lower prices to safety‐net facilities that otherwise may not be able to afford certain drugs”
Source: [7]/STAT.
Adoption of such a proposal has obvious benefits. Nominal pricing would bring the cost of treating hepatitis C in prisons to $2500 a patient – much cheaper than treating them after they are released, thus saving the healthcare system a significant sum by avoiding downstream costs. However, putting downstream costs aside, an inmate has a right to medical care. This is the right thing to do.
* * * * * * * * * * * * * *
There was a time when curing a disease like hepatitis C would have generated tremendous praise for the pharmaceutical industry. The innovator company would have been lauded for its creativity, insights, and diligence. Interviews would have been conducted with patients who were relieved and grateful that they would not have to endure the consequences of hepatitis C, quite possibly even death. But, the approval of Gilead’s SovaldiTM saw little of that. Instead, everyone focused on “The $1000 Pill.”
To a certain extent, that was not a surprise. The industry was getting battered on multiple fronts and this was another opportunity for critics, politicians, and insurance companies to weigh in and focus not on the benefits of the drug, not on the ultimate savings – even at the $84 000 price – that the healthcare system would gain. Rather, the focus was on the drug’s list price.
Yet, the cost of SovaldiTM ended up dropping dramatically. Competition with new hepatitis C drugs enabled payers to negotiate much lower prices, such that the United States was paying less than other nations for these drugs. This is amazing given that countries like the United Kingdom and Germany as single payer nations have remarkable bargaining power since they are buying for their entire populations. Furthermore, at some point, these prices will drop even more dramatically as the patents that currently protect these drugs will expire. Once generic manufacturers enter the picture, curing hepatitis C will likely cost a few thousand dollars a patient.
There are those who will say that, even at a cost of $25 000 per treatment, these drugs are overpriced and that pharmaceutical companies are gouging the public. Yet, there is no evidence of that. If you look at the industry’s return on investment or return on capital, this industry’s performance is about average across similar sectors. But there is nothing average about the benefits biopharma delivers. As will be seen in subsequent chapters, this is an industry capable of saving the lives of millions of people.
REFERENCES
1 1. Smith, Michael (2014). AHIP Blasts “Unsustainable” Drug Costs. Med Page Today, 21 May.
2 2. Forbes Healthcare Summit (2015). Better, Cheaper, Safer: Creating the Care We Deserve, 2 December.
3 3. Forbes Healthcare Summit (2016). Solving Healthcare’s Biggest Challenges, 30 November.
4 4. 24th Annual Wharton Health Care Conference (2018). Adapting to Consumer‐Driven Care, 23 February.
5 5 LaMattina, J. (2018). The VA Will eliminate hepatitis C in veterans by year‐end. Forbes Media LLC. (1 March 2018).
6 6. Thanthong‐Knight, Siraphob (2018). State Prisons Fail To Offer Cure To 144,000 Inmates With Deadly Hepatitis C. Kaiser Health News. 9 July.
7 7. Spaulding, A.C., Chhatwal, J. (2019). “Nominal Pricing” can help prisons and jails treat hepatitis C without breaking the bank. STAT. 9 January.
CHAPTER 2 ENTER THE PAYERS: FDA APPROVAL DOES NOT GUARANTEE COMMERCIAL SUCCESS
The introduction of the statin class of drugs revolutionized the treatment of heart disease. These drugs, notably LipitorTM and CrestorTM, lower the levels of low‐density lipoprotein cholesterol (LDL‐c), the “bad cholesterol.” Numerous studies over the years have shown that these pills reduce heart attacks and strokes in vulnerable populations, that is, those with significant risk factors like atherosclerosis, diabetes, smoking, and a family history of heart disease. In fact, the availability of statins changed medical practice so that physicians now recommend LDL‐c levels less than 100 mg/dl [1].
While statins are impressive drugs, a new class of drugs known as PCSK9 inhibitors emerged, which proved to be even more exciting. These are not pills but biological drugs (antibodies) that must be given by injection. They are designed to block an enzyme that mechanistically limits the effectiveness of statins. When PCSK9 antibodies are combined with statins, the LDL‐c lowering effects are stunning, with levels as low as 30 mg/dl observed. No other therapy can approach such results. Given the consensus that the lower your LDL‐c, the less likely you are to suffer a heart attack or stroke, these results offered great hope to heart patients.
Two PCSK9 antibodies garnered US Food and Drug Administration (FDA) approvals almost simultaneously: PraluentTM (from Regeneron/Sanofi) on 24 July 2015 and RepathaTM (from Amgen) on 27 August 2015. The launches of these drugs should have been celebrated by the cardiovascular medical community. Instead, any enthusiasm was tempered when the prices of these drugs were announced: $14 600 per patient per year for PraluentTM and $14 000 per patient per year for RepathaTM. It should be noted that these are list prices. Furthermore, these are not pills but injectable biologics that are expensive to manufacture, store, and distribute. Thus, these prices were expected to be higher than oral statins – but not that much higher.
The ensuing outcry was to be expected. Dr. Steve Miller of Express Scripts, echoing his previous views on hepatitis C drugs, said that “Even if physicians adopt this new therapy slower than anticipated, it is clear that PCSK9 inhibitors are on a path to become the costliest therapy class that this country has even seen”[2]. In reality, this did not happen. In fact, 2020 sales of these drugs were quite modest with sales of $887 million for RepathaTM and $358.8 for PraluentTM. How could such expensive breakthrough drugs generate such disappointing sales?
Just because a drug has been approved by the FDA does not mean that insurance companies will pay for it. First, there were two PCSK9 inhibitors available, so payers encouraged Amgen and Regeneron/Sanofi to bid against each other for positions on their formularies. Remember, the roughly $14 000 price tag was the list price. Details for the deals that companies strike with payers are confidential. Given the choice between Regeneron’s PraluentTM and Amgen’s RepathaTM, Express Scripts opted for the former. While he did not say what Express Scripts was actually paying for PraluentTM, Dr. Len Schleifer, chief executive officer (CEO) of Regeneron, glumly told a Forbes Healthcare Summit audience, “Dr. Miller drives a hard bargain.” Clearly, Express Scripts as well as other payers were shelling out far less than $14 000 for these medicines.
But beyond negotiating lower prices, payers also limited the ability of patients and physicians to access these drugs. Despite high‐risk patients having inadequate LDL‐c lowering on statins, studies found 80% of doctors’ prescriptions for PCSK9 therapy were denied by payers. After repeated justifications and appeals by the prescribing physician, only 25% of PCSK9 prescriptions were approved by commercial payers and about 50% for Medicare [3]. How could those denials be justified?
There was no doubt that the drugs lowered LDL‐c. There were, however, no data that proved that heart attack and strokes were less likely at 30 mg/dL than at 75 mg/dl (which is what is generally achieved with a high dose of a statin like LipitorTM). As a result, payers only allowed these drugs to patients with extraordinarily high LDL‐c levels. The concept of “lower is better” for LDL‐c to reduce cardiovascular events seemed correct intuitively. However, it was still only a theory.
