[Ip-health] New York Times: British Balance Gain Against the Cost of the Latest Drugs

[Thiru Balasubramaniam]

December 3, 2008
The Evidence Gap
British Balance Gain Against the Cost of the Latest Drugs
By GARDINER HARRIS

RUISLIP, England =97 When Bruce Hardy=92s kidney cancer spread to his
lung, his doctor recommended an expensive new pill from Pfizer. But
Mr. Hardy is British, and the British health authorities refused to
buy the medicine. His wife has been distraught.

=93Everybody should be allowed to have as much life as they can,=94 Joy
Hardy said in the couple=92s modest home outside London.

If the Hardys lived in the United States or just about any European
country other than Britain, Mr. Hardy would most likely get the drug,
although he might have to pay part of the cost. A clinical trial
showed that the pill, called Sutent, delays cancer progression for six
months at an estimated treatment cost of $54,000.

But at that price, Mr. Hardy=92s life is not worth prolonging, according
to a British government agency, the National Institute for Health and
Clinical Excellence. The institute, known as NICE, has decided that
Britain, except in rare cases, can afford only =A315,000, or about
$22,750, to save six months of a citizen=92s life.

British authorities, after a storm of protest, are reconsidering their
decision on the cancer drug and others.

For years, Britain was almost alone in using evidence of cost-
effectiveness to decide what to pay for. But skyrocketing prices for
drugs and medical devices have led a growing number of countries to
ask the hardest of questions: How much is life worth? For many, NICE
has the answer.

Top health officials in Austria, Brazil, Colombia and Thailand said in
interviews that NICE now strongly influences their policies.

=93All the middle-income countries =97 in Eastern Europe, Central and
South America, the Middle East and all over Asia =97 are aware of NICE
and are thinking about setting up something similar,=94 said Dr. Andreas
Seiter, a senior health specialist at the World Bank.

Even in the United States, rising costs have led some in Congress to
propose an institute that would compare the effectiveness of new
medical technologies, although the proposals so far would not allow
for price considerations. At the present rate of growth, medical costs
will increase to 25 percent of the nation=92s gross domestic product in
2025 from 16 percent, with half of the increase coming from new drugs
and devices, according to the Congressional Budget Office.

To arrest this trend, the United States needs to adopt at least some
of NICE=92s methods, said Dr. Mark McClellan and Dr. Sean Tunis, who
served earlier in the Bush administration as, respectively,
administrator and chief medical officer of the Center for Medicare and
Medicaid Services. Dr. Tunis said he spent a lot of time in government
=93learning about NICE and trying to adopt the processes and mechanisms
they used, and we just couldn=92t.=94

That=92s because the idea of using price to determine which drugs or
devices Medicare or Medicaid provides has provoked fierce protests.
But Dr. McClellan said the American government would soon have no
choice.

Drug and device makers, which once routinely denounced the British for
questioning product prices, have begun quietly slashing prices in
Britain to gain NICE=92s coveted approval, especially because other
nations are following the institute=92s lead. Companies have said that
they will consult with NICE to help determine which experimental
compounds enter the final stage of clinical trials, so the British
agency=92s officials will soon influence which drugs enter the market in
the United States.

The British government created NICE a decade ago to ensure that every
pound spent buys as many years of good-quality life as possible, but
the agency is increasingly rejecting expensive treatments. The denials
have led to debate over what is to blame: company prices or the health
institute=92s math.

Dr. Michael Rawlins, chairman of NICE, blames the industry, saying
that some companies raise prices =93to get profits up so their
executives can get better bonuses.=94 Dr. Karol Sikora, a prominent
London oncologist, said that the institute=92s math was flawed and that
Dr. Rawlins had a =93personal vendetta=94 against cancer treatments.

Drug company executives who were interviewed uniformly promised to
cooperate with NICE, but industry advocates were not so kind. Robert
Goldberg, vice president of the Center for Medicine in the Public
Interest, an advocacy group financed by drug makers, likened Dr.
Rawlins and his institute to terrorists and said their decisions were
morally indefensible.

Developing a Method

It all started with Viagra.

Pfizer=92s introduction of the drug in 1998 panicked British health
officials, who feared it would wreck the government=92s health budget.
So they placed restrictions on its use. Pfizer sued, claiming the
government=92s decision was arbitrary. To defend itself against similar
claims, the government needed a standard method of rationing. The
following year, NICE opened.

Asked whether he thought the institute would succeed, Frank Dobson,
the Labor health minister at the time, famously said, =93Probably not,
but it=92s worth a bloody good try.=94

Britain=92s National Health Service provides 95 percent of the nation=92s
care from an annual budget, so paying for costly treatments means less
money for, say, sick children. Before NICE, hospitals and clinics
often came to different decisions about which drugs to buy, creating
geographic disparities in care that led to outrage. (Such disparities
are common in the United States, even for federal Medicare patients.)

