When the patient is a source of income: a problem with medicines for rare diseases

Original author: Benjamin Elgin, Doni Bloomfield, Caroline Chen
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How does Alexion earn so much money if her main medicine helps less than 11,000 people?


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Kerry Owens, a doctor from Oklahoma City who specializes in kidney problems, was taken aback by a call to her cell phone in September 2015. She and a team of specialists treated a woman who had recently become a mother from the nearby town of Inid , whose health began to deteriorate after giving birth. Doctors conducted countless tests, but could not determine the cause of the problems. For a time, they were worried about the fact that it could be an extremely rare and fatal blood disease, an atypical hemolytic-uremic syndrome (aHUS), from which 1 in 500,000 people suffer every year. They prescribed the drug " Soliris " to the patient."[with the active substance eculizumab], which was recently approved for use. But her health continued to deteriorate, and they stopped using the medication.

Owens called the sales representative of the company Alexion Pharmaceuticals Inc., producing "Soliris" in New Haven. Soliris is one of the most expensive drugs in the world, its annual rate is from $ 500,000 to $ 700,000 [in the USA - approx. trans.].

The seller argued with the methods of treatment. He insisted that Owens continue to use Soliris, quickly speaking into the phone information about the state of the internal organs of the mother, which the doctor did not give to the manufacturer of the medicine. How do you know that? Owens thought. She tracked the patient's condition along with several hematologists and the presentation of the seller did not impress her. “I was completely taken aback by how persistent and arrogant he was,” says Owens. “Never, neither before nor after this incident, have I experienced anything like it.”

Alexion is a vigorously developing company in the market of "orphan drugs" [drugs for the treatment of rare diseases, the production of which is unprofitable; US law provides for the provision of certain benefits to pharmaceutical companies producing these drugs - approx. trans.]. This is a fast-growing niche in the pharmaceutical industry. In the US, medication is given the status of "orphan" when it is needed by no more than 200,000 people across the country. Orphan drugs occupied a disproportionately large share of the drug market in 2014, 41%, according to a study by the John Hopkins University. By 2022, worldwide sales of orphan drugs should double to reach $ 209 billion, according to forecasts by consulting company Evaluate Ltd.

These drugs have helped millions of people. Patients with aHUS, for example, had to undergo kidney dialysis for years and sometimes die from fatal blood clots before Soliris appeared on the market. “This is the best medicine among those who change the result of the disease of all that I have seen since I finished my studies in 1985,” says Jeanouliou Ardissino, a Milan doctor who treated Solyris for more than 70 patients.

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But the emergence of orphan drugs led to a geological shift in treatment costs. The average patient in the US last year using an orphan drug spent $ 136,000 on it, and this cost has increased by 38% since 2010. The volume of Soliris less than a teaspoon, which is administered to the patient at a time during a 35-minute session, costs more than $ 18,000, and the patient may need 26 such sessions per year for the rest of his life. [Interestingly, in Europe you can buy a German equivalent for € 5,600 or a Swiss equivalent for € 2,400 per ampule - approx. transl.]

The company Alexion, almost all of whose income is based on sales of this single drug, earned unrealistic amounts. In 2016, its revenue amounted to $ 3 billion, and its market value of $ 24 billion puts it on par with such companies as HP Inc. [manufacturer of computers and printers] and Yum! Brands Inc. [specializes in fast food; trademarks: Taco Bell, KFC, Pizza Hut, WingStreet]

The need to rely on a small number of customers, each of which is potentially worth millions of dollars, leads to side effects. For years, Alexion’s sales technique was so assertive that aggressive calls to doctors can be considered the most innocent of misconduct. The boundaries of ethics intersected on a routine basis, which worried many people working there - this can be seen from interviews with 20 current and former employees, as well as 2,000 pages of internal documentation.

Last November, Alexion announced an internal investigation into sales practices. As a result, it became known from the press release that the company’s management could not “find the right tone” for sales. Within a few months, the company was left by the chairman of the board of directors and co-founder Leonard Bell, its executive director, financial director and head of the control service. In March, the company hired Ludwig Hentson, an industry veteran, as executive director, who shuffled control and appointed a head of culture “to redefine the organization’s culture with an emphasis on integrity, trust, and following the rules” —that was written in a letter sent to Bloomberg. On May 23, the company announced the departure of the commercial director, the head of research, the head of the HR department and the new financial director.

