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.”
Twice a day, morning and night, I use a neti pot to send a warm saltwater solution coursing through one nostril and out the other to flush out debris and pathogens. I started many years ago because of sinus congestion and infections and it has greatly reduced those problems. Along with vaccination when it became available, it seems to have helped with protecting me from developing Covid-19 symptoms despite being of an age and weight that puts me squarely at risk.
Now that supposition of protection has been backed up with evidence from a solidly designed randomized clinical trial. It found that irrigating your sinuses twice a day with a simple saltwater solution can lead to an 8.5-fold reduction in hospitalization from Covid-19. The study is another example of recent research that points to easy and inexpensive ways to help protect yourself and help control the epidemic.
Amy Baxter, the physician researcher behind the study at Augusta University, Medical College of Georgia, began the study in 2020, before a vaccine or monoclonal antibodies became available to counter the virus. She wanted to be able to offer another line of defense for people with limited access to healthcare.
The nasal cavity is the front door that the SARS-CoV-2 virus typically uses to enter the body, latching on to the ACE2 receptors on cells lining those tissue compartments to establish infection. Once the virus replicates here, infection spreads into the lungs and often other parts of the body, including the brain and gut. Some studies have shown that a mouthwash could reduce the viral load, but any effect on disease progression was less clear. Baxter reasoned that reducing the amount of virus in the nose might give the immune system a better chance to react and control that growth before it got out of hand.
She decided to test this approach in patients who had just tested positive for Covid-19, were over 55 years of age, and often had other risk factors for developing serious symptoms. It was the quickest and easiest way to get results. A traditional prevention study would have required many more volunteers, taken a longer period of follow up, and cost money she did not have.
The trial enrolled 79 participants within 24 hours of testing positive for Covid-19, and they agreed to follow the regimen of twice daily nasal irrigation. They were followed for 28 days. One patient was hospitalized; a 1.27% rate compared with 11% in a national sample control group of similar age people who tested positive for Covid-19. Patients who strictly adhered to nasal irrigation had fewer, shorter and less severe symptoms than people in the study who missed some of their saline rinses.
Baxter initially made the results of her clinical trial available as a preprint in the summer of 2021 and was dismayed when many of the comments were from anti-vaxxers who argued this was a reason why you did not need to get vaccinated. That was not her intent.
There are several mechanisms that explain why warm saltwater is so effective. First and most obvious is the physical force of the water that sweeps away debris just as a rainstorm sends trash into a street gutter and down a storm drain. It also lubricates the cilia, small hair-like structures whose job it is to move detritus away from cells for expulsion. Cilia are rich in ACE2 receptors and keeping them moving makes it harder for the virus to latch on to the receptors.
It turns out the saline has a direct effect on the virus itself. SARS-CoV-2 becomes activated when an enzyme called furin snips off part of its molecular structure, which allows the virus to grab on to the ACE2 receptor, but saline inhibits this process. Once inside a cell the virus replicates best in a low salt environment, but nasal cells absorb salt from the irrigation, which further slows viral replication, says Baxter.
Finally, “salt improves the jellification of liquid, it makes better and stickier mucus so that you can get those virus out,” she explains, lamenting, “Nobody cares about snot. I do now.”
She initially made the results of her clinical trial available as a preprint in the summer of 2021 and was dismayed when many of the comments were from anti-vaxxers who argued this was a reason why you did not need to get vaccinated. That was not her intent. Two journals rejected the paper, and Baxter believes getting caught up in the polarizing politics of Covid-19 was an important part of the reason why. She says that editors “didn't want to be associated with something that was being used by anti-vaxxers.” She strongly supports vaccination but realizes that additional and alternative approaches also are needed.
Premeasured packets of saline are inexpensive and can be purchased at any drug store. They are safe to use several times a day. Say you’re vaccinated but were in a situation where you fear you might have been exposed to SARS-CoV-2; an extra irrigation will clear out your sinuses and may reduce the risk of that possible exposure.
Baxter plans no further study in this area. She is returning to her primary research focus, which is pain control and reducing opioid use, but she hopes that others will expand on what she had done.
Podcast: The Friday Five Weekly Roundup in Health Research
The Friday Five covers five stories in research that you may have missed this week. There are plenty of controversies and troubling ethical issues in science – and we get into many of them in our online magazine – but this news roundup focuses on scientific creativity and progress to give you a therapeutic dose of inspiration headed into the weekend.
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Here are the promising studies covered in this week's Friday Five:
- A pill to prevent lung cancer?
- Ancient wisdom about Neti pots could pay off for Covid
- Breakthrough for precision medicine and obesity
- How to refreeze the north and south poles
- The connection between taking multivitamin pills and brain health