Clinicians call for reforms to slow ‘unsustainable’ rise in drug costs

The cost of the typical new cancer drug coming on the market in the United States has more than doubled in the past decade, from $4,500 per month of treatment to about $10,000 per month.

Cancer therapies now account for about one-third of all drug expenditures in clinics across the country, according to a report published earlier this year in the American Journal of Health-System Pharmacy.

“The current cost of health care — and specifically cancer care — is unsustainable,” Sandra M. Swain, MD, FACP, ASCO’s immediate past president and medical director of the Washington Cancer Institute at MedStar Washington Hospital Center, told HemOnc Today. “The most significant challenge is striking the right balance between giving and delivering evidence-based medicine while making it affordable to individuals and families so that they are actually able to get the effective treatment.”

Clinicians have become increasingly vocal in recent months, calling on practitioners, pharmaceutical companies, insurance industry representatives and other stakeholders to work together to identify ways to reduce drug prices.

Among them is Hagop M. Kantarjian, MD, chair of the department of leukemia and associate vice president for global academic programs at The University of Texas MD Anderson Cancer Center.

Kantarjian was one of more than 100 chronic myeloid leukemia experts who signed an editorial published earlier this year in Blood that drew attention to the increasing costs of therapies and outlined the need for reform.

The editorial authors noted the FDA approved three drugs in 2012 for the treatment of CML — bosutinib (Bosulif, Wyeth Pharmaceuticals), ponatinib (Iclusig, Ariad Pharmaceuticals) and omacetaxine mepesuccinate (Synribo, Teva Pharmaceuticals).

The cost of 1 year of treatment with bosutinib is $118,000, and a 12-month regimen of ponatinib carries a $138,000 annual price tag. Omacetaxine costs $28,000 per induction and $14,000 per maintenance course.

Those prices could prevent needy patients from accessing highly effective therapies and also are harmful to the sustainability of national health care systems, Kantarjian and colleagues wrote.

“As cancer experts, we must do something about this,” Kantarjian told HemOnc Today. “Otherwise, we are not abiding by our Hippocratic Oath of ‘first, do no harm’ to our patients.”

New threshold

Oncology drugs and biologics are accounting for an increasingly large percentage of costs for hospitals and clinics, according to the report published in the American Journal of Health-System Pharmacy.

Researchers led by James M. Hoffman, PharmD, medication outcomes and safety officer in the pharmaceutical sciences department at St. Jude Children’s Research Hospital, assessed overall drug expenditure trends in US non-federal hospitals and clinics during 2011 and 2012. They also examined factors most likely to influence costs this year.

“Aggregate drug expenditures have increased modestly over the past several years, or even decreased slightly in the latest data, but expenditures for specialized and innovative therapies — including those used by cancer patients — have continued to grow significantly,” Hoffman told HemOnc Today.

Drug expenditure growth for oncology drugs is driven by a variety of factors, Hoffman said.

“One of the biggest factors is the continuing introduction of new and innovative therapies that are brought to market with very high prices,” he said. “There may be various rationales from the pharmaceutical industry for these pricing decisions, but the bottom line is that new cancer drugs come to market at very high costs and they are often rapidly adopted into practice.”

In the report, researchers found that antineoplastic agents accounted for 15.1% of all hospital drug expenditures in 2012, whereas oncology therapies accounted for 32.2% of all drug expenditures in clinics during the first 9 months of 2012.

A new threshold has been reached in which one course of treatment for new cancer therapies costs more than $100,000, Hoffman said.

The FDA’s implementation of an approval process for biosimilars and other actions that facilitate the introduction of generic drugs into the medication pipeline may help ease the cost burden in the future, but they will fail to provide short-term relief.

“The introduction of biosimilars will offer new cost savings for the health care system in general, but is not expected to influence drug costs this year,” Hoffman said.

A question of value

A 2009 report in Health Economics suggested it costs $1 billion to get a drug to market.

That figure — often cited by those in the pharmaceutical industry — is a myth, Kantarjian said.

“Originally, pharmaceutical companies claimed that high drug prices are necessitated by the high cost of research, but independent studies have shown the cost is as low as 10% of that amount,” Kantarjian said.

Matthew Bennett, senior vice president of Pharmaceutical Research and Manufacturers of America — which represents biopharmaceutical researchers and biotechnology companies — said “the tremendous value of medicines in the larger health care system” cannot be overlooked when considering cost.

Bennett cited a 20% decline in cancer death rates since 1990, significantly reduced mortality among children with cancer, and dramatically improved survival for patients with breast cancer, colon cancer and non-Hodgkin’s lymphoma.

