[Ip-health] Alexander Kaufman in Huffpo: This Pharma Company Won’t Commit To Fairly Pricing A Zika Vaccine You Helped Pay For

Jamie Love james.love at keionline.org
Fri Jun 9 09:29:30 PDT 2017

If the listserve software broke the link to the Huffpo story, try:



On Fri, Jun 9, 2017 at 9:26 AM, Jamie Love <james.love at keionline.org> wrote:

> The Huffington Post has a story of more than 2,700 words on the
> Army/Sanofi Zika vaccine license fiasco.  Sanofi is seeking a legal
> monopoly on the Army's Zika vaccine until the year 2036.
> The Huffpo story covers a lot of ground, and involved interviews with
> several persons and quotes  Judit Rius, Dr. Rebekah Gee,  Senator Bernie
> Sanders, Representative Jan Schakowsky, Governor John Bel Edwards,
> Professors Rachel Sachs and John Gruber, Sanofi's Elias Xerhouni and KEI.
>   Alexander Kaufman cites cases where Sanofi has priced products higher
> in the United States, or overcharged the federal government (KEI has more
> on Sanofi's recent  fines for fraud, kickbacks, etc here:
> http://keionline.org/sanofi-fines).
> Here is the Kaufman story, but best to read it on the Huffpo site if you
> can, to ensure the author and the publisher benefit from the traffic.
> http://www.huffingtonpost.com/entry/zika-vaccine-sanofi_us_5
> 9373298e4b0ce1e7408b9ca?ncid=inblnkushpmg00000009
> This Pharma Company Won’t Commit To Fairly Pricing A Zika Vaccine You
> Helped Pay For
> After the “pharma bro” and EpiPen, this could be the next big battle in
> drug pricing.
> By Alexander C. Kaufman
> POLITICS 06/09/2017 05:45 am ET
> Last year, as worries grew that Zika ― a mosquito-borne illness that can
> lead to devastating birth defects ― might spread north from Latin America,
> scientists working for the U.S. government got to work on a vaccine.
> The Walter Reed Army Institute of Research, which is part of the U.S.
> Department of Defense, began developing the vaccine in March 2016. In
> September, the Army announced that it had enlisted Sanofi Pasteur, a
> division of the Paris-based pharmaceutical giant Sanofi, as its research
> partner. Sanofi was awarded a $43 million grant to conduct a second phase
> of trials, set to begin in early 2018. If those prove successful, the
> government has promised Sanofi another $130 million to conduct the third
> phase of trials.
> But that’s not all Sanofi stands to gain if the Zika vaccine works. The
> Army intends to grant the company an exclusive license to sell the vaccine
> in the U.S., according to a notice filed in the Federal Register in
> December.
> That arrangement has consumer watchdogs and U.S. lawmakers, including Sen.
> Bernie Sanders (I-Vt.), raising the alarm. Millions of Americans of
> reproductive age could need this vaccine to protect against a virus that
> can spread through sex and cause major birth defects in the children of
> infected women. And Sanofi ― a company that has previously been accused of
> jacking up drug prices for American customers ― would be the one setting
> the cost of this much-anticipated vaccine.
> There hasn’t been a decision on this proposed short-term monopoly, nor are
> the details of the deal public. At this point, there isn’t even a vaccine.
> But when the Army requested a fair pricing promise from Sanofi, the company
> rejected it. And that has plenty of people worried.
> Pregnant women infected with Zika are more likely to give birth to babies
> with microcephaly, a rare defect that leads to small skulls and undeveloped
> brains.
> A monopoly in the making
> Broadly speaking, what’s going on here is not unusual. The U.S. government
> doesn’t commonly take the lead role in developing a drug for commercial
> use. Often, it funds university research, and it’s the universities that
> grant licenses to pharmaceutical manufacturers to actually produce and sell
> the vaccine or drug.
> While the Army led the initial research on the Zika vaccine, government
> agencies don’t have the capacity to mass-produce a vaccine and distribute
> it to hospitals, clinics and doctors’ offices.
> At first glance, Sanofi might seem like a good choice to handle that end
> of the process. The company has experience developing a vaccine for dengue
> fever, a virus spread by the same species of mosquito that carries Zika.
> And it’s one of the world’s biggest vaccine makers, with the ability to
> produce in large volumes if the Zika virus should ever reach pandemic
> status.
