A Lonely Voice Asking Tough Questions on Cancer Cost-Effectiveness

7/30/12Follow @xconomy

If a new cancer drug comes out at a price of $100,000 per person, how many patients likely to benefit will actually get it? How many will drain their entire life savings just to make the insurance co-pays? How many people will go bankrupt to stay alive a few more months? How many people will get overtreated with expensive new meds, when there’s no evidence to support use?

It’s news to nobody that the U.S. healthcare system is an inefficient mess. Yet after all the awareness raised by political and legal wrangling over healthcare the past several years, it’s striking how little real capacity exists for getting answers about cost-effectiveness. This has to change, especially for cancer, the second leading cause of death in the U.S., behind heart disease. Overall healthcare spending has been on an unsustainable trajectory for years, but spending on cancer drugs is growing even faster. It’s on pace to increase by more than 10 percent a year through 2013, according to pharmacy services provider Medco Health Solutions.

Now a small group of researchers in Seattle are planning to tackle these kind of tough questions.

Last week, the Fred Hutchinson Cancer Research Center announced that it is investing some of its own funds to start an institute with a stated goal to “improve the efficiency and effectiveness of cancer prevention, early detection and treatment to reduce the economic and human burdens of cancer.” In a country that’s poured billions into cancer R&D over the past four decades, and has an impressive network of comprehensive cancer centers, the Hutch said it believes this modest initiative will be the first of its kind dedicated to cancer outcomes research.

Lofty as the goal is, the institute, called ICORE, has scraped together a small amount of money to set up a team of about 6-7 faculty members, with additional support staff, who will ask cost-effectiveness questions, according to Scott Ramsey, the health economist leading the institute. Results from its studies will end up being published in peer-reviewed journals, but also put into a free public resource designed to help patients see where the waste is, and where they can find bang for their healthcare buck.

It sounds reasonable, but done well, this effort is bound to ruffle plenty of feathers. The National Institutes of Health focuses mostly on exploration of basic workings of biology, and doesn’t put much grant money to work in cost-effectiveness because “they don’t think quality improvement in cancer is very sexy or research-worthy,” Ramsey says. Hospital networks tend to be leery of anything that might expose their weak underbellies, like disparities in care for people in rural areas or racial and ethnic minorities. Health insurers aren’t exactly champions of transparency in what they do. And drug companies are still mostly allergic to any open and honest public dialogue about whether their products deliver good enough health outcomes to justify their cost.

Scott Ramsey, a health economist at the Fred Hutchinson Cancer Research Center

“There’s a lot of variation in care,” Ramsey says. “That’s potentially a problem for providers and health plans. We’ll have to walk carefully so that others view it as a win-win. Our focus is on improving care for patients.” This won’t be easy. “There will be people threatened by this,” he says.

Every research institute needs money, and ICORE probably won’t get it from many of the deeper pockets in healthcare. The institute hopes to be self-sustaining over time, and to pick up support from foundations, community donors, and agencies like the U.S. Department of Health & Human Services’ Agency for Healthcare Research & Quality (AHRQ), Ramsey says.

While some larger medical practice groups evaluate cost-effectiveness within their networks, nobody is really asking big cost-effectiveness questions in a systematic way, Ramsey says. The institute is starting local in the Seattle area, where Ramsey and his colleagues have … Next Page »

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  • Bill Ghormley

    Thank you for reminding us all that there are indeed 3 corners to the life science triangle = quality of care + access to care + cost-effectiveness of care!

  • Del Merenda

    I believe Luke is confusing the issue. Research is a pre-requisite to break-through innovation. There are many incredible successes in other industry sectors that started out fiting Luke’s cost/benefit position. Should we then shut down innovation because cost presents a substantial challenge? Does not sound like the ‘can do’ free-enterprise mindset that has served society so well for generations.

  • http://twitter.com/nswa nwscience.org

    Debate today at Seattle City Club on “Cost of overtreatment.” A few seats remain. http://www.seattlecityclub.org/20120730

  • Steve pemberton

    Agree with Del. How do you make progress and begin to save more lives if you don’t invest in the treatments currently available? How do go from 3 months mean survival, to a year, to five years if you don’t invest in the treatments available today? The hail Mary passes and statue of liberty plays may be thrilling and sexy, but it’s the short yardage plays that are the fundamental keys to a winning game.

    Mr. Timmerman’s populist rant aside, there are questions of cost, access, and disparity of treatments that Fred Hutch may be able to address by giving providers and consumers more transparency on efficacy, but the suggestion he makes that it’s not worthwhile to continue to bring treatments to market that push the survival envelope is nonsensical. It denies the fact of market forces as a selective factor in treatment decisions. Patients, providers, caregivers, and family will continue to balance treatment decisions, versus cost, versus quality of life and outcomes. I for one would have paid the price to have 3 more months with my brother.

