With Humira, revenue piles up as price rises
Maker of best-selling drug has increased its price not at once, but incrementally.
Humira is the best-selling prescription drug in the world. You may have seen the commercials.
Because of Humira, a woman with rheumatoid arthritis can wash her puppy in the bathtub, another with colitis can stroll happily through a fair packed with food vendors, while a third suffering from psoriasis can go to the gym without hiding her neck.
But they probably wouldn’t all look so relieved if they saw the bill. The price of Humira, an anti-inflammatory drug dispensed in an injectable pen, has risen from about $19,000 a year in 2012 to more than $38,000 today, per patient, after rebates, according to SSR Health, a research firm. That’s an increase of 100 percent.
Pharma bosses probably miss Martin Shkreli, the reigning villain of the industry. If you’ll recall, Shkreli, as chief executive of Turing Pharmaceuticals, acquired Daraprim, a drug used to fight infections in AIDS patients, and then raised the price overnight to $750 a pill from $13.50. He also trolled critics and spent $2 million on a one-of-akind Wu Tang Clan album, before his conviction on three securities fraud charges last year.
For a time, Shkreli’s antics, along with the soaring price of EpiPens, sold by Mylan, deflected attention from the rest of the industry. A more typical play for drug companies — the Humira play — is to start at a high price and keep raising it ever higher, but incrementally.
“What they have done with Humira is just as unfair, just as morally wrong, but they did it over five years,” said Ben Wakana, a former Obama administration spokesman who became executive director of Patients for Affordable Drugs, an advocacy group, because his younger brother couldn’t afford Humira without the financial support of their parents.
“People are skipping doses, people are rationing, people are going into bankruptcy because of this drug,” he said, arguing that Humira is both more expensive per dose and has a far higher volume than Daraprim.
AbbVie, which was spun off from Abbott Laboratories in 2013, declined to comment.
How much you actually pay out of pocket, and whether you can afford Humira at all, depend on your insurance and eligibility for discounts.
Anne Marie Garza, 51, an administrative assistant in Houston who suffers from colitis and Crohn’s disease, said she had held off buying her latest dose because her insurer had changed. She was trying to see if she could avoid an out-of-pocket payment of more than $1,200, one of two she would have to make this year, on top of her rising expenses for vitamins and supplements. She has relatively good insurance, but the payments will strain her budget.
“During the holidays, I was contemplating what I’m going to do,” she said. “I was thinking, should I just go on a liquid diet, because I can’t afford this.” It’s a difficult choice.
“It does give you your life back,” she said of the drug. “I literally couldn’t go away from the house or very far from a bathroom; 20, 25 times in the bathroom all day long, I can’t imagine living like that,” she said, adding, “I was becoming a hermit because I was so sick.”
Humira, which accounted for nearly two-thirds of AbbVie’s $25.6 billion in revenue in 2016, was not simple to develop. It is among a new class of drugs known as biologics, which are made from living cells rather than synthetic chemicals. The industry has argued that high U.S. prices are needed to fund drug development, but a 2016 study published by the Journal of the American Medical Association found “no evidence of an association between research and development costs and prices; rather, prescription drugs are priced in the United States primarily on the basis of what the market will bear.”
Competitive pressures have been muted. Copies of biologic drugs, known as biosimilars, are not as easy to produce
The price of Humira, an anti-inflammatory drug dispensed in an injectable pen, has risen from about $19,000 a year in 2012 to more than $38,000 today, per patient, after rebates.
as normal generic drugs, and AbbVie’s aggressive patent strategy has allowed it to further push off rivals. While there are name-brand competitors to Humira, they are not exactly alike, complicating efforts by doctors or insurers to switch a patient from one drug to another.
Looking at the international picture tells its own story about drug costs. A prefilled carton with two syringes costs $2,669 in the United States, compared with $1,362 in Britain, $822 in Switzerland and $552 in South Africa, according to a 2015 report from the International Federation of Health Plans.
“You’ve got the largest market for pharmaceuticals, which has the highest prices,” said Christopher Raymond, senior biotech analyst at Piper Jaffray. “That doesn’t make any sense.”
But it is typical. Other countries have single-payer systems, like Britain’s National Health Service, that negotiate with drug companies or governments that exert price controls.
AbbVie has put some of its earnings to work lobbying against efforts at price controls in the United States, recently in California. The industry also successfully lobbied in 2006 to bar Medicare from negotiating over drug prices. While President Donald Trump once talked about taking action on drug prices, his administration did not follow through in the health care debate last year.
By contrast, Britain’s National Health Service, while strained of late, has more formidable negotiating leverage.
“I do think we need something like that in the United States, not the NHS
broadly, but some means of dealing with the extreme pricing instances,” said Richard Evans, founder of SSR Health.
An analysis by the Institute for Clinical and Economic Review found that Humira’s list price would need to be discounted by at least 55 percent to be cost-effective for rheumatoid arthritis, its originally approved use.
Dr. Steven D. Pearson, the founder of the institute, which provides cost-benefit data to health plans, said competing drugs were overpriced as well.
“Even in a space like this, where there is a lot of competition, we don’t see the prices coming down,” he said. “That speaks to the fact that it doesn’t often function like a free market usually would.”
For the present, Americans have to rely on the generosity of the drug industry, such as it is. A spin through AbbVie’s corporate Code of Conduct, entitled “Inspired by Integrity,” reveals a lofty document. “WE ARE COMMITTED TO IMPROVING PATIENTS’ LIVES,” it says, in all caps.
It even makes a point of saying that AbbVie supports the United Nations’ Universal Declaration of Human Rights. That declaration says, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care.”
AbbVie joined a few of its rivals in saying it would limit price increases to single digits this year, and so only raised Humira by another 9.7 percent this month, roughly 41/2 times the inflation rate. For the drug industry, that counts as generosity.