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The original research pricing strategy caused controversy

A few years ago, a group of oncologists wrote an editorial on drug prices, with the breakthrough tyrosine kinase inhibitor Gleevec (imatinib mesylate) as an example of extreme pricing practices. This has sparked a major discussion about the price and value of anticancer drugs across the United States.

When first approved, Gleevec pioneered a new era of small molecule targeted tumor drugs. When launched in 2001, the annual cost of taking Gleevec was approximately $26,000. However, when the patent expired, the price of Gleevec climbed to more than $120,000 a year.

In addition to the price rise, Gleevec’s uniqueness also makes it controversial. From the perspective of patient benefit, more expensive oncology drugs than Gleevec, but no measure of survival or quality of life can provide considerable benefits. Pricing for these drugs appears to be clearly inconsistent with value.

Some experts believe that the price of dozens of anticancer drugs is more than 100,000 US dollars per year, and there is almost no miracle drug status comparable to Gleevec. The lifespan of people taking Gleevec for chronic myeloid leukemia is greatly extended. Even for some patients, Gleevec is similar to maintenance medications, enabling patients to reach their natural lifespan.

Therefore, experts believe that Gleevec’s pricing strategy is understandable, given that it is a tumor specialist. Since 2000, the biggest driver of the growth in prescription drug costs has been specialty medicines, which have grown by nearly 15% annually. Before the patent expires, the original price increase is a regular strategy, not unique to Gleevec.

 

The price of generic drugs is not obvious

In the opinion of experts, the pricing of imatinib generic drugs is still high, which is an accident. At the end of 2017, nearly two years after the original patent expired, Gleevec spent about $9,000 a month, while the generic imatinib spent nearly $8,000.

Despite the decline in market share, original manufacturers have expanded their co-payment assistance programs for specialist oncology drugs such as Gleevec. But this did not bring about a significant drop in the price of generic drugs, which was both confusing and disturbing. It seems that the generic drug pricing model for oncology drugs is different from traditional generic drugs.

It has also been said that there is no significant price cut because of the original method of “distribution according to doctor’s advice”. But this is only a reason for the fact that the original sales market is not being eroded as expected, and it cannot explain the pricing strategy of generic drugs.

In the opinion of experts, although the supply of two or more generic drugs is conducive to a sharp decline in prices, the price of the first imitation is usually not lower than the original 10%. For specialty oncology drugs such as imatinib, there is only one generic drug on the market that may have a hard time affecting the original price.

However, there are currently three imatinib generics on the US market, but the discounts are still relatively small. The traditional “generic drug should be significantly reduced price” idea does not explain the viscosity of imatinib pricing.

 

What pricing strategy should be followed?

Some special generic drugs, such as AIDS drugs, have followed the traditional price reduction model since the first imitation, even the first-time biosimilars have a greater discount than imatinib generics. Perhaps the decline in biosimilars has not yet reached expectations, but the price of a few biosimilars in the US market has fallen from 15% to 38%.

Another specialty drug, Copaxone for the treatment of multiple sclerosis, is the best example of “following the traditional price reduction model”.

Like Gleevec, Copaxone has risen sharply since its launch; it has risen from $8,000 at the time of its launch in 1996 to $90,000 in 2015.

But since the advent of Copaxone’s first generics in 2015, it has effectively limited the price of the original research. Compared with the original research, the pricing of subsequent generic drugs can only be up to 64% of the original research price.

So what is the reason for the high pricing of Gleevec? It may be that certain special factors have caused the market strategy around Gleevec’s original research and generic drug price games to fail, but this is difficult to determine.

Next, around the oncology, autoimmune diseases, multiple sclerosis, hepatitis C and other specialist treatments in many fields, what kind of pricing model can we expect?

Is it following a more traditional route, or is it mimicking the route of Imatinib? In the case of the latter, this is obviously not good news for the patient.

Because each drug has a patent period and a life cycle, and capital and pharmaceutical companies often do not consider the people-oriented concept in order to maximize the benefits for a limited period of time.

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