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Global Affairs

Big Pharma and Its Drug Price Games

 8 min read / 

Drug prices are too high.

Everybody agrees with that. Everybody always thinks they pay too much for everything. In the US. drug prices are about three times as high as Canada, Britain and the EU, but that is a peculiar problem caused by the free-marketeers and the scattered healthcare system (no single payer; national healthcare system = socialism = bad bad bad).

The price disparity can be extreme. For example, one analysis found that a year’s supply of Syprine, a liver failure drug, costs about $400 around the world, but list price is $300,000 in the US. Sovaldi, a hepatitis C drug, goes for $1,000 elsewhere, but in the US is $84,000.

How you define “too high” depends on a number of factors. If you’re Martin Shkrelli or the president of Eli Lilly, no price is “too high” if it saves lives. Your life is priceless, isn’t it? If you’re a patient and you can’t afford to pay for a lifesaving drug, with or without insurance, you have a different estimate.

Arguably, prices are still too high outside the US, for the National Health Service if not the individual, because Big Pharma wants it that way.

Big Pharma has nine and sixty ways of squelching cheaper generics and biosimilars to protect their monopoly and high prices. It’s easier and more profitable than developing new drugs. Delaying the arrival of a generic drug for even six months can mean another $500m on the ledger.

Keeping Generics Off the Market

How does Big Pharma slow down or stop generics?

  • Evergreening or Product Hopping. Changing the formula just enough that it qualifies for a new patent.
  • Stop making the original because they say the new version is much safer and tell the FDA not to allow a generic of the original, less-safe version. Reckitt Benckiser tried this with its Suboxone tablets.
  • Restricting access to the original product so competitors cannot reverse engineer it. This is through a provision meant to keep hazardous chemicals from vulnerable people such as pregnant women and children.
  • Not cooperate with generic manufacturers on a joint Risk Evaluation and Mitigation Strategy (REMS). Generics are supposed to be as effective and safe as the original.
  • Challenge the generic/biosimilar by claiming it violates patents that have not expired. Mylan has delayed Semglee’s US launch by suing for violation of 18 patents, as Sanofi has done for another insulin biosimilar Lusduna. Both are already available in Europe.
  • Transfer ownership of the patent before it expires. Allergan transferred its patent rights to the Saint Regis Mohawk Tribe of New York, hoping its tribal sovereign immunity would stall any generic competitors

Big Pharma justifies these tactics in many ways. One is that even in the US the people do not really pay the costs since health insurance pays for all but a small co-pay. Unlike the United Kingdom and European Union, however, not everybody has health insurance.

The High Cost of Research and Development

Most consumers assume the price of a product should be based on the cost of the materials and the labour it takes to produce it, plus a reasonable (not excessive) profit. There is an additional cost factor, however: research and development.

Estimates for how much it costs to bring a new drug to market range from $648m to $2.7bn, though a Forbes analysis says a truer average is $2bn, and the cost for many drugs is much less.

Big Pharma likes the higher figure because it includes the cost of failed drugs that never come to market. They also like to justify the higher US prices because without it, they say, innovation would suffer. That is debatable.

Nevertheless, US President Donald Trump campaigned on lowering prescription drug prices, as he did on ending the Opioid Epidemic (which also was abetted by Big Pharma, which claimed its new prescription painkillers were not addictive).

So far it has not happened. Maybe it is just harder than he thought, or maybe it’s because he selected Alex Azar as his secretary of Health and Human Services. Azar is a former Eli Lilly executive who tripled the cost for its insulin during his tenure and has been accused of gaming the system to extend a patent on Cialis.


Insulin is one of the drugs that logic dictates ought to have strong generic competition. Well, not generic. Because it is a biologic, a large molecule biotech drug, a cheaper post-patent version would be a biosimilar. In general, generics and biosimilars usually are 80% cheaper.

Not always, however. There is a biosimilar for Lantus – Sanofi’s insulin glargine brand name – called Abasaglar (Basaglar in the US), but its cost after manufacturer and pharmacy coupons – widely distributed to those who cannot pay in order to squelch critics – is only slightly lower. Five 3ml pens of Lantus cost about $278, while Basaglar is $235, a reduction of little more than 15%.

Another biosimilar for insulin glargine, Semglee, may soon be on the market in Europe – although the US will take longer – but the cost reduction is expected to only to be around 30%.

So insulin biosimilars are coming, finally.

Insulin glargine is not covered by most US health care plans. There are less expensive insulins, but not as many as there could be – the original form of animal-based insulin, which was “sold” for $1, was discontinued in the US as soon as recombinant DNA insulin was invented, though it or something similar is still sold in Canada – and they do not work the same as more expensive formulas. Some require twice-a-day shots, some require a shot one hour before eating, some eating regularly at strictly scheduled times to maintain proper blood sugar levels.

Buprenorphine, Suboxone, Suboxone Film

Big Pharma is even impairing stopping the opioid epidemic or at least making it more costly.

One of the most effective medication-assisted treatments for opioid addiction is buprenorphine, a weaker opioid that can be used to forestall withdrawal without (at the proper dosage) getting high.

The patent expired long ago, but the manufacturer maintained its exclusivity by creating a new, supposedly safer version called Suboxone, which adds the opioid antagonist naloxone. When that patent was running out, they came up with a sublingual film.

Suboxone has a larger dose of buprenorphine but is time-released. In pill form, without the naloxone, it would be possible to get all of the “high” at once, by crushing it or dissolving it for injection. The naloxone was supposed to cancel out the opioid when so tampered with, making it “impossible” to get high.

The film is supposed to be even more tamper-resistant, but it also has been dissolved and then injected, or reformed into a pill that can be crushed and snorted. A generic form of Suboxone film is ready for release but is facing patent challenges. Meanwhile, Indivior has received FDA approval for a once-monthly Suboxone injection.

In practice, Suboxone does not work quite as well as advertised. One problem is that someone not already addicted to stronger opioids such as oxycodone and hydrocodone can still get high on low-dose Suboxone. Another is that naloxone’s opioid-cancelling effect when crushed or dissolved apparently is not as strong or consistent as the maker claims.

When taken in conjunction with other opioid addiction treatments at as 12 step or non-12 step rehab, buprenorphine is very effective. It is not insignificant, however, that in 2016 the US Drug Enforcement Agency reported that buprenorphine was among its most commonly confiscated drugs,

The Value of Generics

Generics do save money – more than $1.5bn between 2007 and 2017 in the US, according to the FDA, and more than $1trn between 2002 and 2011 according to the Generic Pharmaceutical Association. In the UK, generic prescribing by the National Health Service is estimated to have saved more than £7bn from 1976 to 2013. All things being equal, that seems like a good thing. If greedy pharmaceutical companies oppose it, that also seems to be a good thing. But it might not be.

While Big Pharma overplays the risks associated with alternatives to its products, 80% of generic drugs in the US are made overseas in India and China, some at least in sweatshop conditions with “significant violations” and “significant deviations” of standard pharmaceutical practices, including failure to prevent contamination and “producing adulterated drugs”.

What Big Pharma does not tell people is that 80% of non-generic drugs are also made overseas.

Generics are not a panacea. Big Pharma does need to make money. And the world’s healthcare systems need affordable, effective medicines. It would be easier if everyone worked together rather than fighting each other.

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