Battling the pharmaceutical Microsoft

Hepatitis C activists are angry about Schering-Plough's decision to "bundle" two drugs, one of which is a potentially life-saving pill not available anywhere else.


David Tuller
August 22, 2000 11:00PM (UTC)

Remember the good old ACT UP era? When AIDS activists blocked traffic on the San Francisco Bay Area's Golden Gate Bridge and stormed the Food and Drug Administration's headquarters, and screamed that drug companies valued profits over lives? Well, those fun days are back -- sort of. The decibel level is lower and the disease is different, but the punch and counterpunch of the combatants are more or less the same.

This time around, hepatitis C activists are pummeling drug-maker Schering-Plough for its unorthodox -- and, say the patients, despicable -- marketing of Rebetron, the leading treatment for the illness. Rebetron, which costs a whopping $18,000 a year, is actually a package that includes a pill called ribavirin and an injectable drug named interferon. The medications, when taken together, produce a sustained reduction in blood levels of the virus up to 40 percent of the time. In contrast, interferon taken alone is effective in only 10 to 15 percent of hepatitis C patients.

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Many patients would like to add ribavirin to their current regimen, but Schering-Plough won't sell the drug by itself. It is bundling the pill -- which it has an exclusive license to market -- with its own interferon, even though other pharmaceutical companies also manufacture the drug. Although the various interferon products are relatively similar, response to the drug is highly individual and some hepatitis C patients suffer fewer of the debilitating side effects -- which can include depression, irritability, nausea and fatigue -- from versions made from companies such as Hoffman-LaRoche and Amgen. In addition, some patients who are already using other brands don't want to disrupt their treatment regimen by switching to Schering-Plough's interferon.

Brian Klein, the energetic, irrepressible and nasal-twanged co-founder of the Hepatitis C Action and Advocacy Coalition (HAAC), calls Schering-Plough's actions "extortion." It is, he says, the pharmaceutical equivalent of Microsoft forcing consumers to use its browser -- for the simple reason that it could. Even those who prefer Schering-Plough's interferon, he says, should have the choice to try ribavirin with other brands as a matter of principle.

"Microsoft tied its own browser to the sale of Windows," says Klein, who lives in San Francisco and modeled his organization on ACT UP. "Schering-Plough is tying the sale of ribavirin, which they have a lock on, to the sale of interferon, which they don't. But the decision of which drugs to use should be made by patients and their doctors, not drug companies. This is holding people hostage by forcing them to buy both drugs from Schering-Plough."

Nonsense, retorts the New Jersey pharmaceutical firm. Far from being criticized, says Schering-Plough spokesman Robert Consalvo, the company deserves credit for recognizing the life-saving potential of the combination and investing the funds to test it and bring it to market. Moreover, he points out, the FDA only evaluated the combination of ribavirin with Schering-Plough's interferon, called Intron A, which is what the company used in its clinical trials. "Schering-Plough is providing the best proven treatment for hepatitis C," he says. "We put these two products together and got Rebetron through [the drug approval process] very quickly. The bottom line is it's being marketed the way it was tested and approved."

Like AIDS, Hepatitis C, also known as HCV, is a public health disaster of epidemic proportions -- a blood-borne disease that is spreading rapidly and often leaves those infected feeling stigmatized, ostracized or abandoned by society. More than 4 million Americans are currently believed to carry the hepatitis C virus, far greater than the number of those infected with HIV. Although some never get sick, liver failure and other complications of the disease kill an estimated 8,000 a year; health authorities expect the figure to triple within two decades.

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The bundling issue raises a host of thorny legal, ethical and medical questions. For a company to package two drugs together is not inherently controversial. But to package two drugs together when one of them is unavailable from any other pharmaceutical company -- and can therefore only be obtained by purchasing both of them -- is rare, if not unprecedented. Laura Bradbard, a FDA spokeswoman, says she does not know of any similar situations. Neither does Stefan Loren, the pharmaceutical industry analyst for Legg Mason, a Baltimore-based investment bank. "This is a very unusual phenomenon," he says.

The stakes are high for drug companies as well as patients. Loren pegs the current annual market for HCV treatments at about $1.7 billion and says the total figure could reach $4 billion within 10 years. In the highly competitive pharmaceutical industry, firms salivate at numbers like that. Schering-Plough leads the pack at the moment, but the large firms are all pursuing their own lines of research in hopes of grabbing a bigger slice of the pie. The company's exclusive right to market Rebetron, which it licensed from ICN Pharmaceuticals, will expire next year. But some patents on the drug extend for another 15 years, and Schering-Plough is expected to fight the efforts by other companies to product their own versions of ribavirin.

