'Orphan drugs' save lives — at high cost

Steve Holland and his wife watched helplessly as, one by one, their three children fell victim to a rare and deadly genetic disease, becoming so lethargic they could barely walk. Hope arrived when a biotechnology venture enrolled all three in an experimental drug trial.

It soon became obvious that one child was receiving the placebo, the others Aldurazyme. Then came more battles to get all three, Spencer, Madison and Laynie, on the drug, which was finally approved last month for widespread sale by federal regulators.

Now that the testing is done, the family from River Oaks, Texas, has a new challenge: How to pay $450,000 per year to get weekly injections for all three children.

The Holland family's predicament underscores a growing debate among drugmakers, federal regulators, insurance companies and patients over who should pay for expensive drugs developed for a few very sick people.

Advances in biotechnology and a pivotal federal law are fueling an explosion of specialty drug development. Companies that once wrote off such drugs as unprofitable are now attacking obscure diseases with gusto.

As a result, once-overlooked sick people are getting treated. But the cost of their new drugs has contributed to the skyrocketing cost of filling prescriptions, the pharmacy benefits management firm Medco Health Solutions Inc. concluded in a study released Wednesday.

"Given their rapidly escalating costs, it is not surprising that these drugs are appearing with increasing frequency on plans' radar screens," the report said.

In the past five years, specialty drug prices rose 40 percent per year while non-specialty drug costs rose 15 percent annually.

"I hate the prices they charge," said Dianne Dorman of the National Organization of Rare Disorders in Washington, D.C. "But I don't want anything to discourage the companies from developing these drugs."

The Holland kids suffer from Hurler Schie syndrome, which damages organs and joints. The bodies of the afflicted are simply unable to dispose of dead cells.

The three children, ages 13, 11 and 9, have been receiving Aldurazyme for free while serving as subjects in experiments run by the biotechnology companies developing the drug.

Thanks to Aldurazyme, the Holland kids lead fairly typical lives. They're able, for example, to visit the zoo without wheelchairs.

It took years and millions of dollars to develop Aldurazyme, which will be used by only about 1,000 Americans.

Its makers say the only way to profit from so few patients is to charge some of the highest rates ever for a single drug -- more than $2,800 for each weekly injection.

"We have to make a profit to make this drug," said Dr. David Meeker of Genzyme General, which is co-marketing Aldurazyme with BioMarin Pharmaceutical Inc. "It's not enough just to recoup our costs."

Congress passed the Orphan Drug Act in 1983 to prompt drug makers to address rare diseases they would otherwise ignore. The law guarantees tax breaks, funding help and a seven-year monopoly to companies developing drugs for diseases that afflict fewer than 200,000 people.

The FDA has approved 240 orphan drugs since.

Manufacturing orphan drugs has proven to be a profitable niche for Genzyme. Its best-selling medicine is Cerezyme, which treats Gaucher's disease -- a potentially deadly genetic disorder that causes anemia and enlarged organs. Only 3,500 take Genzyme's Cerezyme, but the drug still generated $619 million for the company in 2002, costing about $170,000 per patient per year.

Some federal officials, though, believe the government has been overcharged for some of these medicines.

In January, the Centers for Medicare and Medicaid Services slashed what it pays hospitals and doctors for most of the orphan drugs used to treat Medicare patients. The Biotechnology Industry Organization and patient groups are protesting, saying the cuts will scare away drug makers from tackling more rare diseases.

Medicare now reimburses only four orphan drugs at "reasonable cost," including Genzyme's Gaucher drug. All others are lumped in with most outpatient drug treatments, which are paid at 95 percent of wholesale cost.

Medicare administrator Tom Scully said in an interview that many of the orphan drugs now serve much larger patient populations than originally envisioned.

The drug commonly referred to as EPO, for instance, is the world's best-selling orphan medicine, ringing up $8 billion in worldwide sales. That's because the drug has been found to work on many more patients other than the drug's original target -- anemia in kidney patients.

Scully said Medicare classifies such multi-use orphan drugs as common treatments to keep costs down, but will pay in full for orphan drugs that treat just one rare disease.

He said the agency will soon announce that it will reimburse a dozen more orphan drugs at higher rates because their makers proved the medications weren't multi-use.

Holland said he's just now started thinking about how to pay for the injections his children get every week. The Hollands are talking with their insurer. They also hope to enroll at least one of the kids in continuing trials the drug companies are required to conduct.

The companies, too, say they routinely provide drugs for free to patients who have no way of paying.

While financing the drugs is a worry, Holland says he's more concerned about his children's health.

"The difference from what they were like before the treatment and what they are like now is unbelievable," Holland said. "They didn't walk very far without a wheelchair or a stroller. Now they play sports. It's not a cure. But it's big step in the right direction."

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