WASHINGTON, June 12 (UPI) -- A study released Monday reveals Eli Lilly's osteoporosis treatment Forteo is not cost-effective when compared to Merck's Fosamax, and experts said the findings may have implications for the high-pricing strategy pharmaceutical manufacturers typically employ for novel drugs.
The study, which appears in the June 12 issue of Archives of Internal Medicine, found Forteo therapy is more expensive and produces a smaller increase in quality-adjusted life years than Fosamax.
"Forteo was not cost-effective compared to Fosamax because of it's high price," the study's lead author, Hau Liu of Stanford University's Center for Health Policy/Center for Primary Care and Outcomes Research, told United Press International.
"However, we did evaluate certain instances in which it did become cost-effective," Liu added.
Forteo, which costs approximately $6,700 per year, could become cost-effective if the price is reduced by 60 percent. Shortening the course of therapy or limiting use of the drug to women at exceptionally high-risk could also make it cost-effective.
Liu said the United Kingdom's National Health Service conducted a previous analysis of the cost-effectiveness of Forteo and obtained similar results.
Cost-effective studies may become more important as healthcare expenditures increase, Liu said. "My understanding is that CMS and other agencies don't explicitly take into account cost-effective analyses, but as we move forward and think about getting more bang for our healthcare dollar, this is one way we may able to think about this in a systematic fashion," he said.
However, Eli Lilly said Forteo was too different to be compared with other medications.
"You really can't compare Forteo ... to other osteoporosis therapies, called anti-resorptives," spokeswoman Keri McGrath told UPI. "They're not in the same class of medications, and are very different."
McGrath said Forteo is an important option for some osteoporosis patients and noted that Lilly has an assistance program in place for those eligible patients who can't afford the drug.
Forteo, which was approved by the Food and Drug administration in 2002, generated more than $350 million in revenue last year and sales could be as much as $750 million by 2008.
The drug was hailed as a breakthrough because it is the first agent that stimulates new bone growth rather than merely halting bone loss and increasing density as Fosamax and other osteoporosis treatments do. However, this analysis indicates the benefits of Forteo may be limited.
Liu's team used a computer simulation model to analyze the cost-effectiveness of four treatment strategies -- vitamin D and calcium, Forteo for two years, Fosamax for five years or two years of Forteo followed by five years of Fosamax -- in a hypothetical group of 200,000 women with severe osteoporosis.
In addition to quality of life, the researchers took into account the number and type of pre-existing fractures, new fractures and death or survival.
Fosamax alone costs $11,600 per quality-adjusted life-year gained in comparison to treatment with vitamin D and calcium, coming in well under the threshold of $50,000 that is generally used as the cutoff for a cost-effective therapy.
Forteo, however, costs $172,300 per quality-adjusted life-year and the Forteo/Fosamax combination came in at $156,500, indicating that neither regimen was cost-effective.
Alan Garber, senior author of the study and director of Stanford's health policy center, said the findings may have implications for pricing strategies for other drugs.
"What's changing, and I think this is the key issue, is we have an aging population, premiums are going up and Medicare expenditures and going up," Garber told UPI. "So what's changing is health plans are getting more sensitive to cost. In the coming years, I think there will be more and more push back in coverage of high priced drugs or patients will have to pay a greater share of costs."
If too much of the burden falls to patients, this could lead them to forego medications, he said.
This situation has not escaped the attention of the pharmaceutical industry, Garber added. "Drug companies are thinking about these issues and for them the market is a moving target," because it's uncertain how much patients are willing to shell out for co-payments, he said.
In the end, it may make more sense to price drugs higher initially. It's much easier for a company to reduce the cost of a high-priced drug if it's too expensive for the market to bear than to raise the price tag for a drug that was initially introduced at a low price, Garber said.