Will anything ever curb the runaway growth in the cost of breakthrough cancer drugs?
Eleven years ago, I wrote about a Memorial Sloan Kettering oncologist named Leonard Saltz who, after helping to develop some of the most important drugs for colon cancer, had gotten a bad case of sticker shock. The new breakthroughs were simply too expensive, he insisted. “Sooner or later the bubble is going to pop,” he told me.
He was dead wrong. As 29% of my life so far passed by, two things changed: the new cancer medicines got more promising, and they got way more expensive. So there I was yesterday listening to him give a blistering talk on high cancer drug prices to thousands of oncologists at the annual meeting of the American Society of Clinical Oncology.
The prices will make your nose bleed. Take the exciting new medicines that unleash the immune system against tumors. A combination of two
Saltz is an evangelist, and it’s possible to take issue with his numbers. He uses an average selling price for the Bristol drugs; using their list prices gives a figure closer to $280,000, and we could discount it as much as 30% because so many patients have to stop the treatments because of side effects. (In one demonstration of how great these drugs are, many of those patients still get a benefit as their immune systems continue to attack their cancer.)
And the $1,000,000 price tag? Merck tried out both 2 mg/kg and 10 mg/kg doses, and found them to be equivalent, but results are still coming out that use that higher dose. The company is looking at moving to a flat 200 mg dose every three weeks for all patients.
The fuzziness on this math helps to actually highlight the problem, though. We don’t even have good figures on what these drugs cost! And that’s a result of a healthcare system where the laws of economics can work backward.
Take the example of Gleevec, the
When it was launched in 2001, Gleevec cost $24,000 a year, but the price increased to $90,000 over the next fifteen years. It happened partly because competition increased and, as new drugs entered the market at higher prices, Novartis raised its price too. The normal law of supply and demand worked in reverse. In another example, the colon cancer drugs Avastin and Erbitux resulted in equal survival for patients with a particular version of a cancer gene called KRAS. But Erbitux, made by Eli
The Food and Drug Administration does not consider costs when it approves drugs, and the Centers for Medicare and Medicaid Services is not allowed to consider cost when it decides which medicines to cover. Saltz often says that in order to deal with this we’re going to have to have a national conversation about how much we’re willing to pay to keep people alive. There is a cut point, he likes to say, somewhere between paying $1 billion for a month of life and paying $500 for five years of life. We just need to find it.
I don’t agree that our national inability to face death is the main problem here. Instead, it’s the baroque system of paying for medicines that we’ve created because of our fear of socialist price controls. Medicare’s not allowed to negotiate prices. Pressure on the price of drugs comes from two forces: from insurers forcing patients to pay some of the costs out of pocket, which can result in the human disaster of people forced to pay $60,000 for a lifesaving drug even though they have insurance, and from insurers negotiating with drug firms to get rebates on the back end. Pharma complicates this by having programs that help patients pay their copays, and by raising prices to counteract the discounts, so the prices get higher.
Unfortunately, in cancer in particular, this system hasn’t been working. One reason is the Hippocratic oath: once you’ve proven a cancer drug is effective, it can be almost impossible to test a second drug that is equally effective. This is less true in hepatitis C, or heart disease, and it prevents price competition. Another reason is that we are all particularly afraid of the emperor of all maladies.
Everybody knows this. Last year, Joseph Jimenez, the chief executive of Novartis, told me: “What you know is not going to happen is the ability to stack therapies on top of each other at the current price and expect people to pay. The whole oncology pricing structure needs to be rethought because it’s reached the level that is not going to be sustainable for the long term.”
What’s finally changing is that there may be some ideas on how to change the system we have to fix the problem. One of the most promising is to admit that we’re not really paying $50,000 for a drop of drug, but for the research that created it and act accordingly: insurers would start paying different amounts when the same drugs were used for different diseases, counteracting the frequent problem in which a drug is approved at a high price for a rare cancer – and then that price carries over once it is approved for a common one.
Besides, if I have to write a piece about Saltz lambasting the first $4 million cancer drug when I’m 49, I’m going to be really, really annoyed.
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