California to Have Insulin Manufactured and Sold at Lower Price

California Governor Gavin Newsom is following through on promises to attack the high cost of drugs.  The press release states:

Governor Gavin Newsom, as part of his tour of the State of California, announced that CalRx has secured a contract with a manufacturer (CIVICA), to make $30 insulin available to all who need it. The Governor also announced today that California will seek to manufacture its own Naloxone.

Today’s announcement makes good on Governor Newsom’s promise on his first day in office, to bring down the price of prescription drugs for Californians and increase accountability and transparency in health care. Californians can learn more about CalRX on the newly launched website.

WHAT GOVERNOR NEWSOM SAID: “People should not be forced to go into debt to get life saving prescriptions. Through CalRx, Californians will have access to some of the most inexpensive insulin available, helping them save thousands each year. But we’re not stopping there – California will seek to make our own Naloxone as part of our plan to fight the fentanyl crisis.”

WHY THIS MATTERS: Today’s announcement will bring down the price of insulin by about 90%, saving cash-paying patients between $2,000 and $4,000 annually. With CalRx, and unlike private companies, we’re getting at the underlying cost – the price is the price, and CalRx will prevent the egregious cost-shifting that happens in traditional pharmaceutical price games. It’ll cost us $30 to manufacture and distribute, and that’s how much the consumer can buy it for. You don’t need a voucher or coupon to access this price, and it’s available to everybody regardless of insurance plan. This is a crucial step in not just cutting the cost for the consumer, but cutting costs across the board in order to bring cheaper prescription drugs to all Californians.

“To address the affordability crisis in California, we have to address the high cost of prescription drugs,” said Dr. Mark Ghaly, Secretary of the California Health and Human Services Agency. “The CalRx Biosimilar Insulin Initiative will benefit Californians who are today paying too much for a medication that we know is life saving and life altering.”

KEY DETAILS

• A 10mL vial will be made available for no more than $30 (normally $300)
• A box of 5 pre-filled 3mL pens will be made available for no more than $55 (normally more than $500)
• No new prescription will be needed. Californians will be able to ask for the CalRx generic at their local pharmacy or via mail order pharmacies. Pharmacies must agree to order/stock the product.
• CalRx plans to make biosimilar insulins available for: Glargine, Aspart, and Lispro (expected to be interchangeable with Lantus, Humalog, and Novolog respectively)

WHAT COMES NEXT

·       As part of the State’s Master Plan to Tackle the Fentanyl Crisis, California is exploring potential next products to bring to market, like Naloxone, to aid in the State’s effort to combat fentanyl overdoses.

·       CIVICA is working with the California Health and Human Services Agency to identify a California-based manufacturing facility.

The CalRX website states, in part:

CalRx represents a groundbreaking solution for addressing drug affordability. Originally announced in January 2019 in Governor Newsom’s first Executive Order(this is a pdf file) and later signed into law in the California Affordable Drug Manufacturing Act of 2020 (Pan, SB 852, Chapter 207, Statutes of 2020), CalRx empowers the State of California to develop, produce, and distribute generic drugs and sell them at low cost.

The State will target prescription drugs where the pharmaceutical market has failed to lower drug costs, even when a generic or biosimilar medication is available. 

The first drug manufactured will be insulin. Once approved by the FDA, Californians can ask their doctor or pharmacist for a CalRx biosimilar insulin.

The CalRx Biosimilar Insulin Initiative will lay the groundwork for future drug projects.

Bringing CalRx products into the drug market will create more competition, which will help shift the industry from obscure, rebate-based pricing towards low, transparent pricing.

• CalRx will use transparent pricing – and set as low as possible – based on the development, production, and distribution costs.
• CalRx will develop target drugs in collaboration with the State’s public programs.
• CalRx will be available for doctors to prescribe and will be available through a variety of outlets, such as a local pharmacy or retail outlet.
• CalRx is not a coupon program. As mandated by law, CalRx will only use federally mandated rebates or discounts, not other ones.

