'Miracle' biotech drugs growing in use and cost

Judith Levinson-Warsaw whispers this prayer every time she takes the medicine she credits with rescuing her from crippling rheumatoid arthritis: "Miracle drug, miracle drug. Thank you, science, and God above."

The 59-year-old Rockville resident had been on disability for almost a decade and was reeling from 14 operations and a string of side effects from traditional medication when she was introduced in 1999 to a new biotech medicine, etanercept. Now - after more than 530 treatments - Levinson-Warsaw says she's "in the go mode," working as a glass artist in her studio and looking forward to dancing at her daughter's wedding this summer.


"If I hadn't got into this drug, I'd need a scooter to get around, and I'd have to have somebody come in and help me get dressed in the morning," she said. "But now, I'm out and around. My husband called me his Energizer Bunny."

The cost of Levinson's "miracle" is $17,300 a year.


Etanercept, which Amgen Inc. markets as Enbrel, is one of many new bio-pharmaceuticals that treat relatively few patients but carry whopping price tags that account for a large and rapidly rising percentage of the nation's medical costs. Americans spent almost $30 billion on such specialty drugs in 2002, or 18 percent of U.S. spending on all prescription drugs that year, according to Medco Health Solutions, the nation's largest pharmacy benefit manager.

Beyond treating rheumatoid arthritis, the new drug therapies are being used to treat types of cancer, HIV/AIDS, multiple sclerosis, hepatitis C, infertility and other disorders. Spending on those drugs is growing at between 20 percent and 25 percent a year, or about double the projected rate of growth this year of spending for conventional pharmaceuticals.

The tab for specialty drugs is expected to continue to balloon as the federal government begins subsidizing their use under a Medicare prescription benefit in 2006 and as the Food and Drug Administration approves new biotech drugs. Last month, the FDA approved two drugs for treating colon cancer - Genentech Inc.'s Avastin, which is expected to cost more than $4,000 a month, and ImClone Systems Inc.'s Erbitux, which is expected to cost $10,000 a month. Annual costs for patients on specialty drugs can be as much as $250,000, compared with $550 for people on traditional medications, Medco reports.

Why are the drugs so expensive? Bio-pharmaceuticals - derived from genetic engineering or other natural sources - are less stable and more difficult to handle than conventional synthetic drugs, which themselves can cost more than $800 million to develop and bring to market, according to the Tufts Center for the Study of Drug Development.

Most biotech drugs are protein-based and must be administered by injection or infusion, which adds to their cost. Moreover, there are no lower-price generic alternatives for biotech drugs as there are for old-line medications. The FDA does not even have rules for marketing a biotech generic drug.

And unlike so-called lifestyle drugs that help people battle toenail fungus or hair loss, which are easy targets for cost-cutting pharmacy benefit managers, "there are no easy answers for lowering prices on these drugs," said Joshua Cohen, a senior research fellow at the Tufts drug study center.

"The high prices for drugs clearly do impact society, and they surely affect insurers' ability to reimburse, yet they can't be denied to people who really need them because these truly are lifesaving drugs," Cohen said.

'Be using up life savings'


Levinson-Warsaw is lucky. She has insurance that helps her pay for Enbrel and nine other prescriptions that cost a total $26,234 a year, which includes $4,488 she pays out of pocket. "If I didn't have insurance, I'd be using up my life savings," she said. "But I couldn't imagine being without this drug."

Her drug is a protein-based medication called a biologic response modifier. Biologics are designed to either inhibit or supplant immune system components called cytokines. If taken early enough, experts say, these treatments might prevent or lessen severe damage to joints.

The discovery of biologics came too late to save Levinson's joints. Levinson, whose rheumatoid arthritis was diagnosed about 20 years ago, was forced to take disability leave from her job as a secretary in 1991. She tried all the usual drugs and treatments. She had gold injections once a month for a decade and took the steroid prednisone and the antirheumatic drug minocycline.

"With prednisone, you blow up. I blew up 20 pounds in three months," she said. "You look in the mirror, and you see this round-faced person looking back at you. And minocycline turned my skin gray, gave the whites of my eyes a blue tint and discolored my teeth."

