Myeloma Drug Pricing
But, with each new approval, price tags continued to
climb, from $50,000 for a year’s supply of bortezomib to
almost $200,000 for pomalidomide. 5
Although these prices are similar to those for therapies
in other cancer types, certain aspects of MM escalate the
financial burden of its treatment even further, according
to Josh J. Carlson, PhD, MPH, of the Comparative Health
Outcomes, Policy, and Economics (CHOICE) Institute at
the University of Washington.
“One of the big issues with pricing in myeloma is the
doublet, and now triplet, therapies that are recommended
as standard care,” Dr. Carlson said. “Using expensive
combinations of drugs really drives up the price.”
Also, because myeloma has no cure, many patients
are advised to continue on these therapies as mainte-
nance treatment. “They can be treated indefinitely,” Dr.
Carlson said. “There are no clear guidelines on when to
stop therapy, which, again, increases the treatment costs
for any given patient.”
Who Foots the Bill?
Pharmaceutical manufacturers often downplay the
high list prices by noting that patients don’t pay the full
amount. Instead, they pay a portion through a copay or
through coinsurance payments after their deductibles
have been met.
“With specialty drugs, a patient typically pays about
20% of the drug cost through coinsurance, until he or she
reaches the out-of-pocket maximum for the year, which
can be quite high,” Dr. Carlson said. “Then it all resets at
the beginning of the next year.”
However, the risks of financial toxicity are still high,
even among patients with private insurance or Medicare.
According to a 2015 survey of 111 myeloma patients, 71%
reported at least a minor financial burden. 6 Almost half of
patients (46%) were forced to dip into their savings, one-
third (36%) to apply for financial assistance, and one in
five (21%) to borrow money to pay for medications.
Even if individual patients aren’t footing the bill for
the entire cost of the drug regimen, someone else is cov-
ering what they don’t pay.
“Organizations may advocate for lower prices for my-
eloma drugs, for lower out-of-pocket costs for patients,
or for eliminating deductibles, but people have to keep in
mind the overall cost to society,” said Vincent Rajkumar,
MD, the Edward W. and Betty Knight Scripps Professor
of Medicine at the Mayo Clinic in Rochester, Minnesota.
For example, in the commercial space, when a
health insurance plan has to cover the remaining costs
of a medication, that expense ends up being spread out
among all of the plan’s members through premiums, Dr.
Carlson explained. As more money is spent on drugs, the
premiums for health insurance rise.
In employer-based plans, increasing premiums are
often covered, at least in part, by the employers. “To cover
these costs, employers are using money that could have
been put into increased employee wages, rather than
toward health insurance,” he said.
In some cases, health insurers may benefit from
prescription drug rebates – a complex and controversial
topic itself. With prescription drug rebates, the drug
manufacturer may provide a rebate to the PBM, which
may share a portion of the rebate with the health insurer.
These rebates serve as incentive for the PBM to include
one product over another or to list that product in a
preferred tier. 7 As evidenced by the Senate testimony that
took place in April, regulators and legislators have called
for more transparency about how these rebates are nego-
tiated. Recently, the U.S. Department of Health and Hu-
man Services (HHS) proposed a rule eliminating rebates.
As HHS Secretary Alex Azar explained, this rule would
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ASH Clinical News
“end this era of backdoor deals in the drug industry …
and deliver savings directly to patients when they walk
into the pharmacy.” 8
A Value Proposition
The cost of medication is not the only financial burden
put on patients, noted Dr. Fonseca.
“When patients live for many years, they have ex-
penses associated with hospital stays, doctor visits, and
medication copays, and many patients cannot continue
working,” he said. “This creates a major strain on the
finances of a household, which often has limited savings.
The cost of drugs is only one part of the story.”
