Wary of Backlash, Cancer-Drug Makers Weigh Price Limits
Wall Street Journal
By JOHN CARREYROU and GEETA ANAND
May 10, 2006; Page B1
As high prices of cancer drugs spark the kind of patient outrage that high AIDS-drug prices unleashed more than a decade ago, a few pharmaceutical and biotech companies are weighing caps and other cost-containment measures, before the outcry turns into a public-relations crisis for the industry.

ImClone Systems Inc. and Bristol-Myers Squibb Co., co-marketers of Erbitux, one of the most expensive cancer drugs on the market, are “well down the road” toward establishing an annual patient price cap for the drug if its market expands, says Ronald Martell, senior vice president of commercial operations at ImClone. Such a program would set an annual ceiling on individual patients’ drug-treatment costs, beyond which companies would provide the drug free of charge or at a steep discount. Genentech Corp., of South San Francisco, Calif., is considering cost-containing alternatives for Avastin, which is currently approved for treatment of early-stage colorectal cancer.
While the backlash against cancer-drug prices is nowhere near as big as the one against AIDS-drug prices, ImClone’s Mr. Martell says the industry should make changes in its policies now. “Otherwise, at some point there will be a confluence of events — social pressure, volume of dollars — and something will have to give,” he warns.

Erbitux, priced at $10,000 a month, is currently approved only for patients with metastatic colorectal cancer who have failed a certain kind of chemotherapy. Their average total cost of treatment is currently about $40,000: In most of these patients, the illness has advanced to the point where they are only a few months from death.

But later this year, ImClone and Bristol-Myers, both based in New York, hope to win Food and Drug Administration approval to market Erbitux for patients in earlier stages of colorectal cancer, who have longer life expectancies. Approval for these patients would result in a sharp rise in the average cost of treatment with Erbitux — and a sharp rise in profits.

In the case of Genentech’s Avastin, the current cost of treatment — $4,400 a month, or $52,000 a year — could rise sharply if the FDA approves the drug as a treatment — at double the dose — to treat lung cancer and breast cancer. Such approvals, expected over the next year, could result in thousands of new patients paying, at current prices, more than $100,000 a year to take Avastin.

The Medicare Modernization Act of 2003, which extended prescription-drug benefits to the elderly, has put financial pressure on elderly cancer patients, the age group with the highest rates of the disease. Under the old system, cancer patients receiving drugs intravenously at a hospital in practice often weren’t forced to make their 20% co-payment: The hospital would bill Medicare directly, and the Medicare reimbursement price — as much as 25% above the drugs’ market price — provided a sufficient profit cushion so that hospitals often didn’t collect co-payments.

But now, Medicare reimbursements are in line with drugs’ actual selling prices, and physicians and hospitals can no longer afford to forgive co-payments. As a result, many elderly cancer patients without supplemental prescription-drug insurance end up on the hook for thousands of dollars.

“There’s a groundswell of patients who are outraged,” says Jerry Flanagan, health-care policy director for the Foundation for Taxpayer & Consumer Rights, a Los Angeles watchdog group.

Full story at Wall Street Journal: Wary of Backlash, Cancer-Drug Makers Weigh Price Limits
By JOHN CARREYROU and GEETA ANAND
May 10, 2006; Page B1 May require subscription or initial ad view.