The President takes on oncology drug pricing
By: Rick Sax, MD | July 12, 2016
An overview of the first workshop held by the President’s Cancer Panel on pricing, value, and innovation in cancer drug development.
On June 10 of this year, I had the privilege of participating in a workshop hosted by the President’s Cancer Panel to explore the ongoing challenges related to Access and Cost of Cancer Drugs in the Healthcare Landscape. This event, which is the first in a series on this topic hosted by the President’s Cancer Panel, convened leaders from across industry, academia, patient groups and the government sector to examine access, cost, innovation, and value in cancer drug therapy. The diversity of participants generated insightful conversations about what is driving the high cost of cancer drugs today, and how we can find a balance between managing costs and driving innovation in this space going forward.
The one thing we agreed on is that there are no easy answers to this challenge. Innovations in cancer therapy hold remarkable potential to transform treatment of this disease. In recent years, we have seen remarkable scientific breakthroughs, in particular in the area of immuno-oncology, that are bringing lifesaving drugs to patients who previously had few other options.
For such innovation to occur, biopharma companies need incentives to develop these drugs, but if the resulting price tag for the drug is too high it can prevent patients from accessing them, a troubling trend that has gained increasing attention in recent months. The advent of precision medicine, with very specific biomarkers for certain cancer phenotypes, means many cancers can now classified as “rare diseases.” This not only means patient populations are harder to find for trials, but also that the target population for new treatments is smaller, putting particular pricing pressures on the company developing the therapy (cost of development vs. return on investment). Furthermore, increasingly targeted therapies mean that there is a high likelihood that combination therapy will be required to address the multiple “escape” pathways tumors develop that lead to resistance and treatment failure. This all adds considerable time and cost-challenges to the oncology drug development, and steadily drives up the cost of these therapies. In the 1970s, the average launch price of oncology drug was roughly $100 a month – today’s therapies cost more than $10,000 a month.
In response, several industry organizations, including the American Society of Clinical Oncology (ASCO), European Society for Medical Oncology (ESMO) and National Comprehensive Cancer Network (NCCN), have begun developing oncology value frameworks in an attempt to quantify the value of various oncology drugs and to determine which drugs deliver the most value. This workshop was another step in this effort to find this balance between cost, value and innovation.
How do we measure value?
The President’s Cancer Panel workshop had several different discussion topics designed to explore different aspect of the oncology value proposition. The first topic focused on what constitutes value for oncology therapies and how we can measure that value. A key messages to emerge from this discussion were that idea that what constitutes value may be different depending on the stakeholder and the need to link pricing to a broader understanding of return on investment on the oncology space.
In a second discussion topic related to the need for a more robust data infrastructure so that decision-makers can access all data about oncology treatments in a single place. One of the challenges we face today with value frameworks is that they often pull data from multiple sources, making it difficult to follow the “patient journey” in a cohesive, coherent way. This make it difficult to understand both the clinical outcomes for the patient and the true cost and burden of illness. Furthermore, the varying ratings of value between different tools that have been developed, making it difficult for stakeholders to know which value framework to rely on – a huge challenge if a “value-based pricing” approach is on the table. Workshop participants felt that a single database of patient de-identified data (e.g., biomarker, outcomes, costing) could help inform and level the playing field for value-based pricing, by allowing stakeholders to view all of the facts before making reimbursement decisions related to the benefits (or lack thereof) of any oncology treatment.
A third discussion point related to the “total cost of care”, and how drug pricing is just one piece of the overall treatment ecosystem. For example, if one oncology drug is more costly than another but it requires fewer doses, shortens hospital stays, reduces the need for follow up care, and/or extends the median progression-free survival of the patient, the overall cost of treatment for the first treatment may actually be less than the alternative. Understanding this broader cost-of-care equation can create more appropriate context relative to a value/pricing/reimbursement discussion
An overriding theme for all of these discussions was that the patient must be part of the conversation. Understanding what patients want from treatment, how they view benefit vs. risk, what outcomes they value, and how they balance cost and benefit are critical considerations in the “value/pricing dialogue” going forward.
As this workshop came to a conclusion, participants recommended that the Panel look at a variety of factors that influence drug cost and pricing, such as research and development costs, payment models, reimbursement policies and regulations, organizational treatment guidelines, and other market forces. Consideration should be given to rational drug pricing models that assess the value of a drug for patients, taking into account data on clinical outcomes, health-related quality of life, and cost. Such models, especially if they are data-informed, could provide a sound framework to assess the value of expensive but highly effective drugs compared with less effective options. Deliberations should also be forward-looking, acknowledging rapidly emerging targeted drugs and immunotherapies for cancer, which provide tremendous hope for improved outcomes, but also are expected to be expensive and used in combinations.
Oncology pricing is a contentious issue that can only be addressed if stakeholders (patients, providers, payers, government and industry) work jointly to craft solutions. There was a unified sense that the government should not be the locus for price-setting, but it can be a powerful driver of these conversations. In conducting this workshop and building on the conversation, the President’s Cancer Panel will play a key role in promoting the discussion (and ultimately making recommendations) of how drug development and fair pricing of oncology therapies will both continue to stimulate patient and provide access to new therapies for the patients who need them.