How ‘green’ inhalers could evade Biden’s drug pricing legacy

President Joe Biden’s career-defining victories over Big Pharma — reforming Medicare to lower prices and capping inhaler costs for millions of Americans with lung disease — are facing an unlikely threat: drug companies going green.

Drug companies are taking advantage of a global climate treaty to boost profits. The treaty, signed by some 120 countries nearly a decade ago, is now providing inhaler makers with a golden escape hatch from Biden’s reforms that could earn them hundreds of millions of dollars annually.

The Kigali Amendment to the Montreal Protocol is pushing major pharmaceutical companies to redevelop their inhalers without greenhouse gases. And that has given them regulatory cover to stamp out competition by launching climate-friendly versions of old drugs. When those devices come to market as early as next year, they will cost Medicare and Medicaid billions of extra dollars, and they’ll give major drug companies, which have committed to cap out-of-pocket costs for inhalers at $35, an opportunity to raise their prices.

AstraZeneca and GlaxoSmithKline produce some of the most widely used inhalers in the United States, including Symbicort and Ventolin. They plan to seek regulatory approval for new, climate-friendly inhalers in 2025. The corporations have invested nearly $1 billion each to develop versions of their blockbuster drugs that don’t rely on planet-warming hydrofluorocarbons, or HFCs, to propel medication into the lungs.

In responses to questions from POLITICO’s E&E News, officials at both companies declined to commit to maintaining the price cap on the new inhalers.

Inhalers are some of the most widely used medical devices and can be lifesaving drugs for the nearly 25 million adults and children who have asthma in the United States. In asthmatics, the disease causes swelling in the airways and lungs, and inhalers can be used to alleviate those asthmatic episodes and to prevent them. More than 140 million metered dose inhalers sold in the U.S. in 2020 included propellants. Their emissions are equivalent to driving half a million cars for a year , according to EPA .

Greening the brand-name products will allow pharmaceutical companies to bring them back under patent protection and effectively kill competition for at least a decade. The companies will also be able to charge Medicare, Medicaid and private insurers higher prices, an investigation by POLITICO’s E&E News found.

That could mean big gains for AstraZeneca, which calls its low-emission inhalers a “business opportunity” in financial documents filed with CDP Worldwide, an international nonprofit that helps companies disclose their environmental impact. The company, which brought in $3.5 billion globally from respiratory drugs last year, estimates that a 5 to 10 percent “uplift” in overall inhaler sales from new green versions could increase yearly revenue by close to $100 million.

“We are talking about big-name products that are going to be largely immune from price negotiations,” said William Feldman, a pulmonologist at Brigham and Women’s Hospital in Boston who studies drug patents and how they influence costs.

For their part, both AstraZeneca and GSK say they are purely motivated by planetary altruism, not profits.

AstraZeneca declined to make its experts available. But through a spokesperson the company said, “Patent extension is not a priority for us with the transition.”

Still, the new products could help drugmakers circumvent work by Sen. Bernie Sanders (I-Vt.) and the Biden administration to lower patients’ drug costs — even as Vice President Kamala Harris campaigns for president on those gains.

As vice president, Harris cast the tie-breaking vote to pass the Inflation Reduction Act, which included price reforms to Medicare. Her first joint appearance with Biden after he ended his reelection run and she became the presumptive Democratic nominee for president was at an event in Largo, Maryland, celebrating the completion of Medicare’s first round of price negotiations, which the administration estimates will save taxpayers $6 billion in the first year.

“For years, Big Pharma has often inflated the price of lifesaving medications, often charging many times what it would cost to make just to increase their profits, and millions of Americans have suffered as a result,” she said.

As California attorney general, she led dozens of states in suing the makers of the opioid addiction treatment Suboxone, accusing them of “ unlawfully” manipulating the market to block competition and boost profits. California won more than $7 billion when the case settled last summer. More recently, Harris touted the Biden administration’s Medicare reforms during a Sept. 10 debate with former President Donald Trump.

“We have capped the cost of insulin at $35 a month,” she boasted. “Since I’ve been vice president, we have capped the cost of prescription medication for seniors at $2,000 a year.”

