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Old 06-13-2014, 10:52 AM
gdpawel gdpawel is offline
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Default The Rising Cost of Cancer Research: Is It Necessary?

Robert A. Nagourney, M.D.

For anyone engaged in developmental therapeutics and for those patients who need new approaches to their cancers, an editorial in the Journal of Clinical Oncology casts a disturbing light on the field The authors examine the impact of the growing research bureaucracy upon the conduct of clinical trials. They use Thomas Edison, who filed 1,093 U.S. patents, to exemplify successful trial and error research. By inference, they suggest that if Mr. Edison were working today in the modern regulatory environment we would all be reading this blog by candlelight. While much of Edison’s work focused upon household conveniences like light bulbs and phonographs, the principals that underlie discovery work are every bit the same.


Although regulations have been put in place to protect human subjects, the redundancies and rigorous re-reviews have outstripped their utility for the patients in need. The process has become so complex that it is now necessary for many institutions to use professional organizations to conduct trials that could easily have done in the past by an investigator with a small staff. These clinical research organizations (CRO’s) are under the gun to adhere to an ever growing collection of standards. Thus, every detail of every consent form is pored over sometimes for years. This has had the effect of driving up the cost of research such that the average Phase III clinical trial conducted in the 1990s that cost $3,000 to $5,000 per accrued patient, today costs between $75,000 and $125,000 per patient. Despite this, the safety of individuals is no better protected today than it was 30 years ago when all of this was done easily and cheaply.

While funding for cancer research has increased slowly, the cancer research bureaucracy has exploded. One need only visit any medium to large size hospital or university medical center to witness the expansion of these departments. Are we safer? Do our patients do better? The answer is a resounding “No.” In 2013, according to the authors, the average patient spent a mere 53 seconds reviewing their consent forms before signing them, while the average parent, signing on behalf of their child, spent only 13 seconds.

The take home messages are several. First, the regulatory process has become too cumbersome. Were this the cost of scientific advance we would accept it as a fact of life, but patients are not safer, trials are not faster and outcomes are not being enhanced. Second, the cancer research process has overwhelmed and undermined cancer researchers. In keeping with Pournelle’s Iron Law of Bureaucracy, “. . . in any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work for the organization itself.”Is there anyone who donates to the American Cancer Society who wants their money to go toward more regulation?


The problem is not with the academic physician. Medical scientists want to do studies. Marching alongside are the patients who are desperate to get new treatments. While many criticize the pharmaceutical industry, it is highly unlikely that these companies wouldn’t relish the opportunity to see their drugs enter the market expeditiously. Standing between patients and better clinical outcomes is the research bureaucracy. Should we fail to arrest the explosive growth in regulatory oversight we will approach a time in the near future when no clinical trials will be conducted whatsoever.
Gregory D. Pawelski

Last edited by gdpawel : 06-13-2014 at 11:00 AM. Reason: Post full article on forum board
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Old 06-13-2014, 04:13 PM
gdpawel gdpawel is offline
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Default Private Health Insurance Rationing

Larry M. Weisenthal, M.D.

Health care rationing ... not by ObamaCare, but by private health insurance. The following is really under the radar; to my knowledge hasn't been picked up by any notable media as yet, but it has profound implications.

Basically, Wellpoint Blue Cross is going to pay doctors (in this case, oncologists) bonuses for prescribing what are typically the cheapest drugs. No, this isn't part of ObamaCare. This is purely private sector medicine. If the government ever tried to do this, with, for example, Medicare, there would be a huge uproar. It's actually a form of coerced rationing ... very devious, and, I'd argue, even evil. One would hope that one's cancer doctor would prescribe the cancer treatment which, in the judgement of the oncologist, had the best chance of working for the individual patient. But to give doctors financial incentives to use what are, in effect, the cheapest treatments really turns medical ethics on its head.

WellPoint Offers Oncologists Incentives to Follow Pathways

Will giving oncologists financial incentives to "stay on track" help reign in cancer costs?

At least one insurer, and maybe more in the future, are counting on it. WellPoint, one of the largest health benefits companies in the United States, will begin offering oncologists a monetary incentive for each patient who receives treatment for breast, colorectal, and lung cancer, as specified by one of the insurer's recommended regimens.

