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Unsustainable New Cancer Drug Prices: Resolution Remains A Far Cry

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Prices of new drugs for the treatment of life-threatening ailments, such as cancer, are increasingly becoming unsustainable, across the world, and more in India. As articulated by the American Society of Clinical Oncology in 2014, this is primarily due to the fact that their prices are disconnected from the actual therapeutic value of products.

Today, a very large number of poor and even the middle-income patients, who spend their entire life-savings for treatment of a disease like cancer, have been virtually priced out of the patented new drugs market.

The plights of such patients are worse in India and would continue to be so, especially when no trace of Universal Health Care/Coverage (UHC) is currently visible anywhere near the healthcare horizon of the country.

I discussed about the recent decision of the Government for shelving UHC in my recent Blog Post titled, “Would Affordable ‘Modicare’ Remain Just A Pipe Dream In India?”

Irresponsible pricing?

To highlight this point, I shall quote from the research paper titled, “Five Years of Cancer Drug Approvals, Innovation, Efficacy and Costs” published in JAMA Oncology dated April 02, 2015. This report states that just one year’s cost of treatment with a patented new cancer drug now routinely exceeds US$ 100,000. It is much known today that the medical bills for cancer treatment have become the single largest cause of personal bankruptcy, in many countries of the world.

The issue is even more impactful and heart wrenching in India, as with much lower per capita income, compared to the global median, a cancer patient pays around the same price for the same patented drugs in the country. Much talked about Nexavar of Bayer, has been a good example.

The above report underscores, the big global pharma players still vigorously contend to establish that the high cost of drugs is required to support their research and development efforts. However, none would possibly deny the hard data that, when costs and revenues are balanced, the pharmaceutical industry generates high profit margins.

On a lighter vain – the fact that the richest person in India is a pharma player of ‘low price generic medicines’ vindicates this point.

The latest report on pharma R&D costs:

In a ‘Press Release’ of November 18, 2014, Tufts Center for the Study of Drug Development announced, “Cost to develop and win marketing approval for a New Drug is US$2.6 Billion”.

This is around 2.5 times more than its previous estimate published in 2003, which reads as US$802 million.

Although the study is not publicly available, neither has it been peer reviewed, it does reflect that above overall inflation rate, pharma R&D costs are reportedly going up at an annual rate of around 8 percent!

Even if the R&D cost of US$2.6 Billion is accepted as correct to justify high prices of patented drugs, one should note that this figure is applicable only to those types of New Chemical Entities (NCE) that did not receive any outside funding in their developmental process, such as, from the National Institutes of Health (NIH).

It is worth noting, such types of NCEs account for less than one-sixth of the annual new drugs approval in the United States.

Interestingly, Tufts Center receives its funding from the pharmaceutical industry, according to reports.

When is a high cost of medicine defendable?

According to some, high price may be justified, if novel products offer significant benefits to patients giving rise to indirect quantifiable economic value through restoration of health of patients.

This is understandable, as those patented drugs represent significant and well-accepted pharmacological advances over the existing ones, offering novel mechanisms of actions for better treatment value through ‘high-risk-high-cost’ research.

Price is a function of the value that a drug offers:

The price of any drug must be a function of the value that it offers to the patients. Not just the cost of its innovation, irrespective of the fact, whether it is a ‘New-Class (Novel)’ or ‘Next-in Class’ or even a ‘Me-too’ NCE.

The above April 2015 research report published in JAMA Oncology, investigated at length, whether novelty of medications or their relative benefits dictated drug pricing.

In that endeavor, the authors found out that from January 1, 2009, to December 31, 2013, the USFDA approved 51 drugs in oncology for 63 indications. During this period, 9 drugs received more than 1 approved indication.

The study observed:

Of these 51 drugs:

- 21 (41 percent) exert their effect via a novel mechanism of action

- While 30 (59 percent) are next-in-class drugs

Despite this fact, there was no difference in the median price per year of treatment between the 30 next-in-class drugs (US$119, 765) and the 21 novel drugs (US$116, 100).

Global cancer market is soaring high fuelled by astronomical prices:

According to a report that quotes an official of IMS Health, the overall cost for cancer treatments per month in the United States is now US$10,000, up from $5,000 just a year ago. At the same time, according to a 2014 study by the IMS Institute for Healthcare Informatics, global oncology spending has hit US$91 billion in 2013, and despite patent cliff is growing at 5 percent annually.

None likes nightmarish cancer drug-pricing trend:

None likes this worrisome drug-pricing trend, not even in the developed world. God forbid, just one cancer patient in the family can drag even a middle class household to the poverty level, especially in a country like India, where Out of Pocket (OoP) expenses for health hovers around 70 percent and Universal Health Coverage still remains a pipe dream.

Payers, including governments and private insurers, in the top cancer markets such as the United States and Europe, are trying hard to bring the cancer drug prices to a reasonable level through regulatory pressure of various kinds and forms. For example, National Institute for Health and Care Excellence (NICE) in the United Kingdom and the regulators for drug cost-effectiveness in other large European countries, are coming hard on patented new cancer drugs with small improvements in survival time but priced much higher than the existing ones.

Even many private insurers in those countries are now raising questions about the additional value offerings in quantifiable terms, especially for the new cancer drugs and other treatments for life-threatening ailments, such as hepatitis C. To give an example, in late 2014, Express Scripts in America negotiated hard for an exclusive deal with AbbVie to provide its hepatitis C treatment Viekira Pak over Gilead’s exorbitantly priced Sovaldi.

Action by the doctors outside India:

In 2012, doctors at the Memorial Sloan-Kettering Cancer Center reportedly announced in ‘The New York Times’ that their hospital would not be using Zaltrap, a newly patented colorectal cancer drug from Sanofi. This action of the Sloan-Kettering doctors compelled Sanofi to cut Zaltrap price by half.

Unlike in India, where prices of even cancer drugs do not seem to be a great issue with the medical profession, just yet, the top cancer specialists of the American Society of Clinical Oncology are reportedly working out a framework for rating and selecting cancer drugs not only on their benefits and side effects, but prices as well.

