CONTEMPORARY
`ISSUES
`
`The cost of multiple sclerosis drugs in the
`US and the pharmaceutical industry
`Too big to fail?
`
`Daniel M. Hartung,
`PharmD, MPH
`Dennis N. Bourdette,
`MD
`Sharia M. Ahmed, MPH
`Ruth H. Whitham, MD
`
`Correspondence to
`Dr. Hartung:
`hartungd@ohsu.edu
`
`Editorial, page 2105
`
`Supplemental data
`at Neurology.org
`
`ABSTRACT
`Objective: To examine the pricing trajectories in the United States of disease-modifying therapies
`(DMT) for multiple sclerosis (MS) over the last 20 years and assess the influences on rising prices.
`Methods: We estimated the trend in annual drug costs for 9 DMTs using published drug pricing
`data from 1993 to 2013. We compared changes in DMT costs to general and prescription drug
`inflation during the same period. We also compared the cost trajectories for first-generation MS
`DMTs interferon (IFN)–b-1b,
`IFN-b-1a IM, and glatiramer acetate with contemporaneously
`approved biologic tumor necrosis factor (TNF) inhibitors.
`Results: First-generation DMTs, originally costing $8,000 to $11,000, now cost about $60,000 per
`year. Costs for these agents have increased annually at rates 5 to 7 times higher than prescription
`drug inflation. Newer DMTs commonly entered the market with a cost 25%–60% higher than
`existing DMTs. Significant increases in the cost trajectory of the first-generation DMTs occurred
`following the Food and Drug Administration approvals of IFN-b-1a SC (2002) and natalizumab
`(reintroduced 2006) and remained high following introduction of fingolimod (2010). Similar changes
`did not occur with TNF inhibitor biologics during these time intervals. DMT costs in the United States
`currently are 2 to 3 times higher than in other comparable countries.
`Conclusions: MS DMT costs have accelerated at rates well beyond inflation and substantially above
`rates observed for drugs in a similar biologic class. There is an urgent need for clinicians, payers, and
`manufacturers in the United States to confront
`the soaring costs of DMTs. Neurology®
`2015;84:2185–2192
`
`GLOSSARY
`AWP 5 average wholesale price; DMT 5 disease-modifying therapy; FDA 5 Food and Drug Administration; IFN 5 interferon;
`MS 5 multiple sclerosis; QALY 5 quality-adjusted life-year; TNF 5 tumor necrosis factor; VA 5 Veterans Affairs; WAC 5
`wholesale acquisition cost.
`
`The landscape of multiple sclerosis (MS) treatment has changed dramatically over the last decade. As
`of November 2014, 12 disease-modifying therapies (DMTs) for MS have been approved by the US
`Food and Drug Administration (FDA). Despite the availability of more treatment options, costs for
`all MS DMTs have increased sharply. Between 2008 and 2012, US DMTs sales doubled from $4
`billion to nearly $9 billion annually.1 In 2004, the average annual DMT cost per person was
`$16,050, accounting for half of all direct medical costs for patients with MS.2 Currently, the average
`annual cost for interferon (IFN)–b-1b (Betaseron; Bayer HealthCare Pharmaceuticals, Whippany,
`NJ) is over $60,000.3 Although high drug costs are a hallmark of specialty pharmaceutical classes,
`such as DMTs, the unexplained escalation in costs for older, first-generation MS therapies such as
`IFN-b-1b, IFN-b-1a IM (Avonex; Biogen Idec, Cambridge, MA), and glatiramer acetate (Copax-
`one; Teva Pharmaceuticals, North Wales, PA) has caused concern in the neurology community.4,5
`The objectives of this study were to (1) investigate our impression that costs for all MS DMTs
`have increased dramatically since 2002, (2) explore the relationship between the release of newer
`
`From the College of Pharmacy (D.M.H., S.M.A.), Oregon State University/Oregon Health & Science University; and the Department of Neurology
`(D.N.B., R.H.W.), Oregon Health & Science University, Multiple Sclerosis Center of Excellence West, Veterans Affairs Medical Center, Portland.
`Go to Neurology.org for full disclosures. Funding information and disclosures deemed relevant by the authors, if any, are provided at the end of the article.
`The Article Processing Charge was paid by OHSU Department of Neurology.
`This is an open access article distributed under the terms of the Creative Commons Attribution-Noncommercial No Derivative 3.0 License, which
`permits downloading and sharing the work provided it is properly cited. The work cannot be changed in any way or used commercially.
