What does the US buy and what drugs? Comments

What does the US buy and what
does it get for chemotherapy
Jeffrey S. McCullough
What I like about this paper
• Oncology context
– Evolving technology and policy
• Thorough and thoughtful
– Address costs and quality
– Theoretically and empirically sound approach
• International comparison
– Addresses important and visible issues
– Ahead of its time (Sherry Glied just called for
more of these)
What I don’t like about this paper
• International comparison
– These are hard…
• Unobserved cross-country differences may
be large
• These measures need to be accurate
– Distribution of treatments (Q)
– Treatment prices (P)
– Treatment benefits
• Why colorectal, NSC lung, and breast
– Hopefully not because they’re expensive in the
US market
• Would like to see that these conditions
– Average expenditures per case in US
– Average expenditure changes over time
• US data – 3.5% non-random sample of
oncology patients.
– US physician specialty and practice settings appear
• Treatments are heterogeneous within US
– High rate of off-label treatments
– Substantial differences in colorectal cancer regimens
across Medicare and private insurance populations
• Is it possible to control for patient age
– I suspect the problem is smaller across private
Off-label uses
• Physicians frequently and increasingly use
off-label treatment regimens
• Dropped from data
– Lack survival and QALY data
– May be the best we can do
• What if these are valuable?
– Could be complementary to other expensive
treatments or just worth more
• US and EU IMS price data may not measure the
same thing
– US: usually based on final point of sale (pharmacy,
hospital, physician office)
– EU: based on contract negotiated with the
• Consequences of intermediate steps may be
• This assumes I correctly remember international
IMS data collection procedures…
Tax treatment
• Taxes aren’t consistently treated in US and EU
– US data (implicitly) include producer and
intermediate taxes in price.
– EU data exclude producer and distributer taxes
• These are transfers from manufacturers to
society, not social costs
– Tax-induced distortions are costs but those should
be small in this setting
• Overestimating real US prices
Distribution costs
• Usually small in the US but are often large in EU
– Included in US prices
– Excluded from EU prices
• Conceptually, large EU distribution costs
probably not relevant – this is a separate
• Included US distribution costs may be high for
some oncology treatments (e.g., biologicals)
– Should be deducted from US prices for consistency
What is our fair share?
• High prices could have dynamic consequences
– Comparison to QALYs is especially useful
• ($50k-$100k)/QALY may be on the low side
– We seem to be paying plenty for colorectal cancer
• Except for colorectal cancer, the more
expensive treatments are “worth it”
– May still be getting gouged
• Wealth effects – we should expect higher US
Why are we paying more?
• Could be pure, unchecked, market power
• Most drastic differences are in colorectal
– After big US expenditure spike EU seems to be
catching up
• Are these long-run differences or a short-run
consequences of new innovation?