What Counts In Pricing Drugs?
As of January 1st, 2022, the Dutch collective basic benefits package contains Kaftrio. Kaftrio is a drug for cystic fibrosis, a rare disease affecting about 1,400 people in the Netherlands. Kaftrio’s original asking price was approximately EUR 194.000 (USD 210.000) per patient per year. The responsible Secretary of State announced that he negotiated an “acceptable” price with Vertex, the pharmaceutical company producing Kaftrio . The Dutch National Health Care Institute, the Health Technology Assessment body in question, considers Kaftrio value for money after this price reduction. However, as social scientists know, value for money is a construct - it is given meaning by particular people in particular contexts, and how it is constructed is essential to consider. Drug pricing is a hotly debated subject in the Netherlands at the moment, but also further afield. Let us look back at the history of the construction of value for money in this case and place it in context.
Nearly a year ago, on May 4th 2021, the National Health Care Institute advised reimbursing of Kaftrio only with a price drop of 75 per cent . The primary reasoning behind this hinged on two elements. First, of course, the drug’s effectiveness for the patient groups in question was crucial. Secondly, the process by which this drug was discovered and developed played an essential role in the rationale. The Institute noted that Kaftrio is a combination of several already-developed drugs. Specifically, it contains three ingredients that are also part of other medicines made by this pharmaceutical company, namely Symkevi, Orkambi, and Kalydeco. These medicines, all Cystic Fibrosis transmembrane conductance regulator (CFTR) modulators, have been marketed and reimbursed for some time. This meant the development costs of Kaftrio were assumed to be lower than usual. In fact, the Institute considered the price, therefore, “inexplicably high”.
The line of thinking that considers the development process is infiltrating reimbursement discussions. The outcome in terms of the drug’s value for money (usually expressed in incremental cost-effectiveness ratios) is no longer considered to be of overriding importance when assessing these types of medicines. Last year, social pharmaceutical innovation actor Medicijn voor de Maatschappij (Medicine for Society) developed a tool for calculating the price of another presumed low-development-cost drug, namely Mexiletine [3,4]. This tool was developed as part of the reimbursement conversation for this particular drug. Specifically, Namuscla, branded version of Mexiletine, was not reimbursed because the pricing was considered excessive given the assumed low development cost. The National Health Care Institute advised reimbursement of the version prepared by a pharmacist instead (so-called magistral preparation) – and the Minister for Health made this possible through a change in regulation .
One often-suggested answer to the question of medicine pricing is transparency, and yes, this will help. However, the essential point behind this: what counts? How about missed opportunities – all the drugs that do not make it to the patient? And what about the number of patients that will be treated, over the years, both nationally and internationally – especially as Vertex announced to be increasing the number of indications Kaftrio would serve in the next couple of years? Engaging in social pharmaceutical innovation (SPIN) means engaging with these questions. A transnational perspective, in particular, comparing how prices are constructed and negotiated by diverse stakeholders across countries, may prove helpful here.
van den Berg, S., van der Wel, V., de Visser, S. J., Stunnenberg, B. C., Timmers, L., van der Ree, M. H., & Hollak, C. E. (2021). Cost-based price calculation of mexiletine for nondystrophic myotonia. Value in Health, 24(7), 925-929.
Photo credit: Diana Polekhina (2021). Measuring Tape and Pills on Yellow Background [Image]. https://unsplash.com/photos/Xg-ut7qtJiM
Written by: Tineke Kleinhout-Vliek, PhD