In a guest post on Matt Herper's Forbes.com blog Peter Bach -- the latest doc seeking celebrity status by demonizing drug prices -- asks the loaded question: "Just how high do prices need to be? When does the potential to profit exceed that which is needed to drive innovation and pervert the market?"
I have previously asked Peter Bach to answer his own question in a different way: What if his idea of how high prices have to be winds up killing off drugs and vaccines that save peoples lives? What if the price he thinks is too high induces lots of companies to develop an Ebola vaccine. What is morally more reprehensible, drug prices higher than what Bach prefers or drug prices that he likes but kills off Ebola vaccine development? t I have asked Bach to discuss or debate this issue to no avail. . Perhaps Matt Herper could arrange for this to happen since Bach has been ducking me for months.
In this recent post Bach actually argues that prices that he regards as too high are bad for innovation. He never explains why. Instead he complains that there is too much innovation designed to treat rare diseases and specific cancer mutations. You tell me if he makes a strong case. Maybe I am missing something.
1. Bach – an oncologist – misrepresents the research activity of companies pursuing drugs to “target lung or and/or other cancers caused by an acquired genetic abnormality called the ALK rearrangement.” He claims that seven drugs targeting the ‘same cancer causing mechanism’ is too much.
In fact, there are at least seven ALK gene rearrangement variants that are involved in NSCLC alone. And he wants us to believe that one drug targeting ALK will do the job. In fact, most patients who have used the first 2-3 ALK inhibitors (let’s call them Bach’s Enough Bunch or BEBs) undergo a relapse…In particular, the central nervous system (CNS) is one of the most common sites of relapse in patients with ALK-positive NSCLC.
For this reason, most cancer doctors who understand the limits of the first generationof drugs welcome the development of new ALK inhibitors that have greater potency and different kinase selectivity compared with the BEBs.
Bach alludes to that fact that other cancers are caused by ALK mutations. Indeed, there are several. Genomic aberrations in ALK are involved in lymphoma, renal cell carcinoma, rhabdomyosarcoma, thyroid
carcinoma, colorectal cancer, and some rare melanomas.
2. His economic reasoning is circular when it’s not silly. He claims that there is a price high enough to induce companies for 2-3 companies to develop products, but not 7 or 8. Bach presumes that if the prices were at levels he deemed appropriate companies that would otherwise invest in such a small group of patients would invest in yet another small subgroup of patients, presumably at a price not too high, which would in turn lead to companies investing in other small groups of patients where the prices are lower than the ‘right ‘ number of drugs.
I defy Bach to could come up with one example – any example – of a pricing system that generates just the right amount of innovation while inducing and moving capital to other important medical condition. Can he show, for instance, that lower prices for drugs for Pompey’s disease (a rare pediatric condition) stimulated investment in Huntington’s disease or Ebola? Indeed, most orphan diseases are priced well above $100K a year. According to Bach, a lower price would only discourage companies that are developing medicines that are superfluous AND cause them to tackle another small disease group where prices are capped.
Failing logic and empirical evidence, Bach resorts to the use of a red herring: that drug prices are too high because they are lower elsewhere. He asserts, “When the FDA approved a drug this month” (called Ebriet for a previously incurable disease, idiopath pulmonary fibrosis or IPF) “Roche announced a $94K per year price tag, more than twice what the drug costs in Europe. Simple math – if they ever could achieve full market penetration Roche would make back their entire investment in a single year. “
Except it won’t. Because IPF also has several mutations involved. Only 10 percent of patients with the disease have the mutation Ebriet targets. According to Bach then, charging $46K per year for the drug is a sure fire way to induce the development of treatments for the 90 percent of patients that have one or more other mutations.
Let’s set aside the real value of a drug that delays the progression of a previously fatal and untreatable disease for a small and neglected group of patients as Bach does. Or that new cancer drugs and treatments for other rare diseases have saved more money and generated more life expectancy than the half-way or hopeless treatment they replaced. Those are two very good reasons why a new medicine should have a high price.
And let’s set aside the facts that lay waste to his unstated conclusion: the high drug prices are driving American health care spending into bankruptcy. In fact, apart from the value they generate and money they save, drug costs for such illnesses are less than 2 percent of total health care spending and have been that level for decades. Let’s ignore all that, as does Bach. How about applying his Euro-pricing to what he makes or Memorial Sloan Kettering where Bach works. MSKCC generates about $3 billion a year in revenue. It pays 6 executives in excess of $1 million a year. Doctors and hospitals also cost more than twice that they do in Europe. MSKCC is probably even more.
