Methods - Drug Pricing Lab

Methods

 

Selection of Drugs and Indications

DrugAbacus covers 52 cancer drugs approved between 2001 and 2015 by the US FDA for the treatment of cancer. This sample begins with the 2001 approval of Gleevec and was compiled from the work of Howard et al for drugs approved through 2013, with supplemental drugs and indications added through 2015. While the characteristic of most drugs in the Abacus are based on information related to the first approved indication, four drugs (Afinitor, Avastin, Nexavar, and Tarceva) in the new indication specific pricing feature include information for supplemental indications.

Current Prices

Estimated monthly prices for the US market are calculated according to a methodology used in prior reportsi, based on the Medicare payment limit—106% of the average sales price (ASP) for Part B drugs. Payment limits are reported in quarterly files released by CMSii. The reduction in reimbursement due to the 2013 ‘sequester’, which lowered reimbursement to ASP+4.2%, is not included in these calculations. For Part D drugs, current prices are retrieved from Medicare’s publicly available, web-based “PlanFinder” tooliii. The price reported is the “Full Cost of Drug” as reported in the PlanFinder for the Humana PDP Enhanced plan for a beneficiary living within ZIP code 10065. If a drug’s ASP is not available Medicare calculates the payment limit as 95% of the Average Wholesale Price (AWP).

The US Department of Veterans Affairs (VA) Federal Supply Schedule (FSS) Big 4 price is statutorily available to the VA, Department of Defense, Public Health Service, and U.S. Coast Guard. We used the online Pharmaceutical Catalog Search via the National Acquisition Center Contract Catalog Search Tool to record prices for all 52 drugs on the “VA” price sheet. When the Big 4 price was unavailable, we used the FSS price. These prices are based on negotiations with vendors and “statutorily-required pricing calculations”.

For the UK market, pricing information was gathered from two sources. The British National Formulary (BNF) is a biannually-updated, online reference tool for prescribers and suppliers of medicines which are available through the National Health Service (NHS) and was used as the primary source of information. Another online resource, the constantly-updated Monthly Index of Medical Specialties (MIMS) published by Haymarket Media Group, provided supplement information when it was unavailable in the BNF. In both cases, we used the dosage most similar to US sources. For three drugs that were unavailable in either source, Provenge, Ixempra, and Iressa, we used the US price.

For drugs that can be taken for an indefinite period of time, the relevant payment limit is applied to a 12 week dosing regimen for an “average” adult weighing 70kg, or with a body area of 1.7 meters squared, and divided by 2.77 to arrive at a monthly price (there are, on average, 2.77 months in 12 weeks).

The 12 week dosing regimen is retrieved from the FDA approved label for each drug via the FDA’s “Drugs@FDA” database.4 We used the lowest total dosing regimen within the first FDA approved indication for the drug for all drugs other than the four in the indication specific pricing feature. Prices are for the listed drug only, costs for supportive care or administration fees are not included. For drugs with a set regimen given over a predefined period of time, such as the drug Provenge, the monthly price is determined by dividing the cost of the regimen by the number of months the regimen takes to administer.

Abacus Price

The Abacus price is calculated from the following formula:

Price=(?_eff ??X?_eff)(1-(?_tol ??X?_tol))(?_nov ??X?_nov)(?_(R&D) ??X?_(R&D)(?_rar ??X?_rar)(?_bur ??X?_bur) (?_unm ??X?_unm)(?_prg ??X?_prg))

Each X is a measurement for one of eight “domains” (efficacy, tolerability, novelty, research & development costs, rarity, population burden, unmet need, and prognosis) and each ? is a weight defining the importance of that domain with respect to the drug’s price (chosen by the user within a predetermined range of possible values). These domains, and their measures, are described in more detail below.

Abacus prices are relevant for a treatment period equivalent to the typical duration of treatment that was required to achieve the reported benefit in the FDA approval trial(s). Model inputs (particularly efficacy and tolerability) correspond to the length of treatment received by patients in the relevant clinical trial(s). Therefore, we consider model-calculated prices to be the price for the duration of treatment used in the clinical trial and adjust to a monthly price via division.

Treatment duration is taken from the FDA approved label or trial publication. In cases where treatment duration is not available the average progression free survival in the treatment arm of that trial is used as a substitute.

Efficacy

The efficacy of the drug is measured as the improvement in overall survival, or a surrogate for this endpoint, attributable to the drug, as measure in the highest level of evidence clinical trial that led to FDA-approval for the first indication. A level-of-evidence grade is applied to the measure of overall survival benefit, such that two drugs with equivalent trial results will receive different efficacy grades if the trial for one drug was of higher quality. In some cases, drugs are approved by the FDA without evidence of an overall survival gain, on the basis of an improvement in either progression-free survival or in response rates. We considered the margin of gain in progression free survival to be equivalent to the gain in overall survival if overall survival data were not available, but the endpoint progression free survival received a lower level of evidence rating. When other endpoints, such as response rates or single arm trial endpoints were all that were available, these were converted to estimates of overall survival benefit using available literature from studies of analogous treatments.

Toxicity

A drug’s toxicity was characterized from the listing of the frequency and severity of side effects experienced by patients receiving the drug, relative to the severity of side effects those patients would otherwise experience. The measurement for this domain consists of a combination of two components: the effect of the drug on the probability of a given patient experiencing severe side effects (proportion of patients in the treatment arm experiencing grade 3 or 4 side effects, minus the proportion in the control arm) and the effect of the drug on the probability or discontinuing use of the drug due to severe side effects (again, difference in proportions by trial arm).

