A Drug Costs $272,000 a Year. Not So Fast, Says New York State.

A Drug Costs $272,000 a Year. Not So Fast, Says New York State.

“Vertex has a longstanding commitment to supporting access for all eligible patients, and we will continue to oppose any attempts to restrict patient access to these transformative medicines,” Ms. Nichols said.

Despite its lukewarm reception, Orkambi has been a boon for Vertex. In 2017, the drug was its top-selling product, bringing in about $1.3 billion in sales, a considerable sum for a product that is only approved to treat about 28,000 people worldwide.

Dr. Steven D. Pearson, the president of the Institute for Clinical and Economic Review, which evaluates the cost-effectiveness of drugs, said the problem is that in the United States, drug companies control the prices, especially in the case of newly approved drugs like Orkambi.

“Our system is set up not to distinguish very well between those drugs that are fairly priced and those that are not,” he said. Dr. Pearson’s institute concluded that Vertex’s cystic-fibrosis drugs should be discounted by as much as 77 percent. “That gives the incentive to the company to overreach, and that’s part of why our system is so out of whack,” he said.

In April, Orkambi became the test case for the New York law when a state board ruled that the drug was not worth its cost, recommending that it be discounted from the list price by roughly 70 percent — an amount that was influenced by work done by Dr. Pearson’s institute. New York’s law, passed in 2017, allows the state to ask manufacturers for a deeper discount if the state’s Medicaid drug budget exceeds a certain amount.

Under federal law, state Medicaid programs get a rebate of at least 23 percent. New York officials said that they identified 30 drugs this year that were priced too high, and that those products’ manufacturers agreed to deeper discounts, resulting in about $60 million in annual savings. Vertex, which is based in Boston, was the only company that refused, the state said. New York officials did not identify the manufacturers that agreed to steeper discounts.

For now, at least, Vertex appears to have the upper hand because federal law requires the state to cover Orkambi, although the state can limit its use. Under its new law, New York could also demand that Vertex disclose details about how it sets its price, including how much goes toward research and development or to other areas, like marketing. But even if Vertex complied, that information would not be made public because it is considered proprietary.

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