High Cancer Drug Prices Hurt Patients

February 2015 Vol 8, Special Issue: Payers' Perspectives in Oncology - Health Economics

San Francisco, CA—Hagop M. Kantarjian, MD, Professor and Chair of Leukemia, M.D. Anderson Cancer Center, Houston, TX, did not mince words during his talk at the ASH 2014 special session on drug pricing.

“Drug prices are definitely too high, and this is harming our patients….We need a situation where cancer drugs are affordable and patients can take them without the anxiety associated with lack of affordability,” Dr Kantarjian said.

Disputing the claim that rising prices is not a new concern, he pointed out that before 2000, the average cost of an oncology drug was less than $10,000 annually. Since then, prices have risen 10-fold, while the average household income has diminished by 8%. This disparity has compromised the financial and emotional security of many patients with cancer, whose out-of-pocket expenses are simply unaffordable, Dr Kantarjian said.

The end result, he suggested, is a “medical Darwinian system” in which “if you can pay, you live, and if you cannot, you may die from your disease.”

Although the concept of cost-sharing (ie, giving patients “skin in the game”) aims to facilitate value-based treatment choices, this holds true only for less expensive drugs and generics, and is not applicable to most cancer treatments, Dr Kantarjian said.
“In cancer, new drugs are patented, and patients don’t have this choice. Having skin in the game is only harmful to them,” he said.

Rebutting Common Arguments
Dr Kantarjian took exception to the arguments made to support high prices: that prices reflect the high cost of research and the cost–benefit ratio of the drug, that market forces will set prices at reasonable levels, and that price control will stifle innovation. “None of these are true, morally justifiable, or defensible,” Dr Kantarjian maintains.

He took exception to the argument that price reflects benefit, noting that some drugs prolong life by years and others by days, yet the near-universal annual cost of new agents is approximately $100,000. Market forces cannot correct price imbalances, he says, because drug companies do not compete on the basis of cost. In addition, drug companies set their own prices for the Medicare system.

Although manufacturers indicate that they set prices by calculating cost–­benefit ratio, examining the competitive marketplace, and estimating the potential market for the drug, Dr Kantarjian suggests that “companies look at the price of an existing drug and put a 20% higher price tag on the new one.”

“Making progress in drug development in the long run is not a reason to increase prices to a profiteering level,” he concluded.—KS

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Last modified: May 4, 2015
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