115 Doctors Propose This Solution For Terrifying Cancer Drug Prices

How furious do doctors and patients have to get about the exploding prices of cancer drugs before something happens to change our medical system?

Probably even more angry than this: “A lot of people think this is a free market for these drugs and therefore there is an internal regulation but it isn’t. What you have is the only person who is holding the cards is the drug companies.”

Those words come from Ayelew Tefferi, the Mayo Clinic hematologist who gave me an interview filled with enough fear and loathing for Hunter S. Thompson. Tefferi just published an editorial in the Mayo Clinic Proceedings that is a stinging rebuke to the U.S. system of drug pricing and what he says is the greed of pharmaceutical companies. Cancer drug prices, the paper notes, have increased by an average of $8,500 a year for the past fifteen years. Even when drug companies give medicines away for free to the poor, he says, he sees his patients being harmed. “We will clean you up of your savings and then we will give it to you free!” he scoffs. “Imagine you are working so hard and saving all this money with the intent to give it to the drug companies after you get old and you get cancer. That is not fair.”

But this paper isn't just a complaint by one angry doctor. It's a petition signed by a 115 of the drug industry's friends, including M.D. Anderson's James Allison, who helped invent Bristol-Myers Squibb's $80,000 melanoma drug Yervoy and oncologists like Clifford Hudis and Julie M. Vose, former presidents of the American Society of Clinical Oncology who run drug trials for pharma. It's time for drug companies to listen.

There’s no denying the numbers. Merck and Bristol-Myers Squibb have in the past year launched breakthrough immunotherapy drugs that cost $150,000 per patient per year. Amgen ’s Blincyto, for a rare leukemia, costs $178,000 per patient. Tefferi says the average cancer drug launched in 2014 cost $120,000, and that most patients are left paying 20% of costs, or $25,000, by their insurance plans. That is half the average annual gross household income in the U.S. Those prices do get discounted by the rebates drug companies pay to insurers, but they are rising at a crazy rate. It was only a few years ago that when Dendreon, a biotechnology company that has now failed and gotten bought out for cheap, was being criticized for its $93,000-a-treatment drug, Provenge. Now that price seems quaint.

I shared the Mayo Clinic article with Joseph Jimenez, the chief executive of Novartis , who has struck me as particularly thoughtful about pricing concerns. He wrote that he agreed the price of cancer care “has reached a level that is concerning and we must find a solution.” But he said the cost of hospital care is a problem in addition to drugs, and that solutions that weaken patent law or institute price controls will put a brake on innovation. “We need a free market solution, and anything else will dis-incent investment in new discovery,” Jimenez wrote. (His whole note is below.)

The 155 doctors provide seven solutions. Five of them are chewed over, but two strike me as brilliant. They are:

1. Create an independent agency that reviews drugs after they are approved by the Food and Drug Administration and proposes a fair price.
2. Allow Medicare to negotiate drug prices.
3. Allow the Patient-Centered Outcomes Research Institute, create by ObamaCare, to evaluate the benefits new treatments provide for the money.
4. Allow people to import cheaper drugs from Canada for personal use.
5. Pass new laws to make it difficult for drug companies to make deals with generic firms to extend a drug’s patent monopoly.
6. Make it more difficult for drug companies to prolong the patent lives of drugs.
7. Encourage organizations like the American Society of Clinical Oncology and the American Cancer Society to protest high drug prices.

Look, option 4 has been discussed forever and will only make a dent, and 5, 6, and 7 are all pretty much happening. And giving Medicare the ability to negotiate? It could work, but the trick is making sure that the negotiations don't turn into price controls. There are probably ways to do this, but they're going to be complicated and come with risks.

On the other hand, we can survive losing a little innovation in cancer. Drug companies are flocking to cancer drug development, and half the drugs in development are for cancer. The high prices are a big part of the reason why, but what good is innovation we can't afford?

Here's the best idea they propose: An independent, government-chartered group that evaluated the value of drugs (option 1)  would give insurance companies a powerful new negotiating tool. Like the U.S. Preventative Services Task Force, which evaluates screening, it would provide a basis for public discussion about these drugs, even if it had not power of its own. Option 3, finding a way to encourage and fund comparisons of different treatments could pay huge dividends, but it's already failed to get political traction. These are things we should be demanding of elected officials, instead of making the FDA approval process easier while still letting drug companies raise prices by huge amounts.

Executives like Jimenez can only go so far in putting forward solutions. CEOs are not owners of their companies. If they decide to price medicines too low, they risk having to fire their employees or getting fired themselves. They should all be thinking about a free market system so they don't wind up with price controls. But they'll only be able to do so if the rest of us -- including doctors who conduct clinical trials and journalists who love writing about innovative medicines -- manage to get a little angry. Because Tefferi and 154 other doctors are right: the drug prices are too damn high.

Here's Jimenez's note:

Matt,

Thanks for giving me the opportunity to respond.

First, I agree that Oncology pricing has reached a level that is concerning and we must find a solution. This is true for both hospital costs (which include large mark ups) and for drug prices. However we need to find a solution that still creates an incentive to innovate and take care of those without adequate insurance coverage.  Discovery and development of Oncology drugs is risky business that has generated multiple breakthroughs in the last decade in some cases offering patients a near normal lifespan.  To incent continued innovation, there must be a return.  Price controls are not the answer.  Weakening IP is not the answer.  We need a free market solution, and anything else will dis-incent investment in new discovery. 

We need a solution which will allow continued innovation, to bring novel, breakthrough therapies to patients.  We are experiencing a phenomenal wave of innovation,  and we are crossing a threshold in the treatment of cancer patients.  Cost pressures are real as these new therapies are costly.  But we will only find solutions if we work together and don’t adopt measures that slow down the accelerated innovation we are experiencing in this field. 

Secondly, we have to gather accurate facts about where the heaviest costs are.  While some people point to the most expensive therapies, this may not be the case.  Often the high cost therapies are for smaller indications with small patient populations.  There are also diagnostics which are used in association with these therapies, which ensure that the therapy has effect and is not wasted on patients who will not respond.   We also have to closely examine all the inputs that are driving costs, including competitive behavior, and the impact on price levels.  Streamlining R&D, regulatory processes, and fully leveraging new technologies may help us to lower costs.

Joe