Prostate Cancer Advance, and Europeans Free Riding on American Research
by Mike Kimel
There’s a story going around in the news about a new prostate cancer drug. Here’s press release:
A life-extending new drug to treat patients with advanced prostate cancer, developed by The Institute of Cancer Research (ICR) and The Royal Marsden Hospital, has received its UK license.
Abiraterone acetate, marketed by Janssen under the trade name ZYTIGA®, has been shown in clinical trials to prolong survival for men with advanced prostate cancer. An estimated 10,500 men in the UK have advanced prostate cancer that has become resistant to standard hormone treatments.
The once-daily pill officially launches in the UK today after the European Commission earlier this month approved it for the treatment of metastatic prostate cancer. Abiraterone acetate was licensed for use in combination with the steroids prednisone or prednisolone, by men whose disease has developed resistance to conventional hormone therapies and docetaxel-based chemotherapy.
Abiraterone acetate is a new type of treatment for prostate cancer that works by blocking the synthesis of testosterone in all tissues including the tumour itself, not just the testes. This testosterone would otherwise continue to fuel prostate cancer growth and spread. Abiraterone was discovered at the ICR in what is now the Cancer Research UK Cancer Therapeutics Unit and further developed at the ICR and The Royal Marsden.*
The ICR’s Chief Executive Professor Alan Ashworth says: “This drug was discovered in the UK at The Institute of Cancer Research. Its launch is the culmination of immense hard work and dedication by scientists and clinicians here and around the world. To have reached the point where thousands of prostate cancer patients will be able to benefit from this life-extending treatment is hugely rewarding.”
Royal Marsden Chief Executive Cally Palmer says: “The development of abiraterone by The Royal Marsden and the ICR highlights the national importance of funding pioneering cancer research. We are delighted our patients at The Royal Marsden have been among the first to benefit from the very latest in drug development.”
Another quote:
Results of a major international Phase III trial of almost 2,000 men jointly led by Professor Johann de Bono from the ICR and The Royal Marsden showed that patients given abiraterone acetate lived on average 15.8 months compared to 11.2 months for men taking a placebo. Pain also eased for a higher proportion of patients taking abiraterone, while side effects were easily manageable and reversible.
From the footnotes:
Cancer Research Technology assigned abiraterone acetate to BTG International Ltd, who in turn licensed it to Cougar Biotechnology Inc., now a member of the Janssen Pharmaceutical Companies.
Now, I’m not that familiar with British entitites, but as I understand it, a publicly funded university and its research hospital developed a new wonder-drug using grants from the public, a charity, and a formerly government owned but now private company. Commercialization rights eventually ended up with Janssen, a company owned by Johnson & Johnson.
How long will it be before Zytiga gets trotted out as an example of the European healthcare system free-riding on American research and who will be the first pundit to make that argument?
Tim W,
“The interesting question is, who paid for the Phase II and III trials? Those are the expensive parts of the process after all. “
I have to imagine that R&D costs a bit of money too. But let’s assume that piece of the process was essentially free. The trials were held at what is essentially a state funded research hospital in conjunction with the state funded university that owns the state funded research hospital. A major charity (which also, from my understanding, gets a fair amount of state funding) also kicked in some money, as did a now private company that was originally started by and owned by the state.
” It is that the European health care systems free ride on the research funded by higher US health care costs.”
OK. Let us say that, hypothetically, that without the ability to charge me in the US X times what they charge you in Britain for the same drug (where X is some number greater than 1, often much greater than 1) it would be impossible for, say, J & J to market a given drug. (And market, incidentally, is what we’re talking about.)
My guess is that we’ll see more and more stories like the Zytiga one going forward – where most or all of the funding for the research and the testing comes from state institutions.
The reason is that a lot of existing drugs have benefits beyond those for which they were approved, and are now off patent. This story (http://latimesblogs.latimes.com/booster_shots/2010/04/metformin-the-new-wonder-drug-may-help-prevent-lung-cancer-in-smokers.html) provides an example, and ends with:
“The problem with all these studies is that metformin is now a generic drug, so there is no incentive for pharmaceutical companies to launch an expensive clinical trial to demonstrate the drug’s utility when they would not be the exclusive beneficiary of their findings.”
Additionally, while a lot (most?) of folk medicine is bunk, a lot of existing drugs originated from research growing out of looking at such claims. Say someone at J & J had a sneaking suspicion that ground up oak leaves might have a beneficial effect. There’s no chance that research would get done at J & J as anyone can go off and grind up oak leaves. In fact, J & J would do everything possible to avoid promoting that sort of research as it could easily compete with profitable drugs J & J currently markets.
Tim,
As to the size of the effect I mention, I’ll quote your comment… “And no, not for every drug, just for enough to make a difference.”
Extending life less than 5 months does’nt seem like much of an effect.
Adding 5 months to patient life is not that great, but it may also have some very positive pain management aspects. Think quality of life, which in the case of terminal patients is very important.
