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We Need To Tame The Price Of New Cancer Drugs

This article is more than 7 years old.

Last week Dr. Peter Bach, a physician and cancer drug pricing theorist, gave a plenary lecture at the San Antonio Breast Cancer Symposium. Until recently, it was unusual for oncologists to hear lectures about the costs of medicines and care. Bach works at Memorial Sloan Kettering Cancer Center in New York City, where he directs the Center for Health Policy and Outcomes.

Bach delivered a quick overview on rising cancer drug prices, ways of addressing the issue, and how his work on the DrugAbacus fits with other approaches to the problem. First off, he explained why sky-high medication costs matter (in case it’s not obvious). “It’s about access,” he said. Because in a constrained system, the more insurers pay out for medications, the less is available for other kinds of treatments and services.

This year, U.S. healthcare costs will approximate $3.41 trillion. Drug prices are a big part of that, Bach emphasized. Although prescriptions drugs account for only 10% of national health expenditures, their prices are rising disproportionately. Bach showed a graph of cancer drug prices at the time of FDA approval, from 1965 to the present, demonstrating a 100-fold increase. “The y-axis is exponential,” he reminded the audience. The same graph indicates that since 1990, price tags for newly approved cancer drugs have gone up 10-fold.

Not long ago, charging $100,000 for a year’s worth of a drug was a big deal, Bach noted. “To really get a rise out of people now, a drug has to cost $500,000 a year.”

OK—and now I’m straying from Bach’s lecture: An economist or pharma CEO (or I) might acknowledge that today’s cancer drugs are more valuable—effective and better for patients—than were most new cancer drugs 50 years ago. It costs loads to develop these medications along with those that fail to get approval. I recognize that pharmaceutical companies are entitled to a return on investment. But how much return is justifiable? Are unbridled profits necessary to drive medical innovation and progress?

Bach referred to data from the Kaiser Family Foundation on rising premiums and high deductibles that affect 150 million non-elderly Americans who get insurance through employment. Many can’t afford out-of-pocket cancer drug costs until they meet their insurance deductibles, so they don’t take their meds, skimp on doses or wait before filling prescriptions. Even then, when companies charge over $100,000 per year per drug, and insured patients with cost-sharing plans are expected to pay some fraction of that, steep prices limit use.

Prices are problematic at the group level, too. They’re a burden for public insurers such as Medicare. “These are serious numbers,” Bach said. In recent years, Medicare has been paying an increasing fraction of prescription drug costs. In private insurance networks, high medication prices drive up premiums and tend to reduce coverage for all participants. “Health insurance, although it’s been extended in the U.S., has been stripped down in terms of what it delivers.”

Bach reflected on the recent U.S. presidential election. “Rising prices of drugs will keep making headlines and keep harming patients, and those two things are interrelated.” Outrage over high drug prices is not particular to Democrats. Unions, religious groups and many organizations are concerned about this. “Even the AMA has said they want to get back to value-backed drug pricing,” he noted.

Republicans overall tend to favor patients having “skin in the game,” Bach considered. This goes along with notions of personal responsibility, and with focus on the marketplace. “These are all synonyms for patient-level cost-sharing,” he observed.

Bach outlined three broad ways of contending with exorbitant medication prices:

  1. Use market forces.
  2. Solve for price.
  3. Make patients deal with price.

The problem with market forces is that they don’t function well in the pharmaceutical realm. There’s “very limited evidence this can work for branded products in oncology,” Bach said. The experience of recent years is that after drug patents expire, competition from generics and biosimilars doesn’t significantly lower prices.

Solve for price refers to ways of calculating a drug’s worth. This category of solutions includes Bach’s DrugAbacus tool and the Institute for Clinical and Economic Review (ICER) value assessment. These are top-down approaches by which policy-makers or payers might consider what a drug should cost, and then negotiate or pay companies only so much for it.

The third method is essentially one of acceptance, with adjustment at the level of distributing information, without price-setting. It’s “to say the price is the price, let’s help patients know what it costs and decide,” Bach explained. “The approaches that ASCO, ESMO and AHA all hinge on this,” he said. “The ASCO value framework is the furthest along in this way, in terms of helping patients to deal with it,” he added.

My view—not necessarily Bach’s—is that market forces don’t work in healthcare, in general. It’s absurd to consider cancer patients as consumers who might go shopping and pick and choose among treatment options. Most doctors don’t know enough to remember all the brand and generic names of drugs, what they’re approved for, the latest data on their efficacy in combinations, toxicity and prices. For most patients who are acutely ill, the task of “rationally choosing cancer treatment” is beyond daunting; it’s impossible.

Solve for price is my preference, by far. In principle, this would favor the most rational distribution of new medications. Better still, it could provide information with which major payors could negotiate with companies to lower prices, as happens in some other countries. Current law precludes Medicare from negotiating with pharma, and that should be changed.

The DrugAbacus is “a massive interactive thought experiment,” Bach said. Appropriately, it can account for research and development costs. Other factors include a drug’s efficacy, toxicity, novelty and whether it fills an unmet need. The DrugAbacus can adjust for rarity of the disease it would treat, disease burden at the population level, and severity of the condition.

The main problem with the DrugAbacus, which applies also to ASCO’s published value framework, is the input of inaccurate or incomplete information about how well drugs work. My concern is that overall survival and other benefits may be systematically underestimated with this tool, as they’re weighed by what clinical evidence led to first FDA approval. Progression-free survival is also considered. But there’s no mention of how drugs might be valued differently when given in combination with other medications, or of biomarkers.

That’s crucial information to assessing a drug’s worth, and will become more so. Because most clinical progress in cancer doesn’t come by giving single drugs, but by combinations of biological agents like antibodies (such as Herceptin), hormone blockers (in breast and prostate cancer), chemotherapy and small molecule inhibitors that may have synergistic effects. Immune therapies are typically given as single agents, but that may change, too.

The other missing data in the DrugAbacus has to do with biomarkers. As companion diagnostics emerge and become more accurate, they’ll be used increasingly by clinicians to predict a drug’s efficacy in subsets of patients. Information that stratifies efficacy, such as PI3K mutations in metastatic breast cancer (to name one of many examples), should be incorporated into the formulas; the DrugAbacus needs become more granular and “grow” with precision medicine, if it is to be used at all. Otherwise, it has the potential to misinform both clinical decisions and policy.

“We’re entering an uncertain political time, and it’s hard to know what forces will prevail,” Bach concluded. Second that.

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