Richard Gonzalez, AP Images

House com­mit­tee un­cov­ers how Hu­mi­ra’s price spiked by 470% as Ab­b­Vie ex­ecs cashed bonus­es tied to the hikes

Pri­or to the House Com­mit­tee on Over­sight’s grilling of Ab­b­Vie CEO Richard Gon­za­lez on Tues­day, the com­mit­tee staff re­leased a 57-page re­port fol­low­ing a two year in­ves­ti­ga­tion in­to how and why the com­pa­ny spiked the price of Hu­mi­ra (adal­i­mum­ab) and made it the high­est-gross­ing drug of all time.

While the com­mit­tee in­ves­ti­ga­tion and pub­lic lash­ing aren’t like­ly to do ac­tu­al dam­age to Ab­b­Vie’s bot­tom line or bring new Hu­mi­ra biosim­i­lar com­pe­ti­tion be­fore 2023 in the US, the re­port digs in­to how Ab­b­Vie used more than two dozen price in­creas­es, shad­ow pric­ing with Am­gen’s block­buster En­brel, and patent thick­ets to block com­pe­ti­tion while amass­ing more than $170 bil­lion in net rev­enue from Hu­mi­ra since 2003.

Reps. Car­olyn Mal­oney (D-NY), chair of the Over­sight Com­mit­tee, Jar­rold Nadler (D-NY), chair of the House Ju­di­cia­ry Com­mit­tee, and sub­com­mit­tee chair David Ci­cilline (D-RI) al­so sent a let­ter to the Fed­er­al Trade Com­mis­sion on Tues­day, call­ing for a for­mal in­quiry in­to Ab­b­Vie’s ac­tions to de­lay the en­try of Hu­mi­ra biosim­i­lars in the US (more on the de­lays be­low).

Price In­creas­es

Near­ly a decade af­ter Ab­bott Lab­o­ra­to­ries first launched Hu­mi­ra in 2003, the list price rose from $522 per 40-mil­ligram sy­ringe to $1,024 by 2013, with 13 price hikes, pri­or to spin­ning off Ab­b­Vie as a sep­a­rate com­pa­ny. Un­der Ab­b­Vie, the price of Hu­mi­ra spiked an­oth­er 14 times, in­clud­ing by 30% with­in a 10-month win­dow.

“Hu­mi­ra is now priced at $2,984 per sy­ringe, or $77,586 an­nu­al­ly — a 470% in­crease from when the drug en­tered mar­ket,” the re­port says.

And those con­sis­tent price hikes were dri­ven by ex­ec­u­tive bonus­es from 2015 to 2018, which were di­rect­ly linked to Hu­mi­ra’s fi­nan­cial per­for­mance, the re­port says.

In that first year that the in­cen­tives were cre­at­ed, ex­ecs pushed Hu­mi­ra’s US net rev­enue to rise from $6.5 bil­lion in 2014 to $8.4 bil­lion in 2015, af­ter Ab­b­Vie ex­ec­u­tives im­ple­ment­ed a 9.9% price in­crease in April 2015 — the largest-ever price in­crease for the drug — and a 7.9% price in­crease in Au­gust 2015.

While Gon­za­lez will like­ly tell Con­gress Tues­day that the price in­creas­es were used to fund more re­search & de­vel­op­ment, the com­mit­tee shows that wasn’t the case.

“Ab­b­Vie’s to­tal re­search and de­vel­op­ment ex­pen­di­tures for Hu­mi­ra rep­re­sent­ed on­ly a small frac­tion of its net rev­enue from this drug. In re­sponse to the Com­mit­tee’s re­quest, Ab­b­Vie iden­ti­fied a to­tal of $5.19 bil­lion in ‘Hu­mi­ra Re­search & De­vel­op­ment’ be­tween 2009 and 2018 — ap­prox­i­mate­ly 7.4% of its Hu­mi­ra U.S. net rev­enue and 4.2% of its Hu­mi­ra world­wide net rev­enue over that pe­ri­od,” the re­port shows.

What the US would’ve saved

The re­port al­so tracks how much the US gov­ern­ment could’ve saved over­all by fac­tor­ing in some of the dis­counts that some fed­er­al de­part­ments re­ceive. Over­all, Ab­b­Vie’s Hu­mi­ra net rev­enue from Medicare — a fig­ure that sub­tracts dis­counts and re­bates— was $9.9 bil­lion from 2010 to 2018.

