Kevin Drum in his health update (TLDR, he’s getting better) has an interesting tidbit on the next round of possible treatments for his blood cancer.
In other news, the Institute for Clinical and Economic Review has released a report evaluating the tsunami of new multiple myeloma treatments that have been brought to market recently. Three of them received a grade of B+, which sounds pretty good—although it turns out to mean only “moderate certainty of a small net health benefit.” In numbers, that’s an increased survival rate of 5-9 months. And do you remember all those recent news reports about how pricey new cancer treatments are these days? This is now more than an intellectual curiosity for me. These new drugs are really, really expensive: upwards of $400,000 per year of extra life.
And who pays for this….
There are a few things that need to be teased out of here. The first is the survival time addition is not 100% good time being added. Table ES5 estimates that roughly 65% of the time being added would be considered good/quality living. So the average cost per Quality Adjusted Life Year (QALY) for these different treatment regimes is north of $500,000. Secondly, the US does not use a hard QALY standard. However there are implicit cost-effectiveness standards where a QALY is worth somewhere between $100,000 and $150,000.
So how should our society pay for these types of treatments? There are a few options.
The doctrinaire conservative answer is the ice floes should be prepared if the insured hits a lifetime limit or the drugs are on an exclusion list and the individual’s HSA account does not have half a million bucks in it.
Let’s disregard that one at the outset.
The question is how do we pay for life extending medicines when the cost is too damn high.
There are two basic options. The first is the current system where intellectual property rights basically give drug makers who control patented drugs the right to print money for most of a generation. This system works great for the drug makers and the IP owners. It sucks for everyone else and it contributes to healthcare costs that continue to grow faster than the economy as a whole.
The second method is to institute a system that can effectively say “No, not at this price” for high end specialty drugs. The British NICE system does that. They evaluate the effectiveness of a new therapy and determine roughly how much marginal benefit is gained from the new regime compared to the current regimes that are available. They then take that incremental improvement and multiply the improvement in terms of QALY’s to a willingness to pay factor. If the drug comes in at or underneath that number, the NHS is willing to pay for the treatment. If the offered price is over that marginal value level, NHS will refuse to pay at that price. The drug makers will usually be willing to negotiate the price down as NICE is a gatekeeper for 65 million people.
The US does not have that single price gatekeeper. Pharmacy Benefit Management companies (PBMs) try to be price sensitive gatekeepers but they are far less effective for two reasons. First, they represent fewer people usually. Secondly, there are alternative pathways to getting the drug via other PBM’s combined with the cultural expectation that price is not a consideration.
So as a long run problem the solution is some combination of a super-classy and huge ice floe for Kevin, systems of no to institute some price controls on the supply side that have some reflection of the clinical gain of a treatment or ever accelerating prices.
VCB
I can’t check where I am now, but I don’t think Drum is using the <60 yo data on QALY for MM. Given the skew towards the elderly in the overall patient population, the stats he's quoting are not really all that useful in making decisions.
amygdala
The invisible hand of the pharmaceutical market is stuck in a permanent cramp with an extended middle finger. I remember when Betaseron (TM), the first disease-modifying therapy (DMT) for multiple sclerosis became available. It was $12K or so a year and in short supply, so there was a lottery to determine who would get it.
Now, decades later, there are more DMTs available than any of us would have dared imagine back then. And still, prices continue to climb faster than the rate of inflation.
greennotGreen
Yes, drug development is expensive, and pharmaceutical companies want sufficient profit to justify the upfront risk, but may I point out (again) that almost all the basic research from which these drugs come is paid for by the federal government, a.k.a. America taxpayers, and to a lesser extent non-profits that get their money from donors like…American taxpayers.
However, to complicate matters, usually it’s only the promise of great profits that cause drug companies to pursue developing life-saving drugs for less common diseases.
Dennis
Maybe once the $400K mark has been hit, the company should be required to provide the drug for free to that patient, since they have been WELL compensated and the marginal cost of production is stupendously low.
I'mNotSureWhoIWantToBeYet
Dean Baker has been reminding us that a lot of problems like these (gargantuan costs for medications on patent, etc.) go away with a sensible patent system. There really is little benefit to society having patents (and copyrights) last so long. Something like 5-10 years would make much more sense. Coupling that with vigorous antitrust enforcement (to prevent price-gouging) and mandatory licensing under reasonable terms could do a lot to address this issue. E.g. The DoD effectively forced Intel to license its microprocessor technology to AMD and others back in the 286 days (they didn’t want to have to depend on a single supplier). They could do the same with medications.
Yeah, it won’t be easy, but we know how to fix this problem and the country (and the companies) would be better off if we did so.
Cheers,
Scott.
