Soaring drug prices hurting medical aids

SURVIVOR: Kelly du Plessis with her five-year-old son, Juan, who suffers from Pompe disease. The cost of treating the condition is astronomical FIVE-year-old Juan du Plessis, son of Johannesburg resident Kelly du Plessis, is missing an enzyme that helps breaks down glycogen, a complex sugar in food. Without medication, he would be dead.

Juan struggled to breast-feed, was in hospital with pneumonia when he was just four months old and was unable to lift up his head at 11 months.

A month later, Juan was diagnosed with the rare Pompe disease, an inherited disorder caused by the build-up of glycogen in the body’s cells, and with the help of a doctor in 2010, his parents were able to get permission to have the only treatment, Myozyme, imported into South Africa.

When Juan walked for the first time, his doctor sobbed.

The cost of the treatment, however, would have bankrupted Du Plessis and her husband.

Three years ago, after they went toe-to-toe with Discovery medical scheme, even camping out at its offices, it finally agreed to pay for Juan’s drugs.

“I sat at Discovery Health, refusing to leave even as it got late,” Du Plessis said. “I sat in front of a lady’s desk and said: ‘I am not going until you give authorisation [to pay].’ ”

Du Plessis would not take no for an answer, and is now lobbying for high-cost treatment for other sick children with rare disorders.

Her fight highlights the fine line that medical aid societies must walk: the prices of new medicines for rare diseases and targeted treatments for specific cancers are pushing medicine costs way above inflation rates. On top of this, consumers are already having to shoulder above-inflation rate hikes in medical aid premiums.

Du Plessis said Discovery had now become one of the only funders of medicines for rare diseases — and it was time other medical aids came to the party.

Medical aids are understandably wary. Discovery is concerned that something has to give — pointing to legislation reform as one means to help.

Even Du Plessis said the high cost of medicines was “unsustainable”.

Invited to speak to a group of medical aid societies this week, she told them that only the “bigger, flashier” schemes were paying for such treatments — and taking on too much risk.

Discovery is the largest medical scheme, with two million members. But last year, only about 2% of them, or 34 700 members, accounted for more than 25% of the risk pool of cash to be spent on medicines. This is over and above the money used by members for medicines from their day-to-day medical savings accounts.

Medical aid schemes, which are designed to cover the catastrophic costs of the very sick, have always struggled with the fact that most of their money is spent on only a few members.

Usually, about 20% of the members claim more than they contribute. But, in the case of high-cost drugs, just 1.3% are sucking up a disproportionate chunk of the money.

This week, Discovery Health’s Inez Naidu said the average medical aid member who claimed for “high-cost” medicine claimed 300 times more than average members did for other drugs.

What complicates this is that the cost of expensive medicines such as Myozyme is rising at 7% for the medical scheme.

Many of the new medicines are biologics, which mimic a protein, enzyme or gene in the body. These are living organisms grown in laboratories. About half of them are for treating cancer.

This week, the IMS Institute for Healthcare Informatics, a global consultancy, reported that global cancer spending reached $100-billion (about R1.2trillion) last year.

This wrong-footed Discovery Health, whose actuaries were not able to accurately predict what these “high-cost” medicines would cost the scheme — and underestimated spending by R355-million.

Discovery Health CEO Jonathan Broomberg is “concerned” about the impact of more new, very expensive medicines coming onto the market.

“Discovery’s position is to support the choices of doctors and patients wherever possible, but cost impacts are a growing concern,” he said.

Meanwhile, the Department of Health warns that the government may take a hand in regulating these prices with the aid of “pharmacoeconomics” — which would require a pharmaceutical company to explain the price of its high-cost drugs by showing the value they offer.

This has never happened in South Africa, but the department’s Gavin Steel said companies could expect that they would soon need to explain the prices of costly drugs.

Du Plessis said: “When there is only one drug for the disease, and it’s life-saving, the world is the drug company’s oyster. They can charge what they like.”

Overseas, drug companies and medical aid schemes often enter into risk-sharing agreements — and medical schemes even negotiate discounts for the treatments that do not work.

But laws in South Africa, which give the government the power to set drug prices, make these discount schemes illegal.

At a medicines summit this week, Discovery Health called for legal reform on medicine prices to deal with escalating costs.

But Steel said if that were to happen, buyers of drugs would have to show that these discounts actually reached patients — and did not only benefit hospitals and the medical aid schemes.

The problem is that curbs on medicine prices would not incentivise research projects at pharmaceutical companies..

IMS researcher Michael Kleinrock defended these highcost medicines, saying: “We all accept innovation from pharmaceutical companies, but then we ask for a discount.”

But even he warned that drug prices would continue to rise as newer, more specialised and individualised treatments emerged or rare diseases were targeted.

“Eventually, society will need to decide what treatments it wants to pay for and what it is willing to pay for a drug. It is a discussion we need to have.”