KEY TAKEAWAY: Vertex argues that a $250,000-per-year price for Orkambi is reasonable, even though that much money could buy health insurance for 14 families of four. Pharma says they need high prices to support research, but Vertex scheduled a half-billion-dollar stock buyback.
During a board meeting, the Institute for Clinical and Economic Review, a nonprofit that assesses the value of prescription drugs, presented its report on Orkambi. ICER found that the drug’s list price amounts to $1.3 million per additional year of life it provides, or $900,000 if you take into account the improved quality of life Orkambi brings. Those numbers are more than four times the current benchmark for cancer drugs.
Pharmaceutical companies do not readily acquiesce to discount demands. In the U.K. and the Netherlands, Vertex denied patients access rather than price Orkambi in line with the value those countries assessed . When asked to provide discounts in France, Vertex shut down clinical studies there . Like all drug companies, Vertex prices its products to maximize profits. Hours after the New York State Medicaid meeting, the company announced that its first quarter 2018 net profit margin was 33 percent.
[pullquote]44% of people in the United States avoid visiting the doctor’s office when sick or injured, and approximately 40% skip necessary medical tests or treatment, according to results from a new national poll that were presented at the American Society on Aging 2018 Aging in America Conference. Given the high price of drugs like Orkambi you can see why. [/pullquote]
Vertex’s arrogance on pricing this drug clearly shows that shareholders come first, not patients. Why does pharma charge so much? Because they can.
As a group of Harvard researchers pointed out in the Journal of the American Medical Association said there are many more examples of sky-high drug prices beyond the few products that have grabbed headlines recently. The cost of insulin jumped 300% in the decade ending in 2012, for example. Even generic drugs are getting out of control: The prices of 400 drugs that are off-patent flew 1,000% from 2008 and 2015.
In 2014, Vertex CEO Jeff Leiden raised eyebrows all over Wall Street when he took home a $45.8 million pay package—a remarkable sum for a biotech company just starting to make its mark in the cystic fibrosis market.
Vertex responded to the backlash: Last February it overhauled its compensation rules, vowing to strengthen the link between executive pay and the company’s progress toward its strategic goals. And those changes are starting to show.
For 2016, Leiden racked up just $17.4 million, a 40% drop from his 2015 pay, according to Vertex’s newly released proxy statement. That’s supposed to make us feel better?