Dendreon's Provenge Costs the Same as Chemotherapy

By David Miller  JUL 29, 2010 2:05 PM

The price of the prostate cancer drug has been widely debated and is often wildly wrong.

 


When Dendreon (DNDN) surprised Wall Street by choosing a price for Provenge of $93,000, it was inevitable much of the conversation about Provenge going forward would revolve around price.

When the Centers for Medicare Services (abbreviated CMS) dove in and launched a National Coverage Assessment (shortened to NCA) for Provenge, this really got the debate about Provenge’s price moving. In retrospect, the NCA process makes sense as CMS most likely wants to make sure it's not paying for off-label use of the drug.

The outcome of the Provenge IMPACT trial was reported yesterday in the New England Journal of Medicine. As is usually the case with important new and/or first-in-class drugs, the publication included an editorial by Dr. Dan Longo, an immunologist working for the National Institute of Aging. The editorial had its positive parts, with Longo concluding a review of the IMPACT trial by stating:

"Thus, a 23% reduction in the risk of death in patients with metastatic disease is an important step.”

However, Longo put forth three criticisms. The first two are trial/science geek stuff, which my firm (Biotech Stock Research) and I don't think hold water. The third criticism was related to Provenge’s cost. Longo states:

“Another concern with sipuleucel-T treatment is the cost. The current cost of care for men with prostate cancer has been estimated to be about $1,800 per month. (Alemayehu, 2010) The manufacturer has set the cost of a 1-month course of sipuleucel-T at $93,000, or $23,000 per month [sic] of survival advantage.”

The problem here is that Longo’s math is wrong and the Alemayehu study he chose to cite used methodology that makes it unusable for drug-to-drug cost comparisons. (On a side note, Longo also errs in assuming Provenge has a 4.1-month survival advantage. It doesn’t. It has a 4.1-month median survival advantage. The best way to understand the difference is to read Stephen Jay Gould’s essay "The Median Isn't the Message”.)

Let me explain to two big flaws in Longo’s cost math:

The Alemayehu cost data come from a retrospective study of patients between 2001 and 2007. The lead author of the paper is an employee of AstraZeneca (AZN), a Dr. Berhanu Alemayehu. I note the cost estimates from his paper for the “treatment” of CRPC are far lower than other data I’ve seen. This made me dive into the study methodology. Here’s what I found:
 

The big problem is the first one. Anywhere from 50%-75% of men with CRPC choose not to use chemotherapy. By including that population in the cost figures, the Alemayehu paper is unsuitable for use for cost comparisons. Using it essentially means you're comparing the cost of no therapy to the cost of therapy.

That’s hardly a fair comparison. Compounding the flaw in his choice of a reference paper, Longo also incorrectly calculated his cost figures. He uses the raw $1,800 PPPM figure and compares it to Provenge’s per median survival month figure. In simpler terms, he uses a monthly cost figure without converting it to a therapy cost figure.

The following table uses data from the Alemayehu paper, numbers from a more complete analysis of chemotherapy costs from the Milliman firm, and actual Provenge costs to place the cost analysis in proper perspective.



I reiterate, the Alemayehu paper is inappropriate for cost comparisons because a substantial number of patients it tracks chose no therapy for CRPC. Comparing the cost of Provenge (or any other therapy, for that matter) against the cost of doing nothing is hardly fair or accurate. I included the Alemayehu column only to illustrate where Longo made his second error.

I should discuss the Milliman data briefly. The report wasn't specific to prostate cancer, but included prostate cancer as a separate data set. It looked at chemotherapy costs across a wide variety of cancers. The data were generated off a very large insurance database. Unlike the Alemayehu paper, it focused only on patients treated with chemotherapy and excluded those who didn't make that choice. It captures more side effect cost data by using primary and secondary codes for cancer/chemo-related treatments whereas the Alemayehu paper used only primary. The Milliman analysis does exclude patients over 70, which I believe likely underestimates the true cost of chemotherapy side effects since all the data I've seen shows people over 70 have higher and more severe side effects to Taxotere. The Milliman analysis doesn't make any attempt to segregate chemo use in CRPC from chemo use in earlier-stage disease. I don't believe this can account for the marked difference in cost PPPM compared to the Alemayehu since chemo is rarely used in earlier-stage prostate cancer (unlike almost all other cancers).

Most likely, the majority of PPPM cost differences between the Milliman analysis and the Alemayehu paper result from Alemayehu’s methodology that captures “no-cost” patients who declined to receive chemotherapy for CRPC. It's worth repeating that this is a majority of patients, somewhere between 50% and 75% depending on the analysis. This choice doesn't represent a flaw in Alemayehu’s methodology, but does mean the paper is unsuitable for use in comparing treatment costs.

I remain unconvinced calculating cost per median month survival is an effective method of cost comparison. Even though the table above shows the monetary cost of Provenge is comparable to the monetary cost of chemo in prostate cancer patients, this analysis ignores the radical difference in quality of life. I summarize a few of these quality-of-life differences in the table below.



Provenge is priced equivalent to the inclusive monetary cost of chemotherapy according to the Milliman data. This is somewhat ironic given the recent focus on Provenge’s “high” cost. When one looks at even the brief side effect comparison I show above, it’s easy to see why men are clamoring for Provenge and why the majority refuse to take Taxotere. It should also be easy to see why simple comparisons of monetary cost don’t represent the entire difference between two therapies.
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