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.”
Everyone Should Hear My COVID Vaccine Experience
On December 18th, 2020, I received my first dose of the Pfizer mRNA vaccine against SARS-CoV-2. On January 9th, 2021, I received my second. I am now a CDC-card-carrying, fully vaccinated person.
The build-up to the first dose was momentous. I was scheduled for the first dose of the morning. Our vaccine clinic was abuzz with excitement and hope, and some media folks were there to capture the moment. A couple of fellow emergency physicians were in the same cohort of recipients as I; we exchanged virtual high-fives and took a picture of socially distanced hugs. It was, after all, the closest thing we'd had to a celebration in months.
I walked in the vaccine administration room with anticipation – it was tough to believe this moment was truly, finally here. I got a little video of my getting the shot, took my obligate vaccine selfie, waited in the observation area for 15 minutes to ensure I didn't have a reaction, and then proudly joined 1000s of fellow healthcare workers across the country in posting #ThisIsMyShot on social media. "Here we go, America!"
The first shot, though, didn't actually do all that much for me. It hurt less than a flu shot (which, by the way, doesn't hurt much). I had virtually no side effects. I also knew that it did not yet protect me. The Pfizer (and Moderna) data show very clearly that although the immune response starts to grow 10-12 days after the first shot, one doesn't reach full protection against COVID-19 until much later.
So when, two days after my first shot, I headed back to work in the emergency department, I kept wondering "Will this be the day that I get sick? Wouldn't that be ironic!" Although I never go without an N95 during patient care, it just takes one slip – scratching one's eyes, eating lunch in a break room that an infected colleague had just been in – to get ill. Ten months into this pandemic, it is so easy to get fatigued, to make a small error just one time.
Indeed, I had a few colleagues fall ill in between their first and second shots; one was hospitalized. This was not surprising, but still sad, given how close they had come to escaping infection.
Scientifically speaking, one doesn't need to feel bad to develop an immune response. Emotionally, though, I welcomed the symptoms as proof positive that I would be protected.
This time period felt a little like we had our learner's permit for driving: we were on our way to being safe, but not quite there yet.
I also watched, with dismay, our failures as a nation at timely distribution of the vaccine. On December 18th, despite the logistical snafus that many of us had started to highlight, it was still somewhat believable that we would at least distribute (if not actually administer) 20 million doses by the New Year. But by December 31, my worst fears about the feds' lack of planning had been realized. Only 14 million doses had gone to states, and fewer than 3 million had been administered. Within the public health and medical community, we began to debate how to handle the shortages and slow vaccination rates: should we change prioritization schemes? Get rid of the second dose, in contradiction to what our FDA had approved?
Let me be clear: I really, really, really wanted my second dose. It is what is supported by the data. After living this long at risk, it felt frankly unfair that I might not get fully protected. I waited with trepidation, afraid that policies would shift before I got it in my arm.
At last, my date for my second shot arrived.
This shot was a little less momentous on the outside. The vaccine clinic was much more crowded, as we were now administering first doses to more people, as well as providing the second dose to many. There were no high fives, no media, and I took no selfies. I finished my observation period without trouble (as did everyone else vaccinated the same day, as is typical for these vaccines). I walked out the door planning to spend a nice afternoon outdoors with my kids.
Within 15 minutes, though, the very common side effects – reported by 80% of people my age after the second dose – began to appear. First I got a headache (like 52% of people my age), then body aches (37%), fatigue (59%), and chills (35%). I felt "foggy", like I was fighting something. Like 45% of trial participants who had received the actual vaccine, I took acetaminophen and ibuprofen to stave off the symptoms. There is some minimal evidence from other vaccines that pre-treatment with these anti-inflammatories may reduce antibodies, but given that half of trial participants took these medications, there's no reason to make yourself suffer if you develop side effects. Forty-eight hours later, just in time for my next shift, the side effects magically cleared. Scientifically speaking, one doesn't need to feel bad to develop an immune response. Emotionally, though, I welcomed the symptoms as proof positive that I would be protected.
