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Drug Pricing Draws Increased Attention in Election Season

the 2020 presidential election draws closer, the conversation of health care
spending has continued to intensify, particularly when it comes to the price of
prescription drugs. A recent poll found that the #1
and #2 domestic concerns
for Democrats and Republicans were to
lower the cost of health care and reduce the price of prescription drugs,

            There are several competing proposals in Congress to
lower the cost of prescription drugs, as both Democrats and Republicans attempt
to craft competing strategies. Last summer, Senators Chuck Grassley (R-IA) and
Ron Wyden (D-OR), the Chairman and Ranking Member of the Senate Finance
Committee, introduced S.
2543, the Prescription Drug Pricing Reduction Act
(PDPRA). This bill would impose
a yearly cap on how much manufacturers raise their list prices and establish a
100 percent rebate on any increases that rise above that level. In December,
House Democrats passed H.R. 3, the Elijah E. Cummings Lower Drug Costs Now
, that would permit the Department of Health and Human Services (HHS) to
negotiate the price of certain prescription drugs offered under the Medicare
Part D program. The bill also integrates provisions in S. 2543 on inflation
caps but adds an additional provision that retroactively penalizes price
increases above the rate of inflation going back to 2016. In December, House
Republicans introduced competing legislation to House Democrat proposals, H.R.
19, the Lower
Costs, More Cures Act
. This bill stripped out proposals
related to drug negotiation and inflation caps and integrated several provisions
from previously introduced previous draft drug pricing legislation, such as
increasing generic drug entry to market and modernizing the benefit structure
under Part D to lower annual out-of-pocket costs for eligible seniors. Five
Senate Republicans, including the current chairman of the Senate Budget
Committee and likely future chairs of the Senate Finance Committee and Senate
Committee on Health, Education, Labor & Pensions (HELP), introduced companion
to H.R. 19 for consideration in the

            It is unlikely that any of the proposed drug pricing
proposals will become law in 2020, as Senate Majority Leader McConnell has
declared H.R. 3 “dead
on arrival
.” The Trump Administration has expressed a preference
for S. 2543, but the bill has run into difficulties
among Senate Republicans, who have raised concerns about the proposed inflation
caps on price increases. Signaling some concern about the influence of
prescription drug pricing on the 2020 presidential election, Senator Martha
McSally (R-AZ), who is in a contentious reelection bid, recently introduced the
Prescription Drug Prices for America’s Seniors and Families Act
. If passed, the
legislation would permit HHS to negotiate the price of prescription drugs
covered under Part D, but only after those drugs lose their patent exclusivity
and do not have any market competition. Congress has had some recent bipartisan
success in drug pricing legislation, including the Creating and Restoring Equal
Access to Equivalent Samples (CREATES) Act in the FY20
spending bill
. The CREATES Act requires brand-name
manufacturers to provide samples to generic drug manufacturers, which could
increase competition among products. The last vehicle for any drug pricing
proposals to be signed into law would be as part of a health
care extender package
, whose funding is set to expire on May 22nd.
There are some bipartisan proposals that may be included in this package,
particularly a redesign of the Part D benefit structure, which all competing
drug pricing bills reform to some degree.

            President Trump has been under significant pressure to
counter Democrat claims that his administration has failed to make meaningful
steps to lower the price of prescription drugs. Many of his regulatory
have faced challenges in the courts or the administration
has chosen not to finalize those initiatives. Proposals by presidential
candidates Senator Bernie Sanders (I-VT) and former Vice President Joe Biden
support greater government intervention in prescription drug pricing, with both
candidates supporting
direct negotiations with manufacturers on pricing. Given the Supreme Court’s decision
to hear a new challenge to the validity of the Affordable Care Act (ACA),
health care will likely continue to be a pressing issue to voters in upcoming

We the Pat[i]ents: HHS v Gilead

On November 6, 2019, the US
Department of Health and Human Services (HHS) filed suit against pharmaceutical
manufacturer Gilead Sciences, Inc., seeking damages against the company for infringing
on HHS patents for pre-exposure prophylaxis (known as “PrEP”) for HIV
prevention.  Gilead manufactures and
sells two pills—Descovy and Truvada—for use in a PrEP regimen.  In an online statement released the same day,
HHS claims that Gilead received approval from the US Food and Drug
Administration (FDA) to produce Descovy and Truvada for post-infection HIV
treatment, and following taxpayer-funded research by the US Centers for Disease
Control and Prevention (CDC), Gilead obtained FDA approval to use the drugs as
preventative treatment—despite not obtaining licenses to use the patents.

