Market Barriers to the Development of Pharmacotherapies for the Treatment of Cocaine Abuse and Addiction: Final Report. Price Sensitivity of a Cocaine Medication

09/12/1997

Since no approved pharmacotherapy for cocaine abuse has been tested on the market, it is not possible to know how sensitive the market would be to such a medication. However, indirect available evidence from other substance abuse medications and the current nature of cocaine abuse treatment and its financing would appear to indicate that the market would be very sensitive to the price of a cocaine medication.

In a market where the average daily treatment cost is a modest $9.00 per patient for standard outpatient care (accounting for the great majority of patients) and $23.00 per patient across all modalities of care, a cocaine pharmacotherapy priced at a daily dose of a few dollars would represent a significant proportionate cost increase. This may be particularly so in the judgment of substance abuse treatment providers that are vested in psychosocial approaches to the exclusion of pharmacotherapy. It is important to note that the price sensitivity of the current treatment system may vary considerably from that of more typical pharmacotherapy markets that involve physician prescribing and distribution through pharmacies.

The price of methadone may exert some pull on the price point for a cocaine medication. The price for that relatively effective medication, used to treat another stigmatized substance abuse population and paid for primarily by government sources, is a mere 50 cents per daily dose. Although the price of medications for smoking cessation is considerably higher, such medications are not paid for out of public sources, but rather by a self-pay population.

As noted in the case study of LAAM (see Case Studies section), in certain states, Medicaid has reimbursed clinics for the cost of methadone (about $0.50 wholesale per daily dose) but would not cover the higher, though still modest, cost of LAAM (about $2.00 wholesale per daily dose). In such instances, clinics either had to negotiate with the state to receive greater funding or had to absorb the additional cost associated with LAAM. Market resistance to naltrexone, which at about $4.00 wholesale per daily dose is twice as expensive as LAAM yet moderately priced compared to other drugs, was complicated by the additional cost of needed adjunctive psychosocial services. As such, state programs cannot afford to treat populations of heroin addicts with naltrexone ($3,500 per patient annually), which carries double the cost of treatment with methadone ($1,200 to $1,700).

Most existing treatment for cocaine abuse is paid for out of fixed annual government appropriations. Treatment centers that must function with capped budgets and that are judged on the number of patients treated would be expected to be price sensitive. Traditional measures of treatment productivity have been the number of patients treated or the cost per patient treated, rather than measures of improved health outcomes. In the current environment, apparent productivity can be increased by reducing the cost per person served, as occurred in treatment funding from the 1970s to the 1980s (Institute of Medicine, 1990). The introduction of any additional and/or more expensive services reduces the number of patients that can be served with a given budget. In the current treatment and financing context, it is likely that treatment systems and providers will be very sensitive to the price of any new cocaine pharmacotherapy.