“If Medicare had re­ceived the same dis­counts as the De­part­ment of De­fense, it would have saved more than $7.4 bil­lion on Hu­mi­ra from 2010 to 2018. Sim­i­lar­ly, if Medicare had re­ceived the same dis­counts as the De­part­ment of Vet­er­ans Af­fairs, it would have saved $7 bil­lion on Hu­mi­ra from 2010 to 2018,” the re­port notes.

Re­pub­li­cans in Con­gress have fo­cused their at­ten­tion less on low­er­ing drug prices and more on low­er­ing out-of-pock­et costs, the re­port re­veals how out-of-pock­et costs for Hu­mi­ra have spiked too.

A 2019 Kaiser Fam­i­ly Foun­da­tion study found that the me­di­an an­nu­al out-of-pock­et cost for Medicare pa­tients on Hu­mi­ra was $5,471 in 2019, which is $606 more than in 2016.

A re­tired teacher and Medicare ben­e­fi­cia­ry with Crohn’s dis­ease told the com­mit­tee that de­spite hav­ing a sup­ple­men­tal health in­sur­ance plan, her out-of-pock­et costs for Hu­mi­ra were more than $2,600 for a month’s sup­ply, pre­vent­ing her from re­ceiv­ing treat­ment.

Rock­ford, Illi­nois May­or Tom Mc­Na­ma­ra al­so re­port­ed that be­tween Au­gust 2013 and Ju­ly 2020, his city spent more than $2.5 mil­lion on Hu­mi­ra alone, which means more than 5% of the city’s em­ploy­ee health plan ex­pen­di­tures were for Hu­mi­ra.

Don’t blame the play­er, blame the game?

In ad­di­tion to rais­ing the price, Ab­b­Vie al­so halt­ed any po­ten­tial com­pe­ti­tion un­til 2023 (de­spite the launch of Hu­mi­ra biosim­i­lars in Eu­rope in 2018), and that sup­pres­sion oc­curred even be­yond Ab­b­Vie’s own in­ter­nal pro­jec­tions.

In Feb­ru­ary 2014, ac­cord­ing to the com­mit­tee re­port, Ab­b­Vie ex­ec­u­tives cir­cu­lat­ed a pre­sen­ta­tion on “US Hu­mi­ra Biosim­i­lar Ero­sion” that pro­ject­ed that three to five biosim­i­lar com­peti­tors would en­ter the mar­ket by the first quar­ter of 2017.

What’s more, Ab­b­Vie’s patent on Hu­mi­ra’s ac­tive in­gre­di­ent ex­pired on De­cem­ber 31, 2016.

“At that time, com­peti­tors should have been free to en­ter the mar­ket. How­ev­er, the com­pa­ny ex­ploit­ed the patent sys­tem to ob­tain or ap­ply for over 200 ad­di­tion­al patents on Hu­mi­ra to block biosim­i­lar com­pe­ti­tion,” the re­port says.

Am­gen’s block­buster bi­o­log­ic En­brel, which won’t see biosim­i­lar com­pe­ti­tion in the US un­til 2029, is al­so one of Hu­mi­ra’s top com­peti­tors, and the com­mit­tee showed how the two com­pa­nies raised the prices of their drugs in lock-step with each oth­er.

“In­ter­nal Ab­b­Vie doc­u­ments ob­tained by the Com­mit­tee re­veal that the com­pa­ny viewed Am­gen’s price in­creas­es as pro­vid­ing cov­er for its own price in­creas­es. For ex­am­ple, one com­pa­ny ex­ec­u­tive re­port­ed to the cur­rent CEO and then-Ex­ec­u­tive Vice Pres­i­dent Richard Gon­za­lez that it was a ‘Great week-end’ af­ter learn­ing that Am­gen had in­creased the price of En­brel on Jan­u­ary 20, 2012, to $25,150 an­nu­al­ly. The email thread not­ed that ear­li­er that month, Ab­b­Vie had in­creased the price of Hu­mi­ra to $24,913 an­nu­al­ly. In Ju­ly, Ab­b­Vie would top Am­gen again by rais­ing the price of Hu­mi­ra to $26,632. Less than 3 weeks lat­er, Am­gen fol­lowed suit with an­oth­er price in­crease,” the re­port says.

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