13 June 2024
Maxence Peigné
Eurydice Bersi (Reporters United)
Cystic fibrosis ‘miracle’ drugs priced higher for poorer EU countries
Cystic fibrosis ‘miracle’ drugs priced higher for poorer EU countries
13 June 2024Investigate Europe reveals how cystic fibrosis patients across the continent have been priced out of access to life-saving medications.
Like most children with cystic fibrosis, Milda has coughed and struggled to gain weight all her life. The genetic condition causes mucus to clog and damage the lungs and patients are prone to infections. "Look, I am strong!", says the three-year-old as she sucks on a bottle curled up on a sofa by her mother's side. The drink is packed with the nutrients she needs to fight her disease. It is part of a daily routine that involves two hours of physiotherapy, pills to ease digestion and, in the worst scenarios, antibiotics and hospital visits. "Yes, you are strong," says her mum, Urtė Gylienė, reassuringly.
Thankfully, game-changing medicines known as CFTR modulators have been approved in the EU since 2012. Four are now on the market, including the more recent ‘miracle’ Kaftrio and Kalydeco therapies. Unfortunately for the Gylienė family, they live in Lithuania where the drugs are not yet reimbursed. They are prescribed in most of Europe but access has been delayed in many countries due to exorbitant prices. Investigate Europe research has found that poorer nations can foot higher bills than their richer neighbours.
"It's insane when you find out that other countries have those miraculous drugs and you are left behind," Gylienė laments. "This is a progressive disease, within years it gets worse and worse. It is my biggest fear that she will suffer and she will die in my arms."
Certain categories of new drugs are centrally approved by the European Medicines Agency, but each EU state has to negotiate prices with companies directly. These deals are highly secretive, which favours the likes of Vertex Pharmaceuticals, the US biotech firm with a monopoly on the four CF drugs. Richer countries with higher purchasing power also benefit and can often negotiate cheaper prices than poorer nations or those with smaller markets.
Analysis of Vertex’s corporate filings as well as budget and health data from national authorities provides for the first time a glimpse into price disparity across Europe for these life-saving medications.
In western Europe, Investigate Europe compared Vertex's local revenues to the official number of patients taking the company's drugs in 2022. The average, excluding VAT, was estimated to be around €71,000 in France, €81,000 in Italy, €87,000 in Spain and €88,000 in the Netherlands per patient annually.
In Spain, a 2022 audit of one region's finances revealed that the state negotiated a discount of 51 per cent to 74 per cent on Kaftrio, depending on volumes purchased. There, a box of the drug costs a maximum of €5,200, according to the auditors. In France, government data shows that the healthcare system enjoyed a 51 per cent rebate from all CFTR modulators revenues as of 2021.
Thankfully, game-changing medicines known as CFTR modulators have been approved in the EU since 2012. Four are now on the market, including the more recent ‘miracle’ Kaftrio and Kalydeco therapies. Unfortunately for the Gylienė family, they live in Lithuania where the drugs are not yet reimbursed. They are prescribed in most of Europe but access has been delayed in many countries due to exorbitant prices. Investigate Europe research has found that poorer nations can foot higher bills than their richer neighbours.
"It's insane when you find out that other countries have those miraculous drugs and you are left behind," Gylienė laments. "This is a progressive disease, within years it gets worse and worse. It is my biggest fear that she will suffer and she will die in my arms."
Certain categories of new drugs are centrally approved by the European Medicines Agency, but each EU state has to negotiate prices with companies directly. These deals are highly secretive, which favours the likes of Vertex Pharmaceuticals, the US biotech firm with a monopoly on the four CF drugs. Richer countries with higher purchasing power also benefit and can often negotiate cheaper prices than poorer nations or those with smaller markets.
Analysis of Vertex’s corporate filings as well as budget and health data from national authorities provides for the first time a glimpse into price disparity across Europe for these life-saving medications.
In western Europe, Investigate Europe compared Vertex's local revenues to the official number of patients taking the company's drugs in 2022. The average, excluding VAT, was estimated to be around €71,000 in France, €81,000 in Italy, €87,000 in Spain and €88,000 in the Netherlands per patient annually.
