Dramatically influence drug prices by positive action

Doctors at Memorial Sloan-Kettering Cancer Center recently declared they would not use Zaltrap (Sanofi), for advanced colorectal cancer. In a New York Times editorial, they suggested the extraordinary cost for incremental benefit could not justify its use. Sanofi appeared to cave to the pressure and announced a 50% discount – which only made things worse.

This August, Zaltrap received FDA approval for the treatment of advanced colorectal cancer. In the definitive trial, the median patient received seven infusions every 2 weeks and lived about 1.5 months longer than with placebo. For this incremental benefit, Sanofi chose to charge more than $5000 for each dose. By extrapolation, the median patient uses about $40,000 of product roughly equating to $320,000 per life year saved.

In October, Doctors at Memorial Sloan-Kettering Cancer Center publicly declared they would not use Zaltrap. They wrote “Zaltrap has proved to be no better than [Avastin]… while its price — at $11,063 on average for a month of treatment — is more than twice as high.”

In November, Sanofi announced a discount of about 50%. But a discount for whom?

Patient copay and insurance reimbursement are calculated from the list price which Sanofi is not changing. This means that patients still have to cover their $2200 a month copay and that Medicare still pays the full amount. The “discount” goes to the owner of the infusion center; primarily doctors or hospitals. Using the median patient example, the patient and the insurer receives no benefit from the 50% price drop, while the infusion center gets a “bonus” of $2500 per dose or $20,000 per median patient.

It feels as if Sanofi admitted their price point was too high. But rather than lower the price they chose to share the profits with the provider in return for market share.

Sloan-Kettering wasn’t impressed and to my knowledge hasn’t changed their position. I’m not aware of any other groups adopting a similar stance.

In truth, the “bonus” payment will decrease over time. Medicare calculates a monthly Actual Sales Price and adds 6% to reach their reimbursement point. A local pharmacoeconomics expert estimated it will take roughly six months for the ASP to approximate the actual cost. But in the short-term it’s a bonanza for the prescribing provider.

The Sloan-Kettering physicians proved that drug prices can be dramatically influenced by positive action. But this story also begs a few questions. Beyond being a conflict of interest, does this reach the level of kickback or bribe? How many other drugs and devices are subject to similar conflicts? Who is responsible for tackling this issue? Should pharmacy and therapeutics committees consider the financial conflict of interest prior to making Zaltrap formulary? Who will take the next step to support the Sloan-Kettering physicians?

I applaud the physicians at Sloan-Kettering and enthusiastically support their assertion that “The future of our health care system, and of cancer care, depends on our using our limited resources wisely.”

What a wonderful example of rational clinical decision making.

Jay Ham is a hospitalist.

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