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perspectives opinion Controlling the cost of innovative cancer therapeutics Nafees N. Malik Abstract | the cost of monoclonal antibody therapies for cancer is soaring out of control. Healthcare payers and patients are increasingly struggling to meet the high costs, which can be up to Us$100,000 a year. A number of methods have been proposed to control these costs—government price controls on cancer drugs, biosimilars and novel drug pricing strategies. this article discusses what the impact of these strategies would be in terms of their ability to reduce costs and their effect on innovative cancer drug discovery. Malik, N. N. Nat. Rev. Clin. Oncol. 6, 550–552 (2009); doi:10.1038/nrclinonc.2009.113 Introduction Monoclonal antibodies against tumor cells are a pioneering step forward in the ongoing war against cancer. These protein-based drugs (biologics) have, however, raised serious questions about cost effectiveness as they are highly priced and may only prolong life by a few months. For instance, bevacizumab (Avastin®, Genentech, San Francisco, CA) can cost more than US$9,000 a month.1 Can healthcare insurers in the US realistically afford them, especially as the population of patients potentially in need of medications is huge? Avastin® (Genentech) is approved for colorectal, lung and breast cancer, which are among the four highest occurring cancers in the US (excluding basal and squamous cell skin malignancies) and account for 38% of cancer cases annually.2 Presently, monoclonal antibodies against solid cancers are indicated in metastatic disease. They are, however, under investigation for both early stage and rare malignancies, which will substantially increase the number of eligible patients for treatment and the duration of therapy. Even with health insurance coverage, patients still have to make a substantial outof-pocket contribution, generally around 20% of the drug price.1 This is alarming, considering that the average monthly salary in the US is $3,500–$4,000. 3 Moreover, cancer predominately affects elderly people, who are among the least likely to be able to afford treatment. Competing interests the author declares no competing interests This article discusses the potential impact of three strategies that could be used to reduce the cost of anticancer monoclonal antibodies. First, the initiation of government price controls on cancer drugs; second, the introduction of less costly generic versions of biotech drugs; and third, the use of novel pricing strategies for cancer medicines. Government price controls In the US, unlike in other industrialized nations, pharmaceutical firms set drug prices without any government regulation. Price controls on cancer drugs would, therefore, help control the rising cost of healthcare. In addition, more patients would be able to afford drug copayments. If an unfair profit was being generated by companies then the government would have a strong case for introducing price controls on cancer medicines. Companies defend high drug prices by citing the escalating cost of research and development (R&D). It costs on average $1.2 billion to bring a new biologic to the market.4 In addition, pharmaceutical firms highlight that they may cap prices of cancer drugs for deprived patients.1 Is there any evidence indicating unfair profiteering? Two simple analyses highlight the difficulties in answering this question. Firstly, a comparison of the price of biologic drugs to conventional medicines for cancer, multiple sclerosis and rheumatoid arthritis shows that in each case biotech drugs are more expensive.5 Hence, one could conclude that anticancer monoclonal antibodies are priced fairly (at least in relation to 550 | SEPTEMBER 2009 | voluME 6 other biologics) or, conversely, that biotech drugs are generally highly overpriced. The argument that biologics for multiple sclerosis and rheumatoid arthritis are worth the high price because they benefit patients more than biologics for cancer is pointless, as the disease types (chronic versus lifethreatening) and outcomes (disability versus death) are not comparable. Secondly, sales figures reveal that anticancer monoclonal antibodies ranked as the seventh best-selling drug class in the US in 2007, generating $6.8 billion, which is an increase of 18% from 2006. 6 This is more than four times the growth rate of the overall US pharmaceutical market. 