“According to recent data from IMS Health, spending on oncologic medicines represented less than 1% of total national health expenditures in 2010. Additionally, only 14% of cancer-related costs are attributable to pharmaceuticals,” Bennett said. “But these medicines have significantly improved quality and length of life and contributed to a stronger understanding of complex cancers. This continual progress leads us closer to future new treatments and, hopefully, cures.”

Making assumptions about the value of a medicine at the time it is approved may significantly underestimate its potential benefits, Bennett added.

“Medical science is based on both rapid and incremental innovation that builds upon each new discovery,” he said. “Each life-extending innovation, whether adding months or years, can also allow patients to survive until the next breakthrough. Ongoing research on individual treatments often reveals added value over time.”

Kantarjian disagreed.

“[Pharmaceutical companies] say prices reflect added value, but in fact there is no correlation whatsoever between cancer drug prices and their objective benefits,” Kantarjian said.

Bankrupting the system

Pharmaceutical companies also suggest they charge what the market will bear and that free-market forces will settle cancer drug prices at their real value, Kantarjian said.

However, competitive market forces are not working appropriately in the case of patented drugs, he said.

In 2001, imatinib (Gleevec, Novartis) became one of the most successful CML therapies developed in oncology, according to the authors of the Blood editorial. Imatinib and new tyrosine kinase inhibitors helped reduce annual all-cause mortality to 2% — compared with the historical rate of up to 20% — and significantly increased the rate of estimated 10-year survival from less than 20% to more than 80%.

Meanwhile, the annual cost of imatinib increased from $30,000 in 2001 to $92,000 by 2012, with annual revenues of about $4.7 billion.

In another editorial published in the Journal of Clinical Oncology, Kantarjian and colleagues wrote that only three of the 12 cancer drugs approved by the FDA in 2012 prolonged patient survival — two were associated with improvements of less than 2 months — yet were priced at more than $10,000 per month.

“Cancer drug prices are exorbitantly high and have nothing to do with cost of research or cost–benefit,” Kantarjian said. “They are harming patients who cannot afford the drugs and contributing to bankrupting our health care system. Oncologists are suffering morally and emotionally from these high prices because they have to fight every day on behalf of their patients with multiple regulatory entities to try to get the needed drugs to their cancer patients.”

Bennett said it is important to consider the lifecycle of a medicine and its unique marketplace, as well as the role of insurance.

“Over time, with the entry of generics and the emergence of the new biosimilars pathway, spending on older treatments declines and health care resources can be redirected toward the development of newer, more effective treatments,” Bennett said. “Further, prescription medicines are purchased in a vibrant, competitive market where very large, powerful and sophisticated purchasers — health plans — with strong incentives to achieve savings, negotiate discounted prices, and steer use toward the medicines they prefer. But in contrast to other aspects of patient care, specialty medicines are often subject to greater cost-sharing by insurers, forcing higher out-of-pocket costs for patients.”

Efficacy–cost connection

The editorials by Kantarjian and colleagues raised the question of whether cost should be associated with the years of life extended, so there is some type of inherent value added, Janis L. Abkowitz, MD, president of ASH, told HemOnc Today.

“This is an important discussion for our country to have in terms of how to make decisions on cancer drug costs,” said Abkowitz, also the Clement A. Finch professor of medicine and head of the division of hematology at the University of Washington School of Medicine.

In a 2012 editorial published in The New York Times, Peter B. Bach, MD, MAPP, Leonard B. Saltz, MD, and Robert E. Wittes, MD, all of Memorial Sloan-Kettering Cancer Center, said their hospital would no longer use ziv-aflibercept (Zaltrap, Sanofi-Aventis) due to its price. At the time, ziv-aflibercept offered comparable efficacy to bevacizumab (Avastin, Genentech) with similar toxicity, yet it cost twice as much.

“We made an internal decision that, given the higher cost of the drug and the higher intended co-payments for care with Medicare, it didn’t make any sense to use the drug,” Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan-Kettering, said in an interview.

“We have been very concerned, not only with the high cost of drugs but how that filters through the patients’ pocketbooks,” Bach said. “This was a clear example of prices having nothing to do with the incremental value. It was unbelievably high, given the income level of most patients with cancer on Medicare. The cost for Zaltrap alone exceeded their pre-tax income.”

Upon publication of the editorial, Sanofi-Aventis almost immediately reduced the price of ziv-aflibercept by 50%, Bach said.

