$300,000 drug won’t be the last

By Joe Nocera

Tuesday, July 22, 2014 | 2 a.m.

Kalydeco is truly a wonder drug.

Developed by Vertex Pharmaceuticals, it is the first drug that attacks not just the symptoms but the underlying cause of cystic fibrosis, a genetic lung disease that usually kills victims by the time they reach their 40s. It doesn’t work for every sufferer of the disease, but rather for a small subset — probably around 2,000 people — who have a specific genetic mutation that the drug targets. But for those it helps, it is life-changing.

“I still pinch myself every day,” says Emily Schaller, 32, who has been taking the drug since she participated in its Phase III trials five years ago. “I can take deep breaths. I can run without coughing.”

Two years ago, as it was coming to market, Dr. Margaret Hamburg, the head of the Food and Drug Administration, described Kalydeco as “an excellent example of the promise of personalized medicine.” Personalized medicine describes drugs that treat so-called orphan diseases — that is, diseases with a small population — or subsets of people with broader diseases. This kind of targeted medicine has been the holy grail ever since the genome was first sequenced about a decade ago. Now it is becoming a reality.

There is one other way that Kalydeco is an excellent example of personalized medicine: its cost. It’s more than $300,000 a year. Because patients will likely be taking the drug for the rest of their lives, it could cost millions of dollars to keep just one patient on Kalydeco. That raises another important question about the coming of personalized medicine. How are we, as a society, going to pay for it?

What brings this question to the fore is a fight taking place in Arkansas, where the state’s Medicaid program is balking at paying for Kalydeco for a handful of young patients with cystic fibrosis. Although state officials won’t say so publicly, it is clear that cost is a key issue; The Wall Street Journal got hold of emails that show Arkansas officials “discussing Kalydeco’s cost and their worries about the expense of future cystic fibrosis drugs.”

It’s likely that Arkansas will eventually fold. Most state Medicaid programs — and private insurers — are paying Kalydeco’s cost because it works so well and because the patient population is so small.

What happens, though, when there are 200 such drugs? Or when they are targeted not at cystic fibrosis, which has maybe 30,000 sufferers, but at diabetes or (heaven forbid) cholesterol? A drug called Sovaldi, marketed by Gilead Sciences, takes aim at hepatitis C. It is described as a “breakthrough” drug. But each pill costs $1,000 — and the full regimen costs $84,000.

And the hepatitis C population isn’t 30,000 — it is more than 3 million. If everyone with hepatitis C took Sovaldi, it would cost something like $300 billion, which is about what the country now pays for all prescription drugs combined.

“This is the future of medicine, and there’s going to be a reckoning,” said Barry Werth, the author of “The Antidote,” a book about Vertex and its race to discover and bring to market these new kinds of drugs. “Everyone wants to see these drugs succeed,” he told me. “Wall Street is all charged up. There really hasn’t been any pushback yet on cost.”

And even when the pushback comes, as it surely will, how will we get the pharmaceutical companies to change their pricing? Brian O’Sullivan, a cystic fibrosis specialist at the University of Massachusetts Medical School, told me that he thought the price of drugs like Kalydeco was “not sustainable.” But in the next breath, he marveled at how well the drug worked and said he didn’t want to “scare companies away from doing cystic fibrosis research” by focusing too much on the cost.

When I asked Vertex how it could possibly justify charging $300,000 for Kalydeco, a company spokesman pointed to the small patient population and “the benefit that the medicine provides.” He also said that the company had spent $6.5 billion on research in its existence and had only two drugs approved by the FDA. In effect, he was saying that the Vertex drug was priced, in part, to recoup not just the research and development that led to Kalydeco but all the company’s R&D. (For cystic fibrosis sufferers with no insurance, Vertex provides the drug for free.)

When I asked Werth how Vertex could charge $300,000, he had a much simpler answer: “Because they can.”

Vertex has another cystic fibrosis drug that has just come through its Phase III trial and is likely to be on the market soon. It attacks a different, more common problem than Kalydeco and may broaden the number of patients who can be helped to more than 15,000. In my talks with people in the cystic fibrosis community, I got the strong sense that they are hoping this next drug will cost less.

Dream on.

Joe Nocera is a columnist for The New York Times.