7 Moreover, of the nine products available,8 four hold the industry’s ‘holy grail’ of being block busters—rituximab, trastuzumab, cetuximab and bevacizumab.9 Each of them generate annual sales of at least $1 billion. Do high revenues indicate profiteering? No. They only confirm that anticancer mono clonal antibodies are considerable moneymakers. High drug sales cannot be used as an indication for drug overpricing because sales figures provide no meaningful information about the ‘worth’ of a product. Whether cancer biologics are priced fairly is difficult to determine because we are fundamentally attempting to put a price on innovation, which is intrinsically challenging to do. Anticancer monoclonal antibodies are groundbreaking and will ultimately lead to life-saving therapies. So are they worth their present high costs? That remains uncertain. The introduction of price controls on anticancer monoclonal antibodies might be harmful to society in the long term. Firstly, drug developers will have less money to invest in the R&D of new cancer drugs. Secondly, companies will lose their financial incentive to pursue life-saving oncology therapies, and investment would move to other therapeutic areas with higher returns. The following examples, although not specific for cancer drugs, demonstrate the negative impact of price controls on pharmaceutical innovation. It is estimated that R&D expenditure would have been 30% lower between 1980–2001 if the US government had restricted drug price increases to the growth rate of the Consumer Price www.nature.com/nrclinonc © 2009 Macmillan Publishers Limited. All rights reserved perspectives Index, which is the price paid by a household for a basic set of goods and services. As a result, 38% fewer drugs would have entered the market.10 Moreover, drug price controls imposed by member countries of the organization for Economic Cooperation and Development are thought to reduce R&D expenditure by $5–8 billion annually. Without price controls, three to four additional drugs would be approved annually.11 Moreover, once price controls are placed on one drug category, they could easily be extended to other therapeutic classes and hence, extensively stifle pharmaceutical innovation. Generic versions of cancer drugs In the US, in contrast to Europe, biologics are protected from generic copies (‘biosimilars’ or ‘follow-on biologics’) because no regulatory pathway exists for FDA approval. Such a pathway is expected soon. President obama has said that biosimilars will form a key healthcare cost containment measure. Three biosimilar bills are presently being debated in Congress. In addition, patents on numerous high-earning biologics will soon expire, thus increasing pressure for biosimilars. Traditional generics are up to 80% cheaper than branded drugs;12 however, biosimilars are expected to be discounted by 20–40%.13 Why? Compared with conventional generics, biosimilars will be much more expensive to bring to the market. Traditional drugs are small, simple molecules that are easy to reproduce. It is straightforward to establish that a generic is identical to the innovator drug using laboratory-based analytical techniques. Generic companies are only required to conduct low-cost clinical trials to show bioequivalence to the original product. Human studies are not required to demonstrate identical safety and efficacy to the innovator drug. At present, analytical technologies cannot establish whether a biosimilar is identical to the innovator product because of the highly complex nature of protein-based drugs; hence, expensive safety and efficacy clinical studies will probably be required to demonstrate ‘comparability’. In addition, few generic drugmakers have the necessary resources to build biologic manufacturing plants. Consequently, this will reduce competition among biosimilar manufacturers, which would normally reduce the price of generics. Biologics are also extremely sensitive to the manufacturing process; their production must be highly controlled, which makes them costly to manufacture. Conventional generics account for around 80% of prescriptions dispensed after 12 months of patent expiry of the branded product.14 However, an analysis by the US Congressional Budget office indicates that biosimilars will make up only 10% of prescription volume after 12 months, rising to 35% by the fourth year of biosimilar entry.13 The uptake of cancer biosimilars may not be as high as hoped for because of three reasons. Firstly, as outlined, biosimilars will be costly. Secondly, protein-based products have a higher propensity to cause immunological reactions. Undetectable differences between an innovator and biosimilar product could produce immunological reactions. Hence, doctors will be cautious about treating patients with biosimilars or switching patients from branded biologics to biosimilars, particularly if the price difference is small and extensive post-marketing biosimilar safety data do not exist. Thirdly, the oncology market is atypical. Cancer is a matter of life or death; when cancer biosimilars become available, patients