The cost of drugs for the treatment of cancer — in the pressure cooker

According to an announcement this morning from The Mayo Clinic, a group of 118 leading cancer experts has drafted proposals for reducing the high cost of cancer drugs and voiced support for a patient-based grassroots movement demanding action on the issue.

Information about the proposals is available in

In addition, a petition has been made available at the web site that asks the Secretary of Health and Human Services, the U.S. House of Representatives. the U.S. Senate, and the President of the United States to take action promptly on the issue of cancer drug prices.

The contributing authors to the article — at a quick glance through the list — include at least one well-known and respected expert in the treatment of prostate cancer.

Basically, the panel is recommending several possible actions that might lead to lower costs of cancer drugs:

  • Creation of mechanisms to propose a fair price for new treatments that is based on the value to patients and heath care (following FDA approval of any new drug)
  • Allowing Medicare to negotiate drug prices with manufacturers/marketers
  • Allowing the Patient Centered Outcomes Research Institute (PCORI) to evaluate the benefits of new treatments and similar organizations to include drug prices in their assessments of the treatment value
  • Allowing importation of cancer drugs across borders for personal use
  • Passage of legislation to prevent drug companies from delaying access to generic drugs
  • Reforms to the patent system to make it more difficult to prolong product exclusivity unnecessarily (commonly known as patent “evergreening”)
  • Encouraging organizations that represent cancer specialists and patients to consider the overall value of drugs and treatments in formulating treatment guidelines

Whether or not any of these recommendations is actually viable in the short term is a difficult question to answer at this time. However, based on a recent survey, the Kaiser Family Foundation noted that 87 percent of Americans felt that Medicare should have the authority to negotiate with drug-makers for lower prices on medications.

Whatever one happens to believe about the issue of drug prices and the profitability and viability of the U.S. biopharmaceutical industry, it is clear that pressure is increasing to seek drug pricing mechanisms that make valuable treatments more accessible for the patients who need them.

5 Responses

  1. Good that this issue is getting up some steam. However, until these companies are no longer allowed to influence elections, our elected officials have no incentive to actually make a significant change for the benefit of ordinary citizens. Perhaps the drug cost issue may be different because cancer affects their loved ones as well, but then again, I am pessimistically certain that many of these elected officials have back door access if needed. Many times it is not needed because they are wealthy and the costs are relatively affordable.

  2. Dendreon and its Provenge as Evidence on the Rebuttal Side

    As a 15 1/2 year survivor of once life-threatening prostate cancer that has been treated very effectively with once high-cost drugs and high cost radiation, I am sympathetic to the main point and agree that we need to find a way to make drugs more affordable. However, I am also highly sympathetic with the wonderful reality that our drug development system has made and is making many strikingly beneficial drugs available to patients, often accompanied with enormous development cost and great risks to investors.

    Consider the development of Provenge and its developer Dendreon. Most of us know how Provenge benefits prostate cancer patients, so I won’t address that. I was among those working on the patient/advocate side for approval of this treatment; I gave a statement at an FDA advisory committee hearing, demonstrated on Capitol Hill in support of the drug, and supported approval in other ways. I was delighted when the drug was approved in 2010, but also disappointed that it was priced so high: about $93,000 for the three course treatment at that time, with many patients responsible personally after insurance for about $18,000 of that cost. However, though disappointed, I understood that Dendreon had a reasonable basis for the pricing; if I were to have been an investor, I suspect I would have thought the price too low!

    That basis included about $1,000,000,000 (one billion!!!) in development cost for this company with no products for sale during development, just racking up huge expenses. During that period company investors faced the prospect that the clinical trials would prove insufficiently successful with the consequence that the drug would not be approved by the FDA, likely resulting in loss of all their funds with no benefit. Investors also ran a high risk that one or more other immune system drugs would be approved first, which would have seriously eroded the potential market share for Provenge. At one point this seemed likely. After approval, Dendreon incurred heavy expenses, about a half billion as I recall reports, in ramping up production facilities from what was basically a laboratory environment to several major facilities that would pass stringent FDA processing requirements. In addition to all that, with no income until early paying patients and their insurers chipped in, Dendreon started paying for ongoing expenses, such as employee salaries, advertising, and insurance to name just a few.

    But these days a company like Dendreon had better not sit on its laurels, and Dendreon did not; it continued substantial investment in R&D, including research that could improve the usefulness of the drug and expand the eligible prostate cancer patient population, as well as exploration of the role of close cousins of the treatment for other cancers. That too is expensive. All this is in a business environment where competing therapies – both similar immune system therapies and others – are under development, with a very real potential risk to Provenge’s market share. Indeed, the slew of recent FDA approvals for prostate cancer drugs has no doubt somewhat curtailed the therapy space where Provenge would be an attractive option, and that risk continues (as just one instance: radioactive Lutetium with an antibody seeking PSMA, as discussed on this board previously).

    My personal disclosure is that I never invested in Provenge, in fact I advised several friends to carefully weigh the risks, considering the somewhat chancy potential for cost recovery and profit making. I am delighted that other people are willing to take such risks, and I wish them the best, but the game is too expensive and risky for me. I hope my friends took my advice about Dendreon, for, as many of us know, Dendreon is now operating under protection of the bankruptcy laws. All this said, I also hope a hardy few investors will help Dendreon continue to work with Provenge and perhaps its cousins. The investors could be just a breakthrough or two away from a huge payback.

