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News

Dec 12, 2023

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Bethany Pray serves as CCLP's Chief Legal and Policy Officer. Her areas of expertise include regulatory analysis and advocacy for Medicaid and commercial coverage, access to behavioral health benefits, Medicaid eligibility and much more.Staff page ›

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CCLP’s public comment on cystic fibrosis drug, Trikafta

by | Dec 12, 2023

Equity work, Family Economic Security, Health, Research and Policy Analysis

On December 5, CCLP’s Deputy Director, Bethany Pray, provided comments to the Prescription Drug Affordability Board on the drug, Trikafta.

 

Dear Prescription Drug Affordability Board (PDAB) Members:

I am writing today on behalf of the Colorado Center on Law and Policy, a nonprofit, state-focused advocacy organization that stands with Coloradans in the fight against poverty. We strongly support the PDAB designating Trikafta as unaffordable and identifying an upper payment limit in service of its mandate to help Coloradans afford life-saving medications.

A common-sense assessment of Trikafta, with a list price of over $300,000 per year and lifetime dependence on the drug, leaves no doubt that it is unaffordable to patients, health systems and taxpayers. Any argument that orphan status might exempt Trikafta or other drugs from consideration is misplaced, considering what I might characterize as gaming of a system initially intended to support financially-unsustainable research.

Affordability, Out of Pocket Costs and Patient Assistance Programs

Three hundred thousand dollars is not a sum that any Coloradan, with a few exceptions, could come up with out of pocket. It is understood, then, that any sufferer of cystic fibrosis among the over 250,000 Coloradans who lack coverage could not access Trikafta. Covering out of pocket costs would also be unaffordable when you consider, for example, that in Denver County, eight out of the top ten occupations do not even have wages sufficient to support a single adult caring for a preschooler and one school-age child without public supports.[i]

As Vertex offered in supporting materials, even those with coverage testified that they depend heavily on Vertex’s patient assistance program, which covers some but not all costs and can be curtailed if Vertex so chooses. Vertex offered that the majority enrolled in an assistance program had no costs in the first half of the year, but we know there are limits on those programs, meaning that the financial burden may not land until later in the year. One news outlet reported that Vertex reduced its annual copay assistance program by 80 percent earlier this year.[ii] One parent whose daughter relied on a precursor of Trikafta expressed his frustration. “‘We felt pretty helpless. We talked about what we could do financially, like if we needed to sell our house … but that would only help for so long,’ said Brickey, a hospital nurse in Santaquin, Utah, where he lives with his wife, who is a kindergarten teacher, and their three small children.” Patient assistance programs are not a solution.

Affordability, Public Programs and the Orphan Drug Designation

The impact on insurance premiums as well as public programs – for which all of us pay – is enormous, in part because the cost savings from improved health are nonetheless dwarfed by the cost of the drug.[iii] The impact on ACA premiums from just specialty drugs, of which Trikafta is one, was a substantial seven percent in one state study.[iv] People who pay premiums and the employers who share those costs face affordability issues, and all taxpayers shoulder the cost of the larger federal ACA subsidies that are a downstream effect of higher drug costs.

Coloradans are also key players in financial support for the Medicaid and Medicare programs that cover Trikafta. Of the 20 most costly Medicare-covered drugs in Part B and Part D, more than half were orphan drugs. “In fact, 16 of the 20 highest-expenditure Medicare Part B drugs— drugs that are injected or infused in physicians’ offices or outpatient settings—have been granted at least one orphan designation.”[v] Medicaid is a major payor for Trikafta, according to data from the All Payer Claims Database, and with a state budget constrained by TABOR, higher payments for medications necessarily results in cuts elsewhere. As one parent of a CF patient in England’s public health system noted, “If cystic fibrosis patients get life-extending drugs at too high a price, thousands of other patients will receive less or worse healthcare, because the same money can only be spent once.”[vi]

When Coloradans pay federal taxes, they are paying again for orphan drugs and other excessive health care costs, and entities like the PDAB have potential to help turn the tide. Almost a quarter of the federal budget goes to Medicare, Medicaid, the Children’s Health Insurance Program (or Child Health Plus, as it is called in Colorado) and ACA marketplace health insurance subsidies. In 2023, that was $1.5 trillion dollars.[vii]

Orphan drugs are particularly costly to public programs, and there is good reason for concern that drug manufacturers are inappropriately taking advantage of orphan drug designation because of related financial perks. That special orphan drug designation was created in 1983 under then-president Reagan to counter industry’s arguments that the cost of testing drugs for efficacy and safety made it unsound financially to develop drugs for small markets.[viii] Initially, orphan status was intended to apply only to drugs that would not be financially viable to develop, but that requirement was dropped within a year. Rather than creating a balance between production of drugs with broad uses and drugs for rare diseases, advantageous financial treatment for orphan drugs has led to manufacturers focusing disproportionately on rare conditions and demanding extraordinary prices.

