Outcomes based pricing–a bad idea

Pricing based on outcomes, yes a money back guarantee, sounds like an attractive marketing idea but probably is unworkable in medicine, cancer medicine in particular

We’re talking big money here. The NEJM (Volume 352: 2546-2548. June 15, 2005) notes the cost comparison between bortezomib (Velcade) and dexamethasone in multiple myeloma is:

“The final consideration of “tolerability” is one of cost. The charge by the pharmacy at my center (Mayo Clinic, Rochester, Minn.) to a patient with a body-surface area of 2 m2 for the nine months of therapy as outlined in the APEX trial would be $45,760 for bortezomib and $170 for dexamethasone. Though no price can be placed on the value of an effective drug to a patient or his or her family and doctor, this differential is sobering.”

From the NY Times article of July 15:

“Johnson and Johnson has proposed that Britain’s national health service pay for the cancer drug Velcade, but only for people who benefit from the medicine, which can cost $48,000 a patient. The company would refund any money spent on patients whose tumors do not shrink sufficiently after a trial treatment.”

There are problems determining the “benefit” of a cancer drug that is not curative. When bortezomib (Velcade) is given with other cancer drugs, as it is most of the time, a response to therapy does not prove Velcade’s efficacy. Improved length of response or time to survival may be a valid measure in groups of patients comparing treatment approaches but is difficult to evaluate in a single patient. Similarly, how does one assess a benefit when the stage of disease at diagnosis, tumor biology and it’s inherent aggressiveness or lack thereof also influence survival?

Patients, physicians, drug companies and insurers have their biases. It would appear to medicynic that accurately determining the contribution of bortezomib (Velcade), or other cancer drugs, to any benefit in a single case will require wisdom beyond our capability.

A better idea would be to to price drugs more fairly so that the decision to treat does not bankrupt patients, insurers and indeed the health care system.

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