Lead Author: Gaelle Krikorian
Organization: IRIS, Interdisciplinary Research Institute on Social Issues
In France, as in other countries, the arrival of Direct-Action Antivirals (DAAs) for the treatment of Hepatitis C has opened up debate regarding a heretofore unknown reality. First of all, it brought out the inability of the healthcare system to support the price levels demanded by the pharmaceutical industry, and in particular the economic inability of the State to follow medical recommendations. It underlines the excessive and unacceptable nature of the prices imposed by the industry. Lastly, it publicly points out for the first time the imperilment of the principle of universal access to care and treatment in the country. In order to resolve this crisis, broader and more systemic thought is required than simply taking random measures targeting specific medications. Returning to reasonable and acceptable price levels requires an in-depth reform of the economics of medication and the role of the various actors involved. This reform should involve at least four lines of action: evaluation of medications and the treatment delivered; relationships between industry and representatives of public institutions; the framework and rules for negotiation and the determination of prices; financing of medical research and the operation of the patent system. Although I would like to make a few comments on points 1 to 3, I will focus in this document on point 4.
Excessive prices for health products in France: revise the economics of medications and medical research.
Emergence of the problem in France
In France, as in other countries, the arrival of Direct-Action Antivirals (DAAs) for the treatment of Hepatitis C has opened up debate regarding a heretofore unknown reality. Negotiating the price of Sovaldi® sold by Gilead in November 2014 resulted in € 41,000 for 3 months. But this situation is not an isolated case and hearkens back to a more systemic problem that undoubtedly explains the movement that it has created in various European countries. In ten years, new drug prices for treating serious diseases have experienced an unexpected increase. While at the start of the 2000s in France, the price of triple-drug therapies for AIDScost approximately € 8,000 per patient per year, the combinations of drugs for treating Hepatitis C cost up to € 70,000 for a 12-week course of treatment. For cancer, treatments that exceed € 100,000 per patient, per year, are multiplying, as is attested to by the arrival of products such as Kadcyla®, Perjeta® or Yervoy®. In a ten-year period, the price of cancer drugs has nearly doubled, increasing from an average cost to the Government of € 3,700 to € 7,400 per month–a trend that can only worsen with the development of so-called “targeted” medicine, which promotes “niche” drugs (Nau 2013).
This abrupt change has raised questions in many countries (France, the U.S., Brazil, Greece, India, the UK, etc.). In France, in its 2016 report, the National Health Insurance Fund for Salaried Employees (CNAMTS) noted that, “[the] arrival of new treatments for Hepatitis C has caused a shock wave throughout all health systems. For the first time, the question of access to drug innovations is being asked, not for developing or emerging countries but for the most wealthy countries” (2015). At the United Nations, Secretary General Ban Ki-moon recently called it a “new agreement” regarding drugs (UN 2015).
In France, disagreements regarding the price of Sovaldi® have broken out in the context of the State’s financial inability to follow medical recommendations envision broad access to the drug by people who are carriers of Hepatitis C. The criteria for patient selection specified in the Decree dated November 18, 2014 have been deemed more restrictive than those recommended in the first expert interdisciplinary report on the treatment of persons infected with the Hepatitis B or Hepatitis C virus, published in May (Dhumeaux, 2014). The High Authority for Health (HAS) therefore recommended using sofosbuvir alone for patients in the severe stages of the disease, if they have developed cirrhosis (Stage F4) or reach the advanced hepatic fibrosis stage (Stage F3, “Severe” Stage F2), as well as patients co-infected withHIV.
This type of policy places a doubly untenable mandate on the shoulders of physicians, with regard to the ethical principles of their profession, on the one hand, and the imperatives of “financial responsibility” that are required of them, on the other. Some of them also believe that the price of the new Hepatitis C treatments impose “a logic of quotas, even rationing”. For its part, civil society has reacted vehemently, claiming access to products based on medical criteria, criticizing the prices that are deemed to be “unfair” and “excessive”, but also the negotiation procedure carried out by the Health Products Financial Committee (CEPS) which set the prices.
