Merck's Isentress HIV/AIDS drug pricing: CalSTRS and CalPERS express concern

AIDS Healthcare Foundation (AHF)Mar 2 2010

Today AIDS Healthcare Foundation (AHF) announced that the two largest public pension funds in the nation, the California State Teachers' Retirement System (CalSTRS) and the California Public Employees’ Retirement System (CalPERS), have sent letters to Merck and Co. Pharmaceuticals expressing concern over the company’s pricing for its key HIV/AIDS drug, Isentress—now the most expensive first-line AIDS treatment in the U.S.

“AHF would like to commend both CalSTRS and CalPERS for expressing concern over the price of Merck’s HIV/AIDS Drug Isentress and for encouraging corporate social responsibility from the companies in which they are invested”

In a letter to Merck & Co. CEO Richard Clark dated February 17, 2010, CalSTRS makes reference to AHF’s ongoing concerns regarding the price of Isentress, stating: “…we would like to encourage you to meet with representatives of AHF to discuss access to the drug, particularly to the uninsured both in California and other states.”

Continuing to urge Merck to work with AHF on the issue of Isentress pricing and access, the letter goes on to state: “We support your continued engagement with the Human Immunodeficiency Virus (HIV) community and believe that it is only through sustained collaboration that a balance can be struck between treatment and affordability of these life saving drugs.”

With a $156 billion investment portfolio, CalSTRS is the second-largest public pension fund in the United States. According to CalSTRS, the fund—which provides retirement, disability and survivor benefits to California's 776,000 public school educators—is a long-term owner of Merck & Co. stock, with more than 3.5 million shares currently worth over $100 million dollars.

Writing on behalf of the more than 1.6 million State, school and local public employees, retirees and their families they represent, CalPERS also sent a letter to Mr. Clark inquiring about Isentress pricing. With more than $200 billion in market assets, CalPERS is the nation’s largest public pension fund and a long-term owner of approximately 9,107,000 shares of Merck common stock.

“AHF would like to commend both CalSTRS and CalPERS for expressing concern over the price of Merck’s HIV/AIDS Drug Isentress and for encouraging corporate social responsibility from the companies in which they are invested,” said Michael Weinstein, AIDS Healthcare Foundation President. “There is simply no justification for Merck to price Isentress three times higher than other first-line AIDS drugs. The price of this drug is putting an unbearable strain on taxpayer funded State AIDS Drug Assistance Programs (ADAP) in California and all over the country, ultimately limiting access to lifesaving HIV/AIDS treatment to those most in need.”

Added Weinstein, “AHF would welcome the opportunity to meet with Merck executives, as CalSTRS has urged, to discuss our agency’s concerns regarding the high price of Isentress.”

Initially approved in October 2007 by the Food and Drug Administration (FDA) as a salvage therapy, the FDA recently expanded its approval of Merck’s Isentress for use as a first line course of treatment in HIV/AIDS, a move which both greatly expanded the US market for the drug and made Merck’s antiretroviral (ARV) Isentress the most expensive first line treatment on the market. When it first came to market, Merck set the Average Wholesale Price (AWP) of Isentress at $12,150 per patient yearly. Merck has since raised the AWP of Isentress to $12,868—a 5% price hike—since its introduction to market two years ago.

Last month Merck released its 4^th quarter 2009 earnings announcing that Isentress had exceeded $1 billion ($1.13 billion) in total sales (U.S. and Int’l combined).

Background on AHF Advocacy on Merck’s Drug Pricing

AHF has undertaken several actions to urge Merck to lower the price of Isentress including a recent protest during the 17^th Conference of Retroviruses and Opportunistic Infections (CROI) in San Francisco on February 17^th. The organization has also initiated an innovative advertising campaign which includes vinyl train station banners ads urging, ‘Merck: ‘Do the Right Thing’ hung from light poles on the train platforms in Whitehouse Station, NJ, Merck’s hometown, in an effort to educate Merck employees and other commuters about Merck’s AIDS drug pricing and policies. In early January AHF participated in a protest targeting Merck at the J.P. Morgan Investor Healthcare Conference in San Francisco where Merck officials were speaking.

In addition, AHF has written letters to all state AIDS Drug Assistance Programs (ADAPs) and Medicaid Directors requesting that Isentress be placed on “prior authorization” in order to control costs while still ensuring that those patients who need Isentress have access to it. Placing “prior authorization” procedures on Isentress ensures that the drug remains available to those for whom it is medically necessary. The procedure simply requires that a physician fill out a request form if he/she deems it necessary to prescribe the drug. NOTE: The price for many of the federally funded, state-run and cash-strapped AIDS Drug Assistance Programs (ADAP) is $8,088 per patient per year—three times more expensive than commonly prescribed ARVs for first-line treatment.

Last summer, AHF sent postcard mailers to homes in select zip codes in and around Merck’s headquarters in an effort to inform Merck employees about the company’s pricing and policies regarding Isentress. Last month, an AHF-led e-letter advocacy campaign generated more than 800 letters urging Merck CEO Richard Clark to “Do the right thing on AIDS and lower the price of Isentress.”