Amgen VP Discusses 'Responsible Pricing' of New Cancer Drugs and Pharm-Sponsored Patient Assistance Programs

In today's cost-conscious health care environment, the pricing of cancer drugs has come under scrutiny from payers, providers, policy makers, and the public. Large pharmaceutical companies are often cast as the villain in this debate. In order to shed light on this issue, Cancer Care & Economics (CC&E) recently spoke with Joshua J. Ofman, MD, MSHS, vice president of reimbursement and payment policy at Amgen, one of the world's leading biotechnology companies.

CC&E: In a nutshell, what is your role at Amgen?

DR. OFMAN: I'm vice president of reimbursement and payment policy, responsible for the design and execution of Amgen's reimbursement and payment strategy, and the integration of reimbursement needs into the product development and commercialization process.

CC&E: The pricing of Vectibix (panitumumab)—which was recently FDA approved for use in metastatic colorectal cancer that has metastasized following standard chemotherapy—created a bit of a stir. What prompted this so-called discounted price?

DR. OFMAN: Although Amgen has extensive experience in supportive care products, Vectibix is our first oncology therapeutic. To allay concerns about the growing costs of new oncology drugs, leadership at Amgen felt that the best policy was a meaningfully lower price, compared with Erbitux (cetuximab), which is our competitor in the metastatic colorectal cancer market. In the long run, I think competitive pricing strategies will have a positive effect on the industry as a whole.

CC&E: Bristol-Myers Squibb has a Patient Assistance Program for Erbitux, which provides the drug free to qualified patients who are unable to pay. Tell us about the Amgen Oncology Assistance (AOA) program.

DR. OFMAN: We wanted to develop a program around Vectibix that balanced cutting-edge cancer treatment with what we a know is a heavy societal and individual financial burden. To that end, we developed Amgen Oncology Assistance, a robust, multifaceted, initiative addressing the needs of patients who are uninsured, underinsured, or unable to afford their insurance co-payments. All of these patients can receive Amgen's cancer medicines, including Vectibix, by calling a toll-free number (1-800-272-9376).

CC&E: What part does the Safety Net Foundation play in this initiative?

DR. OFMAN: The Safety Net Foundation has actually been around for a long time, providing free Amgen medicines to patients who qualify. To qualify for Safety Net, the entire household has to have an adjusted gross yearly income of $75,000 or less.

The newest element of the program is called the Vectibix Cap, which basically puts a ceiling on the total out-of-pocket expenses and co-payments for Vectibix in the United States regardless of a patient's insurance or their income status. Once any patient reaches 5% of their adjusted gross income as an out-of-pocket expense, he or she becomes eligible to receive Vectibix for free.

CC&E: Why do you think Big Pharma philanthropy such as the Safety Net Foundation gets so little attention in mainstream health media?

DR. OFMAN: I'm not sure that's the case. I think it is very well known that the pharmaceutical industry tries to support patients whose medical needs would otherwise be unmet. Most companies, including Amgen, donate millions of dollars a year to independent third-party patient assistance foundations, at home and in Third World countries. Philanthropic programs are common practice in the industry, part of our culture.

CC&E: Could you give a brief explanation of how drugs are priced?

DR. OFMAN: That is an important question, something that people are concerned about. However, there is no one formula on how drugs are priced. We have had a very principled approach to development of what we call a "responsible price."

First, the price should capture the value of the product in terms of clinical efficacy but also the impact the drug has on quality of life and the ability to deliver high-quality care to patients.

The second principle is that the pricing should reflect the market dynamic, including current competition.

Third, in order to fund scientific innovation, we invest hundreds of millions of dollars a year in research and development (R&D), which is reflected in the pricing structure.

And the fourth principle is that we want to ensure patient access and make sure that we balance affordability with the quality and the clinical benefit of the drug by putting aggressive patient assistance programs in place to make sure that no patients are left behind.

So, with those principles, we think we have come up with a methodology to determine a responsible price for our products.

CC&E: Has the passage of the Medicare Modernization Act (MMA) affected Amgen's drug development process in any way?

DR. OFMAN: The MMA has not had a profound effect on the way we develop drugs. The MMA primarily has provided a prescription drug benefit, which is of tremendous benefit to Medicare beneficiaries, but that has very little impact on Amgen because most of our products are in the Medicare Part B side.

CC&E: Does Amgen pursue an aggressive R&D profile?

DR. OFMAN: Yes, Amgen's R&D is in full throttle. Historically, we have invested about 20% of our total revenues back into R&D. In 2006 we are going to increase this adjusted R&D expense by about an additional 30% to 40% to support our growing pipeline, which now includes more than 40 potential medicines to treat serious illness.

CC&E: Any closing thoughts about Amgen's role in health care?

DR. OFMAN: Amgen's mission is to play a leadership role in developing innovative medicines for treating serious medical conditions. In accordance with our scientific innovations, we want to take the lead in developing pricing structures and patient access programs that other companies will follow.

Moreover, we want to make sure that we operate in a socially responsible way, ensuring that all patients who need them have complete access to our products.