Taxpayer money helped create this cancer drug. Should we be able to force the price down?
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In the latest twist in the battle over prescription drug pricing, a pair of consumer groups has asked the Obama administration to override the patent on a prostate cancer drug, arguing the medicine is much more expensive in the United States than elsewhere. And they maintain that the National Institutes of Health should take this step to help US patients because federally funded research was used to create the drug.

At issue is the cost of Xtandi, which is sold by Astellas Pharma and has an average wholesale price in the US of more than $129,000, about two to four times more than what other high-income countries are paying, according to the Union for Affordable Cancer Treatment and Knowledge Ecology International. They sent their letter to the NIH, as well as to the US Department of Health and Human Services and the US Department of Defense.

In their view, the Xtandi patent should be overridden because Xtandi was developed at the University of California, Los Angeles, with help from taxpayer dollars — specifically, NIH and Department of Defense grants. They note that one of the chief inventors of the drug was a UCLA professor and the university later licensed the drug to Medivation, a biotech that eventually struck a marketing deal with Astellas.

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“In our opinion, it is unreasonable, and indeed outrageous, that prices are higher in the US than in foreign countries for a drug invented at UCLA using federal government grants,” they write in their letter. “As a direct result of the high price charged by Astellas, US insurance companies and other third-party payers have predictably restricted access to Xtandi.” The key patent, by the way, expires in 2027, according to the advocacy groups.

Compared with the wholesale price in the US, where a 40-milligram capsule costs $88.48, Xtandi costs $23.46 in Australia, $20.12 in Canada, and $32.43 in Norway. Medicare, by the way, pays $69.41, according to the advocacy groups. Astellas reported that Xtandi net sales were $313 million through the first nine months of 2015, up 73 percent year over year, according to a filing made by Medivation with the Securities and Exchange Commission.

The plea was issued just three days after 50 congressional lawmakers wrote the Obama administration to demand the NIH develop guidelines that would require drug makers to license patents to others in a bid to end “price gouging.” That letter was written by the Affordable Drug Pricing Task Force, which was formed by members of Congress in response to controversy over the price of prescription medicines.

They argued the NIH has the ability to issue so-called march-in rights, which refer to overriding a patent. Under federal law, the lawmakers wrote, this allows an agency that funds private research to require a drug maker to license its patent to another party in order to “alleviate health and safety needs which are not being reasonably satisfied” or when the benefits of a drug are not available on “reasonable terms.”

As we noted previously, the lawmakers wrote that march-in rights should only be used when “wrongdoing occurs” and that “innovation should not be threatened.” But by issuing guidelines, the lawmakers also contend that the NIH would help drug makers make “better-informed pricing decisions.”

The advocacy groups also cite federal law to maintain that the NIH could authorize generic production of Xtandi, and that such a move would ensure the price drops sufficiently to widen access for patients. But the failure of the NIH to do so has meant that “Astellas is exploiting the weak response of the US to excessive pricing of drugs,” according to their letter.

“In this case, all the federal government has to say is that the monopoly will end, if the prices are excessive, and specifically in this case, if the US is paying more than everyone else,” said Jamie Love of Knowledge Ecology International, which focuses on access to medicines, in a statement. “If US residents continue to pay more than everyone else, it is because the federal government wants that outcome, and will do nothing to change it.”

But whether the NIH will take this step is uncertain, at best. In 2013, the agency denied a similar petition from advocacy groups, including Knowledge Ecology International, which complained that the price of an AIDS medicine developed with federal funding was out of reach for most patients. At the time, the agency argued that overriding a patent is an “extraordinary remedy.”

We asked the NIH for comment and will update you accordingly.

As for Astellas, a spokesman wrote us that the company “believes that the price of medicines should reflect the innovation and patient benefit provided, while we also acknowledge that medicines should be accessible to the patients who need them.” He continued that a “significant investment” and “significant risk” was taken to bring the drug to market. The drug maker, he added, remains “committed to working collaboratively” to find ways to encourage innovation and ensure access.

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