Some questions about high drug pricesPeter B. Bach, MDCenter for Health Policy and OutcomesMemorial Sloan Kettering Cancer Centerbachp@mskcc.org @peterbachmdSeptember 3, 2015

100-fold price increase

Rising prices of cancer drugs

Cost for an additional year of life goes up each year in cancer

Prices are at the level needed to drive any innovation!

The Market for ALK Inhibitors: Appropriately Priced? Or frothy?

4 ALK Inhibitors are currently in preclinical development

7/2014: Latest Alectinib trial begins

6/2014: Latest NMS-E628 trial begins

3/2014: Latest AP26113 trial begins

1/2014: Latest PF-06463922 trial begins

7/2013: Latest CEP-37440 trial begins

10/2012: Latest TSR-011 trial begins

6/2012: Latest X-396 trial begins

4/2014: Zykadia approved by the FDA

8/2011: Xalkori approved by the FDA

Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

Okay, prices are high. But at least they make sense!

Two drugs (peter’s crude assessment)Farydak (Feb 2015 approval) Ibrance (Feb 2015 approval)

Price: $10,035 per month

•FDA path: Squeaked through (voted down by ODAC advisors 5 to 2).

• Use: 3rd line multiple myeloma

•(11,000 deaths per year)

• Benefit: Increased PFS by 5 months, but not overall survival

• Tolerability: Severe side effects with a “Black Box”

Price: $9,978 per month

• FDA path: Accelerated approval from impressive Phase 2 data

• Use: 1st line metastatic breast cancer (larger health problem, 40K deaths/yr)

•Benefit: Increased PFS by 10 months, survival data pending

• Tolerability: Moderate side effects

Sure Prices are High, but the market still works

Product prices rise even as: a) competitors enter the marketb) new indications are added

Gleevec Tablet

Year

2004 2006 2008 2010 2012 2014

Aver

age

cost

per

day

($20

14)

0

50

100

150

200

250

Nilotinib approved

Dasatinib approved

Multiple additional indications approved

The reason why US Pharma is such a great sector?

Because we pay high prices in the US.

Top 10 Pharma (based on 2014 sales) 2014 Sales

% US sales in 2014

1. Novartis (Switzerland) $58 bn 32%2. Pfizer (US) $49.6 bn 40%3. Roche (Switzerland) $47.5 bn 43%4. Merck (US) $42.2 bn 41%5. Sanofi (France) $38.1 bn 34%6. GSK (UK) $37 bn 32%7. Johnson & Johnson (US) $32.3 bn 54%8. AstraZeneca (UK) $26.1 bn 39%9. Gilead Sciences (US) $24.9 bn 75%10. Bayer (Germany) $22.4 bn 51% (US + Canada) 11. Teva (Israel) $20.3 bn 54%12. Abbott Laboratories (US) $20.3 bn 30%

Who suffers?• Taxpayers• State Medicaid programs• The VA health system• And . .. Patients

Patients driven into bankruptcy

What does a new model look like?

Bargaining and saying ‘no’

Or what about prices based on ‘value’? • Who cares about value?

– Patients: Benefits and side effects of treatment

– Academia and Industry: Promote innovation and risk-taking, support the costs of research

– Society: Target rare disease, tackle public health problems

DrugAbacus combines value domains

http://www.drugabacus.org/

Thank You