The crazy reason it costs $14,000 to treat a snakebite with $14 medicine
Every once in awhile somebody will go and get themselves bitten by a venomous snake, and come home with an outrageous hospital bill that makes headlines.
Nobody expects anti-venom to be cheap. Making the most common rattlesnake anti-venom, for instance, involves injecting sheep with snake venom and then harvesting the antibodies produced by the animals' immune systems. But does that process, complicated as it may be, add up to the estimated $2,300 per vial hospitals pay for the stuff?
Dr. Leslie Boyer wanted to find out. She's the founding director of the VIPER Institute at the University of Arizona, a research group studying ways to improve the medical treatment of venom injuries. VIPER was instrumental in the development of CroFab, the leading rattlesnake anti-venom, as well as its upcoming competitor Anavip.
Boyer knows more than just about anyone about how anti-venoms work, and how to study them in the lab. But she couldn't figure out why the price was so high. So, as she writes in an upcoming issue of the American Journal of Medicine, she requested "cost data from factory supervisors, sales representatives, animal managers, hospital administrators, health care finance officers, hospital pharmacists, grants managers and insurance specialists representing over 20 organizations involved in anti-venom work affecting Latin America and the USA." She and her colleagues at VIPER used the numbers to build a pricing model for a typical arachnid anti-venom sold in the U.S.
Shockingly, the cost of actually making the anti-venom - of R&D, animal care, plasma harvesting, bottling, and the like - added up to roughly one tenth of one percent of the total cost. Clinical trials to evaluate the efficacy of the anti-venom accounted for another 2 percent. Other miscellaneous costs, including licensing fees, wholesaler fees, regulatory, legal and office costs, and profit to medical providers, added up to 28 percent.
Finally, over 70 percent of the cost - responsible for most of the "sticker shock" you see in so many stories about envenomation care - comes from hospital markups that are used as instruments in negotiation with insurance providers. Depending on the hospital and the insurer, some percentage of this amount later gets discounted during the final payment process.
"It's a markup intended to be discounted back down," Boyer explained in an interview. But if you don't have insurance? The negotiating is all on you. And if you happen to have a high deductible for medications, you have to cough up the deductible amount, which can add up to thousands of dollars.
Setting aside the huge hospital markups, Boyer says there's a lot going on in the "other" cost category as well. "The lion's share of expected payment on behalf of insured patients was attributable to analysts, attorneys, consultants and business activities that set the U.S. bureaucracy apart from its neighbors," she writes in the Journal of American Medicine.
Perversely, in this field competition can sometimes drive up the cost of medication. She points to the fight between rival rattlesnake anti-venoms currently winding down before the International Trade Commission. "Rather than bringing the price of anti-venom down, competition drove it up, as millions of dollars in legal costs had to be distributed across a few thousand patients," she writes.
"My clinical trials can only benefit future patients if they can afford the drugs," Boyer said. "The U.S. needs to re-think how we manage these things, because we have reached the point where the developing world is getting more timely access to better drugs (at least in this field) than we are."
According to Boyer's model, a single vial of anti-venom that would cost over $14,000 in the United States would cost one or two hundred dollars in Mexico. Same medicine. Same manufacturer. But a totally different pharmaceutical market.
In Mexico, Boyer says, authorities determined some time ago that treating venomous snake and spider bites was a public health issue. "Their policy has always been that the government will provide adequate amounts of anti-venom via a massive purchase of the drug which it distributes to health clinics." We could try to implement something similar here, but it would require an act of Congress to do so.
Boyer calls anti-venom troubles the "tip of the iceberg." She goes on: "It sounds esoteric. It's something that happens to so few people. But the truth is the entire American system for developing, testing, licensing and paying for drugs is broken. Things like this go on every day with every drug but in a smaller way, and it adds up."