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Tuesday, March 27, 2007

The Marginal Cost and Marginal Benefit of Cancer Drugs

These are difficult choices:

Setting a price for putting off death, by Daniel Costello, LA Times: What is the value of a few months of life? That question is at the center of one of the most controversial debates in medicine today involving a new generation of hyper-expensive cancer drugs.

On Tuesday, the Food and Drug Administration approved GlaxoSmithKline's Tykerb, a once-a-day pill for late-stage breast cancer patients that costs nearly $35,000 a year. It's the latest of half a dozen new cancer therapies with names such as Avastin and Tarceva that can run as much as $100,000 for an annual supply.

Although the medications work much longer in some patients, they help extend the lives of most for only a few months.

The drugs' sky-high costs compared with their relatively small health benefits have sparked arguments among policymakers and medical professionals about what to do with the growing number of people who are depleting their life savings on the drugs or, worse, who can't get them at all.

More broadly, they ask, is this the best way for society to spend its increasingly limited healthcare dollars? ...

Drug companies and many patients insist even incremental gains are worthwhile. Small clinical advances are likely to turn into larger ones over time, and patients who can afford the treatments say they deserve them. ...

But doctors, patient advocates and healthcare economists warn that the drugs are simply too expensive at a time when medical costs are rising rapidly...

The costs aren't borne only by those who are sick. Because insurers pay for almost all federally approved drugs, the costs of covering them would eventually spill into the nation's overall medical bill and therefore would raise everyone's insurance premiums.

This year, cancer drugs are expected to account for nearly 22% of the nation's drug bill, up from 13% in 2002...

The debate also is raging among oncologists, who admit being torn about wanting to give patients marginally effective drugs that could cause serious financial harm. "These drugs are good, but it's important to remember they aren't a cure," said Peter Eisenberg, an oncologist at California Cancer Center in Greenbrae, Calif. "Drug companies are in another world if they think people can afford these things." ...

The targeted cancer drugs and better detection are helping reshape cancer treatment, leading some to believe a corner has been turned in the fight against the disease.

Last year, cancer deaths fell for a second straight year. ... But those gains have to be taken in context of what else the money spent on cancer treatment could have been used for, said Peter Neumann, director of the Center for the Evaluation of Value and Risk at Tufts-New England Medical Center. "In terms of the cost of a life saved, it's possible other areas of medicine, like better disease prevention or better cardiovascular care, may be more effective."

Although it's a vague metric, one historical tool used to judge the value of a medical intervention is known as the Quality Adjusted Life Year, which is essentially a rule of thumb that a year of prolonged life is worth around $50,000 in today's dollars.

By that standard, some of the new cancer drugs may not be worth their costs when measured against their benefit to society, Neumann said. ...

My family faced this choice a couple of weeks ago. I wasn't part of the decision, but my observation from listening to those who were is that they fell ill-equipped to evaluate the benefits of treatment and there was considerable uncertainty over what choice was best. In the end, I think they were comfortable with the choice, but as others related their own stories and experiences, it seemed to me that families are rarely sure they have done the right thing. At the memorial gathering at my parent's house this topic came up somehow, and I heard tales on both sides - keeping people alive when it was very expensive and the quality of life was extremely poor, and cases where the choice to withhold treatment was second-guessed. I know there are lots of places to go for help and support, but it seems to me that families still need more guidance from the health professionals who are directly involved in treatment. But maybe it's just hard no matter what you do.

More generally, to me life is not just another good to be allocated by the price system and it bothers me that how long you live may depend upon how much wealth you manage to inherit or accumulate. I don't know for sure how to fix this problem, but there is a part of me that believes that where life and death is concerned, everyone, rich and poor alike, should have access to the same care and treatment options.

    Posted by on Tuesday, March 27, 2007 at 01:04 PM in Economics, Health Care | Permalink  TrackBack (0)  Comments (45)


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