Consequences for competitors
This article is part 2 of a two part article. Click here to view part 1.
Although Abbott is trying to downplay the consequences of the ritonavir price increase that took effect on December 4th, pointing to the arrangements made to protect patients and payers from the price shock, a company spokesperson was unrepentant when questioned on the effect of the ritonavir price increase on the cost of other boosted protease inhibitors.
"Other companies must look to their own pricing," said Ann Fahey-Widman of Abbott Laboratories Public Affairs division. "If you're asking about the pricing of another product, you need to call that company and ask about its pricing."
The effect of the price increase is indeed likely to focus attention on the pricing of all new HIV drugs, and will be particularly troubling for the development of tipranavir, a new protease inhibitor which must be boosted with a total of 400mg of ritonavir each day. Tipranavir’s manufacturer Boehringer Ingelheim is widely believed to be contemplating a price for tipranavir that would lie somewhere close to the cost of the new fusion inhibitor Fuzeon (T-20) (around $20,000 a year).
Abbott’s price increase will add approximately $9,000 to the cost of using tipranavir, forcing Boehringer Ingelheim either to cut the price of tipranavir drastically, or limp to market with a product that will cost almost 40% more than Fuzeon (a drug which took many state ADAP programmes to the brink of bankruptcy and forced many states to introduce waiting lists for medications).
The move is also being interpreted as a bid to see off competition in the protease inhibitor market from Bristol Myers-Squibb’s Reyataz (atazanavir). Reyataz costs around $700 a month, and boosting once daily with 100mg of ritonavir added around $50 to this cost prior to the price increase. Until last week, ritonavir-boosted Reyataz was slightly more expensive than Kaletra. The effect of the price increase is to push the cost of ritonavir-boosted Reyataz up by at least $260 a month, making it substantially more expensive than Kaletra.
However. Dr Mike Youle of London's Royal Free Hospital believes that Abbott's action could have an unintended effect on Bristol Myers Squibb's atazanavir development strategy. "This makes it much more attractive for BMS to study the use of atazanavir 600mg as an alternative to Kaletra, since you may achieve very good blood levels at that dose without the need for ritonavir boosting." Bristol Myers Squibb shelved investigation of a 600mg dose after phase II studies showed a higher rate of treatment-limiting hyperbilirubinemia at that dose.
The price increase will have an even more inflationary effect on the cost of Lexiva, the new formulation of amprenavir recently approved in the United States. A license for Lexiva was granted with the recommendation that it should be boosted with ritonavir when used in treatment-experienced patients, at a dose of 700mg of Lexiva and 100mg of ritonavir twice daily. That’s an extra $400-plus a month for any patient who needs amprenavir due to their drug resistance pattern. To dose it once daily would be just as expensive.
Abbott's competitors are also angered by the company's assertion that it must recoup the development costs of research into ritonavir's role as a booster for other company's protease inhibitors.
"In the case of saquinavir, it was Roche who funded the studies into
boosting of saquinavir with low dose ritonavir, from 1997 onwards," Andrew Hill of Roche told aidsmap. "The MaxCmin trials were funded 100%
by Roche, as were several other clinical trials.
Roche has funded trials with the Chelsea and Westminster Hospital in London looking at low dose ritonavir boosting double boosted combinations (atazanavir/SQV/r, fosamprenavir/saquinavir/ritonavir). Roche has also funded research into mechanisms of boosting with alternative drugs, such as ketoconazole and itraconazole [which showed that ritonavir was a superior boosting agent]. The combined cost of this work to Roche is over US $12 million."
The same holds true for Abbott's other competitors. The BEST and HIVNAT 005 trials of indinavir/ritonavir 800/100 mg were funded mainly by Merck, and the CONTEXT, NEAT and SOLO trials of amprenavir/ritonavir were funded by GlaxoSmithKline. Research into use of tipranavir with ritonavir is funded by Boehringer-Ingelheim.
How long before Europe faces a similar price hike?
Although Abbott has assured physicians and community groups in the UK that the price rise only applies to the United States, there is mounting anxiety across Europe that Abbott will seek to price its new formulations, especially Norvir, at much higher levels. Publicly funded health care budgets in Europe may not have the same resilience as US insurance funds when it comes to a large hike in the price of Norvir.
Concern in the UK focuses on the rising cost of salvage therapy, particularly where T-20 and tipranavir might be used together. Some clinicians doubt whether such treatment would be considered cost-effective by NHS purchasers if its annual cost approached £30,000 a year. Recent research based on the TORO 1 and 2 studies of T-20 showed that in advanced HIV patients, the cost per quality adjusted life year of a regimen containing T-20 was £23,200. Forcing the price of other drugs up to the T-20 level, they argue, would make salvage therapy for HIV infection unattractive to the NHS in comparison to other competing claims.
What's it all about?
"People who need salvage regimens are under attack," said Bob Huff, editor of GMHC’s Treatment Issues, a leading treatment newsletter in the United States.
Abbott insists that the price rise is not aimed at fixing its competitors, but at delivering better drugs for patients.
Others see a longer range plan to destabilise the protease inhibitor marketplace by changing the economics of treatment at the very moment when promising data on the use of single-boosted protease inhibitors as maintenance treatment, on dual boosted protease inhibitor treatment and on nucleoside analogue-sparing regimens are beginning to trickle out.
"This isn't just an attack on competitors' pricing, it's an attack on their research strategies. Why bother investing in these areas if Abbott has effectively priced you out of the market in the US?", one pharmaceutical company research scientist told aidsmap.
By pricing others out of the market, Abbott will effectively shape the evidence base in such a way as to ensure that all roads lead to its products, he argues.
"It's a scary abuse of monopoly," he went on, suggesting that all other research into single boosted protease inhibitors and any dual boosted protease inhibitor that excludes Kaletra will grind to a halt.
Is one company to blame?
The dispute plays into a wider debate beginning to take shape in the US, over the extent to which the pharmaceutical industry should be free to set prices. In the UK, the pharmaceutical industry has been warned that the days of the blank cheque may be over, and in many other developed world countries, spiralling drug costs are forcing tougher negotiations over price.
A recent report on HIV drug pricing by the market research company Datamonitor points out: "An influx of new products will require manufacturers to justify setting relatively high price points to sustain profitability in the face of increasing competition."
A collision between the needs of the pharmaceutical industry (for profit and shareholder value), governments (to make tax revenue go further) and patients (for life-sustaining treatment) is fast approaching in North America and Europe, and there are only two possible solutions.
One is a complete overhaul of the profit structure in the pharmaceutical sector, leading at one end of the spectrum to the consolidation of the pharmaceutical sector into a handful of key players, or at the other end to the breakup of big pharma and the advent of a writer/publisher type arrangement, as proposed by the Consumer Project on Technology, in which biotech companies invent drugs and multiple generic manufacturers compete to license those products, with phase III and IV research funded by health maintenance organisations and public payers who seek to define which drugs represent best value.
The other is stricter regulation of price without any structural change in the industry, as proposed recently by The Economist, by which governments reward genuine innovation with higher prices but force drug companies to submit to tighter price regulation.
Either way, a more sophisticated conversation about value and pricing between industry, doctors and patients will be forced to evolve in the next few years.