When the orphan designation is made, manufacturers get significant financial incentives: a tax credit equaling 25 percent of qualifying clinical trial costs – which the board should keep in mind when reviewing manufacturers’ description of the costs of doing clinical trials – as well as an exemption from marketing fees and market exclusivity. There has been a race to win this designation. According to a report from the Office of the Inspector General (OIG) in September 2021, the FDA had granted orphan designations to almost 4,200 drugs as of early 2021.[ix] As reported by the OIG, “In total, 615 of these orphan drugs ultimately received FDA approval to treat 938 orphan indications. Sixty percent of these approvals have occurred in the past decade, with more than a quarter of the total approved in the last 3 years alone.”

As stated by authors in one scientific journal, “We suggest that a paradoxical effect of orphan product exclusivity can be reduced patient access to existing drugs. In addition, the costs of each new drug are arguably unsustainable for patients and for the American health care system.”[x] In no way should orphan drug designation suggest the need for an exemption to upper payment limits.

Affordability and public investment

It is also worth asking who pays for drug development. Certainly, Vertex has carried considerable costs, but federal tax dollars have played a fundamental role in developing Trikafta. Dr. Francis Collins, who recently retired as head of the NIH, was the co-discoverer of the cystic fibrosis gene and did that work thanks to funding from the NIH. As described above, the orphan status itself came with financial support and tax credits. In exchange for that public investment, made over decades, the public should not have to face continuing prohibitive costs and ongoing tax burdens so that Vertex can reap extreme profits. The value of the drug to patients is enormous but it is, nonetheless, unaffordable, and Vertex stands to profit handsomely even if Coloradans pay less for it.

This is not a choice between profits and affordability

It would be unconscionable for a manufacturer to threaten to withhold access to protect outsize profits. The ability to make a solid profit and lower costs for patients, public health systems, other insured Coloradans, and Colorado tax payers, however, is well within reach. The cost to manufacturer the drug is estimated to be approximately $6,000 a year [xi] and profit margins are pegged at 35 percent by investment sites.[xii]  Unfortunately, Vertex has shown reluctance to prioritize access over profit. Because of Vertex’s refusal to reduce its price for the National Health Service in the UK and the resulting multi-year delay, the company ended up destroying almost 8,000 packets of Orkambi, another cystic fibrosis treatment, that were close to expiring – said to be equivalent to six years of medication for 100 patients.[xiii] Having seen that their profit margin has continued to grow, even with a lower negotiated price for the NHS for one price, Vertex has truly no basis for expressed concerns about financial viability.

In Conclusion

Despite being a product of significant public investment for decades, Trikafta is unaffordable when considered at the patient and system level. It is an appropriate candidate for an upper price limit.

Thank you for the opportunity to provide comment.

 

Very truly yours,

Bethany Pray

Deputy Director

Colorado Center on Law and Policy

 

******

 

[i] Colorado Self Sufficiency Standard, Center for Women’s Welfare, Univ. of Wash., 2022. p. 26. https://copolicy.org/resource/self-sufficiency-standard-for-colorado-2022/

[ii] Silverman, Ed. “’Caught in the middle’: A battle between Vertex and insurers is leaving cystic fibrosis patients with crushing drug costs.” STAT, Feb. 20, 2023. https://www.statnews.com/pharmalot/2023/02/20/cystic-fibrosis-drug-costs-copays-vertex/

[iii] Investigators Spenser Smith, Pharm.D. and Molly Borchardt, Pharm.D., found that 12 months after FDA approval, 77 (68%) Blue Cross NC members with cystic fibrosis were using Trikafta. They found that total costs increased by about $5.8 million (52%) over a 10-month observation period despite notable health improvements. https://www.formularywatch.com/view/cystic-fibrosis-medication-adds-significantly-to-healthcare-costs; https://cysticfibrosisnewstoday.com/news/trikafta-cost-far-exceeds-medical-savings-cf-therapy-provides-analysis/

[iv] https://www.insurance.ca.gov/01-consumers/110-health/60-resources/upload/CDI-2022-SB-17-Prescription-Drug-Cost-Report-Final-Accessible.pdf