`
`© 2015 American Academy of Neurology
`2185
`ª 2015 American Academy of Neurology. Unauthorized reproduction of this article is prohibited.
`
`

`

`CONTEMPORARY
`ISSUES
`
`The cost of multiple sclerosis drugs in the
`US and the pharmaceutical industry
`Too big to fail?
`
`Daniel M. Hartung,
`PharmD, MPH
`Dennis N. Bourdette,
`MD
`Sharia M. Ahmed, MPH
`Ruth H. Whitham, MD
`
`Correspondence to
`Dr. Hartung:
`hartungd@ohsu.edu
`
`Editorial, page 2105
`
`Supplemental data
`at Neurology.org
`
`ABSTRACT
`Objective: To examine the pricing trajectories in the United States of disease-modifying therapies
`(DMT) for multiple sclerosis (MS) over the last 20 years and assess the influences on rising prices.
`Methods: We estimated the trend in annual drug costs for 9 DMTs using published drug pricing
`data from 1993 to 2013. We compared changes in DMT costs to general and prescription drug
`inflation during the same period. We also compared the cost trajectories for first-generation MS
`DMTs interferon (IFN)–b-1b,
`IFN-b-1a IM, and glatiramer acetate with contemporaneously
`approved biologic tumor necrosis factor (TNF) inhibitors.
`Results: First-generation DMTs, originally costing $8,000 to $11,000, now cost about $60,000 per
`year. Costs for these agents have increased annually at rates 5 to 7 times higher than prescription
`drug inflation. Newer DMTs commonly entered the market with a cost 25%–60% higher than
`existing DMTs. Significant increases in the cost trajectory of the first-generation DMTs occurred
`following the Food and Drug Administration approvals of IFN-b-1a SC (2002) and natalizumab
`(reintroduced 2006) and remained high following introduction of fingolimod (2010). Similar changes
`did not occur with TNF inhibitor biologics during these time intervals. DMT costs in the United States
`currently are 2 to 3 times higher than in other comparable countries.
`Conclusions: MS DMT costs have accelerated at rates well beyond inflation and substantially above
`rates observed for drugs in a similar biologic class. There is an urgent need for clinicians, payers, and
`manufacturers in the United States to confront
`the soaring costs of DMTs. Neurology®
`2015;84:2185–2192
`
`GLOSSARY
`AWP 5 average wholesale price; DMT 5 disease-modifying therapy; FDA 5 Food and Drug Administration; IFN 5 interferon;
`MS 5 multiple sclerosis; QALY 5 quality-adjusted life-year; TNF 5 tumor necrosis factor; VA 5 Veterans Affairs; WAC 5
`wholesale acquisition cost.
`
`The landscape of multiple sclerosis (MS) treatment has changed dramatically over the last decade. As
`of November 2014, 12 disease-modifying therapies (DMTs) for MS have been approved by the US
`Food and Drug Administration (FDA). Despite the availability of more treatment options, costs for
`all MS DMTs have increased sharply. Between 2008 and 2012, US DMTs sales doubled from $4
`billion to nearly $9 billion annually.1 In 2004, the average annual DMT cost per person was
`$16,050, accounting for half of all direct medical costs for patients with MS.2 Currently, the average
`annual cost for interferon (IFN)–b-1b (Betaseron; Bayer HealthCare Pharmaceuticals, Whippany,
`NJ) is over $60,000.3 Although high drug costs are a hallmark of specialty pharmaceutical classes,
`such as DMTs, the unexplained escalation in costs for older, first-generation MS therapies such as
`IFN-b-1b, IFN-b-1a IM (Avonex; Biogen Idec, Cambridge, MA), and glatiramer acetate (Copax-
`one; Teva Pharmaceuticals, North Wales, PA) has caused concern in the neurology community.4,5
`The objectives of this study were to (1) investigate our impression that costs for all MS DMTs
`have increased dramatically since 2002, (2) explore the relationship between the release of newer
`
`From the College of Pharmacy (D.M.H., S.M.A.), Oregon State University/Oregon Health & Science University; and the Department of Neurology
`(D.N.B., R.H.W.), Oregon Health & Science University, Multiple Sclerosis Center of Excellence West, Veterans Affairs Medical Center, Portland.
`Go to Neurology.org for full disclosures. Funding information and disclosures deemed relevant by the authors, if any, are provided at the end of the article.
