A recent article in The Atlantic highlights specialty drug costs and the impact these rising costs have on our health-care system. The article highlights the drug Sovaldi (Gilead Sciences) which provides a 90% cure rate for those with hepatitis C. While the drug has provided a remarkable leap forward into how we manage the disease, the cost for a 12-week course is $84,000. If states provided the drug to every Medicaid recipient with hepatitis C, the cost to states would be more than $55 billion. Consequently, states have had to significantly restrict access to the medication; many patients are denied treatment until they progress to liver cirrhosis or end-stage disease.1
In 2012, uniQure rolled out Glybera in Europe, a treatment for familial lipoprotein lipase deficiency, charging more than $1 million per treatment. While the disease is rare, MIT Technology Review reports that its price was so high that only one patient received the drug.2 In April, five years after its approval, uniQure announced it was giving up on the drug and not renewing its marketing authorization.3
Why begin an Ophthalmology Management article with discussions on hepatitis C and familial lipoprotein lipase deficiency? Because they highlight a growing concern, the shadow of which is creeping into the ophthalmology and retinal therapeutic spaces. Patients, physicians and lawmakers have voiced their growing apprehension regarding these costs, and fear that, combined with ongoing health-care issues, the system will not remain sustainable for future generations.
Considering the current political climate with ongoing debates at both the national and state levels, how we price new drugs and innovations in ophthalmology today will impact how we care for our patients tomorrow.
DISEASE AND ITS MANAGEMENT: THE LAST DECADE
The past 10 years in our field have brought us innovative therapeutics such as intravitreal anti-VEGF agents and steroid implants that have changed the way we manage patients and the outcomes we can achieve. Ranibizumab (Lucentis, Genentech) was approved in 2006 for use in neovascular AMD. It eventually gained approval for retinal vein occlusion, diabetic macular edema, myopic choroidal neovascularization and diabetic retinopathy.
In addition we have seen approvals for aflibercept (Eylea, Regeneron), the three-month sustained-release dexamethasone intravitreal implant (Ozurdex, Allergan), and the three-year sustained-release fluocinolone acetonide intravitreal implant (Iluvien, Alimera Sciences). Now we can help patients whose diagnosis once signaled a life of blindness, but the economic impact is substantial and difficult to quantify.
What we can quantify, however, are the following: the price tags of these drugs and the aging population dependent upon them for their vision.
Consider that the prevalence of age-related macular degeneration, diabetic macular edema (DME) and retinal vein occlusion (RVO) are projected to increase considerably over the coming decades.4 If current population modeling estimates are correct, the CMS will spend $20 billion over the next decade on intravitreal injections.5 New indications for treatment and innovative intravitreal drug development will only further increased demand.
The sticker shock for these medications is often hard to get past, especially when state and federal budgets traditionally look at short-term costs and not long-term impact. Moving forward, we can anticipate that the tremendous costs to our health-care system highlight the need for us to take a close look atwe our drug pricing models as the system shifts towards a more value-based approach.
WHAT WE’RE STILL WAITING FOR
Despite these advancements in ophthalmic drugs, no new-in-class medications are available since the advent of anti-VEGFs. While we can now address pathology in more powerful ways with these medications, serious gaps remain in our ability to manage patients with retinal disease. These gaps include patients who respond suboptimally to current therapeutics as well as those with retinal disease for whom we have no approved therapies (i.e., inherited disease).
While the last decade has brought us game-changing innovation, it also brought us development failures; most recently the anti-platelet derived growth factors (anti-PDGFs) such as pegpleranib (Fovista, Ophthotech) and rinucumab (Regeneron), which both failed to meet their targeted endpoints in large scale (and large fee) clinical trials.
What do these failures mean for us in regard to future research and development, and how might they impact the pricing of future therapeutics in retina? We will address these questions shortly.
Returning to the Sovaldi and Glybera examples: what if we could come up with a cure for neovascular AMD? How much would it cost per treatment? $1,000? $100,000? More? While the cure for this or other potentially blinding diseases is not imminent, the discussion is important in that pharmaceutical companies continue to search for new and innovative therapeutics and delivery devices that hopefully are more efficacious and durable, thus ultimately taking us in the direction of better patient care and outcomes. If we use pricing in other specialty drug spaces as a guide, these advancements in ophthalmology will likely lead to higher prices for the drugs or devices, but perhaps lower the cost to the system as we improve outcomes. As these therapies become available, the economics will become a more important part of the discussion.
HOW TO PRICE NEW AND INNOVATIVE DRUGS?
To maintain a sustainable system moving forward, we have to arrive at the right intersection where access for our patients, sustainability of our system, and profitability for the pharmaceutical companies meet. There is a lot of discussion now about value-based care and common-sense approaches to drug pricing. In other words, should we pay for drugs based on how well they work or the value they provide?
This is a solid concept in theory, however, the problem with this approach is that it may not take into account the variability that exists in treating our patients. For those of us who use intravitreal injections, for example, we know some patients do better with one drug versus another. We know to treat some people monthly while others only need a handful of treatments. Focusing on these isolated variables and using subjective aspects of value makes it difficult to determine what the cost of a therapy should be.
A number of factors may lead to downward or upward pricing pressure for future drug innovations in our space.
DOWNWARD PRICING PRESSURE
What could lead to lower drug prices in the future?
- Stretched budgets — the most obvious factor is that dollars for Medicaid and Medicare are limited and with looming health-care changes, these budgets could shrink or get stretched even more than they are currently.
