TWO BIRDS OF A FEATHER: ASTRAZENECA TO ACQUIRE FELLOW PRICE-GOUGER ALEXION IN MULTI-BILLION DOLLAR DEAL
In case you missed it, Big Pharma giant AstraZeneca announced plans to acquire rare disease drug maker Alexion Pharmaceuticals in a $39 billion merger. AstraZeneca, the maker of blockbuster cholesterol medication Crestor, notched nearly $25 billion in revenue in 2019, while Alexion, best known for manufacturing one of the world’s most expensive rare disease medications, made nearly $5 billion in annual revenue for 2019.
The move was driven by AstraZeneca’s desire to diversify its rare disease portfolio since “high-priced medicines for rare diseases can generate billions in sales from relatively few patients,” Yahoo! reports. “Snapping up drugmakers that focus on them has been a popular way for larger pharmaceutical companies to stimulate sales growth in recent years.” In fact, priced at a staggering $500,000 per pill, Alexion’s rare disease medication Soliris, brought in almost $4 billion in sales for 2019.
What do AstraZeneca and Alexion have in common? Both follow the Big Pharma playbook of price-gouging patients and consumers while engaging in anti-competitive tactics to undermine more affordable alternatives.
As they say, birds of a feather flock together.
Here are just a few examples of how AstraZeneca has been price-gouging patients and moving to block competitors from coming to the market:
- AstraZeneca Was One Of Several Companies To Participate In Big Pharma’s Biennial Price Hikes This Summer – despite the unprecedented economic uncertainty facing millions of Americans grappling with the pandemic – by increasing prices on 18 drugs, including on popular cholesterol drug Crestor and blockbuster drug Symbicort. (Tori Marsh, “Live Updates: July 2020 Drug Price Increases,” GoodRx, 8/3/20)
- In Anticipation Of Generic Competition For Its Blockbuster Anti-Ulcer Drug Prilosec, AstraZeneca, “Introduced And Pushed Doctors To Prescribe” A New Drug “Which Was Only Slightly Chemically Different From Prilosec But Had 13 Years Of Patent Protection Left.” The Report Estimates The One-Year Cost Of This Product Hop To Be Almost $2.4 Billion. “The anti-ulcer drug Prilosec was, at one time, the top drug by sales in the United States. In 2000, before its scheduled patent expiration the following year, Prilosec sales reached $4.1 billion (NIHCM Foundation, 2001). In anticipation of generic competition for its blockbuster product, AstraZeneca, Prilosec’s manufacturer, introduced and pushed doctors to prescribe its new anti-ulcer drug, Nexium, which was only slightly chemically different from Prilosec but had 13 years of patent protection left. A lawsuit alleging that AstraZeneca engaged in anticompetitive behavior with Prilosec and Nexium was dismissed in early 2008 when a district court found that AstraZeneca “did not eliminate consumer choice” (Callan, 2015). But antitrust experts have pointed out that the court’s reasoning ignores “the realities of drug markets,” where a prescription for a single-source brand drug removes the option of a generic version (Carrier and Shadowen, 2016).” (Alex Brill, “The Cost of Brand Drug Product Hopping,” Matrix Global Advisors, 9/20)
- As AstraZeneca Faced Generic Competition To Its High Cholesterol Drug Crestor, Its “Price Was Increased Several Times Before The Generic Came Out … Including By About 15 Percent Right Before.” “AstraZeneca’s AZN, -0.08% drug Crestor, another of the drugs featured in the report, is a popular but expensive drug that treats high cholesterol. In 2016, when the drug first got a new generic rival, the branded product cost about $300 a month without insurance coverage. The price was increased several times before the generic came out … including by about 15% right before. (AstraZeneca said it could not comment because it was not involved in the study.)” (Emma Court, “Big Pharma Games The System To Make Generic Drugs More Expensive,” MarketWatch, 8/3/18)
- AstraZeneca’s Pricing Strategy Served To Create “A New, Higher Baseline Price When The Generic Hits The Market.” (Tori Marsh, “Prices For Brand Drugs Spike Before A Generic Is Released. Here’s Why.,” GoodRx, 7/27/18)
- After Increasing Drug Prices By As Much As Nine Percent, On A 2018 Earnings Call, Soriot Insisted The Company Was “Sensitive” To Drug Pricing Concerns And Said It Had Raised “Wholesale Prices Earlier [That] Year By ‘Very, Very Modest’ Amounts.” “During an earnings conference call, the AstraZeneca chief executive disclosed the company would not raise prices in the U.S. for the rest of year. Other drug makers have taken the same step in response to pressure from the Trump administration, but he insisted this was ‘our plan … all along’ … He maintained AstraZeneca was sensitive to the problem by raising wholesale prices earlier this year by ‘very, very modest’ amounts, ‘between 1 and 3 percent’ which, he said, was ‘in line with inflation.’” (Ed Silverman, “When Modest Is Actually Excessive: AstraZeneca Spins Its Price Hikes,” STAT News, 7/26/18)
Alexion has a history of price-gouging products, developed with the help of public investment, used for the treatment of rare diseases:
- At $500,000 A Year, Alexion’s Rare Disease Medication Soliris Is “One Of The World’s Most Expensive Drugs In The World.” (Alexander Urry, “Ultomiris: Can Drug Innovation Be Too Expensive?” STAT News, 3/1/19)
- “Most Of The Research And Development [For Soliris] Was Done By University Researchers Working In Academic Laboratories Supported By Public Funds.” (Kelly Crowe, “How Pharmaceutical Company Alexion Set The Price Of The World’s Most Expensive Drug,” CBC, 6/25/15)
- “The Extreme Price Of Soliris Also Can’t Be Explained By The Manufacturing Costs.” “The extreme price of Soliris also can’t be explained by the manufacturing costs, he went on, because monoclonal antibodies are much less expensive to make than people think … In other words, Alexion set the price of Soliris at half a million dollars a year, because that’s what it thinks the market will bear, based on the fact that the drug works and patients have no other treatment options.” (Kelly Crowe, “How Pharmaceutical Company Alexion Set The Price Of The World’s Most Expensive Drug,” CBC, 6/25/15)
This is just one of many Big Pharma takeovers that has happened in recent years as many of the largest drug makers have cash to burn as a result of their egregious pricing and anti-competitive practices. Last June, AbbVie announced
plans to acquire drug maker Allergan in a $63 billion merger. Earlier that year, Bristol-Myers Squibb announced
it was paying $74 billion for rival cancer drug company Celgene – one of the biggest mergers in industry history.
Learn more about market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.