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High Cost of Prescription Drugs - What can we do about it?
- 1. Mayo Clinic College of Medicine Mayo Clinic Comprehensive Cancer Center The High Cost of Cancer Drugs What can we do about it? S. Vincent Rajkumar Professor of Medicine Mayo Clinic Scottsdale, ArizonaScottsdale, Arizona Rochester, MinnesotaRochester, Minnesota Jacksonville, FloridaJacksonville, Florida
- 2. Disclosures No conflicts to disclose
- 3. Treatment of Myeloma Rd VCD 1 new drug ~$120,000 Add monoclonal antibodies to new combinations 3 new drugs ~$300,000 RVD KRd Pano-Vel 2 new drugs ~$200,000 Total Wallet Failure Combos plus… plus… Dinaciclib Filanesib LGH 447 Venetoclax Per year costs! Median OS 7-10 years & Aging Population
- 4. Facts
- 5. FACTS All new cancer drugs approved by FDA in 2014: >$120,000/year Out-of-pocket share: as high as 20% to 30% Average annual household gross income in USA: $52,000 1 in 3 get cancer • Compliance • Bankruptcy
- 6. Its not just new cancer drugs…. http://www.nytimes.com/2015/09/21/business/
- 9. Its not just one villain…. REDBOOK Online-updated periodically. Vasella. Magic Cancer Bullet, 2003 Light, Kantarjian. Cancer 119: 3902; 2013. Fojo. JNCI 101: 1044; 2009 $92,000$ 28,000 $ 132,000 2001 2012 2014
- 10. Its not just 1 or 2 drugs…. • 58 cancer drugs approved from 1995-2013 • Since 1995, cancer drug prices increased by 10% annually, an average of $8,900/year • No correlation between price and survival benefit • Price per life-year gained increased from $54,000 in 1995 to $207,000 in 2013 (adjusted for inflation, in 2013 dollars value) Howard. Journal of Economic Perspectives 29: 139-162; 2015
- 11. Copyright © 2016 American Medical Association. All rights reserved. From: Unintended Consequences of Expensive Cancer Therapeutics—The Pursuit of Marginal Indications and a Me-Too Mentality That Stifles Innovation and Creativity: The John Conley Lecture Fojo T, et al. JAMA Otolaryngol Head Neck Surg. 2014;140(12):1225-1236. doi:10.1001/jamaoto.2014.1570 71 Drugs Approved by the FDA From 2002 to 2014 for Metastatic and/or Advanced and/or Refractory Solid These drugs are not cures. They are only modestly effective….
- 12. Truveris Its not just cancer drugs….
- 13. Facts 16% Andy Slavitt. Acting Administrator, CMS, DHHS Forum, Nov 20, 2015. In 2014: $140 billion on prescription drugs 14% increase in cost of prescription drugs vs 5% increase in other health care spending
- 14. Why?
- 15. #1
- 16. D I S E A S E S Subtle, Hidden, Monopoly Cancer Drug 1 Drug 2 Drug 3 Drug 4 Pneumonia Drug 1, 2, 3, or 4 Competition to be Drug of Choice Each drug is a monopoly
- 17. #2 Medicare Cannot Negotiate CBS News. Under the Influence. April 1, 2007. http://www.cbsnews.com/news/under-the-influence/
- 18. USA pays more.. • US taxpayers subsidize • US pays 50% to 500% more Howard. Journal of Economic Perspectives 29: 139-162; 2015
- 19. • Medicare Reform Act 2003 prohibits negotiation of drug prices + inclusion of drug coverage under Medicare Part D (2006) = skyrocketing profits to Pharmaceutical Companies Revenues Rome E. Huffington Post Politics;4/2013.
