Dr Peter B. Bach Outlines Framework for Tying Price of Cancer Drugs to Indication, Value

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Peter B. Bach, MD, MAPP, Memorial Sloan Kettering Cancer Center, writes in the Journal of the American Medical Association that cancer drugs could be charged different prices by indication, since the value for patients varies. His article appeared days before an appearance on 60 Minutes to discuss the high price of cancer drugs.

If the same cancer drug will add months to a breast cancer patient’s life, but only add a few weeks of life for a lung cancer patient, should these patients pay the same price?

That’s the provocative question that Peter B. Bach, MD, MAPP, of Memorial Sloan Kettering Cancer Center, asks in the Journal of the American Medical Association. In an article published Friday, “Indication Specific Pricing for Cancer Drugs,” Dr Bach adds a new wrinkle to the ongoing discussions of how to define value in an era of cancer therapies that can cost $150,000 a year.

Friday was the start of a high-profile weekend for Dr Bach, who last night appeared on CBS’ 60 Minutes in a segment that followed up a famous episode at Memorial Sloan-Kettering. In 2012, oncologists on the hospital’s pharmacy committee informed Dr Bach they did not plan to add the therapy Zaltrap to the formulary to treat colon cancer, because it was twice as expensive as a drug with similar benefits, Avastin. It marked the first time a drug would be left off the hospital’s formulary because of price—and the impact of the price on patients.

Both Dr Bach and Peter P. Yu, MD, president of the American Society of Clinical Oncology (ASCO) are scheduled to take part in a 2-day conference next month that will center on issues of value in cancer care. The American Journal of Managed Care will host “Patient-Centered Oncology Care,” in Baltimore, Maryland, on November 13-14, 2014.

In Friday’s article in JAMA, Dr Bach writes that as therapies are increasingly used to treat many kinds of cancer, with different degrees of efficacy, perhaps these variations should be factored into the price patients pay, or, more typically, that their managed care organizations reimburse. He used the example of nab-paclitaxel (Abraxane), which is used to treat both metastatic breast cancer and metastatic non-small cell lung cancer (NSCLC). Dr Bach notes that the drug improves median survival in the breast cancer patients by 0.18 years, but the improvement in survival for the NSCLC patients is less than half that, at 0.08 years. Yet, today, patients in the 2 groups would pay the same price.


In JAMA, Dr Bach asks whether a new pricing system is in order, one that takes into account how much value a given drug is expected to bring to a patient, given the tumor type. He acknowledges that current pharmacy sales and shipping practices would have to be revised to accommodate such a system, but he offers an outline on how this could be achieved. Finding alternatives to the high cost of cancer therapy is important for payers generally but especially for managed care in the public sector, as Medicare and Medicaid will foot the bill for more and more cancer care in the years ahead.

“Moving toward paying for drugs at prices that better match the benefits they deliver will be challenging,” Dr Bach writes. “What is the right price for any particular level of benefit? How should benefit be determined?”

Questions about the price of cancer drugs exploded into the public arena a year ago this month, when New York Magazine published “The Cost of Living,” which first chronicled the showdown at Memorial Sloan-Kettering over the price of Zaltrap. An op-ed in The New York Times ultimately forced Zaltrap’s manufacturer to lower the price, first for oncologists, and later for Medicare. In the 60 Minutes segment, Dr Bach called the pharmaceutical pricing practices, “corporate chutzpah.”

The incident was among the triggers that propelled both ASCO and the National Comprehensive Cancer Network (NCCN), to start separate initiatives to at least discuss drug prices—and the impact on patients—when making therapeutic decisions. Both groups have plans to either disclose drug prices (NCCN) or take them into account when developing scales that indicate a drug’s value (ASCO). In the 60 Minutes segment, Lesley Stahl is incredulous as Dr Bach tells her that federal law prevents Medicare from negotiating with drug companies on prices, unlike practices in Europe, Australia and elsewhere.

“Medicare has to pay exactly what the drug company charges. Whatever that number is,” Dr Bach told 60 Minutes..

Around the Web

JAMA: Indication-Specific Pricing for Cancer Drugs

60 Minutes Just Attacked Drug Prices: Here’s What You Should Know

Center for Value-Based Insurance Design

The Cost of Living

Patient Centered-Oncology Care