PhotoA patient in Arizona needed help. Last year, the person had contracted tuberculosis (TB), the lung infection that people might assume just doesn’t happen anymore in United States.

To be sure, TB cases here are few and far between and are rarely serious enough to require antibiotics. But the patient in Arizona proved to be an exception. They were suffering from the drug-resistant form of tuberculosis, known as multidrug-resistant TB or MDR-TB. The diagnosis meant that even typical antibiotics didn’t work. They needed something stronger.

The local county health department in Arizona determined that their patient needed bedaquiline, a newer drug that researchers say has proven in recent years to be the best bet at helping people who have MDR-TB.

But to get that drug, the county would have to make a request to Johnson & Johnson. The pharmaceutical and personal care giant has an exclusive patent on bedaquiline with its breakthrough drug Sirturo. With its monopoly, Johnson & Johnson charges $30,000 for a course of treatment. It was a price that the county in Arizona couldn't afford.

“Prescribing and paying full price for this medication would decimate local health department budgets,” an unnamed official in Arizona recounted of the experience.

That story is detailed by John Hopkins University researchers, who published a report online two months ago describing the difficulties that public health departments face in obtaining bedaquiline from Johnson & Johnson. The report was published in partnership with the National Tuberculosis Controllers Association, a coalition of state agencies responsible for monitoring tuberculosis cases in the United States.

According to the report, people in rural health departments are worried that the cost of treating MDR-TB could devastate their budget, even though the disease is so rare.

“If we had a patient who was underinsured or for whatever reason was not eligible for Medicaid,” a Kentucky health official is quoted saying, “then most definitely the resources would fall upon that local health department and that would be very devastating.”

The burden of expensive drugs

In Arizona, meanwhile, local county health workers last year decided to try to obtain the drug for free. Johnson & Johnson runs a non-profit that gives away bedaquiline doses to uninsured patients. The patient there had private insurance, but it wouldn’t cover the bedaquiline.

But after the Arizona county applied (the specific county is not named in the report), Johnson & Johnson rejected the request, pointing to the patient's insurance coverage. Public health workers explained the problem and submitted a second application.

On the second try, Johnson & Johnson relented, agreeing to provide Sirturo in Arizona free-of-charge

“Allowing us to procure this medication for free has been lifesaving,” an Arizona state health official quoted in the report said of the ordeal.

While the cases in Arizona and Kentucky eventually worked out, with the counties getting free treatment, they reveal the strain that expensive drugs can have on public health agencies and patients.

The situation is even worse in poorer countries, where tuberculosis is more common. In the rest of the world, most people who have MDR-TB simply don’t receive Johnson & Johnson’s bedaquiline treatment. The patients ultimately die from the infection or suffer life-changing side effects from taking less effective drugs, advocates say. 

At the same time, experts say that taxpayers already poured an enormous amount of money into the research behind bedaquiline. But Johnson & Johnson now enjoys the financial rewards thanks to its monopoly on the life-saving drug.

“It has received a significant amount of public support,” Leonardo Palumbo, an advocacy adviser with Doctors Without Borders, tells ConsumerAffairs. “It’s part of a broader question. How to ensure that when taxpayers are funding drugs” that they benefit from the funding.

In a statement, Johnson & Johnson's press team says that patients in the United States and providers are unlikely to pay the full listing price of the drug. 

"When it comes to cost, in the U.S. it is important to remember that the list price for a medication is merely a starting point that is ultimately reduced by the discounts and rebates we provide to insurance companies, pharmacy benefit managers, hospitals, clinics and government programs," the company's press team writes to ConsumerAffairs. 

Drug patents in U.S.

Martin Shkreli may have become the most hated man in America in 2015 when he purchased the sole rights to an AIDS medication and hiked the price from $13.50 to $750 a pill. He is now serving time in a federal prison on securities fraud charges, but that hasn’t deterred other pharmaceutical companies from trying obtain monopolies on drugs for rare diseases.

A small firm called Catalyst Pharmaceuticals recently purchased the rights to a drug for a rare disease called Lambert-Eaton Myasthenic Syndrome. Patients used to access the drug for free through the FDA’s “compassionate use” program, which allows patients to obtain some off-label drugs at no charge. Under the Catalyst deal, the drug now costs up to $375,000.

Some patients are now reportedly rationing their medicine as a result of the increase. And because Lambert-Eaton Myasthenic Syndrome is considered a rare disease that otherwise wouldn’t be of interest to pharmaceutical companies, the FDA has already granted Catalyst seven years of marketing exclusivity.

Lawmakers on both sides of the aisle have questioned who benefits from such exclusive drug licensing deals. Aaron Kesselheim, a Harvard researcher who studies drug prices, told Rep. Alexandria Ocasio-Cortez during a recent congressional hearing that profits from drugs that are developed with grants from the National Institute of Health (NIH) are rarely returned back to taxpayers.

“When those products are eventually handed off to a for-profit company, there aren’t licensing deals that bring money back into the coffers of the NIH,” Kesselheim testified.

Public money in TB

While TB is considered the world’s deadliest infectious disease, treating it hasn’t been a priority in the pharmaceutical industry. The industry and United States officials still regard it as relatively rare.

