That is what this chart asks:
Baffling to me drug companies can sell a drug that does this, and charge $80,000 for it pic.twitter.com/iZ9D6hpIbp
— V Prasad (@VinayPrasad82) July 16, 2016
An $80,000 per course of treatment that is better than the previous regime. It providers, on median, an extra twelve days of life before half of the cohort dies.
Backing out some very rough calculations, that gives a quality adjusted life year cost of at least $2.5 million dollars. It could be much more as I am assuming that each day is a great day instead of probably a severely discounted day.
Update 1: Someone who actually knows WTF they are talking about passed me the Journal of Clinical Oncology CBA on this drug. I was off by a bit.
Incremental cost per life year saved
Incremental cost per qualityadjusted
† (low impact
of diarrhea to high impact of
For 2007 US Dollars.
In Great Britain, a drug that has an incremental improvement over regimes like this might be worth a couple thousand dollars. If the drug prolongs life but keeps a person in the ICU for the incremental days, its incremental value would be close to zero. If the twelve extra days on average are spent out of the hospital and in great shape, it might be worth $4,000.
In the United States, we are paying
625 100 times the British willingness to pay for a quality adjusted life year in this case.
Is that how we want to use our resources? If so, than be ready to see health care costs continue to accelerate. If not, then we need to change our intellectual property regime as well as incorporate and accept some systems of no in order to get the price for a drug like this down to reasonable levels.
Simply insane that such a worthless drug could ever be justified in any manner considering the trivial expenses for so many other drugs/vaccines that do so very much in extending/saving lives.
Twelve more days of Balloon Juice….priceless.
In the end the only way to reduce spending on healthcare is for providers to take a pay cut somewhere in their revenue stream.
Just curbing the rate of run away price gouging is a temporary fix, at best.
Why the rest of the business world, which keeps paying ever increasing costs for healthcare – especially small to medium businesses that are heavily impacted – are not crying for reform is beyond me.
@gene108: Yep. Exorbitant prices for niche drugs make a flashy (and easily fixed) target, but if I’m not mistaken, the majority of health care expenses go directly to 1) hospitals and 2) medical providers.
The Ancient Randonneur
Are insurance companies and the government paying these prices? If so, why.
Moments like this cause me to reevaluate my attitude towards the death penalty.
Yeah, I’m talking about all providers: doctors, nurses, equipment manufacturers, pharma, pharma sales reps, hospital administrators, etc.
Every stinking step in the medical supply chain needs to get a haircut, with regards to what they make. Start cutting the highest paid people first and work down.
Medical costs have skyrocketed in the past 15-20 years and someone has been pocketing the price gouging of the American public.
This is what the Repubs mean when they refer to Death Panels whenever someone brings up single user [SOCIALIZED!!!1!!] health care.
They are fighting for the poors right to die because they can’t afford the treatment.
Seriously, these kinds of value decisions need to be made more often. And just to be clear, the value should be completely about the patient and their quality of life and not the bottom line of the drug company.
@gene108: I’m not convinced that nurses are so wildly overpaid compared to the other actors in the inflation of health care costs.
I think that a concentration on providing a quality of life, rather than length of it, is more important to most people. If taking the drug above left them alive 12 days longer in an ICU hooked up to machines, most people would pass on that chance. Being honest about how likely that is would help people make better choices for their critical and end of life care.
@satby: Exactly. I think that in most markets nurses are not over-paid.
@Keith G: They aren’t. And with constant budget cuts to be sure shareholders get value, hospitals tend to be understaffed, so the work is backbreaking and hazardous, much more so today that in the 70s when I was in nursing school.
[Catholic school, I got thrown out for teaching birth control to my fellow students, among other offenses. So, not a nurse]
Snarki, child of Loki
I’m sure they arrived at that $80,000 price by checking the going price for a mob hit in NYC.
But is that an improvement?