In Spain, a 2022 audit of one region's finances revealed that the state negotiated a discount of 51 per cent to 74 per cent on Kaftrio, depending on volumes purchased. There, a box of the drug costs a maximum of €5,200, according to the auditors. In France, government data shows that the healthcare system enjoyed a 51 per cent rebate from all CFTR modulators revenues as of 2021.
In comparison, the expenditure per patient in some central and eastern European countries appears higher. Investigate Europe analysis of national drug expenditure reports estimates that in 2023, Poland spent an average of around €109,000 before VAT per patient on CFTR modulators. The national health fund said that "all rebates or discounts negotiated with pharma companies are included" in their figures, though some paybacks, which one former health official calls "insignificant", are not counted. In the Czech Republic, the estimate is €140,000, based on 2022 data which includes "the real cost paid for this kind of treatment", according to VZP, the country's largest public insurer. It is not clear if any tax is factored in.
For the above countries, Investigate Europe only looked at data reflecting a full year of availability of all four Vertex drugs. Kaftrio and Kalydeco account for most of the costs. The amounts quoted are estimated averages, since patients may start treatment later in the year or move from one drug to the other. As a result, the real reimbursement price of each medicine can differ.
For the above countries, Investigate Europe only looked at data reflecting a full year of availability of all four Vertex drugs. Kaftrio and Kalydeco account for most of the costs. The amounts quoted are estimated averages, since patients may start treatment later in the year or move from one drug to the other. As a result, the real reimbursement price of each medicine can differ.
In Lithuania, three-year old Milda doesn't have access to Kaftrio.
The government announced in April that it was ready to pay as much as €8.4 million to provide Kaftrio/Kalydeco for up to 48 patients.
After years of trying to extract a better price, the Lithuanian government said in April that it was ready to pay as much as €8.4 million to provide Kaftrio and Kalydeco for up to 48 patients. This could equate to €175,000 per person. The Lithuanian health ministry could not say when the therapies might be available. Due to the expected costs, treatment will be limited initially to the most ill patients aged six and above, about half of the country's CF population.
As Milda is too young to be eligible, she will keep enduring daily lung drainage. "There are so many kids that can't wait a day anymore," says her mum. "I'm really angry because Vertex makes a drug that's not available." Cystic fibrosis affects around 54,000 people in Europe and more than half of related deaths in 2022 were of those aged 18 to 39.
As Milda is too young to be eligible, she will keep enduring daily lung drainage. "There are so many kids that can't wait a day anymore," says her mum. "I'm really angry because Vertex makes a drug that's not available." Cystic fibrosis affects around 54,000 people in Europe and more than half of related deaths in 2022 were of those aged 18 to 39.
In Poland, where talks dragged on for months, Kaftrio is restricted to patients above 12-years-old as no price was agreed for younger ones. Estonia is also finally set to reimburse Kaftrio this summer. When it approaches states, Vertex can ask for more than €200,000 per patient per year. State officials across Europe told Investigate Europe how pressure placed on them from the media and patient organisations gives Vertex the upper hand in negotiations.
"The price of our medicines is based on their innovation and the value they bring to the CF community, caregivers and healthcare systems," a Vertex spokesperson said. "The reimbursed prices quoted in your inquiry are inaccurate." The company declined to comment on individual countries or to specify the inaccuracies.
"The strategy for companies is always profit maximisation," says one European state negotiator with experience of Vertex. "So it's not in their interest to make you a good offer." EU countries don't know how much others pay, says the official, who asked to remain anonymous, adding that “if a company has billions of profit, you can definitely conclude that we all pay way too much."
Some states do not have the luxury to negotiate. In its response to Investigate Europe, Vertex named Cyprus among the nations that have "sustainable access" to its medicines. But the company has not sought a reimbursement deal. This means Cyprus has no discount on the price and access is decided on an individual patient basis, which leaves the state paying a higher fee, likely around the €200,000 commonly set by Vertex. “There is no negotiation" in these types of deals, says Athos Tsinontides, director of health services at the Cyprus Health Insurance Organisation.
"The price of our medicines is based on their innovation and the value they bring to the CF community, caregivers and healthcare systems," a Vertex spokesperson said. "The reimbursed prices quoted in your inquiry are inaccurate." The company declined to comment on individual countries or to specify the inaccuracies.
