Wednesday, June 29, 2011

Avastin: The Economics and Politics of a Prescription Drug

A Case Study in What is Wrong with Health Care in the U. S.

[Disclosure Alert:  The Dismal Political Economist has no connection with cancer, has no clinical knowledge of cancer and is not qualified to offer an opinion on the efficacy of anti-cancer drugs.]

The cancer fighting drug Avastin is on trial this week.  At issue is whether or not the FDA will continue to certify the drug as effective in combating breast cancer.  The history of this issue is as follows.

The drug Avastin was developed by Genentech and has been approved by the FDA to treat various cancers.  One of those cancers is breast cancer.  The FDA gave conditional approval to the drug, pending studies on its effectiveness.  In July 2010 an independent advisory committee voted 12 to 1 against approval of the drug as a treatment for breast cancer.  After agreeing to revoke approval in December, the FDA scheduled

a trial-like hearing Tuesday and Wednesday at the FDA at which an agency official with no ties to the controversy will preside over testimony about the drug and its test results. FDA scientists from the Center for Drug Evaluation and Research will argue their case, while Genentech and a group of researchers, some of whom have received company support, will defend its use.

with a final decision up to FDA Commissioner Margaret Hamburg. 

Some other relevant facts

1.      The sales of the drug for fighting breast cancer are about $1 billion per year.  An annual treatment costs the patient, Medicare or an Insurer about $88,000 per year.

2.      Genentech won accelerated conditional approval in 2008 based on a study that showed the drug could keep women with breast cancer tumor-free for an additional five months. But two follow-up studies funded by Genentech showed minimal if any delay in tumor growth and "nowhere near five months," said FDA cancer-drug chief Richard Pazdur in an interview in January.

3.      Genentech says that it brings important quality-of-life benefits even though the drug hasn't been shown to extend life expectancy.

So what exactly is the problem.

1.      Research is paid for by the Company.  Researchers paid by the Company will be testifying at the hearing.  There is no way around this clear conflict of interest.

2.      Should health care insurers and/or the government pay $88,000 per year for a drug that does not extend the patient’s life?

3.      Why does the drug cost $88,000 per year?  Is all of that to repay development costs or is it for production costs? 

4.      Genentech has made the issue a political one,  with several leading House Republicans criticizing the FDA. They say the agency is trying to withhold life-saving drugs from women, and they link the action to the Obama administration's health-care overhaul, which they say will encourage rationing of care by federal bureaucrats. (Yes, that is those same House Republicans who unanimously approved a plan to end Medicare and whose deficit cutting program includes cuts to health care.  And calling independent scientists trying to make the correct decisions that affect life and death bureaucrats is just plain wrong, but then to hijack an issue like this for purely political purposes is also just plain wrong). 

No rational person would support a health care system characterized by the process described above.  Maybe that is why the U. S. health care system is irrationally expensive and less effective than other countries.  And if politicians get their way, some  health care decisions will be decided by members of Congress instead of independent scientists and health care professionals.  Given the damage that will do, this is just plain sad.

Follow Up:  The Incidental Economist has an excellent discussion of the science and regulatory aspects of this issue.

More Follow Up:

A special advisory committee of the Food and Drug Administration voted 6-0 Wednesday that two key studies on Avastin show it isn't effective as a treatment for breast cancer, for which it received accelerated approval.

The panel also voted 6-0 that available evidence generally doesn't show the drug provides clinical benefits. The votes are setback for Avastin maker Genentech, a U.S. unit of Roche Holding AG, which has argued that the drug can significantly delay tumor growth in breast-cancer patients about five months and improves the quality of life.

The panel is also voting on whether to allow the breast cancer approval to remain on the drug's label while the company conducts another study on the drug's benefits, which could take more than four years.

Exactly why they need to vote on whether or not to allow the breast cancer approval to remain on the drug's label is a mystery The Dismal Poltical Economist cannot solve.  He just does not know that much about science, and never will.


  1. There is little public data on the cost of developing a drug. Companies charge whatever people/insurers will pay. What is known is that drug companies are highly profitable and spend more on marketing than on research.

    In the 70's drugs for cancer were a few hundred dollar a month. In the 80's the price increased but still was reasonable. In the 90's the first drug costing more than $1000/month was marketed (Taxol) Since then new drug prices have increased over 10 fold so that new cancer drugs, targeted agents as well as non targeted, are priced at $10,000/month and more.

    Most have limited efficacy adding a few months if anything to the survival of patients--in many cases (as in bevacizumab/Avastin in Breast Cancer) a survival benefit is hard to demonstrate.

    What other consumer purchase costs as much and has just a few months utility. NONE.

  2. Good Post Cycledoc. As you say there is little data on costs and pricing, but given the importance of those items and the fact that we are paying to the drugs as both patients and taxpayers shouldn't we kinda know.