Breakthrough therapies are breaking patients' banks. Key changes could improve access, experts say.
CSL Behring’s new gene therapy for hemophilia, Hemgenix, costs $3.5 million for one treatment, but helps the body create substances that allow blood to clot. It appears to be a cure, eliminating the need for other treatments for many years at least.
Likewise, Novartis’s Kymriah mobilizes the body’s immune system to fight B-cell lymphoma, but at a cost $475,000. For patients who respond, it seems to offer years of life without the cancer progressing.
These single-treatment therapies are at the forefront of a new, bold era of medicine. Unfortunately, they also come with new, bold prices that leave insurers and patients wondering whether they can afford treatment and, if they can, whether the high costs are worthwhile.
“Most pharmaceutical leaders are there to improve and save people’s lives,” says Jeremy Levin, chairman and CEO of Ovid Therapeutics, and immediate past chairman of the Biotechnology Innovation Organization. If the therapeutics they develop are too expensive for payers to authorize, patients aren’t helped.
“The right to receive care and the right of pharmaceuticals developers to profit should never be at odds,” Levin stresses. And yet, sometimes they are.
Leigh Turner, executive director of the bioethics program, University of California, Irvine, notes this same tension between drug developers that are “seeking to maximize profits by charging as much as the market will bear for cell and gene therapy products and other medical interventions, and payers trying to control costs while also attempting to provide access to medical products with promising safety and efficacy profiles.”
Why Payers Balk
Health insurers can become skittish around extremely high prices, yet these therapies often accompany significant overall savings. For perspective, the estimated annual treatment cost for hemophilia exceeds $300,000. With Hemgenix, payers would break even after about 12 years.
But, in 12 years, will the patient still have that insurer? Therein lies the rub. U.S. payers, are used to a “pay-as-you-go” model, in which the lifetime costs of therapies typically are shared by multiple payers over many years, as patients change jobs. Single treatment therapeutics eliminate that cost-sharing ability.
"As long as formularies are based on profits to middlemen…Americans’ healthcare costs will continue to skyrocket,” says Patricia Goldsmith, the CEO of CancerCare.
“There is a phenomenally complex, bureaucratic reimbursement system that has grown, layer upon layer, during several decades,” Levin says. As medicine has innovated, payment systems haven’t kept up.
Therefore, biopharma companies begin working with insurance companies and their pharmacy benefit managers (PBMs), which act on an insurer’s behalf to decide which drugs to cover and by how much, early in the drug approval process. Their goal is to make sophisticated new drugs available while still earning a return on their investment.
New Payment Models
Pay-for-performance is one increasingly popular strategy, Turner says. “These models typically link payments to evidence generation and clinically significant outcomes.”
A biotech company called bluebird bio, for example, offers value-based pricing for Zynteglo, a $2.8 million possible cure for the rare blood disorder known as beta thalassaemia. It generally eliminates patients’ need for blood transfusions. The company is so sure it works that it will refund 80 percent of the cost of the therapy if patients need blood transfusions related to that condition within five years of being treated with Zynteglo.
In his February 2023 State of the Union speech, President Biden proposed three pilot programs to reduce drug costs. One of them, the Cell and Gene Therapy Access Model calls on the federal Centers for Medicare & Medicaid Services to establish outcomes-based agreements with manufacturers for certain cell and gene therapies.
A mortgage-style payment system is another, albeit rare, approach. Amortized payments spread the cost of treatments over decades, and let people change employers without losing their healthcare benefits.
Only about 14 percent of all drugs that enter clinical trials are approved by the FDA. Pharma companies, therefore, have an exigent need to earn a profit.
The new payment models that are being discussed aren’t solutions to high prices, says Bill Kramer, senior advisor for health policy at Purchaser Business Group on Health (PBGH), a nonprofit that seeks to lower health care costs. He points out that innovative pricing models, although well-intended, may distract from the real problem of high prices. They are attempts to “soften the blow. The best thing would be to charge a reasonable price to begin with,” he says.
