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The cost of saving lives

Posted in Uncategorized by saraburke on March 5, 2015

Here is column from Medical Independent from 5 March on implications of paying for Soliris.

This HSE decision to cover Soliris, one of the most expensive drugs in the world, under the public health schemes, raises important ethical considerations. This drug, which costs €430,000 per person per year, will now be available to about seven patients with a very rare blood disorder.

Speaking on the decision, HSE Director General Tony O’Brien said “this is an astronomical price to pay for any drug” and went on to explain that “the HSE did not want the patients… caught in the crossfire between a drug manufacturer attempting to enhance its corporate profits at all costs, versus the HSE attempting to protect scarce money for delivering health services”.

Speaking in the Seanad on this matter in January, when a handful of hard cases were brought to the attention of the Minister for Health, Leo Varadkar specified just how much money the makers of Soliris — Alexion — are making. He explained that the equity for this company is a whopping €2.4 billion, its revenue €1.15 billion and the CEO is paid €12 million per annum. Minister Varadkar also described Alexion as particularly “aggressive in the way it prices its medicines”.

Varadkar has a good insight into the pharmaceutical business. His political advisor Brian Murphy previously worked as the Director of Commercial Affairs for the Irish Pharmaceutical Healthcare Association (IPHA).

But decisions on drug prices are not, and should not, be political ones. Under James Reilly’s stewardship in health, controversial HSE calls not to include certain expensive, high-tech drugs (such as kalydeco and Ipilimumab) in the public schemes were over-ridden by unexpected Ministerial announcements, with decisions made to cover less-expensive drugs with poorer outcomes than Soliris.

Even though Alexion is building a global supply chain factory in Blanchardstown, the decision to clear this drug had nothing to do with the Minister and was made by the HSE in the public interest.

On two previous occasions, the HSE had ruled the drug was too costly to be made available to patients, so why the change of mind?

The HSE had got itself into the invidious position that 10 patients had already got the drug paid for by the HSE under a trial, so not to give it to the other seven became a difficult line to hold. Alexion refused to negotiate down and the HSE did not feel it had time on its hands for the handful of the patients involved. Hence the clearance.

The decision means that the HSE has to find another €4 million to pay for Soliris, which in turn means not paying for home helps, or extra drugs, or other public health initiatives.

And critically, the decision brings into focus the fact that the HSE has to find other mechanisms to bring down the price it pays for drugs. While some progress has been made reducing the exorbitant costs of drugs in Ireland, much more needs to be done.

So far, savings have been made by the HSE in the drugs budget by switching to a greater proportion of generic drugs, reference pricing, which allows swapping for cheaper drugs, and successive deals done with IPHA.

IPHA’s recently-appointed Chief Executive, Oliver O’Connor, when asked during the week why we still pay more for drugs, said: “We price the drugs against a basket of nine EU countries… overall, Irish prices are still 15-to-25 per cent higher… than the EU average… there are very complex, inter-locking references between different countries and different baskets.”

Whatever about the smokescreen of “complex, interlocking references,” the crucial issue here is pricing based on a basket of countries. It does not really matter to profitable pharmaceutical companies at what cost they sell their drugs here because our market is so small. But the reasons big pharma plays such hardball is that if prices go down here, they then go down elsewhere, which of course affects their bottom line.

Oliver O’Connor was Mary Harney’s political advisor from 1997 to 2010, including the seven years when she was Minister for Health when the first deals were done with IPHA.

The three IPHA agreements have resulted in drug price savings but we still pay more, and too much, for many of our drugs. Most of the savings have been made on the off-patent drugs. Yet 78 per cent of the public drug budget is spent on patented drugs.

Up to now, it’s big pharma that dictated overpriced drugs in Ireland. But the HSE has a new weapon in it armoury — the 2013 Health Pricing and Supply of Medical Goods Act. This allows for unilateral cuts to the prices paid to pharmaceutical companies.

The current IPHA agreement is being reviewed and the new one is up for negotiation. The HSE has no choice but to seek further cuts, to pay for new, more high-tech drugs and to invest in other areas of the health service.

Looks like the gloves are off for next round of drug price negotiations, hopefully in the public interest.

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