As EpiPen® was to Fall 2016 so Deflazacort is to Winter 2017? The frustration continues. The result is a growing understanding among congressional leaders and the public that importation has big advantages for the American public. Senators Chuck Grassley (R-IA), John McCain (R-AZ), and Amy Klobuchar (D-MN), along with Bernie Sanders (I-VT) are by now, the most well-known voices advocating for personal prescription importation. The first three have recently sent a letter to newly confirmed HHS Secretary Tom Price asking him to open personal prescription importation under four conditions:
- If a drug is off patent and is no longer marketed in the US,
- If there are unexplained significant increases in prices,
- If no competitor drug is available and a competitor would lower prices, or
- If a drug is produced in another country by a brand name manufacturer or by a generic manufacturer who also produces pharmaceutical products for the US.
This is a reaction to the Deflazacort controversy that emerged earlier this month. Marathon announced FDA approval of Deflazacort to treat symptoms of Duchenne Muscular Dystrophy, an illness that affects mainly boys and young men. Deflazacort can provide some relief of the symptoms. It was not approved in the US until this year but had been imported by families with children with Duchenne muscular dystrophy for many years. Marathon’s announcement was supposed to be a relief for them. They would no longer have to order their medications online and deal with potential shipping delays or customs hang ups. Yet the announcement was met with disappointment when the list price was announced…$89,000/year. The company says rebates and discounts will bring that price down to $50,000-$54,000 per year.
Marathon did not develop this drug, neither have they improved it nor found a new use for it. Usually these are the main reasons drug companies cite for the need for high drug prices. Yet it just helps to prove that drug pricing makes absolutely no sense. Take, for example, the Hepatitis C drug Harvoni. Harvoni is a drug that doesn’t just manage Hepatitis C, it pretty much cures it in 95% of people. That’s huge. The cost of ongoing care for Hepatitis C is big, tens of thousands of dollars per year. Add in that Hepatitis C can severely damage the Liver and cause Liver cancer, the costs increase even more. With Harvoni, the virus can be stopped dead and the ongoing cost of care is much reduced. The catch is the list price of Harvoni is $98,000. Rebates bring the cost down to around $50,000 for a course of treatment. The difference between Harvoni and Deflazacort is Harvoni only needs to be paid for once, Deflazacort is an ongoing cost.
Harvoni is a blockbuster and novel new drug. It took years to research and develop and has the ability to ultimately eliminate a common but very serious illness. Deflazacort has been around for decades. It is off patent and has been used for Duchenne muscular dystrophy for a long time. Unlike Harvoni, it is not a cure. It is a maintenance drug that slows progression of the illness. Further it has to be used along with other drugs to be effective. To price it at the same level as a brand new and novel new drug does not make sense. Granted the market for Deflazacort is not close to the size of the market for Harvoni. Duchenne muscular dystrophy is comparatively rare. Marathon doesn’t have as big a market to make a profit in. But the circumstances still do not justify the high price. There is little chance that a competitor will come into the market.
Marathon was adamant that people wouldn’t see these massive prices. They would pay the co-pays and insurance would cover the rest. The insurance conundrum is another big part of this problem. Insurance companies are big and wealthy but they’re not unlimited. They have to earn enough money to pay claims and yet they also need to make money for their shareholders. Pharmaceutical companies have relied on health insurers (including the government) to pick up most of the tab for prescription drugs for decades. They have acted like a mask for the pharmaceutical industry, shielding the wider public against the actual costs of their health care. Yet insurers are starting to do what was, in fact, inevitable. They are changing their plans to increase cost sharing and also being much more selective in compiling their drug formularies.
Marathon announced a pause in the rollout of Deflazacort the day after its approval was announced. The pricing uproar may have them rethinking their position. However, in reality, there is very little to push them to change their strategy. The orphan drug status given to Deflazacort means they have a monopoly over the sale of the drug for seven years, and given the potential size of the market, it’s unlikely a competitor will arise.