Low benefits spur alternative drug cost proposals

 

It’s no secret that cancer drugs are among the most expensive medical treatments in the United States, and now, new research reveals some high-priced cancer drugs may yield little benefit for patients.

A recent analysis of 71 oncology indications approved by the Food and Drug Administration between 2011 and 2017 found that overall survival gains were marginal for drugs approved by the FDA based on overall survival (OS) data. The majority of the 71 indications (75%) demonstrated no statistically significant improvement in patient-reported outcomes (PROs), according to the study (JAMA Oncol. 2019 Jul 3 doi: 10.1001/jamaoncol.2019.1760).

More than half of the indications evaluated demonstrated neither an OS benefit nor a PRO improvement post approval, the study found.

While the researchers did not analyze cost, a number of the cancer drugs that demonstrated little benefit come with a high price tag. Cabozantinib (Cabometyx) for example, approved for the treatment of medullary thyroid carcinoma and advanced renal cell carcinoma (RCC) during the study period, did not demonstrate an overall survival benefit post approval, findings showed. Cabometyx, approved based on survival data, had a 2016 wholesale acquisition cost of $13,750 for a 1-month supply. Olaparib (Lynparza) meanwhile, approved for the treatment of advanced ovarian cancer during the study period, also showed no overall survival benefit post approval. The 2017 wholesale acquisition cost for olaparib was $13,482 for a 30-day supply.

Investigators noted in the study that evaluation of OS can be challenging or unfeasible in some instances and is complicated by factors such as use of crossover trial design.

The findings emphasize the need for a sharper eye on how regulatory authorities approve drugs, said Chadi Nabhan, MD, senior author of the study and chief medical officer at Aptitude Health based in Chicago.

Courtesy of Dr. Nabhan

“We all want our patients to receive the best and the latest and the most important and innovative drug they can possible get, as long as these drugs show a benefit,” said Dr. Nabhan, a hematologist and medical oncologist. “We need to look critically at making sure drugs getting approved are truly helping patients by extending their lives or improving their quality of life.”

Growing questions about the benefits of some cancer drugs come as a push to reconsider the pricing of medications to better account for value gains momentum. A number of proposals have recently emerged that would revamp the current payment structure for prescription drugs with the aim of lowering costs and improving access. Value-based pricing proposals are not without challenges, namely defining what value truly means, said Leonard Saltz, MD, a medical oncologist at Memorial Sloan Kettering Cancer Center in New York.

“We’re all quite clear there is a huge absence of connection between cost and value,” Dr. Saltz said in an interview. “There is also a real absence of the definition of, ‘What is value?’ I think that ultimately we have to rely on defining value by its absence. By that I mean, where do we say, this is insufficient value?”


 

 

Many drugs show little benefit

The JAMA Oncology study builds on other data that raise doubts about how the FDA determines value when making approval decisions for cancer drugs.

Overall survival is the most direct measure of clinical benefit used to determine value. But OS as an endpoint in clinical trials generally requires larger patient numbers and increased time for follow-up, thereby delaying approvals. This is likely why the use of surrogate endpoints to approve drugs has increased. Dr. Nabhan’s study found the use of surrogate endpoints during trials grew from 67% during the period of 2008 through 2012 to 76% during the period of 2011 through 2017. Surrogate endpoints can include tumor shrinkage, time to progression, or time to reappearance of disease.

The use of surrogate endpoints to determine value however, has long come under scrutiny. A 2019 analysis published in JAMA Internal Medicine found that most cancer drugs approved by the FDA based on response rate (RR) – the percentage of patients who experience tumor shrinkage – have less than transformational response rates, and that such indications do not have confirmed clinical benefit.

Of 59 oncology drugs with 85 unique indications, most had a response rate ranging from 20% to 59%. Of 81 available indications, the median complete response rate – defined as the percentage of patients with no visible disease and normalization of lymph nodes – was 6%. (Complete response data were not reported for four drug indications.) Investigators also reported that many of the drugs have remained on the market for years without subsequent confirmatory data.

