[Ip-health] The variables in Dr. Peter Bach's Drug Abacus

Ruth Lopert ruth.lopert at gmail.com
Fri Jun 19 12:31:31 PDT 2015

There is no inherent value in novelty. There are plenty of examples of
drugs with novel mechanisms of action that are no more effective and even
less effective than drugs in the classes that preceded them. Innovation
that addresses an unmet or inadequately met clinical need is of value, but
not novelty per se,

On Fri, Jun 19, 2015 at 3:14 PM, Jamie Love <james.love at keionline.org>

> Below are the variables in Dr. Peter Bach's Drug Abacus pricing model.
> I like his proxy for R&D costs, as a starting point, which is the
> enrollment in the trials for the lead indication.   Eventually it will be
> helpful to have some data on per-patient costs for different types of
> trials, some metrics of the length of the trials,  and information about
> government or charity subsidies for R&D, including the 50 percent Orphan
> Drug Tax Credit (9 of 10 cancer drugs approved in 2014 qualified).
> -------------------------
> R&D
> The number of human subjects enrolled in the approval trials for the first
> indication (including FDA mandated confirmatory trials) was used as a proxy
> for the research and development costs necessary to develop the drug. This
> imperfect surrogate is reasonable as in most cases the cost of human
> subjects research is a major component of overall R&D expense.
> ------------------------
> I also liked the novelty variable.   What do others think?
> http://www.drugabacus.org/methods/
> Sloan Kettering Drug Abacus
> Methods
> Selection of Drugs and Indications
> This version of DrugAbacus covers 54 cancer drugs approved between 2001 and
> 2015 by the US FDA for the treatment of cancer. This subset of all drugs
> approved during that time period begins with the 2001 approval of Gleevec
> and was compiled from the work of Howard et al for drugs approved through
> 2013, and supplemented with all drugs with first approval for the treatment
> of cancer subsequent to that time period. All characteristics of drugs are
> based on information related to the first approved indication.
> Current Prices
> Estimated monthly prices for chemotherapy drugs are based on the allowable
> Medicare charge, and calculated according to a methodology used in prior
> reports.1 Since 2005 Medicare has reimbursed at 106% of the average sales
> price (ASP) for Part B drugs. ASPs are reported in quarterly files released
> by CMS.2 For Part D drugs, current prices are retrieved from Medicare’s
> publicly available web-based “PlanFinder” tool.3 The price reported is the
> “Full Cost of Drug” as reported in the PlanFinder for the Humana PDP
> Enhanced plan, for a beneficiary living within ZIP code 10021. Payment
> limits for prior years vary and are described briefly in the table below
> and in more detail within the previously mentioned article.1
> If a drug’s ASP is not available Medicare calculates the payment limit as
> 95% of the Average Wholesale Price (AWP). ASP and AWP for Synribo (a part B
> drug approved in October 2012), Xofigo (a part B drug approved in May of
> 2013), Cyramza (a part B drug approved in April of 2014), Opdivo (a part B
> drug approved in December of 2014) and PlanFinder listings for Gilotrif (a
> part D drug approved in July 2013), Lenvima, Ibrance and Farydak (part D
> drugs approved in February 2015) were not available. Estimated monthly
> prices reported in the media at the time of drug approval were used for
> these drugs. The reduction in reimbursement due to the 2013 ‘sequester’,
> which lowered reimbursement to ASP+4.2%, is not included in these
> calculations.
> For drugs that can be taken for an indefinite period of time, the relevant
> payment limit is applied to a 12 week dosing regimen for an “average” adult
> weighing 70kg, or with a body area of 1.7 meters squared, and divided by
> 2.77 to arrive at a monthly price (there are, on average, 2.77 months in 12
> weeks). The 12 week dosing regimen is retrieved from the FDA approved label
> for the drug, these labels are available via the FDA’s “Drugs at FDA> database.4 The lowest total dosing regimen within the first FDA approved
> indication for the drug is used in all cases. The prices shown are for the
> listed drug only, costs for supportive care or administration fees are not
> included. For drugs with as set regimen given over a pre-defined period of
> time, such as the drugs Provenge or Bexxar, the monthly price is determined
> by dividing the cost of the regimen by the number of months the regimen
> takes to administer.
> Abacus Price
> That Abacus price is calculated from the following formula:   (check the
> web page if the list-serve strips out the non-standard ASCII characters
> here).
> Price=(β_eff 〖∙X〗_eff)(1-(β_tol 〖∙X〗_tol))(β_nov 〖∙X〗_nov)(β_(R&D)
> 〖∙X〗_(R&D))(β_rar 〖∙X〗_rar)(β_bur 〖∙X〗_bur)
> Where each X is a measurement for one of six “domains” (efficacy,
> tolerability, novelty, research & development costs, rarity and population
> burden) and each β is a weight defining the importance of that domain with
> respect to the drug’s price (chosen by the user within a predetermined
> range of possible values). These domains, and their measures, are described
> in more detail below.
> The Abacus price is relevant for a treatment period equivalent to the
> typical duration of treatment that was required to achieve the reported
> benefit in the FDA approval trial(s). Model inputs (particularly efficacy
> and tolerability) correspond to the length of treatment received by
