[Ip-health] Gooznews: Price Competition in Cancer Drugs?

[Mike Palmedo]

http://www.gooznews.com/archives/000414.html

Price Competition in Cancer Drugs?

Merrill Goozner
June 05, 2006

The American Society of Clinical Oncology meeting underway in Atlanta is
generating lots of excitement about the next generation of targeted
cancer therapies. It=92s the most interesting development in cancer
therapeutics since the arrival of drugs like Gleevec for one form of
leukemia and Herceptin for breast cancer, which were the first targeted
drugs.

While David Hamilton in Saturday's Wall Street Journal (subscription
required) raised the specter these new drugs will lead to price
competition, the real use for these new options will either be in
combination with the older drugs or on their own after first line
chemotherapy has failed.

Cancers are, by definition, the rapid proliferation of mutant cells.
Simple population genetics inside the body dictates that when cancer
cells are subjected to a change in the external environment =96 for
instance, the presence of a chemotherapy drug =96 the mutant cells that
survive and thrive become the dominant strain. Patients then need a
different drug to keep the cancer at bay. That's why most chemotherapy
agents when tested in controlled clinical trials extend life by a few
months, and are almost never a cure.

So this new generation of cancer drugs are not like the =93me too=94 drugs
that populate the blood pressure, anti-cholesterol, or antiacid classes
of medicines. They are badly needed follow-on options for desperately
ill patients who, if they=92re willing to put up with the side effects,
deserve a chance at a few more months of life.

That=92s also why the analysts quoted in Hamilton=92s article who raised th=
e
specter of price competition are raising false hopes for the people or
insurers who will pay for these drugs. As Andrew Pollack suggested in
his story in the New York Times, many of these drugs will be used in
combination with older medicines, so even if their prices come down
slightly, the total bill for patients will be higher.

In any case, I doubt there will be significant price competition. It
certainly won=92t be at the same level as generics, which often come to
market at half the price of a brand name drug going off patent. A study
a few years ago by the drug-industry funded Tufts Center for Drug
Development suggested new patented entries coming to market in a class
previously dominated by a single patented drug led to significant price
competition. But if you looked closely at the data in the study, most
drugs actually came in within 10 percent of the price of the innovator=92s
product. When you=92re talking $100,000 per year, which is the price of
many of the new targeted cancer therapies, that=92s no break at all.

The drug industry should be congratulated for coming up with these new
options for cancer patients. But as cancer moves closer to becoming a
manageable disease using a succession of drugs that extend life for six
months or a year and each commands a $10,000 a month fee, one has to
wonder how the health care system will be able to afford it.

Cancer therapeutics may well be the wedge for developing mechanisms for
divorcing the way we fund innovation from the way we fund health care.