In addition, a 2018 review of randomized clinical trials published in JAMA Internal Medicine that analyzed progression-free survival in cancer patients found the endpoint did not improve patients’ lives. A quantitative analysis of 52 articles that covered 38 randomized clinical trials involving 13,979 patients across 12 cancer types found no significant association between progression-free survival and health-related quality of life.

“These findings raise questions regarding the assumption that interventions prolonging [progression-free survival] also improve [health-related quality of life] in patients with cancer,” the study authors wrote. “Therefore, to ensure that patients are truly obtaining important benefit from cancer therapies, clinical trial investigators should measure [health-related quality of life] directly and accurately, ensuring adequate duration and follow-up.

PROs, which can encompass health-related quality of life, is a measure the FDA has encouraged investigators to use during trials – when the benefit exists. In the analysis by Dr. Nabhan, trials evaluated PROs during pivotal studies supporting initial approval in 50 of the 71 indications. Before approval, 14 drugs demonstrated a statistically significant improvement in at least one PRO, but only 1 of the 14 – ruxolitinib – was granted a PRO labeling claim at the time of approval. Post approval, a statistically significant improvement in PROs was shown for only 18 of the 71 (25%) initial indications.

Meanwhile, although overall survival is considered the optimal yardstick with which to measure drug benefit, the value of longevity – and how it should be weighted – poses further questions. A number of new oncology drugs approved based on survival data lengthen lives by a very short time, Dr. Saltz noted. In the study of 71 indications for example, the median OS gain for drugs approved based on survival data was 1.7 months.

“We crossed the absurdity boundary a long time ago with drugs in the range of $10,000 to $20,000 a month with median survival benefits of less than 2 months,” Dr. Saltz said. “That’s not very much. Then we get into a rather circuitous argument that doesn’t settle anything as to whether it’s ‘worth it or not.’ The question becomes to whom is it worth what, and who’s paying for it?”
 

 

Proposals aim to lower cost

Recent cost ideas that center on value-pricing seek to answer some of those questions. Outcomes-based contracts is one such proposal. Under the approach, a drug manufacturer and a payer reach an agreement that ties reimbursement to observed outcomes in patients. Rather than a payer covering all prescriptions at a single price, the initial price remains in place if a certain volume of patients achieves the agreed-upon outcome. If the threshold is not met, the drugmaker refunds some of the original price to the payer.

Outcomes-based contracting sounds like a promising approach because various parties involved in the sale have a stake in the result, Dr. Nabhan said. “If you are a manufacturer, you want to make sure the outcomes are actually good,” he said. “If you’re a physician, you want to maximize monitoring your patient and managing adverse events. If you are the payer, you want to make sure your patient stays adherent to therapy, and you want to make sure you provide access to the doctor’s office, and to the hospital when needed. There’s more skin in the game when we look at outcomes-based contracting.”

Another idea gaining popularity is long-term financing for some drugs, particularly curative treatments. The idea has various models, but generally entails a financing arrangement, such as a loan mechanism for payers or a contractual annuitization that commits payers to pay costs over time. Such financing proposals are gaining speed in response to the high-cost of new gene therapies, according to a summary in Health Affairs. The payment agreements could be augmented by government funds such as government bonds or subsidies and/or efforts to promote risk-pooling across payers.

Peter B. Bach, MD, however, believes neither long-term financing nor outcomes-based contracting are good ideas. In January 2019 testimony to the U.S. Senate Committee on Finance, Dr. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, New York, outlined why both value-based proposals are faulty. Outcomes-based contracting does not guarantee that prices are value based, he said, because it leaves untouched how much a drug costs when it does work. In addition, the long-term financing approach only pushes drug costs into future years, he testified.

“Financing does not reduce total spending, it just changes current obligations,” Dr. Bach said during testimony. “It is also relevant to appreciate that, whether for student loans or home mortgages, long-term payment arrangements are inflationary.”

