The high costs of this dreaded disease are well known and are hard to escape, given the prevalence of the disease in the population. Cancer is the second-leading cause of death in the United States, according to statistics compiled by the American Cancer Society. It is also the second-leading cause of death in the overall First World, trailing only those who succumb from heart disease.
Since 1900, it’s estimated that there have been 5 million cancer deaths. That’s more than tuberculosis, AIDS and malaria combined.
Globally, the International Agency for Research on Cancer (IARC) reports there were 14.1 million new cancer cases in 2012, not counting skin cancers, which aren’t tracked. By 2030, that total is expected to reach more than 21 million new cases, thanks to the current population aging and overall population growth. That number may even grow, as Third World countries adopt some of the bad habits previously only displayed in wealthy economies, including bad diets, lack of physical activity, and smoking.
Clearly, it’s a huge battle, and the tools to wage war against it include radiation, surgery, hormone therapy, chemotherapy, targeted therapy and immune therapy. None of them are inexpensive.
THE HIGH COST OF CANCER
The biggest complaints about high cancer costs are about cancer drugs, which are notoriously expensive. In fact, they are so expensive that some cancer treatment centers refuse to provide certain high-cost drugs to patients.
For example, Memorial Sloan-Kettering Cancer Center, one of the nation’s top hospitals for cancer treatment, told the Wall Street Journal that Zaltrap, which is used for advanced colorectal cancer, comes in at an average cost of $11,063 per month, Sloan-Kettering also determined that the drug was no better than a less-expensive one that was already being used for treatment. Thus, it refused to use Zaltrap in its clinical practice.
The Food and Drug Administration, which is charged with approving new drugs, only determines a new drug’s safety and effectiveness. It does not consider how it will be marketed or its cost to the public in making its determinations.
Medicare, as a matter of law, must cover the costs of every cancer drug approved by the Food and Drug Administration and do so at the manufacturer’s price, plus 6 percent. Many states have similar laws governing insurance company reimbursements. Medicare’s Board of Trustees claims that prescription drug spending over the next 10 years will raise price growth by close to 10 percent in the next decade, a leap from 6.5 percent in the eight years prior to 2015. The average price of new cancer drugs is more than $100,000 per year, according to the Mayo Clinic.
Out-of-Pocket Costs
The median out-of-pocket expenditure for patients who had private health insurance was about $1,500 in the years 2003-2004, according to an analysis by the Henry J. Kaiser Family Foundation. Of those surveyed, about a quarter had expenses that topped $5,000. But the median income of Medicare beneficiaries is less than $22,000, the Foundation reported.
Pharmaceutical companies argue that the price of new treatments reflects the enormous costs of research and development. It’s also true that in a capitalist society, companies can charge what they believe the market will bear. The industry answers its critics by noting that the focus on price ignores the value of the medicines in treatment. It also notes that most cancers are treated in a sequential scale, where drugs are tried and new ones applied when old ones fail to arrest cancer’s development.
Each cancer-fighting drug is estimated to take approximately $1.2 billion to $1.3 billion to develop, typically with eight years of regulatory approval hurdles necessary to bring a drug to market. Pharmaceutical companies spent $50 billion in 2008 on development, according to the Wall Street Journal.
Patent limitations allow a drug’s patent protections to expire after 20 years, which means by the time the drugs are approved and come to market, they have less than 10 years to benefit their manufacturer’s bottom line.
That doesn’t count the number of medications that don’t navigate the complex road to market successfully, estimated at nearly 20 percent of those developed. Pharmacy companies claim that development costs determine retail prices of drugs, the number of potential patients who will use it, the projected patient life span and its return on investment.
The drug pricing problem is more acute in America than in other countries. Here, the market is fragmented, with those paying for medical costs ranging from individuals to private companies to insurance companies to federal and state governments. Unlike other nations, which use a single-payer system that can bargain hard using the economies of scale, the United States winds up with an ineffective competition between those who cover much of the health care system costs. Even though costs have caused some units to bargain harder for price breaks, costs continue to rise. That’s led to calls for legislation to more closely monitor research, development and manufacturing costs Big Pharma claims.
But balancing that outcry is the need for continued study of the mechanisms of cancer. It’s been just 50 years since DNA was first understood, and new therapies are being studied that many hope will lead to medical breakthroughs that may stem the rising tide of cancer. That costs money, and pharmaceutical companies are beholden to their shareholders to deliver a return on investment.
Because cancers have many causes and most are incurable, new drugs are needed to replace those whose effectiveness wears off. No one who has cancer will worry about the cost of treatment when their survival is at stake, even if the added survival rate is only weeks or months.
Some price-cutting advocates argue that value-based pricing should be instituted. That’s a system whereby the price of a drug is determined by an independent analysis of the benefit to the patient. However, when it’s your life or that of a loved one, such calculations are often tossed in the singular focus on and hope of remission. That’s truly the measure that means anything to the afflicted and their loved ones, and prices are driven by that desire.
Ultimately, finding a balance between that very human need, the business argument and the need for affordability for all will determine where prices go in the next years.