The situation encountered with DAAs brings to light more widespread major problems. On the one hand, French society is confronted with the expansion of the cases of medications that are useful for patients, the purchase of which is not sustainable for the health system. This makes the system as a whole more fragile and encourages Governments to restrict themselves to budgetary reasoning that feeds a headlong rush from a financial point of view. In the name of “access for all”, representatives of Gilead have, furthermore, announced in various meetings their intention to propose the ability for the States to pay on credit over several years for the three-month treatment for patients suffering from Hepatitis C, which they cannot pay in one installment due to the price. In order to maintain their annual budget and without needing to significantly alter the prices, since governments prefer a very short-term view, they could thus incur significant debts for their Governments vis-à-vis multinational pharmaceutical companies. In addition, the principle of universal access that is expensive for the countries is called into question. In spite of pockets of poverty, lawlessness or arbitrary decisions, universal social rights such as the right to health and drugs is deemed to be the rule in France. However situations arise in which drug price pressure translates into the weakening of this right and risks the development of measures for rationing among the general population. Various participants (physicians, patients, charities) condemn, for example, any restrictions or limitations on populations who have access or even deferred access due to financial and budgetary pressure exerted by prices and introduced through medical recommendations or instructions to prescribers.
The response publicized to date by the French Government regarding the price of Hepatitis C treatments has had no effect on the structural nature of the problem. In October 2014, the Minister of Health, Marisol Touraine, proposed, in the context of the Draft Social Security Financing Law (PLFSS), a mechanism intended to restrain expenses for the purchase of Sovaldi® from Gilead. Beyond a ceiling of the sale of 450 million Euros in 2014, and of 700 million Euros in 2015, and although the growth rate of revenues exceeds 10%, the various pharmaceutical companies selling Hepatitis C treatments must make an increasing contribution, the total amount of which is reliant on the gap between the income from sales and the amount of the allocation for the financing of these medications established by law. The contribution of each company is determined in proportion to their revenue, up to a ceiling representing 15% of that amount.
This mechanism was inspired by a so-called “K rate” mechanism adopted in France some 15 years ago in order to protect health care insurance from the risk of increases that were too massive or too fast in drug expenses. It provides for pharmaceutical companies to make a contribution to the health insurance entities when their total pre-tax revenue earned in France, for covered specialty medications, grows faster than a rate of increase specified by the Social Security Financing Act (LFSS). In the case before us, this provision has not had a great impact, in particular because the companies may be exempted from paying their contribution if they sign an agreement with the Health Products Financial Committee (CEPS). They thus offset the contractual payments, which does nothing to lower prices.
In addition, because this is a mechanism for regulating drug expenses after the fact, it does not provide for either the effect of financial pressure exerted on hospital budgets or the effects that the posted price of the medication may have on certain prescribers, seeking to limit expenses for certain populations, and it encourages the setting of drug prices at unacceptable levels.
Solutions for the future
Dealing with the issue of abusive prices requires broader and more systemic reflection than simply taking random actions targeting specific drugs. Returning to reasonable, acceptable price levels requires an in-depth reform of the economics of drugs and the roles of the various players involved. This reform should involve at least four lines of action: evaluation of medications and the treatment delivered; relationships between industry and representatives of public institutions; the framework and rules for negotiation and the determination of prices; financing of medical research and the operation of the patent system. Although I would like to make a few comments on points 1 to 3, I will focus in this document on point 4.
1. Evaluation of medications and the treatment delivered:
One of the resounding needs is to limit the prices of drugs that are still the most numerous, that do not provide anything new to patients (“me-too’s”). A report prepared at government request in 2015 envisions strengthening the use of medical-financial assessments, known as “efficiency reports,” conducted by the Financial and Public Health Evaluation Committee (CEESP) of the High Authority for Health (HAS). Although these reports have a certain role to play, one of the risks to be avoided is, nevertheless, that the medical-financial evaluation would not even out prices that are an invariable data point, when in contrast, the prices must be called into question. We have seen, for example, this type of logic being implemented with regard to DAAs: at a fixed price the effectiveness is assessed in terms of public health, which leads to establishing a cost-effectiveness balance that curtails access.
At the national as well as the European level, industry has led a strong offensive to accelerate and reduce procedures for access to drug contracts (through initiatives such as the Adaptive Pathway). Although it may be beneficial, even essential, to diseases at a therapeutic impasse to have early access to new products, it may not be a matter of revising requirements in terms of control of products, their efficacy and their toxicity downward. In France, this logic is flagrantly apparent in the new framework agreement between CEPS and the LEEM that was recently signed.
