“Unsustainable” Cancer Drug PricesApril 2014
By William Faloon
Over 100 oncologists are protesting the outlandish prices charged for cancer drugs and how these inflated costs are economically “unsustainable.”1
Their exposé was published in a prestigious medical journal and received headline news coverage last year.1,2
The more than 100 oncologists who authored this report noted that of twelve cancer drugs approved in 2012, eleven were priced above $100,000 per year.1
Before relating the details, I ask readers to fathom who can afford $100,000 a year for one drug? This does not include hospital costs, physician fees, or other medications cancer patients typically require.
Private insurance premiums are soaring in response to skyrocketing medical costs, along with governmental meddling. Federal healthcare programs face insolvency even without this kind of price gouging.
The oncologists protesting these high prices are experts in chronic myeloid leukemia, a bone marrow cancer that is responding unusually well to new cancer drugs. The dilemma these doctors disclose is that patients are surviving longer than expected…in some cases indefinitely…as long as they continue to receive their expensive drugs.1,3
These doctors conclude that the prices of these drugs “are too high, unsustainable, may compromise access of needy patients to highly effective therapy, and are harmful to the sustainability of our national healthcare systems.”1
These revelations from inside the cancer establishment will not surprise Life Extension’s members, who long ago learned how regulatory strangleholds over drug development inflict harsh economic pain.
Chronic Myelogenous Leukemia (also known as Chronic Myeloid Leukemia or CML) is a cancer of the blood and bone marrow.4 It’s one of four main kinds of leukemia. It is characterized by the increased and unregulated growth of predominantly myeloid cells in the bone marrow and the accumulation of these cells in the blood.4
Treatment enhancements have been significant for this type of leukemia. In the 1960s five-year overall survival rates were only 3-5%.5 Five-year survival rates today are over 90% in those with chronic phase disease.5,6 CML is one of the few cancers where meaningful treatment progress has occurred.6
Cost Per Month Of Added Life
The more than 100 oncologists protesting the high prices are impressed with the anti-leukemic properties of these drugs. They note how some patients appear able to survive with chronic myeloid leukemia indefinitely…as long as they have access to the expensive medication(s).1
The concern they raise is how individuals and/or society can ever afford the high prices, and why pharmaceutical companies need to charge so much after they earn back the costs of development.
Unlike patients with metastasized solid tumors (colon, lung, pancreatic), patients with chronic myeloid leukemia (CML) now live close to normal life spans, as long as they receive the appropriate drugs and adhere to treatment.
In these patients, their CML condition has become different from cancers that sadly kill many patients within a year or two. The CML form of leukemia is now more similar to chronic disorders like diabetes and hypertension, where daily therapy is required to produce the benefit of long-term survival.1
The problem is that patients stricken with CML are becoming the “financial victims” of the treatment success, having to pay outlandishly high prices forever to stay alive.
Three drugs approved by the FDA in 2012 to treat leukemia are priced at the following astronomical levels:7
|Generic Name||Annual Cost|
Older anti-leukemia drugs like imatinib (Gleevec®) were initially priced at nearly $30,000 a year when released in 2001. By 2012, the pharmaceutical company making Gleevec® increased the price to $92,000 a year.8
The annual costs for these anti-leukemia drugs are beyond the financial abilities of private industry, government, and 99% of individuals in the United States.
One reason why these drugs in particular are a problem is that each leukemia patient may need to use one or a combination of these medications for decades. The economic unreality of all this is why more than 100 oncologists grouped together to alert the world that the high prices for these cancer drugs are “unsustainable.”1
Development Costs Long Ago Paid For
Pharmaceutical companies pretend they need to charge high prices to justify their expensive development costs. The more than 100 oncologists carefully examined this argument and found it to be unjustified.
Gleevec®, for instance, quickly covered its research and development costs with its $30,000/year initial annual price. As it was approved for other indications, total revenue soared and it became a financial windfall for its maker (Novartis). Despite pleas by patients and advocates to lower the price of Gleevec®, it sells for more than three times its original price.1,8
Who can afford to pay $92,000 a year for one drug?
Collusive Behavior And High Prices
The drugs working so well against CML are in a class known as “tyrosine-kinase inhibitors.”1
There are now five tyrosine-kinase inhibiting drugs approved to treat CML, yet all five have annual price ranges of $92,000 to $138,000 in the United States. This is twice the price compared to Europe, where government health programs bargain for lower drug prices.1
As the more than 100 oncologists noted in their published report, the price in South Korea for these same tyrosine-kinase inhibitors ranges from $21,000 to $28,000.1 That’s perhaps because the Koreans developed their own tyrosine-kinase inhibitor that sells for an annual price of only $21,500, thus forcing pharmaceutical companies to lower their price sharply downwards compared to the United States and even Europe.
