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The Unsustainable Economics of Cancer Drugs

In New York magazine, Steve Hall lays out the good, bad, and the ugly of cancer-drug economics. Warning: it is mostly bad and ugly.

The pharmacist e-mailed the numbers, and Saltz stared at the figures on his computer screen. Zaltrap, the drug that was extremely similar to Avastin, cost roughly $11,000 a month. (And because that extra 42 days wouldn’t be possible without taking the drug for, say, seven months before—which was roughly what was happening in clinical trials—the price for that six-week life extension could be as high as $75,000.)

“Wow,” he said to himself, “that’s a deal-changer for me.”

That may not seem like a heretical statement, but the unspoken rule in American health care is that doctors should never consider the cost of a medicine that might be beneficial to patients. When the FDA approves a new cancer drug, it analyzes safety and effectiveness only. Medicare is obliged to reimburse payment for the drug, and private insurers in most states must cover the cost. Any doctor who considers cost—or the value of a costly drug—risks being accused of “rationing” health care.

Saltz felt compelled to consider the cost. He didn’t see any medical advantage to Zaltrap for his patients—or any disadvantage, for that matter—but, as he contemplated its price, he thought, I can’t see why I would use this.

That same day, he sent an e-mail to every physician at the hospital who treated patients with colon cancer. “I said, essentially, ‘You all know the data. You were at the meetings. You know what the situation is. What I just learned is this issue regarding the price. Within this context, I can’t envision a scenario where I would plan to use this drug. Can you?’?”

None of the sixteen colon-cancer physicians at Sloan-Kettering who replied to Saltz’s query said they could see a reason for using the drug.

The hospital’s Pharmacy and Therapeutics Committee met in September 2012 to decide whether to include Zaltrap in their list of medications, and Saltz, who chairs the committee, informed his colleagues of the price and recommended not carrying the drug. The committee agreed. Sloan-Kettering, one of the country’s preeminent cancer hospitals, would not be offering Zaltrap to its patients.

When Saltz called upstairs to inform Peter B. Bach, director of the Center for Health Policy and Outcomes at Sloan-Kettering, of the decision, Bach wanted to know the reason.

“Because of the price,” Saltz told him.

As soon as he heard that, Bach, who has been documenting the dizzying rise of cancer-drug prices since 2009, immediately jumped into an elevator to go to Saltz’s office to learn more about the unprecedented decision. Why the rush? “C’mon!” Bach explained to me recently. “It’s never happened before! Sloan-Kettering isn’t including a drug because of its price?”

Thus began the first physician-initiated revolt in anyone’s memory against the skyrocketing cost of cancer drugs.

“Everybody agrees: The prices are unsustainable,” Saltz said. “And I often try to invite myself or people having these discussions to complete the thought: If it’s unsustainable, what happens when it’s unsustained? Do we have an adjusted, steady correction? Or do we have an implosion and a crash?”

This is a good follow-up to what we wrote in SuperFreakonomics about cancer treatment, and is especially relevant with the onset of ObamaCare:

Most people want to fend off death no matter the cost. More than $40 billion is spent worldwide each year on cancer drugs. In the United States, they constitute the second- largest category of pharmaceutical sales, after heart drugs, and are growing twice as fast as the rest of the market. The bulk of this spending goes to chemotherapy, which is used in a variety of ways and has proven effective on some cancers, including leukemia, lymphoma, Hodgkin’s disease, and testicular cancer, especially if these cancers are detected early.

But in most other cases, chemotherapy is remarkably ineffective. An exhaustive analysis of cancer treatment in the United States and Australia showed that the five-year survival rate for all patients was about 63 percent but that chemotherapy contributed barely 2 percent to this result. There is a long list of cancers for which chemotherapy had zero discernible effect, including multiple myeloma, soft-tissue sarcoma, melanoma of the skin, and cancers of the pancreas, uterus, prostate, bladder, and kidney.

