Greed, then Vigorous Competition for Patent Drug Makers

Earlier this year, the House removed a bipartisan generic drug measure from an act approving the federal budget. The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act is pro-consumer legislation. CREATES gives generic drug makers sufficient paid access to enough samples of the patent drug that they need to complete formal FDA equivalency tests.

Behind a veil of fake concerns for their contracts with drug distributors, the patent holders have been blocking access to the 1,500-2,000 doses of the patent drug that generic drug makers must have to complete the FDA equivalency tests. These tests are required to make generic drugs available to consumers at low costs. The CREATES Act would help reduce out-of-control prescription drug prices and stop some of the anti-competitive abuses that keep drug prices high in the US. The Senate Judiciary Committee saw the wisdom of passing the CREATES Act and passed it out of committee. There is a sliver of hope that it can make it all the way through the Congress.

The patent drug makers are holding onto their patent protection advantage for as long as possible using tactics that the public sees as disreputable. Big Pharma seems unconcerned with the precipitous slide in their reputation in the eyes of the public. In the past year, public trust in the pharmaceutical industry has dropped from 51% to 38%. Being liked may not be important to patented pharmaceutical firms, but profits surely are. On the horizon, however, they can expect a massive wave of competition and they might need the public’s affection.

New investments in Chinese pharmaceuticals are targeting research and development that leads to world class drug portfolios. Venture capital Investment in China’s health care surged from $1 billion in 2013 to $11.7 billion last year. As part of its “Made in China 2025,” China wants domestic producers to compete successfully against world-class Western pharmaceutical firms, unlike earlier Chinese pharmaceuticals firms “which for decades made only cheap copycat medicines.”

In the short run, US and European pharmaceutical firms view China as a rich market for their latest and most sophisticated drugs. A recent and very successful US drug under patent protection is Opdivo (NIVOLUMAB) which is a monoclonal antibody used to treat melanoma, lung cancer, kidney cancer, head and neck cancer, Hodgkin lymphoma, urothelial cancer, colon cancer, and liver cancer. Opdivo reduces the incidence of death by 36% compared with treatment by chemo therapy alone. Opdivo has been approved for entry into the Chinese market where 781,000 patients are newly diagnosed with lung cancer each year.

In the US, Opdivo is priced at  $12,500 for 12 vials of 4mg each. Bristol Meyers Squibb is submitting pricing material to China’s Drug Administration and without providing an exact number, “the price of Opdivo will take the value of the medicine, affordability for the Chinese patient and the high unmet medical needs into consideration.”   Translating the double speak, we can expect Opdivo to be priced in China at a level far below the price Bristol Meyers charges US consumers. This is too often the stance taken by US patent pharmaceutical firms.

In the US, Opdivo and Merck’s Keytruda compete in the market for drugs that control the PD-1 protein, a switch that can enable T cells to attack cancer cells. Merck submitted Keytruda for usage approval in the Chinese market and should expect approval soon, due to efficacy. For example, a Keytruda-chemo treatment combo was shown to cut the risk of death by 51% among previously untreated lung cancer patients. But some Chinese firms are also well advanced in PD-1 drug development and they can be expected to soon compete against Keytruda and Opdivo.

Chinese firms may soon be offering advanced pharmaceutical products in US markets. Perhaps the presence of Chinese pharmaceutical firms will remind the Congress that consumers matter at least as much as drug makers.

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