Economy

Overview – the Canadian system

As in the US and EU drug costs are rising and in Canada are the second largest health care expense (public and private) after hospitals. Total health expenditure in Canada was $CAD 200.1 billion in 2012. Per capita health expenditure was $CAD 5803 in 2011, and is forecast to reach $CAD 5988 for 2013. The Canadian Cancer Society estimated that in 2013, 187,600 Canadians would be diagnosed with cancer and 75,500 would die of cancer. Approximately 2 in 5 Canadians will develop cancer and 1 in 4 will die of their disease. Fifty-two percent of new cases will be lung, breast, colorectal and prostate cancer.

A recent analysis of all healthcare costs for the province of Ontario estimated a mean of $CAD 27,560 per patient in the year after diagnosis. This included direct health care costs such as inpatient and outpatient care, intravenous chemotherapy, outpatient drugs, radiotherapy, same-day surgery and diagnostic tests. They did not estimate indirect costs, lost productivity or other expenditures. Costs varied considerably according to tumor site and 1-year survival. There was also variation according to geographical location with more remote areas of the province incurring higher costs, which the study authors suggest may be due to a later stage at diagnosis. There is little reliable national data on direct or total health care expenditures for cancer. However, based on the Ontario data and assuming similar disease burden and costs in all Provinces, the same report estimated healthcare costs from the first year of diagnosis to be as high as $CAD 484 million for colorectal cancer, $CAD 453 million for lung cancer, $CAD $267 million for breast cancer and $CAD 238 million for prostate cancer. Using 2009 GDP of $CAD 1.5 trillion, the first-year costs for colorectal, breast, lung and prostate cancer combined would represent approximately 0.09% of Canada’s GDP.

While cancer survival in Canada compares favorably with the US and the EU new drug approvals by Health Canada remain slow, and the absence of a common pharmaceutical policy creates some inequities in access and pricing across the ten provinces. Canada’s publicly funded health care system is based on the principle of universal coverage for “medically necessary health care services provided on basis of need, rather than the ability to pay”. While public coverage for physician and hospital services is 100%, there is no legislated national coverage for drugs or home and community care services, with the exception of drugs administered in hospital. Provinces hold jurisdiction for decision-making regarding public funding of and pricing for new medicines including cancer drugs.

The national health system, known as “medicare”, can be best described as an “interlocking set of ten provincial and three territorial health insurance plans”. However, unlike many other unitary states, Canada as a federation does not have a national health insurance plan but has 6 federal, 10 provincial and 3 territorial tax-payer funded plans in addition to thousands of private insurance plans. Health Canada, the government Ministry charged with setting and administering the principles of the Canada Health Act, assists in the financing of provincial/territorial health care services through fiscal transfers, in the form of cash or tax points, conditional on meeting the principles of the Act. Tax points transfers occur when the federal government reduces some of its taxes enabling provinces to raise theirs by the same amount. The result is an increase in provincial revenues, with no increase in the total tax burden borne by Canadians. In effect the federal government steers policy through the indirect means of its spending power.

While Health Canada delivers health care services to specific groups including the aboriginal groups, First Nations and Inuit, for the vast majority of Canadians, provinces are responsible for the organization, financing and delivery of health services including approvals and pricing for new drugs and technologies. Any drug approved by Health Canada can theoretically be paid for out of pocket, however many intravenous and oral cancer drugs are publicly funded, albeit with considerable variation across jurisdictions. Those not publicly funded may be covered through private insurance/third party coverage (about 60% of Canadians), or through special provincial coverage for the elderly or those on social assistance. Individuals may purchase some intravenous cancer drugs not publicly funded. In some provinces including Ontario, a few private chemotherapy infusion clinics were established in the mid-2000s. Debate is on-going regarding the utilization of public health infrastructure (i.e. pharmacy, nursing, and space resources) for patients who choose to pay for unfunded drugs; both Ontario and the UK have adopted a more permissive approach to this matter.

