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Expensive New Drugs: Are They Worth It?

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    • 1. Expensive New Drugs:Expensive New Drugs: Are They Worth It?Are They Worth It? David Orentlicher, MD, JDDavid Orentlicher, MD, JD Indiana University Schools of Law and MedicineIndiana University Schools of Law and Medicine Indiana House of RepresentativesIndiana House of Representatives October 29, 2008October 29, 2008 (With thanks to Paul R. Helft, MD(With thanks to Paul R. Helft, MD Indiana University School of Medicine)Indiana University School of Medicine)
    • 2. Cancer drugs as an area of concern  Cancer treatment in the US cost $72.1 billion inCancer treatment in the US cost $72.1 billion in 20042004  Just under 5% of the total US spending on medicalJust under 5% of the total US spending on medical carecare  1995-2004, overall costs of treating cancer rose1995-2004, overall costs of treating cancer rose by 75%by 75%  These costs are expected to rise faster than the rateThese costs are expected to rise faster than the rate of overall medical expenditures in the futureof overall medical expenditures in the future NCI, The Nation’s Progress in Cancer Research: An annual report for 2004
    • 3. Cost of treatment for metastatic colon cancer (Schrag D. NEJM. 2004;351:317-319)
    • 4. Can we afford these drugs?  Avastin (monoclonal antibody to block blood vesselAvastin (monoclonal antibody to block blood vessel growth) = $4,000-$9,000/monthgrowth) = $4,000-$9,000/month  For treating metastatic colon cancer; also lung and breast cancerFor treating metastatic colon cancer; also lung and breast cancer  Erbitux (monoclonal antibody to block cell growth) =Erbitux (monoclonal antibody to block cell growth) = $17,000/month$17,000/month  For treating metastatic colon cancer; also head and neck cancerFor treating metastatic colon cancer; also head and neck cancer  Zevalin (monoclonal antibody that binds a radioactiveZevalin (monoclonal antibody that binds a radioactive isotope) = $24,000/monthisotope) = $24,000/month  For treating non-Hodgkin’s lymphomaFor treating non-Hodgkin’s lymphoma  SIR-Spheres (radioactive microspheres) = $14,000/dose,SIR-Spheres (radioactive microspheres) = $14,000/dose, with an overall cost = $150,000?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 inDepends on their benefit—commonly measured in QALYsQALYs
    • 5. What is a QALY?What is a QALY? 0 1 Dead Perfect health Major stroke Recurrent stroke Writing a grant proposal
    • 6. 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
    • 7. Some sample QALYs (2002 dollars)Some sample QALYs (2002 dollars) Harvard Public Health Review (Fall 2004)Harvard Public Health Review (Fall 2004)  < $0 (If the cost per QALY is less than zero, the intervention actually saves< $0 (If the cost per QALY is less than zero, the intervention actually saves money)money) Flu vaccine for the elderlyFlu vaccine for the elderly  Under $10,000Under $10,000 Beta-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 $20,000 Combination antiretroviral therapy for certain patients infected with the AIDS virusCombination antiretroviral therapy for certain patients infected with the AIDS virus  $15,000 to $20,000$15,000 to $20,000 Colonoscopy every five to 10 years for women age 50 and upColonoscopy every five to 10 years for women age 50 and up  $20,000 to $50,000$20,000 to $50,000 Antihypertensive medications in adults age 35-64 with high blood pressure but noAntihypertensive medications in adults age 35-64 with high blood pressure but no coronary heart diseasecoronary heart disease Lung 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-$100,000 Dialysis for patients with end-stage kidney diseaseDialysis for patients with end-stage kidney disease Antibiotic prophylaxis during dental procedures for persons at moderate to high riskAntibiotic prophylaxis during dental procedures for persons at moderate to high risk of bacterial endocarditis ($88,000) (of bacterial endocarditis ($88,000) (Med Decis Making. 2005;25(3):308-20)Med Decis Making. 2005;25(3):308-20)  Over $500,000Over $500,000 CT and MRI scans for children with headache and an intermediate risk of brainCT and MRI scans for children with headache and an intermediate risk of brain tumortumor
    • 8. 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
    • 9. The example of bevacizumab (Avastin)The example of bevacizumab (Avastin)  2007 sales of $2.3 billion in US ($3.52007 sales of $2.3 billion in US ($3.5 billion worldwide) to treat about 100,000billion worldwide) to treat about 100,000 patients with advanced lung, colon orpatients with advanced lung, colon or breast cancerbreast cancer  Genentech price: $4,000-$9,000 a monthGenentech price: $4,000-$9,000 a month  Cost to private insurers: As high asCost 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?
