Drug windfall raises questions for foundations

Nova Safo Nov 19, 2014
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Drug windfall raises questions for foundations

Nova Safo Nov 19, 2014
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The Cystic Fibrosis Foundation made a blockbuster announcement Wednesday: It’s receiving $3.3 billion for selling its royalty rights for a drug manufactured by Vertex Pharmaceuticals.

The foundation invested at least $100 million in the research for the drug Kalydeco, and the nonprofit was granted a share of the profits. The drug has proven successful in treating some cystic-fibrosis patients.

But it’s also very expensive, costing a reported $300,000 a year per person a year.

The foundation’s big payday has raised some eyebrows about whether it’s profiting from a drug that’s a financial burden for the very patients it’s supposed to help.

“I don’t know whether to celebrate or not… It’s going to take a while to sink in,” says David Orenstein, who treats cystic fibrosis at Children’s Hospital of Pittsburgh. “The scale of the money that’s involved here is phenomenal.”

When Vertex first came out with the new drug, Orenstein took issue with the price. The foundation says it’s had no influence over the price of the drug, and the research it funded was essential to getting the drug developed.

“On the big picture, it’s very similar to what almost all disease foundations do,” says George Annas, a Boston University health law and bioethics professor. “Most of them fund research by academics, but it’s not a big leap to fund research by a biotech company on the theory that they are more likely to actually translate their research into a product.”

So far, foundations have not seen returns on their investments anywhere near this scale. But Dr. Peter Bach of Memorial Sloan Kettering Cancer Center says he won’t find future billion-dollar paydays surprising.

“This will be an outlier until it happens again,” Bach says. “Drugs that get approved even for rare conditions can command essentially infinitely high prices.”

And if foundations benefit from those prices, he says, they could face a conflict of interest. 

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