[v] High-expenditure Medicare drugs often qualified for Orphan Drug Act incentives designed to encourage the development of treatments for rare diseases. Office of the Inspector General, September 2021, p. 9. https://oig.hhs.gov/oei/reports/OEI-BL-20-00080.asp

[vi] My daughter’s life is precious but the NHS must not overpay for drugs. The Guardian; Letters. Feb. 5, 2019. https://www.theguardian.com/business/2019/feb/05/my-daughters-life-is-priceless-but-the-nhs-must-not-overpay-for-drugs

[vii] Where Do Our Federal Tax Dollars Go? Center for Budget and Policy Priorities. Updated September 28, 2023. https://www.cbpp.org/research/policy-basics-where-do-our-federal-tax-dollars-go#:~:text=The%20rest%20includes%20investing%20in,duties%20of%20the%20federal%20government

[viii] Murphy, Sinead M., Puwanant, Araya; Griggs, Robert C. Unintended Effects of Orphan Product Designation for Rare Neurological Diseases. Ann Neurol. Oct. 2012, 72(4): 481-490.

[ix] High-expenditure Medicare drugs, p. 2.

[x] Murphy, Puwanant, Griggs. Unintended Effects of Orphan Product Designation; see also Cote, Andre; Keating, Bernard. What is Wrong with Orphan Drug Policies. Value in Health. Dec. 2012, 15(8): 1185-1191. https://www.sciencedirect.com/science/article/pii/S1098301512041290

[xi] Wexler, Marisa. Trikafta cost in CF seen to far exceed medical savings it provides. Cystic Fibrosis News Today, June 22, 2023.  https://cysticfibrosisnewstoday.com/news/trikafta-cost-far-exceeds-medical-savings-cf-therapy-provides-analysis/

[xii] Vertex Pharmaceuticals Profit Margin 2010-2023. Macrotrends. Retrieved Dec 3. 2023. https://www.macrotrends.net/stocks/charts/VRTX/vertex-pharmaceuticals/profit-margins

[xiii] Boseley, Sarah. 600 years’ supply of cystic fibrosis drug destroyed in price row. The Guardian, March 27, 2019. https://www.theguardian.com/society/2019/mar/27/600-years-supply-of-cystic-fibrosis-drug-destroyed-in-price-row

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HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

Health First Colorado is the name given to Colorado’s Medicaid program. Medicaid provides public, low-cost health insurance to qualifying adults and children. It is an entitlement program funded by the federal, state, and county governments and is administered by counties in Colorado. Those who are required to pay must pay a small co-pay when receiving certain health care services.

State Department: Department of Health Care Policy and Financing

Eligibility: Most adults 18 to 64 are eligible for Medicaid in Colorado if their household income is at or below 133% of the federal poverty limit (FPL). Pregnant women are eligible with incomes of up to 195% FPL, while children under 18 may be eligible if the live in a household with income at or below 142% FPL. Some adults over 65 may also be eligible for Medicaid.

Program Benefits: Through Medicaid, low-income Coloradans are eligible for a range of health care services at little to not cost. Services provided include doctors visits, prescription drugs, mental health services, and dental care. Co-pays for certain individuals may be needed for certain services.

Program Funding and Access: Colorado funds our Medicaid program through state and federal dollars. Medicaid is an entitlement program, which means that all who are eligible for Medicaid can access the program, regardless of the funding level in a given year. This does not mean that it is always easy to access Medicaid, even when eligible. And since the program is administered by counties, funding levels for county staff and other administrative roles can make it easier or harder for Coloradans to access the program. On top of this, not all medical providers accept Medicaid which limits the ability of Coloradans to seek health services even if enrolled, such as if the nearest provider is a 2+ hour drive away.

Note: This data is from before the pandemic and does not reflect changes in enrollment rules during the COVID-19 pandemic and public health emergency.

Statewide Program Access 2015-19: Over the study period of this report, an average of 89.0% of the population at or below 133% of FPL (i.e., the population who is likely to be eligible for Medicaid) were enrolled in Medicaid in Colorado.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

The Supplemental Nutrition Assistance Program or SNAP helps low-income Coloradans purchase food by providing individuals and families with a monthly cash benefit that can be used to buy certain foods. SNAP is an entitlement program that is funded by the federal and state governments and administered by counties in Colorado.

State Department: Department of Human Services

Eligibility: Currently, Coloradans qualify for SNAP if they have incomes below 200% FPL, are unemployed or work part-time or receive other forms of assistance such as TANF, among other eligibility criteria. Income eligibility for SNAP was different during the study period of this report than today—it was 130% FPL back in 2019 for example. The US Department of Agriculture uses the population at or below 125% FPL when calculating the Program Access Index (or PAI) for SNAP. We follow this practice in our analysis despite Colorado currently having a higher income eligibility threshold.