@satby: BLS average of 65 and change a year, which for a high stress, long hour, highly skilled job doesn’t sound great. Especially when it’s trivial to be promoted to a position that disqualifies you from Union representation.
That’s why I want to start at the top. Start with the hospital CEO’s, pharma CEO’s, etc. and if needed work down.
All the increases in money we spend, year after year, on healthcare has to be going to lining someone’s pockets.
Nothing of substance to add, just wanted to thank Richard Mayhew for these posts. Mr. Mayhew is one of the reasons I work on steering my GOP-for-life mom to Balloon Juice- she can be responsive to facts (other than Hillary is a demon-lord)(but I’m working on that, too).
Thank you Richard Mayhew! Even though you don’t get the comment-tsunami of other posts I’m confident you’re our vegetables: to be consumed and used well but not necessarily provoking the normal Balloon Juice windstorm. Although there’s an unintentional fart metaphor there.
@gene108: But there are also layers of middle men now that are taking their cut so the cut may not be any one person. Health care IT exists now.
Has anyone been looking at all of the Epi-Pen stories about how the cost went from $50 an Epi-Pen to $300 an Epi-Pen?
Major Major Major Major
A few thing, based on my understanding…
One, we do in fact not have an ethos in this country of giving a shit about quality-adjusted life years as patients. Twelve more days not-dead is worth it, no matter what. This is probably doubly true if it’s not the patient themselves but a loved one or attorney making these decisions. Now, this all sucks a lot, and I know that people in England get pissed about it too, but obviously not enough that they don’t have that board that prices these things out for the NHS.
Second, I don’t know how this is scheduled/adjusted, but the patient/the person making decisions for the patient probably isn’t seeing this number.
Lastly, aren’t we always told that we have to have prices like this in the US specifically because nobody else is willing to pay them, to encourage innovation or whatever?
Hahahahaha! You’re a VERY funny man! Just how in the fuck would Pharma companies have enough money to make the next, 13-day life extending-drug (improvement!) without the money from this one? How would Mr. CEO afford his 6th yacht if he couldn’t make $35 million a year in salary and $40 mill in stock options?
And why are you advocating killing all the old people?
Would you be willing to accept a pay cut equal to the highest percentage cut you advocate for medical professionals?
The general point about cost-effectiveness is a good one, but in this case I don’t agree with your methodology. Improvement in quality of life must be measured with respect to the standard of care across the full course of the therapy. To calculate based only on the (median) 12 extra days of life is implicitly to assume that quality of life is not improved at all at any other point in the course of treatment.
That said, I have little doubt that such a price would not be considered reimbursable by a payer agency like NICE on cost-effectiveness grounds. And I don’t know how many insurers have this drug on formulary, or if so at what actual cost. Just because they ask $80K doesn’t mean anyone pays it.
Yes. My wife carries one everywhere and has done so for about 10 years. Fortunately, she has never had to use one given how careful she is. Our co-pay for 2 pens was $30 until last year when it jumped to $180. It was a shocking visit to our pharmacy that day.
I think I know what you’re trying to say, but I can’t quite guess what happened here.
The most current numbers for the statistical value of a life are roughly $9 million (from the EPA, FDA, and DoT), but that is for an entire life.
The most current numbers for the value of one year of additional healthy life range from $50K to $129K. These different estimates of life vs. year of life do not quite line up since saving the life of an average person would typically mean saving about 40 years of healthy life which multiplied out would result in a value of life of $2 million to $5 million.
Still, a $2.5 million cost for a year of healthy life puts this drug at at least 10x and maybe as far as 50x the normal cost-benefit ratio. At $4,000 per treatment, as noted, this would be right around the limit of what society should be willing to pay for the benefits of the drug.
Major Major Major Major
@Victor Matheson: If we actually lived in a society and not Individualstan, yes.