Hentson refused an interview for this article and did not respond to specific questions, so it is not entirely clear what caused such a strong reorganization. But the company's past seems to catch up with her, especially abroad, where the company earns up to 60% of its income - and where, according to former employees, it behaved in a blatant manner. On May 8, Brazilian police broke into the company’s offices in Sao Paulo as part of an investigation into its commercial activities.

Public uproar over the price of vital medicines for years has been shaking the entire planet. But much less attention is paid to the insane events of the Glengarry Glen Ross level [an American play and its screen versionabout the difficulties of working desperate realtors - approx. trans.], occurring in companies like Alexion, whose medicine costs more than most new homes, and in some parts of the world is delivered under armed guard.

Until the early 1980s, pharmaceutical companies for the most part ignored the niche of 7000 orphan diseases. There was no commercial sense to deal with deadly, but rare diseases such as Huntington's disease or muscular dystrophy , when widespread and chronic diseases such as arthritis, heart disease and diabetes provided a good flow of patients and insurance companies willing to pay bills.

To draw attention to the ignored areas, the Congress passed the “Orphan Drugs Act” in 1983, promising drug grants to federal drug manufacturers, tax deductions and seven years of exclusive sales of new drugs for rare diseases (for ordinary drugs, this period is limited to three years). In the following 34 years, about 600 orphan drugs were approved in the US, compared with 10 drugs in the ten years preceding the adoption of the law.

But the government-protected monopolies, together with desperate patients, led to the emergence of today's drug prices. Genzyme Corp. began this trend in 1991, demanding $ 150,000 per year for the treatment of Gaucher disease.weakening bones and internal organs. In 2016, Biogen Inc began taking $ 750,000 for the first year that Spinrase was used to treat spinal muscular atrophy. “Many drug manufacturers perceive the situation as an empty signed bank check and demand as much for the medicine as they consider possible,” says Rina Conti, associate professor of health and economics at the University of Chicago.

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Leonard Bell, former director of Alexion, in 2016

Despite the controversial pricing situation, it is politically considered unprofitable to flirt with the Orphans Drugs Act. The law very effectively allows you to find and focus the best scientific minds on the treatment of long-ignored diseases. It is believed that such drugs should cost more than drugs for common diseases, because companies need to repel research and development and make money on a small customer base. Government health programs, moaning from the high cost of drugs, need to figure out how to bargain with companies or make drugs available only to the most needy patients.

In many ways, Bell is a great example of how drug subsidies should work. When he founded Alexion in 1992, he did not have the chance to take a lot of risk. Then he was 33 years old, he worked as a cardiologist, he had three children aged 1 to 7 years and a position at Yale University under a contract with a limited term. Bell became very interested in such an immune response as a complementary cascade that helps the blood to get rid of damaged cells and bacteria. Sometimes this defensive reaction can harm a person, for example, when rejecting a transplanted organ. If he could figure out how to limit the cascade in certain cases, Bell believed, he could solve many medical problems.

It was difficult to find funding for the study, and Bell barely remained afloat. “As with most things in biotechnology, six months after leaving Yale, everything began to fall apart,” he told Bloomberg in 2015.

Alexion began working with another company in an attempt to change the internal organs of pigs so that they could be transplanted to people. Although the attempt was unsuccessful, she helped Alexion receive funding from private investors and the government to continue research on the interrelationships of the immune system and blood cells.

Bell brought the company to the exchange in 1996. Years of research were needed before the new products were introduced to the market, but investors were willing to take risks in the light of possible profits, if Alexion could reveal the secrets of the complement system - Barry Luke, former vice president of finance and administrative affairs, recalls this.

In 2002, Alexion had a breakthrough. A British researcher showed that one of the therapies really helped patients suffering from a rare blood disorder, paroxysmal nocturnal hemoglobinuria(PNH), in which the patient's complement system attacks the red blood cells. About 35% of patients die within 5 years after diagnosis. When Soliris was approved by US regulators for the treatment of PNH in 2007, it took 15 years and $ 850 million to bring the drug to the market. In 2011, Soliris was also approved to treat aHUS.

