Gordon Campbell on Pharmac’s unequal battle over the funding of Keytruda

Sad to say, but the Key government has never showed much stomach for saying ‘No’ to corporate lobbyists from the pharmaceutical industry or the film industry. Even before taking office in 2008, Key and his colleagues had promised to over-ride Pharmac’s objections to the funding of a 52 week programme of the anti-cancer drug Herceptin. Health Minister Jonathan Coleman now concedes that this commitment to bypass Pharmac was a big mistake.

As Pharmac had suspected all along, a year-long dose of Herceptin has proved to be generally no more effective than the cheaper nine-week treatment regime. Similarly over The Hobbit, the Key government caved in (or colluded) in meeting the raft of concessions demanded by Hollywood, citing a union opposition that was already known to have been withdrawn before the concessions were signed off.

Currently, the government’s backbone is once again looking suspiciously pliable. Pharmac’s reluctance to fund the anti-cancer drug Keytruda has become a political football. The roles of the major parties have been somewhat reversed. It is Labour in opposition that is promising to fund the drug and a National government that is dragging its feet. And again as in 2007-08, the pressure to fund the drug in question is coming from a combination of (a) cancer sufferers doing all they can to get access to what could be a life-saving treatment, and (b) Big Pharma waging a skilful public relations effort to sell their wares at the highest possible price, to a government known to be a soft touch.

Some background. Keytruda is the commercial name used by the Merck Sharp and Dohme drug company for pembrolizumab – which belongs to a class of new biologic drugs called anti PD-1 inhibitors. Essentially, these drugs work by blocking PD-1, a protein that inhibits certain types of immune responses and thereby helps cancer cells to metastasize, undetected. Drugs that block PD-1 do seem like a genuine medical breakthrough. They enhance the ability of the immune system to fight cancer, and Keytruda has shown promising early signs of being able to shrink tumours over a sustained period.

Much of the publicity about Keytruda has been over its vast expense, running well into six figures for a year’s treatment, per patient. Looking at the literature, one can see why Pharmac might want to delay committing to Merck’s branded product at a time when (a) competing PD-1 inhibitors are coming on the market, such as Bristol Myers Squibb’s Opdivo and (b) parallel work is going into the use of PD-1 inhibitors in combination with other treatments. Both these developments will (presumably) have some effect on price, even within the next 12 months.

While my own search of the PD-1 inhibitor literature doesn’t claim to be exhaustive, it is striking – and relevant to Pharmac’s weighing of the current cost – that PD-1 inhibitors seem to work for what is still only a relative minority of melanoma sufferers. The figure regularly cited is 25-30% of those already shown to be no longer responsive to Yervoy (aka ipilimumab) the first drug option if and when chemotherapy is no longer effective. Here’s a very recent summary of the current state of play:

Opdivo from Bristol-Myers Squibb (BMS) followed Merck’s Keytruda onto the market, but the immuno-oncology drug quickly overtook its rival and has never looked back. It just today [February 26, 2016] won recommendations in Europe for two more indications. But while it leads the race, analysts say there are still opportunities for Keytruda and drug candidates from others to close the gap in a market that is projected to reach $40 billion in annual sales.

How come? For one thing, Merck’s Keytruda has got some of the relevant research data together faster:

[Merck’s] data on Keytruda as a first-line fighter of lung cancer looks to be 4 to 6 months further along than BMS. Bernstein analyst Tim Anderson has said that could start to level the playing field for Merck.

More to the point, the future of PD-I inhibitor drugs may not be simply as mono-therapies, but as ingredients in so-called combo or ‘cocktail’ treatments:

…Analysts point out that while the immuno-oncology drugs have been improving overall survival in some patients, they still only work in about 25% of patients. To expand their use, drug-makers are looking at using them in combo with other new or existing cancer drugs. While AstraZeneca CEO Pascal Soriot has already conceded his company’s candidate as a mono-therapy, he says it is making progress as a combo drug. Deutsche Bank is banking on AstraZeneca being the first to report out data for its drug candidate in combo with others, Reuters said, saying it may have it early next year, if not yet this year.

But others are looking at that approach as well. Merck last month added BioLineRx to a fast-growing list of companies with which it is working on potential Keytruda cocktails, a group that includes GlaxoSmithKline, Eli Lilly, Amgen, Incyte, and many others.