The more than 100 oncologists who authored the published report protesting the high prices state:
“A new branch of economics, called game theory, details how collusive behavior can tacitly maintain high prices over extended periods of time, despite competitive markets, thus representing a form of collective monopoly.”1
We at Life Extension® have alleged for decades that drug companies function like cartels in stomping out competition while maintaining monopolistic-like pricing. They do this in many ways that are quite open, such as filing lawsuits to delay the introduction of lower costs generics, and/or filing petitions with the FDA asking the agency to disallow a competitor’s lower cost and sometimes superior product.9
It is interesting to note that some of the cancer-protective effects of nutrients like curcumin have been partially attributed to its tyrosine-kinase inhibiting properties. While curcumin has not yet been proven to be as specific as the drugs described in this article, a search on PubMed using the terms “curcumin and leukemia” reveals multiple mechanisms by which low-cost curcumin may prevent and treat a wide range of cancers.10
What Do Drugs Really Cost To Develop?
There is a debate as to how much it really “costs” a pharmaceutical company to bring a new cancer drug to market. The sum of $1.3-1.7 billion37 is often cited, though some independent experts put it as low as $60-90 million.38
Whatever the real number, be assured it includes costs of development of the new drug that won FDA approval, all other drugs that failed, and ancillary expenses such as the cost of conducting the clinical trials, bonuses, salaries, infrastructures, royalties, advertising, and all kinds of perks to the doctors who prescribe the drugs.
As to how much a new drug really costs to develop, once a company sells about a billion dollars of a medication, most of the rest is profit. It’s incredulous to claim that new cancer drugs are priced over $100,000 a year because they cost so much to develop.
As you’ll read later, much of the initial discovery costs are funded by non-profit entities involved in basic research. After the first two years of a successful drug launch, the “costs” of development are usually more than paid back.
How Drug Companies Fleece The Public
Before the federal government started picking up the tab for cancer drugs, there was at least an affordability factor that constrained how much pharmaceutical companies could charge.
This changed in response to intensive lobbying by pharmaceutical interests that enabled passage of laws such as the Medicare Modernization Act of 2003. This Act resulted in the federal government paying full retail price for cancer drugs and prohibited the federal government from negotiating a lower price.39
Even before the Medicare Modernization Act, the federal government was paying retail prices for cancer drugs under existing Medicare and Medicaid programs. Passage of the Affordable Care Act of 2010 will enable pharmaceutical companies to gouge virtually the entire American market with their outlandish prices.40
Consumers pay for these inflated drug prices in the form of higher private insurance premiums, higher deductibles, higher co-pays, and higher taxes.
Medicare’s date with insolvency will be hastened as it pays out tens of billions of excess dollars into pharmaceutical company coffers. Those who have employer-funded health insurance are paying a greater portion of their medical insurance premium, while healthcare inflation remains a major factor behind corporate and municipal bankruptcies.
I don’t view it as a coincidence that since the passage of the Medicare Modernization Act, cancer drugs the federal government pays for (like Gleevec®) have spiraled upwards in price. This Act was written and enacted into law under intensive pressure from pharmaceutical lobbyists.
We at Life Extension vehemently opposed the Medicare Modernization Act that enabled pharmaceutical companies to charge full retail price for drugs paid for by federal tax/debt dollars.
The obscene profits earned by a relatively small number of pharmaceutical companies provide them with virtually unlimited resources to influence Congress, the FDA, academia, the media, medical journals, and prescribing physicians in ways that go against the welfare of the American public.
Novartis Accused Of Paying Illegal Kickbacks To Doctors
Two of the five overpriced anti-leukemic drugs identified by oncologists are Gleevec® (imatinib) and Tasigna® (nilotinib), both made by Swiss pharmaceutical behemoth Novartis®.41
US prosecutors have brought civil-fraud charges against Novartis® for allegedly paying kickbacks to physicians to prescribe their diabetes and anti-hypertension drugs.42 Novartis claims the money was paid to doctors to speak at education programs around the United States.
The charges against Novartis allege speaking fees, lavish dinners, and vacations illegally provided to doctors totaling nearly $65 million.42 This money of course is all included in the “cost” of drug development.
How Much The Doctors Were Paid
The lawsuit alleges that the doctors (speakers) were usually paid $750-$1,500 per program, with some earning as much as $3,000 to talk at fancy restaurants, or in one case, on a fishing boat in Florida.42 The government’s lawsuit further alleges that one doctor was paid $3,750 for speaking to the same four doctors about a Novartis drug five times in a nine-month period.43
In another allegation, a doctor was paid $500 to speak at an expensive Manhattan restaurant dinner attended by his friends. Many of these so-called “speaking engagements” occurred with less than three doctors attending, or in some cases, no doctor attending in which case I suppose, Novartis paid the doctor to speak to himself at a fancy dinner paid for by Novartis.
The government’s lawsuit describes dinners where the price per person attending ranged from $672 to over $1,000.42 I feel somewhat out of place here, but I have never been to a dinner where each guest ran up a tab like this for food and beverages. The lawsuit alleges that few slides were ever shown at these speaking engagements. “ Instead, Novartis simply wined and dined the doctors at high-end restaurants with astronomical costs.”43
Not all the restaurants where Novartis paid doctors to speak and covered the meals were high end. Some were sports bars (such as Hooters) with so many blaring TV screens (and no private room) that it would have been impossible to make a scientific presentation.42