At $300,000 A Year, How Much Drug Is Too Much?
9 CommentsBy Ed Silverman // March 17th, 2008 // 7:17 am
Is $300,000 a lot to pay for one drug for a year? If so, the correct dose is rather important, yes? That’s the issue concerning Cerezyme, which is used to treat a rare inherited enzyme deficiency called Gaucher disease, The New York Times writes, which notes that some experts say, for most patients, as little as one-fourth the standard top dose would work, saving the health care system more than $200,000 a year per Gaucher patient.
“It is economic malpractice to give a much higher dose of an expensive drug than is required,” Ernest Beutler, an authority on Gaucher disease at the Scripps Research Institute, tells the Times. Some other Gaucher specialists argue otherwise, saying that skimping on the med could endanger patients, but all sides agree on one thing. “Nobody would even be wasting their time talking about this if it were a cheap drug,” Neal Weinreb, a Coral Springs, Fla., specialist in Gaucher, tells the paper.
And the goes on to write that “the dispute over Cerezyme could be a sign of the increased scrutiny that dosing will receive as drugs become more expensive.” Drugmakers, the Times continues, may now look forward to defusing efforts to use less of their drugs to cut costs, and rebutting accusations that doses are inflated to bolster profits. There are also economic and social questions, the paper adds, about how much burden taxpayers and co-workers should be expected to bear - After all, very expensive drugs, especially at full doses, can raise the cost of everyone’s insurance.
The profits are sizable, the Times notes. Gaucher disease, which can have complications like ruined joints, is rare; only about 1,500 people in the US are on the drug and about 5,000 worldwide. Yet, last year’s sales totaled $1.1 billion last year, making the drug a blockbuster for Genzyme.
Genzyme says that it has raised the price only once - 3 percent last year - since introducing the drug in 1994, and needs the high price because of the small number of patients, and to pay for research. Genzyme also says it provides the drug free, if necessary, so that no one goes without due to cost. But critics say development costs were minimal, because the early work on the treatment was done by the National Institutes of Health, which gave Genzyme a contract to manufacture it. And analysts estimate the current cost of manufacturing the drug to be only about 10 percent of its price.
The standard Cerezyme dose — an infusion of 60 units of the drug per kilogram of body weight every two weeks — was set in a clinical trial involving only 12 patients, the Times writes. Based on that trial, Ceredase, a nearly identical predecessor drug, was approved in 1991. Cerezyme, the same enzyme made differently, replaced it starting in 1994.
Beutler tells the paper that it was reasonable to use a high dose in the initial trial to prove the drug worked. But after that, he says, “the reasonable thing was to cut back and see what you really need. It didn’t fit Genzyme’s business plan, so they never cut back.” David Meeker, the president of the Genzyme division that sells Cerezyme, says Genzyme thought doc should determine doses specific to each patient. So there was no point in doing a clinical trial comparing different doses. “Showing that 6 out of 10 got by with a certain dose doesn’t help us,” he tells the paper.
According to Genzyme, the average dose in the US is 51 units per kilogram every two weeks. At that dose, it costs about $350,000 a year to treat an adult weighing 70 kilograms, or 154 pounds. But the worldwide average, even factoring in US patients, is 34 units. And in Israel, the standard dose is 15 units per kilogram every two weeks. “Patients are doing just as well on a treatment that is 75 percent less expensive,” Ari Zimran, an Israeli Gaucher expert, tells the Times.
To read the complete story, please click here.
There’s also a sidebar that offers a glimpse into the way Genzyme interacts with doctors and patients. This is what the Times writes, in part…
Most drugmaker don’t know the identities of most patients taking their products. But Genzyme knows virtually everyone with Gaucher disease. And that, some critics say, lets it influence treatment to an unusual extent and encourage the use of high doses of its drug. Because Gaucher disease is so rare, and because the drug is so expensive, many patients have to come to Genzyme at some point for help in negotiating insurance coverage or arranging other financial assistance, the paper writes. The drugmaker has a staff of about 50 to help patients with such matters.