might be compelled to pay higher prices for newer patented drugs even if they are only marginally better. This argument is supported by the current situation, where people will buy costly cancer biologics even though they increase life expectancy by only a few months. Biosimilars should nonetheless help control the cost of anticancer monoclonal antibodies. Their most important benefit to society, however, will come from their ability to drive innovation forward, by preventing pharmaceutical companies from resting on their past product successes. The ideal situation is one where, to sustain their profits, drug companies must continuously pursue new opportunities to replace drugs going off-patent. Policymakers must not stifle innovation by accepting a pathway for biosimilars that gives prolonged data exclusivity, which is the time after approval of a drug during which the FDA cannot license a generic based on data from the innovator product. Pharmaceutical companies, however, must be allowed to recuperate their R&D costs and make a fair profit. Agreement on the length of data exclusivity remains a key obstacle to a biosimilar FDA pathway. The ‘Promoting Innovation and Access to life-Saving Medicines Act’, which has a data exclusivity period of 5 years, NATURE REvIEWS | CliniCAl onCology is supported by the Generic Pharmaceutical Association.15 The ‘Pathway for Biosimilars Act’ has 12 years of data exclusivity and is backed by the Biotechnology Industry organization. 16 The Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry’s trade group, proposes at least 14 years of data exclusivity.17 In Europe, biologics are granted 10 years of data exclusivity, which may represent the best compromise.18 Novel pricing strategies The National Institute for Health and Clinical Excellence (NICE) is an independent body in England and Wales that determines whether a drug is cost-effective enough to qualify for payment by the National Health Service (NHS). In the past, NICE has not recommended NHS reimbursement for a number of cancer drugs. For instance, in August 2008, in a controversial decision, NICE rejected four drugs for renal-cell carcinoma,19 one of which has subsequently been recommended.20 Historically, in the US, there has not been a national system similar to NICE. The economic stimulus package signed into law in February 2009 seeks to address this gap by allocating $1.1 billion for comparative effectiveness research, which will provide information about the benefits and drawbacks of drugs compared with competitor products.21 Data from this research could help Medicare, the nation’s largest single healthcare payer, decide when to reimburse expensive cancer drugs.22 other healthcare payers in the US tend to follow Medicare’s lead. Healthcare payers may increasingly pursue risk-sharing pricing deals with pharmaceutical companies for cancer drugs judged to have poor cost-effectiveness. The pay-for-performance model is one such option. For instance, in 2007, in the first deal of its kind in England, Johnson & Johnson agreed to refund the NHS if its multiple myeloma drug bortezomib fails to benefit a patient.23 This deal was negotiated because NICE had concluded that this drug was not cost-effective.24 Pay-for-performance reimbursement would decrease overall drug costs. It would also foster innovation by providing an insentive for drugmakers to discover biomarkers to identify subpopulations of patients who might benefit from a particular drug. Companies would adopt this approach to prevent drugs from being given for free volUME 6 | SEPTEMBER 2009 | 551 © 2009 Macmillan Publishers Limited. All rights reserved perspectives to patients who do not respond to them, which is particularly undesirable for biologics because they are costly to manufacture. In addition, biomarker tests to guide prescribing decisions would give manufacturers a competitive advantage; physicians would be more willing to prescribe a drug if they had strong evidence that it would benefit a particular patient. This approach would help a patient get the right drug promptly, which is critical for patients with cancer. other possible pricing strategies also exist. For instance, products could be launched at a discount, and prices increased if robust data for effectiveness emerge. This approach would decrease drug costs and encourage drug companies to assess clinically meaningful rather than surrogate marker end points to demonstrate product superiority, thus promoting evidence-based medicine. Another pricing policy could be to discount a product once a patient has used it for a certain period of time. Almost one-third of the industry’s pipeline consists of cancer drugs 7—approximately 659 and 103 new oncology drugs are in phase II and III