`The Article Processing Charge was paid by OHSU Department of Neurology.
`This is an open access article distributed under the terms of the Creative Commons Attribution-Noncommercial No Derivative 3.0 License, which
`permits downloading and sharing the work provided it is properly cited. The work cannot be changed in any way or used commercially.
`
`© 2015 American Academy of Neurology
`2185
`ª 2015 American Academy of Neurology. Unauthorized reproduction of this article is prohibited.
`
`Page 1 of 10
`
`

`

`DMTs and the trend in costs for older DMTs,
`and (3) compare DMT costs in the United
`States to those in other countries. This study
`suggests the need for the neurology commu-
`nity to advocate for changes in the pricing of
`MS treatments.
`
`METHODS Although the FDA had approved 12 DMTs for
`MS as of November 2014, we did not include 3 in our analysis.
`Cost data were not available at the time of our analysis for the 2
`most recently approved DMTs: peginterferon-b-1a (Plegridy;
`Biogen Idec) and alemtuzumab (Lemtrada; Genzyme, Cambridge,
`MA). Mitoxantrone (generic, multiple manufacturers), approved
`in 2000 for MS, was excluded because it is much less commonly
`used to treat MS due to safety concerns.6,7 For the remaining 9
`FDA-approved drugs, we
`computed the
`average
`annual
`acquisition costs for each month from July 1993 (approval date
`for
`IFN-b-1b)
`through December 2013. We
`estimated
`acquisition costs using average wholesale price (AWP) published
`by First DataBank.3 Although most third-party payers have moved
`away from AWP-based reimbursement formulas,
`it was the
`prevailing methodology for most of
`the study period and
`provides a consistent measure of price for comparisons of
`change over the past 20 years.8 AWP reporting was phased out
`in 2011 and acquisition costs were then estimated using wholesale
`acquisition cost (WAC) with the conversion AWP 5 1.2 3
`WAC.8 We applied a 12% discount to AWP, the median
`discount that state Medicaid programs reimburse pharmacies, to
`estimate the amount paid to pharmacies by third-party payers.9
`We then computed the effective percentage increase in annual
`costs and compared this to changes in the consumer price index
`for prescription drugs and all consumer goods and services (general
`inflation) over the same period using data from the US Bureau of
`Labor Statistics.10
`Next, we compared the median annual cost trends for first-
`generation MS DMTs IFN-b-1b, IFN-b-1a IM, and glatiramer
`acetate to the contemporaneously approved biologic tumor
`necrosis factor (TNF) inhibitors etanercept (Enbrel; Amgen,
`Thousand Oaks, CA) and adalimumab (Humira; AbbVie, North
`Chicago, IL) using segmented regression analyses.11 We com-
`puted annual costs for TNF inhibitors using the same approach
`described for the MS drugs based on FDA-approved doses for
`rheumatoid arthritis. Annual costs were estimated quarterly
`beginning the fourth quarter of 1998 (the quarter etanercept
`was approved) until the fourth quarter of 2013 (61 total quarters).
`Four major periods of change were examined: (1) a baseline
`period preceding the approval of IFN-b-1a SC (Rebif; EMD
`Serono, Rockland, MA) (fourth quarter 1998 to first quarter
`2002); (2) a period from the approval of IFN-b-1a SC to the
`re-introduction of natalizumab (Tysabri; Biogen Idec) (second
`quarter 2002 to second quarter 2006); (3) a period from the
`re-introduction of natalizumab to the approval of fingolimod
`(Gilenya; Novartis Pharmaceuticals, East Hanover, NJ) (third
`quarter 2006 to third quarter 2010); and (4) a period following
`the approval of fingolimod (fourth quarter 2010 to fourth quarter
`2013). We selected the re-introduction date for natalizumab
`(June 2006–second quarter 2006) because it was only available
`for 2 months before marketing was suspended in 2005 to evaluate
`the risks of progressive multifocal leukoencephalopathy.
`The general form of the segmented regression model (without
`interaction parameterization) was log(Yt) 5 b0 1 b1 3 Timet 1
`b2 3 Rebift 1 b3 3 Time Rebift 1 b4 3 Tysabrit 1 b5 3 Time
`Tysabrit 1 b6 3 Gilenyat 1 b7 3 Time Gilenyat 1 b8 3
`
`DrugType 1 et. We log-transformed the dependent variable
`annual cost because initial plots of quarterly data were nonlinear.
