[Ip-health] ​National Institutes of Health Declines to Exercise Authority to Lower Xtandi Price

Zack Struver zack.struver at keionline.org
Mon Jun 20 14:30:58 PDT 2016

National Institutes of Health Declines to Exercise Authority to Lower
Xtandi Price

The National Institutes of Health will not use its rights under the
Bayh-Dole Act to end the monopoly on the expensive prostate cancer drug
Xtandi and allow low-priced generic versions to compete on the market.

CONTACT: Zack Struver, zack.struver at keionline.org, +1 (202) 332-2670

Washington, DC — National Institutes of Health (NIH) Director Francis
Collins informed Knowledge Ecology International (KEI) and the Union for
Affordable Cancer Treatment (UACT) today that the NIH would not take action
to lower the price of an expensive taxpayer-funded prostate cancer drug
(copy of decision by Collins here

Researchers developed the drug, Xtandi, at the the University of
California, Los Angeles, with the support of taxpayer funds from the NIH
and U.S. Army. Astellas Pharma, a Japanese pharmaceutical company, sells
Xtandi in the U.S. for over $129,000 per year ($88.48 per pill), a price
two to four times higher than other high-income, high-GDP countries.

Background on this case, including the original petition, is available
here: http://www.keionline.org/xtandi andhttp://cancerunion.org/xtandi.html.

KEI and UACT requested that the NIH use its authority under the Bayh-Dole
Act to break the monopoly on Xtandi in a January 2016 letter. As noted in
the letter, the NIH has both march-in rights, which allows the NIH to issue
a non-exclusive license to any generic manufacturer, and its own
non-exclusive, royalty-free license to allow Xtandi to be manufactured for
use by the federal government.

In his letter to KEI and UACT, Dr. Collins cited the lack of a shortage of
Xtandi as justification for not using the government’s rights to enable
generic competition.

Dr. Collins’ letter did not evaluate evidence provided by KEI and UACT that
Astellas charges U.S. residents prices that are far higher than those
available to non-U.S. consumers, and that price discrimination against U.S.
residents is not consistent with making the product “available to the
public on reasonable terms,” as required by the Bayh-Dole Act. Nor did Dr.
Collins address the evidence that the unreasonably high price for Xtandi
limits patient access, places the drugs on restrictive formularies, causes
strain to healthcare budgets, and requires patients to pay unreasonably
high coinsurance and copayments, all justifications for the use of the
NIH’s march-in rights under the Bayh-Dole Act. Moreover, the NIH does not
need to justify use of its non-exclusive, royalty-free license for
government use of Xtandi, an issue that Dr. Collins’ letter did not address
even though it was central part of the request, and the subject of a recent
op-ed in Nature Medicine (http://www.keionline.org/node/2591).

In late April, the Canadian generic manufacturer Biolyse Pharma offered to
sell Xtandi for $3 per pill to the Federal government for use by Medicare
and in developing countries. Xtandi is one of the costliest drugs under the
Medicare Part D prescription drug program.

Medicare patients pay high copayments on Xtandi. The costs associated with
treatment for one Medicare patient are detailed in this blog:

Xtandi patient on Medicare — with supplement — pays $441.97 per month.

In 2014, the U.S. Medicare program alone reported outlays of $447 million
on Xtandi. The costs to U.S. taxpayers and employers now, in 2016, are far

A lower price for Xtandi would significantly reduce out of pocket costs for
patients and allow insurers to remove the drugs from restrictive
formularies that limit access.

KEI plans to submit an appeal of Director Collins’ decision to the
Secretary of Health and Human Services, Sylvia Burwell. Specifically, KEI
plans to challenge the NIH’s flawed legal rationale in regards to its use
of march-in rights and its lack of analysis on its refusal to use its
royalty-free license. KEI also plans to refile this case after a new
President takes office next year if HHS declines our appeal.

