The price of novel cancer drugs have more than doubled in the past decade, as they now cost on average $10, 000 per month, though some have reached more than $30, 000 per month. Old treatments have also skyrocketed in price - the average percent change in costs for cancer drugs over only an 8-year period was +25%. Some of the most extreme price hikes include:
- Trisenox, used for acute promyelocytic leukemia, increased in price by 95.5% over 12 years.
- Rituxan, used for non-Hodgkin’s lymphoma, increased in price by 85.2% over 12 years.
- Nelabarine, used for T-cell acute lymphoblastic leukemia, increased in price by 83.2% over 12 years.
Many patients bear the sentiment that spending their income and liquidating their assets is not worth extending their lives by a matter of months, and choose to forgo treatments and/or doctors’ orders – in fact, up to 20% of cancer patients do not follow their advised treatment plan for this reason, as reported in a nationwide study that involved more than 100 American oncologists. A separate study that followed 200 patients over a spectrum of cancer types and degrees of severity found that 66% of men and 79% of women believe that the costs of their treatments are or are becoming unmanageable (see Figure).
The costs of cancer drugs are a market anomaly: for most products, competition decreases prices. However, competition has only driven the prices of these medicines up. Dr. Daniel Goldstein of Emory University in Atlanta posits that this atypical pattern may be the result of pharmaceutical companies communicating with each other and agreeing to simultaneously raise their prices, though he has yet to verify this posit.
This all, then, raises the question: why do cancer drugs cost so much? There are numerous factors that contribute to these high costs. Interestingly, the efficacy of a drug seems to have little influence on its price. It seems, then, that pharmaceutical companies price cancer drugs based off of what they think the market will bear. Pharmaceutical companies themselves claim that these prices are a reflection of the high cost of research and development. Advancing drugs from the bench to the bedside is a very long and expensive process, costing about $1.2 billion to $1.3 billion per new drug. The process of developing a drug is made even more onerous due to the amount of regulatory procedures that are imposed by health agencies such as the National Cancer Institute. A drug must pass up to 600 regulatory procedures, half of which researchers feel are unnecessary. Furthermore, a cancer patient is regularly treated with a multitude of cancer drugs. This creates a monopoly, because the use of one drug does not mean that the others are not needed.
There have been a number of reforms that have been proposed to try to solve this problem and ultimately make these life-saving drugs more accessible. Unlike in Canada, there are laws that prohibit the American government (Medicare) from negotiating with pharmaceutical companies for lower prices. These laws have been contested; though, this has been met with resistance from the pharmaceutical and biotechnology industries. Furthermore, there is a need for improved and more transparent evidence-based national guidelines regarding cancer treatments. The current American cancer guidelines outline all the possible treatments, but fail to assess the cost against the effectiveness (i.e., the mortality rate and the quality-adjusted life years (the number of years, adjusted for quality of life, that a treatment is projected to provide)) of each treatment. Dr. Peter Bach, the Director for the Centre for Health Policy Outcomes at Memorial Sloan Kettering Centre in New York, supports value-based pricing; this pricing approach accepts the reality that drug development is costly, and instead prices the drug based on its performance: if a patient responds well to a drug, pay more; if not, pay less.
However, it seems that America is reluctant to adopt value-based pricing. The Republican administration favours pricing based on supply-and-demand, and believes in personal responsibility for health care. Ultimately, efforts must be made to strive towards a framework that will strike the balance between affordability for the payers and profit/incentive for the payees. Failing to do so may result in a healthcare system that fails the very people that it is supposed to protect.
Written by Janine Ting
Janine is currently in her second year of undergraduate studies at Western University and serves as a UAEM Access Representative.