Vertex Pharmaceuticals ($VRTX) has been charging ahead with its cystic fibrosis med Orkambi, but now the company is facing a roadblock in the U.K. The country's National Institute for Health and Care Excellence (NICE) recommended against funding the drug, saying that it did not demonstrate enough benefits to patients to justify its high cost.
The U.K. cost gatekeeper in draft guidance said that Orkambi is pricier than the current standard of care, and therefore it isn't a "cost-effective use of NHS resources," NICE said in a statement. The agency cited costs of about £104,000 ($147,000) per patient for Orkambi, to treat individuals with an F508del mutation in their CFTR genes.
Plus, Orkambi hasn't proven itself superior to existing treatments, the agency said. The combo med helps reduce hospitalizations when patients' symptoms suddenly get worse. But Orkambi only shows "modest" benefits to lung function, a critical test of how well patients are improving, NICE said.
NICE is "disappointed" that it wasn't able to recommend the drug, Director Carole Longson said in a statement. But "the NHS is a finite resource and we can only recommend treatments for routine funding that are both clinically effective and represent good value for money," Longson said.
This isn't the first time Vertex has gotten flak over Orkambi's price. After the drug was approved in the U.S. last year, Vertex said that it would roll out a list price for the med of $259,000 per year. The number, while falling in line with analysts' expectations, roiled payers and other pricing critics.
"It's egregious," Paul Quinton, a professor of biomedical science at the University of California at San Diego, told The Boston Globe in July. "This is more than 5 times the annual salary of the average American family. How can they in good conscience charge that much?"
But Vertex is quick to point to the drug's advantages to justify its price. The med treats a broader patient population than the company's first CF treatment, Kalydeco, and it addresses the underlying causes of the disorder. Vertex also took on significant time and costs to bring the drug to market, and needs more cash for R&D to find new treatments for patients with different forms of CF, Vertex COO Stuart Arbuckle said after the drug was approved in July.
Vertex has struggled a bit recently with Orkambi. The drug brought in $220 million last year, nearly $30 million short of Street predictions. Kalydeco, whose patient pool is 5 times smaller, exceeded analysts' expectations with $630 million in 2015 sales.
Vertex CEO Jeffrey Leiden
Still, the company is counting on Orkambi to drive growth and help it maintain its independence. Strong sales for the drug could allow Vertex to resist takeover bids from deal-hungry rivals such as Gilead Sciences ($GILD) and Biogen ($BIIB) and keep enjoying life as a solo act.
"There's complete alignment in the employees, the management and the board that we can create more value for patients and we can create more value for shareholders by being independent," Vertex CEO Jeffrey Leiden said earlier this year. With Orkambi, "we have a track record that we can really point to and say, 'This is the proof of that,'" Leiden said.
- read the NICE statement
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