Small company offers Medicare cheap version of pricey cancer drug

A small Canadian drug maker is offering to make a prostate cancer medicine that consumer groups and several Democratic lawmakers, including Bernie Sanders, believe is too costly for most Americans.

Biolyse Pharma maintains that it can supply a version of Xtandi for $3 per 40-milligram tablet, compared with the $69.41 that Medicare paid in 2014. “The offer involves dramatic savings to the US government,” the privately held manufacturer wrote in an April 22 email to the US Centers of Medicare and Medicaid Services. The company believes it can make a version of the drug available in three years.

The drug maker also noted the US government holds a royalty-free right to license the medicine to other manufacturers. A spokesman for Biolyse, which is working with a pair of consumer groups on its proposal, maintained the US government “can act right now.” The treatment, which has a list price of more than $129,000 in the US, is currently marketed by Astellas and Medivation.

By promoting cost savings, however, Biolyse is trying to sidestep the apparent unwillingness of the Obama administration to consider so-called march-in rights, which involves overriding patents. Earlier this year, two consumer groups urged the Obama administration to override a Xtandi patent over concerns the medicine is more expensive in the United States than elsewhere.

Under federal law, a march-in right 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.”

The drug was developed at the University of California, Los Angeles, with help from National Institutes of Health and US Department of Defense grants. The university later licensed the drug to Medivation, a biotech that struck a marketing deal with Astellas.

Last month, however, US Health and Human Services Secretary Sylvia Mathews Burwell rejected a request from dozens of congressional Democrats to develop guidelines that would require drug makers to license their patents and put a lid on “price gouging.” In response, Sanders and several other lawmakers are now seeking a congressional hearing about issuing march-in rights for Xtandi.

And at a Congressional hearing earlier this month, National Institutes of Health director Dr. Francis Collins questioned whether federal law permits march-in rights to be used to address pricing. “I am concerned that the negatives that may be flowing forward if we begin to use march-in in a very broad way about drug pricing may in fact be substantial in terms of a loss of interest in industry participation in discoveries that NIH has supported,” he said.

Whether the Obama administration takes up the offer remains to be seen. But the high cost of medicines is a hot-button issue that has sparked congressional hearings. In recent months, the Obama administration held a daylong forum on the topic and is pursuing an experiment to lower the cost of Medicare Part B drugs, which are generally expensive infused and injectable treatments.

A CMS spokesman declined to comment.

For its part, Astellas argued that the true cost of Xtandi is much lower when factoring in rebates that the company pays to pharmacy benefit managers and government agencies.

“During 2015, 20,000 men fighting advanced prostate cancer received Xtandi. Of those, 81 percent of privately insured patients paid $25 or less out of pocket per month, 79 percent of Medicare patients paid $0 out of pocket per month and 2,000 uninsured or underinsured men with an annual adjusted household income of $100,000 or less received Xtandi for free,” an Astellas spokesman wrote us.

One of the consumer groups that advocates for march-in rights and is working with Biolyse now plans to lobby Congress in hopes of persuading the Obama administration to take action.

“I’ve approached several companies, and we have multiple companies that are willing to supply this,” said Jamie Love, who heads Knowledge Ecology International, an advocacy group that focuses on patents and access to medicines. “We’re just pushing ahead, trying to find solutions to a problem.”