How do you Measure the Real Value of Prescription Drugs?

Sep 23, 2019

By Bob Coughlin, President & CEO of MassBio

We’ve all seen the headlines over the last year, as the drug pricing debate becomes more inflamed and top of mind for both politicians and the public. Instead of celebrating the incredible advances in science, with biopharma companies coming out with cures for the first time, promising new hope and a healthier life for patients with debilitating and sometimes fatal diseases, we’re questioning whether they are “too expensive” and if the healthcare system can afford them.

At its core, the argument is about how we establish the true value of these medicines. This is a serious and legitimate question that must be addressed. The answer will ultimately determine who, if anyone, has access to present and future “high priced” treatments.

As the head of the Massachusetts Biotechnology Council the value of prescription drugs is clear – they save lives, they keep people healthy, make them productive members of society, and they save costs across the healthcare system. As a dad with a son with a rare disease, it’s even clearer: a new drug could mean he will live a long and healthy life.

My son Bobby has cystic fibrosis (CF) – a fatal, incurable genetic disease affecting about 30,000 Americans. As my wife and I learned about the disease and the seeming impossibility of a healthy life for him, we also discovered how many other children have diseases with few to no treatment options. In fact, 95% of rare diseases do not have one single FDA approved treatment, and for those that do, most are just masking the symptoms instead of treating the underlying cause of the disease.

My son is now 17 and for the first time I think he will outlive me, thanks to new treatments that are in the pipeline for his specific genetic mutation, and for that we are incredibly lucky. But even before these treatments are available, some are already claiming they will be “too expensive” and not offer enough value. This is where the existing debate about value falls apart. It ignores that therapies are first meant to make sick people healthy, in addition to reducing other healthcare costs. My son will no longer have an expiration date. As a parent, you can’t put a number on that.

To better understand why new therapies like these offer immense value to our healthcare system, let’s examine two factors: what someone like my son currently costs the healthcare system; and the incalculable difference they make to patients’ and their families’ lives.

Currently, my son takes dozens of pills a day along with multiple nebulizer therapies to counteract the lung-clogging buildup caused by his condition. He receives regular X-rays and chest physical therapy. Healthcare professionals come to the house to administer much of this. Yet, despite all of this, he still frequently ends up in the hospital. I haven’t added up exactly what my insurer and my family pay annually, but a 2013 study found that the mean cost of hospital visits for someone with severe symptoms of CF, like my son, is as much as $94,664 per year – not even including all the other treatments listed above. My son has also been hospitalized several times this year, most recently for an episode of acute symptoms called pulmonary exacerbations. Treating patients with this issue can cost up to $119,862 annually in hospital costs alone.

Yet, this continual treatment cycle is not the end of the line for Bobby and many others like him. Cystic fibrosis worsens over time, and at some point in the future he will need a liver transplant. This is a huge expense – $812,500, on average – compounded by trying to find a donor liver and undergoing a major surgery and recovery. Lung transplants have been shown to extend and improve quality of life for CF patients, but they also come with a price tag of $500,000 – $800,000.

A therapy that treats the underlying cause of CF will avoid costs across the system for Bobby and others with CF. But we cannot be fooled into thinking that the value of prescription drugs is a 1:1 accounting equation. The new CF therapies also mean CF patients will be able to live a more normal life, free from the daily nurse visits, free from the fear of yet another hospitalization, and quite possibly avoiding a failed organ.

Eventually the drug will go generic, resulting in a dramatic price drop that will bring down the overall cost of his care. I’m even more hopeful that someday soon, there will be a cure for CF – and it’ll be a one-and-done treatment.  

The problem we face now is that determining a drug’s value is not simply an academic exercise. Insurers are increasingly basing whether to cover a new drug based on its “value.”  If a drug is ultimately determined to deliver too little “value” insurers won’t cover them or will create additional barriers for access. We also have an insurance system that is accustomed to paying for chronic therapies over time, and only considering the 12-month snapshot of a patient. While many of these payers are not arguing with the value or effectiveness of a one-time cure, they are still grappling with how to cover its costs.

Instead of restricting patient access to new treatments or saying in-effect innovation is too expensive, we need all pieces of the healthcare system to come together and agree about how to assess the value of prescription drugs. We need to break free from a one-size-fits-all approach to paying for therapies, meaning insurers and drug manufacturers must test new ways of covering drugs, whether that’s reimbursing for drugs that do not work as expected, or coming up with some other cost sharing model among insurers. If we do not address the value equation as an industry, government or other stakeholders will – and they will likely get it wrong because it’s too complicated. 

This is the impetus behind MassBio's Value of Health series, a major, new initiative to explore the future of the biotech industry through the prism of drug pricing. Guided by experts, we are producing a series of three whitepapers and related events in 2019 that together seek to answer the question: is the current biotech pricing model sustainable, and if not, what needs to change?

The series is a way for us to educate our members about the changing paradigm as it relates to value and access, and to get early and mid-stage biopharma companies thinking about value earlier and in a more actionable way. It is MassBio’s belief that the sooner companies start thinking about value and how they will demonstrate it, the fewer hurdles to patient access will exist. 

“A therapy that can cure disease in a single treatment isn't a unit of drug,” wrote former FDA Commissioner Scott Gottlieb in a recent op-ed on CNBC. “It's a public health solution.”

It’s now up to us to prove that value.

To attend our next event in the series, register here.

Learn more about the Value of Health series and download our whitepapers here.

See all MassBio News