Instead, he proposes making better use of research on cost and clinical effectiveness. The Institute for Clinical and Economic Review (ICER) conducts such research in the U.S., determining whether the benefits of specific drugs justify their proposed prices. ICER is an independent non-profit research institute. Its reports typically assess the degrees of improvement new therapies offer and suggest prices that would reflect that. “Publicizing that data is very important,” Kramer says. “Their results aren’t used to the extent they could and should be.” Pharmaceutical companies tend to price their therapies higher than ICER’s recommendations.
Drug Development Costs Soar
Drug developers have long pointed to the onerous costs of drug development as a reason for high prices.
A 2020 study found the average cost to bring a drug to market exceeded $1.1 billion, while other studies have estimated overall costs as high as $2.6 billion. The development timeframe is about 10 years. That’s because modern therapeutics target precise mechanisms to create better outcomes, but also have high failure rates. Only about 14 percent of all drugs that enter clinical trials are approved by the FDA. Pharma companies, therefore, have an exigent need to earn a profit.
Skewed Incentives Increase Costs
Pricing isn’t solely at the discretion of pharma companies, though. “What patients end up paying has much more to do with their PBMs than the actual price of the drug,” Patricia Goldsmith, CEO, CancerCare, says. Transparency is vital.
PBMs control patients’ access to therapies at three levels, through price negotiations, pricing tiers and pharmacy management.
When negotiating with drug manufacturers, Goldsmith says, “PBMs exchange a preferred spot on a formulary (the insurer’s or healthcare provider’s list of acceptable drugs) for cash-base rebates.” Unfortunately, 25 percent of the time, those rebates are not passed to insurers, according to the PBGH report.
Then, PBMs use pricing tiers to steer patients and physicians to certain drugs. For example, Kramer says, “Sometimes PBMs put a high-cost brand name drug in a preferred tier and a lower-cost competitor in a less preferred, higher-cost tier.” As the PBGH report elaborates, “(PBMs) are incentivized to include the highest-priced drugs…since both manufacturing rebates, as well as the administrative fees they charge…are calculated as a percentage of the drug’s price.
Finally, by steering patients to certain pharmacies, PBMs coordinate patients’ access to treatments, control patients’ out-of-pocket costs and receive management fees from the pharmacies.
Therefore, Goldsmith says, “As long as formularies are based on profits to middlemen…Americans’ healthcare costs will continue to skyrocket.”
Transparency into drug pricing will help curb costs, as will new payment strategies. What will make the most impact, however, may well be the development of a new reimbursement system designed to handle dramatic, breakthrough drugs. As Kramer says, “We need a better system to identify drugs that offer dramatic improvements in clinical care.”
The Cellular Secrets of “Young Blood” Are Starting to Be Unlocked
The quest for an elixir to restore youthful health and vigor is common to most cultures and has prompted much scientific research. About a decade ago, Stanford scientists stitched together the blood circulatory systems of old and young mice in a practice called parabiosis. It seemed to rejuvenate the aged animals and spawned vampirish urban legends of Hollywood luminaries and tech billionaires paying big bucks for healthy young blood to put into their own aging arteries in the hope of reversing or at least forestalling the aging process.
It was “kind of creepy” and also inspiring to Fabrisia Ambrosio, then thousands of miles away and near the start of her own research career into the processes of aging. Her lab is at the University of Pittsburgh but on this cold January morning I am speaking with her via Zoom as she visits with family near her native Sao Paulo, Brazil. A gleaming white high rise condo and a lush tropical jungle split the view behind her, and the summer beach is just a few blocks away.
Ambrosio possesses the joy of a kid on Christmas morning who can't wait to see what’s inside the wrapping. “I’ve always had a love for research, my father was a physicist," she says, but interest in the human body pulled her toward biology as her education progressed in the U.S. and Canada.
Back in Pittsburgh, her lab first extended the work of others in aging by using the simpler process of injecting young blood into the tail vein of old mice and found that the skeletal muscles of the animals “displayed an enhanced capacity to regenerate.” But what was causing this improvement?
When Ambrosio injected old mice with young blood depleted of EVs, the regenerative effect practically disappeared.
The next step was to remove the extracellular vesicles (EVs) from blood. EVs are small particles of cells composed of a membrane and often a cargo inside that lipid envelope. Initially many scientists thought that EVs were simply taking out the garbage that cells no longer needed, but they would learn that one cell's trash could be another cell's treasure.