- 20. #3 Patent Ever-greening • Patent-related legal maneuvers; “pay-for-delay” • Off-Label indications • “New and Improved” versions promoted in medical meetings
- 21. #4 FDA Authority is Limited •Approve based on clinical benefit and safety • Cancer: Accelerated approval •Limited consideration to magnitude of benefit •No say in price •No say in off-label use
- 22. #5 Lack of Allies •Physicians •Professional Organizations/ Societies •Patients •Patient care organizations
- 23. #6 Seriousness of the Disease
- 25. Pharma’s Counter Arguments High Cost of Development Cost-Benefit of New Drugs Market Forces will Decide Stifle Innovation None of the 4 arguments are convincing
- 26. High Cost of Drug Development • $1 billion to Develop a Cancer Drug to Market—a Myth • 50% is estimate of profit if money had been invested in pharma stocks • Unnecessary Trials • Revised estimates as low as 5-20% of original estimate ~ $170 million DiMasi. Journal of Health Economics 22: 151; 2003. http://csdd.tufts.edu. Light. BMJ 331: 958;2005. Light. Cancer 119: 3900; 2013. Harper. Forbes-Pharma and Health 8.11.2013. Silverman. Pharmalot-posted 3.18.2013. Light, Kantarjian. AARP Your Health: 22; 05.2014.
- 27. Cost-Benefit of New Drugs • Little correlation between actual efficacy/benefit of a new drug and its price
- 28. Free-Market Forces • No free-market forces • No differential price sensitivities that produce competitive marketing • 6 drugs for CML; all priced at $132,000- 170,000 • 8 drugs for renal cancer; all priced at $80,000-120,000 • Appearance of tacit collusive behavior Krugman. NYT Editorial, October 18-19, 2014. Stiglitz. The Price of Inequality; 2012; pp45. Scherer. Oligopoly and Shared Monopoly; 2013: https://research.hks.harvard.edu/publications/getFile.aspx?Id=978
- 30. Controlling price will stifle innovation • Innovation continues regardless of profit • 50% of discoveries from academic institutions • 85% of basic research funded by taxpayers’ money (NCI, NIH, philanthropy) • Drug companies invest 20% of revenues in advertisement; only 1.3% invested in basic research • Most profits benefit CEOs, bonuses, salaries, investors--little returns to discoverers or to basic research reinvestment • High drug prices are actually bad for innovation Bach, P. Forbes 10-23-2014
- 31. Date of download: 2/1/2016 Copyright © 2016 American Medical Association. All rights reserved. From: Unintended Consequences of Expensive Cancer Therapeutics—The Pursuit of Marginal Indications and a Me-Too Mentality That Stifles Innovation and Creativity: The John Conley Lecture Fojo T, et al. JAMA Otolaryngol Head Neck Surg. 2014;140(12):1225-1236. doi:10.1001/jamaoto.2014.1570
- 32. What can we do about it?
- 33. 1. Value-Based Pricing • Post-FDA approval review mechanism
- 34. 2. Importation of Drugs for Personal Use
- 35. 3. Encourage Competition • Approve more readily equivalent drugs with similar mechanism of action • Bio-Similars • Incentivize Generic Manufacturers • Each year, the use of FDA-approved generics save the country $200 billion1 • But prices of generics available for years have increased substantially without any additional health benefits Andy Slavitt. Acting Administrator, CMS, DHHS Forum, Nov 20, 2015.