Canada – challenges and solutions

In 2005 Ontario published the first 3-year provincial cancer plan that included several hundred million dollars in capital and health services investment. The province also began to (1) report systematically on system performance through the Cancer System Quality Index (CSQI); (2) include indicators and targets across the cancer control continuum; (3) support a strategy for improved national surveillance, performance and risk assessment; and (4) identify areas of strategic priority for investment. The Ontario-based Committee to Evaluate Drugs (CED) is the Ministry’s independent expert advisory committee on drug-related issues. The CED evaluates the clinical value of drug products, interchangeability of generic drug products and cost-effectiveness of drugs through evidence-based reviews. These reviews result in recommendations being made to the Executive Officer regarding the coverage of these products through the Ontario Public Drug Programs and ultimately the Executive Officer at the provincial Ministry of Health, makes final decisions whether or not to list a new drug in the public system and at what price.

Meanwhile, at the national level, in 2006 the Canadian Strategy for Cancer Control published the first national cancer plan. To implement the new strategy the Canadian Partnership Against Cancer (CPAC), an independent non-profit organization with federal government funding was launched, with $CAD 250 million over 5 years; this has since been renewed. In March 2007 the inter provincial Joint Oncology Drug Review (JODR) was developed and in 2010 became the Pan-Canadian Oncology Drug Review (pCODR), with a broader nationwide representation. pCODR provides clinical and pharmacoeconomic assessment of new drugs, at the request of provincial cancer agencies, pharmaceutical companies or other relevant stakeholders. With the exception of the initial price offered by pharmaceutical companies, pCODR processes are transparent and all reviews including details of deliberations and input from patient advocacy groups are publicly available online. The pCODR publishes their final recommendations, which are then considered by individual provincial formulary mechanisms. In November 2013 an online lay-oriented tutorial was posted, to inform health professionals and the public on how cancer drug funding decisions are made.

To date the majority of pCODRs recommendations have been approvals, but these are almost always “conditional on the cost-effectiveness being improved to an acceptable level” (e.g. Ipilimumab for stage II/IV melanoma). Despite mechanisms to ensure timely, equitable recommendations based on clinical evidence and cost-effectiveness, the adoption of pCODR recommendations is uneven across the country. Some provinces may decide against listing a new cancer drug for a variety of reasons, the most salient of which is the absence of conventional cost-effectiveness). Despite the lack of national coverage standard for drugs, over a 2–3 year period following submission for consideration of a drug for funding, there does appear to be ‘soft’ harmonization of the formularies, as provinces tend to adopt common cancer drug coverage over time.

How each province sets the final price is coming under greater scrutiny with efforts underway to reduce inter-provincial differences. First, the Patented Medicine Price Review Board (PMPRB) sets a “ceiling price” nationally and this effectively becomes a floor price for a pharmaceutical company. PMPRB is an independent, quasi-judicial body established by Parliament in 1987 According to the PMPRB mandate a new brand-name drug in Canada can never be the most expensive in the world, and drugs already approved cannot increase by more than the Consumer Price Index. The cost of a new drug is considered as excessive if it exceeds the highest price of the same strength and dosage form of the same patented drug product for each country listed in the Regulations (France, Germany, Italy, Sweden, Switzerland, the United Kingdom, and the United States). Upon considering pCODR’s recommendation to list a new drug, it is then within each provincial Ministry of Health that closed door deliberations take place, leading to a final price being offered to the pharmaceutical company. In some cases, such as erbitux (Cetuximab®) in Ontario, a pharmaceutical company may choose to withdraw their request for approval on the basis of this final price, leaving patients to seek funding through private insurance. This process too will soon be more transparent, and harmonized across the country via a new mechanism, the Pan-Canadian Pricing Alliance. The goals of the alliance are to: (1) increase access to drug treatment options; (2) improve the consistency of drug listing decisions across the country; (3) capitalize on combined buying power of jurisdictions; (4) achieve consistent pricing and lower drug costs; and (5) reduce duplication of negotiations and improve utilization of services.

