John Key says his budget boost for Pharmac should be enough to get a melanoma drug over the line, after the Pharmac CEO says it wouldn't fund Keytruda even if it had the money. Let's unpack this...

How high is "quite high"?

That's a life and death question having heard both the Pharmac CEO Steffan Crausaz and Prime Minister talk about funding a melanoma drug over the past 48 hours.

On Saturday morning Crausaz had this conversation on The Nation with Lisa Owen:

Owen: So are there actually other drugs as good as Keytruda or better? You know, because the Health Minister has acknowledged that Keytruda could save about 120 lives a year. But are there others ahead of that that are better and there’s more evidence that suggests they’re better value for money?

Crausaz: Yeah, so after that review, they’ve [Pharmac's review committee] said this isn’t in the top tier of medicines that we would like to see funded. That’s why they said compared to everything else, a low priority. The context is—

But how many? How many—?

About 20 at the moment we’re actively working on would have a high-priority recommendation from those committees.

This morning, on RNZ's Morning Report, Key told Susie Ferguson:

"It's [Keytruda] not at the head of their list, or it wasn't last time I was given the advice, it might move around a wee bit. But on the principle that we give them the sort of money we're talking about then I think it would be enough for them to fund it, or fund a treatment.

Asked then if he thinks Keytruda should be funded, Key replied:

"...For want of a better term, they fund in an order of what will provided the most value for the dollar they're given... and a melanoma drug, not necessarily Keytruda, is quite high on their list. So we have a sense of how much money we would need to give them to get them over the line on as melanoma drug."

It's interesting to unpack those comments. Crausaz was quite clear; a lack of funds isn't the main reason Keytruda isn't being funded. Sure, it's part of the picture, because the way Pharmac's formula works, the cheaper the drug the more willing it is to take a punt on encouraging (yet not definitive) research. In other words, the lower the bet the more willing it is to take long odds. Keytruda is very expensive.

But Pharmac views Keytruda as a "low priority" because, bluntly, "Keytruda hasn’t been proven to help people live longer lives", the CEO says. Yes, it shrinks tumours. But there's no proof yet that leads to longer and better lives.

At least 20 other drugs have been graded "high priority", and so are ahead of low priority Keytruda in Pharmac's thinking. They include other cancer drugs, but also medicines for shingles and chicken pox.

Which raises questions about the Prime Minister's comments this morning. He acknowledges, rightly, that Keytruda isn't at the head of Pharmac's list. But he immediately says that if National gives it enough funding in this year's budget, the drug agency should be able to fund it or another melanoma treatment.

Now that appears to leave the PM and the CEO somewhat at odds. For a start, Crausaz said it's not just about the money, it's about a lack of evidence that it works terribly well. As I noted before, price plays a part because, the cheaper the drug the more willing Pharmac is to give it a crack. And Crausaz did say that if Merck Sharp & Dohme cut their price, that "helps".

But that means a funding increase by government wouldn't be enough on its own to fund Keytruda or a similar treatment; Merck would have to come to the party. And even then, Crausaz says there are 20 drugs ahead of Keytruda on his list.

So is Key saying the funding boost will be enough to fund at least 21 new drugs? Does he somehow know there's new research coming that will push it up the list? Or is this pressure for Keytruda or another melanoma drug to jump the queue?

Because if I'm waiting on one of those other 20 "high priority" drugs and Keytruda or something similar gets funding before me, I'm going to be rather cross.

Before we go any further, let's address that "something similar". Crausaz and Key seem to be on the same page, implying that a different melanoma treatment may be funded before the highlighted Keytruda. Crausaz named a competitor, Opdivo, as another potential form of treatment.

But the CEO says it isn't even available in New Zealand yet and it will be "a couple of months" before it arrives and Pharmac can begin trials. So presumably it's also months before that could be funded.

Both the PM's and CEO's comments seem to be as clever as they are blunt. They are presumably trying to create a price war between Keytruda and Opdivo, hoping one or both of either Merck or Bristol-Myers Squibb will do a deal and cut their price.

But that's a big if. And it doesn't offer any certainty as to whether one of those drugs will be able to climb to the top of Pharmac's list. That mostly depends on trial results.

If Crausaz is playing with a straight bat and there are 20 drugs – even 20 less expensive drugs – ahead of Keytruda, then is Key playing with fire – and raising false hope – saying that the government's funding increase will get a melanoma treatment "across the line".

Key says a treatment is "quite high" on Pharmac's lists, but at this stage the only viable drug on the market sits outside the agency's top 20. Is that what Key means by quite high? Could all 20+ drugs be funded? Is Pharmac more flexible on this drug than it says?

It's not clear. But the men's comments don't quite square.

Comments (4)

by Alan Johnstone on March 07, 2016
Alan Johnstone

Ministers, esp the PM shouldn't be anywhere near operational decisions like this. It's unhealthy.

Pharmac has a terms of reference to work within, it should be allowed to do it's job in a professional, non politicised fashion.

It's typical of Mr Key's "Let's make a deal" mindset, that was also evident in the convention center process. 

by Moz on March 07, 2016

Could all 20+ drugs be funded?

That's the obvious reading. But since it's Key, that reading will almost certainly be wrong.

Or is this pressure for Keytruda or another melanoma drug to jump the queue?

That would match National/Key behaviour across a whole range of issues. Ignore the research, ignore the rules, bypass best practice and pick a winner.

by Stewart Hawkins on March 07, 2016
Stewart Hawkins

Agree with both comments. On my reading of the very limited research available on Keytruda there is little to recommend it at this stage unless it was much, much cheaper.I would guess that Pharmac is correct in saying there are many more effective medicines they will be looking at funding before these melanoma drugs.This is another example of a politically active health group getting airplay, combined with the general secrecy employed by Pharmac, resulting in politicians trying to do deals that really mean buying votes with tax-payers money. Don't get me started on breast screening - if we looked at this scientifically it wouldn't be funded.

by John Monro on May 03, 2016
John Monro

Not that dissimilar to the Herceptin arguments. Actually these drug companies are guilty of cynical blackmailing patients and countries in the ridiculous prices of these drugs. They are not priced according to cost of development or testing, but are costed at the maximum possible price that experience tells the company they can get away with - effective emotional campaigns being particularly potent - for the treatment to be funded. The profit margins for some of these drugs and companies producing them is over 90%. . 

Having said that, pembrolizumab, (Keytruda) is semi-effective. 33% response rate in one study, 5% remission rate (i.e. complete clearance - for an unknown time)- the other 27% being a partial response.  No other drug regime comes even close to these (rather imperfect) figures, where metastatic melanoma is otherwise a death sentence. Basically one is comparing Keytruda with other treatment modalities which are just about useless in metastatic malignant melanoma. So yes, for about 5% of patients the drug is miraculous, on a temporary basis at least, and for about one third  provides useful life extension. I believe that Pharmac have been pretty strict in what trial results they're willing to take note of. Note too that Keytruda has shown equal promise in the treatment of non-small cell lung cancer. I think there are between 1000 and 1500 lung cancer deaths per annum, so if this is confirmed, we'd be looking at another cohort of cancer victims needing this drug about four times larger than the melanoma cohort. I believe the cost of Keytruda for melanoma will be about $30 million p.a, with lung cancer we'll be looking at $150 million for these two conditions alone. Multiply by patients in much larger countries such as the UK, USA, Australia etc. we're talking many billions of dollars. No drug costs anything like that much to develop, though they do regularly cost hundred of millions of dollars in advertising and marketing. 

And there's the rub. Higher taxes, less holidays in Rarotonga? And we've just started the journey with biologics........

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