Now, any drug or device approved by the institute must be offered to
patients. The institute has also written hundreds of treatment
guidelines in hopes of improving, and making more consistent, basic
medical care.

The institute has analyzed the cost-effectiveness of surgical
operations, cancer screening tests and medical devices. For example,
it found that drug-coated cardiac stents were worth only $450 more
than bare-metal ones. In the United States, stent price differences
are often far wider.

Five years ago, the British health institute recommended more
emergency room CT scans of patients suffering from head trauma =97
forcing hospitals to buy more machines.

But the decisions that get the most attention are those involving new
drugs. Any drug that provides an extra six months of good-quality life
for =A310,000 =97 about $15,150 =97 or less is automatically approved, whil=
e
those that give six months for $22,750 or less might get approved.
More expensive medicines have been approved only rarely. The spending
limits represent the health institute=92s best guess for how much the
nation can afford.

After consulting a citizens group, the institute decided that the
nation should spend the same amount saving or improving the life of a
75-year-old smoker as it would a 5-year-old.

=91Muddling Through=92

The institute=92s decision-making process involves a series of
independent assessments, consultations with manufacturers, committee
meetings, comment periods for outsiders and appeals that, taken
together, Dr. Rawlins described as =93procedural justice,=94 or =93muddling
through elegantly.=94 While the institute provides advice, decisions are
made by one of three committees made up of doctors, nurses and
economists from outside the government.

Transparency recently became a high priority, but gaps in the idea of
openness remain. At the institute=92s first public decision-making
appraisal meeting in September, staff members handed a reporter a
stack of documents, only to snatch them back moments later. The
committee=92s chairman, Dr. David Barnett, was so intent on keeping the
meeting brief that he told a committee member: =93This must be the last
question. It must be relevant. Otherwise, you will feel my wrath.=94

To analyze the value of the drug that Mr. Hardy, the kidney cancer
patient, wanted, and the value of three other kidney cancer medicines,
the British institute hired a university group that considered how
many months the drugs delayed cancer=92s progress.

Firestorm of Protest

The academics got drug prices and calculated the costs of
administering them and treating their side effects. Not one of the
drugs came close to being worth their expense, the group suggested. In
a preliminary ruling in August, a committee from NICE agreed.

The decision caused a firestorm. Twenty-six prominent British
oncologists wrote a letter to The Sunday Times saying that the
institute assessed cancer treatments poorly and that patients were
remortgaging their homes to buy drugs freely available in other
countries.

Given that fewer than 6,000 people per year in England and Wales are
diagnosed with kidney cancer, =93Why put ourselves through so much
heartache for very little money?=94 Andrew Dillon, the institute=92s chief
executive, asked in a September interview. =93The answer is that if we
don=92t apply the same criteria even to small groups of patients,
there=92s little value to what we do at all.=94

Dr. Sikora, who helped organize the August protest, predicted in a
September interview that the institute would buckle under political
pressure.

Flooded with anguished comments, the institute beat a hasty retreat. A
preliminary consultation posted Nov. 5 said that the institute would
instruct its appraisal committees to consider approving highly
expensive life-saving drugs for terminal illnesses affecting fewer
than 7,000 patients per year =97 a policy that seems tailor-made for
Sutent and the three other kidney cancer drugs.

Negotiations with companies on possible discounts are continuing, and
a committee is scheduled on Jan. 14 to make public this nascent
compromise.

NICE has stood fast in other areas, though, rejecting Kineret for
rheumatoid arthritis and Avonex for multiple sclerosis. In 2001, NICE
ruled that Aricept and two other drugs used to treat Alzheimer=92s
disease were worth their costs only if patients=92 conditions had
increased from mild to moderate severity.

The analysis put a value on patients=92 improved thinking skills, and
possible savings from delayed entry into nursing homes. Instead of
pills, the institute suggested more counseling.

Advocates for patients with Alzheimer=92s disease called the decision
heartless.

Dr. Rawlins said he was frustrated that his institute had been
censured instead of the drug company executives who set sky-high
prices. Take the case of Celgene, the maker of Revlimid, a drug for
multiple myeloma, a bone-marrow cancer, that in a preliminary ruling
on Oct. 28 the institute said was too costly.

Celgene=92s first big seller was thalidomide, a decades-old medicine now
used as a cancer treatment, which is so cheap to manufacture that a
company in Brazil sells it for pennies a pill.

Celgene initially spent very little on research and priced each pill
in 1998 at $6. As the drug=92s popularity against cancer grew, the
company raised the price 30-fold to about $180 per pill, or $66,000
per year. The price increases reflected the medicine=92s value, company
executives said.

In 2005, the company introduced Revlimid, a derivative of thalidomide
that is supposed to be less toxic, but may be no more effective.
Celgene priced it at about $260 per pill, or $94,000 per year.