The development of green inhalers jeopardizes those gains. Drug companies will be able to charge a premium for the new devices, costing Medicare and Medicaid billions that will be shouldered by taxpayers. Patients on private insurance, too, could see costs increase, with neither GSK nor AstraZeneca having committed to keeping the $35 out-of-pocket cap for patients who use the climate-friendly inhalers.

‘A tremendous windfall’

This isn’t the first time that drug companies have exploited an international treaty to pad their bottom lines.

In 1987, nearly 200 countries signed the Montreal Protocol to address a growing hole in the ozone layer, which had been linked to increased skin cancer rates. The landmark treaty required the complete phase-out of chemicals called chlorofluorocarbons, or CFCs, which were used in industrial products like air conditioners and refrigerators and consumer products like hair spray.

Inhalers had also used the ozone-depleting gases since 1956, when the asthmatic daughter of a drug company CEO asked her father why she couldn’t spray her medicine into her lungs the same way she set her hair.

Drug companies hadn’t updated their inhalers in decades, so finding a replacement for CFCs required a lot of new research, says Richard Lostritto, who worked for pharmaceutical company Boehringer Ingelheim at the time.

First, they had to identify a new gas that was not flammable or toxic. Once HFCs were identified, companies then had to calculate how much of the propellant to include with the drugs. They also had to redesign the plastic boot that helped puff the combination into patients’ lungs, changing specifications for valves and other mechanisms.

“These are highly pressurized devices that come with safety risks,” Lostritto said. “There was a lot of retooling and a lot of explosions.”

The research paid off.

The Food and Drug Administration approved the first HFC inhalers in 2001 and officially banned devices from using CFCs in 2008. The result was a market composed entirely of brand-name drugs, with no competition from cheaper, generic versions.

Take the market for albuterol inhalers, filled with fast-acting drugs meant to stop an asthma attack in its tracks. Before the propellant switch, annual sales for the three brand-name inhalers had each dipped below $200 million thanks to competition from four generic albuterol makers. After the CFC ban, the generic drugs were discontinued and new versions of the brand-name drugs saw annual sales between $800 million and $1.3 billion, collectively generating some $14 billion in U.S. sales between 2007 and 2021, according to one study in the New England Journal of Medicine .

By 2009, there were no generics and brand-name albuterol inhaler prices had nearly tripled, with one brand, ProAir, costing patients more than $40 out of pocket for a medicine they had to refill monthly.

“These environmental treaties are just a tremendous windfall for these companies,” said Feldman at Brigham and Women’s Hospital, who authored the NEJM study.

Now, inhaler makers are facing calls to change their propellants yet again. In 2022 the United States ratified the Kigali Amendment to the Montreal Protocol, which calls for the phase-down of HFCs. The propellants are greenhouse gases that can trap heat up to 3,600 times as well as carbon dioxide.

Though medical devices technically have an exemption under the treaty, inhaler makers are concerned that the agreement will eventually decrease availability of the gases they depend on.

What’s more, both GSK and AstraZeneca have pledged to significantly reduce their greenhouse gas emissions, and inhalers make up a surprising portion of the companies’ pollution. GSK estimates that some 49 percent of all its greenhouse gas emissions are related to patients using its inhalers. A large portion of those emissions come from its albuterol inhaler Ventolin, which is used by 35 million patients globally, according to the company.

GSK Medicine Development Leader Laura Clow said in an interview with POLITICO’s E&E News that developing low-emission Ventolin “is clearly a big win for us” and the company’s sustainability goals, but acknowledged the Kigali Amendment is among “external factors that have contributed to our own sustainability and business ambition here.”

“It really is exciting that we have set these incredibly ambitious sustainability goals, and the whole organization is motivated around achieving those goals,” Clow said.

Clow referred questions about drug marketing and pricing to GSK spokesperson Kate Kanaby, who said “it is too early to comment on pricing” for its climate-friendly Ventolin given that the products are currently in Phase III clinical trials.

Diplomats and environmental experts who negotiated the Montreal Protocol and Kigali Amendment are unapologetic about the treaties’ consequences. That the world’s nations agreed on a solution that helped close the hole in the ozone layer and that will now mitigate climate change is something to be celebrated, they say.