"The strategy for companies is always profit maximisation," says one European state negotiator with experience of Vertex. "So it's not in their interest to make you a good offer." EU countries don't know how much others pay, says the official, who asked to remain anonymous, adding that “if a company has billions of profit, you can definitely conclude that we all pay way too much."
Some states do not have the luxury to negotiate. In its response to Investigate Europe, Vertex named Cyprus among the nations that have "sustainable access" to its medicines. But the company has not sought a reimbursement deal. This means Cyprus has no discount on the price and access is decided on an individual patient basis, which leaves the state paying a higher fee, likely around the €200,000 commonly set by Vertex. “There is no negotiation" in these types of deals, says Athos Tsinontides, director of health services at the Cyprus Health Insurance Organisation.
“It's insane when you find out that other countries have those miraculous drugs and you are left behind.”
— Urtė Gylienė
On paper, German public health insurers pay more than most. Taking into account only openly known rebates, an annual course of Kaftrio with Kalydeco costs around €150,000 in Germany. AOK, a major German insurer, told Investigate Europe that they do not have an agreement with Vertex for further discounts. Yet, various European negotiators and researchers, speaking on condition of anonymity, expressed strong doubts about publicly available German prices in general.
The beginning of the highly sought-after medicines was in 2000 when the non-profit Cystic Fibrosis Foundation agreed to fund Aurora Biosciences, a US pharmaceutical firm, to discover new therapies against the disease. One year later, Vertex bought Aurora and continued the partnership. As part of the arrangement, the foundation bankrolled Vertex's therapy development with $150 million against royalty rights on future sales. Simply put, Vertex would own the patents and market the drugs, while the non-profit would take a slice of all future revenues.
"It was brave of the company to invest in it, but it only did it because the Cystic Fibrosis Foundation offered money," says Prof Martin Hug, chief pharmacist at the University Hospital of Freiburg, in Germany. As the father of two daughters with CF, he is grateful to live in a country willing to pay for the treatments, even though "it would be presumptuous to let the prices be as high as they are because our society can afford it." But, he adds: "You also have to realise that the development of drugs for rare diseases in particular is very, very expensive.”
Vertex said it has "invested over $10 billion overall into research and development for CF. Over the past 10 years, we've invested more than 70 per cent of our operating expenses back into R&D."
Research and development aside, only around four per cent of what Vertex charges for its medicines relates to manufacturing costs, according to analysis of its latest accounts. The group spent about $400 million to produce pills in 2023. It sold them for $9.8 billion globally. Its other outlay on selling the drugs came from its royalties agreement with the Cystic Fibrosis Foundation. Except the non-profit is no longer the beneficiary.
The beginning of the highly sought-after medicines was in 2000 when the non-profit Cystic Fibrosis Foundation agreed to fund Aurora Biosciences, a US pharmaceutical firm, to discover new therapies against the disease. One year later, Vertex bought Aurora and continued the partnership. As part of the arrangement, the foundation bankrolled Vertex's therapy development with $150 million against royalty rights on future sales. Simply put, Vertex would own the patents and market the drugs, while the non-profit would take a slice of all future revenues.
"It was brave of the company to invest in it, but it only did it because the Cystic Fibrosis Foundation offered money," says Prof Martin Hug, chief pharmacist at the University Hospital of Freiburg, in Germany. As the father of two daughters with CF, he is grateful to live in a country willing to pay for the treatments, even though "it would be presumptuous to let the prices be as high as they are because our society can afford it." But, he adds: "You also have to realise that the development of drugs for rare diseases in particular is very, very expensive.”
Vertex said it has "invested over $10 billion overall into research and development for CF. Over the past 10 years, we've invested more than 70 per cent of our operating expenses back into R&D."
Research and development aside, only around four per cent of what Vertex charges for its medicines relates to manufacturing costs, according to analysis of its latest accounts. The group spent about $400 million to produce pills in 2023. It sold them for $9.8 billion globally. Its other outlay on selling the drugs came from its royalties agreement with the Cystic Fibrosis Foundation. Except the non-profit is no longer the beneficiary.
