Commentary: We need to make sure new drug cures don’t widen income gap for the poor

Science offers the chance to cure debilitating and once-intractable disorders like hemophilia and sickle cell disease. But we need to make sure the ability to access these therapies, or the risk that someone can be locked out of them, doesn’t widen gaps between the rich and poor.

Many inherited disorders can perpetuate poverty by leading to disabilities that disrupt people’s ability to work. In turn, someone’s capacity to secure an effective new cure for these diseases can mean the difference between a life led productively, or one plagued by infirmity.

Gene therapies and other treatments that can cure — not just treat — disease are going to be expensive. All of the cost of innovating and reaping an economic return may need to be recouped in a single payment. Insurance pools that are on a fixed budget are going to struggle to make sure everyone living with a disease can be rapidly cured when a safe and effective treatment comes along.

These challenges were never obvious because we never had so many looming chances to cure serious disorders. In many cases, Medicaid plans that already care for the poor will be the most constrained. This problem was shown when a cure for hepatitis C hit the market in 2014 and many Medicaid plans delayed access to the drug or rationed its use because they couldn’t absorb the one-time cost of rolling out the therapy and curing their population straightaway.

Since Medicaid budgets are fixed through appropriations, they can’t absorb a spending surge in any given year. But when it comes to a safe and effective drug for a vexing disorder, there’s an imperative to deliver it to as many patients as possible. Especially when the therapies address a disease where disabilities accumulate with time like inherited muscle disorders such as muscular dystrophy. In the case of a prevalent disease, some states simply won’t be able to budget the one-time cost of extending access to everyone.

The drug debate is often focused on price. But the real imperative turns on these questions of access. Drugmakers have a compact with the society. Consumers finance high-cost, high-risk science needed to deliver pharmaceutical innovation through the premium prices that are paid on the resulting successes. And Americans have long supported life science innovation. But that support — and the commitment to fund new drug treatments through the prices paid on the successful outcomes — comes with an implicit belief that a patient who needs access to a critical therapy will have the opportunity to alter his or her destiny through innovation.

The expanding promise of that innovation makes this compact more crucial. First and foremost, drugmakers need to make sure there’s equitable access to effective therapies and that the destiny of a child with a debilitating disease doesn’t turn on which insurance pool they’re born into. Along with advances in science, we must also modernize the way we pay for the resulting therapies. This is especially true when it comes to Medicaid, where the greatest strains are felt.

This requires us to re-think what’s being sold when a new drug reaches the market. A therapy that can cure disease in a single treatment isn’t a unit of drug. It’s a public health solution. So instead of pricing it per dose like we currently do for traditional medications, companies should negotiate with states to offer Medicaid recipients a multi-year solution to their total population’s health.

Louisiana is experimenting with a potentially ground-breaking payment model to treat Hepatitis C in its Medicaid recipients and prison population. Called the “Netflix model,” Louisiana entered into a contract in March with Gilead Sciences subsidiary Asegua Therapeutics to pay a fixed annual fee for an unlimited supply of its hepatitis C medication, a generic version of Epclusa, for five years.

This is especially relevant when it comes to treatments for inherited disorders where an initial group of people already living with the disease will immediately need the cure, along with newly diagnosed patients throughout the years.  

This could give states an option to renew at preferable terms if the existing technology remains the standard of care.

These approaches can be helped by federal legislation that frees drugmakers from the mandatory discounting, restrictions and reporting requirements that hobble innovate payment schemes.

The multi-year nature of the commitment can allow drugmakers to offer states better pricing. For the states, this approach smooth’s out the costs of extending treatment to a whole population.

If a new drug is introduced for the same condition and shows non-inferiority to the existing treatment, the state could have the option to end the contract early, giving drugmakers incentive to develop better treatments.

Moreover, drug companies that are focused on gene therapies and other novel treatments often have a pipeline of advances in care for the same disease. They’re not one-hit wonders. If the same sponsor develops a follow-on innovation for the same disease, they could commit to a similar pricing structure as Louisiana. That can improve contract terms for both sides and give states a predictable option on follow on innovation that advances care.

The debate over price is fundamentally a debate over access. Gene therapies and other treatments that can cost millions of dollars can still be a relative bargain for what they give patients and society if they’re able to cure a disease that would severely limit or even end life. But the high cost of providing early and uniform access can mean the underinsured go without these opportunities.

We need to make sure that access to a curative drug doesn’t become a yardstick by which poverty is eventually measured. Doing so requires a shared commitment between innovators and the insurance plans that are harder pressed to offer these advances to the poor.

This is especially true when it comes to Medicaid, which has a special role in helping lift people out of poverty. Cures for devastating diseases are now at hand. They can mean the difference between a productive or disabled life. A financing model that leases access to these kinds of opportunities moves drugmakers and Medicaid plans closer to that vital compact.

Editor’s Note: Dr. Scott Gottlieb is the former commissioner of the Food and Drug Administration and a CNBC contributor. He kicks off CNBC’s Healthy Returns Summit Tuesday in New York.  

Click here to join Gottlieb and other top health-care executives at the summit.

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