Biogen Accused of Price Gouging for New MS Drug

By Pat Anson, PNN Editor

FDA approval of a new multiple sclerosis (MS) drug has resulted in a big payoff for one company and sharp criticism from a patient advocacy group.

Last month the FDA approved Vumerity (diroximel fumarate) for the treatment of relapsing-remitting and secondary-progressive MS, as well as management of clinically isolated syndrome (CIS), neurologic symptoms that can be an early sign of MS — a chronic and progressive disease that attacks the body’s central nervous system.

Vumerity was jointly developed by Biogen and Alkermes. Under the terms of their operating agreement, FDA approval triggered a clause in which Biogen paid Alkermes $150 million for the worldwide commercial rights to Vulmerity, along with a share of future royalties.

Biogen said it would account for the Alkermes payment by amortizing its cost “over the expected useful life of the product.” It then announced the price of Vumerity – at a wholesale acquisition cost (WAC) in the U.S. of $88,000 per year. Biogen claimed that was “the lowest annual WAC price for oral MS disease-modifying therapies.”

MS drugs are notoriously expensive, but the $88,000 price tag for Vumerity brought a rare rebuke from the National Multiple Sclerosis Society, which released a statement that basically accused Biogen of price gouging.

“Vumerity is an efficacious and tolerable treatment option for people with relapsing MS, but being priced only $500 lower than the least expensive oral disease modifying treatment, does not show the commitment to affordable access that we had hoped,” said Bari Talente, executive vice president of advocacy for the National MS Society.

“We know that high wholesale acquisition cost (WAC) prices for MS disease modifying treatments put a heavy burden on people with MS. Too many are forced to take on high out-of-pocket costs, navigate through complex systems, and face varied and unpredictable decisions by public and private payers and pharmacy benefit managers.”

The statement points out Biogen has steadily escalated the price of another MS product, Tecfidera, by $40,000 since its launch in 2013. A year’s worth of treatment with Tecfidera now costs nearly $95,000.

“We urge Biogen to publicly commit to keeping price increases lower than the rate of inflation,” Talente said.

A recent study found that prices of several MS drugs have soared over the past decade, to an average of nearly $76,000 per patient annually.

“The pharmaceutical and biotechnology industries claim that the high prices reflect the expense of research and development and need to incentivize continued innovation. These claims are never backed up with transparent data,” said Daniel Hartung, PharmD, and Dennis Bourdette, MD, in an editorial in JAMA Neurology. “These drugs have long since recouped any cost of drug development, yet their prices have continued to rise.

“What is driving this increase is uncertain. However, the simplest explanation is that pharmaceutical and biotechnology companies increase prices because they can, they do it to increase their profit margins, and there are few limits on what they can charge.”

Biogen Involved in Illegal Co-Pay Charity

Biogen is one of three companies accused by federal prosecutors of paying a Florida-based charity to operate an illegal co-pay assistance program that helped Medicare patients buy high-priced MS drugs. The payments are considered kickbacks under a federal law that prohibits companies from subsidizing Medicare patients.

In a settlement announced Wednesday, The Assistance Fund (TAF) agreed to pay $4 million to resolve claims that it acted as a conduit for kickbacks from Biogen, Novartis and Teva Pharmaceuticals.

“Pharmaceutical companies and foundations cannot undermine the Medicare program through the use of kickbacks disguised as routine charitable donations. TAF operated as a vehicle for specific pharmaceutical companies to pay kickbacks at the ultimate expense of the American taxpayers who support the Medicare program,” said U.S. Attorney Andrew Lelling.

The DOJ has been cracking down on co-pay charities and the companies that fund them. Over $840 million in fines and penalties have been collected from eight pharmaceutical companies (United Therapeutics, Pfizer, Actelion, Jazz, Lundbeck, Alexion, Astellas and Amgen) to resolve allegations that they used third-party foundations to funnel kickbacks to patients.

Soaring Cost of Multiple Sclerosis Drugs 'Alarming'

By Pat Anson, Editor

The cost of drugs used to treat multiple sclerosis (MS) in the United States has soared as much as 700 percent in the past two decades, according to researchers who call the price escalation “alarming” and possibly coordinated by drug companies.

There are no multiple sclerosis drugs now available in the U.S. with a list price below $50,000 a year, which is two to three times more than the price of the same drugs in Canada, Australia or the United Kingdom. Prices of MS drugs rose at five to seven times the rate of drug inflation in the U.S.