Two decades after the AIDS epidemic
began, CDC researchers developed medications to prevent HIV infection after
exposure.  According to the CDC, the
government’s patented regimens are 99 percent effective at preventing HIV
contraction after exposure to the virus. 
According to HHS, the US Patent and Trademark Office granted four
patents allowing HHS to license (and receive royalties for) CDC’s PrEP
regimens.  HHS alleges Gilead refused to
reach a licensure agreement with the government on multiple occasions.

AIDS activist organizations, such
as PrEP4All, have urged HHS to collect royalties from Gilead, arguing the
manufacturer used the government’s (and taxpayer-funded) intellectual property
to raise prices for Truvada.  Accusations
of Gilead’s “price-gouging” practices led to a House Committee on Oversight and
Government Reform hearing in May.  During
the hearing, lawmakers asked Gilead’s CEO about Truvada’s prices overseas—in
Australia, the drug only costs $8 per person per month.

Gilead has argued that rising costs
support research.  In 2004, when Truvada
was first approved as HIV treatment, its monthly wholesale cost was $650.  When the drug was approved for a PrEP regimen
in 2012, its cost rose to $1,159, according to research from Truven Health
Analytics.  The pill is now over $1,750
per month, or $21,100 per year, though health insurance can offset
out-of-pocket costs.  The drug brought
Gilead $3 billion in sales last year.

To help patients obtain the drug,
the company offers the Gilead Advancing Access program to help eligible
patients pay for their medication—and even patients with commercial health
insurance might not have a copay.  In the
spring of 2019, Gilead donated enough medication to cover up to 200,000
patients over the next 11 years. 
However, only 10 percent of those who need the drug receive it.

This past summer, Gilead challenged
the government’s patents.  A Gilead
executive corroborated HHS’ claim that the manufacturer and the agency could
not reach a license agreement during several years of discussions.  In a November 7 statement published in STAT,
a Gilead spokesperson claimed the patents granted to HHS for PrEP and PEP
(post-exposure prophylaxis) are not valid, and that HHS filed for patents
without alerting the manufacturer, which it was obligated to do.  The company argues that HHS’ patents are not
valid because other entities developed antiretroviral therapies for PrEP and
PEP before HHS claimed invention in 2006. 
The company also claims that it invented Truvada, funded the clinical
trials that led to FDA’s 2004 approval, spent $1.1 billion in research and
development for the drug—including for subsequent studies on PrEP regimens—and
similarly bore costs for Descovy.

According to the activists, HHS could use royalties to fund HIV prevention efforts and treatments.  On the same day that HHS filed suit, the Journal of Acquired Immune Deficiency Syndromes published a study from Abbott Laboratories and the University of Missouri, Kansas City, announcing that scientists discovered a new strain of the HIV virus—the first in 19 years.

SOURCES: Available upon request.

23&you – Warrantless Searches of Familial DNA

DNA testing companies, like 23&me,, and
MyHeritage, have gained popularity. In 2017, 12
million people
tested their genealogy, doubling the number of people
tested from the previous year. An estimated 1
in 25
American adults have had their DNA tested. Indeed, there are DNA
testing companies for animals, such as Wisdom panel, which is a canine
DNA testing site.

