[Ip-health] New York Magazine feature on cancer drugs: The Cost of Living

Rigel Hope (né Christian) rigelc at gmail.com
Thu Oct 24 10:07:36 PDT 2013


You think that's a big increase...

http://www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-drugs-is-shaping-the-future-of-medicine/
On Oct 23, 2013 12:39 PM, "Michael H Davis" <m.davis at csuohio.edu> wrote:

> The cost of developing new drugs is more than "contested." When I started
> in this field almost thirty years ago, the cost was claimed to be $100-200
> million. Now they claim--with no reliable data to support the claim--that
> it costs $1.3 billion. It could almost be funny. It's chutzpah on a giant
> scale. Using the $200 million figure, that's an increase of 650% in 30
> years, which amounts to 22% increase annually--around ten times the rate of
> inflation!
>
> It is simply not possible and to call it a criminal lie is not
> unreasonable, in my view. Laboratory work has become more, not less
> efficient, we simply know more, the government subsidizes the big drugs,
>  and economies of scale due to consolidation in the industry all tell us
> that the cost of developing drugs is probably going down, not up.
>
> What's going up is the  willingness of the industry to spread even bigger
> deceptions to maintain their grip on this golden goose. There is an answer
> although the industry throws up it's hands in mock frustration over it. The
> government should be doing all this work , in a transparent way. Watch
> those numbers fall....
>
>
>
> Michael H. Davis
> Professor of Law
> Cleveland State University
> College of Law
> Cleveland, OH 44115
> 216-687-2228
> 917-771-0235
>
> Admitted Attorney, U.S. Patent and Trademark Office, Reg. No. 45,863
>
> Ruth Lopert <ruth.lopert at gmail.com> wrote:
>
>
> "Fueled by his concern for both patients and the health-care system,
> .. Kantarjian
> favors the creation of a
> governmental “value-based system” to set drug prices on the basis of
> medical benefit. … Such a committee already exists in England. Its
> technical name is the
> National Institute for Health and Clinical Excellence, or NICE, and it
> considers not only the benefit but also the cost in deciding what drugs
> will be covered by the U.K.’s National Health Service. "
>
> And existed 10 years before that in Australia. Thank goodness.
>
>
>
>
> On Tue, Oct 22, 2013 at 8:10 PM, Thiru Balasubramaniam
> <thiru at keionline.org>wrote:
>
> > http://nymag.com/news/features/cancer-drugs-2013-10/
> >
> > The Cost of LivingNew drugs could extend cancer patients’ lives—by days.
> At
> > a cost of thousands and thousands of dollars. Prompting some doctors to
> > refuse to use them.
> >
> >    - By Stephen S. Hall
> >    - Published Oct 20, 2013
> >
> >
> >
> > On August 3, 2012, the Food and Drug Administration approved a new cancer
> > drug called Zaltrap as a safe and effective treatment for patients with
> > advanced colon cancer. The approval was based on a large-scale clinical
> > trial that showed that Zaltrap, given in combination with three
> previously
> > approved drugs to patients who had failed initial therapy, extended
> median
> > overall survival by 42 days.
> >
> > No one knew the price of Zaltrap at that point, but Leonard Saltz, who
> > heads the gastrointestinal oncology group at Memorial Sloan-Kettering
> > Cancer Center, had a sense of what was coming. Zaltrap’s effectiveness,
> in
> > his opinion, was almost identical to that of Avastin, an FDA-approved
> > cancer drug that had also been targeted at that same patient population.
> > Several weeks earlier, Saltz had traveled to Chicago to inflict a little
> > premonitory sticker shock on his medical colleagues. He reviewed the
> recent
> > clinical results of both Zaltrap and Avastin when used as a “second line”
> > treatment, after initial treatment had failed. As Saltz reminded the
> other
> > oncologists, Avastin was modestly effective as a second-line treatment—it
> > extended median overall survival by 42 days, the same as Zaltrap—but it
> > cost about $5,000 a month and, like Zaltrap, would have to be taken for
> > many months to achieve that modest clinical benefit. The overall cost was
> > so high that Saltz devoted the end of his talk to a back-of-the-envelope
> > calculation, delivered via PowerPoint, that recast the question in terms
> of
> > health-care costs: If you extended the 42 days survival to a year, “what
> is
> > the cost of Avastin for one year of human life saved?”
> >
> > The answer was astounding, even to doctors who have grown inured to the
> > zero-gravity economics of cancer pharmaceuticals. As Saltz worked his way
> > through slide 73 of 78, he arrived at the bottom line: $303,000.
> >
> > “Now, that’s essentially the cost of the bare-bones drug,” Saltz later
> > explained to me in his office at Sloan-Kettering. “It’s parts, not labor.