- 36. 4. National Guidelines • Role of PCORI in “value” assessment • Develop cancer drug Rx pathways that incorporate “value” • Hold experts/societies to higher standards in publicizing benefits of new drugs Kantarjian. Cancer 119: 3902; 2013. Tefferi. Mayo Clinic Proceedings 90: 996; 2015
- 37. 4. Compulsory Licensing • Compulsory licensing- WTO Doha declaration, 2001 • Sorafenib (Roche) • March 12, 2012, the Indian government awarded a compulsory license to a generic company to manufacture the drug for use in India (Roche $50,000; NATCO $150) • Brazil: Antiretroviral drug efavirenz (Merck) • Dual Compulsory Licensing • Canada and Rwanda (October 2007) • Triavir (Generic manufacturer: Apotex)
- 38. Tefferi, Kantarjian, Rajkumar et al. Mayo Clinic Proceedings 90: 996; Jul 2015 5. Medicare Should be Authorized to Negotiate for Lower Prices
- 39. Medicare Should be Authorized to Negotiate for Lower Prices Supported by 86% of Healthcare CEO Power Panel (Modern Healthcare, 2015)
- 40. Cancer Drug Prices in US vs Canada/England Drug % Price Abroad vs US Bevacizumab 50 Brentuximab 60 Cetuximab 47 Ipilimumab 67 Obinutuzumab 79 Trastuzumab 45 Afatinib 34 Bosutinib 40 Imatinib 26 Nilotinib 31 Erlotinib 30 Erlotinib 29 Ibrutinib 63 Sorafenib 33 Pazopanib 37 Sunitinib 37 Vemurafenib 40 Kantarjian. JAMA Oncology. [Epub ahead of print] July. 2015
- 41. Medicare Negotiation • Why do other governments obtain cancer drugs at 20-50% of US prices? • Dean Baker: Allowing Medicare to negotiate would save $600 billion between 2006 and 2013 Baker Dean. Center for Economic and Policy Research, The Savings from an Efficient Medicare Prescription Drug Plan Washington, D.C.: January 2006.
- 42. http://chn.ge/1DCWT1M Tefferi. Mayo Clinic Proceedings 90: 996; 2015
- 43. • Siddiqui M, Rajkumar SV. Mayo Clin Proc. 2012;87:935-943 • Kantarjian H, Rajkumar SV. Mayo Clin Proc. 2015;90:500-504 • Tefferi A, Kantarjian H, Rajkumar SV et al. Mayo Clin Proc 90: 996; 2015
Editor's Notes
- Prescription Drug costs are soaring. Especially for cancer drugs. The annual costs are staggering. Many cancers require drugs to be given in combination. And the total costs for a novel combination in myeloma can be >$200,000-300,000 per year! Factor in median survival and the increasing number of new patients with cancer- the costs are more than the system can bear.
- First, some basic facts.
- In the case of cancer drugs, all new drugs are priced at >$100,000 per year. Much higher than average household income.
- Daraprim story – Old drug for 1950s to treat toxoplasmosis. Turing bought rights to this in 2015 and increased price overnight.
- Price hike and Good Rx, IDSA, Cost in other countries
- Helped us
- What Turing did overnight is happening in a more gradual manner – that is not overtly noticed- with most other drugs. Turing only sped up the process. This question was raised at the Nov 2015 meeting DHHS pharmaceutical forum. (Check the price of insulin, or doxycyline over time.. Check goodrx.com to find out how much Darparim costs today… and how much your favorite drug costs.)
- These are not totally amazing drugs that we are talking about. Many do not prolong survival. Many have median progression free survival and overall survival improvement of 2-3 months.
- The cost of most prescription drugs is rising. Much higher than inflation or cost of manufacturing.
- Fastest rising segment of medicare cost is prescription drugs.
- The reasons are complex, and the system is at fault and is broken. Pharma companies are operating within what is permitted by the system. They are for-profit entities, after all.
- The prescription drug market, especially in cancer and chronic diseases, is not representative of a free market. It lacks the two fundamental requirements of a free market: competition and negotiation over price.
- In curable diseases, drugs are like any other products. They are not monopolies. Competition is there to be the drug of choice, and hence prices by and large are reasonable. In incurable serious chronic diseases like most advanced cancers, there is no cure, and the fact that there are 5 drugs to treat a cancer doesn't mean there is competition. Patients will need each drug that is approved at some point. So each drug represents a protected monopoly.
- This Act basically said that Medicare will cover prescription drugs for all, and when they buy it from pharma they cannot negotiate over price. Represents a big pharma give away. Mind-boggling. Read how the bill was passed and decide for yourself.