In a recent 2015 paper, a group of cancer specialists from Mayo Clinic also articulated, that the oft-repeated arguments of price controls stifle innovation are not good enough to justify unusually high prices of such drugs. Their solution for this problem includes value-based pricing and NICE like body of the U.K.

This Interesting Video from Mayo Clinic justifies the argument.

Tokenism by the Indian Government:

India sent a signal to global pharma players about its unhappiness of astronomical pricing of patented new cancer drugs in the country on March 9, 2012. On that day, the then Indian Patent Controller General issued the first ever Compulsory License (CL) to a domestic drug manufacturer Natco, allowing it to sell a generic equivalent of a kidney cancer treatment drug from Bayer – Nexavar, at a small fraction of the originator’s price.

In this context, it won’t be out of place recapitulating that an article published in a global business magazine on December 5, 2013 quoted Marijn Dekkers, the CEO of Bayer AG saying: “Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western Patients that can afford it.”

Whether, CL is the right approach to resolve allegedly ‘profiteering mindset’ at the cost of human lives, is a different subject of discussion.

Be that as it may, India did send a very strong signal in this regard, which some construe as mere tokenism. Nonetheless, this action of the Indian Government shook the global pharma world very hard, that it would find difficult to forget in a foreseeable future.

Government’s determination to make it happen is still eluding:

The headline of this article would probably invoke an instant negative response from my friends in the industry, an understandably so, expressing… ‘Hey, are you talking against innovation and suggesting one more regulator for the heavily regulated pharma industry?’ 

I would very humbly say, no…I am suggesting neither of those two, but requesting to give shape to a very important decision already taken by the Government on this issue, in a meaningful way. That decision has been scripted in Para 4.XV of the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) and was notified on December 07, 2012.

On ‘Patented Drugs Pricing’, it categorically states as follows:

“There is a separate committee constituted by the Government Order dated February 01, 2007 for finalizing the pricing of Patented Drugs, and decisions on pricing of patented Drugs would be based on the recommendation of this committee.”

The following long drawn unproductive events would vindicate, beyond even an iota of doubt, that a strong determination to make it happen, by even by the new Government, is still eluding by far.

Is this committee ‘Jinxed’?

To utter dismay of the patients and their well-wishers, the above committee took over six years after it was formed to submit its report.

It recommended ‘Reference Pricing’ for the Patented Drugs in India, after adjusting against India’s Gross National Income and Purchasing Power Parity. The suggested ‘Reference Countries’ were UK, Canada, France, Australia and New Zealand, where there exist a strong public health policy, together with tough bargaining power of the governments for drug price negotiations.

However, our Government found this report useless for various reasons and dissolved the panel. The grapevine in the corridors of power whispers, it could possibly be due to intense pressure from the global pharma players and their powerful lobby groups.

Interestingly, again by the end of 2013, the Department of Pharmaceuticals (DoP) set up a brand new inter-ministerial committee with four representatives each from the Ministry of Commerce and Industry, Ministry of Health and Family Welfare, National Pharmaceutical Pricing Authority (NPPA) and one from the DoP to resolve the same issue of ‘Patented Drugs Pricing’ in India.

Unfortunately, a serious issue of this magnitude has still remained unresolved, even under the new seemingly dynamic Government, till date. There were media reports though, just prior to the Union Budget in January 2015, that ‘the Government may negotiate prices of patented medicines with their manufacturers before allowing pharmaceutical companies to launch them in India.’

The scenario is still far from even sketchy. A lurking fear, therefore, creeps into the minds of many: Is this committee on ‘Patented Drugs Pricing’ jinxed or incompetent or has deliberately been kept non-functional under tremendous external pressure on pricing of patented drugs?

The way forward:

To find an implementable ‘Patented Drug Pricing Model’ soon, the new committee of the Government should consider Pharmacoeconomics Based or Value-Based Pricing (PBP/VBP) Model for the country.

Pharmacoeconomics, as we know, is a scientific model of setting price of a medicine commensurate to the economic value of the drug therapy.  Pharmacoeconomics principles, therefore, intend to maximize the value obtained from expenditures towards medicines through a structured evaluation of products costs and disease outcomes.

Thus, PBP/VBP basically offers the best value for money spent. It ‘is the costs and consequences of one treatment compared with the costs and consequences of alternative treatments’.

To the best of my knowledge, the Public Health Foundation of India, spearheaded by well-reputed internationally acclaimed physician – Dr. Srinath Reddy, has requisite expertise in this area and to build on it further, as required by the committee.

This new model would help establishing in India that the price of any drug is always a key function of the value that it offers and not of the so called ‘high cost of innovation’, irrespective of whether it is a ‘New-Class (Novel)’ or ‘Next-in Class’ or even ‘Me-Too’ NCE.

The concept is gaining ground: 

The concept of ‘Value-Based Pricing’, has started gaining ground in the developed markets of the world, prompting the pharmaceutical companies generate requisite ‘health outcome’ data using similar or equivalent products.

Cost of incremental value that a product delivers over the existing ones, is of key significance and should always be the order of the day. Some independent organizations such as, the National Institute for Health and Clinical Excellence (NICE) in the UK have taken a leading role in this area.

Conclusion:

Warren Buffet – the financial investor of global repute once said, “Price is what you pay. Value is what you get.” Unfortunately, this dictum is not applicable to the consumers of high priced life saving drugs, such as, for cancer.

Price tags of most of the patented new cancer drugs, do not seem to give any indication that the pharma players believe in this pricing model, even remotely. As JAMA Oncology has established in their recent research study, there is no difference in the median price of per year of treatment between ‘Next-in-Class’ and ‘Novel Drugs’.

Thus far, India has been able to address this issue either through section 3(d) or Compulsory Licensing (CL) provisions of its Patents Act. As the saying goes, ‘proof of the pudding is in the eating’, the net fall-out of these measures has been demonstrably profound. For example, the global pharma giant Gilead has entered into voluntary License (VL) agreements with several local companies to market in India one of the most expensive products of the world – Sovaldi, at a small fraction of its original price of US$1,000/tablet. 

