Drug firm made billions by gaming system
Humira’s price rises despite competition
In 2016, a blockbuster drug called Humira was poised to become a lot less valuable.
The key patent on the bestselling anti-inflammatory medication, used to treat conditions like arthritis, was expiring at the end of the year. Regulators had blessed a rival version of the drug, and more copycats were close behind. The onset of competition seemed likely to push down the medication’s $50,000a-year list price.
Instead, the opposite happened. Through its savvy but legal exploitation of the US patent system, Humira’s manufacturer, AbbVie, blocked competitors from entering the market. For the next six years, the drug’s price kept rising. Today, Humira is the most lucrative franchise in pharmaceutical history.
This week, the curtain is expected to come down on a monopoly that has generated $114 billion in revenue for AbbVie just since the end of 2016. The knockoff drug that regulators authorised more than six years ago, Amgen’s Amjevita, will come to market in the United States, and as many as nine more Humira competitors will follow this year from pharmaceutical giants including Pfizer. Prices are likely to tumble.
The reason that it has taken so long to get to this point is a case study in how drug companies artificially prop up prices on their bestselling drugs.
AbbVie orchestrated the delay by building a formidable wall of intellectual property protection and suing would-be competitors before settling with them to delay their product launches until this year.
The strategy has been a gold mine for AbbVie, at the expense of patients and taxpayers.
Over the past 20 years, AbbVie and its former parent company increased Humira’s price about 30 times, most recently by 8% this month. Since the end of 2016, the drug’s list price has gone up 60% to over $80,000 a year, according to SSR Health, a research firm.
One analysis found that Medicare, which in 2020 covered the cost of Humira for 42,000 patients, spent $2.2 billion more on the drug from 2016 to 2019 than it would have if competitors had been allowed to start selling their drugs promptly. In interviews, patients said they either had to forgo treatment or were planning to delay their retirement in the face of enormous out-ofpocket costs for Humira.
AbbVie did not invent these patentprolonging strategies; companies like Bristol Myers Squibb and AstraZeneca have deployed similar tactics to maximise profits on drugs for the treatment of cancer, anxiety and heartburn. But AbbVie’s success with Humira stands out even in an industry adept at manipulating the US intellectual property regime.
“Humira is the poster child for many of the biggest concerns with the pharmaceutical industry,” said Rachel Sachs, a drug pricing expert at Washington University in St. Louis. “AbbVie and Humira showed other companies what it was possible to do.”
Following AbbVie’s footsteps, Amgen has piled up patents for its anti-inflammatory drug Enbrel, delaying a copycat version by an expected 13 years after it won regulatory approval. Merck and its partners have sought 180 patents, by one count, related to its blockbuster cancer drug Keytruda, and the company is working on a new formulation that could extend its monopoly further.
Humira has earned $208 billion globally since it was first approved in 2002 to ease the symptoms of rheumatoid arthritis. It has since been authorised to treat more autoimmune conditions, including Crohn’s disease and ulcerative colitis. Patients administer it themselves, typically every week or two, injecting it with a pen or syringe. In 2021, sales of Humira accounted for more than one-third of AbbVie’s total revenue.
An AbbVie spokesperson declined to comment. The company’s lawyers have previously said that it is acting within the parameters of the US patent system. Federal courts have upheld the legality of AbbVie’s patent strategy with Humira, although lawmakers and regulators over the years have proposed changes to the system to discourage such tactics.
In 2010, the Affordable Care Act created a pathway for the approval of so-called biosimilars, which are competitors to complex biologic drugs like Humira that are made inside living cells. Unlike generic equivalents of traditional synthetic medications, biosimilars usually are not identical to their branded counterparts and cannot be swapped out by a pharmacist.
The hope was that biosimilars would drastically drive down the cost of pricey brand-name biologics. That is what has happened in Europe. But it has not worked out that way in the United States.
Patents are good for 20 years after an application is filed. Because they protect patent holders’ right to profit off their inventions, they are supposed to incentivise the expensive risk-taking that sometimes yields breakthrough innovations. But drug companies have turned patents into weapons to thwart competition.
AbbVie and its affiliates have applied for 311 patents, of which 165 have been granted, related to Humira, according to the Initiative for Medicines, Access and Knowledge, which tracks drug patents. A vast majority were filed after Humira was on the market.
AbbVie has been aggressive about suing rivals that have tried to introduce biosimilar versions of Humira. In 2016, with Amgen’s copycat product on the verge of winning regulatory approval, AbbVie sued Amgen, alleging that it was violating 10 of its patents. Amgen argued that most of AbbVie’s patents were invalid, but the two sides reached a settlement in which Amgen agreed not to begin selling its drug until 2023.
Over the next five years, AbbVie reached similar settlements with nine other manufacturers seeking to launch their own versions of Humira. All of them agreed to delay their market entry until 2023.
Some Medicare patients have been suffering as a result.
Sue Lee, 80, of Crestwood, Kentucky, had been taking Humira for years to prevent painful sores caused by a chronic skin condition known as psoriasis. Her employer’s insurance plan had helped keep her annual payments to $60. Then she retired. Under Medicare rules, she would have to pay about $8,000 a year, which she could not afford.
“I cried a long time,” she said. For months, Lee stopped taking any medication. The sores “came back with a vengeance,” she said. She joined a clinical trial to temporarily get access to another medication. Now she is relying on free samples of another drug provided by her doctor. She doesn’t know what she’ll do if that supply runs out.
AbbVie executives have acknowledged that Medicare patients often pay much more than privately insured people, but they said the blame lays with Medicare. In 2021 testimony to a congressional committee investigating drug prices, AbbVie CEO Richard Gonzalez said the average Medicare patient had to pay $5,800 out of pocket annually. (AbbVie declined to provide updated figures.) He said AbbVie provided the drug for virtually nothing to nearly 40% of Medicare patients.
The drug’s high price is also taxing employers.
Soon after she started taking Humira, Melissa Andersen, an occupational therapist from Camdenton, Missouri, got a call from a human resources representative at her company. The company directly covers its employees’ health claims, rather than paying premiums to an insurer. Her Humira was costing the company well over $70,000 a year — more than Andersen’s salary.
The HR employee asked if Andersen would be willing to obtain the drug in an unconventional way to save money. She said yes.
As soon as March, her company plans to fly Andersen, 48, to the Bahamas, so that a doctor can prescribe her a fourmonth supply of Humira that she can pick up at a pharmacy there. Humira is much cheaper in the Bahamas, where the industry has less influence than it does in Washington and the government proactively controls drug pricing.
It is not yet clear how much the knockoff products will cost and how quickly patients will switch over to them. Billions of dollars in drug spending will ride on the answers to those questions.
“We price our products according to the value they deliver,” said Jessica Akopyan, a spokesperson for Amgen, whose biosimilar product was to come to market Tuesday. She added that the company would “employ flexible pricing approaches to ensure patient access.”
Even now, as AbbVie prepares for competitors to erode its Humira sales in the United States, the company will have a new way to make more money from the drug. Under the terms of the legal settlements it reached with rival manufacturers from 2017 to 2022, AbbVie will earn royalties from the knockoff products that it delayed.
The exact sizes of the royalties are confidential, but analysts have estimated that they could be 10% of net sales. That could translate to tens of millions of dollars annually for AbbVie.