In 2007, Wall Street analysts were eagerly awaiting the announcement of the market value of Soliris. Most thought that it would cost more than $ 100,000. But Alexion counted all the factors, for example, saving patients on trips to the hospital and blood transfusion.. When the company announced a treatment price of $ 389,000 per year during a teleconference, one analyst from Credit Suisse Group AG was so taken aback that when it was his turn to ask a question, he said: “Sorry, I have no words. Could you repeat that number? ”

Soliris saved the lives of patients like Michelle King from Canada. When she turned 21 in 1988, she was knocked down by weakness on a New Zealand walking tour. After two years of tests and medical techniques, she was diagnosed with PNH. She began to make blood transfusions to restore red blood cells and take steroids to slow down the attacks of the immune system on her body. It helped a little, but she had very little strength left, and steroids made her irritable, at the same time leading to swelling of her facial features. She tried to work in administrative positions to pay bills. “In the afternoon, I sometimes went home to sleep because I felt very tired,” she says.

In 2005, she came to the test of the drug Soliris, which does not cure PNH, but is able to contain symptoms. “From the very first dose, my health changed,” says King, who has since been using the drug. The energy returned, the swelling of the face disappeared, she took up horse riding. "For me, this is a magical cure."

The company immediately increased sales efforts. “In 2007, the main question of the company was how to build a business on this? Doesn't only a few hundred people in the world suffer from PNG? ”Said the former CEO of Alexion, David Hallall, in an interview with Bloomberg in 2015. "We have not slept for 4-5 years of nights."

For new employees, the sales culture seemed too tense. Managers forced them to challenge the opinion of doctors, many of whom had never seen patients with such rare diseases, and “turn no to yes”, as one of the sellers, who left in 2016, recalls. If the doctors did not believe that the patient was sick enough to prescribe such an expensive medicine, the vendors should have warned the doctors that their patient might die.

The company carefully monitored key details - for example, the number of tests conducted by doctors in the market. Vendors distributed intricate spreadsheets with thousands of lines containing information about potential patients, including birth dates, symptom data, doctors, and hospitals. Sometimes patients were identified by initials.

A team of nurses worked with salespeople. Pharmaceutical companies often hire professional medical staff to help with complex treatment cases. But licensed practitioners with a license are generally obliged to put the interests of patients above the profits of their employers. To avoid conflicts, most drug manufacturers separate nurses from vendors. And in Alexion, the medical staff reported directly to the sales department, and the task of capturing and retaining patients was often assigned to them, for it was they who had access to the patients.

Several former employees of the company talked about how, during Friday’s salesmen’s meetings, managers gathered salespeople and nurses together to discuss customers. If someone finished taking Soliris, managers would rush at the nurse who was working with this patient: What did you do to prevent the patient from peeling off the medicine? Did you tell the patient that if he stopped treatment, he could earn a fatal thrombus? Have you tried to refer the patient to another doctor who could resume treatment? “The flames flared up beneath you, and the sweat ran down your back,” says one of the nurses, who had previously worked with the company for a long time, asked to remain anonymous because of fear of retribution.

Stacy is a 43-year-old housewife from Vancouver. In 2004 she was diagnosed with PNH and she began a blood transfusion. When Soliris appeared, she really wanted to try it. But the results of blood tests showed only minor improvements. When she told the nurse from Alexion that she and the doctor decided to stop treatment, her sister started calling her and discourage her from doing so.

“I felt that they were trying to intimidate me by saying, 'Oh my god, you must not stop, you can earn a blood clot and die,'” recalls Stacy. - I say: But the medicine does not help. I know it's all about dollars. ”

Possessing medicine for only two very rare diseases, Alexion has long been confronted with the question that plagues most orphan drug companies: how to find these rare patients and send their doctors to our medicine? (One of the earliest PR techniques of these companies was advertising their rare diseases in the TV series "Dr. House"). To find these “needles in a haystack,” as Bell called such patients, sellers spent most of their time talking to doctors, urging them to look for symptoms and persuaded them to undergo testing for rare diseases. Alexion intended to convince doctors to carry out tests for PNH and aHUS more often - and find ways to get into the results of tests that are usually available only to the patient, the doctor and the laboratory.

Salespeople had to force doctors to send tests to preferred “partner laboratories,” as evidenced by several former employees of the company and internal documents. Unbeknownst to the patients and many doctors, several of these “preferred” laboratories agreed with Alexion to provide them with copies of the analyzes. The name of the patient was removed from the copies in order to avoid violating the laws. But sometimes they contained everything else — age, gender, zip code, hospital name, doctor's name, and test results. And it gave salespeople the opportunity to find patients who would otherwise have been difficult to find.

