Misguided Rating Cancels Rare Disease Patients
Five years before taking the pills that changed my life, I was fading fast. The antibiotic-resistant bacteria trapped in my mucus-filled lungs was overpowering, and I often required an overnight feeding tube to sustain myself during my lost early 20s. After enduring two dozen invasive medical procedures, I was slipping into end-stage cystic fibrosis.
In my family, you never count out the underdog or the chance for a Hail Mary miracle. So I kept fighting until, lo and behold, my family’s prayers were answered in 2018 by a biotech company in Boston, Massachusetts.
I realized almost immediately I wasn’t in the placebo arm of Vertex’s clinical trial for its triple-combination CF breakthrough. Three days after my first dose, I woke up without coughing for the first time in years. On day six, I played ice hockey with my dad pain-free for the first time ever.
The treatment freed me. It was like I had been running full speed through life with a parachute attached to my back that had been suddenly clipped. Those three tablets a day have since allowed me to move out of my parents’ house, become a husband, a father and a Dartmouth MBA grad. I haven’t undergone a medical procedure in almost three years. I can literally breathe easier.
Patients, providers and the markets have spoken: Trikafta is a blockbuster. Following its approval by the U.S. Food and Drug Administration in 2019, then-National Institutes of Health Director Francis Collins grabbed his guitar and burst into song. CF patients and families cried tears of disbelief.
Everyone was celebrating except for a group of economists at the Institute for Clinical and Economic Review, who issued a report saying the CF drug’s efficacy didn’t justify its price. ICER was doing the job it is paid to do by health insurance companies: provide low-ball cost-effectiveness assessments used to deny claims and save them money.
Valuations of new medicines by private payers are entirely proper in a market-based system like ours. However, I was dumbfounded by Morningstar’s recent decision to start calculating drug companies’ environmental, social and governance risk rating based on fidelity to ICER’s pennywise pricing methodology.
My objections are both moral and mathematical. ICER is using discriminatory metrics devised by the British government in the 1960s to ration care through its National Health Service. ICER scores medicines based on the perceived value of living with a given condition in comparison to being in “perfect health.”
Its formula assigns greater value to young people in good health than it does to people who are elderly, sick or disabled. In a study of every rare disease drug evaluated by ICER from 2014 and 2018, not a single one received a “high value” rating.
While Medicare banned the use of ICER’s controversial methodology, Morningstar is pushing it in the name of reducing governance risk. But the private sector won’t invest in R&D in sectors where the reward for success is a price set post hoc by a committee. The Soviet Union showed us that. A Wall Street ratings firm dinging biopharma companies for refusing to abandon market-based pricing in favor of a demonstrably flawed formula is an institution that has lost its way.
This isn’t the case of a missing negative externality, like failing to account for the harms of carbon emissions. In applying the ethos of environmental social governance to healthy economics, Morningstar elected to strip away elements of known value, discouraging investment in companies working to deliver cost-effective treatments for intractable rare diseases.
How is that socially responsible?
No one else was riding to the CF community’s rescue. Vertex’s heroic gamble produced ROI for its investors, a new lease on life for thousands of CF patients and substantial profits that it reinvests back into clinical programs for non-opioid painkillers and new treatments for diabetes and sickle cell disease.
This is the way the system is supposed to work.
Morningstar is essentially saying that society shouldn’t care about patients like me. But society does care. Every year, we spend untold millions inside hospitals and ERs to keep people with CF alive. It is ethically dubious to suggest that it’s better for insurers to pay for my hospitalization as I slip away than to cover this extraordinary panacea that allows me to live and thrive.
Unlike hospital costs that will remain high forever, medicines go generic. Prices plunge when patents expire, which we’re about to see in the CF community as a generic competitor to an earlier drug hits the market. A decade from now, a young child with undamaged organs who starts on generic Trikafta can have a totally different life at a dramatically lower cost to society. Markets have a mechanism for valuing genericization, ICER economists and Morningstar do not.
Giving demerits to companies for their willingness to invest billions in orphan drugs for the truly sick sends a terrible message to investors about who is worthy of a cure.
For its embrace of myopic ESG math, I give Morningstar zero stars.
Gunnar Esiason lives with cystic fibrosis and is the executive vice president of Strategy & Advocacy at the Boomer Esiason Foundation — his family’s nonprofit organization that has raised more than $160 million in the fight against cystic fibrosis since he was diagnosed in 1993. The foundation provides resources that financially support patients and their families, research for a cure and cystic fibrosis care centers across the U.S. Follow Gunnar on Twitter @G17Esiason and follow the foundation @cysticfibrosis.
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