The drug pricing discussion that won’t disappear

Discussions of the pharma industry in the political sphere have lingered on pricing for a number of years. Ben Hargreaves finds that, in the US, a new debate is taking place over taxpayer-funded drug research and the thorny issue of prices compared to other wealthy countries.

The pricing of drug treatments has frequently been a political battleground. The need to balance public budgets while the global population increases in age is causing difficulties in makings ends meet. For pharma companies themselves, newer treatment modalities involve increasingly complex R&D and manufacturing processes, whilst newer treatments often target smaller patient populations. There are a number of other factors involved, but the outcome is that often governments in the higher-income countries are at loggerheads with the pharma industry over pricing.

Recent years have seen high profile cases bring this confrontation to the general public’s attention. The controversy over Mylan’s pricing of its EpiPen product became a major talking point, after the company increased the price from $100 to over $600 in a decade. Despite the brunt of the controversy emerging in 2016, a case over a claim of price-gouging was only settled last year.

Feeling the Bern

One individual who has been at the forefront of making sure attention is focused on drug pricing is US senator, Bernie Sanders. A more recent discussion over pricing has been centred on the cost of insulin. In a high-profile campaign in 2019, the senator organised for a dozen individuals with type 1 diabetes to cross the border from the US into Canada to buy their insulin. At that time in Canada, the price of insulin was only a tenth of the cost compared to prices in the US, and could be purchased without a prescription. A large part of the dispute was focused on the price increases that had occurred on insulin products, which The Lancet reported had increased by more than 200% over the course of the decade leading up to 2018.

This year, the pressure led to the largest manufacturers of insulin for the US market - Novo Nordisk, Eli Lilly, and Sanofi - to all significantly lower ‘out-of-pocket’ costs of their products to around $35. The actions were welcomed by the US administration and by patient advocate groups, though the White House confirmed that it still plans to push for legislation requiring the capped cost. With the success of the campaign to lower the pricing of insulin, Sanders announced that he would push for this to be reduced to no more than $20 per vial of insulin.

Targeting the price disparity

The politician has now broadened his campaign from single issues on product pricing to a potentially more damaging focus for the pharmaceutical industry. In June, Sanders’ team released a report that covered both the difference in list price between the US and other countries and linked each treatment to its development being aided by US institutions. According to the report, this aspect of the R&D process for treatments means that US taxpayers are put in a position of ‘paying twice’ for their treatments: through their tax contribution, and then at the pharmacy.

Sanders stated: “It is unacceptable that half of new prescription drugs invented with the help of NIH scientists now cost more than $111,000. The price of some of these taxpayer-funded drugs is now over $1.9 million. Now is the time for the Biden Administration to take executive action to substantially lower the price of prescription drugs and to take on the unacceptable corporate greed of the pharmaceutical industry.”

Inside the report, the authors highlight the case of Yescarta (axicabtagene ciloleucel), which was originally developed by Kite Pharma before being bought out by Gilead. The report notes how Kite had previously told investors that it was ‘highly dependent’ on the US National Institutes of Health (NIH) for R&D on the treatment. Adding further detail, the report noted that the price for the treatment had risen from an initial price of $373,000 to $424,000 per treatment, despite being listed at exactly half this cost in Japan.

Gilead’s therapy is not the only one referenced as part of the report, as the authors produce a list of treatments that were support by NIH funding and expertise that are sold at a higher cost in the US compared to other wealthy nations. Other drugs in the crosshairs are 2seventy bio’s Abecma (idecabtagene vicleucel), which has a list price of $457,000 in the US, but sells for $260,000 in Germany. Amryt Pharma’s Myalept (metreleptin) is also named, and costs $1.9 million per year, but is delivered in France for $580,000 per year, among other such examples.

Calling on the government

The authors note that the limitation of their analysis is the scope with which they are able to examine the treatments on the market. They add that this is primarily down to the lack of detailed information about how the NIH and federal agencies fund researchers to support drug development across the country.

The conclusion reached by the report is a call for the reintroduction of a ‘reasonable pricing clause’, which was first introduced in 1989 in response to the perceived profiteering on a newly developed AIDS medication. However, six years after its introduction, the clause was withdrawn, after difficulties emerged between the pharma industry and government over research. Despite this, the authors outline that the government should look again to impose such a clause in all future collaborations, funding, and licensing agreements for biomedical research. Such a clause would place price limitation on treatments where the research has been federally funded.

Another angle to the debate over pricing of treatments is currently the last thing that the pharma industry wants to entertain. The provision in the US Inflation Reduction Act that allows Medicare to negotiate pricing on drugs or biologics without generic or biosimilar competition, which are covered by Medicare Part D and B, is currently at the centre of an ongoing debate. This amendment will come into force starting in 2026 for Part D and 2028 for Part B, with the aim of lowering prescription drug costs for people with Medicare, and to reduce overall drug spending by the federal government. The pharma industry has reacted to this by going on the offensive with lawsuits, as PhRMA, the industry association in the US, and a number of the largest pharma companies, have claimed that the negotiation policy violates the US Constitution. PhRMA did not respond to a request for comment on this piece.

With Sanders also attacking drug pricing from the angle of US taxpayer support for treatments that are more expensive in other countries, the pressure on drug pricing is only increasing. Given the success Sanders has had in swaying the debate towards previous issues, and also seeing bipartisan support on drug pricing issues more broadly, the industry will be wary of having to engage in another battle.