Time to Consider Cost in Evaluating Cancer Drugs in United States?

Nick Mulcahy

July 14, 2009

July 14, 2009 — It is not sustainable.

That is the prevailing opinion of a number of oncology and healthcare experts — in government, academia, and even industry — interviewed by Medscape Oncology or publicly commenting about the spiraling cost of cancer drugs in the United States.

Oncology drugs are now the best-selling class of drug, having surpassed lipid regulators. Last year, oncologic drugs had annual sales in the United States of $19.2 billion, according to figures from IMS Health (Plymouth Meeting, Pennsylvania). Sales have increased more than 4-fold in the past 10 years, from less than $5 billion in 1998 to the current level.

Dr. Tito Fojo
(Courtesy of the National Cancer Institute)

Newer anticancer agents are particularly expensive.

Most of the cancer agents (> 90%) approved by the Food and Drug Administration (FDA) in the past 4 years cost more than $20,000 for a 12-week course of therapy, writes Tito Fojo, MD, the lead author of a new essay about the cost of cancer drugs published online June 29 in the Journal of the National Cancer Institute.

Such big price tags have produced sticker shock among clinicians and at least 1 industry executive.

Dr. Leonard Saltz
(Courtesy of Memorial-Sloan Kettering Cancer Center)

"We all know it's extravagant," said Dr. Fojo about the cost of many cancer drugs in an interview with Medscape Oncology. He is a senior investigator at the Center for Cancer Research of the National Cancer Institute (NCI), in Rockville, Maryland.

"I'm shocked at the cost," Leonard Saltz, MD, from Memorial-Sloan Kettering Cancer Center, in New York City, told Medscape Oncology about the newer agents for colorectal cancer, which is his specialty.

We all know it's extravagant.

“There is a shocking disparity between value and price, and it's not sustainable,” said Roy Vagelos, MD, at the 2008 annual meeting of the International Society for Medical Publication Professionals, according to cnbc.com. Dr. Vagelos is a former chief executive at Merck and the current chair of 2 biotech companies, Regeneron and Theravance.

Recently, Bruce Hillner, MD, and Thomas J Smith, MD, from Virginia Commonwealth University, in Richmond, suggested some of the cancer drug pricing amounts to "profiteering."

However, cost was not the lone inspiration for Dr. Fojo's new essay. It was also the "value" that Dr. Vagelos referred to in his 2008 speech.

After attending American Society of Clinical Oncology (ASCO) in 2008 and listening to a presentation in which a 1.2-month survival benefit with cetuximab (Erbitux, Bristol-Myers Squibb) plus a platinum-based chemotherapy compared with chemotherapy alone was hailed as the "new standard" for non–small-cell lung cancer (NSCLC), Dr. Fojo returned to his office at the NCI and wrote a first draft of the now-published essay.

There is a shocking disparity between value and price, and it's not sustainable.

In the essay, Dr. Fojo, who eventually enlisted bioethicist Christine Grady, PhD, from the National Institutes of Health, in Bethesda, Maryland, as a coauthor, reviews the "marginal benefits" that a number of high-priced agents produce in terms of survival. He highlights cetuximab for NSCLC, which costs $80,000 for an 18-week course but provides only the above-mentioned 1.2 months of additional survival.

There is too much blame on pharmaceuticals for rising healthcare costs in general.

Dr. Fojo cites multiple examples of cancer drugs with high costs and marginal benefits, including bevacizumab (Avastin, Genentech) for metastatic breast cancer (provides progression-free survival improvement but no increase in overall survival; estimated total cost of therapy, $90,816).

Dr. Shelby Reed (Courtesy of Dr. Reed)

Nevertheless, a health economist who agrees that these cancer drug prices are not sustainable says, "There is too much blame on pharmaceuticals for rising healthcare costs in general." Attention should also be paid to the overall cost of cancer care, suggested Shelby Reed, PhD, from Duke Clinical Research Institute, in Durham, North Carolina.

Still, according to Dr. Reed, "the prize of premium pricing" should be commensurate with the effect of the drug.

"Not every drug should be awarded the prize for just getting over the hurdle of being approved," Dr. Reed told Medscape Oncology.

A UK-Style Cost Threshold for the US Cancer Drugs?

In their essay, Drs. Fojo and Grady make a number of proposals for cancer drug–expenditure reduction and improvement in treatment decision-making. The purpose of the proposals is to get oncologists to discuss change.

Their lead proposal was provocative enough that Dr. Fojo told only his wife — and not any colleagues at the NCI — about its inclusion in the essay.

The proposal: a UK-style spending threshold for cancer drugs in the United States.