Recently, a genealogy service was used to catch the Golden
State Killer, a serial killer who has been linked to more than fifty rapes and
twelve murders from 1976 to 1986. The case has been cold for decades, but
interest in the case was revitalized with Michelle McNamara’s book entitled I’ll Be Gone in the Dark. The California
police had the Golden State Killer’s DNA in a preserved sample and uploaded his
DNA sample to GEDmatch. GEDmatch is a
website that provides genealogical analysis (such as discovering unknown
relatives) using DNA profiles generated by larger commercial DNA testing
companies. The Golden State Killer’s DNA was matched to the Killer’s distant
relative, allowing the police to narrow down the suspect to Joseph James
DeAngelo, a 72-year-old former police officer.*

The Golden State Killer is not the first case where law
enforcement has used a genealogy site to narrow down or find a suspect. One of
the first cases solved using familial DNA searches was the mutilation and
murder of Lynette White in England in 1988. The White murder was a notorious
unsolved case until the early 2000s when the police found a new DNA sample,
which they matched to a 14-year-old boy whose DNA was on file. The 14-year-old
boy led to his uncle, who confessed to the murder.*

Since this is a new technology, it is unclear how and what
type of Fourth Amendment protections the courts will provide to DNA data
obtained through commercial genealogy testing. The courts may apply the third-party
rule, which allows police to search—without a warrant—information given to a
third party because a person does not have a reasonable expectation of privacy
in information he voluntarily turns over to a third party. The courts have
applied this doctrine to allow warrantless searches of bank records, U.S. v. Miller, 425 U.S. 435 (1976),
phone numbers dialed, Smith v. Maryland, 442 U.S. 735 (1979), and
email addresses, U.S. v. Forrester,
512 F.3d 500 (9th Cir. 2008). Courts might rule that, like historical cell site
information from a suspect’s cellphone, genetic information provides an
“intimate window into a person’s personal life.” But this is unlikely since the
courts allow law enforcement to obtain DNA samples from suspects and analyze
the sample by running it through criminal databases. Maryland v. King, 569 U.S. 435 (2013).

The American Civil Liberties Union stated in an op-ed
that uploading a suspect’s DNA profile on a public site, like
GEDmatch, infringes on the suspect’s privacy right because the penalty for his
crimes does not include releasing information about his entire genetic makeup.

Before the courts start hearing cases on familial DNA
searches, Maryland and the District of Columbia have banned familial DNA
searches. Md. Code Ann. Pub. Safety § 2-506; D.C. Code § 22-4151. Other states,
like California,
and Colorado,
regulate the police’s use of DNA searches.

Companies have also released policies on providing data to
law enforcement. 23andme announced in a Privacy Statement that
the company will not provide information to law enforcement unless required by
a court order, subpoena, or search warrant.

Police are likely going to keep pursuing suspects through
familial DNA searches since, overtime, it will become more fruitful. Currently, 60%
of white Americans
can be identified through genetic testing services,
whether or not they have themselves gotten the genetic test, and researchers
predict that within two to three years, 90% of white Americans can be
identified through genetic testing services.

*Information for this paragraph of the post was obtained from
two sources: Avi Selk, The ingenious and
‘dystopian’ DNA technique police used to hunt the ‘Golden State Killer’ suspect
Wash. Post (Apr. 28, 2018),;
Gina Kolata & Heather Murphy, The
Golden State Killer Is Tracked Through a Thicket of DNA, and Experts Shudder
N.Y. Times (Apr. 27, 2018),

States Fight to Control High Drug Prices

On Friday, April 13, 2018, the Fourth Circuit ruled 2-1 that Maryland law HB 631, prohibiting price gouging by generic pharmaceutical companies, is unconstitutional because it violates the dormant commerce clause by directly regulating transactions that occur outside of the state.

The Maryland law prohibites generic drug manufacturers or wholesale distributors from making unconscionable increases to the price of an essential off-patent or generic drug. The Association for Accessible Medicines (AAM), a trade group of generic drug manufacturers, sued the Maryland Attorney General to stop implementation of the law because they said the law violated the dormant commerce clause and the law is impermissibly vague, violating the Fourteenth Amendment Due Process Clause. The Commerce Clause allocates power to the federal government to regulate interstate commerce and constrains states from enacting legislation that interferes with or burdens interstate commerce. The dormant commerce clause limits states from enacting legislation that controls the price of goods outside of the state. The AAM appealed the District Court for the District of Maryland’s decision that granted the State of Maryland’s motion to dismiss AAM’s challenge and denied AAM’s motion for injunctive relief.

The Fourth Circuit found the law unconstitutional because (1) the law is not triggered by conduct that happens inside the state of Maryland, (2) even if it did, the law seeks to control transactions that occur outside of the state, and (3) if other states enacted similar laws, this would impose a significant burden on interstate commerce. The Court did not address whether the statute violated the Fourteenth Amendment because it ruled it unconstitutional under the commerce clause.