The program will begin on July 1, and initially be rolled out in Indiana, Kentucky, Missouri, Ohio, Wisconsin, and Georgia, but is expected to expand to other states throughout this year and into 2015. It will be applicable to fully insured and self-insured members, those with Medicare Advantage, and national account members who live in states in which the program has been initiated.

"This program — while sharing best practices and evidence-based medicine — also helps to support oncologists who require large staffs to treat these complex patients and provides the practice with enhanced reimbursement to offset the lower fees they receive when prescribing less expensive drugs," commented Jennifer Malin, MD, PhD, WellPoint oncology medical director, in a statement.

The WellPoint Cancer Care Quality Program was developed in collaboration with WellPoint subsidiary AIM Specialty Health, and identifies certain cancer treatment pathways that were selected based upon current medical evidence, peer-reviewed published literature, consensus guidelines, and WellPoint's clinical policies. The premise is to support oncologists in identifying cancer treatment therapies that are highly effective and provide greater value.

According to WellPoint spokesperson Lori McLaughlin, if a practice follows the pathways, it will receive a $350 one-time fee at the onset of treatment planning and care coordination.

"The practice will also receive $350 per month per patient while the patient is active in therapy and on pathway," she said. "This should offset on average the difference in what the practice makes from administering more costly drugs, they say. The goal is that the Cancer Care Quality Program is revenue neutral for the practices, but encourages them to follow the best evidence."

Pathways Already in Use

The idea of clinical pathways to guide care is certainly not new, and some data suggest that they can help reduce cost without compromising the quality of care. One study published last year found that an oncology pathways program could save about 15% on cancer-related costs and reduce hospital admissions by about 7%.

As previously reported by Medscape Medical News, this scheme was devised by Cardinal Health, a Fortune 500 healthcare services company that specializes in the distribution of pharmaceuticals and medical products. In partnership with payers, they established evidence-based oncology treatment pathways to eliminate unnecessary medical interventions and promote the most cost-effective treatments to enhance care and reduce costs. In August 2008, Cardinal Health Specialty Solutions partnered with CareFirst BlueCross BlueShield to launch the first cancer clinical pathway in the United States.

"Only recently have we had enough experience, analysis, and data to subject our work to validation and peer review," said Bruce Feinberg, MD, chief medical officer of oncology at Cardinal Health Specialty Solutions, at the time the study was reported.

The Centers for Medicare & Medicaid Services are currently reviewing a proposal from a major consulting company to use oncology clinical pathways in a pilot program designed to control costs and promote more uniform medical practice. The US Oncology Network, a nationwide network with approximately 1000 oncologists, has also developed its own clinical pathways. They have partnered with insurers to use preferred treatment pathways for adjuvant and metastatic regimens in breast, lung, and colorectal cancers.

Patient by Patient

The WellPoint guidelines currently cover breast, colorectal, and nonsmall-cell lung cancer, and WellPoint notes that the pathways are not available for every patient's medical condition but are intended to be applicable for 80% to 90% of patients. According to a document outlining the pathways, "given the complexity of cancer and all of the unique individual circumstances, it would not be possible to have a Pathway for every specific situation. The treating oncologist will determine if, in his/her medical opinion, a Pathway treatment is the best option for a patient or whether, given his or her unique circumstances, another treatment regimen will be a better treatment for him or her."

In an article published in the Wall Street Journal , Richard Schilsky, MD, chief medical officer of the American Society of Clinical Oncology, was quoted as saying that the WellPoint program contains "many of the important elements you'd like to see" in a pathways initiative. However, he also pointed out that this type of program can drive everyone toward getting the same treatment, while "precision medicine wants to drive toward everyone getting unique treatment."

Also reported in the same article, Brian J. Bolwell, MD, chairman of the Cleveland Clinic's Taussig Cancer Institute, said that his institution will participate in the WellPoint program "where it makes sense," and the extra $350 payment "is not something we'd ignore."

Dr. Bolwell said that WellPoint's clinical recommendations were reasonable, but that they were also developing their own treatment pathways, and according to the article, he was also "concerned about facing different recommendations from each insurer."

"We generally don't like to practice by insurance company. We practice by patient," he said.

