European payers question value of new cancer drugs

Cancer is the fastest-growing section of the drugs market but developing new treatments is only half the battle. Persuading payers to use them, particularly in Europe, is another matter.

Recent multi-billion dollar bids for Genentech and ImClone by Roche and Bristol-Myers Squibb highlight Big Pharma's desire to secure revenues from modern cancer blockbusters like Avastin and Erbitux.

Yet use of both these medicines remains controversial in key European markets, where state-backed healthcare systems are struggling with the escalating cost of cancer treatments.

The issue has come to a head in Britain, where the National Institute for Health and Clinical Excellence (NICE) has led the world in assessing the cost-effectiveness of drugs since 1999.

Similar "health technology assessment" bodies are blossoming across Europe as authorities seek a rational way to assess whether costly new targeted cancer therapies, which may improve life expectancy by a few months, are worth using.

"Payers are all wrestling with the same thing: the level of potential demand for these new treatments," said David Twinberrow, director of oncology at healthcare information provider IMS Health. "Affordability is a big issue."

He expects global sales of cancer drugs to grow at an average annual rate of 12-15 percent over the next five years -- twice the rate of the overall pharmaceutical market -- and reach $75 billion to $80 billion by 2012.

But that buoyant growth is forecast to drop below 10 percent by the end of the period, reflecting growing financial constraints on payers and increased competition.