Syringe and vials of vaccine.

How Does Moderna’s COVID-19 Vaccine Work, and Who Is Funding Its Development?

Cross-posted from Written Description, where it originally appeared on August 19, 2020. 

By Jacob S. Sherkow, Lisa Larrimore Ouellette, Nicholson Price, and Rachel Sachs

Moderna, Inc., a Cambridge, MA-based biotech company, is a leading contender in the race to develop a SARS-CoV-2 vaccine. Moderna’s vaccine, however, works using a completely novel mechanism, unlike any other vaccine currently approved anywhere in the world. Despite this, the U.S. government—and two agencies in particular, the NIH and Biomedical Advanced Research and Development Authority (BARDA)—has invested, heavily, in the vaccine’s development. This week, we explore how these investments interact through different forms of research partnerships, and what this says about IP, novel technologies, and innovation policy.

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a pile of vaccine vials and a needle

COVID-19 Vaccine Advance Purchases Explained

Cross-posted from Written Description, where it originally appeared on August 5, 2020. 

By Nicholson PriceRachel SachsJacob S. Sherkow, and Lisa Larrimore Ouellette

No vaccine for the novel coronavirus has been approved anywhere. Nevertheless, governments and international organizations around the world are announcing deals for billions of dollars to procure tens of millions of doses of vaccines from companies that are still running clinical trials, including a $2.1 billion deal with Sanofi and GSK announced by the US on Friday. What’s going on? And what do these deals tell us about innovation policy for COVID-19 vaccines? In this post, we lay out the landscape of COVID-19 vaccine pre-purchases; we then turn to the innovation impact of these commitments, and finish by asking what role patents and compulsory licensing have to play.
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Pile of colorful pills in blister packs

How Can the US Address Coronavirus Drug Shortages?

Cross-posted from Written Description, where it originally appeared on April 7, 2020. 

By Lisa Larrimore OuelletteNicholson PriceRachel Sachs, and Jacob Sherkow

The escalating pandemic has caused devastating shortages not only of ventilators and personal protective equipment like masks, but also of essential medicines needed to treat COVID-19 patients. As detailed by STAT and the New York Times, prescriptions for painkillers, sedatives, anesthetics, and antibiotics are up, but the rate at which prescriptions are filled and shipped to hospitals is down. The FDA helpfully tracks drug shortages, but this doesn’t solve the problem. With the sudden spike in hospitalized patients with COVID-19 symptoms, physicians are using these drugs faster than manufacturers are making them.

What is causing these drug shortages?

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Image of Novatis building

CMS Abandonment of Outcomes-Based Payment Deal with Novartis is a Missed Opportunity

Earlier this week, Politico broke the news that the Centers for Medicare and Medicaid Services (CMS) had withdrawn its outcomes-based payment deal for Novartis’ CAR-T therapy, Kymriah, without public acknowledgement.

The Food and Drug Administration’s approval of Kymriah in August of last year was accompanied by the announcement of a novel outcomes-based agreement with CMS, in which CMS would pay for Kymriah only if patients had responded to it by the end of the first month. Now, CMS has quietly backed away from that agreement. What does the deal – and its subsequent abandonment – tell us about CMS’ involvement in outcomes-based contracts going forward?

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How to “Lower Drug Prices” Without Lowering Drug Prices

Yesterday, Alex Azar was sworn in as the Secretary for the Department of Health and Human Services. A key question is whether Azar will take action against high drug prices, and if so, what he will do. At his confirmation hearing, Azar stated clearly that “drug prices are too high.” And during Azar’s swearing-in ceremony, the President stated that Azar was “going to get those prescription drug prices way down.” But I’m skeptical that Secretary Azar will do much to address the problem in the near term.

To be clear, I’m skeptical for a host of reasons, none of which are necessarily reflective of Secretary Azar. Much like health care, drug pricing is complicated. HHS should (and will) worry about potential unintended consequences of drug pricing proposals, proceeding cautiously and taking concerns seriously. HHS’ ability to act may be limited without Congressional involvement, and Congress has thus far been unable to act on this issue. Other proposals may take years to develop or implement, leaving patients without relief in the interim.

