The Cost of Cancer Drugs (Continued)

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  • 10/16/2006
The announcement that Genentech is going to cap the cost of Avastin was met with derision and skepticism -- if you read the accounts in MSM. Critics assert that drugs like Avastin and Revlimid are not worth their price. But a complaint is not a statement supported by analysis. The Lenny Saltz school of public policy is to use the price of 25 year old cancer drugs as a benchmark and then loudly bleat that new drugs don't add anything in terms of survival.

A more thoughtful and scholarly approach is taken by Richard Gralla of the NY Lung Cancer Alliance. Dr. Gralla was quoted by Andrew Pollack of the NY Times as say that Avastin is not "cost effective to society." But that is not what Dr. Gralla said exactly. I called Dr. Gralla up because in light of his research with other drugs to treat lung cancer -- which focused on improving quality of life -- the statement seemed cold and too dispassionate. What Gralla told me -- and I am paraphrasing here -- is that most new cancer drugs that are based on new pathways and novel mechanisms while only improving survival by a couple of months in the sickest patients are by definition advances. Are they cost-effective? By virtue of the fact that they add -- on average -- little to life expectancy most new targeted therapies are NOT cost effective to society if you use the old measure of a quality adjusted life year being worth $50000 or less.

But University of Chicago economists Kevin Murphy and Robert Topel have found that: "eliminating deaths from cancer would be worth $47 trillion to Americans. In other words, Americans would be willing to pay this amount to achieve such an increase in the length and quality of their lives."

Hence, the potential benefits of increased spending on medical innovation are so huge, especially compared with the cost or illnes, that much higher expenditures on medicines, diagnostics, etc are justified, along with the prices that are required to sustain investment "even if they only yield small declines in death rates." See the article "The Cost of Living" in Chicago Business School magazine.

One other point: the Avastin cost cap reflects an acknowledgement that different groups of people, with different diseases at different stages, genetic and clinical characteristics will require variations in doses. Drugs are going to have be part of solution and not sold as a stand alone product. "More" will be replaced with "optimal" and the standard will be "value" not "cost-effective."

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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