- We pay more for specialty drugs than any other country.
- Companies have been accused of prolonging patent life, by settling with generic companies to delay the generic drug launch (“pay-for-delay”) eg., read up about Novartis vs Sun Pharma for Gleevec; J and J and Novartis with Fentanyl. Second, a drug approved for one disease soon gets newer indications for use off-label, extending the market. Third, by the time a drug goes off patent, “newer, improved” versions arrive, and the old generic drug becomes passe.
- Unfortunately in the US system, the law limits FDA authority. They are doing what they can under the law.
- Very few people and organizations speak up against pharma companies and cost of prescription drugs. Most have conflicts of interest. Exception is AARP, and perhaps now insurance companies.
- Cancer invokes emotions. And most family members willing to spend any amount for very little prolongation in survival. This is a vulnerable population. And they can be taken advantage of. Sad.
- There are 4 counter-arguments that pharma usually comes up with. None are convincing. In any case, why should the US alone pay for innovation?
- If a drug is truly effective, it does not take multiple large randomized trials to show benefit. Weak drugs require the company to run multiple large randomized trials- no wonder it costs a lot to develop a new drug.
- Most new drugs provide marginal value, and the price has no correlation to value.
- In cancer drugs and in drugs used to treat chronic incurable diseases, there are no free market forces.
- Read up on how actually price is determined by a company. This was revealed by a Senate investigation into the pricing of Sovaldi. This drug would cost $18 billion in California alone
- Because high drug prices can be charged no matter how weakly effective the drug is, true innovative drugs with new mechanism of action are only a small proportion of new drugs developed by companies. Why risk making a totally innovative drug that may fail after a large expensive trial, if you can make same $ by making a drug that is a slight improvement over something you already know works?
- 1. We need a system of value based pricing. Almost all western countries negotiate over price before agreeing to reimburse. Approval is only the first step. The critical second step of value assessment is absent in the US. This second step is needed because unlike other products on the market, this industry is monopolistic. And has patent protections. Absent this, price has no relationship to value.
- Sovaldi ($84,000 in USA) – How much does it cost in India, licensed by the same company that sells it in the US? – check it out! 40-80 times lower!! We can import alcohol and tobacco, but not life saving drugs? If someone is dying because they cannot afford the co-pays, or the drugs, who are we to say we cannot let them find the same drug from other countries where they are affordable. It is their lives, and they are the ones assuming the risks.
- Imatinib generic cost – In Poland >20 companies make imatinib! Now that is competition. And that brings costs down. We need not just one generic version but many. The government needs to provide incentives to generic manufacturers.
- PCORI is a good step. But they cannot consider cost in their recommendations to Medicare
- Should we consider this? Check this out. It allows a country to grant a generic manufacturer a license if the brand name drug is felt to be life saving but unaffordable, and a negotiation with the company has failed to reduce cost to an acceptable level. Many countries have take advantage of this WTO declaration and granted compulsory licenses.
- By far the biggest thing we can do, is to have Medicare negotiate for drug prices. This requires a change in the law.
- This appears to be a position that many national leaders, and most healthcare leaders endorse.
- Change.org petition.
- There are many other problems in the healthcare system. Many other areas with high cost. Pharma says why are we focusing on prescription drugs. Well, this is the fastest rising expense for Medicare. Second, just because there are other problems that need fixing doesn’t mean we ignore what is glaring at us. Third, doctors and researchers have full time jobs taking care of patients and doing research. We are highlighting what we think is a big problem for the country. We cannot be expected to fight for all the problems in the health care system; we are not saying that there arent other problems that need fixing. Finally trying to fix all problems at one time is how nothing gets fixed. Tackle one at a time; one issue at a time. We are not blaming Pharma. We need to fix the system. We should fight for lower drug prices for the sake of our patients. Additional reading: see references on this slide.