Klein's group, which has chapters in New York and San Francisco, has done its best to make life unpleasant for Schering-Plough. The activists have distributed leaflets and buttons denouncing the marketing of Rebetron at professional gatherings and challenged company representatives in public forums. Though Schering-Plough officials have met with activists to discuss the issue, they have refused to unbundle the product -- despite an appeal from the FDA to reconsider the marketing scheme.

To Schering-Plough's chagrin, the activists have now settled on a strategy that sidesteps the company's lock on ribavirin. They are touting a tiny pharmacy in Pittsburgh that has taken advantage of a legal loophole to sell its own form of the medication -- and at a fraction of what Schering-Plough charges. The pharmacy, which imports the ingredients from abroad, accepts prescriptions from doctors for individual patients and creates ribavirin capsules on a custom basis -- a process known as "compounding."

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Regardless of whether they win the fight against Schering-Plough, the HCV activists have their work cut out for them. U.S. Surgeon General David Satcher recently said the country was suffering from a "silent epidemic" of the disease, which is far more deadly than hepatitis A or B. A huge number of Americans -- perhaps a majority -- have never even heard of HCV. And because the symptoms can take decades to appear, many people have no idea they are infected until they develop chronic liver disease. About a fifth of those infected with HCV develop cirrhosis and may die without a liver transplant. Before blood banks began screening for the virus a decade ago, HCV, was spread primarily through transfusions. Now most transmission occurs through the sharing of infected needles and, occasionally, through sexual contact.

Up until two years ago, the treatment outlook for HCV was bleak. The only approved drug was interferon, whose side effects earned it the nickname "demon juice." Then, in June of 1998, the FDA approved an application from Schering-Plough for the interferon-ribavirin combination.

Patients and doctors, who had heard reports about this remarkable new regimen, were ecstatic. But once it became clear that Schering-Plough had no intention of selling ribavirin separately, patient advocates howled. Access to ribavirin wasn't the only problem; the high price also concerned HCV advocates. Though most insurance programs pay for Rebetron, many patients complain that it costs much more than could possibly be justified by the expense of manufacturing it.

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But industry analyst Loren notes that a company may invest up to $500 million to develop a drug and bring it to market. "Rebetron is very pricey, no question, but these companies have only a few drugs to recoup all the failures, the projects that never really went anywhere, the drugs that didn't sell well," he says. "People are saying they can make obscene profits, but the fact is they're in a very risky business."

Alan Franciscus, the founder of the Hepatitis C Support Project in San Francisco, praises Schering-Plough for awarding grants to many HCV groups, including his own. He adds, however, that the company was naive if it didn't expect the vociferous reaction to its marketing plans. "It's not like they're the evil empire," says Franciscus, whose group runs support groups and publishes informational material about HCV. "But their attitude is, We developed this drug, we're going to do what we want with it and you should be happy. That's not reality, though. The reality is that we want what's best for the community while still allowing them to make a good profit."

Despite their radical reputation, the HCV activists have received some support from mainstream sources. Last year the Committee on Ethical and Judicial Affairs of the American Medical Association urged the organization's board of trustees to examine the issue, stating in a letter that "the practice of bundling raises concerns regarding limitations on choice of treatment options and potential limits on access to standard care." The trustees have not taken up the issue, although a spokesman for the AMA says that they have simply not gotten around to it yet.

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The normally staid American Liver Foundation -- sometimes called the Chicken Liver Foundation by HCV activists who feel it rarely takes a controversial stand -- has also gingerly stepped into the fray, even though it receives close to 10 percent of its annual budget in grants from Schering-Plough. During an interview at an HCV conference in San Francisco two weeks ago, foundation president Alan Brownstein appeared decidedly uncomfortable when asked to comment about the issue. He attempted to finesse the question with platitudes about the need for patients to have maximum treatment options, but then conceded that he was not happy with the practice of bundling.

"They're playing hardball," he said of the pharmaceutical company. "As far as HAAC's position, we're supportive. We've made that clear (to Schering-Plough). People with Hep C are fighting for their lives."

Even the FDA, which approved the Rebetron package but faced immediate protests from patients, is concerned that bundling limits consumers' options, acknowledges spokeswoman Bradbard. But the agency has no authority to force the manufacturer to unbundle the product, she adds.