Novelty

The novelty of each drug was scored by two clinical experts, in line with their recent related research. The experts classified each drug to one of three groups based on its mechanism of action. The three groups are: 1) Novel mechanism of action (score of 1), 2) Drugs with known target but novel delivery (eg. Capecitabine) Drugs with known target but different mechanism of targeting (eg. TKI vs. MAB, antibody drug conjugates etc) (score of 0.5), 3) Next-in-class (score of 0). If the raters assigned conflicting scores to two drugs, such as Ixempra and Halaven, the more-novel score was assigned to the drug.

R&D

The number of human subjects enrolled in the approval trials for the first indication (including FDA mandated confirmatory trials) was used as a proxy for the research and development costs necessary to develop the drug. This imperfect surrogate is reasonable, as in most cases the cost of human subjects research is a major component of overall R&D expense.

Rarity

Rarity of the disease was determined from the projected incidence of the disease in 2015 as per the American Cancer Society Facts & Figures Report.

Population Health Burden

The population health burden of a disease was determined from the estimated years of life lost due to the disease in the US population, a statistic defined as the average difference between life expectancy at death and age at death for individuals dying from the disease in question during a specific period of time. This statistic is reported in the SEER Cancer Statistics Review for many diseases; where not, we estimated the years of life lost by replicating the SEER methodology using information on the count of deaths at various ages from the CDC’s WONDER database along with estimates for life expectancy by age and gender.

Unmet Need

The Unmet need domain measures the social need for a drug, represented by the number of recommended treatments in the National Comprehensive Care Network’s guidelines for a drug’s target indication at the moment of its FDA approval .

Prognosis

The Prognosis domain measures the severity of the disease that each drug is designed to treat. Median survival from in the absence of intervention with each of the therapies was gathered from the FDA label.

Annual Spending

Calculated at the drug level as consensus estimates for expected total US sales in the year 2015 according to the EvaluatePharma database, courtesy of Defined Health. Estimated sales at Abacus prices and prices in other markets assume that the volume of sales of each drug is not altered by a change in price.

i Bach PB. Limits on Medicare’s ability to control rising spending on cancer drugs. N Engl J Med. Feb 5
2009;360(6):626-633.
ii Center for Medicare and Medicaid Services. Medicare Part B Drug Average Sales Price. Manufacturer reporting of
Average Sales Price (ASP) data. http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-
Drugs/McrPartBDrugAvgSalesPrice/index.html. Accessed 10/18/2013.
iii Center for Medicare and Medicaid Services. Medicare Plan Finder. https://www.medicare.gov/find-a-
plan/questions/home.aspx. Accessed 10/18/2013.
iv Food and Drug Administration. Drugs@FDA: FDA Approved Drug Products.
http://www.accessdata.fda.gov/scripts/cder/drugsatfda/index.cfm. Accessed 10/18/2013.

FAQs

What is the purpose of the DrugAbacus tool?

DrugAbacus was created by Dr. Peter B. Bach, and represents a draft of a tool that could be used to determine appropriate prices for cancer drugs based on what experts tend to list as possible components of a drug’s value. There is no doubt that drug prices in cancer have been causing a lot of worry, as they are rising rapidly. High prices drive out of pocket costs up, because coinsurance is calculated as a percentage of the price. In some insurance, like Medicare, in both Part B and D there is no upper limit on the out of pocket costs patients may face. Numerous systematic studies have documented that higher out of pocket costs lead patients to stop taking the medications that could improve their outcome. With the rising prices of cancer drug, how those prices should be tied to the drug’s value, or how that might be operationalized, are logical questions to ask.

Why aren’t all cancer drugs included in the DrugAbacus?

DrugAbacus contains a convenience sample assembled for the proof of concept of the tool. It includes the cancer drugs approved between 2001 and 2013 that were examined by Howard et al. (Dr. Bach was a co-author on that study), and all the cancer drugs approved after that paper was completed. Howard et al. did not include some drugs because they were used for symptom relief, and others because the effectiveness data were hard to locate.

What did you do about the fact that some drugs have multiple different indications and are effective different degrees in those indications?

While previous versions of DrugAbacus focused on effectiveness in a drug’s first indication, this version includes an Indication Specific Pricing feature, which allows users to compare the actual and Abacus price of a drug in multiple, different indications for Abraxane, Avastin, Nexavar, and Tarceva.

What about the fact that some drugs may help the average person only somewhat, but rare patients get huge benefits?

The chance that a drug helps a few people a lot is something that probably should be considered in the value of the drug, and it can likely be operationalized, but it has not been in this version of DrugAbacus.

Prices in the US are often much higher than those in other countries. how does the Abacus account for this?

The newest update allows users to compare prices across 3 different markets spanning 2 different countries. These include US Medicare, US Veterans Administration, UK, Ireland, Belgium, and Canada.

How are the components of drug pricing used in the tool defined? What are the sources for this information?

Visit our methods page to further understand how we determined the price components of tool.

How do I keep up to date with the DrugAbacus project, or give you feedback?

Stay up to date on the Evidence Driven Drug Pricing Project by signing up for our mailing list and following Dr. Bach on Twitter:@peterbachmd.

If you have any questions or feedback on the project or DrugAbacus tool, visit our contact page.