A 2017 study by Dr. Fonseca and colleagues looking at
trends in overall survival and costs of MM therapy bore
that out: From 2000 to 2014, the percentage of patients
with MM using a novel therapy increased from 8.7% to
61.3%, which was accompanied by substantial improve-
ments in survival outcomes. 9
The new wave of FDA approvals in myeloma have
successfully extended survival, but there are plenty of
investigational drugs that never made it to market. The
pharmaceutical industry argues that prices for ap-
proved drugs are set high to recover the costs of failed
drugs. According to the Pharmaceutical Research
and Manufacturers of America (PhRMA), the trade
organization representing biopharmaceutical research
companies, research and development of a new medi-
cine takes between 10 to 15 years and costs an average
of $2.6 billion. 10
“This reasoning is a function of how hard it is to
conduct clinical trials and how many different attempts
companies have to make to bring a successful drug to
market,” Dr. Carlson said. “They try to recuperate all
failed attempts with a single successful attempt.”
“The fact that
pharmaceutical
companies can price
a drug high regardless
of whether or not it
is innovative or just a
modification, like an
analog rather than a
new class of drugs,
is the enemy of
innovation.”
—VINCENT RAJKUMAR, MD
“It’s a little bit unfair just to look at the cost of the rela-
tively few winners that you have in this business and say,
‘Aren’t you making a lot of money on those winners?’”
Kenneth Frazier, CEO of Merck, told Harvard Business
Review. “When in fact, in order to be a sustainable, ongo-
ing business, you have to be able to pay for the cost of all
those programs that inevitably don’t succeed.”
The pharmaceutical industry is a business, and com-
panies are beholden to shareholders who “keep giving us
the capital to do the research that’s going to produce to-
morrow’s drugs, while at the same time allowing patients
and health systems to have access,” Mr. Frazier continued.
In 2015, the FDA approved Merck’s PD-L1 inhibitor
Keytruda (pembrolizumab) for advanced lung cancer, at
a price of roughly $150,000 per year, per patient. When
asked if he considered the cost reasonable, Mr. Frazier
said, for patients who need pembrolizumab in this
setting, “we’re talking about a life-and-death situation.
… When you say the $150,000 for this successful drug
doesn’t make sense, you have to realize that we’re actually
paying for the 90% -plus projects that fail. Because we
can’t have the winners if we’re not able to pay for the cost
of the losers, so to speak.”
This argument is harder to justify when one looks at
some of the year-over-year price increases, however, Dr.
Carlson said.
A recent study looked at the contributions of both
new and existing drugs to the changes in costs of oral
and injectable brand-name drugs. 11 Between 2008 and
2016, the costs of oral brand-name drugs increased 9.2%
annually, and the cost of injectables increased 15.1%. Ac-
cording to the study, these increases were largely driven
by existing drugs.
Killing Competition
There is also a lack of understanding about how drug
prices are derived. According to Mr. Frazier, at Merck,
determining the list price for a newly approved medica-
tion involves asking first, “What is the value that this
new medicine provides to patients and to the health-care
system? … And the second [question asked] implicitly is,
‘What can patients and the health system afford?’”
Pharmaceutical companies often fix their prices ac-
cording to other available agents within that drug class.
However, in the myeloma space, there is a definite lack of
competition; the proteasome inhibitors are owned by two
companies, and all three IMIDs are owned by the same
company.
Pharmaceutical manufacturers have been accused of
using unsavory tactics to keep potential competitors at bay,
which, in turn, keep prices high. For example, “product
hopping,” also known as “forced switching” or “evergreen-
ing,” involves companies issuing a reformulated version of
a branded drug before the original product’s patent expires.
Patients are switched to the reformulated drug that offers
little to no therapeutic advantage over the original version,
but it has an expanded patent, meaning a longer market
exclusivity period. 12 If a generic version of the original drug
becomes available after a clinician has switched to the new
drug formulation, pharmacists cannot substitute the refor-
mulated version for this generic because state laws allow
for substitutions only when the dosage strength or other
characteristics remain the same.
Regardless, competition between companies does not
always have a big impact on price, Dr. Carlson said. This
is especially true with cancer therapies; even if patients
receive one company’s drug as firstline treatment, they
may use another company’s drug as second- or thirdline
treatment.
“In myeloma, because patients go through many
sequences of drugs, the companies are not getting
completely excluded [from the treatment plan]; they
may just get a smaller market share,” he explained. “The
health care marketplace doesn’t operate like a full free-
market system.”
The CEOs who testified before Congress earlier this
year also justified the high costs of medicine on the com-
plexities of the U.S. drug-pricing system. According to
June 2019