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Lowering the High Cost of Cancer Drugs—II

      To the Editor:
      We read with interest the article by Kantarjian and Rajkumar
      • Kantarjian H.
      • Rajkumar S.V.
      Why are cancer drugs so expensive in the United States, and what are the solutions?.
      in the April 2015 issue of Mayo Clinic Proceedings in which the authors explored the main controversies surrounding the pricing of new innovative drugs, particularly drugs used in oncology and hepatology. Subsequently, in the August 2015 issue of the Proceedings, Tefferi and more than 100 cancer-specialist coauthors
      • Tefferi A.
      • Kantarjian H.
      • Rajkumar S.V.
      • et al.
      In support of a patient-driven initiative and petition to lower the high price of cancer drugs.
      addressed the same issue by emphasizing that cancer patients' out-of-pocket expenses have dramatically increased over the past few years and that these price increases are unsustainable.
      Although different strategies to reduce drug prices and subsequently improve patients' adherence in using prescribed drugs were discussed in these 2 articles, one recent procurement tool—the price-volume agreement—was not mentioned by these authors, even though some experience has already accumulated with this tool, particularly in Europe.
      In managing drug prices at the national level, price-volume agreements represent a procurement tool that markedly improves drug affordability by patients when the drug price is initially high but the treated patient population expands and becomes large. Specifically, these agreements determine a progressive price reduction as more and more patients are treated. Price reductions have generally been based on empirical data (eg, what is the cost of the recently introduced drug and how many patients are taking it?), but a theoretical basis for determining price may also be beneficial.
      • Zhang H.
      • Zaric G.S.
      Using price-volume agreements to manage pharmaceutical leakage and off-label promotion.

      Fadda V, Trippoli S. Drug prices decline with time and with volume of sales: a qualitative relationship in the absence of quantitative models. Ann Intern Med website. http://annals.org/article.aspx?articleId=2212249&guestAccessKey=23bbce4c-c6c3-40c3-9295-e19f82618091&utm_source=OR+033115+Related+Linas%2Feditorial&utm_campaign=ff12641518-OR_033115_Related_Linas_editorial&utm_medium=email&utm_term=0_f686d27d67-ff12641518-260568945. Published June 4, 2015. Accessed July 3, 2015.

      • Messori A.
      Newest treatments for hepatitis C: how can we manage sustainability [letter]?.
      We analyzed the price-volume agreement that the Italian Medicine Agency negotiated with the manufacturer of sofosbuvir, a nucleotide analogue drug used to manage hepatitis C virus infection. The price-volume agreement made in Italy is confidential,
      • Messori A.
      Newest treatments for hepatitis C: how can we manage sustainability [letter]?.
      but some information has been reported in the media (the data presented herein are based on references from the Italian Medicine Agency website

      Sovaldi/Harvoni - Attività di rimborso alle regioni in attuazione del meccanismo prezzo/volume. Agenzia Italiana del Farmaco website. http://www.agenziafarmaco.gov.it/it/content/sovaldiharvoni-attivit%C3%A0-di-rimborso-alle-regioni-attuazione-del-meccanismo-prezzovolume. Accessed July 23, 2015.

      and from Quotidiano La Repubblica

      Azienda Sanitaria 3 Toscana. Press releases from Quotidiano La Repubblica, page 14. http://www.usl3.toscana.it/allegati/8%20giugno%202015.pdf. Published June 8, 2015. Accessed July 3, 2015.

      ). The Italian agreement with sofosbuvir's manufacturer is very similar—in terms of parameterization and confidentiality—to the agreement introduced in France.

      Taylor P. France agrees lowest Sovaldi pricing in EU - Government brings cost of hepatitis C drug to €5,000 below list price, published 21st November 2014, PMLIVE website. http://www.pmlive.com/pharma_news/france_agrees_lowest_sovaldi_pricing_in_eu_618661. Accessed January 22, 2016.

      In the absence of any recognized price-volume model, our analysis employed a simplified exponential equation reported in 2014.

      Messori A. Spend less on drug enforcement and more on treating hepatitis C, say campaigners [response]. BMJ website. http://www.bmj.com/content/346/bmj.f3428/rr/689912. Published March 11, 2014. Accessed November 1, 2014.

      Our model (Table) includes the following information: (1) total number of patients who are candidates to receive the treatment; (2) number of patients actually treated; (3) treatment full price per patient (fPRICE); and (4) estimate of the nationwide budget impact in the absence of any price-volume intervention (calculated as fPRICE × number of patients actually treated). Although the decay is exponential, applying a logarithmic transformation to the y-axis data converts this curve into a straight line; hence, the knowledge of only 2 points permits one to determine a full model parameterization.
      TableExponential Model for Handling Price-Volume Agreements
      The equation describes the exponential model that relates a progressive price reduction to the increase in the number of treated patients.
      • Equation: PRICE = f (Npt) = fPRICE e − (0.693/PHP) × Npt
      • Where:
        • Npt is the cumulative number of treated patients
        • PRICE (in euro per patient) is the cost of the treatment (expressed as a function of Npt, which is assumed to undergo an exponential decay as Npt increases)
        • fPRICE (in euro) is the “initial” price on the y-axis attributed to the treatment (ie, the full price with no discount)
        • PHP (expressed as number of patients) is defined as the “price-halving population” and, in the framework of this exponential model, represents the number of patients at which the drug price is iteratively halved
        • e is the base of the system of natural logarithms and equals approximately 2.718
      a The equation describes the exponential model that relates a progressive price reduction to the increase in the number of treated patients.
      To estimate the model parameters ensuring the best fit to the “real decision” data made on sofosbuvir, we applied the 2-point linear interpolation with logarithmic transformation (using the following 2 data-pairs: price = 37,500 euro at × = 0 treated patients and price = 4000 euro at × = 60,000 treated patients).
      The results of this 2-point fit were the following: fPRICE = 37,500 euro per patient; price-halving population (expressed as number of patients) = 18,579 patients. The price of the drug tends therefore to be halved for every 18,579 treated patients, in an overall recruitment process involving a total of 60,000 patients. In addition, as a final parameter participating in the model, the nationwide budget impact in the absence of any price-volume intervention was easily estimated to be at 2.2 billion euro. (At an exchange rate of 1.091 US dollars per euro, 2.2 billion euro equals 2.4 US dollars.)
      In the past, price-volume agreements have been applied on an empirical basis, ie, in the absence of any quantitative predetermined rule. The experience described herein for sofosbuvir is a first attempt that aims to generate a conceptual framework in this field. Interestingly enough, 3 parameters (price-halving population, fPRICE, and total number of patients who are candidates to receive the treatment) were found to ensure an adequate modeling of this price-volume relationship.
      In handling the issue of drug pricing, critical cases similar to that involving sofosbuvir are likely to occur quite frequently, especially in areas of pharmacotherapy such as oncology and cardiovascular-targeted drugs (eg, evolocumab

