Expensive New Drugs: Are They Worth It

1
Expensive New DrugsAre They Worth It?

• David Orentlicher, MD, JD
• Indiana University Schools of Law and Medicine
• Indiana House of Representatives
• October 29, 2008
• (With thanks to Paul R. Helft, MD
• Indiana University School of Medicine)

2
Cancer drugs as an area of concern

• Cancer treatment in the US cost 72.1 billion in
  2004
• Just under 5 of the total US spending on medical
  care
• 1995-2004, overall costs of treating cancer rose
  by 75
• These costs are expected to rise faster than the
  rate of overall medical expenditures in the future

NCI, The Nations Progress in Cancer Research An
annual report for 2004
3
Cost of treatment for metastatic colon
cancer(Schrag D. NEJM. 2004351317-319)
4
Can we afford these drugs?

• Avastin (monoclonal antibody to block blood
  vessel growth) 4,000-9,000/month
• For treating metastatic colon cancer also lung
  and breast cancer
• Erbitux (monoclonal antibody to block cell
  growth) 17,000/month
• For treating metastatic colon cancer also head
  and neck cancer
• Zevalin (monoclonal antibody that binds a
  radioactive isotope) 24,000/month
• For treating non-Hodgkins lymphoma
• SIR-Spheres (radioactive microspheres)
  14,000/dose, with an overall cost 150,000?
• For treating liver metastases from colon cancer
• Depends on their benefitcommonly measured in
  QALYs

5
What is a QALY?
0
1
Perfect health
Dead
6
Whats a good buy?

• Expensive more than 100,000/QALY
• Reasonable 50,000/QALY
• Very Efficient less than 25,000/QALY
• Most writers use 50-100,000 as upper limit of
  good value, but public preferences suggest upper
  limit over 200,000.
• Hirth RA, et al., Medical Decision Making.
  200020332-342

7
Some sample QALYs (2002 dollars)Harvard Public
Health Review (Fall 2004)

• intervention actually saves money)Flu vaccine
  for the elderly
• Under 10,000Beta-blocker drugs post-heart
  attack in high-risk patients
• 10,000 to 20,000Combination antiretroviral
  therapy for certain patients infected with the
  AIDS virus
• 15,000 to 20,000
• Colonoscopy every five to 10 years for women age
  50 and up
• 20,000 to 50,000Antihypertensive medications
  in adults age 35-64 with high blood pressure but
  no coronary heart disease
• Lung transplant in UK (Anyanwu AC et al. J
  Thorac Cardiovasc Surg 2002123411-420)
• 50,000-100,000Dialysis for patients with
  end-stage kidney disease
• Antibiotic prophylaxis during dental procedures
  for persons at moderate to high risk of bacterial
  endocarditis (88,000) (Med Decis Making.
  200525(3)308-20)
• Over 500,000CT and MRI scans for children with
  headache and an intermediate risk of brain tumor

8
COST/QALY Selected Medicare services
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The example of bevacizumab (Avastin)

• 2007 sales of 2.3 billion in US (3.5 billion
  worldwide) to treat about 100,000 patients with
  advanced lung, colon or breast cancer
• Genentech price 4,000-9,000 a month
• Cost to private insurers As high as 35,000 a
  month
• NY Times, July 6, 2008
• Whats the benefit?

10
Phase III trial of bevacizumab in metastatic
colon cancer

• Median survival 15.6 vs 20.3 mo (HR0.66,
  P
• Error bars represent 95 confidence intervals

Median survival benefit 4.7 months or 30
increase
Hurwitz H, et al. N Eng J Med. 20043502335-2342
11
Examining the cost and cost-effectiveness of
adding bevacizumab (Avastin) to chemo in
metastatic colon cancer

• Randomized trial compared chemotherapy alone vs.
  chemotherapy bevacizumab
• Bevacizumab regimen prolonged median survival
  from 15.6 to 20.3 months (p
• Cost of extra 4.7 months?
• 101,500 (assuming 5,000 per month for
  bevacizumab)
• 259,149 per year of life gained (not quality
  adjusted)

12
Examining the cost and cost-effectiveness of
adding bevacizumab (Avastin) to chemo in advanced
non-small cell lung cancer

• Randomized trial compared chemotherapy alone vs.
  chemotherapy bevacizumab
• Bevacizumab regimen prolonged median survival
  from 10.2 to 12.5 months (p0.007)
• Cost of extra 2.3 months?
• 66,270-80,343
• 345,762 per year of life gained (assuming
  66,270 cost)
• Grusenmeyer PA, Gralla RJ. J. Clin. Oncology.
  200624(18S)6057.

13
Do oncologists believe bevacizumab offers good
value?

• Survey of 139 academic med oncologists at two
  hospitals in Boston
• Designed to estimate cost-effectiveness of
  bevacizumab (Avastin) what is a justifiable
  cost-effectiveness amount does the drug provide
  good value ?
• Mean implied cost-effectiveness threshold for
  bevacizumab was 320,000/QALY
• Only 25 percent of the oncologists thought
  bevacizumab provides a good value
• Nadler E, Eckert B, Neumann PJ. The Oncologist
  20061190-95

14
Studies of patients attitudes toward expensive
cancer drugs and their benefits
15
Is it cost-effective to add erlotinib to
gemcitabine in advanced pancreatic cancer?