> > No money for doctors; no money for nurses; no money for pharmacists; no
> > money for real estate, heat, and lights; no money for the needles, the IV
> > tubing, the IV fluids, the anti-nausea medicines, the other
> chemotherapies
> > that are given, because Avastin doesn’t do anything by itself. It has to
> be
> > given with other drugs … I want to emphasize it’s not that we can have a
> > year of life saved for $303,000. That’s probably less than half of what
> the
> > actual cost would be when you factor in everything.” Zaltrap, he figured,
> > was probably going to be in the same range.
> >
> > Saltz’s message was not entirely unexpected. He has been warning about
> the
> > danger of rising drug prices, to patients and to the health-care system
> in
> > general, for the last decade. Having made this point to his colleagues,
> > Saltz packed up his computer, took the next flight back to New York, and,
> > after the FDA approved Zaltrap in early August, began to prepare—“not
> with
> > great enthusiasm,” he conceded—the Zaltrap presentation he would deliver
> to
> > the hospital committee responsible for approving any new drugs for
> > Sloan-­Kettering’s pharmacy.
> >
> > Then, on August 31, he received an e-mail from a pharmacist at the
> hospital
> > about the price that Zaltrap’s manufacturers, Sanofi and Regeneron
> > Pharmaceuticals, had set. The pharmacist said, in effect, “Are you aware
> > that this drug is twice as expensive as Avastin?”
> >
> > “No,” Saltz replied, “I wasn’t aware.”
> >
> > The pharmacist e-mailed the numbers, and Saltz stared at the figures on
> his
> > computer screen. Zaltrap, the drug that was extremely similar to Avastin,
> > cost roughly $11,000 a month. (And because that extra 42 days wouldn’t be
> > possible without taking the drug for, say, seven months before—which was
> > roughly what was happening in clinical trials—the price for that six-week
> > life extension could be as high as $75,000.)
> >
> > “Wow,” he said to himself, “that’s a deal-changer for me.”
> >
> > That may not seem like a heretical statement, but the unspoken rule in
> > American health care is that doctors should never consider the cost of a
> > medicine that might be beneficial to patients. When the FDA approves a
> new
> > cancer drug, it analyzes safety and effectiveness only. Medicare is
> obliged
> > to reimburse payment for the drug, and private insurers in most states
> must
> > cover the cost. Any doctor who considers cost—or the *value* of a costly
> > drug—risks being accused of “rationing” health care.
> >
> > Saltz felt compelled to consider the cost. He didn’t see any medical
> > advantage to Zaltrap for his patients—or any disadvantage, for that
> > matter—but, as he contemplated its price, he thought, *I can’t see why I
> > would use this*.
> >
> > That same day, he sent an e-mail to every physician at the hospital who
> > treated patients with colon cancer. “I said, essentially, ‘You all know
> the
> > data. You were at the meetings. You know what the situation is. What I
> just
> > learned is this issue regarding the price. Within this context, I can’t
> > envision a scenario where I would plan to use this drug. Can you?’ ”
> >
> > None of the sixteen colon-cancer physicians at Sloan-Kettering who
> replied
> > to Saltz’s query said they could see a reason for using the drug.
> >
> > The hospital’s Pharmacy and Therapeutics Committee met in September 2012
> to
> > decide whether to include Zaltrap in their list of medications, and
> Saltz,
> > who chairs the committee, informed his colleagues of the price and
> > recommended not carrying the drug. The committee agreed. Sloan-Kettering,
> > one of the country’s preeminent cancer hospitals, would not be offering
> > Zaltrap to its patients.
> >
> > When Saltz called upstairs to inform Peter B. Bach, director of the
> Center
> > for Health Policy and Outcomes at Sloan-Kettering, of the decision, Bach
> > wanted to know the reason.
> >
> > “Because of the price,” Saltz told him.
> >
> > As soon as he heard that, Bach, who has been documenting the dizzying
> rise
> > of cancer-drug prices since 2009, immediately jumped into an elevator to
> go
> > to Saltz’s office to learn more about the unprecedented decision. Why the
> > rush? “C’mon!” Bach explained to me recently. “It’s never happened
> before!
> > Sloan-Kettering isn’t including a drug because of its *price*?”
> >
> > Thus began the first physician-initiated revolt in anyone’s memory
> against
> > the skyrocketing cost of cancer drugs.
> >
> > “Everybody agrees: The prices are *unsustainable,*” Saltz said. “And I
> > often try to invite myself or people having these discussions to complete
> > the thought: If it’s unsustainable, what happens when it’s unsustained?
> Do
> > we have an adjusted, steady correction? Or do we have an implosion and a
> > crash?”
> >
> > Every time there is a public debate about drug prices, the pharmaceutical
> > industry replies, as it did to the Zaltrap episode, with several
> > fundamental arguments: The cost of bringing a new drug to market is
> > enormous—$1.3 billion per drug, according to one often-cited (but
> > often-contested) academic study; the drugs provide value and address
> unmet
> > patient needs; and, perhaps most important, high prices—and profits—are
> > necessary to subsidize the innovation that allows the industry to bring
> > newer, better medicines to market. After Sloan-Kettering’s decision,
> Sanofi
> > also pointed out in a statement that Zaltrap demonstrated “important
> > survival benefits” for patients with metastatic colon cancer and provided
> > an important treatment option (a company spokesperson declined to answer
> > any further questions about the pricing of Zaltrap for this story).