> But watchdog groups warn that granting Sanofi exclusive rights to this
> particular vaccine could be catastrophic. (Some 32 potential Zika vaccines
> are in various stages of development around the world, according to the
> National Institute of Allergy and Infectious Diseases. The Japanese
> drugmaker Takeda has also won U.S. government funding for phase one trials,
> albeit at much lower amounts. But it doesn’t appear to be as far along as
> Sanofi.)
> Sanofi has a history of overcharging U.S. customers for its products. The
> price of its multiple sclerosis drug Aubagio is eight times higher in the
> U.S. than in France and the United Kingdom, according to Knowledge Ecology
> International, a Washington-based nonprofit that advocates for fair drug
> prices and government transparency. Diabetic patients sued Sanofi and two
> other drugmakers in January for jacking up the cost of insulin. And in
> April, Sanofi agreed to pay $19.8 million to settle claims that it had
> overcharged the Department of Veterans Affairs for two vaccines, albeit as
> a result of what the company said was a clerical error caused by a computer
> glitch. (The company said the error led to undercharges, too.)
> Critics of the deal say the U.S would lose most of its leverage to
> negotiate affordable prices once it granted Sanofi an exclusive license to
> the Zika vaccine ― which means Americans could end up paying more for a
> drug that their own government played a key role in creating.
> “Today, the government can exert leverage, and say, ‘We’ll sign the
> license over to you, but first let’s talk price,’” said Jamie Love,
> director of KEI. “It’s harder to have that conversation after there’s only
> one company you can buy it from because you’ve made them a legal monopoly.”
> The Army did not respond to a request for comment.
> Dr. Rebekah Gee is the secretary of Louisiana’s Department of Health and
> Hospitals.
> ’God forbid we have an outbreak’
> The prospect of the Zika virus spreading north into Louisiana, with its
> large mosquito population and semi-tropical climate, petrifies Dr. Rebekah
> Gee, the secretary of the state’s Department of Health and Hospitals.
> Her department already faces a budget crisis as dwindling tax revenue and
> low oil prices have left the state with a $1.1 billion shortfall. Money
> that Congress allotted last year to deal with Zika is running out, and the
> Trump administration has signaled that future funding for Zika prevention
> may be targeted for cuts. Gee worries that if the Zika virus does spread in
> her state, she will have to choose between using her limited Medicaid
> budget to maintain other basic health services or using it to provide
> vaccines for people who are, or want to become, pregnant.
> Gee doesn’t want to tell low-income women and their partners that they’re
> on their own ― that they’d better stock up on mosquito repellent and hope
> for the best. “I can just imagine the panic on their faces when we tell
> them we can’t afford it,” she said. “How can we do that?”
> Just 123 travel-related Zika cases have been reported in the States so far
> this year, according to the Centers for Disease Control and Prevention.
> U.S. territories, including Puerto Rico, have suffered more, with roughly
> 500 cases this year. The island declared an end to the epidemic on June 5,
> but Zika transmissions in Puerto Rico are ongoing. And on the brink of
> summer, which is peak mosquito season, the risk of an outbreak on the
> mainland remains high — particularly in places like Louisiana, Texas and
> Florida, where other mosquito-borne diseases like dengue fever are a major
> health concern.
> The consequences of infection can be devastating. In the continental U.S.,
> 10 percent of pregnant women with confirmed cases of Zika gave birth to
> babies with brain damage or other serious health issues, according a CDC
> study released in April. The agency estimates that the lifetime cost of
> caring for a baby born with microcephaly can top $10 million.
> “God forbid we have an outbreak,” Gee said. “Louisiana has the climate as
> well as the bugs that carry this illness. We have the perfect storm in
> terms of the right conditions for a Zika outbreak.”
> She worries about an exclusivity agreement for a vaccine that does not
> specify that American consumers be charged no more than people in other
> industrialized countries.
> “The U.S. taxpayer is by far the largest shareholder in the research of
> this drug,” Gee said. “To me, it’s completely irresponsible that this would
> then be given to a pharmaceutical company ― not even a U.S. company ― with
> no price protections whatsoever for the American people, including the
> stipulation that they’d charge us no more for this than they’d charge other
> countries when they paid nothing.”
