- Vertex initiated the first price hike for one of its products since 2013 on Saturday, increasing the cost of rare disease drug Orkambi (ivacaftor/lumacaftor) by five percent.
- The wholesale acquisition cost for the cystic fibrosis (CF) treatment now clocks in at $20,919 for four, 28-tablet boxes, according to an investor note from Cowen & Co. analyst Phil Nadeau. Patients ages 12 and up are supposed to take Orkambi twice daily, giving it an annual bill of $251,000 before rebates.
- "Vertex has previously estimated that 60% of Orkambi's U.S. market is served by commercial payors," Nadeau said in the note. "We would anticipate the price increase to be recognized nearly immediately within this market. In the government payor segment price increases are recognized more slowly as price can typically only increase by a magnitude related to inflation."
CF affects around 30,000 people in the U.S. — well below the Food and Drug Administration's 200,000-patient-or-less benchmark that determines whether or not a disease is considered rare. Approved in 2015, Orkambi is a mixture of Vertex's other marketed product, Kalydeco, and lumacaftor, a drug that helps correct the misfolded proteins that are characteristic of CF.
Like many rare disease treatments, Orkambi comes at a high price. Though Vertex's offering doesn't break into the territory of Alexion's paroxysmal nocturnal hemoglobinuria drug Soliris (eculizumab) — which at one point was the most expensive medicine in the world — its cost remains a big pill to swallow for consumers, pharmacy benefit managers (PBMs) and payers.
Rare disease drugmakers have typically been able to price drugs at higher levels, due largely to the severity of the illnesses they targeted and few, if any, competing treatments. While that is largely still the case, there are some signs the pricing practices of the past may be facing more pushback, particularly as more drugmakers load up on rare disease drug development.
Some payers, for instance, limited coverage of Biogen and Ionis Pharma's Spinraza (nusinersen) to higher risk patients despite a broad label granted by the Food and Drug Administration. Elsewhere, Sarepta Therapeutics has run into roadblocks for its muscular dystrophy drug Exondys 51 (eteplirsen) — though resistance to covering that drug may be just as much due to its shaky clinical trial data as its cost.
Until now, Vertex had kept list prices on Orkambi steady. Even with the recent price increase, the company doesn't expect the price increase to alter out-of-pocket costs for U.S. patients, a Vertex spokesman said.
"This price increase reflects the significant investments we have made since Orkambi was first approved, including clinical studies to understand the long-term benefit of the medicine and to make it available to younger patients," the spokesman told BioPharma Dive in an email.
Vertex could catch a break for the fact that this price hike is only its second in several years. The last one was a 4.5% WAC increase for Kalydeco back in 2013, according to Cowen's Nadeau.
Looked at another way, Vertex's steady price for Orkambi and Kalydeco can also be seen as atypical in an industry that historically tended to bump up prices twice a year.
In face of ongoing criticism of rising drug prices, a number of pharmas, including Allergan, AbbVie and Novo Nordisk, have recently pledged to keep price increases below double digits each year. Others, however, have kept to business as usual. Last month, the Financial Times reported Pfizer had upped the prices for 91 of its drugs by 20% on average in 2017.
In any case, Vertex will continue to rake in money from the cystic fibrosis market. Though Orkambi had a slower-than-expected ramp up, the company expects the drug to hit blockbuster status this year. Last year, Kalydeco and Orkambi brought in $703 million and $980 million, respectively, spurring a 68% increase in Vertex's total revenues compared to 2015.
Vertex also plans to file a combination of Kalydeco (ivacaftor) and a corrector molecule dubbed tezacaftor with U.S. and European regulators sometime in the third quarter.