In The Debate About Cost And Efficacy, PCSK9 Inhibitors May Be The Biggest Challenge Yet

By William Shrank, Alan Lotvin, Surya Singh, and Troyen Brennan
Health Affairs Blog, February 17, 2015

Health care reform is intended to lower costs, but they are still rising, albeit less steeply than in the past. Moderation is not however the case in the area of specialty pharmacy. The medications to treat Hepatitis C are the most cited examples of a general inflationary trend, but the pipeline of expensive medications is extensive.

Yet, policymakers and payers appear unwilling to undertake significant cost controls on medication pricing. Indeed the controversy over the $84,000 price tag for Sovaldi (sofosbuvir) has largely faded, suggesting a certain resiliency in our system’s ability to absorb costs.

We believe that resiliency is about to be challenged in a manner unlike we have seen in the past, at least in the area of pharmaceuticals. A number of pharmaceutical manufacturers are developing a new class of medication to manage high cholesterol — the PCSK9 (proprotein convertase subtilisin/kexin 9) enzyme inhibitors.

The PCSK9 inhibitors will be specialty medications and likely priced as such. While we will not know exact pricing until the first generation of these medications is approved for use by the Food and Drug Administration sometime in mid-2015, estimates of annual pricing for these injectable drugs are in the range of $7,000 – $12,000. Given the number of people potentially eligible for treatment with the PCSK9 inhibitors will number in the millions, the potential overall expenditures by payers are huge.

As this is chronic therapy, PCSK9 sales could be expected to persist and grow over time, and will likely be the highest selling class of medications in history. Plus, as a biologic agent, there will not be a simple pathway to cheaper generics in a 10-15 year timeframe. Even in a system that costs $4 trillion per year, a single therapy adding $100-200 billion in costs annually is extraordinary.

Managed pharmacy care, indeed the health care system, has never seen a challenge like this to our resilience in absorbing costs. Payors, the employers, and health insurers, will first be shocked, then expect action. Action will take the form of compliance with clinical guidelines, and careful managed care oversight.

But in addition, perhaps the costs of PCSK9 inhibitors will push us to develop some consensus about the pricing of new specialty medications, as part of a more thoughtful discussion about the use of scarce resources on behalf of patients.

(The authors are from CVS Caremark and CVS Health.)

http://healthaffairs.org/blog/2015/02/17/in-the-debate-about-cost-and-ef…

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President Obama’s Precision Medicine Initiative

The White House, January 30, 2015

Building on President Obama’s announcement in his State of the Union Address, today the Administration is unveiling details about the Precision Medicine Initiative, a bold new research effort to revolutionize how we improve health and treat disease.  Launched with a $215 million investment in the President’s 2016 Budget, the Precision Medicine Initiative will pioneer a new model of patient-powered research that promises to accelerate biomedical discoveries and provide clinicians with new tools, knowledge, and therapies to select which treatments will work best for which patients.

Public-private partnerships:

The Obama Administration will forge strong partnerships with existing research cohorts, patient groups, and the private sector to develop the infrastructure that will be needed to expand cancer genomics, and to launch a voluntary million-person cohort.  The Administration will call on academic medical centers, researchers, foundations, privacy experts, medical ethicists, and medical product innovators to lay the foundation for this effort, including developing new approaches to patient participation and empowerment.

http://www.whitehouse.gov/the-press-office/2015/01/30/fact-sheet-preside…

In the United States, innovation and research in health care have been well rewarded… too well rewarded. The hepatitis C drugs, and now the PCSK9 inhibitors for high cholesterol are cases in point.

Our obsession with letting the market perform its miracles has led to a culture in which we accept and even expect the medical entrepreneurs to be rewarded with the maximum prices that the market will bear. In fact, prices have been pushed up well beyond what any normal functioning market would bear simply because the new products are able to bury their prices in the risk pools established by the private insurers and the pharmacy benefit managers.

Prices are so outrageous that now even the pharmacy benefit managers are complaining, as in the article by Shrank, et al. It is interesting that they suggest, as a solution, “careful managed care oversight.” Yet it is the intermediary “care managers” that have permitted this outrage. Besides, the private insurers are using these high prices to their advantage by placing these drugs in tiers that shift much of the costs to patients, thereby chasing away patients that would have higher health care costs.

President Obama’s Precision Medicine Initiative, as proposed, should have us all concerned. He calls for public-private partnerships that include medical product innovators. You can be assured that these biomedical innovators have already plotted to share in this lucrative market, knowing that their products will be introduced with prices in the stratosphere after they complete the nuisance stage of developing the products for the market.

The government already plays a role in taxpayer financed research. The public has a vested interest in these products and the government should be protecting our interest. When markets go awry it is the government that has the responsibility to step in and right the wrongs. Since the private insurers and pharmacy benefit managers have served us so poorly, we should replace them with our own public program – a single payer national health program. That would end our culture of developing new products that have outrageously high prices built in as an essential component.