Cost Impacts of a Precision Medicine

By May 29, 2018 Commentary

Precision drugs are designed to impact very specific biochemical processes, usually related to gene expression.  They often are targeted at relatively rare diseases that have no other effective treatments.  One such disease is cystic fibrosis, which affects about 35,000 Americans and can be life threatening.  Loss of lung function due to a genetic mutation is the basic effect of cystic fibrosis.   (HA Article)   A drug called Ivacaftor was approved by the FDA in 2012 to specifically reduce the effects of the genetic mutation.  The researchers in this study sought to use claims data from commercial health plans to identify whether there was a reduction in hospitalizations as a result of its use.  Both cystic fibrosis and all-cause hospitalizations were the outcomes of interest and the period of one-year before initiation of the drug treatment was compared to one-year after its start.

Given the small population with the disease, and the even smaller subset with the mutations for which the drug was approved, the study sample was small, only 143 people.  31% had at least one hospital admission in the year prior to starting the medication.  In the year after the start, hospitalizations dropped by 55%, with a similar drop for both adults and children.  Admissions related solely to cystic fibrosis dropped even more, by 78%, again at a similar rate for adults and children.  And those patients who had higher medication adherence had even higher reductions in use of hospital inpatient stays.  Inpatient spending was 60% lower in the year after medication start than the year before, an average reduction of over $10,000.  The reductions were lower for a Medicaid sample population, which also was much less adherent to the medication regiment.  But here is the real problem.  The list price for the drug is over $300,000 for a year of treatment.  Let’s be generous and assume payer’s are reimbursing at half that price.  While the benefits appear significant, the price far outweighs the cost-savings.  And the drug isn’t curative, and if it extends lifespan, it is just adding even more to the total lifetime cost of treatment.  So this medication is an example of another reason why it is so hard to reduce health spending.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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