[Ip-health] Post from Sergey Kondratyuk: Possible treatments for COVID-19 could all be made for a dollar a day, say researchers.

Paul Fehlner pfehlner at revisiontx.com
Wed May 6 19:24:34 PDT 2020

There are a lot of interesting ideas for incentivizing new medicines independently of patent rights. So far, I’m not seeing how they are scalable.

The Senate proposal for antibiotic development is a case in point. It’s an interesting proposal that would seem to provide incentives for up to three antibiotic products over a 10 year period. Since it does not guarantee any period of exclusivity, indeed requires that the recipient waive excluvities, there is little if any incentive to manufacture the product once the award is provided. The low probability of receipt of an award (three awards in 10 years), and relatively low value (the statute does not say, but it appears that there will be a total of about $1.9 billion in play, so assuming a 1/3 distribution, $600 million) will not incentivize an award winner to spend money on education (also known as marketing and sales), manufacturing, distribution, etc. With these odds and disincentives, it’s likely that profit-focused investment capital will continue to build conventional companies instead of hoping for a one-off prize, and those investors will continue to rely on conventional exclusivities — or more likely given the track record in antibiotics, choose greener pastures for investment. With the prize coming after development, where will capital for a potentially unsuccessful project come from?

This plan does not provide for a market, it assumes it. That will create potential disparities in education/marketing. Assuming two more or less equivalent antibiotics, one awarded the prize and one subject to existing commercial pressures and opportunities, it is highly likely that the concentrated marketing and sales effort for the more profitable antibiotic will result in greater market share. It is possible that healthcare providers and payers would insist on the lower cost alternative, if someone were actually making it, but how will healthcare providers and perhaps even payers learn about it? Will the prize winner seek to spend down the prize money on education/marketing & sales efforts? The same would go for manufacturing — with uncertain purchase commitments, who would invest in full manufacturing capability and operations for little or no profit? Generic manufacturers would be unlikely to fill the void because there would be little or no market for a generic entry; generics replace a product in a market, they do not make the market. 

In fairness, there is reason to believe that the healthcare system would adopt an effective antibiotic and ensure manufacturing and use given the unique threat of antibiotic resistant bacteria, although the recent spate of bankruptcies of antibiotic startups is discouraging. Even if the prize sponsor establishes some mechanism for education/marketing, that effort could flounder (especially where politicians in the service of industry may be expected to undermine those efforts). And it’s difficult to see how that incentive would extend generally to new medicines and have broad impact.

To my mind, creating a sustainable competitive threat would be much more effective because it would have the potential to scale to all drugs, not just three antibiotics over 10 years. This model requires exclusivity incentives to ensure that payers have a risk of high prices if they do not come on board with a low price model. This has worked so far for Civica Rx: payers have access to high quality product at a reasonable and stable price in return for a commitment to purchase a minimum amount for a defined period of time. Various accelerants would make low priced, reasonably profitable products realistic, including repurposing and advanced manufacturing like continuous flow process manufacturing. Economic and contractual pressures would result in a stable, sustainable supply of lower cost product, diminishing the ability of conventional biopharmaceutical companies to price at whatever they can get. 

None of this happens unless funders invest for that impact. The companies exist that can and want to create an alternative, responsible model for developing and commercializing medicines (Audacity Therapeutics, Fair Medicine, reVision; Just Biotherapeutics started that way but were acquired). It’s true that outsize profits aren’t absolutely necessary for innovation. Researchers and clinicians don’t require a 10x return to do their work, just fair compensation. However, until investors insist on outcomes as well as profitability (both are necessary, ideally in that order), it is unlikely that we can achieve the required pace of innovation and affordable access. And unless other stakeholders — particularly payers — are willing to put skin in the game, which means investing in potential drug failures and in ensuring commercially viable market size, we can either genericize the current pharmaceutical armamentarium with the prospect of few new drugs or see more innovation benefitting fewer patients at greater cost to society. 

Paul Fehlner
President & CEO
reVision Therapeutics, Inc.
pfehlner at revisiontx.com

