Two nonprofit groups have petitioned the federal government to take actions to increase the competition for a cancer drug that costs $129,269 a year by exercising its right to step in if the fruits of taxpayer-funded research are not "available to the public on reasonable terms," according to U.S. law.
The "march-in" rights are a last-ditch loophole that allows the government to intervene when inventions it helped create become inaccessible -- if "action is necessary to alleviate health and safety needs which are not being reasonably satisfied," the law states. The government essentially reserves the right to license patents that were made possible by federal funds to other companies in extreme circumstances -- potentially disrupting a lucrative monopoly.
The letter sent Thursday by Knowledge Ecology International and the Union for Affordable Cancer Treatment argues that the government should "march-in" on Astellas Pharma prostate cancer drug, Xtandi. Three key patents that cover the drug were granted to the University of California and were made possible by grants from the National Institutes of Health and the Department of Defense.
"In our opinion, it is unreasonable, and indeed outrageous, that prices are higher in the United States than in foreign countries, for a drug invented at UCLA using federal government grants," the petition states, furnishing its own analysis of the difference in prices in the U.S. and other developed countries.
The letter notes that while the U.S. average wholesale price of the drug -- a list price that doesn't take into account discounts or rebates that manufacturers provide -- is $88.48 per 40 milligram capsule. In Japan, that same pill costs $26.37, and in Norway it is $32.43.
Despite its considerable power, the National Institutes of Health has declined five petitions requesting its march-in rights be used as an antidote to high drug prices or shortage problems since the mid-1990s.
"Drug pricing and patient access are broad and challenging issues in the United States," Francis Collins, the director of the NIH wrote in November 2013 in deciding not to march-in on the patents underlying the HIV drug Norvir, made by AbbVie. "The extraordinary remedy of march-in is not an appropriate means of controlling prices of drugs broadly available to physicians and patients."
Astellas' spokesman Tyler J. Marciniak said in an e-mail that the company believes the price should reflect the innovation and benefit that drugs provide to patients. He noted that the company is committed to preserving access to drugs as well, using patient assistance programs to alleviate the cost. He noted that Astellas and Medivation, the company that jointly developed and commercialized the drug, had also made a "significant investment and have taken significant risk" in bringing Xtandi to market.
"Every country has its own public health policies and medicine pricing structures, and these can vary greatly. As a result, price differences do exist across countries," Marciniak said. "Unlike many other countries, pricing in the United States reflects diverse types of purchasers, health insurance plans and funding systems."
The request comes days after members of Congress sent a letter to federal health officials requesting that the federal government exercise its "march-in" rights to deal with the general problem of high drug prices.
"While NIH has appropriately referred to march-in rights as an 'extraordinary remedy,' too many families and providers are facing an extraordinary challenge from unreasonably priced pharmaceuticals," the letter, led by Rep. Lloyd Doggett (D--Tex.), a senior member of the Ways and Means Committee, said. "The failure to act in the past has undoubtedly sent an unfortunate signal that prices for federally-funded inventions can be set as high as a sick or dying consumer will pay."
The petition offers one such framework for how such decisions could be made: when a drug is far more expensive in the U.S. than in other countries with developed economies and high incomes.
The letter from Congress urges the development of guidelines that could predictably inform pharmaceutical companies the terms under which they would exercise their march-in rights.
While high drug prices have gained intense political and news scrutiny over the past year, Holly Campbell, a spokeswoman for PhRMA, the drug industry's trade group, said total spending on medicines has been "consistent" for half a century. She urged greater focus on total health care spending and specifically on health insurers.
"There also needs to be a greater focus on the critical challenge facing patients: increasingly high cost sharing and additional restrictions on access as a result of their health insurance coverage," Campbell said.
NIH spokeswoman Renate Myles said that the agency had received the letter from Congress and would respond.