The evaluation of drugs also brings up the issue of pharmaco-monitoring of drugs that is in great need of strengthening. The endless progression of scandals pleads for the publication of data resulting from the biomedical clinical research studies by the competent authority when the authorization for commercial distribution is granted.
2. Fighting conflicts of interest between public institutions and industry:
For several years, scandals involving the industry have abounded (astronomical prices, conflicts of interest, collusion, dissimulated side effects, etc.). The measures taken to date by the public authorities are insufficient to change the deal. This primarily involves the public Health Transparency database, which brings together stated data regarding all the monetary and in-kind benefits (contributions of equipment, transport, lodging, etc.) of a value greater than or equal to 10 Euros granted by a company to a professional. However data is only kept for 5 years, and the law does not require “the publication of benefits received in exchange for services rendered in the context of a contract”, which extensively limits its interest.
3. The framework and rules for negotiation and the determination of prices:
The crisis surrounding the price Sovaldi® has brought about a number of significant claims intended to counter the opacity of the work conducted by the CEPS:
- The transparency of face prices, actual prices, mechanisms for delivery and listing fees put into force.
- The transparency of the conventions signed between pharmaceutical firms and the CEPS.
- The transparency vis-à-vis procedures, stages and price determination criteria.
- The expansion of the parties included in price negotiations or having access to information regarding the contents of negotiations, and in particular the addition of representatives of patients and users of the health system.
4. Financing of medical research and the operation of the patent system:
Limit of the system focused on granting exclusive rights:
Drugs are protected by patents, each offering 20-year protection by the WTO but which is nevertheless frequently extended (specifically via Supplementary Protection Certificates). During this entire period, the patent holder enjoys a monopoly on the market covered by the patent. This makes price negotiations difficult, since there is only a single, possible source for the drug, and there is no competitive effect to push prices down.
According to the historical justification of the patent system, the exclusivity granted on the market must allow innovation to be encouraged, ensuring the reimbursement of investments in the research and the release of profits. However the current model that is systematically based on the granting of monopolies and other exclusive rights to industrial concerns shows its limits in an increasingly flagrant manner:
- the development of real medical innovations in a very limited number.
- a profusion of drugs that are similar to each other ("me too") because the companies direct their procurement of patents and/or their research and/or development based on the prospects for a financial return.
- for the same reasons, a shortage of research and treatments for diseases that affect few people or poor populations.
- increasing difficulties in access for patients or difficulties with sustainability for the health systems because prices of products for serious diseases are increasingly high.
Rebalancing the patent system:
A patent must not be granted unless it describes a real invention, and not something that is already known by at least some of the experts in the field in question: this is the basis for the social contract on which the patent system is based. This is the reason that there are patentable criteria that should be carefully applied by the patent offices (national or European), in order to not create an unjustified monopolistic situation. A challenge through the European Patent Office (EPO) of a Gilead patent on Sovaldi® filed by the humanitarian NGO Médecins du Monde (MDM) notes these abuses. A “good product”, that represents major progress for diseases (and that will, in this regard, be commercially distributed, sold at a price that is of interest to the company and reimbursed by the health system) is not necessarily an invention from the point of view of science, and in this regard, it does not necessarily merit a patent and a monopoly.
In addition, the fact of granting or assigning monopoly rights to private companies when the innovation in question is the fruit of work to a large extent financed by public funds poses the problem of a lack of return on investments for the public (all the more so since the price limits access by certain populations).
When the drugs are covered by patents, and if the State deems it necessary, there are legal tools to break the monopoly. French law, in accordance with international rules (established by the WTO), allows that State granting the patents to lift the protection, in particular in the case of “abnormally high prices”, while having recourse to an automatic license. However, and in spite of the flagrant abuses by the industry, the government has so far refused to use this tool.
Diversifying the mechanisms supporting research and creating transparency:
There are various means of supporting and encouraging research and development in the medical field via mechanisms that do not necessarily lead to establishing monopolies and the fact of making funding contingent of drug sales:
- the public funding of research (grants, subsidies, research institutes, etc.).
- balanced public-private partnerships that do not translate into systematic privatization of the developed knowledge.
- the creation of conditional funding targeting specific health needs that reward the development of inventions without leading to the granting of exclusive rights to technologies or knowledge that is developed.