Jennifer Haverkamp, who was the lead U.S. negotiator for the Kigali Amendment during the Obama administration, noted that the refrigeration and air conditioning industries that also used the industrial gases supported the treaty. The industries then lobbied Congress for a law that locked in the shift away from HFCs, and that created a standard for more innovation across the appliance industry.

“What has made it as successful as it has been in the U.S.,” she said of appliance makers, “is that the industry has seen a financial benefit to the change.”

‘It’s a game’

For their part, brand-name inhaler makers have been able to keep up profits and stave off competition since the treaty — not by driving innovation but largely through idiosyncrasies in the American drug patent system.

One United Nations official, who was granted anonymity to speak freely about the treaties he is tasked with enforcing, said the world’s nations can’t be blamed for how the U.S. drug market works.

“Everyone knows U.S. drug prices pay for the research and development for the rest of the world,” he said. “How the U.S. manages its drug bills is their own concern.”

Inhalers essentially have two components — the combined medication and propellants, and the plastic boots that help send those ingredients into patients’ lungs.

Pharmaceutical companies have prevented generic competitors from entering the market for old drugs simply by repackaging the medicines in slightly changed plastic devices. Sometimes the companies slap new device patents on existing brands. Other times they rebrand the same medicines with new names and discontinue old versions, in a practice known as “product hopping.”

Often the improvements have nothing to do with the medicine at issue or its delivery. That includes one patent on AstraZeneca’s Symbicort for a thin plastic strap that allows the inhaler’s cap to dangle under it when the inhaler is in use. That patent was approved in 2013 and protects Symbicort through 2027. Another patent on the brand lasting until 2029 covers a new way to display how many doses are left in the device.

“It’s a game,” acknowledged Mike Gonzales, who used to market drugs for pharmaceutical company AbbVie and is now an independent consultant. “If you have a product that’s approaching the end of its life cycle and there is a way you can change it to sell at a higher margin and ensure it is not superseded by another product, you do it.”

Whatever the patents are for, all patents on a brand are listed in what’s called the Orange Book. The FDA won’t approve generic versions of medicines if there is an active patent listed in the book, regardless of what the patent covers.

Device patents can increase profits long after drug patents have expired. One study looking at Orange Book inhaler patents from 2000 to 2021 found that manufacturers earned $111 billion on inhalers after patents on their active ingredients had expired. By comparison, companies earned just $67 billion when the drug patents were still active.

Going green, earning green

AstraZeneca and GSK’s $1 billion investment each to develop new devices has earned them praise from environmental advocates and even the White House, which included AstraZeneca’s efforts in a 2022 press release about reducing health care emissions.

The swap will also benefit the companies’ bottom lines.

GSK’s fast-acting brand-name albuterol inhaler, Ventolin, first entered the market in 1967. It was without direct competition for some 50 years, thanks to its switch to HFCs. Today, the only alternative to brand-name Ventolin is an authorized generic version that is also made and manufactured by GSK.

Now, a “green” Ventolin is in Phase III clinical trials, with GSK planning to seek FDA approval as soon as 2025. Right now, Clow said, the company is “still working through” if it will launch a new version of generic Ventolin along with the name brand. But if the FDA gives the go-ahead to only the new name-brand version, drug policy experts expect GSK to pull its older drug from the market, which, according to drug laws, would also kill the generic version.

“There are all these discussions about climate change and concerns about emissions, but these climate-friendly inhalers are a way for them to take back their share of the market,” said Jeromie Ballreich, who researches health economics and outcomes at Johns Hopkins Bloomberg School of Public Health.

Similarly, AstraZeneca’s blockbuster drug Symbicort is only now facing a generic competitor, nearly 20 years after its 2006 launch. The inhaler has been widely prescribed because it contains a unique combination of medicines that, if used on a regular basis, can control asthma and decrease the risk of severe attacks.

Half of Symbicort’s patents are on the plastic device, not the drug. Those device patents extended patent exclusivity for more than six years, helping Symbicort become AstraZeneca’s second-highest-selling drug in any category in 2021, generating more than $2.7 billion in sales, according to company financial records .

Total revenue for the drug fell some 7 percent in 2023 after a federal judge ruled that Viatris and Kindeva Drug Delivery could start selling a generic version, which came on the market in July.

