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HEALTH NEWS


SHOULD MULTIPLE SCLEROSIS DRUGS COST $62,000 A YEAR?

By Jeri Burtchell — Updated on January 16, 2019

The first in a two-part series examines the business of Big Pharma and the role
of patents and competition in the drug pricing process.

For those who suffer from multiple sclerosis (MS), perhaps the only thing more
shocking than receiving their diagnosis is learning how much the disease
modifying drugs (DMDs) used to control it will cost. Patient demand, research
and development costs, and competition all affect the pricing of these
life-altering medications.

MS is a chronic, progressive, and often debilitating autoimmune disease that
affects the central nervous system, including the brain, spinal cord, and optic
nerves. More than 400,000 people in the U.S. have been diagnosed with MS, while
worldwide that number is in excess of 2.1 million.

The first MS DMD to be approved by the U.S. Food and Drug Administration (FDA)
was Betaseron, which came on the market in 1993. Drug makers predicted there
would be such a high demand for the product that it was initially prescribed by
lottery. Only one in five patients who applied received it.

Since then, nine other DMDs have joined the ranks of medications proven
effective at reducing the number of relapses an MS patient suffers. Some have
even been shown to slow the disease progression. With no cure in sight, many
patients must take these medications indefinitely.

The fact that there are so many options available to patients is the good news;
the bad news is that they all come with a substantial price tag. The chart below
shows today’s drug prices, as quoted by Walmart and Walgreen’s pharmacies in
northeast Florida.

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CURRENT CASH PRICES FOR A ONE-MONTH SUPPLY OF MS MEDICATION

Drug Name (Manufacturer)

Dose

Walmart

Walgreen’s



1 month supply

1 month supply

Aubagio (Genzyme)

14MG (30)

(Pharmacist could not locate in database)

$4,757.19

Avonex (Biogen Idec)

Prefill 30MCG/0.5ML Kit

$4,877.08

$5,058.19

Betaseron (Bayer)

0.3MG INJ (14)

$5,154.54

$5,809.69

Copaxone (Teva)

20MG 1PK=30 INJ

$5,507.32

$6,000.09

Extavia (Bayer)

0.3MG INJ (15)

$4,430.46

$5,589.99

Gilenya (Novartis)

0.5MG CAP (28)

$5,372.18

$4,790.19

Novantrone*

…

…

…

Rebif (Merck KGaA/Pfizer)

44MCG/0.5SYG INJ (12)

$5,150.54

$5,304.49

Tecfidera (Biogen Idec)

240 MG CAP (60)

$5,139.01

$5,320.09

Tysabri (Biogen Idec)

300MG/15 INJ

$5,418.62

$5,629.49

*Administered by IV every 3 months and is prescribed in multi-dose vials.
Single-month pricing information was unavailable.

In 2010, when Novartis won FDA approval of its much-anticipated, first-ever pill
treatment for MS, Gilenya, the company set the price for the oral medication at
$4,000 per month. At the time that price was 30 to 50 percent above that of
other established DMDs, according to a post written by noted MS blogger Lisa
Emrich. Other drug manufacturers soon responded with price increases to match.

Tecfidera, the newest pill treatment to enter the market, is also priced in the
range of $62,000 per year.


JUST HOW ARE DRUG PRICES SET?

“That is the blackest of all black boxes,” said Dr. Kenneth Kaitin, a professor
at Tufts University School of Medicine in Boston, Mass., in an interview with
Healthline. “People in the industry will never talk about drug pricing. [Unless
they are directly involved, they are] kept in the dark about all of it just
because the less they know about it, the better.”

None of the drug makers we contacted responded to requests for comment.

“There is [no publication] I have ever seen that describes the pricing process
because there is no incentive for industry to provide any clarification on that
process. Industry says that it’s the enormous cost of drug development…and
bringing to market new medicines that drive these very high costs,” Kaitin said.
“The real factor is value. If you develop a very expensive drug that few people
are interested in, then you’re not going to price it high because then even
fewer people will be interested in it. In that regard, pharmaceuticals are just
like any other commodity, any other product.”

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MEDICATIONS AS COMMODITIES

The pharmaceutical industry has been around for a very long time. While Merck
boasts of being the oldest drug company on the planet since its inception in
1668, the very first drug storeTrusted Source opened its doors in Baghdad in the
year 754. And the pharmaceutical industry survives and thrives based on the same
business practices that drive all companies that produce consumer goods.

