Do We Pay Too Much for Cancer Drugs?

Two recent journal articles highlight the exorbitant prices for cancer drugs in the United States. While I’m far from being an expert in oncology, I strongly feel that anticancer treatments should be affordable and insurers should give patients access to the best medication for their condition.

One study from the National Bureau of Economic Research evaluated pricing trends for 58 anticancer drugs approved by the FDA between 1995 and 2013. It also evaluated information on the incremental survival benefits of these drugs.

The study found that anticancer drugs’ average benefit- and inflation-adjusted launch prices increased by 10% annually from 1995 to 2013. This represents an average increase of $8500 per year.

Of note, newer anticancer drugs were not associated with greater survival benefits compared with older drugs.

Another analysis by University of Liverpool pharmacologist Andrew Hill found that Americans pay up to 600 times what the medications cost to manufacture. The United States also pays more than double the price charged in Europe for tyrosine kinase inhibitors (TKIs).

While Gleevec costs only $159 a year to produce, US insurers pay $106,000 for a year’s worth of treatment. Similarly, Tarceva costs $236 to produce against a US price of $79,000, and Tykerb costs $4000 to produce against a price of $74,000.

In all of these cases, the US cost was far above the prices charged in certain western European countries.

“Why should the U.S. bear this huge burden cost?” Hill asked. “It is not as if the GDP of the United States is so much higher than that of European countries, but they just seem to pay these big premiums.”

A lesser-known reason why the United States pays more for these anticancer medications is reimbursement from federal discount programs. Certain hospitals and outpatient clinics are eligible to receive deep discounts from drug manufacturers through the 340B Drug Pricing Program.

From 2001 to 2011, the number of providers eligible for this program nearly doubled, which means non-eligible providers may be paying more to make up the cost.

The American Society of Clinical Oncology (ASCO) encourages its members to consider costs when they choose drugs, but these efforts are mostly focused on costs to patients, rather than the system.

Oncologists are in a strong position to influence the market share of anticancer drugs. Although they do not have direct incentives to avoid costly drugs, oncologists may balk at prescribing drugs with prices they perceive as exploitative.

In my mind, pricing for life-sustaining medications comes back to the argument of whether health care is a right or a privilege. If health care is truly a right, then we need to ensure that drug pricing is based on the benefits a therapy provides over other existing ones.

References

1. Pricing in the market for anticancer drugs. National Bureau of Economic Research. http://www.nber.org/papers/w20867.pdf. Accessed October 2015.

2. Cancer Drugs Aren't As Cost-Effective As They Used To Be. Forbes. http://www.forbes.com/sites/peterubel/2015/09/30/cancer-drugs-arent-as-cost-effective-as-they-used-to-be/ Accessed October 2015.

3. Americans overpaying hugely for cancer drugs - study. Reuters. http://www.reuters.com/article/2015/09/22/us-health-pharmaceuticals-cancer-usa-idUSKCN0RM1EC20150922 Accessed October 2015.