New $710-a-day drug saves lives but strains state budgets

  • By Dave Gram Associated Press
  • Sunday, November 22, 2015 1:16pm
  • Business

MONTPELIER, Vt. — 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 forces patients to struggle to breathe. But it comes with a punishing price tag — about $710 per patient per day.

The treatment takes a bite out of Medicaid programs that are already facing big budget problems, and a small state like Vermont will be on the hook next year for $3.6 million for a drug expected to treat only 40 people.

Orkambi — taken as two pills, twice daily — is a combination of two cystic fibrosis drugs that won approval from the Food and Drug Administration on July 2. Federal law requires Medicaid programs to cover FDA-approved drugs, and the U.S. government picks up more than half the tab.

But what’s left over will make up nearly 7 percent of Vermont’s estimated $54 million Medicaid budget deficit next fiscal year.

“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,” said Dr. Brian O’Sullivan, who specializes in childhood lung disorders at the Dartmouth-Hitchcock Medical Center in New Hampshire and has written on drug pricing. “So yes there is a breaking point. As more and more expensive drugs come out, we’re reaching that breaking point.”

Orkambi’s arrival follows on the heels of last year’s introduction of a 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, said spokesman Sean Sheehan of the Department of Vermont Health Access.

One patient who has taken Orkambi and is now involved in tests on a second generation of it is Brian Callanan, 39, who moved from Vergennes, Vermont, to Florida two years ago.

“It feels like new lungs. … You no longer feel this daily rattle or tightness that you wake up to every morning. … The other major, major component is the psychological and emotional impact of this of reducing anxiety and depression and fear” that can come with limited breathing, he said.

Callanan is founder of the Cystic Fibrosis Lifestyle Foundation, whose aim is to help patients stay as healthy as possible. The foundation gets more than a fifth of its $350,000 annual budget from Vertex Pharmaceuticals, the maker of Orkambi.

A spokesman for the Boston-based firm, Zach Barber, defended the retail price of $259,000 per patient per year, which is reduced with Medicaid rebates to about $200,000 per patient. Barber said Orkambi resulted from more than 15 years of research costing billions of dollars.

“We have a tremendous amount of work still to do to help the patients who don’t have a medicine today to treat the cause of their disease,” Barber said. “And that work’s going to take a very long time, measured in years. It’s going to take a very significant amount of money that’s measured in billions.”

Matt Salo, executive director of the National Association of Medicaid Directors, said absorbing a big new cost causes state Medicaid programs around the country to scramble to find savings elsewhere.

“It’s always resource-constrained. Anytime you see one part of it, the costs of it, balloon, it’s going to put immediate pressure on everything else,” Salo said.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.