That said, effective long-term resolution of ‘Patented Drugs Pricing’ issue, in my view, is long overdue in India, especially for the treatment of life-threatening diseases, such as cancer. This has been necessitated by the fact that in many cases, therapeutic benefits of most of these drugs are not commensurate to their high costs.

The provision for ‘Patented Drugs Pricing’ has already been made in the NPPP 2012, though not implemented, as yet. While working out an implementable mechanism for the same, the new committee of the present Government may consider ‘Pharmacoeconomics Based or Value-Based Pricing (PBP/VBP) Model’ to effectively resolve this crucial issue. The specialized group that will operate this system could be a part of the National Pharmaceutical Pricing Authority (NPPA) of India.

The struggle for life in the fierce battle against dangerous ailments, without having access to new life-saving drugs, has indeed assumed a mind-boggling dimension in India, especially in the absence of Universal Health Coverage. It would continue to remain so, unless the new Government demonstrates its will to act, putting in place a transparent model of patented drugs pricing, without succumbing to any power play or pressures of any kind from vested interests.

The bottom-line is: It has to happen soon…very soon. For patients’ sake.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Paying For The Best Health Outcomes At The Lowest Possible Cost

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“Bayer CEO Dr. Marijn Dekkers is happy to have fair Outcomes-Based Pricing”, reported ‘PharmaTimes’ on December 3, 2014.

Dr. Dekkers was quoted saying, “It is okay to be tested on that in the process of price-setting, that is fine, we should only be paid for the value we bring”. However, at the same time he also reminded, “When we have a new drug that is significantly better than the previous drug but the previous drug just went generic, we are compared to the 20% price, not the 100% price”.

I reckon, the above statement of the Bayer CEO sounds quite amazing, if not bizarre, especially considering the legality in the prevailing global pharma patent regime.  Thus, any discontentment in this area, howsoever intense these are, would unlikely to be able to attract any unbiased favorable ear, across the world.

Another aspect of the aggressive patented drug pricing trend, I deliberated in one of my earlier blog posts titled, “An Aggressive New Drug Pricing Trend: What It Means To India?” of October 27, 2014.

What is it really?

As many would know, another common terminology of Outcome-Based Pricing (OBP) is Value-Based-Pricing (VBP). This approach for pricing is basically intended to offering the best value for the money spent in healthcare. It is ‘the costs and consequences of one treatment compared with the costs and consequences of alternative treatments’. For pharmaceutical players, VBP/OBP would mean not charging more than the actual real value of the product offerings.

As we shall find below, this concept is gaining ground now in the developed markets of the world, prompting the pharmaceutical companies generate requisite ‘health outcomes’ data using similar or equivalent products. Cost of incremental value that a product will deliver is of key significance. Some independent organizations such as, the ‘National Institute for Health and Clinical Excellence (NICE)’in the United Kingdom (UK) has taken a leading role in this area.

An evolving scenario:

It would be worthwhile to note that over a period of time, while pricing new pharma products, manufacturers have been traditionally considering the costs of all inputs of various kinds incurred to bring these drugs into the market and thereafter adding hefty mark-ups on those medicines in a non-transparent manner to arrive at the market price.

This absolutely opaque process of patented drugs pricing is increasingly making the stakeholders, such as patients’ groups, payors, including the governments and insurers much concerned about the differential value offerings of these high priced new drugs over the existing ones for commensurate improvement in the actual health outcomes for the patients.

The relevance:

In the past decade, there has been a clear trend in the price negotiation of new and complex pharma based on health outcomes models as the pharma players are coming under increasing pressure from the payors/patients to improve the treatment cost-effectiveness.

In an article published in the Harvard Business Review of October 2013, Michael Porter and Thomas Lee had cautioned, “ In healthcare, the days of business as usual are over…it is time for a fundamentally new strategy. At its core is maximizing value for patients: that is, achieving the best outcomes at the lowest cost.”

They elucidated the relevance of value based pricing, supporting very strongly the idea of paying for “value” in healthcare.

Thus, if this trend were not checked, the healthcare spending would keep going up, as it is happening today globally, impacting access of these drugs to patients significantly due to spiraling cost pressure.

 A recent vindication:

‘Gallup’ in an articles titled, “Cost Still a Barrier Between Americans and Medical Care” published in December 5, 2014, has reported that in U.S., 33% of Americans have put off medical treatment because of cost. Interestingly, more of them put off treatment for serious conditions than non-serious and more with private insurance had put off treatment in 2014 than 2013.

Thus, to address this issue, as we shall see below, various governments either have or in the process of developing regulatory policies to rationalize new drug prices based on the Outcome/Value-Based Pricing (OBP/VBP) Models of different kinds.

In this backdrop, Bayer CEO’s acceptance of OBP/VBP is indeed a welcoming development. This process is undoubtedly one of the most reasonable ways to arrive at a patented drug price.

For a large majority of stakeholders, treatment outcomes and differential value offerings of new medicines are the most critical factors to monitor the value pathway of patients’ medical care, irrespective of types of illnesses.

The move has already commenced: 

Deloitte Center for Health Solutions in a study on Value-Based Pricing for

Pharmaceuticals, has highlighted that unlike the United States, many countries, where the government plays a decisive role in pricing and price negotiations of pharmaceuticals, have focused on reducing costs through value-based pricing agreements.

The article gives examples of Denmark, where Bayer entered into a “no cure, no pay” initiative on Levitra (vardenafil) for erectile dysfunction in 2005.  Patients not satisfied with the treatment were eligible for a refund. Similarly, in 2007, after the National Institute for Health and Clinical Excellence (NICE) of the United Kingdom (UK) initially concluded that Velcade (bortezomib) was too expensive as compared to its estimated benefits to the population, Johnson & Johnson offered to forgo charges for patients who did not have an adequate medication response.

