Saturday, October 17, 2015

How Three Asian Nations are Beating Outrageous Price-Gouging by American Pharmas

by Nomad

Some have started to question the exorbitant prices pharmaceutical companies charge the public. In Asia, we may be seeing a push back against what some see as price-gouging of the most desperate and vulnerable segment of the world's population: The sick and the poor.

In the recent past, Nomadic Politics examined, in two posts, alleged price-gouging for one company's drug for Hepatitis C. There are further developments to that story. First, let's re-cap.

The Breakthrough

The story begins with some very good news. It was reported last year that one orally-administered drug,  Sovaldi (sofosbuvir), has proved to be a breakthrough for the treatment of a silent killer virus, hepatitis C.  
From the clinical trial reports, researchers claimed that Sovaldi was not a life-long treatment but a genuine cure for the deadly disease itself. The therapy required a 12-week therapy but at the end, most of the patients would be free of the disease.  

Then came the bad news: Gilead Sciences, the patent-owner and developer of the drug, was definitely not a charity organization. It was a profit-making company which, according to Wikipedia, earned US $12.059 billion in 2014. 
It was immediately clear to everybody that the Hep C cure was not going to be given away free. Few, however, were expecting the price the company settled on. Sovaldi costs $1,000 a day, adding up to staggering $84,000 for a 12-week supply. 
The problem is obvious: at that price, a cure is out of reach of most patients in the world and even in rich countries.

Hepatitis CIt's not a trivial matter either.
This is a disease that infects an estimated 150–200 million people around the world. Compare that to HIV infection rates which, according to the World Health Organization affected in 2013 approximately 35 million people worldwide.

In the US, the majority of the estimated 3.2 million people with chronic hepatitis C virus (HCV) are baby boomer adults. The disease is found worldwide with some countries having chronic infection rates as high as 5% and above. 

Seventy-three percent of hepatitis C deaths were reported among those 45 to 64 years old. For every 100 people who contract the virus, 75 will develop chronic infection. About 5 to 20 will develop cirrhosis over the next 20 to 30 years. Between 1 and 5 will die of cirrhosis and liver cancer. Meaning, more than 350 000 people die every year from hepatitis C-related liver diseases.

As one source noted, the pharmaceutical giant stood to reap a colossal reward for its investment in hep C therapeutics. That's how a free market works in a capitalist system. It had what people were literally dying for, it had a monopoly on that commodity and therefore could charge what it wanted. No Ayn Rand free market libertarian could argue with that logic. 

However, the question a lot of people began asking is when are "colossal rewards" simply another way of saying price-gouging and a form of extortion to the sick and dying.

While drug manufacturing can be expensive, a Liverpool University showed that this drug could actually be produced for as little as $101 for a three-month treatment course. Ramping up the scale could perhaps bring down the cost even further. 

The sting of negative publicity forced Gilead to make special arrangements with generics makers to provide discounted copies of Sovaldi in 91 developing countries. However, the company exempted 5 nations from that offer, China, Argentina, Brazil, Russia and Ukraine.  

Hep C Worldwide

The Indian Rejection

Then in  February of this year, things took an interesting turn. 
A court in India declared that the Patent Office Controller of India rejected the patent application by Gilead on the grounds that the drug was not sufficiently unique. 
While drug advocacy groups applauded, the pharma industry was stunned by the implications of the decision and questioned its validity. After all, the drug was unique in that it was a cure. How they asked could a breakthrough drug not be unique.

However, according to Intellectual Property Watch
A look at the decision shows that a provision in India's law continues to stop patent applications if they fail to show sufficient novelty and inventive step -- and are subject to opposition.
Even those there have been other court challenges to drug patient, pharmas had every reason to be incensed. They had invested much time and cost in research and development and testing, clinical trials, and other associated costs

In effect, the Indian courts effectively took the patent controls out of the hands of pharma companies and under the control of generic manufacturers, without licensing from the US patent holder. 

Then Came China

Poor Hep C infection rates per countryThen, in June, China seemed to join with India in rejecting exclusive ownership of the drug patent. The details of the Chinese rejection were not exactly clear. 
Reuters explained:
The application China has rejected was for a so-called prodrug, the inactive form of the drug which then converts into the chemically active compound once in the body, the New York-based Initiative for Medicines, Access & Knowledge (I-MAK) said.
Gilead, however, holds the China patent to the base compound in the drug, also known by its generic name sofosbuvir and China's rejection of the prodrug patent does not open the way for copycat drugs to be made in the world's No. 2 drug market.
Needless to say, Gilead and other firms must be looking at the decisions with apprehension and dread. American pharmas must surely have felt cheated by the direction things were turning.

