[Ip-health] FT: counting the cost of cancer

Sophie Bloemen sbloemen at bits-of-information.org
Fri Jan 16 02:35:28 PST 2015


http://www.ft.com/cms/s/2/5e0b1f54-9ca0-11e4-a730-00144feabdc0.html#axzz3OyhX6oMz

January 15, 2015 7:08 pm


  Healthcare: Counting the cost of cancer

Andrew Ward

©Science Photo Library

Anne Strange was too ill to dance at the evening reception when her 
daughter, Debbie, married in November but just being there was enough. 
The 63-year-old Londoner was diagnosed with breast cancer in 2010 and 
the disease has since spread to her liver, lungs and spine.

“All I was aiming for was to get to the wedding,” she says. “I’m so glad 
I did.”

Ms Strange would probably not have got there but for 
theCancer<http://www.ft.com/intl/reports/combating-cancer>Drugs Fund, a 
scheme within 
Britain’sNHS<http://www.ft.com/intl/cms/s/0/8e02822a-9993-11e4-93c1-00144feabdc0.html?siteedition=intl>that 
pays for expensive oncology medicines typically used in advanced cases 
of the disease when often the best that can be hoped for is an extra few 
months of life.

Soon, even that hope will be extinguished for many after the NHS 
announced this week that the number of therapies covered by the fund 
would be cut by 30 per cent to contain spiralling costs. Among the 
casualties will be eribulin, made 
byEisai<http://markets.ft.com/tearsheets/performance.asp?s=jp:4523>of 
Japan, which Ms Strange has been taking since other treatments failed.

 From a UK standpoint, thesqueeze on the Cancer Drugs Fund 
<http://www.ft.com/intl/cms/s/0/a7bbb1de-9a81-11e4-8426-00144feabdc0.html?siteedition=intl>was 
just another reminder of the tough choices facing the public-funded 
health system in an era of fiscal austerity. But it highlighted the 
broader global challenge posed by the rising cost of cancer care, 
especially medicines, as people live longer.

The number of over-65s on the planet is projected almost to triple 
between 2010 and 2050 to 1.5bn, according to the UN. This, in turn, will 
spur a surge in age-related diseases such as cancer. The World Health 
Organisation predicts the number of cases will increase 70 per cent in 
the next 20 years.

These trends are putting health systems under pressure. Global spending 
on cancer drugs has more than doubled in the past decade to $91bn in 
2013, according to the IMS Institute for Healthcare Informatics. “What 
we’re seeing in the UK is the first manifestation of something that has 
been predicted for some time: the cost of these drugs is not 
sustainable,” says Bernard Munos, a formerEli 
Lilly<http://markets.ft.com/tearsheets/performance.asp?s=us:LLY>executive and 
veteran industry consultant.


    *Pressure on US market*

Such warnings are casting a cloud over recent medical breakthroughs that 
promise to revolutionise the way cancer is treated — at least for those 
who can afford it. More than 20 cancer drugs have been launched globally 
in the past two years — the strongest burst of innovation for over a 
decade — with an even bigger wave approaching market.


Many of them involve a new approach that aims to boost the immune 
system’s ability to detect and fight tumours. These so-called 
immunotherapies work by removing the camouflage that cancer cells use to 
evade the body’s disease-fighting T-cells. In clinical trials, many 
people who had exhausted existing treatment options have been kept alive 
by the new drugs for months and in some cases years.

“The whole immuno-oncology area is exploding,” says John LaMattina, 
former head of research and development forPfizer 
<http://markets.ft.com/tearsheets/performance.asp?s=us:PFE>. “We are 
heading towards a world where cancer will become a chronic disease in 
much the same way as we have seen with diabetes and HIV.”

This vision is raising hopes for cancer patients but also for investors 
as the pharmaceutical industry battles to revive growth after the weak 
productivity and serial patent losses of recent years. Seamus Fernandez, 
analyst at Leerink, says the immuno-oncology market could reach $40bn in 
annual sales within a decade.

Yet, such bullish forecasts are based on equally aggressive pricing 
assumptions. Two of the first immunotherapies — Keytruda fromMerck & 
Co<http://markets.ft.com/tearsheets/performance.asp?s=us:MRK>and Opdivo 
fromBristol-Myers 
Squibb<http://markets.ft.com/tearsheets/performance.asp?s=us:BMY>— 
wereapproved by US 
regulators<http://www.ft.com/intl/cms/s/0/64b46802-7760-11e4-a082-00144feabdc0.html?siteedition=intl>last 
year, each carrying a price tag of $150,000 per patient, per year.