Further, according to the Burrill Report of October 2013, as part of an effort to regain market share for its statin Zocor, which had been losing ground to then Warner Lambert’s Lipitor, Merck had reportedly offered an out of box proposition to consumers and insurers in 1998. Merck’s “Get to Goal” guarantee offered refunds to any takers who failed to reach target cholesterol levels set by their doctors within six months of using Zocor and adjusting their diet.

Could serve the purpose of global pharma too:

The above Burrill Report also states, “The performance-based pricing also serves a simpler purpose for drug makers. It allows them to provide discounts that may be necessary to establish acceptable value in one market without affecting the price for a drug in other markets around the world as a number of payers peg the price they will pay for a drug to what price a specific country may negotiate with the drug maker.”

Following this trend it appears that like Dr. Dekkers, other head honchos of global pharma majors would ultimately be left with no option but to willy-nilly toe this line in most of the countries across the world for their patented products.

This would be necessitated due to increasing product-pricing pressure based on quantification of differential benefits of the new medicines over already existing ones, as would be reflected in the analysis of intensive cost-effectiveness data.

Defining a measure of cost-effectiveness:

One of the several other methods to measure the cost-effectiveness of a new drug, as reported in a case study published by ‘2020 Public Services Trust at the RSA’, is as under:

“The efficiency of new products can be captured through incremental cost-effectiveness ratios (ICER). These are usually based on quality-adjusted life-years (QALY), which are a measure of how many extra months or years of reasonable quality life a patient might gain as a result of treatment, based on average life expectancy. Life expectancy is usually extrapolated from the results of clinical trials whilst the quality adjustment is based on patients’ experiential response to the level of pain, mobility and general mood which are usually expressed as a weighted utility value of between 0 and 1. The final calculation of the ratio is based on the difference in the cost to QALY ratio between the new drug and the standard available treatment. However, to make sense of the ICERs it has been necessary to establish thresholds beyond which drugs are no longer deemed cost-effective.”

As the above case study highlights, “NICE had established a notional upper limit of £20-30,000 per QALY above which a drug will generally not be recommended, although in exceptional circumstances this can be increased as was the case for beta-interferon, where it was raised to £36,000.”

The Indian perspective:

In developing countries such as India, expenditure towards medicines is considered as an investment made by patients to improve their health and productivity at work. Maximizing benefits from such spending will require avoidance of those medicines, which will not be effective together with the use of lowest cost option with comparable value and ‘health outcomes’.

For this reason, as stated above, many countries have started engaging the regulatory authorities to come out with head to head clinical comparison of similar or equivalent drugs keeping ultimate ‘health outcomes’ of patients in mind.

A day may come in India too, when the regulatory authorities will concentrate on ‘outcomes/value-based’ pricing models, both for patented and high price branded generics, where low priced equivalents are available.

However, at this stage it appears, this would take some more time. Till then for ‘health outcomes’ based medical prescriptions, working out ‘Standard Treatment Guidelines (STG)’, especially for those diseases, which are most prevalent in India, should assume high importance.

Standard Treatment Guidelines (STG):

STG is usually defined as systematically developed statements designed to assist practitioners and patients in making decisions about appropriate cost-effective treatment in specific disease areas.

For each disease area, the treatment should include “the name, dosage form, strength, average dose (pediatric and adult), number of doses per day, and number of days of treatment.” STG also includes specific referral criteria from a lower to a higher level of the diagnostic and treatment requirements.

In India, the medical experts have already developed STGs for some disease areas. However, formulation of STGs covering all major disease areas and, more importantly, their effective implementation would ensure cost-effective healthcare benefits to a vast majority of population.

The Ministry of health of the respective states of India should encourage the medical professionals/institutions to lay more emphasis on ‘health-outcomes/value based’ prescription of medicines, ensuring more cost effective treatment for their patients.

Conclusion:

The medical practitioners in their part should ideally volunteer to avoid prescribing expensive drugs offering no significant improvement in ‘health outcomes’, against the cheaper equivalents. The Government should initially encourage it through ‘self-regulation’ and if it does not work, stringent regulatory measures must be strictly enforced, within a reasonable time frame.

Be that as it may, it clearly emerges today that in the healthcare arena, effective implementation of ‘Outcomes/Value-Based-Pricing-Models’ would ensure paying for the best health outcomes at the lowest possible cost, especially for those who deserve it the most, not just in India, but across the world too.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

Alarming Incidence of Cancer: Fragile Infrastructure: Escalating Drug Prices

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According to the ‘Fact-Sheet 2014′ of the World Health Organization (WHO), cancer cases would rise from 14 million in 2012 to 22 million within the next two decades. It is, therefore, no wonder that cancers figured among the leading causes of over 8.2 million deaths in 2012, worldwide.

A reflection of this scary scenario can also be visualized while analyzing the growth trend of various therapy segments of the global pharmaceutical market.

A recent report of ‘Evaluate Pharma (EP)’ has estimated that the worldwide sales of prescription drugs would reach US$ 1,017 bn by 2020 with a Compounded Annual Growth Rate (CAGR) of 5.1 percent between 2013 and 2020. Interestingly, oncology is set to record the highest sales growth among the major therapy categories with a CAGR of 11.2 percent during this period, accounting for US$ 153.4 bn of the global pharmaceutical sales.

The key growth driver is expected to be an exciting new class of cancer products targeting the programmed death-1 (PD-1) pathway with a collective value of US$ 14 bn in 2020, says the report.

Another recent report from the IMS Institute for Healthcare Informatics also highlights that global oncology spending touched US$ 91 billion in 2013 growing at 5 percent annually.

Consequently, Oncology would emerge as the biggest therapeutic class, more than twice of the anti-diabetic category, which features next to it.

Key global players:

Roche would continue to remain by far the largest player in the oncology market in 2020 with a 5 percent year-on-year growth between 2013 and 2020 with estimated total sales of over US$ 34bn in 2020 against US$ 25bn in 2013.

