The government and academic medical centers need to rethink their technology transfer policies, which have allowed the price of specialty drugs to soar to unsustainable heights.
The latest targeted therapies for cancer and genetic diseases are coming to market with price tags approaching a half-million dollars per patient. What most have in common are their origins in academic or government labs funded by the National Institutes of Health.
The most important advance in cancer treatment in decades—chimeric antigen receptor T-cell therapy, known as CAR-T—has achieved long-term remission in about two-thirds of children and half of adults with leukemia and lymphoma. In CAR-T, immune cells are removed from a patient’s body and bioengineered to fight a patient-specific tumor. More than 400 clinical trials are testing CAR-T in a wide array of cancers.
There are also new drugs to slow the advance of cystic fibrosis and Leber congenital amaurosis, or LCA. These are mutation-driven diseases whose effects begin at birth and lead to debilitating lung disease and blindness, respectively.
The CAR-T now marketed by Novartis, Kymriah, was developed at the University of Pennsylvania by Dr. Carl June and colleagues. The version marketed by Gilead Sciences is Yescarta, which was invented at the National Cancer Institute; Gilead purchased the rights from Kite Pharmaceuticals for $11 billion. The new drugs for cystic fibrosis, Orkambi and Kalydeco, were developed with grants from the NIH and the Cystic Fibrosis Foundation, which eventually sold the rights to Vertex Pharmaceuticals for $3.3 billion.
The gene therapy for LCA, Luxturna, was developed at the Children’s Hospital of Philadelphia. Its lead scientist, Dr. Katherine High, helped form Spark Therapeutics with a $50 million investment by CHOP, whose CEO at the time, Dr. Steven Altschuler, sat on its board. When Roche recently announced plans to purchase the firm for $4.8 billion, Bloomberg News estimated CHOP would walk away with $456 million from the deal.
In each of these cases (and many more I could cite), the argument that high prices are needed to repay development costs is laughable. The final clinical trials needed for Food and Drug Administration approval had enrollments in the low two-figures with desperate patients or their parents breaking down doors to get in. Those prices are set on Wall Street, not by any calculus based on cost.
Nor are they based on value. The prices for many of these drugs far exceed what the not-for-profit Institute for Clinical and Economic Review considers the upper limit on what insurers should pay for a medical technology. For instance, ICER estimated Vertex would have to cut the prices of Orkambi and Kalydeco, its two cystic fibrosis drugs, by three-fourths to make them cost-effective.
In the mid-1990s, AIDS activists demanded the NIH use the retained-rights clause in its licensed patents to lower the cost of the new miracle drugs it had helped develop. Bowing to industry pressure, the government said no.
University technology transfer offices have also turned their backs on the price issue, which isn’t surprising since the higher the price, the greater their royalty stream. Their defense is that the additional revenue is plowed back into their research labs, which is the same argument made by the not-for-profit Cystic Fibrosis Foundation.
But this distorts the nation’s research prioritization process. It divorces funded projects from the public accountability that comes from an independent review of their medical need and scientific opportunity. “We’re working against the ethical standards we should be driven by,” said Dr. Ross McKinney, chief scientific officer for the Association of American Medical Colleges.
That needs to change. If Congress actually moves to adopt drug pricing legislation this year, it should include language requiring there be affordable, value-based prices whenever therapeutic products are developed with technologies licensed from the NIH or taxpayer-funded university research.