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  • John Lantos

The cost of miracles



If you knew that your child would be unable to walk, talk, swallow or breathe on their own, how much would you pay for a curative drug? Such drugs recently became available for children born with spinal muscular atrophy (SMA). One cost $750,000 for the first year and half that in every other year. Forever. The other cost $2,100,000 for a one-time dose.


Such prices, like much that we do in modern American medicine, seem offensive, outrageous, impossible, unsustainable, absurd. But then we read the dispassionate economic analyses and they realize that such pricing is inevitable. It is baked into the system because the drugs are less expensive than currently provided alternatives. Here’s how it works: The drugs treat a very rare disease. The market for their use will be tiny. They were expensive to develop. Legislation incentivizes drug companies to go after these tiny markets. They get enhanced patent-protection when they do. Furthermore, current therapies for spinal muscular atrophy are even more expensive and don’t work very well. The new drugs will lead to longer survival and fewer symptoms or complications. $2M, then, is a bargain.

SMA was just the first disease for which there was a $2M treatment. An FDA advisory committee is considering the evidence regarding a new gene therapy treatment for thalassemia. It will also cost $2M. Currently, patients with this disease must get find a stem cell donor (only 25% can find a matched donor) are receive bi-weekly blood transfusions which lead to iron overload and organ damage. Small but convincing studies of the new drug suggest that it can eliminate the need for transfusions or transplants in 90% of patients. The company that manufactures the new drug even guaranteed it, sort of. If the drug doesn’t work, they will payback 80% of the cost. That sounds good, though it would still leave the patient or insurance company with a $400,000 bill.


I recently spoke to the American Academy of Pediatrics about the high price of drugs and the failure of one after another legislative effort to curtail the inexorable rise. The problems are wicked ones, in that the solution to any one problem leads to another. The requirement that drugs rigorously demonstrate efficacy makes the process of bringing a drug to market more expensive. Incentives for generic drugs leads to situations in which manufacturers corner the market and raise prices, or to shortages of commonly used drugs with low profit margins.


As complex as those problems are, they are 20th century problems that reflect issues in population medicine rather than personalized medicine. In population medicine, economies of scale eventually prevail. Prices of drugs drop because most of the cost is in the development and testing of new drugs, rather than in their manufacture. That may not be the case in the future. Instead, drugs will be manufactured as needed for individual patients. There will be no economies of scale. There will be no generics. We don’t know how to regulate the development of these drugs or even think about pricing. The first $2M drugs will certainly not be the last. Frighteningly, they might someday even seem inexpensive.


Seems insane but, as The Fat Man says to his bewildered intern in The House of God, “That’s not crazy, that’s modern medicine.” First, we are awestruck and grateful for cures that seem almost miraculous. Then we have to decide whether we can afford them.


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