Big Pharma Lawsuit Threatens Program That Is the Only Hope for Many Patients

The Pharmaceutical Research and Manufacturers of America (PhARMA) is unhappy with the billions of dollars the drug industry rakes in every year, so it has filed another lawsuit to stop needy medical facilities from getting certain drugs at discount prices.

As reported by the Wall Street Journal’s (WSJ) Pharmalot blog, the lawsuit is just the latest punch in an ongoing feud between Big Pharma and the federal government over a discount drug program that enables “safety net” hospitals to get “orphan” drugs at a discount.

Safety net hospitals and clinics serve low-income, uninsured and otherwise vulnerable patients. They can be public, private and/or nonprofit, and have in common only the commitment to care for people with limited or no access to health because of financial, insurance or health conditions.

Orphan drugs, as we’ve reported, are meds that treat extremely rare diseases. Because so few people have the disorders they address, the market is too small to sustain the drugs’ research and development. So the feds offer drug makers incentives to develop them. Because their market is so small, they’re incredibly expensive.

The discount drug program, known as 340B, requires drug makers to offer discounts of as much as half the cost for all outpatient drugs to safety net hospitals and clinics. The WSJ said there are about 2,000 such facilities.

In the summer, the federal government imposed a rule Big Pharma didn’t agree with. Safety-net facilities may obtain orphan drugs at a discount to treat conditions other than the one for which orphan status was granted.

The intention of Congress in devising the rule, the WSJ explained, was to maintain incentives for drug makers to get orphan status for their drugs – and marketing exclusivity – and simultaneously enable hospitals and clinics to obtain needed medicines at affordable prices.

It was the second time the government tried to issue the rule. It did so in 2013, and PhARMA filed a lawsuit to cease all discounts, claiming that the government misread the law. The trade group also claimed that drug manufacturers would suffer financially to the degree their ability to develop orphan drugs would be threatened.

According to, the world’s 11 largest drug companies netted $711.4 billion from 2003 to 2012. In 2012 alone, they earned nearly $85 billion in profit. If this industry can’t afford to invest in life-saving R&D, who can?

In the U.S., the drug industry spent $3.5 billion promoting its wares to consumers in 2012; in 2011, one manufacturer, Boehringer Ingelheim, spent $464 million advertising its blood thinner Pradaxa, a drug with demonstrable problems that have created legal problems for the company and considerable harm to patients.

Big Pharma won the first legal round over the discount rule. Earlier this year, a federal judge said that the feds lacked the authority to make such a rule, but also that they could issue a new one, which materialized over the summer. And the drug manufacturers responded as they did the first time: They sued.

It’s the same old story. PhRMA still says the government misinterprets federal law, and isn’t happy that the feds have threatened to order drug makers to issue refunds for discounts they didn’t offer, or otherwise punish companies for failing to comply.

A spokesman for the Safety Net Hospitals for Pharmaceutical Access, which represents nearly 1,000 health-care institutions that participate in the 340B program, told the WSJ, “Once again, big pharma is trying to increase its prices at the expense of rural and cancer hospitals and their patients. These providers depend on 340B savings to serve needy patients and, in many cases, to keep their doors open.”

The hospital trade group said that that only five drug makers and biotech companies are complying with the rule to offer discounts. PhRMA claimed that is has no idea how its individual members respond to the rule.

Really? Then how do they know how supposedly harmful it is? As always, the pharmaceutical industry believes it can, and should, have it both ways.

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