    • 10. Phase III trial of bevacizumab in metastatic colon cancerPhase III trial of bevacizumab in metastatic 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 Percentsurviving 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
    • 11. Examining the cost and cost-effectiveness of adding bevacizumab (Avastin) to chemo in metastatic colon cancer  Randomized trial compared chemotherapy aloneRandomized trial compared chemotherapy alone vs. chemotherapy + bevacizumabvs. chemotherapy + bevacizumab  Bevacizumab regimen prolonged medianBevacizumab regimen prolonged median survival from 15.6 to 20.3 months (p<0.001)survival from 15.6 to 20.3 months (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 adjusted)$259,149 per year of life gained (not quality adjusted)
    • 12.  Randomized trial compared chemotherapy aloneRandomized trial compared chemotherapy alone vs. chemotherapy + bevacizumabvs. chemotherapy + bevacizumab  Bevacizumab regimen prolonged median survivalBevacizumab regimen prolonged median survival from 10.2 to 12.5 months (p=0.007)from 10.2 to 12.5 months (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 $66,270$345,762 per year of life gained (assuming $66,270 cost)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
    • 13. Do oncologists believe bevacizumabDo oncologists believe bevacizumab offers good value?offers good value?  Survey of 139 academic med oncologists at twoSurvey of 139 academic med oncologists at two hospitals in Bostonhospitals in Boston  Designed to estimate cost-effectiveness of bevacizumabDesigned to estimate cost-effectiveness of bevacizumab (Avastin): what is a justifiable cost-effectiveness amount;(Avastin): what is a justifiable cost-effectiveness amount; does the drug provide “good value”; ?does the drug provide “good value”; ?  Mean implied cost-effectiveness threshold forMean implied cost-effectiveness threshold for bevacizumab was $320,000/QALYbevacizumab was $320,000/QALY  Only 25 percent of the oncologists thoughtOnly 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
    • 14. Studies of patients’ attitudes toward expensive cancer drugs and their benefits
    • 15. Is it cost-effective to add erlotinib toIs it cost-effective to add erlotinib to gemcitabine in advanced pancreatic cancer?gemcitabine in advanced pancreatic cancer?  Cost effectiveness analysis of erlotinib (Tarceva) inCost effectiveness analysis of erlotinib (Tarceva) in pancreatic cancerpancreatic cancer  Study enrolled 569 patients and comparedStudy enrolled 569 patients and compared gemcitabine alone versus gemcitabine plus erlotinibgemcitabine alone versus gemcitabine plus erlotinib  Median survival improved from 6.0 to 6.4 monthsMedian survival improved from 6.0 to 6.4 months  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 year of$498,379 per year of life gained ($332,252 per year of life gained for a 4 month course of therapy)life gained for a 4 month course of therapy)  Grubbs SS et al., J. Clin. Oncology. 2006;24(18S):6048
    • 16. Cost-effectiveness analysis of trastuzumabCost-effectiveness analysis of trastuzumab (Herceptin) in the adjuvant setting for(Herceptin) in the adjuvant setting for treatment of HER2+ breast cancertreatment of HER2+ breast cancer  Trastuzumab (a monoclonal antibody) associatedTrastuzumab (a monoclonal antibody) associated with a 52% reduction in disease recurrence andwith a 52% reduction in disease recurrence and 33% reduction in death.33% reduction in 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 (rangeOver a lifetime, cost per QALY $27,800 (range $18-39,000)$18-39,000)  Garrison LP et al. J Clin Oncology. 2006;24(18S):6023
    • 17. Expensive new drugs and the poor  Cost pressures are similar for privately insured andCost pressures are similar for privately insured and publicly insured (or uninsured), but the pressurespublicly insured (or uninsured), but the pressures are accentuated with the poorare accentuated with the poor  Program and personal budgets are tighterProgram and personal budgets are tighter  Trade-offs are more tangible—when a state’s MedicaidTrade-offs are more tangible—when a state’s Medicaid budget rises, spending on other public services (e.g.,budget rises, spending on other public services (e.g., schools) may decline, and this can pit poor againstschools) may decline, and this can pit poor against other taxpayersother taxpayers
