BioWorld Today Columnist

You don't have to go out and see Michael Moore's "Sicko" to know that the health care system works a lot differently in the U.S. than in many other industrialized nations. With the right insurance, you can get care here that is the envy of the world - cutting-edge therapies that include the latest biotech drugs.

With no insurance - and sometimes even with inadequate insurance - you may find yourself struggling to meet basic health care needs.

It's a lousy system, unless it happens to be working for you, in which case it's great. But with the specter of major health care reform once again taking shape, it's worth considering how some other countries look at and value the marvels of our industry. Their financial calculus, after all, may some day be ours. In short, they're not impressed.

We all know that most drugs find the lion's share of their market in U.S., where price negotiations are decentralized, prices are consequently higher and insurers often are willing to pay for expensive therapies. Many Americans, however, may not realize how difficult it can be to get biotech drugs in other countries.

In the UK, for instance, the National Institute for Clinical Excellence (NICE) makes determinations about the cost effectiveness of new therapies and whether they'll be covered under the government's single-payer National Health Service (NHS).

Here's NICE's verdict on some prominent biotech drugs: Genentech's Avastin for colorectal cancer? Not worth it. ImClone's Erbitux for colorectal cancer? No thanks. OSI Pharmaceuticals' Tarceva for non-small-cell lung cancer? Uh-uh. Millennium Pharmaceuticals' Velcade for multiple myeloma? Nope. Eli Lilly's Alimta for mesothelioma and non-small-cell lung cancer? Forget about it.

For those and other biotech drugs, NICE determined that the benefits did not outweigh the additional costs of the drugs and the NHS should not "routinely" pay for them.

Naturally, there are many sides to this story. In human terms, it's clear that NICE's verdict is costing lives. In some cases, companies are appealing negative decisions. But the flipside is that whether you agree with the assessments of NICE, they are made on a rational and reasonably unbiased basis. In a January 2007 guideline recommending Avastin not be used as therapy for colorectal cancer, for example, the evaluating committee estimated the typical cost to the NHS for a round of Avastin therapy at about $33,600. Genetech's own submitted cost-effectiveness analysis suggested that it costs more than $176,000 to gain one "quality-adjusted life year" (QALY) using Avastin plus irinotecan, bolus 5-FU, and leucovorin (IFL) vs. IFL alone. Since NICE uses a cost of about $60,000 per QALY as a general yardstick for reasonable expenditure, Avastin didn't even come close.

Now, you can argue with any part of that. You can fault the analysis or the conclusions drawn from it. You can consider it ghoulish to put a monetary figure on the value of a year of life. But it seems far more ghastly to me to deny nothing to some patients and essentially everything to others.

Moreover, if the state is the payer, everyone has a vested interest in not bankrupting the system. In the long run, that kind of analysis is unavoidable, and some very successful biotech drugs just don't measure up on the QALY scale.

And if you think such coldly pragmatic calculus can't or won't be used in the U.S., think again. The state of Oregon made headlines in 1991-1992 for its decision to explicitly ration health care based on the outcomes, cost-effectiveness and the social value of various interventions. It was a shift in how state Medicaid dollars were spent. Oregon decided to bring more people under coverage, instead of just the ultra-poor, by looking up front at how health care dollars could be spent most effectively. The state halted coverage for what it deemed to be the most cost-ineffective treatments but expanded basic coverage to more people.

To do that, it needed a federal government waiver, which was denied under the senior President George Bush's administration but finally granted by President Clinton in 1993. After finally receiving the federal government's permission to part ways with Medicaid in 1993, the Oregon Health Plan was born. It still is running today (although major cutbacks in 2004 have seriously downsized the program.)

Now Oregon is up to it again. In late June, Sen. Ron Wyden (D-Ore.) introduced the first comprehensive national health care reform bill since the first Clinton administration. It's not quite "Hillary care," but it's a hybrid public-private system that disconnects insurance from employers and puts the money in the hands of individuals to buy insurance.

I'd give that particular bill low odds of ever becoming law, but that doesn't mean our health care system can avoid being rationalized - and rationed - forever. There are individuals here, just as there are in the UK, who always will be able to afford insurance that will make the very latest drugs available. But eventually, it's likely that many or most Americans will get their care through a payer that has to make tough decisions about what's worth the cost.

Right now, some of biotech's finest medicines don't appear to stack up so well. Sure, it's not an easy struggle. Those drugs cost a lot because they are incredibly expensive to bring to market, and that's not likely to change soon. But the industry might find itself grappling with changing notions about what the public will pay for, and $50,000 cancer monoclonals that extend life a few months probably won't find a broadly receptive public. Executives strategizing their early stage pipelines with an eye to products targeted to launch a decade hence should keep that in mind.

It's not just about safety and efficacy anymore.

Karl Thiel is a freelance writer who lives in Portland, Ore.