How Big Pharma Manipulates The Public Good
November 17, 2016
By Grace Song
This seems like a typical case of companies warring over market share, and in many ways it is, but the arguments and policies that came into play in this suit provide a great case study for how the concept of the public good gets manipulated in the pharmaceutical industry’s fight for revenue. Consumers would benefit from understanding how Big Pharma is simultaneously for and against their best interests, as illustrated by this lawsuit.
The main thing to know about Crestor is that the FDA had previously granted Crestor orphan drug status under the Orphan Drug Act, a law passed in 1983 designed to incentivize R&D efforts for drugs that will treat orphan diseases. These are defined as “rare diseases/disorders that affect fewer than 200,000 people in the U.S.” If a company can prove such treatment, they receive benefits including seven-year marketing exclusivity of the approved indication. Congress recognized the need for such a policy given the costly nature of drug development, supported by the fact that only 20% of marketed drugs return revenues that match or exceed the cost of their R&D. In the last decade alone, FDA has approved almost 250 Orphan Drugs, whereas in the pre-policy 1970s, less than 10 such drugs were approved. Therefore, the Act is widely applauded for having benefited the public, given its great impact on vulnerable populations affected by orphan diseases.
For consumers, the interesting part to hone in on is how the Orphan Drug Act is being wielded by AstraZeneca. In June, AstraZeneca sued the FDA, claiming that under the Orphan Drug Act, Crestor is entitled to seven more years of market exclusivity, which would prevent generic competitors until 2023. This was related to the fact that back in 2014, FDA granted Crestor orphan drug status over one indication, namely its ability to treat children diagnosed with homozygous familial hypercholesterolemia (HoFH). Essentially, AstraZeneca wanted to prevent generic competitors from marketing any version of Crestor, even though the company was only granted extended exclusivity over Crestor’s HoFH indication. The FDA disagreed and released a memorandum that allowed competitors to market generic versions of the drug, so long as the labels omitted information protected under the orphan drug provisions. AstraZeneca’s lawsuit against the FDA cited the FDA’s lack of authority to declare such and the substantial safety risk for consumers if such an interpretation is allowed.
So if AstraZeneca only has orphan drug designation over HoFH, what was their argument for preventing all generic versions of Crestor? This is where the notion of the public good gets dragged into the arena. AstraZeneca’s argument is supported by a categorical rule in FDA’s pediatric-labeling regulation which states “[g]eneric drugs must contain all the pediatric information included on the corresponding brand-name drug’s label.” The company argued that it’s dangerous for generic alternatives to be on the market because the alternatives, which are not allowed to have treatment information for HoFH on their labels, are bound to be prescribed by doctors to treat HoFH regardless. This will result in incorrect dosages and jeopardize the safety of those that take the drug to treat HoFH. Thus, the FDA should only approve generic versions with HoFH usage information on its label, and since AstraZeneca has a monopoly on that usage information, the company should retain sole rights to Crestor for as long as its orphan drug status holds.
From a purely numerical perspective, consider that HoFH affects a few hundred children in the US, whereas tens of millions of adults suffer from high cholesterol. Without generic versions of Crestor, the 20 million consumers that currently have Crestor prescriptions would be denied access to cheaper alternatives of the drug. This would be a devastating economic reality for those Americans, especially given that AstraZeneca increased the price of Crestor a dramatic 40% between 2011 and 2015 alone. Currently, the drug costs consumers about $260 a month. For AstraZeneca, their considerations are also fiscal, but not in regard to the consumer’s pocket. The company estimated that it would lose $400 million to generic competitors this year should their case be denied. For those with context, this number makes AstraZeneca’s case seem even pettier, because Crestor sales totaled $5 billion last year.
The remaining legal components of this case were more complex and the lawsuit continued into the end of July, but ultimately the court ruled that FDA retained the right to approve generic versions. While this is great news for consumers, the fact remains that the public good can and is manipulated by pharmaceutical companies for solely economic purposes. Of course, courts are not blind to corporate motives, but at the end of the day, courts are tied to what’s written in the law. It is naïve to expect that AstraZeneca’s failed case will be the end of pharmaceuticals using legal loopholes for their gain and to the detriment of the public. This case provides surmounting evidence that congress needs to prioritize pinpointing and closing such loopholes in order to re-possess control over the public’s health and good.
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