Tuesday, July 29, 2014

Conflict Free Zone

I do not have ANY AFFILIATIONS that I need to disclose.  I am not employed by anyone.  I hold several volunteer positions within The Cystic Fibrosis Foundation (Great Strides Spokane, WA Chair, Idaho State Advocacy Chair, Patient Engagement Advisory Committee member).  I have zero conflicts of interest.  In fact, my only real interest in this topic is to see my child, and others that need it, have access to Kalydeco and other new therapies that might be available soon to treat CF.  This entry is simply the way that I see the flood of recent media attention, as a parent of a child with CF. Brady has been taking Kalydeco since February 10, 2012.

I can feel the storm brewing as Vertex's VX-809/VX-770 combo approaches the doors of the FDA. Kalydeco, The CF Foundation, and the astronomical price of this little blue pill have also been very hot topics in economic, pharmaceutical, and medical journals lately. Bloggers all have their own point of view on the issue.  I think I know a lot about it, so I'm offering mine--

The Issue--The Price of Kalydeco.
First of all, let me say that Brady has been enrolled in the Vertex GPS (patient assistance program), since his 6th birthday.  The case managers at Vertex have been really phenomenal to work with.  They are total experts at getting things done with insurance.  Nothing but good things to say about this program. The tricky part is that you must fall under the FDA approved guidelines to qualify for this program.  We pay $15/month out-of-pocket for Kalydeco.  Seems too good to be true.  Before Brady turned 6, Kalydeco was covered by the private insurance (Blue Cross/Blue Shield of Idaho), that we have through my husband's employer (Yes, we got insurance coverage, "off-label" for Brady at age 4 1/2.). Even though the approved label has now been expanded to several other gating mutations, and patients in other countries, the price of Kalydeco has mysteriously climbed over $6K/month over the last 2 1/2 years. Why is that? According to Vertex, they set the price of Kalydeco based on "the perceived benefit for the limited patient population."  Shouldn't MORE patients lead to a LOWER price?  Ha!  Not in a market economy!

The truth is that Vertex, as a company, took a huge blow with the recent failure of their hepatitis drug Incivek.  When Incivek was approved by the FDA in 2011, it generated huge sales for Vertex--estimated at around $951 million for the first 6 months it was on the market.  Their sales came to a screeching halt, as Abbvie and Gilead came out with newer, superior Hepatitis drugs, making Incivek virtually obsolete.  This Forbes article discusses the financial impact on this failed Hep C drug, which prompted Vertex to cut 15% of their workforce.  The article describes how "This has created an enormous gap in future earnings and Vertex needed to cut costs to make up for this loss."

Vertex is a FOR-PROFIT company in a free market economy.  They want to remain profitable as a business, so they can keep their doors open.  Vertex is using the sale of Kalydeco--their one and only successful drug, to make up for their losses in other areas of research, and close the expected earnings gap.

How Can Vertex Do That?  
Why Doesn't The CFF Make Them Charge Less?

Vertex has set the price of Kalyeco so extremely high, that it has delayed access to the drug in some countries (Australia and Canada most notably) and caused push-back from Medicaid in Arkansas.  Lately, I have been reading some criticism on the role of the CFF in this mess, and it upsets me.  This is what I know.
The Cystic Fibrosis Foundation has invested millions of dollars into Vertex (formerly Aurora Biosciences). This money has been used mainly to set up and operate a high-throughput screening lab, to allow scientists to screen thousands of compounds in search of those with the ability to restore chloride channel function. When compounds are discovered that enhance chloride channel activity, they can then be tweaked and further devoloped, tested on human cell lines in the lab, and eventually progress toward clinical trials in humans.  That is exactly how Kalydeco was discovered.  The work done by Vertex with the money invested by The CFF has been nothing short of incredible.  This is the cutting edge of genetic science.   Our understanding of CFTR function has been enriched enormously by their work, which has really set the stage for the whole "small molecule treatment based on mutation class" era that we are entering today.  Even if Vertex hadn't uncovered a blockbuster compound like Kalydeco...we still would have gotten our money's worth.  They did EXACTLY what they were given money to do, and they did a damn good job.  Never in the negotiation did The Cystic Fibrosis Foundation have the power to demand where Vertex must set the price of a drug--if it were to be discovered.  The CFF hoped they would find ANYTHING at all...and they found Kalydeco. Amazing!  At that point in time,  the CFF was knocking on doors begging pharmaceutical companies to do any CF research at all.  We didn't hold the power, or the stock, to have any real sway in setting the price point for Kalydeco.  That isn't how the free market operates.  Honestly, investing in research, there are MANY more failed projects than success stories.  The CFF has put millions of dollars into numerous companies over the years to do research that resulted in absolutely nothing.  That seriously happens all the time! Sometimes all we learn from our investments is what DOESN'T WORK.  Of course, some of those research risks also led to drugs like Pulmozyme, Tobi, and Cayston.  Ahhhh science--strikes and gutters. We paid Vertex to do the research so that it might not take their company out of business if they happened to roll a gutterball with their CF research.  Instead, they rolled a strike by discovering Kalydeco.

