Price wars
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Physicians fight for patients’ access to costly drugs

When a group of gastrointestinal oncologists at Memorial Sloan-Kettering Cancer Center recommended that the hospital pharmacy not carry a new cancer drug called Zaltrap, a New York article (“The Cost of Living,” Oct. 20, 2013) noted that their refusal marked “the first physician-initiated revolt in anyone’s memory against the skyrocketing cost of cancer drugs.” Their objection centered not just on the cost of the drug, said to be roughly $11,000 a month, but also on the fact that it worked no better than an existing drug as a second-line treatment for patients with advanced colon cancer (both have been shown to extend median survival by 42 days). Yet it cost more than twice as much.

Three Memorial Sloan-Kettering physicians who co-authored an op-ed for the New York Times (“In cancer care, cost matters,” Oct. 12, 2012) maintained that “ignoring the cost of no longer tenable. Soaring spending has presented the medical community with a new obligation. When choosing treatments for a patient, we have to consider the financial strains they may cause alongside the benefits they might deliver.” Shortly after the op-ed appeared, the Times reported that Sanofi would discount Zaltrap to doctors and hospitals by 50 percent; in a statement, the company cited “some market resistance to the perceived relative price of Zaltrap in the U.S.” (“Sanofi halves price of cancer drug Zaltrap after Sloan-Kettering rejection,” Nov. 8, 2012). 

The rebellion at Memorial Sloan-Kettering may be just the beginning. “A new drug war is looming,” notes an article in the Economist (“Hard pills to swallow,” Jan. 4, 2014). “The market is growing: patients in rich countries are aging, and those in developing ones are getting richer and suffering from chronic diseases. But as demand for drugs rises, so does concern at their price.” Given the high cost of some drugs used to treat dermatologic diseases — most notably, metastatic melanoma and psoriasis — will dermatologists and oncologists who treat melanoma join the battle? For the time being, the majority of melanoma patients appear to be able to pay for their drugs with support from their insurance companies and/or the drug manufacturers. In contrast, psoriasis patients sometimes battle their insurance companies for reimbursement. What can physicians do, collectively and individually, to help ensure that their patients have access to medications that can enhance and extend their lives? [pagebreak]

New cancer drugs, new pricing models

Approved melanoma drugs that target a BRAF mutation (vemurafenib, dabrafenib, and trametinib) and ipilimumab, an immunotherapy agent, are helping a significant portion of patients with metastatic disease — but the cost can exceed six figures for a year of treatment. Two prominent oncologists who treat melanoma say their patients have, on the whole, been able to pay their portion of the cost. “Cost is not generally an issue [for patients], and yet they’re inordinately expensive drugs,” said Keith T. Flaherty, MD, associate professor in the department of medicine at Harvard Medical School and director of the Termeer Center for Targeted Therapy at the Massachusetts General Hospital Cancer Center. “Both private insurers and Medicare offer a higher rate of coverage for intravenous medications. As a consequence, ipilimumab, which is monstrously expensive therapy that generally costs more than BRAF-inhibitor therapy, is typically covered at 100 percent because it’s intravenous.” (When ipilimumab was released, a study in Pharmacy and Therapeutics indicated that it was priced at $30,000 per injection. “This translates to a cost of $120,000 for a course of therapy, based on the approved dosing regimen of 3 mg/kg every 3 weeks for four doses. The company’s patient-assistance program, however, may reduce net pricing to $80,000” (Sep 2012; 37(9): 503-511, 530).

Despite large deductibles and co-pays, only one among his several hundred patients has had serious difficulty in paying for an expensive drug, said Jeffrey S. Weber, MD, PhD, senior member of the H. Lee Moffitt Cancer Center and director of the Donald A. Adam Comprehensive Melanoma Research Center in Tampa, Fla. “I’ve been told by patients that some insurance plans, for certain types of drugs, require them to pay a couple of thousand bucks a year out of pocket just for the drugs,” he said. “The drug companies have some fairly generous plans to support the cost for people who have either no insurance or not very good insurance. By hook or by crook, people either get the insurance company to pay the vast majority or they’ll be helped by another source, like the pharmaceutical company.” (Medicare patients aren’t eligible for manufacturer rebates but may apply to patient assistance foundations.) [pagebreak]

In contrast, a leading California oncologist said, “In places like the county hospital, it is hard to find any patient who has been on ipilimumab because it has not been approved for administration even though it is an FDA-approved drug and there are randomized trials that demonstrate approval and survival.” Antoni Ribas, MD, PhD, professor of hematology/oncology at UCLA’s Jonsson Comprehensive Cancer Center, remarked that those patients who are disease-free after treatment with the drug “should not be alive but continue to be alive, and are going on with their lives. That is something that I have trouble putting a price on, but the worst case is when we don’t even have the chance to give it, and that is what is happening with the price of ipilimumab being so high.”