Maryland is not the only state working to control high drug prices through legislation. In March of 2018, Oregon passed the Prescription Drug Price Transparency Act, HB 4005. The Oregon law would create new reporting requirements for drug manufacturers related to price increases and patient assistance programs. In 2017, Louisiana, Nevada, California, Maryland, and New York all enacted transparency bills related to drug prices. In 2016, Vermont enacted SB 216 to identify the top fifteen drugs that the state spends the most money on. These states join others that have already put in transparency laws related to prescription drugs like the District of Columbia’s AccessRx law, which requires reporting on gifts to healthcare providers in the District from pharmaceutical companies.

Similar to the Maryland law, laws in other states have been challenged by pharmaceutical and device manufacturer trade groups. The Pharmaceutical Research Manufacturers Association (PhRMA) and Biotechnology Innovation Organization (BIO) have challenged Nevada statute, SB 539, for infringement on patent and trade secrets. The Nevada law requires manufacturers of essential diabetes drugs to report manufacturing costs of the drug, a list of sales representatives who market the drug, payments or donations to nonprofit organization, and other information. In California, PhRMA filed a complaint seeking declaratory and injunctive relief against implementation of SB17, which imposes reporting requirements on pharmaceutical companies for certain price increases on their products sold to state purchasers in California.

The Maryland law was unique because it was the first state law that went beyond reporting and instead explicitly prohibited price increases. The Fourth Circuit decision might scare other state legislatures from passing more aggressive laws to stabilize or lower drug prices. Transparency laws, like the ones passed in 2017, are important because policy makers cannot know there is a problem without the data to examine whether there is one. But there also needs to be more policy action towards potential solutions to keep drug prices down. The Fourth Circuit majority opinion did note that they were sympathetic with consumers who have been affected by high drug prices and that the decision is is not meant to suggest that Maryland and other states cannot enact legislation to secure lower prices for prescription drugs for citizens within their state. Hopefully patient advocacy groups keep pushing for similar state laws and other policy changes to shift the landscape of drug pricing.

Cozy Bedfellows – Journalism and the Pharmaceutical Industry

Announcing LeapsMag: a magazine created and funded by Bayer, the German pharmaceutical company that is covering Alzheimer’s diagnostics, gene therapy, and CRISPR. Bayer started the magazine with the goal of publishing a variety of stories and opinions – as long as the stories do not criticize Bayer initiatives, such as the Bayer-Monsanto merger. Both Bayer and their editor, Kira Peikoff, assert that the company does not have any editorial influence on the content of the magazine. Peikoff even published a statement of independence on the LeapsMag website. But before publishing the statement, she ran it by Bayer because she was “worried that it might ruffle some feathers.”

How do we ease the problem of pharmaceutical (or any commercial) sponsorship of news stories and publications? When I tweeted this article out, biotech reporter, Alaric DeArment asked, “Would journalists take these kinds of roles if the job market in news was better? My guess is that most company-sponsored publications would be staffed by PR and marketing people and not journalists if it was.”  I agree with him. As news consumers, we need to be more cognizant of the price we pay, when we don’t pay for our news or media.

This isn’t the first (or only) instance of cozy relationships between journalism and pharmaceutical companies. Last year, Pfizer sponsored a story in the Boston Globe on a woman’s struggles with Parkinson’s disease, as narrated by her daughter to a scientist working on Parkinson’s research. This story was part of the Boston Globe’s Brand Lab – a section of the Boston Globe enterprise with the specific aim of engaging consumers, encouraging brand loyalty, and communicating a brand’s ideals without using explicit messaging. What the sponsored page fails to mention is that Pfizer has a drug for Parkinson’s in Phase II clinical trials.

