Expensive New Drugs:Expensive New Drugs:Are They Worth It?Are They Worth It?

David Orentlicher, MD, JDDavid Orentlicher, MD, JDIndiana University Schools of Law and Indiana University Schools of Law and

MedicineMedicineIndiana House of RepresentativesIndiana House of Representatives

October 29, 2008October 29, 2008

(With thanks to Paul R. Helft, MD(With thanks to Paul R. Helft, MDIndiana University School of Medicine)Indiana University School of Medicine)

Cancer drugs as an area of concern

Cancer treatment in the US cost Cancer treatment in the US cost $72.1 billion in 2004$72.1 billion in 2004 Just under 5% of the total US spending Just under 5% of the total US spending

on medical careon medical care 1995-2004, overall costs of treating 1995-2004, overall costs of treating

cancer rose by 75%cancer rose by 75% These costs are expected to rise faster These costs are expected to rise faster

than the rate of overall medical than the rate of overall medical expenditures in the futureexpenditures in the future

NCI, The Nation’s Progress in Cancer Research: An annual report for 2004

Cost of treatment for metastatic colon cancer

(Schrag D. NEJM. 2004;351:317-319)

Can we afford these drugs? Avastin (monoclonal antibody to block blood Avastin (monoclonal antibody to block blood

vessel growth) = $4,000-$9,000/monthvessel growth) = $4,000-$9,000/month For treating metastatic colon cancer; also lung and For treating metastatic colon cancer; also lung and

breast cancer breast cancer Erbitux (monoclonal antibody to block cell Erbitux (monoclonal antibody to block cell

growth) = $17,000/monthgrowth) = $17,000/month For treating metastatic colon cancer; also head and For treating metastatic colon cancer; also head and

neck cancerneck cancer Zevalin (monoclonal antibody that binds a Zevalin (monoclonal antibody that binds a

radioactive isotope) = $24,000/monthradioactive isotope) = $24,000/month For treating non-Hodgkin’s lymphomaFor treating non-Hodgkin’s lymphoma

SIR-Spheres (radioactive microspheres) = SIR-Spheres (radioactive microspheres) = $14,000/dose, with an overall cost = $150,000?$14,000/dose, with an overall cost = $150,000? For treating liver metastases from colon cancerFor treating liver metastases from colon cancer

Depends on their benefit—commonly measured Depends on their benefit—commonly measured in QALYsin QALYs

What is a QALY?What is a QALY?

0 1

Dead Perfecthealth

Major stroke

Recurrent stroke

Writing a grant

proposal

What’s a “good” buy?What’s 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. 2000;20:332-342

Some sample QALYs (2002 Some sample QALYs (2002 dollars)dollars)

Harvard Public Health Review (Fall Harvard Public Health Review (Fall 2004)2004) < $0 (If the cost per QALY is less than zero, the intervention < $0 (If the cost per QALY is less than zero, the intervention

actually saves money)actually saves money)Flu vaccine for the elderlyFlu vaccine for the elderly

Under $10,000Under $10,000Beta-blocker drugs post-heart attack in high-risk patientsBeta-blocker drugs post-heart attack in high-risk patients

$10,000 to $20,000$10,000 to $20,000Combination antiretroviral therapy for certain patients infected with Combination antiretroviral therapy for certain patients infected with the AIDS virusthe AIDS virus

$15,000 to $20,000$15,000 to $20,000Colonoscopy every five to 10 years for women age 50 and up Colonoscopy every five to 10 years for women age 50 and up

$20,000 to $50,000$20,000 to $50,000Antihypertensive medications in adults age 35-64 with high blood Antihypertensive medications in adults age 35-64 with high blood pressure but no coronary heart diseasepressure but no coronary heart diseaseLung transplant in UK (Anyanwu AC et al.Lung transplant in UK (Anyanwu AC et al. J Thorac Cardiovasc Surg 2002;123:411-420)

$50,000-$100,000$50,000-$100,000Dialysis for patients with end-stage kidney diseaseDialysis for patients with end-stage kidney diseaseAntibiotic prophylaxis during dental procedures for persons at Antibiotic prophylaxis during dental procedures for persons at moderate to high risk of bacterial endocarditis ($88,000) (moderate to high risk of bacterial endocarditis ($88,000) (Med Decis Med Decis Making. 2005;25(3):308-20)Making. 2005;25(3):308-20)

