Avastin is one of the most important cancer treatments to come along in a decade. Developed by Genentech Inc. (DNA) and approved in the U.S. two years ago, it can add months to the lives of the sickest patients with colon, lung, and breast cancer, a triple crown no other recent cancer drug can claim. Still, Genentech announced this month that Avastin's recent sales are running about 10% lower than many Wall Street analysts had expected.
The reason isn't hard to figure out. Avastin costs anywhere from $4,400 to $8,800 a month. The drug has Food & Drug Administration approval only for the treatment of colon cancer, so many insurers are refusing to pay for its use against breast and lung cancer. "It is naive to think that a patient's ability to pay wouldn't affect the practice of medicine," says Dr. Neal J. Meropol of Fox Chase Cancer Center in Philadelphia.
Cancer has always been an expensive disease, but the stratospheric prices of the newest drugs are injecting cost into treatment decisions to a degree rarely seen before. As a result, some doctors, patients, and even whole nations are beginning to reject the latest treatments, no matter how effective.
Drug companies argue that the high prices are necessary to offset development costs of these complex drugs. They also note that the newer products are more effective and safer. Before these were available, "the patients died quickly, so their treatment didn't impact the cost of health care," says Ian T. Clark, head of Genentech's commercial operations.
"SOMETHING HAS TO GIVE"
Now the impact is obvious. Most of the newest treatments are taken along with older chemotherapies, and some are even taken in combination with one another, adding pricey drug on top of pricey drug. Dr. Leonard Saltz of Memorial Sloan-Kettering Cancer Center in New York says that 10 years ago the drugs used to treat colon cancer cost about $500. Today, the tab is $250,000. Over the same 10-year period, the average life expectancy for colon cancer patients increased from 11 months to a little more than two years. "We're excited about these drugs," he says, "but not everyone can get them. Something has to give."
Avastin is far from the only cancer drug raising such concerns. ImClone Systems Inc.'s (IMCL) Erbitux costs $30,000 for eight weeks of treatment. Gleevec, a Novartis (NVS) drug, costs $2,200 a month and can be taken indefinitely. Herceptin, a Genentech drug for breast cancer, runs $3,200 a month. And antinausea drugs to relieve side effects can cost $100 a pill.
Insurers are watching this trend with alarm. Most drugs are only prescribed for FDA-approved uses, but oncologists routinely administer cancer drugs for unapproved, or off-label, uses if supported by clinical trial data. Medicare is required to pay for most off-label cancer treatments, and private insurers used to follow suit, but recently they have started to balk. Morgan Stanley (MWD) surveyed 100 U.S. oncologists in December and found that their off-label use of Avastin for breast and lung cancer was very low, even though clinical data showed the drug could improve survival for those diseases. The doctors said they expect to step up their use of Avastin once they are assured of reimbursement. "We're finally beginning to see some pushback on off-label uses,"says Dr. Steven Harr, a Morgan Stanley analyst.
Even so, drug companies have little incentive to lower prices. New cancer drugs have patent protection, there are virtually no me-too drugs, and desperate patients have been known to mortgage their homes to pay for treatment. Plus, Medicare is forbidden from negotiating prices with drug companies. "You might see some pressure in three to five years to moderate prices, but there are no forces at work now," says Eric Schmidt, analyst with S.G. Cowen & Co.
That leaves oncologists and patients with tough choices. Doctors say many breast cancer patients routinely refuse a new class of drugs known as aromatase inhibitors, which prevent the disease from recurring, because they can't afford them. Herceptin is also effective at preventing recurrence, but a Belgian study released last month calculated that Herceptin would cost European governments $42,000 per patient if used for that purpose. "It is possible that present budgets will not be able to bear the extra expense," the authors warned.
In America, even patients with generous insurance policies are struggling with the expense. H. Wayne Thornton of Albuquerque, a supervisor with the U.S. Forest Service, was shocked when he was diagnosed with breast cancer in 1996. The 59-year-old has gone through surgery and numerous rounds of chemo. He is now trying to survive on a combination of Herceptin, Avastin, and Abraxane, a new chemotherapy from American Pharmaceutical Partners Inc. (APPX) -- at a cost of about $25,000 a month.
Thornton pays a premium of $388 per month to cover his wife, Betty, and himself. Still, his co-pays total hundreds of dollars each month for these three drugs. He also has co-pays for pain killers, antinausea medication, and doctors' bills. "I try to stay focused on my health, but it's easy to slide into depression," he says.
Oncologists are also fighting despair. Because they administer most cancer drugs intravenously, the docs usually buy the drugs themselves and bill their patients at a razor-thin markup. "I am in an incredible bind," says Dr. Barbara L. McAneny, Thornton's doctor. She would like to give patients state-of-the-art treatment every time, "but you have to live in the real world. When the patient says 'I can't afford it,' I start to think about what is second-best."
All drug manufacturers have programs that provide medicines free of charge to uninsured patients. Last year Genentech spent $200 million on such subsidies. But that doesn't address all the problems of the underinsured. "I have patients who refuse treatment all the time because they cannot come up with the money," says Dr. Craig Hildreth, a St. Louis oncologist. Hildreth says he does not believe any of his patients have been denied a chance at prolonged survival because of an inability to pay. Yet.
By Catherine Arnst