Vertex Pharmaceutical's headquarters in Boston, USA.Shutterstock
Between 2014 and 2020, Royalty Pharma bought the foundation’s royalty rights for almost $4 billion. The New York-listed investment firm now pockets nine per cent of all CFTR modulators earnings worldwide, in perpetuity. In just seven years, it cashed in over $4 billion, its accounts show. The deal was all the more lucrative in that Royalty Pharma pays zero corporation tax across a string of entities in tax havens like Ireland and Delaware.
"Investors in Royalty Pharma plc pay taxes on the income earned by Royalty Pharma plc on a pass-through basis," a spokesperson said. "Royalty Pharma plc does not pay any tax because it is taxed as a fund." The group said it was proud to have helped the Cystic Fibrosis Foundation "accelerate their mission."
The firm's portfolio boasts several other blockbusters: Xtandi, a prostate cancer drug, or Imbruvica, a Leukaemia treatment, contributed to its $3 billion of royalties in 2023.
Financial records are not the only way to lift the veil on CFTR modulators' true costs. Dr Andrew Hill, a British researcher and adviser to the World Health Organisation, monitors shipments of Vertex's raw ingredients on import-export databases. Tracking their value, his team calculated that Kaftrio could be produced for just $5,600 per patient per year and would still be profitable.
"I think it's outrageous if a drug company is so determined to get a price that's not even cost-effective and let children die,” he says. “But Vertex has a monopoly so the choice for a country is either you buy this drug at the Vertex price, or you get nothing and your children suffer."
Vertex said that the production costs quoted in this article are inaccurate. "In addition, the price of these medicines is not determined by the production costs, but by the investment made in their development, the risk undertaken, and their value to patients and the health care system," a spokesperson added.
"Investors in Royalty Pharma plc pay taxes on the income earned by Royalty Pharma plc on a pass-through basis," a spokesperson said. "Royalty Pharma plc does not pay any tax because it is taxed as a fund." The group said it was proud to have helped the Cystic Fibrosis Foundation "accelerate their mission."
The firm's portfolio boasts several other blockbusters: Xtandi, a prostate cancer drug, or Imbruvica, a Leukaemia treatment, contributed to its $3 billion of royalties in 2023.
Financial records are not the only way to lift the veil on CFTR modulators' true costs. Dr Andrew Hill, a British researcher and adviser to the World Health Organisation, monitors shipments of Vertex's raw ingredients on import-export databases. Tracking their value, his team calculated that Kaftrio could be produced for just $5,600 per patient per year and would still be profitable.
"I think it's outrageous if a drug company is so determined to get a price that's not even cost-effective and let children die,” he says. “But Vertex has a monopoly so the choice for a country is either you buy this drug at the Vertex price, or you get nothing and your children suffer."
Vertex said that the production costs quoted in this article are inaccurate. "In addition, the price of these medicines is not determined by the production costs, but by the investment made in their development, the risk undertaken, and their value to patients and the health care system," a spokesperson added.
“I think it's outrageous if a drug company is so determined to get a price that's not even cost-effective and let children die.”
— Andrew Hill, British researcher and adviser to the WHO
In an application to the Australian health authorities, the company assessed that generics - replica drugs made by other companies - could be 90 per cent cheaper when Kaftrio's period of exclusivity ends. In Europe, the drug's patent is not expected to expire until 2037.
For now, generics of the medication are only sold in Argentina, where patent laws are less restrictive. A yearly supply of a Kaftrio copycat there can cost $100,000, much less than elsewhere, but still prohibitive for many. Scarce alternatives include crowdfunding, or moving to a different country.
Monika Luty, a 27-year-old from Poland, was forced to do both. In 2020, her condition was so poor that her lung capacity dangerously neared 20 per cent and she weighed just 37 kg. She posted a video online, begging Vertex to give her Kaftrio. At the time it had EU approval, but was not reimbursed in Poland.
"I felt a huge disappointment," she says. "Living in the EU, being Polish, I was discriminated against because I was not German or of another nationality where treatment was available. There should be no discrimination in the EU."
Her plea to the company was in vain. Her friends helped her crowdfund over €200,000 and her dad sold his car so she could buy the drugs from Germany and, seeing how effective they were, she crossed the border for good when she felt better. She moved to Frankfurt, got an office job and received a free prescription for Kaftrio.
