After five months of deliberation, the US National Institutes of Health on Monday rejected a request by several consumer groups to override the patent on a prostate cancer drug because the medicine is more expensive in the United States than elsewhere. And one of the consumer groups plans to seek an appeal.
Last January, the groups petitioned the NIH to take this step, which is known as a march-in right, to help US patients because federally funded research was used to create Xtandi. The drug is sold by Astellas Pharma (ALPMY) and has an average wholesale price in the United States of more than $129,000, about two to four times more than what other high-income countries are paying, according to the consumer groups.
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 grants from NIH and the US Department of Defense. The school licensed the drug to Medivation, which struck a marketing deal with Astellas.
However, the NIH denied the petition because there was no information to suggest that Xtandi is or will be in short supply, according to a letter sent on Monday by NIH Director Dr. Francis Collins to Knowledge Ecology International, one of the consumer groups. The agency, which has rarely granted such petitions, noted that the litmus test used in one previous case was whether there were sufficient supplies of the medicine for which a petition was sought.
In a statement, the consumer groups argued the NIH “did not evaluate evidence provided that Astellas charges US residents prices that are far higher than those available to non-US consumers, and that price discrimination against US residents is not consistent with making the product ‘available to the public on reasonable terms,’” as required by federal law.
They also maintained the NIH failed to address evidence that “the unreasonably high price for Xtandi limits patient access, places the drugs on restrictive formularies, causes strain to health care budgets, and requires patients to pay unreasonably high coinsurance and copayments,” all of which justify the use of march-in rights.
They added that the NIH ignored its ability to issue a nonexclusive, royalty-free license to allow Xtandi to be manufactured for use by the federal government. Knowledge Ecology legal and policy counselor Andrew Goldman said there is no precondition about supplies and the NIH is wrong to assert that there is no limit on “excessive pricing” in order to grant a march-in right.
“This is contrary to the legislative intent of the law, and sends a terrible signal about the government’s willingness to confront the high drug prices through available legal mechanisms,” he said.
The consumer group plans to submit an appeal to US Secretary of Health and Human Services Sylvia Burwell and said it will base its appeal on the NIH’s “flawed legal rationale” about the use of march-in rights and “its lack of analysis concerning its refusal to use a royalty-free license.” The group added that it plans to refile this case after a new president takes office next year if the HHS declines its appeal.
As part of its effort, Knowledge Ecology two months ago solicited Biolyse, a small Canadian drug company, to make Xtandi. The drug maker maintained it could supply a version for $3 per 40-milligram tablet, compared with the $69.41 that Medicare paid in 2014. Biolyse hoped to be able to supply its version in three years. We left word with a company spokesman and will pass along any reply.
An Astellas spokesman wrote us to say that the company is “pleased that the NIH has concluded that Xtandi is broadly available to patients, and we are committed to continuing our work with our diverse stakeholders to provide patients with affordable access to our medicines.”
The rejection is not a surprise, though.
Two months ago, the Obama administration rejected a request from dozens of congressional Democrats, who call themselves the Affordable Drug Pricing Task Force, to develop guidelines that would require drug makers to license their patents and put a lid on “price gouging.” They argued the NIH should be more aggressively granting march-in rights in light of the high price of medicines.
At the time, Burwell noted such decisions are made on a case-by-case basis. The NIH previously considered using its march-in authority concerning drug pricing in 2004 and 2013, but determined statutory requirements were not met. Two of those instances involved the Norvir AIDS medicine that was marketed by Abbott Laboratories (ABT) — now owned by AbbVie (ABBV) — and the Xalatan glaucoma treatment sold by Pfizer (PFE).
In response, several lawmakers, including presidential aspirant Bernie Sanders, said they would seek a hearing about NIH use of march-in rights, but that never took place.