However, the FDA has tried to exert some pressure. In a letter sent to Schering-Plough after the initial approval of Rebetron, Heidi Jolson, director of the division of anti-viral drug products, wrote that the agency's decision "in no way restricts, nor precludes a request by Schering Corporation to market the individual components separately for their approved use." The letter invited Schering-Plough "to discuss alternative marketing package options that would make available the ribavirin component alone" and noted that the agency "is open to such discussions and would be willing to work with you regarding appropriate revisions to the approved product labeling."

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Translation from bureaucrat-speak to English: Hey, guys, please do this. PLEASE! Schering-Plough's response: No, thanks.

Schering-Plough vigorously defends its actions. Besides saying that there's no conclusive data to support the effectiveness of using ribavirin with other brands of interferon, Consalvo notes that the company is also concerned about liability issues. Since the drug is approved for use only with Intron A, someone who used it with other brands and reacted badly to it could sue Schering-Plough, he explains. Consalvo acknowledges that the company markets the two drugs separately in Europe because of legal requirements from the European Commission. He stresses, however, that the ribavirin is clearly labeled that it is to be used in combination with Intron A.

HCV activists dismiss the liability argument as disingenuous. They point out, accurately, that it is standard medical practice to prescribe drugs "off-label" -- that is, to use medications to treat conditions for which they have not been formally approved. Much of the remarkable increase in understanding of how to treat AIDS patients, in fact, stems from physicians' freedom to fine-tune their patients' regimes without being bound by the strict combinations, uses and doses for which the drugs are labeled.

Hoffman-LaRoche, Schering-Plough's chief rival in the HCV market, has reportedly been lobbying behind the scenes against the bundling of Rebetron. A spokeswoman for the firm declined to comment on the controversy. But she may have offered a hint of the company's stance when she suggested calling HAAC, the group spearheading the protest, for more information.

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Some doctors who work with HCV patients understand Schering-Plough's position. At the San Francisco hepatitis C conference earlier this month, Dr. Joanne Imperial, an associate professor of gastroenterology at Stanford University Medical Center, acknowledged that it was "frustrating" for physicians who want to prescribe ribavirin with other interferon products. But she added that since ribavirin by itself is pretty much useless in treating HCV, it wouldn't have made medical sense for the FDA to approve it for sale separately. "I don't see how it could have been done differently," she said.

Since last summer, however, Fisher's Specialty Pharmacy Services in Pittsburgh has exploited a legal loophole to offer its own version of ribavirin. Other companies are prohibited from large-scale manufacturing of generic ribavirin until Schering-Plough's exclusivity expires. But U.S. law permits pharmacies to compound medication, just as old-time druggists used to do. Fisher sells its product for $225 a month, about a fifth of the cost for the ribavirin in Rebetron. Other compounding pharmacies have begun to follow Fisher's lead.

The development has delighted activists and dismayed Schering-Plough. "This really does not comply with the spirit of the compounding regulations," says Consalvo. "You're supposed to fill an individual patient's one prescription, not say, 'Hey, I can make the same product this big guy is making and sell it for a lot less because I don't have the overhead.'" Schering-Plough has complained to the FDA, but so far the agency has taken no action.

Klein and other activists are doing their best to alert doctors and HCV patients to the availability of Fisher's product. But no one expects Fisher and the other small compounding pharmacies to make much of a dent in the market share of a pharmaceutical giant like Schering-Plough. And the activists recognize that it is not a long-term solution to the problem.

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What may help is the advent of pegylated interferon, the next generation of interferon products. By delivering time-released doses of interferon, the new drugs boost efficacy and hold the potential for producing fewer side effects. Preliminary data suggest that the combination of ribavirin and the pegylated versions works even better than current treatments. Schering-Plough's pegylated drug could be approved as monotherapy by the end of this year. Approval of its use with ribavirin should occur at some point next year.

But other companies are testing their own pegylated interferons with and without ribavirin, and given the current uproar it remains an open question how the FDA will handle Schering-Plough's drug applications. Loren, the pharmaceutical analyst, says the backlash over Rebetron could motivate federal authorities to pressure Schering-Plough to market the two drugs separately -- at least until generic ribavirin becomes available down the line.

The hepatitis C community certainly expects that to be the outcome. "I don't think this type of bundling will happen again," says Franciscus of the Hepatitis C Support Project. "I think Schering-Plough was taken aback by the reaction, but pharmaceutical companies now know that we won't stand still for any of that nonsense."


David Tuller

David Tuller is a contributing writer at Salon. He is the author of "Cracks in the Iron Closet: Travels in Gay and Lesbian Russia."

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