Last week, we talked about the oncoming wave of super high cost treatments for fairly rare to very rare diseases. These treatments are priced in the millions. They may be cost-effective and cost-savings from a societal point of view with a long time horizon but they are not cost-effective from an insurer’s point of view that has a one or two year time horizon.
I want to illustrate this a bit more from the point of view of an ACA insurer. I’ll be using the 2021 Risk Adjustment reports from CMS to outline my numbers and NBPP 2021 for my risk adjustment co-efficiencts. We’ll take hemophilia as the case example as the Wall Street Journal article had some good info on this very rare and super high cost disease.
The most recent one approved in the U.S. set a price record: $3.5 million for CSL Ltd.’s Hemgenix, a treatment for the blood disorder hemophilia B….
The condition is rare, affecting only about 6,000 people in the U.S., of whom about 1,900 have severe enough cases to require frequent Factor IX replacement infusions aimed at preventing serious bleeds, according to CSL. These repeat treatments, which CSL also makes, can cost millions of dollars over a lifetime, according to CSL….
A study found that a one-time Hemgenix treatment decreased subjects’ need for routine Factor IX replacement and reduced their bleeding episodes. Some 94% of the patients discontinued Factor IX prophylaxis.
Let’s assume ACA insurers are profit seeking (even if not all of them are actually good at finding profits after losing 90% of their IPO value). Let’s assume that insurers profit seek by trying to cover people whose net expenses are less than their net revenue. Let’s assume that insurers have some ability above random chance to actually identify marginal members who may or may not be profitable and can act on that belief in a rational way by chasing away likely money losers and attracting likely money makers on the margin.
Now let’s look at what a $3.5 million dollar singly year payment for a disease looks like from the point of view of an insurer.