The money invested by The CFF into Vertex served to take away some of the huge financial risk of entering the realm of CF research.  Without development incentives, companies wouldn't bother getting involved at all.  The CF population is very small, and it is much more PROFITABLE to be involved in research for a cancer, diabetes, or cholesterol medication--that could potentially be prescribed to MILLIONS of people rather than a few thousand.  The fact that we are having this conversation means that the miracle drug exists...and falls into the "good problem to have" category, as far as I am concerned.

The Unfair Part

The major problem I have with the way this has played out, is that access discrepancies  leave some CF families PAYING TWICE.  The CF Foundation funded a significant portion of the the cost to develop Kalydeco, and the CF community works hard to keep money flowing to The CFF, through grassroots fundraising.  CFF execs also work hard to bring in millions in major donations. It just feels wrong and dirty that the price of Kalydeco is so exorbitantly high, that some eligible patients may never get the chance to try it. In the words of Dr. Francis Collins, "Drugs that are lifesaving, ought to be affordable." It makes me so sick to think about the patients in Australia, and other parts of the world that could benefit from Kalydeco, but don't have access to it because of cost negotiations. After all, it isn't the CF community's fault that Vertex's Hep C drug failed!  Why are we being saddled with the burden of recouping totally unrelated losses?  Because that is the way business works. Vertex charges $300K/yr for Kalydeco simply because THEY CAN. I obviously have some mixed feelings about Vertex.

The Good--The scientists couldn't be any higher on a pedestal in my mind...
The Bad--but I have issues with some of the executive behavior.
The Ugly--Vertex execs have made multi-millions on questionable stock exchanges, and are being investigated by the SEC.  Some patients that desperately need the drug, still don't have it, because of price issues.

Rumors About "Conflicts of Interest" for The CFF

The Cystic Fibrosis Foundation owns a small % of the rights to Kalydeco and receives royalties on its sale. The money that comes in from royalties is re-invested in further scientific research.  The CFF invested $75 million in Vertex to develop Kalydeco.  The CFF then sold a portion of those rights for $150 million (double our original investment!), investing that money in further projects with Vertex, and new projects with pharma giants Pfizer and Genzyme.  Some people argue that it is unethical for The CFF to promote the sale of Kalydeco, which it now considers the standard of treatment for approved mutations, and receive cash royalties for every astronomically priced prescription that is filled.  This is an investment model that The CF  Foundation has used in the past, that has successfully generated millions for new research.  In fact, $20 million of the original $75 million that was invested in Vertex came from the royalties that The CFF made from sales of TOBI. Was THAT wrong? And I will argue that The CFF recommends Kalydeco as a standard of treatment because the science shows it is by far the most beneficial treatment for these eligible CF patients--not to line their own pockets.  It would be absurd if The CFF DIDN'T recommend Kalydeco!  This is certainly not the first time The CFF has used royalties to further scientific discovery, and it has resulted in some amazing improvements to treating CF.   This "venture philanthropy" model is precisely what sets The CFF apart from other disease non-profits.  The CF Foundation may not have the power to demand that Vertex charge a lower price, but they can choose to broaden their investment portfolio, in hope of giving Vertex some direct competition.  In this article, Dr. Beall says,

"Without the financial support of the foundation drugs such as Kalydeco would never get on the market".  He rejected the idea of using the royalty money to help patients pay for the medical care, noting that foundation needed the money to entice large drug companies such as Pfizer to get involved in risky cystic fibrosis drug research.  He said he could only express his concern about the price and invest funds with other companies that might develop competing drugs that someday could bring the price down.  