`Because of this, the estimated b-coefficients are interpreted as a
`percent change.12 For each period, we report the quarterly per-
`centage change (trend) in median costs for DMTs and TNF
`inhibitors individually and relative to each other. Statistical anal-
`yses were performed using PROC AUTOREG in SAS version 9.2
`(SAS Institute, Cary, NC).
`Finally, we compared the most recent annual cost of therapy for
`each DMT to US dollar-adjusted costs from the United Kingdom,
`Canada, and Australia, a convenience sample of developed coun-
`tries with accessible cost data. The following conversion rates (as
`of April 2, 2014) for cost data were applied: Canada (0.91), United
`Kingdom (1.66), Australia (0.92). In the United Kingdom, the
`National Health Service publishes net prices in the British National
`Formulary.13 Canadian drug costs were estimated using drug
`benefit prices published through Ontario’s Exceptional Access
`Program, although costs can vary by province.14 Drug costs in
`Australia are listed in an online compendium of the Australian
`Pharmaceutical Benefit Scheme and represent agreed-upon pri-
`ces paid by the Commonwealth of Australia.15 We also examined
`costs paid by the US Department of Veterans Affairs (VA)
`because of their ability to negotiate discounts directly with man-
`ufacturers.16 VA costs were estimated using Big Four pricing (or
`Federal Supply Schedule price if no Big Four price was listed)
`available through the online VA National Formulary.16 For com-
`parative purposes, we further adjusted US costs to account for
`federally mandated rebates paid to the Medicaid program.17,18
`Appendix e-1 on the Neurology® Web site at Neurology.org
`contains details of our cost and statistical modeling methods.
`
`RESULTS First-generation DMTs IFN-b-1b, IFN-
`b-1a IM, and glatiramer acetate were introduced with
`annual
`acquisition costs between $8,292 and
`$11,532 (table 1). Over subsequent decades, costs
`for these DMTs rose on average 21%–36% annually.
`Costs of the most recently approved oral agents fin-
`golimod, teriflunomide (Aubagio; Genzyme), and
`dimethyl
`fumarate (Tecfidera; Biogen Idec) have
`increased 8%–17% annually since their approval. In
`contrast, general and prescription drug inflation only
`increased 3%–5% per year during the same period.
`The acquisition cost of IFN-b-1b, the oldest DMT
`on the market, is now $61,529 a year, roughly 6 times
`its original cost. The cost trajectories for IFN-b-1a
`IM and glatiramer acetate were similar. Without
`accounting for any potential manufacturer rebates,
`there are currently no MS DMTs with an annual cost
`less than $50,000 per year.
`the first-
`The dramatic increase in costs of
`generation DMTs was not uniform over the last 20
`years. Costs for first-generation DMTs increased mod-
`estly between 1993 and 2001 (figure 1). IFN-b-1a SC,
`a recombinant IFN-b similar to IFN-b-1b and IFN-
`b-1a IM, entered the market in March 2002 with an
`annual cost of $15,262, 30%–60% higher than the 3
`other available DMTs. The annual cost of natalizu-
`mab, the first monoclonal antibody for MS, at initial
`release (November 2004) was $25,850, over 50%
`higher than IFN-b-1b, IFN-b-1a IM, and glatiramer
`
`2186
`
`Neurology 84 May 26, 2015
`ª 2015 American Academy of Neurology. Unauthorized reproduction of this article is prohibited.