> > Usually, after these arguments are made, the debate dies down and prices
> > continue to go up.
> >
> > Cancer drugs have become a very big business, even though they serve what
> > one expert has described as a “boutique” market. An estimated 1.7 million
> > Americans will be diagnosed with cancer this year, according to the
> > National Cancer Institute, and more than 580,000 people will die from
> some
> > form of malignancy. In 2012, the overall market for “oncologics” reached
> > nearly $26 billion a year in the U.S. alone, and annual global sales are
> > projected to total $85 billion by 2016, according to the IMS Institute
> for
> > Health Informatics.
> >
> > What is sobering about this booming business is that, as a group of
> > oncologists wrote earlier this year, “most anti-cancer drugs provide
> minor
> > survival benefits, if at all.” They often (but not always) reduce the
> size
> > of inoperable tumors, but they rarely eradicate the disease. For
> relatively
> > uncommon malignancies like testicular cancer, some forms of leukemia, and
> > lymphoma, drugs effectively cure the disease; for the common “solid
> tumor”
> > cancers (lung, breast, colon, prostate, and so on), which account for the
> > vast majority of annual cases, drugs buy some time—precious time, to be
> > sure, but time usually measured in weeks and months rather than years.
> And
> > even though many of the newer drugs are less toxic, they often still have
> > to be given with older drugs whose side effects include nausea, hair
> loss,
> > fatigue, and decreasing blood counts. One anti-cancer drug produces a
> skin
> > rash so severe and disturbing, according to Saltz, that some patients
> have
> > been asked by employers not to come to work.
> >
> > In 1965, at the dawn of Medicare, the chemotherapy drug Vinblastine cost
> > $78 a month, according to a widely cited Sloan-Kettering price
> compendium.
> > In 2011, Bristol-Myers Squibb introduced a new melanoma drug called
> Yervoy
> > at a cost of about $38,000 a month. Yervoy followed, by about a year, a
> new
> > prostate-cancer therapy called Provenge that cost $93,000 per course of
> > treatment. Even an ancient chemotherapy like nitrogen mustards, cousins
> to
> > World War I’s mustard gas and in use since 1949, have gotten caught in
> the
> > cost updraft; in 2006, a course of treatment experienced a thirteen­fold
> > price increase, from $33 a month to $420 a month.
> >
> > And it’s not just that the price of cancer drugs has doubled in the last
> > decade—it’s that the rise in prices, according to cancer doctors, has far
> > exceeded the drugs’ effectiveness. In 1994, the median survival rate for
> > someone with advanced colon cancer was eleven months, according to Saltz,
> > and the lifetime costs of the drugs used to treat the average patient
> would
> > be about $500 at today’s prices. By 2004, the median survival rate had
> > increased twofold, to 22 months, but Saltz says the drug costs had
> > increased hundreds of times for that extra eleven months.
> >
> > Richard Larson, an oncologist at the University of Chicago Hospital, says
> > the Zaltrap episode was “a shot across the bow” of the health-care
> > community, “making people start to think that there needs to be some sort
> > of limit on costs,” especially for drugs with “such a marginal benefit.”
> > But the problem, according to Saltz, is much bigger than one drug.
> “Zaltrap
> > is simply a little piece of the puzzle,” he says. “The prices of cancer
> > drugs in general, I believe, are inappropriately high.”
> >
> > Explaining how cancer-drug prices have become “inappropriately high” is
> > complicated, and there is more than one explanation. To a colon-cancer
> > expert like Saltz, it is the story of drugs that cost too much and do too
> > little. To a leukemia expert like Hagop Kantarjian, of MD Anderson Cancer
> > Center in Houston, it is conversely the story of drugs that are
> > spectacularly effective but cost so much that they threaten to bankrupt
> the
> > patients whose lives they have miraculously prolonged. To a
> > health-care-policy analyst like Peter Bach, it is the story of a market
> so
> > jerry-rigged with regulations that, as a graduate-school professor once
> > told him, “the beautiful thing about health care is that it has every
> > market failure you’ve ever heard of—plus two or three more.”
> >
> > To an oncologist like Deborah Schrag, of the Dana-Farber Cancer Institute
> > in Boston, who first warned nine years ago in a *New England Journal of
> > Medicine*editorial that increases in prices of colon-cancer drugs were
> far
> > outstripping increases in clinical benefit, it is the story of a kind of
> > reimbursement shell game, where most patients are buffered from the high
> > cost of drugs (and health care in general) by third-party payers. As the
> > Affordable Care Act begins its fitful rollout, some health-care experts
> are
> > expressing concern about a crazy quilt of plans on health-insurance
> > exchanges where patients enrolled in some state plans may pay modest
> > amounts for drugs (New York plans call for a $70 co-pay on cancer drugs),
> > while patients in other states might pay considerably higher rates.
