When Biogen Inc. received regulatory approval last month to sell the Spinraza rare disease drug, the company surprised Wall Street by setting a price that few expected — $750,000 for the first year of treatment and $375,000 each year thereafter. At the time, at least one analyst suggested the price tag amounted to “sticker shock” that may cheer investors but also invite criticism amid growing outrage over drug pricing.
Already, the scrutiny has begun.
A consumer advocacy group alleges the organizations that discovered the drug — Cold Spring Harbor Laboratory and Ionis Pharmaceuticals — failed to properly file paperwork noting research was supported, in part, by federal funds. And this failure could allow the federal government to take title to the patents, should it determine there is a need to prevent a monopoly that impedes access to lower-cost versions.
So the advocacy group, Knowledge Ecology International, plans to ask the National Institutes of Health and the Centers for Medicare and Medicaid Services to exercise legal rights that, ultimately, could make it possible for the federal government to decide that lower-cost versions should be available, according to a letter the group sent last week to the HHS Office of Inspector General.
In its letter, which an OIG spokesman says the agency is “carefully reviewing,” KEI calls the price excessive. The drug is the first to be approved to treat spinal muscular atrophy, a disease that robs people of the ability to walk, eat, or breathe, and is the leading genetic cause of death for infants. Ionis, which struck a development and marketing deal with Biogen in 2012, is named on two key patents.
“The government has rights in the inventions it funds, and the inventors have an obligation to report the invention to the funding agency and disclose it on the patent,” said Jamie Love of KEI, which tracks patents and access to medicines issues. “When the inventor fails to report, there is a violation . . . and the nonprofit organization or small business organization is not allowed to retain title to the invention.”
For now, taking patents is a hypothetical notion, but the move by KEI reflects a wider variety of tactics pursued by critics of drug pricing, an issue that has galvanized consumer anger at drug makers and is attracting the attention of President Trump. And while Spinraza may be a welcome salve for an unmet medical need, the price charged by Biogen, which licensed the drug from Ionis, stands out.
The cost could be “the straw that breaks the camel’s back in terms of the US market’s tolerance for rare disease drug pricing,” Leerink analyst Geoffrey Porges wrote in an investor note after the drug was approved last month. “At the very least . . . the price is going to force payers to closely scrutinize which patients receive access and limit the overall access provided.”
Specifically, the advocacy group wants the NIH to pursue so-called march-in rights. Under federal law, this allows an agency that funds private research to require a drug maker to license its patent to another party in order to “alleviate health and safety needs which are not being reasonably satisfied” or when the benefits of a drug are not available on “reasonable terms.” KEI also plans to ask Medicare to use its royalty-free rights to license others to make a generic version available at “reasonable prices.”
An Ionis spokesman, however, contends that the drug maker “has not received any federal grants or funding” for Spinraza. And a spokeswoman for Cold Spring Harbor would only say that the laboratory is “aware of the KEI letter to HHS and [is] looking into it.” A Biogen spokesman said the company is aware of the KEI report but does not comment on legal matters.
A KEI spokesman said that, while a Cold Spring Harbor scientist received NIH funding that directly led to the discovery of the drug, employees from both the lab and the drug maker are listed as inventors on the patents. Consequently, he said, both organizations were required to file paperwork with the NIH.