Dr. Bach, a health policy expert whose work focuses on the cost and value of cancer drugs, and his colleagues at Memorial Sloan Kettering Cancer Center have spent the last few years fine-tuning an interactive drug-pricing tool that Dr. Bach says has distinct advantages over alternative drug-pricing proposals when it comes to considering value. The tool, called the DrugAbacus, integrates objective information about cancer drugs while empowering users to define what value means to them. For example, the DrugAbacus allows users to choose a dollar amount for each additional year of life the drug provides and lets them decide how much to discount the price for side effects, according to a summary of the tool by Dr. Bach published in the New England Journal of Medicine Catalyst. The price can be adjusted for factors such as treating a rare disease or having a novel action mechanism. The final result reveals the user’s self-valued DrugAbacus price and compares the cost with the drug’s initial market price.

“[DrugAbacus] provides a template for how we need to start thinking about value in drug pricing – by capturing some of the inherent complexity of value-based decisions without making the fundamentally flawed assumptions that are embedded in other drug-pricing proposals,” Dr. Bach wrote in the summary.

He declined to comment for this story.
 

 

A three-tiered approach

Another novel idea would link drug prices to value, but allow costs to change with new information. The proposal would create a three-part pricing model where prices vary over fixed time intervals, according to an article published in the New England Journal of Medicine Catalyst.

First, drugmakers would agree to launch a drug with a low price, with a potentially significant increase after a specified period to observe performance. During a second period, the price would be adjusted up or down based on newly emergent evidence. After a window of higher prices to reward innovation, the cost would then decline in a third period to ensure long-term access.

The advantage is access to truly miraculous therapies in a very short time – from 3 to 5 years earlier than the current system, said Luca Pani, MD, a coauthor of the paper and professor of psychiatry at the University of Miami.

“Another advantage emerges when it comes to drugs that treat patient populations with inaccurate epidemiology, in which we do not know exactly how many patients we have,” Dr. Pani said. “The model in this case allows to reduce the economic impact of this uncertainty.”

The main challenge would be finding a drug manufacturer that would agree to the arrangement, said Erik Snowberg, PhD, a coauthor of the study and a research associate for the National Bureau of Economic Research.

“There’s a lot of uncertainty right now,” Dr. Snowberg said. “The big challenge would be to find a drugmaker that would think about implementing this and finding the right payer for whom this would solve a pressing need.”

Despite the barriers to the idea, Dr. Pani said a more cost-effective drug cost structure is imperative, especially as the rapid rate of new therapies continues.

“We have a moral obligation to find alternative models that allow access and that are not only scientifically and economically sound and sustainable but also realistic and logical to implement,” he said.

 

It’s no secret that cancer drugs are among the most expensive medical treatments in the United States, and now, new research reveals some high-priced cancer drugs may yield little benefit for patients.

A recent analysis of 71 oncology indications approved by the Food and Drug Administration between 2011 and 2017 found that overall survival gains were marginal for drugs approved by the FDA based on overall survival (OS) data. The majority of the 71 indications (75%) demonstrated no statistically significant improvement in patient-reported outcomes (PROs), according to the study (JAMA Oncol. 2019 Jul 3 doi: 10.1001/jamaoncol.2019.1760).

More than half of the indications evaluated demonstrated neither an OS benefit nor a PRO improvement post approval, the study found.

While the researchers did not analyze cost, a number of the cancer drugs that demonstrated little benefit come with a high price tag. Cabozantinib (Cabometyx) for example, approved for the treatment of medullary thyroid carcinoma and advanced renal cell carcinoma (RCC) during the study period, did not demonstrate an overall survival benefit post approval, findings showed. Cabometyx, approved based on survival data, had a 2016 wholesale acquisition cost of $13,750 for a 1-month supply. Olaparib (Lynparza) meanwhile, approved for the treatment of advanced ovarian cancer during the study period, also showed no overall survival benefit post approval. The 2017 wholesale acquisition cost for olaparib was $13,482 for a 30-day supply.