> >
> > And because the economics of cancer drugs have always been colored by
> > emotion, where patients facing a grim prognosis are desperate to try
> > anything (as are their doctors), it is also a story of misunderstanding
> > what many of these drugs can and can’t do. Last year, Schrag published a
> > stunning study in the *New England Journal of Medicine* reporting that 81
> > percent of patients with advanced colon cancer (and 69 percent of
> patients
> > with advanced lung cancer) did not understand that the drugs used in
> their
> > treatment would not cure them. “People really anchor on cancer as a
> disease
> > that causes so much suffering that patients are willing to bankrupt
> > themselves to try something,” says Rena Conti, a health-care economist at
> > the University of Chicago. “There is an irrationality about it, which is
> > quite natural but feeds into this willingness to pay for anything.”
> >
> > For those reasons and others, the average price of cancer drugs has gone
> > “through the roof,” according to George W. Sledge Jr., former president
> of
> > the American Society of Clinical Oncology. “What predicts the price of
> the
> > next cancer drug is the price of the last cancer drug,” says Bach. “The
> > only check on the system is corporate chutzpah.”
> >
> > In 1957, a chemotherapy drug named 5-fluorouracil was patented, and by
> the
> > sixties “5-FU,” as the drug is commonly called, had quickly become the
> > first choice of oncologists in treating colon cancers and related
> > gastrointestinal malignancies. It usually didn’t cure the disease once
> the
> > cancer had spread; it temporarily blunted the disease’s progression. Over
> > the ensuing decades, massive amounts of 5-FU have been used to treat
> colon
> > cancer, which strikes about 145,000 Americans each year.
> >
> > The same year 5-FU was patented, Saltz was born in New York. He grew up
> in
> > Westchester County, went to Horace Mann, attended Stanford, got his
> medical
> > degree at Yale, began to specialize in oncology, and since 1989, has
> > treated colon-cancer patients at Memorial Sloan-Kettering. And 5-FU,
> Saltz
> > admits, is “a drug that’s very embarrassing to people like me.”
> >
> > Now 56 years old, just like Saltz, the drug continues to be “the best and
> > most important drug we have to treat colorectal cancer,” he says. “Every
> > drug that has come along since was designed to replace it and failed and
> > wound up finding a niche by adding to it.” The newer
> medications—including
> > Avastin and Zaltrap—have become part of combination therapies, but, as
> > Saltz says,* drug cocktail* has come to mean “a combination of drugs that
> > don’t work well enough to do the job by themselves.”
> >
> > That didn’t stop pharmaceutical companies from charging top dollar for
> new
> > colon-cancer drugs that did not live up to expectations. The FDA approved
> > Camptosar in 1996; until it went generic, the Pfizer drug cost about
> $5,300
> > a month, and it extends median overall survival by, at best, 90 days,
> > according to Saltz. Avastin was approved in 2004; the Genentech drug now
> > costs about $5,000 a month (based on Sloan-Kettering’s analysis), and it
> > extends average survival by, at best, 141 days as a first-line treatment
> > and by about 42 days as a second-line treatment. ImClone, a biotech
> > company, won approval for Erbitux in 2004; Bristol-Myers Squibb and Eli
> > Lilly, which acquired ImClone, now market the drug for about $8,400 a
> > month; the best-case study, according to Saltz, extends median survival
> by
> > 120 days. Some follow-up studies, he adds, show less of an overall
> survival
> > benefit. Moreover, virtually none of the newer drugs extends survival
> > without being used with other chemotherapy, usually 5-FU, which currently
> > costs about $30 per treatment. The IV apparatus, Saltz says, is probably
> > more expensive than the drug.
> >
> > Saltz acknowledges that cancer research is incredibly difficult and that
> > progress is neither easy nor cheap, but he once believed that the drugs
> > developed over the last twenty years, based on elegant new molecular
> > biology, would revolutionize treatment and make the use of 5-FU and other
> > chemotherapies seem like an archaic practice by medical Druids. “These
> were
> > going to make us look back and say, ‘Can you believe we used to give
> drugs
> > to people that made their blood counts drop and made them vomit and made
> > their hair fall out? Now we block the blood supply to the tumor! We turn
> > off the growth-factor receptor! It’s so much better! It’s so much less
> > toxic! It’s *so* much more effective!’ ” Saltz says. “That’s what we all
> > envisioned. That’s not what happened.”
> >
> > The only part of the vision that came true was that the drugs were so
> much
> > more expensive. “When these drugs failed—and they did fail—to replace the
> > drugs before them,” Saltz says, “the fallback position was: Let’s see if
> > the [old] drugs plus the new drug are better than the [old] drugs alone.