When the PNG and AHUS results were received by Alexion, the diagnostic team, about five people, passed the information to the sales department, and then she reached the doctor on the list. “It was like landing in Normandy,” says a former client relations officer. Pharmaceutical companies have been seeking access to data from laboratories for years, but they resisted, says Adam Tanner, a full-time author at the Harvard Institute of Numerical Sociology and author of Our Bodies, Our Data [Our Bodies, Our Data]. In 2010, the behavior of laboratories has changed. They tried to find ways to increase slimming profits, and, hiding behind the help of drug manufacturers in their research, began selling unnamed test results to data aggregators and directly to pharmaceutical companies.

In the case of Alexion, this collaboration began with the Dal-Chase laboratory from Bangor, Maine, which helped develop the PNG test. Further cooperation extended to other regional laboratories, including Machaon Diagnostics from Auckland, as well as to national ones, for example, Laboratory Corp. of America Holdings, known as LabCorp, and Quest Diagnostics Inc. Even Mayo Medical Laboratories, a division of the non-profit Mayo Clinic.

In April, in response to requests from Bloomberg, Kim Diamond, a spokesman for Alexion, sent a written response in which, inter alia, it was stated: “Such partnerships with laboratories are critical, since PNG and aHUS are life-threatening, extremely rare diseases, about which few knows in the medical environment. " But on May 16, after Bloomberg sent additional questions, Diamond stated that the company temporarily stops collecting data due to a review of the relationship with the laboratories. She refused to discuss the reasons for such a decision.

The directors at Dal-Chase and Machaon did not respond to calls and email Bloomberg. Quest Diagnostics and Mayo reported that their data exchange contracts are confidential, but they are subject to laws. LabCorp could not confirm or reject the data exchange with Alexion.

Around the world there is a network of organizations fighting for the rights of patients, offering their support and helping to accelerate drug approval. They also offer companies another way to find potential customers. In 2015, Alexion helped some 75 such organizations with money, according to information from her website.

In the United States, the National Association of Rare Diseases (NORD), which appeared in 1983 to lobby for the Orphan Drug Act, remains one of the most influential organizations to help patients with rare diseases. For grants from Alexion, NORD holds meetings in different parts of the country about PNH and aHUS several times a year, during which patients and their families meet, offer support to each other and listen to reports from medical experts. “People felt very isolated,” says Maria Hardin, a former vice president of patient care at NORD, who conducted several meetings of patients with PNH with Alexion money. “The meeting of such people turned out to be very beneficial.”

Alexion grants pay for transportation, accommodation and meals. Usually, patients and their families come to the hotel in the evening and gather for lunch with a meeting organizer from NORD. The next day they gather for an informational meeting, at which the doctor is usually present, also paid by Alexion, speaking to an audience and answering questions. Alexion and NORD were discussing the candidacy of a doctor, as Hardin and a former employee of Alexion said. Alexion wanted to have representatives from the sales department at the meeting, but NORD opposed this. But instead, NORD agreed to have the nurses present at the meeting. “I don’t like this decision, but I couldn’t influence it,” says Hardin.

According to the two former nurses who attended these meetings, they were punished to collect lists of participants with names and contact information. A few days after the meeting, the company contacted those who did not take Soliris to begin negotiations with the aim of planting them for medicine. A NORD spokeswoman, Jennifer Huron, said that her organization protected the privacy of patients and was not aware of the fact that the nurses were collecting contact information.

Over the ocean, Alexion has developed even closer ties with patient protection organizations. A particularly dark picture of her actions is painted in Brazil, where the sale of orphan drugs is stimulated by perverted methods.

To sell drugs in Brazil, pharmaceutical companies must negotiate a retail price with the government. To avoid this, for years Alexion was dragging on the registration of Soliris, according to her five former managers and directors. According to the Brazilian constitution, which states that “health is the right of all people and the duty of the state,” citizens can sue the government to get medicines that have not yet been approved by regulators. If a citizen wins the trial, the government pays for the medicine without discussing the prices [medicine and medicines prescribed by doctors in Brazil are free for citizens - approx. trans.].

Most citizens do not have funds for such litigation, therefore, Alexion organized and sponsored a group of patients called the Association of PNH Patients. The principal lawyers of the firm who conducted the cases on behalf of the patients initially worked for a law firm owned by the sister of the local manager Alexion, according to an analysis from 2014 conducted by a third-party law firm that Alexion hired to evaluate its business in Brazil.