Keith G
I remember the days when revealing nearly any type of a cancer diagnosis was revealing one’s start on a relatively short, and often grisly journey towards one premature death. Those of us at a certain age remember relatives suffering through radiation treatments and multiple amputations , seemingly always still leading to the same sad (if not also horrifying) end.
Twenty-five years ago, my Mum died from the same disease that Kevin is fighting now for nine-teen months. Mum last fifteen months.
Thus, my general feeling is: If, as a civilized society, it is decided to devote resources to develop these new cancer treatments, we must create the mechanisms to make them available (in a timely manner) to all who will be aided by them. Period.
And then I wonder about who makes the “will be aided” decision based of what quality of life, timeline, and even scarcity factors.
Punchy
The cost of basic research is staggering. If you kneecap the Big Pharmas (Pharmi?) w/r/t drug costs, you then need to regulate clinical research company fees. And the just obscene prices that Fischer and VWR charge for beakers and fleakers and cell culture flasks, etc. Every aspect of the entire supply chain is am ATM machine. Im not saying that $400 large is reasonable, but I think the less informed are ignorant on just how much a pharma company has to lay out just to get to Stage 3.
Dadadadadadada
Greetings, everyone! I’ve been lurking around these parts for a while and recently started commenting, so I figure it’s only polite to introduce myself a bit.
I’m a lifelong Mormon recently converted to atheism/rationalism, a Marine vet with one extremely boring Iraq tour under my belt, a currently unemployed stay-at-home dad (hence my nym, adapted from the first coherent word-like sound made by both my kids), and a liberal scold.
I’m also a huge fan of Hamilton, since I’ve noticed that’s important to a lot of you guys.
dr. bloor
Good to see a discussion about what’s really going to have an impact on “bending the cost curve,” i.e., rationing care and rethinking intellectual property rights in health care.
raven
@Dadadadadadada: Wow, I rarely meet a jarhead that wasn’t on point at Fallujah!
Richard Mayhew
@Dadadadadadada: You might want to keep an eye out on SoonerGrunt as he has some shared experiences with as well as being a new transfer to the Greater SLC area…
raven
@Richard Mayhew: He hardly posts at all anymore. He’s pretty busy with his new gig in Salt Lake.
Dadadadadadada
@raven: i like to downplay my “service” because it really was boring and I absolutely wish I hadn’t done it, but…
How ironic that by being honest about it, I’m being more unique and distinctive than the Fallujah fakers who are mostly trying to appear special and get noticed.
@Richard Mayhew: Thank you. I’ve seen him around here a time or three. SLC can be pretty weird to a Gentile (that’s Mormonese for non-Mormon), but I hear a lot less weird than a lot of the rest of Utah. If SoonerGrunt or anyone else needs some Mormonsplaining done, I can probably help.
Riggsveda
I agree with greennotGreen that much Pharma research owes the American taxpayer for the resulting profits. My husband worked for SmithKlineBeecham/GlaxoSmithKline for over 16 years. Billions of dollars were funneled upward to the corner offices with each merger, each series of layoffs, each cultural wipeout, and endless numbers of incompetent, lazy, or just plain disinterested Vice Presidents pulled in millions while they screwed things up again and again, and those things had to be put right by underlings and contractors. And GSK isn’t even one of the worst offenders when it comes to price-gouging, but it is representative of a growing oligarchy of fattened cats with very little accountability outside of the research lab itself.
That said, when it comes to deciding who should get an extra year of life for a half million dollars, there is nothing better than the case-by-case review. Maybe someone is 85, barely alive, and ready to leave it all behind but their kids want to hang on to them. Is that the same as a 50 year old whose daughter only has 1 more year of college to get through but will lose that chance if she loses her mother? Maybe that half million is worth it. There is a lot of money going to Pharma that could be clawed back. And compassionate reviews of life situations could help determine how best to use the money. Otherwise, Pharma keeps getter fatter and more complacent, and only the wealthy get the benefit of state of the art meds. Kind of like where we’re going with the school system now.
raven
@Dadadadadadada: I think you know I was fooling around. There were certainly plenty of people in the shit but experience tells me that the vast percentage of service folks were in various support roles. I know a couple of Marines that readily talk about being in the rear with the gear but not that many. Sooner, of course, was a grunt and there are a couple more around here who you would never even know were in the military at all if you didn’t know it already.
benw
So, Richard, you want a government panel to make my life choices? Hell no. I’m happy with the current system where my life decisions are made by pharma execs and health insurance adjusters, thank you very much!
And bake sales.
