The High Cost of Living

Photo: ExtremeTech


In August, the U.S. Food and Drug Administration (FDA) approved the first-ever gene-altering treatment for a rare form of childhood leukemia.

This milestone medical breakthrough allows scientists to genetically modify a patient’s own cells to fight cancer, turning them into a “living drug.”

It also opens the door for a plethora of other immunotherapy gene-altering treatments to transform a patient’s DNA in order to train their cells to recognize and attack disease, leading to long remissions and possibly even cures.

But the revolutionary new drug, produced by Swiss pharmaceutical giant Novartis and marketed under the name of Kymriah, comes with a heavy price tag – $475,000 – and similar gene-altering therapies are likely to be just as expensive, or even more so.

That has insurance companies, doctors and patients on edge, because no one is quite sure how these treatments will be paid for.

Someone is going to have to come up with an answer fast.

Kymriah is already on the market, and there are at least 34 other gene-altering therapies in the final stages of testing to gain FDA approval.

Nearly 500 additional gene-altering treatments are now in initial clinical trials.

Since almost all these therapies are aimed at rare “orphan diseases,” their production and use will be limited to a few patients.

That means two things: 1) There will be no economy of scales to help bring down the cost of production over time, and 2) If these drugs are to be distributed to insured patients, the price will have to be absorbed by other insured subscribers, which translates into higher insurance premiums.

Moreover, most of these treatments require only a single application, which means that pharmaceutical companies will not have a steady demand for production.

A DNA-altering therapy to prevent a specific type of genetically linked blindness (now in clinical studies), for example, is expected to run somewhere between $700,000 and $900,000, and a pioneering gene-altering treatment for hemophilia could cost as much as $1 million for a single application.

A spokesman for UniQure, the U.S.-Dutch company that is developing the hemophilia drug, has pointed out that, if successful, the new one-time therapy would potentially eliminate patients’ dependence on regular blood product infusions that can cost more than $5 million over 10 years.

Still, the costs are staggering.

Simple economics suggest that not all patients who are candidates for these treatments will be able to afford them.

There are several pharmaceutical companies that are trying to develop alternative payment schemes, such as long-term loans from governments or the pharmaceutical companies themselves.

Others are offering to not charge patients or their insurers if the therapies do not work (satisfaction guaranteed or you pay nothing).

There are several other factors that could help to offset some of the costs of the therapies.

To begin with, research and development costs for most of these drugs will be far less than those of conventional medications since, because most of the diseases are so rare, the FDA is allowing gene-therapy companies to conduct extremely small clinical trials (sometimes with just 12 or 15 patients) without control groups for comparison.

Also, the United States and many other governments offer 50 percent tax credits for research on orphan drugs.

And thirdly, once an effective means of delivering the therapies developed, the cost of administering the drugs should go down considerably.

Still, none of those factors is going to bring the cost of gene-altering treatments down to a price tag that most people can come up with.

The majority of these new gene-altering therapies will treat life-threatening diseases.

With the introduction of Kymriah to the market, the potential to cure nearly every form of cancer is in the offing.

The question now is: Can we afford it?

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