Cost in the Context of Value for Cancer Medicines

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If we are to make any real progress in managing the rising cost of cancer treatment, we must consider the substantial value that new cancer drugs provide patients and society and then ask whether that value is worth the price compared with alternative options.

Mace L. Rothenberg, MD

Bringing new cancer therapies through the discovery and development process entails considerable risk and many years of study. It also requires substantial investment and incentives from the public and private sectors to fuel future investment and discovery. A system that rewards advances in cancer treatments that improve outcomes and can compete on value provides the greatest chance of offsetting the human and financial costs of cancer in the long term.

Much has been written recently about the high costs of cancer drugs and their likely impact on cancer care. Like all other health-care services, medicines deserve their share of price scrutiny. However, if we are to make any real progress in managing the rising cost of cancer treatment, we must consider the substantial value that new cancer drugs provide patients and society and then ask whether that value is worth the price compared with alternative options.

Maintaining Investments in Innovative Treatments

Consider the case of a patient diagnosed with chronic myeloid leukemia (CML). In 2001, that patient faced a 5-year survival rate of only 20%. Today, thanks to innovative treatments like imatinib and other Bcr-Abl tyrosine kinase inhibitors, the outlook has dramatically changed, with more than 80% of CML patients now surviving 10 years or longer.1 To extend this progress to other malignancies and reduce the devastating burden of cancer, we need sustained investment in biomedical science, which will yield even more innovative treatments. Proposals that bluntly seek to cap or lower the price of drugs will deter investments and curtail the development of much-needed new therapies.

We are experiencing a remarkable period of innovation in cancer therapy. Since 2000, 5-year survival rates are up 39% across all cancers. Survival rates for childhood cancers have increased by 43% since the mid-1970s. Although prevention and early detection have played a role, the proportion of survival gains attributable to innovative treatments, including medicines, is 83%.2 Collaboration among researchers in universities, cancer centers, hospitals, and pharmaceutical companies has made it possible for us to understand and exploit the unique abnormalities in the cancer cell and to turn them into targets of treatment.

Discovery of the genomic basis for certain cancers has enabled the identification of new disease subsets and the development of specific therapies to treat those subsets of patients. One such example is crizotinib (Xalkori), which doubled the time of progression-free survival for patients with advanced ALK–positive non–small cell lung cancer, tripled response rates, and led to longer survival compared with patients who did not have access to ALK inhibitors and received standard chemotherapy.3 These insights are leading to the development of targeted treatments and immunotherapies, which are creating new hope for patients. With more than 800 drugs in development to treat cancer (80% of which represent potential first-in-class medicines and 73% potential personalized medicines), the potential future value provided by these innovations has never been greater.2

Rewarding Improved Outcomes

Cancer medicines are initially tested and developed in patients with very advanced disease, where delay in tumor progression or improvement in overall survival of only a few months can represent a large improvement in relation to available therapy, which is both statistically and clinically significant. Then as the medicine is used and studied in patients with earlier stages of disease, we often discover much larger gains, leading to dramatically improved progression-free and overall survival.

A system that rewards technologies that improve outcomes and allows them to compete on value when viewed in a clinically relevant time horizon is the straightest path toward progress and provides the greatest chance of offsetting the human and financial costs of cancer over time. A singular focus on short-term drug costs ignores the longer-term costs that society would bear as a result of decreased innovation—suboptimal health outcomes, lost productivity, and shorter lives. A recent study suggests that if we could reduce cancer death rates by another 10%, we would unleash $4 trillion in economic value.4 There is little doubt that cancer medicines will be critically important to achieving this goal.

Spending on cancer therapies represents just 1 penny of the overall U.S. health-care dollar—and just 20 cents of total spending on cancer.5 And although the cost of cancer medicines has increased 39% in the United States over the past 10 years in inflation-adjusted terms, over the same period, patient response rates have improved by 42%, and treatment duration has increased by 45%—a clear reflection of improved outcomes.6

Medicines across all diseases generally make up only 13% of overall health-care costs, yet they remain the main target of cost containment.7 The way we pay for health care often discourages the effective use of preventive care and medicines. And incentive and payment models that health plans have to operate within make it difficult to invest in care that has a longer-term benefit.

