Is(n’t) Kalydeco Worth It?

You may have seen the news last week that the FDA approved Vertex Pharmaceutical’s Kalydeco™ (ivacaftor), a drug used to treat people with cystic fibrosis (CF) who have a specific mutation of a gene called CFTR. CF is a miserable, inherited disease that afflicts about 30,000 people in the US. It causes stick mucous, making breathing labored, infections frequent, digestive problems the norm, and early death (around age 37) a patient’s destiny. About 4 percent of those have the mutation targeted by Kalydeco, meaning that it will be useful for only about 1,200 people—a true orphan drug. From the data summary in the drug label, and anecdotal reports in the general press, this group of patients improves—sometimes a lot. They feel better, their lungs work better, they get fewer infections, they gain weight. They have to take the drug—a pill—twice daily, continuously. If resistance to the drug has emerged, I am not aware of it—but I’m not an expert in CF.
The drug had been in development since the late 1990’s, first by a venture-backed company, Aurora Biosciences, then by Vertex after an acquisition in 2001. The pivotal clinical trials included 213 of the 1,200 potentially eligible patients—a remarkable effort by the company, the doctors treating the disease, and the patients participating. Clinical trials are not finished; the FDA will require Vertex to do a (small) clinical study to address the potential for certain drug interactions, but that’s not a big hurdle. Also, data are not yet available to show the drug is safe and effective in children under age 6.
The FDA approved it in 3 months after getting the data for review—a true fast track.
Oh, and it will cost $294,000 a year per patient.
On its website, the company advertises a financial assistance program it says (press release dated 1/31/12) includes free drug for people with no insurance and an annual household income of $150,000 or less, and co-payment/co-insurance support for “up to 30% of the list price of the medication,” after “a minimal out-of-pocket obligation,” for people of any income who have insurance. Since insurance co-pays for specialty drugs like this commonly are a quarter to a third of the total price, this sounds like, in effect, secondary insurance from the manufacturer to help people afford it.
I think it’s a good deal. I can’t guess at the details of Vertex’s financial calculations based on the publicly available information I can find. They told the SEC that they had about $1.4 billion in revenue last year, almost all from its approved hepatitis C drug and other payments in their hepatitis C work, and about $190 million in profit. They expect to spend roughly $750 million in the next year on R+D all told. I don’t know how much they spent developing Kalydeco. The San Diego Union-Tribune said “millions of dollars of [Vertex’s] own money.” The Cystic Fibrosis Foundation, which will get royalties from Kalydeco sales, contributed $75 million to the drug’s development.
So, although I can’t fully defend the pricing, it sounds like this drug is worth the price. In thinking about these “expensive drug” questions, I suggest: 1) Realize that drug companies are medically-oriented businesses, not an arm of the medical profession, and therefore subject more to business than medical ethics when it comes to financials; 2) Challenge the too-simple notion that “making all drug companies non-profit” will reduce costs or be beneficial to society, since the issues of financing expensive development and recouping costs do not go away, and non-profits’ operations can be distorted by the actions of sinful/fallen actors; 3) Judge each case on its own, separate merits—Kalydeco sounds to me like a much better value proposition than, say, Avastin for breast cancer did; 4) Resist the Manichean “drug-companies: evil” grunt; 5) Affirm that there is a societal obligation to make effective but expensive drugs available for those who need it. That means that, whatever set of payment arrangements we adopt, I’m all for my tax dollars or insurance premiums being used to get this drug to a stranger who would benefit from it.
I realize that doesn’t magically solve the issues raised by expensive new drugs, but I submit it provides a framework for proceeding.

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