THE HEALTHCARE ENIGMA

Healthcare, Healthcare General Information, Healthcare Politics, Politics, Science

This example is based on fact and is designed to provide a discussion framework for looking at the complexities of managing healthcare costs.

The Disease:                                      Hemophilia A[1]

The Cause:                                          A genetic mutation resulting in the loss of a single protein, Factor VIII in the clotting protein sequence.

The Current Treatment:                IV injection of Factor VIII, purified from human plasma

The New Treatment:                      in vitro synthesized Factor VIII

Our national statistics (from the US Centers for Disease Control and Prevention) [2]:

  • Hemophilia A occurs in about 1 in 5,000 live births
  • It can occur through a genetic factor or can be acquired later in life after pregnancy, during autoimmune diseases, cancer or multiple sclerosis
  • There are currently about 20,000 people with this disease in the US.
  • All races and ethnic groups are affected.

The dangers of the disease (from the Mayo Clinic[3])

  • If you have hemophilia, you may bleed for a longer time after an injury than you would if your blood clotted normally.
  • Bleeding that occurs in deep muscle can cause your limbs to swell and may lead to damage to nerves, numbness or pain.
  • Bleeding can put pressure on joints causing severe pain. Left untreated this may cause arthritis or destruction of the joint.
  • The greatest health concern is deep bleeding inside your body, especially in your knees, ankles and elbows. That internal bleeding can damage your organs and tissues, and may be life-threatening.
  • A simple bump on the head can cause bleeding into the brain for some people. Although rare, it's one of the most serious complications that can occur. Acquired hemophilia is a rare variety of the condition that occurs when a person's immune system attacks clotting factors in the blood. It can be associated with:

Treatment

  • The main treatment for severe hemophilia involves receiving replacement of the specific clotting factor that you need, through a tube placed in a vein.
  • Treatment can be given at the hospital to combat a bleeding episode in progress.
  • Treatment can also be given prophylactically by administration at home on a regular schedule.

The costs of Treatment

  • Replacement clotting factor can be made from donated blood; however such drugs are expensive, costing an average of more than $270,000 annually per patient, according to a 2015 Express Scripts report.
  • If complications arise, that yearly price tag can soar above $1 million[4].
  • Even with those costs, there is far too little Factor VIII potentially available from human blood sources to treat hemophiliacs prophylactically.

The value proposition for Treatment

  • The hemophiliac can lead a virtually normal life without the fear of internal bleeding from scrapes or falls
  • The hospital system pressure for ER treatment is reduced
  • Hemophilia patients manage their disease and don’t develop the downstream consequences that are more expensive.                                                                                                                                                 

THE PROBLEM:

A drug company has now developed an in vitro method to produce enough Factor VIII to treat all hemophiliacs prophylactically.

  1. If they are successful in getting FDA approval, what should they charge to replace the current treatment?
    1. Drug companies spent $71.4 Billion on R&D in 2017[5]. The FDA has approved an average of 32 new drugs per year over the past 10 years[6]
    2. Thus, each new approval represents an investment of 71 $2.23 Billion.
    3. The most commonly sited academic study of drug development costs was published in 2014 by a group of researchers at Tufts. It finds an average cost of $2.6 Billion[7]
  2. What will be the costs to the system?
    1. Under current costs ($270,000 per year per patient) the total cost to treat the 20,000 hemophiliacs would be $5.4 Billion.
  3. Who should pay for those costs?

[1] Hemophilia A, also called factor VIII (FVIII) deficiency or classic hemophilia, is a genetic disorder caused by missing or defective factor VIII, a clotting protein. Although it is passed down from parents to children, about 1/3 of cases are caused by a spontaneous mutation, a change in a gene.

[2] National Hemophilia Foundation

[3] Mayo Clinic web site

[4] https://www.npr.org/sections/health-shots/2018/03/05/589469361/miracle-of-hemophilia-drugs-comes-at-a-steep-price

[5] https://www.biopharmadive.com/news/phrma-research-development-spending-industry-report/529943/

[6] https://decisionresourcesgroup.com/drg-blog/fda-roll-drug-approvals-h1-2018/

[7] https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Finds-Big-Rise.html