By Steven Rosenfeld
AlterNet July 24, 2015
The Mayo Clinic leads a protest against drug company greed.
Americans diagnosed with cancer are at risk of losing their life savings because cancer drug costs are escalating almost as fast as the worst forms of the disease, according to a Mayo Clinic medical journal article decrying these costs signed by scores of nationally known oncologists.
“In the United States, the average price of new cancer drugs increased 5- to 10-fold over 15 years, to more than $100,000 per year in 2012,” the article says. “The cost of drugs for each additional year lived (after adjusting for inflation) has increased from $54,000 in 1995 to $207,000 in 2013. This increase is causing harm to patients with cancer and their families.”
“Cancer is very scary,” Dr. Ayalew Tefferi, the lead author, told NPR. “Everybody’s shocked. But they don’t know about the second shock coming, and that is the financial destruction that’s coming with it. That comes in the course of treatment. That comes after the patient dies. All of a sudden, they see that their lifelong savings is being given to drug companies.”
Tefferi blames drug company greed, physicians who are too quick to prescribe new drugs without proven efficacy, health insurers willing to go along with upwards of $3,000-a-month co-pays, and a lack of federal government oversight adding checks and balances to a Wild West of drug pricing — especially for the federal health plan for seniors, Medicare, which is barred from negotiating drug prices. That prohibition was signed into law by President George W. Bush in 2003.
“The prices are fixed by the drug companies,” Tefferi said. “There is no regulation.”
Outsized drug company greed is not new. Medicare, unlike the Department of Veterans Affairs, has been barred by Congress from negotiating for drug price breaks—one of the pharmaceutical industry’s sordid lobbying achievements. But the latest statistics cited in the Mayo Clinic’s article show how this trend has worsened.
To start, cancer will affect one in three people during their lives. Most health plans require co-pays of 20 to 30 percent of the total drug cost. In 2014, all of the cancer drugs approved by the U.S. Food and Drug Administration—including promising approaches such as molecular-focused therapies—were “priced above $120,000 per year,” Mayo noted. That figure is double the average annual U.S. household income of $52,000.
“Patients with cancer then have to make difficult choices between spending their incomes (and liquidating assets) on potentially lifesaving therapies or foregoing treatment to provide for family necessities (food, housing, education),” Mayo said. “This decision is even more critical for senior citizens who are more frequently affected by cancers and have lower incomes and limited assets.”
Mayo noted that oral medications were most expensive, but their overall sky-high cost meant that “10 to 20 percent of patients with cancer do not take the perscribed treatment or compromise it.” Most ominously, because of the size of the aging post-World War II baby boom generation, there will be a “rising incidence of cancer in our aging population” and “high cancer drug prices will affect millions of Americans and their immediate families, often repeatedly.”
“There’s a lot of very expensive concept drugs that either have no or marginal benefit,” Tefferi said. “But there’s a huge marketing effort from drug companies to push for the utilization of this drug even though they know very well that there is really marginal benefit or no benefit… And that’s why I say their responsibility does not only lie in the drug companies, but the doctors that prescribe this drug.”
The Solutions Needed Now
The nearly 120 oncologists who co-authored the article, including more than 30 past presidents of the American Societies of Clinical Oncology, Hematology and Cancer, listed seven actions the federal government must do to end this crisis.
Create a post-FDA drug approval review mechanism to propose a fair price for new treatments, based on the value to patients and health care.
Allow Medicare to negotiate drug prices.
Allow the Patient-Centered Outcomes Research Institute, created through the Affordable Care Act initiatives to evaluate the benefits of new treatments, and similar organizations to include drug prices in their assessments of the treatment value.
Allow importation of cancer drugs across borders for personal use (e.g. prices in Canada are about half prices in the United States).
Pass legislation to prevent drug companies from delaying access to generic drugs.
Reform patent system to make it more difficult to prolong product exclusivity unnecessarily (patent “evergreening”).
Encourage organizations that represent cancer specialists and patients (American Society of Clinical Oncology, American Society of Hematology, American Association for Cancer Research, American Cancer Society, National Comprehensive Cancer Network) to consider the overall value of drugs and treatments in their guidelines.
“The issue, at large, is directly harming patients and their families,” Tefferi explained in a video on the Mayo website. “It is a crisis, an ongoing crisis, that needs to be dealt with as soon as possible. This undermines our Hippocratic Oath, and undermines our responsibilities to our patients.”
The obstacle, he explained, was that “drug companies hold the cards in terms of deciding how much we have to pay for them, or the patients have to pay for them.”
The pharmaceutical industry’s response to Mayo’s call for fairer pricing was to recite the same talking points it has used for years in Washington, even though a series of recent independent reports have debunked its claims. The industry justifies its prices by saying the drugs provide great value to patients and drug makers need to recoup costs.
“Too often the focus has been solely on the price of a medicine, and largely ignored the value these medicines are providing,” Robert Zirkelbach, spokesman for Pharmaceutical Research and Manufacturers of America, told the Wall Street Journal. “We’ve made tremendous strides in the fight against cancer—death rates are down, survival rates are up, and quality of life continues to improve.”
“We find neither explanation plausible,” wrote Donald W. Light, a fellow at Harvard University’s E.J. Safra Center for Ethics and a professor at Rowan University School of Osteopathic Medicine, and Hagop Kantarjian, professor and chair of the Department of Leukemia at MD Anderson Cancer Center, in the May issue of AARP Bulletin.
“The argument that drug companies are offering improved drugs for these higher prices is not true,” they continued. “Oncologists find that most new cancer drugs provide few clinical advantages over existing ones. Only one of the 12 new cancer drugs approved in 2012 helps patients survive more than two months longer.”
The two researchers also deconstructed the industry’s claim that it spends on average $1.3 billion to create new drugs and get FDA approval. The real figure would be one-tenth of that—closer to $125 million, they said, after deducting taxpayer subsidies, comparisons to other investment opportunities, inflating the cost of basic research and other factors.
“In sum, we find no credible evidence that the real research costs to major companies themselves for cancer research are higher than producing other drugs,” their AARP analysis said. “So why are cancer drug prices higher? We think pharmaceutical companies are price-gouging. Even worse, companies raise the prices on some of their older drugs by 20 to 25 percent a year. In the past decade, they have almost doubled their prices for cancer drugs.”
Light and Kantarjian said this strategy of “market spiral pricing” is an outrageous consumer rip-off. “No other advanced country allows companies to raise prices on older drugs. No other industry raises prices on last year’s cars or cellphones.”
“Congress should hold hearings on the spiraling prices for speciality drugs,” the two researchers wrote, echoing Mayo’s call for federal action. “And it should eliminate the rule that prohibits Medicare from negotiating discount drug prices… These changes could substantively cut the nation’s health care costs and provide incentives for companies to focus on developing clinically better drugs than slightly better drugs at sky-high prices.”
But right now, the pharmaceutical industry is lobbying Congress to pass a bill that would slow the distribution of generic drugs—adding billions to annual taxpayer costs for Medicare and Medicaid, progressive economists say—by exempting drug makers from a new patent review board that was intended to keep companies from making bogus claims about their patents.
In other words, while some of the nation’s leading cancer doctors are trying to draw attention to an unnecessary medical crisis causing financial ruin for many American households, the pharmaceutical industry is pressuring Congress to give it greater profit-making abilities.
Sign the Mayo Clinic’s change.org petition calling on Congress to act.
Steven Rosenfeld covers national political issues for AlterNet, including America’s retirement crisis, democracy and voting rights, and campaigns and elections. He is the author of “Count My Vote: A Citizen’s Guide to Voting” (AlterNet Books, 2008).