  • steve stroop

    Thanks Luke for some provocative ideas to consider. These discussion will be ongoing. Critisms aside, this introduction to an emerging research area by a nationally recognized cancer treatment facility is important to anyone interested in cancer treatments of the future. Like it or not, the current definitions for effective treatments are changing and need to change. In the next few years the market will likely be saturated with an increased number of approved biological treatments for cancer (mAbs, etc) all costing around $100K and which only provide a few months survival benefit. The business case for another marginally effective treatment will fade. “The market” will dictate that future products have to be better in terms of cost and benefit. Econ-Omics analysis like the Fred Hutch team will also likely help researchers, manufacturers and providers accelerate a transition to improved technologies worthy of investment and high cost of treatment. Sure, it’s important to keep making the “incremental” improvements in therapies and products – but that doesn’t mean each increment deserves to be the foundation of a billion dollar business with double digit annual returns does it?

  • HIFU works

    There is a treatment for cancer that isn’t being used in the USA as the drug companies run us, and no drugs are needed. It’s High Intensity Focused Ultrasound, My husband had it done out of the country as it is available everywhere except here. It took 2 hours and then we went back to the hotel. He was treated 4 years ago and is still cancer free, no side effects, no pain. If the word got out about this, we could pressure the FDA to approve it. It’s been in trials all over the country for 7 years, but the hospitals won’t tell anyone about it so one enters the trial, thus it’s never going to be approved. It’s a travesty. Maybe if health care wasn’t motivated by profit we could move forward to treating people with cancer with the best treatments.

  • Bernard Munos

    Spot on! By offering drugs that only governments can afford without a solid value proposition, drug companies are inviting pushback that will ultimately defeat the $80,000 pill business model. It’s already happening, and will only get worse (compulsory licensing, reference pricing, denied reimbursement, Makena, etc). Pharmaceutical companies cannot expect to be exempt from cost/benefit analyses.

    The other fallacy is that a lot of marginal innovation will eventually add up to a breakthrough, and therefore $80,000 pills that give patients a few extra weeks (of poor quality of life) should be supported. No. This is inconsistent with the historical record. All the NSAIDs have not delivered a breakthrough for rheumatoid arthritis. TNF blockers did. All the SSRIs still have not produced a breakthrough for refractory depression. Gleevec and Rituxan were not the end products of a cascade of marginal improvements. Neither were ACE inhibitors, sumatriptan, omeprazole, epogen, biphosphonates, etc. Breakthrough drugs start with breakthrough science. Iterating on the same target/scaffold may be easier, but seldom delivers clinical benefits that qualify as breakthroughs.

    There are no shortcuts in drug R&D. High-risk research, as it is practiced by companies such as Novartis or Vertex, is what delivers breakthroughs. For $80,000+ treatments, society is right to demand breakthroughs and reject pseudo-innovation.

    • John

      “High-risk research, as it is practiced by companies such as Novartis or Vertex, is what delivers breakthroughs”.

      Except when it doesn’t. For schizophrenia, pharma has now looked at compounds targeting alpha-7 nicotinic receptor antagonists, 5-HT6 receptors, acetylcholinesterase, mGluR2, NMDA glycine site coreceptors, H3 receptors, PDE10, AMPA receptors, D3, CB1, D4, and neurokinin receptors, without finding any useful, let alone breakthrough products. Useful product with reduced side effect profiles have been discovered by incremental improvements in early SGAs.

      A simllar list of even more expensive “risky” failures can be written for AD (GSI’s, antibodies, PDE9, 5HT targeted compounds) oncology (MMPs, most kinase inhibitors) and a wide variety of trans therapeutic area platform technologies (antisense, gene therapy, nanotechnology).

      The answer is not to take more risks, but to lower investment to a point where you are not forcing money on research problems that do not represent real scientific opportunities.

  • annoyed

    these articles, which ignore bigger problems, annoy me greatly. the elephants in the room:

    constrained supply of physicians — through organizations like the AMA that limit the number of new physicians per year.

    constrained supply of hospital facilities — through monopolistic consolidation

    constrained supply of insurance — through further predatory monopolism

    constrained supply of new drugs — through FDA policies that don’t deny many safe, effective drugs from coming to market

    lack of preventitive care — how often do you go in

    those are the biggies. the pill that actually extends your life and costs some amount of money is a much better deal than paying for those porsches in the garage.