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pursue this strategy. Vertex has since been swept from the field by better, second-to-market drugs. Vertex may have learned from this experience, and might be more aggressive about protecting its CF franchise. If the company is able to put this strategy into effect, the quality of Vertex’s CF drugs would likely improve further. What’s more, that franchise would stay at a very high price over the long run; the cost is actually borne primarily by the healthcare system (i.e., all of us) as a whole, and not by patients, who are insulated from the true costs of specialty pharmaceuticals through the use of co-pay assistance programs.
The chance that Vertex might consolidate the competitive landscape makes it all the more interesting that the CF Foundation has converted its royalty stream into a war chest with which to arm the competition, though the foundation has called it “reinvesting to accelerate further drug discovery.” Regardless of how this development is communicated, the foundation’s creativity on behalf of patients and the entire healthcare system should be recognized. It is now able to help many of the smaller companies generate clinical data that would allow them to be appreciated and ultimately funded by investors. Those companies could even end up being acquired by big players like AbbVie or Novartis, which have CF drugs in their pipelines and are looking to compete with Vertex.
While pharma stalwarts would claim that fighting on price is not how innovative drugs are differentiated, price wars are already a reality and, in certain situations, inevitable. For example, in the type 2 diabetes market, Merck’s sitagliptin (Januvia) was the first DPP-4 inhibitor to reach the market in 2006. Although in the U.S., sitagliptin enjoyed three years of market exclusivity before the first competing drug was approved, the onset of competition upended Merck’s position and drove down the price of sitagliptin through more aggressive rebates and discounts. When there are several good options and payers care about the magnitude of the expense, price wars are a likely outcome.
We should remember that the CF Foundation helped catalyze a major breakthrough in the treatment of CF. By retaining and monetizing a royalty on that first big win, the foundation now has a chance to help bring about other treatment options and the competitive pricing pressure that would come with them—providing even more benefits to patients and the healthcare system. The CF Foundation should be commended for its forward-thinking strategy and all it has done for patients and families with CF. Hopefully, non-profits serving other patient groups will borrow from its playbook.
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