Program Benefits: SNAP participants receive a monthly SNAP benefit that is determined by the number of people in their household and their income. Benefit amounts decrease as income increases, helping households avoid a sudden loss of SNAP when their incomes increase, even by a minor amount. Benefits are provided to an Electronic Benefit Transfer (EBT) card that can be used to purchase eligible food items, such as fruits and vegetables; meat, poultry, and fish; dairy products; and breads and cereals. Other items, such as foods that are hot at their point of sale, are not allowable purchases under current SNAP rules.

Program Funding and Access: SNAP, like Medicaid, is a federal entitlement program. This means that Colorado must serve any Coloradan who is eligible for the program. As such, funding should not be a limit to how many Coloradans can be served by the program. However, funding for administration of SNAP at the state and county level can limit the ability of county human service departments to enroll those who are eligible. Other program rules and administrative barriers can make it difficult for Coloradans to receive the benefits they are legally entitled to receive.

Statewide Program Access 2015-19: Over the study period of this report, an average of 61.1% of the population at or below 125% of FPL (i.e., the population who is likely to be eligible for SNAP) were enrolled.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

The Special Supplemental Nutrition Program for Women, Infants, and Children, also know as WIC, provides healthcare and nutritional support to low-income Coloradans who are pregnant, recently pregnant, breastfeeding, and to children under 5 who are nutritionally at risk based on a nutrition assessment.

State Department: Department of Public Health and Environment

Eligibility: To participate in WIC you must be pregnant, pregnant in the last six months, breastfeeding a baby under 1 year of age, or a child under the age of 5. Coloradans do not need to be U.S. citizens to be eligible for WIC. In terms of income, households cannot have incomes that exceed 185% FPL. Families who are enrolled in SNAP, TANF, Food Distribution Program on Indian Reservations (FDPIR), or Medicaid are automatically eligible for WIC. Regardless of gender, any parents, foster parents, or caregivers are able to apply for and use WIC services for eligible children.

Program Benefits: WIC provides a range of services to young children and their parents. These include funds to purchase healthy, fresh foods; breastfeeding support; personalized nutrition education and shopping tips; and referrals to health care and other services participants may be eligible for.

Program Funding and Access: WIC is funded by the US Department of Agriculture. The state uses these federal funds to contract with local providers, known as WIC Clinics. In most cases, these are county public health agencies, but that is not the case in all Colorado counties. Some WIC Clinics cover multiple counties, while others are served by multiple clinics. Private non-profit providers are also eligible to be selected as a WIC Clinic.

Statewide Program Access 2015-17: Between 2015 and 2017, an average of 52.2% of the population eligible for WIC were enrolled in the program in Colorado.

Financial Security:
Colorado Works

Colorado Works is the name given to Colorado’s program for Temporary Assistance to Needy Families or TANF. It is an employment program that supports families with dependent children on their path to self-sufficiency. Participants can receive cash assistance, schooling, workforce development and skills training depending on the services available in their county.

State Department: Department of Human Services

Eligibility: In general, Coloradans are eligible to enroll in TANF if they are a resident of Colorado, have one or more children under the age of 18 or pregnant, and have very low or no income. For example, to be eligible to receive a basic cash assistance grant through TANF, a single-parent of one child could not earn more than $331 per month, with some exclusions—and would only receive $440 per month (as of 2022). That said, there are other services provided by counties through TANF that those with incomes as high as $75,000 may be eligible for. In addition to these, participants in TANF are required to work or be pursuing an eligible “work activity” or work-related activity. Any eligible individual can only receive assistance if they have not previously been enrolled in TANF for a cumulative amount of time of more than 60 months—this is a lifetime limit that does not reset. Counties may have additional requirements and offer benefits that are not available in other counties in Colorado.

Program Benefits:  While the exact benefits that one is eligible for under TANF can vary, all qualified participants are eligible to receive a monthly cash payment, call basic cash assistance. Other than cash assistance, counties are have a lot of choice in how to use their TANF funding; generally a use of TANF funds is appropriate so long as it advances one or more of the four purposes of the program: (1) provide assistance to needy families so that children can be cared for in their own homes or in the homes of their relatives; (2) end the dependence of needy families on government benefits by promoting job preparation, work, and marriage; (3) prevent and reduce the incidence of out-of-wedlock pregnancies; and (4) encourage the formation and maintenance of two-parent families.

