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 The growing reluctance of governments and private insurers to fund
very expensive drugs - even remarkably effective ones - points to a
showdown as manufacturers mix and match therapies that harness the
immune system to fight tumors.
Several companies acknowledge discounts will be needed when drugs
costing more than $100,000 each are combined. That could give firms
with multiple products in-house an edge over those having to
negotiate pricing arrangements with partners.
Dozens of new cancer combinations will be launched over the next few
years, with ones for lung cancer, melanoma and other solid tumors
taking off strongly after 2018, drug company pipelines suggest.
Pricey immunotherapies, offering long-lasting responses, are already
starting to change practice, as doctors use so-called checkpoint
inhibitors like Merck's Keytruda and Bristol-Myers Squibb's Opdivo
in melanoma and lung cancer.
These drugs release the brakes on the immune system, allowing the
body's defenses to recognize and destroy cancer cells.
But the real promise lies in combining treatments, either by using
two checkpoint medicines together or by adding a different kind of
drug. Both approaches will drive up prices.
Giving all U.S. patients whose cancer has metastasised, or spread,
Opdivo and another Bristol immunotherapy called Yervoy, for example,
would cost $174 billion, based on a combined list price of $295,000
for just under a year's treatment.
Cancer specialist Leonard Saltz, who presented the calculation in a
speech to the American Society of Clinical Oncology annual meeting
two months ago, said the conclusion was obvious - these drugs cost
too much.
Some pharmaceutical executives, while insisting they need a decent
return for their risk-taking, admit he has a point.
"There's got to be a limit. One drug plus one drug can't equal the
cost of two drugs," Novartis pharma head David Epstein told Reuters.
"We recognize the need for oncology drug pricing to become more
rational."
Roche, which is the world's biggest cancer drug supplier and is
working on more immunotherapy combination trials than any other
company, agrees there is a problem.
"We need to keep the system sustainable," said Roche Chief Executive
Severin Schwan. "That is also in our interest."
BUDGET STRAINS
The strains on healthcare budgets are clear. Worldwide cancer
drug spending increased 10 percent in 2014 to $100 billion, up from
$75 billion five years earlier, with oncology now accounting for
14.7 percent of total drug spending in Europe and 11.3 percent in
the United States, according to IMS Health.
That has already prompted Roche to strike deals in parts of Europe
capping costs per patient for its two targeted breast cancer drugs
Perjeta and Herceptin, a template Schwan said was likely to be
duplicated with the new immunotherapy products.
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Other firms are pursuing other ways to keep prices affordable, with
AstraZeneca preparing a cut-price version of one promising cocktail
component.
The British drugmaker struck a deal last month to develop a cheap
copy, or biosimilar, of Roche's established drug Avastin, which will
go off patent at the end of the decade.
"Having the ability to include biosimilar Avastin will decrease the
purchase price and give us a competitive advantage in terms of
discounting," said Mondher Mahjoubi, AstraZeneca's head of oncology.
"The name of the game is going to be combinations in immuno-oncology
and the more internal assets we have, the more flexibility we will
have in pricing."
Most of the current buzz around checkpoint inhibitors centers on
drugs blocking a protein known as Programmed Death receptor (PD-1),
or a related one PD-L1, which tumors use to evade the body's natural
defenses, plus another called CTLA-4.
But an alphabet soup of second-generation therapies is waiting in
the wings, with names like OX40, LAG3 and TIM3, pointing to many new
potential combinations.
It all means increasingly tough choices for healthcare providers,
under intense pressure from patients and their families to provide
access to modern treatments.
IMS data shows monthly cancer therapy costs have increased by 39
percent over the past 10 years in inflation-adjusted terms, similar
to the 42 percent increase in overall response rates. But there has
also been a 45 percent increase in the time that patients are on
therapy, pushing up costs further.
Price is a growing issue for doctors, particularly in the United
States where out-of-pocket costs can threaten to bankrupt some
patients, as well as for pharmacy benefit managers, who negotiate
drug prices for health plan members.
Investors are also watching developments closely.
"It's inevitable that prices will come under pressure, although
because it is cancer and there is high unmet medical need, this
might delay the squeeze," said Mirjam Heeb, co-manager of the JB
Health Innovation Fund.
(Editing by Philippa Fletcher)
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