The Many Truths About Drug Prices

My 27-year-old son James has Duchenne muscular dystrophy, a nasty disorder that has wrecked his muscles.

He hasn’t walked in 14 years, and the deterioration doesn’t stop with his legs. The U.S. Food and Drug Administration (FDA) last year approved a gene therapy drug for this disease, albeit only for younger kids. The agency is about to open up the label, and it’s conceivable the drug will be available for James. It’s not clear how well it works.

The price tag for the single treatment: $3.2 million.

That’s one truth. Here’s the other. I’m the CEO of the trade association whose members sell the overwhelming majority of private health insurance policies. For even the most artfully designed ERISA health plan for a small-to-medium-sized employer, a $3.2 million hit can be devastating. The spiraling cost of specialty drugs is one of the gravest threats to the private employer-sponsored group health insurance (ESI) marketplace. Specialty drugs could be ESI’s Waterloo.

As a parent, I will demand coverage for this treatment if it is made available for my son. As an insurance guy who cares deeply about the plight of employers trying to care for their workers, I’m not so sure.

Until relatively recently, FDA approval for life-altering drugs almost automatically meant insurance coverage. But the rise in the effectiveness of patient advocacy has led to approval of certain drugs that have a great safety profile but not necessarily efficacy. Insurers are increasingly skeptical of covering these drugs.

For example, the voices of patients and loved ones may have influenced the FDA’s decision to grant expedited approval to an Alzheimer’s drug, aducanumab. It failed its clinical trials, but advocacy groups converged on Congress and the FDA and worked with celebrities to convince the regulator to approve the drug, which it did. Said Office of New Drugs Director Peter Stein: “[We] heard very clearly from patients that they’re willing to accept some uncertainty to have access to a drug that could provide meaningful benefit in preventing the progression of this disease, which, as we all know, can have very devastating consequences.”

My son’s disease is the result of readily identifiable flaws on a single gene that creates the protein dystrophin. It’s the largest gene in the body times 10. Placing the genetic fix inside a virus is very difficult, so scientists have created “micro-dystrophins” that create expression of the protein, albeit at relatively low levels. It may be on the pathway to being a “cure” but it isn’t fully that. It’s not completely clear that micro-dystrophins are suitable as a surrogate endpoint to prove efficacy. It’s also not clear that the treatment will last for a lifetime, or whether the immune system would reject further treatments.

Said one parent to the FDA about his son: “He’s dying anyways. What other choice do I have as a parent than to let him take a drug that hasn’t been through the rigmarole of getting years of [perfecting] research. We as DMD parents have no options. It’s die or die trying.”

Fortunately, an emerging industry of companies is trying to mitigate the cost of genetic therapies, by either using or bypassing the existing pharmacy benefit manager system. And more and more of these drugs are coming online. A hemophilia drug that shows good efficacy recently made it to market at a $3.5 million list price. As the CRISPR gene-splicing technology comes closer to clinical trials, there could be dramatic developments in lifesaving drugs, and that’s undoubtedly a good thing. As the old phrase goes, though, everybody wants to go to heaven, and nobody wants to die.

You could make the case, I guess, that the stratospheric cost of special drugs is a rationale for Medicare for All, price-capping, and U.K.-style national health coverage. But this is not a simple case of profiteering and gouging. I can attest from more than 20 years in the disease world that an intriguing novel compound’s path from the petri dish to the marketplace is mind-numbingly expensive. We’re talking 10 to 15 years of research and development, more than $1 billion in investment, and a 97% fail rate. Are there profiteers in the biopharma world? You bet. But in rare disorders (like my son’s), the price tag is justifiable.

The health insurance industry’s critique of the Affordable Care Act is that it undoubtedly did much to increase access to healthcare (more than 25 million additional Americans are insured because of it) but did little to nothing to bend the healthcare cost curve. One exception would have created the Independent Payment Advisory Board as a budgetary tool to propose mandatory cuts to Medicare. It promptly got labeled as the “death panel,” and Congress rapidly repealed it.

I don’t have any simple conclusion here, because there is no simple conclusion. One cannot put a price on the value of a life.

But in line with my study of dialectics, I can only hope that these opposite truths are integrated and lead us all to greater truths about ourselves and others.