It’s really unclear what the test results mean because ‘probability of survival’ could mean a wide range of different things on an individual level, e.g., twelve days, on average, could mean several months for a small proportion of patients. That could change the story, particularly if there’s some way of distinguishing patients who will benefit from those who won’t. I’m not saying, ‘Yeah, jack up the price for a debatable benefit’, I’m saying the results, as presented, don’t really answer the relevant questions.
What is being sold to patients is not the 12 day average, but the lottery ticket for the chance to live 24 months.
The odds of living 24 months with the treatment vs without looks about 2x.
What large organization does not have an IT department? I’m not sure how that makes a difference versus the auto industry, banking, etc., with regards to higher year-over-year costs.
I’m not charging my consumers 10% more a year, every year, with no end in sight. My costs to consumers have not more than doubled in the last 15 years.
There are trillions of dollars of money we have shifted from spending in other parts of our economy into healthcare over the last 15 years or money people could have saved, if they did not have to spend so much on healthcare.
Our healthcare system is broken in basic fundamental ways. The consumer is paying astronomically more, via their insurance premiums and out of pocket costs, to access the same providers.
That’s like me paying $50k to buy a brand new car that only has front impact airbags and no anti-lock brakes.
As much as people scream at insurers, and sometimes rightfully so, the crux of the problem is what providers are doing that drive up the costs.
There the ones that need to get their shit in order, because it is hurting the rest of the American people and American economy with a slow bleed that siphons more and more of our money into healthcare.
One of the big reasons people have less money than 20 or 30 years ago is because so much gets sucked into healthcare.
Howard Beale IV
Just look at the price of cloimpramine lately. It used to be $30/month, now its $300/month.
pseudonymous in nc
As Alan Beattie noted in the FT today, the US-UK component of the Brexit negotiations will unleash the full force of the US pharma lobby against the NHS, with (right now) zero zilch nada professional trade negotiators employed by the UK government.
Major Major Major Major
@pseudonymous in nc: oof, that’s gonna leave a mark. Good thing they’re saving ten bajillion pounds a month that they’ll spend on NHS instead of sending to Brussels!
pseudonymous in nc
We know the answer to this, and it’s transparent across-the-board reimbursement tariffs like in every fucking actual healthcare system. Not price-fixing per se: just a very clear indication that the going rate is X and that’s what any insurer will reimburse. If you consider yourself a special snowflake provider who’s justified in billing X+Y, then you tell people up front that they’re getting a bill for Y.
First off does gene work in a field that over charges and spends a lot of that money on executive pay?
Second does gene work in a field that affects what others pay for something? For example I do work in a field like that. Better than 90% of what I do is make tooling for mfg in the aerospace/medical markets. But the difference is we have real competition, which puts a limit on how much we can charge for our work. Drug companies don’t have real competition for drugs like the one Richard is using as an example. And they get (over) protected by patient law from that competition. My job doesn’t have that. Your job probably doesn’t either or at least not anywhere near to the extent.
@gene108: You know who’s cost has risen like health care? Higher education.
And that plays at least a contributing role in healthcare costs. Medical school students graduate with huge debt and don’t want to go into general/family med. They want high buck specialty practices and thatvscrews with cost effective delivery of care.
I don’t believe doctors get enough training on counseling their patients on making lower cost decisions, they get 15 minute appointments to try to educate patients on huge lifestyle changes that could lower costs (and improve the patient’s life far more than a pill, or pill alone at least) but the incentives aren’t there.
Good point. And it shows that it’s not all the drug companies making the total costs go higher. Yes they are a noticeable point of price gouging, but not the only one.
My only question is how do you get 15 minutes out of a doctor? When I had insurance or even paid cash for my primary care doc, the most time I got was 5 minutes, unless they figured I had some condition that needed additional money to be spent. The last time I paid the cost for the same doc had gone up in 6 months from $85/visit to $108/visit. However I also noticed that there were more people working in the office doing paperwork for insurance companies than people providing medical care. 50% more people.
Major Major Major Major
@Ruckus: if you live in a place that has One Medical Group, do that. They’re awesome.
