4 Ways A Drug Company Makes Billions Off Patients With The Rarest Diseases

Image courtesy of Michael Kappel

It’s no secret that there’s big money to be had in drugs. The cost of many pharmaceuticals has increased dramatically. But the real money makers for the drug industry aren’t necessarily the commonplace prescriptions for antibiotics of painkillers that most of us know by name; it’s the drugs that are used by very few people, who often need them to survive.

Bloomberg’s big cover story for next week is all about the ways one particular drug manufacturer makes billions of dollars annually — putting its valuation on par with the likes of HP and Yum! brands — all off a medicine that only 11,000 people in the whole world can take.

The entire deep-dive is worth a read, and covers a whole tangled web of global drug pricing shenanigans. A few key takeaways?

1. Expensive means expensive.
Soliris, a drug from Alexion Pharmaceuticals that treats two rare blood disorders, is one of the world’s highest-cost drugs, running $500,000 to $700,000 per year for a single patient.

Only about 11,000 people worldwide take Soliris, Bloomberg estimates — and yet with that tiny handful of people taking its flagship product, Alexion generated $3 billion (yes, with a B) in sales last year.

The problem is unique neither to Alexion nor this drug, Bloomberg notes, but is endemic to so-called “orphan drugs” worldwide. In the U.S., an orphan drug is one that treats a disease affecting fewer than 200,000 people in the country — roughly 0.06% of Americans.

For another example, Bloomberg points to points to Spinraza, a muscle disease drug introduced in 2016 by manufacturer Biogen, that goes for $750,000 for the first year. The average cost of an orphan drug is about $136,000 per year — a number that’s gone up by 38% since 2010. (So only seven years ago, it would have been barely $100,000.)

3. Your testing lab sells your results to drug companies.
Bloomberg’s story starts out with a doctor in Oklahoma who was “stunned” to receive a call to her mobile phone in 2015. It was from a sales rep at Alexion, who wanted to know why the doctor had taken her patient off Soliris and demanding to put her back on.

But how does Alexion know in the first place who’s treating patients with the rare disorders its drug can manage? From your lab work.

Both regional and national testing labs — including biggies LabCorp, Quest, and even the Mayo Clinic — have deals to provide patient test data to Alexion, Bloomberg reports. Those reports have names scrubbed, but may include a veritable treasure trove of other data including the patient’s age, gender, and ZIP code, and the name and work information of the doctor ordering the test. Given that information — and how few people take some of these drugs — it could be quite easy to figure out a patient’s identity.

(None of the labs Bloomberg spoke with would confirm or deny whether they shared testing data with Alexion; Quest Diagnostics and Mayo both said that their data-sharing contracts are confidential.)

2. Your nurse team might report to the sales team.
Folks who take specialty drugs — high-cost or rare medications, especially those administered by injection or infusion — get a lot of contact from nurses who work for the drug company.

The nurses are genuinely professionals, who help patients with questions about their drug or their condition — but at Alexion, the line between health care and sales was non-existent.

Until an investigation late last year and early into this year, Bloomberg says, a team of nurses sat right beside the Alexion sales staff. Usually, in-house nurses are kept separate from the business side of things, so that they can genuinely care for patients’ best interests. But at Alexion, the nurses reported to sales, and worked under high pressure to “lock in and keep customers” because they had access to patients directly. And that, in turn, made nurses into unwilling sales reps.

If somebody had stopped taking Soliris, the managers would turn to the nurse assigned to that patient: What steps did you take to keep the patient on the drug? Have you told the patient he could get a potentially fatal blood clot if he stops? Did you steer the patient to a different doctor who might resume treatment? “It was your feet to the fire, sweat pouring down your back,” says one former longtime company nurse, who requested anonymity because she feared retaliation from the company.

The high-pressure, sales-focused culture ended up leading to a business reorganization that happened just this week.

4. Some of the price problems are an unintended consequence of a life-saving law.
Drug companies exist to generate a profit: that’s capitalism. Researching, developing, and manufacturing an entirely new drug from whole cloth is a very, very expensive undertaking that can eat years or even decades of time. So absent a strong incentive, no self-interested company is going to do it if only a few hundred people are going to buy the final product.

So in 1983, Bloomberg explains, Congress passed the Orphan Drug Act, which gave manufactures grants, tax incentives, and a seven-year exclusivity window if they’d make drugs to treat orphan diseases instead of ignoring them. In the years since, more than 600 new orphan drugs have been approved for use in the U.S.

But that’s led to a situation where drug-makers have monopolies over a group of customers with no other options except suffering and/or death. So prices go up… and up… and up, with no sign of stopping anytime soon.