Genzyme also helped set up Gaucher disease treatment centers around the country, often at academic hospitals. The specialists there usually have more experience than the typical doc, who might see only one case of Gaucher disease in a lifetime. But critics say the docs who run these centers are beholden to Genzyme and contribute to the development of treatment guidelines. “Genzyme wisely created their own opinion leaders,” says Zimran, who has been a consultant to some emerging competitors. Genzyme has “monopolized the disease itself, not just the medicine,” he tells the paper.
qetzal
I’m not usually impressed by most claims of pharma piggy-backing off public research and reaping huge profits as a result. However, it looks like this is a bona fide example.
This report from 1992 shows that the money Genzyme spent to develop Ceredase is a very small fraction of the subsequent revenues.
Manufacturing cost at that time was actually quite high - estimated at $1.90/unit (versus a sales price of $3.50/unit). However, that was for Ceredase, which was purified from human placentas. I couldn’t find a robust estimate for the cost of Cerezyme, but as a recombinant protein produced in mammalian cells, it is certainly very much cheaper to make than Ceredase was.
Related to that, I also found this interesting press release from 1994, as Genzyme was switching over from Ceredase to Cerezyme:
I guess they changed their minds….
Jack2
Genzyme says that it has raised the price only once - 3 percent last year - since introducing the drug in 1994…
So let’s back-calculate and assume it was raised 3% to its current price of $300k, instead of raised from $300k by 3% (it makes little difference).
x*1.03=$300k
x=$291k
So let’s assume it went from $291k in 1994 to $300k in 2008.
$291k in ‘94 equals $416k in 2008 using US inflation rates during that time
(http://data.bls.gov/cgi-bin/cpicalc.pl)
Using a healthcare based inflation rate (6%/year) it should cost $658k in 2008, if the price relative to healthcare inflation remained constant.
In essence, raising the price only once, by 3%, over 14 years, amounts to a substantial price decrease.
How would you feel if your salary only went up once, by 3%, over the past 14 years?
qetzal
Jack2,
Good point. I didn’t think about adjusting for inflation.
Even so, $300K in ‘08 amounts to only a 28% or a 54% discount relative to an ‘expected’ price of either $416K or $658K. That’s not such a big discount. Especially since Genzyme argued early on that Ceredase was so expensive because of high manufacturing costs. The first link I posted suggests that was probably true, but the manufacturing cost for Cerezyme is certainly much, much lower.
Ordinarily, it would be reasonable to argue that the high price is mainly due to development costs. In this case, however, it really does seem to be true that Genzyme’s development costs were relatively modest, due to significant gov’t contributions.
I agree we need incentives to promote development of new drugs. Patents, orphan exclusivity periods, etc., are all appropriate in my view (though one can argue how long they should last). But in this case, I think the rules worked too much in Genzyme’s favor at the public’s expense.
Sarah Millerick, Genzyme
We’ve noted the good discussion here of some issues raised in the NYT article and in the March 23 editorial. Of course, we talked to the Times at length to provide our views, but we realized we need to make these views more broadly known and accessible. So, this week we’ve posted on our Web site answers to many of the questions frequently posed to us about the cost of Cerezyme and our other drugs for rare diseases. Please check it out a page
Char Lyn
Sarah,
It looks like your link is broken. I think you meant to link to this?
Ed Silverman
Hi Sarah,
Nice to see a company chime in on an official basis, if only to point out one of its own links. As you note, companies do need to make their views more broadly known and accessible. So I would encourage all the folks at Genzyme - and elsewhere - to participate in these conversations. After all, if you don’t participate, your voice can’t be heard. So come back soon.
Cheers
ed
Lisa Van S
Very Classy,.. Thank You Sarah
Bob Freeman
Agreed. It is rare that a company will address these issues in an open dialog. Thank you, Sarah.
Sarah Millerick, Genzyme
We also wanted to add that we were happy to see Henri Termeer’s letter to the editor run in yesterday’s New York Times. There were many points he could have responded to given the scope of the article but given the space limitations he decided to emphasize a couple of key points- 1) the main factors that drive the cost of Genzyme’s therapies and 2) the potential of personalized medicines like these to transform healthcare. Thanks.
http://www.nytimes.com/2008/03/31/opinion/l31drug.html?_r=2&oref=slogin&pagewanted=print&oref=slogin