Statement by James Love (james.love at keionline.org), Director of KEI:

“The two page response by Dr. Collins to KEI and UACT’s 26-page submission
was an appalling dereliction of his duty to protect the public from
unreasonable use of inventions funded by U.S. taxpayers. As far as Dr.
Collins is concerned, a foreign drug company can charge U.S. residents
anything it wants on on NIH funded invention, even three or four times as
much as in any other country. Dr. Collins did not even attempt to deal with
the evidence provided in the petition, or acknowledge that taxpayers are
entitled to protections from excessive pricing. We will be appealing the
decision, but regardless of the outcome of the appeal, we will be re-filing
this case next year after a new U.S. president takes office. If the NIH had
granted the petition, patients on Medicare or private insurance would find
it easier to obtain access to treatments and face much lower co-payments,
taxpayers would save more than $6,000 per month for each patient on
Medicare, employers would pay lower healthcare costs. There are problems
with drug prices the government can’t solve under existing laws, but this
is a problem the government won’t solve, even when it holds a royalty free
right in the drug patents. The NIH is throwing the federal government’s
leverage on the drug’s price into a trash can, along with the interests of
every U.S. resident that pays for this drug directly or indirectly.”

Statement by Andrew Goldman (andrew.goldman at keionline.org), KEI Counsel for
Policy and Legal Affairs:

“The written response from Dr. Collins seems to rest his decision in large
part on the lack of evidence that Xtandi ‘is currently or will be in short
supply.’ Yet there is no such precondition for the government's
royalty-free license under 35 U.S.C. § 202(d); the government simply has
that license under the law. As for the march-in right under § 203, the NIH
response suggests that that agency believes that the ‘practical
application’ requirement of being ‘available to the public on reasonable
terms’ does not include a limitation on excessive prices. This is contrary
to the legislative intent of the law, and sends a terrible signal about the
government's willingness to confront the high drug prices through available
legal mechanisms.”

Statement of Diane Singhroy (diane.singhroy at keionline.org), KEI Scientific
and Technical Advisor:

“The high prices for Xtandi predictably lead to restrictive formularies by
health insurers. Among other things, this systematically delays access to
the drug for patients who are forced to fail other forms of treatment
before they can receive reimbursements for Xtandi. Delays in treatment can
render Xtandi less effective or completely ineffective. For some patients,
this is a matter of death rather than life.”

Statement of Dr. Manon Ress (manon.ress at cancerunion.org), Union for
Affordable Cancer Treatment (UACT):

"From the patient point of view, Dr. Collins chose to help increase the
profit of a foreign firm that charges high prices for a life saving drug
for many cancer patients, instead of ensuring that U.S. cancer patients can
have affordable access to this U.S. government-funded drug. It is wrong and
undermines the credibility of the NIH.”

Public Citizen was one of the NGOs that called upon the NIH to hold a
hearing on the Xtandi petition.

Statement of Peter Maybarduk, Director of Public Citizen's Global Access to
Medicines program:

“Today Director Collins passes once again on an opportunity to make
medicines affordable, preferring to allow drugmakers to price gouge the
public with the full blessing, and indeed the support, of our government.

“Medicines are unaffordable because pharmaceutical companies abuse the
monopoly powers we give them, through patents and other exclusivities.
Until the U.S. government confronts this problem, we will all pay ever
higher prices for the medicines we need. We will pay higher insurance
premiums and suffer further treatment rationing.

“The reforms which our government proposes to lower drug prices are ever
more convoluted, because we fail to address the core problem of
pharmaceutical monopoly power.”

Statement of Merith Basey, Executive Director of Universities Allied for
Essential Medicines (UAEM):

“Dr. Francis Collins is failing to act on behalf of the American people who
helped to fund this life-saving cancer treatment with their tax-payer
dollars. The President of the United States must ensure that the NIH serves
the people it is intended to serve, rather than being held hostage to
pharmaceutical corporations whose primary interest is profiteering.”

Zack Struver, Communications and Research Associate
Knowledge Ecology International
zack.struver at keionline.org
Twitter: @zstruver <https://twitter.com/zstruver>
Office: +1 (202) 332-2670 Cell: +1 (914) 582-1428

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