New Abacus Calculates Price of Cancer Drug Based on Value

Roxanne Nelson

July 10, 2015

Escalating drug costs have put some of the newer therapies out of reach for many cancer patients, even for those with health insurance. And more concerning is that the price tag attached to a particular agent does not necessarily align with its overall benefit.

Memorial Sloan Kettering Cancer Center (MSKCC), in New York City, has come up with a new interactive strategy that they hope will put the cost of a drug in context with its overall value. Created by Peter B. Bach, MD, director of the Center for Health Policy and Outcomes, the DrugAbacus represents the first draft of a tool that may help determine a more appropriate price for a specific agent, based on what experts feel are possible components of a drug's value.

"This is really a proof of principle that we could develop an approach — if we choose to ― where price was based on the value of the drugs," Dr Bach told Medscape Medical News.

"There is reasonable consensus that it would make sense to ― as in many other areas of healthcare — to pay for the value of the service," said Dr Bach. "It could be the value of a surgical admission, for example, or in this case, the value of a drug."

However, defining what exactly value is when it comes to drug pricing has been one of the stumbling blocks. "It seems that there was a fair amount of coalescence around the possible domains of value, but there has been little effort and certainly little consensus on how much each of those domains should matter in the determination of value, or if they should even be included," he explained.

To create the DrugAbabcus, Dr Bach and his team incorporated measures of cost, toxicity, efficacy, novelty, research and development costs, rarity of the disease, and population health burden. On its website, the interactive tool is presented in the form of an abacus ― hence the name ― with two beads on each wire.

The calculator shows the price of each cancer drug brought to market since 2001 and calculates the abacus price on the basis of settings selected by the user. The gray beads represent the price of the drug when it was launched, and the other color beads represent the price that is calculated. If the bead is green, then the calculated "abacus price" is higher than the market place; if it is red, then its lower.

The results will vary, depending on what factors the user selects. A calculation carried out by the Wall Street Journal showed, for example, that when the value of a year of life is set at $120,000, with a toxicity discount that subtracts 15% off that level, the abacus price for many of the drugs becomes less than the market price.

For some drugs, the difference between market price and the calculated abacus price is huge. For example, blinatumomab (Blincyto, Amgen Inc), which is currently approved for relapsed or refractory B-cell precursor acute lymphoblastic leukemia, currently costs $64,260 per month, but the suggested abacus price is one fifth of that, at $12,612.

Two New Frameworks

Defining the value of a drug in relation to its cost has become a rapidly emerging theme in the cancer field. Last month, both of the major cancer societies ― the American Society of Clinical Oncology (ASCO) and the European Society of Medical Oncology (ESMO) ― unveiled new strategies to assess the value of cancer drugs.

The ASCO Value Framework defines value as a measure of clinical benefit, toxicity, and cost. Developed by ASCO's Value in Cancer Care Task Force, with input from oncologists, patient advocates, and representatives of the pharmaceutical and insurance industries, among others, it proposes a methodology that will compare the relative clinical benefits, side effects, and costs of treatment regimens that have been tested in randomized clinical trials. Data on the clinical benefits and toxicity of a regimen are used to calculate a combined net health benefit score.

"It's critical to distinguish between value and cost," commented Lowell E. Schnipper, MD, chair of ASCO's Value in Cancer Care Task Force. "Sometimes the more valuable treatment will be the more expensive one, and sometimes it won't be. Ultimately, the definition of 'value' will be highly personalized for each patient, taking into account an individual's own preferences and circumstances," she said in a statement,

ASCO is accepting comments on the framework until August 21, 2015, at www.asco.org/value.

ESMO's new tool is similar to the one proposed by ASCO in that it also strives to balance the drug's clinical benefit against its cost. The Magnitude of Clinical Benefit Scale (MCBS) uses a rational, structured, and consistent approach to derive a relative ranking of the magnitude of clinically meaningful benefit that can be expected from a new anticancer treatment, according to ESMO. In addition to measures of efficacy, the patient's prognosis and the toxicity of the drug are taken together to make the assessment about the magnitude of clinical benefit.

ESMO says that it intends to apply the scale prospectively to new drugs that will be approved by the European Medicines Agency; those with the highest MCBS scores will be highlighted in the ESMO Clinical Practice Guidelines.

"With the ESMO-MCBS, we aim to signal the drugs with a large magnitude of clinical benefit which should be endorsed across Europe for rapid patient access," commented ESMO president Rolf A. Stahel, MD, in a statement.

Abacus Differs From ASCO Framework

Dr Bach emphasized that the MSKCC DrugAbacus is primarily an experimental tool for creating policy and that it does differ from the ASCO Value Framework to some extent. "Its like two dialects of the same language," he said.

ASCO has tried to create a common scale for comparing therapies in cancer care across conditions and regimens. "Because it's a point-of-care tool, they've taken the price as something as immutable, the same as for every other aspect of the drug ― such as how it improves survival," he pointed out. "But with the abacus, we are trying to figure out what the price should actually be, based on actual characteristics of the drug which we can't change."

He explained that drug prices are flexible and are products of markets, so the same drug can sell for a "million different prices" even within the United States, owing to different suppliers and different intermediaries. Prices also vary considerably in European countries and elsewhere globally. There have been many instances when drug prices have been changed to comply with markets, and this shows that manufacturers will respond and change the prices when need be.

"Manufacturers have been very clear that they set prices based on the market and what they think the market will bear," Dr Bach explained.

"The idea of the DrugAbacus isn't to get prices to move per se but to say that this is a better way to pay for value — the same way we want to pay for value everywhere else," he added.

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