Citation: WellPoint Offers Oncologists Incentives to Follow Pathways. Medscape. Jun 12, 2014.

Gregory D. Pawelski
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Old 06-18-2014, 10:03 PM
gdpawel gdpawel is offline
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Default It really is about the money

How Big Pharma Deals Benefit Oncology

Oncology has big reason to celebrate the unprecedented $20 billion “super-swap” between Novartis and GlaxoSmithKline (GSK), which was announced by the two pharmaceutical giants last month (1).

The term “super-swap” refers to the fact that the Novartis/GSK deal is not, in reality, a merger or acquisition. It is what Novartis called a “portfolio transformation”—a common sense trade of business units between two companies acutely aware of their strengths and weaknesses. A major part of the deal delivers the entire GSK oncology unit—a business that brings GSK an estimated $54 billion in annual revenue from cancer drugs—to Novartis (2).

This means Novartis, the second most profitable pharmaceutical company in the world behind Pfizer, will add GSK's development pipeline of oncology drugs to the nearly 18 oncology drugs in Novartis' current oncology pipeline (3), with the option to rights for future cancer treatments in development at GSK (4). This is a huge leap ahead for Novartis in terms of new drug delivery, and also gives the company a chance to accelerate drug development with one less competitor to have to worry about. In addition, it strengthens Novartis in terms of cancer drugs used in combination treatments because cancer drugs from a single manufacturer can more efficiently be used in combination, a Novartis spokesperson told

What Is the Benefit to the Oncology World?

The Novartis/GSK deal means that the delivery of new and better oncology drugs may be expedited. It is a minimally disruptive agreement in a world where, typically, big money mergers and acquisitions (M&A) between leading competitors typically trigger warnings of disrupted sales channels and a slowed research and development (R&D)(5).

The deal with GSK now means that Novartis has the sizeable resources needed to drive oncology drug R&D, thus keeping pace with accelerating cancer genetics research while avoiding traditional M&A log jams, said Jason Kapnick, MD, assistant consulting professor at Duke University and a practicing oncologist in Florida.

Top 7 Pharmaceutical Companies by Revenue (3)

1. Pfizer
2. Novartis
3. Roche
4. Merck & Co
5. Sanofi
6. GlaxoSmithKline
7. Johnson & Johnson

“This deal is unique. You can't look at it and expect or fear the known results of corporate mergers in other industries,” said Dr. Kapnick. “There won't be an antitrust issue; it won't limit the consumer or the provider. So, in fact, this is the opposite of antitrust, particularly in personalized medicine. Competition does not drive big pharma to innovation anymore. That model is obsolete. Big is better.”

Big has better marketing too. Novartis, whose best-selling medicine is the cancer drug Gleevec, will add GSK's recently approved Tafinlar, a B-RAF inhibitor, and Mekinist, a MEK inhibitor, according to Novartis. These newly approved drugs will likely make their way to patients with cancer sooner given the marketing influence and leadership position of Novartis versus GSK. The end result? Novartis becomes the leader in treating melanoma, said Melissa Elder, an analyst for Kalorama Information, a market analyst group based in New York.

All this begs the inevitable question: In the dispassionate world of big business, why would GSK relinquish such a mature and profitable position in the oncology drug market?

During a conference call on April 22, 2014, GSK CEO Andrew Witty explained, “We're about number 14 in the world oncology market. Novartis is number two. So I believe that Novartis will do better with these (cancer) medicines. I think more patients who need them have the chance to get them with a stronger company.”

The Novartis/GSK deal gives future M&A deals a more benevolent model to work from compared with traditional M&A deals, said Elder. For example, where traditional M&A deals introduce added risk from the adoption of newly acquired product lines, the new oncology R&D projects Novartis brings into its pipeline from GSK actually reduce risk to Novartis because the bigger the pipeline, the more breadth Novartis has to “balance stages of drug development and high- and low-risk projects, including innovative drugs and follow-on products” (3).