`
`Page 2 of 10
`
`

`

`Table 1
`
`Initial (market release date) and current annual costs (December 2013) of multiple sclerosis disease-modifying therapies in the
`United States relative to consumer price index changes during the same period
`
`Interferon-b-1ba (Betaseron)
`
`Interferon-b-1a IM (Avonex)
`
`US approval
`date
`
`7/23/1993
`
`5/17/1996
`
`Glatiramer acetate (Copaxone)
`
`12/20/1996
`
`Interferon-b-1a SC (Rebif)
`
`3/7/2002
`
`Natalizumab (Tysabri)b
`
`11/23/2004b
`
`Interferon-b-1ba (Extavia)
`
`Fingolimod (Gilenya)
`
`Teriflunomide (Aubagio)
`
`8/14/2009
`
`9/21/2010
`
`9/12/2012
`
`Dimethyl fumarate (Tecfidera)
`
`3/27/2013
`
`Approval date,
`annual cost
`
`2013
`annual cost
`
`Annualized
`change, %
`
`Annualized change
`in CPI prescription
`drugs, %
`
`Annualized change in
`CPI all goods and
`services, %
`
`$11,532
`
`$8,723
`
`$8,292
`
`$15,262
`
`$25,850
`
`$32,826
`
`$50,775
`
`$47,651
`
`$57,816
`
`$61,529
`
`$62,394
`
`$59,158
`
`$66,394
`
`$64,233
`
`$51,427
`
`$63,806
`
`$57,553
`
`$63,315
`
`21.0
`
`34.6
`
`35.7
`
`28.1
`
`16.2
`
`13.0
`
`7.9
`
`16.8
`
`13.8
`
`4.8
`
`4.7
`
`4.7
`
`3.6
`
`3.3
`
`2.9
`
`2.4
`
`0.0
`
`1.0
`
`3.0
`
`2.8
`
`2.8
`
`2.7
`
`2.4
`
`2.0
`
`2.2
`
`1.1
`
`1.3
`
`Abbreviation: CPI 5 consumer price index.
`CPI data source: http://www.bls.gov/cpi/data.htm.
`a Interferon-b-1b is marketed as both Betaseron (Bayer) and Extavia (Novartis).
`b Natalizumab was withdrawn from the market in February 2005 to evaluate progressive multifocal leukoencephalopathy risk and was reintroduced in
`June 2006.
`
`acetate. Similarly, fingolimod entered the market in
`2010 with an annual cost of $50,775, over 25% higher
`than IFN-b-1b, IFN-b-1a IM, and glatiramer acetate.
`We sought to determine whether the introduction
`of new MS DMTs influenced the rate of increase in
`cost for the first-generation DMTs and, as a compar-
`ison, used changes in the cost of TNF inhibitors
`(figure 2). During the baseline period of 1998–
`2001, costs for DMTs and TNF inhibitors increased
`significantly by 1.4% (p , 0.0001) and 2.2% (p ,
`0.0001) per quarter, respectively. During this period,
`the quarterly rate of increase was significantly higher
`for the TNF inhibitors (p 5 0.0001). Following the
`introduction of IFN-b-1a SC, the trend in costs for
`first-generation DMTs
`increased significantly to
`3.3% per quarter (p , 0.0001 for change in trend).
`In contrast, the rate of growth for the TNF inhibitors
`decreased significantly to 1.3% per quarter (p 5
`0.0001 for change in trend) and was statistically lower
`than the DMT trend change (p , 0.0001 for change
`in trend interaction). The re-introduction of natali-
`zumab in 2006 was followed by another significant
`increase in the trend of first-generation DMT costs to
`4.6% per quarter (p , 0.0001 for change in trend).
`During the same period, there was no significant
`change in the trend for the TNF inhibitors and the
`difference between the 2 classes was statistically sig-
`nificant (p , 0.0001 for change in trend interaction).
`Fingolimod was approved in the third quarter of
`2010. Although growth in first-generation DMT
`costs moderated to 3.7% per quarter, it remained
`significantly above the quarterly growth rate for the
`TNF inhibitors trend, which increased to 3.1% per
`quarter (p 5 0.0183 for period trend interaction).
`
`After accounting for federally mandated Medicaid
`rebates, annual costs for DMTs in the United States
`ranged from $41,078 for IFN-b-1b (Extavia; Novar-
`tis Pharmaceuticals) to $53,032 for IFN-b-1a SC.
`Annual DMT costs were often more than 70% lower
`in the 3 comparator countries (table 2). Costs for the
`VA were, on average, 36% less than those paid by
`Medicaid, but ranged from a nearly 80% discount for
`IFN-b-1b to a 19% discount for fingolimod.
`
`DISCUSSION This study documents the alarming
`rise in costs for MS DMTs in the United States since
`2002. While we would expect that legitimate advan-
`ces, such as the development of oral DMTs, might
`garner higher prices, the escalation in costs for first-
`generation agents that have been available for up to
`2 decades is puzzling. Our analyses show that cost
`increases
`for
`IFN-b-1b,
`IFN-b-1a
`IM,
`and
`glatiramer acetate were many times higher than
`prescription drug inflation. First-generation MS
`DMT costs
`substantially outpaced those for a
`contemporaneous class of TNF inhibitor biologic
`agents, accelerating upwards following introduction
`of each new MS DMT. These results suggest that
`the dramatic increases in the costs of
`the first-
`generation DMTs may have been a response to the
`introduction of competing treatments with higher
`prices. The reasons for this are unclear. Classic
`economic theory asserts that competition should
`reduce or stabilize costs for the consumer as more
`products enter
`the market. However, our data
`suggest prices of existing DMTs paradoxically rise,
`quickly matching prices
`set by
`the newest
`competitor. Costs of MS DMTs are substantially
`
`Neurology 84 May 26, 2015
`2187
`ª 2015 American Academy of Neurology. Unauthorized reproduction of this article is prohibited.