Mike, I don’t quite get the point. The “free riding” is still in effect when Israel develops the drug, sells it in Canada and Israel (and probably others) for 57% of the price it charges in the US AND the US gives multiple extensions of patent protection. In your example, if the price is higher in the US and the drug is given the same type of open ended patent protection, the US ends up reimbursing some of the R&D costs indirectly, don’t they?
No more free riding for the Europeans. Stop crying, lets do what they do, reduce the health care costs in the US. It is a free market, down with the costs, who is going to stop the US from doing it? (just a little snark)
Anna Lee,
In the press release, it indicates that prostate cancer kills one man an hour in the UK. There’s no way to prove it, but its hard to imagine that even if the US market were closed off entirely and for all eternity to this drug, it would have changed the development or testing process one iota.
“OK. Let us say that, hypothetically, that without the ability to charge me in the US X times what they charge you in Britain for the same drug (where X is some number greater than 1, often much greater than 1) it would be impossible for, say, J & J to market a given drug.”
No, impossible is too strong. “Less likely” is fair.
There’s x amount of cost in getting a drug to approval. There’s Y amount to be made from it. Drugs that get to market are the ones where those trying to bring it to market think that Y is greater than x, yes?
We’re agreed on the idea that companies which wish to make profits from drugs do actually consider how much profit they might make from making drugs, yes?
OK, so now we have two sets of markets. Those where prices are government controlled for drugs (most of the world) and the occasional place where they’re not (the US inside patent life). Excellent, our basic model will predict that companies desiring to make money from creating drugs will charge as much as they can in the US market to pay for development and then take the foriegn prices offered as they are above marginal cost but (sometimes, perhaps, maybe) not above average cost.
It’s the same basis that Wellcome (a UK drug comany) sold retrovirals to poor countries. We can get additional profit margin out of it because it’s above marginal cost, But we must make sure that such drugs do not flow back into higher priced markets where we cover development, average costs.
“In the press release, it indicates that prostate cancer kills one man an hour in the UK. There’s no way to prove it, but its hard to imagine that even if the US market were closed off entirely and for all eternity to this drug, it would have changed the development or testing process one iota. “
In the UK, if a drug does not provide 1 QUALY per £30,000 a year of the cost of the drug ( QUALY is quality adjusted life year and £30k is around $50,000) then the NHS will not pay for it. And absent the US market, which is not so limited, if the NHS won’t pay for it, then the Phase II and III trials will not happen and the drug won’t be approved (as an example, Herceptin, for breast cancer, is not approved on the NHS).
It really is true that we Europeans are free riding off the US. No, not the research, not the universities, the NIH etc. It really is that you USians pay more for drugs than we do. Thus drugs get brought to market that wouldn’t be if only we were paying for them.
But then this free riding is the sort of thing you liberals should be applauding. You in the US are richer than we Europeans are so you should be paying part of the bill for our health care, no?
“
Tim Worstall,
“You in the US are richer than we Europeans” You haven’t read my book. We’re number 10 when it comes to GDP per capita. Or at least we were when we wrote the book. And I’m currently unemployed, so you shouldn’t be looking toward me!
I agree that some drugs are more likely to be brought to market by private companies as a result of the fact that Americans are collectively willing to pay more. (That, incidentally, is largely a function of the private insurance companies. I had a post once noting how my wife kept calling the insurance company trying to explain they were being defrauded by the doctor’s office for a bill they paid for services I had not received, but nobody at the insurance company cared. Insurance companies here in the US seem to be happy to pay any bill a doctor sends them, no matter how insane. As an example, I had another post relating to the time when my insurance company paid for all but a small portion of the bill associated with my delivering a child. And no, “Mike” is not my nom de plume.)
However, as I noted, that profit motive reduces the likelihood that many other studies – including many that are low hanging fruit – will be performed. Why study the likelihood that a drug for hair loss treatment that has gone off-patent will effectively and cheaply treat cancer, say, even if the indications are that it does? After all, there’s no money in it. Only a government agencies will even consider such a study.
BTW… we’ve been shopping around looking for new health insurance since I left my employer. Fortunately, we don’t plan on having any more kids. Plans that cover anything related to having a child are insanely expensive. But ironically, so many of them aren’t covering contraceptives either any more. Its very odd.
Just so you have a frame of reference since you’re in Europe… we’re looking at about $500 a month or so, with a $5,000 deductible per person in the family. And we are healthy people – no pre-existing conditions, we don’t drink, we don’t smoke, and are extremely healthy relative to other Americans. That is to say, we cover about $15,000 worth of expenses ($5K for each of us) and insurance will cover expenses beyond that. In exchange, we pay $6K a year.
So figure… if if my wife, my son and I are all in a car accident, that’s $21K before insurance kicks in… assuming that they don’t then cancel the insurance because we’re all in the hospital and nobody is paying the bill. Now, according to the census, real median income was a bit under 50K. And once again, we’re three very healthy people.
