Should insurance companies or patients pay $6000 to $10,000 a month for a cancer drug that extends life five months on average? Should oncologists be marking the drug up to make money on it? Should the drug manufacturer keep the price so high it keeps it out of the reach of many potential patients ?
Avastin is a drug approved by the FDA for colorectal cancer and is used primarily in advanced stages of the disease. Manufactured by Genentech, it works in conjunction with other, tumor-fighting drugs to slow the spread of cancer by reducing the blood flow to tumors. And it does appear to do this pretty well. This success has led physicians to consider using it in early stages, but there are two problems with this.
First, it has not been approved by the FDA for that usage. As a result, many insurance companies may not pay for it. Therefore this leaves doctors and patients facing the all-too-common financial conundrum – is it worth it? An article in the New York Times (free subscription required) describes the decision making process of several cancer victims, some of whom cannot afford the drug and are not taking it due to cost.
Before we start hurling invective at the insurance companies, remember that they are spending your dollars. So ask yourself the question – do you want your personal funds paying for these drugs?
Another medication, Gleevec, has shown excellent results for leukemia patients, extending life significantly albeit at a very high price.
Genentech’s executives describe Avastin’s pricing methodology as value-based; according to William M. Burns, the chief executive of Roche’s pharmaceutical division and a member of Genentech’s board; “”The pressure on society to use strong and good products is there.” And this pressure allows/enables pharma companies to charge what they want, knowing payers will face incredible pressure to cover the cost.
In contrast, or perhaps contradiction of Burns’ position, Dr. Desmond-Hellmann, the Genentech product development chief, was quoted in the Times as saying “I don’t think any patient should go without a Genentech drug for an inability to pay,” she said. “If this is about money, that would disturb me.”
(I can see the PR types at Genentech cringing…)
Avastin, with annual treatment costs around $100,000, provides about $7 billion in revenues for the company annually.
It is about money – who gets it and who pays it. And therefore it is about choices. Remember a significant portion of medical expense is for treatment of people in their last six months of life. Are we as a society willing to pay $40,000 for five more months of life for people with this horrible disease?
What does this mean for you?
More tough thinking and very uncomfortable debate.
Feb
15
Joe- good post. Remember that 15% of all medicare spending is on the last 3 months of life. Also, as I have stated on THCB many times, 20% of the population account for 80% of the costs.
Though the issue of ‘health insurance’ or the lack thereof is important, the real issue for those who want to keep the train of healthcare from hurtling over the proverbial cliff is one of healthcare utilization.
Small changes in utilization from the big users would have a big impact on healthcare costs, as would changes in utilization of services for end of life care.
It does not, in any way, change the fact that, for many (those in the healthier 80%), HSAs could make them better conumers of healthcare services, and, in the long term could make an even bigger difference.
In a related vein, I ask you about the paradox of those who, on the one hand scream and shout about lack of insurance= lack of access (and make a similar argument about HSAs), while on the other hand scream about how doctors constantly push ‘unnecessary and unproven’ treatments on those seek healthcare.
Yes Joe, great post!
This sounds like a perfect of example of ‘rationing’, that many are concerned will become quite common, with the implementation of a universal health care system.
When is enough enough? Will 5 months buy enough time to find a cure for the disease? Will 5 months ‘substantially’ improve the patients quality of life for that additional time?
In those two incidents, when the answer is ‘yes’I think the answer is obvious. The problem arises when the answer to either or both those questions is ‘no’, especially since the answer to either of those questions is not always clear.
For me the answer is a simple one, but for others it is not so simple, especially if it is a loved one who has to make that decision.
While I disagree with Eric that HSAs will produce better consumers of health care, HSAs will likely hasten the increase in ‘rationing’ that will result due to the purchase of more HSAs by younger and healthier patients, and could have an impact on health care costs.
Either way, I believe similar situations, as you posed today, will become more common in the future. I would just prefer those decisions be made under a system of ‘universal health care’.
Great post Joe. This is such a tough issue. I honestly can’t even bring myself to make these kinds of choice. How do you decide who gets care and who doesn’t?
In my utopian libertarian world of healthcare though people would be shoppers for these drugs in the same way they are shoppers for tylenol. If that were the case, these prices would probably be much lower.