@RaflW: And the higher education costs are rolled into the doctor/nurse/etc. charges. The countries who pay their doctors significantly less also subsidize their education, usually the entire cost. It’s the American way — can’t spend “my money” AKA “taxes” on tuition-free medical school so everyone ends up paying massively more for health care all along the line.
I’m in Boston, health care mecca, and I see all the ads and listings for healthcare related master’s degrees. Once there is a degree in something, a dipshit who has one is hired before a talented person who could pick up the skills on the job, so it becomes a job requirement to have one. And health care prices go up.
note – autocorrect changed dip shit to dips hit, which I found amusing.
Kaplan-Meier curves for a lot of therapies look like this. The pursuit of the almighty p-value has meant that effect size gets ignored. Not such a big deal for cheap, safe interventions, but a nightmare if either of those conditions aren’t met, much less both.
I think that anyone, in any field, should tread carefully before they make bold statements about how people in medicine are overpaid and need to have their salaries reduced. It’s not just a matter of the field in which you, he, or I work.
And the poster was not suggesting that drug company executives should get a pay cut. He was advocating this for doctors, nurses and other health professionals.
Would you want your customers to be able to directly control your salary, or to demand that your salary be cut because they were sure you make too much money? Or, not just your customers, but the guy down the street, just because he believed that lowering your salary might be good for him and the economy in the long run?
J R in WV
Something I suspect everyone has forgotten, we don’t want to do this kind of math/analysis on the charge of $80,000 for the new treatment, but the cost of the new treatment less the cost of the existing treatment.
So $80,000-existing treatment=cost of adopting the new drug regimen. How much did treatment cost before, which I didn’t see in Richard’s original post, which may be my bad for not seeing it. Mrs J bashes me pretty often for not seeing what I’m looking for – although she conveniently forgets about the times where I find her purse before she does. Right now it’s hiding out in the car under a bag of DF kibble.
Anyway, I’m sure the existing treatment is many thousands of dollars, which means we should be looking at $50K or so for all this evaluation work (that number is a WAG, based upon suspicion of greed levels rather than medical knowledge – also, WAG stands for wild ass guess, a technical term used by geeks). Which is still a stupid amount of money, which I wouldn’t be willing to pay, myself, nor to expect my insurance to pay, for 12 extra days, esp for 12 extra days of ICU.
OK, Google gave me a ball-park cost for gemcitabine of $23.5K, which means my WAG wasn’t bad, within 10% or so. So the real cost of this new drug is 80,000 – 23,500 = 56,500 …
@Major Major Major Major:
Oh I’m good now, I’m in the VA system. Enlisting did have some upsides.
Certainly there is more than one side to the issue. But gene did say start at the top. I assume that he meant the executive suite.
My salary is effectively set by others. As are most salaries. Our competition, the purchaser, the market place, all of these effectively set salaries. Except in the medical field it doesn’t work that way, except at the bottom of the food chain. Gene may have simplified it but his concept of controlling costs is what is necessary and is missing in healthcare.
@Ruckus: we do but taking it out on nurses, and providers who try to live off Medicare and Medicaid reimbursements isn’t going to do the trick. Even just regulating what pharma can call R&D would go a long way. Rolling marketing in to research then only working on drugs that have already passed blue sky at a tax payer funded schools tells me where we should be aiming the fiscal scalple.
It certainly would be worth tracking down just how many individuals or insurers actually paid $80,000 for this drug.
List prices are frankly deceiving throughout medicine.
Two amateur observations:
Whee do economists get the idea that a year of life is worth $126,000?
For anyone who is taking care of a very old person, the key question is what is the COST of another year of life.
I had a friend whose child was born with a bad liver, and has had millions of dollars of probably futile medical care. The parents went bankrupt and divorced years ago.
My fantasy is that the doctors on the case should be forced to pay for the care. If they feel generous, good. If not, we have a few more early deaths.