In 2012, the company redirected funding to a larger AFAG group. And although AFAG works with other pharmaceutical companies, Alexion spent 1.672 million Brazilian reais ($ 500,000) for charity in 2014-2015. This amount was about 30% of the AFAG budget, according to the president of the group, Maria Cecilia Oliveira. In 2016, donations rose to 2,675 million reais. These donations have opened up special data access. According to internal documents, a manager from Alexion appeared at AFAG every week and studied the patients ’personal files. The manager told AFAG exactly what kind of business needed to be spun and took all the new patient information with him to Alexion. Few of the doctors, patients, or government officials understood how badly Alexion influences AFAG, as the company's former managers say.

An external law firm in 2014 concluded that Alexion’s Brazil operations are “unethical.” But they were very profitable. By the end of 2016, the company planned to plant over 600 Brazilians on Soliris, which would give them a profit of $ 200 million, according to internal documents. The Brazilian health care system is unable to easily absorb such expenses. Soliris, a medicine for treating 0.0003% of the country's population, took up 30% of the budget for the purchase of medicines in 2013 and 2014.

Now, Brazilian police claim that some of the lawsuits funded through Alexion's donations to AFAG were fraudulent, and used the wrong diagnoses to create bogus patients - as stated in the request for a search warrant that fell into Bloomberg. In one case, armed guards regularly delivered much more Soliris than needed, to a woman who was diagnosed with aHUS - and, as it turned out later, wrong. For many years of supply, she has accumulated in her fridge medicines for 2.2 million reais. She thought it was strange, and in the end she turned to the authorities. Brazilian police also searched AFAG offices on 8 May. In a telephone interview, Oliveira confirmed the fact of the searches and said that AFAG was cooperating with the authorities and had done nothing wrong. Diamond says that the company worked "in compliance with local laws," and that "has not yet been accused of criminal or administrative violations." In an interview with investors on May 16, the company's general director Hentson said that Alexion was trying to improve its work with patient groups in Brazil and elsewhere.

Alexion grants in favor of foreign groups have attracted attention and US regulators. Over the past two years, the Securities and Exchange Commission has investigated cases of payment of grants by the company in Brazil, Colombia, Japan, Russia and Turkey, examining a possible violation of the Foreign Corruption Act.

Despite the problems, Alexion enjoys the ardent attention of his fans. Stacy, a housewife from Washington State, who was pressured by the company's nurse after she stopped taking the drug, tried it again several years later. For an inexplicable reason, it worked much better the second time. The medicine "is life for me," she says. - In the money it does not appreciate.

But, in fact, with money it is possible and necessary to evaluate it. Each country is trying to develop a reasonable strategy - from the Canadian Committee on Drug Prices (who has fought with Alexion for years over prices) and the New Zealand Pharmaceutical Agency (in 2013 the company was denied financing because of the price of the medicine) to President Trump on Twitter:


“I am working on a new system providing for competition among drug manufacturers. Prices will drop a lot! ”

Trump hasn’t yet talked about the details of the new system, but for now the main threat to US orphan drug companies is the Republicans’ plan to abolish Obamacare [ Health Reform and Patient Protection in the US ]. The bill, passed in May, may return some lifelong restrictions on paying patients for treatment - which means people will have to pay for treatment from their own pockets after exceeding the limit on medications. This may force companies to lower prices.

Investors have not yet decided what to do with investigations into the Alexion business practices and potential changes initiated by the new director of the company. Barclays Plc wrote in its report in April: “The investigation of the sales practices of Soliris and the recent replacement of directors has led to chaos in the feelings of investors.” Shares have fallen by 18% since the company announced internal audits in 2016, while on average biotech companies grew by 2%.

Hentson is studying the company's most aggressive practices. Having received a lot of questions from Bloomberg, he announced upcoming changes - for example, staff nurses will now transfer information to the medical department, rather than to the sales department. Analysts who follow the company, such as Geoffrey Porges of Leerink Partners LLC, wondered if the company that made the orphan drug worth half a million dollars and 11,000 patients could get out of this mess and not upset investors. “Everyone is afraid that if a company says goodbye to the old culture,” Porges says, “it will lose in the generation of profits.”

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