August 28, 2019

One family's $6M drug claim (and what it means for the future of rare diseases)

Daily Briefing

    Dawn Patterson and two of her children suffer from a rare bone disease, the only treatment for which is a multimillion-dollar drug that was slated to cost $6 million a year—a high price tag that's indicative of the pharmaceutical industry's growing interest in treatment for rare diseases, Katie Thomas and Reed Abelson report for the New York Times.

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    A $6 million drug bill

    The disease Patterson and her children suffer from, hypophosphatasia, is believed to affect just 1,300 people in the United States. The only treatment for hypophosphatasia is a drug called Strensiq, manufactured by Alexion. After a year of taking the drug, Patterson said the pain was almost entirely gone and she was able to return to work part time, Thomas and Abelson write.

    But the bills quickly added up. In 2018, the International Brotherhood of Boilermakers, the labor union to which Patterson's husband belongs and provides the family's insurance, was expecting to pay a $6 million annual bill for the family's treatment. According to Thomas and Abelson, Alexion in 2015 estimated Strensiq would cost about $285,000 for a child, but the company declined to disclose how much it would cost for an adult. Patterson's drug claim alone totaled nearly $2 million in 2018, Thomas and Abelson report.

    The drug's cost presented a challenge for the union's health plan, Thomas and Abelson write. At one point in 2018, 35 cents of each of the union's 16,000 members' hourly pay went toward paying for the Pattersons' medication. Since Strensiq has to be taken indefinitely, Lori Jasperson, who oversees the health care plan for the union, estimated that the Pattersons' care could ultimately cost the union $60 million total.

    After the first four months, the union's health plan put the payment for the drug on hold to evaluate whether it was necessary for Patterson to take.

    "This is the only choice of medication that we have," Patterson told the union. "There are no other options here, and we need this medicine."

    Jasperson reached out to officials, from her congressional representative to the Department of Labor to President Trump, asking for help, Thomas and Abelson report.

    In a statement, Alexion defended its drug prices, saying the development of drugs for rare diseases is complicated, expensive, and carries a significant risk of failure. "There continues to be significant ongoing investment required to bring Strensiq to patients, including in diagnostic and educational efforts and manufacturing," Alexion said.

    The massive rare disease drug market

    Decades ago, drug companies hardly invested in treatments for rare diseases because the small market for the drugs provided little incentive, Thomas and Abelson write. But in 1983, Congress passed the Orphan Drug Act, which provided government subsidies, tax incentives, and monopoly protections for companies developing treatments for rare diseases.

    Since then, those incentives alongside scientific advances have spawned a number of treatments for rare diseases, Thomas and Abelson write. In 2018, 59 new drugs were approved by FDA, 34 of which were for rare diseases. And because cheaper, generic versions of drugs account for 90% of all prescriptions in the United States, drugmakers are investing in these treatments to maximize profits, Thomas and Abelson write.

    Insurance claims for these drugs are becoming more common too. For example, Sun Life, which provides specialized insurance to employers to cover their most expensive medical bills, said claims over $1 million increased by a third over the past three years.

    Steve Miller, chief clinical officer for Cigna, said, "In the past, we'd think of rare … diseases and an employer would say, oh, I just had bad luck—I had one of these patients. Going forward, if we're successful and have therapies for these things, everyone's going to have them."

    Treatments for rare diseases face no real competition, which allows drugmakers to set essentially whatever price they want, Thomas and Abelson write.

    Some experts attribute the high prices of rare disease treatments to the Affordable Care Act, which banned lifetime caps and annual limits on coverage and required employers to continue paying for drugs, no matter the cost, Thomas and Abelson write.

    To make these drugs more affordable, some drugmakers have offered payment plans. For example, when Novartis announced that Zolgensma, its gene therapy treatment for spinal muscular atrophy, would cost $2.1 million, it offered a payment plan for insurers and employees, allowing them to pay in installments over five years.

    Still, some point out that drugmakers largely control the price, Thomas and Abelson report. Matt Salo, executive director of the National Association of Medicaid Directors, said, "A lot of these products haven't hit the market yet, and there's still a hope we can do something about the price rather than try to figure out a 20-year mortgage payment for them."

    As for the Pattersons, Alexion reached a deal with Express Scripts, the union's pharmacy benefits manager, to cap the annual cost for Strensiq at $1.5 million for each adult in Express Scripts commercial plans. But Patterson says she still worries about the costs' effect on the union's health plan. Last year, her son, now age, who had practically no symptoms decided to stop taking the drug, reducing the union's per member cost to 26 cents for each hour worked (Thomas/Abelson, New York Times, 8/25).

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