The cost of drug monopolies in the United States

By James Love

The United States, like other countries, uses the grant of legal monopolies as the incentive to reward successful R&D investments. The legal mechanisms are varied, and include most importantly patents on medical inventions, but also a variety of regulatory exclusivities in a patchwork of programs that address (for example) delays in regulatory approval, testing for pediatric patients, development of treatments for rare diseases, rights in test data used to provide new drugs and vaccines, and the development of new antibiotic drugs.

Each of these legal mechanisms that are used to block competition can be evaluated separately, but it is also useful to look at the big picture, and ask – what is the cost of the drug monopolies in the United States?

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Hits and misses from the Senate HELP Committee hearing on the President’s Blueprint for lower drug prices

 

By James Love

The Senate HELP committee held a hearing on June 12 on “The Cost of Prescription Drugs: Examining the President’s Blueprint ‘American Patients First’ to Lower Drug Prices” where Secretary Alex Azar was the sole witness.

It was a moment for the Democrats in the Senate to draw a sharp contrast with the Trump Administration on an issue voters care about: drug prices.

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Roche and City of Hope Claim Pfizer Biosimilar Version of Trastuzumab Will Infringe “At Least” 40 Patents

By James Love

On November 17, 2017, Genentech, a subsidiary of the giant Swiss drug company Roche, together with City of Hope, a charity, filed a complaint in a U.S. District Court, seeking an injunction to block introduction of a Pfizer biosimilar version of Herceptin (INN: trastuzumab), as well as other remedies to infringement, including compensation for Roche’s lost profits if competition occurs. The complaint (Genentech vPfizer, 17-cv-1672, U.S. District Court, District of of Delaware (Wilmington), filed November 17, 2017) illustrates the complexity of the patent landscape on a drug placed on the market more than 19 years ago and the need for compulsory licensing of patents.

Trastuzumab is a very important drug for the treatment of breast cancer that is Human Epidermal growth factor Receptor 2-positive (HER2+). My wife was treated with trastuzumab for several years, and is currently on a follow-on Roche treatment named Kadcyla, which is a combination of trastuzumab and the small molecule DM1. (DM1 is an NIH funded drug now off patent).

The early development of trastuzumab was dramatic, and documented in such accounts as Robert Bazell’s very readable book, Her-2: The Making of Herceptin, a Revolutionary Treatment for Breast Cancer, published in 1998, and the 2008 movie Living Proof, starting Harry Connick, Jr..  Bazell’s book was referred in the New York Times and the New England Journal of Medicine. The Bazell book and the Living Proof movie provide a dramatic account of the unwillingness of Genentech to invest in the research that led to the approval of trastuzmab, and the role of the Revlon Foundation to support Dr. Dennis Slamon’s critical work at UCLA.

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Errors in Patent Grants: More Common in Medical Patents

By James Love

Recently I have become interested in the frequency of a “certificate of correction” on a granted patent, after two efforts to establish federal rights in patents granted.

The first case involved the University of Pennsylvania.  We had identified five patents on CAR T technologies granted to five inventors from the University of Pennsylvania where there was no disclosure of federal funding on the patents when they were granted by the USPTO, as is required by law.  All five patents had been filed in 2014.    We had reason to believe the five patents should have disclosed NIH funding in the invention, and we were right. But the error had been corrected by Penn, and five “certificate of correction” documents were granted by the USPTO in May 2016, something we had overlooked, in part because the corrections to patents are published as image files, and were not text searchable.

The second case involved the Cold Spring Harbor Laboratory.  KEI had identified two patents listed in the FDA Orange Book for the drug Spinraza,  which were assigned to Cold Spring Harbor, and which had not disclosed federal funding.  KEI was interested in pursuing a march-in case for Spinraza, on the grounds of excessive pricing.  The cost of Spinraza in the first year was $750,000, and the maintenance doses were priced at $375,000 per year.  Researchers listed on the two patents had received funding from the NIH to work on the subject of the two patents. Continue reading

Orphan Drugs Designations and Approvals have Something to Say about Risks

This brief essay examines data from the U.S. Orphan Drug Act, including specifically the FDA designations of an indication for a drug to treat an orphan disease, and the likelihood that once the designation is made, the FDA will approve the drug for that indication. This is one empirical measure of the risks associated with the development of new drugs to treat U.S. defined orphan diseases.  Note that 75 percent of all novel cancer drugs approved in the United States from 2010 to 2016 qualified as orphan products.    The essay also reports the average time between the FDA designation and the FDA approval for orphan indications.

The main findings are that since 2010, the average time from orphan designation to approval is 5.3 years, and the likelihood of FDA approval for an orphan indication, which varies over time and across business cycles, was .22 from 1990 to 2017, and since 2010, was .25.

The essay concludes with a comparison to other studies of the risks of drug development.


On January 5, 1983, the U.S. Orphan Drug Act became law as Public Law 97-414. Over the past 34 years the Act has been amended numerous times, often extending or expanding the benefits, which currently include a 50 percent tax credit for qualifying clinical trials, exemptions or discounts on prescription drug user fees, an easier and faster path to FDA approval, and seven years of marketing exclusivity for an approved orphan indication. Continue reading

Perspectives on Cancer Drug Development Costs in JAMA

By James Love

Vinay Prasad and Sham Mailankody’s JAMA Internal Medicine study on the costs of research and development (R&D) when bringing a single cancer drug to market has sparked renewed discussion about how to measure R&D costs as well as the relationship between R&D costs and prices. What follows is my perspective on the Prasad/Mailankody (PM) paper, how it compares to DiMasi’s widely quoted 2016 study, and on the debate in general.  Continue reading