Category Archives: Merrill Goozner

$100-dollar bill inside a capsule

New cancer drugs offer hope — but at an often staggering cost

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High Cost Of New Cancer Drugs Sparks New Care Struggle

By Merrill Goozner, The Fiscal Times
This story comes from our partner 

Julie Grabow, an oncologist at the Fred Hutchinson Cancer Center in Seattle, recently prescribed an exciting new therapy for a 60-year-old woman with metastatic breast cancer.

Three-and-a-half years into her battle against the disease, the patient had already exhausted three different anti-estrogen therapies, each of which only put a temporary check on the spreading tumors.

Box of the drug AfinitorThe newly prescribed drug, Novartis’ Afinitor, is one of the recently approved targeted therapies that have generated a lot of excitement among cancer patients and oncologists in recent years.

Drugs that target just the cancer cells promise the same or better results as toxic chemotherapy, but with far fewer side effects.

There was a catch, though. Like many of the latest cancer drugs, Novartis is charging exorbitant amounts for the treatment – in this case, $10,000 per month.

That quickly put an end to that possibility for Grabow’s patient. Her monthly co-payment, even after her insurance company agreed to pay its share of the off-label use the drug (the Food and Drug Administration has only approved Afinitor for kidney and pancreatic cancer, not breast cancer), was $2,900.

“She can’t afford this, even though it’s potentially a less toxic and potentially equally effective regimen,” Grabow said. “Chemo will help her, and it’s a reasonable choice. But that choice is 100 percent driven by economics.”

Over the past year, official Washington and candidates on the campaign trail have locked horns over the best way to curb rising health insurance costs. The public has been bombarded with dueling slogans – Republicans vowing to fight the “death panels” and “rationing” of Obamacare while Democrats promise “guaranteed access” and “affordability” with the Affordable Care Act.

But an economic drama that neither side wants to confront is playing itself out in cancer wards and oncologists’ offices across the country.

Unaffordable new drugs, even when they’re covered by insurance, are being rationed by price as patients, doctors and hospital officials struggle with what is likely to be the most pressing problem for the nation’s health care system over the next decade: how to pay for the spectacular rise in the cost of cancer care, especially drugs and diagnostic tests.

“In the real world of private practice where most care is delivered, it would be a mistake to say rising costs haven’t affected care,” said Eric Nadler, a head, neck and lung cancer specialist at Baylor University Medical Center.

84 percent of oncologists say their patients’ out-of-pocket spending influences treatment recommendations.

A recent survey published in Health Affairs found a stunning 84 percent of oncologists say their patients’ out-of-pocket spending influences treatment recommendations.

The growing cost of cancer care will impose its greatest burden on the nation’s Medicare system, since 55 percent of all cancers are diagnosed in individuals 65 or older.

A recent study by the National Cancer Institute projected the cost of treating the 29 most common cancers in men and women will rise 27 percent by 2020, even though incidence of the disease is going down due to successful public health campaigns like the war on smoking.

Among the six new drugs approved in 2011, the cheapest . . . cost $44,000 a year.

 That estimate is based on a relatively static cost of care per case. If costs increase just 2 percent more a year than previous trends in the first and last years of care, the study said, then costs would soar to $173 billion, a 39 percent increase.

The study pointed out that its projections were based on 2006 Medicare claims data, which predated the development of most of the latest targeted therapies.

There’s no doubt that there will be many new therapies for cancer coming to market in the years ahead. The nation’s $150 billion public investment in understanding the biology of cancer – the science side of the War on Cancer launched by President Richard Nixon in 1971 – is beginning to bear fruit.

The pharmaceutical industry, which draws on that publicly funded science to develop drug candidates, now has 887 new cancer drugs in development, over 30 percent of its total portfolio of new drug candidates, according to the Pharmaceutical Research and Manufacturers of America, the industry trade group. That’s up from 646 or 26 percent of the total devoted to cancer in 2006.

The industry is pouring increased research and development resources in cancer therapeutics in hopes that it will replace the revenue being lost from the expiration of patents on blockbusters like Lipitor.

However, since there are fewer cancer patients than there are people with chronic conditions like elevated cholesterol, and many don’t live very long, the prices needed to support the industry’s current size and structure, and profits must be substantially higher.

“They’re trying to maximize profits given their incentives,” said Peter Neumann, director of the Center for the Evaluation of Value and Risk in Health at Tufts Medical Center, which receives funding from the drug industry.

