Senate proposal would tie DOD research backing to pricing limits

The controversy over Sanofi's eventual pricing for an in-development Zika vaccine might just spawn pricing constraints for all treatments developed with the help of Defense Department funding. 

Under an amendment to the military spending authorization now working through Congress, the Department of Defense would have the power to invite in new competition to certain drugs and vaccines it helped research.

Proposed by Sen. Angus King, I-Maine, the measure would apply to products whose prices are markedly higher in the U.S. than in other high-income countries. The amendment passed the Senate Armed Services Committee unanimously on June 28.

If the proposal makes its way into law, it could affect Pfizer and Astellas’ prostate cancer med Xtandi and other projects that have received government R&D support, such as Sanofi’s in-development Zika vaccine. King is one of the senators who has called for pricing guarantees on a Zika vaccine Sanofi is developing with the U.S. Army. 

Though the Zika vaccine controversy is freshest, Xtandi—and its roots in federally funded research—has been at the center of its own pricing brouhaha. The cancer med was developed at the University of California at Los Angeles, with support from the National Institutes of Health and the Department of Defense, Knowledge Ecology International (KEI) said.

The Japanese drugmaker charges $129,000 per year for the med in the U.S., a figure multiples higher than in other high-income countries, according to the nonprofit. KEI has argued since early last year that generics to the prostate cancer med should be made available in the U.S. under a never-used provision of federal law that allows the government to usher in generics of on-patent drugs.

The NIH refused to exercise those "march-in" rights and break Xtandi patents last June. Writing on the decision, Director Francis Collins said the med is "broadly available as a prescription drug." KEI director Jamie Love called the move "an appalling dereliction of his duty to protect the public from unreasonable use of inventions funded by U.S. taxpayers."

On Wednesday, Love said in a statement that Sen. King's amendment will do "something concrete to curb excessive prices on drugs, and it would have an immediate impact, in particular, lowering Medicare outlays by hundreds of millions of dollars annually, and lowering patient co-payments significantly."

KEI estimated the amendment could save Medicare $500 million each year on Xtandi alone.

"If the amendment becomes law, it will be the first time in more than 25 years that U.S. residents get any type of protection on the pricing of taxpayer-funded drugs or vaccines," Love continued.

Pfizer representatives declined to comment on the amendment. An Astellas spokesperson said it'd be premature to comment as the amendment text isn't public. A spokesperson for the drug industry's lobby group, PhRMA, said the proposal "ignores the subsequent substantial R&D investments and risks undertaken by the private sector in developing and bringing a new medicine to patients."

"This amendment would undermine critical intellectual property rights and incentives, create substantial uncertainty for companies, and establish completely arbitrary criteria for taking intellectual property," according to PhRMA's representative. "This could chill critically needed collaborations and investment by the private sector to address some of our most serious unmet medical needs."

Though it’s not close to hitting the market, another high-profile project that’s received DOD support is Sanofi’s Zika vaccine, which uses technology initially developed by Army scientists. The partnership, which includes options for ongoing funding, has been under intense scrutiny since late last year, when the U.S. government said it was negotiating an exclusive license with the French drugmaker. Nonprofit groups called for assurances that the vaccine would be affordable for U.S. citizens.

An Army official has said his group can’t enforce future vaccine prices, and Sanofi said it’s too early to talk about pricing for a vaccine that's still in early-stage testing and may never make it to market. So far, the project has received $43 million in U.S. government funding, with another $130 million potentially available if the shot advances.

Sen. King was among a group of senators who last month called for a public hearing on the proposed Zika vaccine license. Writing to Sanofi CEO Olivier Brandicourt, the lawmakers noted that 95% of the National Institutes of Health's licensing agreements with industry aren't exclusive, and argued that Sanofi stands to gain considerably from the project whether or not the license is exclusive. Sanofi declined to comment on the amendment.