On August 3, 2012, the Food and Drug Administration approved a new cancer drug called Zaltrap as a safe and effective treatment for patients with advanced colon cancer. The approval was based on a large-scale clinical trial that showed that Zaltrap, given in combination with three previously approved drugs to patients who had failed initial therapy, extended median overall survival by 42 days.
No one knew the price of Zaltrap at that point, but Leonard Saltz, who heads the gastrointestinal oncology group at Memorial Sloan-Kettering Cancer Center, had a sense of what was coming. Zaltrap’s effectiveness, in his opinion, was almost identical to that of Avastin, an FDA-approved cancer drug that had also been targeted at that same patient population. Several weeks earlier, Saltz had traveled to Chicago to inflict a little premonitory sticker shock on his medical colleagues. He reviewed the recent clinical results of both Zaltrap and Avastin when used as a “second line” treatment, after initial treatment had failed. As Saltz reminded the other oncologists, Avastin was modestly effective as a second-line treatment—it extended median overall survival by 42 days, the same as Zaltrap—but it cost about $5,000 a month and, like Zaltrap, would have to be taken for many months to achieve that modest clinical benefit. The overall cost was so high that Saltz devoted the end of his talk to a back-of-the-envelope calculation, delivered via PowerPoint, that recast the question in terms of health-care costs: If you extended the 42 days survival to a year, “what is the cost of Avastin for one year of human life saved?”
The answer was astounding, even to doctors who have grown inured to the zero-gravity economics of cancer pharmaceuticals. As Saltz worked his way through slide 73 of 78, he arrived at the bottom line: $303,000.
“Now, that’s essentially the cost of the bare-bones drug,” Saltz later explained to me in his office at Sloan-Kettering. “It’s parts, not labor. No money for doctors; no money for nurses; no money for pharmacists; no money for real estate, heat, and lights; no money for the needles, the IV tubing, the IV fluids, the anti-nausea medicines, the other chemotherapies that are given, because Avastin doesn’t do anything by itself. It has to be given with other drugs … I want to emphasize it’s not that we can have a year of life saved for $303,000. That’s probably less than half of what the actual cost would be when you factor in everything.” Zaltrap, he figured, was probably going to be in the same range.
Saltz’s message was not entirely unexpected. He has been warning about the danger of rising drug prices, to patients and to the health-care system in general, for the last decade. Having made this point to his colleagues, Saltz packed up his computer, took the next flight back to New York, and, after the FDA approved Zaltrap in early August, began to prepare—“not with great enthusiasm,” he conceded—the Zaltrap presentation he would deliver to the hospital committee responsible for approving any new drugs for Sloan-Kettering’s pharmacy.
Then, on August 31, he received an e-mail from a pharmacist at the hospital about the price that Zaltrap’s manufacturers, Sanofi and Regeneron Pharmaceuticals, had set. The pharmacist said, in effect, “Are you aware that this drug is twice as expensive as Avastin?”
“No,” Saltz replied, “I wasn’t aware.”
The pharmacist e-mailed the numbers, and Saltz stared at the figures on his computer screen. Zaltrap, the drug that was extremely similar to Avastin, cost roughly $11,000 a month. (And because that extra 42 days wouldn’t be possible without taking the drug for, say, seven months before—which was roughly what was happening in clinical trials—the price for that six-week life extension could be as high as $75,000.)
“Wow,” he said to himself, “that’s a deal-changer for me.”
That may not seem like a heretical statement, but the unspoken rule in American health care is that doctors should never consider the cost of a medicine that might be beneficial to patients. When the FDA approves a new cancer drug, it analyzes safety and effectiveness only. Medicare is obliged to reimburse payment for the drug, and private insurers in most states must cover the cost. Any doctor who considers cost—or the value of a costly drug—risks being accused of “rationing” health care.
Saltz felt compelled to consider the cost. He didn’t see any medical advantage to Zaltrap for his patients—or any disadvantage, for that matter—but, as he contemplated its price, he thought, I can’t see why I would use this.
That same day, he sent an e-mail to every physician at the hospital who treated patients with colon cancer. “I said, essentially, ‘You all know the data. You were at the meetings. You know what the situation is. What I just learned is this issue regarding the price. Within this context, I can’t envision a scenario where I would plan to use this drug. Can you?’ ”