Finally, we examine the US system, exploring the efficacy of cancer therapeutics and the value and limitations of clinical trial results, important factors that should inform and influence health policy decisions.

The US healthcare system – attributes, deficiencies and on-goingchanges

The system for approving cancer therapeutics in the US is relativelystraightforward. After initial consultations with the UnitedStates Food and Drug Administration (US FDA) the sponsor setsout to achieve previously agreed to endpoint(s). Approval willlikely be granted if results are statistically valid and the drug generallytolerable. Importantly the US FDA does not discriminateagainst therapies similar to already approved therapies, as discussedbelow. Following US FDA approval the Centers for Medicareand Medicaid Services (CMS) grants its approval as do a majorityof insurance companies often looking for guidance from groupssuch as the American Society of Clinical Oncology (ASCO) and theNational Comprehensive Cancer Network (NCCN). Unlike Europewhere European Medicines Agency (EMA) approval requires subsequentapproval by nations, US FDA approval covers all fifty statesand the District of Columbia. Also because the US FDA does notconsider costs and CMS is forbidden from negotiating prices, costis not a factor neither in approval nor deployment of therapeutics.The law forbidding CMS from negotiating prices is a subjectof debate. As in the EU and Canada, the US system is subjectto both societal and political pressures. Nearly everyone agreeswith this, although not everyone agrees whether this is harmful orbeneficial.

The current health care burden and where it may go

A recent Council of Economic Advisers report noted that medicalspending is slowing. Per-capita health-care spending rose just1.8 percent annually from 2007 to 2010 and even slower since then.While some of the slowdown can be explained by the recession andthe slow recovery, many believe other factors may also be at work.As to the future, “structural changes” such as insurance plans withnarrower networks of hospitals/doctors and changes in incentivesmay begin to have a salutary effect. Additionally, higher deductiblesand co-pays will likely bring value into focus. In cancer, efficacy andnovelty of therapies are likely to emerge as even more importantfactors.

Cancer therapeutics: are we getting what we pay for?

While much has been written about the cost of cancer therapeutics,the problem is not that therapies are expensive, but thatfor the benefit they deliver, their costs are excessive. Lookingat cancer therapies approved by the US FDA for solid tumorsbetween 2002 and 2012, one finds surprisingly small median benefits with progression-free and overall survivals prolonged 2.15 and 2.16 months, respectively. Even more important: (1) combination therapies have repeatedly failed (inhibitors of BRAF and MEK in melanoma as exception); and (2) their use sequentially has proven disappointing. Consider examples in metastatic colorectal cancer (mCRC) and metastatic renal cell carcinoma (mRCC). In mCRC, gains have stagnated. The recently published ML18147 trail, a prospective study in which bevacizumab was given with all chemotherapy regimens achieved a survival of 23.9 months. This was disappointingly indistinguishable from survival a decade earlier in a GERCOR study without bevacizumab that reported similar survivals of 21.5 and 20.6 months. While in mRCC one finds a similar stagnation in benefits even as the number of options has increased. To be sure, gains have been made. In the population based Surveillance, Epidemiology, and End Results (SEER) cancer registry survival between 2000 and 2003 before “targeted therapies” was 15 months compared to 20 months between 2005 and 2008 in the “targeted therapy” era. But the evidence also indicates benefits may have reached a plateau. In a recently published trial the estimated survival of 29.3 months with sunitinib overlapped the value of 26.4 months achieved with sunitinib in a trial that enrolled patients five years earlier.

