I’ve been on four biological medicines over the past 3 ½ years to treat rheumatoid arthritis. I’m thankful for these complex drugs as it’s clear that they slowed disease progression. I’m currently taking Orencia. After a recent Orencia infusion, my insurance company sent an Explanation of Benefits (EOB) form showing the cost and coverage of the medicine and infusion services (see a photo of the form). The form shows that the charges billed by the infusion clinic for the Orencia was $4,425 for 1,000 mg of medicine. I’m curious about the source of this cost and can only assume that this is the cost suggested by the drug manufacturer Bristol-Myers Squibb…sort of like a “suggested retail price.” The adjustments made by the clinic were for $2,609.25 making the final cost of the drug that the insurance company agreed to pay $1,815.75. The mark-up on Orencia must be huge if the adjustment was almost 59% less than the original cost. Insurance companies obviously know the price structures to medicines and know what price pharmaceutical companies and clinics will actually accept in order to cover their costs. The clinic also charged $367 for the infusion which included the nurse and equipment. My insurance company agreed to pay $260 for these services. The total cost of this infusion was $2,076.29. A total annual cost of such infusion treatments would be $24,912. And that does not include other costs associated with my RA treatment including other medicines, doctor visits, blood tests, imaging, and surgeries.
I had already met my deductible for the year so there were no out-of-pocket expenses this time. However, pharmaceutical companies know that deductibles and co-pays can present huge financial challenges to patients and many offer co-pay assistance. Bristol-Myers Squibb provides an assistance plan where they will pay all but $5 of each infusion co-pay costs (just for the medicine, not the clinic costs). They actually sent me a debit card and loaded it with “cash” ready to be used to pay the clinic any co-pays not covered by insurance. I used this card to pay for thousands of dollars of co-pay costs to the clinic during the first six months of the year.
Biological medicines are understandably expensive because of the complex manufacturing processes involved. Such medicines also have extended patent protection over chemical pharmaceuticals in order to help drug companies recoup the extensive cost of research and development. Those costs are passed onto the patient. Every time an Orencia commercial comes on the TV, I wonder about the cost of publicity – a relatively new thing in the pharmaceutical industry.
The wild difference in charged costs versus covered costs as shown on the EOB can only make one wonder about drug company profit margins. Clearly biologicals are big business. In 2010, Amgen’s Enbrel had over $3 billion in sales just in the United States.[i] This represented 23% of Amgen’s annual sales. Humira is projected to be the world’s biggest revenue drug by 2016 with over $10 billion in annual sales.[ii]
The real cost of Orencia isn’t a mystery that I will likely solve any time soon. There are numerous business and political players involved. I’m just thankful for a medicine to treat RA, insurance coverage, and co-pay coverage by the pharmaceutical company.