New Zealand's fight to drive down Cancer Drug pricing

A 'Mexican Stand-off ' has broken out between Merck and New Zealand over a pricey new cancer drug in the latest example of how the cost of medicines is a flashpoint between drug makers and governments.

At issue is Merck’s Keytruda, one of the new oncology treatments that harness the power of the body’s immune system to battle tumors. The medicine was approved in the United States two years ago to combat melanoma and, more recently, to tackle the most common form of lung cancer. Although priced at a hefty $150,000 a year, Keytruda is largely covered by public and private payers in the US.

In New Zealand, the drug was approved last fall to treat melanoma. But since then, Pharmac, the government agency that decides whether coverage will be funded, has so far refused to endorse Keytruda. The agency contends evidence is lacking to verify whether the drug helps melanoma patients live longer compared with other new melanoma treatments or standard chemotherapy.

Patient groups are upset with Pharmac. For instance, the Cancer Society of New Zealand, has expressed frustration that Pharmac has not released cost effectiveness data to justify its decision.

The struggle between Pharmac and Merck may intensify, though. Just last week, the government regulator, Medsafe, endorsed a rival treatment called Opdivo from Bristol-Myers Squibb for treating melanoma. And Pharmac has agreed to fund coverage.
“We can now expect Pharmac to lever one company off against each other in order to drive down the price for New Zealand taxpayers to get the best possible value for money,” Cancer Society medical director Chris Jackson, stated.