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A row 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.


“There is a gap between the public’s perception of the benefits offered by (Keytruda) and the measured benefits seen in the clinical trials to date,” the agency wrote on its website. “… Our expert advisors recommend (Keytruda) as an option for funding, but not ahead of other medicine funding options that offer a better balance of evidence and price.”

At the time the drug was approved in 2014 in the US, regulators noted that tumors shrank in about 24 percent of patients and this effect lasted from at least 1.4 to 8.5 months, although a survival benefit had not been established. Last year, however, Merck released study results showing Keytruda improved survival when compared with Yervoy, an older cancer treatment from Bristol-Myers Squibb.


Not surprisingly, 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. We asked Pharmac for comment and will update you accordingly.

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 told Radio New Zealand.

For its part, Merck has run an intense campaign to win coverage. For instance, late last year, the drug maker complained about Pharmac to the health ministry that the gatekeeper evaluated “incorrect data” in making its decision. The drug maker also maintained its most recent clinical data that was given the agency prior to the official review was not reported in the minutes for agency meetings.

“In the recent debate over the efficacy of Keytruda, there has been some confusion because the most up-to-date and correct clinical data has not always been referenced in the figures given to the media and the wider public,” Paul Smith, Merck’s top New Zealand executive, wrote in a Dec. 10 letter. This “gives a false and misleading impression of how effective” the drug is in treating melanoma.

But health minister Jonathan Coleman shot back. “I am advised that the information you refer to is from presentations delivered at clinical conferences and has not yet been subject to peer review,” he wrote in a Feb. 11 letter to Smith. “I am also informed that some of the promotional material based on the information you refer to has subsequently been withdrawn and corrected internationally.” The letters were obtained by Radio New Zealand.

Meanwhile, Pharmac has regularly updated an explanation on its website for its refusal to fund Keytruda coverage. The agency argued that Keytruda is “an expensive medicine. For Pharmac to justify an investment of this size, we’d need to see more certainty of benefit in the evidence, and more reliable evidence on the best use” of the drug.

“We’re willing to consider how we might work with the supplier to develop the evidence base and/or set a more appropriate price given the current evidence base,” the agency continued. For now, “we currently consider that other medicines offer better, and more certain, value than Keytruda in terms of delivering better health outcomes for all New Zealanders.”

A Merck spokeswoman sent us a note saying that “patients are our reason for being, and our goal is to ensure patients have access to our medicines and vaccines. Merck is committed to continue working closely with Pharmac and the New Zealand government in this review process.”

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  • My Husband has been on keytruda since September last year for secondaries for grade 4 melanomas ……we were given a very poor progress
    By end of Jan 2016 the multiple secondaries in lungs and liver had resolved
    We continue on the 3 weekly Keytruda

  • Pharmac’s quasi-competition gatekeeping revolves around cost-effectiveness and QALY scores, and even if it sounds a little like extortion it’s good to remember that we are a relatively small market, but to which companies are rewarded with near market exclusivity if they get in. I think it ends up being a good deal for everyone though (pharma may disagree).

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