“This behavior by companies charging very high prices is having a meaningful impact on our patients,” Bach said. “If we argue that we are not going to double the out-of-pocket cost for zero the benefit, then no other institution will either.”

‘Financial toxicity’

The association between high medical expenses and the likelihood for bankruptcy has been the subject of extensive research.

However, prior studies have not focused specifically on patients diagnosed with cancer.

A team of researchers led by Scott Ramsey, MD, PhD, an internist and health economist at Fred Hutchinson Cancer Research Center, set out to assess this association.

The study results, published in May in Health Affairs, showed people diagnosed with cancer were 2.5 times more likely to declare bankruptcy than those without cancer. Bankruptcy filings increased as time passed after a cancer diagnosis, and younger patients had a two- to fivefold increased risk for bankruptcy, the researchers found.

The analysis included 197,840 cancer patients in western Washington. All patients were aged 18 years or older, and they were diagnosed between 1995 and 2009.

The findings showed 4,408 patients (2.2%) filed for bankruptcy after their diagnosis compared with 2,291 (1.1%) of matched controls. Patients who filed for bankruptcy were more likely to be nonwhite, female and younger than those who did not file.

“This is the strongest evidence we have between a disease and the risk for severe financial distress,” Ramsey said in a press release. “I’ve not seen other studies that linked databases of this quality.”

ASCO developed resources for patients and physicians to help initiate discussions about the costs of cancer care early in the treatment continuum, Swain said. Educational support tools help providers communicate with patients about cost, and one of the goals is to help patients avoid bankruptcy due to health care expenses.

“One of the terms used now is financial toxicity,” Swain said. “You really don’t want someone having to mortgage their home to pay for therapies, so this discussion should be upfront. A lot of times, patients don’t really want to talk about that part. But the key is to be transparent about all aspects of treatment, including the benefits, the side effects and the costs.”

Drug coverage parity

One way oncologists are getting involved in trying to manage the increasing costs of cancer care is through their support of the Cancer Drug Coverage Parity Act, which has received bipartisan support in Congress.

If approved, the legislation would require all private health plans that offer IV chemotherapy benefits to also offer benefits for orally administered and self-injectable chemotherapy medications. Proponents suggest the legislation would help more patients afford newer, more effective cancer therapies.

ASH has been a vocal supporter of the bill because it could have an immediate impact on patients’ abilities to cope with the escalating costs of care, Abkowitz said.

“We think it’s a concrete step that can really happen,” Abkowitz said. “Imatinib is a great example — it’s not covered by many plans because it’s not IV chemotherapy. This legislation doesn’t change the cost of the drug, but it shifts the burden of the cost of the drug from the patient to the drug company. The patient should be able to be treated without the financial burden.”

Search for common ground

In October, physicians, patient advocacy groups, pharmaceutical companies and health care insurers will convene in Washington for the inaugural Cancer Care and Research Summit.

The goal is to have all stakeholders begin a dialogue intended to find common ground in the quest to reduce the costs of cancer drugs.

“Through these first and subsequent periodic summits, we hope to initiate and continue a productive and positive dialogue on all the components of cancer care, including research regulations and costs,” Kantarjian said. “This will streamline cancer research and care more effectively and reduce the economic burdens on our patients.”

Bach said he does not anticipate dramatic changes will occur in the near future.

“It is highly unlikely that for-profit companies are going to suddenly decide that they are going to lower prices because of what we accomplished [with Zaltrap],” Bach said. “Increased scrutiny is currently the only check we have against prices rising without limit. Companies will continue to face this challenge. This isn’t the best counterbalance, but it’s sort of all we have right now.”

Although the objective has been clearly identified, Abkowitz said the means by which it will be reached still must be established.

“Clearly, drug companies need to exist and have profit margin and encourage research,” Abkowitz said. “However, the current situation is out of whack — it is not appropriate and not sustainable. Pricing has to change, but I’m not sure how we are going to get there.” – by Jennifer R. Southall

References:

Adams CP. Health Econ. 2009;19:130-141.

Bach PM. In cancer care, cost matters. The New York Times. Available at www.nytimes.com/2012/10/15/opinion/a-hospital-says-no-to-an-11000-a-month-cancer-drug.html?partner=rss&emc=rss. Published Oct. 14, 2012. Accessed June 7, 2013.

Experts in Chronic Myeloid Leukemia. Blood. 2013;121:4439-4442.

Hoffman JM. Am J Health Syst Pharm. 2013;15;70:525-539.

Kantarjian HM. J Clin Oncol. 2013;doi:10.1200/JCO.2013.49.1845.