> patients in the relevant clinical trial(s). Therefore, we consider
> model-calculated prices to be the price for the duration of treatment used
> in the clinical trial and adjust to a monthly price via division. More
> detail on treatment duration is provided below.
> Efficacy
> The efficacy of the drug is measured as the improvement in overall
> survival, or a surrogate for this endpoint, attributable to the drug, as
> measure in the highest level of evidence clinical trial that led to
> FDA-approval for the first indication. A level-of-evidence grade is applied
> to the measure of overall survival benefit, such that two drugs with
> equivalent trial results will receive different efficacy grades if the
> trial for one drug was of higher quality. In some cases, drugs are approved
> by the FDA without evidence of an overall survival gain, on the basis of an
> improvement in either progression-free survival or in response rates. We
> considered the margin of gain in progression free survival to be equivalent
> to the gain in overall survival if overall survival data were not
> available, but the endpoint progression free survival received a lower
> level of evidence rating. When other endpoints, such as response rates or
> single arm trial endpoints were all that were available, these were
> converted to estimates of overall survival benefit using available
> literature from studies of analogous treatments.
> Toxicity
> A drug’s toxicity was characterized from the listing of the frequency and
> severity of side effects experienced by patients receiving the drug,
> relative to the severity of side effects those patients would otherwise
> experience. The measurement for this domain consists of a combination of
> two components. The effect of the drug on the probability of a given
> patient experiencing severe side effects (proportion of patients in the
> treatment arm experiencing grade 3 or 4 side effects, minus the proportion
> in the control arm) and the effect of the drug on the probability or
> discontinuing use of the drug due to severe side effects (again, difference
> in proportions by trial arm).
> Novelty
> The novelty of each drug was scored by two clinical experts, in line with
> their recent related research. The experts classified each drug to one of
> three groups based on its mechanism of action. The three groups are: 1)
> Novel mechanism of action (score of 1), 2) Drugs with known target but
> novel delivery (eg. Capecitabine) Drugs with known target but different
> mechanism of targeting (eg. TKI vs. MAB, antibody drug conjugates etc)
> (score of 0.5), 3) Next-in-class (score of 0). The raters assigned
> conflicting scores to two drugs, Ixempra and Halaven, in each case the
> more-novel score was assigned to the drug.
> R&D
> The number of human subjects enrolled in the approval trials for the first
> indication (including FDA mandated confirmatory trials) was used as a proxy
> for the research and development costs necessary to develop the drug. This
> imperfect surrogate is reasonable as in most cases the cost of human
> subjects research is a major component of overall R&D expense.
> Rarity
> Rarity of the disease was determined from the projected incidence of the
> disease in 2015 as per the American Cancer Society Facts & Figures Report.
> Population health burden
> The population health burden of the disease the treatment targets in its
> first approved indication was determined from the estimated years of life
> lost due to the disease in the US population, a statistic defined as the
> average difference between life expectancy at death and age at death for
> individuals dying from the disease in question during a specific period of
> time. This statistic is reported in the SEER Cancer Statistics Review for
> many diseases; where not, we estimated the years of life lost by
> replicating the SEER methodology using information on the count of deaths
> at various ages from the CDC’s WONDER database along with estimates for
> life expectancy by age and gender, also from the CDC.
> Other
> Treatment Duration: Treatment duration is taken from the FDA approved label
> or trial publication. In cases where treatment duration is not available
> the average progression free survival in the treatment arm of that trial is
> used as a substitute.
> Total Sales: Calculated at the drug level as consensus estimates for
> expected total US sales in the year 2015 according to the EvaluatePharma
> database, courtesy of Defined Health. Estimated sales at Abacus prices
> assume that the volume of sales of each drug is not altered by a change in
> price.
> References
> Bach PB. Limits on Medicare’s ability to control rising spending on cancer
> drugs. N Engl J Med. Feb 5 2009;360(6):626-633.
> Center for Medicare and Medicaid Services. Medicare Part B Drug Average
> Sales Price. Manufacturer reporting of
> Average Sales Price (ASP) data.
> http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/
> McrPartBDrugAvgSalesPrice/index.html. Accessed 10/18/2013.
> Center for Medicare and Medicaid Services. Medicare Plan Finder.
> https://www.medicare.gov/find-a-plan/questions/home.aspx. Accessed
> 10/18/2013.
> Food and Drug Administration. Drugs at FDA: FDA Approved Drug Products.
> http://www.accessdata.fda.gov/scripts/cder/drugsatfda/index.cfm. Accessed
> 10/18/2013.
> --
> James Love.  Knowledge Ecology International
> http://www.keionline.org/donate.html
> KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
> +41.76.413.6584, twitter.com/jamie_love
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