Why are re-purposed medicines expensive?

The quest for developing a vaccine and finding a definitive treatment for COVID-19 treatment is reportedly making good progress. However, with the number of infections around the globe having crossed 14.7 million, there is no easy containment of this pandemic. Clinical trials with re-purposed antivirals and biologicals have been approved in different geographical settings. These medicines are believed to have some potential in shortening the recovery time in COVID-19 patients. Recently, the Drugs Controller General of India (DCGI) issued approval to Glenmark Pharma to manufacture and market Favipiravir tablets for ‘restricted emergency use’. It also issued approvals to Hetero and Cipla to manufacture and market injectable formulations of Remdesivir, and to Biocon Limited to market injectable formulations of Itolizumab.

Pricing of medicines

Remdesivir is an antiviral originally developed by Gilead to treat the Ebola virus infection. Favipiravir is a generic version of an anti-influenza medicine developed by Toyama Chemical in Japan. Gilead has entered into royalty-free voluntary licensing agreement with companies including Hetero and Cipla to provide technology transfer to manufacture Remdesivir for distribution in 127 countries. The free royalty period is valid until the World Health Organization (WHO) declares the end of the pandemic or until another medicine or vaccine is approved to treat or prevent COVID-19. Hetero has priced Remdesivir at Rs. 5,400 for a 100 mg injection vial, and Cipla at Rs. 4,000 per vial. A five-day treatment course with Remdesivir would work out to Rs. 24,000-32,000 per patient. Glenmark claims to have developed the active pharmaceutical ingredient and formulation of Favipiravir through its in-house research team and has priced Favipiravir 200 mg tablet at Rs. 103, with a course of treatment costing Rs. 12,566 per patient. Both these medicines inhibit viral RNA-dependent RNA polymerase, thereby retarding viral replication in host cells. Itolizumab, incidentally used in the treatment of psoriasis, reportedly shows therapeutic effects in severe COVID-19 infections progressing to acute respiratory distress syndrome. Treatment with Itolizumab is also not inexpensive by any means with the medical costs amounting to Rs. 32,000 per patient. The critical question is whether the above pricing would exclude a majority of the patients from the benefits of these re-purposed medicines.

Question of affordability

The updated clinical management protocol of the Ministry of Health and Family Welfare (MHFW) lists Remdesivir as a potential medicine for investigational therapy in moderate COVID-19 infections without underlying contra-indications. The protocol does not mention Favipiravir, which nevertheless finds a place in the WHO Clinical Management Protocol. Itolizumab figures neither in the MHFW nor in the WHO protocol.

The question that begs an answer from pharmaceutical companies marketing re-purposed medicines for restricted emergency use is whether these medicines can be made available at affordable prices to patients. The current pricing does not indicate this. Andrew Hill et al in their study published in the Journal of Virus Eradication determined the price of ‘final finished product’ (FFP) or medicine ready for use, by adding the costs of the active pharmaceutical ingredient, excipients, formulation, packaging and a reasonable profit margin. Their calculations have estimated the cost for a treatment course with Remdesivir to be $9 and the estimated production cost for a course with Favipiravir to be $20 per patient. Itolizumab has not been subjected to a costing analysis in their study.

Affordability of medicines is a matter of particular concern. When companies attempt to recover the fixed costs or sunk costs that went into the investment and development of the medicine, the final price becomes unreasonable. This is distressing for the patient, especially when the therapeutic results or clinical benefits have not been fully established.

Various laws

Akin to the flexibilities in the TRIPS agreement which helped in making antiretrovirals affordable during the AIDS crisis, some countries are resorting to enabling legislation and procedural modifications of existing regulations to address affordability of anti-COVID-19 medicines. Israel issued a compulsory licence to Hetero for production and import of the Lopinavir-Ritonavir combination from India, following which the innovator AbbVie decided not to enforce its patent right. Canada passed the COVID-19 Emergency Response Act and Germany, The Prevention and Control of Infectious Diseases in Humans Act. Chile’s Lower House of Parliament and Ecuador’s National Assembly passed resolutions allowing TRIPS flexibilities in the pandemic. Prompted by Costa Rica, WHO opened a voluntary patents pool, for compiling and sharing information and technological know-how for the development of medicines, vaccines and diagnostics for COVID-19.

Indian patent laws too are armed with sufficient powers to ensure reasonable pricing for pharmaceutical products. India has used compulsory licensing only once in 2012 for Sorafenib. Section 92 of the Act enables grant of compulsory licensing in circumstances of national emergency or extreme urgency. Compulsory licences may not be the solution in all such situations. Nevertheless, the pricing will have to reflect the magnitude of the crisis and the socioeconomic realities in individual countries.

Many innovator companies, perhaps to escape or avoid any coercive move or legal action by governments, agree upon voluntary licences with generic companies. Such tie-ups can cause substantial reduction of medicine prices, as was seen in the case of Sofosbuvir, the $1,000 anti-hepatitis C medicine. Its price went down to approximately $10 per tablet in India, subsequent to the innovator’s voluntary licences with Indian generic companies in 2014. The terms and conditions of such agreements are generally wrapped in secrecy and may have clauses detrimental to public interest. Besides, as allegations of cartelisation between innovators and generic companies were raised in the case of antidiabetics Sitagliptin and Vildagliptin in the past, such arrangements are generally viewed with suspicion.

The prices announced for the re-purposed medicines appear to be high, especially given the rate of spread and the public health crisis in India. Economies of scale will ensure that the companies recoup their investment costs, and still generate profits. The burden of a global pandemic will have to be borne by governments and pharmaceutical companies alike. Unprecedented public health crises call for situation-specific decisions from pharmaceutical companies and profit maximisation should take a back seat. At least there is a strong case for reconfiguring the pricing strategies of the re-purposed medicines for COVID-19 treatment.

Sharmila Mary Joseph is Secretary, Department of Ayush, Government of Kerala, and James J. Nedumpara is Professor and Head, Centre for Trade and Investment Law, Indian Institute of Foreign Trade, New Delhi. Views are personal