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Friday 8 February 2019

Medical monopolies

What? The NHS in the UK says it cannot afford the cost of drugs for cystic fibrosis sufferers.

Why? For thousands of people, it a matter of death and quality of life. For society, it’s a question of how to handle modern monopolies.

Cystic fibrosis is a genetic disorder which affects people of northern European origin; a cruel, dramatically life-shortening condition. Per capita, more people suffer from it in the UK than almost anywhere in the world, but three years of negotiations between the National Health Service in England and the manufacturer of a drug which can transform the lives of cystic fibrosis sufferers have broken down in an argument over its price – around £100,000 per patient per year.

The drug, Orkambi, acts at the cellular level to replace a missing part of the protein which causes cystic fibrosis, but neither it nor its successors will be available in England; perhaps four thousand young lives which could have been changed for the better will not be. It is a tragedy for them and a sure sign that health systems and pharmaceutical companies are already failing to deal with a challenge they are only just beginning to confront: in a world of dazzling advances in medicine, how to make drugs affordable while modern monopolies proliferate and corporate power grows.

The lifetime of the research which developed Orkambi is now 30 years, roughly the same as the expected lifespan of someone born with cystic fibrosis. It is a condition which affects the movement of salt and water in and out of cells in the lungs. It causes difficulty breathing, which worsens constantly. It is painful to endure and dreadful for families to behold. Orkambi and its sister drugs Kalydeco and Symdeko are not a cure, but one doctor has described them as “close to a functional cure”. They improve quality of life enormously and are expected to extend it hugely. How much, we will not know until the drugs have been around for longer. It is not hard to understand the anguish of the families of sufferers in England who can see this and not get it.

Orkambi is manufactured by the US pharmaceutical company Vertex. It says it has ploughed $11.3bn into the research which developed it, and no one argues that it has recouped that investment yet. Nor is the research complete; Vertex is still spending heavily.

Up to this point, the arguments are difficult but familiar. Within its limited budget, how does the National Health Service put a value on the life of someone who is suffering terribly, and weigh that against the cost of treatment? How do drug companies make sufficient returns to do the next generation of high-risk research? But there are complicating factors.

  • At the moment, Vertex has a monopoly on effective treatments for cystic fibrosis and a window of five to ten years before competitor drugs come along. The company has massive pricing power. Health systems are understandably nervous.
  • The population of cystic fibrosis sufferers is relatively small; about 75,000 people worldwide. The risk is that each of them has to pay an extraordinary amount to finance Vertex’s investment.

The importance of the debate about Orkambi is that these conditions will come along more often. Advances in gene-based medicines will create more must-have drugs and give pharmaceutical companies, for a time, an unbeatable edge over their competitors; and designer drugs will become ever more closely targeted at small populations of people, not just those with rare diseases but with specific variants of more common diseases as well. This process already has a name; it is known as stratification.

The little we know about negotiations between Vertex and the NHS suggests that the NHS was willing to pay roughly a quarter of the price that Vertex was asking. The gulf is alarming because it, too, is likely to grow.

The United States distorts the global market, for good and ill. Any new drug which is deemed safe is made available at a price which its manufacturer sets (Vertex charges nearly twice as much for Orkambi in the US as it was asking in England). The profits underpin the next generation of research, and American health insurance subsidises the rest of the world.

At the same time, the price of a drug in the United States sets a benchmark that cannot be ignored and, increasingly, other countries cannot afford. The market is broken, and the world knows what to do when it sees a broken market in something as vital as healthcare: regulators have to step in. There are, broadly, three ways in which governments could powerfully intervene. One is competition: there have been a wave of mega-mergers in the pharmaceuticals industry in the past year, as healthcare businesses bulk up to make big bets on medical research in the hope of drugs that pay out. Governments can block or, at least, put real-world conditions on those deals. The second is market access: the NHS does not have the money of the US healthcare market, but it has scale and data that the pharmaceuticals industry depends on. And, third, there is regulation: the NHS can set market expectations on price.

In the absence of these interventions one thing is clear: the market is working better for pharmaceutical companies than for patients.