> > And that’s how these drugs come to market … We start out with a new drug
> > and get excited about it. We do big expensive studies with high hopes for
> > it. And the drug winds up doing less than we hoped it would, but it gets
> on
> > the market, and then it is both hyped and billed as if it did what we
> hoped
> > it would do in the first place.” (Pharmaceutical companies, not
> > surprisingly, disagree with Saltz. “A person diagnosed with advanced
> > colorectal cancer can now be expected to live for two years, and each of
> > these medicines have contributed to that,” says Charlotte Arnold, a
> > spokesperson for Genentech, which manufactures Avastin. “I think that
> when
> > we talk about what we gain as a society, we should be looking at the big
> > picture. As a society, our investment in new drugs and new medicines has
> > been paying off.”)
> >
> > In the battle against terminal illness, of course, a patient’s calculus
> of
> > cost effectiveness often has more to do with living to see a child’s
> > graduation or a spouse’s birthday than with the median survival benefit,
> > and reaching those milestones is worth every penny. But as Saltz and
> other
> > doctors are increasingly pointing out, the cost is steep both to society
> > (in terms of those third-party pennies) and to patients (in terms of
> > quality of life). “You might live 60 days longer,” says Bruce Hillner of
> > Virginia Commonwealth University, “but the evidence suggests that each of
> > those 60 days was diminished in some meaningful way” by the side effects
> of
> > the drugs. Just last week, a *New England Journal of Medicine* editorial
> > characterized high drug prices as a form of “financial toxicity.”
> >
> > Saltz takes these failures a little personally, because he played a major
> > role in bringing some of these medicines to market. He led key clinical
> > trials resulting in FDA approval for two of them (Camptosar and Erbitux)
> > and has conducted clinical trials with Avastin, too. And, like many
> > oncologists, he keenly feels the emotional cost of resorting to
> treatments
> > he wishes were more effective. Hence, these words—mind you, from the
> > chairman of the Pharmacy and Therapeutics Committee at a hospital that
> > likes to think of itself as the premier cancer center in the world:
> > “Whereas we had hoped that small, incremental gains would be a
> springboard
> > to something bigger and more productive, I fear those small, incremental
> > gains have become a business model. Right now, it is safer for a
> > pharmaceutical company to strategize for large-scale clinical trials that
> > look for small, incremental gains that will get a drug to market, than to
> > swing for the fences and try for the big advance.”
> >
> > It’s not just that the skewed market for cancer drugs rewards mediocre
> > products, he says. “Mediocrity is *so* well rewarded that it’s a better
> > risk than aiming higher.”
> >
> > Alot of what determines the price of cancer drugs can be attributed to
> the
> > byzantine economics of health care: markets that don’t behave the way
> “real
> > world” markets do; artificial price supports that are called something
> > else; government regulations that remove any downward pressures on
> pricing;
> > and, until Medicare reforms kicked in, in 2005, arcane reimbursement
> > policies that actually rewarded oncologists who used higher-priced drugs,
> > because it would increase the profit margins of their practices. You
> > practically have to become a health-care economist to understand how it
> > works, which is exactly how Bach, who trained as a pulmonary physician,
> > became Sloan-­Kettering’s in-house expert on cancer-drug pricing.
> >
> > In 2009, Bach published an article on cancer-drug prices in the *New
> > England Journal of Medicine *that documented their dramatic rise and
> tried
> > to explain the reason for it. The article laid out the tangled, almost
> Rube
> > Goldberg regulatory strictures that shape—or, more accurately,
> distort—the
> > cancer-drug market. The foundation for that market is the patent system,
> > which rewards innovation by granting monopoly status to a new drug and
> > essentially allows drug companies to name their price during the period
> of
> > market exclusivity, generally seven to twelve years. It continues with
> > federal limitations on Medicare that prevent the government’s largest
> > purchaser of cancer drugs from negotiating with drug-makers on price.
> >
> > The centerpiece of the 2009 article was a chart tracking the price of
> every
> > cancer drug approved by the FDA since 1965 (now regularly updated by Bach
> > and his colleague Geoffrey Schnorr). In preparing it, Bach discovered
> > several dirty secrets about drug pricing. The first is that there is no
> > fixed price. The “sticker price” of a cancer drug is listed in a
> compendium
> > called the *Red Book**, *but no one pays that price, according to
> experts.
> > Drug companies can, and do, offer undisclosed discounts to
> health-insurance
> > companies, hospitals, and middlemen in the health-care market. So prices
> > vary widely. The Sloan-Kettering compendium pegs its cancer-drug prices
> to
> > Medicare reimbursements, which give an indication of the real marketplace
> > price (and the cost to taxpayers). These prices are lower than those in
> the
> > *Red Book, *but still, according to Bach, are “astronomical.”
> >
> > Second, the chart documents a recent sea change in pricing. It shows a
> very
> > slight uptick in prices until the mid-­eighties, when the rise becomes
> more
> > substantial, and then bends sharply upward around 2000. Beginning about
> > twenty years ago, the graph also shows a series of dots way above the
> curve
> > of average prices, indicating drugs that, in effect, have broken the
> sound
> > barrier on price since the nineties.