development, respectively.25 Intense competition within the oncology market will, therefore, force pharma ceutical companies to consider accepting pricing deals in the future. Conclusions Action is needed to control the cost of anticancer monoclonal antibodies. Government price controls on cancer biologics would be harmful to society in the long run by reducing the financial incentive and funds available for pioneering and life-saving oncology drug discovery. Biosimilars and novel pricing strategies are much better solutions. They will reduce spending on cancer biologics and also, equally importantly, help drive innovation forward in oncology drug discovery, which will translate into improved outcomes for patients. We are only now beginning to make headway in the war against cancer by discovering innovative therapies, and it would be a pity if this was halted by shortsighted government policies. Institute of Biotechnology, University of Cambridge, Cambridge, UK. Correspondence: N. Malik, Institute of Biotechnology, University of Cambridge, Tennis Court Road, Cambridge CB2 1QT, UK [email protected] 1. Kolata, G. & pollack, A. costly cancer Drug Offers Hope, but Also a Dilemma. New York Times (July 6 2008) [online], http:// www.nytimes.com/2008/07/06/ health/06avastin.html?ex=1373083200&en= 6e4927b1af312159&ei=5124&partner= permalink&exprod=permalink (2008). 2. American cancer society. cancer Facts & Figures 2007. American Cancer Society [online], http://www.cancer.org/downloads/ stt/cAFF2007pWsecured.pdf (2007). 3. chao, e. L. & Hall, K. National compensation survey: Occupational earnings in the United states, 2007. Bureau of Labor Statistics [online], http://www.bls.gov/ncs/ ncswage2007.htm#Wage_tables (2008). 4. DiMasi, J. A. & Grabowski, H. G. the cost of biopharmaceutical r&D: is biotech different? Manage. Decis. Econ. 28, 469–479 (2007). 5. rucker, N. L. Biologics in perspective: expanded clinical Options amid Greater cost scrutiny. AArp [online], http://www.aarp.org/ research/health/drugs/fs136_biologics.html (2007). 6. iMs Health. 2007 top therapeutic classes by U. s. sales. IMS Health [online], http:// www.imshealth.com/deployedfiles/imshealth/ Global/content/Document/top-Line% 20industry%20Data/2007%20top% 20therapeutic%20classes%20by%20sales.pdf (2008). 7. iMs Health. intelligence.360—Global pharmaceutical perspectives 2007. IMS Health [online], http://www.imshealth.com/portal/ site/imshealth/menuitem.c96f97d74b76899 c33a004f09418c22a/?vgnextoid=b04e51dd6 8585110vgnvcM10000071812ca2rcrD&vg nextfmt=default (2008). 8. American cancer Association. Monoclonal Antibodies. 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Pharmaceutical Research and Manufacturers of America [online], http://www.phrma.org/news_room/ press_releases/phrma_statement_on_rep._ eshoo%92s_follow-on_biologics_bill/ (2009). 18. Biotechnology industry Organization. How has europe Approached Biosimilars? Biotechnology Industry Organization [online], http://bio.org/ healthcare/followonbkg/europe.asp (2009). 19. National institute for Health and clinical excellence. renal cell carcinoma—bevacizumab, sorafenib, sunitinib and temsirolimus: appraisal consultation document. National Institute for Health and Clinical Excellence [online], http:// www.nice.org.uk/guidance/index. jsp?action=article&o=41473 (2008). 20. National institute for Health and clinical excellence. sunitinib for the first-line treatment of advanced and/or metastatic renal cell carcinoma. National Institute for Health and Clinical Excellence [online], http:// www.nice.org.uk/Guidance/tA169 (2009). 21. HHs.GOv/recovery. United States Department of Health and Human Services [online], http:// www.hhs.gov/recovery/programs/cer/ index.html (2009). 22. Bach, p. Limits on Medicare’s Ability to control rising spending on cancer Drugs. N. Engl. J. Med. 360, 626–633 (2009). 23. National institute for Health and clinical excellence. press release. Nice guidance on bortezomib (velcade) is a win-win solution for multiple myeloma patients and the NHs. National Institute for Health and Clinical Excellence [online], http://www.nice.org.uk/media/eB7/ 14/2007056Bortezomibformultiplemyeloma Appv2.pdf (2007). 24. National institute for Health and clinical excellence. Health and clinical excellence: the Nice Bulletin for parliamentarians. National Institute for Health and Clinical Excellence [online], http://www.nice.org.uk/niceMedia/ pdf/HceNovember06.pdf (2006). 25. Gavel, s. J. the Oncology pipeline: Maturing, competitive, and Growing? Oncology Business review 2008 september. IMS Health [online], http://www.imshealth.com/deployedfiles/ imshealth/Global/content/staticFile/ the_Oncology_pipeline.pdf (2008). www.nature.com/nrclinonc © 2009 Macmillan Publishers Limited. All rights reserved