Ben Locwin, Ph.D., Healthcare Science Advisors09.08.14
Healthcare resources are ultimately limited. Not everyone can be screened or treated for everything, and, in fact, many screening procedures (most recently prostate-specific antigen testing and mammography) have come under fire for failing to provide adequate value.
People’s views on the neutrality of risk are different. Take one of the modifiers for Quality-Adjusted Life Years: Time Trade-Off (TTO).
Invariably, patients report different responses when asked the question “Would you choose to remain in your current [ill] health for a period of time or have your health fully restored, but have your life expectancy shortened?”
Similarly, all healthcare interventions have risk, and these include drug treatment side effects and adverse events, nosocomial infections as well as post-operative complications. Everyone who elects to undergo surgery signs a waiver indicating that they understand that surgery carries risks, up to and including death.
Deconstructing Hepatitis C
For an example that is often in the news today, Hepatitis C is a viral infection that principally causes damage to the liver. It is caused by the hepatitis C virus, a single-stranded enveloped RNA virus. HCV was originally only known as non-A/non-B hepatitis.
According to the U.S. Centers for Disease Control (CDC), it can lead to chronic liver disease in about 60% of patients and cirrhosis in about 20%, and in some cases even to liver cancer and liver failure. Liver transplantation can address cirrhosis in some cases, but of course comes with high risk, and endogenous re-infection with HCV occurs frequently.
There is an unmet need for vaccination against HCV. Currently, there are vaccines for hepatitis A and hepatitis B, and vaccines for HCV are currently under study.
The National AIDS Treatment Advocacy Project (NATAP) reports that patients with hepatitis C virus die 15 years earlier and have a 12-times greater risk of death when compared with those without the virus. The CDC conducted a multi-cohort analysis using data from 2010 and estimated that 80,000 of the 2.5 million people (about 3%) who died in the U.S. in 2010 had HCV, and about 53,000 died at least in part, due to consequences from HCV.
Harm-reduction strategies are in practice, and largely target intravenous drug use, safety of the donated blood supply, and universal precautions in healthcare practice.
A common measure of disease burden, the disability-adjusted life year (DALY) is moderately affected by HCV because acute infection can sometimes spontaneously resolve, and chronic infection can largely be asymptomatic for years.
Clinical Attrition
When I’m asked “Why are drug treatments so expensive?” I give a brief elevator speech of the reasons, and principally the reasons are well-known in the industry (i.e., long approval timelines, [very] high phase-by-phase attrition rates, infrastructure, intellectual property, analytical testing, etc.).
These factors stem from a number of nudges along the timeline of drug development. For example, public perception of new or emergent conditions (and whether they are adequately represented by the current treatments), perception of “evergreening” (extending the life of drug patents by making minor modifications to formulae, dosing, or dosage form).
The ability to enroll the vast number of patients needed for appropriate clinical trials can be challenging as well. Additionally, the placebo effect has had an increased magnitude in clinical trial results in recent years1, which has the effect of making “separating from placebo” (demonstrating statistical superiority) in study outcomes more difficult.
The Placebo Response Drug Trials Survey was initiated exactly because placebo effects have gotten stronger in recent years and includes Merck, Lilly, Pfizer, AstraZeneca, GlaxoSmithKline, Sanofi-Aventis, Johnson & Johnson, among others. (For more, see http://harvardmagazine.com/2013/01/the-placebo-phenomenon)
Figure 1 shows a success-rate scatter created based on attrition rates across phases using Nature Biotechnology data, with the overall attrition rate (rolled throughput yield—Letter of Agreement, 89.6%) in the rightmost section.
Additionally, of all registered anti-cancer drugs evaluated by UK National Centre for Health & Clinical Excellence (NICE), 43% were approved in 2012 versus 65% in 2000-2012. Further, 0% were approved in 2013, and between January and December there were six treatments.
Each failure in clinical trial phase costs that particular investigational product, and the time and resources to development to that point. So there is a rolled throughput yield (RTY) of failure probability to consider with each and every treatment to go into development. The ultimate toll in this situation is that the average spend per new pharmaceutical drug approved for market is $5 billion.
Time Isn’t Free
That brings us to the next question: How to quantify the value of time? I described above the concept of Quality-Adjusted Life Years, and wildly divergent values can be calculated given different assumptions and factors used in the model. But self-preservation is a genetically-coded desire. The degree to which one favors quality over duration is looking at two sides of the same coin. Everyone wants to hold onto that coin, regardless of which side is facing up. With this in mind, there are (as mentioned) several HCV vaccines currently in development phases, but the current treatment for manifest hepatitis C, Sovaldi (sofosbuvir), has been generating a huge amount of media attention, most of it focusing on how much it costs (~$1,000 per pill). The perception has been so far emotionalized that The New York Times just ran an article that captures some of the public outcry, with the following quote: “Clearly, $1,000 a pill strikes people as completely unreasonable,” said John Rother, president of the National Coalition on Health Care.
