Drugs and the cost of living

Chemotherapy and cancer drugs

Drugs – an expensive habit

Squabble breaks out, as NICE says new kidney drugs aren’t cost effective

August 2008 saw the usual spate of PR releases that we always get when NICE sets about its job and decides whether new drugs are really worth their money.
In this case, it was over four new drugs all designed to treat advanced cases of kidney cancer: Sutent (sunitinib), Avastin (bevacizumab), Nexavar (sorafenib) and Torisel (temsirolimus).

NICE decided that the money in the NHS coffers was better spent elsewhere than on these drugs, which each may provide less than six months extra life expectancy. This decision, according to the UK media, has ‘outraged charities, kidney specialists and campaigners’.

In a wonderful moment of honesty John Wagstaff, an honorary consultant in medical oncology at the South Wales Cancer Institute, has said in the National Press that this leaves him with ‘only interferon to treat advanced kidney cancer and 75 per cent of patients do not gain any real benefit from that’.

NICE’s draft guidelines say that the drugs are not cost effective for advanced kidney cancer, or where it has spread to other organs.

The counter charge was lead by people such as Jonathan Waxmann, Professor of oncology from Imperial College, London. His piece in the Daily Mail started with ‘NICE’s misguided and barbaric decision to ban four kidney cancer drugs that are widely available in Europe and the USA’, and concluded that ’NICE must be scrapped – it’s killing too many people’. Many Press articles then followed claiming NICE was ‘giving Kidney cancer patients a death sentence’.

Of course, the sad truth these people seem to miss is that many kidney cancer patients already have a death sentence anyway, with or without these drugs.

NICE immediately countered in the Press the next day with ‘Tell us which drugs you would like us to drop off the NHS approved list, in order to include these’.

The mess continued with accusations that NICE was incompetent and had its sums wrong. And that these drugs were available and paid for by the Governments in the USA and Europe, where more money per head is spent on cancer treatments than in the UK. NICE countered that these drugs would be available in the UK – just not on the NHS.

But Sloan-Kettering has a better drug


Interestingly, in our post bag we received another PR release about Kidney drugs at the same time. (See Cancer Watch – Autumn 2008). This time it was for ‘a new and better drug’ (Their words) from Memorial Sloan-Kettering Cancer Center, New York. In clinical trials with Everolimus, a once-daily oral therapy, after six months, 26 percent of patients had disease that had not progressed, This used patients ‘all of whom had disease that had progressed with currently available targeted therapies sunitinib and/or sorafenib’.

Reality check
So let us stop for a second.

  1. Firstly, here is a new drug ‘better than’ at least 2 of the drugs being squabbled about, but even then three quarters of patients do have progression within six months!

  2. Secondly, these drugs are not always completely free to patients in other countries. A conversation with American and German colleagues confirmed that you may have to pay for all, or some, of the cost of treatment depending upon the quality of your insurance policy.
    Maybe NICE has a good point: If you want this sort of performance, you can pay for it yourself! They want the NHS to use their money on things that perform better.

Now, we sympathise greatly with kidney cancer patients. The reality is that there is little on offer that actually ‘works’; witness the interferon quote. And that is really the point. If these drugs offered a cure, there would be no squabble. But they don’t – they offer a life extension of just a few weeks on average – longer to a few, and little to many.

Now I’m not belittling a life extension of 6 months for a cancer patient. I’m just asking for a sensible dose of realism, and a stop to the hype and ‘overclaim’ in this squabble.

NICE concerns

The problem arises because of a number of key factors.

  1. The NICE remit is across all drugs that might end up in the NHS. Only this week NICE has approved the use of a drug, Lucentis, for wet macular degeneration – it will save the sight of 23,000 people per year. Already two regional NHS trusts are saying ‘OK, you’ve approved it, but we don’t have the funds allowing doctors to prescribe it!’

  2. Although it doesn’t control the NHS budget, obviously the NHS feels the effects of whether NICE approves an expensive drug or not. So when last week it was announced that there was a surplus of £1.75 billion in the NHS coffers, some people jumped to say this proves NICE are being too conservative.

  3. NICE has set the on-cost of a new drug at between £20,000 and £30,000. In Europe some countries apparently have this figure set as high as £45,000. Anyway the NICE figure was set 9 years ago and hasn’t been changed with inflation. They have now decided to undertake research into this figure with results due in January 2009.

  4. NICE is slow - sometimes dreadfully slow – and it does change its mind. It did twice in a year on the eyesight drug.

  5. If all drugs currently available were provided completely free by the NHS, estimates in previous icon articles conclude that their provision would cost about 4-5 per cent of GDP.

  6. This squabble can only get worse. NICE may still turn down some designer cancer drugs because, for the money, they only offer a few months extra life on average. And even if they approve them, you may still find some local NHS trusts can’t afford them.

A never ending dilemma

Be warned. Over the coming years you will see such squabbles again and again, especially with cancer drugs.

