No amount of innovation can justify the doubling of prices for cancer drugs

shutterstock_614148POST SUMMARY: The number of over-65s on the planet is projected almost to triple between 2010 and 2050 to 1.5bn, according to the UN. This, in turn, will spur a surge in age-related diseases such as cancer. The World Health Organization predicts the number of cases will increase 70 per cent in the next 20 years.  Global spending on cancer drugs has more than doubled in the past decade to $91bn in 2013, according to the IMS Institute for Healthcare Informatics. However, can the US healthcare system really afford $100,000 drugs?

Source: Financial Times “Counting the cost of cancer”

More than 20 cancer drugs have been launched globally in the past two years — the strongest burst of innovation for over a decade — with an even bigger wave approaching market. Many of them involve a new approach that aims to boost the immune system’s ability to detect and fight tumors. These so-called immunotherapies work by removing the camouflage that cancer cells use to evade the body’s disease-fighting T-cells. In clinical trials, many people who had exhausted existing treatment options have been kept alive by the new drugs for months and in some cases years.

“The whole immuno-oncology area is exploding,” says John LaMattina, former head of research and development for Pfizer. “We are heading towards a world where cancer will become a chronic disease in much the same way as we have seen with diabetes and HIV.”  The immuno-oncology market could reach $40bn in annual sales within a decade.

But at what cost?

The rationale for against high prices..

Companies say such prices are justified by the multibillion-dollar development costs and increased effectiveness. Advances in genomic science are opening the way to evermore targeted treatments compared with the “carpet bombing” of traditional chemotherapy.


Steve Miller, chief medical officer for Express Scripts, which manages prescription drug programmes on behalf of US insurers, says nobody disputes the potential benefits of these new drugs. But he insists companies must adjust their expectations of what price even the ultraliberal US market will bear. “The science has never been better but economically it is incredibly scary.”

Patients are becoming more exposed to drug costs as insurers pass on a bigger share through out-of- pocket expenses. This means that, for many Americans, a cancer diagnosis is a financial as well as medical crisis. “We believe in a free market solution for the US,” says Mr Miller. “But we need to create a sustainable system.”


Hagop Kantarjian, a leukaemia specialist at the MD Anderson Cancer Center in Texas, argues that no amount of innovation can justify the doubling in average US prices over the past decade to more than $100,000.

“It is profiteering and greed,” he says. “If pharma companies continue on this path they will kill the goose that laid the golden egg.”

Such arguments are disputed by industry leaders who point out that gross profit margins have come down in the past decade. They say the rise of biosimilars — cheaper copycat versions of modern biological drugs — will help control costs as the previous wave of blockbuster cancer therapies from a decade ago, such as Novartis’s leukaemia drug Gleevec, begin to lose patent protection.

The answer, he argues, is to break up inefficient R&D operations and outsource innovation to nimbler biotech companies — a prescription big pharma is already embracing. “The only durable solution is to make drugs more affordable and the only way to do that is to take waste out of the industry.”


What about prevention?  Money would be better used, they argue, on measures to reduce the 30 per cent of cancers the WHO says could be prevented with lifestyle changes such as stopping smoking or losing weight. A study by the Wolfson Institute of Preventive Medicine this week suggested a daily dose of aspirin taken by everyone in their 50s could reduce deaths from some cancers by up to 50 per cent. In other words a 19th-century medicine could have a bigger impact than modern drugs at a fraction of the price.


I understand that pharma companies are, for the most part, public companies and have a responsibility to shareholders, but at what point does that responsibility outweigh high drug costs?  That is the question that every pharma CEO is going to have to answer and, in an age of transparency, that answer can’t lead to record profits while cutting R&D.

At the same time, insurers need to push back based on the product efficacy results, not on cost alone.  We read this week that Aetna, for example, is raising the hourly wage for employees to $16 to increase retention.  Who is going to pay for that increased expense, patients or shareholders?

For the first time fewer adults, in the US, had a reported a problem paying medical debts while less people are delaying medical care due to costs.  This is great news, but as more and more Boomers enter the age when they are likely to get cancer how much will be a drain on our system and patients?



If we believe that no cancer patient should be denied care due to cost we have to ask some hard questions and those questions are going to extend to the boardroom of every pharma company.




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