Legacy Treatments Were Expensive
Legacy treatments for hepatitis C were expensive (on the order of tens-of-thousands of dollars), and like every drug therapy, had their own panel of [sometimes severe] side effects. The typical treatment course of Sovaldi is estimated at about $84,000, and it seems that the $1,000-a-pill threshold is more of a consumer psychology artifact than a real cause for industry overhaul or introspection.
There are a vast number of medical treatments, and many far less efficacious than Sovaldi for its primary indication, which cost more than $1,000 per use/service/iteration. It seems that the dosage form associated in the mind is what drives the perception. The SVR (sustained virologic response, in NEUTRINO study) due to treatment including Sovaldi was 90% (295/327). The most prevalent genotype of HCV is 1, which has several subtypes, and efficacy ranged from 82% to 92% across the subtypes in the clinical trial results.
As I mentioned above, hepatitis C represents affects an estimated 3.2 million people in the U.S. alone, and 2-3% (130-170 million) of the world’s population.
If we know that lifespans are generally about 15 years shorter with hepatitis C, are 15 additional life-years worth $84,000 in treatment? This equates to about $5,600 per year. Even using extremes for Quality-Adjusted Life Years, this sort of treatment represents and enormous impact on significant life-impacting disease and co-morbid disorders. The cost of a liver transplant in the absence of a more preventive therapy is estimated at about $577,000.
We need some critical thinking in this debate. Instead of focusing on procedural questions, such as whether health insurance should or shouldn’t cover the costs of drugs like Sovaldi, the bigger question is what the standards of care should be. We need to get beyond simplistic thinking, as in “a pill is small and $1,000 is a lot of money.”
Ben Locwin, Ph.D.
Healthcare Science Advisors
Ben Locwin, PhD, MBA is President of Healthcare Science Advisors and is an author of a wide variety of scientific articles for books and magazines. He is also a frequent speaker and consultant for a variety of industries including behavioral and psychological, food and nutrition, pharmaceutical, and academic. Follow him at @BenLocwin.
Additional Reading
People’s views on the neutrality of risk are different. Take one of the modifiers for Quality-Adjusted Life Years: Time Trade-Off (TTO).
Invariably, patients report different responses when asked the question “Would you choose to remain in your current [ill] health for a period of time or have your health fully restored, but have your life expectancy shortened?”
Similarly, all healthcare interventions have risk, and these include drug treatment side effects and adverse events, nosocomial infections as well as post-operative complications. Everyone who elects to undergo surgery signs a waiver indicating that they understand that surgery carries risks, up to and including death.
Deconstructing Hepatitis C
For an example that is often in the news today, Hepatitis C is a viral infection that principally causes damage to the liver. It is caused by the hepatitis C virus, a single-stranded enveloped RNA virus. HCV was originally only known as non-A/non-B hepatitis.
According to the U.S. Centers for Disease Control (CDC), it can lead to chronic liver disease in about 60% of patients and cirrhosis in about 20%, and in some cases even to liver cancer and liver failure. Liver transplantation can address cirrhosis in some cases, but of course comes with high risk, and endogenous re-infection with HCV occurs frequently.
There is an unmet need for vaccination against HCV. Currently, there are vaccines for hepatitis A and hepatitis B, and vaccines for HCV are currently under study.
The National AIDS Treatment Advocacy Project (NATAP) reports that patients with hepatitis C virus die 15 years earlier and have a 12-times greater risk of death when compared with those without the virus. The CDC conducted a multi-cohort analysis using data from 2010 and estimated that 80,000 of the 2.5 million people (about 3%) who died in the U.S. in 2010 had HCV, and about 53,000 died at least in part, due to consequences from HCV.
Harm-reduction strategies are in practice, and largely target intravenous drug use, safety of the donated blood supply, and universal precautions in healthcare practice.
A common measure of disease burden, the disability-adjusted life year (DALY) is moderately affected by HCV because acute infection can sometimes spontaneously resolve, and chronic infection can largely be asymptomatic for years.
Clinical Attrition
When I’m asked “Why are drug treatments so expensive?” I give a brief elevator speech of the reasons, and principally the reasons are well-known in the industry (i.e., long approval timelines, [very] high phase-by-phase attrition rates, infrastructure, intellectual property, analytical testing, etc.).
These factors stem from a number of nudges along the timeline of drug development. For example, public perception of new or emergent conditions (and whether they are adequately represented by the current treatments), perception of “evergreening” (extending the life of drug patents by making minor modifications to formulae, dosing, or dosage form).
The ability to enroll the vast number of patients needed for appropriate clinical trials can be challenging as well. Additionally, the placebo effect has had an increased magnitude in clinical trial results in recent years1, which has the effect of making “separating from placebo” (demonstrating statistical superiority) in study outcomes more difficult.
