^High Price of New AIDS Drug Causes Controversy (Washn)<

^By Malcolm Gladwell=

^ 1991, The Washington Post=

WASHINGTON _ To slow the course of the disease destroying their immune

systems, most AIDS patients spend between $2,000 and $3,000 a year on the drugs

AZT and DDI. To prevent against a form of tuberculosis, many spend another

$3,000 a year on clarithromycin, and for pneunomia the bulk of AIDS patients

are on sulfamethoxazole, which costs several hundred dollars a year.

But all of these bills pale next to the price of foscarnet, the newest

addition to the aresenal of anti-AIDS drugs. Approved several weeks ago by the

FDA to treat the blindess that afflicts 30 percent to 40 percent of AIDS

patients, foscarnet costs $21,000 a year. It is one of the most expensive drugs

on the market for any purpose.

The company that makes foscarnet, the Swedish-based Astra Pharmaceuticals

Inc., says this is more than a fair price because the drug cost $100 million to

bring to market and would have no more than a few thousand customers.

But AIDS activists, citing calculations of their own, charge that foscarnet

will actually be hugely profitable. Researchers, noting that the government

paid for a significant share of foscarnet's development costs, have called the

price irresponsible. Even some pharmaceutical industry officials have worried

that foscarnet's high price may provoke Congress into reining in drug prices.

At a time when drug prices are the fastest rising segment of health care

costs, many industry observers feel that foscarnet may ignite the long

smouldering controversy over what constitutes a fair price for a new drug.

``There is an awful lot of hyperbole in all of these discussions,'' said

Stephen Skuce, an AIDS activist in Boston. ``But anyone who thinks this isn't a

naked grab at Medicaid funds, third-party payer funds and the limited funds of

some of the least fortunate people in the U.S. is hopelessly naive.''

``These drugs are priced for kings and most AIDS patients are paupers,''

said Rep. Henry Waxman, D-Calif., chairman of the House health and environment

subcomittee. ``We have to find a way to give better coverage to people with HIV

and a way to restrain prices for all drugs. There has to be some middle

ground.''

Much of the controversy over foscarnet's price stems from the fact that it

does not fit the profile of an expensive drug. Although its current use to

treat CMV retinis _ an infection of the retina caused by the cytomegalovirus

that can cause blindness in people with AIDS _ is new, the drug itself is not.

It was discovered in 1924. Nor is it the kind of complex molecule that can be

very difficult and expensive to manufacture.

``It's very simple,'' said Clyde Krumpacker, a researcher at Beth Israel

Hospital in Boston who helped develop the drug. ``Next to lithium, this is the

simplest drug ever approved by the FDA.''

Foscarnet also benefited from the special treatment given to AIDS drugs by

the federal approval process. While some companies are required to test their

drugs in thousands of people over several years to demonstrate safety and

effectiveness, Astra Pharmaceuticals Inc. was allowed to get by with much less

data. In making its case to the FDA, Astra presented results from five studies

_ typically of six or eight months duration _ totalling 180 people. Of the

studies four were funded by the company, one by the National Institutes of

Health.

From start to finish foscarnet spent a year before the FDA, about one-half

to one-third as long as new drugs normally take. Members of the advisory

committee that recommended its approval said they deliberately let Astra get by

with less evidence of safety and efficacy because it was intended for AIDS

patients.

But none of this special treatment added up to a low price. The company says

that prior to discovering that foscarnet was useful in treating CMV retinitis,

they spent a lot of time and money in hopes of developing the drug as a general

treatment against HIV.

Despite the small size of the drug's trial, they say testing it was

unusually expensive and the firm spent an additional $15 million giving the

drug away to patients before it was approved.

The total cost of developing foscarnet, estimates Astra vice president Nigel

Rulewski, was $100 million. Given the company's estimate that only about 6,000

patients will be taking it at any one time, and then for an average of six

months, the drug may gross $63 million a year. Considering the costs of making

and selling it _ which the company will not disclose _ and the amount of drug

the company says it will continue to give away to those without any insurance,

Rulewski argues it is in fact underpriced.

``I don't think Astra assumes that it will ever make back the money that we

spent,'' said Rulewski. ``I don't think we will ever get into a profit

position. It's one of those things that while it looks good on the surface, it

doesn't really make any money, as hard as it is to believe that.''

Even Rulewski, however, concedes that the company's revenue estimates for

foscarnet are conservative. Others call them fanciful. Foscarnet, for example,

is one of two drugs approved to treat CMV retinitis, a disease that strikes

40,000 AIDS patients per year. And, price aside, it is the treatment of choice,

as confirmed by a 3-year, $15 million dollar, government-funded trial that

ended late last month. The study found that patients taking foscarnet not only

had their blindness cured but lived an average of one year after beginning

treatment _ four months longer than those taking the alternative treatment, a

drug known as ganciclovir, which costs $8,000 a year. Some researchers

speculate that this is because foscarnet has additional action against HIV.

Analysts at the AIDS Action Council estimate that in the wake of those

results, a more realistic market for foscarnet is between 8,000 and 20,000

patients and a more realistic duration for treatment is one year. If that is

the case, the potential first year revenues from foscarnet would be between

$420 million and $168 million, and Astra would recoup its investment on the

drug in a matter of months.

At a time when the drug industry is under increasing scrutiny from Congress

for high drug prices, Astra's pricing strategy has made some pharmaceutical

officials nervous. Others have argued that because the company was given

special treatment by FDA, enabling it to get its drug to market more quickly,

it should have been more restrained in setting a price for foscarnet.