    • 18. 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 source.approximately 36% are uninsured by any source.  Pharmacy budget at WMH was around $18 millionPharmacy budget at WMH was around $18 million (2005)(2005)  855 metastatic colon cancer patients receiving855 metastatic colon cancer patients receiving FOLFOX + bevacizumab cost entire WishardFOLFOX + bevacizumab cost entire Wishard pharmacy budgetpharmacy budget  500 stage II and III patients receiving adjuvant500 stage II and III patients receiving adjuvant FOLFOX alone cost entire pharmacy budgetFOLFOX alone cost entire pharmacy budget (Actual number of colon cancer patients at Wishard in the dozens(Actual number of colon cancer patients at Wishard in the dozens per year; numbers above are less than in Indiana overall)per year; numbers above are less than in Indiana overall)
    • 19. Growth in Medicaid spending (Medicaid expenditures as percentage of total state spending) 19871987 19971997 20072007 IowaIowa 5.05.0 13.413.4 16.716.7 IndianaIndiana 10.710.7 17.617.6 21.421.4 OhioOhio 10.610.6 20.820.8 25.925.9 IllinoisIllinois 10.110.1 23.723.7 28.428.4 New YorkNew York 16.616.6 33.433.4 28.728.7 All StatesAll States 9.89.8 20.020.0 21.121.1
    • 20. Medicaid expenditures ($ 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).
    • 21. What drives increased spending on pharmaceuticals?  Number of prescriptions dispensed (42%)Number of prescriptions dispensed (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 existing drugsManufacturer price increases for existing drugs (25%)(25%) Prescription drug trends. October 2004; http://www.kff.org/rxdrugs/upload/Prescription-Drug- Trends-October-2004-UPDATE.pdf
    • 22. Is increased spending on drugs bad?  Prescription drugs can treat—or prevent—seriousPrescription drugs can treat—or prevent—serious illnessesillnesses  consider, for example, statins to lower cholesterol and the risk of heart attacks, insulin to control blood sugar  But there is considerable over-prescribing—manyBut 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
    • 23. Expensive new drugs and the poor  Difficult to protect the poor when it’s only theDifficult to protect the poor when it’s only the poor whose interests are at stakepoor whose interests are at stake  Political decisions driven by interest group advocacy,Political decisions driven by interest group advocacy, and the poor often fare poorly in such a system (butand the poor often fare poorly in such a system (but sometimes their interests coincide with those of moresometimes their interests coincide with those of more effective advocates—see formulary restrictions)effective advocates—see formulary restrictions)  Need to link the fortunes of the poor to those ofNeed to link the fortunes of the poor to those of others (Medicaid versus Medicare) and need otherothers (Medicaid versus Medicare) and need other systemic reforms to address the wasteful spendingsystemic reforms to address the wasteful spending problemsproblems
    • 24. Successful health care reformSuccessful health care reform  Social welfare programs fare better whenSocial welfare programs fare better when  Universal rather than targeted just at poorUniversal 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 (Medicare,Beneficiaries are “innocent” persons (Medicare, SCHIP)SCHIP)  Benefit levels determined by federal rather thanBenefit levels determined by federal rather than state government (Medicare vs. Medicaid)state government (Medicare vs. Medicaid)  Benefits can be limited easily (food and shelter vs.Benefits can be limited easily (food and shelter vs. health care)health care)
    • 25. Systemic reform: reduce over-prescribing  Important social pressures  The identifiable victim versus saving statistical lives (lowThe identifiable victim versus saving statistical lives (low osmolar contrast media and the Canadian experience)osmolar contrast media and the Canadian experience)  Physician relationships with industry (consulting fees forPhysician relationships with industry (consulting fees for opinion leaders)opinion leaders)  Physician reimbursement (cancer chemotherapy)Physician reimbursement (cancer chemotherapy)  Patient desire for a prescription (direct-to-consumerPatient desire for a prescription (direct-to-consumer advertising and cyclyooxygenase-2-inhibitors (coxibs)advertising and cyclyooxygenase-2-inhibitors (coxibs) for arthritis (e.g., Vioxx))for arthritis (e.g., Vioxx))  Counter-regulation is critical (e.g., preferred drugCounter-regulation is critical (e.g., preferred drug lists), but some regulations cause more harm thanlists), but some regulations cause more harm than good (e.g., prescription caps)good (e.g., prescription caps)

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