Arkansas settles claims it withheld Vertex's Kalydeco on price

Arkansas Medicaid officials have wrapped up a legal dispute over Vertex's ($VRTX) cystic fibrosis drug Kalydeco, settling to resolve claims the state denied patients the treatment based on its high price tag. And while it's good news for the drugmaker, this may be just the first in a series of cost-control battles to follow.

Three patients brought the suit last year, alleging Arkansas had for two years violated their civil rights by denying them the $311,000 orphan drug, The Wall Street Journal reports. While all three met the FDA's eligibility criteria, state officials had tightened the reins on the pricey treatment's use, adding a requirement that patients couldn't receive the drug unless their health had deteriorated after taking older treatments.

As part of the settlement, Arkansas is revising its criteria for renewing prescriptions, making it easier for patients to maintain their access to the CF-fighter. While patients seeking prescription reauthorization were previously required to prove Kalydeco improved their lung function, helped them gain weight or cut down their hospitalizations, under the new policy, patients only have to show upside in one of these measures or provide other evidence of clinical benefit, the WSJ says.

But Vertex may have more hurdles headed its way with the FDA due for a decision on a new combo, Kalydeco plus lumacaftor, this summer. The tandem could be a game-changer for Vertex, which is seeking approval in patients with the F508del mutation--a population vastly bigger than Kalydeco's current patient pool (think 8,500 eligible U.S. patients versus Kalydeco's 1,650).

But that fact--and the fact that its effect on lung function has been about a quarter to a third of the benefit shown with Kalydeco, according to Sanford Bernstein analyst Geoffrey Porges--could spark a fresh round of price criticism, he predicts.

"There will be an enormous amount of complaining and frustration on the part of payers," he told the WSJ. "Our expectation is that the ivacaftor-lumacaftor combination will be this year's headline battle."

Stuart Arbuckle

The pharma industry has seen plenty of payer pushback and creative cost-controlling since the arrival of Gilead's ($GILD) ultra-pricey next-gen hep C star Sovaldi, and Vertex has taken note. On last week's Q4 conference call, Chief Commercial officer Stuart Arbuckle seemed to be prepping payers for the blow, telling them the company was "investing in disease education to help payers estimate the number of eligible patients they may have in their plans."

With the potential on the line to more than double CF drug sales to $1.1 billion this year, the Massachusetts company isn't stopping there, either. The drugmaker will also scale up its patient services team ahead of its July 5 PDUFA date so it "can help providers and patients navigate the reimbursement process and also help with patient education and compliance," Arbuckle said.

- read the WSJ story (sub. req.)

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