Price of CF drug may be health cuts elsewhere

ANALYSIS:It comes as no surprise that the decision of Minister for Health James Reilly to make the cystic fibrosis drug Kalydeco available to Irish patients from next month has been widely welcomed.

Kalydeco has the potential to transform the lives of a minority of patients with cystic fibrosis, a debilitating disease which is particularly prevalent in Ireland. The manufacturer, Vertex Pharmaceuticals, claims the average patient will survive for an additional 29.2 years by taking the drug.

For Reilly, the decision was a no-brainer. His political ratings are already low enough as a result of other controversies without allowing himself to be cast as the villain in this piece. He was under pressure from high-profile patient advocates and backbench TDs – it was hardly coincidental that the announcement was made yesterday in Cork, home of Fine Gael deputy Áine Collins, who has a child with CF.

Yet for all the congratulations, there are reasons why this decision should give us pause. These relate to secrecy, the speed with which the decision was made, the implications for other drugs and the wider implications for the health budget.

The simple fact is that resources are finite – nowhere more so than in the Irish health service – and more spending in one area means less for other areas. Across the western world, healthcare spending is rising at such a rate that, if unchecked, the health budget could swallow entire national budgets within 20 years. Unless the size of the pot is increased, more spending on drugs may mean fewer home help hours, or kidney transplants or hospital consultants.

The Minister said little yesterday about the terms of the deal, other than it will cost “€20 million plus” to provide the drug for the 120 patients involved. This compares to the original price of €28 million. It’s about one-third of the entire budget for new drugs this year.

Vertex is forecasting a handsome $320 million in sales for the drug this year. Yet we know little about how much was spent on developing it as the company has refused to disclose the research and development costs. It is difficult, therefore, to assess whether the original asking price of €235,000 per patient per year was a fair one.

The relationship between drug companies, doctors and patient groups is understandably symbiotic. This bond is crystallised in the current example, where in the US the Cystic Fibrosis Foundation invested $75 million to support the development of Kalydeco and receives royalties on sales.

If someone in your family is affected by one of the diseases modern, high-tech drugs are designed to treat, no price is too high for the benefits they bring. CF campaigners have described Kalydeco as “priceless” and the decision on its approval as one that can’t be reduced to a mere cost-benefit analysis.

Regulators have to take a different view. To be able to assess the relative value of different drugs, they have developed a system based on the quality-adjusted life years (QALY), a measure of the quality of life and length of life they deliver. It is a complicated system but QALY give a good idea of the cost-effectiveness of a drug. Medicines that are shown to be effective and have a low cost per QALY get full approval because we know they will deliver benefits while not breaking the bank. In Ireland, the threshold in most cases is €45,000 per QALY; below that, and a drug is approved, but above this threshold and the offering is considered more than the system can bear.