(Bloomberg Business) — As the one-year cost of cancer drugs edges up to $200,000 per patient, a top doctor from Memorial Sloan Kettering Cancer Center used his speech before a massive gathering of colleagues to call for limits on the cost of cancer therapies. “These drugs cost too much,” Dr. Leonard Saltz, a gastrointestinal oncologist, said in an unusual speech at the American Society of Clinical Oncology meeting on Sunday.
“We need to first accept that there has to be some upper limit as to what we as a society are going to be willing to spend on a patient, and we have to be willing to engage in that discussion,” Saltz told Bloomberg in an interview from the meeting in Chicago. “It’s a very uncomfortable discussion. We should be willing to have it. Because we’re not having the conversation, only the people selling the drugs are weighing in on what they should cost.”
Saltz has been among an outspoken group of physicians at Memorial Sloan Kettering that has railed against high-priced cancer drugs. He co-wrote a 2012 op-ed in the New York Times defending the decision to stop prescribing a “phenomenally expensive” new drug. In his latest broadside he lit into the cost of a melanoma drug combination from Bristol-Myers Squibb (NYSE:BMY), just hours after another physician from his hospital presented data showing the combination could delay the progression of advanced melanoma by months.
The cocktail combining two existing Bristol-Myers Squibb drugs, Opdivo and Yervoy, would cost the average patient $295,000 for a little less than a year of therapy, Saltz calculated. If all advanced cancer patients in the U.S. received drugs at that price, he projected, the total cost would reach $174 billion per year. An experimental high-dose regimen of another new drug highlighted in Saltz’s speech could cost patients as much as $1 million a year.
See also: Cost to develop a drug more than doubles.
Saltz based his cost estimates on existing prices for individual drugs sold separately. Bristol-Myers declined to say whether it would offer discounts for the combination when it is approved. “It’s premature to speculate on what the pricing strategy will be,” says Michael Giordano, head of oncology development at Bristol-Myers Squibb. He says the company offers one of the “most robust patient assistance programs” to make sure underinsured cancer patients get access to its drugs.
The cost debate is intensifying as drug companies such as AstraZeneca (NYSE:AZN), Roche, Bristol-Myers Squibb, and Merck (NYSE:MRK) race to develop medications that harness the body’s own immune system to fight various forms of cancer. Two of the first drugs on the market, Opdivo and Merck’s Keytruda, cost about $150,000 per year. Drugmakers are starting to combine the immune-therapy drugs for greater effectiveness, raising the potential prices even more.
Alan Venook, an oncologist at the University of California at San Francisco and the scientific program chair for the American Society of Clinical Oncology this year, says he picked Saltz to discuss cancer costs even before he knew that the melanoma combination would be on the program. The problem of rising cancer drug costs “needed to be front and center,” Venook says, and Saltz “is somebody who will really come out there and put it on the table.”
As Saltz sees it, all patients should be afforded access to effective treatments, even if a minority is able to spend extra on an even higher standard of care. “Somehow as a society, we’ve got to get everybody on the airplane—but that means getting everybody on coach, but that doesn’t mean some people won’t get on first class,” he said in the interview. In the United Kingdom and Canada, he noted, the governments ensure health care systems provide basic coverage for all citizens while wealthier patients pay for additonal care.
Saltz became interested in drug pricing in 2004, when a new drug for colon cancer, Erbitux, came out priced at more than $100,000 a year. Now such prices have become routine for new cancer drugs. An analysis by his colleagues at Memorial Sloan Kettering found that about half of new cancer drugs approved since 2010 cost $10,000 a month or more. Another study found that prices for cancer drugs are rising faster than the survival benefits, according to results published in the Journal of Economic Perspectives.
Part of the problem, according to Saltz, is that U.S. government agencies are barred from considering price when evaluating new treatments. The Food and Drug Administration considers only safety and efficacy of drugs, while Medicare is prohibited from negotiating with drugmakers over price. European governments, by contrast, routinely negotiate prices.
That has left drug companies in the driver’s seat over prices in the U.S.—and Saltz believes the companies have been adept at deflecting the public conversation: “‘Let’s see the science. Let’s stick to the science,’ is something I was hearing from drug reps for a decade. It’s a way of killing the conversation.”
“As a doctor, I’m excited to see drugs that are really, truly working,” Saltz said. “And as one who is concerned about making sure we can make health care available to everyone, I’m really concerned that these drugs cost too much.”
Some drug company executives agree that it’s time to talk more seriously about how much the new cancer drugs are worth. “We have set up a system in the U.S. that deliberately blocks that kind of conversation, and we need a place to have it,” says Roger Perlmutter, head of research and development at Merck. “The question of what represents appropriate value is generally something that society has struggled with for a long time.”
Briggs Morrison, chief medical officer at AstraZeneca, says his company may be able to offer discounts for combinations of its own drugs if they work in combination, in contrast with cancer drug cocktails that mix products from different companies. “We think there is potential advantage to be able to go to a payer and say, ‘We have all three drugs that you need, and we’ll negotiate a price that you need for all three together,’” he says. “You could sell it at a discount to everybody else who’s charging for the two.”
Anthem (NYSE:ANTM) has implemented a program that incentivizes oncologists to use the most effective—and most cost-effective—drug by offering a bonus to doctors who put patients on the drugs the insurer deems to fit that criteria. Anthem estimates drug spending represents about a third of the cost of cancer care for the insurer, Jennifer Malin, Anthem’s medical director for oncology, said in an interview at the American Society of Clinical Oncology meeting. As for the newest cancer drugs coming to market, Malin said Anthem will look at the effectiveness and side-effect profile when making coverage decisions.