Prof. Peter Littlejohns
(Courtesy of NICE)

In the United Kingdom, the National Institute for Clinical Excellence (NICE) has established a maximum threshold of £30,000 per quality-adjusted life-year (QALY). This means that the cost of a patient's drug treatment should not exceed this amount, which is equivalent to about $55,000, for a year of healthy survival. The threshold works on a cost-effectiveness principle — the greater the benefit of a drug, the more money allotted for the drug.

"The size of the effect and the cost of the drug should be related," explained Prof. Peter Littlejohns, MD, the clinical and public-health director of NICE, in an interview with Medscape Oncology.

The size of the effect and the cost of the drug should be related.

In their proposal, Drs. Fojo and Grady propose that an American threshold for anticancer drugs be set at $129,000, which is the cost of a QALY in patients treated with renal dialysis. Dr. Fojo said that dialysis was an appropriate comparator. The threshold would apply to federal reimbursement of cancer drugs such as that from Medicare.

"For $129,000 a year, you should get a lot of good medication," said Dr. Fojo.

In the United Kingdom, the threshold is not absolutely fixed, explained Prof. Littlejohns. "Our committees occasionally go above the threshold," he said. The evaluation process in the United Kingdom allows for drug makers to adjust price to satisfy the threshold requirements. However, NICE initially assesses a drug at a manufacturer's given price. If the drug is rejected, industry can then go back to the National Health Service and "do a deal," said Prof. Littlejohns.

While most drugs, including cancer drugs, are approved for use in the United Kingdom, the NICE process means that some are ultimately rejected, said Prof. Littlejohns.

For instance, cetuximab was not recently recommended for use by NICE for the treatment of recurrent and/or metastatic head and neck cancer.

In a press statement, NICE said that a cost-effectiveness analysis indicated that the projected cost of a year of quality life with treatment of cetuximab plus platinum-based chemotherapy compared with platinum-based chemotherapy alone to be £121,367, yet the drug provided "a predicted gain in overall survival of just over 2 months."

NICE called cetuximab a "very expensive treatment that may or may not benefit individual patients."

The FDA is mandated to ignore costs and the Centers for Medicare and Medicaid Services is mandated to pay for drugs and is forbidden to negotiate cost.

In the United States, where cost is not considered in the drug-approval process, cetuximab was approved by the FDA for use in head and neck cancer (locally or regionally advanced squamous-cell carcinoma in combination with radiation therapy and recurrent or metastatic squamous-cell carcinoma progressing after platinum-based therapy).

The US drug-approval process is part of an "unbelievable disconnect in our government," said Dr. Saltz.

"The FDA is mandated to ignore costs and the Centers for Medicare and Medicaid Services is mandated to pay for drugs and is forbidden to negotiate cost," he summarizes.

No Hoorays for Healthcare Rationing

In interviews with experts, Medscape Oncology found support for the idea of a UK-style spending threshold for cancer drugs but little belief in the political possibility of its enactment.

A cost-effectiveness review akin to the United Kingdom's NICE seems like an "inevitable necessity," said Dr. Saltz. "However, I fear it will be exceedingly difficult, if not impossible, to bring into reality," he said.

Furthermore, Dr. Saltz believes that a spending-cap policy for cancer drugs or other therapeutics would be release tremendous anger in the United States. "A cap is political suicide. The lead advocate is going to be a hated individual.Not a lot of people are going to say 'hooray' about rationing or restricting healthcare,"he explained.

A cap is political suicide.

"The political feasibility is a huge question," said Dr. Hillner, about any kind of spending threshold for individual cancer drugs.

Dr. Hillner has advocated for "cost-effectiveness cut points of acceptability" or price thresholds based on clinical effectiveness in the range of $140,000 and $200,000 per QALY. As reported earlier this year by Medscape Oncology , he and Dr. Smith suggested that the high pricing of cancer drugs is a trend that smacks of profiteering.

Dr. Fojo believes that a spending threshold on cancer drugs "may be the only way" that drug-cost reduction in oncology will work.

"I think it's feasible," he argued. "I think a majority of people are likely to agree that $129,000 is a reasonable amount of money to extend life for a year," he said.

$129,000 is a reasonable amount of money to extend life for a year.

Furthermore, Dr. Fojo thinks that if there was a consensus to benchmark costs, physicians "would all fall into line" after a period of adjustment. However, ASCO and other professional societies must "lead the way" to such change, he added.

This call for leadership is not new, suggested Dr. Hillner. "There have been calls for professional societies to take the lead for about 20-plus years," he said.

Still, Medscape Oncology contacted ASCO to get its opinion of Dr. Fojo's proposal for a cancer drug cost threshold.

"ASCO does not favor arbitrary caps on the cost of cancer treatment in this country. That approach is too simplistic to adequately address the complex issue of the cost of cancer care.  We need thoughtful solutions that will balance the need for continued progress against cancer with the issue of cost," said Douglas Blayney, MD, ASCO president, in a statement.