"I paid zero, so I was crying because it was so easy," she remembers. "To get the drugs in Germany, all I needed was insurance, a job and to live there." Two years later, Luty returned to Poland when modulators became available. Though her health improved, the medication was not a silver bullet. She suffered from depression while taking the pills, a known potential side effect of the treatment.
For now, generics of the medication are only sold in Argentina, where patent laws are less restrictive. A yearly supply of a Kaftrio copycat there can cost $100,000, much less than elsewhere, but still prohibitive for many. Scarce alternatives include crowdfunding, or moving to a different country.
Monika Luty, a 27-year-old from Poland, was forced to do both. In 2020, her condition was so poor that her lung capacity dangerously neared 20 per cent and she weighed just 37 kg. She posted a video online, begging Vertex to give her Kaftrio. At the time it had EU approval, but was not reimbursed in Poland.
"I felt a huge disappointment," she says. "Living in the EU, being Polish, I was discriminated against because I was not German or of another nationality where treatment was available. There should be no discrimination in the EU."
Her plea to the company was in vain. Her friends helped her crowdfund over €200,000 and her dad sold his car so she could buy the drugs from Germany and, seeing how effective they were, she crossed the border for good when she felt better. She moved to Frankfurt, got an office job and received a free prescription for Kaftrio.
"I paid zero, so I was crying because it was so easy," she remembers. "To get the drugs in Germany, all I needed was insurance, a job and to live there." Two years later, Luty returned to Poland when modulators became available. Though her health improved, the medication was not a silver bullet. She suffered from depression while taking the pills, a known potential side effect of the treatment.
Polish Monika Luty had to move to Germany to have access to Kaftrio.Monika Luty
"It's really awful and upsetting when you hear what families are having to do to access these drugs," says Gayle Pledger, co-founder of Vertex Save Us, an advocacy group.
"Vertex is prepared to sit back and hold out for the highest price during negotiations, even if this costs patients’ lives, and during this time, CF communities become more and more desperate and put pressure on their governments to pay the prices, when actually the root of the problem is these extortionate prices themselves."
The assumption that Vertex's demands are disproportionate has led to clashes with several governments. In Britain, health authorities recently criticised Kaftrio's cost-effectiveness and threatened to cut reimbursement for new patients. In a previous stand-off with the UK, the manufacturer destroyed 600 years' supply of Orkambi, another of its treatments.
In Ireland, a dispute with the government kept Kaftrio out of reach from 35 children in 2022 because their gene mutation was excluded from an earlier contract and Vertex pressed for additional payment. It was nearly a year before the children eventually received the drug.
"It was horrific, it was 11 months of torture and of crying every day," reflects Gràinne Uí Lúing, whose two daughters were affected by the delay. "It just came down to money for Vertex. Nothing personal about this. Nothing medical. Just money and filling their pockets. It's disgusting."
"Vertex is prepared to sit back and hold out for the highest price during negotiations, even if this costs patients’ lives, and during this time, CF communities become more and more desperate and put pressure on their governments to pay the prices, when actually the root of the problem is these extortionate prices themselves."
The assumption that Vertex's demands are disproportionate has led to clashes with several governments. In Britain, health authorities recently criticised Kaftrio's cost-effectiveness and threatened to cut reimbursement for new patients. In a previous stand-off with the UK, the manufacturer destroyed 600 years' supply of Orkambi, another of its treatments.
In Ireland, a dispute with the government kept Kaftrio out of reach from 35 children in 2022 because their gene mutation was excluded from an earlier contract and Vertex pressed for additional payment. It was nearly a year before the children eventually received the drug.
"It was horrific, it was 11 months of torture and of crying every day," reflects Gràinne Uí Lúing, whose two daughters were affected by the delay. "It just came down to money for Vertex. Nothing personal about this. Nothing medical. Just money and filling their pockets. It's disgusting."
Caoimhe, 10, and Fiadh, eight, were at the heart of price row between Vertex and the Irish government.
The dispute impacted 35 children with a rare genotype to whom it was denied access to Kaftrio.