It is important to note that those eligible for TANF are also eligible for many of the other programs we’ve included in this report, such as SNAP, Medicaid, and CCCAP.

Program Funding and Access: Colorado funds its TANF program through funds received from the federal government through the Temporary Assistance for Needy Families block grant. Most of the federal funds are allocated by the state to counties, which are required to provide a 20% match of state funding. Federal and state rules allow the state and counties to retain a portion of unspent funds in a TANF reserve.

Statewide Program Access 2015-19: Over the study period of this report, an average of 50.7% of the population at or below 100% of FPL (i.e., the population who is likely to be eligible for TANF) were enrolled in TANF in Colorado.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

The Colorado Child Care Assistance Program provides child care assistance to low-income families and caregivers living in Colorado in the form of reduced payments for child care. It is a program funded by the federal, state, and county governments and is administered by counties in Colorado. The share owed by parents/caregivers is determined on a sliding scale based on the family’s income.

State Department: Department of Early Childhood Education

Eligibility: Counties set eligibility for families separately, but must serve families with incomes at or below 185% of the Federal Poverty Limit. Families accepted to the program are no longer eligible once their income exceeds 85% of the state median income. Parents or caregivers must be employed, searching for work, or engaged in another approved activity to be eligible for CCCAP. Parents and caregivers enrolled in Colorado Works (Temporary Assistance to Needy Families or TANF) or in the child welfare system are also eligible to participate in CCCAP. Generally, CCCAP serves families with children under 13, although children as old as 19 may be eligible under certain circumstances.

Program Benefits: If a family is eligible for CCCAP and has income, they may likely have to pay a portion of their child’s or children’s child care costs each month. The amount that families owe is based on their gross income, number of household members, and the number of children in child care in the household. As such, households tend not to experience a benefit cliff with CCCAP when they see their incomes increase

Program Funding and Access: Colorado funds the CCCAP program using federal dollars it receives from the Child Care and Development Block Grant program. The state allocates federal and state funds to counties using a formula that takes into account factors like current caseloads and the number of eligible residents. Assistance is available until the county’s funds are spent, so the number of families that can be served is often a function of how much funding is available and the income and composition of the household that applies. It is not uncommon for counties to overspend or underspend their allocations of funds. The state reallocates unspent funds from counties who underspent to those who overspent. While underspending could indicate a problem with the way a county administers its CCCAP program, it could just as likely be a sign that there are few providers in the county who participate in CCCAP—or a lack of providers generally.

Statewide Program Access 2015-19: Over the study period of this report, an average of 10.8% of the population at or below 165% of FPL and younger than age 13 (i.e., the population who is likely to be eligible for CCCAP) were enrolled in CCCAP.

Housing:
HUD rental assistance programs

The US Department of Housing and Urban Development (HUD) has three housing assistance programs that we look at together: Housing Choice Vouchers (Section 8), Project-based Section 8, and Public Housing. In Colorado, these programs provided assistance to over 90% of the households who received federal housing assistance from all HUD programs. Through federally funded, local or regional public housing agencies (PHAs) are the agencies that administer these programs, through not all are available in all counties. These are not the only programs available in Colorado that assist households afford the cost of housing, such as units funded through federal and state tax credit programs.

State Department: Department of Local Affairs

Eligibility: Generally, households with incomes under 50% of the area median income (AMI) of the county they live in are eligible for these rental assistance programs, although PHAs have discretion to select households with incomes at higher percentages of AMI. That said, HUD requires that 75% of new vouchers issued through the Housing Choice Voucher/Section 8 program in a given year are targeted to households with incomes at or below 30% of AMI. PHAs are also able to create criteria that give priority to certain types of households who are on waiting lists for these programs.

Program Benefits: These rental assistance programs help households afford the cost of housing by reducing their housing costs to around 30% of their household income. In the case of the Housing Choice Voucher program, the PHA pays the voucher holder’s landlord the remaining portion of the rent.

Program Funding and Access: Funding and access are both challenges for these rental assistance programs. In addition to limitations on the number of public housing units or housing vouchers a PHA can manage or issue, lack of funding compared to the need constrains the ability of PHAs to assist low-income households. In 2020, Coloradans were on waitlists for Housing Choice Vouchers for an average of 17 months. Waitlists also exist for the other rental assistance programs.

Statewide Program Access 2015-19: Over the study period of this report, an average of 21.1% of renter households with incomes at or below 50% AMI (i.e., the population who is likely to be eligible for HUD rental assistance programs) were living in subsidized housing.