Nonprofit Foundation Rakes in Cystic Fibrosis Drug Revenues
October 13, 2015
The Food and Drug Administration (FDA) recently approved a drug aimed at treating an underlying mechanism of the fatal disease cystic fibrosis. At first glance, this would seem to be an optimistic victory for those who suffer from the condition and a validation of an effective system for medical advancement. A deeper look tells a different story.
With a price tag of over $250,000 per year, the drug is understandably controversial, as is the “venture philanthropy” partnership between a nonprofit organization and pharmaceutical company that was responsible for the creation and promotion of the drug. But it is not the biotech firm, Vertex Pharmaceuticals, which faces scrutiny. Drug companies relentlessly pursue ten-figure profit margins, so it was unsurprising news that Vertex planned to pay its executives massive bonuses with revenue from the high-priced drug, or that the new medication was being leveraged to make the company profitable for the first time in its 26-year history. Rather, it is the Cystic Fibrosis Foundation, the nonprofit organization supposedly representing patients with the rare genetic defect, which is being called into question.
Despite the astronomical price tag, benefits of the new drug, Orkambi, are modest at best. The Cystic Fibrosis Foundation has been zealously pushing the medication because of the $3.3 billion windfall it stands to gain from it. It is unclear how this money will be spent by the foundation; it has no obligation to spend it in the interest of the patients, and has indicated that none of it will be used to help patients pay for the drug. Rather than push for costs of medications to be lower, the foundation has an incentive to keep costs high to increase its return on investments. The cost of specialty drugs across the entire pharmaceutical industry is on a spectacular rise.
The president of the Cystic Fibrosis Foundation, Robert Beall, insisted that the organization’s strategy represents the best interest of those who suffer from the disease. According to Beall, “No one’s profiting here; we’re going to make the investment back to the patients,” primarily by continuing to develop new drugs. While he admits that Orkambi is “too expensive” and he is “very concerned” about patients being excluded from treatments because of high costs, he still believes that the recent advances from Vertex “have been among the most significant milestones in the journey toward a permanent cure.”
Receiving annual donations totaling over $130 million, the Cystic Fibrosis Foundation was ranked as the 43rd-largest nonprofit in the United States in 2013 (prior to the foundation’s $3.3 billion payout). It is now the largest disease-focused charity in the nation, ahead of the American Cancer Society, American Heart Association and American Diabetes Foundation. Representing less than .001 percent of the global population, cystic fibrosis (a primarily white European disease) is easily the most heavily funded rare disease in the world.
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