In a more scandalous story, STAT News (a subsidiary of the Boston Globe) published an op-ed piece by a physician praising how helpful drug reps are to his practice. When the piece was initially published, readers complained that the physician’s conflicts of interest weren’t disclosed (the physician had received $300,0000 from the drug industry, which is easily searchable on Dollars for Docs). When the physician was interviewed about his disclosures, he admitted to the reporter that he did not write the op-ed piece at all. Instead, the piece was written by a PR firm. The physician was approached by an industry-sponsored group, Alliance for Patient Access, if he wanted to “publish” this op-ed. The physician did say that he “agrees with the spirit of the article” or he “wouldn’t have put his name to it.” After this was revealed, STAT News did retract the article and update their policies on authorship and conflicts of interest in response to this incident.

These three stories are only examples of a pervasive problem of corporate influence in journalism. Health news readers need to be cognizant of the potential conflicts of interest that are present when journalists learn about health news from industry sponsored conferences or when news publications are partially sponsored by healthcare companies. Readers also need to work to support the media so that the news can financially be corporation-free. Although digital subscriptions have been increasing, big traditional news outlets, like the New York Times, have had declining revenue. As people stop paying to support media outlets, these industries become more dependent on ad revenue and commercial support. Another important thing to do is to support organizations that work to expose bias in journalism, like my favorite organization, HealthNewsReview, which reviews news articles and exposes marketing messages in healthcare reporting.

Pharma-Funded Charities v. Health and Human Services

The battle to control high drug prices between pharmaceutical companies, insurance companies, and the government continues to rage on. On January 8, Patient Services Inc. (PSI), a patient-assistance charity, launched the newest crusade by suing the Department of Health and Human Services (HHS).

What is a patient-assistance charity?

A patient-assistance charity works to help patients with expensive prescriptions pay for their medication. Though seemingly benign, patient-assistance charities get most, if not all, of their funding from pharmaceutical companies. These are the same pharmaceutical companies that have, since the heyday of Martin Shrekli, been criticized countless times by the media and dragged into Congress for raising drug prices.

This is where a patient-assistance charity comes in and provides a shield for badly bruised companies. Charities help quell public criticism for increased drug prices because companies, by pointing to the charities, are able to ensure critics that patients who need their drugs will be able to afford them. Shrekli even did this for Daraprim, the drug that he raised the price by 5,000%. Within days of raising the price, Turing, the company that manufactures Daraprim, called PSI and created a fund for patients with toxoplasmosis, the infection that is most often treated with Daraprim.

The good publicity is only icing on the cake. The real reason pharmaceutical companies donate to patient-assistance charities is because it is profitable. For every $1 million spent on a charitable donation, the company has the potential to generate $21 million in revenue. The company also receives a tax deduction for their donation. Companies profit because they only have to pay a couple hundred dollars to cover the patient’s co-pay and they will receive thousands of dollars for the remaining cost of the drug from the patient’s insurance company.

The funds also allow drug companies to get around anti-kickback provisions. Pharmaceutical companies cannot give patients enrolled in Medicare or Medicaid a co-pay coupon (coupons that help reduce or eliminate co-pay costs for a certain drug). However, companies are authorized to give to patient-assistance charities that help patients on Medicare or Medicaid.

There are rules governing the relationship between the companies and charities. Companies are not allowed to dictate how the donations are spent, but this doesn’t always play out in practice. An IRS analysis of the Chronic Disease Fund (CDF) found that almost all of the financial assistance went to patients taking drugs from their biggest funder, Genentech. In 2011, Celegene gave CDF $48.8 million to support a fund for multiple myeloma patients and 98% of the money from that fund went to patients taking drugs from Celegene.

Patient Services Inc v. Health and Human Services

In its suit, Patient Service Inc v. Health and Human Services, PSI alleges that the federal oversight of its charity violated its free speech rights by limiting its ability to communicate with donors. PSI says the oversight is burdensome and threatens the existence of the organization.

PSI might be going on the offensive in reaction to the Office of Inspector General (OIG) of HHS revoking its favorable advisory opinion of another patient-assistance charity, Caring Voice Coalition (CVC). OIG rescinded its favorable opinion because CVC gave drugmakers data that could help them see if their contribution was being directed for their own drugs, potentially giving the companies “greater ability to raise the prices of their drugs while insulating patients from the immediate out-of-pocket effects.” The coalition has since announced that it will no longer be able to offer any financial assistance in 2018. On top of this, patient-assistance charities are also feeling the heat from the U.S. Attorney’s Office in Massachusetts and the Internal Revenue Service.