Investigators noted in the study that evaluation of OS can be challenging or unfeasible in some instances and is complicated by factors such as use of crossover trial design.

The findings emphasize the need for a sharper eye on how regulatory authorities approve drugs, said Chadi Nabhan, MD, senior author of the study and chief medical officer at Aptitude Health based in Chicago.

Courtesy of Dr. Nabhan

“We all want our patients to receive the best and the latest and the most important and innovative drug they can possible get, as long as these drugs show a benefit,” said Dr. Nabhan, a hematologist and medical oncologist. “We need to look critically at making sure drugs getting approved are truly helping patients by extending their lives or improving their quality of life.”

Growing questions about the benefits of some cancer drugs come as a push to reconsider the pricing of medications to better account for value gains momentum. A number of proposals have recently emerged that would revamp the current payment structure for prescription drugs with the aim of lowering costs and improving access. Value-based pricing proposals are not without challenges, namely defining what value truly means, said Leonard Saltz, MD, a medical oncologist at Memorial Sloan Kettering Cancer Center in New York.

“We’re all quite clear there is a huge absence of connection between cost and value,” Dr. Saltz said in an interview. “There is also a real absence of the definition of, ‘What is value?’ I think that ultimately we have to rely on defining value by its absence. By that I mean, where do we say, this is insufficient value?”


 

 

Many drugs show little benefit

The JAMA Oncology study builds on other data that raise doubts about how the FDA determines value when making approval decisions for cancer drugs.

Overall survival is the most direct measure of clinical benefit used to determine value. But OS as an endpoint in clinical trials generally requires larger patient numbers and increased time for follow-up, thereby delaying approvals. This is likely why the use of surrogate endpoints to approve drugs has increased. Dr. Nabhan’s study found the use of surrogate endpoints during trials grew from 67% during the period of 2008 through 2012 to 76% during the period of 2011 through 2017. Surrogate endpoints can include tumor shrinkage, time to progression, or time to reappearance of disease.

The use of surrogate endpoints to determine value however, has long come under scrutiny. A 2019 analysis published in JAMA Internal Medicine found that most cancer drugs approved by the FDA based on response rate (RR) – the percentage of patients who experience tumor shrinkage – have less than transformational response rates, and that such indications do not have confirmed clinical benefit.

Of 59 oncology drugs with 85 unique indications, most had a response rate ranging from 20% to 59%. Of 81 available indications, the median complete response rate – defined as the percentage of patients with no visible disease and normalization of lymph nodes – was 6%. (Complete response data were not reported for four drug indications.) Investigators also reported that many of the drugs have remained on the market for years without subsequent confirmatory data.

In addition, a 2018 review of randomized clinical trials published in JAMA Internal Medicine that analyzed progression-free survival in cancer patients found the endpoint did not improve patients’ lives. A quantitative analysis of 52 articles that covered 38 randomized clinical trials involving 13,979 patients across 12 cancer types found no significant association between progression-free survival and health-related quality of life.

“These findings raise questions regarding the assumption that interventions prolonging [progression-free survival] also improve [health-related quality of life] in patients with cancer,” the study authors wrote. “Therefore, to ensure that patients are truly obtaining important benefit from cancer therapies, clinical trial investigators should measure [health-related quality of life] directly and accurately, ensuring adequate duration and follow-up.

PROs, which can encompass health-related quality of life, is a measure the FDA has encouraged investigators to use during trials – when the benefit exists. In the analysis by Dr. Nabhan, trials evaluated PROs during pivotal studies supporting initial approval in 50 of the 71 indications. Before approval, 14 drugs demonstrated a statistically significant improvement in at least one PRO, but only 1 of the 14 – ruxolitinib – was granted a PRO labeling claim at the time of approval. Post approval, a statistically significant improvement in PROs was shown for only 18 of the 71 (25%) initial indications.

