This weekly column offers opinions on the latest pharmaceutical industry news.
Everyone wants to pay less for prescription medicines, and Maura Healey believes she has found a way to make it happen: by suing drug companies for violating state consumer protection laws.
In a controversial maneuver, the Massachusetts attorney general is threatening to file a lawsuit against Gilead Sciences (GILD) if the California drug maker doesn’t lower its prices for a pair of costly hepatitis C treatments.
Legal experts are calling this a long shot. Consumer advocates believe this is a brilliant tactic. And in truth, both sides have a point.
Let’s start with the legal debate. Healey contends Gilead is guilty of unfair trade practices for charging, before discounts, anywhere from $63,000 to $94,500 for a course of treatment, depending upon the drug and regimen. She noted in a letter to Gilead made public last week — and first reported by the Boston Globe — that the company’s Sovaldi and Harvoni treatments sell for just a fraction of those prices in some other countries.
But since the cure rates for these drugs exceed 90 percent, Gilead insists they offer a good value for the money by helping patients avoid the long-term costs of treating liver disease, cancer, and transplantation.
For her part, Healey claimed that the drugs are out of reach for too many people, notably those who are covered by government programs. Her rationale is simple: What good is a cure if it remains inaccessible?
On a populist level, this may resonate widely — and it certainly has on the presidential campaign trail. Three leading candidates — Bernie Sanders, Hillary Clinton and, most recently, Donald Trump — have all targeted drug prices in their stump speeches.
Whether such logic is grounds for a lawsuit is another matter. Healey’s argument turns on the notion that charging a high price constitutes unfair commercial conduct. This appears highly questionable.
“I don’t know of any state unfair trade practices law that gives a state the right to regulate [drug] prices,” said Erik Gordon, a business and law professor at the University of Michigan. Moreover, as he and other legal experts wonder: How high is too high?
A Healey spokeswoman declined to discuss the legal points. Nonetheless, the attorney general apparently believes state law is sufficiently broad to encompass her contention, although past legal decisions suggest otherwise.
Last May, a federal court in Philadelphia tossed a lawsuit brought by the regional transit authority, which claimed Gilead was charging excessive prices for its employees. In reaching its decision, the court wrote that federal law covering patented drugs offers companies immunity from state law. In other words, the transit authority couldn’t use state law to force Gilead to lower its prices.
Another federal court expressed the same reasoning nearly a decade ago to strike down a law the District of Columbia had passed to curb excessive drug prices.
For Healey to make a case, she will probably have to argue that Gilead’s pricing is “defectively designed,” according to Kevin Outterson, who directs the health law program at Boston University.
This means that Gilead would have had to know its pricing would hurt consumers. “It’s an innovative argument,” Outterson said. “But until we know more, the argument is more political than legal.”
Indeed, some see Healey’s effort as nothing more than grandstanding.
“This is about demonizing the industry,” said Robert Easton, a pharmaceutical consultant. “Someone has to get a political action committee together and get her out of office.”
“She could be a problem for industry elsewhere in the country,” added Easton, who also chairs NewYorkBIO, a state trade group.
Posturing or not, Healey has scored some points: a Gilead spokeswoman said the drug maker has agreed to hold talks with her; other states are now watching what Healey does; and then there is all the publicity.
“I believe this ratchets up the pressure,” said Brian Rosman, research director at Health Care For All, a Boston-based consumer advocacy group. “This just may contribute to an atmosphere in which the company finds a way to make the drugs more affordable.”
For now, Gilead is not showing signs of budging, but may reconsider, albeit for an entirely different reason. Late last week, Merck won approval for a new hepatitis C treatment called Zepatier, and it set the cost at $54,600 — nearly 60 percent below the cost of Harvoni, the newer and more widely prescribed of the two Gilead medicines.
Perhaps old-fashioned competition may accomplish what legal threats cannot.