Abortion: A drug on the market to induce abortion appears to be highly effective against Cushing’s syndrome, a condition that can be fatal. Due to mifepristone’s association with abortion, there are tight restrictions on its use and it’s less likely to be prescribed off-label or developed for other conditions.
Orphan drugs: Because Cushing’s only affects about 10,000 people in the US, treatments are eligible for orphan drug status, which provides seven-year market exclusivity for the manufacturer and therefore a chance to make an attractive profit. The orphan drug law can also be abused by jacking up prices on low-cost products.
Drug price levels: The price for Korlym (as the Cushing version of the drug is known) is about $550, compared with $80 for the abortion drug. And the abortion drug is only needed once, whereas the Cushing drug might be needed up to 3x/day forever. The manufacturing cost is presumably close to zero.
Drug price increases: Korlym came on the market at about $220 per pill, but the manufacturer has boosted the price substantially every year, with no end in site. Meanwhile the price of the abortion pill has stayed the same or dropped.
Pharmacy benefit management: The article duly notes that the prices quoted are “before any discounts or rebates.” Pharmacy benefit managers (PBMs) negotiate discounts and rebates. Depending on what’s happening behind the scenes, it’s possible that the big boosts in list price have not been matched by an equal run-up in actual price realization by the manufacturer, and it’s likely that there are significant differences from one PBM to the next. Meanwhile the PBMs may be benefiting from higher prices, which could boost their own revenues from rebates and other incentives and fees.
Funding of drug development: Corcept Therapeutics, which developed Korlym, is developing a variety of other drugs, which may help more people with Cushing’s or treat aggressive forms of cancer –or may fail completely and help no one. One way the company rationalizes the high price of Korlym is as a source of funding for new drug development. But is there a reason Cushing patients and their insurers should be the source of such funding? Would the company charge less if it didn’t have other drugs in development?
The role of generic drugs: Teva has filed a patent for a generic version of the drug, now that the exclusivity period is coming to an end. That could lower prices for those paying the bill and dent Corcept’s profits and stock price.
How pharma tries to block generics from coming to market: Generic companies need to compare their product with the branded product to get it approved. But the branded company can sometimes interfere with that. Corcept’s CEO implies in the article that Teva may have obtained Korlym for testing through nefarious means. Corcept’s CEO says Teva won’t have an impact on Korlym soon because the issued will be tied up in court for years.
Conflict of interest: The original idea for Corcept was to develop mifepristone for major depression. But a co-founder left the company in 2007 after Congress investigated his conflict of interest.
Patient advocacy: Corcept is a funder of a patient advocacy group for Cushing’s. These groups can be useful for patients and their families as advocates for treatment and reimbursement and for raising awareness and educating people. Of course the drug manufacturers have an interest in how it goes.
Every one of these topics merits extensive discussion –or at least a blog post of its own. Thanks to Kaiser Health News for bringing all these issues to the surface.
The Affordable Care Act continues to be controversial, eight years after its passage, and a hostile Administration and Congressional majority have managed to undermine it, even if they haven’t been able to repeal it. Regardless, the ACA (aka Obamacare) has shifted the discussion on health insurance. Policy makers and the public increasingly assume that affordable coverage should be available to everyone and that pre-existing conditions should not be a factor in rate-setting or eligibility.
With uncertainty and dysfunction at the federal level, states are looking into using Medicaid “buy-in” as a way to achieve their policy goals. There are two main approaches being discussed: allowing individuals to enroll in traditional Medicaid by paying a premium or allowing individuals to buy Medicaid managed care policies on the marketplace.
A Health Affairsblog post provides a framework for evaluating these buy-in proposals. They outline six goals that policymakers may have in mind when instituting these programs:
Improve coverage for the current individual market
Provide options for people living in regions with limited choices of health plans
Improve the viability of the private insurance marketplace
Reduce premiums for consumers in the private insurance market
Provide people with a guarantee of coverage with state-mandated consumer protections
Improve the financial viability and contracting power of the Medicaid Agency
These are all worthy goals, but I would add another, systemic one. We read over and over again that the main reason healthcare spending is so much higher in the US than elsewhere is that prices are so much higher. Private health plans and Medicare haven’t done much to address this issue. Only Medicaid consistently pays low rates, so it seems that a way to bring down overall spending is to pay Medicaid rates, something that all of these buy-in approaches would achieve.
Providers won’t be happy with Medicaid rates and I don’t blame them. But a “Medicaid reset” would do the job of price reduction more than any other policy I can think of.
To succeed in value based care, providers must reduce unwarranted variance in utilization and cost. Medical devices and drugs are good places to focus, since they represent big slices of the spending pie that are rarely optimized. In this podcast interview, Lumere CEO Hani Elias describes how his company deploys evidence based software and services to help health system clients take on variation.
(0:12)What are some of the key challenges in healthcare?
(1:31) What do you mean by “unwarranted” variation?
(2:45) Are you able to tell which variation is appropriate and which is not?
(4:30) How does the decision making process differ between drugs and devices?
(6:42) Drug and device companies are large and are influential with physicians. How do you operate effectively in that environment?
(8:45) How do you differentiate from others who work on reducing cost and improving quality?
(10:30) What’s new, and what’s the same in this administration in Washington compared to the prior one?
Saul Marquez’s weekly Outcomes Rocket podcast features interviews with healthcare leaders sharing lessons on best practices to improve outcomes and business success. I’m featured in the latest edition, discussing hot topics, how to tackle costs, value based care, and suggested areas of focus for 2018.