Build the Pipeline

In addition to the near-term R&D advantages Novartis receives from GSK, along with opt-in rights to the current and future GSK oncology R&D pipeline, the deal also sets the stage for long-term advantages for Novartis in accelerating the development of new cancer drugs (1). A bigger in-house R&D arsenal “could potentially make it easier for Novartis to create more advanced therapies. It could also mean that Novartis has to do less legwork to create combination therapies or new entities thanks to the large cache of R&D resources it gets from GSK,” Elder told

A Novartis spokesperson told that “GSK Oncology strengthens our early- and late-stage pipeline, including a wider range of targeted agents well-suited for combinations. Its deep and broad pipeline of over 30 new molecular entities in development, targeting key molecular pathways in cancer biology, will position Novartis Oncology as a preferred partner for combination agents. It enables us to create a leading oncology pipeline, with a significant amount of planned filings through 2018.”

Consolidation is a key issue right now as a rise in M&A activity in pharmaceutical companies has been taking place. This includes Pfizer's' acquisition of Wyeth in 2009 and its retracted bid for AstraZeneca this month, and Merck's purchase of Schering-Plough in 2009. More consolidation—known as rationalization to economists—is expected as big company resources trump small company agility in the quest for cancer cures, according to Alastair Flanagan, a senior health care partner at the financial analyst firm Boston Consulting Group, New York, NY.

"Oncology is one of the places where there is clearly huge unmet medical need but also a large number of companies active in the field. I would absolutely expect there to be more rationalization," Flanagan wrote (2).

Consolidation between the makers of cancer drugs will result in more consistent pricing and discounting from a single supplier, which will in turn help keep the costs of the drugs low enough for insurers to bear. Here, the oncology drug industry is also beginning to see the value of scale—large companies over smaller start-ups—when it comes to drug pricing, said Seamus Fernandez, an analyst at the brokerage firm Leerink, based in Boston, MA.

"I think scale is starting to be viewed as a critical point in oncology because you need the combinations of drugs from a pricing perspective,” Fernandez wrote (2).

Bigger Is Better

Upon completion of the deal in early 2015, GSK will supply their currently marketed oncology products to Novartis for an initial supply term of 5 years, according to Novartis. This will allow sufficient time to transition product and sales teams and prevent any sudden shock to the drug distribution channel.

Bruce Feinberg, DO, chief medical officer at Cardinal Health Specialty Solutions, in Dublin, OH, told that he is not concerned with the supply of—or problems in—delivering current cancer medications. “I haven't historically seen acquisitions create concern for practices before, and I don't believe this case is likely to be different,” said Dr. Feinberg.

Both Novartis and GSK are looking “to try to focus their respective strengths in areas the companies feel will bring them better margins in a demanding pharmaceutical environment,” Elder told “These are two of the largest multinational companies that generally only see limited supply disruptions for cancer products.”

“The economy of scale required to keep up with advances in DNA research and move those discoveries into R&D has enormous requirements. So while it is common to think smaller is better, we should not be afraid of size in the world of big pharma,” said Dr. Kapnick.


1. Novartis AG. Novartis announces portfolio transformation, focusing company on leading businesses with innovation power and global scale: pharmaceuticals, eye care and generics [press release]. April 22, 2014. [url]

2. Falconi M, Plumridge H. Novartis overhauls portfolio with deals worth $25 billion—3rd update. Wall Street Journal Online. April 22, 2014. [url]

3. Elder M. Top 25 pharmaceutical company pipeline analysis and sales projections to 2023. Kalorama Information. May 2014. [url]

4. Staley O. Novartis to buy Glaxo cancer drugs, sell animal health. Bloomberg News. April 22, 2014. [url]

5. Henske P, van Biesen T. Mega mergers can't cure the pharmaceutical industry. Bloomberg Businessweek Technology. July 26, 2014. [url]

Citation: How Big Pharma Deals Benefit Oncology. Chemotherapy Advisor. June 18, 2014.
Gregory D. Pawelski
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Old 06-20-2014, 09:36 PM
gdpawel gdpawel is offline
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Robert A. Nagourney, M.D.

According to Wikipedia, cancer research is “basic research into cancer in order to identify causes and develop strategies for prevention, diagnosis, treatments and cure.” At face value this seems self-evident, yet “cancer research” means different things to different people.

