The pricing of drugs is under a magnifying glass, thanks to the actions thanks to the actions of biopharma blowhard Martin Shkreli. We’re now debating which drugs – new and old – deliver the appropriate value for their cost.
Some of this is pitting academia up against entrepreneurs, in a quest to find an appropriately price structure for drugs.
This idea was outlined in a piece by Dr. John LaMattina of PureTech Ventures in a Forbes article, which discusses the sky-high costs of new cancer drugs. He riffs off a piece in Harvard Business Review by Dr. Peter Bach, a longstanding opponent of cancer drug price hikes.
Bach has developed an interactive drug pricing tool called the “DrugAbacus,” which evaluates a drug’s efficacy, novelty and safety and determines an appropriate price. He wrote earlier this week:
Yes, everyone agrees that a drug’s value is tied to its clinical benefit for the patient. But how do you measure the impact of, say, drug side effects? If they’re bad, is the drug less valuable? What about if the drug costs a lot to develop or if its novel mechanism of action breaks new scientific ground? What if it treats a rare disease? Do those considerations add value? The DrugAbacus lets you decide how much these and other factors are related to a drug’s value. The tool’s intended users are policymakers who wish to explore the idea of finding fair prices for drugs while respecting the complexity and subjectivity of what “value” means.
When cancer drugs stretch past $300,000 for a course of treatment, this leaves patients, physicians and entrepreneurs to this question: What’s a life worth? Some of these are, after all, life-saving drugs; others only extend life a few months and have egregiously high price tags.
Take the drug Zaltrap, which cost $11,063 per month in 2012 – but was no more effective than the $5,000 per month drug Avastin. The crusade against Zaltrap’s pricing was led by Bach of Memorial Sloan-Kettering Cancer Center – and it was due to his efforts that the drug price was lowered to meet Avastin’s.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
LaMattina writes:
The biotechnology industry has rightly justified the high prices of drugs based on the value they bring. This was certainly the rationale used in the pricing of the hepatitis C cure, Sovaldi. While a Sovaldi regimen can cost $84,000, its manufacturer, Gilead, argued that curing hepatitis C eliminates the disease’s downstream consequences such as cirrhosis, liver failure, and liver transplants. Bach harshly dismisses the value rationale when he states that “Most interventions that extend life increase total spending in the end, because a patient who lives longer ends up needing more health care”. That’s a pretty cynical view. Taken to its extreme, it suggests that we should let people die at an early age to avoid dealing with the high costs of caring for the elderly.
So what’s a life worth? It’s a question to be answered by patients, families, doctors – but not the drug companies.
