[Ip-health] Taxpayer money helped create this cancer drug. Should we be able to force the price down?

Claire Cassedy claire.cassedy at keionline.org
Thu Jan 14 10:10:10 PST 2016


Taxpayer money helped create this cancer drug. Should we be able to force
the price down?


In the latest twist in the battle over prescription drug pricing, a pair of
consumer groups has asked the Obama administration to override the patent
on a prostate cancer drug, arguing the medicine is much more expensive in
the United States than elsewhere. And they maintain that the National
Institutes of Health should take this step to help US patients because
federally funded research was used to create the drug.

At issue is the cost of Xtandi, which is sold by Astellas Pharma and has an
average wholesale price in the US of more than $129,000, about two to four
times more than what other high-income countries are paying, according to
the Union for Affordable Cancer Treatment and Knowledge Ecology
International. They sent their letter to the NIH, as well as to the US
Department of Health and Human Services and the US Department of Defense.

In their view, the Xtandi patent should be overridden because Xtandi was
developed at the University of California, Los Angeles, with help from
taxpayer dollars — specifically, NIH and Department of Defense grants. They
note that one of the chief inventors of the drug was a UCLA professor and
the university later licensed the drug to Medivation, a biotech that
eventually struck a marketing deal with Astellas.Read more: NIH asked to
fight price gouging by overriding drug patents“

In our opinion, it is unreasonable, and indeed outrageous, that prices are
higher in the US than in foreign countries for a drug invented at UCLA
using federal government grants,” they write in their letter. “As a direct
result of the high price charged by Astellas, US insurance companies and
other third-party payers have predictably restricted access to Xtandi.” The
key patent, by the way, expires in 2027, according to the advocacy groups.

Compared with the wholesale price in the US, where a 40-milligram capsule
costs $88.48, Xtandi costs $23.46 in Australia, $20.12 in Canada, and
$32.43 in Norway. Medicare, by the way, pays $69.41, according to the
advocacy groups. Astellas reported that Xtandi net sales were $313 million
through the first nine months of 2015, up 73 percent year over year,
according to a filing made by Medivation with the Securities and Exchange

The plea was issued just three days after 50 congressional lawmakers wrote
the Obama administration to demand the NIH develop guidelines that would
require drug makers to license patents to others in a bid to end “price
gouging.” That letter was written by the Affordable Drug Pricing Task
Force, which was formed by members of Congress in response to controversy
over the price of prescription medicines.

They argued the NIH has the ability to issue so-called march-in rights,
which refer to overriding a patent. Under federal law, the lawmakers wrote,
this allows an agency that funds private research to require a drug maker
to license its patent to another party in order to “alleviate health and
safety needs which are not being reasonably satisfied” or when the benefits
of a drug are not available on “reasonable terms.”As we noted previously,
the lawmakers wrote that march-in rights should only be used when
“wrongdoing occurs” and that “innovation should not be threatened.” But by
issuing guidelines, the lawmakers also contend that the NIH would help drug
makers make “better-informed pricing decisions.”

The advocacy groups also cite federal law to maintain that the NIH could
authorize generic production of Xtandi, and that such a move would ensure
the price drops sufficiently to widen access for patients. But the failure
of the NIH to do so has meant that “Astellas is exploiting the weak
response of the US to excessive pricing of drugs,” according to their

“In this case, all the federal government has to say is that the monopoly
will end, if the prices are excessive, and specifically in this case, if
the US is paying more than everyone else,” said Jamie Love of Knowledge
Ecology International, which focuses on access to medicines, in a
statement. “If US residents continue to pay more than everyone else, it is
because the federal government wants that outcome, and will do nothing to
change it.”

But whether the NIH will take this step is uncertain, at best. In 2013, the
agency denied a similar petition from advocacy groups, including Knowledge
Ecology International, which complained that the price of an AIDS medicine
developed with federal funding was out of reach for most patients. At the
time, the agency argued that overriding a patent is an “extraordinary

We asked the NIH for comment and will update you accordingly.

As for Astellas, a spokesman wrote us that the company “believes that the
price of medicines should reflect the innovation and patient benefit
provided, while we also acknowledge that medicines should be accessible to
the patients who need them.” He continued that a “significant investment”
and “significant risk” was taken to bring the drug to market. The drug
maker, he added, remains “committed to working collaboratively” to find
ways to encourage innovation and ensure access.

Ed Silverman can be reached at ed.silverman at statnews.com

Follow Ed on Twitter @Pharmalot

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