WHAT SHOULD CANCER DRUGS COST?

Toasty warm in
Glacier Bay, Alaska, 1991  

It has become painfully obvious that many, if not most, of you skim my laboriously crafted blogs searching for amusing bits of trivia and avoiding anything at all technical.  Several of you have confessed as much, and I suspect the prevalence of this behavior in a large part of my “audience”.  (This is in addition to the hundreds of pseudo-“hits” generated by computer algorithms from Latvia, Poland, Russia, etc. searching for who know what.)   In fact, I suspect that many of you are simply going to “Myrl’sBlog” to see a picture of Linda, and have no Intention of reading anything;.  You disappoint me, but I will carry on.  This next blog is about cancer, all right, but not about biology, and you should read it.  It is about money

Would you ever have guessed that of the 12 new cancer drugs approved by the FDA in 2011, 11 of them cost more than $100.000/year?  And that old people on Medicare would be out-of-pocket $20,000 to $30,000 to take them?  And that all of them can be shown to be “successful”, defined as buying the patient a few more months of life?   These shocking facts are brought to you courtesy of Linda’s sister, Carolyn.  You can read about them yourself by going to the following web address:

http://health.yahoo.net/experts/dayinhealth/cancer-doctors-protest-astronomical-drug-costs

Obviously drugs are going to cost real money.  Companies making them must cover the cost of research, including research to develop new drugs that don’t pan out.  And, to stay in business, they must show a profit. I accept all that.  The problem seems to be that the usual price-setting role of competition doesn’t apply here, given the way the drug industry is structured. Getting a new drug to market goes something like this.  First, some smart and/or lucky biochemist (more likely a group of such) runs on some aspect of cancer development that they think they might be able to exploit.  Then they spend years trying to determine whether it actually works. If it seems to work, they sell it to Merck or Novartis - that is to big pharma.  Then big pharma studies it some more, for years sometimes.  Very likely, it doesn’t work - and Merck or Novartis is out a bundle of cash.  “Finding out” normally will involve one or more extremely expensive clinical trials.  If the drug does seem to work, the company asks the FDA to approve it for clinical use.  The FDA takes God’s own time making that determination, and often as not it's decision is “no”.  But suppose it’s “yes”.  In that case Merck or Novartis ponders on its costs and arbitrarily sets a price. Note that neither the FDA nor market forces have any say in the matter. And so, the drug goes on the market. 

Clearly, if this were a market for shoes, or whiskey, competition would determine the price.  If your drug did something that some other drug does better, you would have to sell it for less.  But that’s not the way it works here.  For one thing, Medicare (and supplement insurance schemes) are required to cover the drug, even though it is ineffective or over-priced.  And some “clinicians” will prescribe it because “it’s new, and thus must be better” Or, patients actually believe the noxious drug commercials that run on TV all the time, and they ask for it.  You must agree: this is a stupid way to run a health care system.

What to do?  Well, oncologists at two of the foremost cancer hospitals in the country are refusing to prescribe some of these expensive drugs even, I guess, if the patient demands them.  Good for them.  Also, it has been suggested that Medicare be allowed to bargain with big pharma and extort “bargain” prices.  The VA does this and can supply drugs to sick veterans at half the cost Medicare charges.  Again, drug X in, say, Canada or the UK (“Socialized Medicine”!)sometimes costs half what drug X will set you back in the U.S.  So, something is definitely rotten in Denmark or, in this case, the U.S..

So, let’s think about a solution:

Maybe all drug research should be done by non-profits, or by the government. I know some of you believe strongly that this would work, but after 80 years of dealing with government, including government science at all levels, I much doubt it.

Figure out some way to get competition into the drug pricing business.  Sounds great – but, how?  Mom and Pop drug firms are never going to happen.

So, this free market, small government conservative is driven to the wall.  I’m afraid that we need the FDA, or some other agency to set prices.  I hate the idea, not least because it will bring politics into the drug business, with possible desperate consequences.  If prices are set too low, to please the consumer (aka, the voter), there will be no incentive to develop new drugs(profit incentive, that is – there is little altruism in big pharm, or anywhere else).  If the prices are set too high, to encourage research and development, patients will be unable to afford the drugs. 

Okay – there was no biology at all in this blog, so you have no excuse not to have read it.  What do you think?  I will be counting the Comments.