`
`Page 3 of 10
`
`

`

`Figure 1
`
`Estimated annual costs of multiple sclerosis disease-modifying therapies in the United States from
`1993 to 2013
`
`Annual costs estimated from average wholesale prices (AWP), or wholesale acquisition costs if AWP not reported, and dis-
`counted 12%. IFN 5 interferon.
`
`higher in the US market than in the other countries
`we highlight, suggesting the dramatic increases in
`costs in the United States are not demanded by
`increases in manufacturing costs or other changes
`out of the control of the pharmaceutical industry.
`Why the costs of MS DMTs in the United States
`have risen so dramatically is uncertain. However, the
`simplest explanation is that pharmaceutical compa-
`nies raise prices of new and old MS DMTs in the
`
`United States to increase profits and our health care
`system puts no limits on these increases. Unlike most
`industrialized countries, the United States lacks a
`national health care system to negotiate prices directly
`with the pharmaceutical industry. The US Medicare
`program, the largest single-payer health care system
`in the United States, is legally prohibited from nego-
`tiating drug prices directly with the pharmaceutical
`industry.19 Pharmaceutical pricing and purchasing is
`
`2188
`
`Neurology 84 May 26, 2015
`ª 2015 American Academy of Neurology. Unauthorized reproduction of this article is prohibited.
`
`Page 4 of 10
`
`

`

`Figure 2
`
`Segmented time series of median annual cost in the United States for first-generation multiple
`sclerosis disease-modifying therapies relative to tumor necrosis factor inhibitors
`
`Disease-modifying therapies (DMTs) are interferon (IFN)–b-1b, IFN-b-1a IM, and glatiramer acetate and tumor necrosis
`factor (TNF) inhibitors are etanercept and adalimumab. Trends are % change in median annual cost per quarter. With the
`exception of the first (baseline) period, p values reflect changes in trend from one period to the next. Complete model results
`are reported in appendix e-1.
`
`complex and one of the least transparent transactions
`in health care. Government-issued patent monopo-
`lies, third-party payers, lack of reimbursement trans-
`parency, and imperfect clinical
`information all
`contribute to a seemingly dysfunctional marketplace
`where expanded choice has led to higher, rather
`than lower, prices. Some argue that recent trends in
`industry pricing suggest collusive behavior between
`
`manufacturers, although this is challenging to prove
`with price data alone.20 Similar to the MS DMTs,
`noncompetitive markets have produced rapid and
`coordinated rises in unit prices for drugs used to treat
`hemophilia.21,22 Our data add to a body of literature
`suggesting that branded pharmaceuticals in the same
`therapeutic class likely compete against each other on
`aspects other than price.23–25
`
`Neurology 84 May 26, 2015
`2189
`ª 2015 American Academy of Neurology. Unauthorized reproduction of this article is prohibited.
`
`Page 5 of 10
`
`

`

`Table 2
`
`Annual costs of multiple sclerosis disease-modifying therapies in the United States relative to cost
`estimates from other countries and the US Department of Veterans Affairs
`
`US Medicaida
`
`US VAb
`
`Interferon-b-1b (Betaseron)
`
`Interferon-b-1a IM (Avonex)
`
`Glatiramer acetate (Copaxone)
`
`Interferon-b-1a SC (Rebif)
`
`Natalizumab (Tysabri)
`
`Interferon-b-1b (Extavia)
`
`Fingolimod (Gilenya)
`
`Teriflunomide (Aubagio)
`
`Dimethyl fumarate (Tecfidera)
`
`$49,146
`
`$49,837
`
`$47,253
`
`$53,032
`
`$51,306
`
`$41,078
`
`$50,965
`
`$45,970
`
`$50,573
`
`$10,583
`
`$30,273
`
`$34,635
`
`$30,451
`
`$36,485
`
`$22,821
`
`$41,269
`
`$35,357
`
`$40,704
`
`Canadac
`
`$18,218
`
`$18,641
`
`$14,779
`
`$22,267
`
`$33,651
`
`$16,456
`
`$28,287
`
`Price pendingf
`
`$21,510
`
`Australiad
`
`UKe
`
`$11,174
`
`$12,641
`
`$13,107
`
`$12,641
`
`$22,505
`
`$11,174
`
`$27,742
`
`$22,154
`
`$22,547
`
`$12,018
`
`$14,113
`
`$11,124
`
`$17,550
`
`$22,510
`
`$12,018
`
`$31,810
`
`$22,458
`
`$29,711g
`
`Abbreviation: UK 5 United Kingdom; VA 5 Veterans Affairs.
