Poll: Which of These 10 New Drugs Is Priced Too High?
Drug pricing tends to drive people to extreme positions. Critics see the drug companies as evil, greedy bastards out to gouge grandma. Defenders say the industry improves patients’ lives, and merely charges what the free market will bear, and what it must to recoup its substantial R&D investments.
Those positions have held firm for at least 15 to 20 years. But in the past few months, we have seen drugmakers push sticker shock to an entirely new level. This time, it could come back to bite the industry in a big way.
Some of these tales read like a farce. Anaheim, CA-based Questcor Pharmaceuticals (NASDAQ: QCOR) jacked up the price of a 50-year-old anti-inflammatory gel from $50 to $28,400 a vial, and started pitching it for a wide variety of diseases without solid clinical proof, according to an excellent Dec. 29 report by Andrew Pollack of the New York Times. Days later, Bedminster, NJ-based NPS Pharmaceuticals (NASDAQ: NPSP) said it set the price at $295,000 a year for its short bowel syndrome treatment, more than triple what analysts had been expecting.
When the FDA approves the new souped-up version of Genentech’s trastuzumab (Herceptin) for breast cancer later this month, as many observers expect, how high will it go? The standard trastuzumab goes for about $4,500 a month, and the data for the new “empowered” version is clearly superior. Will Genentech charge a 20 percent premium? 50 percent? 100 percent?
It’s easy to have a knee-jerk reaction to these prices. It’s much harder to do a serious analysis of what each drug is really worth. Lots of factors need to be considered. How convincing is the company’s body of clinical trial evidence? How many patients might take the drug? How much do existing treatments cost? How effective are they? How much benefit can patients really get from the new medicine, above and beyond what they can get today? Will it save their lives, improve their quality of life, enable them to go back to work and be productive citizens? How much time and money went into the drug’s R&D? How long does the patent on the new medicine last, and how long will the company’s window of opportunity stay open before generic competitors charge in?
People in the industry understand that all these factors count, and more. That’s why it’s not fair to just look at a price and recoil in sticker shock, without knowing the broader context.
All that said, I’ve been hearing lately from several people inside the industry who worry that things have gotten out of hand. Some drugmakers are acting like kids fighting to stuff their mouths full of cookies before Mom takes away the cookie jar—essentially trying to fatten up before price controls kick in.
There has been grumbling among industry leaders, mostly behind closed doors, that the audacious pricing gambits could finally lead to a political backlash that truly would hurt the entire industry. The mad dash toward treatments for the rare “orphan” diseases, where companies seem to think they have unlimited pricing power, may also be skewing the industry’s priorities, causing companies to turn away from diseases that affect millions of people.
“What’s breaking the budget of the government isn’t the orphan diseases, it’s diabetes, depression, schizophrenia,” says Richard Pops, the CEO of Dublin, Ireland and Waltham, MA-based Alkermes (NASDAQ: ALKS). “We as an industry need to develop cost-effective medications for these diseases. These are the diseases of our epoch.”
Some people in biotech seem to think they can “take refuge,” as Pops put it, in orphan disease categories where payers don’t tend to push back much, because so few patients are affected. Instead of thinking about these as refuges where they have unlimited pricing power, companies need to make better progress in tailoring precise diagnostics and treatments based on how patients differ at the genetic and molecular level. I’m personally OK with a drug company charging a high price for a product when we know there’s at least a 60-80 percent chance the patient will get a meaningful benefit, based on solid genetic or molecular profiling. As the world comes to expect more of these “personalized” or “precision” medicines, companies are asking for trouble if they continue on with sky-high pricing of drugs that only have a one-in-four chance of helping a patient with some poorly defined diagnosis.
Given that there have been a number of important new drug approvals in the last year, and a quite a few with sky-high prices, I thought it would be interesting to poll our readers about which ones have gone too far. I know Xconomy readers are very sophisticated about these issues, as people who make a living in the drug development world. I realize this is an unscientific poll, but I’m still curious to see how many people in this pro-industry crowd think some of these new drug prices are too high.
So, below is a chart of 10 new and newsworthy drugs that have been approved by the FDA over the last year. I’ve sought to gather some basic facts—the drug name, disease, number of patients affected, and price. I’m not trying to condense the key clinical findings in table form, because that would take all day, but if you really want to look deeper, I’ve provided hyperlinks to the FDA-approved prescribing information for each product.
One last note: The free poll I’m using, from SurveyMonkey, only accepts votes from the first 100 responders. I’ll be sure to update with a comment when the final results are in. Happy voting!
|Hyperion Therapeutics||glycerol phenylbutyrate (Ravicti)||Urea cycle disorders||2,100 in U.S.||$250,000-$290,000/year based on patient’s weight|
|Sanofi’s Genzyme unit & Isis Pharmaceuticals||mipomersen (Kynamro)||Homozygous Familial Hypercholesterolemia||6,000 worldwide||$175,000/year.|
|Sanofi & Regeneron Pharmaceuticals||ziv-afilbercept (Zaltrap)||Colorectal cancer||143,000 diagnosed in U.S. each year||Originally $11,000/month, but now available for 50% off after pressure from Memorial Sloan-Kettering physicians.|
|NPS Pharmaceuticals||teduglutide (Gattex)||Short Bowel Syndrome||15,000 in the U.S.||$295,000/year.|
|Vertex Pharmaceuticals||ivacaftor (Kalydeco)||Cystic fibrosis patients with G551d mutations||1,200 in the U.S.||$307,000/year.|
|Medivation & Astellas Pharma||enzalutamide (Xtandi)||Prostate cancer that has spread, following prior chemical castration treatment||29,270 expected to die of prostate cancer in U.S. this year||$7,450/month.|
|Ironwood Pharmaceuticals & Forest Laboratories||linaclotide (Linzess)||Irritable bowel syndrome with constipation, and chronic constipation||10 million adults in U.S. who see a physician 3 times/year for symptoms.||$220/month.|
|Onyx Pharmaceuticals||carfilzomib (Kyprolis)||Relapsed forms of multiple myeloma||10,710 patients expected to die from it in U.S. this year.||$9,950/month.|
|Ariad Pharmaceuticals||ponatinib (Iclusig)||Chronic myeloid leukemia (CML) and Philadelphia chromosome positive acute lymphoblastic leukemia||2,500 patients in U.S. each year||$115,000/year.|
|Exelixis||cabozantinib (Cometriq)||Metastatic medullary thyroid cancer||500-700 in U.S., and about the same in Europe.||$9,900/month.|
|–Sources: Company reports, Xconomy reports, FDA, American Cancer Society, New York Times, TheStreet.com|
Now, for the polling part.
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