Pharma Strategy Blog

The Obama administration provided $1.1 billion for health care comparative effectiveness research in the American Recovery and Reinvestment Act (ARRA).  Following this, the Institute of Medicine (IOM) delivered a report in June with comparative effectiveness research priorities (downloadable file).  However, it remains to be seen how comparative effectiveness will work in the U.S. to control costs and guide payers and providers on the cost/benefit of treatment options. 

There is little being said about comparative effectiveness in the debate on health care reform, which seems to be driven more by emotional sentiments such as these from Senator Baucus:

"There is no denying that our system is broken.  Millions of Americans struggle each day because they do not have the coverage they need. Currently, more than 46 million people are uninsured and therefore risk their health and financial stability every time they get sick."

U.S. physicians currently have little incentive to weigh the cost/benefits of drug, which is why direct to consumer advertising works.  Consumers see a drug advertised on television, resonate with the symptoms being described and go to their doctor who may prescribe it (if appropriate), often with little thought towards weighing the cost against the benefits provided.  That is because unlike the UK model, payment for the drug is up to the patient, and they either pay themselves or have it covered by the pharmacy benefit associated with their health care insurance.  There is little or no direct connection between the prescriber and the payer.

A recent editorial in the New England Journal of Medicine by Schwartz and Woloshin, argues that what is needed is for more of the information that already exists about a drug’s harm and benefits to be shared with physicians.  They use Sepracor’s sleep medicine, eszopiclone (Lunesta) as an example.  The company heavily promoted the drug through TV advertisements, spending $750,000 a day in 2007 and had sales of over $800 million in 2008. 

According to the NEJM article, what is less widely known than the iconic Lunesta moth is that the phase 3 study results on which the FDA based approval showed that Lunesta only led to subjects falling asleep 15 minutes faster (median sleep latency of 30 mins vs. 45 mins with placebo) and sleeping 37 minutes longer (median total sleep time of 6h 22 mins compared to 5h 45 minutes with placebo).  Although the Lunesta results were statistically significant, do the relatively modest clinical benefits justify the cost? 

This question is also increasingly being raised in oncology given the high price of novel agents and targeted therapies.  For example, a course of cetuximab (Erbitux) costs $80,000, yet only prolongs overall survival for patients with non-small cell lung cancer by 1.2 months.  Bevacizumab (Avastin) gained FDA approval for non-small cell lung cancer on the basis of a 2 month increase in overall survival, at a cost of $90,000 for a course of treatment.  A course of treatment with erlotinib (Tarceva) costs $16,000 for the benefit of an increase in overall survival in pancreatic cancer of just 10-12 days on average. 

While I am not saying that those survival increases are not worth the cost to patients to whom it gives hope and a few weeks longer to live, the high cost associated with them does raise hard questions that need to be addressed given that health care resources are not inexhaustible.  Physicians may need to become more involved in these tough cost/benefit decisions with patients, as resources and finances become more scarce all around and both payers and patients begin to wonder at the overall cost benefit being provided.

Of course, we should also remember that according to the Centers for Medicare and Medicaid Services, drug costs only account for approx. 10% of the total health care costs (hat tip, Rich Meyer), with physician and hospital costs taking up a significant portion of the budget, but comparative effectiveness could be applied across the board for in and out patient procedures and administration, not just medicinal products per se.

In the future, will we see the FDA only grant approval for drugs that are cost effective for the clinical benefit they offer much as NICE does in the UK?  At some point drug will have to justify their cost, as will hospitals and doctors for the fees they charge. 

Irrespective of whatever happens with the current bill trundling through the Senate sponsored by Max Baucus, health care reform in the U.S. sadly still has a long way to go.

Baucus, M. (2009). Doctors, Patients, and the Need for Health Care Reform New England Journal of Medicine, 361 (19), 1817-1819 DOI: 10.1056/NEJMp0910001

Sox HC, & Greenfield S (2009). Comparative effectiveness research: a report from the Institute of Medicine. Annals of internal medicine, 151 (3), 203-5 PMID: 19567618

Schwartz, L., & Woloshin, S. (2009). Lost in Transmission – FDA Drug Information That Never Reaches Clinicians New England Journal of Medicine, 361 (18), 1717-1720 DOI: 10.1056/NEJMp0907708