Cancer Drug Pricing in the United States: What Is Driving the High Costs?

TOP - February 2015, Vol 8, No 1 - Conference Correspondent
Wayne Kuznar

San Francisco, CA—The cost of medical innovation, in particular, a fair price for new cancer medicines, is a complex topic that requires urgent attention, said speakers at a special symposium at the 2014 American Society of Hematology meeting. The financial burden imposed by cancer treatments, and how best to reduce this burden without compromising patient outcomes, generated heated exchanges. Some charged that the price tag of new cancer drugs does not match the clinical benefit. Others emphasized the impact on patients as reducing outcomes.

US Market Shoulders Bigger Cost Burden
Three new drugs approved by the FDA for the treatment of chronic myeloid leukemia (CML) cost approximately $100,000 annually, or almost 5 times the cost of imatinib (Gleevec) in 2001. Before 2000, the average cancer drug price was from $5000 to $10,000 annually. By 2005, the increase was between $30,000 and $50,000 annually, and then ≥$100,000 by 2012, observed Hagop M. Kantarjian, MD, Professor of Medicine and Chairman, Department of Leukemia, M.D. Anderson Cancer Center, Houston.

Of the 13 drugs approved by the FDA in 2012 for cancer indications, 13 were priced at ≥$100,000 annually. Even older drugs are increasing in price at a rate of 10% to 20% annually. The price for imatinib increased from $28,000 in 2001 to $92,000 in 2012.

“The explanation is that the industry can charge what the market bears,” said Dr Kantarjian. In addition, the US taxpayers subsidize most of the research and development in cancer, he noted. “Ironically, when drugs are approved, US patients and the healthcare system pay 50% to 200% more than the rest of the world on comparable drugs,” Dr Kantarjian said.

In addition, the pharmaceutical companies claim that it now costs $1 billion to research, develop, and bring to market a cancer drug. Dr Kantarjian suggested that this is not the case, saying that the revised estimate is that the actual cost is 5% to 20% of that cost estimate, which amounts to $60 million to $170 million.

High Costs Affect Patient Outcomes
The end result, Dr Kantarjian noted, is the financial harm to patients—high rate of personal bankruptcies, and emotional and socioeconomic adverse effects on patients and their families. Overall, 10% of patients with cancer do not take their medications, and 20% are poorly adherent. This adversely affects survival rates, he said.

In CML, for example, the 10-year relative survival rate in Sweden is 80% compared with a 5-year survival rate of only 60% in patients with CML in the United States, based on SEER data. Despite this disparity in survival, patients in the United States have a 30% higher cost of treatment.

Patients have “skin in the game,” Dr Kantarjian said. The key question, he added, “is what our patients can afford.” When it comes to cancer drugs, out-of-pocket (OOP) costs are not affordable for many patients.

In part, the reason that US patients pay more is the vast number of lobbyists for the pharmaceutical industry, said Dr Kantarjian. The lack of patient advocates keeps drug prices high in the United States, he argued. “Even elected officials appear to represent interest groups,” he said. “Only patients are patient advocates.” It will take a patient-based grassroots movement to reverse the tide.

Market Forces Drive Drug Costs
Alex W. Bastian, MBA, of GfK Market Access, San Francisco, argued that practical market forces drive drug cost, as with other commodities. The high cost is an “unintended consequence” of continued investment in drug research by the private market.

“What is the US getting for these higher prices? Broader access to new medicines than other countries have,” Mr Bastian said.

He noted that spending on cancer treatment accounts for approximately 6% of all healthcare spending, which is lower in the United States than in Europe. Rising costs are a global phenomenon, and rising healthcare spending is not an isolated US phenomenon.

Between 1998 and 2014, a total of 249 hematologic cancer drugs were unsuccessful, which creates a huge burden on pharmaceutical companies.

“The market may fix itself; it always has….Natural mechanisms provide balance to the system, and one of these is loss of exclusivity” (ie, patent expirations), he added.

Dr Kantarjian countered that a drug purchase by a patient is not a business transaction. “We are talking about a population who did everything right, including buying insurance, and now they are dying and are humiliated,” he said.
According to Mr Bastian, drug pricing reflects American-style capitalism. “Alternative pricing models are very difficult to implement.”

Greater Transparency Can Improve Outcomes
The cost of paying for cancer impacts the efficacy of treatment, agreed S. Yousuf Zafar, MD, MHS, Assistant Professor, Division of Medical Oncology, Duke Cancer Institute, Durham, NC. High patient cost burden is associated with a 70% higher likelihood of nonadherence to treatment.

Improving transparency may be one way to empower patients and improve outcomes, said Dr Zafar. He described his prospective study in which equipping patients with understandable information on the burden of costs of cancer care reduced OOP costs in 57% of cases, without requiring a change in the treatment regimen.

Responding to the suggestion that prices must be high to fuel progress and innovation in drug development, he said, “Making progress in the long run is not a reason for prices to be at the profiteering level.”

Dr Zafar introduced the concept of financial toxicity in oncology into patient care, calling on all oncologists to discuss cost issues with their patients to enhance outcomes and reduce pain.

See article in the November 2014 issue of Value-Based Cancer Care ( 2014/november-2014-vol-5-no-9/25781-financial-toxicity-beginning-to-gain-oncologists-attention-finally).

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Last modified: May 21, 2015