The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Stealing Patents Won’t Bring Down Drug Costs

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


On February 15, 2018, 18 Democratic members of Congress sent a letter to Health and Human Services (HHS) Secretary Alex Azar, asking him to use his authority under 28 U.S.C. §1498 to issue a compulsory license on patents for drugs that treat hepatitis C.  In other words, they are demanding that the government steal a hepatitis C drug patent for “reasonable and entire compensation” when it is “in the interest of the public good.”  The amorphous definitions of reasonable and compensation will be whatever the government decides they should be.  If this authority is exercised, it would set a dangerous precedent and suffocate future investment in the development of drugs that cure complicated and chronic diseases.

Hepatis C is a viral infection that affects the liver.  It is spread through contact with blood from an infected individual, often through the sharing of needles and syringes, and less commonly through sexual contact or sharing items such as toothbrushes or razors.  It becomes an acute infection within six months and becomes a chronic infection in 75 to 80 percent of those who contract hepatitis C.  The Centers for Disease Control and Prevention estimate that 3.2 million people in the U.S. are living with hepatitis C, and that there are approximately 17,000 new cases each year.

Gilead’s Sovaldi was the first non-interferon hepatitis C drug approved by the Food and Drug Administration (FDA) in December 2013.  It provided a 90 percent cure rate.  The list price of $84,000 for a course of treatment made headlines and received criticism.  Gilead’s Harvoni, a more effective drug with a 94 to 99 percent cure rate, was approved in December 2014 and had list price of $94,500 for a course of treatment.  Also approved in December 2014 was AbbVie’s Viekira Pak, with a list price of $83,319.  AbbVie agreed to sell its drug to Express Scripts, the nation’s largest pharmacy benefit manager, at a discount of 20 to 38 percent.  Express Scripts dropped Gilead’s drugs from its formulary and competition began in earnest.

Since 2014, newer hepatitis C drugs have entered the market, accompanied by lower prices.  In October 2017, AbbVie received FDA approval for its new drug Mavyret, which cures all major strains of hepatitis C in eight weeks, with a list price of $26,400.  With discounts and rebates, insurance companies, pharmacy benefit managers, and patients will pay less.

The price of prescription drugs generates considerable media attention and debate, and it is understandable why government officials, payors, and consumers express their concern.  Too often, though, the other side of the ledger is not considered.  Because hepatis C is a long-term chronic condition, it has enormous costs to society for healthcare and the loss of work by people who are too ill to have a productive life.  Chronic hepatitis C is the leading cause of liver transplants in the U.S., costing on average $735,000 for the surgery and first-year expenses.  Approximately 19,000 people die from hepatitis C every year.

Studies show that the new hepatitis C drugs are cost-effective.  For example, a November 2015 University of California study found that giving hepatitis C patients the new drugs much earlier saves $3.3 billion in the long run, rather than waiting until giving it in the later stages of the disease.

Stealing patents is not the way to bring down drug prices.  It is a dangerous, knee-jerk reaction that ignores the enormous risks involved in pharmaceutical research and development.

While they otherwise demonstrated a lack of understanding of the pharmaceutical industry, at least the members of congress recognized in their letter that negotiations can bring down costs.  Competition always produces that outcome, while improving products at the same time. 

Adopting compulsory licensing policies would kill competition and scientific advancement.  President Trump and Secretary Azar should ignore the members’ demands.

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