This Drug Didn’t Work for Me. May I Have My $88,000 Back, Please?

6/30/11

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hard enough. However, the vast majority may not be helped, and many might even be harmed by side effects. The risk to benefit ratio for any medication is evaluated based upon the seriousness of the disease being treated. Society is willing to tolerate more serious side effects in a cancer medication than a cold remedy, but these still need to be outweighed by the benefits. And since most patients can’t afford to pay for these medicines out of pocket, then insurance companies must bear the cost. This is ultimately passed along to consumers in the form of higher premiums. Insurance companies are not in the habit of paying for drugs that are ineffective, have serious side effects, or both, which is exactly what the FDA concluded in their review of this treatment for breast cancer. There is a longstanding historical rationale for having the FDA serve as a societal shield that protects consumers from dangerous and ineffective drugs.

I’ll suggest a potential solution for those rare patients who might be helped by the drug, but whose insurance companies won’t pay for it. Why not set up a system where patients that may benefit from the drug get to take it on a trial basis? Their insurance plan will pay for its use in this indication under strict guidelines. If the patient shows no clear benefit from the drug in a specified period of time, then the drug’s seller will reimburse the insurance company (or the patient, if they paid for it out of pocket) for the expense.

Such an approach, though admittedly complicated, has several benefits. Patients will gain “off label” access to a drug that their doctors feel may benefit them, and have the expense covered by their insurance if it works. Insurance companies only pay for the drug if it works effectively; otherwise the manufacturer reimburses them. The drug company’s potential pool of patients will be expanded with a proviso that their sales are directly tied to the ability of the medicine to benefit this population. This reimbursement approach links company profits from “off-label” sales to how frequently the drug actually works in this population, which would help promote more effective medicines.

This idea is not as radical as it sounds. A very similar approach is already being employed in England. Britain’s drug oversight group, the National Institute for Health and Clinical Excellence (NICE), originally rejected covering the multiple myeloma drug bortezomib (Velcade) for patients in the U.K. Andrew Dillion, the head of NICE, put forth a “money back” proposal to the drug’s seller “If the drug’s manufacturer accepts the proposals . . . it will mean that when the drug works well the NHS pays but when it doesn’t the manufacturer should bear the cost. All patients suitable for treatment will get the chance to see if the drug works well for them.” Janssen-Cilag, the drug’s manufacturer, accepted the proposal under which NICE would now recommend the drug (which costs $49,450 per year). Patients that show a minimal response, or none at all, will have their treatment stopped and the drugs costs will be refunded. Why not bring such a system here to the U.S?

This isn’t to say that all drugs should be sold on a refundable basis if the patient derives no benefit. While a merchant can readily establish that a toaster is defective or a pineapple is bad, proving that an expensive drug failed to work would likely require costly and … Next Page »

Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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  • steve

    I can envision several benefits to such a proposal and at least one unintended benefit

    - greater job opportunities for unemployed and underemployed attorneys. Going after drug companies for reimbursement plus punitive and pain and suffering damages might be quite lucrative.

  • Simo

    If you bought a pineapple and it turned out you were allergic, would you expect the grocery store to refund your money? If it cost $88k, maybe you would. But the real problem is that the drug costs that much even though it costs only a few dollars to manufacture. Which gets back to the way our government grants patent monopolies, how we fund pharmaceutical research, and how we provide health care to our citizens.

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  • Orla

    This is a ridiculous suggestion. Pharma companies are already forced to cut their spending on discovery research, by shareholder demands by the way, not by the people working there. They stop making money, they go out of business; end of story. You think generic drug comapnies develop new drugs? No, because the failure rate of potential therapeutics is astronomical; only a fraction of a percentage even make it to clinical trials. Should we stop looking for these needles in haystacks that do work? Of course not. But it costs money to look and the consumer has to pay for that search, not just the manufacturing costs of the sucessful drugs.

  • http://www.lymanbiopharma.com Stewart Lyman

    Thanks to Steve, Simo, and Orla for taking the time to comment. Yes, some drugs are very expensive, but the foundations of our drug discovery and pricing system are too large a topic to cover in a short op-ed piece. My focus here was to propose a possible solution for how some very expensive drugs might be paid for by insurance companies if the firms selling them are willing to put their money where their mouths are and assume some of the risk. While Medicare and Medicaid have announced that they will continue to pay for Avastin even if the FDA removes its approval for breast cancer patients, an unknown number of insurance companies are likely to stop paying for what will then be an unapproved use. While Orla thought my suggestion wass ridiculous, Janssen-Cilag adopted it. They must have thought that the money-back proposal put forth by NICE was worth their while, or they never would have accepted it. Let’s set aside for the moment the general issue of astronomical prices of cancer medicines, many of which are going to need to be given in combination to be more-than-just-a-little-bit effective. Medicine is just on the verge of beginning to identify patients who may benefit from a drug, and segregate them from patients who won’t benefit. For most drugs, however, this type of personalized medicine approach is still down the road. Are there other suggestions out there for making expensive drugs available to patients wishing to try them when they aren’t covered by insurance? How do you affordably get new medicines out to a potentially small subset of patients who may benefit from them before the technology exists to identify these patients up-front?

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  • http://www.linkedin.com/profile/view?id=57527&trk=tab_pro Marc Samet

    You have such a valid point that NICE…the National Institute for Clinical Excellence…the UK equivalent of the FDA…has approved reimburesment for some cancer drugs ONLY if they do something in extending the life of patients receiving the medications….if nothing happens then the UK system won’t pay for the drug and/or will demand a refund….RIGHT ON!!!!