“If you develop a product that doesn’t cost too much to manufacture, however if
it’s of tremendously high value, it’s going to be priced very high,” Kaitin
said. “If you compare a Mercedes and a…Hyundai, the fact is the Mercedes may not
cost that much more to develop, but there’s a higher demand for it and there are
people that are willing to pay for it, and therefore the price is very high.”

To further illustrate his point, Kaitin said there is a high demand for
“lifestyle” drugs like Rogaine to promote hair growth. “People are willing to
pay for [them], so the products will be priced accordingly. It’s not based on
the cost of production; it’s based on the value.”

The issue, of course, is that DMDs for MS are not “lifestyle” drugs, and
patients do not so much choose to take them as have to.

Besides value, Kaitin said, pharmaceutical companies “consider any kind of
competition or therapeutic alternatives that are out there. If they are
competing with other products in the same therapeutic area…they have to take
that into consideration.”

Competition doesn’t always mean other drugs. The new medication could be
competing with surgical procedures, physical therapy, or even changes in
lifestyle.

“Think of it this way,” Kaitin explained, “if everybody could be convinced to
lose weight then the cost of anti-hypertensives [for high blood pressure, which
has been linked to obesity] would have to go down because…people’s blood
pressure would go down as well. But people tend to not lose weight so…there’s
still demand for high blood pressure drugs.”



THE ROLE OF PATENTS IN DRUG PRICING

Another important factor, besides value and competition, is the patent life of a
drug. For new medications just hitting the market, patients can expect to wait
five to 10 years before seeing generic competition.

It’s during this time that drug companies must glean as much profit as possible
because, according to Kaitin, “Once the product goes off patent, if it’s a
popular product, there will be generic competition and the market share will
erode by about 80 percent with the first two months or so. They lose market
share very, very rapidly.”

“In an ideal situation, a pharmaceutical company would have a balanced portfolio
of products that are reliable generators of revenue, like [DMDs for MS], and
then the revenues that come in from those drugs help sustain their efforts to
find cures for diseases that are untreatable, or not adequately treated. It’s a
balance,” Kaitin added, “and industry is always struggling with that balance.”

During the early 2000s, pharmaceutical companies took a lot of criticism for
making only incremental improvements to existing drugs, as opposed to looking
for “breakthrough” drugs in new areas. Now, the industry is trying to re-balance
the portfolio, putting more emphasis on breakthrough products, which is leading
to a rash of partnerships between big companies and smaller companies that
typically focus on breakthrough drugs.

Smaller companies, according to Kaitin, have a “life or death situation with
those products. These small companies are created to develop a product with a
lot of promise. If the product fails in development, often the company will
disappear. But if it doesn’t, that’s where a lot of the breakthroughs are coming
from.” If the drug fails in clinical trials, it also means big losses for the
larger company that invested in the partnership.

“Just like anybody’s financial portfolio, they have a hedge against different
problems,” Kaitin said. “If a breakthrough drug fails in development, they’ve
got these more standard drugs that are more likely to continue to generate
revenue for them.”

WHAT DOES THIS MEAN FOR MS PATIENTS?

With 10 therapies to choose from and more currently in clinical trials, MS
patients have options that didn’t exist 20 years ago. But with many newer
medications having just earned their patent rights, you won’t see cheaper
generics available for as long as two decades.

In the end, it’s business as usual, despite the great need for these drugs and
the impact drug costs have on patients’ lives. Drug companies are not totally
insensitive to this, however, and all have patient assistance programs in place
to help cover the cost of medication if a patient has insufficient insurance or
no coverage and cannot otherwise afford it.

In part two of this series, we will examine the emerging roles of social media,
patient activism, and physicians groups in effecting change in a market that,
according to Kaitin, “pays even more attention than they have in the past.”

Read the second story in this series here.


LEARN MORE

 * Multiple Sclerosis Learning Center
 * Multiple Sclerosis Treatments
 * Alternative Treatments for MS
 * Sanofi’s Drugs Add to Neurologists’ Arsenal Against MS

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By Jeri Burtchell — Updated on January 16, 2019




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