Most cancer patients think of cancer research as the effort to achieve the best possible outcome for individual patients. Taxpayers and donors to charitable organizations also tend to view the process through the lens of therapeutics. But patient treatment is but a small part of cancer research. One of the largest cancer research organizations, the American Cancer Society, was the subject of an investigative report by Channel 2 in Atlanta, Georgia. They found that this billion dollar organization spent 32% of the money it raised on raising money. What of the other 68%? How much of that money actually goes to patient care? When one factors in education, transportation, administration, PR, salaries and basic research, actual patient care support is close to the bottom of the list.

More instructive is an examination of how people engaged in cancer research define their work. On one side are clinical investigators (trialists) who administer the treatments developed in the laboratories of scientists after pre-clinical analyses. On the other side are the basic researchers whose job it is to answer questions and resolve scientific dilemmas. They are granted enormous amounts of money to delve into the deepest intricacies of cancer biology, genomics, transcriptomic and proteomics in an effort to better understand the etiology (causation) of this dreaded disease.

In examining this disjointed field, I considered my own area of work. I am a clinical investigator who also conducts research in a laboratory. As such, I straddle the fence between basic research and clinical science. This is increasingly dangerous ground, as the gap between scientists and clinicians grows wider by the day. Most clinical investigators have, at best, a passing understanding of molecular biology, and most molecular biologist have absolutely no idea what clinical medicine is. This is unfortunate, for it is the greater blending of science with clinical therapy that will lead to better outcomes. Pondering this dichotomy I recognized that my job is first and foremost to save lives and to alleviate suffering. For me, the laboratory is a means to an end. It is a tool that I use to resolve clinical questions. What drug, what combination, what sequence? These questions are best answered in the laboratory, not in patients, wherever possible.

For the basic scientist the task is to answer a question. For them the laboratory is an end unto itself. They use multiple parameters to examine the same question from different angles, seeking to control every variable. A good scientific paper will use genomic (DNA), transcriptomic (RNA), and proteomic (protein expression) analyses until the issues have all been resolved to their satisfaction. In the literature this is known as “elegant” science. The operative term here is control. The scientist controls the experiment, controls the environment, controls the outcome, and controls the publication process. They are in charge.

What of the poor clinical investigator, who must, per force of necessity, be humble. They are not in control of the clinical environment and rarely understand the intricacies of the metabolic, genomic and proteomic events taking place before their eyes. They must approximate, sometimes guess and then act. For the clinician, the laboratory is an opportunity to answer practical real-world questions, not nuanced theoretical principles.

The greatest criticism that a scientist can level at an opponent is a lack of focus, defined as the inability to drill down onto the essence of the question. These scientists sit on study sections, review manuscripts and fund grants. Over decades they have been allowed to define the best research as the most narrowly focused. Incrementalists have out-stripped, out-funded and out-maneuvered big thinkers. While basic researchers examine which residue on the EGFr domain becomes phosphorylated, clinical physicians must do hand-to-hand combat with the end result of these mutations: non-small cell lung cancer.

Medical history instructs that big questions are best answered when prepared minds (William Withering, Ignaz Semmelweis, etc.) pursue scientific answers to real clinical questions. Unfortunately, today’s clinicians have been relegated to the role of “hypothesis testers.” This has led to a profusion of blind alleys, failed clinical trials and the expenditure of billions of dollars on extremely “interesting questions.”

George Bernard Shaw said, “England and America are two countries separated by a common language.” Increasingly, cancer research has become two distinctly different disciplines divided by a common name.
Gregory D. Pawelski
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Old 10-07-2014, 02:03 AM
gdpawel gdpawel is offline
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Default '60 Minutes' Just Attacked High Drug Prices

60 Minutes, the most successful news program in American history, just took aim at the extraordinarily high ($100,000 per patient per year) prices charged for cancer drugs. The pharmaceutical industry, which only provided canned statements and badly thought-out explanation via the president of its lobbying group, came off looking callous and insensitive.

Here’s what 60 Minutes correspondent Lesley Stahl had, none of it new: first she chronicled how two doctors at Memorial Sloan Kettering Cancer Center, Peter Bach and Leonard Saltz, decided that the hospital would not pay for Sanofi’s Zaltrap, which cost $11,063 a month, for colon cancer, because it was more expensive than Roche’s Avastin but no better. Then she spoke to Hagop Kantarjian, of M.D. Anderson Cancer Center, who co-authored an editorial in the hematology journal Blood, decrying the high prices of drugs like Gleevec, from Novartis and Sprycel from Bristol-Myers Squibb BMY +0.51% for rare blood cancers. A complete transcript of the segment, as well as the video itself, can be found here.

