New Marketplace

Protect Patient and Provider Access to Essential Medicines

Article · June 10, 2016

On August 10, 2015, Turing Pharmaceuticals bought the marketing rights to pyrimethamine (Daraprim), a decades-old first-line treatment for toxoplasmosis. The price of pyrimethamine immediately increased by 5433%. Heavy scrutiny followed, and although Turing agreed to reduce the price, the drug remains prohibitively expensive for many patients. Recently, at our hospital, an immigrant patient with a new diagnosis of HIV–AIDS and toxoplasmosis couldn’t receive first-line therapy because of cost: the price for 100 pills was $75,000. The patient is currently receiving second-line therapy.

Unfortunately, the highly publicized pyrimethamine acquisition is not unique. Prices have been quietly but dramatically increasing for many older, off-patent drugs. Some of these medicines are considered essential by the World Health Organization (WHO) (see Table 1). In some cases, price hikes have disproportionately affected vulnerable populations, making potentially lifesaving therapies unavailable to disadvantaged patients. It seems that a new business model has emerged: companies are acquiring drugs in niche markets where there are few or no therapeutic alternatives in order to maximize their profits. Unlike new brand-name drugs, the patents of the drugs being targeted by this model expired years ago. These companies seem to have no interest in adding value to the health care system by developing new drugs.

Price Increases Affecting Off-Patent Medications on the WHO Model List of Essential Medicines

Table 1: Price Increases Affecting Off-Patent Medications. Click To Enlarge.

The increased cost of albendazole, an antiparasitic medication, is a case in point.1 CorePharma acquired the U.S. marketing license for albendazole from GlaxoSmithKline in 2010 and subsequently sold it to a private equity group, Amedra Pharmaceuticals. Amedra then bought the only potential competitor available on the U.S. market, mebendazole, from Teva Pharmaceuticals. Since Amedra’s acquisition, albendazole’s average wholesale price has increased by 3299%, from $5.92 per typical daily dose in 2010 to $201.27 in 2015.2

Other pharmaceutical companies have also used this strategy for manipulating the market. Valeant Pharmaceuticals, a publicly traded company with 2014 revenues of $8.25 billion, has taken a similar approach with several drugs. Valeant has been forthright about its goal of maximizing profits for shareholders while minimizing research-and-development (R&D) costs; the company currently spends 3% of its total revenue on R&D. Rodelis Therapeutics, a private company with little public transparency, also became notorious for buying the rights to cycloserine — a niche medication used in multidrugresistant tuberculosis — and immediately increasing its price by more than 2000%. In response to a negative public reaction, Rodelis has since sold the drug back to its previous owner.

Many factors contribute to high pharmaceutical prices, including drug shortages, supply disruptions, manufacturer consolidations, and R&D costs. Though some companies that have purchased and increased the price of niche medicines cite R&D as an explanation for high prices, it’s hard to find credible evidence of their involvement in substantial drug-development projects. Turing and Amedra state on their websites that they’re engaged in research, yet neither company lists substantial R&D activities or publications. Frequent license sales, mergers, and acquisitions obscure the financial picture. This complexity and lack of transparency in the pharmaceutical market enable companies to remain vague about the reasons behind increasing prices.

What makes this business model particularly disturbing is that vulnerable patients — such as immigrants, refugees, and people of low socioeconomic status — are often disproportionately affected, since many of the medications are for tropical or opportunistic infections. These patients often have limited or no access to insurance, or have access only through public programs, so already stark health disparities are compounded. In addition to pyrimethamine, albendazole, and cycloserine, other antiinfective medications that are often used in treating vulnerable patients have also had dramatic price increases. These include two drugs that are the first-line agents in their respective classes: praziquantel (Biltricide), used for schistosomiasis and other parasitic infections, and flucytosine (Ancobon), used for cryptococcal meningitis.

