Generic Cancer Drug Shortage

Today’s Managing Health Care Costs Indicator is 14

Ezekiel Emanuel has a column in this weekend’s NY Times  pointing out that there are currently national shortages of 14 of 34 generic cancer drugs currently on the market.  As a result, oncologists are rationing care, and some with leukemia are unable to receive the standard care.  Here’s a link to a Boston-affiliate public radio interview on the same topic.

The underlying problem here is that the 2003 Medicare Part D act, which limited oncologist payment for chemotherapeutic drugs, also put in place a cap of price increases for these generic drugs.   This cap, while well-meaning, has turned out to be too low to support new generic company capital investments in plants to manufacture generic chemotherapy drugs .

It’s possible that we’ll need some type of price control for branded pharmaceuticals.  Sometimes a branded oncology drug costs as much as $90,000 – and there is no competition for unique medications still under patent.   However, price controls can cause unexpected market distortions – like the problem we’re having now with oncology medications.  European governments extensively regulate drug prices, but their generic cancer drugs prices are higher than ours, and they are not suffering from supply shortages.

I’ve written in the past about apparent drug discounts which can actually raise overall costs.  In many cases a pharmaceutical company offers a discount to patients, which undermines a higher differential cost patient share and eliminates price sensitivity.  This raises the average price paid by all purchasers.

The shortage of generic cancer drugs is another example where the lowest unit price doesn’t lead to the best value in health care purchasing.

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Changes Oncologists Could Make That Would Lower Costs

Today’s Managing Health Care Costs Indicator is $173 billion

Two courageous oncologists wrote in the May 26 New England Journal of Medicine (Free full text) that there were five changes in behavior and five changes in attitude that could lower overall health care costs.  They cite a projection that the cost of oncology care in the US will be $173 billion in 2020, and state that continued increases are unsustainable.   

The behavior changes (reworded by me):

1. Don’t do routine tests of cancer survivors looking for recurrence, except where there is evidence that this improves quality of life or survival
2. Give a single chemotherapy agent for most solid tumors –don’t use multiple agents except where there is good evidence to do so
3. Don’t give chemotherapy to patients who are so frail that they can’t walk
4. Don’t routinely use medicines to raise white blood cell counts. (This is for solid tumors – chemotherapy for leukemias and lymphomas does sometimes require these medications)
5. If patients fail three chemo regimens, limit further chemo to clinical trials.

The changes in attitudes (also reworded)

1. Recognize that costs are due to choices that oncologists make
2. Have realistic expectations
3. Pay more for cognitive services rather than chemo
4. Start palliative care earlier
5. Support comparative effectiveness research, and accept that there will be some limits on the care we can offer.

We’ve had over a generation of the “war on cancer,” and we’ve promised society that we can ‘cure’ cancer.   The authors suggest that we should acknowledge that palliation is often the best goal, and we should avoid costs for treatment that has not been shown to be valuable. 

This is rational – but could easily be misconstrued to be an endorsement of “death panels.”  I think this is an important addition to the dialog on how to lower health care costs. We will clearly need to bring patient advocates along for this approach, and sometimes it’s hard to tell patient advocates from parties interested in maintaining high health care costs (and company revenues). 

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Two case studies on why it's hard to constrain health care costs

Two articles in the New York Times on Saturday demonstrate the difficulty we have constraining health care costs.  We have trouble agreeing to cuts in home health care when independent analysis shows overly generous margins (on average), and we have trouble rejecting payment for a cancer drug that costs $36,000 a month, and has not been shown to have clinical benefit.

A front page article  follows a home health nurse making rounds in rural Caribou, Maine. (Not coincidentally, Maine has two Republican senators most likely to buck their party and vote for health care reform. One of them, Susan Collins, was born in Caribou.)   Cuts in home health care payments could force large layoffs in this community – which would deprive isolated rural seniors from a low-tech lifeline, and could lead to more hospitalizations. 

MedPAC recommended sharp cuts in home health care, as its analysis showed that on the average the margin in home care was too high.  (Of course, averages obscure many situations – and rural home care nurses who are only able to see five patients a day due to travel distances are very different than urban home care nurses who can walk from client to client!)   This information from the Dartmouth Atlas shows that overall Maine has far less home health expenses than expected, even though more highly populated southern Maine uses more resources than average. 

National Average:   434.5 services/1000

Maine Average:   350.3 services/1000

Maine uses $14,600,000 less resources on home health services than the national average

The front page of the business section  of the paper highlighted Folotyn, a drug newly approved for peripheral T cell lymphoma.  This disease is aggressive, strikes under 6000 in the US each year, and there is no other effective therapy.  Folotyn has been shown to shrink tumors in 27% of patients treated; it was not shown to prolong life. Here’s a direct quote from the article.

...Dr. Lee N. Newcomer, senior vice president for oncology at the big insurer UnitedHealthcare, called the price of Folotyn “unconscionable.” He said that Folotyn alone would cost as much as UnitedHealthcare now typically spends in total to treat a lymphoma patient from diagnosis until death. That median expenditure now, he said, is $87,000 for a little over a year of treatments.

But Dr. Newcomer said insurers would be obligated to pay for Folotyn because there were no alternatives.

So there you have it.  Home care probably is paid too much on average – but there are areas where resources spent are inadequate.  We focus on these areas in our public discussion.   Oncology care costs too much, but with no alternative for this new medication, we will keep writing checks.

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