When it comes to cancer drugs, greed can be good
The FDA just approved Keytruda as a “first-line,” go-to treatment for certain patients with lung cancer. Doctors can now treat patients with Keytruda right off the bat, rather than first prescribing traditional chemotherapy. Merck share prices soared in expectation of a big return on the drug maker’s investment.
Yet this happy news for patients and investors comes on the heels of the clinical trial failure of another promising drug. In late-stage clinical trials, Opdivo — which is already approved for a subset of cancer patients — failed to demonstrate better results than chemotherapy for the patient population under study.
The FDA didn’t approve the medicine for wider use, a decision that wiped out $20 billion in market value for its manufacturer, Bristol-Myers Squibb.
The disparate fates of Keytruda and Opdivo illustrate the risks and rewards of biopharmaceutical research. Both Bristol-Myers Squibb and Merck invested staggering time and resources into developing their drugs. Both have demonstrated considerable benefits in cancer care. Both ventured into first line use. But only one bet ultimately paid off.
Without powerful incentives, no company would take on the multibillion-dollar challenge of drug development. Medical innovation depends on profitability. If Americans want cutting-edge drugs, they need a thriving pharmaceutical industry.
Developing a new drug and acquiring FDA approval is a painstakingly slow process. This year alone, Merck spent $2 billion on Keytruda-related research. But it paid off — Merck has now developed a drug that successfully slows the progression of advanced lung cancer and reduces death rates by 50 percent among a subset of patients.
Opdivo has also achieved incredible results for a subset of patients. Bristol-Myers Squibb hoped it would work for a broader range of patients, and undertook extensive clinical trials to test that hypothesis. That gamble ultimately didn’t pay off. But that sort of risk-taking is exactly the behavior that drives medical innovation forward.
New medicines like Keytruda and Opdivo are able to target the genetic mutations specific to a particular class of tumors without wreaking havoc on the rest of the body. Older therapies — like chemo or radiation — work on a large number of patients, but they also are painfully imprecise, destroying normal healthy cells alongside tumors.
Unfortunately, the very precision of the new therapies means that they aren’t the right option for all patients. We need to encourage more research and more clinical trials on a broad array of patients, to find which therapies work best for the many varieties of the monstrous, $122 billion per year killer we call “cancer.”
In recent decades, new therapies have delivered big gains in the fight against cancer. Medical innovation has multiplied the number of cancer survivors from 3 million in the 1970s to 14 million today. For lung cancer patients, five-year survival rates have increased by over half, and 83 percent of that progress is thanks to new drugs.
But extending life is only part of the goal; improving quality of life also is important. The latest cancer drugs are much less toxic than chemotherapy. They don’t come with debilitating side effects like fatigue, nausea, increased risk of infection, gastrointestinal problems, and hair loss. Patients can take them orally in the comfort of their homes rather than traveling to clinics.
Such medical progress isn’t guaranteed. Politicians have campaigned hard for greater regulation of drug prices. Those measures, such as a ballot initiative in California to cap drug prices and another in Colorado to establish a single-payer health system, failed this election season. But the voices urging crackdowns on drug company “greed” won’t go away anytime soon.
Supporters of such regulation no doubt sincerely want to help patients. But to paraphrase Wall Street’s fictional Gordon Gekko, “greed” is good for patients. Because the risks of drug development are so huge, drug companies need a chance to recoup their investments in spades. Without the possibility of big rewards, investors simply won’t fund lifesaving and life-improving research.
For every Keytruda, there are many more promising medicines that disappoint in clinical trials and don’t gain the FDA’s stamp of approval. Discovering and delivering more breakthrough drugs to patients depends on the right incentive structures.
Sandip Shah is the founder and president of Market Access Solutions (MKTXS). He spent nearly three decades working at large pharmaceutical firms, where he developed pricing and reimbursement strategies. Vidya Ramesh is an associate director at MKTXS, with multiple years of experience in market access and pricing/ reimbursement.