Evan Vucci/AP Photo
President Joe Biden speaks about the omicron COVID-19 variant during a visit to the National Institutes of Health, December 2, 2021, in Bethesda, Maryland.
Any day now, the National Institutes of Health will render a decision that will signal whether the Biden administration is serious about using all available tools to lower the cost of prescription drugs.
The NIH decision involves a prostate cancer drug called enzalutamide, marketed as Xtandi. The price of Xtandi in the U.S. is three to five times higher than in similarly situated, industrialized countries. Patients must take four pills a day to stay on track. Though prostate cancer is common, and Xtandi does not eliminate it from the body, the average U.S. listed wholesale price for a full course is an eye-popping $188,900 per year. More than half of global sales revenue from Xtandi comes from the U.S.
Even with insurance, co-pays range as high as $10,000 or more. Most Xtandi patients are on Medicare, but the high price also puts it on a private insurance tier that often requires prior authorization for use, restricting access.
Xtandi was invented due to grants from the U.S. Army and the NIH; all three of its patents disclose those funders. In the case of publicly developed drugs, under the Bayh-Dole Act of 1980 the government has so-called “march-in rights” to effectively extinguish such patents if the drug is not being distributed on “reasonable terms.” After that, generic companies could market their versions and create competition on price.
Activists, public-health experts, and patients have urged the government to use march-in rights on Xtandi, which is owned by a Japanese pharmaceutical conglomerate named Astellas. (Through an acquisition, Pfizer owns half of the U.S. market for the drug, where it and Astellas share costs and profits.)
The advocates’ argument is that charging U.S. patients significantly more than patients in other high-income countries for the same drug is in fact unreasonable. On January 10, the NIH said it would complete an initial review on how to proceed within a month. A decision is expected imminently.
The fact that President Biden is speaking about prescription drug prices in Virginia on Thursday could signal a favorable result. With the Build Back Better Act, which included prescription drug pricing reform, flailing, march-in rights and a similar measure under Section 1498 of the U.S. Code (often called “eminent domain for patents”) offer an alternative to make progress on lowering prices, without needing congressional approval.
However, the NIH has never determined that pricing is eligible under the reasonable terms clause, and the government has never marched in to take a patent. Advocates say this is as close to an open-and-shut case as you can get. There are two generic versions of the drug ready to go, with approval from the Food and Drug Administration, as soon as they’re allowed to enter the market; one, from a Canadian manufacturer, has been offered for $3 per pill, a little over 2 percent of the average price. The drug has already been super-profitable for the patent holders, earning more than $20 billion in overall revenue.
“Sometimes the price is high but it’s high everywhere,” said James Love of Knowledge Ecology International, a nonprofit that advocates for greater prescription-drug access. “This is a case where it’s a huge difference between the price here and everywhere else. It costs $189,000 a year. If we lose this case, the NIH is going to be saying, that’s OK.”
THIS IS THE SECOND REQUEST to use march-in rights on Xtandi. The NIH and the Defense Department rejected the first in 2016, and prices on Xtandi subsequently accelerated higher. The following year’s National Defense Authorization Act directed DOD to exercise march-in rights on any treatment the Pentagon helped fund to develop, if the list price in the U.S. cost more than the median of seven high-income countries. The Army’s participation in developing Xtandi made it subject to the directive, but the Pentagon has ignored it.
In 2018, a new petition was filed, and while it was ignored during the Trump administration, advocates became hopeful when both President Biden and Vice President Kamala Harris touted march-in rights on the campaign trail. An executive order issued in July on increasing competition in the U.S. economy offered more hope.
The National Institute of Standards and Technology (NIST) was preparing a rule that would have removed price as a consideration under the reasonable terms clause, a long-held wish of the pharmaceutical lobby. But the Biden order directed NIST to not finalize the rule, which was seen as a signal of openness to march-in rights. Moreover, Biden’s choice for Health and Human Services secretary, Xavier Becerra, endorsed the use of march-in rights while serving as California’s attorney general. In a comprehensive plan for addressing high drug prices released in September, Becerra promised to give petitions to use march-in rights “due consideration.”
But after receiving a revised Xtandi petition in November, Becerra assigned it to NIH, the partial funder of Xtandi’s research grant. “This was filed to Becerra because NIH is horrible on these issues,” said Love. “They’ve been fighting provisions on NIH-funded grants for decades.”
