Company Sold $1.3B of a Drug That's Not Hugely Effective

Only 28,000 of the planet's 7 billion people are eligible to take the cystic fibrosis drug Orkambi. And yet that tiny population enabled drugmaker Vertex to make roughly $1.3 billion in sales off the product. How does that math work out? The annual price of the drug is $272,000 a year, a figure perhaps even more eye-popping when the drug's effectiveness is factored in. In a piece that focuses on how New York state is using a new law to push back against that sticker price, the New York Times explains the drug's positioning: 2012 saw the approval of the first drug that tries "to counteract the genetic defect that causes cystic fibrosis." But Kalydeco can only be used by a small subset of patients with a specific genetic mutation.

When Orkambi followed in 2015, it was hailed for its ability to treat nearly 1 of every 2 patients—except it's not as effective. Medicaid must cover almost all FDA-approved drugs; per federal law, state programs get a minimum 23% rebate. The Times explains New York last year passed a law that enables it to ask pharma companies for a price break if the state's drug budget passes a certain threshold. New York in April determined Orkambi was one of 30 drugs whose cost effectiveness was out of whack. It sought price cuts, specifically one of about 70% off the list price for Orkambi. State officials say Vertex was the only drugmaker who didn't play ball. A rep for Vertex backs that up, saying the company plans to stick with the 23% discount it is required to pay. Read the full article for more on the cards New York has left to play and why the whole issue may soon be "moot."