SECOND OPINION: BIG PHARMA’S OUT-OF-POCKET PLANS ON BRAND NAME INHALERS MAY BE DESIGNED TO FURTHER UNDERMINE COMPETITION

Big Pharma’s Announcements Designed to Deflect from Criticism and Scrutiny for Years of Egregious Anti-Competitive and Pricing Practices on Brand Name Inhalers

Under increasing scrutiny from policymakers and the public for egregious anti-competitive and price-gouging practices on brand name inhalers, several Big Pharma companies, including AstraZeneca, Boehringer Ingelheim and GlaxoSmithKline (GSK), recently announced commitments to cap patients’ out-of-pocket costs for these products, used to treat asthma and chronic obstructive pulmonary disease (COPD).

There’s one big problem. Big Pharma’s decision to “cap” out-of-pocket costs for these drugs is largely a public relations ploy, as drug makers control price, not the details of cost-sharing. In fact, Big Pharma may utilize so-called patient assistance programs as the vehicle for these pledges.

In GSK’s announcement of an out-of-pocket cap for brand name inhaler Advair, the company said it would, “share specific details closer to implementation,” but pointed to these types of programs, saying, “GSK offers patient assistance through multiple programs such as the GSK Patient Access Programs Foundation and the GSK Patient Assistance Program, which provides many medicines and vaccines at no cost to eligible patients in the U.S.

Big Pharma has a long history of utilizing such programs to mask egregious pricing practices on brand name products and undermine competition from more affordable alternatives — to keep prices and profits high.

A 2022 study published in Health Affairs explored how Big Pharma companies skirt anti-kickback protections in federal law by using these so-called patient assistance charities to undermine competition in the market and pad their bottom line.

The study, conducted by researchers affiliated with Harvard University, Northwestern University and the University of Southern California, Los Angeles, examined drug spending by a subset of Medicare Advantage enrollees from 2010 to 2017, along with data on the enrollees’ conditions and which drugs were covered by charities funded by brand name drug companies.

They found Big Pharma’s share of sales for brand name medicines used to treat specific conditions covered by these charities increased over time. For the 10 costliest treatments, the brand name manufacturer’s share of sales increased from 67 percent in 2010 to 89 percent in 2017, demonstrating that “manufacturers could effectively assist in the purchase of their own medications by contributing to condition-specific charities.”

According to the study’s authors, overall “donations by the leading manufacturer of drugs for each condition were often likely to be profitable.” The authors argue that “the current regulations or enforcement permit donations that violate the spirit of Medicare’s Anti-Kickback Statute.”

In a 2020 hearing before the U.S. House Committee on Ways & Means Subcommittee on Health, experts and patients highlighted how Big Pharma exploits non-profit charities as a vehicle to boost their bottom line.

GE Bai, PHD, CPA, Associate Professor of Accounting at Johns Hopkins Carey Business School said:

“These actions lead to market distortions, price increases and the inefficient drug spending, but benefit the bottom lines of the drug manufacturers … These programs are called in appearance ‘assistance programs’ but if we think about the kickback concern, it’s really a mechanism designed to bring money to drug companies.”

If so-called patient assistance programs are the mechanism for Big Pharma’s out-of-pocket ploy, they won’t only be designed to deflect scrutiny and criticism for past behavior but may be designed to undermine competition going forward and keep profits rolling on their blockbuster inhalers.

Regardless of the final details of how Big Pharma intends to act on these recent pledges, the announcements are first-and-foremost designed to mask years of egregious anti-competitive practices and price hikes.

Get a Dose of Reality on Big Pharma’s history of bad behavior on brand name inhalers here:

AstraZeneca’s Symbicort (Inhaler)

• Over the course of its time on the market, AstraZeneca increased the price of Symbicort by a whopping 158 percent.
• In 2022, the drug brought in more than $2.54 billion for AstraZeneca, and its list price was close to $475 per month.
• Symbicort has faced repeated price hikes from AstraZeneca. In 2015, the company increased the price of Symbicort by 8 percent. In 2016, 2017, 2018 and 2019, the company increased the price of the drug by 6 percent each year.

Boehringer Ingelheim’s Spiriva (Inhaler)

• Between just 2015 and 2020, the price of Spiriva increased from $3,886 per year to $5,289 per year.
• Prior to the recent announcement on a potential out-of-pocket cap, Spiriva cost up to $620 for a month’s supply and up to $7,000 per year.
• In 2015, Boehringer Ingelheim increased Spiriva’s price by six percent. In 2016, 2017, 2018 and 2018, the company increased the price of the drug by eight percent each year.

GlaxoSmithKline’s Advair (Inhaler)

• According to some estimates, GlaxoSmithKline’s Advair product recently cost up to $319 for a month’s supply.
• Advair was a target for repeated price hikes from GlaxoSmithKline for years. In 2014, the company increased its price by six percent. In 2015, by nine percent. And in 2016 and 2017, by eight percent each year.

Washington Post Op-ed Examines Big Pharma’s Patent Abuse Around Inhalers

In a June 2023 op-ed in The Washington Post, William B. Feldman and Aaron S. Kesselheim, physicians at Brigham and Women’s Hospital and faculty members at Harvard Medical School, highlighted how brand name drug makers have engaged in anti-competitive tactics to block competition around inhaler products to boost profits and deny patients access to more affordable alternatives.

Citing a January 2023 study in JAMA Network, Feldman and Kesselheim outline how brand name drug manufacturers “have used the patent and regulatory system to keep generics off the market,” including through tactics like product hopping and patent thicketing. “Of the $178 billion that manufacturers earned on inhalers in the United States from 2000 to 2021, about $111 billion of that total came after patents on their active ingredients had expired,” the authors explain. “The patent system was designed to promote innovation, not grant monopolies for small tweaks to devices containing decades-old drugs.”

Analysis Examines How Big Pharma Extended Lifecycle on Inhaler Products to Block Competition

A May 2022 analysis in Health Affairs found that manufacturers of brand name inhalers used to treat asthma and chronic obstructive pulmonary disease engaged in anti-competitive tactics to keep more affordable generic competition from entering the market.

According to the analysis, manufacturers are guilty of “combining old ingredients into new inhalers; shifting ingredients from one inhaler to another; and adding new patent and exclusive rights bestowed by regulators after approvals.”

Specifically, the study “examined 62 inhalers approved by the Food and Drug Administration between 1986 and 2020 and found 53 — or 85 percent — were brand-name products with an average of 16 years of patent protection. Yet only one inhaler contained an active ingredient with a new mechanism of action, while more than half of the patents were on devices, not any of the ingredients.”

Among the more egregious examples, one branded product was granted extended market exclusivity 28 years after the drug’s initial approval. Researchers also point to GlaxoSmithKline, who extended one inhaler’s exclusivity 35 years by product hopping or simply placing the same active ingredient into a new device.

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Read more about how Big Pharma gamed the patent system to boost profits and block competition on brand name inhalers HERE.

Read more about the cost of Big Pharma’s anti-competitive practices on brand name inhalers HERE.

Read more about Big Pharma’s misuse of so-called patient assistance programs HERE.

And read more on bipartisan, market-based solutions to hold Big Pharma accountable HERE.