We believe that other older medications on the WHO Model List of Essential Medicines may be potential targets for opportunistic companies using this business model. Many of these drugs lack therapeutic alternatives, target conditions that contribute to high morbidity and even mortality, are produced by one or few manufacturers, and exist in a market that offers little incentive for new entrants. The WHO recommends that items on the Model List “be available within the context of functioning health systems at all times in adequate amounts . . . and at a price the individual and the community can afford.”3 Although many of these drugs may be at risk for price increases, antiinfective agents appear to be the most vulnerable.

We identified 17 antiinfective medications on the WHO list that are produced by three or fewer manufacturers and have limited or no therapeutic equivalents (see Table 2). Seven of these treat tuberculosis; others are first-line treatments for leprosy, strongyloidiasis, malaria, or Chagas’ disease. We speculate that these medications may experience dramatic price increases in the future, which would disproportionately affect vulnerable populations in the United States. Ironically, many of these agents are among the least expensive medications available elsewhere; price-control mechanisms not available in the United States, such as governmental ability to negotiate drug prices, are the primary reason for this discrepancy.

Essential Medicines at Risk for Price Increases

Table 2: Essential Medicines at Risk for Price Increases. Click To Enlarge.

As questionable as the actions of companies such as Turing and Valeant may seem, they don’t violate antitrust laws. Even in cases in which anticompetitive behavior is suspected, the Federal Trade Commission (FTC) has been slow to respond or has failed to prove that the company’s behavior was anticompetitive.4 Recently, the FTC began investigating a “restricted drug distribution scheme” by Turing that may limit access to potential generic-drug entrants. A congressional committee is investigating the actions of Valeant, Rodelis, and Retrophin.

Timely market solutions that promote competition are needed when high prices result from monopolies. Currently, there’s little incentive for a generic drug company to enter a niche market, especially given the expensive and lengthy process of gaining approval from the Food and Drug Administration (FDA). One recent development has been the FDA announcement that it will expedite the review of abbreviated new drug applications for generic entrants when only one manufacturer exists. This move may encourage potential generic entrants that would otherwise have little incentive to enter a niche drug market with limited sales. In addition, the FDA could consider eliminating user fees in order to encourage competition in drug markets threatened by limited sales and small profit margins.

One private-sector response has come from compounding pharmacies, which have recently started providing cheaper versions of many drugs that have become prohibitively expensive. Compounded drugs are not subject to FDA approval, and some observers have suggested that the agency consider temporary approval in order to ensure access to essential medicines.5 Although this approach may help individual patients, it’s unlikely to represent a market-wide solution, since compounding pharmacies won’t provide access to all essential medicines, have limited capacity, and are not universally available. In addition, because most insurance plans don’t cover compounded drugs, the out-of-pocket expenses for patients can be high, further exacerbating disparities.

We believe that empowering Medicare to negotiate drug prices and opening U.S. markets to imported drugs would be a welcome regulatory response.5 Quality and safety could be ensured by reliance on reputable regulatory agencies such as the European Medicines Agency and Health Canada. Other globally accepted regulatory mechanisms, such as the WHO guidelines designed to ensure that drugs are produced using acceptable manufacturing and laboratory practices, could also be used.

Until U.S. regulatory leaders and policymakers consider creative proposals for addressing socially detrimental incentives in drug manufacturing and pricing, pharmaceutical companies will continue to grow wealthy at the expense of taxpayers and vulnerable patients. Meanwhile, providers are left prescribing medications that they know are unaffordable, relying on options other than first-line therapies, or assisting patients in acquiring medications through alternative, unregulated sources.

SOURCE INFORMATION

From the Division of Infectious Diseases (J.D.A., W.M.S.) and the Center for Bioethics and Division of General Internal Medicine (J.S.), University of Minnesota, Minneapolis.

1. Alpern JD, Stauffer WM, Kesselheim AS. High-cost generic drugs — implications for patients and policymakers. N Engl J Med 2014; 371: 1859-62.
2. Micromedex 2.0. Greenwood Village, CO: Truven Health Analytics (http://www.micromedexsolutions.com).
3. Essential medicines and health products information portal: a World Health Organization resource. Geneva: World Health Organization, 2016 (http://apps.who.int/medicinedocs/en/d/Js4875e/5.2.html#Js4875e.5.2).
4. FTC sues Ovation Pharmaceuticals for illegally acquiring drug used to treat premature babies with life-threatening heart condition. Press release of the Federal Trade Commission, December 16, 2008 (https://www.ftc.gov/news-events/press-releases/2008/12/ftc-sues-ovation-pharmaceuticals-illegally-acquiring-drug-used).
5. Greene JA, Anderson G, Sharfstein JM. Role of the FDA in affordability of off-patent pharmaceuticals. JAMA 2016; 315: 461-2.

