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Kalydeco for Cystic Fibrosis: 2000 Patients at $300,000 a year

2014-07-19

The New York Times online has published an opinion piece by Joe Nocera that reveals how the drug development system works.  Vertex, the company that has brought Kalydeco to market, says that they have spent $6.5 billion on drug development so far, and Kalydeco is the only drug they have to show for it so far.  They do have another drug in development that may target a much larger percentage of patients with cystic fibrosis, and their research has led to a better understanding of the disease.

At any rate, for $300,000 a year and 2,000 patients, you are getting $600 million a year.  In ten years, you will have made back most of your investment.  Of course, your 2,000 patients will continue to need your drug for the rest of their lives, which will be greatly extended by the drug itself.

If Vertex develops another drug which comes to market, which seems increasingly likely, the initial investment will get further return and perhaps the drug’s costs will decline. Or so one might think, if one were a reasonable person.  But drug prices aren’t reasonable, and there doesn’t seem to be much pushback from insurers.  It appears that Vertex, and many other drug developers, are sitting on a gold mine.

The risks are high: only ten percent of drugs developed are brought to market.  The costs, reflecting so many failures, are said to exceed 6 billion dollars per drug.

Medicaid has balked at paying for Kalydeco in one state so far; they are likely to cave in, however, according to Joe Nocera’s opinion piece.  Since a lot of cystic fibrosis patients are on Medicaid, this is going to be a federal government problem that really could use an efficient solution.  Like this one, from the comments:

“I’m a veteran drug rep, and I can tell you that the only way Americans can avoid paying these sorts of prices for drugs is to nationalize drug development. Obviously, this would be paid for by a federal tax, but it would dramatically reduce the cost of drugs because profit would be removed from the equation.

In addition, a government-run drug development program would save billions of dollars in wasted pharmaceutical research, because we would focus on develop much-needed drugs–such as antibiotics–and we would not waste money developing me-toos (for example, new statins or SSRIs) and patent-extenders (drugs in which a very minor change was made, in order to extend the patent).”

That’s right, nationalize drug development.  The federal government pays so much for drugs, through the Veteran’s Administration, Medicare, and Medicaid, that it makes sense to create a federal system to develop drugs.  The potential benefits would be really dramatic.  Small government advocates will swoon at this advice, but Medicare has been such a success that we feel comfortable advocating national drugs as well.

Here is a link to the NYT opinion piece: http://www.nytimes.com/2014/07/19/opinion/joe-nocera-cystic-fibrosis-drug-price.html

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