Possible solutions, he said, include letting Medicare set prices based on the medical value of adding extra months to life. That’s a variation on Great Britain’s cost-effectiveness model, which has been roundly condemned by most U.S. politicians and the press.

The other path is to turn to a bundled payment for every for every episode of cancer care and let the health care delivery organizations and private insurers sort it out. (Bundled payments account for all medical services associated with a given episode of care—doctors, nurses, technicians, etc.) That approach, in essence, would force the marketplace to execute the rationing.

“Bundled payment isn’t a panacea, but it does create incentives,” Neumann said. Some private insurers are experimenting with bundled payments for cancer care.

A quick review of the new cancer drugs approved by the Food and Drug Administration last year reveals how fast drug prices are rising.

Most of the older chemotherapy regimens for cancer, some of which have been around since the 1950s, are generic and relatively inexpensive.

But among the six new drugs approved in 2011, the cheapest – Johnson & Johnson’s Zytiga for advanced prostate cancer – cost $44,000 a year. The drug extended life by an average of less than 5 months to 16 months, according to a company spokesperson.

At the high end of the spectrum was Adcetris, a biotech product from Seattle Genetics that treats recurrences of Hodgkin’s lymphoma. A highly curable disease when initially treated in the 8,830 mostly middle-aged patients who get the disease every year, it is usually fatal if a drug-resistant strain emerges later in life.

Adcetris, the first new treatment to come along since 1977, kept the cancer in check for nearly 7 months in the single small trial that led to its quick FDA approval. It’s price tag: $216,000 for a full course of treatment.

Skin cancer specialists had a lot to cheer about in 2011 with two new therapies coming on the market for metastatic melanoma, which is fatal within one year for about 75 percent of the 10,000 people stricken each year.

But Roche/Genentech’s Zelboraf cost $61,400 a year and Bristol-Myers Squibb’s Yervoy, which nearly doubled the one-year survival rate from 25 percent to 46 percent, cost $120,000 for a four-month course of treatment.

“We price our medicines based on a number of factors including the value they deliver to patients and the scientific innovation they represent,” said Sarah Koenig, a spokeswoman for Bristol-Myers. “We have one of the most robust patient assistance programs for cancer patients in the industry.”

Most drug companies have patient assistance programs for poor or struggling patients, but many only come into play if patients are poor or families have exhausted their savings.

And since many of the latest therapies, like the older chemotherapies they are replacing or supplementing, extend life for brief periods of time, patients wind up weighing whether they want to deplete their children’s inheritances for a couple extra months of being very, very sick.

A study released at last June’s annual conference of the American Society of Clinical Oncology, which represents the nation’s 25,000 oncologists, revealed that patients with co-payments over $500 a month were four times more likely to refuse treatment than those whose co-payments were under $100 a month.

“The price of drugs can’t be set so outrageously high,” study author Lee Schwartzberg told Reuters. Schwartzberg is the chief medical officer at Acorn Research, which conducted the study.

“All stake holders have to get together and compromise to translate this great science into great patient care without breaking the bank.


This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Three red and white capsules

Health care reform: Prove it works and we’ll pay

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By Merrill Goozner, The Fiscal Times

This story comes from

Savvy consumers know the drill. Toyota takes a high-end Camry, slaps a Lexus nameplate adds bells, whistles and leather seats, and charges customers $10,000 more.

Nobody cares when people spend their own money for the illusion of higher quality.

But when it comes to Medicare, where it is everybody’s money and overpriced technologies are a significant factor undermining the senior citizen health care program’s long-term financial viability, it is no longer acceptable.

Two researchers with past experience setting payment policy at the Centers for Medicare and Medicaid Services (CMS) say the time has come to rip the nameplate off new and higher-priced medical technologies that do not deliver better outcomes than older methods of care.

They have come up with an alternative scheme for setting prices at CMS, where the time-worn method of adding a profit to self-reported industry costs to set prices dates from World War II.

Companies that ask Medicare to begin paying for an ostensibly better mouse trap will get three years to show that it is superior to older treatments.

The technical name for their proposal is “reference pricing.”

Companies that ask Medicare to begin paying for an ostensibly better mouse trap will get three years to show that it is superior to older treatments, whether it is a drug, a device, a diagnostic test or a new surgical technique.

Companies that fail to provide proof of superiority will only receive the same price as the older technology, no matter how much it cost to develop the newer one.

“It’s a way for CMS to combine clinical effectiveness with cost effectiveness in a way that can work in the U.S.,” said Steven D. Pearson, president of the Institute for Clinical and Economic Review in Boston and a former advisor to CMS.

