The challenges of the FDA’s drug approval process are well known. In what appeared to be an encouraging departure from the norm, Spinraza – the first and only FDA-approved therapy for Spinal Muscular Atrophy – gained its approval at twice the usual speed last December, after only five years in clinical trials. But patients continue to wait on the treatment, thanks to a different flaw in our convoluted health insurance system. If your child suffers from the most common type of SMA you are unlikely to celebrate her second birthday.
The Lives of Babes
Spinal Muscular Atrophy (SMA) is the leading genetic cause of death in infants and toddlers. It is characterized by progressive, incapacitating muscle weakness. There are four primary types of SMA. If your child suffers from the most common – SMA Type I – you are unlikely to celebrate her second birthday. Type II means your baby will never be strong enough to walk; she will start getting weaker soon after learning to crawl, and eventually will lose the ability to sit independently.
For patients, their families, and the entire SMA community, December 23rd was a day of great joy. Spinraza, which was shown in clinical trials to help 40 percent of children reach new motor milestones, would finally be available to all patients.
Six months later that joy has turned into disappointment and heartache: as of May 4th, only about 250 U.S. patients had received the treatment – that’s fewer than two percent of the 15,000 affected by the disease in the country.
What’s causing the delay? It’s not a medication shortage, as Biogen, Spinraza’s manufacturer, was ready to ship the drug within a week of its approval. Rather, the key problem is the lack of providers that administer the drug. CureSMA, an advocacy group that played a major role in speeding up FDA approval, estimates that about 250-300 sites are needed to serve the U.S population. So far, only 63 have been confirmed.
The key culprit is reimbursement uncertainty.
Why so few? While malpractice insurance, scope-of-practice limitations, and the fragmented organizational structure of U.S. hospitals all contribute to red tape and discourage innovation, in the case of Spinraza delays, the key culprit is reimbursement uncertainty.
While all insurers promptly issued Spinraza coverage policies, these provide no payment guarantee. The problem is magnified because Spinraza is expensive and hospitals can only submit claims after buying the drug and administering treatment. Biogen encourages providers to get pre-authorization, invest in payer remittance monitoring, and pursue appeals. While taking on this administrative burden might mitigate some of the reimbursement uncertainty, the process is far from encouraging.
It would be easy to blame insurers – after all, billing requires an army of administrators and claim denials cost hospitals millions of dollars annually. Yet it’s not the individual insurance companies that cause the problem, but rather our regulatory system which protects these companies from competition. Burdensome regulations and concentrated market power among just four companies create an absurd system that perpetuates uncertainty.
Without competition, insurance companies have little incentive to serve patients. The lack of patient choice allows insurers to get away with malleable reimbursement policies and arbitrary claim denials. Patients don’t know what is covered or how much it will cost them, and must wait until after treatment to see the bill.
Since most of us must change jobs to change insurance, we have no way of signaling dissatisfaction to our provider.
The issue is magnified by the tax-exempt status of group health insurance. Since most of us must change jobs to change insurance, we have no way of signaling dissatisfaction to our insurance provider. In turn, the risk of not getting paid keeps providers from adopting new treatments. Without competition in the health insurance market, patients and providers face tremendous uncertainty.
And yet, the very point of insurance is to mitigate uncertainty so that when tragedy strikes, you don’t have to worry about the money. An effective health insurance system should also ensure that providers don’t hesitate to take on innovative, life-saving treatments, especially those that have passed FDA efficacy and efficiency standards.
The System Stands in the Way of Treatment
Today, SMA patients need the ability to switch between health insurance providers. In fact, we all would benefit from individual, portable, lifelong, guaranteed-renewable, transferrable, competitive, lightly-regulated health insurance.
Of course, health insurance is unique in that once you develop a lifelong condition, your premium dramatically increases. But as economist John Cochrane has shown, it is possible to have a competitive health insurance market that protects people with pre-existing conditions from premium spikes through health status insurance. The first step is to end the tax exemption on employer-provided health insurance.
We don’t know how many children died as Spinraza was being developed or as it was undergoing FDA review. But imagine the pain of knowing that rather than research or even safety concerns standing between your child and the treatment – it’s a broken, counterproductive, over-regulated insurance system.
Reprinted from Real Clear Health.