DOSE OF REALITY: BIG PHARMA IS THE CULPRIT BEHIND OUT-OF-CONTROL PRESCRIPTION DRUG PRICES

Lawmakers Should Focus Attention on Brand Name Drug Companies That Set Prices, Increase Prices and Game the System to Block Competition

Lawmakers must remember that Big Pharma is the culprit behind out-of-control prescription drug prices, and the sole entity responsible for setting and hiking prescription drug prices — and should reject Big Pharma’s multi-million-dollar blame game attempting to point the finger at others to evade accountability and keep prices high.

To lower prescription drug prices for patients and the U.S. health care system, policymakers must focus on market-based solutions to crack down on brand name drug companies’ egregious abuse of the patent system and price-gouging practices.

Get a Dose of Reality below on why Big Pharma is behind out-of-control drug prices.

Big Pharma’s Price Hikes

Almost 600 Price Hikes to Start 2023

• So far this year, brand name drug makers have hiked prices on at least 587 brand name drugs.

Examples of the most egregious price hikes in January include:

• Omnipaque [GE Healthcare]: 26.76 Percent (X-ray imaging treatment)
• Cystaran [Leadiant Biosciences]: 20.60 Percent (Eye treatment for patients with cystinosis)
• Elcys [Exela Pharma]: 15.00 Percent (intravenous protein supplement)

And other examples of Big Pharma giants hiking prices by more than the rate of inflation this January include:

• Atgam (Pfizer): 10 Percent (renal transplant rejection management treatment)
• FRAGMIN (Pfizer): 10 Percent (cardiac care treatment)
• THAM (Pfizer – Hospira Inc.]: 10 Percent (metabolic acidosis treatment)
• Humira [AbbVie]: 8 Percent (autoimmune condition treatment)
• Skyrizi [AbbVie]: 8 Percent (plaque psoriasis treatment)

Hiking Prices on COVID-19 Treatments and Vaccines

Big Pharma is also increasingly looking to profiteer off COVID-19 treatments and vaccines as payment moves from the government to the commercial market.

• In October, Big Pharma giant Pfizer announced plans to “as much as quadruple” the price of the company’s COVID-19 vaccine – to a price that represents a “10,000 percent markup over what experts have estimated it costs the vaccine makers to produce the shots.”
• In September, fellow Big Pharma drug maker Moderna revealed in a presentation to shareholders plans for a six-fold increase to the price of its COVID-19 vaccine, branded under the name Spikevax.
• And in August, Eli Lilly hiked the price of its monoclonal antibody treatment for COVID-19 ahead of a transition to the commercial market.

1,200 Price Hikes Above the Rate of Inflation Between 2021 & 2022

• Big Pharma’s price hikes also consistently outpace inflation. Last October, the U.S. Department of Health and Human Services (HHS) released an analysis that found Big Pharma increased prices at rates higher than inflation on more than 1,200 drugs between 2021 and 2022 – with an average price increase of 31.6 percent.

Skyrocketing Launch Prices

Median Annual Launch Price in 2022: $222,003

• A Reuters analysis in January found that the median annual price among drugs approved by the U.S. Food and Drug Administration (FDA) in 2022 was $222,003 — compared with a median annual price of $180,000 for 30 medications approved in 2021.
• In August, a Reuters analysis found that Big Pharma was on track for record-breaking launch prices after 13 novel drugs used to treat chronic conditions entered the market in the first half of the year with a record-setting median annual price of $257,000 – significantly higher than the $180,000 mark set over the same period in 2021.

Launch Prices Increased 20 Percent for 14 Years

• An academic study published in The Journal of the American Medical Association (JAMA) in June, by researchers affiliated with Harvard University and Brigham and Women’s Hospital, found that for 14 years, “from 2008 to 2021, launch prices for new drugs increased by 20 percent per year.”
• Coverage in Bloomberg noted that “over 47 percent of new drugs introduced in 2020 and 2021 cost more than $150,000 per year, compared to just nine percent of new drugs from 2008 to 2013.” And overall, drug prices have risen at rates more than double that of other pillars of health care spending.

Examples of Egregious 2022 Launch Prices

• In November, pharmaceutical companies CSL Behring and uniQure set a $3.5 million price tag on their hemophilia drug Hemgenix, which was recently approved by the U.S. Food and Drug Administration (FDA) as a treatment for adults with Hemophilia B. The pricing of the drug makes it the most expensive drug in the world and is more than $600,000 higher than what the Institute for Clinical and Economic Review (ICER) estimated for the upper limits of a fair price.
• Also in November, Provention Bio set a $193,900 price tag for a course of treatment on the brand name prescription drug Tzield, which was approved by the FDA as a treatment for Type 1 diabetes. According to Reuters, Tzield will launch at a price of $13,850 per vial, with a total of 14 vials needed for a full course of treatment, for a total cost of $193,900. Wall Street analysts expressed shock and concern at the pricing of the brand name drug — which far exceeded expectations.
• Gregory Renza, an analyst at RBC Capital Markets, said “This (price) is much higher than perhaps what the Street was expecting.”
• David Hoang, an analyst at SMBC Nikko Securities, said “Investors will have some level of concern that this pricing could lead to insurance hurdles.” Hoang expected a price in the $70,000-$80,000 range. Pink Sheet reported analysts expected a final price between $100,000 and $115,000.
• In October, brand name drug maker Amylyx set a list price of $158,000 annually on the company’s new and unproven treatment for amyotrophic lateral sclerosis (ALS), Relyvrio, following FDA approval. The FDA’s approval came even though the drug has only completed Phase II trials, while most FDA-approved drugs typically require Phase III trials. Amylyx’s $158,000 price tag for Relyvrio was between five and 17 times what experts estimated would be a fair price for the treatment that lacks clear evidence on its clinical value for patients.