> Louisiana is one of the poorest states in the country, ranking 44th with a
> median household income of less than $46,000 a year. Gee said the state has
> about 540,000 low-income people of reproductive age on Medicaid. If Zika
> hits the state hard, anyone of reproductive age having sex ― particularly
> couples looking to get pregnant ― would likely want to be inoculated.
> How much would that cost the Louisiana Department of Health? If Sanofi
> charged as little as $2 a vaccine, which isn’t her best guess, Gee said
> that’s $1 million she has to find. “Even if it’s $1, that’s still more than
> half a million.”
> Sanofi will consider “social value” and affordability when it eventually
> sets prices, company spokeswoman Ashleigh Koss told HuffPost. She pointed
> out that until an outbreak actually happens, the company won’t know how
> many doses it will need to produce and how much it will need to charge to
> break even on the expensive manufacturing process. Indeed, new cases of
> Zika virus in South and Central America have dropped dramatically this
> year, making it harder to carry out vaccine trials.
> Koss called it “premature to consider or predict Zika vaccine pricing.”
> But she added that “it is in the public-health interest to price this and
> other vaccines in a way that will facilitate access to and usage of a
> preventative vaccine.”
> Rather than rely on Sanofi’s goodwill, the government could build price
> protections into the exclusive licensing deal it plans to strike with the
> company. The most direct way would be to simply set a price in the
> contract. Alternatively, the Army could negotiate what economists call an
> “advanced market commitment,” where the government agrees to buy a fixed
> volume of the vaccine at a price high enough to guarantee that Sanofi’s
> investment is worthwhile. If the Zika outbreak proves worse than expected
> and the pre-purchased supply is used up, Sanofi would then be required to
> sell additional vaccine at production cost.
> Health advocates say it’s critical to bake price protections into any
> vaccine deal at the start, so that a drug company can’t raise prices if an
> outbreak drives up demand.
> “If the U.S. government gives an exclusive license to Sanofi without
> conditions, basically it’s a blank check to Sanofi to charge anything that
> they want,” said Judit Rius Sanjuan, a legal policy adviser at Doctors
> Without Borders. “This is completely unacceptable ― it’s fully funded by
> the U.S. government.”
> In January, KEI led a coalition of watchdog groups, including Doctors
> Without Borders, in filing comments urging the Army not to grant Sanofi an
> exclusive patent. They argue that the pending deal might violate the
> Bayh-Dole Act, a 1980 law that says the government can only award a company
> an exclusive license on an invention arising from federally funded research
> if the exclusivity is “a reasonable and necessary incentive to call forth
> the investment capital needed to bring the invention to practical
> application; or otherwise promote the invention’s utilization by the
> public.”
> In other words, in order to justify its proposed deal with Sanofi, the
> Army must demonstrate that the only way to manufacture and distribute the
> Zika vaccine in sufficient quantities is by offering Sanofi exclusive
> rights. Critics of the deal say the Army hasn’t proven that.
> Before President Trump makes this deal, he must guarantee that Sanofi will
> not turn around and gouge American consumers.
> Sen. Bernie Sanders (I-Vt.)
> An ounce of prevention
> Opposition to the deal has been growing in recent months. In February,
> Rep. Jan Schakowsky (D-Ill.) and 10 other House Democrats sent a letter to
> the Army’s acting secretary opposing the arrangement. Sanders, for his
> part, thrust the deal into the national spotlight in a March 10 New York
> Times op-ed calling on President Donald Trump to fulfill his promise to
> “make only the best deals on behalf of the American people” by securing
> price protections for the Zika vaccine.
> “Before President Trump makes this deal, he must guarantee that Sanofi
> will not turn around and gouge American consumers, Medicare and Medicaid or
> our military when it sells the vaccine,” Sanders wrote. “Unfortunately, the
> likelihood is that Sanofi will engage in exactly this predatory behavior ―
> because it’s happened before.”
> Sanders pointed to the prostate cancer drug Xtandi as an example. The drug
> was developed at the University of California, Los Angeles, with government
> grants and support from the Army and the National Institutes of Health ―
> but then the government transferred the patent to Astellas Pharma, which
> now charges U.S. patients $129,000 a year for the drug. In Canada, Sanders
> noted, “the same drug costs just $30,000 because, unlike the United States,
> Canada regulates drug prices.”
> “It is unacceptable that Sanofi has rejected the Army’s request for fair
> pricing,” Sanders told HuffPost. “American taxpayers have already spent
> more than $1 billion on Zika research and prevention efforts, including
> millions to develop this vaccine. Americans should not be forced to pay the
> highest prices in the world for a critical vaccine we paid to help develop.”
