'Skin in the Game' and Importing Cancer Drugs

Roxanne Nelson

July 06, 2015

"Skin in the game" is a phrase that has gained popularity in the healthcare market. It implies that if patients have a personal financial stake in a decision, such as higher out-of-pocket expenses, they will be more prudent and act more responsibly.

Skin in the game can work to some degree, note Hagop Kantarjian, MD, chair of the Department of Leukemia, the University of Texas MD Anderson Cancer Center, Houston, and colleagues in a viewpoint article published online July 2 in JAMA Oncology.

However, for many cancer patients, it has become "life in the game," they add.

If patients have a choice of two equally effective drugs, they will generally choose the $10 generic drug over the $1000 patented drug because their out-of-pocket expenses, usually about 20% of the cost, will be dramatically reduced — from $200 to $2.

But it often does not work that way in cancer, writes Dr Kantarjian and his coauthors. In cancer care, all too often only expensive, patented drugs are available, and patients have no real choice. Most patented cancer drugs, old or new, are priced close to or more than $100,000 per year.

"Considering the average family household income of $52,000 per year, a 20% out-of-pocket expense would equal close to half that income," they write. "Patients and families have to make hard choices between paying for the patient's care vs the socioeconomic welfare of the family (food, education, necessities)."

Thus, about 10% to 20% of cancer patients may have to make the tough decision to forgo the treatment or compromise it and reduce their chances of survival and cure.

There are multiple factors involved in pricing drugs in the United States, and many solutions to curb costs have been thrown into the ring. In the current article, the authors broach the subject of allowing Americans to import drugs from Canada, and thus acquire some real "skin in the game."

Highest Drug Costs in the World

Dr Kantarjian has long been an outspoken critic of the high cost of drugs in the United States, and he has repeatedly warned that the high prices are harming patients.

In 2013, Dr Kantarjian and 120 experts from around the globe published an article in Blood that addressed the multiple factors involved in cancer drug pricing and their impact on individual patients and healthcare policies, and they argued for the need to lower prices.

Last year, during a segment of the prominent television newsmagazine 60 Minutes, Dr Kantarjian stated that the pharmaceutical companies are "making prices unreasonable, unsustainable, and, in my opinion, immoral."

"For the longest time, drug companies had a dual mission," he told Medscape Medical News in an interview last fall. "They wanted to help patients and at the same time make a reasonable profit."

Dr Kantarjian pointed to George Merck, son of the founder of the pharmaceutical company, who highlighted this concept when he said that "medicine is for the people. It is not for the profits."

"Until about 2000, this practice had been followed; they were in synergy with investigators, they were helping patients, and they were making reasonable profits," Dr Kantarjian said. "But now I think they have lost their moral compass."

 
But now I think they have lost their moral compass. Dr Hagop Kantarjian
 

Prices of cancer drugs are significantly higher in the United States than anywhere else in the world, even in other wealthy nations. For example, the cost of patented cancer drugs in the United States is twofold to threefold higher in the United States than in Canada and England.

Across the Border

Current US laws prevent importing drugs, even for personal use, a policy presumably intended to protect patients from potentially harmful consequences, such as counterfeit products, the authors note. However, many individuals find ways to import drugs because they are unaffordable in the United States, and prices in other countries may be only 20% to 30% of the cost in the United States.

Importing drugs for personal use would be a win-win solution for everyone, the authors contend.

As an example, if a drug cost $100,000 a year, the patient may pay $20,000 in out-of-pocket costs while the insurer is left to cover the bulk of the bill, to the tune of $80,000. "Consequently, the penetration of many cancer drugs in stable markets would be low, and the drug companies would have lower profits," they say.

But if insurers incorporate the strategy of importing drugs from abroad, they might pay only $10,000 or $50,000 for the same drug, and they can also reward the patient by foregoing the 20% out-of-pocket expenses.

Patients would win because their costs would be lower and they could access potentially lifesaving drugs. Insurance companies would save money by paying less than 10% to 50% of the current price in the United States. And pharmaceutical companies would still make profits on drugs that patients purchase, which they could not have afforded in the United States.

The companies "will sell more drugs in the long run in a stable market where more patients are alive and receiving the treatment," write Dr Kantarjian and colleagues. "This ultimately may lead drug companies to rethink their high price/higher short-term profits/unstable markets in favor of lower price/higher long-term profits/more patients living and receiving treatment/better penetration and stable markets.