[Yes, yes, naivete, inexperience, ivory tower…just thought I say it anyway]
I read an article where a visionary oncologist saw the class of drugs like Avastin leading to treatment for cancer before the tunors were even visible. He likened it to the way we treat infections today: a blood test shows an infection somewhere in the body and medications to treat the infection is given before an infected abcess must be treated. A bloodtest will show that a cancerous tumor is somewhere in the body, a medication that treats and eliminates the tumor is given before a larger tumor must be treated. If that;s where we are headed, that will be great.
But for now we need to look at the costs incurred over the last five months of life. I would hope that I would have the strength to not let my family spend needlessly if I am ever in a hopeless medical situation, but I know that it would be hard for me to make that decision for someone else in my family.
As I have always maintained, being dragged, kicking and screaming into universal health care will mean that it is not done in a planned and studied manner. Who knows where we will end up, and how many people will suffer needlessly because of our reluctance to talk about all options for healthcare.
HMMM….
Avastin = Supply, Cancer = Demand… I wonder what could be the driving force behind the skyrocketing cost of this drug?
One issue surrounding end of life care is, of course, cost. As a society, we need to look carefully at people’s most significant asset– their home, and whether we need to think about tightening equity requirements.
I am all in favor of people being able to use euqity in their homes for any use, but when the rest of society then must pay for healthcare (avg about 180,000 dollars during retirement, according to recent stats) we need to openly discuss how we can afford care for the baby boomers and their grandchildren.
Hey Trap – good observations. It was another joe, not me – I always sign w my last name.
This is a very helpful and necessary debate. In actuality, some folks interviewed by the NYT are NOT taking the drug due to cost, so the market is having an effect. One wonders how Genentech has figured that into their pricing scheme – they may need to price down the demand curve to maximize profits.
See Trap, I can do economist-speak.
Re consumer demand – I absolutely believe in it – you just have to define who the “consumer” is. In this case, it is the patient/provider; for most health care decisions it is the provider.
I will take the position of a benevolent big brother who cares for nothing but the overall welfare of society. Under that premise: does it make any sense to spend 40.000 dollars to extend the life of a man for four more months? Wouldn’t that money be much better spent if we would build schools and feed underpriviledged children whose only fault has been to be born on the wrong side of society? We might be making healthy and productive adults just by giving them food and education while they are kids. Because that is the other side of the coin, the resources society spends for low Value Added projects such as extending the life of a dying man cannot be spent for other purposes.
But thanks to the perverse incentive system where physicians prescribe without much regard to costs (and usually by means of some financial incentive provided by the pharma industry, be that gifts, trips or money), individual consumers do not pay directly (but receive directly the benefits of the most expensive treatment) and society (be that HMO or medicare) foots the bill, the pharma industry is able to get away with it.
Trapper – hey, we found something about which we have complete agreement.
As to multiplying, I have three kids, all of whom are way more demonstrative about their opinions and politics than I am.
That’s why they’re such great kids.
Michael,
As more and more people put money in HSAs less money is put into the insurance pool to pay for health care, thus less care can be provided, and rationing becomes a necessary option. (I hope I explained that right.)
And Michael how would HSAs will bring down the cost of the drug? Will the demand disappear? Most HDHPs still have max out of pocket limits. Even if we we used a max out of pocket of $10,000, if you were in need of the Avastin, it is likely that you will already have reached that max, so the third party will pay regardless. Where is the difference?
And now that we’re on this topic, I’ve always wondered about this concept of shopping around for health care. Just how does that work?
Do you decide what care you are going to need and then call several doctors and hospitals to get prices? Then when you need the procedure you go to that doctor or hospital, and expect them to maintain that price.
Or do you wait until you need care, and then call various hospitals while you are in the ambulance to get prices?
Marc- when the government (or a couple of mega-insurers) are the only ones you need to convince that the price is worth paying– good lobbying is all you need. When you need to convince the paying public, over time, the prices would likely be somewhat more sensitive to public perception.
…”low Value Added projects such as extending the life of a dying man…” Oh, boy…
I wonder if the value would change if it were you or I, or perhaps one of our fathers or sons that were the dying man… Would the value be any different if they were a janitor or the CEO of a billion dollar company…? What would the value be for 1 year as opposed to 6 months? Would the value be more or less if they were only a child? How about a mentally challenged patient?
I’d rather not have a big brother determining what the “value” of my life is compared to the dollar amount of a given treatment… (next thing you know – they’ll be taking away my house to build an apartment complex)
BTW HMO’s/Managed Care Co.’s don’t feed underpriviledged children or build schools. Should they?