Biotech Values

[hirogen]

Here is another article on the subject of costly cancer drugs with some interesting factoids.

http://www.clinicaloncology.com//ViewArticle.aspx?ses=ogst&d=Policy+and+Management&d_id=151&i=ISSUE%3a+October+2012&i_id=902&a_id=21991

Cancer Drug Costs Under Scrutiny
Some newer agents provide only marginal gains

In recent years, the FDA has approved a number of cancer drugs based on small improvements in survival. An increasing number of health care economists and physicians are raising the alarm that these treatments are not cost-effective.

image “When we go out and buy a new car, if we are buying a Ford, we don’t expect to pay for a Ferrari. That is what we are doing at the moment with anticancer drugs,” said Ian Tannock, MD, PhD, a professor of medical oncology at Princess Margaret Hospital in Toronto, Canada. He discussed the cost of cancer drugs at the recent annual meeting of the American Society of Clinical Oncology (ASCO).

A study published in 2004 showed that the near doubling of median survival in patients with colorectal cancer has been accompanied by a 340-fold increase in drug costs in the Western world (N Engl J Med 2004;351:317-319, PMID: 15269308). Drug prices have risen sharply since 2004.

“Some of the workhorses that provide real value are priced relatively inexpensively. Paclitaxel and trastuzumab (Herceptin, Genentech) are under $5,000 a month, whereas the new drugs are coming in at $10,000 a month,” said Thomas Smith, MD, pointing to vemurafenib (Zelboraf, Genentech) and crizotinib (Xalkori, Pfizer) as examples. “Some drugs are over $100,000 for a one-time administration.” Dr. Smith, the director of palliative medicine at Johns Hopkins Sidney Kimmel Comprehensive Cancer Center in Baltimore, also spoke at the ASCO meeting.

Cost-Effectiveness

Although drug costs have risen, cost-effectiveness has declined. In many countries, cost-effectiveness is measured in cost per life-year gained.

“If you live in Paris, Chicago or Toronto, it’s been suggested that the publicly funded health care system can generally afford up to $60,000, but not more than $100,000 per life-year saved,” said Dr. Tannock. He highlighted estimates of cost per life-year gained for several drugs: $10,000 for statins, $500 to $1,000 for CMF (cyclophosphamide, methotrexate and fluorouracil), and $15,000 to $45,00 for adjuvant trastuzumab.

Many of the newer oncologic drugs do not meet the threshold for what would be considered cost-effective. They often “provide extremely small gains, despite some of the hype we hear in the sessions at [scientific meetings], at an extremely high price,” said Dr. Tannock.

Ipilimumab (Yervoy, Bristol-Myers Squibb) was approved for melanoma based on a median 3.5-month increase in overall survival and a full course of therapy costs $120,000. Vismodegib (Erivedge, Genentech) was approved for advanced basal cell carcinoma based on tumor shrinkage rates of 30% and 43% in people with metastatic and locally advanced forms of the disease, respectively, with a full course of therapy costing $75,000. Pemetrexed (Alimta, Eli Lilly) was approved for maintenance therapy of nonsquamous non-small cell lung cancer based on a three-month improvement in median overall survival and the cost of therapy runs between $20,000 and $30,000.

So, how are drug prices determined? A recent study found no correlation between market pricing of new anticancer drugs and the magnitude of clinical benefit. The study looked at three groups of agents approved by the FDA since 2000 and found that new agents with specific molecular targets are clinically the most beneficial, but their monthly market prices are not significantly different from the price of other anticancer agents (J Clin Oncol 2011;29:2543-2549, PMID: 21606435). For example, the overall survival hazard ratio (HR) was 0.69 for a group of targeted agents with a monthly cost of $5,375 and the HR was 0.84 for a group of chemotherapeutic agents at a monthly cost of $6,584. “There were relatively small benefits that translate usually into absolute benefits of a few months, at most, in survival,” said Dr. Tannock, who was involved in the study. “If you look at these hazard ratios in relation to cost, there is absolutely no relation at all.”

Physicians are encouraged to prescribe these costly cancer drugs. The “buy and bill” approach for reimbursement provides incentives for medical oncologists to use expensive medications when less costly alternatives that deliver similar results are available (Health Aff 2012;31:780-785, PMID: 22492895). “We as oncologists are encouraged constantly and sometimes directly to prescribe more expensive drugs. Some people get direct reward for that,” said Dr. Tannock.

