Forget Rent: The Cost of These 5 New Drugs Is Too Damn High

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Source: Thinkstock

Disclaimer: The following list was composed using the FDA’s list of drugs approved in 2013 and 2014 (so far.) We were only able to rate the drugs we currently have pricing data for, meaning many of 2014′s approvals aren’t yet included. Most of those drugs have either not made it onto the market yet or are still very new to the market and not commonly used.

With global spending on medicines expected to reach $1 trillion by the end of 2014 and exceed $1.17 trillion by 2017, it makes sense that medication costs are on a lot of Americans’ minds these days. It’s not just American consumers who are worried: just last year, a group of oncology physicians released a report describing the unacceptably high cost of cancer medicines. According to the report published by the Washington Post, in the last decade the average cost of a brand name cancer drug doubled from about $5,000 a month to about $10,000 per month in 2013. Meanwhile, drug manufacturers argue that the astronomical cost of research and development, particularly given that not all investigational drugs are successful, justifies the extreme cost of their medicines.

Regardless of what you believe, several reports have noted that cancer drugs, particularly immunotherapies, are one of the biggest areas of drug research and development today, along with a variety of different specialty medicines. Cancer drugs and specialty medicines almost exclusively comprise our top 10 list, with the exception of anti-infectives like Gilead Sciences’ Inc. (NYSE:GILD) much talked about Sovaldi, a groundbreaking hepatitis C cure that was approved last year.

There’s been a lot of outcry recently regarding the astounding price of Sovaldi, a combination therapy taken orally for the treatment of hepatitis C; and while the drug, which costs $1,000 a pill or approximately $84,000 for a full course of treatment, may seem bank-breaking, it doesn’t actually come close to the most expensive drug on our list. Click through to see our top five picks.

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Source: Thinkstock

5. Olysio

Olysio is one of two new hepatitis C treatments on our list. The drug, manufactured by Janssen Pharmaceuticals – Johnson & Johnson’s (NYSE:JNJ) pharmaceutical arm — will cost you approximately $23,500 for a bottle of 28 capsules, and about $66,000 for a full course of treatment. While it’s true that Janssen’s pill costs significantly less than Gilead’s Sovaldi, $66,000 is $66,000 (read: a lot of money.) Analysts have been skeptical about the drug, however, which has been largely overshadowed by Sovaldi; Olysio’s pricier competitor was found to be more effective in clinical trials.

As a result, Olysio may not be a name you’ve heard before, and analysts suspect that the drug will become even more diluted in the market as competing treatments from rivals like AbbVie, Bristol-Myers Squibb Co., Merck & Co. Inc., and others are released.

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Source: Thinkstock

4. Hetlioz

Hetlioz is a specialty medicine if we’ve ever heard of one. It’s the first ever treatment for a rare disorder that affects completely blind individuals — that is, those who are unable to distinguish even shades of light, which is necessary for the regulation of sleep schedules. Individuals affected by the disorder, which is known as non-24-hour-sleep-wake disorder, often have difficulty maintaining a sleep schedule. Patients can expect to pay a lofty price for the breakthrough medicine, however, which costs about $60,000 annually. Hetlioz was developed by Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) and first approved in January of 2014.

Hetlioz is a sedative that works by “resetting” the body’s internal clock, allowing the individual to maintain a more natural sleep cycle, and is taken at the patient’s normal bedtime. Individuals with non-24 often experience difficulty falling asleep, or staying awake, and may fall asleep only to feel groggy later when they wake up. Similarly, it’s often difficult for individuals with non-24 to maintain a normal day-to-day schedule because they aren’t “triggered” by changes in light which would normally signal to the body that it is time to go to sleep, according to the National Sleep Foundation.

Interestingly, a recent report released last week notes that Vanda Pharmaceuticals has actually suffered a loss following the release of Hetlioz. The drug increased the company’s operating costs to such an extent that Vanda reported its total operating expenses for the first-quarter of 2014 were $35.7 million, a massive jump considering a year previous the company reported just $12.6 million in expenses. Vanda’s total net losses for the first-quarter of 2014 amount to a disheartening $26.5 million.

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Source: Thinkstock

3. Sovaldi

If you follow pharma, then the next drug on our list is hardly news. Sovaldi, a hepatitis C treatment developed by Gilead Sciences, Inc. (NASDAQ:GILD) and approved by the FDA in December of 2013 is notoriously, perhaps even prohibitively expensive. The drug retails for about $1,000 a pill and an entire 12 week course of treatment costs $84,000, according to the Los Angeles Times.

