While there has been no shortage of press about the recent FDA approval of MakenaTM, made by K-V Pharmaceutical Company, I think the recent recently published letter in the New England Journal of Medicine about the pharmacoeconomics of the drug is quite useful.
Separate from the business and ethical questions of the $30,000 plus price tag for Makena (a drug that previously cost around $300 as a generic), one could argue that the pharmacoeconomics of the drug at the new price may still render the medication a cost-effective therapy. A physician at Aetna examined just this question, evaluating the pharmacoeconomics of Makena based on the likely rate of treatment, the efficacy of the drug versus placebo, and the subsequent costs avoided due to treatment.
Based on published literature, Aetna estimated that about 139,000 women are candidates for Makena, of which about 22% (30,500) are likely to have a recurrent preterm birth absent medication. With treatment, 33% (10,000) preterm births could be prevented, saving $334 million in direct medical costs and $519 million in indirect medical costs. The indirect medical costs include maternal care, special education, early intervention costs, etc. The cost of treating the 139,900 women, at $29,000 per course of treatment (price before distribution mark-ups) would be $4.0 billion. Accordingly, including both direct and indirect medical costs, Makena will cost $8 for every $1 saved, a strongly negative ROI.
However, one could argue that demonstration of net cost-savings should not be the criteria for coverage but rather payers should examine the drug’s cost-effectiveness, measured as cost per life-year saved (LYS). To meet the threshold of $100,000 per LYS (inflation adjusted for the more commonly used $50,000 per quality-adjusted life year), the drug would need to prevent nearly 35,000 life years or 435 deaths, assuming an average lifespan of 80 years. Previous studies suggest this is unlikely as the drug has shown a small (and not statistically significant) effect on reducing mortality.
Another coverage option is to identify opportunities to further target use of the drug to patients at the greatest risk for preterm birth. However, even with an ability to target only patients with a 100% risk of preterm birth (highly implausible), the drug would still cost nearly double the amount it saves in direct and indirect medical costs given its effectiveness. Of course, these figures represent back-of-the-envelope pharmacoeconomic calculations for Makena; but absent very significant unmeasured benefits, the analysis highlights the difficulty this drug will have in demonstrating a favorable pharmacoeconomic profile.