Editor’s Desk

Cancer drugs, even at these prices, may be worth it

Peter Wehrwein

No one is against all the progress being made in cancer treatment, which includes milder, effective treatments and medications tailored to take advantage of the genetic weaknesses of tumor cells.

This morning I woke up to front-page story in the Philadelphia Inquirer about the University of Pennsylvania and Novartis settling a patent dispute that had cast a legal cloud over their immunotherapeutic treatments, which rev up a person’s own immune system to take on the cancer and its runaway growth instead of relying on toxic chemicals.

But is the price of this progress just way too steep?

Oncology drugs are a hot topic

Many people are wrestling with these questions. Two sessions this afternoon at the Academy of Managed Care Pharmacy’s annual meeting in San Diego are devoted to management of oncology drugs.

Meanwhile, this morning Health Affairs unveiled its April issue devoted to cost and quality of cancer care.

I thought one of the most thought-provoking articles in Health Affairs was by Darius Lakdawalla, a professor at University of Southern California, and his colleagues.

They argued that we shouldn’t just be looking at the dollar outlay for cancer drugs:

The more complete approach suggested in the health economics literature offsets the growth in costs with the corresponding gain in patient value that resulted from it.

Sounds good. But what is “patient value?”

Some QALY math

Lakdawalla and his team deftly answer that question by cooking something they called quality-adjusted cost of care.

Their recipe starts simply enough with the cost of the new treatment. Next, they measured the growth in the value of the treatment in terms of how much it adds in quality-adjusted life-years (QALYs)—and they also put a price tag on the QALYs. How a QALY should be priced is always open for discussion, but Lakdawalla and company settle on a not-unreasonable figure of $100,000.

Then they compared the added cost of the new treatments to the monetized QALYs to show the net change in quality-adjusted cost of care.

In slightly plainer English, they compared the cost of these high-priced cancer drugs with the QALYs they provide, with QALYs valued at  $100,000 per.

An example always helps clarify this kind of number crunching, and Lakdawalla provides two.

Colorectal cancer tx: A break-even proposition

The first example they picked is colorectal cancer treatment.  As they explain, in the early 90s, almost all colorectal cancer patients were treated with fluorouracil and leucovorin. The cost for 24 weeks of treatment was $121. One hundred and twenty-one dollars! That’s cheap by any standard.

In 1998, a regimen that included irinotecan became popular and the average cost of treatment was $688. That still seems like a bargain.

But in the early 2000s, four new drugs are introduced for the treatment of colorectal cancer: capecitabine (Xeloda), oxaliplatin (Eloxatin), bevacizumab (Avastin), and cetuximab (Erbitux). The days of frugal colorectal cancer treatment were over. The cost of a treatment cycle climbed to more than $35,000.

So, in relatively short period of time, the cost of colorectal cancer treatment went from being roughly equivalent to the price of a television to being the equivalent of the price of a Lexus.

But, of course, we are not talking about TVs and cars, but people's lives. So is the extra money worth it? Lakdawalla reports that patients with stage 4 colorectal cancer treated with fluorouracil and leucovorin lived, on average, just over a year.

Patients treated with bevacizumab and oxaliplatin live, on average, almost twice as long.

(Patients with less severe cases of colorectal cancer probably live longer but the researchers were cautious and assumed that the QALY gain was the same as that for the stage 4 cancers.)

There are more assumptions and math involved in their quality-adjusted cost of care calculations, but here is bottom line from the researchers: 

The average treatment cost increased sharply between 1998 and 2005, but the quality-adjusted cost of care remained largely flat because of roughly offsetting gains in health. To be precise, health care costs increased by $34,493 as a result of the new products. However, health improved by 0.33115 QALYs, valued at $33,115 per person. Thus, the quality-adjusted cost of care increased by only $1,377 during this time period. In this case, society got roughly what it paid for

The last sentence is worth repeating: we got what we paid for.

Lakdawalla performed a similar set of calculations of multiple myeloma. The annual cost of drugs to treat the blood marrow cancer increased from about $36,000 in 2004 to more than $109,000 in 2009. But crank up the quality-adjusted cost of care calculator, and that tripling seems like a good deal. Here’s Lakdawalla’s summary:

Although cost increased, the quality-adjusted cost of care for patients with multiple myeloma fell by $67,863 per patient between 2004 and 2009 because of offsetting health gains valued at $140,800 for all patients with multiple myeloma.

An important caveat: The gains were mainly among patients who received new therapies as second-line treatments. For those receiving only established first-line therapies, the quality-adjusted cost of care increased by $49,000 per patient because the price of thalidomide went up.

Still, how do we pay for it?

There is a lot of talk these days about value-based care and payment. It seems to me that Lakdawalla’s research grounds that chatter in some numbers, even if those numbers are built on several assumptions. Certainly these kinds of calculations will help payers compare treatments. 

Some tiny sliver of the public may even find them helpful as the way American health care is paid for and delivered changes.

Still, the big questions remain. How are we, as a society, going to pay these oncology bills? If they are paid, who exactly is going to foot the bill? And are pharmaceutical and biotech companies making the price of the progress they are providing us far too dear?