She recalls one particularly tense meeting with company representatives during the negotiations: "I asked them, 'how much for my child’s life, what are you costing?'" Hearing about their mum's battle revives painful memories for her daughters, Caoimhe, 10, and Fiadh, eight. "It's OK, we're just having a chat. We have it. We're happy," Uí Lúing comforts them.
A few minutes later, the sisters are beaming again playing chess at the kitchen table of their family house near Dublin. They chat about their upcoming trip to the Harry Potter studios in London, something they could not have dreamt of before. Caoimhe and Fiadh recently celebrated their first anniversary of treatment and are now "unbelievably well", their mum says.
A few minutes later, the sisters are beaming again playing chess at the kitchen table of their family house near Dublin. They chat about their upcoming trip to the Harry Potter studios in London, something they could not have dreamt of before. Caoimhe and Fiadh recently celebrated their first anniversary of treatment and are now "unbelievably well", their mum says.
Vertex's financial connections to Ireland run deeper than their income from patients. The tax-friendly jurisdiction is a cornerstone of the group's corporate structure in Europe. All of its EU sales, nearly $2 billion in 2022, run through its Irish holding. Consequently, Vertex records little profit in EU countries. In 2022, the company paid €2 million of corporate tax in Italy, despite €223 million of revenues. In Spain, the amount was €877,000 for a €115 million turnover.
Globally, Vertex paid over $760 million of corporate tax last year, a 17.4 per cent rate that left it with a $3.6 billion net profit. It rewarded its investors with $427 million of share buybacks and handed its CEO $20 million.
"Vertex paid billions of dollars in income taxes during the period 2018-2023," a company spokesperson said, adding that the group complies with all disclosure requirements and its corporate tax rate "is well above the OECD minimum global tax rate of 15 per cent."
Later this year, Vertex will be eying regulatory approval for its fifth CF therapy, known as Vanza Triple. Some analysts believe it could yield nearly $10 billion in annual revenues.
Still, just like the four breakthrough treatments before, access is poised to be an issue. Vertex has been condemned for blocking cheap generics globally, while not marketing its products in poor countries. Middle-income nations like India and South Africa are also denied the drug and one South African patient is suing the firm over patent abuse and human rights violation.
Vertex runs a pilot programme to donate free Kaftrio supplies in 12 countries, but declined to say how many patients benefited. The company added that two-thirds of patients worldwide take its drugs, a percentage that masks the widespread unavailability of Kaftrio. Out of 100,000 patients who have been diagnosed with CF in the world, only 12 per cent were estimated to take Kaftrio in 2022.
For Milda, the three-year-old Lithuanian girl among the remaining 88 per cent, the struggle for access continues. "She knows that there are some medications that I talk about," says her mother. "I tell her every day that mummy's fighting for you, mummy is doing the best she can to give you medications."
Editor: Chris Matthews
Globally, Vertex paid over $760 million of corporate tax last year, a 17.4 per cent rate that left it with a $3.6 billion net profit. It rewarded its investors with $427 million of share buybacks and handed its CEO $20 million.
"Vertex paid billions of dollars in income taxes during the period 2018-2023," a company spokesperson said, adding that the group complies with all disclosure requirements and its corporate tax rate "is well above the OECD minimum global tax rate of 15 per cent."
Later this year, Vertex will be eying regulatory approval for its fifth CF therapy, known as Vanza Triple. Some analysts believe it could yield nearly $10 billion in annual revenues.
Still, just like the four breakthrough treatments before, access is poised to be an issue. Vertex has been condemned for blocking cheap generics globally, while not marketing its products in poor countries. Middle-income nations like India and South Africa are also denied the drug and one South African patient is suing the firm over patent abuse and human rights violation.
Vertex runs a pilot programme to donate free Kaftrio supplies in 12 countries, but declined to say how many patients benefited. The company added that two-thirds of patients worldwide take its drugs, a percentage that masks the widespread unavailability of Kaftrio. Out of 100,000 patients who have been diagnosed with CF in the world, only 12 per cent were estimated to take Kaftrio in 2022.
For Milda, the three-year-old Lithuanian girl among the remaining 88 per cent, the struggle for access continues. "She knows that there are some medications that I talk about," says her mother. "I tell her every day that mummy's fighting for you, mummy is doing the best she can to give you medications."
Editor: Chris Matthews