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.

Kalydeco, at the original price quoted by its manufacturers, came in at 10-20 times this threshold; a deal approved by the Minister won’t do much to change that multiple. It is off the spectrum, and there doesn’t seem to be much point in having an assessment system if it’s going to be disregarded.

Besides, why the rush? The decision, and the negotiations involved, were supposed to take a few months, but have been finalised within a few weeks. The marginal benefit to patients has to be set against the long-term aim of securing a fair price. There is a broader point to be made here in relation to the way we approve new medicines. Generally, it takes years to fully assess the efficacy and safety of a drug. However, pharmaceutical companies need to get their products on the market as quickly as possible to maximise profits before their patent runs out. Sometimes it makes sense not to withhold the benefits of a new drug from patients who clearly need it. Kalydeco has clearly been on the fast track since birth. In the US, the Food and Drug Administration gave approval in three months instead of the normal 10 months. Two clinical studies of the drug, which found it resulted in significant and sustained improvement in lung function in CF patients, lasted just 48 weeks and involved 213 patients, not particularly large numbers. This may be why the the Irish regulator, the National Centre for Pharmacoeconomics gave a less than ringing endorsement: “Whilst ivacaftor [Kalydeco] may represent an innovation for the treatment of patients with cystic fibrosis there are significant uncertainties, including the absence of long-term health outcome data,” it noted.

If Kalydeco were the only new drug coming on stream, there wouldn’t be much of an issue about funding it. But this isn’t the case – other treatments nearing the market are likely to match this price and, in some cases, to exceed it. Some, like the gene therapy treatment Glybera, are projected to cost more than $1 million per patient per year. Kalydeco as currently authorised treats only about 10 per cent of CF patients in Ireland. There is hope that it could be used for more common forms of the disease when used with another drug. That could increase spending on the drug by a factor of five.

Perhaps you can see a pattern here. Perhaps you read in the past about agreements made with the pharmaceutical companies which were supposed to deliver massive savings but never did. This was because the price cuts on older drugs were more than offset by the cost of providing newer on-patent drugs.

With the ink barely dry on the most recent deal with the industry, it seems like the same thing is happening again. That provided for savings of €120 million this year, offset by new drug costs of €70 million. However, already that figure of €70 million is starting to look optimistic.

And if those targets are not met – and let’s face it, the health system doesn’t have a good record here – the result is likely to be cuts in other areas of the service.

PAUL CULLENis Health Correspondent