D

ear Secretary Price,

The state of Louisiana has a serious problem paying for pricey hepatitis C medicines, and as secretary of the Department of Health and Human Services, you can do something to help.

A federal law gives you the ammunition to make it possible for the state to treat, and quite possibly cure, thousands of infected low-income people without busting its budget. To take action would require gumption, because it would involve involuntarily licensing patents, which is certain to rile the pharmaceutical industry.

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But in taking such a step, you could send a meaningful signal that the Trump administration is truly serious about addressing the high cost of medicines.

Are you up to the task?

Here’s the back story: The new hepatitis C treatments that came to market over the past three years, with list prices nearing $100,000 per patient, have strained many state budgets. Last year, Louisiana had to ration care and treated just 320 people enrolled in its Medicaid program. Why? Covering the cost of hepatitis C treatments at current prices would run an estimated $764 million, according to the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center. To do so would require the state to cut other services sharply.

“We have a public health crisis. The current system is not working,” Dr. Rebekah Gee, the Louisiana health secretary, told me. “They’re charging Bentley prices and Louisiana can’t afford a Bentley. It would cost me less to put everyone in the state on a cruise ship for 12 weeks than pay for Sovaldi,” one of two medicines sold by Gilead Sciences, which dominates the hepatitis C market.

To cope, Gee last month turned to Dr. Josh Sharfstein, a former FDA deputy commissioner, who assembled an informal panel of experts to review a couple of options she wants to consider.

The first would be to seek a license from Gilead so that another company could make lower-cost versions of its drugs. Gilead has actually made such an arrangement with seven generic drug makers based in India, letting them sell lower-cost versions of its hepatitis C medicines in 101 low-income and middle-income countries.

“It would cost me less to put everyone in the state on a cruise ship for 12 weeks than pay for Sovaldi.”

Dr. Rebekah Gee, Louisiana health secretary

The idea is appealing enough that a committee of the National Academies of Sciences, Engineering, and Medicine last month recommended this approach as a way to eradicate the disease in the United States. The rationale is that a license would also benefit Gilead, because it could get some added revenue while ensuring its medicines reach a population that would otherwise never be able to afford the drugs.

Whether Gilead would be willing to strike a deal for a state Medicaid program is uncertain. A company spokesman sent me a statement that did not address this specific question, but noted that Gilead is open to talks with the states. He added that the average price per bottle for Harvoni, a follow-on to Sovaldi, is now less than $10,000 for states that provide open access to all Medicaid patients.

Gee, however, said that talks with Gilead have so far gone nowhere. The company offered “long-term financing,” which she argued does not really lower long-term costs, although she remains open to discussion.

This brings us to the other option, which is where you come in, Mr. Secretary.

If Gilead is unwilling to offer a voluntary license, the Department of Health and Human Services could tap a century-old federal law to use a patented invention without permission. Known as Section 1498, this is like a form of eminent domain. A drug maker can demand a “reasonable” compensation — such as royalties — but cannot stop the government from overriding a patent.

“If Price and [President] Trump are interested in lower-priced drugs, they have access to a tool that enables them to do that,” explained Rachel Sachs, an associate professor at the Washington University School of Law who participated in the informal panel advising Louisiana. “This has been invoked repeatedly by the federal government regarding other technologies.”

Of course, this is no slam dunk.

The law allows HHS to get around the patent, but the Food and Drug Administration also offers market exclusivity periods that may run beyond a patent. The time frame varies for each drug, although as Sachs pointed out, the first exclusivity for Sovaldi runs out next year.

Also, setting compensation may get contentious.

“If Price and Trump are interested in lower-priced drugs, they have access to a tool that enables them to do that.”

Rachel Sachs, Washington University School of Law

“It is certainly true that 1498 can be used to buy drugs without regard to patent status, but that comes at an uncertain price,” said Jamie Love of Knowledge Ecology International, an advocacy group that focuses on patents and access to medicines. “A judge would decide how much money the patent holders would be compensated, and that can take a while.”

More broadly, some say involuntarily licensing patents would send the wrong signal to drug makers and result in less innovative research and development, because companies would be less inclined to spend money discovering new medicines if they thought their patents wouldn’t be respected. In an essay last year, Duke University economics professor Henry Grabowski argued it would be “fanciful” to think there would be no adverse consequences.

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Right now, Gee is soliciting public comment and talking with state lawmakers before deciding what to do. Meanwhile, a Gee spokeswoman tells me that two other states have expressed interest in taking similar action.

Involuntarily licensing patents may seem like a last-resort solution, Secretary Price, but there is clearly a need for drastic action. Even the mere threat might get a company to think differently about negotiating a voluntary license.

Your boss likes to brag about tough dealmaking. This is an opportunity to lead the way and alleviate a national problem. Or is all the talk from the administration about high drug prices just whimsical chatter designed to placate the public?

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  • Agree with Rob.

    On the other hand, I could ask: isn’t your health worth a fully loaded pricey pickup truck, with which you are not actually towing or transporting anything? Or, a 700 bhp muscle car to blast at 70 mph down the freeway?
    People, should get their priorities straight, first.

  • I’m not convinced that it takes all that much “guts” (courage) to change the situation on the cost of medication. What it takes is inclination — a willingness — even an interest. But President Trump comes from the same billionaire class that profits so nicely from the current drug prices. Is Trump interested in cutting friends’ incomes? Hardly.
    Before the “guts” for change comes the inclination, the willingness. That’s is what’s really missing.

  • You need to overhaul your whole system, your lobbyists hold the whole world to ransom. The immediate solution to this problem already exists: buyers clubs of generic hep C medication, is what saved my life when I had that gun to my head. Mail order life saving. Is legal, and a direct action we can take, run by humanitarians. I don’t work for anyone but you can look me up, or look up fixhepc- please share this is so important, and an American dies every 25 mins because of the price, who could be cured.

  • When I read the following I felt like I fell down the rabbit hole: “When the government subsidizes drug prices for SOME people, the drug companies see an increased demand for their drugs at these artificially high prices. This keeps prices high and pushes them higher…for ALL buyers.”

    What’s overlooked is that the drug companies start the chain reaction by setting prices so high in the first place.

  • Drug pricing is not transparent – that needs to be fixed. Meanwhile, predation is like pornography – we know it when we see it. The price of these Hep C drugs is impossible to justify. Health economists have invented woo metrics like QALY (quality adjusted life years) that drug firms use to justify these excessive prices. Better to base price on actual costs of production, which can include R&D leading up to the drug. But then over time prices should fall, just as for other innovations like computers. In the drugs business, however, prices keep rising, and that is predatory.

    • That’s not how the world works! The price of the output (final product) is never based on the price of the input (cost of production)…except in fantasyland.

      The REAL cause of high drug prices are subsidies provided by the government. These subsidies don’t go to patients. They go to drug manufacturers – through no fault of the drug companies themselves (If someone offered you $10000 for your used car instead of $500, which would you take? Drug companies are no different).

      When the government subsidizes drug prices for SOME people, the drug companies see an increased demand for their drugs at these artificially high prices. This keeps prices high and pushes them higher…for ALL buyers.

      Better to give poor people cash and let them decide what they want to buy with their cash. When we direct the poor people’s cash to pharmaceuticals, drug prices are guaranteed to rise. It’s the fault of well meaning politicians – and their constituents – who are ignorant regarding economics and how the world works.

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