How Alexion is Making So Much Cash With a Drug That Treats Less Than 11,000 Patients
May 24, 2017
By Mark Terry, BioSpace.com Breaking News Staff
How do you put a price on a miracle? It’s not easy, and not without controversy and unintended consequences, as it turns out.
The overall topic is drugs for so-called Orphan Diseases, rare or ultra-rare diseases. If there are only thousands of patients for an illness, why would a pharmaceutical company invest billions of dollars in developing a drug for such a tiny market? The secondary topic, as explored in a lengthy Bloomberg article focuses on New Haven, Conn.-based Alexion Pharmaceuticals and its drug Soliris, used to treat a rare blood disease called atypical hemolytic-uremic syndrome (aHUS), which affects about 1 in 500,000 people annually.
Soliris is priced from $500,000 to $700,000 for a year’s treatment.
Alexion has been controversial for a number of reasons, mostly related to Soliris and pricing, but it’s also run into other problems. In May 2015, it received a subpoena regarding an investigation by the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) asking for information related to grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA) in several countries.
There were resultant internal investigations based on the whistleblower allegations, and the company’s chief executive officer, David Hallal, and chief financial officer, Vikas Sinha, were forced out, to be replaced by interim chief executive David Brennan. Brennan recently stepped down to be replaced by Ludwig Hantson, who seems to be shaking up the company’s executive suite. And just this month, Brazilian authorities raided the company’s offices in Sao Paulo as part of an investigation into its sales practices.
There are about 7,000 orphan diseases. In 1983, Congress passed the Orphan Drug Act, which gave pharmaceutical companies federal grants, tax incentives, and marketing exclusivity for seven years. Since then, more than 600 orphan drugs have been approved. For the most part—and despite the current political sniping over drug pricing—the government and insurers have gone along with the high prices as part of the incentives, and as part of an understanding that they are necessary for drugmakers to recoup their expenses when the markets are so small.
However, one of the unintended consequences, and what has put Alexion Pharmaceuticals and Soliris in the crosshairs, is the company’s sales practices. Which is to say—high pressure.
The scenario is this: what if the doctor isn’t convinced that the patient actually has the rare disease? They are not easily diagnosed, and in some cases, the physicians will prescribe a medication and see what happens. If the patient doesn’t respond, then they try something else.
What Alexion is reported to have done was pressure the physicians and the patients to stay on the drug—at half-a-million bucks or more a year. One report was by Kerry Owens, a kidney specialist in Oklahoma City. Bloomberg writes that Owens received a call from an Alexion sales rep. “The rep was calling to argue with the treatment plan. She pressured Owens to continue Soliris treatments, ticking off detailed information about the mother’s organs that the doctor hadn’t shared with the drugmaker. ‘How did you know that?’ Owens remembers thinking. She was monitoring the patient’s condition with seven hematologists and wasn’t swayed by the Alexion rep. ‘I was really taken aback by how bold and brash she was,” Owens says. ‘I’ve never had an experience like that—before or since.’”
And it’s not an isolated anecdote, with patients receiving similar treatment from sales reps. In many cases, the drug really is a miracle, very effective at treating patients who are otherwise untreatable. But there’s a range of symptoms, and not everyone responds to the drug.
Bloomberg wrote of Alexion, “For new arrivals at the company, the sales culture was intense. Managers drilled into them the need to question doctors, many of whom had never seen patients with these rare diseases, and to ‘transform no to yes,’ recalls a sales manager who left in 2016. If doctors didn’t think patients were sick enough to warrant a drug with this price tag, the salespeople were instructed to warn the doctor that his patient could die.”
Alexion was also acquiring test data from major clinical diagnostic companies in order to identify potential patients. In addition, they had nurses working alongside the sales staff, which is unusual in the industry because of potential conflicts of interest.
Many of the laboratories are reevaluating their policies on selling data, and Alexion is reportedly trying to shift its tone from the top down. Although there’s plenty of rhetoric by U.S. politicians about drug pricing, few have the stomach or political will to tackle the Orphan Drug Act, and even if they did, it’s not a cut-and-dried topic. No company is going to take a shot at developing a drug for a limited number of patients if they can’t recoup their costs. They’re businesses and most are publicly-traded companies answerable to shareholders.
But the Alexion story, which appears to be continuing to unfold, is a good example of the unintended consequences of putting a price on miracles.