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Cancer Specialists Offer Plan to Reduce Drug Prices

Pills in blister packs

(PublicDomainPictures, Pixabay)

23 July 2015. A group of 118 cancer specialists proposed steps to reduce the cost of drugs to cancer patients, calling the current system of drug pricing “unsustainable and not affordable for many patients.” Their recommendations appear today in a commentary published in the journal Mayo Clinic Proceedings.

Pharmaceutical industry representatives, however, say drugs play a lesser role in the overall cost of cancer care and that the proposals in the journal article would dampen risk-taking and innovation.

The journal authors, primarily physicians at academic medical centers and cancer research institutes in the U.S., highlight the growing numbers of people affected by cancer, coupled with the rapidly rising prices for cancer drugs, while household incomes in the U.S. remain stagnant. Prices for cancer drugs approved by Food and Drug Administration in 2014, say the authors, exceeded $120,000 for use over one year, with the average price of new cancer drugs increasing 5- to 10-fold over 15 years. This rapid increase, say the authors, “is causing harm to patients with cancer and their families.”

For patients needing one cancer drug, the $120,000 cost translates into out-of-pocket costs of $25,000 to $30,000 under many insurance plans. Paying for this one drug, say the authors, could eat up half or more of the median household income in the U.S. of $52,000 in 2013. “When you consider that cancer will affect 1 in 3 individuals over their lifetime,” says lead author and Mayo Clinic hematologist Ayalew Tefferi in a clinic statement, “and [with] recent trends in insurance coverage [that] put a heavy financial burden on patients with out-of-pocket expenses, you quickly see that the situation is not sustainable.”

In addition, the authors point to studies showing higher out-of-pocket costs reduce patients’ adherence to medications, with 10 to 20 percent of cancer patients either not taking the drugs or compromising (e.g., reducing dosage of) their prescriptions. Given the aging of the U.S. population, say the authors, the pricing problem and negative consequences are likely to get worse.

The authors note that despite 900 new drugs under development, drug pricing today is solely in the hands of pharmaceutical companies. While laws may allow cancer drugs to be covered under Medicare, for example, other legislation forbids the U.S. government from negotiating high-volume discounts for those drugs. This anomaly, say the authors, raises questions about the true basis of drug prices: reasonable expected returns or what the market can bear.

The commentary proposes what the authors call “simple and measured incremental actions” to build more market forces into cancer drug pricing:

– Create a mechanism in FDA to propose a fair price for new drugs, based on value to patients and health care, after drugs are approved to go on the market.

– Allow Medicare to negotiate drug prices

– Allow the Patient-Centered Outcomes Research Institute or PCORI to evaluate treatment benefits and include drug prices in those evaluations. PCORI is an independent, not-for-profit organization created by the Affordable Care Act to conduct comparative effectiveness research in health care.

– Allow imports of drugs by individuals for personal use, including from Canada where drug prices are about half that of the U.S.

– Pass laws preventing drug companies from delaying access to generic drugs, through so-called pay-for-delay agreements with generic drug companies discouraging development of generic versions

– Revise patent regulations making it more difficult extend exclusivity periods by making minor changes in patent specifications, a process called patent evergreening.

– Encourage professional and patient organizations in the field of cancer to consider overall value of drugs in preparing treatment guidelines.

The authors recommend that patients and other stakeholders affected by drug prices to better organize their efforts for voicing their concerns and demanding action. They cite the experience of HIV/AIDS advocates that pressed for more effective treatments, while also calling for greater access to those drugs. The result, note the authors, is more than 35 new AIDS drugs approved by FDA, while making AIDS drugs affordable for all patients.

Industry response

Robert Zirkelbach, vice president of communications at PhRMA, the U.S. pharmaceutical industry association, says on the organization’s Web site that the Mayo Clinic Proceedings commentary ignores the fact that medications make up only about one-fifth the cost of cancer care. Moreover, implementing the authors’ recommendations would “send a chilling signal to the marketplace that risk-taking will no longer be rewarded, stopping innovation in its tracks and halting decades of progress in cancer care.

Zirkelbach adds that despite the complex and difficult nature of cancer research, more than 800 cancer drugs are in development, with a track record of 14 million cancer survivors in the U.S. Zirkelbach notes as well that pharmaceuticals have their own market mechanisms that help keep drug prices in check, including aggressive negotiating by insurance companies and pharmacy benefit managers, and eventual expiration of patents, which he says contribute to the share of health care spending for cancer remaining consistent for decades.

Editor’s note: We asked other industry organizations for their reactions to the published commentary that we will add to the text.

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