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." (More cystic fibrosis stories.)