`a Acquisition cost estimate as of December 2013 includes 23% Medicaid rebate.
`b Source: Available at: www.pbm.va.gov/PBM/PharmaceuticalPrices.asp (big 4 pricing listed for drugs except Rebif, where
`federal supply schedule pricing is listed). Accessed August 11, 2014.
`c Source: Available at: www.health.gov.on.ca/en/pro/programs/drugs/odbf/odbf_except_access.aspx. Accessed August 21,
`2014.
`d Source: Available at: http://www.pbs.gov.au/pbs/home. Accessed August 21, 2014.
`e Source: British National Formulary. 66th ed. UK: BMJ Publishing Group; 2013–2014.
`f Funding decision under review at Ontario Public Drug Programs.
`g Source: Available at: www.mims.co.uk/news/1281928/Depth-Tecfidera-dimethyl-fumarate-new-oral-MS-treatment. Ac-
`cessed August 21, 2014.
`
`It is also unclear why the MS DMT pricing trajec-
`tory is so different from that of the TNF inhibitors.
`One possible explanation is that TNF inhibitors face
`significant price competition from generic drugs in
`most therapeutic applications (e.g., generic disease-
`modifying anti-rheumatic drugs such as methotrexate
`and hydroxychloroquine). Although the evidence is
`mixed, there are some data suggesting that generic
`drug entry may slow the growth of competing
`branded drug prices.25
`Generic drugs are one of the most effective checks
`on rising drug costs in the United States.26 However,
`most MS DMTs are complex biologic agents and not
`exposed to price competition from generics. The Bio-
`logics Price Competition and Innovation Act of 2009
`was intended to develop a generic pathway for bio-
`logics through the approval of biosimilars. Because
`the evidentiary requirement for a biosimilar is sub-
`stantially higher than for small-molecule agents, bio-
`similar applications have been slow to emerge.27
`Historically, the pharmaceutical industry has fought
`efforts
`to undermine their branded monopolies
`through the traditional Hatch-Waxman generic drug
`pathway.28 Teva Pharmaceuticals, which manufac-
`tures a variety of generic small-molecule drugs, has
`aggressively pursued several strategies to mitigate
`potential financial losses following the expiration of
`its patents on glatiramer acetate in May 2014. Patent
`infringement
`lawsuits brought against Momenta
`Pharmaceuticals by Teva threaten to delay the release
`of a generic version of glatiramer acetate.29
`In
`
`addition, through a process commonly known as
`evergreening, Teva has been actively converting cur-
`rent glatiramer acetate patients to a recently approved
`higher dose 3 times a week formulation in an effort to
`protect their franchise.4,30,31 Barriers and regulatory
`loopholes make economic relief in the form of generic
`competition unlikely in the near future.
`The primary limitation to our analysis concerns
`the estimation of drug costs. As previously noted,
`third-party reimbursement of pharmaceuticals is not
`transparent, and actual costs are often driven by pro-
`prietary contractual discounts and rebates. Therefore,
`the list price, commonly estimated by AWP or WAC,
`frequently does not reflect the ultimate cost to the
`payer net these discounts and rebates. With a few ex-
`ceptions (most notably the VA), the US Medicaid
`program is legally entitled to receive best prices on
`medications in the United States. Although we have
`attempted to estimate net costs to a typical state Med-
`icaid program by adjusting for average rebates, the
`actual rebate amounts are not publicly available and
`therefore the actual costs are not known.