      Shrank W, Lotvin A, Singh S, Brennan T. In the debate about cost and efficacy, PCSK9 inhibitors may be the biggest challenge yet. Health Affairs Blog. http://healthaffairs.org/blog/2015/02/17/in-the-debate-about-cost-and-efficacy-pcsk9-inhibitors-may-be-the-biggest-challenge-yet/. Published February 17, 2015. Accessed July 20, 2015.

      ). In this context, the availability of a rational model is a useful prerequisite to ensure that price-volume decisions made for different agents are not purely empirical but tend to share the same rationale or the same operational strategy.

      References

        • Kantarjian H.
        • Rajkumar S.V.
        Why are cancer drugs so expensive in the United States, and what are the solutions?.
        Mayo Clin Proc. 2015; 90: 500-504
        • Tefferi A.
        • Kantarjian H.
        • Rajkumar S.V.
        • et al.
        In support of a patient-driven initiative and petition to lower the high price of cancer drugs.
        Mayo Clin Proc. 2015; 90: 996-1000
        • Zhang H.
        • Zaric G.S.
        Using price-volume agreements to manage pharmaceutical leakage and off-label promotion.
        Eur J Health Econ. 2015; 16: 747-761
      1. Fadda V, Trippoli S. Drug prices decline with time and with volume of sales: a qualitative relationship in the absence of quantitative models. Ann Intern Med website. http://annals.org/article.aspx?articleId=2212249&guestAccessKey=23bbce4c-c6c3-40c3-9295-e19f82618091&utm_source=OR+033115+Related+Linas%2Feditorial&utm_campaign=ff12641518-OR_033115_Related_Linas_editorial&utm_medium=email&utm_term=0_f686d27d67-ff12641518-260568945. Published June 4, 2015. Accessed July 3, 2015.

        • Messori A.
        Newest treatments for hepatitis C: how can we manage sustainability [letter]?.
        Clin Infect Dis. 2015; 61: 1891-1892
      2. Sovaldi/Harvoni - Attività di rimborso alle regioni in attuazione del meccanismo prezzo/volume. Agenzia Italiana del Farmaco website. http://www.agenziafarmaco.gov.it/it/content/sovaldiharvoni-attivit%C3%A0-di-rimborso-alle-regioni-attuazione-del-meccanismo-prezzovolume. Accessed July 23, 2015.

      3. Azienda Sanitaria 3 Toscana. Press releases from Quotidiano La Repubblica, page 14. http://www.usl3.toscana.it/allegati/8%20giugno%202015.pdf. Published June 8, 2015. Accessed July 3, 2015.

      4. Taylor P. France agrees lowest Sovaldi pricing in EU - Government brings cost of hepatitis C drug to €5,000 below list price, published 21st November 2014, PMLIVE website. http://www.pmlive.com/pharma_news/france_agrees_lowest_sovaldi_pricing_in_eu_618661. Accessed January 22, 2016.

      5. Messori A. Spend less on drug enforcement and more on treating hepatitis C, say campaigners [response]. BMJ website. http://www.bmj.com/content/346/bmj.f3428/rr/689912. Published March 11, 2014. Accessed November 1, 2014.

      6. Shrank W, Lotvin A, Singh S, Brennan T. In the debate about cost and efficacy, PCSK9 inhibitors may be the biggest challenge yet. Health Affairs Blog. http://healthaffairs.org/blog/2015/02/17/in-the-debate-about-cost-and-efficacy-pcsk9-inhibitors-may-be-the-biggest-challenge-yet/. Published February 17, 2015. Accessed July 20, 2015.

      Linked Article

      • In Support of a Patient-Driven Initiative and Petition to Lower the High Price of Cancer Drugs
        Mayo Clinic ProceedingsVol. 90Issue 8
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          The high prices of cancer drugs are affecting the care of patients with cancer and our health care system.1 In the United States, the average price of new cancer drugs increased 5- to 10-fold over 15 years, to more than $100,000 per year in 2012. A study by Howard et al2 documented the escalation in cancer drug prices by an average of $8500 a year over the past 15 years. The cost of drugs for each additional year lived (after adjusting for inflation) has increased from $54,000 in 1995 to $207,000 in 2013.
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      • In Reply—Lowering the High Cost of Cancer Drugs
        Mayo Clinic ProceedingsVol. 91Issue 3
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          We thank our colleagues for their perspectives on our commentary.1 We agree with the comments of Drs Braillon and Martenson, and we thank Dr Messori and coauthors for their thoughtful analysis.
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