In 2020, besides Roche, other key players in the oncology segment would, in all probability, be Bristol-Myers Squibb, Celgene, Novartis, Pfizer, Johnson & Johnson, Astellas Pharma, AstraZeneca, Eli Lilly and Merck & Co, the EP report says.

Escalating costs of cancer drugs:

As IMS Health indicates, the overall cost for cancer treatments per month in the United States has now reached to US$10,000 from US$ 5,000 just a year ago. Thus, cancer drugs are fast becoming too expensive even in the developed markets, leave aside India.

The following table would help fathom how exorbitant are the costs per therapy of the common cancer drugs, though these are from the United States:

Generic                               Diagnosis

 Cost/ Dose (US$)

Cost of     Therapy/    28 days  (US$)

Cost per  Therapy      (US$)
brentuximab Hodgkins lymphoma

14,000

18,667

224,000
Pertuzumab Breast cancer

4,000

5,333

68,000
pegylated interferon Hepatitis C

700

2,800

36,400
Carfilzomib Multiple myeloma

1,658

9,948

129,324
ziv-aflibercept CRC

2,300

4,600

59,800
Omacetaxine CML

560

3,920

50,960
Regorafenib CRC

450

9,446

122,800
Bosutinib CML

278

7,814

101,580
Vemurafenib Melanoma

172

4,840

62,915
Abiraterone Prostate

192

5,391

70,080
Crizotinib NSCLC

498

27,951

363,367
Enzalutamide Prostate

248

6,972

90,637
ado-trastuzumab emtansine Breast – metastatic

8,500

8,115

105,500
Ponatinib Leukemia

319

8,941

116,233
Pomalidomide Multiple myeloma

500

10,500

135,500

(Source: ION Solutions)

Even US researchers concerned about high cancer drugs cost:

It is interesting to note, that in a review article published recently in ‘The Lancet Oncology’, the US researchers Prof. Thomas Smith and Dr. Ronan Kelly identified drug pricing as one area of high costs of cancer care. They are confident that this high cost can be reduced, just as it is possible for end-of-life care and medical imaging – the other two areas of high costs in cancer treatment.

Besides many other areas, the authors suggested that reducing the prices of new cancer drugs would immensely help containing cancer costs. Prof. Smith reportedly said, “There are drugs that cost tens of thousands of dollars with an unbalanced relationship between cost and benefit. We need to determine appropriate prices for drugs and inform patients about their costs of care.”

Cancer drug price becoming a key issue all over:

As the targeted therapies have significantly increased their share of global oncology sales, from 11 percent a decade ago to 46 percent last year, increasingly, both the Governments and the payers, almost all over the world, have started feeling quite uncomfortable with the rapidly ascending drug price trend.

In the top cancer markets of the world, such as, the United States and Europe, both the respective governments and also the private insurers have now started playing hardball with the cancer drugs manufacturers.

There are several instances in the developed markets, including the United States, where the stakeholders, such as, National Institute for Health and Care Excellence (NICE) of the United Kingdom and American Society of Clinical Oncology (ASCO) are expressing their concerns about manufacturers’ charging astronomical prices, even for small improvements in the survival time.

Following examples would give an idea of global sensitivity in this area:

  • After rejecting Roche’s breast cancer drug Kadcyla as too expensive, NICE reportedly articulated in its statement, “A breast cancer treatment that can cost more than US$151,000 per patient is not effective enough to justify the price the NHS is being asked to pay.”
  • In October 2012, three doctors at Memorial Sloan-Kettering Cancer Center announced in the New York Times that their hospital wouldn’t be using Zaltrap. These oncologists did not consider the drug worth its price. They questioned, why prescribe the far more expensive Zaltrap? Almost immediately thereafter, coming under intense stakeholder pressure, , Sanofi reportedly announced 50 percent off on Zaltrap price.
  • Similarly, ASCO in the United States has reportedly launched an initiative to rate cancer drugs not just on their efficacy and side effects, but prices as well.

India:

  • India has already demonstrated its initial concern on this critical issue by granting Compulsory License (CL) to the local player Natco to formulate the generic version of Bayer’s kidney cancer drug Nexavar and make it available to the patients at a fraction of the originator’s price. As rumors are doing the rounds, probably some more patented cancer drugs would come under Government scrutiny to achieve the same end goal.
  • I indicated in my earlier blog post that the National Pharmaceutical Pricing Authority (NPPA) of India by its notification dated July 10, 2014 has decided to bring, among others, some anticancer drugs too, not featuring in the National List of Essential Medicines 2011 (NLEM 2011), under price control.
  • Not too long ago, the Indian government reportedly contemplated to allow production of cheaper generic versions of breast cancer drug Herceptin in India. Roche – the originator of the drug ultimately surrendered its patent rights in 2013, apprehending that it would lose a legal contest in Indian courts, according to media reports. Biocon and Mylan thereafter came out with biosimilar version of Herceptin in the country with around 40 percent lesser price.

Hence, responsible pricing of cancer drugs would continue to remain a key pressure-point  in the days ahead.

Increasing R&D investments coming in oncology:

Considering lucrative business growth opportunities and financial returns from this segment, investments of global pharma players remain relatively high in oncology, accounting for more than 30 percent of all preclinical and phase I clinical product developments, with 21 New Molecular Entities (NMEs) being launched and reaching patients in the past two years alone, according to IMS Health.

However, it is also worth noting that newly launched treatments typically increase the overall incremental survival rate between two and six months.

Opportunities for anti-cancer biosimilars:

With gradual easing out of the regulatory pathways for biosimilar drugs in the developed markets, especially in the US, a new competitive dynamic is evolving in the high priced, over US$ 40 billion, biologics market related to cancer drugs. According to IMS Health, on a global basis, biosimilars are expected to generate US$ 6 to12 billion in oncology sales by 2020, increasing the level of competition but accounting for less than 5 percent of the total biologics market even at that time.

