Should Sarepta’s patents be seized by the government? Patient advocates pitch controversial drug pricing proposal

Six advocacy groups are sending a big ask to the federal government to lower the price of one rather expensive drug for Duchenne muscular dystrophy, petitioning health regulators to flex power it’s never exercised before.

Amidst a years-long debate over drug pricing, Sarepta has hit a sensitive chord with the high price tag of its DMD drug Exondys 51 (eteplirsen), which goes for a around $300,000 per year.

The organizations drafted a letter to the Department of Health and Human Services (HHS), pleading that Secretary Alex Azar act to lower the price of the drug. Specifically, the group wants HHS to leverage a piece of legislation called the Bayh-Dole Act — along with contractual agreements with funding agencies — to take over ownership of five patents on Exondys 51. They can do that, the group insists, because the intellectual property was backed by federal research dollars. Grant recipients are required to disclose federal funding that contributes to a patented invention on their patent application — a step that both Sarepta and the University of Western Australia failed to do.

By taking title to the patents, the HHS could leverage their position to lower the price of Exondys, the organizations said.

Analysts at Leerink, who cover Sarepta’s stock $SRPT, sent a note to investors this morning noting the unlikelihood that such action would be taken by the government.

“Bottom Line: Today’s letter from several groups delivered to HHS Secretary (Alex) Azar highlights the lengths that some are willing to go in order to force drug prices lower; however we believe these groups have an uphill battle, and even if they were to prevail there would be limited read through to other rare disease companies whose business models rely on premium pricing.”

Leerink reminds investors that a similar strategy was used against Gilead, Vertex, and Novartis, among others. Those efforts failed, analysts said in a note.

But KEI, one of the organizations that wrote the letter, said Leerink’s note is misleading.

“If they are referring to research we’ve submitted to HHS on drugs marketed by Gilead and other firms, that statement isn’t quite accurate,” KEI spokesperson Kim Treanor wrote in an email. “Our research has been submitted very recently and is still being reviewed by HHS, so no resolution to these cases has occurred as of yet.”

The letter writers do acknowledge, however, that the action they’re requesting is unprecedented:

In the past, the federal government has, on several occasions, asked recipients of federal grants and contracts to correct failures to disclose federal funding of the inventions, but has not exercised its rights to take the title of such patents for purposes of influencing drug prices. In this respect, we recognize that we are asking HHS to do something new.

And later, the letter reiterates what the organizations are up against:

We respectfully ask for a meeting with your staff to further discuss this issue, noting that as a practical matter, if the decisions are delegated solely to the NIH (Office of Technology Transfer) staff it is highly unlikely any action will be taken to moderate the price of this drug.

Read the full letter here, written and submitted by KEI, Health GAP, Patients for Affordable Drugs, People of Faith for Access to Medicines, Social Security Works and Universities Allied for Essential Medicines.

Image: Sarepta Therapeutics. AP IMAGES

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