The Placebo Response Drug Trials Survey was initiated exactly because placebo effects have gotten stronger in recent years and includes Merck, Lilly, Pfizer, AstraZeneca, GlaxoSmithKline, Sanofi-Aventis, Johnson & Johnson, among others. (For more, see http://harvardmagazine.com/2013/01/the-placebo-phenomenon)
Figure 1 shows a success-rate scatter created based on attrition rates across phases using Nature Biotechnology data, with the overall attrition rate (rolled throughput yield—Letter of Agreement, 89.6%) in the rightmost section.
Additionally, of all registered anti-cancer drugs evaluated by UK National Centre for Health & Clinical Excellence (NICE), 43% were approved in 2012 versus 65% in 2000-2012. Further, 0% were approved in 2013, and between January and December there were six treatments.
Each failure in clinical trial phase costs that particular investigational product, and the time and resources to development to that point. So there is a rolled throughput yield (RTY) of failure probability to consider with each and every treatment to go into development. The ultimate toll in this situation is that the average spend per new pharmaceutical drug approved for market is $5 billion.
Time Isn’t Free
That brings us to the next question: How to quantify the value of time? I described above the concept of Quality-Adjusted Life Years, and wildly divergent values can be calculated given different assumptions and factors used in the model. But self-preservation is a genetically-coded desire. The degree to which one favors quality over duration is looking at two sides of the same coin. Everyone wants to hold onto that coin, regardless of which side is facing up. With this in mind, there are (as mentioned) several HCV vaccines currently in development phases, but the current treatment for manifest hepatitis C, Sovaldi (sofosbuvir), has been generating a huge amount of media attention, most of it focusing on how much it costs (~$1,000 per pill). The perception has been so far emotionalized that The New York Times just ran an article that captures some of the public outcry, with the following quote: “Clearly, $1,000 a pill strikes people as completely unreasonable,” said John Rother, president of the National Coalition on Health Care.
Legacy Treatments Were Expensive
Legacy treatments for hepatitis C were expensive (on the order of tens-of-thousands of dollars), and like every drug therapy, had their own panel of [sometimes severe] side effects. The typical treatment course of Sovaldi is estimated at about $84,000, and it seems that the $1,000-a-pill threshold is more of a consumer psychology artifact than a real cause for industry overhaul or introspection.
There are a vast number of medical treatments, and many far less efficacious than Sovaldi for its primary indication, which cost more than $1,000 per use/service/iteration. It seems that the dosage form associated in the mind is what drives the perception. The SVR (sustained virologic response, in NEUTRINO study) due to treatment including Sovaldi was 90% (295/327). The most prevalent genotype of HCV is 1, which has several subtypes, and efficacy ranged from 82% to 92% across the subtypes in the clinical trial results.
As I mentioned above, hepatitis C represents affects an estimated 3.2 million people in the U.S. alone, and 2-3% (130-170 million) of the world’s population.
If we know that lifespans are generally about 15 years shorter with hepatitis C, are 15 additional life-years worth $84,000 in treatment? This equates to about $5,600 per year. Even using extremes for Quality-Adjusted Life Years, this sort of treatment represents and enormous impact on significant life-impacting disease and co-morbid disorders. The cost of a liver transplant in the absence of a more preventive therapy is estimated at about $577,000.
We need some critical thinking in this debate. Instead of focusing on procedural questions, such as whether health insurance should or shouldn’t cover the costs of drugs like Sovaldi, the bigger question is what the standards of care should be. We need to get beyond simplistic thinking, as in “a pill is small and $1,000 is a lot of money.”
Ben Locwin, Ph.D.
Healthcare Science Advisors
Ben Locwin, PhD, MBA is President of Healthcare Science Advisors and is an author of a wide variety of scientific articles for books and magazines. He is also a frequent speaker and consultant for a variety of industries including behavioral and psychological, food and nutrition, pharmaceutical, and academic. Follow him at @BenLocwin.
Additional Reading
- FAQ on Hepatitis C, U.S. Centers for Disease Control, http:///www.cdc.gov/hepatitis/c/cfaq.htm
- Hep-C Takes 15 Yeaers Off Life Span, National AIDS Treatment Advocacy Report, http://www.hepmag.com/articles/death_risk_2501_24659.shtml
- CDC Statistics on deaths from patients with hepatitis C http://www.cdc.gov/nchs/fastats/deaths.htm, https://www.nice.org.uk/News/
- Herper, M., How the Staggering Cost of New Drugs is Shaping the Future of Medicine, http://www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-drugs-is-shaping-the-future-of-medicine/
- Sanger-Katz, M., $1000 Hepatitis Pill Shows Why Fixing Health Costs Is So Hard, http://www.nytimes.com/2014/08/03/upshot/is-a-1000-pill-really-too-much.html?_r=1