When Bach proposes the same cut in price for MSKCC I can take his conviction about drug prices seriously. He will still be misguided or misleading. And I bet he will still be afraid to debate me.
I have previously asked Peter Bach to answer his own question in a different way: What if his idea of how high prices have to be winds up killing off drugs and vaccines that save peoples lives? What if the price he thinks is too high induces lots of companies to develop an Ebola vaccine. What is morally more reprehensible, drug prices higher than what Bach prefers or drug prices that he likes but kills off Ebola vaccine development? t I have asked Bach to discuss or debate this issue to no avail. . Perhaps Matt Herper could arrange for this to happen since Bach has been ducking me for months.
In this recent post Bach actually argues that prices that he regards as too high are bad for innovation. He never explains why. Instead he complains that there is too much innovation designed to treat rare diseases and specific cancer mutations. You tell me if he makes a strong case. Maybe I am missing something.
1. Bach – an oncologist – misrepresents the research activity of companies pursuing drugs to “target lung or and/or other cancers caused by an acquired genetic abnormality called the ALK rearrangement.” He claims that seven drugs targeting the ‘same cancer causing mechanism’ is too much.
In fact, there are at least seven ALK gene rearrangement variants that are involved in NSCLC alone. And he wants us to believe that one drug targeting ALK will do the job. In fact, most patients who have used the first 2-3 ALK inhibitors (let’s call them Bach’s Enough Bunch or BEBs) undergo a relapse…In particular, the central nervous system (CNS) is one of the most common sites of relapse in patients with ALK-positive NSCLC.
For this reason, most cancer doctors who understand the limits of the first generationof drugs welcome the development of new ALK inhibitors that have greater potency and different kinase selectivity compared with the BEBs.
Bach alludes to that fact that other cancers are caused by ALK mutations. Indeed, there are several. Genomic aberrations in ALK are involved in lymphoma, renal cell carcinoma, rhabdomyosarcoma, thyroid
carcinoma, colorectal cancer, and some rare melanomas.
2. His economic reasoning is circular when it’s not silly. He claims that there is a price high enough to induce companies for 2-3 companies to develop products, but not 7 or 8. Bach presumes that if the prices were at levels he deemed appropriate companies that would otherwise invest in such a small group of patients would invest in yet another small subgroup of patients, presumably at a price not too high, which would in turn lead to companies investing in other small groups of patients where the prices are lower than the ‘right ‘ number of drugs.
I defy Bach to could come up with one example – any example – of a pricing system that generates just the right amount of innovation while inducing and moving capital to other important medical condition. Can he show, for instance, that lower prices for drugs for Pompey’s disease (a rare pediatric condition) stimulated investment in Huntington’s disease or Ebola? Indeed, most orphan diseases are priced well above $100K a year. According to Bach, a lower price would only discourage companies that are developing medicines that are superfluous AND cause them to tackle another small disease group where prices are capped.
Failing logic and empirical evidence, Bach resorts to the use of a red herring: that drug prices are too high because they are lower elsewhere. He asserts, “When the FDA approved a drug this month” (called Ebriet for a previously incurable disease, idiopath pulmonary fibrosis or IPF) “Roche announced a $94K per year price tag, more than twice what the drug costs in Europe. Simple math – if they ever could achieve full market penetration Roche would make back their entire investment in a single year. “
Except it won’t. Because IPF also has several mutations involved. Only 10 percent of patients with the disease have the mutation Ebriet targets. According to Bach then, charging $46K per year for the drug is a sure fire way to induce the development of treatments for the 90 percent of patients that have one or more other mutations.
Let’s set aside the real value of a drug that delays the progression of a previously fatal and untreatable disease for a small and neglected group of patients as Bach does. Or that new cancer drugs and treatments for other rare diseases have saved more money and generated more life expectancy than the half-way or hopeless treatment they replaced. Those are two very good reasons why a new medicine should have a high price.
And let’s set aside the facts that lay waste to his unstated conclusion: the high drug prices are driving American health care spending into bankruptcy. In fact, apart from the value they generate and money they save, drug costs for such illnesses are less than 2 percent of total health care spending and have been that level for decades. Let’s ignore all that, as does Bach. How about applying his Euro-pricing to what he makes or Memorial Sloan Kettering where Bach works. MSKCC generates about $3 billion a year in revenue. It pays 6 executives in excess of $1 million a year. Doctors and hospitals also cost more than twice that they do in Europe. MSKCC is probably even more.
When Bach proposes the same cut in price for MSKCC I can take his conviction about drug prices seriously. He will still be misguided or misleading. And I bet he will still be afraid to debate me.