Several interesting mechanisms have been proposed in France in the context of the debates regarding the 2015 Health Act, in order to balance the relationship between public interest and private interest:
- The tracking of direct or indirect public support and funding for medical research (funding, public-private partnerships, availability of researchers, hospitals, tax credits, etc.), in order for it to be possible to identify the various public contributions to research that will allow the development of a new medication brought to market.
- The implementation of a procedure to support the use of a mandatory license through the European Commission in order to allow the Member States to use this indispensable tool to bring the operation of the patent system and negotiations with industry back into balance.
- The creation at the national or European level of “innovation prices” that fund innovation without granting a monopoly: the establishment of ad hoc funds intended to offset the development of medical innovations or stages of research necessary to develop innovations, the fruits of which will remain in the public domain.
- The obligation assumed by pharmaceutical firms wanting to bring a product to market to forward to the CEPS and make public the following:
• the actual amounts spent on R&D and in particular the amounts allocated to funding the clinical trials referenced during the registration of the product, indicating the number of trials and patients included in these trials;
• the tax credits, grants and other public funding granted to industrial concerns, in relation to these research and development activities;
• possible purchases of patents related to health products, the cost of acquisitions or speculation activities related to the acquisition of patents;
• the production costs of health products, as well as the costs of commercial sale and promotion incurred by the companies;
• the annual revenue earned in France, attributable to a commercially distributed specialty drug.
Bibliography and References
Gaëlle Krikorian is a sociologist and member of the , Interdisciplinary Research Institute on Social Issues (IRIS). She wrote her thesis in sociology at the Ecole des hautes études en sciences sociales in Paris, titled “La propriété ou la vie ? Économies morales, actions collectives et politiques du médicament dans la négociation d'accords de libre-échange. Maroc, Thaïlande, États-Unis” [Ownership or life? Moral economies, collective and political action regarding drugs in the negotiation of free-exchange agreements. Morocco, Thailand and the United States”]. This work involves the production of rules of law and policies for intellectual property in the context of globalization that have an impact on access to drugs. Her work primarily involves the place of legal and technical expertise in social and political controversies related to health and conflict analysis that oppose various types of social agents (representatives of States, activists and industrial concerns, etc.) in the field of ethical issues.
Among her recent publications are:
• Krikorian G. (2014), Un activisme savant. De la lutte contre le sida aux mobilisations contre les accords de libre-échange. La vie des idées. Dossier La fin du sida ? 20 November 2014. http://www.laviedesidees.fr/Un-activisme-savant.html
• Krikorian G. (2014). Le programme de préqualification de l’OMS au coeur d’un conflit sur la propriété intellectuelle. Commentary. Sciences Sociales et Santé, Vol. 32, No. 1, March 2014, 101-107.
• Krikorian, G. (2013). Conditions d’usage des licences obligatoires : l’action du gouvernement thaïlandais, in Accès aux antirétroviraux dans les pays du Sud. Propriété intellectuelle et politiques publiques, edited by Cristina Possas and Bernard Larouzé, ANRS, p. 51-67.
• Krikorian G. (2011), Intellectual Property and Access to Medicines: paradoxes in Moroccan policy, in Intellectual Property, Pharmaceuticals and Public Health. Access to Drugs in Developing Countries, Kenneth C. Shadlen, Samira Guennif, Alenka Guzmn, N. Lalitha (Eds.), Edward Elgar Publishing, p. 56-76.
• Krikorian G. (2011), Accès à la santé ou renforcement des droits de propriété intellectuelle : enjeux des normes internationales, in Libres Savoirs, les biens communs de la connaissance, C&F éditions, p. 105-115.
• Krikorian G. (2010). Décision de l’OMC du 30 août 2003 et l’étude de cas du Rwanda. In G. Velasquez & C. M. Correa, Innovation pharmaceutique et santé publique (L’Harmattan, Paris), p. 89-101.
• Krikorian G. (2010). Dispositions ADPIC-plus introduites dans le cadre des négociations internationales. In G. Velasquez & C. M. Correa (Ed.), Innovation pharmaceutique et santé publique (L’Harmattan, Paris), p. 131-143.
• Krikorian G. & Kapczynski, A. (2010), Access to Knowledge in the Age of Intellectual Property. (Zone Books Eds., New York), 652 p.