Can this be true? Has improvement in overall survival in mCRC and mRCC reached plateaus? The SEER data shows gains in the community are much less than in clinical trials – survivals of 20 months in the era of targeted therapies, compared with 26.4–29.3 months in clinical trials bracketing this period. Furthermore, the SEER data shows new therapies have had limited impact on both renal cell and colorectal cancer survival. How can it be that in mRCC despite approval of seven drugs since 2005, improvement in survival rates has been disappointing? Amongst several explanations, the class of the drugs approved and the design of clinical trials stand out.

The impact of drug class underscores an attribute of the US FDA that is also a drawback – it largely ignores the class of the drug under review. Nearly identical drugs can seek approval for similar indications; and provided efficacy and safety are demonstrated, approval is likely. The FDA believes it is not in their purview to decide if a similar drug is or is not needed – marketplace forces will decide. Thus, four of seven drugs approved for renal cell carcinoma inhibit the vascular endothelial growth factor receptor (VEGFR) and a fifth targets the ligand (VEGF). While the other two are derivatives of sirolimus. Having very similar options has added little to survival. Patients are not living substantially longer, and receive drugs sequentially at no greater cost.

What about the design of clinical trials? Unfortunately they do not represent the general population. The importance of this is underscored by a report from the International Metastatic RCC Database Consortium study [99]. Trial eligible patients survived 28.4 months, but the 35% of patients that did not satisfy standard trial eligibility criteria had a discouraging 12.5 months survival. The authors concluded, “The number of patients ineligible for clinical trials is substantial and their outcomes are inferior. Specific trials addressing the unmet needs of protocol ineligible patients are warranted.”

Patients enrolled in clinical trials are “better fit” and younger underscoring the flaw in extrapolating clinical trial results to all patients, especially in policy decisions. The US SEER data cited above, for example, found age older than 65 a predictor of a shorter survival. And in the fifty-seven trials supporting the forty-eight FDA approvals between 2002 and 2012, enrolled patients were generally younger than those in the community with the same cancer and in the majority older patients achieved less benefit. An additional consequence of this disparity is poorer tolerability in the community as seen in an observational study of patients with hepatocellular carcinoma treated with sorafenib in which the rates of dose reduction and discontinuation were 50–100% higher in the observational study than in the original report. The elderly can also be expected to gain less from ensuing therapies.

These facts are important for society and pharmaceutical companies. In mRCC, for example, initial surgical costs are “built into the system” so that going forward the administration of expensive therapies to patients with metastatic disease will drive higher costs. Unfortunately, as discussed, the length of that time has not increased appreciably despite seven new therapies and outlays by individuals and society will not change much in the near term – indeed as drug patents expire, costs may decrease. Novel therapeutics may yet add some benefit and cost, but this will likely be incremental. For society this offers the possibility the rate of increase of oncology drug prices fro some cancers may now fall. As for pharmaceutical companies one would think the experience in mRCC with “me too drugs” that do not substantially prolong survival when used sequentially but must compete for market share would be instructional. But unfortunately “me too” drug development is not likely not go away – inhibitors of the anaplastic lymphoma kinase (ALK) in non-small cell lung cancer (NSCLC) as an example in a very small market. And although “me-too drugs” may be viewed as a safe investment, for society it is unacceptable to have patients enrolled in clinical trials involving drugs that are either never approved or do not yield the needed gains in survival.

Cancer patient outcomes in the United States

Finally we turn to allegations cancer patient outcomes in the US are less than would be expected for its investment. Lets begin by first looking at some of the data within the United States that speaks to these allegations, then consider very basic facts, and conclude by “assigning responsibility”.

Data from the World Cancer Research Fund International shows the rate for all cancers (excluding non-melanoma skin cancers) was 1.73 times higher in more developed compared with less developed countries (255.8 versus 147.8 per 100,000 population). Such data imply greater wealth leads to greater cancer risk, but the United States data suggests a threshold exists, and that all Americans exceed this threshold. Furthermore, wealth confers only limited advantages suggesting gains in cancer survival have a threshold above which additional expenditures bring diminishing returns. Consistent with this, SEER-Medicare linked data found no consistent association between mean regional Medicare spending and survival.