Over $500,000Over $500,000CT and MRI scans for children with headache and an intermediate CT and MRI scans for children with headache and an intermediate risk of brain tumor risk of brain tumor

Condition/Treatment Cost per QALY

Treatment for Erectile Dysfunction $6,400/QALY

*Physician Counseling for Smoking $7,200/QALY

Total Hip Replacement $9,900/QALY

*Outreach for Flu and Pneumonia $13,000/QALY

Treatment of Major Depression $20,000/QALY

Gastric Bypass Surgery $20,000/QALY

Treatment for Osteoporosis $38,000/QALY

*Screening For Colon Cancer $40,000/QALY

Implantable Cardioverter Defibrillator $75,000/QALY

Lung-Volume Reduction Surgery $98,000/QALY

Tight Control of Diabetes $154,000/QALY

*Treating Elevated Cholesterol ( + 1 risk factor) $200,000/QALY

Resuscitation After Cardiac Arrest $270,000/QALY

Left Ventricular Assist Device $900,000/QALY

COST/QALY: Selected Medicare services

The example of bevacizumab The example of bevacizumab (Avastin)(Avastin)

2007 sales of $2.3 billion in US ($3.5 2007 sales of $2.3 billion in US ($3.5 billion worldwide) to treat about billion worldwide) to treat about 100,000 patients with advanced 100,000 patients with advanced lung, colon or breast cancerlung, colon or breast cancer

Genentech price: $4,000-$9,000 a Genentech price: $4,000-$9,000 a monthmonth

Cost to private insurers: As high as Cost to private insurers: As high as $35,000 a month$35,000 a month NY Times, July 6, 2008NY Times, July 6, 2008

What’s the benefit?What’s the benefit?

Phase III trial of bevacizumab in Phase III trial of bevacizumab in metastatic colon cancermetastatic colon cancer

• Median survival: 15.6 vs 20.3 mo (HR=0.66, P<0.001)• Error bars represent 95% confidence intervals

Hurwitz H, et al. N Eng J Med. 2004;350:2335-2342

Per

cen

t s

urv

ivin

g

Duration of survival (mo)

20

0 12 18 30

0

80

100

40

60

Treatment Group

IFL + placebo (n=411)IFL + Avastin (n=402)

246

Median survival benefit:

4.7 months or 30% increase

Examining the cost and cost-effectiveness of adding

bevacizumab (Avastin) to chemo in metastatic colon cancer

Randomized trial compared chemotherapy Randomized trial compared chemotherapy alone vs. chemotherapy + bevacizumabalone vs. chemotherapy + bevacizumab

Bevacizumab regimen prolonged median Bevacizumab regimen prolonged median survival from 15.6 to 20.3 months survival from 15.6 to 20.3 months (p<0.001)(p<0.001)

Cost of extra 4.7 months?Cost of extra 4.7 months? $101,500 (assuming $5,000 per month for $101,500 (assuming $5,000 per month for

bevacizumab)bevacizumab) $259,149 per year of life gained (not quality $259,149 per year of life gained (not quality

adjusted)adjusted)

Randomized trial compared Randomized trial compared chemotherapy alone vs. chemotherapy + chemotherapy alone vs. chemotherapy + bevacizumabbevacizumab

Bevacizumab regimen prolonged median Bevacizumab regimen prolonged median survival from 10.2 to 12.5 months survival from 10.2 to 12.5 months (p=0.007)(p=0.007)

Cost of extra 2.3 months?Cost of extra 2.3 months? $66,270-$80,343$66,270-$80,343 $345,762 per year of life gained (assuming $345,762 per year of life gained (assuming

$66,270 cost)$66,270 cost) Grusenmeyer PA, Gralla RJ. J. Clin. Oncology. Grusenmeyer PA, Gralla RJ. J. Clin. Oncology.

2006;24(18S):6057.2006;24(18S):6057.