Meanwhile, although overall survival is considered the optimal yardstick with which to measure drug benefit, the value of longevity – and how it should be weighted – poses further questions. A number of new oncology drugs approved based on survival data lengthen lives by a very short time, Dr. Saltz noted. In the study of 71 indications for example, the median OS gain for drugs approved based on survival data was 1.7 months.

“We crossed the absurdity boundary a long time ago with drugs in the range of $10,000 to $20,000 a month with median survival benefits of less than 2 months,” Dr. Saltz said. “That’s not very much. Then we get into a rather circuitous argument that doesn’t settle anything as to whether it’s ‘worth it or not.’ The question becomes to whom is it worth what, and who’s paying for it?”
 

 

Proposals aim to lower cost

Recent cost ideas that center on value-pricing seek to answer some of those questions. Outcomes-based contracts is one such proposal. Under the approach, a drug manufacturer and a payer reach an agreement that ties reimbursement to observed outcomes in patients. Rather than a payer covering all prescriptions at a single price, the initial price remains in place if a certain volume of patients achieves the agreed-upon outcome. If the threshold is not met, the drugmaker refunds some of the original price to the payer.

Outcomes-based contracting sounds like a promising approach because various parties involved in the sale have a stake in the result, Dr. Nabhan said. “If you are a manufacturer, you want to make sure the outcomes are actually good,” he said. “If you’re a physician, you want to maximize monitoring your patient and managing adverse events. If you are the payer, you want to make sure your patient stays adherent to therapy, and you want to make sure you provide access to the doctor’s office, and to the hospital when needed. There’s more skin in the game when we look at outcomes-based contracting.”

Another idea gaining popularity is long-term financing for some drugs, particularly curative treatments. The idea has various models, but generally entails a financing arrangement, such as a loan mechanism for payers or a contractual annuitization that commits payers to pay costs over time. Such financing proposals are gaining speed in response to the high-cost of new gene therapies, according to a summary in Health Affairs. The payment agreements could be augmented by government funds such as government bonds or subsidies and/or efforts to promote risk-pooling across payers.

Peter B. Bach, MD, however, believes neither long-term financing nor outcomes-based contracting are good ideas. In January 2019 testimony to the U.S. Senate Committee on Finance, Dr. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, New York, outlined why both value-based proposals are faulty. Outcomes-based contracting does not guarantee that prices are value based, he said, because it leaves untouched how much a drug costs when it does work. In addition, the long-term financing approach only pushes drug costs into future years, he testified.

“Financing does not reduce total spending, it just changes current obligations,” Dr. Bach said during testimony. “It is also relevant to appreciate that, whether for student loans or home mortgages, long-term payment arrangements are inflationary.”

Dr. Bach, a health policy expert whose work focuses on the cost and value of cancer drugs, and his colleagues at Memorial Sloan Kettering Cancer Center have spent the last few years fine-tuning an interactive drug-pricing tool that Dr. Bach says has distinct advantages over alternative drug-pricing proposals when it comes to considering value. The tool, called the DrugAbacus, integrates objective information about cancer drugs while empowering users to define what value means to them. For example, the DrugAbacus allows users to choose a dollar amount for each additional year of life the drug provides and lets them decide how much to discount the price for side effects, according to a summary of the tool by Dr. Bach published in the New England Journal of Medicine Catalyst. The price can be adjusted for factors such as treating a rare disease or having a novel action mechanism. The final result reveals the user’s self-valued DrugAbacus price and compares the cost with the drug’s initial market price.

“[DrugAbacus] provides a template for how we need to start thinking about value in drug pricing – by capturing some of the inherent complexity of value-based decisions without making the fundamentally flawed assumptions that are embedded in other drug-pricing proposals,” Dr. Bach wrote in the summary.

He declined to comment for this story.
 

 

A three-tiered approach

Another novel idea would link drug prices to value, but allow costs to change with new information. The proposal would create a three-part pricing model where prices vary over fixed time intervals, according to an article published in the New England Journal of Medicine Catalyst.