The drug has enraged some who argue that the populations most affected by hepatitis C are precisely those who cannot possibly afford the drug, which is more expensive than many specialty chemotherapy medicines. Medicaid and the federal prison system in particular have struggled with how to deal with Sovaldi’s expense, according to recent reports. “This is a harbinger of things to come,” says Steven Pearson, president of the Institute for Clinical and Economic Review, a non-profit research group based in Boston. “Other specialty drugs are being priced in this range.”

Sovaldi is also famous — or infamous — for the massive profits it has brought Gilead Sciences since its release. In just one quarter, the drug made $2.27 billion, more than many medicines do in an entire year. The drug was dubbed a “rocket ship” by FiercePharma, and was included in our previous report of 6 Drugs Likely to Move the Pharma Market.

Analysts expect that demand for Sovaldi may fade substantially over time, and note that several competitors, including Merck & Co. Inc., AbbVie, and others are expected to launch its own hepatitis C cures in the next few months, though Sovaldi remains the most effective and most sought after of the bunch, boasting a cure rate of more than 90 percent. That, in fact, is part of the problem with Sovaldi’s long-term outlook, says Robyn Karnauskas, an analyst with Deutsche Bank who spoke with the San Francisco Gate. “The idea is that Gilead’s drug does such a good job of suppressing the virus that everyone will be cured,” she said.

Other analysts seem to concur. “There’s no doubt that this is a tremendously impressive drug launch,” said Marshall Gordon, an investor with ClearBridge Investments LLC, “but everybody knows that, and there’s limited visibility on the sustainability of it,” he said in an interview with BusinessWeek.

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Source: Thinkstock

2. Kadcyla

Kadcyla, a breast cancer treatment that was developed by Genentech, a branch of Swiss company Roche Holding Ltd., is second on our list, coming in at $94,000 for a standard course of treatment. The drug was first approved by the FDA in February of 2013 and costs nearly $3,000 per vial. Kadcyla, like Sovaldi, has also recently appeared in the news due to public outcry over its expensiveness, and Britain’s National Health Service (NHS) has even refused to cover the drug due to its price, echoing similar concerns expressed by Medicare regarding Sovaldi.

“A breast cancer treatment that can cost more than 90,000 pounds [$150,000] per patient is not effective enough to justify the price the NHS is being asked to pay,” said British healthcare watchdog NICE (National Institute for Health and Care Excellence) in a statement published in The Guardian earlier last month.

Kadcyla is a new kind of breast cancer drug that combines Herceptin, a widely used breast cancer medicine, with a chemotherapy agent. The drug is designed to treat women with advanced stage breast cancer (called HER2+ breast cancer) that has spread to other parts of the body. The drug is not a cure for breast cancer, but can extend patients’ life expectancy by almost six months, according to The Guardian, which reported on the story in April.

The drug has sparked arguments between the NHS and the manufacturer, with Roche arguing that the added time spent with loved ones that Kadcyla provides is priceless, while NICE argues that the cost for that time is too high for the organization to bear. “We had hoped that Roche would have recognized the challenge the NHS faces in managing the adoption of expensive new treatments by reducing the cost of Kadcyla to the NHS,” said Sir Andrew Dillon, NICE’s chief executive.

1. Imbruvica

Developed by the Sunnyvale, California-based biotech company Pharmacyclics, Inc. (NASDAQ:PCYC), ibrutinib, which is branded under the name Imbruvica, obtained accelerated approval from the FDA in February.

The drug was initially approved to treat mantle cell lymphoma, a rare and particularly aggressive type of blood cancer, but the drug has proved so successful that doctors may soon start prescribing it to patients with chronic lymphocytic leukemia as well. Dr. John C. Byrd, a researcher for Pharmacyclics, says that the drug’s results are “really blowing the pants off of what we are standardly doing.” Byrd adds that the drug’s positive results are particularly impressive given that the two diseases are both very hard to treat, according to a report by The New York Times. The drug apparently boasted a 24-month disease-free survival rate of 96 percent in patients with CLL.

The FDA shepherded imbruvica through the accelerated approval process and the drug continues to prove promising — it also happens to be the most expensive drug on our list, with a month’s supply costing an astounding $8,672 per bottle (90 capsules a bottle) and annual costs for the treatment closer to $130,000 or more.

Like many other expensive medications, Imbruvica treats two rare conditions, and specialty medicines show no signs of falling in price. Perhaps the most expensive drug ever to hit the market, Alexion’s Soliris, which treats a rare blood disease and which was approved in 2012, a year prior to Imbruvica, may as well be our runner-up in this category. The drug makes the Imbruvica’s cost look like chump change, costing well over $400,000 annually.

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