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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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July 25, 2004

Costs and Benefits, Risks and Rewards

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Posted by Derek

Continuing on the latest issue of the New England Journal of Medicine and its articles on cancer therapies, there's the Perspective article, from Deborah Schrag at Sloan-Kettering, which points out that:

"In the wake of the optimism generated by recent trial results, patients experience sticker shock when they encounter the prices of chemotherapy drugs. Physicians find themselves in the undesirable position of having to help patients make decisions about whether the potential clinical benefits warrant the financial strain that even the copayments for these medications may create."

I don't doubt it. She has a chart for a typical patient's eight-week therapy on various regimes. Drug costs for the classic fluorouracil-based therapies will run from $60 to $300 for that period. Throw in irinotecan, the standard since the mid-1990s, and you're looking at about $10,000 for the same eight weeks. An Avastin-based treatment will double that, and an Erbitux-based one will triple it. And those are just wholesale drug costs; they neglect support, labor, wastage, and so on. Avastin and Erbitux are harder to store and administer, so their costs will be still higher. And even if you take the statistics in the latest paper at face value, median survival is increased by less than two months with Erbitux. That brings us to a terrible question: how much are those two extra months worth, and who should pay for them? Everyone's trying to offload that decision onto someone else, and I don't blame them a bit.

We're back to where I was discussing this issue a few weeks ago. As I said then, I think that the solution is that many people won't (and shouldn't) take these therapies, because they're just not worth it. But that's a hard thing to convince someone of, and I'm glad that I don't have to try. My attempt to pass the buck is to point out that none of us in the industry is trying to develop a hugely expensive drug that only prolongs survival by a couple of months - that's just how the damn things come out after we've already spent the time and money. We're trying to hit home runs over here, but the pitching is too strong for us.

The article gets its shots in at the drug industry, though:

"Early scientific work that led to the discovery of bevacizumab (Avastin) and cetuximab (Erbitux) was financed with federal dollars. The pharmaceutical industry translated these fundamental insights into the development of commercial products. The rising stock prices of the publicly traded companies that manufacture these drugs reveal that, development costs notwithstanding, the risk-adjusted return on pharmaceutical products is very high indeed. The drug costs that support these stock prices threaten to overwhelm our ability to pay for health care."

Well. . .let's dispose of those in order, then. The first part is the old drug-companies-rip-off-NIH canard. Allow me to point out that no academic labs were attempting to turn antibodies against the growth factors receptors into new drugs, so why is industry to blame for trying? "Translating fundamental insights into the development of commercial products" is exactly what the drug industry does. It's very hard to do, it's very risky, and it costs a hell of a lot of money. You have a problem with that? If Dr. Schrag believes that she can do it more cheaply and efficiently, I invite her to raise the money and come on down and try it. Many people have done just that, and it's an education, all right.

And as for drug costs overwhelming "our ability to pay for health care", has Dr. Schrag considered that the total contibution of drug costs to health care is below 20%? Isn't there any overwhelming being down by the rest of the business, or are they just standing around in awe of our mighty powers?

And let's see. . .the rising price of the stocks, yes. Please note that I think that Imclone's stock is already too high. As high as Erbitux's cost is, I still don't think it can support Imclone's current price. I think that Bristol-Meyers Squibb overpaid for their share of the drug, and I'm not sure they're going to end up with much of a return. Note also this post about the amount of money that the biotechs have lost over the years - on average, biotech investors have lost money and they continue to lose it. For some years now, anyone investing in the stocks of companies I've worked for has been taking a bracing bath indeed. Believe me, although there are some good investment opportunities, the drug industry only looks like a money machine to the unwary.

Comments (1) + TrackBacks (0) | Category: Cancer | Drug Prices


1. fin2ut on July 29, 2004 4:59 PM writes...

As a physician, I've always been sympathetic to the Drug Industry, & will continue to be, so long as they continue with the quality of their Comfort Women. With that said, I was taught in, say, the 3rd grade that the purpose of the Federal Government is to provide support for long-term necessities like basic science research, which don't typically provide enough short-term motivation for the average individual (being the angels that we are). By her Vulcanic logic, perhaps we should shake down Disneyworld for the cost of I-95. The reason we tolerate the inequities of the free market is that ultimately this is the best system for turning the selfish motives of all of us as individuals to the Common Good; this is really the issue at play here. But don't be too hard on the good doctor- I saw her last week at the Society of Well-Meaning Professionals Opposed to Gravity, & she assures me that Good Intentions alone will soon solve this problem. So grab your rocket pack.

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