The physicians agree that the current model of pricing and reimbursement is probably unsustainable for the most expensive drugs, particularly when they’re combined, as melanoma specialists are beginning to do (see "Discovering hope"). “Let’s say you go to triple drugs; the price for BRAF plus [a MEK inhibitor] is, I think, $16,000 a month,” said Dr. Weber. “Then let’s say you add another $10,000 a month to that [for a third drug], eventually you’re going to run out of money.” Among other factors, health policy analysts are studying how Americans value one extra year of life, Dr. Weber said, “and I think it’s in the realm of $50,000 to $100,000 per year. So if somebody said, this drug will extend your life by a year and it’s going to cost half a million dollars, that’s probably way out there. Public opinion will weigh in, and the companies are well aware of this.”

One approach that can help determine the value of a drug for a particular patient is identifying biomarkers to predict the outcome of specific therapies, Dr. Weber said. Pointing to the FDA’s approval of a test for the BRAF V600E mutation, concurrent with its approval of vemurafenib, he remarked that “the FDA is conscious of these issues; they want to select patients properly, and who wouldn’t? Biomarkers are a prominent part of ongoing translational research. Everyone’s working on it, and the National Cancer Institute is funding it. A number of the large companies I’ve worked with have newly expanded biomarker groups, and they’re well aware that in the future, without a good predictive biomarker, drugs may not get approved.” [pagebreak]

Other pricing approaches have been considered, said Dr. Weber, who recently participated in a discussion of the issue that included a broad variety of health professionals and explored several models of value-based reimbursement. “One model was you would only charge for the first dose or two, and if it worked, and you were getting many more doses, you wouldn’t have to pay any extra. Or some folks have proposed only allowing reimbursement if the drug worked: if you had a response, you pay whatever your cost; if it doesn’t work, you don’t pay. All these ideas are coming about because there’s a consciousness that there’s only so much money in the world, and we have to be prudent about how we spend it, and rationalize the benefit.”

Dr. Flaherty said that while cancer drugs would likely be among the last to be severely constrained in terms of their insurance coverage, “the day will come when that will occur.” In the accountable care organization environment, “you will want to have worked out already among equivalent options which is the most cost-effective.” Any discussion of what cost society is willing to bear to treat cancer “feeds back to the issue of how companies can set a price for drugs. Because the idea that you can simply price them at the highest price that the market will bear, and then sort of let time pass and see how things play out using the assumptions of standard market forces, is probably not going to hold in the health care arena.” High cost alone would be unlikely to spark many revolts like the one at Memorial Sloan-Kettering, Dr. Flaherty noted, but “if a new therapy comes along that does not appear to be an advance over what we’ve already got, and yet the price is out of whack with what’s currently available — which is what happened in that case — I think it’s totally reasonable to expect that physicians will be among the first to step up and make that statement.”

Pricey biologics impact psoriasis care

“There was a time when I would be embarrassed to give out coupons for drugs,” said Mark Lebwohl, MD, AAD president-elect and professor and chair of the department of dermatology at the Icahn School of Medicine at Mount Sinai. “Now the cost of simple creams has gotten so expensive that they’re out of reach of patients.” In an article exploring the phenomenon of costly generic creams (“Soaring ointment prices are a dermatologic mystery,” Aug. 9, 2012), the Times noted that because doctors and patients are often unaware of the cost, “the situation can create a lucrative opening for some companies, especially in a low-profile corner of the industry like dermatology.” The Times story also pointed out that proving to the FDA that the creams “are absorbed through the skin in the same quantities as the brand-name drugs, a more difficult task than proving that a generic pill is equivalent,” can drive up manufacturing costs and market prices. [pagebreak]

Manufacturing costs are also a key factor underlying what Dr. Lebwohl terms the “exorbitant” prices of the biologics used to treat moderate to severe psoriasis. “The cost of the plant approaches a billion dollars,” he pointed out. “The approval process from the FDA is very difficult. You have to go through a tremendous amount of testing, and of course this is for the protection of patients. Then they add a profit, and that goes into the cost of the drug. If they could cut the price so that more patients could gain access to these drugs, they would make up for some of the reduction in price by volume.”