Now, AstraZeneca says it will replace the propellant in Symbicort within the next five years. The company plans to relaunch all propellant-using inhalers, including Symbicort, with the new gas by 2030.

The company’s own climate disclosures make clear that, far from a threat to business, going green is a solution to “mitigate the financial risks posed to our … respiratory portfolio.”

“Loss of product exclusivity through patent expiration currently poses a much greater risk to revenue than climate related risks,” the documents say.

The documents do not divulge that AstraZeneca already makes a version of Symbicort that does not use any propellants and thus does not emit greenhouse gases at all. That dry powdered inhaler has been widely used in the United Kingdom and across Europe for nearly two decades. It’s not available in the U.S. despite advocacy from climate-conscious physicians like Gregg Furie, a pulmonologist and medical director of climate and sustainability at Brigham and Women’s Hospital.

“AstraZeneca positions itself as a very progressive pharmaceutical company around climate, but this is an area in which they are behaving quite hypocritically, and we should be calling out that hypocrisy,” he said.

AstraZeneca refused to make its experts available for an interview but answered emailed questions in a statement from the company. The pharmaceutical giant said it has approached the FDA about bringing its dry powdered Symbicort to the U.S. but that the agency wanted to see additional research. Because of that, AstraZeneca says it “will not proceed” with bringing the zero-emission Symbicort to the U.S.

The FDA said it could not comment on the matter “due to federal disclosure laws and regulations.”

‘Taxpayers are ... on the hook’

Asthma rates are higher among Black people and those living below the poverty line, according to the American Lung Association . That’s in part because poor communities and communities of color are more likely to be located near sources of pollution.

A 2020 report by the Asthma and Allergy Foundation of America, " Asthma Disparities in America ," found that annual prescription costs can average $1,830 per person. When patients can’t afford to refill their prescriptions on time, they skip doses, putting their health at risk.

That’s one reason why Biden hosted a White House victory lap this spring to celebrate Medicare reforms, as well as inhaler cost caps secured by Sanders.

Speaking in the Eisenhower Executive Office Building in April beside a table where a dozen inhalers were piled high, Biden declared victory over drug companies.

“Finally, finally we beat Big Pharma — finally,” he said.

Despite those reforms, green inhalers could cost taxpayers billions in Medicare and Medicaid spending.

In 2022 the programs had a combined gross spending of $5.3 billion on metered dose inhalers produced by AstraZeneca and GSK, according to an E&E News analysis of federal spending data. Any of those drugs could ultimately be relaunched at higher prices with low-emission propellants.

This spring, Sanders concluded an investigation into the high prices consumers pay for inhalers by securing promises from three companies, including GSK and AstraZeneca, to cap out-of-pocket costs at $35.

“These companies as well as many others in the pharmaceutical industry are beginning to catch on to the fact that the American people are sick and tired of paying astronomical prices for the prescription drugs they need to stay alive or ease their suffering,” he said at the time.

AstraZeneca blames its high prices, in part, on pharmacy benefit managers, which work as middlemen between drug companies and insurers. The company would not specifically commit to maintaining the $35 out-of-pocket cap when it launches green inhalers, saying, “We remain dedicated to addressing the need for affordability of our medicines, but the system is complex and we cannot do it alone.”

The caps do not apply to patients who rely on Medicare and Medicaid for health insurance. But the Inflation Reduction Act of 2022 put a $2,000 annual cap on patients’ out-of-pocket costs starting next year. The landmark climate law also allows Medicare to negotiate the prices it pays for drugs for the first time — topping off a push Biden himself began 50 years ago as a freshman senator in 1973 when he co-sponsored a bill that would have capped Medicare costs for some drugs.

In August, the Biden administration announced negotiated prices for the first 10 medications, none of which were inhalers. Some of the drugs, including non-injectable diabetes medicines, had their prices lowered by hundreds of dollars. Those new prices will take effect in 2026. Inhalers are likely to be included in the next 10 drugs Medicare targets for negotiation next year.

AstraZeneca has sued the government over that law, saying that setting its own prices for Medicare is “necessary to support and improve patients’ access to future lifesaving medicines, and our rights as a company.” The case is currently on appeal.