Examining the cost and cost-effectiveness of adding bevacizumab (Avastin) to chemo in advanced non-

small cell lung cancer

Do oncologists believe Do oncologists believe bevacizumab offers good bevacizumab offers good

value?value? Survey of 139 academic med oncologists at Survey of 139 academic med oncologists at

two hospitals in Bostontwo hospitals in Boston Designed to estimate cost-effectiveness of Designed to estimate cost-effectiveness of

bevacizumab (Avastin): what is a justifiable bevacizumab (Avastin): what is a justifiable cost-effectiveness amount; does the drug cost-effectiveness amount; does the drug provide “good value”; ?provide “good value”; ?

Mean implied cost-effectiveness threshold for Mean implied cost-effectiveness threshold for bevacizumab was $320,000/QALYbevacizumab was $320,000/QALY

Only 25 percent of the oncologists thought Only 25 percent of the oncologists thought bevacizumab provides a good valuebevacizumab provides a good value Nadler E, Eckert B, Neumann PJ. The Oncologist 2006;11:90-

95

Studies of patients’ attitudes toward expensive cancer drugs

and their benefits

Is it cost-effective to add erlotinib Is it cost-effective to add erlotinib to gemcitabine in advanced to gemcitabine in advanced

pancreatic cancer?pancreatic cancer? Cost effectiveness analysis of erlotinib Cost effectiveness analysis of erlotinib

(Tarceva) in pancreatic cancer(Tarceva) in pancreatic cancer Study enrolled 569 patients and compared Study enrolled 569 patients and compared

gemcitabine alone versus gemcitabine plus gemcitabine alone versus gemcitabine plus erlotiniberlotinib

Median survival improved from 6.0 to 6.4 Median survival improved from 6.0 to 6.4 monthsmonths

Cost of extra 0.4 months?Cost of extra 0.4 months? Erlotinib adds $16,613 retail for six months orErlotinib adds $16,613 retail for six months or $498,379 per year of life gained ($332,252 per $498,379 per year of life gained ($332,252 per

year of life gained for a 4 month course of therapy)year of life gained for a 4 month course of therapy) Grubbs SS et al., J. Clin. Oncology. 2006;24(18S):6048

Cost-effectiveness analysis of Cost-effectiveness analysis of trastuzumab (Herceptin) in the trastuzumab (Herceptin) in the

adjuvant setting for treatment of adjuvant setting for treatment of HER2+ breast cancerHER2+ breast cancer

Trastuzumab (a monoclonal antibody) Trastuzumab (a monoclonal antibody) associated with a 52% reduction in associated with a 52% reduction in disease recurrence and 33% reduction in disease recurrence and 33% reduction in death.death.

Romond EH, et al. NEJM. 2005;353:1673-1684. Romond EH, et al. NEJM. 2005;353:1673-1684.

Over a lifetime, cost per QALY $27,800 Over a lifetime, cost per QALY $27,800 (range $18-39,000)(range $18-39,000)

Garrison LP et al. J Clin Oncology. 2006;24(18S):6023

Expensive new drugs and the poor

Cost pressures are similar for privately Cost pressures are similar for privately insured and publicly insured (or insured and publicly insured (or uninsured), but the pressures are uninsured), but the pressures are accentuated with the pooraccentuated with the poor Program and personal budgets are tighterProgram and personal budgets are tighter Trade-offs are more tangible—when a Trade-offs are more tangible—when a

state’s Medicaid budget rises, spending on state’s Medicaid budget rises, spending on other public services (e.g., schools) may other public services (e.g., schools) may decline, and this can pit poor against other decline, and this can pit poor against other taxpayerstaxpayers

Wishard Memorial HospitalWishard Memorial Hospital

More than 22,000 admissions per yearMore than 22,000 admissions per year 10% of patients are commercially insured; 10% of patients are commercially insured;

approximately 36% are uninsured by any approximately 36% are uninsured by any source. source.

Pharmacy budget at WMH was around Pharmacy budget at WMH was around $18 million (2005)$18 million (2005)

855 metastatic colon cancer patients 855 metastatic colon cancer patients receiving FOLFOX + bevacizumab cost receiving FOLFOX + bevacizumab cost entire Wishard pharmacy budgetentire Wishard pharmacy budget

500 stage II and III patients receiving 500 stage II and III patients receiving adjuvant FOLFOX alone cost entire adjuvant FOLFOX alone cost entire pharmacy budgetpharmacy budget(Actual number of colon cancer patients at Wishard in (Actual number of colon cancer patients at Wishard in

the dozens per year; numbers above are less than in the dozens per year; numbers above are less than in Indiana overall)Indiana overall)