Some senior officials at NIH are also patent holders who receive personal royalties of up to $150,000 per year for prescription drugs and other treatments, on top of their salary. Any march-in based on “reasonable” pricing could ultimately revert to their own work and limit future royalty payments.
However, Love believes that ultimately, HHS and the president will decide the fate of the petition. The hope of activists is that using march-in once will discourage other drug companies that used federal grants (which is the overwhelming majority of them) from pricing their products high.
Activists, public-health experts, and patients have urged the government to use march-in rights on Xtandi.
In July, I spoke with Robert Sachs, a prostate cancer patient who took Xtandi for several months and has petitioned the government to march in to lower the price. “If drug companies are going to gouge patients, in this instance cancer patients, they do so at the risk of the government granting additional rights to other manufacturers,” Sachs told me.
Sachs and three other patients are the named petitioners; Universities Allied for Essential Medicines has asked to join the case. In a letter, Robert Mermell of St. Augustine, Florida, told HHS and the NIH that one prescription of Xtandi cost him $625.70 out of pocket last summer. “Please allow American prostate cancer patients the same right to access affordable care as patients around the world,” Mermell wrote. He is the father of Jesse Mermell, who ran for Congress in 2020 in Massachusetts.
Progressive organizations that focus on health have also rallied on the Xtandi issue. Public Citizen, among others, has called for a public hearing so supporters of march-in could present evidence, and Astellas could defend their pricing. “It would strain credulity to suggest that charging triple price to consumers who paid for the invention … is reasonable,” wrote Peter Maybarduk, director of Public Citizen’s Access to Medicines Program. Social Security Works, which is active on pharmaceutical issues, also has an active petition urging the use of march-in rights, with nearly 16,000 signatures. Five professors at Harvard Medical School have also written to endorse march-in rights and generic competition for Xtandi.
On Tuesday, 12 House Democrats, led by Reps. Peter DeFazio (D-OR) and Lloyd Doggett (D-TX), wrote their own letter to HHS asking for march-in rights on Xtandi. “Once again, American taxpayers bankroll the development of life-saving pharmaceuticals, only to face outrageous prices for drugs they helped finance,” Rep. DeFazio said in a statement.
The opponents of this approach, predictably, are the pharmaceutical companies, along with universities and research institutions that benefit from high drug prices developed with federal dollars. Some of these interests, including top drug company lobbyists PhRMA and BIO and several research arms of colleges, have created a lobbying group called the Bayh-Dole Coalition, claiming that the true spirit of the law would not allow march-in rights over high prices. Bayh and Dole themselves claimed in 2002 that their own legislation does not cover unreasonable prices, but at the time, both of them were serving as lobbyists for the pharmaceutical industry.
THE ADVOCATES FEEL they have something else in their corner. Pfizer recently signed a contract with the U.S. government over its COVID treatment Paxlovid. In it, the company agreed to sell the drug to the U.S. at the lowest price of all G7 countries, plus Switzerland. This kind of international reference pricing is what the petitioners proposed as a way to assess reasonableness in the march-in case. It’s one of several “most favored nation” clauses on COVID therapeutics.
Bolstering their argument, Pfizer collects a share of all revenues from Xtandi.
The Trump administration, in a September 2020 executive order, also directed Medicare to not pay more than an international reference price, though that order was never acted upon. Still, the idea that U.S. patients should pay a price for lifesaving treatments in line with patients in other countries, especially when the government paid for the research and development, is common sense. It’s the standard that Knowledge Ecology International offered as a way to determine whether drug companies were unreasonably pricing products developed with federal funding.
“To reject this position, they have to endorse the idea that you can charge three to five times more for this cancer drug,” Love said. He added that a rejection would be fatal to efforts to use this congressional statute for the benefit of patients.
If the government used march-in rights for Xtandi, the rights holders could appeal. However, a second provision of march-in allows for royalty-free rights for government programs like Medicare, Medicaid, and the VA. The majority of Xtandi patients are on Medicare. So there would be an immediate benefit for those patients while the appeal is litigated to get the same treatment for all Xtandi users.
Pfizer referred all questions from the Prospect to Astellas, which did not respond to a request for comment. In Japan, where Astellas has its corporate headquarters, Xtandi costs less than one-sixth the price of the medication in the United States.