• Cost effectiveness analysis of erlotinib
  (Tarceva) in pancreatic cancer
• Study enrolled 569 patients and compared
  gemcitabine alone versus gemcitabine plus
  erlotinib
• Median survival improved from 6.0 to 6.4 months
• Cost of extra 0.4 months?
• Erlotinib adds 16,613 retail for six months or
• 498,379 per year of life gained (332,252 per
  year of life gained for a 4 month course of
  therapy)
• Grubbs SS et al., J. Clin. Oncology.
  200624(18S)6048

16
Cost-effectiveness analysis of trastuzumab
(Herceptin) in the adjuvant setting for treatment
of HER2 breast cancer

• Trastuzumab (a monoclonal antibody) associated
  with a 52 reduction in disease recurrence and
  33 reduction in death.
• Romond EH, et al. NEJM. 20053531673-1684.
• Over a lifetime, cost per QALY 27,800 (range
  18-39,000)
• Garrison LP et al. J Clin Oncology.
  200624(18S)6023

17
Expensive new drugs and the poor

• Cost pressures are similar for privately insured
  and publicly insured (or uninsured), but the
  pressures are accentuated with the poor
• Program and personal budgets are tighter
• Trade-offs are more tangiblewhen a states
  Medicaid budget rises, spending on other public
  services (e.g., schools) may decline, and this
  can pit poor against other taxpayers

18
Wishard Memorial Hospital

• More than 22,000 admissions per year
• 10 of patients are commercially insured
  approximately 36 are uninsured by any source.
• Pharmacy budget at WMH was around 18 million
  (2005)
• 855 metastatic colon cancer patients receiving
  FOLFOX bevacizumab cost entire Wishard pharmacy
  budget
• 500 stage II and III patients receiving adjuvant
  FOLFOX alone cost entire pharmacy budget
• (Actual number of colon cancer patients at
  Wishard in the dozens per year numbers above are
  less than in Indiana overall)

19
Growth in Medicaid spending (Medicaid
expenditures as percentageof total state
spending)

• 1987 1997 2007
• Iowa 5.0 13.4 16.7
• Indiana 10.7 17.6 21.4
• Ohio 10.6 20.8 25.9
• Illinois 10.1 23.7 28.4
• New York 16.6 33.4 28.7
• All States 9.8 20.0 21.1

20
Medicaid expenditures ( billions) for outpatient
prescription drugs
In 2003, Medicaid spent 33.7 billion on drugs
(19 of national spending for drugs and more than
10 of the Medicaid budget).
21
What drives increased spending on pharmaceuticals?

• Number of prescriptions dispensed (42)
• more beneficiaries
• more medications per beneficiary
• Types of prescriptions (34)
• newer, higher-priced drugs replacing older,
  less-expensive drugs
• Manufacturer price increases for existing drugs
  (25)

Prescription drug trends. October 2004
http//www.kff.org/rxdrugs/upload/Prescription-Dru
g-Trends-October-2004-UPDATE.pdf
22
Is increased spending on drugs bad?

• Prescription drugs can treator preventserious
  illnesses
• consider, for example, statins to lower
  cholesterol and the risk of heart attacks,
  insulin to control blood sugar
• But there is considerable over-prescribingmany
  people receive
• prescriptions when they dont need a drug (e.g.,
  Ritalin)
• a brand-name drug when a generic could be taken,
• an expensive drug when a less expensive
  alternative would work as well (e.g., Nexium for
  heartburn), or
• a very expensive drug that provides little
  benefit (? Avastin)
• Covering very expensive drugs may be done for
  only some, and at the same time divert limited
  funds from more effective health care,
  particularly for the poor

23
Expensive new drugs and the poor

• Difficult to protect the poor when its only the
  poor whose interests are at stake
• Political decisions driven by interest group
  advocacy, and the poor often fare poorly in such
  a system (but sometimes their interests coincide
  with those of more effective advocatessee
  formulary restrictions)
• Need to link the fortunes of the poor to those of
  others (Medicaid versus Medicare) and need other
  systemic reforms to address the wasteful spending
  problems

24
Successful health care reform

• Social welfare programs fare better when
• Universal rather than targeted just at poor
  (Medicare vs. Medicaid)
• Perceived as earned (Medicare Part A, EITC)
• Beneficiaries are innocent persons (Medicare,
  SCHIP)
• Benefit levels determined by federal rather than
  state government (Medicare vs. Medicaid)
• Benefits can be limited easily (food and shelter
  vs. health care)

25
Systemic reform reduce over-prescribing

• Important social pressures
• The identifiable victim versus saving statistical
  lives (low osmolar contrast media and the
  Canadian experience)
• Physician relationships with industry (consulting
  fees for opinion leaders)
• Physician reimbursement (cancer chemotherapy)
• Patient desire for a prescription
  (direct-to-consumer advertising and
  cyclyooxygenase-2-inhibitors (coxibs) for
  arthritis (e.g., Vioxx))
• Counter-regulation is critical (e.g., preferred
  drug lists), but some regulations cause more harm
  than good (e.g., prescription caps)