First, drugmakers would agree to launch a drug with a low price, with a potentially significant increase after a specified period to observe performance. During a second period, the price would be adjusted up or down based on newly emergent evidence. After a window of higher prices to reward innovation, the cost would then decline in a third period to ensure long-term access.

The advantage is access to truly miraculous therapies in a very short time – from 3 to 5 years earlier than the current system, said Luca Pani, MD, a coauthor of the paper and professor of psychiatry at the University of Miami.

“Another advantage emerges when it comes to drugs that treat patient populations with inaccurate epidemiology, in which we do not know exactly how many patients we have,” Dr. Pani said. “The model in this case allows to reduce the economic impact of this uncertainty.”

The main challenge would be finding a drug manufacturer that would agree to the arrangement, said Erik Snowberg, PhD, a coauthor of the study and a research associate for the National Bureau of Economic Research.

“There’s a lot of uncertainty right now,” Dr. Snowberg said. “The big challenge would be to find a drugmaker that would think about implementing this and finding the right payer for whom this would solve a pressing need.”

Despite the barriers to the idea, Dr. Pani said a more cost-effective drug cost structure is imperative, especially as the rapid rate of new therapies continues.

“We have a moral obligation to find alternative models that allow access and that are not only scientifically and economically sound and sustainable but also realistic and logical to implement,” he said.

 

It’s no secret that cancer drugs are among the most expensive medical treatments in the United States, and now, new research reveals some high-priced cancer drugs may yield little benefit for patients.

A recent analysis of 71 oncology indications approved by the Food and Drug Administration between 2011 and 2017 found that overall survival gains were marginal for drugs approved by the FDA based on overall survival (OS) data. The majority of the 71 indications (75%) demonstrated no statistically significant improvement in patient-reported outcomes (PROs), according to the study (JAMA Oncol. 2019 Jul 3 doi: 10.1001/jamaoncol.2019.1760).

More than half of the indications evaluated demonstrated neither an OS benefit nor a PRO improvement post approval, the study found.

While the researchers did not analyze cost, a number of the cancer drugs that demonstrated little benefit come with a high price tag. Cabozantinib (Cabometyx) for example, approved for the treatment of medullary thyroid carcinoma and advanced renal cell carcinoma (RCC) during the study period, did not demonstrate an overall survival benefit post approval, findings showed. Cabometyx, approved based on survival data, had a 2016 wholesale acquisition cost of $13,750 for a 1-month supply. Olaparib (Lynparza) meanwhile, approved for the treatment of advanced ovarian cancer during the study period, also showed no overall survival benefit post approval. The 2017 wholesale acquisition cost for olaparib was $13,482 for a 30-day supply.

Investigators noted in the study that evaluation of OS can be challenging or unfeasible in some instances and is complicated by factors such as use of crossover trial design.

The findings emphasize the need for a sharper eye on how regulatory authorities approve drugs, said Chadi Nabhan, MD, senior author of the study and chief medical officer at Aptitude Health based in Chicago.

Courtesy of Dr. Nabhan

“We all want our patients to receive the best and the latest and the most important and innovative drug they can possible get, as long as these drugs show a benefit,” said Dr. Nabhan, a hematologist and medical oncologist. “We need to look critically at making sure drugs getting approved are truly helping patients by extending their lives or improving their quality of life.”

Growing questions about the benefits of some cancer drugs come as a push to reconsider the pricing of medications to better account for value gains momentum. A number of proposals have recently emerged that would revamp the current payment structure for prescription drugs with the aim of lowering costs and improving access. Value-based pricing proposals are not without challenges, namely defining what value truly means, said Leonard Saltz, MD, a medical oncologist at Memorial Sloan Kettering Cancer Center in New York.

“We’re all quite clear there is a huge absence of connection between cost and value,” Dr. Saltz said in an interview. “There is also a real absence of the definition of, ‘What is value?’ I think that ultimately we have to rely on defining value by its absence. By that I mean, where do we say, this is insufficient value?”