Why do greater US expenditures not bring better outcomes or at least outcomes commensurate with outlays? Expensive therapeutics conferring modest or marginal benefits is one explanation. But pharmaceutical companies bristle at this focus, arguing this is only a fraction of health care expenditures. Admittedly self-serving, this argument has some validity since doctor’s fees, expensive diagnostics, excessive procedures by innumerable consultants and skyrocketing intensive care unit costs contribute enormously. And more importantly, a large percentage of these outlays occur at what many might consider inappropriate times. For example, the data show a quarter of total cancer care expenditures occur in the last year of life with a large portion in the last 30 days. Given healthier cancer patients derive the greatest benefit from any intervention much is being spent when the return on investment can be expected to be very low, and current data is not encouraging for a solution in the near term.

Consider recent data from the Dartmouth Atlas Project, an endeavour that uses Medicare data to provide information and analysis about hospitals and their affiliated physicians at a local, regional and national level. Its 2010 report found mixed results when looking at trends in end-of-life cancer care across the country: (1) fewer days hospitalized but increased number in intensive care in the last month of; (2) Increase in hospice days but often beginning in the last three days of life; (3) increase in percentage of patients who saw ten or more physicians during the last six months of their lives; (4) not much change in endotracheal intubation, feeding tube placement, and cardiopulmonary resuscitation during the last month of life or percentage of patients receiving chemotherapy during the last two weeks of life. The report concluded: “Despite the increased frequency of end-of-life discussions, cancer treatment has become more aggressive in general. It could be that some patients prefer more aggressive care, or do not fully understand – or accept – that their life expectancy is limited when expressing their preferences. Alternatively, end-of-life discussions may occur too late in the course of illness to have a serious impact on treatment . . . the findings . . . suggest that there is more work to be done to ensure the wishes of cancer patients facing the end of their lives are elicited, understood, and honored.”

Finally we turn to “assigning responsibility”, and in the US system there is plenty of “responsibility” to assign. Consider the following: As a society the US expects results too often fueled by hype in the lay press. Patients and their families, read about the imminent cure of cancer, the personalizing of medicine and how cancer can now be a chronic disease and feel hopeful. They present to their oncologist expecting a cure or at a minimum a decade of life – often with expensive, “personalized results” that have not been validated but that they think will ensure success. Many options will be “me-too drugs” one can argue should never have been but were developed and are often very expensive – in part because many other “me-too drugs” did not succeed adding cost to company ledgers that must be “recovered”. Additional expenses were incurred because academicians with pharmaceutical company support conducted large multi-institutional trials. These were needed because participation in clinical trials has reached intolerable lows and large numbers were needed quickly to achieve statistical significance for the expected marginal benefits before the competition. Additional expenses occurred because the trials have become increasingly burdened by regulations, the majority of which, many have argued, have not made patients safer, but have made trials difficult and expensive.

Unfortunately expensive therapies are not curative, too often deliver only marginal benefits, and in the majority the cancer recurs. Hard-working, dedicated oncologists wanting to help their patients who wish to “continue fighting”, all too often demure and continue treating when they should not. They reach for unproven drugs or combinations, many extraordinarily expensive, or for regimens proven only in first line but found in various guidelines as a fourth line alternative where it provides little or more likely no benefit, but at great cost – financially and in terms of toxicity. Or the oncologist administers “off-label”, often at great expense to the patient, a “novel therapy” that has never been proven beneficial in the setting being used. The oncologist knows nothing has worked in the past and in desperation looks to something “novel”. But the problem is not drugs from the past were ineffective; the problem is the cancer is refractory and will not respond to this novel, expensive therapy. The oncologist knows the remote chances of a meaningful outcome; the patient encounters the certainty of financial costs and toxicities that impact the quality of their remaining lives. Only in the end, when less than two weeks of life remain, does the “average cancer patient” in the US seek out hospice.