Unbiased Analysis of Today's Healthcare Issues

Avastin: Worth the price?

Written By: Jason Shafrin - Jul• 11•08

The New York Times (“The evidence gap“) has a great article about the high-priced cancer drug Avastin.  Avastin treats patients with advanced forms of cancer by cutting of blood supply to the cancerous tumors.  The cost-effectiveness of Avastin has been cast in doubt.

Roy Vagelos, a former chief executive of Merck who is considered an elder statesman of the industry, said in a recent speech that he was troubled by a drug, which he would not name but which was a clear reference to Avastin, that costs $50,000 a year and adds four months of life. ‘There is a shocking disparity between value and price,” he said, “and it’s not sustainable.’

Some patient advocates are also troubled by very expensive treatments like Avastin coming into routine use on what they see as little more than a hope and an expensive prayer.

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  1. Jeffrey Seguritan says:

    Although often heralded as a wonder drug, Avastin has thrusted itself front and center in the uneasy cost-benefit analysis of cancer drugs. While it is generally noted that drug prices are elevated to reflect the sunk cost of expensive R&D, it seems more and more that drug companies are really taking their chances and aggressively pricing based on what they believe the market will bear. And it is this fact that haunts the FDA decision to approve new cancer drugs and new indications when clinical trials fail to show a significant difference in overall survival. Very few individual cancer patients will resign themselves to these broad statistical measures because in every fighting spirit is the belief that they can be the outlier and beat the odds. And hence the dilemma–to what extent should clinical trials speak over the insistence of patients willing to try anything and everything?

    An intriguing proposal emerged last year when J&J offered to charge the $48,000/yr multiple myeloma drug Velcade (marketed in US by Millenium, recently acquired by Takeda) based on whether a clinical response is achieved. Poor response would result in a refund (“Pricing Pills by the Results”, NYT 07/14/08). Is there any real viability that such a cancer drug pricing model can be extended to other drugs of questionable efficacy? What would be the criteria and caveats under which a pay-for-performance mechanism could practically be implemented?