As a former President of Eli Lilly, Secretary Azar understands the drug pricing system deeply. He’s absolutely right that “there’s not one action that all of a sudden fixes this.” But if Azar is under pressure to deliver drug pricing changes in the short term, I’d expect to see focus in three main areas. Here’s the problem, though: at least two of these would not necessarily lower drug prices individually or drug spending overall. They might well increase overall spending. Importantly, that may not be a bad thing (as I’ll explain). But they won’t hurt the bottom line of the drug companies the President believes are “getting away with murder,” and they may well bolster it. The third area may lower prices – but it wouldn’t be Azar’s accomplishment.

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Be Very, Very Concerned About What Allergan Just Did

Yesterday, it was announced that Allergan had transferred the ownership of the patents on its billion-dollar drug Restasis, used for the treatment of chronic dry eye, to the Saint Regis Mohawk Tribe. The Tribe then exclusively licensed the drug back to Allergan, in exchange for tens of millions of dollars in both licensing and royalty fees. Although it may not sound like it, this transfer is potentially huge news in the drug pricing world. It is also extremely complex, and its full implications have yet to be determined.

Enormous caveat before we begin: I am by no means an expert on tribal sovereign immunity. I may well be wrong here. (In fact, I would very much like to be wrong here.) There is little (any?) case law on sovereign immunity’s impact in the Hatch-Waxman area, and much of what follows is extrapolated from case law on tribal sovereign immunity both in IP and in other contexts, state sovereign immunity in the IP area, and discussions with other law professors. Please let me know if this is your area of expertise and you believe I’ve gotten the analysis wrong!

In short, if repeated and taken to its logical conclusion, this transfer has the potential to prevent most invalidity challenges to drug patents. Would-be generic competitors could not seek to initiate inter partes review (IPR) actions before the Patent and Trademark Office (PTO). They could not bring declaratory judgment actions in federal court. And – both most importantly and most unclear – they could not bring Paragraph IV invalidity counterclaims under Hatch-Waxman, preventing generic companies from independently challenging patents’ invalidity and potentially requiring us all to wait until the very end of patent expiration to experience generic competition.

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How to Destabilize Insurance Markets Without Really Trying

Cross-posted from the Take Care blog

On Thursday, Senate Majority Leader Mitch McConnell released the latest draft of his effort to repeal the Affordable Care Act (ACA). As of last night, it appears that this version of the bill is dead, with four Senators declaring that they won’t vote to move it forward. But provisions of this bill are worth talking about, both for what they reveal about health insurance and for what they reveal about the process by which the Senate is considering ACA repeal.  The latest draft contains a number of new provisions, but two caught my eye: (1) Senator Ted Cruz’s attempt to bifurcate the individual insurance market and (2) a clause about membership in a health care sharing ministry as satisfying the requirement of “continuous creditable coverage.”

The Cruz amendment has received a large amount of coverage both in the popular press and by more specialized policy outlets. But there has been little attention to the clause about health care sharing ministries. Fortunately, I wrote a 5,000 word book chapter on the ministries as part of an academic conference in 2015 (here I am presenting on the topic, if you’re really interested). Read More

New Drug Pricing Bill from Democrats Balances Innovation, Access

By Rachel Sachs

Yesterday, a group of 20 Democrats in both the House and Senate introduced the Improving Access to Affordable Prescription Drugs Act, a 129-page bill designed to lower drug costs while increasing innovation and promoting transparency.  The bill aims to accomplish a number of different goals, and in this post I’ll go through the different functions it serves and consider some notable provisions.  For those who are interested, here’s a provision-by-provision summary.  This is going to be a very long post, so I apologize in advance.