Pakistan Joins the Dissent

But more storms were on the horizon, it seems. This week, Pakistan joined in with the East Asian push-back of pharma greed.

As reported by one source, the Drug Registration Authority Pakistan (DRAP) in Pakistan has granted registration to 14 pharmaceutical companies to locally manufacture Sovaldi. DRAP had earlier allowed only M/s Ferozsons Laboratories Limited to ‘import’ the drug on the basis of the personal use at a discounted rate of US $20 per pill (compared to at US$1000 per pill in America.) 

This price was apparently part of the Gilead's concession discount rate. Yet, when you consider that the average monthly salary in Pakistan is only $255 then $20 per pill isn't quite as altruistic as it may sound.
There are other problems too. How can there be any justification for the imbalance between the two rates? In any case, both Pakistani and American patients were being asked to pay more than they could possibly afford.

According to some reports, Pakistan has the second highest prevalence rates for Hep C in the world. It's hard to get firm figures in the region. 
Nevertheless, health officials there conclude that over 20 million Pakistanis were infected with Hepatitis-C virus (HCV).  According to WHO statistics, 7% of the population in Pakistan is hep-c infected. While in some areas in Pakistan the prevalence of hepatitis C is as high as 40% according to Journal of Pakistan Medical Sciences (JPMS), which warns Hepatitis C in Pakistan as Silent Storm

Clearly importing this breakthrough drug to Pakistan was going to save lives, at least for those who could afford it. However, pharma companies in Pakistan called the DRAP decision to allow one company alone to import the drug "ridiculous." 

Last week, DRAP authorized the registration of 14 pharmaceutical companies for the manufacture of the Sovaldi in Pakistan. This say doctors, would go a long way in helping to eradicate hepatitis-C in the near future. The decision will also create "a healthy competition to bring those poor patients in the net who were unable to afford the drug."
*   *   * 
In less than a year,  India,  China  Pakistan  (with a combined population of something around 2.80 billion) have rejected what many saw as the greediness of American pharmas. These companies have only themselves to blame by pushing the issue beyond the reasonable and ethical limits.  
"Your money or your life" is a corporate strategy that is bound to cause some degree of fallout.

The question is now whether Americans will demand the same stand from his regulatory officials. After all Americans, unlike Pakistanis or Indians or Chinese, will still be paying $1000 per pill.

Sanders angry

Greed Comes Home

The subject of pharma price gouging has lately become a political issue.
Democratic candidates Hillary Clinton and Bernie Sanders both expressed outrage when one pharma, Turing Pharmaceuticals, raised the cost for Daraprim an HIV drug from $13.50 to $750.. per tablet. 

In fact, Turning obtained the manufacturing license for the antiparasitic compound in August. Licensing for this drug has changed hands several times since companies are legally allowed to hold right for the drug only for a certain period of time. This would encourage companies to raise prices to maximize profits. 
Still it's hard to justify an increase of 5,455 percent.
As one article noted:
A full course of the treatment now runs about $63,000, according to infectious disease experts, and those who require a steady maintenance dose — such as immune-deficient HIV patients — could end up paying $634,000 a year.
Sanders called the overnight price increase “blatant profiteering.”

The subject of pharma overreach has long riled Bernie Sanders and he delivered an impassioned speech on the floor of the Senate in 2007. He noted that pharmas have spent millions attempting to sway governmental regulations.
“Since 1998, the pharmaceutical industry has spent over $900 million on lobbying activities; $900 million since 1998. That is more than any other industry in the United States of America.”
Turing CEO Martin Shkreli The 32 years old founder and CEO of Turing, Martin Shkreli initially seemed nonplussed by the criticisms that followed. He didn't seem at all bothered to find himself to be one of the most hated men in America. 

Shkreli is an American hedge fund manager and entrepreneur, For him, it was simply business as usual and he seemed quite willing to ride out the storm with a smile on his face.

Eventually, he appeared to cave in and promised to reduce the prices. In fact, observers say that Shrekli has reneged on that promise. To make matters worse, the CEO cynically attempted instead to donate to Sanders' campaign. The campaign said no thanks.
The Boston Globe quoted Michael Briggs, a Sanders campaign spokesman:
“We are not keeping the money from this poster boy for drug company greed."
And more insultingly for a businessman whose net worth is estimated at over  $100 million  this campaign contribution was such a puny amount... $2,700.  
Why, that's only three and a half pills of Turing's HIV drug.