But if Medicare secures a lower price for a current inhaler, it could be moot if a drugmaker launches a climate-friendly version to replace it, depending on whether it simultaneously decides to kill the generic version.

The IRA will also allow Medicare to penalize drugmakers if they raise prices on existing drugs too quickly. But similar reforms to Medicaid included in the American Rescue Plan backfired. Last winter, GSK discontinued one of its top inhalers, Flovent, rather than pay new Medicaid penalties. The corporation then partnered with another company to launch an authorized generic version of the drug, which cost more than the original brand-name medicine. What’s more, though GSK had agreed to a $35 out-of-pocket cap for patients using its brand-name inhalers, it has not voluntarily applied that limit to the new version.

Geoff Joyce, director of health policy at the University of Southern California’s Schaeffer Center, said Medicare and Medicaid reforms are important. But stabilizing patients’ costs at the pharmacy counter also means they won’t be as aware of price shocks the federal government — and therefore taxpayers — could still experience through product hops.

“If there's not a competitive market for these new climate-friendly inhalers, taxpayers are going to be on the hook,” he said.

Going after ‘bogus’ patents

The Federal Trade Commission has been attacking pharmaceutical companies for product hops for nearly a year.

The agency has challenged Orange Book listings for hundreds of patents on all kinds of drugs, including Symbicort’s cap and dose counter. The agency says patents should not be able to delay generic competition if they are not related to a drug’s active ingredients.

“Inhalers have been around for decades, but they still cost hundreds of dollars,” FTC Chair Lina Khan said on " The Daily Show With Jon Stewart" in April, where she explained drug companies’ “tricks and monopolistic behavior.”

“Our staff took a close look, and we’ve realized that some of the patents that had been listed for these inhalers were improper, they were bogus,” she said.

The initiative has seen results. Last winter, GSK agreed to delist the last remaining patent for Ventolin from the Orange Book, potentially opening the door for other companies to produce generic versions of the drug for the first time in nearly two decades.

The FTC has even intervened on behalf of generic competitors in court. When Teva Pharmaceutical Industries sued a generic drugmaker for trying to compete with its brand-name ProAir HFA albuterol inhaler, the FTC wrote an amicus brief supporting Amneal Pharmaceuticals’ efforts. They argued that the patents at issue were improperly listed in the Orange Book because they covered non-medical elements of the device, like dose counters.

Asked about the future launch of climate-friendly inhalers, FTC’s director of policy planning, Hannah Garden-Monheit, told POLITICO’s E&E News that her office would “continue to scrutinize whether improper Orange Book listings are blocking and hindering competition.”

“It should also be an ongoing area of focus to drug companies,” she said.

The U.S. Patent and Trademark Office is also mulling action on “patent thickets,” where drugmakers obtain multiple patents for claims with only minor differences. In May, the agency proposed to lower the cost for generic makers to challenge each patent in a group of patents related to “indistinct” versions of the same drug. It would also add new rules for patent applicants that would prevent “indistinct” patents from remaining valid longer than existing patents.

The rule is still under consideration and has received strong pushback from the Pharmaceutical Research and Manufacturers of America , an industry lobbying group, which says strong patent protections are “more important than ever” given the cost of bringing new drugs to market.

Congress is divided on how to handle the issue. In July, the Senate unanimously passed the " Affordable Prescriptions for Patients Act ," which would limit how many patents a brand-name manufacturer can assert when challenging the development of generics. Its passage was lauded as “long overdue” by Sen. John Cornyn (R-Texas), who co-sponsored the bill with Sen. Richard Blumenthal (D-Conn.).

A companion bill introduced in the House in July also has bipartisan support, though it has yet to see a hearing.

Merith Basey, executive director of Patients for Affordable Drugs, a nonprofit that advocates for lower prescription costs, supports the legislation. Her organization has also pushed Congress to pass additional bills that would prevent common pharmaceutical company practices used to delay generic drugs, including paying would-be competitors , and improve coordination between FDA and the Patent and Trademark Office .

Without more action from Congress, she fears inhaler prices will continue to increase as they go green.

“We need this to be the law of the land, rather than the will of the corporations,” she said.