From: Patricia.Bregman@f24.n3602.z1.fidonet.org (Patricia Bregman)
Newsgroups: misc.handicap
Subject: Drug prices           1/2
Date: 12 Aug 92 21:28:02 GMT
Reply-To: Patricia.Bregman@f24.n3602.z1.fidonet.org
Organization: FidoNet node 1:3602/24 - ADAnet One (tm) Net, Pinson AL
X-Fidonet: Rare Disorder Conference

Index Number: 23890

[This is from the Rare Disorders Conference]

The Canadian government has given a retroactive increase in the
length that foreign drug companies can maintain their patent to 20
years.  THis summary of a report in the National Organization of
Rare Diseases (NORD) recent newsletter gives some indication as to
why this decision may have significant negative impacts on health
care budgets in the future.

DRUG COSTS - ANTITRUST HEARINGS
BACKGROUND

The Spring 1992 Orphan Disease Update, published by the National
Organization of Rare Diseases reports on the activities of the US
Senate's Antitrust, Monopolies and Business Rights Subcommittee
chaired by Sen. Howard Metzenbaum which held hearings into the
Orphan Drug Act to consider amendments to that legislation.  The
hearings produced some very interesting information about drugs
prices and costs.

First passed in 1983 the Orphan Drug Act gave extended patent
protection to ensure that drug companies would continue to produce
drugs that would be used by few people.  However, according to the
hearings a some companies have made enormous profits on a small
number of drugs recouping far more than their development costs.

COST INFORMATION

While the Committee reported that most orphan drugs cost little to
research, had moderate prices and had relatively low sales.
However, their data showed that some drugs made alot of money for
their companies.

Ceredase

For example, they cite the drug Ceredase which treats Gaucher's
disease. The cost of the drug averages $350,000 per year per
person.  The comittee estimated that there were between $80 to $120
million in sales its first year on the market, but the drug cost
only $54 million to develop.

Human Growth Hormone

Similarly, the Human Growth Hormone (HGH) used for pituitary
dwarfism cots $10,000 to $30,000 per year.  Genentech which makes
the HGH Protopin estimated 1991 sales of $180 million. The drug
cost only $45 million to develop.  It was the 34th top selling drug
in the US during 1990.

Erythropoeitin

Another drug that sold extremely well was Erythropoeiten which was
the 36the top selling drug in 1990 and was expected to sell almost
$400 million in 1991.  Much of the cost is covered by Medicare for
kidney dialysis patients.  It cost approximately $150 million to
develop.

Pentamidine

AIDS drugs were also protected by the Orphan Drug Act since
initially few people were affected. Pentamidine cost less than $25
million to develop and had sales in 1990 of $120 million.

ORPHAN DRUG ACT AND AMENDMENTS

Amendments have been proposed to the Act that would use a sales
trigger of $200 million after which other companies could produce
the drugs. If a company could prove development costs were more
than $200 million they could appeal this.

The Orphan Drug Act Amendments of 1992 (S. 2060) was introduced by
S. Metzenbaum (D-OH) and Send. Nancy Kassebaum (R-KS).  Similar
legislation was introduced by Rep. Gerry Studds (D-MA) in the House
(HR 3930)

Abby Myers, NORD President, and the person who lobbied hard for the
Orphan Drug Act,  described the history of the Act following two
government reports in the 1970s about significant drugs of limited
commercial value.

Incentives, including 7-hear exclusive marketing, tax credits for
clinical research, government grants and special handing by the
FDA, were to entice companies to develop drugs.

She said that while most companies acted properly, some companies
used the law to shelter from competition, in particular biotech
companies since these products are not as well protected.

She reported receiving a call the morning that President Bush was
to pocket the Orphan Drug Amendment Act (of 1990) from Larry
Lindsay of the Vice President's Competitiveness Council. He tried
to explain why the veto would be used.

She explained her concerns about the high costs of the drugs,
saying, "If the government doesn't do something about these prices,
only the rich will live and the poor will die."

Lindsay responded "Before the Orphan Drug Act everyone died. Now at
least the rich will live."

WITNESSES

Associations

CF Foundation

They are not members of NORD and said the cost does not matter.
She reports that he said, "The lives saved by orphan drugs are more
valuable than any amount of money spent on those drugs."

Industry

Genetench, Genzyme (biotech companies producing expensive drugs.)
Said that they need to charge high prices to fund other research on
other drugs.  Questioned by Senator Metzenbaum since the purpose of
the Act was to develop drugs of little commercial value.

Consumers

Protrobin:  Parents of a child whose pituitary gland was destroyed
during treatment for a brain tumour.  Father lost home and jobs to
pay for drug. Not told that Genentech had free giveaway program for
needy patients despite sending a registered letter to the company's
president.  Provided free only after they could not pay anything
due to no insurance Protrobin until new insurance took effect.

Human Growth Hormone:  Parents of 2-1/2 year old who is 27 in. tall
(equivalent to 7-month-old child.)  Health insurance premium
through husband's job continued to rise and they are concerned that
he will lose his job because of the cost to the company. "Our whole
life is devoted to paying medical bills,".  Asked the state of Utah
for assistance and were told to get private insurance, get divorced
and go on welfare, "...move to Canada"

Cedareses:  The drug is used for Gaucher's disease which affects
approximately 20,000 Americans and is a disorder affecting the
liver, spleen and bones.  One witness presented information about
the fact that the company producing the drug was given research
subsidies, tax breaks and a seven -year monopoly now charges
$270,000/year.

She said that initially her insurance company would not pay for it
when it was experimental and Genzyme, the manufacturer would not
provide it free.

In April 1991 the drug was approved for marketing after a
streamlined process through the FDA taking 10 months.  She pointed
out that it took longer for that for her insurance company to
preapprove reimbursement.

She also said that her insurance has a $250,000 lifetime cap
leaving her no coverage. Even with insurance her copayment is
$50,000 yearly.

Another witness also talked about the history of the drug, pointing
out that the research was done at NIH for 30 years (at taxpayer's
expense).

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