My reaction was truly typical. Although the media hype focuses on major negative reactions, they are – statistically speaking – tremendously rare: fewer than 11/million people who received the Pfizer vaccine, and 3/million who received the Moderna vaccine, developed anaphylaxis; of these, all were treated, and all are fine. Compare this with the fact that approximately 1200/million Americans have died of this virus. I'll choose the minor, temporary, utterly treatable side effects any day.
Now, more than 14 days after my second dose, the data says that my chance of getting really sick is, truly, infinitesimally low. I don't have to worry that each shift will put me into the hospital. I feel emotionally lighter, and a little bit like I have a secret super-power.
But I also know that we are not yet home free.
I may have my personal equivalent of Harry Potter's invisibility cloak – but we don't yet know whether it protects those around me, at all. As Dr. Fauci himself has written, while community spread is high, there is still a chance that I could be a carrier of infection to others. So I still wear my N95 at work, I still mask in public, and I still shower as soon as I get home from a shift and put my scrubs right in the washing machine to protect my husband and children. I also won't see my parents indoors until they, too, have been vaccinated.
At the end of the day, these vaccines are both amazing and life-changing, and not. My colleagues are getting sick less often, now that many of us are a week or more out from our second dose. I can do things (albeit still masked) that would simply not have been safe a month ago. These are small miracles, for which I am thankful. But like so many things in life, they would be better if shared with others. Only when my community is mostly vaccinated, will I breathe easy again.
My deepest hope is that we all have – and take - the chance to get our shots, soon. Because although the symbolism and effect of the vaccine is high, the experience itself was … not that big a deal.
New Hope for Organ Transplantation: Life Without Anti-Rejection Drugs
Rob Waddell dreaded getting a kidney transplant. He suffers from a genetic condition called polycystic kidney disease that causes the uncontrolled growth of cysts that gradually choke off kidney function. The inherited defect has haunted his family for generations, killing his great grandmother, grandmother, and numerous cousins, aunts and uncles.
But he saw how difficult it was for his mother and sister, who also suffer from this condition, to live with the side effects of the drugs they needed to take to prevent organ rejection, which can cause diabetes, high blood pressure and cancer, and even kidney failure because of their toxicity. Many of his relatives followed the same course, says Waddell: "They were all on dialysis, then a transplant and ended up usually dying from cancers caused by the medications."
When the Louisville native and father of four hit 40, his kidneys barely functioned and the only alternative was either a transplant or the slow death of dialysis. But in 2009, when Waddell heard about an experimental procedure that could eliminate the need for taking antirejection drugs, he jumped at the chance to be their first patient. Devised by scientists at the University of Louisville and Northwestern University, the innovative approach entails mixing stem cells from the live kidney donor with that of the recipient to create a hybrid immune system, known as a chimera, that would trick the immune system and prevent it from attacking the implanted kidney.
The procedure itself was done at Northwestern Memorial Hospital in Chicago, using a live kidney donated by a neighbor of Waddell's, who camped out in Chicago during his recovery. Prior to surgery, Waddell underwent a conditioning treatment that consisted of low dose radiation and chemotherapy to weaken his own immune system and make room for the infusion of stem cells.
"The low intensity chemo and radiation conditioning regimen create just enough space for the donor stem cells to gain a foothold in the bone marrow and the donor's immune system takes over," says Dr. Joseph Levanthal, the transplant surgeon who performed the operation and director of kidney and pancreas transplantation at Northwestern University Feinberg School of Medicine. "That way the recipient develops an immune system that doesn't see the donor organ as foreign."
"As a surgeon, I saw what my patients had to go through—taking 25 pills a day, dying at an early age from heart disease, or having a 35% chance of dying every year on dialysis."
A week later, Waddell had the kidney transplant. The following day, he was infused with a complex cellular cocktail that included blood-forming stem cells derived from his donor's bone marrow mixed what are called tolerance inducing facilitator cells (FCs); these cells help the foreign stem cells get established in the recipient's bone marrow.