His co-author on a paper that appears in the latest Health Affairs is Peter Bach of Memorial Sloan-Kettering Cancer Center in New York, who served at CMS during the Bush administration.

The government poured $1.1 billion in stimulus funds into making comparisons between competing medical technologies. The Patient Protection and Affordable Care Act earmarked another half billion dollars annually for the effort over the next decade, and last week the Government Accountability Office appointed a 17-member board to oversee the research.

“. . . show me the data or you get the old price.”

The question now is how to make use of this information once it begins getting published in medical journals and government websites.

The authors’ proposed pricing method leaps over the roadblocks to using comparative effectiveness research that were included in the recently enacted health care reform law which specifically prohibited CMS from using comparative effectiveness research to deny patients access to any technology that has been approved by the Food and Drug Administration.

Manufacturers of medical technologies, many patient advocacy groups and their backers on Capitol Hill insisted on that provision.

Under the Pearson-Bach proposal, however, CMS won’t have to say no.

“Companies will be under the gun of a three-year deadline to measure outcomes to maintain their higher prices.”

The agency could simply say, “show me the data or you get the old price.”

“We’re saying let’s pay comparable prices for comparable results,” said Pearson. “It’s a different paradigm.”

The three-year grace period arises from the fact that many new technologies such as drug-eluting stents open clogged arteries and advanced radiation cancer therapy came to market with very little clinical data backing their approvals and none comparing them to older techniques.

The FDA has asked the Institute of Medicine to recommend ways it can overhaul its device approval system to generate better data on the front end of the approval process.

Drug-eluting stents, for instance, introduced in the early 2000s, quickly seized 90 percent of the market from older bare metal stents without proof of their superiority and despite being much more expensive.

A half decade later, evidence began emerging that the drug-eluting stents may actually have had worse outcomes than the bare-metal variety, and usage dropped sharply.

“Historically, there is a surge whenever new technologies are introduced driven by higher reimbursements” for physicians and manufacturers, Pearson said.

They have no incentive to generate data showing how well it is working once on the market.

Under the proposed reference pricing scheme, however, companies will be under the gun of a three-year deadline to measure outcomes to maintain their higher prices.

Pearson dismissed concerns that reference pricing would discourage innovation in medicine by making companies reluctant to invest in new technology.

“It would be okay if it leads some companies to leave some projects on the drawing room table,” he said. “We want them to prioritize the development of products that really have a superior patient outcome. The system doesn’t work hard to do that now,” he said.

The proposal received a cool reception from device makers, one of the industries that would face new hurdles for raising prices under reference pricing.

“AdvaMed (the industry trade group) supports comparative effectiveness research to inform patients and their providers in selecting the most appropriate care for individual patient needs,” said Ann-Marie Lynch, executive vice president of payment and health care delivery policy. “CER should not be used to deny coverage, or otherwise limit access directly, or indirectly through the reimbursement system.”

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Pink Ribbon

Breast Cancer: How politics is driving up costs

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By Merrill Goozner, The Fiscal Times

This story comes from KaiserHealthNews partner

Pink ribbon to raise breast cancer awarenessFirst it was the dust-up. Now it’s high-priced drugs for breast cancer.

Late last week, the Food and Drug Administration received a letter from Susan B. Komen for the Cure, the pink ribbon-bedecked juggernaut among breast cancer treatment advocacy groups, demanding the agency maintain its approval of Genentech’s Avastin for women with life-threatening metastatic breast cancer.

“We recognize the benefits of Avastin overall are modest for women with metastatic breast cancer,” Komen chief Nancy G. Brinker said in the letter. “However, we do know that for some women, Avastin offers a greater than modest benefit.”

Lawmakers have also sent warning letters to the FDA. Sen. David Vitter, R-La., told The Washington Post over the weekend that he feared “this is the beginning of a slippery slope leading to more and more rationing under the government takeover of health care.”

Women’s access to the drug isn’t at stake — at least for those with money. Avastin, designed to restrict the formation of new blood vessels that feed nutrients to fast-growing cancer tumors, has clearly shown its benefit for colorectal cancer, so it will stay on the market. Any physician can prescribe an approved drug for any condition if he or she thinks it will benefit the patient.

But an FDA decision to pull back its specific approval for the breast cancer indication would allow (not require) insurers — including Medicare and Medicaid — to reject paying for the Avastin, whose annual costs can reach $100,000 a year for those who live that long.