Consider lung cancer, by far the most prevalent fatal cancer, killing more than 150,000 people a year in the United States. A typical chemotherapy regime for non-small-cell lung cancer costs more than $40,000 but helps extend a patient’s life by an average of just two months. Thomas J. Smith, a highly regarded oncology researcher and clinician at Virginia Commonwealth University, examined a promising new chemotherapy treatment for metastasized breast cancer and found that each additional year of healthy life gained from it costs $360,000 — if such a gain could actually be had. Unfortunately, it couldn’t: the new treatment typically extended a patient’s life by less than two months.

Costs like these put a tremendous strain on the entire healthcare system. Smith points out that cancer patients make up 20 percent of Medicare cases but consume 40 percent of the Medicare drug budget. Some oncologists argue that the benefits of chemotherapy aren’t necessarily captured in the mortality data, and that while chemotherapy may not help nine out of ten patients, it may do wonders for the tenth. Still, considering its expense, its frequent lack of efficacy, and its toxicity — nearly 30 percent of the lung-cancer patients on one protocol stopped treatment rather than live with its brutal side effects — why is chemotherapy so widely administered?

The profit motive is certainly a factor. Doctors are, after all, human beings who respond to incentives. Oncologists are among the highest paid doctors, their salaries increasing faster than any other specialists’, and they typically derive more than half of their income from selling and administering chemotherapy drugs. Chemotherapy can also help oncologists inflate their survival-rate data. It may not seem all that valuable to give a late-stage victim of lung cancer an extra two months to live, but perhaps the patient was only expected to live four months anyway. On paper, this will look like an impressive feat: the doctor extended the patient’s remaining life by 50 percent.

Tom Smith doesn’t discount either of these reasons, but he provides two more.

It is tempting, he says, for oncologists to overstate— or perhaps overbelieve in— the efficacy of chemotherapy. “If your slogan is ‘We’re winning the war on cancer,’ that gets you press and charitable donations and money from Congress,” he says. “If your slogan is ‘We’re still getting our butts kicked by cancer but not as bad as we used to,’ that’s a different sell. The reality is that for most people with solid tumors — brain, breast, prostate, lung — we aren’t getting our butts kicked as badly, but we haven’t made much progress.”

There’s also the fact that oncologists are, once again, human beings who have to tell other human beings they are dying and that, sadly,there isn’t much to be done about it. “Doctors like me find it incredibly hard to te
ll people the very bad news,” Smith says, “and how ineffective our medicines sometimes are.”

If this task is so hard for doctors, surely it must also be hard for the politicians and insurance executives who subsidize the widespread use of chemotherapy. Despite the mountain of negative evidence, chemotherapy seems to afford cancer patients their last, best hope to nurse what Smith calls “the deep and abiding desire not to be dead.” Still, it is easy to envision a point in the future, perhaps fifty years from now, when we collectively look back at the early twenty-first century’s cutting-edge cancer treatments and say: We were giving our patients what?

The age-adjusted mortality rate for cancer is essentially unchanged over the past half-century, at about 200 deaths per 100,000 people. This is despite President Nixon’s declaration of a “war on cancer” more than thirty years ago, which led to a dramatic increase in funding and public awareness.

Believe it or not, this flat mortality rate actually hides some good news. Over the same period, age-adjusted mortality from cardiovascular disease has plummeted, from nearly 600 people per 100,000 to well beneath 300. What does this mean? Many people who in previous generations would have died from heart disease are now living long enough to die from cancer instead. Indeed, nearly 90 percent of newly diagnosed lung-cancer victims are fifty-five or older; the median age is seventy-one.

The flat cancer death rate obscures another hopeful trend. For people twenty and younger, mortality has fallen by more than 50 percent, while people aged twenty to forty have seen a decline of 20 percent. These gains are real and heartening — all the more so because the incidence of cancer among those age groups has been increasing. (The reasons for this increase aren’t yet clear, but among the suspects are diet, behaviors, and environmental factors.)