Propaganda or the cost of innovation? Challenging the high price of new drugs

The impact of conventional cost-effectiveness analysis on pricing dynamics in the market of new medicines: a proposed countervailing approach

BACKGROUND

Countries using cost effectiveness ratio as a decision tool for price and reimbursement decisions still witness accelerating price increases. The objective of this paper is to propose a change in the application of the incremental cost effectiveness ratio as a criterion for price policy.

RESEARCH DESIGN

We develop a model that sets a price for marginal effectiveness equal to the marginal willingness to pay, but it reimburses average effectiveness according to the size of increased QALY gain.

RESULTS

This new formula also allows to split the economic value of drug between patients and the industry and creates a reward to invest into QALY gains. We show some empirical data of the new prices derived from the application of the new formula, as well as the implications in terms of the consumer and manufacturer´s surplus based on two potential scenarios of the incentives generated by this new formulation.

DISCUSSION

We propose that small increases in life expectancy be priced differently from substantial as a way of containing the price dynamics.

CONCLUSIONS

A change in the application of the ICER threshold will help to reduce the price pressure on public budgets.

Medication Wastage in a University Hospital in Japan

Medication wastage is a global issue; however, there are few reports in Japanese hospitals. The purpose of this study was to clarify the situation of medication wastage at our university hospital. We investigated the numbers, costs, reasons, occurrence departments, and involvement of high-priced medications of medication wastage for two years. We analyzed 6730 cases and the total cost was 22782027 Japanese yen (JPY). The most common reasons for medication wastage were change or discontinuation of medication after preparation and breakage or contamination due to dropping. The highest cost was expired medications. The department with the highest number of cases was the hospital wards; however, the hospital pharmacy department accounted for the majority of the costs and most of the reasons were expired medications. Medication wastage of 50000 JPY or more per case was only 1.3% of the total but accounted for 70.7% of the cost and medication wastage of 100000 JPY or more per case was only 0.7% of the total but accounted for 58.6% of the cost. These findings indicate that expired medications in the hospital pharmacy department have the largest impact on medication wastage from the viewpoint of economic loss, and suggest the need for efforts on medication management focusing on high-priced medications. The challenge of minimizing medication wastage should be addressed from the perspectives of both hospital management and the effective use of resources.

Drug Prices and Value of Oncology Drugs in Italy

OBJECTIVE

The main objective of this study was to evaluate the potential role of efficacy data and other information available at the time of price and reimbursement (P&R) decision-making process within the definition of oncology treatment costs in Italy.

METHODS

The study included all P&R dossiers submitted to the Italian Medicines Agency between July 2015 and December 2017. It prospectively collected the data of the P&R process starting from dossier submission up to the Italian Health Service reimbursement decision. The cost of treatment per patient was estimated using both the list price ("gross cost") and the confidential net price ("net cost") of drug packages and applied to the median duration of treatment. A 2-sample stage Heckman decomposition model was used to evaluate the potential role of efficacy data and other information available at the time of P&R decision making on the gross and net cost.

RESULTS

A total of 37 oncology drugs related to 58 therapeutic indications were analyzed. The multivariate model showed that the variation of progression-free survival is the only variable predictor statistically associated with treatment cost, but this effect was observed only when confidential net prices were used (P=.026).

CONCLUSIONS

Considering the perspective of a developed country having a public healthcare service with a central reimbursement negotiation is determined a relevant reduction in the treatment cost purchased by public payers. This is a useful approach to guarantee the affordability of innovative oncology drugs and to contain public expenditures on healthcare. Furthermore, the negotiation of confidential discounts and agreement clauses in managed entry agreements seemed to reward oncology drugs displaying an added therapeutic benefit.

Anticancer drug prices and clinical outcomes: a cross-sectional study in Italy

OBJECTIVE

To investigate whether the prices of new anticancer drugs correlated with their relative benefit despite negotiation.

DESIGN

Retrospective cross-sectional study correlating new anticancer drugs prices with clinical outcomes.

SETTING

We did a retrospective cross-sectional study including all new anticancer drugs approved by the European Medicines Agency (EMA) (2010-2016) and reimbursed in Italy.

MAIN OUTCOMES AND MEASURES

Information on clinical outcomes-in terms of median overall survival (OS), median progression-free survival (PFS) and objective response rate (ORR)-was extracted from pivotal trials as reported in the European Public Assessment Reports available on the EMA website. Cost of a full course treatment was estimated on negotiated official and discounted prices. Regression coefficients β, their levels of significance p and the coefficients of determination R2 were estimated adjusting by tumour type.

RESULTS

Overall, 30 new anticancer drugs (with 35 indications) were available for analysis. Where data on OS were available, we observed no correlation between the improvement in median OS (in weeks) and negotiated price (R2=0.067, n=16 drugs for 17 indications). When the clinical outcomes were expressed as improvements in the median PFS or ORR, 25 drugs (29 indications) were available for the analysis, and again, there was no correlation with prices (R2=0.004 and 0.006, respectively).

CONCLUSIONS AND RELEVANCE

Our results suggest that the prices of anticancer drugs in Italy do not reflect their therapeutic benefit. Drug price negotiations, which is mandatory by law in Italy, do not seem to ensure that prices correlate with clinical benefits provided by the cancer drugs. These results call for further efforts to establish the standard determinants of drug prices available at the time of negotiation. These findings need to be confirmed in other countries where price negotiations are in place. Moreover, further investigations may verify whether outcome data obtained after drug marketing would improve the correlation between prices and therapeutic benefit.