The Drawback to “Accelerated Approval”

Why would a government agency like the FDA incur the wrath of the breast cancer advocacy community so soon after the U.S. Preventive Services Task Force got rebuked by advocates and Congress for daring to suggest that annual mammograms for women under 50 probably weren’t necessary?

Last month, an FDA advisory committee made up of academic experts without ties to the drug industry voted 12-1 to withdraw the agency’s previous approval of Avastin for breast cancer.

That nod, given in 2008, had been based on a single clinical trial that showed the drug, when added to chemotherapy in women with far-advanced disease, delayed tumor progression for an additional 5 1/2 months compared to women who got chemotherapy alone.

The new evidence contained in the two confirmatory clinical trials submitted to the FDA earlier this year disappointed fans of the drug.

However, there was a catch. That single trial didn’t last long enough to show whether the women on Avastin lived any longer. So the FDA gave the drug so-called “accelerated approval,” which is a process created during the early days of the AIDS epidemic for rushing potentially life-saving drugs to market.

Companies can begin marketing a drug given accelerated approval, but they must also conduct new trials to confirm that the surrogate marker of clinical benefit — in this case, postponement of tumor growth – actually postponed death.

“We now have a number of well done studies that show no benefit to extension of life,” — Wyndham Wilson of the National Cancer Institute.

The new evidence contained in the two confirmatory clinical trials submitted to the FDA earlier this year disappointed fans of the drug.

In one, Avastin delayed tumor progression for three months, but the average length of time to death stayed the same.

In the other, delay of tumor progression dropped to less than a month, and the patients on Avastin actually fared worse in terms of time until death than those on chemotherapy alone.

“We now have a number of well done studies that show no benefit to extension of life,” the chairman of the committee, Wyndham Wilson of the National Cancer Institute, said near the conclusion of the meeting. “It hasn’t been shown that it has a clinical benefit.”

“When we approved this drug, there was considerable controversy over the magnitude of the improvement in progression free survival,” said Richard Pazdur, director of the office of oncology drug products at the FDA. “We’re… somewhat disappointed that the initial enthusiasm” for the drug was not borne out by the new trials.

The Political Hurdles

If the FDA caves to the pressure and allows Genentech to keep advanced metastatic breast cancer on the Avastin label, it will be one more indication that the nation still isn’t serious about controlling health care costs by complying with science-based medicine.

But as so often happens in health care, the science of well controlled clinical trials (sometimes called the gold standard of medical research) must also clear political hurdles before it can be incorporated into standard medical practice.

Patient advocacy groups are in the business of providing hope to their donors, which for Komen’s ubiquitous “Race for the Cure” fundraisers includes millions of women across the U.S.

The group, which generates over $100 million a year for research, also spends $1 million a year lobbying, according to its latest Internal Revenue Service filing.

Drug companies are in the business of selling drugs, and, as Genentech’s Sandra Horning argued to the advisory committee, they are also in the business of selling hope.

Allowing patients with metastatic breast cancer to hope for a few more weeks that their tumors weren’t progressing provided substantial solace to those women, she said.

That comment provoked heated rebuttal from many advisors, including several of the practicing oncologists on the committee, about whether that was worth the vomiting, stomach pains and raised blood pressure that many women experience on the drug.

And then there’s the bipartisan consensus on Capitol Hill, which backs health care cost control except when it means that it might cost votes.

Vitter may be a Republican, but it was Sen. Barbara Mikulski, D-Md., who led the charge to include in the Patient Protection and Affordable Care Act (health care reform) a mandate that the government pay for all mammograms, no matter what the age of the patient.

If the FDA caves to the pressure and allows Genentech to keep advanced metastatic breast cancer on the Avastin label, it will be one more indication that the nation still isn’t serious about controlling health care costs by complying with science-based medicine.

Merrill Goozner is the author of The $800 Million Pill: The Truth behind the Cost of New Drugs.


This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Three red and white capsules

Bad Medicine: The Real Cost of a Dangerous Drug

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Will comparative effectiveness prevent harmful and costly treatments?

By Merrill Goozner, The Fiscal Times

This story comes from KaiserHealthNews partner

Making drugs safer saves lives. It also lowers health care costs.

The Food and Drug Administration later this year will impanel an advisory committee to consider whether to pull GlaxoSmithKline’s diabetes drug Avandia off the market.

An internal FDA report leaked to The New York Times in February suggested the drug is causing in excess of 800 heart failure and heart attack cases a month, with one in eight leading to premature death.

