Sovaldi, Harvoni, Viekira Pak, a slew of oncology meds—they’re all contributing to specialty pharmacy sticker shock.
Ivacaftor (Kalydeco) for cystic fibrosis hasn’t been in the news quite as much, but priced at $300,000 per year, it’s also part of the trend of super-high-priced drugs that is sweeping American health care.
Approved by the FDA two years ago, ivacaftor targets a particular genetic mutation that affects only about 4% of people with cystic fibrosis, so despite that stratospheric price, it hasn’t had the same effect on budgets as the hepatitis C drugs like Sovaldi or, increasingly, expensive cancer drugs.
One of our regular contributors, Krishna Patel, wrote about ivacaftor in this month’s issue of Managed Care, and her takeaway was for payers to follow the guidelines for ivacaftor and not erect obstacles to people getting a drug that might make a huge difference in their lives.
But the FDA is expected to approve a new medication some time this year that combines ivacaftor with another medication, lumacaftor. And rather than working in small percentage of people with cystic fibrosis, this new combination is expected to be effective in roughly half of those with the cystic fibrosis who are ages 12 and older.
Kevin Bowen and Patrick Gleason of Prime Therapeutics are presenting a poster today at the annual meeting of Academy of Managed Care Pharmacy in San Diego that gives some estimates of the financial consequences of this new drug on health plans and other payers.
If Bowen and Gleason have crunched the numbers correctly, this new combination drug for cystic fibrosis might also be quite the budget buster.
“We wanted to open people’s eyes to the reality of these numbers,” says Gleason.
And, says Gleason, it’s wishful thinking to believe the cost of the new combination will be offset by avoidance of medical costs, which can be extraordinarily high for cystic fibrosis because some people with the disease get lung transplants.
“You can’t pay for this with medical cost avoidance,” says Gleason.
Okay, now let's do the numbers
Bowen and Gleason started with the premise that the new ivacaftor-lumacaftor drug will be roughly the same price as ivacaftor alone and, by looking Prime Therapeutics claims, put a price tag of $367,000 per year on it, which includes medical and pharmacy costs.
They figured someone might be on the drug for 28 years if they start at about age 12 (the harsh truth is that people with cystic fibrosis face a limited life expectancy).
So the lifetime treatment cost can be estimated at $10.3 million ($367,000 x 28 = $10.3 million).
Then they looked at medical costs of someone who got a lung transplant. Lung transplants are terrifically expensive. The total medical and pharmacy cost in the year of the transplant is $577,000 and in subsequent years, $143,000.
Cystic fibrosis care without a lung transplant or ivacaftor costs about $76,000 per years.
Bowen and Gleason didn’t do this math, but if you figure lung transplants are done as a last resort, it is reasonable to assume that a person with cystic fibrosis might have many years of care prior to lung transplant, then a transplant, followed by years of post-transplant care.
So the equation for lifetime treatment costs might look something like this:
$1.368 million (18 years x $76,000) + $577,000 (the year of the lung transplant) + $1.287 million (9 years x $143,000 of post-transplant care).
That adds up to $3.232 million, which is about a third of the $10.3 million in life treatment cost for the ivacaftor-lumacaftor combination (again, presuming it is priced at about the same as ivacaftor).
In their poster, Bowen and Gleason say that about 4.5 out of every 100,000 members would meet the criteria for the new combination drug and that 90% would take the drug. So for Prime Therapeutics population, that translates into increased cost of $1.01 PMPM, or $150 million per year.
These new drugs for cystic fibrosis seem to be a great advance. If they mean that the young people who are affected by very difficult disease can live healthier, presumably happier, and perhaps longer lives, they deserve the welcome mat—and more. We want medical progress.
But at these prices how are we going to pay for it?