Shortages and the high cost of cancer drugs are putting treatment out of reach for many cancer patients in the U.S.

In searching for solutions, experts at an Institute of Medicine National Cancer Policy Forum Monday looked at regulatory practices, reimbursement policies and societal attitudes that have contributed to a pricing structure that incentivizes innovation but potentially limits patient access.

"Innovation is important, but it has to be innovation we can afford," NICE International's Kalipso Chalkidou said, adding that innovation can't come at the cost of patient access to drugs.

U.S. leniency toward high drug prices, which are based on how prior drugs are priced rather than value, does the rest of the world a disservice, she said.

In the UK where the National Institute for Health and Care Excellence (NICE) is charged with evaluating value-based pricing, the focus is on the number of people who can be helped – not what's best for one patient, Chalkidou noted.

That attitude doesn't fly in the U.S., where a growing emphasis is on personalized medicine. Instead, the issue is how to ensure equitable access to the best cancer drugs for each patient. That raises the question of who decides which treatment is used, said Alex Bastian, of GfK Custom Research LLC. American patients think they should make that choice, but they're generally not the ones paying for it.

The federal government is now covering about 50 percent of health care costs in the U.S., Bastian said. That's the point in other markets that government began controlling prices.

Insurance picks up the bulk of the remaining tab. When it comes to buying insurance, Americans tend to act as consumers, making their decision based on the price of the policy rather than on what it covers, United Health Group's Lee Newcomer said. Then when they get sick, they want the treatment, but they don't want hefty co-pays or deductibles.

So are health care costs really too high? Newcomer asked. Or are Americans not willing to save for medical contingencies? Do they not value health care? It is an economic problem, he said.

One way to address value issues is for doctors to discuss drug price when discussing treatment options with patients, said Yousuf Zafar, of the Duke Cancer Center. While some panelists agreed that such a conversation would be beneficial, others thought that patients dealing with cancer need to be immune to pricing concerns.

Representing the patient view, Shelley Fuld Nasso, of the National Coalition for Cancer Survivorship, said if she's discussing her own care with her doctor, cost is a valid issue. But if she's discussing treatment options for her 3-year-old son, she doesn't want price to be a factor.

PART B REIMBURSEMENT

Aside from such societal issues, the panelists discussed the impact of Medicare's Part B reimbursement scheme on drug prices and utilization. Under the 340B program, health care providers are reimbursed the average sales price of the drug plus 6 percent to cover their administrative costs. (That percentage was reduced under sequestration.) Obviously, a physician would realize a larger reimbursement by using an expensive brand drug rather than a cheap generic drug that is equally as effective, said Jeffrey Peppercorn, of Duke University Medical School.

It's not a matter of greed, he said. It's about covering the administrative costs involved in acquiring and using the drug. The few hundred dollars a physician would get for using a generic drug would be inadequate to cover actual costs.

As a result, Medicare's reimbursement policy discourages the use of generic cancer drugs and drives generic drugmakers away from the sterile injectable drugs used to treat cancer. The unintended consequences of that policy, which was adopted in 2005, are ongoing shortages of cancer drugs, Peppercorn said. In 2004, only 58 drugs were in shortage, he noted, but a few years after the policy change, the shortage list had grown to more than 200 drugs.

REGULATORY ISSUES

Regulatory practices also promote higher prices and have a role in ongoing shortages of cancer drugs, said Peyton Howell, of Amerisource Bergen. Continuing supply issues involve the lower-cost oncology drugs, but solving the shortages always results in a higher cost, she added.

While shortages are a multifaceted problem, Howell pointed to evolving manufacturing standards as a major contributor. Good manufacturing practices shouldn't be a moving target, she added.

Another factor is the number of generic drugmakers that are shifting their focus from low-cost sterile injectables to brand drugs and biosimilars.

To deal with legitimate regulatory issues, Howell recommended the FDA:

• provide better collaboration and coordination between its offices that deal with generic drugs and drug shortages;

• prioritize shortages, dealing with the most urgent shortages first rather than "working through the stack;"

• reduce the wait time for facility inspections.

Barry Fortner, of Ion Solutions, offered another regulatory problem contributing to the high price of cancer drugs – the lack of me-too drugs in the space. Copycat drugs would promote price competition and ensure multiple sources of important cancer treatments, heading off shortages.

Peter Bach, of Memorial Sloan-Kettering Cancer Center, agreed. Even when two cancer drugs have the same mechanism of action, targets, diagnostics and administration, the FDA approves them as unique drugs, he said.

Although a number of panelists mentioned the pending advent of biosimilars in the U.S., they weren't optimistic that the follow-on biologics, with their high development costs, would do much to lower the price of cancer drugs.