May 2019 Edition Vol.11, Issue 5

Price, Cost, and Value of Cancer Drugs

by Megan Garlapow, PhD

In an in-depth presentation titled “The Industry Perspective: Addressing the Price, Cost, and Value of Cancer Drugs” at the 2019 Community Oncology Conference in Orlando, FL, leaders from several pharmaceutical companies participated in a panel discussion on the evolving landscape of drug pricing, value, patient access, provider reimbursement, and patient affordability. The panel was moderated by Bo Gamble, Director of Strategic Practice Initiatives, Community Oncology Alliance.

Though drug pricing is complex and forms an important component to the overall cost of care, it is different from drug value. Quantifying the value of a drug depends on the metrics used to assess value, and, according to Eli Lilly’s Senior Director of Global Oncology Corporate Affairs, Jax Zummo, pharmaceutical companies often intentionally obfuscate their methodology to gain competitive advantage.

Zummo said that she finds it easy to measure drug value and does not ascribe to debates over whether such measurements are complex. She stated the major factors typically used for evaluating drug value are list price, price increase strategies, rebates, discounts, clinical outcomes, how much unmet need the drug is addressing, and patient out-of-pocket costs.

Dan Wygal, Executive Director of Contract & Channel Strategy, AstraZeneca, stated that he is tasked with moving the dialog and defining value “in a very different way.” AstraZeneca’s approach, he said, aims to establish value by designing and placing contracts in the marketplace that demonstrate sustainable pricing practices. However, he added, “we really need to drive value to be more focused around the patient.”

The advent of technology and the evolution of clinical trials may be helping drug manufacturers accomplish that. Wygal suggested looking at real world evidence to better understand what the value is beyond the drug itself, such as patients’ daily behaviors, and then examine how those measures relate to overall outcomes, and how they may be able to translate to higher value and total cost of care.

Drug Pricing

When the conversation turned to drug pricing, Dan Lyons, Senior Director, Value and Access, Sanofi-Genzyme, explained that prices for Sanofi-Genzyme products increased by 4.6% in 2018. The net increase, however, was negative 8% once discounts were considered.

For him, understanding value optimally entails understanding which components can be controlled, such as setting drug prices at market entry. Sanofi-Genzyme’s transparency on setting drug prices as they enter the market and continue in the market are, notably, openly available on the company’s website. “Ultimately, the goal is to bring a drug to market that patients need and healthcare providers will use to achieve better outcomes,” he stated.

With national and political attention centered on drug prices, panel members thought incentives must exist first if pharmaceutical companies are to lower drug prices. Zummo described Eli Lilly’s launch of an immunology drug a couple of years ago, explaining that they had deliberately launched the drug at half its cost.

This launch strategy resulted in no access from payers. Zummo described how that approach was the wrong one and ended up hurting Eli Lilly. She said, “Incentives in the system don’t exist for us to cut our prices. I know that’s painful to hear, but that’s the reality of it.”

She later explained how drug price reform and strengthening community oncology are only going to partially address the rising costs of cancer care.

The Perils and Promises of Precision Medicine

Biomarker-based fractionation of patient populations are thought to be adding to increases in drug prices among most panel members. The developmental costs of these drugs are expensive, and the patient population served by these drugs is smaller. “The wonderful part of the science of oncology and the terrible part of our value future is that the profits we are making on precision medicine are really going to exacerbate the issue for us,” Zummo said.

Zummo noted that approximately 80% of the oncology pipeline is first-in-class therapies; thus, these therapies have no competitors when they come to market. Additionally, most of these drugs have corresponding biomarker testing with correlate improved clinical outcomes. This necessitates a higher cost as these drugs are, according to Zummo, “serving patients with pretty incredible response rates.”

Implementation in the community oncology setting, however, could not only deliver higher quality of care and better outcomes across a specific population of patients identified with precision medicine but also decrease overall costs to the healthcare system in the long term. This longer-term perspective suggests precision medicine might not inevitably increase the cost to the healthcare system, even if the cost of the drug is high.

Future Directions

Future development of telemedicine, apps, and artificial intelligence could fill some persistent gaps in drug value. For example, the value of patients communicating how they are doing on a drug could be communicated via an app on a smartphone such that healthcare providers are not burdened by reams of additional information. Furthermore, drugs can be titrated as needed, and patients may avoid unnecessary trips to the emergency department.

Zummo added that establishing value-based approaches should be published in peer-reviewed journals so that practices can feel confident about implementing them. She was critical of the practice of keeping this information confidential so as to use it as a competitive advantage. She commended Genentech for publishing its information on the value of Avastin and encouraged others to follow suit.

Seemingly, the distortion in the way drug pricing systematically flows to patients is what is essential for drug manufacturers to collectively work on.

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