Companies say such prices are justified by the multibillion-dollar 
development costs and increased effectiveness. Advances in genomic 
science are opening the way to evermore targeted treatments compared 
with the “carpet bombing” of traditional chemotherapy.

Steve Miller, chief medical officer for Express Scripts, which manages 
prescription drug programmes on behalf of US insurers, says nobody 
disputes the potential benefits of these new drugs. But he insists 
companies must adjust their expectations of what price even the 
ultraliberal US market will bear. “The science has never been better but 
economically it is incredibly scary.”

The US has long balked at drug rationing of the kind seen in the UK; 
Republican critics of socialised healthcare decry as “death panels” 
bodies such as Britain’s National Institute for Health and Care 
Excellence which decides whether medicines offer sufficientvalue for 
money to be adopted.

This greater freedom for drugmakers in the US explains why prices are 
typically 20-40 per cent higher than in Europe. But Mr Miller says 
companies must compromise if they are to maintain the free market status 
quo in a country already spending about 18 per cent of gross domestic 
product on healthcare. Patients are becoming more exposed to drug costs 
as insurers pass on a bigger share through out-of-pocket expenses. This 
means that, for many Americans, a cancer diagnosis is a financial as 
well as medical crisis. “We believe in a free market solution for the 
US,” says Mr Miller. “But we need to create a sustainable system.”


There have been some examples of pressure being successfully applied. 
When doctors at Memorial Sloan Kettering Cancer Center in New York 
refused to useSanofi 
<http://markets.ft.com/tearsheets/performance.asp?s=fr:SAN>’s Zaltrap 
colon cancer drug in 2012 because it cost twice as much as a rival 
product, the company backed down and halved the price.

“What is happening in the UK today will happen in America tomorrow,” 
says Mr Munos. “The pressure is going to be the same from payers whether 
they are governments in Europe or US insurers.”

Attempts to rein in US prices 
<http://www.ft.com/intl/cms/s/0/f3ede8ae-189c-11e4-933e-00144feabdc0.html?siteedition=intl>will 
be cheered from across the Atlantic by Mark Harries, a consultant 
oncologist at Guy’s and St Thomas’ NHS trust in London. He routinely 
prescribes some of the medicines which will no longer be funded by the 
NHS for new patients from March. “We all suffer from the traditional 
model where the price that the market will bear in America sets the 
benchmark for the world,” he says.


    *Cancer-hunting army*

Developing countries too face a struggle to contain rising cancer costs. 
Already 60 per cent of new annual cases are in Asia, Africa and Latin 
America, according to the WHO. This proportion will increase as growing 
wealth brings more risk factors such as sedentary lifestyles and greater 
longevity.

It took more than 100 years for the proportion of over-65s in France to 
increase from 7 per cent to 14 per cent of the population. China and 
Brazil are on course to make that leap within a single generation.


Access to the most advanced oncology medicines in the developing world 
has so far been limited. But as nascent public health insurance schemes 
widen and cancer rates increase, tensions over drug costs are inevitable.

“Pricing pressure is enormous in the developed and developing markets 
and that will only go up as people get older,” says Severin Schwan, 
chief executive ofRoche 
<http://markets.ft.com/tearsheets/performance.asp?s=ch:ROG>, the world’s 
biggest cancer drugmaker. “The relative spend of healthcare versus 
overall budgets is increasing, whether politicians want to hear it or not.”

Roche andAstraZeneca 
<http://markets.ft.com/tearsheets/performance.asp?s=uk:AZN>are racing to 
catch Merck and Bristol-Myers Squibb in the first wave of immunotherapy 
drugs called checkpoint inhibitors, which remove the brake that holds 
back T-cells from attacking tumours. Novartis, meanwhile, is leading a 
different approach that involves extracting white blood cells from 
patients and re-engineering them in a laboratory. These modified cells 
are then reinfused into the blood stream where they proliferate into a 
cancer-hunting army.

The first human treated with theNovartis 
<http://markets.ft.com/tearsheets/performance.asp?s=ch:NOVN>therapy, 
known as Cart-19, was a six-year-old from Pennsylvania called Emily 
Whitehead suffering from a deadly form of leukaemia which was failing to 
respond to existing medicines. Nearly three years later, she is alive 
and cancer free. There is still much to prove but other children have 
shown similar recoveries in subsequent trials.


“If the innovation is big enough, I think societies will continue to 
reward it,” says Mr Schwan. “You will only survive in this industry in 
the long term if you bring truly clinically meaningful innovation or if 
you are a low-cost generic provider. Anything in between will disappear.”

