iStock_000047578328_SmallThe U.S. medical community has been increasingly vocal over the high cost of oncology drugs and its impact on the ability to treat patients. Oncologists coined the term “financial toxicity” to indicate the need to consider patient cost as a component in treatment decision making.

Unfortunately, the cost of healthcare has been rising rapidly, as newer diagnostics and treatments have become available. Some U.S. cancer patients have a large exposure to treatment cost as some patients still don’t carry health insurance and many insurance programs and Medicare have substantial co-payments and deductibles. Prohibition of annual and lifetime coverage caps under the Patient Protection and Affordable Care Act (ACA) have addressed some of these issues, but patient cost continues to be a point of high concern to treating physicians.

Growing concerns from oncologists have resulted in a number of recent initiatives to assess value and a reasonable price for prescription drugs, including the ASCO value framework and the DrugAbacus created by the Memorial Sloan Kettering Cancer Center in New York. These tools are mainly intended to provide some guidance to physicians in discussions with patients on available options and their cost. Both initiatives are only focusing on drug cost.

ASCO value framework

The ASCO framework is an attempt to create a value score for drug treatments in the advanced and adjuvant treatment setting that can serve as a tool to assist physician and patient decision making. Ratings are given for clinical benefit, toxicity and net health benefit, which are then compared with monthly drug cost. For advanced disease, an additional palliation bonus can be awarded. The published paper shows a few examples of ratings with this methodology.

The clinical rating uses weighted scores to elevate overall survival (OS) scores over progression-free survival (PFS) and, more so, over response rate (RR). This reflects general payer sentiment, but also illustrates some of the challenges in real life. More about this later.

Sloan Kettering Abacus

Sloan Kettering’s DrugAbacus uses a simple calculator to determine a “reasonable” drug price. The calculations are driven by inputs on value of an additional year of life, toxicity, novelty of the drug, cost of development, a rarity multiplier and population burden of disease. The results show that at an assumed value of $120,000 for an additional life year of life, some drugs are priced higher than the Abacus calculation, others lower. The critical assumption is the value of an additional year of life, which is also the source of intense emotional debate in many ex-U.S. healthcare systems.

What value do the ASCO framework and DrugAbacus bring?

Prescription drug pricing has clearly been a point of contention in the United States over the past few years particularly. The creation of these frameworks stems from concerns and some frustration over drug cost in our medical community and, as such, we need to take them very seriously. As a drug industry, it seems that we have dropped the ball in demonstrating the value of our pharma innovations to the medical community and perhaps to the broader set of stakeholders, including patient organizations, the media and the general public.

The ASCO framework and the DrugAbacus both use very simple metrics to evaluate drug value. There is a lot of power in simplicity, but it also results in some serious flaws, for example:

  • The value framework is focused only on drugs. Both with respect to effectiveness and cost, it is inappropriate to exclude the large majority of healthcare costs from the evaluation. Drugs can be a very effective way to treat any disease and can, in certain cases offset medical expenses. There may be larger savings opportunities in avoiding unnecessary diagnostic tests and procedures.
  • Drug pricing is set at launch, whereas demonstrated value will change over the product’s life cycle. Drugs that are just launched therefore tend to fall short in value evidence. When Gleevec was launched, it would have been valued much lower than today, as we now have evidence of its significant OS impact on chronic myeloid leukemia (CML) patients.
  • Value of a drug will not be the same for each patient population within an approved indication. Treating oncologists know this and will be able to use a drug for a specific subset of patients for which successful treatment pathways have been established.
  • Evidence of clinical value of a drug can be a mix of expected but not yet proven OS, demonstrated PFS improvement and patient quality-of-life improvements. The clinical benefit metric does not seem to accommodate this fairly complex reality, but rather forces a rating of each of the individual OS/PFS/CR rates only, without a broader interpretation.

From experience in European and other international markets, we know that placing a value on life is not easy and raises a lot of emotion. Even in England, where the cost-effectiveness principles employed by the National Institute for Health and Care Excellence (NICE) have been relatively well accepted, application of this principle in oncology has been proven to be difficult. A special Cancer Drugs Fund (CDF) was created to cover oncology drugs with a negative NICE appraisal. Recent initiatives around “value-based pricing,” intended to rationalize pricing and coverage evaluations on the basis of societal value in addition to cost-effectiveness, stranded over public resistance to its proposed methodology and underlying principle.

Resource allocation decisions

As healthcare costs continue to rise, decision making will have to increasingly include cost considerations. In a free market economy, it makes little sense to calculate and try to set price based on each customer’s perspective. We should rather find a way to choose the right medical and drug treatment for individual patients while considering clinical characteristics, personal preferences and cost. Prescribing costly drugs may not make sense in some individual cases, just as it may not always make sense to perform procedures or perform tests.

Oncology has been a therapy area with a high unmet need despite some great clinical successes, such as the ones for CML. As a result, many drug companies have made deep investments in research, which is now leading to an inflow of new drug candidates. For some cancer types, such as renal cell carcinoma, we already see increasing competition. Also other markets are expected to become increasingly competitive due to a large influx of new drugs and the emergence of biosimilars.

Dialog in value

As treatment and drug choice decisions become more difficult under resource constraints, the demonstration and communication of the value of new treatments to medical communities, individual physicians and their patients is critical. Physicians and treatment practice staff will have to be ready and equipped to engage in that dialog with patients. The current version of the ASCO framework can be helpful in that context, but there are several serious limitations and flaws that need to be considered.

Topics: Pharmaceutical, pharmaceutical industry, Pharma, Drug pricing, Ed Schoonveld