Alarming situation of cancer in India:

A major report, published in ‘The Lancet Oncology’ states that In India, around 1 million new cancer cases are diagnosed each year, which is estimated to reach 1.7 million in 2035.

The report also highlights, though deaths from cancer are currently 600,000 -700,000 annually, it is expected to increase to around 1.2 million during this period.

Such high incidence of cancer in India is attributed to both internal factors such as, poor immune conditions, genetic pre-disposition or hormonal and also external factors such as, industrialization, over growth of population, lifestyle and food habits.

The Lancet Oncology study showed that while incidence of cancer in the Indian population is only about a quarter of that in the United States or Europe, mortality rates among those diagnosed with the disease are much higher.

Experts do indicate that one of the main barriers of cancer care is its high treatment cost, that is out of reach for millions of Indians. They also believe that cancer treatment could be effective and cheaper, if detected early. Conversely, the treatment would be more expensive, often leading to bankruptcy, if detected late and would, at the same time, significantly reduce the chances of survival too.

The fact that cancer is being spotted too late in India and most patients lack access to treatment, would be quite evident from the data that less than even 30 percent of patients suffering from cancer survive for more than five years after diagnosis, while over two-thirds of cancer related deaths occur among people aged 30 to 69.

Unfortunately, according to the data of the Union Ministry of Health, 40 percent of over 300 cancer centers in India do not have adequate facilities for advanced cancer care. It is estimated that the country would need at least 600 additional cancer care centers by 2020 to meet this crying need.

Breast cancer is the most common type of cancer, accounting for over 1 in 5 of all deaths from cancer in women, while 40 percent of cancer cases in the country are attributable to tobacco.

Indian Market and key local players:

Cancer drug market in India was reported to be around Rs 2,000 Crore (US$ 335 million) in 2013 and according to a recent Frost & Sullivan report, is estimated to grow to Rs 3,881 Crore (US$ 650 million) by 2017 with a CAGR of 15.46 percent, throwing immense business growth opportunities to pharma players.

Dr.Reddy’s Laboratories (DRL) is one of the leading Indian players in oncology. DRL has already developed biosimilar version of Rituxan (Rituximab) of Roche, Filgastrim of Amgen and has also launched the first generic Darbepoetin Alfa and Peg-grafeel.

Other major Indian players in this field are Cipla, Lupin, Glenmark, Emcure, Biocon, Ipca, Natco, Intas, Reliance Life Science, Zydus Cadila and some more. These home grown companies are expected to take a leading role in the fast growing oncology segments of India, together with the major MNC players, as named above.

Analysis of detailed opportunities that would be available to these companies and consequent financial impacts could be a subject of separate discussion.

Conclusion:

Unlike many other developed and developing countries of the world, there is no system yet in place in India to negotiate prices of innovative patented drugs with the respective manufacturers, including those used for cancer. However, NPPA is now moving fast on reducing prices of cancer drugs. It has reportedly pulled up six pharma for not providing pricing data of cancer drugs sold by them.

Further, CL for all patented anti-cancer drugs may not be a sustainable measure for all time to come, either. One robust alternative, therefore, is the intense price negotiation for patented drugs in general, including anti-cancer drugs, as provided in the National Pharmaceutical Pricing Policy 2012 (NPPP 2012).

This important issue has been under consideration of the Department of Pharmaceuticals (DoP) since 2007. The report produced by the committee formed for this specific purpose, after dilly-dallying for over five years, now hardly has any takers and gathering dusts.

I reckon, much discussed administrative inertia, insensitivity and abject lack of sense of urgency of the previous regime, have desisted the DoP from progressing much on this important subject, beyond of course customary lip services, as on date. Intense lobbying by vested interests from across the world, seems to have further helped pushing this envelope deep inside an inactive terrain.

The new Government would hopefully make the DoP break its deep slumber now to resolve this critical issue decisively, in a time bound manner, assigning clear accountability, without any further delay.

At the same time, shouldn’t both the Honorable Ministers of Health and Chemicals & Fertilizers, taking the State Governments on board, put their collective resources together to create the following, expeditiously:

- A robust national health infrastructure for cancer care

- A transparent mechanism to prevent escalating cancer drug prices and other treatment costs

Hope, the good days would come to the cancer patients of India, at least, sooner than never.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion. 

An El Dorado…But Not Without Responsible Pricing:The Cancer Segment in India

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The affordability issue for cancer treatment has been the subject of a raging debate since quite some time, as the incidence of cancer is fast increasing across the world. Just for example a very recent report highlighted that cancer has now become the greatest health risk in the UK, with an average British boy born in 2010 running a 44 percent chance of being diagnosed with any form of cancer during his lifetime. The risk for a baby girl is slightly lower at 40 percent.

In India too, the problem of affordable cancer treatment has now become the center piece of a fiercer public opinion in the healthcare space, more than even HIV, prompting the Government to intervene in this dreadful disease area and address the problem in a holistic way both in the short and also on a longer term basis. This demand is supported by rapidly growing number of cancer patients in the country.

Out of the total number of new cancer patients globally, India now reportedly ranks third as follows:

Rank Country % Of total
1. China 22
2. USA 11
3. India 7.5

As a consequence, cancer now reportedly accounts for one of the main causes of deaths  in India, which is nearly 19 percent higher than deaths caused by heart diseases.

Number of new cancer patients staggering in India:

Over 60,000 new cases are reportedly diagnosed every year in India and 80 percent of them are at an advanced stage, which involve mostly the middle-aged and elderly population of the country, where affordability is even a greater issue.

Cervical and breast cancers are reportedly the most common, contributing over 26 per cent to the total cancer cases in India, followed by lung, mouth, pharynx, ovarian, pancreatic and esophagus cancers.

Whereas cervical cancer is reportedly most common in females with a mortality rate of nearly 15 per 10,000 females, lung cancer has the highest mortality rate of 28 per 10,000 males.

Incidentally, lung cancer is the most commonly diagnosed cancer even globally. Non-Small Cell Lung Cancer (NSCLC) accounts for approximately 90% of all lung cancers. The primary cause of lung cancer in up to 90% of patients is tobacco and represents one-fifth of all cancer-related deaths in India.

