A new record has been set for the highest price medication. The newly approved hemophilia drug Hemgenix.
The US Food and Drug Administration on Tuesday approved Hemgenix, a new drug to treat hemophilia. Manufacturer CSL Behring set the price at $3.5 million per treatment, making it the most expensive drug in the world.
Hemgenix is a gene therapy to treat adults with hemophilia B, a genetic bleeding disorder in which people do not produce a protein needed to create blood clots. About 1 in 40,000 people have the disease, most of whom are men.
The previous record for the most expensive medication was Zolgensma.
According to an analysis by GoodRx, the most expensive drug in the US previously was Zolgensma, which was approved by the FDA in 2019 to treat spinal muscular atrophy and priced at $2.1 million for a course of treatment.
Some new medications are truly breakthroughs. An example is Sovaldi (Sofosbuvir), approved nearly 10 years ago. It was the first medication to cure Hepatitis C, a disease that had previously been chronic. The end-stage condition often required a liver transplant. When the $84,000 treatment came out people were aghast. Though it’s expensive it works. It cures a disease that could not be cured before. An estimate from 2020 found a liver transplant cost $878,400. Sovaldi is a huge savings compared to a transplant or a lifetime of chronic care. If Sovaldi were newly approved today its launch price would probably exceed $1 million.
About 90% of drugs dispensed are cheap, generic drugs. They account for a very small portion of drug expenditures, perhaps 16% of total spending. The remaining 10% are specialty drugs or name brand drugs, which account for 84% of spending. Specialty drugs can cost hundreds of thousands or more. Only about 2% of drugs dispensed are considered specialty drugs. Yet specialty drugs account for nearly half of all drug spending.
The cost is concentrated. The specialty category encompasses a range of high-cost drugs. However, there are standouts, even within this expensive class. Within the nearly 3,500 therapies we classify as specialty, the top 10 drugs make up approximately 25 percent of costs, and the top 50 drugs make up over half of costs.
Once upon a time if your yearly medical claims exceeded $500,000 a year your insurance could cut you off for the rest of that policy year. If your lifetime costs exceeded, say, $2,000,000 you were cut off for good. These amounts varied somewhat from plan to plan. You may think this bad but it allowed people select the amount of coverage they were willing to pay for. Medical prices were lower because drug makers, hospitals and medical device makers knew there were limits to what they could expect to receive. Thus, insurance premiums were also much lower. Much, much lower.
Obamacare banned all yearly caps and all lifetime cap on benefits. Obamacare also banned premiums based on risk, instead forcing people into broad age bands with premiums that are equally high. The result is the healthy are paying way too much for health care premiums. Once Obamacare ruled there were no limits, the sky became the only limit. One-million-dollar therapies, that are sometimes of little value are still $1 million therapies. Health plans often have to pay regardless of their value. When
When Obamacare was first passed million-dollar therapies were rare. Now they’re common.
How much should the healthy have to subsidize those with health conditions? That is more than an ethical and philosophical question. Am I my brother’s keeper? The Christian Bible suggests we are but it was written in a time when a bit of food, shelter for a few days or a bandage might alleviate suffering until relatives died or got better. This is an important debate because Obamacare forced millions of Americans who are in relatively good health to pay thousands more for health coverage so those who are less healthy get care with no limits on benefits.
Here are the statistics:
- The sickest 1% account for more than one-fifth (21%) of health spending.
- The sickest 5% account for 49% of health expenditure.
- The sickest 10 account for two-thirds (65%) of health expenditures.
- The sickest 15% account for 75% of health costs.
- The sickest 20% account for 81% of health costs.
By contrast, the healthiest 50% only account for 3% of total health costs and spend almost nothing each year on health care despite paying thousands in Obamacare premiums.
Why not allow insurance companies to sell affordable health plans that limit the benefits they pay out in any given year and allow premiums based on risk? In other words, allow consumers to have access to the type of coverage that meets their and their family’s needs.
4 thoughts on “Pharmacist: That Prescription Will Cost You $3.5 Million!”
I believe that all or virtually all other advanced nations regulate the launch prices of new drugs. Why our FDA continues to tiptoe around pricing like a helpless blind man is disgusting to me…(though a real blessing to drug companies,)
I do remember a study by the Urban Institute about lifetime limits…sorry I cannot find it readily.
The study did state that removing these limits was not a major cause for higher premiums. The dollar volume of these no-limit cases was just not that huge on the national scale.
Several people made this comment to me a dozen years ago when Obamacare was passed. You may have been one of them since you were a regular blog commenter. My thoughts are that although it may not have been a big deal back then, it’s becoming a bigger deal as drug companies are targeting specialty drugs and attaching prices of (then thousands) and now millions.
Your last paragraph in this post is worth unpacking. The logic of “buy only what you need” is tempting, but perhaps incomplete.
For one thing, your needs can change overnight. If I were buying insurance on January 1, 2015, I might have saved money by not buying cancer coverage. Then I was diagnosed with chronic leukemia in July 2015….whoops! (fortunately I was on Medicare)
A person determined to save money might indeed choose a health policy which covered only 5 days in the hospital. The maximum benefit might be just $25,000….Whoops! they fall off a ladder and have compound leg and arm and spinal fractures. Bankruptcy might be next.
Now, one could argue that if 1,000 customers can save big money buying a $25,000 health policy, and 20 of them go bankrupt due to accidents or having a child with hemophilia, that overall this is a welfare gain. I can buy that….but it is a more nuanced argument than you present in your last paragraph.
I think there is a broad range between limited benefit plans of $25,000 (which back in the early days of TennCare were enough for 98% of enrollees) to now when the sky is the limit. My premiums are about $7,000 a year with an $8,700 deductible. I have to spend $15,700 before insurance does me any good. This is basically a sickness tax on me above and beyond the outrageous taxes I already pay. I went to the doctor zero times this year and made no claims. Yet, I’m supposed to give the insurance pool $7,000. I wish I had skipped insurance this year as I did the previous four years. Of course, hindsight is 20/20.