Metabolites, mRNA, and myriad other signaling molecules inside the EV can function as a complex network by which cells communicate with others both near and far. These cargoes can up and down-regulate gene expression, affecting cell activity and potentially the entire body. EVs are present in humans, the bacteria that live in and on us, even in plants; they likely communicate across all forms of life.
Being inside the EV membrane protects cargo from enzymes and other factors in the blood that can degrade it, says Kenneth Witwer, a researcher at Johns Hopkins University and program chair of the International Society for Extracellular Vesicles. The receptors on the surface of the EV provide clues to the type of cell from which it originated and the cell receptors to which it might later bind and affect.
When Ambrosio injected old mice with young blood depleted of EVs, the regenerative effect practically disappeared; purified EVs alone were enough to do the job. The team also looked at muscle cell gene expression after injections of saline, young blood, and EV-depleted young blood and found significant differences. She believes this means that the major effect of enhanced regenerative capacity was coming from the EVs, though free floating proteins within the blood may also contribute something to the effect.
One such protein, called klotho, is of great interest to researchers studying aging. The name was borrowed from the Fates of Greek mythology, which consists of three sisters; Klotho spins the thread of life that her sisters measure and cut. Ambrosio had earlier shown that supplementing klotho could enhance regenerative capacity in old animals. But as with most proteins, klotho is fragile, rapidly degrading in body fluids, or when frozen and thawed. She suspected that klotho could survive better as cargo enclosed within the membrane of an EV and shielded from degradation.
So she went looking for klotho inside the EVs they had isolated. Advanced imaging technology revealed that young EVs contained abundant levels of klotho mRNAs, but the number of those proteins was much lower in EVs from old mice. Ambrosio wrote in her most recent paper, published in December in Nature Aging. She also found that the stressors associated with aging reduced the communications capacity of EVs in muscle tissue and that could be only partially restored with young blood.
Researchers still don't understand how klotho functions at the cellular level, but they may not need to know that. Perhaps learning how to increase its production, or using synthetic biology to generate more copies of klotho mRNA, or adding cell receptors to better direct EVs to specific aging tissue will be sufficient to reap the anti-aging benefits.
“Very, very preliminary data from our lab has demonstrated that exercise may be altering klotho transcripts within aged extracellular vesicles" for the better Ambrosio teases. But we already know that exercise is good for us; understanding the cellular mechanism behind that isn't likely to provide additional motivation to get up off the couch. Many of us want a prescription, a pill that is easy to take, to slow our aging.
Ambrosio hopes that others will build upon the basic research from her lab, and that pharmaceutical companies will be able to translate and develop it into products that can pass through FDA review and help ameliorate the diseases of aging.
Podcast: Should Scientific Controversies Be Silenced?
The "Making Sense of Science" podcast features interviews with leading medical and scientific experts about the latest developments and the big ethical and societal questions they raise. This monthly podcast is hosted by journalist Kira Peikoff, founding editor of the award-winning science outlet Leaps.org.
The recent Joe Rogan/Spotify backlash over the misinformation presented in his recent episode on the Covid-19 vaccines raises some difficult and important bioethical questions for society: How can people know which experts to trust? What should big tech gatekeepers do about false claims promoted on their platforms? How should the scientific establishment respond to heterodox viewpoints from experts who disagree with the consensus? When is silencing of dissent merited, and when is it problematic? Journalist Kira Peikoff asks infectious disease physician and pandemic scholar Dr. Amesh Adalja to weigh in.
Dr. Amesh Adalja, Senior Scholar, Johns Hopkins Center for Health Security and an infectious disease physician
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Kira Peikoff was the editor-in-chief of Leaps.org from 2017 to 2021. As a journalist, her work has appeared in The New York Times, Newsweek, Nautilus, Popular Mechanics, The New York Academy of Sciences, and other outlets. She is also the author of four suspense novels that explore controversial issues arising from scientific innovation: Living Proof, No Time to Die, Die Again Tomorrow, and Mother Knows Best. Peikoff holds a B.A. in Journalism from New York University and an M.S. in Bioethics from Columbia University. She lives in New Jersey with her husband and two young sons. Follow her on Twitter @KiraPeikoff.