Some facts on Daraprim (Pyrimethamine)
If you guessed, "the kind who would buy a patent for a 62-year-old drug and hike its price 4,000 percent," you're absolutely right – meet Martin Shkreli.
Shkreli, 32, landed in the hot seat this week when news broke that his company, Turing Pharmaceuticals, purchased the rights to the drug Daraprim, used to treat the parasitic infection toxoplasmosis (HIV and AIDS patients are especially susceptible). The company that had previously held the rights to the drug was selling it at $18 a pill; Turing changed the price to $750.
Daraprim has been available since 1953, meaning the patent for Pyrimethamine has expired. In the United States the market for this product is quite small so no generic manufacturer has emerged. In 2010 GlaxoSmithKline sold the marketing rights for Daraprim to CorePharma and in 2015 the rights were bought by Turing Pharmaceuticals
What is going on with Daraprim is not a patent issue. It is the FDA, not the US Patent Office, which grants exclusivity as to specialty drugs.
**One can find a more thorough discussion of the matter at InThePipeline
Martin Shkreli Has One Idea, And It’s a Bad One
**From The FDA Law Blog in June 2015:
Noting that revoking patent protection is not a practical (or realistic) way to address the problem he lays out, Dr. Nichols says that we should consider revoking non-patent exclusivity if a company proces a drug too high:
What if we changed existing law enough to say this to developers of newly approved specialty drugs: you can price them as you will, this is America, but if you price them high enough, you will forfeit the marketing and/or data exclusivity grants that the FDA is empowered to make – but not your patents from the US Patent Office – and encourage competitors to enter the market with all our regulatory powers and fast track authorities.
From the FDA website:
Exclusivity. Exclusivity is exclusive marketing rights granted by the FDA upon approval of a drug and can run concurrently with a patent
or not. It prevents the submission or effective approval of ANDAs or applications described in Section 505(b)(2) of the Act, and was
designed to promote a balance between new drug innovation and generic drug competition.
Exclusivity is granted upon approval of a drug product if the statutory requirements are met. The length of time that FDA grants new drug
exclusivity depends on the type of exclusivity. Note that exclusivity is not added to the patent life. Hatch Waxman exclusivity (5-year, 3-
year, and 180-day) is described in 21 C.F.R. 314.108.
<-- link: http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/SmallBusinessAssistance/UCM447307.pdf As to specialty drugs-->
In 2010, specialty drug approvals by the FDA exceeded traditional drug approvals for the first time, a trend that has continued each year since. And in 2013, 60 percent of the drugs approved by the FDA are expected to be specialty drugs. Under current law, brand name biologic drugs are given a 12 year exclusivity period upon approval from the FDA, while traditional drugs are given exclusivity protection for just 5 years. Granting exclusivity to specialty drugs removes the economic benefits of price competition, resulting in higher prices relative to what they would be in a perfectly competitive market. The Government Accountability Office released a report examining trends in Medicare Part B spending and found that in 2010, not only did 10 drugs account for 44 percent of all Part B spending, but none of these drugs had a generic version also approved by the FDA.
See also the IPBiz post on colchicine, wherein the FDA granted exclusivity on a drug known to treat gout for hundreds of years.
[The colchicine case is different from the Daraprim case in that there were other makers of pharmaceutical grade colchicine.]
As to specialty drugs:
Treatment for complex or life-threatening health conditions now includes the use of certain drugs broadly referred to as specialty drugs. These are typically made using advanced biotechnology methods and are referred to as “biologics” or “large molecules.”4 While no standard definition exists, specialty drugs generally are defined as having one or more of the following characteristics:
• Complex to manufacture, requiring special handling and administration
• Injectable or oral, self-administered or administered by a health care provider
• Costly, both in total and on a per-patient basis; taken by a relatively small share of the population who have complex medical conditions
• Difficult for patients to take without ongoing clinical support; also challenging for providers to manage5
A decade ago, specialty drugs were commonly referred to as “injectable drugs” and were used to treat conditions like cancer, rheumatoid arthritis, multiple sclerosis, and growth disorders; today, their use has expanded beyond those conditions to include treatment for other chronic and inflammatory conditions and through other modes of administration. The Food and Drug Administration (FDA) has approved about 300 drugs, which many industry stakeholders consider “specialty,” compared to a mere handful available two decades
Costs for patients. A relatively small share of the population uses specialty drugs—in the commercial population, approximately three to four of every 100 plan enrollees use at least one.21,22 Therefore, per-person specialty drug costs are high, ranging from several thousand dollars to hundreds of thousands of dollars annually for some of the highest-cost products.
In 2012, MS drugs accounted for 10% of specialty drug outlay.
[From United Health Care, April 2014]
Specialty pharmacy, which once occupied only a small niche in the marketplace, has now become the largest growth area in the pharmacy industry. IMS Health data shows a clear trend of increasing utilization for top Rheumatoid Arthritis (RA) and Oral Oncology products in the specialty channel with decreasing utilization in retail channel over the past 5 years (Figure 2). Currently, three pharmacies -- Express Scripts, CVS Caremark and Walgreens -- make up more than 50% of the specialty drug market while the rest of the market is comprised of hundreds of smaller specialty pharmacies, including Diplomat pharmacy and Omnicare’s advanced care scripts4. However, due to the commoditization of retail pharmacy dispensing, there has been an ever-growing increase in the number of pharmacy providers dispensing specialty drugs, driving up the level of competition. In addition to traditional specialty pharmacies which are independent or owned by pharmacy benefit managers (PBMs), there is a range of new entities entering the specialty pharmacy marketplace. The new players include specialty pharmacies operated by wholesalers, large hospital organizations, physician practices and retail pharmacies. As a result, there has been an emergence of several specialty pharmacy trade associations representing viewpoints from a diverse set of players and further increasing the complexity of this market.