Are $100,000 drugs a right?
British Clinic Is Allowed to Deny Medicine
By Sarah Lyall
The New York Times
February 16, 2006
When her local health service refused to treat her (early-stage) breast cancer with the drug Herceptin, 54-year-old Ann Marie Rogers sued. But on Wednesday, a High Court judge ruled against her.
In his decision the judge, David Bean, said that although he sympathized with Ms. Rogers’s predicament, the health service in Swindon, where she lives, had been justified in withholding the drug.
Herceptin, made by Roche, is currently licensed for use in late-stage breast cancer. Although some studies have shown that it is also effective in treating HER-2 early-stage breast cancer, it has not yet been licensed for such use. If it does receive a license, the drug will be appraised for potential countrywide use.
But Herceptin is an expensive drug, costing $36,000 to $47,000 a year for each patient, and the health service has finite resources.
… the Swindon health service has a policy of allowing its use for early-stage breast cancer only in “exceptional circumstances,” and her doctor said that her case was no different from those of “the 20 or so other residents in the Swindon area in the same position.”
http://www.nytimes.com/2006/02/16/international/europe/
16cancer.html
A Cancer Drug Shows Promise, at a Price That Many Can’t Pay
By Alex Berenson
The New York Times
February 15, 2006
Doctors are excited about the prospect of Avastin, a drug already widely used for colon cancer, as a crucial new treatment for breast and lung cancer, too. But doctors are cringing at the price the maker, Genentech, plans to charge for it: about $100,000 a year.
Even some patients with insurance are thinking hard before agreeing to treatment, doctors say, because out-of-pocket co-payments for the drug could easily run $10,000 to $20,000 a year.
Until now, drug makers have typically defended high prices by noting the cost of developing new medicines. But executives at Genentech and its majority owner, Roche, are now using a separate argument - citing the inherent value of life-sustaining therapies.
If society wants the benefits, they say, it must be ready to spend more for treatments like Avastin and another of the company’s cancer drugs, Herceptin, which sells for $40,000 a year.
“As we look at Avastin and Herceptin pricing, right now the health economics hold up, and therefore I don’t see any reason to be touching them,” said William M. Burns, the chief executive of Roche’s pharmaceutical division and a member of Genentech’s board. “The pressure on society to use strong and good products is there.”
The high prices are especially discouraging for patients who have been told that the new drugs may have only marginal benefits for them.
Ellis Minrath, who has pancreatic cancer, said he had chosen not to take Tarceva, a drug from Genentech that is approved for lung cancer and has shown promise in pancreatic cancer.
But Dr. Desmond-Hellmann, the Genentech product development chief, said she would recommend that Mr. Minrath be treated with Tarceva. “I don’t think any patient should go without a Genentech drug for an inability to pay,” she said. “If this is about money, that would disturb me.”
Because the actual cost of producing Avastin is a fraction of what Genentech charges for it, some analysts and doctors had expected the company to lower Avastin’s price per milligram for use in lung and breast cancer.
Dr. Desmond-Hellmann said that Genentech was assuming that some cancer doctors might, in fact, use Avastin at the lower dosage to treat breast and lung cancer. That is a reason the company does not want to lower Avastin’s per-milligram price, she said, because doing so would cut too deeply into revenues if doctors do not prescribe the higher doses that were used in the breast and lung cancer trials.
http://www.nytimes.com/2006/02/15/business/15drug.html?pagewanted=all
Comment: By Don McCanne, M.D.
These are very sad stories, but, in a way, they represent both the best and the worst of the approaches of health care systems to very high priced innovative drugs.
It would seem reasonable to price drugs based on research costs, production costs, appropriate administrative costs and a fair profit. Traditionally, drugs were priced that way, perhaps with a nudge toward higher profits.
In the United States, we rely quite heavily on markets to set prices. What are we now hearing from the pharmaceutical industry? Forget costs. Don’t adjust prices based on the marginal costs of increasing manufacturing volume. Price the drugs based on “the inherent value of life-sustaining therapies.”
If a drug can extend life that has an actuarial value of maybe $300,000, then it is argued that the drug manufacturer is entitled to a transfer of a significant portion of that dollar value. By delaying death, the drug company has created a value of $300,000. The patient is $200,000 better off for a drug company fee of only one-third. They’re not really being greedy since they could claim that they have created that $300,000 value, and that they arguably could be entitled to all of it. But then Dr. Demond-Hellmann would be disturbed if this was really “about money.”
It would be interesting to see this same rationale applied to Gov. George Pataki’s appendectomy this morning. One-third of the actuarial value of the remaining life of a governor and potential presidential candidate might command a very handsome fee indeed.
So we see what represents perhaps the worst of our approaches to innovative drugs: blatant greed. What “best” could there be in this muddle?
The British have a health care system that is dedicated to providing the best care for the patient, within limits of their resources. An expensive drug, Herceptin, is currently available for the indication for which it is licensed: late-stage breast cancer. If it later becomes licensed for early-stage disease, the British will make every effort to see that it is available for any person who could benefit. Trying to make the health care system work for the benefit of the patient represents the best of the approaches to high-cost pharmaceuticals.
Should a $100,000 drug be a right for any individual who could benefit from it? That’s really the wrong question. The right question: Should policies of a health care system be designed so that they enable the highest possible return on investments in the health care marketplace, though sacrificing affordable access, or should they be designed so that they enhance patient access to beneficial health services, within the limits of available resources? The British and the Americans have different answers to this question.