Miss Bianca
Dumb question: why *isn’t* the research/development of experimental drugs – particularly ones that are potentially so expensive – undertaken by the federal government directly – as part of a CDC mandate, for example? It seems that leaving such things up to the giant pharmaceutical companies – who have a lot invested, so to speak, in turning large profits on desperately needed medicines – is bad public policy. Or can we not have such things because that would be “socialized medicine”? What is the actual arrangement between the government and the private pharmaceutical companies when it comes to research/development/marketing of new drugs and experimental treatments?
Yutsano
@Dadadadadadada: Woof and hail Teufelhund!
catclub
Speaking of living to older age, I thought the new study NPR was pushing ‘Working even LONGER increases life expectancy’
was a total selection bias crock. {it is approximately the case that } All the people who are unable to work die early.
But they loved it at NPR. I am surprised they did not suggest cutting Social Security, or increasing the age of full benefits even more,
while they were discussing it.
Also, the GOP consultant backing Trump got this one past with out objection: ‘Neither of the parties is interested in the middle class’
Of course, since Mara Liasson was playing goalie on that one for the so-called non-GOP side. I was not surprised.
MomSense
@catclub:
I heard that segment and couldn’t believe it.
Roger Moore
@Punchy:
Getting to Stage 3 is expensive, but it’s nothing compared to the cost of a major drug ad campaign. Drug companies like to talk up how expensive it is to bring a drug to market, but they include ad costs in those calculations, and they’re generally bigger than R&D costs.
Worse, there’s a inverse relationship between how necessary the drug is and how hard the drug companies promote it. Think about it. Drugs that are genuine improvements over the state of the art don’t need billion dollar ad campaigns to get into the hands of patients; the doctors will happily prescribe them without prodding. It’s the ones that are copycats of existing drugs or minor improvements (or even no improvement) on the state of the art that need all the promotion. One of the best things we could do to bring drug costs down would be to end advertising drugs directly to patients. It would save money of ad costs and on unnecessary prescriptions.
Roger Moore
@Miss Bianca:
Because we as a country are ideologically committed to private enterprise, whether it’s economically sound or not. SATSQ.
Richard Mayhew
@Roger Moore: And a bit less ideological, the Federal role is often basic and intermediate research. The Feds will pay to explain how a particular process works and they’ll pay to identify which molecules interfere in interesting ways with ion transfer across the cell membrane for instance. But once those molecules are ID’ed the private companies are often the ones who will take the thirty three interesting molecules and pay to see if a useful drug can actually be developed from one of them. It is the foundation versus superstructure approach.
Poopyman
@Roger Moore: Research reveals role of government funding in pharmaceutical R&D
liberal
@Roger Moore: Spot on.
Seanly
My wife had Hodgkin’s Lymphoma* in 2010 followed by Acute Lymphoblastic Leukemia 4 years later. It was positive for the Philadelphia chromosome which meant the cancer could potentially ‘hide’ in the brain. That required she be given dasatinib (Sprycel), one of the few chemo drugs that can cross the blood/brain barrier.
In September of 2014 she received blood stem cells. Before she could come back home from that treatment, she developed a lung infection that almost killed her and then had issues with C. diff at the tailend of her recovery from that.
She likely would’ve passed the old lifetime maximums about halfway through her ALL treatments. I hope she’s around for a long, long time.
I’m an atheist, but I know we’re blessed that I work in a profession where almost all employers have to offer the equivalent of gold or silver plans (think mine were golds about 10 years ago, now really silvers).
I had posted about my wife before. To update, she is doing pretty well. She does have some graft vs host (GVHD) issues, but it’s as expected so far. While her energy level is still low, she is back to working part time (her goal – she doesn’t want to work full time). Luckily, she qualified for SSDI back to work program that continues to pay benefits while working. After about 9 months, she can still get SSDI if she makes less than a certain amount each month.
* edit – it might’ve been Non-Hodgkins ~ it was a subtype that presented as both. Anyway, she’s been through a lot and I’m happy for what years together we’ll have thanks to modern medicine.
Kelly
My fantasy democracy has implemented a formulary with negotiated prices that covers all government drug payments. Medicare, Medicaid, VA, government employees, Exchange plans. Most Employer plans have negotiated to get the same deal. Oh, and there’s a chargemaster kinda thingy that works the same way.
catclub
@Kelly: The way the negotiated prices should work:
“If you want to be on the Government healthcare formulary, give us your best price. Otherwise, never mind.”
RSA
@Riggsveda:
I think looking at cases is important, but in the end it comes down to people making decisions about themselves and others, and for so many issues that have to do with life and quality of life, we don’t have much general agreement.
The Lodger
@Seanly: Glad to hear your wife is doing as well as she is. Thanks for sharing your story.
