Oncology Stakeholders Summit, Spring 2017 - Episode 10

Drug Price Arguments Have No Easy Answer

Leonard Lichtenfeld, MD: When we talk about drug pricing and the FDA, the issue—at least for many people, including our legislators—is that one of the reasons the drugs are so expensive is because the FDA acts as a roadblock to approving the drug.

The other piece that’s embedded in this is the question about clinical trials: how they’re structured, how they’re done, and how long it takes to do a clinical trial. So, there are a lot of moving parts that get involved in drug pricing. I don’t know if the FDA is the major issue with drug pricing. I think that it may be a part of the problem in the sense that—then again, it may be that the evidence isn’t sufficient and you have to go back and do another trial. That has happened in several occasions where the drug looks like it might be promising, but the evidence simply isn’t sufficient to warrant approval. So, yes, that increases the cost. These trials are very, very expensive.

I don’t know that we can blame the FDA for the whole problem, however. And, once again, I think that there’s what we call the Sunshine transparency issue: Why do the drugs cost so much? Well, there are arguments on both sides of that. There’s the whole question about the value it brings to patient care. There’s the whole question about the cost of development, the whole cost of manufacturing some of these biologics, which are not inconsiderable. But what tends to get lost in the discussion is that the markets for some of these drugs are, in fact, very small.

Years ago, we didn’t have drugs for blood pressure. We didn’t have drugs for heart disease. And when we got those drugs, although they may have been a couple of dollars a pill, if you spread that across millions of people worldwide, the return on that investment is substantial. Now, we’re in a place where we’re talking about 1% of a disease population. So, you may have lung cancer, and you may have people with a recurrence of their lung cancer. You take 1% of that population, and that’s not a lot of people. When you have drugs for melanoma—and it changed the lives for a lot of people with melanoma, when we had nothing to offer before—it’s still not a very big group of people. So, there has to be an investment.

I actually sat in a conference a number of years ago where one presenter was a venture capitalist—there were a couple of them. They said, “We’re not putting any more money into drug development.” This was at the beginning of the targeted therapy era, or the immunotherapy era. And they said, “We just don’t see the return on this investment.”

The next talk in this fairly small room of people was from somebody who did a study on a new drug for melanoma and showed the data on the melanoma responses, and it was dramatic. So, on one hand, you have people saying we can’t afford to make the investment. On the other hand, you’re seeing lives, if not saved, clearly improved. Those markets are small, and to make it happen you have to have investment.

And we’re coming to a point—I refer to it as the funnel effect. I mentioned high blood pressure: in the 1950s, we had no medicine to treat high blood pressure. Now, for pennies a day, I can buy my high blood pressure medicine, and so can many other people. We can control that disease, hopefully. But when you start thinking about the market, the investment, you have to give credit to the fact that we’re moving to diseases—maybe is it not only in oncology, but also in other diseases—where there may be 1200 people a year in this country who have a particular illness. Companies are out there trying to develop a market, to develop and market that drug.

So, it’s a complex question with no easy answer. I could probably argue both sides of the question, but I think there needs to be that middle ground where we have respect for the issues faced by the patients, by the pharmaceutical companies, and by the folks who pay the bills.