Do cancer drugs provide good value or are they overpriced? Last week’s post discussed the value framework introduced by ASCO for evaluating the value of cancer drugs. This week we will look at another approach to estimating the value of cancer drugs – the DrugAbacus interactive tool developed by Sloan Memorial Kettering Cancer Center. According to a recent Wall Street Journal article, Dr. Peter Bach developed DrugAbacus “to get drug makers, insurers, doctors and patients talking about the factors that should determine price” and to develop “a value-driven system for pricing cancer drugs”. A screenshot of the tool is shown below.
How does it work?
DrugAbacus estimates what a cancer drug should cost based on six criteria, then compares the DrugAbacus price with the drug’s actual price. The actual price is estimated as the amount that Medicare reimburses for the drug. As shown in the screenshot, Blincyto has a DrugAbacus price of $12,612 and an actual price of $64,260, indicating the drug does not provide good value (or should be priced a lot lower). Gleevec has a DrugAbacus price of $6,240 and an actual price of $4,546, indicating that it provides good value.
The six criteria used to calculate the DrugAbacus price are efficacy, toxicity, novelty, the cost of developing the drug, rarity of the cancer treated, and population health burden of that cancer. Efficacy is measured as the improvement in overall survival attributable to the drug. Toxicity is based on the frequency and severity of side effects. A drug gets a higher novelty score if it has a novel mechanism of action or method of delivery. Development costs are measured by the number of subjects enrolled in the clinical trials submitted to FDA for drug approval. Population health burden is the estimated years of life lost due to the disease in the US population. Estimates for all criteria are “based on data the company sent in to the FDA to get the first approval.”
User defined criteria
An interesting and novel feature of DrugAbacus is that it allows users to vary the weights of each of the six components in determining the DrugAbacus price. (The DrugAbacus web page asks “How does DrugAbacus find the value of a drug?” then responds “It doesn’t. You do.”) For example, the weight for efficacy can be varied by specifying the value of a life-year saved from $12,000 to $300,000. Similarly, the weight of toxicity can be changed by varying the toxicity discount from 0 to 30%. Using the default values of $120,000 per life-year saved and a 15% toxicity discount, Blincyto has a DrugAbacus price of $12,612. But if the user believes a life-year is worth only $60,000, then the DrugAbacus price falls to $6,306.
Thoughts about DrugAbacus
Most of the comments I made last week in a post about ASCO’s value framework also apply to DrugAbacus. DrugAbacus does have one advantage. The ASCO framework presents the Net Health Benefit and the cost of the drug and leaves the user to decide if the drug provides good value. DrugAbacus presents a price based on user-weighted criteria and compares that to the actual price. This provides a more clear-cut measure of value.
There are a few problems with DrugAbacus. It’s not clear to me why development costs are part of the DrugAbacus calculation. If two drugs had equal efficacy and toxicity, would patients and third-party payers pay more for one of them because it had higher development costs? I’m also not sure how much value the novelty criteria adds. It seems to me that most of the value of a new mechanism of action or delivery would be measured as improvements in efficacy or toxicity. (But to be fair, users who have similar views can set the weights on these criteria so that they have no impact on the DrugAbacus price.)
DrugAbacus, like the ASCO framework, ignores all costs except the cost of the drug. Vital Options International points out that DrugAbacus prices do not reflect “value in terms of offsetting other medical costs such as hospital costs while allowing people to continue to be productive, working and paying bills.” This is a major limitation for these tools.
Despite these limitations, DrugAbacus provides physicians, patients, pharmacists and policy makers with another tool to encourage and guide conversations about the price and value of cancer drugs.