A glance at the 2013 financial results for the manufacturers of three biologics demonstrates the importance of these drugs to the companies’ bottom line. Amgen, which markets Enbrel (etanercept), announced revenues of $18.7 billion in 2013 (up 8 percent over 2012); a news release issued by the company noted that “Enbrel sales increased 7 percent for the full year driven mainly by price.” A Chicago Tribune article (“AbbVie profit drops 27 percent, meets expectations,” Feb. 1, 2014) reporting 2013 results for AbbVie Inc. states that “the company’s blockbuster drug Humira [adalimumab] eclipsed $10 billion in sales in 2013, making it the highest-grossing drug in the world, according to industry data.” A Medscape article (“Top 100 selling drugs of 2013,” Jan. 30, 2014) puts Janssen Biotech’s Remicade (infliximab) at number eight, with over $4 billion in U.S. sales. The Medscape list had Humira at number three and Enbrel at number seven.

These and other companies that market biologics have put coupon and discount programs in place to help patients who can’t afford their drugs, an effort strongly supported by the National Psoriasis Foundation (NPF) during Dr. Lebwohl’s tenure as president of its medical board. The bigger problem for dermatologists, he insists, lies in the hurdles set up by insurance companies that don’t want to pay for costly biologics throughout a patient’s lifetime. “Nobody went into dermatology to write letters to insurance companies. We don’t enjoy applying for approval and having it get denied and then reapplying and reapplying until it gets approved,” he said. “It’s possible that the insurance companies would deny approval for the drugs even if they were cheaper, but the bottom line is that our patients are hurting for it, it’s creating more work for us, and the cost of drugs has been a problem for everybody.” Physicians who prescribe biologics are being excluded from ACOs and from independent practice associations in the state of New York, Dr. Lebwohl said. And many insurers require that psoriasis patients fail methotrexate, a practice of step therapy that rankles Dr. Lebwohl because methotrexate “doesn’t work nearly as well as the biologics. But it’s cheap.” [pagebreak]

Individual dermatologists can try to run interference with their patients’ insurers, as Dr. Lebwohl does. “If patients come to me, and they’ve paid me, they’re my obligation,” he insisted. “Very few people can pay the full cost of the biologic themselves; these drugs cost $30,000 to $60,000 a year, and they need to stay on it for life. So when a prescription gets denied, I have to dictate a letter explaining why the insurer has to pay for it. We have a nurse who’s assigned full-time to appeal denials.” As AAD president-elect, he said that the ways in which the specialty can affect the system are “more complicated. Dermatology is less important to the government than other specialties or primary care physicians because we’re small. It’s important that we should partner with like-minded specialties and even other medical organizations like the American Medical Association.” Regarding what the specialty should do to address the question of cost with manufacturers, he said, all dermatology can do is say, “look, we’re in this together, and you could get more prescriptions if you charge less. We have to let them know, as one voice, that the cost of drugs is impairing medical care.”

The NPF remains active in working with pharmaceutical companies, insurers, and state-level and federal legislators on issues around drug pricing and reimbursement, said Leah McCormick Howard, the NPF’s director of government relations and advocacy. Through its website ( the foundation provides links to patient support programs for six biologics, as well as information on other resources for financial assistance, including information specific to Medicare patients. The NPF is also one of more than two dozen patient advocacy groups and medical associations that form the Coalition for Accessible Treatment. The coalition is backing the Patients’ Access to Treatments Act, introduced in the U.S. House of Representatives in 2013. Co-sponsored by Rep. David McKinley (R-W. Va.) and Rep. Lois Capps (D-Calif.), the bill would amend the Public Health Service Act to establish cost-sharing limits for health plans that cover prescription drugs and use a formulary or other tiered cost-sharing structure. “We have been very optimistic because although it’s a small number of patients that would be affected, the benefit for them would be huge,” Howard said. “We have data showing the impact it would have on insurance plans: for just $3 per person per plan year, it would eliminate the hardships created by specialty tiers and protect patient access to medically necessary treatments.”