A letter to Annette

Gareth MorganHealth

On Tuesday we spoke out against Andrew Little’s politicking over Pharmac’s decision to not fund (at the moment) one of the new generation of cancer drugs called Keytruda. To his credit the Greens health spokesperson Kevin Hague was the voice of reason – speaking out in support of the independence of Pharmac. However Labour deputy and former Health Minister Annette King defended her party leader in a series of tweets:

This sparked a large conversation that could not possibly be conducted in 140 characters. So here’s a blog. We’ll take each of these claims in turn.

There is no first line treatment for melanoma

Actually, like other cancers there is a first line treatment for melanoma. Existing first line treatments include removing the cancerous cells physically with surgery, radio therapy and chemotherapy. The problem with melanoma is that it is often not diagnosed early enough for these treatments to be effective.

Perhaps what Annette means is that there is no first line ‘biological therapy’ for melanoma. If this is what she means she is right, but that is also true for many other cancers.


What is Biological therapy?

Biological therapy involves the use of living organisms, substances derived from living organisms, or laboratory-produced versions of such substances to treat disease. Some biological therapies for cancer use vaccines or bacteria to stimulate the body’s immune system to act against cancer cells. These types of biological therapy, which are sometimes referred to collectively as “immunotherapy” or “biological response modifier therapy,” do not target cancer cells directly. Other biological therapies, such as antibodies or segments of genetic material (RNA or DNA), do target cancer cells directly. Biological therapies that interfere with specific molecules involved in tumor growth and progression are also referred to as targeted therapies. (For example Herceptin which targets the specific molecules (“molecular targets”) that are involved in the growth, progression, and spread of a particular type of breast cancer.)


In the case of Keytruda it acts to help the body’s own immune system target the cancer. It is revolutionary stuff in the world of cancer treatment and has amazing potential. Certainly initial trials show in the short term it is very effective for some patients (around 1 in 3) who have very advanced melanoma, and we have seen this in some of the stories told by those who have self-funded. It would be a cold and calculated person to not be moved by these stories.

However a biological therapy that is effective at a late stage in cancer is pretty revolutionary. We do also have biological treatments for some cancers that can be used much earlier in the disease, for example Herceptin. However, there are also a lot of cancers (including some skin cancers) where we have no biological therapies yet available for any stage. For example ovarian cancer and some types of lung cancer have no biological treatments yet available and first line treatments of radio and chemotherapy are not very effective. Both of these cancers are usually diagnosed quite late and become quite advanced before treatment starts – lowering the impact current treatments have.

So melanoma sufferers are not alone at not having first line biological treatments funded by Pharmac. And given the field is wide open for the development of these new drugs, we are likely to see many more of them in the future. As more biological therapies come online, we will face more tough choices with our limited Pharmac budget.

And here lies the issue, with multiple drug companies at this moment researching these new types of treatments for many different types of cancers, and working hard to bring them to market (with associated huge price tags) how do we decide what to fund at the early stages of the drug coming online? Pretty much the reality for Pharmac is that we don’t fund them because they cannot tell whether they are cost effective.

How Pharmac makes life and death decisions

Pharmac has a committee staffed by experts in medical research who look at both the published and often unpublished drug company data (if they can get it) to see how effective a drug is – does it work? They don’t just look at survival times but also side effects – the quality of life a patient has.

Then they have to face up to the reality of a fixed budget. That means working out whether a drug is not just effective but whether it is cost effective. Given how much we spend, how much bang for buck does this drug pack? How many extra healthy years of life can we get for this drug compared to that one? Remember, some of these drugs are very expensive.

So it all has to get a bit cold and calculating. The question becomes whether the cost of Keydruda per treatment works out as more or less than the value of the extended life years it can give. The problem is we don’t have enough data yet to know how many years Keytruda extends life for. We know it extends it for some (roughly 1/3) patients for a year or two and we know it shrinks tumours in others. However, we don’t know if these benefits last so at the moment it is not cost effective – not until we have evidence of longer survival available

We simply don’t have the data yet that says we know for sure it is cost effective. Now you may say surely this is just a matter of time and we should fund in the meantime? Well that is not really how research works. Something that is promising in the short term can often turn out to not be as successful as we initially thought. So second guessing trial data is a dangerous precedent to set, because once you fund a drug it is very difficult to stop funding it. And also as you’re funding that, you’re not funding something else.


Annette King also talked about the impact of the TPP on Pharmac, but in reality the impact was far less than initially feared.

Pharmac will have to increase transparency, including a timeframe for considering applications. One of its tactics in the past has been to sit on applications to try to push the price down.

New Zealand will also have to establish a specific review process for funding applications declined by Pharmac, although this could be an internal Pharmac review.

These changes are expected to cost a one-off sum of $4.5 million and $2.2 million a year ongoing. We presume that the government will be able to fund this cost through increased tax revenue as a result of the trade benefits from the TPP.

Kevin was right

Lurking around in the background of all of this are the drug companies. Kevin Hague should be praised for drawing our attention to the rather salient point that encouraging patients to advocate loudly for expensive drugs to be funded when cost effectiveness is not yet proven is manipulative behaviour on the part of an industry. They probably weren’t behind the push for Keytruda, but certainly it is behaviour that they are guilty of.

It was not long ago when investigations by The Sunday Star Times revealed that global drug giant Janssen Pharmaceuticals (part of Johnson & Johnson) had employed a PR company to team up with the Prostate Cancer Foundation and terminally ill men to bring pressure on the Government to fund a $60,000-a-year drug called Abiraterone for men with late stage prostate cancer. This was prior to a cost effectiveness analysis by Pharmac. The drug was eventually funded last year when the trial data came through but at the time their tactics were pretty nasty. The campaign argued that men were not being given the same priority as women with breast or cervical cancer – that  breast cancer sufferers received “gold standard” treatment but men with prostate cancer were “sent home to die”. The reality was that this is like comparing apples with fish because as the drug company well knew this treatment extended the life of terminal patients, while Herceptin could cure patients.

This sort of manipulation is a dirty business that makes it more difficult for Pharmac to do its job, and for politicians to keep themselves from wanting to play God. The drug companies know this for sure and will do all they can to pour fuel on the fire.

A letter to Annette was last modified: March 24th, 2016 by Gareth Morgan
About the Author

Gareth Morgan

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Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist. Gareth and his wife Joanne have a charitable foundation, the Morgan Foundation, which has three main stands of philanthropic endeavour – public interest research, conservation and social investment.