But for the health care system, such drugs are enormously expensive, among the priciest in the nation. Medications to treat hemophilia cost an average of more than $270,000 annually per patient, according to a 2015 Express Scripts report. If complications arise, that annual price tag can soar above $1 million. The U.S. hemophilia drug market, which serves about 20,000 patients, is worth $4.6 billion a year, according to the investment research firm AllianceBernstein.
Examining the stubbornly high cost of these medications opens a window into why some prescription drugs in the United States – especially those for rare diseases – have stratospheric prices. The short answer: Competition doesn’t do its traditional job of tamping down costs.
Vying for patients
The market for hemophilia medicines in the United States is flooded with 28 different drugs, with another 21 drugs in development. Because blood factor drugs are biological products – in this case, a protein – there are no cheaper copies, called biosimilars, available. Not only do prices rise steadily as each new product comes on the market, demand is growing – and pushing costs upward – as more and more clotting factor is used to prevent bleeding episodes, not just to treat them.
Yet competition has not brought prices down in the way someone “operating at the level of undergrad Econ 101 would expect,” said Jerry Avorn, MD, a professor of medicine at Harvard Medical School, Boston, who studies prescription drug costs.
The problem is that companies have no incentive to lower prices. Patients generally don’t push back because insurers pay the bulk of the cost. And insurers tend not to object because the market for the drugs – expensive as they are – is small and the patients are especially vulnerable.