Cost Efficacy in Medicine: Not My Department

Medicare, unlike health programs in virtually all other industrial nations doesn’t explicitly consider cost effectiveness in it’s health decisions.

“The reasons for Medicare’s resistance to the use of cost effectiveness analysis are many and include America’s affinity for new medical technology, a distaste for explicit limit setting, a sense of entitlement with regard to Medicare funds, the perception that in a vast and wealthy country, health care resources are not really constrained, a political system in which interest groups wield enormous influence and a splintered and pluralistic health care system in the United States in which no single payer is responsible for allocating resources for health care.” ( From: Neumann et al. NEJM 2005;353: 1516-1522.)

I regularly attend our local hospital’s tumor board. It’s amazing how quickly very costly agents have been adopted into the oncology medical practice, regardless of cost and effectiveness. These drugs include Trastusumab (Herceptin), erlotinib (Tarceva), bevacimab (Avastin), cetuximab (Erbitux), paniturmumab (Vectibex).

These drugs in controlled studies seem to have limited efficacy (lung, colon, or breast cancer) about 1 to 2 months and high costs. For example, this estimate of efficacy of panitumumab :

“The mean time to disease progression or death in patients receiving Vectibix was 96 days versus 60 days in patients receiving the best standard supportive care. In addition, 8% of the patients on Vectibix experienced a tumor shrinkage that in some cases exceeded 50% of the pre-treatment size of the tumor. Both study groups showed similar overall survival.” Medicynical note: That means while there was some activity there was no significant significant extension of life (i.e. no survival advantage)

Given minimal efficacy of some of these new agents, I wondered whether my experience is a local aberration or indicative of a general trend. Is medical oncology at all interested in cost/efficacy data? Looking at the last 4 years of abstracts from the annual meeting of the American Society of Clinical Oncology (ASCO) the following was noted.

At ASCO’s annual meetings between 2004 and 2007 there were just 37 (2004), 27 (2005), 35 (2006), and 41(2007) presentations with the word cost in the title–less then 1% of presentations.  Many of these studies were about the cost of complications, non-compliance, and non-cost evaluative studies erroneously labeled as such. Many of the other studies were from overseas and not applicable to the U.S. experience. Of the cost efficacy studies done in the U.S. only a handful dealt with the newer high cost biological agents. These included the following:

1. A metananalysis of cost studies regarding trastuzumab (Herceptin), used in Her 2 neu positive breast cancer patients ,(about 20% of all breast cancer cases) from 2003 to 2005 showed:

“The median cost per patient treated was calculated €44,196 yielding costs per life year saved in the range between €63,137 – €162,417 (medicynical note: one euro is currently worth about U.S. dollars $1.50) depending on survival gain and discount rate employed. A sensitivity analysis documented the price of trastuzumab and the survival benefit the two major factors influencing the cost-effectiveness ratio. Conclusions: The economic evaluation indicates trastuzumab not cost effective in metastatic breast cancer. Reduced drug costs and/or improved survival may alter the conclusion”

Other studies of trastuzumab (Herceptin) were mainly done in Europe where costs are significantly less than here. One U.S. study from 2006 revealed

Over a 20-year horizon, addition of H (trastuzumab) to AC (adriamycin and cytoxan) is estimated to cost an additional $46,300 on average, with an expected gain of 1.28 QALYs (Quality Adjusted Life Year) -a cost/QALY of $36,100. The key drivers of CE are the cost of treatment and the improvement in DFS. “ medicynical note: QALY is roughly equivalent to the YLG, year live gained, data below) In this study the use of trastuzumab was considered cost effective in that it’s costs were less than the arbitrary cost/QALY of $50,000-$100,000 that appears to be generally accepted.

2. Regarding erlotinib (Tarceva), it is approved by the FDA for lung cancer and pancreatic cancer. In lung cancer it has be found to increase life by about 2 months versus placebo treatment. One abstract evaluating it’s cost effectiveness, done by the manufacturer, assumed equal survival with standard chemotherapy and was not based on randomized trials or actual patient survival data.

In pancreatic cancer, a 2006 abstract reported:

“The addition of erlotinib increases cost by $12,156 wholesale or $16,613 retail. Given an increase of 0.4 months in median survival over gemcitabine alone, the addition of erlotinib costs $364,680 per year of life gained (YLG) wholesale and $498,379/YLG retail.” Medicynical note: despite the finding the FDA has approved this drug in pancreatic cancer.

3. Bevacimab (Avastin), an antiangiogenic medication, has been approved for use in colon cancer, lung cancer and most recently breast cancer.

A 2006 abstract evaluated it’s cost effectiveness in lung cancer:

The addition of bevacizumab increases cost by $66,270 to $80,343. Given an increase of 2.3 months in median overall survival over chemotherapy alone, the addition of bevacizumab to chemotherapy costs $345,762 per year of life gained. Conclusions: Adding bevacizumab to chemotherapy is not cost effective even at the $100,000 per Year of Life ” medicynical note: This drug is widely used for lung cancer.”

And in 2007 this was noted:

“Total direct medical cost estimates were similar for bi-weekly FOLFOX4 and 3-weekly XELOX: $45,800 vs. $44,500. XELOX had higher drug costs while FOLFOX had higher drug administration costs, with about 15 more visits. Costs for hospitalization and ambulatory encounters were slightly lower for FOLFOX4; other medications and venous access were slightly higher for FOLFOX4. Similar patterns held for FOLFOX4+bev vs. XELOX+bev (total direct medical cost estimates $76,100 vs. $79,200).” medicynical note: FOLFOX4 and XELOX are traditional chemotherapeutic regimens for details check the abstract.

The treatment results of the above study reported in the ASCO GI conference of 2007 reported:

“PFS (progression free survival) for XELOX-Bev + FOLFOX4-Bev was 9.3 months vs. 8.0 months for XELOX-Pla + FOLFOX4-Pla (p=0.0023, HR 0.83, 97.5% CI, 0.72-0.95). Median PFS on specified study treatment was 10.4 months for chemotherapy + Bev vs. 8.1 months for chemotherapy + Pla (HR 0.63, p<0.0001).”

This means that at an added cost of $30,000-40,000 the patient’s survival improved between 1.3 and 2.4 months when compared with placebo used instead of bevacizumab. My estimate of the cost/year of life gained is $150,000 to $360,000, far in excess of the usual cost effectiveness marker. Not particularly impressive, though it is a incremental step forward. Worth the money?

4. There were no cost studies in the period on the use of cetuximab.

I conclude that there is an indifference to cost efficacy data that is endemic to our system. It appears that no one including Medicare, researchers and practitioners seriously considers cost/efficacy when using exceptionally expensive agents.

Patients are not cured with these drugs, do not have exceptional responses and if used they will not predictably markedly improve outcomes–as they will predictably markedly increase expenses. We need more cost efficacy studies done in an objective manner and a system in which their findings are factored into treatment choices. Indeed, the FDA and/or insurers should not approve such drugs for wide use until such studies are done.


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