> >
> > “Then one day I looked at the whole landscape,” Bach recalled, “and
> > thought,
> > *Huh, I now know why cancer-drug prices are so high.* Because the entire
> > regulatory environment is structured in a way where there are no downward
> > pressures and there are no standards. Medicare—and most private insurers,
> > who want to do business in most states—have to include every drug in
> > coverage. And they have to pay the producer’s price. It’s kind of that
> > simple.”
> >
> > Bach, incidentally, doesn’t fault the pharmaceutical companies for
> > continuing to push the envelope on pricing. They have a responsibility to
> > shareholders to maximize their profits, he says, and “are responding in a
> > logical way” to an illogical system that, in terms of prices, has “no
> upper
> > limits. They’re just going to creep up as fast as they can get away
> with.”
> >
> > He also realized that one of the few downward-market pressures on
> > pharmaceutical prices was what he calls “headline risk”—an economist’s
> way
> > of saying “negative publicity.” And that’s why he raced down to the tenth
> > floor when Saltz called him about the Zaltrap decision. It was an
> > opportunity to make some public noise in the drug-price debate.
> >
> > Saltz proposed writing a joint commentary about Sloan-Kettering’s Zaltrap
> > decision for the *Journal of Clinical Oncology,* where cancer doctors
> have
> > been venting about high prices for years. (In a 2009 *JCO* editorial,
> > Hillner and his colleague Thomas J. Smith criticized the rise in
> > cancer-drug prices with this statement: “Profiteering, the act of making
> a
> > profit by methods considered unethical, such as raising prices after a
> > natural disaster, is a pejorative term that we believe can be applied to
> > this recent trend where a life-threatening disease is the natural
> > disaster.”)
> >
> > Despite this rising discontent in the medical literature, Bach knew that
> no
> > one besides doctors would read a medical journal, so he argued instead
> for
> > approaching the *Times* with the idea of announcing Sloan-Kettering’s
> > Zaltrap decision as an op-ed piece signed by Saltz, Bach, and Robert
> > Wittes, then physician-in-chief of the hospital. In the piece, which
> > appeared last October, they wrote, “When choosing treatments for a
> patient,
> > we have to consider the financial strains they may cause alongside the
> > benefits they might deliver.”
> >
> > Several weeks later, citing “market resistance,” Sanofi cut the price by
> 50
> > percent—an unprecedented discount for a cancer drug. Sloan-Kettering
> still
> > does not carry Zaltrap.
> >
> > When Hagop Kantarjian, who heads the Department of Leukemia at the
> > University of Texas’s MD Anderson, saw the op-ed, and the effect it had
> on
> > the drug’s price, he was both surprised and heartened. “Before that,” he
> > says, “all the previous efforts by doctors had been halfhearted and not
> > successful.” As several health-care economists pointed out in the wake of
> > the Zaltrap episode, hospitals could use their pharmacies as a way to
> hold
> > the line on drug prices, and physicians could take the lead in
> highlighting
> > the problem. So Kantarjian said to himself, “What if you took one
> disease,
> > and all of the experts in the field advocated against high drug prices?
> If
> > they could do it, why not us?” *Us* was an international group of experts
> > on leukemia. But these doctors picked an entirely different fight with
> the
> > pharmaceutical industry: They wanted to highlight the problem of high
> > prices for really effective drugs.
> >
> > Over the past decade, Kantarjian watched in disbelief as the cost of a
> > successful leukemia drug called Gleevec rose. “I was shocked that it had
> > tripled since 2001,” he says, “and there was no reason for the increase
> in
> > price, except that the companies could do it and nobody could do anything
> > about it.” Kantarjian, as established a figure as there is in American
> > oncology, suddenly became radicalized.
> >
> > He drafted a letter protesting the high prices of certain leukemia drugs
> > and began showing it to colleagues, including Richard T. Silver of New
> York
> > ­Presbyterian–Weill Cornell Medical Center. The issue clearly touched a
> > nerve with other doctors. “At first the group was kind of small,” Silver
> > says, “and then everybody wanted to be on the bandwagon.” By the time the
> > letter appeared last April in *Blood,* the field’s primary journal,
> > Kantarjian had collected 119 signatories on six continents, including
> > doctors at Massachusetts General Hospital, the Mayo Clinic, and the Fred
> > Hutchinson Cancer Research Center in Seattle.
> >
> > The doctors confined their argument to drugs for chronic myelogenous
> > leukemia (CML), a cancer of the blood that strikes roughly 5,000
> Americans
> > each year. But they suggested that the pricing of CML drugs bordered on
> > profiteering, because patients now have to take these very expensive
> drugs
> > continuously, for years, if they want to stay alive. When Gleevec, the
> > first successful CML drug, came out in 2001, the annual sticker price was
> > $30,000, they noted; by 2012, it had risen to $92,000 a year. Moreover,
> > Kantarjian said, three new second-generation CML drugs, approved in 2012,
> > all have list prices around $100,000 a year. (The Sloan-Kettering
> analysts
> > price these drugs at less than the *Blood* editorialists, although Bach
> > agrees that the prices for CML drugs are exceptionally high.) “The
> > financial picture is completely different from ten years ago,” Kantarjian
> > says.