In another study that has yet to be published, researchers identified 25 new drugs approved by the FDA for 17 malignant diseases between 2000 and 2010 and estimated the cost per life-year gained. Only 37% of the new agents had a cost per life-year gained less than $100,000.

Determining a Price Tag

Everyone expects drug companies to be able to make a profit—private companies aim to maximize profit. When Clinical Oncology News asked various companies how they determine the price of drugs, a variety of answers were provided but all of the companies said pricing was set to support investment in future research.

“At Genentech, we choose prices for our medicines that allow us to continue discovering new medicines for people with serious diseases such as cancer and Alzheimer’s disease,” said Charlotte Arnold, a spokesperson for Genentech, in an email. “Things we consider when choosing a price [include] how well the medicine works; what other medicines are used to treat the same disease; the amount of money we will need to continue discovering new medicines for life-threatening diseases; [and] how to ensure that our medicines get to the people who need them, even if they can’t afford them.”

The monthly cost of the new HER2-targeted agent pertuzumab (Perjeta, Genentech) for breast cancer is $5,900. “When determining a price for Perjeta, we took into consideration that it would be used with Herceptin, and priced Perjeta (as a single agent) less than many other recently approved cancer medicines,” said Ms. Arnold. “The monthly cost of Herceptin is $4,500. Most patients will take the combination of Perjeta and Herceptin until their disease worsens, which is about 18 months. The estimated cost for a course of treatment with Perjeta and Herceptin for 18 months is approximately $188,000.” The combination of pertuzumab, trastuzumab and docetaxel improved progression-free survival by roughly six months compared with trastuzumab and docetaxel.

Amy Sousa, a spokesperson for Eli Lilly, said Lilly priced “medicines based on the value they bring to patients” and that “pricing also ensures that Lilly is able to invest in research and development of new medicines to meet the medical needs of patients in the future.”

Sarah Koenig, a spokesperson for Bristol Myers Squibb, explained that the company priced its drugs on a number of factors including “the value they deliver to patients, the scientific innovation they represent and the cost to develop them.”

All three companies pointed out that they provide patient assistance programs.

Drug Approval Process

While company pricing and physician behavior are each a part of the skyrocketing drug cost problem, the process by which drugs are approved in the United States can also be seen as playing a role. Historically, the FDA and the European Medicines Agency (EMA), the European equivalent of the FDA, have approved drugs based on any significant difference in survival. This has encouraged larger and larger trials to demonstrate what some would say are clinically meaningless, but statistically significant differences (J Natl Cancer Inst 2010;103:1-5). Erlotinib was approved in combination with gemcitabine for patients with advanced pancreatic cancer after a clinical trial showed it improved survival by 10 days compared with gemcitabine alone (J Clin Oncol 2007;25:1960-1966, PMID: 17452677).

The FDA evaluates drugs for safety and efficacy compared with placebo, and it considers neither cost nor comparative efficacy against other treatments in determining what drugs get the green light. In England, after the EMA has approved a drug, the National Institute for Health and Clinical Excellence (NICE) considers all these factors in calculating what it will cover. After concluding patients would derive minimal benefits at an excessive cost, NICE has rejected a number of cancer drugs that are regularly prescribed in the United States. The rejection list includes erlotinib (Tarceva, OSI/Genentech) for maintenance therapy of non-small cell lung cancer and lapatinib (Tykerb, GlaxoSmithKline) in combination with capecitabine (Xeloda, Roche) for women with advanced or metastatic HER2-positive breast cancer.

“I think the way around this [the drug cost problem] is that registration of new anticancer drugs ought to be based on value-based pricing,” said Dr. Tannock. “Every other thing we buy is related to value, but that is not the case for anticancer drugs in Western countries.”

He pointed out, however, that obviously the profit motive is a powerful incentive for developing new treatments and that prices go down as drugs go off patent, making them more accessible to more people. Attempts to control pricing might lead to nonavailability of drugs, said Dr. Tannock. Some clinicians and health economists point out that the slim profit margin of generics may be part of the drug shortage problem that has been plaguing the United States.

Dr. Tannock argued that value-based pricing can work, but “you have to allow companies to recover the real cost of research.”