 

 

Many drugs show little benefit

The JAMA Oncology study builds on other data that raise doubts about how the FDA determines value when making approval decisions for cancer drugs.

Overall survival is the most direct measure of clinical benefit used to determine value. But OS as an endpoint in clinical trials generally requires larger patient numbers and increased time for follow-up, thereby delaying approvals. This is likely why the use of surrogate endpoints to approve drugs has increased. Dr. Nabhan’s study found the use of surrogate endpoints during trials grew from 67% during the period of 2008 through 2012 to 76% during the period of 2011 through 2017. Surrogate endpoints can include tumor shrinkage, time to progression, or time to reappearance of disease.

The use of surrogate endpoints to determine value however, has long come under scrutiny. A 2019 analysis published in JAMA Internal Medicine found that most cancer drugs approved by the FDA based on response rate (RR) – the percentage of patients who experience tumor shrinkage – have less than transformational response rates, and that such indications do not have confirmed clinical benefit.

Of 59 oncology drugs with 85 unique indications, most had a response rate ranging from 20% to 59%. Of 81 available indications, the median complete response rate – defined as the percentage of patients with no visible disease and normalization of lymph nodes – was 6%. (Complete response data were not reported for four drug indications.) Investigators also reported that many of the drugs have remained on the market for years without subsequent confirmatory data.

In addition, a 2018 review of randomized clinical trials published in JAMA Internal Medicine that analyzed progression-free survival in cancer patients found the endpoint did not improve patients’ lives. A quantitative analysis of 52 articles that covered 38 randomized clinical trials involving 13,979 patients across 12 cancer types found no significant association between progression-free survival and health-related quality of life.

“These findings raise questions regarding the assumption that interventions prolonging [progression-free survival] also improve [health-related quality of life] in patients with cancer,” the study authors wrote. “Therefore, to ensure that patients are truly obtaining important benefit from cancer therapies, clinical trial investigators should measure [health-related quality of life] directly and accurately, ensuring adequate duration and follow-up.

PROs, which can encompass health-related quality of life, is a measure the FDA has encouraged investigators to use during trials – when the benefit exists. In the analysis by Dr. Nabhan, trials evaluated PROs during pivotal studies supporting initial approval in 50 of the 71 indications. Before approval, 14 drugs demonstrated a statistically significant improvement in at least one PRO, but only 1 of the 14 – ruxolitinib – was granted a PRO labeling claim at the time of approval. Post approval, a statistically significant improvement in PROs was shown for only 18 of the 71 (25%) initial indications.

Meanwhile, although overall survival is considered the optimal yardstick with which to measure drug benefit, the value of longevity – and how it should be weighted – poses further questions. A number of new oncology drugs approved based on survival data lengthen lives by a very short time, Dr. Saltz noted. In the study of 71 indications for example, the median OS gain for drugs approved based on survival data was 1.7 months.

“We crossed the absurdity boundary a long time ago with drugs in the range of $10,000 to $20,000 a month with median survival benefits of less than 2 months,” Dr. Saltz said. “That’s not very much. Then we get into a rather circuitous argument that doesn’t settle anything as to whether it’s ‘worth it or not.’ The question becomes to whom is it worth what, and who’s paying for it?”
 

 

Proposals aim to lower cost

Recent cost ideas that center on value-pricing seek to answer some of those questions. Outcomes-based contracts is one such proposal. Under the approach, a drug manufacturer and a payer reach an agreement that ties reimbursement to observed outcomes in patients. Rather than a payer covering all prescriptions at a single price, the initial price remains in place if a certain volume of patients achieves the agreed-upon outcome. If the threshold is not met, the drugmaker refunds some of the original price to the payer.

