Cancer Drugs in the US: High Prices but Low Value

Roxanne Nelson

May 05, 2016

The cost of cancer drugs has garnered a great deal of attention as six-figure price tags become increasingly commonplace. But contrary to at least some analyses, competition will not necessarily rein in the escalating costs of oral anticancer drugs in any meaningful way, according to a new report published online in Health Affairs.

A related article in the same issue of Health Affairs found that despite its high spending, the United States gets low value for cancer drugs.

The authors evaluated the "real-world" use of cancer drugs in nine industrialized nations during a 10-year period. Although there was a wide range in how cancer patients in the different countries benefited from these drugs, the analysis found that the United States spent more money than any of the other countries but seemed to get the lowest return on its investment.

Prices Rise After Launch

Much has been written on the ever escalating costs of newly approved cancer drugs, but less attention has been paid to how these costs evolve once the drugs are out in the marketplace.

In the first article, Caroline S. Bennette, PhD, School of Pharmacy, University of Washington, Seattle, and colleagues used pharmacy claims for commercially insured individuals to examine trends in postlaunch prices for 24 orally administered cancer medications that received US Food and Drug Administration (FDA) approval from 2007 to 2013.

They found that during the study period, 30-day drug costs increased, on average, 5.2% per year following their initial market introduction after adjustment for inflation.

There was also substantial heterogeneity over time and across drugs with regard to changes in cost. As an example, the monthly cost of sunitinib (Sutent, Pfizer Inc) had both a 9% decrease and a 15% increase from one quarter to the next.

They note that there were "several important associations between changes in the market for a drug and average monthly costs."

One was the receipt of a supplemental FDA approval, which was associated with a significant 9.9% increase in per-patient monthly costs. Another was the receipt of a compendium-recommended off- label indication, which was associated with a nonsignificant 3.2% increase.

However, competition did not affect prices in any meaningful way. The introduction of a competing product caused prices to drop about 2.4% per month, but the other factors led to overall price increases.

Competition has been a successful method of controlling prices for drugs used in many chronic conditions, but Dr Bennette and her team note that this has not been the case in oncology.

The most likely reason is that cancer patients tend to be treated with multiple lines of therapy until all options are exhausted, so choosing one drug over another does not necessarily preclude the demand for similar agents.

Competition is unlikely to meaningfully rein in the escalating costs of oral anticancer drugs in the near future. Dr Caroline Bennette and colleagues

"Our findings therefore suggest that competition is unlikely to meaningfully rein in the escalating costs of oral anticancer drugs in the near future," they write. "Instead, potential policies to address these trends could seek to link reimbursement rates or coverage mandates with a metric of comparative clinical value or benefit."

Low Value for Money Spent

In the second article, Sebastian Salas-Vega and Elias Mossialos MD, PhD, both from the London School of Economics, in the United Kingdom, sought to examine the value of cancer spending in terms of lives saved.

Using a proprietary international data set, they looked at real-world cancer drug use and expenditure during the period 2004 to 2014 in Australia, Canada, France, Germany, Italy, Japan, Sweden, the United Kingdom, and the United States and explored the value that was obtained.

There was substantial variability across countries in cancer drug use. Canada, for example, consistently consumed a lower total volume of cancer drugs than the other countries, whereas Japan consumed a significantly greater total volume in both 2004 and 2014.

Overall, global expenditures for all cancer drugs increased between 2004 and 2014. The authors found that the United States consistently outspent the other countries on all cancer drugs, both proprietary and generic.

This growth in US spending appeared to be driven by specific classes of drugs, namely, monoclonal antibody antineoplastics and protein kinase inhibitor antineoplastics.

Incidence-adjusted expenditures on cancer drugs increased for all countries during the study period. At the same time, the number of years of potential life lost from all cancer types declined.

The authors note that according to their analyses, cancer drugs have become more effective. However, they found a high degree of variation with regard to their measure of health economic value.

The United States accounted for nearly 56% of cancer drug expenditures in 2014 across all countries evaluated in this study but only received 12.6% of the global total net economic return generated in that year from oncology drug care.

At the other end, Japan achieved close to seven times as much return in health gains per dollar spent on cancer drugs as the United States did.

Estimates of net value were calculated by assuming that 25%, 50%, and 75% of the gains observed in years of potential life lost were the result of cancer drug care. In almost all scenarios, cancer drugs produced net positive value.

The overall net return from oncology drug care amounted to $259.8 billion in 2014 for the nine countries when examined under base-case assumptions (a 50% level of attribution).

Base-case analyses indicate that the United States had an estimated $32.6 billion in net positive return from cancer drug care in 2014.

There was a "notable uptick in the net positive return from 2007 to 2013, which may have reflected therapeutic innovations," according to the authors.

That said, the net positive return has begun to trend downward, and the United States lags behind other countries in health gains obtained per dollar spent on cancer drugs. In 2014, the total net value generated from cancer drug care in Japan was $82.3 billion; in Germany, $43.3 billion; and in France, $34.0 billion.

The United States "can do better," the authors note, inasmuch as it outspent all other countries in the study on cancer drugs despite having the highest level of generic penetration in the market and normal levels of cancer drug consumption.

"Growth in US cancer drug expenditures is primarily driven not by consumption ― which is key to improving patient outcomes — but by high prices for brand-name drugs," the authors point out.

The study by Salas-Vegas and colleagues was supported by the Commonwealth Fund. Dr Bennette was supported by an institutional mentored career development award from the Agency for Healthcare Research and Quality. None of the other authors have disclosed any relevant financial relationships.

Health Aff. 2016 ;35:805-812, 813-823. Article 1 abstract, Article 2 abstract


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