In-Hospital Production of Medicines: Preparing for Disruption

In-hospital production of affordable medicines holds potential to address problems of drug accessibility. However, expanding the scope of magistral preparation to include high-cost drugs and complex biologicals gives rise to new challenges. We discuss ethical and regulatory complexities faced by Dutch initiatives defying the current pharmaceutical system through magistral preparation.

Orphan Drug Pricing and Costs: A Case Study of Kalydeco and Orkambi

BACKGROUND

A common narrative is that high prices are necessary for "orphan drugs" because of the fewer patients. In the context of state health insurance systems, the high prices create significant challenges because of limited budgets.

RESULTS

This study carefully examines both costs and revenues of two drugs for cystic fibrosis (ivacaftor and lumacaftor), showing that, for this important example, prices are not high because of fewer patients. The study then explores the justifications usually given for high orphan drug prices, including the need to support research and development for new drugs. Each of these standard justifications is shown to be inadequate; instead, it appears that the exercise of market power in the presence of insurance is the dominant driver of high prices.

INTERPRETATION

Insurers need to re-examine how they address high-priced drugs.

[Chapter 3. The moral economy of the availability of therapeutic innovations for neglected diseases]

The main problems of the system governing the development and dissemination of innovative medicines are known. Despite relatively low manufacturing costs, patented drugs are unduly expensive, and neglected diseases attract little pharmaceutical research. Both problems are compounded by patients who, discouraged by high prices, lack of access to competent medical services and low quality medicines, do not complete their treatment.

Little to lose and no other options: Ethical issues in efforts to facilitate expanded access to investigational drugs

BACKGROUND

Today, public and private bodies around the world are trying to facilitate and increase expanded access to unapproved, investigational drugs for patients with unmet medical needs.

METHODS

This paper discusses three major shifts in the field of expanded access and presents an argumentative account of ethical issues connected with those shifts, based on a literature study and unstructured interviews with 35 stakeholders in the Netherlands.

RESULTS AND DISCUSSION

Traditionally, expanded access has been based on three key principles: 1) it is exceptional, 2) it is done 'out of compassion', and 3) it has a therapeutic aim. Current efforts to facilitate expanded access affect these key principles, rendering expanded access a default option, allowing companies to charge for investigational drugs and gather data on its outcomes. These shifts may generate new ethical issues, including false hope, safety concerns and funding issues, which must be anticipated by physicians, pharmaceutical companies, payers and policymakers.

CONCLUSION

Healthcare systems allow for the use of promising unapproved drugs in exceptional circumstances, but do not always assist patients with unmet medical needs in getting access. It is time to replace the current patchwork of practices with systems for expanded access in which criteria are clearly described, responsibilities are assigned and arrangements are made, so that patients will know what (not) to expect from expanded access.

ESMO European Consortium Study on the availability, out-of-pocket costs and accessibility of antineoplastic medicines in Europe

BACKGROUND

The management of cancer is predicated on the availability and affordability of anticancer therapies, which may be either curative or noncurative.

AIM

The primary aims of the study were to evaluate (i) the formulary availability of licensed antineoplastic medicines across Europe; (ii) patient out-of-pocket costs for the medications and (iii) the actual availability of the medication for a patient with a valid prescription.

MATERIALS AND METHODS

The survey tool was based on the previous ESMO studies that addressed the availability and accessibility of opioids for the management of cancer pain. A total of 185 field reporters from 49 countries were invited to participate. The preliminary set of data was posted on the ESMO website for open peer-review, and amendments have been incorporated into the final report.

RESULTS

There are substantial differences in the formulary availability, out-of-pocket costs and actual availability for many anticancer medicines. The most profound lack of availability is in countries with lower levels of economic development, particularly in Eastern Europe, and these are largely related to the cost of targeted agents approved in the last 10 years. Discrepancies are less profound among medications on the WHO model essential medicines list (EML) for cancer and in curative settings. However, medicine shortages also affect WHO EML medicines, with relevant therapeutic implications for many patients.

CONCLUSIONS

The cost and affordability of anticancer treatments with recent market approval is the major factor contributing to inequity of access to anticancer medications. This is especially true with regards to new medications used in the management of EGFR- or ALK-mutated non-small-cell lung cancer, metastatic melanoma, metastatic renal cell cancer, RAS/RAF wild-type metastatic colorectal cancer, HER2 overexpressed breast cancer and castration-resistant metastatic prostate cancer.

Access to High Cost Cancer Medicines Through the Lens of an Australian Senate Inquiry-Defining the "Goods" at Stake

Cancer is a major burden on populations and health systems internationally. The development of innovative cancer medicines is seen as a significant part of the solution. These new cancer medicines are, however, expensive, leading to limited or delayed access and disagreements among stakeholders about which medicines to fund. There is no obvious resolution to these disagreements, with stakeholders holding firmly to divergent positions. Access to cancer medicines was recently explored in Australia in a Senate Inquiry into the Availability of New, Innovative, and Specialist Cancer Drugs in Australia. We analysed the resultant Senate Report to identify competing stakeholder values. Our analysis illustrates that there are four main "goods" prioritized by different stakeholders: 1) innovation, 2) compassion, 3) equity, and 4) sustainability. We observe that, with the exception of sustainability, all of these "goods" put pressure on payers to provide access to cancer medicines more quickly and based on less rigorous evaluation processes. We then explore the consequences of giving in to such pressure and suggest that deconstructing the implicit values in calls for "enhanced access" to cancer medicines is necessary so that more nuanced solutions to the challenge of providing access to these high cost medicines can be found.