Global spending on cancer drugs rose 28 percent to $91 billion in 2013 from $71
billion in 2008, according to a report by the IMS Institute for Healthcare
Informatics. The average cost of branded cancer drugs in the U.S. has doubled
over the past decade. And it’s not just cancer treatments. Dozens of medicines,
for ailments including multiple sclerosis, diabetes and high cholesterol, have
doubled or more in price from 2007 to early 2014.
Doctors,
insurers, patients and politicians are beginning to push back.“This is a moral
imperative,” says Clifford Hudis, a former president of the American Society of
Clinical Oncology. “I don’t think any of us want to look back and say we turned
away and didn’t lead while this was happening.” Cancer doctors are in the
process of creating a way to measure the value of drugs that weighs both
effectiveness and cost.
Insurers
are making changes that also may put a check on prices by forcing patients to
pay a bigger share of expensive medications. Many health-care plans sold
through the exchanges established under the Patient Protection and Affordable
Care Act require patients to pay a percentage of the total price of high-priced
drugs, rather than a fixed dollar co-pay. With costs running into tens of
thousands of dollars, patients can pay thousands, limited only by insurance
out-of-pocket maximums.
As more
employer-based health plans copy this feature, drug makers will be forced to grant steep
discounts to keep their products off the list of costly drugs handled in this
way, says Richard Evans, an analyst at SSR Health in Montclair, New Jersey.
“There is a major inflection point coming on pharmaceutical pricing,” he says.
Fifteen
cancer drugs introduced in the past five years cost more than $10,000 a month,
according to data from Memorial Sloan Kettering Cancer Center in New York. And
pharmaceutical makers are boosting prices on existing drugs as well.“
We are
looking at a drug-pricing bubble,” says Leonard Saltz, chief of the gastrointestinal
oncology unit at Sloan Kettering. Saltz in 2012 led a rebellion against an
expensive new cancer drug. He refused to put it on the hospital’s formulary,
its list of medicines accepted for use. “At what point do we say this is more
than society can afford?” he asks.
For now,
price increases are helping drug companies make up for steep declines in
revenue as some blockbuster drugs come off patent. Drug and biotech stocks in
the Standard & Poor’s 500 Index returned 8.4 percent this year through June
9 and 45 percent in 2013.
The
introduction of a new treatment for hepatitis C, which affects some 3 million
people in the U.S., has helped bring the debate to a head. Gilead Sciences Inc.
priced Sovaldi at $84,000 for 12 weeks of treatment. Sovaldi in combination
with other drugs usually cures the disease, marking a significant advance in
treatment, as hepatitis C has been chronic in some patients. The potential to
eradicate the virus, which destroys the liver, could make Sovaldi one of the
biggest-selling drugs in history.
If everyone
with hepatitis C uses the new drug, insurance carriers will face a huge bill,
says Sharon Frazee, vice president for research and analysis at Express Scripts
Holding Co., a pharmacy benefit manager.
Sovaldi has
caught politicians’ attention. In March, Representative Henry Waxman, a
California Democrat, and two other members of Congress demanded data from
Gilead on how it came up with the price. Gilead officials met with Waxman’s
staff at the end of that month, and the congressman’s office has asked for additional
information.
Sovaldi may
reduce total treatment costs because it cures the disease and so doesn’t need
to be taken for extended periods, says Gregg Alton, an executive vice president
at Gilead. Still, Express Scripts has threatened to stop covering Sovaldi if similarly
effective competitors come to market with better prices.
ROBERT
LANGRETH
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