This is unabashedly good news:
The FDA has approved elexacaftor, tezacaftor, and ivacaftor as a combination pill (marketed as Trikafta) for treatment of CF in patients >=12. The 3 drugs improve the function of CFTR protein resulting from a mutation responsible for ~90% of CF cases https://t.co/G7lAufg94o
— JAMA (@JAMA_current) December 5, 2019
And now I will be a ball of fun at parties. This is also a massive risk adjustment problem.
This drug cocktail will be expensive. The list price is over $300,000 per person per year. It is not a cure, it is a chronic medication. The economics of this particular drug category don’t support the idea that there will be large rebates so the net vs gross price spread won’t be huge.
Cystic Fibrosis is not randomly distributed in the population. It is clustered in families as it is a genetic condition. When insurers were setting their 2020 rates, cystic fibrosis treatments were a small population with a particular mutation who had access to a very expensive and effective treatment and most everyone else. Now there is a big technological shock that is expensive and will quickly become the new standard of care for most individuals with cystic fibrosis. Risk adjustment payments either through “widget” payments like in Medicare Advantage where an additional diagnosis triggers a lump sum transfer, or revenue neutral risk adjustment like in the ACA markets will be significantly underpaying for the soon to be standard of care for CF.
When an insurer is obligated to cover a standard of care that is not supported by net revenue which is premiums plus reinsurance plus risk adjustment flows, the incentive to dodge and delay treatment increases quickly. I would be shocked if insurers do not institute pre-authorization, screening and strict limits on this new CF drug cocktail for the first year. This will bring lawsuits or at least the threat of lawsuits of course, but until the revenue model catches up to the care model, insurers will have an incentive to delay care payments.
As a side note, technological shocks that are effective but expensive also blow up strict block grants in Medicaid.
WaterGirl
Hey David, how did your presentation go yesterday?
Immanentize
@WaterGirl:
Ditto Water Girl. How did it go?
Also, my cousin worked on the first treatments for CF at Genentech almost 20 years ago. Research to patient takes time….
Victor Matheson
I’ve got multiple questions here.
taumaturgo
I for one have not seen a better description of the insane profits before the healthcare system that is callously incentivized to toss chronically ill folks into the let them die bin. If this system is not broken, then what is?
dr. bloor
@Victor Matheson: #4 is actually the best question, because even after you trim all the “fat” out of healthcare, hang the CEOs from lamp posts, and tie all physician reimbursement to Medicaid-20%, our ability to make medical advances and keep people healthier and alive will inevitably outstrip our ability as a society to pay for it.
David Anderson
@Victor Matheson: Yep, #4 is my big question too
#3 I don’t think there is a lot of potential competition in the pipeline at the moment.
David Anderson
@WaterGirl: It went really well. I had the luxury of presenting positive news/good stuff during a briefing session where most of the papers were premised on DOOM.
The best part of the entire thing was everything that surrounded the presentation. I got to meet lots of professional colleagues who I’ve either been in Twitter contact with or was just generally aware of due to them writing awesome things that I enjoyed reading and we could talk and geek out over a great dinner or even better tacos.
By 3:00pm yesterday, I was peopled out and wanted to curl up in ball over in a corner for a while, but it was really good.
Capri
I have a huge vested interest in this as my grand daughter has CF. She just turned 2 and her parents and health team are eagerly waiting for the day she’s old enough to go on this drug. The state where she lives (and I believe most if not all of the others) have state-supplied funds for sick kids that are separate from regular insurance. This should buffer the effect for children eligible for these programs. The issue will be with adults that need the drug.
It’s possible that from an insurance point of view, paying for the drug could actually be a net cost saving. If it prevents weeks and weeks of hospital stays, transplants, and all the other things that are currently part of living with CF it might actually be a wash.
David Anderson
@Capri: Given that CF risk adjusts on the ACA at ~$30,000 to $50,000 a year I don’t think that any plausible set of assumptions would make a $300,000/year drug cost savings
https://www.govinfo.gov/content/pkg/FR-2019-04-25/pdf/2019-08017.pdf
BethanyAnne
I did my Marketplace enrollment last night. I’m so happy! I will get a Silver plan in 2020 for money that only got me Bronze in 2019. 8 of meds are genetic, and have a $0 copay. Woot! I won’t have to rely on Kroger savings club to drop my med costs.