Bringing competitor potentiators and correctors to the market is how we are going to influence the price of treating CF, and The CF Foundation has been absolutely masterful at not putting all their eggs in one basket. The CFF now has numerous partners like Pfizer, Abbvie, N30, and Galapagos working to bring better, competitive compounds to market.  Vertex got burned when competitors made their Hep C drug Incivek obsolete...the same exact thing could happen to Kalydeco or the VX-809/VX-770 combo.  The CF Foundation is working to lower the cost of these treatments in the most effective, realistic manner our system allows.  And I honestly don't see the conflict of interest in re-investing a portion of the sale of Kalydeco back into research.  As a parent, and "paying customer," I would rather see at least a small part of the monthly payment from our insurance go back to The CFF for continued research.  I think that is the investment that will provide Brady with the greatest returns--in the form of a long healthy life.  The alternative is to see 100% of the money go to Vertex, and miss out on those research opportunities.  It isn't going to lower the price of Kalydeco a single penny if The CFF sells their rights.  It would just be someone else collecting the check at the end of the day.  You know how many Great Strides walks and family bake sales it would take to raise the $150 million in royalties we have received from Kalydeco?  I say we keep the damn money and put it right back into the laboratory.

Speaking of Fat Checks...I've Heard Some Complaints About the Salaries of The CFF Executives Also. 

The CFF has been lead by CEO Dr. Bob Beall, and COO Rich Mattingly for well over 30 years.  These men have dedicated their lives and careers to creating hope, where there was none.  In terms of non-profit disease organizations, The Cystic Fibrosis Foundation is the envy of the industry.  They have had more SUCCESS in changing the course of the history of a genetic disease than some people believed possible. That success came from a radical departure from the typical non-profit operations.  That success came from huge risks that others weren't willing to take.  That success came because our leaders are absolutely extraordinary.  Charitywatch.org reports Dr. Beall's salary at slightly over $1 million per year.  I believe that he is worth every single penny.  We simply wouldn't be where we are today without their unique vision and never quit attitude.  I am  not interested in a mediocre leader for this organization.  I want to cure this disease.  Our leadership is NOT where we want to settle for second-rate, and try to pinch pennies.  Just because it is a non-profit organization, doesn't mean that The CFF doesn't compensate it's own employees, and we want the best!  Of course, there are thousands of individuals that contribute great value to the organization on a volunteer basis.  The executive team, however, is made up of top notch professionals that have made curing CF their entire career.  Criticize all you want, but the fact is, that Dr. Beall's salary is a mere drop in the bucket compared to the multi-millions he BRINGS IN to The CF Foundation every year.  He secured $20 million from Bill Gates alone, in 1999, to get the initial project (The Aurora Project) with Vertex (formerly Aurora Pharmaceuticals) off the ground.  I will argue, until I am blue in the face, that the CFF execs are a HUGE NET WIN for the CF Community.  I admire them as heroes, and can't imagine trying to put an actual value on their worth.  If we want the best in the business, we have to be willing to compensate them appropriately.  And after 30+ years at the same organization, I can't imagine anyone accusing them of staying with CFF to get rich.  INDUSTRY is where the big money is made with expertise like that.  I stand in firm defense of The CFF execs, and their SUCCESSFUL venture philanthropy business model.  If you take Kalydeco, Pulmozyme, Tobi, Cayston, prescription digestive enzymes, or basically any other drug developed to treat CF, you should thank Bob Beall, Rich Mattingly, and Preston Campbell at the CFF. They are responsible for extending people's lives.

Back to the Value of Kalydeco  

Lastly, I've been reading plenty of speculation on the effectiveness of Kalydeco, mostly in financial papers.
Is Kalydeco really THAT good?  Is it really worth the price if patients don't experience close to a "cure"? What about the side effects?

Here is the deal--just as no two cases of CF are alike (even with siblings with CF), no two patients will respond in exactly the same way to Kalydeco.  One big factor is how much "permanent damage" or bronchiectasis, the patient has sustained.  When a patient (with a gating mutation) begins taking Kalydeco,
their Chloride transport is suddenly turned ON.  This new found functioning at the cell surface causes a flush of hydration to those tissues and can stir up some mucous plugs and pockets of infection that may have been hanging out for DECADES in some patients.  For most adults initiating Kalydeco, they go through a period of time that can last from several days to even a few months where their body sort of PURGES old mucous and adjusts to the new mode of operation.  Stirring up these old infections can cause fever, flu-like symptoms, almost unbelievable amounts of flying mucous, and an overall feeling of unwellness (from what I've heard).  HOWEVER, once the initial clearing phase is over, patients report deeper breathing, more watery mucous, and decreased coughing.  In general, well-being is IMPROVED when the body's chloride is functioning more normally.

Imagine a 40 year old man that had smoked cigarettes daily since the age of 15.  If he stopped smoking one day, his body would adjust, and he would experience some HUGE benefits to his breathing ability.  His lungs would start to clear some of the gunk, and greatly slow the rate of decline of lung function.  Still, he may have already developed some emphysema or COPD, and will never breath like someone who had never smoked a day in their life.  He may still need medications to treat his lungs, and may still succumb to illnesses like pneumonia more easily.  He may still, eventually die of lung related problems...even though he stopped smoking.

