Orphan Drug Makers Would Escape Price Reporting Requirements Under House Bill
Executive Summary
Legislation pending in US House Energy and Commerce Committee would exempt drugs treating diseases with less than 200,000 patients from needing to justify price increases.
Manufacturers of some of the most expensive drugs on the market would not be required to justify price increases under legislation to be considered by the House Energy and Commerce Committee.
Rare disease treatments are specifically exempted from the reports in the bill, which may place advocates in a difficult position.
The More Efficient Tools To Realize Information for Consumers (METRIC) Act would require drug manufacturers to report an increase in a drug's wholesale acquisition cost (WAC) of 10% or more in one year, or 25% or more within three consecutive years, to the Health and Human Services Department, as well as explain why the increase is necessary.
However, a qualifying drug is one "administered or otherwise dispensed to treat a disease or condition affecting more than 200,000 persons" in the US, which would exclude all orphan drugs. Vaccines also are exempt, as well as drugs with a WAC of less than $100 after inflation adjustments for a month's supply or typical course of treatment.
Exempting rare disease treatments from the reporting may raise eyebrows among stakeholders because some of the noteworthy complaints about high drug prices have related to rare disease drugs.
Several new drugs and biologics for rare diseases have been approved recently carrying six- and seven-figure price tags, raising concerns about costs. Novartis AG's Zolgensma (onasemnogene abeparvovec-xioi), a gene therapy for spinal muscular atrophy, was priced at about $2.12m, or $425,000 annually for five years. (Also see "It's Official: Novartis SMA Gene Therapy Zolgensma Is World's Most Expensive Drug" - Scrip, 24 May, 2019.)
Spark Therapeutics Inc.'s Luxturna (vortigene neparvovec-rzyl), a gene therapy for rare inherited blindness was priced at $850,000 for most patients: $425,000 per eye. (Also see "Installment Payments For Gene Therapy; From Luxturna To Hemophilia" - Pink Sheet, 4 Jan, 2018.)
On a much lower scale, patients complained when the price skyrocketed following US Food and Drug Administration approval of Marathon Pharmaceuticals LLC's Emflaza (deflazacort) for Duchenne muscular dystrophy. Marathon announced the treatment cost $89,000 per year, even though deflazacort previously had been used off-label for the orphan condition and patients reportedly had been importing it for $1,000 annually. (Also see "Patient-Centered Promotion? Marathon's Non-Launch Of Emflaza Illustrates Challenge Of New Era" - Pink Sheet, 22 Feb, 2017.)
After the controversy affected launch plans, Marathon sold the product to PTC Therapeutics Inc. (Also see "PTC To Appeal Translarna's Complete Response Letter From US FDA " - Pink Sheet, 25 Oct, 2017.)
The bill, which cleared the Energy and Commerce Subcommittee on Health by voice vote 11 July, is one of 26 covering a variety of topics that the full committee is scheduled to mark-up on 17 July. A positive vote would send the bill to the House floor for consideration.
The METRIC Act is one of several drug pricing bills under consideration in Congress, some with more potential impact than others. (See sidebar above.)
Rare Disease Groups In Awkward Position
Patient organizations often must balance their push for innovation and new treatments, often when there are none, with concerns about the cost of them once developed. The bill may place them in an awkward position no matter which side they take.
Nancy Goodman, founder and executive director of Kids v Cancer, a pediatric cancer advocacy organization, told the Pink Sheet that she supported disclosure and transparency and couldn't understand why orphan diseases would be exempt.
"Sometimes rare disease developers need to raise prices to achieve a reasonable risk-adjusted investment and that's OK," she said.
Debra Miller, co-founder of CureDuchenne, a DMD patient advocacy group, said that the focus should remain on encouraging investment in rare diseases.
“It will be an absolute miracle if we have a viable treatment for this disease given the difficulty of creating a protein in the cells where there is none," Miller said. "These are complex problems to solve and take many years and incredible financial investment. With a small patient population, we need to encourage biotech companies to invest in these challenging diseases.”
Indeed, there may be a concern that forcing price increase disclosures could exert the wrong kind of pressure on rare disease companies. Instead of incentivizing them to keep costs low, they could decide to leave or not consider an investment in the rare disease sector.
Part Of Broader (So Far Unsuccessful) Shame Strategy
Among the items to be reported annually is not only research spending, but also total revenue, net profit and total marketing and advertising costs. All reports also would be released on the HHS website when respective prices increases go into effect, according to the bill.
However, efforts to shame drug companies into lowering prices so far have not worked. HHS's attempt at forcing drug companies to include prices in direct-to-consumer TV advertising was rejected by a federal judge. (Also see "After DTC Rule Tossed Out In Court, Attention Turns (Again) To Congress" - Pink Sheet, 9 Jul, 2019.)
The Congressional Budget Office also estimated that increasing pricing transparency likely would not save much money, in part because the reporting requirements would not force changes to pricing practices. (Also see "Drug Price Transparency Bills May Be Empty Calories" - Pink Sheet, 13 Jul, 2019.)
Shaming tactics in other areas also have so far not been successful. Publicly listing companies that may be denying generic companies access to samples for testing has not alleviated the problem. (Also see "REMS Abuse Website: Has It Changed The Behavior Of Innovators? " - Pink Sheet, 11 Feb, 2019.)
Some committee members praised the bill for helping the public understand why prices move.
"While price increases can happen for a lot of reasons, from failed clinical trials to research and development to research that doesn't pan out, with the federal government being such a major purchaser of drugs, having information on cost drivers is important for context," said Republican Rep. Greg Walden of Oregon, Energy and Commerce Committee ranking member.
Reports Would Require Detailed Information On Spending
For the makers of qualifying drugs, the bill would require them to report the percentage WAC price increase expected and effective date of the increase, as well as "an explanation for, and description of, each price increase for such drug that will occur."
Manufacturers also must include a description of the history of the drug's increases since approval or acquisition and total spending on materials, manufacturing, patent acquisition, and licensing. In addition, they must list the percentage of total expenditures on research and development that was derived from federal funds, total expenditures on basic, preclinical and clinical research, new drug development, pursuance of new indications or dosage changes, and postmarket requirements.
Reports for 2019 increases already in place would be due 90 days after enactment and then no later than 30 days before a planned increase occurs. Those not complying would face a $75,000 fine for each day a violation continues.