The Price and Costs of Cancer Medicines

To determine a medicine’s price, we consider many factors, including its impact on patients, other available treatments, its potential to reduce overall health-care costs, and affordability. The price that patients with health insurance pay for medicines is determined by their health plan and may include significant discounts from the initial price.

Although much public debate has focused on how individual patients are struggling to afford newer cancer treatments on their own, the simple fact is that they shouldn’t have to. The purpose of health insurance is to protect patients financially in the event of a catastrophic illness. The proportion of health-care insurance plans that require a pharmacy deductible has doubled since 2012. In fact, the growth in health-care spending is led by hospital care (36%), compared with just 10% from retail drugs, on average, and patients are paying nearly 20% out-of-pocket expenses for their prescriptions, compared with just 5% for their hospital care.8,9 Yet the trend in insurance is to increasingly push costs onto patients through higher deductibles and higher co-pays. Even when medicines have a proven track record of offsetting costs over time, insurance policies are making it more difficult for patients to access cancer medicines.

When there are gaps in coverage that make it difficult for patients to afford their medicines, we stand ready to assist them by offering lower income or underinsured individuals the option of getting their Pfizer medicines for free or at a reduced price. Between 2010 and 2014, we helped more than 33,000 uninsured and underinsured patients gain access to nearly 148,000 Pfizer oncology prescriptions. Pfizer also provides charitable donations to independent nonprofit organizations that support eligible patients who require help paying their out-of-pocket expenses, including co-pays or co-insurance. In 2014, Pfizer donated $6.3 million to U.S. co-pay foundations dedicated to helping patients with cancer obtain the medications they need.

Removing Barriers to Progress

Medicines are unique within the health-care system because their price goes down over time. Our system of time-limited, patent protection not only secures strong incentives to innovate, but it also means that lower cost versions of these medicines will become available after the patent has expired. Although the percentage of health-care spending devoted to prescription drugs has remained about the same over the past 50 years, the overall use of medicines has increased significantly over this period, as did the average life expectancy in the United States, by more than 9 years.10 This life cycle of innovation, patent protection, and patent expirations has meant that the cost of treating conditions such as heart disease, pain, and depression has declined significantly through the years.

Working together, we must strive to remove barriers to investment and progress in new cancer therapies without placing undue financial burdens on patients with cancer. We must support public policies that continually drive investments into drug development. When one examines drug prices in isolation, outside the context of the overall health-care system, a common reaction is, how can we afford to pay these costs? However, if medicines are viewed as the critical investments that they are, the question we need to be asking is, how can we afford not to? ■

Disclosure: Dr. Rothenberg is Senior Vice President and Chief Medical Officer of Pfizer Oncology.

Editor’s note: The ASCO Post invites all readers to share their perspectives on cost and value in cancer care. All submissions will be considered for publication in The ASCO Post.


1. Kalmanti L, Saussele S, Lauseker M, et al: Safety and efficacy of imatinib in CML over a period of 10 years: Data from the randomized CML-study IV. Leukemia 29:1123-1132, 2015.

2. PhRMA: Medicines in Development for Cancer: 2015 Report, featuring the AACR Cancer Progress Report. Available at Accessed February 2, 2016.

3. Shaw AT, Yeap BY, Solomon BJ, et al: Effect of crizotinib on overall survival in patients with advanced non-small-cell lung cancer harbouring ALK gene rearrangement: A retrospective analysis. Lancet Oncol 12:1004-1012, 2011.

4. National Cancer Institute: Value of Cancer Medicines. Available at Accessed February 2, 2016.

5. PhRMA: Cancer Medicines: Value in Context (Spring 2014). Available at Accessed February 2, 2016.

6. IMS Institute for Healthcare Informatics: IMS Health finds global cancer drug spending crossed $100 billion threshold in 2014. Available at$100-billion-threshold-in-2014-article. Accessed February 2, 2016.

7. The Kaiser Family Foundation and Health Research & Educational Trust: Employer Health Benefits 2014 Annual Survey. Available at Accessed February 2, 2016.

8. Centers for Medicare & Medicaid Services: National Health Expenditure Accounts (NHEA). Available at Accessed February 2, 2016.

9. U.S. Department of Health & Human Services, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey (MEPS). Available at Accessed February 2, 2016.

10. OECD: Health at a Glance 2013: OECD Indicators. Available at Accessed February 2, 2016.