"In essence: drug companies do good, and do well," if they were to follow this strategy, they comment.

Downfall of Price Control Policies

The Pharmaceutical Research and Manufacturers of America (PhRMA), however, believes that the authors of this opinion piece have omitted important information.

"The commentary fails to acknowledge the ramifications of centralized price control policies other countries use to achieve whatever price differences may exist," Holly Campbell, a PhRMA spokeswoman, told Medscape Medical News. "Many industrialized nations seek cost containment through price controls, which restrict access to medicines and discourage the research and development of new treatments."

 

She pointed out that the United States relies on its competitive biopharmaceutical market to control costs, while encouraging the development of new therapies. "This is why U.S. patients enjoy access to innovative medicines far earlier than patients in countries with centralized price controls and leads the world in drug discovery and development," Campbell explained. "High generic utilization rates also help to control how much the U.S. health care system spends on medicines."

She also added that 90% of all medicines prescribed to U.S. patients are generics, which typically cost up to 80% less than the brand medicine. In contrast, 50% to 60% of all medicines prescribed in countries with strict price controls are generics, and are more expensive.

Drug (US Brand Name) US Indication Cost in United States Cost in Canada Cost in England Cost in Canada/England vs United States
Parenteral, Monthly or Per-Cycle Cost          
Bevacizumab (Avastin, Genentech, Inc) Colorectal cancer $13,000 $7100 $5700 44% ‐ 55%
Cetuximab (Erbitux, ImClone Systems Inc) Head and neck $12,600 $6700 $5400 43% - 53%
Ipilimumab (Yervoy, Bristol-Meyers Squibb Company) Melanoma $38,800 $23,300 $28,700 60% - 74%
Rituximab (Rituxan, Genentech, Inc) Non-Hodgkin lymphoma $6100 $3600 $2700 44% - 59%
Trastuzumab (Herceptin, Genentech, Inc) Breast cancer $45,000 $2200 $1900 42% - 49%
Oral, Yearly Cost          
Bosutinib (Bosulif, Wyeth Pharmaceuticals Inc) CML $14,3500 $48,000 $64,000 33% - 45%
Afatinib (Gilotrif, Boehringer Ingelheim Pharmaceuticals, Inc) Lung cancer $93,500 $25,500 $37,000 27% - 40%
Imatinib (Gleevec, Novartis Pharmaceuticals Corporation) CML $132,500 $38,000 $32,000 24% - 29%
Nilotinib (Tasigna, Novartis Pharmaceuticals Corporation) CML $13,1500 $37,000 $45,000 28% - 34%
Crizotinib (Xalkori, PF Prism CV) Lung cancer $184,500 $100,500 $86,500 47% - 54%
Ibrutinib (Imbruvica, Pharmacyclics LLC) CLL $126,500 $79,000 $84,500 62% - 67%

CML, chronic myelogenous leukemia; CLL, chronic lymphocytic leukemia.

 

Legislation on the Horizon

Importing drugs for personal use has long been a subject of debate, and bills have been both introduced and blocked in the US Congress.

Currently, the Safe and Affordable Drugs from Canada Act of 2015 has been reintroduced into the Senate by John McCain (R-AZ) and Amy Klobuchar (D-MN). The legislation would allow individual patients to import a prescription drug that is purchased from an approved Canadian pharmacy and that has been dispensed by a pharmacist licensed in Canada; that is purchased for personal use in quantities not greater than a 90-day supply; that is filled using a valid prescription issued by a physician licensed to practice in the United States; and that has the same active ingredient or ingredients, route of administration, dosage form, and strength as a prescription drug approved under the Federal Food, Drug, and Cosmetic Act.

At the beginning of May, an identical bill was introduced into the House of Representatives.

“Like many other Americans, far too many Arizonans have been burdened by the rising cost of prescription medication,” said Senator McCain in a statement. "No American should have to worry about having to fill a prescription because they can't afford to pay for it."

The new legislation "would allow individuals to safely import prescription drugs into the United States from our neighbors to the north, spur much-needed competition in the pharmaceutical market, and save individual Americans up to hundreds of dollars a year," he added.

In their opinion piece, Dr Kantarjian and colleagues "applaud and support these efforts."

"Americans need cancer care and drugs that are available and affordable to all," they conclude. "This is what 'just' health care is about."

JAMA Oncol. Published online July 2, 2015. Abstract

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