> >
> > Unlike the drugs with “modest” colon-cancer benefits, Gleevec is arguably
> > the biggest success story in cancer therapy in the last fifteen years.
> > Practically overnight, it changed chronic myelogenous leukemia from a
> > devastatingly fatal disease in which less than 20 percent of patients
> were
> > still alive ten years after diagnosis to essentially a chronic illness in
> > which more than 80 percent of those diagnosed are alive ten years later.
> “A
> > *hugely* successful drug,” says Ellin Berman, a CML expert at
> > Sloan-Kettering. “Really a home run.”
> >
> > So why would more than 100 international leukemia experts, including
> > Berman, sign the *Blood* editorial and take the pharmaceutical industry
> to
> > task about such a marvelous class of drugs? One reason, of course, was
> the
> > sheer financial burden of having to take a $100,000-a-year drug for the
> > rest of one’s suddenly extended life. But the biography of Gleevec also
> > undermines two key arguments used by the drug industry to justify high
> > prices: that those revenues justifiably reward innovation and that the
> free
> > market ultimately establishes a fair price.
> >
> > The compound now known as Gleevec was originally designed by chemists at
> > the Swiss company Ciba-Geigy (which later merged with another company to
> > form Novartis). But Ciba-Geigy balked at developing the drug because it
> > considered the CML market too small, even though enterprising research by
> > physician Brian Druker, first at Harvard and then at the Oregon Health &
> > Science University, showed the drug to be remarkably effective against
> > human leukemia cells. “To me, this was the innovation, and this was the
> > risk,” Druker told me recently, “and I was dealing with one of the most
> > risk-averse companies in the world.” For nearly five years, Druker
> > relentlessly pressured Ciba-Geigy, and then Novartis, to allow him to
> test
> > the drug in human patients. For five years, the companies refused.
> >
> > Finally, in 1998, after Druker essentially challenged Novartis to test
> the
> > drug or license it to a company that would, the company relented, fully
> > expecting the drug to fail, according to Druker and others. But even the
> > early Phase I results, usually limited to establishing safe dosages,
> > produced spectacular results: Higher doses of the drug sent 53 of 54
> > patients with a previously incurable form of cancer into remission. Last
> > year alone, Gleevec racked up sales of about $4.7 billion for Novartis,
> and
> > the success of the drug opened the door to the development of five
> > second-generation CML drugs—all with a sticker price around $100,000.
> >
> > This early history is one of the reasons Druker is so frustrated by the
> > current pricing situation and why he, too, signed the *Blood *editorial.
> “I
> > would have thought more drugs would have meant more competition, and that
> > more competition would have meant prices coming down. But here, prices
> keep
> > going up.” If you want to see how a free market operates for Gleevec-like
> > drugs, Kantarjian suggests looking at South Korea. That’s because a South
> > Korean drug company independently patented and developed a
> > second-generation CML drug and priced it at about $21,500 a year,
> according
> > to Kantarjian. As a result, all the competing CML drugs are priced
> between
> > $21,000 and $28,000—a quarter of what the same drugs cost for American
> > cancer patients.
> >
> > And these high prices in the U.S. may now be having negative
> consequences,
> > both financial and medical. Patients with cancer are 2.5 times as likely
> to
> > declare bankruptcy as the general population, according to a recent study
> > led by Scott Ramsey of the Fred Hutchinson Cancer Research Center.
> Monthly
> > co-pays for an $8,000-a-month drug can be financially onerous, especially
> > for people known as “naked patients”—those who aren’t wealthy enough to
> > have supplemental health insurance and not poor enough to qualify for
> > Medicaid. Kantarjian said a disturbing new trend has emerged; some
> > middle-class patients saddled with these continuing co-­payments—up to 10
> > percent of CML patients, by his estimation—are beginning to discontinue a
> > lifesaving treatment because of the out-of-pocket cost, after which the
> > cancer develops resistance to the drug and they can no longer be treated.
> >
> > In response to the *Blood *editorial, Novartis issued a statement saying
> > that sustainability of the health-care system is a “complex topic” and
> that
> > the company’s “critical role … is to discover and develop innovative
> > treatments.” Novartis also noted its “patient access programs,” which
> help
> > patients cover the high cost of their medications. Many pharmaceutical
> > companies have such patient-assistance programs. Economists like Bach
> > consider these programs a form of artificial price supports that allow
> the
> > companies to keep overall prices high.
> >
> > It was precisely these financial issues that led to a little literary
> tiff
> > between Kantarjian and Silver over the wording of the *Blood* editorial.