However, to address the havoc caused by this dreaded disease effectively, India will also need to bridge the huge gap of shortfall in disease diagnostic infrastructure in the country.

The humongous access gap for cancer patients needs to be effectively addressed by the Government sooner with Public-Private-Partnership (PPP) for diagnosis and treatment, in tandem with other proactive initiatives like, disease awareness campaigns targeted to ensure greater screening and disease prevention, wherever possible.

‘The Lancet’ finding:

Following are some of the important findings on cancer disease profile in India, as reported in May 12, 2012, edition of ‘The Lancet’:

-       6 percent of the study deaths were due to cancer

-       71 percent cancer deaths occurred in people aged 30—69 years

-       Age-standardized cancer mortality rates per 100,000 were similar in rural and urban     areas but varied greatly between the states, and were two times higher in the least educated than in the most educated adults.

This report further calls for immediate Government intervention in this area.

Growing patients number making ‘Oncology Market’ increasingly attractive:

As stated above, incidence of various types of cancer is rapidly increasing across the world, making oncology segment an ‘El Dorado’ for many pharmaceutical players prompting commensurate investments for product development in this area, be these are new molecules or biosimilars.

Thus, the global turnover of anti-cancer drugs, which was around US$ 50 billion in 2009, is expected to grow to US$ 75 billion in 2013 registering a jaw dropping growth rate in today’s turbulent global pharmaceutical market environment.

World Health Organization (WHO) has predicted over 20 million new cases of cancer in 2025 against 12 million in 2008.

Globally, the segment growth will mainly be driven by early detection, longer duration of treatment and the global ascending trend in the incidence and prevalence of cancer propelled by new treatments and improved access to cancer therapies in many countries.

Indian business landscape:

Oncology segment has now emerged as a leading therapeutic area in the Indian pharmaceuticals market too, being fourth largest in volume and tenth largest in value term, mainly driven by lower priced generic equivalents in volume term.

Despite only a smaller number of patients can afford any comprehensive cancer treatment protocol in India, the demand for cancer drugs in the country, where many drug companies follow various types of unconventional logistics systems to reach these drugs to patients, is increasing at a rapid pace.

Global players namely, Roche, BMS, Pfizer, Sanofi, GSK and Merck reportedly dominate the market with innovative drugs. Whereas, domestic companies like, Natco Pharma, Cipla, Sun Pharma, Dr. Reddy’s Lab (DRL), Biocon and others are now coming up with low price generic equivalents of many cancer drugs.

The fact that currently over 30 pharmaceutical companies market cancer drug in the country, demonstrates growing attractiveness of the Oncology segment in India.

Access to newer cancer drugs:

It has been widely reported that newer cancer therapies have significant advantages over available generic cancer drugs both in terms of survival rate and toxicity.

Unfortunately such types of drugs cost very high, severely limiting access to their therapeutic benefits for majority of patients. For a month’s treatment such drugs reportedly cost on an average US$ 3,000 – 4,500 or Rs 1.64 – 2.45 lakh to each patient in India.

More R&D investments in Oncology segment:

Another study recently published by ‘Citeline’ in its  ‘Pharma R&D Annual Review 2012’ points out, more than half of the top 25 disease areas targeted for R&D falls under cancer therapy. Breast cancer comes out as the single most targeted disease followed by Type 2 diabetes. 

This will ensure steady growth of the Oncology segment over a long period of time and simultaneously the issue of access to these medicines to a large number of patients, if the product pricing does not fall in line with socioeconomic considerations of India.

Cancer drug sales dominated in 2012: 

It is interesting to note that around one-third of the ‘Top 10 Brands in 2012′ were for the treatment of cancer as follows:

Top 10 global brands in 2012

Rank Brand Therapy Area Company Sales: (US$ bn)
1. Humira Rheumatoid Arthritis and others Abbott /Eisai (now AbbVie/Eisai) 9.48
2. Enbrel Anti-inflammatory Amgen/Pfizer/Takeda 8.37
3. Advair/Seretide Asthma, COPD GlaxoSmithKline 8.0
4. Remicade  Auto-immune Johnson & Johnson/Merck/ Mitsubishi Tanabe 7.67
5. Rituxan Anti-cancer Roche 6.94
6. Crestor Anti-lipid AstraZeneca/ Shionogi 6.65
7. Lantus Anti-diabetic Sanofi 6.12
8. Herceptin Anti-cancer Roche 6.08
9. Avastin Anti-cancer Roche 5.98
10. Lipitor Anti-lipid Pfizer/Astellas Pharma/Jeil Pharmaceutical 5.55

(Source: Fierce Pharma)

Responsible Pricing a key issue with cancer drugs:

In the battle against the much dreaded disease cancer, the newer innovative drugs being quite expensive, even in the developed markets the healthcare providers are feeling the heat of cost pressure of such medications, which in turn could adversely impact the treatment decisions for the patients.

Thus, to help the oncologists to appropriately discuss the treatment cost of anti-cancer drugs with the patients, the ‘American Society of Clinical Oncology’ recently has formed a task force who will also try to resolve this critical issue.

In many other developed markets of the world, for expensive cancer medications, the patients are required to bear the high cost of co-payment. This may run equivalent to thousands of U.S dollars, which many patients reportedly find difficult to arrange.

It has been reported that even the ‘National Institute of Health and Clinical Excellence (NICE), UK’ considers some anti-cancer drugs not cost-effective enough for inclusion in the NHS formulary, sparking another set of raging debate.

‘The New England Journal of Medicine’ in one of its recent articles with detail analysis, also expressed its concern over sharp increase in the price of anti-cancer medications, specifically. 

An interesting approach:

Experts are now deliberating upon the possibility of creating a ‘comparative effectiveness center’ for anti-cancer drugs. This center will be entrusted with the responsibility to find out the most cost effective and best suited anti-cancer drugs that will be suitable for a particular patient, eliminating possibility of any wasteful expenses with the new drugs just for newness and some additional features. If several drugs are found to be working equally well on the same patient, most cost effective medication will be recommended to the particular individual.

