Mass. biotechs won’t commit to drug price cap
Under growing pressure to control prices, three big drug companies have separately pledged to hold increases on their prescription medicines to below 10 percent in 2017.
So far, however, biopharma companies that are based in Massachusetts or have large operations here have declined to make a similar pledge, even though some say their recent price increases have been below the 10 percent cap embraced by AbbVie Inc., Allergan PLC, and Novo Nordisk.
“We haven’t committed to a specific policy,” said Ashleigh Koss, spokeswoman for Sanofi SA, which owns Cambridge’s Sanofi Genzyme. The company charges hundreds of thousands of dollars a year for its biotech drugs, which treat small numbers of patients suffering from enzyme deficiencies such as Gaucher and Fabry diseases. “We have a range of products from rare diseases to vaccines” with different pricing considerations, Koss said.
Long-running criticism of high drug costs gained momentum on Wednesday when President-elect Donald Trump said at a press conference that drug makers are “getting away with murder.” He vowed to slash spending by encouraging “bidding on drugs.”
That would presumably mean lifting the current prohibition on Medicare negotiating how much it pays for medicines used by seniors, an idea that appears to be gaining traction.
To get ahead of the critics, some Big Pharma leaders, notably Allergan chief executive Brent Saunders, have begun advocating for companies to cap price increases. The most recent to join his preemptive campaign was AbbVie chief executive Richard Gonzalez, who this week told investors at the J.P. Morgan Healthcare Conference in San Francisco that “we need to make sure we are operating in an appropriate way” when it comes to pricing.
Biogen Inc., the largest Massachusetts biotech, last month priced its newest drug, the spinal muscular atrophy treatment Spinraza, at about $375,000 a year. The company charges more than $80,000 a year for its multiple sclerosis medicines, which treat larger populations of patients. Prices for those drugs increased between 3.5 and 8 percent on Jan. 1.
“We are an active participant in the critical dialogue between the industry, payers and policy makers and appreciate many of the recently introduced pricing initiatives,” Biogen said in a statement that stopped short of saying the company would put a formal cap on price increases.
Another big Massachusetts biotech, Vertex Pharmaceuticals Inc., priced one of its cystic fibrosis drugs at $259,000 per patient annually and another at more than $300,000, but it has not raised those prices since 2013, and has reinvested more than 80 percent of its revenue into research and development, spokeswoman Heather Nichols said.
Data on annual drug price increases are hard to come by, though prices vary widely between specialized therapies that are the only treatments for rare disorders and drugs that face competition on the market and are used by hundreds of thousands or millions of people. Price increases for protected brands averaged 12.4 percent in 2015, the most recent year for which data was available, according to research firm IMS Institute for Healthcare Informatics.
But many health insurers don’t pay the listed average wholesale price for medicines. After rebates and other discounts negotiated with private and government payers, the net price growth reported by drug companies was 2.8 percent in 2015, the IMS survey said.
Some industry leaders dismiss the 10 percent pledge as little more than a public relations ploy.
“Promising to raise prices no more than 10 percent and then raising them 9.9 percent is not the answer,” Len Schleifer, chief executive of Regeneron Pharmaceuticals Inc., told a J.P. Morgan gathering. Schleifer noted that many biopharma executives say they base their prices on the “value” of their medicines, but then sometimes implement increases more than once a year.
One company criticized for doing just that was Ariad Pharmaceuticals Inc., the Cambridge biotech that drew the wrath of some US lawmakers, including Senator Bernie Sanders of Vermont, by raising the price of its blood cancer treatment last year to more than $200,000. Ariad this week agreed to be acquired by Japan’s Takeda Pharmaceuticals Inc. for $5.2 billion.
In a statement, Takeda said its US price hikes for specialty medicines “have been limited to the single digits over the last 10 years, well below the industry’s average increase of 10 percent.”