State Budgets Pushed to Brink by $710-a-Day Drug

It's the latest pharmaceutical pricing controversy
By Newser Editors and Wire Services
Posted Nov 24, 2015 11:36 AM CST
State Budgets Pushed to Brink by $710-a-Day Drug
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A newly approved drug is being hailed as a major advance in treatment of cystic fibrosis, a life-threatening genetic disease that clogs the lungs with mucus and makes patients struggle to breathe. But it comes with a punishing price tag—about $710 per patient per day. Orkambi—taken as two pills, twice daily—is a combination of two cystic fibrosis drugs that won approval from the FDA in July. Federal law requires Medicaid to cover FDA-approved drugs, and the US government picks up more than half the tab. The treatment takes a bite out of Medicaid programs already facing big budget problems, and a small state like Vermont will be on the hook next year for $3.6 million—nearly 7% of the state's estimated $54 million Medicaid budget deficit—for a drug expected to treat only 40 people.

Orkambi's arrival follows on the heels of last year's new hepatitis C drug, Harvoni, which claimed the record for the most expensive drug purchase by Vermont Medicaid. About 70 Medicaid patients received it in Vermont last fiscal year, leaving the state with a bill of nearly $5.9 million, says a Department of Vermont Health Access rep. "States that have small budgets in their Medicaid also can't afford ... to pay for 40 people in their state when they've got many others who need diabetes drugs and whatever other drugs," says a drug pricing expert. "So yes there is a breaking point. As more and more expensive drugs come out, we're reaching that breaking point." A rep for Orkambi maker Vertex Pharmaceuticals defended its price, saying it took more than 15 years of research costing billions of dollars. (More Medicaid stories.)

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