Researchers say they have found a prescription for rising prices for cancer drugs, but drug regulators must decide if they want to take it.
A new study examined the value of a cancer drug up for approval and found that its price should be linked to the effectiveness of the product. But the federal drug approval process does not evaluate a product’s value, which researchers say needs to change to address high prices.
“Essentially the industry is able to put any price that they like on a drug,” said Dr. Daniel Goldstein, lead author of the study and a fellow in hematology and oncology at Emory University.
The finding comes amid growing concern among Americans about high drug prices, as indicated by several polls.
While the debate at times has centered on the high cost of specialty drugs such as a cure for hepatitis C, cancer drugs also have been heavily scrutinized.
Cancer drugs that keep a patient alive for a short amount of time more than current therapies can sometimes run past $100,000 a year in cost, according to a letter from more than 100 cancer experts issued earlier this year.
The study looked at the lung cancer drug necitumumab being developed by Eli Lilly. A clinical trial showed that adding necitumumab to chemotherapy bought patients with a lung cancer called metastatic squamous cell lung cancer roughly another six weeks of survival.
Researchers then performed an economic analysis to determine what the drug should cost based on the value it provides in the additional weeks of survival.
After looking at the clinical trial results and the economic analysis, the study concluded necitumumab should cost between $563 and $1,309 every few weeks. Because chemotherapy is administered every three weeks, and necitumumab is taken alongside it, the study examined the cost every three weeks to the patient.
A new oncology drug typically exceeds $10,000 per month in costs, according to the study.
The price was determined based on 2014 Medicare reimbursement rates and took into account administrative and development costs, the study said.
Eli Lilly responded that the study excluded commonly used therapies that are more expensive than the generic alternatives called gemcitabine and cisplatin that necitumumab’s potential price was compared to.
The company added that the FDA has not reached a decision on necitumumab and that any pricing discussion is premature. Eli Lilly expects a decision by the end of this year.
Goldstein said a drug maker could put together a similar economic analysis for roughly $200,000, which isn’t considering the cost of developing a drug is more than $1 billion.
But there is no incentive to do that currently, he said. A big reason is that when the FDA considers a drug, it looks at only whether it is safe and effective, he said.
“What is needed in the U.S. is some type of independent institution to be developed that either evaluates cost-effectiveness or value-based prices either prior to or in tandem with the FDA [review],” he added.
Goldstein pointed to England, which has a separate institution that reviews a drug for cost effectiveness before the single payer health system decides to approve it.
He said Medicare should be allowed to negotiate lower prices for drugs it covers, a commonly proposed reform.
However, a 2007 report from the nonpartisan Congressional Budget Office found that any benefit to giving Medicare negotiating power would be negligible.
That is because pharmacy benefit managers, which manage drug plans for insurance plans, negotiate heavily with drug companies. Medicare wouldn’t have the leverage to negotiate for lower prices since these managers are already doing it.
The pharmaceutical industry also was skeptical of additional reforms for combating high prices.
“Private payers in the U.S. already consider a wide range of clinical and economic data, and utilize numerous cost containment tools in oncology,” said Randy Burkholder, vice president of policy and research for the Pharmaceutical Research and Manufacturers of America, an industry trade group.
He added that cancer drug costs represented just 1 percent of the total national health expenditures in 2014 and 20 percent of total cancer spending.