Hopefully, we don't have many smokers in the CF community, but you can relate the huge spectrum of responses to Kalydeco to this scenario, and understand that the type of maintenance therapies required to manage each person's disease from that point forward will be completely unique.  Scientists are learning more every year about how Kalydeco impacts the body, and have broadened their scope of interest beyond the lungs.  They are looking at how Kalydeco impacts digestion, liver function, sinus function, development of CFRD, etc...  I feel compelled to attend the NACFC each year to stay updated on the newest Kalydeco research.  So far, the more I learn, the better it gets.  Here are some of the highlights--

You don't need to be a scientist to read this graph.  I burst into tears the first time I saw it. Huge increase in FEV1% predicted almost immediately upon initiation of Kalydeco--maintained fairly evenly for the course of the trial.

Another clear example of the power of this drug.  We have NEVER had anything in our hands with the power to change sweat chloride levels--which are (at least loosely) linked to CFTR function.  This graph shows a huge decrease in sweat chloride for patients taking Kalydeco--again, sustained through the course of the trial.
This is a summary from the GOAL study, which examined different study endpoints than were reported on in the phase 3 trial.  Report represents longer term data...shows continued awesomeness.  

I saw data for the first time at The NACFC 2013 that patients experienced a decrease in hospitalization rate with Kalydeco.

Patients taking Kalydeco also have 35% reduced odds of culturing positive for Pseudomonas.

Ivacaftor has been shown to normalize the pH in the lung, enhancing the body's own natural lung defense--proper pH promotes the lungs own "killing power" of invading bacteria.

Ivacaftor has also been shown to normalize pH in the intestines, enhancing the function of the digestive enzyme replacements that most CF patients rely on at every meal.  The enzymes are designed to dissolve when their environment turns from acidic to basic.  This is supposed to happen at the beginning of the small bowel.  CF patients often have trouble achieving that basic environment because of impaired bicarb channel function (bicarb "neutralizes" the acid, changing the pH in healthy individuals).  Many CF patients take acid blockers of some kind to aid the body in achieving a basic intestinal pH.  Patients taking Kalydeco saw intestinal pH normalize, thereby bringing their bodies into the zone where their enzymes would work at their absolute best.  

I am hoping to hear more information on Kalydeco's ability to impact pancreatic function and the development of CFRD at upcoming Conference!  Still an unknown, but an exciting prospect!
Beyond all this "official data," you can read the most recent update on Brady's personal response to Kalydeco in this previous blog entry.

Bottom line: If you want to question the effectiveness of Kalydeco, please bring some real data to back it up. Published information, and what I have seen personally in Brady and the many others I have connected with on Kalydeco, show a highly effective, life-changing  drug for eligible mutation types.  I have heard individuals bring up the fact that those on Kalydeco still showed some decrease in lung function over time. That is very likely true, but the rate of that decline has been cut in HALF.  The long-term data presented at the European Cystic Fibrosis Society Conference still paints a pretty rosy picture, as far as I am concerned. Patients with COPD, asthma, or any other lung disease may experience a decrease in lung function over time also. We may not have achieved perfection with Kalydeco...but we have major improvement.  Patients taking Kalydeco first saw a huge jump in lung function, followed by a reduction in the rate of decline.  Win. Win.

Closing Thoughts
*I believe that The CF Foundation is fighting exorbitant drug pricing in the best possible manner within our system--by investing in competition.  If we want to be in the game at all, we have to follow the free market rules, and you've got to play to win!  I will also argue that CFF execs are worth every penny they are paid.

*Kalydeco wouldn't exist without the venture philanthropy model--which has fueled a large part of the CFF's drug development success.

*Vertex is behaving as many businesses do (despicable, but not overly surprising).  They have a blockbuster in their hands now with Kalydeco, and a recent failure with Incivek.  As far as anyone knows, they haven't done anything illegal.

*Lastly, I could never describe how deeply I appreciate the work done at Vertex Pharmaceuticals.  I mean, I have their molecule tattooed on my left foot.  All I am saying...is that it is my one and only tattoo, and I have plenty of empty real estate where I can place the next amazing compound that comes around!  I would love nothing more than to see my precious Kalydeco become obsolete (and cheap) when a competitor drug maker eventually comes to market with an even more effective potentiator!  Please be respectful in your comments, and remember that I represent no one but myself.

