How Much is Too Much to Pay for Newly Approved Drugs?
June 6, 2017
By Josh Baxt, BioSpace.com Breaking News Staff
For patients with deadly and debilitating conditions, FDA drug approvals can be cause for celebration. Many of these patients and their families have been waiting years for better therapies – or any therapy at all. They consume every public announcement about drug approvals for their particular disease like it’s water in the desert.
But there’s also a sense of trepidation once the drug launches. How much will this new drug cost? What will insurance cover? What will be our share?
Pharmaceutical companies and biotechs have their own concerns, too. A drug can cost north of $2 billion to develop. If those companies don’t recoup the costs in the relatively brief intellectual property window, how will they fund future therapies and reward their investors?
Still, valid as these concerns are, the pharmaceutical industry seems to be playing a giant game of chicken with patients and payers. Roche recently received approval for its multiple sclerosis (MS) drug Ocrevus, which is listed at around $65,000 a year per patient. Granted, drugs are like cars now, nobody pays list price.
One of the interesting side effects of the drug pricing discussion is how easily these costs are normalized. The $65,000 price tag has been described as “disruptive” because it comes in well below the $86,000 list for Rebif, Merck ’s MS drug.
As expensive as these therapies may be, they look downright thrifty compared to BioMarin ’s recently approved Batten disease medicine Brineura, which compensates for TPP1 enzyme deficiency in a subset of patients. Brineura costs $702,000 a year. However, discounts for patients on federal assistance bring the price down to $486,000. Keep in mind, Brineura has orphan status, so it has increased patent exclusivity, R & D write-offs, etc.
I know a family whose child has Batten’s. They’ve watched their child slowly waste away, losing motor function and speech. I am personally grateful to BioMarin for developing this drug, but I have to wonder: why is it so expensive?
That question goes beyond Brineura, Ocrevus and Rebif. It’s true, drugs are expensive to develop and prices tend to come down as more competitors enter the market and patent protections lapse.
Still, the reasons behind specific pricing decisions remain obscure. Companies don’t like to reveal this information, and nobody is forcing them to, yet. But people want to know what’s inside the box. Are prices based on these companies’ costs of doing business, or are they just charging what the market will bear?
Every time a new expensive drug comes out, these discussions get rehashed, so the debate isn’t likely to go away. At some point, Congress may be forced to act, which would likely be a bad outcome for everyone involved. Legislators tend to respond to public outcry with axes rather than scalpels. It would be preferable if the industry showed more pricing transparency, provided that casts them in a favorable light. And if they cannot make those decisions in public view, perhaps they should reconsider how those decisions are made.
Josh Baxt has been a science and healthcare writer for more than 18 years, working at Scripps Health and the Sanford-Burnham Medical Research Institute before going freelance in 2011. He writes about molecular biology, genomics, pharmaceuticals, emerging medical technologies, regulation and public policy. He is based in San Diego.