India should also explore this possibility without further delay.

Indian Government trying to find an answer in CL/NLEM/NPPP 2012:

Going by the recent developments in Compulsory License (CL) area for high priced new and innovative cancer drugs, it appears that in the times to come exorbitant prices for cancer drugs may prove to be loaded with risks of grant of CL in India due to immense public pressure.

It appears from the grapevine that Government may also explore the possibility to include some of the newer cancer drugs under National List of Essential Medicines (NLEM) bringing them under price control in conformance with the National Pharmaceutical Pricing Policy 2012 (NPPP 2012), if not through the provision of pricing of patented drugs.

Thus responsible pricing of cancer drugs assumes huge importance for avoidance of the above unpleasant situation in India.

Cancer drug pricing related developments in India:

As stated above, cancer being the second largest killer in India and the patented cancer drugs being generally expensive, a large Indian pharmaceutical player has been reportedly insisting on the government to allow widespread use of “compulsory licenses” for cancer drugs. About 11 years ago various news reports highlighted that this company broke ‘monopoly ‘ of the multinationals by offering to supply life-saving triple therapy AIDS drug cocktails for under US$1 a day, which is about one-thirtieth the price of the global companies.

In May 2012, this same Indian company named Cipla, significantly reduced the cost of three medicines to fight brain, kidney and lung cancers in India, making these drugs around four times cheaper than the originators, as per the above news report. The company reportedly wants to reduce the prices of more cancer drugs in future.

Prompted by the above steps taken by Dr. Yusuf Hamied, the Chairman of Cipla, many global players have reportedly branded him as an Intellectual Property (IP) thief, while Dr. Hamied reportedly accused them of being “Global Serial Killers” whose high prices are costing many precious lives across the globe.

In the same interview Dr. Hamied said poverty-racked India “can’t afford to divide people into those who can afford life-saving drugs and those who can’t”.

Promising future potential for low cost newer generic cancer drugs: 
 

While R&D initiatives are going on full throttle for newer and innovative drugs for cancer, interestingly over a quarter of the following 15 brands, which will go off-patent in 2013 are for cancer, throwing open the door for cheaper newer generics entry and increasing access to these medicine for a larger population of cancer patients.

Patent expiry in 2013 

Rank Brand Generic name Therapy Area Company Patent Expiry Sales US$ billion (2012)
1. Cymbalta Duloxetine Antidepressant, musculoskeletal pain Eli Lilly/Shionogi Dec 11 4.9
2. Avonex Interferon beta1a Multiple Sclerosis (MS) Biogen Idec Dec 31 2.9
3. Humalog Insulin lispro Anti-diabetic Eli Lilly May 7 2,52
4. OxyContin Oxycodone Pain Perdue August 31, 2.35
5. Rebif Interferon beta-1a Multiple Sclerosis (MS) Merck KgaA Dec 31 2.3
6. Aciphex Rabeprazole Acid-peptic disorder J&J, Eisai May 8 1.93
7. Xeloda Capecitabin
 Cancer Roche Dec 14 1.63
8. Procrit Epoetin Alfa Anemia J&J Aug 29 1.41
9. Neupogen Filgrastim Cancer Amgen, Kirin, Roche, Royalty Pharma Dec 12 1.29
10. Zometa Zoledronic Acid Cancer Novartis March 2 1.26
11. Lidoderm Lidocaine patch 5% Pain-relieving patch Endo Health Solutions/ EpiCept Sep 15 0.918
12. Temodar Temozolomide Cancer Merck, Bayer Aug 31 0.882
13. Asacol Mesalamine Ulcerative Colitis Warner Chilcott, UCB, Zeria Pharma Jul 30 0.891
14. Niaspan Niacin Anti-lipid Abbott, Teva Sep 20 0.835
15 Reclast Zoledronic acid injection Osteoporosis Novartis March 02 0.612

(Source: Fierce Pharma)

A thought:

Initiatives for faster resolution of a pressing issue like providing affordable treatment for cancer should not be put in the back burner of a longer term planning process. The issue is very real, humanitarian, here and now, for all of us. The Government is expected to display some sense of urgency through its expeditious intervention in all the four of the following treatment processes for cancer to make them affordable, if not free for the general population:

  1. Medical intervention and consultation
  2. Diagnostic tests and detection
  3. Surgical procedure and hospitalization
  4. Medicines and chemotherapy

As ‘The Lancet” study mentions, cancer in India is all-pervasive. It has no rich or poor, urban or rural or even any gender bias. It needs to be addressed in a holistic way for the benefit of all.

Conclusion: 

High incidence of cancer in India with even higher mortality rate, coupled with very high treatment cost has positioned this disease area in the eye of a stormy debate for quite some time. The naked fact that a large number of Indian population cannot afford the high treatment cost for cancer as ‘Out of Pocket’ expenditure, has made the issue even more sensitive and socially relevant in India.

Pricing issue for cancer drugs is not just India centric. Even in the developed countries, heated debate on expensive new drugs, especially, in the oncology segment is brewing up for a while. This could possibly assume a much larger proportion in not too distant future.

It is about time for also the private players to come forward and extend support to the Government in a joint endeavor to tame the destructibility and catastrophic effect of this dreaded disease on human lives, families and the society in general. Setting access improving tangible examples through Public Private Partnership (PPP) initiatives, rather than mere pontification of any kind, is the need of the hour.

If it does not happen, soon enough, willy-nilly the concerned players in this area may get caught in a much fiercer debate, possibly with a force multiplier effect, inviting more desperate measures by the Government.

Responsible pricing, for the patients’ sake, of each element of the cancer treatment process will ultimately assume a critical importance, not just for survival and progress of any business, but also to fetch pots of gold, as business return, from the ‘El Dorado’ of ‘Oncology Segment’ of India.

By: Tapan J. Ray 

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.