> On Apr 22, 2020, at 9:36 AM, James Love <james.love at keionline.org> wrote:
> Paul, I suggest you look at the market entry reward model from S.1801, and provide some thoughts on how this could be adopted for COVID-19 vaccines or drugs. 
> https://delinkage.org/s-1801-proposes-innovation-incentive-fund-antibiotic-drugs-delinking-incentives-prices/ <https://delinkage.org/s-1801-proposes-innovation-incentive-fund-antibiotic-drugs-delinking-incentives-prices/>
> On Wed, Apr 22, 2020 at 9:13 AM Paul Fehlner <pfehlner at revisiontx.com <mailto:pfehlner at revisiontx.com>> wrote:
> The problem is getting the multi-million dollar investment in any medicine given the risk that it will not work or be safe, especially if it will be made available at or near cost, limiting profit. Funders willing to take that risk could develop all drugs for pricing at or below marginal costs of production. It’s just a question of whether there is enough risk capital seeking outcomes instead of profit as a return on investment. So far, not much.
> We think that there is a sustainable middle ground: payers willing to share some of the development and commercial risk in return for stable, low price (and quality and supply). COVID-19 is an acute opportunity for risk impact investing to create products sold at or below marginal cost. Proving the model in the extreme would potentially open the door to a largely untapped source of innovative medicines through repurposing by establishing an effective alternative drug development and commercialization model.
> Prizes? I’m not sure. Who gets the prize? What if there are multiple entities? The discoverer of a “drug” compound usually does little or nothing to make it into an approvable drug product. Let’s face it: discovery is relatively inexpensive and easy. Properly translating discovery into an approved product is expensive, takes a long time, fraught with uncertainty and error, and essential for public health and safety. That process often involves two or three entities after discovery. And what about manufacturing? Who will invest in the production line, a huge capital expense, and in the substantial ongoing cost of production? Possibly yet another entity. What about distribution? Approval of a new drug (even a repurposed one) does not lead to automatic use by doctors, sometimes because they don’t know about it, sometimes because of bias for established treatment or as a results of an unlucky first bad outcome with the new one, sometimes because of influence of other drug companies. Who is paying to inform and educate healthcare providers, and do they also get a prize? 
> Instead, impact investors seeking outcomes first and letting profit follow and payers seeking lower prices with price stability, by taking on some of the development and commercial risk, can create a sustainable system conducive to low price, high quality, innovative drugs.
> So where is that capital? Where are the payers willing to put skin in the game? We are certainly looking for it!
> Paul
> Paul Fehlner
> President & CEO
> reVision Therapeutics, Inc.
> +1.201.966.7474
> pfehlner at revisiontx.com <mailto:pfehlner at revisiontx.com>
> www.revisiontx.com <http://www.revisiontx.com/>
> > On Apr 10, 2020, at 9:57 AM, Outterson, Kevin <mko at bu.edu <mailto:mko at bu.edu>> wrote:
> > 
> > The article does not engage well on the R&D side of the question for the possible treatment drugs with remaining patent/exclusivity; instead they assume or ask for public funding of R&D costs including clinical trials.  Prize-based approaches have the advantages of rewarding innovation more appropriately, but permitting distribution of drugs at or below marginal cost of production.
> > 
> > Kevin
> > ___________________
> > Professor of Law & N. Neal Pike Scholar in Health and Disability Law - Boston University
> > Executive Director, CARB-X
> > Research papers at SSRN & Google Scholar
> > @koutterson  |  617 935 6517
> > 
> > This email message (including attachments) is confidential (-contains trade secrets and/or commercial information). If you have received this message in error, please delete it immediately and reply to the sender that you received the message in error.      
> > 
> > 
> > 
> >> On Apr 10, 2020, at 7:51 AM, James Love <james.love at keionline.org <mailto:james.love at keionline.org>> wrote:
> >> 
> >> ---------- Forwarded message ----------
> >> From: Sergey Kondratyuk <skondratyuk at itpcglobal.org <mailto:skondratyuk at itpcglobal.org>>
> >> To: "ip-health at lists.keionline.org <mailto:ip-health at lists.keionline.org>" <ip-health at lists.keionline.org <mailto:ip-health at lists.keionline.org>>
> >> Date: Fri, 10 Apr 2020 11:41:01 +0000
> >> Subject: research on cost of possible treatments for COVID-19
> >> Possible treatments for COVID-19 could all be made for a dollar a day, say
> >> researchers.
> >> 
> >> Research published today by the University of Liverpool, supported by ITPC,
> >> reinforces a very simple message - pharma must not profiteer from a
> >> pandemic.
> >> 
> >> Countries must not act hastily and stockpile any of the potential drugs.
> >> Currently all the drugs being used in COVID-19 trials remain unproven.
> >> 
> >> However, there are other ways that countries can be prepared.
> >> 
> >> The tragedy already resulting from the COVID-19 pandemic must not be
> >> exacerbated by the current health inequities in play.
> >> 
> >> We lay out the facts and a series of recommendations.
> >> 
> >> Drugs that are already in COVID-19 treatment trials can all be