  1. These new designer drugs are expensive, sometimes ridiculously so. They also work on certain genetic factors which may only lie behind some, but not all, cases of a type of cancer. We have been telling you for years that cancer is as individual as you are. In the USA the FDA has turned down certain new ‘designer’ cancer drugs because they have a benefit, say, on only 25 per cent of patients, and therefore the average across all patients in terms of survival gain looked small. In some cases the drug company response was to provide a genetic ‘test’ so that the drug was not given to 100 per cent of patients, but – like Herceptin – just the patients who might benefit. Unfortunately, with some subsequently approved drugs, some of these tests don’t get used so wastage of Government money then occurs.

  2. The NHS coffers are not limitless. With all the new ‘Biotech’ drugs coming on stream, one estimate concluded that to provide them all in 2020 would require about 15 per cent of GDP. No Government can afford that.

  3. More and more people are developing cancer, because we have no real cancer prevention plan with proper funding in the UK. 

  4. And finally, while the drugs may not cure they do offer ‘Life Extension’. And that will be the definition of ‘survival’ in the future for cancer drugs.

More people with cancer, living longer, on a succession of more expensive drugs

A couple of years ago in icon, Professor Karol Sikora told us that by 2020 we would have the drugs available to help you live with your cancer - the issue would be ‘can you afford them?’

Recently, the MD Anderson Cancer Centre in the USA started saying much the same thing when telling the Press that the future lay in turning cancer into a manageable, albeit chronic, disease like Diabetes, where patients would take one drug until the cancer moved on, then another until it moved on again then another and so on. Although these cancers may never be curable, they may well be controllable for long periods of time, using ‘successional treatments’.

Dr Michael Fisch of MD Anderson recently stated, ‘We are seeing people being periodically treated and living year after year with advanced disease, even with cancers that have spread to other organs like the lung. Ten years ago in 1997, we wouldn’t have guessed this would be possible’.  Fisch calls this treatment for advanced cancers, ‘The Hitchhiker Model’. Time is bought by going from point A to point B with the first line therapy, then to point C with the second line therapy, then to point D with the third line therapy and so on. ‘The approach can continue indefinitely as long as new, relevant treatments are forthcoming and the patient can withstand the rigors of the drugs’.


With reference to the current squabble, another MD Anderson expert, Dr Nizar Tannir, who specialises in kidney and bladder cancers, says that ‘before 2005 there was not much to offer patients with advanced renal cancer. But within two years we have had three drugs that have seen a 50 per cent increase in overall survival’.

His advice is important. He also recommends that any patient given a bleak prospect of survival, immediately seeks a second opinion from a major US cancer centre, in person if possible, or by phone or e mail if not. (Start saving your pennies now).

This strategy is one of ‘Self-empowerment’ – encouraging the patient to take responsibility for their own health. In the USA, seeking a second opinion is fully encouraged but clearly it comes at a cost. You do have to pay somehow for the drugs. Equally you are encouraged to seek and use complementary therapies, be they dietary or energy therapies. Every little helps!

This is a very different model from the desire to control every aspect of the patient’s treatment that many a UK Doctor currently has. (For your information, when Catherine developed her brain tumour back in 2001, I rang two top hospitals in the USA – in each case the Head of the brain tumour wing rang me back personally within 24 hours. Many UK patients will find this in stark contrast to the attention they receive in the UK in 2008.But then you pay for it!)

But, can we afford to pay?

Get used to the idea. More and more people with cancer treated ‘successionally’ with a new breed of bioengineered drugs and living longer. With 80 per cent of cancers in the over 60 age group, if the Doctors can buy you two years of extra life successionally with each of four drugs you will stand a real chance of reaching your mid- seventies and the average life expectancy anyway. At least, that’s the theory.

‘We now genuinely have the prospect of long term survival in the majority of cancer patients. We humans are cleverer than cancer. And we could reach this goal nearer than you think’.

Treatments will increasingly target genetic flaws, or imbalances and deficiencies caused by the cancer, to halt its progression or its effects. Increasingly the ‘tailored’ effect of drugs should bring less and less side effects (although we are certainly not there yet – The Lancet Oncology warned only recently against the negative side-effects of monoclonal antibodies). But there is a new hope – sadly, not always tempered in the UK by realism, especially in the Press Releases!

Unfortunately this ‘Successional’ route to buying you ten years is not much good if you are young but, of course, this is all about putting the money where the biggest benefits are. Sorry, kids!

Why is it all so expensive?

With more people living longer on more expensive drugs, the crucial issue is ‘Can we afford the bill – out of our own pockets, or through our taxes?’

Obviously, a crucial part of the answer to this question is cost. Why are these drugs so expensive? And here, frankly, a lot of rubbish is talked by some of our eminent drug-supporting professors. Their usual tack is to defend the drug companies (as was apparent in last week’s papers) by trotting out the standard mantra: ‘It costs £500,000 to £1 million to hold a clinical trial. Only one in a hundred drugs actually makes it to market, so the up front development costs are astronomical and these poor people have to recoup them during a small window, which is the length of time for which they have the patent. After that generic copies are allowed. It’s all so risky’.

