A Q&A with Pramod John, PhD, CEO of VIVIO Health, a specialty drug management company in San Leandro, CA, that aims to provide better outcomes at lower costs; firstname.lastname@example.org
Originally published December 13, 2017
Q: Some American pharmaceutical companies are well-known for pricing drugs at “whatever the market will bear.” In oncology, some specialty drugs seem to have price tags completely unrelated to the proven effectiveness of the drug. Your company has been taking a lead in confronting this problem. What do you envision as possible solutions?
“You already know you pay too much for prescription medication. But a new study by Memorial Sloan Kettering Cancer Center reveals one simple factor that may be contributing to high costs: Waste.
“According to the new study, published Tuesday inBMJ, as much as $3 billion worth of cancer drugs is thrown away every year, unused. The reason why is drug manufacturers package single dose vials that contain more medicine than needed so that leftover medication is simply thrown away. As the authors, which includes Peter Bach, director of MSK’s Center for Health Policy and Outcomes, note:
” ‘These drugs must be either administered or discarded once open, and because patients’ body sizes are unlikely to match the amount of drug included in the vial, there is nearly always some left over. The leftover drug still has to be paid for, even when discarded, making it possible for drug companies to artificially increase the amount of drug they sell per treated patient by increasing the amount in each single dose vial relative to the typically required dose.’ “
” ‘Skin in the game’ is a phrase that has gained popularity in the healthcare market. It implies that if patients have a personal financial stake in a decision, such as higher out-of-pocket expenses, they will be more prudent and act more responsibly.
“Skin in the game can work to some degree, note Hagop Kantarjian, MD, chair of the Department of Leukemia, the University of Texas MD Anderson Cancer Center, Houston, and colleagues in a viewpoint article published online July 2 in JAMA Oncology.
“However, for many cancer patients, it has become ‘life in the game,’ they add.”
“In 1987, my 3rd year of medical school, I sat in a morbidity and mortality conference listening to a senior oncologist explain that his patient ‘did not want to give up’ despite suffering from incurable metastatic cancer. ‘So we offered him therapy with vinblastacancer and cytokilocure,’ he said. (I’m paraphrasing here, and making up some pretty horrific sounding medication names, because I wasn’t taking notes at the time.) He then concluded by explaining that the patient’s tumor didn’t respond to further chemo, and he died in the hospital.
“I raised my hand: ‘I’m just wondering why you thought you were doing this patient a favor by torturing him with useless treatments before he died.’ The room let out a collective gasp at the temerity, the out and out rudeness, of my question. The oncologist, to his credit, remained calm, explaining that the patient wanted the treatment and that the treatment was his only hope for slowing down the cancer. The conference concluded, and I walked into the hall where the chief medical resident chewed me out, quite appropriately, for asking the question in a disrespectful manner.”
“Cancer drugs with six-figure price tags are here to stay, according to an analysis by Bloomberg Business. Even though the oncology community, health insurers, and even President Obama have all spoken out against high costs, prices continue to rise with each new drug that enters the marketplace.
“So, a prominent oncologist has decided to tackle the problem from another angle — that of bringing the patients to the forefront of the issue.
“As previously reported by Medscape Medical News, Hagop Kantarjian, MD, PhD, chair of the Department of Leukemia at the University of Texas MD Anderson Cancer Center, in Houston, has been a driving force behind an online petition aimed at garnering more than 1 million signatures in order to put pressure on the government to do something about the high prices.
” ‘If we collect enough signatures — hopefully over 100,000, but we are hoping for a million — we can deliver it to our elected representatives and to the White House and ask them to stop representing special interest groups and represent the people who elected them,’ Dr Kantjarian said in an interview. ‘This is, after all, a democracy, unless the United States has changed into a “pharmaceutocracy.” ‘ “
“A new survey of hospitals and academic medical centers finds that a recent move by Genentech to switch distribution of three widely used cancer treatments – Avastin, Rituxan and Herceptin – is resulting in higher costs, reduced access to the medications and delays in treating patients. And the institutions are hoping the results will prompt the drug maker, which says it’s unaware of such problems, to revert to its earlier distribution program.
“Here’s the background: Last fall, Genentech began using just a few distributors that specialize in handling such medicines. Until then, the Roche unit used dozens of wholesalers, although the specialty distributors are actually divisions of some of those same wholesalers. Genentech says the change was made to save money, but also make distribution more efficient and prevent the possibility of shortages.
“However, most of the institutions – 93% – say they had not experienced shortages, and the move has disrupted not only their finances, but patient care. The survey also found that 81% say the switch will have a moderate to significant impact on their expenses. Meanwhile, 63% say deliveries have been unreliable and 88% reported a delay in patient treatment because one of the drugs was unavailable.
“The institutions say they are forced to increase inventories to hedge against any supply disruptions that may occur because shipping can take longer, depending upon the location of the distributor. Some institutions say they cannot afford to keep large amounts of drug on hand, which can result in delays in treating new patients or unexpected events. And previous discounts may no longer be available.”
“Express Scripts Holding Co., which this year forced price concessions from makers of $1,000-a-day hepatitis C medicines, has set its sights on $37 billion in U.S. spending on cancer medications. Its goal is to start influencing the drugs’ costs as soon as next year.
“Express Scripts is the country’s biggest manager of prescription drug benefits. However, its reach doesn’t extend to many injected or infused cancer drugs administered in doctors’ offices and hospitals, not dispensed in retail pharmacies. The St. Louis-based company’s ambition is to change that, including eventually for new drugs that trigger the body’s own immune system to attack tumors and can cost $150,000.
“ ‘We want to be able to start influencing the market by 2016,’ said Steve Miller, Express Scripts’ chief medical officer, in an interview at Bloomberg’s offices in New York. ‘We are accumulating all the keys to the puzzle to be able to do this.’ ”
“Eli Lilly charges more than $13,000 a month for Cyramza, the newest drug to treat stomach cancer. The latest medicine for lung cancer, Novartis’s Zykadia, costs almost $14,000 a month. Amgen’s Blincyto, for leukemia, will cost $64,000 a month.
“Why? Drug manufacturers blame high prices on the complexity of biology, government regulations and shareholder expectations for high profit margins. In other words, they say, they are hamstrung. But there’s a simpler explanation.
“Companies are taking advantage of a mix of laws that force insurers to include essentially all expensive drugs in their policies, and a philosophy that demands that every new health care product be available to everyone, no matter how little it helps or how much it costs. Anything else and we’re talking death panels.
“Cancer drug prices keep rising. The industry says this reflects the rising costs of drug development and the business risks they must take when testing new drugs. I think they charge what they think they can get away with, which goes up every year.
“Let’s consider the two arguments, and how the latest new drug for lung cancer supports each.
“The drug is Zykadia, Novartis ’ pill for a sub-type of lung cancer caused by a defect in the Alk gene, approved by the FDA in April of this year. The company charges $13,200 per month for it. Its competitor is the older drug Xalkori, Pfizer ’s pill that has the same mechanism of action and targets the same type of lung cancer. Approved in 2011, it costs $11,500 per month. In other words, Zykadia costs almost $2000 more per month.
“The industry talks about the risk that a drug they develop may not work. True, there are large risks, as clinical research often fails to pan out. Novartis took that risk with Zykadia. But Zykadia is a me-too drug. Xalkori, the drug it imitates, was the first of its kind. So whatever Novartis’ risk, Pfizer’s was greater. Yet Zykadia costs more.”
Editor’s note: This is an interesting opinion piece on the rising costs of cancer drugs.