> >> mass-produced affordably, research from the University of Liverpool,
> >> published today demonstrates.
> >> 
> >> The researchers ‘priced-up’ the key drug contenders. Some of them are
> >> currently marketed for other uses, and priced at thousands of dollars per
> >> person. Yet all of them can be produced generically – at a profit – for $1
> >> a day, or less.
> >> 
> >> The effects of COVID-19 must not be exacerbated by our current patent and
> >> pricing system. Patents for ‘new use inventions’ must not be granted on
> >> existing drugs, as has regularly happened in the past, nor should they be
> >> granted for any new drugs or diagnostic tests developed to treat COVID-19.
> >> Instead, countries should adopt systematic, compulsory mechanisms that
> >> expedite access to any medicines or technologies that may be needed in the
> >> near future.
> >> 
> >> As the new research (
> >> http://viruseradication.com/journal-details/Minimum_costs_to_manufacture_new_treatments_for_COVID-19/ <http://viruseradication.com/journal-details/Minimum_costs_to_manufacture_new_treatments_for_COVID-19/>)
> >> outlines, repurposing existing drugs to treat COVID-19 is vital for
> >> reducing mortality and controlling the pandemic. Several promising drugs
> >> have already been identified and are in various stages of clinical trials
> >> globally.
> >> 
> >> If re-purposed drugs demonstrate efficacy against COVID-19, they could be
> >> manufactured profitably at very low costs. Any existing patents or other
> >> intellectual property barriers on the production, import and export of
> >> these drugs must be overridden by governments.
> >> 
> >> The research was supported by ITPC’s Make Medicines Affordable campaign,
> >> which challenges unmerited patents and other barriers to medicines, and
> >> demands an end to inequitable pricing. Using an established methodology,
> >> previously designed to find the fair price for HIV and Hepatitis C
> >> medicines, the researchers estimated minimum costs of production, including
> >> the costs of the active pharmaceutical ingredients (API). The methodology
> >> includes factoring in realistic production and distribution costs for
> >> generic manufacturing, and a 10% profit margin and tax on net profit.
> >> 
> >> Drugs in the World Health Organization trials
> >> 
> >> The 9 drugs covered by the research includes four of the five drugs in the
> >> World Health Organization’s (WHO) Solidarity trial:
> >> 
> >> * Remdesivir, previously tested as an Ebola treatment.
> >> This is an investigational medicine which  has not been approved by
> >> regulatory authorities anywhere in the world. The safety and efficacy are
> >> not yet known.
> >> The originator company, Gilead has said it will donate 1.5 million doses,
> >> enough to treat 140,000 patients with severe symptoms for compassionate
> >> use, expanded access and clinical trials.
> >> 
> >> This is not a philanthropic gesture; it is a way for Gilead to retain
> >> control over production if the newly fast-tracked clinical trials yield
> >> positive results. If remdesivir is proven effective, the only way to meet
> >> global demand for it would be to allow technology transfer, including for
> >> the drug’s active pharmaceutical ingredients (API), so that it can be
> >> produced quickly and cost-effectively around the world. The research
> >> estimates that this experimental drug can be produced generically for $9
> >> per treatment course (estimated at present to be 10 days); since this is an
> >> intravenous drug, governments would have to factor in additional costs for
> >> its administration .
> >> 
> >> * Lopinavir/Ritonavir (LPV/r) is used as part of HIV treatment.
> >> Reports indicate that the originator company, Abbvie, will announce that it
> >> will not enforce patents on LPV/r, however this is not the same, or as
> >> conclusive, as withdrawing patents. Currently used in lifelong
> >> HIV-treatment, the annual costs can be astronomical for many governments.
> >> In Ukraine, for example, thousands of people are without HIV treatment
> >> because the health budget cannot stretch to cover the price Abbvie demands
> >> per person per year ($730). Our campaign partner has been opposing Abbvie’s
> >> unmerited, costly monopolies for years. At every stage Abbvie has fought
> >> back vigorously so any promises that the company is currently making should
> >> be viewed with caution. Lopinavir/Ritonavir (LPV/r)can be produced for $4
> >> for 14 days, 7x less than what Ukraine pays.
> >> 
> >> * Chloroquine and hydroxychloroquine are very closely related; they are
> >> used to treat malaria and rheumatology conditions respectively. Both drugs
> >> are already being produced generically, although prices still vary, with
> >> the highest prices being paid in China and the US. Although COVID-19
> >> trials have yet to show  whether either of these drugs are effective,
> >> reports of their stockpiling by the US presents a risk of shortages for
> >> other countries – and for people who need them to treat pre-existing
> >> conditions. A pandemic cannot be contained when countries scramble to look
> >> after themselves. It’s a short-sighted strategy. To treat a pandemic we
> >> need equitable access. Cholroquine is $93 for a 14 -day course in the US,
> >> which could be produced for $0.30 for the same period, and 14 days of
> >> hydroxychloroquine could cost $1.
> >> 
> >> Solidarity, not stockpiling
> >> 
> >> Until efficacy is demonstrated, all treatments remain unproven. The WHO