This Perspective article originally appeared in The New England Journal of Medicine as “Essential Medicines in the United States — Why Access Is Diminishing.”

New call for submissions

Now accepting submissions for NEJM Catalyst Innovations in Care Delivery, our new peer-reviewed journal

Connect

A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

More From New Marketplace
Value-Based Pricing Would Lower Drug Costs and Boost Quality

New Marketplace Buzz Survey: Who’s to Blame for Drug Pricing, and How to Fix It

This survey of NEJM Catalyst Insights Council members shows strong opinions about the impact of high prices, who’s to blame, and how to fix the problem.

A Look at the Four Pillars of Primary Care

Pay for Relationship: A Novel Solution to the Primary Care Crisis

What society should and can pay for is care that enables relationships between patients and providers.

Examples of Stages of AI Technology Development and Diffusion

How Artificial Intelligence Is Changing Health Care Delivery

The development of intelligent machines holds great promise for making health care delivery more accurate, efficient, and accessible, but challenges remain for incorporating AI technology into clinical and administrative settings.

Recommendations to Resolve Information Asymmetry at the Strategic Level

Information Asymmetry: The Untapped Value of the Patient

The knowledge and preferences that patients could — and should — share with clinicians would restore balance to point-of-care interactions, leading to better outcomes and enhanced value.

Key Components for Health Care Systems to Address Patient Affordability

The Next Frontier in Reducing Costs of Care: Patient Affordability

To create meaningful point-of-care guidance so that patients can make informed medical and financial decisions, health system leaders and policymakers can develop interventions to address four major components of a proposed patient affordability scale.

Direct-to-Consumer Telemedicine Is the Biggest Coming Threat to Traditional Health Care Organizations

Survey Snapshot: Mega-Mergers and Telemedicine Accelerate Convenient Care Growth

NEJM Catalyst Insights Council members detail how providers are looking to direct-to-consumer telemedicine and partnerships to meet the differing needs of their patient populations.

Opelka01_pullquote - ACS IPU team-based surgical care bundles playbook

Developing a Playbook for IPU-based Surgical Care and New Payment Models

The complexity associated with most surgery lends itself to the integrated practice unit structure, with its focus on the care team and value-based payment.

Convenient Care Has Been Good Overall for the Health Care Industry

New Marketplace Survey: Convenient Care — Opportunity, Threat, or Both?

A survey of the NEJM Catalyst Insights Council shows conflicting views about both the value of convenient care and what respondents’ organizations should do.

Payer-Provider Partnerships Produce Better Quality Outcomes 3 - community health plan - physician partnership

New Research Shows How Payer-Provider Partnerships Can Accelerate Adoption of Evidence-Based Care

Five best practices that are replicable and scalable are facilitating improved clinical and financial outcomes today.

30-Day Mortality Rates at Non-Teaching and Major Teaching Hospitals 2013-2014 - value-based care at academic medical centers

What Value-Based Payment Means for Academic Medical Centers

Academic medical centers must become as dedicated to advancing operational and clinical efficiency as they have been to advancing the science of medicine.

Connect

A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

Topics

Value Based Care

222 Articles

New Marketplace Buzz Survey: Who’s to…

This survey of NEJM Catalyst Insights Council members shows strong opinions about the impact of…

From the Commonwealth to Obamacare: Reflections…

The former Executive Director of the Commonwealth Health Insurance Connector — a model for the…

Medicare and Medicaid

131 Articles

From the Commonwealth to Obamacare: Reflections…

The former Executive Director of the Commonwealth Health Insurance Connector — a model for the…

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now