On the whole, I think there’s a lot to like in this bill, particularly in its promotion of innovation and in the way in which it seeks to curtail bad actors within the industry.  However, I don’t agree with all of its provisions (as you’ll see) and I view some of its proposals as kludge-y solutions to kludge-y problems our complex system has created.  I’m not yet sure whether I see that as a bad thing, to be clear – it works to create meaningful change within a system that was cobbled together over decades, mostly accidentally.  But it isn’t the platonic ideal of a value-based pricing system, or anything similar.

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PhRMA, Marathon Is Why You Can’t Have Nice Things

By Rachel Sachs

Yesterday, the FDA approved a steroid, deflazacort, for the treatment of Duchenne Muscular Dystrophy (DMD).  DMD is a rare, heartbreaking, and ultimately fatal genetic disease with few if any real treatments, and the steroid may be helpful to patients.  Deflazacort’s sponsor, Marathon, has offered the drug at a list price of $89,000 per year.  High, but actually much lower than the typical prices charged for new orphan drugs, which can easily run to $300,000 or more per year.

Here’s the big problem: deflazacort isn’t really a new drug.  As the Wall Street Journal and Endpoints have pointed out, the drug is approved in many other countries, and its list price is about $1,000-$1,600 in Canada and the UK.  Patients have been importing the drug and accessing it since the 1990s.  Now, patients will pay many times those prices for the same product they had already been purchasing.

But the drug had not previously been approved in the United States, and surely Marathon conducted new clinical trials to demonstrate the drug’s benefit?  Not clearly.  Marathon mostly relied on clinical trial data from the 1990s that had not been fully analyzed.  In return, Marathon gets 1) a seven-year market exclusivity period for the drug (as required by the Orphan Drug Act) and 2) a valuable priority review voucher (as required by law for rare pediatric diseases).

This is not acceptable.  Full stop.  It is the worst sort of gaming that other companies have engaged in over the years.  And at a time when the drug industry is under fire for its high prices, PhRMA cannot afford to have its members (of which Marathon is one) acting this way.  If PhRMA and patient groups funded by pharmaceutical companies are serious about drug pricing, here are three things they should do/encourage right now:

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The 21st Century Cures Act: One of Many Reasons Why Today’s Executive Order Is Misguided

By Rachel Sachs

Today, President Trump signed an executive order (EO) whose purpose is ostensibly to reduce the regulatory burden imposed by the government on many different types of industries.  The EO envisions achieving this goal through an incredibly sophisticated strategy: “for every one new regulation issued, at least two prior regulations be identified for elimination.”  Not how burdensome any particular regulation is, or how old it is, or how broad it is – just how many regulations there are.

The next question, of course, is what the EO means by “regulation.”  It clearly includes traditional APA notice-and-comment rulemaking (the EO specifically calls out situations when an agency “publicly proposes for notice and comment” a regulation).  More generally, the EO does provide a definition: “For purposes of this order the term “regulation” or “rule” means an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency.”

This sounds to me as if it includes guidance documents, which are used extensively by many agencies to set and implement policy. To be sure, it is not always clear what counts as a guidance document, and it is not always clear whether agencies are attempting to use guidance to circumvent the notice-and-comment rulemaking process.  But by many common definitions of guidance documents (including those put forth in executive orders by the Bush Administration, for instance), the term “regulation” as defined in this EO would seem to include guidance documents.  As with other EOs issued in the past week, this one could have benefited from more clarity, but I think the better reading of the EO is that it does cover guidance.

There are many reasons why this strategy in general is a bad one, but I’ll focus on just one: the need to develop policy as a result of particular statutes.  Take the 21st Century Cures Act.  Whatever your view of its merits, it passed with overwhelming bipartisan support in the last weeks of President Obama’s administration.  It also imposes enormous new obligations on HHS and the FDA to make all kinds of policy judgments going forward.  It rarely requires the creation of a traditional notice-and-comment rulemaking (see sections 4002 and 4003 for examples), but often speaks in terms of “establish[ing] a program” or “establish[ing] a draft framework,” much of which could be done through guidance.

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