Offering Discounts

Private and public insurers in the United States must pay whatever
Celgene and other makers of unique cancer medicines decide to charge,
so prices are soaring. Spending on cancer drugs and other such
specialty medicines rose 9 percent last year and now represents 24
percent of the nation=92s drug bill, according to Health Strategies
Group, a New Jersey consulting company. Drug expenses in 2006 grew
faster than any other part of the nation=92s health bill except home care.

But because of the institute, Britain=92s National Health Service has
been among the first to balk at paying such prices, which has led many
companies to offer the British discounts unavailable almost anywhere
else.

Johnson & Johnson, for instance, agreed to charge for Velcade, another
drug for multiple myeloma, only if tests showed it was effective in a
particular patient. Novartis agreed to give free injections of
Lucentis, a drug for age-related macular degeneration, if patients
needed more than 14 shots. Dr. Rawlins said these deals were
constructed by drug makers to hide from other countries the discounts
offered in Britain.

=93It=92s a good deal for us, but I can=92t see that it will work in the
long run because I can=92t see that others countries will be so dim as
to not notice it,=94 Dr. Rawlins said.

A more prudent bureaucrat would never make such a remark. Dr. Rawlins
said that he delighted in controversy, =93although I=92ll admit that it
doesn=92t always work out.=94 He wears thick glasses and fine suits whose
pockets are stuffed with nicotine gum packages that rattle as he
walks. He laughs easily, plays the piano and viola, and moves
effortlessly between politics and medicine.

His criticisms of the pharmaceutical industry have sharpened.

=93I want them to produce new drugs for conditions we really need
treatments for, but I loathe their marketing practices, which corrupt
doctors in a dreadful way,=94 said Dr. Rawlins, who until recently
practiced general medicine and for years was chairman of the British
version of the Food and Drug Administration. =93And I=92m very conscious
that the prices the pharmaceutical industry charges are what they
think the market will bear.=94

In 10 years, the health institute=92s budget has grown to $50 million
from $13 million, and it is scheduled to rise to $142 million in four
years. NICE has 270 employees, who include doctors, economists and
pharmacists.

Worldwide Impact

Agencies like NICE are popping up across the globe. Dr. Leonardo
Cubillos, Colombia=92s national director of insurance, said that
Colombia was using British methods to choose drugs for a national
health insurance package.

Membership in an international group of drug and device assessment
agencies grew to 45 last year from 8 in 1992. The British institute
has created a consulting group to advise foreign governments.

Much of the reason for this proliferation of agencies is that, while
prescription drugs represent just 10.3 percent of overall medical
spending in the United States, that share is 17 percent on average in
industrialized countries.

As spending on drugs soared in many nations =97 often haphazardly =97
overall health often showed little improvement. So international aid
agencies are advising governments to adopt British assessments and
deliberations to improve their public=92s health while lowering costs,
and officials are listening =97 a trend that is likely to accelerate
during the present global economic slowdown.

The health institutes in both Britain and Germany may soon suggest
prices for drugs, a strategy intended to deflect political pressure
back on the companies and shorten negotiations that now often take
months.

=93We have been told that the price is the price, but the worm is
turning now,=94 Dr. Barnett said.

Company executives acknowledge that they are increasingly acceding to
British demands to slash prices.

But the most pressing question for the industry is what influence the
British institute will have in the United States. The United States
already spends more than twice as much per capita on health care as
the average of other industrialized nations, while getting generally
poorer health outcomes.

Michael O. Leavitt, the Bush administration=92s secretary of health and
human services, said in a September speech that, at its present growth
rate, health care spending =93could potentially drag our nation into a
financial crisis that makes our major subprime mortgage crisis look
like a warm summer rain.=94

And while there is fierce disagreement about how and whether to
control drug and device expenses as part of a broader reform of the
health system, many say some cost controls are inevitable. At a
September device industry conference in Washington, a seminar on the
issue was standing-room only and half of the questioners mentioned NICE.

John R. Dwyer Jr., a Washington lawyer who represents device makers,
said that many in the industry have believed that major changes to
control costs in the federal Medicare program were inevitable, and
=93people see NICE as the only workable paradigm.=94

Meanwhile, Mr. Hardy waits. In recent weeks his growing tumor has
pressed on a nerve that governs his voice. He can barely speak and is
increasingly out of breath. The Hardys are hoping that in January NICE
will approve the use of Sutent, allowing Mr. Hardy further treatment.

"It=92s hard to know that there is something out there that could help
but they=92re saying you can=92t have it because of cost,=94 said Ms. Hardy=
,
who now speaks for her husband of 45 years. =93What price is life?=94

------------------------------------------------------------


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


Tel: +41 22 791 6727
Mobile: +41 76 508 0997