- Growing numbers of patients (see Figure 1 and Table 1) — who rely on these programs. Increasing overall costs to the system (see Table 2) have created long-term budgetary concerns, making some wonder (erroneously, according to the Center on Budget and Policy Priorities)6 about their long-term viability.
Table 1. Medicare and Medicaid enrollment and projections, 2012 - 2020 in millions (rounded numbers) Medicare Medicaid 2012 50 58 2013 51 59 2014 53 66 2015 54 69 2016 56 71 2017 58 72 2018 59 74 2019 61 75 2020 63 76 DATA COURTESY CMS, OFFICE OF THE ACTUARY, NATIONAL HEALTH STATISTICS GROUP. Table 2. Medicare and Medicaid spending, including projections, 2012 – 2020 in billions (rounded numbers) Medicare Medicaid 2012 $570 $423 2013 $590 $445 2014 $619 $497 2015 $646 $545 2016 $679 $566 2017 $719 $587 2018 $768 $622 2019 $825 $658 2020 $891 $697 DATA COURTESY CMS, OFFICE OF THE ACTUARY, NATIONAL HEALTH STATISTICS GROUP.
- Public perception — as these concerns intensify, the ability for pharmaceutical companies to raise existing drug prices or set new drug prices at exorbitant levels becomes more difficult. Case in point: EpiPen manufacturer Mylan raised its price 17 times in the last decade, with the public finally exploding last year at the two-pack, $600 price tag.7
- Competitive landscape — it would be difficult for a new drug to be priced significantly higher than any other in its drug class unless there was a remarkable upside to the new therapy. The more options available, the greater the competition, the lower the prices tend to be.8 Add to this drugs going off patent, off-label use and the introduction of biosimilars, and behold! Significant downward pricing pressure.
- Increasing out-of-pocket expenses — historically, patients have been shielded from knowing the actual cost of the health care they receive.8 Now, with third-party payers contributing less and patients paying higher out-of-pocket expenses, patients (and their physicians) are becoming more aware of the true cost of the drugs they choose. This awareness may also contribute to downward pressure on drug pricing.
WHICH DIRECTION THE PENDULUM?
There are numerous forces that may drive prices down, but the truth is our system allows for an open market and demands the highest quality care and outcomes, so the tendency is for new drugs to cost more. The most common reason given for this is that new and innovative drugs are expensive to develop. If you don’t buy this argument, just consider how much money was poured into R&D for anti-PDGFs over the past five years: millions of dollars spent and no drug to market.
These failures were not the only ones over the past decade. Add up the millions, and you can start to understand some justification for costs. Look at the Alzheimer’s disease space. Today, the current U.S. economic burden for Alzheimer’s disease is $200 billion and will rise to $1.2 trillion in current dollars by 2050.9 Today, only 7% of Alzheimer-drug trials are funded by the NIH, pharmaceutical companies fund the rest. Of the more than 400 clinical trials run in the past decade, 99% have failed.8
Given these statistics, it is hard to envision a pharmaceutical company running trial number 401 if its upside from a pricing standpoint is limited. Without that incentive, we constrain the innovation potential in that space.
In 2012 the NIH funded about $30 billion in research while industry sponsored about $50 billion.5 To put that into context, in 2013 Apple spent $4.5 billion on R&D, which is 2.6% of its net sales. Merck spent $7.5 billion on research that year, or 17% of net sales.8 Add that it takes more than 10 years to bring a drug to market while it takes two years to put a new smartphone into our hands, and we can make an argument that continued upward pricing pressure will exist for some time.
RULES OF ENGAGEMENT
As physicians we want to ensure we can care for our patients with the most efficacious therapies available, however, those therapies must benreasonably priced as well. The key to finding a sustainable solution to the drug pricing-escalation problem is to engage all stakeholders involved in the process. Working with patients, policymakers and pharmaceutical companies we must find ways to ensure that new— but affordable — innovations continue, not only for our generation but ensuing ones as well. OM
- Khazan O. The true cost of expensive medication. The Atlantic. Sep 25, 2015. https://tinyurl.com/y8g9mjun . Accessed July 17, 2017.
- Regalado A. The world’s most expensive medicine is a bust. MIT Technology Review. May 4, 2016.
- Nasdaq. Marketing authorization for Glybera to expire on October 25, 2017. https://tinyurl.com/y8uaw4gr . Accessed July 6, 2017.
- Retinal diseases fact sheet. Genentech. https://www.gene.com/stories/retinal-diseases-fact-sheet . Acceessed July 6, 2017.
- Hutton D, Newman-Casey PA, Tavag M, et al. Switching to less expensive blindness drug could save Medicare part B $18 billion over a ten-year period. Health Affairs. 2014; 33: 931-939.
- Van de Water, PN. Medicare is not bankrupt. Center on Budget and Policy Priorities. July 18, 2016. http://www.cbpp.org/research/health/medicare-is-not-bankrupt . Accessed July 6, 2017.
- Mangan, D. Mylan hit with racketeering suit over big price hikes of EpiPen. April 3, 2017 http://www.cnbc.com/2017/04/03/mylan-hit-with-racketeering-suit-over-big-price-hikes-of-epipen.html
- Rosenblatt M. The real cost of “high-priced” drugs. Harvard Business Review. Nov 17, 2014.
- Congressional Record. Page S4907, July 24, 2014. https://www.congress.gov/congressional-record/volume-160/senate-section/page/S4906-4907 . Accessed July 17, 2017.