Acadia Outsources Compassion and Math

On their quarterly call, Acadia Pharmaceuticals announced the pricing for Nuplazid, freshly approved by the FDA for the treatment of Parkinsonian psychosis (PDP). The price has been set at $1950 per month, about $23,400 per year. A quick scan of the atypical antipsychotic drugs that might be supplanted by Nuplazid in PDP indicates that they tend to be priced at about $900-1000 per month. The expectation had been that Acadia would exact a premium over the predecessors, but not to this degree: Acadia has roughly doubled the price of their competitors, figuring that, with Nuplazid the first drug to primarily target 5HT-2a receptors, and to be labeled for Parkinsonian psychosis, they can do as they please. Which they can. But this does bring us back to a topic discussed in NeuroPerspective and Neurogram+ in the not-too-distant past; “Why do they hate us?” (In this context, ‘us’ refers to the Pharma industry, ‘they’ refers to everyone else). This is why.
Sure, compared to the $84,000 per year originally cited for Solvadi, this does not trigger the same kind of sticker shock, though it should be noted that Sovaldi is curative for Hepatitis C, whereas Nuplazid provides relief of a specific symptom-cluster within a chronic neurodegenerative illness, and its use for many patients might be stretched out over years. Even if one considers full remission of psychosis to be the psychiatric version of ‘curative’, that only applies to 14% of Nuplazid users.
Semi-attuned to the spate of recent negative publicity around drug pricing, Acadia hastened to add that they would take steps to ameliorate the financial burden, reminiscent of other companies who claim that with discounts and rebates, that the list price isn’t nearly as onerous as it sounds–no one pays ‘retail’. But Acadia’s actual behaviors are likely to fall short of their purported promise.
Rounding off Acadia’s own estimates, 1/3 of patients will have commercial insurance, and Acadia says that they will cover their co-pay, albeit based on “coverage and circumstances”, implying some kind of means-testing. But setting that minority aside for the moment, roughly two-thirds are expected to be on Medicare D, and here it gets more convoluted. Acadia indicates that the co-insurance obligation for Medicare D patients will be in the 25-30% range, which at the low end, is about $6000 per year. That would be a huge burden for many, if not most, elderly patients with Parkinson’s. With this population, the majority of Nuplazid patients, Acadia plans to make donations to “charitable foundations” in the expectation that they will in turn provide monetary relief to patients being impacted by this sizable co-pay obligation. In other words, for two-thirds of the Nuplazid population, Acadia intends to turn over the cost-amelioration task to charities, outsourcing the task of alleviating what might well be an untenable burden for many elderly patients and their families. This presumes that such charities have the infrastructure and skillsets to do so, which they do not.
Let’s see how this would play out. For the sake of simplicity, let us suppose that Nuplazid might eventually generate in the neighborhood of one billion dollars in revenue per year. If two-thirds of patients are on Medicare, that is $660 million per year of drug cost attributable to that population, and the 25% co-pay obligation associated with that total comes out to…$165 million. Based on what Acadia has cited as their plan, in order to actually offset that out-of-pocket burden, Acadia would have to donate something approaching $165 million per year to charities who would in turn somehow funnel it to those patients in need. To be clear, they did not cite this figure, since they are making no revenue projections at this time, but based on the model that they presented as their approach to ‘easing the burden’, that’s how it would pan out: $165 million in charitable donations, somehow passed through some intermediary ‘charities’ to PDP patients and their families. We look forward to hearing from anyone who thinks this is going to happen, and how it would work.*
This is of course part of a much larger-scale problem: The American approach to drug pricing, where a sky-high list price is cited along with vague reassurances that the ‘real’ cost won’t be nearly so bad, turns the pharma industry into a giant used car lot. Recalling that CarMax’s corporate model did away with the smoke and mirrors, instead simply stating the no-haggle price for a car, we almost yearn for a DrugMax that would provide the same clarity in the pharma world. Like most of its peers, Acadia will exploit the lack of industry transparency, and it is this kind of gamesmanship, in the context of escalating prices and societal costs, that makes the American public skeptical that anything we say can be taken at face value, and buttresses the perception that the pharma industry operates primarily on the basis of greed. That is ‘why they hate us’, and turns this into one more step on the slow creep towards price controls. Acadia management probably figures that, as was the case with Sovaldi, they can milk the system until a competitor comes along, like Axovant’s nelotanserin. But there is another potential ‘side effect’: Given the population size, the FDA is certain to be more demanding when Acadia files for Nuplazid’s label-expansion into the huge Alzheimer’s market, and if the atmosphere around Nuplazid is tainted by media stories about the cost-reduction that wasn’t, and anecdotes of PDP patients financially strapped by the costs or doing without, that could come back to haunt Acadia.
Acadia can be semi-excused for buying into the double-speak and illogic, because they are on the receiving end as well. Case in point: Their European marketing application for Nuplazid will be delayed while they sort out what the EU wants in terms of a PIP for Nuplazid, because the PIP must be approved before the filing can be accepted. What is a PIP? It is the Pediatric Investigation Plan–the presentation of how pediatric testing would be done, or waivered. That’s right: Pediatric factors must be explicated to the satisfaction of European regulators before they will accept the filing for a drug for Parkinson’s, one of the least pediatric indications in all of creation. That kind of absurdity sets the tone, and the stage, for cynicism.
Unfortunately, Acadia took the bait, decided to push the pricing envelope as far as they can, and to make the problem of financial burden…someone else’s. Perhaps it is unfair to blame them for doing what everyone does, but at some point, somebody will have to break the mold, or else it will be broken and reshaped for us, and that outcome will not be to the taste or benefit of the pharma industry.
*Acadia was contacted with the questions of whether this correctly depicts their plan for Medicare D cost-offsets, and whether any charitable organizations had identified themselves as prepared to collaborate with them on this. No response was received.

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1 Response to Acadia Outsources Compassion and Math

  1. Majority of PDP patients on Nuplazid will qualify for a low income subsidy which was set up to keep rx cost low for those that are elderly and poor.

    If you meet certain income and resource limits, you may qualify for Extra Help from Medicare to pay the costs of Medicare prescription drug coverage.

    In 2016, costs are no more than $2.95 for each generic/$7.40 for each brand-name covered drug.

    Other people pay only a portion of their Medicare drug plan premiums and deductibles based on their income level.

    In 2016, you may qualify if you have up to $17,820 in yearly income ($24,030 for a married couple) and up to $13,640 in resources ($27,250 for a married couple).

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