> > Kantarjian insisted that the high prices of CML drugs were forcing
> doctors
> > to violate the Hippocratic oath (“First, do no harm”). Silver disagreed.
> >
> > “I thought using the Hippocratic oath was inappropriate,” Silver says, so
> > he told Kantarjian: “Hippocrates meant ‘Do no harm’ from a medical point
> of
> > view.” Kantarjian replied, “If you kill a patient financially, that
> counts
> > too.”
> >
> > Kantarjian has brought a rhetoric to the price debate that is unusual for
> > such a prominent figure in oncology. He accuses the pharmaceutical
> industry
> > of “greed” in its pricing of CML drugs, argues that “there is zero
> > correlation—*zero*—between how effective a drug is and the cost of the
> > drug,” and becomes especially indignant when pharmaceutical-industry
> > spokespeople suggest that any effort to contain drug prices will curtail
> > innovation, calling it a form of “blackmailing” against the national
> > interest. He’s pretty exasperated with his fellow oncologists, too. “In
> the
> > last decade, we have become glorified employees of the drug companies,”
> he
> > says.
> >
> > Since the *Blood* editorial, Kantarjian has begun to talk to other
> > disgruntled physicians, including a doctor concerned about the price of a
> > new drug for a blood disorder called paroxysmal nocturnal hemoglobinuria
> > (which costs a staggering $523,000 a year) and a pair of cystic-fibrosis
> > physicians who published an editorial in the *Journal of the American
> > Medical Association* on October 2 lamenting the $311,000-a-year cost of a
> > “personalized medicine” drug for the disorder. Kantarjian, meanwhile, is
> > trying to spread his “cut the price” gospel. He’s going to be speaking
> to a
> > group of health-care executives at the end of October in Chicago and
> wants
> > to enlist oncologists who specialize in the skin cancer melanoma. Yervoy
> > now costs about $39,000 a month, and a promising new class of drugs
> called
> > PD-1 inhibitors, currently in advanced testing, is expected to cost even
> > more. (“I mean, why not?” Bach says. “No one is going to stop them.”)
> > “We’ve come to an intolerable situation,” says Kantarjian.
> >
> > Fueled by his concern for both patients and the health-care system, he is
> > helping to organize a meeting in Washington, D.C., in December of what he
> > calls “stakeholders” in the drug-price debate—doctors, patients, health
> > insurers, federal regulators, and, of course, the drug companies—to
> “begin
> > the dialogue” about high drug prices; the Leukemia & Lymphoma Society is
> > planning a similar initiative. Kantarjian favors the creation of a
> > governmental “value-based system” to set drug prices on the basis of
> > medical benefit. “New drugs should be evaluated by a committee of
> experts,”
> > he says, “who can say, ‘This is how much it improves survival, and this
> is
> > how much the price should be.’ ”
> >
> > Such a committee already exists in England. Its technical name is the
> > National Institute for Health and Clinical Excellence, or NICE, and it
> > considers not only the benefit but also the cost in deciding what drugs
> > will be covered by the U.K.’s National Health Service. Its decisions
> allow
> > an implicit form of government negotiating over the price of drugs,
> because
> > when NICE has turned down a drug as having too little clinical bang for
> the
> > buck, companies have often come back to the panel with a lower price.
> >
> > As a result, a British cancer patient usually pays substantially less
> than
> > American patients. Gleevec costs about $33,500 a year in England,
> according
> > to NICE; the U.S. price ranges up to $92,000 (according to the *Blood*
> > editorial).
> > Tasigna, a newer CML drug, costs about $51,000 in England, while the U.S.
> > price ranges up to $115,000. Sprycel, another new CML drug, costs nearly
> > $49,000 a year in England, while the U.S. price ranges up to $123,000.
> >
> > More to the point, NICE has recently said no where Medicare has been
> forced
> > to say yes. In January 2012, NICE declined to approve Avastin for both
> > colon and breast cancer, and last June, NICE reached the same conclusion
> > about Zaltrap as Sloan-Kettering’s physicians—it declined to cover the
> use
> > of the drug, considering it too expensive.
> >
> > “One of my many politically incorrect opinions,” Saltz says, “is that
> NICE
> > is an undesirable but necessary inevitability.” The notion that something
> > like NICE could be imported to this country is anathema to the
> > pharmaceutical industry and a pipe dream to most American health-care
> > economists, but Saltz believes we need to start talking about the price
> > tag.
> >
> > “There is a number in people’s minds,” he says. “If you say to people, ‘I
> > have a drug that extends life by one day at a billion dollars; shouldn’t
> we
> > as a society pay for it?,’ I’m pretty confident most people would say no.
> > If I say, ‘I have a drug that extends life by three years at a cost of
> > $1.50,’ I’m pretty confident everybody would say, ‘Of course!’ Somewhere
> in
> > there is a number, a tipping point, where we say, ‘No, we can’t.’ Right
> > now, we’re unwilling as a society to *explore* where that point is. And I
> > would argue that we have to. Wherever it may be, we have to find it.”
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