Patients increasingly are being exposed to actual drug prices, leading to delays in treatment and even bankruptcies. The reasons are many and all point to the necessity of including price in the value discussion, Peter P. Bach, MD, MAPP, director, Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center (MSKCC), New York, New York, said in a plenary lecture at the 2016 San Antonio Breast Cancer Symposium.1
The value discussion is an ongoing attempt to assess the value of cancer treatment regimens. In addition to the Drug Abacus project Dr Bach founded at MSKCC, others include the ASCO Value Framework, The European Society for Medical Oncology Magnitude of Clinical Benefit Scale, the National Comprehensive Cancer Network evidence blocks, and the Institute for Clinical and Economic Review evidence reports.2-6
Dr Bach, who runs the Evidence Driven Drug Pricing Project at MSKCC, said, “we do work in drug pricing and drug policy, primarily focused on branded specialty drugs in the [United States].” For example, a recent paper showed that packaging size or disposable single dose vials result in “a tremendous amount of money spent on wasted cancer drugs” in the United States,7 which prompted the Office of the Inspector General to design a 2017 work plan to investigate the problem, Dr Bach explained. The cost of wasted drugs is estimated at approximately $3 billion annually.
In his presentation, Dr Bach focused on escalating drug prices and provided “some predictions about where we are headed.”
Factors That Influence Drug Cost
Drugs account for approximately 19% of spending, if you include medical benefit drugs and institutional drugs, and that share is rising. Growth in rates of spending on prescription drugs is the fastest rising sector of health care over the last 3 years, Dr Bach reported. In the next decade, and in the next 50 years, prescription drug costs covered by Medicare Part D are expected to “outpace the rate of growth of everything else over that time period by more than 1% per year,” causing a “serious strain on this program.”
The question is why? One reason is the increasing launch prices of drugs, such that a drug now has to cost $500,000 for 1 year of treatment “to really get a rise out of people.” Since the Medicare program began in 1965, the price of 1 month of therapy with a new drug has increased 100-fold for standard-sized adults.
Two other reasons: prices for older drugs are rising, as demonstrated by the EpiPen and acquisitions that resulted in substantial price hikes, and new drugs entering the market “with absolutely enormous market sizes” drive up spending, the most prominent of which is the treatments for hepatitis C. National spending on drugs rose 12.4% the year hepatitis C treatments were introduced. “Hepatitis C drugs alone accounted for $18 billion in 2014/2015 combined; that’s against a total US spend across all drugs of approximately $300 to $350 billion, a huge blip, if you will,” Dr. Bach said.
Cost vs Value
The value of drugs, however, has gone down. Twenty years ago, a typical drug coming on the market cost approximately $50,000 per life year delivered; that cost is now approximately $250,000 per life year.