Friday, November 21, 2014

FAQ Regarding The CFF's Recent Transaction

Judging by the comment thread here and other discussions I've seen online, there are some questions regarding the Cystic Fibrosis Foundation's recent announcement of selling its royalty rights to CF treatments developed by Vertex Pharmaceuticals for $3.3 billion.

Since I regularly (including now) ask other people to join me in supporting the CFF, I thought I would share how I see things. What follows is what my impressions are as a reasonably well-informed CF dad and CFF fundraiser.  While I'm doing my best to avoid any factual errors, I did not conduct any research for this other than reading the linked articles.  It may be necessary for me to revise this in light of some errors or omissions.

These answers are my own, and I do not speak for any of the pertinent organizations.

So, what's the deal?

Essentially, the Cystic Fibrosis Foundation provided Vertex with funds in exchange for royalty rights in any treatments that are developed with those funds.

In that time, Vertex has developed Kalydeco, which shows great promise in addressing a somewhat rare mutation of Cystic Fibrosis, and in combination with some other drugs, in treating the most common mutation of CF, which is what my daughter has.  This last treatment is working its way through FDA approval now.

CFF has elected to sell its claim on the royalties to Royalty Phamra for $3.3 billion.

Mutation?? Maybe you can give me a brief primer on Cystic Fibrosis.


Cystic Fibrosis is a genetic disease.  In order for a child to have CF, both her parents must be carriers of the gene mutation.   If that is the case, any child of that couple would have a 25% chance of having the disease, a 50% chance of being a symptom-free carrier, and a 25% chance of not even being a carrier.

Within CF, there are various mutations, with D508 being the most common.

This mutation effects the way that cells absorb and process salt (the initially most apparent symptom is skin that is salty to the taste, and CF has been diagnosed via testing the salt content of the patient's perspiration -- the "sweat test.").

This causes a number of symptoms, most notably trouble in digesting fats and a thick mucous in the lungs that can very easily attract infections.  CF patients often have trouble gaining weight, leaving them weak to fight the infections, which is why the disease has been so deadly.

Advances in treatments over the past half century have raised the median survival age of CF patients from elementary school to approaching middle age.  These treatments attack the symptoms (antibiotics and breathing treatments for respiratory problems, enzymes for digestive problems).

There is particular excitement about the treatments recently developed by Vertex because they attack the root of the problem at the cell level.

OK.  When I gave money to CFF, I thought I was donating to find a cure, not help the foundation play in the stock market with Big Pharma. What gives?

Some time ago, the CFF adopted a strategy of partnering with certain drug companies to develop CF treatments.   They deemed this necessary for a couple of reasons:
  • The development of these treatments is largely a hit-and-miss proposition.  Years and years of expensive research can come up with nothing. There is a tremendous potential downside in performing this type of research, and the downside is more likely that any upside.
  • The patient population of CF is limited. There are about 30,000 CF patients in the US, and they have may different types of mutations.  
Because of these factors, the CFF wanted to provide an incentive for drug companies to devote their resources to CF research, and this partnership is a way for them to do so.

Isn't CFF a non-profit? How can it be involved in these big-money financial transactions?

"Non-profit" is a tax designation meaning that the company re-invests all revenue back into its mission. It does not mean that it does not get involved in finances or even that it has an altruistic mission. When I started working at MasterCard in 2000, it was a non-profit. So is another one of my former employers, BJC Healthcare, the largest St. Louis-based employer.

So, there isn't any inconsistency with the CFF being involved in this type of transaction and its non-profit status.

More to the spirit of the question, I don't believe anyone at CFF will be buying a mansion or a boat as a result of this deal.  The funds will be re-invested in treatments to benefit CF patients and families. I and others will be watching to ensure this is the case.

Ok, but the treatments Vertex is developing cost upward of $300,000 a year. Shouldn't the CFF be using its influence to lower the price and ensure access rather then sharing in the profits from gouging needy CF patients?

The high price reflects some of the dynamics I mention above -- it is not for the manufacture of the actual pills but for the immense about of research that went into developing this treatment, as well as other research avenues that were not so fruitful. I'm not an expert in the economics of drug development, but it does not strike me as unfair that Vertex and other companies would receive some profit for their work in developing life-saving cures.  

I've been blessed and lucky enough in my life to be well compensated for work that is much less obviously beneficial. Part of this compensation has been access to health plans that have covered a very large portion of the costs of Meagan's treatments and medications. I hope that these upcoming treatments will not be an exception.

It is my understanding from the announcement that the CFF will be using some of these funds to ensure that CF families less fortunate than ours have access to a variety of CF treatments.

Does this mean we are at "Mission Accomplished?" Can we stop now?

If only.

Kalydeco by itself only treats a relatively rare form of CF. The new combination looks promising, but is far from a slam dunk. 

And this will still leave many other untreatedmutations, and this treatment will require a daily medication, with the aforementioned price tag.

CFF's goal is a one-time treatment that will address all the symptoms of CF. We are, unfortunately, still very far from that goal.

OK, if the CFF just brought in $3.3 billion, why should I donate to them instead of some other disease? Or my local food bank? Or my church? Or my favorite political cause? Or my neighbor who just lost his job? Or the needs of my family?

How we choose to spend the limited money we have available for charitable donations like this is an obviously very personal decision.

Particularly at this time of year, the number of worthy causes asking for our donations can be overwhelming. I know that I personally pass on more opportunities to donate than I accept.

My aim here is to lay out why I believe that there is still work and progress to be made in finding a cure for Cystic Fibrosis, and why I continue to trust the Cystic Fibrosis Foundation to do it.

If you have reached a different conclusion, or you feel called to direct your generosity in a different direction, I certainly understand that.

Regardless, I am thankful for the many ways people have supported Meagan and our family through CF, whether it be financial contributions to CFF, showing up at events, practical assistance and forbearance for our practical needs, or kind words and prayers for Meagan and all of us.

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