ASCO does not favor arbitrary caps on the cost of cancer treatment in this country.

It's not a "fair expectation" of a professional society such as ASCO to push for a drug spending cap, said Dr. Saltz. "I'm not aware of any precedent for a professional association making that kind of change," he said.

Ultimately, the United States may not have the appropriate kind of healthcare system to implement a cost-effectiveness type of approach to evaluating drugs, including cancer drugs, said another expert.

"These approaches tend to be more common in 'single-payer' systems, like those with a public healthcare system or nationally coordinated health insurance," said Michael Drummond, PhD, from University of York, in the United Kingdom, and the former president of the International Society of Pharmacoeconomics and Outcomes Research. Currently, "about 25 to 30 countries" employ cost-effectiveness analysis in their review of drugs, he told Medscape Oncology.

Nevertheless, Prof. Littlejohns of NICE thinks that the United States may be on its way to incorporating cost-effectiveness into its evaluation and approval of drugs, including cancer drugs.

It's a natural progression to move from comparing effectiveness to comparing cost.

"Currently, the United States is looking at comparative clinical effectiveness," he said, referring to the Obama Administration's proposal to study a wide variety of healthcare topics, including multiple oncology-related subjects. "But that only takes you so far. A new drug could extend life by 3 weeks compared with the current treatment, but is the price worth it?" he continued. "So it's a natural progression to move from comparing effectiveness to comparing cost," he summarized.

Indeed, as reported by Medscape Oncology , 1 of the proposed studies in the Obama Administration's initiative is a comparison of the management of localized prostate cancer, and it includes cost as a consideration.

If It Is Unsustainable but Unchecked, What Is Going to Happen?

In the meantime, cancer drugs must be paid for.

Drs. Fojo and Grady offer a number of other proposals to reduce cancer drug spending, including that FDA indications should be "strictly adhered to," because that is where the evidence of effectiveness exists.

They also believe the "all-too-common practice" of administering marginally effective drugs to a patient with advanced cancer should also be discouraged and that oncologists should avoid the temptation of offering dying patients yet another therapy.

Thus, the essayists see oncologists as the gatekeepers of sensible cancer drug use.

Prof. Littlejohns of the NICE believes that is too much to ask of a clinician. "Clinicians should be their patients' advocate. It is very difficult to have a societal point of view in this regard," he said, explaining that government should establish that point of view.

Clinicians should be their patients' advocate. It is very difficult to have a societal point of view.

Dr. Saltz would like to see patients bear more responsibility. "As long as every individual patient wants every available drug and third parties are paying for most of it, then nothing will change," he said.

Health economist Dr. Reed of Duke does not think that 1 of the third parties, the insurance industry, is likely to limit the use of even the highest-cost, most marginally beneficial cancer drugs.

"In the United States, insurers have been reluctant to touch cancer drugs. They don't want to be seen as denying treatment to a dying cancer patient. It's too great a risk in terms of negative publicity," she says.

Furthermore, many cancer drugs are treatments of last resort, and patients will generally not be on therapy for years, as they would be with statins, Dr. Reed observes. "Cancer drugs are not breaking the budget," she says.

And if they are, the costs are not shouldered by the insurers. "Insurance companies pass higher costs onto enrollees by way of higher premiums and higher copays," said Dr. Reed.

While agreeing that the cancer drug costs are not sustainable, Dr. Reed wonders where substantial change is going to come from. "We have been saying it's not sustainable for years," she says.

We have been saying it's not sustainable for years.

Dr. Hillner has similar thoughts to Dr. Reed about the prolonged stasis. "Many of us are amazed that pushback by payers and the public has been so minimal over the last 20 years," he said.

The pushback from the public about exorbitant costs may be minimal, but the public is both aware and afraid of the costs, suggests a new survey from the Community Oncology Association (COA).

In the survey of 1022 American adults, 69% report being very concerned about paying for cancer treatment if they developed the disease, which is same proportion as those who are very concerned about dying of cancer (68%).

The high cost of drugs is part of the equation that threatens quality of cancer care in many areas of the country, says COA president Patrick Cobb,MD, who is also a partner in Hematology-Oncology Centers of the Northern Rockies, in Billings, Montana.

“The increasing cost of drugs, declining Medicare reimbursement, and current financial crisis have created a 'perfect storm' that jeopardizes community cancer clinics, where most Americans with cancer are treated,” he said in a press statement.

Dr. Saltz sees a change coming in cancer drug prices. "There is not enough money to pay for what we are doing. However, I don't think the price drop will be a well-thought-out event," he said, adding that the drop may come only if the cancer care system nears a "total collapse."

J Natl Cancer Inst. Published online June 29. Abstract

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