Now, you may feel that free-riding explains this. I feel inefficiencies in the system explain this. I’d prefer the NHS to what we have over here, thank you very much.
Note also that a very large fraction of the US health care R&D spending is public. The budget of the National Institutes of Health dwarfs all other funding sources for investigator initiate peer reviewed grants. It’s on the same order as total R&D spending by Pharmaceutical companies in the US (NIH= $30 billion < PRMA R&d= around $45 B). Oh and this is on the order of 1,000 times the fudning for economic research grants. By the way, there is this team at the NIH (financed out of the 10% of the budget spent on campus not the 90% for grants) which can cure prostate cancer in mice. Not delay death. Cure. Of all the things that might have been, the saddest are those that worked in mice but not in men.
RW,
“Of all the things that might have been, the saddest are those that worked in mice but not in men.”
Not for the mice.
I may have blogged about this, but my mother in law was a patient at the NIH campus in Bethesda for about six months until her death as they were trying something experimental last year.
While there, I talked to one of the other patients. That patient had a rare disease… almost everyone who has it is dead by 30, and nobody lives much longer than that. She was participating in a study because she had several kids and was afraid they might have it too. Apparently her drug cocktail cost about $300K a month. I may have the figure wrong as my memory is fading but it was very high because the drugs were tailor made not just to her, but to what part of the month it was. She had this Star Trek type gadget on her upper arm that administered the drug in doses throughout the day. And they flew her back to Oklahoma once a month. All that at taxpayer expense as the gov’t is trying to learn how to modify a person’s genes on the fly.
Nobody but the gov’t will fund that sort of thing. Eventually it will work, and pharma companies will license the technology and sell it at a higher price here in the US to the taxpayers who funded the research. The Megan McArdles will then write about how that tech would never exist if every country had socialized medicine.
Ah yes… as to the woman with Star Trek device on her arm. I got to talking to her. She sympathized with the Tea Party and was looking to a government shut down. She simply couldn’t see that a government shut down would mean she’d be dead in days, and dooming her children as well.
In a few thousand years this will all seem comical.
a 5 month life span difference is good news for me. Prostate Cancer is a manageable disease. One just need the right medication, support and knowledge about the illness to fight off the cancer. Also check prostate cancer treatment. btw, I’ve bookmarked and shared this article
Mike,
your experience does confirm that the private insurance industry is not as likely to investigate fraud as Medicare is. They simply charge the customers higher premiums. $300K per month for one patient research sounds astronomical too. Makes me think the industry is ripping off the government.
The government makes mistakes but it does not on purpose rip off the people as the private sector, health, insurance, and banking, does.
Drugs are expensive in any country that has a powerful pharma industry, it is true for Germany and Switzerland and France.
I must say, government service always tops the private sector, including the postal service.
Lys,
Actually, the 300K was the NIH’s own research project. And it isn’t outlandish. Its the most far out project I can imagine in bio today. That makes it expensive as all get out. But fifty years from today the world will be a different place because of that research. And there is no chance at all that any private company will even conisder doing that resarch right now. Hence, the NIH.
The crux of the argument is that there is some scurilous misstatement that may be made, but that hasn’t been made yet, yes? If I’m mistaken, let me know, but so far, that’s the point of the final paragraph? The post makes sense up to that point, but unless and until the scurilous argument is made, the final paragraph is kinda gratuitous.
Then, your response to Anna Lee, in addition to being nothing more than a hand wave, wasn’t really a response to Anna Lee. It’s hard for YOU to imagine that the closing off the US market, the richest market for drugs in the world, would have changed the outcome one iota, but it may have, nonetheless. But that doesn’t seem to be Anna Lee’s point. The developer of any drug knows that it may not be marketable in the US, but may be outside the US. A drug developed in the US may not be marketed there, but still be marketed elsewhere. Anna Lee’s point, as I read it, is that the US market represents an opportunity to earn larger margins on drugs that are sold there than is often the case elsewhere, and that if the US market is open to a drug, “the US ends up reimbursing some of the R&D costs indirectly.” You seem to have dodged her questions.
kharris,
OK. Let me try again.
Whoever pays the most ends up covering most of the expense. True enough. And thus, the US market will encourage private, profit motivated entitites.
My response to Anna Lee (and to Tim Worstall and below to Robert W, or rather, expanding on Robert W’s point) is that these days there does seem to be a bit more, call it a presence, of the public sector. I’ve noted that the private sector simply doesn’t have the motivation to do some types of research. I’ve also noted in instances like Zytiga, while the private sector does seemingly have the motivation to do the research, oddly the research is not coming from the private sector or even from America… and it would have taken place even without the existence of the American market. That simply doesn’t fit with the Megan McArdle story of the world.
Mike, I guess calculating the price for the woman’s drug cocktail includes all the costs of the research so far. If it is a rare disease there is a question of cost/benefit too. But then you are right , maybe there will be some benefits we can’t even imagine now. Penicillin was “discovered”. We all would like to live a long and good life.
With that, I would agree.
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