Growth in Medicaid spending (Medicaid expenditures as

percentageof total state spending)

19871987 1997199720072007

IowaIowa 5.0 5.0 13.413.4 16.716.7Indiana Indiana 10.710.7 17.617.6 21.421.4OhioOhio 10.610.6 20.820.8 25.925.9IllinoisIllinois 10.110.1 23.723.7 28.428.4New YorkNew York 16.616.6 33.433.4 28.728.7

All StatesAll States 9.8 9.8 20.020.0 21.121.1

Medicaid expenditures ($ billions) for outpatient

prescription drugs

0

5

10

15

20

25

30

1991 1993 1995 1997 1999 2001

In 2003, Medicaid spent $33.7 billion on drugs (19% of national spending for drugs and more than 10% of the Medicaid budget).

What drives increased spending on pharmaceuticals? Number of prescriptions dispensed Number of prescriptions dispensed

(42%)(42%) more beneficiariesmore beneficiaries more medications per beneficiarymore medications per beneficiary

Types of prescriptions (34%)Types of prescriptions (34%) newer, higher-priced drugs replacing

older, less-expensive drugs Manufacturer price increases for Manufacturer price increases for

existing drugs (25%)existing drugs (25%)Prescription drug trends. October 2004; http://www.kff.org/rxdrugs/upload/Prescription-Drug-Trends-October-2004-UPDATE.pdf

Is increased spending on drugs bad?

Prescription drugs can treat—or prevent—Prescription drugs can treat—or prevent—serious illnessesserious illnesses consider, for example, statins to lower cholesterol and

the risk of heart attacks, insulin to control blood sugar But there is considerable over-prescribing—many But there is considerable over-prescribing—many

people receivepeople receive prescriptions when they don’t 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

Expensive new drugs and the poor

Difficult to protect the poor when it’s only Difficult to protect the poor when it’s only the poor whose interests are at stakethe poor whose interests are at stake Political decisions driven by interest group Political decisions driven by interest group

advocacy, and the poor often fare poorly in advocacy, and the poor often fare poorly in such a system (but sometimes their interests such a system (but sometimes their interests coincide with those of more effective coincide with those of more effective advocates—see formulary restrictions)advocates—see formulary restrictions)

Need to link the fortunes of the poor to those Need to link the fortunes of the poor to those of others (Medicaid versus Medicare) and of others (Medicaid versus Medicare) and need other systemic reforms to address the need other systemic reforms to address the wasteful spending problemswasteful spending problems

Successful health care Successful health care reformreform

Social welfare programs fare better whenSocial welfare programs fare better when Universal rather than targeted just at poor Universal rather than targeted just at poor

(Medicare vs. Medicaid)(Medicare vs. Medicaid) Perceived as earned (Medicare Part A, EITC)Perceived as earned (Medicare Part A, EITC) Beneficiaries are “innocent” persons Beneficiaries are “innocent” persons

(Medicare, SCHIP)(Medicare, SCHIP) Benefit levels determined by federal rather Benefit levels determined by federal rather

than state government (Medicare vs. than state government (Medicare vs. Medicaid)Medicaid)

Benefits can be limited easily (food and Benefits can be limited easily (food and shelter vs. health care)shelter vs. health care)

Systemic reform: reduce over-prescribing

Important social pressures The identifiable victim versus saving statistical The identifiable victim versus saving statistical

lives (low osmolar contrast media and the lives (low osmolar contrast media and the Canadian experience)Canadian experience)

Physician relationships with industry (consulting Physician relationships with industry (consulting fees for opinion leaders)fees for opinion leaders)

Physician reimbursement (cancer Physician reimbursement (cancer chemotherapy)chemotherapy)

Patient desire for a prescription (direct-to-Patient desire for a prescription (direct-to-consumer advertising and cyclyooxygenase-2-consumer advertising and cyclyooxygenase-2-inhibitors (coxibs) for arthritis (e.g., Vioxx))inhibitors (coxibs) for arthritis (e.g., Vioxx))

Counter-regulation is critical (e.g., preferred Counter-regulation is critical (e.g., preferred drug lists), but some regulations cause more drug lists), but some regulations cause more harm than good (e.g., prescription caps)harm than good (e.g., prescription caps)