    If the US starts thinking as a society about a way of achieving “fair prices” for new drugs, we need to think about Dendreon’s experience with Provenge and similar cases, including drugs that never were approved.

  3. Thinking about “Based on Value To Patients And Heath Care”

    As a now savvy survivor, described in my preceding post, I have a far more insightful view of a drug’s “value to patients and heath care” than I had when my cancer was diagnosed in 1999. I am convinced that few of our citizens and voters really understand some of the key points unless they have gone down a similar road. Here’s my point: it is not really possible to determine the “value to patients and heath care” for many, many years, and our own experience as a prostate cancer community helps us understand this.

    Consider the drug metformin, for example. It was approved for treatment of diabetes so many years ago that it is now dirt cheap as a generic. Yet just recently it has been recognized as having important anti-cancer benefits, and not just for prostate cancer. Those benefits were clearly not apparent for many years after FDA approval of metformin, and therefore there would have been no way to tally such benefits in assessing the value of the drug. Consider the drug docetaxel – the mainstay of chemotherapy for years now for prostate cancer. Very recently docetaxel has been recognized as substantially boosting success when coupled with androgen deprivation therapy (ADT) for some challenging cases of prostate cancer. As with metformin, that benefit was not appreciated at all until years after docetaxel was approved for prostate cancer.

    Let’s add the important fact that we are now living in a medical age that is seeing the value in treating cancer and other major diseases of combining therapies, often drugs with other drugs or non-drug treatments/management technologies (such as imaging). Yet we know that drugs are not approved initially in combination with other therapies, at least I am not aware of a single instance. (Sitemaster?) Therefore, despite the important and growing role of combination therapy, the value of a newly approved drug in such a combination will almost certainly not be apparent until years after the drug is approved.

    Similarly, we arguably will not see until years later the benefit of a drug for a smaller sub-set of the initial approval combination after GENETIC RESEARCH has given us understanding of who will benefit and who will not, a calculus that would be of immense importance in assessing the “value to patients and heath care”. One example is determination of BRCA gene positive patients in breast and other cancers, which tells us who will and who will not benefit from certain expensive chemo.

    Let’s keep in mind another perspective on the issue of fair value: it’s not just survival, it’s also quality of life that should be thrown into the pot when assessing value. Just to stir that pot further, a drug may contribute to quality of life achieved under another therapy (for example, statins lowering certain problems risks of androgen deprivation therapy), or conversely it may benefit from a breakthrough recognition that one of its side effects can be greatly reduced.

    As a final example of the likely numerous difficulties in assessing “value to patients and heath care “, we need to remember that the benefits determined in our clinical trial process typically greatly underestimate the benefit of a drug once it (1) gets into general clinical use where application of growing physician community experience and talent enhances benefit, (2) where subsequent trials lead to use in wider (often earlier stage) populations of patients, and (3) where the drug is used in off-label situations. (A number of drugs important in my therapy were prescribed for me “off-label, such as Proscar and Avodart, and such as low-dose thalidomide (plus vitamin B6), to extend my vacation period for intermittent ADT,” to name just two of several.)

    I hope a way can be found to assess “value to patients and heath care”, but I’m suspicious that this will prove a far more daunting challenge than currently visualized, especially as visualized by politicians and voters who take a “sound-bite” view of the world.

    PS: Ultimately a Government board or agency would be given the task of assessing fair pricing, likely, hopefully with stakeholders participating. However, experience with the non-government but influential US Preventive Services Task Force is highly discouraging. That group clearly and egregiously blundered in assessing the value of screening for prostate cancer, a blunder the Task Force has yet to acknowledge despite the passage of several years!

    The question is how we ensure that such a fairness board would be competent.

  4. The current “system” for incentivizing development of new drugs provides the developer organization with patent protection for a period of time, during which it (hopefully) has a shot at recovering the huge costs required to run trials and win FDA approval. Maybe a profit can be made — sometimes it can and often it can’t. Although it is a ramshackle “system”, it is arguably producing fabulous results for patients with awful diseases. Often, the high price of the new drug is covered by insurance, and thus spread across the population of insured patients in the form of higher premiums. The expectation is that the price of the drug will be dramatically reduced when the patent protection ends.
    I believe anybody supporting a petition for lower prices should be prepared to suggest alternative viable “systems” to encourage innovation, before attempting to pull the rug from under the current (admittedly flawed) setup, which is all the Mayo “proposals” seem to be aimed at. (For what it’s worth I did invest in Dendreon, unfortunately. I have had better success with some other biotech issues).

  5. Some of the Proposed Measures Should Be Fairly Uncontroversial

    Without doubt each of us would have our own list for the bullet points above, but here is my own list of what I believe are the feasible changes that should be achievable fairly rapidly:

    • Allowing Medicare to negotiate drug prices with manufacturers/marketers. This was precluded as part of the deal for PhRMA’s support of Obamacare, but I feel the situation is now ripe for a change.

    • Allowing importation of cancer drugs across borders for personal use. I can see this as a good thing with certain restrictions. There’s a difference in drugs coming from Canada versus from China.

    • Passage of legislation to prevent drug companies from delaying access to generic drugs. Amen!

    • Reforms to the patent system to make it more difficult to prolong product exclusivity unnecessarily (commonly known as patent “evergreening”). Again, Amen!

    • Encouraging organizations that represent cancer specialists and patients to consider the overall value of drugs and treatments in formulating treatment guidelines.

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