Snake cost

Nobody expects antivenom to be cheap. Making the most common rattlesnake antivenom, 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?

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 antivenom, as well as its upcoming competitor Anavip.

Boyer knows more than just about anyone about how antivenoms 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 antivenom 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 antivenom sold in the United States. Here's how that model breaks down:

Shockingly, the cost of actually making the antivenom — 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 antivenom 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 the 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 antivenoms currently winding down before the International Trade Commission. "Rather than bringing the price of antivenom 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 rethink 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."