ARIAD Pharmaceuticals, Inc.
The latest company to suffer a public relations and stock price crisis based on its drug pricing strategy is Ariad Pharmaceuticals, which has been blasted by Sen. Bernard Sanders (I-VT) on Twitter and in a formal letter demanding justification for the price tag Ariad has attached to the chronic myelogenous leukemia (CML) drug ponatinib (Iclusig).
Ariad has raised the price of the drug 4 times this year, adding $80,000 to the annual cost of the medication, which is now priced at $16,561 for a month’s supply or nearly $199,000 per year. According to Bloomberg, Ariad stock dropped 15% on October 14 after Sanders criticized the ponatinib pricing on Twitter. The stock was trading around $11 a share on Friday, October 21, still well down from the plunge a week ago from the $13-a-share mark.
The company, based in Cambridge, MA, and founded in 1991, has not yet achieved profitability, and ponatinib represents its first product to come to market. The company has accumulated $1.4 billion in losses, largely as a result of its heavy investment spending on research and development into oncology drug candidates. Its current CEO, Paris Panayiotopoulos, to whom Sanders addressed his letter, was appointed in 2015 and has been charged with the task of reversing the company’s fortunes, according to Bloomberg.
In his letter addressed to Panayiotopoulos, Sanders reflects on ponatinib’s troubled history. Following the drug’s initial approval in December 2012 for patients with CML who no longer responded to available therapies, the FDA requested a suspension of sales upon reports of serious adverse events. The subsequent investigation found that 1 in 4 patients treated with ponatinib developed blood clots or narrowing of blood vessels, a greater rate than was observed in Ariad’s pre-approval clinical trial data, according to Sanders.
In December 2013, the FDA allowed Ariad to resume sales of the drug to a smaller subset of patients for whom a genetic mutation made them resistant to other drugs available to treat CML.
“Despite this new evidence showing the drug posed a far greater safety risk to patients than was known when the drug came on the market, Ariad nonetheless raised the price of ponatinib several times over the subsequent 4 years to $199,000 from $115,000 per year,” Sanders wrote in the letter, which was cosigned by Sen. Elijah E. Cummings (D-MD). The two congressmen accused the company of being “more concerned with its profit than with its patients.”
Sanders noted that in addition to raising the price of the drug, Ariad has discontinued sales of a two-month 60-tablet supply of its 15mg dose and is now selling a 30-tablet supply of the same dose for the same price.
Sanders demanded that Ariad address its decision to discontinue sales of the 30mg tablet form of ponatinib, which the senator described as “an effort to require patients and insurers to pay twice as much for two 15mg doses.”
In acknowledging receipt of Sanders’ letter, Ariad stated that innovative oncology drugs are, by nature, costly and said that it has invested more than $1.3 billion in research and development while accumulating an even greater sum in losses.
“In 2015, ARIAD generated $119 million in total revenue and invested $171 million, or 143% of revenue, in R&D,” the company said in its response, adding that ponatinib is its first cancer drug to come to market and serves a “very small and seriously ill group of patients.”
The new range of oncolytic medications has been priced into the stratosphere, and fresh concerns about treatment costs for patients have been fueled by the rise of combination treatments, which may involve the use of more than one costly drug in the treatment of a single individual. The attacks on drug companies for their pricing strategies have now extended to the social media forum. Hillary Clinton’s criticism of drug pricing has also undermined biotech stock prices.
Cummings, himself, has been highly active in this fusillade on drug manufacturers, having targeted Valeant Pharmaceuticals and Turing Pharmaceuticals for the high prices they have attached to medications considered vital to patient care. Japan-based Astellas Pharma also has been in the shooting duck gallery over its pricing of enzalutamide (Xtandi), a drug that costs several times more in the United States than it does in many other developed countries. Critics have stated that the drug was developed in the United States at the University of California, Los Angeles (UCLA), with the aid of extensive government funding, and therefore, US residents should not have to pay such a disproportionately high price for the drug.
OncLive, in a formal public records request, asked UCLA in April to provide a breakdown of the actual government-based funding used in the enzalutamide discovery and development process. Despite repeated assurances from UCLA and follow-up requests from OncLive, that information was never produced. The university said in a statement that it has sold its enzalutamide royalty rights for $520 million plus a share of future sales. UCLA maintains that it has no influence over the pricing of the drug, stating that the money it earned from the royalty rights sale enables the development of other medications that benefit patients.