What's a pricey cancer drug really worth? New value-based 'abacus' has some ideas

Early on in the cancer drug pricing debates, doctors at Memorial Sloan Kettering Cancer Center made waves by rejecting a new Sanofi ($SNY) colon cancer drug as too expensive for its benefits. Now, the noted hospital has taken its cost-benefit analysis to more than 50 cancer meds.

And this time, the analysis pegs new prices to those treatments--and dependingly on the inputs, some drugs can come out the other side with dramatically lower prices.

Helmed by Peter Bach, who directs the hospital's Center for Health Policy and Outcomes, the interactive calculator--dubbed DrugAbacus--tweaks prices using data on side effects, survival benefits, disease incidence, R&D spending and more. Users can factor in which pieces of data they consider most important to the value of a treatment, and the calculator spits out a price accordingly.

Preceded by disclaimers about its use "for general information only," the calculator incorporates potential pricing bonuses for rare cancers versus more common forms of the disease--or, conversely, bonuses for common cancers that put a big burden on society. Pay a premium for more novel treatments? Users can decide that, too.

DrugAbacus will also let users add to a price for drugs more costly to develop, and knock off for those that come with more serious side effects.

At its baseline settings--which value an extra year of life at $120,000, and incorporate a toxicity discount of 15%--the calculator flags a couple of drugs as far overpriced: Amgen's ($AMGN) new drug for a rare blood cancer, Blincyto, for instance, has a list price of $64,260 per month, but DrugAbacus pegs it at $12,612. (Offering a 3X bonus for rare-disease meds changes that to $37,836, if one were so inclined.) Provenge, the Dendreon prostate cancer vaccine that Valeant ($VRX) recently bought out of bankruptcy, was priced at $77,554 at launch, and the calculator figures $27,261 as more reasonable.

Other meds are actually pricier when put through the calculator. Teva's ($TEVA) lymphoma drugTreanda, for instance, has a launch price of $7,725, but DrugAbacus' baseline settings deliver a value-based price of more than $21,000.

The DrugAbacus unveiling comes amid a vociferous debate about pricey cancer drugs. As new treatments launch with sticker prices of $150,000 and up, doctors, payers and patients have been raising big questions about why. Payers are pushing for discounts--their bottom lines depend on it--and some doctors have grown fed up enough to take the argument to social media, in hopes of getting the public to fight back.

Meanwhile, the American Society of Clinical Oncology said last year that it would develop a tool for doctors to use in evaluating treaments, not only for efficacy and side effects, but costs as well. At the group's annual meeting at the end of May, pricing was a big issue, with one prominent Memorial Sloan Kettering doctor taking drugmakers to task in a plenary-session speech.

A series of recent journal articles--most recently in JAMA Oncology--have argued that cancer drug prices are unrelated to an individual drug's actual attributes. Hence DrugAbacus, said Bach, who himself is an outspoken critic of "irrational" pricing in the cancer market. Bach intends the calculator to be a jumping-off point for decision-making on how to create a value-driven system for cancer treatment spending. "[H]ere's a first draft of how to do it," he told The Wall Street Journal.

- check out DrugAbacus here
- see the WSJ article

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