The three goals of health care reform are increasing access, increasing quality and controlling costs. Accomplishing this would increase the value of health care to more citizens. The Affordable Care Act (ACA) will probably increase access by expanding the number of Americans with health insurance, but the ACA only peripherally addresses quality and cost, the two major determinants of value. The annual U.S. health care bill is more than $2.5 trillion. Yet we do not employ a measure of value as a way to compare various proposals to limit cost increases that can derive from technical advances in medicine such as the introduction of new therapeutics.

A good start might be setting the prices of new anti-cancer drugs based upon the new drugs' efficacy as demonstrated by the drug manufacturers in obtaining FDA approval to market new pharmaceuticals.

Given that the price of new cancer drugs has more than doubled over the past 10 years due to the industry's claim of escalating research and development costs, these extremely high priced drugs might be a good place to formulate a way to link prices to clinical benefit.

The Food and Drug Administration is willing to approve drugs producing as few as weeks of additional clinical benefit, but the FDA exerts absolutely no control over the price charged by the manufacturer, including to those insured by the government itself (Medicare and Medicaid). Furthermore, the majority of patients treated with some of these newer agents may get no benefit at all despite the payment of thousands or even hundreds of thousands of dollars by insurers and a significant amount of co-payment by the cancer patients and their families. Is it any wonder that a Harvard study demonstrated that excessive medical debt was the most common cause of personal bankruptcy in the United States?

Some European countries will not sanction the use of very costly anti-cancer agents that extend life by only weeks or months. In Great Britain, for example, the limit on payment for a drug producing a year of quality-adjusted life is 30,000 pounds. Some drugs available to Americans are not available to U.K. patients because of this, but what is the real cost of this decision? In Great Britain, it means some very expensive, minimally effective drugs are not widely used. In America, it means bankruptcy in the face of large pharmaceutical industry profits and greater and greater expenses for patients, families and other health care payers. And Medicare cannot even negotiate for lower drug prices due to specifics in the legislation that established the Part D prescription drug law. This is compared with the Department of Veterans Affairs, which can negotiate and obtains prices 48 percent below those paid by Medicare.

As medical oncologists, we propose a graded system of new drug pricing based upon the efficacy demonstrated by the new drug in the trials used to gain FDA approval. This pricing can be based on quality-adjusted life year gained per permitted dollar of pricing. For example, if a new drug prolongs survival (compared with standard therapy) by more than six months and by more than one-third of that produced by the current best treatment (e.g. 12 to 18-plus months, or 30 to 40-plus months), this would be considered extremely effective and would put the drug price in a higher range, for example $50,000-plus/year, but not more than $75,000. A drug that prolongs survival by three to six months and by 25 percent to 33 percent of the current treatment's (e.g., 12 to 16 months, or 30 to 37 months) would be considered beneficial and priced modestly, perhaps between $30,000 to $50,000 per year. Finally drugs that demonstrate "statistically significant survival benefits" of two months or less and less than 25 percent prolongation of the current life expectancy produced would be considered to have minimal efficacy and priced below $30,000 a year. This would present a true value-based pricing system, under the control of the pharmaceutical industry that makes the drugs, sponsors and oversees the trials, and requests the FDA's approval to go to market. As a double check, proposed prices can be reviewed by a panel of independent, impartial oncology experts. The better the drug, the more the drug company can make. Isn't that a true measure of value, and isn't that really the American way?