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Starting the New Year With Creative Drug Pricing

Starting the New Year With Creative Drug Pricing
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Published on January 10, 2018


In a couple of weeks I’ll be, once again, at the Precision Medicine World Conference in Silicon Valley. As I attempt to bring them the “patient voice,” I’ll mingle with hundreds of executives from emerging medical companies that have, or will have, expensive and often breakthrough solutions for patients. So we continue to face the challenge of how to compensate these developers of new products in medicine, and their risk-taking investors, with a reasonable return. This article shows, at least, that some companies are working on flexibility and to prove value.

Back in November in this column, we wrote about Luxturna, a new gene therapy awaiting approval for a certain form of blindness (IRD), that was expected to be priced in the million-dollar range. At the time we wrote, “Seems outrageous. But the market is small, with possibly as few as 3,000 to 6,000 patients who carry the precise gene mutation worldwide ... that’s a very small number of patients to cover the development costs.”

Here’s the good news.

Spark Therapeutics Inc. announced Luxturna will not be priced that high, and it will come with a creative pricing/payment package, perhaps presenting similar options for targeted cancer medications. We are not defending the pricing, but we are encouraged by the creative strategy that the company CEO says will “strike a balance between the access concerns of patients, families and providers … and the need for us to create a business model that will support the sustainability of the company." (BioCentury Extra)

Step 1: Instead of a million-dollar price tag, the company set the total wholesale acquisition cost at $425,000 for each eye, or $850,000 if both eyes have to be treated.

Still too high!

Of course, this is well beyond the reach of most patients.  However, bear in mind that agreeing to a reduced price is just part of a creative package

Step 2:  The company worked out a formula for rebates with a regional insurer if the drug doesn’t work (doesn’t meet pre-determined standards) in the first 30 to 90 days, with another rebate to kick in at 30 months if improvement in eyesight is not maintained. 

Wait, there’s more.

Step 3: The company also has an agreement for Express Scripts Specialty Pharma to distribute the medication instead of hospitals buying it and then marking it up for patients.

Still, more.

Step 4: The company is trying to work out agreements to let commercial and government payers make installment payments over time, instead of forking over the entire amount at once.

This creative thinking follows a plan announced by CELGENE last August when introducing a new medication for certain patients with AML: “Celgene is proactively working with major commercial U.S. health-care payers on arrangements designed to give eligible patients access …  without deductibles, co-pays and co-insurance ... our hope is to prevent some of the financial burden that leads to many of the problems currently impacting patient care.”

To be sure, these precision medicines where small patient populations have to carry the burden for drug discovery and development, testing and approval, are still going to be expensive. No matter how you slice it, we need responsive and responsible insurance plans that help us carry the burden without adding to it.

But we are encouraged that the pharmaceutical industry is listening and, as the CEO of Spark said, is willing to “strike a balance between the access concerns of patients, families and providers … and the need for us to create a business model that will support the sustainability of the company."

As always, your comments are welcome.

And stay tuned as we work on educational programs to empower you—without breaking the bank!—to get access to the medicines you need and deserve.

Andrew Schorr
Co-Founder and President
Patient Power

Please remember the opinions expressed on Patient Power are not necessarily the views of our sponsors, contributors, partners or Patient Power. Our discussions are not a substitute for seeking medical advice or care from your own doctor. That’s how you’ll get care that’s most appropriate for you. 


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