Gaming the System to Keep Prices High

I-MAK Call for Patent Reform to Be Top Priority in 118^th Congress

• In January, Tahir Amin and Priti Krishtel, co-executive directors of the Initiative for Medicines, Access & Knowledge (I-MAK), published an op-ed in The Hill calling on Congress to lower prescription drug prices by holding Big Pharma accountable for the industry’s egregious abuse of the patent system.
• “Today, many drugmakers are less focused on researching and developing new drugs than protecting their monopolies on old ones — to such an extent, in fact, that pharmaceutical companies file for an average of more than 140 patents on top-selling drugs,” the authors wrote.
• “Many companies delay or block more affordable competitors from entering the market for far longer than the 20-year protection allowed by law.”
• To hold Big Pharma accountable and lower prescription drug prices, the authors outline solutions in three areas: 1) Congress must stop Big Pharma from gaming the patent system to extend monopolies; 2) lawmakers must expand public participation in the patent system; and 3) Congress must ensure a return on investment for public funding of pharmaceutical research and development.
• “Surely, to earn special privileges in the marketplace, companies should be required to do more than merely change a tablet into a capsule, branding it as ‘innovation,’” the authors wrote.
• “Lawmakers, too, agree across the aisle that patent abuse is aggravating the crisis,” the authors continued. “Patent system reform is not a partisan issue; it’s an American issue. The new Congress has an opportunity to address it, once and for all.”

Staggering Cost of Big Pharma’s Patent Thickets

• A new report from Matrix Global Advisors and commissioned by the Coalition for Affordable Prescription Drugs, “Patent Thickets and Lost Drug Savings,” examines the cost of Big Pharma’s use of ‘patent thickets’ on patients and the U.S. healthcare system.
• The report quantifies the one-year cost of lost savings on five brand name drugs around which Big Pharma has built especially egregious patent thickets: AbbVie’s autoimmune drug Humira and oncology drug Imbruvica, Regeneron’s ophthalmology drug Eylea, Amgen’s autoimmune drug Enbrel, and Bristol Myers Squibb’s oncology drug Opdivo.
• Based on these calculations, the one-year cost of delayed competition from patent thickets on these five drugs would range from $1.8 billion to $7.6 billion. The one-year cost of each of these brand name drugs on the U.S. health care system due to their patent thickets is:
• $7.6 billion for Humira
• $3.1 billion for Imbruvica
• $2.5 billion for Eylea
• $1.9 billion for Enbrel
• $1.8 billion for Opdivo

A Recent Case Study in Big Pharma’s Patent Greed: Keytruda

• In December, Big Pharma giant Merck announced that it will seek new patents on its blockbuster cancer drug Keytruda, which last year brought in over $17 billion for the company. According to reporting from Reuters, Merck is seeking “to patent a new formulation of its $20 billion cancer immunotherapy Keytruda that can be injected under the skin, allowing it to protect its best-selling drug from competition expected as soon as 2028.”
• This is just the latest example of a strategy Big Pharma companies have used repeatedly to extend their monopolies on blockbuster products – filing for patents for changes such as intake method or dosage that don’t represent truly new innovations or improve clinical benefits for patients. This enables Big Pharma to add to patent thickets designed to block competition from more affordable alternatives, keep drug prices high and boost profits.
• Shailender Bhatia, an oncologist at the Fred Hutchinson Cancer Center in Seattle said, “I don’t think it’s going to improve the safety or the effectiveness of the drug.”
• “It’s the way the pharmaceutical companies now use that system — it’s all about taking up as much space as possible, making it difficult for anybody to enter,” Tahir Amin, co-founder of Initiative for Medicines, Access & Knowledge (I-MAK), said in Reuters coverage of the move. “Keytruda is going to be the next Humira by all accounts.”
• According to research from I-MAK, Merck has filed for 129 patent applications on Keytruda – more than half of which were filed after the drug’s initial approval by the U.S. Food and Drug Administration (FDA). The Big Pharma company has been granted 53 patents on this one drug.
• I-MAK estimates that Americans will spend at least $137 billion on Keytruda while the drug faces no competition due to its extended exclusivity that already totals more than eight years — without reflecting the added impact of the Big Pharma giant’s new patent strategy.

Targeting Blockbuster Products for Patent Abuse

• And a May 2022 study published in JAMA Health Forum revealed how brand name drug companies target their most profitable products for reformulation to extend monopolies and prohibit generic competition from entering the market.
• The results of the study showed that “of 206 brand-name drugs approved in tablet or capsule form by the U.S. Food and Drug Administration between 1995 and 2010, approval of new formulations was four times more likely among blockbuster drugs.”
• The study also found that drug makers sought to pursue new formulations, “less frequently once generic competitors entered the market.”

Lawmakers should reject Big Pharma’s blame game and focus on solutions to hold brand name drug companies accountable for the industry’s price hikes, out-of-control launch prices and patent abuse.

Read more about the cost of Big Pharma’s patent abuse that blocks competition from more affordable alternatives HERE.

Read more on why Big Pharma’s tired argument that innovation justifies their out-of-control prices doesn’t hold up to scrutiny HERE.

Read more on market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.