Hagop Kantarjian, a leukaemia specialist at the MD Anderson Cancer 
Center in Texas, argues that no amount of innovation can justify the 
doubling in average US prices over the past decade to more than $100,000.

“It is profiteering and greed,” he says. “If pharma companies continue 
on this path they will kill the goose that laid the golden egg.”

Such arguments are disputed by industry leaders who point out that gross 
profit margins have come down in the past decade. They say the rise of 
biosimilars — cheaper copycat versions of modern biological drugs — will 
help control costs as the previous wave of blockbuster cancer therapies 
from a decade ago, such as Novartis’s leukaemia drug Gleevec, begin to 
lose patent protection.

But Mr Munos says this does nothing to address the high price of the 
latest generation of products. The answer, he argues, is to break up 
inefficient R&D operations and outsource innovation tonimbler biotech 
companies 
<http://www.ft.com/intl/cms/s/0/46ebb2b0-9a5d-11e4-8426-00144feabdc0.html?siteedition=intl>— 
a prescription big pharma is already embracing. “The only durable 
solution is to make drugs more affordable and the only way to do that is 
to take waste out of the industry.”


Others say there is too much focus on pharmaceuticals. Money would be 
better used, they argue, on measures to reduce the 30 per cent of 
cancers the WHO says could be prevented with lifestyle changes such as 
stopping smoking or losing weight. A study by the Wolfson Institute of 
Preventive Medicine this week suggested a daily dose of aspirin taken by 
everyone in their 50s could reduce deaths from some cancers by up to 50 
per cent. In other words a 19th-century medicine could have a bigger 
impact than modern drugs at a fraction of the price.

None of this helps those who go on to develop the disease. Mr LaMattina 
predicts that societies will be willing to pay ahigh premium for drugs 
capable of extending lives by years 
<http://www.ft.com/intl/cms/s/0/f54ab5fc-9014-11e4-a0e5-00144feabdc0.html?siteedition=intl>but 
they will become more accepting of decisions such as the one made in the 
UK to scrap those offering weaker benefits.

Richard Smith, a former editor of the British Medical Journal, argued 
last month that patients should be wary of “overambitious oncologists” 
and rely more on “love, morphine and whisky” in the final months of 
life. Better to die of cancer, he said, than a slow decline from organ 
failure or dementia.

But try telling that to Ms Strange, who is convinced that medicines soon 
to be removed from the NHS have given her an extra 18 months of life. 
“I’m grateful when my eyes open in the morning,” she says. “It’s just a 
shame that other people are not going to benefit from these drugs in the 
way I have.”

***

*Healthcare policy: UK rationing offers a taste of things to come*

For global pharmaceuticals groups, this week’s decision to remove more 
than a dozen cancer drugs from the NHS in England reinforced their 
impression of the UK as a hostile place to do business.

“We need stable, predictable healthcare policies to support investment 
and we are not seeing that in the UK,” says Haruo Naito, chief executive 
ofEisai <http://markets.ft.com/tearsheets/performance.asp?s=jp:4523>, 
the Japanese drugmaker whose eribulin breast cancer medicine was cut.

Yet, in private, industry executives grudgingly accept that the UK 
provides a taste of things to come as countries around the world 
struggle to rein in healthcare costs.

Companies seeking access for a new drug to the NHS’s 64m patients must 
first convince England’s National Institute for Health and Care 
Excellence (Nice) and similar bodies in Scotland and Wales of its 
cost-effectiveness. In the case of expensive cancer drugs, the verdict 
has often been negative.

This created a political problem for ministers fearful of headlines 
about patients being denied life-extending treatments. Their solution 
was to set up a Cancer Drugs Fund to provide extra money but its 
spending has soared — leading to this week’s cuts.

A government review is planned to look at whether greater flexibility 
can be injected into Nice’s cost-benefit calculations to allow approval 
of more cancer drugs. But nobody expects price pressure to ease in a 
country facing an annual £30bn health funding gap by 2020.

Other countries are looking to the UK for lessons. Nice has an 
international consulting arm and health economists at York university 
have become global authorities on measurement of “quality-adjusted life 
years” to value drugs.

There are even signs of private insurers testing the taboo that has 
traditionally surrounded rationing of medicines on cost grounds in the 
US. Express Scripts, which negotiates with drug companies on behalf of 
many insurers, has led a push to force cuts in the price of hepatitis C 
treatments by shutting out higher-priced products. Steve Miller, the 
company’s chief medical officer, says: “We’re closely following what 
Nice is doing.”

This UK influence irks Severin Schwan, chief executive of Roche, the 
Swiss drugmaker. “What is right for the UK is not necessarily right for 
everyone else.”






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