Thursday, April 30, 2015
Just like the Supreme Court of India demanded that Bayer submit an account of its costs in developing the anti-cancer drug sorafenib, more and more states in the US are proposing legislations that could force pharmaceutical companies to reveal the development cost of drugs and profits to justify the high prices they charge.
Five states in the US, including Massachusetts, Oregon, California, Pennsylvania and North Carolina, moved legislations that could have forced pharma companies to justify the high price they charges for drugs.
However, Oregon's Pharmaceutical Cost Transparency Bill was defeated recently. Had the bill been passed, pharmaceutical manufacturers would have had to file an annual report with the health authority on costs associated with the prescription drug for the previous year including a detailed break-up of the cost of drug discovery, clinical trials, marketing and advertisement for the drug and so on.
Last week, the pharmaceutical industry trade group testified against the bill in California where voting on it was postponed due to its opposition.
These bills are coming up as the national debate on rising cost of prescription drugs intensifies. Drug makers have been strongly opposing these bills claiming that what they (bills) demand could not be met as providing the developmental cost of a drug is impossible since it includes the cost of all the medicines that fail the test.
Last year, several US senators were up in arms over the pricing of Gilead's new Hepatitis C drug with the brand name Solvadi (sofosbuvir) which is expected to cost at least $84,000 for the full treatment course, or $1000 per pill. The senators demanded that Gilead explain the reason for such high pricing.
When Bayer contested the royalty rate fixed for operating the compulsory licence given to the Indian company Natco to produce sorafenib, the Supreme Court bench asked why Bayer had not made available the unaudited accounts of R&D expenses to develop the drug, which would have been the best evidence to calculate a reasonable royalty rate. Though Bayer argued that 98% of the cost of a drug was from failed drugs which made providing precise accounts impossible, the Apex Court refused to accept this argument and ordered that in absence of any evidence supplied by Bayer, they would go with Natco's statement that all R&D costs of Bayer were recouped within the first year itself.
Shamnad Basheer, an IP expert pointed out that it was unfortunate that the laws in most countries did not mandate a revelation of true drug costs, without which, one would never whether drug makers were being undercompensated, overcompensated, or fairly compensated. "Given their excessive profits year after year, the prevalent perception is that big pharma is being overcompensated. Till such time as these drug companies are transparent about their costs and profits, India should use this perception in its favour, coming down on the side of public health and affordable medication, wherever possible," stated Basheer in an opinion piece on the supreme court judgement.
timesofindia.indiatimes.com