Given this hive of competitive activity… you can readily see why Pharmac is reluctant to put all of its funding eggs in the Keytruda basket right now. Everything from the research and marketing position to the ideal delivery mode of PD1- inhibitors to the data on outcomes is in flux. It certainly makes Labour’s rush to play the populist card and promise to fund Keytruda look more than ever like cheap politics, and bad health sector financial management to boot. Keep in mind that at the same time that Pharmac is having to make what are literally life and death funding decisions about the vastly expensive biologics drugs to do with melanoma treatment… there are also equally exciting, equally expensive biologics drugs (and stem cell treatments) for multiple sclerosis coming up on the horizon:

There are also competing biologics lung cancer treatments. Zykadia or Xaikori? Both treat the same condition. Both cost in six figures for annual treatments, per patient. And if Big Pharma’s excuse for the high price is the cost of development and marketing and the associated risk… then why is the newer me-too drug Zykadia, even more expensive than the older drug, Xaikori?

All of these drugs will also be competing for Pharmac funding. All have populations of patients in desperate need. MS sufferers versus people with lung cancer versus people with terminal skin cancer. Who should be deemed to be the most deserving? Well, forget the guff about money being limited and hard decisions needing to be made. That can’t be true – not when the government is planning to spend $11 billion on Defence.

Big Pharma can read those $11 billion numbers for weapons purchasing, too – and it wants some of that money.

Finally, as a fascinating side issue on Keytruda – and on how Big Pharma makes its profits – consider this aspect. Merck and Keytruda have just been cited in a recent British Medical Journal article on the price/profit inflation associated with drug packaging. Basically, Keytruda originally came in a small 50-mg vial that got replaced by a vial that is double the size. Here’s some of the reasoning behind Merck’s decision:

Pembrolizumab [Keytruda] provides another example of how vial sizes can influence revenues. When it was initially approved in the US in September 2014, the drug was sold in 50 mg vials (as a powder that needs to be reconstituted into a liquid). But in February 2015 the manufacturer introduced a larger 100 mg vial (as a liquid) and stopped distributing the 50 mg vials to the US market…

Here’s how this works: you make the vial bigger, and for health and safety reasons, the nurse has to throw away the leftover…

The increased revenue from the change is substantial. Consider a 70 kg patient who requires a dose of 140 mg (the drug is dosed at 2 mg/kg). When the drug was sold in 50 mg vials, reaching the desired dose would require three 50 mg vials and leave 10 mg unused. But with only 100 mg vials available, 60 mg is left over. According to the Medicare Not Otherwise Classified October 2015 file, which lists Medicare’s re-imbursement rates for these drugs, each milligram of pembrolizumab costs around $50. In this example the change in vial size alone increases the revenues for the company from leftover drug by sixfold, from $500 to $3000, for a single dose. We estimate that the additional revenue to the company from the packaging change over the next five years will be $1.2bn, which comes on top of the $1.2bn they would have gained from leftover drug with the 50 mg package.

Keep that in mind if and when you hear the government has agreed to give Pharmac more money to buy Keytruda. Will it be coming in the 50mg vial, or in the 100mg vial?

Footnote : Can a small market like New Zealand do much to rein in the galloping price of new medicines? Probably not. Drug companies have split identities. On one hand, they are nakedly, unashamedly for-profit entities that – like any other private business – claim total control and utter confidentiality when it comes to their pricing structures. Yet when it suits them, they also argue that what they do and the products that they provide are in the public interest – and if that were true, Big Pharma should arguably be subject to a greater degree of regulation and price review, like any other public utility. Fat chance of that. The only public interest they appear to demonstrate is an interest in testing the price limits of whatever the public – and its elected representatives – will bear.

Those boundaries are being pushed out. In the US, the purchase price of an extra year of life has been escalating at a rate far faster than the rate of inflation.

The costs of life-saving specialty cancer drugs have increased by an average of 10% per year since 1995, even when adjusted for inflation, according to one recent study. To put that in dollar terms, for every year a cancer drug added to a patient’s life in 1995, the cost was $US54,100. That cost reached $US207,000 in 2013.

Keytruda came on the market a year later, in 2014. Plainly, the cost of buying one more year of life from Big Pharma is still on the up escalator.