“The coordinated price escalations for these therapies has lead to increasing access and affordability problems for patients with MS. Pricing decisions by pharmaceutical companies need to better reflect the financial realities and constraints of our healthcare system as opposed to a strategy of whatever our dysfunctional market will bear,” said Daniel Hartung, an associate professor in the Oregon State University/Oregon Health & Science University College of Pharmacy, in an email to Pain News Network.

Hartung is the lead author of a scathing new study appearing in the journal Neurology, which blames the soaring cost of MS drugs on the greed of drug companies and the inability of a national healthcare system to negotiate drug prices.

"The simplest explanation is that pharmaceutical companies raise prices of new and old MS disease modifying therapies in the United States to increase profits, and our healthcare system puts no limits on these increases," the researchers wrote in their report. "The U.S. Medicare program, the largest single-payer healthcare system in the U.S., is legally prohibited from negotiating drug prices directly with the pharmaceutical industry.

“Government-issued patent monopolies, third-party payers, lack of reimbursement transparency, and imperfect clinical information all contribute to a seemingly dysfunctional marketplace where expanded choice has led to higher, rather than lower, prices. Some argue that recent trends in industry pricing suggest collusive behavior between manufacturers, although this is challenging to prove with price data alone.”

Pricing Defies "Common Sense"

The researchers cite several examples of older MS drugs rising in price decades after they were approved by the Food and Drug Administration – and long after pharmaceutical companies recovered the cost of developing the medications.

The annual cost of Copaxone, for example, was $8,292 when it was introduced in 1996 by Teva Pharmaceuticals. Today it is $59,158 – over seven times higher.

Avonex, another early MS treatment, had an annual cost of $8,723 when it was introduced by Biogen in 1996. Today it is $62,394 – also seven times higher.

"Economics 101 would suggest that competition should lower prices. In the pharmaceutical industry we often don't see that. Many professionals now believe that it's time to push back, to say enough is enough," said Hartung.

“What has happened defies common sense, logic, and the expected rules of the marketplace,” wrote T. Jock Murray, MD, in an editorial about Hartung’s study also published in Neurology. “These counter-intuitive increases suggest the possibility of collusion among the manufacturers, but the authors say they do not have evidence.

“What justification does the pharmaceutical industry in the United States offer for the remarkable increase in the costs of these drugs? Well, they do not have to explain, as they are allowed to set prices in a black box, based on the business ethic of maximizing profit, supported by a bizarre law that prevents Medicare from negotiating prices directly with the pharmaceutical industry.”

“We cannot comment on the practices or products of other companies,” said Kate Niazi-Sai, a spokesperson for Biogen in an email to Pain News Network.

“What we can say is that since its introduction as one of the first MS therapies two decades ago, Avonex has helped many thousands of people with MS, who before then had no treatment options.  Since then revenue from Avonex has enabled the development of improved treatments so that today, patients have a breadth of options they need to deal with MS.”

Niazi-Sai said Biogen offers discount programs and free medicines to needy patients worth hundreds of millions of dollars each year. But that’s a fraction of what the company makes from MS drugs.

According to first quarter financial results released by Biogen, sales of Avonex and other MS therapies were $2.1 billion, compared to $1.7 billion in the same quarter last year.

Niazi-Sai said the money is put to good use.

“Revenue from our therapies for MS and hemophilia are now fueling the search for a way to reverse or possibly cure MS, as well as new treatments for Alzheimer’s disease, Lou Gehrig’s disease and other devastating medical conditions.  We are eager to be part of any thoughtful discussion about funding medical advances. Anyone who believes there is a better way should propose it," she wrote.

Teva Pharmaceuticals declined to comment on its pricing policies, but said in a statement to Pain News Network that “the wholesale acquisition cost for Copaxone is competitive to other branded molecules in this category. It is reflective of investments made to research, develop and commercialize a safe and effective relapsing MS product.”

MS is a chronic and incurable disease which attacks the body’s central nervous system, causing numbness in the limbs, difficulty walking, paralysis, loss of vision, fatigue and pain.

Escalating costs for MS therapies and other specialty drugs are a growing concern in the healthcare industry. A recent study said the cost of treating rheumatoid arthritis with new biologic drugs has become a “significant financial burden” for many patients. Patients enrolled in Medicare Part D plans paid an average out-of-pocket cost of $835 a month for a biologic drug in 2013. Costs varied widely depending on the drug – from $269 to $2,993 a month.

"Pricing in the pharmaceutical industry increasingly is a case of whatever the market will bear," Hartung said. "We used to think that any drug with $1 billion in sales was a blockbuster, but last year a drug for hepatitis C had 10 times that, or $10 billion in sales. This does not necessarily mean that drug research and innovation will be 10 times better.”