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NORPLANT FOUNDATION HAS PROVIDED 13,000 WOMEN WITH FREE PRODUCT, WYETH EXEC TELLS REP. WYDEN HEARING; FIRM CREDITS ONE- PRICE POLICY FOR MARKET ACCEPTANCE

Executive Summary

The Norplant Foundation has made the contraceptive implant Norplant available to 13,000 women free of charge since its establishment in 1992, Wyeth-Ayerst VP-Medical Affairs and Medical Director Marc Deitch, MD, told the House Small Business/Regulation Subcommittee Nov. 10 at a hearing on Norplant pricing. Recognizing that "there are women who want [Norplantl but may not be able to afford it, or at least who cannot afford it without difficulty," Deitch said, Wyeth-Ayerst set up the independent, nonprofit foundation in February 1992 "to assist women in need." The company has committed to provide support for the foundation valued at $8.4 mil. through 1994, Deitch reported. The Norplant Foundation's function is to provide Norplant "at no cost to women who meet the eligibility requirements." To qualify for foundation eligibility, a woman must have no insurance coverage for reversible contraception, annual income less than 185% of the poverty level, and sponsorship of a clinician for insertion and removal of Norplant at no cost to the woman. The 13,000 women who have received Norplant through the foundation represent 1.7% of the approximately 780,000 U.S. women who have used Norplant since the product was introduced in the U.S. in 1991. The company estimates that public sector clinics represent about 40% of the U.S. Norplant market, while private clinics represent 60%. Deitch pointed to Wyeth-Ayerst's funding of the Norplant Foundation in response to criticism from subcommittee chairman Rep. Wyden (D-Ore.) about the U.S. pricing of the contraceptive and charges that low- and middle-income women are denied access to the product. Wyden insisted that Norplant pricing should be changed and that all U.S. women "should be able to purchase Norplant at a more reasonable price given the taxpayer's contribution to the product's development." He also contended that "patients at non- profit, publicly supported clinics ought to have this device at a "public sector,' or discount, price," such as that used for oral contraceptives and intrauterine devices. The Nov. 10 hearing was the third in a series focusing on conflict of interest and the protection of public ownership in drug development deals between federally supported research labs and the drug industry. The two previous hearings centered on a 10- year, $300 mil. agreement between Sandoz and the Scripps Institute. Wyden maintained at the hearing that U.S. taxpayers "subsidized basic research [for Norplant] through federally supported labs; paid for the lion's share of the approval process at [FDA]; and continue to underwrite worldwide sales of the device through federally supported family planning clinics." He concluded that "this massive taxpayer investment ought to be reflected in a better deal for the consumer." Norplant was developed by the Population Council, a nonprofit group to which Wyeth-Ayerst licensed its patented progestin, levonorgestrel, in 1969. Council VP Wayne Bardin told the subcommittee that the Council spent about $41.3 mil. on R&D and the introduction of Norplant into developing countries, of which $17.2 mil. came from the U.S. Agency for International Development and $24.1 mil. from private donors. Wyeth-Ayerst agreed to supply the product as needed for development, and provided "the knowledge that it had developed on levonorgestrel, including all preclinical toxicology and pharmacology data," Bardin said. Under the licensing agreement between Wyeth-Ayerst and the Population Council, Wyeth retained the right to market Norplant and Norplant II, a two-capsule implant for which the Council expects to file an NDA in a few years, to the private sector worldwide, as well as the public sector in the U.S. and Canada. The Council kept the right to market the products to the public sector in the rest of the world, which it subsequently sublicensed to Leiras, the Finnish company that now manufactures Norplant. Wyeth licensed Norplant to Leiras for distribution in the private sector in Finland, Sweden and other countries. Wyeth-Ayerst sells Norplant in the U.S. for $365, in a kit containing a sterilized packet of six Norplant capsules, Norplant trocar, scalpel, forceps, syringe and needles, skin closures, gauze sponges, bandages and surgical drapes. The costs of implantation and removal bring the total cost of using Norplant to about $700, which Wyeth-Ayerst's Deitch noted "is considerably less than the price of oral contraceptives" for five years. A subcommittee report released at the Nov. 10 hearing maintains that Leiras sells Norplant to international family planning agencies for $27 per unit. Some agencies, including USAID and the U.N. Family Planning Agency, can buy the product for $23, the report states. It also notes that the license which the Population Council negotiated with Leiras included an international discount price for family planning agencies and programs in the developing world. The report cites analysts' estimates that the production cost of Norplant is about $16. In the U.K., where Norplant was approved this year, distributor Roussel-Uclaf sells the product to the National Health Service for about $289, providing access to Norplant to "British taxpayers who made no direct contributions to the development of this product...at a cost significantly less than American taxpayers whose contributions were critical to the product's development," the report charges. Wyeth-Ayerst's Deitch argued that adjusting for changes in the exchange rate closes the gap between the prices in the U.S. and U.K., and he also noted that the U.K. product does not include a complete implantation kit. Deitch maintained that comparing the price of Norplant in the U.S. to the price in developing countries is "an apples and oranges comparison." Wyeth-Ayerst is not involved in selling Norplant outside the U.S., Deitch pointed out, and the $23 price is neither a private sector price nor "even generally representative of the price the foreign manufacturer charges public agencies in developing countries," which ranges from $23 to $120. Deitch argued that product sold in developing countries is "fundamentally different, "both because it is bulk supply of capsules only, and because the foreign product "includes none of the physician training essential for the widespread acceptance of Norplant." The company rep maintained that Norplant has "achieved an insubstantial market penetration in most of those countries." For the U.S. introduction of Norplant, Wyeth-Ayerst conducted a program which has provided training to 