Cancer Drugs in the United States: Justum Pretium—The Just Price

TL;DR: In the context of cancer therapy, the prices of new anticancer agents seem to be decided by pharmaceutical companies according to what the market will bear as discussed by the authors, and there is little correlation between the actual efficacy of a new drug and its price, as measured by cost-efficacy (CE) ratios, prolongation of patient life in years, or quality-adjusted life-years (QALYs)

Abstract: In 2011, health care spending in the United States was estimated at $27 trillion,1 making it the sixth largest economy in the world, larger than the national budget of France National health care spending is approximately 18% of the US gross domestic product, more than $8,000 per person, compared with 6% to 9% in Europe and elsewhere, with apparently similar patient outcomes Total Medicare expenditures in 2011 were $549 billion2 A study comparing the Canadian universal health care program in older patients with the Medicare program in the United States suggested that adopting more-prudent health care strategies could have saved $256 trillion from 1980 to 2009, or approximately one fifth of our national debt, without compromising benefit3 In the debate about health care and Medicare solvency, strategies that reduce health care costs without compromising treatment efficacy and patient safety should be explored Several experts have addressed health care costs in excellent analyses and editorials,4–9 but their efforts have not translated into concrete decisions and results that benefit patients, providers, insurers, or payees However, an interesting exception occurred recently when Bach et al,10 in a New York Times editorial, compared the efficacy and cost of two anticancer agents—ziv-aflibercept (Zaltrap; sanofi-aventis, Bridgewater, NJ) and bevacizumab (Avastin; Genentech, South San Francisco, CA)—in the treatment of metastatic colorectal cancer After noting ziv-aflibercept had similar efficacy but was twice the cost of bevacizumab, they stated it would be excluded from their hospital formulary10 Within 1 week, sanofi-aventis, the company producing ziv-aflibercept, reduced its price by 50% Thus, expert review of anticancer therapies for their cost-benefit ratios may influence institutional usage and drug pricing while preserving a healthy profit margin for pharmaceutical companies Aristotle is credited to be the first to discuss the relationship between price and worth in his book Justum Pretium—the just price Sixteen centuries later, Saint Albert the Great and Saint Thomas Aquinas refined Aristotle's argument Their conclusion: of moral necessity, price must reflect worth In the context of cancer therapy, the prices of new anticancer agents seem to be decided by pharmaceutical companies according to what the market will bear There is little correlation between the actual efficacy of a new drug and its price, as measured by cost-efficacy (CE) ratios, prolongation of patient life in years, or quality-adjusted life-years (QALYs)7 Compared with a decade ago, the price range of new anticancer agents has more than doubled, from $4,500 to more than $10,000 per month4,5 Of the 12 anticancer drugs approved by the US Food and Drug Administration (FDA) in 2012, only three prolonged survival, two of them by less than 2 months Yet nine were priced at more than $10,000 per month Many so-called targeted therapies have been priced between $6,000 to 12,000 per month, or approximately $70,000 to 115,000 per patient annually (Table 1)11 However, novel or reformulated chemotherapy drugs like pralatrexate (Folotyn; Allos Therapeutics, Westminster, CO; $120,000 per course), omacetaxine (Synribo; Teva Pharmaceuticals, North Wales, PA; $28,000 for induction, $14,000 for monthly treatments), and pegylated asparaginase (Oncaspar; Sigma-Tau Pharmaceuticals, Gaithersburg, MD; $22,000 per course) are also expensive Hillner and Smith7 suggested that profiteering (ie, making profit by unethical methods, such as raising prices after natural disasters) could be applied to this recent trend, where a life-threatening disease is the natural disaster Table 1 Cost of Targeted Therapy Pharmaceutical companies justify the high price of drugs as necessary to support investment in research and development The often-cited cost of bringing anticancer drugs to FDA approval is $1 billion12 This figure is roughly calculated by dividing total expenditures on research and development by the number of agents that receive FDA approval However, this figure may be inflated, because it includes ancillary expenses, salaries, bonuses, and other indirect costs not related to research or development13 as well as an 11% compounded discount rate over 10 years based on stock market returns on capital investment14 Other independent estimates of cost of drug development put the figure as low as 4% to 25% of this estimate15–17 Allowing the producer-dominated market to set drug prices has spiraled the cost of cancer drugs out of control In this analysis, we highlight examples of the cost benefit of different anticancer agents and suggest scenarios for reduced drug pricing, while preserving the profit-making incentive, by linking price to a true measure of quality: preservation and meaningful prolongation of life