. The drug is off patent or no longer marketed in the U.S. by the innovator company that initially developed the drug;
  2. Significant and unexplained increases in price;
  3. No direct competitor drug is currently in the market and introduction of a competitor drug will benefit the prices paid by taxpayers and consumers;
  4. The drug is produced in another country by the name brand manufacturer that initially developed the drug or by a well-known generic manufacturer that commonly sells pharmaceutical products in the U.S.;

“Where these conditions are met,” the Senators wrote, “the Secretary should permit importation from Canada with a fast track approval process for the competitor.”  

The letter to Secretary Price omitted some notable details, however. For example, it did not define “price” or when “increases” are “unexplained” or “significant” enough to justify accelerated importation. Also unspecified are the “prices paid by taxpayers and consumers” (presumably including public health insurance programs) and how such prices will benefit from the introduction of a competitor drug.

Proposal #2: Overhauling the current regulatory framework

On February 28, Senate Democrats unveiled S. 469, the Affordable and Safe Prescription Drug Importation Act. House Democrats introduced a companion bill, H.R. 1245, the same day.  

The law, if passed, would amend the Federal Food, Drug, and Cosmetic Act (FDCA) to require the HHS Secretary to promulgate regulations that allow wholesale distributors, U.S. pharmacies, and individuals to import “qualifying prescription drugs” manufactured at FDA-inspected facilities from licensed Canadian sellers.

The bill excludes controlled substances and compounded drugs. It imposes supply chain security requirements and mandates a review of drug safety, cost savings, and expenses within 18 months of the law’s implementation. After two years, the bill would permit drug imports from all OECD member countries that have implemented statutory or regulatory standards for the approval and sale of prescription drugs that are comparable to those in the U.S.

The Senate and House bills drew praise and criticism from politicians, drug industry stakeholders, and health care provider and patient advocacy organizations.

Importation’s twin goals and drawbacks: savings and safety

While the debate over drug importation presents a myriad of political, economic, and health policy issues, most distil down to drug quality and safety and lower costs for patients.

Proponents of drug importation argue that easing restrictions on imports would promote broader access to more affordable prescription drugs and drive competition to lower the cost of drugs produced and sold in the U.S. They argue the safety of American consumers can be maintained by “strengthening and expanding the current regulatory system, including inspections of foreign production plants” and by limiting importation to Canada, initially at least, citing the security of the Canadian regulatory system. These arguments enjoy obvious appeal, but should be viewed with some skepticism.  

In 2004, the Congressional Budget Office examined how much private consumers and governments would save if drug importation was permitted. It concluded that permitting importation from Canada alone would produce a “negligible reduction in drug spending.” On the other hand, “importation from a broad set of industrialized countries was estimated to reduce total drug spending by $40 billion over 10 years, or by about 1 percent.”  

That same year, the HHS Report on Prescription Drug Importation acknowledged that “under any safe, legalized commercial importation program, when the scope is limited, intermediaries would likely capture a large part of the price differences. (This is based on evidence from European countries where some form of importation is legal.)”

More pressing, of course, are public health concerns raised by the sale of drugs produced outside the current safety system established by Congress under the FDCA.

HHS concluded in 2004 that “it would be extraordinarily difficult to ensure that drugs personally imported by individual consumers could meet the necessary standards for a certification of safety to be made,” and that “a commercial importation program could be feasible but would require new legal authorities, substantial additional resources, and significant restrictions on the type of drugs that could be imported, which could increase the costs of imported drugs.”

These problems are exacerbated by the fact that Canada and other would-be drug exporters could possibly obtain pharmaceuticals and pharmaceutical ingredients from countries with less rigorous regulatory oversight.

Indeed, concerns regarding the quality, safety, and authenticity of drugs produced abroad are borne out by the prevalence of substandard, adulterated, and counterfeit drugs. The World Health Organization has cautioned that “no countries remain untouched by this issue,” estimating in 2013 that “up to 1 percent of medicines available in the developed world are likely to be fraudulent,” ranging from “ordinary painkillers and antihistamines to ‘lifestyle’ medicines… to life-saving medicines including those for the treatment of cancer and heart disease.” Use of these medicines carries potentially life-threatening consequences. 

What now?

As policymakers wrestle with drug access and affordability, brand and generic drugs are arriving in the U.S. from all corners of the developed and developing world. FDA has taken enforcement action against poorly-regulated and bogus foreign and internet operations, but the significantly increasing volume of imported drugs makes it difficult to quantify, monitor, control, and ensure safety. In 2003, for instance, Americans imported 12 million prescription drug products with a value of approximately $700 million from Canada alone.  

A national drug importation policy is critical to managing the influx of drugs into the U.S. and ensuring Americans continue to enjoy “the benefit of one of the safest drug supplies in the world.” As HHS observed, “safety and protection of the public health are paramount; safety should not be sacrificed for affordability.” 

Photo: arunchristensen, Getty Images