California scientist Paul M. Quinton learned that he has cystic fibrosis at age 19 and has spent his long career in his lab working on ways to cure it.
He is, in short, not the kind of person you’d expect to be fighting with Vertex Pharmaceuticals Inc., the company developing a new class of breakthrough drugs for the obstructive lung disease.
But he and a group of prominent cystic fibrosis doctors are doing just that. For the past three years, they have engaged in a private and largely fruitless dialogue with Vertex over their complaints that the Boston biotechnology firm is overcharging for its medicines.
Now, nearly three weeks after Vertex won US approval for a two-drug therapy called Orkambi that eventually could treat roughly half of the 30,000 Americans with cystic fibrosis, Quinton and his medical colleagues are going public with their objection to the company’s decision to price the drug at $259,000 per patient annually.
“It’s egregious,” Quinton, 70, a professor of biomedical science at the University of California at San Diego, said in an interview. “This is more than five times the annual salary of the average American family. How can they in good conscience charge that much?”
The question resonates with health insurers and consumer groups that have raised alarms about the soaring prices of specialty therapies for everything from cancers to rare genetic disorders. Vertex’s prices have come under scrutiny, initially in a 2013 article in a leading medical journal, partly because they seemed to crystallize the broader debate over how to hold down health costs while rewarding makers of treatments for relatively small numbers of patients.
Vertex spokesman Zach Barber said the company, which has lost money in all but one of its 26 years, has invested billions of dollars in its cystic fibrosis program. Vertex needs to generate the revenue and profit that will enable it to expand the market for Orkambi worldwide and develop treatments for cystic fibrosis patients with other mutations, Barber said.
“Right now, two-thirds of the patients in the United States don’t have medicines’’ to treat the cause of the cystic fibrosis, Barber said. “We want to help those people. That work is going to take a very long time, hundreds of people, and a very significant continued investment.’’
Dr. Brian P. O’Sullivan, a pulmonary specialist at Dartmouth-Hitchcock Children’s Hospital in New Hamphire, is one of those who joined Quinton in meetings with Vertex executives. He said the group is concerned not only about the cost of Orkambi and Kalydeco, another Vertex cystic fibrosis drug priced at more than $300,000 a year, but about the cost of specialty drugs of all kinds.
“This is not sustainable,” said O’Sullivan, who until recently taught at the University of Massachusetts Medical School in Worcester. He said he hopes to bring the issue of high drug prices to larger groups of specialists in cystic fibrosis and other medical fields.
“As we move into genomics medicine, diseases are being divided into smaller pieces based on genetic mutations, and the prices to treat each of the pieces is exceedingly high,” O’Sullivan said. “I don’t think that health care can be treated like a commodity the way a car is.”
The Food and Drug Administration initially approved Orkambi for a population of only about 8,500 patients age 12 and over with the most common cystic fibrosis mutation. Vertex already has begun making the treatment available to those patients and is testing it on Americans under 12 and on subsets of patients in other countries with the same mutation. Its other drug, Kalydeco, treats about 2,000 cystic fibrosis patients with a different mutation.
Patients don’t typically pay for drugs out of their own pockets. About 35 percent of those now eligible for Orkambi are insured by Medicaid, the government program for low-income residents. Most of the rest are covered by private insurers. But even when insurers foot most of the bill, patients are responsible for often hefty deductibles and copays. And the drugs contribute to a health care system that is increasingly expensive for everyone.
Vertex says its aim is to make sure every patient who is eligible for Orkambi can get it. The company has launched a program to provide the drug free to uninsured patients and subsidize copays for qualified insured patients.
In a conference call after the FDA approval, Vertex chief commercial officer Stuart Arbuckle cited four factors in justifying Orkambi’s price: a small patient population, the clinical benefit of a drug combination that treats the underlying cause of the disease, the time and cost of Vertex’s efforts to bring the medicine to market, and the need to invest in research to develop other therapies for tens of thousands of patients with other forms of cystic fibrosis.
