Arnold Ventures recently funded research conducted by Harvard Medical School that of the 27 active ingredients in the 25 brand-name drugs involved with the highest Medicare spend in 2017, 11 or 41% of the ingredients were previously approved by the U.S. FDA in other formulations or products. The median time between first FDA approval and then end of 2017 was over 19 years. This research team also uncovered that 84% of Medicare Part D spending derived from brand-name drugs despite the fact they such brand-name drugs only represented 14% of overall prescriptions. Drug prices continue to go up and drug producers are repurposing older drugs to monetize as much as possible.
As was recently covered by Zachary Brennan with Regulatory Focus, the Harvard research team has uncovered a disturbing trend: that drug companies’ innovation could be waning and that they are essentially monetizing every dollar out of legacy product and compound portfolios while continuing to aggressively raise key drug prices. Brennan summarized the recent research that derived from the work of Harvard’s Program on Regulation, Therapeutics and Law including Emily Jung, Ameet Sarpatwari and Aaron Kesselheim recently writing in Journal of General Internal Medicine.
The authors noted, “Repurposing already-approved drugs in new formulations, or with different dosage forms and delivery devices, can be a less costly form of drug innovation, yet Medicare spending on such older products remains high, for example, because of intellectual property protections on those delivery devices.”
What about the argument: Costly older drugs are vital to help fund newer, more innovative treatments, like gene or cell therapies?
Well, one could surely make the point, and undoubtedly there are probably some industry sponsors that do. However, Kesselheim told Regulatory Focus and Brennan that “Gene therapies get a lot of press, and rightfully so, although their applicability has been restricted to small populations. Also this is Medicare, and gene therapies mostly apply to younger patients. But eve for cell therapies like CAR T, even though there are large price tags for them, they thus far apply to relatively few people, they haven’t accounted for much spending overall. The drugs on our list is where a substantial amount of Medicare spending goes—which is one of the largest public payors covering prescription drugs—and we were surprised at how many of them have active ingredients discovered 2-3 decades ago or even longer.”
Potential actions to lower prices
The research team is obviously on to a potential pattern of sponsors heavily leveraging decades-old approved drugs for monetization purposes. This makes sense from the standpoint of shareholder value. Commercial sponsors must continuously drive revenue growth and profits while tightening up costs ongoing—innovation or not. Hence, a fundamental conflict exists, at times, between shareholders (and management bonuses) and true innovation that will benefit the great mass of patients. Follow the link to Mr. Brennan’s piece to learn more as well as some of the authors’ policy prescriptions.