A proverbial elephant crowding the drug-accessibility room is getting harder and harder to ignore. The high cost of some new pharmaceutical medicines designed to treat devastating and often deadly, but relatively rare disease conditions, combined with concerns over the sustainability of government-led public health systems and current healthcare platforms to give access to low-income patients, is leading to a nexus of debate over the issue.
A prima facie example is Kalydeco (generic name Ivacaftor), an oral drug engineered and manufactured by Cambridge, Massachusetts-based Vertex Pharmaceuticals Incorporated to treat a statistically small subset of cystic fibrosis (CF) patients whose disease is caused by a particular mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene called G551D. It works by helping the CFTR protein function more normally once it reaches the cell surface.
However, Kalydeco is astronomically expensive. The main reason for this high cost is because Kalydeco is exclusively indicated to treat a minuscule number of potential end-users. The CF prevalence rate overall in the most vulnerable ethnic group, Caucasians, is just one in every 2,500 births, and the proportion of cystic fibrosis cases positive for the G551D mutation in the CFTR gene is very low, only a subset about three percent of CF patients in all of North America, numbering about 1,100 (about 2,150 globally) eligible to use Kalydeco — out of what is already a tiny demographic minority of about 30,000 CF patients overall in the U.S.; some 70,000 patients worldwide. When Vertex was authorized to expand Kalydeco sales in Europe last month, the company noted that just 254 more patients would have access to the drug. Because Kalydeco is indicated only for treatment of such an exclusive and tiny cohort of patients, economies of scale associated with sales of more widely-prescribed drugs don’t obtain, keeping the cost per patient high — estimated at approximately $311,000 annually per patient for two pills a day that will likely need to be taken for decades, potentially running the total cost of the treatment into many millions of dollars.
Kalydeco is designed to help the CFTR protein function more normally once it reaches the cell surface, to help hydrate and clear mucus from the airways thus facilitating increased chloride transport by potentiating the channel-open probability (or gating) of the CFTR protein. It was discovered as part of a collaboration with Cystic Fibrosis Foundation Therapeutics, Inc. (CFFT), the nonprofit drug discovery and development affiliate of the Cystic Fibrosis Foundation. Vertex initiated its CF research program in 1998 as part of a collaboration with CFFT, and this collaboration was expanded to support the accelerated discovery and development of Vertex’s CFTR modulators, and the drug was granted FDA approval in 2012. Kalydeco will be under patent protection until 2025, prior to which there will be no supplier competition.
Vertex has pledged to make the drug available free to patients in the United States with no insurance and a household income of under $150,000. However, the high costs of the drug have already led to a handful of high-profile stories wherein healthcare organizations are balking at covering the therapy.
In the U.S., some who could potentially benefit from Kalydeco, but who are excluded due to cost, are pushing back. The Wall Street Journal’s Joseph Walker reported (paywall) last week that a lawsuit filed in an Arkansas federal court last month by three persons afflicted with CF alleges that Medicaid officials have for two years blocked their access to Kalydeco because of the drug’s cost, contending that state officials have violated their civil rights under federal law governing Medicaid.
Mr. Walker says this litigation is just the latest example of the pressure expensive new drugs are exerting causing cracks in the sustainability of government medical insurance programs inadequately funded to satisfy new demands being placed on them, with yet more expensive, niche drugs on the way. He cites a recent report by insurer UnitedHealth Group Inc. estimating that specialty-drug spending in the U.S. could more than quadruple to about $400 billion by 2020, up from $87 billion in 2012, and Matt Salo, executive director of the National Association of Medicaid Directors, observing: “We have this public health mentality that all people have to be cured no matter what the cost, and also let the innovators charge whatever they want. Those are fine theories independently, but when you combine them together in a finite budget environment, it’s not sustainable.”
A major MIT technology review published in 2013 notes that because of medical insurance, co-pay reductions, and expanded access programs for the uninsured, relatively few Americans pay more than a few thousand dollars per year for even the most expensive drugs. Indeed, the Milwaukee Journal Sentinel’s John Fauber cites a spokeswoman for Vertex, maintaining that the vast majority of patients pay between $15 and $50 a month out-of-pocket for Kalydeco.
The MIT paper’s authors observe that the primary drug customers in the United States are neither patients nor physicians, but rather taxpayers (through Medicare and Medicaid) and private insurance companies — a state of affairs that facilitates companies setting prices that very few individuals could pay. Consequently this distortion (or near-obliteration) of market indued checks and balances on cost means that increasing the price doesn’t reduce how much the drugs are used, with prices instead being set and raised according to what the adulterated and dysfunctional market will bear, and with the parties who actually pay the drug companies obliged to pay whatever price is charged for an effective drug to which there is no alternative.
The MIT commentators contend that this is an inherent problem with a system where government is one of the biggest payers, and where doctors, hospitals, insurers, pharmacy benefit managers, drug companies, and investors all expect to profit handsomely from treating sick people — no matter how little real value they add to patients’ lives or to society. They observe that drug companies insist that they need to make billions of dollars on their medicines because their failure rate is so high and because they need to convince investors it is wise to sink money into more research. They acknowledge the truth of those contentions, but also note that the United States, with less than 5 percent of the world’s population, buys more than 50 percent of its prescription drugs, and at prices calculated to subsidize sales to the rest of the industrial world, where the same drugs cost much less, although most poor governments can’t afford them at even those lower prices.
They conclude that ultimately, what matters in pricing a drug is its value, and acknowledge that Vertex succeeded in pricing Kalydeco the way it has because the medicine really works, because the company’s scientists knew the exact genetic profile of the people who would benefit, because they were able to show definitive clinical results in well-designed trials, and because the company ensured that the right patients got the drug and that access was no issue. The drug makes a true difference where nothing else does.
Journal of the American Medical Association
Milwaukee Journal Sentinel
MIT Technology Review
The Wall Street Journal