There are a couple zingers from the episode that are likely to enter our national conversation about high drug prices. Stahl asked Saltz if we have to start treating the cost of medicines like a side effect. He responded: “I think that’s a fair way of looking at it. We’re starting to see the term ‘financial toxicity’ being used in the literature. Individual patients are going into bankruptcy trying to deal with these prices.” Saltz has been fighting high cancer drug prices since I met him a decade ago, but with that line he landed one of his strongest ever punches. Then there is this from Kantarjian: “They are making prices unreasonable, unsustainable and, in my opinion, immoral.”

But the biggest point landed was not from a quote or a mind-blowing stat, but from an eyebrow raise. Bach tells Stahl: “Medicare has to pay exactly what the drug company charges. Whatever that number is.” And Stahl is shocked. “Wait a minute, this is a law?”

“Yes,” Bach replies.

“And there’s no negotiating whatsoever with Medicare?”


This is one of those facts that lots of us who spend a lot of time around the drug business start to take for granted, and we forget how astounding this is. It’s not just that Medicare has to pay for $100,000 cancer drugs sight unseen after they are approved by the Food and Drug Administration, which doesn’t consider cost. It’s that our fragmented insurance system has not until now provided any counterweight to companies who want to raise prices. And 60 Minutes gives the perfect example: Gleevec, from Novartis, possibly the greatest cancer drug ever invented, cost $24,000 a year when it was introduced in 2001; now it costs $90,000 per year, a quadrupling in price. (My numbers differ slightly from Kantarjian’s.)

When I profiled him for a Forbes cover story earlier this year, Novartis Chief Executive Joe Jimenez was well aware of this problem. “What you know is not going to happen is the ability to stack therapies on top of each other at the current price and expect people to pay,” he told me. “The whole oncology pricing structure needs to be rethought because it’s reached the level that is not going to be sustainable for the long term.”

There were no such industry-based reality checks in the 60 Minutes piece. Neither Jimenez nor Sanofi CEO Chris Viehbacher, one of the most charismatic men in the industry, appeared on screen. Instead, we got John Castellani, the CEO of the industry lobbying group PhRMA, explaining that “The drug companies have to put a price on a medicine that reflects the cost of developing them, which is very expensive and takes a long period of time, and the value that it can provide.”

This is, of course, either hogwash or a misstatement of a hard truth, depending on your perspective. It’s hogwash in that you never buy anything because it cost more to develop. You wouldn’t pay more for a car because GM wasted extra money in R&D without results, nor would you buy a yogurt from Danone because the company spent R&D dollars on the bacteria in it. You buy the car or the yogurt for the result of that R&D, because the car is safer in a collision or the yogurt is claimed to help you poop. The same with drugs: we should pay what they’re worth, not what it cost to develop them.

But the hard truth is true, too, although it’s a bit different from the way Castellani puts it. Drugs are expensive to produce, with pharma companies spending several billion dollars for every success. If the prices aren’t high enough to generate a return, nobody will develop drugs. This is one reason why we don’t have desperately needed antibiotics; the prices are too cheap. And it’s one reason why we have more drugs in development for cancer than any other disease: the high prices guarantee a return if you succeed. (There are other reasons, too, including an explosion in new science.)

And here’s an amazing thing: from the perspective of a health care system — in terms of cost per year of life saved, adjusted for quality — some of these drugs really are worth this much. Gleevec, despite that exorbitant price increase probably is. The United Kingdom has convinced Celgene CELG -0.75% to cap the per patient cost of its expensive myeloma drug, Revlimid, but is still willing to pay for years of treatment. Super-expensive cancer drug prices are here to stay. But just because some cancer drugs cost $100,000 per pattern per year, it’s not automatic that they all should. Right now, they all do.

