Vertex Pharma CEO Jeffrey Leiden’s move earlier this month to pressure England’s prime minister Theresa May on drug prices seems to have set some wheels in motion. After negotiations seemingly broke down between health officials and the BOSTON-based drugmaker, NHS England has made a new offer for cystic fibrosis drug Orkambi and others in the company’s portfolio.
In a letter posted by Cystic Fibrosis Trust chief David Ramsden, NHS England official John Stewart wrote that during a year of direct negotiations between officials and the company, Vertex has “remained unwilling to price responsibly,” even after NICE recommended against coverage. NHS just made its “final” offer that would “guarantee immediate and expanded access” for Orkambi and Kalydeco, plus Symdeco upon its approval.
The “deal” would also provide access to a next-generation triple therapy from Vertex. The deal would mean revenues for the company of £500 million over 5 years and £1 billion over 10 years, according to Stewart, and would be the NHS’s “largest ever financial commitment” in its 70-year history.
Still, Vertex and patient advocates have concerns about the new offer. The company said it appreciates the offer and hopes it “signals a willingness to re-engage in discussions to reach our collective goal of providing access to our CF medicines for patients.”
But the company says it’s worried the “proposal fails to adequately reflect the value of our current and future medicines and the number of patients that will be treated with these medicines.” Vertex said it stands “ready to meet to find a productive path forward.” Ramsden tweeted that despite the large figures, he’s “deeply concerned” the offer doesn’t “truly reflect the difference the pipeline of drugs will make.”
In a letter to the UK patient community, Vertex senior vice president and international general manager Simon Bedson wrote that the offer “does not take into account the vast time and resources invested” to develop the CF meds and claimed it could hamper the company’s ability to one day find a cure.
Patient advocates blasted the gridlock. Ramsden said his group is “appalled and deeply frustrated” to hear about stalled negotiations. In a related blog post, Ramsden called on the sides to make their arguments in the negotiating room instead of in public.
Orkambi costs £104,000 per patient per year in the UK before discounts, according to documents from UK health officials. (Ref: FiercePharma)
Much has been written here in the US about the need to bring down drug prices but little has actually be done about the situation, which has been exacerbated by the plethora of exciting new treatments for cancer, for example, but with eye-popping, budget-busting price tags.
No question–regardless of one’s political proclivity–price is a dilemma NOW. So what’s next? More haranguing about prices from the White House for political show, which Big Pharma largely ignores?
Just how did we get here, anyway?
Sarah Kliff at Vox penned a particularly astute piece that cuts to the chase in plumbing the core of this dilemma, beginning with the following simple hypothetical: Let’s say you’re at the doctor. And the doctor hands you a prescription.
The prescription is for Humira, an injectable medication made by Abbott Labs, used to treat a lot of common conditions like arthritis and psoriasis. Humira is an especially popular medication right now. In 2015, patients all around the world spent $14 billion on Humira prescriptions–that’s roughly the size of Jamaica’s entire economy, says Kliff.
Now, instead let’s say your doctor appointment is in the United Kingdom. There, your Humira prescription will cost, on average, $1,362. If you’re seeing a doctor in Switzerland, the drug runs around $822. But if you’re seeing a doctor in the US, your Humira prescription will, on average, run you $2,669.
How does this happen? Why does Humira cost so much more here than it does in other countries? Humira is the exact same drug whether it’s sold in the US, in Switzerland, or anywhere else. What’s different about Humira in the US is the regulatory system we’ve set up around our pharmaceutical industry.
Put simply, the US is unique among “rich” nations in that it does not regulate or negotiate the prices of new prescription drugs when they come onto market. Other countries will task a government agency to meet with pharmaceutical companies and haggle over an appropriate price.
These agencies will typically make decisions about whether these new drugs represent any improvement over the old drugs–whether they’re even worth bringing onto the market in the first place. They’ll comb through piles of evidence about drugs’ risks and benefits.
The US , on the other hand, allows drugmakers to set their own prices for a given product–and allows every drug that’s proven to be safe come onto market. And the problems that causes are quite predictable, from the high copays at the drugstore to the people who can’t afford lifesaving medications.
What’s harder to see is that if we did lower drug prices, we would be making a trade-off. Lowering drug profits would make pharmaceuticals a less desirable industry for investors. And less investment in drugs would mean less research toward new and ground-breaking cures.
Kliff notes an analogy that Craig Garthwaite, a professor at Northwestern’s Kellogg School of Management who studies drug prices, offers that helps make this clear. Think about a venture capitalist who is deciding whether to invest $10 million in a social media app or a cure for pancreatic cancer.
“As you decrease the potential profits I’m going to make from pancreatic cures, I’m going to shift more of my investment over to apps or just keep the money in the bank and earn the money I make there,” Garthwaite says.
Right now, America’s high drug prices mean that investing in pharmaceuticals can generate a truckload of profits while at the same time becoming too expensive for far too many Americans to afford.
Other countries regulate the price of drugs because they see them as a public utility. Countries like Britain, Australia and Canada don’t regulate the price of other things that consumers buy, like computers or clothing.
But they and dozens of other countries have made the decision to regulate the price of drugs to ensure that medical treatment remains affordable for all citizens, regardless of their income. Medication is treated differently because it is a product that some consumers simply can’t live without.
Drugmakers know that as long as their products are approved by the FDA as safe and effective, the US’s Medicare program, for example, will buy them.
“For Medicare, the sky really is the limit,” on drug prices, says Jamie Love, who has studied drug pricing and directs the DC-based nonprofit Knowledge Ecology International. The result of this system is that Americans spend $858 per person on prescription drugs.
That’s about twice as much as Australians and three times as much as the Dutch.Steve's Take: the US should start price-regulating #drugs for #Medicare. That would mean savings on #healthinsurance premiums. Click To Tweet
Americans aren’t buying lots more drugs. We’re just spending more on the ones we do buy, Kliff asserts. There isn’t much evidence that Americans use an inordinately high amount of prescription drugs. It’s just that when we buy prescription medications, we pay more for the exact same product.
What would happen if the US started price-regulating drugs?
For one thing, it would spend a lot less on prescription drugs. If the US set up an agency that negotiated drug prices on behalf of the country’s population of 328 million, it would likely be able to demand discounts similar to those of European countries.
This would mean that health insurance premiums wouldn’t go up nearly as quickly–they might even, dare I say it, go down. Wouldn’t that be ground-breaking?