For Reference

Here are some of the publications referenced within the blog...if you are looking for some more light reading.

This article, "Open Channels," was in The NewYorker Magazine in 2009, and details the CFF's financial involvement in the development of Kalydeco, and demonstrates the unique leadership style of the CFF execs.

"Cystic Fibrosis: Charity and Industry Partner for Profit."  This article explains the "venture philanthropy model" and outlines potential conflicts of interest.

"The Curious Timing of those Vertex Stock Sales," describes the questionable stock sales that led to the SEC probe.

"Charity's Investment a Prescription for Profits for Drug Maker." More info on Vertex stock profits, orphan disease drug development, and financial entanglement with industry.

Drugmakers Find Breakthroughs in Medicine Tailored to Individuals' Genetic Makeups was published in The Washington Post on June 1st, and discusses the expensive new era of genetic medicine.  Brady's Kalydeco Story is featured in this article!

"Vertex Failure Shows Biotech is Not Immune to Pharma Type Layoffs" Describes some of the damage control measures taken by Vertex to stay in the game.

"Kalydeco: A Miracle Drug With a Catch" describes access struggles in Canada.

In "The Miracle Drug That Has Changed My Life," read about access issues in Australia, and the absolute cruelness of the delays caused by continued price negotiations.

"Top 25 Compensation Packages" from The American Institute of Philanthropy reports on salaries of non-profit leaders.

"Cracking Your Genetic Code" is an awesome PBS NOVA special, that features Kalydeco story about mid-way through.  AN ABSOLUTE MUST SEE!

"Four Studies of Vertex's Kalydeco" presented at The European Cystic Fibrosis Society Conference this June.


  1. Thank you for your information an insitefull words. :-) From a CFer of 33yrs I personally do not benefit from Kaleydeco or the upcoming compound, but I have friends that do and I am immensely happy for them. I can't express how excited I am to see the leaps and bounds that scientist's are making in CF research every year.
    I sincerely hope Brady continues to improve and lives a healthy and long life. #CFWarriors4life #mydreamistoseeacure

  2. The alternative thing that could have happened with Vertex is that it could have gone bankrupt after their Hepatitis drug failure. The Intellectual Property could have been sold sold off at a more appropriate valuation for the drug to be priced at a more realistic level. CFF would probably lose most of their investment in Kalydeco... but the drug would still exist to help sufferers. Also, alternative CF drugs would not necessary decrease the price of Kalydeco either - but there is still opportunity for better treatments and helping more of the CF population. These drug companies are likely to be just as unwilling to lower their price as Vertex is. The patent expiry date in 2024 probably has the biggest potential to lower the price of the drug.

    1. This comment has been removed by the author.

    2. Thanks for reading Geoff! If Vertex were to sell the rights to Kalydeco for any reason, including bankruptcy, the new owners of the rights would also be completely free to choose their own price--and right now, patients in 49 out of 50 U.S. states are accessing Kalydeco at $300,000+, even with Medicaid (excluding Arkansas)! I believe that the price will be as high as the market will support, and so far, Vertex has pushed it up to the threshold! I agree with you--I don't think it is realistic to expect a new company to lower the price of the drug simply because "it is the right thing to do." I am pleased though, that The CFF's partnership with Vertex has led to some big opportunities for research for the CFF. When the CFF sold a portion of their Kalydeco rights, they DOUBLED their original investment (invested $75 million, made $150 on sale of rights, and they are STILL making money on royalties!). Each year at NACFC, I become more and more hopeful about new companies coming to the market with competitors sooner, rather than later. I am going to be cautiously optimistic, and disagree with you about having to wait for the patent to expire, but I guess only time will tell! Thanks again for your comments!

  3. Hi Rebecca. The problem we have now is that many new potentiators and correctors are being found among already approved compounds and organizations like the CFF are not financing clinical trials.
    The Dutch public health service are now financing two new clinical trials:
    one of them is a combination of Curcumin and Genistein as a CFTR potentiator. This would be a direct competitor of Kalydeco, if successful (but treatment would cost 1000th of Kalydeco).
    The second trial is a combination of Genistein and Ivacaftor:

    The ex-vivo and in-vitro experiments to date have been hugely convincing. Yet, why haven't the CFF even discussed them? In particular, genistein has huge potential as an addition to the Ivacaftor/Lumicaftor therapy, due to Lumicaftor interacting with Ivacaftor. Why is there even no talk of these therapies? I can tell you why. They are not patentable, an no pharma company can make money from them. For such candidate therapies, the CFF should help push them. But no, there's only silence. And you're claiming they have no conflict of interest with big pharma? I don't agree.