High Cancer Drug Prices in the United States: Reasons and Proposed Solutions
By Hagop Kantarjian, MD, David Steensma, MD, Judit Rius Sanjuan, Adam Elshaug, MPH, PhD and Donald Light, PhD
Journal of Oncology Practice, May 6, 2014
The increase in cancer drug prices in the last 15 years has many contributing factors and is harming our patients and our health care system. It represents to many cancer experts a crossing of a moral line between reasonable profits and profiteering, in a situation involving a human catastrophe: patients who have developed cancer, and who may die because they cannot afford the treatment. With typical out-of-pocket expenses of 20% to 30%, the financial burden of cancer treatment would be $20,000 to 30,000 a year, nearly half of the average annual household income in the United States. Many patients (estimated 10% to 20%) may decide not to take the treatment or may compromise significantly on the treatment plan. This difficult situation poses three relevant questions: (1) Are cancer drug prices too high? (2) Are they hurting patients and our health care system? and (3) Can we do something about it? The answer to each is affirmative. It is also our obligation as cancer doctors to keep patients from “harm and injustice.” If high prices make drugs unaffordable and inaccessible, thus causing harm, then we should voice our concerns and advocate for solutions.
What would be a just price for a cancer drug? A simple answer would be a price that recognizes that most risks and costs of development are borne by the public through tax breaks and public funding, so that cancer drugs are affordable. The prices would maintain reasonable profits to drug companies but remain fair, accessible and affordable to patients and to the health care system.
What are some potential solutions? The United States is on the precipice of great change in how we measure value in health care. In a recent survey of US oncologists, 80% favored more use of cost-effectiveness data in coverage decisions. In 2011, the American College of Physicians outlined the position that “There should be a transparent and publicly acceptable process for making health resource allocation decisions with a focus on medical efficacy, clinical effectiveness, and need, with consideration of cost based on the best available medical evidence.” Several solutions could help reduce cancer drug prices. Reviewing and reducing the research bureaucracy and burdens could eliminate unnecessary steps that increase cost, delay timelines, and shorten drug patent times. Allowing Medicare to negotiate drug prices, eliminating pay-for-delay strategies; allowing importation of drugs from abroad for personal use; and allowing PCORI and other cancer advocacy groups, experts, or committees to consider cost in their recommendations, would all enhance the capacity of market forces to produce more reasonable cancer drug prices. Professional societies representing cancer specialists and advocating for cancer patients should be involved in reducing the hype around new cancer drugs that do not have a major impact on patient outcomes. They could also develop pathways and guidelines that incorporate estimates of a drug “value” (benefit, toxicities, cost, etc). A broad-based group representing cancer experts, PCORI, patients and their advocates, regulatory bodies, and pharmaceutical and insurance companies could review the new drugs for their cost and benefit after US Food and Drug Administration approval, and formulate cancer treatment pathways that incorporate the costs and benefits of cancer drugs. Such structures are in place in many other countries. These include, for instance, the Pharmaceutical Benefits Scheme in Australia, the Pharmaceutical Market Restructuring Act in Germany (AMNOG; affects prices in 31 countries), and others (Canada, United Kingdom, New Zealand, France, etc). These structures have been documented to result in more reasonable cancer drug prices (based on expected benefits), which improves affordability and promotes high levels of access for the population. For manufacturers, this creates predictable markets with strong drug penetration, and ultimately generates better profits to drug companies.
As this article indicates, there are many things that could be done to reduce prices of, not just cancer drugs, but all new drugs that enter the market with exorbitant pricing. Just think how much easier this would be under a single payer system.