Adam Lang
One wonders how long it will be before a generic enters the market.
My over/under, ceteris paribus, is 26 years.
WaterGirl
@David Anderson: So glad to hear that!
Martin
So, my stepfather has a rare genetic condition – it’s a form of MD, and he and my mom are going through end of life planning, because even though he’s only 62, we’re kind of in any-day-now territory. He’s had multiple surgeries to extend his QOL, but he’s running out of options. They’re headed up to see a specialist that is trialing a gene therapy solution that might work. His challenge is that it’s a very rare condition, so much so that they’ve traced it back to a single couple as the origin of the defect. Needless to say, this is all going to be out of pocket since he’s too young for Medicare and has a shitty policy given the options left in Iowa. Thankfully we should be able to afford it, and it’s worth it, of course, but having to write 6 figure checks makes me cranky.
But I have a much greater appreciation for events like this now, and it makes me feel good that a bunch of families get to breathe at least a little bit easier. But I look at the 23 and Me discussion we had a few days ago and think about our lack of single payer, and recognize there are so many policy solutions you can wrap around this problem but eventually they’re all going to fail. In the case of CF, it’s detected early, so there’s not much that insurers can do, but my stepfathers condition doesn’t usually manifest symptoms until you’re in your 40s or 50s.
Mousebumples
I work for a PBM, and I know we’ve seen some requests come through for this already. Some are new starts (didn’t have the genetic alleles needed for Symdeko approval, for example) but a lot of patients are transitioning from Symdeko to Trikafta. I’m not sure if the cost is much different, off hand, though…
lurker3000
I’m interested in #1. And if the costs will be this high for other countries. Great news for people I know with CF–less good if they will bankrupt themselves to be healthy.
Capri
@David Anderson: That seems very light, I wonder if they are counting the baseline costs and not complications.
I was under the impression that a single 3-5 week hospital stay could cost 30K, transplants cost millions.
MoCA Ace
@Capri:
Ditto on the vested interest. Had a good conversation with my sons fiance last weekend and she is already on one of the three drugs at a cost of over $6,000 per month… along with the other drugs and routine CF clinics her medical costs are well over $150,000 per year. She had a conversation with her doctor and he is recommending the treatment as she has a difficult case (her description).
They are waiting until she is stable in her insurance again as once again she was dumped from her state ins plan since her siblings college scholarships put the family over some arbitrary fucking income limit. In the last three years she has been on three different plans and said she has probably spent several days each year missing classes because she has to deal with insurance issues.
I also got a peek into the sacrifices her family has been forced to make due to her, and a siblings, diagnosis. keeping themselves purposely poor or near-poor so they would be eligible for health care assistance. Trying to hide income so they can have some of the nice things other (lower) middle class families take for granted, laundering money through relatives so they don’t loose their health care etc. Its sickening that we do this to families in this country.
SP123
Long time reader, very occasional commenter, but I work at the company that developed this so I can answer the questions above. (Typical disclaimer, I’m not speaking for the company, just pointing you to statements or facts that are already public.)
1. It is a combination of synthetic small molecules, not a biologic, so cost of production is low compared to something like a protein therapy. I don’t know the exact numbers but they’re not terribly complex molecules to make. So it’s mostly covering R&D- we’re still working on treatments for the remaining 10% for whom this drug doesn’t work, and that is primarily funded out of the revenues of the existing drugs and the expected revenue from the new one.
2. This I don’t know, but as noted in 14 some of the patients taking the triple will be switching from an existing drug rather than representing new patients.
3. Interesting you should use this example, because one of the earliest drugs from the company was one of the first HCV drugs. It shot up to over $1B in sales, and was promptly superseded by improved competitor drugs to the point that we stopped making it altogether only three years later. #6 is correct, there are other companies developing CF drugs but nothing that seems likely to follow in the near term.
4. Can’t really speak to this other than to suggest reading some of the patient accounts of their reactions when they heard that the drug was approved. One thing to note is that these drugs are causing the prevalence of CF to rise worldwide, which sounds weird or suspicious until you realize it’s because CF used to be a death sentence and now people with the disease are staying alive long enough that there’s an easily measurable increase in the total number of living people with CF.