Peter Bach Values PBM Profits Over Patient's

  • by: Robert Goldberg |
  • 05/11/2016

The American Journal of Managed Care ran a Q&A with Express Scripts and ICER consultant Peter Bach about his " DrugAbacus, the importance of using value frameworks, and using the European market as a model to recalibrate the healthcare system in the United States.

Bach likes to claim that he trying to reduce the mismatch between value and price.   That is a presumption without much basis in fact and is largely shaped by his Malthusian definition of value.   
Let's once again prove that Bach has an ideological axe to grind that has nothing to do with reality.  

In his interview, Bach claims that "it’s impossible to convince yourself that we are getting any incremental value, period, let alone any incremental value of the excess spending. If we compare ourselves with other countries, there does not seem to be any rationale, except that we simply spend more for all units of healthcare"  

I will get to his inaccurate assertion about other countries in a bit.  But first, let's look at his claim about incrementalism, one he has been repeating for several years.  Today and yesterday, Bach has ignored how cancer survivorship and life expectancy steadily increased over the past 20 years.   More recently, new drugs for lung cancer have doubled response rates and increased survival by 45 percent.  The total drug cost per patient (which includes the part of the price going to PBM rebates, etc.) is estimated to be between $36000-98000.   

He may believe that the  additional increment of average survival (which ignores genomic variation) is not worth spending money on.  But that ignores the fact that treatments are targeted to smaller populations that have fewer options than previous generations.  And he decidely believes that being able to live long enough to benefit from future medicines is a waste of time and money.

Bach knows better.  After all, one of his co-authors in the paper he cites in his NEJM oral hallucination about new drugs not adding more survival despite higher prices, makes that very point in another study: " In the absence of significant pricing and total oncology outlay flexibility by payers, our analysis suggests that private sector investment in small oncology segments, and in stratified medicine generally, may not prove economically sustainable, thus endangering the translation of scientific advances into bedside medicines. Beyond increasing reimbursement, decreasing development cycle time and costs, or both, would most directly improve the economic incentives facing developers. By contrast, extending exclusivity periods, or initiating advance market commitments and awarding prizes would likely have less impact and involve greater implementation challenges." (Trusheim, Berndt "Economics of Stratified Medicine" Personalized Medicine (2012) 9(4), 413–427)  
2.  Bach's main point: "The reality is that the drivers of healthcare spending in the US are unit price, not volume."
 To prove his claim Bach asserts: So, if we want to manage healthcare spending, you can make the argument that the excess price above that, which is being paid ambiently in European countries, is actually wasted dollars. It does not make the pill any better by paying 4 times as much for it."

That is untrue on two levels with respect to drugs. 
In developed markets, most growth is from new brands and increased volume, not price.  As the chart (from the IHI Oncology Trend Report: 2015

The IHI report notes: "Oncology drug spending has risen slightly as a percentage of total drug spending over the past five
years in all regions, most notably in the EU5 countries where oncology now represents 14.7% of total
drug spending, up from 13.3% in 2010, while the U.S. has seen oncology increase more modestly from
10.7% to 11.3% of total drug spending over the same period."

Indeed, the US rate of spending was lower compared to Europe even though  US adopts new medicines more quickly than Europe and other developed countries.  
 Yet the share of oncology of total drug spend is lower and increased more slowly in the US.
The IHI report estimates total spending on cancer drugs in the US is $42 billion.   Forty eight percent of that spend is for targeted therapies ($20 billion)   Total drug spending was $425 billion (without rebates) so new therapies are about 4.7 percent or that amount, which is unchanged since 2010.    Cancer drugs as a percent of total health care spending remains at about 1 percent.    

But Bach claims cancer drugs cost four times as much here than in Europe.  
As an aside, Bach’s claim that drugs are 6 times more expensive in the US than in Europe is an absurdity.   I can find a drug on the UK NHS formulary that has been subject to price concessions and price controls for a decade and compare it retail price here.  But that ignores the fact that in most cases the US is using generic drugs that are less expensive than the brand drug Bach has selected.   And with respect to cancer drugs the acquisition price of new products are about the same.   For instance, the retail price of a 50ml vial of Keytruda in the US is about $2200.   In the UK it is $1900.   A year supply of 40 mg crestor is (US dollars) is $4300 and the retail price in the US is  $2280.   A year’s supply of Januvia in the UK is 3326 pounds or $4800 while the retail price in the US is $4552. 
Finally, he glosses over the inequities of applying a QALY to a class of drugs or indication without regard to genomic variation or the severity  of the tumor being treated.  That's because he has a vested interest in using QALY to devalue new medicines which in turn allows the PBMs and insurance companies he consults for to rake in billions more in rebates.  And this devaluation will also hurt and even cause cancer patients to die. 
As I noted in a previous blog reviewing another work of fiction by Bach, "In an article published last year in the Journal of the American Medical Association, he suggested that in an indication-specific arrangement, the monthly price for Eli Lilly & Co.’s cancer drug Erbitux (cetuximab) would plummet from $10,320 a patient to about $470 a patient for its least effective use, treating recurrent or metastatic head and neck cancer. The drug also is used to treat locally advanced head and neck cancer, as well as colorectal cancer."
 Bach claims that the use of Erbitux for head and neck cancer is a "least effective use".  Let's set side the curious math used to arrive at the $470 figure.  It is more important to note that Bach ignores not only individual differences in response but the impact of Erbitux relative to existing need and treatment protocols.     Bach uses an average 2.3  months more of survival as his benchmark.   
Here's what we know about pre-Erbitux treatment of recurrent, metastatic squamous cell carcinoma of the head and neck (SCCHN):
"None of the trials performed in the past, even those with a reasonable sample size, have shown that aggressive platinum-based combination chemotherapy leads to survival benefit when compared to single agent methotrexate, cisplatin or 5-fluorouracil.
What difference does Erbitux makes?  
After decades without real progress, a recent European randomized trial showed that adding cetuximab, the first clinically available EGFR-directed monoclonal antibody, to a standard chemotherapy regimen (platinum/5-fluorouracil) leads to an important survival benefit and this, with support of an additional smaller study in the US, has changed practice."  J. B. Vermorken and P. Specenier Optimal treatment for recurrent/metastatic head and neck cancer. Ann Oncol (2010) 21 (suppl 7): vii252-vii261 doi:10.1093/annonc/mdq453
Hence, the Bach pricing approach would whittle away payment for the hardest to treat cancers for patients that have had no real advances in care for decades.  Maybe Bach supports paying doctors less for people who are the farthest gone because the relative health gains are well, not worth it??

Bach never comes clean about who benefits from the discounts he proposes.  In the US, it's the PBMs and insurers.  Currently, these special interests rake in about $4-8 billion in rebates on targeted oncology drugs.   Meanwhile patients are forced to use drugs that generate the most rebates and have to pay a large portion of the retail drug cost on top of everything.  

I guess that's linking prices to one set of interests -- PBMs and insurers -- that Bach values more than what is best for patients.  

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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