"A lot of it has to do with who gets TB, where they live, how they are seen or not seen by the market,” Mike Frick, a researcher with the advocacy group the Treatment Action Group, tells ConsumerAffairs. "It’s considered to be a disease closely associated with poverty.”

As a result of that perception, finding a better TB cure was often left to NGOs or government organizations. When Janssen, a Johnson & Johnson subsidiary, won approval from the FDA to market bedaquiline in 2012, the move was seen as a major victory. The treatment was hailed as the first new tuberculosis drug developed in nearly 40 years. Researchers were hopeful that bedaquiline would have less painful side effects than other available treatments for MDR-TB.

Johnson & Johnson subsequently earned tax breaks in exchange for its marketing of the new drug under FDA programs meant to incentivize the treatment of ignored tropical diseases. A report by Treatment Action Group estimates that Johnson & Johnson has likely recouped the cost of research and development due to the tax incentives.

Even before sales, “Johnson & Johnson has already benefited just for registering the drug, even though it was primarily developed with public dollars, and has been since its approval,” Frick says.

Yet Sirturo doesn’t come cheap for patients -- or the government health agencies and public health groups that ultimately pay. In South Africa, Johnson & Johnson charges $400 for a course of treatment. The price is $900 in other low-income countries. For middle-income countries, the company charges $3,000. In the United States and other wealthy nations, where MDR-TB is rare, the price of the drug is $30,000. Researchers have said that Johnson & Johnson could have capped the price at just $32 and still reaped profits.

While Johnson & Johnson has resisted calls to lower the price of its drug to $32, it has agreed to set aside 90,000 doses to be given away to charity. Still, those donations cover a fraction of the 558,000 people that the World Health Organization (WHO) says are diagnosed with MDR-TB.

“The price of bedaquiline is of serious concern in the post-donation era,” the Treatment Action Group says.

Foreign countries, U.S. prices

United States drugmakers are able to hold monopolies in foreign nations under international trade agreements, preventing local generic drug companies from cutting into their business. But during the height of the AIDS epidemic, poorer nations questioned why they had to pay hefty prices for life-saving drugs, leading to industry and government concessions to make the HIV and AIDS drugs more affordable. That same fight is only starting to brew when it comes to the tuberculosis medications.

"More and more countries are struggling with the same thing we're struggling with in America,” Palumbo, the advisor with Doctors Without Borders, tells ConsumerAffairs. “How can we afford to treat our patients?”

India is considered the frontline of the TB epidemic and also has a robust generic drug industry. But Johnson & Johnson’s patent on Sirturo ensures that no local competitors can enter the field until 2023. Even then, the monopoly may extend further. Johnson & Johnson currently has an application  requesting to extend its patent in India until 2027.

In response, two TB survivors recently filed a challenge against the pharmaceutical company, arguing that its monopoly on bedaquiline should end by 2023.

Doctors Without Borders says in a news release that the women “are now fighting to ensure that newer drugs like bedaquiline -- which are safer and more effective -- are made affordable and accessible to everybody with DR-TB so fewer people have to use painful and toxic alternatives.”

Johnson & Johnson responds to ConsumerAffairs that generic competitors in India are still free to develop their own formulations of drugs containing bedaquiline after 2023, even if the patent extension is approved. The company also says that they have donated 10,000 courses of medicine in India.  

"The application was first considered by the Indian Patent Office in 2012 and remains under review," the company says in an emailed statement. "If granted, a formulation patent would not prevent generic manufacturers from developing the active pharmaceutical ingredient in their own formulations after July 2023, when the API patent expires in India."

But Johnson & Johnson has given no indication that it plans to lower its price.

“Bedaquiline is cost-effective, and the price is on par with some decades-old generic drugs,” the company said online last week. “Johnson & Johnson is committed to remaining in the fight against TB for the long haul.”

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Update: 2/24/19

Johnson & Johnson disputes reports that the public funded most bedaquiline research. The company also suggests that it may make more doses for charity available in the future. An emailed statement that the company sent ConsumerAffairs after this story was published is featured below:

"Claims that bedaquiline received significant public funding are completely inaccurate. Clinical trials that supported the registration of bedaquiline were almost exclusively funded by Johnson & Johnson. We funded thirteen of the sixteen Phase I clinical trials and all three of the Phase II clinical trials used to support the registration of bedaquiline. The remaining three Phase I dosing studies were funded by a non-profit, the TB Alliance. (Two Phase I studies were executed by NIH – but were funded by Janssen.) As a responsible medical innovator, Johnson & Johnson continues to fund studies and collaborate with external partners to advance the clinical development of bedaquiline."

"More than 100 low- and middle-income countries (not just South Africa) are eligible for the $400 price that we announced in July 2018."

"Of the half a million cases of DR-TB annually, only 139,000 patients are diagnosed and put on treatment – with any treatment regimen – due to a variety of systemic challenges. Of the 139,000, only a small subset of MDR-TB patients were previously eligible for bedaquiline, up until late 2018 when WHO revised its long-course MDR-TB treatment guidelines. In 2018, we delivered approximately 40,000 courses of bedaquiline globally – which was in line with the old guidelines. We remain committed to broadening access to bedaquiline as is appropriate and justified by the evidence – while also ensuring appropriate stewardship of this novel antibiotic."

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