When a Drug Costs $300,000
The extraordinarily high prices of some drugs used to treat ultrarare diseases raise troubling questions for the American health care system. When prices mount into the hundreds of thousands of dollars a year, they impose a burden on patients and sometimes on employers and insurance programs that must pay most of the bill.
The Board Blog
As a case in point, Genzyme, a Massachusetts-based biotechnology company, has long charged more than $300,000 a year for typical patients on Cerezyme, a drug used to treat Gaucher disease, a rare, sometimes fatal, inherited disorder that can cause enlarged livers and spleens, anemia and bone deterioration. Cerezyme, which is administered intravenously, eases their symptoms.
The company justifies the high price as necessary to sustain a business that develops drugs for remarkably small groups of patients. Only about 5,000 people around the world are taking Cerezyme, including about 1,500 in the United States. The company makes other very high-priced drugs for patient pools that are even smaller.
The experience with Cerezyme and other biological drugs defies conventional wisdom on drug marketing, which holds that blockbuster drugs — generating revenues of a billion dollars a year or more — are generally those that can be sold to vast numbers of people.
But Genzyme has made Cerezyme a blockbuster, with sales of $1.1 billion last year, by charging very high prices for a few thousand patients. That could bode ill for efforts to curb health care costs if, as expected, the future of medicine lies in targeting treatments to limited numbers of patients most likely to benefit from them.
The company is essentially exploiting a monopoly position to charge what the market will bear to treat desperate patients with no other option. This is hard to take, given that the federal government did much of the scientific work that led to development of the drug and provided contract money that got the company started.
Most public and private insurance plans cover the cost of Cerezyme and administering it. Even so, patients may face thousands of dollars in co-payments, and those whose policies have lifetime spending limits can exhaust their coverage within a few years. They are then forced to scramble — often with Genzyme's help — to find new policies lest they and their families have no insurance left for other medical expenses.
It is not clear whether the cost can be driven down much any time soon. As Andrew Pollack reported in The Times on March 16, some experts believe that much lower doses of Cerezyme would still be medically effective and could save the health care system more than $200,000 a year per patient. Lower doses are used in other countries and are deemed effective. But patient advocates in this country worry that lower doses won't work in many patients, and some doctors are wary of under-treating patients as well.
Cerezyme is so entrenched in a small market that it seems relatively immune from competition. For the future, it would be wise to foster generic competition for biological drugs and allow government programs to negotiate for lower prices on drugs with no competitors.
