With some cancer drug prices soaring past $10,000 a month, doctors have begun to ask one nagging question:
Do drug prices correctly reflect the value they bring to patients by extending or improving their lives?
A study published Thursday in JAMA Oncology aims to answer that question by examining necitumumab, an experimental lung cancer drug made by Eli Lilly & Co. The drug isn't approved yet, and Eli Lilly has not set a price. But there is data on how well it works: in a clinical trial, researchers found that adding the drug to chemotherapy extended life by 1.6 months, on average, for patients with a dire prognosis -- a type of non-small cell lung cancer that has spread.
In order to estimate what the price of this drug "should" be based on its value to patients, the research team modeled various scenarios. Generally, economists suggest that one additional year in perfect health in the U.S. is worth somewhere between $50,000 and $200,000 a year. Although patients taking necitumumab lived longer, people with advanced cancer often have a lower quality of life than healthy people and the researchers took that into consideration.
Based on their calculations, the drug should cost from $563 to $1,309 for a three-week cycle.
That is much lower than the typical new cancer drug, which can cost many thousands of dollars per month.
"Currently, the prices of cancer drugs are increasing, and the prices are not linked to the benefit that the drug provides," Daniel Goldstein, an oncologist at the Winship Cancer Institute at Emory University who led the study, said in an e-mail.
"We propose that drugs that provide a minimal benefit should have a low price, while drugs that provide a major benefit should have a high price. This method of value based pricing will financially incentivize researchers and industry to develop truly game-changing innovations."
A spokeswoman for Eli Lilly said that the design of the study was sound, but had some limitations, including the types of drugs the researchers compared to necitumumab.
"The pricing of cancer medicines is complex, and Lilly recognizes that assessing value is extraordinarily difficult," spokeswoman Crystal Livers-Powers said in an e-mail.
It is premature to discuss the drug's price, she said. Squamous non-small cell lung cancer that has spread, Livers-Powers said, "is a devastating, difficult-to-treat disease with a high unmet medical need."
Goldstein and his collaborators have done this kind of analysis before. They found, for example, that the price of the advanced colon cancer drug, regorafenib, assumes that the value of an additional year of life in perfect health is more than $700,000 -- more than three times what most economists suggest we should be paying. The price of bevacizumab for advanced colon cancer reflects a year of life valued somewhere between $350,000 and $500,000.
But those drugs are already on the market, and prices that are already set can be hard to budge. The researchers said they decided to do this study because the Food and Drug Administration is expected to make a decision on whether the company can sell the drug by year's end, and they hope their analysis of the value might factor into the price if it gains approval.
Another recent study by researchers at the University of Texas MD Anderson Cancer Center found that treatments for many blood cancers were overpriced compared to their value. In the journal Cancer, those researchers examined two dozen studies and found that the cost of extended healthy life provided by these drugs exceeded $50,000 a year. In some cases, the drugs were priced to reflect an additional year of life valued between $210,000 to $426,000 -- well above what economists think we should pay.
PhRMA, a trade group for the drug industry, defended the industry's pricing practices, noting that cancer drug costs represent just a fifth of total cancer care spending.
“New cancer treatments are contributing to significant patient gains against many forms of cancer. It is essential to support continued discovery of better treatments for cancer patients, including for diseases for which there previously has been little or no hope for patients like squamous cell lung cancer," Randy Burkholder, PhRMA vice president of policy and research, said in an e-mail.
There are many variables that go into the price of a drug, but mounting evidence suggests that the value it brings to patients is not the biggest factor.
"How they price the drug is they price it at whatever the market is willing to bear," said Benjamn Djulbegovic, an oncologist at the University of South Florida.