What Does Cost Mean?
While the cost of certain medicines are alarmingly high, they can be considered a bargain measured against a lifetime of traditional costs.
The recent passing of the Inflation Reduction Act expands the Affordable Care Act and allows Medicare to negotiate for the price of prescription drugs, in a limited and phased introduction. This introduces direct government influence on drug prices, albeit in a phased and small-scale initial deployment. The median launch price of a new drug in the United States in 2021 was $180,000 for a year’s supply [fewer than 8% of drugs introduced cost this much in 2008] (1). While drug makers aren’t hiking prices of existing products quite as aggressively as they did prior to 2019, they continue to rise approximately 5% a year, according to 46brooklyn Research, a nonprofit drug pricing research firm (1). Patients’ out-of-pocket costs are only 13.3% of total costs. But these “are ultimately passed on to members of the public through the premiums they pay to keep their insurance policies active (40.4%) and the taxes they pay to the government,” Medicare 31.5%, Medicaid 9.9%, others 4.8% (1).
On August 17, 2022, bluebird bio’s one-time treatment, Zynteglo, for Beta-thalassemia (liver and heart malfunctions caused by oxygen deprivation) was approved by FDA and priced at a record $2.8 million (2). Not only sticker shock, but trendline increases for median prices are hard to ignore. To defend its cost structure, bluebird bio’s Chief Operating Officer Tom Klima pointed out that traditional transfusion intervention can cost around $6.4 million per patient, and the company will reimburse 80% of the fees if transfusion independence is not achieved after one treatment with Zynteglo. “We feel the prices we are considering still bring a significant value to patients,”
Klima stated (2).
While it is unclear how the cards will play out for bluebird and Zynteglo, it is instructive to look back to what happened to the previous most expensive drug, Novartis’ Zolgensma, which in 2019 offered discounts and outcome-based installment payments, after insurers demurred (3).
While high-priced genetic disorder treatments are here to stay, I would argue the cost of poor diet, lack of pandemic planning, poor general infectious disease control, and sporadic exercise, are a far higher cost to society, and a much more obtainable fix, than overreacting to either legislative change or wildly expensive niche treatment options. The cost of overlooking simple public health overhauls, and behavior change, is far more expensive.
References
- R. Langreth, “Why Prescription Drug Prices in the US Are So High,” Bloomberg, July 19, 2022.
- M. Roy, “Bluebird’s $2.8 Million Gene Therapy Becomes Most Expensive Drug after US Approval,” Reuters, August 17, 2022.
- M. Nuijten, “Pricing Zolgensma–The World’s Most Expensive Drug,
Journal of Market Access Health Policy, 2022.
About the author
Mike Hennessy Jr. is the President and CEO of MJH Life Sciences.
Article details
Pharmaceutical Technology
Vol. 46, No. 9
September 2022
Pages: 8
Citation
When referring to this article, please cite it as M. Hennessy, “What Does Cost Mean?,” Pharmaceutical Technology 46 (9) 2022.