More than that, drug companies like to act as if patients aren’t really the ones who pay. Medicare pays, insurers pay, but patients are sheltered from these high costs by an arrangement of drug giveaways and charities. But look at the lead of this Bloomberg story, by Robert Langreth:

Earl Harford, a retired professor, recently bought a month’s worth of the pills he needs to keep his leukemia at bay. The cost: $7,676, or three times more than when he first began taking the pills in 2001. Over the years, he has paid more than $140,000 from his retirement savings to cover his share of the drug’s price.

“People with this condition are being taken advantage of by the pharmaceutical industry,” said Harford, 84, of Tucson, Arizona. “They haven’t improved the drug; they haven’t done anything but keep manufacturing it. How do they justify it?”

I hear some forward-looking execs, like Novartis’ Jimenez, acknowledging that there is a problem and starting to try to come up with solutions. But I don’t really hear an answer to Harford’s question. And none of this is new. The examples used in Stahl’s story tonight were a year or two old. But in my business we often think of the moment when a story hits 60 Minutes as peak hype. It might be time for drug industry executives to think out loud about how to decide what will limit cancer drug costs, and when costs should be high — before someone else does that thinking for them. With Merck, AstraZeneca, and Roche all making high-priced, high-value cancer drugs central to their business plans, this is a major issue.


Citation: '60 Minutes' Just Attacked High Drug Prices. Here's What You Should Know. Matthew Herper. Forbes. October 5, 2014.
Gregory D. Pawelski
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Old 02-03-2015, 04:03 PM
gdpawel gdpawel is offline
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Default High Prices for Cancer Drugs are set at Launch

By Ed Silverman
The Wall Street Journal - Pharmalot

There is little question that rising prices for medicines – including many cancer treatments – is a flashpoint in the growing controversy over health care costs. But just how much have the prices for new cancer drugs been rising in recent years?

A new paper published by the National Bureau of Economic Research finds that, of 58 cancer drugs that were approved by the FDA between 1995 and 2013, the launch prices increased by 10% a year, or an average of about $8,500, when adjusted for inflation and a formula for determining survival benefits.


This is, of course, just one more data point in a gathering spool of metrics that are being used by payers are using to assess the effect that cancer medicines are having on their budgets. But it is likely to factor into the debate as the prices of medicines come under increased scrutiny.

In any event, the authors offer various reasons as to why prices have climbed. They point to “generous” insurance coverage that “insulates patients from drug prices, strong financial incentives for physicians and hospitals to use novel products and the lack of therapeutic substitutes.”

They also maintain that, even though physicians “may be reluctant to prescribe medicines with prices that exceed subjective standards of fairness,” doctors can also become “habituated to rising prices,” which gives drug makers the “leeway to set even higher prices in the future.”

And they cite the effect of the growing 340B Drug Discount program in which drug makers must offer discounts of up to 50% on all outpatient drugs to hospitals and clinics that serve indigent populations. Drug makers, they speculate, may offset the growth in this program by setting higher prices elsewhere.

“We argue that, under these conditions, manufacturers are able to set the prices of new products at or slightly above the prices of existing therapies, giving rise to an upward trend in launch prices,” write the authors, one of which is Peter Bach, a physician at Memorial Sloan Kettering Cancer Center in New York, who has been outspoken about the rising prices for cancer treatments.

How did the authors determine the benefits of the drugs that were examined, though? They reviewed information about survival benefits – either overall survival or progression-free survival – that they found in clinical trial information.

When weighing prices against benefits, they found that prices rose by 120% for each additional life year gained, or 14% per month of added life. And the effect in dollar terms came to $75,000 per year gained. Meanwhile, prices increased over time – rising by 12% per year, according to the paper.

They also calculated what they call the price per life-year gained, which equals the price per treatment episode in 2013 dollars divided by survival benefits. The price per life year gained can be thought of as a “benefit-adjusted” price, they write.

“The sample average is $150,100 per year of life gained. Put another way, in 1995 patients and their insurers paid $54,100 for a year of life. A decade later, 2005, they paid $139,100 for the same benefit. By 2013, they paid $207,000” for a year of life, the authors write.

And here is another interesting piece of data – they find that the average annualized growth rate in real prices after launch was 1%. In other words, “the prices of innovative drugs do not change much after launch,” they observe. “Launch prices are where the action is.”
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