Do you want a new for­mu­la for cal­cu­lat­ing “ex­cess” prices paid for brand­ed drug prices? A group of health­care re­searchers found a ripe prospect: Tack­ling the pre­mi­um built in­to US drug costs.

Big Phar­ma R&D is a game of block­busters. Find­ing one, get­ting one ap­proved and then build­ing the mar­ket is a multi­bil­lion-dol­lar quest. And there’s been con­sid­er­able fo­cus on the US pre­mi­um, the ex­tra that big bio­phar­ma col­lects in this coun­try while sell­ing the same drugs in tight­ly con­trolled sin­gle-pay­er mar­kets in Eu­rope for much, much less.

That US pre­mi­um, the com­pa­nies of­ten in­sist, is es­sen­tial to ac­com­mo­date huge R&D bud­gets re­quired to cov­er the bil­lions in av­er­age costs for new drug de­vel­op­ment, what Pres­i­dent Trump and oth­ers re­fer to as a huge sub­sidy that this coun­try pays to help oth­er coun­tries who won’t share the load of in­no­va­tion.

Writ­ing in Health Af­fairs, though, a trio of in­ves­ti­ga­tors says the ar­gu­ment is bunk. They crunched the num­bers on the list ex-US price against the av­er­age net in the US, us­ing VA and Med­ic­aid dis­counts to try and achieve a clear­er pic­ture of the bot­tom line for man­u­fac­tur­ers. And they found that the US pre­mi­um paid for the top 20 drugs on the mar­ket far ex­ceeds the to­tal amount the same 15 com­pa­nies spent on their glob­al R&D bud­gets.

That pre­mi­um, they say, nets 15 com­pa­nies $116 bil­lion in ex­tra an­nu­al rev­enue, com­pared to $76 bil­lion in to­tal re­search spend­ing. And 3 com­pa­nies earn more in pre­mi­um pric­ing for one prod­uct than they spend on re­search each year: Ab­b­Vie — Hu­mi­ra, Bio­gen — Tec­fidera; and Te­va – Co­pax­one.

Source

Nan­cy Yu, Zachary Helms and Pe­ter Bach — fi­nan­cial an­a­lysts at the Cen­ter for Health Pol­i­cy and Out­comes at Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter — write:

We found that the pre­mi­ums phar­ma­ceu­ti­cal com­pa­nies earn from charg­ing sub­stan­tial­ly high­er prices for their med­ica­tions in the US com­pared to oth­er West­ern coun­tries gen­er­ates sub­stan­tial­ly more than the com­pa­nies spend glob­al­ly on their re­search and de­vel­op­ment. This find­ing coun­ters the claim that the high­er prices paid by US pa­tients and tax­pay­ers are nec­es­sary to fund re­search and de­vel­op­ment. Rather, there are bil­lions of dol­lars left over even af­ter world­wide re­search bud­gets are cov­ered.

If you take out the pre­mi­um US pay­ers cov­er for these drugs rel­a­tive to R&D spend­ing, you could save $40 bil­lion off of the to­tal $325 bil­lion paid for drugs in 2015.

Don’t look for any rapid adop­tion in the US, though. These com­pa­nies aren’t in the busi­ness of cov­er­ing costs, and bleed­ing prof­its isn’t on the agen­da in Wash­ing­ton DC. Trump’s fo­cus, to the ex­tent we un­der­stand it so far, is to make drug de­vel­op­ment sim­pler, with few­er reg­u­la­to­ry re­quire­ments and there­by less ex­pen­sive, of­fer­ing a route to low­er costs. This new piece un­der­scores, though, that there is no di­rect re­la­tion­ship be­tween re­search spend­ing and block­buster drug prices.

The sto­ry trig­gered an in­ter­est­ing round of com­ments on Twit­ter this morn­ing.

“If the ar­gu­ment is disin­gen­u­ous figleaf­ing for mo­nop­oly pric­ing be­hav­ior, it has now al­so been fal­si­fied,” Bach re­spond­ed to crit­i­cism of his piece.

The US pharma giant Eli Lilly will be increasing its financial commitment to a manufacturing site in Ireland.

According to a release from Ireland’s Industrial Development Agency (IDA) on Monday, Lilly will be investing another $500 million in its manufacturing facility in Limerick, Ireland — bringing the total investment into the facility to approximately $1 billion.

In January of last year, Lilly announced it was placing a $446 million investment into the site to expand active pharmaceutical ingredient and monoclonal antibody production.

DC District Court Judge Christopher Cooper today granted Vanda Pharma’s request to require the FDA to disclose more info on the complete response letter for its sleep disorder drug Hetlioz.

The melatonin receptor agonist is approved by the FDA to treat non-24-hour sleep-wake disorder, a circadian rhythm disorder. But in 2018 Vanda filed a supplemental application to market Hetlioz as a treatment for jet lag, which the FDA rejected in August 2019, with few details on what Vanda needed to correct course, according to the company.