Download Controlling the cost of innovative cancer therapeutics

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
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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
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© 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]
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