I've already posted this week on conflicts of interest, orphan drugs, and the "financial toxicity" associated with some medications, and now I've found a story that combines all three.
A new cystic fibrosis drug–the first to be developed based on understanding of the genetics of the illness–is an orphan drug that can help only about 4 percent of patients with cystic fibrosis. Its financial toxicity is such that it can destroy the finances of those whose lives it saves: It costs $307,000 per year. And it sits in the center of a swarm of conflicting interests involving a pharmaceutical company, a non-profit patients' organization, and researchers who have taken their money.
This comes from John Fauber of the Milwaukee Journal-Sentinel, who describes a disturbing case of what he calls "venture philanthropy," in which "a nonprofit helps finance development of a treatment in return for a cut of sales." (Fauber's story also appears at Medpage Today; the two organizations have a cooperative arrangement.)
The nonprofit in this case is the Cystic Fibrosis Foundation, which gave Vertex Pharmaceuticals $75 million to develop the new cystic fibrosis drug, called Kalydeco. Because of its investment, the foundation earned royalties on the drug. It sold the right to future royalties for $150 million–an excellent return on its $75 million investment–and immediately gave half of that sum ($75 million) back to Vertex for the development of more cystic fibrosis drugs.
"The Kalydeco story reveals much about how advances in medicine and escalating health care costs often go hand-in-hand. It also raises questions about conflicts of interest and where to draw the line between a charity and a profit-driven, publicly traded drug company," Fauber writes.
The Cystic Fibrosis Foundation has a clear conflict of interest here, in Fauber's telling: It is a patients' organization, yet it stands to profit enormously from its relationship with a pharmaceutical company–which in turn is reaping profits only because it charges patients what some doctors described as an "unconscionable" cost.
Further, some Vertex executives, as Fauber details, have made enormous personal fortunes in the tens of millions of dollars from this deal.
The Cystic Fibrosis Foundation also has the opportunity to promote the drug through its involvement in treatment guidelines that are supposed to be an impartial guide for doctors. As Fauber reports, new guidelines were approved last month, and "three of the 10 authors of the guidelines were employees of the foundation and four others worked for institutions that received grants from the foundation."
One authority, who described the situation as "definitely a conflict of interest," told Farber, "In the past, drug companies have been criticized for funding treatment guidelines that recommend their drugs. It is no different if the guidelines are funded by a foundation that gets royalties from drug sales."
Why, one might wonder, did the foundation not require, as part of the deal, that Vertex sell the drug at a price patients can afford? Fauber asked the foundation. "That would have been a deal-breaker," said the foundation's president, Robert Beall.
Fauber tells the story in his usual understated way, allowing the facts to speak for themselves. And the facts are not pretty. Nobody wants to deny the new drug to the estimated 1,200 Americans who can benefit from it. But Fauber's story underscores the question that underlies so many discussions of healthcare costs in the U.S.
Are we simply not clever enough to work out financial arrangements that can guarantee reasonable profits and reasonable costs? Others have done it. Why can't we?
-Paul Raeburn
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