Expensive drugs for a different reason

Usually, when there’s a very expensive medication in the news it’s because some company has just invented it and is trying to make as much money as possible before there’s competition– either from other similar drugs or from generic versions.   This is (presumably) the issue that Hillary Clinton is planning to address. The manufacturer is charging all the market will bear, but it’s not precisely a case of the uncaring free market. The drugs can only be that expensive because the government deliberately gives one company a monopoly, which we do as a strategy by society to bribe companies to invent drugs that work.  Like lots of people, I think the details could be improved but the basic idea is sensible.

Yesterday’s story (Stuff, Herald) is somewhat different. An existing, off-patent, treatment is having its price jacked up enormously. It’s about 50 times what it was recently, and 750 times what it was in 2010 when the drug was owned by a huge multinational, GSK. Derek Lowe (a drug company chemist) has some good posts about this. I’m mostly summarising.

There have been a few of these cases over the past few years, with different mechanisms.  The first is a well-meaning but poorly-designed idea of the FDA to collect evidence about drugs that were already in use when effectiveness testing was brought in. For some of these drugs, knowing whether (or how well) they actually work would be valuable. In return for doing the clinical trials to modern standards, a company can get a period of ‘marketing exclusivity’ on an old off-patent drug. Unfortunately, a company can pick up a drug where there isn’t any real doubt about effectiveness, so the trials provide little benefit, and then raise the price through the roof.

The second approach is to pick a drug that has no alternatives but where the total market is small enough that getting through the FDA approval process even for a generic is enough of an obstacle to keep out competitors.  One of the recent stories was about cycloserine, a last-ditch treatment for drug-resistant tuberculosis. There are still very few cases of this in the US — about 90 per year — so even a twenty-fold price increase doesn’t open up much of a market opportunity. The regulatory problem here is the impact of high standards for demonstrating manufacturing safety. Ordinarily that’s something you want, but for very rare diseases it provides a barrier to competition.

The third mechanism really looks like a regulatory loophole, and that’s what just happened with Daraprim for treating toxoplasmosis. The active ingredient of Daraprim, pyrimethamine, is off patent. There isn’t any FDA marketing exclusivity, either. But you can’t sell it as a drug unless you show that your formulation of pyrimethamine delivers a sufficiently-similar dose with sufficiently-similar timing to the formulation that was originally approved.

Toxoplasmosis isn’t as rare as drug-resistant TB, and historically the idea was that  an attempt to charge extortionate prices couldn’t work because someone would make a generic competitor. The trick is that you would need a supply of Daraprim to show that your formulation is close enough. You can’t do that if they won’t sell it to you.

As a concept, this goes back to a lawsuit over thalidomide (which now has a couple of genuine medical uses). One US company, Celgene, had the patent. Another company, Lannett, wanted to buy some of their drug to do bioequivalence studies, and claimed Celgene was refusing only to block competition. Celgene claimed they were just worried about Lannett’s safety procedures — which, in the case of thalidomide, could be fair enough.  They settled the case and it doesn’t really matter who was right; whether Lannett was paranoid or Celgene was cheating the system, the idea was out.