“It is highly expensive and risky,” Arbuckle said.
Quinton and his associates are quick to note that other parties, including the US government and a private foundation, helped fund early research on Vertex’s medicines. In the 1980s, in his federally funded lab, Quinton himself made a discovery — identifying a basic defect in the sweat glands — that was a building block in research that led to cystic fibrosis drugs. While he said he doesn’t believe he should profit from his own contribution to cystic fibrosis therapies through publicly funded research, Quinton questions the compensation to executives who he said got involved in the drug program much later. “It just seems wrong,” he said.
Quinton said he is particularly upset about Vertex’s board awarding more than $53 million in one-time bonuses to a dozen senior executives. The payouts would not come until the end of 2017 at the earliest, and only after the company posted profits for the previous four quarters. Analysts say this is a likely scenario given their sales projections for Orkambi.
“What we’ve done is essentially make the executives a bunch of millionaires,” said Quinton, who takes Vertex’s Kalydeco to improve his breathing and who runs a lab focusing on cystic fibrosis at the University of California at San Diego.
Quinton, O’Sullivan, and other cystic fibrosis specialists, including Dr. David Orenstein at the Children’s Hospital of Pittsburgh and Dr. Mark Pian, a San Diego doctor who is former director for the cystic fibrosis center at the University of California at San Diego, first raised the issue of Vertex’s pricing after Kalydeco entered the US market in 2012.
They corresponded by e-mail with company leaders, including chief executive Jeffrey M. Leiden, and personally brought their concerns to Leiden and his lieutenants in private meetings during North American Cystic Fibrosis Conferences in Orlando in 2012 and Atlanta last fall.
At the meetings, they recall, Leiden invited them to support Vertex in its campaign to find treatments for almost all types of cystic fibrosis by 2020. But he also made it clear, they said, that Vertex needed to generate the revenue that would let it invest in other profitable drugs. They said he warned that lower prices could make the company vulnerable to a takeover by a pharmaceutical giant with less interest in pursuing cystic fibrosis drug development.
Quinton and the cystic fibrosis doctors say they also proposed that Leiden and other Vertex executives address the price issue before a larger forum or in a webcast that would be open to doctors and patients via the Internet, but nothing came of the idea.
“We really saw that the bottom line was what the market would bear,” Orenstein recalled. “He [Leiden] said every year they were in the red and Wall Street has only so much patience and no more.” Orenstein conceded that he and his colleagues don’t know what the price of a drug like Orkambi should be. “We’re not health economists,” he said.
Barber, the Vertex spokesman, said that in the meetings Leiden sought to communicate the company’s goal of becoming a sustainable and independent business. But he denied the Vertex chief executive said that drugs were being priced to Wall Street expectations.
In October 2013, about a year after they first met with the Vertex executives, O’Sullivan, Orenstein, and Dr. Carlos E. Milla at the Stanford University School of Medicine coauthored an article in the Journal of the American Medical Association criticizing the pricing of drugs for rare diseases. The article centered on Kalydeco, which had been introduced the previous year. Vertex had set Kalydeco’s price at $294,000 per year and increased it to $311,000, they wrote.
“The vast majority of patients cannot afford this financial burden, and transferring the cost to private or federal insurers does not obviate the underlying problem — an unsustainable pricing structure,” they wrote. They also noted that, as with most drug development programs, Vertex didn’t develop Kalydeco alone. The National Institutes of Health and other funders, including the Cystic Fibrosis Foundation, helped underwrite basic research and subsequent development at Vertex and a company it acquired, Aurora Biosciences Corp. of San Diego.
A spokeswoman for the Cystic Fibrosis Foundation wouldn’t comment specifically on the price of Orkambi. But in a statement, the foundation said that the cost of doctors, hospitals, drugs, and diagnostics together places “a tremendous financial burden on people with the disease and their families.”