`The high cost of MS DMTs in the United States is
`producing a cascade of negative effects upon patients
`with MS and their medical care. In what appears to be
`a direct response to the high cost of these drugs, insur-
`ance carriers have developed tiered formularies requir-
`ing step-wise DMT trials, with the tiers apparently
`determined by preferential pricing contracts rather
`than any objective analysis of risks and benefits of
`the various therapies.32,33 In our experience, initial
`
`2190
`
`Neurology 84 May 26, 2015
`ª 2015 American Academy of Neurology. Unauthorized reproduction of this article is prohibited.
`
`Page 6 of 10
`
`

`

`denials of coverage for DMTs for both new and es-
`tablished patients are occurring much more fre-
`quently now than in years past, requiring multiple
`approval steps for patients and their neurologists.
`Our results shed light on systemic problems with
`pharmaceutical pricing in the United States, with rele-
`vance beyond drugs for MS. The escalating costs of spe-
`cialty pharmaceuticals for conditions such as MS,
`cancer, and hepatitis C have been a growing concern
`among health care payers, policy-makers, clinicians,
`and patients.34,35 Recently,
`some in the medical
`community have begun to question the ethics of our
`current
`free-market drug pricing system and to
`acknowledge that exorbitant pricing for drugs is a major
`burden on our already stressed health care system.20,34,36
`While it is important for neurologists and MS advocacy
`groups to work on maintaining access for patients to all
`the MS DMTs, it may be even more critical to address
`DMT costs as a root cause of the access issues.
`Recent cost-utility studies suggest the incremen-
`tal cost per quality-adjusted life-year (QALY) for MS
`DMTs relative to supportive care are high, with one
`analysis reporting estimates in excess of $900,000
`per QALY, several fold higher than traditionally
`accepted thresholds of what is believed to be cost-
`effective.37–39 One cost-effectiveness study found
`that the cost to prevent an MS relapse exceeded
`$80,000 for several IFNs and glatiramer acetate.40
`Dramatic increases in the cost of MS DMTs without
`significant improvements in efficacy will only fur-
`ther reduce the cost-effectiveness of these drugs.
`Sensitivity analyses suggest that incremental cost-
`effectiveness ratios for MS DMTs would approach
`accepted thresholds if US drug costs were reduced to
`levels similar to the United Kingdom.38 The prices
`for MS drugs in the United Kingdom, Canada, and
`Australia, and the more controlled drug costs in large
`integrated health care systems, such as the VA, sug-
`gest that solutions are possible.
`industry provides
`A flourishing pharmaceutical
`invaluable benefit to society by developing new drugs
`to combat disease and alleviate suffering. The success
`of the pharmaceutical industry in bringing new ther-
`apies to market for the treatment of MS has improved
`the care of people with MS. However, the unbridled
`rise in the cost of MS drugs has resulted in large profit
`margins and the creation of an industry “too big to
`fail.” It is time for neurologists to begin a national
`conversation about unsustainable and suffocating
`drug costs for people with MS—otherwise we are
`failing our patients and society.
`
`AUTHOR CONTRIBUTIONS
`Daniel M. Hartung: contributed to study design, acquired data, super-
`vised statistical analysis, interpreted the results, drafted and critically
`revised the manuscript. Dennis N. Bourdette: conceived the study
`question, contributed to study design and interpretation of results,
`
`and critically revised the manuscript. Sharia M. Ahmed: contributed
`to study design, statistical analysis, interpretation of results, and editing
`of manuscript. Ruth H. Whitham: conceived the study question, con-
`tributed to study design and interpretation of results, drafted and crit-
`ically revised the manuscript.
`
`ACKNOWLEDGMENT
`The authors thank Sheila Markwardt, BS, for assistance with statistical
`analysis.
`
`STUDY FUNDING
`No targeted funding reported.
`
`DISCLOSURE
`D. Hartung reports no disclosures. D. Bourdette has served as a consul-
`tant for Teva Neurosciences and Biogen Idec and has had research grants
`from the Department of Veterans Affairs, National MS Society, and
`NIH. S. Ahmed reports no disclosures relevant to the manuscript. R.
`Whitham reports serving on the Independent Data Monitoring Commit-
`tee for a clinical trial sponsored by Chugai Pharmaceutical Co. Go to
`Neurology.org for full disclosures.
`
`Received August 25, 2014. Accepted in final form January 15, 2015.
`
`4.
`
`3.
`
`REFERENCES
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`IMS Health. Top Therapeutic Classes by Non-discounted
`Spending (U.S.). Available at: http