The Avandia problem is not new.  Between 1999, when the drug came on the market, and 2007, the year its sales plunged after its dangerous side effects were brought to light by a study in The New England Journal of Medicine, an estimated 41,000 to 205,000 diabetics may have suffered unnecessary heart attacks and heart failures, according to Steven E. Nissen, a cardiologist at the Cleveland Clinic who co-authored the analysis.

The safety controversy swirling around the drug has been accompanied by allegations of scientific skullduggery. They include charges that a peer reviewer leaked the NEJM manuscript to Glaxo officials prior to publication, and Glaxo prematurely halted a study designed to show if Avandia was safe.

Capitol Hill has also jumped into the controversy. A Senate Finance committee report issued in February blasted the FDA’s handling of Avandia over the years and alleged that Glaxo attempted to intimidate researchers who had sought to bring the drug’s safety problems to light.

The company denied those charges. And last week, a spokeswoman said the company will mount a vigorous defense of the drug at the FDA’s July hearing.

“Six large randomized controlled clinical trials have looked at the cardiovascular safety of Avandia and none show a connection,” she said.

The Real Cost

Drug safety generates lots of headlines, and the FDA advisory committee will no doubt focus exclusively on that issue.

But drug safety is also a cost issue.

If the FDA’s internal reviewers are accurate, those 800 excess heart failures a month are costing the health care system nearly a half-billion dollars a year (conservatively estimating the cost of treating a single heart attack including follow-up care at about $50,000 a year).

Safer alternatives that work just as well at the primary task of lowering blood sugar in diabetics — and several are available — would not only save lives, they would eliminate that unnecessary expenditure.

What Works, What Doesn’t

The original industry-funded clinical trials that lead to a drug’s or device’s approval usually contain no comparisons, since the law requires they only be compared to placebo.

The recently enacted health care reform bill calls for investing more money in comparative effectiveness research, which will show which health care interventions work best for a particular disease.

Obviously, such studies will take both the benefits and risks of competing treatments into account. The Obama administration’s $787 billion stimulus package includes a $1.1 billion down payment on the program.

But by its very nature, comparative effectiveness research cannot appear until years after competing treatments have come on the market.

The original industry-funded clinical trials that lead to a drug’s or device’s approval usually contain no comparisons, since the law requires they only be compared to placebo.

Follow-up studies that compare various approaches only appear gradually. In the interim, the health care system can waste billions, and harm thousands.

How can the process be shortened? One way is to generate better information about the safety of drugs on the front end of the approval process.

A Possible Solution

The FDA on Monday held its first public hearing on the 2012 reauthorization of the Prescription Drug User Fee Act, which occurs every five years.

Under PDUFA, originally passed in 1992, drug and device companies pay fees to the FDA in exchange for more rapid review of their new drug applications.

About one-half of the $1 billion Center for Drug Evaluation and Research budget now comes from industry user fees.

The last time Congress reauthorized PDUFA (in the wake of the painkiller Vioxx’s withdrawal from the market for its heart attack problems), it gave the FDA more power to demand that companies implement risk management plans when new drugs show hints of safety problems in their original approval trials.

The plans usually involve closely monitoring the patients who take the drugs immediately after they go on the market. Had such a program been in place in 1999, Avandia would have no doubt been subjected to a Risk Evaluation and Mitigation Strategy (REMS), since there was an elevated but statistically insignificant increase in heart problems in its first clinical tests.

The industry plans to use the hearing to push the FDA to streamline the REMS approval process and make it less onerous.

“Implementation of . . . REMS has led to a breakdown in FDA’s review process and has eroded some of the positive progress derived from earlier PDUFA agreements,” David Wheadon, senior vice president at the Pharmaceutical Research and Manufacturers of America, testified.

Consumer groups, meanwhile, pushed for more controls over direct-to-consumer advertising and better access to the results of early stage clinical trials.

But no one is pushing the FDA to require companies to conduct comparative clinical trials when they are developing new drugs for diseases for which there are already existing treatments. The trials would need to be large enough to test not only which drug was better for the condition, but which drug was safer.

If someone pushed for such a reform, the companies would complain bitterly that it would raise the cost of developing new drugs. That is true. But it would actually be a win-win-win reform.

It would be better for patients and physicians since they would more quickly learn which are the safer and more effective treatments.

It would be better for insurers and their customers since it would save the health care system money.

And it would be better for the drug and device industries, since it would force companies to focus their research on truly innovative products.

And that would be more profitable, at least for the winners, since they would be able to charge higher prices and gain greater market share.

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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