U.S. FDA Sends Letter to Push USPTO Concerning Drug Patents and Access

The U.S. Federal Food and Drug Administration (FDA) recently sent a letter to the U.S. Patent and Trademark Office concerning the FDA’s concerns regarding pharmaceutical patents and their impact on innovation and access. Some of the concerns include the use of continuations to build patent thickets to raise litigation costs as well as resulting in possible delays of generic entry; evergreening practices; and product-hopping.  Notably, the FDA is generally interested in increasing communication and collaboration to address those issues, including offering expertise, collecting additional information regarding IPRs and other post-grant procedures as well as inquiring whether examiners need more time to review patent applications. While the Trump Administration also had concerns regarding drug pricing, President Biden’s recent Executive Order concerning competition is the impetus for this letter’s push for increased collaboration. 

Novartis, the Good Samaritan

As discussed in a previous post, the Covid-19 pandemic is an excellent opportunity for the pharmaceutical industry to demonstrate its commitment to serving the world through philanthropy.  Novartis recently stated that it will “donate up to 130 million doses” of a generic drug which may be a good treatment for coronavirus.  The Press Release further outlines Novartis’ other efforts to combat Covid-19.  Notably, Gilead Sciences received a significant amount of criticism for its attempt to get a potential treatment for Covid-19 orphan status under U.S. law—which it has since withdrawn.  Professor Lisa Larrimore Ouellette has an excellent analysis of the situation, here.  The Novartis Press Release states, in part:

Basel, March 20, 2020 - Novartis announced today its commitment to donate up to 130 million doses of generic hydroxychloroquine to support the global COVID-19 pandemic response. Hydroxychloroquine and a related drug, chloroquine, are currently under evaluation in clinical trials for the treatment of COVID-19. Novartis is supporting ongoing clinical trial efforts, and will evaluate needs for additional clinical trials.

When supported for use in COVID-19 infected patients by regulatory authorities, Novartis intends to donate up to 130 million 200 mg doses by the end of May, including its current stock of 50 million 200 mg doses. The company is also exploring further scaling of capacity to increase supply and is committed to working with manufacturers around the world to meet global demand.

Novartis Sandoz division currently only holds a registration for hydroxychloroquine in the U.S., and will pursue appropriate regulatory authorizations from the U.S. FDA and the European Medicines Agency. Novartis will work with stakeholders including the World Health Organization to determine the best distribution of the medicine to ensure broad access to patients most in need of this medicine globally. The company aims to ensure that patients currently depending on this medicine are not impacted by the donation.

The commitment announced today builds on the previously announced commitments of a USD 20 million Novartis COVID-19 Response Fund, drug discovery collaboration efforts, support of clinical trials for existing Novartis medicines, and the Sandoz commitment to maintain stable prices on a basket of essential medicines that may help in the treatment of COVID-19.

Novartis intends to work closely with other manufacturers to scale up production of hydroxychloroquine as necessary to support global supply, and encourages industry, governments and international institutions to ensure adequate global supply of medications to treat COVID-19 patients.

U.S. State Wants to Adopt "Netflix" Model for Paying for Pharmaceuticals

The state of Louisiana is attempting to adopt the Netflix model of paying for pharmaceuticals as a way to tackle the high cost of pharmaceuticals and public health issues.  The Netflix model was proposed in a recent article.  Basically, the state pays a set price for an unlimited number of drugs for its citizens.  This has the benefit of providing certainty as to price as well as opens up access to the drugs to more people than previously treated.  The Washington Post discusses Louisiana and the Netflix model, here.  The abstract of the article titled, Alternative State-Level Financing for Hepatitis C Treatment—The “Netflix Model”, authored by Mark R. Trusheim, MS; William M. Cassidy, MD; Peter B. Bach, MD is in the November issue of the Journal of the American Medical Association states:

Drug prices in the United States remain the highest in the world. New payment approaches are needed, a point illustrated by the new treatments for hepatitis C virus (HCV) infection that are highly effective but also very expensive, at least from the view of many payers, physicians, and patients. Five years after the introduction of these drugs, and due in many cases to budgetary constraints of state Medicaid programs and prisons, only 15% of the estimated population of more than 3 million individuals with HCV infection in the United States have been treated. Yet the optimal way to treat HCV is at the population level, that is, by treating every patient possible, with as much speed as is possible. Doing so would reduce the health consequences for those infected, generate the most future savings from improved health, and help decrease future transmission of HCV from person to person.

