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The $6 Million Drug Claim
In Dawn Patterson’s fridge, a multimillion-dollar drug sits beside a bottle of root beer and a jar of salsa.
The drug, Strensiq, treats hypophosphatasia, a rare bone disease that causes excruciating pain, leaving Ms. Patterson struggling to work or care for her family. One year after she began taking Strensiq, Ms. Patterson credits it with nearly vanquishing her pain, enabling her to return to work part-time for a hospital.
But her family and her husband’s union, which covers the cost of the drug, have been shocked by the mounting bills for her treatments and for those of two of her children, who have the same disease. In 2018, the union faced a potential $6 million annual bill for the Patterson household.
Strensiq, one of the costliest drugs in the world, is part of an unsettling trend in which ultra-expensive drugs are becoming more common, spurring a national debate over whether any drug should cost millions of dollars, and whether Americans will be priced out of lifesaving treatments as drug companies maximize their profits.
Extraordinary scientific advances—and tax breaks and other government incentives for developing drugs for rare diseases—have spawned treatments, and even cures, for illnesses that were once a death sentence. And now that cheaper generic drugs account for about 90% of all prescriptions filled in the United States, pharmaceutical companies are turning to rare-disease treatments and gene therapies as their next profit engine.
These drugs face no real competition, leaving the door wide open for manufacturers to set the price almost at whatever they want. How high is too high, some argue, if a drug can save 200 or 300 babies a year from a debilitating, degenerative illness or death?
Sarepta, Sanofi, and other manufacturers of rare-disease drugs say they provide assistance to patients who are uninsured or can’t afford the out-of-pocket costs of their products. The companies say they have to recoup their investment in drugs that treat a small pool of patients—rare diseases are defined as those that affect fewer than 200,000 people nationwide. The Pattersons’ disease, hypophosphatasia, is thought to affect just 1,300 people in the United States.
But rare diseases aren’t all that rare. About 30 million Americans have one, which is roughly the same number of people who have diabetes. And although there are no treatments for most rare diseases, new therapies are coming on the market nearly every month, some of them exceeding $2 million a year for a single treatment. Of 59 new drugs approved in 2018, more than half, or 34, were for rare diseases. Top of Form
As more and more families are begging drug companies and insurers to pay for this novel class of treatments, employers big and small are getting hit with higher drug bills. And not every union or corporate employer has an adequate cushion to absorb these bills.
In the Pattersons’ case, Strensiq was expected to cost about $285,000 in 2015, according to its manufacturer, Alexion Pharmaceuticals. In 2018, Ms. Patterson’s drug bill approached $2 million. As Strensiq needs to be taken indefinitely, the family’s total drug coverage could cost the union $60 million. The amount threw the International Brotherhood of Boilermakers into a crisis. Four months after Patterson began taking Strensiq, the union’s health plan put payment for the drug on hold to evaluate whether she really needed it.
Companies cannot predict these costs. “You are one hire, one diagnosis away from this happening to you,” said Rich Fuerstenberg, who advises employers for the consulting firm Mercer. “It’s like being struck by lightning.”
Ultimately, under pressure from the boilermakers’ union and Express Scripts, Alexion said that it would cap the annual cost at $1.5 million for each adult in commercial plans covered by the pharmacy benefits manager, including the union’s. Alexion said that it is negotiating similar price caps with others, but that those talks are confidential.
Drug companies once shunned investment in rare diseases because, with such a small market, there was little incentive. But that began to change after the passage of the Orphan Drug Act, which provides government subsidies for clinical trials as well as tax incentives and additional monopoly protection.
In an attempt to mollify public outrage over high prices, some drug makers have begun to offer other options. When Novartis announced that Zolgensma, which can halt the progression of spinal muscular atrophy in babies, would cost $2.1 million, the company offered to let insurers and employers pay in installments over three to five years, and some of the money could be refunded if the treatment failed.
But manufacturers retain autonomy over a drug’s price. “A lot of these products haven’t hit the market yet, and there’s still a hope we can do something about the price rather than try to figure out a 20-year mortgage payment for them,” said Matt Salo, executive director of the National Association of Medicaid Directors.
Source: The New York Times, August 25, 2019