How Trump’s HHS nominee’s drug company ‘gamed’ patent

- 02.22

When Donald Trump’s nominee for HHS secretary was a top executive at Eli Lilly, the patent on its blockbuster Cialis was soon to expire.

So Lilly tested it on kids.

The drugmaker believed the erectile dysfunction drug might help a rare and deadly muscle-wasting disease that afflicts boys. The drug didn’t work — but under a law that promotes pediatric research, Lilly was able to extend the Cialis patent anyway for six months — and that’s worth a lot when a medication brings in over $2 billion a year.

Critics say the brand-name drugmakers are “gaming” the patent system, finding all sorts of ways to protect monopolies and delay competition from generics. And Alex Azar — the former president of Eli Lilly's U.S. operations, now poised to become the top U.S. health official — professes to oppose such tactics.

But the tension between his past actions as a drug executive and his likely future as the nation’s top health official are evident in both the Cialis story and in Lilly’s tripling of the price of insulin.

Questions about his commitment to rein in skyrocketing drug costs, an unfulfilled Trump campaign pledge, are likely to dominate his confirmation hearing before the Senate Finance Committee on Tuesday. The full Senate is likely to vote on his nomination to lead the Department of Health and Human Services late this month. He'd succeed Tom Price, who resigned after a taxpayer-funded travel scandal.


Azar himself told the Senate HELP panel in November that “we have to fight gaming in the system of patents and exclusivity by drug companies. I have always been an opponent of abuse and gaming of the patent systems by drug companies.”

As a drug company executive, Azar’s job was to find treatments and make money. The Cialis experiment was legal, and Lilly’s competitors engage in similar practices. As the nation’s top health official — the first drug executive to become HHS secretary, if confirmed — he might have different imperatives.

Critics, however, say that his record at Lilly crossed lines and should be disqualifying. Azar “gamed the patent system to protect Eli Lilly’s taxpayer-funded profits under the guise of helping sick kids,” said Tyson Brody, research and investigations director of the left-leaning Democracy Forward.

HHS officials handling communication for the nominee, who is likely to be confirmed, declined to comment, deferring to Eli Lilly. But Azar’s mostly Republican supporters, noting he was well-regarded in high-level HHS jobs in the George W. Bush administration before joining Lilly, say Azar understands the system from inside and out. They say that makes him particularly well-suited to address skyrocketing drug prices.

The pediatric exclusivity law — the one that eventually encouraged Lilly to give kids a sex drug — was enacted about 20 years ago with the best of intentions. Drugs don’t work the same in children as they do in adults, and companies needed incentives to do costly studies. In addition, the law encouraged drugmakers to do more research on rare disorders.

Lilly tested Cialis on Duchenne muscular dystrophy. Its competitor Pfizer tested Viagra in children with a lung disorder. Neither found a cure — Viagra was more likely to harm children than to help them — but both boosted their bottom line.

Lilly didn’t hide its financial interest. The company’s public discussion of testing Cialis in children centered around the likely financial perks of having a longer monopoly on the drug for use in adults — not the promise of a new treatment for seriously ill children. In fact, sometimes the company openly highlighted that it could get the financial benefits, even if the pediatric trial failed.

“The key purpose of these studies is to do relevant clinical trials done in in the pediatric population. And the studies do not necessarily have to be positive,” Lilly’s then Research and Development Chief Jan Lundberg said at a health care conference in March 2016.


And while Lilly did this work, it was also pushing the government on other fronts to keep the price of Cialis high — and delaying the availability of cheaper generics.

In November 2016, attorneys for Lilly and United Therapeutics wrote a letter to the federal Health Resources and Services Administration — which would fall under Azar’s purview as HHS secretary — pushing back against a proposed rule that imposed strict penalties against companies that raise the price of a drug faster than the rate of inflation. The policy would have forced companies to sell some drugs to nonprofit and safety-net hospitals that treat lots of low-income people for as little as a penny.

Cialis sales would likely have taken a big hit if that rule had ever been finalized. According to United Therapeutics, which helps Lilly sell a version of Cialis for a lung condition, Lilly regularly raised the wholesale price of the drug multiple times a year, usually by 9 percent or 10 percent, far outpacing inflation. The Obama-era rule was still in the pipeline — not yet in effect — when Trump took office, and the new administration nixed it.

While Azar may have acted aggressively to protect profits at Lilly, his supporters argue that his record at HHS under Bush reflects a commitment to promoting cheaper medicines. For instance, as HHS general counsel in 2002, he helped push forward an FDA rule on generics that was designed to close loopholes. It made it harder for brand-name drug companies to keep cheaper versions off the market through tactics like filing new patents on old drugs.

And some health policy experts argue that the 1997 pediatric patent extension law is still important. Even when a drug trial fails, it can advance science. The Cialis pediatric tests were designed to help youths with Duchenne muscular dystrophy, which has no cure and kills many by young adulthood. “The pediatric exclusivity scheme is specifically designed to hold out an extremely attractive carrot for research that would not otherwise be done. This works only if the exclusivity is awarded regardless of outcome; the prize is for research, not specific results,” said Erika Lietzan, an FDA-focused lawyer at the University of Missouri who spent many years representing drug companies in Washington.

Lietzan also notes that FDA has to sign off on these studies from the start if the company is seeking the pediatric patent extension. That helps ensure that studies are conducted only if there is scientific merit and that companies follow through on the research. They can’t just fake it and claim the extra six months on patent.


Lilly had a reason to believe Cialis might help children with Duchenne. Earlier research had found that the drug increased blood flow to the muscles of men with another type of muscular dystrophy. Lilly told POLITICO it initiated the Duchenne study based on requests from patient advocacy groups and leading scientists who thought Cialis might slow the decline, preserving the youths' ability to walk for at least some time.

The additional patent protection granted for pediatric studies “is critical to encouraging society’s understanding of how medicines can be used safely and effectively in children,” Lilly’s communications director J. Scott MacGregor told POLITICO. Before Congress created those patent extensions, more than 80 percent of drugs approved in adults were being used in children, without any knowledge of whether the medicines would help or harm then, Lilly said. By 2013, that had been reduced to about 50 percent.

But others have raised concerns that drugmakers are gaming the pediatric program to maximize profits, not cures. A recent study of 200 drug trials led by Tulane University’s health policy director found that companies prioritized pediatric studies for drugs with high U.S. sales, and that they are more likely to launch these studies for older drugs with time running out on their patent.

Harvard drug price expert Aaron Kesselheim has similar concerns. “Pediatric trials have been conducted on a number of products with marginal public health importance for children, and the drugs most frequently used by children have been underrepresented; instead pediatric exclusivity studies have tended to involve drugs that were both popular and profitable in the market for adults,” he wrote in the New England Journal of Medicine.

That doesn’t mean Lilly did anything wrong when studying Cialis in kids, Kesselheim told POLITICO. But it would just make more sense, he said, to directly fund the best pediatric research, rather than to use this roundabout system that keeps prices high and makes consumers pay more.

The intricacies of pediatric patent extensions aren’t likely to dominate the Finance Committee hearing. But questions about where Azar’s loyalties lie — with drugmakers or patients — are likely to be aired.

“I told you in my office you've got some convincing to make me believe that you're going to represent the American people and not big pharma,” Sen. Rand Paul (R-Ky.) told Azar at his November HELP committee hearing. “And I know that's insulting, and I don't mean it to be, because I'm sure you're an honest and upright person.

“But we all have our doubts, because big pharma manipulates the system to keep prices high,” Paul added. “We have to really fix it, and I — you need to convince those of us who are skeptical that you'll be part of fixing it and won't beholden to big pharma.”


 

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