> >> “cautions against physicians and medical associations recommending or
> >> administering these unproven treatments to patients with COVID-19 or people
> >> self-medicating with them… Unnecessary stockpiling and the creation of
> >> shortages of approved medicines that are required to treat other diseases
> >> should be avoided.”
> >> 
> >> Andrew Hill, lead researcher, supports the WHO’s advice. He hopes the
> >> research will enable all countries to prepare now so that they are in a
> >> stronger position when or if a drug is ready to be rolled out, which would
> >> save time and lives.
> >> 
> >> “If efficacy is demonstrated, countries need agreement now that the
> >> relevant drugs will be available and affordable. Waiting until we know a
> >> treatment is effective would cause further delay. But countries acting very
> >> insular and competing for limited resources now is not the answer. Rapid,
> >> mass availability at an affordable cost would be essential to ensure equity
> >> and access especially amongst low- and middle-income economies.”
> >> 
> >> Hill continues: “There should be no intellectual property barriers
> >> preventing mass production of these treatments worldwide. We need
> >> technology transfer so that the methods used to manufacture the key drugs
> >> can be shared with any country deciding to produce the drugs locally. Local
> >> producers with sufficient capacities could also supply regionally. It is
> >> essential to remember that the production requirements need to account for
> >> existing uses of these medicines as well.”
> >> 
> >> A pandemic is not a ‘new market’ for business
> >> 
> >> Current list prices (the price negotiated between a company and each
> >> country) of all the drugs considered by the research are significantly
> >> higher than what they can be produced for, in all but one case. The
> >> research compared a range of countries with different levels of economic
> >> development to give a representative sample. Some of these treatments have
> >> list prices over 100 times higher than the cost of production.
> >> 
> >> “Patents and other intellectual property (IP) barriers have prevented
> >> access to life-saving treatments for too long,” says Othoman Mellouk,
> >> ITPC’s Intellectual Property and Access to Medicines Lead. “It would be
> >> immoral for any pharmaceutical company to profit from a pandemic. But based
> >> on the track record of some of the pharmaceutical companies involved in the
> >> trials, it is possible that they could view a pandemic as ‘new markets
> >> opening up’ or as a financial opportunity. Old tactics used to profit from
> >> existing drugs must be quashed conclusively.”
> >> 
> >> “If prices for the same drug vary in the way that they have been allowed to
> >> in recent years, many countries will find themselves in an impossible
> >> position where they can’t afford to treat everyone in need,” continues
> >> Mellouk. “We’ve seen before that when decisions are made about who to
> >> treat, that the most marginalised and vulnerable in society are the ones
> >> with the most to lose.”
> >> 
> >> “It must be one, fair, price for all. The tragedy already resulting from
> >> the COVID-19 pandemic must not be exacerbated by the current health
> >> inequities in play. It cannot be a question of who to treat, but to treat
> >> all, and that is only possible if medicine is affordable in every country.”
> >> 
> >> Recommendations
> >> 
> >> Research has now confirmed that the affordability of several drugs under
> >> investigation for treating COVID-19 can be assured. Ensuring the widespread
> >> availability of any approved drugs at the most affordable prices for health
> >> systems to roll them out will depend on the immediate actions of
> >> governments and the international community. These actions should include:
> >> 
> >> 1. Governments must immediately identify any existing patents and other
> >> monopolies on potential drugs to treat COVID-19.
> >> 
> >> 2. Where patents exist, governments should put systems in place that allow
> >> compulsory licenses to be granted automatically so no time is wasted if
> >> drugs turn out to be effective against COVID-19.
> >> 
> >> 3. There must be no new patents on drugs with potential to treat COVID-19.
> >> 
> >> 4. Governments and the WHO must identify sources of API and ensure
> >> technology transfer so drugs can be mass-produced locally or regionally and
> >> cost-effectively.
> >> 
> >> 5. The capacity for local and regional production must be mapped and, where
> >> necessary, upgraded, for taking on any additional requirements that may
> >> arise for drugs approved for treating COVID-19; this is also important for
> >> countries already facing potential shortages for drugs currently used in
> >> COVID-19 treatment protocols or for other illnesses.
> >> 
> >> The world does not have the luxury to simply wait and watch the
> >> developments on the COVID-19 treatment front. Decisions and systems need to
> >> be in place now for the mass production and supply of any treatment that
> >> may be approved.
> >> 
> >> There will be no excuses for our failure to do so.
> >> 
> >> Sergiy Kondratyuk
> >> project manager | Global Team
> >> Based: Kyiv, Ukraine
> >> Mobile: +380673599323
> >> www.itpcglobal.org <http://www.itpcglobal.org/>
> >> makemedicinesaffordable.org <http://makemedicinesaffordable.org/>
> >> _______________________________________________
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> -- 
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