> Sanofi’s president of research and development fired back in a letter to
> the editor on March 21. Elias Zerhouni, a former NIH director under
> President George W. Bush, defended the deal. He said Sanofi “would make
> significant milestone and royalty payments” to the Army lab responsible for
> the vaccine, “allowing the United States government to recoup its
> investment.”
> The pressure for an affordably priced vaccine grew when the CDC alerted
> state health officials in April that federal funding for Zika prevention
> could run out by summertime. The following month, the House passed the
> American Health Care Act, which the Congressional Budget Office estimates
> would eliminate insurance coverage for roughly 23 million people. If
> anything like that bill manages to pass the Senate, there will be a whole
> lot more people who would need publicly funded vaccines.
> With the federal government preparing to step back, the cost of obtaining
> the vaccine for low-income people would likely fall on state and local
> health departments. Louisiana Gov. John Bel Edwards (D) wrote the Defense
> Department last month to warn that granting a single company an effective
> monopoly on the Zika vaccine without any price constraints “could cripple
> state budgets and threaten public health.”
> “No one should have to worry about their child being born with
> microcephaly or other birth defects, and certainly no one should have to
> face that frightening prospect simply because the vaccine is unaffordable,”
> Edwards wrote.
> Pharmaceutical industry representatives argue that concern over public
> image ― presumably including public backlash over tragic stories of
> brain-damaged babies ― is already forcing companies to discipline their own
> pricing. “This isn’t something the government can solve, because it isn’t a
> bright line — it’s a facts-and-circumstance test,” Allergan CEO Brent
> Saunders told CNBC’s “Closing Bell” last September. “And so I’d rather
> industry self-police, which is what Allergan is doing.”
> But such self-policing has a checkered record in other areas of business,
> and it’s hardly a widespread practice in the pharmaceutical industry. In
> 2015, Martin Shkreli, then CEO of Turing Pharmaceuticals, jacked up the
> price of a drug used to treat AIDS patients from $13.50 a tablet to $750.
> Last year, Mylan Inc. hiked the price of a two-pack of EpiPens from $100 to
> $500. Despite public outcry, inflating the price of lifesaving drugs
> remains common.
> “The incentives for any one company to raise its prices or engage in
> questionable conduct are quite high, while the incentives for the industry
> as a whole to corral and police its members are really quite difficult to
> see,” said Rachel Sachs, an associate law professor at Washington
> University in St. Louis. “The best thing the industry can do to help itself
> is to tie its own hands in some of these very public deals.”
> To be sure, Sanofi has expressed sensitivity to concerns about price
> gouging. The company said it would cap price increases for its product at
> 5.4 percent this year, with a few exceptions. It also said it benchmarks
> prices to the national health expenditures growth projection, a figure
> calculated by the U.S. Department of Health and Human Services. The
> Institute for Clinical and Economic Review, a drug price watchdog, praised
> Sanofi’s multiple sclerosis drug alemtuzumab, sold under the brand name
> Lemtrada, as a “good value.”
> What makes the Zika vaccine different is the extent to which U.S.
> taxpayers have already funded it, said John Gruber, an economics professor
> at the Massachusetts Institute of Technology. “Saying to Sanofi, ‘We’ve
> taken all the risk and development, and we’re going to let you make a lot
> of money off this,’” Gruber said, “that’s just crazy.”
> Until the federal government takes action, however, health officials like
> Gee are left to wait and worry.
> “The American people, with their money, developed this vaccine,” she said.
> “It’s not like the company went out, did the research, innovated and did
> this out of the goodness of its heart. To me, it’s inconceivable that the
> American people would pay for this and we’d have no protection whatsoever
> that we’d receive the benefit.”
> --
> James Love.  Knowledge Ecology International
> http://www.keionline.org/donate.html
> KEI DC tel: +1.202.332.2670 <(202)%20332-2670>, US Mobile: +1.202.361.3040
> <(202)%20361-3040>, Geneva Mobile: +41.76.413.6584
> <+41%2076%20413%2065%2084>, twitter.com/jamie_love

James Love.  Knowledge Ecology International
KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
+41.76.413.6584, twitter.com/jamie_love

More information about the Ip-health mailing list