Over the course of the following year, he was slowly weaned off of antirejection medications—a precaution in case the procedure didn't work—and remarkably, hasn't needed them since. "I felt better than I had in decades because my kidneys [had been] degrading," recalls Waddell, now 54 and a CPA for a global beverage company. And what's even better is that this new approach offers hope for one of his sons who has also inherited the disorder.
Kidney transplants are the most frequent organ transplants in the world and more than 23,000 of these procedures were done in the United States in 2019, according to the United Network for Organ Sharing. Of this, about 7,000 operations are done annually using live organ donors; the remainder use organs from people who are deceased. Right now, this revolutionary new approach—as well as a similar strategy formulated by Stanford University scientists--is in the final phase of clinical trials. Ultimately, this research may pave the way towards realizing the holy grail of organ transplantation: preventing organ rejection by creating a tolerant state in which the recipient's immune system is compatible with the donor, which would eliminate the need for a lifetime of medications.
"As a surgeon, I saw what my patients had to go through—taking 25 pills a day, dying at an early age from heart disease, or having a 35% chance of dying every year on dialysis," says Dr. Suzanne Ildstad, a transplant surgeon and director of the Institute for Cellular Therapeutics at the University of Louisville, whose discovery of facilitator cells were the basis for this therapeutic platform. Ildstad, who has spent more than two decades searching for a better way, says, "This is something I have worked for my entire life."
The Louisville group uses a combination of chemo and radiation to replace the recipient's immune and blood forming cells with that of the donor. In contrast, the Stanford protocol involves harvesting the donor's blood stem cells and T-cells, which are the foot soldiers of the immune system that fight off infections and would normally orchestrate the rejection of the transplanted organ. Their transplant recipients undergo a milder form of "conditioning" that only radiates discrete parts of the body and selectively targets the recipient's T-cells, creating room for both sets of T-cells, a strategy these researchers believe has a better safety profile and less of a chance of rejection.
"We try to achieve immune tolerance by a true chimerism," says Dr. Samuel Strober, a professor of medicine for immunology and rheumatology at Stanford University and a leader of this research team. "The recipients immune system cells are maintained but mixed in the blood with that of the donor."
Studies suggest both approaches work. In a 2018 clinical trial conducted by Talaris Therapeutics, a Louisville-based biotech founded by Ildstad, 26 of 37 (70%) of the live donor kidney transplant recipients no longer need immunosuppressants. Last fall, Talaris began the final phase of clinical tests that will eventually encompass more than 120 such patients.
The Stanford group's cell-based immunotherapy, which is called MDR-101 and is sponsored by the South San Francisco biotech, Medeor Therapeutics, has had similar results in patients who received organs from live donors who were either well matched, such as one from siblings, meaning they were immunologically identical, or partially matched; Talaris uses unrelated donors where there is only a partial match.
In their 2020 clinical trial of 51 patients, 29 were fully matched and 22 were a partial match; 22 of the fully matched recipients didn't need antirejection drugs and ten of the partial matches were able to stop taking some of these medications without rejection. "With our fully matched, roughly 80% have been completely off drugs up to 14 years later," says Strober, "and reducing the number of drugs from three to one [in the partial matches] means you have far fewer side effects. The goal is to get them off of all drugs."
But these protocols are limited to a small number of patients—living donor kidney recipients. As a consequence, both teams are experimenting with ways to broaden their approach so they can use cadaver organs from deceased donors, with human tests planned in the coming year. Here's how that would work: after the other organs are removed from a deceased donor, stem cells are harvested from the donor's vertebrae in the spinal column and then frozen for storage.
"We do the transplant and give the patient a chance to recover and maintain them on drugs," says Ildstad. "Then we do the tolerance conditioning at a later stage."
If this strategy is successful, it would be a genuine game changer, and open the door to using these protocols for transplanting other cadaver organs, including the heart, lungs and liver. While the overall procedure is complex and costly, in the long run it's less expensive than repeated transplant surgeries, the cost of medications and hospitalizations for complications caused by the drugs, or thrice weekly dialysis treatments, says Ildstad.
And she adds, you can't put a price tag on the vast improvement in quality of life.