Anybody who has ever run a company, worked in marketing, or reads the financial pages of the press will know that this logic is tosh. When you sell a product - be it a lipstick, a BMW, a beer or a drug - your selling price is determined by the cost of goods, including overheads and the sales and marketing expense, plus a profit margin to generate a price that you think the customer will pay. Often, for example with food products where ten or so companies have similar competitive products, those profit margins are squeezed. But not so in the Pharmaceutical industry.  I read today that one biotech company had grown its company’s stock market value from £100 million to £5 billion in just 6 years because of two cancer drugs. On the stock market a company’s value is a multiple (in this case 12) of the company’s profits. Be clear…. Profits.

Think about it a second. If we generously allow £1 million to develop a product through a clinical trial (as stated last week by one Professor) and say 99 failed doing it, that’s £100 million to launch a product, plus overheads. But one pill a day for 200 days a year, and just 20,000 patients taking it in the UK, 130,000 in the USA (never mind the rest of the world) means that adding £3.30 to the cost of one pill or £660 per year to the course of treatment RECOUPS THE WHOLE OUTLAY IN ONE YEAR!!!!! And a course of a new ‘designer drug’ costs about £25,000 per year. That’s a big premium and a lot of contribution to overheads! Maybe I have my sums wrong.

So, let’s work it out another way. If the margin was, say, 25 per cent of gross (33 per cent of net) to the manufacturer, and bearing in mind you don’t have a retailer (Boots, Sainsbury, Tesco) margin, the cost of product, sales and marketing, and development would be about 75 per cent, or £18,000. 150,000 people on a course of the drug thus generate 150,000 x £18,000 or £2.7 billion.

So do you still think it costs a lot of money to develop a drug?

The real cost of drugs

A final point is that (again from the financial page experts) many patents are running out for the big Pharmaceutical companies. Their answer is not to finance new products themselves but to buy the new breed of smaller biotech firms who have already done the research and development and paid the costs. And that can prove cheaper still.
Actually drugs are not that expensive to produce through the factory. But the money provided to costs of sales and marketing is huge. For example, we have covered before the amounts of money ‘dedicated’ to encourage doctors and other health workers to think kindly towards the product. And we have covered several of the court cases in the USA and UK concerning bribery too.

When it comes to setting a price the main influencing factors are the level of competition (often little in the drug market, at least for the first few years), the ‘worth’ of the product, the depth of the buyers’ pockets and his or her desire/gullibility. In a previous article we told you of several firms who were saying quite clearly that a particular drug was unique and had a real benefit and that was worth paying a premium for. As I say, that’s how they really set a price: ‘What do they think they can sell it for on the open market?’

Moreover, normal market forces do not apply to drugs.  If you think a Renault Clio is not worth the money, in the end no one buys it and the manufacturer has to bring the price down to ‘shift the tin’. If NICE say that a drug is not worth it, Professors, the pharma PR machines and the media rubbish and bully the authority who took the view into eventually accepting the drug anyway, at the original price.
For the record, last year Astra Zeneca generated $8.6 billion in annual profit.

‘Drug culture’ in Britain – an expensive habit

So there we have it. The scientists will make wonderful discoveries. The drugs will exist to target the type of breast cancer just 8 per cent of women have; the side effects will be significantly reduced; follow up treatments will be available when a cancer develops a resistance to the first drug; you will live 5 to 12 years with your cancer and may even die with your cancer not from it.

But start saving your pennies now because either the drug companies will have to cut their costs or the NHS and Governments around the world will go bust.

If ever there was a case for windfall profits – this is the area people should be protesting about!

What I personally don’t quite understand, is how a Government like ours can simply accept that more and more people are going to be living with heart problems, high blood pressure, high cholesterol, diabetes and cancer? How on earth are we going to pay the eventual, and increasing, drugs bill?

Yet when we took our Prevention package for schools to the Government Section 64 Grant Committee, we were turned down because ‘Schools already have the lessons we proposed’. Where?? What health education is there in the UK?

School playing fields and time spent exercising in schools are both declining. The food in our shops is less nutritious than ever. The Health Department answer? Scientists and Doctors propose a daily 5-in-1 pill when you reach 50 years of age to avoid heart problems. 25 years of taking a 5 drug pill – how much will that cost?? Would that be more, or less, than running a 25 year health education programme in schools?

We also see a complete blind spot when it comes to the widespread UK use of toxic chemicals from formaldehyde (banned in Sweden and Japan) to phthalates (banned in Canada) to pesticides (EU and IARC links to cancer) etc. We can’t upset the Chemical companies.

The fact is we don’t have a Health policy – we have a Government approved Drug Culture. And it’s an expensive habit at that.

Perhaps the sheer size of the impending drugs bill will galvanise our UK Health Authorities into some action. Somehow I doubt it. They will wake up when it’s all too late and the NHS implodes. How sad.


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