Riggsveda
@RSA: True; there has always been disagreement, and there will always be people unhappy with the mechanisms for decision that are in place, no matter what they are. But those decisions are being made, nonetheless, whether by commission or omission, and they are made by actuaries and tables and corporations with money, not lives, at stake. The question is whether we’re ok with that status quo, or whether we want to change what those decisions look like so there is a place at the table for compassion and mercy, and for those who have known what skin in the game feels like. Every time.
Mnemosyne
@catclub:
I heard that same segment and found it fascinating that the quotes from the experts didn’t match what the narration was. The experts seemed to be saying that staying as active as possible — including, if you want, a part-time paid or volunteer job — is good for longevity.
There was a bit towards the end that got buried where they talked about people in their 50s and 60s having the highest level of “entrepreneurship.” Basically, they step back from full-time work and start calling themselves “consultants” so they can keep a hand in but not have to do a daily grind.
So, nothing new, but gussied up in new clothes.
Mnemosyne
@Dadadadadadada:
Welcome, fellow Hamimaniac! We grow legion by the day.
Prescott Cactus
@RSA:
Oft times an older, weakened patient is guided by their doctor or family, by guilt and even sorrow to continue treatment that just isn’t in their own best interest. Sad stuff.
ETA:
@Seanly: Glad your bride is doing well !
RSA
@Riggsveda: Excellent points.
RSA
@Prescott Cactus:
Very much so, right.
Miss Bianca
@Roger Moore: Amen to that – I would love to see TV ads for pharmaceuticals outlawed entirely, like cigarette and liquor ads were back in the day.
singfoom
Same problem with transplant recipients and immunosuppressives. Right now, kidney transplant recipients get 3 years of medicare regardless of their age from the date of the transplant as a seconday to your primary insurance.
After the 3 years, you’re on your own. If you have good insurance after the Medicare goes away you’re probably on the hook for at least 400 per month for infusions if not more, plus the cost of the pill immunosuppressives.
liberal
@Riggsveda: Come on. “Case by case” review is just a nice way of saying “no rationing of care.” It’s the same BS as “decisions should be between the doctor and patient only.” It’s a recipe for exploding health care costs.
The NHS’s methodology is completely reasonable.
Prescott Cactus
@Mnemosyne:
The type of ones job depends greatly on their ability to keep working in the same field. 35 years in an AFL-CIO building trade is enough for any man or woman. I understand the experts think part time or volunteer work “counts”.
My distaste for this story is that the “take away” seems to be “working longer is good for you”. This will then enable those that are trying to raise the Social Security age higher to greater insanity. The last 10 years of my job were tough, but more so because I picked an industry with jobs that were all heavy overtime. (Shame on me !)
Prescott Cactus
@Miss Bianca:
And how would I know about
mythe neighbors, ED problem if it wasn’t for those two couples watching the sunset in separate bathtubs?Miss Bianca
@Prescott Cactus: errr…I guess…ask them instead? “So, Tom/Jane, any ED problems I ought to know about?”
On second thought…don’t.
catclub
@Prescott Cactus: The Blu-ray video of Dead Pool is coming out and the commercial I saw for it was a parody of those couples-in-separate-bathtubs-watching-sunsets. It was hilarious.
Roger Moore
@Seanly:
I’m glad to hear she’s doing better and wish her continued good health. We just had our 40th annual transplant reunion at work. Unfortunately, the original patient who would have been celebrating 40 years died (in a car accident) a couple of years ago, but there were people there who were celebrating 35+ years and were still going strong. Once the transplant takes hold, you really can go on for the rest of a fairly normal life and lifespan.
Ruckus
I’ve talked on BJ before that I am a patient at the VA. Two points concerning the care I get. First, if a drug is not on the VA fomulary, you aren’t getting it from the VA. Second, treatment absolutely has a quality and quantity of life remaining issue. Your treatment for say, cancer, is discussed in terms of 5 and 10 yr prognosis and that very much guides the options open to you. It’s not that they want to kill you but if they know your disease will kill you in say months, they are reluctant to go all in unless you have a chance and a reasonable life remaining if cured. IOW the treatment options for a 60 yr old most likely are different than for an 85 yr old. And if you are old and the treatment would probably do you in at about the same rate as doing nothing, there is a strong incentive to actually do nothing. My sister was in remission for breast cancer, twice. But the third time there were only two choices, hospice for 1-2 weeks till she dies or large amounts of nasty chemo for another 3-4 months, at which time the same exact result. She got a choice. But if she was unable and had no one legally authorized to make that decision, the docs would have gone with the expensive, and painful chemo. How many of us could make the choice to put someone else into hospice and have a week or two left? I’ve had to make it once, but that was not a difficult choice, for me, for that person, at that time.
Ruckus
@Seanly:
Glad to hear that things are getting better. Hope it keeps going that way.
Theodore Wirth
So the choice is between die quickly and death panels.