The Complex Economics of Cancer Care

The last two high profile patent battles in India have incidentally been for cancer drugs –Glivec and Tarceva, developed by Novartis and Roche respectively. And the reason these two cases became landmark, discussed threadbare internationally, was because not only cancer cases are on the rise with the disease still being perceived as a death sentence, but because the economics of cancer medication is turning out to be very complex.

(Glenmark’s challenge of Merck’s diabetes drug Januvia had a precedent in Tarceva case. While the Delhi court rejected the injunction plea of Merck last week, the latter has once again appealed against the court decision.)

In a substantive paper published today in the journal Nature Reviews Clinical Oncology, a group of authors from Singapore, USA and Brazil evaluate the cost of cancer medication in low and middle income countries. The good news is that many countries are experimenting with measures that hold promise; the bad news, though, is that these experiments are just not enough. The authors propose a global fund to find cancer in the mould of the Global Fund to Fight Malaria.

That might not be a bad idea. Here’s why:

Among non-communicable diseases cancer causes more than 7.1 million deaths annually, exceeding those caused by TB, HIV/AIDS and malaria combined. The global cost of cancer, excluding the direct cost of treatment was $895 billion in 2008. The economic toll of cancer was 19 percent higher than the second most common case (heart disease) and was equivalent to 1.5 percent of global Gross Domestic Product.

Data shows that 60 percent of new cancer cases are now being reported from low and middle income countries which contribute only about 6.2 percent of the total spend on cancer globally. Clearly, poor and emerging economies are not able to meet the needs of their cancer patients.

The authors have calculated the economic burden of cancer per patient including direct medical expenses, non-medical expenses and productivity losses. It turns out to be: $7.92 in South America, $4.32 in China, and $0.54 in India. Now compare these figures with those in rich countries: $183 in UK, $244 in Japan and $460 in USA.

When adjusted for income at current exchange rates, the money spent on cancer care is equivalent to 0.12 percent of the per capita gross national income in South America, 0.05 percent in India and 0.11 percent in China. In the UK, Japan and USA, the corresponding numbers expenses are 0.51 percent, 0.6 percent ad 1.02 percent of GNI respectively.

With such shoe-string budgets to work with, some countries have been forced to test new ways of making cancer drugs accessible and affordable. Generics or biosimilars is certainly one option, and one that the last bastion of patented drugs,i.e. Japan, is now falling for. Data presented at the 2013 American Society of Clinical Oncology annual meeting shows that use of generic anti-cancer drugs like Oxaliplatin and irinotecan in India, led to cost savings of $64 million and there was no decrease in clinical outcomes. Dabur Pharma’s launch in 2006 of a nanoparticle-based drug Nanoxel (a formulation of patented drug paclitaxel) is another good example of innovation. Authors estimate that Nanoxel is $400 cheaper to administer per cycle than paclitaxel.

China too has launched a generic lung cancer drug which is doing well in the country.

These are good models but unfortunately no peer reviewed paper has been published on the clinical trials of these drugs so that they stand stringent scrutiny of regulate markets. Without larger and additional studies, these drugs won’t enter developed markets, even though they are in equally big need there to reduce the overall health care costs.

In the recent din and bustle of Novartis and Glenmark cases, many of us may have forgotten the compulsory licensing that was issued last year to Natco Pharma to make kidney cancer drug sorefenib (brand name Nexavar) which has been originally developed by Bayer. It was argued, like today, that it’d deter big pharma from investing in India, or that it might impact the overall foreign direct investment into the country. Truth it, there’s no data to back such prognosis.

In oncology, a well-studied example of compulsory licensing comes from Thailand. It issued compulsory license for four cancer drugs and a budget impact study shows a saving of $140 million. Countries issuing these licenses may be under some diplomatic pressure or lobbying by industry groups but there is no evidence to show innovation or introduction of new drugs is adversely impacted. In Thailand’s case particularly, no relationship could be found between the use of the compulsory licenses and foreign direct investment inflows in the country between 2002 and 2008.

These are a handful of steps meant to ensure access to cancer drugs but they can at best be called patchy. There needs to be coordinated plan, both at the country and at the global level. A decade ago, the international response to HIV was remarkable. Can the world unite once again to halt the march of cancer?

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