Ramsey S. Health Affairs. 2013;32:1143-1152.

For more information:

Janis L. Abkowitz, MD, can be reached at The University of Washington, Department of Medicine, Division of Hematology, Box 357710, 1705 NE Pacific St., HSB K-136, Seattle, WA 98195-7710; email: janabk@u.washington.edu.

Peter B. Bach, MD, MAPP, can be reached at Memorial Sloan-Kettering Cancer Center, 1275 York Ave., New York, NY 10065; email: bachp@mskcc.org.

Matthew Bennett can be reached at PhRMA Headquarters, 950 F St., Suite 300, Washington, DC 20004; email: mbennett@phrma.org.

James M. Hoffman, PharmD, can be reached at Pharmaceutical Sciences, MS 150, Room C1303F, St. Jude Children’s Research Hospital, 262 Danny Thomas Place, Memphis, TN 38105-3678; email: james.hoffman@stjude.org.

Hagop M. Kantarjian, MD, can be reached The University of Texas MD Anderson Cancer Center, 1515 Holcombe Blvd.,
Houston, TX 77030; email: hkantarjian@mdanderson.org.

Sandra M. Swain, MD, FACP, can be reached at MedStar Washington Hospital Center, 110 Irving St. NW, Washington, D.C. 20010; email: sandra.m.swain@medstar.net.

Disclosure: Abkowitz, Bach, Bennett, Hoffman, Kantarjian and Swain report no relevant financial disclosures.

 

Should the government intervene to control the cost of cancer drugs?

Yes, the government should intervene.

Pharmaceuticals are not treated as ordinary consumer products subject to market forces. Before they can be tested, companies need to submit detailed protocols to both regulatory authorities and to ethics committees. Before they can be marketed, regulatory authorities need to determine that the overall benefits outweigh the overall harms.

Drugs receive extra patent time to make up for the time they spend in the regulatory process, and promotion of drugs is controlled by legislation. Even once they have been approved, drugs are still monitored for unexpected side effects.

Having been intimately involved up to this point, should governments now step aside and let companies set whatever price they want for new medications? The usual defense of high prices is the high cost of developing a new product — now at $1 billion or more. But that figure rests on a study using data from a relatively small sample of companies, and the data is confidential.

Drug companies have consistently refused to open their books to show that the costs they claim are justified. Companies also readily admit that they do not price their drugs based on what they cost to develop and produce, but rather on what they think that the market will pay. That’s why a new blood pressure medication may cost hundreds of dollars per month and a new cancer drug may cost $10,000 per month.

Do we really want to leave patients and their health open to market forces with the inevitable result that some patients won’t be able to afford therapy or will go bankrupt in doing so? Government needs to ensure that prices are affordable.

Joel R. Lexchin, MD, is a professor in the school of health policy and management at York University in Toronto. He can be reached at York University, School of Health Policy and Management, 420 HNES Building, 4700 Keele St., Toronto, Ontario M3J 1P3, Canada; email: jlexchin@yorku.ca. Disclosure: Lexchin reports no relevant financial disclosures.

Government control comes at the expense of oncologists.

It is difficult to calibrate if chemotherapy drugs are priced appropriately, as the decision-making process that goes into what a company charges is a veritable “closely held corporate secret.”

That said, once a pharmaceutical company sets an initial price for a new medication, Medicare exerts a form of control over the rate of increase in the cost through the Average Sales Price (ASP) system of reimbursement. Most unfortunately, this control comes mostly at the expense of oncologists. 

The ASP system is updated every quarter by companies but is not reflective in reimbursement rates until the quarter after next.

For example, the rates for the third quarter are based on first quarter ASPs.  If a company increases the price for a drug, there is a 6-month lag before the ASP reimbursement reflects that escalation. This creates a disincentive for a company to raise its price quickly, because a sharp increase would mean the cost of the drug would far outpace its reimbursement. But even a small rise in cost is borne entirely by oncologists who have to absorb the shortfall in payment.

Innovative chemotherapy drugs will always be expensive due to the costs of development and the limited market of targeted agents. We therefore need a better system to keep these prices reasonable, rather than the current one that punishes community oncologists for providing cost-effective care.

Patrick W. Cobb, MD, FACP, is an oncologist at St. Vincent Frontier Cancer Center. He can be reached at St. Vincent Frontier Cancer Center, 1315 Golden Valley Circle, Billings, MT 59102; email: patrick.cobb@svh-mt.org. Disclosure: Cobb reports no relevant financial disclosures.