26,000 providers on proper implantation and removal of the product. Women participating in the training program received Norplant free of charge and are guaranteed free removal at any time. Deitch added that the company has set up a "removal-provider network" list of providers who will do removals "on demand, no questions asked." Deitch argued that the success of Norplant in the U.S., where gross revenues have been estimated to be about $270 mil., "is to a certain measure due to the investment Wyeth-Ayerst made and the risks we've taken in making the product available in the U.S. with a genuinely unprecedented level of educational support and training for health care professionals." In addition, the company has produced the data on cost effectiveness which "led to Norplant's coverage by Medicaid, HMOs and private insurers," Deitch pointed out. Since 1991, Deitch claimed, Norplant "has produced net savings to the health care system of nearly $300 mil. in costs that would have been incurred as a result of contraceptive failures by users of other methods, including the medical costs associated with such pregnancies." While there is currently no public sector price available, Deitch acknowledged, the company does provide rebates to Medicaid and the V-A and qualifying Public Health Service- funded clinics. Norplant has been certified as a covered product by the Medicaid programs of all 50 states and the District of Columbia. However, the subcommittee report notes, according to the HHS Inspector General's Office, only 30 state programs reimbursed Norplant in 1992, and "at any one time only 25 to 26 states may be enrolled." The report maintains "many states actually fail to provide budget support for the high-priced item, and therefore [Norplantl is not purchased for qualified Medicaid participants." Total state and federal Medicaid reimbursement for Norplant in 1992 was $12.3 mil., the report states, with $1.65 mil. returned in the form of rebates, for an average Medicaid price of $326. The subcommittee reports contends that this "marginally discounted price effects relatively few U.S. Norplant users." A 1992 Planned Parenthood survey of its affiliates found that among the 21,276 Norplant implants provided between February 1991 and October 1992, 69% of recipients were women covered by Medicaid, who represent only 12% of Planned Parenthood clients nationally, Pamela Maraldo, PhD, president of the Planned Parenthood Federation of America, told the subcommittee. Other public funding sources paid for 18% of implants, out-of-pocket payments accounted for 10%, the Norplant Foundation provided 2%, private insurance covered 1%, and the Wyeth-Ayerst Provider Training Program covered 1%. Out of Planned Parenthood's 1.8 mil. contraceptive patients in 1992, 26,000, or 1.4%, chose Norplant. Prompted by the subcommittee inquiry and the public attention attracted by the complaints of family planning experts about the price that clinics are paying for Norplant, Wyeth-Ayerst announced to the subcommittee that a public sector price for Norplant will become available in December 1995. Wyeth-Ayerst's licensing agreement with the Population Council calls for the company to pay a licensing fee for the first five years after FDA product approval, "during which Wyeth-Ayerst had to create the market for this product," Deitch reported. After five years, Wyeth will also provide a public sector discount. Deitch explained that the one-price policy was necessary during the first five years because of "the unique nature" of Norplant. "To be assured that it would be widely accepted in the public sector," Deitch said, "Wyeth-Ayerst understood thatNorplant also had to be widely accepted in the private sector." If the product "came to be seen as one for public sector clinics and lower-income users, we knew it would not be well accepted broadly." Furthermore, Deitch argued, the availability of Norplant at public clinics at a discounted price would have disrupted the private sector and "tempted" women to leave their personal physicians for one-time purchase at a public clinic. Two-tiered pricing "would also encourage HMOs and insurance companies to deny coverage and steer patients to public clinic alternatives," Deitch suggested. "For the private market to take hold and to sustain itself," Deitch argued, "especially initially, it must not be undermined by a less expensive public sector alternative." In addition, he noted, "a large discounted public sector inevitably requires a higher-priced private sector." Responding to claims by Wyden and family planning experts appearing before the subcommittee that the large discount provided to public sector clinics on OCs have not shut down the private market or sent women flocking to public clinics, Deitch explained that OCs were already established products. He also suggested that the expiration of Norplant exclusivity in December may pose a threat to Wyeth-Ayerst's market. It is "not impossible that we'll see a generic in the next few years," Deitch contended. The Wyeth-Ayerst exec warned that the scrutiny Norplant is undergoing by the subcommittee is likely to discourage the expansion of contraceptive research which the panel is seeking. "If a revolutionary contraceptive product, facing uncertain prospects at its launch, is considered overpriced when it costs less than existing inferior competitive options," Deitch declared, "other companies will not join us." Subcommittee Ranking Republican Rep. Combest (Tex.) expressed similar concern. "Because of the many high profile discussions of these types of agreements it is my fear that companies will become more withdrawn from entering into partnerships with the federal government," he said. "I believe that not enough public or private research is being undertaken in regard to developing contraceptive products," Combest asserted, noting the regulatory burdens and liability concerns that companies have decried. The National Institute of Child Health and Human Development Center for Population Research Contraceptive Development Branch is now working on a new levonorgestrel product, Capronor, which also uses an implant delivery system and is being developed in a form that requires it to be used once a year, Director Florence Haseltine, MD, said. Unlike Norplant, Capronor, which Haseltine said is "a couple of years away from reaching the market," uses a biodegradable delivery capsule which does not need to be removed. The $400,000 spent by the Center on toxicology studies of levonorgestrel in the early stages of Capronor development, which the Population Council used in its Norplant NDA, represents the only support NIH provided to the development of Norplant, Haseltine noted.
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