The Importance of an Accurate Assessment of Patent Valuation and Potential Market

A recent article in the Saint Louis Post Dispatch by Christopher Yasiejeko describes a patent-related dispute between two academic institutions.  Two major research universities, University of Wisconsin (through its technology licensing arm, Wisconsin Alumni Research Foundation (WARF)) and University of Washington, Saint Louis (WUSTL) are engaged in litigation concerning royalty payments over a jointly invented patented invention that was licensed to Abbott Laboratories.  The inventors included a researcher from Wisconsin and one from WUSTL. 

One of the issues with university developed technology is who will cover the patent prosecution costs.  Here, WARF apparently agreed to cover the costs for a higher royalty rate.  The dispute concerns apparent representations made by WARF concerning the value of the patent—allegedly representations were made that the value was not very high by WARF.  WUSTL appears to assert that WARF made representations to others that the patent was actually quite valuable and eventually important to the pharmaceutical, Zemplar, which according to the article “generated $409 million in sales in 2011.”  This appears to be a case where fraud in the inducement in entering the contract is relevant.  However, it seems strange that WUSTL was unable to arrive at their own valuation or understand the potential market for the invention—perhaps they did not have the resources at the time invested in technology transfer.  WARF was likely well financed at that time and certainly experienced.

[Hat Tip to Technology Transfer Central]

Professor Margaret Kyle on Whether Pharmaceutical Innovations are Rewarded

Our friends at Oxfirst are hosting another interesting webinar on March 14, 2018 at 15.00 BST and 16.00 CET.  The webinar is titled, “Are Important Innovations Rewarded?  Evidence from Pharmaceutical Markets.”  The presenter is Professor Margaret Kyle. 

Here is a description of the presentation:

This research focuses on the relationship between therapeutic value and different measures of market rewards (the number of patents, price, market share, and total revenues) of a new treatment. Using an assessment of therapeutic value provided by the French Haute Authorité de Santé (HAS), I find a weak relationship between most measures of rewards and this assessment of therapeutic value, suggesting that the returns to developing a “me-too” product are not very different from developing treatments with greater therapeutic effects. One interpretation is that the HAS score is a poor assessment of therapeutic value, in which case the use of similar health technology assessments by governments and other payers should be re-examined. Alternatively, if the HAS score is informative, the results suggest countries are spending too much on less innovative products, and that a re-balancing of innovation incentives may be worth considering if therapeutic value is highly related to social welfare.

Here is Professor Kyle’s biography:

Prof. Margaret Kyle (MINES ParisTech and CEPR) currently holds the Chair in Intellectual Property and Markets for Technology at MINES ParisTech. Her research concerns innovation, productivity and competition. She has a number of papers examining R&D productivity in the pharmaceutical industry, specifically the role of geographic and academic spillovers; the firm-specific and policy determinants of the diffusion of new products; generic competition; and the use of markets for technology. Recent work examines the effect of trade and IP policies on the level, location and direction of R&D investment and competition. She also works on issues of innovation and access to therapies in developing countries. Her papers have been published in various journals of economics, strategy, and health policy, including the RAND Journal of Economics, Journal of Public Economics, Review of Economics and Statistics, Journal of Public Economics, Journal of Law and Economics, Antitrust Law Journal, Management Science, and Health Affairs. Margaret holds a PhD in economics from the Massachusetts Institute of Technology and is an associate editor of the International Journal of Industrial Organization. She previously held positions at Carnegie Mellon University, Duke University, London Business School, and the Toulouse School of Economics, and is a visiting professor at the Kellogg School of Management, Northwestern University. She has also been a visiting scholar at the Center for the Study of Innovation and Productivity at the Federal Reserve Bank of San Francisco and at the University of Hong Kong.

Registration is available, here.  Space is limited and you must register with a professional email address.