Paying a high price for drugs that save lives

Medicine that treats their children's disease will cost one family $450,000 a year.
ASSOCIATED PRESS
Steve Holland jokes that he and his wife avoid Las Vegas because of the bad genetic luck they've had with their three young children, who are afflicted with an extremely rare and deadly disease.
But the River Oaks, Texas, couple could really use a windfall now that federal regulators last month approved the drug Aldurazyme, which has dramatically improved and prolonged their children's lives.
To keep Spencer, Madison and Laynie on the drug, which they had received for free during trials run by biotechnology companies, will now cost a combined $450,000 a year.
The Holland family's predicament underscores a growing debate among drug makers, federal regulators, insurance companies and patients over who should pay for expensive drugs developed for a few very sick people.
Advances in biotechnology and a pivotal federal law are fueling an explosion of specialty drug development. Companies that once wrote off such drugs as unprofitable are now attacking obscure diseases with gusto.
At what price?
As a result, once-overlooked sick people are getting treated. But the cost of their new drugs has contributed to the skyrocketing cost of filling prescriptions, the pharmacy benefits management firm Medco Health Solutions Inc. concluded in a recent study.
"Given their rapidly escalating costs, it is not surprising that these drugs are appearing with increasing frequency on plans' radar screens," the report said.
In the last five years, specialty drug prices rose 40 percent per year, while nonspecialty drug costs rose 15 percent annually.
"I hate the prices they charge," said Dianne Dorman of the National Organization of Rare Disorders in Washington, D.C. "But I don't want anything to discourage the companies from developing these drugs."
The Holland kids suffer from Hurler Schie Syndrome, which damages organs and joints. The bodies of the afflicted are simply unable to dispose of dead cells.
The three children, ages 13, 11 and 9, have been receiving Aldurazyme for free while serving as subjects in experiments run by the biotechnology companies developing the drug.
Thanks to Aldurazyme, the Holland kids lead fairly typical lives.
It took years and millions of research dollars to develop Aldurazyme, which will be used by only about 1,000 Americans.
Its makers say the only way to profit from so few patients is to charge some of the highest rates ever for a single drug -- more than $2,800 for each weekly injection.
"We have to make a profit to make this drug," said Dr. David Meeker of Genzyme General, which is co-marketing Aldurazyme with BioMarin Pharmaceutical Inc. "It's not enough just to recoup our costs."
Congress passed the Orphan Drug Act in 1983 to prompt drug makers to address rare diseases they would otherwise ignore. The law guarantees tax breaks, funding help and a seven-year monopoly to companies developing drugs for diseases that afflict fewer than 200,000 people.
The FDA has approved 240 orphan drugs since.
Profitable
Manufacturing orphan drugs has proven to be a profitable niche for Genzyme. Its best-selling medicine is Cerezyme, which treats Gaucher's disease -- a potentially deadly genetic disorder that causes anemia and enlarged organs. Only 3,500 people take Genzyme's Cerezyme, but the drug still generated $619 million for the company in 2002, costing about $170,000 per patient per year.
Some federal officials, though, believe the government has been overcharged for some of these medicines.
In January, the Centers for Medicare and Medicaid Services slashed what it pays hospitals and doctors for most of the orphan drugs used to treat Medicare patients. The Biotechnology Industry Organization and patient groups are protesting, saying the cuts will scare away drug makers from tackling more rare diseases.
Medicare now reimburses only four orphan drugs at "reasonable cost," including Genzyme's Gaucher drug. All others are lumped in with most outpatient drug treatments, which are paid at 95 percent of wholesale cost.
Holland said he's just now starting to think about how to pay for the injections his children get every week. The Hollands are talking with their insurer. They also hope to enroll at least one of the kids in continuing trials the drug companies are required to conduct.