Another drug made her hair fall out. "I stood there in the shower, and I watched my hair going down the drain," she said.

Meanwhile, she underwent 14 operations. She had knuckles replaced, her wrists fused and toes amputated. "If you saw my hands it'd make you want to cry," she said.


With Enbrel, Levinson-Warsaw is able to live a normal life, she said. She even managed to take up glass art almost three years ago, with the help of specialized tools.

Growing sophistication

The number of specialty drugs in development is rising, reflecting the growing sophistication of biotech research. There were more than 900 biotech drugs in development for about 200 diseases in 2001, more than triple the number of drugs in development in 1994, according to pharmacy manager Express Scripts Inc. And in 2002, the FDA approved 35 new specialty drugs, the largest number in a single year.

"To put it in the overall scheme of things now, it's really a percentage point or two" of all patients who use the specialty drugs, said Dr. Alan Wright, chief science officer for the pharmacy benefits manager AdvancePCS. "But that could change significantly in five or 10 years as these drugs creep into treatment of more and more chronic diseases, and people take them for longer and longer periods."

And when that happens, the nation's spending on drugs - already the fastest growing expense in health care - could explode. AdvancePCS, for example, estimates that no more than 5 percent of those insured under health plans require specialty drugs, yet they account for 25 percent to 50 percent of the plans' medical costs. The total cost of those drugs, the company says, is hidden because they are often reported as medical expenses, not drug spending.

The number of prescriptions being written for specialty drugs is already skyrocketing. Express Scripts Inc. reports that the number of scripts dispensed from its specialty care pharmacy in 2002 rose 90 percent over the previous year, and it sees the advances in the biotechnology industry driving continued growth.


'Make or break time'

Other experts see expansion of spending on specialty drugs even without new blockbuster drugs. The market will expand when Medicare offers a prescription benefit to more than 40 million seniors, including 10 million who have little or no drug coverage now. For example, 900,000 rheumatoid arthritis patients will be eligible for the Medicare benefit, according to the Congressional Budget Office. But it is unclear how many are candidates for injectable biologics.

This is how the Medicare benefit will work: A beneficiary would pay the first $250 of drug costs, and Medicare would cover 75 percent of the patient's annual costs from $251 to $2,250. Coverage would then stop until the patient had spent $3,600 out of pocket. After that, Medicare will cover up to 95 percent of drug costs.

The Bush administration has projected the drug benefit will cost $534 billion over 10 years, an estimate that many experts say is optimistic given that the bill bars government efforts to negotiate with drug companies for lower prices. The administration maintains that competition among private pharmacy benefit management companies that will administer the Medicare drug program will help restrain prices.

Cohen expects the benefit will run to $600 billion. "It's make or break time," he said. "The government's going to have to make it cost effective."

$500 million study


The federal agency that oversees Medicare, the Centers for Medicare and Medicaid Services, will learn how it will handle expensive specialty drugs in a study that is scheduled to begin this spring and continue until the full benefit takes effect Jan. 1, 2006. Last year, Congress authorized the $500 million study for self-injectable specialty drugs and oral cancer drugs for as many as 50,000 patients as part of the Medicare reform law.

The agency has yet to release rules of the study, which has drawn interest from a wide range of patient advocacy groups. Along with rheumatoid arthritis patients, people with multiple sclerosis are expected to benefit most from Medicare's inclusion of self-injectable drugs. There are almost 400,000 people with MS and roughly half use one of three injectables, which cost about $12,000 a year, according to Susan Sanabria, vice president of advocacy for the National Multiple Sclerosis Society.

The demonstration is aimed at allowing Medicare administrators to assess whether paying for self-injectable drugs will improve the health of patients and be cheaper than paying for specialty drugs administered in physicians' offices and hospitals.

Medicare currently pays for drugs given in doctors' offices and hospitals but not for outpatient medications. People with rheumatoid arthritis can be reimbursed for receiving Remicade, a biologic that is delivered intravenously at a doctor's office, but not for Enbrel or two other biologics, Humira and Kineret, which patients can administer with syringes at home.

"This could be a boon for people who can't afford these drugs and don't have any insurance coverage," Sanabria said. "We know of thousands of people who need these therapies now but are going without them."