Mount Moriah

Roots rock – the countryish ‘rock’ music peddled by the likes of Lucinda Williams and any number of her Southern/ Texas imitators – is a very hard genre for anyone to bring something new to the party. Somehow, Mount Moriah do manage it. They hail from a college town in North Carolina, have a Southern Baptist church background and were founded by a couple of friends who met in a record shop.

So far , so predictable and yet… the band’s ace in the hole is lead singer Heather McEntire, who has a gorgeous young Dolly Parton voice, and song writing skills to match. Sure, this is a fairly exhausted, played out vein of music, but they do it proud. “Bright Lights” is from their second album Miracle Temple, and “Precita” is the first video track from their just-released third album, How To Dance.

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6 Comments on Gordon Campbell on Pharmac’s unequal battle over the funding of Keytruda

  1. Further footnote : while I linked to the articles concerned, I think I should have more directly attributed (a) the Zykadia vs Xaikori standoff and (b) the Big Pharma as profit seeking vs its public benefit role to the guy who shaped my thinking on both those issues – namely, Dr Peter B. Bach of the Sloan Kettering Institute of Health Policy in New York. His work on drug pricing is terrific.

  2. All you say is true, but ultimately Pharmac’s funding is political. One could probably fairly make the point that Pharmac’s overall funding is not that generous and many drugs are put to the side in New Zealand, which are funded overseas. One could argue over the merits or cost effectiveness of some of these drugs, but when patients dying with melanoma, who have NO other effective treatment options in New Zealand, see that overseas if given Keytruda they’d have an approximately 30-50% chance of seeing their secondaries substantially recede and perhaps several years of extra life (this of course is mere surmise for the moment) they can’t be blamed for making their voices heard. It is a pity though that the political football continues to be kicked around.

    The problem isn’t the drug, is their expense. There isn’t much doubt that such drugs are priced not at any sort of rational profit, taking into account the development and manufacturing costs, but are priced at the maximum the companies think our (relatively) rich countries will bear. A successful drug will bring profits of billions of dollars. There needs to be a lot more transparency about these matters, but the secrecy of the drug companies is legendary, as is the lack of political will to deal with them.

    My suggestion is that a cross party subcommittee involving the Health Minister, or deputy, plus opposition spokespeople and Pharmac representatives should be able to convene rapidly for the evidence and costing to be placed before them in these sort of cases (and Keytruda for melanoma is just the start of a likely flood of such drugs, which to subsidise all would bankrupt the state). By involving all parties, some of the political heat can be taken out of the debate. It is possible, isn’t it, that Pharmac’s remit and financing is just a bit too rigid to deal with some of these issues; that a small amount of flexibility is not wrong in all circumstances.

  3. The problem isn’t just the funding. It is the efficacy and toxicity of all of these drugs.

    Keytruda, Opdivo or Ippilimumab doesn’t work for everyone or for that long either in most cases and it is not a cure. Chemo does not work for Melanoma (thankfully) so it is not even a first option if the oncologist is honest.

    It is a huge positive that chemo does not work on melanoma because once chemo has been administered the cancer patients immune system is usually stuffed and so not much else will work anyway.

    Less than 3% of patients survive longer than five years after chemotherapy. Once the cancer stem cells regrow it comes back and often more aggressively.

    What does work for melanoma much more effectively and if done properly can cure the disease is natural treatment. Especially the Gerson or Budwig protocol therapies.

    They cost bugger all. Its time the taxpayer was told the truth and given the full range of cancer treatment options open to them.

  4. This is by far the best (and only) careful outline of the issues around Keytruca. Thanks for all your hard work.
    What I find interesting is that the actual stats that lead to the 25%-30% cure are absent or not available.
    How many people in the trial?
    Are all trials disclosed?
    What stage of melanoma were the people in the trial and did this relate to the success of the drug?
    What are the side effects?
    Did any participants die from the side effects rather than the melanoma?
    What are the long term benefits/harm of the drug?
    If the drug is as effective as claimed why doesn’t the drug company supply it at a subsidised price to help promote the drug?

    Thanks again for your rigorous research. I was appalled by the coverage on all media including RNZ which saddens me.

  5. Big pharma’s lobbyists are well known for their history of data fudging, re-marketing and re-purposing overpriced drugs and paying out bribes.

    “Organised by Pharma lobbying group Medicines NZ, the dinner also included representatives from Keytruda makers Merck Sharp and Dohme, Pfizer, Roche, Healthcare Logistics and Sanofi.”

    Its a racket.

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