Outcomes-based contracting sounds like a promising approach because various parties involved in the sale have a stake in the result, Dr. Nabhan said. “If you are a manufacturer, you want to make sure the outcomes are actually good,” he said. “If you’re a physician, you want to maximize monitoring your patient and managing adverse events. If you are the payer, you want to make sure your patient stays adherent to therapy, and you want to make sure you provide access to the doctor’s office, and to the hospital when needed. There’s more skin in the game when we look at outcomes-based contracting.”

Another idea gaining popularity is long-term financing for some drugs, particularly curative treatments. The idea has various models, but generally entails a financing arrangement, such as a loan mechanism for payers or a contractual annuitization that commits payers to pay costs over time. Such financing proposals are gaining speed in response to the high-cost of new gene therapies, according to a summary in Health Affairs. The payment agreements could be augmented by government funds such as government bonds or subsidies and/or efforts to promote risk-pooling across payers.

Peter B. Bach, MD, however, believes neither long-term financing nor outcomes-based contracting are good ideas. In January 2019 testimony to the U.S. Senate Committee on Finance, Dr. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, New York, outlined why both value-based proposals are faulty. Outcomes-based contracting does not guarantee that prices are value based, he said, because it leaves untouched how much a drug costs when it does work. In addition, the long-term financing approach only pushes drug costs into future years, he testified.

“Financing does not reduce total spending, it just changes current obligations,” Dr. Bach said during testimony. “It is also relevant to appreciate that, whether for student loans or home mortgages, long-term payment arrangements are inflationary.”

Dr. Bach, a health policy expert whose work focuses on the cost and value of cancer drugs, and his colleagues at Memorial Sloan Kettering Cancer Center have spent the last few years fine-tuning an interactive drug-pricing tool that Dr. Bach says has distinct advantages over alternative drug-pricing proposals when it comes to considering value. The tool, called the DrugAbacus, integrates objective information about cancer drugs while empowering users to define what value means to them. For example, the DrugAbacus allows users to choose a dollar amount for each additional year of life the drug provides and lets them decide how much to discount the price for side effects, according to a summary of the tool by Dr. Bach published in the New England Journal of Medicine Catalyst. The price can be adjusted for factors such as treating a rare disease or having a novel action mechanism. The final result reveals the user’s self-valued DrugAbacus price and compares the cost with the drug’s initial market price.

“[DrugAbacus] provides a template for how we need to start thinking about value in drug pricing – by capturing some of the inherent complexity of value-based decisions without making the fundamentally flawed assumptions that are embedded in other drug-pricing proposals,” Dr. Bach wrote in the summary.

He declined to comment for this story.
 

 

A three-tiered approach

Another novel idea would link drug prices to value, but allow costs to change with new information. The proposal would create a three-part pricing model where prices vary over fixed time intervals, according to an article published in the New England Journal of Medicine Catalyst.

First, drugmakers would agree to launch a drug with a low price, with a potentially significant increase after a specified period to observe performance. During a second period, the price would be adjusted up or down based on newly emergent evidence. After a window of higher prices to reward innovation, the cost would then decline in a third period to ensure long-term access.

The advantage is access to truly miraculous therapies in a very short time – from 3 to 5 years earlier than the current system, said Luca Pani, MD, a coauthor of the paper and professor of psychiatry at the University of Miami.

“Another advantage emerges when it comes to drugs that treat patient populations with inaccurate epidemiology, in which we do not know exactly how many patients we have,” Dr. Pani said. “The model in this case allows to reduce the economic impact of this uncertainty.”

The main challenge would be finding a drug manufacturer that would agree to the arrangement, said Erik Snowberg, PhD, a coauthor of the study and a research associate for the National Bureau of Economic Research.

“There’s a lot of uncertainty right now,” Dr. Snowberg said. “The big challenge would be to find a drugmaker that would think about implementing this and finding the right payer for whom this would solve a pressing need.”

Despite the barriers to the idea, Dr. Pani said a more cost-effective drug cost structure is imperative, especially as the rapid rate of new therapies continues.

“We have a moral obligation to find alternative models that allow access and that are not only scientifically and economically sound and sustainable but also realistic and logical to implement,” he said.