Peg cancer drug prices to effectiveness, '60 Minutes' interviewee suggests

Dr. Peter Bach

If you're interested in a recap on cancer drug prices, check out the "60 Minutes" segment that aired Sunday. If you're interested in the topics for public debate that "60 Minutes" raises, then ditto. If you'd like a more practical and technical look at the same issue, zip on over to the Journal of the American Medical Association's website.

Both sources feature Dr. Peter Bach, the Memorial Sloan-Kettering Cancer Center researcher who's been quite vocal about the prices on new cancer drugs--and the price hikes on older ones. He and his colleague Leonard Saltz wrote the much-discussed op-ed in The New York Times explaining Sloan-Kettering's decision to bar Sanofi's ($SNY) new colon cancer drug Zaltrap because it was twice the price of--and no more effective than--Roche's ($RHHBY) Avastin.

On "60 Minutes," Bach and Saltz deliver some sound bites that might get the general public talking--and politicians, too:

  • About the patients' share of costs: "We're starting to see the term 'financial toxicity' being used in the literature," Saltz said. "Individual patients are going into bankruptcy trying to deal with these prices." For Medicare patients, covering their 20% copays on $100,000-plus meds ... "[takes] money from their children's inheritance, from the money they've saved," Bach said.

  • About the drug industry's responsibility for costs: "We have a pricing system for drugs [in the U.S.] which is completely dictated by the people who are making the drugs," Bach said.

  • And about Medicare's mandate to pay for every FDA-approved drug, regardless of cost, and without any power to influence prices: "Medicare has to pay exactly what the drug company charges," Bach pointed out. "Wait a minute, this is a law?" Stahl asked. "And there's no negotiating whatsoever with Medicare?"

True that. Which brings us to Bach's JAMA article, in which he outlines some ideas for moderating cancer drug prices. Pay for performance is the governing principle. The practice? Pay different prices for different results in different indications.

For example, Erbitux (cetuximab). Say its list price were linked to the indication where it delivers the best results, which Bach says is pre-metastatic head and neck cancer. For that indication, the per-month price would be $10,319. For another approved use in recurrent or metastatic head and neck cancer, where it's less beneficial, the price would be $471 per month.

Or, Bach suggests, set prices using a benchmark of $150,000 per year of life gained. For Herceptin (trastuzumab), if the price were set in that way, its current $5,412 per month would zoom to $25,000 when used along with surgery--earlier in the disease course--but would equate to $6,000 a month in advanced disease.

Of course, the U.S. healthcare system isn't set up to use that approach. Changing it is technically feasible, Bach writes, but "[p]olitical challenges may be more substantial." No kidding. Drugmakers would fight the idea as the thin end of a wedge leading to government control over all pricing. Some groups would take up the "socialized medicine" cry.

Over and over, experts have said that rising drug prices will eventually force a public debate. Perhaps "60 Minutes" will help touch that off. But one of the biggest obstacles to overhauling cancer costs will be Americans themselves. Everyone wants access to the latest treatments, no matter how expensive. No one wants to put a number on the value of longer life, no matter how brief.

So, while private insurers may be setting up their own barriers to expensive meds, allowing public programs to do the same is frightening. Letting payers restrict access behind closed doors is more comfortable than facing the issue in the open.

- get the JAMA article
- see the "60 Minutes" story

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